Segment Information

12 Months Ended

Dec. 31, 2020

Schwab’s two reportable segments are Investor Services and Advisor Services. Schwab structures the 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, and retirement plan services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking, and support services, as well as retirement business services, to independent RIAs, independent retirement advisors, and recordkeepers. Revenues and expenses are attributed to the two segments based on which segment services the client.

The Company integrated its business and asset acquisitions during 2020 into its two existing reportable segments. Revenues and expenses from our acquisition of USAA-IMCO are allocated to Investor Services only; revenues and expenses from TD Ameritrade and our other 2020 acquisitions are attributed to Investor Services and Advisor Services based on which segment services the client. See Note 3 for more information regarding business acquisitions.

The accounting policies of the segments are the same as those described in Note 2. For the computation of its segment information, Schwab 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.

Management evaluates the performance of the segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are no revenues from transactions between the segments.

Financial information for the segments is presented in the following table:


	Investor Services						Advisor Services						Total
Year Ended December 31,	2020		2019		2018		2020		2019		2018		2020		2019		2018
Net Revenues
Net interest revenue	$	4,391	$	4,685	$	4,341	$	1,722	$	1,831	$	1,482	$	6,113	$	6,516	$	5,823
Asset management and administration fees	2,544		2,289		2,260		931		922		969		3,475		3,211		3,229
Trading revenue (1)	1,156		503		604		260		249		298		1,416		752		902
Bank deposit account fees	255		—		—		100		—		—		355		—		—
Other (1)	262		146		116		70		96		62		332		242		178
Total net revenues	8,608		7,623		7,321		3,083		3,098		2,811		11,691		10,721		10,132
Expenses Excluding Interest	5,529		4,284		4,145		1,862		1,589		1,425		7,391		5,873		5,570
Income before taxes on income	$	3,079	$	3,339	$	3,176	$	1,221	$	1,509	$	1,386	$	4,300	$	4,848	$	4,562
Capital expenditures	$	535	$	507	$	390	$	206	$	246	$	186	$	741	$	753	$	576
Depreciation and amortization (2)	$	288	$	216	$	158	$	126	$	106	$	119	$	414	$	322	$	277
Amortization of acquired intangible assets (2)	$	149	$	26	$	28	$	41	$	1	$	1	$	190	$	27	$	29

(1) Beginning in 2020, order flow revenue was reclassified from other revenue to trading revenue. Prior period amounts have been reclassified to reflect this change.

(2) Beginning in 2020, amortization of acquired intangible assets was reclassified from depreciation and amortization. Prior periods have been reclassified to reflect this change.