Strong Client Relationships and Financial Discipline Yield 35% Increase in EPS From Continuing Operations.
Public Company Information:
SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation announced today that its income from continuing operations (which excludes U.S. Trust) was $313 million for the second quarter of 2008, up 22% from the second quarter of 2007. For the six months ended June 30, 2008, the company’s income from continuing operations was $618 million, up 26% from the first half of 2007.
|Three Months Ended||Six Months Ended|
|--June 30,--||%||--June 30,--||%|
Net revenues (in millions) (1)
|Net income (in millions)||$||295||$||292||1||%||$||600||$||565||6||%|
|Diluted earnings per share||$||.26||$||.23||13||%||$||.52||$||.45||16||%|
Pre-tax profit margin (1)
|Return on stockholders' equity||32||%||23||%||31||%||22||%|
Results from continuing operations:
|Income (in millions)||$||313||$||256||22||%||$||618||$||492||26||%|
|Diluted earnings per share||$||.27||$||.20||35||%||$||.53||$||.39||36||%|
|(1) Prior period amounts are presented on a continuing operations basis to exclude U.S. Trust, which was sold on July 1, 2007.|
Chairman and CEO Charles Schwab said, “I’m very pleased with how our business model continued to deliver great service and consistent financial results in the second quarter. Clients brought $26 billion in net new assets to the company and total client assets ended June at $1.4 trillion, up 1% from June 2007. Active brokerage accounts and retirement plan participants were up 5% and 13% over the year-earlier levels, and banking accounts more than doubled to 355,000. Even in a tough market environment, our business showed standout growth and profitability.”
CFO Joe Martinetto commented, “With strong asset inflows from clients during the second quarter, we achieved 9% year-over-year growth in net revenue despite headwinds from lower short term interest rates and flat to down equity markets. Our ongoing financial discipline helped limit overall expense growth to just 2% and fueled a 39.3% pre-tax profit margin, a 35% increase in earnings per share from continuing operations, and a 32% return on equity. Our financial discipline is also reflected in a strong balance sheet that includes a high-quality loan portfolio – mortgage delinquencies at Schwab Bank were 0.33% of outstanding balances as of month-end June, a fraction of the national average, and loan charge-offs totaled just $0.8 million for the quarter.”
Business highlights for the second quarter (data as of quarter-end unless otherwise noted):
Schwab Investor Services Business (SIS)
Schwab Institutional® Business (SI)
Schwab Corporate and Retirement Services Business (SCRS)
Products and Infrastructure
Balance sheet assets = $21.6 billion, up 72% year-over-year.
Outstanding mortgage and home equity loans = $4.7 billion, up 76% year-over-year.
First mortgage originations during the quarter = $1.1 billion.
Supporting schedules are either attached or located at: http://www.aboutschwab.com/media/xls/q2_2008_schedule.xls
About Charles Schwab
The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.3 million client brokerage accounts, 1.3 million corporate retirement plan participants, 355,000 banking accounts, and $1.4 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com.
Alison Wertheim, 415-636-5812 (Media)
Rich Fowler, 415-636-9869 (Investors/Analysts)