SAN FRANCISCO (AP) — Discount broker Charles Schwab Corp. said on Tuesday that its second-quarter earnings rose 16 percent in part due to a gain from a confidential settlement with a vendor.
Schwab also attracted more clients in its financial advisory, brokerage and banking businesses, and its earnings topped Wall Street expectations.
The San Francisco-based company reported net income for the three months ended June 30 of $275 million, or 20 cents per share. That compares with earnings of $238 million, or 20 cents per share, in the year-ago period, when Schwab had a smaller number of common shares outstanding.
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Analysts polled by FactSet had expected earnings of 18 cents per share, on average, in the latest quarter.
Revenue rose 8 percent to $1.28 billion from $1.19 billion in the year-ago quarter, topping analysts' consensus forecast for about $1.23 billion.
Schwab said the gain from resolving a dispute with a vendor totaled $70 million on a pretax basis, and $44 million after taxes. Schwab didn't identify the vendor or the nature of the dispute.
Asset management and administration fees slipped 1 percent to $496 million, while net interest revenue rose 2 percent to $458 million. Trading revenue rose 7 percent to $219 million.
Expenses excluding interest rose 6 percent to $851 million.
Schwab posted a 9 percent increase with 2.5 million accounts of clients enrolled in one of Schwab's financial advisory offerings or under the guidance of an independent adviser.
Schwab's brokerage account total was 8.7 million at the end of June, up 7 percent from a year earlier. The company's banking account total is up 10 percent, to 822,000. Total client assets were $1.8 trillion, up 9 percent. Net new assets totaled $16 billion, up 4 percent from a year ago.
Schwab also runs corporate retirement plans. The company reported 1.52 million participants in those plans in June, up 6 percent from a year ago.
Schwab is among several asset managers that have been hurt by near-zero short-term interest rates coming out of the recession. Because of the low rates, Schwab and other companies have temporarily extended fee waivers on their money-market mutual funds to ensure clients earn slightly positive returns. Waivers last quarter totaled $146 million, up from $128 million in the year-ago quarter.
Shares of Charles Schwab fell 9 cents to $12.58 in morning trading. The stock is near the midpoint of its 52-week range of $10.56 to $15.82.
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