Company Announcements

Schwab Reports Record Earnings Per Share of $.70, Up 8%

Revenues Grow 5% to $2.7 Billion, Net Income Rises 3% to $951 Million, Both Third Quarter Records

Core Net New Assets Total $56.6 Billion, Representing a 7% Annualized Growth Rate

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 15, 2019-- The Charles Schwab Corporation announced today that its net income for the third quarter of 2019 was $951 million, up 3% from $923 million for the third quarter of 2018. Net income for the nine months ended September 30, 2019 was $2.9 billion, up 11% from the year-earlier period. The company’s financial results for the third quarter and first nine months of 2019 include severance charges described below.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191015005428/en/

 

 

Three Months Ended
September 30,

 

%

 

Nine Months Ended
September 30,

 

%

Financial Highlights

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

 

$

2,711

 

 

$

2,579

 

 

5%

 

$

8,115

 

 

$

7,463

 

 

9%

Net income (in millions)

 

$

951

 

 

$

923

 

 

3%

 

$

2,852

 

 

$

2,572

 

 

11%

Diluted earnings per common share

 

$

.70

 

 

$

.65

 

 

8%

 

$

2.05

 

 

$

1.79

 

 

15%

Pre-tax profit margin

 

45.6

%

 

47.3

%

 

 

 

46.0

%

 

44.9

%

 

 

Return on average common stockholders’ equity (annualized)

 

20

%

 

20

%

 

 

 

20

%

 

19

%

 

 

EPS impact of $62 million in severance charges related to position eliminations (1)

 

$

(.04

)

 

 

 

 

 

$

(.04

)

 

 

 

 

 

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.

(1)

The pre-tax severance charges related to position eliminations, which reduced earnings per share by $.04, are included in Compensation and benefits expense.

CEO Walt Bettinger said, “As we remain faithful to our “Through Clients’ Eyes” strategy, investors continue to reward us with strong business growth. Our contemporary full-service model helps us remain a trusted partner as clients navigate an environment that has only grown more cloudy in recent months. The equity markets have shown noteworthy durability – the S&P 500 remained up nearly 20% for the year as of quarter-end. Concerns persist, however, regarding global trade and a generally softening economic outlook. The Federal Reserve has moved forward with expected mid-cycle easing, cutting short-term interest rates 25 bps in both July and September, and long-term rates have also shown significant declines. Against this backdrop, clients brought us $56.6 billion in core net new assets, a third quarter record, which brings our year-to-date total to $145.5 billion, representing a 6% annualized organic growth rate. In addition, we attracted 363,000 new brokerage accounts in the quarter, helping raise active brokerage accounts to 12.1 million, up 6% year-over-year. Client demand for help and guidance continued to grow, with assets receiving ongoing advisory services reaching nearly $2.0 trillion at quarter end, up 7%. Assets in digital advisory solutions grew even faster, rising 20% to $43.0 billion at the end of September. Overall, our client assets totaled a record $3.77 trillion at quarter end, up 6%.”

“Our commitment to challenge the status quo and disrupt the industry on behalf of clients endures through all environments,” Mr. Bettinger added. “Most recently, we eliminated online trade commissions for stocks, ETFs, and options listed on U.S. or Canadian exchanges, a move that represents another significant investment in bringing ever greater value to our clients. This action is consistent with the principles on which our company was founded, helping realize Chuck Schwab’s vision of making investing accessible to all. We also continue to extend our products and platforms, including the recent launch of three new fixed-income ETFs. In support of our independent advisors, we’ve made enhancements to Institutional Intelligent Portfolios® including a paperless account conversion feature making it simpler than ever to incorporate automated investing into their practices, while freeing up time to spend with investors and scale their businesses. Additionally, on July 25th, we announced an agreement to acquire certain assets of USAA’s Investment Management Company, with closing targeted for the middle of next year. We are honored to have the opportunity to serve USAA members as their exclusive wealth management and brokerage provider, and are looking forward to exploring a new growth opportunity via the multi-year referral agreement included in this transaction.”

Mr. Bettinger concluded, “Schwab’s ‘Virtuous Cycle’ is renewed by bold steps like our recent price cuts, reflecting our belief that investors will entrust us with more business as we do right by them. We are acting from a position of strength – both financial and competitive – which allows us to take these steps with confidence, knowing we are able to push forward as we choose, not as the current environment might dictate.”

CFO Peter Crawford commented, “Our continued success with clients and full-service model enabled us to deliver third quarter revenues of $2.7 billion, up 5% year-over-year. Net interest revenue rose 7% from a year ago to $1.6 billion, largely a result of generally higher investment yields and higher client cash allocations. Growing client balances in purchased money market funds, advisory solutions, and other third-party mutual funds and ETFs pushed asset management and administration fees to $825 million, increasing 2% year-over-year. A pick-up in trading volumes was more than offset by a decline in average revenue per trade, bringing trading revenue to $172 million, down 2% from a year ago. Turning to expenses, our reported total of $1.5 billion includes $62 million in severance charges associated with our decision to eliminate positions spanning approximately 3% of our workforce, as we work to ensure we remain properly positioned to serve clients through what has become a more challenging environment. These charges contributed roughly half of our 8% year-over-year expense growth. Ongoing expenses remained in line with management expectations and we were able to report a pre-tax profit margin of 45.6% – our sixth consecutive quarter of at least 45%.”

Mr. Crawford added, “Consistent with the evolution of the Schwab story to include both business growth and meaningful capital returns, we repurchased 19.9 million shares for approximately $770 million during the third quarter. We have repurchased more than 49 million shares for $2 billion under our current $4 billion authorization. Our expanding client base and related increases in their cash balances drove modest organic growth in our balance sheet during the third quarter, with consolidated assets increasing $2.7 billion sequentially to $279 billion at September 30th. Our preliminary Tier 1 Leverage Ratio ended the quarter at 7.3%, slightly above our operating objective of 6.75%-7.00%; our capital management in coming quarters will incorporate preparations for the $1.8 billion USAA transaction next year. With a 20% return on equity for the quarter and year-to-date, we remain well-positioned to drive strong profitable growth into the future through a combination of sustained business momentum, thoughtful expense management, and a healthy balance sheet.”

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on our decision to reduce online trade commissions for U.S. and Canadian-listed equities, ETFs, and options to $0, was posted on October 1, 2019.

Forward-Looking Statements

This press release contains forward-looking statements relating to business growth; enhancements to products and platforms; the company’s acquisition of certain assets of USAA’s Investment Management Company (IMCO), including timing of closing and entering into a referral agreement; financial and competitive strength; capital returns to stockholders; growth in the client base, client accounts and assets; cash balances; Tier 1 Leverage Ratio operating objective; profitable growth; expense management; and the balance sheet. 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, general market conditions, including the level of interest rates, equity valuations, and trading activity; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; competitive pressures on pricing, including deposit rates; the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; failure of the parties to satisfy the closing conditions in the USAA IMCO purchase agreement in a timely manner or at all, including regulatory approvals and the implementation of conversion plans; capital and liquidity needs and management; level of client assets, including cash balances; the company’s ability to manage expenses; and other factors set forth in the company’s most recent report on Form 10-K.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 365 offices and 12.1 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking accounts, and $3.77 trillion in client assets as of September 30, 2019. 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 affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.schwab.com and 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,

 

2019

 

2018

 

2019

 

2018

Net Revenues

 

 

 

 

 

 

 

Interest revenue

$

1,892

 

 

$

1,755

 

 

$

5,817

 

 

$

4,766

 

Interest expense

(261

)

 

(228

)

 

(896

)

 

(569

)

Net interest revenue

1,631

 

 

1,527

 

 

4,921

 

 

4,197

 

Asset management and administration fees

825

 

 

809

 

 

2,366

 

 

2,474

 

Trading revenue

172

 

 

176

 

 

531

 

 

557

 

Other

83

 

 

67

 

 

297

 

 

235

 

Total net revenues

2,711

 

 

2,579

 

 

8,115

 

 

7,463

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

857

 

 

737

 

 

2,514

 

 

2,252

 

Professional services

168

 

 

164

 

 

516

 

 

476

 

Occupancy and equipment

144

 

 

124

 

 

408

 

 

368

 

Advertising and market development

71

 

 

70

 

 

217

 

 

220

 

Communications

63

 

 

59

 

 

187

 

 

179

 

Depreciation and amortization

88

 

 

78

 

 

255

 

 

226

 

Regulatory fees and assessments

30

 

 

57

 

 

92

 

 

158

 

Other

54

 

 

71

 

 

190

 

 

232

 

Total expenses excluding interest

1,475

 

 

1,360

 

 

4,379

 

 

4,111

 

Income before taxes on income

1,236

 

 

1,219

 

 

3,736

 

 

3,352

 

Taxes on income

285

 

 

296

 

 

884

 

 

780

 

Net Income

951

 

 

923

 

 

2,852

 

 

2,572

 

Preferred stock dividends and other

38

 

 

38

 

 

127

 

 

128

 

Net Income Available to Common Stockholders

$

913

 

 

$

885

 

 

$

2,725

 

 

$

2,444

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

1,300

 

 

1,351

 

 

1,320

 

 

1,349

 

Diluted

1,308

 

 

1,364

 

 

1,329

 

 

1,363

 

Earnings Per Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

$

.70

 

 

$

.66

 

 

$

2.06

 

 

$

1.81

 

Diluted

$

.70

 

 

$

.65

 

 

$

2.05

 

 

$

1.79

 

 

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

Q3-19 % change

 

 

2019

 

2018

 

vs.

 

vs.

 

 

Third

 

Second

 

First

 

Fourth

 

Third

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

Q3-18

 

Q2-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

7

%

 

1

%

 

 

$

1,631

 

 

$

1,609

 

 

$

1,681

 

 

$

1,626

 

 

$

1,527

 

Asset management and administration fees

2

%

 

5

%

 

 

825

 

 

786

 

 

755

 

 

755

 

 

809

 

Trading revenue

(2

)%

 

(1

)%

 

 

172

 

 

174

 

 

185

 

 

206

 

 

176

 

Other

24

%

 

(26

)%

 

 

83

 

 

112

 

 

102

 

 

82

 

 

67

 

Total net revenues

5

%

 

1

%

 

 

2,711

 

 

2,681

 

 

2,723

 

 

2,669

 

 

2,579

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

16

%

 

6

%

 

 

857

 

 

807

 

 

850

 

 

805

 

 

737

 

Professional services

2

%

 

(6

)%

 

 

168

 

 

178

 

 

170

 

 

178

 

 

164

 

Occupancy and equipment

16

%

 

8

%

 

 

144

 

 

133

 

 

131

 

 

128

 

 

124

 

Advertising and market development

1

%

 

(8

)%

 

 

71

 

 

77

 

 

69

 

 

93

 

 

70

 

Communications

7

%

 

2

%

 

 

63

 

 

62

 

 

62

 

 

63

 

 

59

 

Depreciation and amortization

13

%

 

5

%

 

 

88

 

 

84

 

 

83

 

 

80

 

 

78

 

Regulatory fees and assessments

(47

)%

 

 

 

 

30

 

 

30

 

 

32

 

 

31

 

 

57

 

Other

(24

)%

 

(27

)%

 

 

54

 

 

74

 

 

62

 

 

81

 

 

71

 

Total expenses excluding interest

8

%

 

2

%

 

 

1,475

 

 

1,445

 

 

1,459

 

 

1,459

 

 

1,360

 

Income before taxes on income

1

%

 

 

 

 

1,236

 

 

1,236

 

 

1,264

 

 

1,210

 

 

1,219

 

Taxes on income

(4

)%

 

(5

)%

 

 

285

 

 

299

 

 

300

 

 

275

 

 

296

 

Net Income

3

%

 

1

%

 

 

$

951

 

 

$

937

 

 

$

964

 

 

$

935

 

 

$

923

 

Preferred stock dividends and other

 

 

(24

)%

 

 

38

 

 

50

 

 

39

 

 

50

 

 

38

 

Net Income Available to Common Stockholders

3

%

 

3

%

 

 

$

913

 

 

$

887

 

 

$

925

 

 

$

885

 

 

$

885

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

6

%

 

4

%

 

 

$

.70

 

 

$

.67

 

 

$

.69

 

 

$

.66

 

 

$

.66

 

Diluted

8

%

 

6

%

 

 

$

.70

 

 

$

.66

 

 

$

.69

 

 

$

.65

 

 

$

.65

 

Dividends declared per common share

31

%

 

 

 

 

$

.17

 

 

$

.17

 

 

$

.17

 

 

$

.13

 

 

$

.13

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(4

)%

 

(2

)%

 

 

1,300

 

 

1,328

 

 

1,333

 

 

1,343

 

 

1,351

 

Diluted

(4

)%

 

(2

)%

 

 

1,308

 

 

1,337

 

 

1,344

 

 

1,354

 

 

1,364

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

45.6

%

 

46.1

%

 

46.4

%

 

45.3

%

 

47.3

%

Return on average common stockholders’ equity (annualized) (1)

 

 

 

 

 

20

%

 

19

%

 

20

%

 

20

%

 

20

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

(7

)%

 

(16

)%

 

 

$

20.3

 

 

$

24.2

 

 

$

32.6

 

 

$

27.9

 

 

$

21.8

 

Cash and investments segregated

91

%

 

15

%

 

 

16.2

 

 

14.1

 

 

13.9

 

 

13.6

 

 

8.5

 

Receivables from brokerage clients — net

(6

)%

 

(1

)%

 

 

21.1

 

 

21.4

 

 

20.5

 

 

21.7

 

 

22.4

 

Available for sale securities

(2

)%

 

3

%

 

 

56.5

 

 

54.6

 

 

60.0

 

 

66.6

 

 

57.6

 

Held to maturity securities

1

%

 

1

%

 

 

140.2

 

 

138.3

 

 

132.4

 

 

144.0

 

 

139.0

 

Bank loans — net

2

%

 

2

%

 

 

16.9

 

 

16.6

 

 

16.5

 

 

16.6

 

 

16.6

 

Total assets

3

%

 

1

%

 

 

279.0

 

 

276.3

 

 

282.8

 

 

296.5

 

 

272.1

 

Bank deposits

(2

)%

 

 

 

 

209.3

 

 

208.4

 

 

219.5

 

 

231.4

 

 

213.4

 

Payables to brokerage clients

28

%

 

15

%

 

 

35.6

 

 

31.0

 

 

29.7

 

 

32.7

 

 

27.9

 

Long-term debt

28

%

 

 

 

 

7.4

 

 

7.4

 

 

6.8

 

 

6.9

 

 

5.8

 

Stockholders’ equity

3

%

 

 

 

 

21.4

 

 

21.3

 

 

21.6

 

 

20.7

 

 

20.8

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

4

%

 

(3

)%

 

 

19.8

 

 

20.5

 

 

20.0

 

 

19.5

 

 

19.1

 

Capital expenditures — purchases of equipment, office facilities, and
property, net (in millions)

22

%

 

10

%

 

 

$

190

 

 

$

173

 

 

$

181

 

 

$

159

 

 

$

156

 

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

 

 

 

 

 

0.16

%

 

0.16

%

 

0.17

%

 

0.17

%

 

0.15

%

Clients’ Daily Average Trades (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue trades (2)

3

%

 

1

%

 

 

395

 

 

392

 

 

418

 

 

466

 

 

382

 

Asset-based trades (3)

(5

)%

 

(11

)%

 

 

123

 

 

138

 

 

149

 

 

188

 

 

129

 

Other trades (4)

16

%

 

8

%

 

 

200

 

 

186

 

 

210

 

 

213

 

 

172

 

Total

5

%

 

 

 

 

718

 

 

716

 

 

777

 

 

867

 

 

683

 

Average Revenue Per Revenue Trade (2)

(5

)%

 

 

 

 

$

6.94

 

 

$

6.94

 

 

$

7.19

 

 

$

7.13

 

 

$

7.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

Includes all client trades that generate trading revenue (i.e., commission revenue or principal transaction revenue); also known as DART.

(3)

Includes eligible trades executed by clients who participate in one or more of the company’s asset-based pricing relationships.

(4)

Includes all commission-free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.

THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions)

(Unaudited)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

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

$

22,288

 

 

$

123

 

 

2.16

%

 

 

$

18,623

 

 

$

94

 

 

1.98

%

 

 

$

24,506

 

 

$

432

 

 

2.33

%

 

 

$

16,164

 

 

$

217

 

 

1.78

%

Cash and investments segregated

16,140

 

 

92

 

 

2.25

%

 

 

10,253

 

 

51

 

 

1.94

%

 

 

14,771

 

 

264

 

 

2.36

%

 

 

12,002

 

 

149

 

 

1.64

%

Broker-related receivables

216

 

 

2

 

 

2.34

%

 

 

307

 

 

1

 

 

1.94

%

 

 

225

 

 

4

 

 

2.21

%

 

 

324

 

 

4

 

 

1.62

%

Receivables from brokerage clients

19,438

 

 

205

 

 

4.13

%

 

 

20,224

 

 

217

 

 

4.19

%

 

 

19,279

 

 

636

 

 

4.35

%

 

 

19,629

 

 

600

 

 

4.03

%

Available for sale securities (1)

53,487

 

 

366

 

 

2.71

%

 

 

55,283

 

 

328

 

 

2.34

%

 

 

58,738

 

 

1,203

 

 

2.72

%

 

 

52,797

 

 

859

 

 

2.16

%

Held to maturity securities

136,880

 

 

906

 

 

2.63

%

 

 

137,065

 

 

887

 

 

2.57

%

 

 

134,031

 

 

2,721

 

 

2.70

%

 

 

129,490

 

 

2,420

 

 

2.48

%

Bank loans

16,724

 

 

146

 

 

3.49

%

 

 

16,579

 

 

142

 

 

3.43

%

 

 

16,621

 

 

443

 

 

3.56

%

 

 

16,522

 

 

410

 

 

3.31

%

Total interest-earning assets

265,173

 

 

1,840

 

 

2.75

%

 

 

258,334

 

 

1,720

 

 

2.63

%

 

 

268,171

 

 

5,703

 

 

2.82

%

 

 

246,928

 

 

4,659

 

 

2.50

%

Other interest revenue

 

 

52

 

 

 

 

 

 

 

35

 

 

 

 

 

 

 

114

 

 

 

 

 

 

 

107

 

 

 

Total interest-earning assets

$

265,173

 

 

$

1,892

 

 

2.82

%

 

 

$

258,334

 

 

$

1,755

 

 

2.69

%

 

 

$

268,171

 

 

$

5,817

 

 

2.88

%

 

 

$

246,928

 

 

$

4,766

 

 

2.56

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

208,592

 

 

$

166

 

 

0.32

%

 

 

$

208,666

 

 

$

158

 

 

0.30

%

 

 

$

213,089

 

 

$

616

 

 

0.39

%

 

 

$

193,010

 

 

$

339

 

 

0.23

%

Payables to brokerage clients

25,080

 

 

21

 

 

0.33

%

 

 

20,595

 

 

16

 

 

0.31

%

 

 

23,443

 

 

68

 

 

0.39

%

 

 

21,591

 

 

37

 

 

0.23

%

Short-term borrowings (2)

21

 

 

 

 

2.48

%

 

 

 

 

 

 

 

 

 

18

 

 

 

 

2.49

%

 

 

4,488

 

 

54

 

 

1.59

%

Long-term debt

7,425

 

 

67

 

 

3.58

%

 

 

5,790

 

 

51

 

 

3.52

%

 

 

7,122

 

 

192

 

 

3.59

%

 

 

5,053

 

 

131

 

 

3.46

%

Total interest-bearing liabilities

241,118

 

 

254

 

 

0.42

%

 

 

235,051

 

 

225

 

 

0.38

%

 

 

243,672

 

 

876

 

 

0.48

%

 

 

224,142

 

 

561

 

 

0.33

%

Non-interest-bearing funding sources

24,055

 

 

 

 

 

 

 

23,283

 

 

 

 

 

 

 

24,499

 

 

 

 

 

 

 

22,786

 

 

 

 

 

Other interest expense

 

 

7

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

8

 

 

 

Total funding sources

$

265,173

 

 

$

261

 

 

0.39

%

 

 

$

258,334

 

 

$

228

 

 

0.36

%

 

 

$

268,171

 

 

$

896

 

 

0.45

%

 

 

$

246,928

 

 

$

569

 

 

0.31

%

Net interest revenue

 

 

$

1,631

 

 

2.43

%

 

 

 

 

$

1,527

 

 

2.33

%

 

 

 

 

$

4,921

 

 

2.43

%

 

 

 

 

$

4,197

 

 

2.25

%

(1)

Amounts have been calculated based on amortized cost.

(2)

Interest revenue or expense was less than $500,000 in the period or periods presented.

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions)

(Unaudited)

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

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

$

177,892

 

 

$

133

 

 

0.30

%

 

 

$

130,202

 

 

$

122

 

 

0.37

%

 

 

$

166,053

 

 

$

378

 

 

0.30

%

 

 

$

142,177

 

 

$

451

 

 

0.42

%

Schwab equity and bond funds, ETFs, and

collective trust funds (CTFs) (1)

274,005

 

 

75

 

 

0.11

%

 

 

235,148

 

 

78

 

 

0.13

%

 

 

260,034

 

 

219

 

 

0.11

%

 

 

221,818

 

 

228

 

 

0.14

%

Mutual Fund OneSource® and other non-

transaction fee funds

192,409

 

 

153

 

 

0.32

%

 

 

209,560

 

 

171

 

 

0.32

%

 

 

190,847

 

 

452

 

 

0.32

%

 

 

216,699

 

 

524

 

 

0.32

%

Other third-party mutual funds and ETFs (2)

486,285

 

 

84

 

 

0.07

%

 

 

342,316

 

 

75

 

 

0.09

%

 

 

469,901

 

 

238

 

 

0.07

%

 

 

329,033

 

 

216

 

 

0.09

%

Total mutual funds, ETFs, and CTFs (3)

$

1,130,591

 

 

445

 

 

0.16

%

 

 

$

917,226

 

 

446

 

 

0.19

%

 

 

$

1,086,835

 

 

1,287

 

 

0.16

%

 

 

$

909,727

 

 

1,419

 

 

0.21

%

Advice solutions (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

251,591

 

 

305

 

 

0.48

%

 

 

$

234,338

 

 

294

 

 

0.50

%

 

 

$

241,678

 

 

878

 

 

0.49

%

 

 

$

228,326

 

 

859

 

 

0.50

%

Non-fee-based

71,195

 

 

 

 

 

 

 

65,146

 

 

 

 

 

 

 

69,136

 

 

 

 

 

 

 

62,377

 

 

 

 

 

Total advice solutions

$

322,786

 

 

305

 

 

0.37

%

 

 

$

299,484

 

 

294

 

 

0.39

%

 

 

$

310,814

 

 

878

 

 

0.38

%

 

 

$

290,703

 

 

859

 

 

0.40

%

Other balance-based fees (1,4)

421,241

 

 

56

 

 

0.05

%

 

 

384,038

 

 

52

 

 

0.05

%

 

 

407,762

 

 

162

 

 

0.05

%

 

 

388,836

 

 

158

 

 

0.05

%

Other (5)

 

 

19

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

38

 

 

 

Total asset management and administration fees

 

 

$

825

 

 

 

 

 

 

 

$

809

 

 

 

 

 

 

 

$

2,366

 

 

 

 

 

 

 

$

2,474

 

 

 

(1)

Beginning in the first quarter of 2019, a change was made to move CTFs from other balance-based fees. Prior periods have been recast to reflect this change.

(2)

Includes Schwab ETF OneSourceTM.

(3)

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, 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®, and Schwab Intelligent Portfolios PremiumTM; 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.

(4)

Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.

(5)

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)

 

 

Q3-19 % Change

 

 

2019

 

2018

 

vs.

 

vs.

 

 

Third

 

Second

 

First

 

Fourth

 

Third

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

Q3-18

 

Q2-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

1

%

 

2

%

 

 

$

242.9

 

 

$

237.3

 

 

$

247.0

 

 

$

261.2

 

 

$

239.5

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

46

%

 

11

%

 

 

187.0

 

 

168.1

 

 

159.7

 

 

153.5

 

 

128.5

 

Equity and bond funds and CTFs (2,3)

5

%

 

1

%

 

 

112.4

 

 

110.9

 

 

106.2

 

 

94.3

 

 

107.4

 

Total proprietary mutual funds and CTFs

27

%

 

7

%

 

 

299.4

 

 

279.0

 

 

265.9

 

 

247.8

 

 

235.9

 

Mutual Fund Marketplace® (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

(8

)%

 

(2

)%

 

 

194.7

 

 

197.8

 

 

195.1

 

 

180.5

 

 

212.6

 

Mutual fund clearing services

8

%

 

2

%

 

 

197.2

 

 

192.9

 

 

182.7

 

 

164.4

 

 

182.2

 

Other third-party mutual funds

5

%

 

1

%

 

 

776.8

 

 

767.3

 

 

737.2

 

 

650.4

 

 

740.1

 

Total Mutual Fund Marketplace

3

%

 

1

%

 

 

1,168.7

 

 

1,158.0

 

 

1,115.0

 

 

995.3

 

 

1,134.9

 

Total mutual fund assets

7

%

 

2

%

 

 

1,468.1

 

 

1,437.0

 

 

1,380.9

 

 

1,243.1

 

 

1,370.8

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (3)

20

%

 

5

%

 

 

150.8

 

 

143.6

 

 

134.7

 

 

115.2

 

 

125.2

 

Schwab ETF OneSource™ (4)

183

%

 

7

%

 

 

94.1

 

 

88.1

 

 

82.5

 

 

30.6

 

 

33.3

 

Other third-party ETFs

(5

)%

 

2

%

 

 

321.6

 

 

315.7

 

 

303.7

 

 

309.9

 

 

338.6

 

Total ETF assets

14

%

 

3

%

 

 

566.5

 

 

547.4

 

 

520.9

 

 

455.7

 

 

497.1

 

Equity and other securities (2)

(1

)%

 

1

%

 

 

1,178.0

 

 

1,168.3

 

 

1,131.3

 

 

1,005.4

 

 

1,186.7

 

Fixed income securities

14

%

 

 

 

 

332.3

 

 

332.1

 

 

324.1

 

 

306.1

 

 

290.4

 

Margin loans outstanding

(7

)%

 

(2

)%

 

 

(19.4

)

 

(19.7

)

 

(18.8

)

 

(19.3

)

 

(20.8

)

Total client assets

6

%

 

2

%

 

 

$

3,768.4

 

 

$

3,702.4

 

 

$

3,585.4

 

 

$

3,252.2

 

 

$

3,563.7

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

5

%

 

2

%

 

 

$

1,978.7

 

 

$

1,946.5

 

 

$

1,886.7

 

 

$

1,701.7

 

 

$

1,876.9

 

Advisor Services

6

%

 

2

%

 

 

1,789.7

 

 

1,755.9

 

 

1,698.7

 

 

1,550.5

 

 

1,686.8

 

Total client assets

6

%

 

2

%

 

 

$

3,768.4

 

 

$

3,702.4

 

 

$

3,585.4

 

 

$

3,252.2

 

 

$

3,563.7

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

(9

)%

 

42

%

 

 

$

25.4

 

 

$

17.9

 

 

$

29.2

 

 

$

28.7

 

 

$

27.8

 

Advisor Services

21

%

 

62

%

 

 

31.2

 

 

19.3

 

 

22.5

 

 

26.6

 

 

25.7

 

Total net new assets

6

%

 

52

%

 

 

$

56.6

 

 

$

37.2

 

 

$

51.7

 

 

$

55.3

 

 

$

53.5

 

Net market gains (losses)

(92

)%

 

(88

)%

 

 

9.4

 

 

79.8

 

 

281.5

 

 

(366.8

)

 

113.2

 

Net growth (decline)

(60

)%

 

(44

)%

 

 

$

66.0

 

 

$

117.0

 

 

$

333.2

 

 

$

(311.5

)

 

$

166.7

 

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

(2

)%

 

(6

)%

 

 

363

 

 

386

 

 

386

 

 

380

 

 

369

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts (5)

6

%

 

1

%

 

 

12,118

 

 

11,967

 

 

11,787

 

 

11,593

 

 

11,423

 

Banking accounts

6

%

 

2

%

 

 

1,361

 

 

1,336

 

 

1,300

 

 

1,302

 

 

1,283

 

Corporate retirement plan participants

6

%

 

1

%

 

 

1,718

 

 

1,698

 

 

1,684

 

 

1,655

 

 

1,627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.

(2)

Beginning in the first quarter of 2019, a change was made to move CTFs from equity and other securities. Prior periods have been recast to reflect this change.

(3)

Includes balances held on and off the Schwab platform. As of September 30, 2019, off-platform equity and bond funds, CTFs, and ETFs were $12.6 billion, $4.8 billion, and $39.9 billion, respectively.

(4)

Excludes all proprietary mutual funds and ETFs.

(5)

In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.

 

The Charles Schwab Corporation Monthly Activity Report For September 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

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

26,458

 

25,116

 

25,538

 

23,327

 

25,000

 

25,916

 

25,929

 

26,593

 

24,815

 

26,600

 

26,864

 

26,403

 

26,917

 

2

%

2

%

Nasdaq Composite

8,046

 

7,306

 

7,331

 

6,635

 

7,282

 

7,533

 

7,729

 

8,095

 

7,453

 

8,006

 

8,175

 

7,963

 

7,999

 

 

(1

)%

Standard & Poor’s 500

2,914

 

2,712

 

2,760

 

2,507

 

2,704

 

2,784

 

2,834

 

2,946

 

2,752

 

2,942

 

2,980

 

2,926

 

2,977

 

2

%

2

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

3,555.9

 

3,563.7

 

3,388.1

 

3,431.9

 

3,252.2

 

3,447.7

 

3,533.0

 

3,585.4

 

3,668.5

 

3,530.6

 

3,702.4

 

3,746.7

 

3,716.5

 

 

 

Net New Assets

16.4

 

14.9

 

15.6

 

24.8

 

15.1

 

18.3

 

18.3

 

(0.3

)

17.3

 

20.2

 

19.3

 

19.9

 

17.4

 

(13

)%

6

%

Net Market Gains (Losses)

(8.6

)

(190.5

)

28.2

 

(204.5

)

180.4

 

67.0

 

34.1

 

83.4

 

(155.2

)

151.6

 

25.0

 

(50.1

)

34.5

 

 

 

Total Client Assets (at month end)

3,563.7

 

3,388.1

 

3,431.9

 

3,252.2

 

3,447.7

 

3,533.0

 

3,585.4

 

3,668.5

 

3,530.6

 

3,702.4

 

3,746.7

 

3,716.5

 

3,768.4

 

1

%

6

%

Core Net New Assets (1)

16.4

 

14.9

 

15.6

 

24.8

 

15.1

 

18.3

 

18.3

 

(0.3

)

17.3

 

20.2

 

19.3

 

19.9

 

17.4

 

(13

)%

6

%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

292.7

 

280.3

 

284.7

 

272.4

 

286.9

 

294.2

 

298.4

 

305.7

 

298.5

 

311.6

 

314.8

 

314.2

 

318.5

 

1

%

9

%

Advisor Services (2)

1,559.2

 

1,485.8

 

1,510.1

 

1,436.1

 

1,514.2

 

1,551.6

 

1,572.8

 

1,608.0

 

1,554.6

 

1,626.6

 

1,646.1

 

1,635.7

 

1,659.4

 

1

%

6

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts (3)

11,423

 

11,479

 

11,529

 

11,593

 

11,653

 

11,712

 

11,787

 

11,870

 

11,929

 

11,967

 

12,026

 

12,085

 

12,118

 

 

6

%

Banking Accounts (4)

1,283

 

1,289

 

1,297

 

1,302

 

1,312

 

1,313

 

1,300

 

1,310

 

1,323

 

1,336

 

1,352

 

1,361

 

1,361

 

 

6

%

Corporate Retirement Plan Participants

1,627

 

1,634

 

1,639

 

1,655

 

1,679

 

1,685

 

1,684

 

1,690

 

1,699

 

1,698

 

1,701

 

1,711

 

1,718

 

 

6

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

119

 

133

 

115

 

132

 

131

 

115

 

140

 

147

 

123

 

116

 

129

 

126

 

108

 

(14

)%

(9

)%

Inbound Calls (in thousands)

1,715

 

1,976

 

1,681

 

1,839

 

1,924

 

1,742

 

1,882

 

1,966

 

1,671

 

1,595

 

1,773

 

1,759

 

1,570

 

(11

)%

(8

)%

Web Logins (in thousands)

53,923

 

59,261

 

54,654

 

53,920

 

64,563

 

60,121

 

63,692

 

65,669

 

61,522

 

60,824

 

65,809

 

63,928

 

63,530

 

(1

)%

18

%

Client Cash as a Percentage of Client Assets (5)

10.3

%

11.1

%

11.2

%

12.8

%

11.7

%

11.5

%

11.3

%

10.9

%

11.3

%

10.9

%

11.0

%

11.3

%

11.4

%

10 bp

110 bp

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (6, 7) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Capitalization Stock

311

 

308

 

331

 

717

 

1,343

 

1,109

 

1,045

 

980

 

1,114

 

206

 

717

 

328

 

23

 

 

 

Small / Mid Capitalization Stock

151

 

(1,344

)

(456

)

(1,414

)

1,329

 

638

 

302

 

136

 

(190

)

18

 

10

 

(374

)

(212

)

 

 

International

(88

)

(109

)

(418

)

(2,163

)

2,212

 

1,086

 

1,274

 

863

 

(100

)

225

 

744

 

(1,390

)

(355

)

 

 

Specialized

73

 

(914

)

(397

)

(2,105

)

124

 

609

 

750

 

(109

)

(440

)

341

 

418

 

353

 

583

 

 

 

Hybrid

(324

)

(1,313

)

(1,248

)

(2,985

)

(321

)

(309

)

(357

)

(228

)

(316

)

(181

)

(366

)

(569

)

(372

)

 

 

Taxable Bond

1,371

 

(351

)

(836

)

(4,342

)

3,956

 

2,871

 

1,923

 

3,029

 

1,821

 

2,378

 

3,806

 

2,725

 

2,935

 

 

 

Tax-Free Bond

262

 

(591

)

(407

)

(409

)

1,184

 

1,111

 

1,133

 

760

 

1,057

 

682

 

960

 

760

 

593

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (6)

(1,538

)

(5,734

)

(7,955

)

(21,372

)

6,740

 

2,312

 

1,850

 

1,860

 

86

 

7

 

2,151

 

(1,281

)

(573

)

 

 

Exchange-Traded Funds (7)

3,294

 

1,420

 

4,524

 

8,671

 

3,087

 

4,803

 

4,220

 

3,571

 

2,860

 

3,662

 

4,138

 

3,114

 

3,768

 

 

 

Money Market Funds

(1,933

)

2,546

 

8,515

 

13,548

 

4,944

 

(1,577

)

1,785

 

(2,097

)

5,067

 

4,570

 

6,143

 

6,068

 

5,833

 

 

 

Average Interest-Earning Assets (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions of dollars)

261,741

 

264,156

 

265,648

 

274,913

 

277,068

 

270,718

 

272,727

 

270,308

 

263,718

 

262,759

 

263,993

 

265,005

 

266,430

 

1

%

2

%

(1)

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.

(2)

Excludes Retirement Business Services.

(3)

In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.

(4)

In March 2019, banking accounts were reduced by approximately 23,000 as a result of inactive account closures.

(5)

Schwab One®, certain cash equivalents, bank deposits, and money market fund balances as a percentage of total client assets.

(6)

Represents the principal value of client mutual fund transactions handled by Schwab, including transactions in proprietary funds. Includes institutional funds available only to Investment Managers. Excludes money market fund transactions.

(7)

Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.

(8)

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

 

Source: The Charles Schwab Corporation

MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525

INVESTORS/ANALYSTS:
Rich Fowler
Charles Schwab
Phone: 415-667-1841