E TRADE Financial Corporation (NASDAQ:ETFC) is a financial stumblebum. On the rare occasions the company rights itself and starts to walk again, its legs give out from under it and once more it flops to the ground. It hasn't stood upright very much in recent times, reporting a 2012 that saw its fifth annual net loss in the last six years,and a quarter that featured its third red bottom line in the past five quarters. What went wrong this time?

Nine-digit pain This most recent slate of E*TRADE earnings featured important numbers printed in scarlet ink. Chief among these was bottom line, which for the quarter was well in the nine figures at $186 million, or $0.65 per share. Analysts were expecting bad, but not that bad -- their average estimate was in the neighborhood of $0.54.

Full-year net wasn't as ugly, but that doesn't mean we should crack open the champagne. That loss was "only" $113 million, but this is from a firm that posted a nearly $157 million profit the year before.

If it isn't one thing with this company, it's another. The big wound during 4Q was debt refinancing. These guys are still trying to crawl out of the hole created by an ill-fated attempt several years ago to diversify away from the traditional investment banking model. In other words, instead of depending on the fees and commissions derived from trading, they tried to make money by offering banking services.

Unfortunately, these services included mortgages, and we all know how wonderfully that business performed during the crisis era. Even the most apparently solid of banks were caught aboard that particular Titanic, and E*TRADE was not the most solid of banks.

Much of the financial sector is benefiting from the twin positives of an improved housing market and vibrant mortgage refinancing activity, but not these guys: Still in recovery mode, the company took a $257 million charge in 4Q to essentially refinance $1.3 billion in debt that it took on some time ago to deal with mortgage-related losses. And that debt had been carrying rates as high as 12.5%. It's nice that the company is making decisive moves to cut its borrowing costs, but a quarter of a billion dollars is an awfully pricey way to get that done.

Trading is fading These problems are compounded by the difficulty all brokerages are facing these days: There just isn't that much trading going on. This was an especially acute problem at the end of last year, when Europe's economic problems and nervousness over the fiscal cliff discouraged many from being active on the markets.

This badly affected -- and impacts -- E*TRADE because, after its banking misadventures, it's essentially a wirehouse. Its trading and investment unit produced nearly 64% of its total net revenue in 4Q, which was more or less the same as the previous quarter (although lower overall, coming in at $298 million vs. 3Q's $307 million).