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8-K - FORM 8-K - SCHWAB CHARLES CORPd459085d8k.htm

Exhibit 99.1

 

LOGO

News Release

Contacts:

 

MEDIA:    INVESTORS/ANALYSTS:     
Greg Gable    Rich Fowler   
Charles Schwab    Charles Schwab   
Phone: 415-667-0473    Phone: 415-667-1841   

SCHWAB REPORTS FOURTH QUARTER NET INCOME UP 29% YEAR-OVER-YEAR

Sustained Client Focus and Financial Discipline Yielded Profitable Growth in 2012

December Core Net New Assets Total a Record $22.6 Billion

SAN FRANCISCO, January 16, 2013 – The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2012 was $211 million, down 15% from $247 million for the third quarter of 2012, and up 29% from $163 million for the fourth quarter of 2011. Net income for the twelve months ended December 31, 2012 was $928 million, up 7% year-over-year. Schwab’s 2012 results include an after-tax gain of approximately $44 million relating to the resolution of a vendor dispute and a non-recurring state tax benefit of approximately $20 million, which were recorded in the second and third quarters, respectively.

 

     

Three Months Ended

--December 31,--

      %    

Twelve Months Ended

--December 31,--

      %  

Financial Highlights

   2012     2011     Change     2012     2011     Change  

Net revenues (in millions)

   $ 1,215      $  1,113        9   $ 4,883      $  4,691        4

Net income (in millions)

   $ 211      $ 163        29   $ 928      $ 864        7

Diluted earnings per common share

   $ .15      $ .13        15   $ .69      $ .70        (1 %) 

Pre-tax profit margin

     28.3     22.6       29.7     29.7  

Return on average common stockholders’ equity (annualized)

     9     8       11     12  

CEO and President Walt Bettinger commented, “Our ‘through clients’ eyes’ strategy helped build investor trust in Schwab and supported another year of outstanding growth for our company in 2012. Our individual client loyalty scores reached new highs during the year, and our client metrics ended strongly, with December core net new assets totaling a record $22.6 billion, 28% higher than the previous record set in March 2008. Core net new assets totaled $112.4 billion for 2012, up 37% over the prior year. We ended the year with a record $1.95 trillion in total client assets, up 16% over December 2011. We added 900,000 new brokerage accounts to our client base during 2012, and active brokerage accounts reached a record 8.8 million at year-end, up 3% year-over-year. In addition, we served 865,000 banking accounts and 1.6 million corporate retirement plan participants as of month-end December 2012, up 11% and 5%, respectively.”

“By continuing to challenge the status quo in investing services we believe that both our clients and the company win,” Mr. Bettinger said. “Our progress in completing and delivering a number of significant innovations in our client service capabilities remained on track throughout 2012. For example, our new index-based 401(k) offering has 41 companies committed to participate and more than 200 actively considering enrollment; our new independent branches were open in 12 locations by year-end; and our expanded mobile and tablet solutions are already being utilized by over half a million clients.”


Mr. Bettinger added, “Just as clients trust us to find a better way to serve them, our stockholders trust us to use resources effectively as we work to grow the company and its earnings. With environmental pressures continuing to slow our revenue progress in 2012, our enduring commitment to expense discipline enabled Schwab to allocate over $160 million to projects across our businesses and still deliver a 30% pre-tax profit margin for the year.”

CFO Joe Martinetto noted, “In addition to successfully growing our client base in 2012, we made further progress in building non rate-sensitive sources of revenue, including an 11% increase in fees from rising balances in our proprietary advice solutions. As a result, despite further declines in interest rates and relatively muted investor trading activity, our full-year performance included increases in both net interest revenue and asset management and administration fees, and 4% overall revenue growth. Our fourth quarter results illustrate the company’s improved momentum heading into 2013, with year-over-year revenue growth of 9% and a 29% increase in net income. Looking ahead, we believe that Schwab’s financial story will remain driven by the three key themes of strong business growth, diversified revenue streams, and expense discipline.”

Mr. Martinetto concluded, “Our work to further strengthen the company’s balance sheet while maximizing its contribution to earnings power continued throughout 2012. During the fourth quarter, we acted to reduce the cost of outstanding long-term debt by redeeming the remaining $494 million of our 4.95% Senior Notes due in 2014, with the cost of the redemption offset by gains from the sale of selected investment portfolio securities. Our actions also included the issuance of $350 million of new Senior Notes with a coupon of 0.85% and a 2015 due date.”

Business highlights for the fourth quarter (data as of quarter-end unless otherwise noted):

Investor Services

 

   

Net new accounts for the quarter totaled approximately 4,000, down 69% year-over-year. Total accounts reached 6.1 million as of December 31, 2012, up 7% year-over-year.

 

   

Launched an enhanced On Investing® application for the iPad®, providing access to articles from Schwab’s On Investing® magazine, Schwab’s latest research, expert perspectives and investment guidance all in one place.

Institutional Services

Advisor Services

 

   

Launched the Schwab Advisor Center® application for the iPad®, enabling advisors to view key client data such as balances, positions, and transactions while away from the office.

Other Institutional Services

 

   

Launched Compliance Solutions, an offering for corporate clients which combines the capabilities of both Designated Brokerage Services and recently acquired Compliance11 to create a comprehensive compliance and employee trade monitoring solution.

Products and Infrastructure

 

   

For Charles Schwab Bank:

 

   

Balance sheet assets = $85.8 billion, up 30% year-over-year.

 

   

Outstanding mortgage and home equity loans = $9.8 billion, up 8% year-over-year.

 

   

First mortgage originations through its loan program during the quarter = $2.2 billion, a new record.

 

   

Delinquency, nonaccrual, and loss reserve ratios for Schwab Bank’s loan portfolio = 0.77%, 0.45% and 0.52%, respectively, at month-end December.

 

   

Schwab Bank High Yield Investor Checking® accounts = 671,000, with $11.6 billion in balances.

 

   

Client assets managed by Windhaven® totaled $13.6 billion, up 9% from the third quarter of 2012.

 

   

Total assets under management in Schwab ETFs™ = $8.6 billion. Total assets in Schwab Managed Portfolios-ETFs = $2.4 billion.

 

   

Completed the acquisition of ThomasPartners, Inc., a growth and dividend income-focused asset management firm with $2.4 billion in assets under management as of December 31, 2012.


   

Launched the ETF Education Exchange™ (www.schwabetfeducationexchange.com), a new website designed to close the knowledge gap in ETFs by aggregating educational content, research and market insights from ETF industry leaders.

 

   

Expanded client access to fixed income securities by adding new municipal bond issues from Piper Jaffray to Schwab’s BondSource® platform.

 

   

Launched a new Order and Execution Management System, which leverages optionsXpress’ order routing capabilities to help create better execution opportunities for clients.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries.

Supporting schedules are either attached or located at: http://www.aboutschwab.com/media/xls/q4_2012_schedule.xls

Forward Looking Statements

This press release contains forward looking statements relating to enrollment and participation in the company’s new index-based 401(k) offering, growth of the company’s business, revenues, earnings and expense discipline. Achievement of these expectations 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 enrollment rate in the company’s index-based 401(k) offering, general market conditions, including the level of interest rates, equity valuations and trading activity; net interest margin; level of expenses; the company’s ability to attract and retain clients and grow client assets/relationships; competitive pressures on rates and fees; the level of client assets, including cash balances; the company’s ability to monetize client assets; the company’s ability to develop and launch new products, services and capabilities in a timely and successful manner; capital needs and management; the impact of changes in market conditions on money market fund fee waivers, revenues, expenses and pre-tax margins; the effect of adverse developments in litigation or regulatory matters and the extent of any charges associated with legal matters; any adverse impact of financial reform legislation and related regulations; and other factors set forth in the company’s Form 10-Q for the period ended September 30, 2012.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 8.8 million active brokerage accounts, 1.6 million corporate retirement plan participants, 865,000 banking accounts, and $1.95 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://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 www.schwab.com and www.aboutschwab.com.

###


THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  

Net Revenues

        

Asset management and administration fees

   $ 539      $ 458      $ 2,043      $ 1,928   

Interest revenue

     467        436        1,914        1,900   

Interest expense

     (34     (41     (150     (175
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest revenue

     433        395        1,764        1,725   

Trading revenue

     202        233        868        927   

Other

     47        41        256        160   

Provision for loan losses

     (2     (5     (16     (18

Net impairment losses on securities (1) 

     (4     (9     (32     (31
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     1,215        1,113        4,883        4,691   
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses Excluding Interest

        

Compensation and benefits

     450        442        1,803        1,732   

Professional services

     101        99        388        387   

Occupancy and equipment

     78        79        311        301   

Advertising and market development

     68        69        241        228   

Communications

     54        54        220        220   

Depreciation and amortization

     50        48        196        155   

Class action litigation and regulatory reserve

     —          —          —          7   

Other

     70        70        274        269   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding interest

     871        861        3,433        3,299   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes on income

     344        252        1,450        1,392   

Taxes on income

     133        89        522        528   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     211        163        928        864   
  

 

 

   

 

 

   

 

 

   

 

 

 

Preferred stock dividends

     22        —          45        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income Available to Common Stockholders

   $ 189      $ 163      $ 883      $ 864   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-Average Common Shares Outstanding — Diluted

     1,278        1,271        1,275        1,229   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Common Share — Basic

   $ .15      $ .13      $ .69      $ .70   

Earnings Per Common Share — Diluted

   $ .15      $ .13      $ .69      $ .70   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Net impairment losses on securities include total other-than-temporary impairment losses of $0 million and $5 million, net of $(4) million and $(4) million recognized in other comprehensive income, for the three months ended December 31, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $15 million and $18 million, net of $(17) million and $(13) million recognized in other comprehensive income, for the twelve months ended December 31, 2012 and 2011, respectively.

See Note to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.


THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

 

                          
     Q4-12 % change     2012     2011  

(In millions, except per share amounts and as noted)

   vs.
Q4-11
    vs.
Q3-12
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
    First
Quarter
    Fourth
Quarter
 

Net Revenues

                

Asset management and administration fees

     18     3   $ 539      $ 524      $ 496      $ 484      $ 458   

Net interest revenue

     10     (1 %)      433        439        458        434        395   

Trading revenue

     (13 %)      (1 %)      202        204        219        243        233   

Other (1)

     15     12     47        42        121        46        41   

Provision for loan losses

     (60 %)      (80 %)      (2     (10     (4     —          (5

Net impairment losses on securities

     (56 %)      33     (4     (3     (7     (18     (9
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     9     2     1,215        1,196        1,283        1,189        1,113   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses Excluding Interest

                

Compensation and benefits

     2     2     450        442        446        465        442   

Professional services

     2     3     101        98        93        96        99   

Occupancy and equipment

     (1 %)      1     78        77        80        76        79   

Advertising and market development

     (1 %)      39     68        49        57        67        69   

Communications

     —          2     54        53        55        58        54   

Depreciation and amortization

     4     —          50        50        48        48        48   

Other

     —          6     70        66        72        66        70   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding interest

     1     4     871        835        851        876        861   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes on income

     37     (5 %)      344        361        432        313        252   

Taxes on income (2)

     49     17     133        114        157        118        89   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     29     (15 %)    $ 211      $ 247      $ 275      $ 195      $ 163   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Preferred stock dividends

     N/M        144     22        9        14        —          —     
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income Available to Common Stockholders

     16     (21 %)    $ 189      $ 238      $ 261      $ 195      $ 163   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per common share

     15     (21 %)    $ .15      $ .19      $ .20      $ .15      $ .13   

Diluted earnings per common share

     15     (21 %)      $ .15      $ .19      $ .20      $ .15      $ .13   

Dividends declared per common share

     —          —        $ .06      $ .06      $ .06      $ .06      $ .06   

Weighted-average common shares outstanding - diluted

     1     —          1,278        1,275        1,274        1,273        1,271   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Performance Measures

                

Pre-tax profit margin

           28.3     30.2     33.7     26.3     22.6

Return on average common stockholders’ equity (annualized) (3)

           9     11     13     10     8
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial Condition (at quarter end, in billions)

                

Cash and investments segregated

     10     14   $ 28.5      $ 25.0      $ 22.7      $ 26.9      $ 26.0   

Receivables from brokerage clients

     22     13   $ 13.5      $ 11.9      $ 12.0      $ 11.2      $ 11.1   

Loans to banking clients

     9     6   $ 10.7      $ 10.1      $ 9.8      $ 9.8      $ 9.8   

Total assets

     23     14   $ 133.6      $ 117.7      $ 111.8      $ 111.5      $ 108.6   

Deposits from banking clients

     30     15   $ 79.4      $ 68.8      $ 66.3      $ 62.3      $ 60.9   

Payables to brokerage clients

     14     16   $ 40.3      $ 34.8      $ 31.8      $ 36.4      $ 35.5   

Long-term debt

     (20 %)      (11 %)    $ 1.6      $ 1.8      $ 2.0      $ 2.0      $ 2.0   

Stockholders’ equity (4)

     25     1   $ 9.6      $ 9.5      $ 9.1      $ 8.3      $ 7.7   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

                

Full-time equivalent employees (at quarter end, in thousands)

     (2 %)      1     13.8        13.6        13.7        14.0        14.1   

Annualized net revenues per average full-time equivalent employee (in thousands)

     12     1   $ 355      $ 352      $ 372      $ 340      $ 316   

Capital expenditures—cash purchases of equipment, office facilities, and property, net (in millions)

     (27 %)      21   $ 40      $ 33      $ 31      $ 34      $ 55   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Clients’ Daily Average Trades (in thousands) (5)

                

Revenue trades (6)

     (14 %)      2     265.7        261.5        285.2        318.4        307.4   

Asset-based trades (7)

     30     32     59.6        45.2        50.6        53.7        45.9   

Other trades (8)

     17     30     124.7        95.7        99.8        104.1        106.3   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     (2 %)      12     450.0        402.4        435.6        476.2        459.6   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Revenue Per Revenue Trade (5,6)

     2     —        $ 12.49      $ 12.44      $ 12.15      $ 12.35      $ 12.21   
        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                                        

 

(1) 

Includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

(2) 

Includes a non-recurring state tax benefit of $20 million in the third quarter of 2012.

(3) 

Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.

(4) 

In the second quarter and first quarter of 2012, the Company issued non-cumulative perpetual preferred stock, Series B, for a total liquidation preference of $485 million and non-cumulative perpetual preferred stock, Series A, with a total liquidation preference of $400 million, respectively.

(5) 

The fourth quarter of 2012 does not include two trading days due to weather-related market closures on October 29 and 30, 2012.

(6) 

Includes all client trades that generate either commission revenue or revenue from principal markups (i.e., fixed income); also known as DART.

(7) 

Includes eligible trades executed by clients who participate in one or more of the Company’s asset-based pricing relationships.

(8) 

Includes all commission free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.

N/M Not meaningful.

See Note to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.


THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2012     2011     2012     2011  
     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

   $ 8,287       $ 6         0.29 %      $ 5,736       $ 4         0.28 %      $ 7,130       $ 18         0.25 %      $ 5,554       $ 13         0.23

Cash and investments segregated

     25,284         13         0.20     27,912         9         0.13     25,263         46         0.18     25,831         39         0.15

Broker-related receivables (1)

     366         —           0.11     203         —           0.04     351         —           0.04     310         —           0.05

Receivables from brokerage clients

     11,460         113         3.92     10,225         111         4.31     10,928         446         4.08     10,637         467         4.39

Securities available for sale (2)

     43,624         140         1.28     30,789         124         1.60     39,745         583         1.47     27,486         456         1.66

Securities held to maturity

     15,954         95         2.37     15,268         79         2.05     15,371         397         2.58     16,050         492         3.07

Loans to banking clients

     10,447         76         2.89     9,857         79         3.18     10,053         309         3.07     9,472         310         3.27

Loans held for sale

     —           —           —          74         1         3.99     18         1         4.12     65         3         4.62
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     115,422         443         1.53     100,064         407         1.61     108,859         1,800         1.65     95,405         1,780         1.87
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Other interest revenue

        24                29                114                120      
     

 

 

           

 

 

           

 

 

           

 

 

    

Total interest-earning assets

   $ 115,422       $ 467         1.61   $ 100,064       $ 436         1.73   $ 108,859       $ 1,914         1.76   $ 95,405       $ 1,900         1.99
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Funding sources:

                                      

Deposits from banking clients

   $ 71,411       $ 11         0.06   $ 55,822       $ 13         0.09   $ 65,546       $ 42         0.06   $ 52,701       $ 62         0.12

Payables to brokerage clients

     30,368         1         0.01     32,079         1         0.01     29,831         3         0.01     29,992         3         0.01

Long-term debt

     1,815         22         4.82     2,002         27         5.35     1,934         103         5.33     2,004         108         5.39
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     103,594         34         0.13     89,903         41         0.18     97,311         148         0.15     84,697         173         0.20
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Non-interest-bearing funding sources

     11,828                10,161                11,548                10,708         

Other interest expense

        —                  —                  2                2      
  

 

 

    

 

 

        

 

 

    

 

 

        

 

 

    

 

 

        

 

 

    

 

 

    

Total funding sources

   $ 115,422       $ 34         0.12   $ 100,064       $ 41         0.16   $ 108,859       $ 150         0.14   $ 95,405       $ 175         0.18
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net interest revenue

      $ 433         1.49      $ 395         1.57      $ 1,764         1.62      $ 1,725         1.81
     

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

 

 

(1) 

Interest revenue was less than $500,000 in the period or periods presented.

(2) 

Amounts have been calculated based on amortized cost.

See Note to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.

Note to Consolidated Statements of Income, Financial and Operating Highlights,

and Net Interest Revenue Information

(Unaudited)

The Company

The consolidated statements of income, financial and operating highlights, and net interest revenue information include The Charles Schwab Corporation (CSC) and its majority-owned subsidiaries (collectively referred to as the Company), including Charles Schwab & Co., Inc. and Charles Schwab Bank. Certain prior period amounts have been reclassified to conform to the 2012 presentation. The consolidated statements of income, financial and operating highlights, and net interest revenue information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

**********


THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions)

(Unaudited)

 

    Three Months Ended
December 31,
        Twelve Months Ended
December 31,
 
    2012         2011         2012         2011  
    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 before fee waivers

  $ 159,421      $ 228        0.57     $ 157,863      $ 226        0.57     $ 155,866      $ 891        0.57     $ 153,478      $ 865        0.56

Fee waivers

      (142           (168           (587           (568  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Schwab money market funds

    159,421        86        0.21       157,863        58        0.15       155,866        304        0.20       153,478        297        0.19

Equity and bond funds (1)

    50,559        30        0.24       40,711        29        0.28       47,778        125        0.26       41,347        118        0.29

Mutual Fund OneSource ®

    221,338        179        0.32       200,779        160        0.32       216,564        680        0.31       210,907        680        0.32
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total mutual funds (2)

  $ 431,318        295        0.27     $ 399,353        247        0.25     $ 420,208        1,109        0.26     $ 405,732        1,095        0.27
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Advice solutions (2)

  $ 125,589        153        0.48     $ 108,048        130        0.48     $ 119,850        580        0.48     $ 109,703        522        0.48

Other (3)

      91              81              354              311     
   

 

 

         

 

 

         

 

 

         

 

 

   

Total asset management and administration fees

    $ 539            $ 458            $ 2,043            $ 1,928     
   

 

 

         

 

 

         

 

 

         

 

 

   

 

(1) 

Includes Schwab ETFs.

(2) 

Advice solutions include separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and full-time portfolio management offered through the Company’s Schwab Private Client, Schwab Managed Portfolio and Managed Account Select programs. Advice solutions also includes Schwab Advisor Network, Schwab Advisor Source, and Windhaven. Average client assets for advice solutions may also include the asset balances contained in the three categories of mutual funds listed above.

(3) 

Includes various asset based fees, such as trust fees, 401k record keeping fees, and mutual fund clearing and other service fees.


THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)

 

    Q4-12 % Change     2012     2011  

(In billions, at quarter end, except as noted)

  vs.
Q4-11
    vs.
Q3-12
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
    First
Quarter
    Fourth
Quarter
 
             

Assets in client accounts

               

Schwab One®, other cash equivalents and deposits from banking clients

    23     15   $ 119.0      $ 103.7      $ 98.2      $ 98.8      $ 96.4   

Proprietary funds (Schwab Funds® and Laudus Funds®):

               

Money market funds

    5     8     167.9        155.7        152.9        154.4        159.8   

Equity and bond funds

    30     2     49.6        48.4        45.3        45.8        38.2   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total proprietary funds

    10     7     217.5        204.1        198.2        200.2        198.0   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mutual Fund Marketplace® (1)

               

Mutual Fund OneSource®

    12     —          223.2        222.1        211.2        219.5        198.6   

Mutual fund clearing services

    53     18     159.1        134.4        126.4        127.0        104.2   

Other third-party mutual funds

    18     3     360.1        350.0        328.7        334.1        305.9   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Mutual Fund Marketplace

    22     5     742.4        706.5        666.3        680.6        608.7   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total mutual fund assets

    19     5     959.9        910.6        864.5        880.8        806.7   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity and other securities (1)

    16     —          702.4        705.5        670.4        685.0        607.9   

Fixed income securities

    3     —          181.8        181.8        180.5        179.4        176.9   

Margin loans outstanding

    13     3     (11.5     (11.2     (11.2     (10.5     (10.2
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total client assets

    16     3   $ 1,951.6      $ 1,890.4      $ 1,802.4      $ 1,833.5      $ 1,677.7   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Client assets by business

               

Investor Services

    11     1   $ 775.4      $ 770.4      $ 737.0      $ 753.3      $ 697.9   

Advisor Services

    16     3     788.5        762.3        727.6        735.9        679.0   

Other Institutional Services

    29     8     387.7        357.7        337.8        344.3        300.8   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total client assets by business

    16     3   $ 1,951.6      $ 1,890.4      $ 1,802.4      $ 1,833.5      $ 1,677.7   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net growth in assets in client accounts (for the quarter ended)

               

Net new assets

               

Investor Services (2)

    98     144   $ 10.5      $ 4.3      $ 2.9      $ 5.9      $ 5.3   

Advisor Services (3)

    165     157     24.4        9.5        9.9        12.6        9.2   

Other Institutional Services (4)

    N/M        N/M        29.5        6.6        3.2        20.4        7.0   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net new assets

    N/M        N/M        64.4        20.4        16.0        38.9        21.5   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net market (losses) gains

    (104 %)      (105 %)      (3.2     67.6        (47.1     116.9        79.8   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net growth (decline)

    (40 %)      (30 %)    $ 61.2      $ 88.0      $ (31.1   $ 155.8      $ 101.3   
       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

New brokerage accounts (in thousands, for the quarter ended)

    19     22     241        198        221        240        203   

Clients (in thousands)

               

Active Brokerage Accounts (5)

    3     1     8,787        8,736        8,720        8,639        8,552   

Banking Accounts

    11     2     865        844        822        801        780   

Corporate Retirement Plan Participants

    5     2     1,571        1,547        1,524        1,516        1,492   

 

(1) 

Excludes all proprietary money market, equity, and bond funds.

(2) 

Includes outflows of approximately $100 million as a result of the sale of Open E Cry, LLC, in the third quarter of 2012.

(3) 

Includes inflows of approximately $900 million as a result of the acquisition of ThomasPartners, Inc., in the fourth quarter of 2012.

(4) 

Includes inflows of $21.1 billion from mutual fund clearing services clients and outflows of $900 million related to a planned transfer from Corporate Brokerage Services in the fourth quarter of 2012. Includes outflows of $1.2 billion as a result of the closure of brokersXpress LLC in the third quarter of 2012. Includes inflows of $12.0 billion from a mutual fund clearing services client in the first quarter of 2012.

(5) 

Removed approximately 30,000 due to escheatment and other factors in the fourth quarter of 2012. Reduced by 19,000 as a result of the sale of Open E Cry, LLC, and the closure of brokersXpress LLC in the third quarter of 2012.

N/M Not meaningful


The Charles Schwab Corporation Monthly Market Activity Report For December 2012

 

    2011     2012                                                                       % change  
    Dec     Jan     Feb     Mar     Apr     May     Jun     Jul     Aug     Sep     Oct     Nov     Dec     Mo.     Yr.  

Change in Client Assets

                               

(in billions of dollars)

                               

Net New Assets (1)

    10.5        7.1        21.3        10.5        1.0        9.2        5.8        7.4        6.9        6.1        24.7        16.2        23.5        45     124

Net Market (Losses) Gains

    (4.2     58.9        43.4        14.6        (8.0     (78.3     39.2        13.5        26.3        27.8        (17.3     6.8        7.3       
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Total Client Assets

                               

(at month end, in billions of dollars)

    1,677.7        1,743.7        1,808.4        1,833.5        1,826.5        1,757.4        1,802.4        1,823.3        1,856.5        1,890.4        1,897.8        1,920.8        1,951.6        2     16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

New Brokerage Accounts

                               

(in thousands)

    75        74        76        90        87        70        64        62        72        64        74        70        97        39     29

Clients

                               

(at month end, in thousands)

                               

Active Brokerage Accounts (2)

    8,552        8,572        8,599        8,639        8,684        8,706        8,720        8,723        8,724        8,736        8,726        8,746        8,787        —          3

Banking Accounts

    780        787        794        801        808        815        822        829        838        844        851        857        865        1     11

Corporate Retirement Plan Participants

    1,492        1,504        1,511        1,516        1,526        1,522        1,524        1,537        1,541        1,547        1,557        1,560        1,571        1     5

Clients’ Daily Average Trades (3)

                               

(in thousands)

    435.1        468.4        500.1        461.7        458.9        432.3        417.0        396.1        375.9        441.3        439.7        431.8        480.2        11     10

Market Indices

                               

(at month end)

                               

Dow Jones Industrial Average

    12,218        12,633        12,952        13,212        13,214        12,394        12,880        13,009        13,091        13,437        13,097        13,026        13,104        1     7

Nasdaq Composite

    2,605        2,814        2,967        3,092        3,046        2,827        2,935        2,940        3,067        3,116        2,977        3,010        3,020        —          16

Standard & Poor’s 500

    1,258        1,312        1,366        1,408        1,398        1,310        1,362        1,379        1,407        1,441        1,412        1,416        1,426        1     13

Daily Average Market Share Volume

                               

(in millions)

                               

NYSE

    3,576        3,991        3,910        3,806        3,713        3,940        3,869        3,478        3,043        3,666        3,415        3,398        3,311        (3 %)      (7 %) 

Nasdaq

    1,606        1,819        1,895        1,675        1,697        1,898        1,782        1,782        1,560        1,787        1,740        1,763        1,684        (4 %)      5

Total US Exchanges

    6,345        6,917        6,921        6,603        6,497        7,083        6,857        6,177        5,419        6,490        6,084        6,165        5,951        (3 %)      (6 %) 

Mutual Fund Net Buys (Sells) (4)

                               

(in millions of dollars)

                               

Large Capitalization Stock

    (840.8     (2.0     71.5        (338.5     (75.8     (97.6     (428.2     (268.3     (709.6     (873.0     (726.6     (1,429.1     (1,547.7    

Small / Mid Capitalization Stock

    (483.7     (15.5     (7.9     (420.6     (175.8     (291.7     (257.5     (163.0     (203.9     (593.2     (392.6     (559.0     (639.1    

International

    (1,034.9     669.2        564.5        138.7        257.5        150.9        167.1        240.1        311.9        (112.7     224.8        278.5        431.0       

Specialized

    (161.6     206.4        286.3        538.0        109.2        (54.6     151.5        (5.1     247.1        (177.5     67.8        (220.4     (415.3    

Hybrid

    158.1        730.2        535.2        669.2        313.7        164.1        (136.5     179.2        536.4        188.5        90.7        35.7        (24.6    

Taxable Bond

    1,079.3        2,728.5        3,407.0        3,154.7        2,097.6        1,492.0        1,725.9        2,309.6        2,544.2        2,693.1        2,583.1        1,888.1        1,153.9       

Tax-Free Bond

    459.9        644.4        678.8        547.3        199.0        296.1        222.8        408.3        530.8        539.7        467.0        327.8        (286.7    

Money Market Funds

    2,697.6        (3,037.3     (2,359.6     (1,338.3     (2,327.0     442.4        457.4        722.2        1,254.5        810.5        315.3        3,933.4        7,902.5       

 

(1) 

December 2012 includes inflows of approximately $900 million as a result of the acquisition of ThomasPartners, Inc. November 2012 includes inflows of $5.4 billion from a mutual fund clearing services client and outflows of $900 million related to a planned transfer from Corporate Brokerage Services. October 2012 includes inflows of $15.7 billion from a mutual fund clearing services client. September 2012 includes outflows of approximately $400 million as a result of the closure of brokersXpress LLC. August 2012 includes outflows of approximately $900 million as a result of the sale of Open E Cry, LLC, and closure of brokersXpress LLC. February 2012 includes inflows of $12.0 billion from a mutual fund clearing services client.

(2) 

Periodically, the Company reviews its active account base. Effective October 31, 2012, the Company removed approximately 30,000 brokerage accounts from its active account total due to escheatment and other factors. Amounts for prior periods were not adjusted. September 2012 active brokerage accounts were reduced by approximately 3,000 as a result of the closure of brokersXpress LLC. August 2012 active brokerage accounts were reduced by approximately 16,000 as a result of the sale of Open E Cry, LLC, and closure of brokersXpress LLC.

(3) 

October 29 and 30, 2012 were not included as trading days due to weather-related market closures. Includes revenue trades from commissions or principal mark-ups, trades by clients in asset-based pricing relationships and all commission-free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.

(4) 

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.