Schwab Reports Second Quarter Results

Rhea-AI Summary

Charles Schwab (SCHW) reported strong Q2 2024 results, with net income of $1.3 billion and diluted EPS of $0.66. Adjusted figures were $1.5 billion and $0.73, respectively. Total client assets reached a record $9.4 trillion, up 17% year-over-year. Core net new assets rose 17% to $61.2 billion. The company's pre-tax profit margin was 37.2% (41.0% adjusted). Schwab's Tier 1 Leverage Ratio stood at 9.4%, with an adjusted ratio of 5.9%. The company saw robust client engagement, with active brokerage accounts up 4% to 35.6 million and margin balances increasing 15% since the end of 2023 to $71.7 billion.

Positive

• Record total client assets of $9.4 trillion, up 17% year-over-year
• Core net new assets increased 17% to $61.2 billion
• Net interest margin expanded to 2.03%, up 1 basis point sequentially
• Asset management and administration fees reached a new quarterly record of $1.4 billion
• Strong capital levels with Tier 1 Leverage Ratio at 9.4%

Negative

• Adjusted net income decreased 2% year-over-year to $1.5 billion
• Adjusted diluted EPS declined 3% to $0.73
• Adjusted pre-tax profit margin decreased to 41.0% from 42.0% in Q2 2023
• Return on average common stockholders' equity dropped to 14% from 17% in Q2 2023

Insights

Financial Analyst

The second quarter results for Charles Schwab highlight a record-high total client assets of $9.4 trillion, an impressive year-over-year growth of 17%. This increase is a strong indicator of investor confidence and the effectiveness of Schwab's 'no trade-offs' value proposition, which has attracted over 2 million new brokerage accounts. The net new assets rose by 17% to $61.2 billion, reflecting continued momentum in asset gathering.

One noteworthy element is the adjusted net income of $1.5 billion and diluted earnings per share of $.73. These figures, despite incorporating $175 million in transaction-related and restructuring costs, underscore Schwab's robust financial health. Additionally, the pre-tax profit margin stands at 37.2%, with an adjusted margin of 41%. A high profit margin generally signifies efficient cost management and strong revenue generation.

In the broader financial landscape, Schwab's performance is noteworthy for its balance sheet management, with a Tier 1 Leverage Ratio of 9.4% and an adjusted Tier 1 Leverage Ratio of 5.9%. These ratios are indicators of the firm’s strong capital adequacy and ability to withstand financial stress, as evidenced by their results in the 2024 Federal Reserve stress test.

Retail investors should consider these robust financial metrics, as they indicate Schwab's stability and growth potential in both the short-term and long-term. However, it's worth noting the minor decline in revenue and income growth compared to the previous year, which could suggest a need for cautious optimism moving forward.

Market Research Analyst

The growth in Schwab's managed investing solutions by 56% year-to-date and the 30% rise in enrollments highlight an increasing client interest in diversified investment options. These metrics are significant as they point to Schwab's success in catering to modern investors' needs for comprehensive financial solutions and advisory services. The net flows into Schwab's Wealth Advisory and Wasmer Schroeder Strategies, increasing by 40% and 53% respectively, further underscore the client's trust in Schwab's advisory capabilities.

Additionally, Schwab's position as the top-ranked mobile app for customer experience for the second consecutive year indicates a strong digital strategy, which is essential in today's increasingly tech-driven financial industry. This accolade, backed by independent research, can enhance client engagement and retention, boosting long-term client loyalty.

For retail investors, Schwab’s emphasis on technology and managed investing solutions signals a forward-thinking approach that aligns with market trends. The robust growth in these areas suggests potential for sustained client acquisition and asset growth, making it an attractive proposition for those considering long-term investments.

Total Client Assets Reached A Record $9.4 Trillion, Up 17% Year-Over-Year

Core Net New Assets Rose 17% to $61.2 Billion, Highlighting Continued Momentum

WESTLAKE, Texas--(BUSINESS WIRE)-- The Charles Schwab Corporation reported net income for the second quarter totaling $1.3 billion, or $.66 diluted earnings per common share. Excluding $175 million of pre-tax transaction-related and restructuring costs, adjusted ⁽¹⁾ net income and diluted common earnings per share equaled $1.5 billion and $.73, respectively.

Client Driven Growth		+17% Core Net New Asset Growth Versus 2Q23		“Schwab’s ‘no trade-offs’ value proposition continued to resonate with investors, as new brokerage accounts opened this year grew to over 2 million and second quarter core asset gathering equaled $61.2 billion – a year-over-year increase of 17%.” Co-Chairman and CEO Walt Bettinger
Modern Wealth Solutions		+56% YTD Inflows to Managed Investing Solutions Versus 2023		“Client interest in our broad array of wealth solutions remained strong through June. Year-to-date enrollments are up ~30% versus the prior year period and net flows into Managed Investing solutions reached $25 billion – an increase of 56% versus the first 6 months of 2023.” Co-Chairman and CEO Walt Bettinger
Diversified Operating Model		41.0% 2Q24 Adjusted Pre-Tax Profit Margin (1)		“Record asset management and administration fees, along with our balanced approach to expense management, helped Schwab produce a second quarter pre-tax margin of 37.2% – 41.0% adjusted (1).” CFO Peter Crawford
Balance Sheet Management		9.4% Tier 1 Leverage Ratio 5.9% Adj. Tier 1 Leverage Ratio (1)		“Similar to prior years, our strong capital levels and all-weather model enabled us to successfully complete the 2024 Federal Reserve stress test, with Schwab notching the highest post-stress ratios among all major banks.” CFO Peter Crawford

2Q24 Client and Business Highlights

• Sustained equity market strength and organic asset gathering pushed total client assets to a record $9.41 trillion
• Active brokerage accounts increased 4% year-over-year to 35.6 million
• Despite expected integration-related attrition, core net new assets grew 17% versus the prior year to $61.2 billion
• Client assets receiving ongoing advisory services are up 16% year-over-year, including year-to-date net flow increases into Schwab Wealth Advisory™ and Wasmer Schroeder™ Strategies of 40% and 53%, respectively
• Margin balances totaled $71.7 billion at quarter-end, up 15% since the end of 2023
• Second quarter trading activity remained robust versus 2023 levels as client engagement in the markets persisted
• Strong year-to-date client net buying of mutual and exchange-traded funds totaled $77 billion – the 2nd highest first half ever
• Schwab ranked #1 for mobile app customer experience by Corporate Insight for the second year in a row ⁽²⁾

		Three Months Ended June 30,								%			Six Months Ended June 30,								%
Financial Highlights (1)		2024				2023				Change			2024				2023				Change
Net revenues (in millions)		$	4,690			$	4,656			1	%		$	9,430			$	9,772			(3	)%
Net income (in millions)
GAAP		$	1,332			$	1,294			3	%		$	2,694			$	2,897			(7	)%
Adjusted (1)		$	1,465			$	1,494			(2	)%		$	2,934			$	3,274			(10	)%
Diluted earnings per common share
GAAP		$	.66			$	.64			3	%		$	1.34			$	1.48			(9	)%
Adjusted (1)		$	.73			$	.75			(3	)%		$	1.47			$	1.68			(13	)%
Pre-tax profit margin
GAAP			37.2	%			36.3	%						37.6	%			38.9	%
Adjusted (1)			41.0	%			42.0	%						40.9	%			44.0	%
Return on average common stockholders’ equity (annualized)			14	%			17	%						15	%			20	%
Return on tangible common equity (annualized) (1)			34	%			62	%						36	%			71	%
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.

2Q24 Financial Commentary

• Total net revenue increased by 1% year-over-year led by sustained market strength
• Net interest margin expanded to 2.03%, up 1 basis point sequentially
• Client transactional sweep cash balances ended June at $374.8 billion, reflecting clients’ April tax disbursements, slowing client cash realignment activity, and continued net securities purchases by clients
• Supplemental funding ⁽³⁾ finished the second quarter at $73.7 billion, up from the first quarter as we redirected some client cash from the bank to the broker-dealer to support increased margin lending
• Asset management and administration fees totaled $1.4 billion, a new quarterly record
• GAAP expenses declined by 1% versus the prior year period and included $43 million in accruals in connection with an industry-wide regulatory review of off-channel communications
• Second quarter acquisition and integration-related costs, amortization of acquired intangibles, and restructuring costs totaled $175 million, down $89 million from 2Q23. Exclusive of these items, adjusted total expenses ⁽¹⁾ grew by 2%
• Charles Schwab Bank, SSB (CSB) capital ratios continued to build, with preliminary Tier 1 Leverage and adjusted Tier 1 Leverage ⁽¹⁾ reaching 10.9% and 6.2%, respectively

(1)		Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10–12 of this release.
(2)		Charles Schwab leads in mobile in Corporate Insight’s 2024 Brokerage Experience Benchmarks (https://corporateinsight.com/the-2024-brokerage-experience-benchmarks-find-hybrids-still-offer-best-experiences/), which evaluate the individual investor experience offered by 20 leading brokerage websites and mobile apps. This research was independently conducted by Corporate Benchmarks’ analytical frameworks that are built on over 25 years of research and provide a clear view of how the nation’s top brokerage websites and mobile apps stack up against one another in terms of functionality, design, navigation, and usability. Schwab paid a licensing fee to Corporate Insight for use of the award and logos.
(3)		Supplemental funding includes repurchase agreements, Schwab Bank Certificates of Deposit (CDs), and Federal Home Loan Bank balances.

Summer Business Update

The company will host its Summer Business Update for institutional investors this morning from 7:30 a.m. - 8:30 a.m. CT, 8:30 a.m. - 9:30 a.m. ET.

Registration for this Update webcast is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements

This press release contains forward-looking statements relating to the company’s value proposition and success with investors, Ameritrade integration-related attrition, expense management and capital levels. 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 are described in the company’s most recent reports on Form 10-K and Form 10-Q, which have been filed with the Securities and Exchange Commission and are available on the company’s website (https://www.aboutschwab.com/financial-reports) and on the Securities and Exchange Commission’s website (https://www.sec.gov). The company makes no commitment to update any forward-looking statements.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 35.6 million active brokerage accounts, 5.4 million workplace plan participant accounts, 1.9 million banking accounts, and $9.41 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 subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://www.sipc.org), and its 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.

THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net Revenues
Interest revenue		$	3,817			$	4,104			$	7,758			$	8,120
Interest expense			(1,659	)			(1,814	)			(3,367	)			(3,060	)
Net interest revenue			2,158				2,290				4,391				5,060
Asset management and administration fees			1,383				1,173				2,731				2,291
Trading revenue			777				803				1,594				1,695
Bank deposit account fees			153				175				336				326
Other			219				215				378				400
Total net revenues			4,690				4,656				9,430				9,772
Expenses Excluding Interest
Compensation and benefits			1,450				1,498				2,988				3,136
Professional services			259				272				500				530
Occupancy and equipment			248				319				513				618
Advertising and market development			107				103				195				191
Communications			172				188				313				334
Depreciation and amortization			233				191				461				368
Amortization of acquired intangible assets			129				134				259				269
Regulatory fees and assessments			96				80				221				163
Other			249				180				435				362
Total expenses excluding interest			2,943				2,965				5,885				5,971
Income before taxes on income			1,747				1,691				3,545				3,801
Taxes on income			415				397				851				904
Net Income			1,332				1,294				2,694				2,897
Preferred stock dividends and other			121				121				232				191
Net Income Available to Common Stockholders		$	1,211			$	1,173			$	2,462			$	2,706
Weighted-Average Common Shares Outstanding:
Basic			1,828				1,820				1,827				1,827
Diluted			1,834				1,825				1,832				1,834
Earnings Per Common Shares Outstanding (1):
Basic		$	.66			$	.64			$	1.35			$	1.48
Diluted		$	.66			$	.64			$	1.34			$	1.48

(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.

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
	Q2-24 % change								2024								2023
(In millions, except per share amounts and as noted)		vs. Q2-23			vs. Q1-24				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter
Net Revenues
Net interest revenue		(6	)%		(3	)%			$	2,158			$	2,233			$	2,130			$	2,237			$	2,290
Asset management and administration fees		18	%		3	%				1,383				1,348				1,241				1,224				1,173
Trading revenue		(3	)%		(5	)%				777				817				767				768				803
Bank deposit account fees		(13	)%		(16	)%				153				183				174				205				175
Other		2	%		38	%				219				159				147				172				215
Total net revenues		1	%		(1	)%				4,690				4,740				4,459				4,606				4,656
Expenses Excluding Interest
Compensation and benefits (1)		(3	)%		(6	)%				1,450				1,538				1,409				1,770				1,498
Professional services		(5	)%		7	%				259				241				253				275				272
Occupancy and equipment		(22	)%		(6	)%				248				265				331				305				319
Advertising and market development		4	%		22	%				107				88				104				102				103
Communications		(9	)%		22	%				172				141				144				151				188
Depreciation and amortization		22	%		2	%				233				228				238				198				191
Amortization of acquired intangible assets		(4	)%		(1	)%				129				130				130				135				134
Regulatory fees and assessments		20	%		(23	)%				96				125				270				114				80
Other (2)		38	%		34	%				249				186				386				173				180
Total expenses excluding interest		(1	)%		—					2,943				2,942				3,265				3,223				2,965
Income before taxes on income		3	%		(3	)%				1,747				1,798				1,194				1,383				1,691
Taxes on income		5	%		(5	)%				415				436				149				258				397
Net Income		3	%		(2	)%				1,332				1,362				1,045				1,125				1,294
Preferred stock dividends and other		—			9	%				121				111				119				108				121
Net Income Available to Common Stockholders		3	%		(3	)%			$	1,211			$	1,251			$	926			$	1,017			$	1,173
Earnings per common share (3):
Basic		3	%		(4	)%			$	.66			$	.69			$	.51			$	.56			$	.64
Diluted		3	%		(3	)%			$	.66			$	.68			$	.51			$	.56			$	.64
Dividends declared per common share		—			—				$	.25			$	.25			$	.25			$	.25			$	.25
Weighted-average common shares outstanding:
Basic		—			—					1,828				1,825				1,823				1,821				1,820
Diluted		—			—					1,834				1,831				1,828				1,827				1,825
Performance Measures
Pre-tax profit margin										37.2	%			37.9	%			26.8	%			30.0	%			36.3	%
Return on average common stockholders’ equity (annualized) (4)										14	%			15	%			12	%			14	%			17	%
Financial Condition (at quarter end, in billions)
Cash and cash equivalents		(47	)%		(20	)%			$	25.4			$	31.8			$	43.3			$	33.3			$	47.7
Cash and investments segregated		(14	)%		(16	)%				21.7				25.9				31.8				18.6				25.1
Receivables from brokerage clients — net		12	%		2	%				72.8				71.2				68.7				69.1				65.2
Available for sale securities		(26	)%		(7	)%				93.6				101.1				107.6				110.3				125.8
Held to maturity securities		(8	)%		(2	)%				153.2				156.4				159.5				162.5				166.3
Bank loans — net		5	%		3	%				42.2				40.8				40.4				40.3				40.1
Total assets		(12	)%		(4	)%				449.7				468.8				493.2				475.2				511.5
Bank deposits		(17	)%		(6	)%				252.4				269.5				290.0				284.4				304.4
Payables to brokerage clients		(6	)%		(5	)%				80.0				84.0				84.8				72.8				84.8
Other short-term borrowings		28	%		19	%				10.0				8.4				6.6				7.6				7.8
Federal Home Loan Bank borrowings		(40	)%		2	%				24.4				24.0				26.4				31.8				41.0
Long-term debt		—			(2	)%				22.4				22.9				26.1				24.8				22.5
Stockholders’ equity		19	%		4	%				44.0				42.4				41.0				37.8				37.1
Other
Full-time equivalent employees (at quarter end, in thousands)		(12	)%		(1	)%				32.3				32.6				33.0				35.9				36.6
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)		(45	)%		(25	)%			$	92			$	122			$	199			$	250			$	168
Expenses excluding interest as a percentage of average client assets (annualized)										0.13	%			0.14	%			0.16	%			0.16	%			0.15	%
Clients’ Daily Average Trades (DATs) (in thousands)		4	%		(8	)%				5,486				5,958				5,192				5,218				5,272
Number of Trading Days		2	%		3	%				63.0				61.0				62.5				62.5				62.0
Revenue Per Trade (5)		(9	)%		—				$	2.25			$	2.25			$	2.36			$	2.35			$	2.46

(1)		Fourth quarter of 2023 includes $16 million in restructuring costs. Third quarter of 2023 includes $276 million in restructuring costs.
(2)		Fourth quarter of 2023 includes $181 million in restructuring costs.
(3)		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.
(4)		Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(5)		Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions, except ratios or as noted)
(Unaudited)
		Three Months Ended June 30,																					Six Months Ended June 30,
		2024										2023											2024										2023
		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		$	28,839		$	382		5.24	%			$	44,683		$	547			4.84	%			$	31,394		$	836		5.26	%			$	40,891		$	960		4.67	%
Cash and investments segregated			21,493			281		5.17	%				27,399			324			4.68	%				25,503			669		5.19	%				33,699			756		4.46	%
Receivables from brokerage clients			68,715			1,351		7.78	%				60,709			1,167			7.60	%				66,259			2,611		7.80	%				60,626			2,251		7.39	%
Available for sale securities (1)			104,045			555		2.13	%				145,032			791			2.18	%				107,956			1,149		2.12	%				150,382			1,616		2.15	%
Held to maturity securities			154,314			658		1.70	%				167,499			720			1.72	%				155,862			1,348		1.73	%				169,184			1,466		1.73	%
Bank loans			41,562			460		4.44	%				40,124			410			4.09	%				41,046			900		4.40	%				40,185			801		4.00	%
Total interest-earning assets			418,968			3,687		3.50	%				485,446			3,959			3.24	%				428,020			7,513		3.49	%				494,967			7,850		3.16	%
Securities lending revenue						95										124											171										236
Other interest revenue						35										21											74										34
Total interest-earning assets		$	418,968		$	3,817		3.62	%			$	485,446		$	4,104			3.36	%			$	428,020		$	7,758		3.60	%			$	494,967		$	8,120		3.27	%
Funding sources
Bank deposits		$	258,119		$	840		1.31	%			$	312,543		$	863			1.11	%			$	266,243		$	1,761		1.33	%			$	327,739		$	1,481		0.91	%
Payables to brokerage clients			67,680			77		0.45	%				64,892			64			0.40	%				68,011			150		0.44	%				70,997			139		0.40	%
Other short-term borrowings			9,268			129		5.59	%				7,622			97			5.08	%				8,327			232		5.60	%				7,272			183		5.06	%
Federal Home Loan Bank borrowings			25,582			348		5.42	%				46,813			606			5.13	%				25,220			678		5.35	%				35,697			910		5.07	%
Long-term debt			22,460			208		3.70	%				21,237			157			2.95	%				23,730			432		3.64	%				20,766			296		2.85	%
Total interest-bearing liabilities			383,109			1,602		1.68	%				453,107			1,787			1.57	%				391,531			3,253		1.66	%				462,471			3,009		1.31	%
Non-interest-bearing funding sources			35,859										32,339											36,489										32,496
Securities lending expense						57										28											112										50
Other interest expense						—										(1	)										2										1
Total funding sources		$	418,968		$	1,659		1.59	%			$	485,446		$	1,814			1.49	%			$	428,020		$	3,367		1.57	%			$	494,967		$	3,060		1.24	%
Net interest revenue					$	2,158		2.03	%						$	2,290			1.87	%						$	4,391		2.03	%						$	5,060		2.03	%

(1)		Amounts have been calculated based on amortized cost.

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions, except ratios or as noted)
(Unaudited)
		Three Months Ended June 30,																				Six Months Ended June 30,
		2024										2023										2024										2023
		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		$	523,665		$	357		0.27	%			$	375,898		$	252		0.27	%			$	511,776		$	693		0.27	%			$	346,145		$	465		0.27	%
Schwab equity and bond funds, exchange-traded funds (ETFs), and collective trust funds (CTFs)			565,848			112		0.08	%				465,079			94		0.08	%				552,755			219		0.08	%				457,830			185		0.08	%
Mutual Fund OneSource® and other no-transaction- fee funds			338,198			214		0.25	%				229,207			151		0.26	%				326,387			423		0.26	%				225,822			299		0.27	%
Other third-party mutual funds and ETFs			600,902			102		0.07	%				681,486			133		0.08	%				603,263			208		0.07	%				678,915			266		0.08	%
Total mutual funds, ETFs, and CTFs (1)		$	2,028,613			785		0.16	%			$	1,751,670			630		0.14	%			$	1,994,181			1,543		0.16	%			$	1,708,712			1,215		0.14	%
Advice solutions (1)
Fee-based		$	525,689			510		0.39	%			$	455,859			464		0.41	%			$	515,911			1,013		0.39	%			$	449,443			917		0.41	%
Non-fee-based			110,234			—		—					95,427			—		—					108,133			—		—					94,948			—		—
Total advice solutions		$	635,923			510		0.32	%			$	551,286			464		0.34	%			$	624,044			1,013		0.33	%			$	544,391			917		0.34	%
Other balance-based fees (2)			763,750			69		0.04	%				594,528			63		0.04	%				741,599			138		0.04	%				578,158			125		0.04	%
Other (3)						19										16										37										34
Total asset management and administration fees					$	1,383									$	1,173									$	2,731									$	2,291

(1)		Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth AdvisoryTM, 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 Premium®, 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.
(2)		Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(3)		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)
		Q2-24 % Change							2024								2023
(In billions, at quarter end, except as noted)		vs. Q2-23			vs. Q1-24				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter
Assets in client accounts
Schwab One®, certain cash equivalents, and bank deposits		(14	)%		(5	)%			$	330.7			$	348.2			$	368.3			$	353.1			$	384.4
Bank deposit account balances		(18	)%		(6	)%				84.5				90.2				97.4				99.5				102.7
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
Money market funds (1)		36	%		3	%				533.6				515.7				476.4				436.3				392.9
Equity and bond funds and CTFs (2)		24	%		4	%				214.4				206.0				186.7				167.9				172.6
Total proprietary mutual funds and CTFs		32	%		4	%				748.0				721.7				663.1				604.2				565.5
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other no-transaction-fee funds		35	%		5	%				344.8				329.2				306.2				288.0				254.6
Mutual fund clearing services		20	%		7	%				264.7				248.1				233.4				216.9				220.7
Other third-party mutual funds		2	%		—					1,177.5				1,182.9				1,126.5				1,055.3				1,150.8
Total Mutual Fund Marketplace		10	%		2	%				1,787.0				1,760.2				1,666.1				1,560.2				1,626.1
Total mutual fund assets		16	%		2	%				2,535.0				2,481.9				2,329.2				2,164.4				2,191.6
Exchange-traded funds
Proprietary ETFs (2)		19	%		2	%				349.6				342.9				319.4				286.2				293.2
Other third-party ETFs		26	%		4	%				1,738.6				1,676.6				1,521.7				1,352.6				1,381.4
Total ETF assets		25	%		3	%				2,088.2				2,019.5				1,841.1				1,638.8				1,674.6
Equity and other securities		22	%		5	%				3,648.8				3,467.7				3,163.5				2,886.4				3,002.7
Fixed income securities		10	%		2	%				792.0				779.0				779.7				747.4				722.6
Margin loans outstanding		14	%		5	%				(71.7	)			(68.1	)			(62.6	)			(65.1	)			(62.8	)
Total client assets		17	%		3	%			$	9,407.5			$	9,118.4			$	8,516.6			$	7,824.5			$	8,015.8
Client assets by business
Investor Services		18	%		4	%			$	5,055.7			$	4,852.2			$	4,519.1			$	4,157.7			$	4,267.9
Advisor Services		16	%		2	%				4,351.8				4,266.2				3,997.5				3,666.8				3,747.9
Total client assets		17	%		3	%			$	9,407.5			$	9,118.4			$	8,516.6			$	7,824.5			$	8,015.8
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (4)		11	%		14	%			$	39.9			$	34.9			$	25.0			$	28.6			$	36.0
Advisor Services (5)		(5	)%		(36	)%				34.3				53.3				41.3				19.6				36.0
Total net new assets		3	%		(16	)%			$	74.2			$	88.2			$	66.3			$	48.2			$	72.0
Net market gains (losses)										214.9				513.6				625.8				(239.5	)			363.8
Net growth (decline)									$	289.1			$	601.8			$	692.1			$	(191.3	)		$	435.8
New brokerage accounts (in thousands, for the quarter ended)		3	%		(10	)%				985				1,094				910				894				960
Client accounts (in thousands)
Active brokerage accounts		4	%		1	%				35,612				35,301				34,838				34,540				34,382
Banking accounts		8	%		2	%				1,931				1,885				1,838				1,799				1,781
Workplace Plan Participant Accounts (6)		7	%		2	%				5,363				5,277				5,221				5,141				5,003

(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 June 30, 2024, off-platform equity and bond funds, CTFs, and ETFs were $31.6 billion, $3.7 billion, and $117.3 billion, respectively.
(3)		Excludes all proprietary mutual funds and ETFs.
(4)		Second quarter of 2024 includes net inflows of $2.7 billion from off-platform Schwab Bank Retail CDs and an inflow of $10.3 billion from a mutual fund clearing services client. First quarter of 2024 includes net outflows of $7.4 billion from off-platform Schwab Bank Retail CDs. Fourth quarter of 2023 includes net inflows of $2.4 billion from off-platform Schwab Bank Retail CDs and outflows of $5.8 billion from an international relationship. Third quarter of 2023 includes net inflows of $3.3 billion from off-platform Schwab Bank Retail CDs. Second quarter of 2023 includes an inflow of $12.0 billion from a mutual fund clearing services client and inflows of $7.8 billion from off-platform Schwab Bank Retail CDs.
(5)		Fourth quarter of 2023 includes outflows of $6.4 billion from an international relationship. Third quarter of 2023 includes an outflow of $0.8 billion from an international relationship.
(6)		Beginning in the fourth quarter 2023, Retirement Plan Participants was expanded to include accounts in Stock Plan Services, Designated Brokerage Services, and Retirement Business Services. Participants may be enrolled in services in more than one Workplace business. Prior periods have been recast to reflect this change.

The Charles Schwab Corporation Monthly Activity Report For June 2024
		2023																					2024																			Change
		Jun			Jul			Aug			Sep			Oct			Nov			Dec			Jan			Feb			Mar			Apr			May				Jun			Mo.			Yr.
Market Indices (at month end)
Dow Jones Industrial Average®		34,408			35,560			34,722			33,508			33,053			35,951			37,690			38,150			38,996			39,807			37,816			38,686				39,119			1	%		14	%
Nasdaq Composite®		13,788			14,346			14,035			13,219			12,851			14,226			15,011			15,164			16,092			16,379			15,658			16,735				17,733			6	%		29	%
Standard & Poor’s® 500		4,450			4,589			4,508			4,288			4,194			4,568			4,770			4,846			5,096			5,254			5,036			5,278				5,460			3	%		23	%
Client Assets (in billions of dollars)
Beginning Client Assets		7,650.2			8,015.8			8,241.0			8,094.7			7,824.5			7,653.4			8,180.6			8,516.6			8,558.1			8,879.5			9,118.4			8,847.5				9,206.3
Net New Assets (1)		33.8			12.9			8.1			27.2			5.0			19.2			42.1			14.8			31.7			41.7			10.0			31.0				33.2			7	%		(2	)%
Net Market Gains (Losses)		331.8			212.3			(154.4	)		(297.4	)		(176.1	)		508.0			293.9			26.7			289.7			197.2			(280.9	)		327.8				168.0
Total Client Assets (at month end)		8,015.8			8,241.0			8,094.7			7,824.5			7,653.4			8,180.6			8,516.6			8,558.1			8,879.5			9,118.4			8,847.5			9,206.3				9,407.5			2	%		17	%
Core Net New Assets (1,2)		33.8			13.7			4.9			27.1			11.3			21.7			43.1			17.2			33.4			45.0			1.0			31.1				29.1			(6	)%		(14	)%
Receiving Ongoing Advisory Services (at month end)
Investor Services		547.5			560.6			552.2			533.0			522.2			557.0			581.4			584.1			601.8			618.5			602.2			624.0				632.9			1	%		16	%
Advisor Services (3)		3,527.8			3,619.8			3,554.2			3,448.0			3,380.3			3,604.4			3,757.4			3,780.4			3,902.5			4,009.5			3,893.9			4,027.3				4,090.0			2	%		16	%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts		34,382			34,434			34,440			34,540			34,571			34,672			34,838			35,017			35,127			35,301			35,426			35,524				35,612			—			4	%
Banking Accounts		1,781			1,792			1,798			1,799			1,812			1,825			1,838			1,856			1,871			1,885			1,901			1,916				1,931			1	%		8	%
Workplace Plan Participant Accounts (4)		5,003			5,030			5,037			5,141			5,212			5,212			5,221			5,226			5,268			5,277			5,282			5,345				5,363			—			7	%
Client Activity
New Brokerage Accounts (in thousands)		315			303			311			280			284			286			340			366			345			383			361			314				310			(1	)%		(2	)%
Client Cash as a Percentage of Client Assets (5,6)		10.5	%		10.2	%		10.4	%		10.8	%		11.2	%		10.7	%		10.5	%		10.5	%		10.2	%		10.0	%		10.2	%		9.9	%			9.7	%		(20) bp			(80) bp
Derivative Trades as a Percentage of Total Trades		23.9	%		23.0	%		24.4	%		24.2	%		23.2	%		23.1	%		21.8	%		21.8	%		22.2	%		21.9	%		22.1	%		21.9	%			21.3	%		(60) bp			(260) bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (7)		479,752			466,659			449,483			444,864			438,522			439,118			446,305			443,694			434,822			431,456			423,532			415,950				417,150			—			(13	)%
Average Margin Balances		61,543			63,040			64,226			64,014			63,946			61,502			62,309			61,368			63,600			66,425			68,827			67,614				69,730			3	%		13	%
Average Bank Deposit Account Balances (8)		102,917			102,566			101,928			100,404			97,893			94,991			95,518			95,553			92,075			90,774			88,819			86,844				85,195			(2	)%		(17	)%
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (9,10) (in millions of dollars)
Equities		9,190			7,423			(278	)		675			(3,039	)		6,099			7,903			8,182			7,624			10,379			3,472			5,734				3,379
Hybrid		(903	)		(407	)		(1,037	)		(828	)		(1,457	)		(1,466	)		(1,596	)		(501	)		(1,330	)		(439	)		(703	)		(558	)			(843	)
Bonds		3,302			2,515			4,696			2,723			1,094			255			6,104			7,510			9,883			7,561			5,949			5,854				6,346
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (9)		(4,485	)		(3,333	)		(6,476	)		(5,853	)		(12,245	)		(9,267	)		(7,406	)		(966	)		(1,348	)		(1,607	)		(4,818	)		(5,544	)			(4,254	)
Exchange-Traded Funds (10)		16,074			12,864			9,857			8,423			8,843			14,155			19,817			16,157			17,525			19,108			13,536			16,574				13,136
Money Market Funds		9,112			7,911			16,869			13,388			16,976			11,670			7,745			11,717			10,129			9,085			(2,357	)		9,790				3,858

Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.
(1)		Unless otherwise noted, differences between net new assets and core net new assets are net flows from off-platform Schwab Bank Retail CDs. Additionally, 2024 includes an inflow of $10.3 billion from a mutual fund clearing services client in April, and 2023 includes outflows from a large international relationship of $0.8 billion in September, $6.2 billion in October, $5.4 billion in November, and $0.6 billion in December.
(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, and activity from off-platform Schwab Bank Retail CDs. These flows may span multiple reporting periods.
(3)		Excludes Retirement Business Services.
(4)		Beginning October 2023, Retirement Plan Participants was expanded to include accounts in Stock Plan Services, Designated Brokerage Services, and Retirement Business Services. Participants may be enrolled in services in more than one Workplace business. Prior periods have been recast to reflect this change.
(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)		Beginning July 2023, client cash as a percentage of client assets excludes brokered CDs issued by Charles Schwab Bank. Prior periods have been recast to reflect this change.
(7)		Represents average total interest-earning assets on the Company’s balance sheet.
(8)		Represents average clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.
(9)		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.
(10)		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 second 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. Beginning in the third quarter of 2023, these adjustments also include restructuring costs, which the Company began incurring in connection with its previously announced plans to streamline its operations to prepare for post-integration of Ameritrade. See Part I – Item 1 – Note 10 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 for additional information.

Non-GAAP Adjustment or Measure		Definition		Usefulness to Investors and Uses by Management
Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs		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, restructuring costs, 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, amortization of acquired intangible assets, and restructuring costs 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. Costs related to acquisition and integration or restructuring fluctuate based on the timing of acquisitions, integration and restructuring 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.
Adjusted Tier 1 Leverage Ratio		Adjusted Tier 1 Leverage Ratio represents the Tier 1 Leverage Ratio as prescribed by bank regulatory guidance for the consolidated company and for CSB, adjusted to reflect the inclusion of accumulated other comprehensive income (AOCI) in the ratio.		Inclusion of the impacts of AOCI in the Company’s Tier 1 Leverage Ratio provides additional information regarding the Company’s current capital position. We believe Adjusted Tier 1 Leverage Ratio may be useful to investors as a supplemental measure of the Company’s capital levels.

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 June 30,																Six Months Ended June 30,
		2024								2023								2024								2023
		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)		$	2,943			$	1,332			$	2,965			$	1,294			$	5,885			$	2,694			$	5,971			$	2,897
Acquisition and integration-related costs (1)			(36	)			36				(130	)			130				(74	)			74				(228	)			228
Amortization of acquired intangible assets			(129	)			129				(134	)			134				(259	)			259				(269	)			269
Restructuring costs (2)			(10	)			10				—				—				18				(18	)			—				—
Income tax effects (3)			N/A				(42	)			N/A				(64	)			N/A				(75	)			N/A				(120	)
Adjusted total expenses (non-GAAP), Adjusted net income (non-GAAP)		$	2,768			$	1,465			$	2,701			$	1,494			$	5,570			$	2,934			$	5,474			$	3,274

(1)		Acquisition and integration-related costs for the three and six months ended June 30, 2024 primarily consist of $18 million and $35 million of compensation and benefits, $12 million and $29 million of professional services, and $5 million of depreciation and amortization. Acquisition and integration-related costs for the three and six months ended June 30, 2023 primarily consist of $48 million and $106 million of compensation and benefits, $41 million and $74 million of professional services, $10 million and $14 million of occupancy and equipment, and $20 million and $22 million of other.
(2)		Restructuring costs for the three and six months ended June 30, 2024 reflect a change in estimate of $3 million and $34 million in compensation and benefits, offset by $1 million and $3 million of occupancy and equipment and $12 million and $13 million of other expense for the periods. There were no restructuring costs for the three and six months ended June 30, 2023.
(3)		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, amortization of acquired intangible assets and restructuring costs on an after-tax basis.
N/A Not applicable.

		Three Months Ended June 30,												Six Months Ended June 30,
		2024						2023						2024							2023
		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)		$	1,747		37.2	%		$	1,691		36.3	%		$	3,545			37.6	%		$	3,801		38.9	%
Acquisition and integration-related costs			36		0.8	%			130		2.8	%			74			0.8	%			228		2.3	%
Amortization of acquired intangible assets			129		2.8	%			134		2.9	%			259			2.7	%			269		2.8	%
Restructuring costs			10		0.2	%			—		—				(18	)		(0.2	%)			—		—
Adjusted income before taxes on income (non-GAAP), Adjusted pre-tax profit margin (non-GAAP)		$	1,922		41.0	%		$	1,955		42.0	%		$	3,860			40.9	%		$	4,298		44.0	%

		Three Months Ended June 30,																Six Months Ended June 30,
		2024								2023								2024								2023
		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)		$	1,211			$	.66			$	1,173			$	.64			$	2,462			$	1.34			$	2,706			$	1.48
Acquisition and integration-related costs			36				.02				130				.07				74				.04				228				.12
Amortization of acquired intangible assets			129				.07				134				.07				259				.14				269				.15
Restructuring costs			10				.01				—				—				(18	)			(.01	)			—				—
Income tax effects			(42	)			(.03	)			(64	)			(.03	)			(75	)			(.04	)			(120	)			(.07	)
Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP)		$	1,344			$	.73			$	1,373			$	.75			$	2,702			$	1.47			$	3,083			$	1.68

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Return on average common stockholders’ equity (GAAP)			14	%			17	%			15	%			20	%
Average common stockholders’ equity		$	33,991			$	27,556			$	33,264			$	27,429
Less: Average goodwill			(11,951	)			(11,951	)			(11,951	)			(11,951	)
Less: Average acquired intangible assets — net			(8,067	)			(8,591	)			(8,132	)			(8,657	)
Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net			1,747				1,834				1,753				1,837
Average tangible common equity		$	15,720			$	8,848			$	14,934			$	8,658
Adjusted net income available to common stockholders (1)		$	1,344			$	1,373			$	2,702			$	3,083
Return on tangible common equity (non-GAAP)			34	%			62	%			36	%			71	%

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

		(Preliminary)
		June 30, 2024
		CSC				CSB
Tier 1 Leverage Ratio (GAAP)			9.4	%			10.9	%
Tier 1 Capital		$	42,624			$	32,091
Plus: AOCI adjustment			(16,926	)			(14,755	)
Adjusted Tier 1 Capital			25,698				17,336
Average assets with regulatory adjustments			451,304				294,465
Plus: AOCI adjustment			(17,301	)			(15,251	)
Adjusted average assets with regulatory adjustments		$	434,003			$	279,214
Adjusted Tier 1 Leverage Ratio (non-GAAP)			5.9	%			6.2	%

 

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MEDIA

Mayura Hooper, 415-667-1525

public.relations@schwab.com



INVESTORS/ANALYSTS

Jeff Edwards, 415-667-1524

investor.relations@schwab.com

Source: The Charles Schwab Corporation

FAQ

What was Charles Schwab's (SCHW) net income for Q2 2024?

Charles Schwab reported a net income of $1.3 billion for Q2 2024.

How much did Charles Schwab's (SCHW) total client assets grow in Q2 2024?

Charles Schwab's total client assets reached a record $9.4 trillion, up 17% year-over-year.

What was Charles Schwab's (SCHW) core net new asset growth in Q2 2024?

Charles Schwab's core net new assets rose 17% to $61.2 billion in Q2 2024.

How did Charles Schwab's (SCHW) active brokerage accounts change in Q2 2024?

Charles Schwab's active brokerage accounts increased 4% year-over-year to 35.6 million in Q2 2024.