SAN FRANCISCO, Oct. 16 /PRNewswire-FirstCall/ -- The Charles Schwab
Corporation announced today that its net income for the quarter ended
September 30, 2006 was $266 million. In comparison, the company reported
net income of $251 million for the second quarter of 2006 and net income of
$207 million for the third quarter of 2005. For the first nine months of
2006, the Company's net income was $760 million, compared with $538 million
earned during the same period in 2005.
Three Months Ended Nine Months Ended
Financial Highlights -September 30,- % -September 30,- %
2006 2005 Change 2006 2005 Change
Net revenues (in millions) $1,290 $1,138 13% $3,880 $3,284 18%
Net income (in millions) $266 $207 29% $760 $538 41%
Diluted earnings per share $.21 $.16 31% $.59 $.41 44%
Pre-tax profit margin(1) 33.9% 28.9% 32.2% 26.7%
Return on stockholders' equity 23% 19% 22% 16%
(1) From continuing operations.
Chairman and CEO Charles Schwab commented, "We continue to focus on
delivering great value, performance and service in building relationships
with our clients. As previously announced, we instituted a number of price
reductions effective July 1st, including the elimination of various service
and account fees. In recognition of our ability to help clients improve
their investment performance, Barron's once again awarded Schwab top honors
in its semi-annual stock recommendation competition for both the three- and
five-year performance categories. These accomplishments, combined with our
commitment to service and building client loyalty, supported solid client
metrics during the traditionally slower summer season. Net new assets
totaled $21 billion in the third quarter and clients opened 137,000 new
brokerage accounts. With strong asset flows and improved valuations in the
securities markets, total client assets rose 14% to a record $1.332
trillion by month-end September. Our progress with clients is also
reflected in our third quarter financial performance, including 13% net
revenue growth and a 29% increase in earnings."
CFO Chris Dodds said, "Non-trading revenues reached a new record of
$1.122 billion, or 87% of total net revenues, in the third quarter. Our
reduced reliance on more volatile trading revenue, combined with ongoing
expense discipline, is enabling us to deliver more consistent and
predictable margins and earnings. We limited overall expense growth to just
5% during the quarter, helping us achieve a record 33.9% pre-tax profit
margin and the second highest level of quarterly earnings in the firm's
history. We also remain committed to rigorous capital management - outlays
for capital expenditures totaled just $38 million during the quarter while
common stock repurchases totaled $300 million, contributing to a 23% return
on equity."
Business highlights for the third 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 = $45.6 billion, up 25%
year-over-year.
* Client assets in employer-sponsored retirement plans at Schwab = $169
billion, up 18% year-over-year.
* Introduced complimentary phone-based portfolio consultations for clients
with less than $250,000 in assets.
* Expanded distribution of On Investing(R), Schwab's quarterly financial
journal, to include over 2.7 million Schwab Investor Services clients.
This publication features investment insights and commentary from Schwab
experts.
Schwab Institutional(R) Business
* Expanded online cashiering services for advisors to include real-time
Schwab MoneyLink(R) (ACH) transaction queries.
* Enhanced Internet-based eDocuments sites for both advisors and their
clients to provide multi-year archiving of online statements, trade
confirms and tax reports, along with document search capabilities.
* Added 12 investment strategies to the Managed Account Access(TM)
program. There are now approximately 2,470 strategies available to
advisors and their clients across the Managed Account Platforms. Also
added 3 funds to the Alternative Investment Source platform, bringing
the total available to 32.
U.S. Trust Business
* Assets under management = $93.6 billion, up 3% year-over-year. Total
client assets = $158.7 billion.
* Net new client assets during the quarter = $611 million.
* Launched Private Fund Solutions, a private equity and venture capital
vehicle for qualified investors, with an initial client offering that
provided access to the Cerberus Institutional Partners IV fund in
increments of $500,000. The fund normally requires a $10 million
investment.
* The Capital Markets Advisory Division created and delivered its first
structured notes as part of integrated wealth management planning for
certain clients. These notes were tailored to each client's specific
risk profile and provided targeted exposure to specific commodities,
currencies and equity markets.
Products and Infrastructure
* For Charles Schwab Bank, N.A.:
-- Balance sheet assets = $10.0 billion, up 10% from the prior quarter.
-- Outstanding mortgage and home equity loans = $2.2 billion.
-- First mortgage originations during the quarter = $271 million.
* Introduced Schwab Managed Portfolios(TM), a suite of diversified
portfolios that combine Schwab Equity Ratings(R)-based mutual funds with
funds chosen from the company's Mutual Fund OneSource Select List(R).
Schwab's money managers create and maintain these portfolios for
individuals with as little as $50,000 to invest.
* Barron's awarded first place to a model portfolio based on Schwab Equity
Ratings(R) for the most recent three- and five-year periods.
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 330 offices and 6.8 million client
brokerage accounts, 535,000 corporate retirement plan participants, 181,000
banking accounts, and $1.3 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 ),
offers 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. The company's other
operating subsidiaries include U.S. Trust Corporation (member FDIC) and
CyberTrader(R), Inc. (member SIPC, http://www.sipc.org ). More information
is available at http://www.schwab.com.
SOURCE Charles Schwab
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Related links:
http://www.schwab.com
CONTACT:
media, Glen Mathison, +1-415-636-5448, or
investors, Rich Fowler, +1-415-636-9869, both of Charles Schwab
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