Schwab Reports Second Quarter Results

Core Net New Assets Total $108.8 Billion, a Second Quarter Record

Client Assets Reach a Record $7.57 Trillion

WESTLAKE, Texas--()--The Charles Schwab Corporation announced today that its net income for the second quarter of 2021 was $1.3 billion, compared with $1.5 billion for the first quarter of 2021, and $671 million for the second quarter of 2020. Net income for the six months ended June 30, 2021 was $2.7 billion, compared with $1.5 billion for the year-earlier period. The company’s financial results include TD Ameritrade from closing on October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. For the second quarter and first half of 2021, these transaction-related expenses totaled $298 million and $571 million, respectively, on a pre-tax basis. In addition, the company’s second quarter of 2021 results included a non-deductible charge of $200 million, or $.10 per share, regarding a previously disclosed regulatory matter.

 

 

Three Months Ended
June 30,

 

%

 

Six Months Ended
June 30,

 

%

Financial Highlights (1)

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

 

$

4,527

 

 

$

2,450

 

 

85%

 

$

9,242

 

 

$

5,067

 

 

82%

Net income (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

$

1,265

 

 

$

671

 

 

89%

 

$

2,749

 

 

$

1,466

 

 

88%

Adjusted (2)

 

$

1,483

 

 

$

742

 

 

100%

 

$

3,173

 

 

$

1,569

 

 

102%

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

$

.59

 

 

$

.48

 

 

23%

 

$

1.32

 

 

$

1.07

 

 

23%

Adjusted (2)

 

$

.70

 

 

$

.54

 

 

30%

 

$

1.55

 

 

$

1.14

 

 

36%

Pre-tax profit margin

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

38.0

%

 

36.2

%

 

 

 

39.8

%

 

38.2

%

 

 

Adjusted (2)

 

44.6

%

 

40.0

%

 

 

 

46.0

%

 

40.9

%

 

 

Return on average common stockholders’ equity (annualized)

 

10

%

 

10

%

 

 

 

10

%

 

12

%

 

 

Return on tangible common equity (annualized) (2)

 

20

%

 

12

%

 

 

 

21

%

 

15

%

 

 

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

(1)

Approximate impact of the $200 million regulatory matter charge, included in other expense, on results for the three months ended June 30, 2021 is as follows: Diluted earnings per common share, $.10; pre-tax profit margin, 4.4%; return on average common stockholders’ equity, 1%; and return on tangible common equity, 3%.

(2)

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, “Schwab’s strong business momentum is sustained by the power of our contemporary full-service model as it continues to attract new clients and deepen existing relationships. During the second quarter, signs of normalcy took root across the U.S. as vaccinations accelerated, social activities largely resumed, and people started returning to corporate offices. At the same time, equity markets continued their ascent, with both the S&P 500® and NASDAQ® achieving record highs during the quarter, while longer-term interest rates fluctuated as investors digested economic recovery data and recent Federal Reserve commentary. Against this evolving backdrop, we continued to support highly engaged investors even as activity levels moderated from the first quarter surge. Clients opened 1.7 million new brokerage accounts in the second quarter, representing our third consecutive quarter in excess of a million new accounts when excluding M&A activity. Daily trade volume averaged 6.0 million over the same period – a 28% slowdown on the heels of the record first quarter, yet a still-impressive 4% increase over the fourth quarter of 2020, when we included TD Ameritrade for the first time. At the same time, both independent advisors and individual clients contributed to our total core net new assets of $108.8 billion, up 133% from a year ago – the highest second quarter in our history and a particularly noteworthy result when considering the impact of seasonal tax-related outflows. Our first half core net new assets reached $257.0 billion, a total which is more than double the first half of 2020 and implies a year-to-date organic growth rate of 8%. Total client assets ended June at a record $7.57 trillion, up 7% from the prior record set three months earlier, and up 84% year-over-year.”

Mr. Bettinger added, “Our full-service model embraces an omni-channel approach – aiming to blend the best elements of human interaction and technology so that clients can access us where, when, and how they choose. Our branch network remains integral to our approach, and we successfully re-opened nearly all of our 406 branches, including 80 independent branches during the second quarter. Additionally, we continue to further diversify our offerings and push forward on our key strategic initiatives via our recent acquisitions. The TD Ameritrade integration is on track, and we’ve rolled out the newly combined Schwab Advisor Network® consisting of a nationwide array of independent advisory firms with a range of capabilities to serve the specialized needs of high and ultra-high net worth investors. Following the early 2021 launch of Wasmer SchroederTM Strategies, client demand has accelerated, with net inflows more than doubling sequentially to $2.2 billion in the second quarter. Finally, our referral program for USAA members has proven a steady source of new accounts with open rates of 5,000 per month on average. Entering the second half of 2021, our focus remains firmly on clients. As we help them work towards their financial goals, strive to meet their service expectations, and drive forward on all of our integration efforts, we are simultaneously building the future of modern wealth management.”

CFO Peter Crawford commented, “We continue to deliver solid financial performance through a combination of ongoing success with clients and sustained expense discipline. On the revenue front, net interest revenue grew 2% versus the first quarter of 2021 as modest growth in interest-earning assets, as well as higher bank and margin loan utilization, helped offset the Federal Reserve’s ongoing Zero Interest Rate Policy and persistent prepayment activity within our investment portfolio. In addition, strong asset gathering and sustained growth in advisory solution enrollments pushed asset management and administration fees up 3% sequentially. Trading revenue fell 21% as client activity stepped down from the dramatic surge of the prior quarter, but still remained quite strong relative to past levels. Total revenues contracted 4% quarter-over-quarter to $4.5 billion. Looking at expenses, typical compensation-related seasonality and the slowdown in client engagement from earlier in 2021 helped shape our second quarter spending as we concurrently worked to enhance service capacity and make progress on our integration efforts. Total GAAP expenses increased 2% sequentially to $2.8 billion for the quarter, including $144 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Exclusive of these items (1), adjusted total expenses were up 1%. The sequential increases in GAAP and adjusted expenses both reflect the $200 million regulatory matter charge. We once again effectively balanced near-term profitability with reinvestment for future growth. Our 38.0% pre-tax profit margin – 44.6% on an adjusted basis (1) – marked the 25th consecutive quarter in excess of 35%.”

Mr. Crawford concluded, “We maintained a consistent approach to balance sheet management during the second quarter as we continued to support organic growth and prepared for initial bank deposit account migrations, which have totaled $9.9 billion to date. We supplemented our funding mix in the second quarter by issuing $2.25 billion in long-term senior notes and repaying $1.2 billion in similar debt that matured in May. In addition, we redeemed our $600 million Series C preferred stock in June. Consolidated balance sheet assets were $575 billion at June 30th, up 2% from the first quarter, and our preliminary Tier 1 Leverage Ratio was flat at 6.4%. The company’s 10% return on equity and 20% ROTCE (1) for the quarter reflect our ability to sustain the healthy financial performance, strong balance sheet, and efficient capital management necessary to build long-term value for both clients and stockholders.”

(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.

Forward-Looking Statements

This press release contains forward-looking statements relating to business momentum; growth in the client base, accounts and assets; investments and acquisitions to improve service capacity and the client experience, expand products, services and offerings to meet client needs, diversify revenues, and drive scale and efficiency; strategic initiatives; integration of TD Ameritrade; client demand for Wasmer Schroeder Strategies; USAA referral program; financial performance; expense discipline; the liability and related charge for the pending regulatory matter; balancing near-term profitability with reinvestment for future growth; balance sheet strength; capital management; and long-term value for clients and stockholders. 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 registered 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 talent; support client activity levels; successfully implement integration strategies and plans; monetize client assets; and manage expenses. Other important factors include general market conditions, including equity valuations, trading activity, the level of interest rates – which can impact money market fund fee waivers, and credit spreads; market volatility; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; the transfer of Bank Deposit Account balances; balance sheet cash; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; adverse developments in the resolution and settlement amount of the pending regulatory matter; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 32.3 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.6 million banking accounts, and approximately $7.57 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,

 

 

2021

 

2020

 

2021

 

2020

Net Revenues

 

 

 

 

 

 

 

 

Interest revenue

 

$

2,068

 

 

$

1,486

 

 

$

4,083

 

 

$

3,194

 

Interest expense

 

(121)

 

 

(97)

 

 

(225)

 

 

(233)

 

Net interest revenue

 

1,947

 

 

1,389

 

 

3,858

 

 

2,961

 

Asset management and administration fees (1)

 

1,047

 

 

801

 

 

2,063

 

 

1,628

 

Trading revenue

 

955

 

 

193

 

 

2,171

 

 

381

 

Bank deposit account fees

 

337

 

 

 

 

688

 

 

 

Other

 

241

 

 

67

 

 

462

 

 

97

 

Total net revenues

 

4,527

 

 

2,450

 

 

9,242

 

 

5,067

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

Compensation and benefits

 

1,318

 

 

819

 

 

2,748

 

 

1,716

 

Professional services

 

247

 

 

198

 

 

473

 

 

380

 

Occupancy and equipment

 

239

 

 

152

 

 

476

 

 

294

 

Advertising and market development

 

128

 

 

70

 

 

244

 

 

137

 

Communications

 

166

 

 

78

 

 

313

 

 

153

 

Depreciation and amortization (2)

 

135

 

 

97

 

 

264

 

 

187

 

Amortization of acquired intangible assets (2)

 

154

 

 

12

 

 

308

 

 

18

 

Regulatory fees and assessments

 

66

 

 

36

 

 

144

 

 

70

 

Other

 

355

 

 

100

 

 

593

 

 

177

 

Total expenses excluding interest

 

2,808

 

 

1,562

 

 

5,563

 

 

3,132

 

Income before taxes on income

 

1,719

 

 

888

 

 

3,679

 

 

1,935

 

Taxes on income

 

454

 

 

217

 

 

930

 

 

469

 

Net Income

 

1,265

 

 

671

 

 

2,749

 

 

1,466

 

Preferred stock dividends and other

 

148

 

 

50

 

 

244

 

 

88

 

Net Income Available to Common Stockholders

 

$

1,117

 

 

$

621

 

 

$

2,505

 

 

$

1,378

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

1,886

 

 

1,288

 

 

1,884

 

 

1,287

 

Diluted

 

1,896

 

 

1,294

 

 

1,894

 

 

1,294

 

Earnings Per Common Shares Outstanding (3):

 

 

 

 

 

 

 

 

Basic

 

$

.59

 

 

$

.48

 

 

$

1.33

 

 

$

1.07

 

Diluted

 

$

.59

 

 

$

.48

 

 

$

1.32

 

 

$

1.07

 

(1)

Includes fee waivers of $85 million and $163 million for the three and six months ended June 30, 2021, respectively, and $15 million for the three and six months ended June 30, 2020.

(2)

Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.

(3)

For the three and six months ended June 30, 2021, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

 

Q2-21 % change

 

 

2021

 

2020

 

 

vs.

 

vs.

 

 

Second

 

First

 

Fourth

 

Third

 

Second

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

 

Q2-20

 

Q1-21

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

 

40

%

 

2

%

 

 

$

1,947

 

 

$

1,911

 

 

$

1,809

 

 

$

1,343

 

 

$

1,389

 

Asset management and administration fees

 

31

%

 

3

%

 

 

1,047

 

 

1,016

 

 

987

 

 

860

 

 

801

 

Trading revenue

 

N/M

 

(21)

%

 

 

955

 

 

1,216

 

 

854

 

 

181

 

 

193

 

Bank deposit account fees

 

N/M

 

(4)

%

 

 

337

 

 

351

 

 

355

 

 

 

 

 

Other

 

N/M

 

9

%

 

 

241

 

 

221

 

 

171

 

 

64

 

 

67

 

Total net revenues

 

85

%

 

(4)

%

 

 

4,527

 

 

4,715

 

 

4,176

 

 

2,448

 

 

2,450

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

61

%

 

(8)

%

 

 

1,318

 

 

1,430

 

 

1,398

 

 

840

 

 

819

 

Professional services

 

25

%

 

9

%

 

 

247

 

 

226

 

 

269

 

 

194

 

 

198

 

Occupancy and equipment

 

57

%

 

1

%

 

 

239

 

 

237

 

 

254

 

 

155

 

 

152

 

Advertising and market development

 

83

%

 

10

%

 

 

128

 

 

116

 

 

123

 

 

66

 

 

70

 

Communications

 

113

%

 

13

%

 

 

166

 

 

147

 

 

127

 

 

73

 

 

78

 

Depreciation and amortization (1)

 

39

%

 

5

%

 

 

135

 

 

129

 

 

130

 

 

97

 

 

97

 

Amortization of acquired intangible assets (1)

 

N/M

 

 

 

 

154

 

 

154

 

 

147

 

 

25

 

 

12

 

Regulatory fees and assessments

 

83

%

 

(15)

%

 

 

66

 

 

78

 

 

57

 

 

36

 

 

36

 

Other

 

N/M

 

49

%

 

 

355

 

 

238

 

 

195

 

 

73

 

 

100

 

Total expenses excluding interest

 

80

%

 

2

%

 

 

2,808

 

 

2,755

 

 

2,700

 

 

1,559

 

 

1,562

 

Income before taxes on income

 

94

%

 

(12)

%

 

 

1,719

 

 

1,960

 

 

1,476

 

 

889

 

 

888

 

Taxes on income

 

109

%

 

(5)

%

 

 

454

 

 

476

 

 

341

 

 

191

 

 

217

 

Net Income

 

89

%

 

(15)

%

 

 

$

1,265

 

 

$

1,484

 

 

$

1,135

 

 

$

698

 

 

$

671

 

Preferred stock dividends and other

 

196

%

 

54

%

 

 

148

 

 

96

 

 

85

 

 

83

 

 

50

 

Net Income Available to Common Stockholders

 

80

%

 

(20)

%

 

 

$

1,117

 

 

$

1,388

 

 

$

1,050

 

 

$

615

 

 

$

621

 

Earnings per common share (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

23

%

 

(20)

%

 

 

$

.59

 

 

$

.74

 

 

$

.57

 

 

$

.48

 

 

$

.48

 

Diluted

 

23

%

 

(19)

%

 

 

$

.59

 

 

$

.73

 

 

$

.57

 

 

$

.48

 

 

$

.48

 

Dividends declared per common share

 

 

 

 

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

46

%

 

 

 

 

1,886

 

 

1,882

 

 

1,848

 

 

1,289

 

 

1,288

 

Diluted

 

47

%

 

 

 

 

1,896

 

 

1,892

 

 

1,855

 

 

1,294

 

 

1,294

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

 

38.0

%

 

41.6

%

 

35.3

%

 

36.3

%

 

36.2

%

Return on average common stockholders’ equity (annualized) (3)

 

 

 

 

 

 

10

%

 

12

%

 

11

%

 

10

%

 

10

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

(10)

%

 

(38)

%

 

 

$

30.3

 

 

$

48.6

 

 

$

40.3

 

 

$

27.5

 

 

$

33.6

 

Cash and investments segregated

 

20

%

 

(1)

%

 

 

39.9

 

 

40.4

 

 

50.4

 

 

29.6

 

 

33.2

 

Receivables from brokerage clients — net

 

N/M

 

10

%

 

 

82.2

 

 

74.7

 

 

64.4

 

 

25.4

 

 

21.4

 

Available for sale securities

 

28

%

 

5

%

 

 

359.6

 

 

341.6

 

 

337.4

 

 

303.8

 

 

281.2

 

Bank loans — net

 

38

%

 

14

%

 

 

28.9

 

 

25.4

 

 

23.8

 

 

22.3

 

 

20.9

 

Total assets

 

43

%

 

2

%

 

 

574.5

 

 

563.5

 

 

549.0

 

 

419.4

 

 

400.5

 

Bank deposits

 

22

%

 

 

 

 

368.6

 

 

369.9

 

 

358.0

 

 

320.7

 

 

301.6

 

Payables to brokerage clients

 

110

%

 

4

%

 

 

105.0

 

 

101.3

 

 

104.2

 

 

52.0

 

 

50.1

 

Short-term borrowings

 

N/M

 

40

%

 

 

3.5

 

 

2.5

 

 

 

 

 

 

 

Long-term debt

 

120

%

 

6

%

 

 

18.7

 

 

17.7

 

 

13.6

 

 

7.8

 

 

8.5

 

Stockholders’ equity

 

87

%

 

3

%

 

 

57.5

 

 

55.6

 

 

56.1

 

 

31.3

 

 

30.8

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

49

%

 

2

%

 

 

32.5

 

 

32.0

 

 

32.0

 

 

22.1

 

 

21.8

 

Capital expenditures — purchases of equipment, office facilities, and

property, net (in millions)

 

33

%

 

8

%

 

 

$

225

 

 

$

209

 

 

$

200

 

 

$

122

 

 

$

169

 

Expenses excluding interest as a percentage of average client assets

(annualized)

 

 

 

 

 

 

0.15

%

 

0.16

%

 

0.17

%

 

0.14

%

 

0.16

%

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

 

N/M

 

(28)

%

 

 

6,042

 

 

8,414

 

 

5,796

 

 

1,460

 

 

1,619

 

Number of Trading Days

 

 

 

3

%

 

 

63.0

 

 

61.0

 

 

63.0

 

 

64.0

 

 

63.0

 

Revenue Per Trade (4)

 

33

%

 

6

%

 

 

$

2.51

 

 

$

2.37

 

 

$

2.34

 

 

$

1.94

 

 

$

1.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at provisional fair value as of October 6, 2020. Results of operations and metrics are inclusive of TD Ameritrade beginning October 6, 2020.

(1)

Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.

(2)

Beginning in the fourth quarter of 2020, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

(3)

Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.

(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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,913

 

 

$

9

 

 

0.07

%

 

 

$

56,553

 

 

$

19

 

 

0.13

%

 

 

$

40,414

 

 

$

16

 

 

0.08

%

 

 

$

44,343

 

 

$

104

 

 

0.46

%

Cash and investments segregated

 

41,037

 

 

4

 

 

0.04

%

 

 

33,521

 

 

27

 

 

0.32

%

 

 

44,573

 

 

14

 

 

0.06

%

 

 

28,619

 

 

114

 

 

0.79

%

Receivables from brokerage clients

 

75,737

 

 

609

 

 

3.18

%

 

 

17,915

 

 

111

 

 

2.44

%

 

 

71,760

 

 

1,172

 

 

3.25

%

 

 

18,533

 

 

279

 

 

2.97

%

Available for sale securities (1)

 

344,719

 

 

1,103

 

 

1.28

%

 

 

234,346

 

 

1,146

 

 

1.95

%

 

 

341,500

 

 

2,194

 

 

1.28

%

 

 

216,045

 

 

2,331

 

 

2.15

%

Bank loans

 

27,234

 

 

148

 

 

2.18

%

 

 

20,163

 

 

133

 

 

2.63

%

 

 

25,862

 

 

287

 

 

2.22

%

 

 

19,530

 

 

277

 

 

2.84

%

Total interest-earning assets

 

530,640

 

 

1,873

 

 

1.40

%

 

 

362,498

 

 

1,436

 

 

1.58

%

 

 

524,109

 

 

3,683

 

 

1.40

%

 

 

327,070

 

 

3,105

 

 

1.89

%

Securities lending revenue (2)

 

 

 

194

 

 

 

 

 

 

 

49

 

 

 

 

 

 

 

398

 

 

 

 

 

 

 

86

 

 

 

Other interest revenue (2)

 

 

 

1

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

3

 

 

 

Total interest-earning assets (3)

 

$

530,640

 

 

$

2,068

 

 

1.55

%

 

 

$

362,498

 

 

$

1,486

 

 

1.63

%

 

 

$

524,109

 

 

$

4,083

 

 

1.55

%

 

 

$

327,070

 

 

$

3,194

 

 

1.94

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

 

$

368,026

 

 

$

13

 

 

0.01

%

 

 

$

288,990

 

 

$

12

 

 

0.02

%

 

 

$

365,576

 

 

$

26

 

 

0.01

%

 

 

$

258,256

 

 

$

69

 

 

0.05

%

Payables to brokerage clients

 

87,367

 

 

2

 

 

0.01

%

 

 

37,500

 

 

1

 

 

0.01

%

 

 

87,353

 

 

4

 

 

0.01

%

 

 

33,894

 

 

9

 

 

0.05

%

Short-term borrowings (4)

 

3,245

 

 

3

 

 

0.33

%

 

 

39

 

 

 

 

0.24

%

 

 

2,175

 

 

3

 

 

0.30

%

 

 

21

 

 

 

 

0.31

%

Long-term debt

 

18,349

 

 

97

 

 

2.12

%

 

 

8,524

 

 

77

 

 

3.60

%

 

 

16,308

 

 

182

 

 

2.23

%

 

 

8,025

 

 

143

 

 

3.57

%

Total interest-bearing liabilities

 

476,987

 

 

115

 

 

0.10

%

 

 

335,053

 

 

90

 

 

0.11

%

 

 

471,412

 

 

215

 

 

0.09

%

 

 

300,196

 

 

221

 

 

0.15

%

Non-interest-bearing funding sources (3)

 

53,653

 

 

 

 

 

 

 

27,445

 

 

 

 

 

 

 

52,697

 

 

 

 

 

 

 

26,874

 

 

 

 

 

Securities lending expense (2)

 

 

 

7

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

16

 

 

 

Other interest expense (2)

 

 

 

(1)

 

 

 

 

 

 

 

(2)

 

 

 

 

 

 

 

(2)

 

 

 

 

 

 

 

(4)

 

 

 

Total funding sources (3)

 

$

530,640

 

 

$

121

 

 

0.09

%

 

 

$

362,498

 

 

$

97

 

 

0.10

%

 

 

$

524,109

 

 

$

225

 

 

0.08

%

 

 

$

327,070

 

 

$

233

 

 

0.14

%

Net interest revenue

 

 

 

$

1,947

 

 

1.46

%

 

 

 

 

$

1,389

 

 

1.53

%

 

 

 

 

$

3,858

 

 

1.47

%

 

 

 

 

$

2,961

 

 

1.80

%

(1)

Amounts have been calculated based on amortized cost.

(2)

Beginning in the fourth quarter of 2020, securities lending revenue has been reclassified from broker-related receivables and other revenue. Securities lending expense has been reclassified from other expense. Prior period amounts have been reclassified to reflect this change.

(3)

Beginning in the fourth quarter of 2020, broker-related receivables were removed from total interest-earning assets and netted against non-interest-bearing funding sources, resulting in an immaterial reduction to total interest-earning assets and total funding sources. Prior period amounts have been reclassified to reflect this change.

(4)

Interest revenue or expense was less than $500 thousand in the period or periods presented.

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

Schwab money market funds before fee

waivers

 

$

157,057

 

 

$

114

 

 

0.29

%

 

 

$

213,037

 

 

$

164

 

 

0.31

%

 

 

$

163,370

 

 

$

236

 

 

0.29

%

 

 

$

208,405

 

 

$

316

 

 

0.30

%

Fee waivers

 

 

 

(85)

 

 

 

 

 

 

 

(15)

 

 

 

 

 

 

 

(163)

 

 

 

 

 

 

 

(15)

 

 

 

Schwab money market funds

 

157,057

 

 

29

 

 

0.07

%

 

 

213,037

 

 

149

 

 

0.28

%

 

 

163,370

 

 

73

 

 

0.09

%

 

 

208,405

 

 

301

 

 

0.29

%

Schwab equity and bond funds, ETFs, and

collective trust funds (CTFs)

 

415,311

 

 

94

 

 

0.09

%

 

 

274,570

 

 

68

 

 

0.10

%

 

 

396,296

 

 

180

 

 

0.09

%

 

 

282,689

 

 

144

 

 

0.10

%

Mutual Fund OneSource® and other non-

transaction fee funds

 

228,890

 

 

180

 

 

0.32

%

 

 

175,067

 

 

135

 

 

0.31

%

 

 

225,673

 

 

352

 

 

0.31

%

 

 

181,825

 

 

282

 

 

0.31

%

Other third-party mutual funds and ETFs (1)

 

896,236

 

 

178

 

 

0.08

%

 

 

416,242

 

 

73

 

 

0.07

%

 

 

872,822

 

 

346

 

 

0.08

%

 

 

434,100

 

 

150

 

 

0.07

%

Total mutual funds, ETFs, and CTFs (2)

 

$

1,697,494

 

 

481

 

 

0.11

%

 

 

$

1,078,916

 

 

425

 

 

0.16

%

 

 

$

1,658,161

 

 

951

 

 

0.12

%

 

 

$

1,107,019

 

 

877

 

 

0.16

%

Advice solutions (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

 

$

448,107

 

 

490

 

 

0.44

%

 

 

$

260,653

 

 

314

 

 

0.48

%

 

 

$

436,368

 

 

958

 

 

0.44

%

 

 

$

261,954

 

 

626

 

 

0.48

%

Non-fee-based

 

87,857

 

 

 

 

 

 

 

69,234

 

 

 

 

 

 

 

86,312

 

 

 

 

 

 

 

70,232

 

 

 

 

 

Total advice solutions

 

$

535,964

 

 

490

 

 

0.37

%

 

 

$

329,887

 

 

314

 

 

0.38

%

 

 

$

522,680

 

 

958

 

 

0.37

%

 

 

$

332,186

 

 

626

 

 

0.38

%

Other balance-based fees (3)

 

605,617

 

 

63

 

 

0.04

%

 

 

407,796

 

 

45

 

 

0.04

%

 

 

591,090

 

 

127

 

 

0.04

%

 

 

420,321

 

 

99

 

 

0.05

%

Other (4)

 

 

 

13

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

27

 

 

 

 

 

 

 

26

 

 

 

Total asset management and administration fees

 

 

 

$

1,047

 

 

 

 

 

 

 

$

801

 

 

 

 

 

 

 

$

2,063

 

 

 

 

 

 

 

$

1,628

 

 

 

(1)

Beginning in the fourth quarter of 2020, includes third-party money funds related to the acquisition of TD Ameritrade.

(2)

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, Schwab Intelligent Portfolios Premium®, TD Ameritrade AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.

(3)

Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.

(4)

Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

 

 

Q2-21 % Change

 

 

2021

 

2020

 

 

vs.

 

vs.

 

 

Second

 

First

 

Fourth

 

Third

 

Second

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

 

Q2-20

 

Q1-21

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

 

34

%

 

 

 

 

$

469.5

 

 

$

467.3

 

 

$

458.4

 

 

$

370.3

 

 

$

349.2

 

Bank deposit account balances

 

N/M

 

(1)

%

 

 

161.9

 

 

164.2

 

 

165.9

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

 

(28)

%

 

(7)

%

 

 

151.9

 

 

163.6

 

 

176.1

 

 

190.3

 

 

211.6

 

Equity and bond funds and CTFs (2)

 

42

%

 

9

%

 

 

165.9

 

 

152.9

 

 

142.9

 

 

125.5

 

 

117.0

 

Total proprietary mutual funds and CTFs

 

(3)

%

 

 

 

 

317.8

 

 

316.5

 

 

319.0

 

 

315.8

 

 

328.6

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

 

24

%

 

6

%

 

 

240.2

 

 

227.3

 

 

223.9

 

 

203.6

 

 

193.0

 

Mutual fund clearing services

 

25

%

 

9

%

 

 

271.3

 

 

248.7

 

 

252.9

 

 

228.4

 

 

217.3

 

Other third-party mutual funds (4)

 

81

%

 

5

%

 

 

1,441.5

 

 

1,375.8

 

 

1,304.6

 

 

848.1

 

 

796.5

 

Total Mutual Fund Marketplace

 

62

%

 

5

%

 

 

1,953.0

 

 

1,851.8

 

 

1,781.4

 

 

1,280.1

 

 

1,206.8

 

Total mutual fund assets

 

48

%

 

5

%

 

 

2,270.8

 

 

2,168.3

 

 

2,100.4

 

 

1,595.9

 

 

1,535.4

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

 

57

%

 

11

%

 

 

245.2

 

 

220.9

 

 

198.8

 

 

168.9

 

 

156.3

 

Other third-party ETFs

 

148

%

 

12

%

 

 

1,158.8

 

 

1,035.1

 

 

947.3

 

 

512.6

 

 

468.0

 

Total ETF assets

 

125

%

 

12

%

 

 

1,404.0

 

 

1,256.0

 

 

1,146.1

 

 

681.5

 

 

624.3

 

Equity and other securities

 

129

%

 

10

%

 

 

2,988.8

 

 

2,721.0

 

 

2,504.7

 

 

1,453.2

 

 

1,305.8

 

Fixed income securities

 

14

%

 

(1)

%

 

 

359.6

 

 

364.5

 

 

377.1

 

 

318.0

 

 

314.8

 

Margin loans outstanding

 

N/M

 

11

%

 

 

(79.8)

 

 

(72.2)

 

 

(60.9)

 

 

(23.6)

 

 

(19.4)

 

Total client assets

 

84

%

 

7

%

 

 

$

7,574.8

 

 

$

7,069.1

 

 

$

6,691.7

 

 

$

4,395.3

 

 

$

4,110.1

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

 

86

%

 

7

%

 

 

$

4,146.2

 

 

$

3,865.9

 

 

$

3,667.9

 

 

$

2,377.7

 

 

$

2,223.5

 

Advisor Services

 

82

%

 

7

%

 

 

3,428.6

 

 

3,203.2

 

 

3,023.8

 

 

2,017.6

 

 

1,886.6

 

Total client assets

 

84

%

 

7

%

 

 

$

7,574.8

 

 

$

7,069.1

 

 

$

6,691.7

 

 

$

4,395.3

 

 

$

4,110.1

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

 

(61)

%

 

(32)

%

 

 

$

44.5

 

 

$

65.1

 

 

$

939.2

 

 

$

18.9

 

 

$

113.0

 

Advisor Services (6)

 

164

%

 

(6)

%

 

 

64.3

 

 

68.7

 

 

751.5

 

 

32.3

 

 

24.4

 

Total net new assets

 

(21)

%

 

(19)

%

 

 

$

108.8

 

 

$

133.8

 

 

$

1,690.7

 

 

$

51.2

 

 

$

137.4

 

Net market gains (losses)

 

(17)

%

 

63

%

 

 

396.9

 

 

243.6

 

 

605.7

 

 

234.0

 

 

475.8

 

Net growth (decline)

 

(18)

%

 

34

%

 

 

$

505.7

 

 

$

377.4

 

 

$

2,296.4

 

 

$

285.2

 

 

$

613.2

 

New brokerage accounts (in thousands, for the quarter ended) (7)

 

 

 

(47)

%

 

 

1,657

 

 

3,153

 

 

15,774

 

 

592

 

 

1,652

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts

 

129

%

 

1

%

 

 

32,265

 

 

31,902

 

 

29,629

 

 

14,393

 

 

14,107

 

Banking accounts

 

8

%

 

(2)

%

 

 

1,574

 

 

1,608

 

 

1,499

 

 

1,486

 

 

1,463

 

Corporate retirement plan participants

 

25

%

 

2

%

 

 

2,149

 

 

2,105

 

 

2,054

 

 

1,722

 

 

1,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2021, off-platform equity and bond funds, CTFs, and ETFs were $20.5 billion, $6.2 billion, and $82.0 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of June 30, 2021, third-party money funds were $15.2 billion.

(5)

First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade. Second quarter of 2020 includes inflows of $79.9 billion related to the acquisition of the assets of USAA’s Investment Management Company and $10.9 billion from a mutual fund clearing services client.

(6)

Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade. Third quarter of 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC.

(7)

Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. Second quarter of 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAA’s Investment Management Company.

N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

The Charles Schwab Corporation Monthly Activity Report For June 2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

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

 

25,813

 

 

26,428

 

 

28,430

 

 

27,782

 

 

26,502

 

 

29,639

 

 

30,606

 

 

29,983

 

 

30,932

 

 

32,982

 

 

33,875

 

 

34,529

 

 

34,503

 

 

 

 

34

%

Nasdaq Composite

 

10,059

 

 

10,745

 

 

11,775

 

 

11,168

 

 

10,912

 

 

12,199

 

 

12,888

 

 

13,071

 

 

13,192

 

 

13,247

 

 

13,963

 

 

13,749

 

 

14,504

 

 

5

%

 

44

%

Standard & Poor’s® 500

 

3,100

 

 

3,271

 

 

3,500

 

 

3,363

 

 

3,270

 

 

3,622

 

 

3,756

 

 

3,714

 

 

3,811

 

 

3,973

 

 

4,181

 

 

4,204

 

 

4,298

 

 

2

%

 

39

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

 

4,009.0

 

 

4,110.1

 

 

4,278.0

 

 

4,489.7

 

 

4,395.3

 

 

5,878.5

 

 

6,421.0

 

 

6,691.7

 

 

6,759.6

 

 

6,900.5

 

 

7,069.1

 

 

7,336.1

 

 

7,395.7

 

 

 

 

 

Net New Assets (1)

 

24.6

 

 

11.2

 

 

20.0

 

 

20.0

 

 

1,596.9

 

 

32.1

 

 

61.7

 

 

34.2

 

 

37.0

 

 

62.6

 

 

37.2

 

 

28.1

 

 

43.5

 

 

55

%

 

77

%

Net Market Gains (Losses)

 

76.5

 

 

156.7

 

 

191.7

 

 

(114.4)

 

 

(113.7)

 

 

510.4

 

 

209.0

 

 

33.7

 

 

103.9

 

 

106.0

 

 

229.8

 

 

31.5

 

 

135.6

 

 

 

 

 

Total Client Assets (at month end)

 

4,110.1

 

 

4,278.0

 

 

4,489.7

 

 

4,395.3

 

 

5,878.5

 

 

6,421.0

 

 

6,691.7

 

 

6,759.6

 

 

6,900.5

 

 

7,069.1

 

 

7,336.1

 

 

7,395.7

 

 

7,574.8

 

 

2

%

 

84

%

Core Net New Assets (2)

 

13.7

 

 

2.7

 

 

20.0

 

 

20.0

 

 

25.6

 

 

32.1

 

 

61.7

 

 

34.2

 

 

51.4

 

 

62.6

 

 

37.2

 

 

28.1

 

 

43.5

 

 

55

%

 

N/M

Receiving Ongoing Advisory Services (at month end) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

 

345.2

 

 

355.6

 

 

366.8

 

 

361.2

 

 

425.3

 

 

457.1

 

 

471.8

 

 

472.4

 

 

481.3

 

 

495.2

 

 

511.1

 

 

517.8

 

 

525.1

 

 

1

%

 

52

%

Advisor Services (4)

 

1,747.5

 

 

1,818.5

 

 

1,900.5

 

 

1,870.1

 

 

2,505.5

 

 

2,715.7

 

 

2,828.3

 

 

2,840.6

 

 

2,913.3

 

 

2,997.9

 

 

3,112.5

 

 

3,150.4

 

 

3,209.3

 

 

2

%

 

84

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

 

14,107

 

 

14,220

 

 

14,311

 

 

14,393

 

 

29,013

 

 

29,202

 

 

29,629

 

 

30,534

 

 

31,523

 

 

31,902

 

 

31,877

 

 

32,110

 

 

32,265

 

 

 

 

129

%

Banking Accounts

 

1,463

 

 

1,480

 

 

1,493

 

 

1,486

 

 

1,496

 

 

1,504

 

 

1,499

 

 

1,518

 

 

1,542

 

 

1,608

 

 

1,562

 

 

1,584

 

 

1,574

 

 

(1)

%

 

8

%

Corporate Retirement Plan Participants

 

1,716

 

 

1,712

 

 

1,715

 

 

1,722

 

 

2,072

 

 

2,045

 

 

2,054

 

 

2,069

 

 

2,093

 

 

2,105

 

 

2,116

 

 

2,130

 

 

2,149

 

 

1

%

 

25

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands) (5)

 

201

 

 

206

 

 

202

 

 

184

 

 

14,718

 

 

430

 

 

626

 

 

1,095

 

 

1,211

 

 

847

 

 

609

 

 

549

 

 

499

 

 

(9)

%

 

148

%

Client Cash as a Percentage of Client Assets (6)

 

13.6

%

 

13.0

%

 

12.5

%

 

12.8

%

 

13.4

%

 

12.4

%

 

12.3

%

 

12.2

%

 

11.8

%

 

11.5

%

 

10.9

%

 

10.8

%

 

10.5

%

 

(30) bp

 

(310) bp

Derivative Trades as a Percentage of Total Trades

 

10.6

%

 

13.1

%

 

13.8

%

 

14.5

%

 

20.5

%

 

19.4

%

 

18.9

%

 

17.4

%

 

16.6

%

 

18.5

%

 

20.4

%

 

20.9

%

 

20.6

%

 

(30) bp

 

1,000 bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (7,8)

 

373,986

 

 

379,521

 

 

384,690

 

 

392,784

 

 

442,119

 

 

466,677

 

 

482,394

 

 

517,306

 

 

514,885

 

 

520,074

 

 

527,194

 

 

528,642

 

 

536,146

 

 

1

%

 

43

%

Average Margin Balances (8)

 

18,658

 

 

19,802

 

 

21,190

 

 

22,780

 

 

48,095

 

 

53,916

 

 

59,142

 

 

62,999

 

 

69,064

 

 

71,266

 

 

72,863

 

 

75,921

 

 

78,410

 

 

3

%

 

N/M

Average Bank Deposits Account Balances (8,9)

 

 

 

 

 

 

 

 

 

132,030

 

 

162,315

 

 

163,463

 

 

167,980

 

 

167,433

 

 

164,866

 

 

162,392

 

 

160,459

 

 

161,377

 

 

1

%

 

N/M

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (10,11) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

(2,877)

 

 

(3,280)

 

 

(727)

 

 

(1,372)

 

 

(1,305)

 

 

10,980

 

 

13,875

 

 

8,234

 

 

14,246

 

 

16,301

 

 

13,422

 

 

9,854

 

 

10,873

 

 

 

 

 

Hybrid

 

(97)

 

 

(769)

 

 

(124)

 

 

(12)

 

 

(553)

 

 

(402)

 

 

359

 

 

407

 

 

832

 

 

1,133

 

 

877

 

 

1

 

 

390

 

 

 

 

 

Bonds

 

10,925

 

 

8,611

 

 

9,328

 

 

6,857

 

 

6,765

 

 

5,956

 

 

12,169

 

 

13,601

 

 

9,334

 

 

8,237

 

 

8,940

 

 

5,906

 

 

10,101

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (10)

 

1,768

 

 

(147)

 

 

2,568

 

 

757

 

 

(2,260)

 

 

2,832

 

 

6,336

 

 

5,713

 

 

6,273

 

 

6,190

 

 

5,754

 

 

2,022

 

 

5,872

 

 

 

 

 

Exchange-Traded Funds (11)

 

6,183

 

 

4,709

 

 

5,909

 

 

4,716

 

 

7,167

 

 

13,702

 

 

20,067

 

 

16,529

 

 

18,139

 

 

19,481

 

 

17,485

 

 

13,739

 

 

15,492

 

 

 

 

 

Money Market Funds

 

(5,673)

 

 

(9,039)

 

 

(5,614)

 

 

(6,627)

 

 

(4,021)

 

 

(5,908)

 

 

(7,332)

 

 

(5,248)

 

 

(4,405)

 

 

(4,528)

 

 

(5,153)

 

 

(3,988)

 

 

(3,806)

 

 

 

 

 

                               

(1)

February 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. October 2020 includes an inflow of $1.6 trillion related to the acquisition of TD Ameritrade. July 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC. June 2020 includes an inflow of $10.9 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)

Beginning in December 2020, AdvisorDirect® assets are presented as Investor Services. In December 2020, $46.5 billion and $50.4 billion for October and November, respectively, were reclassified from Advisor Services to Investor Services.

(4)

Excludes Retirement Business Services.

(5)

October 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade.

(6)

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

(7)

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

(8)

October 2020 averages reflect a full month of Schwab balances and 26 days of TD Ameritrade balances following the acquisition closing on October 6, 2020. Calculating the consolidated daily average from the closing date onwards would result in Average Interest- Earning Assets, Average Margin Balances, and Average Bank Deposit Account Balances of $450,004 million, $52,744 million, and $157,414 million, respectively.

(9)

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

(10)

Represents the principal value of client mutual fund transactions handled by Schwab, including transactions in proprietary funds. Includes institutional funds available only to Investment Managers. Excludes money market fund transactions. Additional fund categories can be found at https://www.aboutschwab.com/financial-reports.

(11)

Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs. Additional fund categories can be found at https://www.aboutschwab.com/financial-reports.

N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

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.

Beginning in 2021, the Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria.

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,

 

 

2021

 

2020

 

2021

 

2020

 

 

Total
Expenses
Excluding
Interest

 

Net
Income

 

Total
Expenses
Excluding
Interest

 

Net
Income

 

Total
Expenses
Excluding
Interest

 

Net
Income

 

Total
Expenses
Excluding
Interest

 

Net
Income

Total expenses excluding interest (GAAP),

Net income (GAAP)

 

$

2,808

 

$

1,265

 

 

$

1,562

 

$

671

 

 

$

5,563

 

$

2,749

 

 

$

3,132

 

$

1,466

 

Acquisition and integration-related costs (1)

 

(144)

 

144

 

 

(81)

 

81

 

 

(263)

 

 

263

 

 

(118)

 

 

118

 

Amortization of acquired intangible assets

 

(154)

 

154

 

 

(12)

 

 

12

 

 

(308)

 

308

 

 

(18)

 

18

 

Income tax effects (2)

 

N/A

 

(80)

 

 

N/A

 

(22)

 

 

N/A

 

(147)

 

 

N/A

 

(33)

 

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

 

$

2,510

 

$

1,483

 

 

$

1,469

 

$

742

 

 

$

4,992

 

$

3,173

 

 

$

2,996

 

 

$

1,569

 

(1)

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. Acquisition and integration-related costs for the three and six months ended June 30, 2020 primarily consist of professional services and other.

(2)

The income tax effect of the non-GAAP adjustments is determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and is used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis.

N/A Not applicable.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

Amount

 

% of Total
Net
Revenues

 

Amount

 

% of Total
Net
Revenues

 

Amount

 

% of Total
Net
Revenues

 

Amount

 

% of Total
Net
Revenues

Income before taxes on income (GAAP),

Pre-tax profit margin (GAAP)

 

$

1,719

 

 

38.0

%

 

$

888

 

 

36.2

%

 

$

3,679

 

 

39.8

%

 

$

1,935

 

 

38.2

%

Acquisition and integration-related costs

 

144

 

 

3.2

%

 

81

 

 

3.3

%

 

263

 

 

2.9

%

 

118

 

 

2.3

%

Amortization of acquired intangible assets

 

154

 

 

3.4

%

 

12

 

 

0.5

%

 

308

 

 

3.3

%

 

18

 

 

0.4

%

Adjusted income before taxes on income (non-GAAP),

Adjusted pre-tax profit margin (non-GAAP)

 

$

2,017

 

 

44.6

%

 

$

981

 

 

40.0

%

 

$

4,250

 

 

46.0

%

 

$

2,071

 

 

40.9

%

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

Amount

 

Diluted
EPS

 

Amount

 

Diluted
EPS

 

Amount

 

Diluted
EPS

 

Amount

 

Diluted
EPS

Net income available to common stockholders (GAAP),

Earnings per common share — diluted (GAAP)

 

$

1,117

 

 

$

.59

 

 

$

621

 

 

$

.48

 

 

$

2,505

 

 

$

1.32

 

 

$

1,378

 

 

$

1.07

 

Acquisition and integration-related costs

 

144

 

 

.08

 

 

81

 

 

.07

 

 

263

 

 

.14

 

 

118

 

 

.09

 

Amortization of acquired intangible assets

 

154

 

 

.08

 

 

12

 

 

.01

 

 

308

 

 

.16

 

 

18

 

 

.01

 

Income tax effects

 

(80)

 

 

(.05)

 

 

(22)

 

 

(.02)

 

 

(147)

 

 

(.07)

 

 

(33)

 

 

(.03)

 

Adjusted net income available to common stockholders

(non-GAAP), Adjusted diluted EPS (non-GAAP)

 

$

1,335

 

 

$

.70

 

 

$

692

 

 

$

.54

 

 

$

2,929

 

 

$

1.55

 

 

$

1,481

 

 

$

1.14

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Return on average common stockholders’ equity (GAAP)

 

10

%

 

10

%

 

10

%

 

12

%

Average common stockholders’ equity

 

$

46,276

 

 

$

24,515

 

 

$

47,912

 

 

$

22,253

 

Less: Average goodwill

 

(11,952)

 

 

(1,480)

 

 

(11,952)

 

 

(1,480)

 

Less: Average acquired intangible assets — net

 

(9,762)

 

 

(700)

 

 

(9,838)

 

 

(703)

 

Plus: Average deferred tax liabilities related to goodwill and acquired

intangible assets — net

 

1,907

 

 

67

 

 

1,925

 

 

67

 

Average tangible common equity

 

$

26,469

 

 

$

22,402

 

 

$

28,047

 

 

$

20,137

 

Adjusted net income available to common stockholders (1)

 

$

1,335

 

 

$

692

 

 

$

2,929

 

 

$

1,481

 

Return on tangible common equity (non-GAAP)

 

20

%

 

12

%

 

21

%

 

15

%

(1)

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

 

Contacts

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

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

Release Summary

The Charles Schwab Corporation reports results for the second quarter of 2021.

Contacts

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

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