eTrade 2013 Annual Report Download - page 2

• Loan loss provision declined 60 percent or $211 million.
• DARTs increased 9 percent.
• Margin loan balances ended the year at $6.4 billion, up from $5.8 billion a year ago.
• Both net new accounts and net new assets continued to grow (from existing and new customers).
• The benefit of the cost restructuring exercise, which started to hit the bottom line.
Overall, with greater customer engagement, 2013 was a good financial year for our Company.
During the year the management team maintained its energetic commitment to the capital plan,
which was aimed at:
• Improving the Company’s capital ratios through better core earnings and some targeted
deleveraging; and
• Reducing the legacy loan portfolio (from $10.6 billion at the end of 2012 to a year-end 2013
position of $8.6 billion).
Alongside this attention to ensuring good capital management, the Company continued building
out its enterprise risk management capabilities. This reflects our desire to run the business better
as well as meet the heightened expectations of our regulators while they work to improve the
soundness of the overall financial system. The Company spent $17 million more on this effort in
2013 than the prior year. We are engaged with our regulators to ensure that our risk management
capabilities are appropriate for our size and complexity.
Better financial results, significant enhancements to our risk management, and improved capital
ratios were interrelated factors that contributed to the quarterly dividends (Q3 and Q4) in 2013 to
the parent from the bank after a hiatus of eight quarters. I am pleased to note that we also obtained
regulatory and Board approval for a dividend to our parent in Q1 of 2014.
Corporate Report 2013
Paul T. Idzik
Chief Executive Officer
Fellow shareholders:
2013 was an important year for E*TRADE, as we made solid
progress across multiple fronts — which drove significant value
for our shareholders. In addition to exhibiting improvement in
our bottom-line results, we made meaningful headway toward
rationalizing our capital structure, took steps to position
ourselves for growth, and refocused Management’s efforts on
the core of our Company — the customer.
We earned $204 million or $0.70 per share in 2013, excluding
the impact of exiting the market making business (up from a
net loss of $113 million or $0.39 loss per share in 2012, which
included a $257 million pre-tax charge related to our $1.3 billion
refinance of corporate debt).
Five key factors contributed to this improvement in results
from the prior year: