10-QPeriod: Q2 FY2008

SCHWAB CHARLES CORP Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 7, 2008For Securities:SCHWSCHW-PDSCHW-PJ

Summary

Charles Schwab Corporation (SCHW) reported its second quarter 2008 financial results, showcasing resilience amidst challenging economic conditions. Total net revenues increased by 9% year-over-year to $1.31 billion, driven by growth in asset management and administration fees, net interest revenue, and trading revenue. Despite a slight decrease in net new client assets, overall client assets remained stable at $1.397 trillion. The company demonstrated strong expense discipline, leading to a significant improvement in its pre-tax profit margin from continuing operations to 39.3% from 35.2% in the prior year. The company's performance reflects the effectiveness of its diversified business model and its ability to navigate a volatile market environment. Key segments, Schwab Investor Services and Schwab Institutional, showed robust revenue growth. The company also highlighted its strong capital position, with Schwab Bank being considered well-capitalized by regulatory standards, underscoring its financial stability.

Financial Highlights

26 data points
Beta

Revenue

$1.31B

Net Income

$295.00M

22.6% Net Margin

EPS (Diluted)

$0.26

Cash & Equivalents

$5.24B

Free Cash Flow

-$305.00M

Financial Statements
Beta
Revenue$1.31B
Operating Income$618.00M
Interest Expense$51.00M
Net Income$295.00M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Diluted)1.15B

Key Highlights

  • 1Total net revenues grew 9% year-over-year to $1.308 billion in Q2 2008.
  • 2Income from continuing operations increased 22% to $313 million in Q2 2008.
  • 3Pre-tax profit margin from continuing operations improved to 39.3% from 35.2% in Q2 2007.
  • 4Client assets remained stable at $1.397 trillion, with a 1% year-over-year increase.
  • 5Daily average client trades increased by 16% in Q2 2008.
  • 6Schwab Bank maintained its 'well capitalized' status, exceeding regulatory requirements.
  • 7The company reported an EPS of $0.26 for Q2 2008, compared to $0.23 in Q2 2007.

Frequently Asked Questions

Charles Schwab Corporation reported a 9% year-over-year increase in total net revenues for the second quarter of 2008, reaching $1.308 billion. This growth was primarily driven by increases in asset management and administration fees, net interest revenue, and trading revenue.

The company showed strong profitability, with income from continuing operations increasing by 22% to $313 million in the second quarter of 2008 compared to the prior year. Consequently, the pre-tax profit margin from continuing operations improved significantly to 39.3%, up from 35.2% in the second quarter of 2007, demonstrating effective cost management.

Despite a challenging economic environment, client assets remained relatively stable, growing 1% year-over-year to $1.397 trillion by the end of the second quarter of 2008. Furthermore, client engagement increased, as evidenced by a 16% rise in daily average client trades during the same period.

The company maintained a strong regulatory standing. Schwab Bank, the company's depository institution subsidiary, was considered 'well capitalized' by banking regulatory guidelines, exceeding minimum capital requirements. This highlights the company's robust financial health and ability to meet its obligations.