E*TRADE Financial Corporation (NASDAQ:ETFC) Q3 2016 Earnings Conference Call Transcript

Oct 20, 2016 • 05:00 pm ET


E*TRADE Financial Corporation (NASDAQ:ETFC) Q3 2016 Earnings Conference Call Transcript


Loading Event

Loading Transcript


Good evening, and thank you for joining E*TRADE's third-quarter 2016 earnings conference call. Joining the call today are Executive Chairman Rodger Lawson; CEO, Karl Roessner; and CFO, Michael Pizzi.

(Forward-Looking Cautionary Statements) 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 would now like to turn the call over to Mr. Lawson. Please go ahead.

Rodger Lawson

Patterson, thank you very much, and good evening everyone and thank you for joining us. We are at a critical juncture for E*TRADE and this last quarter was particularly significant. While all of you tuning in are certainly aware of the more headline-inducing changes we made, I'm going to take a few minutes to reiterate the impetus for those changes, before giving a bit of color on the Board's current thinking about what constitutes success, and then finally provide my observations of the Company's current trajectory from my new unique vantage point as an insider.

First off all, our decision to replace the CEO. E*TRADE has spent the last several years appropriately focused on the most impactful opportunities in its path, namely, managing the wind-down of the legacy balance sheet, bolstering its risk and operating foundations, improving all facets of its regulatory standing, and of course, unlocking and deploying a meaningful amount of capital to the benefit of its shareholders.

Many of these efforts were interdependent, and some were set in motion many years ago, but over the last three years, we have harvested most of the fruit of this labor, and the stock appreciated in commensurate fashion. During that period, the Board has vigorously supported the Management Team in pursuing all of those matters. At the same time, however, we as a Board have always remained fully cognizant to the need to develop ongoing avenues of growth and value creation once the fix-it story had been executed.

Key to that growth has always been our core brokerage business and as you would expect, we have remained particularly focused on the major business driver metrics of accounts, DARTs and assets. I believe our business driver focus has always been thoughtful and certainly alert to the impact of the vagaries of the markets, but having said that, as a Board, we have become increasingly concerned with both current business driver results as well as the forward trajectory.

Given that, we faced two choices, give it some more time or take action. We ultimately favored the latter, and made changes at the top of the Company. Again, the former CEO was a good steward of the Company through its recent chapter, but we believe shareholders are better served with a reconfigured executive team to align the Company for future growth. In putting together that team, we strongly believe that Karl Roessner was a natural choice to lead E*TRADE.

Karl has a deep history with the Company, substantial experience and