The Charles Schwab Corporation has posted its annual report for 2020, with the document providing an update on the integration of TD Ameritrade.

Let’s recall that Schwab completed its acquisition of TD Ameritrade in October 2020. At the time of closing, TD Ameritrade, which provides securities brokerage services, including trade execution, clearing services, margin lending, and futures and Forex trade execution services, had approximately $1.6 trillion in client assets and approximately 14.5 million brokerage accounts.

In exchange for each share of TD Ameritrade common stock, TD Ameritrade stockholders received 1.0837 shares of CSC common stock, except for TD Bank and its affiliates which received a portion in nonvoting common stock. In connection with the transaction, Schwab issued approximately 586 million common shares to TD Ameritrade stockholders consisting of approximately 509 million shares of common stock and 77 million shares of nonvoting common stock.

The integration of TD Ameritrade’s operations is expected to occur over 18 to 36 months from the date of acquisition, and Schwab expects to continue to incur significant acquisition and integration-related costs and integration-related capital expenditures throughout the integration process.

Such costs have included and are expected to continue to include professional fees, such as legal, advisory, and accounting fees, and compensation and benefits expenses for employees and contractors involved in the integration work, costs for technology enhancements, as well as exit and other related costs incurred to attain anticipated synergies. The costs include employee compensation and benefits, including severance pay, other termination benefits and retention costs, as well as costs related to facility closures, including accelerated depreciation or impairments of assets in those locations.

Schwab currently estimates that total acquisition and integration-related costs and capital expenditures related to the integration of TD Ameritrade will be approximately $1.6 billion.

There are factors that could cause variability in the expected acquisition and integration-related costs include the level of employee attrition, workforce redeployment from eliminated positions into open roles, changes in the levels of client activity, as well as increased real estate-related exit cost variability due to effects of the COVID-19 pandemic.

Let’s note that acquisition and integration-related costs, which includes related exit costs, for all of Schwab’s acquisitions completed in 2020 totaled $442 million, and the company expects to incur a roughly consistent amount in 2021 related primarily to continued work on the integration of TD Ameritrade.

While inclusion of TD Ameritrade’s operating costs and continued acquisition and integration-related costs will increase the company’s total expenses excluding interest in 2021 and going forward, it expects to realize cost synergies through integration. Over the course of the integration, Schwab expects to realize annualized cost synergies of between $1.8 billion and $2.0 billion, with one-quarter to one-third on an annualized run-rate basis expected by the end of the first year following acquisition.