Exhibit 99.1

FOR IMMEDIATE RELEASE

E*TRADE FINANCIAL Media Contact

Pam Erickson

E*TRADE FINANCIAL Corporation

617-296-6080

pam.erickson@etrade.com

E*TRADE FINANCIAL Investor Relations Contact

Adam Townsend

E*TRADE FINANCIAL Corporation

703-236-8719

adam.townsend@etrade.com

E*TRADE FINANCIAL CORPORATION ANNOUNCES HIGHEST QUARTERLY AND ANNUAL REVENUE AND EARNINGS IN THE COMPANY’S HISTORY

• Fourth-quarter Record Net Income of $129.4 million, or $0.32 per share

• Full-year 2005 Record Net Income of $430.4 million, or $1.12 per share

• Full-year Record Total Net Revenue of $1.7 billion

• Fourth-quarter Enterprise Net Interest Spread of 257 basis points

• Record Total Client Assets of $178.5 billion

• Fourth-quarter Record $1.0 billion of organic growth in customer enterprise cash

• Fourth-quarter Total Daily Average Revenue Trades of 128,400

New York, January 23, 2006 – E*TRADE FINANCIAL Corporation (NYSE: ET) today announced results for its fourth quarter ended December 31, 2005, reporting record net income of $129.4 million, or $0.32 per diluted share compared to $89.8 million, or $0.24 per diluted share a year ago – representing a 44 percent increase in net income over the year ago period. Total net revenue for the fourth quarter increased 19 percent to a record $478.9 million from $403.7 million a year ago, with net interest income increasing 43 percent year over year, representing over 50 percent of total net revenue. For the year ended December 31, 2005, E*TRADE FINANCIAL reported record net income of $430.4 million, or $1.12 per share, on record revenue of $1.7 billion. This compares to net income of $380.5 million, or $0.99 per share, on net revenue of $1.5 billion in 2004.

The fourth-quarter GAAP EPS of $0.32 included $0.08 per share non-recurring gain related to the Company’s previously announced sale of E*TRADE Consumer Finance. This gain was partially offset by a net $0.06 per share in incremental interest expense, share dilution, restructuring and other deal-related costs associated with the Company’s earlier than expected closing of the Harrisdirect and BrownCo acquisitions. Excluding both the non-recurring gain from E*TRADE Consumer Finance and the impact from the closing of these acquisitions, the Company would have reported fourth-quarter earnings per share of $0.30, or $1.10 for the year ended December 31, 2005.

“In 2005, we delivered our third consecutive year of exceptional growth, resulting in record revenue, net income and profit margins. We achieved these financial results while simultaneously strengthening the franchise through strategic acquisitions,” said Mitchell H. Caplan, Chief Executive Officer, E*TRADE FINANCIAL Corporation. “Our compelling customer value proposition resulted in significant organic growth in assets, cash, borrowings and

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E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 2

transactions which translated into double digit growth in net income and net revenue year-over-year.”

Other selected highlights from the fourth quarter of 2005:

• Closed the acquisition of Harrisdirect from Bank of Montreal on October 6^th – three months ahead of schedule

• Closed the acquisition of BrownCo from JPMorgan Chase on November 30^th – a month ahead of schedule

• Closed acquisition of Kobren Insight Management on November 3^rd

• Full-year record Net Interest Income of $817.1 million

• Increased options-related DART volume by 28 percent quarter-over-quarter and 64 percent year-over-year

• Launched Pan Asian investor education website, providing investors in Asia with an insightful mix of research, commentary and educational information on the US stock and Forex markets

• Launched the E*TRADE Mileage Maximizer Account, a credit solution designed to enable consumers to enjoy low interest rates while continuing to realize the benefits of their rewards credit cards

Historical monthly metric data from January 2003 to December 2005 can be found on the E*TRADE FINANCIAL investor relations site at www.etrade.com.

About E*TRADE FINANCIAL

The E*TRADE FINANCIAL family of companies provides financial services including trading, investing, banking and lending for Retail and Institutional customers. Securities products and services are offered by E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries.

# # #

Important Notice

E*TRADE FINANCIAL and the E*TRADE FINANCIAL logo are registered trademarks or trademarks of E*TRADE FINANCIAL Corporation. The statements contained in this news release that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include, but are not limited to, changes in market activity, anticipated increases in the rate of new customer acquisition, the conversion of new visitors to the site to customers, the activity of customers and assets held at the institution, seasonality, the development and enhancement of products and services, competitive pressures (including price competition), system failures, economic and political conditions, changes in consumer behavior and the introduction of competing products having technological and/or other advantages. Further information about these risks and uncertainties can be found in the information included in the annual reports previously filed by E*TRADE FINANCIAL Corporation with the SEC on Form 10-K (including information under the caption “Risk Factors”) and quarterly reports on Form 10-Q.

^© 2006 E*TRADE FINANCIAL Corporation. All rights reserved.

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 3

Financial Statements

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2004			2005			2004
Revenues:
Commissions	$	135,723		$	114,842		$	458,834		$	431,638
Principal transactions		23,789			35,476			99,336			126,893
Gain on sales of loans and securities, net		14,737			33,640			98,858			140,718
Service charges and fees		34,675			24,598			135,314			97,575
Other revenues		27,820			25,249			94,419			89,077
Interest income		501,880			323,127			1,650,264			1,145,597
Interest expense		(243,632	)		(140,839	)		(779,164	)		(510,455	)
Net interest income		258,248			182,288			871,100			635,142
Provision for loan losses		(16,070	)		(12,420	)		(54,016	)		(38,121	)
Net interest income after provision for loan losses		242,178			169,868			817,084			597,021
Total net revenues		478,922			403,673			1,703,845			1,482,922
Expenses excluding interest:
Compensation and benefits		100,331			88,065			380,803			350,440
Occupancy and equipment		18,416			17,756			69,089			69,572
Communications		27,835			17,830			82,485			69,674
Professional services		23,681			22,838			75,237			67,747
Commissions, clearance and floor brokerage		40,616			33,559			140,806			129,696
Advertising and market development		31,683			16,346			105,935			62,155
Servicing and other banking expenses		17,659			9,890			52,326			35,971
Fair value adjustments of financial derivatives		987			518			4,892			(2,299	)
Depreciation and amortization		21,671			19,834			74,981			77,892
Amortization of other intangibles		30,014			5,013			43,765			19,443
Facility restructuring and other exit charges		(30,512	)		16,921			(30,017	)		15,688
Other		(7,736	)		28,731			53,751			91,144
Total expenses excluding interest		274,645			277,301			1,054,053			987,123
Income before other income (loss), income taxes and discontinued operations		204,277			126,372			649,792			495,799
Other income (loss):
Corporate interest income		3,247			1,937			11,043			6,692
Corporate interest expense		(36,981	)		(11,774	)		(73,956	)		(47,525	)
Gain on sale and impairment of investments		14,972			20,605			83,144			128,111
Loss on early extinguishment of debt		—			—			—			(22,972	)
Equity in income of investments and venture funds		(1,039	)		1,306			6,103			4,382
Total other income (loss)		(19,801	)		12,074			26,334			68,688
Income before income taxes and discontinued operations		184,476			138,446			676,126			564,487
Income tax expense		58,959			38,951			229,823			181,764
Minority interest in subsidiaries		9			17			65			893
Income from continuing operations		125,508			99,478			446,238			381,830
Discontinued operations, net of tax:
Loss from discontinued operations		(2,592	)		(9,649	)		(21,495	)		(32,755	)
Gain (loss) on disposal of discontinued operations		6,444			—			4,023			31,408
Net income (loss) from discontinued operations		3,852			(9,649	)		(17,472	)		(1,347	)
Cumulative effect of accounting change, net of tax		—			—			1,646			—
Net income	$	129,360		$	89,829		$	430,412		$	380,483
Basic income per share from continuing operations	$	0.32		$	0.26		$	1.20		$	1.04
Basic income (loss) per share from discontinued operations		0.01			(0.02	)		(0.04	)		(0.00	)
Basic income per share from cumulative effect of accounting change		—			—			0.00			—
Basic net income per share	$	0.33		$	0.24		$	1.16		$	1.04
Diluted income per share from continuing operations	$	0.31		$	0.26		$	1.16		$	0.99
Diluted income (loss) per share from discontinued operations		0.01			(0.02	)		(0.04	)		(0.00	)
Diluted income per share from cumulative effect of accounting change		—			—			0.00			—
Diluted net income per share	$	0.32		$	0.24		$	1.12		$	0.99
Shares used in computation of per share data:
Basic		387,055			367,603			371,468			366,586
Diluted (1)		400,717			381,061			384,630			405,389

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 4

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended
	December 31, 2005			September 30, 2005			December 31, 2004
Revenues:
Commissions	$	135,723		$	114,278		$	114,842
Principal transactions		23,789			23,793			35,476
Gain on sales of loans and securities, net		14,737			21,850			33,640
Service charges and fees		34,675			32,893			24,598
Other revenues		27,820			22,920			25,249
Interest income		501,880			424,114			323,127
Interest expense		(243,632	)		(207,101	)		(140,839	)
Net interest income		258,248			217,013			182,288
Provision for loan losses		(16,070	)		(12,909	)		(12,420	)
Net interest income after provision for loan losses		242,178			204,104			169,868
Total net revenues		478,922			419,838			403,673
Expenses excluding interest:
Compensation and benefits		100,331			103,084			88,065
Occupancy and equipment		18,416			16,249			17,756
Communications		27,835			18,210			17,830
Professional services		23,681			16,058			22,838
Commissions, clearance and floor brokerage		40,616			34,619			33,559
Advertising and market development		31,683			21,188			16,346
Servicing and other banking expenses		17,659			12,989			9,890
Fair value adjustments of financial derivatives		987			1,269			518
Depreciation and amortization		21,671			18,443			19,834
Amortization of other intangibles		30,014			4,382			5,013
Facility restructuring and other exit charges		(30,512	)		(469	)		16,921
Other		(7,736	)		21,827			28,731
Total expenses excluding interest		274,645			267,849			277,301
Income before other income (loss), income taxes and discontinued operations		204,277			151,989			126,372
Other income (loss):
Corporate interest income		3,247			3,409			1,937
Corporate interest expense		(36,981	)		(13,783	)		(11,774	)
Gain on sale and impairment of investments		14,972			22,028			20,605
Equity in income of investments and venture funds		(1,039	)		3,103			1,306
Total other income (loss)		(19,801	)		14,757			12,074
Income before income taxes and discontinued operations		184,476			166,746			138,446
Income tax expense		58,959			57,608			38,951
Minority interest in subsidiaries		9			—			17
Income from continuing operations		125,508			109,138			99,478
Discontinued operations, net of tax:
Loss from discontinued operations		(2,592	)		(3,464	)		(9,649	)
Gain (loss) on disposal of discontinued operations		6,444			171			—
Net gain (loss) from discontinued operations		3,852			(3,293	)		(9,649	)
Cumulative effect of accounting change, net of tax		—			1,646			—
Net income	$	129,360		$	107,491		$	89,829
Basic income per share from continuing operations	$	0.32		$	0.29		$	0.26
Basic income (loss) per share from discontinued operations		0.01			(0.00	)		(0.02	)
Basic income per share from cumulative effect of accounting change		—			0.00			—
Basic net income per share	$	0.33		$	0.29		$	0.24
Diluted income per share from continuing operations	$	0.31		$	0.28		$	0.26
Diluted income (loss) per share from discontinued operations		0.01			(0.00	)		(0.02	)
Diluted income per share from cumulative effect of accounting change		—			0.00			—
Diluted net income per share	$	0.32		$	0.28		$	0.24
Shares used in computation of per share data:
Basic		387,055			367,342			367,603
Diluted (1)		400,717			382,031			381,061

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 5

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

	December 31,
	2005			2004
ASSETS
Cash and equivalents	$	844,188		$	939,906
Cash and investments required to be segregated under Federal or other regulations		610,174			724,026
Brokerage receivables, net		7,174,175			3,034,548
Trading securities		146,657			593,245
Available-for-sale mortgage-backed and investment securities		12,564,738			12,543,818
Other investments		65,189			46,269
Loans receivable, net		19,424,895			11,505,755
Loans held-for-sale, net		87,371			279,280
Property and equipment, net		299,256			302,291
Goodwill		2,003,456			395,043
Other intangibles, net		532,108			134,121
Other assets		807,392			534,281
Total assets	$	44,559,599		$	31,032,583
LIABILITIES AND SHAREHOLDERS’ EQUITY
Brokerage payables	$	7,315,659		$	3,618,892
Deposits		15,948,015			12,302,974
Securities sold under agreements to repurchase		11,101,542			9,897,191
Other borrowings by Bank subsidiary		4,166,592			1,760,732
Senior notes		1,401,947			400,452
Convertible subordinated notes		185,165			185,165
Mandatory convertible notes		435,589			—
Accounts payable, accrued and other liabilities		605,530			638,975
Total liabilities		41,160,039			28,804,381
Shareholders’ equity:
Preferred stock, shares authorized: 1,000,000; issued and outstanding: none at December 31, 2005 and December 31, 2004		—			—
Shares exchangeable into common stock, $0.01 par value, shares authorized: 10,644,223; issued and outstanding: none at December 31, 2005 and 1,302,801 at December 31, 2004		—			13
Common stock, $0.01 par value, shares authorized: 600,000,000; issued and outstanding: 416,582,164 at December 31, 2005 and 369,623,604 at December 31, 2004		4,166			3,696
Additional paid-in-capital		2,990,676			2,234,093
Deferred stock compensation		—			(18,419	)
Retained earnings		580,430			150,018
Accumulated other comprehensive loss		(175,712	)		(141,199	)
Total shareholders’ equity		3,399,560			2,228,202
Total liabilities and shareholders’ equity	$	44,559,599		$	31,032,583

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 6

Segment Reporting

	Three Months Ended December 31, 2005
	Retail			Institutional			Eliminations (2)			Total
	(in thousands)
Revenues:
Commissions	$	103,895		$	31,828		$	—		$	135,723
Principal transactions		—			23,789			—			23,789
Gain on sales of loans and securities, net		11,959			2,778			—			14,737
Service charges and fees		29,419			5,256			—			34,675
Other revenues		30,659			1,971			(4,810	)		27,820
Interest income		221,002			411,979			(131,101	)		501,880
Interest expense		(78,362	)		(296,371	)		131,101			(243,632	)
Net interest income		142,640			115,608			—			258,248
Provision for loan losses		—			(16,070	)					(16,070	)
Net interest income after provision for loan losses		142,640			99,538			—			242,178
Total net revenues		318,572			165,160			(4,810	)		478,922
Expenses excluding interest:
Compensation and benefits		60,558			39,773			—			100,331
Occupancy and equipment		16,167			2,249			—			18,416
Communications		25,109			2,726			—			27,835
Professional services		18,205			5,476			—			23,681
Commissions, clearance and floor brokerage		15,914			26,532			(1,830	)		40,616
Advertising and market development		30,074			1,609			—			31,683
Servicing and other banking expenses		1,491			19,148			(2,980	)		17,659
Fair value adjustments of financial derivatives		—			987			—			987
Depreciation and amortization		17,278			4,393			—			21,671
Amortization of other intangibles		6,968			23,046			—			30,014
Facility restructuring and other exit charges		(32,584	)		2,072			—			(30,512	)
Other		(18,791	)		11,055			—			(7,736	)
Total expenses excluding interest		140,389			139,066			(4,810	)		274,645
Segment income	$	178,183		$	26,094		$	—		$	204,277
	Three Months Ended September 30, 2005
	Retail			Institutional			Eliminations (2)			Total
	(in thousands)
Revenues:
Commissions	$	83,755		$	30,523		$	—		$	114,278
Principal transactions		—			23,793			—			23,793
Gain on sales of loans and securities, net		17,534			4,316			—			21,850
Service charges and fees		26,933			5,960			—			32,893
Other revenues		27,929			2,901			(7,910	)		22,920
Interest income		175,329			362,548			(113,763	)		424,114
Interest expense		(63,223	)		(257,641	)		113,763			(207,101	)
Net interest income		112,106			104,907			—			217,013
Provision for loan losses		—			(12,909	)					(12,909	)
Net interest income after provision for loan losses		112,106			91,998			—			204,104
Total net revenues		268,257			159,491			(7,910	)		419,838
Expenses excluding interest:
Compensation and benefits		58,899			44,185			—			103,084
Occupancy and equipment		14,271			1,978			—			16,249
Communications		15,389			2,821			—			18,210
Professional services		10,464			5,594			—			16,058
Commissions, clearance and floor brokerage		9,344			27,315			(2,040	)		34,619
Advertising and market development		19,363			1,825			—			21,188
Servicing and other banking expenses		1,603			17,256			(5,870	)		12,989
Fair value adjustments of financial derivatives		—			1,269			—			1,269
Depreciation and amortization		14,379			4,064			—			18,443
Amortization of other intangibles		2,193			2,189			—			4,382
Facility restructuring and other exit charges		(270	)		(199	)		—			(469	)
Other		13,297			8,530			—			21,827
Total expenses excluding interest		158,932			116,827			(7,910	)		267,849
Segment income	$	109,325		$	42,664		$	—		$	151,989

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 7

	Three Months Ended December 31, 2004
	Retail			Institutional			Eliminations (2)			Total
	(in thousands)
Revenues:
Commissions	$	89,603		$	25,239		$	—		$	114,842
Principal transactions		—			35,476			—			35,476
Gain on sales of loans and securities, net		19,940			13,700			—			33,640
Service charges and fees		21,692			2,906			—			24,598
Other revenues		30,132			4,957			(9,840	)		25,249
Interest income		130,519			272,106			(79,498	)		323,127
Interest expense		(44,264	)		(176,073	)		79,498			(140,839	)
Net interest income		86,255			96,033			—			182,288
Provision for loan losses		—			(12,420	)					(12,420	)
Net interest income after provision for loan losses		86,255			83,613						169,868
Total net revenues		247,622			165,891			(9,840	)		403,673
Expenses excluding interest:
Compensation and benefits		57,274			30,791			—			88,065
Occupancy and equipment		14,485			3,271			—			17,756
Communications		15,512			2,318			—			17,830
Professional services		15,173			7,665			—			22,838
Commissions, clearance and floor brokerage		11,146			25,972			(3,559	)		33,559
Advertising and market development		15,441			905			—			16,346
Servicing and other banking expenses		1,709			14,462			(6,281	)		9,890
Fair value adjustments of financial derivatives		—			518			—			518
Depreciation and amortization		17,091			2,743			—			19,834
Amortization of other intangibles		2,549			2,464			—			5,013
Facility restructuring and other exit charges		5,548			11,373			—			16,921
Other		15,948			12,783			—			28,731
Total expenses excluding interest		171,876			115,265			(9,840	)		277,301
Segment income	$	75,746		$	50,626		$	—		$	126,372

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 8

Key Performance Metrics (3)

Corporate Metrics	Qtr ended 12/31/05			Qtr ended 9/30/05			Qtr ended 12/31/05 vs. Qtr ended 9/30/05		Qtr ended 12/31/04			Qtr ended 12/31/05 vs. Qtr ended 12/31/04
Operating margin % (4)
Consolidated		43	%		36	%	7	%		31	%	12	%
Retail		56	%		41	%	15	%		31	%	25	%
Institutional		16	%		27	%	(11	)%		31	%	(15	)%
Employees		3,439			3,039		13	%		3,320		4	%
Consultants and other		497			413		20	%		505		(2	)%
Total headcount		3,936			3,452		14	%		3,825		3	%
Revenue per headcount (5)	$	127,396		$	121,622		5	%	$	105,535		21	%
Revenue per compensation and benefits dollar	$	4.77		$	4.07		17	%	$	4.58		4	%
Book value per share	$	8.16		$	6.72		21	%	$	6.01		36	%
Tangible book value per share	$	2.07		$	5.33		(61	)%	$	4.58		(55	)%
Cash & equivalents ($MM)	$	844.2		$	1,389.6		(39	)%	$	939.9		(10	)%
Free cash ($MM)	$	542.3		$	784.3		(31	)%	$	691.0		(22	)%
Enterprise net interest spread (basis points) (6)		257			252		2	%		244		5	%
Enterprise interest-earning assets, average ($MM) (6)	$	35,619		$	32,690		9	%	$	28,454		25	%
Earnings before interest, taxes, depreciation & amortization ($MM)
Net income from continuing operations	$	125.5		$	109.1		15	%	$	99.5		26	%
Tax expense		59.0			57.6		2	%		39.0		51	%
Depreciation & amortization		51.7			22.8		126	%		24.8		108	%
Corporate interest expense		37.0			13.8		168	%		11.8		214	%
EBITDA	$	273.1		$	203.4		34	%	$	175.1		56	%
Interest coverage		7.4			14.8		(50	)%		14.9		(50	)%

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 9

Key Performance Metrics (3)

Retail Metrics	Qtr ended 12/31/05			Qtr ended 9/30/05			Qtr ended 12/31/05 vs. Qtr ended 9/30/05		Qtr ended 12/31/04			Qtr ended 12/31/05 vs. Qtr ended 12/31/04
Trading days		62.5			64.0		(2	)%		63.5		(2	)%
Daily Average Revenue Trades (DARTs)
- US		113,017			79,257		43	%		76,955		47	%
- International		15,391			14,619		5	%		12,649		22	%
Total DARTs		128,408			93,876		37	%		89,604		43	%
Total retail trades (MM)		8.0			6.0		34	%		5.7		41	%
Retail average commission per trade	$	12.95		$	13.94		(7	)%	$	15.75		(18	)%
End of period margin debt ($B)	$	6.56		$	2.43		170	%	$	2.20		198	%
Average margin debt ($B)	$	4.40		$	2.27		94	%	$	2.07		113	%
Gross new trading/investing accounts		782,052			155,304		404	%		161,737		384	%
Gross new deposit/lending accounts		96,823			68,560		41	%		42,072		130	%
Inactive accounts		(169,065	)		(121,107	)	(40	)%		(90,106	)	(88	)%
Customer closed accounts		(118,948	)		(54,029	)	N.M.			(58,374	)	N.M.
Net new retail accounts		590,862			48,728		N.M.			55,329		N.M.
End of period trading/investing accounts		3,617,778			3,014,467		20	%		2,956,090		22	%
End of period deposit/lending accounts		666,000			678,449		(2	)%		626,673		6	%
End of period retail accounts		4,283,778			3,692,916		16	%		3,582,763		20	%
Net new customers		524,668			33,205		1480	%		28,429		1746	%
End of period total retail customers		3,459,074			2,934,406		18	%		2,887,441		20	%
End of period assets per customer	$	51,592		$	36,243		42	%	$	34,639		49	%
Consolidated net revenue per customer (7)	$	142		$	143		(1	)%	$	140		2	%
Consolidated segment income per customer (7)	$	61		$	52		17	%	$	44		38	%
Products per customer		2.1			2.0		5	%		1.9		10	%
Total Retail Client Assets ($B)
Security holdings	$	117.6		$	57.2		106	%	$	52.6		124	%
Cash (including money market funds)		13.3			5.4		146	%		6.7		99	%
Unexercised options (vested)		32.1			29.8		8	%		28.7		12	%
Client assets in trading/investing accounts		163.0			92.4		76	%		88.0		85	%
Sweep Deposit Account		7.7			7.4		4	%		6.2		24	%
Transaction accounts		5.1			4.2		21	%		3.7		38	%
CDs		2.7			2.4		13	%		2.1		29	%
Client assets in deposit accounts		15.5			14.0		11	%		12.0		29	%
Total retail client assets	$	178.5		$	106.4		68	%	$	100.0		79	%
Total customer cash and deposits	$	28.8		$	19.4		48	%	$	18.7		53	%
Unexercised options (unvested) ($B)	$	19.7		$	18.7		5	%	$	20.1		(2	)%

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 10

Key Performance Metrics (3)

Institutional Metrics	Qtr ended 12/31/05			Qtr ended 9/30/05			Qtr ended 12/31/05 vs. Qtr ended 9/30/05		Qtr ended 12/31/04			Qtr ended 12/31/05 vs. Qtr ended 12/31/04
Market Making
Equity shares traded (MM)		33,264			35,125		(5	)%		75,717		(56	)%
Average revenue capture per 1,000 equity shares	$	0.545		$	0.535		2	%	$	0.318		71	%
% of Bulletin Board equity shares to total equity shares		86.6	%		86.0	%	1	%		93.9	%	(7	)%
Bank Asset Portfolio Detail ($MM)
Cash & equivalents	$	64		$	99		(35	)%	$	82		(22	)%
Trading securities		125			200		(38	)%		567		(78	)%
Investment securities, available-for-sale		1,969			1,684		17	%		3,367		(42	)%
Mortgage securities, available-for-sale		10,424			9,359		11	%		9,052		15	%
Loans receivable, net including loans held-for-sale:
- Mortgage and home equity loans, net		15,517			13,556		14	%		7,634		103	%
- Consumer loans, net		3,907			4,081		(4	)%		4,148		(6	)%
- Other		88			48		83	%		3		2833	%
Other assets		941			954		(1	)%		700		34	%
Total assets	$	33,035		$	29,981		10	%	$	25,553		29	%
Bank net interest spread (basis points)		223			223		0	%		220		1	%
Bank interest-earning assets, average ($MM)	$	30,819		$	28,303		9	%	$	24,780		24	%
Credit Quality and Reserve Metrics
Net charge-offs as a % of average held-for-investment loans, net (annualized)		0.27	%		0.20	%	0.07	%		0.27	%	0.00	%
Provision as a % of average held-for-investment loans, net (annualized)		0.34	%		0.30	%	0.04	%		0.44	%	(0.10	)%
Allowance as a % of total ending gross held-for-investment loans		0.32	%		0.34	%	(0.02	)%		0.41	%	(0.09	)%
Total non-performing loans, net, as a % of total gross held-for-investment		0.18	%		0.13	%	0.05	%		0.17	%	0.01	%
Total loan loss allowance as a % of total non-performing loans, net		183	%		256	%	(73	)%		239	%	(56	)%
Tier 1 Capital Ratio (8)		5.93	%		5.87	%	0.06	%		5.83	%	0.10	%
Risk Weighted Capital Ratio (8)		10.97	%		11.13	%	(0.16	)%		11.09	%	(0.12	)%
Other Metrics
Banking revenue ($MM)	$	183.7		$	179.0		3	%	$	168.7		9	%
Brokerage revenue (net of SDA elimination) ($MM)		295.2			240.8		23	%		235.0		26	%
Total revenue ($MM)	$	478.9		$	419.8		14	%	$	403.7		19	%

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 11

Activity in Allowance for Loan Losses

	Three Months Ended December 31, 2005
	Mortgage			Consumer			Total
	(in thousands)
Allowance for loan losses, ending 9/30/05	$	28,516		$	31,338		$	59,854
Provision for loan losses		3,294			12,776			16,070
Charge-offs, net		(903	)		(11,735	)		(12,638	)
Allowance for loan losses, ending 12/31/05	$	30,907		$	32,379		$	63,286

Bank Average Balance Data

	Three Months Ended December 31, 2005						Three Months Ended December 31, 2004
	Average Balance		Interest Income/ Expense		Average Annualized Yield/Cost		Average Balance		Interest Income/ Expense		Average Annualized Yield/Cost
	(in thousands)
Interest-earning banking assets:
Loans receivable, net	$	18,370,193	$	259,527	5.65	%	$	11,678,476	$	143,885	4.93	%
Mortgage-backed and related available-for-sale securities		10,259,120		116,416	4.54	%		9,031,367		89,563	3.97	%
Available-for-sale investment securities		1,796,590		25,573	5.69	%		3,347,929		36,904	4.41	%
Trading securities		148,957		2,711	7.28	%		581,458		4,546	3.13	%
Other		244,027		2,823	4.59	%		140,312		1,130	3.20	%
Total interest-earning banking assets (9)		30,818,887	$	407,050	5.28	%		24,779,542	$	276,028	4.45	%
Non-interest-earning banking assets		404,915						497,226
Total banking assets	$	31,223,802					$	25,276,768
Interest-bearing banking liabilities:
Retail deposits	$	14,564,378	$	69,062	1.88	%	$	11,834,734	$	40,663	1.37	%
Brokered certificates of deposit		512,379		4,862	3.76	%		325,269		2,176	2.66	%
Repurchase agreements and other borrowings		10,472,888		112,845	4.22	%		9,905,559		75,068	2.97	%
FHLB advances		3,954,934		40,137	3.97	%		1,664,272		16,457	3.87	%
Total interest-bearing banking liabilities		29,504,579	$	226,906	3.05	%		23,729,834	$	134,364	2.25	%
Non-interest bearing banking liabilities		278,228						389,069
Total banking liabilities		29,782,807						24,118,903
Total banking shareholder’s equity		1,440,995						1,157,865
Total banking liabilities and shareholder’s equity	$	31,223,802					$	25,276,768
Excess of interest-earning banking assets overinterest-bearing banking liabilities/net interest income	$	1,314,308					$	1,049,708
Net interest spread			$	180,144	2.23	%			$	141,664	2.20	%

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 12

SUPPLEMENTAL INFORMATION AND ENDNOTES

Explanation of Non-GAAP Measures and Certain Metrics

In order to better assess the Company’s financial operating results, management believes consolidated operating margin, free cash, EBITDA and interest coverage are appropriate measures of evaluating the operating and liquidity performance of the Company. We believe that the elimination of certain items from these measures is helpful to analysts and investors who may wish to use some or all of this information to analyze our current performance, prospects and valuation. Our management uses non-GAAP information internally to evaluate our operating performance and in formulating our budget for future periods.

Consolidated Operating Margin

Consolidated operating margin is defined as income before other income, income taxes, discontinued operations and cumulative effect of accounting change divided by net revenues. Operating margin for Retail and Institutional is based on segment results. Our consolidated statements of operations contain a reconciliation of income before other income, income taxes, discontinued operations and cumulative effect of accounting change to net income.

Free Cash

Free cash as reported by the Company represents cash held at Parent and non-Bank or Brokerage subsidiaries less discretionary reserves and excess capital at Bank and Brokerage after regulatory capital requirements and the Company’s own regulatory capital guidelines. The Company believes that free cash is a useful measure of the Company’s liquidity as it excludes cash reflected on the balance sheet that may not be freely available to the Company.

EBITDA

EBITDA represents net income from continuing operations before corporate interest expense, taxes and depreciation and amortization. Management believes that EBITDA provides a useful additional measure of our performance by excluding certain non-cash charges and expenses that are not directly related to the performance of our business.

Interest Coverage

Interest coverage represents EBITDA divided by corporate interest expense. Management believes that by excluding the charges and expenses that are excluded from EBITDA, interest coverage provides a useful additional measure of our ability to continue to meet our interest obligations and our liquidity.

It is important to note these metrics and other non-GAAP measures may involve judgment by management and should be considered in addition to, not as a substitute for, or superior to, net income, consolidated statements of cash flows, or other measures of financial performance prepared in accordance with GAAP. For complete information on the items excluded from these non-GAAP measures, please see our financial statements and “Management’s Discussion and Analysis of Results of Operations and Financial Condition” that will be included in the periodic report we expect to file with the SEC with respect to the financial periods discussed herein.

(1) For the twelve months ended December 31, 2004, diluted earnings per share is calculated using the ‘if converted’ method, which includes the additional dilutive impact assuming conversion of the Company’s subordinated convertible debt. Under the ‘if converted’ method, the per share numerator excludes the interest expense and related amortization of offering costs from the convertible debt, net of tax, of $20.0 million. The denominator includes the shares issuable from the assumed conversion of the convertible debt of 25.8 million. For all other periods presented the ‘if converted’ method is not used as its effect would be anti-dilutive.

(2) Reflects elimination of transactions between Retail and Institutional segments, which include deposit transfer pricing, servicing and order flow rebates.

(3) Amounts and percentages may not calculate due to rounding.

(4) Operating margin is defined as income before other income, income taxes, discontinued operations and cumulative effect of accounting change (“segment income”) divided by net revenues. Operating margin for Retail and Institutional is based on segment results.

(5) Total headcount in the quarter ended December 31, 2005, calculation was adjusted to reflect the contribution of BrownCo employees for only one month in the quarter.

(6) Enterprise spread is defined as the combined net interest spread generated from the interest-earning assets and liabilities of our segment operating results and does not include corporate interest income or interest expense.

E*TRADE FINANCIAL Results for the Quarter Ended December 31, 2005

Page 13

(7) Total retail customers in the quarter ended December 31, 2005, calculations were adjusted to reflect the contribution of BrownCo customers for only one month in the quarter.

(8) Quarter ended December 31, 2005, estimate.

(9) Amounts include a taxable equivalent increase in interest income of $2.6 million and $2.4 million for the three months ended December 31, 2005 and 2004, respectively.