Charles Schwab Corp. reported that income from continuing operations rose 10% for 2008 to $1.2 billion on a 3% increase in net revenue to $5.15 billion (Schwab sold U.S. Trust for $3.3 billion in July 2007). For the volatile fourth quarter of 2008, Schwab had essentially flat income from continuing operations of $308 million on a 5% decline in net revenues from 2007′s fourth quarter to $1.28 billion; those results include $25 million in pre-tax severance charges for the 100 jobs the company announced in the period that it would eliminate.
CEO Walt Bettinger said in a prepared statement that net new assets, “while pressured by the environment, still totaled $113 billion, new brokerage accounts reached 889,000, up 10% year-over-year, total brokerage accounts rose 5% to 7.4 million, corporate retirement plan participants were up 17% to 1.4 million, and banking accounts ended the year at 447,000, up 71%.”
CFO Joe Martinetto said, however, that in 2009 “we are proceeding with our previously announced effort to reduce expenses significantly, with the current expectation of identifying and implementing cuts totaling 7% to 8% of our 2008 total spending.” Martinetto noted the company was still concerned about the overall mortgage market and warned that “further deterioration in this arena could negatively impact mortgage-backed securities in our investment portfolio; in particular, those holdings backed by Alt-A collateral, a relatively small portion of the total.”
As for advisors, Schwab’s RIA custodian, Schwab Advisor Services (SAS), one of two units within its Schwab Institutional Services division run by Jim McCool, announced healthy 2008 results. The former Schwab Institutional unit reported net new assets from its 5,500 affiliated RIAs of $60 billion, including $13 billion from 123 advisor groups that went independent with Schwab during the year; total assets under custody stood at $477.2 billion. Schwab’s separately managed account platform attracted $5.7 billion in net new assets for the year as well.