Revenues Grow 15% Year-Over-Year to $2.4
Billion, Marking Eleven Consecutive Record Quarters
Core Net New Assets Rise 69% to a New All-Time
High of $65.6 Billion
The Charles Schwab Corporation announced today that its net
income for the first quarter of 2018 was a record $783 million, up
31% from $597 million for the prior quarter, and up 39% from $564
million for the first quarter of 2017.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20180416005333/en/
Three Months EndedMarch 31, % Financial Highlights
2018 2017 Change Net revenues (in
millions) $ 2,398 $ 2,081 15 % Net income (in millions) $ 783 $ 564
39 % Diluted earnings per common share $ .55 $ .39 41 % Pre-tax
profit margin 41.8 % 40.5 %
Return on average common stockholders’
equity (annualized)
18 % 15 % Note: All per-share results are rounded to the
nearest cent, based on weighted-average diluted common shares
outstanding.
CEO Walt Bettinger said, “Our contemporary full-service model
continues to build stronger client relationships and drive record
growth, even during times of market uncertainty. In the first
quarter, investors experienced sharp market swings after nine
consecutive quarters of positive S&P 500® returns. Amidst the
volatility, client interactions surged as we offered the insight
and assistance they expect – call volumes and web logins from both
our retail and independent advisor clients were up nearly 20% and
50% from their respective quarterly averages. Engagement remained
strong during the quarter, with trading activity rising nearly 40%
year-over-year to a new all-time high and clients continuing to be
net buyers of securities. New accounts totaled 443,000 company-wide
– the highest quarterly level in 18 years. In addition, households
new to our Retail business rose 42% versus the first quarter of
2017. Excluding planned mutual fund clearing outflows of $84.4
billion, our clients entrusted us with record quarterly core net
new assets of $65.6 billion, implying an annualized growth rate of
7.8% – a level not seen since 2008. This strength in asset
gathering spanned our largest businesses, as Advisor Services and
Retail both set new records, with inflows up 27% and 64%,
respectively, from last year. Our outstanding organic growth helped
to partially offset market declines, and we ended the quarter
serving $3.31 trillion in client assets, up 13% from last year,
across 11.0 million active brokerage accounts, 1.2
million banking accounts, and 1.6 million retirement plan
participants.”
Mr. Bettinger continued, “Operating ‘through clients’ eyes’
remains central to serving our current clients and fueling growth.
Every day we ask ourselves how we can better support our clients,
improve the value we offer, and make it simpler and easier to do
business with us. We were recently honored as the ‘Highest in
Investor Satisfaction with Full Service Brokerage Firms’ by J.D.
Power* for the third consecutive year, demonstrating the importance
of our broad capabilities, which include an extensive array of
advice solutions. Total assets receiving ongoing advice continued
growing faster than client assets overall, totaling $1.72 trillion
at March 31st. The first quarter marked three years since the
launch of Schwab Intelligent Portfolios® and one year since the
introduction of Schwab Intelligent Advisory® – which, combined with
Institutional Intelligent Portfolios®, reached $30.6 billion in
total digital advisory solution assets at quarter-end, up 92%
year-over-year. Also this quarter, we passed an important milestone
for Schwab ETF OneSource™. Launched five years ago, this program,
which offers Schwab clients online commission-free ETFs, has more
than doubled in scope to 254 ETFs spanning 69 Morningstar
categories and now has over $130 billion in assets. Additionally,
we initiated a ‘Sweep Tower’ for uninvested cash, offering eligible
clients extended FDIC insurance of up to $500,000**. This
enhancement broadens Schwab’s range of cash solutions for our
clients, which provide smart features, competitive yields, and
transparency that helps investors make informed decisions. In early
April, we improved our futures trading capabilities, which now
include contingent orders, trade calculators, education, and
research, all at a lower per contract cost of $1.50. We are better
positioned than ever to attract and serve a growing share of U.S.
investable wealth by offering a ‘no trade-offs’ combination of
quality service, advice, and innovative products at a great value –
all while leveraging our scale to operate efficiently and
profitably.”
CFO Peter Crawford commented, “We’ve achieved another quarter of
record financial performance, driven in part by sustained business
momentum, higher interest rates, and lower corporate taxes. Net
interest revenue grew 26% to a record $1.3 billion due to larger
client cash sweep balances as well as the impact of the Fed’s 2017
and March 2018 rate hikes – our net interest margin expanded to
2.12%, up from 1.87% a year earlier. Asset management and
administration fees increased 3% to $851 million due to growing
balances in advised solutions, equity and bond funds, and ETFs,
partially offset by lower money market fund revenue as a result of
bulk transfers and 2017 fee cuts. Our clients’ record trading
activity boosted Trading revenue 5% to $201 million, more than
offsetting the commission pricing reductions announced in February
of last year. On the expense front, our 13% first quarter spending
increase reflected strong client metrics and activity, as well as
recent market volatility. Compensation was 10% higher in the first
quarter due to hiring to serve our expanding investor base and
growth-related incentives. Professional services rose by 17%,
largely from third-party fees tied to higher balances in our asset
management business, and from our project spending. Lastly, Other
expense grew by 44% mainly due to a $15 million charge associated
with unsecured client margin losses in volatility-related products
during early February. While these factors contributed to outlays
that were a bit above our initial expectations, the expense
scenario we shared at our Winter Business Update incorporated
slightly elevated quarterly comparisons during the first half of
2018. Altogether, we achieved a 240 basis point gap between revenue
and expense growth, which resulted in a 41.8% pre-tax profit
margin; combined with a lower tax rate of 21.9%, we delivered
record net income of $783 million, up 39% from a year ago.”
Mr. Crawford concluded, “During the first quarter, we actively
utilized available capital to further our client cash strategy. As
part of this process, we transferred approximately $25 billion from
sweep money market funds to bank sweep and paid off $15 billion in
Federal Home Loan Bank advances. The net effect of these moves and
client activity lifted our consolidated balance sheet assets to
$248 billion at quarter-end. We still anticipate crossing the $250
billion threshold in the first half of 2018. In keeping with the
deployment of capital to support bulk transfers, our preliminary
Tier 1 Leverage Ratio at quarter-end declined to 7.5%, remaining
above our operating objective of 6.75%-7%. Our solid capital
position enables Schwab to continue driving profitable growth while
building long-term stockholder value – our first quarter return on
equity reached 18%, the highest since 2009.”
Beginning with the first quarter of 2018, the Business
Highlights section of the earnings release has been discontinued;
selected balances are now located at:
www.aboutschwab.com/investor-relations/.
Supporting schedules are either attached or located at:
www.aboutschwab.com/investor-relations/financial-reports.
*Disclaimer: Charles Schwab received the highest numerical score
in the J.D. Power 2016-2018 Full Service Investor Satisfaction
Study. 2018 study based on 4,419 total responses from 18 firms
measuring opinions of investors who used full service investment
institutions, surveyed November-December 2017. Your experiences may
vary. Visit jdpower.com.
**Bank Sweep deposits are held at one or more FDIC-insured banks
that are affiliated with Charles Schwab & Co., Inc.
(“Affiliated Banks”). Funds deposited at Affiliated Banks are
insured, in aggregate, up to $250,000 per Affiliated Bank, per
depositor, for each account ownership category, by the Federal
Deposit Insurance Corporation (FDIC).
Commentary from the CFO
Periodically, our Chief Financial Officer provides insight and
commentary regarding Schwab’s financial picture at:
www.aboutschwab.com/investor-relations/cfo-commentary. The most
recent commentary, which discusses mutual fund clearing, was posted
on February 14, 2018.
Forward-Looking Statements
This press release contains forward-looking statements relating
to the company’s record growth; growth in client base, accounts,
and assets; expense scenario; crossing the $250 billion asset
threshold; Tier 1 Leverage Ratio operating objective; profitable
growth; and 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 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 pricing, including
deposit rates; the company’s ability to develop and launch new
products, services, and capabilities in a timely and successful
manner; client use of the company’s investment advisory services
and other products and services; level of client assets, including
cash balances; the company’s ability to manage expenses; the timing
and amount of bulk transfers; client sensitivity to interest rates;
regulatory guidance; and other factors set forth in the company’s
most recent report on Form 10-K.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading
provider of financial services, with more than 345 offices and
11.0 million active brokerage accounts, 1.6 million corporate
retirement plan participants, 1.2 million banking accounts, and
$3.31 trillion in client assets as of March 31, 2018. 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, 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 EndedMarch 31, 2018
2017
Net Revenues Interest revenue $ 1,421 $ 1,055
Interest expense (158 ) (55 ) Net interest revenue 1,263 1,000
Asset management and administration fees 851 823 Trading revenue
201 192 Other 83 66 Total net revenues
2,398 2,081
Expenses Excluding
Interest Compensation and benefits 770 701 Professional
services 156 133 Occupancy and equipment 122 105 Advertising and
market development 73 71 Communications 62 57 Depreciation and
amortization 73 65 Regulatory fees and assessments 51 44 Other
89 62 Total expenses excluding interest
1,396 1,238 Income before taxes on
income 1,002 843 Taxes on income 219 279
Net Income 783 564
Preferred stock dividends and other (1) 37 39
Net Income Available to Common Stockholders $
746 $ 525
Weighted-Average Common Shares
Outstanding: Basic 1,347 1,336 Diluted 1,362
1,351
Earnings Per Common Shares Outstanding:
Basic $ .55 $ .39 Diluted $ .55 $ .39
Dividends Declared Per Common Share $ .10
$ .08 (1) 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)
Q1-18 %
change
2018 2017 vs. vs. First Fourth Third Second
First (In millions, except per share amounts and as noted) Q1-17
Q4-17 Quarter Quarter Quarter Quarter
Quarter
Net Revenues Net interest revenue 26 % 10 % $
1,263 $ 1,147 $ 1,082 $ 1,053 $ 1,000 Asset management and
administration fees 3 % (1 )% 851 863 861 845 823 Trading revenue 5
% 31 % 201 154 151 157 192 Other 26 % 6 % 83
78 71 75 66 Total
net revenues 15 % 7 % 2,398 2,242
2,165 2,130 2,081
Expenses Excluding Interest Compensation and benefits 10 % 8
% 770 711 662 663 701 Professional services 17 % 3 % 156 151 152
144 133 Occupancy and equipment 16 % 8 % 122 113 111 107 105
Advertising and market development 3 % 16 % 73 63 63 71 71
Communications 9 % 3 % 62 60 56 58 57 Depreciation and amortization
12 % 6 % 73 69 69 66 65 Regulatory fees and assessments 16 % 11 %
51 46 43 46 44 Other 44 % 17 % 89 76
64 66 62 Total expenses
excluding interest 13 % 8 % 1,396 1,289
1,220 1,221 1,238 Income
before taxes on income 19 % 5 % 1,002 953 945 909 843 Taxes on
income (22 )% (38 )% 219 356 327
334 279
Net Income 39 %
31 % $ 783 $ 597 $ 618
$ 575 $ 564 Preferred stock dividends
and other (5 )% (21 )% 37 47 43
45 39
Net Income Available to
Common Stockholders 42 % 36 % $ 746 $ 550
$ 575 $ 530 $ 525
Earnings per common share: Basic 41 % 34 % $ .55 $ .41 $ .43 $ .40
$ .39 Diluted 41 % 34 % $ .55 $ .41 $ .42 $ .39 $ .39 Dividends
declared per common share 25 % 25 % $ .10 $ .08 $ .08 $ .08 $ .08
Weighted-average common shares outstanding: Basic 1 % — 1,347 1,343
1,339 1,338 1,336 Diluted 1 % — 1,362 1,358
1,353 1,351 1,351
Performance Measures Pre-tax profit margin 41.8 % 42.5 %
43.6 % 42.7 % 40.5 % Return on average common stockholders’ equity
(annualized) (1) 18 % 14 % 15 % 15 %
15 %
Financial Condition (at quarter end, in
billions) Cash and investments segregated (40 )% (15 )% $ 12.8 $
15.1 $ 15.9 $ 18.5 $ 21.2 Receivables from brokerage clients — net
27 % 3 % 21.2 20.6 18.5 18.0 16.7 Bank loans — net 6 % (1 )% 16.4
16.5 16.2 15.8 15.5 Total assets 9 % 2 % 248.3 243.3 230.7 220.6
227.1 Bank deposits 14 % 12 % 190.2 169.7 165.3 162.3 166.9
Payables to brokerage clients (9 )% — 31.1 31.2 31.5 33.0 34.3
Short-term borrowings (100 )% (100 )% — 15.0 5.0 .3 .6 Long-term
debt 17 % (15 )% 4.1 4.8 3.3 3.5 3.5 Stockholders’ equity 14 % 4 %
19.3 18.5 18.0
17.5 17.0
Other Full-time equivalent
employees (at quarter end, in thousands) 10 % 3 % 18.2 17.6 17.3
16.9 16.5
Capital expenditures — purchases of
equipment, office facilities, and property, net (in millions)
101 % (4 )% $ 135 $ 141 $ 118 $ 86 $ 67
Expenses excluding interest as a
percentage of average client assets (annualized)
0.17 % 0.16 % 0.16 % 0.16 % 0.18
%
Clients’ Daily Average Trades (in thousands) Revenue
trades (2) 46 % 34 % 462 345 312 311 317 Asset-based trades (3) 35
% 16 % 139 120 137 103 103 Other trades (4) 28 % 29 % 211
163 184 175
165 Total 39 % 29 % 812 628
633 589 585
Average
Revenue Per Revenue Trade (2) (26 )% (1 )% $ 7.24
$ 7.33 $ 7.74 $ 7.96
$ 9.84
(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 EndedMarch 31, 2018
2017 AverageBalance
InterestRevenue/Expense AverageYield/Rate AverageBalance
InterestRevenue/Expense AverageYield/Rate
Interest-earning assets: Cash
and cash equivalents $ 17,084 $ 66 1.53 % $ 9,047 $ 17 0.76 % Cash
and investments segregated 13,969 48 1.37 % 21,820 35 0.65 %
Broker-related receivables (1) 287 1 1.32 % 388 — 0.55 %
Receivables from brokerage clients 18,872 179 3.79 % 15,245 126
3.35 % Available for sale securities (2) 50,371 240 1.91 % 71,430
251 1.43 % Held to maturity securities 121,412 721 2.38 % 83,368
485 2.36 % Bank loans 16,456 130
3.19 % 15,527 110 2.87 % Total
interest-earning assets 238,451 1,385
2.33 % 216,825 1,024 1.92 %
Other interest revenue 36
31 Total interest-earning assets
$ 238,451 $ 1,421 2.39 % $
216,825 $ 1,055 1.97 %
Funding
sources: Bank deposits $ 176,988 $ 64 0.15 % $ 163,682 $ 19
0.05 % Payables to brokerage clients 22,469 7 0.14 % 27,666 2 0.03
% Short-term borrowings 12,170 47 1.55 % 1,332 2 0.61 % Long-term
debt 4,392 37 3.37 % 3,090
28 3.67 % Total interest-bearing
liabilities 216,019 155 0.29 %
195,770 51 0.11 % Non-interest-bearing
funding sources 22,432 21,055 Other interest expense
3 4
Total funding sources $ 238,451 $ 158
0.27 % $ 216,825 $ 55 0.10 %
Net interest revenue $
1,263 2.12 %
$ 1,000 1.87 % (1)
Interest revenue or expense was less than $500,000 in the
period or the periods presented. (2) Amounts have been calculated
based on amortized cost.
THE CHARLES SCHWAB CORPORATION
Asset Management and Administration
Fees Information
(In millions)
(Unaudited)
Three Months Ended March 31, 2018 2017
AverageClientAssets Revenue AverageFee
AverageClientAssets Revenue AverageFee Schwab money
market funds before fee waivers $ 156,362 $ 182 0.47
% $ 162,789 $ 231 0.58 % Fee waivers
— (8 )
Schwab money market funds 156,362 182 0.47 % 162,789 223 0.56 %
Schwab equity and bond funds and ETFs 196,950 63 0.13 % 140,054 55
0.16 % Mutual Fund OneSource ® and other non-transaction fee funds
222,669 178 0.32 % 202,416 170 0.34 % Other third-party mutual
funds and ETFs (1) 319,722 70
0.09 % 272,626 58 0.09 % Total mutual
funds and ETFs (2) $ 895,703 493
0.22 % $ 777,885 506 0.26 % Advice
solutions (2) : Fee-based $ 224,760 282 0.51 % $ 191,775 244 0.52 %
Non-fee-based 59,762 — —
42,722 — — Total advice
solutions $ 284,522 282 0.40 % $
234,497 244 0.42 % Other balance-based
fees (3) $ 426,012 66 0.06 % $ 388,739 61 0.06 % Other (4)
10 12
Total asset management and administration fees
$ 851
$ 823 (1)
Includes Schwab ETF OneSource™. (2) 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®, and Schwab
Intelligent Advisory®, launched in March 2017; as well as legacy
non-fee advice solutions including Schwab Advisor Source and
certain retirement plan balances. Beginning the fourth quarter of
2017, a prospective change was made to add non-fee based average
assets from managed portfolios. Average client assets for advice
solutions may also include the asset balances contained in the
mutual fund and/or ETF categories listed above. For the total end
of period view, please see the Monthly Activity Report. (3)
Includes various asset-related fees, such as trust fees, 401(k)
recordkeeping fees, and mutual fund clearing fees and other service
fees. (4) Includes miscellaneous service and transaction fees
relating to mutual funds and ETFs that are not balance-based.
THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and
Accounts
(Unaudited)
Q1-18 %
Change
2018 2017 vs. vs. First Fourth Third
Second First (In billions, at quarter end, except as
noted) Q1-17 Q4-17 Quarter Quarter Quarter
Quarter Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and bank deposits 10 % 10 % $
219.4 $ 198.6 $ 195.0 $ 193.7 $ 199.6 Proprietary mutual funds
(Schwab Funds® and Laudus Funds®): Money market funds (1) (11 )%
(11 )% 145.0 163.6 159.2 156.2 162.9 Equity and bond funds (2) 19 %
1 % 83.4 82.5 77.3
73.3 70.1 Total proprietary mutual funds (2 )%
(7 )% 228.4 246.1 236.5
229.5 233.0 Mutual Fund Marketplace®
(3) Mutual Fund OneSource® and other non-transaction fee funds 8 %
(2 )% 221.6 225.2 221.2 224.7 204.9 Mutual fund clearing services
(10 )% (33 )% 178.3 265.4 236.5 226.4 197.5 Other third-party
mutual funds 16 % 2 % 693.4 682.6
652.5 609.0 596.2 Total
Mutual Fund Marketplace 9 % (7 )% 1,093.3
1,173.2 1,110.2 1,060.1
998.6 Total mutual fund assets 7 % (7 )% 1,321.7
1,419.3 1,346.7 1,289.6
1,231.6 Exchange-traded funds (ETFs)
Proprietary ETFs (2) 51 % 5 % 104.5 99.1 87.8 78.0 69.3 ETF
OneSource™ (3) 29 % 4 % 29.8 28.7 26.6 24.9 23.1 Other third-party
ETFs 22 % 2 % 314.7 308.8 286.7
270.2 257.0 Total ETF assets 29
% 3 % 449.0 436.6 401.1
373.1 349.4 Equity and other securities
14 %
—
1,075.9 1,080.0 1,016.9 971.4 939.7 Fixed income securities 19 % 5
% 258.8 245.6 238.4 229.3 217.5 Margin loans outstanding 27 % 6 %
(19.4 ) (18.3 ) (16.9 ) (16.5 )
(15.3 )
Total client assets 13 % (2 )%
$
3,305.4 $ 3,361.8
$ 3,181.2 $ 3,040.6
$ 2,922.5 Client assets by
business Investor Services 11 % (4 )% $ 1,740.8 $ 1,810.9 $
1,707.0 $ 1,634.1 $ 1,565.9 Advisor Services 15 % 1 %
1,564.6 1,550.9 1,474.2
1,406.5 1,356.6
Total client assets 13
% (2 )%
$ 3,305.4 $
3,361.8 $ 3,181.2
$ 3,040.6 $ 2,922.5
Net growth in assets in client accounts (for the
quarter ended)
Net new assets by business Investor Services
(4) N/M N/M $ (50.8 ) $ 46.4 $ 23.4 $ 39.9 $ 14.0 Advisor Services
29 % 1 % 32.0 31.7 28.2
24.6 24.9
Total net new assets
(148 )% (124 )%
$ (18.8 )
$ 78.1 $ 51.6
$ 64.5 $ 38.9
Net market (losses) gains (136 )% (137 )% (37.6 )
102.5 89.0 53.6
104.1
Net (decline) growth (139 )% (131 )%
$ (56.4 ) $ 180.6
$ 140.6 $ 118.1
$ 143.0 New brokerage
accounts (in thousands, for the quarter ended) 22 % 15 % 443
386 336 357 362
Clients (in thousands) Active Brokerage
Accounts 7 % 2 % 11,005 10,755 10,565 10,487 10,320 Banking
Accounts 9 % 2 % 1,221 1,197 1,176 1,143 1,120 Corporate Retirement
Plan Participants 3 % 2 % 1,594 1,568
1,552 1,540 1,545
(1)
Total client assets in purchased money
market funds are located at:
http://www.aboutschwab.com/investor-relations.
(2) Includes proprietary equity and bond funds and ETFs held on and
off the Schwab platform. As of March 31, 2018, off-platform equity
and bond funds and ETFs were $10.8 billion and $25.3 billion,
respectively. (3) Excludes all proprietary mutual funds and ETFs.
(4) First quarter of 2018 includes outflows of $84.4 billion from
certain mutual fund clearing services clients. Fourth quarter of
2017 includes an inflow of $16.2 billion from a mutual fund
clearing services client. Second quarter of 2017 includes inflows
of $18.3 billion from a mutual fund clearing services client. First
quarter of 2017 includes an outflow of $9.0 billion from a mutual
fund clearing services client. N/M Not meaningful.
The Charles Schwab Corporation Monthly
Activity Report For March 2018
2017
2018
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
20,663 20,941 21,009 21,350 21,891 21,948 22,405 23,377 24,272
24,719 26,149 25,029 24,103 (4)% 17% Nasdaq Composite 5,912 6,048
6,199 6,140 6,348 6,429 6,496 6,728 6,874 6,903 7,411 7,273 7,063
(3)% 19% Standard & Poor’s 500 2,363 2,384 2,412 2,423 2,470
2,472 2,519 2,575 2,648 2,674 2,824 2,714 2,641 (3)% 12%
Client
Assets (in billions of dollars) Beginning Client Assets 2,895.2
2,922.5 2,948.8 2,995.8 3,040.6 3,099.9 3,122.3 3,181.2 3,256.5
3,318.8 3,361.8 3,480.5 3,328.8 Net New Assets (1) 21.2 2.8 24.0
37.7 15.8 18.0 17.8 35.4 15.7 27.0 11.5 (50.5 ) 20.2 140% (5)% Net
Market Gains (Losses) 6.1 23.5 23.0
7.1 43.5 4.4
41.1 39.9 46.6
16.0 107.2 (101.2 ) (43.6 )
Total Client Assets (at month end) 2,922.5 2,948.8
2,995.8 3,040.6 3,099.9
3,122.3 3,181.2 3,256.5
3,318.8 3,361.8 3,480.5
3,328.8 3,305.4 (1)% 13% Core
Net New Assets (2) 21.2 2.8 21.3 22.1 15.8 18.0 17.8 19.2 15.7 27.0
18.7 21.3 25.6 20% 21% Receiving Ongoing Advisory Services (at
month end) Investor Services 230.9 234.4 239.1 242.2 247.2 249.9
255.0 259.8 265.1 268.7 278.6 273.0 273.2 — 18% Advisor Services
(3) 1,250.9 1,262.7 1,283.4 1,297.6 1,323.8 1,333.1 1,358.6 1,382.6
1,410.8 1,431.1 1,483.7 1,449.5 1,444.4 — 15%
Client
Accounts (at month end, in thousands) Active Brokerage Accounts
(4) 10,320 10,386 10,439 10,487 10,477 10,525 10,565 10,603 10,671
10,755 10,858 10,936 11,005 1% 7% Banking Accounts 1,120 1,128
1,138 1,143 1,154 1,167 1,176 1,181 1,192 1,197 1,210 1,218 1,221 —
9% Corporate Retirement Plan Participants 1,545 1,543 1,541 1,540
1,540 1,550 1,552 1,556 1,564 1,568 1,580 1,580 1,594 1% 3%
Client Activity New Brokerage Accounts (in thousands) 138
125 115 117 107 123 106 117 122 147 165 138 140 1% 1% Inbound Calls
(in thousands) 2,111 1,788 1,727 1,736 1,683 1,823 1,709 1,988
1,804 2,046 2,303 2,005 2,145 7% 2% Web Logins (in thousands)
45,441 39,750 44,024 43,790 42,236 47,290 39,639 51,454 50,583
54,486 64,488 60,830 58,906 (3)% 30% Client Cash as a Percentage of
Client Assets (5) 12.4 % 12.1 % 11.8 % 11.5 % 11.3 % 11.4 % 11.1 %
10.9 % 10.8 % 10.8 % 10.4 % 10.9 % 11.0 % 10 bp (140) bp
Mutual
Fund and Exchange-Traded Fund Net Buys (Sells) (6, 7)
(in millions of dollars) Large Capitalization Stock (125 ) 346 134
(63 ) (95 ) (1,683 ) (138 ) (51 ) 85 1,023 496 715 (158 ) Small /
Mid Capitalization Stock (409 ) (797 ) (285 ) (322 ) (139 ) (293 )
45 378 (144 ) 274 (125 ) (167 ) 130 International 1,703 2,410 3,610
3,631 2,675 1,705 1,549 1,913 2,627 1,852 4,306 2,685 1,546
Specialized 273 570 529 647 236 279 465 655 58 424 1,569 187 326
Hybrid 563 92 65 (340 ) 142 (272 ) 460 (118 ) (263 ) 307 978 (88 )
529 Taxable Bond 3,876 2,060 3,618 3,499 3,064 3,481 3,809 3,466
2,389 2,561 3,284 155 2,117 Tax-Free Bond 300 155 290 507 453 715
494 452 371 341 1,247 211 247
Net Buy (Sell) Activity (in
millions of dollars) Mutual Funds (6) 2,368 1,116 3,837 2,980 3,201
1,048 3,002 2,401 882 775 4,843 (417 ) 1,976 Exchange-Traded Funds
(7) 3,813 3,720 4,124 4,579 3,135 2,884 3,682 4,294 4,241 6,007
6,912 4,115 2,761 Money Market Funds 1,218 (4,434 ) (1,167 ) (1,260
) 1,022 2,105 (374 ) 213 1,166 2,968 (5,730 ) (4,292 ) (9,100 )
Average Interest-Earning Assets (8) (in millions of dollars)
218,554 217,407 215,252 214,709 212,108 214,458 216,472 219,658
223,292 228,540 234,619 239,922 241,049 — 10% (1)
March, February, and January 2018 include outflows of $5.4
billion, $71.8 billion, and $7.2 billion, respectively, from
certain mutual fund clearing services clients. October and June
2017 include inflows of $16.2 billion and $15.6 billion,
respectively, from certain mutual fund clearing services clients.
(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. (3)
Excludes Retirement Business Services. (4) Periodically, the
Company reviews its active account base. In July 2017, active
brokerage accounts were reduced by approximately 48,000 as a result
of low-balance closures. (5) Schwab One®, certain cash equivalents,
bank deposits, and money market fund balances as a percentage of
total client assets. (6) 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.
(7) Represents the principal value of client ETF transactions
handled by Schwab, including transactions in proprietary ETFs. (8)
Represents average total interest-earning assets on the Company’s
balance sheet.
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Charles SchwabMEDIA:Mayura Hooper,
415-667-1525orINVESTORS/ANALYSTS:Rich Fowler,
415-667-1841
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