Are you still mired in the fiscal quicksand that many financial-services stocks have become? Charles Schwab
The leading discount broker posted healthy fourth-quarter results this morning. Net revenue climbed 23% to $1.345 billion. Earnings from continuing operations soared 36% to $0.26 a share.
Obviously, not every discounter is clicking its heels at the moment. E*Trade
Schwab is now watching over $1.4 trillion in client assets, a 17% boost over the past year. There are now 7 million brokerage accounts at Schwab, with its biggest gains coming in banking and retirement plan accounts.
Is Schwab completely invulnerable to the subprime meltdown? Not necessarily. The company originated $574 million in mortgages during the quarter. Schwab now has $3.3 billion in outstanding mortgage and home equity loans, a 44% increase year over year.
I'm not overly concerned about this. Mortgages are just a small fraction of Schwab's business, and the late push here feels more shrewd and opportunistic than troublesome. Just as Chimera Investment
The company is also growing its banking business at a time when consumers have been burned elsewhere. From the pathetic yields being offered at brick-and-mortar banks to the perceived risk in chasing yields at E*Trade, Schwab may appear to be at the wrong place, but it's there at the right time.
Well done, Chuck.