E*TRADE Financial February Trading Down Here Too; Credit Trends Stable $ETFC [Credit Suisee}

■ February update. This morning, E*Trade provided an update on February brokerage and credit trends. Similar to peers, retail trading activity retrenched during the month (-18% mth/mth) while client assets were higher in part to market appreciation. With respect to the loan portfolio, delinquency trends were relatively stable through February.

■ Stable trends in delinquencies, portfolio unwind continues. Through the end of February, portfolio-wide early delinquency trends (30-90 days) increased 34 bps to 4.29% of gross loans from 3.96% at the end of 4Q. This was mainly driven by continued portfolio unwinding outpacing the reduction in special delinquency loans. Taking these varying factors into account, early
delinquency trends are tracking relatively stable across the board in the loan portfolio from 4Q levels. Specifically, early delinquencies by portfolio: first lien +12 bps to 5.10% (vs. December), HELOC +15 bps to 3.28%, consumer/other +10 bps to 1.71%. Longer-term delinquencies (90-179 days) were up modestly (+2 bps) from the end of 4Q. Gross loan balances totaled
$18.7 billion at February 28th, down 8% from December 31st.

ETFC February Trends
This morning, E*Trade provided an update on February brokerage and credit trends. Similar to peers, retail trading activity retrenched during the month (-18% mth/mth) while client assets were higher in part to market appreciation. With respect to the loan portfolio, delinquency trends were relatively stable through February. Our overall estimates/target price are unchanged—we maintain our Neutral rating given expectations for continued elevated credit costs and limited earnings power and upside to common shares.

■ Stable trends in delinquencies, portfolio unwind continues. Through the end of February, portfolio-wide early delinquency trends (30-90 days) increased 34 basis points to 4.29% of gross loans from 3.96% at the end of the fourth quarter. This was
mainly driven by continued portfolio unwinding outpacing the reduction in special delinquency loans. Taking these varying factors into account, early delinquency trends are tracking relatively stable across the board in the loan portfolio from fourth quarter levels. Specifically, early delinquencies by portfolio: first lien +12 bps to 5.10% (vs. December), HELOC +15 bps to 3.28%, consumer/other +10 bps to 1.71%. Longerterm delinquencies (90-179 days) were up modestly (+2 bps) from the end of the
fourth quarter. Gross loan balances totaled $18.7 billion at February 28th, down 8% from December 31st.



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