SAN FRANCISCO, Jan. 17 /PRNewswire-FirstCall/ -- The Charles Schwab
Corporation announced today that its net income for the quarter ended
December 31, 2006 was $467 million. In comparison, the company reported net
income of $266 million for the third quarter of 2006 and $187 million for
the fourth quarter of 2005. For the year ended December 31, 2006, the
company's net income was a record $1.2 billion, compared with $725 million
in 2005. The company's fourth quarter and full-year results include a $205
million non-cash tax benefit relating to its pending sale of U.S. Trust;
further details on the tax benefit are provided at the end of this release.
Three Months Twelve Months
Ended Ended
Financial --December 31,-- % --December 31,-- %
Highlights 2006 2005 Change 2006 2005 Change
Net revenues
(in millions)(1) $1,096 $964 14% $4,309 $3,619 19%
Net income
(in millions) $467 $187 150% $1,227 $725 69%
Diluted earnings
per share $.37 $.14 164% $.95 $.55 73%
Pre-tax profit
margin(1) 33.9% 29.3% 34.3% 28.4%
Return on
stockholders'
equity 39% 17% 26% 16%
1. From continuing operations. Amounts have been adjusted to summarize
the impact of the pending sale of U.S. Trust in income from
discontinued operations.
Chairman and CEO Charles Schwab commented, "In 2006, we sharpened our
focus on individual investors and independent advisors with the sale of
U.S. Trust and the acquisition of The 401(k) Company. We also continued to
build stronger client relationships and improve our financial performance.
Total client assets rose 18% in 2006 to $1.2 trillion at year-end, while
net new assets rose 33% to $87 billion in our core Schwab Investor Services
and Schwab Institutional businesses. Additionally, new brokerage accounts
rose 15% in 2006 to 655,000, reflecting the continued success of our "Talk
to Chuck" advertising. These client metrics reflect both our emphasis on
value, performance, and service and the superb efforts of all the employees
on the Schwab team. Once again, we combined our client success with
financial discipline, and our 2006 net income and earnings per share set
new records. Our momentum is building, and I'm excited about the
opportunities that lie ahead in 2007 and beyond."
CFO Chris Dodds said, "For 2006, we set out to accelerate our revenue
growth, limit our expense growth while investing in our client service
capabilities, and build our margins, earnings and return on equity. We
delivered on all fronts -- net revenues grew 19% in 2006 versus 6% in 2005,
expense growth was held to 9% over the 2005 level even as client loyalty
improved and attrition declined, our pre-tax profit margin improved from
28% to 34%, and net income passed the $1 billion milestone. Our ongoing
commitment to rigorous capital management resulted in net capital
expenditures of just $59 million, a reduction in our long-term debt of $74
million, a doubling of our dividend, $859 million of common stock
repurchases, and a return on equity of 26% for the year."
Business highlights for the fourth quarter (data as of quarter-end
unless otherwise noted):
Schwab Investor Services Business (includes Individual Investor and
Corporate and Retirement Services)
* Client assets enrolled in Schwab advice offers = $49.1 billion, up
25% year-over-year.
* Client assets in employer-sponsored retirement plans at Schwab =
$142 billion, up 20% year-over-year.
* Relaunched the Online Portfolio Consultation tool to provide clients
with a more intuitive and comprehensive analysis of their holdings,
including detailed diagnostic views of asset allocation,
diversification, and quality.
* Ended 2006 with approximately 9,000 accounts and $1.2 billion in
client assets enrolled in the Schwab Managed Portfolios(TM) mutual
fund wrap account, marking Schwab's most successful fee-based offer
launch to date.
Schwab Institutional(R) Business
* Introduced the GrowthPoint(TM) program, which combines a suite of
three distinct service offerings -- marketing and business
development, business strategy and planning, and transition support
-- to help advisors plan and manage the growth of their businesses.
* Launched a new public website that provides interactive tools,
educational content, and archived Schwab Institutional webcasts,
research reports, and guides, to assist advisors thinking about
establishing their own practice.
* Held the 16th annual IMPACT(R) conference in Washington, D.C. and
announced the first winners of the new Schwab Institutional IMPACT
Awards(TM), which honor advisors and firms that have advanced the
industry.
Products and Infrastructure
* For Charles Schwab Bank, N.A.:
o Balance sheet assets = $11.0 billion, up 10% from the prior
quarter.
o Outstanding mortgage and home equity loans = $2.3 billion.
o First mortgage originations during the quarter = $296 million.
* Enhanced the Schwab BondSource(R) fixed income trading platform to
include viewing of all security types on a single page, improved
research and screening tools, and access to research and trading 7
days a week, 22 hours a day.
* Extended relationship pricing discounts on mortgage and home equity
lending products to all Schwab clients.
Tax Benefit
The $205 million tax benefit recognized by Schwab in the fourth quarter
of 2006 resulted from the difference between the tax and financial
reporting bases of the company's U.S. Trust stock. When calculating
Schwab's gain on the sale of U.S. Trust, the tax basis will be the basis of
U.S. Trust's prior stockholders in their shares as of the date U.S. Trust
was acquired by Schwab, since the transaction qualified as a tax-free
exchange. Generally accepted accounting principles call for the recognition
of the tax effects of stock basis differences once a commitment is in place
to sell a subsidiary and the subsidiary's results are presented as a
"discontinued operation." The fourth quarter tax benefit is intended to
equalize the tax and reporting bases in the company's U.S. Trust stock as
of year-end 2006; it is, however, an estimate based on publicly available
information. The final amount of the basis difference will be determined
following a survey that the company expects to complete within the next six
months.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.7 million client
brokerage accounts, 542,000 corporate retirement plan participants, 147,000
banking accounts, and $1.2 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, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com.
SOURCE Charles Schwab
 back to top
Related links:
http://www.schwab.com
CONTACT:
media, Glen Mathison, +1-415-636-5448, or
investors/analysts, Rich Fowler, +1-415-636-9869, both of Charles
Schwab
|
