Summary

• The Charles Schwab Corporation is an American multinational financial services company.
• It offers banking, commercial banking, investing and related services including consulting, and wealth management advisory services to both retail and institutional clients.
• It has over 400 branches, primarily in financial centers in the United States and the United Kingdom.

The Charles Schwab Corporation (NYSE: SCHW, LSE: 0L3I) is an American multinational financial services company. It offers banking, commercial banking, investing and related services including consulting, and wealth management advisory services to both retail and institutional clients. It has over 400 branches, primarily in financial centers in the United States and the United Kingdom.

As of August 31, 2023, it had 34.4 million active brokerage accounts, 2.5 million corporate retirement plan participants, 1.8 million banking accounts, and $8.09 trillion in client assets.

Recent Developments

Investor’s Business Daily Recognizes Charles Schwab as Most Trusted¹

09/28/2023; Charles Schwab Bank was named the most trusted bank by Investor’s Business Daily (IBD) in its 2023 Most Trusted Financial Companies Survey, marking the first year a bank broke into the annual survey’s top 10 since its inception in 2020. Charles Schwab was also named one of the most trusted investment firms, with consumers ranking Schwab among the top two most trusted financial companies across four categories – ETF/Fund Company, Online Broker, Wealth Management and Banking.

The survey scores financial companies on seven key attributes: financially sound/secure; quality of products/services; ethical business practices; privacy and security of personal data; customer service; prices; and sensitivity to customer needs in the current economic and financial climate.

Recent Acquisition

Effective October 6, 2020, the Company completed its acquisition of TD Ameritrade Holding Corporation. TD Ameritrade provides securities brokerage services, including trade execution, clearing services, and margin lending; and futures and foreign exchange trade execution services. TD Ameritrade serves individual retail investors and RIAs predominantly through the Internet, a national branch network, and relationships with RIAs. TD Ameritrade’s sources of net revenues primarily consist of trading revenue, net interest revenue, bank deposit account fees, and asset management and administration fees.

On May 26, 2020, the Company completed its acquisition of the assets of USAA’s Investment Management Company (USAAIMCO). Along with the asset purchase agreement, the companies entered into a long-term referral agreement that makes Schwab the exclusive provider of wealth management and investment brokerage services for USAA members. The USAA-IMCO acquisition has added scale to the Company’s operations through the addition of 1.1 million brokerage and managed portfolio accounts with approximately $80 billion in client assets at the acquisition date. The transaction also provides Schwab the opportunity to further expand its client base by serving USAA’s members through the long-term referral agreement.

During 2020, the Company completed its acquisition of technology and intellectual property of Motif, a financial technology company. The Motif assets are helping it build on its existing capabilities and helped accelerate its development of thematic and direct index investing for Schwab’s retail investors and RIA clients. Also during 2020, the Company completed its acquisition of Wasmer, Schroeder & Company, LLC (Wasmer Schroeder), which added established strategies and new separately managed account offerings to its fixed income lineup.

Financial Highlights

Full Year 2022 Results

Total net revenues rose 12% year-over-year to $20.8 billion in 2022. Net interest revenue increased to $10.7 billion, rising 33% from 2021 as significantly higher market rates more than offset the impact of balance sheet contraction due to client cash allocation decisions. Asset management and administration fees totaled $4.2 billion in 2022, down 1% year-over-year as lower market valuations throughout the year offset the benefit of lower money market fund fee waivers. Trading revenue declined by 12% to $3.7 billion in 2022, due to lower DATs relative to the extraordinary trading volume seen in 2021 and changes in mix of client trading activity. Bank deposit account fee revenue was $1.4 billion in 2022, up 7% from 2021 as higher average net yields more than offset lower average BDA balances. BDA balances totaled $126.6 billion at December 31, 2022, down 20% from year-end 2021, reflecting client cash allocation decisions and migrations to its balance sheet.

Total expenses excluding interest amounted to $11.4 billion in 2022, increasing 5% from 2021, and adjusted total expenses were $10.4 billion, up 7% from the prior year. These increases reflected higher compensation and benefits expense and higher occupancy and equipment expense, as the company continued to invest in its people and technology to support ongoing growth in its client base. These increases were partially offset by lower other expense, which included a charge of approximately $200 million in 2021 Acquisition and integration-related costs and amortization of acquired intangibles were $392 million and $596 million, respectively, in 2022, compared with $468 million and $615 million, respectively, in 2021.

Company Overview

The Charles Schwab Corporation (CSC) is a savings and loan holding company. CSC engages, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.²

Effective January 1, 2021, CSC changed the designation of its corporate headquarters from San Francisco, California to Westlake, Texas. The Company maintains a nationwide presence across a network of branches and operations centers, as well as several international locations, and its Westlake location provides a centrally located hub for the Company.

Products and Services

Schwab offers a broad range of products and services through intuitive end-to-end solutions.

• Brokerage – an array of full-feature brokerage accounts with equity and fixed income trading, margin lending, options trading, futures and forex trading, and cash management capabilities including certificates of deposit;
• Mutual funds – third-party mutual funds through the Mutual Fund Marketplace® , including no-transaction-fee (NTF) mutual funds through the Mutual Fund OneSource® service, which also includes proprietary mutual funds, plus mutual fund trading and clearing services to broker-dealers;
• Exchange-traded funds (ETFs) – an extensive offering of ETFs, including both proprietary and third-party ETFs;
• Advice solutions – managed portfolios of both proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management;
• Banking – checking and savings accounts, first lien residential real estate mortgage loans (First Mortgages), home equity lines of credit (HELOCs), and pledged asset lines (PALs); and
• Trust – trust custody services, personal trust reporting services, and administrative trustee services.

Company History

In 1963 Chuck Schwab and two other partners launch Investment Indicator, an investment advisory newsletter.³

References

1. ^ https://pressroom.aboutschwab.com/press-releases/press-release/2023/Investors-Business-Daily-Recognizes-Charles-Schwab-Bank-as-Most-Trusted-Bank-and-Charles-Schwab-as-one-of-the-Most-Trusted-Financial-Services-Firms-in-Annual-Survey/default.aspx
2. ^ https://fintel.io/doc/sec-schwab-charles-corp-316709-10k-2023-february-24-19413-7126
3. ^ https://www.investor.nexteraenergy.com/news-and-events/news-releases/2023/8-29-2023