The Charles Schwab Corporation (SCHW) will receive a $6 million investment from the Texas Enterprise Fund for churning out more than 1200 jobs by spreading its wings in El Paso as well as Austin. Shares of the company have gone down roughly 1% since the declaration by the governor of the fund.
Despite the announcement of Schwab’s expansion plans, investors remain apprehensive given the company’s declining trading revenues, higher provision for loan losses and elevated expenses.
Schwab will expand its operations in Austin and target adding 823 jobs and appreciating capital to $210 million over the next 10 years in return for $4.5 million provided by the fund.
Similarly, the company will extend its activities through an operation center in El Paso with an aim to produce 445 jobs and $21.5 million in capital investment within 10 years. An incentive of $1.45 million will be granted for the same by the fund.
About the State Fund
The Texas Enterprise Fund is a business incentive fund that was created by legislation in 2003. The fund is used to ensure business growth in Texas by attracting new business to the state or to assist the substantial expansion of an existing business.
According to the governor, the fund has spent approximately $560 million and created around 75,000 jobs since its inception. However, a few legislators have voiced their concern regarding lack of transparency in the current deal.
In the persisting low interest rate scenario and slow economic growth environment where most of the companies are competing to cut back costs by mass layoffs, Schwab’s efforts for job creation and expansion are impressive.
Currently, Schwab carries a Zacks Rank #3 (Hold). Some better-ranked investment banks include Piper Jaffray Companies (PJC), FBR & Co. (FBRC) and The Goldman Sachs Group, Inc. (GS). All these stocks hold a Zacks Rank #2 (Buy).