Charles Schwab 2015 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 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)
- 36 -
Financial information for the Company’s reportable segments is presented in the following tables:
Investor Services
(1) Advisor Services
(1)
Growth Rate Growth Rate
Year Ended December 31, 2014-2015 2015 2014 2013 2014-2015 2015 2014 2013
Net Revenues
Asset management and
administration fees 5 %
$ 1,837 $ 1,742 $ 1,593 3 % $ 813 $ 791 $ 723
N
et interest revenue 5 %
2,133 2,028 1,755 61 % 392
244 225
Trading revenue (8) %
556 606 609 3 % 310 301 304
Other 7 %
234 218 176 27 % 94
74 59
Provision for loan losses 175 %
11 4 1 N/M - - -
N
et impairment losses
on securities (100) %
-
(1) (9) N/M -
-
(1)
Total net revenues 4 %
4,771 4,597 4,125 14 % 1,609 1,410 1,310
Expenses Excluding
Interest 5 %
3,090 2,937 2,858 8% 1,011
938 872
Income before taxes
on income 1 %
$ 1,681 $ 1,660 $ 1,267 27 % $ 598 $ 472 $ 438
Unallocated Total
Growth Rate Growth Rate
Year Ended December 31, 2014-2015 2015 2014 2013 2014-2015 2015 2014 2013
Net Revenues
Asset management and
administration fees N/M $ - $ - $ (1) 5 % $ 2,650 $ 2,533 $ 2,315
N
et interest revenue N/M -
-
-
11 % 2,525
2,272 1,980
Trading revenue N/M - - - (5)% 866 907 913
Other N/M -
51 1
(4)% 328
343 236
Provision for loan losses N/M - - - 175 % 11 4 1
N
et impairment losses
on securities N/M -
-
-
(100)% -
(1) (10)
Total net revenues N/M - 51 - 5 % 6,380 6,058 5,435
Expenses Excluding
Interest N/M - 68 - 4 % 4,101 3,943 3,730
Income before taxes
on income N/M $ - $ (17) $ - 8 % $ 2,279 $ 2,115 $ 1,705
(1) During 2015, the Corporate Brokerage Retirement Services business was transferred from the Investor Services segment
to the Advisor Services segment. All prior-period amounts have been recast to conform with the current year
p
resentation.
N/M Not meaningful.
Investor Services
Net revenues increased by $174 million, or 4%, in 2015 from 2014 primarily due to increases in net interest revenue, asset
management and administration fees, and other revenue, partially offset by a decrease in trading revenue. Net interest revenue
increased mainly due to higher balances of interest-earning assets, partially offset by the effect of lower net interest margins.
Asset management and administration fees increased primarily due to fees from advice solutions which increased mainly due
to growth in client assets enrolled in advisory offers. Other revenue increased primarily due to litigation proceeds relating to
the Company’s non-agency RMBS portfolio. Trading revenue decreased in 2015 from 2014 largely due to lower commissions
per revenue trade and lower daily average revenue trades. Expenses excluding interest increased by $153 million, or 5%, in
2015 from 2014 primarily due to growth in the business resulting in increases in compensation and benefits and other
expenses.