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Schwab Reports Record Quarterly and Full-Year Earnings Per Share

Quarterly and Annual Core Net New Assets Total $162.2 Billion and $558.2 Billion, Both Records

Total Client Assets Reach a Record $8.14 Trillion at Year-end, up 22% Versus December 2020

The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2021 was a record $1.6 billion compared with $1.5 billion for the third quarter of 2021, and $1.1 billion for the fourth quarter of 2020. Net income for the twelve months ended December 31, 2021 was a record $5.9 billion, compared with $3.3 billion for the year-earlier period. The company’s financial results include TD Ameritrade from October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. For the fourth quarter and the twelve months of 2021, these transaction-related expenses totaled $255 million and $1.1 billion, respectively, on a pre-tax basis.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220118005201/en/

 

Three Months Ended

December 31,

 

%

 

Twelve Months Ended

December 31,

 

%

Financial Highlights (1)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

Net revenues (in millions)

$

4,708

 

$

4,176

 

13

%

$

18,520

 

$

11,691

 

58

%

Net income (in millions)

 

 

 

 

 

 

GAAP

$

1,580

 

$

1,135

 

39

%

$

5,855

 

$

3,299

 

77

%

Adjusted (1)

$

1,775

 

$

1,459

 

22

%

$

6,670

 

$

3,777

 

77

%

Diluted earnings per common share

 

 

 

 

 

 

GAAP

$

.76

 

$

.57

 

33

%

$

2.83

 

$

2.12

 

33

%

Adjusted (1)

$

.86

 

$

.74

 

16

%

$

3.25

 

$

2.45

 

33

%

Pre-tax profit margin

 

 

 

 

 

 

GAAP

 

43.0

%

 

35.3

%

 

 

41.6

%

 

36.8

%

 

Adjusted (1)

 

48.4

%

 

45.6

%

 

 

47.5

%

 

42.2

%

 

Return on average common stockholders’ equity (annualized)

 

12

%

 

11

%

 

 

11

%

 

9

%

 

Return on tangible common equity (annualized) (1)

 

24

%

 

21

%

 

 

22

%

 

15

%

 

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 11-12 of this release.

 

CEO Walt Bettinger said, “We delivered another year of record-breaking growth and financial performance in 2021 by staying true to our 'Through Clients’ Eyes' strategy in the face of a fluctuating environment. That shifting picture included strengthening investor optimism early on, fueled by an advancing economic recovery, expanding vaccine rollouts and government aid packages. Then came increasing debates regarding the overall pace of economic growth, the potential path of inflation, and the ultimate impact of multiple global market disruptions. After rising throughout the first half of 2021, the major equity indices were essentially flat during the summer months before the ongoing recovery helped them close the year at near-record levels. While short-term interest rates remained near zero throughout the year, longer-term rates began to rise initially, then eased and rose again in keeping with the economic outlook - the 10-year Treasury yield finally ended 2021 at 1.52%, up 59 basis points from year-end 2020.”

Mr. Bettinger continued, “Investors remained actively engaged with the markets throughout the year, and our competitive positioning as a trusted financial partner offering both value and service continued to resonate in the marketplace. While some measures of engagement eased from the extraordinary levels seen during the first quarter 2021 ‘re-opening’ surge, activity generally exceeded the fourth quarter of 2020, when we included TD Ameritrade in our results for the first time, and core net new assets set yet another record over the final three months of 2021 at $162.2 billion. Clients brought us $80.3 billion in December alone, 28% above our prior single-month record, and our full-year total of $558.2 billion represents an 8% annual organic growth rate. We ended the year with $8.14 trillion in client assets across 33.2 million brokerage accounts, increases of 22% and 12%, respectively.”

Mr. Bettinger added, “Even as we worked to support unprecedented levels of client activity during 2021, the Schwab team continued to drive progress across our key strategic priorities of scale and efficiency, win-win monetization, and segmentation. We kept the TDA integration on track, launched a newly combined version of our Schwab Advisor Network referral program, and hired over 3,000 client service professionals. We broadened our clients’ access to fixed income investment choices by launching and expanding our Wasmer Schroeder™ Strategies lineup of separately managed accounts, which now spans 25 taxable and non-taxable alternatives, including several positive impact strategies. We also added another option for clients to incorporate environmental, social and governance (ESG) factor-based investing in their portfolios by collaborating with Ariel Investments, LLC to launch the Schwab® Ariel ESG ETF, our first proprietary ESG fund and first active ETF. Additionally, we enhanced the digital onboarding experience for new accounts opened by the independent advisors who custody with Schwab, and we expanded their access to Schwab Advisor Portfolio Connect®, our proprietary portfolio management capability. Other noteworthy client initiatives included the addition of person-to-person payment capabilities via Zelle® and the introduction of the Schwab Starter Kit™, a new experience designed to support first-time investors with tailored educational content and tools, along with $50 in funding for an initial purchase of fractional shares, to help them develop their knowledge and confidence as they begin to build their financial futures with us. Clients continued to turn to us as a trusted source of help and guidance throughout 2021 – assets enrolled in one of our advisory offerings rose to $559.2 billion across Investor Services by year-end, up 19% from year-earlier levels. Furthermore, utilization of our bank lending capabilities rose at an even faster pace last year, with outstanding balances of mortgage loans and secured credit lines rising by a combined total of $11.0 billion, or 48%, during 2021 to end the year at $33.8 billion.”

Mr. Bettinger concluded, “Successfully focusing on quality client service while pushing forward with firm-wide initiatives to build a stronger and more capable company would be demanding in any environment. I believe doing so amidst the tumult of the last few years is truly extraordinary. I can’t say this enough – Schwab’s achievements are only possible because thousands of talented individuals show up for work every day, ready to continue creating a better version of modern wealth management for our clients. Following four recent acquisitions, including the largest brokerage transaction in history, I’m particularly proud of our progress in uniting as a single team, pulling in the same direction through challenge after challenge, supporting each other and our clients as we pursue Chuck Schwab’s vision. I share his excitement and passion for our combined organization’s potential, and remain convinced we have the talent, culture, and client-first strategy needed to pursue the tremendous growth opportunities ahead of us.”

CFO Peter Crawford said, “Our fourth quarter and full-year 2021 financial results demonstrate the impressive performance that our all-weather business model can produce when our strong business momentum aligns with easing macroeconomic headwinds. With interest rates stabilizing and even rebounding somewhat to end above year-end 2020 levels, fourth quarter net interest revenue increased 18% over the year-earlier period, as strong asset gathering helped lift investment portfolio balances while client utilization of our range of lending products continued to expand. Asset management and administration fees were up 12% year-over-year due to rising balances in advisory solutions, as well as proprietary and third-party mutual funds and ETFs. Including 19% growth in trading revenue driven by higher activity levels, our total fourth quarter revenues were up 13% to $4.7 billion. Pivoting to expenses, our total GAAP spending was essentially flat versus a year ago at $2.7 billion, which included $101 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Adjusted total expenses(1) were up 7% year-over-year, reflecting robust client engagement and business growth, as well as the 5% employee salary increase that went into effect at the end of September. Strong revenue growth and disciplined expense management enabled us to produce a 43.0% pre-tax profit margin for the fourth quarter – 48.4% on an adjusted basis(1) – and helped our full-year margins reach 41.6% and 47.5%, respectively. I believe that achieving this level of profitability in 2021, on revenues that approached $19 billion despite the persistence of historically low interest rates, is a testament to the combined Schwab team’s relentless attention to driving scale and efficiency – that’s what enables us to provide clients with the service they trust us to deliver while continuing to invest in our strategic agenda.”

Mr. Crawford added, “Our balance sheet expanded to end 2021 with total assets of $667 billion, up 22% versus December 31, 2020. Last year’s increase was driven primarily by client asset flows, as well as approximately $10 billion in bank deposit account migrations. We also added a net $10.2 billion to outstanding debt largely for liquidity management purposes, and increased preferred stock by $2.3 billion to help support continued business growth. The company’s preliminary Tier 1 Leverage Ratio was 6.2% at year-end 2021. Our ongoing capital management and healthy financial performance helped support consistently solid returns on capital throughout the year – we delivered a double-digit return on equity and a ROTCE(1) of at least 20% every quarter, ending with full-year results of 11% and 22%, respectively.”

Mr. Crawford concluded, “The operating environment, our own strategic and competitive success, and unprecedented levels of client engagement and activity all came together in 2021 to help us deliver impressive financial performance. No one could have predicted the way the year would unfold, and we certainly can’t predict what 2022 holds in store for us. What we have long known, however, and what the events of 2021 have reinforced, is that success with clients and consistent growth over time is only made possible by managing for the long-term and by putting clients first, serving them with clarity and focus in all environments. Maintaining a rock-solid balance sheet and robust capital position enables us to concentrate on leveraging our client focus into sustained business momentum that helps build 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 11-12 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 recent account activity, was posted on May 14, 2021.

Winter Business Update

The company has scheduled a Winter Business Update for institutional investors on Friday, January 28, 2022. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 12:30 p.m. PT, 11:00 a.m. - 3:30 p.m. ET. Registration for this Update is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements

This press release contains forward-looking statements relating to strategic priorities; TD Ameritrade integration; investments to attract and retain talent, improve service and the client experience, expand products, services and offerings to meet client needs, diversify revenues, and drive scale and efficiency; growth opportunities; business momentum; balance sheet and capital position; growth in the client base, accounts, and assets; 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 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; successfully implement integration strategies and plans; support client activity levels; monetize client assets; attract and retain clients and independent investment advisors and grow those relationships and client assets; and manage expenses. Other important factors include general market conditions, including equity valuations, trading activity, and the level of interest rates – which can impact money market fund fee waivers; market volatility; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; the migration of bank deposit account balances; balance sheet cash; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; adverse developments in the resolution and settlement amount of the pending regulatory matter; 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 33.2 million active brokerage accounts, 2.2 million corporate retirement plan participants, 1.5 million banking accounts, and approximately $8.14 trillion in client assets. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

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

THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended

December 31,

Twelve Months Ended

December 31,

 

2021

2020

2021

2020

Net Revenues

 

 

 

 

Interest revenue

$

2,270

 

$

1,905

 

$

8,506

 

$

6,531

 

Interest expense

 

(128

)

 

(96

)

 

(476

)

 

(418

)

Net interest revenue

 

2,142

 

 

1,809

 

 

8,030

 

 

6,113

 

Asset management and administration fees (1)

 

1,110

 

 

987

 

 

4,274

 

 

3,475

 

Trading revenue

 

1,017

 

 

854

 

 

4,152

 

 

1,416

 

Bank deposit account fees

 

304

 

 

355

 

 

1,315

 

 

355

 

Other

 

135

 

 

171

 

 

749

 

 

332

 

Total net revenues

 

4,708

 

 

4,176

 

 

18,520

 

 

11,691

 

Expenses Excluding Interest

 

 

 

 

Compensation and benefits

 

1,399

 

 

1,398

 

 

5,450

 

 

3,954

 

Professional services

 

271

 

 

269

 

 

994

 

 

843

 

Occupancy and equipment

 

254

 

 

254

 

 

976

 

 

703

 

Advertising and market development

 

122

 

 

123

 

 

485

 

 

326

 

Communications

 

130

 

 

127

 

 

587

 

 

353

 

Depreciation and amortization

 

145

 

 

130

 

 

549

 

 

414

 

Amortization of acquired intangible assets

 

154

 

 

147

 

 

615

 

 

190

 

Regulatory fees and assessments

 

67

 

 

57

 

 

275

 

 

163

 

Other

 

143

 

 

195

 

 

876

 

 

445

 

Total expenses excluding interest

 

2,685

 

 

2,700

 

 

10,807

 

 

7,391

 

Income before taxes on income

 

2,023

 

 

1,476

 

 

7,713

 

 

4,300

 

Taxes on income

 

443

 

 

341

 

 

1,858

 

 

1,001

 

Net Income

 

1,580

 

 

1,135

 

 

5,855

 

 

3,299

 

Preferred stock dividends and other

 

131

 

 

85

 

 

495

 

 

256

 

Net Income Available to Common Stockholders

$

1,449

 

$

1,050

 

$

5,360

 

$

3,043

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

Basic

 

1,892

 

 

1,848

 

 

1,887

 

 

1,429

 

Diluted

 

1,902

 

 

1,855

 

 

1,897

 

 

1,435

 

Earnings Per Common Shares Outstanding (2):

 

 

 

 

Basic

$

.77

 

$

.57

 

$

2.84

 

$

2.13

 

Diluted

$

.76

 

$

.57

 

$

2.83

 

$

2.12

 

(1)

Includes fee waivers of $80 million and $326 million for the three and twelve months ended December 31, 2021, respectively, and $68 million and $127 million for the three and twelve months ended December 31, 2020, respectively.

(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)

 

Q4-21 % change

 

2021

 

2020

 

vs.

 

vs.

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-20

 

Q3-21

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

Net interest revenue

18

%

6

%

$

2,142

 

$

2,030

 

$

1,947

 

$

1,911

 

$

1,809

 

Asset management and administration fees

12

%

1

%

 

1,110

 

 

1,101

 

 

1,047

 

 

1,016

 

 

987

 

Trading revenue

19

%

5

%

 

1,017

 

 

964

 

 

955

 

 

1,216

 

 

854

 

Bank deposit account fees

(14

)%

(6

)%

 

304

 

 

323

 

 

337

 

 

351

 

 

355

 

Other

(21

)%

(11

)%

 

135

 

 

152

 

 

241

 

 

221

 

 

171

 

Total net revenues

13

%

3

%

 

4,708

 

 

4,570

 

 

4,527

 

 

4,715

 

 

4,176

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

 

7

%

 

1,399

 

 

1,303

 

 

1,318

 

 

1,430

 

 

1,398

 

Professional services

1

%

8

%

 

271

 

 

250

 

 

247

 

 

226

 

 

269

 

Occupancy and equipment

 

3

%

 

254

 

 

246

 

 

239

 

 

237

 

 

254

 

Advertising and market development

(1

)%

3

%

 

122

 

 

119

 

 

128

 

 

116

 

 

123

 

Communications

2

%

(10

)%

 

130

 

 

144

 

 

166

 

 

147

 

 

127

 

Depreciation and amortization

12

%

4

%

 

145

 

 

140

 

 

135

 

 

129

 

 

130

 

Amortization of acquired intangible assets

5

%

1

%

 

154

 

 

153

 

 

154

 

 

154

 

 

147

 

Regulatory fees and assessments

18

%

5

%

 

67

 

 

64

 

 

66

 

 

78

 

 

57

 

Other

(27

)%

2

%

 

143

 

 

140

 

 

355

 

 

238

 

 

195

 

Total expenses excluding interest

(1

)%

5

%

 

2,685

 

 

2,559

 

 

2,808

 

 

2,755

 

 

2,700

 

Income before taxes on income

37

%

1

%

 

2,023

 

 

2,011

 

 

1,719

 

 

1,960

 

 

1,476

 

Taxes on income

30

%

(9

)%

 

443

 

 

485

 

 

454

 

 

476

 

 

341

 

Net Income

39

%

4

%

$

1,580

 

$

1,526

 

$

1,265

 

$

1,484

 

$

1,135

 

Preferred stock dividends and other

54

%

9

%

 

131

 

 

120

 

 

148

 

 

96

 

 

85

 

Net Income Available to Common Stockholders

38

%

3

%

$

1,449

 

$

1,406

 

$

1,117

 

$

1,388

 

$

1,050

 

Earnings per common share (1):

 

 

 

 

 

 

 

Basic

35

%

4

%

$

.77

 

$

.74

 

$

.59

 

$

.74

 

$

.57

 

Diluted

33

%

3

%

$

.76

 

$

.74

 

$

.59

 

$

.73

 

$

.57

 

Dividends declared per common share

 

 

$

.18

 

$

.18

 

$

.18

 

$

.18

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

2

%

 

 

1,892

 

 

1,888

 

 

1,886

 

 

1,882

 

 

1,848

 

Diluted

3

%

 

 

1,902

 

 

1,898

 

 

1,896

 

 

1,892

 

 

1,855

 

Performance Measures

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

43.0

%

 

44.0

%

 

38.0

%

 

41.6

%

 

35.3

%

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

 

 

 

12

%

 

12

%

 

10

%

 

12

%

 

11

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

Cash and cash equivalents

56

%

84

%

$

63.0

 

$

34.3

 

$

30.3

 

$

48.6

 

$

40.3

 

Cash and investments segregated

7

%

27

%

 

53.9

 

 

42.3

 

 

39.9

 

 

40.4

 

 

50.4

 

Receivables from brokerage clients — net

41

%

5

%

 

90.6

 

 

86.6

 

 

82.2

 

 

74.7

 

 

64.4

 

Available for sale securities

16

%

3

%

 

390.1

 

 

377.0

 

 

359.6

 

 

341.6

 

 

337.4

 

Bank loans — net

45

%

9

%

 

34.6

 

 

31.6

 

 

28.9

 

 

25.4

 

 

23.8

 

Total assets

22

%

10

%

 

667.3

 

 

607.5

 

 

574.5

 

 

563.5

 

 

549.0

 

Bank deposits

24

%

12

%

 

443.8

 

 

395.3

 

 

368.6

 

 

369.9

 

 

358.0

 

Payables to brokerage clients

21

%

11

%

 

125.7

 

 

113.1

 

 

105.0

 

 

101.3

 

 

104.2

 

Short-term borrowings

N/M

 

63

%

 

4.9

 

 

3.0

 

 

3.5

 

 

2.5

 

 

 

Long-term debt

39

%

(3

)%

 

18.9

 

 

19.5

 

 

18.7

 

 

17.7

 

 

13.6

 

Stockholders’ equity

 

(2

)%

 

56.3

 

 

57.4

 

 

57.5

 

 

55.6

 

 

56.1

 

Other

 

 

 

 

 

 

 

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

4

%

3

%

 

33.4

 

 

32.4

 

 

32.5

 

 

32.0

 

 

32.0

 

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

116

%

145

%

$

431

 

$

176

 

$

225

 

$

209

 

$

200

 

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

 

 

 

0.13

%

 

0.13

%

 

0.15

%

 

0.16

%

 

0.17

%

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

5

%

10

%

 

6,102

 

 

5,549

 

 

6,042

 

 

8,414

 

 

5,796

 

Number of Trading Days

1

%

(1

)%

 

63.5

 

 

64.0

 

 

63.0

 

 

61.0

 

 

63.0

 

Revenue Per Trade (3)

12

%

(3

)%

$

2.62

 

$

2.71

 

$

2.51

 

$

2.37

 

$

2.34

 

 

 

 

 

 

 

 

 

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

(1)

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.

(2)

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

(3)

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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

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

$

41,735

$

13

 

0.11

%

$

35,008

$

8

 

0.09

%

$

40,325

$

40

 

0.10

%

$

39,052

$

120

 

0.30

%

Cash and investments segregated

 

44,027

 

5

 

0.05

%

 

45,828

 

13

 

0.11

%

 

43,942

 

24

 

0.05

%

 

34,100

 

141

 

0.41

%

Receivables from brokerage clients

 

86,485

 

655

 

2.97

%

 

53,719

 

444

 

3.23

%

 

77,768

 

2,455

 

3.11

%

 

28,058

 

848

 

2.97

%

Available for sale securities (1)

 

382,776

 

1,260

 

1.31

%

 

305,231

 

1,103

 

1.44

%

 

357,122

 

4,641

 

1.30

%

 

253,555

 

4,537

 

1.78

%

Bank loans

 

33,102

 

172

 

2.08

%

 

22,971

 

134

 

2.34

%

 

28,789

 

620

 

2.15

%

 

20,932

 

545

 

2.60

%

Total interest-earning assets

 

588,125

 

2,105

 

1.42

%

 

462,757

 

1,702

 

1.46

%

 

547,946

 

7,780

 

1.41

%

 

375,697

 

6,191

 

1.64

%

Securities lending revenue

 

 

163

 

 

 

 

201

 

 

 

 

720

 

 

 

 

334

 

 

Other interest revenue

 

 

2

 

 

 

 

2

 

 

 

 

6

 

 

 

 

6

 

 

Total interest-earning assets

$

588,125

$

2,270

 

1.53

%

$

462,757

$

1,905

 

1.63

%

$

547,946

$

8,506

 

1.54

%

$

375,697

$

6,531

 

1.73

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

409,961

$

14

 

0.01

%

$

336,912

$

12

 

0.01

%

$

381,549

$

54

 

0.01

%

$

291,206

$

93

 

0.03

%

Payables to brokerage clients

 

99,325

 

2

 

0.01

%

 

77,160

 

2

 

0.01

%

 

91,667

 

9

 

0.01

%

 

46,347

 

12

 

0.02

%

Short-term borrowings (2)

 

4,294

 

3

 

0.27

%

 

306

 

 

0.19

%

 

3,040

 

9

 

0.30

%

 

89

 

 

0.20

%

Long-term debt

 

19,124

 

103

 

2.14

%

 

11,903

 

77

 

2.59

%

 

17,704

 

384

 

2.17

%

 

8,992

 

289

 

3.22

%

Total interest-bearing liabilities

 

532,704

 

122

 

0.09

%

 

426,281

 

91

 

0.09

%

 

493,960

 

456

 

0.09

%

 

346,634

 

394

 

0.11

%

Non-interest-bearing funding sources

 

55,421

 

 

 

36,476

 

 

 

53,986

 

 

 

29,063

 

 

Securities lending expense

 

 

8

 

 

 

 

7

 

 

 

 

24

 

 

 

 

33

 

 

Other interest expense

 

 

(2

)

 

 

 

(2

)

 

 

 

(4

)

 

 

 

(9

)

 

Total funding sources

$

588,125

$

128

 

0.09

%

$

462,757

$

96

 

0.08

%

$

547,946

$

476

 

0.09

%

$

375,697

$

418

 

0.11

%

Net interest revenue

 

$

2,142

 

1.44

%

 

$

1,809

 

1.55

%

 

$

8,030

 

1.45

%

 

$

6,113

 

1.62

%

(1)

Amounts have been calculated based on amortized cost.

(2)

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

 

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

 

Twelve Months Ended

December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

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

$

147,035

$

109

 

0.29

%

$

183,846

$

136

 

0.29

%

$

155,821

$

457

 

0.29

%

$

200,119

$

605

 

0.30

%

Fee waivers

 

 

(80

)

 

 

 

(68

)

 

 

 

(326

)

 

 

 

(127

)

 

Schwab money market funds

 

147,035

 

29

 

0.08

%

 

183,846

 

68

 

0.15

%

 

155,821

 

131

 

0.08

%

 

200,119

 

478

 

0.24

%

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

 

462,059

 

101

 

0.09

%

 

334,113

 

81

 

0.10

%

 

423,999

 

380

 

0.09

%

 

301,598

 

300

 

0.10

%

Mutual Fund OneSource® and other non-transaction fee funds

 

231,438

 

184

 

0.32

%

 

208,397

 

163

 

0.31

%

 

229,342

 

724

 

0.32

%

 

192,464

 

599

 

0.31

%

Other third-party mutual funds and ETFs (1)

 

928,989

 

193

 

0.08

%

 

763,494

 

158

 

0.08

%

 

898,248

 

726

 

0.08

%

 

525,379

 

393

 

0.07

%

Total mutual funds, ETFs, and CTFs (2)

$

1,769,521

 

507

 

0.11

%

$

1,489,850

 

470

 

0.13

%

$

1,707,410

 

1,961

 

0.11

%

$

1,219,560

 

1,770

 

0.15

%

Advice solutions (2)

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

473,443

 

524

 

0.44

%

$

392,148

 

444

 

0.45

%

$

452,503

 

1,993

 

0.44

%

$

306,010

 

1,443

 

0.47

%

Non-fee-based

 

96,374

 

 

 

 

78,332

 

 

 

 

89,911

 

 

 

 

73,161

 

 

 

Total advice solutions

$

569,817

 

524

 

0.36

%

$

470,480

 

444

 

0.38

%

$

542,414

 

1,993

 

0.37

%

$

379,171

 

1,443

 

0.38

%

Other balance-based fees (3)

 

644,164

 

64

 

0.04

%

 

520,830

 

58

 

0.04

%

 

614,787

 

259

 

0.04

%

 

451,350

 

208

 

0.05

%

Other (4)

 

 

15

 

 

 

 

15

 

 

 

 

61

 

 

 

 

54

 

 

Total asset management and administration fees

 

$

1,110

 

 

 

$

987

 

 

 

$

4,274

 

 

 

$

3,475

 

 

(1)

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

(2)

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

(3)

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

(4)

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

 

THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

 

 

 

 

 

 

 

 

Q4-21 % Change

 

2021

 

2020

 

 

vs.

 

vs.

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-20

 

Q3-21

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

23

%

12

%

$

566.1

 

$

503.9

 

$

469.5

 

$

467.3

 

$

458.4

 

Bank deposit account balances

(4

)%

3

%

 

158.5

 

 

153.3

 

 

161.9

 

 

164.2

 

 

165.9

 

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

 

 

 

 

 

 

 

Money market funds (1)

(17

)%

(1

)%

 

146.5

 

 

147.7

 

 

151.9

 

 

163.6

 

 

176.1

 

Equity and bond funds and CTFs (2)

28

%

9

%

 

183.1

 

 

167.4

 

 

165.9

 

 

152.9

 

 

142.9

 

Total proprietary mutual funds and CTFs

3

%

5

%

 

329.6

 

 

315.1

 

 

317.8

 

 

316.5

 

 

319.0

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

Mutual Fund OneSource® and other non-transaction fee funds

5

%

 

 

234.9

 

 

234.7

 

 

240.2

 

 

227.3

 

 

223.9

 

Mutual fund clearing services

1

%

(7

)%

 

254.2

 

 

271.9

 

 

271.3

 

 

248.7

 

 

252.9

 

Other third-party mutual funds (4)

15

%

3

%

 

1,497.7

 

 

1,450.1

 

 

1,441.5

 

 

1,375.8

 

 

1,304.6

 

Total Mutual Fund Marketplace

12

%

2

%

 

1,986.8

 

 

1,956.7

 

 

1,953.0

 

 

1,851.8

 

 

1,781.4

 

Total mutual fund assets

10

%

2

%

 

2,316.4

 

 

2,271.8

 

 

2,270.8

 

 

2,168.3

 

 

2,100.4

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

Proprietary ETFs (2)

37

%

8

%

 

271.8

 

 

251.6

 

 

245.2

 

 

220.9

 

 

198.8

 

Other third-party ETFs

37

%

10

%

 

1,296.4

 

 

1,183.7

 

 

1,158.8

 

 

1,035.1

 

 

947.3

 

Total ETF assets

37

%

9

%

 

1,568.2

 

 

1,435.3

 

 

1,404.0

 

 

1,256.0

 

 

1,146.1

 

Equity and other securities

30

%

10

%

 

3,259.8

 

 

2,976.7

 

 

2,988.8

 

 

2,721.0

 

 

2,504.7

 

Fixed income securities

(5

)%

 

 

356.4

 

 

356.8

 

 

359.6

 

 

364.5

 

 

377.1

 

Margin loans outstanding

44

%

4

%

 

(87.4

)

 

(83.8

)

 

(79.8

)

 

(72.2

)

 

(60.9

)

Total client assets

22

%

7

%

$

8,138.0

 

$

7,614.0

 

$

7,574.8

 

$

7,069.1

 

$

6,691.7

 

Client assets by business

 

 

 

 

 

 

 

Investor Services

20

%

6

%

$

4,400.7

 

$

4,137.7

 

$

4,146.2

 

$

3,865.9

 

$

3,667.9

 

Advisor Services

24

%

8

%

 

3,737.3

 

 

3,476.3

 

 

3,428.6

 

 

3,203.2

 

 

3,023.8

 

Total client assets

22

%

7

%

$

8,138.0

 

$

7,614.0

 

$

7,574.8

 

$

7,069.1

 

$

6,691.7

 

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

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

Investor Services (5)

(96

)%

(42

)%

$

33.4

 

$

57.9

 

$

44.5

 

$

65.1

 

$

939.2

 

Advisor Services (6)

(87

)%

25

%

 

101.2

 

 

81.1

 

 

64.3

 

 

68.7

 

 

751.5

 

Total net new assets

(92

)%

(3

)%

$

134.6

 

$

139.0

 

$

108.8

 

$

133.8

 

$

1,690.7

 

Net market gains (losses)

(36

)%

N/M

 

 

389.4

 

 

(99.8

)

 

396.9

 

 

243.6

 

 

605.7

 

Net growth (decline)

(77

)%

N/M

 

$

524.0

 

$

39.2

 

$

505.7

 

$

377.4

 

$

2,296.4

 

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

(92

)%

12

%

 

1,318

 

 

1,178

 

 

1,657

 

 

3,153

 

 

15,774

 

Client accounts (in thousands)

 

 

 

 

 

 

 

Active brokerage accounts

12

%

1

%

 

33,165

 

 

32,675

 

 

32,265

 

 

31,902

 

 

29,629

 

Banking accounts (8)

 

(5

)%

 

1,499

 

 

1,580

 

 

1,574

 

 

1,608

 

 

1,499

 

Corporate retirement plan participants

7

%

 

 

2,200

 

 

2,207

 

 

2,149

 

 

2,105

 

 

2,054

 

 

 

 

 

 

 

 

 

(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, 2021, off-platform equity and bond funds, CTFs, and ETFs were $24.6 billion, $6.2 billion, and $92.3 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of December 31, 2021, third-party money funds were $13.5 billion.

(5)

Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients. First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade.

(6)

Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade.

(7)

Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade.

(8)

In the fourth quarter of 2021, banking accounts were reduced as a result of inactive account closures.

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

The Charles Schwab Corporation Monthly Activity Report For December 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

30,606

 

29,983

 

30,932

 

32,982

 

33,875

 

34,529

 

34,503

 

34,935

 

35,361

 

33,844

 

35,820

 

34,484

 

36,338

 

5

%

19

%

Nasdaq Composite

12,888

 

13,071

 

13,192

 

13,247

 

13,963

 

13,749

 

14,504

 

14,673

 

15,259

 

14,449

 

15,498

 

15,538

 

15,645

 

1

%

21

%

Standard & Poor’s® 500

3,756

 

3,714

 

3,811

 

3,973

 

4,181

 

4,204

 

4,298

 

4,395

 

4,523

 

4,308

 

4,605

 

4,567

 

4,766

 

4

%

27

%

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

6,421.0

 

6,691.7

 

6,759.6

 

6,900.5

 

7,069.1

 

7,336.1

 

7,395.7

 

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

 

 

Net New Assets (1)

61.7

 

34.2

 

37.0

 

62.6

 

37.2

 

28.1

 

43.5

 

44.3

 

51.8

 

42.9

 

22.9

 

31.4

 

80.3

 

156

%

30

%

Net Market (Losses) Gains

209.0

 

33.7

 

103.9

 

106.0

 

229.8

 

31.5

 

135.6

 

23.6

 

143.7

 

(267.1

)

345.4

 

(95.4

)

139.4

 

 

 

Total Client Assets (at month end)

6,691.7

 

6,759.6

 

6,900.5

 

7,069.1

 

7,336.1

 

7,395.7

 

7,574.8

 

7,642.7

 

7,838.2

 

7,614.0

 

7,982.3

 

7,918.3

 

8,138.0

 

3

%

22

%

Core Net New Assets (2)

61.7

 

34.2

 

51.4

 

62.6

 

37.2

 

28.1

 

43.5

 

44.3

 

51.8

 

42.9

 

36.8

 

45.1

 

80.3

 

78

%

30

%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

471.8

 

472.4

 

481.3

 

495.2

 

511.1

 

517.8

 

525.1

 

531.9

 

542.5

 

530.1

 

548.3

 

543.1

 

559.2

 

3

%

19

%

Advisor Services (3)

2,828.3

 

2,840.6

 

2,913.3

 

2,997.9

 

3,112.5

 

3,150.4

 

3,209.3

 

3,256.5

 

3,333.4

 

3,253.2

 

3,399.8

 

3,374.3

 

3,505.2

 

4

%

24

%

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts

29,629

 

30,534

 

31,523

 

31,902

 

31,877

 

32,110

 

32,265

 

32,386

 

32,513

 

32,675

 

32,796

 

32,942

 

33,165

 

1

%

12

%

Banking Accounts (4)

1,499

 

1,518

 

1,542

 

1,608

 

1,562

 

1,584

 

1,574

 

1,578

 

1,594

 

1,580

 

1,593

 

1,608

 

1,499

 

(7

)%

 

Corporate Retirement Plan Participants

2,054

 

2,069

 

2,093

 

2,105

 

2,116

 

2,130

 

2,149

 

2,159

 

2,188

 

2,207

 

2,213

 

2,198

 

2,200

 

 

7

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

626

 

1,095

 

1,211

 

847

 

609

 

549

 

499

 

402

 

402

 

374

 

397

 

448

 

473

 

6

%

(24

)%

Client Cash as a Percentage of Client Assets (5)

12.3

%

12.2

%

11.8

%

11.5

%

10.9

%

10.8

%

10.5

%

10.4

%

10.3

%

10.8

%

10.4

%

10.5

%

10.9

%

40 bp

(140) bp

Derivative Trades as a Percentage of Total Trades

18.9

%

17.4

%

16.6

%

18.5

%

20.4

%

20.9

%

20.6

%

22.2

%

23.1

%

23.1

%

22.5

%

23.4

%

23.0

%

(40) bp

410 bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (6)

482,394

 

517,306

 

514,885

 

520,074

 

527,194

 

528,642

 

536,146

 

546,579

 

552,372

 

565,379

 

574,181

 

584,362

 

605,709

 

4

%

26

%

Average Margin Balances

59,142

 

62,999

 

69,064

 

71,266

 

72,863

 

75,921

 

78,410

 

79,910

 

81,021

 

81,705

 

83,835

 

87,311

 

88,328

 

1

%

49

%

Average Bank Deposits Account Balances (7)

163,463

 

167,980

 

167,433

 

164,866

 

162,392

 

160,459

 

161,377

 

151,275

 

150,896

 

152,330

 

154,040

 

153,877

 

154,918

 

1

%

(5

)%

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Buys (Sells) (8,9) (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

13,875

 

8,234

 

14,246

 

16,301

 

13,422

 

9,854

 

10,873

 

7,418

 

8,808

 

7,596

 

8,840

 

13,099

 

11,519

 

 

 

Hybrid

359

 

407

 

832

 

1,133

 

877

 

1

 

390

 

666

 

569

 

335

 

81

 

308

 

(1,207

)

 

 

Bonds

12,169

 

13,601

 

9,334

 

8,237

 

8,940

 

5,906

 

10,101

 

6,917

 

8,044

 

6,232

 

4,425

 

4,097

 

5,600

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (8)

6,336

 

5,713

 

6,273

 

6,190

 

5,754

 

2,022

 

5,872

 

2,644

 

3,876

 

(308

)

302

 

189

 

(2,859

)

 

 

Exchange-Traded Funds (9)

20,067

 

16,529

 

18,139

 

19,481

 

17,485

 

13,739

 

15,492

 

12,357

 

13,545

 

14,471

 

13,044

 

17,315

 

18,771

 

 

 

Money Market Funds

(7,332

)

(5,248

)

(4,405

)

(4,528

)

(5,153

)

(3,988

)

(3,806

)

(2,501

)

(1,372

)

(1,512

)

(451

)

(1,725

)

(144

)

 

 

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

(1)

November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 billion from a mutual fund clearing services client. February 2021 includes an outflow of $14.4 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 December 2021, banking accounts were reduced as a result of inactive account closures.

(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)

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

(7)

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

(8)

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.

(9)

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.

Non-GAAP Adjustment

or Measure

Definition

Usefulness to Investors and Uses by

Management

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

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

 

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

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

 

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

Return on tangible common equity

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

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

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 CHARLES SCHWAB CORPORATION

Non-GAAP Financial Measures

(In millions, except ratios and per share amounts)

(Unaudited)

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

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

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)

$

2,685

 

$

1,580

 

$

2,700

 

$

1,135

 

$

10,807

 

$

5,855

 

$

7,391

 

$

3,299

 

Acquisition and integration-related costs (1)

 

(101

)

 

101

 

 

(282

)

 

282

 

 

(468

)

 

468

 

 

(442

)

 

442

 

Amortization of acquired intangible assets

 

(154

)

 

154

 

 

(147

)

 

147

 

 

(615

)

 

615

 

 

(190

)

 

190

 

Income tax effects (2)

 

N/A

 

 

(60

)

 

N/A

 

 

(105

)

 

N/A

 

 

(268

)

 

N/A

 

 

(154

)

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,430

 

$

1,775

 

$

2,271

 

$

1,459

 

$

9,724

 

$

6,670

 

$

6,759

 

$

3,777

 

(1)

Acquisition and integration-related costs for the three and twelve months ended December 31, 2021 primarily consist of $56 million and $283 million of compensation and benefits, $33 million and $132 million of professional services, and $9 million and $39 million of occupancy and equipment. Acquisition and integration-related costs for the three and twelve months ended December 31, 2020 primarily consist of $193 million and $235 million of compensation and benefits, $66 million and $158 million of professional services, and $10 million and $30 million of other expense.

(2)

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

N/A Not applicable.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

Amount

 

% of

Total Net

Revenues

 

Amount

 

% of

Total Net

Revenues

 

Amount

 

% of

Total Net

Revenues

 

Amount

 

% of

Total Net

Revenues

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

$

2,023

43.0

%

$

1,476

35.3

%

$

7,713

41.6

%

$

4,300

36.8

%

Acquisition and integration-related costs

 

101

2.1

%

 

282

6.8

%

 

468

2.5

%

 

442

3.8

%

Amortization of acquired intangible assets

 

154

3.3

%

 

147

3.5

%

 

615

3.4

%

 

190

1.6

%

Adjusted income before taxes on income (non-GAAP), Adjusted pre-tax profit margin (non-GAAP)

$

2,278

48.4

%

$

1,905

45.6

%

$

8,796

47.5

%

$

4,932

42.2

%

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

Amount

 

Diluted

EPS

 

Amount

 

Diluted

EPS

 

Amount

 

Diluted

EPS

 

Amount

 

Diluted

EPS

Net income available to common stockholders (GAAP), Earnings per common share — diluted (GAAP)

$

1,449

 

$

.76

 

$

1,050

 

$

.57

 

$

5,360

 

$

2.83

 

$

3,043

 

$

2.12

 

Acquisition and integration-related costs

 

101

 

 

.05

 

 

282

 

 

.15

 

 

468

 

 

.25

 

 

442

 

 

.31

 

Amortization of acquired intangible assets

 

154

 

 

.08

 

 

147

 

 

.08

 

 

615

 

 

.32

 

 

190

 

 

.13

 

Income tax effects

 

(60

)

 

(.03

)

 

(105

)

 

(.06

)

 

(268

)

 

(.15

)

 

(154

)

 

(.11

)

Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP)

$

1,644

 

$

.86

 

$

1,374

 

$

.74

 

$

6,175

 

$

3.25

 

$

3,521

 

$

2.45

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2021

 

2020

 

2021

 

2020

Return on average common stockholders’ equity (GAAP)

 

12

%

 

11

%

 

11

%

 

9

%

Average common stockholders’ equity

$

46,898

 

$

37,198

 

$

47,318

 

$

33,640

 

Less: Average goodwill

 

(11,952

)

 

(6,845

)

 

(11,952

)

 

(6,590

)

Less: Average acquired intangible assets — net

 

(9,456

)

 

(5,624

)

 

(9,685

)

 

(5,059

)

Plus: Average deferred tax liabilities related to goodwill

and acquired intangible assets — net

 

1,889

 

 

1,005

 

 

1,919

 

 

1,005

 

Average tangible common equity

$

27,379

 

$

25,734

 

$

27,600

 

$

22,996

 

Adjusted net income available to common stockholders (1)

$

1,644

 

$

1,374

 

$

6,175

 

$

3,521

 

Return on tangible common equity (non-GAAP)

 

24

%

 

21

%

 

22

%

 

15

%

(1)

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

 

Contacts

MEDIA:

Mayura Hooper

Charles Schwab

Phone: 415-667-1525



INVESTORS/ANALYSTS:

Jeff Edwards

Charles Schwab

Phone: 415-667-1524

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