Schwab Reports Record Quarterly Earnings Per Share
The Charles Schwab Corporation reported record net income of $1.5 billion for Q3 2021, a 119% increase from $698 million in Q3 2020. Total client assets reached $7.61 trillion, up 14% year-to-date. Core net new assets rose 28% sequentially to $139 billion. The firm opened over a million new brokerage accounts, bringing the total to 6 million in 2021. Adjusted diluted earnings per share rose 65% to $0.84. Despite an 8% decline in overall trading activity, daily average trades remained strong at 5.5 million.
- Record net income of $1.5 billion for Q3 2021, up 119% YoY.
- Total client assets rose to $7.61 trillion, reflecting a 14% year-to-date increase.
- Core net new assets increased 28% sequentially to $139 billion.
- Opened over 1 million new brokerage accounts in Q3, totaling 6 million for 2021.
- Adjusted diluted EPS rose 65% to $0.84.
- Total trading activity decreased by 8%, impacting revenue.
Core Net New Assets Rise
Total Client Assets Reach
|
Three Months Ended
|
|
% |
|
Nine Months Ended
|
|
% |
|||||||||||||||
Financial Highlights (1) |
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
|||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Net revenues (in millions) |
$ |
4,570 |
|
$ |
2,448 |
|
87 |
% |
$ |
13,812 |
|
$ |
7,515 |
|
84 |
% |
||||||
Net income (in millions) |
|
|
|
|
|
|
||||||||||||||||
GAAP |
$ |
1,526 |
|
$ |
698 |
|
119 |
% |
$ |
4,275 |
|
$ |
2,164 |
|
98 |
% |
||||||
Adjusted (1) |
$ |
1,722 |
|
$ |
749 |
|
130 |
% |
$ |
4,895 |
|
$ |
2,318 |
|
111 |
% |
||||||
Diluted earnings per common share |
|
|
|
|
|
|
||||||||||||||||
GAAP |
$ |
.74 |
|
$ |
.48 |
|
54 |
% |
$ |
2.06 |
|
$ |
1.54 |
|
34 |
% |
||||||
Adjusted (1) |
$ |
.84 |
|
$ |
.51 |
|
65 |
% |
$ |
2.39 |
|
$ |
1.66 |
|
44 |
% |
||||||
Pre-tax profit margin |
|
|
|
|
|
|
||||||||||||||||
GAAP |
44.0 |
% |
36.3 |
% |
|
41.2 |
% |
37.6 |
% |
|
||||||||||||
Adjusted (1) |
49.6 |
% |
39.1 |
% |
|
47.2 |
% |
40.3 |
% |
|
||||||||||||
Return on average common stockholders’ equity (annualized) |
12 |
% |
10 |
% |
|
11 |
% |
12 |
% |
|
||||||||||||
Return on tangible common equity (annualized) (1) |
23 |
% |
12 |
% |
|
21 |
% |
14 |
% |
|
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 10-11 of this release. |
CEO
“I am incredibly proud of all the great work our team of talented employees have poured into serving our clients and each other this year and throughout the pandemic,”
CFO
(1) |
Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 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
Forward-Looking Statements
This press release contains forward-looking statements relating to business momentum; growth in the client base, accounts and assets; integration of TD Ameritrade; strategic initiatives; 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; balance sheet and capital base strength; 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 attract and retain clients and independent investment advisors and grow those relationships and client assets; 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; support client activity levels; successfully implement integration strategies and plans; monetize client assets; and manage expenses. Other important factors include general market conditions, including equity valuations, trading activity, the level of interest rates – which can impact money market fund fee waivers, and credit spreads; 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
|
||||||||||||||||
Consolidated Statements of Income |
||||||||||||||||
(In millions, except per share amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||||||
Net Revenues |
|
|
|
|
||||||||||||
Interest revenue |
$ |
2,153 |
|
$ |
1,432 |
|
$ |
6,236 |
|
$ |
4,626 |
|
||||
Interest expense |
(123 |
) |
(89 |
) |
(348 |
) |
(322 |
) |
||||||||
Net interest revenue |
2,030 |
|
1,343 |
|
5,888 |
|
4,304 |
|
||||||||
Asset management and administration fees (1) |
1,101 |
|
860 |
|
3,164 |
|
2,488 |
|
||||||||
Trading revenue |
964 |
|
181 |
|
3,135 |
|
562 |
|
||||||||
Bank deposit account fees |
323 |
|
— |
|
1,011 |
|
— |
|
||||||||
Other |
152 |
|
64 |
|
614 |
|
161 |
|
||||||||
Total net revenues |
4,570 |
|
2,448 |
|
13,812 |
|
7,515 |
|
||||||||
Expenses Excluding Interest |
|
|
|
|
||||||||||||
Compensation and benefits |
1,303 |
|
840 |
|
4,051 |
|
2,556 |
|
||||||||
Professional services |
250 |
|
194 |
|
723 |
|
574 |
|
||||||||
Occupancy and equipment |
246 |
|
155 |
|
722 |
|
449 |
|
||||||||
Advertising and market development |
119 |
|
66 |
|
363 |
|
203 |
|
||||||||
Communications |
144 |
|
73 |
|
457 |
|
226 |
|
||||||||
Depreciation and amortization |
140 |
|
97 |
|
404 |
|
284 |
|
||||||||
Amortization of acquired intangible assets |
153 |
|
25 |
|
461 |
|
43 |
|
||||||||
Regulatory fees and assessments |
64 |
|
36 |
|
208 |
|
106 |
|
||||||||
Other |
140 |
|
73 |
|
733 |
|
250 |
|
||||||||
Total expenses excluding interest |
2,559 |
|
1,559 |
|
8,122 |
|
4,691 |
|
||||||||
Income before taxes on income |
2,011 |
|
889 |
|
5,690 |
|
2,824 |
|
||||||||
Taxes on income |
485 |
|
191 |
|
1,415 |
|
660 |
|
||||||||
Net Income |
1,526 |
|
698 |
|
4,275 |
|
2,164 |
|
||||||||
Preferred stock dividends and other |
120 |
|
83 |
|
364 |
|
171 |
|
||||||||
Net Income Available to Common Stockholders |
$ |
1,406 |
|
$ |
615 |
|
$ |
3,911 |
|
$ |
1,993 |
|
||||
Weighted-Average Common Shares Outstanding: |
|
|
|
|
||||||||||||
Basic |
1,888 |
|
1,289 |
|
1,885 |
|
1,288 |
|
||||||||
Diluted |
1,898 |
|
1,294 |
|
1,895 |
|
1,294 |
|
||||||||
Earnings Per Common Shares Outstanding (2): |
|
|
|
|
||||||||||||
Basic |
$ |
.74 |
|
$ |
.48 |
|
$ |
2.07 |
|
$ |
1.55 |
|
||||
Diluted |
$ |
.74 |
|
$ |
.48 |
|
$ |
2.06 |
|
$ |
1.54 |
|
(1) |
Includes fee waivers of |
|
(2) |
For the three and nine months ended |
|
|
||||||||||||||||||||||||||
Financial and Operating Highlights |
||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||
|
|
Q3-21 % change |
|
2021 |
|
2020 |
||||||||||||||||||||
|
vs. |
|
vs. |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|||||||||||||
(In millions, except per share amounts and as noted) |
Q3-20 |
|
Q2-21 |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|||||||||||||
Net Revenues |
|
|
|
|
|
|
|
|||||||||||||||||||
Net interest revenue |
51 |
% |
4 |
% |
$ |
2,030 |
|
$ |
1,947 |
|
$ |
1,911 |
|
$ |
1,809 |
|
$ |
1,343 |
|
|||||||
Asset management and administration fees |
28 |
% |
5 |
% |
1,101 |
|
1,047 |
|
1,016 |
|
987 |
|
860 |
|
||||||||||||
Trading revenue |
N/M |
1 |
% |
964 |
|
955 |
|
1,216 |
|
854 |
|
181 |
|
|||||||||||||
Bank deposit account fees |
N/M |
(4 |
)% |
323 |
|
337 |
|
351 |
|
355 |
|
— |
|
|||||||||||||
Other |
138 |
% |
(37 |
)% |
152 |
|
241 |
|
221 |
|
171 |
|
64 |
|
||||||||||||
Total net revenues |
87 |
% |
1 |
% |
4,570 |
|
4,527 |
|
4,715 |
|
4,176 |
|
2,448 |
|
||||||||||||
Expenses Excluding Interest |
|
|
|
|
|
|
|
|||||||||||||||||||
Compensation and benefits |
55 |
% |
(1 |
)% |
1,303 |
|
1,318 |
|
1,430 |
|
1,398 |
|
840 |
|
||||||||||||
Professional services |
29 |
% |
1 |
% |
250 |
|
247 |
|
226 |
|
269 |
|
194 |
|
||||||||||||
Occupancy and equipment |
59 |
% |
3 |
% |
246 |
|
239 |
|
237 |
|
254 |
|
155 |
|
||||||||||||
Advertising and market development |
80 |
% |
(7 |
)% |
119 |
|
128 |
|
116 |
|
123 |
|
66 |
|
||||||||||||
Communications |
97 |
% |
(13 |
)% |
144 |
|
166 |
|
147 |
|
127 |
|
73 |
|
||||||||||||
Depreciation and amortization |
44 |
% |
4 |
% |
140 |
|
135 |
|
129 |
|
130 |
|
97 |
|
||||||||||||
Amortization of acquired intangible assets |
N/M |
(1 |
)% |
153 |
|
154 |
|
154 |
|
147 |
|
25 |
|
|||||||||||||
Regulatory fees and assessments |
78 |
% |
(3 |
)% |
64 |
|
66 |
|
78 |
|
57 |
|
36 |
|
||||||||||||
Other |
92 |
% |
(61 |
)% |
140 |
|
355 |
|
238 |
|
195 |
|
73 |
|
||||||||||||
Total expenses excluding interest |
64 |
% |
(9 |
)% |
2,559 |
|
2,808 |
|
2,755 |
|
2,700 |
|
1,559 |
|
||||||||||||
Income before taxes on income |
126 |
% |
17 |
% |
2,011 |
|
1,719 |
|
1,960 |
|
1,476 |
|
889 |
|
||||||||||||
Taxes on income |
154 |
% |
7 |
% |
485 |
|
454 |
|
476 |
|
341 |
|
191 |
|
||||||||||||
Net Income |
119 |
% |
21 |
% |
$ |
1,526 |
|
$ |
1,265 |
|
$ |
1,484 |
|
$ |
1,135 |
|
$ |
698 |
|
|||||||
Preferred stock dividends and other |
45 |
% |
(19 |
)% |
120 |
|
148 |
|
96 |
|
85 |
|
83 |
|
||||||||||||
Net Income Available to Common Stockholders |
129 |
% |
26 |
% |
$ |
1,406 |
|
$ |
1,117 |
|
$ |
1,388 |
|
$ |
1,050 |
|
$ |
615 |
|
|||||||
Earnings per common share (1): |
|
|
|
|
|
|
|
|||||||||||||||||||
Basic |
54 |
% |
25 |
% |
$ |
.74 |
|
$ |
.59 |
|
$ |
.74 |
|
$ |
.57 |
|
$ |
.48 |
|
|||||||
Diluted |
54 |
% |
25 |
% |
$ |
.74 |
|
$ |
.59 |
|
$ |
.73 |
|
$ |
.57 |
|
$ |
.48 |
|
|||||||
Dividends declared per common share |
— |
|
— |
|
$ |
.18 |
|
$ |
.18 |
|
$ |
.18 |
|
$ |
.18 |
|
$ |
.18 |
|
|||||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||||||||||||
Basic |
46 |
% |
— |
|
1,888 |
|
1,886 |
|
1,882 |
|
1,848 |
|
1,289 |
|
||||||||||||
Diluted |
47 |
% |
— |
|
1,898 |
|
1,896 |
|
1,892 |
|
1,855 |
|
1,294 |
|
||||||||||||
Performance Measures |
|
|
|
|
|
|
|
|||||||||||||||||||
Pre-tax profit margin |
|
|
44.0 |
% |
38.0 |
% |
41.6 |
% |
35.3 |
% |
36.3 |
% |
||||||||||||||
Return on average common stockholders’ equity (annualized) (2) |
|
|
12 |
% |
10 |
% |
12 |
% |
11 |
% |
10 |
% |
||||||||||||||
Financial Condition (at quarter end, in billions) |
|
|
|
|
|
|
|
|||||||||||||||||||
Cash and cash equivalents |
25 |
% |
13 |
% |
$ |
34.3 |
|
$ |
30.3 |
|
$ |
48.6 |
|
$ |
40.3 |
|
$ |
27.5 |
|
|||||||
Cash and investments segregated |
43 |
% |
6 |
% |
42.3 |
|
39.9 |
|
40.4 |
|
50.4 |
|
29.6 |
|
||||||||||||
Receivables from brokerage clients — net |
N/M |
5 |
% |
86.6 |
|
82.2 |
|
74.7 |
|
64.4 |
|
25.4 |
|
|||||||||||||
Available for sale securities |
24 |
% |
5 |
% |
377.0 |
|
359.6 |
|
341.6 |
|
337.4 |
|
303.8 |
|
||||||||||||
Bank loans — net |
42 |
% |
9 |
% |
31.6 |
|
28.9 |
|
25.4 |
|
23.8 |
|
22.3 |
|
||||||||||||
Total assets |
45 |
% |
6 |
% |
607.5 |
|
574.5 |
|
563.5 |
|
549.0 |
|
419.4 |
|
||||||||||||
Bank deposits |
23 |
% |
7 |
% |
395.3 |
|
368.6 |
|
369.9 |
|
358.0 |
|
320.7 |
|
||||||||||||
Payables to brokerage clients |
118 |
% |
8 |
% |
113.1 |
|
105.0 |
|
101.3 |
|
104.2 |
|
52.0 |
|
||||||||||||
Short-term borrowings |
N/M |
(14 |
)% |
3.0 |
|
3.5 |
|
2.5 |
|
— |
|
— |
|
|||||||||||||
Long-term debt |
150 |
% |
4 |
% |
19.5 |
|
18.7 |
|
17.7 |
|
13.6 |
|
7.8 |
|
||||||||||||
Stockholders’ equity |
83 |
% |
— |
|
57.4 |
|
57.5 |
|
55.6 |
|
56.1 |
|
31.3 |
|
||||||||||||
Other |
|
|
|
|
|
|
|
|||||||||||||||||||
Full-time equivalent employees (at quarter end, in thousands) |
47 |
% |
— |
|
32.4 |
|
32.5 |
|
32.0 |
|
32.0 |
|
22.1 |
|
||||||||||||
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions) |
44 |
% |
(22 |
)% |
$ |
176 |
|
$ |
225 |
|
$ |
209 |
|
$ |
200 |
|
$ |
122 |
|
|||||||
Expenses excluding interest as a percentage of average client assets (annualized) |
|
|
0.13 |
% |
0.15 |
% |
0.16 |
% |
0.17 |
% |
0.14 |
% |
||||||||||||||
Clients’ Daily Average Trades (DATs) (in thousands) |
N/M |
(8 |
)% |
5,549 |
|
6,042 |
|
8,414 |
|
5,796 |
|
1,460 |
|
|||||||||||||
Number of Trading Days |
— |
|
2 |
% |
64.0 |
|
63.0 |
|
61.0 |
|
63.0 |
|
64.0 |
|
||||||||||||
Revenue Per Trade (3) |
40 |
% |
8 |
% |
$ |
2.71 |
|
$ |
2.51 |
|
$ |
2.37 |
|
$ |
2.34 |
|
$ |
1.94 |
|
|||||||
|
|
|
|
|
|
|
|
Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at fair value as of |
||
(1) |
Beginning in 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. |
|
(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 |
||
|
||||||||||||||||||||||||||||||||||||||||||
Net Interest Revenue Information |
||||||||||||||||||||||||||||||||||||||||||
(In millions, except ratios or as noted) |
||||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||||||||||||||||||||||||
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
||||||||||||||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Cash and cash equivalents |
$ |
38,732 |
$ |
11 |
0.12 |
% |
$ |
32,628 |
$ |
8 |
|
0.10 |
% |
|
$ |
39,848 |
$ |
27 |
|
0.09 |
% |
$ |
40,410 |
$ |
112 |
|
0.37 |
% |
||||||||||||||
Cash and investments segregated |
42,617 |
5 |
0.04 |
% |
33,214 |
14 |
|
0.16 |
% |
|
43,914 |
19 |
|
0.06 |
% |
30,162 |
128 |
|
0.56 |
% |
||||||||||||||||||||||
Receivables from brokerage clients |
80,873 |
628 |
3.04 |
% |
21,242 |
125 |
|
2.31 |
% |
|
74,831 |
1,800 |
|
3.17 |
% |
19,442 |
404 |
|
2.73 |
% |
||||||||||||||||||||||
Available for sale securities (1) |
362,204 |
1,187 |
1.30 |
% |
276,081 |
1,103 |
|
1.59 |
% |
|
348,477 |
3,381 |
|
1.29 |
% |
236,204 |
3,434 |
|
1.93 |
% |
||||||||||||||||||||||
Bank loans |
30,235 |
161 |
2.12 |
% |
21,668 |
134 |
|
2.46 |
% |
|
27,336 |
448 |
|
2.18 |
% |
20,248 |
411 |
|
2.70 |
% |
||||||||||||||||||||||
Total interest-earning assets |
554,661 |
1,992 |
1.42 |
% |
384,833 |
1,384 |
|
1.43 |
% |
|
534,406 |
5,675 |
|
1.41 |
% |
346,466 |
4,489 |
|
1.72 |
% |
||||||||||||||||||||||
Securities lending revenue (2) |
|
159 |
|
|
47 |
|
|
|
|
557 |
|
|
|
133 |
|
|
||||||||||||||||||||||||||
Other interest revenue (2) |
|
2 |
|
|
1 |
|
|
|
|
4 |
|
|
|
4 |
|
|
||||||||||||||||||||||||||
Total interest-earning assets (3) |
$ |
554,661 |
$ |
2,153 |
1.54 |
% |
$ |
384,833 |
$ |
1,432 |
|
1.47 |
% |
|
$ |
534,406 |
$ |
6,236 |
|
1.55 |
% |
$ |
346,466 |
$ |
4,626 |
|
1.77 |
% |
||||||||||||||
Funding sources |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Bank deposits |
$ |
384,561 |
$ |
14 |
0.01 |
% |
$ |
310,685 |
$ |
12 |
|
0.02 |
% |
|
$ |
371,974 |
$ |
40 |
|
0.01 |
% |
$ |
275,860 |
$ |
81 |
|
0.04 |
% |
||||||||||||||
Payables to brokerage clients |
92,498 |
3 |
0.01 |
% |
40,169 |
1 |
|
0.01 |
% |
|
89,087 |
7 |
|
0.01 |
% |
36,001 |
10 |
|
0.04 |
% |
||||||||||||||||||||||
Short-term borrowings (4) |
3,485 |
3 |
0.34 |
% |
5 |
— |
|
0.12 |
% |
|
2,617 |
6 |
|
0.32 |
% |
16 |
— |
|
0.29 |
% |
||||||||||||||||||||||
Long-term debt |
19,030 |
99 |
2.10 |
% |
7,992 |
69 |
|
3.46 |
% |
|
17,225 |
281 |
|
2.18 |
% |
8,014 |
212 |
|
3.53 |
% |
||||||||||||||||||||||
Total interest-bearing liabilities |
499,574 |
119 |
0.09 |
% |
358,851 |
82 |
|
0.09 |
% |
|
480,903 |
334 |
|
0.09 |
% |
319,891 |
303 |
|
0.13 |
% |
||||||||||||||||||||||
Non-interest-bearing funding sources (3) |
55,087 |
|
|
25,982 |
|
|
|
53,503 |
|
|
26,575 |
|
|
|||||||||||||||||||||||||||||
Securities lending expense (2) |
|
4 |
|
|
10 |
|
|
|
|
16 |
|
|
|
26 |
|
|
||||||||||||||||||||||||||
Other interest expense (2) |
|
— |
|
|
(3 |
) |
|
|
|
(2 |
) |
|
|
(7 |
) |
|
||||||||||||||||||||||||||
Total funding sources (3) |
$ |
554,661 |
$ |
123 |
0.09 |
% |
$ |
384,833 |
$ |
89 |
|
0.09 |
% |
|
$ |
534,406 |
$ |
348 |
|
0.09 |
% |
$ |
346,466 |
$ |
322 |
|
0.13 |
% |
||||||||||||||
Net interest revenue |
|
$ |
2,030 |
1.45 |
% |
|
$ |
1,343 |
|
1.38 |
% |
|
|
$ |
5,888 |
|
1.46 |
% |
|
$ |
4,304 |
|
1.64 |
% |
(1) |
Amounts have been calculated based on amortized cost. |
|
(2) |
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. |
|
(3) |
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. |
|
(4) |
Interest revenue or expense was less than |
|
|
|||||||||||||||||||||||||||||||||||||||||||
Asset Management and Administration Fees Information |
|||||||||||||||||||||||||||||||||||||||||||
(In millions, except ratios or as noted) |
|||||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
||||||||||||||||||||||||||||||||
|
|
Average
|
|
Revenue |
|
Average
|
|
|
Average
|
|
Revenue |
|
Average
|
|
|
Average
|
|
Revenue |
|
Average
|
|
|
Average
|
|
Revenue |
|
Average
|
||||||||||||||||
Schwab money market funds before fee waivers |
$ |
149,508 |
$ |
112 |
|
0.30 |
% |
$ |
199,822 |
$ |
153 |
|
0.30 |
% |
$ |
158,749 |
$ |
348 |
|
0.29 |
% |
$ |
205,544 |
$ |
469 |
|
0.30 |
% |
|||||||||||||||
Fee waivers |
|
(83 |
) |
|
|
(44 |
) |
|
|
(246 |
) |
|
|
(59 |
) |
|
|||||||||||||||||||||||||||
Schwab money market funds |
149,508 |
29 |
|
0.08 |
% |
199,822 |
109 |
|
0.22 |
% |
158,749 |
102 |
|
0.09 |
% |
205,544 |
410 |
|
0.27 |
% |
|||||||||||||||||||||||
Schwab equity and bond funds, ETFs, and collective trust funds (CTFs) |
441,344 |
99 |
|
0.09 |
% |
306,899 |
75 |
|
0.10 |
% |
411,312 |
279 |
|
0.09 |
% |
290,759 |
219 |
|
0.10 |
% |
|||||||||||||||||||||||
Mutual Fund OneSource® and other non-transaction fee funds |
234,582 |
188 |
|
0.32 |
% |
197,809 |
154 |
|
0.31 |
% |
228,643 |
540 |
|
0.32 |
% |
187,153 |
436 |
|
0.31 |
% |
|||||||||||||||||||||||
Other third-party mutual funds and ETFs (1) |
918,363 |
187 |
|
0.08 |
% |
469,822 |
85 |
|
0.07 |
% |
888,003 |
533 |
|
0.08 |
% |
446,007 |
235 |
|
0.07 |
% |
|||||||||||||||||||||||
Total mutual funds, ETFs, and CTFs (2) |
$ |
1,743,797 |
503 |
|
0.11 |
% |
$ |
1,174,352 |
423 |
|
0.14 |
% |
$ |
1,686,707 |
1,454 |
|
0.12 |
% |
$ |
1,129,463 |
1,300 |
|
0.15 |
% |
|||||||||||||||||||
Advice solutions (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Fee-based |
$ |
463,827 |
511 |
|
0.44 |
% |
$ |
307,983 |
373 |
|
0.48 |
% |
$ |
445,521 |
1,469 |
|
0.44 |
% |
$ |
277,297 |
999 |
|
0.48 |
% |
|||||||||||||||||||
Non-fee-based |
90,649 |
— |
|
— |
|
73,850 |
— |
|
— |
|
87,758 |
— |
|
— |
|
71,438 |
— |
|
— |
|
|||||||||||||||||||||||
Total advice solutions |
$ |
554,476 |
511 |
|
0.37 |
% |
$ |
381,833 |
373 |
|
0.39 |
% |
$ |
533,279 |
1,469 |
|
0.37 |
% |
$ |
348,735 |
999 |
|
0.38 |
% |
|||||||||||||||||||
Other balance-based fees (3) |
632,806 |
68 |
|
0.04 |
% |
443,929 |
51 |
|
0.05 |
% |
604,995 |
195 |
|
0.04 |
% |
428,191 |
150 |
|
0.05 |
% |
|||||||||||||||||||||||
Other (4) |
|
19 |
|
|
|
13 |
|
|
|
46 |
|
|
|
39 |
|
|
|||||||||||||||||||||||||||
Total asset management and administration fees |
|
$ |
1,101 |
|
|
|
$ |
860 |
|
|
|
$ |
3,164 |
|
|
|
$ |
2,488 |
|
|
(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, |
|
(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. |
|
|
||||||||||||||||||||||||||
Growth in Client Assets and Accounts |
||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Q3-21 % Change |
|
2021 |
|
2020 |
||||||||||||||||||||
|
vs. |
|
vs. |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|||||||||||||
(In billions, at quarter end, except as noted) |
Q3-20 |
|
Q2-21 |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|||||||||||||
Assets in client accounts |
|
|
|
|
|
|
|
|||||||||||||||||||
|
36 |
% |
7 |
% |
$ |
503.9 |
|
$ |
469.5 |
|
$ |
467.3 |
|
$ |
458.4 |
|
$ |
370.3 |
|
|||||||
Bank deposit account balances |
N/M |
(5 |
)% |
153.3 |
|
161.9 |
|
164.2 |
|
165.9 |
|
— |
|
|||||||||||||
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs |
|
|
|
|
|
|
|
|||||||||||||||||||
Money market funds (1) |
(22 |
)% |
(3 |
)% |
147.7 |
|
151.9 |
|
163.6 |
|
176.1 |
|
190.3 |
|
||||||||||||
Equity and bond funds and CTFs (2) |
33 |
% |
1 |
% |
167.4 |
|
165.9 |
|
152.9 |
|
142.9 |
|
125.5 |
|
||||||||||||
Total proprietary mutual funds and CTFs |
— |
|
(1 |
)% |
315.1 |
|
317.8 |
|
316.5 |
|
319.0 |
|
315.8 |
|
||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||
Mutual Fund OneSource® and other non-transaction fee funds |
15 |
% |
(2 |
)% |
234.7 |
|
240.2 |
|
227.3 |
|
223.9 |
|
203.6 |
|
||||||||||||
Mutual fund clearing services |
19 |
% |
— |
|
271.9 |
|
271.3 |
|
248.7 |
|
252.9 |
|
228.4 |
|
||||||||||||
Other third-party mutual funds (4) |
71 |
% |
1 |
% |
1,450.1 |
|
1,441.5 |
|
1,375.8 |
|
1,304.6 |
|
848.1 |
|
||||||||||||
|
53 |
% |
— |
|
1,956.7 |
|
1,953.0 |
|
1,851.8 |
|
1,781.4 |
|
1,280.1 |
|
||||||||||||
Total mutual fund assets |
42 |
% |
— |
|
2,271.8 |
|
2,270.8 |
|
2,168.3 |
|
2,100.4 |
|
1,595.9 |
|
||||||||||||
Exchange-traded funds (ETFs) |
|
|
|
|
|
|
|
|||||||||||||||||||
Proprietary ETFs (2) |
49 |
% |
3 |
% |
251.6 |
|
245.2 |
|
220.9 |
|
198.8 |
|
168.9 |
|
||||||||||||
Other third-party ETFs |
131 |
% |
2 |
% |
1,183.7 |
|
1,158.8 |
|
1,035.1 |
|
947.3 |
|
512.6 |
|
||||||||||||
Total ETF assets |
111 |
% |
2 |
% |
1,435.3 |
|
1,404.0 |
|
1,256.0 |
|
1,146.1 |
|
681.5 |
|
||||||||||||
Equity and other securities |
105 |
% |
— |
|
2,976.7 |
|
2,988.8 |
|
2,721.0 |
|
2,504.7 |
|
1,453.2 |
|
||||||||||||
Fixed income securities |
12 |
% |
(1 |
)% |
356.8 |
|
359.6 |
|
364.5 |
|
377.1 |
|
318.0 |
|
||||||||||||
Margin loans outstanding |
N/M |
5 |
% |
(83.8 |
) |
(79.8 |
) |
(72.2 |
) |
(60.9 |
) |
(23.6 |
) |
|||||||||||||
Total client assets |
73 |
% |
1 |
% |
$ |
7,614.0 |
|
$ |
7,574.8 |
|
$ |
7,069.1 |
|
$ |
6,691.7 |
|
$ |
4,395.3 |
|
|||||||
Client assets by business |
|
|
|
|
|
|
|
|||||||||||||||||||
Investor Services |
74 |
% |
— |
|
$ |
4,137.7 |
|
$ |
4,146.2 |
|
$ |
3,865.9 |
|
$ |
3,667.9 |
|
$ |
2,377.7 |
|
|||||||
Advisor Services |
72 |
% |
1 |
% |
3,476.3 |
|
3,428.6 |
|
3,203.2 |
|
3,023.8 |
|
2,017.6 |
|
||||||||||||
Total client assets |
73 |
% |
1 |
% |
$ |
7,614.0 |
|
$ |
7,574.8 |
|
$ |
7,069.1 |
|
$ |
6,691.7 |
|
$ |
4,395.3 |
|
|||||||
Net growth in assets in client accounts (for the quarter ended) |
|
|
|
|
|
|
|
|||||||||||||||||||
Net new assets by business |
|
|
|
|
|
|
|
|||||||||||||||||||
Investor Services (5) |
N/M |
30 |
% |
$ |
57.9 |
|
$ |
44.5 |
|
$ |
65.1 |
|
$ |
939.2 |
|
$ |
18.9 |
|
||||||||
Advisor Services (6) |
151 |
% |
26 |
% |
81.1 |
|
64.3 |
|
68.7 |
|
751.5 |
|
32.3 |
|
||||||||||||
Total net new assets |
171 |
% |
28 |
% |
$ |
139.0 |
|
$ |
108.8 |
|
$ |
133.8 |
|
$ |
1,690.7 |
|
$ |
51.2 |
|
|||||||
Net market (losses) gains |
N/M |
N/M |
(99.8 |
) |
396.9 |
|
243.6 |
|
605.7 |
|
234.0 |
|
||||||||||||||
Net growth (decline) |
(86 |
)% |
(92 |
)% |
$ |
39.2 |
|
$ |
505.7 |
|
$ |
377.4 |
|
$ |
2,296.4 |
|
$ |
285.2 |
|
|||||||
New brokerage accounts (in thousands, for the quarter ended) (7) |
99 |
% |
(29 |
)% |
1,178 |
|
1,657 |
|
3,153 |
|
15,774 |
|
592 |
|
||||||||||||
Client accounts (in thousands) |
|
|
|
|
|
|
|
|||||||||||||||||||
Active brokerage accounts |
127 |
% |
1 |
% |
32,675 |
|
32,265 |
|
31,902 |
|
29,629 |
|
14,393 |
|
||||||||||||
Banking accounts |
6 |
% |
— |
|
1,580 |
|
1,574 |
|
1,608 |
|
1,499 |
|
1,486 |
|
||||||||||||
Corporate retirement plan participants |
28 |
% |
3 |
% |
2,207 |
|
2,149 |
|
2,105 |
|
2,054 |
|
1,722 |
|
||||||||||||
|
|
|
|
|
|
|
|
(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 |
|
(3) |
Excludes all proprietary mutual funds and ETFs. |
|
(4) |
As of |
|
(5) |
First quarter of 2021 includes an outflow of |
|
(6) |
Fourth quarter of 2020 includes inflows of |
|
(7) |
Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. |
|
N/M Not meaningful. Percentage changes greater than |
||
The Charles Schwab Corporation Monthly Activity Report For |
|||||||||||||||||||||||||||||||||||||||||||||
|
2020 |
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
||||||||||||||||||
|
Sep |
|
Oct |
|
Nov |
|
Dec |
|
Jan |
|
Feb |
|
Mar |
|
Apr |
|
May |
|
Jun |
|
Jul |
|
Aug |
|
Sep |
|
Mo. |
|
Yr. |
||||||||||||||||
Market Indices (at month end) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Dow Jones Industrial Average |
27,782 |
|
26,502 |
|
29,639 |
|
30,606 |
|
29,983 |
|
30,932 |
|
32,982 |
|
33,875 |
|
34,529 |
|
34,503 |
|
34,935 |
|
35,361 |
|
33,844 |
|
(4 |
)% |
22 |
% |
|||||||||||||||
Nasdaq Composite |
11,168 |
|
10,912 |
|
12,199 |
|
12,888 |
|
13,071 |
|
13,192 |
|
13,247 |
|
13,963 |
|
13,749 |
|
14,504 |
|
14,673 |
|
15,259 |
|
14,449 |
|
(5 |
)% |
29 |
% |
|||||||||||||||
Standard & Poor’s® 500 |
3,363 |
|
3,270 |
|
3,622 |
|
3,756 |
|
3,714 |
|
3,811 |
|
3,973 |
|
4,181 |
|
4,204 |
|
4,298 |
|
4,395 |
|
4,523 |
|
4,308 |
|
(5 |
)% |
28 |
% |
|||||||||||||||
Client Assets (in billions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Beginning Client Assets |
4,489.7 |
|
4,395.3 |
|
5,878.5 |
|
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 |
|
|
|
|||||||||||||||||
Net New Assets (1) |
20.0 |
|
1,596.9 |
|
32.1 |
|
61.7 |
|
34.2 |
|
37.0 |
|
62.6 |
|
37.2 |
|
28.1 |
|
43.5 |
|
44.3 |
|
51.8 |
|
42.9 |
|
(17 |
)% |
115 |
% |
|||||||||||||||
|
(114.4 |
) |
(113.7 |
) |
510.4 |
|
209.0 |
|
33.7 |
|
103.9 |
|
106.0 |
|
229.8 |
|
31.5 |
|
135.6 |
|
23.6 |
|
143.7 |
|
(267.1 |
) |
|
|
|||||||||||||||||
Total Client Assets (at month end) |
4,395.3 |
|
5,878.5 |
|
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 |
|
(3 |
)% |
73 |
% |
|||||||||||||||
Core Net New Assets (2) |
20.0 |
|
25.6 |
|
32.1 |
|
61.7 |
|
34.2 |
|
51.4 |
|
62.6 |
|
37.2 |
|
28.1 |
|
43.5 |
|
44.3 |
|
51.8 |
|
42.9 |
|
(17 |
)% |
115 |
% |
|||||||||||||||
Receiving Ongoing Advisory Services (at month end) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Investor Services |
361.2 |
|
425.3 |
|
457.1 |
|
471.8 |
|
472.4 |
|
481.3 |
|
495.2 |
|
511.1 |
|
517.8 |
|
525.1 |
|
531.9 |
|
542.5 |
|
530.1 |
|
(2 |
)% |
47 |
% |
|||||||||||||||
Advisor Services (4) |
1,870.1 |
|
2,505.5 |
|
2,715.7 |
|
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 |
|
(2 |
)% |
74 |
% |
|||||||||||||||
Client Accounts (at month end, in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Active Brokerage Accounts |
14,393 |
|
29,013 |
|
29,202 |
|
29,629 |
|
30,534 |
|
31,523 |
|
31,902 |
|
31,877 |
|
32,110 |
|
32,265 |
|
32,386 |
|
32,513 |
|
32,675 |
|
— |
|
127 |
% |
|||||||||||||||
Banking Accounts |
1,486 |
|
1,496 |
|
1,504 |
|
1,499 |
|
1,518 |
|
1,542 |
|
1,608 |
|
1,562 |
|
1,584 |
|
1,574 |
|
1,578 |
|
1,594 |
|
1,580 |
|
(1 |
)% |
6 |
% |
|||||||||||||||
Corporate Retirement Plan Participants |
1,722 |
|
2,072 |
|
2,045 |
|
2,054 |
|
2,069 |
|
2,093 |
|
2,105 |
|
2,116 |
|
2,130 |
|
2,149 |
|
2,159 |
|
2,188 |
|
2,207 |
|
1 |
% |
28 |
% |
|||||||||||||||
Client Activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
New Brokerage Accounts (in thousands) (5) |
184 |
|
14,718 |
|
430 |
|
626 |
|
1,095 |
|
1,211 |
|
847 |
|
609 |
|
549 |
|
499 |
|
402 |
|
402 |
|
374 |
|
(7 |
)% |
103 |
% |
|||||||||||||||
Client Cash as a Percentage of Client Assets (6) |
12.8 |
% |
13.4 |
% |
12.4 |
% |
12.3 |
% |
12.2 |
% |
11.8 |
% |
11.5 |
% |
10.9 |
% |
10.8 |
% |
10.5 |
% |
10.4 |
% |
10.3 |
% |
10.8 |
% |
50 bp |
(200) bp |
|||||||||||||||||
Derivative Trades as a Percentage of Total Trades |
14.5 |
% |
20.5 |
% |
19.4 |
% |
18.9 |
% |
17.4 |
% |
16.6 |
% |
18.5 |
% |
20.4 |
% |
20.9 |
% |
20.6 |
% |
22.2 |
% |
23.1 |
% |
23.1 |
% |
— |
|
860 bp |
||||||||||||||||
Selected Average Balances (in millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Average Interest-Earning Assets (7,8) |
392,784 |
|
442,119 |
|
466,677 |
|
482,394 |
|
517,306 |
|
514,885 |
|
520,074 |
|
527,194 |
|
528,642 |
|
536,146 |
|
546,579 |
|
552,372 |
|
565,379 |
|
2 |
% |
44 |
% |
|||||||||||||||
Average Margin Balances (8) |
22,780 |
|
48,095 |
|
53,916 |
|
59,142 |
|
62,999 |
|
69,064 |
|
71,266 |
|
72,863 |
|
75,921 |
|
78,410 |
|
79,910 |
|
81,021 |
|
81,705 |
|
1 |
% |
N/M |
||||||||||||||||
Average Bank Deposits Account Balances (8,9) |
— |
|
132,030 |
|
162,315 |
|
163,463 |
|
167,980 |
|
167,433 |
|
164,866 |
|
162,392 |
|
160,459 |
|
161,377 |
|
151,275 |
|
150,896 |
|
152,330 |
|
1 |
% |
N/M |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Equities |
(1,372 |
) |
(1,305 |
) |
10,980 |
|
13,875 |
|
8,234 |
|
14,246 |
|
16,301 |
|
13,422 |
|
9,854 |
|
10,873 |
|
7,418 |
|
8,808 |
|
7,596 |
|
|
|
|||||||||||||||||
Hybrid |
(12 |
) |
(553 |
) |
(402 |
) |
359 |
|
407 |
|
832 |
|
1,133 |
|
877 |
|
1 |
|
390 |
|
666 |
|
569 |
|
335 |
|
|
|
|||||||||||||||||
Bonds |
6,857 |
|
6,765 |
|
5,956 |
|
12,169 |
|
13,601 |
|
9,334 |
|
8,237 |
|
8,940 |
|
5,906 |
|
10,101 |
|
6,917 |
|
8,044 |
|
6,232 |
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Mutual Funds (10) |
757 |
|
(2,260 |
) |
2,832 |
|
6,336 |
|
5,713 |
|
6,273 |
|
6,190 |
|
5,754 |
|
2,022 |
|
5,872 |
|
2,644 |
|
3,876 |
|
(308 |
) |
|
|
|||||||||||||||||
Exchange-Traded Funds (11) |
4,716 |
|
7,167 |
|
13,702 |
|
20,067 |
|
16,529 |
|
18,139 |
|
19,481 |
|
17,485 |
|
13,739 |
|
15,492 |
|
12,357 |
|
13,545 |
|
14,471 |
|
|
|
|||||||||||||||||
Money Market Funds |
(6,627 |
) |
(4,021 |
) |
(5,908 |
) |
(7,332 |
) |
(5,248 |
) |
(4,405 |
) |
(4,528 |
) |
(5,153 |
) |
(3,988 |
) |
(3,806 |
) |
(2,501 |
) |
(1,372 |
) |
(1,512 |
) |
|
|
Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports. | ||
(1) |
|
|
(2) |
Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than |
|
(3) |
Beginning in |
|
(4) |
Excludes Retirement Business Services. |
|
(5) |
|
|
(6) |
|
|
(7) |
Represents average total interest-earning assets on the company’s balance sheet. |
|
(8) |
|
|
(9) |
Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions. |
|
(10) |
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. |
|
(11) |
Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs. |
|
N/M Not meaningful. Percentage changes greater than |
||
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
Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.
Non-GAAP Adjustment
|
Definition |
Usefulness to Investors and Uses by
|
||
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. |
Beginning in 2021, 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.
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 |
|
Nine Months Ended |
|||||||||||||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||||||||||||||||||
|
Total
|
|
Net
|
|
Total
|
|
Net
|
|
Total
|
|
Net
|
|
Total
|
|
Net
|
|||||||||||||||||
Total expenses excluding interest (GAAP),
|
$ |
2,559 |
|
$ |
1,526 |
|
$ |
1,559 |
|
$ |
698 |
|
$ |
8,122 |
|
$ |
4,275 |
|
$ |
4,691 |
|
$ |
2,164 |
|
||||||||
Acquisition and integration-related costs (1) |
(104 |
) |
104 |
|
(42 |
) |
42 |
|
(367 |
) |
367 |
|
(160 |
) |
160 |
|
||||||||||||||||
Amortization of acquired intangible assets |
(153 |
) |
153 |
|
(25 |
) |
25 |
|
(461 |
) |
461 |
|
(43 |
) |
43 |
|
||||||||||||||||
Income tax effects (2) |
N/A |
|
(61 |
) |
N/A |
|
(16 |
) |
N/A |
|
(208 |
) |
N/A |
|
(49 |
) |
||||||||||||||||
Adjusted total expenses (non-GAAP),
|
$ |
2,302 |
|
$ |
1,722 |
|
$ |
1,492 |
|
$ |
749 |
|
$ |
7,294 |
|
$ |
4,895 |
|
$ |
4,488 |
|
$ |
2,318 |
|
(1) |
Acquisition and integration-related costs for the three and nine months ended |
|
(2) |
The income tax effects of the non-GAAP adjustments is determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and is 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 |
|
Nine Months Ended |
|||||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||||||||||
|
Amount |
|
% of Total
|
|
Amount |
|
% of Total
|
|
Amount |
|
% of Total
|
|
Amount |
|
% of Total
|
|||||||||
Income before taxes on income (GAAP),
|
$ |
2,011 |
44.0 |
% |
$ |
889 |
36.3 |
% |
$ |
5,690 |
41.2 |
% |
$ |
2,824 |
37.6 |
% |
||||||||
Acquisition and integration-related costs |
104 |
2.3 |
% |
42 |
1.7 |
% |
367 |
2.7 |
% |
160 |
2.1 |
% |
||||||||||||
Amortization of acquired intangible assets |
153 |
3.3 |
% |
25 |
1.1 |
% |
461 |
3.3 |
% |
43 |
0.6 |
% |
||||||||||||
Adjusted income before taxes on income (non-GAAP),
|
$ |
2,268 |
49.6 |
% |
$ |
956 |
39.1 |
% |
$ |
6,518 |
47.2 |
% |
$ |
3,027 |
40.3 |
% |
||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||||||||||||||||||
|
Amount |
|
Diluted
|
|
Amount |
|
Diluted
|
|
Amount |
|
Diluted
|
|
Amount |
|
Diluted
|
|||||||||||||||||
Net income available to common stockholders (GAAP),
|
$ |
1,406 |
|
$ |
.74 |
|
$ |
615 |
|
$ |
.48 |
|
$ |
3,911 |
|
$ |
2.06 |
|
$ |
1,993 |
|
$ |
1.54 |
|
||||||||
Acquisition and integration-related costs |
104 |
|
.05 |
|
42 |
|
.03 |
|
367 |
|
.19 |
|
160 |
|
.12 |
|
||||||||||||||||
Amortization of acquired intangible assets |
153 |
|
.08 |
|
25 |
|
.02 |
|
461 |
|
.24 |
|
43 |
|
.03 |
|
||||||||||||||||
Income tax effects |
(61 |
) |
(.03 |
) |
(16 |
) |
(.02 |
) |
(208 |
) |
(.10 |
) |
(49 |
) |
(.03 |
) |
||||||||||||||||
Adjusted net income available to common stockholders
|
$ |
1,602 |
|
$ |
.84 |
|
$ |
666 |
|
$ |
.51 |
|
$ |
4,531 |
|
$ |
2.39 |
|
$ |
2,147 |
|
$ |
1.66 |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Return on average common stockholders’ equity (GAAP) |
12 |
% |
10 |
% |
11 |
% |
12 |
% |
||||||||
Average common stockholders’ equity |
$ |
47,492 |
|
$ |
25,810 |
|
$ |
47,908 |
|
$ |
22,511 |
|
||||
Less: Average goodwill |
(11,952 |
) |
(1,735 |
) |
(11,952 |
) |
(1,482 |
) |
||||||||
Less: Average acquired intangible assets — net |
(9,609 |
) |
(1,268 |
) |
(9,762 |
) |
(693 |
) |
||||||||
Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net |
1,895 |
|
67 |
|
1,913 |
|
67 |
|
||||||||
Average tangible common equity |
$ |
27,826 |
|
$ |
22,874 |
|
$ |
28,107 |
|
$ |
20,403 |
|
||||
Adjusted net income available to common stockholders (1) |
$ |
1,602 |
|
$ |
666 |
|
$ |
4,531 |
|
$ |
2,147 |
|
||||
Return on tangible common equity (non-GAAP) |
23 |
% |
12 |
% |
21 |
% |
14 |
% |
(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/20211015005150/en/
MEDIA:
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Charles Schwab
Phone: 415-667-1524
Source:
FAQ
What were the earnings results for Charles Schwab in Q3 2021?
How did Charles Schwab's total client assets change in 2021?
What is the core net new assets figure for Charles Schwab in Q3 2021?
What was the adjusted diluted EPS for Charles Schwab in Q3 2021?