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Schwab Reports Record Quarterly and Full-Year Earnings Per Share

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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