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Schwab Reports Strong First Quarter Results

Client And Business Momentum Continued; Organic Asset Growth Exceeded 7%

10% Year-over-Year Revenue Growth; GAAP Pre-Tax Profit Margin of 41.2%; 45.8% Adjusted (1)

The Charles Schwab Corporation announced today that its net income for the first quarter of 2023 was $1.6 billion, up 14% from $1.4 billion for the first quarter of 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230417005253/en/

 

Three Months Ended March 31,

 

%

Financial Highlights (1)

2023

 

2022

 

Change

 

 

 

 

 

 

Net revenues (in millions)

$

5,116

 

 

$

4,672

 

 

10

%

Net income (in millions)

 

 

 

 

 

GAAP

$

1,603

 

 

$

1,402

 

 

14

%

Adjusted (1)

$

1,780

 

 

$

1,591

 

 

12

%

Diluted earnings per common share

 

 

 

 

 

GAAP

$

.83

 

 

$

.67

 

 

24

%

Adjusted (1)

$

.93

 

 

$

.77

 

 

21

%

Pre-tax profit margin

 

 

 

 

 

GAAP

 

41.2

%

 

 

39.4

%

 

 

Adjusted (1)

 

45.8

%

 

 

44.7

%

 

 

Return on average common

 

 

 

 

 

stockholders’ equity (annualized)

 

23

%

 

 

12

%

 

 

Return on tangible

 

 

 

 

 

common equity (annualized) (1)

 

83

%

 

 

26

%

 

 

 

 

 

 

 

 

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
(1)  

Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

Co-Chairman and CEO Walt Bettinger commented, “When I drafted my first letter to stockholders 15 years ago in the middle of the financial crisis, I outlined four factors that helped distinguish Schwab from other financial institutions during a very challenging time for global markets: a strong financial foundation, a client-centric strategy, a disciplined operating approach, and a diversified business model. These characteristics remain every bit as relevant to our story today. We continue to consistently manage the business in a conservative manner, with an unwavering long-term orientation. Our ongoing commitment to this consistency of mission, including our “Through Clients’ Eyes” strategy, highlights why we maintain the ability to meet the needs of individual investors and the advisors who serve them through various environments.”

“The first quarter presented clients with a mixed macroeconomic backdrop,” Mr. Bettinger noted. “While equity markets rebounded from year-end 2022 levels, investor sentiment remained bearish – especially following the onset of the banking industry turmoil in early March. Fixed income markets also reflected growing fears of an economic downturn as the 10-year U.S. Treasury yield declined approximately 50 basis points from its intra-quarter peak to end March just under 3.50%. Through the various ups and downs to start the year, Schwab remained a trusted partner to investors. During the quarter, clients opened over 1 million new brokerage accounts and entrusted us with $132 billion of core net new assets – including over $53 billion in March alone. While Investor Services gathered approximately $60 billion during the period, the Advisor Services segment posted a record first quarter with over $71 billion in net flows and attracted 70 transitioning advisor teams. These near-record inflows across both our primary businesses represents an annualized organic growth rate north of 7% and helped push total client assets to $7.58 trillion at quarter-end.”

Mr. Bettinger continued, “Our top priority this quarter was to stay connected to our clients – to help them understand what is happening in the marketplace – and empower them with the tools and support to navigate the current environment. I believe our robust asset gathering speaks to our success on this front. Amidst all that was happening around us, we further advanced our key strategic initiatives of scale and efficiency, win-win monetization, and segmentation. Completing the Ameritrade integration will unlock sizeable opportunities across all three of those areas and we took a meaningful step towards achieving that goal with the completion of the first client transition group in February. The successful conversion of this initial group was made possible by the efforts of our dedicated employees and further validates our roadmap for the remaining client transition groups. During the quarter, we also announced several enhancements to Schwab Personalized Indexing™ (SPI), including new tools that expand the personalization options available to clients. We also evolved SPI’s digital experience to streamline the onboarding process and bolster real-time reporting analytics. We continue to see a tremendous opportunity in meeting the advice needs of both Schwab and legacy Ameritrade clients. As investors sought out advice amidst a more challenging environment, net flows into our Managed Investing solutions grew 26% from the prior year – totaling $8.9 billion for the quarter. Finally, we announced the acquisition of The Family Wealth Alliance which, in conjunction with our industry-leading Advisor Services capabilities, will bring industry-wide relationships, thought leadership resources, and technology to help enable success for advisors serving the needs of ultra-high net worth individuals.

“It was an honor to be ranked #1 in Investor Satisfaction with Full-Service Wealth Management Firms by J.D. Power,” Mr. Bettinger concluded. “The combination of our sustained business momentum and third-party recognition highlights the fact that our “no trade-offs” approach continues to resonate with investors. At the same time, it is a testament to the intentional evolution of the company since its inception almost 50 years ago. Over those many decades, we have continuously enhanced our business while seeking to better serve investors’ needs through the thoughtful transformation of our platform from a pioneer in the discount brokerage space to a leader in full-service wealth management. Looking ahead, we intend to continue pressing our competitive advantages as we seek to gain share by emphasizing our attractive value proposition, award-winning service experience, commitment to transparency, and role as a trusted leader in the marketplace.”

CFO Peter Crawford stated, “Our first quarter revenue picture reflected the company’s sustained business momentum and the benefits of rising interest rates, partially offset by clients’ asset allocation decisions. Total revenue was up 10% year-over-year and exceeded $5 billion for the fourth consecutive quarter. While bank deposits shrank by 11% versus the prior year-end as clients realigned their allocations across our expansive selection of transaction and investment cash solutions, we observed a decline in the average daily pace of bank sweep movements from January to March – even when allowing for a temporary spike in activity at the onset of the banking system turmoil. Concurrently, we benefited from higher asset yields resulting from the Federal Reserve’s pronounced tightening program. This helped expand net interest margin by 81 basis points from the first quarter of 2022 – growing net interest revenue by 27% to $2.8 billion. Additionally, asset management and administration fees increased slightly, while trading revenue declined, and bank deposit account revenue was down due in part to a $97 million one-time breakage fee relating to ending our arrangements with certain third-party banks ahead of the initial Ameritrade client transition group.”

Mr. Crawford proceeded, “GAAP expenses rose 6% from a year ago to $3.0 billion, including $98 million in acquisition and integration-related costs and $135 million in amortization of acquired intangibles. Exclusive of these items, adjusted total expenses (1) increased 7% versus the first quarter of 2022. Our combination of top-line growth, coupled with disciplined expense management, yielded a pre-tax margin of 41.2% – 45.8% adjusted (1) – levels achieved by few other financial services firms.”

“Maintaining the capital and liquidity required to support Schwab’s long-term growth remains our primary balance sheet objective,” Mr. Crawford concluded. “We increased our quarterly common dividend by 14% to $.25 per share and returned capital via common and preferred stock repurchases. Even with the accelerated capital return during the first two months of the quarter, our Tier 1 Leverage Ratio finished at 7.1%. In light of recent events within the U.S. banking sector, and the resulting regulatory uncertainty, we have decided to pause our active buyback program. That being said, opportunistic capital return is still an important component of our ‘through the cycle’ financial formula. Ultimately, we believe the current headwinds will prove transitory and we remain well positioned to deliver long-term value to our stockholders.”

(1) Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on the dynamics of the BDA was posted on January 18, 2023.

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 the Update webcast is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements

This press release contains forward-looking statements relating to the company’s strategy and approach; Ameritrade integration; opportunities; business momentum; market share; capital and liquidity; growth; capital return; positioning; and stockholder value. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; successfully implement integration strategies and plans; attract and retain clients and independent investment advisors and grow those relationships and client assets; hire and retain talent; support client activity levels; 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; client cash allocation decisions; client sensitivity to rates; level of client assets, including cash balances; competitive pressures on pricing; 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; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; legislative or regulatory changes; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 34.1 million active brokerage accounts, 2.4 million corporate retirement plan participants, 1.7 million banking accounts, and $7.58 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

March 31,

 

2023

 

2022

Net Revenues

 

 

 

Interest revenue

$

4,016

 

 

$

2,319

 

Interest expense

 

(1,246

)

 

 

(136

)

Net interest revenue

 

2,770

 

 

 

2,183

 

Asset management and administration fees (1)

 

1,118

 

 

 

1,068

 

Trading revenue

 

892

 

 

 

963

 

Bank deposit account fees

 

151

 

 

 

294

 

Other

 

185

 

 

 

164

 

Total net revenues

 

5,116

 

 

 

4,672

 

Expenses Excluding Interest

 

 

 

Compensation and benefits

 

1,638

 

 

 

1,546

 

Professional services

 

258

 

 

 

244

 

Occupancy and equipment

 

299

 

 

 

269

 

Advertising and market development

 

88

 

 

 

102

 

Communications

 

146

 

 

 

144

 

Depreciation and amortization

 

177

 

 

 

150

 

Amortization of acquired intangible assets

 

135

 

 

 

154

 

Regulatory fees and assessments

 

83

 

 

 

68

 

Other

 

182

 

 

 

156

 

Total expenses excluding interest

 

3,006

 

 

 

2,833

 

Income before taxes on income

 

2,110

 

 

 

1,839

 

Taxes on income

 

507

 

 

 

437

 

Net Income

 

1,603

 

 

 

1,402

 

Preferred stock dividends and other

 

70

 

 

 

124

 

Net Income Available to Common Stockholders

$

1,533

 

 

$

1,278

 

Weighted-Average Common Shares Outstanding:

 

 

 

Basic

 

1,834

 

 

 

1,894

 

Diluted

 

1,842

 

 

 

1,905

 

Earnings Per Common Shares Outstanding (2):

 

 

 

Basic

$

.84

 

 

$

.67

 

Diluted

$

.83

 

 

$

.67

 

(1) 

 

No fee waivers were recognized for the three months ended March 31, 2023. Includes fee waivers of $54 million for the three months ended March 31, 2022.

(2) 

 

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

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

Q1-23 % change

 

2023

 

2022

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-22

 

Q4-22

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest revenue

27

%

 

(9

) %

 

 

$

2,770

 

 

$

3,029

 

 

$

2,926

 

 

$

2,544

 

 

$

2,183

 

Asset management and administration fees

5

%

 

7

%

 

 

 

1,118

 

 

 

1,049

 

 

 

1,047

 

 

 

1,052

 

 

 

1,068

 

Trading revenue

(7

) %

 

 

 

 

 

892

 

 

 

895

 

 

 

930

 

 

 

885

 

 

 

963

 

Bank deposit account fees

(49

) %

 

(57

) %

 

 

 

151

 

 

 

350

 

 

 

413

 

 

 

352

 

 

 

294

 

Other

13

%

 

6

%

 

 

 

185

 

 

 

174

 

 

 

184

 

 

 

260

 

 

 

164

 

Total net revenues

10

%

 

(7

) %

 

 

 

5,116

 

 

 

5,497

 

 

 

5,500

 

 

 

5,093

 

 

 

4,672

 

Expenses Excluding Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

6

%

 

10

%

 

 

 

1,638

 

 

 

1,488

 

 

 

1,476

 

 

 

1,426

 

 

 

1,546

 

Professional services

6

%

 

(3

) %

 

 

 

258

 

 

 

266

 

 

 

264

 

 

 

258

 

 

 

244

 

Occupancy and equipment

11

%

 

(7

) %

 

 

 

299

 

 

 

320

 

 

 

292

 

 

 

294

 

 

 

269

 

Advertising and market development

(14

) %

 

(28

) %

 

 

 

88

 

 

 

123

 

 

 

89

 

 

 

105

 

 

 

102

 

Communications

1

%

 

1

%

 

 

 

146

 

 

 

144

 

 

 

131

 

 

 

169

 

 

 

144

 

Depreciation and amortization

18

%

 

1

%

 

 

 

177

 

 

 

176

 

 

 

167

 

 

 

159

 

 

 

150

 

Amortization of acquired intangible assets

(12

) %

 

(1

) %

 

 

 

135

 

 

 

136

 

 

 

152

 

 

 

154

 

 

 

154

 

Regulatory fees and assessments

22

%

 

34

%

 

 

 

83

 

 

 

62

 

 

 

65

 

 

 

67

 

 

 

68

 

Other

17

%

 

(1

) %

 

 

 

182

 

 

 

184

 

 

 

187

 

 

 

187

 

 

 

156

 

Total expenses excluding interest

6

%

 

4

%

 

 

 

3,006

 

 

 

2,899

 

 

 

2,823

 

 

 

2,819

 

 

 

2,833

 

Income before taxes on income

15

%

 

(19

) %

 

 

 

2,110

 

 

 

2,598

 

 

 

2,677

 

 

 

2,274

 

 

 

1,839

 

Taxes on income

16

%

 

(20

) %

 

 

 

507

 

 

 

630

 

 

 

657

 

 

 

481

 

 

 

437

 

Net Income

14

%

 

(19

) %

 

 

 

1,603

 

 

 

1,968

 

 

 

2,020

 

 

 

1,793

 

 

 

1,402

 

Preferred stock dividends and other

(44

) %

 

(52

) %

 

 

 

70

 

 

 

147

 

 

 

136

 

 

 

141

 

 

 

124

 

Net Income Available to Common Stockholders

20

%

 

(16

) %

 

 

$

1,533

 

 

$

1,821

 

 

$

1,884

 

 

$

1,652

 

 

$

1,278

 

Earnings per common share (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

25

%

 

(14

) %

 

 

$

.84

 

 

$

.98

 

 

$

1.00

 

 

$

.87

 

 

$

.67

 

Diluted

24

%

 

(14

) %

 

 

$

.83

 

 

$

.97

 

 

$

.99

 

 

$

.87

 

 

$

.67

 

Dividends declared per common share

25

%

 

14

%

 

 

$

.25

 

 

$

.22

 

 

$

.22

 

 

$

.20

 

 

$

.20

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

(3

) %

 

(2

) %

 

 

 

1,834

 

 

 

1,864

 

 

 

1,887

 

 

 

1,896

 

 

 

1,894

 

Diluted

(3

) %

 

(2

) %

 

 

 

1,842

 

 

 

1,873

 

 

 

1,895

 

 

 

1,904

 

 

 

1,905

 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

 

 

 

 

41.2

%

 

 

47.3

%

 

 

48.7

%

 

 

44.6

%

 

 

39.4

%

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

 

 

 

 

 

 

23

%

 

 

27

%

 

 

25

%

 

 

19

%

 

 

12

%

Financial Condition (at quarter end, in billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

(46

) %

 

22

%

 

 

$

49.2

 

 

$

40.2

 

 

$

46.5

 

 

$

64.6

 

 

$

91.1

 

Cash and investments segregated

(43

) %

 

(28

) %

 

 

 

31.0

 

 

 

43.0

 

 

 

44.1

 

 

 

53.5

 

 

 

54.4

 

Receivables from brokerage clients — net

(25

) %

 

(5

) %

 

 

 

63.2

 

 

 

66.6

 

 

 

73.9

 

 

 

76.1

 

 

 

84.1

 

Available for sale securities

(48

) %

 

(4

) %

 

 

 

141.3

 

 

 

147.9

 

 

 

236.5

 

 

 

265.3

 

 

 

272.0

 

Held to maturity securities

61

%

 

(2

) %

 

 

 

169.9

 

 

 

173.1

 

 

 

96.3

 

 

 

100.1

 

 

 

105.3

 

Bank loans — net

8

%

 

(1

) %

 

 

 

40.0

 

 

 

40.5

 

 

 

40.4

 

 

 

39.6

 

 

 

37.2

 

Total assets

(21

) %

 

(3

) %

 

 

 

535.6

 

 

 

551.8

 

 

 

577.6

 

 

 

637.6

 

 

 

681.0

 

Bank deposits

(30

) %

 

(11

) %

 

 

 

325.7

 

 

 

366.7

 

 

 

395.7

 

 

 

442.0

 

 

 

465.8

 

Payables to brokerage clients

(30

) %

 

(10

) %

 

 

 

87.6

 

 

 

97.4

 

 

 

110.0

 

 

 

114.9

 

 

 

125.3

 

Other short-term borrowings (3)

69

%

 

51

%

 

 

 

7.1

 

 

 

4.7

 

 

 

0.5

 

 

 

1.4

 

 

 

4.2

 

Federal Home Loan Bank borrowings (3)

N/M

 

 

N/M

 

 

 

 

45.6

 

 

 

12.4

 

 

 

 

 

 

 

 

 

 

Long-term debt

(9

) %

 

(4

) %

 

 

 

20.0

 

 

 

20.8

 

 

 

20.8

 

 

 

21.1

 

 

 

21.9

 

Stockholders’ equity

(25

) %

 

(1

) %

 

 

 

36.3

 

 

 

36.6

 

 

 

37.0

 

 

 

44.5

 

 

 

48.1

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

5

%

 

2

%

 

 

 

36.0

 

 

 

35.3

 

 

 

35.2

 

 

 

35.2

 

 

 

34.2

 

Capital expenditures — purchases of equipment, office facilities,

and property, net (in millions)

(11

) %

 

(11

) %

 

 

$

187

 

 

$

211

 

 

$

193

 

 

$

339

 

 

$

209

 

Expenses excluding interest as a percentage of average client assets

(annualized)

 

 

 

 

 

 

0.17

%

 

 

0.16

%

 

 

0.16

%

 

 

0.16

%

 

 

0.15

%

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

(10

) %

 

9

%

 

 

 

5,895

 

 

 

5,389

 

 

 

5,523

 

 

 

6,227

 

 

 

6,578

 

Number of Trading Days

 

 

(1

) %

 

 

 

62.0

 

 

 

62.5

 

 

 

64.0

 

 

 

62.0

 

 

 

62.0

 

Revenue Per Trade (4)

3

%

 

(8

) %

 

 

$

2.44

 

 

$

2.66

 

 

$

2.63

 

 

$

2.29

 

 

$

2.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)  

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

(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

March 31,

 

2023

 

 

2022

 

Average

Balance

 

Interest

Revenue/

Expense

 

Average

Yield/

Rate

 

 

Average

Balance

 

Interest

Revenue/

Expense

 

Average

Yield/

Rate

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

37,056

 

$

413

 

4.46

%

 

 

$

72,465

 

$

34

 

 

0.19

%

Cash and investments segregated

 

40,068

 

 

432

 

4.31

%

 

 

 

51,913

 

 

15

 

 

0.11

%

Receivables from brokerage clients

 

60,543

 

 

1,084

 

7.16

%

 

 

 

84,204

 

 

626

 

 

2.97

%

Available for sale securities (1,2)

 

155,791

 

 

825

 

2.12

%

 

 

 

284,526

 

 

947

 

 

1.33

%

Held to maturity securities

 

170,889

 

 

746

 

1.75

%

 

 

 

103,416

 

 

378

 

 

1.46

%

Bank loans

 

40,248

 

 

391

 

3.92

%

 

 

 

35,852

 

 

187

 

 

2.10

%

Total interest-earning assets

 

504,595

 

 

3,891

 

3.09

%

 

 

 

632,376

 

 

2,187

 

 

1.38

%

Securities lending revenue

 

 

 

112

 

 

 

 

 

 

 

129

 

 

 

Other interest revenue

 

 

 

13

 

 

 

 

 

 

 

3

 

 

 

Total interest-earning assets

$

504,595

 

$

4,016

 

3.19

%

 

 

$

632,376

 

$

2,319

 

 

1.47

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

Bank deposits

$

343,105

 

$

618

 

0.73

%

 

 

$

452,692

 

$

16

 

 

0.01

%

Payables to brokerage clients

 

77,169

 

 

75

 

0.39

%

 

 

 

105,929

 

 

2

 

 

0.01

%

Other short-term borrowings (3)

 

6,917

 

 

86

 

5.05

%

 

 

 

4,717

 

 

4

 

 

0.33

%

Federal Home Loan Bank borrowings (3,4)

 

24,458

 

 

304

 

5.05

%

 

 

 

 

 

 

 

 

Long-term debt

 

20,290

 

 

139

 

2.74

%

 

 

 

19,864

 

 

108

 

 

2.18

%

Total interest-bearing liabilities

 

471,939

 

 

1,222

 

1.05

%

 

 

 

583,202

 

 

130

 

 

0.09

%

Non-interest-bearing funding sources

 

32,656

 

 

 

 

 

 

 

49,174

 

 

 

 

Securities lending expense

 

 

 

22

 

 

 

 

 

 

 

7

 

 

 

Other interest expense

 

 

 

2

 

 

 

 

 

 

 

(1

)

 

 

Total funding sources

$

504,595

 

$

1,246

 

1.00

%

 

 

$

632,376

 

$

136

 

 

0.09

%

Net interest revenue

 

 

$

2,770

 

2.19

%

 

 

 

 

$

2,183

 

 

1.38

%

(1)  

Amounts have been calculated based on amortized cost.

(2)  

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

(3)  

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

(4)  

Average balance and interest expense was less than $500 thousand in the prior period.

THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions, except ratios or as noted)

(Unaudited)

 

Three Months Ended

March 31,

 

2023

 

 

2022

 

Average

Client

Assets

 

Revenue

 

Average

Fee

 

 

Average

Client

Assets

 

Revenue

 

Average

Fee

Schwab money market funds before fee

waivers

$

316,391

 

$

213

 

0.27

%

 

 

$

144,732

 

$

102

 

 

0.29

%

Fee waivers

 

 

 

 

 

 

 

 

 

 

(54

)

 

 

Schwab money market funds

 

316,391

 

 

213

 

0.27

%

 

 

 

144,732

 

 

48

 

 

0.13

%

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

collective trust funds (CTFs)

 

450,581

 

 

91

 

0.08

%

 

 

 

456,326

 

 

97

 

 

0.09

%

Mutual Fund OneSource® and other

no-transaction-fee funds

 

222,437

 

 

148

 

0.27

%

 

 

 

212,641

 

 

165

 

 

0.31

%

Other third-party mutual funds and ETFs

 

676,344

 

 

133

 

0.08

%

 

 

 

872,212

 

 

179

 

 

0.08

%

Total mutual funds, ETFs, and CTFs (1)

$

1,665,753

 

 

585

 

0.14

%

 

 

$

1,685,911

 

 

489

 

 

0.12

%

Advice solutions (1)

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based

$

443,027

 

 

453

 

0.41

%

 

 

$

469,325

 

 

496

 

 

0.43

%

Non-fee-based

 

94,469

 

 

 

 

 

 

 

90,335

 

 

 

 

 

Total advice solutions

$

537,496

 

 

453

 

0.34

%

 

 

$

559,660

 

 

496

 

 

0.36

%

Other balance-based fees (2)

 

561,788

 

 

62

 

0.04

%

 

 

 

616,679

 

 

67

 

 

0.04

%

Other (3)

 

 

 

18

 

 

 

 

 

 

 

16

 

 

 

Total asset management and administration fees

 

 

$

1,118

 

 

 

 

 

 

$

1,068

 

 

 

(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)

 

Q1-23 % Change

 

2023

 

2022

 

vs.

 

vs.

 

 

First

 

Fourth

 

Third

 

Second

 

First

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

Q1-22

 

Q4-22

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

Assets in client accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schwab One®, certain cash equivalents and bank deposits

(30

) %

 

(11

) %

 

 

$

408.5

 

 

$

459.4

 

 

$

501.4

 

 

$

552.5

 

 

$

584.3

 

Bank deposit account balances

(31

) %

 

(16

) %

 

 

 

106.5

 

 

 

126.6

 

 

 

139.6

 

 

 

155.6

 

 

 

154.8

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

150

%

 

28

%

 

 

 

357.8

 

 

 

278.9

 

 

 

211.1

 

 

 

159.2

 

 

 

143.1

 

Equity and bond funds and CTFs (2)

(7

) %

 

6

%

 

 

 

163.1

 

 

 

153.6

 

 

 

141.5

 

 

 

149.5

 

 

 

175.8

 

Total proprietary mutual funds and CTFs

63

%

 

20

%

 

 

 

520.9

 

 

 

432.5

 

 

 

352.6

 

 

 

308.7

 

 

 

318.9

 

Mutual Fund Marketplace® (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

4

%

 

4

%

 

 

 

244.3

 

 

 

235.7

 

 

 

181.5

 

 

 

196.6

 

 

 

235.5

 

Mutual fund clearing services

(14

) %

 

6

%

 

 

 

201.7

 

 

 

191.1

 

 

 

175.3

 

 

 

184.4

 

 

 

235.4

 

Other third-party mutual funds (4)

(19

) %

 

4

%

 

 

 

1,123.6

 

 

 

1,077.1

 

 

 

1,105.7

 

 

 

1,189.4

 

 

 

1,383.3

 

Total Mutual Fund Marketplace

(15

) %

 

4

%

 

 

 

1,569.6

 

 

 

1,503.9

 

 

 

1,462.5

 

 

 

1,570.4

 

 

 

1,854.2

 

Total mutual fund assets

(4

) %

 

8

%

 

 

 

2,090.5

 

 

 

1,936.4

 

 

 

1,815.1

 

 

 

1,879.1

 

 

 

2,173.1

 

Exchange-traded funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary ETFs (2)

5

%

 

8

%

 

 

 

280.6

 

 

 

259.3

 

 

 

232.2

 

 

 

237.7

 

 

 

268.5

 

Other third-party ETFs

2

%

 

7

%

 

 

 

1,297.5

 

 

 

1,208.4

 

 

 

1,094.6

 

 

 

1,129.0

 

 

 

1,270.6

 

Total ETF assets

3

%

 

8

%

 

 

 

1,578.1

 

 

 

1,467.7

 

 

 

1,326.8

 

 

 

1,366.7

 

 

 

1,539.1

 

Equity and other securities

(11

) %

 

10

%

 

 

 

2,772.2

 

 

 

2,529.4

 

 

 

2,451.3

 

 

 

2,548.5

 

 

 

3,131.1

 

Fixed income securities

90

%

 

15

%

 

 

 

684.7

 

 

 

593.4

 

 

 

481.5

 

 

 

403.5

 

 

 

360.7

 

Margin loans outstanding

(25

) %

 

(4

) %

 

 

 

(60.5

)

 

 

(63.1

)

 

 

(71.5

)

 

 

(73.4

)

 

 

(81.0

)

Total client assets

(4

) %

 

8

%

 

 

$

7,580.0

 

 

$

7,049.8

 

 

$

6,644.2

 

 

$

6,832.5

 

 

$

7,862.1

 

Client assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

(6

) %

 

9

%

 

 

$

4,001.9

 

 

$

3,682.1

 

 

$

3,508.1

 

 

$

3,598.7

 

 

$

4,235.5

 

Advisor Services

(1

) %

 

6

%

 

 

 

3,578.1

 

 

 

3,367.7

 

 

 

3,136.1

 

 

 

3,233.8

 

 

 

3,626.6

 

Total client assets

(4

) %

 

8

%

 

 

$

7,580.0

 

 

$

7,049.8

 

 

$

6,644.2

 

 

$

6,832.5

 

 

$

7,862.1

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new assets by business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services (5)

45

%

 

23

%

 

 

$

79.4

 

 

$

64.3

 

 

$

55.1

 

 

$

8.8

 

 

$

54.6

 

Advisor Services

8

%

 

11

%

 

 

 

71.3

 

 

 

64.1

 

 

 

59.5

 

 

 

34.6

 

 

 

65.9

 

Total net new assets

25

%

 

17

%

 

 

$

150.7

 

 

$

128.4

 

 

$

114.6

 

 

$

43.4

 

 

$

120.5

 

Net market gains (losses)

 

 

 

 

 

 

379.5

 

 

 

277.2

 

 

 

(302.9

)

 

 

(1,073.0

)

 

 

(396.4

)

Net growth (decline)

 

 

 

 

 

$

530.2

 

 

$

405.6

 

 

$

(188.3

)

 

$

(1,029.6

)

 

$

(275.9

)

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

(13

) %

 

12

%

 

 

 

1,042

 

 

 

931

 

 

 

897

 

 

 

1,014

 

 

 

1,202

 

Client accounts (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active brokerage accounts (6)

2

%

 

1

%

 

 

 

34,120

 

 

 

33,758

 

 

 

33,875

 

 

 

33,896

 

 

 

33,577

 

Banking accounts

6

%

 

2

%

 

 

 

1,746

 

 

 

1,716

 

 

 

1,696

 

 

 

1,669

 

 

 

1,641

 

Corporate retirement plan participants

6

%

 

1

%

 

 

 

2,379

 

 

 

2,351

 

 

 

2,305

 

 

 

2,275

 

 

 

2,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2023, off-platform equity and bond funds, CTFs, and ETFs were $25.6 billion, $4.7 billion, and $108.3 billion, respectively.

(3)  

Excludes all proprietary mutual funds and ETFs.

(4)  

As of March 31, 2023, third-party money funds were $2.9 billion.

(5)  

First quarter of 2023 includes inflows of $19.0 billion from off-platform Schwab Bank Certificates of Deposit (CDs). Second quarter of 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client.

(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 March 2023

 

2022

 

 

 

 

 

 

 

 

 

2023

 

 

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®

34,678

 

32,977

 

32,990

 

30,775

 

32,845

 

31,510

 

28,726

 

32,733

 

34,590

 

33,147

 

34,086

 

32,657

 

33,274

 

2

%

(4

) %

Nasdaq Composite®

14,221

 

12,335

 

12,081

 

11,029

 

12,391

 

11,816

 

10,576

 

10,988

 

11,468

 

10,466

 

11,585

 

11,456

 

12,222

 

7

%

(14

) %

Standard & Poor’s® 500

4,530

 

4,132

 

4,132

 

3,785

 

4,130

 

3,955

 

3,586

 

3,872

 

4,080

 

3,840

 

4,077

 

3,970

 

4,109

 

4

%

(9

) %

Client Assets (in billions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Client Assets

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

 

7,480.6

 

7,380.2

 

 

 

Net New Assets (1)

46.3

 

(9.2

)

32.8

 

19.8

 

31.5

 

43.3

 

39.8

 

42.0

 

33.1

 

53.3

 

36.1

 

41.7

 

72.9

 

75

%

57

%

Net Market Gains (Losses)

129.2

 

(568.5

)

(15.5

)

(489.0

)

440.8

 

(220.5

)

(523.2

)

318.4

 

282.9

 

(324.1

)

394.7

 

(142.1

)

126.9

 

 

 

Total Client Assets (at month end)

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

 

7,480.6

 

7,380.2

 

7,580.0

 

3

%

(4

) %

Core Net New Assets (2)

46.3

 

(9.2

)

32.8

 

40.6

 

31.5

 

43.3

 

39.8

 

42.0

 

33.1

 

53.3

 

36.1

 

41.7

 

53.9

 

29

%

16

%

Receiving Ongoing Advisory Services (at month end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Services

538.9

 

509.3

 

513.0

 

483.8

 

514.8

 

499.2

 

466.6

 

487.3

 

514.0

 

499.8

 

524.6

 

515.5

 

526.2

 

2

%

(2

) %

Advisor Services (3)

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

 

3,345.4

 

3,289.6

 

3,369.3

 

2

%

(1

) %

Client Accounts (at month end, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Brokerage Accounts (4)

33,577

 

33,759

 

33,822

 

33,896

 

33,934

 

33,984

 

33,875

 

33,896

 

33,636

 

33,758

 

33,878

 

34,010

 

34,120

 

 

2

%

Banking Accounts

1,641

 

1,652

 

1,658

 

1,669

 

1,680

 

1,690

 

1,696

 

1,706

 

1,705

 

1,716

 

1,729

 

1,733

 

1,746

 

1

%

6

%

Corporate Retirement Plan Participants

2,246

 

2,261

 

2,275

 

2,275

 

2,267

 

2,285

 

2,305

 

2,322

 

2,336

 

2,351

 

2,369

 

2,384

 

2,379

 

 

6

%

Client Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brokerage Accounts (in thousands)

420

 

386

 

323

 

305

 

278

 

332

 

287

 

298

 

303

 

330

 

344

 

320

 

378

 

18

%

(10

) %

Client Cash as a Percentage of Client Assets (5)

11.4

%

11.9

%

12.0

%

12.8

%

12.0

%

12.1

%

12.9

%

12.2

%

11.5

%

12.3

%

11.6

%

11.7

%

11.6

%

(10) bp

20 bp

Derivative Trades as a Percentage of Total Trades

22.4

%

21.9

%

22.6

%

22.3

%

24.2

%

23.3

%

23.6

%

24.1

%

24.6

%

23.2

%

23.0

%

23.5

%

22.8

%

(70) bp

40 bp

Selected Average Balances (in millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Interest-Earning Assets (6)

644,768

 

636,668

 

620,157

 

614,100

 

605,751

 

586,154

 

568,351

 

552,631

 

527,019

 

520,100

 

512,893

 

503,122

 

497,627

 

(1

) %

(23

) %

Average Margin Balances

81,526

 

83,762

 

78,841

 

74,577

 

72,177

 

72,855

 

73,224

 

69,188

 

66,011

 

64,759

 

60,211

 

60,575

 

60,848

 

 

(25

) %

Average Bank Deposit Account Balances (7)

155,657

 

152,653

 

154,669

 

155,306

 

154,542

 

148,427

 

141,198

 

136,036

 

130,479

 

126,953

 

122,387

 

115,816

 

109,392

 

(6

) %

(30

) %

Mutual Fund and Exchange-Traded Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

14,177

 

(786

)

1,889

 

(1,586

)

5,589

 

10,465

 

(2,662

)

3,984

 

3,777

 

(1,837

)

7,236

 

5,850

 

(3,234

)

 

 

Hybrid

(497

)

(529

)

(1,718

)

(1,054

)

(2,041

)

(783

)

(938

)

(1,380

)

(2,052

)

(1,595

)

(433

)

47

 

(1,641

)

 

 

Bonds

(7,851

)

(6,933

)

(6,121

)

(5,631

)

729

 

(141

)

(5,801

)

(7,218

)

(3,721

)

(3,260

)

5,646

 

4,281

 

6,158

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds (8)

(11,888

)

(16,657

)

(20,761

)

(16,258

)

(8,674

)

(7,117

)

(15,200

)

(18,473

)

(17,143

)

(21,851

)

552

 

(2,338

)

(7,423

)

 

 

Exchange-Traded Funds (9)

17,717

 

8,409

 

14,811

 

7,987

 

12,951

 

16,658

 

5,799

 

13,859

 

15,147

 

15,159

 

11,897

 

12,516

 

8,706

 

 

 

Money Market Funds

(1,344

)

(3,430

)

7,106

 

11,544

 

13,711

 

19,702

 

17,018

 

21,542

 

16,929

 

27,778

 

24,285

 

23,347

 

27,106

 

 

 

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

(1)

 

March 2023 includes inflows of $19.0 billion from off-platform Schwab Bank CDs issued year-to-date through March 31,2023. 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, and activity from off-platform Schwab Bank CDs. 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 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 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.

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 March 31,

 

2023

2022

 

Total

Expenses

Excluding

Interest

Net

Income

Total

Expenses

Excluding

Interest

Net

Income

Total expenses excluding interest (GAAP),

Net income (GAAP)

$

3,006

 

$

1,603

 

$

2,833

 

$

1,402

 

Acquisition and integration-related costs (1)

 

(98

)

 

98

 

 

(96

)

 

96

 

Amortization of acquired intangible assets

 

(135

)

 

135

 

 

(154

)

 

154

 

Income tax effects (2)

 

N/A

 

 

(56

)

 

N/A

 

 

(61

)

Adjusted total expenses (non-GAAP),

Adjusted net income (non-GAAP)

$

2,773

 

$

1,780

 

$

2,583

 

$

1,591

 

(1) 

 

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. Acquisition and integration-related costs for the three months ended March 31, 2022 primarily consist of $56 million of compensation and benefits, $31 million of professional services, and $4 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 March 31,

2023

2022

Amount

% of

Total Net

Revenues

Amount

% of

Total Net

Revenues

Income before taxes on income (GAAP),

Pre-tax profit margin (GAAP)

$

2,110

 

 

41.2

%

$

1,839

 

 

39.4

%

Acquisition and integration-related costs

 

98

 

 

1.9

%

 

96

 

 

2.1

%

Amortization of acquired intangible assets

 

135

 

 

2.7

%

 

154

 

 

3.2

%

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

Adjusted pre-tax profit margin (non-GAAP)

$

2,343

 

 

45.8

%

$

2,089

 

 

44.7

%

 

Three Months Ended March 31,

2023

2022

Amount

Diluted

EPS

Amount

Diluted

EPS

Net income available to common stockholders (GAAP),

Earnings per common share — diluted (GAAP)

$

1,533

 

$

.83

 

$

1,278

 

$

.67

 

Acquisition and integration-related costs

 

98

 

 

.05

 

 

96

 

 

.05

 

Amortization of acquired intangible assets

 

135

 

 

.07

 

 

154

 

 

.08

 

Income tax effects

 

(56

)

 

(.02

)

 

(61

)

 

(.03

)

Adjusted net income available to common stockholders

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

$

1,710

 

$

.93

 

$

1,467

 

$

.77

 

 

Three Months Ended March 31,

2023

 

2022

Return on average common stockholders’ equity (GAAP)

 

23

%

 

12

%

Average common stockholders’ equity

$

27,028

 

$

41,856

 

Less: Average goodwill

 

(11,951

)

 

(11,952

)

Less: Average acquired intangible assets — net

 

(8,724

)

 

(9,303

)

Plus: Average deferred tax liabilities related to goodwill

and acquired intangible assets — net

 

1,842

 

 

1,886

 

Average tangible common equity

$

8,195

 

$

22,487

 

Adjusted net income available to common stockholders (1)

$

1,710

 

$

1,467

 

Return on tangible common equity (non-GAAP)

 

83

%

 

26

%

(1)  

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

 

Contacts

MEDIA:

Mayura Hooper

Charles Schwab

Phone: 415-667-1525

INVESTORS/ANALYSTS:

Jeff Edwards

Charles Schwab

Phone: 415-667-1524

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