Charles Schwab 2010 Annual Report Download - page 3

When I look back on 2010, it reminds me of a typical early
morning in my ofce. On most mornings, the darkness and
fog give way to incredible sunshine and magical views of
the San Francisco Bay. Similarly, the environment in 2010
evolved from a time of bleakness early in the year to a time
of building optimism as the year came to a close.
Yes, our near-term nancial performance continues
to suffer from record low interest rates, but our valued
clients are increasingly engaged, and we are more
focused than ever on clients and their needs. Looking
forward to 2011, I feel a sense of optimism and
excitement. We are aggressively investing in building
our business for the long term ... and our clients are
rewarding us with their business.
In 2010, our clients brought $78.1 billion in net new
assets* to Schwab — a gure that handily outpaces the
results reported by other brokerage rms. More importantly,
client momentum strengthened as the year went on. During
the fourth quarter of 2010, clients entrusted us with $26.2
billion of net new assets, our best performance since the
rst quarter of 2008. By year-end, clients had entrusted us
with almost $1.6 trillion of their hard-earned money, up 11
percent over 2009.
How do we achieve these results? It all starts with our
unwavering belief that if you do the right thing by your
clients, they will choose to do more business with you. It’s
a simple philosophy, but one that drives every decision we
make. We call it “Through Clients’ Eyes.”
This philosophy works. Clients opened 829,000 new
brokerage accounts last year, with 99,000 of these
in December — our strongest month for new accounts
in more than eight years. We now serve more than
10 million client accounts, including approximately
8 million brokerage, 700,000 bank, and 1.5 million
retirement plan accounts.
These and many other signs indicate that the darkness
of early 2010 is beginning to transition to daylight as we
move into 2011.
IMPROVING FINANCIAL RESULTS
In 2010, our net revenues of $4.2 billion grew 1 percent
over 2009. However, consistent with momentum across
the rm, we achieved revenue growth of 14 percent
when viewing the fourth quarter of 2010 relative to the
fourth quarter of 2009. In addition, we concluded the
year with sequential quarterly improvement across all
three major sources of revenue — asset management
and administration fees, net interest revenue, and
trading revenue.
Our operating nancial performance in 2010 was quite
strong. However, our reported results were masked by
several one-time charges related to the recent nancial
crisis. Specically, we incurred charges of $320 million
for settling litigation and regulatory matters related to
a mutual fund we manage; we incurred charges of
$132 million to cover remaining losses recognized by our
To My Fellow Stockholders:
FROM WALT BETTINGER
President and Chief Executive Ocer
LETTER FROM THE CHIEF EXECUTIVE OFFICER 1
* Excluding $51.5 billion in institutional withdrawals from our low-revenue mutual fund clearing unit