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I'm pretty keen on Charles Schwab's (NYSE: SCHW ) acquisition of derivatives-brokerage expert optionsXpress (Nasdaq: OXPS ) . And an impressive quarterly showing from optionsXpress gives shareholders of Chuck -- which didn't do so bad itself in its first-quarter earnings report -- their own set of reasons to be bullish about the deal.
optionsXpress' results benefited from an overall improvement in its key business metrics. Net income grew by 20% to $14.2 million year over year. Revenues increased to $65.9 million -- a year-over-year growth of 16%, with much of the growth coming from new accounts, higher daily average revenue trades (DARTs), and record-high customer assets.
New customer accounts grew by 9%, while total DARTs, a crucial metric in the brokerage industry, rose by 13% to $50.5 million. Customer brokerage assets also increased by 12%.
The positive momentum we first saw in the financial markets in the fourth quarter of 2010 has accelerated during the first quarter of 2011, and the uptick is obviously helping optionsXpress, as well as some of its rivals. E*TRADE (Nasdaq: ETFC ) has also seen significant improvements in DARTs, new brokerage accounts, and new brokerage assets.
The Foolish bottom line
In my previous look at optionsXpress, I admired the company's mostly strong financials but advised Fools to keep an eye on slipping margins. Since then, we've seen considerable improvements in these metrics, as well as positive loan-performance trends that should make Chuck's investors happy.
Charles Schwab appears poised to reap some serious long-term benefits from this deal. The marriage of two fundamentally strong companies looks as if it will be a happy one. Who wants to join the party?
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