Schwab Reports Record Quarterly and Full-Year Earnings Per Share

Rhea-AI Summary

The Charles Schwab Corporation reported a record net income of $1.6 billion for Q4 2021, up from $1.1 billion in Q4 2020. Full-year 2021 net income reached $5.9 billion, a 77% increase year-over-year. The company achieved record core net new assets of $162.2 billion in Q4, totaling $558.2 billion for the year, reflecting an 8% organic growth rate. Client assets rose 22% to $8.14 trillion. Despite transaction-related costs of $255 million in Q4, the pre-tax profit margin was 43%. CEO Walt Bettinger noted strong client engagement amidst fluctuating market conditions.

Positive

• Record Q4 net income of $1.6 billion, up 39% year-over-year.
• Full-year net income of $5.9 billion, a 77% increase from the previous year.
• Core net new assets of $162.2 billion for Q4, a record high.
• Total client assets reached $8.14 trillion, up 22% from December 2020.
• Pre-tax profit margin at 43.0%, reflecting strong profitability.

Negative

• Transaction-related costs of $255 million in Q4 and $1.1 billion for the year.

Quarterly and Annual Core Net New Assets Total $162.2 Billion and $558.2 Billion, Both Records

Total Client Assets Reach a Record $8.14 Trillion at Year-end, up 22% Versus December 2020

WESTLAKE, Texas--(BUSINESS WIRE)-- The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2021 was a record $1.6 billion compared with $1.5 billion for the third quarter of 2021, and $1.1 billion for the fourth quarter of 2020. Net income for the twelve months ended December 31, 2021 was a record $5.9 billion, compared with $3.3 billion for the year-earlier period. The company’s financial results include TD Ameritrade from October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. For the fourth quarter and the twelve months of 2021, these transaction-related expenses totaled $255 million and $1.1 billion, respectively, on a pre-tax basis.

		Three Months Ended December 31,								%			Twelve Months Ended December 31,								%
Financial Highlights (1)		2021				2020				Change			2021				2020				Change
Net revenues (in millions)		$	4,708			$	4,176			13	%		$	18,520			$	11,691			58	%
Net income (in millions)
GAAP		$	1,580			$	1,135			39	%		$	5,855			$	3,299			77	%
Adjusted (1)		$	1,775			$	1,459			22	%		$	6,670			$	3,777			77	%
Diluted earnings per common share
GAAP		$	.76			$	.57			33	%		$	2.83			$	2.12			33	%
Adjusted (1)		$	.86			$	.74			16	%		$	3.25			$	2.45			33	%
Pre-tax profit margin
GAAP			43.0	%			35.3	%						41.6	%			36.8	%
Adjusted (1)			48.4	%			45.6	%						47.5	%			42.2	%
Return on average common stockholders’ equity (annualized)			12	%			11	%						11	%			9	%
Return on tangible common equity (annualized) (1)			24	%			21	%						22	%			15	%

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 GAAP reported results are included on pages 11-12 of this release.

CEO Walt Bettinger said, “We delivered another year of record-breaking growth and financial performance in 2021 by staying true to our 'Through Clients’ Eyes' strategy in the face of a fluctuating environment. That shifting picture included strengthening investor optimism early on, fueled by an advancing economic recovery, expanding vaccine rollouts and government aid packages. Then came increasing debates regarding the overall pace of economic growth, the potential path of inflation, and the ultimate impact of multiple global market disruptions. After rising throughout the first half of 2021, the major equity indices were essentially flat during the summer months before the ongoing recovery helped them close the year at near-record levels. While short-term interest rates remained near zero throughout the year, longer-term rates began to rise initially, then eased and rose again in keeping with the economic outlook - the 10-year Treasury yield finally ended 2021 at 1.52%, up 59 basis points from year-end 2020.”

Mr. Bettinger continued, “Investors remained actively engaged with the markets throughout the year, and our competitive positioning as a trusted financial partner offering both value and service continued to resonate in the marketplace. While some measures of engagement eased from the extraordinary levels seen during the first quarter 2021 ‘re-opening’ surge, activity generally exceeded the fourth quarter of 2020, when we included TD Ameritrade in our results for the first time, and core net new assets set yet another record over the final three months of 2021 at $162.2 billion. Clients brought us $80.3 billion in December alone, 28% above our prior single-month record, and our full-year total of $558.2 billion represents an 8% annual organic growth rate. We ended the year with $8.14 trillion in client assets across 33.2 million brokerage accounts, increases of 22% and 12%, respectively.”

Mr. Bettinger added, “Even as we worked to support unprecedented levels of client activity during 2021, the Schwab team continued to drive progress across our key strategic priorities of scale and efficiency, win-win monetization, and segmentation. We kept the TDA integration on track, launched a newly combined version of our Schwab Advisor Network referral program, and hired over 3,000 client service professionals. We broadened our clients’ access to fixed income investment choices by launching and expanding our Wasmer Schroeder™ Strategies lineup of separately managed accounts, which now spans 25 taxable and non-taxable alternatives, including several positive impact strategies. We also added another option for clients to incorporate environmental, social and governance (ESG) factor-based investing in their portfolios by collaborating with Ariel Investments, LLC to launch the Schwab^® Ariel ESG ETF, our first proprietary ESG fund and first active ETF. Additionally, we enhanced the digital onboarding experience for new accounts opened by the independent advisors who custody with Schwab, and we expanded their access to Schwab Advisor Portfolio Connect^®, our proprietary portfolio management capability. Other noteworthy client initiatives included the addition of person-to-person payment capabilities via Zelle^® and the introduction of the Schwab Starter Kit™, a new experience designed to support first-time investors with tailored educational content and tools, along with $50 in funding for an initial purchase of fractional shares, to help them develop their knowledge and confidence as they begin to build their financial futures with us. Clients continued to turn to us as a trusted source of help and guidance throughout 2021 – assets enrolled in one of our advisory offerings rose to $559.2 billion across Investor Services by year-end, up 19% from year-earlier levels. Furthermore, utilization of our bank lending capabilities rose at an even faster pace last year, with outstanding balances of mortgage loans and secured credit lines rising by a combined total of $11.0 billion, or 48%, during 2021 to end the year at $33.8 billion.”

Mr. Bettinger concluded, “Successfully focusing on quality client service while pushing forward with firm-wide initiatives to build a stronger and more capable company would be demanding in any environment. I believe doing so amidst the tumult of the last few years is truly extraordinary. I can’t say this enough – Schwab’s achievements are only possible because thousands of talented individuals show up for work every day, ready to continue creating a better version of modern wealth management for our clients. Following four recent acquisitions, including the largest brokerage transaction in history, I’m particularly proud of our progress in uniting as a single team, pulling in the same direction through challenge after challenge, supporting each other and our clients as we pursue Chuck Schwab’s vision. I share his excitement and passion for our combined organization’s potential, and remain convinced we have the talent, culture, and client-first strategy needed to pursue the tremendous growth opportunities ahead of us.”

CFO Peter Crawford said, “Our fourth quarter and full-year 2021 financial results demonstrate the impressive performance that our all-weather business model can produce when our strong business momentum aligns with easing macroeconomic headwinds. With interest rates stabilizing and even rebounding somewhat to end above year-end 2020 levels, fourth quarter net interest revenue increased 18% over the year-earlier period, as strong asset gathering helped lift investment portfolio balances while client utilization of our range of lending products continued to expand. Asset management and administration fees were up 12% year-over-year due to rising balances in advisory solutions, as well as proprietary and third-party mutual funds and ETFs. Including 19% growth in trading revenue driven by higher activity levels, our total fourth quarter revenues were up 13% to $4.7 billion. Pivoting to expenses, our total GAAP spending was essentially flat versus a year ago at $2.7 billion, which included $101 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Adjusted total expenses⁽¹⁾ were up 7% year-over-year, reflecting robust client engagement and business growth, as well as the 5% employee salary increase that went into effect at the end of September. Strong revenue growth and disciplined expense management enabled us to produce a 43.0% pre-tax profit margin for the fourth quarter – 48.4% on an adjusted basis⁽¹⁾ – and helped our full-year margins reach 41.6% and 47.5%, respectively. I believe that achieving this level of profitability in 2021, on revenues that approached $19 billion despite the persistence of historically low interest rates, is a testament to the combined Schwab team’s relentless attention to driving scale and efficiency – that’s what enables us to provide clients with the service they trust us to deliver while continuing to invest in our strategic agenda.”

Mr. Crawford added, “Our balance sheet expanded to end 2021 with total assets of $667 billion, up 22% versus December 31, 2020. Last year’s increase was driven primarily by client asset flows, as well as approximately $10 billion in bank deposit account migrations. We also added a net $10.2 billion to outstanding debt largely for liquidity management purposes, and increased preferred stock by $2.3 billion to help support continued business growth. The company’s preliminary Tier 1 Leverage Ratio was 6.2% at year-end 2021. Our ongoing capital management and healthy financial performance helped support consistently solid returns on capital throughout the year – we delivered a double-digit return on equity and a ROTCE⁽¹⁾ of at least 20% every quarter, ending with full-year results of 11% and 22%, respectively.”

Mr. Crawford concluded, “The operating environment, our own strategic and competitive success, and unprecedented levels of client engagement and activity all came together in 2021 to help us deliver impressive financial performance. No one could have predicted the way the year would unfold, and we certainly can’t predict what 2022 holds in store for us. What we have long known, however, and what the events of 2021 have reinforced, is that success with clients and consistent growth over time is only made possible by managing for the long-term and by putting clients first, serving them with clarity and focus in all environments. Maintaining a rock-solid balance sheet and robust capital position enables us to concentrate on leveraging our client focus into sustained business momentum that helps build long-term stockholder value.”

(1)		Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP 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 recent account activity, was posted on May 14, 2021.

Winter Business Update
The company has scheduled a Winter Business Update for institutional investors on Friday, January 28, 2022. 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.aboutschwab.com/schwabevents.

Forward-Looking Statements
This press release contains forward-looking statements relating to strategic priorities; TD Ameritrade integration; investments to attract and retain talent, improve service and the client experience, expand products, services and offerings to meet client needs, diversify revenues, and drive scale and efficiency; growth opportunities; business momentum; balance sheet and capital position; growth in the client base, accounts, and assets; and stockholder value. 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 and capacity, in a timely and successful manner; hire and retain talent; successfully implement integration strategies and plans; support client activity levels; monetize client assets; attract and retain clients and independent investment advisors and grow those relationships and client assets; and manage expenses. Other important factors include general market conditions, including equity valuations, trading activity, and the level of interest rates – which can impact money market fund fee waivers; market volatility; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; the migration of bank deposit account balances; balance sheet cash; 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; adverse developments in the resolution and settlement amount of the pending regulatory matter; 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 33.2 million active brokerage accounts, 2.2 million corporate retirement plan participants, 1.5 million banking accounts, and approximately $8.14 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,
		2021				2020				2021				2020
Net Revenues
Interest revenue		$	2,270			$	1,905			$	8,506			$	6,531
Interest expense			(128	)			(96	)			(476	)			(418	)
Net interest revenue			2,142				1,809				8,030				6,113
Asset management and administration fees (1)			1,110				987				4,274				3,475
Trading revenue			1,017				854				4,152				1,416
Bank deposit account fees			304				355				1,315				355
Other			135				171				749				332
Total net revenues			4,708				4,176				18,520				11,691
Expenses Excluding Interest
Compensation and benefits			1,399				1,398				5,450				3,954
Professional services			271				269				994				843
Occupancy and equipment			254				254				976				703
Advertising and market development			122				123				485				326
Communications			130				127				587				353
Depreciation and amortization			145				130				549				414
Amortization of acquired intangible assets			154				147				615				190
Regulatory fees and assessments			67				57				275				163
Other			143				195				876				445
Total expenses excluding interest			2,685				2,700				10,807				7,391
Income before taxes on income			2,023				1,476				7,713				4,300
Taxes on income			443				341				1,858				1,001
Net Income			1,580				1,135				5,855				3,299
Preferred stock dividends and other			131				85				495				256
Net Income Available to Common Stockholders		$	1,449			$	1,050			$	5,360			$	3,043
Weighted-Average Common Shares Outstanding:
Basic			1,892				1,848				1,887				1,429
Diluted			1,902				1,855				1,897				1,435
Earnings Per Common Shares Outstanding (2):
Basic		$	.77			$	.57			$	2.84			$	2.13
Diluted		$	.76			$	.57			$	2.83			$	2.12

(1)		Includes fee waivers of $80 million and $326 million for the three and twelve months ended December 31, 2021, respectively, and $68 million and $127 million for the three and twelve months ended December 31, 2020, respectively.
(2)		The Company has 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)
		Q4-21 % change						2021																2020
		vs.			vs.			Fourth				Third				Second				First				Fourth
(In millions, except per share amounts and as noted)		Q4-20			Q3-21			Quarter				Quarter				Quarter				Quarter				Quarter
Net Revenues
Net interest revenue		18	%		6	%		$	2,142			$	2,030			$	1,947			$	1,911			$	1,809
Asset management and administration fees		12	%		1	%			1,110				1,101				1,047				1,016				987
Trading revenue		19	%		5	%			1,017				964				955				1,216				854
Bank deposit account fees		(14	)%		(6	)%			304				323				337				351				355
Other		(21	)%		(11	)%			135				152				241				221				171
Total net revenues		13	%		3	%			4,708				4,570				4,527				4,715				4,176
Expenses Excluding Interest
Compensation and benefits		—			7	%			1,399				1,303				1,318				1,430				1,398
Professional services		1	%		8	%			271				250				247				226				269
Occupancy and equipment		—			3	%			254				246				239				237				254
Advertising and market development		(1	)%		3	%			122				119				128				116				123
Communications		2	%		(10	)%			130				144				166				147				127
Depreciation and amortization		12	%		4	%			145				140				135				129				130
Amortization of acquired intangible assets		5	%		1	%			154				153				154				154				147
Regulatory fees and assessments		18	%		5	%			67				64				66				78				57
Other		(27	)%		2	%			143				140				355				238				195
Total expenses excluding interest		(1	)%		5	%			2,685				2,559				2,808				2,755				2,700
Income before taxes on income		37	%		1	%			2,023				2,011				1,719				1,960				1,476
Taxes on income		30	%		(9	)%			443				485				454				476				341
Net Income		39	%		4	%		$	1,580			$	1,526			$	1,265			$	1,484			$	1,135
Preferred stock dividends and other		54	%		9	%			131				120				148				96				85
Net Income Available to Common Stockholders		38	%		3	%		$	1,449			$	1,406			$	1,117			$	1,388			$	1,050
Earnings per common share (1):
Basic		35	%		4	%		$	.77			$	.74			$	.59			$	.74			$	.57
Diluted		33	%		3	%		$	.76			$	.74			$	.59			$	.73			$	.57
Dividends declared per common share		—			—			$	.18			$	.18			$	.18			$	.18			$	.18
Weighted-average common shares outstanding:
Basic		2	%		—				1,892				1,888				1,886				1,882				1,848
Diluted		3	%		—				1,902				1,898				1,896				1,892				1,855
Performance Measures
Pre-tax profit margin									43.0	%			44.0	%			38.0	%			41.6	%			35.3	%
Return on average common stockholders’ equity (annualized) (2)									12	%			12	%			10	%			12	%			11	%
Financial Condition (at quarter end, in billions)
Cash and cash equivalents		56	%		84	%		$	63.0			$	34.3			$	30.3			$	48.6			$	40.3
Cash and investments segregated		7	%		27	%			53.9				42.3				39.9				40.4				50.4
Receivables from brokerage clients — net		41	%		5	%			90.6				86.6				82.2				74.7				64.4
Available for sale securities		16	%		3	%			390.1				377.0				359.6				341.6				337.4
Bank loans — net		45	%		9	%			34.6				31.6				28.9				25.4				23.8
Total assets		22	%		10	%			667.3				607.5				574.5				563.5				549.0
Bank deposits		24	%		12	%			443.8				395.3				368.6				369.9				358.0
Payables to brokerage clients		21	%		11	%			125.7				113.1				105.0				101.3				104.2
Short-term borrowings		N/M			63	%			4.9				3.0				3.5				2.5				—
Long-term debt		39	%		(3	)%			18.9				19.5				18.7				17.7				13.6
Stockholders’ equity		—			(2	)%			56.3				57.4				57.5				55.6				56.1
Other
Full-time equivalent employees (at quarter end, in thousands)		4	%		3	%			33.4				32.4				32.5				32.0				32.0
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)		116	%		145	%		$	431			$	176			$	225			$	209			$	200
Expenses excluding interest as a percentage of average client assets (annualized)									0.13	%			0.13	%			0.15	%			0.16	%			0.17	%
Clients’ Daily Average Trades (DATs) (in thousands)		5	%		10	%			6,102				5,549				6,042				8,414				5,796
Number of Trading Days		1	%		(1	)%			63.5				64.0				63.0				61.0				63.0
Revenue Per Trade (3)		12	%		(3	)%		$	2.62			$	2.71			$	2.51			$	2.37			$	2.34

Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at fair value as of October 6, 2020. Results of operations and metrics are inclusive of TD Ameritrade beginning October 6, 2020.
(1)		The Company has 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.
(2)		Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(3)		Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.
N/M Not meaningful. Percentage changes greater than 200% are presented as 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,
		2021											2020											2021											2020
		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		$	41,735		$	13			0.11	%			$	35,008		$	8			0.09	%			$	40,325		$	40			0.10	%			$	39,052		$	120			0.30	%
Cash and investments segregated			44,027			5			0.05	%				45,828			13			0.11	%				43,942			24			0.05	%				34,100			141			0.41	%
Receivables from brokerage clients			86,485			655			2.97	%				53,719			444			3.23	%				77,768			2,455			3.11	%				28,058			848			2.97	%
Available for sale securities (1)			382,776			1,260			1.31	%				305,231			1,103			1.44	%				357,122			4,641			1.30	%				253,555			4,537			1.78	%
Bank loans			33,102			172			2.08	%				22,971			134			2.34	%				28,789			620			2.15	%				20,932			545			2.60	%
Total interest-earning assets			588,125			2,105			1.42	%				462,757			1,702			1.46	%				547,946			7,780			1.41	%				375,697			6,191			1.64	%
Securities lending revenue						163											201											720											334
Other interest revenue						2											2											6											6
Total interest-earning assets		$	588,125		$	2,270			1.53	%			$	462,757		$	1,905			1.63	%			$	547,946		$	8,506			1.54	%			$	375,697		$	6,531			1.73	%
Funding sources
Bank deposits		$	409,961		$	14			0.01	%			$	336,912		$	12			0.01	%			$	381,549		$	54			0.01	%			$	291,206		$	93			0.03	%
Payables to brokerage clients			99,325			2			0.01	%				77,160			2			0.01	%				91,667			9			0.01	%				46,347			12			0.02	%
Short-term borrowings (2)			4,294			3			0.27	%				306			—			0.19	%				3,040			9			0.30	%				89			—			0.20	%
Long-term debt			19,124			103			2.14	%				11,903			77			2.59	%				17,704			384			2.17	%				8,992			289			3.22	%
Total interest-bearing liabilities			532,704			122			0.09	%				426,281			91			0.09	%				493,960			456			0.09	%				346,634			394			0.11	%
Non-interest-bearing funding sources			55,421											36,476											53,986											29,063
Securities lending expense						8											7											24											33
Other interest expense						(2	)										(2	)										(4	)										(9	)
Total funding sources		$	588,125		$	128			0.09	%			$	462,757		$	96			0.08	%			$	547,946		$	476			0.09	%			$	375,697		$	418			0.11	%
Net interest revenue					$	2,142			1.44	%						$	1,809			1.55	%						$	8,030			1.45	%						$	6,113			1.62	%

(1)		Amounts have been calculated based on amortized cost.
(2)		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,
		2021											2020											2021											2020
		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		$	147,035		$	109			0.29	%			$	183,846		$	136			0.29	%			$	155,821		$	457			0.29	%			$	200,119		$	605			0.30	%
Fee waivers						(80	)										(68	)										(326	)										(127	)
Schwab money market funds			147,035			29			0.08	%				183,846			68			0.15	%				155,821			131			0.08	%				200,119			478			0.24	%
Schwab equity and bond funds, ETFs, and collective trust funds (CTFs)			462,059			101			0.09	%				334,113			81			0.10	%				423,999			380			0.09	%				301,598			300			0.10	%
Mutual Fund OneSource® and other non-transaction fee funds			231,438			184			0.32	%				208,397			163			0.31	%				229,342			724			0.32	%				192,464			599			0.31	%
Other third-party mutual funds and ETFs (1)			928,989			193			0.08	%				763,494			158			0.08	%				898,248			726			0.08	%				525,379			393			0.07	%
Total mutual funds, ETFs, and CTFs (2)		$	1,769,521			507			0.11	%			$	1,489,850			470			0.13	%			$	1,707,410			1,961			0.11	%			$	1,219,560			1,770			0.15	%
Advice solutions (2)
Fee-based		$	473,443			524			0.44	%			$	392,148			444			0.45	%			$	452,503			1,993			0.44	%			$	306,010			1,443			0.47	%
Non-fee-based			96,374			—			—					78,332			—			—					89,911			—			—					73,161			—			—
Total advice solutions		$	569,817			524			0.36	%			$	470,480			444			0.38	%			$	542,414			1,993			0.37	%			$	379,171			1,443			0.38	%
Other balance-based fees (3)			644,164			64			0.04	%				520,830			58			0.04	%				614,787			259			0.04	%				451,350			208			0.05	%
Other (4)						15											15											61											54
Total asset management and administration fees					$	1,110										$	987										$	4,274										$	3,475

(1)		Beginning in the fourth quarter of 2020, includes third-party money funds related to the acquisition of TD Ameritrade.
(2)		Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private Client™, Schwab Managed Portfolios™, 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 Premium®, 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.
(3)		Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(4)		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)
		Q4-21 % Change						2021																2020
		vs.			vs.			Fourth				Third				Second				First				Fourth
(In billions, at quarter end, except as noted)		Q4-20			Q3-21			Quarter				Quarter				Quarter				Quarter				Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and bank deposits		23	%		12	%		$	566.1			$	503.9			$	469.5			$	467.3			$	458.4
Bank deposit account balances		(4	)%		3	%			158.5				153.3				161.9				164.2				165.9
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
Money market funds (1)		(17	)%		(1	)%			146.5				147.7				151.9				163.6				176.1
Equity and bond funds and CTFs (2)		28	%		9	%			183.1				167.4				165.9				152.9				142.9
Total proprietary mutual funds and CTFs		3	%		5	%			329.6				315.1				317.8				316.5				319.0
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other non-transaction fee funds		5	%		—				234.9				234.7				240.2				227.3				223.9
Mutual fund clearing services		1	%		(7	)%			254.2				271.9				271.3				248.7				252.9
Other third-party mutual funds (4)		15	%		3	%			1,497.7				1,450.1				1,441.5				1,375.8				1,304.6
Total Mutual Fund Marketplace		12	%		2	%			1,986.8				1,956.7				1,953.0				1,851.8				1,781.4
Total mutual fund assets		10	%		2	%			2,316.4				2,271.8				2,270.8				2,168.3				2,100.4
Exchange-traded funds (ETFs)
Proprietary ETFs (2)		37	%		8	%			271.8				251.6				245.2				220.9				198.8
Other third-party ETFs		37	%		10	%			1,296.4				1,183.7				1,158.8				1,035.1				947.3
Total ETF assets		37	%		9	%			1,568.2				1,435.3				1,404.0				1,256.0				1,146.1
Equity and other securities		30	%		10	%			3,259.8				2,976.7				2,988.8				2,721.0				2,504.7
Fixed income securities		(5	)%		—				356.4				356.8				359.6				364.5				377.1
Margin loans outstanding		44	%		4	%			(87.4	)			(83.8	)			(79.8	)			(72.2	)			(60.9	)
Total client assets		22	%		7	%		$	8,138.0			$	7,614.0			$	7,574.8			$	7,069.1			$	6,691.7
Client assets by business
Investor Services		20	%		6	%		$	4,400.7			$	4,137.7			$	4,146.2			$	3,865.9			$	3,667.9
Advisor Services		24	%		8	%			3,737.3				3,476.3				3,428.6				3,203.2				3,023.8
Total client assets		22	%		7	%		$	8,138.0			$	7,614.0			$	7,574.8			$	7,069.1			$	6,691.7
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (5)		(96	)%		(42	)%		$	33.4			$	57.9			$	44.5			$	65.1			$	939.2
Advisor Services (6)		(87	)%		25	%			101.2				81.1				64.3				68.7				751.5
Total net new assets		(92	)%		(3	)%		$	134.6			$	139.0			$	108.8			$	133.8			$	1,690.7
Net market gains (losses)		(36	)%		N/M				389.4				(99.8	)			396.9				243.6				605.7
Net growth (decline)		(77	)%		N/M			$	524.0			$	39.2			$	505.7			$	377.4			$	2,296.4
New brokerage accounts (in thousands, for the quarter ended) (7)		(92	)%		12	%			1,318				1,178				1,657				3,153				15,774
Client accounts (in thousands)
Active brokerage accounts		12	%		1	%			33,165				32,675				32,265				31,902				29,629
Banking accounts (8)		—			(5	)%			1,499				1,580				1,574				1,608				1,499
Corporate retirement plan participants		7	%		—				2,200				2,207				2,149				2,105				2,054

(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, 2021, off-platform equity and bond funds, CTFs, and ETFs were $24.6 billion, $6.2 billion, and $92.3 billion, respectively.
(3)		Excludes all proprietary mutual funds and ETFs.
(4)		As of December 31, 2021, third-party money funds were $13.5 billion.
(5)		Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients. First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade.
(6)		Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade.
(7)		Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade.
(8)		In the fourth quarter of 2021, banking accounts were reduced as a result of inactive account closures.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

The Charles Schwab Corporation Monthly Activity Report For December 2021
		2020			2021																																				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		30,606			29,983			30,932			32,982			33,875			34,529			34,503			34,935			35,361			33,844			35,820			34,484			36,338			5	%		19	%
Nasdaq Composite		12,888			13,071			13,192			13,247			13,963			13,749			14,504			14,673			15,259			14,449			15,498			15,538			15,645			1	%		21	%
Standard & Poor’s® 500		3,756			3,714			3,811			3,973			4,181			4,204			4,298			4,395			4,523			4,308			4,605			4,567			4,766			4	%		27	%
Client Assets (in billions of dollars)
Beginning Client Assets		6,421.0			6,691.7			6,759.6			6,900.5			7,069.1			7,336.1			7,395.7			7,574.8			7,642.7			7,838.2			7,614.0			7,982.3			7,918.3
Net New Assets (1)		61.7			34.2			37.0			62.6			37.2			28.1			43.5			44.3			51.8			42.9			22.9			31.4			80.3			156	%		30	%
Net Market (Losses) Gains		209.0			33.7			103.9			106.0			229.8			31.5			135.6			23.6			143.7			(267.1	)		345.4			(95.4	)		139.4
Total Client Assets (at month end)		6,691.7			6,759.6			6,900.5			7,069.1			7,336.1			7,395.7			7,574.8			7,642.7			7,838.2			7,614.0			7,982.3			7,918.3			8,138.0			3	%		22	%
Core Net New Assets (2)		61.7			34.2			51.4			62.6			37.2			28.1			43.5			44.3			51.8			42.9			36.8			45.1			80.3			78	%		30	%
Receiving Ongoing Advisory Services (at month end)
Investor Services		471.8			472.4			481.3			495.2			511.1			517.8			525.1			531.9			542.5			530.1			548.3			543.1			559.2			3	%		19	%
Advisor Services (3)		2,828.3			2,840.6			2,913.3			2,997.9			3,112.5			3,150.4			3,209.3			3,256.5			3,333.4			3,253.2			3,399.8			3,374.3			3,505.2			4	%		24	%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts		29,629			30,534			31,523			31,902			31,877			32,110			32,265			32,386			32,513			32,675			32,796			32,942			33,165			1	%		12	%
Banking Accounts (4)		1,499			1,518			1,542			1,608			1,562			1,584			1,574			1,578			1,594			1,580			1,593			1,608			1,499			(7	)%		—
Corporate Retirement Plan Participants		2,054			2,069			2,093			2,105			2,116			2,130			2,149			2,159			2,188			2,207			2,213			2,198			2,200			—			7	%
Client Activity
New Brokerage Accounts (in thousands)		626			1,095			1,211			847			609			549			499			402			402			374			397			448			473			6	%		(24	)%
Client Cash as a Percentage of Client Assets (5)		12.3	%		12.2	%		11.8	%		11.5	%		10.9	%		10.8	%		10.5	%		10.4	%		10.3	%		10.8	%		10.4	%		10.5	%		10.9	%		40 bp			(140) bp
Derivative Trades as a Percentage of Total Trades		18.9	%		17.4	%		16.6	%		18.5	%		20.4	%		20.9	%		20.6	%		22.2	%		23.1	%		23.1	%		22.5	%		23.4	%		23.0	%		(40) bp			410 bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (6)		482,394			517,306			514,885			520,074			527,194			528,642			536,146			546,579			552,372			565,379			574,181			584,362			605,709			4	%		26	%
Average Margin Balances		59,142			62,999			69,064			71,266			72,863			75,921			78,410			79,910			81,021			81,705			83,835			87,311			88,328			1	%		49	%
Average Bank Deposits Account Balances (7)		163,463			167,980			167,433			164,866			162,392			160,459			161,377			151,275			150,896			152,330			154,040			153,877			154,918			1	%		(5	)%
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (8,9) (in millions of dollars)
Equities		13,875			8,234			14,246			16,301			13,422			9,854			10,873			7,418			8,808			7,596			8,840			13,099			11,519
Hybrid		359			407			832			1,133			877			1			390			666			569			335			81			308			(1,207	)
Bonds		12,169			13,601			9,334			8,237			8,940			5,906			10,101			6,917			8,044			6,232			4,425			4,097			5,600
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (8)		6,336			5,713			6,273			6,190			5,754			2,022			5,872			2,644			3,876			(308	)		302			189			(2,859	)
Exchange-Traded Funds (9)		20,067			16,529			18,139			19,481			17,485			13,739			15,492			12,357			13,545			14,471			13,044			17,315			18,771
Money Market Funds		(7,332	)		(5,248	)		(4,405	)		(4,528	)		(5,153	)		(3,988	)		(3,806	)		(2,501	)		(1,372	)		(1,512	)		(451	)		(1,725	)		(144	)

Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.
(1)		November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 billion from a mutual fund clearing services client. February 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client.
(2)		Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods.
(3)		Excludes Retirement Business Services.
(4)		In December 2021, banking accounts were reduced as a result of inactive account closures.
(5)		Schwab One®, certain cash equivalents, bank deposits, third-party bank deposit accounts, and money market fund balances as a percentage of total client assets.
(6)		Represents average total interest-earning assets on the company’s balance sheet.
(7)		Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.
(8)		Represents the principal value of client mutual fund transactions handled by Schwab, including transactions in proprietary funds. Includes institutional funds available only to Investment Managers. Excludes money market fund transactions.
(9)		Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.

THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)

In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Schwab’s fourth quarter earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwab’s results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies.

Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.

Non-GAAP Adjustment or Measure	Definition	Usefulness to Investors and Uses by Management
Acquisition and integration-related costs and amortization of acquired intangible assets	Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, and, where applicable, the income tax effect of these expenses.   Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Company’s revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives.	We exclude acquisition and integration-related costs and amortization of acquired intangible assets for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwab’s ongoing operations, and is useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods.   Acquisition and integration-related costs fluctuate based on the timing of acquisitions and integration activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Company’s ongoing business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Company’s underlying operating performance.
Return on tangible common equity	Return on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets — net, and related deferred tax liabilities.	Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwab’s balance sheet.

The Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria.

THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)

The tables below present reconciliations of GAAP measures to non-GAAP measures:

		Three Months Ended December 31,																Twelve Months Ended December 31,
		2021								2020								2021								2020
		Total Expenses Excluding Interest				Net Income				Total Expenses Excluding Interest				Net Income				Total Expenses Excluding Interest				Net Income				Total Expenses Excluding Interest				Net Income
Total expenses excluding interest (GAAP), Net income (GAAP)		$	2,685			$	1,580			$	2,700			$	1,135			$	10,807			$	5,855			$	7,391			$	3,299
Acquisition and integration-related costs (1)			(101	)			101				(282	)			282				(468	)			468				(442	)			442
Amortization of acquired intangible assets			(154	)			154				(147	)			147				(615	)			615				(190	)			190
Income tax effects (2)			N/A				(60	)			N/A				(105	)			N/A				(268	)			N/A				(154	)
Adjusted total expenses (non-GAAP), Adjusted net income (non-GAAP)		$	2,430			$	1,775			$	2,271			$	1,459			$	9,724			$	6,670			$	6,759			$	3,777

(1)		Acquisition and integration-related costs for the three and twelve months ended December 31, 2021 primarily consist of $56 million and $283 million of compensation and benefits, $33 million and $132 million of professional services, and $9 million and $39 million of occupancy and equipment. Acquisition and integration-related costs for the three and twelve months ended December 31, 2020 primarily consist of $193 million and $235 million of compensation and benefits, $66 million and $158 million of professional services, and $10 million and $30 million of other expense.
(2)		The income tax effects of the non-GAAP adjustments are determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and are used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis.
N/A Not applicable.

		Three Months Ended December 31,												Twelve Months Ended December 31,
		2021						2020						2021						2020
		Amount			% of Total Net Revenues			Amount			% of Total Net Revenues			Amount			% of Total Net Revenues			Amount			% of Total Net Revenues
Income before taxes on income (GAAP), Pre-tax profit margin (GAAP)		$	2,023		43.0	%		$	1,476		35.3	%		$	7,713		41.6	%		$	4,300		36.8	%
Acquisition and integration-related costs			101		2.1	%			282		6.8	%			468		2.5	%			442		3.8	%
Amortization of acquired intangible assets			154		3.3	%			147		3.5	%			615		3.4	%			190		1.6	%
Adjusted income before taxes on income (non-GAAP), Adjusted pre-tax profit margin (non-GAAP)		$	2,278		48.4	%		$	1,905		45.6	%		$	8,796		47.5	%		$	4,932		42.2	%

		Three Months Ended December 31,																Twelve Months Ended December 31,
		2021								2020								2021								2020
		Amount				Diluted EPS				Amount				Diluted EPS				Amount				Diluted EPS				Amount				Diluted EPS
Net income available to common stockholders (GAAP), Earnings per common share — diluted (GAAP)		$	1,449			$	.76			$	1,050			$	.57			$	5,360			$	2.83			$	3,043			$	2.12
Acquisition and integration-related costs			101				.05				282				.15				468				.25				442				.31
Amortization of acquired intangible assets			154				.08				147				.08				615				.32				190				.13
Income tax effects			(60	)			(.03	)			(105	)			(.06	)			(268	)			(.15	)			(154	)			(.11	)
Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP)		$	1,644			$	.86			$	1,374			$	.74			$	6,175			$	3.25			$	3,521			$	2.45

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2021				2020				2021				2020
Return on average common stockholders’ equity (GAAP)			12	%			11	%			11	%			9	%
Average common stockholders’ equity		$	46,898			$	37,198			$	47,318			$	33,640
Less: Average goodwill			(11,952	)			(6,845	)			(11,952	)			(6,590	)
Less: Average acquired intangible assets — net			(9,456	)			(5,624	)			(9,685	)			(5,059	)
Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net			1,889				1,005				1,919				1,005
Average tangible common equity		$	27,379			$	25,734			$	27,600			$	22,996
Adjusted net income available to common stockholders (1)		$	1,644			$	1,374			$	6,175			$	3,521
Return on tangible common equity (non-GAAP)			24	%			21	%			22	%			15	%

(1)

See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220118005201/en/

MEDIA:

Mayura Hooper

Charles Schwab

Phone: 415-667-1525



INVESTORS/ANALYSTS:

Jeff Edwards

Charles Schwab

Phone: 415-667-1524

Source: The Charles Schwab Corporation

FAQ

What were the financial highlights for Charles Schwab (SCHW) in Q4 2021?

Charles Schwab reported a net income of $1.6 billion for Q4 2021, a 39% increase year-over-year, with total revenues reaching $4.7 billion, up 13%.

How did Charles Schwab (SCHW) perform in terms of client assets in 2021?

By year-end 2021, Charles Schwab's total client assets reached a record $8.14 trillion, representing a 22% increase from December 2020.

What were the total core net new assets for Charles Schwab (SWTXX) in 2021?

Charles Schwab achieved total core net new assets of $558.2 billion in 2021, with a record $162.2 billion contributed in Q4.

What is the significance of the transaction-related costs reported by Charles Schwab (SCHW)?

Charles Schwab incurred transaction-related costs of $255 million in Q4 2021 and $1.1 billion for the entire year, impacting overall profitability.

What was the return on equity for Charles Schwab (SWTXX) in 2021?

Charles Schwab reported a return on equity of 11% for 2021, with a return on tangible common equity of 22%.