Segment Information

12 Months Ended

Dec. 31, 2014

Segment Information [Abstract]

Segment Information

23.Segment Information

The Company’s two reportable segments are Investor Services and Advisor Services. The Company structures its operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage and banking services to individual investors, retirement plan services, and corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services to independent investment advisors, and retirement business services to independent retirement plan advisors and recordkeepers whose plan assets are held at Schwab Bank. Revenues and expenses are allocated to the Company’s two segments based on which segment services the client.

The accounting policies of the segments are the same as those described in note “2 – Summary of Significant Accounting Policies.” Financial information for the Company’s reportable segments is presented in the following table. For the computation of its segment information, the Company utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues.

The Company evaluates the performance of its segments on a pre-tax basis, excluding extraordinary or significant non-recurring items and results of discontinued operations. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. However, capital expenditures are used in resource allocation and are therefore disclosed. There are no revenues from transactions between the segments. Capital expenditures are reported gross, and are not net of proceeds from the sale of fixed assets.

Financial information for the Company’s reportable segments is presented in the following table:

	Investor Services						Advisor Services						Unallocated						Total
Year Ended December 31,	2014		2013		2012		2014		2013		2012		2014		2013		2012		2014		2013		2012
Net Revenues:
Asset management and
administration fees	$	1,775	$	1,627	$	1,436	$	758	$	689	$	607	$	-	$	(1)	$	-	$	2,533	$	2,315	$	2,043
Net interest revenue		2,030		1,756		1,559		242		224		205		-		-		-		2,272		1,980		1,764
Trading revenue		618		621		612		289		292		255		-		-		1		907		913		868
Other – net (1)		221		178		123		71		57		62		51		1		71		343		236		256
Provision for loan losses		4		1		(15)		-		-		(1)		-		-		-		4		1		(16)
Net impairment losses
on securities		(1)		(9)		(29)		-		(1)		(3)		-		-		-		(1)		(10)		(32)
Total net revenues		4,647		4,174		3,686		1,360		1,261		1,125		51		-		72		6,058		5,435		4,883
Expenses Excluding Interest (2)		2,974		2,899		2,693		901		831		739		68		-		1		3,943		3,730		3,433
Income before taxes on income	$	1,673	$	1,275	$	993	$	459	$	430	$	386	$	(17)	$	-	$	71	$	2,115	$	1,705	$	1,450
Capital expenditures	$	271	$	190	$	98	$	134	$	80	$	40	$	-	$	-	$	-	$	405	$	270	$	138
Depreciation and amortization	$	154	$	155	$	157	$	45	$	47	$	39	$	-	$	-	$	-	$	199	$	202	$	196

(1)	Unallocated amount includes a net insurance settlement of $45 million in 2014 and a non-recurring gain of $70 million relating to a confidential resolution of a vendor dispute in 2012.
(2)	Unallocated amount includes a charge of $68 million for estimated future severance benefits resulting from changes in the Company’s geographic footprint in 2014.

Fees received from Schwab’s proprietary mutual funds represented 7%,  9%, and 10%of the Company’s net revenues in 2014, 2013, and 2012, respectively.  Except for Schwab’s proprietary mutual funds, which are considered a single client for purposes of this computation, no single client accounted for more than 10% of the Company’s net revenues in 2014, 2013, or 2012. Substantially all of the Company’s revenues and assets are generated or located in the U.S. The percentage of Schwab’s total client accounts located in California was 23% at December 31, 2014,  2013, and 2012.