NEW YORK (
shares were rising in premarket action, despite the fact that the online brokerage firm said two separate pre-tax charges would affect third-quarter earnings.
CFO Joe Martinetto said in a statement that third-quarter earnings are likely to be "comparable" to the $205 million earned in the second quarter, prior to the effect of two recent developments.
First it will exclude a pre-tax charge of approximately $20 million relating to Invest First and WorldPoints Visa credit cards. Schwab said it is ending its sponsorship with the cards due to "challenging card industry economics."
Additionally, the company will take a pre-tax charge of $130 million to "cover all losses recognized by Schwab money market mutual funds as a result of their investments in a single structured investment vehicle that defaulted in 2008."
Schwab clients currently hold $154 billion in money fund balances there.
The earnings guidance was disclosed in the same announcement of Schwab's monthly release of daily average revenue trades (DARTs). Schwab's client daily average trades were 346,700 in August, down 5% from July and 16% from August 2009, it said Wednesday.
The San Francisco brokerage firm said net new assets totaled $4.2 billion for the month of August. Total client assets reached $1.39 trillion as of month-end August, up 6% from August 2009 and down 2% from July 2010.
"With interest rates and equity market valuations remaining at or above their year-to-date lows, our operating performance continues to recover," Martinetto said in a statement. "We expect that third quarter revenues will show a year-over-year increase for the first time since the second quarter of 2008, and we are poised to resume sequential improvement in revenues and earnings as soon as interest rates and equity valuations stabilize or improve."
shares were slipping in pre-market action after the online broker said that DARTs fell 5% to 123,219 in August as compared to the prior month.
E*Trade's daily average revenue trades declined 36% when compared to the year-earlier period. The company said it added 24,927 new brokerage accounts last month. E*Trade ended the month with 2.7 million brokerage accounts, down 1,416 from July. E*Trade's total accounts were 4.2 million at the end of August.
E*Trade brought in $400 million in net new brokerage assets in August, totaling $5.2 billion year-to-date, it said.
The online broker also said that within its troubled loan portfolio, total special mention delinquencies (30 to 89 days delinquent) fell by 6% June 30 to August 31, while total "at risk" delinquencies (30 to 179 days delinquent) fell by 7%.
E*Trade's loans receivable totaled $17.4 billion at August's end. Delinquent loans totaled $19.3 billion.
Sandler O'Neill & Partners analyst Rich Repetto had predicted
earlier this month that DARTs at the three largest brokers - E*Trade, TD Ameritrade and Charles Schwab -- would fall, given combination of lower volatility and general seasonal slowdown in the summer months.
E*Trade shares were down 0.6% to $14.17 before the market opened. Schwab's shares were rising 0.5% to $13.92 before the market opened.
--Written by Laurie Kulikowski in New York.
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