Schwab Reports Record Full-year Earnings Per Share

Gathered $428 Billion in Annual Core Net New Assets; Added More Than 4 Million New Accounts

2022 Revenues Grew 12% to $20.8 Billion; Earnings per Share Increased to $3.50, $3.90 Adjusted (1)


The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2022 was $2.0 billion, up 25% from $1.6 billion for the fourth quarter 2021. Net income for the twelve months ended December 31, 2022 was a record $7.2 billion, an increase of 23% versus the prior year.

 

Three Months Ended

December 31,

 

%

 

Twelve Months Ended

December 31,

 

%

Financial Highlights (1)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (in millions)

$

5,497

 

 

$

4,708

 

 

17

%

 

$

20,762

 

 

$

18,520

 

 

12

%

Net income (in millions)

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

1,968

 

 

$

1,580

 

 

25

%

 

$

7,183

 

 

$

5,855

 

 

23

%

Adjusted (1)

$

2,151

 

 

$

1,775

 

 

21

%

 

$

7,934

 

 

$

6,670

 

 

19

%

Diluted earnings per common share (2)

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

.97

 

 

$

.76

 

 

28

%

 

$

3.50

 

 

$

2.83

 

 

24

%

Adjusted (1)

$

1.07

 

 

$

.86

 

 

24

%

 

$

3.90

 

 

$

3.25

 

 

20

%

Pre-tax profit margin

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

47.3

%

 

 

43.0

%

 

 

 

 

45.2

%

 

 

41.6

%

 

 

Adjusted (1)

 

51.6

%

 

 

48.4

%

 

 

 

 

50.0

%

 

 

47.5

%

 

 

Return on average common stockholders’ equity (annualized)

 

27

%

 

 

12

%

 

 

 

 

18

%

 

 

11

%

 

 

Return on tangible common equity (annualized) (1)

 

102

%

 

 

24

%

 

 

 

 

42

%

 

 

22

%

 

 

(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.

(2)

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

Co-Chairman and CEO Walt Bettinger said, “Our consistent ‘Through Clients’ Eyes’ strategy helped us continue to succeed with clients even as they faced a very difficult environment in 2022. Emerging concerns around inflation and global market stability became reality, with Russia’s invasion of Ukraine exacerbating the impact. Equity markets suffered their worst year since 2008, led by the S&P 500® and NASDAQ Composite® which contracted 19% and 33%, respectively. At the same time, the Federal Reserve tightened short-term rates at the fastest pace in 40 years – pushing the Fed Funds upper bound to 4.50% in December. Additionally, uncertainty around future economic growth increased during the back half of the year, weighing on longer-term rates and leading to an inverted yield curve. This shift reflected the persistent bearish sentiment amongst investors for most of the year – with certain indicators hitting levels below those observed during the 2008 Financial Crisis.”

Mr. Bettinger continued, “Against this challenging backdrop, investors looked to Schwab for help achieving their financial goals. Both of our primary businesses contributed to core net new assets of $428 billion, a full-year organic growth rate of 5%, which included record tax-related outflows in April. Total client assets ended the year at $7.05 trillion, as the company’s asset gathering was offset by $1.5 trillion in lower market values over the past 12 months. In addition, we also added over 4 million new brokerage accounts, pushing total accounts to nearly 34 million by December 31. Momentum within the retail channel was particularly strong in 2022, achieving record core inflows during 6 separate months. Similarly, Advisor Services attracted over 350 transitioning advisor teams, the second highest number ever, and recorded a transfer of account ratio of approximately 2-to-1 for the fifth consecutive year.”

“Through the relentless efforts of our dedicated employees, we made significant progress on our key strategic initiatives of scale and efficiency, win-win monetization, and segmentation,” Mr. Bettinger added. “This work included ongoing preparations for the largest broker-dealer integration in our industry’s history – with the first wave of client conversions scheduled to begin next month. Throughout 2022, we also took meaningful steps to further empower investors with more personalization options, increased access to high-quality products, and an evolved suite of tools and solutions. We launched our proprietary direct indexing offering, Schwab Personalized Indexing™(SPI), for both registered investment advisors (RIAs) and retail clients – providing them with tax-efficient, customizable portfolio management capabilities at a much lower cost than existing alternatives in the market. Additionally, we introduced our initial thematic stock lists, which assist self-directed clients in selecting stocks aligned with their personal perspectives and values. The current range of themes spans over 40 different categories, including environmental innovation, artificial intelligence, and medical breakthroughs. We also further bolstered our leading value proposition to RIAs by expanding our institutional no transaction fee mutual fund platform to include over 900 additional equity and bond funds across 16 leading third-party asset managers. Finally, Schwab’s wealth management capabilities continued to evolve with the needs of our clients, including a growing interest in fixed income. Client allocations to this asset class increased 66% versus December 2021 as they took advantage of our self-directed tools and income-focused advisory solutions such as Wasmer Schroeder™ Strategies. The Wasmer team’s ability to deliver an attractive value proposition across a range of tax-exempt and taxable offers, along with rising interest rates, helped these strategies collect $7.3 billion in net flows since becoming part of Schwab in July 2020 – including $3.5 billion in 2022.”

Mr. Bettinger concluded, “Our focus on meeting the needs of individual investors and the advisors who serve them remains steadfast across any environment. This commitment to consistency of mission, service, and experience sets us apart, helping to drive our strong performance and keeping us positioned as one of the most trusted names in financial services. While we are proud of the firm’s success thus far, we believe there is tremendous opportunity still ahead of us and we are excited to keep striving to deliver value for all of our key stakeholders – clients, employees, and owners.”

CFO Peter Crawford commented, “Schwab’s record financial performance in 2022 highlighted the resiliency of our diversified financial model. Sustained business momentum through an uneven macroeconomic environment helped drive 12% growth in total net revenues. Net interest revenue reached $10.7 billion, an increase of 33% versus the prior year, as higher interest rates more than offset the impact of balance sheet contraction due to client cash sorting. Lower market valuations throughout the year pushed asset management and administration fees down slightly to $4.2 billion, or 1% year-over-year. Trading revenue declined by 12% to $3.7 billion as daily average trades subsided from 2021’s unprecedented levels to just under 6 million for the full year. Transitioning to expenses, our total GAAP spending grew 5% to $11.4 billion, reflecting client engagement and growth, as well as the 12-month impact of the broad employee salary increase that went into effect at the end of 2021. Acquisition and integration-related costs and amortization of acquired intangibles were $392 million and $596 million, respectively. Exclusive of these items, adjusted total expenses (1) were up 7% year-over-year. Strong revenue growth and balanced expense management enabled us to deliver a 45.2% pre-tax profit margin for the full year – 50.0% on an adjusted basis (1) .”

“Over the course of the year, our approach to balance sheet management prioritized flexibility to help navigate through a dynamic environment,” Mr. Crawford added. “As rates rose from the ultra-low levels observed during the most recent period of the Federal Reserve’s Zero Interest-rate Policy, clients allocated a growing portion of their assets to higher yielding cash and fixed income alternatives. As a result of this expected sorting activity, the balance sheet shrank by $115 billion, a decline of 17% versus December 31, 2021. To facilitate these movements, we took steps to further bolster liquidity by limiting new portfolio investments to help build available cash and utilizing a limited amount of short-term funding sources such as Federal Home Loan Bank Advances and retail certificates of deposit. At the same time, the combination of Schwab’s enhanced earnings power and lower capital intensity enabled us to accelerate the pace of capital return to our owners. Following the authorization of a $15 billion buyback program in July, we have repurchased an aggregate of 47 million shares for $3.4 billion in 2022. During the year, we also redeemed $1 billion of preferred equity and increased our common dividend by 22%. Inclusive of these actions, the company’s preliminary Tier 1 Leverage Ratio finished the year at 7.2%, above our stated operating objective of 6.50% – 6.75%.”

Mr. Crawford concluded, “Although 2022 unfolded much differently than we and many others anticipated at the start of the year, Schwab’s unwavering focus on serving clients, along with our all-weather business model, delivered another year of record financial performance. We believe the core tenets of the company’s financial formula remain firmly intact. The combination of strong business momentum, diversified revenue growth, expense discipline, and attentive capital management supports our long-term growth plus capital return story.”

(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

Peter Crawford, Managing Director and Chief Financial Officer, provides additional perspective on our fourth quarter and full-year 2022 financial results at: https://www.aboutschwab.com/cfo-commentary.

Winter Business Update

The company has scheduled a Winter Business Update for institutional investors on Friday, January 27, 2023. The Update is scheduled to run from approximately 8:00 a.m. – 1:00 p.m. CT, 9:00 a.m. – 2p.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 success with clients; strategic initiatives; TD Ameritrade integration; opportunity; stakeholder value; earnings power; capital needs and management; returning capital to stockholders; Tier 1 Leverage Ratio operating objective; all-weather business model; business momentum; revenue growth; and expense discipline. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to attract and retain clients and independent investment advisors and grow those relationships and client assets; develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire and retain talent; support client activity levels; successfully implement integration strategies and plans; monetize client assets; and manage expenses. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including equity valuations and the level of interest rates; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; competitive pressures on pricing; client cash sorting; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the migration of bank deposit account balances; 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 33.8 million active brokerage accounts, 2.4 million corporate retirement plan participants, 1.7 million banking accounts, and $7.05 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,

 

2022

 

2021

 

2022

 

2021

Net Revenues

 

 

 

 

 

 

 

Interest revenue

$

3,841

 

 

$

2,270

 

 

$

12,227

 

 

$

8,506

 

Interest expense

 

(812

)

 

 

(128

)

 

 

(1,545

)

 

 

(476

)

Net interest revenue

 

3,029

 

 

 

2,142

 

 

 

10,682

 

 

 

8,030

 

Asset management and administration fees (1)

 

1,049

 

 

 

1,110

 

 

 

4,216

 

 

 

4,274

 

Trading revenue

 

895

 

 

 

1,017

 

 

 

3,673

 

 

 

4,152

 

Bank deposit account fees

 

350

 

 

 

304

 

 

 

1,409

 

 

 

1,315

 

Other

 

174

 

 

 

135

 

 

 

782

 

 

 

749

 

Total net revenues

 

5,497

 

 

 

4,708

 

 

 

20,762

 

 

 

18,520

 

Expenses Excluding Interest

 

 

 

 

 

 

 

Compensation and benefits

 

1,488

 

 

 

1,399

 

 

 

5,936

 

 

 

5,450

 

Professional services

 

266

 

 

 

271

 

 

 

1,032

 

 

 

994

 

Occupancy and equipment

 

320

 

 

 

254

 

 

 

1,175

 

 

 

976

 

Advertising and market development

 

123

 

 

 

122

 

 

 

419

 

 

 

485

 

Communications

 

144

 

 

 

130

 

 

 

588

 

 

 

587

 

Depreciation and amortization

 

176

 

 

 

145

 

 

 

652

 

 

 

549

 

Amortization of acquired intangible assets

 

136

 

 

 

154

 

 

 

596

 

 

 

615

 

Regulatory fees and assessments

 

62

 

 

 

67

 

 

 

262

 

 

 

275

 

Other

 

184

 

 

 

143

 

 

 

714

 

 

 

876

 

Total expenses excluding interest

 

2,899

 

 

 

2,685

 

 

 

11,374

 

 

 

10,807

 

Income before taxes on income

 

2,598

 

 

 

2,023

 

 

 

9,388

 

 

 

7,713

 

Taxes on income

 

630

 

 

 

443

 

 

 

2,205

 

 

 

1,858

 

Net Income

 

1,968

 

 

 

1,580

 

 

 

7,183

 

 

 

5,855

 

Preferred stock dividends and other

 

147

 

 

 

131

 

 

 

548

 

 

 

495

 

Net Income Available to Common Stockholders

$

1,821

 

 

$

1,449

 

 

$

6,635

 

 

$

5,360

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

1,864

 

 

 

1,892

 

 

 

1,885

 

 

 

1,887

 

Diluted

 

1,873

 

 

 

1,902

 

 

 

1,894

 

 

 

1,897

 

Earnings Per Common Shares Outstanding
(2):

 

 

 

 

 

 

 

Basic

$

.98

 

 

$

.77

 

 

$

3.52

 

 

$

2.84

 

Diluted

$

.97

 

 

$

.76

 

 

$

3.50

 

 

$

2.83

 

(1)

No fee waivers were recognized for the three months ended December 31, 2022. Includes fee waivers of $57 million for the twelve months ended December 31, 2022, and $80 million and $326 million for the three and twelve months ended months ended December 31, 2021, 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)

 

Q4-22 % change

2022

2021

 

vs.

 

vs.

 

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-21

 

Q3-22

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

41

%

 

4

%

 

 

$

3,029

 

 

$

2,926

 

 

$

2,544

 

 

$

2,183

 

 

$

2,142

 

Asset management and administration fees

(5

) %

 

 

 

 

 

1,049

 

 

 

1,047

 

 

 

1,052

 

 

 

1,068

 

 

 

1,110

 

Trading revenue

(12

) %

 

(4

) %

 

 

 

895

 

 

 

930

 

 

 

885

 

 

 

963

 

 

 

1,017

 

Bank deposit account fees

15

%

 

(15

) %

 

 

 

350

 

 

 

413

 

 

 

352

 

 

 

294

 

 

 

304

 

Other

29

%

 

(5

) %

 

 

 

174

 

 

 

184

 

 

 

260

 

 

 

164

 

 

 

135

 

Total net revenues

17

%

 

 

 

 

 

5,497

 

 

 

5,500

 

 

 

5,093

 

 

 

4,672

 

 

 

4,708

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

6

%

 

1

%

 

 

 

1,488

 

 

 

1,476

 

 

 

1,426

 

 

 

1,546

 

 

 

1,399

 

Professional services

(2

) %

 

1

%

 

 

 

266

 

 

 

264

 

 

 

258

 

 

 

244

 

 

 

271

 

Occupancy and equipment

26

%

 

10

%

 

 

 

320

 

 

 

292

 

 

 

294

 

 

 

269

 

 

 

254

 

Advertising and market development

1

%

 

38

%

 

 

 

123

 

 

 

89

 

 

 

105

 

 

 

102

 

 

 

122

 

Communications

11

%

 

10

%

 

 

 

144

 

 

 

131

 

 

 

169

 

 

 

144

 

 

 

130

 

Depreciation and amortization

21

%

 

5

%

 

 

 

176

 

 

 

167

 

 

 

159

 

 

 

150

 

 

 

145

 

Amortization of acquired intangibles assets

(12

) %

 

(11

) %

 

 

 

136

 

 

 

152

 

 

 

154

 

 

 

154

 

 

 

154

 

Regulatory fees and assessments

(7

) %

 

(5

) %

 

 

 

62

 

 

 

65

 

 

 

67

 

 

 

68

 

 

 

67

 

Other

29

%

 

(2

) %

 

 

 

184

 

 

 

187

 

 

 

187

 

 

 

156

 

 

 

143

 

Total expenses excluding interest

8

%

 

3

%

 

 

 

2,899

 

 

 

2,823

 

 

 

2,819

 

 

 

2,833

 

 

 

2,685

 

Income before taxes on income

28

%

 

(3

) %

 

 

 

2,598

 

 

 

2,677

 

 

 

2,274

 

 

 

1,839

 

 

 

2,023

 

Taxes on income

42

%

 

(4

) %

 

 

 

630

 

 

 

657

 

 

 

481

 

 

 

437

 

 

 

443

 

Net Income

25

%

 

(3

) %

 

 

 

1,968

 

 

 

2,020

 

 

 

1,793

 

 

 

1,402

 

 

 

1,580

 

Preferred stock dividends and other

12

%

 

8

%

 

 

 

147

 

 

 

136

 

 

 

141

 

 

 

124

 

 

 

131

 

Net Income Available to Common Stockholders

26

%

 

(3

) %

 

 

$

1,821

 

 

$

1,884

 

 

$

1,652

 

 

$

1,278

 

 

$

1,449

 

Earnings per common share (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

27

%

 

(2

) %

 

 

$

.98

 

 

$

1.00

 

 

$

.87

 

 

$

.67

 

 

$

.77

 

Diluted

28

%

 

(2

) %

 

 

$

.97

 

 

$

.99

 

 

$

.87

 

 

$

.67

 

 

$

.76

 

Dividends declared per common share

22

%

 

 

 

 

$

.22

 

 

$

.22

 

 

$

.20

 

 

$

.20

 

 

$

.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(1

) %

 

(1

) %

 

 

 

1,864

 

 

 

1,887

 

 

 

1,896

 

 

 

1,894

 

 

 

1,892

 

Diluted

(2

) %

 

(1

) %

 

 

 

1,873

 

 

 

1,895

 

 

 

1,904

 

 

 

1,905

 

 

 

1,902

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

 

47.3

%

 

 

48.7

%

 

 

44.6

%

 

 

39.4

%

 

 

43.0

%

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

 

 

 

 

 

 

27

%

 

 

25

%

 

 

19

%

 

 

12

%

 

 

12

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

(36

) %

 

(14

) %

 

 

$

40.2

 

 

$

46.5

 

 

$

64.6

 

 

$

91.1

 

 

$

63.0

 

Cash and investments segregated

(20

) %

 

(2

) %

 

 

 

43.0

 

 

 

44.1

 

 

 

53.5

 

 

 

54.4

 

 

 

53.9

 

Receivables from brokerage clients — net

(26

) %

 

(10

) %

 

 

 

66.6

 

 

 

73.9

 

 

 

76.1

 

 

 

84.1

 

 

 

90.6

 

Available for sale securities (3)

(62

) %

 

(37

) %

 

 

 

147.9

 

 

 

236.5

 

 

 

265.3

 

 

 

272.0

 

 

 

390.1

 

Held to maturity securities (3)

N/M

 

 

80

%

 

 

 

173.1

 

 

 

96.3

 

 

 

100.1

 

 

 

105.3

 

 

 

 

Bank loans — net

17

%

 

 

 

 

 

40.5

 

 

 

40.4

 

 

 

39.6

 

 

 

37.2

 

 

 

34.6

 

Total assets

(17

) %

 

(4

) %

 

 

 

551.8

 

 

 

577.6

 

 

 

637.6

 

 

 

681.0

 

 

 

667.3

 

Bank deposits

(17

) %

 

(7

) %

 

 

 

366.7

 

 

 

395.7

 

 

 

442.0

 

 

 

465.8

 

 

 

443.8

 

Payables to brokerage clients

(23

) %

 

(11

) %

 

 

 

97.4

 

 

 

110.0

 

 

 

114.9

 

 

 

125.3

 

 

 

125.7

 

Short-term borrowings

N/M

 

 

N/M

 

 

 

 

17.1

 

 

 

0.5

 

 

 

1.4

 

 

 

4.2

 

 

 

4.9

 

Long-term debt

10

%

 

 

 

 

 

20.8

 

 

 

20.8

 

 

 

21.1

 

 

 

21.9

 

 

 

18.9

 

Stockholders’ equity

(35

) %

 

(1

) %

 

 

 

36.6

 

 

 

37.0

 

 

 

44.5

 

 

 

48.1

 

 

 

56.3

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

6

%

 

 

 

 

 

35.3

 

 

 

35.2

 

 

 

35.2

 

 

 

34.2

 

 

 

33.4

 

Capital expenditures — purchases of equipment, office facilities,

and property, net (in millions)

(51

) %

 

9

%

 

 

$

211

 

 

$

193

 

 

$

339

 

 

$

209

 

 

$

431

 

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

 

 

 

 

 

 

0.16

%

 

 

0.16

%

 

 

0.16

%

 

 

0.15

%

 

 

0.13

%

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

(12

) %

 

(2

) %

 

 

 

5,389

 

 

 

5,523

 

 

 

6,227

 

 

 

6,578

 

 

 

6,102

 

Number of Trading Days

(2

) %

 

(2

) %

 

 

 

62.5

 

 

 

64.0

 

 

 

62.0

 

 

 

62.0

 

 

 

63.5

 

Revenue Per Trade
(4)

2

%

 

1

%

 

 

$

2.66

 

 

$

2.63

 

 

$

2.29

 

 

$

2.36

 

 

$

2.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

In January and November 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

(4)

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,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

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

$

38,067

 

$

351

 

3.62

%

 

 

$

41,735

 

$

13

 

 

0.11

%

 

 

$

57,163

 

$

812

 

 

1.40

%

 

 

$

40,325

 

$

40

 

 

0.10

%

Cash and investments segregated

 

45,096

 

 

383

 

3.33

%

 

 

 

44,027

 

 

5

 

 

0.05

%

 

 

 

49,430

 

 

691

 

 

1.38

%

 

 

 

43,942

 

 

24

 

 

0.05

%

Receivables from brokerage clients

 

66,663

 

 

1,077

 

6.32

%

 

 

 

86,485

 

 

655

 

 

2.97

%

 

 

 

75,614

 

 

3,321

 

 

4.33

%

 

 

 

77,768

 

 

2,455

 

 

3.11

%

Available for sale securities (1,2)

 

196,577

 

 

943

 

1.90

%

 

 

 

382,776

 

 

1,260

 

 

1.31

%

 

 

 

260,392

 

 

4,139

 

 

1.58

%

 

 

 

357,122

 

 

4,641

 

 

1.30

%

Held to maturity securities (2)

 

146,384

 

 

626

 

1.70

%

 

 

 

 

 

 

 

 

 

 

 

112,357

 

 

1,688

 

 

1.50

%

 

 

 

 

 

 

 

 

Bank loans

 

40,531

 

 

366

 

3.59

%

 

 

 

33,102

 

 

172

 

 

2.08

%

 

 

 

38,816

 

 

1,083

 

 

2.79

%

 

 

 

28,789

 

 

620

 

 

2.15

%

Total interest-earning assets

 

533,318

 

 

3,746

 

2.77

%

 

 

 

588,125

 

 

2,105

 

 

1.42

%

 

 

 

593,772

 

 

11,734

 

 

1.96

%

 

 

 

547,946

 

 

7,780

 

 

1.41

%

Securities lending revenue

 

 

 

88

 

 

 

 

 

 

 

163

 

 

 

 

 

 

 

 

471

 

 

 

 

 

 

 

 

720

 

 

 

Other interest revenue

 

 

 

7

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

6

 

 

 

Total interest-earning assets

$

533,318

 

$

3,841

 

2.84

%

 

 

$

588,125

 

$

2,270

 

 

1.53

%

 

 

$

593,772

 

$

12,227

 

 

2.04

%

 

 

$

547,946

 

$

8,506

 

 

1.54

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

374,812

 

$

438

 

0.46

%

 

 

$

409,961

 

$

14

 

 

0.01

%

 

 

$

424,168

 

$

723

 

 

0.17

%

 

 

$

381,549

 

$

54

 

 

0.01

%

Payables to brokerage clients

 

87,001

 

 

76

 

0.35

%

 

 

 

99,325

 

 

2

 

 

0.01

%

 

 

 

97,825

 

 

123

 

 

0.13

%

 

 

 

91,667

 

 

9

 

 

0.01

%

Short-term borrowings

 

11,927

 

 

142

 

4.71

%

 

 

 

4,294

 

 

3

 

 

0.27

%

 

 

 

4,993

 

 

154

 

 

3.07

%

 

 

 

3,040

 

 

9

 

 

0.30

%

Long-term debt

 

20,837

 

 

135

 

2.59

%

 

 

 

19,124

 

 

103

 

 

2.14

%

 

 

 

20,714

 

 

498

 

 

2.40

%

 

 

 

17,704

 

 

384

 

 

2.17

%

Total interest-bearing liabilities

 

494,577

 

 

791

 

0.64

%

 

 

 

532,704

 

 

122

 

 

0.09

%

 

 

 

547,700

 

 

1,498

 

 

0.27

%

 

 

 

493,960

 

 

456

 

 

0.09

%

Non-interest-bearing funding sources

 

38,741

 

 

 

 

 

 

 

55,421

 

 

 

 

 

 

 

46,072

 

 

 

 

 

 

 

53,986

 

 

 

 

Securities lending expense

 

 

 

20

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

 

 

24

 

 

 

Other interest expense

 

 

 

1

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

(4

)

 

 

Total funding sources

$

533,318

 

$

812

 

0.60

%

 

 

$

588,125

 

$

128

 

 

0.09

%

 

 

$

593,772

 

$

1,545

 

 

0.26

%

 

 

$

547,946

 

$

476

 

 

0.09

%

Net interest revenue

 

 

$

3,029

 

2.24

%

 

 

 

 

$

2,142

 

 

1.44

%

 

 

 

 

$

10,682

 

 

1.78

%

 

 

 

 

$

8,030

 

 

1.45

%

(1)

Amounts have been calculated based on amortized cost.

(2)

In January and November 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

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,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

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

$

243,587

 

$

159

 

0.26

%

 

 

$

147,035

 

$

109

 

 

0.29

%

 

 

$

179,791

 

$

499

 

 

0.28

%

 

 

$

155,821

 

$

457

 

 

0.29

%

Fee waivers

 

 

 

 

 

 

 

 

 

 

(80

)

 

 

 

 

 

 

 

(57

)

 

 

 

 

 

 

 

(326

)

 

 

Schwab money market funds

 

243,587

 

 

159

 

0.26

%

 

 

 

147,035

 

 

29

 

 

0.08

%

 

 

 

179,791

 

 

442

 

 

0.25

%

 

 

 

155,821

 

 

131

 

 

0.08

%

Schwab equity and bond funds, ETFs, and

collective trust funds (CTFs)

 

421,238

 

 

86

 

0.08

%

 

 

 

462,059

 

 

101

 

 

0.09

%

 

 

 

433,005

 

 

364

 

 

0.08

%

 

 

 

423,999

 

 

380

 

 

0.09

%

Mutual Fund OneSource® and other

no-transaction-fee funds

 

219,965

 

 

149

 

0.27

%

 

 

 

231,438

 

 

184

 

 

0.32

%

 

 

 

202,015

 

 

602

 

 

0.30

%

 

 

 

229,342

 

 

724

 

 

0.32

%

Other third-party mutual funds and ETFs

 

659,870

 

 

137

 

0.08

%

 

 

 

928,989

 

 

193

 

 

0.08

%

 

 

 

768,871

 

 

647

 

 

0.08

%

 

 

 

898,248

 

 

726

 

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

1,544,660

 

 

531

 

0.14

%

 

 

$

1,769,521

 

 

507

 

 

0.11

%

 

 

$

1,583,682

 

 

2,055

 

 

0.13

%

 

 

$

1,707,410

 

 

1,961

 

 

0.11

%

Advice solutions (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

424,407

 

 

445

 

0.42

%

 

 

$

473,443

 

 

524

 

 

0.44

%

 

 

$

441,336

 

 

1,854

 

 

0.42

%

 

 

$

452,503

 

 

1,993

 

 

0.44

%

Non-fee-based

 

87,804

 

 

 

 

 

 

 

96,374

 

 

 

 

 

 

 

 

89,525

 

 

 

 

 

 

 

 

89,911

 

 

 

 

 

Total advice solutions

$

512,211

 

 

445

 

0.34

%

 

 

$

569,817

 

 

524

 

 

0.36

%

 

 

$

530,861

 

 

1,854

 

 

0.35

%

 

 

$

542,414

 

 

1,993

 

 

0.37

%

Other balance-based fees (2)

 

524,465

 

 

58

 

0.04

%

 

 

 

644,164

 

 

64

 

 

0.04

%

 

 

 

561,416

 

 

244

 

 

0.04

%

 

 

 

614,787

 

 

259

 

 

0.04

%

Other (3)

 

 

 

15

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

 

61

 

 

 

Total asset management and administration fees

 

 

$

1,049

 

 

 

 

 

 

$

1,110

 

 

 

 

 

 

 

$

4,216

 

 

 

 

 

 

 

$

4,274

 

 

 

(1)

Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth Advisory™, Schwab Managed Portfolios™, Managed Account Select®, Schwab Advisor Network®, Windhaven Strategies®, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, Schwab Intelligent Portfolios Premium®, 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.

(2)

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

(3)

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

THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

Q4-22 % Change

 

2022

2021

 

vs.

 

vs.

 

 

Fourth

 

Third

 

Second

 

First

 

Fourth

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

Q4-21

 

Q3-22

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

(19

) %

 

(8

) %

 

 

$

459.4

 

 

$

501.4

 

 

$

552.5

 

 

$

584.3

 

 

$

566.1

 

Bank deposit account balances

(20

) %

 

(9

) %

 

 

 

126.6

 

 

 

139.6

 

 

 

155.6

 

 

 

154.8

 

 

 

158.5

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

90

%

 

32

%

 

 

 

278.9

 

 

 

211.1

 

 

 

159.2

 

 

 

143.1

 

 

 

146.5

 

Equity and bond funds and CTFs (2)

(16

) %

 

9

%

 

 

 

153.6

 

 

 

141.5

 

 

 

149.5

 

 

 

175.8

 

 

 

183.1

 

Total proprietary mutual funds and CTFs

31

%

 

23

%

 

 

 

432.5

 

 

 

352.6

 

 

 

308.7

 

 

 

318.9

 

 

 

329.6

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

30

%

 

 

 

235.7

 

 

 

181.5

 

 

 

196.6

 

 

 

235.5

 

 

 

234.9

 

Mutual fund clearing services

(25

) %

 

9

%

 

 

 

191.1

 

 

 

175.3

 

 

 

184.4

 

 

 

235.4

 

 

 

254.2

 

Other third-party mutual funds (4)

(28

) %

 

(3

) %

 

 

 

1,077.1

 

 

 

1,105.7

 

 

 

1,189.4

 

 

 

1,383.3

 

 

 

1,497.7

 

Total Mutual Fund Marketplace

(24

) %

 

3

%

 

 

 

1,503.9

 

 

 

1,462.5

 

 

 

1,570.4

 

 

 

1,854.2

 

 

 

1,986.8

 

Total mutual fund assets

(16

) %

 

7

%

 

 

 

1,936.4

 

 

 

1,815.1

 

 

 

1,879.1

 

 

 

2,173.1

 

 

 

2,316.4

 

Exchange-traded funds (ETFs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

(5

) %

 

12

%

 

 

 

259.3

 

 

 

232.2

 

 

 

237.7

 

 

 

268.5

 

 

 

271.8

 

Other third-party ETFs

(7

) %

 

10

%

 

 

 

1,208.4

 

 

 

1,094.6

 

 

 

1,129.0

 

 

 

1,270.6

 

 

 

1,296.4

 

Total ETF assets

(6

) %

 

11

%

 

 

 

1,467.7

 

 

 

1,326.8

 

 

 

1,366.7

 

 

 

1,539.1

 

 

 

1,568.2

 

Equity and other securities

(22

) %

 

3

%

 

 

 

2,529.4

 

 

 

2,451.3

 

 

 

2,548.5

 

 

 

3,131.1

 

 

 

3,259.8

 

Fixed income securities

66

%

 

23

%

 

 

 

593.4

 

 

 

481.5

 

 

 

403.5

 

 

 

360.7

 

 

 

356.4

 

Margin loans outstanding

(28

) %

 

(12

) %

 

 

 

(63.1

)

 

 

(71.5

)

 

 

(73.4

)

 

 

(81.0

)

 

 

(87.4

)

Total client assets

(13

) %

 

6

%

 

 

$

7,049.8

 

 

$

6,644.2

 

 

$

6,832.5

 

 

$

7,862.1

 

 

$

8,138.0

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

(16

) %

 

5

%

 

 

$

3,682.1

 

 

$

3,508.1

 

 

$

3,598.7

 

 

$

4,235.5

 

 

$

4,400.7

 

Advisor Services

(10

) %

 

7

%

 

 

 

3,367.7

 

 

 

3,136.1

 

 

 

3,233.8

 

 

 

3,626.6

 

 

 

3,737.3

 

Total client assets

(13

) %

 

6

%

 

 

$

7,049.8

 

 

$

6,644.2

 

 

$

6,832.5

 

 

$

7,862.1

 

 

$

8,138.0

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

93

%

 

17

%

 

 

$

64.3

 

 

$

55.1

 

 

$

8.8

 

 

$

54.6

 

 

$

33.4

 

Advisor Services

(37

) %

 

8

%

 

 

 

64.1

 

 

 

59.5

 

 

 

34.6

 

 

 

65.9

 

 

 

101.2

 

Total net new assets

(5

) %

 

12

%

 

 

$

128.4

 

 

$

114.6

 

 

$

43.4

 

 

$

120.5

 

 

$

134.6

 

Net market gains (losses)

 

 

 

 

 

 

277.2

 

 

 

(302.9

)

 

 

(1,073.0

)

 

 

(396.4

)

 

 

389.4

 

Net growth (decline)

 

 

 

 

 

$

405.6

 

 

$

(188.3

)

 

$

(1,029.6

)

 

$

(275.9

)

 

$

524.0

 

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

(29

) %

 

4

%

 

 

 

931

 

 

 

897

 

 

 

1,014

 

 

 

1,202

 

 

 

1,318

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts (6)

2

%

 

 

 

 

 

33,758

 

 

 

33,875

 

 

 

33,896

 

 

 

33,577

 

 

 

33,165

 

Banking accounts

6

%

 

1

%

 

 

 

1,716

 

 

 

1,696

 

 

 

1,669

 

 

 

1,641

 

 

 

1,614

 

Corporate retirement plan participants

7

%

 

2

%

 

 

 

2,351

 

 

 

2,305

 

 

 

2,275

 

 

 

2,246

 

 

 

2,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2022, off-platform equity and bond funds, CTFs, and ETFs were $23.6 billion, $4.9 billion, and $98.2 billion, respectively.

(3)

Excludes all proprietary mutual funds and ETFs.

(4)

As of December 31, 2022, third-party money funds were $3.2 billion.

(5)

Second quarter of 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients.

(6)

Fourth quarter of 2022 includes the company-initiated closure of approximately 350 thousand low-balance accounts. Third quarter of 2022 includes the company-initiated closure of approximately 152 thousand low-balance accounts.

The Charles Schwab Corporation Monthly Activity Report For December 2022

 

 

2021

2022

 

 

 

 

 

 

 

 

 

 

 

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®

36,338

 

35,132

 

33,893

 

34,678

 

32,977

 

32,990

 

30,775

 

32,845

 

31,510

 

28,726

 

32,733

 

34,590

 

33,147

 

(4

) %

(9

) %

Nasdaq Composite®

15,645

 

14,240

 

13,751

 

14,221

 

12,335

 

12,081

 

11,029

 

12,391

 

11,816

 

10,576

 

10,988

 

11,468

 

10,466

 

(9

) %

(33

) %

Standard & Poor’s® 500

4,766

 

4,516

 

4,374

 

4,530

 

4,132

 

4,132

 

3,785

 

4,130

 

3,955

 

3,586

 

3,872

 

4,080

 

3,840

 

(6

) %

(19

) %

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

7,918.3

 

8,138.0

 

7,803.8

 

7,686.6

 

7,862.1

 

7,284.4

 

7,301.7

 

6,832.5

 

7,304.8

 

7,127.6

 

6,644.2

 

7,004.6

 

7,320.6

 

 

 

Net New Assets (1)

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

19.8

 

31.5

 

43.3

 

39.8

 

42.0

 

33.1

 

53.3

 

61

%

(34

) %

Net Market Gains (Losses)

139.4

 

(367.8

)

(157.8

)

129.2

 

(568.5

)

(15.5

)

(489.0

)

440.8

 

(220.5

)

(523.2

)

318.4

 

282.9

 

(324.1

)

 

 

Total Client Assets (at month end)

8,138.0

 

7,803.8

 

7,686.6

 

7,862.1

 

7,284.4

 

7,301.7

 

6,832.5

 

7,304.8

 

7,127.6

 

6,644.2

 

7,004.6

 

7,320.6

 

7,049.8

 

(4

) %

(13

) %

Core Net New Assets (2)

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

40.6

 

31.5

 

43.3

 

39.8

 

42.0

 

33.1

 

53.3

 

61

%

(34

) %

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

559.2

 

541.9

 

533.7

 

538.9

 

509.3

 

513.0

 

483.8

 

514.8

 

499.2

 

466.6

 

487.3

 

514.0

 

499.8

 

(3

) %

(11

) %

Advisor Services (3)

3,505.2

 

3,382.4

 

3,342.5

 

3,404.6

 

3,190.5

 

3,213.8

 

3,040.4

 

3,222.5

 

3,150.5

 

2,950.9

 

3,106.0

 

3,270.5

 

3,173.4

 

(3

) %

(9

) %

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts (4)

33,165

 

33,308

 

33,421

 

33,577

 

33,759

 

33,822

 

33,896

 

33,934

 

33,984

 

33,875

 

33,896

 

33,636

 

33,758

 

 

2

%

Banking Accounts

1,614

 

1,628

 

1,641

 

1,641

 

1,652

 

1,658

 

1,669

 

1,680

 

1,690

 

1,696

 

1,706

 

1,705

 

1,716

 

1

%

6

%

Corporate Retirement Plan Participants

2,200

 

2,216

 

2,235

 

2,246

 

2,261

 

2,275

 

2,275

 

2,267

 

2,285

 

2,305

 

2,322

 

2,336

 

2,351

 

1

%

7

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

473

 

426

 

356

 

420

 

386

 

323

 

305

 

278

 

332

 

287

 

298

 

303

 

330

 

9

%

(30

) %

Client Cash as a Percentage of Client Assets (5)

10.9

%

11.3

%

11.5

%

11.4

%

11.9

%

12.0

%

12.8

%

12.0

%

12.1

%

12.9

%

12.2

%

11.5

%

12.3

%

80 bp

140 bp

Derivative Trades as a Percentage of Total Trades

23.0

%

22.4

%

24.0

%

22.4

%

21.9

%

22.6

%

22.3

%

24.2

%

23.3

%

23.6

%

24.1

%

24.6

%

23.2

%

(140) bp

20 bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (6)

605,709

 

622,997

 

629,042

 

644,768

 

636,668

 

620,157

 

614,100

 

605,751

 

586,154

 

568,351

 

552,631

 

527,019

 

520,100

 

(1

) %

(14

) %

Average Margin Balances

88,328

 

86,737

 

84,354

 

81,526

 

83,762

 

78,841

 

74,577

 

72,177

 

72,855

 

73,224

 

69,188

 

66,011

 

64,759

 

(2

) %

(27

) %

Average Bank Deposit Account Balances (7)

154,918

 

157,706

 

153,824

 

155,657

 

152,653

 

154,669

 

155,306

 

154,542

 

148,427

 

141,198

 

136,036

 

130,479

 

126,953

 

(3

) %

(18

) %

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

11,519

 

7,384

 

9,371

 

14,177

 

(786

)

1,889

 

(1,586

)

5,589

 

10,465

 

(2,662

)

3,984

 

3,777

 

(1,837

)

 

 

Hybrid

(1,207

)

(367

)

(478

)

(497

)

(529

)

(1,718

)

(1,054

)

(2,041

)

(783

)

(938

)

(1,380

)

(2,052

)

(1,595

)

 

 

Bonds

5,600

 

1,804

 

(1,973

)

(7,851

)

(6,933

)

(6,121

)

(5,631

)

729

 

(141

)

(5,801

)

(7,218

)

(3,721

)

(3,260

)

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (8)

(2,859

)

(4,961

)

(6,318

)

(11,888

)

(16,657

)

(20,761

)

(16,258

)

(8,674

)

(7,117

)

(15,200

)

(18,473

)

(17,143

)

(21,851

)

 

 

Exchange-Traded Funds (9)

18,771

 

13,782

 

13,238

 

17,717

 

8,409

 

14,811

 

7,987

 

12,951

 

16,658

 

5,799

 

13,859

 

15,147

 

15,159

 

 

 

Money Market Funds

(144

)

(1,984

)

(1,086

)

(1,344

)

(3,430

)

7,106

 

11,544

 

13,711

 

19,702

 

17,018

 

21,542

 

16,929

 

27,778

 

 

 

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

(1)

June 2022 includes an outflow of $20.8 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)

November 2022 includes the company-initiated closure of approximately 350 thousand low-balance accounts. September 2022 includes the company-initiated closure of 152 thousand low-balance accounts.

(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. November 2022 includes the impact of transferring certain investment securities from the available for sale category to the held-to-maturity category.

(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,

 

2022

2021

 

2022

2021

 

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)

$

2,899

 

$

1,968

 

$

2,685

 

$

1,580

 

 

$

11,374

 

$

7,183

 

$

10,807

 

$

5,855

 

Acquisition and integration-related costs (1)

 

(101

)

 

101

 

 

(101

)

 

101

 

 

 

(392

)

 

392

 

 

(468

)

 

468

 

Amortization of acquired intangible assets

 

(136

)

 

136

 

 

(154

)

 

154

 

 

 

(596

)

 

596

 

 

(615

)

 

615

 

Income tax effects (2)

 

N/A

 

 

(54

)

 

N/A

 

 

(60

)

 

 

N/A

 

 

(237

)

 

N/A

 

 

(268

)

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,662

 

$

2,151

 

$

2,430

 

$

1,775

 

 

$

10,386

 

$

7,934

 

$

9,724

 

$

6,670

 

(1)

Acquisition and integration-related costs for the three and twelve months ended December 31, 2022 primarily consist of $54 million and $220 million of compensation and benefits, $38 million and $140 million of professional services, and $7 million and $21 million of occupancy and equipment. 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.

(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,

 

2022

2021

 

2022

2021

 

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)

$

2,598

47.3

%

$

2,023

43.0

%

 

$

9,388

45.2

%

$

7,713

41.6

%

Acquisition and integration-related costs

 

101

1.8

%

 

101

2.1

%

 

 

392

1.9

%

 

468

2.5

%

Amortization of acquired intangible assets

 

136

2.5

%

 

154

3.3

%

 

 

596

2.9

%

 

615

3.4

%

Adjusted income before taxes on income (non-GAAP),

Adjusted pre-tax profit margin (non-GAAP)

$

2,835

51.6

%

$

2,278

48.4

%

 

$

10,376

50.0

%

$

8,796

47.5

%

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2022

2021

 

2022

2021

 

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)

$

1,821

 

$

.97

 

$

1,449

 

$

.76

 

 

$

6,635

 

$

3.50

 

$

5,360

 

$

2.83

 

Acquisition and integration-related costs

 

101

 

 

.05

 

 

101

 

 

.05

 

 

 

392

 

 

.21

 

 

468

 

 

.25

 

Amortization of acquired intangible assets

 

136

 

 

.07

 

 

154

 

 

.08

 

 

 

596

 

 

.31

 

 

615

 

 

.32

 

Income tax effects

 

(54

)

 

(.02

)

 

(60

)

 

(.03

)

 

 

(237

)

 

(.12

)

 

(268

)

 

(.15

)

Adjusted net income available to common stockholders

(non-GAAP), Adjusted diluted EPS (non-GAAP)

$

2,004

 

$

1.07

 

$

1,644

 

$

.86

 

 

$

7,386

 

$

3.90

 

$

6,175

 

$

3.25

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2022

2021

 

2022

2021

Return on average common stockholders’ equity (GAAP)

 

27

%

 

12

%

 

 

18

%

 

11

%

Average common stockholders’ equity

$

26,823

 

$

46,898

 

 

$

36,605

 

$

47,318

 

Less: Average goodwill

 

(11,951

)

 

(11,952

)

 

 

(11,952

)

 

(11,952

)

Less: Average acquired intangible assets — net

 

(8,856

)

 

(9,456

)

 

 

(9,084

)

 

(9,685

)

Plus: Average deferred tax liabilities related to goodwill

and acquired intangible assets — net

 

1,842

 

 

1,889

 

 

 

1,870

 

 

1,919

 

Average tangible common equity

$

7,858

 

$

27,379

 

 

$

17,439

 

$

27,600

 

Adjusted net income available to common stockholders (1)

$

2,004

 

$

1,644

 

 

$

7,386

 

$

6,175

 

Return on tangible common equity (non-GAAP)

 

102

%

 

24

%

 

 

42

%

 

22

%

(1)

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

 

Source: The Charles Schwab Corporation