Summary
The Charles Schwab Corporation (SCHW) reported consistent net income of $205 million for the three months ended June 30, 2010, compared to the same period in the prior year. However, for the six months ended June 30, 2010, net income decreased to $211 million from $423 million in the prior year, largely influenced by a $196 million class action litigation reserve related to the Schwab YieldPlus Fund. Net revenues remained stable year-over-year for the quarter but decreased by 6% for the six-month period. This was primarily driven by lower asset management and administration fees, and trading revenue, partially offset by an increase in net interest revenue due to higher average balances of interest-earning assets. Expenses excluding interest were flat for the quarter but increased significantly for the six-month period, mainly due to the aforementioned litigation reserve. The company's client assets grew to $1.36 trillion, an 11% increase year-over-year, indicating continued client engagement despite revenue pressures.
Financial Highlights
36 data points| Revenue | $1.08B |
| Interest Expense | $45.00M |
| Net Income | $205.00M |
| EPS (Basic) | $0.17 |
| EPS (Diluted) | $0.17 |
| Shares Outstanding (Basic) | 1.19B |
| Shares Outstanding (Diluted) | 1.20B |
Key Highlights
- 1Net income for the second quarter of 2010 was $205 million, flat compared to the prior year's second quarter.
- 2For the first six months of 2010, net income significantly decreased to $211 million from $423 million in the prior year, primarily due to a $196 million class action litigation reserve related to the Schwab YieldPlus Fund.
- 3Total net revenues were $1.08 billion for the quarter, a slight decrease from $1.09 billion in the prior year, and decreased 6% to $2.06 billion for the six-month period compared to $2.20 billion in the prior year.
- 4Client assets under management grew 11% year-over-year to $1.36 trillion as of June 30, 2010.
- 5Net interest revenue increased due to higher average balances of interest-earning assets, but this was partially offset by lower asset management, administration, and trading fee revenues.
- 6Expenses excluding interest were stable for the quarter but increased 13% for the six-month period, largely due to the class action litigation reserve.
- 7The company maintained strong regulatory capital levels, with Schwab Bank considered 'well capitalized'.