(Adds CEO comment, financial details, after-hours stock price)
By Jed Horowitz
NEW YORK, Jan 24 (Reuters) - E*Trade Financial Corp, which last week named a new chief executive to helpshed bad loans and return it to its online brokerage roots,reported a fourth-quarter 2012 loss on a higher-than-expectedcost in refinancing its debt.
The New York-based company reported a loss of $186 million,or 65 cents a share, for the fourth quarter. Its shares fellmore than 4 percent in after-hours trading.
E*Trade was expected to lose 54 cents a share, according tothe consensus estimate of 16 analysts surveyed by ThomsonReuters I/B/E/S.
In the 2012 third quarter, E*Trade had a loss of $29million, or 10 cents a share. Investors are closely monitoringE*Trade's quarter-to-quarter results to evaluate progress inshedding credit problems and building brokerage revenue.
The company, which has lost hundreds of millions of dollarson its bank unit's bad mortgage loans since late 2007, had aloss of $6 million, or 2 cents a share, in the fourth quarter of2011. In all of 2012, it lost $112.6 million, compared with again of $156.7 million in 2011.
E*Trade had forecast that its retirement of $1.3 billion ofhigh-rate debt in the fourth quarter would create a loss. Thedebt retirement cost it $257 million pretax, or about 59 cents ashare, the company said Thursday.
Revenue in the fourth quarter fell to $468 million, down 4.5percent from the third quarter and down 1 percent from theyear-earlier quarter.
The company said it made progress in shedding bad assets inorder to strengthen its capital position. Its balance sheetcontracted by $3 billion in the quarter, money set aside tocover future bad loans plummeted by 47 percent from the thirdquarter to $74.4 million and its modification of mortgage loansfell to its lowest level in several quarters and is expected tocontinue trending down, E*Trade Chief Financial Officer MatthewAudette said on the conference call.
E*Trade last week appointed Paul Idzik, a former banker atBarclays Plc and consultant at Booz Allen Hamilton, as its fifth chief executive since 2009.
"It's a great business model bouncing along in anunfavorable investment environment," Idzik said on a conferencecall with investors after the market closed on Thursday.
Without referencing its past problems, he said that thebrokerage business is well-positioned for growth when theeconomy revives and investor confidence returns. "We'rewell-positioned but we're not there yet. Retail investorconfidence is low and so are volumes."
E*Trade said trading by clients that produced revenue in thefourth quarter of 2012 fell 1 percent from the prior quarter and9 percent from the fourth quarter of 2011. Daily average clienttrades fell 12 percent in the year, the company said, althoughtrades are up in January from December.
Clients added $2.3 billion of net new brokerage assets inthe quarter, and the company said it improved retention ofclients. Rival brokerage firms also have reported extremelystrong inflows of assets in late 2012 as many clients cashed outinvestments in anticipation of higher U.S. tax rates in 2013.
TD Ameritrade Holding Corp gathered a record $15.6billion in new client assets in the last three months of theyear, up from about $10 billion in the year-earlier quarter.
Charles Schwab Corp brought in $44 billon of netnew assets in its last quarter, including $22.6 billion of netinflows in December alone.
Shares of E*Trade, which have ranged between $7.08 and$11.50 over the past year, on Thursday closed 0.3 percent lowerat $10.27. They fell about 4.5 percent in after-market tradingon Thursday to $9.81. (Editing by Leslie Adler and Matthew Lewis)
Barclays (BARC)