E TRADE FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - E TRADE FINANCIAL CORP	d8k.htm

2010 Citi Financial Services Conference

Bruce Nolop

Chief Financial Officer

March 10, 2010

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

EXHIBIT 99.1

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Safe Harbor Statement

This presentation contains certain projections or other forward-

looking statements regarding future events or the future

performance of the Company. Various factors, including risks

and uncertainties referred to in the 10Ks, 10Qs and other

reports E*TRADE FINANCIAL Corporation periodically files

with the SEC, could cause our actual results to differ materially

from those indicated by our projections or other forward-

looking statements. This presentation also contains disclosure

of non-GAAP financial measures. A reconciliation of these

financial measures to the most directly comparable GAAP

financial measures can be found on the investor relations site

https://investor.etrade.com

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Overview

Thriving Online Brokerage Business

Improving Loan Performance Trends

Strengthened Financial Condition

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

Achieved record levels in 2009 for DARTs,

brokerage accounts, and

consistent growth in

brokerage cash

Gained market share versus traditional brokers

and remained competitive versus online brokers

Introduced new products and enhancements

for both active traders and long-term investors

Benefited from disciplined expense management,

while investing in customer service

Generated consistent net operating income

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

161

156

166

194

175

203

180

158

100

125

150

175

200

225

Thriving Online Brokerage Business

Strength

DARTs

(1)

179

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

100

110

120

130

140

150

ETFC

AMTD

SCHW

Thriving Online Brokerage Business

Competitive versus largest online brokers

DARTs indexed to Q1 2008

Ameritrade

acquires

thinkorswim

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

Growth

brokerage

accounts

(2)

114K

net new

2,397

2,420

2,440

2,516

2,575

2,627

2,639

2,630

2,300

2,350

2,400

2,450

2,500

2,550

2,600

2,650

2,700

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

Improved

brokerage

account

attrition

(3)

13.3%

16.9%

17.0%

15.8%

15.4%

18.4%

13.2%

12.4%

11.6%

14.3%

10%

15%

20%

25%

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

-$1.5

-$1.0

-$0.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

Thriving Online Brokerage Business

Net

new

brokerage

assets

(4)

$7.2B

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$10

$15

$20

$25

Thriving Online Brokerage Business

Growth in brokerage-related cash

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving

Online Brokerage Business

Planned decline in bank-related cash

* APY for E*TRADE Complete Savings Account

3.45%

3.15%

3.30%

3.01%

1.45%

0.95%

0.60%

0.50%

CSA*

Balances are not adjusted for the sale of approximately $1B of deposits to Discover Financial Services, completed in Q1 2010

$10

$15

$20

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

Thriving

Online Brokerage Business

Recovery of customer margin receivables

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$100

$200

$300

$400

Thriving Online Brokerage Business

Consistent net operating interest income

Trading and Investing

Balance Sheet Management

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$285

$279

$283

$281

$313

$283

$299

$335

$100

$200

$300

$400

Thriving Online Brokerage Business

Disciplined expense management

Adjusted Total Operating Expense

(5)

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$50

$100

$150

$200

$250

Thriving Online Brokerage Business

Profitable trading and investing segment

Segment income

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

Simplified and transparent pricing

Eliminated $12.99 commission tier

Eliminated

per

charges

(6)

Eliminated

account

inactivity

fees

(7)

Estimated

revenue

impact:

$50

million

150+ trades per quarter

0-149 trades per quarter

Stock trades

(8)

$7.99

$9.99

Options trades

(8)

$7.99 + $0.75

$9.99 + $0.75

Revised

commission

schedule

(8)

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

New products and enhancements for active traders

Updated Power E*TRADE Pro

Upgrades for mobile devices

Back-testing and advanced

screeners

Portfolio margining

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

New products and enhancements for long-term investors

Managed Investment Portfolio

Retirement QuickPlan

Investor Resource Center

Bond Investor Tools

Online Advisor

Brand expansion

Value propositions

Thriving Online Brokerage Business

Highly effective marketing program

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Thriving Online Brokerage Business

Grow active trader franchise

Deepen penetration of long-term

investor segment

Increase the quality of customer

accounts

Reduce brokerage account attrition

Restructure international operations

to improve profitability

Focusing on profitable growth

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Improving Loan Performance

Trends

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Loan portfolio in full run-off mode

Proactively managing to reduce charge-offs

Meaningful improvement in delinquencies

Provision has crossed below the level of charge-offs

Expect loan loss provision and internally-generated

Bank capital to breakeven in 2010

Improving Loan Performance Trends

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Improving Loan Performance Trends

($ in billions)

Loan

Balance

9/30/07

(9)

Paydowns

(10)

Charge-offs

Loan

Balance

12/31/09

(9)

1-4 Family loans

$16.9

($5.8)

($0.5)

$10.6

Home equity

$12.4

($2.7)

($1.9)

$7.8

Consumer

$3.0

($1.0)

($0.2)

$1.8

TOTAL

$32.3

($9.5)

($2.6)

$20.2

Loan portfolio in full run-off mode

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

2008

$0.0B

2007

$1.0B

12%

2006

$3.6B

47%

2005

$1.9B

24%

2004

$0.7B

2003

and older

$0.6B

Total

$7.8B

100%

Unpaid Balances by

Origination Vintage

2007

2003

and older

2004

2005

2006

Improving Loan Performance Trends

Seasoning of the home equity portfolio

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$0.9

$1.1

$1.7

$2.0

$2.5

$3.0

$3.7

$5.6

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

Undrawn Home Equity Lines

Improving Loan Performance Trends

Proactively managing to reduce exposure

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$100

$200

$300

$400

$500

Improving Loan Performance Trends

Significantly lower home equity delinquencies in 2009

30-89 Days Delinquent

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

$100

$200

$300

$400

$500

$600

$700

Improving Loan Performance Trends

Gradually declining 1-4 Family delinquencies in 2009

30-89 Days Delinquent

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E*TRADE FINANCIAL Corporation’s written permission.

1.95%

Improving Loan Performance Trends

5.27%

4.91%

4.23%

3.31%

2.30%

5.66%

5.81%

Allowance

% of total

gross loans

$566

$1,219

$1,201

$1,081

$874

$636

$1,215

$1,183

Provision for

loan losses

Charge-offs

Declining provisions below charge-offs

$100

$200

$300

$400

$500

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Improving Loan Performance Trends

Generating regulatory capital to absorb loan loss provision

($ in millions)

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Bank earnings

(11)

$181

$232

$243

$247

Dividend to parent

($28)

Loan

run-off

(12)

$84

$101

$131

$81

Portfolio

changes

and

other

(12)

($82)

$39

($53)

($94)

Provision for loan losses

($454)

($405)

($347)

($292)

Net generation (usage)

(13)

($271)

($33)

($26)

($86)

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Strengthened Financial Condition

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E*TRADE FINANCIAL Corporation’s written permission.

Reduced parent debt burden

Bolstered Bank capital ratios

Improved consolidated capital structure

Retained value of the deferred tax asset

Eliminated uncertainty about long-term viability

Strengthened Financial Condition

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Strengthened Financial Condition

Benefits from 2009 recapitalization

as of 12/31/09

($ in millions)

Ratio

Excess

to well-capitalized

Total capital to

risk-weighted assets

14.1%

$899

Tier I Capital to

risk-weighted assets

12.8%

$1,496

Tier I Capital to

total adjusted assets

6.7%

$724

2009 Recapitalization actions

Net proceeds from stock issuance

$733 million

Debt exchanged for convertible

$1.7 billion

Annual interest payment reduction

$198 million

Bank capital

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E*TRADE FINANCIAL Corporation’s written permission.

(in millions)

7 3/8%

Due 2013

7 7/8%

Due 2015

12 1/2%

Due 2017

(15)

Total

Outstanding

(14)

$415

$243

$930

$1,591

Annual interest payments

$31

$19

$116

$166

Strengthened Financial Condition

Improved consolidated capital structure

Interest-bearing debt

(in billions)

Book value

Common stock

1.894

$3.750

Convertible debt

0.987

$1.021

Total

2.881

$4.771

Corporate Cash (12/31): $393 million

Goal: Maintain 2 years of debt service

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E*TRADE FINANCIAL Corporation’s written permission.

$1.4

$3.6

$0.0

$1.0

$2.0

$3.0

$4.0

DTA

Pre-tax Income

Strengthened Financial Condition

Substantial value in deferred tax asset

Shelters approximately

$3.6 billion of income

from tax in future periods

Approximately 19 years

to utilize

Approximately $1.4B

Deferred Tax Asset

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E*TRADE FINANCIAL Corporation’s written permission.

$0.9

$0.5

$0.0

$0.4

$0.8

$1.2

$1.6

Limited

Not limited

Strengthened Financial Condition

Substantial value in deferred tax asset

Total DTA: $1.4B

Tax code 382 Limitation

382 Tax ownership change imposes

an annual limitation on a portion of

the Company’s DTA

Limited to using $60 million per

year, sheltering $155 million of

income

Remainder of DTA –

only limited to

Company’s ability to generate

taxable income

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Conclusion

Thriving Online Brokerage Business

Improving Loan Performance Trends

Strengthened Financial Condition

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Appendix

($ in thousands)

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Operating expense

354,333

318,543

295,890

321,449

293,984

329,226

301,714

318,405

Less: FDIC insurance premiums

8,859

7,592

7,721

7,086

12,712

42,129

19,993

19,424

Less: Facility restructuring and other exit activities

10,566

12,433

5,526

977

(112)

4,447

2,497

13,820

Total adjusted operating expense

334,908

298,518

282,643

313,386

281,384

282,650

279,224

285,161

(6) Per share charges eliminated for certain market orders over 2,000 shares.

(7) Account inactivity fees scheduled for elimination after the first quarter of 2009.

(9) Represents unpaid principal balances.

(10) Net paydowns includes paydowns on loans, as well as limited origination activity, home equity advances, repurchase activity and transfers to real estate owned assets.

Explanation of Non-GAAP Measures and Certain Metrics

Management believes that operating income (pre-credit cost) and bank earnings before taxes and before credit losses are appropriate measures for evaluating the operating

and liquidity performance of the Company. Management believes that the elimination of certain items from the related GAAP measures is helpful to investors and analysts who

may wish to use some or all of this information to analyze our current performance, prospects and valuation. Management uses non-GAAP information internally to evaluate our

operating performance in formulating our budget for future periods.

(1) U.S. DARTs are defined as transactions executed on the Company’s domestic platforms.

(2) References to “brokerage” in these metrics refer to activity on our domestic platforms and do not include brokerage activity from our international local brokerage accounts.

(4) The net new brokerage assets metrics treat asset flows between E*TRADE entities in the same manner as unrelated third party accounts.

(5) Total adjusted operating expense, excluding FDIC insurance premiums and facilities restructuring and other exit activities expense is a non-GAAP measure useful to

investors and analysts as it is an indicator of recurring expenses that management considers when budgeting for future periods, as it presents a normalized operating

environment

(3) The

attrition

rate

calculated

dividing

attriting

(a)

brokerage

accounts,

excluding

international

local

accounts,

total

brokerage

accounts,

excluding

international

local

accounts for the previous period end. This measure is presented annually and on an annualized basis (where it appears quarterly)

(a) Attriting

brokerage

accounts:

Gross

new

brokerage

accounts,

less

net

new

brokerage

accounts,

excluding

international

local

accounts

(8) This

presentation

does

not

represent

offer

E*TRADE

Securities.

current

schedule

commissions

and

service

fees

available

www.etrade.com

under

the

“Pricing”

section

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Appendix

(a)

The

capital

release

from

loan

portfolio

run-off

includes

the

decrease

risk-based

capital

required

for

our

one-

four-family,

home

equity

and

consumer

loan

portfolios.

(b) Represents cash flows to and from the parent company.

Q4 2009

Q3 2009

Q2 2009

Q1 2009

Beginning E*TRADE Bank excess risk-based capital ($MM)

985

911

444

715

Bank earnings before taxes and before credit losses

247

243

232

181

Provision for loan losses

(292)

(347)

(405)

(454)

Loan portfolio run-off

(a)

131

101

Margin decrease (increase)

(37)

(30)

(69)

Capital downstream (upstream)

(b)

(28)

100

500

Other capital changes

(c)

(57)

(23)

108

(118)

Ending E*TRADE Bank excess risk-based capital ($MM)

899

985

911

444

Q4 2009

Q3 2009

Q2 2009

Q1 2009

Loss before income tax benefit and discontinued operations

(128,530)

(1,151,349)

(211,496)

(344,056)

Add back:

Non-bank loss before income tax benefit

and discontinued operations (b)

80,286

1,032,910

71,731

84,525

Provision for loan losses

292,402

347,222

404,525

453,963

Gains on loans and securities, net

(18,667)

(41,979)

(73,170)

(35,290)

Net impairment

21,412

19,229

29,671

18,783

Losses on early extinguishment of FHLB advances

37,239

10,356

2,999

Bank earnings before taxes and before credit losses

246,903

243,272

231,617

180,924

(a)

Excess risk-based capital is the excess capital that E*TRADE Bank has compared to the regulatory minimum well-capitalized threshold.

(b)

Non-bank loss represents all of the Company’s subsidiaries, including Corporate, but excluding the Bank.

(12) The portfolio changes from loan run-off only includes the decrease in risk based capital required for our 1-4 family, home equity and consumer loan portfolios. This slide does not

depict

the

capital

impact

changes

other

risk-weighted

assets

(represented

‘other’

line

the

below

chart),

such

securities,

and

the

impact

our

provision

for

loan

losses.

(11) Bank earnings before taxes and before credit losses represents the pre-tax earnings of E*TRADE Bank Holding Company (“Bank”) before discontinued operations, provision for loan

losses, gains (losses) on loans and securities, net, net impairment and losses on early extinguishment of FHLB advances. This metric shows the amount of earnings that the Bank, after

accruing for the interest expense on its trust preferred securities, generates each quarter prior to credit related losses, primarily provision and losses on securities. Management believes

this

non-GAAP

measure

useful

investors

and

analysts

indicator

the

level

credit

losses

the

Bank

can

absorb

without

causing

decline

E*TRADE

Bank’s

excess risk-based capital(a). Below is a reconciliation of Bank earnings before taxes and before credit losses from loss before income taxes and discontinued operations:

This presentation contains confidential information and may not be disclosed without

E*TRADE FINANCIAL Corporation’s written permission.

Appendix

(13) Net usage is calculated by adding the bank earnings and capital release from loan run off and other then subtracting the loan loss provision.

(14)Total interest-bearing outstanding debt includes $3.6M of 8% Senior Notes due in 2011 that are not represented in the table.

(15) Interest on the 12 ½% Springing Lien Notes may be paid in kind (PIK) through May 2010.

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