Schwab Reports Quarterly Results

Tuesday, April 15, 2008 5:45 am PDT



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 $305 million for the first quarter of 2008, up 29% from the first quarter of 2007.

  Three Months Ended  
--March 31,-- %
Financial Highlights   2008   2007   Change

Net revenues (in millions) (1)

$ 1,307   $ 1,153 13 %
Net income (in millions) $ 305 $ 273 12 %
Diluted earnings per share $ .26 $ .22 18 %

Pre-tax profit margin (1)

38.9 % 33.9 %
Return on stockholders' equity 33 % 22 %
Results from continuing operations:
Income (in millions) $ 305 $ 236 29 %
Diluted earnings per share $ .26 $ .19 37 %

(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 commented, In the face of a tough economic environment, our clients have remained actively engaged with us in managing their investments. Net new assets totaled $41.3 billion for the first quarter, 5% higher than the prior period and one of our strongest quarters ever. These flows helped total client assets end the first quarter at $1.4 trillion, up 7% from March 2007. Clients opened 246,000 new brokerage accounts during the quarter, up 27% from a year ago and the highest total in almost seven years. In addition, at month-end March we were serving 318,000 banking accounts and 1.3 million retirement plan participants, both new records and up 111% and 16%, respectively, from a year ago.

CFO Joe Martinetto noted, Short term interest rates and equity market valuations declined during the first quarter, which put pressure on both net interest revenue and asset management and administration fees. Our continued success in attracting and retaining client assets, however, along with sustained expense discipline, helped offset some of these headwinds and we achieved 13% year-over-year revenue growth, a 39% pre-tax profit margin, and a 37% increase in earnings per share from continuing operations. Our focus on rigorous capital management also continues - we repurchased a total of $350 million in common stock during the first quarter, and achieved a 33% ROE for the period.

Business highlights for the first quarter (data as of quarter-end unless otherwise noted):

Schwab Investor Services Business (SIS)

  • Client assets enrolled in Schwab advice offers = $52.8 billion, up 3% year-over-year.
  • Introduced $8.95 online equity trade pricing for clients with at least $1 million in household assets or 120 trades annually.
  • Announced an offer to rebate the program fee on Schwab Managed PortfoliosTM to investors who bring $25,000 or more in new assets into a new or existing retirement account, providing an opportunity to experience Schwabs mutual fund-based professional money management with no program fees for the first year.

Schwab Institutional® Business (SI)

  • Acquired Etelligent Consulting, Inc., a multi-custodian provider of back office capabilities, allowing advisors to outsource major administrative responsibilities such as performance reporting via PortfolioCenter®, Schwabs portfolio data management system.
  • Enhanced Schwabs managed account platform for advisors by expanding to 18 turnkey asset management provider (TAMP) participants; building its Managed Account Select®, and Managed Account Access® programs to include more than 230 investment strategies from over 75 money managers; and introducing a Diversified Portfolios offering, which supports multiple strategies in a single account.

Schwab Corporate and Retirement Services Business (SCRS)

  • Auto enrollment has been adopted by 29% of the bundled retirement plans administered by Schwab, up from 16% a year ago.
  • Seven Schwab-administered retirement plans were recognized by Pensions and Investments Magazine for excellence in retirement plan investment education.
  • Retirement plans converted to Schwab administration during the quarter = 38, with approximately 38,400 participants, compared with 37 plans and approximately 29,400 participants in the first quarter of 2007.

Products and Infrastructure

  • For Charles Schwab Bank:
            --   Balance sheet assets = $16.9 billion, up 47% year-over-year.
-- Outstanding mortgage and home equity loans = $3.9 billion, up 61% year-over-year.
-- First mortgage originations during the quarter = $1.1 billion.
  • Schwab Bank High Yield Investor CheckingTM balances passed the $2 billion mark and ended the quarter at $2.4 billion.
  • Launched the Schwab Fundamental International Small-Mid Company Index and Emerging Markets Index funds, part of the companys suite of Fundamental Index mutual funds.
  • Expanded mutual fund solutions for retirees with the introduction of the Schwab Monthly Income Funds, which are designed to provide monthly income and the opportunity for growth to meet future income needs.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.2 million client brokerage accounts, 1.3 million corporate retirement plan participants, 318,000 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,, 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


Charles Schwab
Greg Gable, 415-636-5847
Rich Fowler, 415-636-9869

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