Charles Schwab (SCHW) reported third quarter earnings of $321 million, up 11 percent from a year ago. Earnings translated to 24 cents per share, which came in right at analysts expectations. Third quarter results were impacted slightly by non-recurring fees which included moving some jobs from San Francisco to Texas and other locations to attempt to cut costs. Total revenue rose 12.9 percent to $1.5 billion in the third quarter. Schwab earned $324 million in the fiscal second quarter of 2014, so profits in the third quarter were very similar.
Asset management and service fees climbed $66 million (11 percent) to $649 million and interest revenue jumped $69 million (13 percent) to $600 million. Provision for loan losses was just $1 million, down 75 percent from the same quarter last year. Adjusted pre-tax profit margin came in at 35.9 percent compared to 33.8 percent a year ago. Schwab added 229,000 new brokerage accounts in the third quarter. The company now has 9.31 million active brokerage accounts, 970,000 banking accounts, and 1.41 corporate retirement plan participants. Schwab has $2.40 trillion in total client assets, which is up 12 percent from last year.
Daily Average Revenue Trades (DARTs) fell five percent from a year ago to a level of 269,000 per day. That’s also two percent lower than the figure reported by Schwab in the second quarter. Not surprisingly, Schwab reported a seven percent decrease in trading income. Keep an eye on the DARTs for Schwab in the fourth quarter as volume in the market as a whole has risen in October thus far.
Schwab management spoke extensively during the conference call about the companies continued plans to improve their full-service investing model. CEO Walt Bettinger said he believes that very model is resonating with investors especially as there is heightened volatility in the markets.
For the full press release on Schwab’s third quarter earnings click here.