In a press release sent out after market close, E-Trade Financial Corp. announced it would revise 2007 guidance and exit its wholesale mortgage lending business.
According to the press release, “The Company will exit its wholesale mortgage operations and will streamline its direct mortgage lending business to focus on its retail franchise.”
“In addition, the Company is increasing the provision for loan losses due to charge-offs expected as a result of the disturbance in the credit markets.”
The company now expects earnings between $1.05 and $1.15 per share, a sheer drop from its previous range of $1.53 to $1.67.
E-Trade President and Chief Operating Officer Jarrett Lilien said, “It’s our way of taking a bad credit market and turning it into something positive.”
Regarding loan losses, the release said, “Given the significant deterioration in the mortgage market in August and particularly the pace of change in the performance of home equity loans in August, the Company expects charge-offs of $95 million dollars and total provision expense of $245 million in the second half of 2007.”
A fair number of layoffs are also expected as a result of the restructuring, though no specific numbers have been provided thus far.
Shares of E-Trade dropped to $13.03 in after hours trading, down $1.18, or 8.30%.
See the latest closed mortgage companies and related layoffs.