THREAD ---The best writeup on SCH ---Look at the trading for April 12--- second qtr will be strong ---
Schwab Reports Record Quarterly Results Earnings Rise 110% on 57%
Revenue Growth Online Assets Reach $219 Billion
April 15, 1999 9:14 AM
SAN FRANCISCO, April 15 /PRNewswire/ -- The Charles Schwab Corporation (NYSE: SCH)
reported net income of $142.9 million, or $.34 per share, on revenues of $951.6 million for the quarter
ended March 31, 1999. Net income for the first quarter of 1998 was $68.0 million, or $.16 per share,
on revenues of $604.4 million. Both revenues and net income for the first quarter of 1999 were the
highest in the Company's history.
Three Months Ended
--March 31,-- %
Financial Highlights 1999 1998 Change
Revenues (in millions) $951.6 $604.4 57%
Net income (in millions) $142.9 $68.0 110%
Diluted earnings per share (a) $.34 $.16 113%
After-tax profit margin 15.0% 11.3%
Return on stockholders' equity 36% 23%
(a) Reflects the December 1998 three-for-two common stock split.
In reviewing the first quarter, Chairman and Co-CEO Charles R. Schwab commented, "Throughout a
period marked by record volumes in the securities markets, we continued to enhance our ability to
provide Schwab's customers with access, information and guidance designed to help them succeed
as investors. We believe our efforts are reflected in the continued strength of the Company's
fundamentals -- during the past three months our customers brought a record $28 billion in net new
assets to the firm and opened 388,000 new accounts. After reaching the $500 billion milestone
during January, we ended the quarter with $542 billion in customer assets held in 5.9 million active
accounts."
"Our customers' daily average revenue trades exceeded 160,000 in the first quarter of 1999, which
was 90% more than a year ago," the Chairman said. "This unprecedented level of activity led to
strong growth in our trading revenues -- principal transaction revenues more than doubled, while
commissions rose by 59%. Additionally, our broad range of services continued to appeal to
investors, as net interest income and mutual fund service fees grew by 43% and 35%, respectively,
over last year. Our ongoing investments in technology have enabled the firm to handle significant
increases in customer activity without a corresponding rise in staffing levels. Full-time equivalent
employees totaled 14,800 at month-end March, up 11% from last year. Given the recent growth in
our customer base, we are proceeding with an aggressive hiring program designed to help us keep
pace with our customers' service needs -- the Company is currently working to fill well over 1,000
open positions. Our continued focus on expenses and risk management, in combination with the
recent surge in customer trading volumes, helped Schwab achieve a 15% after-tax profit margin for
the first quarter, well above our performance in recent years."
President and Co-CEO David S. Pottruck said, "The past three months demonstrated why we
believe Schwab's combination of high-tech and high-touch is redefining full-service investing.
Reflecting our continued leadership in online investing, our Web site handled an average of 50 million
hits each business day during the first quarter and online trades accounted for 65% of total trades for
the period, up from 12 million and 48%, respectively, a year ago. We believe that we now have the
most active encrypted Web site in the world. By quarter-end, we had 2.5 million active online
accounts with $219 billion in assets, and our momentum has continued into April. On Monday the
12th we processed 192,000 online trades and 303,000 trades overall, which were both Company
records."
"While Web-based activity continued to grow during the first quarter, our automated telephone
systems were handling 370,000 calls and 10,000 trades each day as well," Mr. Pottruck continued.
"We also opened seven new branches during the period, bringing our total to 298. Schwab
employees answered an average of 140,000 calls and processed an average of 58,000 trades each
day during the quarter, a feat made possible by the extraordinary commitment of our customer
service staff and the participation of approximately 450 headquarters employees trained to assist
customers during periods of exceptional volume."
"We believe that delivering full-service investing means delivering the information and guidance
customers expect, along with multi-channel access," Mr. Pottruck added. "During the first quarter
we launched our Schwab Signature Services(TM) program, which provides the nearly 600,000
Schwab customers who either have at least $100,000 to invest or trade at least twelve times a year
with access to a package of services designed to expand as their relationship with Schwab grows.
The program includes priority access to dedicated representatives and a special Web site that
includes tools like our Quarterly Profile Report(TM), which assists in the evaluation of investment
performance, and online access to both our CEO and Mutual Fund Speakers Series. We've also
completed the rollout of the Equity Report Card(TM) and the Positions Monitor(TM), which are
Web-based investment evaluation tools that provide comparisons against market benchmarks. In
addition, we now offer SchwabAlerts(TM), which enables customers to receive news relating to their
investments and market activity via e-mail."
"The Company continues to improve the way it meets the needs of the 5,400 independent
investment managers who use us for custodial, trading and support services," the President said.
"As part of that effort, we recently inaugurated an Emerging Practices Advisory Council, a forum for
managers with developing practices to share their thoughts and ideas with us. Overall, customer
assets at Schwab under the management of independent investment managers totaled
approximately $163 billion as of month-end March, up 34% from a year ago."
"During the first quarter we launched three proprietary equity index funds in the U.S. designed for our
investment manager customers, who can now choose from over 875 funds at Schwab that are
tailored to their needs," Mr. Pottruck said. "Our SchwabFunds(R) family now includes 39 funds with
a total of $91 billion in customer assets, a 44% increase over last year. Total mutual fund assets at
Schwab reached $226 billion as of month-end March, including $73 billion in Mutual Fund
OneSource(R) funds."
Mr. Pottruck noted, "Early in 1999, we took another step in building our international presence by
completing the acquisitions of Priority Brokerage Inc. and Porthmeor Securities Inc. of Toronto,
which we combined to form Charles Schwab Canada, Co. In addition, we became the first brokerage
firm in the United Kingdom to enable customers to open and manage self-directed Individual Savings
Accounts through the Internet."
The Company's Annual Meeting of stockholders will be held at 2:00 p.m. on Monday, May 17, 1999,
in San Francisco at the Yerba Buena Center for the Arts Theater, 700 Howard Street. Stockholders
who wish to attend may return the ticket request card included with their proxy material. Any
questions concerning the Annual Meeting should be directed to the Assistant Corporate Secretary at
415-636-1406.
1049 04/15/99 08:45 EDT HT
Schwab Reports Record Quarterly Results -2- The Charles Schwab Corporation, through its principal
operating subsidiary, Charles Schwab & Co., Inc. (member SIPC/NYSE), is one of the nation's
largest financial services firms serving 5.9 million active accounts with $542 billion in customer
assets through 298 branch offices, four regional customer telephone service centers and automated
telephonic and online channels. The Charles Schwab Web Site(TM) can be reached at
www.schwab.com.
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