The Charles Schwab Corporation announced today that its net income for the third quarter of 2018 was a record $923 million, up 7% from $866 million for the prior quarter, and up 49% from $618 million for the third quarter of 2017. Net income for the nine months ended September 30, 2018 was $2.6 billion, up 46% from the year-earlier period.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20181015005197/en/
Three Months Ended | % |
Nine Months Ended | % | |||||||||||||||||
Financial Highlights | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||
Net revenues (in millions) | $ | 2,579 | $ | 2,165 | 19% | $ | 7,463 | $ | 6,376 | 17% | ||||||||||
Net income (in millions) | $ | 923 | $ | 618 | 49% | $ | 2,572 | $ | 1,757 | 46% | ||||||||||
Diluted earnings per common share | $ | .65 | $ | .42 | 55% | $ | 1.79 | $ | 1.21 | 48% | ||||||||||
Pre-tax profit margin | 47.3 | % | 43.6 | % | 44.9 | % | 42.3 | % | ||||||||||||
Return on average common stockholders’ equity (annualized) | 20 | % | 15 | % | 19 | % | 15 | % | ||||||||||||
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding. | ||||||||||||||||||||
CEO Walt Bettinger said, “Schwab’s unwavering focus on our ‘Through Clients’ Eyes’ strategy and disciplined execution have helped us set new performance records again and again. Clients opened 369,000 brokerage accounts in the third quarter, bringing our year-to-date new accounts to 1.2 million – the highest nine-month total in our history. The company is growing through both our Retail channel and the registered investment advisors who custody on our platform. Households new to Retail rose 24% for the first nine months of 2018 compared to last year, with 53% of those new clients under the age of 40. Additionally, Advisor Services attracted 173 RIA teams to Schwab thus far in the year, a pace that beats all pre-2017 annual totals. Each of our two primary businesses helped propel total company core net new assets to $53.5 billion, a third quarter record. We’ve generated $172.5 billion in core net new assets year-to-date – also surpassing all full-year totals prior to 2017. Client trading activity provided further evidence of ongoing engagement during the summer months. Against a backdrop of relatively stable markets, daily average trades reached 683,000, consistent with the second quarter and a third quarter record. In addition, clients continued to seek help and guidance through us; assets receiving ongoing advice marked a new high of $1.85 trillion at September 30th, up 15%. Total client assets grew 12% year-over-year, ending the quarter at a record $3.56 trillion.”
Mr. Bettinger added, “The consistent application of our ‘Virtuous Cycle’ has enabled us to drive growth, scale, and efficiency as we capture more market share. Since 2008, we have increased brokerage accounts over 50% and tripled our client asset base, all while driving down our ratio of expenses to client assets by a third – a notable accomplishment for a U.S. investment services firm of our size, especially without any substantial acquisitions. And we are not letting up: the company has attracted at least two dollars in inflows for every dollar transferred to a competitor for six consecutive quarters and our third quarter core net new assets represented a 7% annualized organic growth rate, outpacing our 6% average over the past 10 years. This success with clients has enabled us to make ongoing investments to support our current and future growth. Schwab’s 2018 investment priorities – Application Modernization, Business Process Transformation, and Digital Accelerator – should all help to improve our cost structure advantage versus others in our industry, along with our ability to attract and serve an increasing share of the $45 trillion in U.S. investable wealth. We believe we have never been better positioned to continue winning in the marketplace and extending our lead in a scalable and efficient way – a testament to our inexorable pursuit of sustained profitable growth through putting clients first.”
CFO Peter Crawford commented, “As our ‘no trade-offs’ approach continued to resonate with clients, the company’s strengthened business momentum and a generally favorable economic environment helped drive the thirteenth consecutive quarter of record revenues. Net interest revenue grew 41% year-over-year to a record $1.5 billion due to larger client cash sweep balances, as well as the cumulative effect of the Fed’s rate normalization. Asset management and administration fees declined 6% to $809 million, reflecting lower money market fund revenue as a result of transfers to bank sweep, client asset allocation choices, and our 2017 fee reductions. Our clients’ record trading activity boosted trading revenue 17% to $176 million. Overall, total revenues reached $2.6 billion, a 19% increase from last year, while expenses rose 11%, reflecting hiring to support our expanding client base and ongoing investments for driving growth and efficiency. As a result, pre-tax income increased 29% to a record $1.2 billion. Year-to-date through September, we’ve produced a 530 basis point gap between revenue and expense growth and delivered a record 44.9% pre-tax profit margin, resulting in $2.6 billion of net income, which exceeds all prior full-year totals in our history.”
Mr. Crawford concluded, “During the third quarter, we effectively managed our balance sheet to support both growth and solid financial performance. The company’s consolidated balance sheet reached $272 billion at month-end September, a $10 billion quarterly increase, largely driven by bank sweep transfers and client activity. We transferred balances totaling $23 billion from sweep money market funds to bank sweep in the quarter, bringing our 2018 transfers to $68 billion and leaving $33 billion remaining in sweep funds at quarter-end. In July, the Board of Directors declared a 30% increase in the quarterly cash dividend to $0.13 per common share. We finished the quarter with a preliminary Tier 1 Leverage Ratio of 7.5% and we delivered a 20% return on equity – our highest ROE in nine years.”
Supporting schedules and selected balances are either attached or located at: http://www.aboutschwab.com/investor-relations/.
Commentary from the CFO
Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: http://www.aboutschwab.com/investor-relations/cfo-commentary. The most recent commentary, which provides perspective on crossing the $250 billion consolidated asset threshold for heightened regulatory requirements, was posted on August 14, 2018.
Forward-Looking Statements
This press release contains forward-looking statements relating to growth in client accounts and assets; investments to support growth, serve clients and drive scale and efficiency; market share; expenses; and cost structure advantage. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.
Important factors that may cause such differences include, but are not limited to, the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; general market conditions, including the level of interest rates, equity valuations, and trading activity; competitive pressures on pricing, including deposit rates; the company’s ability to develop and launch new products, services, and capabilities, as well as enhance its infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; level of client assets, including cash balances; the company’s ability to manage expenses; and other factors set forth in the company’s most recent report on Form 10-K.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 350 offices and 11.4 million active brokerage accounts, 1.6 million corporate retirement plan participants, 1.3 million banking accounts, and $3.56 trillion in client assets as of September 30, 2018. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, money management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org), and 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 banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.
THE CHARLES SCHWAB CORPORATION | ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Revenues | ||||||||||||||||
Interest revenue | $ | 1,755 | $ | 1,176 | $ | 4,766 | $ | 3,358 | ||||||||
Interest expense | (228 | ) | (94 | ) | (569 | ) | (223 | ) | ||||||||
Net interest revenue | 1,527 | 1,082 | 4,197 | 3,135 | ||||||||||||
Asset management and administration fees | 809 | 861 | 2,474 | 2,529 | ||||||||||||
Trading revenue | 176 | 151 | 557 | 500 | ||||||||||||
Other | 67 | 71 | 235 | 212 | ||||||||||||
Total net revenues | 2,579 | 2,165 | 7,463 | 6,376 | ||||||||||||
Expenses Excluding Interest | ||||||||||||||||
Compensation and benefits | 737 | 662 | 2,252 | 2,026 | ||||||||||||
Professional services | 164 | 152 | 476 | 429 | ||||||||||||
Occupancy and equipment | 124 | 111 | 368 | 323 | ||||||||||||
Advertising and market development | 70 | 63 | 220 | 205 | ||||||||||||
Communications | 59 | 56 | 179 | 171 | ||||||||||||
Depreciation and amortization | 78 | 69 | 226 | 200 | ||||||||||||
Regulatory fees and assessments | 57 | 43 | 158 | 133 | ||||||||||||
Other | 71 | 64 | 232 | 192 | ||||||||||||
Total expenses excluding interest | 1,360 | 1,220 | 4,111 | 3,679 | ||||||||||||
Income before taxes on income | 1,219 | 945 | 3,352 | 2,697 | ||||||||||||
Taxes on income | 296 | 327 | 780 | 940 | ||||||||||||
Net Income | 923 | 618 | 2,572 | 1,757 | ||||||||||||
Preferred stock dividends and other | 38 | 43 | 128 | 127 | ||||||||||||
Net Income Available to Common Stockholders | $ | 885 | $ | 575 | $ | 2,444 | $ | 1,630 | ||||||||
Weighted-Average Common Shares Outstanding: | ||||||||||||||||
Basic | 1,351 | 1,339 | 1,349 | 1,338 | ||||||||||||
Diluted | 1,364 | 1,353 | 1,363 | 1,352 | ||||||||||||
Earnings Per Common Shares Outstanding: | ||||||||||||||||
Basic | $ | .66 | $ | .43 | $ | 1.81 | $ | 1.22 | ||||||||
Diluted | $ | .65 | $ | .42 | $ | 1.79 | $ | 1.21 | ||||||||
Dividends Declared Per Common Share | $ | .13 | $ | .08 | $ | .33 | $ | .24 | ||||||||
THE CHARLES SCHWAB CORPORATION | |||||||||||||||||||||||||||
Financial and Operating Highlights | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Q3-18 % change | 2018 | 2017 | |||||||||||||||||||||||||
vs. | vs. | Third | Second | First | Fourth | Third | |||||||||||||||||||||
(In millions, except per share amounts and as noted) | Q3-17 | Q2-18 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||
Net Revenues | |||||||||||||||||||||||||||
Net interest revenue | 41 | % | 9 | % | $ | 1,527 | $ | 1,407 | $ | 1,263 | $ | 1,147 | $ | 1,082 | |||||||||||||
Asset management and administration fees | (6 | )% | (1 | )% | 809 | 814 | 851 | 863 | 861 | ||||||||||||||||||
Trading revenue | 17 | % | (2 | )% | 176 | 180 | 201 | 154 | 151 | ||||||||||||||||||
Other | (6 | )% | (21 | )% | 67 | 85 | 83 | 78 | 71 | ||||||||||||||||||
Total net revenues | 19 | % | 4 | % | 2,579 | 2,486 | 2,398 | 2,242 | 2,165 | ||||||||||||||||||
Expenses Excluding Interest | |||||||||||||||||||||||||||
Compensation and benefits | 11 | % | (1 | )% | 737 | 745 | 770 | 711 | 662 | ||||||||||||||||||
Professional services | 8 | % | 5 | % | 164 | 156 | 156 | 151 | 152 | ||||||||||||||||||
Occupancy and equipment | 12 | % | 2 | % | 124 | 122 | 122 | 113 | 111 | ||||||||||||||||||
Advertising and market development | 11 | % | (9 | )% | 70 | 77 | 73 | 63 | 63 | ||||||||||||||||||
Communications | 5 | % | 2 | % | 59 | 58 | 62 | 60 | 56 | ||||||||||||||||||
Depreciation and amortization | 13 | % | 4 | % | 78 | 75 | 73 | 69 | 69 | ||||||||||||||||||
Regulatory fees and assessments | 33 | % | 14 | % | 57 | 50 | 51 | 46 | 43 | ||||||||||||||||||
Other | 11 | % | (1 | )% | 71 | 72 | 89 | 76 | 64 | ||||||||||||||||||
Total expenses excluding interest | 11 | % | — | 1,360 | 1,355 | 1,396 | 1,289 | 1,220 | |||||||||||||||||||
Income before taxes on income | 29 | % | 8 | % | 1,219 | 1,131 | 1,002 | 953 | 945 | ||||||||||||||||||
Taxes on income | (9 | )% | 12 | % | 296 | 265 | 219 | 356 | 327 | ||||||||||||||||||
Net Income | 49 | % | 7 | % | $ | 923 | $ | 866 | $ | 783 | $ | 597 | $ | 618 | |||||||||||||
Preferred stock dividends and other | (12 | )% | (28 | )% | 38 | 53 | 37 | 47 | 43 | ||||||||||||||||||
Net Income Available to Common Stockholders | 54 | % | 9 | % | $ | 885 | $ | 813 | $ | 746 | $ | 550 | $ | 575 | |||||||||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | 53 | % | 10 | % | $ | .66 | $ | .60 | $ | .55 | $ | .41 | $ | .43 | |||||||||||||
Diluted | 55 | % | 8 | % | $ | .65 | $ | .60 | $ | .55 | $ | .41 | $ | .42 | |||||||||||||
Dividends declared per common share | 63 | % | 30 | % | $ | .13 | $ | .10 | $ | .10 | $ | .08 | $ | .08 | |||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||||||
Basic | 1 | % | — | 1,351 | 1,350 | 1,347 | 1,343 | 1,339 | |||||||||||||||||||
Diluted | 1 | % | — | 1,364 | 1,364 | 1,362 | 1,358 | 1,353 | |||||||||||||||||||
Performance Measures | |||||||||||||||||||||||||||
Pre-tax profit margin | 47.3 | % | 45.5 | % | 41.8 | % | 42.5 | % | 43.6 | % | |||||||||||||||||
Return on average common stockholders’ equity (annualized) (1) | 20 | % | 19 | % | 18 | % | 14 | % | 15 | % | |||||||||||||||||
Financial Condition (at quarter end, in billions) | |||||||||||||||||||||||||||
Cash and investments segregated | (47 | )% | (23 | )% | $ | 8.5 | $ | 11.0 | $ | 12.8 | $ | 15.1 | $ | 15.9 | |||||||||||||
Receivables from brokerage clients — net | 21 | % | — | 22.4 | 22.4 | 21.2 | 20.6 | 18.5 | |||||||||||||||||||
Bank loans — net | 2 | % | — | 16.6 | 16.6 | 16.4 | 16.5 | 16.2 | |||||||||||||||||||
Total assets | 18 | % | 4 | % | 272.1 | 261.9 | 248.3 | 243.3 | 230.7 | ||||||||||||||||||
Bank deposits | 29 | % | 7 | % | 213.4 | 199.9 | 190.2 | 169.7 | 165.3 | ||||||||||||||||||
Payables to brokerage clients | (11 | )% | (8 | )% | 27.9 | 30.3 | 31.1 | 31.2 | 31.5 | ||||||||||||||||||
Short-term borrowings | (100 | )% | — | — | — | — | 15.0 | 5.0 | |||||||||||||||||||
Long-term debt | 76 | % | — | 5.8 | 5.8 | 4.1 | 4.8 | 3.3 | |||||||||||||||||||
Stockholders’ equity | 16 | % | 3 | % | 20.8 | 20.1 | 19.3 | 18.5 | 18.0 | ||||||||||||||||||
Other | |||||||||||||||||||||||||||
Full-time equivalent employees (at quarter end, in thousands) | 10 | % | 2 | % | 19.1 | 18.7 | 18.2 | 17.6 | 17.3 | ||||||||||||||||||
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions) | 32 | % | 24 | % | $ | 156 | $ | 126 | $ | 135 | $ | 141 | $ | 118 | |||||||||||||
Expenses excluding interest as a percentage of average client assets (annualized) | 0.15 | % | 0.16 | % | 0.17 | % | 0.16 | % | 0.16 | % | |||||||||||||||||
Clients’ Daily Average Trades (in thousands) | |||||||||||||||||||||||||||
Revenue trades (2) | 22 | % | 2 | % | 382 | 376 | 462 | 345 | 312 | ||||||||||||||||||
Asset-based trades (3) | (6 | )% | (13 | )% | 129 | 149 | 139 | 120 | 137 | ||||||||||||||||||
Other trades (4) | (7 | )% | (4 | )% | 172 | 179 | 211 | 163 | 184 | ||||||||||||||||||
Total | 8 | % | (3 | )% | 683 | 704 | 812 | 628 | 633 | ||||||||||||||||||
Average Revenue Per Revenue Trade (2) | (6 | )% | — | $ | 7.27 | $ | 7.30 | $ | 7.24 | $ | 7.33 | $ | 7.74 | ||||||||||||||
(1) | Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity. | |
(2) | Includes all client trades that generate trading revenue (i.e., commission revenue or principal transaction revenue); also known as DART. | |
(3) | Includes eligible trades executed by clients who participate in one or more of the Company’s asset-based pricing relationships. | |
(4) | Includes all commission-free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products. | |
THE CHARLES SCHWAB CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
Net Interest Revenue Information | |||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
Average Balance |
Interest Revenue/ Expense |
Average Yield/ Rate |
Average Balance |
Interest Revenue/ Expense |
Average Yield/ Rate |
Average Balance |
Interest Revenue/ Expense |
Average Yield/ Rate |
Average Balance |
Interest Revenue/ Expense |
Average Yield/ Rate | ||||||||||||||||||||||||||||||||||||
Interest-earning assets | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 18,623 | $ | 94 | 1.98 | % | $ | 10,498 | $ | 33 | 1.25 | % | $ | 16,164 | $ | 217 | 1.78 | % | $ | 9,375 | $ | 72 | 1.03 | % | |||||||||||||||||||||||
Cash and investments segregated | 10,253 | 51 | 1.94 | % | 17,355 | 44 | 1.01 | % | 12,002 | 149 | 1.64 | % | 19,609 | 120 | 0.82 | % | |||||||||||||||||||||||||||||||
Broker-related receivables | 307 | 1 | 1.94 | % | 459 | 1 | 0.96 | % | 324 | 4 | 1.62 | % | 428 | 2 | 0.74 | % | |||||||||||||||||||||||||||||||
Receivables from brokerage clients | 20,224 | 217 | 4.19 | % | 16,498 | 151 | 3.63 | % | 19,629 | 600 | 4.03 | % | 15,861 | 415 | 3.50 | % | |||||||||||||||||||||||||||||||
Available for sale securities (1) | 55,283 | 328 | 2.34 | % | 45,906 | 187 | 1.62 | % | 52,797 | 859 | 2.16 | % | 55,070 | 615 | 1.49 | % | |||||||||||||||||||||||||||||||
Held to maturity securities | 137,065 | 887 | 2.57 | % | 107,557 | 606 | 2.24 | % | 129,490 | 2,420 | 2.48 | % | 99,523 | 1,691 | 2.27 | % | |||||||||||||||||||||||||||||||
Bank loans | 16,579 | 142 | 3.43 | % | 16,058 | 122 | 3.01 | % | 16,522 | 410 | 3.31 | % | 15,764 | 347 | 2.94 | % | |||||||||||||||||||||||||||||||
Total interest-earning assets | 258,334 | 1,720 | 2.63 | % | 214,331 | 1,144 | 2.12 | % | 246,928 | 4,659 | 2.50 | % | 215,630 | 3,262 | 2.02 | % | |||||||||||||||||||||||||||||||
Other interest revenue | 35 | 32 | 107 | 96 | |||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets | $ | 258,334 | $ | 1,755 | 2.69 | % | $ | 214,331 | $ | 1,176 | 2.18 | % | $ | 246,928 | $ | 4,766 | 2.56 | % | $ | 215,630 | $ | 3,358 | 2.08 | % | |||||||||||||||||||||||
Funding sources | |||||||||||||||||||||||||||||||||||||||||||||||
Bank deposits | $ | 208,666 | $ | 158 | 0.30 | % | $ | 163,039 | $ | 49 | 0.12 | % | $ | 193,010 | $ | 339 | 0.23 | % | $ | 163,475 | $ | 98 | 0.08 | % | |||||||||||||||||||||||
Payables to brokerage clients | 20,595 | 16 | 0.31 | % | 24,833 | 6 | 0.10 | % | 21,591 | 37 | 0.23 | % | 26,198 | 11 | 0.06 | % | |||||||||||||||||||||||||||||||
Short-term borrowings | — | — | — | 1,695 | 6 | 1.40 | % | 4,488 | 54 | 1.59 | % | 1,475 | 11 | 1.00 | % | ||||||||||||||||||||||||||||||||
Long-term debt | 5,790 | 51 | 3.52 | % | 3,436 | 30 | 3.46 | % | 5,053 | 131 | 3.46 | % | 3,349 | 89 | 3.55 | % | |||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 235,051 | 225 | 0.38 | % | 193,003 | 91 | 0.19 | % | 224,142 | 561 | 0.33 | % | 194,497 | 209 | 0.14 | % | |||||||||||||||||||||||||||||||
Non-interest-bearing funding sources | 23,283 | 21,328 | 22,786 | 21,133 | |||||||||||||||||||||||||||||||||||||||||||
Other interest expense | 3 | 3 | 8 | 14 | |||||||||||||||||||||||||||||||||||||||||||
Total funding sources | $ | 258,334 | $ | 228 | 0.36 | % | $ | 214,331 | $ | 94 | 0.18 | % | $ | 246,928 | $ | 569 | 0.31 | % | $ | 215,630 | $ | 223 | 0.14 | % | |||||||||||||||||||||||
Net interest revenue | $ | 1,527 | 2.33 | % | $ | 1,082 | 2.00 | % | $ | 4,197 | 2.25 | % | $ | 3,135 | 1.94 | % |
(1) | Amounts have been calculated based on amortized cost. | |
THE CHARLES SCHWAB CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
Asset Management and Administration Fees Information | |||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
Average Client Assets | Revenue |
Average Fee |
Average Client Assets | Revenue |
Average Fee |
Average Client Assets | Revenue |
Average Fee |
Average Client Assets | Revenue |
Average Fee | ||||||||||||||||||||||||||||||||||||
Schwab money market funds before fee waivers | $ | 130,202 | $ | 122 | 0.37 | % | $ | 158,927 | $ | 220 | 0.55 | % | $ | 142,177 | $ | 451 | 0.42 | % | $ | 160,230 | $ | 675 | 0.56 | % | |||||||||||||||||||||||
Fee waivers | — | (1 | ) | — | (10 | ) | |||||||||||||||||||||||||||||||||||||||||
Schwab money market funds | 130,202 | 122 | 0.37 | % | 158,927 | 219 | 0.55 | % | 142,177 | 451 | 0.42 | % | 160,230 | 665 | 0.55 | % | |||||||||||||||||||||||||||||||
Schwab equity and bond funds and ETFs | 219,137 | 67 | 0.12 | % | 164,011 | 56 | 0.14 | % | 206,058 | 195 | 0.13 | % | 151,579 | 163 | 0.14 | % | |||||||||||||||||||||||||||||||
Mutual Fund OneSource® and other non-transaction fee funds | 209,560 | 171 | 0.32 | % | 219,076 | 179 | 0.32 | % | 216,699 | 524 | 0.32 | % | 214,058 | 528 | 0.33 | % | |||||||||||||||||||||||||||||||
Other third-party mutual funds and ETFs (1) | 342,316 | 75 | 0.09 | % | 291,307 | 65 | 0.09 | % | 329,033 | 216 | 0.09 | % | 278,479 | 182 | 0.09 | % | |||||||||||||||||||||||||||||||
Total mutual funds and ETFs (2) | $ | 901,215 | 435 | 0.19 | % | $ | 833,321 | 519 | 0.25 | % | $ | 893,967 | 1,386 | 0.21 | % | $ | 804,346 | 1,538 | 0.26 | % | |||||||||||||||||||||||||||
Advice solutions (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Fee-based | $ | 234,338 | 294 | 0.50 | % | $ | 206,854 | 265 | 0.51 | % | $ | 228,326 | 859 | 0.50 | % | $ | 199,500 | 765 | 0.51 | % | |||||||||||||||||||||||||||
Non-fee-based | 65,146 | — | — | 50,758 | — | — | 62,377 | — | — | 46,785 | — | — | |||||||||||||||||||||||||||||||||||
Total advice solutions | $ | 299,484 | 294 | 0.39 | % | $ | 257,612 | 265 | 0.41 | % | $ | 290,703 | 859 | 0.40 | % | $ | 246,285 | 765 | 0.42 | % | |||||||||||||||||||||||||||
Other balance-based fees (3) | 400,048 | 63 | 0.06 | % | 424,280 | 67 | 0.06 | % | 404,596 | 191 | 0.06 | % | 406,442 | 192 | 0.06 | % | |||||||||||||||||||||||||||||||
Other (4) | 17 | 10 | 38 | 34 | |||||||||||||||||||||||||||||||||||||||||||
Total asset management and administration fees | $ | 809 | $ | 861 | $ | 2,474 | $ | 2,529 |
(1) | Includes Schwab ETF OneSource™. | |
(2) | Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private Client, Schwab Managed Portfolios, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, and Schwab Intelligent Advisory®, launched in March 2017; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Beginning the fourth quarter of 2017, a prospective change was made to add non-fee based average assets from managed portfolios. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report. | |
(3) | Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees. | |
(4) | Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based. | |
THE CHARLES SCHWAB CORPORATION | |||||||||||||||||||||||||||
Growth in Client Assets and Accounts | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Q3-18 % Change | 2018 | 2017 | |||||||||||||||||||||||||
vs. | vs. | Third | Second | First | Fourth | Third | |||||||||||||||||||||
(In billions, at quarter end, except as noted) | Q3-17 | Q2-18 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||
Assets in client accounts | |||||||||||||||||||||||||||
Schwab One®, certain cash equivalents and bank deposits | 23 | % | 5 | % | $ | 239.5 | $ | 228.2 | $ | 219.4 | $ | 198.6 | $ | 195.0 | |||||||||||||
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) | |||||||||||||||||||||||||||
Money market funds (1) | (19 | )% | (4 | )% | 128.5 | 134.2 | 145.0 | 163.6 | 159.2 | ||||||||||||||||||
Equity and bond funds (2) | 19 | % | 6 | % | 91.7 | 86.6 | 83.4 | 82.5 | 77.3 | ||||||||||||||||||
Total proprietary mutual funds | (7 | )% | — | 220.2 | 220.8 | 228.4 | 246.1 | 236.5 | |||||||||||||||||||
Mutual Fund Marketplace® (3) | |||||||||||||||||||||||||||
Mutual Fund OneSource® and other non-transaction fee funds | (4 | )% | — | 212.6 | 212.5 | 221.6 | 225.2 | 221.2 | |||||||||||||||||||
Mutual fund clearing services | (23 | )% | 4 | % | 182.2 | 175.3 | 178.3 | 265.4 | 236.5 | ||||||||||||||||||
Other third-party mutual funds | 13 | % | 3 | % | 740.1 | 716.1 | 693.4 | 682.6 | 652.5 | ||||||||||||||||||
Total Mutual Fund Marketplace | 2 | % | 3 | % | 1,134.9 | 1,103.9 | 1,093.3 | 1,173.2 | 1,110.2 | ||||||||||||||||||
Total mutual fund assets | 1 | % | 2 | % | 1,355.1 | 1,324.7 | 1,321.7 | 1,419.3 | 1,346.7 | ||||||||||||||||||
Exchange-traded funds (ETFs) | |||||||||||||||||||||||||||
Proprietary ETFs (2) | 43 | % | 9 | % | 125.2 | 114.8 | 104.5 | 99.1 | 87.8 | ||||||||||||||||||
Schwab ETF OneSource™ (3) | 25 | % | 8 | % | 33.3 | 30.8 | 29.8 | 28.7 | 26.6 | ||||||||||||||||||
Other third-party ETFs | 18 | % | 5 | % | 338.6 | 322.1 | 314.7 | 308.8 | 286.7 | ||||||||||||||||||
Total ETF assets | 24 | % | 6 | % | 497.1 | 467.7 | 449.0 | 436.6 | 401.1 | ||||||||||||||||||
Equity and other securities | 18 | % | 7 | % | 1,202.4 | 1,121.7 | 1,075.9 | 1,080.0 | 1,016.9 | ||||||||||||||||||
Fixed income securities | 22 | % | 6 | % | 290.4 | 275.1 | 258.8 | 245.6 | 238.4 | ||||||||||||||||||
Margin loans outstanding | 23 | % | 2 | % | (20.8 | ) | (20.4 | ) | (19.4 | ) | (18.3 | ) | (16.9 | ) | |||||||||||||
Total client assets | 12 | % | 5 | % | $ | 3,563.7 | $ | 3,397.0 | $ | 3,305.4 | $ | 3,361.8 | $ | 3,181.2 | |||||||||||||
Client assets by business | |||||||||||||||||||||||||||
Investor Services | 10 | % | 5 | % | $ | 1,876.9 | $ | 1,784.8 | $ 1,740.8 | $ | 1,810.9 | $ | 1,707.0 | ||||||||||||||
Advisor Services | 14 | % | 5 | % | 1,686.8 | 1,612.2 | 1,564.6 | 1,550.9 | 1,474.2 | ||||||||||||||||||
Total client assets | 12 | % | 5 | % | $ | 3,563.7 | $ | 3,397.0 | $ | 3,305.4 | $ | 3,361.8 | $ | 3,181.2 | |||||||||||||
Net growth in assets in client accounts (for the quarter ended) | |||||||||||||||||||||||||||
Net new assets by business | |||||||||||||||||||||||||||
Investor Services (4) | 19 | % | 103 | % | $ | 27.8 | $ | 13.7 | $ | (50.8 | ) | $ | 46.4 | $ | 23.4 | ||||||||||||
Advisor Services | (9 | )% | (15 | )% | 25.7 | 30.2 | 32.0 | 31.7 | 28.2 | ||||||||||||||||||
Total net new assets | 4 | % | 22 | % | $ | 53.5 | $ | 43.9 | $ | (18.8 | ) | $ | 78.1 | $ | 51.6 | ||||||||||||
Net market gains (losses) | 27 | % | 137 | % | 113.2 | 47.7 | (37.6 | ) | 102.5 | 89.0 | |||||||||||||||||
Net growth (decline) | 19 | % | 82 | % | $ | 166.7 | $ | 91.6 | $ | (56.4 | ) | $ | 180.6 | $ | 140.6 | ||||||||||||
New brokerage accounts (in thousands, for the quarter ended) | 10 | % | (4 | )% | 369 | 384 | 443 | 386 | 336 | ||||||||||||||||||
Clients (in thousands) | |||||||||||||||||||||||||||
Active Brokerage Accounts (5) | 8 | % | 2 | % | 11,423 | 11,202 | 11,005 | 10,755 | 10,565 | ||||||||||||||||||
Banking Accounts | 9 | % | 3 | % | 1,283 | 1,250 | 1,221 | 1,197 | 1,176 | ||||||||||||||||||
Corporate Retirement Plan Participants | 5 | % | 2 | % | 1,627 | 1,599 | 1,594 | 1,568 | 1,552 | ||||||||||||||||||
(1) | Total client assets in purchased money market funds are located at: http://www.aboutschwab.com/investor-relations. | |
(2) | Includes proprietary equity and bond funds and ETFs held on and off the Schwab platform. As of September 30, 2018, off-platform equity and bond funds and ETFs were $11.9 billion and $30.4 billion, respectively. | |
(3) | Excludes all proprietary mutual funds and ETFs. | |
(4) | Second quarter of 2018 includes outflows of $9.5 billion from certain mutual fund clearing services clients. First quarter of 2018 includes outflows of $84.4 billion from certain mutual fund clearing services clients. Fourth quarter of 2017 includes an inflow of $16.2 billion from a mutual fund clearing services client. | |
(5) | In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000. | |
The Charles Schwab Corporation Monthly Activity Report For September 2018 | |||||||||||||||||||||||||||||||||||||||||||
2017 | 2018 | Change | |||||||||||||||||||||||||||||||||||||||||
Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Mo. | Yr. | |||||||||||||||||||||||||||||
Market Indices (at month end) | |||||||||||||||||||||||||||||||||||||||||||
Dow Jones Industrial Average | 22,405 | 23,377 | 24,272 | 24,719 | 26,149 | 25,029 | 24,103 | 24,163 | 24,416 | 24,271 | 25,415 | 25,965 | 26,458 | 2% | 18% | ||||||||||||||||||||||||||||
Nasdaq Composite | 6,496 | 6,728 | 6,874 | 6,903 | 7,411 | 7,273 | 7,063 | 7,066 | 7,442 | 7,510 | 7,672 | 8,110 | 8,046 | (1)% | 24% | ||||||||||||||||||||||||||||
Standard & Poor’s 500 | 2,519 | 2,575 | 2,648 | 2,674 | 2,824 | 2,714 | 2,641 | 2,648 | 2,705 | 2,718 | 2,816 | 2,902 | 2,914 | — | 16% | ||||||||||||||||||||||||||||
Client Assets (in billions of dollars) (1) | |||||||||||||||||||||||||||||||||||||||||||
Beginning Client Assets | 3,122.3 | 3,181.2 | 3,256.5 | 3,318.8 | 3,361.8 | 3,480.5 | 3,328.8 | 3,305.4 | 3,312.1 | 3,378.1 | 3,397.0 | 3,477.9 | 3,555.9 | ||||||||||||||||||||||||||||||
Net New Assets (1) | 17.8 | 35.4 | 15.7 | 27.0 | 11.5 | (50.5 | ) | 20.2 | 0.4 | 19.4 | 24.1 | 16.3 | 20.8 | 16.4 | (21)% | (8)% | |||||||||||||||||||||||||||
Net Market Gains (Losses) | 41.1 | 39.9 | 46.6 | 16.0 | 107.2 | (101.2 | ) | (43.6 | ) | 6.3 | 46.6 | (5.2 | ) | 64.6 | 57.2 | (8.6 | ) | ||||||||||||||||||||||||||
Total Client Assets (at month end) | 3,181.2 | 3,256.5 | 3,318.8 | 3,361.8 | 3,480.5 | 3,328.8 | 3,305.4 | 3,312.1 | 3,378.1 | 3,397.0 | 3,477.9 | 3,555.9 | 3,563.7 | — | 12% | ||||||||||||||||||||||||||||
Core Net New Assets (2) | 17.8 | 19.2 | 15.7 | 27.0 | 18.7 | 21.3 | 25.6 | 9.9 | 19.4 | 24.1 | 16.3 | 20.8 | 16.4 | (21)% | (8)% | ||||||||||||||||||||||||||||
Receiving Ongoing Advisory Services (at month end) | |||||||||||||||||||||||||||||||||||||||||||
Investor Services | 255.0 | 259.8 | 265.1 | 268.7 | 278.6 | 273.0 | 273.2 | 274.7 | 279.1 | 280.0 | 287.0 | 292.0 | 292.7 | — | 15% | ||||||||||||||||||||||||||||
Advisor Services (3) | 1,358.6 | 1,382.6 | 1,410.8 | 1,431.1 | 1,483.7 | 1,449.5 | 1,444.4 | 1,451.6 | 1,478.0 | 1,488.7 | 1,525.5 | 1,555.3 | 1,559.2 | — | 15% | ||||||||||||||||||||||||||||
Client Accounts (at month end, in thousands) | |||||||||||||||||||||||||||||||||||||||||||
Active Brokerage Accounts (4) | 10,565 | 10,603 | 10,671 | 10,755 | 10,858 | 10,936 | 11,005 | 11,081 | 11,145 | 11,202 | 11,243 | 11,310 | 11,423 | 1% | 8% | ||||||||||||||||||||||||||||
Banking Accounts | 1,176 | 1,181 | 1,192 | 1,197 | 1,210 | 1,218 | 1,221 | 1,230 | 1,240 | 1,250 | 1,262 | 1,274 | 1,283 | 1% | 9% | ||||||||||||||||||||||||||||
Corporate Retirement Plan Participants | 1,552 | 1,556 | 1,564 | 1,568 | 1,580 | 1,580 | 1,594 | 1,599 | 1,599 | 1,599 | 1,611 | 1,621 | 1,627 | — | 5% | ||||||||||||||||||||||||||||
Client Activity | |||||||||||||||||||||||||||||||||||||||||||
New Brokerage Accounts (in thousands) | 106 | 117 | 122 | 147 | 165 | 138 | 140 | 141 | 122 | 121 | 118 | 132 | 119 | (10)% | 12% | ||||||||||||||||||||||||||||
Inbound Calls (in thousands) | 1,709 | 1,988 | 1,804 | 2,046 | 2,303 | 2,005 | 2,145 | 2,034 | 1,852 | 1,814 | 1,849 | 1,964 | 1,715 | (13)% | — | ||||||||||||||||||||||||||||
Web Logins (in thousands) | 39,639 | 51,454 | 50,583 | 54,486 | 64,488 | 60,830 | 58,906 | 55,980 | 56,234 | 56,491 | 57,137 | 62,797 | 53,923 | (14)% | 36% | ||||||||||||||||||||||||||||
Client Cash as a Percentage of Client Assets (5) | 11.1 | % | 10.9 | % | 10.8 | % | 10.8 | % | 10.4 | % | 10.9 | % | 11.0 | % | 10.9 | % | 10.6 | % | 10.7 | % | 10.5 | % | 10.4 | % | 10.3 | % | (10) bp | (80) bp | |||||||||||||||
Mutual Fund and Exchange-Traded Fund | |||||||||||||||||||||||||||||||||||||||||||
Net Buys (Sells) (6, 7) (in millions of dollars) | |||||||||||||||||||||||||||||||||||||||||||
Large Capitalization Stock | (138 | ) | (51 | ) | 85 | 1,023 | 496 | 715 | (158 | ) | 410 | 953 | 981 | 486 | 918 | 311 | |||||||||||||||||||||||||||
Small / Mid Capitalization Stock | 45 | 378 | (144 | ) | 274 | (125 | ) | (167 | ) | 130 | 359 | 753 | 1,195 | 768 | (186 | ) | 151 | ||||||||||||||||||||||||||
International | 1,549 | 1,913 | 2,627 | 1,852 | 4,306 | 2,685 | 1,546 | 809 | 372 | (498 | ) | (529 | ) | 186 | (88 | ) | |||||||||||||||||||||||||||
Specialized | 465 | 655 | 58 | 424 | 1,569 | 187 | 326 | 122 | (19 | ) | 383 | 520 | (245 | ) | 73 | ||||||||||||||||||||||||||||
Hybrid | 460 | (118 | ) | (263 | ) | 307 | 978 | (88 | ) | 529 | (541 | ) | (241 | ) | (288 | ) | (548 | ) | (678 | ) | (324 | ) | |||||||||||||||||||||
Taxable Bond | 3,809 | 3,466 | 2,389 | 2,561 | 3,284 | 155 | 2,117 | 1,661 | 1,002 | 928 | 879 | 965 | 1,371 | ||||||||||||||||||||||||||||||
Tax-Free Bond | 494 | 452 | 371 | 341 | 1,247 | 211 | 247 | (113 | ) | 449 | 588 | 306 | 559 | 262 | |||||||||||||||||||||||||||||
Net Buy (Sell) Activity (in millions of dollars) | |||||||||||||||||||||||||||||||||||||||||||
Mutual Funds (6) | 3,002 | 2,401 | 882 | 775 | 4,843 | (417 | ) | 1,976 | (36 | ) | (88 | ) | 555 | (522 | ) | (1,936 | ) | (1,538 | ) | ||||||||||||||||||||||||
Exchange-Traded Funds (7) | 3,682 | 4,294 | 4,241 | 6,007 | 6,912 | 4,115 | 2,761 | 2,743 | 3,357 | 2,734 | 2,404 | 3,455 | 3,294 | ||||||||||||||||||||||||||||||
Money Market Funds | (374 | ) | 213 | 1,166 | 2,968 | (5,730 | ) | (4,292 | ) | (9,100 | ) | (4,156 | ) | (2,245 | ) | (4,919 | ) | (4,801 | ) | 704 | (1,883 | ) | |||||||||||||||||||||
Average Interest-Earning Assets (8) | |||||||||||||||||||||||||||||||||||||||||||
(in millions of dollars) | 216,472 | 219,658 | 223,292 | 228,540 | 234,619 | 239,922 | 241,049 | 239,833 | 242,584 | 249,432 | 254,211 | 259,137 | 261,741 | 1% | 21% |
(1) | April, March, February, and January 2018 include outflows of $9.5 billion, $5.4 billion, $71.8 billion, and $7.2 billion, respectively, from certain mutual fund clearing services clients. October 2017 includes an inflow of $16.2 billion from a mutual fund clearing services client. | |
(2) | Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods. | |
(3) | Excludes Retirement Business Services. | |
(4) | In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000. | |
(5) | Schwab One®, certain cash equivalents, bank deposits, and money market fund balances as a percentage of total client assets. | |
(6) | 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. | |
(7) | Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs. | |
(8) | Represents average total interest-earning assets on the Company’s balance sheet. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20181015005197/en/
Contacts:
MEDIA:
Mayura Hooper, 415-667-1525
or
INVESTORS/ANALYSTS:
Rich
Fowler, 415-667-1841