Schwab Announces Quarterly Results

Net New Client Assets Total $31 Billion



Apr 17, 2001, 01:00 ET from Charles Schwab Corporation

    SAN FRANCISCO, April 17 /PRNewswire/ -- The Charles Schwab Corporation
 (NYSE:   SCH) announced today that its operating income for the quarter ended
 March 31, 2001 was $120 million, or $.08 per share, on revenues of
 $1.20 billion. In comparison, operating income for the first quarter of 2000
 was $323 million, or $.23 per share, on revenues of $1.73 billion.
     The Company's first quarter 2001 operating results exclude approximately
 $9 million in after-tax charges for the cost of employee retention programs
 associated with its acquisitions of U.S. Trust Corporation and CyBerCorp
 Holdings, Inc., and approximately $14 million in after-tax charges for
 amortization of goodwill and other intangibles associated with acquisitions.
 Including these acquisition-related costs, reported net income was
 $97 million, or $.07 per share, for the quarter.
 
                                            Three Months Ended
                                                 March 31,              %
     Financial Highlights                    2001          2000      Change
 
     Revenues (in millions)                 $1,200       $1,726       (30)%
 
     Operating Results (A):
       Income (in millions)                   $120         $323       (63)%
       Diluted earnings per share             $.08         $.23       (65)%
       After-tax profit margin                10.0%        18.7%
 
     Reported Results (B):
       Net Income (in millions)                $97         $300       (68)%
       Diluted earnings per share             $.07         $.22       (68)%
       After-tax profit margin                 8.1%        17.4%
       Return on stockholders' equity            9%          40%
 
     (A) Excludes goodwill and intangible asset amortization,
         acquisition-related compensation expense and other expenses relating
         to acquisitions.
     (B) Includes acquisition-related costs.
 
     In reviewing the first quarter, Chairman and Co-CEO Charles R. Schwab
 commented, "The difficult securities market environment that emerged late last
 year continued into early 2001, and our clients' daily average revenue trades
 declined to their lowest level since the fourth quarter of 1999. Our
 fundamentals held up well, however, as our full-service capabilities continue
 to attract investors during these challenging times. Our clients opened
 280,000 new accounts during the first quarter and we ended the period with
 7.6 million active accounts, up 9% from last March. In addition, clients
 brought a total of $31 billion in net new assets to the firm during the
 first quarter. At the same time, continuing pressure on market valuations
 resulted in total assets in client accounts dropping to $806 billion at
 month-end March, which was 15% below the year-ago level."
     "Our ability to attract new accounts and assets enabled the Company to
 achieve year-over-year growth in balance-related revenues -- asset management
 and administration fees increased by 10% and other non trading-related income
 rose by 16%," the Chairman said. "Net interest income, however, declined by
 13% versus a year ago due to substantial reductions in margin loans and a
 lower interest rate environment. Trading-related revenues -- commissions and
 principal transaction revenues -- declined by 51% from year-earlier levels due
 to reduced client trading activity and continued pressure on spreads in our
 market-making business."
     Mr. Schwab continued, "We believe that the current market environment has
 led to fundamental changes in investor behavior that may persist for some
 time. While the hiring restrictions and other expense reduction measures we've
 put in place since last November enabled the Company to achieve a
 10% after-tax operating profit margin for the first quarter, this perspective
 has led us to an even greater focus on expenses, including our recently
 announced plans to restructure our workforce, facilities, and systems
 capacity."
     President and Co-CEO David S. Pottruck said, "Even as we contend with the
 toughest market environment in many years, our focus on improving and
 expanding the access, information and guidance available to all of our clients
 continues. For our retail clients, we continue to develop and deliver
 Schwab-style help and advice, and our service representatives completed over
 67,000 advice interactions during the first quarter. In addition, we've
 recently enhanced our IRA-related services in several ways -- we rolled out
 the IRA Express, a complete array of online tools and information to help
 clients research and apply for IRAs quickly and easily; we created three new
 online workshops to enable investors at different life stages to develop the
 strategies that will help them meet their retirement goals; and we launched
 the Personal Rollover Assistant, a comprehensive service that provides a
 dedicated specialist for qualifying clients who wish to roll over existing
 retirement plan funds into a Schwab IRA. To support the continuing growth in
 client demand for personal interaction, we opened 14 new offices during the
 quarter, bringing the total number of Schwab and U.S. Trust domestic offices
 to 429."
     "Our continued leadership in providing clients with Clicks and Mortar(TM)
 access -- combining the best of people and technology -- was very much in
 evidence during the first quarter," the President said. "Schwab's most
 actively trading clients now have access to StreetSmart Pro(R), which
 leverages CyberTrader's trading technology and matches Nasdaq Level II quotes,
 real-time streaming news, unlimited watch lists and real-time, streaming,
 interactive charts with the multi-channel access and dedicated personal
 support of our Platinum-level Signature Services(TM) offer. Schwab also
 launched a new online stock screening tool called the Stock Explorer(TM)
 during the quarter, which enables clients to identify equities that meet the
 screening criteria of different investment strategies, such as growth or
 value. In addition, we recently announced the Schwab MyAccounts service, which
 will utilize technology provided by Yodlee, Inc. to aggregate online financial
 information for our clients and enable them to analyze and manage that
 information in one convenient password-protected site. We now have 4.3 million
 accounts with $328 billion in assets using online services at Schwab, up
 16% and down 22%, respectively, from their year-earlier levels; online trades
 made up 81% of all trades during the first quarter of 2001, up from 79% for
 the first three months of 2000."
     Mr. Pottruck commented, "During the first quarter, U.S. Trust leveraged
 Schwab's technical capabilities to launch a revised Web site, which now
 provides clients with secure access to consolidated account information as
 well as updated equity pricing, proprietary research, and financial
 information from third-party providers such as Standard & Poor's and Dow
 Jones. U.S. Trust and Schwab staff also teamed up to launch a new advertising
 campaign designed to reinforce the key strengths and attributes of the U.S.
 Trust brand. Referrals from Schwab to U.S. Trust through our AdvisorSource(TM)
 program continued at a strong pace during the first quarter -- there were over
 450 such referrals during the period, with average potential new assets per
 referral of $7 million. Overall client assets at U.S. Trust totaled
 $119 billion as of month-end March, down 8% from last year."
     Mr. Pottruck noted, "The independent investment managers (IMs) who use
 Schwab for information, trading and administrative support are crucial to our
 ability to offer individual investors a full spectrum of choice with regard to
 investment guidance. We believe that the independence, expertise and personal
 attention IMs can offer will help to keep them well positioned to serve
 clients who are seeking guidance on a continuing basis. While the
 5,400 AdvisorSource referrals during the first quarter of 2001 were about the
 same as last year's first quarter, potential new assets associated with those
 referrals increased by 31% to $7 billion. Client assets at Schwab under the
 guidance of IMs totaled $224 billion as of March 31, 2001, down 5% from their
 year-earlier levels."
     "For our international clients, Charles Schwab Europe (CSE) has
 established an alliance with EO.net to create an online IPO Centre, which is
 designed to provide CSE clients with direct access to new equity offerings in
 the United Kingdom and Europe," Mr. Pottruck continued. "CSE has also launched
 a self-invested personal pension product, which provides clients with an
 efficient, low-cost alternative for managing retirement-related investments.
 Overall, our international operations currently serve 486,000 accounts with
 $21 billion in assets, up 19% and down 30%, respectively, over the past year."
     Mr. Pottruck said, "The success of our retirement plan business keeps
 building. Already in 2001, our SchwabPlan(R) bundled 401(k) offering has
 received commitments for new plan assets equaling almost $2.5 billion, which
 is approximately 75% of total new plan assets in 2000. Our recently redesigned
 participant account statements have garnered an 'excellent' rating by Dalbar,
 Inc., a distinction earned by less than 3% of the industry. Overall client
 assets in employer-sponsored retirement plans at Schwab now total $91 billion,
 down 11% from last year."
     "Reflecting the ongoing importance of mutual fund investing for our
 clients, we recently launched the eProspectus service, through which mutual
 fund prospectuses can be delivered electronically rather than via regular
 mail," the President said. "Since the program was started in February, 96% of
 clients buying a fund for the first time have chosen electronic delivery.
 Total client asset balances in mutual funds at Schwab totaled $325 billion at
 the end of March, including $84 billion in third-party Mutual Fund
 OneSource(R) funds, $19 billion in our clearing business, $69 billion in other
 third-party Mutual Fund Marketplace(R) funds, and $153 billion in proprietary
 SchwabFunds(R) and Excelsior(R) Funds."
     Mr. Pottruck said, "During the first quarter, we continued working to
 improve our clients' access to the securities markets in several ways,
 including our ongoing participation in the rollout of decimal-based equities
 trading here in the U.S. Additionally, we bolstered our fixed-income offering
 by developing a new online service called Schwab CDSource(TM), which enables
 clients to research and purchase certificates of deposit from a variety of
 FDIC-insured depository institutions, including U.S. Trust, entirely online.
 We also teamed up with TD Waterhouse Group, Inc. to form a joint venture
 focused on securities market-making in the U.K. The foundation for this
 operation was laid in January, when Schwab and Waterhouse announced an
 agreement to acquire Aitken Campbell, a Scotland-based market maker, from
 Abbey National plc."
     Mr. Pottruck concluded, "The current economic environment certainly
 presents some tough challenges, but it also brings opportunity -- companies
 that can draw on their values and culture to stay focused on delivering great
 service can build stronger client relationships. We believe that our ongoing
 commitment to our clients is reflected in the honors conferred upon the
 Company during the first quarter -- first place in Gomez Advisors' Web site
 rankings for the fourth straight quarter, moving up four spots to second in
 the J.D. Power and Associates Online Trading Investor Satisfaction Study, a
 four-star Web site ranking in Barron's, 'Best of the Web' according to
 Forbes.com, and WebFinance magazine's 2001 'Clicks and Picks' award for
 Brokerage."
     The Company's Annual Meeting of Stockholders will be held at 2:00 p.m. on
 Monday, May 7, 2001, in San Francisco at the Palace Hotel, 2 New Montgomery
 Street. Stockholders who wish to attend may request a ticket by going to
 www.schwabevents.com or contacting the Assistant Corporate Secretary either in
 writing at The Charles Schwab Corporation, 101 Montgomery Street (88/5),
 San Francisco, CA 94104 or by calling 415-636-1337. The Annual Meeting will
 also be broadcast over the Internet.  Information on how to access this
 real-time Webcast is available at www.schwabevents.com.
     The Charles Schwab Corporation, through Charles Schwab & Co., Inc. (member
 SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. and its other operating
 subsidiaries, is one of the nation's largest financial services firms serving
 7.6 million active accounts with $806 billion in client assets through
 429 domestic offices, 5 regional client telephone service centers and
 automated telephonic and online channels. The Charles Schwab, U.S. Trust and
 CyberTrader Web sites can be reached at www.schwab.com, www.ustrust.com and
 www.cybertrader.com, respectively.
 
 

SOURCE Charles Schwab Corporation
    SAN FRANCISCO, April 17 /PRNewswire/ -- The Charles Schwab Corporation
 (NYSE:   SCH) announced today that its operating income for the quarter ended
 March 31, 2001 was $120 million, or $.08 per share, on revenues of
 $1.20 billion. In comparison, operating income for the first quarter of 2000
 was $323 million, or $.23 per share, on revenues of $1.73 billion.
     The Company's first quarter 2001 operating results exclude approximately
 $9 million in after-tax charges for the cost of employee retention programs
 associated with its acquisitions of U.S. Trust Corporation and CyBerCorp
 Holdings, Inc., and approximately $14 million in after-tax charges for
 amortization of goodwill and other intangibles associated with acquisitions.
 Including these acquisition-related costs, reported net income was
 $97 million, or $.07 per share, for the quarter.
 
                                            Three Months Ended
                                                 March 31,              %
     Financial Highlights                    2001          2000      Change
 
     Revenues (in millions)                 $1,200       $1,726       (30)%
 
     Operating Results (A):
       Income (in millions)                   $120         $323       (63)%
       Diluted earnings per share             $.08         $.23       (65)%
       After-tax profit margin                10.0%        18.7%
 
     Reported Results (B):
       Net Income (in millions)                $97         $300       (68)%
       Diluted earnings per share             $.07         $.22       (68)%
       After-tax profit margin                 8.1%        17.4%
       Return on stockholders' equity            9%          40%
 
     (A) Excludes goodwill and intangible asset amortization,
         acquisition-related compensation expense and other expenses relating
         to acquisitions.
     (B) Includes acquisition-related costs.
 
     In reviewing the first quarter, Chairman and Co-CEO Charles R. Schwab
 commented, "The difficult securities market environment that emerged late last
 year continued into early 2001, and our clients' daily average revenue trades
 declined to their lowest level since the fourth quarter of 1999. Our
 fundamentals held up well, however, as our full-service capabilities continue
 to attract investors during these challenging times. Our clients opened
 280,000 new accounts during the first quarter and we ended the period with
 7.6 million active accounts, up 9% from last March. In addition, clients
 brought a total of $31 billion in net new assets to the firm during the
 first quarter. At the same time, continuing pressure on market valuations
 resulted in total assets in client accounts dropping to $806 billion at
 month-end March, which was 15% below the year-ago level."
     "Our ability to attract new accounts and assets enabled the Company to
 achieve year-over-year growth in balance-related revenues -- asset management
 and administration fees increased by 10% and other non trading-related income
 rose by 16%," the Chairman said. "Net interest income, however, declined by
 13% versus a year ago due to substantial reductions in margin loans and a
 lower interest rate environment. Trading-related revenues -- commissions and
 principal transaction revenues -- declined by 51% from year-earlier levels due
 to reduced client trading activity and continued pressure on spreads in our
 market-making business."
     Mr. Schwab continued, "We believe that the current market environment has
 led to fundamental changes in investor behavior that may persist for some
 time. While the hiring restrictions and other expense reduction measures we've
 put in place since last November enabled the Company to achieve a
 10% after-tax operating profit margin for the first quarter, this perspective
 has led us to an even greater focus on expenses, including our recently
 announced plans to restructure our workforce, facilities, and systems
 capacity."
     President and Co-CEO David S. Pottruck said, "Even as we contend with the
 toughest market environment in many years, our focus on improving and
 expanding the access, information and guidance available to all of our clients
 continues. For our retail clients, we continue to develop and deliver
 Schwab-style help and advice, and our service representatives completed over
 67,000 advice interactions during the first quarter. In addition, we've
 recently enhanced our IRA-related services in several ways -- we rolled out
 the IRA Express, a complete array of online tools and information to help
 clients research and apply for IRAs quickly and easily; we created three new
 online workshops to enable investors at different life stages to develop the
 strategies that will help them meet their retirement goals; and we launched
 the Personal Rollover Assistant, a comprehensive service that provides a
 dedicated specialist for qualifying clients who wish to roll over existing
 retirement plan funds into a Schwab IRA. To support the continuing growth in
 client demand for personal interaction, we opened 14 new offices during the
 quarter, bringing the total number of Schwab and U.S. Trust domestic offices
 to 429."
     "Our continued leadership in providing clients with Clicks and Mortar(TM)
 access -- combining the best of people and technology -- was very much in
 evidence during the first quarter," the President said. "Schwab's most
 actively trading clients now have access to StreetSmart Pro(R), which
 leverages CyberTrader's trading technology and matches Nasdaq Level II quotes,
 real-time streaming news, unlimited watch lists and real-time, streaming,
 interactive charts with the multi-channel access and dedicated personal
 support of our Platinum-level Signature Services(TM) offer. Schwab also
 launched a new online stock screening tool called the Stock Explorer(TM)
 during the quarter, which enables clients to identify equities that meet the
 screening criteria of different investment strategies, such as growth or
 value. In addition, we recently announced the Schwab MyAccounts service, which
 will utilize technology provided by Yodlee, Inc. to aggregate online financial
 information for our clients and enable them to analyze and manage that
 information in one convenient password-protected site. We now have 4.3 million
 accounts with $328 billion in assets using online services at Schwab, up
 16% and down 22%, respectively, from their year-earlier levels; online trades
 made up 81% of all trades during the first quarter of 2001, up from 79% for
 the first three months of 2000."
     Mr. Pottruck commented, "During the first quarter, U.S. Trust leveraged
 Schwab's technical capabilities to launch a revised Web site, which now
 provides clients with secure access to consolidated account information as
 well as updated equity pricing, proprietary research, and financial
 information from third-party providers such as Standard & Poor's and Dow
 Jones. U.S. Trust and Schwab staff also teamed up to launch a new advertising
 campaign designed to reinforce the key strengths and attributes of the U.S.
 Trust brand. Referrals from Schwab to U.S. Trust through our AdvisorSource(TM)
 program continued at a strong pace during the first quarter -- there were over
 450 such referrals during the period, with average potential new assets per
 referral of $7 million. Overall client assets at U.S. Trust totaled
 $119 billion as of month-end March, down 8% from last year."
     Mr. Pottruck noted, "The independent investment managers (IMs) who use
 Schwab for information, trading and administrative support are crucial to our
 ability to offer individual investors a full spectrum of choice with regard to
 investment guidance. We believe that the independence, expertise and personal
 attention IMs can offer will help to keep them well positioned to serve
 clients who are seeking guidance on a continuing basis. While the
 5,400 AdvisorSource referrals during the first quarter of 2001 were about the
 same as last year's first quarter, potential new assets associated with those
 referrals increased by 31% to $7 billion. Client assets at Schwab under the
 guidance of IMs totaled $224 billion as of March 31, 2001, down 5% from their
 year-earlier levels."
     "For our international clients, Charles Schwab Europe (CSE) has
 established an alliance with EO.net to create an online IPO Centre, which is
 designed to provide CSE clients with direct access to new equity offerings in
 the United Kingdom and Europe," Mr. Pottruck continued. "CSE has also launched
 a self-invested personal pension product, which provides clients with an
 efficient, low-cost alternative for managing retirement-related investments.
 Overall, our international operations currently serve 486,000 accounts with
 $21 billion in assets, up 19% and down 30%, respectively, over the past year."
     Mr. Pottruck said, "The success of our retirement plan business keeps
 building. Already in 2001, our SchwabPlan(R) bundled 401(k) offering has
 received commitments for new plan assets equaling almost $2.5 billion, which
 is approximately 75% of total new plan assets in 2000. Our recently redesigned
 participant account statements have garnered an 'excellent' rating by Dalbar,
 Inc., a distinction earned by less than 3% of the industry. Overall client
 assets in employer-sponsored retirement plans at Schwab now total $91 billion,
 down 11% from last year."
     "Reflecting the ongoing importance of mutual fund investing for our
 clients, we recently launched the eProspectus service, through which mutual
 fund prospectuses can be delivered electronically rather than via regular
 mail," the President said. "Since the program was started in February, 96% of
 clients buying a fund for the first time have chosen electronic delivery.
 Total client asset balances in mutual funds at Schwab totaled $325 billion at
 the end of March, including $84 billion in third-party Mutual Fund
 OneSource(R) funds, $19 billion in our clearing business, $69 billion in other
 third-party Mutual Fund Marketplace(R) funds, and $153 billion in proprietary
 SchwabFunds(R) and Excelsior(R) Funds."
     Mr. Pottruck said, "During the first quarter, we continued working to
 improve our clients' access to the securities markets in several ways,
 including our ongoing participation in the rollout of decimal-based equities
 trading here in the U.S. Additionally, we bolstered our fixed-income offering
 by developing a new online service called Schwab CDSource(TM), which enables
 clients to research and purchase certificates of deposit from a variety of
 FDIC-insured depository institutions, including U.S. Trust, entirely online.
 We also teamed up with TD Waterhouse Group, Inc. to form a joint venture
 focused on securities market-making in the U.K. The foundation for this
 operation was laid in January, when Schwab and Waterhouse announced an
 agreement to acquire Aitken Campbell, a Scotland-based market maker, from
 Abbey National plc."
     Mr. Pottruck concluded, "The current economic environment certainly
 presents some tough challenges, but it also brings opportunity -- companies
 that can draw on their values and culture to stay focused on delivering great
 service can build stronger client relationships. We believe that our ongoing
 commitment to our clients is reflected in the honors conferred upon the
 Company during the first quarter -- first place in Gomez Advisors' Web site
 rankings for the fourth straight quarter, moving up four spots to second in
 the J.D. Power and Associates Online Trading Investor Satisfaction Study, a
 four-star Web site ranking in Barron's, 'Best of the Web' according to
 Forbes.com, and WebFinance magazine's 2001 'Clicks and Picks' award for
 Brokerage."
     The Company's Annual Meeting of Stockholders will be held at 2:00 p.m. on
 Monday, May 7, 2001, in San Francisco at the Palace Hotel, 2 New Montgomery
 Street. Stockholders who wish to attend may request a ticket by going to
 www.schwabevents.com or contacting the Assistant Corporate Secretary either in
 writing at The Charles Schwab Corporation, 101 Montgomery Street (88/5),
 San Francisco, CA 94104 or by calling 415-636-1337. The Annual Meeting will
 also be broadcast over the Internet.  Information on how to access this
 real-time Webcast is available at www.schwabevents.com.
     The Charles Schwab Corporation, through Charles Schwab & Co., Inc. (member
 SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. and its other operating
 subsidiaries, is one of the nation's largest financial services firms serving
 7.6 million active accounts with $806 billion in client assets through
 429 domestic offices, 5 regional client telephone service centers and
 automated telephonic and online channels. The Charles Schwab, U.S. Trust and
 CyberTrader Web sites can be reached at www.schwab.com, www.ustrust.com and
 www.cybertrader.com, respectively.
 
 SOURCE  Charles Schwab Corporation