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E*Trade says loss narrowed in the fourth quarter

E-Trade Financial Corp. reported a narrower fourth quarter loss late Wednesday as the online broker reduced its provision for loan losses.

E*Trade Financial Corp. reported a narrower fourth quarter loss late Wednesday as the online broker reduced its provision for loan losses.

For the final three months of the year, E*Trade reported a loss of $67.1 million, or 4 cents per share. That compares with a loss of $275.6 million, or 50 cents per share, a year earlier.

Results were in line with the forecasts of analysts polled by Thomson Reuters.

While the company’s provision for loan losses remain high, they were 43 percent lower from the prior year quarter.

E*Trade set aside $292.4 million during the fourth quarter to cover potential loan losses. That’s down from the third-quarter provision of $347.2 million and significantly lower than the $512.9 million the company set aside in the year-ago period. Total loan losses now stand at $1.2 billion.

The New York-based company has been restructuring throughout the past year to cope with the credit crisis and recession. It was hit especially hard by loan losses in its mortgage and home lending portfolios.

In the most recent quarter, net operating interest income, or the difference between how much it costs to borrow money and how much the company receives from lending money to customers, rose 17 percent to $321 million from $274.1 million in the prior-year quarter.

Income from commission, fees and other service charges fell 8 percent to $205.2 million from $223.7 million.

Total daily average revenue trades fell 20 percent year-over-year to 173,778.

In December, E*Trade named director Robert Druskin as chairman and interim CEO to succeed Don Layton, who announced his retirement late last year. A the time, the company said it is continuing its search for a permanent CEO to replace Layton, and noted that Druskin is not a candidate.

In November, the company withdrew its application to obtain $800 million from the government’s $700 billion financial bailout program.

The company has been the target of takeover speculation for months. Some analysts have pointed to competitors such as TD Ameritrade Holding Corp. or Charles Schwab Corp. as possible suitors.