SCHW Charles Schwab Corporation

Total Client Assets Increased 27% Year-Over-Year to a Record $9.92 Trillion Core Net New Assets Equaled $95.3 Billion, Year-To-Date Exceeds $250 Billion Quarterly Net Revenues Grew 5% Year-Over-Year to $4.8 Billion

The Charles Schwab Corporation reported net income for the third quarter totaling $1.4 billion, or $.71 diluted earnings per common share. Excluding $153 million of pre-tax transaction-related costs, adjusted (1) net income and diluted common earnings per share equaled $1.5 billion and $.77, respectively.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20241015717862/en/

Client Driven

Growth

 

$95.3B

3Q24 Core

Net New Assets

“Our momentum with clients continues to build following the successful completion of the Ameritrade conversion earlier this year. Third quarter net asset gathering of over $95 billion pushed year-to-date core net new assets to $252 billion – up 10% versus 2023 year-to-date.”

Co-Chairman and CEO Walt Bettinger

 

 

 

 

Modern Wealth

Solutions

 

$40B

YTD Net Inflows to

Schwab’s Managed Investing Solutions

“Record YTD flows into Schwab Wealth AdvisoryTM helped Managed Investing net flows reach $40 billion – an increase of 65% versus 2023 year-to-date. Converted Retail Ameritrade client interest in wealth solutions remains robust, accounting for approximately 35% of these flows.”

Co-Chairman and CEO Walt Bettinger

 

 

 

 

Diversified Operating Model

 

41.2%

3Q24 Adjusted

Pre-Tax Profit Margin (1)

“Third quarter revenue increased 5% versus 3Q23, driven by sustained investor engagement and market performance. The combination of growing revenue and expense discipline yielded a 38.0% pre-tax profit margin – 41.2% adjusted (1).”

CFO Mike Verdeschi

 

 

 

 

Balance Sheet

Management

 

$8.9B

3Q24 Reduction in Bank Supplemental Funding (2)

“Client transactional sweep cash grew by $9 billion sequentially, including net inflows of $17 billion in September. This build in client cash on the balance sheet helped us reduce Bank Supplemental Funding by $8.9 billion sequentially.”

CFO Mike Verdeschi

3Q24 Client and Business Highlights

• Healthy net asset gathering and equity market resilience resulted in record total client assets of $9.92 trillion
• Active brokerage accounts reached 36.0 million, up 4% versus September 2023
• Core net new assets equaled $95.3 billion, bringing the year-to-date total to $252.1 billion – a 10% increase versus 2023 year-to-date
• Assets receiving ongoing advisory services are up 6% sequentially and up 26% versus September 2023, including record net flows into Schwab Wealth AdvisoryTM
• Margin balances grew sequentially by 2% to $73.0 billion, up 17% from year-end 2023
• Trading activity increased relative to the prior quarter as client engagement remained strong
• Schwab ranked #1 by J.D. Power in Participant Satisfaction with Retirement Plan Digital Experiences (3)
• Charles Schwab Bank rated #1 in Investor’s Business Daily Most Trusted Financial Companies survey (4)

 

Three Months Ended

September 30,

 

%

 

Nine Months Ended

September 30,

 

%

Financial Highlights

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

$

4,847

 

 

$

4,606

 

 

5

%

 

$

14,277

 

 

$

14,378

 

 

(1

)%

Net income (in millions)

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

1,408

 

 

$

1,125

 

 

25

%

 

$

4,102

 

 

$

4,022

 

 

2

%

Adjusted

$

1,525

 

 

$

1,518

 

 

—

 

 

$

4,459

 

 

$

4,792

 

 

(7

)%

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

.71

 

 

$

.56

 

 

27

%

 

$

2.05

 

 

$

2.03

 

 

1

%

Adjusted

$

.77

 

 

$

.77

 

 

—

 

 

$

2.25

 

 

$

2.45

 

 

(8

)%

Pre-tax profit margin

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

38.0

%

 

 

30.0

%

 

 

 

 

37.7

%

 

 

36.1

%

 

 

Adjusted

 

41.2

%

 

 

41.3

%

 

 

 

 

41.0

%

 

 

43.1

%

 

 

Return on average common stockholders’ equity (annualized)

 

14

%

 

 

14

%

 

 

 

 

14

%

 

 

18

%

 

 

Return on tangible common equity (annualized) (1)

 

31

%

 

 

58

%

 

 

 

 

33

%

 

 

66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Items labeled “adjusted” are non-GAAP financial measures; further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-12 of this release. All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.

3Q24 Financial Commentary

• Net revenues grew on both a year-over-year and sequential basis, up 5% and 3%, respectively
• Sequential net interest margin expanded modestly to 2.08%
• Client transactional sweep cash balances finished September at $384.0 billion, a sequential increase of $9.2 billion
• Bank Supplemental Funding (2) declined sequentially by $8.9 billion to $64.8 billion at September month-end
• Asset management and administration fees achieved a new quarterly record of $1.5 billion
• Trading revenue increased 4% versus 3Q23 as a result of higher volumes and changes in trading mix
• GAAP expenses for the quarter declined 7% versus 3Q23
• Third quarter acquisition and integration-related costs, amortization of acquired intangibles, and restructuring costs equaled $153 million, or a decline of $367 million versus 3Q23; exclusive of these items, adjusted total expenses (1) increased by 6%
• Capital ratios across the firm continue to build – including preliminary consolidated Tier 1 Leverage and adjusted Tier 1 Leverage (1) reaching 9.7% and 6.7%, respectively

(1)

Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-12 of this release.

(2)

Bank Supplemental Funding includes repurchase agreements at the banks, Schwab Bank Certificates of Deposit (CDs), and Federal Home Loan Bank balances.

(3)

Charles Schwab received the highest score in the J.D. Power 2021-2022, and 2024 U.S. Retirement Plan Digital Satisfaction Studies, which measures group retirement plan participant satisfaction with plan provider digital experiences. Visit https://www.jdpower.com/business/awards for more details. Use of study results in promotional materials is subject to a license fee.

(4)

The Investor’s Business Daily Most Trusted Bank accolade/recognition was published by Investor’s Business Daily on September 20, 2024, and is licensed for a 15-month timeframe. The criteria, evaluation, and ranking were determined by Investor’s Business Daily in conjunction with its research partner, TechnoMetrica Market Intelligence, and were based on consumer surveys conducted May-July 2024. (https://www.investors.com/news/most-trusted-financial-companies-top-30-list-2024/) Schwab paid a licensing fee to York Graphic Services, LLC. for uses of the award and logos through January 4, 2026.

Fall Business Update

The company will host its Fall Business Update for institutional investors this morning from 7:30 a.m. - 8:30 a.m. CT, 8:30 a.m. - 9:30 a.m. ET.

Registration for this Update webcast is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements

This press release contains forward-looking statements relating to asset gathering and the company’s momentum with clients; client interest in wealth solutions; the company’s diversified operating model; and capital ratios. 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 are described in the company’s most recent reports on Form 10-K and Form 10-Q, which have been filed with the Securities and Exchange Commission and are available on the company’s website (https://www.aboutschwab.com/financial-reports) and on the Securities and Exchange Commission’s website (https://www.sec.gov). The company makes no commitment to update any forward-looking statements.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 36.0 million active brokerage accounts, 5.4 million workplace plan participant accounts, 2.0 million banking accounts, and $9.92 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 subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://www.sipc.org), and its 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.

THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Revenues

 

 

 

 

 

 

 

Interest revenue

$

3,928

 

 

$

4,028

 

 

$

11,686

 

 

$

12,148

 

Interest expense

 

(1,706

)

 

 

(1,791

)

 

 

(5,073

)

 

 

(4,851

)

Net interest revenue

 

2,222

 

 

 

2,237

 

 

 

6,613

 

 

 

7,297

 

Asset management and administration fees

 

1,476

 

 

 

1,224

 

 

 

4,207

 

 

 

3,515

 

Trading revenue

 

797

 

 

 

768

 

 

 

2,391

 

 

 

2,463

 

Bank deposit account fees

 

152

 

 

 

205

 

 

 

488

 

 

 

531

 

Other

 

200

 

 

 

172

 

 

 

578

 

 

 

572

 

Total net revenues

 

4,847

 

 

 

4,606

 

 

 

14,277

 

 

 

14,378

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

 

1,522

 

 

 

1,770

 

 

 

4,510

 

 

 

4,906

 

Professional services

 

256

 

 

 

275

 

 

 

756

 

 

 

805

 

Occupancy and equipment

 

271

 

 

 

305

 

 

 

784

 

 

 

923

 

Advertising and market development

 

101

 

 

 

102

 

 

 

296

 

 

 

293

 

Communications

 

147

 

 

 

151

 

 

 

460

 

 

 

485

 

Depreciation and amortization

 

231

 

 

 

198

 

 

 

692

 

 

 

566

 

Amortization of acquired intangible assets

 

130

 

 

 

135

 

 

 

389

 

 

 

404

 

Regulatory fees and assessments

 

88

 

 

 

114

 

 

 

309

 

 

 

277

 

Other

 

259

 

 

 

173

 

 

 

694

 

 

 

535

 

Total expenses excluding interest

 

3,005

 

 

 

3,223

 

 

 

8,890

 

 

 

9,194

 

Income before taxes on income

 

1,842

 

 

 

1,383

 

 

 

5,387

 

 

 

5,184

 

Taxes on income

 

434

 

 

 

258

 

 

 

1,285

 

 

 

1,162

 

Net Income

 

1,408

 

 

 

1,125

 

 

 

4,102

 

 

 

4,022

 

Preferred stock dividends and other

 

109

 

 

 

108

 

 

 

341

 

 

 

299

 

Net Income Available to Common Stockholders

$

1,299

 

 

$

1,017

 

 

$

3,761

 

 

$

3,723

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

1,829

 

 

 

1,821

 

 

 

1,827

 

 

 

1,825

 

Diluted

 

1,834

 

 

 

1,827

 

 

 

1,833

 

 

 

1,832

 

Earnings Per Common Shares Outstanding (1):

 

 

 

 

 

 

 

Basic

$

.71

 

 

$

.56

 

 

$

2.06

 

 

$

2.04

 

Diluted

$

.71

 

 

$

.56

 

 

$

2.05

 

 

$

2.03

 

(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.

 

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

 

Q3-24 % change

 

2024

 

 

2023

 

 

vs.

vs.

 

Third

 

Second

 

First

 

Fourth

 

Third

(In millions, except per share amounts and as noted)

Q3-23

Q2-24

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

(1

)%

 

3

%

 

 

$

2,222

 

 

$

2,158

 

 

$

2,233

 

 

$

2,130

 

 

$

2,237

 

Asset management and administration fees

21

%

 

7

%

 

 

 

1,476

 

 

 

1,383

 

 

 

1,348

 

 

 

1,241

 

 

 

1,224

 

Trading revenue

4

%

 

3

%

 

 

 

797

 

 

 

777

 

 

 

817

 

 

 

767

 

 

 

768

 

Bank deposit account fees

(26

)%

 

(1

)%

 

 

 

152

 

 

 

153

 

 

 

183

 

 

 

174

 

 

 

205

 

Other

16

%

 

(9

)%

 

 

 

200

 

 

 

219

 

 

 

159

 

 

 

147

 

 

 

172

 

Total net revenues

5

%

 

3

%

 

 

 

4,847

 

 

 

4,690

 

 

 

4,740

 

 

 

4,459

 

 

 

4,606

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits (1)

(14

)%

 

5

%

 

 

 

1,522

 

 

 

1,450

 

 

 

1,538

 

 

 

1,409

 

 

 

1,770

 

Professional services

(7

)%

 

(1

)%

 

 

 

256

 

 

 

259

 

 

 

241

 

 

 

253

 

 

 

275

 

Occupancy and equipment

(11

)%

 

9

%

 

 

 

271

 

 

 

248

 

 

 

265

 

 

 

331

 

 

 

305

 

Advertising and market development

(1

)%

 

(6

)%

 

 

 

101

 

 

 

107

 

 

 

88

 

 

 

104

 

 

 

102

 

Communications

(3

)%

 

(15

)%

 

 

 

147

 

 

 

172

 

 

 

141

 

 

 

144

 

 

 

151

 

Depreciation and amortization

17

%

 

(1

)%

 

 

 

231

 

 

 

233

 

 

 

228

 

 

 

238

 

 

 

198

 

Amortization of acquired intangible assets

(4

)%

 

1

%

 

 

 

130

 

 

 

129

 

 

 

130

 

 

 

130

 

 

 

135

 

Regulatory fees and assessments

(23

)%

 

(8

)%

 

 

 

88

 

 

 

96

 

 

 

125

 

 

 

270

 

 

 

114

 

Other (2)

50

%

 

4

%

 

 

 

259

 

 

 

249

 

 

 

186

 

 

 

386

 

 

 

173

 

Total expenses excluding interest

(7

)%

 

2

%

 

 

 

3,005

 

 

 

2,943

 

 

 

2,942

 

 

 

3,265

 

 

 

3,223

 

Income before taxes on income

33

%

 

5

%

 

 

 

1,842

 

 

 

1,747

 

 

 

1,798

 

 

 

1,194

 

 

 

1,383

 

Taxes on income

68

%

 

5

%

 

 

 

434

 

 

 

415

 

 

 

436

 

 

 

149

 

 

 

258

 

Net Income

25

%

 

6

%

 

 

 

1,408

 

 

 

1,332

 

 

 

1,362

 

 

 

1,045

 

 

 

1,125

 

Preferred stock dividends and other

1

%

 

(10

)%

 

 

 

109

 

 

 

121

 

 

 

111

 

 

 

119

 

 

 

108

 

Net Income Available to Common Stockholders

28

%

 

7

%

 

 

$

1,299

 

 

$

1,211

 

 

$

1,251

 

 

$

926

 

 

$

1,017

 

Earnings per common share (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

27

%

 

8

%

 

 

$

.71

 

 

$

.66

 

 

$

.69

 

 

$

.51

 

 

$

.56

 

Diluted

27

%

 

8

%

 

 

$

.71

 

 

$

.66

 

 

$

.68

 

 

$

.51

 

 

$

.56

 

Dividends declared per common share

—

 

 

—

 

 

 

$

.25

 

 

$

.25

 

 

$

.25

 

 

$

.25

 

 

$

.25

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

—

 

 

—

 

 

 

 

1,829

 

 

 

1,828

 

 

 

1,825

 

 

 

1,823

 

 

 

1,821

 

Diluted

—

 

 

—

 

 

 

 

1,834

 

 

 

1,834

 

 

 

1,831

 

 

 

1,828

 

 

 

1,827

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

 

38.0

%

 

 

37.2

%

 

 

37.9

%

 

 

26.8

%

 

 

30.0

%

Return on average common stockholders’ equity (annualized) (4)

 

 

 

 

 

 

14

%

 

 

14

%

 

 

15

%

 

 

12

%

 

 

14

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

5

%

 

37

%

 

 

$

34.9

 

 

$

25.4

 

 

$

31.8

 

 

$

43.3

 

 

$

33.3

 

Cash and investments segregated

81

%

 

55

%

 

 

 

33.7

 

 

 

21.7

 

 

 

25.9

 

 

 

31.8

 

 

 

18.6

 

Receivables from brokerage clients — net

7

%

 

2

%

 

 

 

74.0

 

 

 

72.8

 

 

 

71.2

 

 

 

68.7

 

 

 

69.1

 

Available for sale securities

(18

)%

 

(4

)%

 

 

 

90.0

 

 

 

93.6

 

 

 

101.1

 

 

 

107.6

 

 

 

110.3

 

Held to maturity securities

(8

)%

 

(2

)%

 

 

 

149.9

 

 

 

153.2

 

 

 

156.4

 

 

 

159.5

 

 

 

162.5

 

Bank loans — net

7

%

 

3

%

 

 

 

43.3

 

 

 

42.2

 

 

 

40.8

 

 

 

40.4

 

 

 

40.3

 

Total assets

(2

)%

 

4

%

 

 

 

466.1

 

 

 

449.7

 

 

 

468.8

 

 

 

493.2

 

 

 

475.2

 

Bank deposits

(13

)%

 

(2

)%

 

 

 

246.5

 

 

 

252.4

 

 

 

269.5

 

 

 

290.0

 

 

 

284.4

 

Payables to brokerage clients

23

%

 

12

%

 

 

 

89.2

 

 

 

80.0

 

 

 

84.0

 

 

 

84.8

 

 

 

72.8

 

Other short-term borrowings

39

%

 

6

%

 

 

 

10.6

 

 

 

10.0

 

 

 

8.4

 

 

 

6.6

 

 

 

7.6

 

Federal Home Loan Bank borrowings

(29

)%

 

(7

)%

 

 

 

22.6

 

 

 

24.4

 

 

 

24.0

 

 

 

26.4

 

 

 

31.8

 

Long-term debt

(10

)%

 

—

 

 

 

 

22.4

 

 

 

22.4

 

 

 

22.9

 

 

 

26.1

 

 

 

24.8

 

Stockholders’ equity

25

%

 

7

%

 

 

 

47.2

 

 

 

44.0

 

 

 

42.4

 

 

 

41.0

 

 

 

37.8

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full-time equivalent employees (at quarter end, in thousands)

(11

)%

 

(1

)%

 

 

 

32.1

 

 

 

32.3

 

 

 

32.6

 

 

 

33.0

 

 

 

35.9

 

Capital expenditures — purchases of equipment, office facilities, and property,

net (in millions)

(46

)%

 

47

%

 

 

$

135

 

 

$

92

 

 

$

122

 

 

$

199

 

 

$

250

 

Expenses excluding interest as a percentage of average client assets (annualized)

 

 

 

 

 

 

0.12

%

 

 

0.13

%

 

 

0.14

%

 

 

0.16

%

 

 

0.16

%

Clients’ Daily Average Trades (DATs) (in thousands)

9

%

 

4

%

 

 

 

5,697

 

 

 

5,486

 

 

 

5,958

 

 

 

5,192

 

 

 

5,218

 

Number of Trading Days

2

%

 

1

%

 

 

 

63.5

 

 

 

63.0

 

 

 

61.0

 

 

 

62.5

 

 

 

62.5

 

Revenue Per Trade (5)

(6

)%

 

(2

)%

 

 

$

2.20

 

 

$

2.25

 

 

$

2.25

 

 

$

2.36

 

 

$

2.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Fourth quarter of 2023 includes $16 million in restructuring costs. Third quarter of 2023 includes $276 million in restructuring costs.

(2)

Fourth quarter of 2023 includes $181 million in restructuring costs.

(3)

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.

(4)

Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.

(5)

Revenue per trade is calculated as trading revenue divided by the product of DATs multiplied by the number of trading days.

THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

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

$

27,623

 

$

369

 

5.24

%

 

 

$

34,391

 

$

459

 

5.22

%

 

 

$

30,128

 

$

1,205

 

5.26

%

 

 

$

38,700

 

$

1,419

 

4.83

%

Cash and investments segregated

 

26,220

 

 

345

 

5.15

%

 

 

 

21,987

 

 

285

 

5.08

%

 

 

 

25,744

 

 

1,014

 

5.18

%

 

 

 

29,752

 

 

1,041

 

4.61

%

Receivables from brokerage clients

 

73,102

 

 

1,431

 

7.66

%

 

 

 

63,760

 

 

1,282

 

7.87

%

 

 

 

68,557

 

 

4,042

 

7.75

%

 

 

 

61,682

 

 

3,533

 

7.55

%

Available for sale securities (1)

 

98,645

 

 

531

 

2.14

%

 

 

 

129,545

 

 

724

 

2.22

%

 

 

 

104,830

 

 

1,680

 

2.13

%

 

 

 

143,360

 

 

2,340

 

2.17

%

Held to maturity securities

 

151,004

 

 

650

 

1.71

%

 

 

 

163,904

 

 

706

 

1.72

%

 

 

 

154,231

 

 

1,998

 

1.72

%

 

 

 

167,405

 

 

2,172

 

1.73

%

Bank loans

 

42,653

 

 

484

 

4.52

%

 

 

 

40,177

 

 

426

 

4.23

%

 

 

 

41,585

 

 

1,384

 

4.44

%

 

 

 

40,183

 

 

1,227

 

4.08

%

Total interest-earning assets

 

419,247

 

 

3,810

 

3.58

%

 

 

 

453,764

 

 

3,882

 

3.37

%

 

 

 

425,075

 

 

11,323

 

3.52

%

 

 

 

481,082

 

 

11,732

 

3.23

%

Securities lending revenue

 

 

 

87

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

258

 

 

 

 

 

 

 

341

 

 

Other interest revenue

 

 

 

31

 

 

 

 

 

 

 

41

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

75

 

 

Total interest-earning assets

$

419,247

 

$

3,928

 

3.69

%

 

 

$

453,764

 

$

4,028

 

3.50

%

 

 

$

425,075

 

$

11,686

 

3.63

%

 

 

$

481,082

 

$

12,148

 

3.35

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

248,405

 

$

841

 

1.35

%

 

 

$

290,853

 

$

911

 

1.24

%

 

 

$

260,254

 

$

2,602

 

1.34

%

 

 

$

315,309

 

$

2,392

 

1.01

%

Payables to brokerage clients

 

72,700

 

 

79

 

0.43

%

 

 

 

63,731

 

 

66

 

0.41

%

 

 

 

69,586

 

 

229

 

0.44

%

 

 

 

68,548

 

 

205

 

0.40

%

Other short-term borrowings

 

10,821

 

 

150

 

5.52

%

 

 

 

7,315

 

 

97

 

5.26

%

 

 

 

9,164

 

 

382

 

5.57

%

 

 

 

7,286

 

 

280

 

5.13

%

Federal Home Loan Bank borrowings

 

22,621

 

 

310

 

5.38

%

 

 

 

36,287

 

 

477

 

5.18

%

 

 

 

24,347

 

 

988

 

5.36

%

 

 

 

35,896

 

 

1,387

 

5.11

%

Long-term debt

 

22,446

 

 

208

 

3.71

%

 

 

 

23,492

 

 

193

 

3.30

%

 

 

 

23,299

 

 

640

 

3.66

%

 

 

 

21,685

 

 

489

 

3.01

%

Total interest-bearing liabilities

 

376,993

 

 

1,588

 

1.67

%

 

 

 

421,678

 

 

1,744

 

1.64

%

 

 

 

386,650

 

 

4,841

 

1.67

%

 

 

 

448,724

 

 

4,753

 

1.41

%

Non-interest-bearing funding sources

 

42,254

 

 

 

 

 

 

 

32,086

 

 

 

 

 

 

 

38,425

 

 

 

 

 

 

 

32,358

 

 

 

 

Securities lending expense

 

 

 

118

 

 

 

 

 

 

 

46

 

 

 

 

 

 

 

230

 

 

 

 

 

 

 

96

 

 

Other interest expense

 

 

 

—

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

2

 

 

Total funding sources

$

419,247

 

$

1,706

 

1.61

%

 

 

$

453,764

 

$

1,791

 

1.56

%

 

 

$

425,075

 

$

5,073

 

1.59

%

 

 

$

481,082

 

$

4,851

 

1.35

%

Net interest revenue

 

 

$

2,222

 

2.08

%

 

 

 

 

$

2,237

 

1.94

%

 

 

 

 

$

6,613

 

2.04

%

 

 

 

 

$

7,297

 

2.00

%

(1)

Amounts have been calculated based on amortized cost.

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

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

$

551,945

 

$

379

 

0.27

%

 

 

$

414,074

 

$

270

 

0.26

%

 

 

$

525,166

 

$

1,072

 

0.27

%

 

 

$

368,788

 

$

735

 

0.27

%

Schwab equity and bond funds, exchange-traded funds (ETFs), and collective trust funds (CTFs)

 

603,314

 

 

118

 

0.08

%

 

 

 

485,326

 

 

99

 

0.08

%

 

 

 

569,608

 

 

337

 

0.08

%

 

 

 

466,995

 

 

284

 

0.08

%

Mutual Fund OneSource® and other no-transaction-

fee funds

 

354,664

 

 

224

 

0.25

%

 

 

 

255,039

 

 

170

 

0.26

%

 

 

 

335,813

 

 

647

 

0.26

%

 

 

 

235,561

 

 

469

 

0.27

%

Other third-party mutual funds and ETFs

 

611,555

 

 

106

 

0.07

%

 

 

 

632,902

 

 

127

 

0.08

%

 

 

 

606,026

 

 

314

 

0.07

%

 

 

 

663,577

 

 

393

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

2,121,478

 

$

827

 

0.16

%

 

 

$

1,787,341

 

$

666

 

0.15

%

 

 

$

2,036,613

 

$

2,370

 

0.16

%

 

 

$

1,734,921

 

$

1,881

 

0.14

%

Advice solutions (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

554,726

 

$

559

 

0.40

%

 

 

$

468,305

 

$

476

 

0.40

%

 

 

$

528,850

 

$

1,572

 

0.40

%

 

 

$

455,730

 

$

1,393

 

0.41

%

Non-fee-based

 

114,307

 

 

—

 

—

 

 

 

 

97,957

 

 

—

 

—

 

 

 

 

110,191

 

 

—

 

—

 

 

 

 

95,951

 

 

—

 

—

 

Total advice solutions

$

669,033

 

$

559

 

0.33

%

 

 

$

566,262

 

$

476

 

0.33

%

 

 

$

639,041

 

$

1,572

 

0.33

%

 

 

$

551,681

 

$

1,393

 

0.34

%

Other balance-based fees (2)

 

795,737

 

 

72

 

0.04

%

 

 

 

610,450

 

 

64

 

0.04

%

 

 

 

759,645

 

 

210

 

0.04

%

 

 

 

588,922

 

 

189

 

0.04

%

Other (3)

 

 

 

18

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

55

 

 

 

 

 

 

 

52

 

 

Total asset management and administration fees

 

 

$

1,476

 

 

 

 

 

 

$

1,224

 

 

 

 

 

 

$

4,207

 

 

 

 

 

 

$

3,515

 

 

(1)

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth AdvisoryTM, Schwab Managed PortfoliosTM, 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®, 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)

 

 

Q3-24 % Change

 

2024

 

 

2023

 

 

vs.

vs.

 

Third

 

Second

 

First

 

Fourth

 

Third

(In billions, at quarter end, except as noted)

Q3-23

Q2-24

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents, and bank deposits

(5

)%

 

1

%

 

 

$

334.1

 

 

$

330.7

 

 

$

348.2

 

 

$

368.3

 

 

$

353.1

 

Bank deposit account balances

(16

)%

 

(1

)%

 

 

 

84.0

 

 

 

84.5

 

 

 

90.2

 

 

 

97.4

 

 

 

99.5

 

Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

29

%

 

5

%

 

 

 

562.1

 

 

 

533.6

 

 

 

515.7

 

 

 

476.4

 

 

 

436.3

 

Equity and bond funds and CTFs (2)

36

%

 

7

%

 

 

 

228.9

 

 

 

214.4

 

 

 

206.0

 

 

 

186.7

 

 

 

167.9

 

Total proprietary mutual funds and CTFs

31

%

 

6

%

 

 

 

791.0

 

 

 

748.0

 

 

 

721.7

 

 

 

663.1

 

 

 

604.2

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other no-transaction-fee funds

24

%

 

4

%

 

 

 

358.0

 

 

 

344.8

 

 

 

329.2

 

 

 

306.2

 

 

 

288.0

 

Mutual fund clearing services

29

%

 

6

%

 

 

 

280.8

 

 

 

264.7

 

 

 

248.1

 

 

 

233.4

 

 

 

216.9

 

Other third-party mutual funds

17

%

 

5

%

 

 

 

1,236.5

 

 

 

1,177.5

 

 

 

1,182.9

 

 

 

1,126.5

 

 

 

1,055.3

 

Total Mutual Fund Marketplace

20

%

 

5

%

 

 

 

1,875.3

 

 

 

1,787.0

 

 

 

1,760.2

 

 

 

1,666.1

 

 

 

1,560.2

 

Total mutual fund assets

23

%

 

5

%

 

 

 

2,666.3

 

 

 

2,535.0

 

 

 

2,481.9

 

 

 

2,329.2

 

 

 

2,164.4

 

Exchange-traded funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

35

%

 

10

%

 

 

 

385.9

 

 

 

349.6

 

 

 

342.9

 

 

 

319.4

 

 

 

286.2

 

Other third-party ETFs

40

%

 

9

%

 

 

 

1,888.2

 

 

 

1,738.6

 

 

 

1,676.6

 

 

 

1,521.7

 

 

 

1,352.6

 

Total ETF assets

39

%

 

9

%

 

 

 

2,274.1

 

 

 

2,088.2

 

 

 

2,019.5

 

 

 

1,841.1

 

 

 

1,638.8

 

Equity and other securities

33

%

 

5

%

 

 

 

3,839.6

 

 

 

3,648.8

 

 

 

3,467.7

 

 

 

3,163.5

 

 

 

2,886.4

 

Fixed income securities

6

%

 

—

 

 

 

 

795.4

 

 

 

792.0

 

 

 

779.0

 

 

 

779.7

 

 

 

747.4

 

Margin loans outstanding

12

%

 

2

%

 

 

 

(73.0

)

 

 

(71.7

)

 

 

(68.1

)

 

 

(62.6

)

 

 

(65.1

)

Total client assets

27

%

 

5

%

 

 

$

9,920.5

 

 

$

9,407.5

 

 

$

9,118.4

 

 

$

8,516.6

 

 

$

7,824.5

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

28

%

 

5

%

 

 

$

5,305.9

 

 

$

5,055.7

 

 

$

4,852.2

 

 

$

4,519.1

 

 

$

4,157.7

 

Advisor Services

26

%

 

6

%

 

 

 

4,614.6

 

 

 

4,351.8

 

 

 

4,266.2

 

 

 

3,997.5

 

 

 

3,666.8

 

Total client assets

27

%

 

5

%

 

 

$

9,920.5

 

 

$

9,407.5

 

 

$

9,118.4

 

 

$

8,516.6

 

 

$

7,824.5

 

Net growth in assets in client accounts (for the quarter ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (4)

28

%

 

(8

)%

 

 

$

36.7

 

 

$

39.9

 

 

$

34.9

 

 

$

25.0

 

 

$

28.6

 

Advisor Services (5)

176

%

 

58

%

 

 

 

54.1

 

 

 

34.3

 

 

 

53.3

 

 

 

41.3

 

 

 

19.6

 

Total net new assets

88

%

 

22

%

 

 

$

90.8

 

 

$

74.2

 

 

$

88.2

 

 

$

66.3

 

 

$

48.2

 

Net market gains (losses)

 

 

 

 

 

 

422.2

 

 

 

214.9

 

 

 

513.6

 

 

 

625.8

 

 

 

(239.5

)

Net growth (decline)

 

 

 

 

 

$

513.0

 

 

$

289.1

 

 

$

601.8

 

 

$

692.1

 

 

$

(191.3

)

New brokerage accounts (in thousands, for the quarter ended)

9

%

 

(1

)%

 

 

 

972

 

 

 

985

 

 

 

1,094

 

 

 

910

 

 

 

894

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts

4

%

 

1

%

 

 

 

35,982

 

 

 

35,612

 

 

 

35,301

 

 

 

34,838

 

 

 

34,540

 

Banking accounts

9

%

 

1

%

 

 

 

1,954

 

 

 

1,931

 

 

 

1,885

 

 

 

1,838

 

 

 

1,799

 

Workplace Plan Participant Accounts (6)

5

%

 

—

 

 

 

 

5,388

 

 

 

5,363

 

 

 

5,277

 

 

 

5,221

 

 

 

5,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 September 30, 2024, off-platform equity and bond funds, CTFs, and ETFs were $34.4 billion, $4.1 billion, and $129.3 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

Third quarter of 2024 includes net outflows of $4.4 billion from off-platform Schwab Bank Retail CDs and an outflow of $0.1 billion from an international relationship. Second quarter of 2024 includes net inflows of $2.7 billion from off-platform Schwab Bank Retail CDs and an inflow of $10.3 billion from a mutual fund clearing services client. First quarter of 2024 includes net outflows of $7.4 billion from off-platform Schwab Bank Retail CDs. Fourth quarter of 2023 includes net inflows of $2.4 billion from off-platform Schwab Bank Retail CDs and outflows of $5.8 billion from an international relationship. Third quarter of 2023 includes net inflows of $3.3 billion from off-platform Schwab Bank Retail CDs.

(5)

Fourth quarter of 2023 includes outflows of $6.4 billion from an international relationship. Third quarter of 2023 includes an outflow of $0.8 billion from an international relationship.

(6)

Beginning in the fourth quarter 2023, Retirement Plan Participants was expanded to include accounts in Stock Plan Services, Designated Brokerage Services, and Retirement Business Services. Participants may be enrolled in services in more than one Workplace business. Third quarter 2023 has been recast to reflect this change.

The Charles Schwab Corporation Monthly Activity Report For September 2024

 

 

2023

 

 

 

2024

 

 

 

 

 

 

 

 

Change

 

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Mo.

Yr.

Market Indices (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average®

33,508

 

33,053

 

35,951

 

37,690

 

38,150

 

38,996

 

39,807

 

37,816

 

38,686

 

39,119

 

40,843

 

41,563

 

42,330

 

2

%

26

%

Nasdaq Composite®

13,219

 

12,851

 

14,226

 

15,011

 

15,164

 

16,092

 

16,379

 

15,658

 

16,735

 

17,733

 

17,599

 

17,714

 

18,189

 

3

%

38

%

Standard & Poor’s® 500

4,288

 

4,194

 

4,568

 

4,770

 

4,846

 

5,096

 

5,254

 

5,036

 

5,278

 

5,460

 

5,522

 

5,648

 

5,762

 

2

%

34

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

8,094.7

 

7,824.5

 

7,653.4

 

8,180.6

 

8,516.6

 

8,558.1

 

8,879.5

 

9,118.4

 

8,847.5

 

9,206.3

 

9,407.5

 

9,572.1

 

9,737.7

 

 

 

Net New Assets (1)

27.2

 

5.0

 

19.2

 

42.1

 

14.8

 

31.7

 

41.7

 

10.0

 

31.0

 

33.2

 

29.0

 

31.5

 

30.3

 

(4

)%

11

%

Net Market Gains (Losses)

(297.4

)

(176.1

)

508.0

 

293.9

 

26.7

 

289.7

 

197.2

 

(280.9

)

327.8

 

168.0

 

135.6

 

134.1

 

152.5

 

 

 

Total Client Assets (at month end)

7,824.5

 

7,653.4

 

8,180.6

 

8,516.6

 

8,558.1

 

8,879.5

 

9,118.4

 

8,847.5

 

9,206.3

 

9,407.5

 

9,572.1

 

9,737.7

 

9,920.5

 

2

%

27

%

Core Net New Assets (1,2)

27.1

 

11.3

 

21.7

 

43.1

 

17.2

 

33.4

 

45.0

 

1.0

 

31.1

 

29.1

 

29.0

 

32.8

 

33.5

 

2

%

24

%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

533.0

 

522.2

 

557.0

 

581.4

 

584.1

 

601.8

 

618.5

 

602.2

 

624.0

 

632.9

 

649.1

 

663.7

 

675.1

 

2

%

27

%

Advisor Services (3)

3,448.0

 

3,380.3

 

3,604.4

 

3,757.4

 

3,780.4

 

3,902.5

 

4,009.5

 

3,893.9

 

4,027.3

 

4,090.0

 

4,185.4

 

4,268.1

 

4,343.8

 

2

%

26

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

34,540

 

34,571

 

34,672

 

34,838

 

35,017

 

35,127

 

35,301

 

35,426

 

35,524

 

35,612

 

35,743

 

35,859

 

35,982

 

—

 

4

%

Banking Accounts

1,799

 

1,812

 

1,825

 

1,838

 

1,856

 

1,871

 

1,885

 

1,901

 

1,916

 

1,931

 

1,937

 

1,940

 

1,954

 

1

%

9

%

Workplace Plan Participant Accounts (4)

5,141

 

5,212

 

5,212

 

5,221

 

5,226

 

5,268

 

5,277

 

5,282

 

5,345

 

5,363

 

5,382

 

5,373

 

5,388

 

—

 

5

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

280

 

284

 

286

 

340

 

366

 

345

 

383

 

361

 

314

 

310

 

327

 

324

 

321

 

(1

)%

15

%

Client Cash as a Percentage of Client Assets (5)

10.8

%

11.2

%

10.7

%

10.5

%

10.5

%

10.2

%

10.0

%

10.2

%

9.9

%

9.7

%

9.6

%

9.5

%

9.5

%

—

 

(130) bp

Derivative Trades as a Percentage of Total Trades

24.2

%

23.2

%

23.1

%

21.8

%

21.8

%

22.2

%

21.9

%

22.1

%

21.9

%

21.3

%

21.2

%

20.8

%

21.5

%

70 bp

(270) bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (6)

444,864

 

438,522

 

439,118

 

446,305

 

443,694

 

434,822

 

431,456

 

423,532

 

415,950

 

417,150

 

417,379

 

420,191

 

420,203

 

—

 

(6

)%

Average Margin Balances

64,014

 

63,946

 

61,502

 

62,309

 

61,368

 

63,600

 

66,425

 

68,827

 

67,614

 

69,730

 

73,206

 

73,326

 

72,755

 

(1

)%

14

%

Average Bank Deposit Account Balances (7)

100,404

 

97,893

 

94,991

 

95,518

 

95,553

 

92,075

 

90,774

 

88,819

 

86,844

 

85,195

 

83,979

 

82,806

 

82,336

 

(1

)%

(18

)%

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (8,9) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

675

 

(3,039

)

6,099

 

7,903

 

8,182

 

7,624

 

10,379

 

3,472

 

5,734

 

3,379

 

10,908

 

5,609

 

5,217

 

 

 

Hybrid

(828

)

(1,457

)

(1,466

)

(1,596

)

(501

)

(1,330

)

(439

)

(703

)

(558

)

(843

)

(1,155

)

(1,377

)

(432

)

 

 

Bonds

2,723

 

1,094

 

255

 

6,104

 

7,510

 

9,883

 

7,561

 

5,949

 

5,854

 

6,346

 

8,651

 

10,919

 

11,015

 

 

 

Net Buy (Sell) Activity (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (8)

(5,853

)

(12,245

)

(9,267

)

(7,406

)

(966

)

(1,348

)

(1,607

)

(4,818

)

(5,544

)

(4,254

)

(4,679

)

(4,003

)

(1,261

)

 

 

Exchange-Traded Funds (9)

8,423

 

8,843

 

14,155

 

19,817

 

16,157

 

17,525

 

19,108

 

13,536

 

16,574

 

13,136

 

23,083

 

19,154

 

17,061

 

 

 

Money Market Funds

13,388

 

16,976

 

11,670

 

7,745

 

11,717

 

10,129

 

9,085

 

(2,357

)

9,790

 

3,858

 

9,110

 

8,048

 

9,672

 

 

 

Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.

(1)

Unless otherwise noted, differences between net new assets and core net new assets are net flows from off-platform Schwab Bank Retail CDs. Additionally, 2024 includes an outflow from a large international relationship of $0.1 billion in August and an inflow of $10.3 billion from a mutual fund clearing services client in April. 2023 also includes outflows from a large international relationship of $0.8 billion in September, $6.2 billion in October, $5.4 billion in November, and $0.6 billion in December.

(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, and activity from off-platform Schwab Bank Retail CDs. These flows may span multiple reporting periods.

(3)

Excludes Retirement Business Services.

(4)

Beginning October 2023, Retirement Plan Participants was expanded to include accounts in Stock Plan Services, Designated Brokerage Services, and Retirement Business Services. Participants may be enrolled in services in more than one Workplace business. September 2023 has been recast to reflect this change.

(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; client cash excludes brokered CDs issued by Charles Schwab Bank.

(6)

Represents average total interest-earning assets on the Company’s balance sheet.

(7)

Represents average 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 third 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. Beginning in the third quarter of 2023, these adjustments also include restructuring costs, which the Company began incurring in connection with its previously announced plans to streamline its operations to prepare for post-integration of Ameritrade. See Part I – Item 1 – Note 10 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 for additional information.

Non-GAAP Adjustment or Measure

Definition

Usefulness to Investors and Uses by Management

Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs

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, restructuring costs, 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, amortization of acquired intangible assets, and restructuring costs 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.

 

Costs related to acquisition and integration or restructuring fluctuate based on the timing of acquisitions, integration and restructuring 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.

Adjusted Tier 1 Leverage Ratio

Adjusted Tier 1 Leverage Ratio represents the Tier 1 Leverage Ratio as prescribed by bank regulatory guidance for the consolidated company and for Charles Schwab Bank, SSB (CSB), adjusted to reflect the inclusion of accumulated other comprehensive income (AOCI) in the ratio.

Inclusion of the impacts of AOCI in the Company’s Tier 1 Leverage Ratio provides additional information regarding the Company’s current capital position. We believe Adjusted Tier 1 Leverage Ratio may be useful to investors as a supplemental measure of the Company’s capital levels.

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. Additionally, the Company uses adjusted Tier 1 Leverage Ratio in managing capital, including its use of the measure as its long-term operating objective.

The tables below present reconciliations of GAAP measures to non-GAAP measures:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

2023

 

2024

2023

 

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)

$

3,005

 

$

1,408

 

$

3,223

 

$

1,125

 

 

$

8,890

 

$

4,102

 

$

9,194

 

$

4,022

 

Acquisition and integration-related costs (1)

 

(23

)

 

23

 

 

(106

)

 

106

 

 

 

(97

)

 

97

 

 

(334

)

 

334

 

Amortization of acquired intangible assets

 

(130

)

 

130

 

 

(135

)

 

135

 

 

 

(389

)

 

389

 

 

(404

)

 

404

 

Restructuring costs (2)

 

—

 

 

—

 

 

(279

)

 

279

 

 

 

18

 

 

(18

)

 

(279

)

 

279

 

Income tax effects (3)

 

N/A

 

 

(36

)

 

N/A

 

 

(127

)

 

 

N/A

 

 

(111

)

 

N/A

 

 

(247

)

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,852

 

$

1,525

 

$

2,703

 

$

1,518

 

 

$

8,422

 

$

4,459

 

$

8,177

 

$

4,792

 

(1)

Acquisition and integration-related costs for the three and nine months ended September 30, 2024 primarily consist of $9 million and $44 million of compensation and benefits, $3 million and $32 million of professional services, and $8 million and $13 million of depreciation and amortization. Acquisition and integration-related costs for the three and nine months ended September 30, 2023 primarily consist of $52 million and $158 million of compensation and benefits, $37 million and $111 million of professional services, $7 million and $21 million of occupancy and equipment, and $4 million and $26 million of other.

(2)

Restructuring costs for the nine months ended September 30, 2024 reflect a change in estimate of $34 million in compensation and benefits, offset by $3 million of occupancy and equipment and $13 million of other. Restructuring costs for the three and nine months ended September 30, 2023 primarily consist of $276 million of compensation and benefits.

(3)

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, amortization of acquired intangible assets, and restructuring costs on an after-tax basis.

N/A Not applicable.

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

2023

 

2024

2023

 

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)

$

1,842

38.0

%

$

1,383

30.0

%

 

$

5,387

 

37.7

%

$

5,184

36.1

%

Acquisition and integration-related costs

 

23

0.5

%

 

106

2.3

%

 

 

97

 

0.7

%

 

334

2.3

%

Amortization of acquired intangible assets

 

130

2.7

%

 

135

2.9

%

 

 

389

 

2.7

%

 

404

2.8

%

Restructuring costs

 

—

—

 

 

279

6.1

%

 

 

(18

)

(0.1

)%

 

279

1.9

%

Adjusted income before taxes on income (non-GAAP),

Adjusted pre-tax profit margin (non-GAAP)

$

1,995

41.2

%

$

1,903

41.3

%

 

$

5,855

 

41.0

%

$

6,201

43.1

%

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

2023

 

2024

2023

 

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)

$

1,299

 

$

.71

 

$

1,017

 

$

.56

 

 

$

3,761

 

$

2.05

 

$

3,723

 

$

2.03

 

Acquisition and integration-related costs

 

23

 

 

.01

 

 

106

 

 

.06

 

 

 

97

 

 

.05

 

 

334

 

 

.18

 

Amortization of acquired intangible assets

 

130

 

 

.07

 

 

135

 

 

.07

 

 

 

389

 

 

.21

 

 

404

 

 

.22

 

Restructuring costs

 

—

 

 

—

 

 

279

 

 

.15

 

 

 

(18

)

 

(.01

)

 

279

 

 

.15

 

Income tax effects

 

(36

)

 

(.02

)

 

(127

)

 

(.07

)

 

 

(111

)

 

(.05

)

 

(247

)

 

(.13

)

Adjusted net income available to common stockholders

(non-GAAP), Adjusted diluted EPS (non-GAAP)

$

1,416

 

$

.77

 

$

1,410

 

$

.77

 

 

$

4,118

 

$

2.25

 

$

4,493

 

$

2.45

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

2023

 

 

 

2024

 

 

2023

 

Return on average common stockholders’ equity (GAAP)

 

14

%

 

14

%

 

 

14

%

 

18

%

Average common stockholders’ equity

$

36,393

 

$

28,274

 

 

$

34,895

 

$

27,747

 

Less: Average goodwill

 

(11,951

)

 

(11,951

)

 

 

(11,951

)

 

(11,951

)

Less: Average acquired intangible assets — net

 

(7,938

)

 

(8,457

)

 

 

(8,067

)

 

(8,589

)

Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net

 

1,735

 

 

1,822

 

 

 

1,747

 

 

1,830

 

Average tangible common equity

$

18,239

 

$

9,688

 

 

$

16,624

 

$

9,037

 

Adjusted net income available to common stockholders (1)

$

1,416

 

$

1,410

 

 

$

4,118

 

$

4,493

 

Return on tangible common equity (non-GAAP)

 

31

%

 

58

%

 

 

33

%

 

66

%

(1)

See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).

 

(Preliminary)

 

September 30, 2024

 

CSC

CSB

Tier 1 Leverage Ratio (GAAP)

 

9.7

%

 

11.2

%

Tier 1 Capital

$

43,692

 

$

32,225

 

Plus: AOCI adjustment

 

(14,620

)

 

(12,669

)

Adjusted Tier 1 Capital

 

29,072

 

 

19,556

 

Average assets with regulatory adjustments

 

450,752

 

 

287,924

 

Plus: AOCI adjustment

 

(15,353

)

 

(13,480

)

Adjusted average assets with regulatory adjustments

$

435,399

 

$

274,444

 

Adjusted Tier 1 Leverage Ratio (non-GAAP)

 

6.7

%

 

7.1

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241015717862/en/

MEDIA Mayura Hooper, 415-667-1525 public.relations@schwab.com

INVESTORS/ANALYSTS Jeff Edwards, 817-854-6177 investor.relations@schwab.com