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Topping Expectations, E*Trade Financial Corporation Watches Earnings per Share Soar

Today E*Trade Financial Corporation (NASDAQ: ETFC  ) announced that its earnings per share nearly tripled in the first quarter of this year, moving from $0.12 in the first three months of 2013 to $0.33 in 2014.

Net income at E*Trade rose by 175% from $35 million in the first quarter of 2013 to $97 million in the most recent quarter. This was the result of significant increases in both interest and non-interest income -- fees, commissions, and other services -- as well as a significant reduction in its provision for loan losses, which fell from $43 million to just $4 million.

"We've had a great start to the year across several dimensions of our business, as reflected in our Q1 results," noted the CEO of E*Trade, Paul Idzik, in the earnings release. He continued by saying "In all, we performed remarkably well during the quarter and look forward to building on this momentum throughout the year."

Revenue at E*Trade rose from $420 million to $475 million thanks to significant gains in its interest income, which rose by $25 million to $266 million, and its commissions, which were up by 28%, from $101 million to $128 million. Although a smaller source of revenue, its fees and service charges also saw remarkable growth, rising from $32 million to $47 million, a gain of almost 50%.

In addition to strong financial performance, E*Trade noted its daily average revenue trades (DARTs) rose to 198,000, an increase of 33% relative to the first quarter of last year, and 24% above the fourth quarter. In addition it concluded the quarter with 3.1 million brokerage accounts, by adding 72,000 new clients. Its total brokerage accounts stood at 2.9 million in the first quarter of 2013.

The company also saw significant gains in its customer assets, which rose from $219 billion to $269 billion in the last year, an increase of 23%.

"In Q1 we made great strides in reducing risk and improving our earnings profile," added the CFO of E*Trade, Matthew Audette, in the announcement. "Our actions this quarter represent important steps forward in unlocking embedded value for our shareholders."

The results posted by E*Trade came in well above analyst expectations, as its earnings per share were expected to be $0.23. Its revenue was also above expectations, as analysts were expecting roughly $455 million. 

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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9/1/2015 3:59 PM
ETFC $25.00 Down -1.29 -4.91%
E*TRADE Financial… CAPS Rating: ***