CFO commentary

Schwab strives to keep our stockholders and analysts informed of the firm’s bigger financial picture. Hear from our CFO.

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Periodically, Peter Crawford, our Chief Financial Officer, will use this forum to provide insight and commentary regarding Schwab's financial picture. For any questions, please contact Investor Relations via email or call: Richard G. Fowler, senior vice president: 415-667-1841

The commentary in this section speaks only as of the date specified below. The company makes no commitment to update any of this information.

Latest Commentary

CFO Commentary

March 12, 2021

Starting in early 2020, words like “unprecedented” and “historic” became fixtures in our descriptions of the environment, and the trend has persisted thus far in 2021. As we all continue to grapple with the effects of the COVID-19 pandemic, these first few months of the new year have seen additional political and social unrest, severe weather conditions across the country, and fresh evidence of the enormous strides that Schwab and others in our industry have made in making it easier, simpler, and less expensive for individuals to invest. While retail trading activity overall has been increasing since Schwab helped lead the industry to $0 commissions1 in October 2019, the effects of work-from-home, technology-driven enhancements in access to information, and the increased convenience of stock-trading have further heightened investor engagement. Most recently, the added accelerant of social media-influenced trading has led to a massive surge in interactions for brokerage firms and helped push equity trading volumes to truly breathtaking heights – well beyond the pre-pandemic peak reached during the 2008 financial crisis.

Given our size and reach, it’s no surprise that Schwab – with the inclusion of TD Ameritrade – has seen engagement levels soar as clients utilize our broad array of products, solutions, and educational resources to meet their investing needs.

With the remarkable strength of client engagement continuing through month-end February, I thought it might be useful to spend some time “looking under the hood” – shedding light on some of the underlying dynamics that have given rise to our recent record-breaking client metrics.

As you can see in the charts below, this heightened trading activity is largely a retail-driven event; therefore, we will focus on trends within this segment.

Who's trading?

  • While trading levels are up for all demographics, younger retail clients, with account balances below $100K, are driving a greater percentage of trading volume than in prior periods. While this percentage has doubled over the past two years, it’s clear that clients above the age of 40 still account for the substantial majority of trading activity. Additionally, since October 2019, we have observed a steady build in the contribution to overall DAT volume from accounts open less than a year – growing from ~15% to ~35% today.

What are they trading?

  • While volumes for all trading products have been significantly elevated over the past 12 months, client interest in equities has noticeably outpaced derivatives and other products. And when looking at the most frequently traded stocks by principal value, that interest spans both large cap tech and some newer names that have been the subject of recent social media buzz.

How are they trading?

  • Clients are actively increasing their usage of our digital platforms to place trades, with the usage of mobile increasing 15 percentage points over the past two years. At the same time, both the number of shares per NMS equity trade, as well as the number of contracts per option trade, have continued to decline over that same timeframe. We believe these trends are a combination of several factors: the removal of friction following the broad move to $0 commissions1, an increase in fractional share utilization, and the growing influence of relatively new-to-category investors. 

What are the potential short- and longer-term implications for these trends?

As you heard throughout our recent Winter Business Update, there’s no question job number one is being there for our clients, regardless of the environment, by delivering a modern and reliable investing experience that meets their expectations. In the near-term, we are actively working to enhance our systems and service capacity in order to support current demand as well as position us to appropriately serve ongoing growth. We are also continuing to advance our powerful and intuitive trading capabilities for all skill-levels, which emphasize the importance of best-in-class investor education. From on-demand guided learning paths and expert commentary that covers beginner-to-advanced topics, to direct support from trading specialists, the goal is to provide investors with a broad range of tools to help them feel informed when choosing to interact with the market to help achieve their financial goals.

Looking further out, we expect our approach to capacity planning to evolve beyond historical “peak” reference points as we transition our trading functionality to better support the potential for significant and rapid swings in volume. We’ll look to leverage the cloud where it makes sense to build more flexibility into our capacity management, enabling us to ramp up or down in real-time.

Although we are not in a position to foretell either the sustainability or ultimate trajectory of the recent engagement trends, we do recognize that they will continue to play an integral role in shaping our business momentum as well as our financial results. As we navigate these uncharted waters, we remain guided by our “Through Clients’ Eyes” strategy, including listening to their needs and endeavoring to build trusted relationships with them. We believe such an approach will continue to position Schwab for sustained, long-term success.

Notes:
All data shown on a pro forma combined company basis.  EOP = End of period.  B = Billions.  M = Millions.   K = Thousands.  ASI = Advisor Services Institutional.  AUM = Assets under Management.  NMS = National Market System. 
1. Commissions for all U.S. and Canadian-listed stocks, ETFs, and options online and mobile trades reduced from $4.95 to $0.00 in October 2019; options trades are still subject to the standard $0.65 per-contract fee. 
2. Market Open data through March 8, 2021. 
3. Year-to-date daily logins to Schwab mobile app and TD Ameritrade mobile app through month-end February 2021.

Forward-Looking Statements

This commentary contains forward-looking statements relating to recent trends and implications; enhancements to systems and service capacity; ongoing growth; trading capabilities; capacity planning and management for trading functionality; business momentum; and financial results that reflect management’s expectations as of the date hereof. 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 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; general market conditions, including equity valuations, trading activity, the level of interest rates and credit spreads;  the company’s ability to attract and retain clients and RIAs and grow those relationships and client assets; the company’s ability to monetize client assets; capital and liquidity needs and management; the company’s ability to manage expenses; the migration of BDA balances; the company’s ability to support client activity levels; daily average trades; margin balances; balance sheet cash; the risk that expected revenue and expense synergies and other benefits from the TD Ameritrade and other recent acquisition may not be fully realized or may take longer to realize than expected; the ability to successfully implement integration strategies and plans; market volatility; 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; and other factors set forth in the company’s filings with the Securities and Exchange Commission, including the company’s most recent report on Form 10-K.

 

Past Commentaries

October 6, 2020

Today we announced that we’ve completed the acquisition of TD Ameritrade (“TDA”) in an all-stock transaction with an estimated value of approximately $22 billion. Per the merger agreement, TD Ameritrade stockholders are entitled to receive 1.0837 Schwab shares for each TD Ameritrade share owned, which represents a 17% premium over the 30-day volume weighted average price exchange ratio as of November 20, 2019. Read more >

June 12, 2020

On May 26, 2020, we completed the acquisition of the assets of USAA’s Investment Management Company, a very important milestone for Schwab, USAA members, and the ~400 employees from USAA who joined our company. Given how much the environment has changed since we last provided specific information on this acquisition, I wanted to give you an update on certain relevant data. The transaction brought to Schwab a total of $81 billion in client assets and 1.1 million accounts, for which we paid ~$1.6 billion in cash. We also entered into a long-term referral agreement that makes Schwab the exclusive provider of wealth management and investment brokerage services for USAA members. Read more >

March 13, 2020

With global health concerns relating to COVID-19 weighing on the macroeconomic environment and driving heightened volatility in the financial markets, we thought it might be helpful to spend some time discussing the effects on client activity. Not surprisingly, our clients have turned to us for help in this environment and we’ve been there to support them. Read more >

October 1, 2019

Today, we announced our decision to reduce online trade commissions for U.S. and Canadian-listed equities and ETFs to $0, and to reduce the base charge on options to $0, as well. As noted in the press release, this action is consistent with the principles on which Chuck Schwab founded this company nearly 45 years ago and with the “Through Clients’ Eyes” strategy we have followed ever since then – which have made the Charles Schwab Corporation so successful. Read more >

August 14, 2018

As we announced in our second quarter earnings release, we crossed the $250 billion asset threshold1 for heightened regulatory requirements, ending the period at $262 billion in consolidated assets. While we don't believe the consequences will be disruptive to our business model or our strategy, I wanted to share a brief overview of what crossing this threshold means to Schwab and how we have been preparing over the last few years. Read more >

February 14, 2018

In our January SMART report released today, we noted a $7.2 billion outflow from a mutual fund clearing services ("clearing") client. Since we expect several additional large clearing outflows in early 2018, I wanted to share some context on the business and discuss the potential effect on our reported client asset flows (noticeable) and revenues (immaterial).  Read more >

December 22, 2017

Today, President Trump signed significant tax reform legislation into law and I wanted to spend a moment focusing on the potential impacts to Schwab's effective tax rate. As you may know, we have historically paid close to the full statutory federal corporate income tax rate, so the benefits are likely to be significant – though the new law does include the disallowance of some Schwab-relevant deductions.  Read more >

February 28, 2017

Today we announced another reduction in our online equity, ETF, and option trade commission rates, following moves we announced just a few weeks ago on February 2nd.  With this second action coming right on the heels of the first, I thought it might be useful to share some context regarding how they both fit within our financial planning for 2017.  Read more >

January 19, 2016

Those of you who follow The Charles Schwab Corporation closely may receive our quarterly financial results through a wire service/email, a market data aggregator, or simply by checking our corporate website.  This morning, we began making our results available via another widely-used platform: Twitter.  You can find our page on  with the handle @CharlesSchwab.  Today's activity includes a Tweet noting the availability of fourth quarter 2015 results with a link to our press release, and follow-ups sharing the headlines from this morning's announcement.   Read more >

December 14, 2015

Today we released our November Monthly Activity Report.  While we produced another month of solid client metrics, we have no illusions about another press release stealing the show later this week.  As you know, the Federal Reserve is widely anticipated to begin raising interest rates on December 16th.  We have seen economic and employment reports meet expectations, FOMC minutes evolve, and member speeches show increasing conviction.  Read more >

September 15, 2015

We issued our SMART report for the month of August today, and between the client metrics shown there and the trading data that we've already posted it's clear we've been busy.  With the elevated market volatility late in the month, our clients made extensive use of our branches, phone-based service centers and online capabilities to help keep their investing on track.  Many of them engaged with our financial consultants and subject matter experts to ask questions about how their assets enrolled in our advisory solutions are positioned, as well as assess their holdings and determine what, if any, action should be taken.  Read more >

August 14, 2015

By now, you may have noticed that we recently made a few changes to our disclosures, and I'd like to make sure everyone is aware of these developments as well as provide context for how they help tell our story.  As a large savings and loan holding company, our required reporting has expanded significantly in recent years.  In addition, as Schwab evolves, we revisit our reporting and strive to keep it closely aligned with the everyday workings of the business.  In the second quarter of 2015, we added a new Other Regulatory Disclosures tab to our corporate website, made changes to the Asset Management and Administration Fees (AMAF) table in our earnings release package, and included some new information in our 10-Q filing.  Read more >

January 16, 2015

As we announced in our earnings release today, our Q4 '14 financial results included two nonrecurring items related to the company's non-agency residential mortgage-backed securities (RMBS) portfolio: net litigation proceeds of approximately $28 million and net losses of $8 million from selling securities totaling approximately $500 million. Taken together, these items increased pre-tax income by approximately $20 million, or $.01 per share. With the financial crisis well behind us, it's been a while since we've needed to discuss these securities, so I wanted to walk through some history and share a perspective on these recent developments.  Read more >

October 15, 2014

Concurrent with our Earnings Release today, we are inaugurating a new approach to reporting on our clients' trading activity intra-quarter.  We have retired the inclusion of trade reporting in our Monthly Market Activity Report ("SMART") and are now providing a weekly look at trading activity, including revenue, asset-based, and other trades, which is posted on the Investor Relations landing page on .  Read more >

July 16, 2014

As you look through today's earnings release, you might notice that the size of our balance sheet (shown in the Financial and Operating Highlights table on page 5) hasn't changed much since year-end 2013, continuing to hover around $144 billion. That's unusual for us–for example, the company's balance sheet grew by approximately $8 billion during the second half of 2013. Given the factors influencing this situation, I wanted to share some perspective on current client behavior and ramifications for our capital management going forward.  Read more >

March 31, 2014

As I mentioned in my last post, here are a few more thoughts on the evolution of client behavior during the market recovery, which is now a full five years along: With the S&P 500 up over 170% from its lowest point in the first quarter of 2009 and setting new records, it's not really surprising to see investors put cash back to work in the markets. There are, however, some interesting aspects to the way our clients have reallocated their holdings across products and asset classes during the recovery thus far.  Read more >

March 14, 2014

The S&P 500 Index bottomed at 676.53 on March 9, 2009, so we are now a full five years into the market recovery.  As the recovery has strengthened in recent months, we have been asked more often about individual investor engagement, with the questioner usually equating engagement with trading activity.  Read more >

January 16, 2014

This is my inaugural CFO Commentary. I expect to use this site regularly to provide perspectives on Schwab's financial picture, including color on our performance and details on topical issues. Over time, I can see sharing more significant financial information that might be better discussed in a forum like this, versus press releases or other forms of communication.  Read more >

 

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