In its first earnings report since acquiring TD Ameritrade in October, Charles Schwab Corp. (SCHW, Financial) recorded strong results for fourth-quarter and full-year 2020 before the opening bell on Tuesday.
As trading activity surged in the final months of the year, the Westlake, Texas-based brokerage company posted adjusted earnings of 74 cents per share for the quarter ended Dec. 31, topping Refinitiv's estimates of 71 cents by a hair. Revenue of $4.18 billion grew 60% from the prior-year quarter and also surpassed analysts' expectations of $4.01 billion.
For the full year, Charles Schwab recorded earnings of $2.45 per share on $11.7 billion in sales.
In a statement, Chief Financial Officer Peter Crawford noted the company's performance in 2020 "demonstrate[d] our ongoing success with clients and the benefits of our diversified revenue model in the face of environmental headwinds."
The company said it now operates nearly 29.6 million brokerage accounts, while total client assets for 2020 grew 66% year over year to a record $6.69 trillion as a result of gaining TD Ameritrade's assets.
In the fourth quarter, Charles Schwab added 15.77 million new clients, 14.5 million of which were created from the merger. Due to unprecedented market volatility and Covid-19 lockdowns creating a unique opportunity for individual investors, the company also saw a record number of daily average trades during the quarter at 5.8 million. As a result of this increased client activity as well as the addition of TD Ameritrade and higher interest rates, trading revenue grew 88% to $1.4 billion.
CEO Walt Bettinger noted the company's "record operating performance" along with the feat of "closing the largest brokerage acquisition in history" resulted in an "extraordinary capstone to an extraordinary year."
"Schwab's unrelenting commitment to seeing through clients' eyes helped us not only stand tall throughout the events of the past 12 months, but also enabled us to enter 2021 larger, stronger, and more capable of serving clients than ever," he added.
With a $111.5 billion market cap, shares of Charles Schwab were up 0.7% at $59.16 on Tuesday afternoon. GuruFocus estimates the stock climbed more than 10% in 2020.
Disclosure: No positions.
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