Net Revenues Rise 20% to $1.9 Billion, Highest
in Company History
Total Client Assets Reach Record $2.73
Trillion, Up 13% From Prior Year
The Charles Schwab Corporation announced today that its net
income for the third quarter of 2016 was $503 million, up 11%
from $452 million for the prior quarter, and up 34% from
$376 million for the third quarter of 2015. Net income for the
nine months ended September 30, 2016 was $1.37 billion, up 33%
from the year-earlier period. The company’s financial results for
the third quarter and first nine months of both 2016 and 2015
include certain non-recurring items; a description of these items
is included below.
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Three Months Ended Nine Months Ended
September 30, % September 30, % Financial Highlights
2016 2015 Change
2016 2015 Change Net revenues
(in millions) $ 1,914 $ 1,597 20 % $ 5,506 $ 4,689 17 % Net income
(in millions) $ 503 $ 376 34 % $ 1,367 $ 1,031 33 % Diluted
earnings per common share $ .35 $ .28 25 % $ .95 $ .74 28 % Pre-tax
profit margin 41.5 % 36.5 % 39.4 % 34.9 %
Return on average common stockholders’
equity (annualized)
14 % 13 % 13 % 12 % EPS Impact of Certain Non-Recurring
Items Net litigation proceeds (1) $ .01 $ - $ .01 $ .01 Net
tax benefits (2) $ - $ .01 $ - $ .01
Note: All per-share results are rounded to
the nearest cent, based on weighted-average diluted common shares
outstanding.
(1) Net litigation proceeds include $14 million and $2
million in the third quarters of 2016 and 2015, respectively, and
$16 million and $18 million in the first nine months of 2016 and
2015, respectively, relating to the company’s non-agency
residential mortgage-backed securities (RMBS) portfolio, which are
included in Other revenue. (2) Net tax benefits include $14 million
in the third quarter of 2015, relating to certain current and
prior-year matters, which are included in Taxes on income.
CEO Walt Bettinger said, “Schwab’s third quarter results reflect
the combined power of our strategy and scale – we served more
clients than ever while delivering record financial performance.
Our range of full-service investment capabilities continued to
attract a broad spectrum of investors and helped core net new
assets total $30.0 billion in the third quarter, sustaining a
solid 5% annualized organic growth rate. We ended the quarter
serving 10.0 million brokerage accounts and 1.1 million bank
accounts, both records, as well as 1.6 million retirement plan
participants, up 4%, 6% and 5%, respectively. Total client assets
reached a record $2.73 trillion, up 13% year-over-year, as
investors continued to engage with us for help and advice
throughout the summer quarter. Our financial consultants held
planning conversations with 34,000 clients, up 17%.
Year-to-date, 101,000 clients have participated in such
conversations with us, up 22% from the year-earlier period.
Assets enrolled in some form of ongoing advisory service totaled
$1.37 trillion at quarter-end, up 14% from a year ago.”
Mr. Bettinger continued, “We contribute to our scale through a
longstanding focus on connecting people and technology in ways that
yield improved capabilities and value for our clients, as well as
greater operating efficiency for the company. This quarter, we
leveraged our scale in asset management to launch the Schwab Target
Index Funds™, a new series of index-based target date mutual funds
constructed with Schwab ETFs™. These funds are the lowest cost of
their kind available to employer-sponsored retirement plans, with
an expense ratio of just 8 basis points and no minimum
investment. They are also available to retail investors at
13 basis points and a $100 minimum investment. In July,
we also enhanced our technology capabilities for registered
investment advisors who custody with us. We expanded participation
in Schwab OpenView Gateway®, the flexible, open-architecture
platform that enables integration between our systems and select
technology providers. With the addition of Morningstar Total
Rebalance Expert, a portfolio rebalancing provider, and
ModestSpark, a client portal provider, OpenView Gateway now works
with 18 types of software that are widely used by RIAs.
Finally, client assets enrolled in Intelligent Portfolios surpassed
the $10 billion mark at month-end September, just
19 months after launching in March 2015. This digital
advisory program’s combination of sophisticated, ongoing portfolio
management – with no advisory fee charged and access to live
support – has attracted investors of all ages and wealth levels,
the majority of whom are formerly self-directed. Roughly a quarter
of the assets enrolled in Intelligent Portfolios are new to Schwab,
and that proportion is growing steadily.”*
Mr. Bettinger added, “The growing importance of scale and
increasing fee awareness across financial services are among the
longer-term trends in our industry that we view as important guides
in shaping our strategy going forward. We will continue to invest
in our clients with these themes in mind.”
CFO Joe Martinetto commented, “Schwab posted its fifth
consecutive quarter of record revenues for the period ending in
September, as well as a record pre-tax profit margin of 41.5%. Our
prior peak margin was set in the third quarter of 2008. We have
rebuilt our profitability from post-financial crisis lows by
driving client asset and revenue growth with our ‘Through Clients’
Eyes’ strategy, and applying expense discipline to maintain an
appropriate balance between near-term profitability and
reinvestment for growth. Asset management and administration fees
were a record $798 million, up 20% year-over-year, due to
success with clients, positive market valuations throughout much of
the period, and market-driven increases in certain short-term
interest rates. Net interest revenue was a record
$845 million, up 33%, driven by a 22% increase in average
interest-earning assets from the year-earlier period, as well as
the improved short-term rate environment. Trading revenue declined
17% to $190 million, primarily reflecting reduced market
volatility and trading volumes from the year-ago quarter. Finally,
other revenue included net litigation proceeds of approximately
$14 million relating to the company’s non-agency RMBS
portfolio; these proceeds mark the conclusion of our last pending
cases. Altogether, revenues grew 20% to $1.91 billion,
allowing for both a healthy level of investment in the company’s
growth initiatives and stronger profitability.”
Mr. Martinetto concluded, “In the third quarter, we took further
steps to optimize the spread earned on client cash sweep balances
through bulk transfers from money market funds to Schwab Bank. We
moved approximately $3 billion onto the Bank’s balance sheet
during the quarter, primarily in relation to money market fund
reform changes. We currently anticipate up to $4 billion more
in bulk transfer activity through the end of 2016. Third quarter
balance sheet growth also reflected the impact of designating the
Bank as the primary sweep option for new accounts, along with our
ongoing asset-gathering efforts. Interest-earning assets on
Schwab’s balance sheet totaled $202 billion at quarter-end,
and the company’s preliminary Tier 1 Leverage ratio was 7.1%.
Through effective capital management and an emphasis on driving
profitable growth, we’ve been able to support strong balance sheet
expansion and still deliver a 14% return on equity for the third
quarter, our highest in more than five years.”
Business highlights for the third quarter
(data as of quarter-end unless otherwise noted):
Investor Services
- New retail brokerage accounts for the
quarter totaled approximately 167,000, up 6% year-over-year;
total accounts were 7.0 million, up
3% year-over-year.
- Held financial planning conversations
with approximately 34,000 clients during the quarter, up
17% year-over-year. Approximately 101,000 planning
conversations have been held year-to-date, up 22% from the prior
year.
- Schwab Trading Services™ hosted a
Schwab Live Conversations event for 3,300 virtual and
in-person attendees, featuring expert insights on ETFs, a trading
Q&A session, and guest speaker Dr. Condoleezza Rice.
- Launched paperless account enrollment
processes for Schwab Managed Investing solutions, making it easier,
faster, and more convenient to participate in ongoing help and
advice.
- Renovated Schwab branch locations in
Bethesda, Maryland and Charlotte, North Carolina, to better serve
growing populations in these areas. Hired 23 new financial
consultants and other support staff to facilitate branch
expansion.
- Opened two independent branches in
Holland, Michigan and Greenville, Texas, continuing the company’s
franchising initiative designed to make financial advice and
guidance more accessible in local communities across the
country.
- Opened a new contact center in
Westlake, Texas, where representatives from Schwab Private Client
and Client Service & Support will assist clients with wealth
management, transactional, and administrative needs by phone.
Advisor Services
- Expanded vendor participation in Schwab
OpenView Gateway, the flexible, open architecture platform that
enables integration between Schwab custody and portfolio management
systems and select technology providers. Additions included
rebalancing provider Morningstar Total Rebalance Expert and client
portal provider ModestSpark.
- Launched a Cybersecurity Resource
Center to provide advisors with information and tools to help them
organize, strengthen, and maintain their firms’ cybersecurity
programs.
- Published findings from Schwab’s
10th annual RIA Benchmarking Study, the largest of its kind
focused exclusively on RIAs. Topics included asset and revenue
growth, client acquisition, products and pricing, staffing,
compensation, marketing, technology, and financial
performance.
- Held our annual SOLUTIONS® events in
12 cities across the country for more than
1,800 attendees. These events introduce advisors to Schwab’s
technology and resources for optimizing firm performance and client
service.
Products and Infrastructure
- For Charles Schwab Bank:
- Balance sheet assets =
$165.2 billion, up 28% year-over-year.
- Outstanding mortgage and home equity
loans = $11.2 billion, comparable to a year ago.
- Pledged Asset Line® balances =
$3.6 billion, up 13% year-over-year.
- Schwab Bank High Yield Investor
Checking® accounts = 896,000, with $13.5 billion in
balances.
- For Charles Schwab Investment
Management:
- Launched Schwab Target Index Funds,
target date mutual funds constructed with low-cost Schwab ETFs and
structured with unprecedented $0 minimums for plan sponsors
and a $100 minimum for retail investors.
- Schwab ETFs, a suite of 21 equity and
fixed income funds, surpassed $50 billion in assets under
management. Schwab market cap-weighted ETFs have the lowest
operating expense ratios in their Lipper categories.*
- Schwab fixed income products, including
taxable bond funds, tax-free bond funds, sub-advised bond funds and
ETFs, surpassed $10 billion in assets under management,
doubling in size over the last five years.
- Client assets managed by Windhaven®
totaled $10.2 billion, down 21% from the third quarter of
2015.
- Client assets managed by
ThomasPartners® totaled $9.2 billion, up 35% from the
third quarter of 2015.
- Launched ThomasPartners’ Balanced
Income Strategy for retail clients, which seeks to provide a
monthly income stream that can grow over time and a competitive
total return.
- Client assets managed by Intelligent
Portfolios (Schwab Intelligent Portfolios™ and Institutional
Intelligent Portfolios®) totaled $10.2 billion, up
$2.0 billion from the second quarter of 2016.
- Schwab Stock Plan Services released a
new Schwab Equity Award Center® web experience; participants now
have a detailed, multi-module view of their equity awards, current
holdings, and upcoming vesting dates.
Supporting schedules are either attached or located at:
http://www.aboutschwab.com/investor-relations/financial-reports.
* For more information about Schwab Target Index Funds and
Schwab ETFs, see csimfunds.com. For program information and details
about how we make money on Schwab Intelligent Portfolios, see
intelligent.schwab.com and the Disclosure Brochures. Schwab
Intelligent Portfolios is offered through Schwab Wealth Investment
Advisory, Inc. Institutional Intelligent Portfolios is made
available through independent investment advisors and is sponsored
by Schwab Wealth Investment Advisory, Inc.
Commentary from the CFO
Joe Martinetto, Senior Executive Vice President and Chief
Financial Officer, provides insight and commentary regarding
Schwab’s financial picture at:
http://www.aboutschwab.com/investor-relations/cfo-commentary. The
most recent commentary was posted on January 19, 2016.
Forward-Looking Statements
This press release contains forward-looking statements relating
to scale; capabilities and value; operating efficiency; proportion
of new to Schwab assets enrolled in Intelligent Portfolios; fee
awareness; profitability; client asset and revenue growth; expense
discipline; and bulk transfers.
Important factors that may cause such differences include, but
are not limited to, the company’s ability to develop and launch new
products, services and capabilities in a timely and successful
manner; general market conditions, including the level of interest
rates, equity valuations and trading activity; the company’s
ability to attract and retain clients and registered investment
advisors and grow those relationships and client assets;
competitive pressures on rates and fees; client use of the
company’s advisory solutions and other products and services; the
level of client assets, including cash balances; the company’s
ability to manage expenses; capital needs and management; the
company’s ability to monetize client assets; the timing, amount and
impact of bulk transfers; the quality of the company’s balance
sheet assets; client sensitivity to interest rates; regulatory
guidance; the effect of adverse developments in litigation or
regulatory matters and the extent of any charges associated with
legal matters; any adverse impact of financial reform legislation
and related regulations; 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 more than 330 offices and
10.0 million active brokerage accounts, 1.6 million
corporate retirement plan participants,
1.1 million banking accounts, and $2.73 trillion in
client assets as of September 30, 2016. Through its operating
subsidiaries, the company provides a full range of wealth
management, securities brokerage, banking, money management,
custody, and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and 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 banking subsidiary, Charles
Schwab Bank (member FDIC and an Equal Housing Lender), provides
banking and lending services and products. More information is
available at www.schwab.com and www.aboutschwab.com.
THE CHARLES SCHWAB CORPORATION
Consolidated Statements of
Income
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015
2016 2015
Net Revenues
Asset management and administration fees (1) $
798 $ 663 $ 2,254 $ 1,977 Interest revenue 891 669 2,541 1,931
Interest expense (46 ) (34 ) (126 ) (96 ) Net
interest revenue 845 635 2,415 1,835 Trading revenue 190 228 623
658 Other 76 66 209 208 Provision for loan losses
5 5
5 11 Total net revenues
1,914 1,597
5,506 4,689
Expenses Excluding Interest Compensation and benefits 609
548 1,837 1,669 Professional services 131 114 372 340 Occupancy and
equipment 100 92 299 260 Advertising and market development 64 58
204 189 Communications 57 58 179 175 Depreciation and amortization
60 57 173 166 Other 99
87 273
256 Total expenses excluding interest
1,120 1,014
3,337 3,055 Income before
taxes on income 794 583 2,169 1,634 Taxes on income
291 207
802 603
Net Income
503 376
1,367 1,031
Preferred stock dividends and other (2) 33
11 99
45
Net Income Available to
Common Stockholders $ 470 $
365 $ 1,268 $ 986
Weighted-Average Common Shares Outstanding: Basic 1,324
1,316 1,322 1,315 Diluted 1,334
1,328 1,332
1,326
Earnings Per Common Share: Basic
$ .36 $ .28 $ .96 $ .75 Diluted $ .35
$ .28 $ .95 $ .74
Dividends Declared Per Common Share $
.07 $ .06 $ .20
$ .18 (1) Includes fee waivers of $41
and $166 during the third quarters of 2016 and 2015, respectively,
and $193 and $519 during the first nine months of 2016 and 2015,
respectively, relating to Schwab-sponsored money market funds. (2)
Includes preferred stock dividends and undistributed earnings and
dividends allocated to non-vested restricted stock units.
THE CHARLES SCHWAB CORPORATION
Financial and Operating
Highlights
(Unaudited)
Q3-16 %
change
2016 2015 vs. vs. Third Second First Fourth Third (In
millions, except per share amounts and as noted)
Q3-15 Q2-16 Quarter Quarter
Quarter Quarter
Quarter
Net Revenues Asset management and administration
fees 20% 5% $ 798 $ 757 $ 699 $ 673 $ 663 Net interest revenue 33%
6% 845 798 772 690 635 Trading revenue (17%) (5%) 190 201 232 208
228 Other 15% 9% 76 70 63 120 66 Provision for loan losses
- 150% 5 2
(2) -
5 Total net revenues
20% 5% 1,914 1,828
1,764
1,691 1,597
Expenses
Excluding Interest Compensation and benefits 11% 1% 609 602 626
572 548 Professional services 15% 5% 131 125 116 119 114 Occupancy
and equipment 9% (1%) 100 101 98 93 92 Advertising and market
development 10% (9%) 64 70 70 60 58 Communications (2%) (8%) 57 62
60 58 58 Depreciation and amortization 5% 5% 60 57 56 58 57 Other
14% 9% 99
91 83
86 87 Total expenses
excluding interest 10% 1% 1,120
1,108 1,109
1,046 1,014
Income before taxes on income 36% 10% 794 720
655 645 583 Taxes on income 41% 9% 291
268 243
229
207
Net Income 34% 11% $ 503
$ 452 $ 412
$ 416 $ 376 Preferred
stock dividends and other N/M (28%) 33
46 20
38
11
Net Income Available to Common Stockholders
29% 16% $ 470 $ 406
$ 392 $ 378
$ 365 Earnings per common share: Basic 29% 16% $ .36
$ .31 $ .30 $ .29 $ .28 Diluted 25% 17% $ .35 $ .30 $ .29 $ .28 $
.28 Dividends declared per common share 17% - $ .07 $ .07 $ .06 $
.06 $ .06 Weighted-average common shares outstanding: Basic 1% -
1,324 1,322 1,321 1,319 1,316 Diluted - -
1,334 1,333
1,330 1,330
1,328
Performance Measures Pre-tax
profit margin 41.5 % 39.4 % 37.1 % 38.1 % 36.5 % Return on average
common stockholders’ equity (annualized) (1)
14 % 13 % 13 %
13 % 13 %
Financial Condition (at quarter end, in billions) Cash and
investments segregated 17% 8% $ 20.1 $ 18.6 $ 20.3 $ 19.6 $ 17.2
Receivables from brokerage clients - net (4%) (2%) 16.4 16.8 16.0
17.3 17.1 Bank loans - net 4% 1% 14.9 14.7 14.4 14.3 14.3 Total
assets 23% 6% 209.3 198.1 191.0 183.7 170.4 Bank deposits 26% 9%
149.6 137.3 135.7 129.5 119.0 Payables to brokerage clients 6% 1%
33.0 32.7 32.3 33.2 31.0 Short-term borrowings N/M (40%) 3.0 5.0 .8
- - Long-term debt - - 2.9 2.9 2.9 2.9 2.9 Stockholders’ equity
17% 3% 15.5
15.0 14.5
13.4 13.2
Other
Full-time equivalent employees (at quarter end, in thousands) 5% -
16.1 16.1 15.6 15.3 15.4
Capital expenditures - purchases of
equipment, office facilities, and property, net (in millions)
(6%) (43%) $ 75 $ 131 $ 61 $ 67 $ 80
Expenses excluding interest as a
percentage of average client assets (annualized)
0.17 % 0.17 %
0.18 % 0.16 %
0.16 %
Clients’ Daily Average Trades
(in thousands) Revenue trades (2) (12%) (4%) 268 279 328 285 304
Asset-based trades (3) (5%) (11%) 80 90 101 84 84 Other trades (4)
31% 31% 195
149 187
168 149 Total
1% 5% 543 518
616
537 537
Average Revenue Per
Revenue Trade (2) (4%) (1%) $ 11.17
$ 11.27 $ 11.44
$ 11.73 $ 11.67
(1) Return on average
common stockholders’ equity is calculated using net income
available to common stockholders divided by average common
stockholders’ equity. (2) Includes all client trades that generate
trading revenue (i.e., commission revenue or principal transaction
revenue); also known as DART. (3) Includes eligible trades executed
by clients who participate in one or more of the Company’s
asset-based pricing relationships. (4) Includes all commission-free
trades, including Schwab Mutual Fund OneSource® funds and ETFs, and
other proprietary products.
N/M Not meaningful.
THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended September 30, September 30,
2016 2015 2016
2015 Interest Average
Interest Average Interest
Average Interest Average Average
Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
Average Revenue/ Yield/ Balance
Expense Rate
Balance Expense Rate Balance
Expense Rate Balance
Expense Rate
Interest-earning
assets: Cash and cash equivalents $ 12,875 $ 17 0.53% $ 9,764 $
6 0.24% $ 11,510 $ 44 0.51% $ 9,230 $ 17 0.25% Cash and investments
segregated 19,941 24 0.48% 18,061 8 0.18% 19,788 65 0.44% 18,607 21
0.15% Broker-related receivables (1) 667 - 0.31% 312 - 0.09% 579 -
0.21% 285 - 0.07% Receivables from brokerage clients 14,940 123
3.28% 15,594 130 3.31% 14,952 372 3.32% 15,043 374 3.32% Securities
available for sale (2) 74,064 227 1.22% 63,916 159 0.99% 71,230 636
1.19% 60,866 454 1.00% Securities held to maturity 57,669 349 2.41%
38,533 241 2.48% 53,791 1,006 2.50% 36,637 686 2.50% Bank loans
14,739 100
2.70% 14,137 93
2.61% 14,570 297
2.72% 13,848
274 2.65% Total interest-earning assets
194,895 840 1.71%
160,317 637
1.58% 186,420 2,420
1.73% 154,516
1,826 1.58% Other interest revenue
51
32
121
105
Total interest-earning assets $
194,895 $ 891 1.82%
$ 160,317 $ 669 1.66% $ 186,420
$ 2,541 1.82% $
154,516 $ 1,931 1.67%
Funding
sources: Bank deposits $ 143,578 $ 10 0.03% $ 115,606 $ 8 0.03%
$ 137,093 $ 26 0.03% $ 110,569 $ 22 0.03% Payables to brokerage
clients 26,204 1 0.01% 25,585 1 0.01% 26,079 2 0.01% 25,596 2 0.01%
Short-term borrowings (1,3) 2,952 4 0.54% 36 - 0.15% 1,674 6 0.48%
23 - 0.15% Long-term debt (4) 2,876
26 3.60%
2,888 24 3.30% 2,876
78 3.62%
2,642 67 3.39% Total
interest-bearing liabilities (4) 175,610
41 0.09%
144,115 33 0.09%
167,722 112 0.09%
138,830 91 0.09%
Non-interest-bearing funding sources (3) 19,285 16,202 18,698
15,686 Other interest expense
5
1
14
5 Total
funding sources $ 194,895 $ 46
0.10% $ 160,317 $ 34
0.09% $ 186,420 $ 126
0.09% $ 154,516 $ 96
0.08%
Net interest revenue
$
845 1.72%
$
635
1.57% $
2,415 1.73%
$ 1,835
1.59% (1) Interest revenue or expense was less than
$500,000 in the period or periods presented. (2) Amounts have been
calculated based on amortized cost. (3) Certain prior-period
amounts have been reclassified to conform to the 2016 presentation.
(4) Adjusted for the retrospective adoption of Accounting Standards
Update 2015-03, which decreased long-term debt and total
interest-bearing liabilities by an immaterial amount.
THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2016 2015 2016 2015 Average Average
Average Average Client Average Client Average Client Average Client
Average Assets Revenue
Fee Assets Revenue
Fee Assets Revenue Fee
Assets Revenue Fee Schwab
money market funds before fee waivers $ 161,904 $ 239 0.59% $
160,266 $ 237 0.59% $ 164,758 $ 724 0.59% $ 161,029 $ 706 0.59% Fee
waivers (41)
(166)
(193)
(519)
Schwab money market funds 161,904 198 0.49% 160,266 71 0.18%
164,758 531 0.43% 161,029 187 0.16% Schwab equity and bond funds
and ETFs 121,378 57 0.19% 102,898 55 0.21% 112,528 160 0.19%
101,337 163 0.22% Mutual Fund OneSource ® 203,589 175 0.34% 220,419
187 0.34% 199,758 508 0.34% 229,660 582 0.34% Other third-party
mutual funds and ETFs (1) 263,995
56 0.08%
251,245 56 0.09% 251,211
163 0.09%
252,423
170 0.09% Total mutual funds and
ETFs (2) $ 750,866 486
0.26% $ 734,828
369 0.20% $ 728,255 1,362
0.25% $ 744,449
1,102 0.20% Advice solutions (2) : Fee-based $
183,191 237 0.51% $ 170,211 225 0.52% $ 175,210 678 0.52% $ 171,516
673 0.52% Intelligent Portfolios 8,249 - - 3,714 - - 6,662 - -
2,578 - - Legacy Non-Fee 17,232
- - 16,372
- - 16,901
- - 16,573
- - Total advice solutions $
208,672 237 0.45%
$ 190,297 225 0.47% $
198,773 678 0.46%
$ 190,667 673 0.47% Other
balance-based fees (3) 350,117 62 0.07% 328,461 57 0.07% 335,555
176 0.07% 323,087 169 0.07% Other (4)
13
12
38
33
Total asset management and administration fees
$ 798
$
663
$ 2,254
$ 1,977
Note: Beginning in the fourth quarter of
2015, certain changes have been made to the above categorizations
of both balances and revenues in order to provide improved insight
into asset management and administration fee drivers. Prior period
information has been recast to reflect these changes.
(1) Includes Schwab ETF OneSource™. (2) Advice solutions
include managed portfolios, specialized strategies and customized
investment advice. Fee-based advice solutions include Schwab
Private Client, Schwab Managed Portfolios, Managed Account Select®,
Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners®
Dividend Growth Strategy, and Schwab Index Advantage® advised
retirement plan balances. Intelligent Portfolios include Schwab
Intelligent Portfolios™, launched in March 2015, and Institutional
Intelligent Portfolios®, launched in June 2015. Legacy Non-Fee
advice solutions include superseded programs such as 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. (3) Includes
various asset-based 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)
Q3-16 %
Change
2016 2015 vs. vs. Third Second First Fourth Third (In
billions, at quarter end, except as noted) Q3-15
Q2-16 Quarter Quarter
Quarter Quarter Quarter
Assets in client accounts Schwab One®, certain cash
equivalents and bank deposits 22% 8% $ 181.1 $ 168.4 $ 166.4 $
161.1 $ 148.7
Proprietary mutual funds (Schwab Funds®
and Laudus Funds®):
Money market funds (1%) - 160.3 161.0 167.4 166.1 161.8 Equity and
bond funds 9% 3% 64.6
62.8 62.1
62.4 59.3 Total proprietary mutual
funds 2% - 224.9
223.8 229.5
228.5 221.1 Mutual Fund Marketplace® (1)
Mutual Fund OneSource® (2) (2%) 1% 206.1 203.4 203.8 207.7 210.7
Mutual fund clearing services 12% 4% 198.8 192.0 186.3 186.5 177.8
Other third-party mutual funds (2) 13% 5%
556.1 529.7
510.7 496.4 490.4
Total Mutual Fund Marketplace 9% 4%
961.0 925.1 900.8
890.6 878.9 Total
mutual fund assets 8% 3% 1,185.9
1,148.9 1,130.3
1,119.1 1,100.0
Exchange-traded funds (ETFs) Proprietary ETFs (3) 58% 13% 53.9 47.9
42.9 39.7 34.2 ETF OneSource™ (1) 31% 6% 20.2 19.0 17.5 16.1 15.4
Other third-party ETFs 19% 5%
230.8 220.5 211.5
207.4 194.6 Total ETF
assets 25% 6% 304.9
287.4 271.9
263.2 244.2 Equity and other securities
(2) 14% 4% 860.3 830.7 808.5 799.0 755.3 Fixed income securities
13% 3% 208.0 202.0 194.1 187.2 183.6 Margin loans outstanding
(6%) (3%) (14.9)
(15.4) (14.5)
(15.8) (15.9)
Total client
assets 13% 4%
$
2,725.3 $ 2,622.0
$ 2,556.7 $
2,513.8 $ 2,415.9 Client
assets by business (4) Investor Services 13% 4% $ 1,470.8 $
1,415.5 $ 1,377.3 $ 1,358.6 $ 1,306.2 Advisor Services
13% 4% 1,254.5
1,206.5 1,179.4
1,155.2 1,109.7
Total client assets
13% 4%
$ 2,725.3
$ 2,622.0 $
2,556.7 $ 2,513.8
$ 2,415.9 Net growth (decline) in assets in
client accounts (for the quarter ended)
Net new assets by
business (4) Investor Services (5) 7% (4%) $ 14.2 $ 14.8 $ 15.7
$ 21.6 $ 13.3 Advisor Services (10%) 34%
15.8 11.8
16.3 21.3 17.5
Total net new assets (3%) 13%
$ 30.0 $ 26.6
$ 32.0 $
42.9 $ 30.8 Net market gains
(losses) 146% 89% 73.3
38.7 10.9
55.0 (158.2)
Net growth
(decline) 181% 58%
$
103.3 $ 65.3
$ 42.9 $ 97.9
$ (127.4) New brokerage accounts
(in thousands, for the quarter ended) 4% (3%) 264 271 265 262 254
Clients (in thousands) Active Brokerage Accounts 4% 1%
10,046 9,977 9,869 9,769 9,691 Banking Accounts 6% 2% 1,088 1,065
1,047 1,033 1,027 Corporate Retirement Plan Participants
5% 1% 1,561 1,553
1,532 1,519
1,492 (1)
Excludes all proprietary mutual funds and ETFs. (2) In 2015,
certain Mutual Fund OneSource balances were reclassified to Other
third-party mutual funds and Equity and other securities. Prior
period information has been recast to reflect these changes. (3)
Includes proprietary ETFs held on and off the Schwab platform. (4)
In the fourth quarter of 2015, the Company
realigned its reportable segments as a result of organizational
changes. The Corporate Brokerage Retirement Services business was
transferred from the Investor Services segment to the Advisor
Services segment. Prior period segment information has been recast
to reflect this change.
(5) Second quarter of 2016 includes an inflow of $2.7 billion from
a mutual fund clearing services client. Fourth quarter and third
quarter of 2015 include inflows of $10.2 billion and $4.9 billion,
respectively, from certain mutual fund clearing services clients.
The Charles Schwab
Corporation Monthly Activity Report For September 2016
2015 2016
Change
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Mo.
Yr.
Market Indices (at month end) Dow Jones Industrial Average
16,285 17,664 17,720 17,425 16,466 16,517 17,685 17,774 17,787
17,930 18,432 18,401 18,308 (1%) 12% Nasdaq Composite 4,620 5,054
5,109 5,007 4,614 4,558 4,870 4,775 4,948 4,843 5,162 5,213 5,312
2% 15% Standard & Poor’s 500 1,920 2,079 2,080 2,044 1,940
1,932 2,060 2,065 2,097 2,099 2,174 2,171 2,168 - 13%
Client
Assets (in billions of dollars) Beginning Client Assets 2,462.4
2,415.9 2,539.9 2,553.3 2,513.8 2,428.3 2,433.6 2,556.7 2,576.2
2,607.2 2,622.0 2,698.2 2,710.4 Net New Assets (1) 11.8 10.5 17.2
15.2 8.1 10.9 13.0 1.3 16.0 9.3 9.0 10.4 10.6 2% (10%) Net Market
(Losses) Gains (58.3) 113.5 (3.8)
(54.7) (93.6) (5.6)
110.1 18.2 15.0
5.5 67.2 1.8 4.3 Total
Client Assets (at month end) 2,415.9 2,539.9
2,553.3 2,513.8 2,428.3
2,433.6 2,556.7 2,576.2
2,607.2 2,622.0 2,698.2
2,710.4 2,725.3 1% 13% Receiving Ongoing Advisory
Services (at month end) Investor Services 184.9 193.3 194.5 192.6
187.3 187.9 197.9 200.3 202.7 205.0 210.2 211.7 213.4 1% 15%
Advisor Services (2) 1,019.9 1,072.4 1,075.6 1,061.1 1,029.9
1,032.3 1,084.0 1,093.2 1,103.7 1,110.5 1,142.3 1,149.4 1,155.4 1%
13%
Client Accounts (at month end, in thousands) Active
Brokerage Accounts 9,691 9,712 9,731 9,769 9,792 9,826 9,869 9,916
9,948 9,977 9,989 10,021 10,046 - 4% Banking Accounts 1,027 1,029
1,033 1,033 1,039 1,045 1,047 1,053 1,060 1,065 1,074 1,083 1,088 -
6% Corporate Retirement Plan Participants 1,492 1,502 1,514 1,519
1,518 1,523 1,532 1,532 1,555 1,553 1,559 1,565 1,561 - 5%
Client Activity New Brokerage Accounts (in thousands) 80 88
76 98 83 84 98 103 81 87 84 96 84 (13%) 5% Inbound Calls (in
thousands) 1,631 1,716 1,554 1,844 1,736 1,737 1,902 1,867 1,554
1,665 1,605 1,755 1,633 (7%) - Web Logins (in thousands) 29,550
33,574 30,488 32,156 33,268 33,283 38,078 37,854 38,000 43,220
46,217 42,627 38,237 (10%) 29% Client Cash as a Percentage of
Client Assets (3) 12.9% 12.3% 12.3% 13.0% 13.7% 13.7% 13.1% 12.8%
12.7% 12.6% 12.5% 12.5% 12.5% -
(40) bp
Mutual Fund and Exchange-Traded Fund Net Buys (Sells)
(4, 5) (in millions of dollars) Large Capitalization Stock (608)
(214) 637 451 (162) (212) (462) (857) (799) 185 (1,173) (755)
(1,209) Small / Mid Capitalization Stock (108) 17 (2) (572) (952)
58 685 (86) (272) (113) (320) (214) 460 International (560) 72 427
(918) 469 (28) 833 324 (207) (1,208) (347) 386 (26) Specialized
(643) 667 744 (495) (668) 260 191 815 265 470 357 189 (274) Hybrid
(726) (110) (410) (1,361) (377) 38 281 14 1,133 (403) (463) (219)
58 Taxable Bond (91) 628 (1,250) (4,020) 99 546 1,628 1,098 1,526
1,421 1,420 1,888 1,585 Tax-Free Bond 35 494 260 731 379 641 949
479 940 700 766 920 539
Net Buy (Sell) Activity (in millions
of dollars) Mutual Funds (4) (4,336) (910) (3,602) (10,988) (1,215)
197 1,769 (207) 620 (2,049) (1,683) (297) (656) Exchange-Traded
Funds (5) 1,635 2,464 4,008 4,804 3 1,106 2,336 1,994 1,966 3,101
1,923 2,492 1,789 Money Market Funds (717) (451) 251 4,538 1,994
1,359 (2,101) (3,959) (738) (1,799) 701 (768) (658)
Average Interest-Earning Assets
(6)
(in millions of dollars) 162,639 165,351 167,388 172,334 177,332
178,610 181,529 183,341 184,432 187,933 191,850 194,268 199,107 2%
22% (1) May 2016 includes an inflow of $2.7 billion from a
mutual fund clearing services client. November and September 2015
include inflows of $10.2 billion and $4.9 billion, respectively,
from certain mutual fund clearing services clients. (2) Excludes
Retirement Business Services Trust and Corporate Brokerage
Retirement Services. (3) Schwab One®, certain cash equivalents,
bank deposits and money market fund balances as a percentage of
total client assets. (4) 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.
(5) Represents the principal value of client ETF transactions
handled by Schwab, including transactions in proprietary ETFs. (6)
Represents average total interest-earning assets on the Company’s
balance sheet.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161017005263/en/
MEDIA:Charles SchwabGreg Gable,
415-667-0473orINVESTORS/ANALYSTS:Charles SchwabRich Fowler,
415-667-1841
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