Schwab Reports Record First Quarter Earnings Per Share

Unprecedented Client Engagement Included $148.2 Billion in Core Net New Assets,

3.2 Million New Brokerage Accounts and 8.4 Million Daily Average Trades, All Records

WESTLAKE, Texas--(BUSINESS WIRE)--Apr. 15, 2021-- The Charles Schwab Corporation announced today that its net income for the first quarter of 2021 was a record $1.5 billion, compared with $1.1 billion for the fourth quarter of 2020, and $795 million for the first quarter of 2020. The company’s financial results include TD Ameritrade from closing on October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. Together these transaction-related expenses totaled $273 million pre-tax for the first quarter of 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210415005353/en/

 

Three Months Ended
March 31,

 

%

Financial Highlights

2021

 

2020

 

Change

 

 

 

 

 

 

Net revenues (in millions)

$

4,715

 

 

$

2,617

 

 

80%

Net income (in millions)

 

 

 

 

 

GAAP

$

1,484

 

 

$

795

 

 

87%

Adjusted (1)

$

1,690

 

 

$

827

 

 

104%

Diluted earnings per common share

 

 

 

 

 

GAAP

$

.73

 

 

$

.58

 

 

26%

Adjusted (1)

$

.84

 

 

$

.61

 

 

38%

Pre-tax profit margin

 

 

 

 

 

GAAP

41.6

%

 

40.0

%

 

 

Adjusted (1)

47.4

%

 

41.7

%

 

 

Return on average common

 

 

 

 

 

stockholders’ equity (annualized)

12

%

 

14

%

 

 

Return on tangible

 

 

 

 

 

common equity (annualized) (1)

24

%

 

16

%

 

 

 

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

(1)

Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

CEO Walt Bettinger said, “The first three months of 2021 have in many ways been both the most successful and the most challenging in our history. As the U.S. economic recovery advanced, supported by expanding COVID-19 vaccine rollouts and government aid packages, the equity markets continued to climb, with the S&P 500® rising 78% between the pandemic-driven low in March 2020 and the end of this year’s first quarter. Interest rates began to lift as well, with the 10-year Treasury yield moving to 1.74% by quarter-end – its highest level since January 2020. This environment contributed to another rise in client engagement and activity beyond the record levels of late last year. As investors turned to Schwab for help in navigating current conditions, they opened 3.2 million new brokerage accounts – a level that exceeds our reported total for all of 2020, excluding the accounts we acquired as part of our recent M&A activity. At the same time, elevated interest in technology and other growth-oriented stocks, as well as heightened market attention to certain names via social media, significantly bolstered trading activity. Daily trades rose to an average of 8.4 million in the first three months of 2021, with a single day peak of 12.3 million. That average is approximately four times higher than the pro forma combined pace for the fourth quarter of 2019 – the onset of the $0 online equity commission era. Amidst this surge in activity, investors entrusted us with $148.2 billion in core net new assets – including $62.6 billion in March alone – up 102% from a year ago, and 24% higher than the record we just set last quarter. This strength in asset gathering enabled us to end March serving a record $7.07 trillion in client assets, up 102% from a year ago, and up 6% in just three months.”

Mr. Bettinger continued, “Early in the first quarter, we were challenged to keep pace with extraordinary activity from both new and existing clients. On the heels of an already strong 2020, retail call volumes accelerated further to 8.3 million across the combined company, up 19% from a year ago and 51% above the busiest quarter in 2019. In addition, mobile and web logins topped 1.1 billion, up 138% year-over-year. This strength in engagement was felt broadly – all of our top 25 market opens occurred during the first quarter, and we have seen multiple days where we handled at least 10 million trades and concurrently accommodated more than 15 million logins across mobile and web. With activity levels running well beyond anything we’ve ever seen, our service quality was impacted at times. As a result, we took multiple steps to better deliver the service experience our clients deserve and rely on, including enhancing online self-service capabilities, streamlining our call-routing processes, and actively ramping up hiring to expand capacity. We’ve increased our team of client service professionals by 10% since month-end December and are developing a pipeline of talent to support ongoing growth. Our efforts were already yielding results by quarter-end, with average speed-to-answer progressing back towards a more normalized range and call handle times declining back to late 2020 levels. Whatever lies ahead for us during the remainder of the year, living up to our ‘no trade-offs’ approach to service is our priority. Our team comes to work each day committed to earning the trust clients place in us to do just that.”

CFO Peter Crawford commented, “Schwab’s strong financial performance in early 2021 reflects the power of our diversified revenue streams. Net interest revenue grew 6% versus the fourth quarter of 2020, largely due to elevated margin utilization and higher overall interest-earning assets stemming from rising client cash balances. These factors more than offset the ongoing impacts of the Fed’s Zero Interest Rate Policy, including elevated prepayments of mortgage-backed securities. Asset management and administration fees increased 3% from the fourth quarter of 2020 as growth in advisory solution balances and strong equity markets more than offset a small increase in money market fund fee waivers. Trading revenue rose dramatically, up 42% sequentially, boosted by early-2021 market events on top of an already busy trading environment. Bank deposit account fee revenue declined 1% as balances ended the first quarter relatively flat to December 31 at $164.2 billion and certain balances repriced to current rates. Altogether, total revenues grew 13% from the prior quarter to a record $4.7 billion. On the expense side, total GAAP spending increased 2% to $2.8 billion for the quarter, including $119 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Exclusive of these items (1), adjusted total expenses were up 9% quarter-over-quarter, reflecting the impact of extraordinary client activity alongside our planned spending. Overall, our ability to maintain disciplined expense management while investing to support current and future growth through this period enabled us to produce a 41.6% pre-tax profit margin – our highest level in four quarters – or 47.4% on an adjusted basis (1).”

Mr. Crawford concluded, “During the first quarter we took advantage of favorable market conditions to help optimize our capital mix. We executed two preferred offerings equal to $2.25 billion and $600 million – which placed outstanding balances at the upper-end of our 25%-30% guideline relative to Total Tier 1 Capital. As previously announced, proceeds from the more recent Series J issuance will be used to redeem our $600 million Series C preferred. Additionally, we moved to enhance our liquidity position ahead of pending debt maturities by issuing 3- and 7- year senior notes totaling $4 billion in March. Our priority for capital management remains centered on maintaining flexibility to support ongoing growth – which will soon include the first Bank Deposit Account transfers, set to begin as early as June 30 – while also helping us move towards our long-term Tier 1 Leverage Ratio operating objective of 6.75%-7.00%. Consolidated balance sheet assets ended the quarter at $563 billion, up 3% from December 31 and our preliminary Tier 1 Leverage Ratio increased to 6.4%. Overall, our healthy financial performance, high-quality balance sheet, and solid capital base enabled us to achieve a 12% return on equity and a 24% ROTCE (1) for the first quarter. Confidence in our all-weather business model, coupled with a focus on balancing near-term profitability and long-term investment, enables us to continue driving scale while endeavoring to meet our clients’ needs.”

(1)

Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on trends in client trading activity, was posted on March 12, 2021.

Forward-Looking Statements

This press release contains forward-looking statements relating to actions being taken to expand capacity, enhance service quality and support ongoing growth; maintaining disciplined expense management while investing to support current and future growth, meet client needs, and drive scale and efficiency; guideline percentage of preferred stock relative to Total Tier 1 Capital; Tier 1 Leverage Ratio operating objective; capital management; Bank Deposit Account transfers; and balancing near-term profitability and long-term investment. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire talent; support client activity levels; successfully implement integration strategies and plans; manage expenses; attract and retain clients and registered investment advisors and grow those relationships and client assets; and monetize client assets. Other important factors include general market conditions, including equity valuations, trading activity, the level of interest rates – which can impact money market fund fee waivers, and credit spreads; market volatility; client use of the company’s advisory solutions and other products and services; capital and liquidity needs and management; client sensitivity to rates; level of client assets, including cash balances; the transfer of Bank Deposit Account balances; balance sheet cash; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; 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 31.9 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.6 million banking accounts, and approximately $7.07 trillion in client assets. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly-owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended
March 31,

 

2021

 

2020

Net Revenues

 

 

 

Interest revenue

$

2,015

 

 

$

1,708

 

Interest expense

(104)

 

 

(136)

 

Net interest revenue

1,911

 

 

1,572

 

Asset management and administration fees (1)

1,016

 

 

827

 

Trading revenue

1,216

 

 

188

 

Bank deposit account fees

351

 

 

 

Other

221

 

 

30

 

Total net revenues

4,715

 

 

2,617

 

Expenses Excluding Interest

 

 

 

Compensation and benefits

1,430

 

 

897

 

Professional services

226

 

 

182

 

Occupancy and equipment

237

 

 

142

 

Advertising and market development

116

 

 

67

 

Communications

147

 

 

75

 

Depreciation and amortization (2)

129

 

 

90

 

Amortization of acquired intangible assets (2)

154

 

 

6

 

Regulatory fees and assessments

78

 

 

34

 

Other

238

 

 

77

 

Total expenses excluding interest

2,755

 

 

1,570

 

Income before taxes on income

1,960

 

 

1,047

 

Taxes on income

476

 

 

252

 

Net Income

1,484

 

 

795

 

Preferred stock dividends and other

96

 

 

38

 

Net Income Available to Common Stockholders

$

1,388

 

 

$

757

 

Weighted-Average Common Shares Outstanding:

 

 

 

Basic

1,882

 

 

1,287

 

Diluted

1,892

 

 

1,294

 

Earnings Per Common Shares Outstanding (3):

 

 

 

Basic

$

.74

 

 

$

.59

 

Diluted

$

.73

 

 

$

.58

 

(1)

Includes fee waivers of $78 million for the three months ended March 31, 2021.

(2)

Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.

(3)

For the three months ended March 31, 2021, the Company had 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)

 

Q1-21 % change

 

 

2021

 

2020

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-20

 

Q4-20

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

22

%

 

6

%

 

 

$

1,911

 

 

$

1,809

 

 

$

1,343

 

 

$

1,389

 

 

$

1,572

 

Asset management and administration fees

23

%

 

3

%

 

 

1,016

 

 

987

 

 

860

 

 

801

 

 

827

 

Trading revenue

N/M

 

42

%

 

 

1,216

 

 

854

 

 

181

 

 

193

 

 

188

 

Bank deposit account fees

N/M

 

(1)

%

 

 

351

 

 

355

 

 

 

 

 

 

 

Other

N/M

 

29

%

 

 

221

 

 

171

 

 

64

 

 

67

 

 

30

 

Total net revenues

80

%

 

13

%

 

 

4,715

 

 

4,176

 

 

2,448

 

 

2,450

 

 

2,617

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

59

%

 

2

%

 

 

1,430

 

 

1,398

 

 

840

 

 

819

 

 

897

 

Professional services

24

%

 

(16)

%

 

 

226

 

 

269

 

 

194

 

 

198

 

 

182

 

Occupancy and equipment

67

%

 

(7)

%

 

 

237

 

 

254

 

 

155

 

 

152

 

 

142

 

Advertising and market development

73

%

 

(6)

%

 

 

116

 

 

123

 

 

66

 

 

70

 

 

67

 

Communications

96

%

 

16

%

 

 

147

 

 

127

 

 

73

 

 

78

 

 

75

 

Depreciation and amortization (1)

43

%

 

(1)

%

 

 

129

 

 

130

 

 

97

 

 

97

 

 

90

 

Amortization of acquired intangible assets (1)

N/M

 

5

%

 

 

154

 

 

147

 

 

25

 

 

12

 

 

6

 

Regulatory fees and assessments

129

%

 

37

%

 

 

78

 

 

57

 

 

36

 

 

36

 

 

34

 

Other

N/M

 

22

%

 

 

238

 

 

195

 

 

73

 

 

100

 

 

77

 

Total expenses excluding interest

75

%

 

2

%

 

 

2,755

 

 

2,700

 

 

1,559

 

 

1,562

 

 

1,570

 

Income before taxes on income

87

%

 

33

%

 

 

1,960

 

 

1,476

 

 

889

 

 

888

 

 

1,047

 

Taxes on income

89

%

 

40

%

 

 

476

 

 

341

 

 

191

 

 

217

 

 

252

 

Net Income

87

%

 

31

%

 

 

$

1,484

 

 

$

1,135

 

 

$

698

 

 

$

671

 

 

$

795

 

Preferred stock dividends and other

153

%

 

13

%

 

 

96

 

 

85

 

 

83

 

 

50

 

 

38

 

Net Income Available to Common Stockholders

83

%

 

32

%

 

 

$

1,388

 

 

$

1,050

 

 

$

615

 

 

$

621

 

 

$

757

 

Earnings per common share (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

25

%

 

30

%

 

 

$

.74

 

 

$

.57

 

 

$

.48

 

 

$

.48

 

 

$

.59

 

Diluted

26

%

 

28

%

 

 

$

.73

 

 

$

.57

 

 

$

.48

 

 

$

.48

 

 

$

.58

 

Dividends declared per common share

 

 

 

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

46

%

 

2

%

 

 

1,882

 

 

1,848

 

 

1,289

 

 

1,288

 

 

1,287

 

Diluted

46

%

 

2

%

 

 

1,892

 

 

1,855

 

 

1,294

 

 

1,294

 

 

1,294

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

41.6

%

 

35.3

%

 

36.3

%

 

36.2

%

 

40.0

%

Return on average common stockholders’ equity (annualized) (3)

 

 

 

 

 

12

%

 

11

%

 

10

%

 

10

%

 

14

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

(29)

%

 

21

%

 

 

$

48.6

 

 

$

40.3

 

 

$

27.5

 

 

$

33.6

 

 

$

68.5

 

Cash and investments segregated

18

%

 

(20)

%

 

 

40.4

 

 

50.4

 

 

29.6

 

 

33.2

 

 

34.3

 

Receivables from brokerage clients — net

N/M

 

16

%

 

 

74.7

 

 

64.4

 

 

25.4

 

 

21.4

 

 

19.0

 

Available for sale securities

54

%

 

1

%

 

 

341.6

 

 

337.4

 

 

303.8

 

 

281.2

 

 

221.2

 

Bank loans — net

30

%

 

7

%

 

 

25.4

 

 

23.8

 

 

22.3

 

 

20.9

 

 

19.5

 

Total assets

52

%

 

3

%

 

 

563.5

 

 

549.0

 

 

419.4

 

 

400.5

 

 

370.8

 

Bank deposits

33

%

 

3

%

 

 

369.9

 

 

358.0

 

 

320.7

 

 

301.6

 

 

277.5

 

Payables to brokerage clients

105

%

 

(3)

%

 

 

101.3

 

 

104.2

 

 

52.0

 

 

50.1

 

 

49.3

 

Short-term borrowings

N/M

 

N/M

 

 

2.5

 

 

 

 

 

 

 

 

 

Long-term debt

108

%

 

30

%

 

 

17.7

 

 

13.6

 

 

7.8

 

 

8.5

 

 

8.5

 

Stockholders’ equity

111

%

 

(1)

%

 

 

55.6

 

 

56.1

 

 

31.3

 

 

30.8

 

 

26.3

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

58

%

 

 

 

 

32.0

 

 

32.0

 

 

22.1

 

 

21.8

 

 

20.2

 

Capital expenditures — purchases of equipment, office facilities, and

property, net (in millions)

(16)

%

 

5

%

 

 

$

209

 

 

$

200

 

 

$

122

 

 

$

169

 

 

$

250

 

Expenses excluding interest as a percentage of average client assets

(annualized)

 

 

 

 

 

0.16

%

 

0.17

%

 

0.14

%

 

0.16

%

 

0.16

%

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

N/M

 

45

%

 

 

8,414

 

 

5,796

 

 

1,460

 

 

1,619

 

 

1,540

 

Number of Trading Days

(2)

%

 

(3)

%

 

 

61.0

 

 

63.0

 

 

64.0

 

 

63.0

 

 

62.0

 

Revenue Per Trade (4)

20

%

 

1

%

 

 

$

2.37

 

 

$

2.34

 

 

$

1.94

 

 

$

1.89

 

 

$

1.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at provisional fair value as of October 6, 2020. Results of operations and metrics are inclusive of TD Ameritrade beginning October 6, 2020.

(1)

Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.

(2)

Beginning in the fourth quarter of 2020, the Company had 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.

(3)

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

(4)

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

N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

Three Months Ended
March 31,

 

 

2021

 

 

2020

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

38,898

 

 

$

7

 

 

0.08

%

 

 

$

32,134

 

 

$

85

 

 

1.04

%

Cash and investments segregated

48,149

 

 

10

 

 

0.08

%

 

 

23,716

 

 

87

 

 

1.45

%

Receivables from brokerage clients

67,738

 

 

563

 

 

3.32

%

 

 

19,151

 

 

168

 

 

3.47

%

Available for sale securities (1)

338,245

 

 

1,091

 

 

1.29

%

 

 

197,745

 

 

1,185

 

 

2.39

%

Bank loans

24,476

 

 

139

 

 

2.27

%

 

 

18,897

 

 

144

 

 

3.06

%

Total interest-earning assets

517,506

 

 

1,810

 

 

1.40

%

 

 

291,643

 

 

1,669

 

 

2.28

%

Securities lending revenue (2)

 

 

204

 

 

 

 

 

 

 

37

 

 

 

Other interest revenue (2)

 

 

1

 

 

 

 

 

 

 

2

 

 

 

Total interest-earning assets (3)

$

517,506

 

 

$

2,015

 

 

1.56

%

 

 

$

291,643

 

 

$

1,708

 

 

2.33

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

363,099

 

 

$

13

 

 

0.01

%

 

 

$

227,523

 

 

$

57

 

 

0.10

%

Payables to brokerage clients

87,339

 

 

2

 

 

0.01

%

 

 

30,287

 

 

8

 

 

0.10

%

Short-term borrowings (4)

1,093

 

 

 

 

0.22

%

 

 

3

 

 

 

 

1.07

%

Long-term debt

14,245

 

 

85

 

 

2.37

%

 

 

7,527

 

 

66

 

 

3.53

%

Total interest-bearing liabilities

465,776

 

 

100

 

 

0.09

%

 

 

265,340

 

 

131

 

 

0.20

%

Non-interest-bearing funding sources (3)

51,730

 

 

 

 

 

 

 

26,303

 

 

 

 

 

Securities lending expense (2)

 

 

5

 

 

 

 

 

 

 

7

 

 

 

Other interest expense (2)

 

 

(1)

 

 

 

 

 

 

 

(2)

 

 

 

Total funding sources (3)

$

517,506

 

 

$

104

 

 

0.08

%

 

 

$

291,643

 

 

$

136

 

 

0.19

%

Net interest revenue

 

 

$

1,911

 

 

1.48

%

 

 

 

 

$

1,572

 

 

2.14

%

(1)

Amounts have been calculated based on amortized cost.

(2)

Beginning in the fourth quarter of 2020, securities lending revenue has been reclassified from broker-related receivables and other revenue. Securities lending expense has been reclassified from other expense. Prior period amounts have been reclassified to reflect this change.

(3)

Beginning in the fourth quarter of 2020, broker-related receivables were removed from total interest-earning assets and netted against non-interest-bearing funding sources, resulting in an immaterial reduction to total interest-earning assets and total funding sources. Prior period amounts have been reclassified to reflect this change.

(4)

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

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

Three Months Ended
March 31,

 

2021

 

 

2020

 

Average
Client
Assets

 

Revenue

 

Average
Fee

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

Schwab money market funds before fee waivers

$

169,683

 

 

$

122

 

 

0.29

%

 

 

$

203,772

 

 

$

152

 

 

0.30

%

Fee waivers

 

 

(78)

 

 

 

 

 

 

 

 

 

 

Schwab money market funds

169,683

 

 

44

 

 

0.11

%

 

 

203,772

 

 

152

 

 

0.30

%

Schwab equity and bond funds, ETFs, and

collective trust funds (CTFs)

377,282

 

 

86

 

 

0.09

%

 

 

290,808

 

 

76

 

 

0.11

%

Mutual Fund OneSource® and other non-

transaction fee funds

222,455

 

 

172

 

 

0.31

%

 

 

188,583

 

 

147

 

 

0.31

%

Other third-party mutual funds and ETFs (1)

849,409

 

 

168

 

 

0.08

%

 

 

451,959

 

 

77

 

 

0.07

%

Total mutual funds, ETFs, and CTFs (2)

$

1,618,829

 

 

470

 

 

0.12

%

 

 

$

1,135,122

 

 

452

 

 

0.16

%

Advice solutions (2)

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

424,629

 

 

468

 

 

0.45

%

 

 

$

263,256

 

 

312

 

 

0.48

%

Non-fee-based

84,767

 

 

 

 

 

 

 

71,229

 

 

 

 

 

Total advice solutions

$

509,396

 

 

468

 

 

0.37

%

 

 

$

334,485

 

 

312

 

 

0.38

%

Other balance-based fees (3)

576,562

 

 

64

 

 

0.05

%

 

 

432,847

 

 

54

 

 

0.05

%

Other (4)

 

 

14

 

 

 

 

 

 

 

9

 

 

 

Total asset management and administration fees

 

 

$

1,016

 

 

 

 

 

 

 

$

827

 

 

 

(1)

Beginning in the fourth quarter of 2020, includes third-party money funds related to the acquisition of TD Ameritrade.

(2)

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®, Schwab Intelligent Portfolios Premium®, TD Ameritrade AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.

(3)

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

(4)

Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

 

 

Q1-21 % Change

 

 

2021

 

2020

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-20

 

Q4-20

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One ®, certain cash equivalents and bank deposits

44

%

 

2

%

 

 

$

467.3

 

 

$

458.4

 

 

$

370.3

 

 

$

349.2

 

 

$

324.4

 

Bank deposit account balances

N/M

 

(1)

%

 

 

164.2

 

 

165.9

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

(20)

%

 

(7)

%

 

 

163.6

 

 

176.1

 

 

190.3

 

 

211.6

 

 

203.7

 

Equity and bond funds and CTFs (2)

54

%

 

7

%

 

 

152.9

 

 

142.9

 

 

125.5

 

 

117.0

 

 

99.1

 

Total proprietary mutual funds and CTFs

5

%

 

(1)

%

 

 

316.5

 

 

319.0

 

 

315.8

 

 

328.6

 

 

302.8

 

Mutual Fund Marketplace ® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

41

%

 

2

%

 

 

227.3

 

 

223.9

 

 

203.6

 

 

193.0

 

 

161.6

 

Mutual fund clearing services

38

%

 

(2)

%

 

 

248.7

 

 

252.9

 

 

228.4

 

 

217.3

 

 

180.8

 

Other third-party mutual funds (4)

103

%

 

5

%

 

 

1,375.8

 

 

1,304.6

 

 

848.1

 

 

796.5

 

 

676.2

 

Total Mutual Fund Marketplace

82

%

 

4

%

 

 

1,851.8

 

 

1,781.4

 

 

1,280.1

 

 

1,206.8

 

 

1,018.6

 

Total mutual fund assets

64

%

 

3

%

 

 

2,168.3

 

 

2,100.4

 

 

1,595.9

 

 

1,535.4

 

 

1,321.4

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

62

%

 

11

%

 

 

220.9

 

 

198.8

 

 

168.9

 

 

156.3

 

 

136.5

 

Other third-party ETFs

171

%

 

9

%

 

 

1,035.1

 

 

947.3

 

 

512.6

 

 

468.0

 

 

382.5

 

Total ETF assets

142

%

 

10

%

 

 

1,256.0

 

 

1,146.1

 

 

681.5

 

 

624.3

 

 

519.0

 

Equity and other securities

163

%

 

9

%

 

 

2,721.0

 

 

2,504.7

 

 

1,453.2

 

 

1,305.8

 

 

1,035.5

 

Fixed income securities

16

%

 

(3)

%

 

 

364.5

 

 

377.1

 

 

318.0

 

 

314.8

 

 

313.8

 

Margin loans outstanding

N/M

 

19

%

 

 

(72.2)

 

 

(60.9)

 

 

(23.6)

 

 

(19.4)

 

 

(17.2)

 

Total client assets

102

%

 

6

%

 

 

$

7,069.1

 

 

$

6,691.7

 

 

$

4,395.3

 

 

$

4,110.1

 

 

$

3,496.9

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

109

%

 

5

%

 

 

$

3,865.9

 

 

$

3,667.9

 

 

$

2,377.7

 

 

$

2,223.5

 

 

$

1,846.8

 

Advisor Services

94

%

 

6

%

 

 

3,203.2

 

 

3,023.8

 

 

2,017.6

 

 

1,886.6

 

 

1,650.1

 

Total client assets

102

%

 

6

%

 

 

$

7,069.1

 

 

$

6,691.7

 

 

$

4,395.3

 

 

$

4,110.1

 

 

$

3,496.9

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

84

%

 

(93)

%

 

 

$

65.1

 

 

$

939.2

 

 

$

18.9

 

 

$

113.0

 

 

$

35.3

 

Advisor Services (6)

81

%

 

(91)

%

 

 

68.7

 

 

751.5

 

 

32.3

 

 

24.4

 

 

37.9

 

Total net new assets

83

%

 

(92)

%

 

 

$

133.8

 

 

$

1,690.7

 

 

$

51.2

 

 

$

137.4

 

 

$

73.2

 

Net market gains (losses)

N/M

 

(60)

%

 

 

243.6

 

 

605.7

 

 

234.0

 

 

475.8

 

 

(615.1)

 

Net growth (decline)

N/M

 

(84)

%

 

 

$

377.4

 

 

$

2,296.4

 

 

$

285.2

 

 

$

613.2

 

 

$

(541.9)

 

New brokerage accounts (in thousands, for the quarter ended) (7)

N/M

 

(80)

%

 

 

3,153

 

 

15,774

 

 

592

 

 

1,652

 

 

609

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts

150

%

 

8

%

 

 

31,902

 

 

29,629

 

 

14,393

 

 

14,107

 

 

12,736

 

Banking accounts

13

%

 

7

%

 

 

1,608

 

 

1,499

 

 

1,486

 

 

1,463

 

 

1,426

 

Corporate retirement plan participants

22

%

 

2

%

 

 

2,105

 

 

2,054

 

 

1,722

 

 

1,716

 

 

1,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 March 31, 2021, off-platform equity and bond funds, CTFs, and ETFs were $18.5 billion, $5.8 billion, and $72.4 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of March 31, 2021, third-party money funds were $18.2 billion.

(5)

First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade. Second quarter of 2020 includes inflows of $79.9 billion related to the acquisition of the assets of USAA’s Investment Management Company and $10.9 billion from a mutual fund clearing services client.

(6)

Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade. Third quarter of 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC.

(7)

Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. Second quarter of 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAA’s Investment Management Company.

N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

The Charles Schwab Corporation Monthly Activity Report For March 2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

Change

 

 

Mar

 

Apr

 

May

 

Jun

 

Jul

 

Aug

 

Sep

 

Oct

 

Nov

 

Dec

 

Jan

 

Feb

 

 

Mar

 

Mo.

 

Yr.

Market Indices (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average

21,917

 

24,346

 

25,383

 

25,813

 

26,428

 

28,430

 

27,782

 

26,502

 

29,639

 

30,606

 

29,983

 

30,932

 

32,982

 

7

%

50

%

Nasdaq Composite

7,700

 

8,890

 

9,490

 

10,059

 

10,745

 

11,775

 

11,168

 

10,912

 

12,199

 

12,888

 

13,071

 

13,192

 

13,247

 

 

72

%

Standard & Poor’s® 500

2,585

 

2,912

 

3,044

 

3,100

 

3,271

 

3,500

 

3,363

 

3,270

 

3,622

 

3,756

 

3,714

 

3,811

 

3,973

 

4

%

54

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

3,862.8

 

3,496.9

 

3,778.3

 

4,009.0

 

4,110.1

 

4,278.0

 

4,489.7

 

4,395.3

 

5,878.5

 

6,421.0

 

6,691.7

 

6,759.6

 

6,900.5

 

 

 

Net New Assets (1)

27.9

 

15.3

 

97.5

 

24.6

 

11.2

 

20.0

 

20.0

 

1,596.9

 

32.1

 

61.7

 

34.2

 

37.0

 

62.6

 

69

%

124

%

Net Market Gains (Losses)

(393.8)

 

266.1

 

133.2

 

76.5

 

156.7

 

191.7

 

(114.4)

 

(113.7)

 

510.4

 

209.0

 

33.7

 

103.9

 

106.0

 

 

 

Total Client Assets (at month end)

3,496.9

 

3,778.3

 

4,009.0

 

4,110.1

 

4,278.0

 

4,489.7

 

4,395.3

 

5,878.5

 

6,421.0

 

6,691.7

 

6,759.6

 

6,900.5

 

7,069.1

 

2

%

102

%

Core Net New Assets (2)

27.9

 

15.3

 

17.6

 

13.7

 

2.7

 

20.0

 

20.0

 

25.6

 

32.1

 

61.7

 

34.2

 

51.4

 

62.6

 

22

%

124

%

Receiving Ongoing Advisory Services (at month end) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

291.5

 

309.9

 

339.8

 

345.2

 

355.6

 

366.8

 

361.2

 

425.3

 

457.1

 

471.8

 

472.4

 

481.3

 

495.2

 

3

%

70

%

Advisor Services (4)

1,531.3

 

1,647.9

 

1,711.7

 

1,747.5

 

1,818.5

 

1,900.5

 

1,870.1

 

2,505.5

 

2,715.7

 

2,828.3

 

2,840.6

 

2,913.3

 

2,997.9

 

3

%

96

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

12,736

 

12,866

 

14,007

 

14,107

 

14,220

 

14,311

 

14,393

 

29,013

 

29,202

 

29,629

 

30,534

 

31,523

 

31,902

 

1

%

150

%

Banking Accounts

1,426

 

1,439

 

1,448

 

1,463

 

1,480

 

1,493

 

1,486

 

1,496

 

1,504

 

1,499

 

1,518

 

1,542

 

1,608

 

4

%

13

%

Corporate Retirement Plan Participants

1,721

 

1,696

 

1,714

 

1,716

 

1,712

 

1,715

 

1,722

 

2,072

 

2,045

 

2,054

 

2,069

 

2,093

 

2,105

 

1

%

22

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands) (5)

283

 

201

 

1,250

 

201

 

206

 

202

 

184

 

14,718

 

430

 

626

 

1,095

 

1,211

 

847

 

(30)

%

199

%

Client Cash as a Percentage of Client Assets (6)

15.1

%

14.3

%

14.0

%

13.6

%

13.0

%

12.5

%

12.8

%

13.4

%

12.4

%

12.3

%

12.2

%

11.8

%

11.5

%

(30) bp

(360) bp

Derivative Trades as a Percentage of Total Trades

7.0

%

10.2

%

12.2

%

10.6

%

13.1

%

13.8

%

14.5

%

20.5

%

19.4

%

18.9

%

17.4

%

16.6

%

18.5

%

190 bp

1,150 bp

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (7,8) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Capitalization Stock

984

 

(693)

 

(768)

 

(1,254)

 

(2,536)

 

(1,422)

 

(1,360)

 

(935)

 

4,454

 

3,693

 

(1,604)

 

3,143

 

6,447

 

 

 

Small / Mid Capitalization Stock

(954)

 

151

 

(401)

 

(1,063)

 

(1,476)

 

(441)

 

(497)

 

(753)

 

2,431

 

2,293

 

1,841

 

1,492

 

1,995

 

 

 

International

(2,116)

 

(2,207)

 

(1,953)

 

(1,580)

 

(773)

 

230

 

370

 

168

 

2,110

 

4,112

 

4,330

 

4,439

 

4,323

 

 

 

Specialized

333

 

2,059

 

1,512

 

1,020

 

1,505

 

906

 

115

 

215

 

1,985

 

3,777

 

3,667

 

5,172

 

3,536

 

 

 

Hybrid

(4,790)

 

(860)

 

(518)

 

(97)

 

(769)

 

(124)

 

(12)

 

(553)

 

(402)

 

359

 

407

 

832

 

1,133

 

 

 

Taxable Bond

(23,142)

 

1,642

 

5,469

 

9,215

 

7,314

 

7,680

 

5,734

 

5,904

 

4,825

 

10,004

 

10,922

 

8,418

 

6,584

 

 

 

Tax-Free Bond

(5,229)

 

(242)

 

805

 

1,710

 

1,297

 

1,648

 

1,123

 

861

 

1,131

 

2,165

 

2,679

 

916

 

1,653

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (7)

(34,382)

 

(3,863)

 

(564)

 

1,768

 

(147)

 

2,568

 

757

 

(2,260)

 

2,832

 

6,336

 

5,713

 

6,273

 

6,190

 

 

 

Exchange-Traded Funds (8)

(532)

 

3,713

 

4,710

 

6,183

 

4,709

 

5,909

 

4,716

 

7,167

 

13,702

 

20,067

 

16,529

 

18,139

 

19,481

 

 

 

Money Market Funds

(1,233)

 

8,465

 

4,833

 

(5,673)

 

(9,039)

 

(5,614)

 

(6,627)

 

(4,021)

 

(5,908)

 

(7,332)

 

(5,248)

 

(4,405)

 

(4,528)

 

 

 

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (9,10)

317,850

 

353,018

 

361,814

 

373,986

 

379,521

 

384,690

 

392,784

 

442,119

 

466,677

 

482,394

 

517,306

 

514,885

 

520,074

 

1

%

64

%

Average Bank Deposit Account Balances (10,11)

 

 

 

 

 

 

 

132,030

 

162,315

 

163,463

 

167,980

 

167,433

 

164,866

 

(2)

%

N/M

(1)

February 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. October 2020 includes an inflow of $1.6 trillion related to the acquisition of TD Ameritrade. July 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC. June 2020 includes an inflow of $10.9 billion from a mutual fund clearing services client. May 2020 includes an inflow of $79.9 billion related to the acquisition of the assets of USAA’s Investment Management Company.

(2)

Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods.

(3)

Beginning in December 2020, AdvisorDirect® assets are presented as Investor Services. In December 2020, $46.5 billion and $50.4 billion for October and November, respectively, were reclassified from Advisor Services to Investor Services.

(4)

Excludes Retirement Business Services.

(5)

October 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. May 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAA’s Investment Management Company.

(6)

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

(7)

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

(8)

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

(9)

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

(10)

October 2020 averages reflect a full month of Schwab balances and 26 days of TD Ameritrade balances following the acquisition closing on October 6, 2020. Calculating the consolidated daily average from the closing date onwards would result in Average Interest- Earning Assets and Average Bank Deposit Account Balances of $450,004 million and $157,414 million, respectively.

(11)

Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.

N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Schwab’s first quarter earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwab’s results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies.

Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.

Non-GAAP
Adjustment or
Measure

Definition

Usefulness to Investors and Uses by
Management

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

Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s business acquisitions, amortization of acquired intangible assets, and, where applicable, the income tax effect of these expenses.

 

Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Company’s revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives.

We exclude acquisition and integration-related costs and amortization of acquired intangible assets for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwab’s ongoing operations, and is useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods.

 

Acquisition and integration-related costs fluctuate based on the timing of acquisitions and integration activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Company’s ongoing business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Company’s underlying operating performance.

Return on tangible common equity

Return on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets — net, and related deferred tax liabilities.

Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwab’s balance sheet.

Beginning in 2021, the Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria.

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

 

Three Months Ended March 31,

 

2021

 

2020

 

Total
Expenses
Excluding
Interest

 

Net Income

 

Total Expenses
Excluding
Interest

 

Net Income

Total expenses excluding interest (GAAP),

Net income (GAAP)

$

2,755

 

$

1,484

 

$

1,570

 

$

795

 

Acquisition and integration-related costs (1)

(119)

 

119

 

(37)

 

37

 

Amortization of acquired intangible assets

(154)

 

154

 

(6)

 

6

 

Income tax effects (2)

N/A

(67)

 

N/A

(11)

 

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,482

 

$

1,690

 

$

1,527

 

$

827

 

(1)

Acquisition and integration-related costs for the three months ended March 31, 2021 primarily consist of $72 million of compensation and benefits, $27 million of professional services, and $16 million of occupancy and equipment. Acquisition and integration-related costs for the three months ended March 31, 2020 primarily consist of $23 million of professional services, $8 million of compensation and benefits, and $4 million of other expense.

(2)

The income tax effect of the non-GAAP adjustments is determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and is used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis.

N/A Not applicable.

 

Three Months Ended March 31,

 

2021

 

2020

 

Amount

 

% of Total
Net
Revenues

 

Amount

 

% of Total
Net
Revenues

Income before taxes on income (GAAP), Pre-tax

profit margin (GAAP)

$

1,960

 

41.6

%

$

1,047

 

40.0

%

Acquisition and integration-related costs

119

 

2.5

%

37

 

1.5

%

Amortization of acquired intangible assets

154

 

3.3

%

6

 

0.2

%

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

Adjusted pre-tax profit margin (non-GAAP)

$

2,233

 

47.4

%

$

1,090

 

41.7

%

 

Three Months Ended March 31,

 

2021

 

2020

 

Amount

 

Diluted
EPS

 

Amount

 

Diluted
EPS

Net income available to common stockholders (GAAP),

Earnings per common share — diluted (GAAP)

$

1,388

 

$

.73

 

$

757

 

$

.58

 

Acquisition and integration-related costs

119

 

.06

 

37

 

.03

 

Amortization of acquired intangible assets

154

 

.08

 

6

 

 

Income tax effects

(67)

 

(.03)

 

(11)

 

 

Adjusted net income available to common stockholders

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

$

1,594

 

$

.84

 

$

789

 

$

.61

 

 

Three Months Ended March 31,

 

2021

 

2020

Return on average common stockholders' equity (GAAP)

12

%

14

%

Average common stockholders' equity

$

46,691

 

$

21,215

 

Less: Average goodwill

(11,952)

 

(1,227)

 

Less: Average acquired intangible assets — net

(9,915)

 

(125)

 

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

1,935

 

67

 

Average tangible common equity

$

26,759

 

$

19,930

 

Adjusted net income available to common stockholders (1)

$

1,594

 

$

789

 

Return on tangible common equity (non-GAAP)

24

%

16

%

(1)

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

 

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

INVESTORS/ANALYSTS:
Jeff Edwards
Charles Schwab
Phone: 415-667-1524

 

Source: The Charles Schwab Corporation