The Charles Schwab Corporation announced today that its net income for
the fourth quarter of 2012 was $211 million, down 15% from $247 million
for the third quarter of 2012, and up 29% from $163 million for the
fourth quarter of 2011. Net income for the twelve months ended
December 31, 2012 was $928 million, up 7% year-over-year. Schwab’s 2012
results include an after-tax gain of approximately $44 million relating
to the resolution of a vendor dispute and a non-recurring state tax
benefit of approximately $20 million, which were recorded in the second
and third quarters, respectively.
|
|
|
Three Months Ended
|
|
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
--December 31,--
|
|
%
|
|
--December 31,--
|
|
|
|
%
|
|
Financial Highlights
|
|
2012
|
|
2011
|
|
Change
|
|
2012
|
|
2011
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues (in millions)
|
|
$
|
1,215
|
|
|
$
|
1,113
|
|
|
9
|
%
|
|
$
|
4,883
|
|
|
$
|
4,691
|
|
|
4
|
%
|
|
Net income (in millions)
|
|
$
|
211
|
|
|
$
|
163
|
|
|
29
|
%
|
|
$
|
928
|
|
|
$
|
864
|
|
|
7
|
%
|
|
Diluted earnings per common share
|
|
$
|
.15
|
|
|
$
|
.13
|
|
|
15
|
%
|
|
$
|
.69
|
|
|
$
|
.70
|
|
|
(1
|
%)
|
|
Pre-tax profit margin
|
|
|
28.3
|
%
|
|
|
22.6
|
%
|
|
|
|
|
29.7
|
%
|
|
|
29.7
|
%
|
|
|
|
Return on average common stockholders’ equity (annualized)
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
|
|
11
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
CEO and President Walt Bettinger commented, “Our ‘through clients’ eyes’
strategy helped build investor trust in Schwab and supported another
year of outstanding growth for our company in 2012. Our individual
client loyalty scores reached new highs during the year, and our client
metrics ended strongly, with December core net new assets totaling a
record $22.6 billion, 28% higher than the previous record set in
March 2008. Core net new assets totaled $112.4 billion for 2012, up 37%
over the prior year. We ended the year with a record $1.95 trillion in
total client assets, up 16% over December 2011. We added 900,000 new
brokerage accounts to our client base during 2012, and active brokerage
accounts reached a record 8.8 million at year-end, up 3% year-over-year.
In addition, we served 865,000 banking accounts and 1.6 million
corporate retirement plan participants as of month-end December 2012, up
11% and 5%, respectively.”
“By continuing to challenge the status quo in investing services we
believe that both our clients and the company win,” Mr. Bettinger said.
“Our progress in completing and delivering a number of significant
innovations in our client service capabilities remained on track
throughout 2012. For example, our new index-based 401(k) offering has 41
companies committed to participate and more than 200 actively
considering enrollment; our new independent branches were open in 12
locations by year-end; and our expanded mobile and tablet solutions are
already being utilized by over half a million clients.”
Mr. Bettinger added, “Just as clients trust us to find a better way to
serve them, our stockholders trust us to use resources effectively as we
work to grow the company and its earnings. With environmental pressures
continuing to slow our revenue progress in 2012, our enduring commitment
to expense discipline enabled Schwab to allocate over $160 million to
projects across our businesses and still deliver a 30% pre-tax profit
margin for the year.”
CFO Joe Martinetto noted, “In addition to successfully growing our
client base in 2012, we made further progress in building non
rate-sensitive sources of revenue, including an 11% increase in fees
from rising balances in our proprietary advice solutions. As a result,
despite further declines in interest rates and relatively muted investor
trading activity, our full-year performance included increases in both
net interest revenue and asset management and administration fees, and
4% overall revenue growth. Our fourth quarter results illustrate the
company’s improved momentum heading into 2013, with year-over-year
revenue growth of 9% and a 29% increase in net income. Looking ahead, we
believe that Schwab’s financial story will remain driven by the three
key themes of strong business growth, diversified revenue streams, and
expense discipline.”
Mr. Martinetto concluded, “Our work to further strengthen the company’s
balance sheet while maximizing its contribution to earnings power
continued throughout 2012. During the fourth quarter, we acted to reduce
the cost of outstanding long-term debt by redeeming the remaining
$494 million of our 4.95% Senior Notes due in 2014, with the cost of the
redemption offset by gains from the sale of selected investment
portfolio securities. Our actions also included the issuance of
$350 million of new Senior Notes with a coupon of 0.85% and a 2015 due
date.”
Business highlights for the fourth quarter (data
as of quarter-end unless otherwise noted):
Investor Services
-
Net new accounts for the quarter totaled approximately 4,000, down 69%
year-over-year. Total accounts reached 6.1 million as of December 31,
2012, up 7% year-over-year.
-
Launched an enhanced On Investing® application for
the iPad®, providing access to articles from Schwab’s On
Investing® magazine, Schwab’s latest research,
expert perspectives and investment guidance all in one place.
Institutional Services
Advisor Services
-
Launched the Schwab Advisor Center® application for the iPad®,
enabling advisors to view key client data such as balances, positions,
and transactions while away from the office.
Other Institutional Services
-
Launched Compliance Solutions, an offering for corporate clients which
combines the capabilities of both Designated Brokerage Services and
recently acquired Compliance11 to create a comprehensive compliance
and employee trade monitoring solution.
Products and Infrastructure
-
For Charles Schwab Bank:
-
Balance sheet assets = $85.8 billion, up 30% year-over-year.
-
Outstanding mortgage and home equity loans = $9.8 billion, up 8%
year-over-year.
-
First mortgage originations through its loan program during the
quarter = $2.2 billion, a new record.
-
Delinquency, nonaccrual, and loss reserve ratios for Schwab Bank’s
loan portfolio = 0.77%, 0.45% and 0.52%, respectively, at
month-end December.
-
Schwab Bank High Yield Investor Checking® accounts =
671,000, with $11.6 billion in balances.
-
Client assets managed by Windhaven® totaled $13.6 billion,
up 9% from the third quarter of 2012.
-
Total assets under management in Schwab ETFs™ =
$8.6 billion. Total assets in Schwab Managed Portfolios-ETFs =
$2.4 billion.
-
Completed the acquisition of ThomasPartners, Inc., a growth and
dividend income-focused asset management firm with $2.4 billion in
assets under management as of December 31, 2012.
-
Launched the ETF Education Exchange™ (www.schwabetfeducationexchange.com),
a new website designed to close the knowledge gap in ETFs by
aggregating educational content, research and market insights from ETF
industry leaders.
-
Expanded client access to fixed income securities by adding new
municipal bond issues from Piper Jaffray to Schwab’s BondSource®
platform.
-
Launched a new Order and Execution Management System, which leverages
optionsXpress’ order routing capabilities to help create better
execution opportunities for clients.
iPad is a trademark of Apple Inc., registered in the U.S. and other
countries.
Supporting schedules are either attached or located at: www.aboutschwab.com/investor_relations/financial_reports
Forward Looking Statements
This press release contains forward looking statements relating to
enrollment and participation in the company’s new index-based 401(k)
offering, growth of the company’s business, revenues, earnings and
expense discipline. Achievement of these expectations 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 enrollment
rate in the company’s index-based 401(k) offering, general market
conditions, including the level of interest rates, equity valuations and
trading activity; net interest margin; level of expenses; the company’s
ability to attract and retain clients and grow client
assets/relationships; competitive pressures on rates and fees; the level
of client assets, including cash balances; the company’s ability to
monetize client assets; the company’s ability to develop and launch new
products, services and capabilities in a timely and successful manner;
capital needs and management; the impact of changes in market conditions
on money market fund fee waivers, revenues, expenses and pre-tax
margins; the effect of adverse developments in litigation or regulatory
matters and the extent of any charges associated with legal matters; any
adverse impact of financial reform legislation and related regulations;
and other factors set forth in the company’s Form 10-Q for the period
ended September 30, 2012.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of
financial services, with more than 300 offices and 8.8 million active
brokerage accounts, 1.6 million corporate retirement plan participants,
865,000 banking accounts, and $1.95 trillion in client assets. Through
its operating subsidiaries, the company provides a full range of
securities brokerage, banking, money management and financial advisory
services to individual investors and independent investment advisors.
Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,
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; compliance and trade monitoring solutions; 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
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
Asset management and administration fees
|
|
$
|
539
|
|
|
$
|
458
|
|
|
$
|
2,043
|
|
|
$
|
1,928
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest revenue
|
|
|
467
|
|
|
|
436
|
|
|
|
1,914
|
|
|
|
1,900
|
|
|
Interest expense
|
|
|
(34
|
)
|
|
|
(41
|
)
|
|
|
(150
|
)
|
|
|
(175
|
)
|
|
Net interest revenue
|
|
|
433
|
|
|
|
395
|
|
|
|
1,764
|
|
|
|
1,725
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading revenue
|
|
|
202
|
|
|
|
233
|
|
|
|
868
|
|
|
|
927
|
|
|
Other
|
|
|
47
|
|
|
|
41
|
|
|
|
256
|
|
|
|
160
|
|
|
Provision for loan losses
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
(16
|
)
|
|
|
(18
|
)
|
|
Net impairment losses on securities (1) |
|
|
(4
|
)
|
|
|
(9
|
)
|
|
|
(32
|
)
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
1,215
|
|
|
|
1,113
|
|
|
|
4,883
|
|
|
|
4,691
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Excluding Interest
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
450
|
|
|
|
442
|
|
|
|
1,803
|
|
|
|
1,732
|
|
|
Professional services
|
|
|
101
|
|
|
|
99
|
|
|
|
388
|
|
|
|
387
|
|
|
Occupancy and equipment
|
|
|
78
|
|
|
|
79
|
|
|
|
311
|
|
|
|
301
|
|
|
Advertising and market development
|
|
|
68
|
|
|
|
69
|
|
|
|
241
|
|
|
|
228
|
|
|
Communications
|
|
|
54
|
|
|
|
54
|
|
|
|
220
|
|
|
|
220
|
|
|
Depreciation and amortization
|
|
|
50
|
|
|
|
48
|
|
|
|
196
|
|
|
|
155
|
|
|
Class action litigation and regulatory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
Other
|
|
|
70
|
|
|
|
70
|
|
|
|
274
|
|
|
|
269
|
|
|
Total expenses excluding interest
|
|
|
871
|
|
|
|
861
|
|
|
|
3,433
|
|
|
|
3,299
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
344
|
|
|
|
252
|
|
|
|
1,450
|
|
|
|
1,392
|
|
|
Taxes on income
|
|
|
133
|
|
|
|
89
|
|
|
|
522
|
|
|
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
211
|
|
|
|
163
|
|
|
|
928
|
|
|
|
864
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
22
|
|
|
|
-
|
|
|
|
45
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Available to Common Stockholders
|
|
$
|
189
|
|
|
$
|
163
|
|
|
$
|
883
|
|
|
$
|
864
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Shares Outstanding — Diluted
|
|
|
1,278
|
|
|
|
1,271
|
|
|
|
1,275
|
|
|
|
1,229
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share — Basic
|
|
$
|
.15
|
|
|
$
|
.13
|
|
|
$
|
.69
|
|
|
$
|
.70
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share — Diluted
|
|
$
|
.15
|
|
|
$
|
.13
|
|
|
$
|
.69
|
|
|
$
|
.70
|
|
|
(1) |
|
Net impairment losses on securities include total
other-than-temporary impairment losses of $0 million and $5 million,
net of $(4) million and $(4) million recognized in other
comprehensive income, for the three months ended December 31, 2012
and 2011, respectively. Net impairment losses on securities include
total other-than-temporary impairment losses of $15 million and $18
million, net of $(17) million and $(13) million recognized in other
comprehensive income, for the twelve months ended December 31, 2012
and 2011, respectively.
|
|
|
|
|
|
See Note to Consolidated Statements of Income, Financial and
Operating Highlights, and Net Interest Revenue Information.
|
|
|
|
|
|
THE CHARLES SCHWAB CORPORATION
|
|
Financial and Operating Highlights
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4-12 % change
|
|
2012
|
|
2011
|
|
|
|
vs.
|
|
vs.
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
(In millions, except per share amounts and as noted)
|
|
Q4-11
|
|
Q3-12
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset management and administration fees
|
|
18
|
%
|
|
3
|
%
|
|
$
|
539
|
|
|
$
|
524
|
|
|
$
|
496
|
|
|
$
|
484
|
|
|
$
|
458
|
|
|
Net interest revenue
|
|
10
|
%
|
|
(1
|
%)
|
|
|
433
|
|
|
|
439
|
|
|
|
458
|
|
|
|
434
|
|
|
|
395
|
|
|
Trading revenue
|
|
(13
|
%)
|
|
(1
|
%)
|
|
|
202
|
|
|
|
204
|
|
|
|
219
|
|
|
|
243
|
|
|
|
233
|
|
|
Other (1) |
|
15
|
%
|
|
12
|
%
|
|
|
47
|
|
|
|
42
|
|
|
|
121
|
|
|
|
46
|
|
|
|
41
|
|
|
Provision for loan losses
|
|
(60
|
%)
|
|
(80
|
%)
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(5
|
)
|
|
Net impairment losses on securities
|
|
(56
|
%)
|
|
33
|
%
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
(7
|
)
|
|
|
(18
|
)
|
|
|
(9
|
)
|
|
Total net revenues
|
|
9
|
%
|
|
2
|
%
|
|
|
1,215
|
|
|
|
1,196
|
|
|
|
1,283
|
|
|
|
1,189
|
|
|
|
1,113
|
|
|
Expenses Excluding Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
2
|
%
|
|
2
|
%
|
|
|
450
|
|
|
|
442
|
|
|
|
446
|
|
|
|
465
|
|
|
|
442
|
|
|
Professional services
|
|
2
|
%
|
|
3
|
%
|
|
|
101
|
|
|
|
98
|
|
|
|
93
|
|
|
|
96
|
|
|
|
99
|
|
|
Occupancy and equipment
|
|
(1
|
%)
|
|
1
|
%
|
|
|
78
|
|
|
|
77
|
|
|
|
80
|
|
|
|
76
|
|
|
|
79
|
|
|
Advertising and market development
|
|
(1
|
%)
|
|
39
|
%
|
|
|
68
|
|
|
|
49
|
|
|
|
57
|
|
|
|
67
|
|
|
|
69
|
|
|
Communications
|
|
-
|
|
|
2
|
%
|
|
|
54
|
|
|
|
53
|
|
|
|
55
|
|
|
|
58
|
|
|
|
54
|
|
|
Depreciation and amortization
|
|
4
|
%
|
|
-
|
|
|
|
50
|
|
|
|
50
|
|
|
|
48
|
|
|
|
48
|
|
|
|
48
|
|
|
Other
|
|
-
|
|
|
6
|
%
|
|
|
70
|
|
|
|
66
|
|
|
|
72
|
|
|
|
66
|
|
|
|
70
|
|
|
Total expenses excluding interest
|
|
1
|
%
|
|
4
|
%
|
|
|
871
|
|
|
|
835
|
|
|
|
851
|
|
|
|
876
|
|
|
|
861
|
|
|
Income before taxes on income
|
|
37
|
%
|
|
(5
|
%)
|
|
|
344
|
|
|
|
361
|
|
|
|
432
|
|
|
|
313
|
|
|
|
252
|
|
|
Taxes on income (2) |
|
49
|
%
|
|
17
|
%
|
|
|
133
|
|
|
|
114
|
|
|
|
157
|
|
|
|
118
|
|
|
|
89
|
|
|
Net Income
|
|
29
|
%
|
|
(15
|
%)
|
|
$
|
211
|
|
|
$
|
247
|
|
|
$
|
275
|
|
|
$
|
195
|
|
|
$
|
163
|
|
|
Preferred stock dividends
|
|
N/M
|
|
|
144
|
%
|
|
|
22
|
|
|
|
9
|
|
|
|
14
|
|
|
|
-
|
|
|
|
-
|
|
|
Net Income Available to Common Stockholders
|
|
16
|
%
|
|
(21
|
%)
|
|
$
|
189
|
|
|
$
|
238
|
|
|
$
|
261
|
|
|
$
|
195
|
|
|
$
|
163
|
|
|
Basic earnings per common share
|
|
15
|
%
|
|
(21
|
%)
|
|
$
|
.15
|
|
|
$
|
.19
|
|
|
$
|
.20
|
|
|
$
|
.15
|
|
|
$
|
.13
|
|
|
Diluted earnings per common share
|
|
15
|
%
|
|
(21
|
%)
|
|
$
|
.15
|
|
|
$
|
.19
|
|
|
$
|
.20
|
|
|
$
|
.15
|
|
|
$
|
.13
|
|
|
Dividends declared per common share
|
|
-
|
|
|
-
|
|
|
$
|
.06
|
|
|
$
|
.06
|
|
|
$
|
.06
|
|
|
$
|
.06
|
|
|
$
|
.06
|
|
|
Weighted-average common shares outstanding - diluted
|
|
1
|
%
|
|
-
|
|
|
|
1,278
|
|
|
|
1,275
|
|
|
|
1,274
|
|
|
|
1,273
|
|
|
|
1,271
|
|
|
Performance Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit margin
|
|
|
|
|
|
|
28.3
|
%
|
|
|
30.2
|
%
|
|
|
33.7
|
%
|
|
|
26.3
|
%
|
|
|
22.6
|
%
|
|
Return on average common stockholders’ equity (annualized) (3) |
|
|
|
|
|
|
9
|
%
|
|
|
11
|
%
|
|
|
13
|
%
|
|
|
10
|
%
|
|
|
8
|
%
|
|
Financial Condition (at quarter end, in billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and investments segregated
|
|
10
|
%
|
|
14
|
%
|
|
$
|
28.5
|
|
|
$
|
25.0
|
|
|
$
|
22.7
|
|
|
$
|
26.9
|
|
|
$
|
26.0
|
|
|
Receivables from brokerage clients
|
|
22
|
%
|
|
13
|
%
|
|
$
|
13.5
|
|
|
$
|
11.9
|
|
|
$
|
12.0
|
|
|
$
|
11.2
|
|
|
$
|
11.1
|
|
|
Loans to banking clients
|
|
9
|
%
|
|
6
|
%
|
|
$
|
10.7
|
|
|
$
|
10.1
|
|
|
$
|
9.8
|
|
|
$
|
9.8
|
|
|
$
|
9.8
|
|
|
Total assets
|
|
23
|
%
|
|
14
|
%
|
|
$
|
133.6
|
|
|
$
|
117.7
|
|
|
$
|
111.8
|
|
|
$
|
111.5
|
|
|
$
|
108.6
|
|
|
Deposits from banking clients
|
|
30
|
%
|
|
15
|
%
|
|
$
|
79.4
|
|
|
$
|
68.8
|
|
|
$
|
66.3
|
|
|
$
|
62.3
|
|
|
$
|
60.9
|
|
|
Payables to brokerage clients
|
|
14
|
%
|
|
16
|
%
|
|
$
|
40.3
|
|
|
$
|
34.8
|
|
|
$
|
31.8
|
|
|
$
|
36.4
|
|
|
$
|
35.5
|
|
|
Long-term debt
|
|
(20
|
%)
|
|
(11
|
%)
|
|
$
|
1.6
|
|
|
$
|
1.8
|
|
|
$
|
2.0
|
|
|
$
|
2.0
|
|
|
$
|
2.0
|
|
|
Stockholders' equity (4) |
|
25
|
%
|
|
1
|
%
|
|
$
|
9.6
|
|
|
$
|
9.5
|
|
|
$
|
9.1
|
|
|
$
|
8.3
|
|
|
$
|
7.7
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time equivalent employees (at quarter end, in thousands)
|
|
(2
|
%)
|
|
1
|
%
|
|
|
13.8
|
|
|
|
13.6
|
|
|
|
13.7
|
|
|
|
14.0
|
|
|
|
14.1
|
|
|
Annualized net revenues per average full-time equivalent employee
(in thousands)
|
|
12
|
%
|
|
1
|
%
|
|
$
|
355
|
|
|
$
|
352
|
|
|
$
|
372
|
|
|
$
|
340
|
|
|
$
|
316
|
|
|
Capital expenditures - cash purchases of equipment, office
facilities, and property, net (in millions)
|
|
(27
|
%)
|
|
21
|
%
|
|
$
|
40
|
|
|
$
|
33
|
|
|
$
|
31
|
|
|
$
|
34
|
|
|
$
|
55
|
|
|
Clients’ Daily Average Trades (in thousands) (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue trades (6) |
|
(14
|
%)
|
|
2
|
%
|
|
|
265.7
|
|
|
|
261.5
|
|
|
|
285.2
|
|
|
|
318.4
|
|
|
|
307.4
|
|
|
Asset-based trades (7) |
|
30
|
%
|
|
32
|
%
|
|
|
59.6
|
|
|
|
45.2
|
|
|
|
50.6
|
|
|
|
53.7
|
|
|
|
45.9
|
|
|
Other trades (8) |
|
17
|
%
|
|
30
|
%
|
|
|
124.7
|
|
|
|
95.7
|
|
|
|
99.8
|
|
|
|
104.1
|
|
|
|
106.3
|
|
|
Total
|
|
(2
|
%)
|
|
12
|
%
|
|
|
450.0
|
|
|
|
402.4
|
|
|
|
435.6
|
|
|
|
476.2
|
|
|
|
459.6
|
|
|
Average Revenue Per Revenue Trade (5,6) |
|
2
|
%
|
|
-
|
|
|
$
|
12.49
|
|
|
$
|
12.44
|
|
|
$
|
12.15
|
|
|
$
|
12.35
|
|
|
$
|
12.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes a pre-tax gain of $70 million relating to a confidential
resolution of a vendor dispute in the second quarter of 2012.
|
|
(2)
|
|
Includes a non-recurring state tax benefit of $20 million in the
third quarter of 2012.
|
|
(3)
|
|
Return on average common stockholders' equity is calculated using
net income available to common stockholders divided by average
common stockholders' equity.
|
|
(4)
|
|
In the second quarter and first quarter of 2012, the Company issued
non-cumulative perpetual preferred stock, Series B, for a total
liquidation preference of $485 million
|
|
|
|
and non-cumulative perpetual preferred stock, Series A, with a total
liquidation preference of $400 million, respectively.
|
|
(5)
|
|
The fourth quarter of 2012 does not include two trading days due to
weather-related market closures on October 29 and 30, 2012.
|
|
(6)
|
|
Includes all client trades that generate either commission revenue
or revenue from principal markups (i.e., fixed income); also known
as DART.
|
|
(7)
|
|
Includes eligible trades executed by clients who participate in one
or more of the Company's asset-based pricing relationships.
|
|
(8)
|
|
Includes all commission free trades, including Schwab Mutual Fund
OneSource® funds and ETFs, and other proprietary products.
|
|
N/M
|
|
Not meaningful.
|
|
|
|
|
|
See Note to Consolidated Statements of Income, Financial and
Operating Highlights, and Net Interest Revenue Information.
|
|
|
|
|
|
|
|
THE CHARLES SCHWAB CORPORATION
|
|
Net Interest Revenue Information
|
|
(In millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
Interest
|
|
Average
|
|
|
|
Interest
|
|
Average
|
|
|
|
Interest
|
|
Average
|
|
|
|
Interest
|
|
Average
|
|
|
|
Average
|
|
Revenue/
|
|
Yield/
|
|
Average
|
|
Revenue/
|
|
Yield/
|
|
Average
|
|
Revenue/
|
|
Yield/
|
|
Average
|
|
Revenue/
|
|
Yield/
|
|
|
|
Balance
|
|
Expense
|
|
Rate
|
|
Balance
|
|
Expense
|
|
Rate
|
|
Balance
|
|
Expense
|
|
Rate
|
|
Balance
|
|
Expense
|
|
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,287
|
|
$
|
6
|
|
0.29
|
%
|
|
$
|
5,736
|
|
$
|
4
|
|
0.28
|
%
|
|
$
|
7,130
|
|
$
|
18
|
|
0.25
|
%
|
|
$
|
5,554
|
|
$
|
13
|
|
0.23
|
%
|
|
Cash and investments segregated
|
|
|
25,284
|
|
|
13
|
|
0.20
|
%
|
|
|
27,912
|
|
|
9
|
|
0.13
|
%
|
|
|
25,263
|
|
|
46
|
|
0.18
|
%
|
|
|
25,831
|
|
|
39
|
|
0.15
|
%
|
|
Broker-related receivables (1) |
|
|
366
|
|
|
-
|
|
0.11
|
%
|
|
|
203
|
|
|
-
|
|
0.04
|
%
|
|
|
351
|
|
|
-
|
|
0.04
|
%
|
|
|
310
|
|
|
-
|
|
0.05
|
%
|
|
Receivables from brokerage clients
|
|
|
11,460
|
|
|
113
|
|
3.92
|
%
|
|
|
10,225
|
|
|
111
|
|
4.31
|
%
|
|
|
10,928
|
|
|
446
|
|
4.08
|
%
|
|
|
10,637
|
|
|
467
|
|
4.39
|
%
|
|
Securities available for sale (2) |
|
|
43,624
|
|
|
140
|
|
1.28
|
%
|
|
|
30,789
|
|
|
124
|
|
1.60
|
%
|
|
|
39,745
|
|
|
583
|
|
1.47
|
%
|
|
|
27,486
|
|
|
456
|
|
1.66
|
%
|
|
Securities held to maturity
|
|
|
15,954
|
|
|
95
|
|
2.37
|
%
|
|
|
15,268
|
|
|
79
|
|
2.05
|
%
|
|
|
15,371
|
|
|
397
|
|
2.58
|
%
|
|
|
16,050
|
|
|
492
|
|
3.07
|
%
|
|
Loans to banking clients
|
|
|
10,447
|
|
|
76
|
|
2.89
|
%
|
|
|
9,857
|
|
|
79
|
|
3.18
|
%
|
|
|
10,053
|
|
|
309
|
|
3.07
|
%
|
|
|
9,472
|
|
|
310
|
|
3.27
|
%
|
|
Loans held for sale
|
|
|
-
|
|
|
-
|
|
-
|
|
|
|
74
|
|
|
1
|
|
3.99
|
%
|
|
|
18
|
|
|
1
|
|
4.12
|
%
|
|
|
65
|
|
|
3
|
|
4.62
|
%
|
|
Total interest-earning assets
|
|
|
115,422
|
|
|
443
|
|
1.53
|
%
|
|
|
100,064
|
|
|
407
|
|
1.61
|
%
|
|
|
108,859
|
|
|
1,800
|
|
1.65
|
%
|
|
|
95,405
|
|
|
1,780
|
|
1.87
|
%
|
|
Other interest revenue
|
|
|
|
|
24
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
114
|
|
|
|
|
|
|
120
|
|
|
|
Total interest-earning assets
|
|
$
|
115,422
|
|
$
|
467
|
|
1.61
|
%
|
|
$
|
100,064
|
|
$
|
436
|
|
1.73
|
%
|
|
$
|
108,859
|
|
$
|
1,914
|
|
1.76
|
%
|
|
$
|
95,405
|
|
$
|
1,900
|
|
1.99
|
%
|
|
Funding sources:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from banking clients
|
|
$
|
71,411
|
|
$
|
11
|
|
0.06
|
%
|
|
$
|
55,822
|
|
$
|
13
|
|
0.09
|
%
|
|
$
|
65,546
|
|
$
|
42
|
|
0.06
|
%
|
|
$
|
52,701
|
|
$
|
62
|
|
0.12
|
%
|
|
Payables to brokerage clients
|
|
|
30,368
|
|
|
1
|
|
0.01
|
%
|
|
|
32,079
|
|
|
1
|
|
0.01
|
%
|
|
|
29,831
|
|
|
3
|
|
0.01
|
%
|
|
|
29,992
|
|
|
3
|
|
0.01
|
%
|
|
Long-term debt
|
|
|
1,815
|
|
|
22
|
|
4.82
|
%
|
|
|
2,002
|
|
|
27
|
|
5.35
|
%
|
|
|
1,934
|
|
|
103
|
|
5.33
|
%
|
|
|
2,004
|
|
|
108
|
|
5.39
|
%
|
|
Total interest-bearing liabilities
|
|
|
103,594
|
|
|
34
|
|
0.13
|
%
|
|
|
89,903
|
|
|
41
|
|
0.18
|
%
|
|
|
97,311
|
|
|
148
|
|
0.15
|
%
|
|
|
84,697
|
|
|
173
|
|
0.20
|
%
|
|
Non-interest-bearing funding sources
|
|
|
11,828
|
|
|
|
|
|
|
10,161
|
|
|
|
|
|
|
11,548
|
|
|
|
|
|
|
10,708
|
|
|
|
|
|
Other interest expense
|
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
2
|
|
|
|
Total funding sources
|
|
$
|
115,422
|
|
$
|
34
|
|
0.12
|
%
|
|
$
|
100,064
|
|
$
|
41
|
|
0.16
|
%
|
|
$
|
108,859
|
|
$
|
150
|
|
0.14
|
%
|
|
$
|
95,405
|
|
$
|
175
|
|
0.18
|
%
|
|
Net interest revenue
|
|
|
|
$
|
433
|
|
1.49
|
%
|
|
|
|
$
|
395
|
|
1.57
|
%
|
|
|
|
$
|
1,764
|
|
1.62
|
%
|
|
|
|
$
|
1,725
|
|
1.81
|
%
|
|
(1)
|
|
Interest revenue was less than $500,000 in the period or periods
presented.
|
|
(2)
|
|
Amounts have been calculated based on amortized cost.
|
|
|
|
|
See Note to Consolidated Statements of Income, Financial and
Operating Highlights, and Net Interest Revenue Information.
|
|
|
Note to Consolidated Statements of Income, Financial and
Operating Highlights,
|
|
and Net Interest Revenue Information
|
|
(Unaudited)
|
|
|
|
The Company
|
|
The consolidated statements of income, financial and operating
highlights, and net interest revenue information include The Charles
Schwab Corporation (CSC) and its majority-owned subsidiaries
(collectively referred to as the Company), including Charles Schwab
& Co., Inc. and Charles Schwab Bank. Certain prior period amounts
have been reclassified to conform to the 2012 presentation. The
consolidated statements of income, financial and operating
highlights, and net interest revenue information should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2011.
|
|
|
|
|
|
THE CHARLES SCHWAB CORPORATION
|
|
Asset Management and Administration Fees Information
|
|
(In millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Client
|
|
|
|
Average
|
|
Client
|
|
|
|
Average
|
|
Client
|
|
|
|
Average
|
|
Client
|
|
|
|
Average
|
|
|
|
Assets
|
|
Revenue
|
|
Fee
|
|
Assets
|
|
Revenue
|
|
Fee
|
|
Assets
|
|
Revenue
|
|
Fee
|
|
Assets
|
|
Revenue
|
|
Fee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schwab money market funds before fee waivers
|
|
$
|
159,421
|
|
$
|
228
|
|
|
0.57
|
%
|
|
$
|
157,863
|
|
$
|
226
|
|
|
0.57
|
%
|
|
$
|
155,866
|
|
$
|
891
|
|
|
0.57
|
%
|
|
$
|
153,478
|
|
$
|
865
|
|
|
0.56
|
%
|
|
Fee waivers
|
|
|
|
|
(142
|
)
|
|
|
|
|
|
|
(168
|
)
|
|
|
|
|
|
|
(587
|
)
|
|
|
|
|
|
|
(568
|
)
|
|
|
|
Schwab money market funds
|
|
|
159,421
|
|
|
86
|
|
|
0.21
|
%
|
|
|
157,863
|
|
|
58
|
|
|
0.15
|
%
|
|
|
155,866
|
|
|
304
|
|
|
0.20
|
%
|
|
|
153,478
|
|
|
297
|
|
|
0.19
|
%
|
|
Equity and bond funds (1) |
|
|
50,559
|
|
|
30
|
|
|
0.24
|
%
|
|
|
40,711
|
|
|
29
|
|
|
0.28
|
%
|
|
|
47,778
|
|
|
125
|
|
|
0.26
|
%
|
|
|
41,347
|
|
|
118
|
|
|
0.29
|
%
|
|
Mutual Fund OneSource ® |
|
|
221,338
|
|
|
179
|
|
|
0.32
|
%
|
|
|
200,779
|
|
|
160
|
|
|
0.32
|
%
|
|
|
216,564
|
|
|
680
|
|
|
0.31
|
%
|
|
|
210,907
|
|
|
680
|
|
|
0.32
|
%
|
|
Total mutual funds (2) |
|
$
|
431,318
|
|
|
295
|
|
|
0.27
|
%
|
|
$
|
399,353
|
|
|
247
|
|
|
0.25
|
%
|
|
$
|
420,208
|
|
|
1,109
|
|
|
0.26
|
%
|
|
$
|
405,732
|
|
|
1,095
|
|
|
0.27
|
%
|
|
Advice solutions (2) |
|
$
|
125,589
|
|
|
153
|
|
|
0.48
|
%
|
|
$
|
108,048
|
|
|
130
|
|
|
0.48
|
%
|
|
$
|
119,850
|
|
|
580
|
|
|
0.48
|
%
|
|
$
|
109,703
|
|
|
522
|
|
|
0.48
|
%
|
|
Other (3) |
|
|
|
|
91
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
354
|
|
|
|
|
|
|
|
311
|
|
|
|
|
Total asset management and administration fees
|
|
|
|
$
|
539
|
|
|
|
|
|
|
$
|
458
|
|
|
|
|
|
|
$
|
2,043
|
|
|
|
|
|
|
$
|
1,928
|
|
|
|
|
(1)
|
|
Includes Schwab ETFs.
|
|
(2)
|
|
Advice solutions include separately managed accounts, customized
personal advice for tailored portfolios, and specialized planning
and full-time portfolio management offered through the Company's
Schwab Private Client, Schwab Managed Portfolio and Managed
Account Select programs. Advice solutions also includes Schwab
Advisor Network, Schwab Advisor Source, and Windhaven. Average
client assets for advice solutions may also include the asset
balances contained in the three categories of mutual funds listed
above.
|
|
(3)
|
|
Includes various asset based fees, such as trust fees, 401k record
keeping fees, and mutual fund clearing and other service fees.
|
|
|
|
|
|
THE CHARLES SCHWAB CORPORATION
|
|
Growth in Client Assets and Accounts
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4-12 % Change
|
|
2012
|
|
2011
|
|
|
|
vs.
|
vs.
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
(In billions, at quarter end, except as noted)
|
|
Q4-11
|
Q3-12
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Assets in client accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schwab One®, other cash equivalents and deposits from
banking clients
|
|
23
|
%
|
15
|
%
|
|
$
|
119.0
|
|
|
$
|
103.7
|
|
|
$
|
98.2
|
|
|
$
|
98.8
|
|
|
$
|
96.4
|
|
|
Proprietary funds (Schwab Funds® and Laudus Funds®):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
5
|
%
|
8
|
%
|
|
|
167.9
|
|
|
|
155.7
|
|
|
|
152.9
|
|
|
|
154.4
|
|
|
|
159.8
|
|
|
Equity and bond funds
|
|
30
|
%
|
2
|
%
|
|
|
49.6
|
|
|
|
48.4
|
|
|
|
45.3
|
|
|
|
45.8
|
|
|
|
38.2
|
|
|
Total proprietary funds
|
|
10
|
%
|
7
|
%
|
|
|
217.5
|
|
|
|
204.1
|
|
|
|
198.2
|
|
|
|
200.2
|
|
|
|
198.0
|
|
|
Mutual Fund Marketplace®(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Fund OneSource® |
|
12
|
%
|
-
|
|
|
|
223.2
|
|
|
|
222.1
|
|
|
|
211.2
|
|
|
|
219.5
|
|
|
|
198.6
|
|
|
Mutual fund clearing services
|
|
53
|
%
|
18
|
%
|
|
|
159.1
|
|
|
|
134.4
|
|
|
|
126.4
|
|
|
|
127.0
|
|
|
|
104.2
|
|
|
Other third-party mutual funds
|
|
18
|
%
|
3
|
%
|
|
|
360.1
|
|
|
|
350.0
|
|
|
|
328.7
|
|
|
|
334.1
|
|
|
|
305.9
|
|
|
Total Mutual Fund Marketplace
|
|
22
|
%
|
5
|
%
|
|
|
742.4
|
|
|
|
706.5
|
|
|
|
666.3
|
|
|
|
680.6
|
|
|
|
608.7
|
|
|
Total mutual fund assets
|
|
19
|
%
|
5
|
%
|
|
|
959.9
|
|
|
|
910.6
|
|
|
|
864.5
|
|
|
|
880.8
|
|
|
|
806.7
|
|
|
Equity and other securities (1) |
|
16
|
%
|
-
|
|
|
|
702.4
|
|
|
|
705.5
|
|
|
|
670.4
|
|
|
|
685.0
|
|
|
|
607.9
|
|
|
Fixed income securities
|
|
3
|
%
|
-
|
|
|
|
181.8
|
|
|
|
181.8
|
|
|
|
180.5
|
|
|
|
179.4
|
|
|
|
176.9
|
|
|
Margin loans outstanding
|
|
13
|
%
|
3
|
%
|
|
|
(11.5
|
)
|
|
|
(11.2
|
)
|
|
|
(11.2
|
)
|
|
|
(10.5
|
)
|
|
|
(10.2
|
)
|
|
Total client assets
|
|
16
|
%
|
3
|
%
|
|
$
|
1,951.6
|
|
|
$
|
1,890.4
|
|
|
$
|
1,802.4
|
|
|
$
|
1,833.5
|
|
|
$
|
1,677.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client assets by business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Services
|
|
11
|
%
|
1
|
%
|
|
$
|
775.4
|
|
|
$
|
770.4
|
|
|
$
|
737.0
|
|
|
$
|
753.3
|
|
|
$
|
697.9
|
|
|
Advisor Services
|
|
16
|
%
|
3
|
%
|
|
|
788.5
|
|
|
|
762.3
|
|
|
|
727.6
|
|
|
|
735.9
|
|
|
|
679.0
|
|
|
Other Institutional Services
|
|
29
|
%
|
8
|
%
|
|
|
387.7
|
|
|
|
357.7
|
|
|
|
337.8
|
|
|
|
344.3
|
|
|
|
300.8
|
|
|
Total client assets by business
|
|
16
|
%
|
3
|
%
|
|
$
|
1,951.6
|
|
|
$
|
1,890.4
|
|
|
$
|
1,802.4
|
|
|
$
|
1,833.5
|
|
|
$
|
1,677.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net growth in assets in client accounts (for the quarter
ended)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Services (2) |
|
98
|
%
|
144
|
%
|
|
$
|
10.5
|
|
|
$
|
4.3
|
|
|
$
|
2.9
|
|
|
$
|
5.9
|
|
|
$
|
5.3
|
|
|
Advisor Services (3) |
|
165
|
%
|
157
|
%
|
|
|
24.4
|
|
|
|
9.5
|
|
|
|
9.9
|
|
|
|
12.6
|
|
|
|
9.2
|
|
|
Other Institutional Services (4) |
|
N/M
|
|
N/M
|
|
|
|
29.5
|
|
|
|
6.6
|
|
|
|
3.2
|
|
|
|
20.4
|
|
|
|
7.0
|
|
|
Total net new assets
|
|
N/M
|
|
N/M
|
|
|
|
64.4
|
|
|
|
20.4
|
|
|
|
16.0
|
|
|
|
38.9
|
|
|
|
21.5
|
|
|
Net market (losses) gains
|
|
(104
|
%)
|
(105
|
%)
|
|
|
(3.2
|
)
|
|
|
67.6
|
|
|
|
(47.1
|
)
|
|
|
116.9
|
|
|
|
79.8
|
|
|
Net growth (decline)
|
|
(40
|
%)
|
(30
|
%)
|
|
$
|
61.2
|
|
|
$
|
88.0
|
|
|
$
|
(31.1
|
)
|
|
$
|
155.8
|
|
|
$
|
101.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New brokerage accounts (in thousands, for the quarter ended)
|
|
19
|
%
|
22
|
%
|
|
|
241
|
|
|
|
198
|
|
|
|
221
|
|
|
|
240
|
|
|
|
203
|
|
|
Clients (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Brokerage Accounts (5) |
|
3
|
%
|
1
|
%
|
|
|
8,787
|
|
|
|
8,736
|
|
|
|
8,720
|
|
|
|
8,639
|
|
|
|
8,552
|
|
|
Banking Accounts
|
|
11
|
%
|
2
|
%
|
|
|
865
|
|
|
|
844
|
|
|
|
822
|
|
|
|
801
|
|
|
|
780
|
|
|
Corporate Retirement Plan Participants
|
|
5
|
%
|
2
|
%
|
|
|
1,571
|
|
|
|
1,547
|
|
|
|
1,524
|
|
|
|
1,516
|
|
|
|
1,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes all proprietary money market, equity, and bond funds.
|
|
(2)
|
|
Includes outflows of approximately $100 million as a result of the
sale of Open E Cry, LLC, in the third quarter of 2012.
|
|
(3)
|
|
Includes inflows of approximately $900 million as a result of the
acquisition of ThomasPartners, Inc., in the fourth quarter of 2012.
|
|
(4)
|
|
Includes inflows of $21.1 billion from mutual fund clearing
services clients and outflows of $900 million related to a planned
transfer from Corporate Brokerage Services in the fourth quarter
of 2012. Includes outflows of $1.2 billion as a result of the
closure of brokersXpress LLC in the third quarter of 2012.
Includes inflows of $12.0 billion from a mutual fund clearing
services client in the first quarter of 2012.
|
|
(5)
|
|
Removed approximately 30,000 due to escheatment and other factors
in the fourth quarter of 2012. Reduced by 19,000 as a result of
the sale of Open E Cry, LLC, and the closure of brokersXpress LLC
in the third quarter of 2012.
|
|
N/M
|
|
Not meaningful
|
