Schwab Q3 Net Jumps 12%

By
Cinthia Murphy and Olly Ludwig
October 15, 2012
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Charles Schwab, the San Francisco-based brokerage firm known in part for its roster of low-cost ETFs, said today its third-quarter net income increased 12 percent, a decent showing considering what the company called a “challenging economic environment.”

Net income rose in the quarter to $247 million, or 19 cents a diluted share from $220 million, or 18 cents in the same year-earlier period. Net revenues increased 1 percent to $1.2 billion from $1.18 billion in the 2011 third quarter.

“We know this environment continues to impact our clients’ confidence in making investment decisions, reinforcing the importance of sustained investment in our full-service model,” Schwab Chief Executive Officer and President Walt Bettinger said in a press release. “Our clients remain resilient yet cautious in this challenging economic environment.”

The company also said Monday that its total assets under management in Schwab ETFs reached $7.6 billion, and assets in Schwab-managed ETF portfolios totaled $2.5 billion at the end of the third quarter.

The company’s third quarter and year-to-date financial results include a nonrecurring state tax benefit of about $20 million.

A Timely Acquisition?

Separately, the San Francisco-based company also said today that it reached an agreement to acquire Wellesley, Mass.-based money manager ThomasPartners, a firm that specializes in dividend-producing investments—an increasingly popular theme in the current period of ultra-lower interest rates.

Schwab said it agreed to an upfront payment of $85 million in cash, and that it may pay more should assets under management grow by an unspecified amount.

It said the transaction should have no effect on its earnings in the first year after it closes, and that the acquisition will begin pumping up its bottom line in the 12 months after that first post-close year.

Schwab said it expects the transaction to close in the 2012 fourth quarter.

 

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