Charles Schwab 2015 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2015 Charles Schwab annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

THE CHARLES SCHWAB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Ratios, or as Noted)
- 33 -
Growth Rate
Year Ended December 31, 2014-2015 2015
2014 2013
Daily average revenue trades (in thousands) (2)% 292.0 298.2 295.0
Clients’ daily average trades (in thousands) 4 % 536.9 516.8 490.5
N
umber of trading days - 251.0 250.5 250.5
Average revenue per revenue trade (2)% $ 11.83 $ 12.13 $ 12.31
Trading revenue decreased by $41 million, or 5%, in 2015 from 2014 primarily due to a decrease in commission revenue as a
result of lower commissions per revenue trade and lower daily average revenue trades. Trading revenue remained relatively
flat in 2014 from 2013.
Daily average revenue trades decreased in 2015 from 2014 primarily due to a lower volume of equity trades. Daily average
revenue trades increased in 2014 from 2013 primarily due to a higher volume of equity trades, offset by a lower volume of
mutual fund trades. Average revenue per revenue trade decreased 2% in 2015 compared to 2014 but remained relatively flat
from 2014 to 2013.
Other Revenue
Other revenue includes order flow revenue, nonrecurring gains, software fees from the Company’s portfolio management
services, exchange processing fees, and other service fees.
Other revenue decreased by $15 million, or 4%, in 2015 compared to 2014 primarily due to lower order flow revenue. Order
flow revenue was $103 million during 2015 compared to $114 million during 2014. The decrease was primarily due to
changes in the composition and volume of different types of orders and the fees and rebates for such orders. Other revenue in
2015 also includes net litigation proceeds of $75 million related to the Company’s non-agency RMBS portfolio. Other
revenue in 2014 includes a net insurance settlement of $45 million and net litigation proceeds of $28 million related to the
Company’s non-agency RMBS portfolio.
Other revenue increased by $107 million, or 45%, in 2014 compared to 2013 primarily due to a net insurance settlement of
$45 million, net litigation proceeds of $28 million related to the Company’s non-agency RMBS portfolio, and increases in
order flow revenue. Order flow revenue was $114 million during 2014 compared to $99 million during 2013. The increase
was due to higher rebates received and higher volumes for certain types of orders.
Expenses Excluding Interest
The following table shows a comparison of expenses excluding interest:
Growth Rate
Year Ended December 31, 2014-2015 2015 2014 2013
Compensation and benefits 3 % $ 2,241 $ 2,184 $ 2,027
Professional services - 459 457 415
Occupancy and equipment 9 % 353 324 309
Advertising and market development 2 % 249 245 257
Communications 4 % 233 223 220
Depreciation and amortization 13 % 224 199 202
Other 10 % 342 311 300
Total expenses excluding interest 4 % $ 4,101 $ 3,943 $ 3,730
Expenses as a percentage of total net revenues:
Compensation and benefits 35 % 36 % 37 %
Advertising and market development 4 % 4 % 5 %