Schwab Reports Fourth Quarter Earnings Per Share of $.57 GAAP, $.74 Adjusted (1), Bringing Full-Year Results to $2.12 and $2.45, Respectively

Rhea-AI Summary

The Charles Schwab Corporation reported net income of $1.1 billion for Q4 2020, a 33% increase from Q4 2019. Total net income for the year decreased to $3.3 billion from $3.7 billion in 2019. Net revenues surged by 60% to $4.176 billion in Q4, while annual revenues rose 9% to $11.691 billion. The company recorded $281.9 billion in core net new assets, with total client assets reaching a record $6.69 trillion. Key acquisitions in 2020, including TD Ameritrade, were highlighted as pivotal for growth.

Positive

• Net income for Q4 2020 increased by 33% year-over-year.
• Total client assets reached a record $6.69 trillion, up 66% from the previous year.
• Core net new assets totaled $281.9 billion, including a record $119.4 billion in Q4.
• Trading revenue rose by 88% to $1.4 billion.
• Schwab's Q4 net revenues increased by 60% compared to the previous year.

Negative

• Annual net income decreased by 11% compared to 2019.
• Diluted earnings per share (EPS) decreased by 21% year-over-year.
• GAAP pre-tax profit margin dropped to 36.8% from 45.2% in 2019.

The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2020 was $1.1 billion, compared with $698 million for the third quarter of 2020, and $852 million for the fourth quarter of 2019. Net income for the twelve months ended December 31, 2020 was $3.3 billion, compared with $3.7 billion for the year-earlier period. The company’s financial results include TD Ameritrade from closing on October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. Together these transaction-related expenses totaled $429 million and $632 million on a pre-tax basis, for the fourth quarter and full-year 2020, respectively.

Beginning with the second quarter of 2020, the company’s financial presentations include references to adjusted measures of expenses, net income, diluted earnings per common share, and pre-tax profit margin, as well as return on tangible common equity (ROTCE), which are intended to help investors evaluate Schwab’s operating performance as well as facilitate a meaningful comparison of our current results to both historic and future periods.

		Three Months Ended December 31,								%		Twelve Months Ended December 31,								%
Financial Highlights		2020				2019				Change		2020				2019				Change
Net revenues (in millions)		$	4,176			$	2,606			60%		$	11,691			$	10,721			9%
Net income (in millions)
GAAP		$	1,135			$	852			33%		$	3,299			$	3,704			(11)%
Adjusted (1)		$	1,459			$	871			68%		$	3,777			$	3,744			1%
Diluted earnings per common share
GAAP		$	.57			$	.62			(8)%		$	2.12			$	2.67			(21)%
Adjusted (1)		$	.74			$	.63			17%		$	2.45			$	2.70			(9)%
Pre-tax profit margin
GAAP		35.3		%		42.7		%				36.8		%		45.2		%
Adjusted (1)		45.6		%		43.6		%				42.2		%		45.7		%
Return on average common
stockholders’ equity (annualized)		11		%		17		%				9		%		19		%
Return on tangible
common equity (annualized) (1)		21		%		19		%				15		%		21		%

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
(1)		Further details on non-GAAP financial measures and a reconciliation of such measures to reported results are included on pages 11-12 of this release.

CEO Walt Bettinger said, “Producing record operating performance and closing the largest brokerage acquisition in history during the fourth quarter of 2020 was 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 twelve months, but also enabled us to enter 2021 larger, stronger, and more capable of serving clients than ever.”

“The impact of COVID-19, along with social and political turmoil, created an unprecedented combination of personal and macroeconomic challenges for our clients, employees and stockholders alike,” Mr. Bettinger continued. “The pandemic’s rapid escalation in early 2020 was accompanied by volatile equity markets and further easing of monetary policy. As the year progressed, government aid packages and vaccine developments helped settle the markets, with the S&P 500^® eventually erasing its pandemic-related losses to finish up 16% from December 2019. Against this backdrop, client engagement with the financial markets rose to record levels – pro-forma combined new-to-firm households increased more than 175% compared to 2019, with the number of households placing trades up more than 50% year-over-year. Our clients also continued to set numerous single-day trading records, including a peak of 7.8 million trades on November 9. As we collectively focused on helping clients navigate the trials of this environment, they rewarded us with a record $281.9 billion in core net new assets – including a record $119.4 billion in the fourth quarter – exceeding $200 billion for the third consecutive year. At December 31, total client assets reached a record of $6.69 trillion spread across 29.6 million brokerage accounts, up 66% and 140%, respectively, from a year ago.”

Mr. Bettinger added, “Throughout 2020, we persisted in executing our strategy, working tirelessly to reinforce our overall value proposition and share the benefits of increased scale with our clients. Notable solutions introduced during the year included Schwab Intelligent Income^® and Schwab Plan^TM, each designed to assist with key investing and planning needs. In addition, we made several enhancements to our mobile app – which supported 2.6 million unique users during the year, up 54% from 2019 – such as the integration of Schwab Intelligent Portfolios^® as well as the launch of Schwab Assistant, a chatbot that enables clients to intuitively perform tasks on-demand. Our ongoing investments in technology that improve both the client experience and our efficiency helped us to accommodate unprecedented levels of activity in 2020 – Schwab alone handled 2.3 billion total interactions across web, mobile, chat, and direct messaging. Access to guidance remains extremely important in this environment. Advised assets made up roughly half of our overall client assets at December 31, and assets enrolled in digital advisory ended the year at $57.9 billion, up 18%. For our registered investment advisor clients, we’ve made strides in improving our service delivery by better aligning advisors with the teams and resources that support their particular needs. Additionally, we continued to expand our digital service capabilities to help advisors more seamlessly and efficiently support existing clients, cultivate new relationships, and scale their businesses. We also celebrated the 30^th anniversary of Schwab IMPACT^® with a virtual format that included advisors who custody client assets with TD Ameritrade for the first time. The conference brought together participants from around the country in an interactive forum, with a record 2,200 advisors in attendance. Our focus remains unchanged as we work to create a combined custodian positioned to deliver top-quality service and value to advisors of all sizes across a rapidly growing industry.

“In addition to TD Ameritrade, we also successfully closed three other acquisitions during the year, which each support our key strategic initiatives in unique ways. The USAA transaction added incremental scale as we welcomed over 1 million new accounts and $80 billion in brokerage and wealth management client assets, as well as a long-term referral arrangement, which is well underway. The acquisition of Motif’s technology and hiring of their staff enables us to accelerate progress on personalized investing capabilities. Similarly, Wasmer Schroeder^TM Strategies advances our efforts to develop proprietary solutions that benefit clients by allowing us to deliver a range of fixed income offerings designed specifically to meet our clients’ needs. And finally, TD Ameritrade not only builds scale, but also supports our ability to meet specific needs across client segments.”

Mr. Bettinger concluded, “As I reflect on 2020, I feel a deep sense of gratitude – to our clients, for entrusting us with record levels of new business, to our employees for their diligent commitment to serving others while balancing the health and safety of their own families, and to our stockholders, for focusing on the long-term, despite a volatile year and another round of accommodative interest rate policies instituted by the Federal Reserve. Pulling off our to-do list in an environment like the past twelve months takes a very special team, and I am more certain than ever that we have the talent, culture, and client-first strategy needed to successfully pursue the tremendous growth opportunities still ahead of us.”

CFO Peter Crawford commented, “Schwab’s 2020 financial results, which include TD Ameritrade from October 6 forward, demonstrate our ongoing success with clients and the benefits of our diversified revenue model in the face of environmental headwinds. During March, the Federal Reserve acted to support the economy by cutting the Fed Funds rate from 1.75% to near zero and announcing sizeable asset purchase programs. Mortgage refinancing activity subsequently accelerated and our net interest margin was impacted by both historically low rates and increased prepayments of mortgage-backed securities held in our investment portfolio. Strong growth in interest-earning assets via client asset inflows and allocation decisions, as well as our TD Ameritrade acquisition, helped limit the resulting year-over-year decline in net interest revenue to just 6% to $6.1 billion. Growing balances in advisory solutions and a robust rebound in equity markets led to an 8% increase in asset management and administration fees to $3.5 billion. Record client trading activity, and the addition of TD Ameritrade, led to an 88% increase in trading revenue to $1.4 billion – even as we absorbed a full-year impact of the commission reductions we implemented late in 2019. With the TD Ameritrade acquisition, our fourth quarter results included bank deposit account (BDA) fee revenue for the first time, which totaled $355 million for the period from close to year-end. BDA balances grew by 6% during that period and ended the year at $165.9 billion. Overall, while both Schwab and TD Ameritrade were performing well independently, we believe our first reported results as a combined firm help support the case that we’re creating an even more resilient business, producing fourth quarter revenues that were up 60% relative to standalone Schwab on a year-over-year basis.”

“On the expense front, our 2020 spending was in-line with expectations given our acquisition activities, along with the need to support our clients and employees as they navigated uniquely challenging environmental stresses,” Mr. Crawford continued. “Total GAAP expenses increased 26% to $7.4 billion for the year, which encompassed $442 million in acquisition and integration-related costs and $190 million in amortization of acquired intangibles. Exclusive of these items ⁽¹⁾, adjusted total expenses were up 16% year-over-year, with approximately 13% attributable to including our acquisitions for part of 2020. The challenges of the past twelve months notwithstanding, our flexibility as an organization enabled us to successfully harness efficiencies and leverage our scale in order to produce a still-solid 36.8% pre-tax profit margin (42.2% on an adjusted basis) and a 9% return on equity (15% ROTCE) for the year ⁽¹⁾.”

Mr. Crawford added, “Last year’s combination of stiff revenue headwinds and remarkable growth provides a clear example of why we remain focused on building a strong balance sheet capable of supporting our business in any environment. Our consolidated balance sheet grew 87% to end the year at $549 billion, reflecting both our substantial organic growth and the absorption of TD Ameritrade’s margin book and other interest-earning assets. We ended the year with a preliminary consolidated Tier 1 Leverage Ratio of 6.3%, which reflects the impact of that acquisition as well as the issuance of an additional $2.5 billion of preferred equity in early December.”

Mr. Crawford concluded, “2020 was an intensely challenging year in which we stayed true to our heritage. Together, our expanded team pushed through the business obstacles triggered by COVID-19 – uncertainty, volatility, and complexity – to effectively balance near-term profitability with driving strategic progress and helping solidify our competitive positioning. While we cannot predict what the future holds, we know that consistent growth is only made possible by managing for the long-term and serving our clients with clarity and focus – regardless of the circumstances.”

⁽¹⁾ Further details on non-GAAP financial measures and a reconciliation of such measures to reported results are included on pages 11-12 of this release.

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on The Charles Schwab Corporation’s recently completed acquisition of TD Ameritrade, was posted on October 6, 2020.

Winter Business Update

The company has scheduled a Winter Business Update for institutional investors on Tuesday, February 2, 2021. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 12:30 p.m. PT, 11:00 a.m. - 3:30 p.m. ET. Registration for this Update is accessible at https://www.schwabevents.com/corporation.

Forward-Looking Statements

This press release contains forward-looking statements relating to investments and acquisitions to improve the client experience, expand products and services to meet client needs, diversify revenues, and drive scale and efficiency; growth opportunities; the integration of TD Ameritrade; growth in the client base, accounts, and assets; building a strong balance sheet; and balancing near-term profitability with ongoing investment to support current and long-term growth. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure, in a timely and successful manner; the ability to support client activity levels; the ability to successfully implement integration strategies and plans; the risk that expected revenue and expense synergies and other benefits from recent acquisitions may not be fully realized or may take longer to realize than expected; general market conditions, including equity valuations, trading activity, and credit spreads; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; client use of the company’s advisory solutions and other products and services; capital and liquidity needs and management; client cash allocations; client sensitivity to rates; the level of client assets, including cash balances; the company’s ability to monetize client assets; the company’s ability to manage expenses; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 29.6 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.5 million banking accounts, and approximately $6.69 trillion in client assets. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly-owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2020				2019				2020				2019
Net Revenues
Interest revenue		$	1,905			$	1,763			$	6,531			$	7,580
Interest expense		(96)				(168)				(418)				(1,064)
Net interest revenue		1,809				1,595				6,113				6,516
Asset management and administration fees (1)		987				845				3,475				3,211
Trading revenue (2)		854				122				1,416				752
Bank deposit account fees		355				—				355				—
Other (2)		171				44				332				242
Total net revenues		4,176				2,606				11,691				10,721
Expenses Excluding Interest
Compensation and benefits		1,398				806				3,954				3,320
Professional services		269				186				843				702
Occupancy and equipment		254				151				703				559
Advertising and market development		123				90				326				307
Communications		127				66				353				253
Depreciation and amortization (3)		130				87				414				322
Amortization of acquired intangible assets (3)		147				7				190				27
Regulatory fees and assessments		57				30				163				122
Other		195				71				445				261
Total expenses excluding interest		2,700				1,494				7,391				5,873
Income before taxes on income		1,476				1,112				4,300				4,848
Taxes on income		341				260				1,001				1,144
Net Income		1,135				852				3,299				3,704
Preferred stock dividends and other		85				51				256				178
Net Income Available to Common Stockholders		$	1,050			$	801			$	3,043			$	3,526
Weighted-Average Common Shares Outstanding:
Basic		1,848				1,284				1,429				1,311
Diluted		1,855				1,293				1,435				1,320
Earnings Per Common Shares Outstanding (4):
Basic		$	.57			$	.62			$	2.13			$	2.69
Diluted		$	.57			$	.62			$	2.12			$	2.67

Note: The Consolidated Statements of Income include the results of operations for TD Ameritrade beginning October 6, 2020, including bank deposit account fee revenue, as described in Part I – Item 1 – Note 17 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
(1)		Includes fee waivers of $68 million and $127 million for the three and twelve months ended December 31, 2020, respectively.
(2)		Beginning in the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change.
(3)		Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.
(4)		For the three and twelve months ended December 31, 2020, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
		Q4-20 % change							2020																2019
		vs.			vs.				Fourth				Third				Second				First				Fourth
(In millions, except per share amounts and as noted)		Q4-19			Q3-20				Quarter				Quarter				Quarter				Quarter				Quarter
Net Revenues
Net interest revenue		13	%		35	%			$	1,809			$	1,343			$	1,389			$	1,572			$	1,595
Asset management and administration fees		17	%		15	%			987				860				801				827				845
Trading revenue (1)		N/M			N/M				854				181				193				188				122
Bank deposit account fees		N/M			N/M				355				—				—				—				—
Other (1)		N/M			167	%			171				64				67				30				44
Total net revenues		60	%		71	%			4,176				2,448				2,450				2,617				2,606
Expenses Excluding Interest
Compensation and benefits		73	%		66	%			1,398				840				819				897				806
Professional services		45	%		39	%			269				194				198				182				186
Occupancy and equipment		68	%		64	%			254				155				152				142				151
Advertising and market development		37	%		86	%			123				66				70				67				90
Communications		92	%		74	%			127				73				78				75				66
Depreciation and amortization (2)		49	%		34	%			130				97				97				90				87
Amortization of acquired intangible assets (2)		N/M			N/M				147				25				12				6				7
Regulatory fees and assessments		90	%		58	%			57				36				36				34				30
Other		175	%		167	%			195				73				100				77				71
Total expenses excluding interest		81	%		73	%			2,700				1,559				1,562				1,570				1,494
Income before taxes on income		33	%		66	%			1,476				889				888				1,047				1,112
Taxes on income		31	%		79	%			341				191				217				252				260
Net Income		33	%		63	%			$	1,135			$	698			$	671			$	795			$	852
Preferred stock dividends and other		67	%		2	%			85				83				50				38				51
Net Income Available to Common Stockholders		31	%		71	%			$	1,050			$	615			$	621			$	757			$	801
Earnings per common share (3):
Basic		(8)	%		19	%			$	.57			$	.48			$	.48			$	.59			$	.62
Diluted		(8)	%		19	%			$	.57			$	.48			$	.48			$	.58			$	.62
Dividends declared per common share		6	%		—				$	.18			$	.18			$	.18			$	.18			$	.17
Weighted-average common shares outstanding:
Basic		44	%		43	%			1,848				1,289				1,288				1,287				1,284
Diluted		43	%		43	%			1,855				1,294				1,294				1,294				1,293
Performance Measures
Pre-tax profit margin									35.3		%		36.3		%		36.2		%		40.0		%		42.7		%
Return on average common stockholders’ equity (annualized) (4)									11		%		10		%		10		%		14		%		17		%
Financial Condition (at quarter end, in billions)
Cash and cash equivalents		38	%		47	%			$	40.3			$	27.5			$	33.6			$	68.5			$	29.3
Cash and investments segregated		146	%		70	%			50.4				29.6				33.2				34.3				20.5
Receivables from brokerage clients — net		195	%		154	%			64.4				25.4				21.4				19.0				21.8
Available for sale securities (5)		N/M			11	%			337.4				303.8				281.2				221.2				61.4
Held to maturity securities (5)		(100)	%		—				—				—				—				—				134.7
Bank loans — net		31	%		7	%			23.8				22.3				20.9				19.5				18.2
Total assets		87	%		31	%			549.0				419.4				400.5				370.8				294.0
Bank deposits		63	%		12	%			358.0				320.7				301.6				277.5				220.1
Payables to brokerage clients		166	%		100	%			104.2				52.0				50.1				49.3				39.2
Long-term debt		84	%		74	%			13.6				7.8				8.5				8.5				7.4
Stockholders’ equity		159	%		79	%			56.1				31.3				30.8				26.3				21.7
Other
Full-time equivalent employees (at quarter end, in thousands)		62	%		45	%			32.0				22.1				21.8				20.2				19.7
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)		(4)	%		64	%			$	200			$	122			$	169			$	250			$	209
Expenses excluding interest as a percentage of average client assets (annualized)									0.17		%		0.14		%		0.16		%		0.16		%		0.15		%
Clients’ Daily Average Trades (DATs) (in thousands)		N/M			N/M				5,796				1,460				1,619				1,540				785
Number of Trading Days		—			(2)	%			63.0				64.0				63.0				62.0				63.0
Revenue Per Trade (6)		(5)	%		21	%			$	2.34			$	1.94			$	1.89			$	1.97			$	2.47

Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at provisional fair value as of October 6, 2020. Results of operations and metrics are inclusive of TD Ameritrade beginning October 6, 2020.
(1)		Beginning in the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change.
(2)		Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.
(3)		During the fourth quarter of 2020, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
(4)		Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(5)		On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part I – Item 1 – Note 5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
(6)		Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.
N/M Not meaningful.

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions, except ratios or as noted)
(Unaudited)
		Three Months Ended December 31,																								Twelve Months Ended December 31,
		2020												2019												2020												2019
		Average Balance				Interest Revenue/ Expense				Average Yield/ Rate				Average Balance				Interest Revenue/ Expense				Average Yield/ Rate				Average Balance				Interest Revenue/ Expense				Average Yield/ Rate				Average Balance				Interest Revenue/ Expense				Average Yield/ Rate
Interest-earning assets
Cash and cash equivalents		$	35,008			$	8			0.09	%			$	20,563			$	86			1.64	%			$	39,052			$	120			0.30	%			$	23,512			$	518			2.17	%
Cash and investments segregated		45,828				13				0.11	%			18,434				81				1.71	%			34,100				141				0.41	%			15,694				345				2.17	%
Receivables from brokerage clients		53,719				444				3.23	%			19,241				185				3.77	%			28,058				848				2.97	%			19,270				821				4.20	%
Available for sale securities (1,2)		305,231				1,103				1.44	%			56,528				357				2.51	%			253,555				4,537				1.78	%			58,181				1,560				2.67	%
Held to maturity securities (2)		—				—				—				136,717				870				2.53	%			—				—				—				134,708				3,591				2.65	%
Bank loans		22,971				134				2.34	%			17,457				141				3.22	%			20,932				545				2.60	%			16,832				584				3.47	%
Total interest-earning assets		462,757				1,702				1.46	%			268,940				1,720				2.53	%			375,697				6,191				1.64	%			268,197				7,419				2.75	%
Securities lending revenue (3)						201												41												334												147
Other interest revenue (3)						2												2												6												14
Total interest-earning assets (4)		$	462,757			$	1,905			1.63	%			$	268,940			$	1,763			2.59	%			$	375,697			$	6,531			1.73	%			$	268,197			$	7,580			2.80	%
Funding sources
Bank deposits		$	336,912			$	12			0.01	%			$	211,172			$	84			0.16	%			$	291,206			$	93			0.03	%			$	212,605			$	700			0.33	%
Payables to brokerage clients		77,160				2				0.01	%			27,051				11				0.16	%			46,347				12				0.02	%			24,353				79				0.33	%
Short-term borrowings (5)		306				—				0.19	%			11				—				1.72	%			89				—				0.20	%			17				—				2.36	%
Long-term debt		11,903				77				2.59	%			7,428				66				3.54	%			8,992				289				3.22	%			7,199				258				3.58	%
Total interest-bearing liabilities		426,281				91				0.09	%			245,662				161				0.26	%			346,634				394				0.11	%			244,174				1,037				0.42	%
Non-interest-bearing funding sources (4)		36,476												23,278												29,063												24,023
Securities lending expense (3)						7												9												33												38
Other interest expense (3)						(2)												(2)												(9)												(11)
Total funding sources (4)		$	462,757			$	96			0.08	%			$	268,940			$	168			0.25	%			$	375,697			$	418			0.11	%			$	268,197			$	1,064			0.39	%
Net interest revenue						$	1,809			1.55	%							$	1,595			2.34	%							$	6,113			1.62	%							$	6,516			2.41	%

Note: The above table reflects the acquisition of TD Ameritrade, effective October 6, 2020.
(1)		Amounts have been calculated based on amortized cost.
(2)		On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part I – Item 1 – Note 5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
(3)		Beginning in the fourth quarter of 2020, securities lending revenue has been reclassified from broker-related receivables and other revenue. Securities lending expense has been reclassified from other expense. Prior period amounts have been reclassified to reflect this change.
(4)		Beginning in the fourth quarter of 2020, broker-related receivables were removed from total interest earning assets and netted against non-interest-bearing funding sources, resulting in an immaterial reduction to total interest-earning assets and total funding sources. Prior period amounts have been reclassified to reflect this change.
(5)		Interest revenue or expense was less than $500 thousand in the period or periods presented.

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions, except ratios or as noted)
(Unaudited)
		Three Months Ended December 31,																								Twelve Months Ended December 31,
		2020												2019												2020												2019
		Average Client Assets				Revenue				Average Fee				Average Client Assets				Revenue				Average Fee				Average Client Assets				Revenue				Average Fee				Average Client Assets				Revenue				Average Fee
Schwab money market funds before fee waivers		$	183,846			$	136			0.29	%			$	196,074			$	147			0.30	%			$	200,119			$	605			0.30	%			$	173,558			$	525			0.30	%
Fee waivers						(68)												—												(127)												—
Schwab money market funds		183,846				68				0.15	%			196,074				147				0.30	%			200,119				478				0.24	%			173,558				525				0.30	%
Schwab equity and bond funds, ETFs, and collective trust funds (CTFs)		334,113				81				0.10	%			288,750				79				0.11	%			301,598				300				0.10	%			267,213				298				0.11	%
Mutual Fund OneSource® and other non- transaction fee funds		208,397				163				0.31	%			193,665				154				0.32	%			192,464				599				0.31	%			191,552				606				0.32	%
Other third-party mutual funds and ETFs (1,2)		763,494				158				0.08	%			462,466				80				0.07	%			525,379				393				0.07	%			478,037				318				0.07	%
Total mutual funds, ETFs, and CTFs (3)		$	1,489,850			470				0.13	%			$	1,140,955			460				0.16	%			$	1,219,560			1,770				0.15	%			$	1,110,360			1,747				0.16	%
Advice solutions (3)
Fee-based		$	392,148			444				0.45	%			$	262,516			320				0.48	%			$	306,010			1,443				0.47	%			$	246,888			1,198				0.49	%
Non-fee-based		78,332				—				—				73,356				—				—				73,161				—				—				70,191				—				—
Total advice solutions		$	470,480			444				0.38	%			$	335,872			320				0.38	%			$	379,171			1,443				0.38	%			$	317,079			1,198				0.38	%
Other balance-based fees (4)		520,830				58				0.04	%			443,814				54				0.05	%			451,350				208				0.05	%			432,613				216				0.05	%
Other (5)						15												11												54												50
Total asset management and administration fees						$	987											$	845											$	3,475											$	3,211

(1)		Beginning in the fourth quarter of 2020 includes TD Ameritrade money market funds.
(2)		Beginning in the fourth quarter of 2019, Schwab ETF OneSourceTM was discontinued as a result of the elimination of online trading commissions for U.S. and Canadian-listed ETFs.
(3)		Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, Schwab Intelligent Portfolios PremiumTM, TD Ameritrade AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.
(4)		Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(5)		Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)
		Q4-20 % Change							2020																2019
		vs.			vs.				Fourth				Third				Second				First				Fourth
(In billions, at quarter end, except as noted)		Q4-19			Q3-20				Quarter				Quarter				Quarter				Quarter				Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and bank deposits		79	%		24	%			$	458.4			$	370.3			$	349.2			$	324.4			$	256.7
Bank deposit account balances		N/M			N/M				165.9				—				—				—				—
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
Money market funds (1)		(12)	%		(7)	%			176.1				190.3				211.6				203.7				200.8
Equity and bond funds and CTFs (2)		17	%		14	%			142.9				125.5				117.0				99.1				122.5
Total proprietary mutual funds and CTFs		(1)	%		1	%			319.0				315.8				328.6				302.8				323.3
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other non-transaction fee funds		11	%		10	%			223.9				203.6				193.0				161.6				202.1
Mutual fund clearing services		16	%		11	%			252.9				228.4				217.3				180.8				217.4
Other third-party mutual funds (4)		58	%		54	%			1,304.6				848.1				796.5				676.2				824.5
Total Mutual Fund Marketplace		43	%		39	%			1,781.4				1,280.1				1,206.8				1,018.6				1,244.0
Total mutual fund assets		34	%		32	%			2,100.4				1,595.9				1,535.4				1,321.4				1,567.3
Exchange-traded funds (ETFs)
Proprietary ETFs (2)		21	%		18	%			198.8				168.9				156.3				136.5				163.8
Other third-party ETFs		107	%		85	%			947.3				512.6				468.0				382.5				457.0
Total ETF assets		85	%		68	%			1,146.1				681.5				624.3				519.0				620.8
Equity and other securities		95	%		72	%			2,504.7				1,453.2				1,305.8				1,035.5				1,286.4
Fixed income securities		15	%		19	%			377.1				318.0				314.8				313.8				327.1
Margin loans outstanding		N/M			158	%			(60.9)				(23.6)				(19.4)				(17.2)				(19.5)
Total client assets		66	%		52	%			$	6,691.7			$	4,395.3			$	4,110.1			$	3,496.9			$	4,038.8
Client assets by business
Investor Services		72	%		54	%			$	3,667.9			$	2,377.7			$	2,223.5			$	1,846.8			$	2,131.0
Advisor Services		58	%		50	%			3,023.8				2,017.6				1,886.6				1,650.1				1,907.8
Total client assets		66	%		52	%			$	6,691.7			$	4,395.3			$	4,110.1			$	3,496.9			$	4,038.8
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (5)		N/M			N/M				$	939.2			$	18.9			$	113.0			$	35.3			$	43.1
Advisor Services (6)		N/M			N/M				751.5				32.3				24.4				37.9				34.2
Total net new assets		N/M			N/M				$	1,690.7			$	51.2			$	137.4			$	73.2			$	77.3
Net market gains (losses)		N/M			N/M				605.7				234.0				475.8				(615.1)				193.1
Net growth (decline)		N/M			N/M				$	2,296.4			$	285.2			$	613.2			$	(541.9)			$	270.4
New brokerage accounts (in thousands, for the quarter ended) (7)		N/M			N/M				15,774				592				1,652				609				433
Client accounts (in thousands)
Active brokerage accounts		140	%		106	%			29,629				14,393				14,107				12,736				12,333
Banking accounts		8	%		1	%			1,499				1,486				1,463				1,426				1,390
Corporate retirement plan participants		18	%		19	%			2,054				1,722				1,716				1,721				1,748

(1)		Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.
(2)		Includes balances held on and off the Schwab platform. As of December 31, 2020, off-platform equity and bond funds, CTFs, and ETFs were $16.6 billion, $5.6 billion, and $59.3 billion, respectively.
(3)		Excludes all proprietary mutual funds and ETFs.
(4)		Fourth quarter of 2020 includes third-party money funds of $19.7 billion related to the acquisition of TD Ameritrade.
(5)		Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade. Second quarter of 2020 includes inflows of $79.9 billion related to the acquisition of the assets of USAA’s Investment Management Company and $10.9 billion from a mutual fund clearing services client. Fourth quarter of 2019 includes an inflow of $11.1 billion from a mutual fund clearing services client.
(6)		Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade. Third quarter of 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC.
(7)		Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. Second quarter of 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAA’s Investment Management Company.
N/M Not meaningful.

The Charles Schwab Corporation Monthly Activity Report For December 2020
		2019			2020																																				Change
		Dec			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			Mo.			Yr.
Market Indices (at month end)
Dow Jones Industrial Average		28,538			28,256			25,409			21,917			24,346			25,383			25,813			26,428			28,430			27,782			26,502			29,639			30,606			3	%		7	%
Nasdaq Composite		8,973			9,151			8,567			7,700			8,890			9,490			10,059			10,745			11,775			11,168			10,912			12,199			12,888			6	%		44	%
Standard & Poor’s 500		3,231			3,226			2,954			2,585			2,912			3,044			3,100			3,271			3,500			3,363			3,270			3,622			3,756			4	%		16	%
Client Assets (in billions of dollars)
Beginning Client Assets		3,942.2			4,038.8			4,051.6			3,862.8			3,496.9			3,778.3			4,009.0			4,110.1			4,278.0			4,489.7			4,395.3			5,878.5			6,421.0
Net New Assets (1)		30.1			20.9			24.4			27.9			15.3			97.5			24.6			11.2			20.0			20.0			1,596.9			32.1			61.7			92	%		105	%
Net Market Gains (Losses)		66.5			(8.1)			(213.2)			(393.8)			266.1			133.2			76.5			156.7			191.7			(114.4)			(113.7)			510.4			209.0
Total Client Assets (at month end)		4,038.8			4,051.6			3,862.8			3,496.9			3,778.3			4,009.0			4,110.1			4,278.0			4,489.7			4,395.3			5,878.5			6,421.0			6,691.7			4	%		66	%
Core Net New Assets (2)		30.1			20.9			24.4			27.9			15.3			17.6			13.7			2.7			20.0			20.0			25.6			32.1			61.7			92	%		105	%
Receiving Ongoing Advisory Services (at month end)(3)
Investor Services		337.1			336.8			323.2			291.5			309.9			339.8			345.2			355.6			366.8			361.2			425.3			457.1			471.8			3	%		40	%
Advisor Services (4)		1,769.7			1,773.2			1,694.0			1,531.3			1,647.9			1,711.7			1,747.5			1,818.5			1,900.5			1,870.1			2,505.5			2,715.7			2,828.3			4	%		60	%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts		12,333			12,431			12,521			12,736			12,866			14,007			14,107			14,220			14,311			14,393			29,013			29,202			29,629			1	%		140	%
Banking Accounts		1,390			1,403			1,411			1,426			1,439			1,448			1,463			1,480			1,493			1,486			1,496			1,504			1,499			—			8	%
Corporate Retirement Plan Participants		1,748			1,732			1,726			1,721			1,696			1,714			1,716			1,712			1,715			1,722			2,072			2,045			2,054			—			18	%
Client Activity
New Brokerage Accounts (in thousands) (5)		164			167			159			283			201			1,250			201			206

FAQ

What was Schwab's net income for Q4 2020?

Schwab's net income for Q4 2020 was $1.1 billion.

How did Schwab's annual revenue change in 2020?

Schwab's annual revenue increased by 9% to $11.691 billion in 2020.

What record did Schwab achieve in client assets?

Schwab reached a record total client assets of $6.69 trillion.

What was the increase in trading revenue for Schwab in Q4 2020?

Trading revenue increased by 88% to $1.4 billion in Q4 2020.

What impact did acquisitions have on Schwab's financial results?

Acquisitions, particularly TD Ameritrade, significantly contributed to Schwab's revenue growth.