Charles Schwab said it had net income of $205 million, or $0.17 a share, for the second quarter of 2010, flat vs. the second quarter of 2009 but up from $6 million for the first quarter of 2010.
Client assets handled by advisor services, or RIAs, topped those of individual investors for the third quarter in a row — $596.7 billion vs. $568.7 billion. Assets in the advisor-services unit were up 18% from last year, though they fell 4% from the previous quarter.
Net new assets in these RIA-focused accounts were $10.2 billion in the second quarter, up 32% over last year, but down 31% from $14.7 billion in the first quarter.
“Since the fourth quarter we have seen an acceleration in organic growth for many of the advisors we work with,” said Bernie Clark, senior vice president and head of Charles Schwab Advisor Services, in a statement. “While the industry average for growth of independent advisors is 5.5%, advisors who work with Schwab are growing at more than 11%.”
In terms of net new assets year to day, advisors turning to Schwab for custodial services have brought in $25 billion, Clark says. More than $6 billion of these net new assets, roughly 25%, are from advisors who recently went independent.
“In addition to the organic growth from our existing advisors, we are also continuing to see a steady stream of advisors and assets leaving established firms and entering the independent model,” he explained.
Unlike most other stocks, Schwab’s shares (SCHW) traded up on Friday, July 16, by more than 4% to close at $15.15 per share after it beat analysts’ estimates. And on Monday, July 20, its shares at mid-day were up roughly 0.75% to $1.25 on another down-day for the markets.
“The second quarter of 2010 was a solid quarter for Charles Schwab, in our opinion,” wrote Patrick O’Shaughnessy, CFA, an equity analyst with Raymond James & Associates, in a research note.
“The company’s EPS of $0.17 was one penny above our estimate and two cents above the Street’s. An improvement in net interest margin (NIM), a slight improvement in money market mutual fund fee waivers, and generally strong asset management fees were key positives during the quarter.”