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The Charles Schwab (SCHW) Investor Relations Interim Business Update Results - Earnings Call Transcript

Investor Relations Interim Business Update Call

April 22, 2016 11:00 AM ET

Executives

Rich Fowler - SVP, IR

Walter Bettinger - President & CEO

Joseph Martinetto - CFO

Analysts

Richard Repetto -

Christopher Shutler -

Brian Bedell -

Douglas Mewhirter -

Chris Harris -

Kenneth Worthington -

Conor Fitzgerald -

Rich Fowler

Good morning everyone, welcome to the Spring 2016 Schwab business update. This is Rich Fowler, Head of Investor Relations for Schwab coming to you as always from beautiful, but currently a little rainy San Francisco. Thanks for joining us at the end of a very busy week, with me here in the studio are Joe Martinetto; our CFO; and Walter Bettinger, our President and CEO. Per our usual practice with these interim updates, we’ll spend a focused hour with these two sharing their perspectives on life of Schwab right now.

Starting off with some prepared comments and following up with the Q&A until it’s time to wrap. I think we had a pretty straightforward quarter and I think this will see like a very straightforward update although Professor Martinetto will inevitably have at least one or two technical details to walk us through.

Walt is going to start us off, but let’s spend a minute on the ever important forward-looking statement page, the main point of which as always is to remind us that things will never turn out different than we think, so please stay in touch with us as we update our disclosures through the course of the year. Let’s cover the dial-in, in case we get bumped off or you need to make a note of that. There it is upon the screen. Let’s cover questions, as usual we’ll do so via the webcast council as well as the dial-in and when we start the Q&A session, we’ll ask the operator to remind us how the process works.

And with that I think we’re ready to get going. So Walt, please take it away.

Walter Bettinger

Thank you Rich, good morning everyone, thanks for joining us, investing a bit of time with us this morning to go through our Q1. We continued to execute on our strategy, long term strategy during the first quarter and our financial benefits began to illustrate some separation between Schwab and other investments, overseas firms are 16% revenue growth, 36% net income growth clearly stood out. But as always, our focus is on serving our existing clients as well as striving to add hundreds of thousands of new clients each year.

Now certainly, as the environment involves whether its due technology evolving client expectations are even regulatory changes, we feel confident that we remain ideally positioned. So, it’s definitely evolve to core for our clients, we know what happened the market plunged early in the quarter and then it rebounded sharply. And as one might expect during a quarter like that or client did tend to trade a bit more then might in a period with less volatility.

Interestingly, client cash balances remained relatively consistent, they grew pretty much in proportion to organic overall client growth that indicating, I think, the clients really didn’t panic even during that first half of the last quarter.

We continued our focus on expanding our planning capabilities with clients, we completed about 35% more financial plans for our clients and we did in the same period a year ago and also continued to grow the number of our clients who are enrolling in our advisory solutions. And our core, finally our client base continue to grow during the quarter we reached almost $10 million in active brokerage accounts and we’re claiming our way I guess, inching our way off late toward the $2.6 trillion asset level as our core net new assets exceeded $30 billion during the quarter.

So, going a little bit deeper into a couple of areas of priorities, Schwab Intelligent Portfolios continued its strong growth and new-to-firm households also continued expanding their usage. During the first quarter new-to-firm assets made up about a third of all the new investment dollars that moved in Schwab Intelligent Portfolios. We also began making some planned investments in our strategy of expanding our financial consultant and branch population, made about 25 new hires during the quarter in those areas.