InformationWeek

June 2, 1999

Some Old School For E-Trade

E-Trade Group Inc., the hot online trading site, hopes to add relatively predictable sources of income to its volatile revenue stream from commissions charged on stock trades. It plans to acquire an online bank and offer some traditional banking services.

E-Trade says it will buy Telebanc Financial Corp. in a $1.8 billion stock swap aimed at broadening E-Trade's services and revenue streams beyond stock brokerage and residential mortgages. The deal gives E-Trade ownership of Telebanc's operating subsidiary, Telebank, which had $2.6 billion in assets and more than 57,000 retail accounts at the end of the first quarter.

Telebank competes with other Web banks such as Net.Bank Inc. and Security First Network Bank by charging customers lower fees for services such as checking accounts and offering them higher interest rates on their deposits than traditional banks that have expenses associated with operating local branches.

--Gregory Dalton

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