10-KPeriod: FY2019

SCHWAB CHARLES CORP Annual Report, Year Ended Dec 31, 2019

Filed February 26, 2020For Securities:SCHWSCHW-PDSCHW-PJ

Summary

The Charles Schwab Corporation (SCHW) filed its 10-K for the fiscal year ended December 31, 2019, highlighting strong financial performance and significant strategic initiatives. The company reported total net revenues of $10.7 billion, a 6% increase year-over-year, with net income reaching $3.7 billion, up 6% from the previous year. Diluted earnings per share also saw a 9% increase to $2.67. A major development for Schwab in 2019 was the announcement of two significant acquisitions: the planned all-stock acquisition of TD Ameritrade for approximately $26 billion and the acquisition of USAA's Investment Management Company for $1.8 billion in cash. These strategic moves are expected to significantly expand Schwab's scale, enhance its client offerings, and improve operational efficiency. The company also continued to focus on client-centric initiatives, including the elimination of online trading commissions for U.S. and Canadian-listed stocks and ETFs, and base options charges, which is anticipated to drive long-term growth in client assets and accounts. Schwab maintained a disciplined approach to capital management, returning capital to shareholders through dividends and share repurchases while also strengthening its regulatory capital position.

Financial Highlights

40 data points
Beta

Revenue

$10.72B

Net Income

$3.70B

34.5% Net Margin

EPS (Diluted)

$2.67

Total Assets

$294.00B

Cash & Equivalents

$29.34B

Free Cash Flow

$8.62B

Financial Statements
Beta
Revenue$10.72B
Interest Expense$1.06B
Net Income$3.70B
EPS (Basic)$2.69
EPS (Diluted)$2.67
Shares Outstanding (Basic)1.31B
Shares Outstanding (Diluted)1.32B

Key Highlights

  • 1Total net revenues increased by 6% to $10.7 billion in 2019.
  • 2Net income grew by 6% to $3.7 billion, with diluted EPS increasing by 9% to $2.67.
  • 3Announced the planned acquisition of TD Ameritrade for approximately $26 billion in an all-stock transaction.
  • 4Announced the acquisition of USAA's Investment Management Company assets for $1.8 billion in cash.
  • 5Eliminated online trading commissions for U.S. and Canadian-listed stocks and ETFs, and the base charge on options, effective October 7, 2019.
  • 6Client assets grew by 24% to $4.04 trillion at year-end 2019.
  • 7Maintained a strong Tier 1 Leverage Ratio of 7.3% at year-end 2019.

Frequently Asked Questions

In 2019, Charles Schwab reported total net revenues of $10.7 billion, a 6% increase from 2018. Net income was $3.7 billion, also up 6% year-over-year, and diluted earnings per share rose 9% to $2.67. Total client assets grew significantly by 24% to $4.04 trillion by the end of the year.

The most significant strategic developments were the announcements of two major acquisitions: the all-stock acquisition of TD Ameritrade for approximately $26 billion and the acquisition of USAA's Investment Management Company assets for $1.8 billion in cash. Additionally, Schwab eliminated online trading commissions for U.S. and Canadian-listed stocks and ETFs, and the base charge on options, a move aimed at enhancing client value and long-term growth.

Schwab maintained a disciplined approach to capital management. The company's Tier 1 Leverage Ratio was strong at 7.3% at year-end 2019. Schwab returned capital to shareholders by increasing its quarterly cash dividend by 31% and repurchasing $2.2 billion of common stock under its authorized program.

The TD Ameritrade acquisition, expected to close in the second half of 2020, is anticipated to significantly increase Schwab's scale, enhance client experience, provide more resources for independent investment advisors, and improve operating efficiency. The company expects this transaction to be accretive to earnings per share in the third year following completion.