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Schwab Reports Record Quarterly Net Income of $923 Million, Up 49%

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.

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Three Months Ended
September 30,

%

Nine Months Ended
September 30,

%
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
September 30,

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$1,5272.33%$1,0822.00%$4,1972.25%$3,1351.94%
(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

20172018

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)17.819.215.727.018.721.325.69.919.424.116.320.816.4(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.

Contacts:

Charles Schwab
MEDIA:
Mayura Hooper, 415-667-1525
or
INVESTORS/ANALYSTS:
Rich Fowler, 415-667-1841

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