Charles Schwab (SCHW) reported first quarter earnings on Monday. The online broker managed to earn more than a year ago, but earnings came in a penny short of Wall Streey analysts estimates. The company reported a profit of 15 cents per share, compared to estimates for 16 cents in profit. Net income came in at $206 million, which was 6% higher than last year’s first quarter number of $195 million. Schwab’s profit margin in the first quarter was 25.7 percent.
What was the main reason for Schwab’s minor miss in the first quarter? It was the same old story of lower trading revenues. Money from client trades totaled $223 million, which was nine percent lower than the same quarter a year ago. To put that number in perspective, money from client trades only represents 17 percent of the company’s profits. At one time, 60 percent of Schwab’s earnings were directly from money from client trades. Daily Average Revenue Trades (DARTs) were down 6 percent from a year ago, but they were 12 percent higher than the fourth quarter.
On the positive side, Schwab continues to bring in new money at an impressive rate. Schwab’s asset management division brought in $43.4 billion in new money during the first quarter. This was the most in any quarter since the first quarter of 2000. Schwab said it will work to lower expenses, which came in higher than many analysts expected during this quarter. The company said it might be slowing its hiring efforts since trading volumes haven’t returned as much as the company initially projected.
Charles Schwab reiterated its earlier estimates of full year profits for 2013 to be in the mid 70 cent range. For more on Schwab’s first quarter earnings release click here.