On Wednesday, Online broker E*TRADE Financial Corporation (ETFC) reported an improved Daily Average Revenue Trades (DARTs) through February 22, 2011. The company also reported monthly delinquencies in its loan portfolio for November 2010, December 2010 and January 2011.

For the period ended from February 1, 2011 to February 22, 2011, DARTs were approximately 184,000, up 2% from the prior month. Broker performance is generally measured through DARTs. DARTs represent a number of trades from which brokers can expect commissions or fees.

For the month of January 2011, total delinquencies (30 to 89 days delinquent) edged down 6% sequentially to $556 million in E*TRADE’s entire loan portfolio. Total delinquencies (30 to 179 days delinquent) decreased 4% sequentially to $372 million.

At the end of January, total accounts were approximately 4.3 million, including more than 2.7 million brokerage accounts, 1.1 million stock plan accounts and 0.5 million banking accounts.

During January, customer security holdings were $124.3 billion, up 2.6% sequentially. Moreover, brokerage-related cash inched up 2.9% sequentially to $25.2 billion, as customers were net buyers of approximately $0.7 billion in securities in January. Bank-related cash and deposits inched down 2.2% sequentially to $8.8 billion in the reported month.

Earnings Recap

Last month, E*TRADE reported fourth-quarter net loss of 11 cents per share, which was significantly worse than the Zacks Consensus Earnings Estimate of 4 cents. However, the loss compares favorably with loss of 36 cents per share in the prior-year quarter.

Results improved year over year on the back of lower operating expenses, decrease in provision for loan losses, and strong brokerage business, partially offset by lower operating net revenue.

The company’s initiatives to reduce balance sheet risk are encouraging but it will add near-term pressure on the interest margin. Though strong capital position and restructuring initiatives are expected to support bottom line, an increase in operating expenses will act as a headwind.

E*TRADE currently retains its Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Also, considering the fundamentals, we are maintaining a “Neutral” recommendation on the stock. The company’s closest competitor Charles Schwab Corporation’s (SCHW) also maintained a short-term Hold rating.

 
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