E*TRADE Financial Corporation (ETFC)
Q4 2009 Conference Call
January 27, 2009 5:00 p.m. ET

Executives

Susan Hickey (ph)
Robert Druskin – Chairman and Interim Chief Executive Officer
Bruce Nolop – Executive Vice President and Chief Financial Officer
Paul Brandow – Chief Risk Officer
Matthew Audette – Executive Vice President, Finance
Robert V. Burton – President of E*TRADE Bank
Michael Curcio - Executive Vice President and President of E*TRADE Securities

Analysts

William Tanona - Collins Stewart
Matthew Snowling - FBR Capital Markets
Richard Repetto - Sandler O’Neill
Michael Vinciquerra - BMO Capital Markets
Daniel Harris - Goldman Sachs
Roger Freeman - Barclays Capital
Faye Elliott - Bank of America/Merrill Lynch
Michael Carrier - Deutsche Bank
Howard Chen - Credit Suisse
Michael Hecht - JMP Securities
Matt Fischer – CLSA

Presentation

Operator

Welcome to the E*TRADE Financial Fourth Quarter and Year-End 2009 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. Following the formal remarks, we will open the call for questions-and-answers. At that time, if you have a question, please press star then the number one on your touchtone phone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Thank you. It is my pleasure to turn the call over to Susan Hickey (ph) from E*TRADE Financial. Please go ahead.

Susan Hickey

Thank you. Good afternoon and thank you for joining us today. Joining me are Bob Druskin, E*TRADE''s Chairman and Interim CEO and Bruce Nolop, our CFO and other members of E*TRADE''s Management Team.

Before turning the call over to Bob, I would like to remind everyone that during this conference call the company will be sharing with you certain projections or other forward looking statements regarding future events or its future performance. E*TRADE Financial cautions you that certainly factors, including risks and uncertainties referred to in the 10-Ks and 10-Qs and other documents E*TRADE files with the Securities and Exchange Commission, could cause the company''s actual results to differ materially from those indicated by its projections in its forward-looking statements. This call will present information as of January 27, 2010. Please note that E*TRADE Financial disclaims any duty to update any forward looking statements made in the presentations.

During this call, E*TRADE Financial may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the Company''s press release, which can be found on its website at investor.etrade.com. This call is being recorded. A replay of this call will be available via phone, webcast and podcast beginning at approximately 7 PM Eastern Time. The call is being webcast live at investor.etrade.com. No other recordings or copies of this call are authorized or may be relied upon. And with that, I will turn the call over to Bob Druskin.

Robert Druskin

Thank you everyone for joining us this afternoon. I''m pleased to be participating in my first call as E*TRADE''s new Chairman and also as Interim CEO. During my nearly two years as a board member, I worked closely with Don Layton and the entire leadership team at E*TRADE, so from my perspective, it has been a very smooth transition and I''m happy to be working more closely with the organization during this interim period.

The knowledge I pick up while acting as CEO will be helpful to me and hopefully to the entire company in my ongoing role as Chairman. During today''s call, I will discuss a number of 2009 highlights and key issues and then turn it over to Bruce who will provide a financial overview for the quarter and year. From there, I will share our outlook on 2010 and then we will open up the call for questions.

Like many companies, E*TRADE began 2009 in uncharted waters, while our core franchise, the online brokerage business was strong. We continued to be weighed down by unsettled markets, a very weak global economy and our own asset quality issues.

By executing on a number of key initiatives though, we ended the year with a much stronger company position for sustainable, profitable growth supported by a stronger balance sheet and capital structure. While significant time and energy were devoted to our recapitalization efforts during the year, we stayed focused on the online brokerage business, enabling us to gain market share from traditional brokers while competing effectively against our on-line competitors.

During 2009, we recorded our highest dart levels in history and added more than 115,000 net new brokerage accounts. We ended the year with a record 2.7 million brokerage accounts and so both brokerage cash and margin receivables increased during the period.

If we exclude the loan loss provision and any gains or losses on securities, our operating profit increased 8% when compared with 2008. Our success during the year was supported by continued investments in our online brokerage business, specifically product and service enhancements to address the needs of both active traders and long-term investors. This was a high priority for us.

We did not want to succeed in recapitalizing the company and find that our core business franchise had been eroded. We delivered several new investor offerings including an IRA converter tool to support customers through the rules governing 2010 (inaudible) conversions and enhanced investor resource center to simplify access to our comprehensive offerings.