Online broker E-Trade Financial Corp. reported third-quarter profits Wednesday that surged eightfold from a year ago due to a hefty tax benefit and increased trading by its customers during a summer of high volatility in the stock markets.
The results exceeded analysts' expectations and strengthened its return to profitability this year after several money-losing years due to bad mortgages in its banking division.
E-Trade got a big boost in the quarter from a $62 million income tax benefit for liquidating a European subsidiary.
The New York-based company reported net income of $70.7 million, or 24 cents per share, up from $8.4 million, or 3 cents per share, in the same period a year earlier.
Revenue was $507 million, up 4 percent from $489 million in the third quarter of 2010.
Analysts surveyed by FactSet had forecast earnings of 18 cents a share and revenue of $511 million.
It decreased its loan loss provision in the quarter to $98 million from $152 million a year ago.
CEO Steven Freiberg said delinquency trends in the company's loan portfolio continue to improve and the quarterly loan provision is now down about 80 percent from its peak.
E-Trade, which returned to profitability this year, recently began a strategic review at the behest of its largest shareholder, hedge fund Citadel LLC, that could lead to E-trade's sale. Prospective suitors include Schwab, TD Ameritrade and Capital One Financial Corp.
Shares in the company rose 15 cents to $9.55 after hours after the company reported its results. During the regular session, the stock fell 25 cents a share, or 2.6 percent, to close at $9.40.
Former Speaker Dennis Hastert Indicted For Lying To The FBI, Evading Currency Transaction Reports | Matt Vespa
Fifteen Dollars an Hour for Thee, but Not for Me: California Unions Request Exemption from New Wage Law | Christine Rousselle