Summary
Charles Schwab Corporation (SCHW) reported strong financial performance for the second quarter and first half of 2021, significantly driven by the acquisition of TD Ameritrade (TDA) completed in late 2020. Total net revenues surged 85% year-over-year for the quarter and 82% for the first half, largely due to the inclusion of TDA's operations. Net income available to common stockholders increased by 80% and 82% respectively, demonstrating the accretive impact of the acquisition. The company saw robust growth in client assets, reaching $7.57 trillion by the end of Q2 2021, an 84% increase from the prior year, fueled by strong net new client asset inflows, particularly in 'core' net new assets which grew by 133% in the quarter. Despite a moderation in trading activity from the surge in Q1 2021, trading revenues remained substantially higher than the prior year. The integration of TD Ameritrade is progressing, with expectations of significant cost synergies and client conversion within 30-36 months, although integration costs and technology build-out have increased. Schwab's balance sheet remains strong, with a Tier 1 Leverage Ratio of 6.4% at quarter-end. The company is actively managing its capital and liquidity, including recent debt and preferred stock issuances. Regulatory matters, including an SEC investigation into Schwab Intelligent Portfolios, have resulted in a $200 million charge in the current quarter, but the company is cooperating with the SEC to resolve the matter.
Financial Highlights
39 data points| Revenue | $4.53B |
| Interest Expense | $121.00M |
| Net Income | $1.26B |
| EPS (Basic) | $0.59 |
| EPS (Diluted) | $0.59 |
| Shares Outstanding (Basic) | 1.89B |
| Shares Outstanding (Diluted) | 1.90B |
Key Highlights
- 1Total net revenues increased by 85% to $4.5 billion in Q2 2021 and by 82% to $9.2 billion in the first six months of 2021, primarily driven by the inclusion of TD Ameritrade.
- 2Net income available to common stockholders grew significantly, up 80% to $1.1 billion in Q2 2021 and 82% to $2.5 billion in the first six months of 2021.
- 3Total client assets reached $7.57 trillion by June 30, 2021, an 84% increase year-over-year, supported by strong net new client asset inflows.
- 4Core net new client assets saw substantial growth, increasing 133% in Q2 2021 compared to the prior year.
- 5Trading revenue saw a significant increase of over 390% in Q2 2021 and over 470% in the first six months of 2021, largely due to the TDA acquisition and higher client engagement.
- 6The company incurred a $200 million charge related to a tentative agreement with the SEC staff to resolve an investigation into Schwab Intelligent Portfolios.
- 7The integration of TD Ameritrade is on track for client conversion within 30-36 months, with expected annualized cost synergies of $1.8 billion to $2.0 billion.