Past CFO Commentary

The commentary in this section speaks only as of the date specified below. The company makes no commitment to update any of this information.

January 16, 2014

This is my inaugural CFO Commentary. I expect to use this site regularly to provide perspectives on Schwab's financial picture, including color on our performance and details on topical issues. Over time, I can see sharing more significant financial information that might be better discussed in a forum like this, versus press releases or other forms of communication.

To start us off, I thought I'd share a few observations regarding today's earnings release.

Our fourth-quarter and full-year results demonstrate our ability to deliver standout growth in both our business and earnings without dramatic improvement in the operating environment; we simply needed the environment to stop getting worse.

With the environment less of a factor in 2013, the company produced its best financial results since the early days of the financial crisis. Those of you who've followed Schwab for a longer period of time may remember the elements of our baseline formula for producing those results—strong organic growth, plus market appreciation and modest changes in our overall pricing mix, should translate into low double-digit or better revenue growth. Coupled with that, expense discipline should yield earnings growth percentages in the mid to upper teens, and then careful capital management should yield earnings per share growth north of that. With revenue and earnings growth of 11% and 15%, respectively, we hit the first two milestones. With retained earnings still constrained in this environment, our pace of capital formation just exceeded the amount we needed to fuel the growth of the business, so the third element will have to wait a while longer. Still, our 13% improvement in EPS is significant—it's our largest increase since 2008.

I also wanted to confirm that our lower tax rate for the fourth quarter was primarily the result of a $4 million non-recurring state tax benefit. That one-timer represented less than a half-cent of EPS for the period.

We'll share a more fully developed picture of our financial objectives for 2014 during our Business Update on February 12.


Forward-looking statements

This commentary contains forward-looking statements relating to growth in the company's business, revenue and earnings; expense discipline; and growth in earnings per share. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, general market conditions, including the level of interest rates, equity valuations and trading activity; the company's ability to attract and retain clients and grow client assets/relationships; competitive pressures on rates and fees; the level of client assets, including cash balances; the company's ability to monetize client assets; capital needs and managment; the company's ability to develop and launch new products, services and capabilities in a timely and successful manner; the company's ability to manage expenses; the impact of changes in market conditions on money market fund fee waivers, revenues, expenses and pre-tax margins; regulatory guidance; acquisition integration costs; trading activity; the effect of adverse developments in litigation or regulatory matters and the extent of any charges associated with legal matters; any adverse impact of financial reform legislation and related regulations; and other factors set forth in the company's most recent reports on Form 10-K and Form 10-Q.