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Charles Schwab(SCHW) - 2024 Q2 - Quarterly Results
SCHWCharles Schwab(SCHW)2024-07-16 20:18

Client Assets and Growth - Total client assets reached a record 9.4trillion,up179.4 trillion, up 17% year-over-year[1] - Total Client Assets increased by 17% year-over-year to 9.4 trillion in June 2024[25] - Total client assets increased by 17% year-over-year to 9,407.5billioninQ2−24,upfrom9,407.5 billion in Q2-24, up from 8,015.8 billion in Q2-23[22] - Core net new assets grew 17% year-over-year to 61.2billion[1]−NetNewAssetsgrewby761.2 billion[1] - Net New Assets grew by 7% month-over-month to 33.2 billion in June 2024[25] - Net new assets for Investor Services increased by 11% year-over-year to 39.9billioninQ2−24,comparedto39.9 billion in Q2-24, compared to 36.0 billion in Q2-23[22] - Net market gains contributed 214.9billiontoclientassetgrowthinQ2−24,comparedto214.9 billion to client asset growth in Q2-24, compared to 363.8 billion in Q2-23[22] - Investor Services assets increased by 16% year-over-year to 632.9billioninJune2024[25]−AdvisorServicesClientAccountsgrewby16632.9 billion in June 2024[25] - Advisor Services Client Accounts grew by 16% year-over-year to 4.09 million in June 2024[25] - Active brokerage accounts increased 4% year-over-year to 35.6 million[3] - Active brokerage accounts grew by 4% year-over-year to 35,612 thousand in Q2-24, up from 34,382 thousand in Q2-23[22] - Active Brokerage Accounts increased by 4% year-over-year to 35.61 million in June 2024[25] - Client assets receiving ongoing advisory services are up 16% year-over-year[3] - Core Net New Assets Receiving Ongoing Advisory Services decreased by 6% month-over-month to 29.1 billion in June 2024[25] - Year-to-date net flows into Schwab Wealth Advisory and Wasmer Schroeder Strategies increased by 40% and 53%, respectively[3] - Proprietary mutual funds and CTFs grew by 32% year-over-year to 748.0billioninQ2−24,comparedto748.0 billion in Q2-24, compared to 565.5 billion in Q2-23[22] - Total ETF assets rose by 25% year-over-year to 2,088.2billioninQ2−24,upfrom2,088.2 billion in Q2-24, up from 1,674.6 billion in Q2-23[22] - Banking accounts increased by 8% year-over-year to 1,931 thousand in Q2-24, compared to 1,781 thousand in Q2-23[22] - Banking Accounts grew by 8% year-over-year to 1.93 million in June 2024[25] - Workplace Plan Participant Accounts rose by 7% year-over-year to 5,363 thousand in Q2-24, up from 5,003 thousand in Q2-23[22] - Workplace Plan Participant Accounts increased by 7% year-over-year to 5.36 million in June 2024[25] - New brokerage accounts decreased by 10% quarter-over-quarter to 985 thousand in Q2-24, down from 1,094 thousand in Q1-24[22] - Off-platform equity and bond funds, CTFs, and ETFs totaled 31.6billion,31.6 billion, 3.7 billion, and 117.3billionrespectivelyasofJune30,2024[23]FinancialPerformance−Netincomeforthesecondquartertotaled117.3 billion respectively as of June 30, 2024[23] Financial Performance - Net income for the second quarter totaled 1.3 billion, or 0.66dilutedearningspercommonshare[1]−Adjustednetincomeanddilutedcommonearningspershareequaled0.66 diluted earnings per common share[1] - Adjusted net income and diluted common earnings per share equaled 1.5 billion and 0.73,respectively[1]−Netrevenuesforthesecondquarterwere0.73, respectively[1] - Net revenues for the second quarter were 4.69 billion, up 1% year-over-year[4] - Net revenues for the three months ended June 30, 2024, were 4.69billion,comparedto4.69 billion, compared to 4.656 billion in the same period in 2023[12] - Net interest revenue for the three months ended June 30, 2024, was 2.158billion,downfrom2.158 billion, down from 2.29 billion in 2023[12] - Asset management and administration fees increased to 1.383billioninQ22024from1.383 billion in Q2 2024 from 1.173 billion in Q2 2023[12] - Total expenses excluding interest for the three months ended June 30, 2024, were 2.943billion,slightlylowerthan2.943 billion, slightly lower than 2.965 billion in 2023[12] - Net income available to common stockholders for the three months ended June 30, 2024, was 1.211billion,upfrom1.211 billion, up from 1.173 billion in 2023[12] - Earnings per diluted share for the three months ended June 30, 2024, were 0.66,comparedto0.66, compared to 0.64 in 2023[12] - Net revenues for the six months ended June 30, 2024, were 9.43billion,downfrom9.43 billion, down from 9.772 billion in the same period in 2023[12] - Net income available to common stockholders for the six months ended June 30, 2024, was 2.462billion,comparedto2.462 billion, compared to 2.706 billion in 2023[12] - Earnings per diluted share for the six months ended June 30, 2024, were 1.34,downfrom1.34, down from 1.48 in 2023[12] - Weighted-average common shares outstanding (diluted) for the six months ended June 30, 2024, were 1.832 billion, compared to 1.834 billion in 2023[12] - Net interest revenue decreased by 6% YoY to 2,158millioninQ2−24comparedto2,158 million in Q2-24 compared to 2,290 million in Q2-23[14] - Asset management and administration fees increased by 18% YoY to 1,383millioninQ2−24[14]−Totalnetrevenuesremainedflatwitha11,383 million in Q2-24[14] - Total net revenues remained flat with a 1% YoY increase to 4,690 million in Q2-24[14] - Net income available to common stockholders increased by 3% YoY to 1,211millioninQ2−24[14]−Clients′DailyAverageTrades(DATs)increasedby41,211 million in Q2-24[14] - Clients' Daily Average Trades (DATs) increased by 4% YoY to 5,486 thousand in Q2-24[14] - Cash and cash equivalents decreased by 47% YoY to 25.4 billion in Q2-24[14] - Total assets decreased by 12% YoY to 449.7billioninQ2−24[14]−Full−timeequivalentemployeesdecreasedby12449.7 billion in Q2-24[14] - Full-time equivalent employees decreased by 12% YoY to 32.3 thousand in Q2-24[14] - Revenue per trade decreased by 9% YoY to 2.25 in Q2-24[14] - Total expenses excluding interest (GAAP) for Q2 2024 were 2.943billion,withnetincome(GAAP)at2.943 billion, with net income (GAAP) at 1.332 billion[32] - Adjusted net income (non-GAAP) for Q2 2024 was 1.465billion,reflectingadjustmentsforacquisitionandintegration−relatedcosts,amortizationofacquiredintangibleassets,andrestructuringcosts[32]−Pre−taxprofitmargin(GAAP)forQ22024was37.21.465 billion, reflecting adjustments for acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs[32] - Pre-tax profit margin (GAAP) for Q2 2024 was 37.2%, while the adjusted pre-tax profit margin (non-GAAP) was 41.0%[33] - Adjusted diluted EPS (non-GAAP) for Q2 2024 was 0.75, compared to GAAP diluted EPS of 0.64[33]−Acquisitionandintegration−relatedcostsforQ22024were0.64[33] - Acquisition and integration-related costs for Q2 2024 were 36 million, representing 0.8% of total net revenues[33] - Amortization of acquired intangible assets for Q2 2024 was 129million,accountingfor2.8129 million, accounting for 2.8% of total net revenues[33] - Restructuring costs for Q2 2024 were 10 million, contributing 0.2% to total net revenues[33] - Return on average common stockholders' equity (GAAP) for Q2 2024 is 14%, down from 17% in Q2 2023[36] - Average common stockholders' equity increased to 33,991millioninQ22024from33,991 million in Q2 2024 from 27,556 million in Q2 2023[36] - Adjusted net income available to common stockholders for Q2 2024 is 1,344million,slightlydownfrom1,344 million, slightly down from 1,373 million in Q2 2023[36] - Return on tangible common equity (non-GAAP) for Q2 2024 is 34%, significantly lower than 62% in Q2 2023[36] - Tier 1 Leverage Ratio (GAAP) as of June 30, 2024 is 9.4% for CSC and 10.9% for CSB[36] - Tier 1 Capital increased to 42,624millionforCSCand42,624 million for CSC and 32,091 million for CSB as of June 30, 2024[36] - Adjusted Tier 1 Leverage Ratio (non-GAAP) as of June 30, 2024 is 5.9% for CSC and 6.2% for CSB[36] - Average tangible common equity for Q2 2024 is 15,720million,upfrom15,720 million, up from 8,848 million in Q2 2023[36] - Adjusted average assets with regulatory adjustments increased to 434,003millionforCSCand434,003 million for CSC and 279,214 million for CSB as of June 30, 2024[36] - AOCI adjustment for CSC as of June 30, 2024 is -16,926million,comparedto−16,926 million, compared to -14,755 million for CSB[36] Asset Management and Fees - Asset management and administration fees totaled 1.4billion,anewquarterlyrecord[5]−Assetmanagementandadministrationfeesincreasedto1.4 billion, a new quarterly record[5] - Asset management and administration fees increased to 1.383 billion in Q2 2024 from 1.173billioninQ22023[12]−Assetmanagementandadministrationfeesincreasedby181.173 billion in Q2 2023[12] - Asset management and administration fees increased by 18% YoY to 1,383 million in Q2-24[14] - Total asset management and administration fees for the six months ended June 30, 2024, were 2,731million[20]−Schwabmoneymarketfundsgenerated2,731 million[20] - Schwab money market funds generated 357 million in revenue in 2024, with an average fee of 0.27%[20] - Total mutual funds, ETFs, and CTFs generated 785millioninrevenuein2024,withanaveragefeeof0.16785 million in revenue in 2024, with an average fee of 0.16%[20] - Fee-based advice solutions generated 510 million in revenue in 2024, with an average fee of 0.39%[20] - Bank loans generated 460millionininterestrevenuein2024,withanaverageyieldof4.44460 million in interest revenue in 2024, with an average yield of 4.44%[18] - Receivables from brokerage clients generated 1,351 million in interest revenue in 2024, with an average yield of 7.78%[18] - Securities lending revenue for the six months ended June 30, 2024, was 171million[18]InterestandYield−Netinterestmarginexpandedto2.03171 million[18] Interest and Yield - Net interest margin expanded to 2.03%, up 1 basis point sequentially[5] - Total interest-earning assets for the six months ended June 30, 2024, were 428,020 million, generating 7,513millionininterestrevenueatanaverageyieldof3.497,513 million in interest revenue at an average yield of 3.49%[18] - Net interest revenue for the six months ended June 30, 2024, was 4,391 million, representing a 2.03% yield[18] - Total funding sources for the six months ended June 30, 2024, were 428,020million,withanaverageinterestexpenseof1.57428,020 million, with an average interest expense of 1.57%[18] - Average Interest-Earning Assets decreased by 13% year-over-year to 417.15 billion in June 2024[25] - Mutual Fund and Exchange-Traded Fund Net Buys (Sells) decreased by 17% year-over-year to 85.2billioninJune2024[25]CapitalandEfficiencyMetrics−AdjustedTier1LeverageRatioincludesaccumulatedothercomprehensiveincome(AOCI)toprovideasupplementalmeasureofthecompany′scapitallevels[28]−ReturnontangiblecommonequityisusedasasupplementalmeasuretoassesscapitalefficiencyandreturnsrelativetothecompositionofSchwab′sbalancesheet[28]−ThecompanyusesadjusteddilutedEPSandreturnontangiblecommonequityascomponentsofperformancecriteriaforemployeebonusandexecutivemanagementincentivecompensationarrangements[28]−AdjustedTier1LeverageRatio(non−GAAP)asofJune30,2024is5.985.2 billion in June 2024[25] Capital and Efficiency Metrics - Adjusted Tier 1 Leverage Ratio includes accumulated other comprehensive income (AOCI) to provide a supplemental measure of the company's capital levels[28] - Return on tangible common equity is used as a supplemental measure to assess capital efficiency and returns relative to the composition of Schwab's balance sheet[28] - The company uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and executive management incentive compensation arrangements[28] - Adjusted Tier 1 Leverage Ratio (non-GAAP) as of June 30, 2024 is 5.9% for CSC and 6.2% for CSB[36] - Average tangible common equity for Q2 2024 is 15,720 million, up from 8,848millioninQ22023[36]−Adjustedaverageassetswithregulatoryadjustmentsincreasedto8,848 million in Q2 2023[36] - Adjusted average assets with regulatory adjustments increased to 434,003 million for CSC and 279,214millionforCSBasofJune30,2024[36]−AOCIadjustmentforCSCasofJune30,2024is−279,214 million for CSB as of June 30, 2024[36] - AOCI adjustment for CSC as of June 30, 2024 is -16,926 million, compared to -14,755millionforCSB[36]RestructuringandCosts−Fourthquarterof2023included14,755 million for CSB[36] Restructuring and Costs - Fourth quarter of 2023 included 16 million in restructuring costs[15] - Restructuring costs for Q2 2024 were $10 million, contributing 0.2% to total net revenues[33]