☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3025021
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock – $.01 par value per share
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SCHW
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New York Stock Exchange
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Depositary Shares, each representing a 1/40th ownership interest in a share of 6.00% Non-Cumulative Preferred Stock, Series C
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SCHW PrC
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New York Stock Exchange
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Depositary Shares, each representing a 1/40th ownership interest in a share of 5.95% Non-Cumulative Preferred Stock, Series D
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SCHW PrD
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New York Stock Exchange
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Item 1.
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Business
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•
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Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer with over 360 domestic branch offices in 48 states, as well as a branch in the Commonwealth of Puerto Rico. In addition, Schwab serves clients through branch offices in the United Kingdom (U.K.) and Hong Kong through other subsidiaries of CSC;
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•
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Charles Schwab Bank (CSB), our principal banking entity; and
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•
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Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds®) and for Schwab’s exchange-traded funds (Schwab ETFs™).
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•
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Stockholder Agreement with TD Bank which governs the rights and obligations of Schwab and TD Bank with respect to the Schwab stock that will be acquired by TD Bank in the merger. The Stockholder Agreement sets out, among other things, standstill restrictions, a voting agreement and transfer restrictions. It also provides that TD Bank will have the right to designate up to two directors to be nominated for election to Schwab’s Board of Directors and be members of certain board committees, depending on TD Bank’s ownership percentage of Schwab stock.
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•
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Registration Rights Agreement that provides each of TD Bank, Charles R. Schwab, and, if it elects to be a party, Schwab’s Employee Stock Ownership Plan, up to three “demand” registrations in any 12-month period and customary “piggyback” registration rights.
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•
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Amended and Restated Insured Deposit Account Agreement (Amended IDA Agreement) with TD Bank USA, National Association and TD Bank, National Association (together, the Depository Institutions) which will replace the existing IDA agreement between the Depository Institutions and TD Ameritrade. Under the Amended IDA Agreement, there will be an initial period during which the amounts swept to the Depository Institutions will solely be composed of customer funds from the TD Ameritrade subsidiary broker-dealers. Following this initial period, CSC’s subsidiary broker-dealers, including the broker-dealers it will acquire from TD Ameritrade, can sweep client funds to money market deposit accounts at the Depository Institutions, subject to certain limits.
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•
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Scale and Size of the Business – As one of the largest investment services firms in the U.S., we are able to spread operating costs and amortize new investments over a large base of clients, and harness the resources to evolve capabilities to meet client needs.
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•
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Operating Efficiency – Coupled with scale, our operating efficiency and sharing of infrastructure across different businesses creates a cost advantage that enables us to competitively price products and services while profitably serving clients of various sizes across multiple channels.
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•
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Operating Structure – Providing bank and asset management services to broker-dealer clients helps serve a wider array of needs, thereby deepening relationships, enhancing the stability of client assets, and enabling diversified revenue streams.
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•
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Brand and Corporate Reputation – In an industry dependent on trust, Schwab’s reputation and brand across multiple constituents enable us to attract clients and employees while credibly introducing new products to the market.
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•
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Service Culture – Delivering a great client experience earns the trust and loyalty of clients and increases the likelihood that those clients will refer others.
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•
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Willingness to Disrupt – Management’s willingness to challenge the status quo, including our own business practices, to benefit clients fosters innovation and continuous improvement, which helps to attract more clients and assets.
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•
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Brokerage – an array of full-feature brokerage accounts with equity and fixed income trading, margin lending, options trading, and cash management capabilities including third-party certificates of deposit;
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•
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Mutual funds – third-party mutual funds through the Mutual Fund Marketplace®, including non-transaction fee mutual funds through the Mutual Fund OneSource® service, which also includes proprietary mutual funds, plus mutual fund trading and clearing services to broker-dealers;
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•
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Exchange-traded funds – an extensive offering of ETFs, including both proprietary and third-party ETFs;
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Advice solutions – managed portfolios of both proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management;
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•
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Banking – checking and savings accounts, first lien residential real estate mortgage loans (First Mortgages), home equity lines of credit (HELOCs), and pledged asset lines (PALs); and
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•
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Trust – trust custody services, personal trust reporting services, and administrative trustee services.
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Item 1A.
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Risk Factors
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•
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Large positions in financial instruments collateralized by assets with similar economic characteristics or in securities of a single issuer or industry;
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•
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Mortgage loans and HELOCs to banking clients which are secured by properties in the same geographic region; and
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Client margins, options or futures, pledged assets, and securities lending activities collateralized by or linked to securities of a single issuer, index, or industry.
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•
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Our exposure to changes in interest rates;
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Speculation in the investment community or the press about, or actual changes in, our competitive position, organizational structure, executive team, operations, financial condition, financial reporting and results, expense discipline, or strategic transactions;
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The announcement of new products, services, acquisitions, or dispositions by us or our competitors;
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Increases or decreases in revenue or earnings, changes in earnings estimates by the investment community, and variations between estimated financial results and actual financial results; and
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•
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Sales of a substantial number of shares of our common stock by large stockholders.
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•
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the affirmative vote of (A) the holders of a majority of the outstanding shares of TD Ameritrade common stock approving and adopting the Merger Agreement and (B) the holders (other than TD Bank, the Significant TD Ameritrade Stockholders and their respective affiliates) of a majority of the outstanding shares of TD Ameritrade common stock (other than shares of TD Ameritrade common stock held by TD Bank, the Significant TD Ameritrade Stockholders and their respective affiliates) approving and adopting the Merger Agreement;
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the affirmative vote of (A) a majority of the votes cast by holders of outstanding shares of Schwab common stock approving the share issuance and (B) the holders of a majority of the outstanding shares of Schwab common stock approving the Schwab charter amendment;
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expiration or termination of any applicable waiting period (or extension thereof) under the HSR Act and certain governmental authorizations having been made or obtained and being in full force and effect;
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receipt of noncontrol determinations from the Federal Reserve;
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accuracy of the representations and warranties made in the Merger Agreement by the other party, subject to certain materiality thresholds;
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performance in all material respects by the other party of the obligations required to be performed by it at or prior to completion of the merger; and
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the absence since the date of the Merger Agreement of a material adverse effect on the other party.
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December 31, 2019
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Square Footage
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(amounts in thousands)
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Leased
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Owned
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Location
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Corporate headquarters:
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San Francisco, CA (1)
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481
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—
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Service and other office space:
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Phoenix, AZ
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28
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728
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Denver, CO
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—
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731
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Dallas, TX
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318
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293
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Austin, TX
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83
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490
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Indianapolis, IN
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—
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161
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Orlando, FL
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159
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—
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Chicago, IL
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146
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—
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Richfield, OH
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—
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117
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El Paso, TX
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—
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105
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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December 31,
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2014
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2015
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2016
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2017
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2018
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2019
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The Charles Schwab Corporation
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$
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100
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$
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110
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$
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133
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$
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174
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$
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142
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$
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166
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Standard & Poor’s 500 Index
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$
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100
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$
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101
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$
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114
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$
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138
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$
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132
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$
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174
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Dow Jones U.S. Investment Services Index
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$
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100
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$
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100
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$
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126
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$
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157
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$
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139
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$
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172
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Month
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Total Number of Shares Purchased
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Average
Price Paid per Share |
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Total Number of Shares Purchased as Part of Publicly Announced Program
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Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Program
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October:
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Share repurchase program (1)
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6,357
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$
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36.00
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6,357
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$
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1,780
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Employee transactions (2)
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3
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$
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36.85
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N/A
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N/A
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November:
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Share repurchase program (1)
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—
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$
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—
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—
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$
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1,780
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Employee transactions (2)
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652
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$
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41.97
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N/A
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N/A
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December:
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Share repurchase program (1)
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—
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$
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—
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—
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$
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1,780
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Employee transactions (2)
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5
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$
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49.77
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N/A
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N/A
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Total:
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Share repurchase program (1)
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6,357
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$
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36.00
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6,357
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$
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1,780
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Employee transactions (2)
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660
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$
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42.01
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N/A
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N/A
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Item 6.
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Selected Financial Data
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Selected Financial and Operating Data
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(In Millions, Except Per Share Amounts, Ratios, or as Noted)
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Growth Rates
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Compounded
4-Year
2015-2019 (1)
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Annual
1-Year
2018-2019
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2019
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2018
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2017
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2016
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2015
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Results of Operations
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Net revenues
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14%
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6%
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$
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10,721
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$
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10,132
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$
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8,618
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$
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7,478
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$
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6,380
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Expenses excluding interest
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9%
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5%
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$
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5,873
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$
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5,570
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$
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4,968
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$
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4,485
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$
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4,101
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Net income
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26%
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6%
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$
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3,704
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$
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3,507
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$
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2,354
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$
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1,889
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$
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1,447
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Net income available to common stockholders
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27%
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6%
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$
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3,526
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$
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3,329
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$
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2,180
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$
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1,746
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$
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1,364
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Earnings per common share:
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||||||||||
Basic
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27%
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9%
|
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$
|
2.69
|
|
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$
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2.47
|
|
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$
|
1.63
|
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$
|
1.32
|
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$
|
1.04
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Diluted
|
27%
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9%
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$
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2.67
|
|
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$
|
2.45
|
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$
|
1.61
|
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$
|
1.31
|
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$
|
1.03
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Dividends declared per common share
|
30%
|
|
48%
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$
|
.68
|
|
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$
|
.46
|
|
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$
|
.32
|
|
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$
|
.27
|
|
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$
|
.24
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
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||||||||||
Basic
|
—
|
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(3)%
|
|
1,311
|
|
|
1,348
|
|
|
1,339
|
|
|
1,324
|
|
|
1,315
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Diluted
|
—
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(3)%
|
|
1,320
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|
|
1,361
|
|
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1,353
|
|
|
1,334
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|
|
1,327
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Net interest revenue as a percentage of net revenues
|
|
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|
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61
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%
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|
57
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%
|
|
50
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%
|
|
44
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%
|
|
40
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%
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|||||
Asset management and administration fees as a
percentage of net revenues |
|
|
|
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30
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%
|
|
32
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%
|
|
39
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%
|
|
41
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%
|
|
41
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%
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|||||
Trading revenue as a percentage of net revenues
|
|
|
|
|
6
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%
|
|
8
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%
|
|
8
|
%
|
|
11
|
%
|
|
14
|
%
|
|||||
Effective income tax rate
|
|
|
|
|
23.6
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%
|
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23.1
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%
|
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35.5
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%
|
|
36.9
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%
|
|
36.5
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%
|
|||||
Performance Measures
|
|
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||||||||||
Net revenue growth
|
|
|
|
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6
|
%
|
|
18
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%
|
|
15
|
%
|
|
17
|
%
|
|
5
|
%
|
|||||
Pre-tax profit margin
|
|
|
|
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45.2
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%
|
|
45.0
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%
|
|
42.4
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%
|
|
40.0
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%
|
|
35.7
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%
|
|||||
Return on average common stockholders’ equity
|
|
|
|
|
19
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%
|
|
19
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%
|
|
15
|
%
|
|
14
|
%
|
|
12
|
%
|
|||||
Financial Condition (at year end)
|
|
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||||||||||
Total assets
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12%
|
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(1)%
|
|
$
|
294,005
|
|
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$
|
296,482
|
|
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$
|
243,274
|
|
|
$
|
223,383
|
|
|
$
|
183,705
|
|
Short-term borrowings
|
—
|
|
—
|
|
—
|
|
|
—
|
|
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$
|
15,000
|
|
|
—
|
|
|
—
|
|
||||
Long-term debt
|
27%
|
|
8%
|
|
$
|
7,430
|
|
|
$
|
6,878
|
|
|
$
|
4,753
|
|
|
$
|
2,876
|
|
|
$
|
2,877
|
|
Preferred stock
|
18%
|
|
—
|
|
$
|
2,793
|
|
|
$
|
2,793
|
|
|
$
|
2,793
|
|
|
$
|
2,783
|
|
|
$
|
1,459
|
|
Total stockholders’ equity
|
13%
|
|
5%
|
|
$
|
21,745
|
|
|
$
|
20,670
|
|
|
$
|
18,525
|
|
|
$
|
16,421
|
|
|
$
|
13,402
|
|
Assets to stockholders’ equity ratio
|
|
|
|
|
14
|
|
|
14
|
|
|
13
|
|
|
14
|
|
|
14
|
|
|||||
Debt to total capital ratio (2)
|
|
|
|
|
25
|
%
|
|
25
|
%
|
|
52
|
%
|
|
15
|
%
|
|
18
|
%
|
|||||
Employee Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Full-time equivalent employees (at year end, in thousands)
|
7%
|
|
1%
|
|
19.7
|
|
|
19.5
|
|
|
17.6
|
|
|
16.2
|
|
|
15.3
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
The acquisition of TD Ameritrade; the acquisition of assets of USAA-IMCO, the related funding, and entering into a referral agreement; and the expected closing dates of the acquisitions (see Business Acquisitions in Part I, Item 1; Overview and Capital Management in Part II, Item 7; Commitments and Contingencies in Part II, Item 8 – Notes to Consolidated Financial Statements (Item 8) – Note 14);
|
•
|
Maximizing our market valuation and stockholder returns over time; our belief that developing trusted relationships will translate into more client assets which drives revenue and, along with expense discipline and thoughtful capital management, generates earnings growth and builds stockholder value; and maintaining our market position (see Business Strategy and Competitive Environment and Products and Services in Part I, Item 1);
|
•
|
The impact of pricing reductions on our value proposition, competitive positioning and long-term growth in client assets and accounts (see Sources of Net Revenues in Part I, Item I; Overview in Part II, Item 7);
|
•
|
The impact of legal proceedings and regulatory matters (see Legal Proceedings in Part I, Item 3 and Commitments and Contingencies in Part II, Item 8 – Note 14);
|
•
|
Commitment to balancing long-term profitability with reinvesting for growth; business growth; meaningful capital returns; and intent to return excess capital above our long-term operating objective of 6.75% - 7.00% (see Overview in Part II, Item 7);
|
•
|
The adjustment of rates paid on client-related liabilities; client cash sorting; reducing exposure to lower rates; and the duration difference between liabilities and assets (see Net Interest Revenue in Part II, Item 7);
|
•
|
Capital expenditures (see Total Expenses Excluding Interest in Part II, Item 7);
|
•
|
The phase-out of the use of LIBOR (see Expected Phase-out of LIBOR in Part II, Item 7);
|
•
|
Sources of liquidity, capital, and level of dividends (see Liquidity Risk in Part II, Item 7);
|
•
|
Capital ratios (see Regulatory Capital Requirements in Part II, Item 7);
|
•
|
The expected impact of new accounting standards not yet adopted (see Summary of Significant Accounting Policies in Part II, Item 8 – Note 2); and
|
•
|
The likelihood of indemnification and guarantee payment obligations (see Commitments and Contingencies in Part II, Item 8 – Note 14).
|
•
|
The timing and the ability of us and TD Ameritrade to satisfy the closing conditions in the merger agreement, including stockholder and regulatory approvals;
|
•
|
The timing and the ability of us and USAA-IMCO to satisfy the closing conditions in the purchase agreement, including regulatory approvals and the implementation of conversion plans;
|
•
|
The timing and extent to which we realize expected revenue, expense and other synergies from our acquisitions;
|
•
|
General market conditions, including the level of interest rates, equity valuations, and trading activity;
|
•
|
Our ability to attract and retain clients, develop trusted relationships, and grow client assets;
|
•
|
Client use of our advisory solutions and other products and services;
|
•
|
The level of client assets, including cash balances;
|
•
|
Competitive pressure on pricing, including deposit rates;
|
•
|
Client sensitivity to rates;
|
•
|
Regulatory guidance;
|
•
|
Capital and liquidity needs and management;
|
•
|
Our ability to manage expenses;
|
•
|
Our ability to develop and launch new and enhanced products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner;
|
•
|
The effect of pricing reductions on client acquisition, retention and asset levels, including cash balances;
|
•
|
The Company’s ability to monetize client assets;
|
•
|
The timing of campus expansion work and technology projects;
|
•
|
Adverse developments in litigation or regulatory matters and any related charges;
|
•
|
Potential breaches of contractual terms for which we have indemnification and guarantee obligations; and
|
•
|
Client cash sorting and net equity sales.
|
|
Growth Rate 1-Year 2018-2019
|
|
2019
|
|
2018
|
|
2017
|
||||||
Client Metrics
|
|
|
|
|
|
|
|
||||||
Net new client assets (in billions) (1)
|
66%
|
|
$
|
222.8
|
|
|
$
|
133.9
|
|
|
$
|
233.1
|
|
Core net new client assets (in billions)
|
(7)%
|
|
$
|
211.7
|
|
|
$
|
227.8
|
|
|
$
|
198.6
|
|
Client assets (in billions, at year end)
|
24%
|
|
$
|
4,038.8
|
|
|
$
|
3,252.2
|
|
|
$
|
3,361.8
|
|
Average client assets (in billions)
|
8%
|
|
$
|
3,682.0
|
|
|
$
|
3,409.6
|
|
|
$
|
3,060.2
|
|
New brokerage accounts (in thousands)
|
(1)%
|
|
1,568
|
|
|
1,576
|
|
|
1,441
|
|
|||
Active brokerage accounts (in thousands, at year end)
|
6%
|
|
12,333
|
|
|
11,593
|
|
|
10,755
|
|
|||
Assets receiving ongoing advisory services (in billions, at year end)
|
23%
|
|
$
|
2,106.8
|
|
|
$
|
1,708.5
|
|
|
$
|
1,699.8
|
|
Client cash as a percentage of client assets (at year end)
|
|
|
11.3
|
%
|
|
12.8
|
%
|
|
10.8
|
%
|
|||
Company Financial Metrics
|
|
|
|
|
|
|
|
||||||
Total net revenues
|
6%
|
|
$
|
10,721
|
|
|
$
|
10,132
|
|
|
$
|
8,618
|
|
Total expenses excluding interest
|
5%
|
|
5,873
|
|
|
5,570
|
|
|
4,968
|
|
|||
Income before taxes on income
|
6%
|
|
4,848
|
|
|
4,562
|
|
|
3,650
|
|
|||
Taxes on income
|
8%
|
|
1,144
|
|
|
1,055
|
|
|
1,296
|
|
|||
Net income
|
6%
|
|
$
|
3,704
|
|
|
$
|
3,507
|
|
|
$
|
2,354
|
|
Preferred stock dividends and other
|
—
|
|
178
|
|
|
178
|
|
|
174
|
|
|||
Net income available to common stockholders
|
6%
|
|
$
|
3,526
|
|
|
$
|
3,329
|
|
|
$
|
2,180
|
|
Earnings per common share — diluted
|
9%
|
|
$
|
2.67
|
|
|
$
|
2.45
|
|
|
$
|
1.61
|
|
Net revenue growth from prior year
|
|
|
6
|
%
|
|
18
|
%
|
|
15
|
%
|
|||
Pre-tax profit margin
|
|
|
45.2
|
%
|
|
45.0
|
%
|
|
42.4
|
%
|
|||
Return on average common stockholders’ equity
|
|
|
19
|
%
|
|
19
|
%
|
|
15
|
%
|
|||
Expenses excluding interest as a percentage of average client assets
|
|
|
0.16
|
%
|
|
0.16
|
%
|
|
0.16
|
%
|
|||
Consolidated Tier 1 Leverage Ratio (at year end)
|
|
|
7.3
|
%
|
|
7.1
|
%
|
|
7.6
|
%
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||
|
Growth Rate
2018-2019 |
|
Amount
|
% of
Total Net Revenues |
|
Amount
|
% of
Total Net Revenues |
|
Amount
|
% of
Total Net Revenues |
||||||||||
Net interest revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest revenue
|
13
|
%
|
|
$
|
7,580
|
|
71
|
%
|
|
$
|
6,680
|
|
66
|
%
|
|
$
|
4,624
|
|
54
|
%
|
Interest expense
|
24
|
%
|
|
(1,064
|
)
|
(10
|
)%
|
|
(857
|
)
|
(9
|
)%
|
|
(342
|
)
|
(4
|
)%
|
|||
Net interest revenue
|
12
|
%
|
|
6,516
|
|
61
|
%
|
|
5,823
|
|
57
|
%
|
|
4,282
|
|
50
|
%
|
|||
Asset management and administration fees
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mutual funds, ETFs, and collective trust funds
(CTFs) (1)
|
(5
|
)%
|
|
1,747
|
|
16
|
%
|
|
1,837
|
|
18
|
%
|
|
2,088
|
|
24
|
%
|
|||
Advice solutions
|
5
|
%
|
|
1,198
|
|
11
|
%
|
|
1,139
|
|
11
|
%
|
|
1,043
|
|
12
|
%
|
|||
Other (1)
|
5
|
%
|
|
266
|
|
3
|
%
|
|
253
|
|
3
|
%
|
|
261
|
|
3
|
%
|
|||
Asset management and administration fees
|
(1
|
)%
|
|
3,211
|
|
30
|
%
|
|
3,229
|
|
32
|
%
|
|
3,392
|
|
39
|
%
|
|||
Trading revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commissions
|
(20
|
)%
|
|
549
|
|
5
|
%
|
|
685
|
|
7
|
%
|
|
600
|
|
7
|
%
|
|||
Principal transactions
|
(13
|
)%
|
|
68
|
|
1
|
%
|
|
78
|
|
1
|
%
|
|
54
|
|
1
|
%
|
|||
Trading revenue
|
(19
|
)%
|
|
617
|
|
6
|
%
|
|
763
|
|
8
|
%
|
|
654
|
|
8
|
%
|
|||
Other
|
19
|
%
|
|
377
|
|
3
|
%
|
|
317
|
|
3
|
%
|
|
290
|
|
3
|
%
|
|||
Total net revenues
|
6
|
%
|
|
$
|
10,721
|
|
100
|
%
|
|
$
|
10,132
|
|
100
|
%
|
|
$
|
8,618
|
|
100
|
%
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||||
|
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
|
$
|
23,512
|
|
|
$
|
518
|
|
|
2.17
|
%
|
|
$
|
17,783
|
|
|
$
|
348
|
|
|
1.93
|
%
|
|
$
|
9,931
|
|
|
$
|
109
|
|
|
1.10
|
%
|
Cash and investments segregated
|
15,694
|
|
|
345
|
|
|
2.17
|
%
|
|
11,461
|
|
|
206
|
|
|
1.78
|
%
|
|
18,525
|
|
|
166
|
|
|
0.90
|
%
|
||||||
Broker-related receivables
|
376
|
|
|
7
|
|
|
1.87
|
%
|
|
303
|
|
|
6
|
|
|
2.09
|
%
|
|
430
|
|
|
3
|
|
|
0.70
|
%
|
||||||
Receivables from brokerage clients
|
19,270
|
|
|
821
|
|
|
4.20
|
%
|
|
19,870
|
|
|
830
|
|
|
4.12
|
%
|
|
16,269
|
|
|
575
|
|
|
3.53
|
%
|
||||||
Available for sale securities (1)
|
58,181
|
|
|
1,560
|
|
|
2.67
|
%
|
|
54,542
|
|
|
1,241
|
|
|
2.26
|
%
|
|
53,040
|
|
|
815
|
|
|
1.54
|
%
|
||||||
Held to maturity securities
|
134,708
|
|
|
3,591
|
|
|
2.65
|
%
|
|
131,794
|
|
|
3,348
|
|
|
2.53
|
%
|
|
103,599
|
|
|
2,354
|
|
|
2.27
|
%
|
||||||
Bank loans
|
16,832
|
|
|
584
|
|
|
3.47
|
%
|
|
16,554
|
|
|
559
|
|
|
3.37
|
%
|
|
15,919
|
|
|
472
|
|
|
2.97
|
%
|
||||||
Total interest-earning assets
|
268,573
|
|
|
7,426
|
|
|
2.75
|
%
|
|
252,307
|
|
|
6,538
|
|
|
2.57
|
%
|
|
217,713
|
|
|
4,494
|
|
|
2.06
|
%
|
||||||
Other interest revenue
|
|
|
154
|
|
|
|
|
|
|
142
|
|
|
|
|
|
|
130
|
|
|
|
||||||||||||
Total interest-earning assets
|
$
|
268,573
|
|
|
$
|
7,580
|
|
|
2.80
|
%
|
|
$
|
252,307
|
|
|
$
|
6,680
|
|
|
2.63
|
%
|
|
$
|
217,713
|
|
|
$
|
4,624
|
|
|
2.12
|
%
|
Funding sources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Bank deposits
|
$
|
212,605
|
|
|
$
|
700
|
|
|
0.33
|
%
|
|
$
|
199,139
|
|
|
$
|
545
|
|
|
0.27
|
%
|
|
$
|
163,998
|
|
|
$
|
148
|
|
|
0.09
|
%
|
Payables to brokerage clients
|
24,353
|
|
|
79
|
|
|
0.33
|
%
|
|
21,178
|
|
|
56
|
|
|
0.27
|
%
|
|
25,403
|
|
|
16
|
|
|
0.06
|
%
|
||||||
Short-term borrowings (2)
|
17
|
|
|
—
|
|
|
2.36
|
%
|
|
3,359
|
|
|
54
|
|
|
1.59
|
%
|
|
3,503
|
|
|
41
|
|
|
1.17
|
%
|
||||||
Long-term debt
|
7,199
|
|
|
258
|
|
|
3.58
|
%
|
|
5,423
|
|
|
190
|
|
|
3.50
|
%
|
|
3,431
|
|
|
119
|
|
|
3.47
|
%
|
||||||
Total interest-bearing liabilities
|
244,174
|
|
|
1,037
|
|
|
0.42
|
%
|
|
229,099
|
|
|
845
|
|
|
0.37
|
%
|
|
196,335
|
|
|
324
|
|
|
0.17
|
%
|
||||||
Non-interest-bearing funding sources
|
24,399
|
|
|
|
|
|
|
23,208
|
|
|
|
|
|
|
21,378
|
|
|
|
|
|
||||||||||||
Other interest expense
|
|
|
27
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
18
|
|
|
|
||||||||||||
Total funding sources
|
$
|
268,573
|
|
|
$
|
1,064
|
|
|
0.39
|
%
|
|
$
|
252,307
|
|
|
$
|
857
|
|
|
0.34
|
%
|
|
$
|
217,713
|
|
|
$
|
342
|
|
|
0.15
|
%
|
Net interest revenue
|
|
|
$
|
6,516
|
|
|
2.41
|
%
|
|
|
|
$
|
5,823
|
|
|
2.29
|
%
|
|
|
|
$
|
4,282
|
|
|
1.97
|
%
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||||
|
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 |
$
|
173,558
|
|
|
$
|
525
|
|
|
0.30
|
%
|
|
$
|
141,018
|
|
|
$
|
568
|
|
|
0.40
|
%
|
|
$
|
160,735
|
|
|
$
|
875
|
|
|
0.54
|
%
|
Fee waivers
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(10
|
)
|
|
|
||||||||||||
Schwab money market funds
|
173,558
|
|
|
525
|
|
|
0.30
|
%
|
|
141,018
|
|
|
568
|
|
|
0.40
|
%
|
|
160,735
|
|
|
865
|
|
|
0.54
|
%
|
||||||
Schwab equity and bond funds, ETFs, and
CTFs (1)
|
267,213
|
|
|
298
|
|
|
0.11
|
%
|
|
222,830
|
|
|
302
|
|
|
0.14
|
%
|
|
172,809
|
|
|
266
|
|
|
0.15
|
%
|
||||||
Mutual Fund OneSource® and other non-
transaction fee funds
|
191,552
|
|
|
606
|
|
|
0.32
|
%
|
|
210,429
|
|
|
680
|
|
|
0.32
|
%
|
|
215,333
|
|
|
706
|
|
|
0.33
|
%
|
||||||
Other third-party mutual funds and ETFs (2)
|
478,037
|
|
|
318
|
|
|
0.07
|
%
|
|
328,150
|
|
|
287
|
|
|
0.09
|
%
|
|
286,111
|
|
|
251
|
|
|
0.09
|
%
|
||||||
Total mutual funds, ETFs, and CTFs (1,3)
|
$
|
1,110,360
|
|
|
1,747
|
|
|
0.16
|
%
|
|
$
|
902,427
|
|
|
1,837
|
|
|
0.20
|
%
|
|
$
|
834,988
|
|
|
2,088
|
|
|
0.25
|
%
|
|||
Advice solutions (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fee-based
|
$
|
246,888
|
|
|
1,198
|
|
|
0.49
|
%
|
|
$
|
227,790
|
|
|
1,139
|
|
|
0.50
|
%
|
|
$
|
203,794
|
|
|
1,043
|
|
|
0.51
|
%
|
|||
Non-fee-based
|
70,191
|
|
|
—
|
|
|
—
|
|
|
62,813
|
|
|
—
|
|
|
—
|
|
|
48,936
|
|
|
—
|
|
|
—
|
|
||||||
Total advice solutions
|
$
|
317,079
|
|
|
1,198
|
|
|
0.38
|
%
|
|
$
|
290,603
|
|
|
1,139
|
|
|
0.39
|
%
|
|
$
|
252,730
|
|
|
1,043
|
|
|
0.41
|
%
|
|||
Other balance-based fees (1,4)
|
432,613
|
|
|
216
|
|
|
0.05
|
%
|
|
383,050
|
|
|
206
|
|
|
0.05
|
%
|
|
403,474
|
|
|
215
|
|
|
0.05
|
%
|
||||||
Other (5)
|
|
|
50
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
46
|
|
|
|
||||||||||||
Total asset management and administration
fees |
|
|
$
|
3,211
|
|
|
|
|
|
|
$
|
3,229
|
|
|
|
|
|
|
$
|
3,392
|
|
|
|
|
|
Schwab Money
|
|
Schwab Equity and
|
|
Mutual Fund OneSource®
|
||||||||||||||||||||||||||||||
|
|
Market Funds
|
|
Bond Funds, ETFs, and CTFs (1)
|
|
and Other NTF Funds
|
||||||||||||||||||||||||||||||
Year Ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Balance at beginning of period
|
|
$
|
153,472
|
|
|
$
|
163,650
|
|
|
$
|
163,495
|
|
|
$
|
209,471
|
|
|
$
|
196,784
|
|
|
$
|
138,524
|
|
|
$
|
180,532
|
|
|
$
|
225,202
|
|
|
$
|
198,924
|
|
Net inflows (outflows)
|
|
44,077
|
|
|
(11,641
|
)
|
|
(486
|
)
|
|
26,039
|
|
|
31,169
|
|
|
31,127
|
|
|
(19,930
|
)
|
|
(37,513
|
)
|
|
(27,485
|
)
|
|||||||||
Net market gains (losses) and other (2)
|
|
3,277
|
|
|
1,463
|
|
|
641
|
|
|
50,765
|
|
|
(18,482
|
)
|
|
27,133
|
|
|
41,466
|
|
|
(7,157
|
)
|
|
53,763
|
|
|||||||||
Balance at end of period
|
|
$
|
200,826
|
|
|
$
|
153,472
|
|
|
$
|
163,650
|
|
|
$
|
286,275
|
|
|
$
|
209,471
|
|
|
$
|
196,784
|
|
|
$
|
202,068
|
|
|
$
|
180,532
|
|
|
$
|
225,202
|
|
Year Ended December 31,
|
Growth Rate
2018-2019 |
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
DARTs (in thousands)
|
(20
|
)%
|
|
338.4
|
|
|
420.9
|
|
|
321.3
|
|
|||
Daily average trades (in thousands)
|
(2
|
)%
|
|
748.9
|
|
|
765.4
|
|
|
608.8
|
|
|||
Number of trading days
|
—
|
|
|
250.5
|
|
|
249.5
|
|
|
250.0
|
|
|||
Daily average revenue per revenue trade
|
—
|
|
|
$
|
7.26
|
|
|
$
|
7.23
|
|
|
$
|
8.20
|
|
Trading revenue
|
(19
|
)%
|
|
$
|
617
|
|
|
$
|
763
|
|
|
$
|
654
|
|
|
Growth Rate 2018-2019
|
|
2019
|
|
2018
|
|
2017
|
|||||||
Compensation and benefits
|
|
|
|
|
|
|
|
|||||||
Salaries and wages
|
16
|
%
|
|
$
|
1,958
|
|
|
$
|
1,692
|
|
|
$
|
1,496
|
|
Incentive compensation
|
(6
|
)%
|
|
804
|
|
|
855
|
|
|
797
|
|
|||
Employee benefits and other
|
9
|
%
|
|
558
|
|
|
510
|
|
|
444
|
|
|||
Total compensation and benefits
|
9
|
%
|
|
$
|
3,320
|
|
|
$
|
3,057
|
|
|
$
|
2,737
|
|
Professional services
|
7
|
%
|
|
702
|
|
|
654
|
|
|
580
|
|
|||
Occupancy and equipment
|
13
|
%
|
|
559
|
|
|
496
|
|
|
436
|
|
|||
Advertising and market development
|
(2
|
)%
|
|
307
|
|
|
313
|
|
|
268
|
|
|||
Communications
|
5
|
%
|
|
253
|
|
|
242
|
|
|
231
|
|
|||
Depreciation and amortization
|
14
|
%
|
|
349
|
|
|
306
|
|
|
269
|
|
|||
Regulatory fees and assessments
|
(35
|
)%
|
|
122
|
|
|
189
|
|
|
179
|
|
|||
Other
|
(17
|
)%
|
|
261
|
|
|
313
|
|
|
268
|
|
|||
Total expenses excluding interest
|
5
|
%
|
|
$
|
5,873
|
|
|
$
|
5,570
|
|
|
$
|
4,968
|
|
Expenses as a percentage of total net revenues
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits
|
|
|
31
|
%
|
|
30
|
%
|
|
32
|
%
|
||||
Advertising and market development
|
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
||||
Full-time equivalent employees (in thousands)
|
|
|
|
|
|
|
|
|||||||
At year end
|
1
|
%
|
|
19.7
|
|
|
19.5
|
|
|
17.6
|
|
|||
Average
|
7
|
%
|
|
20.0
|
|
|
18.7
|
|
|
16.9
|
|
|
|
Investor Services
|
|
Advisor Services
|
|
Total
|
|||||||||||||||||||||||||||||||||||||||
|
|
Growth Rate
2018-2019 |
|
2019
|
|
2018
|
|
2017
|
|
Growth Rate
2018-2019 |
|
2019
|
|
2018
|
|
2017
|
|
Growth Rate
2018-2019 |
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||
Year Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net interest revenue
|
|
8
|
%
|
|
$
|
4,685
|
|
|
$
|
4,341
|
|
|
$
|
3,231
|
|
|
24
|
%
|
|
$
|
1,831
|
|
|
$
|
1,482
|
|
|
$
|
1,051
|
|
|
12
|
%
|
|
$
|
6,516
|
|
|
$
|
5,823
|
|
|
$
|
4,282
|
|
Asset management and
administration fees |
|
1
|
%
|
|
2,289
|
|
|
2,260
|
|
|
2,344
|
|
|
(5
|
)%
|
|
922
|
|
|
969
|
|
|
1,048
|
|
|
(1
|
)%
|
|
3,211
|
|
|
3,229
|
|
|
3,392
|
|
|||||||||
Trading revenue
|
|
(20
|
)%
|
|
378
|
|
|
475
|
|
|
408
|
|
|
(17
|
)%
|
|
239
|
|
|
288
|
|
|
246
|
|
|
(19
|
)%
|
|
617
|
|
|
763
|
|
|
654
|
|
|||||||||
Other
|
|
11
|
%
|
|
271
|
|
|
245
|
|
|
217
|
|
|
47
|
%
|
|
106
|
|
|
72
|
|
|
73
|
|
|
19
|
%
|
|
377
|
|
|
317
|
|
|
290
|
|
|||||||||
Total net revenues
|
|
4
|
%
|
|
7,623
|
|
|
7,321
|
|
|
6,200
|
|
|
10
|
%
|
|
3,098
|
|
|
2,811
|
|
|
2,418
|
|
|
6
|
%
|
|
10,721
|
|
|
10,132
|
|
|
8,618
|
|
|||||||||
Expenses Excluding
Interest |
|
3
|
%
|
|
4,284
|
|
|
4,145
|
|
|
3,725
|
|
|
12
|
%
|
|
1,589
|
|
|
1,425
|
|
|
1,243
|
|
|
5
|
%
|
|
5,873
|
|
|
5,570
|
|
|
4,968
|
|
|||||||||
Income before taxes
on income |
|
5
|
%
|
|
$
|
3,339
|
|
|
$
|
3,176
|
|
|
$
|
2,475
|
|
|
9
|
%
|
|
$
|
1,509
|
|
|
$
|
1,386
|
|
|
$
|
1,175
|
|
|
6
|
%
|
|
$
|
4,848
|
|
|
$
|
4,562
|
|
|
$
|
3,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net new client assets
(in billions) (1)
|
|
N/M
|
|
|
$
|
115.6
|
|
|
$
|
19.4
|
|
|
$
|
123.7
|
|
|
(6
|
)%
|
|
$
|
107.2
|
|
|
$
|
114.5
|
|
|
$
|
109.4
|
|
|
66
|
%
|
|
$
|
222.8
|
|
|
$
|
133.9
|
|
|
$
|
233.1
|
|
•
|
Operational Risk Oversight Committee – provides oversight of and approves operational risk management policies, risk tolerance levels, and operational risk governance processes, and includes sub-committees covering Information Security, Fraud, Third-Party Risk, Data, and Model Governance;
|
•
|
Compliance Risk Committee – provides oversight of compliance risk management programs and policies providing an aggregate view of compliance risk exposure and employee conduct, including subcommittees covering Fiduciary and Conflicts of Interest Risk and International Compliance Risk;
|
•
|
Financial Risk Oversight Committee – provides oversight of and approves credit, market, liquidity, and capital risk policies, limits, and exposures; and
|
•
|
New Products and Services Risk Oversight Committee – provides oversight of, and approves corporate policy and procedures relating to, the risk governance of new products and services.
|
December 31,
|
2019
|
|
2018
|
|
Increase of 100 basis points
|
4.8
|
%
|
4.4
|
%
|
Decrease of 100 basis points
|
(7.4
|
)%
|
(4.9
|
)%
|
Description
|
Borrower
|
Outstanding
|
Available
|
||||
Federal Home Loan Bank secured credit facility (1)
|
Banking subsidiaries
|
$
|
—
|
|
$
|
34,207
|
|
Federal Reserve discount window (2)
|
Banking subsidiaries
|
—
|
|
8,536
|
|
||
Uncommitted, unsecured lines of credit with various external banks
|
CSC, CS&Co
|
—
|
|
1,642
|
|
||
Unsecured commercial paper (3)
|
CSC
|
—
|
|
750
|
|
||
Committed, unsecured credit facility with various external banks (4)
|
CSC
|
—
|
|
750
|
|
December 31, 2019
|
Par Outstanding
|
Maturity
|
Weighted-Average
Interest Rate |
Moody’s
|
Standard
& Poor’s |
Fitch
|
||||
Senior Notes
|
$
|
7,481
|
|
2020 - 2029
|
3.34%
|
A2
|
A
|
A
|
Issuance Date
|
Issuance Amount
|
Maturity Date
|
Interest Rate
|
Interest Payable
|
||
March 2, 2017
|
$
|
650
|
|
3/2/2027
|
3.200%
|
Semi-annually
|
December 7, 2017
|
$
|
700
|
|
1/25/2028
|
3.200%
|
Semi-annually
|
December 7, 2017
|
$
|
800
|
|
1/25/2023
|
2.650%
|
Semi-annually
|
May 22, 2018
|
$
|
600
|
|
5/21/2021
|
Three-month LIBOR
+ 0.32% |
Quarterly
|
May 22, 2018
|
$
|
600
|
|
5/21/2021
|
3.250%
|
Semi-annually
|
May 22, 2018
|
$
|
750
|
|
5/21/2025
|
3.850%
|
Semi-annually
|
October 31, 2018
|
$
|
500
|
|
2/1/2024
|
3.550%
|
Semi-annually
|
October 31, 2018
|
$
|
600
|
|
2/1/2029
|
4.000%
|
Semi-annually
|
May 22, 2019
|
$
|
600
|
|
5/22/2029
|
3.250%
|
Semi-annually
|
|
Date Issued and Sold
|
Net Proceeds
|
||
Series F
|
October 31, 2017
|
$
|
492
|
|
|
Less than
1 Year |
|
1-3
Years |
|
3-5
Years |
|
More than
5 Years |
|
Total
|
||||||||||
Credit-related financial instruments (1)
|
$
|
3,033
|
|
|
$
|
3,495
|
|
|
$
|
4,549
|
|
|
$
|
1,501
|
|
|
$
|
12,578
|
|
Long-term debt (2)
|
947
|
|
|
1,842
|
|
|
1,615
|
|
|
4,389
|
|
|
8,793
|
|
|||||
Purchase obligations (3)
|
2,061
|
|
|
225
|
|
|
46
|
|
|
44
|
|
|
2,376
|
|
|||||
Leases (4)
|
141
|
|
|
236
|
|
|
173
|
|
|
268
|
|
|
818
|
|
|||||
Total
|
$
|
6,182
|
|
|
$
|
5,798
|
|
|
$
|
6,383
|
|
|
$
|
6,202
|
|
|
$
|
24,565
|
|
December 31,
|
2019 (1)
|
|
2018
|
||||||||||||
|
CSC
|
|
CSB
|
|
CSC
|
|
CSB
|
||||||||
Total stockholders’ equity
|
$
|
21,745
|
|
|
$
|
14,832
|
|
|
$
|
20,670
|
|
|
$
|
15,615
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Preferred Stock
|
2,793
|
|
|
—
|
|
|
2,793
|
|
|
—
|
|
||||
Common Equity Tier 1 Capital before regulatory adjustments
|
$
|
18,952
|
|
|
$
|
14,832
|
|
|
$
|
17,877
|
|
|
$
|
15,615
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Goodwill, net of associated deferred tax liabilities
|
$
|
1,184
|
|
|
$
|
13
|
|
|
$
|
1,188
|
|
|
$
|
13
|
|
Other intangible assets, net of associated deferred tax liabilities
|
104
|
|
|
—
|
|
|
125
|
|
|
—
|
|
||||
Deferred tax assets, net of valuation allowances and deferred tax liabilities
|
4
|
|
|
—
|
|
|
3
|
|
|
1
|
|
||||
AOCI adjustment (1)
|
—
|
|
|
—
|
|
|
(252
|
)
|
|
(231
|
)
|
||||
Common Equity Tier 1 Capital
|
$
|
17,660
|
|
|
$
|
14,819
|
|
|
$
|
16,813
|
|
|
$
|
15,832
|
|
Tier 1 Capital
|
$
|
20,453
|
|
|
$
|
14,819
|
|
|
$
|
19,606
|
|
|
$
|
15,832
|
|
Total Capital
|
20,472
|
|
|
14,837
|
|
|
19,628
|
|
|
15,853
|
|
||||
Risk-Weighted Assets
|
90,512
|
|
|
71,521
|
|
|
95,441
|
|
|
80,513
|
|
||||
Total Leverage Exposure (1)
|
286,813
|
|
|
216,582
|
|
|
N/A
|
|
|
N/A
|
|
||||
Common Equity Tier 1 Capital/Risk-Weighted Assets
|
19.5
|
%
|
|
20.7
|
%
|
|
17.6
|
%
|
|
19.7
|
%
|
||||
Tier 1 Capital/Risk-Weighted Assets
|
22.6
|
%
|
|
20.7
|
%
|
|
20.5
|
%
|
|
19.7
|
%
|
||||
Total Capital/Risk-Weighted Assets
|
22.6
|
%
|
|
20.7
|
%
|
|
20.6
|
%
|
|
19.7
|
%
|
||||
Tier 1 Leverage Ratio
|
7.3
|
%
|
|
7.1
|
%
|
|
7.1
|
%
|
|
7.2
|
%
|
||||
Supplementary Leverage Ratio (1)
|
7.1
|
%
|
|
6.8
|
%
|
|
N/A
|
|
|
N/A
|
|
Date of Declaration
|
Quarterly Cash Increase Per Common Share
|
|
% Increase
|
|
New Quarterly Dividend Per Common Share
|
|||||
January 25, 2018
|
$
|
0.02
|
|
|
25
|
%
|
|
$
|
0.10
|
|
July 25, 2018
|
0.03
|
|
|
30
|
%
|
|
0.13
|
|
||
January 30, 2019
|
0.04
|
|
|
31
|
%
|
|
0.17
|
|
Year Ended December 31,
|
2019
|
|
2018
|
||||||||||
|
Cash Paid
|
Per Share
Amount |
|
Cash Paid
|
Per Share
Amount |
||||||||
Common Stock
|
$
|
898
|
|
$
|
0.68
|
|
|
$
|
623
|
|
$
|
0.46
|
|
Series A Preferred Stock (1)
|
28
|
|
70.00
|
|
|
28
|
|
70.00
|
|
||||
Series C Preferred Stock (2)
|
36
|
|
60.00
|
|
|
36
|
|
60.00
|
|
||||
Series D Preferred Stock (2)
|
45
|
|
59.52
|
|
|
45
|
|
59.52
|
|
||||
Series E Preferred Stock (3)
|
28
|
|
4,625.00
|
|
|
28
|
|
4,625.00
|
|
||||
Series F Preferred Stock (4)
|
25
|
|
5,000.00
|
|
|
27
|
|
5,430.56
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
Consolidated Statements of Income
|
|
|
|
|
|
||||||
(In Millions, Except Per Share Amounts)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Net Revenues
|
|
|
|
|
|
||||||
Interest revenue
|
$
|
7,580
|
|
|
$
|
6,680
|
|
|
$
|
4,624
|
|
Interest expense
|
(1,064
|
)
|
|
(857
|
)
|
|
(342
|
)
|
|||
Net interest revenue
|
6,516
|
|
|
5,823
|
|
|
4,282
|
|
|||
Asset management and administration fees
|
3,211
|
|
|
3,229
|
|
|
3,392
|
|
|||
Trading revenue
|
617
|
|
|
763
|
|
|
654
|
|
|||
Other
|
377
|
|
|
317
|
|
|
290
|
|
|||
Total net revenues
|
10,721
|
|
|
10,132
|
|
|
8,618
|
|
|||
Expenses Excluding Interest
|
|
|
|
|
|
|
|||||
Compensation and benefits
|
3,320
|
|
|
3,057
|
|
|
2,737
|
|
|||
Professional services
|
702
|
|
|
654
|
|
|
580
|
|
|||
Occupancy and equipment
|
559
|
|
|
496
|
|
|
436
|
|
|||
Advertising and market development
|
307
|
|
|
313
|
|
|
268
|
|
|||
Communications
|
253
|
|
|
242
|
|
|
231
|
|
|||
Depreciation and amortization
|
349
|
|
|
306
|
|
|
269
|
|
|||
Regulatory fees and assessments
|
122
|
|
|
189
|
|
|
179
|
|
|||
Other
|
261
|
|
|
313
|
|
|
268
|
|
|||
Total expenses excluding interest
|
5,873
|
|
|
5,570
|
|
|
4,968
|
|
|||
Income before taxes on income
|
4,848
|
|
|
4,562
|
|
|
3,650
|
|
|||
Taxes on income
|
1,144
|
|
|
1,055
|
|
|
1,296
|
|
|||
Net Income
|
3,704
|
|
|
3,507
|
|
|
2,354
|
|
|||
Preferred stock dividends and other (1)
|
178
|
|
|
178
|
|
|
174
|
|
|||
Net Income Available to Common Stockholders
|
$
|
3,526
|
|
|
$
|
3,329
|
|
|
$
|
2,180
|
|
Weighted-Average Common Shares Outstanding:
|
|
|
|
|
|
|
|||||
Basic
|
1,311
|
|
|
1,348
|
|
|
1,339
|
|
|||
Diluted (2)
|
1,320
|
|
|
1,361
|
|
|
1,353
|
|
|||
Earnings Per Common Shares Outstanding:
|
|
|
|
|
|
|
|||||
Basic
|
$
|
2.69
|
|
|
$
|
2.47
|
|
|
$
|
1.63
|
|
Diluted (2)
|
$
|
2.67
|
|
|
$
|
2.45
|
|
|
$
|
1.61
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
||||||
(In Millions)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
3,704
|
|
|
$
|
3,507
|
|
|
$
|
2,354
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
Change in net unrealized gain (loss) on available for sale securities:
|
|
|
|
|
|
||||||
Net unrealized gain (loss)
|
430
|
|
|
(123
|
)
|
|
13
|
|
|||
Reclassification of net unrealized loss transferred to held to maturity
|
—
|
|
|
—
|
|
|
227
|
|
|||
Other reclassifications included in other revenue
|
(6
|
)
|
|
—
|
|
|
(12
|
)
|
|||
Change in net unrealized gain (loss) on held to maturity securities:
|
|
|
|
|
|
||||||
Reclassification of net unrealized loss transferred from available for sale
|
—
|
|
|
—
|
|
|
(227
|
)
|
|||
Amortization of amounts previously recorded upon transfer to held to maturity from
available for sale |
36
|
|
|
35
|
|
|
31
|
|
|||
Other
|
(14
|
)
|
|
(1
|
)
|
|
(11
|
)
|
|||
Other comprehensive income (loss), before tax
|
446
|
|
|
(89
|
)
|
|
21
|
|
|||
Income tax effect
|
(106
|
)
|
|
22
|
|
|
(10
|
)
|
|||
Other comprehensive income (loss), net of tax
|
340
|
|
|
(67
|
)
|
|
11
|
|
|||
Comprehensive Income
|
$
|
4,044
|
|
|
$
|
3,440
|
|
|
$
|
2,365
|
|
Consolidated Balance Sheets
|
|
|
|
||||
(In Millions, Except Per Share and Share Amounts)
|
|
|
|
||||
|
|
|
|
||||
December 31,
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
29,345
|
|
|
$
|
27,938
|
|
Cash and investments segregated and on deposit for regulatory purposes (including resale
agreements of $9,028 and $7,195 at December 31, 2019 and 2018, respectively) |
20,483
|
|
|
13,563
|
|
||
Receivables from brokerage clients — net
|
21,767
|
|
|
21,651
|
|
||
Available for sale securities
|
61,422
|
|
|
66,578
|
|
||
Held to maturity securities
|
134,706
|
|
|
144,009
|
|
||
Bank loans — net
|
18,212
|
|
|
16,609
|
|
||
Equipment, office facilities, and property — net
|
2,128
|
|
|
1,769
|
|
||
Goodwill
|
1,227
|
|
|
1,227
|
|
||
Other assets
|
4,715
|
|
|
3,138
|
|
||
Total assets
|
$
|
294,005
|
|
|
$
|
296,482
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Bank deposits
|
$
|
220,094
|
|
|
$
|
231,423
|
|
Payables to brokerage clients
|
39,220
|
|
|
32,726
|
|
||
Accrued expenses and other liabilities
|
5,516
|
|
|
4,785
|
|
||
Long-term debt
|
7,430
|
|
|
6,878
|
|
||
Total liabilities
|
272,260
|
|
|
275,812
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock — $.01 par value per share; aggregate liquidation preference of $2,850
|
2,793
|
|
|
2,793
|
|
||
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446
shares issued |
15
|
|
|
15
|
|
||
Additional paid-in capital
|
4,656
|
|
|
4,499
|
|
||
Retained earnings
|
19,960
|
|
|
17,329
|
|
||
Treasury stock, at cost — 201,818,100 and 155,116,695 shares at December 31, 2019 and 2018,
respectively |
(5,767
|
)
|
|
(3,714
|
)
|
||
Accumulated other comprehensive income (loss)
|
88
|
|
|
(252
|
)
|
||
Total stockholders’ equity
|
21,745
|
|
|
20,670
|
|
||
Total liabilities and stockholders’ equity
|
$
|
294,005
|
|
|
$
|
296,482
|
|
Consolidated Statements of Stockholders’ Equity
|
||||||||||||||||||||||||||||||
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
Additional
Paid-In Capital |
|
|
|
|
|
Accumulated Other Comprehensive
Income (Loss) |
|
|
|||||||||||||||||
|
Preferred
Stock |
|
Common Stock
|
|
|
Retained
Earnings |
|
Treasury Stock,
at cost |
|
|
|
|||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
||||||||||||||||||||
Balance at December 31, 2016
|
$
|
2,783
|
|
|
1,488
|
|
|
$
|
15
|
|
|
$
|
4,267
|
|
|
$
|
12,649
|
|
|
$
|
(3,130
|
)
|
|
$
|
(163
|
)
|
|
$
|
16,421
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,354
|
|
|
—
|
|
|
—
|
|
|
2,354
|
|
|||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
11
|
|
|||||||
Issuance of preferred stock, net
|
492
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
492
|
|
|||||||
Redemption of preferred stock
|
(482
|
)
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
(485
|
)
|
||||||||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|||||||
Dividends declared on common stock — $.32
per share |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(431
|
)
|
|
—
|
|
|
—
|
|
|
(431
|
)
|
|||||||
Stock option exercises and other
|
—
|
|
|
—
|
|
|
—
|
|
|
(88
|
)
|
|
—
|
|
|
259
|
|
|
—
|
|
|
171
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
9
|
|
|||||||
Balance at December 31, 2017
|
2,793
|
|
|
1,488
|
|
|
15
|
|
|
4,353
|
|
|
14,408
|
|
|
(2,892
|
)
|
|
(152
|
)
|
|
18,525
|
|
|||||||
Adoption of accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
(33
|
)
|
|
167
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,507
|
|
|
—
|
|
|
—
|
|
|
3,507
|
|
|||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
(67
|
)
|
|||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|||||||
Dividends declared on common stock — $.46
per share |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(624
|
)
|
|
—
|
|
|
—
|
|
|
(624
|
)
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
(1,000
|
)
|
|||||||
Stock option exercises and other
|
—
|
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
209
|
|
|
—
|
|
|
125
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
2
|
|
|
(31
|
)
|
|
—
|
|
|
13
|
|
|||||||
Balance at December 31, 2018
|
2,793
|
|
|
1,488
|
|
|
15
|
|
|
4,499
|
|
|
17,329
|
|
|
(3,714
|
)
|
|
(252
|
)
|
|
20,670
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,704
|
|
|
—
|
|
|
—
|
|
|
3,704
|
|
|||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
340
|
|
|||||||
Dividends declared on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|||||||
Dividends declared on common stock — $.68
per share |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(899
|
)
|
|
—
|
|
|
—
|
|
|
(899
|
)
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,220
|
)
|
|
—
|
|
|
(2,220
|
)
|
|||||||
Stock option exercises and other
|
—
|
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
174
|
|
|
—
|
|
|
118
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
(13
|
)
|
|
(7
|
)
|
|
—
|
|
|
22
|
|
|||||||
Balance at December 31, 2019
|
$
|
2,793
|
|
|
1,488
|
|
|
$
|
15
|
|
|
$
|
4,656
|
|
|
$
|
19,960
|
|
|
$
|
(5,767
|
)
|
|
$
|
88
|
|
|
$
|
21,745
|
|
Consolidated Statements of Cash Flows
|
|
|
|
||||||
(In Millions)
|
|
|
|
||||||
|
|
|
|
||||||
Year Ended December 31,
|
2019
|
2018
|
2017
|
||||||
Cash Flows from Operating Activities
|
|
|
|
||||||
Net income
|
$
|
3,704
|
|
$
|
3,507
|
|
$
|
2,354
|
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
|
|
|
|
||||||
Share-based compensation
|
183
|
|
197
|
|
153
|
|
|||
Depreciation and amortization
|
349
|
|
306
|
|
269
|
|
|||
Provision (benefit) for deferred income taxes
|
2
|
|
49
|
|
58
|
|
|||
Premium amortization, net, on available for sale and held to maturity securities
|
446
|
|
350
|
|
342
|
|
|||
Other
|
199
|
|
137
|
|
51
|
|
|||
Net change in:
|
|
|
|
||||||
Investments segregated and on deposit for regulatory purposes
|
(977
|
)
|
6,922
|
|
4,933
|
|
|||
Receivables from brokerage clients
|
(125
|
)
|
(1,100
|
)
|
(3,428
|
)
|
|||
Other assets
|
(709
|
)
|
(8
|
)
|
(193
|
)
|
|||
Payables to brokerage clients
|
6,494
|
|
1,483
|
|
(4,651
|
)
|
|||
Accrued expenses and other liabilities
|
(241
|
)
|
613
|
|
(727
|
)
|
|||
Net cash provided by (used for) operating activities
|
9,325
|
|
12,456
|
|
(839
|
)
|
|||
Cash Flows from Investing Activities
|
|
|
|
||||||
Purchases of available for sale securities
|
(31,815
|
)
|
(32,801
|
)
|
(15,033
|
)
|
|||
Proceeds from sales of available for sale securities
|
24,495
|
|
115
|
|
8,617
|
|
|||
Principal payments on available for sale securities
|
21,616
|
|
16,016
|
|
9,095
|
|
|||
Purchases of held to maturity securities
|
(19,441
|
)
|
(40,873
|
)
|
(32,925
|
)
|
|||
Principal payments on held to maturity securities
|
19,606
|
|
17,410
|
|
11,627
|
|
|||
Net change in bank loans
|
(1,730
|
)
|
(129
|
)
|
(1,071
|
)
|
|||
Purchases of equipment, office facilities, and property
|
(708
|
)
|
(570
|
)
|
(400
|
)
|
|||
Purchases of Federal Home Loan Bank stock
|
(27
|
)
|
(156
|
)
|
(430
|
)
|
|||
Proceeds from sales of Federal Home Loan Bank stock
|
24
|
|
529
|
|
106
|
|
|||
Other investing activities
|
(56
|
)
|
(96
|
)
|
(59
|
)
|
|||
Net cash provided by (used for) investing activities
|
11,964
|
|
(40,555
|
)
|
(20,473
|
)
|
|||
Cash Flows from Financing Activities
|
|
|
|
||||||
Net change in bank deposits (1)
|
(11,329
|
)
|
61,767
|
|
6,186
|
|
|||
Net change in short-term borrowings
|
—
|
|
(15,000
|
)
|
15,000
|
|
|||
Issuance of long-term debt
|
593
|
|
3,024
|
|
2,129
|
|
|||
Repayment of long-term debt
|
—
|
|
(909
|
)
|
(257
|
)
|
|||
Repurchases of common stock
|
(2,220
|
)
|
(1,000
|
)
|
—
|
|
|||
Net proceeds from preferred stock offerings
|
—
|
|
—
|
|
492
|
|
|||
Redemption of preferred stock
|
—
|
|
—
|
|
(485
|
)
|
|||
Dividends paid
|
(1,060
|
)
|
(787
|
)
|
(592
|
)
|
|||
Proceeds from stock options exercised
|
118
|
|
125
|
|
171
|
|
|||
Other financing activities
|
(41
|
)
|
(54
|
)
|
(45
|
)
|
|||
Net cash provided by (used for) financing activities
|
(13,939
|
)
|
47,166
|
|
22,599
|
|
|||
Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted
|
7,350
|
|
19,067
|
|
1,287
|
|
|||
Cash and Cash Equivalents, including Amounts Restricted at Beginning of Year
|
38,227
|
|
19,160
|
|
17,873
|
|
|||
Cash and Cash Equivalents, including Amounts Restricted at End of Year
|
$
|
45,577
|
|
$
|
38,227
|
|
$
|
19,160
|
|
Year Ended December 31,
|
2019
|
2018
|
2017
|
||||||
Supplemental Cash Flow Information
|
|
|
|
||||||
Non-cash investing activity:
|
|
|
|
||||||
Securities transferred from held to maturity to available for sale, at fair value
|
$
|
8,771
|
|
$
|
—
|
|
$
|
—
|
|
Securities transferred from available for sale to held to maturity, at fair value
|
$
|
—
|
|
$
|
—
|
|
$
|
24,696
|
|
Securities purchased during the period but settled after period end
|
$
|
—
|
|
$
|
—
|
|
$
|
29
|
|
Non-cash financing activity:
|
|
|
|
||||||
Extinguishment of finance lease obligation through an assignment agreement
|
$
|
52
|
|
$
|
—
|
|
$
|
—
|
|
Other Supplemental Cash Flow Information
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
||||||
Interest
|
$
|
1,075
|
|
$
|
798
|
|
$
|
327
|
|
Income taxes
|
$
|
1,199
|
|
$
|
927
|
|
$
|
1,212
|
|
Amounts included in the measurement of lease liabilities (2)
|
$
|
133
|
|
N/A
|
|
N/A
|
|
||
Leased assets obtained in exchange for new operating lease liabilities (2)
|
$
|
97
|
|
N/A
|
|
N/A
|
|
December 31,
|
2019
|
2018
|
2017
|
||||||
Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (3)
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
29,345
|
|
$
|
27,938
|
|
$
|
14,217
|
|
Restricted cash and cash equivalents amounts included in cash and investments segregated
and on deposit for regulatory purposes |
16,232
|
|
10,289
|
|
4,943
|
|
|||
Total cash and cash equivalents, including amounts restricted shown in the
statement of cash flows |
$
|
45,577
|
|
$
|
38,227
|
|
$
|
19,160
|
|
1.
|
Introduction and Basis of Presentation
|
•
|
Charles Schwab & Co., Inc. (CS&Co) is a securities broker-dealer with over 360 domestic branch offices in 48 states, as well as a branch in the Commonwealth of Puerto Rico. In addition, Schwab serves clients through branch offices in the United Kingdom (U.K.) and Hong Kong through other subsidiaries of CSC;
|
•
|
Charles Schwab Bank (CSB), our principal banking entity; and
|
•
|
Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds®) and for Schwab’s exchange-traded funds (Schwab ETFs™).
|
2.
|
Summary of Significant Accounting Policies
|
•
|
Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.
|
•
|
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.
|
•
|
Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
|
Standard
|
Description
|
Date of Adoption
|
Effects on the Financial Statements or Other Significant Matters
|
Accounting Standards Update (ASU) 2016-02, “Leases (Topic 842)”
|
Amends the accounting for leases by lessees and lessors. The primary change from the new guidance is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Additional changes include accounting for lease origination and executory costs, required lessee reassessments during the lease term due to changes in circumstances, and expanded lease disclosures.
Adoption provides for modified retrospective transition as of the beginning of the earliest comparative period presented in the financial statements in which the entity first applies the new standard or, optionally, through another transition method by which a cumulative-effect adjustment is recorded to retained earnings as of the beginning of the period of adoption. Certain transition relief is permitted if elected by the entity. |
January 1, 2019
|
The Company adopted the new lease accounting guidance as of January 1, 2019 under the optional transition method provided electing not to recast its comparative periods. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The adoption resulted in a gross up of the consolidated balance sheet due to recognition of ROU assets and lease liabilities primarily related to the CS&Co leases of office space and branches. The amounts were based on the present value of our remaining operating lease payments. The Company’s ROU assets and related lease liabilities upon adoption were $596 million and $662 million, respectively. Further details on the impact of adoption are included below in this Note as well as in Note 13.
|
ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”
|
Shortens the amortization period for the premium on certain callable debt securities to the earliest call date. The amendments are applicable to any purchased individual debt security with an explicit and noncontingent call feature with a fixed price on a preset date. ASU 2017-08 does not impact the accounting for callable debt securities held at a discount.
Adoption requires modified retrospective transition as of the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings. |
January 1, 2019
|
The Company adopted this guidance as of January 1, 2019 using the modified retrospective method. Adoption resulted in an immaterial cumulative-effect adjustment to retained earnings as of the date of adoption.
|
ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”
|
This ASU amends hedge accounting guidance to better align hedge accounting with risk management activities, while reducing the complexity of applying and reporting on hedge accounting. In addition, for a closed pool of prepayable financial assets, entities will be able to hedge an amount that is not expected to be affected by prepayments, defaults and other events under the “last-of-layer” method. The guidance also permits a one-time reclassification of debt securities eligible to be hedged under the “last-of-layer” method from HTM to AFS upon adoption.
|
January 1, 2019
|
The Company adopted this guidance on January 1, 2019. As part of its adoption, the Company made a one-time election to reclassify a portion of its HTM securities eligible to be hedged under the “last-of-layer” method to AFS. As of January 1, 2019, the securities reclassified had a fair value of $8.8 billion and resulted in a net of tax increase to AOCI of $19 million. The adoption of this standard had no other impact on the Company’s financial statements.
|
Standard
|
Description
|
Required Date of Adoption
|
Effects on the Financial Statements or Other Significant Matters
|
ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”
|
Provides guidance for recognizing impairment of most debt instruments measured at amortized cost, including loans and HTM debt securities. Requires estimating current expected credit losses (CECL) over the remaining life of an instrument or a portfolio of instruments with similar risk characteristics based on relevant information about past events, current conditions, and reasonable forecasts. The initial estimate of, and the subsequent changes in, CECL will be recognized as credit loss expense through current earnings and will be reflected as an allowance for credit losses offsetting the carrying value of the financial instrument(s) on the balance sheet. Amends the OTTI model for AFS debt securities by requiring the use of an allowance, rather than directly reducing the carrying value of the security, and eliminating consideration of the length of time such security has been in an unrealized loss position as a factor in concluding whether a credit loss exists.
Adoption requires modified retrospective transition through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the entity applies the new guidance except that a prospective transition is required for AFS debt securities for which an OTTI has been recognized prior to the effective date. |
January 1, 2020
|
The Company adopted CECL as of January 1, 2020 using the modified retrospective method. The adoption of CECL resulted in an immaterial increase in the Company’s allowance for credit losses and an increase in the liability for expected credit losses on commitments to extend credit, both primarily related to First Mortgages and HELOCs. The adoption impact was recorded as an adjustment to retained earnings as of the beginning of the period of adoption.
The Company’s implementation work is now substantially complete.
|
ASU 2018-15, “Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”
|
Aligns the criteria for capitalizing implementation costs for cloud computing arrangements (CCA) that are service contracts with internal-use software that is developed or purchased and CCAs that include an internal-use software license. This guidance requires that the capitalized implementation costs be recognized over the period of the CCA service contract, subject to impairment evaluation on an ongoing basis.
The guidance prescribes the balance sheet, income statement, and statement of cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. Adoption provides for retrospective or prospective application to all implementation costs incurred after the date of adoption. |
January 1, 2020
|
The Company adopted this guidance prospectively on January 1, 2020. As such, adoption had no impact on the Company’s financial statements. Historically, Schwab has expensed implementation costs as they are incurred for CCAs that are service contracts. Therefore, adopting this guidance will change the Company’s accounting treatment for these types of implementation costs going forward. This guidance is not anticipated to have a material impact on future financial statements, including EPS.
|
|
Balance at
December 31, 2018 |
|
Adjustments Due to ASU 2016-02
|
|
Balance at
January 1, 2019 |
||||||
Assets
|
|
|
|
|
|
||||||
Other assets (1)
|
$
|
3,138
|
|
|
$
|
588
|
|
|
$
|
3,726
|
|
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses and other liabilities (2)
|
$
|
4,785
|
|
|
$
|
588
|
|
|
$
|
5,373
|
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Net interest revenue
|
|
|
|
|
|
||||||
Interest revenue
|
$
|
7,580
|
|
|
$
|
6,680
|
|
|
$
|
4,624
|
|
Interest expense
|
(1,064
|
)
|
|
(857
|
)
|
|
(342
|
)
|
|||
Net interest revenue
|
6,516
|
|
|
5,823
|
|
|
4,282
|
|
|||
Asset management and administration fees
|
|
|
|
|
|
||||||
Mutual funds, ETFs, and CTFs (1)
|
1,747
|
|
|
1,837
|
|
|
2,088
|
|
|||
Advice solutions
|
1,198
|
|
|
1,139
|
|
|
1,043
|
|
|||
Other (1)
|
266
|
|
|
253
|
|
|
261
|
|
|||
Asset management and administration fees
|
3,211
|
|
|
3,229
|
|
|
3,392
|
|
|||
Trading revenue
|
|
|
|
|
|
||||||
Commissions
|
549
|
|
|
685
|
|
|
600
|
|
|||
Principal transactions
|
68
|
|
|
78
|
|
|
54
|
|
|||
Trading revenue
|
617
|
|
|
763
|
|
|
654
|
|
|||
Other
|
377
|
|
|
317
|
|
|
290
|
|
|||
Total net revenues
|
$
|
10,721
|
|
|
$
|
10,132
|
|
|
$
|
8,618
|
|
4.
|
Receivables from and Payables to Brokerage Clients
|
December 31,
|
2019
|
|
2018
|
||||
Receivables
|
|
|
|
||||
Margin loans, net of allowance for doubtful accounts
|
$
|
19,474
|
|
|
$
|
19,273
|
|
Other brokerage receivables
|
2,293
|
|
|
2,378
|
|
||
Receivables from brokerage clients — net
|
$
|
21,767
|
|
|
$
|
21,651
|
|
Payables
|
|
|
|
||||
Interest-bearing payables
|
$
|
29,009
|
|
|
$
|
21,990
|
|
Non-interest-bearing payables
|
10,211
|
|
|
10,736
|
|
||
Payables to brokerage clients
|
$
|
39,220
|
|
|
$
|
32,726
|
|
December 31, 2019
|
Amortized
Cost |
|
Gross Unrealized
Gains |
Gross Unrealized
Losses |
Fair
Value |
||||||||
Available for sale securities
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
45,964
|
|
|
$
|
312
|
|
$
|
121
|
|
$
|
46,155
|
|
Corporate debt securities (1)
|
5,427
|
|
|
57
|
|
—
|
|
5,484
|
|
||||
Asset-backed securities (2)
|
4,970
|
|
|
30
|
|
13
|
|
4,987
|
|
||||
U.S. Treasury securities
|
3,387
|
|
|
3
|
|
6
|
|
3,384
|
|
||||
Certificates of deposit
|
1,000
|
|
|
4
|
|
—
|
|
1,004
|
|
||||
Commercial paper (1,3)
|
394
|
|
|
1
|
|
—
|
|
395
|
|
||||
Non-agency commercial mortgage-backed securities
|
13
|
|
|
—
|
|
—
|
|
13
|
|
||||
Total available for sale securities
|
$
|
61,155
|
|
|
$
|
407
|
|
$
|
140
|
|
$
|
61,422
|
|
Held to maturity securities
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
109,325
|
|
|
$
|
1,521
|
|
$
|
280
|
|
$
|
110,566
|
|
Asset-backed securities (2)
|
17,806
|
|
|
50
|
|
85
|
|
17,771
|
|
||||
Corporate debt securities (1)
|
4,661
|
|
|
57
|
|
—
|
|
4,718
|
|
||||
U.S. state and municipal securities
|
1,301
|
|
|
103
|
|
—
|
|
1,404
|
|
||||
Non-agency commercial mortgage-backed securities
|
1,119
|
|
|
22
|
|
—
|
|
1,141
|
|
||||
U.S. Treasury securities
|
223
|
|
|
5
|
|
—
|
|
228
|
|
||||
Certificates of deposit
|
200
|
|
|
—
|
|
—
|
|
200
|
|
||||
Foreign government agency securities
|
50
|
|
|
—
|
|
—
|
|
50
|
|
||||
Other
|
21
|
|
|
—
|
|
—
|
|
21
|
|
||||
Total held to maturity securities
|
$
|
134,706
|
|
|
$
|
1,758
|
|
$
|
365
|
|
$
|
136,099
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2018
|
|
|
|
|
|
||||||||
Available for sale securities
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
25,594
|
|
|
$
|
44
|
|
$
|
82
|
|
$
|
25,556
|
|
U.S. Treasury securities
|
18,410
|
|
|
—
|
|
108
|
|
18,302
|
|
||||
Asset-backed securities (2)
|
10,086
|
|
|
14
|
|
15
|
|
10,085
|
|
||||
Corporate debt securities (1)
|
7,477
|
|
|
10
|
|
20
|
|
7,467
|
|
||||
Certificates of deposit
|
3,682
|
|
|
4
|
|
1
|
|
3,685
|
|
||||
U.S. agency notes
|
900
|
|
|
—
|
|
2
|
|
898
|
|
||||
Commercial paper (1,3)
|
522
|
|
|
—
|
|
—
|
|
522
|
|
||||
Foreign government agency securities
|
50
|
|
|
—
|
|
1
|
|
49
|
|
||||
Non-agency commercial mortgage-backed securities
|
14
|
|
|
—
|
|
—
|
|
14
|
|
||||
Total available for sale securities
|
$
|
66,735
|
|
|
$
|
72
|
|
$
|
229
|
|
$
|
66,578
|
|
Held to maturity securities
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
118,064
|
|
|
$
|
217
|
|
$
|
2,188
|
|
$
|
116,093
|
|
Asset-backed securities (2)
|
18,502
|
|
|
83
|
|
39
|
|
18,546
|
|
||||
Corporate debt securities (1)
|
4,477
|
|
|
2
|
|
47
|
|
4,432
|
|
||||
U.S. state and municipal securities
|
1,327
|
|
|
24
|
|
3
|
|
1,348
|
|
||||
Non-agency commercial mortgage-backed securities
|
1,156
|
|
|
3
|
|
17
|
|
1,142
|
|
||||
U.S. Treasury securities
|
223
|
|
|
—
|
|
6
|
|
217
|
|
||||
Certificates of deposit
|
200
|
|
|
1
|
|
—
|
|
201
|
|
||||
Foreign government agency securities
|
50
|
|
|
—
|
|
1
|
|
49
|
|
||||
Other
|
10
|
|
|
—
|
|
—
|
|
10
|
|
||||
Total held to maturity securities
|
$
|
144,009
|
|
|
$
|
330
|
|
$
|
2,301
|
|
$
|
142,038
|
|
|
Less than
12 months |
|
12 months
or longer |
|
Total
|
||||||||||||||||||
December 31, 2019
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
||||||||||||
Available for sale securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency mortgage-backed securities
|
$
|
16,023
|
|
|
$
|
94
|
|
|
$
|
6,592
|
|
|
$
|
27
|
|
|
$
|
22,615
|
|
|
$
|
121
|
|
Asset-backed securities
|
960
|
|
|
6
|
|
|
298
|
|
|
7
|
|
|
1,258
|
|
|
13
|
|
||||||
U.S. Treasury securities
|
510
|
|
|
—
|
|
|
1,243
|
|
|
6
|
|
|
1,753
|
|
|
6
|
|
||||||
Total
|
$
|
17,493
|
|
|
$
|
100
|
|
|
$
|
8,133
|
|
|
$
|
40
|
|
|
$
|
25,626
|
|
|
$
|
140
|
|
Held to maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. agency mortgage-backed securities
|
$
|
16,183
|
|
|
$
|
100
|
|
|
$
|
18,910
|
|
|
$
|
180
|
|
|
$
|
35,093
|
|
|
$
|
280
|
|
Asset-backed securities
|
7,507
|
|
|
63
|
|
|
2,898
|
|
|
22
|
|
|
10,405
|
|
|
85
|
|
||||||
Total
|
$
|
23,690
|
|
|
$
|
163
|
|
|
$
|
21,808
|
|
|
$
|
202
|
|
|
$
|
45,498
|
|
|
$
|
365
|
|
Total securities with unrealized losses
|
$
|
41,183
|
|
|
$
|
263
|
|
|
$
|
29,941
|
|
|
$
|
242
|
|
|
$
|
71,124
|
|
|
$
|
505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Available for sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. agency mortgage-backed securities
|
$
|
9,529
|
|
|
$
|
32
|
|
|
$
|
4,257
|
|
|
$
|
50
|
|
|
$
|
13,786
|
|
|
$
|
82
|
|
U.S. Treasury securities
|
4,951
|
|
|
6
|
|
|
7,037
|
|
|
102
|
|
|
11,988
|
|
|
108
|
|
||||||
Asset-backed securities
|
4,050
|
|
|
9
|
|
|
837
|
|
|
6
|
|
|
4,887
|
|
|
15
|
|
||||||
Corporate debt securities
|
3,561
|
|
|
19
|
|
|
254
|
|
|
1
|
|
|
3,815
|
|
|
20
|
|
||||||
Certificates of deposit
|
1,217
|
|
|
1
|
|
|
150
|
|
|
—
|
|
|
1,367
|
|
|
1
|
|
||||||
U.S. agency notes
|
195
|
|
|
—
|
|
|
304
|
|
|
2
|
|
|
499
|
|
|
2
|
|
||||||
Foreign government agency securities
|
—
|
|
|
—
|
|
|
49
|
|
|
1
|
|
|
49
|
|
|
1
|
|
||||||
Total
|
$
|
23,503
|
|
|
$
|
67
|
|
|
$
|
12,888
|
|
|
$
|
162
|
|
|
$
|
36,391
|
|
|
$
|
229
|
|
Held to maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. agency mortgage-backed securities
|
$
|
29,263
|
|
|
$
|
222
|
|
|
$
|
56,435
|
|
|
$
|
1,966
|
|
|
$
|
85,698
|
|
|
$
|
2,188
|
|
Asset-backed securities
|
6,795
|
|
|
35
|
|
|
376
|
|
|
4
|
|
|
7,171
|
|
|
39
|
|
||||||
Corporate debt securities
|
2,909
|
|
|
29
|
|
|
1,066
|
|
|
18
|
|
|
3,975
|
|
|
47
|
|
||||||
U.S. state and municipal securities
|
77
|
|
|
2
|
|
|
18
|
|
|
1
|
|
|
95
|
|
|
3
|
|
||||||
Non-agency commercial mortgage-backed securities
|
283
|
|
|
2
|
|
|
632
|
|
|
15
|
|
|
915
|
|
|
17
|
|
||||||
U.S. Treasury securities
|
—
|
|
|
—
|
|
|
218
|
|
|
6
|
|
|
218
|
|
|
6
|
|
||||||
Foreign government agency securities
|
—
|
|
|
—
|
|
|
49
|
|
|
1
|
|
|
49
|
|
|
1
|
|
||||||
Total
|
$
|
39,327
|
|
|
$
|
290
|
|
|
$
|
58,794
|
|
|
$
|
2,011
|
|
|
$
|
98,121
|
|
|
$
|
2,301
|
|
Total securities with unrealized losses
|
$
|
62,830
|
|
|
$
|
357
|
|
|
$
|
71,682
|
|
|
$
|
2,173
|
|
|
$
|
134,512
|
|
|
$
|
2,530
|
|
December 31, 2019
|
Within
1 year |
|
After 1 year through
5 years |
|
After 5 years through
10 years |
|
After
10 years |
|
Total
|
||||||||||
Available for sale securities
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. agency mortgage-backed securities
|
$
|
30
|
|
|
$
|
1,896
|
|
|
$
|
12,509
|
|
|
$
|
31,720
|
|
|
$
|
46,155
|
|
Corporate debt securities
|
1,181
|
|
|
4,132
|
|
|
171
|
|
|
—
|
|
|
5,484
|
|
|||||
Asset-backed securities
|
65
|
|
|
4,093
|
|
|
367
|
|
|
462
|
|
|
4,987
|
|
|||||
U.S. Treasury securities
|
1,915
|
|
|
1,469
|
|
|
—
|
|
|
—
|
|
|
3,384
|
|
|||||
Certificates of deposit
|
703
|
|
|
301
|
|
|
—
|
|
|
—
|
|
|
1,004
|
|
|||||
Commercial paper
|
395
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
395
|
|
|||||
Non-agency commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|||||
Total fair value
|
4,289
|
|
|
11,891
|
|
|
13,047
|
|
|
32,195
|
|
|
61,422
|
|
|||||
Total amortized cost
|
$
|
4,279
|
|
|
$
|
11,823
|
|
|
$
|
13,046
|
|
|
$
|
32,007
|
|
|
$
|
61,155
|
|
Weighted-average yield (1)
|
2.42
|
%
|
|
2.44
|
%
|
|
2.13
|
%
|
|
2.40
|
%
|
|
2.35
|
%
|
|||||
Held to maturity securities
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. agency mortgage-backed securities
|
$
|
966
|
|
|
$
|
15,162
|
|
|
$
|
32,971
|
|
|
$
|
61,467
|
|
|
$
|
110,566
|
|
Asset-backed securities
|
—
|
|
|
3,025
|
|
|
6,473
|
|
|
8,273
|
|
|
17,771
|
|
|||||
Corporate debt securities
|
1,279
|
|
|
2,713
|
|
|
726
|
|
|
—
|
|
|
4,718
|
|
|||||
U.S. state and municipal securities
|
—
|
|
|
98
|
|
|
556
|
|
|
750
|
|
|
1,404
|
|
|||||
Non-agency commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
1,141
|
|
|
1,141
|
|
|||||
U.S. Treasury securities
|
—
|
|
|
—
|
|
|
228
|
|
|
—
|
|
|
228
|
|
|||||
Certificates of deposit
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|||||
Foreign government agency securities
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|||||
Total fair value
|
2,445
|
|
|
21,048
|
|
|
40,954
|
|
|
71,652
|
|
|
136,099
|
|
|||||
Total amortized cost
|
$
|
2,442
|
|
|
$
|
20,775
|
|
|
$
|
40,182
|
|
|
$
|
71,307
|
|
|
$
|
134,706
|
|
Weighted-average yield (1)
|
2.51
|
%
|
|
2.54
|
%
|
|
2.64
|
%
|
|
2.42
|
%
|
|
2.51
|
%
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Proceeds
|
$
|
24,495
|
|
|
$
|
115
|
|
|
$
|
8,617
|
|
Gross realized gains
|
16
|
|
|
—
|
|
|
12
|
|
|||
Gross realized losses
|
10
|
|
|
—
|
|
|
—
|
|
6.
|
Bank Loans and Related Allowance for Loan Losses
|
December 31, 2019
|
Current
|
|
30-59 days
past due |
|
60-89 days
past due |
|
>90 days past
due and other
nonaccrual loans (3) |
|
Total past due and other
nonaccrual loans |
|
Total
loans |
|
Allowance for loan
losses |
|
Total
bank
loans – net |
||||||||||||||||
First Mortgages (1,2)
|
$
|
11,665
|
|
|
$
|
24
|
|
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
39
|
|
|
$
|
11,704
|
|
|
$
|
11
|
|
|
$
|
11,693
|
|
HELOCs (1,2)
|
1,105
|
|
|
2
|
|
|
1
|
|
|
9
|
|
|
12
|
|
|
1,117
|
|
|
4
|
|
|
1,113
|
|
||||||||
Pledged asset lines
|
5,202
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
5,206
|
|
|
—
|
|
|
5,206
|
|
||||||||
Other
|
201
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
203
|
|
|
3
|
|
|
200
|
|
||||||||
Total bank loans
|
$
|
18,173
|
|
|
$
|
30
|
|
|
$
|
5
|
|
|
$
|
22
|
|
|
$
|
57
|
|
|
$
|
18,230
|
|
|
$
|
18
|
|
|
$
|
18,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
First Mortgages (1,2)
|
$
|
10,349
|
|
|
$
|
21
|
|
|
$
|
2
|
|
|
$
|
12
|
|
|
$
|
35
|
|
|
$
|
10,384
|
|
|
$
|
14
|
|
|
$
|
10,370
|
|
HELOCs (1,2)
|
1,493
|
|
|
3
|
|
|
1
|
|
|
8
|
|
|
12
|
|
|
1,505
|
|
|
5
|
|
|
1,500
|
|
||||||||
Pledged asset lines
|
4,558
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
4,561
|
|
|
—
|
|
|
4,561
|
|
||||||||
Other
|
180
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180
|
|
|
2
|
|
|
178
|
|
||||||||
Total bank loans
|
$
|
16,580
|
|
|
$
|
27
|
|
|
$
|
3
|
|
|
$
|
20
|
|
|
$
|
50
|
|
|
$
|
16,630
|
|
|
$
|
21
|
|
|
$
|
16,609
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
|||||||||||||||||||||||||||||||||||||||||
|
First Mortgages
|
|
HELOCs
|
|
Other
|
|
Total (1)
|
|
First Mortgages
|
|
HELOCs
|
|
Other
|
|
Total (1)
|
|
First Mortgages
|
|
HELOCs
|
|
Other
|
Total (1)
|
||||||||||||||||||||||||
Balance at beginning of year
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
21
|
|
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
26
|
|
|
$
|
17
|
|
|
$
|
8
|
|
|
1
|
|
$
|
26
|
|
|
Charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
(3
|
)
|
||||||||||||
Recoveries
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
3
|
|
||||||||||||
Provision for loan losses
|
(4
|
)
|
|
(2
|
)
|
|
1
|
|
|
(5
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
||||||||||||
Balance at end of year
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
21
|
|
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
2
|
|
$
|
26
|
|
December 31,
|
2019
|
|
2018
|
||||
Nonaccrual loans (1)
|
$
|
22
|
|
|
$
|
21
|
|
Other real estate owned (2)
|
1
|
|
|
3
|
|
||
Total nonperforming assets
|
23
|
|
|
24
|
|
||
Troubled debt restructurings
|
2
|
|
|
4
|
|
||
Total impaired assets
|
$
|
25
|
|
|
$
|
28
|
|
•
|
Year of origination;
|
•
|
Borrower FICO scores at origination (Origination FICO);
|
•
|
Updated borrower FICO scores (Updated FICO);
|
•
|
Loan-to-value (LTV) ratios at origination (Origination LTV); and
|
•
|
Estimated Current LTV ratios.
|
December 31, 2019
|
Balance
|
|
Weighted Average
Updated FICO |
|
Percent of Loans that are on
Nonaccrual Status |
||||
First Mortgages
|
|
|
|
|
|
||||
Estimated Current LTV
|
|
|
|
|
|
||||
<70%
|
$
|
10,382
|
|
|
775
|
|
|
0.08
|
%
|
>70% – <90%
|
1,320
|
|
|
770
|
|
|
0.22
|
%
|
|
>90% – <100%
|
2
|
|
|
715
|
|
|
0.04
|
%
|
|
>100%
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
11,704
|
|
|
775
|
|
|
0.09
|
%
|
HELOCs
|
|
|
|
|
|
||||
Estimated Current LTV (1)
|
|
|
|
|
|
||||
<70%
|
$
|
1,056
|
|
|
767
|
|
|
0.81
|
%
|
>70% – <90%
|
56
|
|
|
750
|
|
|
0.80
|
%
|
|
>90% – <100%
|
3
|
|
|
701
|
|
|
3.28
|
%
|
|
>100%
|
2
|
|
|
675
|
|
|
9.71
|
%
|
|
Total
|
$
|
1,117
|
|
|
766
|
|
|
0.83
|
%
|
Pledged asset lines
|
|
|
|
|
|
||||
Weighted-Average LTV (1)
|
|
|
|
|
|
|
|||
=70%
|
$
|
5,206
|
|
|
766
|
|
|
—
|
|
December 31, 2018
|
Balance
|
|
Weighted Average
Updated FICO |
|
Percent of Loans that are on
Nonaccrual Status |
||||
First Mortgages
|
|
|
|
|
|
||||
Estimated Current LTV
|
|
|
|
|
|
||||
<70%
|
$
|
9,396
|
|
|
776
|
|
|
0.04
|
%
|
>70% – <90%
|
985
|
|
|
769
|
|
|
0.41
|
%
|
|
>90% – <100%
|
2
|
|
|
717
|
|
|
—
|
|
|
>100%
|
1
|
|
|
753
|
|
|
—
|
|
|
Total
|
$
|
10,384
|
|
|
775
|
|
|
0.07
|
%
|
HELOCs
|
|
|
|
|
|
||||
Estimated Current LTV (1)
|
|
|
|
|
|
||||
<70%
|
$
|
1,416
|
|
|
770
|
|
|
0.13
|
%
|
>70% – <90%
|
80
|
|
|
752
|
|
|
0.60
|
%
|
|
>90% – <100%
|
6
|
|
|
729
|
|
|
3.36
|
%
|
|
>100%
|
3
|
|
|
702
|
|
|
—
|
|
|
Total
|
$
|
1,505
|
|
|
769
|
|
|
0.17
|
%
|
Pledged asset lines
|
|
|
|
|
|
||||
Weighted-Average LTV (1)
|
|
|
|
|
|
|
|||
=70%
|
$
|
4,561
|
|
|
766
|
|
|
—
|
|
December 31, 2019
|
First Mortgages
|
|
HELOCs
|
||||
Year of origination
|
|
|
|
|
|||
Pre-2015
|
$
|
1,585
|
|
|
$
|
788
|
|
2015
|
773
|
|
|
77
|
|
||
2016
|
2,149
|
|
|
72
|
|
||
2017
|
1,911
|
|
|
81
|
|
||
2018
|
1,284
|
|
|
64
|
|
||
2019
|
4,002
|
|
|
35
|
|
||
Total
|
$
|
11,704
|
|
|
$
|
1,117
|
|
Origination FICO
|
|
|
|
|
|
||
<620
|
$
|
3
|
|
|
$
|
—
|
|
620 – 679
|
77
|
|
|
5
|
|
||
680 – 739
|
1,713
|
|
|
219
|
|
||
>740
|
9,911
|
|
|
893
|
|
||
Total
|
$
|
11,704
|
|
|
$
|
1,117
|
|
Origination LTV
|
|
|
|
||||
<70%
|
$
|
8,928
|
|
|
$
|
798
|
|
>70% – <90%
|
2,773
|
|
|
314
|
|
||
>90% – <100%
|
3
|
|
|
5
|
|
||
Total
|
$
|
11,704
|
|
|
$
|
1,117
|
|
December 31, 2018
|
First Mortgages
|
|
HELOCs
|
||||
Year of origination
|
|
|
|
|
|||
Pre-2015
|
$
|
2,387
|
|
|
$
|
1,140
|
|
2015
|
1,050
|
|
|
106
|
|
||
2016
|
2,606
|
|
|
95
|
|
||
2017
|
2,366
|
|
|
99
|
|
||
2018
|
1,975
|
|
|
65
|
|
||
Total
|
$
|
10,384
|
|
|
$
|
1,505
|
|
Origination FICO
|
|
|
|
|
|
||
<620
|
$
|
5
|
|
|
$
|
—
|
|
620 – 679
|
83
|
|
|
8
|
|
||
680 – 739
|
1,626
|
|
|
282
|
|
||
>740
|
8,670
|
|
|
1,215
|
|
||
Total
|
$
|
10,384
|
|
|
$
|
1,505
|
|
Origination LTV
|
|
|
|
|
|
||
<70%
|
$
|
7,815
|
|
|
$
|
1,064
|
|
>70% – <90%
|
2,564
|
|
|
434
|
|
||
>90% – <100%
|
5
|
|
|
7
|
|
||
Total
|
$
|
10,384
|
|
|
$
|
1,505
|
|
December 31, 2019
|
Balance
|
||
Converted to an amortizing loan by period end
|
$
|
506
|
|
Within 1 year
|
45
|
|
|
> 1 year – 3 years
|
81
|
|
|
> 3 years – 5 years
|
155
|
|
|
> 5 years
|
330
|
|
|
Total
|
$
|
1,117
|
|
7.
|
Equipment, Office Facilities, and Property
|
December 31,
|
2019
|
|
2018
|
||||
Software
|
$
|
1,876
|
|
|
$
|
1,699
|
|
Buildings
|
1,056
|
|
|
945
|
|
||
Leasehold improvements
|
360
|
|
|
367
|
|
||
Construction in progress
|
324
|
|
|
248
|
|
||
Information technology equipment
|
253
|
|
|
206
|
|
||
Furniture and equipment
|
241
|
|
|
219
|
|
||
Land
|
163
|
|
|
179
|
|
||
Telecommunications equipment
|
91
|
|
|
69
|
|
||
Total equipment, office facilities, and property
|
4,364
|
|
|
3,932
|
|
||
Accumulated depreciation and amortization
|
(2,236
|
)
|
|
(2,163
|
)
|
||
Total equipment, office facilities, and property — net
|
$
|
2,128
|
|
|
$
|
1,769
|
|
8.
|
Goodwill
|
|
Investor
Services |
|
Advisor
Services |
|
Total
|
||||||
Balance at December 31, 2017
|
$
|
1,096
|
|
|
$
|
131
|
|
|
$
|
1,227
|
|
Goodwill acquired and other changes during the period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2018
|
1,096
|
|
|
131
|
|
|
1,227
|
|
|||
Goodwill acquired and other changes during the period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2019
|
$
|
1,096
|
|
|
$
|
131
|
|
|
$
|
1,227
|
|
December 31,
|
2019
|
|
2018
|
||||
Receivables — interest, dividends, and other
|
$
|
788
|
|
|
$
|
689
|
|
Securities borrowed
|
735
|
|
|
101
|
|
||
Other securities owned at fair value
|
718
|
|
|
539
|
|
||
Other investments (1)
|
633
|
|
|
460
|
|
||
Operating lease ROU assets
|
577
|
|
|
—
|
|
||
Customer contract receivables
|
356
|
|
|
307
|
|
||
Capitalized contract costs, net
|
281
|
|
|
250
|
|
||
Other receivables from brokers, dealers, and clearing organizations
|
235
|
|
|
452
|
|
||
Intangible assets, net of accumulated amortization of $326 and $299 (2)
|
128
|
|
|
152
|
|
||
Other
|
264
|
|
|
188
|
|
||
Total other assets
|
$
|
4,715
|
|
|
$
|
3,138
|
|
10.
|
Variable Interest Entities
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Aggregate
assets |
|
Aggregate
liabilities |
|
Maximum exposure
to loss |
|
Aggregate
assets |
|
Aggregate
liabilities |
|
Maximum exposure to loss
|
||||||||||||
LIHTC Investments (1)
|
$
|
516
|
|
|
$
|
275
|
|
|
$
|
516
|
|
|
$
|
338
|
|
|
$
|
188
|
|
|
$
|
338
|
|
Other CRA Investments (2)
|
120
|
|
|
—
|
|
|
154
|
|
|
70
|
|
|
—
|
|
|
124
|
|
||||||
Total
|
$
|
636
|
|
|
$
|
275
|
|
|
$
|
670
|
|
|
$
|
408
|
|
|
$
|
188
|
|
|
$
|
462
|
|
11.
|
Bank Deposits
|
December 31,
|
2019
|
|
2018
|
||||
Interest-bearing deposits:
|
|
|
|
||||
Deposits swept from brokerage accounts
|
$
|
201,531
|
|
|
$
|
212,311
|
|
Checking
|
12,650
|
|
|
12,523
|
|
||
Savings and other
|
5,168
|
|
|
5,827
|
|
||
Total interest-bearing deposits
|
219,349
|
|
|
230,661
|
|
||
Non-interest-bearing deposits
|
745
|
|
|
762
|
|
||
Total bank deposits
|
$
|
220,094
|
|
|
$
|
231,423
|
|
|
Date of
|
Principal Amount Outstanding
|
|||||
|
Issuance
|
2019
|
2018
|
||||
Fixed-rate Senior Notes:
|
|
|
|
||||
4.450% due July 22, 2020
|
07/22/10
|
$
|
700
|
|
$
|
700
|
|
3.250% due May 21, 2021
|
05/22/18
|
600
|
|
600
|
|
||
3.225% due September 1, 2022
|
08/29/12
|
256
|
|
256
|
|
||
2.650% due January 25, 2023
|
12/07/17
|
800
|
|
800
|
|
||
3.550% due February 1, 2024
|
10/31/18
|
500
|
|
500
|
|
||
3.000% due March 10, 2025
|
03/10/15
|
375
|
|
375
|
|
||
3.850% due May 21, 2025
|
05/22/18
|
750
|
|
750
|
|
||
3.450% due February 13, 2026
|
11/13/15
|
350
|
|
350
|
|
||
3.200% due March 2, 2027
|
03/02/17
|
650
|
|
650
|
|
||
3.200% due January 25, 2028
|
12/07/17
|
700
|
|
700
|
|
||
4.000% due February 1, 2029
|
10/31/18
|
600
|
|
600
|
|
||
3.250% due May 22, 2029
|
05/22/19
|
600
|
|
—
|
|
||
Floating-rate Senior Notes:
|
|
|
|
||||
Three-month LIBOR + 0.32% due May 21, 2021
|
05/22/18
|
600
|
|
600
|
|
||
Total Senior Notes
|
|
7,481
|
|
6,881
|
|
||
5.450% Finance lease obligation (1)
|
06/04/04
|
—
|
|
52
|
|
||
Unamortized discount — net
|
|
(14
|
)
|
(15
|
)
|
||
Debt issuance costs
|
|
(37
|
)
|
(40
|
)
|
||
Total long-term debt
|
|
$
|
7,430
|
|
$
|
6,878
|
|
|
Maturities
|
||
2020
|
$
|
700
|
|
2021
|
1,200
|
|
|
2022
|
256
|
|
|
2023
|
800
|
|
|
2024
|
500
|
|
|
Thereafter
|
4,025
|
|
|
Total maturities
|
7,481
|
|
|
Unamortized discount — net
|
(14
|
)
|
|
Debt issuance costs
|
(37
|
)
|
|
Total long-term debt
|
$
|
7,430
|
|
|
Balance Sheet Classification
|
December 31, 2019
|
||
Lease assets:
|
|
|
||
Operating lease ROU assets
|
Other assets
|
$
|
577
|
|
Lease liabilities:
|
|
|
||
Operating lease liabilities
|
Accrued expenses and other liabilities
|
$
|
650
|
|
Lease Cost (1)
|
|
Year Ended
December 31, 2019 |
|||
Operating lease cost (2)
|
|
$
|
137
|
|
|
Variable lease cost (3)
|
|
34
|
|
Lease Term and Discount Rate
|
|
|
Weighted-average remaining lease term (years)
|
7.15
|
|
Weighted-average discount rate
|
3.42
|
%
|
Maturity of Lease Liabilities
|
Operating Leases (1)
|
||
2020
|
$
|
128
|
|
2021
|
115
|
|
|
2022
|
93
|
|
|
2023
|
84
|
|
|
2024
|
79
|
|
|
Thereafter
|
241
|
|
|
Total lease payments
|
740
|
|
|
Less: Interest
|
90
|
|
|
Present value of lease liabilities
|
$
|
650
|
|
|
Operating
Leases |
Subleases
|
Net
|
||||||
2019
|
$
|
131
|
|
$
|
4
|
|
$
|
127
|
|
2020
|
125
|
|
4
|
|
121
|
|
|||
2021
|
101
|
|
4
|
|
97
|
|
|||
2022
|
79
|
|
2
|
|
77
|
|
|||
2023
|
72
|
|
1
|
|
71
|
|
|||
Thereafter
|
282
|
|
—
|
|
282
|
|
|||
Total
|
$
|
790
|
|
$
|
15
|
|
$
|
775
|
|
14.
|
Commitments and Contingencies
|
December 31,
|
2019
|
2018
|
||||
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit
|
$
|
10,753
|
|
$
|
11,046
|
|
Commitments to purchase First Mortgage loans
|
1,521
|
|
268
|
|
||
Total
|
$
|
12,274
|
|
$
|
11,314
|
|
2020 (1)
|
$
|
2,061
|
|
2021
|
135
|
|
|
2022
|
90
|
|
|
2023
|
23
|
|
|
2024
|
23
|
|
|
Thereafter
|
44
|
|
|
Total
|
$
|
2,376
|
|
15.
|
Financial Instruments Subject to Off-Balance Sheet Credit Risk
|
|
|
Gross
Assets/ Liabilities |
|
Gross Amounts Offset in the Consolidated
Balance Sheets |
|
Net Amounts Presented in the Consolidated
Balance Sheets |
|
Gross Amounts Not Offset in the
Consolidated Balance Sheets |
|
Net
Amount |
|||||||||||||||
|
|
|
|
Counterparty
Offsetting |
|
Collateral
|
|
||||||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Resale agreements (1)
|
|
$
|
9,028
|
|
|
$
|
—
|
|
|
$
|
9,028
|
|
|
$
|
—
|
|
|
$
|
(9,028
|
)
|
(2)
|
|
$
|
—
|
|
Securities borrowed (3)
|
|
735
|
|
|
—
|
|
|
735
|
|
|
(730
|
)
|
|
(5
|
)
|
|
|
—
|
|
||||||
Total
|
|
$
|
9,763
|
|
|
$
|
—
|
|
|
$
|
9,763
|
|
|
$
|
(730
|
)
|
|
$
|
(9,033
|
)
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities loaned (4,5)
|
|
$
|
1,251
|
|
|
$
|
—
|
|
|
$
|
1,251
|
|
|
$
|
(730
|
)
|
|
$
|
(445
|
)
|
|
|
$
|
76
|
|
Total
|
|
$
|
1,251
|
|
|
$
|
—
|
|
|
$
|
1,251
|
|
|
$
|
(730
|
)
|
|
$
|
(445
|
)
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Resale agreements (1)
|
|
$
|
7,195
|
|
|
$
|
—
|
|
|
$
|
7,195
|
|
|
$
|
—
|
|
|
$
|
(7,195
|
)
|
(2)
|
|
$
|
—
|
|
Securities borrowed (3)
|
|
101
|
|
|
—
|
|
|
101
|
|
|
(98
|
)
|
|
(3
|
)
|
|
|
—
|
|
||||||
Total
|
|
$
|
7,296
|
|
|
$
|
—
|
|
|
$
|
7,296
|
|
|
$
|
(98
|
)
|
|
$
|
(7,198
|
)
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities loaned (4,5)
|
|
$
|
1,184
|
|
|
$
|
—
|
|
|
$
|
1,184
|
|
|
$
|
(98
|
)
|
|
$
|
(975
|
)
|
|
|
$
|
111
|
|
Total
|
|
$
|
1,184
|
|
|
$
|
—
|
|
|
$
|
1,184
|
|
|
$
|
(98
|
)
|
|
$
|
(975
|
)
|
|
|
$
|
111
|
|
December 31,
|
2019
|
2018
|
||||
Fair value of client securities available to be pledged
|
$
|
26,685
|
|
$
|
26,628
|
|
Fair value of securities pledged for:
|
|
|
||||
Fulfillment of requirements with the Options Clearing Corporation (1)
|
$
|
2,171
|
|
$
|
2,315
|
|
Fulfillment of client short sales
|
2,293
|
|
1,292
|
|
||
Securities lending to other broker-dealers
|
1,017
|
|
974
|
|
||
Total collateral pledged
|
$
|
5,481
|
|
$
|
4,581
|
|
(1)
|
Securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.
|
December 31, 2019
|
Level 1
|
Level 2
|
Level 3
|
Balance at
Fair Value |
||||||||
Cash equivalents:
|
|
|
|
|
||||||||
Money market funds
|
$
|
5,179
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5,179
|
|
Commercial paper
|
—
|
|
2,498
|
|
—
|
|
2,498
|
|
||||
Total cash equivalents
|
5,179
|
|
2,498
|
|
—
|
|
7,677
|
|
||||
Investments segregated and on deposit for regulatory purposes:
|
|
|
|
|
||||||||
Certificates of deposit
|
—
|
|
1,351
|
|
—
|
|
1,351
|
|
||||
U.S. Government securities
|
—
|
|
7,276
|
|
—
|
|
7,276
|
|
||||
Total investments segregated and on deposit for regulatory purposes
|
—
|
|
8,627
|
|
—
|
|
8,627
|
|
||||
Available for sale securities:
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
—
|
|
46,155
|
|
—
|
|
46,155
|
|
||||
Corporate debt securities
|
—
|
|
5,484
|
|
—
|
|
5,484
|
|
||||
Asset-backed securities
|
—
|
|
4,987
|
|
—
|
|
4,987
|
|
||||
U.S. Treasury securities
|
—
|
|
3,384
|
|
—
|
|
3,384
|
|
||||
Certificates of deposit
|
—
|
|
1,004
|
|
—
|
|
1,004
|
|
||||
Commercial paper
|
—
|
|
395
|
|
—
|
|
395
|
|
||||
Non-agency commercial mortgage-backed securities
|
—
|
|
13
|
|
—
|
|
13
|
|
||||
Total available for sale securities
|
—
|
|
61,422
|
|
—
|
|
61,422
|
|
||||
Other assets:
|
|
|
|
|
||||||||
Equity and bond mutual funds
|
442
|
|
—
|
|
—
|
|
442
|
|
||||
U.S. Government securities
|
—
|
|
202
|
|
—
|
|
202
|
|
||||
State and municipal debt obligations
|
—
|
|
47
|
|
—
|
|
47
|
|
||||
Equity, corporate debt, and other securities
|
5
|
|
22
|
|
—
|
|
27
|
|
||||
Total other assets
|
447
|
|
271
|
|
—
|
|
718
|
|
||||
Total
|
$
|
5,626
|
|
$
|
72,818
|
|
$
|
—
|
|
$
|
78,444
|
|
December 31, 2018
|
Level 1
|
Level 2
|
Level 3
|
Balance at
Fair Value |
||||||||
Cash equivalents:
|
|
|
|
|
||||||||
Money market funds
|
$
|
3,429
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,429
|
|
Commercial paper
|
—
|
|
4,863
|
|
—
|
|
4,863
|
|
||||
Total cash equivalents
|
3,429
|
|
4,863
|
|
—
|
|
8,292
|
|
||||
Investments segregated and on deposit for regulatory purposes:
|
|
|
|
|
||||||||
Certificates of deposit
|
—
|
|
1,396
|
|
—
|
|
1,396
|
|
||||
U.S. Government securities
|
—
|
|
3,275
|
|
—
|
|
3,275
|
|
||||
Total investments segregated and on deposit for regulatory purposes
|
—
|
|
4,671
|
|
—
|
|
4,671
|
|
||||
Available for sale securities:
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
—
|
|
25,556
|
|
—
|
|
25,556
|
|
||||
U.S. Treasury securities
|
—
|
|
18,302
|
|
—
|
|
18,302
|
|
||||
Asset-backed securities
|
—
|
|
10,085
|
|
—
|
|
10,085
|
|
||||
Corporate debt securities
|
—
|
|
7,467
|
|
—
|
|
7,467
|
|
||||
Certificates of deposit
|
—
|
|
3,685
|
|
—
|
|
3,685
|
|
||||
U.S. agency notes
|
—
|
|
898
|
|
—
|
|
898
|
|
||||
Commercial paper
|
—
|
|
522
|
|
—
|
|
522
|
|
||||
Foreign government agency securities
|
—
|
|
49
|
|
—
|
|
49
|
|
||||
Non-agency commercial mortgage-backed securities
|
—
|
|
14
|
|
—
|
|
14
|
|
||||
Total available for sale securities
|
—
|
|
66,578
|
|
—
|
|
66,578
|
|
||||
Other assets:
|
|
|
|
|
||||||||
Equity and bond mutual funds
|
441
|
|
—
|
|
—
|
|
441
|
|
||||
U.S. Government securities
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
State and municipal debt obligations
|
—
|
|
39
|
|
—
|
|
39
|
|
||||
Equity, corporate debt, and other securities
|
3
|
|
29
|
|
—
|
|
32
|
|
||||
Schwab Funds® money market funds
|
26
|
|
—
|
|
—
|
|
26
|
|
||||
Total other assets
|
470
|
|
69
|
|
—
|
|
539
|
|
||||
Total
|
$
|
3,899
|
|
$
|
76,181
|
|
$
|
—
|
|
$
|
80,080
|
|
December 31, 2019
|
Carrying
Amount |
Level 1
|
Level 2
|
Level 3
|
Balance at
Fair Value |
||||||||||
Assets
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
21,668
|
|
$
|
21,668
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,668
|
|
Cash and investments segregated and on deposit for regulatory purposes
|
11,807
|
|
2,792
|
|
9,015
|
|
—
|
|
11,807
|
|
|||||
Receivables from brokerage clients — net
|
21,763
|
|
—
|
|
21,763
|
|
—
|
|
21,763
|
|
|||||
Held to maturity securities:
|
|
|
|
|
|
||||||||||
U.S. agency mortgage-backed securities
|
109,325
|
|
—
|
|
110,566
|
|
—
|
|
110,566
|
|
|||||
Asset-backed securities
|
17,806
|
|
—
|
|
17,771
|
|
—
|
|
17,771
|
|
|||||
Corporate debt securities
|
4,661
|
|
—
|
|
4,718
|
|
—
|
|
4,718
|
|
|||||
U.S. state and municipal securities
|
1,301
|
|
—
|
|
1,404
|
|
—
|
|
1,404
|
|
|||||
Non-agency commercial mortgage-backed securities
|
1,119
|
|
—
|
|
1,141
|
|
—
|
|
1,141
|
|
|||||
U.S. Treasury securities
|
223
|
|
—
|
|
228
|
|
—
|
|
228
|
|
|||||
Certificates of deposit
|
200
|
|
—
|
|
200
|
|
—
|
|
200
|
|
|||||
Foreign government agency securities
|
50
|
|
—
|
|
50
|
|
—
|
|
50
|
|
|||||
Other
|
21
|
|
—
|
|
21
|
|
—
|
|
21
|
|
|||||
Total held to maturity securities
|
134,706
|
|
—
|
|
136,099
|
|
—
|
|
136,099
|
|
|||||
Bank loans — net:
|
|
|
|
|
|
||||||||||
First Mortgages
|
11,693
|
|
—
|
|
11,639
|
|
—
|
|
11,639
|
|
|||||
HELOCs
|
1,113
|
|
—
|
|
1,153
|
|
—
|
|
1,153
|
|
|||||
Pledged asset lines
|
5,206
|
|
—
|
|
5,206
|
|
—
|
|
5,206
|
|
|||||
Other
|
200
|
|
—
|
|
200
|
|
—
|
|
200
|
|
|||||
Total bank loans — net
|
18,212
|
|
—
|
|
18,198
|
|
—
|
|
18,198
|
|
|||||
Other assets
|
1,014
|
|
—
|
|
1,014
|
|
—
|
|
1,014
|
|
|||||
Liabilities
|
|
|
|
|
|
||||||||||
Bank deposits
|
$
|
220,094
|
|
$
|
—
|
|
$
|
220,094
|
|
$
|
—
|
|
$
|
220,094
|
|
Payables to brokerage clients
|
39,220
|
|
—
|
|
39,220
|
|
—
|
|
39,220
|
|
|||||
Accrued expenses and other liabilities
|
1,882
|
|
—
|
|
1,882
|
|
—
|
|
1,882
|
|
|||||
Long-term debt
|
7,430
|
|
—
|
|
7,775
|
|
—
|
|
7,775
|
|
December 31, 2018
|
Carrying
Amount |
Level 1
|
Level 2
|
Level 3
|
Balance at
Fair Value |
||||||||||
Assets
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
19,646
|
|
$
|
—
|
|
$
|
19,646
|
|
$
|
—
|
|
$
|
19,646
|
|
Cash and investments segregated and on deposit for regulatory purposes
|
8,886
|
|
—
|
|
8,886
|
|
—
|
|
8,886
|
|
|||||
Receivables from brokerage clients — net
|
21,641
|
|
—
|
|
21,641
|
|
—
|
|
21,641
|
|
|||||
Held to maturity securities:
|
|
|
|
|
|
||||||||||
U.S. agency mortgage-backed securities
|
118,064
|
|
—
|
|
116,093
|
|
—
|
|
116,093
|
|
|||||
Asset-backed securities
|
18,502
|
|
—
|
|
18,546
|
|
—
|
|
18,546
|
|
|||||
Corporate debt securities
|
4,477
|
|
—
|
|
4,432
|
|
—
|
|
4,432
|
|
|||||
U.S. state and municipal securities
|
1,327
|
|
—
|
|
1,348
|
|
—
|
|
1,348
|
|
|||||
Non-agency commercial mortgage-backed securities
|
1,156
|
|
—
|
|
1,142
|
|
—
|
|
1,142
|
|
|||||
U.S. Treasury securities
|
223
|
|
—
|
|
217
|
|
—
|
|
217
|
|
|||||
Certificates of deposit
|
200
|
|
—
|
|
201
|
|
—
|
|
201
|
|
|||||
Foreign government agency securities
|
50
|
|
—
|
|
49
|
|
—
|
|
49
|
|
|||||
Other
|
10
|
|
—
|
|
10
|
|
—
|
|
10
|
|
|||||
Total held to maturity securities
|
144,009
|
|
—
|
|
142,038
|
|
—
|
|
142,038
|
|
|||||
Bank loans — net:
|
|
|
|
|
|
||||||||||
First Mortgages
|
10,370
|
|
—
|
|
10,193
|
|
—
|
|
10,193
|
|
|||||
HELOCs
|
1,500
|
|
—
|
|
1,583
|
|
—
|
|
1,583
|
|
|||||
Pledged asset lines
|
4,561
|
|
—
|
|
4,561
|
|
—
|
|
4,561
|
|
|||||
Other
|
178
|
|
—
|
|
178
|
|
—
|
|
178
|
|
|||||
Total bank loans — net
|
16,609
|
|
—
|
|
16,515
|
|
—
|
|
16,515
|
|
|||||
Other assets
|
1,013
|
|
—
|
|
1,013
|
|
—
|
|
1,013
|
|
|||||
Liabilities
|
|
|
|
|
|
||||||||||
Bank deposits
|
$
|
231,423
|
|
$
|
—
|
|
$
|
231,423
|
|
$
|
—
|
|
$
|
231,423
|
|
Payables to brokerage clients
|
32,726
|
|
—
|
|
32,726
|
|
—
|
|
32,726
|
|
|||||
Accrued expenses and other liabilities
|
3,201
|
|
—
|
|
3,201
|
|
—
|
|
3,201
|
|
|||||
Long-term debt
|
6,878
|
|
—
|
|
6,827
|
|
—
|
|
6,827
|
|
|
|
|
Dividend Rate in Effect at December 31, 2019
|
|
Date at Which Dividend Rate Becomes Floating
|
|
Floating Annual Rate of Three-Month LIBOR plus:
|
|||||||||||||||||
|
Shares Issued and Outstanding (in thousands) at December 31,
|
Liquidation Preference Per Share
|
Carrying Value at December 31,
|
|
Earliest Redemption Date
|
|||||||||||||||||||
|
2019 (1)
|
|
2018 (1)
|
|
2019
|
|
2018
|
Issue Date
|
||||||||||||||||
Fixed-rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Series C
|
600
|
|
|
600
|
|
|
$
|
1,000
|
|
$
|
585
|
|
|
$
|
585
|
|
08/03/15
|
6.000
|
%
|
12/01/20
|
N/A
|
|
N/A
|
|
Series D
|
750
|
|
|
750
|
|
|
1,000
|
|
728
|
|
|
728
|
|
03/07/16
|
5.950
|
%
|
06/01/21
|
N/A
|
|
N/A
|
|
|||
Fixed-to-floating-rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Series A
|
400
|
|
|
400
|
|
|
1,000
|
|
397
|
|
|
397
|
|
01/26/12
|
7.000
|
%
|
02/01/22
|
02/01/22
|
|
4.820
|
%
|
|||
Series E
|
6
|
|
|
6
|
|
|
100,000
|
|
591
|
|
|
591
|
|
10/31/16
|
4.625
|
%
|
03/01/22
|
03/01/22
|
|
3.315
|
%
|
|||
Series F
|
5
|
|
|
5
|
|
|
100,000
|
|
492
|
|
|
492
|
|
10/31/17
|
5.000
|
%
|
12/01/27
|
12/01/27
|
|
2.575
|
%
|
|||
Total preferred stock
|
1,761
|
|
|
1,761
|
|
|
|
|
$
|
2,793
|
|
|
$
|
2,793
|
|
|
|
|
|
|
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Total
Declared |
|
Per Share
Amount |
|
Total
Declared |
|
Per Share
Amount |
|
Total
Declared |
|
Per Share
Amount |
|||||||||
Series A
|
$
|
28.0
|
|
|
70.00
|
|
|
$
|
28.0
|
|
|
70.00
|
|
|
$
|
28.0
|
|
|
70.00
|
|
Series B (1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
29.1
|
|
|
60.00
|
|
|||
Series C
|
36.0
|
|
|
60.00
|
|
|
36.0
|
|
|
60.00
|
|
|
36.0
|
|
|
60.00
|
|
|||
Series D
|
44.6
|
|
|
59.52
|
|
|
44.6
|
|
|
59.52
|
|
|
44.6
|
|
|
59.52
|
|
|||
Series E
|
27.8
|
|
|
4,625.00
|
|
|
27.8
|
|
|
4,625.00
|
|
|
23.2
|
|
|
3,867.01
|
|
|||
Series F (2)
|
25.0
|
|
|
5,000.00
|
|
|
27.2
|
|
|
5,430.56
|
|
|
N/A
|
|
|
N/A
|
|
|||
Total
|
$
|
161.4
|
|
|
|
|
$
|
163.6
|
|
|
|
|
$
|
160.9
|
|
|
|
18.
|
Accumulated Other Comprehensive Income
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||
|
Before
Tax |
Tax
Effect |
Net of
Tax |
|
Before
Tax |
Tax
Effect |
Net of
Tax |
|
Before
Tax |
Tax
Effect |
Net of
Tax |
||||||||||||||||||
Change in net unrealized gain (loss) on available for
sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net unrealized gain (loss)
|
$
|
430
|
|
$
|
(102
|
)
|
$
|
328
|
|
|
$
|
(123
|
)
|
$
|
30
|
|
$
|
(93
|
)
|
|
$
|
13
|
|
$
|
(7
|
)
|
$
|
6
|
|
Reclassification of net unrealized loss on securities transferred
to held to maturity (1)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
227
|
|
(85
|
)
|
142
|
|
|||||||||
Other reclassifications included in other revenue
|
(6
|
)
|
1
|
|
(5
|
)
|
|
—
|
|
—
|
|
—
|
|
|
(12
|
)
|
4
|
|
(8
|
)
|
|||||||||
Change in net unrealized gain (loss) on held to maturity
securities: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Reclassification of net unrealized loss on securities transferred
from available for sale (1)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
(227
|
)
|
85
|
|
(142
|
)
|
|||||||||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale
|
36
|
|
(9
|
)
|
27
|
|
|
35
|
|
(8
|
)
|
27
|
|
|
31
|
|
(11
|
)
|
20
|
|
|||||||||
Other
|
(14
|
)
|
4
|
|
(10
|
)
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(11
|
)
|
4
|
|
(7
|
)
|
|||||||||
Other comprehensive income (loss)
|
$
|
446
|
|
$
|
(106
|
)
|
$
|
340
|
|
|
$
|
(89
|
)
|
$
|
22
|
|
$
|
(67
|
)
|
|
$
|
21
|
|
$
|
(10
|
)
|
$
|
11
|
|
|
Total AOCI
|
||
Balance at December 31, 2016
|
$
|
(163
|
)
|
Available for sale securities:
|
|
||
Net unrealized gain (loss)
|
6
|
|
|
Reclassification of net unrealized loss on securities transferred to held to maturity
|
142
|
|
|
Other reclassifications included in other revenue
|
(8
|
)
|
|
Held to maturity securities:
|
|
||
Reclassification of net unrealized loss on securities transferred from available for sale
|
(142
|
)
|
|
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale
|
20
|
|
|
Other
|
(7
|
)
|
|
Balance at December 31, 2017
|
$
|
(152
|
)
|
Adoption of accounting standards (1)
|
(33
|
)
|
|
Available for sale securities:
|
|
||
Net unrealized gain (loss)
|
(93
|
)
|
|
Held to maturity securities:
|
|
||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale
|
27
|
|
|
Other
|
(1
|
)
|
|
Balance at December 31, 2018
|
$
|
(252
|
)
|
Available for sale securities:
|
|
||
Net unrealized gain (loss), excluding transfers to available for sale from held to maturity
|
309
|
|
|
Net unrealized gain on securities transferred to available for sale from held to maturity (2)
|
19
|
|
|
Other reclassifications included in other revenue
|
(5
|
)
|
|
Held to maturity securities:
|
|
||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale
|
27
|
|
|
Other
|
(10
|
)
|
|
Balance at December 31, 2019
|
$
|
88
|
|
19.
|
Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Stock option expense
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
50
|
|
Restricted stock unit expense (1)
|
120
|
|
|
136
|
|
|
94
|
|
|||
Employee stock purchase plan expense
|
12
|
|
|
10
|
|
|
9
|
|
|||
Total share-based compensation expense
|
$
|
183
|
|
|
$
|
197
|
|
|
$
|
153
|
|
Income tax benefit on share-based compensation expense (2)
|
$
|
(44
|
)
|
|
$
|
(47
|
)
|
|
$
|
(57
|
)
|
|
Number
of Options (In millions) |
|
Weighted- Average Exercise Price
per Share |
|
Weighted- Average Remaining Contractual
Life (in years) |
|
Aggregate Intrinsic
Value |
|||||
Outstanding at December 31, 2018
|
30
|
|
|
$
|
30.19
|
|
|
6.27
|
|
$
|
373
|
|
Granted
|
2
|
|
|
46.25
|
|
|
|
|
|
|||
Exercised
|
(5
|
)
|
|
23.51
|
|
|
|
|
|
|||
Forfeited
|
(1
|
)
|
|
43.12
|
|
|
|
|
|
|||
Expired (1)
|
—
|
|
|
41.42
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
26
|
|
|
$
|
32.10
|
|
|
5.75
|
|
$
|
403
|
|
Vested and expected to vest at December 31, 2019
|
26
|
|
|
$
|
32.08
|
|
|
5.74
|
|
$
|
403
|
|
Vested and exercisable at December 31, 2019
|
18
|
|
|
$
|
27.44
|
|
|
4.77
|
|
$
|
371
|
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted-average fair value of options granted per share
|
$
|
11.97
|
|
|
$
|
14.16
|
|
|
$
|
13.04
|
|
Cash received from options exercised
|
118
|
|
|
125
|
|
|
171
|
|
|||
Tax benefit realized on options exercised
|
17
|
|
|
35
|
|
|
70
|
|
|||
Aggregate intrinsic value of options exercised
|
108
|
|
|
189
|
|
|
241
|
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||
Weighted-average expected dividend yield
|
1.85
|
%
|
|
1.42
|
%
|
|
1.06
|
%
|
Weighted-average expected volatility
|
30
|
%
|
|
33
|
%
|
|
34
|
%
|
Weighted-average risk-free interest rate
|
2.5
|
%
|
|
3.0
|
%
|
|
2.1
|
%
|
Expected life (in years)
|
4.2 - 5.9
|
|
|
4.0 - 5.2
|
|
|
4.1 - 5.3
|
|
|
Number
of Units (In millions) |
|
Weighted- Average Grant Date Fair Value
per Unit |
|||
Outstanding at December 31, 2018
|
7
|
|
|
$
|
40.64
|
|
Granted
|
4
|
|
|
42.16
|
|
|
Vested
|
(3
|
)
|
|
36.10
|
|
|
Forfeited (1)
|
—
|
|
|
43.34
|
|
|
Outstanding at December 31, 2019
|
8
|
|
|
$
|
42.93
|
|
December 31,
|
2019
|
|
2018
|
||||
Projected benefit obligation at beginning of year
|
$
|
56
|
|
|
$
|
44
|
|
Benefit cost (1)
|
13
|
|
|
11
|
|
||
Actuarial (gain)/loss (2)
|
14
|
|
|
1
|
|
||
Projected benefit obligation at end of year (3)
|
$
|
83
|
|
|
$
|
56
|
|
20.
|
Taxes on Income
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
958
|
|
|
$
|
847
|
|
|
$
|
1,132
|
|
State
|
184
|
|
|
159
|
|
|
106
|
|
|||
Total current
|
1,142
|
|
|
1,006
|
|
|
1,238
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
3
|
|
|
42
|
|
|
58
|
|
|||
State
|
(1
|
)
|
|
7
|
|
|
—
|
|
|||
Total deferred
|
2
|
|
|
49
|
|
|
58
|
|
|||
Taxes on income
|
$
|
1,144
|
|
|
$
|
1,055
|
|
|
$
|
1,296
|
|
December 31,
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Operating lease liabilities
|
$
|
159
|
|
|
$
|
—
|
|
Employee compensation, severance, and benefits
|
154
|
|
|
132
|
|
||
State and local taxes
|
22
|
|
|
21
|
|
||
Reserves and allowances
|
14
|
|
|
13
|
|
||
Net operating loss carryforwards
|
6
|
|
|
5
|
|
||
Net unrealized loss on available for sale securities
|
—
|
|
|
79
|
|
||
Facilities lease commitments
|
—
|
|
|
12
|
|
||
Other
|
—
|
|
|
6
|
|
||
Total deferred tax assets
|
355
|
|
|
268
|
|
||
Valuation allowance
|
(3
|
)
|
|
(3
|
)
|
||
Deferred tax assets — net of valuation allowance
|
352
|
|
|
265
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Operating lease ROU assets
|
(146
|
)
|
|
—
|
|
||
Depreciation and amortization
|
(113
|
)
|
|
(108
|
)
|
||
Capitalized internal-use software development costs
|
(97
|
)
|
|
(98
|
)
|
||
Capitalized contract costs
|
(68
|
)
|
|
(60
|
)
|
||
Net unrealized gain on available for sale securities
|
(28
|
)
|
|
—
|
|
||
Other
|
(10
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(462
|
)
|
|
(266
|
)
|
||
Deferred tax asset/(liability) — net (1)
|
$
|
(110
|
)
|
|
$
|
(1
|
)
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal tax benefit
|
3.2
|
|
|
3.0
|
|
|
2.2
|
|
Equity compensation benefit
|
(0.5
|
)
|
|
(1.0
|
)
|
|
(2.4
|
)
|
Other (1)
|
(0.1
|
)
|
|
0.1
|
|
|
0.7
|
|
Effective income tax rate
|
23.6
|
%
|
|
23.1
|
%
|
|
35.5
|
%
|
December 31,
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
$
|
112
|
|
|
$
|
111
|
|
Additions for tax positions related to the current year
|
3
|
|
|
3
|
|
||
Additions for tax positions related to prior years
|
4
|
|
|
3
|
|
||
Reductions for tax positions related to prior years
|
(2
|
)
|
|
(4
|
)
|
||
Reductions due to lapse of statute of limitations
|
(14
|
)
|
|
—
|
|
||
Reductions for settlements with tax authorities
|
(2
|
)
|
|
(1
|
)
|
||
Balance at end of year
|
$
|
101
|
|
|
$
|
112
|
|
|
Actual (1)
|
|
Minimum to be
Well Capitalized |
|
Minimum Capital
Requirement |
|||||||||||||||
December 31, 2019
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio (2)
|
|||||||||
CSC
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common Equity Tier 1 Risk-Based Capital
|
$
|
17,660
|
|
|
19.5
|
%
|
|
N/A
|
|
|
|
|
$
|
4,073
|
|
|
4.5
|
%
|
||
Tier 1 Risk-Based Capital
|
20,453
|
|
|
22.6
|
%
|
|
N/A
|
|
|
|
|
5,431
|
|
|
6.0
|
%
|
||||
Total Risk-Based Capital
|
20,472
|
|
|
22.6
|
%
|
|
N/A
|
|
|
|
|
7,241
|
|
|
8.0
|
%
|
||||
Tier 1 Leverage
|
20,453
|
|
|
7.3
|
%
|
|
N/A
|
|
|
|
|
11,189
|
|
|
4.0
|
%
|
||||
Supplementary Leverage Ratio (1)
|
20,453
|
|
|
7.1
|
%
|
|
N/A
|
|
|
|
|
8,604
|
|
|
3.0
|
%
|
||||
CSB
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common Equity Tier 1 Risk-Based Capital
|
$
|
14,819
|
|
|
20.7
|
%
|
|
$
|
4,649
|
|
|
6.5
|
%
|
|
$
|
3,218
|
|
|
4.5
|
%
|
Tier 1 Risk-Based Capital
|
14,819
|
|
|
20.7
|
%
|
|
5,722
|
|
|
8.0
|
%
|
|
4,291
|
|
|
6.0
|
%
|
|||
Total Risk-Based Capital
|
14,837
|
|
|
20.7
|
%
|
|
7,152
|
|
|
10.0
|
%
|
|
5,722
|
|
|
8.0
|
%
|
|||
Tier 1 Leverage
|
14,819
|
|
|
7.1
|
%
|
|
10,486
|
|
|
5.0
|
%
|
|
8,389
|
|
|
4.0
|
%
|
|||
Supplementary Leverage Ratio (1)
|
14,819
|
|
|
6.8
|
%
|
|
N/A
|
|
|
N/A
|
|
|
6,497
|
|
|
3.0
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
CSC
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common Equity Tier 1 Risk-Based Capital
|
$
|
16,813
|
|
|
17.6
|
%
|
|
N/A
|
|
|
|
|
$
|
4,295
|
|
|
4.5
|
%
|
||
Tier 1 Risk-Based Capital
|
19,606
|
|
|
20.5
|
%
|
|
N/A
|
|
|
|
|
5,726
|
|
|
6.0
|
%
|
||||
Total Risk-Based Capital
|
19,628
|
|
|
20.6
|
%
|
|
N/A
|
|
|
|
|
7,635
|
|
|
8.0
|
%
|
||||
Tier 1 Leverage
|
19,606
|
|
|
7.1
|
%
|
|
N/A
|
|
|
|
|
11,058
|
|
|
4.0
|
%
|
||||
CSB
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common Equity Tier 1 Risk-Based Capital
|
$
|
15,832
|
|
|
19.7
|
%
|
|
$
|
5,233
|
|
|
6.5
|
%
|
|
$
|
3,623
|
|
|
4.5
|
%
|
Tier 1 Risk-Based Capital
|
15,832
|
|
|
19.7
|
%
|
|
6,441
|
|
|
8.0
|
%
|
|
4,831
|
|
|
6.0
|
%
|
|||
Total Risk-Based Capital
|
15,853
|
|
|
19.7
|
%
|
|
8,051
|
|
|
10.0
|
%
|
|
6,441
|
|
|
8.0
|
%
|
|||
Tier 1 Leverage
|
15,832
|
|
|
7.2
|
%
|
|
11,044
|
|
|
5.0
|
%
|
|
8,836
|
|
|
4.0
|
%
|
December 31,
|
2019
|
|
2018
|
||||
Net capital
|
$
|
3,700
|
|
|
$
|
2,304
|
|
Minimum net capital required
|
0.250
|
|
|
0.250
|
|
||
2% of aggregate debit balances
|
446
|
|
|
436
|
|
||
Net capital in excess of required net capital
|
$
|
3,254
|
|
|
$
|
1,868
|
|
22.
|
Segment Information
|
|
Investor Services
|
|
Advisor Services
|
|
Total
|
||||||||||||||||||||||||||||||
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net interest revenue
|
$
|
4,685
|
|
|
$
|
4,341
|
|
|
$
|
3,231
|
|
|
$
|
1,831
|
|
|
$
|
1,482
|
|
|
$
|
1,051
|
|
|
$
|
6,516
|
|
|
$
|
5,823
|
|
|
$
|
4,282
|
|
Asset management and administration fees
|
2,289
|
|
|
2,260
|
|
|
2,344
|
|
|
922
|
|
|
969
|
|
|
1,048
|
|
|
3,211
|
|
|
3,229
|
|
|
3,392
|
|
|||||||||
Trading revenue
|
378
|
|
|
475
|
|
|
408
|
|
|
239
|
|
|
288
|
|
|
246
|
|
|
617
|
|
|
763
|
|
|
654
|
|
|||||||||
Other
|
271
|
|
|
245
|
|
|
217
|
|
|
106
|
|
|
72
|
|
|
73
|
|
|
377
|
|
|
317
|
|
|
290
|
|
|||||||||
Total net revenues
|
7,623
|
|
|
7,321
|
|
|
6,200
|
|
|
3,098
|
|
|
2,811
|
|
|
2,418
|
|
|
10,721
|
|
|
10,132
|
|
|
8,618
|
|
|||||||||
Expenses Excluding Interest
|
4,284
|
|
|
4,145
|
|
|
3,725
|
|
|
1,589
|
|
|
1,425
|
|
|
1,243
|
|
|
5,873
|
|
|
5,570
|
|
|
4,968
|
|
|||||||||
Income before taxes on income
|
$
|
3,339
|
|
|
$
|
3,176
|
|
|
$
|
2,475
|
|
|
$
|
1,509
|
|
|
$
|
1,386
|
|
|
$
|
1,175
|
|
|
$
|
4,848
|
|
|
$
|
4,562
|
|
|
$
|
3,650
|
|
Capital expenditures
|
$
|
507
|
|
|
$
|
390
|
|
|
$
|
265
|
|
|
$
|
246
|
|
|
$
|
186
|
|
|
$
|
147
|
|
|
$
|
753
|
|
|
$
|
576
|
|
|
$
|
412
|
|
Depreciation and amortization
|
$
|
242
|
|
|
$
|
186
|
|
|
$
|
203
|
|
|
$
|
107
|
|
|
$
|
120
|
|
|
$
|
66
|
|
|
$
|
349
|
|
|
$
|
306
|
|
|
$
|
269
|
|
23.
|
The Charles Schwab Corporation – Parent Company Only Financial Statements
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Interest revenue
|
$
|
119
|
|
|
$
|
88
|
|
|
$
|
33
|
|
Interest expense
|
(248
|
)
|
|
(184
|
)
|
|
(114
|
)
|
|||
Net interest expense
|
(129
|
)
|
|
(96
|
)
|
|
(81
|
)
|
|||
Other revenue
|
(1
|
)
|
|
1
|
|
|
3
|
|
|||
Expenses Excluding Interest:
|
|
|
|
|
|
||||||
Professional services
|
(24
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
Other expenses excluding interest
|
(83
|
)
|
|
(79
|
)
|
|
(28
|
)
|
|||
Loss before income tax benefit and equity in net income of subsidiaries
|
(237
|
)
|
|
(180
|
)
|
|
(110
|
)
|
|||
Income tax benefit/(expense)
|
(9
|
)
|
|
20
|
|
|
27
|
|
|||
Loss before equity in net income of subsidiaries
|
(246
|
)
|
|
(160
|
)
|
|
(83
|
)
|
|||
Equity in net income of subsidiaries:
|
|
|
|
|
|
||||||
Equity in undistributed net income/(distributions in excess of net income) of subsidiaries
|
(1,198
|
)
|
|
2,590
|
|
|
1,479
|
|
|||
Dividends from bank subsidiaries
|
4,915
|
|
|
750
|
|
|
625
|
|
|||
Dividends from non-bank subsidiaries
|
233
|
|
|
327
|
|
|
333
|
|
|||
Net Income
|
3,704
|
|
|
3,507
|
|
|
2,354
|
|
|||
Preferred stock dividends and other (1)
|
178
|
|
|
178
|
|
|
174
|
|
|||
Net Income Available to Common Stockholders
|
$
|
3,526
|
|
|
$
|
3,329
|
|
|
$
|
2,180
|
|
December 31,
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,839
|
|
|
$
|
2,092
|
|
Receivables from subsidiaries
|
1,085
|
|
|
784
|
|
||
Available for sale securities
|
1,743
|
|
|
1,754
|
|
||
Held to maturity securities
|
224
|
|
|
223
|
|
||
Loans to non-bank subsidiaries
|
—
|
|
|
185
|
|
||
Investment in non-bank subsidiaries
|
7,090
|
|
|
5,507
|
|
||
Investment in bank subsidiaries
|
16,325
|
|
|
16,995
|
|
||
Other assets
|
304
|
|
|
337
|
|
||
Total assets
|
$
|
29,610
|
|
|
$
|
27,877
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Accrued expenses and other liabilities
|
$
|
430
|
|
|
$
|
379
|
|
Payables to subsidiaries
|
5
|
|
|
2
|
|
||
Long-term debt
|
7,430
|
|
|
6,826
|
|
||
Total liabilities
|
7,865
|
|
|
7,207
|
|
||
Stockholders’ equity
|
21,745
|
|
|
20,670
|
|
||
Total liabilities and stockholders’ equity
|
$
|
29,610
|
|
|
$
|
27,877
|
|
Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
3,704
|
|
|
$
|
3,507
|
|
|
$
|
2,354
|
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
|
|
|
|
|
|
||||||
Dividends in excess of (equity in undistributed) earnings of subsidiaries
|
1,198
|
|
|
(2,590
|
)
|
|
(1,479
|
)
|
|||
Other
|
9
|
|
|
13
|
|
|
5
|
|
|||
Net change in:
|
|
|
|
|
|
||||||
Other assets
|
57
|
|
|
(5
|
)
|
|
(27
|
)
|
|||
Accrued expenses and other liabilities
|
34
|
|
|
28
|
|
|
44
|
|
|||
Net cash provided by (used for) operating activities
|
5,002
|
|
|
953
|
|
|
897
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
||||||
Due from (to) subsidiaries — net
|
(122
|
)
|
|
408
|
|
|
(374
|
)
|
|||
Increase in investments in subsidiaries
|
(1,783
|
)
|
|
(1,188
|
)
|
|
(342
|
)
|
|||
Repayments (Advances) of subordinated loan to CS&Co
|
185
|
|
|
(185
|
)
|
|
—
|
|
|||
Purchases of available for sale securities
|
(1,141
|
)
|
|
(1,751
|
)
|
|
(201
|
)
|
|||
Proceeds from sales of available for sale securities
|
181
|
|
|
—
|
|
|
197
|
|
|||
Principal payments on available for sale securities
|
994
|
|
|
573
|
|
|
—
|
|
|||
Other investing activities
|
—
|
|
|
(5
|
)
|
|
(6
|
)
|
|||
Net cash provided by (used for) investing activities
|
(1,686
|
)
|
|
(2,148
|
)
|
|
(726
|
)
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
||||||
Issuance of long-term debt
|
593
|
|
|
3,024
|
|
|
2,129
|
|
|||
Repayment of long-term debt
|
—
|
|
|
(900
|
)
|
|
(250
|
)
|
|||
Repurchases of common stock
|
(2,220
|
)
|
|
(1,000
|
)
|
|
—
|
|
|||
Net proceeds from preferred stock offerings
|
—
|
|
|
—
|
|
|
492
|
|
|||
Redemption of preferred stock
|
—
|
|
|
—
|
|
|
(485
|
)
|
|||
Dividends paid
|
(1,060
|
)
|
|
(787
|
)
|
|
(592
|
)
|
|||
Proceeds from stock options exercised and other
|
118
|
|
|
125
|
|
|
171
|
|
|||
Net cash provided by (used for) financing activities
|
(2,569
|
)
|
|
462
|
|
|
1,465
|
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
747
|
|
|
(733
|
)
|
|
1,636
|
|
|||
Cash and Cash Equivalents at Beginning of Year
|
2,092
|
|
|
2,825
|
|
|
1,189
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
2,839
|
|
|
$
|
2,092
|
|
|
$
|
2,825
|
|
|
Fourth
Quarter |
|
Third
Quarter |
|
Second
Quarter |
|
First
Quarter |
||||||||
Year Ended December 31, 2019:
|
|
|
|
|
|
|
|
||||||||
Total net revenues
|
$
|
2,606
|
|
|
$
|
2,711
|
|
|
$
|
2,681
|
|
|
$
|
2,723
|
|
Total expenses excluding interest
|
$
|
1,494
|
|
|
$
|
1,475
|
|
|
$
|
1,445
|
|
|
$
|
1,459
|
|
Net income
|
$
|
852
|
|
|
$
|
951
|
|
|
$
|
937
|
|
|
$
|
964
|
|
Net income available to common stockholders
|
$
|
801
|
|
|
$
|
913
|
|
|
$
|
887
|
|
|
$
|
925
|
|
Weighted-average common shares outstanding — Basic
|
1,284
|
|
|
1,300
|
|
|
1,328
|
|
|
1,333
|
|
||||
Weighted-average common shares outstanding — Diluted
|
1,293
|
|
|
1,308
|
|
|
1,337
|
|
|
1,344
|
|
||||
Earnings per common share — Basic
|
$
|
.62
|
|
|
$
|
.70
|
|
|
$
|
.67
|
|
|
$
|
.69
|
|
Earnings per common share — Diluted
|
$
|
.62
|
|
|
$
|
.70
|
|
|
$
|
.66
|
|
|
$
|
.69
|
|
Dividends declared per common share
|
$
|
.17
|
|
|
$
|
.17
|
|
|
$
|
.17
|
|
|
$
|
.17
|
|
Year Ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Total net revenues
|
$
|
2,669
|
|
|
$
|
2,579
|
|
|
$
|
2,486
|
|
|
$
|
2,398
|
|
Total expenses excluding interest
|
$
|
1,459
|
|
|
$
|
1,360
|
|
|
$
|
1,355
|
|
|
$
|
1,396
|
|
Net income
|
$
|
935
|
|
|
$
|
923
|
|
|
$
|
866
|
|
|
$
|
783
|
|
Net income available to common stockholders
|
$
|
885
|
|
|
$
|
885
|
|
|
$
|
813
|
|
|
$
|
746
|
|
Weighted-average common shares outstanding — Basic
|
1,343
|
|
|
1,351
|
|
|
1,350
|
|
|
1,347
|
|
||||
Weighted-average common shares outstanding — Diluted
|
1,354
|
|
|
1,364
|
|
|
1,364
|
|
|
1,362
|
|
||||
Earnings per common share — Basic
|
$
|
.66
|
|
|
$
|
.66
|
|
|
$
|
.60
|
|
|
$
|
.55
|
|
Earnings per common share — Diluted
|
$
|
.65
|
|
|
$
|
.65
|
|
|
$
|
.60
|
|
|
$
|
.55
|
|
Dividends declared per common share
|
$
|
.13
|
|
|
$
|
.13
|
|
|
$
|
.10
|
|
|
$
|
.10
|
|
•
|
With the assistance of our IT specialists, we:
|
◦
|
Identified the significant systems used to process revenue transactions and, using a risk-based approach, tested the relevant general IT controls over each of these systems.
|
◦
|
Performed testing of automated business controls and system interface controls (including batch processing) within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.
|
•
|
We tested internal controls within the relevant revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.
|
•
|
We performed testing of controls addressing the accuracy and completeness of reports used in the performance of controls.
|
•
|
With the assistance of our data specialists, we created data visualizations to evaluate recorded revenue and evaluate trends in the revenue data.
|
•
|
For a sample of transactions, we performed detail transaction testing by testing the mathematical accuracy of the recorded revenue and agreeing inputs to the calculation to contractual agreements.
|
•
|
We tested the amount of client assets by obtaining quoted market prices and reconciling total positions to third-party statements.
|
/s/ DELOITTE & TOUCHE LLP
|
|
Item 10.
|
Directors, Executive Officers, and Corporate Governance
|
Executive Officers of the Registrant
|
|||
|
|
|
|
|
Name
|
Age
|
Title
|
|
Charles R. Schwab
|
82
|
Chairman of the Board
|
|
Walter W. Bettinger II
|
59
|
President and Chief Executive Officer
|
|
Bernard J. Clark
|
61
|
Executive Vice President – Advisor Services
|
|
Jonathan M. Craig
|
48
|
Senior Executive Vice President
|
|
Peter B. Crawford
|
51
|
Executive Vice President and Chief Financial Officer
|
|
Joseph R. Martinetto
|
57
|
Senior Executive Vice President and Chief Operating Officer
|
|
Peter J. Morgan III
|
55
|
Executive Vice President, General Counsel and Corporate Secretary
|
|
Nigel J. Murtagh
|
56
|
Executive Vice President – Corporate Risk
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
Exhibit
Number
|
Exhibit
|
|
2.1
|
|
|
|
|
|
3.11
|
|
|
|
|
|
3.14
|
|
|
|
|
|
3.15
|
|
|
|
|
|
3.17
|
|
|
|
|
|
3.18
|
|
|
|
|
|
3.19
|
|
|
|
|
|
3.20
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
(1)
|
|
|
|
|
4.7
|
Neither the Registrant nor its subsidiaries are parties to any instrument with respect to long-term debt for which securities authorized thereunder exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. Copies of instruments with respect to long-term debt of lesser amounts will be provided to the SEC upon request.
|
|
|
|
|
10.4
|
Form of Release Agreement dated as of March 31, 1987 among BAC, Registrant, Schwab Holdings, Inc., Charles Schwab & Co., Inc., and former shareholders of Schwab Holdings, Inc., filed as the identically-numbered exhibit to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
|
|
|
|
|
Exhibit
Number
|
Exhibit
|
|
10.57
|
Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between the Registrant and the holders of the Common Stock, filed as Exhibit 4.23 to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
|
|
|
|
|
10.72
|
|
|
|
|
|
10.271
|
(2)
|
|
|
|
|
10.272
|
(2)
|
|
|
|
|
10.314
|
(2)
|
|
|
|
|
10.338
|
(2)
|
|
|
|
|
10.349
|
(2)
|
|
|
|
|
10.362
|
(2)
|
|
|
|
|
10.381
|
(2)
|
|
|
|
|
10.382
|
(2)
|
|
|
|
|
10.383
|
(2)
|
|
|
|
|
10.384
|
(2)
|
|
|
|
|
10.385
|
(2)
|
|
|
|
|
10.386
|
(2)
|
|
|
|
|
10.389
|
(2)
|
|
|
|
|
10.390
|
(2)
|
|
|
|
|
10.391
|
(2)
|
|
|
|
|
Exhibit
Number
|
Exhibit
|
|
10.392
|
|
|
|
|
|
10.393
|
(2)
|
|
|
|
|
10.394
|
(2)
|
|
|
|
|
10.395
|
|
|
|
|
|
10.396
|
(2)
|
|
|
|
|
10.397
|
(2)
|
|
|
|
|
10.398
|
(2)
|
|
|
|
|
10.399
|
(2)
|
|
|
|
|
10.401
|
(2)
|
|
|
|
|
10.402
|
(2)
|
|
|
|
|
10.403
|
(2)
|
|
|
|
|
10.404
|
(2)
|
|
|
|
|
10.405
|
|
|
|
|
|
10.406
|
|
|
|
|
|
10.407
|
|
Exhibit
Number
|
Exhibit
|
|
|
|
|
10.408
|
(1),(2)
|
|
|
|
|
10.409
|
(1),(2)
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
(1)
|
|
|
|
|
32.2
|
(1)
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
(3)
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
(3)
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
(3)
|
|
|
|
101.DEF
|
XBRL Extension Definition
|
(3)
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label
|
(3)
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
(3)
|
|
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
(1)
|
Furnished as an exhibit to this annual report on Form 10-K.
|
|
|
|
|
(2)
|
Management contract or compensatory plan.
|
|
|
|
|
(3)
|
Attached as Exhibit 101 to this Annual Report on Form 10-K for the annual period ended December 31, 2019, are the following materials formatted in XBRL (Extensible Business Reporting Language) (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Consolidated Financial Statements.
|
|
Item 16.
|
Form 10-K Summary
|
|
THE CHARLES SCHWAB CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
BY:
|
/s/ Walter W. Bettinger II
|
|
|
Walter W. Bettinger II
|
|
|
President and Chief Executive Officer
|
Signature / Title
|
|
Signature / Title
|
|
|
|
/s/ Walter W. Bettinger II
|
|
/s/ Peter Crawford
|
Walter W. Bettinger II,
|
|
Peter Crawford,
|
President and Chief Executive Officer
and Director
|
|
Executive Vice President
and Chief Financial Officer
(principal financial and accounting officer)
|
|
|
|
/s/ Charles R. Schwab
|
|
/s/ John K. Adams, Jr.
|
Charles R. Schwab, Chairman of the Board
|
|
John K. Adams, Jr., Director
|
|
|
|
/s/ Joan T. Dea
|
|
/s/ Christopher V. Dodds
|
Joan T. Dea, Director
|
|
Christopher V. Dodds, Director
|
|
|
|
/s/ Stephen A. Ellis
|
|
/s/ Mark A. Goldfarb
|
Stephen A. Ellis, Director
|
|
Mark A. Goldfarb, Director
|
|
|
|
/s/ William S. Haraf
|
|
/s/ Frank C. Herringer
|
William S. Haraf, Director
|
|
Frank C. Herringer, Director
|
|
|
|
/s/ Stephen T. McLin
|
|
/s/ Charles A. Ruffel
|
Stephen T. McLin, Director
|
|
Charles A. Ruffel, Director
|
|
|
|
/s/ Arun Sarin
|
|
/s/ Paula A. Sneed
|
Arun Sarin, Director
|
|
Paula A. Sneed, Director
|
|
|
|
/s/ Roger O. Walther
|
|
|
Roger O. Walther, Director
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
|
||
|
||
The following table outlines the information required by the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies,” which is presented at the consolidated holding company level.
|
||
|
|
|
|
|
|
Required Disclosure
|
Page
|
|
Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential
|
F-2 – F-3
|
|
Investment Portfolio
|
F-4
|
|
Risk Elements – Cross-border Holdings
|
F-4
|
|
Loan Portfolio
|
F-5
|
|
Summary of Loan Loss Experience
|
F-6
|
|
Deposits
|
F-6
|
|
Return on Equity and Assets
|
F-6
|
|
|
|
|
|
|
|
|
|
|
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
1.
|
Three-year Net Interest Revenue and Average Balances
|
For the Year Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||||
|
Average
|
|
|
|
Average
|
|
Average
|
|
|
|
Average
|
|
Average
|
|
|
|
Average
|
|||||||||||||||
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
|||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash and cash equivalents
|
$
|
23,512
|
|
|
$
|
518
|
|
|
2.17
|
%
|
|
$
|
17,783
|
|
|
$
|
348
|
|
|
1.93
|
%
|
|
$
|
9,931
|
|
|
$
|
109
|
|
|
1.10
|
%
|
Cash and investments segregated
|
15,694
|
|
|
345
|
|
|
2.17
|
%
|
|
11,461
|
|
|
206
|
|
|
1.78
|
%
|
|
18,525
|
|
|
166
|
|
|
0.90
|
%
|
||||||
Broker-related receivables
|
376
|
|
|
7
|
|
|
1.87
|
%
|
|
303
|
|
|
6
|
|
|
2.09
|
%
|
|
430
|
|
|
3
|
|
|
0.70
|
%
|
||||||
Receivables from brokerage clients
|
19,270
|
|
|
821
|
|
|
4.20
|
%
|
|
19,870
|
|
|
830
|
|
|
4.12
|
%
|
|
16,269
|
|
|
575
|
|
|
3.53
|
%
|
||||||
Available for sale securities (1)
|
58,181
|
|
|
1,560
|
|
|
2.67
|
%
|
|
54,542
|
|
|
1,241
|
|
|
2.26
|
%
|
|
53,040
|
|
|
815
|
|
|
1.54
|
%
|
||||||
Held to maturity securities
|
134,708
|
|
|
3,591
|
|
|
2.65
|
%
|
|
131,794
|
|
|
3,348
|
|
|
2.53
|
%
|
|
103,599
|
|
|
2,354
|
|
|
2.27
|
%
|
||||||
Bank loans (2)
|
16,832
|
|
|
584
|
|
|
3.47
|
%
|
|
16,554
|
|
|
559
|
|
|
3.37
|
%
|
|
15,919
|
|
|
472
|
|
|
2.97
|
%
|
||||||
Total interest-earning assets
|
268,573
|
|
|
7,426
|
|
|
2.75
|
%
|
|
252,307
|
|
|
6,538
|
|
|
2.57
|
%
|
|
217,713
|
|
|
4,494
|
|
|
2.06
|
%
|
||||||
Other interest revenue
|
|
|
154
|
|
|
|
|
|
|
142
|
|
|
|
|
|
|
130
|
|
|
|
||||||||||||
Total interest-earning assets
|
268,573
|
|
|
7,580
|
|
|
2.80
|
%
|
|
252,307
|
|
|
6,680
|
|
|
2.63
|
%
|
|
217,713
|
|
|
4,624
|
|
|
2.12
|
%
|
||||||
Non-interest-earning assets (3,4)
|
11,183
|
|
|
|
|
|
|
11,681
|
|
|
|
|
|
|
9,968
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
279,756
|
|
|
|
|
|
|
$
|
263,988
|
|
|
|
|
|
|
$
|
227,681
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Liabilities and Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Bank deposits
|
$
|
212,605
|
|
|
$
|
700
|
|
|
0.33
|
%
|
|
$
|
199,139
|
|
|
$
|
545
|
|
|
0.27
|
%
|
|
$
|
163,998
|
|
|
$
|
148
|
|
|
0.09
|
%
|
Payables to brokerage clients
|
24,353
|
|
|
79
|
|
|
0.33
|
%
|
|
21,178
|
|
|
56
|
|
|
0.27
|
%
|
|
25,403
|
|
|
16
|
|
|
0.06
|
%
|
||||||
Short-term borrowings (5)
|
17
|
|
|
—
|
|
|
2.36
|
%
|
|
3,359
|
|
|
54
|
|
|
1.59
|
%
|
|
3,503
|
|
|
41
|
|
|
1.17
|
%
|
||||||
Long-term debt
|
7,199
|
|
|
258
|
|
|
3.58
|
%
|
|
5,423
|
|
|
190
|
|
|
3.50
|
%
|
|
3,431
|
|
|
119
|
|
|
3.47
|
%
|
||||||
Total interest-bearing liabilities
|
244,174
|
|
|
1,037
|
|
|
0.42
|
%
|
|
229,099
|
|
|
845
|
|
|
0.37
|
%
|
|
196,335
|
|
|
324
|
|
|
0.17
|
%
|
||||||
Other interest expense
|
|
|
27
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
18
|
|
|
|
||||||||||||
Non-interest-bearing liabilities (3,6)
|
14,170
|
|
|
|
|
|
|
14,883
|
|
|
|
|
|
|
13,787
|
|
|
|
|
|
||||||||||||
Total liabilities (7)
|
258,344
|
|
|
1,064
|
|
|
0.39
|
%
|
|
243,982
|
|
|
857
|
|
|
0.34
|
%
|
|
210,122
|
|
|
342
|
|
|
0.15
|
%
|
||||||
Stockholders’ equity (3)
|
21,412
|
|
|
|
|
|
|
20,006
|
|
|
|
|
|
|
17,559
|
|
|
|
|
|
||||||||||||
Total liabilities and stockholders’ equity
|
$
|
279,756
|
|
|
|
|
|
|
$
|
263,988
|
|
|
|
|
|
|
$
|
227,681
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net interest revenue
|
|
|
$
|
6,516
|
|
|
|
|
|
|
$
|
5,823
|
|
|
|
|
|
|
$
|
4,282
|
|
|
|
|||||||||
Net yield on interest-earning assets
|
|
|
|
|
2.41
|
%
|
|
|
|
|
|
2.29
|
%
|
|
|
|
|
|
1.97
|
%
|
2.
|
Analysis of Change in Net Interest Revenue
|
|
2019 Compared to 2018
Increase (Decrease) Due to Change in: |
|
2018 Compared to 2017
Increase (Decrease) Due to Change in: |
||||||||||||||||||||
|
Average
Volume |
|
Average
Rate |
|
Total
|
|
Average
Volume |
|
Average
Rate |
|
Total
|
||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents (1)
|
$
|
111
|
|
|
$
|
59
|
|
|
$
|
170
|
|
|
$
|
86
|
|
|
$
|
153
|
|
|
$
|
239
|
|
Cash and investments segregated
|
75
|
|
|
64
|
|
|
139
|
|
|
(64
|
)
|
|
104
|
|
|
40
|
|
||||||
Broker-related receivables
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
||||||
Receivables from brokerage clients
|
(25
|
)
|
|
16
|
|
|
(9
|
)
|
|
127
|
|
|
128
|
|
|
255
|
|
||||||
Available for sale securities (2)
|
82
|
|
|
237
|
|
|
319
|
|
|
23
|
|
|
403
|
|
|
426
|
|
||||||
Held to maturity securities
|
74
|
|
|
169
|
|
|
243
|
|
|
640
|
|
|
354
|
|
|
994
|
|
||||||
Bank loans (3)
|
9
|
|
|
16
|
|
|
25
|
|
|
19
|
|
|
68
|
|
|
87
|
|
||||||
Other interest revenue
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||||
Total interest-earning assets
|
$
|
328
|
|
|
$
|
572
|
|
|
$
|
900
|
|
|
$
|
830
|
|
|
$
|
1,226
|
|
|
$
|
2,056
|
|
Interest-bearing sources of funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bank deposits
|
$
|
36
|
|
|
$
|
119
|
|
|
$
|
155
|
|
|
$
|
32
|
|
|
$
|
365
|
|
|
$
|
397
|
|
Payables to brokerage clients
|
9
|
|
|
14
|
|
|
23
|
|
|
(3
|
)
|
|
43
|
|
|
40
|
|
||||||
Short-term borrowings
|
(53
|
)
|
|
(1
|
)
|
|
(54
|
)
|
|
(2
|
)
|
|
15
|
|
|
13
|
|
||||||
Long-term debt
|
62
|
|
|
6
|
|
|
68
|
|
|
69
|
|
|
2
|
|
|
71
|
|
||||||
Other interest expense
|
—
|
|
|
15
|
|
|
15
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||
Total sources on which interest is paid
|
54
|
|
|
153
|
|
|
207
|
|
|
96
|
|
|
419
|
|
|
515
|
|
||||||
Change in net interest revenue
|
$
|
274
|
|
|
$
|
419
|
|
|
$
|
693
|
|
|
$
|
734
|
|
|
$
|
807
|
|
|
$
|
1,541
|
|
3.
|
Investment Securities
|
December 31, 2017
|
Amortized
Cost |
|
Gross Unrealized
Gains |
|
Gross Unrealized
Losses |
|
Fair
Value |
||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
20,915
|
|
|
$
|
53
|
|
|
$
|
39
|
|
|
$
|
20,929
|
|
U.S. Treasury securities
|
9,583
|
|
|
—
|
|
|
83
|
|
|
9,500
|
|
||||
Asset-backed securities
|
9,019
|
|
|
34
|
|
|
6
|
|
|
9,047
|
|
||||
Corporate debt securities
|
6,154
|
|
|
16
|
|
|
1
|
|
|
6,169
|
|
||||
Certificates of deposit
|
2,040
|
|
|
2
|
|
|
1
|
|
|
2,041
|
|
||||
U.S. agency notes
|
1,914
|
|
|
—
|
|
|
8
|
|
|
1,906
|
|
||||
Commercial paper
|
313
|
|
|
—
|
|
|
—
|
|
|
313
|
|
||||
Foreign government agency securities
|
51
|
|
|
—
|
|
|
1
|
|
|
50
|
|
||||
Non-agency commercial mortgage-backed securities
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||
Total available for sale securities
|
$
|
50,029
|
|
|
$
|
105
|
|
|
$
|
139
|
|
|
$
|
49,995
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency mortgage-backed securities
|
$
|
101,197
|
|
|
$
|
290
|
|
|
$
|
1,034
|
|
|
$
|
100,453
|
|
Asset-backed securities
|
12,937
|
|
|
127
|
|
|
2
|
|
|
13,062
|
|
||||
Corporate debt securities
|
4,078
|
|
|
13
|
|
|
5
|
|
|
4,086
|
|
||||
U.S. state and municipal securities
|
1,247
|
|
|
57
|
|
|
—
|
|
|
1,304
|
|
||||
Non-agency commercial mortgage-backed securities
|
994
|
|
|
10
|
|
|
5
|
|
|
999
|
|
||||
U.S. Treasury securities
|
223
|
|
|
—
|
|
|
3
|
|
|
220
|
|
||||
Certificates of deposit
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||
Foreign government agency securities
|
50
|
|
|
—
|
|
|
1
|
|
|
49
|
|
||||
Total held to maturity securities
|
$
|
120,926
|
|
|
$
|
497
|
|
|
$
|
1,050
|
|
|
$
|
120,373
|
|
4.
|
Cross-border Holdings
|
December 31, 2019
|
Banks and other
financial institutions |
|
Commercial and
industrial institutions |
|
Total
|
Exposure as a %
of total assets |
|||||||
Country:
|
|
|
|
|
|
|
|||||||
France
|
$
|
3,103
|
|
|
$
|
—
|
|
|
$
|
3,103
|
|
1.1
|
%
|
December 31, 2018
|
Banks and other
financial institutions |
|
Commercial and
industrial institutions |
|
Total
|
Exposure as a %
of total assets |
|||||||
Country:
|
|
|
|
|
|
|
|||||||
France
|
$
|
2,793
|
|
|
$
|
—
|
|
|
$
|
2,793
|
|
0.9
|
%
|
5.
|
Bank Loans and Related Allowance for Loan Losses
|
December 31,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
First Mortgages
|
$
|
11,704
|
|
|
$
|
10,384
|
|
|
$
|
10,016
|
|
|
$
|
9,134
|
|
|
$
|
8,334
|
|
HELOCs
|
1,117
|
|
|
1,505
|
|
|
1,943
|
|
|
2,350
|
|
|
2,735
|
|
|||||
Pledged asset lines
|
5,206
|
|
|
4,561
|
|
|
4,369
|
|
|
3,851
|
|
|
3,232
|
|
|||||
Other
|
203
|
|
|
180
|
|
|
176
|
|
|
94
|
|
|
64
|
|
|||||
Total bank loans
|
$
|
18,230
|
|
|
$
|
16,630
|
|
|
$
|
16,504
|
|
|
$
|
15,429
|
|
|
$
|
14,365
|
|
December 31,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Nonaccrual loans
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
28
|
|
|
$
|
26
|
|
|
$
|
28
|
|
Average nonaccrual loans
|
$
|
21
|
|
|
$
|
25
|
|
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
30
|
|
December 31,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance at beginning of year
|
$
|
21
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
31
|
|
|
$
|
42
|
|
Charge-offs
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||||
Recoveries
|
2
|
|
|
2
|
|
|
3
|
|
|
2
|
|
|
3
|
|
|||||
Provision for loan losses
|
(5
|
)
|
|
(6
|
)
|
|
—
|
|
|
(5
|
)
|
|
(11
|
)
|
|||||
Balance at end of year
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
31
|
|
December 31, 2019
|
Within
1 year |
|
After 1 year
through 5 years |
|
After
5 years |
|
Total
|
||||||||
First Mortgages (1)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
11,703
|
|
|
$
|
11,704
|
|
HELOCs (2)
|
551
|
|
|
236
|
|
|
330
|
|
|
1,117
|
|
||||
Pledged asset lines
|
1,832
|
|
|
3,374
|
|
|
—
|
|
|
5,206
|
|
||||
Other
|
7
|
|
|
192
|
|
|
4
|
|
|
203
|
|
||||
Total
|
$
|
2,390
|
|
|
$
|
3,803
|
|
|
$
|
12,037
|
|
|
$
|
18,230
|
|
December 31, 2019
|
After
1 year |
||
Loans with floating or adjustable interest rates
|
$
|
14,546
|
|
Loans with predetermined interest rates
|
1,294
|
|
|
Total
|
$
|
15,840
|
|
6.
|
Summary of Loan Loss on Banking Loans Experience
|
December 31,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Average loans
|
$
|
16,832
|
|
|
$
|
16,554
|
|
|
$
|
15,919
|
|
|
$
|
14,715
|
|
|
$
|
13,973
|
|
Allowance to year end loans
|
.10
|
%
|
|
.13
|
%
|
|
.16
|
%
|
|
.17
|
%
|
|
.21
|
%
|
|||||
Allowance to nonperforming loans
|
82
|
%
|
|
100
|
%
|
|
93
|
%
|
|
101
|
%
|
|
110
|
%
|
|||||
Nonperforming assets to average loans and real estate owned
|
.14
|
%
|
|
.14
|
%
|
|
.20
|
%
|
|
.21
|
%
|
|
.26
|
%
|
7.
|
Bank Deposits
|
8.
|
Ratios
|
December 31,
|
2019
|
2018
|
2017
|
|||
Return on average total stockholders’ equity
|
17.30
|
%
|
17.53
|
%
|
13.41
|
%
|
Return on average total assets
|
1.32
|
%
|
1.33
|
%
|
1.03
|
%
|
Average total stockholders’ equity as a percentage of average total assets
|
7.65
|
%
|
7.58
|
%
|
7.71
|
%
|
Dividend payout ratio (1)
|
25.47
|
%
|
18.78
|
%
|
19.88
|
%
|
(1)
|
Dividends declared per common share divided by diluted EPS.
|
•
|
prior to that date, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation; or
|
•
|
on or subsequent to that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
|
•
|
a merger of CSC or any of our subsidiaries with an interested stockholder or an affiliate or associate of an interested stockholder;
|
•
|
any sale to an interested stockholder of assets of CSC or one of our subsidiaries, if those assets have a fair market value of $5,000,000 or more;
|
•
|
any sale to CSC or any of our subsidiaries of assets of the interested stockholder, if those assets have a fair market value of $5,000,000 or more;
|
•
|
the issuance or transfer by CSC or any of our subsidiaries of any of our securities or any securities of our subsidiaries to an interested stockholder, unless the fair market value of the property received has a fair market value of less than $5,000,000;
|
•
|
any reclassification of our securities, our merger or consolidation with any of our subsidiaries, or any similar transaction which has the effect of increasing the proportionate amount of the outstanding shares of any class of equity securities of CSC or any of our subsidiaries which is directly or indirectly owned by any interested shareholder or its affiliate or associate; or
|
•
|
the adoption of any plan or proposal for the liquidation or dissolution of CSC.
|
•
|
is not an interested stockholder;
|
•
|
is not an affiliate or a representative of an interested shareholder;
|
•
|
is not a party to an agreement or arrangement with an interested stockholder to act in concert with that interested stockholder to direct our management or policies; and
|
•
|
either was a member of our board before the interested stockholder became an interested stockholder or was nominated to succeed a disinterested director by a majority of the disinterested directors; provided that, this requirement does not apply if the business combination involves a party that was an interested stockholder of CSC on July 30, 1987.
|
•
|
to fix or alter the voting rights, powers, preferences and privileges, and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of preferred stock;
|
•
|
to fix the number of shares constituting any such series and the designation thereof; and
|
•
|
to increase or decrease the number of shares of any series of preferred stock (but not below the number of shares thereof then outstanding).
|
•
|
senior to our junior stock;
|
•
|
equally with each other series of parity stock, including the Series A Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock, and any other series of Preferred Stock we may issue in the future; and
|
•
|
junior to any series of stock we may issue in the future that ranks senior to the Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of CSC, and to all of our existing and future debt obligations.
|
•
|
no dividend will be declared or paid or set aside for payment and no distribution will be declared or made or set aside for payment on any junior stock, other than:
|
•
|
a dividend payable solely in the junior stock, or
|
•
|
any dividend in connection with the implementation of a stockholders’ rights plan, or the redemption or repurchase of any rights under any such plan; and
|
•
|
no shares of junior stock shall be repurchased, redeemed or otherwise acquired for consideration by us, directly or indirectly (nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by us) other than:
|
•
|
as a result of a reclassification of junior stock for or into other junior stock;
|
•
|
the exchange or conversion of one share of junior stock for or into another share of junior stock;
|
•
|
through the use of the proceeds of a substantially contemporaneous sale of other shares of junior stock;
|
•
|
purchases, redemptions or other acquisitions of shares of the junior stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants;
|
•
|
purchases of shares of junior stock pursuant to a contractually binding requirement to buy junior stock existing prior to the preceding dividend period, including under a contractually binding stock repurchase plan; or
|
•
|
the purchase of fractional interests in shares of junior stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged; and
|
•
|
no shares of parity stock shall be repurchased, redeemed or otherwise acquired for consideration by CSC otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Preferred Stock and such parity stock, unless such parity stock is repurchased, redeemed or acquired for consideration by CSC in connection with any of the following:
|
•
|
as a result of a reclassification of parity stock for or into other parity stock or junior stock;
|
•
|
the exchange or conversion of one share of parity stock for or into another share of parity stock or junior stock; or
|
•
|
through the use of the proceeds of a substantially contemporaneous sale of other shares of parity stock or junior stock.
|
•
|
any amendment to, or change in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of the Preferred Stock;
|
•
|
any proposed change in those laws or regulations that is announced after the initial issuance of any share of Preferred Stock; or
|
•
|
any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of any share of Preferred Stock,
|
•
|
the redemption date;
|
•
|
the number of shares of each series of Preferred Stock to be redeemed and, if less than all the shares held by the holder are to be redeemed, the number of shares of each series of Preferred Stock to be redeemed from the holder;
|
•
|
the redemption price;
|
•
|
the place or places where the certificates evidencing shares of Preferred Stock are to be surrendered for payment of the redemption price; and
|
•
|
that dividends on the shares to be redeemed will cease to accrue on the redemption date.
|
•
|
continuous non-cumulative dividends for at least four consecutive quarterly dividend periods; and
|
•
|
cumulative dividends, if any, payable for all past dividend periods,
|
•
|
any other savings and loan holding company may be required to obtain the approval of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) to acquire or retain more than 5% of that series; and
|
•
|
any other persons other than a savings and loan holding company may be required to obtain the non-objection of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) to acquire or retain 10% or more of that series.
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•
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amend, alter or repeal the provisions of CSC’s certificate of incorporation (including the certificate of designation creating that series of Preferred Stock), or CSC’s bylaws, whether by merger, consolidation or otherwise, so as to adversely affect the powers, preferences, privileges or special rights of the series of Preferred Stock; provided, that any of the following will not be deemed to adversely affect such powers, preferences, privileges or special rights:
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•
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increases in the amount of the authorized common stock or, except as provided below, preferred stock;
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•
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increases or decreases in the number of shares of any series of preferred stock ranking equally with or junior to the Preferred Stock; or
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•
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the authorization, creation and issuance of other classes or series of capital stock (or securities convertible or exchangeable into such capital stock) ranking equally with or junior to the Preferred Stock;
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•
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amend or alter CSC’s certificate of incorporation to authorize or increase the authorized amount of or issue shares of any class or series of senior stock, or reclassify any of our authorized capital stock into any such shares of senior stock or issue any obligation or security convertible into or evidencing the right to purchase any such shares of senior stock; or
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•
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consummate a binding share exchange, a reclassification involving the series of Preferred Stock or a merger or consolidation of us with or into another entity; provided, however, that the holder of Preferred Stock will have no right to vote under this provision or otherwise under Delaware law if in each case:
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•
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the series of Preferred Stock remains outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, is converted into or exchanged for preferred securities of the surviving or resulting entity (or its ultimate parent) that is an entity organized and existing under the laws of the United States, any state thereof or the District of Columbia; and
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•
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the series of Preferred Stock remaining outstanding or the new preferred securities, as the case may be, have such powers, preferences and special rights as are not materially less favorable to the holders thereof than the powers, preferences and special rights of the series of Preferred Stock.
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Payment for
Units
|
No payment is required for the Restricted Stock Units that you are receiving. Restricted Stock Units are an unfunded and unsecured obligation of The Charles Schwab Corporation (“Schwab”).
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Vesting
|
Subject to the provisions of this Restricted Stock Unit Agreement (“Agreement”), a Restricted Stock Unit becomes vested as described in the Notice of Restricted Stock Unit Grant based on the achievement of the Performance Goal established by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Schwab (the “Board”), of which this Restricted Stock Unit Agreement is a part.
Unvested units will be considered “Restricted Stock Units.” If your service terminates for any reason, then your Restricted Stock Units will automatically and permanently be forfeited to the extent that they have not vested on or before the termination date and will not vest as a result of the termination, unless otherwise noted below. This means that the Restricted Stock Units will immediately revert to Schwab. You will receive no payment for Restricted Stock Units that are forfeited. Schwab determines when your service terminates for this purpose. For all purposes of this Agreement, “service” means continuous employment as a common-law employee of Schwab or a parent company or subsidiary of Schwab, and “subsidiary” means a subsidiary corporation as defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).
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Accelerated
Vesting
|
This grant, to the extent not already forfeited, will become fully vested and payable at target upon your death or disability. If, prior to the date your service terminates, Schwab is subject to a “change in control”, as defined in [The Charles Schwab Corporation 2013 Stock Incentive Plan] (the “Plan”), this grant, to the extent not already forfeited, will become fully vested and payable at target as of the date that the change in control occurs.
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Continued
Vesting
|
If your service terminates on account of your retirement as defined below, you will be treated as in service in good standing for purposes of determining further vesting of the
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grant.
If you are entitled to severance benefits under The Charles Schwab Severance Pay Plan (or any successor plan) and have signed your Severance Agreement, then you may be treated as in service in good standing during your Severance Period for purposes of determining further vesting of the grant under the terms of that plan.
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Definition of
Fair Market
Value
|
“Fair market value” means the average of the high and low price of a Share (as defined below) as reported on the New York Stock Exchange on the applicable determination date.
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Definition of
Disability
|
For all purposes of this Agreement, “disability” means that you have a disability such that you have been determined to be eligible for benefits under Schwab’s long-term disability plan, or if you are not covered by Schwab’s long-term disability plan, you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which has lasted, or can be expected to last, for a continuous period of not less than 12 months or which can be expected to result in death as determined by Schwab in its sole discretion.
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Definition of
Retirement
|
If you are an employee of Schwab and its subsidiaries, “retirement” means termination of service for any reason other than death at any time after the earlier of when you attain age 55, but only if, at the time of your termination, you have been credited with at least 10 years of service or when you attain age 65, but only if, at the time of your termination, you have been credited with at least 5 years of service.
The phrase “years of service” above has the same meaning given to it under The SchwabPlan Retirement Savings and Investment Plan (or any successor plan).
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Payment of
Shares
|
The Target Restricted Stock Units in the Notice of Restricted Stock Unit Grant will be used to determine the shares of common stock of The Charles Schwab Corporation (“Shares”) payable based on the Performance Goal and formula established by the Compensation Committee not later than the 90th day of the applicable Performance Period (or, in the event that a Performance Period is expected to be less than 12 months, not later than the date when 25% of the Performance Period has elapsed). The Shares payable are calculated following the end of the Performance Period based on the Performance Goal achieved and any adjustments provided for
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under the Plan and this Agreement. The Shares shall be paid as soon as administratively possible following vesting, but in no event beyond March 15th of the year following the year of vesting.
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Restrictions on
Restricted
Stock Units
|
You may not assign, sell, transfer, pledge, encumber, or otherwise dispose of any Restricted Stock Units without Schwab’s written consent. Schwab will deliver Shares to you only after the Restricted Stock Units vest and after all other terms and conditions in this Agreement have been satisfied.
Restricted Stock Units may not be assigned, transferred, pledged, encumbered, or otherwise disposed of in any settlement, judgment, decree or order (including approval of a property settlement agreement) that relates to the provision of child support, alimony payments, or marital property rights or domestic property rights.
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Delivery of
Shares After
Death
|
In the event of your death prior to the date your service terminates, your Shares will be delivered to your beneficiary or beneficiaries. You may designate one or more beneficiaries by filing a beneficiary designation form with Schwab. You may change your beneficiary designation by filing a new form with Schwab at any time prior to your death. If you do not designate a beneficiary or if your designated beneficiary predeceases you, then, your Shares will be delivered to your estate. The Compensation Committee, in its sole discretion, will determine the form and time of the distribution of Shares. In no event will the payment be made beyond March 15th of the year following the year of death.
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Restrictions on
Resale
|
You agree not to sell any Shares at a time when applicable laws, Schwab’s policies, or an agreement between Schwab and its underwriters prohibit a sale. This restriction will apply as long as your service continues and for such period of time after the termination of your service as Schwab may specify.
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Cancellation of
Restricted
Stock Units
|
To the fullest extent permitted by applicable laws, these Restricted Stock Units will immediately be cancelled and will expire in the event that Schwab terminates your employment on account of conduct contrary to the best interests of Schwab, including, without limitation, conduct constituting a violation of law or Schwab policy, fraud, theft, conflict of interest, dishonesty or harassment. The determination whether your employment has been terminated on account of conduct inimical to the best interests of Schwab shall be made by Schwab in its sole discretion, and will be entitled to deference
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upon any review.
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Withholding
Taxes
|
The Restricted Stock Units will not be paid in Shares unless you have made acceptable arrangements to pay any applicable withholding of income and employment taxes that may be due as a result of this grant. These arrangements may include withholding Shares. Schwab may withhold the number of whole Shares, valued at the fair market value on the applicable date required to satisfy such applicable withholding taxes. Schwab will round up to the next whole Share to cover the applicable withholding taxes, and any amounts in excess of the applicable withholding taxes resulting from rounding up to the next whole Share will be added to your federal income tax withholdings. In the event you do not elect to pay applicable withholding taxes in cash, Schwab shall withhold Shares as noted above. While Schwab will withhold to satisfy applicable withholding taxes, you acknowledge that, regardless of any action taken by Schwab, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you, is and remains your responsibility and may exceed the amount, if any, actually withheld by Schwab.
Applicable withholding taxes due on the distribution of Shares subject to this award following termination of employment will be withheld as noted above, unless you have made acceptable arrangements to pay any applicable withholding taxes in cash. If you elect to pay applicable withholding taxes due on the distribution of Shares in cash, you are responsible for having sufficient funds in your Schwab brokerage account to cover the applicable withholding taxes at the time they are due.
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No Stockholder
Rights
|
Your Restricted Stock Units carry no voting or other stockholder rights. You have no rights as a Schwab stockholder until your units are settled by issuing Shares.
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Contribution
of Par Value
|
On your behalf, Schwab will contribute to its capital an amount equal to the par value of the Shares issued to you.
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Dividend
Equivalent
Rights
|
If Schwab pays cash dividends on Shares, each Restricted Stock Unit will accrue a dividend equivalent equal to the cash dividend paid per Share, subject to the same vesting and forfeiture provisions as the associated Restricted Stock Units, to be paid in cash without interest at the time the associated Restricted Stock Units vest and Shares are released. In no event will the accumulated dividend equivalent be paid beyond March 15th of the year following the year in which the associated Restricted Stock Units vest.
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No Right to
Remain
Employee
|
Nothing in this Agreement will be construed as giving you the right to be retained as an employee, contingent worker, or director of Schwab and its subsidiaries for any specific duration or at all.
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Limitation on
Payments
|
If a payment from the Plan would constitute an excess parachute payment under section 280G of the Code or if there have been certain securities law violations, then your grant may be reduced or forfeited and you may be required to disgorge any profit that you have realized from your grant.
If a disqualified individual receives a payment or transfer under the Plan that would constitute an excess parachute payment under section 280G of the Code, such payment will be reduced, as described below. Generally, someone is a “disqualified individual” under section 280G if he or she is (a) an officer of Schwab, (b) a member of the group consisting of the highest paid 1% of the employees of Schwab or, if less, the highest paid 250 employees of Schwab, or (c) a 1% stockholder of Schwab. For purposes of this section on “Limitation on Payments,” the term “Schwab” will include affiliated corporations to the extent determined by the independent auditors most recently selected by the Board (the “Auditors”) in accordance with section 280G(d)(5) of the Code.
In the event that the Auditors determine that any payment or transfer in the nature of compensation to or for your benefit, whether paid or payable (or transferred or transferable) pursuant to the terms of the Plan or otherwise (a “Payment”), would be nondeductible for federal income tax purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments will be reduced (but not below zero) to the Reduced Amount (as defined below); provided, however, that the Compensation Committee may specify in writing that the grant will not be so reduced and will not be
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subject to reduction under this section.
For this purpose, the “Reduced Amount” will be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by Schwab because of section 280G of the Code.
If the Auditors determine that any Payment would be nondeductible because of section 280G of the Code, then Schwab will promptly give you notice to that effect and a copy of the detailed calculation of the Reduced Amount. You may then elect, in your discretion, which and how much of the Payments will be eliminated or reduced (as long as after such election, the aggregate present value of the Payments equals the Reduced Amount, and your election is consistent with any mandatory eliminations or reductions that apply under other agreements or the Plan). You will advise Schwab in writing of your election within 10 days of receipt of the notice.
If you do not make such an election within the 10-day period, then Schwab may elect which and how much of the Payments will be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount). Schwab will notify you promptly of its election. Present value will be determined in accordance with section 280G(d)(4) of the Code. The Auditors’ determinations will be binding upon you and Schwab and will be made within 60 days of the date when a Payment becomes payable or transferable.
As promptly as practicable following these determinations and elections, Schwab will pay or transfer to or for your benefit such amounts as are then due to you under the Plan and will promptly pay or transfer to or for your benefit in the future such amounts as become due to you under the Plan.
As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors, it is possible that Payments will have been made by Schwab that should not have been made (an “Overpayment”) or that additional Payments that will not have been made by Schwab could have been made (an “Underpayment”) consistent in each case with the calculation of the Reduced Amount. In the event the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against you or Schwab that the Auditors believe has a high probability of
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success, determine that an Overpayment has been made, the amount of such Overpayment will be paid by you to Schwab on demand, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code. However, no amount will be payable by you to Schwab if and to the extent that such payment would not reduce the amount that is subject to taxation under section 4999 of the Code. In the event the Auditors determine that an Underpayment has occurred, such Underpayment will promptly be paid or transferred by Schwab to or for your benefit, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.
Notwithstanding the foregoing, in no event will a payment be made under this Section beyond March 15th of the year following the year in which the amount ceases to be subject to a substantial risk of forfeiture.
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Plan
Administration
|
The Plan administrator has discretionary authority to make all determinations related to this grant and to construe the terms of the Plan, the Notice of Restricted Stock Unit Grant and this Agreement. The Plan administrator’s determinations are conclusive and binding on all persons, and they are entitled to deference upon any review.
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Adjustments
|
In the event of a stock split, a stock dividend or a similar change in the Shares, the number of Restricted Stock Units that remain subject to forfeiture shall be adjusted accordingly.
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Severability
|
In the event that any provision of this Agreement is held invalid or unenforceable, the provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.
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Applicable
Law
|
This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions), as such laws are applied to contracts entered into and performed in Delaware.
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The Plan and
Other
Agreements
|
The text of the Plan is incorporated in this Agreement by reference. This Agreement, the Notice of Restricted Stock Unit Grant and the Plan constitute the entire understanding between you and Schwab regarding this grant. Any prior agreements, commitments or negotiations concerning this grant are superseded. This Agreement may be amended only by another written agreement, signed by both parties and approved by the Compensation Committee. If there is any
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inconsistency or conflict between any provision of this Agreement and the Plan, the terms of the Plan will control.
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Subsidiaries of the Registrant
|
|
Pursuant to Item 601 (b)(21)(ii) of Regulation S-K, certain subsidiaries of the Registrant have been omitted which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary (as defined in Rule 1-02(w) of Regulation S-X) as of December 31, 2019.
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Schwab Holdings, Inc. (holding company for Charles Schwab & Co., Inc.), a Delaware corporation
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Charles Schwab & Co., Inc., a California corporation
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Charles Schwab Bank, a federal savings bank
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Charles Schwab Investment Management, Inc., a Delaware corporation
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Charles Schwab Futures, Inc., a Delaware corporation
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Charles Schwab Premier Bank, a federal savings bank
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Charles Schwab Trust Bank, a Nevada-chartered state savings bank
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Registration Statement No. 333-222063
|
(Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Purchase Contracts, Warrants, and Units Consisting of Two or More Securities)
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Registration Statement No. 333-205862
|
(The Charles Schwab Corporation 2013 Stock Incentive Plan)
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Registration Statement No. 333-192893
|
(The Charles Schwab Corporation Financial Consultant Career Achievement Award Program)
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Registration Statement No. 333-189553
|
(The Charles Schwab Corporation 2013 Stock Incentive Plan)
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Registration Statement No. 333-175862
|
(The Charles Schwab Corporation 2004 Stock Incentive Plan)
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Registration Statement No. 333-144303
|
(The Charles Schwab Corporation Employee Stock Purchase Plan)
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Registration Statement No. 333-131502
|
(The Charles Schwab Corporation Deferred Compensation Plan II)
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Registration Statement No. 333-101992
|
(The Charles Schwab Corporation 2004 Stock Incentive Plan)
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Registration Statement No. 333-71322
|
(The SchwabPlan Retirement Savings and Investment Plan)
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Registration Statement No. 333-63448
|
(The Charles Schwab Corporation 2004 Stock Incentive Plan)
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Registration Statement No. 333-47107
|
(The Charles Schwab Corporation 2004 Stock Incentive Plan)
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Registration Statement No. 333-44793
|
(Charles Schwab Profit Sharing and Employee Stock Ownership Plan)
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/s/ Deloitte & Touche LLP
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San Francisco, California
|
February 26, 2020
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1.
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I have reviewed this Annual Report on Form 10-K of The Charles Schwab Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
|
February 26, 2020
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|
/s/ Walter W. Bettinger II
|
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Walter W. Bettinger II
|
||
|
President and Chief Executive Officer
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
|
February 26, 2020
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/s/ Peter Crawford
|
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Peter Crawford
|
||
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Executive Vice President and Chief Financial Officer
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(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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/s/ Walter W. Bettinger II
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Date:
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February 26, 2020
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Walter W. Bettinger II
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President and Chief Executive Officer
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/s/ Peter Crawford
|
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Date:
|
February 26, 2020
|
Peter Crawford
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Executive Vice President and Chief Financial Officer
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