Schwab Earnings Fall but Match Estimates

Online retail brokerage

Charles Schwab

(SCH)

reported that first-quarter earnings after charges fell 3% from a year ago, as a depressed retail trading environment cut into brokerage commissions and net interest revenue on margin loans.

Schwab reported earnings of $94 million, or 7 cents a share, after a $22 million pretax gain for the sale of U.S. Trust assets and a $43 million pretax charge related to restructuring and acquisitions. Revenue for the quarter totaled $1.06 billion. Before the items, the company earned 8 cents a share, matching analysts' estimates.

In the year-ago quarter, the company earned $97 million, or 8 cents a share, after a pretax charge of $23 million, on revenue of $1.2 billion. Schwab also earned 8 cents a share in the fourth quarter of last year.

Brokerage commission revenue fell to $303 million from $408 million in the first quarter of 2001, as trading slumped vs. a year ago. Even as the company added 3 million new client accounts vs. the year-ago quarter, bringing its total to 7.9 million, daily average trades dropped to 147.2 from 173.4 in the year-ago quarter.

With margin loans in decline, net interest revenue dropped to $221 million from $257 million in the first quarter of 2001. Schwab Capital Markets, Schwab's market-making division, saw revenue cut almost in half vs. the year-ago quarter as decimalization slashed revenue per trade.

Schwab's asset management business, which accounts for about 42% of revenue, continued to do well in the first quarter, however. Asset management and administration fees totaled $444 million vs. $411 million in the first quarter of 2001.