EX-99.1 2 a2q22exhibit991_06302022.htm EX-99.1 Document

EXHIBIT 99.1

News Release

Contacts:
cslogoa03a.jpg
MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Jeff Edwards
Charles Schwab
Phone: 415-667-1524

SCHWAB’S SECOND QUARTER REVENUES RISE 13% TO SURPASS $5 BILLION
Quarterly net income also reaches new highs of $1.8 billion GAAP, $2.0 billion adjusted (1)
Sustained client focus helps power continued strong business momentum

    WESTLAKE, Texas, July 18, 2022 – The Charles Schwab Corporation announced today that its net income for the second quarter of 2022 was a record $1.8 billion compared with $1.4 billion for the first quarter of 2022, and $1.3 billion for the second quarter of 2021. Net income for the six months ended June 30, 2022 was $3.2 billion, compared with $2.7 billion for the year-earlier period. During the quarter, acquisition and integration-related costs and the amortization of acquired intangibles totaled $94 million and $154 million, respectively, on a pre-tax basis. In addition, the company’s second quarter of 2021 included a charge of approximately $200 million, or $.10 per share, regarding a now settled regulatory matter.

Three Months Ended June 30,%Six Months Ended June 30,%
Financial Highlights (1)
20222021Change20222021Change
Net revenues (in millions)$5,093 $4,527 13%$9,765 $9,242 6%
Net income (in millions)
GAAP$1,793 $1,265 42%$3,195 $2,749 16%
Adjusted (1)
$1,981 $1,483 34%$3,572 $3,173 13%
Diluted earnings per common share
GAAP$.87 $.59 47%$1.54 $1.32 17%
Adjusted (1)
$.97 $.70 39%$1.74 $1.55 12%
Pre-tax profit margin
GAAP44.6 %38.0 %42.1 %39.8 %
Adjusted (1)
49.5 %44.6 %47.2 %46.0 %
Return on average common
    stockholders’ equity (annualized)19 %10 %15 %10 %
Return on tangible
common equity (annualized) (1)
45 %20 %32 %21 %
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
(1) Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

CEO Walt Bettinger said, “Throughout the first half of 2022, we’ve kept our focus on serving clients and they’ve rewarded us with sustained strength in business momentum and growth. Clients remained engaged during the second quarter even as pressures mounted on the U.S. economy, including rising inflation and the Fed’s corresponding shift to an aggressive tightening stance, ongoing geopolitical turmoil driven by the war in Ukraine, and more-volatile equity markets that are now in bear-market territory. These pressures have all contributed to an environment that highlights the importance of our contemporary approach to full-service investing, where clients can choose how to access the help they need in the manner that works best for them by visiting one of our branches, speaking with one of our phone-based investment professionals, or utilizing the content, resources and capabilities provided through our website and mobile app.

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The value of Schwab’s scalable, multi-channel service model was on full display during the past quarter as we facilitated over 575 million total interactions, including nearly 5 million inbound contacts with an average speed to answer of less than 20 seconds.”

“Sustained client engagement was also reflected in daily trading volume during the second quarter, which averaged 6.2 million, approximately 3% above year-earlier levels,” Mr. Bettinger continued. “Clients opened 1.0 million new brokerage accounts during the quarter, and we ended June with 33.9 million active accounts, up 5% year-over-year. Additionally, while the core net new assets (NNA) that clients brought to us during the quarter were impacted by the record tax-season outflows we experienced in April, the $73 billion in core NNA that came in between May 1 and June 30 represented a continuation of the 6% annualized organic growth rate we achieved during the first quarter of 2022. We ended June with $6.83 trillion in client assets versus $7.57 trillion a year earlier, which helps illustrate the extent of the market valuation pressures clients are facing even as they’ve added more than $480 billion in core NNA to their accounts over the past 12 months.”

Mr. Bettinger concluded, “As we move deeper into 2022, our focus remains squarely on executing our “Through Clients’ Eyes” strategy, along with driving progress across our strategic priorities and our TD Ameritrade integration. We know that clients trust us to provide the help and advice they need to navigate any environment, but that it’s particularly important to be there for them as they assess their investments in light of tougher headwinds. To me, there is no greater reward than seeing our client service professionals earn year-to-date satisfaction scores that are among the highest we’ve ever recorded. We remain convinced that our client-first mindset – in combination with our service culture and relentless attention to scale and efficiency – helps create a formidable competitive advantage for Schwab as we continue to realize our vision of modern wealth management.”

“Our second quarter financial results demonstrated the power of our all-weather model as we supported our clients through an increasingly challenging environment,” noted CFO Peter Crawford. “Record total revenue of $5.1 billion, up 13% versus the prior year, reflected a combination of ongoing business momentum, rapidly tightening monetary policy, and continued strength in client engagement. Net interest revenue was up 31% from the prior year as higher interest rates and client cash balances more than offset the impact of softer securities lending activity. At the same time, asset management and administration fees were essentially flat due to weaker equity market valuations and trading revenues were down 7% largely due to changes in the mix of client activity. Additionally, the other revenue line included $37 million in pre-tax gains related to the sales of Schwab Compliance Technologies and a small business investment.”

Mr. Crawford continued, “On the expense front, quarterly GAAP spending increased slightly year-over-year to $2.8 billion, including $94 million in acquisition and integration-related costs and $154 million in amortization of acquired intangibles. Exclusive of these items, adjusted total expenses (1) were up 2% versus the second quarter of 2021. Our pre-tax profit margin expanded to 44.6% and rose nearly 500 basis points to 49.5% on an adjusted basis (1). Also, the reversal of $62 million in tax reserves due to the resolution of certain state matters helped further bolster after-tax profitability. We believe the combination of our diversified revenue mix with disciplined expense prioritization helps keep us positioned to deliver healthy financial performance through the cycle.”

“Attentive balance sheet management, including the maintenance of appropriate capital and liquidity to support client activity, remains core to our financial strategy,” added Mr. Crawford. “During the quarter, total assets contracted by 6% to $638 billion. This decrease was primarily attributable to record tax disbursements in April as well as expected client cash sorting behavior during the latter part of the period. The company’s preliminary Tier 1 Leverage Ratio moved closer to our operating objective, expanding to 6.4% at the end of June, while second quarter return on equity and ROTCE (1) were 19% and 45%, respectively. The overall strength of today’s results highlights our continued success with clients and further bolsters our confidence in our ability to build long-term stockholder value.”

(1) Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

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 recent account activity was posted on May 14, 2021.

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Summer Business Update
The company has scheduled a Summer Business Update for institutional investors on Thursday, July 28, 2022. The Update, which will be held via webcast, is scheduled to run from approximately 8:00 a.m. - 9:00 a.m. PT, 11:00 a.m. -
12:00 p.m. ET. Registration for this Update is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements
This press release contains forward-looking statements relating to business momentum and growth; strategic priorities; TD Ameritrade integration; competitive advantage; all-weather model; expense prioritization; financial performance; Tier 1 leverage ratio operating objective; and stockholder value. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the company’s ability to attract and retain clients and independent investment advisors and grow those relationships and client assets; develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire and retain talent; support client activity levels; successfully implement integration strategies and plans; manage expenses; and monetize client assets. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including equity valuations and the level of interest rates; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; competitive pressures on pricing; client cash sorting; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the migration of bank deposit account balances; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 33.9 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $6.83 trillion in client assets. 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 subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their 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 primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

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




Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Net Revenues
Interest revenue$2,710 $2,068 $5,029 $4,083 
Interest expense(166)(121)(302)(225)
Net interest revenue2,544 1,947 4,727 3,858 
Asset management and administration fees (1)
1,052 1,047 2,120 2,063 
Trading revenue885 955 1,848 2,171 
Bank deposit account fees352 337 646 688 
Other260 241 424 462 
Total net revenues5,093 4,527 9,765 9,242 
Expenses Excluding Interest
Compensation and benefits1,426 1,318 2,972 2,748 
Professional services258 247 502 473 
Occupancy and equipment294 239 563 476 
Advertising and market development105 128 207 244 
Communications169 166 313 313 
Depreciation and amortization159 135 309 264 
Amortization of acquired intangible assets154 154 308 308 
Regulatory fees and assessments67 66 135 144 
Other187 355 343 593 
Total expenses excluding interest2,819 2,808 5,652 5,563 
Income before taxes on income2,274 1,719 4,113 3,679 
Taxes on income481 454 918 930 
Net Income1,793 1,265 3,195 2,749 
Preferred stock dividends and other141 148 265 244 
Net Income Available to Common Stockholders$1,652 $1,117 $2,930 $2,505 
Weighted-Average Common Shares Outstanding:
Basic1,896 1,886 1,895 1,884 
Diluted1,904 1,896 1,905 1,894 
Earnings Per Common Shares Outstanding (2):
Basic$.87 $.59 $1.55 $1.33 
Diluted$.87 $.59 $1.54 $1.32 

(1) Includes fee waivers of $3 million and $57 million for the three and six months ended June 30, 2022, respectively, and $85 million and $163 million for the three and six months ended June 30, 2021, respectively.
(2) The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
        
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THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
Q2-22 % change20222021
vs.vs.SecondFirstFourthThirdSecond
(In millions, except per share amounts and as noted)Q2-21Q1-22QuarterQuarterQuarterQuarterQuarter
Net Revenues
Net interest revenue31 %17 %$2,544 $2,183 $2,142 $2,030 $1,947 
Asset management and administration fees— (1)%1,052 1,068 1,110 1,101 1,047 
Trading revenue(7)%(8)%885 963 1,017 964 955 
Bank deposit account fees4 %20 %352 294 304 323 337 
Other8 %59 %260 164 135 152 241 
Total net revenues13 %9 %5,093 4,672 4,708 4,570 4,527 
Expenses Excluding Interest
Compensation and benefits8 %(8)%1,426 1,546 1,399 1,303 1,318 
Professional services4 %6 %258 244 271 250 247 
Occupancy and equipment23 %9 %294 269 254 246 239 
Advertising and market development(18)%3 %105 102 122 119 128 
Communications2 %17 %169 144 130 144 166 
Depreciation and amortization 18 %6 %159 150 145 140 135 
Amortization of acquired intangibles assets— — 154 154 154 153 154 
Regulatory fees and assessments2 %(1)%67 68 67 64 66 
Other(47)%20 %187 156 143 140 355 
Total expenses excluding interest— — 2,819 2,833 2,685 2,559 2,808 
Income before taxes on income32 %24 %2,274 1,839 2,023 2,011 1,719 
Taxes on income6 %10 %481 437 443 485 454 
Net Income42 %28 %$1,793 $1,402 $1,580 $1,526 $1,265 
Preferred stock dividends and other(5)%14 %141 124 131 120 148 
Net Income Available to Common Stockholders48 %29 %$1,652 $1,278 $1,449 $1,406 $1,117 
Earnings per common share (1):
Basic47 %30 %$.87 $.67 $.77 $.74 $.59 
Diluted47 %30 %$.87 $.67 $.76 $.74 $.59 
Dividends declared per common share11 %— $.20 $.20 $.18 $.18 $.18 
Weighted-average common shares outstanding:
Basic1 %— 1,896 1,894 1,892 1,888 1,886 
Diluted— — 1,904 1,905 1,902 1,898 1,896 
Performance Measures
Pre-tax profit margin44.6 %39.4 %43.0 %44.0 %38.0 %
Return on average common stockholders’ equity (annualized) (2)
19 %12 %12 %12 %10 %
Financial Condition (at quarter end, in billions)
Cash and cash equivalents113 %(29)%$64.6 $91.1 $63.0 $34.3 $30.3 
Cash and investments segregated34 %(2)%53.5 54.4 53.9 42.3 39.9 
Receivables from brokerage clients — net(7)%(10)%76.1 84.1 90.6 86.6 82.2 
Available for sale securities (3)
(26)%(2)%265.3 272.0 390.1 377.0 359.6 
Held to maturity securities (3)
N/M(5)%100.1 105.3 — — — 
Bank loans — net37 %6 %39.6 37.2 34.6 31.6 28.9 
Total assets11 %(6)%637.6 681.0 667.3 607.5 574.5 
Bank deposits20 %(5)%442.0 465.8 443.8 395.3 368.6 
Payables to brokerage clients9 %(8)%114.9 125.3 125.7 113.1 105.0 
Short-term borrowings(60)%(67)%1.4 4.2 4.9 3.0 3.5 
Long-term debt13 %(4)%21.1 21.9 18.9 19.5 18.7 
Stockholders’ equity(23)%(7)%44.5 48.1 56.3 57.4 57.5 
Other
Full-time equivalent employees (at quarter end, in thousands)8 %3 %35.2 34.2 33.4 32.4 32.5 
Capital expenditures — purchases of equipment, office facilities,
  and property, net (in millions)		51 %62 %$339 $209 $431 $176 $225 
Expenses excluding interest as a percentage of average client assets
        (annualized)		0.16 %0.15 %0.13 %0.13 %0.15 %
Clients’ Daily Average Trades (DATs) (in thousands)
3 %(5)%6,227 6,578 6,102 5,549 6,042 
Number of Trading Days(2)%— 62.0 62.0 63.5 64.0 63.0 
Revenue Per Trade (4)
(9)%(3)%$2.29 $2.36 $2.62 $2.71 $2.51 
(1) The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
(2) Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(3) In January 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
(4) Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.




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THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions, except ratios or as noted)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
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$65,414 $133 0.81 %$41,913 $9 0.07 %$68,920 $167 0.48 %$40,414 $16 0.08 %
Cash and investments segregated51,232 79 0.61 %41,037 4 0.04 %51,570 94 0.36 %44,573 14 0.06 %
Receivables from brokerage clients79,061 706 3.53 %75,737 609 3.18 %81,618 1,332 3.24 %71,760 1,172 3.25 %
Available for sale securities (1,2)
287,313 1,088 1.51 %344,719 1,103 1.28 %285,927 2,035 1.42 %341,500 2,194 1.28 %
Held to maturity securities (2)
101,752 339 1.33 %— — — 102,580 717 1.40 %— — — 
Bank loans38,831 230 2.38 %27,234 148 2.18 %37,351 417 2.24 %25,862 287 2.22 %
Total interest-earning assets623,603 2,575 1.64 %530,640 1,873 1.40 %627,966 4,762 1.51 %524,109 3,683 1.40 %
Securities lending revenue130 194 259 398 
Other interest revenue5 1 8 2 
Total interest-earning assets$623,603 $2,710 1.73 %$530,640 $2,068 1.55 %$627,966 $5,029 1.60 %$524,109 $4,083 1.55 %
Funding sources
Bank deposits$449,936 $28 0.03 %$368,026 $13 0.01 %$451,306 $44 0.02 %$365,576 $26 0.01 %
Payables to brokerage clients101,784 4 0.02 %87,367 2 0.01 %103,846 6 0.01 %87,353 4 0.01 %
Short-term borrowings2,587 4 0.69 %3,245 3 0.33 %3,646 8 0.46 %2,175 3 0.30 %
Long-term debt21,119 124 2.34 %18,349 97 2.12 %20,495 232 2.26 %16,308 182 2.23 %
Total interest-bearing liabilities575,426 160 0.11 %476,987 115 0.10 %579,293 290 0.10 %471,412 215 0.09 %
Non-interest-bearing funding sources48,177 53,653 48,673 52,697 
Securities lending expense8 7 15 12 
Other interest expense(2)(1)(3)(2)
Total funding sources$623,603 $166 0.11 %$530,640 $121 0.09 %$627,966 $302 0.10 %$524,109 $225 0.08 %
Net interest revenue$2,544 1.62 %$1,947 1.46 %$4,727 1.50 %$3,858 1.47 %
(1) Amounts have been calculated based on amortized cost.
(2) In January 2022, the Company transferred a portion of its investment securities designated as available for sale to the held to maturity category, as described in Part I – Item 1 – Note 4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
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THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions, except ratios or as noted)
(Unaudited)

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee		Average
Client
Assets		RevenueAverage
Fee
Schwab money market funds before fee
  waivers		$146,009 $106 0.29 %$157,057 $114 0.29 %$145,371 $208 0.29 %$163,370 $236 0.29 %
Fee waivers(3)(85)(57)(163)
Schwab money market funds146,009 103 0.28 %157,057 29 0.07 %145,371 151 0.21 %163,370 73 0.09 %
Schwab equity and bond funds, ETFs, and
  collective trust funds (CTFs) 		431,747 92 0.09 %415,311 94 0.09 %444,036 189 0.09 %396,296 180 0.09 %
Mutual Fund OneSource® and other non-
  transaction fee funds
192,435 149 0.31 %228,890 180 0.32 %202,538 314 0.31 %225,673 352 0.31 %
Other third-party mutual funds and ETFs795,727 171 0.09 %896,236 178 0.08 %833,969 350 0.08 %872,822 346 0.08 %
Total mutual funds, ETFs, and CTFs (1)
$1,565,918 515 0.13 %$1,697,494 481 0.11 %$1,625,914 1,004 0.12 %$1,658,161 951 0.12 %
Advice solutions (1)
Fee-based$440,336 461 0.42 %$448,107 490 0.44 %$454,830 957 0.42 %$436,368 958 0.44 %
Non-fee-based86,684 — — 87,857 — — 88,509 — — 86,312 — — 
Total advice solutions$527,020 461 0.35 %$535,964 490 0.37 %$543,339 957 0.36 %$522,680 958 0.37 %
Other balance-based fees (2)
566,712 61 0.04 %605,617 63 0.04 %591,695 128 0.04 %591,090 127 0.04 %
Other (3)
15 13 31 27 
Total asset management and administration fees$1,052 $1,047 $2,120 $2,063 
(1) Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Wealth AdvisoryTM, 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®, Schwab Intelligent Portfolios Premium®, TD Ameritrade AdvisorDirect®, Essential Portfolios, Selective Portfolios, and Personalized Portfolios; 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.
(2) Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(3) Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.
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THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)

Q2-22 % Change20222021
vs.vs.SecondFirstFourthThirdSecond
(In billions, at quarter end, except as noted)Q2-21Q1-22QuarterQuarterQuarterQuarterQuarter
Assets in client accounts
Schwab One®, certain cash equivalents and bank deposits
18 %(5)%$552.5 $584.3 $566.1 $503.9 $469.5 
Bank deposit account balances(4)%1 %155.6 154.8 158.5 153.3 161.9 
Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
Money market funds (1)
5 %11 %159.2 143.1 146.5 147.7 151.9 
Equity and bond funds and CTFs (2)
(10)%(15)%149.5 175.8 183.1 167.4 165.9 
Total proprietary mutual funds and CTFs(3)%(3)%308.7 318.9 329.6 315.1 317.8 
Mutual Fund Marketplace® (3)
Mutual Fund OneSource® and other non-transaction fee funds
(18)%(17)%196.6 235.5 234.9 234.7 240.2 
Mutual fund clearing services(32)%(22)%184.4 235.4 254.2 271.9 271.3 
Other third-party mutual funds (4)
(17)%(14)%1,189.4 1,383.3 1,497.7 1,450.1 1,441.5 
Total Mutual Fund Marketplace(20)%(15)%1,570.4 1,854.2 1,986.8 1,956.7 1,953.0 
Total mutual fund assets(17)%(14)%1,879.1 2,173.1 2,316.4 2,271.8 2,270.8 
Exchange-traded funds (ETFs)
Proprietary ETFs (2)
(3)%(11)%237.7 268.5 271.8 251.6 245.2 
Other third-party ETFs(3)%(11)%1,129.0 1,270.6 1,296.4 1,183.7 1,158.8 
Total ETF assets(3)%(11)%1,366.7 1,539.1 1,568.2 1,435.3 1,404.0 
Equity and other securities(15)%(19)%2,548.5 3,131.1 3,259.8 2,976.7 2,988.8 
Fixed income securities12 %12 %403.5 360.7 356.4 356.8 359.6 
Margin loans outstanding(8)%(9)%(73.4)(81.0)(87.4)(83.8)(79.8)
Total client assets(10)%(13)%$6,832.5 $7,862.1 $8,138.0 $7,614.0 $7,574.8 
Client assets by business
Investor Services(13)%(15)%$3,598.7 $4,235.5 $4,400.7 $4,137.7 $4,146.2 
Advisor Services(6)%(11)%3,233.8 3,626.6 3,737.3 3,476.3 3,428.6 
Total client assets(10)%(13)%$6,832.5 $7,862.1 $8,138.0 $7,614.0 $7,574.8 
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services (5)
(80)%(84)%$8.8 $54.6 $33.4 $57.9 $44.5 
Advisor Services(46)%(47)%34.6 65.9 101.2 81.1 64.3 
Total net new assets(60)%(64)%$43.4 $120.5 $134.6 $139.0 $108.8 
Net market gains (losses)(1,073.0)(396.4)389.4 (99.8)396.9 
Net growth (decline)$(1,029.6)$(275.9)$524.0 $39.2 $505.7 
New brokerage accounts (in thousands, for the quarter ended)
(39)%(16)%1,014 1,202 1,318 1,178 1,657 
Client accounts (in thousands)
Active brokerage accounts5 %1 %33,896 33,577 33,165 32,675 32,265 
Banking accounts6 %2 %1,669 1,641 1,614 1,580 1,574 
Corporate retirement plan participants6 %1 %2,275 2,246 2,200 2,207 2,149 
(1) Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.
(2) Includes balances held on and off the Schwab platform. As of June 30, 2022, off-platform equity and bond funds, CTFs, and ETFs were $21.4 billion, $4.9 billion, and $86.4 billion, respectively.
(3) Excludes all proprietary mutual funds and ETFs.
(4) As of June 30, 2022, third-party money funds were $9.3 billion.
(5) Second quarter of 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. Fourth quarter of 2021 includes outflows of $27.6 billion from mutual fund clearing services clients.

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The Charles Schwab Corporation Monthly Activity Report For June 2022
2021    2022  Change
JunJulAugSepOctNovDecJanFebMarAprMayJunMo.Yr.
Market Indices (at month end)
Dow Jones Industrial Average®
34,503 34,935 35,361 33,844 35,820 34,484 36,338 35,132 33,893 34,678 32,977 32,990 30,775 (7)%(11)%
Nasdaq Composite®
14,504 14,673 15,259 14,449 15,498 15,538 15,645 14,240 13,751 14,221 12,335 12,081 11,029 (9)%(24)%
Standard & Poor’s® 500
4,298 4,395 4,523 4,308 4,605 4,567 4,766 4,516 4,374 4,530 4,132 4,132 3,785 (8)%(12)%
Client Assets (in billions of dollars)
Beginning Client Assets7,395.7 7,574.8 7,642.7 7,838.2 7,614.0 7,982.3 7,918.3 8,138.0 7,803.8 7,686.6 7,862.1 7,284.4 7,301.7 
Net New Assets (1)
43.5 44.3 51.8 42.9 22.9 31.4 80.3 33.6 40.6 46.3 (9.2)32.8 19.8 (40)%(54)%
Net Market Gains (Losses)135.6 23.6 143.7 (267.1)345.4 (95.4)139.4 (367.8)(157.8)129.2 (568.5)(15.5)(489.0)
Total Client Assets (at month end)7,574.8 7,642.7 7,838.2 7,614.0 7,982.3 7,918.3 8,138.0 7,803.8 7,686.6 7,862.1 7,284.4 7,301.7 6,832.5 (6)%(10)%
Core Net New Assets (2)
43.5 44.3 51.8 42.9 36.8 45.1 80.3 33.6 40.6 46.3 (9.2)32.8 40.6 24 %(7)%
Receiving Ongoing Advisory Services (at month end)
Investor Services525.1 531.9 542.5 530.1 548.3 543.1 559.2 541.9 533.7 538.9 509.3 513.0 483.8 (6)%(8)%
Advisor Services (3)
3,209.3 3,256.5 3,333.4 3,253.2 3,399.8 3,374.3 3,505.2 3,382.4 3,342.5 3,404.6 3,190.5 3,213.8 3,040.4 (5)%(5)%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts32,265 32,386 32,513 32,675 32,796 32,942 33,165 33,308 33,421 33,577 33,759 33,822 33,896 — 5 %
Banking Accounts 1,574 1,578 1,594 1,580 1,593 1,608 1,614 1,628 1,641 1,641 1,652 1,658 1,669 1 %6 %
Corporate Retirement Plan Participants2,149 2,159 2,188 2,207 2,213 2,198 2,200 2,216 2,235 2,246 2,261 2,275 2,275 — 6 %
Client Activity
New Brokerage Accounts (in thousands)499 402 402 374 397 448 473 426 356 420 386 323 305 (6)%(39)%
Client Cash as a Percentage of Client Assets (4)
10.5 %10.4 %10.3 %10.8 %10.4 %10.5 %10.9 %11.3 %11.5 %11.4 %11.9 %12.0 %12.8 %80 bp230 bp
Derivative Trades as a Percentage of Total Trades20.6 %22.2 %23.1 %23.1 %22.5 %23.4 %23.0 %22.4 %24.0 %22.4 %21.9 %22.6 %22.3 %(30) bp170 bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (5)
536,146 546,579 552,372 565,379 574,181 584,362 605,709 622,997 629,042 644,768 636,668 620,157 614,100 (1)%15 %
Average Margin Balances78,410 79,910 81,021 81,705 83,835 87,311 88,328 86,737 84,354 81,526 83,762 78,841 74,577 (5)%(5)%
Average Bank Deposit Account Balances (6)
161,377 151,275 150,896 152,330 154,040 153,877 154,918 157,706 153,824 155,657 152,653 154,669 155,306 — (4)%
Mutual Fund and Exchange-Traded Fund
  Net Buys (Sells) (7,8) (in millions of dollars)
Equities10,873 7,418 8,808 7,596 8,840 13,099 11,519 7,384 9,371 14,177 (786)1,889 (1,586)
Hybrid390 666 569 335 81 308 (1,207)(367)(478)(497)(529)(1,718)(1,054)
Bonds10,101 6,917 8,044 6,232 4,425 4,097 5,600 1,804 (1,973)(7,851)(6,933)(6,121)(5,631)
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (7)
5,872 2,644 3,876 (308)302 189 (2,859)(4,961)(6,318)(11,888)(16,657)(20,761)(16,258)
Exchange-Traded Funds (8)
15,492 12,357 13,545 14,471 13,044 17,315 18,771 13,782 13,238 17,717 8,409 14,811 7,987 
Money Market Funds(3,806)(2,501)(1,372)(1,512)(451)(1,725)(144)(1,984)(1,086)(1,344)(3,430)7,106 11,544 
Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.
(1) June 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 billion from a mutual fund clearing services client.
(2) 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.
(3) Excludes Retirement Business Services.
(4) Schwab One®, certain cash equivalents, bank deposits, third-party bank deposit accounts, and money market fund balances as a percentage of total client assets.
(5) Represents average total interest-earning assets on the company’s balance sheet.
(6) Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.
(7) 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.
(8) Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.
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THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)
In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Schwab’s second quarter earnings release contains references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwab’s results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies.

Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.
Non-GAAP Adjustment or MeasureDefinitionUsefulness to Investors and Uses by Management
Acquisition and integration-related costs and amortization of acquired intangible assetsSchwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, and, where applicable, the income tax effect of these expenses.

Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Company’s revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives.		We exclude acquisition and integration-related costs and amortization of acquired intangible assets for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwab’s ongoing operations, and is useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods.

Acquisition and integration-related costs fluctuate based on the timing of acquisitions and integration activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Company’s ongoing business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Company’s underlying operating performance.
Return on tangible common equityReturn on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets — net, and related deferred tax liabilities.Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwab’s balance sheet.

The Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria.


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THE CHARLES SCHWAB CORPORATION
Non-GAAP Financial Measures
(In millions, except ratios and per share amounts)
(Unaudited)
The tables below present reconciliations of GAAP measures to non-GAAP measures:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Total Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet IncomeTotal Expenses Excluding InterestNet Income
Total expenses excluding interest (GAAP),
  Net income (GAAP)		$2,819 $1,793 $2,808 $1,265 $5,652 $3,195 $5,563 $2,749 
Acquisition and integration-related costs (1)
(94)94 (144)144 (190)190 (263)263 
Amortization of acquired intangible assets(154)154 (154)154 (308)308 (308)308 
Income tax effects (2)
N/A(60)N/A(80)N/A(121)N/A(147)
Adjusted total expenses (non-GAAP),
  Adjusted net income (non-GAAP)		$2,571 $1,981 $2,510 $1,483 $5,154 $3,572 $4,992 $3,173 
(1) Acquisition and integration-related costs for the three and six months ended June 30, 2022 primarily consist of $53 million and $109 million of compensation and benefits, $35 million and $66 million of professional services, and $4 million and $8 million of occupancy and equipment. Acquisition and integration-related costs for the three and six months ended June 30, 2021 primarily consist of $97 million and $169 million of compensation and benefits, $37 million and $64 million of professional services, and $7 million and $23 million of occupancy and equipment.
(2) The income tax effects of the non-GAAP adjustments are determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and are used to present the acquisition and integration-related costs and amortization of acquired intangible assets on an after-tax basis.
N/A Not applicable.

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Amount% of Total Net RevenuesAmount% of Total Net RevenuesAmount% of Total Net RevenuesAmount% of Total Net Revenues
Income before taxes on income (GAAP),
  Pre-tax profit margin (GAAP)		$2,274 44.6 %$1,719 38.0 %$4,113 42.1 %$3,679 39.8 %
Acquisition and integration-related costs94 1.8 %144 3.2 %190 1.9 %263 2.9 %
Amortization of acquired intangible assets154 3.1 %154 3.4 %308 3.2 %308 3.3 %
Adjusted income before taxes on income (non-GAAP),
  Adjusted pre-tax profit margin (non-GAAP)		$2,522 49.5 %$2,017 44.6 %$4,611 47.2 %$4,250 46.0 %

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
AmountDiluted EPSAmountDiluted EPSAmountDiluted EPSAmountDiluted EPS
Net income available to common stockholders (GAAP),
  Earnings per common share — diluted (GAAP)		$1,652 $.87 $1,117 $.59 $2,930 $1.54 $2,505 $1.32 
Acquisition and integration-related costs94 .05 144 .08 190 .10 263 .14 
Amortization of acquired intangible assets154 .08 154 .08 308 .16 308 .16 
Income tax effects(60)(.03)(80)(.05)(121)(.06)(147)(.07)
Adjusted net income available to common stockholders
  (non-GAAP), Adjusted diluted EPS (non-GAAP)		$1,840 $.97 $1,335 $.70 $3,307 $1.74 $2,929 $1.55 

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Return on average common stockholders’ equity (GAAP)
19 %10 %15 %10 %
Average common stockholders’ equity
$35,611 $46,276 $40,063 $47,912 
Less: Average goodwill(11,952)(11,952)(11,952)(11,952)
Less: Average acquired intangible assets — net(9,151)(9,762)(9,227)(9,838)
Plus: Average deferred tax liabilities related to goodwill
and acquired intangible assets — net		1,868 1,907 1,877 1,925 
Average tangible common equity$16,376 $26,469 $20,761 $28,047 
Adjusted net income available to common stockholders (1)
$1,840 $1,335 $3,307 $2,929 
Return on tangible common equity (non-GAAP)45 %20 %32 %21 %
(1) See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).
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