SCHW
$75.86
The Charles Schwab
$.86
1.15%
Earnings Details
2nd Quarter June 2022
Monday, July 18, 2022 8:45:00 AM
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Summary

The Charles Schwab Beats

The Charles Schwab (SCHW) reported 2nd Quarter June 2022 earnings of $0.97 per share on revenue of $5.1 billion. The consensus earnings estimate was $0.91 per share on revenue of $5.1 billion. The Earnings Whisper number was $0.89 per share. Revenue grew 12.5% on a year-over-year basis.

Charles Schwab Corp is a savings and loan holding company, which through its subsidiaries is engaged in securities brokerage, banking and related financial services. It operates in two segments namely Investor Services and Advisor Services.

Results
Reported Earnings
$0.97
Earnings Whisper
$0.89
Consensus Estimate
$0.91
Reported Revenue
$5.09 Bil
Revenue Estimate
$5.05 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Schwab’s Second Quarter Revenues Rise 13% to Surpass $5 Billion

Quarterly net income also reaches new highs of $1.8 billion GAAP, $2.0 billion adjusted (1)

Sustained client focus helps power continued strong business momentum

WESTLAKE, Texas--(BUSINESS WIRE)--The Charles Schwab Corporation announced today that its net income for the second quarter of 2022 was a record $1.8 billion compared with $1.4 billion for the first quarter of 2022, and $1.3 billion for the second quarter of 2021. Net income for the six months ended June 30, 2022 was $3.2 billion, compared with $2.7 billion for the year-earlier period. During the quarter, acquisition and integration-related costs and the amortization of acquired intangibles totaled $94 million and $154 million, respectively, on a pre-tax basis. In addition, the company’s second quarter of 2021 included a charge of approximately $200 million, or $.10 per share, regarding a now settled regulatory matter.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220718005220/en/

 

Three Months Ended
June 30,

 

%

 

Six Months Ended
June 30,

 

%

Financial Highlights (1)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

Net revenues (in millions)

$

5,093

 

$

4,527

 

13

%

$

9,765

 

$

9,242

 

6

%

Net income (in millions)

 

 

 

 

 

 

GAAP

$

1,793

 

$

1,265

 

42

%

$

3,195

 

$

2,749

 

16

%

Adjusted (1)

$

1,981

 

$

1,483

 

34

%

$

3,572

 

$

3,173

 

13

%

Diluted earnings per common share

 

 

 

 

 

 

GAAP

$

.87

 

$

.59

 

47

%

$

1.54

 

$

1.32

 

17

%

Adjusted (1)

$

.97

 

$

.70

 

39

%

$

1.74

 

$

1.55

 

12

%

Pre-tax profit margin

 

 

 

 

 

 

GAAP

 

44.6

%

 

38.0

%

 

 

42.1

%

 

39.8

%

 

Adjusted (1)

 

49.5

%

 

44.6

%

 

 

47.2

%

 

46.0

%

 

Return on average common stockholders’ equity (annualized)

 

19

%

 

10

%

 

 

15

%

 

10

%

 

Return on tangible common equity (annualized) (1)

 

45

%

 

20

%

 

 

32

%

 

21

%

 

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.

(1)

Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

 

CEO Walt Bettinger said, “Throughout the first half of 2022, we’ve kept our focus on serving clients and they’ve rewarded us with sustained strength in business momentum and growth. Clients remained engaged during the second quarter even as pressures mounted on the U.S. economy, including rising inflation and the Fed’s corresponding shift to an aggressive tightening stance, ongoing geopolitical turmoil driven by the war in Ukraine, and more-volatile equity markets that are now in bear-market territory. These pressures have all contributed to an environment that highlights the importance of our contemporary approach to full-service investing, where clients can choose how to access the help they need in the manner that works best for them by visiting one of our branches, speaking with one of our phone-based investment professionals, or utilizing the content, resources and capabilities provided through our website and mobile app. The value of Schwab’s scalable, multi-channel service model was on full display during the past quarter as we facilitated over 575 million total interactions, including nearly 5 million inbound contacts with an average speed to answer of less than 20 seconds.”

“Sustained client engagement was also reflected in daily trading volume during the second quarter, which averaged 6.2 million, approximately 3% above year-earlier levels,” Mr. Bettinger continued. “Clients opened 1.0 million new brokerage accounts during the quarter, and we ended June with 33.9 million active accounts, up 5% year-over-year. Additionally, while the core net new assets (NNA) that clients brought to us during the quarter were impacted by the record tax-season outflows we experienced in April, the $73 billion in core NNA that came in between May 1 and June 30 represented a continuation of the 6% annualized organic growth rate we achieved during the first quarter of 2022. We ended June with $6.83 trillion in client assets versus $7.57 trillion a year earlier, which helps illustrate the extent of the market valuation pressures clients are facing even as they’ve added more than $480 billion in core NNA to their accounts over the past 12 months.”

Mr. Bettinger concluded, “As we move deeper into 2022, our focus remains squarely on executing our 'Through Clients’ Eyes' strategy, along with driving progress across our strategic priorities and our TD Ameritrade integration. We know that clients trust us to provide the help and advice they need to navigate any environment, but that it’s particularly important to be there for them as they assess their investments in light of tougher headwinds. To me, there is no greater reward than seeing our client service professionals earn year-to-date satisfaction scores that are among the highest we’ve ever recorded. We remain convinced that our client-first mindset – in combination with our service culture and relentless attention to scale and efficiency – helps create a formidable competitive advantage for Schwab as we continue to realize our vision of modern wealth management.”

“Our second quarter financial results demonstrated the power of our all-weather model as we supported our clients through an increasingly challenging environment,” noted CFO Peter Crawford. “Record total revenue of $5.1 billion, up 13% versus the prior year, reflected a combination of ongoing business momentum, rapidly tightening monetary policy, and continued strength in client engagement. Net interest revenue was up 31% from the prior year as higher interest rates and client cash balances more than offset the impact of softer securities lending activity. At the same time, asset management and administration fees were essentially flat due to weaker equity market valuations and trading revenues were down 7% largely due to changes in the mix of client activity. Additionally, the other revenue line included $37 million in pre-tax gains related to the sales of Schwab Compliance Technologies and a small business investment.”

Mr. Crawford continued, “On the expense front, quarterly GAAP spending increased slightly year-over-year to $2.8 billion, including $94 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Exclusive of these items, adjusted total expenses(1) were up 2% versus the second quarter of 2021. Our pre-tax profit margin expanded to 44.6% and rose nearly 500 basis points to 49.5% on an adjusted basis(1). Also, the reversal of $62 million in tax reserves due to the resolution of certain state matters helped further bolster after-tax profitability. We believe the combination of our diversified revenue mix with disciplined expense prioritization helps keep us positioned to deliver healthy financial performance through the cycle.”

“Attentive balance sheet management, including the maintenance of appropriate capital and liquidity to support client activity, remains core to our financial strategy,” added Mr. Crawford. “During the quarter, total assets contracted by 6% to $638 billion. This decrease was primarily attributable to record tax disbursements in April as well as expected client cash sorting behavior during the latter part of the period. The company’s preliminary Tier 1 Leverage Ratio moved closer to our operating objective, expanding to 6.4% at the end of June, while second quarter return on equity and ROTCE(1) were 19% and 45%, respectively. The overall strength of today’s results highlights our continued success with clients and further bolsters our confidence in our ability to 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 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 May 14, 2021.

Summer Business Update
The company has scheduled a Summer Business Update for institutional investors on Thursday, July 28, 2022. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 9:00 a.m. PT, 11:00 a.m. - 12:00 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 business momentum and growth; strategic priorities; TD Ameritrade integration; competitive advantage; all-weather model; expense prioritization; financial performance; Tier 1 leverage ratio operating objective; 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; manage expenses; and monetize client assets. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including equity valuations and the level of interest rates; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; competitive pressures on pricing; client cash sorting; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the migration of bank deposit account balances; 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 33.9 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $6.83 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
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

2021

 

2022

 

2021

Net Revenues

 

 

 

 

Interest revenue

$

2,710

 

$

2,068

 

$

5,029

 

$

4,083

 

Interest expense

 

(166

)

 

(121

)

 

(302

)

 

(225

)

Net interest revenue

 

2,544

 

 

1,947

 

 

4,727

 

 

3,858

 

Asset management and administration fees (1)

 

1,052

 

 

1,047

 

 

2,120

 

 

2,063

 

Trading revenue

 

885

 

 

955

 

 

1,848

 

 

2,171

 

Bank deposit account fees

 

352

 

 

337

 

 

646

 

 

688

 

Other

 

260

 

 

241

 

 

424

 

 

462

 

Total net revenues

 

5,093

 

 

4,527

 

 

9,765

 

 

9,242

 

Expenses Excluding Interest

 

 

 

 

Compensation and benefits

 

1,426

 

 

1,318

 

 

2,972

 

 

2,748

 

Professional services

 

258

 

 

247

 

 

502

 

 

473

 

Occupancy and equipment

 

294

 

 

239

 

 

563

 

 

476

 

Advertising and market development

 

105

 

 

128

 

 

207

 

 

244

 

Communications

 

169

 

 

166

 

 

313

 

 

313

 

Depreciation and amortization

 

159

 

 

135

 

 

309

 

 

264

 

Amortization of acquired intangible assets

 

154

 

 

154

 

 

308

 

 

308

 

Regulatory fees and assessments

 

67

 

 

66

 

 

135

 

 

144

 

Other

 

187

 

 

355

 

 

343

 

 

593

 

Total expenses excluding interest

 

2,819

 

 

2,808

 

 

5,652

 

 

5,563

 

Income before taxes on income

 

2,274

 

 

1,719

 

 

4,113

 

 

3,679

 

Taxes on income

 

481

 

 

454

 

 

918

 

 

930

 

Net Income

 

1,793

 

 

1,265

 

 

3,195

 

 

2,749

 

Preferred stock dividends and other

 

141

 

 

148

 

 

265

 

 

244

 

Net Income Available to Common Stockholders

$

1,652

 

$

1,117

 

$

2,930

 

$

2,505

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

Basic

 

1,896

 

 

1,886

 

 

1,895

 

 

1,884

 

Diluted

 

1,904

 

 

1,896

 

 

1,905

 

 

1,894

 

Earnings Per Common Shares Outstanding (2):

 

 

 

 

Basic

$

.87

 

$

.59

 

$

1.55

 

$

1.33

 

Diluted

$

.87

 

$

.59

 

$

1.54

 

$

1.32

 

(1)

Includes fee waivers of $3 million and $57 million for the three and six months ended June 30, 2022, respectively, and $85 million and $163 million for the three and six months ended June 30, 2021, 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)

 

 

Q2-22 % change

2022

 

2021

 

vs.

vs.

Second

 

First

 

Fourth

 

Third

 

Second

(In millions, except per share amounts and as noted)

Q2-21

Q1-22

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

Net interest revenue

31

%

17

%

$

2,544

 

$

2,183

 

$

2,142

 

$

2,030

 

$

1,947

 

Asset management and administration fees

 

(1

)%

 

1,052

 

 

1,068

 

 

1,110

 

 

1,101

 

 

1,047

 

Trading revenue

(7

)%

(8

)%

 

885

 

 

963

 

 

1,017

 

 

964

 

 

955

 

Bank deposit account fees

4

%

20

%

 

352

 

 

294

 

 

304

 

 

323

 

 

337

 

Other

8

%

59

%

 

260

 

 

164

 

 

135

 

 

152

 

 

241

 

Total net revenues

13

%

9

%

 

5,093

 

 

4,672

 

 

4,708

 

 

4,570

 

 

4,527

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

8

%

(8

)%

 

1,426

 

 

1,546

 

 

1,399

 

 

1,303

 

 

1,318

 

Professional services

4

%

6

%

 

258

 

 

244

 

 

271

 

 

250

 

 

247

 

Occupancy and equipment

23

%

9

%

 

294

 

 

269

 

 

254

 

 

246

 

 

239

 

Advertising and market development

(18

)%

3

%

 

105

 

 

102

 

 

122

 

 

119

 

 

128

 

Communications

2

%

17

%

 

169

 

 

144

 

 

130

 

 

144

 

 

166

 

Depreciation and amortization

18

%

6

%

 

159

 

 

150

 

 

145

 

 

140

 

 

135

 

Amortization of acquired intangibles assets

 

 

 

154

 

 

154

 

 

154

 

 

153

 

 

154

 

Regulatory fees and assessments

2

%

(1

)%

 

67

 

 

68

 

 

67

 

 

64

 

 

66

 

Other

(47

)%

20

%

 

187

 

 

156

 

 

143

 

 

140

 

 

355

 

Total expenses excluding interest

 

 

 

2,819

 

 

2,833

 

 

2,685

 

 

2,559

 

 

2,808

 

Income before taxes on income

32

%

24

%

 

2,274

 

 

1,839

 

 

2,023

 

 

2,011

 

 

1,719

 

Taxes on income

6

%

10

%

 

481

 

 

437

 

 

443

 

 

485

 

 

454

 

Net Income

42

%

28

%

$

1,793

 

$

1,402

 

$

1,580

 

$

1,526

 

$

1,265

 

Preferred stock dividends and other

(5

)%

14

%

 

141

 

 

124

 

 

131

 

 

120

 

 

148

 

Net Income Available to Common Stockholders

48

%

29

%

$

1,652

 

$

1,278

 

$

1,449

 

$

1,406

 

$

1,117

 

Earnings per common share (1):

 

 

 

 

 

 

 

Basic

47

%

30

%

$

.87

 

$

.67

 

$

.77

 

$

.74

 

$

.59

 

Diluted

47

%

30

%

$

.87

 

$

.67

 

$

.76

 

$

.74

 

$

.59

 

Dividends declared per common share

11

%

 

$

.20

 

$

.20

 

$

.18

 

$

.18

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

1

%

 

 

1,896

 

 

1,894

 

 

1,892

 

 

1,888

 

 

1,886

 

Diluted

 

 

 

1,904

 

 

1,905

 

 

1,902

 

 

1,898

 

 

1,896

 

Performance Measures

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

44.6

%

 

39.4

%

 

43.0

%

 

44.0

%

 

38.0

%

Return on average common stockholders’ equity (annualized) (2)

 

 

 

19

%

 

12

%

 

12

%

 

12

%

 

10

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

Cash and cash equivalents

113

%

(29

)%

$

64.6

 

$

91.1

 

$

63.0

 

$

34.3

 

$

30.3

 

Cash and investments segregated

34

%

(2

)%

 

53.5

 

 

54.4

 

 

53.9

 

 

42.3

 

 

39.9

 

Receivables from brokerage clients — net

(7

)%

(10

)%

 

76.1

 

 

84.1

 

 

90.6

 

 

86.6

 

 

82.2

 

Available for sale securities (3)

(26

)%

(2

)%

 

265.3

 

 

272.0

 

 

390.1

 

 

377.0

 

 

359.6

 

Held to maturity securities (3)

N/M

 

(5

)%

 

100.1

 

 

105.3

 

 

 

 

 

 

 

Bank loans — net

37

%

6

%

 

39.6

 

 

37.2

 

 

34.6

 

 

31.6

 

 

28.9

 

Total assets

11

%

(6

)%

 

637.6

 

 

681.0

 

 

667.3

 

 

607.5

 

 

574.5

 

Bank deposits

20

%

(5

)%

 

442.0

 

 

465.8

 

 

443.8

 

 

395.3

 

 

368.6

 

Payables to brokerage clients

9

%

(8

)%

 

114.9

 

 

125.3

 

 

125.7

 

 

113.1

 

 

105.0

 

Short-term borrowings

(60

)%

(67

)%

 

1.4

 

 

4.2

 

 

4.9

 

 

3.0

 

 

3.5

 

Long-term debt

13

%

(4

)%

 

21.1

 

 

21.9

 

 

18.9

 

 

19.5

 

 

18.7

 

Stockholders’ equity

(23

)%

(7

)%

 

44.5

 

 

48.1

 

 

56.3

 

 

57.4

 

 

57.5

 

Other

 

 

 

 

 

 

 

Full-time equivalent employees (at quarter end, in thousands)

8

%

3

%

 

35.2

 

 

34.2

 

 

33.4

 

 

32.4

 

 

32.5

 

Capital expenditures — purchases of equipment, office facilities,

and property, net (in millions)

51

%

62

%

$

339

 

$

209

 

$

431

 

$

176

 

$

225

 

Expenses excluding interest as a percentage of average client assets

(annualized)

 

 

 

0.16

%

 

0.15

%

 

0.13

%

 

0.13

%

 

0.15

%

Clients’ Daily Average Trades (DATs) (in thousands)

3

%

(5

)%

 

6,227

 

 

6,578

 

 

6,102

 

 

5,549

 

 

6,042

 

Number of Trading Days

(2

)%

 

 

62.0

 

 

62.0

 

 

63.5

 

 

64.0

 

 

63.0

 

Revenue Per Trade (4)

(9

)%

(3

)%

$

2.29

 

$

2.36

 

$

2.62

 

$

2.71

 

$

2.51

 

 

 

 

 

 

 

 

(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)

In January 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

(4)

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

June 30,

 

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

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

$

65,414

 

$

133

 

 

0.81

%

 

 

$

41,913

 

$

9

 

 

0.07

%

 

 

$

68,920

 

$

167

 

 

0.48

%

 

 

$

40,414

 

$

16

 

 

0.08

%

Cash and investments segregated

 

51,232

 

 

79

 

 

0.61

%

 

 

 

41,037

 

 

4

 

 

0.04

%

 

 

 

51,570

 

 

94

 

 

0.36

%

 

 

 

44,573

 

 

14

 

 

0.06

%

Receivables from brokerage clients

 

79,061

 

 

706

 

 

3.53

%

 

 

 

75,737

 

 

609

 

 

3.18

%

 

 

 

81,618

 

 

1,332

 

 

3.24

%

 

 

 

71,760

 

 

1,172

 

 

3.25

%

Available for sale securities (1,2)

 

287,313

 

 

1,088

 

 

1.51

%

 

 

 

344,719

 

 

1,103

 

 

1.28

%

 

 

 

285,927

 

 

2,035

 

 

1.42

%

 

 

 

341,500

 

 

2,194

 

 

1.28

%

Held to maturity securities (2)

 

101,752

 

 

339

 

 

1.33

%

 

 

 

 

 

 

 

 

 

 

 

102,580

 

 

717

 

 

1.40

%

 

 

 

 

 

 

 

 

Bank loans

 

38,831

 

 

230

 

 

2.38

%

 

 

 

27,234

 

 

148

 

 

2.18

%

 

 

 

37,351

 

 

417

 

 

2.24

%

 

 

 

25,862

 

 

287

 

 

2.22

%

Total interest-earning assets

 

623,603

 

 

2,575

 

 

1.64

%

 

 

 

530,640

 

 

1,873

 

 

1.40

%

 

 

 

627,966

 

 

4,762

 

 

1.51

%

 

 

 

524,109

 

 

3,683

 

 

1.40

%

Securities lending revenue

 

 

 

130

 

 

 

 

 

 

 

 

194

 

 

 

 

 

 

 

 

259

 

 

 

 

 

 

 

 

398

 

 

 

Other interest revenue

 

 

 

5

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

2

 

 

 

Total interest-earning assets

$

623,603

 

$

2,710

 

 

1.73

%

 

 

$

530,640

 

$

2,068

 

 

1.55

%

 

 

$

627,966

 

$

5,029

 

 

1.60

%

 

 

$

524,109

 

$

4,083

 

 

1.55

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

449,936

 

$

28

 

 

0.03

%

 

 

$

368,026

 

$

13

 

 

0.01

%

 

 

$

451,306

 

$

44

 

 

0.02

%

 

 

$

365,576

 

$

26

 

 

0.01

%

Payables to brokerage clients

 

101,784

 

 

4

 

 

0.02

%

 

 

 

87,367

 

 

2

 

 

0.01

%

 

 

 

103,846

 

 

6

 

 

0.01

%

 

 

 

87,353

 

 

4

 

 

0.01

%

Short-term borrowings

 

2,587

 

 

4

 

 

0.69

%

 

 

 

3,245

 

 

3

 

 

0.33

%

 

 

 

3,646

 

 

8

 

 

0.46

%

 

 

 

2,175

 

 

3

 

 

0.30

%

Long-term debt

 

21,119

 

 

124

 

 

2.34

%

 

 

 

18,349

 

 

97

 

 

2.12

%

 

 

 

20,495

 

 

232

 

 

2.26

%

 

 

 

16,308

 

 

182

 

 

2.23

%

Total interest-bearing liabilities

 

575,426

 

 

160

 

 

0.11

%

 

 

 

476,987

 

 

115

 

 

0.10

%

 

 

 

579,293

 

 

290

 

 

0.10

%

 

 

 

471,412

 

 

215

 

 

0.09

%

Non-interest-bearing funding sources

 

48,177

 

 

 

 

 

 

 

53,653

 

 

 

 

 

 

 

48,673

 

 

 

 

 

 

 

52,697

 

 

 

 

Securities lending expense

 

 

 

8

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

12

 

 

 

Other interest expense

 

 

 

(2

)

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

(2

)

 

 

Total funding sources

$

623,603

 

$

166

 

 

0.11

%

 

 

$

530,640

 

$

121

 

 

0.09

%

 

 

$

627,966

 

$

302

 

 

0.10

%

 

 

$

524,109

 

$

225

 

 

0.08

%

Net interest revenue

 

 

$

2,544

 

 

1.62

%

 

 

 

 

$

1,947

 

 

1.46

%

 

 

 

 

$

4,727

 

 

1.50

%

 

 

 

 

$

3,858

 

 

1.47

%

(1)

Amounts have been calculated based on amortized cost.

(2)

In January 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

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

$

146,009

 

$

106

 

 

0.29

%

 

 

$

157,057

 

$

114

 

 

0.29

%

 

 

$

145,371

 

$

208

 

 

0.29

%

 

 

$

163,370

 

$

236

 

 

0.29

%

Fee waivers

 

 

 

(3

)

 

 

 

 

 

 

 

(85

)

 

 

 

 

 

 

 

(57

)

 

 

 

 

 

 

 

(163

)

 

 

Schwab money market funds

 

146,009

 

 

103

 

 

0.28

%

 

 

 

157,057

 

 

29

 

 

0.07

%

 

 

 

145,371

 

 

151

 

 

0.21

%

 

 

 

163,370

 

 

73

 

 

0.09

%

Schwab equity and bond funds, ETFs, and collective trust funds (CTFs)

 

431,747

 

 

92

 

 

0.09

%

 

 

 

415,311

 

 

94

 

 

0.09

%

 

 

 

444,036

 

 

189

 

 

0.09

%

 

 

 

396,296

 

 

180

 

 

0.09

%

Mutual Fund OneSource® and other non-transaction fee funds

 

192,435

 

 

149

 

 

0.31

%

 

 

 

228,890

 

 

180

 

 

0.32

%

 

 

 

202,538

 

 

314

 

 

0.31

%

 

 

 

225,673

 

 

352

 

 

0.31

%

Other third-party mutual funds and ETFs

 

795,727

 

 

171

 

 

0.09

%

 

 

 

896,236

 

 

178

 

 

0.08

%

 

 

 

833,969

 

 

350

 

 

0.08

%

 

 

 

872,822

 

 

346

 

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

1,565,918

 

 

515

 

 

0.13

%

 

 

$

1,697,494

 

 

481

 

 

0.11

%

 

 

$

1,625,914

 

 

1,004

 

 

0.12

%

 

 

$

1,658,161

 

 

951

 

 

0.12

%

Advice solutions (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

440,336

 

 

461

 

 

0.42

%

 

 

$

448,107

 

 

490

 

 

0.44

%

 

 

$

454,830

 

 

957

 

 

0.42

%

 

 

$

436,368

 

 

958

 

 

0.44

%

Non-fee-based

 

86,684

 

 

 

 

 

 

 

 

87,857

 

 

 

 

 

 

 

 

88,509

 

 

 

 

 

 

 

 

86,312

 

 

 

 

 

Total advice solutions

$

527,020

 

 

461

 

 

0.35

%

 

 

$

535,964

 

 

490

 

 

0.37

%

 

 

$

543,339

 

 

957

 

 

0.36

%

 

 

$

522,680

 

 

958

 

 

0.37

%

Other balance-based fees (2)

 

566,712

 

 

61

 

 

0.04

%

 

 

 

605,617

 

 

63

 

 

0.04

%

 

 

 

591,695

 

 

128

 

 

0.04

%

 

 

 

591,090

 

 

127

 

 

0.04

%

Other (3)

 

 

 

15

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

27

 

 

 

Total asset management and administration fees

 

 

$

1,052

 

 

 

 

 

 

 

$

1,047

 

 

 

 

 

 

 

$

2,120

 

 

 

 

 

 

 

$

2,063

 

 

 

(1)

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth Advisory™, 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.

(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)

 

 

 

 

 

 

 

 

 

 

Q2-22 % Change

 

 

2022

 

2021

 

vs.

 

vs.

 

 

Second

 

First

 

Fourth

 

Third

 

Second

(In billions, at quarter end, except as noted)

Q2-21

 

Q1-22

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

18

%

 

(5

)%

 

 

$

552.5

 

 

$

584.3

 

 

$

566.1

 

 

$

503.9

 

 

$

469.5

 

Bank deposit account balances

(4

)%

 

1

%

 

 

 

155.6

 

 

 

154.8

 

 

 

158.5

 

 

 

153.3

 

 

 

161.9

 

Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

5

%

 

11

%

 

 

 

159.2

 

 

 

143.1

 

 

 

146.5

 

 

 

147.7

 

 

 

151.9

 

Equity and bond funds and CTFs (2)

(10

)%

 

(15

)%

 

 

 

149.5

 

 

 

175.8

 

 

 

183.1

 

 

 

167.4

 

 

 

165.9

 

Total proprietary mutual funds and CTFs

(3

)%

 

(3

)%

 

 

 

308.7

 

 

 

318.9

 

 

 

329.6

 

 

 

315.1

 

 

 

317.8

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

(18

)%

 

(17

)%

 

 

 

196.6

 

 

 

235.5

 

 

 

234.9

 

 

 

234.7

 

 

 

240.2

 

Mutual fund clearing services

(32

)%

 

(22

)%

 

 

 

184.4

 

 

 

235.4

 

 

 

254.2

 

 

 

271.9

 

 

 

271.3

 

Other third-party mutual funds (4)

(17

)%

 

(14

)%

 

 

 

1,189.4

 

 

 

1,383.3

 

 

 

1,497.7

 

 

 

1,450.1

 

 

 

1,441.5

 

Total Mutual Fund Marketplace

(20

)%

 

(15

)%

 

 

 

1,570.4

 

 

 

1,854.2

 

 

 

1,986.8

 

 

 

1,956.7

 

 

 

1,953.0

 

Total mutual fund assets

(17

)%

 

(14

)%

 

 

 

1,879.1

 

 

 

2,173.1

 

 

 

2,316.4

 

 

 

2,271.8

 

 

 

2,270.8

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

(3

)%

 

(11

)%

 

 

 

237.7

 

 

 

268.5

 

 

 

271.8

 

 

 

251.6

 

 

 

245.2

 

Other third-party ETFs

(3

)%

 

(11

)%

 

 

 

1,129.0

 

 

 

1,270.6

 

 

 

1,296.4

 

 

 

1,183.7

 

 

 

1,158.8

 

Total ETF assets

(3

)%

 

(11

)%

 

 

 

1,366.7

 

 

 

1,539.1

 

 

 

1,568.2

 

 

 

1,435.3

 

 

 

1,404.0

 

Equity and other securities

(15

)%

 

(19

)%

 

 

 

2,548.5

 

 

 

3,131.1

 

 

 

3,259.8

 

 

 

2,976.7

 

 

 

2,988.8

 

Fixed income securities

12

%

 

12

%

 

 

 

403.5

 

 

 

360.7

 

 

 

356.4

 

 

 

356.8

 

 

 

359.6

 

Margin loans outstanding

(8

)%

 

(9

)%

 

 

 

(73.4

)

 

 

(81.0

)

 

 

(87.4

)

 

 

(83.8

)

 

 

(79.8

)

Total client assets

(10

)%

 

(13

)%

 

 

$

6,832.5

 

 

$

7,862.1

 

 

$

8,138.0

 

 

$

7,614.0

 

 

$

7,574.8

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

(13

)%

 

(15

)%

 

 

$

3,598.7

 

 

$

4,235.5

 

 

$

4,400.7

 

 

$

4,137.7

 

 

$

4,146.2

 

Advisor Services

(6

)%

 

(11

)%

 

 

 

3,233.8

 

 

 

3,626.6

 

 

 

3,737.3

 

 

 

3,476.3

 

 

 

3,428.6

 

Total client assets

(10

)%

 

(13

)%

 

 

$

6,832.5

 

 

$

7,862.1

 

 

$

8,138.0

 

 

$

7,614.0

 

 

$

7,574.8

 

Net growth in assets in client accounts (for the quarter ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

(80

)%

 

(84

)%

 

 

$

8.8

 

 

$

54.6

 

 

$

33.4

 

 

$

57.9

 

 

$

44.5

 

Advisor Services

(46

)%

 

(47

)%

 

 

 

34.6

 

 

 

65.9

 

 

 

101.2

 

 

 

81.1

 

 

 

64.3

 

Total net new assets

(60

)%

 

(64

)%

 

 

$

43.4

 

 

$

120.5

 

 

$

134.6

 

 

$

139.0

 

 

$

108.8

 

Net market gains (losses)

 

 

 

 

 

 

(1,073.0

)

 

 

(396.4

)

 

 

389.4

 

 

 

(99.8

)

 

 

396.9

 

Net growth (decline)

 

 

 

 

 

$

(1,029.6

)

 

$

(275.9

)

 

$

524.0

 

 

$

39.2

 

 

$

505.7

 

New brokerage accounts (in thousands, for the quarter ended)

(39

)%

 

(16

)%

 

 

 

1,014

 

 

 

1,202

 

 

 

1,318

 

 

 

1,178

 

 

 

1,657

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts

5

%

 

1

%

 

 

 

33,896

 

 

 

33,577

 

 

 

33,165

 

 

 

32,675

 

 

 

32,265

 

Banking accounts

6

%

 

2

%

 

 

 

1,669

 

 

 

1,641

 

 

 

1,614

 

 

 

1,580

 

 

 

1,574

 

Corporate retirement plan participants

6

%

 

1

%

 

 

 

2,275

 

 

 

2,246

 

 

 

2,200

 

 

 

2,207

 

 

 

2,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2022, off-platform equity and bond funds, CTFs, and ETFs were $21.4 billion, $4.9 billion, and $86.4 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of June 30, 2022, third-party money funds were $9.3 billion.

(5)

Second quarter of 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients.

 

The Charles Schwab Corporation Monthly Activity Report For June 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

2022

 

 

 

 

 

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®

34,503

 

34,935

 

35,361

 

33,844

 

35,820

 

34,484

 

36,338

 

35,132

 

33,893

 

34,678

 

32,977

 

32,990

 

30,775

 

(7

)%

(11

)%

Nasdaq Composite®

14,504

 

14,673

 

15,259

 

14,449

 

15,498

 

15,538

 

15,645

 

14,240

 

13,751

 

14,221

 

12,335

 

12,081

 

11,029

 

(9

)%

(24

)%

Standard & Poor’s® 500

4,298

 

4,395

 

4,523

 

4,308

 

4,605

 

4,567

 

4,766

 

4,516

 

4,374

 

4,530

 

4,132

 

4,132

 

3,785

 

(8

)%

(12

)%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

7,395.7

 

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

8,138.0

 

7,803.8

 

7,686.6

 

7,862.1

 

7,284.4

 

7,301.7

 

 

 

 

 

Net New Assets (1)

43.5

 

44.3

 

51.8

 

42.9

 

22.9

 

31.4

 

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

19.8

 

(40

)%

(54

)%

Net Market Gains (Losses)

135.6

 

23.6

 

143.7

 

(267.1

)

345.4

 

(95.4

)

139.4

 

(367.8

)

(157.8

)

129.2

 

(568.5

)

(15.5

)

(489.0

)

 

 

 

 

Total Client Assets (at month end)

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

8,138.0

 

7,803.8

 

7,686.6

 

7,862.1

 

7,284.4

 

7,301.7

 

6,832.5

 

(6

)%

(10

)%

Core Net New Assets (2)

43.5

 

44.3

 

51.8

 

42.9

 

36.8

 

45.1

 

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

40.6

 

24

%

(7

)%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

525.1

 

531.9

 

542.5

 

530.1

 

548.3

 

543.1

 

559.2

 

541.9

 

533.7

 

538.9

 

509.3

 

513.0

 

483.8

 

(6

)%

(8

)%

Advisor Services (3)

3,209.3

 

3,256.5

 

3,333.4

 

3,253.2

 

3,399.8

 

3,374.3

 

3,505.2

 

3,382.4

 

3,342.5

 

3,404.6

 

3,190.5

 

3,213.8

 

3,040.4

 

(5

)%

(5

)%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

32,265

 

32,386

 

32,513

 

32,675

 

32,796

 

32,942

 

33,165

 

33,308

 

33,421

 

33,577

 

33,759

 

33,822

 

33,896

 

 

5

%

Banking Accounts

1,574

 

1,578

 

1,594

 

1,580

 

1,593

 

1,608

 

1,614

 

1,628

 

1,641

 

1,641

 

1,652

 

1,658

 

1,669

 

1

%

6

%

Corporate Retirement Plan Participants

2,149

 

2,159

 

2,188

 

2,207

 

2,213

 

2,198

 

2,200

 

2,216

 

2,235

 

2,246

 

2,261

 

2,275

 

2,275

 

 

6

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

499

 

402

 

402

 

374

 

397

 

448

 

473

 

426

 

356

 

420

 

386

 

323

 

305

 

(6

)%

(39

)%

Client Cash as a Percentage of Client Assets (4)

10.5

%

10.4

%

10.3

%

10.8

%

10.4

%

10.5

%

10.9

%

11.3

%

11.5

%

11.4

%

11.9

%

12.0

%

12.8

%

80

bp

230

bp

Derivative Trades as a Percentage of Total Trades

20.6

%

22.2

%

23.1

%

23.1

%

22.5

%

23.4

%

23.0

%

22.4

%

24.0

%

22.4

%

21.9

%

22.6

%

22.3

%

(30

) bp

170

bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (5)

536,146

 

546,579

 

552,372

 

565,379

 

574,181

 

584,362

 

605,709

 

622,997

 

629,042

 

644,768

 

636,668

 

620,157

 

614,100

 

(1

)%

15

%

Average Margin Balances

78,410

 

79,910

 

81,021

 

81,705

 

83,835

 

87,311

 

88,328

 

86,737

 

84,354

 

81,526

 

83,762

 

78,841

 

74,577

 

(5

)%

(5

)%

Average Bank Deposit Account Balances (6)

161,377

 

151,275

 

150,896

 

152,330

 

154,040

 

153,877

 

154,918

 

157,706

 

153,824

 

155,657

 

152,653

 

154,669

 

155,306

 

 

(4

)%

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (7,8) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

10,873

 

7,418

 

8,808

 

7,596

 

8,840

 

13,099

 

11,519

 

7,384

 

9,371

 

14,177

 

(786

)

1,889

 

(1,586

)

 

 

Hybrid

390

 

666

 

569

 

335

 

81

 

308

 

(1,207

)

(367

)

(478

)

(497

)

(529

)

(1,718

)

(1,054

)

 

 

Bonds

10,101

 

6,917

 

8,044

 

6,232

 

4,425

 

4,097

 

5,600

 

1,804

 

(1,973

)

(7,851

)

(6,933

)

(6,121

)

(5,631

)

 

 

Net Buy (Sell) Activity (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (7)

5,872

 

2,644

 

3,876

 

(308

)

302

 

189

 

(2,859

)

(4,961

)

(6,318

)

(11,888

)

(16,657

)

(20,761

)

(16,258

)

 

 

Exchange-Traded Funds (8)

15,492

 

12,357

 

13,545

 

14,471

 

13,044

 

17,315

 

18,771

 

13,782

 

13,238

 

17,717

 

8,409

 

14,811

 

7,987

 

 

 

Money Market Funds

(3,806

)

(2,501

)

(1,372

)

(1,512

)

(451

)

(1,725

)

(144

)

(1,984

)

(1,086

)

(1,344

)

(3,430

)

7,106

 

11,544

 

 

 

Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.

(1)

June 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. 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.

(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)

Schwab One®, certain cash equivalents, bank deposits, third-party bank deposit accounts, and money market fund balances as a percentage of total client assets.

(5)

Represents average total interest-earning assets on the company’s balance sheet.

(6)

Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.

(7)

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.

(8)

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.

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 June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

 

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)

$

2,819

 

$

1,793

 

$

2,808

 

$

1,265

 

$

5,652

 

$

3,195

 

$

5,563

 

$

2,749

 

Acquisition and integration-related costs (1)

 

(94

)

 

94

 

 

(144

)

 

144

 

 

(190

)

 

190

 

 

(263

)

 

263

 

Amortization of acquired intangible assets

 

(154

)

 

154

 

 

(154

)

 

154

 

 

(308

)

 

308

 

 

(308

)

 

308

 

Income tax effects (2)

 

N/A

 

 

(60

)

 

N/A

 

 

(80

)

 

N/A

 

 

(121

)

 

N/A

 

 

(147

)

Adjusted total expenses (non-GAAP), Adjusted net income (non-GAAP)

$

2,571

 

$

1,981

 

$

2,510

 

$

1,483

 

$

5,154

 

$

3,572

 

$

4,992

 

$

3,173

 

(1)

Acquisition and integration-related costs for the three and six months ended June 30, 2022 primarily consist of $53 million and $109 million of compensation and benefits, $35 million and $66 million of professional services, and $4 million and $8 million of occupancy and equipment. Acquisition and integration-related costs for the three and six months ended June 30, 2021 primarily consist of $97 million and $169 million of compensation and benefits, $37 million and $64 million of professional services, and $7 million and $23 million of occupancy and equipment.

(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 June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

 

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)

$

2,274

44.6

%

$

1,719

38.0

%

$

4,113

42.1

%

$

3,679

39.8

%

Acquisition and integration-related costs

 

94

1.8

%

 

144

3.2

%

 

190

1.9

%

 

263

2.9

%

Amortization of acquired intangible assets

 

154

3.1

%

 

154

3.4

%

 

308

3.2

%

 

308

3.3

%

Adjusted income before taxes on income (non-GAAP), Adjusted pre-tax profit margin (non-GAAP)

$

2,522

49.5

%

$

2,017

44.6

%

$

4,611

47.2

%

$

4,250

46.0

%

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

 

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)

$

1,652

 

$

.87

 

$

1,117

 

$

.59

 

$

2,930

 

$

1.54

 

$

2,505

 

$

1.32

 

Acquisition and integration-related costs

 

94

 

 

.05

 

 

144

 

 

.08

 

 

190

 

 

.10

 

 

263

 

 

.14

 

Amortization of acquired intangible assets

 

154

 

 

.08

 

 

154

 

 

.08

 

 

308

 

 

.16

 

 

308

 

 

.16

 

Income tax effects

 

(60

)

 

(.03

)

 

(80

)

 

(.05

)

 

(121

)

 

(.06

)

 

(147

)

 

(.07

)

Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP)

$

1,840

 

$

.97

 

$

1,335

 

$

.70

 

$

3,307

 

$

1.74

 

$

2,929

 

$

1.55

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Return on average common stockholders’ equity (GAAP)

 

19

%

 

10

%

 

15

%

 

10

%

Average common stockholders’ equity

$

35,611

 

$

46,276

 

$

40,063

 

$

47,912

 

Less: Average goodwill

 

(11,952

)

 

(11,952

)

 

(11,952

)

 

(11,952

)

Less: Average acquired intangible assets — net

 

(9,151

)

 

(9,762

)

 

(9,227

)

 

(9,838

)

Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net

 

1,868

 

 

1,907

 

 

1,877

 

 

1,925

 

Average tangible common equity

$

16,376

 

$

26,469

 

$

20,761

 

$

28,047

 

Adjusted net income available to common stockholders (1)

$

1,840

 

$

1,335

 

$

3,307

 

$

2,929

 

Return on tangible common equity (non-GAAP)

 

45

%

 

20

%

 

32

%

 

21

%

(1)

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

 

MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525

INVESTORS/ANALYSTS:
Jeff Edwards
Charles Schwab
Phone: 415-667-1524

Source: The Charles Schwab Corporation