Quarterly net income also reaches new highs of
$1.8 billion GAAP, $2.0 billion adjusted (1)
Sustained client focus helps power continued
strong business momentum
The Charles Schwab Corporation announced today that its net
income for the second quarter of 2022 was a record $1.8 billion
compared with $1.4 billion for the first quarter of 2022, and $1.3
billion for the second quarter of 2021. Net income for the six
months ended June 30, 2022 was $3.2 billion, compared with $2.7
billion for the year-earlier period. During the quarter,
acquisition and integration-related costs and the amortization of
acquired intangibles totaled $94 million and $154 million,
respectively, on a pre-tax basis. In addition, the company’s second
quarter of 2021 included a charge of approximately $200 million, or
$.10 per share, regarding a now settled regulatory matter.
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Three Months Ended June 30,
%
Six Months Ended June 30,
%
Financial Highlights (1)
2022
2021
Change
2022
2021
Change
Net revenues (in millions)
$
5,093
$
4,527
13
%
$
9,765
$
9,242
6
%
Net income (in millions)
GAAP
$
1,793
$
1,265
42
%
$
3,195
$
2,749
16
%
Adjusted (1)
$
1,981
$
1,483
34
%
$
3,572
$
3,173
13
%
Diluted earnings per common share
GAAP
$
.87
$
.59
47
%
$
1.54
$
1.32
17
%
Adjusted (1)
$
.97
$
.70
39
%
$
1.74
$
1.55
12
%
Pre-tax profit margin
GAAP
44.6
%
38.0
%
42.1
%
39.8
%
Adjusted (1)
49.5
%
44.6
%
47.2
%
46.0
%
Return on average common stockholders’
equity (annualized)
19
%
10
%
15
%
10
%
Return on tangible common equity
(annualized) (1)
45
%
20
%
32
%
21
%
Note: All per-share results are rounded to the nearest cent, based
on weighted-average diluted common shares outstanding.
(1)
Further details on non-GAAP
financial measures and a reconciliation of such measures to GAAP
reported results are included on pages 10-11 of this release.
CEO Walt Bettinger said, “Throughout the first half of 2022,
we’ve kept our focus on serving clients and they’ve rewarded us
with sustained strength in business momentum and growth. Clients
remained engaged during the second quarter even as pressures
mounted on the U.S. economy, including rising inflation and the
Fed’s corresponding shift to an aggressive tightening stance,
ongoing geopolitical turmoil driven by the war in Ukraine, and
more-volatile equity markets that are now in bear-market territory.
These pressures have all contributed to an environment that
highlights the importance of our contemporary approach to
full-service investing, where clients can choose how to access the
help they need in the manner that works best for them by visiting
one of our branches, speaking with one of our phone-based
investment professionals, or utilizing the content, resources and
capabilities provided through our website and mobile app. The value
of Schwab’s scalable, multi-channel service model was on full
display during the past quarter as we facilitated over 575 million
total interactions, including nearly 5 million inbound contacts
with an average speed to answer of less than 20 seconds.”
“Sustained client engagement was also reflected in daily trading
volume during the second quarter, which averaged 6.2 million,
approximately 3% above year-earlier levels,” Mr. Bettinger
continued. “Clients opened 1.0 million new brokerage accounts
during the quarter, and we ended June with 33.9 million active
accounts, up 5% year-over-year. Additionally, while the core net
new assets (NNA) that clients brought to us during the quarter were
impacted by the record tax-season outflows we experienced in April,
the $73 billion in core NNA that came in between May 1 and June 30
represented a continuation of the 6% annualized organic growth rate
we achieved during the first quarter of 2022. We ended June with
$6.83 trillion in client assets versus $7.57 trillion a year
earlier, which helps illustrate the extent of the market valuation
pressures clients are facing even as they’ve added more than $480
billion in core NNA to their accounts over the past 12 months.”
Mr. Bettinger concluded, “As we move deeper into 2022, our focus
remains squarely on executing our 'Through Clients’ Eyes' strategy,
along with driving progress across our strategic priorities and our
TD Ameritrade integration. We know that clients trust us to provide
the help and advice they need to navigate any environment, but that
it’s particularly important to be there for them as they assess
their investments in light of tougher headwinds. To me, there is no
greater reward than seeing our client service professionals earn
year-to-date satisfaction scores that are among the highest we’ve
ever recorded. We remain convinced that our client-first mindset –
in combination with our service culture and relentless attention to
scale and efficiency – helps create a formidable competitive
advantage for Schwab as we continue to realize our vision of modern
wealth management.”
“Our second quarter financial results demonstrated the power of
our all-weather model as we supported our clients through an
increasingly challenging environment,” noted CFO Peter Crawford.
“Record total revenue of $5.1 billion, up 13% versus the prior
year, reflected a combination of ongoing business momentum, rapidly
tightening monetary policy, and continued strength in client
engagement. Net interest revenue was up 31% from the prior year as
higher interest rates and client cash balances more than offset the
impact of softer securities lending activity. At the same time,
asset management and administration fees were essentially flat due
to weaker equity market valuations and trading revenues were down
7% largely due to changes in the mix of client activity.
Additionally, the other revenue line included $37 million in
pre-tax gains related to the sales of Schwab Compliance
Technologies and a small business investment.”
Mr. Crawford continued, “On the expense front, quarterly GAAP
spending increased slightly year-over-year to $2.8 billion,
including $94 million in acquisition and integration-related costs
and $154 million in amortization of acquired intangibles. Exclusive
of these items, adjusted total expenses(1) were up 2% versus the
second quarter of 2021. Our pre-tax profit margin expanded to 44.6%
and rose nearly 500 basis points to 49.5% on an adjusted basis(1).
Also, the reversal of $62 million in tax reserves due to the
resolution of certain state matters helped further bolster
after-tax profitability. We believe the combination of our
diversified revenue mix with disciplined expense prioritization
helps keep us positioned to deliver healthy financial performance
through the cycle.”
“Attentive balance sheet management, including the maintenance
of appropriate capital and liquidity to support client activity,
remains core to our financial strategy,” added Mr. Crawford.
“During the quarter, total assets contracted by 6% to $638 billion.
This decrease was primarily attributable to record tax
disbursements in April as well as expected client cash sorting
behavior during the latter part of the period. The company’s
preliminary Tier 1 Leverage Ratio moved closer to our operating
objective, expanding to 6.4% at the end of June, while second
quarter return on equity and ROTCE(1) were 19% and 45%,
respectively. The overall strength of today’s results highlights
our continued success with clients and further bolsters our
confidence in our ability to build long-term stockholder
value.”
(1)
Further details on non-GAAP
financial measures and a reconciliation of such measures to GAAP
reported results are included on pages 10-11 of this release.
Commentary from the CFO Periodically, our Chief Financial
Officer provides insight and commentary regarding Schwab’s
financial picture at: https://www.aboutschwab.com/cfo-commentary.
The most recent commentary, which provides perspective on recent
account activity, was posted on May 14, 2021.
Summer Business Update The company has scheduled a Summer
Business Update for institutional investors on Thursday, July 28,
2022. The Update, which will be held via webcast, is scheduled to
run from approximately 8:00 a.m. - 9:00 a.m. PT, 11:00 a.m. - 12:00
p.m. ET. Registration for this Update is accessible at
https://www.aboutschwab.com/schwabevents.
Forward-Looking Statements This press release contains
forward-looking statements relating to business momentum and
growth; strategic priorities; TD Ameritrade integration;
competitive advantage; all-weather model; expense prioritization;
financial performance; Tier 1 leverage ratio operating objective;
and stockholder value. These forward-looking statements reflect
management’s expectations as of the date hereof. Achievement of
these expectations and objectives is subject to risks and
uncertainties that could cause actual results to differ materially
from the expressed expectations.
Important factors that may cause such differences include, but
are not limited to, the company’s ability to attract and retain
clients and independent investment advisors and grow those
relationships and client assets; develop and launch new and
enhanced products, services, and capabilities, as well as enhance
its infrastructure and capacity, in a timely and successful manner;
hire and retain talent; support client activity levels;
successfully implement integration strategies and plans; manage
expenses; and monetize client assets. Other important factors
include client use of the company’s advisory solutions and other
products and services; general market conditions, including equity
valuations and the level of interest rates; the level and mix of
client trading activity; market volatility; margin loan balances;
securities lending; competitive pressures on pricing; client cash
sorting; client sensitivity to rates; level of client assets,
including cash balances; capital and liquidity needs and
management; balance sheet positioning relative to changes in
interest rates; interest earning asset mix and growth; the
migration of bank deposit account balances; and other factors set
forth in the company’s most recent reports on Form 10-K and Form
10-Q.
About Charles Schwab The Charles Schwab Corporation
(NYSE: SCHW) is a leading provider of financial services, with 33.9
million active brokerage accounts, 2.3 million corporate retirement
plan participants, 1.7 million banking accounts, and $6.83 trillion
in client assets. Through its operating subsidiaries, the company
provides a full range of wealth management, securities brokerage,
banking, asset management, custody, and financial advisory services
to individual investors and independent investment advisors. Its
broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD
Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC,
https://www.sipc.org), and their affiliates offer a complete range
of investment services and products including an extensive
selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
referrals to independent, fee-based investment advisors; and
custodial, operational and trading support for independent,
fee-based investment advisors through Schwab Advisor Services. Its
primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC
and an Equal Housing Lender), provides banking and lending services
and products. More information is available at
https://www.aboutschwab.com.
TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are
separate but affiliated companies and subsidiaries of TD Ameritrade
Holding Corporation. TD Ameritrade Holding Corporation is a wholly
owned subsidiary of The Charles Schwab Corporation. TD Ameritrade
is a trademark jointly owned by TD Ameritrade IP Company, Inc. and
The Toronto-Dominion Bank.
THE CHARLES SCHWAB
CORPORATION
Consolidated Statements of
Income
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Net Revenues
Interest revenue
$
2,710
$
2,068
$
5,029
$
4,083
Interest expense
(166
)
(121
)
(302
)
(225
)
Net interest revenue
2,544
1,947
4,727
3,858
Asset management and administration fees
(1)
1,052
1,047
2,120
2,063
Trading revenue
885
955
1,848
2,171
Bank deposit account fees
352
337
646
688
Other
260
241
424
462
Total net revenues
5,093
4,527
9,765
9,242
Expenses Excluding Interest
Compensation and benefits
1,426
1,318
2,972
2,748
Professional services
258
247
502
473
Occupancy and equipment
294
239
563
476
Advertising and market development
105
128
207
244
Communications
169
166
313
313
Depreciation and amortization
159
135
309
264
Amortization of acquired intangible
assets
154
154
308
308
Regulatory fees and assessments
67
66
135
144
Other
187
355
343
593
Total expenses excluding interest
2,819
2,808
5,652
5,563
Income before taxes on income
2,274
1,719
4,113
3,679
Taxes on income
481
454
918
930
Net Income
1,793
1,265
3,195
2,749
Preferred stock dividends and other
141
148
265
244
Net Income Available to Common
Stockholders
$
1,652
$
1,117
$
2,930
$
2,505
Weighted-Average Common Shares
Outstanding:
Basic
1,896
1,886
1,895
1,884
Diluted
1,904
1,896
1,905
1,894
Earnings Per Common Shares
Outstanding (2):
Basic
$
.87
$
.59
$
1.55
$
1.33
Diluted
$
.87
$
.59
$
1.54
$
1.32
(1)
Includes fee waivers of $3
million and $57 million for the three and six months ended June 30,
2022, respectively, and $85 million and $163 million for the three
and six months ended June 30, 2021, respectively.
(2)
The Company has voting and
nonvoting common stock outstanding. As the participation rights,
including dividend and liquidation rights, are identical between
the voting and nonvoting stock classes, basic and diluted earnings
per share are the same for each class.
THE CHARLES SCHWAB
CORPORATION
Financial and Operating
Highlights
(Unaudited)
Q2-22 %
change
2022
2021
vs.
vs.
Second
First
Fourth
Third
Second
(In millions, except per share amounts and
as noted)
Q2-21
Q1-22
Quarter
Quarter
Quarter
Quarter
Quarter
Net Revenues
Net interest revenue
31
%
17
%
$
2,544
$
2,183
$
2,142
$
2,030
$
1,947
Asset management and administration
fees
—
(1
)%
1,052
1,068
1,110
1,101
1,047
Trading revenue
(7
)%
(8
)%
885
963
1,017
964
955
Bank deposit account fees
4
%
20
%
352
294
304
323
337
Other
8
%
59
%
260
164
135
152
241
Total net revenues
13
%
9
%
5,093
4,672
4,708
4,570
4,527
Expenses Excluding Interest
Compensation and benefits
8
%
(8
)%
1,426
1,546
1,399
1,303
1,318
Professional services
4
%
6
%
258
244
271
250
247
Occupancy and equipment
23
%
9
%
294
269
254
246
239
Advertising and market development
(18
)%
3
%
105
102
122
119
128
Communications
2
%
17
%
169
144
130
144
166
Depreciation and amortization
18
%
6
%
159
150
145
140
135
Amortization of acquired intangibles
assets
—
—
154
154
154
153
154
Regulatory fees and assessments
2
%
(1
)%
67
68
67
64
66
Other
(47
)%
20
%
187
156
143
140
355
Total expenses excluding interest
—
—
2,819
2,833
2,685
2,559
2,808
Income before taxes on income
32
%
24
%
2,274
1,839
2,023
2,011
1,719
Taxes on income
6
%
10
%
481
437
443
485
454
Net Income
42
%
28
%
$
1,793
$
1,402
$
1,580
$
1,526
$
1,265
Preferred stock dividends and other
(5
)%
14
%
141
124
131
120
148
Net Income Available to Common
Stockholders
48
%
29
%
$
1,652
$
1,278
$
1,449
$
1,406
$
1,117
Earnings per common share (1):
Basic
47
%
30
%
$
.87
$
.67
$
.77
$
.74
$
.59
Diluted
47
%
30
%
$
.87
$
.67
$
.76
$
.74
$
.59
Dividends declared per common share
11
%
—
$
.20
$
.20
$
.18
$
.18
$
.18
Weighted-average common shares
outstanding:
Basic
1
%
—
1,896
1,894
1,892
1,888
1,886
Diluted
—
—
1,904
1,905
1,902
1,898
1,896
Performance Measures
Pre-tax profit margin
44.6
%
39.4
%
43.0
%
44.0
%
38.0
%
Return on average common stockholders’
equity (annualized) (2)
19
%
12
%
12
%
12
%
10
%
Financial Condition (at quarter
end, in billions)
Cash and cash equivalents
113
%
(29
)%
$
64.6
$
91.1
$
63.0
$
34.3
$
30.3
Cash and investments segregated
34
%
(2
)%
53.5
54.4
53.9
42.3
39.9
Receivables from brokerage clients —
net
(7
)%
(10
)%
76.1
84.1
90.6
86.6
82.2
Available for sale securities (3)
(26
)%
(2
)%
265.3
272.0
390.1
377.0
359.6
Held to maturity securities (3)
N/M
(5
)%
100.1
105.3
—
—
—
Bank loans — net
37
%
6
%
39.6
37.2
34.6
31.6
28.9
Total assets
11
%
(6
)%
637.6
681.0
667.3
607.5
574.5
Bank deposits
20
%
(5
)%
442.0
465.8
443.8
395.3
368.6
Payables to brokerage clients
9
%
(8
)%
114.9
125.3
125.7
113.1
105.0
Short-term borrowings
(60
)%
(67
)%
1.4
4.2
4.9
3.0
3.5
Long-term debt
13
%
(4
)%
21.1
21.9
18.9
19.5
18.7
Stockholders’ equity
(23
)%
(7
)%
44.5
48.1
56.3
57.4
57.5
Other
Full-time equivalent employees (at quarter
end, in thousands)
8
%
3
%
35.2
34.2
33.4
32.4
32.5
Capital expenditures — purchases of
equipment, office facilities,
and property, net (in millions)
51
%
62
%
$
339
$
209
$
431
$
176
$
225
Expenses excluding interest as a
percentage of average client assets
(annualized)
0.16
%
0.15
%
0.13
%
0.13
%
0.15
%
Clients’ Daily Average Trades
(DATs) (in thousands)
3
%
(5
)%
6,227
6,578
6,102
5,549
6,042
Number of Trading Days
(2
)%
—
62.0
62.0
63.5
64.0
63.0
Revenue Per Trade (4)
(9
)%
(3
)%
$
2.29
$
2.36
$
2.62
$
2.71
$
2.51
(1)
The Company has voting and
nonvoting common stock outstanding. As the participation rights,
including dividend and liquidation rights, are identical between
the voting and nonvoting stock classes, basic and diluted earnings
per share are the same for each class.
(2)
Return on average common
stockholders’ equity is calculated using net income available to
common stockholders divided by average common stockholders’
equity.
(3)
In January 2022, the Company
transferred a portion of its investment securities designated as
available for sale to the held to maturity category, as described
in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2022.
(4)
Revenue per trade is calculated
as trading revenue divided by DATs multiplied by the number of
trading days.
N/M Not meaningful. Percentage changes greater than 200% are
presented as not meaningful.
THE CHARLES SCHWAB
CORPORATION
Net Interest Revenue
Information
(In millions, except ratios or as
noted)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Average Balance
Interest Revenue/ Expense
Average Yield/ Rate
Average Balance
Interest Revenue/ Expense
Average Yield/ Rate
Average Balance
Interest Revenue/ Expense
Average Yield/ Rate
Average Balance
Interest Revenue/ Expense
Average Yield/ Rate
Interest-earning assets
Cash and cash equivalents
$
65,414
$
133
0.81
%
$
41,913
$
9
0.07
%
$
68,920
$
167
0.48
%
$
40,414
$
16
0.08
%
Cash and investments segregated
51,232
79
0.61
%
41,037
4
0.04
%
51,570
94
0.36
%
44,573
14
0.06
%
Receivables from brokerage clients
79,061
706
3.53
%
75,737
609
3.18
%
81,618
1,332
3.24
%
71,760
1,172
3.25
%
Available for sale securities (1,2)
287,313
1,088
1.51
%
344,719
1,103
1.28
%
285,927
2,035
1.42
%
341,500
2,194
1.28
%
Held to maturity securities (2)
101,752
339
1.33
%
—
—
—
102,580
717
1.40
%
—
—
—
Bank loans
38,831
230
2.38
%
27,234
148
2.18
%
37,351
417
2.24
%
25,862
287
2.22
%
Total interest-earning assets
623,603
2,575
1.64
%
530,640
1,873
1.40
%
627,966
4,762
1.51
%
524,109
3,683
1.40
%
Securities lending revenue
130
194
259
398
Other interest revenue
5
1
8
2
Total interest-earning assets
$
623,603
$
2,710
1.73
%
$
530,640
$
2,068
1.55
%
$
627,966
$
5,029
1.60
%
$
524,109
$
4,083
1.55
%
Funding sources
Bank deposits
$
449,936
$
28
0.03
%
$
368,026
$
13
0.01
%
$
451,306
$
44
0.02
%
$
365,576
$
26
0.01
%
Payables to brokerage clients
101,784
4
0.02
%
87,367
2
0.01
%
103,846
6
0.01
%
87,353
4
0.01
%
Short-term borrowings
2,587
4
0.69
%
3,245
3
0.33
%
3,646
8
0.46
%
2,175
3
0.30
%
Long-term debt
21,119
124
2.34
%
18,349
97
2.12
%
20,495
232
2.26
%
16,308
182
2.23
%
Total interest-bearing liabilities
575,426
160
0.11
%
476,987
115
0.10
%
579,293
290
0.10
%
471,412
215
0.09
%
Non-interest-bearing funding sources
48,177
53,653
48,673
52,697
Securities lending expense
8
7
15
12
Other interest expense
(2
)
(1
)
(3
)
(2
)
Total funding sources
$
623,603
$
166
0.11
%
$
530,640
$
121
0.09
%
$
627,966
$
302
0.10
%
$
524,109
$
225
0.08
%
Net interest revenue
$
2,544
1.62
%
$
1,947
1.46
%
$
4,727
1.50
%
$
3,858
1.47
%
(1)
Amounts have been calculated
based on amortized cost.
(2)
In January 2022, the Company
transferred a portion of its investment securities designated as
available for sale to the held to maturity category, as described
in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2022.
THE CHARLES SCHWAB
CORPORATION
Asset Management and
Administration Fees Information
(In millions, except ratios or as
noted)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Average Client Assets
Revenue
Average Fee
Average Client Assets
Revenue
Average Fee
Average Client Assets
Revenue
Average Fee
Average Client Assets
Revenue
Average Fee
Schwab money market funds before fee
waivers
$
146,009
$
106
0.29
%
$
157,057
$
114
0.29
%
$
145,371
$
208
0.29
%
$
163,370
$
236
0.29
%
Fee waivers
(3
)
(85
)
(57
)
(163
)
Schwab money market funds
146,009
103
0.28
%
157,057
29
0.07
%
145,371
151
0.21
%
163,370
73
0.09
%
Schwab equity and bond funds, ETFs, and
collective trust funds (CTFs)
431,747
92
0.09
%
415,311
94
0.09
%
444,036
189
0.09
%
396,296
180
0.09
%
Mutual Fund OneSource® and other
non-transaction fee funds
192,435
149
0.31
%
228,890
180
0.32
%
202,538
314
0.31
%
225,673
352
0.31
%
Other third-party mutual funds and
ETFs
795,727
171
0.09
%
896,236
178
0.08
%
833,969
350
0.08
%
872,822
346
0.08
%
Total mutual funds, ETFs, and CTFs (1)
$
1,565,918
515
0.13
%
$
1,697,494
481
0.11
%
$
1,625,914
1,004
0.12
%
$
1,658,161
951
0.12
%
Advice solutions (1)
Fee-based
$
440,336
461
0.42
%
$
448,107
490
0.44
%
$
454,830
957
0.42
%
$
436,368
958
0.44
%
Non-fee-based
86,684
—
—
87,857
—
—
88,509
—
—
86,312
—
—
Total advice solutions
$
527,020
461
0.35
%
$
535,964
490
0.37
%
$
543,339
957
0.36
%
$
522,680
958
0.37
%
Other balance-based fees (2)
566,712
61
0.04
%
605,617
63
0.04
%
591,695
128
0.04
%
591,090
127
0.04
%
Other (3)
15
13
31
27
Total asset management and
administration fees
$
1,052
$
1,047
$
2,120
$
2,063
(1)
Advice solutions include managed
portfolios, specialized strategies, and customized investment
advice such as Schwab Wealth Advisory™, Schwab Managed Portfolios™,
Managed Account Select®, Schwab Advisor Network®, Windhaven
Strategies®, ThomasPartners® Strategies, Schwab Index Advantage®
advised retirement plan balances, Schwab Intelligent Portfolios®,
Institutional Intelligent Portfolios®, Schwab Intelligent
Portfolios Premium®, TD Ameritrade AdvisorDirect®, Essential
Portfolios, Selective Portfolios, and Personalized Portfolios; as
well as legacy non-fee advice solutions including Schwab Advisor
Source and certain retirement plan balances. Average client assets
for advice solutions may also include the asset balances contained
in the mutual fund and/or ETF categories listed above. For the
total end of period view, please see the Monthly Activity
Report.
(2)
Includes various asset-related
fees, such as trust fees, 401(k) recordkeeping fees, and mutual
fund clearing fees and other service fees.
(3)
Includes miscellaneous service
and transaction fees relating to mutual funds and ETFs that are not
balance-based.
THE CHARLES SCHWAB
CORPORATION
Growth in Client Assets and
Accounts
(Unaudited)
Q2-22 %
Change
2022
2021
vs.
vs.
Second
First
Fourth
Third
Second
(In billions, at quarter end, except as
noted)
Q2-21
Q1-22
Quarter
Quarter
Quarter
Quarter
Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and
bank deposits
18
%
(5
)%
$
552.5
$
584.3
$
566.1
$
503.9
$
469.5
Bank deposit account balances
(4
)%
1
%
155.6
154.8
158.5
153.3
161.9
Proprietary mutual funds (Schwab Funds®
and Laudus Funds®) and CTFs
Money market funds (1)
5
%
11
%
159.2
143.1
146.5
147.7
151.9
Equity and bond funds and CTFs (2)
(10
)%
(15
)%
149.5
175.8
183.1
167.4
165.9
Total proprietary mutual funds and
CTFs
(3
)%
(3
)%
308.7
318.9
329.6
315.1
317.8
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other
non-transaction fee funds
(18
)%
(17
)%
196.6
235.5
234.9
234.7
240.2
Mutual fund clearing services
(32
)%
(22
)%
184.4
235.4
254.2
271.9
271.3
Other third-party mutual funds (4)
(17
)%
(14
)%
1,189.4
1,383.3
1,497.7
1,450.1
1,441.5
Total Mutual Fund Marketplace
(20
)%
(15
)%
1,570.4
1,854.2
1,986.8
1,956.7
1,953.0
Total mutual fund assets
(17
)%
(14
)%
1,879.1
2,173.1
2,316.4
2,271.8
2,270.8
Exchange-traded funds (ETFs)
Proprietary ETFs (2)
(3
)%
(11
)%
237.7
268.5
271.8
251.6
245.2
Other third-party ETFs
(3
)%
(11
)%
1,129.0
1,270.6
1,296.4
1,183.7
1,158.8
Total ETF assets
(3
)%
(11
)%
1,366.7
1,539.1
1,568.2
1,435.3
1,404.0
Equity and other securities
(15
)%
(19
)%
2,548.5
3,131.1
3,259.8
2,976.7
2,988.8
Fixed income securities
12
%
12
%
403.5
360.7
356.4
356.8
359.6
Margin loans outstanding
(8
)%
(9
)%
(73.4
)
(81.0
)
(87.4
)
(83.8
)
(79.8
)
Total client assets
(10
)%
(13
)%
$
6,832.5
$
7,862.1
$
8,138.0
$
7,614.0
$
7,574.8
Client assets by business
Investor Services
(13
)%
(15
)%
$
3,598.7
$
4,235.5
$
4,400.7
$
4,137.7
$
4,146.2
Advisor Services
(6
)%
(11
)%
3,233.8
3,626.6
3,737.3
3,476.3
3,428.6
Total client assets
(10
)%
(13
)%
$
6,832.5
$
7,862.1
$
8,138.0
$
7,614.0
$
7,574.8
Net growth in assets in client
accounts (for the quarter ended)
Net new assets by business
Investor Services (5)
(80
)%
(84
)%
$
8.8
$
54.6
$
33.4
$
57.9
$
44.5
Advisor Services
(46
)%
(47
)%
34.6
65.9
101.2
81.1
64.3
Total net new assets
(60
)%
(64
)%
$
43.4
$
120.5
$
134.6
$
139.0
$
108.8
Net market gains (losses)
(1,073.0
)
(396.4
)
389.4
(99.8
)
396.9
Net growth (decline)
$
(1,029.6
)
$
(275.9
)
$
524.0
$
39.2
$
505.7
New brokerage accounts (in
thousands, for the quarter ended)
(39
)%
(16
)%
1,014
1,202
1,318
1,178
1,657
Client accounts (in thousands)
Active brokerage accounts
5
%
1
%
33,896
33,577
33,165
32,675
32,265
Banking accounts
6
%
2
%
1,669
1,641
1,614
1,580
1,574
Corporate retirement plan participants
6
%
1
%
2,275
2,246
2,200
2,207
2,149
(1)
Total client assets in purchased
money market funds are located at:
https://www.aboutschwab.com/investor-relations.
(2)
Includes balances held on and off
the Schwab platform. As of June 30, 2022, off-platform equity and
bond funds, CTFs, and ETFs were $21.4 billion, $4.9 billion, and
$86.4 billion, respectively.
(3)
Excludes all proprietary mutual
funds and ETFs.
(4)
As of June 30, 2022, third-party
money funds were $9.3 billion.
(5)
Second quarter of 2022 includes
an outflow of $20.8 billion from a mutual fund clearing services
client. Fourth quarter of 2021 includes outflows of $27.6 billion
from mutual fund clearing services clients.
The Charles Schwab Corporation
Monthly Activity Report For June 2022
2021
2022
Change
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Mo.
Yr.
Market Indices (at month end)
Dow Jones Industrial Average®
34,503
34,935
35,361
33,844
35,820
34,484
36,338
35,132
33,893
34,678
32,977
32,990
30,775
(7
)%
(11
)%
Nasdaq Composite®
14,504
14,673
15,259
14,449
15,498
15,538
15,645
14,240
13,751
14,221
12,335
12,081
11,029
(9
)%
(24
)%
Standard & Poor’s® 500
4,298
4,395
4,523
4,308
4,605
4,567
4,766
4,516
4,374
4,530
4,132
4,132
3,785
(8
)%
(12
)%
Client Assets (in billions of
dollars)
Beginning Client Assets
7,395.7
7,574.8
7,642.7
7,838.2
7,614.0
7,982.3
7,918.3
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
Net New Assets (1)
43.5
44.3
51.8
42.9
22.9
31.4
80.3
33.6
40.6
46.3
(9.2
)
32.8
19.8
(40
)%
(54
)%
Net Market Gains (Losses)
135.6
23.6
143.7
(267.1
)
345.4
(95.4
)
139.4
(367.8
)
(157.8
)
129.2
(568.5
)
(15.5
)
(489.0
)
Total Client Assets (at month end)
7,574.8
7,642.7
7,838.2
7,614.0
7,982.3
7,918.3
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
6,832.5
(6
)%
(10
)%
Core Net New Assets (2)
43.5
44.3
51.8
42.9
36.8
45.1
80.3
33.6
40.6
46.3
(9.2
)
32.8
40.6
24
%
(7
)%
Receiving Ongoing Advisory Services (at
month end)
Investor Services
525.1
531.9
542.5
530.1
548.3
543.1
559.2
541.9
533.7
538.9
509.3
513.0
483.8
(6
)%
(8
)%
Advisor Services (3)
3,209.3
3,256.5
3,333.4
3,253.2
3,399.8
3,374.3
3,505.2
3,382.4
3,342.5
3,404.6
3,190.5
3,213.8
3,040.4
(5
)%
(5
)%
Client Accounts (at month end, in
thousands)
Active Brokerage Accounts
32,265
32,386
32,513
32,675
32,796
32,942
33,165
33,308
33,421
33,577
33,759
33,822
33,896
—
5
%
Banking Accounts
1,574
1,578
1,594
1,580
1,593
1,608
1,614
1,628
1,641
1,641
1,652
1,658
1,669
1
%
6
%
Corporate Retirement Plan Participants
2,149
2,159
2,188
2,207
2,213
2,198
2,200
2,216
2,235
2,246
2,261
2,275
2,275
—
6
%
Client Activity
New Brokerage Accounts (in thousands)
499
402
402
374
397
448
473
426
356
420
386
323
305
(6
)%
(39
)%
Client Cash as a Percentage of Client
Assets (4)
10.5
%
10.4
%
10.3
%
10.8
%
10.4
%
10.5
%
10.9
%
11.3
%
11.5
%
11.4
%
11.9
%
12.0
%
12.8
%
80
bp
230
bp
Derivative Trades as a Percentage of Total
Trades
20.6
%
22.2
%
23.1
%
23.1
%
22.5
%
23.4
%
23.0
%
22.4
%
24.0
%
22.4
%
21.9
%
22.6
%
22.3
%
(30
) bp
170
bp
Selected Average Balances (in millions
of dollars)
Average Interest-Earning Assets (5)
536,146
546,579
552,372
565,379
574,181
584,362
605,709
622,997
629,042
644,768
636,668
620,157
614,100
(1
)%
15
%
Average Margin Balances
78,410
79,910
81,021
81,705
83,835
87,311
88,328
86,737
84,354
81,526
83,762
78,841
74,577
(5
)%
(5
)%
Average Bank Deposit Account Balances
(6)
161,377
151,275
150,896
152,330
154,040
153,877
154,918
157,706
153,824
155,657
152,653
154,669
155,306
—
(4
)%
Mutual Fund and Exchange-Traded
Fund
Net Buys (Sells) (7,8) (in millions of
dollars)
Equities
10,873
7,418
8,808
7,596
8,840
13,099
11,519
7,384
9,371
14,177
(786
)
1,889
(1,586
)
Hybrid
390
666
569
335
81
308
(1,207
)
(367
)
(478
)
(497
)
(529
)
(1,718
)
(1,054
)
Bonds
10,101
6,917
8,044
6,232
4,425
4,097
5,600
1,804
(1,973
)
(7,851
)
(6,933
)
(6,121
)
(5,631
)
Net Buy (Sell) Activity (in millions of
dollars)
Mutual Funds (7)
5,872
2,644
3,876
(308
)
302
189
(2,859
)
(4,961
)
(6,318
)
(11,888
)
(16,657
)
(20,761
)
(16,258
)
Exchange-Traded Funds (8)
15,492
12,357
13,545
14,471
13,044
17,315
18,771
13,782
13,238
17,717
8,409
14,811
7,987
Money Market Funds
(3,806
)
(2,501
)
(1,372
)
(1,512
)
(451
)
(1,725
)
(144
)
(1,984
)
(1,086
)
(1,344
)
(3,430
)
7,106
11,544
Note: Certain supplemental details related to the information above
can be found at: https://www.aboutschwab.com/financial-reports.
(1)
June 2022 includes an outflow of
$20.8 billion from a mutual fund clearing services client. November
2021 includes an outflow of $13.7 billion from a mutual fund
clearing services client. October 2021 includes an outflow of $13.9
billion from a mutual fund clearing services client.
(2)
Net new assets before significant
one-time inflows or outflows, such as acquisitions/divestitures or
extraordinary flows (generally greater than $10 billion) relating
to a specific client. These flows may span multiple reporting
periods.
(3)
Excludes Retirement Business
Services.
(4)
Schwab One®, certain cash
equivalents, bank deposits, third-party bank deposit accounts, and
money market fund balances as a percentage of total client
assets.
(5)
Represents average total
interest-earning assets on the company’s balance sheet.
(6)
Represents average TD Ameritrade
clients’ uninvested cash sweep account balances held in deposit
accounts at third-party financial institutions.
(7)
Represents the principal value of
client mutual fund transactions handled by Schwab, including
transactions in proprietary funds. Includes institutional funds
available only to Investment Managers. Excludes money market fund
transactions.
(8)
Represents the principal value of
client ETF transactions handled by Schwab, including transactions
in proprietary ETFs.
THE CHARLES SCHWAB CORPORATION Non-GAAP
Financial Measures (In millions, except ratios and per share
amounts) (Unaudited)
In addition to disclosing financial results in accordance with
generally accepted accounting principles in the U.S. (GAAP),
Schwab’s second quarter earnings release contains references to the
non-GAAP financial measures described below. We believe these
non-GAAP financial measures provide useful supplemental information
about the financial performance of the Company, and facilitate
meaningful comparison of Schwab’s results in the current period to
both historic and future results. These non-GAAP measures should
not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may not be
comparable to non-GAAP financial measures presented by other
companies.
Schwab’s use of non-GAAP measures is reflective of certain
adjustments made to GAAP financial measures as described below.
Non-GAAP Adjustment or
Measure
Definition
Usefulness to Investors and
Uses by Management
Acquisition and integration-related costs
and amortization of acquired intangible assets
Schwab adjusts certain GAAP financial
measures to exclude the impact of acquisition and
integration-related costs incurred as a result of the Company’s
acquisitions, amortization of acquired intangible assets, and,
where applicable, the income tax effect of these expenses.
Adjustments made to exclude amortization
of acquired intangible assets are reflective of all acquired
intangible assets, which were recorded as part of purchase
accounting. These acquired intangible assets contribute to the
Company’s revenue generation. Amortization of acquired intangible
assets will continue in future periods over their remaining useful
lives.
We exclude acquisition and
integration-related costs and amortization of acquired intangible
assets for the purpose of calculating certain non-GAAP measures
because we believe doing so provides additional transparency of
Schwab’s ongoing operations, and is useful in both evaluating the
operating performance of the business and facilitating comparison
of results with prior and future periods.
Acquisition and integration-related costs
fluctuate based on the timing of acquisitions and integration
activities, thereby limiting comparability of results among
periods, and are not representative of the costs of running the
Company’s ongoing business. Amortization of acquired intangible
assets is excluded because management does not believe it is
indicative of the Company’s underlying operating performance.
Return on tangible common equity
Return on tangible common equity
represents annualized adjusted net income available to common
stockholders as a percentage of average tangible common equity.
Tangible common equity represents common equity less goodwill,
acquired intangible assets — net, and related deferred tax
liabilities.
Acquisitions typically result in the
recognition of significant amounts of goodwill and acquired
intangible assets. We believe return on tangible common equity may
be useful to investors as a supplemental measure to facilitate
assessing capital efficiency and returns relative to the
composition of Schwab’s balance sheet.
The Company also uses adjusted diluted EPS and return on
tangible common equity as components of performance criteria for
employee bonus and certain executive management incentive
compensation arrangements. The Compensation Committee of CSC’s
Board of Directors maintains discretion in evaluating performance
against these criteria.
THE CHARLES SCHWAB CORPORATION Non-GAAP
Financial Measures (In millions, except ratios and per share
amounts) (Unaudited)
The tables below present reconciliations of GAAP measures to
non-GAAP measures:
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Total Expenses Excluding
Interest
Net Income
Total Expenses Excluding
Interest
Net Income
Total Expenses Excluding
Interest
Net Income
Total Expenses Excluding
Interest
Net Income
Total expenses excluding interest
(GAAP), Net income (GAAP)
$
2,819
$
1,793
$
2,808
$
1,265
$
5,652
$
3,195
$
5,563
$
2,749
Acquisition and integration-related costs
(1)
(94
)
94
(144
)
144
(190
)
190
(263
)
263
Amortization of acquired intangible
assets
(154
)
154
(154
)
154
(308
)
308
(308
)
308
Income tax effects (2)
N/A
(60
)
N/A
(80
)
N/A
(121
)
N/A
(147
)
Adjusted total expenses (non-GAAP),
Adjusted net income (non-GAAP)
$
2,571
$
1,981
$
2,510
$
1,483
$
5,154
$
3,572
$
4,992
$
3,173
(1)
Acquisition and
integration-related costs for the three and six months ended June
30, 2022 primarily consist of $53 million and $109 million of
compensation and benefits, $35 million and $66 million of
professional services, and $4 million and $8 million of occupancy
and equipment. Acquisition and integration-related costs for the
three and six months ended June 30, 2021 primarily consist of $97
million and $169 million of compensation and benefits, $37 million
and $64 million of professional services, and $7 million and $23
million of occupancy and equipment.
(2)
The income tax effects of the
non-GAAP adjustments are determined using an effective tax rate
reflecting the exclusion of non-deductible acquisition costs and
are used to present the acquisition and integration-related costs
and amortization of acquired intangible assets on an after-tax
basis.
N/A Not applicable.
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Amount
% of Total Net Revenues
Amount
% of Total Net Revenues
Amount
% of Total Net Revenues
Amount
% of Total Net Revenues
Income before taxes on income
(GAAP), Pre-tax profit margin (GAAP)
$
2,274
44.6
%
$
1,719
38.0
%
$
4,113
42.1
%
$
3,679
39.8
%
Acquisition and integration-related
costs
94
1.8
%
144
3.2
%
190
1.9
%
263
2.9
%
Amortization of acquired intangible
assets
154
3.1
%
154
3.4
%
308
3.2
%
308
3.3
%
Adjusted income before taxes on income
(non-GAAP), Adjusted pre-tax profit margin
(non-GAAP)
$
2,522
49.5
%
$
2,017
44.6
%
$
4,611
47.2
%
$
4,250
46.0
%
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net income available to common
stockholders (GAAP), Earnings per common share — diluted
(GAAP)
$
1,652
$
.87
$
1,117
$
.59
$
2,930
$
1.54
$
2,505
$
1.32
Acquisition and integration-related
costs
94
.05
144
.08
190
.10
263
.14
Amortization of acquired intangible
assets
154
.08
154
.08
308
.16
308
.16
Income tax effects
(60
)
(.03
)
(80
)
(.05
)
(121
)
(.06
)
(147
)
(.07
)
Adjusted net income available to common
stockholders (non-GAAP), Adjusted diluted EPS
(non-GAAP)
$
1,840
$
.97
$
1,335
$
.70
$
3,307
$
1.74
$
2,929
$
1.55
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Return on average common stockholders’
equity (GAAP)
19
%
10
%
15
%
10
%
Average common stockholders’ equity
$
35,611
$
46,276
$
40,063
$
47,912
Less: Average goodwill
(11,952
)
(11,952
)
(11,952
)
(11,952
)
Less: Average acquired intangible assets —
net
(9,151
)
(9,762
)
(9,227
)
(9,838
)
Plus: Average deferred tax liabilities
related to goodwill and acquired intangible assets — net
1,868
1,907
1,877
1,925
Average tangible common equity
$
16,376
$
26,469
$
20,761
$
28,047
Adjusted net income available to common
stockholders (1)
$
1,840
$
1,335
$
3,307
$
2,929
Return on tangible common equity
(non-GAAP)
45
%
20
%
32
%
21
%
(1)
See table above for the
reconciliation of net income available to common stockholders to
adjusted net income available to common stockholders
(non-GAAP).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220718005220/en/
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