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Schwab Reports First Quarter Earnings Per Share of $.58, Including $.04 Per Share of Acquisition and Pandemic Response Expenses

04/15/2020

Strong Client Activity During Volatile Market Included $73.2 Billion in Core Net New Assets, 609,000 New Brokerage Accounts and 1.5 Million Daily Average Trades, All Records

The Charles Schwab Corporation announced today that its net income for the first quarter of 2020 was $795 million, down 7% from $852 million for the prior quarter, and down 18% from $964 million for the first quarter of 2019. The company’s financial results for the first quarter include acquisition-related expenses described below, as well as expenses totaling approximately $27 million, or $.02 per share, relating to certain actions taken in response to the COVID-19 pandemic.

 

Three Months Ended
March 31,

 

%

Financial Highlights

2020

 

2019

 

Change

 

 

 

 

 

 

Net revenues (in millions)

$

2,617

 

 

$

2,723

 

 

(4)%

Net income (in millions)

$

795

 

 

$

964

 

 

(18)%

Diluted earnings per common share

$

.58

 

 

$

.69

 

 

(16)%

Pre-tax profit margin

40.0

%

 

46.4

%

 

 

Return on average common stockholders’ equity (annualized)

14

%

 

20

%

 

 

EPS Impact of Certain Items

 

 

 

 

 

$37 million in expenses relating to pending acquisitions (1)

$

(.02

)

 

 

 

 

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

(1)

 

The pre-tax acquisition-related expenses associated with the pending USAA, TD Ameritrade, and Wasmer Schroeder transactions are largely included in Professional services and Other.

CEO Walt Bettinger said, “With the COVID-19 pandemic continuing, daily life as we’ve known it has been upended, both world-wide and here in the U.S. As the impact of this virus reaches into every corner of our population and economy, our thoughts are with our clients and employees, as well as their families, our communities, and of course the healthcare professionals and first responders helping us face down the crisis. While we at Schwab are also dealing with the pandemic as individuals, we are committed to being there to serve our clients, providing the help and perspectives essential for them to move forward amidst these unique circumstances. I am incredibly proud and grateful to be part of a team that has persistently balanced their personal challenges with sustaining our ‘Through Clients’ Eyes’ strategy and supporting unprecedented levels of engagement.

“We’ve been up and running day after day, without significant disruption, as our clients entrusted us with $73.2 billion in core net new assets during the first quarter, up 42% year-over-year and a first quarter record. In addition, our clients opened a record 609,000 new brokerage accounts – over 280,000 in March alone – bringing total active brokerage accounts at quarter end to 12.7 million, up 8% from March 2019. At the same time, our clients continued to set multiple single-day records for trading, resulting in 27 of the 30 highest volume days in our history – including every trading day in March. During the quarter we handled a peak of 4.0 million trades on March 12th and a 217% year-over-year increase in daily average trades for March alone. They also connected with us across our various communication channels, with Retail call volumes increasing 16% – reaching the highest levels measured since 2003 – and mobile logins up approximately 35% from a year ago. With the S&P 500 experiencing its worst quarter since 2008, client asset valuations were inevitably impacted; total client assets ended March at $3.50 trillion, down 2% from a year ago.”

Mr. Bettinger added, “In the first quarter of 2020 we relied on the enhanced resiliency and flexibility of our technology systems as they withstood monumental volumes – a direct result of ongoing investments made as part of our multi-year Digital Transformation and Application Modernization efforts. For example, through the implementation of password reset automation, we reduced reset-related calls from an average of 12% of Retail volume down to 5%, freeing up capacity to better support our clients.

“We also continue to seek opportunities to deliver more value to clients even as environmental headwinds grow. Early in the year, we launched Schwab Intelligent IncomeTM providing clients with an intuitive, low-cost way to generate a predictable paycheck during retirement, or any other time, from their investment portfolios – initial enrollments are running at approximately twice the average portfolio balance of other Schwab Intelligent Portfolio SolutionsTM. In late February, we entered into a definitive agreement to acquire Wasmer Schroeder, which will add established strategies and new separately managed account offerings to our existing fixed income lineup. Both of these advisory solutions are part of our continuing work to build differentiated asset management capabilities to better meet our clients’ needs.

“Consistent with our pledge to support independent advisors of all sizes, we recently launched Virtual Practice Management. This on-demand learning experience leverages Schwab’s deep expertise in identifying core business issues to help advisors master critical concepts and prioritize next steps to differentiate and build their practices, as well as implement lasting changes that can enable them to grow, compete, and succeed.”

“Our unwavering focus on continuing to earn our clients’ trust is made possible by the significant contributions of thousands of dedicated employees during these turbulent times,” Mr. Bettinger concluded. “We recognize that this is uncharted territory for us all, with uncertainty in the financial markets inextricably linked with concerns regarding everyone’s health. We are committed to serving our clients and protecting our employees’ wellbeing at the same time. Given current conditions, approximately 95% of our employees are working remotely, and, in addition to other measures, we’ve made a $1,000 payment to all non-officer employees to help them cover extraordinary costs incurred due to the pandemic. We don’t know how events will unfold from here, but we do know that Schwab is financially strong and growing – with a business model positioned to weather circumstances like this pandemic-related storm. I have every confidence that we’ll emerge from this successfully as we all – management, employees, clients, and stockholders – support each other in the days ahead.”

CFO Peter Crawford commented, “We continue to drive strong, profitable growth and long-term stockholder value by executing our ‘Through Clients’ Eyes’ strategy. Our first quarter financial results were shaped by a very challenging economic environment in which the decade-long bull market ended – with the S&P falling 20% during the period and the Federal Reserve cutting the target overnight rate 150 basis points to near zero in an emergency effort to help shield the economy amid pandemic concerns. Net interest revenue of $1.6 billion declined 6% year-over-year, due to pressure across the yield curve accelerating late in the quarter, which outweighed the impact of significantly higher levels of client cash sweep balances. Given the rapid accumulation of these balances late in the quarter, we’ve initially placed a substantial amount in excess reserves at the Fed; such balances totaled $58.7 billion at month-end March, up from $18.8 billion at year-end 2019. Asset management and administration fees of $827 million rose 10% year-over-year, largely due to our clients’ sustained utilization of advisory solutions along with increased balances in purchased money funds, which helped offset sharp declines in equity market valuations. Trading revenue, which we are now reporting inclusive of order flow revenue, was 13% lower than the year earlier period at $188 million. This decline stems from our October 2019 pricing actions, partially offset by the dramatic increase in transactions.”

“Alongside this evolving revenue picture, our spending was impacted by the extraordinary environment,” Mr. Crawford added. “Total expenses of $1.6 billion were up 8% year-over-year. This total included approximately $27 million, or $.02 per share, for the employee award and other compensation and business continuity expenses relating to our pandemic response. Our first quarter expenses also included $37 million relating to our pending acquisitions. While other volume-related costs rose as well, we can see the benefits of our ongoing investments in scale and efficiency reflected in Schwab’s ability to support client activity levels which could have overwhelmed a less capable platform. In addition to the record new accounts, asset flows, and trading that Walt discussed above, during the quarter we also handled over 190 million more client interactions across web, mobile, chat, and messaging versus a year ago, increases ranging from approximately 28% to 80%, with essentially the same headcount. Our longstanding focus on scale and efficiency has helped us begin the year with a 40.0% pre-tax profit margin and remains an important strength as we balance near-term profitability with continued reinvestment for long-term growth.”

Mr. Crawford concluded, “Regardless of the environment, our priorities for balance sheet management remain intact, including supporting our ongoing growth while also maintaining appropriate levels of liquidity and capital. With first quarter market volatility driving a significant influx of client cash, our balance sheet expanded by $77 billion during the quarter to $371 billion at March 31st. Consistent with optimizing liquidity management during heightened volatility, we issued 5- and 10-year senior notes totaling $1.1 billion during March. The company’s preliminary Tier 1 Leverage Ratio was 6.9% as of month-end March, consistent with our operating objective of 6.75%-7.00%. Our 14% return on equity to start 2020 was hampered in part by an increase in Stockholders’ equity driven by mark-to-market gains in investment securities. Overall, we’re facing the storm from a position of strength and expect to remain on offense – driving long-term value by protecting our business momentum, as well as thoughtfully managing the investments in our business necessary to sustain and enhance our all-weather model.”

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 client activity during the extraordinary market environment was posted on March 13, 2020.

Forward-Looking Statements

This press release contains forward-looking statements relating to the company’s technology systems; ongoing investments in scale and efficiency; client value; availability of and enrollment in advisory solutions; pending acquisitions; the COVID-19 pandemic; financial strength; profitable business growth; stockholder value; ability to support client activity levels; balancing near-term profitability with continued reinvestment for long-term growth; balance sheet management; liquidity and capital; 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, market volatility; general market conditions, including the level of interest rates, equity valuations, and trading activity; the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; failure of the parties to satisfy the closing conditions in the agreements for the pending acquisitions in a timely manner or at all, and the risk that the expected benefits and synergies from the acquisitions may not be fully realized or may take longer to realize than expected; 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; 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; client sensitivity to rates; level of client assets, including cash balances; cash sorting; capital and liquidity needs and management; 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 360 offices and 12.7 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking accounts, and $3.50 trillion in client assets as of March 31, 2020. 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
March 31,

 

2020

 

2019

Net Revenues

 

 

 

Interest revenue

$

1,708

 

 

$

1,998

 

Interest expense

(136

)

 

(317

)

Net interest revenue

1,572

 

 

1,681

 

Asset management and administration fees

827

 

 

755

 

Trading revenue (1)

188

 

 

217

 

Other (1)

30

 

 

70

 

Total net revenues

2,617

 

 

2,723

 

Expenses Excluding Interest

 

 

 

Compensation and benefits

897

 

 

850

 

Professional services

182

 

 

170

 

Occupancy and equipment

142

 

 

131

 

Advertising and market development

67

 

 

69

 

Communications

75

 

 

62

 

Depreciation and amortization

96

 

 

83

 

Regulatory fees and assessments

34

 

 

32

 

Other

77

 

 

62

 

Total expenses excluding interest

1,570

 

 

1,459

 

Income before taxes on income

1,047

 

 

1,264

 

Taxes on income

252

 

 

300

 

Net Income

795

 

 

964

 

Preferred stock dividends and other

38

 

 

39

 

Net Income Available to Common Stockholders

$

757

 

 

$

925

 

Weighted-Average Common Shares Outstanding:

 

 

 

Basic

1,287

 

 

1,333

 

Diluted

1,294

 

 

1,344

 

Earnings Per Common Shares Outstanding:

 

 

 

Basic

$

.59

 

 

$

.69

 

Diluted

$

.58

 

 

$

.69

 

(1) In the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change.

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

Q1-20 % change

 

 

2020

 

2019

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-19

 

Q4-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

(6

)%

 

(1

)%

 

 

$

1,572

 

 

$

1,595

 

 

$

1,631

 

 

$

1,609

 

 

$

1,681

 

Asset management and administration fees

10

%

 

(2

)%

 

 

827

 

 

845

 

 

825

 

 

786

 

 

755

 

Trading revenue (1)

(13

)%

 

54

%

 

 

188

 

 

122

 

 

206

 

 

207

 

 

217

 

Other (1)

(57

)%

 

(32

)%

 

 

30

 

 

44

 

 

49

 

 

79

 

 

70

 

Total net revenues

(4

)%

 

 

 

 

2,617

 

 

2,606

 

 

2,711

 

 

2,681

 

 

2,723

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

6

%

 

11

%

 

 

897

 

 

806

 

 

857

 

 

807

 

 

850

 

Professional services

7

%

 

(2

)%

 

 

182

 

 

186

 

 

168

 

 

178

 

 

170

 

Occupancy and equipment

8

%

 

(6

)%

 

 

142

 

 

151

 

 

144

 

 

133

 

 

131

 

Advertising and market development

(3

)%

 

(26

)%

 

 

67

 

 

90

 

 

71

 

 

77

 

 

69

 

Communications

21

%

 

14

%

 

 

75

 

 

66

 

 

63

 

 

62

 

 

62

 

Depreciation and amortization

16

%

 

2

%

 

 

96

 

 

94

 

 

88

 

 

84

 

 

83

 

Regulatory fees and assessments

6

%

 

13

%

 

 

34

 

 

30

 

 

30

 

 

30

 

 

32

 

Other

24

%

 

8

%

 

 

77

 

 

71

 

 

54

 

 

74

 

 

62

 

Total expenses excluding interest

8

%

 

5

%

 

 

1,570

 

 

1,494

 

 

1,475

 

 

1,445

 

 

1,459

 

Income before taxes on income

(17

)%

 

(6

)%

 

 

1,047

 

 

1,112

 

 

1,236

 

 

1,236

 

 

1,264

 

Taxes on income

(16

)%

 

(3

)%

 

 

252

 

 

260

 

 

285

 

 

299

 

 

300

 

Net Income

(18

)%

 

(7

)%

 

 

$

795

 

 

$

852

 

 

$

951

 

 

$

937

 

 

$

964

 

Preferred stock dividends and other

(3

)%

 

(25

)%

 

 

38

 

 

51

 

 

38

 

 

50

 

 

39

 

Net Income Available to Common Stockholders

(18

)%

 

(5

)%

 

 

$

757

 

 

$

801

 

 

$

913

 

 

$

887

 

 

$

925

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(14

)%

 

(5

)%

 

 

$

.59

 

 

$

.62

 

 

$

.70

 

 

$

.67

 

 

$

.69

 

Diluted

(16

)%

 

(6

)%

 

 

$

.58

 

 

$

.62

 

 

$

.70

 

 

$

.66

 

 

$

.69

 

Dividends declared per common share

6

%

 

6

%

 

 

$

.18

 

 

$

.17

 

 

$

.17

 

 

$

.17

 

 

$

.17

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(3

)%

 

 

 

 

1,287

 

 

1,284

 

 

1,300

 

 

1,328

 

 

1,333

 

Diluted

(4

)%

 

 

 

 

1,294

 

 

1,293

 

 

1,308

 

 

1,337

 

 

1,344

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

40.0

%

 

42.7

%

 

45.6

%

 

46.1

%

 

46.4

%

Return on average common stockholders’ equity (annualized) (2)

 

 

 

 

 

14

%

 

17

%

 

20

%

 

19

%

 

20

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

110

%

 

134

%

 

 

$

68.5

 

 

$

29.3

 

 

$

20.3

 

 

$

24.2

 

 

$

32.6

 

Cash and investments segregated

147

%

 

67

%

 

 

34.3

 

 

20.5

 

 

16.2

 

 

14.1

 

 

13.9

 

Receivables from brokerage clients — net

(7

)%

 

(13

)%

 

 

19.0

 

 

21.8

 

 

21.1

 

 

21.4

 

 

20.5

 

Available for sale securities (3)

N/M

 

N/M

 

 

221.2

 

 

61.4

 

 

56.5

 

 

54.6

 

 

60.0

 

Held to maturity securities (3)

(100

)%

 

(100

)%

 

 

 

 

134.7

 

 

140.2

 

 

138.3

 

 

132.4

 

Bank loans — net

18

%

 

7

%

 

 

19.5

 

 

18.2

 

 

16.9

 

 

16.6

 

 

16.5

 

Total assets

31

%

 

26

%

 

 

370.8

 

 

294.0

 

 

279.0

 

 

276.3

 

 

282.8

 

Bank deposits

26

%

 

26

%

 

 

277.5

 

 

220.1

 

 

209.3

 

 

208.4

 

 

219.5

 

Payables to brokerage clients

66

%

 

26

%

 

 

49.3

 

 

39.2

 

 

35.6

 

 

31.0

 

 

29.7

 

Long-term debt

25

%

 

15

%

 

 

8.5

 

 

7.4

 

 

7.4

 

 

7.4

 

 

6.8

 

Stockholders’ equity

22

%

 

21

%

 

 

26.3

 

 

21.7

 

 

21.4

 

 

21.3

 

 

21.6

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

1

%

 

3

%

 

 

20.2

 

 

19.7

 

 

19.8

 

 

20.5

 

 

20.0

 

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

38

%

 

20

%

 

 

$

250

 

 

$

209

 

 

$

190

 

 

$

173

 

 

$

181

 

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

 

 

 

 

 

0.16

%

 

0.15

%

 

0.16

%

 

0.16

%

 

0.17

%

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

98

%

 

96

%

 

 

1,540

 

 

785

 

 

718

 

 

716

 

 

777

 

Number of Trading Days

2

%

 

(2

)%

 

 

62.0

 

 

63.0

 

 

63.5

 

 

63.0

 

 

61.0

 

Revenue Per Trade (4)

(57

)%

 

(20

)%

 

 

$

1.97

 

 

$

2.47

 

 

$

4.52

 

 

$

4.59

 

 

$

4.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

In the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change.

(2)

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

(3)

On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part II – Item 8 – Note 25 of our 2019 Annual Report on Form 10-K.

(4)

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

N/M Not meaningful.

THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions)

(Unaudited)

 

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

 

 

Average
Balance

 

Interest
Revenue/
Expense

 

Average
Yield/
Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

32,134

 

 

$

85

 

 

1.04

%

 

 

$

24,983

 

 

$

151

 

 

2.42

%

Cash and investments segregated

23,716

 

 

87

 

 

1.45

%

 

 

13,533

 

 

83

 

 

2.44

%

Broker-related receivables

730

 

 

2

 

 

1.35

%

 

 

257

 

 

2

 

 

2.75

%

Receivables from brokerage clients

19,151

 

 

168

 

 

3.47

%

 

 

18,972

 

 

214

 

 

4.52

%

Available for sale securities (1, 2)

197,745

 

 

1,185

 

 

2.39

%

 

 

66,853

 

 

451

 

 

2.70

%

Held to maturity securities (2)

 

 

 

 

 

 

 

132,427

 

 

916

 

 

2.77

%

Bank loans

18,897

 

 

144

 

 

3.06

%

 

 

16,578

 

 

149

 

 

3.61

%

Total interest-earning assets

292,373

 

 

1,671

 

 

2.28

%

 

 

273,603

 

 

1,966

 

 

2.88

%

Other interest revenue

 

 

37

 

 

 

 

 

 

 

32

 

 

 

Total interest-earning assets

$

292,373

 

 

$

1,708

 

 

2.33

%

 

 

$

273,603

 

 

$

1,998

 

 

2.92

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

227,523

 

 

$

57

 

 

0.10

%

 

 

$

219,987

 

 

$

226

 

 

0.42

%

Payables to brokerage clients

30,287

 

 

8

 

 

0.10

%

 

 

22,184

 

 

23

 

 

0.43

%

Short-term borrowings (3)

3

 

 

 

 

1.07

%

 

 

30

 

 

 

 

2.48

%

Long-term debt

7,527

 

 

66

 

 

3.53

%

 

 

6,845

 

 

62

 

 

3.61

%

Total interest-bearing liabilities

265,340

 

 

131

 

 

0.20

%

 

 

249,046

 

 

311

 

 

0.51

%

Non-interest-bearing funding sources

27,033

 

 

 

 

 

 

 

24,557

 

 

 

 

 

Other interest expense

 

 

5

 

 

 

 

 

 

 

6

 

 

 

Total funding sources

$

292,373

 

 

$

136

 

 

0.19

%

 

 

$

273,603

 

 

$

317

 

 

0.46

%

Net interest revenue

 

 

$

1,572

 

 

2.14

%

 

 

 

 

$

1,681

 

 

2.46

%

(1)

Amounts have been calculated based on amortized cost.

(2)

On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part II – Item 8 – Note 25 of our 2019 Annual Report on Form 10-K.

(3)

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
March 31,

 

2020

 

 

2019

 

Average
Client
Assets

 

Revenue

 

Average
Fee

 

 

Average
Client
Assets

 

Revenue

 

Average
Fee

Schwab money market funds

$

203,772

 

 

$

152

 

 

0.30

%

 

 

$

158,268

 

 

$

122

 

 

0.31

%

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

290,808

 

 

76

 

 

0.11

%

 

 

244,314

 

 

70

 

 

0.12

%

Mutual Fund OneSource® and other non-transaction fee funds

188,583

 

 

147

 

 

0.31

%

 

 

187,223

 

 

147

 

 

0.32

%

Other third-party mutual funds and ETFs (1)

451,959

 

 

77

 

 

0.07

%

 

 

452,461

 

 

75

 

 

0.07

%

Total mutual funds, ETFs, and CTFs (2)

$

1,135,122

 

 

452

 

 

0.16

%

 

 

$

1,042,266

 

 

414

 

 

0.16

%

Advice solutions (2)

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

263,256

 

 

312

 

 

0.48

%

 

 

$

230,394

 

 

278

 

 

0.49

%

Non-fee-based

71,229

 

 

 

 

 

 

 

66,756

 

 

 

 

 

Total advice solutions

$

334,485

 

 

312

 

 

0.38

%

 

 

$

297,150

 

 

278

 

 

0.38

%

Other balance-based fees (3)

432,847

 

 

54

 

 

0.05

%

 

 

392,191

 

 

52

 

 

0.05

%

Other (4)

 

 

9

 

 

 

 

 

 

 

11

 

 

 

Total asset management and administration fees

 

 

$

827

 

 

 

 

 

 

 

$

755

 

 

 

(1)

Beginning in the fourth quarter of 2019, Schwab ETF OneSourceTM was discontinued as a result of the elimination of online trading commissions for U.S. and Canadian-listed ETFs.

(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®, 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.

(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)

 

 

Q1-20 % Change

 

 

2020

 

2019

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-19

 

Q4-19

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

31

%

 

26

%

 

 

$

324.4

 

 

$

256.7

 

 

$

242.9

 

 

$

237.3

 

 

$

247.0

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

28

%

 

1

%

 

 

203.7

 

 

200.8

 

 

187.0

 

 

168.1

 

 

159.7

 

Equity and bond funds and CTFs (2)

(7

)%

 

(19

)%

 

 

99.1

 

 

122.5

 

 

112.4

 

 

110.9

 

 

106.2

 

Total proprietary mutual funds and CTFs

14

%

 

(6

)%

 

 

302.8

 

 

323.3

 

 

299.4

 

 

279.0

 

 

265.9

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

(17

)%

 

(20

)%

 

 

161.6

 

 

202.1

 

 

194.7

 

 

197.8

 

 

195.1

 

Mutual fund clearing services

(1

)%

 

(17

)%

 

 

180.8

 

 

217.4

 

 

197.2

 

 

192.9

 

 

182.7

 

Other third-party mutual funds

(8

)%

 

(18

)%

 

 

676.2

 

 

824.5

 

 

776.8

 

 

767.3

 

 

737.2

 

Total Mutual Fund Marketplace

(9

)%

 

(18

)%

 

 

1,018.6

 

 

1,244.0

 

 

1,168.7

 

 

1,158.0

 

 

1,115.0

 

Total mutual fund assets

(4

)%

 

(16

)%

 

 

1,321.4

 

 

1,567.3

 

 

1,468.1

 

 

1,437.0

 

 

1,380.9

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

1

%

 

(17

)%

 

 

136.5

 

 

163.8

 

 

150.8

 

 

143.6

 

 

134.7

 

Schwab ETF OneSource™ (3,4)

N/M

 

N/M

 

 

 

 

 

 

94.1

 

 

88.1

 

 

82.5

 

Other third-party ETFs (4)

26

%

 

(16

)%

 

 

382.5

 

 

457.0

 

 

321.6

 

 

315.7

 

 

303.7

 

Total ETF assets

 

(16

)%

 

 

519.0

 

 

620.8

 

 

566.5

 

 

547.4

 

 

520.9

 

Equity and other securities

(8

)%

 

(20

)%

 

 

1,035.5

 

 

1,286.4

 

 

1,178.0

 

 

1,168.3

 

 

1,131.3

 

Fixed income securities

(3

)%

 

(4

)%

 

 

313.8

 

 

327.1

 

 

332.3

 

 

332.1

 

 

324.1

 

Margin loans outstanding

(9

)%

 

(12

)%

 

 

(17.2

)

 

(19.5

)

 

(19.4

)

 

(19.7

)

 

(18.8

)

Total client assets

(2

)%

 

(13

)%

 

 

$

3,496.9

 

 

$

4,038.8

 

 

$

3,768.4

 

 

$

3,702.4

 

 

$

3,585.4

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

(2

)%

 

(13

)%

 

 

$

1,846.8

 

 

$

2,131.0

 

 

$

1,978.7

 

 

$

1,946.5

 

 

$

1,886.7

 

Advisor Services

(3

)%

 

(14

)%

 

 

1,650.1

 

 

1,907.8

 

 

1,789.7

 

 

1,755.9

 

 

1,698.7

 

Total client assets

(2

)%

 

(13

)%

 

 

$

3,496.9

 

 

$

4,038.8

 

 

$

3,768.4

 

 

$

3,702.4

 

 

$

3,585.4

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

21

%

 

(18

)%

 

 

$

35.3

 

 

$

43.1

 

 

$

25.4

 

 

$

17.9

 

 

$

29.2

 

Advisor Services

68

%

 

11

%

 

 

37.9

 

 

34.2

 

 

31.2

 

 

19.3

 

 

22.5

 

Total net new assets

42

%

 

(5

)%

 

 

$

73.2

 

 

$

77.3

 

 

$

56.6

 

 

$

37.2

 

 

$

51.7

 

Net market (losses) gains

N/M

 

N/M

 

 

(615.1

)

 

193.1

 

 

9.4

 

 

79.8

 

 

281.5

 

Net (decline) growth

N/M

 

N/M

 

 

$

(541.9

)

 

$

270.4

 

 

$

66.0

 

 

$

117.0

 

 

$

333.2

 

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

58

%

 

41

%

 

 

609

 

 

433

 

 

363

 

 

386

 

 

386

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts

8

%

 

3

%

 

 

12,736

 

 

12,333

 

 

12,118

 

 

11,967

 

 

11,787

 

Banking accounts

10

%

 

3

%

 

 

1,426

 

 

1,390

 

 

1,361

 

 

1,336

 

 

1,300

 

Corporate retirement plan participants

2

%

 

(2

)%

 

 

1,721

 

 

1,748

 

 

1,718

 

 

1,698

 

 

1,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2020, off-platform equity and bond funds, CTFs, and ETFs were $11.4 billion, $4.4 billion, and $36.6 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

Beginning in the fourth quarter of 2019, Schwab ETF OneSource™ was discontinued. These assets are now included with other third-party ETFs.

(5)

Fourth quarter of 2019 includes an inflow of $11.1 billion from a mutual fund clearing services client.

N/M Not meaningful.

The Charles Schwab Corporation Monthly Activity Report For March 2020

 

 

2019

 

 

 

 

 

 

 

 

 

2020

 

 

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

25,929

 

26,593

 

24,815

 

26,600

 

26,864

 

26,403

 

26,917

 

27,046

 

28,051

 

28,538

 

28,256

 

25,409

 

21,917

 

(14

)%

(15

)%

Nasdaq Composite

7,729

 

8,095

 

7,453

 

8,006

 

8,175

 

7,963

 

7,999

 

8,292

 

8,665

 

8,973

 

9,151

 

8,567

 

7,700

 

(10

)%

 

Standard & Poor’s 500

2,834

 

2,946

 

2,752

 

2,942

 

2,980

 

2,926

 

2,977

 

3,038

 

3,141

 

3,231

 

3,226

 

2,954

 

2,585

 

(12

)%

(9

)%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

3,533.0

 

3,585.4

 

3,668.5

 

3,530.6

 

3,702.4

 

3,746.7

 

3,716.5

 

3,768.4

 

3,854.6

 

3,942.2

 

4,038.8

 

4,051.6

 

3,862.8

 

 

 

Net New Assets (1)

18.3

 

(0.3

)

17.3

 

20.2

 

19.3

 

19.9

 

17.4

 

35.2

 

12.0

 

30.1

 

20.9

 

24.4

 

27.9

 

14

%

52

%

Net Market Gains (Losses)

34.1

 

83.4

 

(155.2

)

151.6

 

25.0

 

(50.1

)

34.5

 

51.0

 

75.6

 

66.5

 

(8.1

)

(213.2

)

(393.8

)

 

 

Total Client Assets (at month end)

3,585.4

 

3,668.5

 

3,530.6

 

3,702.4

 

3,746.7

 

3,716.5

 

3,768.4

 

3,854.6

 

3,942.2

 

4,038.8

 

4,051.6

 

3,862.8

 

3,496.9

 

(9

)%

(2

)%

Core Net New Assets (2)

18.3

 

(0.3

)

17.3

 

20.2

 

19.3

 

19.9

 

17.4

 

24.1

 

12.0

 

30.1

 

20.9

 

24.4

 

27.9

 

14

%

52

%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

298.4

 

305.7

 

298.5

 

311.6

 

314.8

 

314.2

 

318.5

 

324.6

 

330.8

 

337.1

 

336.8

 

323.2

 

291.5

 

(10

)%

(2

)%

Advisor Services (3)

1,572.8

 

1,608.0

 

1,554.6

 

1,626.6

 

1,646.1

 

1,635.7

 

1,659.4

 

1,691.6

 

1,728.2

 

1,769.7

 

1,773.2

 

1,694.0

 

1,531.3

 

(10

)%

(3

)%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

11,787

 

11,870

 

11,929

 

11,967

 

12,026

 

12,085

 

12,118

 

12,189

 

12,247

 

12,333

 

12,431

 

12,521

 

12,736

 

2

%

8

%

Banking Accounts (4)

1,300

 

1,310

 

1,323

 

1,336

 

1,352

 

1,361

 

1,361

 

1,374

 

1,384

 

1,390

 

1,403

 

1,411

 

1,426

 

1

%

10

%

Corporate Retirement Plan Participants

1,684

 

1,690

 

1,699

 

1,698

 

1,701

 

1,711

 

1,718

 

1,735

 

1,743

 

1,748

 

1,732

 

1,726

 

1,721

 

 

2

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

140

 

147

 

123

 

116

 

129

 

126

 

108

 

142

 

127

 

164

 

167

 

159

 

283

 

78

%

102

%

Inbound Calls (in thousands)

1,882

 

1,966

 

1,671

 

1,595

 

1,773

 

1,759

 

1,570

 

1,771

 

1,605

 

1,884

 

1,947

 

1,831

 

2,366

 

29

%

26

%

Web Logins (in thousands)

63,692

 

65,669

 

61,522

 

60,824

 

65,809

 

63,928

 

63,530

 

72,547

 

66,394

 

69,733

 

77,716

 

76,941

 

97,523

 

27

%

53

%

Client Cash as a Percentage of Client Assets (5)

11.3

%

10.9

%

11.3

%

10.9

%

11.0

%

11.3

%

11.4

%

11.3

%

11.3

%

11.3

%

11.3

%

12.0

%

15.1

%

310 bp

380 bp

Mutual Fund and Exchange-Traded Fund Net Buys (Sells) (6, 7) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Capitalization Stock

1,045

 

980

 

1,114

 

206

 

717

 

328

 

23

 

900

 

1,406

 

991

 

845

 

(178

)

980

 

 

 

Small / Mid Capitalization Stock

302

 

136

 

(190

)

18

 

10

 

(374

)

(212

)

(458

)

73

 

201

 

(314

)

(531

)

(954

)

 

 

International

1,274

 

863

 

(100

)

225

 

744

 

(1,390

)

(355

)

340

 

735

 

993

 

1,360

 

132

 

(2,130

)

 

 

Specialized

750

 

(109

)

(440

)

341

 

418

 

353

 

583

 

618

 

484

 

455

 

762

 

397

 

350

 

 

 

Hybrid

(357

)

(228

)

(316

)

(181

)

(366

)

(569

)

(372

)

(202

)

(290

)

(96

)

615

 

(257

)

(4,790

)

 

 

Taxable Bond

1,923

 

3,029

 

1,821

 

2,378

 

3,806

 

2,725

 

2,935

 

2,813

 

2,274

 

4,710

 

5,714

 

3,830

 

(22,708

)

 

 

Tax-Free Bond

1,133

 

760

 

1,057

 

682

 

960

 

760

 

593

 

809

 

860

 

1,255

 

1,481

 

1,066

 

(5,229

)

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (6)

1,850

 

1,860

 

86

 

7

 

2,151

 

(1,281

)

(573

)

(473

)

(761

)

1,097

 

2,684

 

(565

)

(34,382

)

 

 

Exchange-Traded Funds (7)

4,220

 

3,571

 

2,860

 

3,662

 

4,138

 

3,114

 

3,768

 

5,293

 

6,303

 

7,412

 

7,779

 

5,024

 

(99

)

 

 

Money Market Funds

1,785

 

(2,097

)

5,067

 

4,570

 

6,143

 

6,068

 

5,833

 

7,059

 

4,768

 

1,515

 

1,911

 

1,312

 

(1,233

)

 

 

Average Interest-Earning Assets (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions of dollars)

272,727

 

270,308

 

263,718

 

262,759

 

263,993

 

265,005

 

266,430

 

266,089

 

268,254

 

274,911

 

279,437

 

278,966

 

317,850

 

14

%

17

%

(1)

October 2019 includes an inflow of $11.1 billion from a mutual fund clearing services client.

(2)

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

(3)

Excludes Retirement Business Services.

(4)

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.

 

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

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

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