SCHW Charles Schwab Corporation

Core Net New Assets Total $120.5 Billion

Total Client Assets Finish at $7.86 Trillion, up 11% Year-over-Year

The Charles Schwab Corporation announced today that its net income for the first quarter of 2022 was $1.4 billion compared with $1.6 billion for the fourth quarter of 2021, and $1.5 billion for the first quarter of 2021. During the quarter, certain acquisition and integration-related costs and the amortization of acquired intangibles totaled $96 million and $154 million, respectively, on a pre-tax basis.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220418005169/en/

 

Three Months Ended March 31,

 

%

Financial Highlights (1)

2022

 

2021

 

Change

 

 

 

 

Net revenues (in millions)

$

4,672

 

$

4,715

 

(1

)%

Net income (in millions)

 

 

 

GAAP

$

1,402

 

$

1,484

 

(6

)%

Adjusted (1)

$

1,591

 

$

1,690

 

(6

)%

Diluted earnings per common share

 

 

 

GAAP

$

.67

 

$

.73

 

(8

)%

Adjusted (1)

$

.77

 

$

.84

 

(8

)%

Pre-tax profit margin

 

 

 

GAAP

 

39.4

%

 

41.6

%

 

Adjusted (1)

 

44.7

%

 

47.4

%

 

Return on average common stockholders’ equity (annualized)

 

12

%

 

12

%

 

Return on tangible common equity (annualized) (1)

 

26

%

 

24

%

 

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, “Our business momentum remained quite strong throughout the first quarter. We helped clients face a complex set of crosscurrents, which included an ongoing economic recovery supported by continued progress against the COVID pandemic, rising inflation, geopolitical turmoil driven by the Russian invasion of Ukraine, the Fed initiating its first tightening cycle since late 2015, and more volatile equity markets that remained below year-end 2021 levels for the vast majority of the period. Ongoing client engagement was reflected in trading activity that averaged more than 6.5 million a day – a level exceeded only by the ‘re-opening’ surge of last year’s first quarter. At the same time, Schwab’s contemporary full-service model and 'no trade-offs' approach to value, service, transparency, and trust helped attract 1.2 million new brokerage accounts during the first quarter, along with $121 billion in core net new assets, which represents a 6% annualized organic growth rate. We ended March with 33.6 million active brokerage accounts and $7.86 trillion in total client assets, up 5% and 11%, respectively, over year-earlier levels.”

“Along with supporting clients through a turbulent environment, we continued to drive progress across our strategic priorities during the quarter, including two significant steps in the exciting area of personalized investing,” Mr. Bettinger continued. “We announced Schwab Personalized Indexing™ (SPI), a proprietary direct indexing solution designed to bring tax efficient personalized portfolio management capabilities – along with a highly competitive account minimum and fee schedule – to a wider spectrum of both registered investment advisors and retail investors. SPI includes daily monitoring of client portfolios and tax-loss harvesting technology that is managed by a team of investment professionals. Additionally, we introduced our initial thematic stock lists, which are built using a proprietary algorithm and designed to help self-directed investors pick stocks aligned with their interests and values. Clients can view potential investments from a list of 45 different categories and approximately 900 companies representing a range of themes including data advancement, medical breakthroughs, and environmental innovation.”

Mr. Bettinger added, “During the first quarter, we took steps to help our clients navigate the mutual fund selection process more efficiently as they look across the broad range of choices available on our open architecture platform. Clients using our enhanced Fund Finder tool on Schwab.com now have the option of referencing modules that highlight funds from Schwab and T. Rowe Price that meet their search criteria, have no transaction fees, and have Morningstar Overall Ratings of four or five stars. Of note, independent advisors who custody with Schwab have already gained access to T. Rowe Price’s lowest cost institutional share class funds through our platform without transaction fees.”

Mr. Bettinger concluded, “We see SPI and our thematic lists as initial steps in giving clients more power in personalizing their investments to reflect their unique circumstances and perspectives. Similarly, simplifying the research experience for clients when selecting mutual funds gives them more power to build their financial futures with investments that make sense for them. We remain committed to pushing forward with these and other strategic initiatives even as we keep our TD Ameritrade integration work on schedule, because we know that both fronts are essential elements of our 'Through Clients’ Eyes' strategy. Schwab’s strong growth reflects the enduring appeal of that strategy for millions of investors as well as the independent advisors who serve them.”

CFO Peter Crawford noted, “Our first quarter 2022 financial results reflected our ongoing success with clients while contending with the effects of a challenging environment. Total revenues of $4.7 billion were just under the record level set in the year-ago quarter amidst that extraordinary surge in client activity, with increases in net interest revenue (NIR) and asset management and administration fees (AMAF) essentially offsetting the effects of trading activity returning to more moderate levels. First quarter 2022 NIR and AMAF were strengthened by growing balances and modestly improved – but still low – short-term interest rates. The lift from these increases, however, was muted somewhat by recent equity market weakness and volatility, which affected margin loan balances and securities lending activity as well as client asset valuations.”

Mr. Crawford continued, “Our GAAP expenses rose 3% year-over-year to $2.8 billion, including $96 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 4% versus the first quarter of 2021, consistent with our expectations as we invest in our people and our ability to support current and ongoing growth in our client base. Our diversified revenue model, along with disciplined expense management that aims to balance near-term profitability and long-term investment, enabled us to achieve a pre-tax profit margin of 39.4% – 44.7% on an adjusted basis(1). We believe the relative resiliency of our first quarter revenues and profitability represents solid performance in the face of significant environmental headwinds.”

“Our priority for capital management remains centered on maintaining flexibility for supporting ongoing growth,” Mr. Crawford said. “During the first quarter, we migrated an additional $13 billion in Insured Deposit Account (IDA) balances onto our balance sheet, and total assets rose by a similar amount versus year-end 2021. To augment our capital position amidst this growth in assets, we issued $750 million in preferred stock. We also issued $3 billion in senior notes primarily for ongoing liquidity management purposes. The company’s preliminary Tier 1 Leverage Ratio was 6.1% as of March 31. With a first quarter return on equity of 12% and ROTCE(1) of 26%, our healthy financial performance and consistent attention to capital management have helped us deliver a double-digit return on equity and a ROTCE of at least 20% every quarter since acquiring TD Ameritrade. As we move deeper into 2022, we remain confident that Schwab has the financial strength and flexibility necessary to stay focused on serving our clients however conditions evolve.”

(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.

Spring Business Update The company has scheduled a Spring Business Update for institutional investors on Thursday, April 21, 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 am - 12:00 pm 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; strategic initiatives; TD Ameritrade integration; growth in the client base, accounts, and assets; investments to attract and retain talent, improve service and the client experience, expand products, services and offerings to meet client needs, diversify revenues, and drive scale and efficiency; expense management; balancing near-term profitability and long-term investment; capital management; and financial strength and flexibility. 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 general market conditions, including equity valuations, trading activity, and the level of interest rates; market volatility; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; the migration of bank deposit account balances; 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; 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 33.6 million active brokerage accounts, 2.2 million corporate retirement plan participants, 1.6 million banking accounts, and approximately $7.86 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 March 31,

 

2022

2021

Net Revenues

 

 

Interest revenue

$

2,319

 

$

2,015

 

Interest expense

 

(136

)

 

(104

)

Net interest revenue

 

2,183

 

 

1,911

 

Asset management and administration fees (1)

 

1,068

 

 

1,016

 

Trading revenue

 

963

 

 

1,216

 

Bank deposit account fees

 

294

 

 

351

 

Other

 

164

 

 

221

 

Total net revenues

 

4,672

 

 

4,715

 

Expenses Excluding Interest

 

 

Compensation and benefits

 

1,546

 

 

1,430

 

Professional services

 

244

 

 

226

 

Occupancy and equipment

 

269

 

 

237

 

Advertising and market development

 

102

 

 

116

 

Communications

 

144

 

 

147

 

Depreciation and amortization

 

150

 

 

129

 

Amortization of acquired intangible assets

 

154

 

 

154

 

Regulatory fees and assessments

 

68

 

 

78

 

Other

 

156

 

 

238

 

Total expenses excluding interest

 

2,833

 

 

2,755

 

Income before taxes on income

 

1,839

 

 

1,960

 

Taxes on income

 

437

 

 

476

 

Net Income

 

1,402

 

 

1,484

 

Preferred stock dividends and other

 

124

 

 

96

 

Net Income Available to Common Stockholders

$

1,278

 

$

1,388

 

Weighted-Average Common Shares Outstanding:

 

 

Basic

 

1,894

 

 

1,882

 

Diluted

 

1,905

 

 

1,892

 

Earnings Per Common Shares Outstanding (2):

 

 

Basic

$

.67

 

$

.74

 

Diluted

$

.67

 

$

.73

 

(1)

Includes fee waivers of $54 million and $78 million for the three months ended March 31, 2022 and 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)

 

 

Q1-22 % change

 

2022

 

2021

 

vs.

 

vs.

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-21

 

Q4-21

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

Net interest revenue

14

%

2

%

$

2,183

 

$

2,142

 

$

2,030

 

$

1,947

 

$

1,911

 

Asset management and administration fees

5

%

(4

)%

 

1,068

 

 

1,110

 

 

1,101

 

 

1,047

 

 

1,016

 

Trading revenue

(21

)%

(5

)%

 

963

 

 

1,017

 

 

964

 

 

955

 

 

1,216

 

Bank deposit account fees

(16

)%

(3

)%

 

294

 

 

304

 

 

323

 

 

337

 

 

351

 

Other

(26

)%

21

%

 

164

 

 

135

 

 

152

 

 

241

 

 

221

 

Total net revenues

(1

)%

(1

)%

 

4,672

 

 

4,708

 

 

4,570

 

 

4,527

 

 

4,715

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

8

%

11

%

 

1,546

 

 

1,399

 

 

1,303

 

 

1,318

 

 

1,430

 

Professional services

8

%

(10

)%

 

244

 

 

271

 

 

250

 

 

247

 

 

226

 

Occupancy and equipment

14

%

6

%

 

269

 

 

254

 

 

246

 

 

239

 

 

237

 

Advertising and market development

(12

)%

(16

)%

 

102

 

 

122

 

 

119

 

 

128

 

 

116

 

Communications

(2

)%

11

%

 

144

 

 

130

 

 

144

 

 

166

 

 

147

 

Depreciation and amortization

16

%

3

%

 

150

 

 

145

 

 

140

 

 

135

 

 

129

 

Amortization of acquired intangibles assets

—

 

—

 

 

154

 

 

154

 

 

153

 

 

154

 

 

154

 

Regulatory fees and assessments

(13

)%

1

%

 

68

 

 

67

 

 

64

 

 

66

 

 

78

 

Other

(34

)%

9

%

 

156

 

 

143

 

 

140

 

 

355

 

 

238

 

Total expenses excluding interest

3

%

6

%

 

2,833

 

 

2,685

 

 

2,559

 

 

2,808

 

 

2,755

 

Income before taxes on income

(6

)%

(9

)%

 

1,839

 

 

2,023

 

 

2,011

 

 

1,719

 

 

1,960

 

Taxes on income

(8

)%

(1

)%

 

437

 

 

443

 

 

485

 

 

454

 

 

476

 

Net Income

(6

)%

(11

)%

$

1,402

 

$

1,580

 

$

1,526

 

$

1,265

 

$

1,484

 

Preferred stock dividends and other

29

%

(5

)%

 

124

 

 

131

 

 

120

 

 

148

 

 

96

 

Net Income Available to Common Stockholders

(8

)%

(12

)%

$

1,278

 

$

1,449

 

$

1,406

 

$

1,117

 

$

1,388

 

Earnings per common share (1):

 

 

 

 

 

 

 

Basic

(9

)%

(13

)%

$

.67

 

$

.77

 

$

.74

 

$

.59

 

$

.74

 

Diluted

(8

)%

(12

)%

$

.67

 

$

.76

 

$

.74

 

$

.59

 

$

.73

 

Dividends declared per common share

11

%

11

%

$

.20

 

$

.18

 

$

.18

 

$

.18

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

1

%

—

 

 

1,894

 

 

1,892

 

 

1,888

 

 

1,886

 

 

1,882

 

Diluted

1

%

—

 

 

1,905

 

 

1,902

 

 

1,898

 

 

1,896

 

 

1,892

 

Performance Measures

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

39.4

%

 

43.0

%

 

44.0

%

 

38.0

%

 

41.6

%

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

 

 

 

12

%

 

12

%

 

12

%

 

10

%

 

12

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

Cash and cash equivalents

87

%

45

%

$

91.1

 

$

63.0

 

$

34.3

 

$

30.3

 

$

48.6

 

Cash and investments segregated

35

%

1

%

 

54.4

 

 

53.9

 

 

42.3

 

 

39.9

 

 

40.4

 

Receivables from brokerage clients — net

13

%

(7

)%

 

84.1

 

 

90.6

 

 

86.6

 

 

82.2

 

 

74.7

 

Available for sale securities (3)

(20

)%

(30

)%

 

272.0

 

 

390.1

 

 

377.0

 

 

359.6

 

 

341.6

 

Held to maturity securities (3)

N/M

 

N/M

 

 

105.3

 

 

—

 

 

—

 

 

—

 

 

—

 

Bank loans — net

46

%

8

%

 

37.2

 

 

34.6

 

 

31.6

 

 

28.9

 

 

25.4

 

Total assets

21

%

2

%

 

681.0

 

 

667.3

 

 

607.5

 

 

574.5

 

 

563.5

 

Bank deposits

26

%

5

%

 

465.8

 

 

443.8

 

 

395.3

 

 

368.6

 

 

369.9

 

Payables to brokerage clients

24

%

—

 

 

125.3

 

 

125.7

 

 

113.1

 

 

105.0

 

 

101.3

 

Short-term borrowings

68

%

(14

)%

 

4.2

 

 

4.9

 

 

3.0

 

 

3.5

 

 

2.5

 

Long-term debt

24

%

16

%

 

21.9

 

 

18.9

 

 

19.5

 

 

18.7

 

 

17.7

 

Stockholders’ equity

(13

)%

(15

)%

 

48.1

 

 

56.3

 

 

57.4

 

 

57.5

 

 

55.6

 

Other

 

 

 

 

 

 

 

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

7

%

2

%

 

34.2

 

 

33.4

 

 

32.4

 

 

32.5

 

 

32.0

 

Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)

—

 

(52

)%

$

209

 

$

431

 

$

176

 

$

225

 

$

209

 

Expenses excluding interest as a percentage of average client assets

(annualized)

 

 

 

0.15

%

 

0.13

%

 

0.13

%

 

0.15

%

 

0.16

%

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

(22

)%

8

%

 

6,578

 

 

6,102

 

 

5,549

 

 

6,042

 

 

8,414

 

Number of Trading Days

2

%

(2

)%

 

62.0

 

 

63.5

 

 

64.0

 

 

63.0

 

 

61.0

 

Revenue Per Trade (4)

—

 

(10

)%

$

2.36

 

$

2.62

 

$

2.71

 

$

2.51

 

$

2.37

 

 

 

 

 

 

 

 

 

(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 II – Item 8 – Note 6 of our 2021 Annual Report on Form 10-K.

(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 March 31,

 

 

2022

 

2021

 

 

Average Balance

 

Interest Revenue/ Expense

 

Average Yield/ Rate

 

Average Balance

 

Interest Revenue/ Expense

 

Average Yield/ Rate

Interest-earning assets

 

 

 

 

 

 

Cash and cash equivalents

$

72,465

$

34

 

0.19

%

$

38,898

$

7

 

0.08

%

Cash and investments segregated

 

51,913

 

15

 

0.11

%

 

48,149

 

10

 

0.08

%

Receivables from brokerage clients

 

84,204

 

626

 

2.97

%

 

67,738

 

563

 

3.32

%

Available for sale securities (1,2)

 

284,526

 

947

 

1.33

%

 

338,245

 

1,091

 

1.29

%

Held to maturity securities (2)

 

103,416

 

378

 

1.46

%

 

—

 

—

 

—

 

Bank loans

 

35,852

 

187

 

2.10

%

 

24,476

 

139

 

2.27

%

Total interest-earning assets

 

632,376

 

2,187

 

1.38

%

 

517,506

 

1,810

 

1.40

%

Securities lending revenue

 

 

129

 

 

 

 

204

 

 

Other interest revenue

 

 

3

 

 

 

 

1

 

 

Total interest-earning assets

$

632,376

$

2,319

 

1.47

%

$

517,506

$

2,015

 

1.56

%

Funding sources

 

 

 

 

 

 

Bank deposits

$

452,692

$

16

 

0.01

%

$

363,099

$

13

 

0.01

%

Payables to brokerage clients

 

105,929

 

2

 

0.01

%

 

87,339

 

2

 

0.01

%

Short-term borrowings (3)

 

4,717

 

4

 

0.33

%

 

1,093

 

—

 

0.22

%

Long-term debt

 

19,864

 

108

 

2.18

%

 

14,245

 

85

 

2.37

%

Total interest-bearing liabilities

 

583,202

 

130

 

0.09

%

 

465,776

 

100

 

0.09

%

Non-interest-bearing funding sources

 

49,174

 

 

 

51,730

 

 

Securities lending expense

 

 

7

 

 

 

 

5

 

 

Other interest expense

 

 

(1

)

 

 

 

(1

)

 

Total funding sources

$

632,376

$

136

 

0.09

%

$

517,506

$

104

 

0.08

%

Net interest revenue

 

$

2,183

 

1.38

%

 

$

1,911

 

1.48

%

(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 II – Item 8 – Note 6 of our 2021 Annual Report on Form 10-K.

(3)

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 March 31,

 

 

2022

 

 

2021

 

 

Average Client Assets

 

Revenue

 

Average Fee

 

 

Average Client Assets

 

Revenue

 

Average Fee

Schwab money market funds before fee waivers

$

144,732

$

102

 

0.29

%

$

169,683

$

122

 

0.29

%

Fee waivers

 

 

(54

)

 

 

 

(78

)

 

Schwab money market funds

 

144,732

 

48

 

0.13

%

 

169,683

 

44

 

0.11

%

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

 

456,326

 

97

 

0.09

%

 

377,282

 

86

 

0.09

%

Mutual Fund OneSource® and other non-transaction fee funds

 

212,641

 

165

 

0.31

%

 

222,455

 

172

 

0.31

%

Other third-party mutual funds and ETFs

 

872,212

 

179

 

0.08

%

 

849,409

 

168

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

1,685,911

 

489

 

0.12

%

$

1,618,829

 

470

 

0.12

%

Advice solutions (1)

 

 

 

 

 

 

Fee-based

$

469,325

 

496

 

0.43

%

$

424,629

 

468

 

0.45

%

Non-fee-based

 

90,335

 

—

 

—

 

 

84,767

 

—

 

—

 

Total advice solutions

$

559,660

 

496

 

0.36

%

$

509,396

 

468

 

0.37

%

Other balance-based fees (2)

 

616,679

 

67

 

0.04

%

 

576,562

 

64

 

0.05

%

Other (3)

 

 

16

 

 

 

 

14

 

 

Total asset management and administration fees

 

$

1,068

 

 

 

$

1,016

 

 

(1)

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

(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)

 

 

 

 

 

 

 

 

 

Q1-22 % Change

 

2022

 

2021

 

vs.

 

vs.

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-21

 

Q4-21

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

25

%

3

%

$

584.3

 

$

566.1

 

$

503.9

 

$

469.5

 

$

467.3

 

Bank deposit account balances

(6

)%

(2

)%

 

154.8

 

 

158.5

 

 

153.3

 

 

161.9

 

 

164.2

 

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

 

 

 

 

 

 

 

Money market funds (1)

(13

)%

(2

)%

 

143.1

 

 

146.5

 

 

147.7

 

 

151.9

 

 

163.6

 

Equity and bond funds and CTFs (2)

15

%

(4

)%

 

175.8

 

 

183.1

 

 

167.4

 

 

165.9

 

 

152.9

 

Total proprietary mutual funds and CTFs

1

%

(3

)%

 

318.9

 

 

329.6

 

 

315.1

 

 

317.8

 

 

316.5

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

4

%

—

 

 

235.5

 

 

234.9

 

 

234.7

 

 

240.2

 

 

227.3

 

Mutual fund clearing services

(5

)%

(7

)%

 

235.4

 

 

254.2

 

 

271.9

 

 

271.3

 

 

248.7

 

Other third-party mutual funds (4)

1

%

(8

)%

 

1,383.3

 

 

1,497.7

 

 

1,450.1

 

 

1,441.5

 

 

1,375.8

 

Total Mutual Fund Marketplace

—

 

(7

)%

 

1,854.2

 

 

1,986.8

 

 

1,956.7

 

 

1,953.0

 

 

1,851.8

 

Total mutual fund assets

—

 

(6

)%

 

2,173.1

 

 

2,316.4

 

 

2,271.8

 

 

2,270.8

 

 

2,168.3

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

Proprietary ETFs (2)

22

%

(1

)%

 

268.5

 

 

271.8

 

 

251.6

 

 

245.2

 

 

220.9

 

Other third-party ETFs

23

%

(2

)%

 

1,270.6

 

 

1,296.4

 

 

1,183.7

 

 

1,158.8

 

 

1,035.1

 

Total ETF assets

23

%

(2

)%

 

1,539.1

 

 

1,568.2

 

 

1,435.3

 

 

1,404.0

 

 

1,256.0

 

Equity and other securities

15

%

(4

)%

 

3,131.1

 

 

3,259.8

 

 

2,976.7

 

 

2,988.8

 

 

2,721.0

 

Fixed income securities

(1

)%

1

%

 

360.7

 

 

356.4

 

 

356.8

 

 

359.6

 

 

364.5

 

Margin loans outstanding

12

%

(7

)%

 

(81.0

)

 

(87.4

)

 

(83.8

)

 

(79.8

)

 

(72.2

)

Total client assets

11

%

(3

)%

$

7,862.1

 

$

8,138.0

 

$

7,614.0

 

$

7,574.8

 

$

7,069.1

 

Client assets by business

 

 

 

 

 

 

 

Investor Services

10

%

(4

)%

$

4,235.5

 

$

4,400.7

 

$

4,137.7

 

$

4,146.2

 

$

3,865.9

 

Advisor Services

13

%

(3

)%

 

3,626.6

 

 

3,737.3

 

 

3,476.3

 

 

3,428.6

 

 

3,203.2

 

Total client assets

11

%

(3

)%

$

7,862.1

 

$

8,138.0

 

$

7,614.0

 

$

7,574.8

 

$

7,069.1

 

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

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

Investor Services (5)

(16

)%

63

%

$

54.6

 

$

33.4

 

$

57.9

 

$

44.5

 

$

65.1

 

Advisor Services

(4

)%

(35

)%

 

65.9

 

 

101.2

 

 

81.1

 

 

64.3

 

 

68.7

 

Total net new assets

(10

)%

(10

)%

$

120.5

 

$

134.6

 

$

139.0

 

$

108.8

 

$

133.8

 

Net market gains (losses)

N/M

 

N/M

 

 

(396.4

)

 

389.4

 

 

(99.8

)

 

396.9

 

 

243.6

 

Net growth (decline)

N/M

 

N/M

 

$

(275.9

)

$

524.0

 

$

39.2

 

$

505.7

 

$

377.4

 

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

(62

)%

(9

)%

 

1,202

 

 

1,318

 

 

1,178

 

 

1,657

 

 

3,153

 

Client accounts (in thousands)

 

 

 

 

 

 

 

Active brokerage accounts

5

%

1

%

 

33,577

 

 

33,165

 

 

32,675

 

 

32,265

 

 

31,902

 

Banking accounts

2

%

2

%

 

1,641

 

 

1,614

 

 

1,580

 

 

1,574

 

 

1,608

 

Corporate retirement plan participants

7

%

2

%

 

2,246

 

 

2,200

 

 

2,207

 

 

2,149

 

 

2,105

 

 

 

 

 

 

 

 

 

(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 March 31, 2022, off-platform equity and bond funds, CTFs, and ETFs were $23.9 billion, $5.7 billion, and $94.9 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of March 31, 2022, third-party money funds were $12.3 billion.

(5)

Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients. First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client.

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

The Charles Schwab Corporation Monthly Activity Report For March 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

Change

 

 

Mar

 

Apr

 

May

 

Jun

 

Jul

 

Aug

 

Sep

 

Oct

 

Nov

 

Dec

 

Jan

 

Feb

 

Mar

 

Mo.

 

Yr.

Market Indices (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average®

32,982

 

33,875

 

34,529

 

34,503

 

34,935

 

35,361

 

33,844

 

35,820

 

34,484

 

36,338

 

35,132

 

33,893

 

34,678

 

2

%

5

%

Nasdaq Composite®

13,247

 

13,963

 

13,749

 

14,504

 

14,673

 

15,259

 

14,449

 

15,498

 

15,538

 

15,645

 

14,240

 

13,751

 

14,221

 

3

%

7

%

Standard & Poor’s® 500

3,973

 

4,181

 

4,204

 

4,298

 

4,395

 

4,523

 

4,308

 

4,605

 

4,567

 

4,766

 

4,516

 

4,374

 

4,530

 

4

%

14

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

6,900.5

 

7,069.1

 

7,336.1

 

7,395.7

 

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

8,138.0

 

7,803.8

 

7,686.6

 

 

 

Net New Assets (1)

62.6

 

37.2

 

28.1

 

43.5

 

44.3

 

51.8

 

42.9

 

22.9

 

31.4

 

80.3

 

33.6

 

40.6

 

46.3

 

14

%

(26

)%

Net Market (Losses) Gains

106.0

 

229.8

 

31.5

 

135.6

 

23.6

 

143.7

 

(267.1

)

345.4

 

(95.4

)

139.4

 

(367.8

)

(157.8

)

129.2

 

 

 

Total Client Assets (at month end)

7,069.1

 

7,336.1

 

7,395.7

 

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

8,138.0

 

7,803.8

 

7,686.6

 

7,862.1

 

2

%

11

%

Core Net New Assets (2)

62.6

 

37.2

 

28.1

 

43.5

 

44.3

 

51.8

 

42.9

 

36.8

 

45.1

 

80.3

 

33.6

 

40.6

 

46.3

 

14

%

(26

)%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

495.2

 

511.1

 

517.8

 

525.1

 

531.9

 

542.5

 

530.1

 

548.3

 

543.1

 

559.2

 

541.9

 

533.7

 

538.9

 

1

%

9

%

Advisor Services (3)

2,997.9

 

3,112.5

 

3,150.4

 

3,209.3

 

3,256.5

 

3,333.4

 

3,253.2

 

3,399.8

 

3,374.3

 

3,505.2

 

3,382.4

 

3,342.5

 

3,404.6

 

2

%

14

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

31,902

 

31,877

 

32,110

 

32,265

 

32,386

 

32,513

 

32,675

 

32,796

 

32,942

 

33,165

 

33,308

 

33,421

 

33,577

 

—

 

5

%

Banking Accounts

1,608

 

1,562

 

1,584

 

1,574

 

1,578

 

1,594

 

1,580

 

1,593

 

1,608

 

1,614

 

1,628

 

1,641

 

1,641

 

—

 

2

%

Corporate Retirement Plan Participants

2,105

 

2,116

 

2,130

 

2,149

 

2,159

 

2,188

 

2,207

 

2,213

 

2,198

 

2,200

 

2,216

 

2,235

 

2,246

 

—

 

7

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

847

 

609

 

549

 

499

 

402

 

402

 

374

 

397

 

448

 

473

 

426

 

356

 

420

 

18

%

(50

)%

Client Cash as a Percentage of Client Assets (4)

11.5

%

10.9

%

10.8

%

10.5

%

10.4

%

10.3

%

10.8

%

10.4

%

10.5

%

10.9

%

11.3

%

11.5

%

11.4

%

(10) bp

(10) bp

Derivative Trades as a Percentage of Total Trades

18.5

%

20.4

%

20.9

%

20.6

%

22.2

%

23.1

%

23.1

%

22.5

%

23.4

%

23.0

%

22.4

%

24.0

%

22.4

%

(160) bp

390 bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (5)

520,074

 

527,194

 

528,642

 

536,146

 

546,579

 

552,372

 

565,379

 

574,181

 

584,362

 

605,709

 

622,997

 

629,042

 

644,768

 

2

%

24

%

Average Margin Balances

71,266

 

72,863

 

75,921

 

78,410

 

79,910

 

81,021

 

81,705

 

83,835

 

87,311

 

88,328

 

86,737

 

84,354

 

81,526

 

(3

)%

14

%

Average Bank Deposits Account Balances (6)

164,866

 

162,392

 

160,459

 

161,377

 

151,275

 

150,896

 

152,330

 

154,040

 

153,877

 

154,918

 

157,706

 

153,824

 

155,657

 

1

%

(6

)%

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

16,301

 

13,422

 

9,854

 

10,873

 

7,418

 

8,808

 

7,596

 

8,840

 

13,099

 

11,519

 

7,384

 

9,371

 

14,177

 

 

 

Hybrid

1,133

 

877

 

1

 

390

 

666

 

569

 

335

 

81

 

308

 

(1,207

)

(367

)

(478

)

(497

)

 

 

Bonds

8,237

 

8,940

 

5,906

 

10,101

 

6,917

 

8,044

 

6,232

 

4,425

 

4,097

 

5,600

 

1,804

 

(1,973

)

(7,851

)

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (7)

6,190

 

5,754

 

2,022

 

5,872

 

2,644

 

3,876

 

(308

)

302

 

189

 

(2,859

)

(4,961

)

(6,318

)

(11,888

)

 

 

Exchange-Traded Funds (8)

19,481

 

17,485

 

13,739

 

15,492

 

12,357

 

13,545

 

14,471

 

13,044

 

17,315

 

18,771

 

13,782

 

13,238

 

17,717

 

 

 

Money Market Funds

(4,528

)

(5,153

)

(3,988

)

(3,806

)

(2,501

)

(1,372

)

(1,512

)

(451

)

(1,725

)

(144

)

(1,984

)

(1,086

)

(1,344

)

 

 

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

(1)

November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 billion from a mutual fund clearing services client.

(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 first 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 March 31,

 

2022

 

2021

 

Total Expenses Excluding Interest

 

Net Income

 

Total Expenses Excluding Interest

 

Net Income

Total expenses excluding interest (GAAP),

Net income (GAAP)

$

2,833

 

$

1,402

 

$

2,755

 

$

1,484

 

Acquisition and integration-related costs (1)

 

(96

)

 

96

 

 

(119

)

 

119

 

Amortization of acquired intangible assets

 

(154

)

 

154

 

 

(154

)

 

154

 

Income tax effects (2)

 

N/A

 

 

(61

)

 

N/A

 

 

(67

)

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,583

 

$

1,591

 

$

2,482

 

$

1,690

 

(1)

Acquisition and integration-related costs for the three months ended March 31, 2022 primarily consist of $56 million of compensation and benefits, $31 million of professional services, and $4 million of occupancy and equipment. Acquisition and integration-related costs for the three months ended March 31, 2021 primarily consist of $72 million of compensation and benefits, $27 million of professional services, and $16 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 March 31,

 

2022

 

2021

 

Amount

 

% of Total Net Revenues

 

Amount

 

% of Total Net Revenues

Income before taxes on income (GAAP), Pre-tax profit margin (GAAP)

$

1,839

39.4

%

$

1,960

41.6

%

Acquisition and integration-related costs

 

96

2.1

%

 

119

2.5

%

Amortization of acquired intangible assets

 

154

3.2

%

 

154

3.3

%

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

$

2,089

44.7

%

$

2,233

47.4

%

 

 

Three Months Ended March 31,

 

2022

 

2021

 

Amount

 

Diluted EPS

 

Amount

 

Diluted EPS

Net income available to common stockholders (GAAP), Earnings per common share — diluted (GAAP)

$

1,278

 

$

.67

 

$

1,388

 

$

.73

 

Acquisition and integration-related costs

 

96

 

 

.05

 

 

119

 

 

.06

 

Amortization of acquired intangible assets

 

154

 

 

.08

 

 

154

 

 

.08

 

Income tax effects

 

(61

)

 

(.03

)

 

(67

)

 

(.03

)

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

$

1,467

 

$

.77

 

$

1,594

 

$

.84

 

 

 

Three Months Ended March 31,

 

2022

 

2021

Return on average common stockholders’ equity (GAAP)

 

12

%

 

12

%

Average common stockholders’ equity

$

41,856

 

$

46,691

 

Less: Average goodwill

 

(11,952

)

 

(11,952

)

Less: Average acquired intangible assets — net

 

(9,303

)

 

(9,915

)

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

 

1,886

 

 

1,935

 

Average tangible common equity

$

22,487

 

$

26,759

 

Adjusted net income available to common stockholders (1)

$

1,467

 

$

1,594

 

Return on tangible common equity (non-GAAP)

 

26

%

 

24

%

(1)

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220418005169/en/

MEDIA: Mayura Hooper Charles Schwab Phone: 415-667-1525 INVESTORS/ANALYSTS: Jeff Edwards Charles Schwab Phone: 415-667-1524