Charles Schwab released its third-quarter earnings Friday, beating earnings expectations by $0.01. Its shares traded mid-day at $14.36, up 1.9%.
Net income for the company was $124 million, down 38% from $200 million for the third quarter of 2009. Schwab's third quarter net income was $218 million, before including after-tax charges of $94 million. Earnings per share were $0.10, a decline of 41% from last year.
The company's third-quarter pre-tax profit margin was 18.7% vs. 31.7% a year ago and 31.3% in the second quarter of 2010.
Revenue, however, grew 5% in the third quarter to $1.06 billion vs. $1.01 billion last year. That was 2% lower than second-quarter sales of $1.08 billion.
"During the third quarter, we demonstrated the operating leverage in our diversified business model as we grew revenue 5% from the year-ago quarter while expanding profits 9% after adjusting for charges," said Chairman Charles Schwab in a statement.
"Over $670 billion of the client assets currently at Schwab are either enrolled in one of our advisory offerings or under the guidance of an independent advisor, which represents a compound annual growth rate of 7% over the past 24 mo
nths," Schwab explained.
Asset management and administration fees before money market mutual fund fee waivers were $561 million, up 6% from last year. When fund fee waivers are accounted for, these asset management and administrative fees totaled $468 million, a year-over-year jump of 4%.
"Our asset management and administration fees also showed year-over-year improvement in the third quarter – for the first time in two years – through higher client balances in Mutual Fund OneSource and advisory programs such as Schwab Managed Portfolios, as well as further easing in money market fund fee waivers," said CFO Joe Martinetto in a press release.
"Overall, our third quarter revenue growth represents the first year-over- year increase since the second quarter of 2008," Martinetto explained.
