Schwab Shares Rise on Profit Growth

Charles Schwab(SCHW Quote) shares gained ground Wednesday morning, after the brokerage firm met Wall Street's expectations with a 1% rise in second-quarter profit.

The firm said strong asset growth pushed earnings up to $295 million, or 26 cents per share, from $292 million, or 23 cents per share, a year earlier. Revenue climbed 9% to $1.31 billion, from $1.21 billion. Analysts had been expecting the same earnings per share on slightly lower revenue of $1.3 billion, according to a poll by Thomson Reuters.

Charles Schwab shares were up 8% to $20.76 in recent trading.

The company received $26 billion in net new assets, which stood at $1.4 trillion on June 30, a 1% gain from a year earlier. It had 5% more active brokerage accounts and 13% more retirement plan participants, while banking accounts more than doubled to 355,000.

Despite lower short-term interest rates and a challenging stock-market, the firm limited expense growth and drove pre-tax profit margins up to 39.3% from 35.2%.

"Even in a tough market environment, our business showed standout growth and profitability," Chairman and CEO Charles Schwab said in a statement.

Charles Schwab also kept itself largely isolated from direct exposure to subprime housing issues that have plagued other financial firms. CFO Joe Martinetto noted that mortgage delinquencies at the company's Schwab Bank division were 0.33% of outstanding balances at the end of June, much lower than the national average. Loan charge-offs totaled $800,000 for the quarter.

The division's outstanding mortgage and home-equity loans surged 76% to $4.7 billion during the quarter, with $1.1 billion in new mortgage originations.

Rivals TD Ameritrade(AMTD Quote) reports results Thursday and E*Trade Financial(ETFC Quote) reports on Tuesday.