2016 Revenues Rise 17% to $7.5 Billion,
Net Income Grows 31% to $1.9 Billion, Both Records
Total Client Assets Rise 11% to a Record
$2.78 Trillion at Year-end
The Charles Schwab Corporation announced today that its net
income for the fourth quarter of 2016 was a record
$522 million, up 4% from $503 million for the prior
quarter, and up 25% from $416 million for the fourth quarter
of 2015. Net income for the twelve months ended December 31,
2016 was $1.9 billion, up 31% year-over-year.
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Three Months Ended Twelve Months Ended
December 31, % December 31, % Financial Highlights
2016 2015 Change 2016 2015
Change Net revenues (in millions) $ 1,972 $ 1,691 17
% $ 7,478 $ 6,380 17 % Net income (in millions) $ 522 $ 416 25 % $
1,889 $ 1,447 31 % Diluted earnings per common share $ .36 $ .28 29
% $ 1.31 $ 1.03 27 % Pre-tax profit margin 41.8 % 38.1 % 40.0 %
35.7 %
Return on average common stockholders’
equity (annualized)
14 % 13 % 14 % 12 % EPS Impact of Certain Non-Recurring
Items Net litigation proceeds (1) $ - $ .03 $ .01 $ .04 Net
tax benefits (2) $ - $ .01 $ - $ .02 Note: All per-share
results are rounded to the nearest cent, based on weighted-average
diluted common shares outstanding. (1) Net litigation
proceeds include $57 million in the fourth quarter of 2015, and $16
million and $75 million in full-year 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 $15 million in the fourth quarter of
2015 and $29 million for the full year, relating to certain current
and prior-year matters, which are included in Taxes on income.
CEO Walt Bettinger said, “Schwab achieved truly noteworthy
results in 2016 by sustaining our ‘Through Clients’ Eyes’ strategy
and working to earn our clients’ trust every day. During the year,
from disappointing economic news early on, to the disruption of the
Brexit vote, and then through the tumult of the presidential
election, clients could trust that Schwab stood ready to help them
navigate market volatility, and they made active use of our
full-service capabilities. Our financial consultants held planning
conversations with approximately 132,000 clients last year, up 18%
from 2015. Client assets enrolled in one of our retail advisory
solutions and those guided by independent advisors totaled
$1.40 trillion at the end of 2016, up 12%. New and existing
clients brought $125.5 billion in core net new assets to
Schwab during 2016, marking a 5% annual organic growth rate and the
5th consecutive year over $100 billion. Net new assets in our
Retail and Advisor Services businesses rose by 10% and 21%,
respectively, over the prior year, while Mutual Fund Clearing and
Retirement Plan flows slowed due to client turnover. Total client
assets at year-end were a record $2.78 trillion, up 11%. We
closed out 2016 serving more clients than ever, including
10.2 million active brokerage accounts, 1.1 million
banking accounts and 1.5 million retirement plan participants,
increases of 4%, 7% and 2%, respectively.”
Mr. Bettinger continued, “As Schwab continues to offer more
value and a better investing experience, new and existing clients
choose to entrust us with more of their assets, fueling our
financial performance. Our revenues rose 17% to a record
$7.5 billion in 2016. On the expense front, we entered the
year with goals that allowed for needed growth in our
infrastructure and increased reinvestment to better serve clients
while still delivering improved profitability. We kept to those
goals through the ups and downs of 2016, which helped us increase
net income by nearly a third over our 2015 performance, to a record
$1.9 billion.”
Mr. Bettinger added, “Our work to challenge the status quo on
behalf of our clients continued across multiple fronts in 2016. We
expanded and enhanced our Schwab OpenView Gateway® and Schwab
Advisor Center® platforms to help the independent advisors who
custody with us operate more efficiently and stay focused on
serving their clients. We introduced Schwab Intelligent Advisory®
as an extension of our contemporary, full-service approach to
helping all individual clients build and manage their wealth.
Schwab Intelligent Advisory is designed to be broadly accessible
with a low balance minimum and fee, combining personalized
financial and investment planning through CFP® professionals with
automated and diversified portfolio management through Schwab
Intelligent Portfolios®. As part of our commitment to offering more
value to investors, we launched the Schwab Target Index Funds, a
new series of target-date mutual funds constructed with Schwab ETFs
that are designed to be the lowest cost of their kind available to
employer-sponsored retirement plans and retail investors.* We also
expanded Schwab ETF OneSource™ by 16 net new funds in 2016,
enabling Schwab clients to choose from a total of 228 ETFs covering
69 Morningstar categories, all for $0 online trade commissions. In
addition, we introduced the Schwab Live hub to provide traders with
centralized access to the interactive and live content we offer to
help them succeed. We also continued our work to make it easier to
establish a relationship with a locally-based investment
professional by extending our footprint across the country – we
added 3 new company branches and 5 new independent branches during
the year.”
CFO Joe Martinetto commented, “Schwab’s 2016 performance is a
clear example of the company’s financial formula again working as
designed: solid business growth driving solid revenue growth
through diversified sources, leading to improved profitability
through continued expense discipline. We expanded client assets by
11% during an environment that had some rough patches but
ultimately included improving economic conditions, positive equity
market returns and, at long last, the second small step by the
Federal Reserve away from its zero interest rate policy of recent
years. We achieved 17% revenue growth by generating record levels
of net interest revenue and asset management and administration
fees, which more than offset lower revenue from trading and the
conclusion of certain litigation. Net interest revenue rose 32% to
$3.3 billion due to a strong increase in client cash sweep
deposits and higher short-term interest rates. Asset management and
administration fees rose by 15% to $3.1 billion largely due to
higher money market fund management fees relating to the rate
environment and continued lift in client assets enrolled in one of
our retail advisory solutions. Higher rates provided breathing room
for our increased investment in people and technology, resulting in
9% expense growth for 2016. This increase more than doubled
our constrained 2015 increase but still allowed for a 780 basis
point gap between revenue and expense growth and a record 40%
pre-tax profit margin, beating the prior high-water mark set in
2008.”
Mr. Martinetto concluded, “We remain focused on managing the
company’s balance sheet to support growth initiatives and further
our strategy of optimizing the spread earned on client cash sweep
balances. We completed approximately $8 billion in bulk
transfers to Schwab Bank during 2016, including approximately
$4 billion in the fourth quarter. These transfers, along with
growth in bank deposits from our ongoing asset gathering, helped
increase interest-earning assets on our balance sheet by 22% during
2016 to $216 billion at year-end. We supported this growth
with capital generated through earnings and the issuance of
approximately $1.4 billion in additional preferred stock. As
part of managing Schwab’s capital levels, we maintain a target
range for common stock dividends equal to 20-30% of earnings;
consistent with our improving earnings picture, we increased our
quarterly cash dividend by 17% during the year, to $0.07. We ended
2016 with a preliminary Tier-1 Leverage ratio of 7.2% and a
full-year return on equity of 14%, the highest in seven years. Our
solid capital position and healthy returns position Schwab to
continue investing for profitable growth and sharing the benefits
of our scale with clients while building long-term stockholder
value.”
Business highlights for the fourth quarter
(data as of quarter-end unless otherwise noted):
Investor Services
- New retail brokerage accounts for the
quarter totaled approximately 182,000, up 21% year-over-year;
total accounts were 7.1 million, up
3% year-over-year.
- Held financial planning conversations
with approximately 32,000 clients during the quarter, up
10% year-over-year. Approximately 132,000 planning
conversations were held in 2016, up 18% from the prior year.
- Opened two company branches in
Brookfield, WI and Aspen, CO and opened two independent branches in
Gainesville, FL and Peoria, IL. Schwab has over 335 branches across
the country that offer clients access to a range of investing and
personal finance guidance, services, and products.
- Graduated the second class of FC
Academy, a 24-month development rotational program preparing recent
college graduates for a career in one of our branch offices.
- Graduated the second class of FC
University, a 10-week onboarding program that prepares new hires to
be successful at Schwab and supports the expansion of our branch
network.
- Launched “Investing Principles” on
schwab.com that outline Schwab’s core beliefs and approach to
investing. Divided into three key components – Identify Your Goals,
Get Invested, and Stay on Track – they create a foundation for
every client, no matter where they are on their investing
journey.
Advisor Services
- Announced enhancements to Institutional
Intelligent Portfolios®, the automated investment management
platform designed for independent advisors. The primary update is
enhanced portfolio customization, which provides advisors greater
flexibility to design portfolios based on their investment
philosophies.
- Announced enhancements to Schwab
Advisor Center, the custody and trading platform for independent
advisors. The platform now offers an array of automation features
and tools, along with online support, enabling advisors and their
clients to reduce paperwork and complexity.
- Hosted over 5,100 advisors, exhibitors,
sponsors, and media at our IMPACT® conference – the largest and
longest-running annual gathering of independent registered
investment advisors. This year, Schwab executives and industry
leaders focused on growth, cybersecurity, and talent.
Products and Infrastructure
- For Charles Schwab Bank:
- Launched a series of client experience,
risk management, and efficiency improvements including two-way text
fraud alerts for debit cards, online joint Schwab Bank High Yield
Investor Checking® account opening, paperless Schwab Bank High
Yield Investor Saving® statements, and paperless 1099-INT
statements.
- Balance sheet assets =
$175.7 billion, up 26% year-over-year.
- Outstanding mortgage and home equity
loans = $11.5 billion, up 4% year-over-year.
- Pledged Asset Line® balances =
$3.9 billion, up 22% year-over-year.
- Schwab Bank High Yield Investor
Checking accounts = 914,000, with $13.8 billion in
balances.
- Client assets managed by Windhaven®
totaled $9.0 billion, down 24% from the fourth quarter of
2015.
- Client assets managed by
ThomasPartners® totaled $10.2 billion, up 40% from the
fourth quarter of 2015.
- Client assets managed by Intelligent
Portfolios (Schwab Intelligent Portfolios® and Institutional
Intelligent Portfolios®) totaled $12.3 billion, up
$2.1 billion from the third quarter of 2016.
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.
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.
Business Update
The company also announced today that it has scheduled a
Business Update for institutional investors on Thursday,
February 2, 2017. This Update is designed to help the
investment community keep abreast of recent developments and
management’s strategic focus. The program is scheduled to run from
approximately 8:30 a.m. - 12:15 p.m. PT, 11:30 a.m. - 3:15 p.m. ET.
Participants will include members of the company’s executive
management. A simultaneous webcast of this Update will be
accessible to the public at
http://schwabevents.com/corporation.
Forward-Looking Statements
This press release contains forward-looking statements relating
to client value and investing experience; growth in the client base
and client assets; financial performance; business growth; revenue
growth; improved profitability; expense discipline; balance sheet
management; growth initiatives; optimizing the spread earned on
client cash; target range for common stock dividends; investing for
profitable growth; sharing the benefits of scale with clients; and
building long-term stockholder value. 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 develop and launch new
products, services and capabilities in a timely and successful
manner; the company’s ability to attract and retain clients and
registered investment advisors and grow those relationships and
client assets; general market conditions, including the level of
interest rates, equity valuations and trading activity; 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 335 offices and
10.2 million active brokerage accounts, 1.5 million
corporate retirement plan participants,
1.1 million banking accounts, and $2.78 trillion in
client assets as of December 31, 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 Twelve Months Ended December 31,
December 31, 2016 2015
2016 2015
Net Revenues
Asset management and administration fees (1) $ 801 $
673 $ 3,055 $ 2,650 Interest revenue 952 726 3,493 2,657 Interest
expense (45 ) (36 ) (171 ) (132 ) Net
interest revenue
907
690 3,322 2,525 Trading revenue 202 208 825 866 Other 62 120 271
328 Provision for loan losses -
- 5
11 Total net revenues 1,972
1,691 7,478
6,380
Expenses Excluding
Interest Compensation and benefits 629
572
2,466 2,241 Professional services 134 119 506 459 Occupancy and
equipment 99 93 398 353 Advertising and market development 61 60
265 249 Communications 58 58 237 233 Depreciation and amortization
61 58 234 224 Other 106
86 379
342 Total expenses excluding interest
1,148 1,046
4,485 4,101 Income before
taxes on income 824 645 2,993 2,279 Taxes on income
302 229
1,104 832
Net
Income 522 416
1,889 1,447
Preferred stock dividends and other (2)
44 38 143
83
Net Income Available to
Common Stockholders $ 478 $
378 $ 1,746 $ 1,364
Weighted-Average Common Shares Outstanding: Basic
1,329 1,319 1,324 1,315 Diluted 1,341
1,330 1,334
1,327
Earnings Per Common Share:
Basic $ .36 $ .29 $ 1.32 $ 1.04 Diluted $ .36
$ .28 $ 1.31
$ 1.03
Dividends Declared Per Common Share
$ .07 $ .06
$ .27 $ .24 (1) Includes fee
waivers of $31 and $153 during the fourth quarters of 2016 and
2015, respectively, and $224 and $672 during the twelve months
ended 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) Q4-16 % change
2016 2015 vs. vs. Fourth Third
Second First Fourth (In millions, except per share amounts
and as noted) Q4-15 Q3-16 Quarter Quarter
Quarter Quarter Quarter
Net Revenues
Asset management and administration fees 19 %
- $ 801 $ 798 $ 757 $ 699 $ 673 Net interest revenue 31 % 7 % 907
845 798 772 690 Trading revenue (3 %) 6 % 202 190 201 232 208 Other
(48 %) (18 %) 62 76 70 63 120 Provision for loan losses - (100 %)
- 5
2 (2 ) -
Total net revenues 17 % 3 % 1,972
1,914 1,828
1,764 1,691
Expenses Excluding Interest Compensation and benefits 10 % 3
% 629 609 602 626 572 Professional services 13 % 2 % 134 131 125
116 119 Occupancy and equipment 6 % (1 %) 99 100 101 98 93
Advertising and market development 2 % (5 %) 61 64 70 70 60
Communications - 2 % 58 57 62 60 58 Depreciation and amortization 5
% 2 % 61 60 57 56 58 Other 23 % 7 % 106
99 91
83 86 Total
expenses excluding interest 10 % 3 % 1,148
1,120 1,108
1,109 1,046
Income before taxes on income 28 % 4 % 824 794 720 655 645 Taxes on
income 32 % 4 % 302 291
268 243
229
Net Income 25 % 4 % $
522 $ 503 $ 452
$ 412 $ 416
Preferred stock dividends and other 16 % 33 % 44
33 46
20 38
Net Income Available to Common Stockholders 26 % 2 %
$ 478 $ 470 $ 406
$ 392 $ 378
Earnings per common share: Basic 24 % - $ .36 $ .36 $ .31 $ .30 $
.29 Diluted 29 % 3 % $ .36 $ .35 $ .30 $ .29 $ .28 Dividends
declared per common share 17 % - $ .07 $ .07 $ .07 $ .06 $ .06
Weighted-average common shares outstanding: Basic 1 % - 1,329 1,324
1,322 1,321 1,319 Diluted 1 % 1 % 1,341
1,334 1,333
1,330 1,330
Performance Measures Pre-tax profit margin 41.8 % 41.5 %
39.4 % 37.1 % 38.1 % Return on average common stockholders’ equity
(annualized) (1) 14 % 14 %
13 % 13 %
13 %
Financial Condition (at quarter end, in
billions) Cash and investments segregated 13 % 10 % $ 22.2 $ 20.1 $
18.6 $ 20.3 $ 19.6 Receivables from brokerage clients - net (1 %) 5
% 17.2 16.4 16.8 16.0 17.3 Bank loans - net 8 % 3 % 15.4 14.9 14.7
14.4 14.3 Total assets 22 % 7 % 223.4 209.3 198.1 191.0 183.7 Bank
deposits 26 % 9 % 163.5 149.6 137.3 135.7 129.5 Payables to
brokerage clients 8 % 9 % 35.9 33.0 32.7 32.3 33.2 Short-term
borrowings - (100 %) - 3.0 5.0 .8 - Long-term debt - - 2.9 2.9 2.9
2.9 2.9 Stockholders’ equity 22 % 6 % 16.4
15.5 15.0
14.5 13.4
Other Full-time equivalent employees (at quarter end, in
thousands) 6 % 1 % 16.2 16.1 16.1 15.6 15.3
Capital expenditures - purchases of
equipment, office facilities, and property, net (in millions)
28 % 15 % $ 86 $ 75 $ 131 $ 61 $ 67
Expenses excluding interest as a
percentage of average client assets (annualized)
0.17 % 0.17 % 0.17
% 0.18 % 0.16 %
Clients’ Daily Average Trades (in thousands) Revenue trades
(2) 3 % 9 % 293 268 279 328 285 Asset-based trades (3) 26 % 33 %
106 80 90 101 84 Other trades (4) 4 % (11 %) 174
195 149
187 168
Total 7 % 6 % 573 543
518 616
537
Average Revenue
Per Revenue Trade (2) (6 %) (1 %) $ 11.03
$ 11.17 $ 11.27 $ 11.44
$ 11.73
(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.
THE CHARLES SCHWAB CORPORATION
Net Interest Revenue
Information
(In millions)
(Unaudited)
Three
Months Ended Twelve Months Ended December 31, December 31, 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 $ 10,052 $ 13 0.51 % $ 9,738 $ 7 0.29 % $ 11,143 $ 57
0.51 % $ 9,358 $ 24 0.26 % Cash and investments segregated 21,047
28 0.53 % 18,605 10 0.21 % 20,104 93 0.46 % 18,606 31 0.17 %
Broker-related receivables (1) 493 1 0.27 % 243 - 0.08 % 558 1 0.22
% 274 - 0.07 % Receivables from brokerage clients 15,145 125 3.28 %
15,715 128 3.23 % 15,001 497 3.31 % 15,212 502 3.30 % Securities
available for sale (2) 76,624 247 1.28 % 66,352 175 1.05 % 72,586
883 1.22 % 62,249 629 1.01 % Securities held to maturity 68,351 396
2.30 % 43,156 271 2.49 % 57,451 1,402 2.44 % 38,280 957 2.50 % Bank
loans 15,148 103 2.71 %
14,345 95 2.63 % 14,715
400 2.72 % 13,973
369 2.64 % Total interest-earning assets
206,860 913 1.76 %
168,154 686 1.62 % 191,558
3,333 1.74 % 157,952
2,512 1.59 % Other interest revenue
39
40 160
145
Total interest-earning assets $ 206,860 $ 952
1.83 % $ 168,154 $ 726 1.71 % $
191,558 $ 3,493 1.82 % $ 157,952
$ 2,657 1.68 %
Funding sources: Bank deposits $
154,357 $ 11 0.03 % $ 122,054 $ 7 0.02 % $ 141,432 $ 37 0.03 % $
113,464 $ 29 0.03 % Payables to brokerage clients (1) 27,141 1 0.01
% 25,813 - 0.01 % 26,311 3 0.01 % 25,651 2 0.01 % Short-term
borrowings (1,3) 2,429 3 0.49 % 16 - 0.41 % 1,864 9 0.48 % 21 -
0.27 % Long-term debt (4) 2,876 26
3.60 % 2,959 25
3.35 % 2,876 104 3.62 %
2,717 92 3.39 % Total interest-bearing
liabilities (4) 186,803 41 0.09
% 150,842 32 0.08 %
172,483 153 0.09 %
141,853 123 0.09 % Non-interest-bearing
funding sources (3) 20,057 17,312 19,075 16,099 Other interest
expense 4
4
18
9 Total funding sources $ 206,860
$ 45
0.09
% $ 168,154 $ 36 0.08 % $ 191,558
$ 171 0.09 % $ 157,952 $ 132
0.08 %
Net interest revenue
$
907 1.74 %
$
690 1.63 %
$ 3,322 1.73 %
$ 2,525 1.60
% (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 Twelve Months Ended December 31,
December 31, 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 $ 162,207 $
238 0.58 % $ 162,437 $ 241 0.59 % $ 164,120 $ 962 0.59 % $ 161,381
$ 947 0.59 % Fee waivers (31 )
(153 )
(224 )
(672 )
Schwab money market funds 162,207 207 0.51 % 162,437 88 0.21 %
164,120 738 0.45 % 161,381 275 0.17 % Schwab equity and bond funds
and ETFs 125,814 57 0.18 % 105,935 54 0.20 % 115,849 217 0.19 %
102,486 217 0.21 % Mutual Fund OneSource ® 198,289 168 0.34 %
212,409 182 0.34 % 199,389 676 0.34 % 225,347 764 0.34 % Other
third-party mutual funds and ETFs (1) 264,703
59 0.09 % 248,659
53 0.08 % 254,584 222
0.09 % 251,491 223
0.09 % Total mutual funds and ETFs (2) $
751,013 491 0.26 % $
729,440 377 0.21 % $ 733,942
1,853 0.25 % $ 740,705
1,479 0.20 % Advice solutions (2) : Fee-based
$ 184,007 237 0.51 % $ 171,577 225 0.52 % $ 177,409 915 0.52 % $
172,302 898 0.52 % Intelligent Portfolios 11,119 - - 4,891 - -
8,377 - - 3,274 - - Legacy Non-Fee 17,174
- - 16,135
- - 16,969 -
- 16,463 -
- Total advice solutions $ 212,300
237 0.44 % $ 192,603
225 0.46 % $ 202,755 915
0.45 % $ 192,039 898
0.47 % Other balance-based fees (3) 349,610 59 0.07 %
328,982 57 0.07 % 339,071 235 0.07 % 324,701 226 0.07 % Other (4)
14
14
52
47
Total asset
management and administration fees
$ 801
$ 673
$ 3,055
$ 2,650
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) Q4-16 % Change
2016 2015 vs. vs. Fourth Third
Second First Fourth (In billions, at quarter end, except as
noted) Q4-15 Q3-16 Quarter Quarter Quarter
Quarter Quarter
Assets in client accounts Schwab
One®, certain cash equivalents and bank deposits 23 % 9 % $ 197.4 $
181.1 $ 168.4 $ 166.4 $ 161.1
Proprietary mutual funds (Schwab Funds®
and Laudus Funds®):
Money market funds (2 %) 2 % 163.5 160.3 161.0 167.4 166.1 Equity
and bond funds (1) 6 % 2 % 66.1 64.6
62.8 62.1
62.4 Total proprietary mutual funds - 2 %
229.6 224.9 223.8
229.5 228.5 Mutual Fund
Marketplace® (2) Mutual Fund OneSource® (4 %) (3 %) 198.9 206.1
203.4 203.8 207.7 Mutual fund clearing services 5 % (1 %) 196.6
198.8 192.0 186.3 186.5 Other third-party mutual funds 12 % -
558.2 556.1 529.7
510.7 496.4 Total
Mutual Fund Marketplace 7 % (1 %) 953.7
961.0 925.1 900.8
890.6 Total mutual fund assets 6 % -
1,183.3 1,185.9 1,148.9
1,130.3 1,119.1
Exchange-traded funds (ETFs) Proprietary ETFs (1) 51 % 11 % 59.8
53.9 47.9 42.9 39.7 ETF OneSource™ (2) 32 % 5 % 21.2 20.2 19.0 17.5
16.1 Other third-party ETFs 15 % 3 % 238.3
230.8 220.5 211.5
207.4 Total ETF assets 21 % 5 %
319.3 304.9 287.4
271.9 263.2 Equity and
other securities 11 % 3 % 886.5 860.3 830.7 808.5 799.0 Fixed
income securities 11 % - 208.3 208.0 202.0 194.1 187.2 Margin loans
outstanding (3 %) 3 % (15.3 ) (14.9 )
(15.4 ) (14.5 ) (15.8 )
Total
client assets 11 % 2 %
$ 2,779.5
$ 2,725.3 $ 2,622.0
$ 2,556.7 $
2,513.8 Client assets by business Investor
Services 10 % 2 % $ 1,495.4 $ 1,470.8 $ 1,415.5 $ 1,377.3 $ 1,358.6
Advisor Services 11 % 2 % 1,284.1
1,254.5 1,206.5 1,179.4
1,155.2
Total client assets 11 %
2 %
$ 2,779.5 $ 2,725.3
$ 2,622.0 $
2,556.7 $ 2,513.8 Net
growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (3)
(37 %) (4 %) $ 13.7 $ 14.2 $ 14.8 $ 15.7 $ 21.6 Advisor Services 9
% 47 % 23.2 15.8
11.8 16.3 21.3
Total net new assets (14 %) 23 %
$ 36.9
$ 30.0 $ 26.6
$ 32.0 $
42.9 Net market gains (69 %) (76 %) 17.3
73.3 38.7
10.9 55.0
Net growth (45
%) (48 %)
$ 54.2 $ 103.3
$ 65.3 $
42.9 $ 97.9 New
brokerage accounts (in thousands, for the quarter ended) 12 %
11 % 293 264 271 265 262
Clients (in thousands) Active
Brokerage Accounts 4 % 1 % 10,155 10,046 9,977 9,869 9,769 Banking
Accounts 7 % 2 % 1,106 1,088 1,065 1,047 1,033 Corporate Retirement
Plan Participants 2 % (1 %) 1,543 1,561
1,553 1,532
1,519
(1) Includes proprietary equity and bond funds and
ETFs held on and off the Schwab platform. As of December 31, 2016,
off-platform equity and bond funds and ETFs were $7.8 billion and
$12.7 billion, respectively. (2) Excludes all proprietary mutual
funds and ETFs. (3) Second quarter of 2016 includes an inflow of
$2.7 billion from a mutual fund clearing services client. Fourth
quarter of 2015 includes an inflow of $10.2 billion from a mutual
fund clearing services client.
The Charles Schwab Corporation Monthly Activity
Report For December 2016 2015 2016
Change
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Mo.
Yr.
Market Indices (at month end) Dow Jones Industrial Average
17,425 16,466 16,517 17,685 17,774 17,787 17,930 18,432 18,401
18,308 18,142 19,124 19,763 3% 13% Nasdaq Composite 5,007 4,614
4,558 4,870 4,775 4,948 4,843 5,162 5,213 5,312 5,189 5,324 5,383
1% 8% Standard & Poor’s 500 2,044 1,940 1,932 2,060 2,065 2,097
2,099 2,174 2,171 2,168 2,126 2,199 2,239 2% 10%
Client
Assets (in billions of dollars) Beginning Client Assets 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 2,686.7 2,734.6
Net New Assets (1)
15.2 8.1 10.9 13.0 1.3 16.0 9.3 9.0 10.4 10.6 6.1 11.9 18.9 59% 24%
Net Market (Losses) Gains (54.7 ) (93.6 ) (5.6 )
110.1 18.2 15.0
5.5 67.2 1.8 4.3
(44.7 ) 36.0 26.0 Total Client Assets
(at month end) 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 2,686.7 2,734.6
2,779.5 2% 11% Receiving Ongoing Advisory
Services (at month end) Investor Services 192.6 187.3 187.9 197.9
200.3 202.7 205.0 210.2 211.7 213.4 211.3 213.2 217.1 2% 13%
Advisor Services (2) 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 1,140.5 1,161.8 1,184.3 2%
12%
Client Accounts (at month end, in thousands) Active
Brokerage Accounts 9,769 9,792 9,826 9,869 9,916 9,948 9,977 9,989
10,021 10,046 10,068 10,102 10,155 1% 4% Banking Accounts 1,033
1,039 1,045 1,047 1,053 1,060 1,065 1,074 1,083 1,088 1,092 1,099
1,106 1% 7% Corporate Retirement Plan Participants 1,519 1,518
1,523 1,532 1,532 1,555 1,553 1,559 1,565 1,561 1,547 1,550 1,543 -
2%
Client Activity New Brokerage Accounts (in thousands) 98
83 84 98 103 81 87 84 96 84 84 93 116 25% 18% Inbound Calls (in
thousands) 1,844 1,736 1,737 1,902 1,867 1,554 1,665 1,605 1,755
1,633 1,565 1,642 1,931 18% 5% Web Logins (in thousands) 32,156
33,268 33,283 38,078 37,854 38,000 43,220 46,217 42,627 38,237
35,429 37,687 40,720 8% 27% Client Cash as a Percentage of Client
Assets (3) 13.0 % 13.7 % 13.7 % 13.1 % 12.8 % 12.7 % 12.6 % 12.5 %
12.5 % 12.5 % 12.8 % 12.8 % 13.0 % 20 bp -
Mutual Fund and
Exchange-Traded Fund
Net Buys (Sells) (4, 5)
(in millions of dollars) Large Capitalization Stock 451 (162 ) (212
) (462 ) (857 ) (799 ) 185 (1,173 ) (755 ) (1,209 ) (652 ) 200 565
Small / Mid Capitalization Stock (572 ) (952 ) 58 685 (86 ) (272 )
(113 ) (320 ) (214 ) 460 (190 ) 877 1,103 International (918 ) 469
(28 ) 833 324 (207 ) (1,208 ) (347 ) 386 (26 ) (1 ) 348 (683 )
Specialized (495 ) (668 ) 260 191 815 265 470 357 189 (274 ) (159 )
(1,019 ) 20 Hybrid (1,361 ) (377 ) 38 281 14 1,133 (403 ) (463 )
(219 ) 58 (432 ) (687 ) (456 ) Taxable Bond (4,020 ) 99 546 1,628
1,098 1,526 1,421 1,420 1,888 1,585 1,475 (1,110 ) 1,045 Tax-Free
Bond 731 379 641 949 479 940 700 766 920 539 20 (1,090 ) (1,692 )
Net Buy (Sell) Activity (in millions of dollars) Mutual
Funds (4) (10,988 ) (1,215 ) 197 1,769 (207 ) 620 (2,049 ) (1,683 )
(297 ) (656 ) (1,979 ) (5,864 ) (5,825 ) Exchange-Traded Funds (5)
4,804 3 1,106 2,336 1,994 1,966 3,101 1,923 2,492 1,789 2,040 3,383
5,727 Money Market Funds 4,538 1,994 1,359 (2,101 ) (3,959 ) (738 )
(1,799 ) 701 (768 ) (658 ) 211 1,851 1,141
Average
Interest-Earning Assets (6) (in millions of dollars) 172,334
177,332 178,610 181,529 183,341 184,432 187,933 191,850 194,268
199,107 201,894 206,970 212,052 2% 23% (1) May 2016
includes an inflow of $2.7 billion from a mutual fund clearing
services client. (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/20170118005364/en/
MEDIA:Charles SchwabJoe Carberry,
415-667-1677orINVESTORS/ANALYSTS:Charles SchwabRich Fowler,
415-667-1841
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