Schwab Profit Soars 68% as Ads Pull in Customers

Charles Schwab Corp.’s quarterly profit surged to its highest level in six years as the stockbrokerage continued to win over customers with lower prices and an advertising campaign highlighting the Main Street appeal of the company’s namesake founder.

The San Francisco-based company said Monday that it earned $243 million, or 19 cents a share, for the first quarter, which ended in March. That represented a 68% increase from net income of $145 million, or 11 cents a share, for the same period last year.

Revenue totaled $1.28 billion, a 21% increase from $1.06 billion last year.

The earnings matched the average estimate among analysts surveyed by Thomson Financial.

It marked the second-highest quarterly profit in Schwab’s 31-year history, exceeded by net income of $284 million in the first three months of 2000, when the brokerage was reveling in the dot-com boom.

Schwab shares fell 25 cents to $17.34.

The company’s stock price has more than doubled, recovering about $11 billion in shareholder wealth, since founder Charles Schwab returned as chief executive in July 2004, determined to revive a business mired in a slump that had triggered layoffs of more than 10,000 employees in four years.

With Schwab back in control, the brokerage returned to its discounting roots by lowering its prices to become more competitive with more nimble Internet upstarts that had been luring away some of its customers.

Although the price cutting required relinquishing revenue in the short term, Schwab figured the sacrifice would pay off in the long run by spurring customers to trade more frequently.