EX-99.1 2 a4q21exhibit991_12312021.htm EX-99.1 Document

EXHIBIT 99.1

News Release

Contacts:
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MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Jeff Edwards
Charles Schwab
Phone: 415-667-1524

SCHWAB REPORTS RECORD QUARTERLY AND FULL-YEAR EARNINGS PER SHARE
Quarterly and Annual Core Net New Assets Total $162.2 Billion and $558.2 Billion, Both Records
Total Client Assets Reach a Record $8.14 Trillion at Year-end, up 22% Versus December 2020

    WESTLAKE, Texas, January 18, 2022 – The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2021 was a record $1.6 billion compared with $1.5 billion for the third quarter of 2021, and $1.1 billion for the fourth quarter of 2020. Net income for the twelve months ended December 31, 2021 was a record $5.9 billion, compared with $3.3 billion for the year-earlier period. The company’s financial results include TD Ameritrade from October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. For the fourth quarter and the twelve months of 2021, these transaction-related expenses totaled $255 million and $1.1 billion, respectively, on a pre-tax basis.

Three Months Ended December 31,%Twelve Months Ended December 31,%
Financial Highlights (1)
20212020Change20212020Change
Net revenues (in millions)$4,708 $4,176 13%$18,520 $11,691 58%
Net income (in millions)
GAAP$1,580 $1,135 39%$5,855 $3,299 77%
Adjusted (1)
$1,775 $1,459 22%$6,670 $3,777 77%
Diluted earnings per common share
GAAP$.76 $.57 33%$2.83 $2.12 33%
Adjusted (1)
$.86 $.74 16%$3.25 $2.45 33%
Pre-tax profit margin
GAAP43.0 %35.3 %41.6 %36.8 %
Adjusted (1)
48.4 %45.6 %47.5 %42.2 %
Return on average common
    stockholders’ equity (annualized)12 %11 %11 %9 %
Return on tangible
common equity (annualized) (1)
24 %21 %22 %15 %
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
(1) Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 11-12 of this release.

CEO Walt Bettinger said, “We delivered another year of record-breaking growth and financial performance in 2021 by staying true to our “Through Clients’ Eyes” strategy in the face of a fluctuating environment. That shifting picture included strengthening investor optimism early on, fueled by an advancing economic recovery, expanding vaccine rollouts and government aid packages. Then came increasing debates regarding the overall pace of economic growth, the potential path of inflation, and the ultimate impact of multiple global market disruptions. After rising throughout the first half of 2021, the major equity indices were essentially flat during the summer months before the ongoing recovery helped them close the year at near-record levels. While short-term interest rates remained near zero throughout the year, longer-term rates began to rise initially, then eased and rose again in keeping with the economic outlook - the 10-year Treasury yield finally ended 2021 at 1.52%, up 59 basis points from year-end 2020.”

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Mr. Bettinger continued, “Investors remained actively engaged with the markets throughout the year, and our competitive positioning as a trusted financial partner offering both value and service continued to resonate in the marketplace. While some measures of engagement eased from the extraordinary levels seen during the first quarter 2021 ‘re-opening’ surge, activity generally exceeded the fourth quarter of 2020, when we included TD Ameritrade in our results for the first time, and core net new assets set yet another record over the final three months of 2021 at $162.2 billion. Clients brought us $80.3 billion in December alone, 28% above our prior single-month record, and our full-year total of $558.2 billion represents an 8% annual organic growth rate. We ended the year with $8.14 trillion in client assets across 33.2 million brokerage accounts, increases of 22% and 12%, respectively.”

Mr. Bettinger added, “Even as we worked to support unprecedented levels of client activity during 2021, the Schwab team continued to drive progress across our key strategic priorities of scale and efficiency, win-win monetization, and segmentation. We kept the TDA integration on track, launched a newly combined version of our Schwab Advisor Network referral program, and hired over 3,000 client service professionals. We broadened our clients’ access to fixed income investment choices by launching and expanding our Wasmer SchroederTM Strategies lineup of separately managed accounts, which now spans 25 taxable and non-taxable alternatives, including several positive impact strategies. We also added another option for clients to incorporate environmental, social and governance (ESG) factor-based investing in their portfolios by collaborating with Ariel Investments, LLC to launch the Schwab® Ariel ESG ETF, our first proprietary ESG fund and first active ETF. Additionally, we enhanced the digital onboarding experience for new accounts opened by the independent advisors who custody with Schwab, and we expanded their access to Schwab Advisor Portfolio Connect®, our proprietary portfolio management capability. Other noteworthy client initiatives included the addition of person-to-person payment capabilities via Zelle® and the introduction of the Schwab Starter Kit™, a new experience designed to support first-time investors with tailored educational content and tools, along with $50 in funding for an initial purchase of fractional shares, to help them develop their knowledge and confidence as they begin to build their financial futures with us. Clients continued to turn to us as a trusted source of help and guidance throughout 2021 – assets enrolled in one of our advisory offerings rose to $559.2 billion across Investor Services by year-end, up 19% from year-earlier levels. Furthermore, utilization of our bank lending capabilities rose at an even faster pace last year, with outstanding balances of mortgage loans and secured credit lines rising by a combined total of $11.0 billion, or 48%, during 2021 to end the year at $33.8 billion.”

Mr. Bettinger concluded, “Successfully focusing on quality client service while pushing forward with firm-wide initiatives to build a stronger and more capable company would be demanding in any environment. I believe doing so amidst the tumult of the last few years is truly extraordinary. I can’t say this enough – Schwab’s achievements are only possible because thousands of talented individuals show up for work every day, ready to continue creating a better version of modern wealth management for our clients. Following four recent acquisitions, including the largest brokerage transaction in history, I’m particularly proud of our progress in uniting as a single team, pulling in the same direction through challenge after challenge, supporting each other and our clients as we pursue Chuck Schwab’s vision. I share his excitement and passion for our combined organization’s potential, and remain convinced we have the talent, culture, and client-first strategy needed to pursue the tremendous growth opportunities ahead of us.”

CFO Peter Crawford said, “Our fourth quarter and full-year 2021 financial results demonstrate the impressive performance that our all-weather business model can produce when our strong business momentum aligns with easing macroeconomic headwinds. With interest rates stabilizing and even rebounding somewhat to end above year-end 2020 levels, fourth quarter net interest revenue increased 18% over the year-earlier period, as strong asset gathering helped lift investment portfolio balances while client utilization of our range of lending products continued to expand. Asset management and administration fees were up 12% year-over-year due to rising balances in advisory solutions, as well as proprietary and third-party mutual funds and ETFs. Including 19% growth in trading revenue driven by higher activity levels, our total fourth quarter revenues were up 13% to $4.7 billion. Pivoting to expenses, our total GAAP spending was essentially flat versus a year ago at $2.7 billion, which included $101 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Adjusted total expenses (1) were up 7% year-over-year, reflecting robust client engagement and business growth, as well as the 5% employee salary increase that went into effect at the end of September. Strong revenue growth and disciplined expense management enabled us to produce a 43.0% pre-tax profit margin for the fourth quarter – 48.4% on an adjusted basis (1) – and helped our full-year margins reach 41.6% and 47.5%, respectively. I believe that achieving this level of profitability in 2021, on revenues that approached $19 billion despite the persistence of historically low interest rates, is a testament to the combined Schwab team’s relentless attention to driving scale and efficiency – that’s what enables us to provide clients with the service they trust us to deliver while continuing to invest in our strategic agenda.”

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Mr. Crawford added, “Our balance sheet expanded to end 2021 with total assets of $667 billion, up 22% versus December 31, 2020. Last year’s increase was driven primarily by client asset flows, as well as approximately $10 billion in bank deposit account migrations. We also added a net $10.2 billion to outstanding debt largely for liquidity management purposes, and increased preferred stock by $2.3 billion to help support continued business growth. The company’s preliminary Tier 1 Leverage Ratio was 6.2% at year-end 2021. Our ongoing capital management and healthy financial performance helped support consistently solid returns on capital throughout the year – we delivered a double-digit return on equity and a ROTCE (1) of at least 20% every quarter, ending with full-year results of 11% and 22%, respectively.”

Mr. Crawford concluded, “The operating environment, our own strategic and competitive success, and unprecedented levels of client engagement and activity all came together in 2021 to help us deliver impressive financial performance. No one could have predicted the way the year would unfold, and we certainly can’t predict what 2022 holds in store for us. What we have long known, however, and what the events of 2021 have reinforced, is that success with clients and consistent growth over time is only made possible by managing for the long-term and by putting clients first, serving them with clarity and focus in all environments. Maintaining a rock-solid balance sheet and robust capital position enables us to concentrate on leveraging our client focus into sustained business momentum that helps build long-term stockholder value.”

(1) Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 11-12 of this release.

Commentary from the CFO
Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on recent account activity was posted on May 14, 2021.

Winter Business Update
The company has scheduled a Winter Business Update for institutional investors on Friday, January 28, 2022. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 12:30 p.m. PT, 11:00 am - 3:30 pm ET. Registration for this Update is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements
This press release contains forward-looking statements relating to strategic priorities; TD Ameritrade integration; investments to attract and retain talent, improve service and the client experience, expand products, services and offerings to meet client needs, diversify revenues, and drive scale and efficiency; growth opportunities; business momentum; balance sheet and capital position; growth in the client base, accounts, and assets; and stockholder value. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire and retain talent; successfully implement integration strategies and plans; support client activity levels; monetize client assets; attract and retain clients and independent investment advisors and grow those relationships and client assets; and manage expenses. Other important factors include general market conditions, including equity valuations, trading activity, and the level of interest rates – which can impact money market fund fee waivers; market volatility; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; the migration of bank deposit account balances; balance sheet cash; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; adverse developments in the resolution and settlement amount of the pending regulatory matter; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 33.2 million active brokerage accounts, 2.2 million corporate retirement plan participants, 1.5 million banking accounts, and approximately $8.14 trillion in client assets. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual

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investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

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THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)




Three Months Ended
December 31,		Twelve Months Ended
December 31,
2021202020212020
Net Revenues
Interest revenue$2,270 $1,905 $8,506 $6,531 
Interest expense(128)(96)(476)(418)
Net interest revenue2,142 1,809 8,030 6,113 
Asset management and administration fees (1)
1,110 987 4,274 3,475 
Trading revenue1,017 854 4,152 1,416 
Bank deposit account fees304 355 1,315 355 
Other135 171 749 332 
Total net revenues4,708 4,176 18,520 11,691 
Expenses Excluding Interest
Compensation and benefits1,399 1,398 5,450 3,954 
Professional services271 269 994 843 
Occupancy and equipment254 254 976 703 
Advertising and market development122 123 485 326 
Communications130 127 587 353 
Depreciation and amortization145 130 549 414 
Amortization of acquired intangible assets154 147 615 190 
Regulatory fees and assessments67 57 275 163 
Other143 195 876 445 
Total expenses excluding interest2,685 2,700 10,807 7,391 
Income before taxes on income2,023 1,476 7,713 4,300 
Taxes on income443 341 1,858 1,001 
Net Income1,580 1,135 5,855 3,299 
Preferred stock dividends and other131 85 495 256 
Net Income Available to Common Stockholders$1,449 $1,050 $5,360 $3,043 
Weighted-Average Common Shares Outstanding:
Basic1,892 1,848 1,887 1,429 
Diluted1,902 1,855 1,897 1,435 
Earnings Per Common Shares Outstanding (2):
Basic$.77 $.57 $2.84 $2.13 
Diluted$.76 $.57 $2.83 $2.12 

(1) Includes fee waivers of $80 million and $326 million for the three and twelve months ended December 31, 2021, respectively, and $68 million and $127 million for the three and twelve months ended December 31, 2020, respectively.
(2) The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
        
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THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
Q4-21 % change20212020
vs.vs.FourthThirdSecondFirstFourth
(In millions, except per share amounts and as noted)Q4-20Q3-21QuarterQuarterQuarterQuarterQuarter
Net Revenues
Net interest revenue18 %6 %$2,142 $2,030 $1,947 $1,911 $1,809 
Asset management and administration fees12 %1 %1,110 1,101 1,047 1,016 987 
Trading revenue19 %5 %1,017 964 955 1,216 854 
Bank deposit account fees(14)%(6)%304 323 337 351 355 
Other(21)%(11)%135 152 241 221 171 
Total net revenues13 %3 %4,708 4,570 4,527 4,715 4,176 
Expenses Excluding Interest
Compensation and benefits— 7 %1,399 1,303 1,318 1,430 1,398 
Professional services1 %8 %271 250 247 226 269 
Occupancy and equipment— 3 %254 246 239 237 254 
Advertising and market development(1)%3 %122 119 128 116 123 
Communications2 %(10)%130 144 166 147 127 
Depreciation and amortization12 %4 %145 140 135 129 130 
Amortization of acquired intangible assets5 %1 %154 153 154 154 147 
Regulatory fees and assessments18 %5 %67 64 66 78 57 
Other(27)%2 %143 140 355 238 195 
Total expenses excluding interest(1)%5 %2,685 2,559 2,808 2,755 2,700 
Income before taxes on income37 %1 %2,023 2,011 1,719 1,960 1,476 
Taxes on income30 %(9)%443 485 454 476 341 
Net Income39 %4 %$1,580 $1,526 $1,265 $1,484 $1,135 
Preferred stock dividends and other54 %9 %131 120 148 96 85 
Net Income Available to Common Stockholders38 %3 %$1,449 $1,406 $1,117 $1,388 $1,050 
Earnings per common share (1):
Basic35 %4 %$.77 $.74 $.59 $.74 $.57 
Diluted33 %3 %$.76 $.74 $.59 $.73 $.57 
Dividends declared per common share— — $.18 $.18 $.18 $.18 $.18 
Weighted-average common shares outstanding:
Basic2 %— 1,892 1,888 1,886 1,882 1,848 
Diluted3 %— 1,902 1,898 1,896 1,892 1,855 
Performance Measures
Pre-tax profit margin43.0 %44.0 %38.0 %41.6 %35.3 %
Return on average common stockholders’ equity (annualized) (2)
12 %12 %10 %12 %11 %
Financial Condition (at quarter end, in billions)
Cash and cash equivalents56 %84 %$63.0 $34.3 $30.3 $48.6 $40.3 
Cash and investments segregated7 %27 %53.9 42.3 39.9 40.4 50.4 
Receivables from brokerage clients — net41 %5 %90.6 86.6 82.2 74.7 64.4 
Available for sale securities16 %3 %390.1 377.0 359.6 341.6 337.4 
Bank loans — net45 %9 %34.6 31.6 28.9 25.4 23.8 
Total assets22 %10 %667.3 607.5 574.5 563.5 549.0 
Bank deposits24 %12 %443.8 395.3 368.6 369.9 358.0 
Payables to brokerage clients21 %11 %125.7 113.1 105.0 101.3 104.2 
Short-term borrowingsN/M63 %4.9 3.0 3.5 2.5 — 
Long-term debt39 %(3)%18.9 19.5 18.7 17.7 13.6 
Stockholders’ equity— (2)%56.3 57.4 57.5 55.6 56.1 
Other
Full-time equivalent employees (at quarter end, in thousands)4 %3 %33.4 32.4 32.5 32.0 32.0 
Capital expenditures — purchases of equipment, office facilities, and
        property, net (in millions)		116 %145 %$431 $176 $225 $209 $200 
Expenses excluding interest as a percentage of average client assets
        (annualized)		0.13 %0.13 %0.15 %0.16 %0.17 %
Clients’ Daily Average Trades (DATs) (in thousands)
5 %10 %6,102 5,549 6,042 8,414 5,796 
Number of Trading Days1 %(1)%63.5 64.0 63.0 61.0 63.0 
Revenue Per Trade (3)
12 %(3)%$2.62 $2.71 $2.51 $2.37 $2.34 
Note: The above table reflects the recognition of TD Ameritrade’s assets acquired and liabilities assumed at fair value as of October 6, 2020. Results of operations and metrics are inclusive of TD Ameritrade beginning October 6, 2020.
(1) The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
(2) Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(3) Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

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THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions, except ratios or as noted)
(Unaudited)
Three Months Ended
December 31,		Twelve Months Ended
December 31,
2021202020212020
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$41,735 $13 0.11 %$35,008 $8 0.09 %$40,325 $40 0.10 %$39,052 $120 0.30 %
Cash and investments segregated44,027 5 0.05 %45,828 13 0.11 %43,942 24 0.05 %34,100 141 0.41 %
Receivables from brokerage clients86,485 655 2.97 %53,719 444 3.23 %77,768 2,455 3.11 %28,058 848 2.97 %
Available for sale securities (1)
382,776 1,260 1.31 %305,231 1,103 1.44 %357,122 4,641 1.30 %253,555 4,537 1.78 %
Bank loans33,102 172 2.08 %22,971 134 2.34 %28,789 620 2.15 %20,932 545 2.60 %
Total interest-earning assets588,125 2,105 1.42 %462,757 1,702 1.46 %547,946 7,780 1.41 %375,697 6,191 1.64 %
Securities lending revenue163 201 720 334 
Other interest revenue2 2 6 6 
Total interest-earning assets$588,125 $2,270 1.53 %$462,757 $1,905 1.63 %$547,946 $8,506 1.54 %$375,697 $6,531 1.73 %
Funding sources
Bank deposits$409,961 $14 0.01 %$336,912 $12 0.01 %$381,549 $54 0.01 %$291,206 $93 0.03 %
Payables to brokerage clients99,325 2 0.01 %77,160 2 0.01 %91,667 9 0.01 %46,347 12 0.02 %
Short-term borrowings (2)
4,294 3 0.27 %306 — 0.19 %3,040 9 0.30 %89 — 0.20 %
Long-term debt19,124 103 2.14 %11,903 77 2.59 %17,704 384 2.17 %8,992 289 3.22 %
Total interest-bearing liabilities532,704 122 0.09 %426,281 91 0.09 %493,960 456 0.09 %346,634 394 0.11 %
Non-interest-bearing funding sources55,421 36,476 53,986 29,063 
Securities lending expense8 7 24 33 
Other interest expense(2)(2)(4)(9)
Total funding sources$588,125 $128 0.09 %$462,757 $96 0.08 %$547,946 $476 0.09 %$375,697 $418 0.11 %
Net interest revenue$2,142 1.44 %$1,809 1.55 %$8,030 1.45 %$6,113 1.62 %
(1) Amounts have been calculated based on amortized cost.
(2) Interest revenue or expense was less than $500 thousand in the period or periods presented.
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THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions, except ratios or as noted)
(Unaudited)

Three Months Ended
December 31,		Twelve Months Ended
December 31,
2021202020212020
Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee
Schwab money market funds before fee
  waivers		$147,035 $109 0.29 %$183,846 $136 0.29 %$155,821 $457 0.29 %$200,119 $605 0.30 %
Fee waivers(80)(68)(326)(127)
Schwab money market funds147,035 29 0.08 %183,846 68 0.15 %155,821 131 0.08 %200,119 478 0.24 %
Schwab equity and bond funds, ETFs, and
  collective trust funds (CTFs) 		462,059 101 0.09 %334,113 81 0.10 %423,999 380 0.09 %301,598 300 0.10 %
Mutual Fund OneSource® and other non-
  transaction fee funds
231,438 184 0.32 %208,397 163 0.31 %229,342 724 0.32 %192,464 599 0.31 %
Other third-party mutual funds and ETFs (1)
928,989 193 0.08 %763,494 158 0.08 %898,248 726 0.08 %525,379 393 0.07 %
Total mutual funds, ETFs, and CTFs (2)
$1,769,521 507 0.11 %$1,489,850 470 0.13 %$1,707,410 1,961 0.11 %$1,219,560 1,770 0.15 %
Advice solutions (2)
Fee-based$473,443 524 0.44 %$392,148 444 0.45 %$452,503 1,993 0.44 %$306,010 1,443 0.47 %
Non-fee-based96,374 — — 78,332 — — 89,911 — — 73,161 — — 
Total advice solutions$569,817 524 0.36 %$470,480 444 0.38 %$542,414 1,993 0.37 %$379,171 1,443 0.38 %
Other balance-based fees (3)
644,164 64 0.04 %520,830 58 0.04 %614,787 259 0.04 %451,350 208 0.05 %
Other (4)
15 15 61 54 
Total asset management and administration fees$1,110 $987 $4,274 $3,475 
(1) Beginning in the fourth quarter of 2020, includes third-party money funds related to the acquisition of TD Ameritrade.
(2) Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, Schwab Intelligent Portfolios Premium®, TD Ameritrade AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.
(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.
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THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)

Q4-21 % Change20212020
vs.vs.FourthThirdSecondFirstFourth
(In billions, at quarter end, except as noted)Q4-20Q3-21QuarterQuarterQuarterQuarterQuarter
Assets in client accounts
Schwab One®, certain cash equivalents and bank deposits
23 %12 %$566.1 $503.9 $469.5 $467.3 $458.4 
Bank deposit account balances(4)%3 %158.5 153.3 161.9 164.2 165.9 
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
Money market funds (1)
(17)%(1)%146.5 147.7 151.9 163.6 176.1 
Equity and bond funds and CTFs (2)
28 %9 %183.1 167.4 165.9 152.9 142.9 
Total proprietary mutual funds and CTFs3 %5 %329.6 315.1 317.8 316.5 319.0 
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other non-transaction fee funds
5 %— 234.9 234.7 240.2 227.3 223.9 
Mutual fund clearing services1 %(7)%254.2 271.9 271.3 248.7 252.9 
Other third-party mutual funds (4)
15 %3 %1,497.7 1,450.1 1,441.5 1,375.8 1,304.6 
Total Mutual Fund Marketplace12 %2 %1,986.8 1,956.7 1,953.0 1,851.8 1,781.4 
Total mutual fund assets10 %2 %2,316.4 2,271.8 2,270.8 2,168.3 2,100.4 
Exchange-traded funds (ETFs)
Proprietary ETFs (2)
37 %8 %271.8 251.6 245.2 220.9 198.8 
Other third-party ETFs37 %10 %1,296.4 1,183.7 1,158.8 1,035.1 947.3 
Total ETF assets37 %9 %1,568.2 1,435.3 1,404.0 1,256.0 1,146.1 
Equity and other securities30 %10 %3,259.8 2,976.7 2,988.8 2,721.0 2,504.7 
Fixed income securities(5)%— 356.4 356.8 359.6 364.5 377.1 
Margin loans outstanding44 %4 %(87.4)(83.8)(79.8)(72.2)(60.9)
Total client assets22 %7 %$8,138.0 $7,614.0 $7,574.8 $7,069.1 $6,691.7 
Client assets by business
Investor Services20 %6 %$4,400.7 $4,137.7 $4,146.2 $3,865.9 $3,667.9 
Advisor Services24 %8 %3,737.3 3,476.3 3,428.6 3,203.2 3,023.8 
Total client assets22 %7 %$8,138.0 $7,614.0 $7,574.8 $7,069.1 $6,691.7 
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (5)
(96)%(42)%$33.4 $57.9 $44.5 $65.1 $939.2 
Advisor Services (6)
(87)%25 %101.2 81.1 64.3 68.7 751.5 
Total net new assets(92)%(3)%$134.6 $139.0 $108.8 $133.8 $1,690.7 
Net market gains (losses)(36)%N/M389.4 (99.8)396.9 243.6 605.7 
Net growth (decline)(77)%N/M$524.0 $39.2 $505.7 $377.4 $2,296.4 
New brokerage accounts (in thousands, for the quarter ended) (7)
(92)%12 %1,318 1,178 1,657 3,153 15,774 
Client accounts (in thousands)
Active brokerage accounts12 %1 %33,165 32,675 32,265 31,902 29,629 
Banking accounts (8)
— (5)%1,499 1,580 1,574 1,608 1,499 
Corporate retirement plan participants7 %— 2,200 2,207 2,149 2,105 2,054 
(1) Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.
(2) Includes balances held on and off the Schwab platform. As of December 31, 2021, off-platform equity and bond funds, CTFs, and ETFs were $24.6 billion, $6.2 billion, and $92.3 billion, respectively.
(3) Excludes all proprietary mutual funds and ETFs.
(4) As of December 31, 2021, third-party money funds were $13.5 billion.
(5) Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients. First quarter of 2021 includes an outflow of $14.4 billion from a mutual fund clearing services client. Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade.
(6) Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade.
(7) Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade.
(8) In the fourth quarter of 2021, banking accounts were reduced as a result of inactive account closures.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.
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The Charles Schwab Corporation Monthly Activity Report For December 2021
20202021        Change
DecJanFebMarAprMayJunJulAugSepOctNovDecMo.Yr.
Market Indices (at month end)
Dow Jones Industrial Average30,606 29,983 30,932 32,982 33,875 34,529 34,503 34,935 35,361 33,844 35,820 34,484 36,338 5 %19 %
Nasdaq Composite12,888 13,071 13,192 13,247 13,963 13,749 14,504 14,673 15,259 14,449 15,498 15,538 15,645 1 %21 %
Standard & Poor’s® 500
3,756 3,714 3,811 3,973 4,181 4,204 4,298 4,395 4,523 4,308 4,605 4,567 4,766 4 %27 %
Client Assets (in billions of dollars)
Beginning Client Assets6,421.0 6,691.7 6,759.6 6,900.5 7,069.1 7,336.1 7,395.7 7,574.8 7,642.7 7,838.2 7,614.0 7,982.3 7,918.3 
Net New Assets (1)
61.7 34.2 37.0 62.6 37.2 28.1 43.5 44.3 51.8 42.9 22.9 31.4 80.3 156 %30 %
Net Market (Losses) Gains209.0 33.7 103.9 106.0 229.8 31.5 135.6 23.6 143.7 (267.1)345.4 (95.4)139.4 
Total Client Assets (at month end)6,691.7 6,759.6 6,900.5 7,069.1 7,336.1 7,395.7 7,574.8 7,642.7 7,838.2 7,614.0 7,982.3 7,918.3 8,138.0 3 %22 %
Core Net New Assets (2)
61.7 34.2 51.4 62.6 37.2 28.1 43.5 44.3 51.8 42.9 36.8 45.1 80.3 78 %30 %
Receiving Ongoing Advisory Services (at month end)
Investor Services471.8 472.4 481.3 495.2 511.1 517.8 525.1 531.9 542.5 530.1 548.3 543.1 559.2 3 %19 %
Advisor Services (3)
2,828.3 2,840.6 2,913.3 2,997.9 3,112.5 3,150.4 3,209.3 3,256.5 3,333.4 3,253.2 3,399.8 3,374.3 3,505.2 4 %24 %
Client Accounts (at month end, in thousands)
Active Brokerage Accounts29,629 30,534 31,523 31,902 31,877 32,110 32,265 32,386 32,513 32,675 32,796 32,942 33,165 1 %12 %
Banking Accounts (4)
1,499 1,518 1,542 1,608 1,562 1,584 1,574 1,578 1,594 1,580 1,593 1,608 1,499 (7)%— 
Corporate Retirement Plan Participants2,054 2,069 2,093 2,105 2,116 2,130 2,149 2,159 2,188 2,207 2,213 2,198 2,200 — 7 %
Client Activity
New Brokerage Accounts (in thousands)626 1,095 1,211 847 609 549 499 402 402 374 397 448 473 6 %(24)%
Client Cash as a Percentage of Client Assets (5)
12.3 %12.2 %11.8 %11.5 %10.9 %10.8 %10.5 %10.4 %10.3 %10.8 %10.4 %10.5 %10.9 %40 bp(140) bp
Derivative Trades as a Percentage of Total Trades18.9 %17.4 %16.6 %18.5 %20.4 %20.9 %20.6 %22.2 %23.1 %23.1 %22.5 %23.4 %23.0 %(40) bp410 bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (6)
482,394 517,306 514,885 520,074 527,194 528,642 536,146 546,579 552,372 565,379 574,181 584,362 605,709 4 %26 %
Average Margin Balances59,142 62,999 69,064 71,266 72,863 75,921 78,410 79,910 81,021 81,705 83,835 87,311 88,328 1 %49 %
Average Bank Deposits Account Balances (7)
163,463 167,980 167,433 164,866 162,392 160,459 161,377 151,275 150,896 152,330 154,040 153,877 154,918 1 %(5)%
Mutual Fund and Exchange-Traded Fund
  Net Buys (Sells) (8,9) (in millions of dollars)
Equities13,875 8,234 14,246 16,301 13,422 9,854 10,873 7,418 8,808 7,596 8,840 13,099 11,519 
Hybrid359 407 832 1,133 877 1 390 666 569 335 81 308 (1,207)
Bonds12,169 13,601 9,334 8,237 8,940 5,906 10,101 6,917 8,044 6,232 4,425 4,097 5,600 
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (8)
6,336 5,713 6,273 6,190 5,754 2,022 5,872 2,644 3,876 (308)302 189 (2,859)
Exchange-Traded Funds (9)
20,067 16,529 18,139 19,481 17,485 13,739 15,492 12,357 13,545 14,471 13,044 17,315 18,771 
Money Market Funds(7,332)(5,248)(4,405)(4,528)(5,153)(3,988)(3,806)(2,501)(1,372)(1,512)(451)(1,725)(144)
Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.
(1) November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 billion from a mutual fund clearing services client. February 2021 includes an outflow of $14.4 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 December 2021, banking accounts were reduced as a result of inactive account closures.
(5) Schwab One®, certain cash equivalents, bank deposits, third-party bank deposit accounts, and money market fund balances as a percentage of total client assets.
(6) Represents average total interest-earning assets on the company’s balance sheet.
(7) Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.
(8) 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.
(9) Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.
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THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)
In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Schwab’s fourth quarter earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwab’s results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies.

Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.
Non-GAAP Adjustment or MeasureDefinitionUsefulness to Investors and Uses by Management
Acquisition and integration-related costs and amortization of acquired intangible assetsSchwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, and, where applicable, the income tax effect of these expenses.

Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Company’s revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives.		We exclude acquisition and integration-related costs and amortization of acquired intangible assets for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwab’s ongoing operations, and is useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods.

Acquisition and integration-related costs fluctuate based on the timing of acquisitions and integration activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Company’s ongoing business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Company’s underlying operating performance.
Return on tangible common equityReturn on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets — net, and related deferred tax liabilities.Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwab’s balance sheet.

The Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria.


- 11 -
THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)
The tables below present reconciliations of GAAP measures to non-GAAP measures:
Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Total Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet Income
Total expenses excluding interest (GAAP),
  Net income (GAAP)		$2,685 $1,580 $2,700 $1,135 $10,807 $5,855 $7,391 $3,299 
Acquisition and integration-related costs (1)
(101)101 (282)282 (468)468 (442)442 
Amortization of acquired intangible assets(154)154 (147)147 (615)615 (190)190 
Income tax effects (2)
N/A(60)N/A(105)N/A(268)N/A(154)
Adjusted total expenses (non-GAAP),
  Adjusted net income (non-GAAP)		$2,430 $1,775 $2,271 $1,459 $9,724 $6,670 $6,759 $3,777 
(1) Acquisition and integration-related costs for the three and twelve months ended December 31, 2021 primarily consist of $56 million and $283 million of compensation and benefits, $33 million and $132 million of professional services, and $9 million and $39 million of occupancy and equipment. Acquisition and integration-related costs for the three and twelve months ended December 31, 2020 primarily consist of $193 million and $235 million of compensation and benefits, $66 million and $158 million of professional services, and $10 million and $30 million of other expense.
(2) The income tax effects of the non-GAAP adjustments are determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and are used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis.
N/A Not applicable.

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Amount% of Total Net RevenuesAmount% of Total Net RevenuesAmount% of Total Net RevenuesAmount% of Total Net Revenues
Income before taxes on income (GAAP),
  Pre-tax profit margin (GAAP)		$2,023 43.0 %$1,476 35.3 %$7,713 41.6 %$4,300 36.8 %
Acquisition and integration-related costs101 2.1 %282 6.8 %468 2.5 %442 3.8 %
Amortization of acquired intangible assets154 3.3 %147 3.5 %615 3.4 %190 1.6 %
Adjusted income before taxes on income (non-GAAP),
  Adjusted pre-tax profit margin (non-GAAP)		$2,278 48.4 %$1,905 45.6 %$8,796 47.5 %$4,932 42.2 %

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
AmountDiluted EPSAmountDiluted EPSAmountDiluted EPSAmountDiluted EPS
Net income available to common stockholders (GAAP),
  Earnings per common share — diluted (GAAP)		$1,449 $.76 $1,050 $.57 $5,360 $2.83 $3,043 $2.12 
Acquisition and integration-related costs101 .05 282 .15 468 .25 442 .31 
Amortization of acquired intangible assets154 .08 147 .08 615 .32 190 .13 
Income tax effects(60)(.03)(105)(.06)(268)(.15)(154)(.11)
Adjusted net income available to common stockholders
  (non-GAAP), Adjusted diluted EPS (non-GAAP)		$1,644 $.86 $1,374 $.74 $6,175 $3.25 $3,521 $2.45 

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Return on average common stockholders’ equity (GAAP)
12 %11 %11 %9 %
Average common stockholders’ equity
$46,898 $37,198 $47,318 $33,640 
Less: Average goodwill(11,952)(6,845)(11,952)(6,590)
Less: Average acquired intangible assets — net(9,456)(5,624)(9,685)(5,059)
Plus: Average deferred tax liabilities related to goodwill
and acquired intangible assets — net		1,889 1,005 1,919 1,005 
Average tangible common equity$27,379 $25,734 $27,600 $22,996 
Adjusted net income available to common stockholders (1)
$1,644 $1,374 $6,175 $3,521 
Return on tangible common equity (non-GAAP)24 %21 %22 %15 %
(1) See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).
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