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Schwab Reports Fourth Quarter and Full Year Results

01/17/2024

December Core Net New Assets Exceed $40 Billion – Annualized Growth Rate of 6%
Total Client Assets Reach Record $8.5 Trillion at Year-end, Up 21%

The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2023 was $1.0 billion compared with $2.0 billion for the fourth quarter of 2022. Net income for the twelve months ended December 31, 2023 was $5.1 billion, compared with $7.2 billion for the year-earlier period.

 

Three Months Ended

December 31,

 

%

 

Twelve Months Ended

December 31,

 

%

Financial Highlights (1)

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

$

4,459

 

 

$

5,497

 

 

(19)%

 

$

18,837

 

 

$

20,762

 

 

(9)%

Net income (in millions)

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

1,045

 

 

$

1,968

 

 

(47)%

 

$

5,067

 

 

$

7,183

 

 

(29)%

Adjusted (1)

$

1,367

 

 

$

2,151

 

 

(36)%

 

$

6,159

 

 

$

7,934

 

 

(22)%

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

.51

 

 

$

.97

 

 

(47)%

 

$

2.54

 

 

$

3.50

 

 

(27)%

Adjusted (1)

$

.68

 

 

$

1.07

 

 

(36)%

 

$

3.13

 

 

$

3.90

 

 

(20)%

Pre-tax profit margin

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

26.8

%

 

 

47.3

%

 

 

 

 

33.9

%

 

 

45.2

%

 

 

Adjusted (1)

 

36.0

%

 

 

51.6

%

 

 

 

 

41.5

%

 

 

50.0

%

 

 

Return on average common stockholders’ equity (annualized)

 

12

%

 

 

27

%

 

 

 

 

16

%

 

 

18

%

 

 

Return on tangible common equity (annualized) (1)

 

43

%

 

 

102

%

 

 

 

 

54

%

 

 

42

%

 

 

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 10-12 of this release.

Co-Chairman and CEO Walt Bettinger commented, “Over the course of 2023, our commitment to clients was unwavering. Through an uneven environment with shifting views on the trajectory of the U.S. economy, persistent geopolitical unrest, and a temporary disruption within the regional banking sector, our “no trade-offs” value proposition continued to resonate with investors. Clients entrusted us with $306 billion in core net new assets during the year, including over $43 billion in December alone. This ongoing success with clients helped push total client assets to a record $8.52 trillion at year-end. Additionally, we welcomed 977 thousand new-to-firm retail households as well as 315 advisors-in-transition to Schwab. In total, we added 3.8 million new brokerage accounts to increase our total client base to 34.8 million accounts.”

“Maintaining sustained investment in our clients allows our modern wealth management offering to evolve with their needs,” added Mr. Bettinger. “The primary objective coming into 2023 was a successful Ameritrade conversion. By the end of the year, we had transitioned approximately 90% of client assets and accounts with no significant disruptions. The overall feedback from both retail investors and Registered Investment Advisors (RIAs) has been overwhelmingly positive – and when there were minor issues, we addressed most concerns immediately. The entire leadership team is grateful for the tireless efforts of our employees, whose diligent planning has put us in a position to complete the largest integration in our industry’s history, with deal-related attrition tracking better than our initial expectations.”

“While the Ameritrade client conversion garnered a lot of attention and significant resources, we also made substantial progress across our key strategic initiatives of scale and efficiency, win-win monetization, and client segmentation. We took steps to unlock incremental efficiency, including identifying at least $500 million in cost savings beyond the pre-committed Ameritrade synergies. As part of this effort, we reduced our workforce by approximately 6% of staff, which helped streamline the organization and enables us to prioritize investments in key client initiatives. Enhancements to our personalized investing and wealth management solutions demonstrated progress on our win-win monetization efforts. Net flows into our managed investing solutions totaled $33 billion, a 29% increase versus the previous year, supported by record flows into Schwab Wealth Advisory™ and Wasmer Schroeder™ Strategies. We also saw building momentum within Schwab Personalized Indexing® and launched Schwab Investing Themes™. We improved digital capabilities for RIAs, including a new account onboarding workflow and an expedited origination process for our Pledged Asset Line® product. Finally, recognizing that certain client segments often have different needs, we announced new curated experiences for our high net worth and trader clients. Creating more tailored experiences for these individuals helps ensure they are getting the most from their relationship with Schwab.”

Mr. Bettinger finished, “As we move forward with our key initiatives, we remain as confident as ever in our “Through Clients’ Eyes” strategy. Our client focus has guided our culture and operating priorities for five decades and we believe it keeps us best positioned to sustain long-term profitable growth into the future.”

CFO Peter Crawford stated, “Schwab’s financial performance during 2023 reflected the challenges of navigating a market environment shaped by the Federal Reserve’s pronounced interest rate tightening policy and the follow-on effects stemming from the regional banking crisis in March. Total net revenues were down 9% versus prior year levels to $18.8 billion, as client cash realignment activity impacted our net interest revenue. The benefits of rising rates were more than offset by lower interest-earning assets and increased utilization of higher-cost supplemental funding, driving net interest revenue down 12% year-over-year to $9.4 billion. Asset management and administration fees rose to a record $4.8 billion, bolstered by rebounding equity markets as well as strong client interest in purchased money fund products and advisory solutions. A slightly different trading mix and softer volumes led trading revenue to decline 12% to $3.2 billion. On the expense front, GAAP spending grew by 10% to $12.5 billion to facilitate the Ameritrade integration, make investments across our strategic initiatives, and capture incremental cost savings of approximately $500 million that will be realized in 2024. Restructuring costs required to effect these savings totaled $495 million, while acquisition and integration-related costs and amortization of acquired intangibles were $401 million and $534 million, respectively. Exclusive of these items, adjusted total expenses (1) increased by 6% to $11.0 billion, approximately 2% of which reflected the $172 million FDIC special assessment. Together, the combination of our diversified revenue model and rigorous expense discipline enabled us to generate a 33.9% pre-tax profit margin for the full-year, or 41.5% on an adjusted basis (1). These results represent the 11th consecutive year of GAAP pre-tax margins exceeding 30% and the

5th consecutive year of an adjusted pre-tax margin above 40%.”

“Throughout 2023, our approach to balance sheet management continued to prioritize flexibility,” Mr. Crawford added. “We opportunistically raised $6.2 billion in senior notes to prepare for upcoming maturities as well as provide additional liquidity during the larger Ameritrade conversion weekends. While the pace of rate increases slowed substantially during the year, the upper bound of the Fed Funds target range still climbed to 5.50%. As expected, clients took advantage of the highest yields in nearly two decades by increasing their allocations to investment cash and fixed income alternatives available at Schwab. These movements caused Schwab’s balance sheet to shrink by $59 billion, or an 11% decline from the year-end 2022 level. As we have done since the onset of the current tightening cycle, we facilitated these client allocation decisions using cash flows from our investment portfolios as well as the continued utilization of certain supplemental funding sources, including Federal Home Loan Bank advances and retail certificates of deposit. We began to reduce our reliance on these additional sources – repaying 18% of peak balances reached in May 2023 – as realignment activity decelerated by almost 80% during the second half of the year, including a seasonal increase in client cash in December. Earlier in the year, we made the decision to temporarily suspend our stock buyback program after repurchasing 37 million shares for $2.8 billion during the first quarter of the year. This action allows us to more rapidly build our capital ratios inclusive of accumulated other comprehensive income via our healthy earnings power and lower capital intensity. The company’s preliminary consolidated Tier 1 Leverage and Adjusted Tier 1 Leverage (1) ratios increased to 8.5% and 4.9%, respectively. Ratios for Charles Schwab Bank, SSB (CSB) grew as well, with CSB’s preliminary Tier 1 Leverage finishing the year at 10.1%, or 5.4% on an adjusted basis (1).”

Mr. Crawford concluded, “While 2023 presented a number of challenges, we stayed focused on meeting the evolving needs of our clients. Guided by our client-centric approach, we move ahead with confidence that our “through the cycle” financial formula keeps us positioned to deliver long-term stockholder value.”

(1)

 

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

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 cash realignment trends and second quarter revenue expectations, was posted on June 14, 2023.

Winter Business Update

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

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

Forward-Looking Statements

This press release contains forward-looking statements relating to the company’s strategy and approach; Ameritrade integration and deal-related attrition; opportunities for increased efficiency and resulting incremental annual expense savings; investment in client initiatives; profitable growth; positioning; business model; financial formula; stock repurchases; capital ratios; earnings power; balance sheet; and stockholder value. 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 attract and retain clients and independent investment advisors and grow those relationships and client assets; 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 and retain talent; support client activity levels; successfully implement integration strategies and plans; capture Ameritrade deal expense synergies, streamline its operational design, align its real estate footprint, and harness the benefits of automation in order to deliver expected incremental annual expense savings, and the costs incurred in connection with such actions; manage expenses; and monetize client assets. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including the level of interest rates and equity valuations; higher than expected asset attrition from clients originating at Ameritrade; client cash allocation decisions; client sensitivity to rates; level of client assets, including cash balances; competitive pressures on pricing; the level and mix of client trading activity; market volatility; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; new or changed legislation, regulation or regulatory expectations; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 34.8 million active brokerage accounts, 5.2 million workplace plan participant accounts, 1.8 million banking accounts, and $8.52 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 LLC. TD Ameritrade Holding LLC 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

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net Revenues

 

 

 

 

 

 

 

Interest revenue

$

3,963

 

 

$

3,841

 

 

$

16,111

 

 

$

12,227

 

Interest expense

 

(1,833

)

 

 

(812

)

 

 

(6,684

)

 

 

(1,545

)

Net interest revenue

 

2,130

 

 

 

3,029

 

 

 

9,427

 

 

 

10,682

 

Asset management and administration fees (1)

 

1,241

 

 

 

1,049

 

 

 

4,756

 

 

 

4,216

 

Trading revenue

 

767

 

 

 

895

 

 

 

3,230

 

 

 

3,673

 

Bank deposit account fees

 

174

 

 

 

350

 

 

 

705

 

 

 

1,409

 

Other

 

147

 

 

 

174

 

 

 

719

 

 

 

782

 

Total net revenues

 

4,459

 

 

 

5,497

 

 

 

18,837

 

 

 

20,762

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

 

1,409

 

 

 

1,488

 

 

 

6,315

 

 

 

5,936

 

Professional services

 

253

 

 

 

266

 

 

 

1,058

 

 

 

1,032

 

Occupancy and equipment

 

331

 

 

 

320

 

 

 

1,254

 

 

 

1,175

 

Advertising and market development

 

104

 

 

 

123

 

 

 

397

 

 

 

419

 

Communications

 

144

 

 

 

144

 

 

 

629

 

 

 

588

 

Depreciation and amortization

 

238

 

 

 

176

 

 

 

804

 

 

 

652

 

Amortization of acquired intangible assets

 

130

 

 

 

136

 

 

 

534

 

 

 

596

 

Regulatory fees and assessments

 

270

 

 

 

62

 

 

 

547

 

 

 

262

 

Other

 

386

 

 

 

184

 

 

 

921

 

 

 

714

 

Total expenses excluding interest

 

3,265

 

 

 

2,899

 

 

 

12,459

 

 

 

11,374

 

Income before taxes on income

 

1,194

 

 

 

2,598

 

 

 

6,378

 

 

 

9,388

 

Taxes on income

 

149

 

 

 

630

 

 

 

1,311

 

 

 

2,205

 

Net Income

 

1,045

 

 

 

1,968

 

 

 

5,067

 

 

 

7,183

 

Preferred stock dividends and other

 

119

 

 

 

147

 

 

 

418

 

 

 

548

 

Net Income Available to Common Stockholders

$

926

 

 

$

1,821

 

 

$

4,649

 

 

$

6,635

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

1,823

 

 

 

1,864

 

 

 

1,824

 

 

 

1,885

 

Diluted

 

1,828

 

 

 

1,873

 

 

 

1,831

 

 

 

1,894

 

Earnings Per Common Shares Outstanding (2):

 

 

 

 

 

 

 

Basic

$

.51

 

 

$

.98

 

 

$

2.55

 

 

$

3.52

 

Diluted

$

.51

 

 

$

.97

 

 

$

2.54

 

 

$

3.50

 

(1)

 

No fee waivers were recognized for the three and twelve months ended December 31, 2023, or for the three months ended December 31, 2022. Includes fee waivers of $57 million for the twelve months ended December 31, 2022.

(2)

 

The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

 

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

 

Q4-23 % change

 

 

2023

 

 

2022

 

 

vs.

 

vs.

 

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-22

 

Q3-23

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

(30

)%

 

(5

)%

 

 

$

2,130

 

 

$

2,237

 

 

$

2,290

 

 

$

2,770

 

 

$

3,029

 

Asset management and administration fees

18

%

 

1

%

 

 

 

1,241

 

 

 

1,224

 

 

 

1,173

 

 

 

1,118

 

 

 

1,049

 

Trading revenue

(14

)%

 

 

 

 

 

767

 

 

 

768

 

 

 

803

 

 

 

892

 

 

 

895

 

Bank deposit account fees

(50

)%

 

(15

)%

 

 

 

174

 

 

 

205

 

 

 

175

 

 

 

151

 

 

 

350

 

Other

(16

)%

 

(15

)%

 

 

 

147

 

 

 

172

 

 

 

215

 

 

 

185

 

 

 

174

 

Total net revenues

(19

)%

 

(3

)%

 

 

 

4,459

 

 

 

4,606

 

 

 

4,656

 

 

 

5,116

 

 

 

5,497

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits (1)

(5

)%

 

(20

)%

 

 

 

1,409

 

 

 

1,770

 

 

 

1,498

 

 

 

1,638

 

 

 

1,488

 

Professional services

(5

)%

 

(8

)%

 

 

 

253

 

 

 

275

 

 

 

272

 

 

 

258

 

 

 

266

 

Occupancy and equipment

3

%

 

9

%

 

 

 

331

 

 

 

305

 

 

 

319

 

 

 

299

 

 

 

320

 

Advertising and market development

(15

)%

 

2

%

 

 

 

104

 

 

 

102

 

 

 

103

 

 

 

88

 

 

 

123

 

Communications

 

 

(5

)%

 

 

 

144

 

 

 

151

 

 

 

188

 

 

 

146

 

 

 

144

 

Depreciation and amortization

35

%

 

20

%

 

 

 

238

 

 

 

198

 

 

 

191

 

 

 

177

 

 

 

176

 

Amortization of acquired intangible assets

(4

)%

 

(4

)%

 

 

 

130

 

 

 

135

 

 

 

134

 

 

 

135

 

 

 

136

 

Regulatory fees and assessments

N/M

 

 

137

%

 

 

 

270

 

 

 

114

 

 

 

80

 

 

 

83

 

 

 

62

 

Other (2)

110

%

 

123

%

 

 

 

386

 

 

 

173

 

 

 

180

 

 

 

182

 

 

 

184

 

Total expenses excluding interest

13

%

 

1

%

 

 

 

3,265

 

 

 

3,223

 

 

 

2,965

 

 

 

3,006

 

 

 

2,899

 

Income before taxes on income

(54

)%

 

(14

)%

 

 

 

1,194

 

 

 

1,383

 

 

 

1,691

 

 

 

2,110

 

 

 

2,598

 

Taxes on income

(76

)%

 

(42

)%

 

 

 

149

 

 

 

258

 

 

 

397

 

 

 

507

 

 

 

630

 

Net Income

(47

)%

 

(7

)%

 

 

 

1,045

 

 

 

1,125

 

 

 

1,294

 

 

 

1,603

 

 

 

1,968

 

Preferred stock dividends and other

(19

)%

 

10

%

 

 

 

119

 

 

 

108

 

 

 

121

 

 

 

70

 

 

 

147

 

Net Income Available to Common Stockholders

(49

)%

 

(9

)%

 

 

$

926

 

 

$

1,017

 

 

$

1,173

 

 

$

1,533

 

 

$

1,821

 

Earnings per common share (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(48

)%

 

(9

)%

 

 

$

.51

 

 

$

.56

 

 

$

.64

 

 

$

.84

 

 

$

.98

 

Diluted

(47

)%

 

(9

)%

 

 

$

.51

 

 

$

.56

 

 

$

.64

 

 

$

.83

 

 

$

.97

 

Dividends declared per common share

14

%

 

 

 

 

$

.25

 

 

$

.25

 

 

$

.25

 

 

$

.25

 

 

$

.22

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(2

)%

 

 

 

 

 

1,823

 

 

 

1,821

 

 

 

1,820

 

 

 

1,834

 

 

 

1,864

 

Diluted

(2

)%

 

 

 

 

 

1,828

 

 

 

1,827

 

 

 

1,825

 

 

 

1,842

 

 

 

1,873

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

 

26.8

%

 

 

30.0

%

 

 

36.3

%

 

 

41.2

%

 

 

47.3

%

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

 

 

 

 

 

 

12

%

 

 

14

%

 

 

17

%

 

 

23

%

 

 

27

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

8

%

 

30

%

 

 

$

43.3

 

 

$

33.3

 

 

$

47.7

 

 

$

49.2

 

 

$

40.2

 

Cash and investments segregated

(26

)%

 

71

%

 

 

 

31.8

 

 

 

18.6

 

 

 

25.1

 

 

 

31.0

 

 

 

43.0

 

Receivables from brokerage clients — net

3

%

 

(1

)%

 

 

 

68.7

 

 

 

69.1

 

 

 

65.2

 

 

 

63.2

 

 

 

66.6

 

Available for sale securities

(27

)%

 

(2

)%

 

 

 

107.6

 

 

 

110.3

 

 

 

125.8

 

 

 

141.3

 

 

 

147.9

 

Held to maturity securities

(8

)%

 

(2

)%

 

 

 

159.5

 

 

 

162.5

 

 

 

166.3

 

 

 

169.9

 

 

 

173.1

 

Bank loans — net

 

 

 

 

 

 

40.4

 

 

 

40.3

 

 

 

40.1

 

 

 

40.0

 

 

 

40.5

 

Total assets

(11

)%

 

4

%

 

 

 

493.2

 

 

 

475.2

 

 

 

511.5

 

 

 

535.6

 

 

 

551.8

 

Bank deposits

(21

)%

 

2

%

 

 

 

290.0

 

 

 

284.4

 

 

 

304.4

 

 

 

325.7

 

 

 

366.7

 

Payables to brokerage clients

(13

)%

 

16

%

 

 

 

84.8

 

 

 

72.8

 

 

 

84.8

 

 

 

87.6

 

 

 

97.4

 

Other short-term borrowings (5)

40

%

 

(13

)%

 

 

 

6.6

 

 

 

7.6

 

 

 

7.8

 

 

 

7.1

 

 

 

4.7

 

Federal Home Loan Bank borrowings (5)

113

%

 

(17

)%

 

 

 

26.4

 

 

 

31.8

 

 

 

41.0

 

 

 

45.6

 

 

 

12.4

 

Long-term debt

25

%

 

5

%

 

 

 

26.1

 

 

 

24.8

 

 

 

22.5

 

 

 

20.0

 

 

 

20.8

 

Stockholders’ equity

12

%

 

8

%

 

 

 

41.0

 

 

 

37.8

 

 

 

37.1

 

 

 

36.3

 

 

 

36.6

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(7

)%

 

(8

)%

 

 

 

33.0

 

 

 

35.9

 

 

 

36.6

 

 

 

36.0

 

 

 

35.3

 

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

(6

)%

 

(20

)%

 

 

$

199

 

 

$

250

 

 

$

168

 

 

$

187

 

 

$

211

 

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

 

 

 

 

 

 

0.16

%

 

 

0.16

%

 

 

0.15

%

 

 

0.17

%

 

 

0.16

%

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

(4

)%

 

 

 

 

 

5,192

 

 

 

5,218

 

 

 

5,272

 

 

 

5,895

 

 

 

5,389

 

Number of Trading Days

 

 

 

 

 

 

62.5

 

 

 

62.5

 

 

 

62.0

 

 

 

62.0

 

 

 

62.5

 

Revenue Per Trade (6)

(11

)%

 

 

 

 

$

2.36

 

 

$

2.35

 

 

$

2.46

 

 

$

2.44

 

 

$

2.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

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

(2)

 

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

(3)

 

The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

(4)

 

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

(5)

 

Beginning in the first quarter of 2023, Federal Home Loan Bank borrowings are presented separately from other short-term borrowings. Prior period amounts have been reclassified to reflect this change.

(6)

 

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

December 31,

 

 

Twelve Months Ended

December 31,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

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

$

35,312

 

$

475

 

5.27

%

 

 

$

38,067

 

$

351

 

3.62

%

 

 

$

37,846

 

$

1,894

 

4.94

%

 

 

$

57,163

 

$

812

 

 

1.40

%

Cash and investments segregated

 

23,830

 

 

314

 

5.16

%

 

 

 

45,096

 

 

383

 

3.33

%

 

 

 

28,259

 

 

1,355

 

4.73

%

 

 

 

49,430

 

 

691

 

 

1.38

%

Receivables from brokerage clients

 

62,602

 

 

1,260

 

7.88

%

 

 

 

66,663

 

 

1,077

 

6.32

%

 

 

 

61,914

 

 

4,793

 

7.64

%

 

 

 

75,614

 

 

3,321

 

 

4.33

%

Available for sale securities (1,2)

 

118,831

 

 

647

 

2.16

%

 

 

 

196,577

 

 

943

 

1.90

%

 

 

 

137,178

 

 

2,987

 

2.17

%

 

 

 

260,392

 

 

4,139

 

 

1.58

%

Held to maturity securities

 

160,378

 

 

700

 

1.74

%

 

 

 

146,384

 

 

626

 

1.70

%

 

 

 

165,634

 

 

2,872

 

1.73

%

 

 

 

112,357

 

 

1,688

 

 

1.50

%

Bank loans

 

40,386

 

 

437

 

4.31

%

 

 

 

40,531

 

 

366

 

3.59

%

 

 

 

40,234

 

 

1,664

 

4.14

%

 

 

 

38,816

 

 

1,083

 

 

2.79

%

Total interest-earning assets

 

441,339

 

 

3,833

 

3.43

%

 

 

 

533,318

 

 

3,746

 

2.77

%

 

 

 

471,065

 

 

15,565

 

3.28

%

 

 

 

593,772

 

 

11,734

 

 

1.96

%

Securities lending revenue

 

 

 

78

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

419

 

 

 

 

 

 

 

471

 

 

 

Other interest revenue

 

 

 

52

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

127

 

 

 

 

 

 

 

22

 

 

 

Total interest-earning assets

$

441,339

 

$

3,963

 

3.54

%

 

 

$

533,318

 

$

3,841

 

2.84

%

 

 

$

471,065

 

$

16,111

 

3.39

%

 

 

$

593,772

 

$

12,227

 

 

2.04

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

280,380

 

$

971

 

1.37

%

 

 

$

374,812

 

$

438

 

0.46

%

 

 

$

306,505

 

$

3,363

 

1.10

%

 

 

$

424,168

 

$

723

 

 

0.17

%

Payables to brokerage clients

 

61,781

 

 

66

 

0.43

%

 

 

 

87,001

 

 

76

 

0.35

%

 

 

 

66,842

 

 

271

 

0.41

%

 

 

 

97,825

 

 

123

 

 

0.13

%

Other short-term borrowings (3)

 

6,724

 

 

95

 

5.63

%

 

 

 

2,904

 

 

36

 

4.89

%

 

 

 

7,144

 

 

375

 

5.25

%

 

 

 

2,719

 

 

48

 

 

1.75

%

Federal Home Loan Bank borrowings (3)

 

31,630

 

 

423

 

5.28

%

 

 

 

9,023

 

 

106

 

4.59

%

 

 

 

34,821

 

 

1,810

 

5.14

%

 

 

 

2,274

 

 

106

 

 

4.59

%

Long-term debt

 

25,457

 

 

226

 

3.54

%

 

 

 

20,837

 

 

135

 

2.59

%

 

 

 

22,636

 

 

715

 

3.16

%

 

 

 

20,714

 

 

498

 

 

2.40

%

Total interest-bearing liabilities

 

405,972

 

 

1,781

 

1.74

%

 

 

 

494,577

 

 

791

 

0.64

%

 

 

 

437,948

 

 

6,534

 

1.49

%

 

 

 

547,700

 

 

1,498

 

 

0.27

%

Non-interest-bearing funding sources

 

35,367

 

 

 

 

 

 

38,741

 

 

 

 

 

 

 

33,117

 

 

 

 

 

 

 

46,072

 

 

 

 

Securities lending expense

 

 

 

51

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

147

 

 

 

 

 

 

 

48

 

 

 

Other interest expense

 

 

 

1

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

(1

)

 

 

Total funding sources

$

441,339

 

$

1,833

 

1.65

%

 

 

$

533,318

 

$

812

 

0.60

%

 

 

$

471,065

 

$

6,684

 

1.41

%

 

 

$

593,772

 

$

1,545

 

 

0.26

%

Net interest revenue

 

 

$

2,130

 

1.89

%

 

 

 

 

$

3,029

 

2.24

%

 

 

 

 

$

9,427

 

1.98

%

 

 

 

 

$

10,682

 

 

1.78

%

(1)

 

Amounts have been calculated based on amortized cost.

(2)

 

Beginning in the first quarter of 2023, amounts include the impact of derivative financial instruments and the related hedge accounting on our available for sale securities.

(3)

 

Beginning in the first quarter of 2023, Federal Home Loan Bank borrowings are presented separately from other short-term borrowings. Prior period amounts have been reclassified to reflect this change.

 

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

Three Months Ended

December 31,

 

 

Twelve Months Ended

December 31,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

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 before fee waivers

$

461,091

 

$

299

 

0.26

%

 

 

$

243,587

 

$

159

 

0.26

%

 

 

$

391,864

 

$

1,034

 

0.26

%

 

 

$

179,791

 

$

499

 

 

0.28

%

Fee waivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

 

 

Schwab money market funds

 

461,091

 

 

 

299

 

 

0.26

%

 

 

 

243,587

 

 

 

159

 

 

0.26

%

 

 

 

391,864

 

 

 

1,034

 

 

0.26

%

 

 

 

179,791

 

 

 

442

 

 

0.25

%

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

 

486,340

 

 

 

98

 

 

0.08

%

 

 

 

421,238

 

 

 

86

 

 

0.08

%

 

 

 

471,832

 

 

 

382

 

 

0.08

%

 

 

 

433,005

 

 

 

364

 

 

0.08

%

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

 

289,841

 

 

 

188

 

 

0.26

%

 

 

 

219,965

 

 

 

149

 

 

0.27

%

 

 

 

249,131

 

 

 

657

 

 

0.26

%

 

 

 

202,015

 

 

 

602

 

 

0.30

%

Other third-party mutual funds and ETFs

 

572,027

 

 

 

97

 

 

0.07

%

 

 

 

659,870

 

 

 

137

 

 

0.08

%

 

 

 

640,689

 

 

 

490

 

 

0.08

%

 

 

 

768,871

 

 

 

647

 

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

1,809,299

 

 

 

682

 

 

0.15

%

 

 

$

1,544,660

 

 

 

531

 

 

0.14

%

 

 

$

1,753,516

 

 

 

2,563

 

 

0.15

%

 

 

$

1,583,682

 

 

 

2,055

 

 

0.13

%

Advice solutions (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

465,266

 

 

 

475

 

 

0.41

%

 

 

$

424,407

 

 

 

445

 

 

0.42

%

 

 

$

458,114

 

 

 

1,868

 

 

0.41

%

 

 

$

441,336

 

 

 

1,854

 

 

0.42

%

Non-fee-based

 

98,679

 

 

 

 

 

 

 

 

 

87,804

 

 

 

 

 

 

 

 

 

96,633

 

 

 

 

 

 

 

 

 

89,525

 

 

 

 

 

 

Total advice solutions

$

563,945

 

 

 

475

 

 

0.33

%

 

 

$

512,211

 

 

 

445

 

 

0.34

%

 

 

$

554,747

 

 

 

1,868

 

 

0.34

%

 

 

$

530,861

 

 

 

1,854

 

 

0.35

%

Other balance-based fees (2)

 

664,774

 

 

 

65

 

 

0.04

%

 

 

 

524,465

 

 

 

58

 

 

0.04

%

 

 

 

608,170

 

 

 

254

 

 

0.04

%

 

 

 

561,416

 

 

 

244

 

 

0.04

%

Other (3)

 

 

 

19

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

71

 

 

 

 

 

 

 

 

63

 

 

 

Total asset management and administration fees

 

 

$

1,241

 

 

 

 

 

 

 

$

1,049

 

 

 

 

 

 

 

$

4,756

 

 

 

 

 

 

 

$

4,216

 

 

 

(1)

 

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth Advisory™, Schwab Managed Portfolios™, Managed Account Select®, Schwab Advisor Network®, Windhaven Strategies®, ThomasPartners® Strategies, Schwab Index Advantage advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, Schwab Intelligent Portfolios Premium®, AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.

(2)

 

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

(3)

 

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

 

THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

 

Q4-23 % Change

 

 

2023

 

2022

 

vs.

 

vs.

 

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-22

 

Q3-23

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

(20

)%

 

4

%

 

 

$

368.3

 

 

$

353.1

 

 

$

384.4

 

 

$

408.5

 

 

$

459.4

 

Bank deposit account balances

(23

)%

 

(2

)%

 

 

 

97.4

 

 

 

99.5

 

 

 

102.7

 

 

 

106.5

 

 

 

126.6

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

71

%

 

9

%

 

 

 

476.4

 

 

 

436.3

 

 

 

392.9

 

 

 

357.8

 

 

 

278.9

 

Equity and bond funds and CTFs (2)

22

%

 

11

%

 

 

 

186.7

 

 

 

167.9

 

 

 

172.6

 

 

 

163.1

 

 

 

153.6

 

Total proprietary mutual funds and CTFs

53

%

 

10

%

 

 

 

663.1

 

 

 

604.2

 

 

 

565.5

 

 

 

520.9

 

 

 

432.5

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

30

%

 

6

%

 

 

 

306.2

 

 

 

288.0

 

 

 

254.6

 

 

 

244.3

 

 

 

235.7

 

Mutual fund clearing services

22

%

 

8

%

 

 

 

233.4

 

 

 

216.9

 

 

 

220.7

 

 

 

201.7

 

 

 

191.1

 

Other third-party mutual funds (4)

5

%

 

7

%

 

 

 

1,126.5

 

 

 

1,055.3

 

 

 

1,150.8

 

 

 

1,123.6

 

 

 

1,077.1

 

Total Mutual Fund Marketplace

11

%

 

7

%

 

 

 

1,666.1

 

 

 

1,560.2

 

 

 

1,626.1

 

 

 

1,569.6

 

 

 

1,503.9

 

Total mutual fund assets

20

%

 

8

%

 

 

 

2,329.2

 

 

 

2,164.4

 

 

 

2,191.6

 

 

 

2,090.5

 

 

 

1,936.4

 

Exchange-traded funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

23

%

 

12

%

 

 

 

319.4

 

 

 

286.2

 

 

 

293.2

 

 

 

280.6

 

 

 

259.3

 

Other third-party ETFs

26

%

 

13

%

 

 

 

1,521.7

 

 

 

1,352.6

 

 

 

1,381.4

 

 

 

1,297.5

 

 

 

1,208.4

 

Total ETF assets

25

%

 

12

%

 

 

 

1,841.1

 

 

 

1,638.8

 

 

 

1,674.6

 

 

 

1,578.1

 

 

 

1,467.7

 

Equity and other securities

25

%

 

10

%

 

 

 

3,163.5

 

 

 

2,886.4

 

 

 

3,002.7

 

 

 

2,772.2

 

 

 

2,529.4

 

Fixed income securities

31

%

 

4

%

 

 

 

779.7

 

 

 

747.4

 

 

 

722.6

 

 

 

684.7

 

 

 

593.4

 

Margin loans outstanding

(1

)%

 

(4

)%

 

 

 

(62.6

)

 

 

(65.1

)

 

 

(62.8

)

 

 

(60.5

)

 

 

(63.1

)

Total client assets

21

%

 

9

%

 

 

$

8,516.6

 

 

$

7,824.5

 

 

$

8,015.8

 

 

$

7,580.0

 

 

$

7,049.8

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

23

%

 

9

%

 

 

$

4,519.1

 

 

$

4,157.7

 

 

$

4,267.9

 

 

$

4,001.9

 

 

$

3,682.1

 

Advisor Services

19

%

 

9

%

 

 

 

3,997.5

 

 

 

3,666.8

 

 

 

3,747.9

 

 

 

3,578.1

 

 

 

3,367.7

 

Total client assets

21

%

 

9

%

 

 

$

8,516.6

 

 

$

7,824.5

 

 

$

8,015.8

 

 

$

7,580.0

 

 

$

7,049.8

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

(61

)%

 

(13

)%

 

 

$

25.0

 

 

$

28.6

 

 

$

36.0

 

 

$

79.4

 

 

$

64.3

 

Advisor Services (6)

(36

)%

 

111

%

 

 

 

41.3

 

 

 

19.6

 

 

 

36.0

 

 

 

71.3

 

 

 

64.1

 

Total net new assets

(48

)%

 

38

%

 

 

$

66.3

 

 

$

48.2

 

 

$

72.0

 

 

$

150.7

 

 

$

128.4

 

Net market gains (losses)

 

 

 

 

 

 

625.8

 

 

 

(239.5

)

 

 

363.8

 

 

 

379.5

 

 

 

277.2

 

Net growth (decline)

 

 

 

 

 

$

692.1

 

 

$

(191.3

)

 

$

435.8

 

 

$

530.2

 

 

$

405.6

 

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

(2

)%

 

2

%

 

 

 

910

 

 

 

894

 

 

 

960

 

 

 

1,042

 

 

 

931

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts (7)

3

%

 

1

%

 

 

 

34,838

 

 

 

34,540

 

 

 

34,382

 

 

 

34,120

 

 

 

33,758

 

Banking accounts

7

%

 

2

%

 

 

 

1,838

 

 

 

1,799

 

 

 

1,781

 

 

 

1,746

 

 

 

1,716

 

Workplace Plan Participant Accounts (8)

9

%

 

2

%

 

 

 

5,221

 

 

 

5,141

 

 

 

5,003

 

 

 

4,845

 

 

 

4,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 December 31, 2023, off-platform equity and bond funds, CTFs, and ETFs were $27.4 billion, $3.2 billion, and $107.2 billion, respectively.

(3)

 

Excludes all proprietary mutual funds and ETFs.

(4)

 

As of December 31, 2023, third-party money funds were $1.0 billion.

(5)

 

Fourth quarter of 2023 includes net inflows of $2.4 billion from off-platform Schwab Bank Retail Certificates of Deposit (CDs) and outflows of $5.8 billion from an international relationship. Third quarter of 2023 includes net inflows of $3.3 billion from off-platform Schwab Bank Retail CDs. Second quarter of 2023 includes an inflow of $12.0 billion from a mutual fund clearing services client and inflows of $7.8 billion from off-platform Schwab Bank Retail CDs. First quarter of 2023 includes inflows of $19.0 billion from off-platform Schwab Bank Retail CDs.

(6)

 

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

(7)

 

Fourth quarter of 2022 includes the Company-initiated closure of approximately 350 thousand low-balance accounts.

(8)

 

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

 

The Charles Schwab Corporation Monthly Activity Report For December 2023

 

 

2022

2023

 

 

 

 

 

 

 

 

 

 

 

Change

 

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Mo.

Yr.

Market Indices (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average®

33,147

 

34,086

 

32,657

 

33,274

 

34,098

 

32,908

 

34,408

 

35,560

 

34,722

 

33,508

 

33,053

 

35,951

 

37,690

 

5

%

14

%

Nasdaq Composite®

10,466

 

11,585

 

11,456

 

12,222

 

12,227

 

12,935

 

13,788

 

14,346

 

14,035

 

13,219

 

12,851

 

14,226

 

15,011

 

6

%

43

%

Standard & Poor’s® 500

3,840

 

4,077

 

3,970

 

4,109

 

4,169

 

4,180

 

4,450

 

4,589

 

4,508

 

4,288

 

4,194

 

4,568

 

4,770

 

4

%

24

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

7,320.6

 

7,049.8

 

7,480.6

 

7,380.2

 

7,580.0

 

7,631.5

 

7,650.2

 

8,015.8

 

8,241.0

 

8,094.7

 

7,824.5

 

7,653.4

 

8,180.6

 

 

 

Net New Assets (1)

53.3

 

36.1

 

41.7

 

72.9

 

13.6

 

24.6

 

33.8

 

12.9

 

8.1

 

27.2

 

5.0

 

19.2

 

42.1

 

119

%

(21

)%

Net Market Gains (Losses)

(324.1

)

394.7

 

(142.1

)

126.9

 

37.9

 

(5.9

)

331.8

 

212.3

 

(154.4

)

(297.4

)

(176.1

)

508.0

 

293.9

 

 

 

Total Client Assets (at month end)

7,049.8

 

7,480.6

 

7,380.2

 

7,580.0

 

7,631.5

 

7,650.2

 

8,015.8

 

8,241.0

 

8,094.7

 

7,824.5

 

7,653.4

 

8,180.6

 

8,516.6

 

4

%

21

%

Core Net New Assets (1,2)

53.3

 

36.1

 

41.7

 

53.9

 

(2.3

)

20.7

 

33.8

 

13.7

 

4.9

 

27.1

 

11.3

 

21.7

 

43.1

 

99

%

(19

)%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

499.8

 

524.6

 

515.5

 

526.2

 

530.7

 

526.3

 

547.5

 

560.6

 

552.2

 

533.0

 

522.2

 

557.0

 

581.4

 

4

%

16

%

Advisor Services (3)

3,173.4

 

3,345.4

 

3,289.6

 

3,369.3

 

3,394.9

 

3,377.8

 

3,527.8

 

3,619.8

 

3,554.2

 

3,448.0

 

3,380.3

 

3,604.4

 

3,757.4

 

4

%

18

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

33,758

 

33,878

 

34,010

 

34,120

 

34,248

 

34,311

 

34,382

 

34,434

 

34,440

 

34,540

 

34,571

 

34,672

 

34,838

 

 

3

%

Banking Accounts

1,716

 

1,729

 

1,733

 

1,746

 

1,757

 

1,768

 

1,781

 

1,792

 

1,798

 

1,799

 

1,812

 

1,825

 

1,838

 

1

%

7

%

Workplace Plan Participant Accounts (4)

4,807

 

4,817

 

4,839

 

4,845

 

4,869

 

4,962

 

5,003

 

5,030

 

5,037

 

5,141

 

5,212

 

5,212

 

5,221

 

 

9

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

330

 

344

 

320

 

378

 

331

 

314

 

315

 

303

 

311

 

280

 

284

 

286

 

340

 

19

%

3

%

Client Cash as a Percentage of Client Assets (5,6)

12.2

%

11.5

%

11.6

%

11.2

%

10.8

%

10.9

%

10.5

%

10.2

%

10.4

%

10.8

%

11.2

%

10.7

%

10.5

%

(20

) bp

(170

) bp

Derivative Trades as a Percentage of Total Trades

23.2

%

23.0

%

23.5

%

22.8

%

23.4

%

23.5

%

23.9

%

23.0

%

24.4

%

24.2

%

23.2

%

23.1

%

21.8

%

(130

) bp

(140

) bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (7)

520,100

 

512,893

 

503,122

 

497,627

 

493,215

 

483,438

 

479,752

 

466,659

 

449,483

 

444,864

 

438,522

 

439,118

 

446,305

 

2

%

(14

)%

Average Margin Balances

64,759

 

60,211

 

60,575

 

60,848

 

60,338

 

60,250

 

61,543

 

63,040

 

64,226

 

64,014

 

63,946

 

61,502

 

62,309

 

1

%

(4

)%

Average Bank Deposit Account Balances (8)

126,953

 

122,387

 

115,816

 

109,392

 

104,775

 

103,149

 

102,917

 

102,566

 

101,928

 

100,404

 

97,893

 

94,991

 

95,518

 

1

%

(25

)%

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (9,10) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

(1,837

)

7,236

 

5,850

 

(3,234

)

1,126

 

(1,366

)

9,190

 

7,423

 

(278

)

675

 

(3,039

)

6,099

 

7,903

 

 

 

Hybrid

(1,595

)

(433

)

47

 

(1,641

)

(462

)

(889

)

(903

)

(407

)

(1,037

)

(828

)

(1,457

)

(1,466

)

(1,596

)

 

 

Bonds

(3,260

)

5,646

 

4,281

 

6,158

 

2,575

 

2,029

 

3,302

 

2,515

 

4,696

 

2,723

 

1,094

 

255

 

6,104

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (9)

(21,851

)

552

 

(2,338

)

(7,423

)

(4,904

)

(7,157

)

(4,485

)

(3,333

)

(6,476

)

(5,853

)

(12,245

)

(9,267

)

(7,406

)

 

 

Exchange-Traded Funds (10)

15,159

 

11,897

 

12,516

 

8,706

 

8,143

 

6,931

 

16,074

 

12,864

 

9,857

 

8,423

 

8,843

 

14,155

 

19,817

 

 

 

Money Market Funds

27,778

 

24,285

 

23,347

 

27,106

 

6,291

 

15,256

 

9,112

 

7,911

 

16,869

 

13,388

 

16,976

 

11,670

 

7,745

 

 

 

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

(1)

 

Unless otherwise noted, differences between net new assets and core net new assets are net flows from off-platform Schwab Bank Retail CDs – including March 2023 which reflects inflows of $19.0 billion from off-platform Schwab Bank Retail CDs issued year-to-date through March 31, 2023. Additionally, 2023 includes outflows from a large international relationship of $0.8 billion in September, $6.2 billion in October, $5.4 billion in November, and $0.6 billion in December, and an inflow of $12.0 billion from a mutual fund clearing services client in April.

(2)

 

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

(3)

 

Excludes Retirement Business Services.

(4)

 

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

(5)

 

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

(6)

 

Beginning July 2023, client cash as a percentage of client assets excludes brokered CDs issued by Charles Schwab Bank. Prior periods have been recast to reflect this change.

(7)

 

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

(8)

 

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

(9)

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.

(10)

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

THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)

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

Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below. Beginning in the third quarter of 2023, these adjustments also include restructuring costs, which the Company began incurring in connection with its previously announced plans to streamline its operations to prepare for post-integration of TD Ameritrade. See Part I – Item 1 – Note 10 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 for additional information.

Non-GAAP Adjustment or Measure

Definition

Usefulness to Investors and Uses by Management

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

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

 

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

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

 

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

Return on tangible common equity

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

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

Adjusted Tier 1 Leverage Ratio

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

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

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

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

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2023

2022

 

2023

2022

 

Total

Expenses

Excluding

Interest

Net

Income

Total

Expenses

Excluding

Interest

Net

Income

 

Total

Expenses

Excluding

Interest

Net

Income

Total

Expenses

Excluding

Interest

Net

Income

Total expenses excluding interest (GAAP), Net income (GAAP)

$

3,265

 

$

1,045

 

$

2,899

 

$

1,968

 

 

$

12,459

 

$

5,067

 

$

11,374

 

$

7,183

 

Acquisition and integration-related costs (1)

 

(67

)

 

67

 

 

(101

)

 

101

 

 

 

(401

)

 

401

 

 

(392

)

 

392

 

Amortization of acquired intangible assets

 

(130

)

 

130

 

 

(136

)

 

136

 

 

 

(534

)

 

534

 

 

(596

)

 

596

 

Restructuring costs (2)

 

(216

)

 

216

 

 

 

 

 

 

 

(495

)

 

495

 

 

 

 

 

Income tax effects (3)

 

N/A

 

 

(91

)

 

N/A

 

 

(54

)

 

 

N/A

 

 

(338

)

 

N/A

 

 

(237

)

Adjusted total expenses (non-GAAP), Adjusted net income (non-GAAP)

$

2,852

 

$

1,367

 

$

2,662

 

$

2,151

 

 

$

11,029

 

$

6,159

 

$

10,386

 

$

7,934

  <