E*Trade Financial Corp. (ETFC) today completed a previously announced at-the-market common stock offering worth $150 million. The company sold approximately 80.2 million shares at an average price of $1.87 per share. The offering resulted in proceeds of $147 million, net of commissions and offering expenses.

In an at-the-market offering, a company sells shares at market prices over an extended course of time instead of selling all shares straight away at a fixed price. Sandler O’Neill & Partners, acted as sole distributing agent for E*Trade’s offering.

E*Trade is a global financial services company offering a wide range of financial solutions, including investing, trading, lending and cash management services to retail and institutional clients. The firm delivers its retail products and services to 3.4 million clients, primarily online, but increasingly via advisors and branches. E*Trade also offers specialist and market-making services globally to its institutional clients.

E-Trade has been raising capital and working towards reducing its debt as a part of an ongoing plan to improve its capital position amid the economic downturn. The firm has been severely affected by losses on its residential real estate and mortgages portfolio.

In June, E-Trade successfully raised more than $600 million of common equity to enhance liquidity. As a result, it reported Tier 1 capital ratios of 6.79% to total adjusted assets and 12.65% to risk-weighted assets at the end of the second quarter. As of June 30, the company had excess risk-based capital of $916 million which regulators see as above well-capitalized levels.

We remain concerned about the company’s relatively weak financial condition due to its mortgage exposure as well as the limited earnings potential given the massively diluted share base. As such, we maintain a Neutral recommendation on the shares.

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