E*TRADE Financial Corporation (NASDAQ:ETFC) Q2 2016 Earnings Conference Call Transcript

Jul 21, 2016 • 05:00 pm ET


E*TRADE Financial Corporation (NASDAQ:ETFC) Q2 2016 Earnings Conference Call Transcript


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Good evening, and thank you for joining E*TRADE's Second Quarter 2016 Earnings Conference Call. Joining the call today are Chief Executive Officer, Mr. Paul Idzik and Chief Financial Officer, Mr. Michael Pizzi.

(Forward-Looking Cautionary Statements)

During the call, the Company may also discuss non-GAAP financial measures. For a reconciliation of such non-GAAP measures to the comparable GAAP figures, and for a discussion of additional risks and uncertainties that may affect the future results of E*TRADE Financial, please refer to our earnings release, furnished with Form 8-K, and our 10-Ks, 10-Qs, and other documents the Company has filed with the SEC.

Note that we have not reconciled our forward-looking non-GAAP measures to the most directly comparable GAAP measures because material items that impact those measures are out of our control and/or cannot be reasonably predicted.

All of these documents are available at about.etrade.com. This call will present information as of July 21, 2016. The Company disclaims any duty to update forward-looking statements made during the call. This call is being recorded, and a replay will be available via phone and webcast later this evening at about.etrade.com. No other recordings or copies of this call are authorized or may be relied upon.

With that, I will now turn the call over to Mr. Idzik.

Paul Idzik

Thank you. Good evening and thank you for spending some time with us. We had a productive quarter marked by a number of accomplishments on both the customer facing and financial fronts. We launched one of our most compelling offerings in recent history. We generated healthy levels of capital while marching forward on our capital deployment initiatives.

And the investments made to strengthen our platforms and infrastructure again proved their worth as we handled the flurry of Brexit-inspired customer activity without getting on to a sticky wicket. Meanwhile, on an industry level, we deftly managed the challenges of the revenue environment while progressing our work related to the Department of Labor Fiduciary Standards.

Starting with our results; we reported net income of $133 million or $0.48 per share for the quarter. We again had a sizable benefit to the provision line led by a solid loan performance and outsized recoveries. These recoveries are a phenomenon which is difficult to predict but can dramatically impact a portfolio as seasoned as ours.

On the customer activity front, metrics remain healthy largely reflecting seasonality relative to the prior quarter. Trading activity declined throughout the period, but experienced a spike surrounding the courageous UK vote to leave the European Union, when our customers took advantage of the dip in the equity markets to the tune of $1.1 billion in net buying during a single trading day, the highest on record.

The significant attention we placed on strengthening our infrastructure over the past several years enabled our platforms to handle these elevated volumes with room to spare. For the entire quarter, a record 17% of DARTs were executed via mobile platforms.

In July to-date, DARTs are currently tracking down 1% from June. Margin balances,