EX-99.1 2 exhibit991093019.htm EXHIBIT 99.1 Exhibit
 
 
EXHIBIT 99.1

News Release

Contacts:
 
cslogoa03.jpg
MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Rich Fowler
Charles Schwab
Phone: 415-667-1841

SCHWAB REPORTS RECORD EARNINGS PER SHARE OF $.70, UP 8%
Revenues Grow 5% to $2.7 Billion, Net Income Rises 3% to $951 Million, Both Third Quarter Records
Core Net New Assets Total $56.6 Billion, Representing a 7% Annualized Growth Rate
 
SAN FRANCISCO, October 15, 2019 – The Charles Schwab Corporation announced today that its net income for the third quarter of 2019 was $951 million, up 3% from $923 million for the third quarter of 2018. Net income for the nine months ended September 30, 2019 was $2.9 billion, up 11% from the year-earlier period. The company’s financial results for the third quarter and first nine months of 2019 include severance charges described below.
 
 
Three Months Ended September 30,
 
%
 
Nine Months Ended September 30,
 
%
Financial Highlights
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues (in millions)
 
$
2,711

 
$
2,579

 
5%
 
$
8,115

 
$
7,463

 
9%
Net income (in millions)
 
$
951

 
$
923

 
3%
 
$
2,852

 
$
2,572

 
11%
Diluted earnings per common share
 
$
.70

 
$
.65

 
8%
 
$
2.05

 
$
1.79

 
15%
Pre-tax profit margin
 
45.6
%
 
47.3
%
 
 
 
46.0
%
 
44.9
%
 
 
Return on average common
 
 
 
 
 
 
 
 
 
 
 
 
    stockholders’ equity (annualized)
 
20
%
 
20
%
 
 
 
20
%
 
19
%
 
 
EPS impact of $62 million in severance charges
 
 
 
 
 
 
 
 
 
 
 
 
related to position eliminations (1)
 
$
(.04
)
 
—

 
 
 
$
(.04
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
 
 
 
 
 
(1) The pre-tax severance charges related to position eliminations, which reduced earnings per share by $.04, are included in Compensation and benefits expense.

CEO Walt Bettinger said, “As we remain faithful to our “Through Clients’ Eyes” strategy, investors continue to reward us with strong business growth. Our contemporary full-service model helps us remain a trusted partner as clients navigate an environment that has only grown more cloudy in recent months. The equity markets have shown noteworthy durability – the S&P 500 remained up nearly 20% for the year as of quarter-end. Concerns persist, however, regarding global trade and a generally softening economic outlook. The Federal Reserve has moved forward with expected mid-cycle easing, cutting short-term interest rates 25 bps in both July and September, and long-term rates have also shown significant declines. Against this backdrop, clients brought us $56.6 billion in core net new assets, a third quarter record, which brings our year-to-date total to $145.5 billion, representing a 6% annualized organic growth rate. In addition, we attracted 363,000 new brokerage accounts in the quarter, helping raise active brokerage accounts to 12.1 million, up 6% year-over-year. Client demand for help and guidance continued to grow, with assets receiving ongoing advisory services reaching nearly $2.0 trillion at quarter end, up 7%. Assets in digital advisory solutions grew even faster, rising 20% to $43.0 billion at the end of September. Overall, our client assets totaled a record $3.77 trillion at quarter end, up 6%.”

“Our commitment to challenge the status quo and disrupt the industry on behalf of clients endures through all environments,” Mr. Bettinger added. “Most recently, we eliminated online trade commissions for stocks, ETFs, and

- 1 -

options listed on U.S. or Canadian exchanges, a move that represents another significant investment in bringing ever greater value to our clients. This action is consistent with the principles on which our company was founded, helping realize Chuck Schwab’s vision of making investing accessible to all. We also continue to extend our products and platforms, including the recent launch of three new fixed-income ETFs. In support of our independent advisors, we’ve made enhancements to Institutional Intelligent Portfolios® including a paperless account conversion feature making it simpler than ever to incorporate automated investing into their practices, while freeing up time to spend with investors and scale their businesses. Additionally, on July 25th, we announced an agreement to acquire certain assets of USAA’s Investment Management Company, with closing targeted for the middle of next year. We are honored to have the opportunity to serve USAA members as their exclusive wealth management and brokerage provider, and are looking forward to exploring a new growth opportunity via the multi-year referral agreement included in this transaction.”

Mr. Bettinger concluded, “Schwab’s ‘Virtuous Cycle’ is renewed by bold steps like our recent price cuts, reflecting our belief that investors will entrust us with more business as we do right by them. We are acting from a position of strength – both financial and competitive – which allows us to take these steps with confidence, knowing we are able to push forward as we choose, not as the current environment might dictate.”

CFO Peter Crawford commented, “Our continued success with clients and full-service model enabled us to deliver third quarter revenues of $2.7 billion, up 5% year-over-year. Net interest revenue rose 7% from a year ago to $1.6 billion, largely a result of generally higher investment yields and higher client cash allocations. Growing client balances in purchased money market funds, advisory solutions, and other third-party mutual funds and ETFs pushed asset management and administration fees to $825 million, increasing 2% year-over-year. A pick-up in trading volumes was more than offset by a decline in average revenue per trade, bringing trading revenue to $172 million, down 2% from a year ago. Turning to expenses, our reported total of $1.5 billion includes $62 million in severance charges associated with our decision to eliminate positions spanning approximately 3% of our workforce, as we work to ensure we remain properly positioned to serve clients through what has become a more challenging environment. These charges contributed roughly half of our 8% year-over-year expense growth. Ongoing expenses remained in line with management expectations and we were able to report a pre-tax profit margin of 45.6% – our sixth consecutive quarter of at least 45%.”

Mr. Crawford added, “Consistent with the evolution of the Schwab story to include both business growth and meaningful capital returns, we repurchased 19.9 million shares for approximately $770 million during the third quarter. We have repurchased more than 49 million shares for $2 billion under our current $4 billion authorization. Our expanding client base and related increases in their cash balances drove modest organic growth in our balance sheet during the third quarter, with consolidated assets increasing $2.7 billion sequentially to $279 billion at September 30th. Our preliminary Tier 1 Leverage Ratio ended the quarter at 7.3%, slightly above our operating objective of 6.75%-7.00%; our capital management in coming quarters will incorporate preparations for the $1.8 billion USAA transaction next year. With a 20% return on equity for the quarter and year-to-date, we remain well-positioned to drive strong profitable growth into the future through a combination of sustained business momentum, thoughtful expense management, and a healthy balance sheet.”

Commentary from the CFO
Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on our decision to reduce online trade commissions for U.S. and Canadian-listed equities, ETFs, and options to $0, was posted on October 1, 2019.

Forward-Looking Statements
This press release contains forward-looking statements relating to business growth; enhancements to products and platforms; the company’s acquisition of certain assets of USAA’s Investment Management Company (IMCO), including timing of closing and entering into a referral agreement; financial and competitive strength; capital returns to stockholders; growth in the client base, client accounts and assets; cash balances; Tier 1 Leverage Ratio operating objective; profitable growth; expense management; and the balance sheet. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

- 2 -

Important factors that may cause such differences include, but are not limited to, general market conditions, including the level of interest rates, equity valuations, and trading activity; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; competitive pressures on pricing, including deposit rates; the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; client sensitivity to rates; failure of the parties to satisfy the closing conditions in the USAA IMCO purchase agreement in a timely manner or at all, including regulatory approvals and the implementation of conversion plans; capital and liquidity needs and management; level of client assets, including cash balances; the company’s ability to manage expenses; and other factors set forth in the company’s most recent report on Form 10-K.

About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 365 offices and 12.1 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking accounts, and $3.77 trillion in client assets as of September 30, 2019. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.schwab.com and https://www.aboutschwab.com.

###

- 3 -


THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)





 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net Revenues
 
 
 
 
 
 
 
Interest revenue
$
1,892

 
$
1,755

 
$
5,817

 
$
4,766

Interest expense
(261
)
 
(228
)
 
(896
)
 
(569
)
Net interest revenue
1,631

 
1,527

 
4,921

 
4,197

Asset management and administration fees
825

 
809

 
2,366

 
2,474

Trading revenue
172

 
176

 
531

 
557

Other
83

 
67

 
297

 
235

Total net revenues
2,711

 
2,579

 
8,115

 
7,463

Expenses Excluding Interest
 
 
 
 
 
 
 
Compensation and benefits
857

 
737

 
2,514

 
2,252

Professional services
168

 
164

 
516

 
476

Occupancy and equipment
144

 
124

 
408

 
368

Advertising and market development
71

 
70

 
217

 
220

Communications
63

 
59

 
187

 
179

Depreciation and amortization
88

 
78

 
255

 
226

Regulatory fees and assessments
30

 
57

 
92

 
158

Other
54

 
71

 
190

 
232

Total expenses excluding interest
1,475

 
1,360

 
4,379

 
4,111

Income before taxes on income
1,236

 
1,219

 
3,736

 
3,352

Taxes on income
285

 
296

 
884

 
780

Net Income
951

 
923

 
2,852

 
2,572

Preferred stock dividends and other
38

 
38

 
127

 
128

Net Income Available to Common Stockholders
$
913

 
$
885

 
$
2,725

 
$
2,444

Weighted-Average Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
1,300

 
1,351

 
1,320

 
1,349

Diluted
1,308

 
1,364

 
1,329

 
1,363

Earnings Per Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
$
.70

 
$
.66

 
$
2.06

 
$
1.81

Diluted
$
.70

 
$
.65

 
$
2.05

 
$
1.79



         


- 4 -

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
 
Q3-19 % change
 
 
2019
 
2018
 
vs.
 
vs.
 
 
Third
 
Second
 
First
 
Fourth
 
Third
(In millions, except per share amounts and as noted)
Q3-18
 
Q2-19
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Net Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest revenue
7
%
 
1
%
 
 
$
1,631

 
$
1,609

 
$
1,681

 
$
1,626

 
$
1,527

Asset management and administration fees
2
%
 
5
%
 
 
825

 
786

 
755

 
755

 
809

Trading revenue
(2
)%
 
(1
)%
 
 
172

 
174

 
185

 
206

 
176

Other
24
%
 
(26
)%
 
 
83

 
112

 
102

 
82

 
67

Total net revenues
5
%
 
1
%
 
 
2,711

 
2,681

 
2,723

 
2,669

 
2,579

Expenses Excluding Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
16
%
 
6
%
 
 
857

 
807

 
850

 
805

 
737

Professional services
2
%
 
(6
)%
 
 
168

 
178

 
170

 
178

 
164

Occupancy and equipment
16
%
 
8
%
 
 
144

 
133

 
131

 
128

 
124

Advertising and market development
1
%
 
(8
)%
 
 
71

 
77

 
69

 
93

 
70

Communications
7
%
 
2
%
 
 
63

 
62

 
62

 
63

 
59

Depreciation and amortization
13
%
 
5
%
 
 
88

 
84

 
83

 
80

 
78

Regulatory fees and assessments
(47
)%
 
—

 
 
30

 
30

 
32

 
31

 
57

Other
(24
)%
 
(27
)%
 
 
54

 
74

 
62

 
81

 
71

Total expenses excluding interest
8
%
 
2
%
 
 
1,475

 
1,445

 
1,459

 
1,459

 
1,360

Income before taxes on income
1
%
 
—

 
 
1,236

 
1,236

 
1,264

 
1,210

 
1,219

Taxes on income
(4
)%
 
(5
)%
 
 
285

 
299

 
300

 
275

 
296

Net Income
3
%
 
1
%
 
 
$
951

 
$
937

 
$
964

 
$
935

 
$
923

Preferred stock dividends and other
—

 
(24
)%
 
 
38

 
50

 
39

 
50

 
38

Net Income Available to Common Stockholders
3
%
 
3
%
 
 
$
913

 
$
887

 
$
925

 
$
885

 
$
885

Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
6
%
 
4
%
 
 
$
.70

 
$
.67

 
$
.69

 
$
.66

 
$
.66

Diluted
8
%
 
6
%
 
 
$
.70

 
$
.66

 
$
.69

 
$
.65

 
$
.65

Dividends declared per common share
31
%
 
—

 
 
$
.17

 
$
.17

 
$
.17

 
$
.13

 
$
.13

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
(4
)%
 
(2
)%
 
 
1,300

 
1,328

 
1,333

 
1,343

 
1,351

Diluted
(4
)%
 
(2
)%
 
 
1,308

 
1,337

 
1,344

 
1,354

 
1,364

Performance Measures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax profit margin
 
 
 
 
 
45.6
%
 
46.1
%
 
46.4
%
 
45.3
%
 
47.3
%
Return on average common stockholders’ equity (annualized) (1)
 
 
 
 
 
20
%
 
19
%
 
20
%
 
20
%
 
20
%
Financial Condition (at quarter end, in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
(7
)%
 
(16
)%
 
 
$
20.3

 
$
24.2

 
$
32.6

 
$
27.9

 
$
21.8

Cash and investments segregated
91
%
 
15
%
 
 
16.2

 
14.1

 
13.9

 
13.6

 
8.5

Receivables from brokerage clients — net
(6
)%
 
(1
)%
 
 
21.1

 
21.4

 
20.5

 
21.7

 
22.4

Available for sale securities
(2
)%
 
3
%
 
 
56.5

 
54.6

 
60.0

 
66.6

 
57.6

Held to maturity securities
1
%
 
1
%
 
 
140.2

 
138.3

 
132.4

 
144.0

 
139.0

Bank loans — net
2
%
 
2
%
 
 
16.9

 
16.6

 
16.5

 
16.6

 
16.6

Total assets
3
%
 
1
%
 
 
279.0

 
276.3

 
282.8

 
296.5

 
272.1

Bank deposits
(2
)%
 
—

 
 
209.3

 
208.4

 
219.5

 
231.4

 
213.4

Payables to brokerage clients
28
%
 
15
%
 
 
35.6

 
31.0

 
29.7

 
32.7

 
27.9

Long-term debt
28
%
 
—

 
 
7.4

 
7.4

 
6.8

 
6.9

 
5.8

Stockholders’ equity
3
%
 
—

 
 
21.4

 
21.3

 
21.6

 
20.7

 
20.8

Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees (at quarter end, in thousands)
4
%
 
(3
)%
 
 
19.8

 
20.5

 
20.0

 
19.5

 
19.1

Capital expenditures — purchases of equipment, office facilities, and
property, net (in millions)
22
%
 
10
%
 
 
$
190

 
$
173

 
$
181

 
$
159

 
$
156

Expenses excluding interest as a percentage of average client assets
(annualized)
 
 
 
 
 
0.16
%
 
0.16
%
 
0.17
%
 
0.17
%
 
0.15
%
Clients’ Daily Average Trades (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue trades (2)
3
%
 
1
%
 
 
395

 
392

 
418

 
466

 
382

Asset-based trades (3)
(5
)%
 
(11
)%
 
 
123

 
138

 
149

 
188

 
129

Other trades (4)
16
%
 
8
%
 
 
200

 
186

 
210

 
213

 
172

Total
5
%
 
—

 
 
718

 
716

 
777

 
867

 
683

Average Revenue Per Revenue Trade (2)
(5
)%
 
—

 
 
$
6.94

 
$
6.94

 
$
7.19

 
$
7.13

 
$
7.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(2) Includes all client trades that generate trading revenue (i.e., commission revenue or principal transaction revenue); also known as DART.
(3) Includes eligible trades executed by clients who participate in one or more of the company’s asset-based pricing relationships.
(4) Includes all commission-free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.

- 5 -

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions)
(Unaudited)

 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Average
Balance
 
Interest
Revenue/
Expense
 
Average
Yield/
Rate
 
 
Average
Balance
 
Interest
Revenue/
Expense
 
Average
Yield/
Rate
 
 
Average
Balance
 
Interest
Revenue/
Expense
 
Average
Yield/
Rate
 
 
Average
Balance
 
Interest
Revenue/
Expense
 
Average
Yield/
Rate
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
22,288

 
$
123

 
2.16
%
 
 
$
18,623

 
$
94

 
1.98
%
 
 
$
24,506

 
$
432

 
2.33
%
 
 
$
16,164

 
$
217

 
1.78
%
Cash and investments segregated
16,140

 
92

 
2.25
%
 
 
10,253

 
51

 
1.94
%
 
 
14,771

 
264

 
2.36
%
 
 
12,002

 
149

 
1.64
%
Broker-related receivables
216

 
2

 
2.34
%
 
 
307

 
1

 
1.94
%
 
 
225

 
4

 
2.21
%
 
 
324

 
4

 
1.62
%
Receivables from brokerage clients
19,438

 
205

 
4.13
%
 
 
20,224

 
217

 
4.19
%
 
 
19,279

 
636

 
4.35
%
 
 
19,629

 
600

 
4.03
%
Available for sale securities (1)
53,487

 
366

 
2.71
%
 
 
55,283

 
328

 
2.34
%
 
 
58,738

 
1,203

 
2.72
%
 
 
52,797

 
859

 
2.16
%
Held to maturity securities
136,880

 
906

 
2.63
%
 
 
137,065

 
887

 
2.57
%
 
 
134,031

 
2,721

 
2.70
%
 
 
129,490

 
2,420

 
2.48
%
Bank loans
16,724

 
146

 
3.49
%
 
 
16,579

 
142

 
3.43
%
 
 
16,621

 
443

 
3.56
%
 
 
16,522

 
410

 
3.31
%
Total interest-earning assets
265,173

 
1,840

 
2.75
%
 
 
258,334

 
1,720

 
2.63
%
 
 
268,171

 
5,703

 
2.82
%
 
 
246,928

 
4,659

 
2.50
%
Other interest revenue
 
 
52

 
 
 
 
 
 
35

 
 
 
 
 
 
114

 
 
 
 
 
 
107

 
 
Total interest-earning assets
$
265,173

 
$
1,892

 
2.82
%
 
 
$
258,334

 
$
1,755

 
2.69
%
 
 
$
268,171

 
$
5,817

 
2.88
%
 
 
$
246,928

 
$
4,766

 
2.56
%
Funding sources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bank deposits
$
208,592

 
$
166

 
0.32
%
 
 
$
208,666

 
$
158

 
0.30
%
 
 
$
213,089

 
$
616

 
0.39
%
 
 
$
193,010

 
$
339

 
0.23
%
Payables to brokerage clients
25,080

 
21

 
0.33
%
 
 
20,595

 
16

 
0.31
%
 
 
23,443

 
68

 
0.39
%
 
 
21,591

 
37

 
0.23
%
Short-term borrowings (2)
21

 
—

 
2.48
%
 
 
—

 
—

 
—

 
 
18

 
—

 
2.49
%
 
 
4,488

 
54

 
1.59
%
Long-term debt
7,425

 
67

 
3.58
%
 
 
5,790

 
51

 
3.52
%
 
 
7,122

 
192

 
3.59
%
 
 
5,053

 
131

 
3.46
%
Total interest-bearing liabilities
241,118

 
254

 
0.42
%
 
 
235,051

 
225

 
0.38
%
 
 
243,672

 
876

 
0.48
%
 
 
224,142

 
561

 
0.33
%
Non-interest-bearing funding sources
24,055

 
 
 
 
 
 
23,283

 
 
 
 
 
 
24,499

 
 
 
 
 
 
22,786

 
 
 
 
Other interest expense
 
 
7

 
 
 
 
 
 
3

 
 
 
 
 
 
20

 
 
 
 
 
 
8

 
 
Total funding sources
$
265,173

 
$
261

 
0.39
%
 
 
$
258,334

 
$
228

 
0.36
%
 
 
$
268,171

 
$
896

 
0.45
%
 
 
$
246,928

 
$
569

 
0.31
%
Net interest revenue
 
 
$
1,631

 
2.43
%
 
 
 
 
$
1,527

 
2.33
%
 
 
 
 
$
4,921

 
2.43
%
 
 
 
 
$
4,197

 
2.25
%
(1) Amounts have been calculated based on amortized cost.
(2) Interest revenue or expense was less than $500,000 in the period or periods presented.




- 6 -

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions)
(Unaudited)


 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Average
Client
Assets
 
Revenue
 
Average
Fee
 
 
Average
Client
Assets
 
Revenue
 
Average
Fee
 
 
Average
Client
Assets
 
Revenue
 
Average
Fee
 
 
Average
Client
Assets
 
Revenue
 
Average
Fee
Schwab money market funds
$
177,892

 
$
133

 
0.30
%
 
 
$
130,202

 
$
122

 
0.37
%
 
 
$
166,053

 
$
378

 
0.30
%
 
 
$
142,177

 
$
451

 
0.42
%
Schwab equity and bond funds, ETFs, and
  collective trust funds (CTFs) (1)
274,005

 
75

 
0.11
%
 
 
235,148

 
78

 
0.13
%
 
 
260,034

 
219

 
0.11
%
 
 
221,818

 
228

 
0.14
%
Mutual Fund OneSource® and other non-
  transaction fee funds
192,409

 
153

 
0.32
%
 
 
209,560

 
171

 
0.32
%
 
 
190,847

 
452

 
0.32
%
 
 
216,699

 
524

 
0.32
%
Other third-party mutual funds and ETFs (2)
486,285

 
84

 
0.07
%
 
 
342,316

 
75

 
0.09
%
 
 
469,901

 
238

 
0.07
%
 
 
329,033

 
216

 
0.09
%
Total mutual funds, ETFs, and CTFs (3)
$
1,130,591

 
445

 
0.16
%
 
 
$
917,226

 
446

 
0.19
%
 
 
$
1,086,835

 
1,287

 
0.16
%
 
 
$
909,727

 
1,419

 
0.21
%
Advice solutions (3) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-based
$
251,591

 
305

 
0.48
%
 
 
$
234,338

 
294

 
0.50
%
 
 
$
241,678

 
878

 
0.49
%
 
 
$
228,326

 
859

 
0.50
%
Non-fee-based
71,195

 
—

 
—

 
 
65,146

 
—

 
—

 
 
69,136

 
—

 
—

 
 
62,377

 
—

 
—

Total advice solutions
$
322,786

 
305

 
0.37
%
 
 
$
299,484

 
294

 
0.39
%
 
 
$
310,814

 
878

 
0.38
%
 
 
$
290,703

 
859

 
0.40
%
Other balance-based fees (1,4)
421,241

 
56

 
0.05
%
 
 
384,038

 
52

 
0.05
%
 
 
407,762

 
162

 
0.05
%
 
 
388,836

 
158

 
0.05
%
Other (5)
 
 
19

 
 
 
 
 
 
17

 
 
 
 
 
 
39

 
 
 
 
 
 
38

 
 
Total asset management and administration fees
 
 
$
825

 
 
 
 
 
 
$
809

 
 
 
 
 
 
$
2,366

 
 
 
 
 
 
$
2,474

 
 
(1) Beginning in the first quarter of 2019, a change was made to move CTFs from other balance-based fees. Prior periods have been recast to reflect this change.
(2) Includes Schwab ETF OneSourceTM.
(3) Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, and Schwab Intelligent Portfolios PremiumTM; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.
(4) Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(5) Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.
 

- 7 -

THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)


 
Q3-19 % Change
 
 
2019
 
2018
 
vs.
 
vs.
 
 
Third
 
Second
 
First
 
Fourth
 
Third
(In billions, at quarter end, except as noted)
Q3-18
 
Q2-19
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Assets in client accounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Schwab One®, certain cash equivalents and bank deposits
1
%
 
2
%
 
 
$
242.9

 
$
237.3

 
$
247.0

 
$
261.2

 
$
239.5

Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds (1)
46
%
 
11
%
 
 
187.0

 
168.1

 
159.7

 
153.5

 
128.5

Equity and bond funds and CTFs (2,3)
5
%
 
1
%
 
 
112.4

 
110.9

 
106.2

 
94.3

 
107.4

Total proprietary mutual funds and CTFs
27
%
 
7
%
 
 
299.4

 
279.0

 
265.9

 
247.8

 
235.9

Mutual Fund Marketplace® (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual Fund OneSource® and other non-transaction fee funds
(8
)%
 
(2
)%
 
 
194.7

 
197.8

 
195.1

 
180.5

 
212.6

Mutual fund clearing services
8
%
 
2
%
 
 
197.2

 
192.9

 
182.7

 
164.4

 
182.2

Other third-party mutual funds
5
%
 
1
%
 
 
776.8

 
767.3

 
737.2

 
650.4

 
740.1

Total Mutual Fund Marketplace
3
%
 
1
%
 
 
1,168.7

 
1,158.0

 
1,115.0

 
995.3

 
1,134.9

Total mutual fund assets
7
%
 
2
%
 
 
1,468.1

 
1,437.0

 
1,380.9

 
1,243.1

 
1,370.8

Exchange-traded funds (ETFs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proprietary ETFs (3)
20
%
 
5
%
 
 
150.8

 
143.6

 
134.7

 
115.2

 
125.2

Schwab ETF OneSource™ (4)
183
%
 
7
%
 
 
94.1

 
88.1

 
82.5

 
30.6

 
33.3

Other third-party ETFs
(5
)%
 
2
%
 
 
321.6

 
315.7

 
303.7

 
309.9

 
338.6

Total ETF assets
14
%
 
3
%
 
 
566.5

 
547.4

 
520.9

 
455.7

 
497.1

Equity and other securities (2)
(1
)%
 
1
%
 
 
1,178.0

 
1,168.3

 
1,131.3

 
1,005.4

 
1,186.7

Fixed income securities
14
%
 
—

 
 
332.3

 
332.1

 
324.1

 
306.1

 
290.4

Margin loans outstanding
(7
)%
 
(2
)%
 
 
(19.4
)
 
(19.7
)
 
(18.8
)
 
(19.3
)
 
(20.8
)
Total client assets
6
%
 
2
%
 
 
$
3,768.4

 
$
3,702.4

 
$
3,585.4

 
$
3,252.2

 
$
3,563.7

Client assets by business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services
5
%
 
2
%
 
 
$
1,978.7

 
$
1,946.5

 
$
1,886.7

 
$
1,701.7

 
$
1,876.9

Advisor Services
6
%
 
2
%
 
 
1,789.7

 
1,755.9

 
1,698.7

 
1,550.5

 
1,686.8

Total client assets
6
%
 
2
%
 
 
$
3,768.4

 
$
3,702.4

 
$
3,585.4

 
$
3,252.2

 
$
3,563.7

Net growth in assets in client accounts (for the quarter ended)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net new assets by business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services
(9
)%
 
42
%
 
 
$
25.4

 
$
17.9

 
$
29.2

 
$
28.7

 
$
27.8

Advisor Services
21
%
 
62
%
 
 
31.2

 
19.3

 
22.5

 
26.6

 
25.7

Total net new assets
6
%
 
52
%
 
 
$
56.6

 
$
37.2

 
$
51.7

 
$
55.3

 
$
53.5

Net market gains (losses)
(92
)%
 
(88
)%
 
 
9.4

 
79.8

 
281.5

 
(366.8
)
 
113.2

Net growth (decline)
(60
)%
 
(44
)%
 
 
$
66.0

 
$
117.0

 
$
333.2

 
$
(311.5
)
 
$
166.7

New brokerage accounts (in thousands, for the quarter ended)
(2
)%
 
(6
)%
 
 
363

 
386

 
386

 
380

 
369

Client accounts (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active brokerage accounts (5)
6
%
 
1
%
 
 
12,118

 
11,967

 
11,787

 
11,593

 
11,423

Banking accounts
6
%
 
2
%
 
 
1,361

 
1,336

 
1,300

 
1,302

 
1,283

Corporate retirement plan participants
6
%
 
1
%
 
 
1,718

 
1,698

 
1,684

 
1,655

 
1,627

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.
(2) Beginning in the first quarter of 2019, a change was made to move CTFs from equity and other securities. Prior periods have been recast to reflect this change.
(3) Includes balances held on and off the Schwab platform. As of September 30, 2019, off-platform equity and bond funds, CTFs, and ETFs were $12.6 billion, $4.8 billion, and $39.9 billion, respectively.
(4) Excludes all proprietary mutual funds and ETFs.
(5) In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.


- 8 -

The Charles Schwab Corporation Monthly Activity Report For September 2019
 
2018
  
  
  
2019
  
  
  
  
  
  
  
  
Change
 
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Mo.
Yr.
Market Indices (at month end)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dow Jones Industrial Average
26,458

25,116

25,538

23,327

25,000

25,916

25,929

26,593

24,815

26,600

26,864

26,403

26,917

2
%
2
%
Nasdaq Composite
8,046

7,306

7,331

6,635

7,282

7,533

7,729

8,095

7,453

8,006

8,175

7,963

7,999

—

(1
)%
Standard & Poor’s 500
2,914

2,712

2,760

2,507

2,704

2,784

2,834

2,946

2,752

2,942

2,980

2,926

2,977

2
%
2
%
Client Assets (in billions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Client Assets
3,555.9

3,563.7

3,388.1

3,431.9

3,252.2

3,447.7

3,533.0

3,585.4

3,668.5

3,530.6

3,702.4

3,746.7

3,716.5

 
 
Net New Assets
16.4

14.9

15.6

24.8

15.1

18.3

18.3

(0.3
)
17.3

20.2

19.3

19.9

17.4

(13
)%
6
%
Net Market Gains (Losses)
(8.6
)
(190.5
)
28.2

(204.5
)
180.4

67.0

34.1

83.4

(155.2
)
151.6

25.0

(50.1
)
34.5

 
 
Total Client Assets (at month end)
3,563.7

3,388.1

3,431.9

3,252.2

3,447.7

3,533.0

3,585.4

3,668.5

3,530.6

3,702.4

3,746.7

3,716.5

3,768.4

1
%
6
%
Core Net New Assets (1)
16.4

14.9

15.6

24.8

15.1

18.3

18.3

(0.3
)
17.3

20.2

19.3

19.9

17.4

(13
)%
6
%
Receiving Ongoing Advisory Services (at month end)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services
292.7

280.3

284.7

272.4

286.9

294.2

298.4

305.7

298.5

311.6

314.8

314.2

318.5

1
%
9
%
Advisor Services (2)
1,559.2

1,485.8

1,510.1

1,436.1

1,514.2

1,551.6

1,572.8

1,608.0

1,554.6

1,626.6

1,646.1

1,635.7

1,659.4

1
%
6
%
Client Accounts (at month end, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active Brokerage Accounts (3)
11,423

11,479

11,529

11,593

11,653

11,712

11,787

11,870

11,929

11,967

12,026

12,085

12,118

—

6
%
Banking Accounts (4)
1,283

1,289

1,297

1,302

1,312

1,313

1,300

1,310

1,323

1,336

1,352

1,361

1,361

—

6
%
Corporate Retirement Plan Participants
1,627

1,634

1,639

1,655

1,679

1,685

1,684

1,690

1,699

1,698

1,701

1,711

1,718

—

6
%
Client Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Brokerage Accounts (in thousands)
119

133

115

132

131

115

140

147

123

116

129

126

108

(14
)%
(9
)%
Inbound Calls (in thousands)
1,715

1,976

1,681

1,839

1,924

1,742

1,882

1,966

1,671

1,595

1,773

1,759

1,570

(11
)%
(8
)%
Web Logins (in thousands)
53,923

59,261

54,654

53,920

64,563

60,121

63,692

65,669

61,522

60,824

65,809

63,928

63,530

(1
)%
18
%
Client Cash as a Percentage of Client Assets (5)
10.3
%
11.1
%
11.2
%
12.8
%
11.7
%
11.5
%
11.3
%
10.9
%
11.3
%
10.9
%
11.0
%
11.3
%
11.4
%
 10 bp

110 bp

Mutual Fund and Exchange-Traded Fund
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net Buys (Sells) (6, 7) (in millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Large Capitalization Stock
311

308

331

717

1,343

1,109

1,045

980

1,114

206

717

328

23

 
 
Small / Mid Capitalization Stock
151

(1,344
)
(456
)
(1,414
)
1,329

638

302

136

(190
)
18

10

(374
)
(212
)
 
 
International
(88
)
(109
)
(418
)
(2,163
)
2,212

1,086

1,274

863

(100
)
225

744

(1,390
)
(355
)
 
 
Specialized
73

(914
)
(397
)
(2,105
)
124

609

750

(109
)
(440
)
341

418

353

583

 
 
Hybrid
(324
)
(1,313
)
(1,248
)
(2,985
)
(321
)
(309
)
(357
)
(228
)
(316
)
(181
)
(366
)
(569
)
(372
)
 
 
Taxable Bond
1,371

(351
)
(836
)
(4,342
)
3,956

2,871

1,923

3,029

1,821

2,378

3,806

2,725

2,935

 
 
Tax-Free Bond
262

(591
)
(407
)
(409
)
1,184

1,111

1,133

760

1,057

682

960

760

593

 
 
Net Buy (Sell) Activity (in millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual Funds (6)
(1,538
)
(5,734
)
(7,955
)
(21,372
)
6,740

2,312

1,850

1,860

86

7

2,151

(1,281
)
(573
)
 
 
Exchange-Traded Funds (7)
3,294

1,420

4,524

8,671

3,087

4,803

4,220

3,571

2,860

3,662

4,138

3,114

3,768

 
 
Money Market Funds
(1,933
)
2,546

8,515

13,548

4,944

(1,577
)
1,785

(2,097
)
5,067

4,570

6,143

6,068

5,833

 
 
Average Interest-Earning Assets (8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions of dollars)
261,741

264,156

265,648

274,913

277,068

270,718

272,727

270,308

263,718

262,759

263,993

265,005

266,430

1
%
2
%
 
(1) Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods.
(2) Excludes Retirement Business Services.
(3) In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.
(4) In March 2019, banking accounts were reduced by approximately 23,000 as a result of inactive account closures.
(5) Schwab One®, certain cash equivalents, bank deposits, and money market fund balances as a percentage of total client assets.
(6) Represents the principal value of client mutual fund transactions handled by Schwab, including transactions in proprietary funds. Includes institutional funds available only to Investment Managers. Excludes money market fund transactions.
(7) Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.
(8) Represents average total interest-earning assets on the company’s balance sheet.

- 9 -