Charles Schwab reported a slight drop in its third quarter earnings today, but excluding the sale of U.S. Trust in the year-ago quarter, results are mostly flat versus last year—which is an achievement considering the market environment.
The firm reported $1.25 billion in revenues for the quarter, down 3 percent from $1.29 billion in the third quarter of last year. Net income was $304 million, a sharp drop compared to the $1.5 billion in the third quarter of last year; however, last year’s figure includes an after-tax gain of $1.2 billion for the sale of of U.S. Trust to Bank of America. Excluding that sale, net income was down 10 percent from $334 million.
Schwab now manages $1.3 trillion in client assets. The firm brought in $24 billion in net new client assets in the third quarter, a 35-percent decline from the year-ago quarter, but more than any other firm in the business. Schwab Institutional, the firm’s RIA custodian, was responsible for $14 billion of those assets.
Says CFO Joe Martinetto: “We achieved these results in the face of a 20-percent-plus decline in equity market valuations over the past year. Regardless of the year-over-year comparisons, our third quarter 2008 performance represented outstanding results in an extraordinary environment.”
