E*TRADE FINANCIAL Corporation (NYSE:ET) today announced record results for its second quarter ended June 30, 2006, reporting net income of $156 million, or $0.36 per share compared to $102 million, or $0.27 per share a year ago.
As previously indicated, the results in the second quarter of 2006 include approximately $8 million, or $0.01 per share, of acquisition-related integration expenses. Excluding these expenses, the Company generated earnings of $0.37 per share. Total net revenue for the second quarter increased 58 percent year over year to a record $611 million. Net interest income after provision for loan losses increased 71 percent year over year to $334 million -representing 55 percent of total net revenue. Enterprise net interest spread increased to 291 basis points as the Company continued to benefit from strong organic growth in customer cash and growth in higher yielding assets. Non-interest income increased 45 percent year over year to $277 million. Operating margin expanded 700 basis points year over year to a record 43 percent.
The Company also raised its 2006 earnings guidance for the second time this year to a range of $1.42 - $1.52 per share from the previous range of $1.35 - $1.50. As previously indicated, this range excludes $0.05 per share of acquisition-related integration expenses. Of this $0.05, $0.04 was realized through the first and second quarters, and the Company expects to realize an additional $0.01 in the third quarter. Including these expenses, the Company now expects to earn $1.37 - $1.47 per share on a GAAP basis in 2006, up from the previous range of $1.30 - $1.45.
"The strength of our second quarter results demonstrates the flexibility of our model, particularly amid an environment filled with significant macroeconomic uncertainty," said Mitchell H. Caplan, Chief Executive Officer, E*TRADE FINANCIAL Corporation. "As retail customers respond to the market environment, they are increasingly looking for value from a broader set of financial solutions. Through our compelling value proposition across investing, trading, banking and lending products, we remain ideally positioned to capitalize on short-term market opportunities and long-term secular growth trends."
Other selected highlights from the second quarter of 2006:
Generated $1.7 billion in Total Deposit growth:
- Sweep Deposit Account balances up $400 million
- Transaction account balances up $400 million
- Certificates of Deposit balances up $900 million
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- Recorded an 82 percent increase in international DARTs year over year
- Increased options trades to 12.4 percent of U.S. DARTs, up from 12.2 percent in the first quarter and 10.0 percent in the year ago period
- Repurchased 2 million shares at an average price of $23.79
- Announced the acquisition of Retirement Advisors of America, a Texas-based asset management firm with over $1 billion in assets under management
- Continued our phased launch of E*TRADE Complete functionality - introduced the Intelligent Investing Optimizer and Risk Analyzer, enabling customers to evaluate their investment choices against various market scenarios
- Opened three new retail center locations including Farmington, MI; Garden City, NY; and Torrance, CA - increasing total center locations to 20 nationwide