ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
Item 15. | ||
Item 16. | ||
Item 1. | Business |
• | 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; |
• | 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™). |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | Service Culture – Delivering a great client experience earns the trust and loyalty of clients and increases the likelihood that those clients will refer others. |
• | 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. |
• | 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; |
• | 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; |
• | Exchange-traded funds – an extensive offering of ETFs, including both proprietary and third-party ETFs; |
• | 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; |
• | 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 |
• | Trust – trust custody services, personal trust reporting services, and administrative trustee services. |
Item 1A. | Risk Factors |
• | Large positions in financial instruments collateralized by assets with similar economic characteristics or in securities of a single issuer or industry; |
• | Mortgage loans and HELOCs to banking clients which are secured by properties in the same geographic region; and |
• | Client margins, options or futures, pledged assets, and securities lending activities collateralized by or linked to securities of a single issuer, index, or industry. |
• | Our exposure to changes in interest rates; |
• | 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; |
• | The announcement of new products, services, acquisitions, or dispositions by us or our competitors; |
• | 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 |
• | Sales of a substantial number of shares of our common stock by large stockholders. |
• | 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; |
• | 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; |
• | 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; |
• | receipt of noncontrol determinations from the Federal Reserve; |
• | accuracy of the representations and warranties made in the Merger Agreement by the other party, subject to certain materiality thresholds; |
• | 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 |
• | the absence since the date of the Merger Agreement of a material adverse effect on the other party. |
December 31, 2019 | Square Footage | |||
(amounts in thousands) | Leased | Owned | ||
Location | ||||
Corporate headquarters: | ||||
San Francisco, CA (1) | 481 | — | ||
Service and other office space: | ||||
Phoenix, AZ | 28 | 728 | ||
Denver, CO | — | 731 | ||
Dallas, TX | 318 | 293 | ||
Austin, TX | 83 | 490 | ||
Indianapolis, IN | — | 161 | ||
Orlando, FL | 159 | — | ||
Chicago, IL | 146 | — | ||
Richfield, OH | — | 117 | ||
El Paso, TX | — | 105 |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
December 31, | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
The Charles Schwab Corporation | $ | 100 | $ | 110 | $ | 133 | $ | 174 | $ | 142 | $ | 166 | |||||||||||
Standard & Poor’s 500 Index | $ | 100 | $ | 101 | $ | 114 | $ | 138 | $ | 132 | $ | 174 | |||||||||||
Dow Jones U.S. Investment Services Index | $ | 100 | $ | 100 | $ | 126 | $ | 157 | $ | 139 | $ | 172 |
Month | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Program | |||||||||
October: | |||||||||||||
Share repurchase program (1) | 6,357 | $ | 36.00 | 6,357 | $ | 1,780 | |||||||
Employee transactions (2) | 3 | $ | 36.85 | N/A | N/A | ||||||||
November: | |||||||||||||
Share repurchase program (1) | — | $ | — | — | $ | 1,780 | |||||||
Employee transactions (2) | 652 | $ | 41.97 | N/A | N/A | ||||||||
December: | |||||||||||||
Share repurchase program (1) | — | $ | — | — | $ | 1,780 | |||||||
Employee transactions (2) | 5 | $ | 49.77 | N/A | N/A | ||||||||
Total: | |||||||||||||
Share repurchase program (1) | 6,357 | $ | 36.00 | 6,357 | $ | 1,780 | |||||||
Employee transactions (2) | 660 | $ | 42.01 | N/A | N/A |
Item 6. | Selected Financial Data |
Selected Financial and Operating Data | |||||||||||||||||||||||
(In Millions, Except Per Share Amounts, Ratios, or as Noted) | |||||||||||||||||||||||
Growth Rates | |||||||||||||||||||||||
Compounded 4-Year 2015-2019 (1) | Annual 1-Year 2018-2019 | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||
Results of Operations | |||||||||||||||||||||||
Net revenues | 14% | 6% | $ | 10,721 | $ | 10,132 | $ | 8,618 | $ | 7,478 | $ | 6,380 | |||||||||||
Expenses excluding interest | 9% | 5% | $ | 5,873 | $ | 5,570 | $ | 4,968 | $ | 4,485 | $ | 4,101 | |||||||||||
Net income | 26% | 6% | $ | 3,704 | $ | 3,507 | $ | 2,354 | $ | 1,889 | $ | 1,447 | |||||||||||
Net income available to common stockholders | 27% | 6% | $ | 3,526 | $ | 3,329 | $ | 2,180 | $ | 1,746 | $ | 1,364 | |||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | 27% | 9% | $ | 2.69 | $ | 2.47 | $ | 1.63 | $ | 1.32 | $ | 1.04 | |||||||||||
Diluted | 27% | 9% | $ | 2.67 | $ | 2.45 | $ | 1.61 | $ | 1.31 | $ | 1.03 | |||||||||||
Dividends declared per common share | 30% | 48% | $ | .68 | $ | .46 | $ | .32 | $ | .27 | $ | .24 | |||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
Basic | — | (3)% | 1,311 | 1,348 | 1,339 | 1,324 | 1,315 | ||||||||||||||||
Diluted | — | (3)% | 1,320 | 1,361 | 1,353 | 1,334 | 1,327 | ||||||||||||||||
Net interest revenue as a percentage of net revenues | 61 | % | 57 | % | 50 | % | 44 | % | 40 | % | |||||||||||||
Asset management and administration fees as a percentage of net revenues | 30 | % | 32 | % | 39 | % | 41 | % | 41 | % | |||||||||||||
Trading revenue as a percentage of net revenues | 6 | % | 8 | % | 8 | % | 11 | % | 14 | % | |||||||||||||
Effective income tax rate | 23.6 | % | 23.1 | % | 35.5 | % | 36.9 | % | 36.5 | % | |||||||||||||
Performance Measures | |||||||||||||||||||||||
Net revenue growth | 6 | % | 18 | % | 15 | % | 17 | % | 5 | % | |||||||||||||
Pre-tax profit margin | 45.2 | % | 45.0 | % | 42.4 | % | 40.0 | % | 35.7 | % | |||||||||||||
Return on average common stockholders’ equity | 19 | % | 19 | % | 15 | % | 14 | % | 12 | % | |||||||||||||
Financial Condition (at year end) | |||||||||||||||||||||||
Total assets | 12% | (1)% | $ | 294,005 | $ | 296,482 | $ | 243,274 | $ | 223,383 | $ | 183,705 | |||||||||||
Short-term borrowings | — | — | — | — | $ | 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 |
Average for the | |||
Three Months Ended December 31, 2019 | |||
Total eligible HQLA | $ | 54,494 | |
Net cash outflows | $ | 48,135 | |
LCR | 113 | % |
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 |
Note 1. | ||
Note 2. | ||
Note 3. | ||
Note 4. | ||
Note 5. | ||
Note 6. | ||
Note 7. | ||
Note 8. | ||
Note 9. | ||
Note 10. | ||
Note 11. | ||
Note 12. | ||
Note 13. | ||
Note 14. | ||
Note 15. | ||
Note 16. | ||
Note 17. | ||
Note 18. | ||
Note 19. | ||
Note 20. | ||
Note 21. | ||
Note 22. | ||
Note 23. | ||
Note 24. | ||
Note 25. | ||
Consolidated Statements of Income | |||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Net Revenues | |||||||||||
Interest revenue | $ | $ | $ | ||||||||
Interest expense | ( | ) | ( | ) | ( | ) | |||||
Net interest revenue | |||||||||||
Asset management and administration fees | |||||||||||
Trading revenue | |||||||||||
Other | |||||||||||
Total net revenues | |||||||||||
Expenses Excluding Interest | |||||||||||
Compensation and benefits | |||||||||||
Professional services | |||||||||||
Occupancy and equipment | |||||||||||
Advertising and market development | |||||||||||
Communications | |||||||||||
Depreciation and amortization | |||||||||||
Regulatory fees and assessments | |||||||||||
Other | |||||||||||
Total expenses excluding interest | |||||||||||
Income before taxes on income | |||||||||||
Taxes on income | |||||||||||
Net Income | |||||||||||
Preferred stock dividends and other (1) | |||||||||||
Net Income Available to Common Stockholders | $ | $ | $ | ||||||||
Weighted-Average Common Shares Outstanding: | |||||||||||
Basic | |||||||||||
Diluted (2) | |||||||||||
Earnings Per Common Shares Outstanding: | |||||||||||
Basic | $ | $ | $ | ||||||||
Diluted (2) | $ | $ | $ |
Consolidated Statements of Comprehensive Income | |||||||||||
(In Millions) | |||||||||||
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Net income | $ | $ | $ | ||||||||
Other comprehensive income (loss), before tax: | |||||||||||
Change in net unrealized gain (loss) on available for sale securities: | |||||||||||
Net unrealized gain (loss) | ( | ) | |||||||||
Reclassification of net unrealized loss transferred to held to maturity | |||||||||||
Other reclassifications included in other revenue | ( | ) | ( | ) | |||||||
Change in net unrealized gain (loss) on held to maturity securities: | |||||||||||
Reclassification of net unrealized loss transferred from available for sale | ( | ) | |||||||||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale | |||||||||||
Other | ( | ) | ( | ) | ( | ) | |||||
Other comprehensive income (loss), before tax | ( | ) | |||||||||
Income tax effect | ( | ) | ( | ) | |||||||
Other comprehensive income (loss), net of tax | ( | ) | |||||||||
Comprehensive Income | $ | $ | $ |
Consolidated Balance Sheets | |||||||
(In Millions, Except Per Share and Share Amounts) | |||||||
December 31, | 2019 | 2018 | |||||
Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
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) | |||||||
Receivables from brokerage clients — net | |||||||
Available for sale securities | |||||||
Held to maturity securities | |||||||
Bank loans — net | |||||||
Equipment, office facilities, and property — net | |||||||
Goodwill | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Stockholders’ Equity | |||||||
Bank deposits | $ | $ | |||||
Payables to brokerage clients | |||||||
Accrued expenses and other liabilities | |||||||
Long-term debt | |||||||
Total liabilities | |||||||
Stockholders’ equity: | |||||||
Preferred stock — $.01 par value per share; aggregate liquidation preference of $2,850 | |||||||
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446 shares issued | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Treasury stock, at cost — 201,818,100 and 155,116,695 shares at December 31, 2019 and 2018, respectively | ( | ) | ( | ) | |||
Accumulated other comprehensive income (loss) | ( | ) | |||||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
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 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuance of preferred stock, net | — | — | — | — | — | — | ||||||||||||||||||||||||
Redemption of preferred stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Dividends declared on preferred stock | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Dividends declared on common stock — $.32 per share | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Stock option exercises and other | — | — | — | ( | ) | — | — | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | ( | ) | — | |||||||||||||||||||||||
Balance at December 31, 2017 | ( | ) | ( | ) | ||||||||||||||||||||||||||
Adoption of accounting standards | — | — | — | — | — | ( | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Dividends declared on preferred stock | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Dividends declared on common stock — $.46 per share | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock option exercises and other | — | — | — | ( | ) | — | — | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | ( | ) | — | ||||||||||||||||||||||||
Balance at December 31, 2018 | ( | ) | ( | ) | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||||||
Dividends declared on preferred stock | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Dividends declared on common stock — $.68 per share | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock option exercises and other | — | — | — | ( | ) | — | — | |||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | $ |
Consolidated Statements of Cash Flows | |||||||||
(In Millions) | |||||||||
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||
Cash Flows from Operating Activities | |||||||||
Net income | $ | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||||
Share-based compensation | |||||||||
Depreciation and amortization | |||||||||
Provision (benefit) for deferred income taxes | |||||||||
Premium amortization, net, on available for sale and held to maturity securities | |||||||||
Other | |||||||||
Net change in: | |||||||||
Investments segregated and on deposit for regulatory purposes | ( | ) | |||||||
Receivables from brokerage clients | ( | ) | ( | ) | ( | ) | |||
Other assets | ( | ) | ( | ) | ( | ) | |||
Payables to brokerage clients | ( | ) | |||||||
Accrued expenses and other liabilities | ( | ) | ( | ) | |||||
Net cash provided by (used for) operating activities | ( | ) | |||||||
Cash Flows from Investing Activities | |||||||||
Purchases of available for sale securities | ( | ) | ( | ) | ( | ) | |||
Proceeds from sales of available for sale securities | |||||||||
Principal payments on available for sale securities | |||||||||
Purchases of held to maturity securities | ( | ) | ( | ) | ( | ) | |||
Principal payments on held to maturity securities | |||||||||
Net change in bank loans | ( | ) | ( | ) | ( | ) | |||
Purchases of equipment, office facilities, and property | ( | ) | ( | ) | ( | ) | |||
Purchases of Federal Home Loan Bank stock | ( | ) | ( | ) | ( | ) | |||
Proceeds from sales of Federal Home Loan Bank stock | |||||||||
Other investing activities | ( | ) | ( | ) | ( | ) | |||
Net cash provided by (used for) investing activities | ( | ) | ( | ) | |||||
Cash Flows from Financing Activities | |||||||||
Net change in bank deposits (1) | ( | ) | |||||||
Net change in short-term borrowings | ( | ) | |||||||
Issuance of long-term debt | |||||||||
Repayment of long-term debt | ( | ) | ( | ) | |||||
Repurchases of common stock | ( | ) | ( | ) | |||||
Net proceeds from preferred stock offerings | |||||||||
Redemption of preferred stock | ( | ) | |||||||
Dividends paid | ( | ) | ( | ) | ( | ) | |||
Proceeds from stock options exercised | |||||||||
Other financing activities | ( | ) | ( | ) | ( | ) | |||
Net cash provided by (used for) financing activities | ( | ) | |||||||
Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted | |||||||||
Cash and Cash Equivalents, including Amounts Restricted at Beginning of Year | |||||||||
Cash and Cash Equivalents, including Amounts Restricted at End of Year | $ | $ | $ |
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 | $ | $ | $ | ||||||
Securities transferred from available for sale to held to maturity, at fair value | $ | $ | $ | ||||||
Securities purchased during the period but settled after period end | $ | $ | $ | ||||||
Non-cash financing activity: | |||||||||
Extinguishment of finance lease obligation through an assignment agreement | $ | $ | $ | ||||||
Other Supplemental Cash Flow Information | |||||||||
Cash paid during the period for: | |||||||||
Interest | $ | $ | $ | ||||||
Income taxes | $ | $ | $ | ||||||
Amounts included in the measurement of lease liabilities (2) | $ | N/A | N/A | ||||||
Leased assets obtained in exchange for new operating lease liabilities (2) | $ | 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 | $ | $ | $ | ||||||
Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes | |||||||||
Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows | $ | $ | $ |
1. | Introduction and Basis of Presentation |
• | Charles Schwab & Co., Inc. (CS&Co) is a securities broker-dealer with over |
• | 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 |
Equipment and office facilities | 3 to 10 years |
Buildings | 40 years |
Building and land improvements | 20 years |
Software | 3 to 10 years (1) |
Leasehold improvements | Lesser of useful life or lease term |
• | 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) | $ | $ | $ | ||||||||
Liabilities | |||||||||||
Accrued expenses and other liabilities (2) | $ | $ | $ |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Net interest revenue | |||||||||||
Interest revenue | $ | $ | $ | ||||||||
Interest expense | ( | ) | ( | ) | ( | ) | |||||
Net interest revenue | |||||||||||
Asset management and administration fees | |||||||||||
Mutual funds, ETFs, and CTFs (1) | |||||||||||
Advice solutions | |||||||||||
Other (1) | |||||||||||
Asset management and administration fees | |||||||||||
Trading revenue | |||||||||||
Commissions | |||||||||||
Principal transactions | |||||||||||
Trading revenue | |||||||||||
Other | |||||||||||
Total net revenues | $ | $ | $ |
4. | Receivables from and Payables to Brokerage Clients |
December 31, | 2019 | 2018 | |||||
Receivables | |||||||
Margin loans, net of allowance for doubtful accounts | $ | $ | |||||
Other brokerage receivables | |||||||
Receivables from brokerage clients — net | $ | $ | |||||
Payables | |||||||
Interest-bearing payables | $ | $ | |||||
Non-interest-bearing payables | |||||||
Payables to brokerage clients | $ | $ |
December 31, 2019 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||
Available for sale securities | |||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | |||||||||
Corporate debt securities (1) | |||||||||||||
Asset-backed securities (2) | |||||||||||||
U.S. Treasury securities | |||||||||||||
Certificates of deposit | |||||||||||||
Commercial paper (1,3) | |||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||
Total available for sale securities | $ | $ | $ | $ | |||||||||
Held to maturity securities | |||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | |||||||||
Asset-backed securities (2) | |||||||||||||
Corporate debt securities (1) | |||||||||||||
U.S. state and municipal securities | |||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||
U.S. Treasury securities | |||||||||||||
Certificates of deposit | |||||||||||||
Foreign government agency securities | |||||||||||||
Other | |||||||||||||
Total held to maturity securities | $ | $ | $ | $ | |||||||||
December 31, 2018 | |||||||||||||
Available for sale securities | |||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | |||||||||
U.S. Treasury securities | |||||||||||||
Asset-backed securities (2) | |||||||||||||
Corporate debt securities (1) | |||||||||||||
Certificates of deposit | |||||||||||||
U.S. agency notes | |||||||||||||
Commercial paper (1,3) | |||||||||||||
Foreign government agency securities | |||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||
Total available for sale securities | $ | $ | $ | $ | |||||||||
Held to maturity securities | |||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | |||||||||
Asset-backed securities (2) | |||||||||||||
Corporate debt securities (1) | |||||||||||||
U.S. state and municipal securities | |||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||
U.S. Treasury securities | |||||||||||||
Certificates of deposit | |||||||||||||
Foreign government agency securities | |||||||||||||
Other | |||||||||||||
Total held to maturity securities | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Held to maturity securities | |||||||||||||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total securities with unrealized losses | $ | $ | $ | $ | $ | $ | |||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||
Available for sale securities | |||||||||||||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Certificates of deposit | |||||||||||||||||||||||
U.S. agency notes | |||||||||||||||||||||||
Foreign government agency securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Held to maturity securities | |||||||||||||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
U.S. state and municipal securities | |||||||||||||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||||||
Foreign government agency securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total securities with unrealized losses | $ | $ | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | ||||||||||||||
Corporate debt securities | |||||||||||||||||||
Asset-backed securities | |||||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||
Certificates of deposit | |||||||||||||||||||
Commercial paper | |||||||||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||||||||
Total fair value | |||||||||||||||||||
Total amortized cost | $ | $ | $ | $ | $ | ||||||||||||||
Weighted-average yield (1) | % | % | % | % | % | ||||||||||||||
Held to maturity securities | |||||||||||||||||||
U.S. agency mortgage-backed securities | $ | $ | $ | $ | $ | ||||||||||||||
Asset-backed securities | |||||||||||||||||||
Corporate debt securities | |||||||||||||||||||
U.S. state and municipal securities | |||||||||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||
Certificates of deposit | |||||||||||||||||||
Foreign government agency securities | |||||||||||||||||||
Other | |||||||||||||||||||
Total fair value | |||||||||||||||||||
Total amortized cost | $ | $ | $ | $ | $ | ||||||||||||||
Weighted-average yield (1) | % | % | % | % | % |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Proceeds | $ | $ | $ | ||||||||
Gross realized gains | |||||||||||
Gross realized losses |
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) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
HELOCs (1,2) | |||||||||||||||||||||||||||||||
Pledged asset lines | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total bank loans | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||||||||
First Mortgages (1,2) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
HELOCs (1,2) | |||||||||||||||||||||||||||||||
Pledged asset lines | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total bank loans | $ | $ | $ | $ | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Balance at end of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
December 31, | 2019 | 2018 | |||||
Nonaccrual loans (1) | $ | $ | |||||
Other real estate owned (2) | |||||||
Total nonperforming assets | |||||||
Troubled debt restructurings | |||||||
Total impaired assets | $ | $ |
• | 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% | $ | % | |||||||
>70% – <90% | % | ||||||||
>90% – <100% | % | ||||||||
>100% | |||||||||
Total | $ | % | |||||||
HELOCs | |||||||||
Estimated Current LTV (1) | |||||||||
<70% | $ | % | |||||||
>70% – <90% | % | ||||||||
>90% – <100% | % | ||||||||
>100% | % | ||||||||
Total | $ | % | |||||||
Pledged asset lines | |||||||||
Weighted-Average LTV (1) | |||||||||
=70% | $ | ||||||||
December 31, 2018 | Balance | Weighted Average Updated FICO | Percent of Loans that are on Nonaccrual Status | ||||||
First Mortgages | |||||||||
Estimated Current LTV | |||||||||
<70% | $ | % | |||||||
>70% – <90% | % | ||||||||
>90% – <100% | |||||||||
>100% | |||||||||
Total | $ | % | |||||||
HELOCs | |||||||||
Estimated Current LTV (1) | |||||||||
<70% | $ | % | |||||||
>70% – <90% | % | ||||||||
>90% – <100% | % | ||||||||
>100% | |||||||||
Total | $ | % | |||||||
Pledged asset lines | |||||||||
Weighted-Average LTV (1) | |||||||||
=70% | $ |
December 31, 2019 | First Mortgages | HELOCs | |||||
Year of origination | |||||||
Pre-2015 | $ | $ | |||||
2015 | |||||||
2016 | |||||||
2017 | |||||||
2018 | |||||||
2019 | |||||||
Total | $ | $ | |||||
Origination FICO | |||||||
<620 | $ | $ | |||||
620 – 679 | |||||||
680 – 739 | |||||||
>740 | |||||||
Total | $ | $ | |||||
Origination LTV | |||||||
<70% | $ | $ | |||||
>70% – <90% | |||||||
>90% – <100% | |||||||
Total | $ | $ | |||||
December 31, 2018 | First Mortgages | HELOCs | |||||
Year of origination | |||||||
Pre-2015 | $ | $ | |||||
2015 | |||||||
2016 | |||||||
2017 | |||||||
2018 | |||||||
Total | $ | $ | |||||
Origination FICO | |||||||
<620 | $ | $ | |||||
620 – 679 | |||||||
680 – 739 | |||||||
>740 | |||||||
Total | $ | $ | |||||
Origination LTV | |||||||
<70% | $ | $ | |||||
>70% – <90% | |||||||
>90% – <100% | |||||||
Total | $ | $ |
December 31, 2019 | Balance | ||
Converted to an amortizing loan by period end | $ | ||
Within 1 year | |||
> 1 year – 3 years | |||
> 3 years – 5 years | |||
> 5 years | |||
Total | $ |
7. | Equipment, Office Facilities, and Property |
December 31, | 2019 | 2018 | |||||
Software | $ | $ | |||||
Buildings | |||||||
Leasehold improvements | |||||||
Construction in progress | |||||||
Information technology equipment | |||||||
Furniture and equipment | |||||||
Land | |||||||
Telecommunications equipment | |||||||
Total equipment, office facilities, and property | |||||||
Accumulated depreciation and amortization | ( | ) | ( | ) | |||
Total equipment, office facilities, and property — net | $ | $ |
8. | Goodwill |
Investor Services | Advisor Services | Total | |||||||||
Balance at December 31, 2017 | $ | $ | $ | ||||||||
Goodwill acquired and other changes during the period | |||||||||||
Balance at December 31, 2018 | |||||||||||
Goodwill acquired and other changes during the period | |||||||||||
Balance at December 31, 2019 | $ | $ | $ |
December 31, | 2019 | 2018 | |||||
Receivables — interest, dividends, and other | $ | $ | |||||
Securities borrowed | |||||||
Other securities owned at fair value | |||||||
Other investments (1) | |||||||
Operating lease ROU assets | — | ||||||
Customer contract receivables | |||||||
Capitalized contract costs, net | |||||||
Other receivables from brokers, dealers, and clearing organizations | |||||||
Intangible assets, net of accumulated amortization of $326 and $299 (2) | |||||||
Other | |||||||
Total other assets | $ | $ |
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) | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Other CRA Investments (2) | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
11. | Bank Deposits |
December 31, | 2019 | 2018 | |||||
Interest-bearing deposits: | |||||||
Deposits swept from brokerage accounts | $ | $ | |||||
Checking | |||||||
Savings and other | |||||||
Total interest-bearing deposits | |||||||
Non-interest-bearing deposits | |||||||
Total bank deposits | $ | $ |
Date of | Principal Amount Outstanding | ||||||
Issuance | 2019 | 2018 | |||||
Fixed-rate Senior Notes: | |||||||
4.450% due July 22, 2020 | 07/22/10 | $ | $ | ||||
3.250% due May 21, 2021 | 05/22/18 | ||||||
3.225% due September 1, 2022 | 08/29/12 | ||||||
2.650% due January 25, 2023 | 12/07/17 | ||||||
3.550% due February 1, 2024 | 10/31/18 | ||||||
3.000% due March 10, 2025 | 03/10/15 | ||||||
3.850% due May 21, 2025 | 05/22/18 | ||||||
3.450% due February 13, 2026 | 11/13/15 | ||||||
3.200% due March 2, 2027 | 03/02/17 | ||||||
3.200% due January 25, 2028 | 12/07/17 | ||||||
4.000% due February 1, 2029 | 10/31/18 | ||||||
3.250% due May 22, 2029 | 05/22/19 | ||||||
Floating-rate Senior Notes: | |||||||
Three-month LIBOR + 0.32% due May 21, 2021 | 05/22/18 | ||||||
Total Senior Notes | |||||||
5.450% Finance lease obligation (1) | 06/04/04 | ||||||
Unamortized discount — net | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | ( | ) | |||
Total long-term debt | $ | $ |
Maturities | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total maturities | |||
Unamortized discount — net | ( | ) | |
Debt issuance costs | ( | ) | |
Total long-term debt | $ |
Balance Sheet Classification | December 31, 2019 | |||
Lease assets: | ||||
Operating lease ROU assets | Other assets | $ | ||
Lease liabilities: | ||||
Operating lease liabilities | Accrued expenses and other liabilities | $ |
Lease Cost (1) | Year Ended December 31, 2019 | ||||
Operating lease cost (2) | $ | ||||
Variable lease cost (3) |
Lease Term and Discount Rate | ||
Weighted-average remaining lease term (years) | ||
Weighted-average discount rate | % |
Maturity of Lease Liabilities | Operating Leases (1) | ||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total lease payments | |||
Less: Interest | |||
Present value of lease liabilities | $ |
Operating Leases | Subleases | Net | |||||||
2019 | $ | $ | $ | ||||||
2020 | |||||||||
2021 | |||||||||
2022 | |||||||||
2023 | |||||||||
Thereafter | |||||||||
Total | $ | $ | $ |
14. | Commitments and Contingencies |
December 31, | 2019 | 2018 | ||||
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit | $ | $ | ||||
Commitments to purchase First Mortgage loans | ||||||
Total | $ | $ |
2020 (1) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
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) | $ | $ | $ | $ | $ | ( | ) | (2) | $ | ||||||||||||||||
Securities borrowed (3) | ( | ) | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Liabilities | |||||||||||||||||||||||||
Securities loaned (4,5) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Resale agreements (1) | $ | $ | $ | $ | $ | ( | ) | (2) | $ | ||||||||||||||||
Securities borrowed (3) | ( | ) | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Liabilities | |||||||||||||||||||||||||
Securities loaned (4,5) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Total | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
December 31, | 2019 | 2018 | ||||
Fair value of client securities available to be pledged | $ | $ | ||||
Fair value of securities pledged for: | ||||||
Fulfillment of requirements with the Options Clearing Corporation (1) | $ | $ | ||||
Fulfillment of client short sales | ||||||
Securities lending to other broker-dealers | ||||||
Total collateral pledged | $ | $ |
(1) |
December 31, 2019 | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||
Commercial paper | ||||||||||||
Total cash equivalents | ||||||||||||
Investments segregated and on deposit for regulatory purposes: | ||||||||||||
Certificates of deposit | ||||||||||||
U.S. Government securities | ||||||||||||
Total investments segregated and on deposit for regulatory purposes | ||||||||||||
Available for sale securities: | ||||||||||||
U.S. agency mortgage-backed securities | ||||||||||||
Corporate debt securities | ||||||||||||
Asset-backed securities | ||||||||||||
U.S. Treasury securities | ||||||||||||
Certificates of deposit | ||||||||||||
Commercial paper | ||||||||||||
Non-agency commercial mortgage-backed securities | ||||||||||||
Total available for sale securities | ||||||||||||
Other assets: | ||||||||||||
Equity and bond mutual funds | ||||||||||||
U.S. Government securities | ||||||||||||
State and municipal debt obligations | ||||||||||||
Equity, corporate debt, and other securities | ||||||||||||
Total other assets | ||||||||||||
Total | $ | $ | $ | $ |
December 31, 2018 | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||
Commercial paper | ||||||||||||
Total cash equivalents | ||||||||||||
Investments segregated and on deposit for regulatory purposes: | ||||||||||||
Certificates of deposit | ||||||||||||
U.S. Government securities | ||||||||||||
Total investments segregated and on deposit for regulatory purposes | ||||||||||||
Available for sale securities: | ||||||||||||
U.S. agency mortgage-backed securities | ||||||||||||
U.S. Treasury securities | ||||||||||||
Asset-backed securities | ||||||||||||
Corporate debt securities | ||||||||||||
Certificates of deposit | ||||||||||||
U.S. agency notes | ||||||||||||
Commercial paper | ||||||||||||
Foreign government agency securities | ||||||||||||
Non-agency commercial mortgage-backed securities | ||||||||||||
Total available for sale securities | ||||||||||||
Other assets: | ||||||||||||
Equity and bond mutual funds | ||||||||||||
U.S. Government securities | ||||||||||||
State and municipal debt obligations | ||||||||||||
Equity, corporate debt, and other securities | ||||||||||||
Schwab Funds® money market funds | ||||||||||||
Total other assets | ||||||||||||
Total | $ | $ | $ | $ |
December 31, 2019 | Carrying Amount | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Cash and investments segregated and on deposit for regulatory purposes | |||||||||||||||
Receivables from brokerage clients — net | |||||||||||||||
Held to maturity securities: | |||||||||||||||
U.S. agency mortgage-backed securities | |||||||||||||||
Asset-backed securities | |||||||||||||||
Corporate debt securities | |||||||||||||||
U.S. state and municipal securities | |||||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||||
U.S. Treasury securities | |||||||||||||||
Certificates of deposit | |||||||||||||||
Foreign government agency securities | |||||||||||||||
Other | |||||||||||||||
Total held to maturity securities | |||||||||||||||
Bank loans — net: | |||||||||||||||
First Mortgages | |||||||||||||||
HELOCs | |||||||||||||||
Pledged asset lines | |||||||||||||||
Other | |||||||||||||||
Total bank loans — net | |||||||||||||||
Other assets | |||||||||||||||
Liabilities | |||||||||||||||
Bank deposits | $ | $ | $ | $ | $ | ||||||||||
Payables to brokerage clients | |||||||||||||||
Accrued expenses and other liabilities | |||||||||||||||
Long-term debt |
December 31, 2018 | Carrying Amount | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Cash and investments segregated and on deposit for regulatory purposes | |||||||||||||||
Receivables from brokerage clients — net | |||||||||||||||
Held to maturity securities: | |||||||||||||||
U.S. agency mortgage-backed securities | |||||||||||||||
Asset-backed securities | |||||||||||||||
Corporate debt securities | |||||||||||||||
U.S. state and municipal securities | |||||||||||||||
Non-agency commercial mortgage-backed securities | |||||||||||||||
U.S. Treasury securities | |||||||||||||||
Certificates of deposit | |||||||||||||||
Foreign government agency securities | |||||||||||||||
Other | |||||||||||||||
Total held to maturity securities | |||||||||||||||
Bank loans — net: | |||||||||||||||
First Mortgages | |||||||||||||||
HELOCs | |||||||||||||||
Pledged asset lines | |||||||||||||||
Other | |||||||||||||||
Total bank loans — net | |||||||||||||||
Other assets | |||||||||||||||
Liabilities | |||||||||||||||
Bank deposits | $ | $ | $ | $ | $ | ||||||||||
Payables to brokerage clients | |||||||||||||||
Accrued expenses and other liabilities | |||||||||||||||
Long-term debt |
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 | $ | $ | $ | 08/03/15 | % | 12/01/20 | N/A | N/A | ||||||||||||||||
Series D | 03/07/16 | % | 06/01/21 | N/A | N/A | |||||||||||||||||||
Fixed-to-floating-rate: | ||||||||||||||||||||||||
Series A | 01/26/12 | % | 02/01/22 | 02/01/22 | % | |||||||||||||||||||
Series E | 10/31/16 | % | 03/01/22 | 03/01/22 | % | |||||||||||||||||||
Series F | 10/31/17 | % | 12/01/27 | 12/01/27 | % | |||||||||||||||||||
Total preferred stock | $ | $ |
Year Ended December 31, | 2019 | 2018 | 2017 | |||||||||||||||||
Total Declared | Per Share Amount | Total Declared | Per Share Amount | Total Declared | Per Share Amount | |||||||||||||||
Series A | $ | $ | $ | |||||||||||||||||
Series B (1) | N/A | N/A | N/A | N/A | ||||||||||||||||
Series C | ||||||||||||||||||||
Series D | ||||||||||||||||||||
Series E | ||||||||||||||||||||
Series F (2) | N/A | N/A | ||||||||||||||||||
Total | $ | $ | $ |
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) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||
Reclassification of net unrealized loss on securities transferred to held to maturity (1) | ( | ) | |||||||||||||||||||||||||||
Other reclassifications included in other revenue | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Change in net unrealized gain (loss) on held to maturity securities: | |||||||||||||||||||||||||||||
Reclassification of net unrealized loss on securities transferred from available for sale (1) | ( | ) | ( | ) | |||||||||||||||||||||||||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Other comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Total AOCI | |||
Balance at December 31, 2016 | $ | ( | ) |
Available for sale securities: | |||
Net unrealized gain (loss) | |||
Reclassification of net unrealized loss on securities transferred to held to maturity | |||
Other reclassifications included in other revenue | ( | ) | |
Held to maturity securities: | |||
Reclassification of net unrealized loss on securities transferred from available for sale | ( | ) | |
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale | |||
Other | ( | ) | |
Balance at December 31, 2017 | $ | ( | ) |
Adoption of accounting standards (1) | ( | ) | |
Available for sale securities: | |||
Net unrealized gain (loss) | ( | ) | |
Held to maturity securities: | |||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale | |||
Other | ( | ) | |
Balance at December 31, 2018 | $ | ( | ) |
Available for sale securities: | |||
Net unrealized gain (loss), excluding transfers to available for sale from held to maturity | |||
Net unrealized gain on securities transferred to available for sale from held to maturity (2) | |||
Other reclassifications included in other revenue | ( | ) | |
Held to maturity securities: | |||
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale | |||
Other | ( | ) | |
Balance at December 31, 2019 | $ |
19. | Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Stock option expense | $ | $ | $ | ||||||||
Restricted stock unit expense (1) | |||||||||||
Employee stock purchase plan expense | |||||||||||
Total share-based compensation expense | $ | $ | $ | ||||||||
Income tax benefit on share-based compensation expense (2) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
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 | $ | $ | ||||||||||
Granted | ||||||||||||
Exercised | ( | ) | ||||||||||
Forfeited | ( | ) | ||||||||||
Expired (1) | — | |||||||||||
Outstanding at December 31, 2019 | $ | $ | ||||||||||
Vested and expected to vest at December 31, 2019 | $ | $ | ||||||||||
Vested and exercisable at December 31, 2019 | $ | $ |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Weighted-average fair value of options granted per share | $ | $ | $ | ||||||||
Cash received from options exercised | |||||||||||
Tax benefit realized on options exercised | |||||||||||
Aggregate intrinsic value of options exercised |
Year Ended December 31, | 2019 | 2018 | 2017 | |||||
Weighted-average expected dividend yield | % | % | % | |||||
Weighted-average expected volatility | % | % | % | |||||
Weighted-average risk-free interest rate | % | % | % | |||||
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 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited (1) | — | |||||
Outstanding at December 31, 2019 | $ |
December 31, | 2019 | 2018 | |||||
Projected benefit obligation at beginning of year | $ | $ | |||||
Benefit cost (1) | |||||||
Actuarial (gain)/loss (2) | |||||||
Projected benefit obligation at end of year (3) | $ | $ |
20. | Taxes on Income |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Current: | |||||||||||
Federal | $ | $ | $ | ||||||||
State | |||||||||||
Total current | |||||||||||
Deferred: | |||||||||||
Federal | |||||||||||
State | ( | ) | |||||||||
Total deferred | |||||||||||
Taxes on income | $ | $ | $ |
December 31, | 2019 | 2018 | |||||
Deferred tax assets: | |||||||
Operating lease liabilities | $ | $ | — | ||||
Employee compensation, severance, and benefits | |||||||
State and local taxes | |||||||
Reserves and allowances | |||||||
Net operating loss carryforwards | |||||||
Net unrealized loss on available for sale securities | |||||||
Facilities lease commitments | |||||||
Other | |||||||
Total deferred tax assets | |||||||
Valuation allowance | ( | ) | ( | ) | |||
Deferred tax assets — net of valuation allowance | |||||||
Deferred tax liabilities: | |||||||
Operating lease ROU assets | ( | ) | — | ||||
Depreciation and amortization | ( | ) | ( | ) | |||
Capitalized internal-use software development costs | ( | ) | ( | ) | |||
Capitalized contract costs | ( | ) | ( | ) | |||
Net unrealized gain on available for sale securities | ( | ) | |||||
Other | ( | ) | |||||
Total deferred tax liabilities | ( | ) | ( | ) | |||
Deferred tax asset/(liability) — net (1) | $ | ( | ) | $ | ( | ) |
Year Ended December 31, | 2019 | 2018 | 2017 | |||||
Federal statutory income tax rate | % | % | % | |||||
State income taxes, net of federal tax benefit | ||||||||
Equity compensation benefit | ( | ) | ( | ) | ( | ) | ||
Other (1) | ( | ) | ||||||
Effective income tax rate | % | % | % |
December 31, | 2019 | 2018 | |||||
Balance at beginning of year | $ | $ | |||||
Additions for tax positions related to the current year | |||||||
Additions for tax positions related to prior years | |||||||
Reductions for tax positions related to prior years | ( | ) | ( | ) | |||
Reductions due to lapse of statute of limitations | ( | ) | |||||
Reductions for settlements with tax authorities | ( | ) | ( | ) | |||
Balance at end of year | $ | $ |
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 | $ | % | N/A | $ | % | |||||||||||||||
Tier 1 Risk-Based Capital | % | N/A | % | |||||||||||||||||
Total Risk-Based Capital | % | N/A | % | |||||||||||||||||
Tier 1 Leverage | % | N/A | % | |||||||||||||||||
Supplementary Leverage Ratio (1) | % | N/A | % | |||||||||||||||||
CSB | ||||||||||||||||||||
Common Equity Tier 1 Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||
Tier 1 Risk-Based Capital | % | % | % | |||||||||||||||||
Total Risk-Based Capital | % | % | % | |||||||||||||||||
Tier 1 Leverage | % | % | % | |||||||||||||||||
Supplementary Leverage Ratio (1) | % | N/A | N/A | % | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||
CSC | ||||||||||||||||||||
Common Equity Tier 1 Risk-Based Capital | $ | % | N/A | $ | % | |||||||||||||||
Tier 1 Risk-Based Capital | % | N/A | % | |||||||||||||||||
Total Risk-Based Capital | % | N/A | % | |||||||||||||||||
Tier 1 Leverage | % | N/A | % | |||||||||||||||||
CSB | ||||||||||||||||||||
Common Equity Tier 1 Risk-Based Capital | $ | % | $ | % | $ | % | ||||||||||||||
Tier 1 Risk-Based Capital | % | % | % | |||||||||||||||||
Total Risk-Based Capital | % | % | % | |||||||||||||||||
Tier 1 Leverage | % | % | % |
December 31, | 2019 | 2018 | |||||
Net capital | $ | $ | |||||
Minimum net capital required | |||||||
2% of aggregate debit balances | |||||||
Net capital in excess of required net capital | $ | $ |
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 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
Asset management and administration fees | |||||||||||||||||||||||||||||||||||
Trading revenue | |||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||
Total net revenues | |||||||||||||||||||||||||||||||||||
Expenses Excluding Interest | |||||||||||||||||||||||||||||||||||
Income before taxes on income | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
Capital expenditures | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ | $ | $ | $ | $ | $ |
23. | The Charles Schwab Corporation – Parent Company Only Financial Statements |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Interest revenue | $ | $ | $ | ||||||||
Interest expense | ( | ) | ( | ) | ( | ) | |||||
Net interest expense | ( | ) | ( | ) | ( | ) | |||||
Other revenue | ( | ) | |||||||||
Expenses Excluding Interest: | |||||||||||
Professional services | ( | ) | ( | ) | ( | ) | |||||
Other expenses excluding interest | ( | ) | ( | ) | ( | ) | |||||
Loss before income tax benefit and equity in net income of subsidiaries | ( | ) | ( | ) | ( | ) | |||||
Income tax benefit/(expense) | ( | ) | |||||||||
Loss before equity in net income of subsidiaries | ( | ) | ( | ) | ( | ) | |||||
Equity in net income of subsidiaries: | |||||||||||
Equity in undistributed net income/(distributions in excess of net income) of subsidiaries | ( | ) | |||||||||
Dividends from bank subsidiaries | |||||||||||
Dividends from non-bank subsidiaries | |||||||||||
Net Income | |||||||||||
Preferred stock dividends and other (1) | |||||||||||
Net Income Available to Common Stockholders | $ | $ | $ |
December 31, | 2019 | 2018 | |||||
Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Receivables from subsidiaries | |||||||
Available for sale securities | |||||||
Held to maturity securities | |||||||
Loans to non-bank subsidiaries | |||||||
Investment in non-bank subsidiaries | |||||||
Investment in bank subsidiaries | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Stockholders’ Equity | |||||||
Accrued expenses and other liabilities | $ | $ | |||||
Payables to subsidiaries | |||||||
Long-term debt | |||||||
Total liabilities | |||||||
Stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | 2019 | 2018 | 2017 | ||||||||
Cash Flows from Operating Activities | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||||||
Dividends in excess of (equity in undistributed) earnings of subsidiaries | ( | ) | ( | ) | |||||||
Other | |||||||||||
Net change in: | |||||||||||
Other assets | ( | ) | ( | ) | |||||||
Accrued expenses and other liabilities | |||||||||||
Net cash provided by (used for) operating activities | |||||||||||
Cash Flows from Investing Activities | |||||||||||
Due from (to) subsidiaries — net | ( | ) | ( | ) | |||||||
Increase in investments in subsidiaries | ( | ) | ( | ) | ( | ) | |||||
Repayments (Advances) of subordinated loan to CS&Co | ( | ) | |||||||||
Purchases of available for sale securities | ( | ) | ( | ) | ( | ) | |||||
Proceeds from sales of available for sale securities | |||||||||||
Principal payments on available for sale securities | |||||||||||
Other investing activities | ( | ) | ( | ) | |||||||
Net cash provided by (used for) investing activities | ( | ) | ( | ) | ( | ) | |||||
Cash Flows from Financing Activities | |||||||||||
Issuance of long-term debt | |||||||||||
Repayment of long-term debt | ( | ) | ( | ) | |||||||
Repurchases of common stock | ( | ) | ( | ) | |||||||
Net proceeds from preferred stock offerings | |||||||||||
Redemption of preferred stock | ( | ) | |||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | |||||
Proceeds from stock options exercised and other | |||||||||||
Net cash provided by (used for) financing activities | ( | ) | |||||||||
Increase (Decrease) in Cash and Cash Equivalents | ( | ) | |||||||||
Cash and Cash Equivalents at Beginning of Year | |||||||||||
Cash and Cash Equivalents at End of Year | $ | $ | $ |
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Year Ended December 31, 2019: | |||||||||||||||
Total net revenues | $ | $ | $ | $ | |||||||||||
Total expenses excluding interest | $ | $ | $ | $ | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||
Weighted-average common shares outstanding — Basic | |||||||||||||||
Weighted-average common shares outstanding — Diluted | |||||||||||||||
Earnings per common share — Basic | $ | $ | $ | $ | |||||||||||
Earnings per common share — Diluted | $ | $ | $ | $ | |||||||||||
Dividends declared per common share | $ | $ | $ | $ | |||||||||||
Year Ended December 31, 2018: | |||||||||||||||
Total net revenues | $ | $ | $ | $ | |||||||||||
Total expenses excluding interest | $ | $ | $ | $ | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||
Weighted-average common shares outstanding — Basic | |||||||||||||||
Weighted-average common shares outstanding — Diluted | |||||||||||||||
Earnings per common share — Basic | $ | $ | $ | $ | |||||||||||
Earnings per common share — Diluted | $ | $ | $ | $ | |||||||||||
Dividends declared per common share | $ | $ | $ | $ |
• | 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 |
December 31, | 2019 | 2018 | 2017 | ||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||
Analysis of average daily deposits: | |||||||||||||||||
Money market and other savings deposits | $ | 197,788 | 0.33 | % | $ | 184,039 | 0.28 | % | $ | 148,679 | 0.09 | % |
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. |
• | 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: |
• | increases in the amount of the authorized common stock or, except as provided below, preferred stock; |
• | increases or decreases in the number of shares of any series of preferred stock ranking equally with or junior to the Preferred Stock; or |
• | 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; |
• | 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 |
• | 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: |
• | 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 |
• | 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. |
Name of Recipient: | <first_name> <last_name> |
Number of Target Restricted Stock Units Granted: | <shares_awarded> |
Grant Date: | <award_date> |
Performance Period(s): | [xxxx to xxxx] |
Vesting Schedule: | So long as you remain in service in good standing and subject to the terms of the Restricted Stock Unit Agreement and certification of the achievement of the Performance Goal by Schwab’s Compensation Committee, this grant vests as follows: |
Number of Target Restricted Stock Units on Vesting Date: <vesting_schedule> |
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”). |
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”). |
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. |
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 |
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. | |
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. |
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. |
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). |
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 |
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. | |
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. |
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. |
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. |
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 |
upon any review. | |
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. |
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. |
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. |
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. |
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. |
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 |
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 |
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. | |
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. |
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. |
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. |
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. |
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 |
inconsistency or conflict between any provision of this Agreement and the Plan, the terms of the Plan will control. |
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. |
Schwab Holdings, Inc. (holding company for Charles Schwab & Co., Inc.), a Delaware corporation |
Charles Schwab & Co., Inc., a California corporation |
Charles Schwab Bank, a federal savings bank |
Charles Schwab Investment Management, Inc., a Delaware corporation |
Charles Schwab Futures, Inc., a Delaware corporation |
Charles Schwab Premier Bank, a federal savings bank |
Charles Schwab Trust Bank, a Nevada-chartered state savings bank |
Registration Statement No. 333-222063 | (Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Purchase Contracts, Warrants, and Units Consisting of Two or More Securities) |
Registration Statement No. 333-205862 | (The Charles Schwab Corporation 2013 Stock Incentive Plan) |
Registration Statement No. 333-192893 | (The Charles Schwab Corporation Financial Consultant Career Achievement Award Program) |
Registration Statement No. 333-189553 | (The Charles Schwab Corporation 2013 Stock Incentive Plan) |
Registration Statement No. 333-175862 | (The Charles Schwab Corporation 2004 Stock Incentive Plan) |
Registration Statement No. 333-144303 | (The Charles Schwab Corporation Employee Stock Purchase Plan) |
Registration Statement No. 333-131502 | (The Charles Schwab Corporation Deferred Compensation Plan II) |
Registration Statement No. 333-101992 | (The Charles Schwab Corporation 2004 Stock Incentive Plan) |
Registration Statement No. 333-71322 | (The SchwabPlan Retirement Savings and Investment Plan) |
Registration Statement No. 333-63448 | (The Charles Schwab Corporation 2004 Stock Incentive Plan) |
Registration Statement No. 333-47107 | (The Charles Schwab Corporation 2004 Stock Incentive Plan) |
Registration Statement No. 333-44793 | (Charles Schwab Profit Sharing and Employee Stock Ownership Plan) |
/s/ Deloitte & Touche LLP |
San Francisco, California |
February 26, 2020 |
1. | I have reviewed this Annual Report on Form 10-K of The Charles Schwab Corporation; |
2. | 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; |
3. | 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; |
4. | 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: |
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; |
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; |
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 |
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): |
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 |
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. |
Date: | February 26, 2020 | /s/ Walter W. Bettinger II | |
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; |
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; |
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 |
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 |
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. |
Date: | February 26, 2020 | /s/ Peter Crawford | |
Peter Crawford | |||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(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. |
/s/ Walter W. Bettinger II | Date: | February 26, 2020 | |
Walter W. Bettinger II | |||
President and Chief Executive Officer |
/s/ Peter Crawford | Date: | February 26, 2020 | |
Peter Crawford | |||
Executive Vice President and Chief Financial Officer |
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Regulatory Requirements (Net Capital and Net Capital Requirements for CS&Co) (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Banking and Thrift [Abstract] | ||
Net capital | $ 3,700,000 | $ 2,304,000 |
Minimum net capital required | 250 | 250 |
2% of Aggregate Debit Balances | 446,000 | 436,000 |
Net capital in excess of required net capital | $ 3,254,000 | $ 1,868,000 |
Fair Values of Assets and Liabilities (Fair Value of Other Financial Instruments) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Assets: | ||
Held to maturity securities | $ 136,099 | $ 142,038 |
U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 110,566 | 116,093 |
Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 17,771 | 18,546 |
Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 4,718 | 4,432 |
U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,404 | 1,348 |
Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,141 | 1,142 |
U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 228 | 217 |
Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 200 | 201 |
Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 50 | 49 |
Reported Value Measurement [Member] | ||
Assets: | ||
Cash and cash equivalents | 21,668 | 19,646 |
Cash and investments segregated and on deposit for regulatory purposes | 11,807 | 8,886 |
Receivables from brokerage clients — net | 21,763 | 21,641 |
Held to maturity securities | 134,706 | 144,009 |
Bank loans, net | 18,212 | 16,609 |
Other assets | 1,014 | 1,013 |
Liabilities: | ||
Bank deposits | 220,094 | 231,423 |
Payables to brokerage clients | 39,220 | 32,726 |
Accrued expenses and other liabilities | 1,882 | 3,201 |
Long-term debt | 7,430 | 6,878 |
Reported Value Measurement [Member] | First Mortgage [Member] | ||
Assets: | ||
Bank loans, net | 11,693 | 10,370 |
Reported Value Measurement [Member] | HELOC's [Member] | ||
Assets: | ||
Bank loans, net | 1,113 | 1,500 |
Reported Value Measurement [Member] | Pledged asset lines [Member] | ||
Assets: | ||
Bank loans, net | 5,206 | 4,561 |
Reported Value Measurement [Member] | Other [Member] | ||
Assets: | ||
Bank loans, net | 200 | 178 |
Reported Value Measurement [Member] | U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 109,325 | 118,064 |
Reported Value Measurement [Member] | Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 17,806 | 18,502 |
Reported Value Measurement [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 4,661 | 4,477 |
Reported Value Measurement [Member] | U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,301 | 1,327 |
Reported Value Measurement [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,119 | 1,156 |
Reported Value Measurement [Member] | U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 223 | 223 |
Reported Value Measurement [Member] | Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 200 | 200 |
Reported Value Measurement [Member] | Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 50 | 50 |
Reported Value Measurement [Member] | Other [Member] | ||
Assets: | ||
Held to maturity securities | 21 | 10 |
Portion at Other than Fair Value Measurement [Member] | ||
Assets: | ||
Cash and cash equivalents | 21,668 | 19,646 |
Cash and investments segregated and on deposit for regulatory purposes | 11,807 | 8,886 |
Receivables from brokerage clients — net | 21,763 | 21,641 |
Held to maturity securities | 136,099 | 142,038 |
Bank loans, net | 18,198 | 16,515 |
Other assets | 1,014 | 1,013 |
Liabilities: | ||
Bank deposits | 220,094 | 231,423 |
Payables to brokerage clients | 39,220 | 32,726 |
Accrued expenses and other liabilities | 1,882 | 3,201 |
Long-term debt | 7,775 | 6,827 |
Portion at Other than Fair Value Measurement [Member] | First Mortgage [Member] | ||
Assets: | ||
Bank loans, net | 11,639 | 10,193 |
Portion at Other than Fair Value Measurement [Member] | HELOC's [Member] | ||
Assets: | ||
Bank loans, net | 1,153 | 1,583 |
Portion at Other than Fair Value Measurement [Member] | Pledged asset lines [Member] | ||
Assets: | ||
Bank loans, net | 5,206 | 4,561 |
Portion at Other than Fair Value Measurement [Member] | Other [Member] | ||
Assets: | ||
Bank loans, net | 200 | 178 |
Portion at Other than Fair Value Measurement [Member] | U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 110,566 | 116,093 |
Portion at Other than Fair Value Measurement [Member] | Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 17,771 | 18,546 |
Portion at Other than Fair Value Measurement [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 4,718 | 4,432 |
Portion at Other than Fair Value Measurement [Member] | U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,404 | 1,348 |
Portion at Other than Fair Value Measurement [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,141 | 1,142 |
Portion at Other than Fair Value Measurement [Member] | U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 228 | 217 |
Portion at Other than Fair Value Measurement [Member] | Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 200 | 201 |
Portion at Other than Fair Value Measurement [Member] | Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 50 | 49 |
Portion at Other than Fair Value Measurement [Member] | Other [Member] | ||
Assets: | ||
Held to maturity securities | 21 | 10 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents | 21,668 | 0 |
Cash and investments segregated and on deposit for regulatory purposes | 2,792 | 0 |
Receivables from brokerage clients — net | 0 | 0 |
Held to maturity securities | 0 | 0 |
Bank loans, net | 0 | 0 |
Other assets | 0 | 0 |
Liabilities: | ||
Bank deposits | 0 | 0 |
Payables to brokerage clients | 0 | 0 |
Accrued expenses and other liabilities | 0 | 0 |
Long-term debt | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | First Mortgage [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | HELOC's [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Pledged asset lines [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Other [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Other [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | ||
Assets: | ||
Cash and cash equivalents | 0 | 19,646 |
Cash and investments segregated and on deposit for regulatory purposes | 9,015 | 8,886 |
Receivables from brokerage clients — net | 21,763 | 21,641 |
Held to maturity securities | 136,099 | 142,038 |
Bank loans, net | 18,198 | 16,515 |
Other assets | 1,014 | 1,013 |
Liabilities: | ||
Bank deposits | 220,094 | 231,423 |
Payables to brokerage clients | 39,220 | 32,726 |
Accrued expenses and other liabilities | 1,882 | 3,201 |
Long-term debt | 7,775 | 6,827 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | First Mortgage [Member] | ||
Assets: | ||
Bank loans, net | 11,639 | 10,193 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | HELOC's [Member] | ||
Assets: | ||
Bank loans, net | 1,153 | 1,583 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Pledged asset lines [Member] | ||
Assets: | ||
Bank loans, net | 5,206 | 4,561 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Other [Member] | ||
Assets: | ||
Bank loans, net | 200 | 178 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 110,566 | 116,093 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 17,771 | 18,546 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 4,718 | 4,432 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,404 | 1,348 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 1,141 | 1,142 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 228 | 217 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 200 | 201 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 50 | 49 |
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Other [Member] | ||
Assets: | ||
Held to maturity securities | 21 | 10 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Cash and investments segregated and on deposit for regulatory purposes | 0 | 0 |
Receivables from brokerage clients — net | 0 | 0 |
Held to maturity securities | 0 | 0 |
Bank loans, net | 0 | 0 |
Other assets | 0 | 0 |
Liabilities: | ||
Bank deposits | 0 | 0 |
Payables to brokerage clients | 0 | 0 |
Accrued expenses and other liabilities | 0 | 0 |
Long-term debt | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | First Mortgage [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | HELOC's [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Pledged asset lines [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Other [Member] | ||
Assets: | ||
Bank loans, net | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. agency mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Asset-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. state and municipal securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. Treasury securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Certificates of deposit [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Foreign government agency securities [Member] | ||
Assets: | ||
Held to maturity securities | 0 | 0 |
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Other [Member] | ||
Assets: | ||
Held to maturity securities | $ 0 | $ 0 |
Accumulated Other Comprehensive Income (Components of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Other comprehensive income (loss) before tax | |||
Net unrealized gain (loss) | $ 430 | $ (123) | $ 13 |
Reclassification of net unrealized loss transferred to held to maturity | 0 | 0 | 227 |
Other reclassifications included in other revenue | (6) | 0 | (12) |
Change in net unrealized gain (loss) on held to maturity securities: | |||
Reclassification of net unrealized loss transferred from available for sale | 0 | 0 | (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 |
Tax effect | |||
Net unrealized gain (loss) | (102) | 30 | (7) |
Reclassification of net unrealized loss on securities transferred to held to maturity | 0 | 0 | (85) |
Other reclassifications included in other revenue | 1 | 0 | 4 |
Change in net unrealized gain (loss) on held to maturity securities: | |||
Reclassification of net unrealized loss on securities transferred from available for sale (1) | 0 | 0 | 85 |
Amortization of amounts previously recorded upon transfer from available for sale | (9) | (8) | (11) |
Other | 4 | 0 | 4 |
Other comprehensive income (loss) | (106) | 22 | (10) |
Net of tax | |||
Net unrealized gain (loss) | 328 | (93) | 6 |
Reclassification of net unrealized loss on securities transferred to held to maturity | 0 | 0 | 142 |
Other reclassifications included in other revenue | (5) | 0 | (8) |
Change in net unrealized gain (loss) on held to maturity securities: | |||
Reclassification of net unrealized loss on securities transferred from available for sale | 0 | 0 | (142) |
Amortization of amounts previously recorded upon transfer from available for sale | 27 | 27 | 20 |
Other | (10) | (1) | (7) |
Other comprehensive income (loss), net of tax | $ 340 | $ (67) | $ 11 |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity CSC did not issue any shares of common stock through external offerings during 2019, 2018, or 2017. On January 30, 2019, CSC publicly announced that its Board of Directors authorized a new Share Repurchase Program to repurchase up to $4.0 billion of common stock. The share repurchase authorization does not have an expiration date. During 2019, CSC repurchased 55 million shares of its common stock under this authorization for $2.2 billion. On October 25, 2018, CSC publicly announced that its Board of Directors terminated the previous two share repurchase authorizations and replaced them with an authorization to repurchase up to $1.0 billion of common stock. CSC repurchased 22 million shares for $1.0 billion in 2018, completing all repurchases under this authorization. CSC was authorized to issue 9,940,000 shares of preferred stock, $0.01 par value, at December 31, 2019 and 2018. The following is a summary of CSC’s non-cumulative perpetual preferred stock outstanding as of such dates:
(1) Represented by depositary shares, except for Series A. N/A Not applicable. Dividends declared on the Company’s preferred stock are as follows:
(1) On December 1, 2017, CSC redeemed all of the outstanding shares of its 6.00% Non-Cumulative Perpetual Preferred Stock, Series B at their stated redemption value. (2) Series F Preferred Stock was issued on October 31, 2017. Dividends are paid semi-annually beginning on June 1, 2018 until December 1, 2027, and quarterly thereafter. N/A Not applicable. Dividends on CSC’s preferred stock are not cumulative and will only be paid on a series of preferred stock for a dividend period if declared by CSC’s Board of Directors. Under the terms of each series of preferred stock, CSC’s ability to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock or any preferred stock ranking on parity with or junior to the series of preferred stock, is subject to restrictions in the event that CSC does not declare and either pay or set aside a sum sufficient for payment of dividends on the series of preferred stock for the immediately preceding dividend period. Dividends on fixed-rate preferred stock are payable quarterly. Dividends on fixed-to-floating-rate preferred stock are payable semi-annually while at a fixed rate, and will become payable quarterly after converting to a floating rate. Redemption Rights Each series of CSC’s preferred stock may be redeemed at CSC’s option on any dividend payment date on or after the earliest redemption date for that series. All outstanding preferred stock series may also be redeemed following a “capital treatment event,” as described in the terms of each series set forth in the relevant certificate of designations. Any redemption of CSC’s preferred stock is subject to approval from the Federal Reserve.
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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Number of Options | ||
Beginning balance (in shares) | 30,000 | |
Granted (in shares) | 2,000 | |
Exercised (in shares) | (5,000) | |
Forfeited (in shares) | (1,000) | |
Expired (in shares), less than | 500 | |
Ending balance (in shares) | 26,000 | 30,000 |
Vested and expected to vest (in shares) | 26,000 | |
Vested and exercisable (in shares) | 18,000 | |
Weighted- Average Exercise Price per Share | ||
Beginning balance (USD per share) | $ 30.19 | |
Granted (USD per share) | 46.25 | |
Exercised (USD per share) | 23.51 | |
Forfeited (USD per share) | 43.12 | |
Expired (USD per share) | 41.42 | |
Ending balance (USD per share) | 32.10 | $ 30.19 |
Vested and expected to vest (USD per share) | 32.08 | |
Vested and exercisable (USD per share) | $ 27.44 | |
Weighted-Average Remaining Contractual Life | ||
Outstanding | 5 years 9 months | 6 years 3 months 7 days |
Vested and expected to vest | 5 years 8 months 26 days | |
Vested and exercisable | 4 years 9 months 7 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 403 | $ 373 |
Vested and expected to vest | 403 | |
Vested and exercisable | $ 371 |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The following table details the amounts and locations of lease assets and liabilities on the consolidated balance sheet:
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company does not have any finance leases and had an immaterial amount of sublease income for all periods presented. The components of lease expense are as follows:
(1) Rent expense related to operating leases was $146 million and $136 million in 2018 and 2017, respectively. (2) Includes short-term leases, which are immaterial. (3) Includes payments that are entirely variable and amounts that represent the difference between payments based on an index or rate that would be reflected in the lease liability and what is actually incurred. The following tables present supplemental lease information as of December 31, 2019:
(1) Operating lease payments exclude $78 million of legally binding minimum lease payments for leases signed but not yet commenced. These leases will commence between 2020 and 2021 with lease terms of one year to 21 years. In accordance with the disclosure requirements for our adoption of ASU 2016-02, the Company is presenting the operating leases commitment table as of December 31, 2018. The following table is unchanged from the disclosure in Note 14 in the 2018 Form 10-K:
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Other Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Assets | The components of other assets are as follows:
(1) Primarily CRA-related, including LIHTC investments; also includes investments in FHLB stock of $35 million and $32 million at December 31, 2019 and 2018, respectively, which can only be sold to the issuer at its par value. Any cash dividends received from investments in FHLB stock are recognized as interest revenue in the consolidated statements of income. (2) Exclusive of indefinite-lived intangible assets of $77 million and $74 million at December 31, 2019 and 2018, respectively, future amortization over the next five years and thereafter is expected to total $51 million. Amortization expense for intangible assets was $27 million in 2019, $29 million in 2018, and $37 million in 2017.
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Leases | The following table details the amounts and locations of lease assets and liabilities on the consolidated balance sheet:
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Schedule of Lease Cost and Lease Term and Discount Rate | The components of lease expense are as follows:
(1) Rent expense related to operating leases was $146 million and $136 million in 2018 and 2017, respectively. (2) Includes short-term leases, which are immaterial. (3) Includes payments that are entirely variable and amounts that represent the difference between payments based on an index or rate that would be reflected in the lease liability and what is actually incurred. The following tables present supplemental lease information as of December 31, 2019:
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Schedule of Maturity of Lease Liabilities |
(1) Operating lease payments exclude $78 million of legally binding minimum lease payments for leases signed but not yet commenced. These leases will commence between 2020 and 2021 with lease terms of one year to 21 years. |
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Schedule of Maturity of Lease Liabilities Before 842 | In accordance with the disclosure requirements for our adoption of ASU 2016-02, the Company is presenting the operating leases commitment table as of December 31, 2018. The following table is unchanged from the disclosure in Note 14 in the 2018 Form 10-K:
|
Commitments and Contingencies (Narrative) (Details) account in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Nov. 20, 2019
USD ($)
|
Jul. 25, 2019
USD ($)
account
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Nov. 25, 2019
USD ($)
account
shares
|
|
Loss Contingencies [Line Items] | |||||
Aggregate face amount of letter of credit agreements | $ 20,000,000 | ||||
Number of brokerage and managed portfolio accounts acquired | account | 1,000,000 | ||||
Client assets acquired | $ 90,000,000,000 | ||||
Payments to acquire businesses | $ 1,800,000,000 | ||||
TD Ameritrade [Member] | |||||
Loss Contingencies [Line Items] | |||||
Number of brokerage and managed portfolio accounts acquired | account | 12,000,000 | ||||
Client assets acquired | $ 1,300,000,000,000 | ||||
Conversion of shares (in shares) | shares | 1.0837 | ||||
Merger consideration | $ 26,000,000,000 | ||||
Termination fee | 950,000,000 | ||||
Reimbursement fee | 50,000,000 | ||||
Margin Requirements [Member] | |||||
Loss Contingencies [Line Items] | |||||
Funds drawn under LOC's | 0 | ||||
First Mortgage [Member] | |||||
Loss Contingencies [Line Items] | |||||
Loans purchased during period | 4,400,000,000 | $ 2,100,000,000 | |||
Home Equity Line of Credit [Member] | |||||
Loss Contingencies [Line Items] | |||||
Loans purchased during period | 242,000,000 | $ 395,000,000 | |||
U.S. Treasury securities [Member] | |||||
Loss Contingencies [Line Items] | |||||
U.S. Treasury securities posted as collateral | $ 167,000,000 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 3,704 | $ 3,507 | $ 2,354 |
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 | 0 | 0 | 227 |
Other reclassifications included in other revenue | (6) | 0 | (12) |
Change in net unrealized gain (loss) on held to maturity securities: | |||
Reclassification of net unrealized loss transferred from available for sale | 0 | 0 | (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 |
Revenue Recognition (Narrative) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Customer contract receivables | $ 356 | $ 307 |
Summary of Significant Accounting Policies (Equipment, Office Facilities, and Property) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2019 | |
Equipment and office facilities [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, property, plant and equipment | 3 years |
Equipment and office facilities [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, property, plant and equipment | 10 years |
Buildings [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, property, plant and equipment | 40 years |
Software [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than | 3 years |
Software [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than | 3 years |
Software [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than | 10 years |
Building improvements and land improvements [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Estimated useful life, property, plant and equipment | 20 years |
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|---|
Reconciliation of cash, cash equivalents and amounts reported within the balance sheet | |||||
Cash and cash equivalents | [1] | $ 29,345 | $ 27,938 | $ 14,217 | |
Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes | [1] | 16,232 | 10,289 | 4,943 | |
Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows | [1] | $ 45,577 | $ 38,227 | $ 19,160 | |
|
Leases (Lease Cost) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Leases [Abstract] | |||
Operating lease cost | $ 137 | ||
Variable lease cost | $ 34 | ||
Rent expense | $ 146 | $ 136 |
Investment Securities (Available For Sale and Held to Maturity Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Available for sale securities | ||
Less than 12 months Fair Value | $ 17,493 | $ 23,503 |
Less than 12 months Unrealized Losses | 100 | 67 |
12 months or longer Fair Value | 8,133 | 12,888 |
12 months or longer Unrealized Losses | 40 | 162 |
Total Fair Value | 25,626 | 36,391 |
Total Unrealized Losses | 140 | 229 |
Held to maturity securities | ||
Less than 12 months Fair Value | 23,690 | 39,327 |
Less than 12 months Unrealized Losses | 163 | 290 |
12 months or longer Fair Value | 21,808 | 58,794 |
12 months or longer Unrealized Losses | 202 | 2,011 |
Total Fair Value | 45,498 | 98,121 |
Total Unrealized Losses | 365 | 2,301 |
Total securities with unrealized losses | ||
Less than 12 months Fair Value | 41,183 | 62,830 |
Less than 12 months Unrealized Losses | 263 | 357 |
12 months or longer Fair Value | 29,941 | 71,682 |
12 months or longer Unrealized Losses | 242 | 2,173 |
Total Fair Value | 71,124 | 134,512 |
Total Unrealized Losses | 505 | 2,530 |
U.S. agency mortgage-backed securities [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 16,023 | 9,529 |
Less than 12 months Unrealized Losses | 94 | 32 |
12 months or longer Fair Value | 6,592 | 4,257 |
12 months or longer Unrealized Losses | 27 | 50 |
Total Fair Value | 22,615 | 13,786 |
Total Unrealized Losses | 121 | 82 |
Held to maturity securities | ||
Less than 12 months Fair Value | 16,183 | 29,263 |
Less than 12 months Unrealized Losses | 100 | 222 |
12 months or longer Fair Value | 18,910 | 56,435 |
12 months or longer Unrealized Losses | 180 | 1,966 |
Total Fair Value | 35,093 | 85,698 |
Total Unrealized Losses | 280 | 2,188 |
Asset-backed securities [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 960 | 4,050 |
Less than 12 months Unrealized Losses | 6 | 9 |
12 months or longer Fair Value | 298 | 837 |
12 months or longer Unrealized Losses | 7 | 6 |
Total Fair Value | 1,258 | 4,887 |
Total Unrealized Losses | 13 | 15 |
Held to maturity securities | ||
Less than 12 months Fair Value | 7,507 | 6,795 |
Less than 12 months Unrealized Losses | 63 | 35 |
12 months or longer Fair Value | 2,898 | 376 |
12 months or longer Unrealized Losses | 22 | 4 |
Total Fair Value | 10,405 | 7,171 |
Total Unrealized Losses | 85 | 39 |
U.S. Treasury securities [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 510 | 4,951 |
Less than 12 months Unrealized Losses | 0 | 6 |
12 months or longer Fair Value | 1,243 | 7,037 |
12 months or longer Unrealized Losses | 6 | 102 |
Total Fair Value | 1,753 | 11,988 |
Total Unrealized Losses | $ 6 | 108 |
Held to maturity securities | ||
Less than 12 months Fair Value | 0 | |
Less than 12 months Unrealized Losses | 0 | |
12 months or longer Fair Value | 218 | |
12 months or longer Unrealized Losses | 6 | |
Total Fair Value | 218 | |
Total Unrealized Losses | 6 | |
Corporate debt securities [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 3,561 | |
Less than 12 months Unrealized Losses | 19 | |
12 months or longer Fair Value | 254 | |
12 months or longer Unrealized Losses | 1 | |
Total Fair Value | 3,815 | |
Total Unrealized Losses | 20 | |
Held to maturity securities | ||
Less than 12 months Fair Value | 2,909 | |
Less than 12 months Unrealized Losses | 29 | |
12 months or longer Fair Value | 1,066 | |
12 months or longer Unrealized Losses | 18 | |
Total Fair Value | 3,975 | |
Total Unrealized Losses | 47 | |
Certificates of deposit [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 1,217 | |
Less than 12 months Unrealized Losses | 1 | |
12 months or longer Fair Value | 150 | |
12 months or longer Unrealized Losses | 0 | |
Total Fair Value | 1,367 | |
Total Unrealized Losses | 1 | |
Non-agency commercial mortgage-backed securities [Member] | ||
Held to maturity securities | ||
Less than 12 months Fair Value | 283 | |
Less than 12 months Unrealized Losses | 2 | |
12 months or longer Fair Value | 632 | |
12 months or longer Unrealized Losses | 15 | |
Total Fair Value | 915 | |
Total Unrealized Losses | 17 | |
U.S. agency notes [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 195 | |
Less than 12 months Unrealized Losses | 0 | |
12 months or longer Fair Value | 304 | |
12 months or longer Unrealized Losses | 2 | |
Total Fair Value | 499 | |
Total Unrealized Losses | 2 | |
U.S. state and municipal securities [Member] | ||
Held to maturity securities | ||
Less than 12 months Fair Value | 77 | |
Less than 12 months Unrealized Losses | 2 | |
12 months or longer Fair Value | 18 | |
12 months or longer Unrealized Losses | 1 | |
Total Fair Value | 95 | |
Total Unrealized Losses | 3 | |
Foreign government agency securities [Member] | ||
Available for sale securities | ||
Less than 12 months Fair Value | 0 | |
Less than 12 months Unrealized Losses | 0 | |
12 months or longer Fair Value | 49 | |
12 months or longer Unrealized Losses | 1 | |
Total Fair Value | 49 | |
Total Unrealized Losses | 1 | |
Held to maturity securities | ||
Less than 12 months Fair Value | 0 | |
Less than 12 months Unrealized Losses | 0 | |
12 months or longer Fair Value | 49 | |
12 months or longer Unrealized Losses | 1 | |
Total Fair Value | 49 | |
Total Unrealized Losses | $ 1 |
Financial Instruments Subject to Off-Balance Sheet Credit Risk (Offsetting Assets and Liabilities) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Resale agreements | ||
Gross Assets | $ 9,028 | $ 7,195 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheets | 9,028 | 7,195 |
Counterparty Offsetting | 0 | 0 |
Collateral | (9,028) | (7,195) |
Net Amount | 0 | 0 |
Securities borrowed | ||
Gross Assets | 735 | 101 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheets | 735 | 101 |
Counterparty Offsetting | (730) | (98) |
Collateral | (5) | (3) |
Net Amount | 0 | 0 |
Total Gross Assets | 9,763 | 7,296 |
Total Assets, Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 0 | 0 |
Total Assets, Net Amounts Presented in the Condensed Consolidated Balance Sheets | 9,763 | 7,296 |
Total Assets, Gross Amounts Not Offset in the Consolidated Balance Sheet, Counterparty Offsetting | (730) | (98) |
Total Assets, Gross Amounts Not Offset in the Consolidated Balance Sheet, Collateral | (9,033) | (7,198) |
Total Assets, Net Amount | 0 | 0 |
Securities loaned | ||
Gross Liabilities | 1,251 | 1,184 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheets | 1,251 | 1,184 |
Counterparty Offsetting | (730) | (98) |
Collateral | (445) | (975) |
Net Amount | 76 | 111 |
Total Gross Liabilities | 1,251 | 1,184 |
Total Liabilities, Net Amounts Presented in the Consolidated Balance Sheet | 1,251 | 1,184 |
Total Liabilities, Gross Amounts Not Offset in the Consolidated Balance Sheet, Counterparty Offsetting | (730) | (98) |
Total Liabilities, Gross Amounts Not Offset in the Consolidated Balance Sheet, Collateral | (445) | (975) |
Total Liabilities, Net Amount | 76 | 111 |
Offsetting Assets [Line Items] | ||
Fair value of client securities available to be pledged | $ 26,685 | $ 26,628 |
Resale And Repurchase Agreements [Member] | ||
Offsetting Assets [Line Items] | ||
Percentage of collateral to related assets | 102.00% | 102.00% |
Fair value of client securities available to be pledged | $ 9,200 | $ 7,400 |
Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information for Reportable Segments | Financial information for the segments is presented in the following table:
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Accumulated Other Comprehensive Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Comprehensive Income (Loss) | AOCI represents cumulative gains and losses that are not reflected in earnings. The components of other comprehensive income (loss) are as follows:
(1) During 2017, the Company transferred investment securities from the AFS category to the HTM category that had a total net unrealized loss of $227 million before income tax in AOCI on the date of the transfer. |
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Accumulated Other Comprehensive Income Balances | AOCI balances are as follows:
(1) As part of the adoption of ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02), we elected to reclassify the income tax effects of the Tax Cuts and Jobs Act from items in AOCI into retained earnings as of January 1, 2018. (2) As part of the adoption of ASU 2017-12, in the first quarter of 2019, the Company made a one-time election to transfer a portion of its HTM securities to AFS. The transfer resulted in a net of tax increase to AOCI of $19 million. See Notes 2 and 5 for additional discussion on the transfer of HTM securities to AFS.
|
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 167,000,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 200,000,000 |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (33,000,000) |
Leases (Leases) (Details) $ in Millions |
Dec. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating lease ROU assets | $ 577 |
Operating lease liabilities | $ 650 |
Goodwill (Changes in Carrying Amount of Goodwill as Allocated to Reportable Segments) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 1,227 | $ 1,227 |
Goodwill acquired and other changes during the period | 0 | 0 |
Ending balance | 1,227 | 1,227 |
Investor Services [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 1,096 | 1,096 |
Goodwill acquired and other changes during the period | 0 | 0 |
Ending balance | 1,096 | 1,096 |
Advisor Services [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 131 | 131 |
Goodwill acquired and other changes during the period | 0 | 0 |
Ending balance | $ 131 | $ 131 |
Other Assets (Components of Other Assets) (Details) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2025 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jan. 01, 2019 |
|
Debt Instrument [Line Items] | |||||
Receivables — interest, dividends, and other | $ 788 | $ 689 | |||
Securities borrowed | 735 | 101 | |||
Other securities owned at fair value | 718 | 539 | |||
Other investments | 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 | $ 3,726 | ||
Accumulated Amortization | 326 | 299 | |||
Indefinite-lived intangible assets | 77 | 74 | |||
Intangible asset, amortization expense | 27 | 29 | $ 37 | ||
Forecast [Member] | |||||
Debt Instrument [Line Items] | |||||
Intangible asset, amortization expense | $ 51 | ||||
Federal Home Loan Bank Advances [Member] | |||||
Debt Instrument [Line Items] | |||||
FHLB stock | $ 35 | $ 32 |
Bank Loans and Related Allowance for Loan Losses (Composition of Bank Loans and Delinquency Analysis by Loan Segment) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Financing Receivable, Past Due [Line Items] | ||||
Current | $ 18,173,000,000 | $ 16,580,000,000 | ||
Past due and other nonaccrual loans | 57,000,000 | 50,000,000 | ||
Total loans | 18,230,000,000 | 16,630,000,000 | ||
Allowance for loan losses | 18,000,000 | 21,000,000 | $ 26,000,000 | $ 26,000,000 |
Total bank loans – net | 18,212,000,000 | 16,609,000,000 | ||
Loans accruing interest contractually 90 days or more past due | 0 | 0 | ||
30-59 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 30,000,000 | 27,000,000 | ||
60-89 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 5,000,000 | 3,000,000 | ||
>90 Days Past Due And Other Nonaccrual Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 22,000,000 | 20,000,000 | ||
First Mortgage [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Current | 11,665,000,000 | 10,349,000,000 | ||
Past due and other nonaccrual loans | 39,000,000 | 35,000,000 | ||
Total loans | 11,704,000,000 | 10,384,000,000 | ||
Allowance for loan losses | 11,000,000 | 14,000,000 | 16,000,000 | 17,000,000 |
Total bank loans – net | 11,693,000,000 | 10,370,000,000 | ||
First Mortgage [Member] | 30-59 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 24,000,000 | 21,000,000 | ||
First Mortgage [Member] | 60-89 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 4,000,000 | 2,000,000 | ||
First Mortgage [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 11,000,000 | 12,000,000 | ||
HELOC's [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Current | 1,105,000,000 | 1,493,000,000 | ||
Past due and other nonaccrual loans | 12,000,000 | 12,000,000 | ||
Total loans | 1,117,000,000 | 1,505,000,000 | ||
Allowance for loan losses | 4,000,000 | 5,000,000 | 8,000,000 | 8,000,000 |
Total bank loans – net | 1,113,000,000 | 1,500,000,000 | ||
HELOC's [Member] | 30-59 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 2,000,000 | 3,000,000 | ||
HELOC's [Member] | 60-89 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 1,000,000 | 1,000,000 | ||
HELOC's [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 9,000,000 | 8,000,000 | ||
Pledged asset lines [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Current | 5,202,000,000 | 4,558,000,000 | ||
Past due and other nonaccrual loans | 4,000,000 | 3,000,000 | ||
Total loans | 5,206,000,000 | 4,561,000,000 | ||
Allowance for loan losses | 0 | 0 | ||
Total bank loans – net | 5,206,000,000 | 4,561,000,000 | ||
Pledged asset lines [Member] | 30-59 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 4,000,000 | 3,000,000 | ||
Pledged asset lines [Member] | 60-89 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 0 | 0 | ||
Pledged asset lines [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 0 | 0 | ||
Other [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Current | 201,000,000 | 180,000,000 | ||
Past due and other nonaccrual loans | 2,000,000 | 0 | ||
Total loans | 203,000,000 | 180,000,000 | ||
Allowance for loan losses | 3,000,000 | 2,000,000 | $ 2,000,000 | $ 1,000,000 |
Total bank loans – net | 200,000,000 | 178,000,000 | ||
Other [Member] | 30-59 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 0 | 0 | ||
Other [Member] | 60-89 Days Past Due [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 0 | 0 | ||
Other [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Past due and other nonaccrual loans | 2,000,000 | 0 | ||
First Mortgage And Home Equity [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Unamortized premiums and discounts and direct origination costs | $ 74,000,000 | $ 73,000,000 | ||
First Mortgage And Home Equity [Member] | California [Member] | Loans Geographic Area [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Concentration risk percentage | 45.00% | 47.00% |
Bank Loans and Related Allowance for Loan Losses (Credit Quality Indicators of Bank Loan Portfolio) (Details) $ in Millions |
Dec. 31, 2019
USD ($)
credit_rating
|
Dec. 31, 2018
USD ($)
credit_rating
|
---|---|---|
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 18,230 | $ 16,630 |
First Mortgage [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 11,704 | $ 10,384 |
Weighted Average Updated FICO | credit_rating | 775 | 775 |
Percent of Loans that are on Nonaccrual Status | 0.09% | 0.07% |
First Mortgage [Member] | Origination FICO Score Below 620 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 3 | $ 5 |
First Mortgage [Member] | Origination FICO Score 620 Through 679 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 77 | 83 |
First Mortgage [Member] | Origination FICO Score 680 Through 739 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 1,713 | 1,626 |
First Mortgage [Member] | Origination FICO Score 740 And Above [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 9,911 | 8,670 |
First Mortgage [Member] | Year of origination Pre 2015 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 1,585 | 2,387 |
First Mortgage [Member] | Year of origination 2015 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 773 | 1,050 |
First Mortgage [Member] | Year of origination 2016 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 2,149 | 2,606 |
First Mortgage [Member] | Year of origination 2017 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 1,911 | 2,366 |
First Mortgage [Member] | Year of origination 2018 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 1,284 | 1,975 |
First Mortgage [Member] | Year of origination 2019 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 4,002 | |
First Mortgage [Member] | Estimated Current LTV 70% And Below [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 10,382 | $ 9,396 |
Weighted Average Updated FICO | credit_rating | 775 | 776 |
Percent of Loans that are on Nonaccrual Status | 0.08% | 0.04% |
First Mortgage [Member] | Estimated Current LTV Greater Than 70% through 90% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 1,320 | $ 985 |
Weighted Average Updated FICO | credit_rating | 770 | 769 |
Percent of Loans that are on Nonaccrual Status | 0.22% | 0.41% |
First Mortgage [Member] | Estimated Current LTV Greater Than 90% through 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 2 | $ 2 |
Weighted Average Updated FICO | credit_rating | 715 | 717 |
Percent of Loans that are on Nonaccrual Status | 0.04% | 0.00% |
First Mortgage [Member] | Estimated Current LTV Greater Than 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 0 | $ 1 |
Weighted Average Updated FICO | credit_rating | 0 | 753 |
Percent of Loans that are on Nonaccrual Status | 0.00% | 0.00% |
First Mortgage [Member] | Origination Loan To Value Ratio 70% And Below [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 8,928 | $ 7,815 |
First Mortgage [Member] | Origination Loan to Value Ratio Greater Than 70% Through 90% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 2,773 | 2,564 |
First Mortgage [Member] | Origination Loan to Value Ratio Greater Than 90% Through 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 3 | 5 |
HELOC's [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 1,117 | $ 1,505 |
Weighted Average Updated FICO | credit_rating | 766 | 769 |
Percent of Loans that are on Nonaccrual Status | 0.83% | 0.17% |
HELOC's [Member] | Origination FICO Score Below 620 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 0 | $ 0 |
HELOC's [Member] | Origination FICO Score 620 Through 679 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 5 | 8 |
HELOC's [Member] | Origination FICO Score 680 Through 739 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 219 | 282 |
HELOC's [Member] | Origination FICO Score 740 And Above [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 893 | 1,215 |
HELOC's [Member] | Year of origination Pre 2015 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 788 | 1,140 |
HELOC's [Member] | Year of origination 2015 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 77 | 106 |
HELOC's [Member] | Year of origination 2016 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 72 | 95 |
HELOC's [Member] | Year of origination 2017 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 81 | 99 |
HELOC's [Member] | Year of origination 2018 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 64 | 65 |
HELOC's [Member] | Year of origination 2019 [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 35 | |
HELOC's [Member] | Estimated Current LTV 70% And Below [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 1,056 | $ 1,416 |
Weighted Average Updated FICO | credit_rating | 767 | 770 |
Percent of Loans that are on Nonaccrual Status | 0.81% | 0.13% |
HELOC's [Member] | Estimated Current LTV Greater Than 70% through 90% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 56 | $ 80 |
Weighted Average Updated FICO | credit_rating | 750 | 752 |
Percent of Loans that are on Nonaccrual Status | 0.80% | 0.60% |
HELOC's [Member] | Estimated Current LTV Greater Than 90% through 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 3 | $ 6 |
Weighted Average Updated FICO | credit_rating | 701 | 729 |
Percent of Loans that are on Nonaccrual Status | 3.28% | 3.36% |
HELOC's [Member] | Estimated Current LTV Greater Than 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 2 | $ 3 |
Weighted Average Updated FICO | credit_rating | 675 | 702 |
Percent of Loans that are on Nonaccrual Status | 9.71% | 0.00% |
HELOC's [Member] | Origination Loan To Value Ratio 70% And Below [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 798 | $ 1,064 |
HELOC's [Member] | Origination Loan to Value Ratio Greater Than 70% Through 90% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 314 | 434 |
HELOC's [Member] | Origination Loan to Value Ratio Greater Than 90% Through 100% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 5 | 7 |
Pledged asset lines [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | 5,206 | 4,561 |
Pledged asset lines [Member] | Weighted Average Loan to Value Ratio =70% [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Balance | $ 5,206 | $ 4,561 |
Weighted Average Updated FICO | credit_rating | 766 | 766 |
Percent of Loans that are on Nonaccrual Status | 0.00% | 0.00% |
Bank Deposits (Deposits from Banking Clients Consisting of Interest Bearing and Noninterest Bearing Deposits) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 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 |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities are as follows:
(1) As of December 31, 2019 and 2018, approximately 32% and 26%, respectively, of the total AFS and HTM investments in corporate debt securities and commercial paper were issued by institutions in the financial services industry. (2) Approximately 43% and 36% of asset-backed securities held as of December 31, 2019 and 2018, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 42% of the asset-backed securities held as of both December 31, 2019 and 2018. (3) Included in cash and cash equivalents on the consolidated balance sheets, but excluded from this table is $2.5 billion and $4.9 billion of AFS commercial paper as of December 31, 2019 and 2018, respectively. These holdings have maturities of three months or less and an aggregate market value equal to amortized cost. On January 1, 2019 the Company transferred certain U.S. agency mortgage-backed securities with a fair value of $8.8 billion from the HTM category to the AFS category as permitted by ASU 2017-12. For additional information see Notes 2 and 18. At December 31, 2019, our banking subsidiaries had pledged securities with a fair value of $25.9 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 12). Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $8.5 billion as collateral for this facility at December 31, 2019. CSB also pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $913 million at December 31, 2019. See Note 25 for discussion of the transfer of all investment securities designated as HTM to the AFS category made on January 1, 2020. Securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:
At December 31, 2019, substantially all rated securities in the investment portfolios were investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises. Management evaluates whether investment securities are OTTI on a quarterly basis as described in Note 2. No amounts were recognized as OTTI in earnings or other comprehensive income during the years ended December 31, 2019, 2018, and 2017. As of December 31, 2019 and 2018, Schwab did not hold any securities on which OTTI was previously recognized. In the table below, mortgage-backed securities and other asset-backed securities have been allocated to maturity groupings based on final contractual maturities. As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below. The maturities of AFS and HTM securities are as follows:
(1) The weighted-average yield is computed using the amortized cost at December 31, 2019. Proceeds and gross realized gains and losses from sales of AFS securities are as follows:
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Introduction and Basis of Presentation |
12 Months Ended | ||||||||||||
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Dec. 31, 2019 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Introduction and Basis of Presentation | Introduction and Basis of Presentation The Charles Schwab Corporation (CSC) is a savings and loan holding company, headquartered in San Francisco, California. CSC was incorporated in 1986 and engages, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Principal business subsidiaries of CSC include the following:
Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries. The accompanying consolidated financial statements include CSC and its subsidiaries. Intercompany balances and transactions have been eliminated. These consolidated financial statements have been prepared in conformity with GAAP, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from those estimates. Certain estimates relate to taxes on income and legal and regulatory reserves. Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation. Amounts presented in the consolidated balance sheets in prior periods in the line items Receivables from brokers, dealers, and clearing organizations and Other securities owned are now presented as part of Other assets. Amounts presented in prior periods as Payables to brokers, dealers, and clearing organizations are now presented as part of Accrued expenses and other liabilities on the consolidated balance sheets. Corresponding presentation changes have been made to the consolidated statements of cash flows and related notes. Principles of Consolidation Schwab evaluates all entities in which it has financial interests for consolidation, except for money market funds, which are specifically excluded from consolidation guidance. When an entity is evaluated for consolidation, Schwab determines whether its interest in the entity constitutes a controlling financial interest under either the variable interest entity (VIE) model or the voting interest entity (VOE) model. In evaluating whether Schwab’s interest in a VIE is a controlling financial interest, we consider whether our involvement in the context of the design, purpose, and risks of the VIE, as well as any involvement of related parties, provides us with (i) the power to direct the most significant activities of the VIE, and (ii) the obligation to absorb losses or receive benefits that are significant to the VIE. If both of these conditions exist, then Schwab would be the primary beneficiary of that VIE, and consolidate it. Based upon the assessments for all of our interests in VIEs, there are no cases where the Company is the primary beneficiary; therefore, we are not required to consolidate any VIEs. See Note 10 for further information about VIEs. Schwab consolidates all VOEs in which it has majority-voting interests. Investments in entities in which Schwab does not have a controlling financial interest are accounted for under the equity method of accounting when we have the ability to exercise significant influence over operating and financing decisions of the entity. Investments in entities for which Schwab does not have the ability to exercise significant influence are generally carried at cost and adjusted for impairment and observable price changes of the identical or similar investments of the same issuer (adjusted cost method), except for certain investments in qualified affordable housing projects which are accounted for under the proportional amortization method. All equity method, adjusted cost method, and proportional amortization method investments are included in other assets on the consolidated balance sheets.
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Other Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets The components of other assets are as follows:
(1) Primarily CRA-related, including LIHTC investments; also includes investments in FHLB stock of $35 million and $32 million at December 31, 2019 and 2018, respectively, which can only be sold to the issuer at its par value. Any cash dividends received from investments in FHLB stock are recognized as interest revenue in the consolidated statements of income. (2) Exclusive of indefinite-lived intangible assets of $77 million and $74 million at December 31, 2019 and 2018, respectively, future amortization over the next five years and thereafter is expected to total $51 million. Amortization expense for intangible assets was $27 million in 2019, $29 million in 2018, and $37 million in 2017. Capitalized contract costs Capitalized contract costs relate to sales commissions paid to employees for obtaining contracts with clients and are included in other assets on the consolidated balance sheets. These costs are amortized to expense on a straight-line basis over a period that is consistent with how the related revenue is recognized. Capitalized contract costs were $281 million and $250 million at December 31, 2019 and 2018, respectively. Amortization expense related to capitalized contract costs was $55 million and $47 million in 2019 and 2018, respectively, which was recorded in compensation and benefits expense on the consolidated statements of income.
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Taxes on Income (Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate) (Details) |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 21.00% | 21.00% | 35.00% |
State income taxes, net of federal tax benefit | 3.20% | 3.00% | 2.20% |
Equity compensation benefit | (0.50%) | (1.00%) | (2.40%) |
Other | (0.10%) | 0.10% | 0.70% |
Effective income tax rate | 23.60% | 23.10% | 35.50% |
Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited)
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Revenue Recognition (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Schwab's Revenue | Disaggregation of Schwab’s revenue by major source is as follows:
(1) Beginning in the first quarter of 2019, a change was made to move CTFs from other asset management and administration fees. Prior periods have been recast to reflect this change.
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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Schedule of Changes in Projected Benefit Obligations) (Details) - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Defined Benefit Plan, Change in Benefit Obligation | ||
Projected benefit obligation at beginning of year | $ 56 | $ 44 |
Benefit cost | 13 | 11 |
Actuarial (gain)/loss | 14 | 1 |
Projected benefit obligation at the end of year | $ 83 | $ 56 |
Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Information on Stock Options Granted and Exercised) (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Retirement Benefits [Abstract] | |||
Weighted-average fair value of options granted per share (USD 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 |
The Charles Schwab Corporation - Parent Company Only Financial Statements (Tables) |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Statements of Income | Condensed Statements of Income
(1) Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units. |
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Condensed Balance Sheets | Condensed Balance Sheets
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Condensed Statements of Cash Flows | Condensed Statements of Cash Flows
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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Tables) |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense and Related Income Tax Benefit | A summary of share-based compensation expense and related income tax benefit is as follows:
(1) Restricted stock unit expense in 2018 includes $36 million related to special stock awards issued to non-officer employees. (2) Excludes income tax benefits from stock options exercised and restricted stock units vested of $23 million, $46 million, and $87 million in 2019, 2018, and 2017, respectively. |
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Stock Option Activity | Stock option activity is summarized below:
(1) Number of options were less than 500 thousand. |
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Information on Stock Options Granted and Exercised | Information on stock options granted and exercised is presented below:
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Assumptions Used to Value Options Granted and Their Expected Lives | The assumptions used to value the options granted during the years presented and their expected lives were as follows:
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Restricted Stock Units Activity | The Company’s restricted stock units activity is summarized below:
(1) Number of units were less than 500 thousand. |
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Schedule of Changes in Projected Benefit Obligations | The following table presents the changes in projected benefit obligation:
(1) Includes service cost and interest cost, which are recognized in compensation and benefits expense and other expense, respectively, in the consolidated statements of income. (2) Actuarial (gain)/loss is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets. (3) This amount is recognized as a liability on the consolidated balance sheets and also depicts the accumulated benefit obligation.
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Goodwill (Narrative) (Details) - USD ($) |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Investment Securities (Proceeds and Gross Realized Gains And Losses from Sales of Securities Available for Sale) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Investments, Debt and Equity Securities [Abstract] | |||
Proceeds | $ 24,495 | $ 115 | $ 8,617 |
Gross realized gains | 16 | 0 | 12 |
Gross realized losses | $ 10 | $ 0 | $ 0 |
Bank Loans and Related Allowance for Loan Losses (Impaired Assets) (Details) - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Troubled debt restructurings | $ 2 | $ 4 |
Impaired bank loan related assets | 25 | 28 |
Nonperforming Financial Instruments [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total nonperforming assets | 23 | 24 |
Nonperforming Financial Instruments [Member] | Nonaccrual Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total nonperforming assets | 22 | 21 |
Nonperforming Financial Instruments [Member] | Other Real Estate Owned [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total nonperforming assets | $ 1 | $ 3 |
Variable Interest Entities (Aggregate Assets, Liabilities and Maximum Exposure to Loss) (Details) - Variable Interest Entity, Not Primary Beneficiary [Member] - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Variable Interest Entity [Line Items] | ||
Aggregate assets | $ 636 | $ 408 |
Aggregate liabilities | 275 | 188 |
Maximum exposure to loss | 670 | 462 |
LIHTC Investments [Member] | ||
Variable Interest Entity [Line Items] | ||
Aggregate assets | 516 | 338 |
Aggregate liabilities | 275 | 188 |
Maximum exposure to loss | 516 | 338 |
Other CRA Investments [Member] | ||
Variable Interest Entity [Line Items] | ||
Aggregate assets | 120 | 70 |
Aggregate liabilities | 0 | 0 |
Maximum exposure to loss | $ 154 | $ 124 |
Borrowings (Narrative) (Details) - Federal Home Loan Bank Advances [Member] - USD ($) |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | $ 8,500,000,000 | $ 7,900,000,000 |
Borrowings on line of credit | 0 | 0 |
Secured Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | 34,200,000,000 | 35,500,000,000 |
Borrowings on line of credit | $ 0 | $ 0 |
Equipment, Office Facilities, and Property (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense for equipment, office facilities, and property | $ 322 | $ 277 | $ 232 |
Variable Interest Entities |
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Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities As of December 31, 2019 and 2018, all of Schwab’s involvement with VIEs is through CSB’s CRA-related investments and most of those are related to LIHTC investments. As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties and receives tax credits and other tax benefits for these investments. During 2019 and 2018, CSB recorded amortization of $39 million and $32 million, respectively, and recognized tax credits and other tax benefits of $47 million and $36 million, respectively, associated with these investments. The amortization, as well as the tax credits and other tax benefits, are included in taxes on income. Aggregate assets, liabilities and maximum exposure to loss The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:
(1) Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets. (2) Other CRA investments are recorded using either the adjusted cost method, equity method, or as HTM securities. Aggregate assets are included in HTM securities, bank loans – net, or other assets on the consolidated balance sheets. Schwab’s maximum exposure to loss would result from the loss of the investments, including any committed amounts. CSB’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and CSB expects to pay substantially all of these commitments between 2020 and 2023. During the years ended December 31, 2019 and 2018, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide.
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Bank Loans and Related Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Loans and Related Allowance for Loan Losses | Bank Loans and Related Allowance for Loan Losses The composition of bank loans and delinquency analysis by loan type is as follows:
(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $74 million and $73 million at December 31, 2019 and 2018, respectively. (2) At December 31, 2019 and 2018, 45% and 47%, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole. (3) There were no loans accruing interest that were contractually 90 days or more past due at December 31, 2019 or 2018. At December 31, 2019, CSB had pledged $10.5 billion of First Mortgages and HELOCs as collateral to secure borrowing capacity on a secured credit facility with the FHLB (see Note 12). Substantially all of the bank loans were collectively evaluated for impairment at both December 31, 2019 and 2018. Changes in the allowance for loan losses were as follows:
(1)All PALs were fully collateralized by securities with fair values in excess of borrowings at December 31, 2019, 2018, and 2017. A summary of impaired bank loan-related assets is as follows:
(1) Nonaccrual loans include nonaccrual troubled debt restructurings. (2) Included in other assets on the consolidated balance sheets. Credit Quality In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following:
Borrowers’ FICO scores are provided by an independent third-party credit reporting service and updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index. The credit quality indicators of the Company’s bank loan portfolio are detailed below:
(1) Represents the LTV for the full line of credit (drawn and undrawn).
At December 31, 2019, First Mortgage loans of $10.5 billion had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter. Approximately 26% of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 68% of the balance of these interest-only loans are not scheduled to reset for three or more years. Schwab’s mortgage loans do not include interest terms described as temporary introductory rates below current market rates. The HELOC product has a 30-year loan term with an initial draw period of ten years from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a 20-year amortizing loan. The interest rate during the initial draw period and the 20-year amortizing period is a floating rate based on the prime rate plus a margin. The following table presents when current outstanding HELOCs will convert to amortizing loans:
At December 31, 2019, $905 million of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At December 31, 2019, the borrowers on approximately 52% of HELOC loan balances outstanding only paid the minimum amount due.
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Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Revenue recognition Net interest revenue Net interest revenue is not within the scope of ASC 606, Revenue From Contracts With Customers (ASC 606), because it is generated from financial instruments covered by various other areas of GAAP. Net interest revenue is the difference between interest generated on interest earning assets and interest paid on funding sources. Our primary interest earning assets include cash and cash equivalents; segregated cash and investments; margin loans; investment securities; and bank loans. Fees earned and incurred on securities borrowing and lending activities, which are conducted by CS&Co on assets held in client brokerage accounts, are also included in interest revenue and expense. Unsatisfied performance obligations We do not have any unsatisfied performance obligations other than those that are subject to an elective practical expedient under ASC 606. The practical expedient applies to and is elected for contracts where we recognize revenue at the amount to which we have the right to invoice for services performed. Asset management and administration fees The majority of asset management and administration fees are generated through our proprietary and third-party mutual fund and ETF offerings, as well as fee-based advisory solutions. Mutual fund and ETF service fees are charged for investment management, shareholder, and administration services provided to Schwab Funds® and Schwab ETFs™, as well as recordkeeping, shareholder, and administration services provided to third-party funds. Advice solutions fees are charged for brokerage and asset management services provided to advice solutions clients. Both mutual fund and ETF service fees and advice solutions fees are earned and recognized over time. Fees are generally based on a percentage of the daily value of assets under management and are collected on a monthly or quarterly basis. Trading revenue Substantially all trading revenue is generated through commissions earned for executing trades for clients in individual equities, options, fixed income securities, and certain third-party mutual funds and ETFs. This revenue is earned when the trades are executed and collected when the trades are settled. Effective October 7, 2019, CS&Co eliminated online trading commissions for U.S. and Canadian-listed stocks and ETFs, as well as the base charge on options. Other revenue Other revenue includes order flow revenue, other service fees, software fees from our portfolio management solutions, exchange processing fees, and nonrecurring gains. Generally, the most significant portion of other revenue is order flow revenue, which is comprised of rebate payments received from execution venues to which CS&Co sends equity and option orders. Order flow revenue is recognized when the trades are executed and is collected on a monthly or quarterly basis. Cash and cash equivalents Schwab considers all highly liquid investments that mature in three months or less from the time of acquisition and that are not segregated and on deposit for regulatory purposes to be cash and cash equivalents. Cash and cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury securities. Cash and cash equivalents also include balances that our banking subsidiaries maintain at the Federal Reserve. Cash and investments segregated and on deposit for regulatory purposes Pursuant to the SEC’s Customer Protection Rule and other applicable regulations, Schwab maintains cash or qualified securities in segregated reserve accounts for the exclusive benefit of clients. Cash and investments segregated and on deposit for regulatory purposes include resale agreements, which are collateralized by U.S. Government and agency securities. Resale agreements are accounted for as collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The Company obtains collateral with a market value equal to or in excess of the principal amount loaned and accrued interest under resale agreements. Collateral is valued daily by the Company, with additional collateral obtained to ensure full collateralization. Cash and investments segregated also include certificates of deposit and U.S. Government securities. Certificates of deposit and U.S. Government securities are recorded at fair value. Receivables from brokerage clients Receivables from brokerage clients include margin loans to securities brokerage clients and other trading receivables from clients. Margin loans are collateralized by client securities and are carried at the amount receivable, net of an allowance for doubtful accounts. The Company monitors margin levels and requires clients to deposit additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. Receivables from brokerage clients that remain unsecured or partially secured for more than 30 days are fully reserved for in the allowance for doubtful accounts, except in the case of confirmed fraud, which is reserved immediately. The Company’s policy is to charge off any delinquent margin loans no later than at 90 days past due. Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in accordance with federal regulations. The collateral is not reflected in the consolidated financial statements. The allowance for doubtful accounts for brokerage clients and related activity was immaterial for all periods presented. Other securities owned at fair value Other securities owned are included in other assets on the consolidated balance sheets and recorded at fair value based on quoted market prices or other observable market data. Unrealized gains and losses are included in earnings. Investment securities AFS securities are recorded at fair value and unrealized gains and losses are reported, net of taxes, in AOCI included in stockholders’ equity. HTM securities are recorded at amortized cost based on the Company’s positive intent and ability to hold these securities to maturity. Realized gains and losses from sales of AFS securities are determined on a specific identification basis and are included in other revenue. Management evaluates whether investment securities are other-than-temporarily impaired (OTTI) on a quarterly basis. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell such security before any anticipated recovery. If management determines that a security is OTTI under these circumstances, the impairment recognized in earnings is measured as the entire difference between amortized cost and fair value. A security is also OTTI if management does not expect to recover all of the amortized cost of the security. In this circumstance, the impairment recognized in earnings represents the estimated credit loss, and is measured by the difference between the present value of expected cash flows and the amortized cost of the security. Where appropriate, models are utilized to estimate the credit loss on a discounted cash flow basis using the security’s effective interest rate. The evaluation of whether we expect to recover the amortized cost of a security is inherently judgmental. The evaluation considers multiple factors including: the magnitude and duration of the unrealized loss; the financial condition of the issuer; the payment structure of the security; external credit ratings; our internal credit ratings; for asset-backed securities, the amount of credit support provided by the structure of the security to absorb credit losses on the underlying collateral; recent events specific to the issuer and the issuer’s industry; and whether all scheduled principal and interest payments have been received. Securities borrowed and securities loaned Securities borrowed transactions require Schwab to deliver cash to the lender in exchange for securities; the receivables from these transactions are included in other assets on the consolidated balance sheets. For securities loaned, Schwab receives collateral in the form of cash in an amount equal to or greater than the market value of securities loaned; the payables from these transactions are included in accrued expenses and other liabilities on the consolidated balance sheets. The market value of securities borrowed and loaned are monitored, with additional collateral obtained or refunded to ensure full collateralization. Fees received or paid are recorded in interest revenue or interest expense. Bank loans and related allowance for loan losses Bank loans are recorded at their contractual principal amounts and include unamortized direct origination costs or net purchase discounts or premiums. Direct origination costs and premiums and discounts are recognized in interest revenue using the effective interest method over the contractual life of the loan and are adjusted for actual prepayments. Additionally, loans are recorded net of an allowance for loan losses. The loan portfolio includes four loan types: First Mortgages, HELOCs, PALs, and other loans. We use these segments when developing and documenting our methodology for determining the allowance for loan losses. Schwab records an allowance for loan losses through a charge to earnings based on our estimate of probable incurred losses in the existing portfolio. We review the allowance for loan losses quarterly, taking into consideration current economic conditions, the composition of the existing loan portfolio, past loss experience, and risks inherent in the portfolio to ensure that the allowance for loan losses is maintained at an appropriate level. PALs are collateralized by marketable securities with liquid markets. Credit lines are over-collateralized dependent on the type of security pledged. Collateral market value is monitored on a daily basis and a borrower’s committed line may be reduced or collateral may be liquidated if the collateral is in danger of falling below specified levels. As such, the loss inherent within this portfolio is limited. The methodology to establish an allowance for loan losses for First Mortgages and HELOCs utilizes statistical models that estimate prepayments, defaults, and probable losses for the loan segments based on predicted behavior of individual loans within the segments. The methodology considers the effects of borrower behavior and a variety of factors including, but not limited to, interest rates, housing price movements as measured by a housing price index, economic conditions, estimated defaults and foreclosures measured by historical and expected delinquencies, changes in prepayment speeds, LTV ratios, past loss experience, estimates of future loss severities, borrower credit risk, and the adequacy of collateral. The methodology also evaluates concentrations in the loan types, including loan products within those types, year of origination, and geographical distribution of collateral. Probable losses are forecast using a loan-level simulation of the delinquency status of the loans over the term of the loans. The simulation starts with the current relevant risk indicators, including the current delinquent status of each loan, the estimated current LTV ratio (Estimated Current LTV) of each loan, the term and structure of each loan, current key interest rates including U.S. Treasury and LIBOR rates, and borrower FICO scores. The more significant variables in the simulation include delinquency roll rates, loss severity, housing prices, and interest rates. Delinquency roll rates (i.e., the rates at which loans transition through delinquency stages and ultimately result in a loss) are estimated from our historical loss experience adjusted for current trends and market information. Loss severity estimates are based on our historical loss experience and market trends. The estimated loss severity (i.e., loss given default) used in the allowance for loan loss methodology for HELOC loans is higher than that used in the methodology for First Mortgages. Housing price trends are derived from historical home price indices and econometric forecasts of future home values. Factors affecting the home price index include housing inventory, unemployment, interest rates, and inflation expectations. Interest rate projections are based on the current term structure of interest rates and historical volatilities to project various possible future interest rate paths. This methodology results in loss factors that are applied to the outstanding balances to determine the allowance for loan loss for each loan type. Schwab considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be troubled debt restructurings (TDRs). Nonaccrual, Nonperforming and Impaired loans First Mortgages, HELOCs, PALs, and other loans are placed on nonaccrual status upon becoming 90 days past due as to interest or principal (unless the loans are well-secured and in the process of collection), or when the full timely collection of interest or principal becomes uncertain, including loans to borrowers who have filed for bankruptcy. HELOC loans secured by a second lien are placed on non-accrual status if the associated first lien is 90 days or more delinquent, regardless of the payment status of the HELOC. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the loan is accounted for on the cash or cost recovery method until qualifying for return to accrual status. Generally, a nonaccrual loan may be returned to accrual status when all delinquent interest and principal is repaid and the borrower demonstrates a sustained period of performance, or when the loan is both well-secured and in the process of collection and collectability is no longer doubtful. Loans on nonaccrual status and other real estate owned are considered nonperforming assets. Nonaccrual loans, other real estate owned, and TDRs are considered impaired assets. Loan Charge-Offs The Company charges off a loan in the period that it is deemed uncollectible and records a reduction in the allowance for loan losses and the loan balance. Our charge-off policy for First Mortgage and HELOC loans is to assess the value of the property when the loan has been delinquent for 180 days or has been discharged in bankruptcy proceedings, regardless of whether the property is in foreclosure, and charge-off the amount of the loan balance in excess of the estimated current value of the underlying property less estimated costs to sell. The Company’s policy for PALs is to charge off any delinquent loans no later than at 90 days past due. Equipment, office facilities, and property Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:
(1) Amortized over contractual term if less than three years. Equipment, office facilities, and property are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Goodwill Goodwill represents the fair value of acquired businesses in excess of the fair value of the individually identified net assets acquired. Goodwill is not amortized but is tested for impairment annually or whenever indications of impairment exist. Impairment exists when the carrying amount of goodwill exceeds its implied fair value, resulting in an impairment charge for this excess. Our annual impairment testing date is April 1st. Schwab can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. A qualitative assessment considers macroeconomic and other industry-specific factors, such as trends in short-term and long-term interest rates and the ability to access capital, and Company specific factors such as market capitalization in excess of net assets, trends in revenue generating activities, and merger or acquisition activity. If the Company elects to bypass qualitatively assessing goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, management estimates the fair values of each of the Company’s reporting units (defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compares it to their carrying values. The estimated fair values of the reporting units are established using an income approach based on a discounted cash flow model that includes significant assumptions about the future operating results and cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis. Intangible assets Finite-lived intangible assets are amortized over their useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets other than goodwill are included in other assets on the consolidated balance sheets. Low-Income Housing Tax Credit (LIHTC) Investments We account for investments in qualified affordable housing projects using the proportional amortization method if the applicable requirements are met. The proportional amortization method amortizes the cost of the investment over the period in which the investor expects to receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of taxes on income. The carrying value of LIHTC investments is included in other assets on the consolidated balance sheets. Unfunded commitments related to LIHTC investments are included in accrued expenses and other liabilities on the consolidated balance sheets. Leases The Company has operating leases for corporate offices, branch locations, and server equipment and determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease liability may include payments that depend on a rate or index (such as the Consumer Price Index), measured using the rate or index at the commencement date. Payments that vary because of changes in facts or circumstances occurring after the commencement date are considered variable. These payments are not recognized as part of the lease liability and are expensed in the period incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have lease agreements with lease and non-lease components. For the majority of our leases (real estate leases), the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component. We have not elected the practical expedient for equipment leases and account for lease and non-lease components separately for those classes of leases. As the rates implicit in our leases are not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include periods covered by options to extend when it is reasonably certain that we will exercise those options. The lease terms may also include periods covered by options to terminate when it is reasonably certain that we will not exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Guarantees and indemnifications Schwab recognizes, at the inception of a guarantee, a liability equal to the estimated fair value of the obligation undertaken in issuing the guarantee. The fair values of obligations relating to guarantees are estimated based on transactions for similar guarantees or expected present value measures. Advertising and market development Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts. Such costs are generally expensed when incurred. Income taxes Schwab provides for income taxes on all transactions that have been recognized in the consolidated financial statements. Accordingly, deferred tax assets are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax assets and deferred tax liabilities, as well as other changes in income tax laws, are recorded in earnings in the period during which such changes are enacted. Uncertain tax positions are evaluated to determine whether they are more likely than not to be sustained upon examination. When tax positions are more likely than not to be sustained upon examination the difference between positions taken on tax return filings and estimated potential tax settlement outcomes are recognized in accrued expenses and other liabilities. If a position is not more likely than not to be sustained, then none of the tax benefit is recognized in Schwab’s financial statements. Accrued interest and penalties relating to unrecognized tax benefits is recorded in taxes on income. Schwab records amounts within AOCI net of taxes. Income tax effects are released from AOCI using the specific-identification approach. Share-based compensation Share-based compensation includes employee and board of director stock options and restricted stock units. Schwab measures compensation expense for these share-based payment arrangements based on their estimated fair values as of the grant date. The fair value of the share-based award is recognized over the vesting period as share-based compensation. Share-based compensation expense is based on options or units expected to vest and therefore is reduced for estimated forfeitures. Per the Company’s accounting policy election, forfeitures are estimated at the time of grant and reviewed annually based on the Company’s historical forfeiture experience. Share-based compensation expense is adjusted in subsequent periods if actual forfeitures differ from estimated forfeitures. The excess tax benefits or deficiencies from the exercise of stock options and the vesting of restricted stock units are recorded in taxes on income. Earnings per common share EPS is computed using the two-class method. Preferred stock dividends and undistributed earnings and dividends allocated to participating securities are subtracted from net income in determining net income available to common stockholders. Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Dilutive potential common shares include, if dilutive, the effect of outstanding stock options and non-vested restricted stock units. Fair values of assets and liabilities Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance describes the fair value hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from third-party sources independent of the Company. A quoted price in an active market provides the most reliable evidence of fair value and is generally used to measure fair value whenever available. Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. Where inputs used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgment. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:
Assets and liabilities measured at fair value on a recurring basis Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, and certain other assets. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. Quoted prices for investments in exchange-traded securities represent end-of-day close prices published by exchanges. Quoted prices for money market funds and other mutual funds represent reported net asset values. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices in active markets do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent third-party pricing sources for assets recorded at fair value. Our primary independent pricing service provides prices for our fixed income investments such as commercial paper; certificates of deposits; U.S. government and agency securities; state and municipal securities; corporate debt securities; asset-backed securities; foreign government agency securities; and non-agency commercial mortgage-backed securities. Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded. New Accounting Standards Adoption of New Accounting Standards
New Accounting Standards Not Yet Adopted
The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASU 2016-02, Leases (Topic 842) were as follows:
(1) The adoption adjustment is comprised of two parts: 1) an increase of $596 million for the recognition of the January 1, 2019 ROU asset and 2) an $8 million decrease related to prepaid rent and initial direct costs, which were reclassified to the ROU asset upon adoption of ASU 2016-02. (2) The adoption adjustment is comprised of two parts: 1) an increase of $662 million for the recognition of the January 1, 2019 lease liability and 2) a $74 million decrease related to deferred rent and lease incentives, which were reclassified to the ROU asset upon adoption of ASU 2016-02.
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Taxes on Income (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jan. 01, 2018 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Effective tax rate | 23.60% | 23.10% | 35.50% | ||
Remeasurement of net deferred tax assets | $ 46 | ||||
Capitalized contract cost | $ 281 | $ 250 | |||
Deferred tax liability | 110 | 1 | |||
Unrecognized tax benefits | $ 111 | 101 | 112 | $ 111 | |
Unrecognized tax benefits that, if recognized, would affect the annual effective tax rate | 97 | 108 | |||
Unrecognized tax benefits, interest and penalties accrued | 11 | $ 9 | |||
ASU 2018-02 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Increase in retained earnings | $ 33 | ||||
ASU 2014-09 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Capitalized contract cost | 219 | ||||
Deferred tax liability | $ 68 | $ 52 |
Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Assumptions Used to Value Options Granted and Their Expected Lives) (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average expected dividend yield | 1.85% | 1.42% | 1.06% |
Weighted-average expected volatility | 30.00% | 33.00% | 34.00% |
Weighted-average risk-free interest rate | 2.50% | 3.00% | 2.10% |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life | 4 years 2 months | 4 years | 4 years 1 month 6 days |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life | 5 years 11 months | 5 years 2 months 12 days | 5 years 3 months 18 days |
The Charles Schwab Corporation - Parent Company Only Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Charles Schwab Corporation - Parent Company Only Financial Statements | The Charles Schwab Corporation – Parent Company Only Financial Statements Condensed Statements of Income
(1) Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units. Condensed Balance Sheets
Condensed Statements of Cash Flows
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Taxes on Income (Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
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) | 0 |
Reductions for settlements with tax authorities | (2) | (1) |
Balance at end of year | $ 101 | $ 112 |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives | Estimated useful lives are as follows:
(1) Amortized over contractual term if less than three years. Equipment, office facilities, and property are detailed below:
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Schedule of New Accounting Pronouncements | The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASU 2016-02, Leases (Topic 842) were as follows:
(1) The adoption adjustment is comprised of two parts: 1) an increase of $596 million for the recognition of the January 1, 2019 ROU asset and 2) an $8 million decrease related to prepaid rent and initial direct costs, which were reclassified to the ROU asset upon adoption of ASU 2016-02. (2) The adoption adjustment is comprised of two parts: 1) an increase of $662 million for the recognition of the January 1, 2019 lease liability and 2) a $74 million decrease related to deferred rent and lease incentives, which were reclassified to the ROU asset upon adoption of ASU 2016-02.
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The Charles Schwab Corporation – Parent Company Only Financial Statements (Condensed Statements of Cash Flows) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Cash Flows from Operating Activities | |||||||||||||
Net income | $ 852 | $ 951 | $ 937 | $ 964 | $ 935 | $ 923 | $ 866 | $ 783 | $ 3,704 | $ 3,507 | $ 2,354 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Other | 199 | 137 | 51 | ||||||||||
Net change in: | |||||||||||||
Other assets | (709) | (8) | (193) | ||||||||||
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 | ||||||||||
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 | |||||||||||||
Issuance of long-term debt | 593 | 3,024 | 2,129 | ||||||||||
Repayment of long-term debt | 0 | (909) | (257) | ||||||||||
Repurchases of common stock | (2,220) | (1,000) | 0 | ||||||||||
Net proceeds from preferred stock offerings | 0 | 0 | 492 | ||||||||||
Redemption of preferred stock | 0 | 0 | (485) | ||||||||||
Dividends paid | (1,060) | (787) | (592) | ||||||||||
Proceeds from stock options exercised | 118 | 125 | 171 | ||||||||||
Net cash provided by (used for) financing activities | (13,939) | 47,166 | 22,599 | ||||||||||
Cash and Cash Equivalents at Beginning of Year | [1] | 27,938 | 14,217 | 27,938 | 14,217 | ||||||||
Cash and Cash Equivalents at End of Year | [1] | 29,345 | 27,938 | 29,345 | 27,938 | 14,217 | |||||||
Parent Company [Member] | |||||||||||||
Cash Flows from Operating Activities | |||||||||||||
Net income | 3,704 | 3,507 | 2,354 | ||||||||||
Adjustments to reconcile net income to net cash provided by 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) | 0 | ||||||||||
Purchases of available for sale securities | (1,141) | (1,751) | (201) | ||||||||||
Proceeds from sales of available for sale securities | 181 | 0 | 197 | ||||||||||
Principal payments on available for sale securities | 994 | 573 | 0 | ||||||||||
Other investing activities | 0 | (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 | 0 | (900) | (250) | ||||||||||
Repurchases of common stock | (2,220) | (1,000) | 0 | ||||||||||
Net proceeds from preferred stock offerings | 0 | 0 | 492 | ||||||||||
Redemption of preferred stock | 0 | 0 | (485) | ||||||||||
Dividends paid | (1,060) | (787) | (592) | ||||||||||
Proceeds from stock options exercised | 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 | 2,092 | 2,825 | 1,189 | ||||||||
Cash and Cash Equivalents at End of Year | $ 2,839 | $ 2,092 | $ 2,839 | $ 2,092 | $ 2,825 | ||||||||
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Segment Information (Narrative) (Details) |
12 Months Ended |
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Dec. 31, 2019
segment
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Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Accumulated Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income AOCI represents cumulative gains and losses that are not reflected in earnings. The components of other comprehensive income (loss) are as follows:
(1) During 2017, the Company transferred investment securities from the AFS category to the HTM category that had a total net unrealized loss of $227 million before income tax in AOCI on the date of the transfer. AOCI balances are as follows:
(1) As part of the adoption of ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02), we elected to reclassify the income tax effects of the Tax Cuts and Jobs Act from items in AOCI into retained earnings as of January 1, 2018. (2) As part of the adoption of ASU 2017-12, in the first quarter of 2019, the Company made a one-time election to transfer a portion of its HTM securities to AFS. The transfer resulted in a net of tax increase to AOCI of $19 million. See Notes 2 and 5 for additional discussion on the transfer of HTM securities to AFS.
|
Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Loan Portfolio: CSB provides a co-branded loan origination program for CSB clients (the Program) with Quicken Loans, Inc. (Quicken Loans®). Pursuant to the Program, Quicken Loans originates and services First Mortgages and HELOCs for CSB clients. Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Quicken Loans. CSB purchased First Mortgages of $4.4 billion and $2.1 billion during 2019 and 2018, respectively. CSB purchased HELOCs with commitments of $242 million and $395 million during 2019 and 2018, respectively. The Company’s commitments to extend credit on bank lines of credit and to purchase First Mortgages are as follows:
In the last six months of 2019, volume in new and refinanced First Mortgages increased as a result of lower interest rates and enhancements to customer incentives, leading to additional purchases during the last six months of 2019 and an increase in commitments to purchase First Mortgages as of December 31, 2019. Purchase obligations: Schwab has purchase obligations for services such as advertising and marketing, telecommunications, professional services, and hardware- and software-related agreements. As of December 31, 2019, the Company has purchase obligations as follows:
(1) Includes $1.8 billion for the planned acquisition of USAA-IMCO assets discussed below; other costs related to the USAA-IMCO acquisition are excluded. The table above excludes the planned all-stock acquisition of TD Ameritrade and any expenses related to the acquisition. Guarantees and indemnifications: Schwab has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation – a clearing house that establishes margin requirements on these transactions. We partially satisfy the margin requirements by arranging unsecured standby LOCs, in favor of the Options Clearing Corporation, which are issued by several banks. At December 31, 2019, the aggregate face amount of these LOCs totaled $20 million. There were no funds drawn under any of these LOCs at December 31, 2019. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral. Schwab also provides guarantees to securities clearing houses and exchanges under standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing houses and exchanges, other members would be required to meet shortfalls. Schwab’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. At December 31, 2019, amounts posted as collateral with such clearing houses and exchanges included $167 million of U.S. Treasury securities, which are included in other assets on the consolidated balance sheet. The potential requirement for the Company to make payments under these arrangements is remote. Accordingly, no liability has been recognized for these guarantees. Acquisition of TD Ameritrade: On November 25, 2019, CSC announced a definitive agreement to acquire TD Ameritrade in an all-stock transaction. At the time of announcement, TD Ameritrade had approximately twelve million brokerage accounts and $1.3 trillion in total client assets. Under the agreement, TD Ameritrade stockholders will receive 1.0837 CSC shares for each TD Ameritrade share. Based on the closing price of CSC common stock on November 20, 2019, the merger consideration represented approximately $26 billion. The transaction is expected to close in the second half of 2020, subject to satisfaction of closing conditions. Under certain circumstances, CSC or TD Ameritrade could be required to pay the other party a termination fee of $950 million or reimburse the other party’s fees up to $50 million. Acquisition of USAA-IMCO: On July 25, 2019, the Company announced a definitive agreement to acquire assets of USAA-IMCO, including over one million brokerage and managed portfolio accounts with approximately $90 billion in client assets at the time of announcement, for $1.8 billion in cash. The companies have also agreed to enter into a long-term referral agreement, effective at closing of the acquisition, that would make Schwab the exclusive wealth management and brokerage provider for USAA members. The transaction is expected to close in mid-2020, subject to satisfaction of closing conditions, including regulatory approvals and the implementation of conversion plans. Legal contingencies: Schwab is subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. The Company is also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies. Predicting the outcome of a litigation or regulatory matter is inherently difficult, requiring significant judgment and evaluation of various factors, including the procedural status of the matter and any recent developments; prior experience and the experience of others in similar cases; available defenses, including potential opportunities to dispose of a case on the merits or procedural grounds before trial (e.g., motions to dismiss or for summary judgment); the progress of fact discovery; the opinions of counsel and experts regarding potential damages; and potential opportunities for settlement and the status of any settlement discussions. It may not be reasonably possible to estimate a range of potential liability until the matter is closer to resolution – pending, for example, further proceedings, the outcome of key motions or appeals, or discussions among the parties. Numerous issues may have to be developed, such as discovery of important factual matters and determination of threshold legal issues, which may include novel or unsettled questions of law. Reserves are established or adjusted or further disclosure and estimates of potential loss are provided as the matter progresses and more information becomes available. Schwab believes it has strong defenses in all significant matters currently pending and is contesting liability and any damages claimed. Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation. Described below is a matter in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results, or cash flows of the Company. Crago Order Routing Litigation: On July 13, 2016, a securities class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of a putative class of customers executing equity orders through CS&Co. The lawsuit names CS&Co and CSC as defendants and alleges that an agreement under which CS&Co routed orders to UBS Securities LLC between July 13, 2011 and December 31, 2014 violated CS&Co’s duty to seek best execution. Plaintiffs seek unspecified damages, interest, injunctive and equitable relief, and attorneys’ fees and costs. After a first amended complaint was dismissed with leave to amend, plaintiffs filed a second amended complaint on August 14, 2017. Defendants again moved to dismiss, and in a decision issued December 5, 2017, the court denied the motion. Defendants have answered the complaint to deny all allegations, and are vigorously contesting the lawsuit.
|
Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Employee Incentive Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock authorized to be granted under the existing stock incentive plan (in shares) | 65,000,000 | ||
Total unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units | $ 290 | ||
Stock option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units | 1 year 3 months 18 days | ||
Restricted stock unit [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units | 2 years 6 months | ||
Total fair value of restricted stock awards vested | $ 123 | $ 166 | $ 127 |
Performance Shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units | 3 months 18 days | ||
Employee stock purchase plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares reserved for future issuance under the ESPP (in shares) | 34,000,000 | ||
Minimum [Member] | Restricted stock unit [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year | ||
Minimum [Member] | Stock option plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year | ||
Maximum [Member] | Restricted stock unit [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Maximum [Member] | Stock option plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Period from the date of grant in which stock options expire | 10 years | ||
Award vesting period | 4 years |
Fair Values of Assets and Liabilities (Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | $ 61,422 | $ 66,578 |
Other assets | 0 | 0 |
Commercial paper [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 395 | 522 |
Certificates of deposit [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 1,004 | 3,685 |
U.S. agency mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 46,155 | 25,556 |
Corporate debt securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 5,484 | 7,467 |
Asset-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 4,987 | 10,085 |
U.S. Treasury securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 3,384 | 18,302 |
U.S. agency notes [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 898 | |
Foreign government agency securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 49 | |
Non-agency commercial mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 13 | 14 |
Equity and bond mutual funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
State and municipal debt obligations [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Equity, U.S. Government and corporate debt, and other securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Schwab Funds money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Fair Value, Recurring [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 7,677 | 8,292 |
Investments segregated and on deposit for regulatory purposes | 8,627 | 4,671 |
Available for sale securities | 61,422 | 66,578 |
Other assets | 718 | 539 |
Total | 78,444 | 80,080 |
Fair Value, Recurring [Member] | Money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 5,179 | 3,429 |
Fair Value, Recurring [Member] | Commercial paper [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2,498 | 4,863 |
Available for sale securities | 395 | 522 |
Fair Value, Recurring [Member] | Certificates of deposit [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 1,351 | 1,396 |
Available for sale securities | 1,004 | 3,685 |
Fair Value, Recurring [Member] | US Government securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 7,276 | 3,275 |
Other assets | 202 | 1 |
Fair Value, Recurring [Member] | U.S. agency mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 46,155 | 25,556 |
Fair Value, Recurring [Member] | Corporate debt securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 5,484 | 7,467 |
Fair Value, Recurring [Member] | Asset-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 4,987 | 10,085 |
Fair Value, Recurring [Member] | U.S. Treasury securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 3,384 | 18,302 |
Fair Value, Recurring [Member] | U.S. agency notes [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 898 | |
Fair Value, Recurring [Member] | Foreign government agency securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 49 | |
Fair Value, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 13 | 14 |
Fair Value, Recurring [Member] | Equity and bond mutual funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 442 | 441 |
Fair Value, Recurring [Member] | State and municipal debt obligations [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 47 | 39 |
Fair Value, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 27 | 32 |
Fair Value, Recurring [Member] | Schwab Funds money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 26 | |
Level 1 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 5,179 | 3,429 |
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Available for sale securities | 0 | 0 |
Other assets | 447 | 470 |
Total | 5,626 | 3,899 |
Level 1 [Member] | Fair Value, Recurring [Member] | Money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 5,179 | 3,429 |
Level 1 [Member] | Fair Value, Recurring [Member] | Commercial paper [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | Certificates of deposit [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | US Government securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Other assets | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | U.S. agency mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | Corporate debt securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | Asset-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | U.S. agency notes [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | |
Level 1 [Member] | Fair Value, Recurring [Member] | Foreign government agency securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | |
Level 1 [Member] | Fair Value, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | Equity and bond mutual funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 442 | 441 |
Level 1 [Member] | Fair Value, Recurring [Member] | State and municipal debt obligations [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Level 1 [Member] | Fair Value, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 5 | 3 |
Level 1 [Member] | Fair Value, Recurring [Member] | Schwab Funds money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 26 | |
Level 2 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2,498 | 4,863 |
Investments segregated and on deposit for regulatory purposes | 8,627 | 4,671 |
Available for sale securities | 61,422 | 66,578 |
Other assets | 271 | 69 |
Total | 72,818 | 76,181 |
Level 2 [Member] | Fair Value, Recurring [Member] | Money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 2 [Member] | Fair Value, Recurring [Member] | Commercial paper [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2,498 | 4,863 |
Available for sale securities | 395 | 522 |
Level 2 [Member] | Fair Value, Recurring [Member] | Certificates of deposit [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 1,351 | 1,396 |
Available for sale securities | 1,004 | 3,685 |
Level 2 [Member] | Fair Value, Recurring [Member] | US Government securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 7,276 | 3,275 |
Other assets | 202 | 1 |
Level 2 [Member] | Fair Value, Recurring [Member] | U.S. agency mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 46,155 | 25,556 |
Level 2 [Member] | Fair Value, Recurring [Member] | Corporate debt securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 5,484 | 7,467 |
Level 2 [Member] | Fair Value, Recurring [Member] | Asset-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 4,987 | 10,085 |
Level 2 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 3,384 | 18,302 |
Level 2 [Member] | Fair Value, Recurring [Member] | U.S. agency notes [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 898 | |
Level 2 [Member] | Fair Value, Recurring [Member] | Foreign government agency securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 49 | |
Level 2 [Member] | Fair Value, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 13 | 14 |
Level 2 [Member] | Fair Value, Recurring [Member] | Equity and bond mutual funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Level 2 [Member] | Fair Value, Recurring [Member] | State and municipal debt obligations [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 47 | 39 |
Level 2 [Member] | Fair Value, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 22 | 29 |
Level 2 [Member] | Fair Value, Recurring [Member] | Schwab Funds money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | |
Level 3 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Available for sale securities | 0 | 0 |
Other assets | 0 | 0 |
Total | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Commercial paper [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Certificates of deposit [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | US Government securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments segregated and on deposit for regulatory purposes | 0 | 0 |
Other assets | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | U.S. agency mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Corporate debt securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Asset-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | U.S. agency notes [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | |
Level 3 [Member] | Fair Value, Recurring [Member] | Foreign government agency securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | |
Level 3 [Member] | Fair Value, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Equity and bond mutual funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | State and municipal debt obligations [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | $ 0 | 0 |
Level 3 [Member] | Fair Value, Recurring [Member] | Schwab Funds money market funds [Member] | ||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other assets | $ 0 |
Stockholders' Equity (Dividends Declared) (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 01, 2017 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Class of Stock [Line Items] | ||||
Dividends declared | $ 161.4 | $ 163.6 | $ 160.9 | |
Series A Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 28.0 | $ 28.0 | $ 28.0 | |
Dividends declared, per share amount (USD per share) | $ 70.00 | $ 70.00 | $ 70.00 | |
Dividend Rate in Effect | 7.00% | |||
Series B Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 29.1 | |||
Dividends declared, per share amount (USD per share) | $ 60.00 | |||
Dividend Rate in Effect | 6.00% | |||
Series C Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 36.0 | $ 36.0 | $ 36.0 | |
Dividends declared, per share amount (USD per share) | $ 60.00 | $ 60.00 | $ 60.00 | |
Dividend Rate in Effect | 6.00% | |||
Series D Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 44.6 | $ 44.6 | $ 44.6 | |
Dividends declared, per share amount (USD per share) | $ 59.52 | $ 59.52 | $ 59.52 | |
Dividend Rate in Effect | 5.95% | |||
Series E Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 27.8 | $ 27.8 | $ 23.2 | |
Dividends declared, per share amount (USD per share) | $ 4,625.00 | $ 4,625.00 | $ 3,867.01 | |
Dividend Rate in Effect | 4.625% | |||
Series F Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Dividends declared | $ 25.0 | $ 27.2 | ||
Dividends declared, per share amount (USD per share) | $ 5,000.00 | $ 5,430.56 | ||
Dividend Rate in Effect | 5.00% |
Goodwill (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill as Allocated to Reportable Segments | The changes in the carrying amount of goodwill, as allocated to our reportable segments, are presented in the following table:
|
Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt Including Unamortized Debt Discounts and Premiums | The following table lists long-term debt by instrument outstanding as of December 31, 2019 and 2018.
(1) The finance lease obligation was extinguished through an assignment agreement during the first quarter of 2019.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Maturities on Long-term Debt Outstanding | Annual maturities on long-term debt outstanding at December 31, 2019, are as follows:
|
Investment Securities (Maturities of Securities Available for Sale and Held to Maturity) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Available for sale securities, fair value | ||
Within 1 year | $ 4,289 | |
After 1 year through 5 years | 11,891 | |
After 5 years through 10 years | 13,047 | |
After 10 years | 32,195 | |
Fair Value | 61,422 | $ 66,578 |
Available for sale securities, amortized cost | ||
Within 1 year | 4,279 | |
After 1 year through 5 years | 11,823 | |
After 5 years through 10 years | 13,046 | |
After 10 years | 32,007 | |
Amortized Cost | $ 61,155 | 66,735 |
Weighted-average yield | ||
Within 1 year | 2.42% | |
After 1 year through 5 years | 2.44% | |
After 1 year through 5 years | 2.13% | |
After 10 years | 2.40% | |
Total | 2.35% | |
Held to maturity securities, fair value | ||
Within 1 year | $ 2,445 | |
After 1 year through 5 years | 21,048 | |
After 5 years through 10 years | 40,954 | |
After 10 years | 71,652 | |
Fair Value | 136,099 | 142,038 |
Held to maturity securities, amortized cost | ||
Within 1 year | 2,442 | |
After 1 year through 5 years | 20,775 | |
After 5 years through 10 years | 40,182 | |
After 10 years | 71,307 | |
Amortized Cost | $ 134,706 | 144,009 |
Weighted-average yield | ||
Within 1 year | 2.51% | |
After 1 year through 5 years | 2.54% | |
After 5 years through 10 years | 2.64% | |
After 10 years | 2.42% | |
Total | 2.51% | |
U.S. agency mortgage-backed securities [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | $ 30 | |
After 1 year through 5 years | 1,896 | |
After 5 years through 10 years | 12,509 | |
After 10 years | 31,720 | |
Fair Value | 46,155 | 25,556 |
Available for sale securities, amortized cost | ||
Amortized Cost | 45,964 | 25,594 |
Held to maturity securities, fair value | ||
Within 1 year | 966 | |
After 1 year through 5 years | 15,162 | |
After 5 years through 10 years | 32,971 | |
After 10 years | 61,467 | |
Fair Value | 110,566 | 116,093 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 109,325 | 118,064 |
Corporate debt securities [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 1,181 | |
After 1 year through 5 years | 4,132 | |
After 5 years through 10 years | 171 | |
After 10 years | 0 | |
Fair Value | 5,484 | 7,467 |
Available for sale securities, amortized cost | ||
Amortized Cost | 5,427 | 7,477 |
Held to maturity securities, fair value | ||
Within 1 year | 1,279 | |
After 1 year through 5 years | 2,713 | |
After 5 years through 10 years | 726 | |
After 10 years | 0 | |
Fair Value | 4,718 | 4,432 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 4,661 | 4,477 |
Asset-backed securities [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 65 | |
After 1 year through 5 years | 4,093 | |
After 5 years through 10 years | 367 | |
After 10 years | 462 | |
Fair Value | 4,987 | 10,085 |
Available for sale securities, amortized cost | ||
Amortized Cost | 4,970 | 10,086 |
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 3,025 | |
After 5 years through 10 years | 6,473 | |
After 10 years | 8,273 | |
Fair Value | 17,771 | 18,546 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 17,806 | 18,502 |
U.S. Treasury securities [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 1,915 | |
After 1 year through 5 years | 1,469 | |
After 5 years through 10 years | 0 | |
After 10 years | 0 | |
Fair Value | 3,384 | 18,302 |
Available for sale securities, amortized cost | ||
Amortized Cost | 3,387 | 18,410 |
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 228 | |
After 10 years | 0 | |
Fair Value | 228 | 217 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 223 | 223 |
Certificates of deposit [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 703 | |
After 1 year through 5 years | 301 | |
After 5 years through 10 years | 0 | |
After 10 years | 0 | |
Fair Value | 1,004 | 3,685 |
Available for sale securities, amortized cost | ||
Amortized Cost | 1,000 | 3,682 |
Held to maturity securities, fair value | ||
Within 1 year | 200 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 0 | |
After 10 years | 0 | |
Fair Value | 200 | 201 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 200 | 200 |
U.S. state and municipal securities [Member] | ||
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 98 | |
After 5 years through 10 years | 556 | |
After 10 years | 750 | |
Fair Value | 1,404 | 1,348 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 1,301 | 1,327 |
Commercial paper [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 395 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 0 | |
After 10 years | 0 | |
Fair Value | 395 | 522 |
Available for sale securities, amortized cost | ||
Amortized Cost | 394 | 522 |
Foreign government agency securities [Member] | ||
Available for sale securities, fair value | ||
Fair Value | 49 | |
Available for sale securities, amortized cost | ||
Amortized Cost | 50 | |
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 50 | |
After 5 years through 10 years | 0 | |
After 10 years | 0 | |
Fair Value | 50 | 49 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 50 | 50 |
Non-agency commercial mortgage-backed securities [Member] | ||
Available for sale securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 0 | |
After 10 years | 13 | |
Fair Value | 13 | 14 |
Available for sale securities, amortized cost | ||
Amortized Cost | 13 | 14 |
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 0 | |
After 10 years | 1,141 | |
Fair Value | 1,141 | 1,142 |
Held to maturity securities, amortized cost | ||
Amortized Cost | 1,119 | 1,156 |
Other [Member] | ||
Held to maturity securities, fair value | ||
Within 1 year | 0 | |
After 1 year through 5 years | 0 | |
After 5 years through 10 years | 0 | |
After 10 years | 21 | |
Fair Value | 21 | 10 |
Held to maturity securities, amortized cost | ||
Amortized Cost | $ 21 | $ 10 |
Financial Instruments Subject to Off-Balance Sheet Credit Risk (Summary of the Fair Value of Client Securities Available to Utilize as Collateral and Amounts Pledged) (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Securities Financing Transaction [Line Items] | ||
Fair value of client securities available to be pledged | $ 26,685 | $ 26,628 |
Fair value of client securities pledged | 5,481 | 4,581 |
Fulfillment of Requirements with the Options Clearing Corporation [Member] | ||
Securities Financing Transaction [Line Items] | ||
Fair value of client securities pledged | 2,171 | 2,315 |
Fulfillment of Client Short Sales [Member] | ||
Securities Financing Transaction [Line Items] | ||
Fair value of client securities pledged | 2,293 | 1,292 |
Securities Lending to Other Broker-Dealers [Member] | ||
Securities Financing Transaction [Line Items] | ||
Fair value of client securities pledged | 1,017 | 974 |
Fully-Paid Client Securities [Member] | ||
Securities Financing Transaction [Line Items] | ||
Fair value of client securities pledged | $ 142 | $ 97 |
Commitments and Contingencies (Commitments to Extend/Purchase) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Commitments to purchase | $ 12,274 | $ 11,314 |
Home Equity Loans and Lines of Credit, Pledged Asset Lines and Other Lines of Credit [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit | 10,753 | 11,046 |
First Mortgage [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Commitments to purchase | $ 1,521 | $ 268 |
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 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 | ||||
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 (in shares) | 1,311 | 1,348 | 1,339 | ||||
Diluted (in shares) | [2] | 1,320 | 1,361 | 1,353 | |||
Earnings Per Common Shares Outstanding: | |||||||
Basic (USD per share) | $ 2.69 | $ 2.47 | $ 1.63 | ||||
Diluted (USD per share) | [2] | $ 2.67 | $ 2.45 | $ 1.61 | |||
Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS (in shares) | 21 | 18 | 15 | ||||
Asset Management and administration fees [Member] | |||||||
Net Revenues | |||||||
Asset management and administration fees and Trading revenue | $ 3,211 | $ 3,229 | $ 3,392 | ||||
Trading revenue [Member] | |||||||
Net Revenues | |||||||
Asset management and administration fees and Trading revenue | $ 617 | $ 763 | $ 654 | ||||
|
Receivables from and Payables to Brokerage Clients (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Receivables [Abstract] | ||
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 |
California [Member] | Geographic Concentration Risk [Member] | Contract with Customer [Member] | ||
Concentration Risk [Line Items] | ||
Percent of client accounts | 22.00% | 22.00% |
Summary of Significant Accounting Policies (New Accounting Standards) (Details) - USD ($) $ in Millions |
Jan. 01, 2019 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease ROU assets | $ 577 | ||||
Lease liability | 650 | ||||
Accumulated other comprehensive income (loss) | $ 88 | $ (252) | $ (152) | $ (163) | |
ASU 2016-02 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease ROU assets | $ 596 | ||||
Lease liability | 662 | ||||
ASU 2017-12 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fair value of securities transferred from held to maturity | 8,800 | ||||
Accumulated other comprehensive income (loss) | $ 19 |
Consolidated Statements of Cash Flows - USD ($) $ in Millions |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||||||||
Cash Flows from Operating Activities | |||||||||||
Net income | $ 3,704 | $ 3,507 | $ 2,354 | ||||||||
Adjustments to reconcile net income to net cash (used for) provided by 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 | 0 | (15,000) | |||||||||
Net change in short-term borrowings | 15,000 | ||||||||||
Issuance of long-term debt | 593 | 3,024 | 2,129 | ||||||||
Repayment of long-term debt | 0 | (909) | (257) | ||||||||
Repurchases of common stock | (2,220) | (1,000) | 0 | ||||||||
Net proceeds from preferred stock offerings | 0 | 0 | 492 | ||||||||
Redemption of preferred stock | 0 | 0 | (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 | [2] | 19,160 | [2] | 17,873 | ||||||
Cash and Cash Equivalents, including Amounts Restricted at End of Year | [2] | 45,577 | 38,227 | 19,160 | |||||||
Non-cash investing activity: | |||||||||||
Securities transferred from held to maturity to available for sale, at fair value | 8,771 | 0 | 0 | ||||||||
Securities transferred from available for sale to held to maturity, at fair value | 0 | 0 | 24,696 | ||||||||
Securities purchased during the period but settled after period end | 0 | 0 | 29 | ||||||||
Non-cash financing activity: | |||||||||||
Extinguishment of finance lease obligation through an assignment agreement | 52 | 0 | 0 | ||||||||
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 | [3] | 133 | |||||||||
Leased assets obtained in exchange for new operating lease liabilities (2) | [3] | 97 | |||||||||
Transfers from other sweep features to bank sweep | $ 10,300 | $ 71,900 | $ 4,900 | ||||||||
|
Leases (Lease Term and Discount Rate) (Details) |
Dec. 31, 2019 |
---|---|
Leases [Abstract] | |
Weighted-average remaining lease term (years) | 7 years 1 month 24 days |
Weighted-average discount rate | 3.42% |
Other Assets (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Capitalized contract cost | $ 281 | $ 250 |
Amortization expense related to capitalized contract costs | $ 55 | $ 47 |
Bank Loans and Related Allowance for Loan Losses (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total bank loans | $ 18,230 | $ 16,630 |
First Mortgage and Home Equity Loans and Lines of Credit [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans pledged as collateral | 10,500 | |
Adjustable Rate First Mortgage [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying amount of mortgages | $ 10,500 | |
Percent of loans with interest-only payments | 26.00% | |
Percent of interest only adjustable rate | 68.00% | |
Adjustable Rate First Mortgage [Member] | Minimum [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Fixed rate interest rate period | 3 years | |
Interest-only reset period | 3 years | |
Adjustable Rate First Mortgage [Member] | Maximum [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Fixed rate interest rate period | 10 years | |
HELOC's [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing Receivable, Loan Term | 30 years | |
Financing Receivable, Initial Draw Period | 10 years | |
Financing Receivable, Convert to Amortizing Loans, Period | 20 years | |
Total bank loans | $ 1,117 | $ 1,505 |
Percent of loan balance outstanding, borrowers paid only minimum interest due | 52.00% | |
Home Equity Secured By Second Liens [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total bank loans | $ 905 |
Bank Loans and Related Allowance for Loan Losses (Convert to Amortizing Loans) (Details) - HELOC's [Member] $ in Millions |
Dec. 31, 2019
USD ($)
|
---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
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 |
Borrowings (Long-term Debt Including Unamortized Debt Discounts and Premiums) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | ||
Senior Notes | $ 7,481 | $ 6,881 |
Unamortized discount — net | (14) | (15) |
Debt issuance costs | (37) | (40) |
Total long-term debt | $ 7,430 | |
Total long-term debt | 6,878 | |
Senior Notes [Member] | Senior Notes Due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 4.45% | |
Senior Notes | $ 700 | 700 |
Senior Notes [Member] | Senior Notes Due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.25% | |
Senior Notes | $ 600 | 600 |
Senior Notes [Member] | Senior Notes Due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.225% | |
Senior Notes | $ 256 | 256 |
Senior Notes [Member] | Senior Notes Due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 2.65% | |
Senior Notes | $ 800 | 800 |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.55% | |
Senior Notes | $ 500 | 500 |
Senior Notes [Member] | Senior Notes Due March 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.00% | |
Senior Notes | $ 375 | 375 |
Senior Notes [Member] | Senior Notes Due May 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.85% | |
Senior Notes | $ 750 | 750 |
Senior Notes [Member] | Senior Notes Due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.45% | |
Senior Notes | $ 350 | 350 |
Senior Notes [Member] | Senior Notes Due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.20% | |
Senior Notes | $ 650 | 650 |
Senior Notes [Member] | Senior Notes Due 2028 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.20% | |
Senior Notes | $ 700 | 700 |
Senior Notes [Member] | Senior Notes Due 2029 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 4.00% | |
Senior Notes | $ 600 | 600 |
Senior Notes [Member] | Senior Notes Due May 2029 [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 3.25% | |
Senior Notes | $ 600 | 0 |
Senior Notes [Member] | Floating Rate Senior Notes Due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | $ 600 | 600 |
Senior Notes [Member] | Floating Rate Senior Notes Due 2021 [Member] | LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread rate | 0.032% | |
Finance lease obligation [Member] | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 5.45% | |
Finance lease obligation | $ 0 | $ 52 |
Regulatory Requirements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital and Ratios | The regulatory capital and ratios for CSC (consolidated) and CSB are as follows:
(1) Beginning in 2019, CSC and CSB were required to include all components of AOCI in regulatory capital and report our supplementary leverage ratio, which is calculated as Tier 1 capital divided by total leverage exposure. Total leverage exposure includes all on-balance sheet assets and certain off-balance sheet exposures, including unused commitments. Prior to 2019, CSC and CSB elected to opt-out of the requirement to include most components of AOCI in Common Equity Tier 1 Capital; the amounts and ratios for December 31, 2018 are presented on this basis. In the interagency regulatory capital and liquidity rules adopted in October 2019, Category III banking organizations such as CSC were given the ability to opt-out of the inclusion of AOCI in regulatory capital, and CSC made this opt-out election as of January 1, 2020. (2) Under the Basel III capital rule, CSC and CSB are also required to maintain a capital conservation buffer and, beginning in 2019, a countercyclical capital buffer above the regulatory minimum risk-based capital ratios. The capital conservation buffer became 2.5% on January 1, 2019 (1.875% at December 31, 2018). At December 31, 2019, the countercyclical capital buffer was zero. If either buffer falls below the minimum requirement, the Company would be subject to limits on capital distributions and discretionary bonus payments to executive officers. At December 31, 2019, the minimum capital requirement plus capital conservation buffer and countercyclical capital buffer for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 7.0%, 8.5%, and 10.5%, respectively. N/A Not applicable.
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Net Capital and Net Capital Requirements for CS&Co | Net capital and net capital requirements for CS&Co are as follows:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock Issued and Outstanding | The following is a summary of CSC’s non-cumulative perpetual preferred stock outstanding as of such dates:
(1) Represented by depositary shares, except for Series A. N/A Not applicable. Dividends declared on the Company’s preferred stock are as follows:
(1) On December 1, 2017, CSC redeemed all of the outstanding shares of its 6.00% Non-Cumulative Perpetual Preferred Stock, Series B at their stated redemption value. (2) Series F Preferred Stock was issued on October 31, 2017. Dividends are paid semi-annually beginning on June 1, 2018 until December 1, 2027, and quarterly thereafter. N/A Not applicable. |
Introduction and Basis of Presentation (Details) |
Dec. 31, 2019
state
office
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Minimum number of domestic branch offices | office | 360 |
States with domestic branch offices | state | 48 |