Bad loan portfolio looms over ETrade's earnings

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Investors are anxious as they await ETrade Financial Corp.'s (ETFC) earnings report after the bell today.

Analysts polled by Thomson Reuters expect ETrade Financial to post a loss of 39 cents a share on $17 million in revenues. The online broker lost 20 cents per share a year ago on revenues of $316.2 million.

Investors are hoping the company will post a better-than-expected loss, but signs are that the company's banking subsidiary, which has reported heavy loan losses due to mortgage defaults, may be in more trouble than the company has let on.

Earlier this month, Martin D. Weiss of Weiss Research Inc. named Etrade Bank as one of several financial institutions at risk of failure. And the U. S. Treasury Department's reluctance to approve the online broker's application to its Troubled Asset Relief Program has not helped matters.

The company has suffered six consecutive losing quarters due to its bad loan portfolio, but its stock has benefited from the market rally and is up over 60 percent this year. Last month, the company reported that delinquencies on loans of 30 to 90 days had decreased 16 percent during the first two months of the year, so investors will be looking for that trend to continue.
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