E*TRADE Financial Unveils $1.5 Billion Share Buyback Program

Investment products provider E*TRADE Financial (ETFC) unveiled a $1.5 billion share buyback program late on Thursday as it reported a decline in second-quarter revenue following a repositioning of its balance sheet through the sale of lower-yielding investment securities.

The company repositioned its balance sheet during the period through the sales of $4.5 billion of lower-yielding investment securities. It said that these sales enabled a reduction of balance sheet size through the move of deposits to third-party banks, generating additional capital capacity to support share repurchases.

Revenue fell to $685 million during the three months that ended June 30, from $710 million a year ago, as a $64 million net loss due to the sale of lower-yielding investment securities reduced the total non-interest income component of the group turnover, the firm said in its earnings statement.

Analysts in a Capital IQ survey had projected group sales would increase to $751.4 million, implying a miss by the company. Lower turnover in the quarter was also accompanied by the addition of 70,000 net new accounts and $1.6 billion of net new retail and advisor services assets.

Earnings per share at E*TRADE were also down, declining to $0.90 from $0.95 from a year earlier and missing the $1.09 market forecast. However, the unadjusted earnings include a $0.24 per diluted share of losses from balance sheet repositioning related to the sale of the $4.5 billion of lower-yielding investment securities, as well as a $0.02 per diluted share benefit from the provisions made for loan losses.

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