Charles Schwab Corp. reported favorable figures for February and said its first-quarter results would be stronger than expected.
But those announcements, which the San Francisco company made Thursday, were tempered by its revelation that it will take $25 million of one-time charges this quarter to lay off 150-200 workers in its retail and high-end businesses.
In an interview after the monthly data was released, chief financial officer Christopher V. Dodds said that most of the positions his company is eliminating are administrative ones in its Schwab Investor Services and U.S. Trust units.
The company is “plowing those savings back into people who do interact with clients,” he said. “The whole deal is, keep the momentum going with clients, but don’t sacrifice your financial performance.”
The company reported $18 million of severance costs for the fourth quarter, and Mr. Dodds said he does not expect large severance charges in subsequent quarters.
On Thursday, Schwab reported that last month it attracted a net total of $10.6 billion of new assets. That figure rose 12% from January and 68% from a year earlier.
“The company is humming right now,” Mr. Dodds said.
The growth was the second-highest since January 2001. (The highest was in November 2003, when U.S. Trust acquired State Street Corp.’s private asset management business.)
“There is strength across each of the businesses at Schwab,” he said.
U.S. Trust has had 10 consecutive months of net asset inflows. New assets in February from retail investors at Schwab Investor Services doubled from a year earlier, and new assets at Schwab Institutional rose 75%, he said.
February’s performance prompted Schwab to steer investors’ first-quarter earnings expectations above Wall Street’s consensus of 17 cents a share. Mr. Dodds said the company would likely report earnings of 18-19 cents a share for this quarter. In the first quarter of last year it earned 12 cents a share.
Account openings, which were weak through much of last year, rose 30% from a year earlier, to 56,600 in February.
The account and asset growth is “translating into enhanced financial performance as we continue to be very, very disciplined about spending, investing, and making sure we’re giving back an appropriate level of our enhanced fortunes to our stockholders in the form of improved margins and improved earnings,” Mr. Dodds said.
The new-account increase, the third in as many months, may be “the beginning of a great trend,” he said. “I’d like to think we have turned the corner.”
