Schwab Reports Net Income of $937 Million, Up 8%, Posting the Strongest Second Quarter in Company History

Revenues Grow 8% Year-Over-Year to $2.7 Billion, Marking Sustained Business Momentum

Core Net New Assets Total $37.2 Billion and Client Assets Reach a Record $3.70 Trillion

Tuesday, July 16, 2019 5:45 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"strategy includes serving our clients’ evolving needs where and how they prefer"

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation announced today that its net income for the second quarter of 2019 was $937 million, down 3% from $964 million for the prior quarter, and up 8% from $866 million for the second quarter of 2018. Net income for the six months ended June 30, 2019 was a record $1.9 billion, up 15% from the year-earlier period.

 

 

Three Months Ended
June 30,

 

%

 

Six Months Ended
June 30,

 

%

Financial Highlights

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

 

$

2,681

 

 

$

2,486

 

 

8%

 

$

5,404

 

 

$

4,884

 

 

11%

Net income (in millions)

 

$

937

 

 

$

866

 

 

8%

 

$

1,901

 

 

$

1,649

 

 

15%

Diluted earnings per common share

 

$

.66

 

 

$

.60

 

 

10%

 

$

1.35

 

 

$

1.14

 

 

18%

Pre-tax profit margin

 

46.1

%

 

45.5

%

 

 

 

46.3

%

 

43.7

%

 

 

Return on average common
stockholders’ equity (annualized)

 

19

%

 

19

%

 

 

 

20

%

 

19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

CEO Walt Bettinger said, “Our ‘no trade-offs’ approach to combining value, service, transparency, and trust continues to resonate with clients, as they are drawn to our contemporary full-service model through all environments. Thus far in 2019, a challenging mix of geopolitical, economic, and market dynamics has persisted, with investors facing unresolved trade negotiations, the Brexit debate and signals that the Fed may be moving towards a reversal in rate policy, all while U.S. equity markets have rallied to record territory. Amidst this backdrop, we drove sustained business momentum. Clients opened nearly 400,000 new brokerage accounts during the second quarter, bringing year-to-date new accounts to 772,000, helping push active accounts to the 12 million mark by quarter-end, up 7% year-over-year. This includes 3.5 million accounts under the guidance of the 7,500+ independent advisors who custody with us; those accounts are up 8% as advisors successfully build their businesses with our assistance.”

Mr. Bettinger continued, “Both advisors and individual clients contributed to our total core net new assets of $37.2 billion during the second quarter. With first half core net new assets of $88.9 billion, we sustained an annualized organic growth rate in excess of 5% throughout the period despite seasonal tax outflows in April. These strong flows reflect our ability to win in a competitive marketplace – clients have transferred nearly two dollars of assets in for every dollar out over the past six months, helping total client assets climb to a record $3.70 trillion as of June 30th, an increase of $305 billion, or 9% from a year ago.”

“Our “Through Clients’ Eyes” strategy includes serving our clients’ evolving needs where and how they prefer,” Mr. Bettinger added. “We recently opened our 61st independent branch, up from 53 at year end. These offices help extend our traditional branch network, delivering Schwab’s capabilities through local, community-based professionals. For clients exploring our lending capabilities, we have introduced new features to our Pledged Asset Line® offering, including loans with no preset term, streamlined origination and underwriting criteria, and a new application process available via any web-enabled device, with access to a new loan in as little as 24 hours. To aid advisors with growing and managing their practices, we are implementing digital alternatives to traditionally paper-based processes; by eliminating manual touch points and enabling automated status updates, these tools improve efficiency for both advisors and the company. We know that investing in these and other initiatives to build an ever more capable and efficient Schwab is important to our clients and our ability to continue winning in the marketplace. Through consistent strategic focus and disciplined execution, we expect to sustain our track record of delivering profitable growth and long-term value creation while putting clients first.”

CFO Peter Crawford commented, “Our sustained business momentum helped us achieve our strongest second quarter ever, even as we weathered shifts in client asset allocations and activity levels, as well as the interest rate environment. Overall, revenues were up 8% from a year ago at $2.7 billion, which was just under last quarter’s record mark. Net interest revenue rose 14% year-over-year to $1.6 billion, largely driven by higher interest-earning assets relating to the transfer of sweep money market fund balances to bank and broker-dealer sweep. In addition, our net interest margin rose 10 bps from a year ago to 2.40%, reflecting the Fed’s 2018 rate hikes. Asset management and administration fees decreased 3% year-over-year to $786 million as a result of lower money market fund revenue due to the sweep transfers as well as ongoing declines in Mutual Fund OneSource® balances, partially offset by growing enrollment in our advisory solutions. Trading revenue declined 3% to $174 million due to a decrease in average revenue per trade, which more than offset higher activity. Finally, other revenue rose 32%, driven primarily by a gain on the sale of PortfolioCenter®, a portfolio management and reporting software solution for advisors, to Tamarac Inc. Looking at expenses, our 7% increase reflects planned growth in staffing and our investments to drive efficiency and scale as we support our expanding client base. Our ongoing focus on driving efficiency while managing our spending in a disciplined manner enabled us to maintain our ratio of expenses to client assets at 16 bps for the quarter and achieve a pre-tax profit margin of 46.1% – our 5th consecutive quarter of at least 45%.”

Mr. Crawford concluded, “Effective balance sheet management remains a priority as we aim to maintain appropriate liquidity and support business growth. During the second quarter, we issued $600 million in senior notes with a 10-year maturity. Additionally, we transferred just under $200 million from sweep money market fund balances to bank and broker-dealer sweep, marking the completion of a 12-year process during which we moved approximately $130 billion. With sweep transfers done, tax season disbursements and some client sorting between invested and transactional cash allocations contributed to consolidated balance sheet assets declining by approximately $6 billion during the quarter to $276 billion. Consistent with our intent to return excess capital to stockholders, we repurchased 29.1 million shares for $1.2 billion during the quarter, leaving us with an outstanding authorization of $2.8 billion. The company’s preliminary Tier 1 Leverage ratio at quarter-end was 7.3%, somewhat above our operating objective of 6.75% - 7%. Our 19% return on equity for the second quarter marked our 5th consecutive quarter of at least 19% – our best sustained performance since 2009.”

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 crossing the $250 billion consolidated asset threshold for heightened regulatory requirements, was posted on August 14, 2018.

Forward-Looking Statements

This press release contains forward-looking statements relating to client demand for the company’s full-service model, including advisory solutions; growth in the client base, accounts and assets; investments to drive efficiency and scale; profitable growth; long-term value creation; expenses; liquidity; capital returns to stockholders; and Tier 1 Leverage Ratio operating objective. 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; client use of the company’s advisory solutions and other products and services; 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 products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner; the level of client assets, including cash balances; capital and liquidity needs and management; the company’s ability to manage expenses; client sensitivity to interest rates; 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 12.0 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.3 million banking accounts, and $3.70 trillion in client assets as of June 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
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Net Revenues

 

 

 

 

 

 

 

Interest revenue

$

1,927

 

 

$

1,590

 

 

$

3,925

 

 

$

3,011

 

Interest expense

(318

)

 

(183

)

 

(635

)

 

(341

)

Net interest revenue

1,609

 

 

1,407

 

 

3,290

 

 

2,670

 

Asset management and administration fees

786

 

 

814

 

 

1,541

 

 

1,665

 

Trading revenue

174

 

 

180

 

 

359

 

 

381

 

Other

112

 

 

85

 

 

214

 

 

168

 

Total net revenues

2,681

 

 

2,486

 

 

5,404

 

 

4,884

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

807

 

 

745

 

 

1,657

 

 

1,515

 

Professional services

178

 

 

156

 

 

348

 

 

312

 

Occupancy and equipment

133

 

 

122

 

 

264

 

 

244

 

Advertising and market development

77

 

 

77

 

 

146

 

 

150

 

Communications

62

 

 

58

 

 

124

 

 

120

 

Depreciation and amortization

84

 

 

75

 

 

167

 

 

148

 

Regulatory fees and assessments

30

 

 

50

 

 

62

 

 

101

 

Other

74

 

 

72

 

 

136

 

 

161

 

Total expenses excluding interest

1,445

 

 

1,355

 

 

2,904

 

 

2,751

 

Income before taxes on income

1,236

 

 

1,131

 

 

2,500

 

 

2,133

 

Taxes on income

299

 

 

265

 

 

599

 

 

484

 

Net Income

937

 

 

866

 

 

1,901

 

 

1,649

 

Preferred stock dividends and other

50

 

 

53

 

 

89

 

 

90

 

Net Income Available to Common Stockholders

$

887

 

 

$

813

 

 

$

1,812

 

 

$

1,559

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

1,328

 

 

1,350

 

 

1,331

 

 

1,349

 

Diluted

1,337

 

 

1,364

 

 

1,340

 

 

1,363

 

Earnings Per Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

$

.67

 

 

$

.60

 

 

$

1.36

 

 

$

1.16

 

Diluted

$

.66

 

 

$

.60

 

 

$

1.35

 

 

$

1.14

 

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2-19 % change

 

 

2019

 

2018

 

vs.

 

vs.

 

 

Second

 

First

 

Fourth

 

Third

 

Second

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

Q2-18

 

Q1-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

14

%

 

(4

)%

 

 

$

1,609

 

 

$

1,681

 

 

$

1,626

 

 

$

1,527

 

 

$

1,407

 

Asset management and administration fees

(3

)%

 

4

%

 

 

786

 

 

755

 

 

755

 

 

809

 

 

814

 

Trading revenue

(3

)%

 

(6

)%

 

 

174

 

 

185

 

 

206

 

 

176

 

 

180

 

Other

32

%

 

10

%

 

 

112

 

 

102

 

 

82

 

 

67

 

 

85

 

Total net revenues

8

%

 

(2

)%

 

 

2,681

 

 

2,723

 

 

2,669

 

 

2,579

 

 

2,486

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

8

%

 

(5

)%

 

 

807

 

 

850

 

 

805

 

 

737

 

 

745

 

Professional services

14

%

 

5

%

 

 

178

 

 

170

 

 

178

 

 

164

 

 

156

 

Occupancy and equipment

9

%

 

2

%

 

 

133

 

 

131

 

 

128

 

 

124

 

 

122

 

Advertising and market development

 

 

12

%

 

 

77

 

 

69

 

 

93

 

 

70

 

 

77

 

Communications

7

%

 

 

 

 

62

 

 

62

 

 

63

 

 

59

 

 

58

 

Depreciation and amortization

12

%

 

1

%

 

 

84

 

 

83

 

 

80

 

 

78

 

 

75

 

Regulatory fees and assessments

(40

)%

 

(6

)%

 

 

30

 

 

32

 

 

31

 

 

57

 

 

50

 

Other

3

%

 

19

%

 

 

74

 

 

62

 

 

81

 

 

71

 

 

72

 

Total expenses excluding interest

7

%

 

(1

)%

 

 

1,445

 

 

1,459

 

 

1,459

 

 

1,360

 

 

1,355

 

Income before taxes on income

9

%

 

(2

)%

 

 

1,236

 

 

1,264

 

 

1,210

 

 

1,219

 

 

1,131

 

Taxes on income

13

%

 

 

 

 

299

 

 

300

 

 

275

 

 

296

 

 

265

 

Net Income

8

%

 

(3

)%

 

 

$

937

 

 

$

964

 

 

$

935

 

 

$

923

 

 

$

866

 

Preferred stock dividends and other

(6

)%

 

28

%

 

 

50

 

 

39

 

 

50

 

 

38

 

 

53

 

Net Income Available to Common Stockholders

9

%

 

(4

)%

 

 

$

887

 

 

$

925

 

 

$

885

 

 

$

885

 

 

$

813

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

12

%

 

(3

)%

 

 

$

.67

 

 

$

.69

 

 

$

.66

 

 

$

.66

 

 

$

.60

 

Diluted

10

%

 

(4

)%

 

 

$

.66

 

 

$

.69

 

 

$

.65

 

 

$

.65

 

 

$

.60

 

Dividends declared per common share

70

%

 

 

 

 

$

.17

 

 

$

.17

 

 

$

.13

 

 

$

.13

 

 

$

.10

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(2

)%

 

 

 

 

1,328

 

 

1,333

 

 

1,343

 

 

1,351

 

 

1,350

 

Diluted

(2

)%

 

(1

)%

 

 

1,337

 

 

1,344

 

 

1,354

 

 

1,364

 

 

1,364

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

46.1

%

 

46.4

%

 

45.3

%

 

47.3

%

 

45.5

%

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

 

 

 

 

 

19

%

 

20

%

 

20

%

 

20

%

 

19

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

82

%

 

(26

)%

 

 

$

24.2

 

 

$

32.6

 

 

$

27.9

 

 

$

21.8

 

 

$

13.3

 

Cash and investments segregated

28

%

 

1

%

 

 

14.1

 

 

13.9

 

 

13.6

 

 

8.5

 

 

11.0

 

Receivables from brokerage clients — net

(4

)%

 

4

%

 

 

21.4

 

 

20.5

 

 

21.7

 

 

22.4

 

 

22.4

 

Available for sale securities

(2

)%

 

(9

)%

 

 

54.6

 

 

60.0

 

 

66.6

 

 

57.6

 

 

55.5

 

Held to maturity securities

1

%

 

4

%

 

 

138.3

 

 

132.4

 

 

144.0

 

 

139.0

 

 

136.8

 

Bank loans — net

 

 

1

%

 

 

16.6

 

 

16.5

 

 

16.6

 

 

16.6

 

 

16.6

 

Total assets

5

%

 

(2

)%

 

 

276.3

 

 

282.8

 

 

296.5

 

 

272.1

 

 

261.9

 

Bank deposits

4

%

 

(5

)%

 

 

208.4

 

 

219.5

 

 

231.4

 

 

213.4

 

 

199.9

 

Payables to brokerage clients

2

%

 

4

%

 

 

31.0

 

 

29.7

 

 

32.7

 

 

27.9

 

 

30.3

 

Long-term debt

28

%

 

9

%

 

 

7.4

 

 

6.8

 

 

6.9

 

 

5.8

 

 

5.8

 

Stockholders’ equity

6

%

 

(1

)%

 

 

21.3

 

 

21.6

 

 

20.7

 

 

20.8

 

 

20.1

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

10

%

 

3

%

 

 

20.5

 

 

20.0

 

 

19.5

 

 

19.1

 

 

18.7

 

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

37

%

 

(4

)%

 

 

$

173

 

 

$

181

 

 

$

159

 

 

$

156

 

 

$

126

 

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

 

 

 

 

 

0.16

%

 

0.17

%

 

0.17

%

 

0.15

%

 

0.16

%

Clients’ Daily Average Trades (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue trades (2)

4

%

 

(6

)%

 

 

392

 

 

418

 

 

466

 

 

382

 

 

376

 

Asset-based trades (3)

(7

)%

 

(7

)%

 

 

138

 

 

149

 

 

188

 

 

129

 

 

149

 

Other trades (4)

4

%

 

(11

)%

 

 

186

 

 

210

 

 

213

 

 

172

 

 

179

 

Total

2

%

 

(8

)%

 

 

716

 

 

777

 

 

867

 

 

683

 

 

704

 

Average Revenue Per Revenue Trade (2)

(5

)%

 

(3

)%

 

 

$

6.94

 

 

$

7.19

 

 

$

7.13

 

 

$

7.27

 

 

$

7.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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
June 30,

 

 

Six Months Ended
June 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

$

26,146

 

 

$

158

 

 

2.39

%

 

 

$

12,764

 

 

$

57

 

 

1.80

%

 

 

$

25,568

 

 

$

309

 

 

2.41

%

 

 

$

14,912

 

 

$

123

 

 

1.65

%

Cash and investments segregated

14,588

 

 

89

 

 

2.41

%

 

 

11,825

 

 

50

 

 

1.68

%

 

 

14,075

 

 

172

 

 

2.43

%

 

 

12,891

 

 

98

 

 

1.51

%

Broker-related receivables (1)

199

 

 

 

 

1.38

%

 

 

378

 

 

2

 

 

1.58

%

 

 

228

 

 

2

 

 

2.15

%

 

 

333

 

 

3

 

 

1.47

%

Receivables from brokerage clients

19,423

 

 

217

 

 

4.42

%

 

 

19,775

 

 

204

 

 

4.09

%

 

 

19,199

 

 

431

 

 

4.46

%

 

 

19,326

 

 

383

 

 

3.95

%

Available for sale securities (2)

56,020

 

 

386

 

 

2.74

%

 

 

52,682

 

 

291

 

 

2.19

%

 

 

61,407

 

 

837

 

 

2.72

%

 

 

51,533

 

 

531

 

 

2.06

%

Held to maturity securities

132,738

 

 

899

 

 

2.70

%

 

 

129,825

 

 

812

 

 

2.49

%

 

 

132,583

 

 

1,815

 

 

2.73

%

 

 

125,641

 

 

1,533

 

 

2.44

%

Bank loans

16,560

 

 

148

 

 

3.58

%

 

 

16,530

 

 

138

 

 

3.32

%

 

 

16,569

 

 

297

 

 

3.59

%

 

 

16,493

 

 

268

 

 

3.25

%

Total interest-earning assets

265,674

 

 

1,897

 

 

2.84

%

 

 

243,779

 

 

1,554

 

 

2.54

%

 

 

269,629

 

 

3,863

 

 

2.86

%

 

 

241,129

 

 

2,939

 

 

2.43

%

Other interest revenue

 

 

30

 

 

 

 

 

 

 

36

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

72

 

 

 

Total interest-earning assets

$

265,674

 

 

$

1,927

 

 

2.88

%

 

 

$

243,779

 

 

$

1,590

 

 

2.60

%

 

 

$

269,629

 

 

$

3,925

 

 

2.90

%

 

 

$

241,129

 

 

$

3,011

 

 

2.49

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

210,811

 

 

$

224

 

 

0.43

%

 

 

$

193,029

 

 

$

117

 

 

0.24

%

 

 

$

215,374

 

 

$

450

 

 

0.42

%

 

 

$

185,052

 

 

$

181

 

 

0.20

%

Payables to brokerage clients

23,034

 

 

24

 

 

0.42

%

 

 

21,729

 

 

14

 

 

0.26

%

 

 

22,611

 

 

47

 

 

0.42

%

 

 

22,097

 

 

21

 

 

0.20

%

Short-term borrowings (1)

3

 

 

 

 

2.68

%

 

 

1,429

 

 

7

 

 

1.94

%

 

 

17

 

 

 

 

2.50

%

 

 

6,770

 

 

54

 

 

1.59

%

Long-term debt

7,090

 

 

63

 

 

3.58

%

 

 

4,961

 

 

43

 

 

3.47

%

 

 

6,968

 

 

125

 

 

3.60

%

 

 

4,678

 

 

80

 

 

3.42

%

Total interest-bearing liabilities

240,938

 

 

311

 

 

0.52

%

 

 

221,148

 

 

181

 

 

0.33

%

 

 

244,970

 

 

622

 

 

0.51

%

 

 

218,597

 

 

336

 

 

0.31

%

Non-interest-bearing funding sources

24,736

 

 

 

 

 

 

 

22,631

 

 

 

 

 

 

 

24,659

 

 

 

 

 

 

 

22,532

 

 

 

 

 

Other interest expense

 

 

7

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

5

 

 

 

Total funding sources

$

265,674

 

 

$

318

 

 

0.48

%

 

 

$

243,779

 

 

$

183

 

 

0.30

%

 

 

$

269,629

 

 

$

635

 

 

0.47

%

 

 

$

241,129

 

 

$

341

 

 

0.28

%

Net interest revenue

 

 

$

1,609

 

 

2.40

%

 

 

 

 

$

1,407

 

 

2.30

%

 

 

 

 

$

3,290

 

 

2.43

%

 

 

 

 

$

2,670

 

 

2.21

%

(1)

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

(2)

Amounts have been calculated based on amortized cost.

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions)

(Unaudited)

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 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

$

161,998

 

 

$

123

 

 

0.30

%

 

 

$

139,968

 

 

$

147

 

 

0.42

%

 

 

$

160,133

 

 

$

245

 

 

0.31

%

 

 

$

148,165

 

 

$

329

 

 

0.45

%

Schwab equity and bond funds, ETFs, and collective trust funds (CTFs) (1)

261,773

 

 

74

 

 

0.11

%

 

 

218,877

 

 

76

 

 

0.14

%

 

 

253,048

 

 

144

 

 

0.11

%

 

 

215,153

 

 

150

 

 

0.14

%

Mutual Fund OneSource® and other non-transaction fee funds

192,227

 

 

152

 

 

0.32

%

 

 

217,867

 

 

175

 

 

0.32

%

 

 

189,725

 

 

299

 

 

0.32

%

 

 

220,268

 

 

353

 

 

0.32

%

Other third-party mutual funds and ETFs (2)

471,638

 

 

79

 

 

0.07

%

 

 

325,061

 

 

71

 

 

0.09

%

 

 

462,050

 

 

154

 

 

0.07

%

 

 

322,391

 

 

141

 

 

0.09

%

Total mutual funds, ETFs, and CTFs (3)

$

1,087,636

 

 

428

 

 

0.16

%

 

 

$

901,773

 

 

469

 

 

0.21

%

 

 

$

1,064,956

 

 

842

 

 

0.16

%

 

 

$

905,977

 

 

973

 

 

0.22

%

Advice solutions (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

243,050

 

 

295

 

 

0.49

%

 

 

$

225,879

 

 

283

 

 

0.50

%

 

 

$

236,722

 

 

573

 

 

0.49

%

 

 

$

225,320

 

 

565

 

 

0.51

%

Non-fee-based

69,274

 

 

 

 

 

 

 

62,109

 

 

 

 

 

 

 

68,015

 

 

 

 

 

 

 

60,964

 

 

 

 

 

Total advice solutions

$

312,324

 

 

295

 

 

0.38

%

 

 

$

287,988

 

 

283

 

 

0.39

%

 

 

$

304,737

 

 

573

 

 

0.38

%

 

 

$

286,284

 

 

565

 

 

0.40

%

Other balance-based fees (1,4)

408,929

 

 

54

 

 

0.05

%

 

 

372,029

 

 

51

 

 

0.05

%

 

 

400,560

 

 

106

 

 

0.05

%

 

 

391,236

 

 

106

 

 

0.05

%

Other (5)

 

 

9

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

21

 

 

 

Total asset management and administration fees

 

 

$

786

 

 

 

 

 

 

 

$

814

 

 

 

 

 

 

 

$

1,541

 

 

 

 

 

 

 

$

1,665

 

 

 

(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)

 

 

Q2-19 % Change

 

 

2019

 

2018

 

vs.

 

vs.

 

 

Second

 

First

 

Fourth

 

Third

 

Second

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

Q2-18

 

Q1-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

4

%

 

(4

)%

 

 

$

237.3

 

 

$

247.0

 

 

$

261.2

 

 

$

239.5

 

 

$

228.2

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

25

%

 

5

%

 

 

168.1

 

 

159.7

 

 

153.5

 

 

128.5

 

 

134.2

 

Equity and bond funds and CTFs (2,3)

9

%

 

4

%

 

 

110.9

 

 

106.2

 

 

94.3

 

 

107.4

 

 

102.1

 

Total proprietary mutual funds and CTFs

18

%

 

5

%

 

 

279.0

 

 

265.9

 

 

247.8

 

 

235.9

 

 

236.3

 

Mutual Fund Marketplace® (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

(7

)%

 

1

%

 

 

197.8

 

 

195.1

 

 

180.5

 

 

212.6

 

 

212.5

 

Mutual fund clearing services

10

%

 

6

%

 

 

192.9

 

 

182.7

 

 

164.4

 

 

182.2

 

 

175.3

 

Other third-party mutual funds

7

%

 

4

%

 

 

767.3

 

 

737.2

 

 

650.4

 

 

740.1

 

 

716.1

 

Total Mutual Fund Marketplace

5

%

 

4

%

 

 

1,158.0

 

 

1,115.0

 

 

995.3

 

 

1,134.9

 

 

1,103.9

 

Total mutual fund assets

7

%

 

4

%

 

 

1,437.0

 

 

1,380.9

 

 

1,243.1

 

 

1,370.8

 

 

1,340.2

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (3)

25

%

 

7

%

 

 

143.6

 

 

134.7

 

 

115.2

 

 

125.2

 

 

114.8

 

Schwab ETF OneSource™ (4)

186

%

 

7

%

 

 

88.1

 

 

82.5

 

 

30.6

 

 

33.3

 

 

30.8

 

Other third-party ETFs

(2

)%

 

4

%

 

 

315.7

 

 

303.7

 

 

309.9

 

 

338.6

 

 

322.1

 

Total ETF assets

17

%

 

5

%

 

 

547.4

 

 

520.9

 

 

455.7

 

 

497.1

 

 

467.7

 

Equity and other securities (2)

6

%

 

3

%

 

 

1,168.3

 

 

1,131.3

 

 

1,005.4

 

 

1,186.7

 

 

1,106.2

 

Fixed income securities

21

%

 

2

%

 

 

332.1

 

 

324.1

 

 

306.1

 

 

290.4

 

 

275.1

 

Margin loans outstanding

(3

)%

 

5

%

 

 

(19.7

)

 

(18.8

)

 

(19.3

)

 

(20.8

)

 

(20.4

)

Total client assets

9

%

 

3

%

 

 

$

3,702.4

 

 

$

3,585.4

 

 

$

3,252.2

 

 

$

3,563.7

 

 

$

3,397.0

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

9

%

 

3

%

 

 

$

1,946.5

 

 

$

1,886.7

 

 

$

1,701.7

 

 

$

1,876.9

 

 

$

1,784.8

 

Advisor Services

9

%

 

3

%

 

 

1,755.9

 

 

1,698.7

 

 

1,550.5

 

 

1,686.8

 

 

1,612.2

 

Total client assets

9

%

 

3

%

 

 

$

3,702.4

 

 

$

3,585.4

 

 

$

3,252.2

 

 

$

3,563.7

 

 

$

3,397.0

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

31

%

 

(39

)%

 

 

$

17.9

 

 

$

29.2

 

 

$

28.7

 

 

$

27.8

 

 

$

13.7

 

Advisor Services

(36

)%

 

(14

)%

 

 

19.3

 

 

22.5

 

 

26.6

 

 

25.7

 

 

30.2

 

Total net new assets

(15

)%

 

(28

)%

 

 

$

37.2

 

 

$

51.7

 

 

$

55.3

 

 

$

53.5

 

 

$

43.9

 

Net market gains (losses)

67

%

 

(72

)%

 

 

79.8

 

 

281.5

 

 

(366.8

)

 

113.2

 

 

47.7

 

Net growth (decline)

28

%

 

(65

)%

 

 

$

117.0

 

 

$

333.2

 

 

$

(311.5

)

 

$

166.7

 

 

$

91.6

 

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

1

%

 

 

 

 

386

 

 

386

 

 

380

 

 

369

 

 

384

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts (6)

7

%

 

2

%

 

 

11,967

 

 

11,787

 

 

11,593

 

 

11,423

 

 

11,202

 

Banking accounts

7

%

 

3

%

 

 

1,336

 

 

1,300

 

 

1,302

 

 

1,283

 

 

1,250

 

Corporate retirement plan participants

6

%

 

1

%

 

 

1,698

 

 

1,684

 

 

1,655

 

 

1,627

 

 

1,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 June 30, 2019, off-platform equity and bond funds, CTFs, and ETFs were $12.5 billion, $4.7 billion, and $38.2 billion, respectively.

(4)

Excludes all proprietary mutual funds and ETFs.

(5)

Second quarter of 2018 includes outflows of $9.5 billion from certain mutual fund clearing services clients.

(6)

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 June 2019

 

2018

 

 

 

 

 

 

2019

 

 

 

 

 

Change

 

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Mo.

Yr.

Market Indices (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average

24,271

 

25,415

 

25,965

 

26,458

 

25,116

 

25,538

 

23,327

 

25,000

 

25,916

 

25,929

 

26,593

 

24,815

 

26,600

 

7

%

10

%

Nasdaq Composite

7,510

 

7,672

 

8,110

 

8,046

 

7,306

 

7,331

 

6,635

 

7,282

 

7,533

 

7,729

 

8,095

 

7,453

 

8,006

 

7

%

7

%

Standard & Poor’s 500

2,718

 

2,816

 

2,902

 

2,914

 

2,712

 

2,760

 

2,507

 

2,704

 

2,784

 

2,834

 

2,946

 

2,752

 

2,942

 

7

%

8

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

3,378.1

 

3,397.0

 

3,477.9

 

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

 

 

 

Net New Assets

24.1

 

16.3

 

20.8

 

16.4

 

14.9

 

15.6

 

24.8

 

15.1

 

18.3

 

18.3

 

(0.3

)

17.3

 

20.2

 

17

%

(16

)%

Net Market Gains (Losses)

(5.2

)

64.6

 

57.2

 

(8.6

)

(190.5

)

28.2

 

(204.5

)

180.4

 

67.0

 

34.1

 

83.4

 

(155.2

)

151.6

 

 

 

Total Client Assets (at month end)

3,397.0

 

3,477.9

 

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

 

5

%

9

%

Core Net New Assets (1)

24.1

 

16.3

 

20.8

 

16.4

 

14.9

 

15.6

 

24.8

 

15.1

 

18.3

 

18.3

 

(0.3

)

17.3

 

20.2

 

17

%

(16

)%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

280.0

 

287.0

 

292.0

 

292.7

 

280.3

 

284.7

 

272.4

 

286.9

 

294.2

 

298.4

 

305.7

 

298.5

 

311.6

 

4

%

11

%

Advisor Services (2)

1,488.7

 

1,525.5

 

1,555.3

 

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

 

5

%

9

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts (3)

11,202

 

11,243

 

11,310

 

11,423

 

11,479

 

11,529

 

11,593

 

11,653

 

11,712

 

11,787

 

11,870

 

11,929

 

11,967

 

 

7

%

Banking Accounts (4)

1,250

 

1,262

 

1,274

 

1,283

 

1,289

 

1,297

 

1,302

 

1,312

 

1,313

 

1,300

 

1,310

 

1,323

 

1,336

 

1

%

7

%

Corporate Retirement Plan Participants

1,599

 

1,611

 

1,621

 

1,627

 

1,634

 

1,639

 

1,655

 

1,679

 

1,685

 

1,684

 

1,690

 

1,699

 

1,698

 

 

6

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

121

 

118

 

132

 

119

 

133

 

115

 

132

 

131

 

115

 

140

 

147

 

123

 

116

 

(6

)%

(4

)%

Inbound Calls (in thousands)

1,814

 

1,849

 

1,964

 

1,715

 

1,976

 

1,681

 

1,839

 

1,924

 

1,742

 

1,882

 

1,966

 

1,671

 

1,595

 

(5

)%

(12

)%

Web Logins (in thousands)

56,491

 

57,137

 

62,797

 

53,923

 

59,261

 

54,654

 

53,920

 

64,563

 

60,121

 

63,692

 

65,669

 

61,522

 

60,824

 

(1

)%

8

%

Client Cash as a Percentage of Client Assets (5)

10.7

%

10.5

%

10.4

%

10.3

%

11.1

%

11.2

%

12.8

%

11.7

%

11.5

%

11.3

%

10.9

%

11.3

%

10.9

%

(40) bp

20 bp

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Capitalization Stock

981

 

486

 

918

 

311

 

308

 

331

 

717

 

1,343

 

1,109

 

1,045

 

980

 

1,114

 

206

 

 

 

Small / Mid Capitalization Stock

1,195

 

768

 

(186

)

151

 

(1,344

)

(456

)

(1,414

)

1,329

 

638

 

302

 

136

 

(190

)

18

 

 

 

International

(498

)

(529

)

186

 

(88

)

(109

)

(418

)

(2,163

)

2,212

 

1,086

 

1,274

 

863

 

(100

)

225

 

 

 

Specialized

383

 

520

 

(245

)

73

 

(914

)

(397

)

(2,105

)

124

 

609

 

750

 

(109

)

(440

)

341

 

 

 

Hybrid

(288

)

(548

)

(678

)

(324

)

(1,313

)

(1,248

)

(2,985

)

(321

)

(309

)

(357

)

(228

)

(316

)

(181

)

 

 

Taxable Bond

928

 

879

 

965

 

1,371

 

(351

)

(836

)

(4,342

)

3,956

 

2,871

 

1,923

 

3,029

 

1,821

 

2,378

 

 

 

Tax-Free Bond

588

 

306

 

559

 

262

 

(591

)

(407

)

(409

)

1,184

 

1,111

 

1,133

 

760

 

1,057

 

682

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (6)

555

 

(522

)

(1,936

)

(1,538

)

(5,734

)

(7,955

)

(21,372

)

6,740

 

2,312

 

1,850

 

1,860

 

86

 

7

 

 

 

Exchange-Traded Funds (7)

2,734

 

2,404

 

3,455

 

3,294

 

1,420

 

4,524

 

8,671

 

3,087

 

4,803

 

4,220

 

3,571

 

2,860

 

3,662

 

 

 

Money Market Funds

(4,919

)

(4,801

)

704

 

(1,933

)

2,546

 

8,515

 

13,548

 

4,944

 

(1,577

)

1,785

 

(2,097

)

5,067

 

4,570

 

 

 

Average Interest-Earning Assets (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions of dollars)

249,432

 

254,211

 

259,137

 

261,741

 

264,156

 

265,648

 

274,913

 

277,068

 

270,718

 

272,727

 

270,308

 

263,718

 

262,759

 

5

%

(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.

 

Contact:

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

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

Multimedia Files:

PDF of Press Release and Table
Tables Only
Preview image

Corporate Public Relations
Contacts for Journalists Only

 

888-767-5432

Subscribe

Business Wire NewsHQ℠