The Charles Schwab Corporation (SCHW) Bundle
A Brief History of Charles Schwab Corporation
Charles Schwab Corporation (CSC) has experienced significant growth and transformation over the years, particularly in the wake of its acquisition of Ameritrade. As of September 30, 2024, total client assets reached $9.92 trillion, reflecting strong organic asset growth and client engagement.
Financial Performance in 2024
For the third quarter of 2024, CSC reported a net income of $1.4 billion, a 25% increase compared to the same quarter in 2023. The year-to-date net income stood at $4.1 billion, up 2% from the previous year. Diluted earnings per share (EPS) were $.71 for the third quarter and $2.05 year-to-date, marking increases of 27% and 1% respectively from 2023.
Revenue Breakdown
Total net revenues in Q3 2024 amounted to $4.8 billion, a 5% rise year-over-year, with year-to-date revenues at $14.3 billion, down 1% from 2023. Key components include:
| Revenue Source | Q3 2024 ($ billion) | Year-to-Date 2024 ($ billion) | Change from 2023 |
|---|---|---|---|
| Net Interest Revenue | 2.2 | 6.6 | -1% (Q3), -9% (YTD) |
| Asset Management Fees | 1.5 | 4.2 | +21% (Q3), +20% (YTD) |
| Trading Revenue | 0.8 | 2.4 | +4% (Q3), -3% (YTD) |
| Bank Deposit Account Fees | 0.15 | 0.49 | -26% (Q3), -8% (YTD) |
Client Engagement Metrics
During Q3 2024, clients opened 972,000 new brokerage accounts, bringing the year-to-date total to 3.1 million. Active brokerage accounts increased by 4% year-over-year, totaling 36.0 million as of September 30, 2024. The daily average trades (DATs) were reported at 5.7 million, reflecting a 9% increase from the prior year.
Integration of Ameritrade
In May 2024, CSC completed the integration of Ameritrade, transitioning approximately $1.9 trillion in client assets across more than 17 million accounts. The company expects to achieve annualized cost synergies between $1.8 billion and $2.0 billion from this integration, with approximately 95% of the anticipated synergies already realized on an annualized run-rate basis.
Market Conditions and Strategic Outlook
As of September 2024, the Federal Reserve's monetary policy changes, including a 50 basis point cut in interest rates, have influenced market conditions, leading to a bullish investor sentiment. The S&P 500 and NASDAQ Composite indices both rose by 21% in the first nine months of 2024.
Capital Management and Stockholder Returns
CSC declared cash dividends of $.75 per share during the first nine months of 2024, totaling $1.379 billion. As of September 30, 2024, the total stockholders’ equity stood at $47.215 billion, reflecting a robust capital structure.
Debt and Leverage Ratios
The consolidated Tier 1 Leverage Ratio was reported at 9.7% as of September 30, 2024. Total liabilities and stockholders’ equity amounted to $466.055 billion.
Future Expectations
Management maintains a positive outlook, with expectations of continued client engagement and asset growth, bolstered by the successful integration of Ameritrade and favorable market conditions.
A Who Owns The Charles Schwab Corporation (SCHW)
Major Shareholders
As of 2024, The Charles Schwab Corporation (SCHW) has a diverse ownership structure, including both institutional and retail investors. The following table summarizes the major shareholders of SCHW:
| Shareholder Type | Shareholder Name | Percentage Ownership |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.6% |
| Institutional Investor | BlackRock, Inc. | 7.4% |
| Institutional Investor | State Street Corporation | 4.5% |
| Institutional Investor | Wellington Management Company, LLP | 3.2% |
| Institutional Investor | Fidelity Management & Research Company | 2.9% |
| Retail Investor | Charles R. Schwab (Founder) | 1.5% |
| Other | Insider Ownership | ~1.2% |
Stock Performance
As of September 30, 2024, the total shares outstanding for The Charles Schwab Corporation are approximately 2,023 million shares. The company has authorized a total of 3 billion shares of common stock and 300 million shares of nonvoting common stock.
Recent Financial Performance
In the third quarter of 2024, Charles Schwab reported net income of $1.408 billion, an increase from $1.125 billion in the same quarter of the previous year. The diluted earnings per share (EPS) was $0.71 for the third quarter of 2024.
Client Assets
The Charles Schwab Corporation managed total client assets of approximately $9.92 trillion as of September 30, 2024. This figure reflects the company's strong position in the financial services industry following the integration of Ameritrade, which completed the conversion of approximately $1.9 trillion in client assets.
Dividends
In 2024, the company declared dividends of $1.379 billion on common and nonvoting common stock, with a per share amount of $0.75. The dividends on preferred stock also reflect the company's commitment to returning value to shareholders. The total dividends declared on preferred stock for the first nine months of 2024 amounted to $321.4 million.
Share Repurchase Program
As of September 30, 2024, Charles Schwab had approximately $8.7 billion remaining under its share repurchase authorization of $15 billion, which was approved on July 27, 2022. There were no repurchases of common stock during the three and nine months ended September 30, 2024.
The Charles Schwab Corporation (SCHW) Mission Statement
Mission Statement Overview
The Charles Schwab Corporation aims to empower individuals to take control of their financial futures through a commitment to providing innovative financial solutions, exceptional service, and a focus on client needs.
Core Values
- Client Focus: Schwab prioritizes the needs of its clients in all aspects of its operations.
- Integrity: The company operates with transparency and honesty.
- Innovation: Constantly seeks to develop new financial products and services that enhance customer experience.
- Social Responsibility: Committed to positively impacting communities and fostering sustainable practices.
Financial Performance Metrics as of September 30, 2024
| Metric | Value |
|---|---|
| Total Client Assets | $9.92 trillion |
| Core Net New Assets (Q3 2024) | $95.3 billion |
| Year-to-Date Core Net New Assets | $252.1 billion |
| Active Brokerage Accounts | 36.0 million |
| Daily Average Trades (Q3 2024) | 5.7 million |
| Net Income (Q3 2024) | $1.4 billion |
| Adjusted Diluted EPS (Q3 2024) | $0.77 |
| Total Revenues (Q3 2024) | $4.847 billion |
Strategic Goals
Schwab is focused on enhancing client engagement and expanding its market share through:
- Leveraging technology to improve user experience.
- Integrating Ameritrade clients and assets post-acquisition.
- Achieving operational efficiencies and cost synergies.
Recent Developments
As of May 2024, Schwab completed the final integration of Ameritrade, converting approximately $1.9 trillion in client assets, which has provided significant growth opportunities.
Capital Management
As of September 30, 2024, Schwab's consolidated Tier 1 Leverage Ratio stood at 9.7%, an increase from 8.5% at year-end 2023, reflecting strong capital retention and earnings growth.
Regulatory Compliance
Schwab meets all capital requirements, with a common equity tier 1 risk-based capital ratio of 29.1% as of September 30, 2024.
Community Engagement
Schwab actively participates in community initiatives aimed at financial literacy and empowerment, reflecting its commitment to social responsibility.
How The Charles Schwab Corporation (SCHW) Works
Company Overview
The Charles Schwab Corporation operates as a bank and brokerage firm, providing a range of financial services to individual investors and institutions. As of September 30, 2024, the company reported total client assets of $9.92 trillion.
Financial Performance
In the third quarter of 2024, the company generated net revenues of $4.847 billion, compared to $4.606 billion in the same period of 2023. This represents a 5% increase year-over-year.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Revenues | $4.847 billion | $4.606 billion | 5% |
| Net Income | $1.408 billion | $1.125 billion | 25% |
| Earnings Per Share (EPS) | $0.71 | $0.56 | 27% |
Revenue Breakdown
The revenue streams for Schwab consist of net interest revenue, asset management and administration fees, trading revenue, and bank deposit account fees. The breakdown for the third quarter of 2024 is as follows:
| Revenue Source | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Interest Revenue | $2.222 billion | $2.237 billion | -1% |
| Asset Management Fees | $1.476 billion | $1.224 billion | 21% |
| Trading Revenue | $797 million | $768 million | 4% |
| Bank Deposit Account Fees | $152 million | $205 million | -26% |
Expenses Analysis
Total expenses excluding interest for the third quarter of 2024 were $3.005 billion, down 7% from $3.223 billion in the same quarter of 2023. Key components of expenses are:
| Expense Type | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Compensation and Benefits | $1.522 billion | $1.770 billion | -14% |
| Occupancy and Equipment | $271 million | $305 million | -11% |
| Advertising and Market Development | $101 million | $102 million | -1% |
| Other | $259 million | $173 million | 50% |
Client Engagement and Growth
Client trading activity remained strong, with daily average trades amounting to 5.7 million for the third quarter of 2024. The company opened 972,000 new brokerage accounts during this period, bringing the year-to-date total to 3.1 million.
Balance Sheet Management
As of September 30, 2024, total assets increased to $466.1 billion, reflecting a 4% growth from the previous quarter. The Tier 1 Leverage Ratio stood at 9.7% at the end of Q3 2024.
Dividend Payments and Share Repurchases
For the first nine months of 2024, Schwab paid cash dividends totaling $1.379 billion on common stock, maintaining a dividend per share of $0.75. The company has $8.7 billion remaining under its share repurchase authorization.
| Dividend Type | Amount Paid (2024) | Amount Paid (2023) |
|---|---|---|
| Common Stock | $1.379 billion | $1.379 billion |
| Preferred Stock Series D | $33 million | $33 million |
| Preferred Stock Series F | $12 million | $12 million |
Integration of Ameritrade
In May 2024, Schwab completed the final client transition from Ameritrade, successfully integrating approximately $1.9 trillion in client assets across more than 17 million client accounts.
How The Charles Schwab Corporation (SCHW) Makes Money
Revenue Streams
The Charles Schwab Corporation generates revenue through various channels, which are categorized primarily into net interest revenue, asset management and administration fees, trading revenue, bank deposit account fees, and other services.
| Revenue Source | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | % Change YoY |
|---|---|---|---|
| Net Interest Revenue | $2,222 | $2,237 | -1% |
| Asset Management and Administration Fees | $1,476 | $1,224 | 21% |
| Trading Revenue | $797 | $768 | 4% |
| Bank Deposit Account Fees | $152 | $205 | -26% |
| Other Revenue | $200 | $172 | 16% |
| Total Net Revenues | $4,847 | $4,606 | 5% |
Net Interest Revenue
Net interest revenue represents a significant portion of Schwab's income. For Q3 2024, Schwab reported net interest revenue of $2.2 billion, reflecting a slight decrease from $2.237 billion in Q3 2023. The decline is attributed primarily to lower average interest-earning assets and higher rates paid on funding sources.
Asset Management and Administration Fees
Asset management and administration fees increased to $1.476 billion in Q3 2024, up 21% from $1.224 billion in Q3 2023. This growth is driven by increased client engagement and higher balances in money market funds and advisory solutions.
Trading Revenue
Trading revenue for Q3 2024 reached $797 million, a 4% increase compared to the prior year. This increase is primarily due to higher trading volumes and changes in client trading activity mix. Year-to-date trading revenue for 2024 is $2.391 billion, down 3% from 2023 due to lower order flow and commissions.
Bank Deposit Account Fees
Bank deposit account fees decreased significantly to $152 million in Q3 2024, a 26% drop from $205 million in Q3 2023. This decline is primarily due to lower average balances in bank deposit accounts (BDA), which totaled $83.1 billion in Q3 2024, down 18% year-over-year.
Client Metrics
As of September 30, 2024, total client assets stood at $9.92 trillion, a 27% increase from $7.82 trillion a year earlier. Active brokerage accounts rose to 36 million, reflecting a 4% increase from the previous year.
| Client Metrics | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total Client Assets (in trillion) | $9.92 | $7.82 | 27% |
| Active Brokerage Accounts (in millions) | 36.0 | 34.5 | 4% |
| New Brokerage Accounts (in thousands) | 972 | 894 | 9% |
| Daily Average Trades (in millions) | 5.7 | 5.2 | 9% |
Expenses and Profitability
Total expenses excluding interest for Q3 2024 were $3.0 billion, down 7% from $3.223 billion in Q3 2023. The decrease reflects lower restructuring costs and acquisition-related expenses. Net income for Q3 2024 was $1.408 billion, a 25% increase from $1.125 billion in Q3 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total Expenses Excluding Interest (in billions) | $3.005 | $3.223 | -7% |
| Net Income (in billions) | $1.408 | $1.125 | 25% |
| Earnings Per Share (EPS) | $0.71 | $0.56 | 27% |
| Return on Average Common Equity | 14% | 14% | 0% |
As of September 30, 2024, Schwab's consolidated Tier 1 Leverage Ratio was 9.7%, reflecting strong capital management. The company continues to focus on optimizing its balance sheet to support growth and profitability.
The Charles Schwab Corporation (SCHW) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- The Charles Schwab Corporation (SCHW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Charles Schwab Corporation (SCHW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Charles Schwab Corporation (SCHW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.