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WESTLAKE, Texas--(BUSINESS WIRE)--The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2020 was $1.1 billion, compared with $698 million for the third quarter of 2020, and $852 million for the fourth quarter of 2019. Net income for the twelve months ended December 31, 2020 was $3.3 billion, compared with $3.7 billion for the year-earlier period. The companys financial results include TD Ameritrade from closing on October 6, 2020 forward, as well as certain acquisition and integration-related costs and the amortization of acquired intangibles. Together these transaction-related expenses totaled $429 million and $632 million on a pre-tax basis, for the fourth quarter and full-year 2020, respectively. Beginning with the second quarter of 2020, the companys financial presentations include references to adjusted measures of expenses, net income, diluted earnings per common share, and pre-tax profit margin, as well as return on tangible common equity (ROTCE), which are intended to help investors evaluate Schwabs operating performance as well as facilitate a meaningful comparison of our current results to both historic and future periods. Three Months Ended December 31, % Twelve Months Ended December 31, % Financial Highlights 2020 2019 Change 2020 2019 Change Net revenues (in millions) $ 4,176 $ 2,606 60% $ 11,691 $ 10,721 9% Net income (in millions) GAAP $ 1,135 $ 852 33% $ 3,299 $ 3,704 (11)% Adjusted (1) $ 1,459 $ 871 68% $ 3,777 $ 3,744 1% Diluted earnings per common share GAAP $ .57 $ .62 (8)% $ 2.12 $ 2.67 (21)% Adjusted (1) $ .74 $ .63 17% $ 2.45 $ 2.70 (9)% Pre-tax profit margin GAAP 35.3 % 42.7 % 36.8 % 45.2 % Adjusted (1) 45.6 % 43.6 % 42.2 % 45.7 % Return on average common stockholders equity (annualized) 11 % 17 % 9 % 19 % Return on tangible common equity (annualized) (1) 21 % 19 % 15 % 21 % (1) Further details on non-GAAP financial measures and a reconciliation of such measures to reported results are included on pages 11-12 of this release. CEO Walt Bettinger said, Producing record operating performance and closing the largest brokerage acquisition in history during the fourth quarter of 2020 was an extraordinary capstone to an extraordinary year. Schwabs unrelenting commitment to seeing through clients eyes helped us not only stand tall throughout the events of the past twelve months, but also enabled us to enter 2021 larger, stronger, and more capable of serving clients than ever. The impact of COVID-19, along with social and political turmoil, created an unprecedented combination of personal and macroeconomic challenges for our clients, employees and stockholders alike, Mr. Bettinger continued. The pandemics rapid escalation in early 2020 was accompanied by volatile equity markets and further easing of monetary policy. As the year progressed, government aid packages and vaccine developments helped settle the markets, with the S&P 500 eventually erasing its pandemic-related losses to finish up 16% from December 2019. Against this backdrop, client engagement with the financial markets rose to record levels pro-forma combined new-to-firm households increased more than 175% compared to 2019, with the number of households placing trades up more than 50% year-over-year. Our clients also continued to set numerous single-day trading records, including a peak of 7.8 million trades on November 9. As we collectively focused on helping clients navigate the trials of this environment, they rewarded us with a record $281.9 billion in core net new assets including a record $119.4 billion in the fourth quarter exceeding $200 billion for the third consecutive year. At December 31, total client assets reached a record of $6.69 trillion spread across 29.6 million brokerage accounts, up 66% and 140%, respectively, from a year ago. Mr. Bettinger added, Throughout 2020, we persisted in executing our strategy, working tirelessly to reinforce our overall value proposition and share the benefits of increased scale with our clients. Notable solutions introduced during the year included Schwab Intelligent Income and Schwab PlanTM, each designed to assist with key investing and planning needs. In addition, we made several enhancements to our mobile app which supported 2.6 million unique users during the year, up 54% from 2019 such as the integration of Schwab Intelligent Portfolios as well as the launch of Schwab Assistant, a chatbot that enables clients to intuitively perform tasks on-demand. Our ongoing investments in technology that improve both the client experience and our efficiency helped us to accommodate unprecedented levels of activity in 2020 Schwab alone handled 2.3 billion total interactions across web, mobile, chat, and direct messaging. Access to guidance remains extremely important in this environment. Advised assets made up roughly half of our overall client assets at December 31, and assets enrolled in digital advisory ended the year at $57.9 billion, up 18%. For our registered investment advisor clients, weve made strides in improving our service delivery by better aligning advisors with the teams and resources that support their particular needs. Additionally, we continued to expand our digital service capabilities to help advisors more seamlessly and efficiently support existing clients, cultivate new relationships, and scale their businesses. We also celebrated the 30th anniversary of Schwab IMPACT with a virtual format that included advisors who custody client assets with TD Ameritrade for the first time. The conference brought together participants from around the country in an interactive forum, with a record 2,200 advisors in attendance. Our focus remains unchanged as we work to create a combined custodian positioned to deliver top-quality service and value to advisors of all sizes across a rapidly growing industry. In addition to TD Ameritrade, we also successfully closed three other acquisitions during the year, which each support our key strategic initiatives in unique ways. The USAA transaction added incremental scale as we welcomed over 1 million new accounts and $80 billion in brokerage and wealth management client assets, as well as a long-term referral arrangement, which is well underway. The acquisition of Motifs technology and hiring of their staff enables us to accelerate progress on personalized investing capabilities. Similarly, Wasmer SchroederTM Strategies advances our efforts to develop proprietary solutions that benefit clients by allowing us to deliver a range of fixed income offerings designed specifically to meet our clients needs. And finally, TD Ameritrade not only builds scale, but also supports our ability to meet specific needs across client segments. Mr. Bettinger concluded, As I reflect on 2020, I feel a deep sense of gratitude to our clients, for entrusting us with record levels of new business, to our employees for their diligent commitment to serving others while balancing the health and safety of their own families, and to our stockholders, for focusing on the long-term, despite a volatile year and another round of accommodative interest rate policies instituted by the Federal Reserve. Pulling off our to-do list in an environment like the past twelve months takes a very special team, and I am more certain than ever that we have the talent, culture, and client-first strategy needed to successfully pursue the tremendous growth opportunities still ahead of us. CFO Peter Crawford commented, Schwabs 2020 financial results, which include TD Ameritrade from October 6 forward, demonstrate our ongoing success with clients and the benefits of our diversified revenue model in the face of environmental headwinds. During March, the Federal Reserve acted to support the economy by cutting the Fed Funds rate from 1.75% to near zero and announcing sizeable asset purchase programs. Mortgage refinancing activity subsequently accelerated and our net interest margin was impacted by both historically low rates and increased prepayments of mortgage-backed securities held in our investment portfolio. Strong growth in interest-earning assets via client asset inflows and allocation decisions, as well as our TD Ameritrade acquisition, helped limit the resulting year-over-year decline in net interest revenue to just 6% to $6.1 billion. Growing balances in advisory solutions and a robust rebound in equity markets led to an 8% increase in asset management and administration fees to $3.5 billion. Record client trading activity, and the addition of TD Ameritrade, led to an 88% increase in trading revenue to $1.4 billion even as we absorbed a full-year impact of the commission reductions we implemented late in 2019. With the TD Ameritrade acquisition, our fourth quarter results included bank deposit account (BDA) fee revenue for the first time, which totaled $355 million for the period from close to year-end. BDA balances grew by 6% during that period and ended the year at $165.9 billion. Overall, while both Schwab and TD Ameritrade were performing well independently, we believe our first reported results as a combined firm help support the case that were creating an even more resilient business, producing fourth quarter revenues that were up 60% relative to standalone Schwab on a year-over-year basis. On the expense front, our 2020 spending was in-line with expectations given our acquisition activities, along with the need to support our clients and employees as they navigated uniquely challenging environmental stresses, Mr. Crawford continued. Total GAAP expenses increased 26% to $7.4 billion for the year, which encompassed $442 million in acquisition and integration-related costs and $190 million in amortization of acquired intangibles. Exclusive of these items (1), adjusted total expenses were up 16% year-over-year, with approximately 13% attributable to including our acquisitions for part of 2020. The challenges of the past twelve months notwithstanding, our flexibility as an organization enabled us to successfully harness efficiencies and leverage our scale in order to produce a still-solid 36.8% pre-tax profit margin (42.2% on an adjusted basis) and a 9% return on equity (15% ROTCE) for the year (1). Mr. Crawford added, Last years combination of stiff revenue headwinds and remarkable growth provides a clear example of why we remain focused on building a strong balance sheet capable of supporting our business in any environment. Our consolidated balance sheet grew 87% to end the year at $549 billion, reflecting both our substantial organic growth and the absorption of TD Ameritrades margin book and other interest-earning assets. We ended the year with a preliminary consolidated Tier 1 Leverage Ratio of 6.3%, which reflects the impact of that acquisition as well as the issuance of an additional $2.5 billion of preferred equity in early December. Mr. Crawford concluded, 2020 was an intensely challenging year in which we stayed true to our heritage. Together, our expanded team pushed through the business obstacles triggered by COVID-19 uncertainty, volatility, and complexity to effectively balance near-term profitability with driving strategic progress and helping solidify our competitive positioning. While we cannot predict what the future holds, we know that consistent growth is only made possible by managing for the long-term and serving our clients with clarity and focus regardless of the circumstances. (1) Further details on non-GAAP financial measures and a reconciliation of such measures to reported results are included on pages 11-12 of this release. Commentary from the CFO Periodically, our Chief Financial Officer provides insight and commentary regarding Schwabs financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on The Charles Schwab Corporations recently completed acquisition of TD Ameritrade, was posted on October 6, 2020. Winter Business Update The company has scheduled a Winter Business Update for institutional investors on Tuesday, February 2, 2021. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 12:30 p.m. PT, 11:00 a.m. - 3:30 p.m. ET. Registration for this Update is accessible at https://www.schwabevents.com/corporation. Forward-Looking Statements This press release contains forward-looking statements relating to investments and acquisitions to improve the client experience, expand products and services to meet client needs, diversify revenues, and drive scale and efficiency; growth opportunities; the integration of TD Ameritrade; growth in the client base, accounts, and assets; building a strong balance sheet; and balancing near-term profitability with ongoing investment to support current and long-term growth. These forward-looking statements reflect managements expectations as of the date hereof. Achievement of these expectations and objectives 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 companys ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure, in a timely and successful manner; the ability to support client activity levels; the ability to successfully implement integration strategies and plans; the risk that expected revenue and expense synergies and other benefits from recent acquisitions may not be fully realized or may take longer to realize than expected; general market conditions, including equity valuations, trading activity, and credit spreads; the companys ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; client use of the companys advisory solutions and other products and services; capital and liquidity needs and management; client cash allocations; client sensitivity to rates; the level of client assets, including cash balances; the companys ability to monetize client assets; the companys ability to manage expenses; 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 companys most recent reports on Form 10-K and Form 10-Q. About Charles Schwab The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 29.6 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.5 million banking accounts, and approximately $6.69 trillion in client assets. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com. TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly-owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. THE CHARLES SCHWAB CORPORATION Consolidated Statements of Income (In millions, except per share amounts) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Net Revenues Interest revenue $ 1,905 $ 1,763 $ 6,531 $ 7,580 Interest expense (96) (168) (418) (1,064) Net interest revenue 1,809 1,595 6,113 6,516 Asset management and administration fees (1) 987 845 3,475 3,211 Trading revenue (2) 854 122 1,416 752 Bank deposit account fees 355 355 Other (2) 171 44 332 242 Total net revenues 4,176 2,606 11,691 10,721 Expenses Excluding Interest Compensation and benefits 1,398 806 3,954 3,320 Professional services 269 186 843 702 Occupancy and equipment 254 151 703 559 Advertising and market development 123 90 326 307 Communications 127 66 353 253 Depreciation and amortization (3) 130 87 414 322 Amortization of acquired intangible assets (3) 147 7 190 27 Regulatory fees and assessments 57 30 163 122 Other 195 71 445 261 Total expenses excluding interest 2,700 1,494 7,391 5,873 Income before taxes on income 1,476 1,112 4,300 4,848 Taxes on income 341 260 1,001 1,144 Net Income 1,135 852 3,299 3,704 Preferred stock dividends and other 85 51 256 178 Net Income Available to Common Stockholders $ 1,050 $ 801 $ 3,043 $ 3,526 Weighted-Average Common Shares Outstanding: Basic 1,848 1,284 1,429 1,311 Diluted 1,855 1,293 1,435 1,320 Earnings Per Common Shares Outstanding (4): Basic $ .57 $ .62 $ 2.13 $ 2.69 Diluted $ .57 $ .62 $ 2.12 $ 2.67 (1) Includes fee waivers of $68 million and $127 million for the three and twelve months ended December 31, 2020, respectively. (2) Beginning in the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change. (3) Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change. (4) For the three and twelve months ended December 31, 2020, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class. THE CHARLES SCHWAB CORPORATION Financial and Operating Highlights (Unaudited) Q4-20 % change 2020 2019 vs. vs. Fourth Third Second First Fourth (In millions, except per share amounts and as noted) Q4-19 Q3-20 Quarter Quarter Quarter Quarter Quarter Net Revenues Net interest revenue 13 % 35 % $ 1,809 $ 1,343 $ 1,389 $ 1,572 $ 1,595 Asset management and administration fees 17 % 15 % 987 860 801 827 845 Trading revenue (1) N/M N/M 854 181 193 188 122 Bank deposit account fees N/M N/M 355 Other (1) N/M 167 % 171 64 67 30 44 Total net revenues 60 % 71 % 4,176 2,448 2,450 2,617 2,606 Expenses Excluding Interest Compensation and benefits 73 % 66 % 1,398 840 819 897 806 Professional services 45 % 39 % 269 194 198 182 186 Occupancy and equipment 68 % 64 % 254 155 152 142 151 Advertising and market development 37 % 86 % 123 66 70 67 90 Communications 92 % 74 % 127 73 78 75 66 Depreciation and amortization (2) 49 % 34 % 130 97 97 90 87 Amortization of acquired intangible assets (2) N/M N/M 147 25 12 6 7 Regulatory fees and assessments 90 % 58 % 57 36 36 34 30 Other 175 % 167 % 195 73 100 77 71 Total expenses excluding interest 81 % 73 % 2,700 1,559 1,562 1,570 1,494 Income before taxes on income 33 % 66 % 1,476 889 888 1,047 1,112 Taxes on income 31 % 79 % 341 191 217 252 260 Net Income 33 % 63 % $ 1,135 $ 698 $ 671 $ 795 $ 852 Preferred stock dividends and other 67 % 2 % 85 83 50 38 51 Net Income Available to Common Stockholders 31 % 71 % $ 1,050 $ 615 $ 621 $ 757 $ 801 Earnings per common share (3): Basic (8) % 19 % $ .57 $ .48 $ .48 $ .59 $ .62 Diluted (8) % 19 % $ .57 $ .48 $ .48 $ .58 $ .62 Dividends declared per common share 6 % $ .18 $ .18 $ .18 $ .18 $ .17 Weighted-average common shares outstanding: Basic 44 % 43 % 1,848 1,289 1,288 1,287 1,284 Diluted 43 % 43 % 1,855 1,294 1,294 1,294 1,293 Performance Measures Pre-tax profit margin 35.3 % 36.3 % 36.2 % 40.0 % 42.7 % Return on average common stockholders equity (annualized) (4) 11 % 10 % 10 % 14 % 17 % Financial Condition (at quarter end, in billions) Cash and cash equivalents 38 % 47 % $ 40.3 $ 27.5 $ 33.6 $ 68.5 $ 29.3 Cash and investments segregated 146 % 70 % 50.4 29.6 33.2 34.3 20.5 Receivables from brokerage clients net 195 % 154 % 64.4 25.4 21.4 19.0 21.8 Available for sale securities (5) N/M 11 % 337.4 303.8 281.2 221.2 61.4 Held to maturity securities (5) (100) % 134.7 Bank loans net 31 % 7 % 23.8 22.3 20.9 19.5 18.2 Total assets 87 % 31 % 549.0 419.4 400.5 370.8 294.0 Bank deposits 63 % 12 % 358.0 320.7 301.6 277.5 220.1 Payables to brokerage clients 166 % 100 % 104.2 52.0 50.1 49.3 39.2 Long-term debt 84 % 74 % 13.6 7.8 8.5 8.5 7.4 Stockholders equity 159 % 79 % 56.1 31.3 30.8 26.3 21.7 Other Full-time equivalent employees (at quarter end, in thousands) 62 % 45 % 32.0 22.1 21.8 20.2 19.7 Capital expenditures purchases of equipment, office facilities, and property, net (in millions) (4) % 64 % $ 200 $ 122 $ 169 $ 250 $ 209 Expenses excluding interest as a percentage of average client assets (annualized) 0.17 % 0.14 % 0.16 % 0.16 % 0.15 % Clients Daily Average Trades (DATs) (in thousands) N/M N/M 5,796 1,460 1,619 1,540 785 Number of Trading Days (2) % 63.0 64.0 63.0 62.0 63.0 Revenue Per Trade (6) (5) % 21 % $ 2.34 $ 1.94 $ 1.89 $ 1.97 $ 2.47 (1) Beginning in the first quarter of 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior periods have been reclassified to reflect this change. (2) Beginning in the third quarter of 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change. (3) During the fourth quarter of 2020, the Company had voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class. (4) Return on average common stockholders equity is calculated using net income available to common stockholders divided by average common stockholders equity. (5) On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part I Item 1 Note 5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. (6) Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days. N/M Not meaningful. THE CHARLES SCHWAB CORPORATION Net Interest Revenue Information (In millions, except ratios or as noted) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Average Balance Interest Revenue/ Expense Average Yield/ Rate Average Balance Interest Revenue/ Expense Average Yield/ Rate Average Balance Interest Revenue/ Expense Average Yield/ Rate Average Balance Interest Revenue/ Expense Average Yield/ Rate Interest-earning assets Cash and cash equivalents $ 35,008 $ 8 0.09 % $ 20,563 $ 86 1.64 % $ 39,052 $ 120 0.30 % $ 23,512 $ 518 2.17 % Cash and investments segregated 45,828 13 0.11 % 18,434 81 1.71 % 34,100 141 0.41 % 15,694 345 2.17 % Receivables from brokerage clients 53,719 444 3.23 % 19,241 185 3.77 % 28,058 848 2.97 % 19,270 821 4.20 % Available for sale securities (1,2) 305,231 1,103 1.44 % 56,528 357 2.51 % 253,555 4,537 1.78 % 58,181 1,560 2.67 % Held to maturity securities (2) 136,717 870 2.53 % 134,708 3,591 2.65 % Bank loans 22,971 134 2.34 % 17,457 141 3.22 % 20,932 545 2.60 % 16,832 584 3.47 % Total interest-earning assets 462,757 1,702 1.46 % 268,940 1,720 2.53 % 375,697 6,191 1.64 % 268,197 7,419 2.75 % Securities lending revenue (3) 201 41 334 147 Other interest revenue (3) 2 2 6 14 Total interest-earning assets (4) $ 462,757 $ 1,905 1.63 % $ 268,940 $ 1,763 2.59 % $ 375,697 $ 6,531 1.73 % $ 268,197 $ 7,580 2.80 % Funding sources Bank deposits $ 336,912 $ 12 0.01 % $ 211,172 $ 84 0.16 % $ 291,206 $ 93 0.03 % $ 212,605 $ 700 0.33 % Payables to brokerage clients 77,160 2 0.01 % 27,051 11 0.16 % 46,347 12 0.02 % 24,353 79 0.33 % Short-term borrowings (5) 306 0.19 % 11 1.72 % 89 0.20 % 17 2.36 % Long-term debt 11,903 77 2.59 % 7,428 66 3.54 % 8,992 289 3.22 % 7,199 258 3.58 % Total interest-bearing liabilities 426,281 91 0.09 % 245,662 161 0.26 % 346,634 394 0.11 % 244,174 1,037 0.42 % Non-interest-bearing funding sources (4) 36,476 23,278 29,063 24,023 Securities lending expense (3) 7 9 33 38 Other interest expense (3) (2) (2) (9) (11) Total funding sources (4) $ 462,757 $ 96 0.08 % $ 268,940 $ 168 0.25 % $ 375,697 $ 418 0.11 % $ 268,197 $ 1,064 0.39 % Net interest revenue $ 1,809 1.55 % $ 1,595 2.34 % $ 6,113 1.62 % $ 6,516 2.41 % (1) Amounts have been calculated based on amortized cost. (2) On January 1, 2020, the Company transferred all of its investment securities designated as held to maturity to the available for sale category, as described in Part I Item 1 Note 5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. (3) Beginning in the fourth quarter of 2020, securities lending revenue has been reclassified from broker-related receivables and other revenue. Securities lending expense has been reclassified from other expense. Prior period amounts have been reclassified to reflect this change. (4) Beginning in the fourth quarter of 2020, broker-related receivables were removed from total interest earning assets and netted against non-interest-bearing funding sources, resulting in an immaterial reduction to total interest-earning assets and total funding sources. Prior period amounts have been reclassified to reflect this change. (5) Interest revenue or expense was less than $500 thousand in the period or periods presented. THE CHARLES SCHWAB CORPORATION Asset Management and Administration Fees Information (In millions, except ratios or as noted) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Average Client Assets Revenue Average Fee Average Client Assets Revenue Average Fee Average Client Assets Revenue Average Fee Average Client Assets Revenue Average Fee Schwab money market funds before fee waivers $ 183,846 $ 136 0.29 % $ 196,074 $ 147 0.30 % $ 200,119 $ 605 0.30 % $ 173,558 $ 525 0.30 % Fee waivers (68) (127) Schwab money market funds 183,846 68 0.15 % 196,074 147 0.30 % 200,119 478 0.24 % 173,558 525 0.30 % Schwab equity and bond funds, ETFs, and collective trust funds (CTFs) 334,113 81 0.10 % 288,750 79 0.11 % 301,598 300 0.10 % 267,213 298 0.11 % Mutual Fund OneSource and other non- transaction fee funds 208,397 163 0.31 % 193,665 154 0.32 % 192,464 599 0.31 % 191,552 606 0.32 % Other third-party mutual funds and ETFs (1,2) 763,494 158 0.08 % 462,466 80 0.07 % 525,379 393 0.07 % 478,037 318 0.07 % Total mutual funds, ETFs, and CTFs (3) $ 1,489,850 470 0.13 % $ 1,140,955 460 0.16 % $ 1,219,560 1,770 0.15 % $ 1,110,360 1,747 0.16 % Advice solutions (3) Fee-based $ 392,148 444 0.45 % $ 262,516 320 0.48 % $ 306,010 1,443 0.47 % $ 246,888 1,198 0.49 % Non-fee-based 78,332 73,356 73,161 70,191 Total advice solutions $ 470,480 444 0.38 % $ 335,872 320 0.38 % $ 379,171 1,443 0.38 % $ 317,079 1,198 0.38 % Other balance-based fees (4) 520,830 58 0.04 % 443,814 54 0.05 % 451,350 208 0.05 % 432,613 216 0.05 % Other (5) 15 11 54 50 Total asset management and administration fees $ 987 $ 845 $ 3,475 $ 3,211 (1) Beginning in the fourth quarter of 2020 includes TD Ameritrade money market funds. (2) Beginning in the fourth quarter of 2019, Schwab ETF OneSourceTM was discontinued as a result of the elimination of online trading commissions for U.S. and Canadian-listed ETFs. (3) Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select, Schwab Advisor Network, Windhaven Strategies, ThomasPartners Strategies, Schwab Index Advantage advised retirement plan balances, Schwab Intelligent Portfolios, Institutional Intelligent Portfolios, Schwab Intelligent Portfolios PremiumTM, TD Ameritrade AdvisorDirect, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report. (4) Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees. (5) Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based. THE CHARLES SCHWAB CORPORATION Growth in Client Assets and Accounts (Unaudited) Q4-20 % Change 2020 2019 vs. vs. Fourth Third Second First Fourth (In billions, at quarter end, except as noted) Q4-19 Q3-20 Quarter Quarter Quarter Quarter Quarter Assets in client accounts Schwab One, certain cash equivalents and bank deposits 79 % 24 % $ 458.4 $ 370.3 $ 349.2 $ 324.4 $ 256.7 Bank deposit account balances N/M N/M 165.9 Proprietary mutual funds (Schwab Funds and Laudus Funds) and CTFs Money market funds (1) (12) % (7) % 176.1 190.3 211.6 203.7 200.8 Equity and bond funds and CTFs (2) 17 % 14 % 142.9 125.5 117.0 99.1 122.5 Total proprietary mutual funds and CTFs (1) % 1 % 319.0 315.8 328.6 302.8 323.3 Mutual Fund Marketplace (3) Mutual Fund OneSource and other non-transaction fee funds 11 % 10 % 223.9 203.6 193.0 161.6 202.1 Mutual fund clearing services 16 % 11 % 252.9 228.4 217.3 180.8 217.4 Other third-party mutual funds (4) 58 % 54 % 1,304.6 848.1 796.5 676.2 824.5 Total Mutual Fund Marketplace 43 % 39 % 1,781.4 1,280.1 1,206.8 1,018.6 1,244.0 Total mutual fund assets 34 % 32 % 2,100.4 1,595.9 1,535.4 1,321.4 1,567.3 Exchange-traded funds (ETFs) Proprietary ETFs (2) 21 % 18 % 198.8 168.9 156.3 136.5 163.8 Other third-party ETFs 107 % 85 % 947.3 512.6 468.0 382.5 457.0 Total ETF assets 85 % 68 % 1,146.1 681.5 624.3 519.0 620.8 Equity and other securities 95 % 72 % 2,504.7 1,453.2 1,305.8 1,035.5 1,286.4 Fixed income securities 15 % 19 % 377.1 318.0 314.8 313.8 327.1 Margin loans outstanding N/M 158 % (60.9) (23.6) (19.4) (17.2) (19.5) Total client assets 66 % 52 % $ 6,691.7 $ 4,395.3 $ 4,110.1 $ 3,496.9 $ 4,038.8 Client assets by business Investor Services 72 % 54 % $ 3,667.9 $ 2,377.7 $ 2,223.5 $ 1,846.8 $ 2,131.0 Advisor Services 58 % 50 % 3,023.8 2,017.6 1,886.6 1,650.1 1,907.8 Total client assets 66 % 52 % $ 6,691.7 $ 4,395.3 $ 4,110.1 $ 3,496.9 $ 4,038.8 Net growth in assets in client accounts (for the quarter ended) Net new assets by business Investor Services (5) N/M N/M $ 939.2 $ 18.9 $ 113.0 $ 35.3 $ 43.1 Advisor Services (6) N/M N/M 751.5 32.3 24.4 37.9 34.2 Total net new assets N/M N/M $ 1,690.7 $ 51.2 $ 137.4 $ 73.2 $ 77.3 Net market gains (losses) N/M N/M 605.7 234.0 475.8 (615.1) 193.1 Net growth (decline) N/M N/M $ 2,296.4 $ 285.2 $ 613.2 $ (541.9) $ 270.4 New brokerage accounts (in thousands, for the quarter ended) (7) N/M N/M 15,774 592 1,652 609 433 Client accounts (in thousands) Active brokerage accounts 140 % 106 % 29,629 14,393 14,107 12,736 12,333 Banking accounts 8 % 1 % 1,499 1,486 1,463 1,426 1,390 Corporate retirement plan participants 18 % 19 % 2,054 1,722 1,716 1,721 1,748 (1) Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations. (2) Includes balances held on and off the Schwab platform. As of December 31, 2020, off-platform equity and bond funds, CTFs, and ETFs were $16.6 billion, $5.6 billion, and $59.3 billion, respectively. (3) Excludes all proprietary mutual funds and ETFs. (4) Fourth quarter of 2020 includes third-party money funds of $19.7 billion related to the acquisition of TD Ameritrade. (5) Fourth quarter of 2020 includes inflows of $890.7 billion related to the acquisition of TD Ameritrade. Second quarter of 2020 includes inflows of $79.9 billion related to the acquisition of the assets of USAAs Investment Management Company and $10.9 billion from a mutual fund clearing services client. Fourth quarter of 2019 includes an inflow of $11.1 billion from a mutual fund clearing services client. (6) Fourth quarter of 2020 includes inflows of $680.6 billion related to the acquisition of TD Ameritrade. Third quarter of 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC. (7) Fourth quarter of 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. Second quarter of 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAAs Investment Management Company. The Charles Schwab Corporation Monthly Activity Report For December 2020 2019 2020 Change Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mo. Yr. Market Indices (at month end) Dow Jones Industrial Average 28,538 28,256 25,409 21,917 24,346 25,383 25,813 26,428 28,430 27,782 26,502 29,639 30,606 3 % 7 % Nasdaq Composite 8,973 9,151 8,567 7,700 8,890 9,490 10,059 10,745 11,775 11,168 10,912 12,199 12,888 6 % 44 % Standard & Poors 500 3,231 3,226 2,954 2,585 2,912 3,044 3,100 3,271 3,500 3,363 3,270 3,622 3,756 4 % 16 % Client Assets (in billions of dollars) Beginning Client Assets 3,942.2 4,038.8 4,051.6 3,862.8 3,496.9 3,778.3 4,009.0 4,110.1 4,278.0 4,489.7 4,395.3 5,878.5 6,421.0 Net New Assets (1) 30.1 20.9 24.4 27.9 15.3 97.5 24.6 11.2 20.0 20.0 1,596.9 32.1 61.7 92 % 105 % Net Market Gains (Losses) 66.5 (8.1) (213.2) (393.8) 266.1 133.2 76.5 156.7 191.7 (114.4) (113.7) 510.4 209.0 Total Client Assets (at month end) 4,038.8 4,051.6 3,862.8 3,496.9 3,778.3 4,009.0 4,110.1 4,278.0 4,489.7 4,395.3 5,878.5 6,421.0 6,691.7 4 % 66 % Core Net New Assets (2) 30.1 20.9 24.4 27.9 15.3 17.6 13.7 2.7 20.0 20.0 25.6 32.1 61.7 92 % 105 % Receiving Ongoing Advisory Services (at month end)(3) Investor Services 337.1 336.8 323.2 291.5 309.9 339.8 345.2 355.6 366.8 361.2 425.3 457.1 471.8 3 % 40 % Advisor Services (4) 1,769.7 1,773.2 1,694.0 1,531.3 1,647.9 1,711.7 1,747.5 1,818.5 1,900.5 1,870.1 2,505.5 2,715.7 2,828.3 4 % 60 % Client Accounts (at month end, in thousands) Active Brokerage Accounts 12,333 12,431 12,521 12,736 12,866 14,007 14,107 14,220 14,311 14,393 29,013 29,202 29,629 1 % 140 % Banking Accounts 1,390 1,403 1,411 1,426 1,439 1,448 1,463 1,480 1,493 1,486 1,496 1,504 1,499 8 % Corporate Retirement Plan Participants 1,748 1,732 1,726 1,721 1,696 1,714 1,716 1,712 1,715 1,722 2,072 2,045 2,054 18 % Client Activity New Brokerage Accounts (in thousands) (5) 164 167 159 283 201 1,250 201 206 202 184 14,718 430 626 46 % N/M Client Cash as a Percentage of Client Assets (6) 11.3 % 11.3 % 12.0 % 15.1 % 14.3 % 14.0 % 13.6 % 13.0 % 12.5 % 12.8 % 13.4 % 12.4 % 12.3 % (10) bp 100 bp Derivative Trades as a Percentage of Total Trades 10.7 % 12.0 % 11.5 % 7.0 % 10.2 % 12.2 % 10.6 % 13.1 % 13.8 % 14.5 % 20.5 % 19.4 % 18.9 % (50) bp 820 bp Mutual Fund and Exchange-Traded Fund Net Buys (Sells) (7,8) (in millions of dollars) Large Capitalization Stock 991 845 (178) 984 (693) (768) (1,254) (2,536) (1,422) (1,360) (935) 4,454 3,693 Small / Mid Capitalization Stock 201 (314) (531) (954) 151 (401) (1,063) (1,476) (441) (497) (753) 2,431 2,293 International 993 1,360 132 (2,116) (2,207) (1,953) (1,580) (773) 230 370 168 2,110 4,112 Specialized 455 762 397 333 2,059 1,512 1,020 1,505 906 115 215 1,985 3,777 Hybrid (96) 615 (257) (4,790) (860) (518) (97) (769) (124) (12) (553) (402) 359 Taxable Bond 4,710 5,714 3,830 (23,142) 1,642 5,469 9,215 7,314 7,680 5,734 5,904 4,825 10,004 Tax-Free Bond 1,255 1,481 1,066 (5,229) (242) 805 1,710 1,297 1,648 1,123 861 1,131 2,165 Net Buy (Sell) Activity (in millions of dollars) Mutual Funds (7) 1,097 2,684 (565) (34,382) (3,863) (564) 1,768 (147) 2,568 757 (2,260) 2,832 6,336 Exchange-Traded Funds (8) 7,412 7,779 5,024 (532) 3,713 4,710 6,183 4,709 5,909 4,716 7,167 13,702 20,067 Money Market Funds 1,515 1,911 1,312 (1,233) 8,465 4,833 (5,673) (9,039) (5,614) (6,627) (4,021) (5,908) (7,332) Selected Average Balances (in millions of dollars) Average Interest-Earning Assets (9,10) 274,911 279,437 278,966 317,850 353,018 361,814 373,986 379,521 384,690 392,784 442,119 466,677 482,394 3 % 75 % Average Bank Deposit Account Balances (10,11) 132,030 162,315 163,463 1 % N/M (1) October 2020 includes an inflow of $1.6 trillion related to the acquisition of TD Ameritrade. July 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC. June 2020 includes an inflow of $10.9 billion from a mutual fund clearing services client. May 2020 includes an inflow of $79.9 billion related to the acquisition of the assets of USAAs Investment Management Company. (2) Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods. (3) Beginning in December 2020, AdvisorDirect assets are presented as Investor Services. In December 2020, $46.5 billion and $50.4 billion for October and November, respectively, were reclassified from Advisor Services to Investor Services. (4) Excludes Retirement Business Services. (5) October 2020 includes 14.5 million new brokerage accounts related to the acquisition of TD Ameritrade. May 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAAs Investment Management Company. (6) Schwab One, certain cash equivalents, bank deposits, and money market fund balances as a percentage of total client assets. (7) Represents the principal value of client mutual fund transactions handled by Schwab, including transactions in proprietary funds. Includes institutional funds available only to Investment Managers. Excludes money market fund transactions. (8) Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs. (9) Represents average total interest-earning assets on the companys balance sheet. (10) October 2020 averages reflect a full month of Schwab balances and 26 days of TD Ameritrade balances following the acquisition closing on October 6, 2020. Calculating the consolidated daily average from the closing date onwards would result in Average Interest Earning Assets and Average Bank Deposit Account Balances of $450,004 million and $157,414 million, respectively. (11) Represents average TD Ameritrade clients uninvested cash sweep account balances held in deposit accounts at third-party financial institutions. THE CHARLES SCHWAB CORPORATION Non-GAAP Financial Measures (In millions, except ratios and per share amounts) (Unaudited) In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Schwabs fourth quarter earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwabs results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies. Schwabs use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below. Non-GAAP Adjustment or Measure Definition Usefulness to Management and Investors Acquisition and integration-related costs and amortization of acquired intangible assets Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Companys business acquisitions, amortization of acquired intangible assets, and, where applicable, the income tax effect of these expenses. Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Companys revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives. We exclude acquisition and integration-related costs and amortization of acquired intangible assets for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwabs ongoing operations, and may be useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods. Acquisition and integration-related costs fluctuate based on the timing of acquisitions and integration activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Companys on-going business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Companys underlying operating performance. Return on tangible common equity Return on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets net, and related deferred tax liabilities. Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwabs balance sheet. The tables below present reconciliations of GAAP measures to non-GAAP measures and include the results of operations for TD Ameritrade beginning October 6, 2020. Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Total Expenses Excluding Interest Net Income Total Expenses Excluding Interest Net Income Total Expenses Excluding Interest Net Income Total Expenses Excluding Interest Net Income Total expenses excluding interest (GAAP), Net income (GAAP) $ 2,700 $ 1,135 $ 1,494 $ 852 $ 7,391 $ 3,299 $ 5,873 $ 3,704 Acquisition and integration-related costs (1) (282) 282 (18) 18 (442) 442 (26) 26 Amortization of acquired intangible assets (147) 147 (7) 7 (190) 190 (27) 27 Income tax effects (2) N/A (105) N/A (6) N/A (154) N/A (13) Adjusted total expenses (non-GAAP), Adjusted net income (non-GAAP) $ 2,271 $ 1,459 $ 1,469 $ 871 $ 6,759 $ 3,777 $ 5,820 $ 3,744 (1) Acquisition and integration-related costs for the three months ended December 31, 2020 primarily consist of $193 million of compensation and benefits, $66 million of professional services, and $10 million of other expense. Acquisition and integration-related costs for the twelve months ended December 31, 2020 primarily consist of $235million of compensation and benefits, $158 million of professional services, and $30 million of other expense. (2) The income tax effect of the non-GAAP adjustments is determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and is used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis. THE CHARLES SCHWAB CORPORATION Non-GAAP Financial Measures (In millions, except ratios and per share amounts) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Amount % of Total Net Revenues Amount % of Total Net Revenues Amount % of Total Net Revenues Amount % of Total Net Revenues Income before taxes on income (GAAP), Pre-tax profit margin (GAAP) $ 1,476 35.3 % $ 1,112 42.7 % $ 4,300 36.8 % $ 4,848 45.2 % Acquisition and integration-related costs 282 6.8 % 18 0.7 % 442 3.8 % 26 0.2 % Amortization of acquired intangible assets 147 3.5 % 7 0.2 % 190 1.6 % 27 0.3 % Adjusted income before taxes on income (non-GAAP), Adjusted pre-tax profit margin (non-GAAP) $ 1,905 45.6 % $ 1,137 43.6 % $ 4,932 42.2 % $ 4,901 45.7 % Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Net income available to common stockholders (GAAP), Earnings per common share diluted (GAAP) $ 1,050 $ .57 $ 801 $ .62 $ 3,043 $ 2.12 $ 3,526 $ 2.67 Acquisition and integration-related costs 282 .15 18 .01 442 .31 26 .02 Amortization of acquired intangible assets 147 .08 7 .01 190 .13 27 .02 Income tax effects (105) (.06) (6) (.01) (154) (.11) (13) (.01) Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP) $ 1,374 $ .74 $ 820 $ .63 $ 3,521 $ 2.45 $ 3,566 $ 2.70 Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 Return on average common stockholders' equity (GAAP) 11 % 17 % 9 % 19 % Average common stockholders' equity $ 37,198 $ 18,757 $ 33,640 $ 18,415 Less: Average goodwill (6,845) (1,227) (6,590) (1,227) Less: Average acquired intangible assets net (5,624) (130) (5,059) (140) Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets net 1,005 67 1,005 67 Average tangible common equity $ 25,734 $ 17,467 $ 22,996 $ 17,115 Adjusted net income available to common stockholders (1) $ 1,374 $ 820 $ 3,521 $ 3,566 Return on tangible common equity (non-GAAP) 21 % 19 % 15 % 21 % (1) See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).

Answer: Schwab Reports Fourth Quarter Earnings Per Share of $.57 GAAP, $.74 Adjusted (1), Bringing Full-Year Results to $2.12 and $2.45, Respectively Core Net New Assets Rise 33% to a Record $281.9 Billion for the Year, Including $61.7 Billion in December Total Client Assets Reach a Record $6.69 Trillion at Year-End, Up 66%