March Core Net New Assets Equaled $45 Billion –
Annualized Growth Rate of 6% Total Client Assets Reached A Record
$9.1 Trillion, Up 20% Year-Over-Year Expanded Profitability With
GAAP Pre-Tax Margin of 37.9%; 40.9% Adjusted (1)
The Charles Schwab Corporation reported first quarter 2024 net
revenues of $4.7 billion, reflecting a quarter-over-quarter
increase of 6%. Net income for the quarter totaled $1.4 billion, or
$.68 diluted earnings per common share. Excluding $140 million of
pre-tax transaction-related and restructuring costs, adjusted (1)
net income and diluted common earnings per share equaled $1.5
billion and $.74, respectively.
This press release features multimedia. View
the full release here:
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Client Driven
Growth
$96 Billion 1Q24 Core Net
New Assets
“Against an improved
macroeconomic backdrop, clients entrusted us with $96 billion in
core net new assets – including $45 billion in March alone. At the
same time, solid investor engagement contributed to over 1 million
new brokerage account openings during the quarter.” Co-Chairman and
CEO Walt Bettinger
Modern Wealth
Solutions
$14 Billion Net Inflows to
Managed Investing Solutions
“Momentum across our array of
wealth solutions continued through the first quarter. Led by record
flows into our premier fee-based solution, Schwab Wealth Advisory™,
net inflows increased 60% versus the prior year period.”
Co-Chairman and CEO Walt Bettinger
Diversified
Operating Model
~ 500 basis points
Adjusted Pre-Tax Margin Expansion (1) (versus 4Q23)
“Our balanced approach to expense
management helped enable pre-tax profit margins to expand
sequentially to 37.9% – 40.9% adjusted (1) – while continuing to
make investments to support long-term growth.” CFO Peter
Crawford
Balance Sheet
Management
8.8% Tier 1 Leverage Ratio
5.3% Adj. Tier 1 Leverage Ratio (1)
“Organic earnings and a smaller
balance sheet bolstered our capital position, as our preliminary
consolidated Tier 1 Leverage ratio equaled 8.8% and Adjusted Tier 1
Leverage (1) ratio exceeded 5%.” CFO Peter Crawford
1Q24 Client and Business Highlights
- Strong equity markets and organic asset gathering helped total
client assets reach a record $9.12 trillion
- Active brokerage accounts increased 3% year-over-year to end
March at 35.3 million
- Engagement rebounded with trading volume and margin balances up
15% and 9%, respectively, from 4Q23
- Sentiment improved noticeably as clients were net buyers of
securities and increased their exposure to equities
- Schwab recognized as the Best Investing Platform Overall by
U.S. News & World Report in 2024 (2)
- Ameritrade – now part of Schwab – was voted #1 in the J.D.
Power 2024 U.S. Self-Directed Investor Satisfaction StudySM (3),
with Schwab ranking #2 to secure the top two spots; Ameritrade
earned top marks for the first time as it benefited from
enhancements introduced by Schwab such as its Satisfaction
Guarantee and leading service experience
- Schwab selected as a Forbes Best Customer Service 2024 award
winner (4)
- Schwab Retirement Plan Services received the highest number of
PLANSPONSOR® Best in Class awards for 7 years in a row and received
nearly 2x more awards than the nearest qualifying plan provider
(5)
Three Months Ended March 31,
%
Financial Highlights (1)
2024
2023
Change
Net revenues (in millions)
$
4,740
$
5,116
(7
)%
Net income (in millions)
GAAP
$
1,362
$
1,603
(15
)%
Adjusted (1)
$
1,469
$
1,780
(17
)%
Diluted earnings per common share
GAAP
$
.68
$
.83
(18
)%
Adjusted (1)
$
.74
$
.93
(20
)%
Pre-tax profit margin
GAAP
37.9
%
41.2
%
Adjusted (1)
40.9
%
45.8
%
Return on average common stockholders’
equity (annualized)
15
%
23
%
Return on tangible common equity
(annualized) (1)
39
%
83
%
Note: All per-share results are rounded to
the nearest cent, based on weighted-average diluted common shares
outstanding.
1Q24 Financial Commentary
- While total net revenues declined by 7% versus the prior year,
rising equity markets and increased client engagement helped drive
6% sequential top-line growth
- Net interest margin expanded by 13 basis points
quarter-over-quarter to 2.02% due to greater margin balance
utilization and a decline in outstanding supplemental funding
(6)
- Total supplemental funding (6) decreased by $8.8 billion from
the prior year-end to finish the quarter at $70.8 billion
- Client transactional sweep cash balances ended March at $399.2
billion – with bank sweep deposits and broker-dealer free credit
balances above levels observed immediately prior to the late-2023
seasonal build
- Asset management and administration fees increased by 21% over
the prior year to a record $1.3 billion
- Mix shift in client trading activity compressed the average
revenue per trade to $2.25, down 5% versus 4Q23
- Year-over-year expenses benefited from the impact of the
late-2023 incremental cost savings, with total expenses declining
by 2% as acquisition and integration-related costs, amortization of
acquired intangibles, and restructuring costs came in 40% lower at
$140 million. Exclusive of these items, adjusted total expenses (1)
grew by 1% relative to the prior year reflecting higher
volume-related costs, including elevated client engagement amid
higher market valuations
- Charles Schwab Bank, SSB (CSB) capital ratios continued to
build, with preliminary Tier 1 Leverage and adjusted Tier 1
Leverage (1) reaching 10.4% and 5.7%, respectively
(1)
Further details on non-GAAP
financial measures and a reconciliation of such measures to GAAP
reported results are included on pages 10–12 of this release.
(2)
U.S. News & World Report’s
Best Investing Platforms award was given on April 8, 2024 and is
for 2024-2025. The criteria, evaluation, and ranking were
determined by U.S News & World Report. See
https://money.usnews.com/investing/best-brokers/methodology for
more information. Schwab paid a licensing fee to U.S News &
World Report for use of the award and logos.
(3)
TD Ameritrade, Inc. (Ameritrade)
Member SIPC, a subsidiary of The Charles Schwab Corporation,
received the highest score in the do-it-yourself segment of the
J.D. Power 2024 U.S. Self-Directed Investor Satisfaction Study of
investors’ satisfaction with self-directed investment firms. It is
independently conducted, and the participating firms do not pay to
participate. Use of study results in promotional materials is
subject to a license fee. Visit
https://www.jdpower.com/business/awards for more details.
(4)
Forbes Best Customer Service 2024
was given on November 16, 2023, and expires January 2, 2025, The
criteria, evaluation, and ranking were determined by Forbes
partnered with HundredX. See
https://www.forbes.com/sites/rachelpeachman/2023/11/09/best-brands-for-customer-service-2024-methodology/
for more information. Schwab paid a licensing fee to Forbes for use
of the award and logos.
(5)
PLANSPONSOR award was given on
February 15, 2024. The criteria, evaluation, and ranking were
determined by PLANSPONSOR. See
https://www.plansponsor.com/research/2023-best-class-dc-providers/?pagesec=4#
for more information. A licensing fee has been paid to PLANSPONSOR
for the use of the award logo, however Schwab did not pay any fees
to be considered for the award.
(6)
Supplemental funding includes
repurchase agreements, Schwab Bank Retail Certificates of Deposit
(CDs), and Federal Home Loan Bank balances.
Spring Business Update
The company will host its Spring Business Update for
institutional investors this morning from 8:00 a.m. - 9:00 a.m. CT,
9:00 a.m. - 10:00 a.m. ET.
Registration for this Update webcast is accessible at
https://www.aboutschwab.com/schwabevents.
Forward-Looking Statements
This press release contains forward-looking statements relating
to the company’s momentum, operating model and expense management.
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 are
described in the company’s most recent reports on Form 10-K and
Form 10-Q, which have been filed with the Securities and Exchange
Commission and are available on the company’s website
(https://www.aboutschwab.com/financial-reports) and on the
Securities and Exchange Commission’s website (https://www.sec.gov).
The company makes no commitment to update any forward-looking
statements.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading
provider of financial services, with 35.3 million active brokerage
accounts, 5.3 million workplace plan participant accounts, 1.9
million banking accounts, and $9.12 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 Ameritrade Holding LLC. Ameritrade Holding LLC is a
wholly owned subsidiary of The Charles Schwab Corporation.
THE CHARLES SCHWAB
CORPORATION
Consolidated Statements of
Income
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended March 31,
2024
2023
Net Revenues
Interest revenue
$
3,941
$
4,016
Interest expense
(1,708
)
(1,246
)
Net interest revenue
2,233
2,770
Asset management and administration
fees
1,348
1,118
Trading revenue
817
892
Bank deposit account fees
183
151
Other
159
185
Total net revenues
4,740
5,116
Expenses Excluding Interest
Compensation and benefits
1,538
1,638
Professional services
241
258
Occupancy and equipment
265
299
Advertising and market development
88
88
Communications
141
146
Depreciation and amortization
228
177
Amortization of acquired intangible
assets
130
135
Regulatory fees and assessments
125
83
Other
186
182
Total expenses excluding interest
2,942
3,006
Income before taxes on income
1,798
2,110
Taxes on income
436
507
Net Income
1,362
1,603
Preferred stock dividends and other
111
70
Net Income Available to Common
Stockholders
$
1,251
$
1,533
Weighted-Average Common Shares
Outstanding:
Basic
1,825
1,834
Diluted
1,831
1,842
Earnings Per Common Shares
Outstanding (1):
Basic
$
.69
$
.84
Diluted
$
.68
$
.83
(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.
THE CHARLES SCHWAB
CORPORATION
Financial and Operating
Highlights
(Unaudited)
Q1-24 %
change
2024
2023
(In millions, except per share amounts and
as noted)
vs. Q1-23
vs. Q4-23
First Quarter
Fourth Quarter
Third
Quarter
Second Quarter
First Quarter
Net Revenues
Net interest revenue
(19
)%
5
%
$
2,233
$
2,130
$
2,237
$
2,290
$
2,770
Asset management and administration
fees
21
%
9
%
1,348
1,241
1,224
1,173
1,118
Trading revenue
(8
)%
7
%
817
767
768
803
892
Bank deposit account fees
21
%
5
%
183
174
205
175
151
Other
(14
)%
8
%
159
147
172
215
185
Total net revenues
(7
)%
6
%
4,740
4,459
4,606
4,656
5,116
Expenses Excluding Interest
Compensation and benefits (1)
(6
)%
9
%
1,538
1,409
1,770
1,498
1,638
Professional services
(7
)%
(5
)%
241
253
275
272
258
Occupancy and equipment
(11
)%
(20
)%
265
331
305
319
299
Advertising and market development
—
(15
)%
88
104
102
103
88
Communications
(3
)%
(2
)%
141
144
151
188
146
Depreciation and amortization
29
%
(4
)%
228
238
198
191
177
Amortization of acquired intangible
assets
(4
)%
—
130
130
135
134
135
Regulatory fees and assessments
51
%
(54
)%
125
270
114
80
83
Other (2)
2
%
(52
)%
186
386
173
180
182
Total expenses excluding interest
(2
)%
(10
)%
2,942
3,265
3,223
2,965
3,006
Income before taxes on income
(15
)%
51
%
1,798
1,194
1,383
1,691
2,110
Taxes on income
(14
)%
193
%
436
149
258
397
507
Net Income
(15
)%
30
%
1,362
1,045
1,125
1,294
1,603
Preferred stock dividends and other
59
%
(7
)%
111
119
108
121
70
Net Income Available to Common
Stockholders
(18
)%
35
%
$
1,251
$
926
$
1,017
$
1,173
$
1,533
Earnings per common share (3):
Basic
(18
)%
35
%
$
.69
$
.51
$
.56
$
.64
$
.84
Diluted
(18
)%
33
%
$
.68
$
.51
$
.56
$
.64
$
.83
Dividends declared per common share
—
—
$
.25
$
.25
$
.25
$
.25
$
.25
Weighted-average common shares
outstanding:
Basic
—
—
1,825
1,823
1,821
1,820
1,834
Diluted
(1
)%
—
1,831
1,828
1,827
1,825
1,842
Performance Measures
Pre-tax profit margin
37.9
%
26.8
%
30.0
%
36.3
%
41.2
%
Return on average common stockholders’
equity (annualized) (4)
15
%
12
%
14
%
17
%
23
%
Financial Condition (at quarter
end, in billions)
Cash and cash equivalents
(35
)%
(27
)%
$
31.8
$
43.3
$
33.3
$
47.7
$
49.2
Cash and investments segregated
(16
)%
(19
)%
25.9
31.8
18.6
25.1
31.0
Receivables from brokerage clients —
net
13
%
4
%
71.2
68.7
69.1
65.2
63.2
Available for sale securities
(28
)%
(6
)%
101.1
107.6
110.3
125.8
141.3
Held to maturity securities
(8
)%
(2
)%
156.4
159.5
162.5
166.3
169.9
Bank loans — net
2
%
1
%
40.8
40.4
40.3
40.1
40.0
Total assets
(12
)%
(5
)%
468.8
493.2
475.2
511.5
535.6
Bank deposits
(17
)%
(7
)%
269.5
290.0
284.4
304.4
325.7
Payables to brokerage clients
(4
)%
(1
)%
84.0
84.8
72.8
84.8
87.6
Other short-term borrowings
18
%
27
%
8.4
6.6
7.6
7.8
7.1
Federal Home Loan Bank borrowings
(47
)%
(9
)%
24.0
26.4
31.8
41.0
45.6
Long-term debt
15
%
(12
)%
22.9
26.1
24.8
22.5
20.0
Stockholders’ equity
17
%
3
%
42.4
41.0
37.8
37.1
36.3
Other
Full-time equivalent employees (at quarter
end, in thousands)
(9
)%
(1
)%
32.6
33.0
35.9
36.6
36.0
Capital expenditures — purchases of
equipment, office facilities, and property,
net (in millions)
(35
)%
(39
)%
$
122
$
199
$
250
$
168
$
187
Expenses excluding interest as a
percentage of average client assets (annualized)
0.14
%
0.16
%
0.16
%
0.15
%
0.17
%
Clients’ Daily Average Trades
(DATs) (in thousands)
1
%
15
%
5,958
5,192
5,218
5,272
5,895
Number of Trading Days
(2
)%
(2
)%
61.0
62.5
62.5
62.0
62.0
Revenue Per Trade (5)
(8
)%
(5
)%
$
2.25
$
2.36
$
2.35
$
2.46
$
2.44
(1)
Fourth quarter of 2023 includes
$16 million in restructuring costs. Third quarter of 2023 includes
$276 million in restructuring costs.
(2)
Fourth quarter of 2023 includes
$181 million in restructuring costs.
(3)
The Company has voting and
nonvoting common stock outstanding. As the participation rights,
including dividend and liquidation rights, are identical between
the voting and nonvoting stock classes, basic and diluted earnings
per share are the same for each class.
(4)
Return on average common
stockholders’ equity is calculated using net income available to
common stockholders divided by average common stockholders’
equity.
(5)
Revenue per trade is calculated
as trading revenue divided by DATs multiplied by the number of
trading days.
THE CHARLES SCHWAB
CORPORATION
Net Interest Revenue
Information
(In millions, except ratios or as
noted)
(Unaudited)
Three Months Ended March 31,
2024
2023
Average
Balance
Interest
Revenue/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Revenue/
Expense
Average
Yield/
Rate
Interest-earning assets
Cash and cash equivalents
$
33,791
$
454
5.31
%
$
37,056
$
413
4.46
%
Cash and investments segregated
29,297
388
5.24
%
40,068
432
4.31
%
Receivables from brokerage clients
63,804
1,260
7.81
%
60,543
1,084
7.16
%
Available for sale securities (1)
111,867
594
2.12
%
155,791
825
2.12
%
Held to maturity securities
157,410
690
1.75
%
170,889
746
1.75
%
Bank loans
40,529
440
4.36
%
40,248
391
3.92
%
Total interest-earning assets
436,698
3,826
3.48
%
504,595
3,891
3.09
%
Securities lending revenue
76
112
Other interest revenue
39
13
Total interest-earning assets
$
436,698
$
3,941
3.59
%
$
504,595
$
4,016
3.19
%
Funding sources
Bank deposits
$
274,368
$
921
1.35
%
$
343,105
$
618
0.73
%
Payables to brokerage clients
68,343
73
0.43
%
77,169
75
0.39
%
Other short-term borrowings
7,385
103
5.61
%
6,917
86
5.05
%
Federal Home Loan Bank borrowings
24,857
330
5.27
%
24,458
304
5.05
%
Long-term debt
25,000
224
3.59
%
20,290
139
2.74
%
Total interest-bearing liabilities
399,953
1,651
1.65
%
471,939
1,222
1.05
%
Non-interest-bearing funding sources
36,745
32,656
Securities lending expense
55
22
Other interest expense
2
2
Total funding sources
$
436,698
$
1,708
1.57
%
$
504,595
$
1,246
1.00
%
Net interest revenue
$
2,233
2.02
%
$
2,770
2.19
%
(1)
Amounts have been calculated
based on amortized cost.
THE CHARLES SCHWAB
CORPORATION
Asset Management and
Administration Fees Information
(In millions, except ratios or as
noted)
(Unaudited)
Three Months Ended March 31,
2024
2023
Average
Client
Assets
Revenue
Average
Fee
Average
Client
Assets
Revenue
Average
Fee
Schwab money market funds
$
499,887
$
336
0.27
%
$
316,391
$
213
0.27
%
Schwab equity and bond funds,
exchange-traded funds (ETFs), and collective trust funds (CTFs)
539,661
107
0.08
%
450,581
91
0.08
%
Mutual Fund OneSource® and other
no-transaction-fee funds
314,576
209
0.27
%
222,437
148
0.27
%
Other third-party mutual funds and
ETFs
605,625
106
0.07
%
676,344
133
0.08
%
Total mutual funds, ETFs, and CTFs (1)
$
1,959,749
758
0.16
%
$
1,665,753
585
0.14
%
Advice solutions (1)
Fee-based
$
506,133
503
0.40
%
$
443,027
453
0.41
%
Non-fee-based
106,032
—
—
94,469
—
—
Total advice solutions
$
612,165
503
0.33
%
$
537,496
453
0.34
%
Other balance-based fees (2)
719,447
69
0.04
%
561,788
62
0.04
%
Other (3)
18
18
Total asset management and
administration fees
$
1,348
$
1,118
(1)
Advice solutions include managed
portfolios, specialized strategies, and customized investment
advice such as Schwab Wealth Advisory™, Schwab Managed Portfolios™,
Managed Account Select®, Schwab Advisor Network®, Windhaven
Strategies®, ThomasPartners® Strategies, Schwab Index Advantage
advised retirement plan balances, Schwab Intelligent Portfolios®,
Institutional Intelligent Portfolios®, Schwab Intelligent
Portfolios Premium®, AdvisorDirect®, Essential Portfolios,
Selective Portfolios, and Personalized Portfolios; as well as
legacy non-fee advice solutions including Schwab Advisor Source and
certain retirement plan balances. Average client assets for advice
solutions may also include the asset balances contained in the
mutual fund and/or ETF categories listed above. For the total end
of period view, please see the Monthly Activity Report.
(2)
Includes various asset-related
fees, such as trust fees, 401(k) 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)
Q1-24 %
Change
2024
2023
(In billions, at quarter end, except as
noted)
vs.
Q1-23
vs.
Q4-23
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Assets in client accounts
Schwab One®, certain cash equivalents and
bank deposits
(15
)%
(5
)%
$
348.2
$
368.3
$
353.1
$
384.4
$
408.5
Bank deposit account balances
(15
)%
(7
)%
90.2
97.4
99.5
102.7
106.5
Proprietary mutual funds (Schwab Funds®
and Laudus Funds®) and CTFs
Money market funds (1)
44
%
8
%
515.7
476.4
436.3
392.9
357.8
Equity and bond funds and CTFs (2)
26
%
10
%
206.0
186.7
167.9
172.6
163.1
Total proprietary mutual funds and
CTFs
39
%
9
%
721.7
663.1
604.2
565.5
520.9
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other
no-transaction-fee funds
35
%
8
%
329.2
306.2
288.0
254.6
244.3
Mutual fund clearing services
23
%
6
%
248.1
233.4
216.9
220.7
201.7
Other third-party mutual funds (4)
5
%
5
%
1,182.9
1,126.5
1,055.3
1,150.8
1,123.6
Total Mutual Fund Marketplace
12
%
6
%
1,760.2
1,666.1
1,560.2
1,626.1
1,569.6
Total mutual fund assets
19
%
7
%
2,481.9
2,329.2
2,164.4
2,191.6
2,090.5
Exchange-traded funds
Proprietary ETFs (2)
22
%
7
%
342.9
319.4
286.2
293.2
280.6
Other third-party ETFs
29
%
10
%
1,676.6
1,521.7
1,352.6
1,381.4
1,297.5
Total ETF assets
28
%
10
%
2,019.5
1,841.1
1,638.8
1,674.6
1,578.1
Equity and other securities
25
%
10
%
3,467.7
3,163.5
2,886.4
3,002.7
2,772.2
Fixed income securities
14
%
—
779.0
779.7
747.4
722.6
684.7
Margin loans outstanding
13
%
9
%
(68.1
)
(62.6
)
(65.1
)
(62.8
)
(60.5
)
Total client assets
20
%
7
%
$
9,118.4
$
8,516.6
$
7,824.5
$
8,015.8
$
7,580.0
Client assets by business
Investor Services
21
%
7
%
$
4,852.2
$
4,519.1
$
4,157.7
$
4,267.9
$
4,001.9
Advisor Services
19
%
7
%
4,266.2
3,997.5
3,666.8
3,747.9
3,578.1
Total client assets
20
%
7
%
$
9,118.4
$
8,516.6
$
7,824.5
$
8,015.8
$
7,580.0
Net growth in assets in client
accounts (for the quarter ended)
Net new assets by business
Investor Services (5)
(56
)%
40
%
$
34.9
$
25.0
$
28.6
$
36.0
$
79.4
Advisor Services (6)
(25
)%
29
%
53.3
41.3
19.6
36.0
71.3
Total net new assets
(41
)%
33
%
$
88.2
$
66.3
$
48.2
$
72.0
$
150.7
Net market gains (losses)
513.6
625.8
(239.5
)
363.8
379.5
Net growth (decline)
$
601.8
$
692.1
$
(191.3
)
$
435.8
$
530.2
New brokerage accounts (in
thousands, for the quarter ended)
5
%
20
%
1,094
910
894
960
1,042
Client accounts (in thousands)
Active brokerage accounts
3
%
1
%
35,301
34,838
34,540
34,382
34,120
Banking accounts
8
%
3
%
1,885
1,838
1,799
1,781
1,746
Workplace Plan Participant Accounts
(7)
9
%
1
%
5,277
5,221
5,141
5,003
4,845
(1)
Total client assets in purchased
money market funds are located at:
https://www.aboutschwab.com/investor-relations.
(2)
Includes balances held on and off
the Schwab platform. As of March 31, 2024, off-platform equity and
bond funds, CTFs, and ETFs were $30.5 billion, $3.5 billion, and
$113.4 billion, respectively.
(3)
Excludes all proprietary mutual
funds and ETFs.
(4)
As of March 31, 2024, third-party
money funds were $1.1 billion.
(5)
First quarter of 2024 includes
net outflows of $7.4 billion from off-platform Schwab Bank Retail
CDs. Fourth quarter of 2023 includes net inflows of $2.4 billion
from off-platform Schwab Bank Retail CDs and outflows of $5.8
billion from an international relationship. Third quarter of 2023
includes net inflows of $3.3 billion from off-platform Schwab Bank
Retail CDs. Second quarter of 2023 includes an inflow of $12.0
billion from a mutual fund clearing services client and inflows of
$7.8 billion from off-platform Schwab Bank Retail CDs. First
quarter of 2023 includes inflows of $19.0 billion from off-platform
Schwab Bank Retail CDs.
(6)
Fourth quarter of 2023 includes
outflows of $6.4 billion from an international relationship. Third
quarter of 2023 includes an outflow of $0.8 billion from an
international relationship.
(7)
Beginning in the fourth quarter
2023, Retirement Plan Participants was expanded to include accounts
in Stock Plan Services, Designated Brokerage Services, and
Retirement Business Services. Participants may be enrolled in
services in more than one Workplace business. Prior periods have
been recast to reflect this change.
The Charles Schwab Corporation
Monthly Activity Report For March 2024
2023
2024
Change
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Mo.
Yr.
Market Indices (at month end)
Dow Jones Industrial Average®
33,274
34,098
32,908
34,408
35,560
34,722
33,508
33,053
35,951
37,690
38,150
38,996
39,807
2
%
20
%
Nasdaq Composite®
12,222
12,227
12,935
13,788
14,346
14,035
13,219
12,851
14,226
15,011
15,164
16,092
16,379
2
%
34
%
Standard & Poor’s® 500
4,109
4,169
4,180
4,450
4,589
4,508
4,288
4,194
4,568
4,770
4,846
5,096
5,254
3
%
28
%
Client Assets (in billions of
dollars)
Beginning Client Assets
7,380.2
7,580.0
7,631.5
7,650.2
8,015.8
8,241.0
8,094.7
7,824.5
7,653.4
8,180.6
8,516.6
8,558.1
8,879.5
Net New Assets (1)
72.9
13.6
24.6
33.8
12.9
8.1
27.2
5.0
19.2
42.1
14.8
31.7
41.7
32
%
(43
)%
Net Market Gains (Losses)
126.9
37.9
(5.9
)
331.8
212.3
(154.4
)
(297.4
)
(176.1
)
508.0
293.9
26.7
289.7
197.2
Total Client Assets (at month end)
7,580.0
7,631.5
7,650.2
8,015.8
8,241.0
8,094.7
7,824.5
7,653.4
8,180.6
8,516.6
8,558.1
8,879.5
9,118.4
3
%
20
%
Core Net New Assets (1,2)
53.9
(2.3
)
20.7
33.8
13.7
4.9
27.1
11.3
21.7
43.1
17.2
33.4
45.0
35
%
(17
)%
Receiving Ongoing Advisory Services (at
month end)
Investor Services
526.2
530.7
526.3
547.5
560.6
552.2
533.0
522.2
557.0
581.4
584.1
601.8
618.5
3
%
18
%
Advisor Services (3)
3,369.3
3,394.9
3,377.8
3,527.8
3,619.8
3,554.2
3,448.0
3,380.3
3,604.4
3,757.4
3,780.4
3,902.5
4,009.5
3
%
19
%
Client Accounts (at month end, in
thousands)
Active Brokerage Accounts
34,120
34,248
34,311
34,382
34,434
34,440
34,540
34,571
34,672
34,838
35,017
35,127
35,301
—
3
%
Banking Accounts
1,746
1,757
1,768
1,781
1,792
1,798
1,799
1,812
1,825
1,838
1,856
1,871
1,885
1
%
8
%
Workplace Plan Participant Accounts
(4)
4,845
4,869
4,962
5,003
5,030
5,037
5,141
5,212
5,212
5,221
5,226
5,268
5,277
—
9
%
Client Activity
New Brokerage Accounts (in thousands)
378
331
314
315
303
311
280
284
286
340
366
345
383
11
%
1
%
Client Cash as a Percentage of Client
Assets (5,6)
11.2
%
10.8
%
10.9
%
10.5
%
10.2
%
10.4
%
10.8
%
11.2
%
10.7
%
10.5
%
10.5
%
10.2
%
10.0
%
(20) bp
(120) bp
Derivative Trades as a Percentage of Total
Trades
22.8
%
23.4
%
23.5
%
23.9
%
23.0
%
24.4
%
24.2
%
23.2
%
23.1
%
21.8
%
21.8
%
22.2
%
21.9
%
(30) bp
(90) bp
Selected Average Balances (in millions
of dollars)
Average Interest-Earning Assets (7)
497,627
493,215
483,438
479,752
466,659
449,483
444,864
438,522
439,118
446,305
443,694
434,822
431,456
(1
)%
(13
)%
Average Margin Balances
60,848
60,338
60,250
61,543
63,040
64,226
64,014
63,946
61,502
62,309
61,368
63,600
66,425
4
%
9
%
Average Bank Deposit Account Balances
(8)
109,392
104,775
103,149
102,917
102,566
101,928
100,404
97,893
94,991
95,518
95,553
92,075
90,774
(1
)%
(17
)%
Mutual Fund and Exchange-Traded
Fund
Net Buys (Sells) (9,10) (in millions of
dollars)
Equities
(3,234
)
1,126
(1,366
)
9,190
7,423
(278
)
675
(3,039
)
6,099
7,903
8,182
7,624
10,379
Hybrid
(1,641
)
(462
)
(889
)
(903
)
(407
)
(1,037
)
(828
)
(1,457
)
(1,466
)
(1,596
)
(501
)
(1,330
)
(439
)
Bonds
6,158
2,575
2,029
3,302
2,515
4,696
2,723
1,094
255
6,104
7,510
9,883
7,561
Net Buy (Sell) Activity (in millions of
dollars)
Mutual Funds (9)
(7,423
)
(4,904
)
(7,157
)
(4,485
)
(3,333
)
(6,476
)
(5,853
)
(12,245
)
(9,267
)
(7,406
)
(966
)
(1,348
)
(1,607
)
Exchange-Traded Funds (10)
8,706
8,143
6,931
16,074
12,864
9,857
8,423
8,843
14,155
19,817
16,157
17,525
19,108
Money Market Funds
27,106
6,291
15,256
9,112
7,911
16,869
13,388
16,976
11,670
7,745
11,717
10,129
9,085
Note: Certain supplemental details related to the information above
can be found at: https://www.aboutschwab.com/financial-reports.
(1)
Unless otherwise noted,
differences between net new assets and core net new assets are net
flows from off-platform Schwab Bank Retail CDs – including March
2023 which reflects inflows of $19.0 billion from off-platform
Schwab Bank Retail CDs issued year-to-date through March 31, 2023.
Additionally, 2023 includes outflows from a large international
relationship of $0.8 billion in September, $6.2 billion in October,
$5.4 billion in November, and $0.6 billion in December, and an
inflow of $12.0 billion from a mutual fund clearing services client
in April.
(2)
Net new assets before significant
one-time inflows or outflows, such as acquisitions/divestitures or
extraordinary flows (generally greater than $10 billion) relating
to a specific client, and activity from off-platform Schwab Bank
Retail CDs. These flows may span multiple reporting periods.
(3)
Excludes Retirement Business
Services.
(4)
Beginning October 2023,
Retirement Plan Participants was expanded to include accounts in
Stock Plan Services, Designated Brokerage Services, and Retirement
Business Services. Participants may be enrolled in services in more
than one Workplace business. Prior periods have been recast to
reflect this change.
(5)
Schwab One®, certain cash
equivalents, bank deposits, third-party bank deposit accounts, and
money market fund balances as a percentage of total client
assets.
(6)
Beginning July 2023, client cash
as a percentage of client assets excludes brokered CDs issued by
Charles Schwab Bank. Prior periods have been recast to reflect this
change.
(7)
Represents average total
interest-earning assets on the Company’s balance sheet.
(8)
Represents average clients’
uninvested cash sweep account balances held in deposit accounts at
third-party financial institutions.
(9)
Represents the principal value of
client mutual fund transactions handled by Schwab, including
transactions in proprietary funds. Includes institutional funds
available only to Investment Managers. Excludes money market fund
transactions.
(10)
Represents the principal value of
client ETF transactions handled by Schwab, including transactions
in proprietary ETFs.
THE CHARLES SCHWAB CORPORATION Non-GAAP
Financial Measures (In millions, except ratios and per share
amounts) (Unaudited)
In addition to disclosing financial results in accordance with
generally accepted accounting principles in the U.S. (GAAP),
Schwab’s first quarter earnings release contains references to the
non-GAAP financial measures described below. We believe these
non-GAAP financial measures provide useful supplemental information
about the financial performance of the Company, and facilitate
meaningful comparison of Schwab’s results in the current period to
both historic and future results. These non-GAAP measures should
not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may not be
comparable to non-GAAP financial measures presented by other
companies.
Schwab’s use of non-GAAP measures is reflective of certain
adjustments made to GAAP financial measures as described below.
Beginning in the third quarter of 2023, these adjustments also
include restructuring costs, which the Company began incurring in
connection with its previously announced plans to streamline its
operations to prepare for post-integration of Ameritrade. See Part
II – Item 8 – Note 15 of our Annual Report on Form 10-K for the
year ended December 31, 2023 for additional information.
Non-GAAP Adjustment or
Measure
Definition
Usefulness to Investors and
Uses by Management
Acquisition and
integration-related costs, amortization of acquired intangible
assets, and restructuring costs
Schwab adjusts certain GAAP
financial measures to exclude the impact of acquisition and
integration-related costs incurred as a result of the Company’s
acquisitions, amortization of acquired intangible assets,
restructuring costs, and, where applicable, the income tax effect
of these expenses.
Adjustments made to exclude
amortization of acquired intangible assets are reflective of all
acquired intangible assets, which were recorded as part of purchase
accounting. These acquired intangible assets contribute to the
Company’s revenue generation. Amortization of acquired intangible
assets will continue in future periods over their remaining useful
lives.
We exclude acquisition and
integration-related costs, amortization of acquired intangible
assets, and restructuring costs for the purpose of calculating
certain non-GAAP measures because we believe doing so provides
additional transparency of Schwab’s ongoing operations, and is
useful in both evaluating the operating performance of the business
and facilitating comparison of results with prior and future
periods.
Costs related to acquisition and
integration or restructuring fluctuate based on the timing of
acquisitions, integration and restructuring activities, thereby
limiting comparability of results among periods, and are not
representative of the costs of running the Company’s ongoing
business. Amortization of acquired intangible assets is excluded
because management does not believe it is indicative of the
Company’s underlying operating performance.
Return on tangible common
equity
Return on tangible common equity
represents annualized adjusted net income available to common
stockholders as a percentage of average tangible common equity.
Tangible common equity represents common equity less goodwill,
acquired intangible assets — net, and related deferred tax
liabilities.
Acquisitions typically result in
the recognition of significant amounts of goodwill and acquired
intangible assets. We believe return on tangible common equity may
be useful to investors as a supplemental measure to facilitate
assessing capital efficiency and returns relative to the
composition of Schwab’s balance sheet.
Adjusted Tier 1 Leverage
Ratio
Adjusted Tier 1 Leverage Ratio
represents the Tier 1 Leverage Ratio as prescribed by bank
regulatory guidance for the consolidated company and for CSB,
adjusted to reflect the inclusion of accumulated other
comprehensive income (AOCI) in the ratio.
Inclusion of the impacts of AOCI
in the Company’s Tier 1 Leverage Ratio provides additional
information regarding the Company’s current capital position. We
believe Adjusted Tier 1 Leverage Ratio may be useful to investors
as a supplemental measure of the Company’s capital levels.
The Company also uses adjusted diluted EPS and return on
tangible common equity as components of performance criteria for
employee bonus and certain executive management incentive
compensation arrangements. The Compensation Committee of CSC’s
Board of Directors maintains discretion in evaluating performance
against these criteria.
The tables below present reconciliations of GAAP measures to
non-GAAP measures:
Three Months Ended March 31,
2024
2023
Total Expenses Excluding
Interest
Net
Income
Total Expenses Excluding
Interest
Net
Income
Total expenses excluding interest
(GAAP), Net income (GAAP)
$
2,942
$
1,362
$
3,006
$
1,603
Acquisition and integration-related costs
(1)
(38
)
38
(98
)
98
Amortization of acquired intangible
assets
(130
)
130
(135
)
135
Restructuring costs (2)
28
(28
)
—
—
Income tax effects (3)
N/A
(33
)
N/A
(56
)
Adjusted total expenses (non-GAAP),
Adjusted net income (non-GAAP)
$
2,802
$
1,469
$
2,773
$
1,780
(1)
Acquisition and
integration-related costs for the three months ended March 31, 2024
primarily consist of $17 million of compensation and benefits, and
$17 million of professional services. Acquisition and
integration-related costs for the three months ended March 31, 2023
primarily consist of $58 million of compensation and benefits, $33
million of professional services, and $4 million of occupancy and
equipment.
(2)
Restructuring costs for the three
months ended March 31, 2024 reflect a change in estimate of $31
million in compensation and benefits, partially offset by $2
million of occupancy and equipment expense and $1 million of other
expense for the period. There were no restructuring costs for the
three months ended March 31, 2023.
(3)
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,
amortization of acquired intangible assets and restructuring costs
on an after-tax basis.
N/A Not applicable.
Three Months Ended March 31,
2024
2023
Amount
% of
Total Net Revenues
Amount
% of
Total Net Revenues
Income before taxes on income
(GAAP), Pre-tax profit margin (GAAP)
$
1,798
37.9
%
$
2,110
41.2
%
Acquisition and integration-related
costs
38
0.8
%
98
1.9
%
Amortization of acquired intangible
assets
130
2.7
%
135
2.7
%
Restructuring costs
(28
)
(0.5
%)
—
—
Adjusted income before taxes on income
(non-GAAP), Adjusted pre-tax profit margin
(non-GAAP)
$
1,938
40.9
%
$
2,343
45.8
%
Three Months Ended March 31,
2024
2023
Amount
Diluted
EPS
Amount
Diluted
EPS
Net income available to common
stockholders (GAAP), Earnings per common share — diluted
(GAAP)
$
1,251
$
.68
$
1,533
$
.83
Acquisition and integration-related
costs
38
.02
98
.05
Amortization of acquired intangible
assets
130
.07
135
.07
Restructuring costs
(28
)
(.01
)
—
—
Income tax effects
(33
)
(.02
)
(56
)
(.02
)
Adjusted net income available to common
stockholders (non-GAAP), Adjusted diluted EPS
(non-GAAP)
$
1,358
$
.74
$
1,710
$
.93
Three Months Ended March 31,
2024
2023
Return on average common stockholders’
equity (GAAP)
15
%
23
%
Average common stockholders’ equity
$
32,493
$
27,028
Less: Average goodwill
(11,951
)
(11,951
)
Less: Average acquired intangible assets —
net
(8,196
)
(8,724
)
Plus: Average deferred tax liabilities
related to goodwill and acquired intangible assets — net
1,759
1,842
Average tangible common equity
$
14,105
$
8,195
Adjusted net income available to common
stockholders (1)
$
1,358
$
1,710
Return on tangible common equity
(non-GAAP)
39
%
83
%
(1)
See table above for the
reconciliation of net income available to common stockholders to
adjusted net income available to common stockholders
(non-GAAP).
(Preliminary)
March 31, 2024
CSC
CSB
Tier 1 Leverage Ratio (GAAP)
8.8
%
10.4
%
Tier 1 Capital
$
41,598
$
31,944
Plus: AOCI adjustment
(17,568
)
(15,297
)
Adjusted Tier 1 Capital
24,030
16,647
Average assets with regulatory
adjustments
471,116
306,869
Plus: AOCI adjustment
(17,817
)
(15,664
)
Adjusted average assets with regulatory
adjustments
$
453,299
$
291,205
Adjusted Tier 1 Leverage Ratio
(non-GAAP)
5.3
%
5.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240415452844/en/
MEDIA Mayura Hooper, 415-667-1525 public.relations@schwab.com
INVESTORS/ANALYSTS Jeff Edwards, 415-667-1524
investor.relations@schwab.com
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