Charles Schwab beats the Street

Charles Schwab beats the Street
Charles Schwab Corp., the largest independent brokerage by client assets, reported third-quarter profit that beat the average analyst estimate as sales from earned interest offset a decline in trading revenue.
OCT 10, 2010
Charles Schwab Corp., the largest independent brokerage by client assets, reported third-quarter profit that beat the average analyst estimate as sales from earned interest offset a decline in trading revenue. Net income fell to $124 million, or 10 cents a share, from $200 million, or 17 cents, a year earlier, the San Francisco- based company said in a statement today. Analysts estimated profit of 9 cents, according to the average in a Bloomberg survey. The brokerage has been weathering a near-zero interest rate environment since December 2008. About one third of last year’s revenue came from interest earned on cash in its bank and money market funds, while about 45 percent was from fees for managing and administering assets. Third quarter results included a charge of about $132 million to cover losses related to 2008 investments in mortgage-backed securities in its money market fund, as the company had disclosed last month. “Operating earnings at Schwab should continue to grow as the company builds its client asset base and balance sheet, lowers its cost of funds, and reinvests lower-yielding cash into longer-dated securities,” Matt Snowling, an analyst with Arlington, Virginia-based FBR Capital Markets, wrote in a Sept. 15 note. Schwab said it also took a pretax charge of about $20 million for ending a credit-card sponsorship, according to a Sept. 15 statement. Schwab trades at 16.3 times 2011 estimated earnings, the cheapest since July 2009, according to Bloomberg data. The shares rose 0.8 percent to $14.20 at 9:10 a.m. New York time. Before today, they had lost 25 percent year-to-date. That compares with a 5.3 percent gain in the S&P 500 and a 7.2 percent decline for the NYSE Arca Securities Broker/Dealer Index. Competitors E*Trade Financial Corp. and TD Ameritrade Holding Corp. are scheduled to report quarterly results next week. Analysts expect E*Trade to post a profit of 4 cents a share, while TD Ameritrade should return a gain of 23 cents, according to the average of estimates compiled by Bloomberg. Bloomberg

Latest News

AlphaCore expands into New Jersey with Brave Family Advisors deal
AlphaCore expands into New Jersey with Brave Family Advisors deal

The boutique practice brings $700 million in client assets and opens a new Northeast office for the California-headquartered firm.

&Partners caps July recruitment with $1.8 billion Mississippi team from Wells Fargo
&Partners caps July recruitment with $1.8 billion Mississippi team from Wells Fargo

Founder-led 32 North Wealth brings four partners to the hybrid RIA while extending its record of attracting Wells Fargo breakaways.

UBS hit with $125 million in AML penalties as FinCEN imposes record broker-dealer fine
UBS hit with $125 million in AML penalties as FinCEN imposes record broker-dealer fine

Firm admits repeated Bank Secrecy Act violations after regulators say it missed the same kind of wire-monitoring failures flagged in 2018.

Fed and FDIC ease bank insider lending rules in latest deregulatory push
Fed and FDIC ease bank insider lending rules in latest deregulatory push

The proposals extend a wave of regulatory relief in 2026 that has already loosened capital requirements for community banks.

FMG Suite adds four senior leaders to scale AI and enterprise growth
FMG Suite adds four senior leaders to scale AI and enterprise growth

The advisor marketing platform is expanding its leadership team to accelerate enterprise sales and AI-driven compliance tools.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income