E*TRADE Financial Corporation (NASDAQ:ETFC) Q4 2016 Earnings Conference Call Transcript

Jan 26, 2017 • 05:00 pm ET


E*TRADE Financial Corporation (NASDAQ:ETFC) Q4 2016 Earnings Conference Call Transcript


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Good evening, and thank you for joining ETRADE's fourth-quarter and full-year 2016 earnings conference call. Joining the call today are Chief Executive Officer, Karl Roessner; and Chief Financial Officer, Mike 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 will now turn the call over to Mr. Roessner.

Karl Roessner

Good evening, and thanks to everyone for tuning in. Welcome to our fourth-quarter and full-year results call. This January call typically provides a natural point to pause and rehash 12 months of accomplishments while looking forward to what the next 12 may bring. While I will provide somewhat of a retrospective, this moment in time is defined by executing with intensity and focusing on our charge to grow the business.

So while we may be at a natural reflection point, we are anything but paused. After laying out a plan in late Q3 to refocus the Company on brokerage growth, this past quarter we marched forward in devising and beginning to implement the many tactics to deliver on that plan positioning the Company for success.

To quickly recap the 2016 highlights, we built solid momentum and closed the year as a leaner, more focused, more agile organization well-positioned from a financial and capital standpoint. We entered the year lowering the bank's target leverage ratio by 100 basis points reflecting the continued improvement in our risk profile and our regulatory position. We distributed a significant amount of capital to the parent and seized opportunities to accelerate our share repurchase program buying in more than $500 million worth of our shares.

After bringing our balance sheet to nearly $50 billion, we announced our decision to grow through that threshold and began the work of building out the structure to support that growth. We delivered a commitment to our investors to be responsive to the revenue environment shifting our investment philosophy to an operating margin for a framework.

We managed the legacy loan portfolio through the bulk of the loan conversions from interest only to fully amortizing effectively removing the largest remaining credit risk overhang. We completed our first major acquisition in more than a decade jumpstarting a transition back to our scrappy brokerage roots and realigned our business to be more nimble while achieving meaningful cost savings. And finally, we laid out concrete and tangible growth goals for the Company. To this last point, I will turn to our key areas of focus that we believe will drive our growth, all of which I will subsequently expand on.

First, finalize the OptionsHouse integration and realize the full potential of this combination. The team, customer base, and functionality we acquired are vital to reaching our growth goals. The integration activities began the day after closing, and we are tracking to plan, but this process is about much more than personnel and infrastructure. At