Schwab Reports Monthly Activity Highlights

The Charles Schwab Corporation released its Monthly Market Activity Report today. Company highlights for the month of February 2013 include:

• Net new assets brought to the company by new and existing clients in February 2013 totaled $18.3 billion, including an $8.1 billion inflow related to a mutual fund clearing services client.
• Total client assets were a record $2.04 trillion as of month-end February, up 13% from February 2012 and up 1% compared to January 2013.
• Client daily average trades were 506.1 thousand in February 2013, up 1% compared to February 2012 and flat compared to January 2013. February 2013 trading activity included a 2% sequential decline in daily average revenue trades.

The company expects first quarter compensation expense to be elevated by approximately $10 million pre-tax due to the planned transition to a new payout schedule for field incentive plans. Trailing payouts under the old schedule will diminish as the year progresses. In addition, the company funded its entire annual contribution to employee health savings accounts (HSAs), which totaled approximately $10 million, in the first quarter. Schwab is in the process of converting to HSA-focused healthcare, and employee enrollment in these plans has risen significantly in 2013. The company’s average quarterly HSA contribution in 2012 was approximately $200,000, reflecting lower participation. The company also expects to record a one-time compensation expense of approximately $10 million during the first quarter related to previously-announced equity incentive plan changes to vesting for retirement-eligible employees.

CFO Joe Martinetto commented, “Our client-focused strategy continues to yield strong business momentum. Net new assets were $30 billion year-to-date, an annualized organic growth rate of 9%. Client trading activity, however, remains muted. Since trade volumes have yet to rebound as expected, we are adjusting our 2013 spending plans accordingly. With our expense growth beginning to moderate from planned levels at this point in the year, we expect reported first quarter earnings per share to at least match the prior quarter and full-year EPS to remain consistent with the baseline scenario we described during our Winter Business Update on February 7.”

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