Gathered $428 Billion in Annual Core Net New
Assets; Added More Than 4 Million New Accounts 2022 Revenues Grew
12% to $20.8 Billion; Earnings per Share Increased to $3.50, $3.90
Adjusted (1)
The Charles Schwab Corporation announced today that its net
income for the fourth quarter of 2022 was $2.0 billion, up 25% from
$1.6 billion for the fourth quarter 2021. Net income for the twelve
months ended December 31, 2022 was a record $7.2 billion, an
increase of 23% versus the prior year.
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Three Months Ended December
31,
%
Twelve Months Ended December
31,
%
Financial Highlights (1)
2022
2021
Change
2022
2021
Change
Net revenues (in millions)
$
5,497
$
4,708
17
%
$
20,762
$
18,520
12
%
Net income (in millions)
GAAP
$
1,968
$
1,580
25
%
$
7,183
$
5,855
23
%
Adjusted (1)
$
2,151
$
1,775
21
%
$
7,934
$
6,670
19
%
Diluted earnings per common share (2)
GAAP
$
.97
$
.76
28
%
$
3.50
$
2.83
24
%
Adjusted (1)
$
1.07
$
.86
24
%
$
3.90
$
3.25
20
%
Pre-tax profit margin
GAAP
47.3
%
43.0
%
45.2
%
41.6
%
Adjusted (1)
51.6
%
48.4
%
50.0
%
47.5
%
Return on average common stockholders’
equity (annualized)
27
%
12
%
18
%
11
%
Return on tangible common equity
(annualized) (1)
102
%
24
%
42
%
22
%
(1)
Further details on non-GAAP financial
measures and a reconciliation of such measures to GAAP reported
results are included on pages 11-12 of this release.
(2)
All per-share results are rounded to the
nearest cent, based on weighted-average diluted common shares
outstanding.
Co-Chairman and CEO Walt Bettinger said, “Our consistent
'Through Clients’ Eyes' strategy helped us continue to succeed with
clients even as they faced a very difficult environment in 2022.
Emerging concerns around inflation and global market stability
became reality, with Russia’s invasion of Ukraine exacerbating the
impact. Equity markets suffered their worst year since 2008, led by
the S&P 500® and NASDAQ Composite® which contracted 19% and
33%, respectively. At the same time, the Federal Reserve tightened
short-term rates at the fastest pace in 40 years – pushing the Fed
Funds upper bound to 4.50% in December. Additionally, uncertainty
around future economic growth increased during the back half of the
year, weighing on longer-term rates and leading to an inverted
yield curve. This shift reflected the persistent bearish sentiment
amongst investors for most of the year – with certain indicators
hitting levels below those observed during the 2008 Financial
Crisis.”
Mr. Bettinger continued, “Against this challenging backdrop,
investors looked to Schwab for help achieving their financial
goals. Both of our primary businesses contributed to core net new
assets of $428 billion, a full-year organic growth rate of 5%,
which included record tax-related outflows in April. Total client
assets ended the year at $7.05 trillion, as the company’s asset
gathering was offset by $1.5 trillion in lower market values over
the past 12 months. In addition, we also added over 4 million new
brokerage accounts, pushing total accounts to nearly 34 million by
December 31. Momentum within the retail channel was particularly
strong in 2022, achieving record core inflows during 6 separate
months. Similarly, Advisor Services attracted over 350
transitioning advisor teams, the second highest number ever, and
recorded a transfer of account ratio of approximately 2-to-1 for
the fifth consecutive year.”
“Through the relentless efforts of our dedicated employees, we
made significant progress on our key strategic initiatives of scale
and efficiency, win-win monetization, and segmentation,” Mr.
Bettinger added. “This work included ongoing preparations for the
largest broker-dealer integration in our industry’s history – with
the first wave of client conversions scheduled to begin next month.
Throughout 2022, we also took meaningful steps to further empower
investors with more personalization options, increased access to
high-quality products, and an evolved suite of tools and solutions.
We launched our proprietary direct indexing offering, Schwab
Personalized Indexing™ (SPI), for both registered investment
advisors (RIAs) and retail clients – providing them with
tax-efficient, customizable portfolio management capabilities at a
much lower cost than existing alternatives in the market.
Additionally, we introduced our initial thematic stock lists, which
assist self-directed clients in selecting stocks aligned with their
personal perspectives and values. The current range of themes spans
over 40 different categories, including environmental innovation,
artificial intelligence, and medical breakthroughs. We also further
bolstered our leading value proposition to RIAs by expanding our
institutional no transaction fee mutual fund platform to include
over 900 additional equity and bond funds across 16 leading
third-party asset managers. Finally, Schwab’s wealth management
capabilities continued to evolve with the needs of our clients,
including a growing interest in fixed income. Client allocations to
this asset class increased 66% versus December 2021 as they took
advantage of our self-directed tools and income-focused advisory
solutions such as Wasmer Schroeder™ Strategies. The Wasmer team’s
ability to deliver an attractive value proposition across a range
of tax-exempt and taxable offers, along with rising interest rates,
helped these strategies collect $7.3 billion in net flows since
becoming part of Schwab in July 2020 – including $3.5 billion in
2022.”
Mr. Bettinger concluded, “Our focus on meeting the needs of
individual investors and the advisors who serve them remains
steadfast across any environment. This commitment to consistency of
mission, service, and experience sets us apart, helping to drive
our strong performance and keeping us positioned as one of the most
trusted names in financial services. While we are proud of the
firm’s success thus far, we believe there is tremendous opportunity
still ahead of us and we are excited to keep striving to deliver
value for all of our key stakeholders – clients, employees, and
owners.”
CFO Peter Crawford commented, “Schwab’s record financial
performance in 2022 highlighted the resiliency of our diversified
financial model. Sustained business momentum through an uneven
macroeconomic environment helped drive 12% growth in total net
revenues. Net interest revenue reached $10.7 billion, an increase
of 33% versus the prior year, as higher interest rates more than
offset the impact of balance sheet contraction due to client cash
sorting. Lower market valuations throughout the year pushed asset
management and administration fees down slightly to $4.2 billion,
or 1% year-over-year. Trading revenue declined by 12% to $3.7
billion as daily average trades subsided from 2021’s unprecedented
levels to just under 6 million for the full year. Transitioning to
expenses, our total GAAP spending grew 5% to $11.4 billion,
reflecting client engagement and growth, as well as the 12-month
impact of the broad employee salary increase that went into effect
at the end of 2021. Acquisition and integration-related costs and
amortization of acquired intangibles were $392 million and $596
million, respectively. Exclusive of these items, adjusted total
expenses (1) were up 7% year-over-year. Strong revenue growth and
balanced expense management enabled us to deliver a 45.2% pre-tax
profit margin for the full year – 50.0% on an adjusted basis (1)
.”
“Over the course of the year, our approach to balance sheet
management prioritized flexibility to help navigate through a
dynamic environment,” Mr. Crawford added. “As rates rose from the
ultra-low levels observed during the most recent period of the
Federal Reserve’s Zero Interest-rate Policy, clients allocated a
growing portion of their assets to higher yielding cash and fixed
income alternatives. As a result of this expected sorting activity,
the balance sheet shrank by $115 billion, a decline of 17% versus
December 31, 2021. To facilitate these movements, we took steps to
further bolster liquidity by limiting new portfolio investments to
help build available cash and utilizing a limited amount of
short-term funding sources such as Federal Home Loan Bank Advances
and retail certificates of deposit. At the same time, the
combination of Schwab’s enhanced earnings power and lower capital
intensity enabled us to accelerate the pace of capital return to
our owners. Following the authorization of a $15 billion buyback
program in July, we have repurchased an aggregate of 47 million
shares for $3.4 billion in 2022. During the year, we also redeemed
$1 billion of preferred equity and increased our common dividend by
22%. Inclusive of these actions, the company’s preliminary Tier 1
Leverage Ratio finished the year at 7.2%, above our stated
operating objective of 6.50% – 6.75%.”
Mr. Crawford concluded, “Although 2022 unfolded much differently
than we and many others anticipated at the start of the year,
Schwab’s unwavering focus on serving clients, along with our
all-weather business model, delivered another year of record
financial performance. We believe the core tenets of the company’s
financial formula remain firmly intact. The combination of strong
business momentum, diversified revenue growth, expense discipline,
and attentive capital management supports our long-term growth plus
capital return story.”
(1) Further details on non-GAAP financial measures and a
reconciliation of such measures to GAAP reported results are
included on pages 11-12 of this release.
Commentary from the CFO
Peter Crawford, Managing Director and Chief Financial Officer,
provides additional perspective on our fourth quarter and full-year
2022 financial results at:
https://www.aboutschwab.com/cfo-commentary.
Winter Business Update
The company has scheduled a Winter Business Update for
institutional investors on Friday, January 27, 2023. The Update is
scheduled to run from approximately 8:00 a.m. - 1:00 p.m. CT, 9:00
a.m. - 2p.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 success with clients; strategic initiatives; TD Ameritrade
integration; opportunity; stakeholder value; earnings power;
capital needs and management; returning capital to stockholders;
Tier 1 Leverage Ratio operating objective; all-weather business
model; business momentum; revenue growth; and expense discipline.
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; monetize
client assets; and manage expenses. 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 33.8 million active brokerage
accounts, 2.4 million corporate retirement plan participants, 1.7
million banking accounts, and $7.05 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
December 31,
Twelve Months Ended
December 31,
2022
2021
2022
2021
Net Revenues
Interest revenue
$
3,841
$
2,270
$
12,227
$
8,506
Interest expense
(812
)
(128
)
(1,545
)
(476
)
Net interest revenue
3,029
2,142
10,682
8,030
Asset management and administration fees
(1)
1,049
1,110
4,216
4,274
Trading revenue
895
1,017
3,673
4,152
Bank deposit account fees
350
304
1,409
1,315
Other
174
135
782
749
Total net revenues
5,497
4,708
20,762
18,520
Expenses Excluding Interest
Compensation and benefits
1,488
1,399
5,936
5,450
Professional services
266
271
1,032
994
Occupancy and equipment
320
254
1,175
976
Advertising and market development
123
122
419
485
Communications
144
130
588
587
Depreciation and amortization
176
145
652
549
Amortization of acquired intangible
assets
136
154
596
615
Regulatory fees and assessments
62
67
262
275
Other
184
143
714
876
Total expenses excluding interest
2,899
2,685
11,374
10,807
Income before taxes on income
2,598
2,023
9,388
7,713
Taxes on income
630
443
2,205
1,858
Net Income
1,968
1,580
7,183
5,855
Preferred stock dividends and other
147
131
548
495
Net Income Available to Common
Stockholders
$
1,821
$
1,449
$
6,635
$
5,360
Weighted-Average Common Shares
Outstanding:
Basic
1,864
1,892
1,885
1,887
Diluted
1,873
1,902
1,894
1,897
Earnings Per Common Shares
Outstanding (2):
Basic
$
.98
$
.77
$
3.52
$
2.84
Diluted
$
.97
$
.76
$
3.50
$
2.83
(1)
No fee waivers were recognized for the
three months ended December 31, 2022. Includes fee waivers of $57
million for the twelve months ended December 31, 2022, and $80
million and $326 million for the three and twelve months ended
months ended December 31, 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)
Q4-22 %
change
2022
2021
vs.
vs.
Fourth
Third
Second
First
Fourth
(In millions, except per share amounts and
as noted)
Q4-21
Q3-22
Quarter
Quarter
Quarter
Quarter
Quarter
Net Revenues
Net interest revenue
41
%
4
%
$
3,029
$
2,926
$
2,544
$
2,183
$
2,142
Asset management and administration
fees
(5
) %
—
1,049
1,047
1,052
1,068
1,110
Trading revenue
(12
) %
(4
) %
895
930
885
963
1,017
Bank deposit account fees
15
%
(15
) %
350
413
352
294
304
Other
29
%
(5
) %
174
184
260
164
135
Total net revenues
17
%
—
5,497
5,500
5,093
4,672
4,708
Expenses Excluding Interest
Compensation and benefits
6
%
1
%
1,488
1,476
1,426
1,546
1,399
Professional services
(2
) %
1
%
266
264
258
244
271
Occupancy and equipment
26
%
10
%
320
292
294
269
254
Advertising and market development
1
%
38
%
123
89
105
102
122
Communications
11
%
10
%
144
131
169
144
130
Depreciation and amortization
21
%
5
%
176
167
159
150
145
Amortization of acquired intangibles
assets
(12
) %
(11
) %
136
152
154
154
154
Regulatory fees and assessments
(7
) %
(5
) %
62
65
67
68
67
Other
29
%
(2
) %
184
187
187
156
143
Total expenses excluding interest
8
%
3
%
2,899
2,823
2,819
2,833
2,685
Income before taxes on income
28
%
(3
) %
2,598
2,677
2,274
1,839
2,023
Taxes on income
42
%
(4
) %
630
657
481
437
443
Net Income
25
%
(3
) %
1,968
2,020
1,793
1,402
1,580
Preferred stock dividends and other
12
%
8
%
147
136
141
124
131
Net Income Available to Common
Stockholders
26
%
(3
) %
$
1,821
$
1,884
$
1,652
$
1,278
$
1,449
Earnings per common share (1):
Basic
27
%
(2
) %
$
.98
$
1.00
$
.87
$
.67
$
.77
Diluted
28
%
(2
) %
$
.97
$
.99
$
.87
$
.67
$
.76
Dividends declared per common share
22
%
—
$
.22
$
.22
$
.20
$
.20
$
.18
Weighted-average common shares
outstanding:
Basic
(1
) %
(1
) %
1,864
1,887
1,896
1,894
1,892
Diluted
(2
) %
(1
) %
1,873
1,895
1,904
1,905
1,902
Performance Measures
Pre-tax profit margin
47.3
%
48.7
%
44.6
%
39.4
%
43.0
%
Return on average common stockholders’
equity (annualized) (2)
27
%
25
%
19
%
12
%
12
%
Financial Condition (at quarter
end, in billions)
Cash and cash equivalents
(36
) %
(14
) %
$
40.2
$
46.5
$
64.6
$
91.1
$
63.0
Cash and investments segregated
(20
) %
(2
) %
43.0
44.1
53.5
54.4
53.9
Receivables from brokerage clients —
net
(26
) %
(10
) %
66.6
73.9
76.1
84.1
90.6
Available for sale securities (3)
(62
) %
(37
) %
147.9
236.5
265.3
272.0
390.1
Held to maturity securities (3)
N/M
80
%
173.1
96.3
100.1
105.3
—
Bank loans — net
17
%
—
40.5
40.4
39.6
37.2
34.6
Total assets
(17
) %
(4
) %
551.8
577.6
637.6
681.0
667.3
Bank deposits
(17
) %
(7
) %
366.7
395.7
442.0
465.8
443.8
Payables to brokerage clients
(23
) %
(11
) %
97.4
110.0
114.9
125.3
125.7
Short-term borrowings
N/M
N/M
17.1
0.5
1.4
4.2
4.9
Long-term debt
10
%
—
20.8
20.8
21.1
21.9
18.9
Stockholders’ equity
(35
) %
(1
) %
36.6
37.0
44.5
48.1
56.3
Other
Full-time equivalent employees (at quarter
end, in thousands)
6
%
—
35.3
35.2
35.2
34.2
33.4
Capital expenditures — purchases of
equipment, office facilities,
and property, net (in millions)
(51
) %
9
%
$
211
$
193
$
339
$
209
$
431
Expenses excluding interest as a
percentage of average client assets (annualized)
0.16
%
0.16
%
0.16
%
0.15
%
0.13
%
Clients’ Daily Average Trades
(DATs) (in thousands)
(12
) %
(2
) %
5,389
5,523
6,227
6,578
6,102
Number of Trading Days
(2
) %
(2
) %
62.5
64.0
62.0
62.0
63.5
Revenue Per Trade (4)
2
%
1
%
$
2.66
$
2.63
$
2.29
$
2.36
$
2.62
(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 and November 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 September 30, 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
December 31,
Twelve Months Ended
December 31,
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
$
38,067
$
351
3.62
%
$
41,735
$
13
0.11
%
$
57,163
$
812
1.40
%
$
40,325
$
40
0.10
%
Cash and investments segregated
45,096
383
3.33
%
44,027
5
0.05
%
49,430
691
1.38
%
43,942
24
0.05
%
Receivables from brokerage clients
66,663
1,077
6.32
%
86,485
655
2.97
%
75,614
3,321
4.33
%
77,768
2,455
3.11
%
Available for sale securities (1,2)
196,577
943
1.90
%
382,776
1,260
1.31
%
260,392
4,139
1.58
%
357,122
4,641
1.30
%
Held to maturity securities (2)
146,384
626
1.70
%
—
—
—
112,357
1,688
1.50
%
—
—
—
Bank loans
40,531
366
3.59
%
33,102
172
2.08
%
38,816
1,083
2.79
%
28,789
620
2.15
%
Total interest-earning assets
533,318
3,746
2.77
%
588,125
2,105
1.42
%
593,772
11,734
1.96
%
547,946
7,780
1.41
%
Securities lending revenue
88
163
471
720
Other interest revenue
7
2
22
6
Total interest-earning assets
$
533,318
$
3,841
2.84
%
$
588,125
$
2,270
1.53
%
$
593,772
$
12,227
2.04
%
$
547,946
$
8,506
1.54
%
Funding sources
Bank deposits
$
374,812
$
438
0.46
%
$
409,961
$
14
0.01
%
$
424,168
$
723
0.17
%
$
381,549
$
54
0.01
%
Payables to brokerage clients
87,001
76
0.35
%
99,325
2
0.01
%
97,825
123
0.13
%
91,667
9
0.01
%
Short-term borrowings
11,927
142
4.71
%
4,294
3
0.27
%
4,993
154
3.07
%
3,040
9
0.30
%
Long-term debt
20,837
135
2.59
%
19,124
103
2.14
%
20,714
498
2.40
%
17,704
384
2.17
%
Total interest-bearing liabilities
494,577
791
0.64
%
532,704
122
0.09
%
547,700
1,498
0.27
%
493,960
456
0.09
%
Non-interest-bearing funding sources
38,741
55,421
46,072
53,986
Securities lending expense
20
8
48
24
Other interest expense
1
(2
)
(1
)
(4
)
Total funding sources
$
533,318
$
812
0.60
%
$
588,125
$
128
0.09
%
$
593,772
$
1,545
0.26
%
$
547,946
$
476
0.09
%
Net interest revenue
$
3,029
2.24
%
$
2,142
1.44
%
$
10,682
1.78
%
$
8,030
1.45
%
(1)
Amounts have been calculated based on
amortized cost.
(2)
In January and November 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 September 30, 2022.
THE CHARLES SCHWAB
CORPORATION
Asset Management and
Administration Fees Information
(In millions, except ratios or as
noted)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
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
$
243,587
$
159
0.26
%
$
147,035
$
109
0.29
%
$
179,791
$
499
0.28
%
$
155,821
$
457
0.29
%
Fee waivers
—
(80
)
(57
)
(326
)
Schwab money market funds
243,587
159
0.26
%
147,035
29
0.08
%
179,791
442
0.25
%
155,821
131
0.08
%
Schwab equity and bond funds, ETFs,
and
collective trust funds (CTFs)
421,238
86
0.08
%
462,059
101
0.09
%
433,005
364
0.08
%
423,999
380
0.09
%
Mutual Fund OneSource® and other
no-transaction-fee funds
219,965
149
0.27
%
231,438
184
0.32
%
202,015
602
0.30
%
229,342
724
0.32
%
Other third-party mutual funds and
ETFs
659,870
137
0.08
%
928,989
193
0.08
%
768,871
647
0.08
%
898,248
726
0.08
%
Total mutual funds, ETFs, and CTFs (1)
$
1,544,660
531
0.14
%
$
1,769,521
507
0.11
%
$
1,583,682
2,055
0.13
%
$
1,707,410
1,961
0.11
%
Advice solutions (1)
Fee-based
$
424,407
445
0.42
%
$
473,443
524
0.44
%
$
441,336
1,854
0.42
%
$
452,503
1,993
0.44
%
Non-fee-based
87,804
—
—
96,374
—
—
89,525
—
—
89,911
—
—
Total advice solutions
$
512,211
445
0.34
%
$
569,817
524
0.36
%
$
530,861
1,854
0.35
%
$
542,414
1,993
0.37
%
Other balance-based fees (2)
524,465
58
0.04
%
644,164
64
0.04
%
561,416
244
0.04
%
614,787
259
0.04
%
Other (3)
15
15
63
61
Total asset management and
administration fees
$
1,049
$
1,110
$
4,216
$
4,274
(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)
Q4-22 %
Change
2022
2021
vs.
vs.
Fourth
Third
Second
First
Fourth
(In billions, at quarter end, except as
noted)
Q4-21
Q3-22
Quarter
Quarter
Quarter
Quarter
Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and
bank deposits
(19
) %
(8
) %
$
459.4
$
501.4
$
552.5
$
584.3
$
566.1
Bank deposit account balances
(20
) %
(9
) %
126.6
139.6
155.6
154.8
158.5
Proprietary mutual funds (Schwab Funds®
and Laudus Funds®) and CTFs
Money market funds (1)
90
%
32
%
278.9
211.1
159.2
143.1
146.5
Equity and bond funds and CTFs (2)
(16
) %
9
%
153.6
141.5
149.5
175.8
183.1
Total proprietary mutual funds and
CTFs
31
%
23
%
432.5
352.6
308.7
318.9
329.6
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other
no-transaction-fee funds
—
30
%
235.7
181.5
196.6
235.5
234.9
Mutual fund clearing services
(25
) %
9
%
191.1
175.3
184.4
235.4
254.2
Other third-party mutual funds (4)
(28
) %
(3
) %
1,077.1
1,105.7
1,189.4
1,383.3
1,497.7
Total Mutual Fund Marketplace
(24
) %
3
%
1,503.9
1,462.5
1,570.4
1,854.2
1,986.8
Total mutual fund assets
(16
) %
7
%
1,936.4
1,815.1
1,879.1
2,173.1
2,316.4
Exchange-traded funds (ETFs)
Proprietary ETFs (2)
(5
) %
12
%
259.3
232.2
237.7
268.5
271.8
Other third-party ETFs
(7
) %
10
%
1,208.4
1,094.6
1,129.0
1,270.6
1,296.4
Total ETF assets
(6
) %
11
%
1,467.7
1,326.8
1,366.7
1,539.1
1,568.2
Equity and other securities
(22
) %
3
%
2,529.4
2,451.3
2,548.5
3,131.1
3,259.8
Fixed income securities
66
%
23
%
593.4
481.5
403.5
360.7
356.4
Margin loans outstanding
(28
) %
(12
) %
(63.1
)
(71.5
)
(73.4
)
(81.0
)
(87.4
)
Total client assets
(13
) %
6
%
$
7,049.8
$
6,644.2
$
6,832.5
$
7,862.1
$
8,138.0
Client assets by business
Investor Services
(16
) %
5
%
$
3,682.1
$
3,508.1
$
3,598.7
$
4,235.5
$
4,400.7
Advisor Services
(10
) %
7
%
3,367.7
3,136.1
3,233.8
3,626.6
3,737.3
Total client assets
(13
) %
6
%
$
7,049.8
$
6,644.2
$
6,832.5
$
7,862.1
$
8,138.0
Net growth in assets in client
accounts (for the quarter ended)
Net new assets by business
Investor Services (5)
93
%
17
%
$
64.3
$
55.1
$
8.8
$
54.6
$
33.4
Advisor Services
(37
) %
8
%
64.1
59.5
34.6
65.9
101.2
Total net new assets
(5
) %
12
%
$
128.4
$
114.6
$
43.4
$
120.5
$
134.6
Net market gains (losses)
277.2
(302.9
)
(1,073.0
)
(396.4
)
389.4
Net growth (decline)
$
405.6
$
(188.3
)
$
(1,029.6
)
$
(275.9
)
$
524.0
New brokerage accounts (in
thousands, for the quarter ended)
(29
) %
4
%
931
897
1,014
1,202
1,318
Client accounts (in thousands)
Active brokerage accounts (6)
2
%
—
33,758
33,875
33,896
33,577
33,165
Banking accounts
6
%
1
%
1,716
1,696
1,669
1,641
1,614
Corporate retirement plan participants
7
%
2
%
2,351
2,305
2,275
2,246
2,200
(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 December 31, 2022, off-platform equity and
bond funds, CTFs, and ETFs were $23.6 billion, $4.9 billion, and
$98.2 billion, respectively.
(3)
Excludes all proprietary mutual funds and
ETFs.
(4)
As of December 31, 2022, third-party money
funds were $3.2 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.
(6)
Fourth quarter of 2022 includes the
company-initiated closure of approximately 350 thousand low-balance
accounts. Third quarter of 2022 includes the company-initiated
closure of approximately 152 thousand low-balance accounts.
The Charles Schwab Corporation
Monthly Activity Report For December 2022
2021
2022
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®
36,338
35,132
33,893
34,678
32,977
32,990
30,775
32,845
31,510
28,726
32,733
34,590
33,147
(4
) %
(9
) %
Nasdaq Composite®
15,645
14,240
13,751
14,221
12,335
12,081
11,029
12,391
11,816
10,576
10,988
11,468
10,466
(9
) %
(33
) %
Standard & Poor’s® 500
4,766
4,516
4,374
4,530
4,132
4,132
3,785
4,130
3,955
3,586
3,872
4,080
3,840
(6
) %
(19
) %
Client Assets (in billions of
dollars)
Beginning Client Assets
7,918.3
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
6,832.5
7,304.8
7,127.6
6,644.2
7,004.6
7,320.6
Net New Assets (1)
80.3
33.6
40.6
46.3
(9.2
)
32.8
19.8
31.5
43.3
39.8
42.0
33.1
53.3
61
%
(34
) %
Net Market Gains (Losses)
139.4
(367.8
)
(157.8
)
129.2
(568.5
)
(15.5
)
(489.0
)
440.8
(220.5
)
(523.2
)
318.4
282.9
(324.1
)
Total Client Assets (at month end)
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
6,832.5
7,304.8
7,127.6
6,644.2
7,004.6
7,320.6
7,049.8
(4
) %
(13
) %
Core Net New Assets (2)
80.3
33.6
40.6
46.3
(9.2
)
32.8
40.6
31.5
43.3
39.8
42.0
33.1
53.3
61
%
(34
) %
Receiving Ongoing Advisory Services (at
month end)
Investor Services
559.2
541.9
533.7
538.9
509.3
513.0
483.8
514.8
499.2
466.6
487.3
514.0
499.8
(3
) %
(11
) %
Advisor Services (3)
3,505.2
3,382.4
3,342.5
3,404.6
3,190.5
3,213.8
3,040.4
3,222.5
3,150.5
2,950.9
3,106.0
3,270.5
3,173.4
(3
) %
(9
) %
Client Accounts (at month end, in
thousands)
Active Brokerage Accounts (4)
33,165
33,308
33,421
33,577
33,759
33,822
33,896
33,934
33,984
33,875
33,896
33,636
33,758
—
2
%
Banking Accounts
1,614
1,628
1,641
1,641
1,652
1,658
1,669
1,680
1,690
1,696
1,706
1,705
1,716
1
%
6
%
Corporate Retirement Plan Participants
2,200
2,216
2,235
2,246
2,261
2,275
2,275
2,267
2,285
2,305
2,322
2,336
2,351
1
%
7
%
Client Activity
New Brokerage Accounts (in thousands)
473
426
356
420
386
323
305
278
332
287
298
303
330
9
%
(30
) %
Client Cash as a Percentage of Client
Assets (5)
10.9
%
11.3
%
11.5
%
11.4
%
11.9
%
12.0
%
12.8
%
12.0
%
12.1
%
12.9
%
12.2
%
11.5
%
12.3
%
80 bp
140 bp
Derivative Trades as a Percentage of Total
Trades
23.0
%
22.4
%
24.0
%
22.4
%
21.9
%
22.6
%
22.3
%
24.2
%
23.3
%
23.6
%
24.1
%
24.6
%
23.2
%
(140) bp
20 bp
Selected Average Balances (in millions
of dollars)
Average Interest-Earning Assets (6)
605,709
622,997
629,042
644,768
636,668
620,157
614,100
605,751
586,154
568,351
552,631
527,019
520,100
(1
) %
(14
) %
Average Margin Balances
88,328
86,737
84,354
81,526
83,762
78,841
74,577
72,177
72,855
73,224
69,188
66,011
64,759
(2
) %
(27
) %
Average Bank Deposit Account Balances
(7)
154,918
157,706
153,824
155,657
152,653
154,669
155,306
154,542
148,427
141,198
136,036
130,479
126,953
(3
) %
(18
) %
Mutual Fund and Exchange-Traded
Fund
Net Buys (Sells) (8,9) (in millions of
dollars)
Equities
11,519
7,384
9,371
14,177
(786
)
1,889
(1,586
)
5,589
10,465
(2,662
)
3,984
3,777
(1,837
)
Hybrid
(1,207
)
(367
)
(478
)
(497
)
(529
)
(1,718
)
(1,054
)
(2,041
)
(783
)
(938
)
(1,380
)
(2,052
)
(1,595
)
Bonds
5,600
1,804
(1,973
)
(7,851
)
(6,933
)
(6,121
)
(5,631
)
729
(141
)
(5,801
)
(7,218
)
(3,721
)
(3,260
)
Net Buy (Sell) Activity (in millions of
dollars)
Mutual Funds (8)
(2,859
)
(4,961
)
(6,318
)
(11,888
)
(16,657
)
(20,761
)
(16,258
)
(8,674
)
(7,117
)
(15,200
)
(18,473
)
(17,143
)
(21,851
)
Exchange-Traded Funds (9)
18,771
13,782
13,238
17,717
8,409
14,811
7,987
12,951
16,658
5,799
13,859
15,147
15,159
Money Market Funds
(144
)
(1,984
)
(1,086
)
(1,344
)
(3,430
)
7,106
11,544
13,711
19,702
17,018
21,542
16,929
27,778
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.
(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)
November 2022 includes the
company-initiated closure of approximately 350 thousand low-balance
accounts. September 2022 includes the company-initiated closure of
152 thousand low-balance accounts.
(5)
Schwab One®, certain cash equivalents,
bank deposits, third-party bank deposit accounts, and money market
fund balances as a percentage of total client assets.
(6)
Represents average total interest-earning
assets on the company’s balance sheet. November 2022 includes the
impact of transferring certain investment securities from the
available for sale category to the held-to-maturity category.
(7)
Represents average TD Ameritrade clients’
uninvested cash sweep account balances held in deposit accounts at
third-party financial institutions.
(8)
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.
(9)
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 fourth 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 December
31,
Twelve Months Ended December
31,
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)
$
2,899
$
1,968
$
2,685
$
1,580
$
11,374
$
7,183
$
10,807
$
5,855
Acquisition and integration-related costs
(1)
(101
)
101
(101
)
101
(392
)
392
(468
)
468
Amortization of acquired intangible
assets
(136
)
136
(154
)
154
(596
)
596
(615
)
615
Income tax effects (2)
N/A
(54
)
N/A
(60
)
N/A
(237
)
N/A
(268
)
Adjusted total expenses
(non-GAAP),
Adjusted net income (non-GAAP)
$
2,662
$
2,151
$
2,430
$
1,775
$
10,386
$
7,934
$
9,724
$
6,670
(1)
Acquisition and
integration-related costs for the three and twelve months ended
December 31, 2022 primarily consist of $54 million and $220 million
of compensation and benefits, $38 million and $140 million of
professional services, and $7 million and $21 million of occupancy
and equipment. Acquisition and integration-related costs for the
three and twelve months ended December 31, 2021 primarily consist
of $56 million and $283 million of compensation and benefits, $33
million and $132 million of professional services, and $9 million
and $39 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 December
31,
Twelve Months Ended December
31,
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)
$
2,598
47.3
%
$
2,023
43.0
%
$
9,388
45.2
%
$
7,713
41.6
%
Acquisition and integration-related
costs
101
1.8
%
101
2.1
%
392
1.9
%
468
2.5
%
Amortization of acquired intangible
assets
136
2.5
%
154
3.3
%
596
2.9
%
615
3.4
%
Adjusted income before taxes on income
(non-GAAP),
Adjusted pre-tax profit margin
(non-GAAP)
$
2,835
51.6
%
$
2,278
48.4
%
$
10,376
50.0
%
$
8,796
47.5
%
Three Months Ended December
31,
Twelve Months Ended December
31,
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)
$
1,821
$
.97
$
1,449
$
.76
$
6,635
$
3.50
$
5,360
$
2.83
Acquisition and integration-related
costs
101
.05
101
.05
392
.21
468
.25
Amortization of acquired intangible
assets
136
.07
154
.08
596
.31
615
.32
Income tax effects
(54
)
(.02
)
(60
)
(.03
)
(237
)
(.12
)
(268
)
(.15
)
Adjusted net income available to common
stockholders
(non-GAAP), Adjusted diluted EPS
(non-GAAP)
$
2,004
$
1.07
$
1,644
$
.86
$
7,386
$
3.90
$
6,175
$
3.25
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Return on average common stockholders’
equity (GAAP)
27
%
12
%
18
%
11
%
Average common stockholders’ equity
$
26,823
$
46,898
$
36,605
$
47,318
Less: Average goodwill
(11,951
)
(11,952
)
(11,952
)
(11,952
)
Less: Average acquired intangible assets —
net
(8,856
)
(9,456
)
(9,084
)
(9,685
)
Plus: Average deferred tax liabilities
related to goodwill
and acquired intangible assets — net
1,842
1,889
1,870
1,919
Average tangible common equity
$
7,858
$
27,379
$
17,439
$
27,600
Adjusted net income available to common
stockholders (1)
$
2,004
$
1,644
$
7,386
$
6,175
Return on tangible common equity
(non-GAAP)
102
%
24
%
42
%
22
%
(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/20230118005347/en/
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