Brad Hintz of Bernstein summation on(Ticker: SCHW)
Schwab: Quarter Largely as Expected; Outlook Remains Bleak
• SCHW reported operating EPS of $0.13 for Q4 '11, in line with our est & mgmt guidance. Total revs of $1.11 billion were 7% above our estimate for the quarter, offset by expenses 9% above our forecast. Higher expenses were entirely related to higher comp
• The top-line beat was driven by higher commissions as December trading activity was flat better than expected. NIM compression and MMF waivers were expectedly weak and unlikely to abate in 2012. With high fixed cost base, no relief on earnings
• History suggests retail investors will remain inactive well after signs of equity mkt and macro improvement. Given severity of the downturn, it is unlikely the current cycle will prove resilient. We lower our 2012 EPS est to $0.63 and 2013 est to $0.90.