E-Trade Financial Corp. has named a longtime financial services executive, Frank J. Petrilli, as its new chairman — a move that is already reinvigorating deal speculation involving the company.
Petrilli has more than 30 years of experience in investing and financial services, the online brokerage and banking company said Monday. From 1995 to 2004, Petrilli, 61, held several positions at TD Waterhouse, including president and chief executive.
During his time at TD Waterhouse, Petrilli was responsible for the firm's strategic development and growth. He helped launch online investing and start TD Waterhouse Bank.
That resume is prompting discussion that Petrilli's presence could facilitate a long-anticipated combination with TD Ameritrade, which is nearly 40% owned by Toronto-Dominion Bank. (Ameritrade Holding Corp. bought TD Waterhouse USA in 2006 and renamed itself TD Ameritrade; Toronto-Dominion retained a large stake.)
A Sandler O'Neill research note Monday emphasized the potential benefits of Petrilli's past working relationship with Ed Clark, the chief executive of Toronto-Dominion. "We suspect Mr. Petrilli's relationship with Mr. Clark is strong and can only benefit [E-Trade] in the longer term as it looks to potentially unlock the embedded value of the franchise with, in our view, its No. 1 acquisition/merger candidate, TD Ameritrade," the note said.
Under pressure from a major shareholder, Citadel LLC, E-Trade had engaged two investments banks to shop it around last year. TD Ameritrade and Charles Schwab Corp. were viewed as the mostly likely suitors.
But in November, the E-Trade board said decided against putting the company up for sale.
Interestingly, the Sandler note also pointed out, E-Trade hired Petrilli to be president of retail brokerage operations in 1999 but Petrilli decided 10 days after the announcement to remain at TD Waterhouse.
Most recently, Petrilli was the CEO of Surge Trading Inc., a broker that has since ceased trading operations. Before working at TD Waterhouse, Petrilli was president and chief operating officer of American Express Centurion Bank.
E-Trade has been saddled with losses from loans that went bad during the subprime collapse.
Petrilli's experience in securities brokerage and consumer banking businesses will help E-Trade focus on growing its core brokerage franchise, Steven Freiberg, E-Trade's CEO, said in a news release.
Petrilli, whose appointment was effective Jan. 27, took over as chairman for Freiberg. Freiberg had held this position on an interim basis since Robert Druskin's departure in May.
E-Trade reported last week a fourth-quarter loss of $6 million and a 2011 profit of $157 million. During the fourth quarter, the company recorded $10.8 million in additional expenses to settle a class-action suit brought by investors over losses on its mortgage and home-equity loan portfolios.