Schwab Reports First Quarter Results
Schwab reported strong first-quarter results with core net new assets of $45 billion in March, reaching a record $9.1 trillion in total client assets. The company expanded profitability with a pre-tax margin of 37.9% and adjusted margin of 40.9%. Net revenues were $4.7 billion, showing a 6% increase quarter-over-quarter.
Positive
Core net new assets reached $45 billion in March, totaling $96 billion for the quarter.
Total client assets hit a record $9.1 trillion, up 20% year-over-year.
GAAP pre-tax margin was 37.9%, with an adjusted margin of 40.9%.
Net revenues for the first quarter were $4.7 billion, reflecting a 6% increase from the previous quarter.
Net income was $1.4 billion, with adjusted net income of $1.5 billion.
Diluted earnings per common share were $.68, or $.74 adjusted.
Asset management and administration fees rose by 21% to $1.3 billion.
Client transactional sweep cash balances ended March at $399.2 billion.
Total expenses declined by 2% year-over-year, excluding certain costs.
Charles Schwab Bank's capital ratios improved, with Tier 1 Leverage reaching 10.4%.
Schwab was recognized for its customer service and investing platform by various organizations.
The Charles Schwab Corporation's first quarter financials, specifically the 6% year-over-year growth in client assets, reaching $9.1 trillion, indicate a robust trajectory in asset accumulation. This is a key metric for investor evaluation, as it shows the company's ability to attract and retain clients' wealth. Furthermore, an expanded pre-tax profit margin of 37.9% GAAP and 40.9% adjusted, despite a 7% revenue decline from the previous year, demonstrates operational efficiency and resilience in cost management.
However, the reduction in net income by 15% GAAP and 17% adjusted, alongside an 18% drop in diluted earnings per common share GAAP and a 20% adjusted drop, suggest pressures on the bottom line that may concern shareholders. Though these figures should be weighed against the backdrop of increased equity market activity and client engagement, which could present an optimistic outlook for future quarters, especially if positive market trends continue.
Charles Schwab's growth in core net new assets and the 60% increase in net inflows to managed investing solutions, such as Schwab Wealth Advisory, reflect a positive client sentiment and a strong demand for wealth management services. This uptick in organic growth aligns with industry trends where investment platforms are diversifying their offerings to meet the evolving preferences of investors.
Recognition by U.S. News & World Report and J.D. Power suggests Schwab's customer-centric approach is resonating with the market. Nevertheless, the decreased revenue per trade points towards a competitive pricing environment where companies may need to innovate to maintain or increase revenue streams. This could also reflect a shift in trading behavior, which may have implications for future revenue models.
An analysis of Schwab's capital ratios, including the Tier 1 Leverage Ratio at 8.8% and adjusted Tier 1 Leverage Ratio at 5.3%, indicates solid capital adequacy that is favorable for the institution's financial stability and growth potential. Such ratios are consequential for assessing the company's ability to withstand financial stress and for regulatory compliance purposes. Schwab's balance sheet management, reflected in these ratios, provides insights into their capacity to support growth and investment and to safeguard against potential market downturns.
The expansion of profitability and control over supplemental funding are indicative of prudent financial management during a period where interest rates and macroeconomic conditions may fluctuate. Given these considerations, stakeholders should maintain focus on how Schwab adjusts to potential economic headwinds, such as inflationary pressures and shifts in monetary policy that could affect net interest margins and the broader financial market's performance.
04/15/2024 - 08:00 AM
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)
WESTLAKE, Texas --(BUSINESS WIRE)--
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.
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
S olutions
$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
Source: The Charles Schwab Corporation
What were Schwab's core net new assets in March?
Schwab's core net new assets in March were $45 billion.
What was the total client assets for Schwab in the first quarter?
Schwab's total client assets reached a record $9.1 trillion in the first quarter.
What was Schwab's GAAP pre-tax margin?
Schwab's GAAP pre-tax margin was 37.9%.
What were Schwab's net revenues for the first quarter?
Schwab's net revenues for the first quarter were $4.7 billion.
What were Schwab's total expenses year-over-year?
Schwab's total expenses declined by 2% year-over-year, excluding certain costs.