SCHWAB CHARLES CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - SCHWAB CHARLES CORP	d606704d8k.htm

EXHIBIT 99.1


News Release
Contacts:

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

SCHWAB THIRD QUARTER REVENUES RISE 15%, REACH HIGHEST LEVEL IN 13 YEARS

Net Income Increases 17%

Core Net New Assets Total $42.8 Billion, up 97%

SAN FRANCISCO, October 15, 2013 – The Charles Schwab Corporation announced today that its net income for the third quarter of 2013 was $290 million, up 13% from $256 million for the second quarter of 2013, and up 17% from $247 million for the third quarter of 2012. Net income for the nine months ended September 30, 2013 was $752 million, up 5% from the year-earlier period. The company’s financial results for the nine months ended September 30, 2012 include a pre-tax gain of $70 million, or $44 million after-tax, relating to the resolution of a vendor dispute and a non-recurring state tax benefit of $20 million, which were recorded in the second and third quarters of last year, respectively.


	Three Months Ended --September 30,--						%			Nine Months Ended --September 30,--						%
Financial Highlights	2013			2012			Change			2013			2012			Change
Net revenues (in millions)	$	1,373		$	1,196			15	%	$	4,000		$	3,668			9	%
Net income (in millions)	$	290		$	247			17	%	$	752		$	717			5	%
Diluted earnings per common share	$	.22		$	.19			16	%	$	.55		$	.54			2	%
Pre-tax profit margin		33.8	%		30.2	%					30.2	%		30.2	%
Return on average common stockholders’ equity (annualized)		13	%		11	%					11	%		11	%

CEO Walt Bettinger said, “Today’s Schwab is a full-service investment firm capable of helping all types of investors plan for and build their financial futures, with over $2 trillion in client assets – a total that has grown by a compound annual rate of 10% over the past five years. A record $1 trillion of those assets are currently enrolled in some form of ongoing advice, reflecting a decades-long evolution at Schwab beyond our discount-brokerage roots. We’ve made notable progress, ending the third quarter of 2013 with $145 billion in client assets enrolled in one of our 8 retail advisory offers, as well as $891 billion under the guidance of independent advisors, representing year-over-year increases of 17% each. Our work on this front continues, as we provide an alternative to the traditional Wall Street model by offering sophisticated, needs-based approaches designed to enable today’s investors to get the help that’s right for them.”

“As we pursue our strategy of building a better investment firm ‘through clients’ eyes’, we are succeeding in driving growth in both our client base and stockholder value,” Mr. Bettinger continued. “Our core net new assets of nearly $43 billion were 97% higher than a year ago and the highest in Schwab history for a summer quarter; our year-to-date core net new assets of $108.8 billion represent an annualized growth rate of approximately 7.4%. In addition, we ended September with 9.0 million active brokerage accounts and 930,000 banking accounts, up 3% and 10%, respectively, over the third quarter of 2012. While total corporate retirement plan participants declined in keeping with our announced consolidation of plan recordkeeping technology platforms, we are seeing strong interest in our new index-

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based 401(k) offering. Meanwhile, introduction of our groundbreaking, innovative ETF 401(k) Plan solution is pending resolution of a final regulatory issue.”

Mr. Bettinger noted, “These client results supported double-digit percentage increases in all three of our main revenue sources and 15% overall revenue growth versus the year-ago quarter. Even with the continued headwind created by an interest rate environment that remains at historic lows, our third quarter revenues surpassed all our prior quarterly results save the extraordinary spike we experienced at the height of the internet bubble.”

CFO Joe Martinetto commented, “With our client investments running at appropriate levels, we were able to convert Schwab’s strong revenue performance into a 33.8% pre-tax profit margin and $290 million of net income for the third quarter, our highest quarterly earnings since the peak year of 2008. As we deliver improved earnings and our balance sheet growth tracks with our core asset gathering activity, our capital flexibility increases – we ended the quarter with a preliminary consolidated Tier I Leverage Ratio of 6.3% versus our target minimum ratio of 6.0%.”

Mr. Martinetto concluded, “Assuming an ongoing economic recovery, as well as interest rates and client trading activity that remain at or above recent levels, our outlook for the remainder of this year and into 2014 has not changed – we expect our 2013 revenue growth will outpace expenses by approximately 100 to 200 basis points, helping us to achieve a pre-tax profit margin of at least 30% and earnings per share in the mid-$.70s for the year. Additionally, we are aiming for a gap of approximately 300 to 500 basis points between revenue and expense growth in 2014. We continue to believe we possess all of the elements necessary for strong growth and increased operating leverage going forward: business momentum, operating and expense discipline, a healthy balance sheet, and a solid capital base.”

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

Investor Services

•

Net new retail brokerage accounts for the quarter totaled approximately 16,000, up 14% year-over-year; total accounts reached 6.2 million as of September 30, 2013, up 2% year-over-year.

•

Delivered financial plans to approximately 26,000 clients, up 63% year-over-year. Approximately 74,000 clients have received a financial plan year-to-date.

•

Redesigned the Schwab Learning Center to offer new Trading Paths, which provide simple, efficient trading information and insights, and intuitive access to live and on-demand workshops, event schedules, and Trading Catalog articles covering a range of trading topics.

Products and Infrastructure

•

For Charles Schwab Bank:

^¡

Balance sheet assets = $97.9 billion, up 30% year-over-year.

^¡

Outstanding mortgage and home equity loans = $10.9 billion, up 17% year-over-year.

^¡

First mortgage originations through its loan program during the quarter = $1.2 billion.

^¡

Delinquency, nonaccrual, and loss reserve ratios for Schwab Bank’s loan portfolio = 0.51%, 0.38% and 0.43%, respectively, at month-end September.

^¡

Schwab Bank High Yield Investor Checking^® accounts = 733,000, with $11.6 billion in balances.

•

Client assets managed by Windhaven^® totaled $18.2 billion, up 46% from the third quarter of 2012.

•

Client assets managed by ThomasPartners^® totaled $3.3 billion.

•

Introduced six Schwab Fundamental Index* ETFs, expanding the company’s existing proprietary offering to 21 equity and fixed income ETFs.

•

Total assets under management in Schwab ETFs™ = $14.3 billion. Total assets in Schwab Managed Portfolios-ETFs = $2.8 billion.

*Schwab is a registered trademark of Charles Schwab & Co., Inc. Fundamental Index is a registered trademark of Research Affiliates LLC.

Supporting schedules are either attached or located at: http://www.aboutschwab.com/media/xls/q3_2013_schedule.xls

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Forward Looking Statements

This press release contains forward-looking statements relating to growth in the company’s client base and stockholder value; introduction of the ETF 401(k) Plan solution; improved earnings, balance sheet growth and increased capital flexibility; growth in revenues, earnings and profits; gap between revenue and expense growth; pre-tax profit margin; and growth and increased operating leverage. 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, general market conditions, including the level of interest rates, equity valuations and trading activity; 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; capital needs and management; the company’s ability to develop and launch new products, services and capabilities in a timely and successful manner, including the ETF 401(k) Plan solution; operating and expense discipline; the impact of changes in market conditions on money market fund fee waivers, revenues, expenses and pre-tax margins; the level of field sales activity and related incentive compensation; regulatory guidance; acquisition integration costs; the volume of prepayments in the company’s mortgage-backed securities portfolio; net interest margin; client enrollments in advised solutions and utilization of commission-free platforms; trading activity; 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 June 30, 2013.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 9.0 million active brokerage accounts, 1.3 million corporate retirement plan participants, 930,000 banking accounts, and $2.15 trillion in client assets as of September 30, 2013. 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.

###

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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,
	2013			2012			2013			2012
Net Revenues
Asset management and administration fees	$	583		$	524		$	1,707		$	1,504

Interest revenue		531			478			1,527			1,447
Interest expense		(25	)		(39	)		(79	)		(116	)

Net interest revenue		506			439			1,448			1,331

Trading revenue		224			204			682			666
Other		57			42			172			209
Provision for loan losses		4			(10	)		(1	)		(14	)
Net impairment losses on securities⁽¹⁾		(1	)		(3	)		(8	)		(28	)

Total net revenues		1,373			1,196			4,000			3,668

Expenses Excluding Interest
Compensation and benefits		482			442			1,512			1,353
Professional services		103			98			308			287
Occupancy and equipment		77			77			231			233
Advertising and market development		57			49			198			173
Communications		55			53			165			166
Depreciation and amortization		51			50			153			146
Other		84			66			226			204

Total expenses excluding interest		909			835			2,793			2,562

Income before taxes on income		464			361			1,207			1,106
Taxes on income		174			114			455			389

Net Income		290			247			752			717

Preferred stock dividends		8			9			39			23

Net Income Available to Common Stockholders	$	282		$	238		$	713		$	694

Weighted-Average Common Shares Outstanding — Diluted		1,296			1,275			1,288			1,274

Earnings Per Common Share — Basic	$	.22		$	.19		$	.55		$	.54
Earnings Per Common Share — Diluted	$	.22		$	.19		$	.55		$	.54

⁽¹⁾

Net impairment losses on securities include total other-than-temporary impairment losses of $0 million and $1 million, net of $(1) million and $(2) million reclassified from other comprehensive income, for the three months ended September 30, 2013 and 2012, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $2 million and $15 million, net of $(6) million and $(13) million reclassified from other comprehensive income, for the nine months ended September 30, 2013 and 2012, respectively.

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

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THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)


	Q3-13 % change						2013									2012
(In millions, except per share amounts and as noted)	vs. Q3-12			vs. Q2-13			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Net Revenues
Asset management and administration fees		11	%		2	%	$	583		$	572		$	552		$	539		$	524
Net interest revenue		15	%		7	%		506			473			469			433			439
Trading revenue		10	%		(5	%)		224			235			223			202			204
Other		36	%		(3	%)		57			59			56			47			42
Provision for loan losses		(140	%)		N/M			4			1			(6	)		(2	)		(10	)
Net impairment losses on securities		(67	%)		(67	%)		(1	)		(3	)		(4	)		(4	)		(3	)

Total net revenues		15	%		3	%		1,373			1,337			1,290			1,215			1,196

Expenses Excluding Interest
Compensation and benefits		9	%		(2	%)		482			494			536			450			442
Professional services		5	%		(3	%)		103			106			99			101			98
Occupancy and equipment		—			—			77			77			77			78			77
Advertising and market development		16	%		(15	%)		57			67			74			68			49
Communications		4	%		(2	%)		55			56			54			54			53
Depreciation and amortization		2	%		—			51			51			51			50			50
Other		27	%		14	%		84			74			68			70			66

Total expenses excluding interest		9	%		(2	%)		909			925			959			871			835

Income before taxes on income		29	%		13	%		464			412			331			344			361
Taxes on income⁽¹⁾		53	%		12	%		174			156			125			133			114

Net Income		17	%		13	%	$	290		$	256		$	206		$	211		$	247

Preferred stock dividends		(11	%)		(65	%)		8			23			8			22			9

Net Income Available to Common Stockholders		18	%		21	%	$	282		$	233		$	198		$	189		$	238

Basic earnings per common share		16	%		22	%	$	.22		$	.18		$	.15		$	.15		$	.19
Diluted earnings per common share		16	%		22	%	$	.22		$	.18		$	.15		$	.15		$	.19
Dividends declared per common share		—			—		$	.06		$	.06		$	.06		$	.06		$	.06
Weighted-average common shares outstanding–diluted		2	%		1	%		1,296			1,288			1,282			1,278			1,275

Performance Measures
Pre-tax profit margin								33.8	%		30.8	%		25.7	%		28.3	%		30.2	%
Return on average common stockholders’ equity (annualized)⁽²⁾								13	%		10	%		9	%		9	%		11	%

Financial Condition (at quarter end, in billions)
Cash and investments segregated		(6	%)		(13	%)	$	23.5		$	27.0		$	26.9		$	28.5		$	25.0
Receivables from brokerage clients		10	%		2	%	$	13.1		$	12.8		$	12.5		$	13.5		$	11.9
Loans to banking clients		20	%		3	%	$	12.1		$	11.7		$	11.3		$	10.7		$	10.1
Total assets		19	%		3	%	$	140.2		$	135.9		$	133.3		$	133.6		$	117.7
Deposits from banking clients		33	%		8	%	$	91.2		$	84.3		$	82.4		$	79.4		$	68.8
Payables to brokerage clients		(1	%)		(7	%)	$	34.5		$	36.9		$	36.9		$	40.3		$	34.8
Long-term debt		6	%		19	%	$	1.9		$	1.6		$	1.6		$	1.6		$	1.8
Stockholders’ equity		6	%		4	%	$	10.1		$	9.7		$	9.8		$	9.6		$	9.5

Other
Full-time equivalent employees (at quarter end, in thousands)		1	%		(1	%)		13.8			13.9			14.0			13.8			13.6
Annualized net revenues per average full-time equivalent employee (in thousands)		13	%		3	%	$	398		$	385		$	369		$	355		$	352
Capital expenditures–cash purchases of equipment, office facilities, and property, net (in millions)		97	%		(6	%)	$	65		$	69		$	45		$	40		$	33

Clients’ Daily Average Trades (in thousands)
Revenue trades⁽³⁾		8	%		(6	%)		283.2			301.5			298.7			265.7			261.5
Asset-based trades⁽⁴⁾		29	%		(16	%)		58.3			69.0			64.5			59.6			45.2
Other trades⁽⁵⁾		43	%		8	%		137.1			126.7			135.7			124.7			95.7

Total		19	%		(4	%)		478.6			497.2			498.9			450.0			402.4

Average Revenue Per Revenue Trade⁽³⁾		—			2	%	$	12.39		$	12.19		$	12.34		$	12.49		$	12.44

⁽¹⁾	Includes a non-recurring state tax benefit of $20 million in the third quarter of 2012.

⁽²⁾	Return on average common stockholders' equity is calculated using net income available to common stockholders divided by average common stockholders' equity.

⁽³⁾	Includes all client trades that generate either commission revenue or revenue from principal markups (i.e., fixed income); also known as DART.

⁽⁴⁾	Includes eligible trades executed by clients who participate in one or more of the Company's asset-based pricing relationships.

⁽⁵⁾	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.

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THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions)

(Unaudited)


	Three Months Ended September 30,														Nine Months Ended September 30,
	2013							2012							2013							2012
	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	$	8,034	$	4		0.20	%	$	7,942	$	4		0.20	%	$	7,094	$	12		0.23	%	$	6,741	$	12		0.24	%
Cash and investments segregated		24,425		8		0.13	%		23,516		12		0.20	%		26,148		29		0.15	%		25,259		33		0.17	%
Broker-related receivables ⁽¹⁾		351		—		0.01	%		414		—		—			370		—		0.09	%		345		—		0.02	%
Receivables from brokerage clients		11,846		109		3.65	%		10,956		112		4.07	%		11,588		321		3.70	%		10,750		333		4.14	%
Securities available for sale ⁽²⁾		49,205		138		1.11	%		40,701		146		1.43	%		48,250		413		1.14	%		38,443		443		1.54	%
Securities held to maturity		26,819		166		2.46	%		15,311		95		2.47	%		23,601		430		2.44	%		15,175		302		2.66	%
Loans to banking clients		12,004		84		2.78	%		10,014		77		3.06	%		11,569		243		2.81	%		9,921		233		3.14	%
Loans held for sale ⁽¹⁾		—		—		—			1		—		4.06	%		—		—		—			24		1		4.12	%

Total interest-earning assets		132,684		509		1.52	%		108,855		446		1.63	%		128,620		1,448		1.51	%		106,658		1,357		1.70	%

Other interest revenue				22							32							79							90

Total interest-earning assets	$	132,684	$	531		1.59	%	$	108,855	$	478		1.74	%	$	128,620	$	1,527		1.59	%	$	106,658	$	1,447		1.81	%

Funding sources:
Deposits from banking clients	$	87,793	$	7		0.03	%	$	67,027	$	11		0.07	%	$	83,492	$	24		0.04	%	$	63,577	$	31		0.07	%
Payables to brokerage clients		29,312		1		0.01	%		28,435		1		0.01	%		30,847		2		0.01	%		29,651		2		0.01	%
Long-term debt		1,833		17		3.68	%		1,923		27		5.59	%		1,699		51		4.01	%		1,974		81		5.48	%

Total interest-bearing liabilities		118,938		25		0.08	%		97,385		39		0.16	%		116,038		77		0.09	%		95,202		114		0.16	%

Non-interest-bearing funding sources		13,746							11,470							12,582							11,456
Other interest expense				—							—							2							2

Total funding sources	$	132,684	$	25		0.08	%	$	108,855	$	39		0.14	%	$	128,620	$	79		0.08	%	$	106,658	$	116		0.14	%

Net interest revenue			$	506		1.51	%			$	439		1.60	%			$	1,448		1.51	%			$	1,331		1.67	%

⁽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. 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, 2012, as updated by the Company's Current Report on Form 8-K filed on June 24, 2013, relating to the realignment of the Company's reportable segments.

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THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions)

(Unaudited)


	Three Months Ended September 30,																Nine Months Ended September 30,
	2013								2012								2013								2012
	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	$	163,936	$	239			0.58	%	$	154,977	$	221			0.57	%	$	161,589	$	695			0.58	%	$	154,682	$	663			0.57	%
Fee waivers				(180	)							(136	)							(492	)							(445	)

Schwab money market funds		163,936		59			0.14	%		154,977		85			0.22	%		161,589		203			0.17	%		154,682		218			0.19	%
Equity and bond funds ⁽¹⁾		64,956		41			0.25	%		48,557		32			0.26	%		60,591		114			0.25	%		46,851		95			0.27	%
Mutual Fund OneSource^®		241,653		195			0.32	%		217,540		171			0.31	%		238,792		570			0.32	%		214,972		501			0.31	%

Total mutual funds ⁽²⁾	$	470,545		295			0.25	%	$	421,074		288			0.27	%	$	460,972		887			0.26	%	$	416,505		814			0.26	%

Advice solutions ⁽²⁾	$	145,468		183			0.50	%	$	120,112		148			0.49	%	$	141,040		523			0.50	%	$	117,536		427			0.49	%
Other ⁽³⁾				105								88								297								263

Total asset management and administration fees			$	583							$	524							$	1,707							$	1,504

⁽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 include Schwab Advisor Network, Schwab Advisor Source, Windhaven, and ThomasPartners. 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, 401(k) record keeping fees, and mutual fund clearing and other service fees.

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THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)


	Q3-13 % Change						2013									2012
(In billions, at quarter end, except as noted)	vs. Q3-12			vs. Q2-13			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
Assets in client accounts
Schwab One^®, other cash equivalents and deposits from banking clients		21	%		3	%	$	125.0		$	121.1		$	119.2		$	119.0		$	103.7
Proprietary funds (Schwab Funds^® and Laudus Funds^®):
Money market funds		6	%		2	%		165.1			161.6			159.3			167.9			155.7
Equity and bond funds		33	%		9	%		64.2			59.0			56.3			49.6			48.4

Total proprietary funds		12	%		4	%		229.3			220.6			215.6			217.5			204.1

Mutual Fund Marketplace^® ⁽¹⁾
Mutual Fund OneSource^®		11	%		5	%		246.5			234.9			238.8			223.2			222.1
Mutual fund clearing services		22	%		17	%		164.5			140.6			181.5			159.1			134.4
Other third-party mutual funds		10	%		(1	%)		384.1			388.3			388.4			360.1			350.0

Total Mutual Fund Marketplace		13	%		4	%		795.1			763.8			808.7			742.4			706.5

Total mutual fund assets		12	%		4	%		1,024.4			984.4			1,024.3			959.9			910.6

Equity and other securities ⁽¹⁾		18	%		7	%		830.7			779.5			772.3			702.4			705.5
Fixed income securities		(3	%)		—			176.9			177.6			180.5			181.8			181.8
Margin loans outstanding		(7	%)		(3	%)		(12.0	)		(11.7	)		(11.4	)		(11.5	)		(11.2	)

Total client assets		13	%		5	%	$	2,145.0		$	2,050.9		$	2,084.9		$	1,951.6		$	1,890.4

Client assets by business ⁽²⁾
Investor Services		11	%		4	%	$	1,196.0		$	1,150.5		$	1,190.2		$	1,112.1		$	1,078.4
Advisor Services		17	%		5	%		949.0			900.4			894.7			839.5			812.0

Total client assets		13	%		5	%	$	2,145.0		$	2,050.9		$	2,084.9		$	1,951.6		$	1,890.4

Net growth in assets in client accounts (for the quarter ended)
Net new assets
Investor Services ^{(2, 3, 4)}		(76	%)		107	%	$	2.4		$	(35.3	)	$	27.5		$	39.1		$	10.0
Advisor Services ^{(2, 5)}		51	%		15	%		15.7			13.6			15.9			25.3			10.4

Total net new assets		(11	%)		183	%		18.1			(21.7	)		43.4			64.4			20.4

Net market gains (losses)		12	%		N/M			76.0			(12.3	)		89.9			(3.2	)		67.6

Net growth (decline)		7	%		N/M		$	94.1		$	(34.0	)	$	133.3		$	61.2		$	88.0

New brokerage accounts (in thousands, for the quarter ended)		13	%		(8	%)		223			243			244			241			198
Clients (in thousands)
Active Brokerage Accounts ⁽⁶⁾		3	%		1	%		9,013			8,962			8,865			8,787			8,736
Banking Accounts		10	%		2	%		930			910			888			865			844
Corporate Retirement Plan Participants ⁽³⁾		(16	%)		(19	%)		1,297			1,595			1,575			1,571			1,547

⁽¹⁾	Excludes all proprietary money market, equity, and bond funds.

⁽²⁾

In the first quarter of 2013, the Company realigned its reportable segments as a result of organizational changes. The segment formerly reported as Institutional Services was renamed to Advisor Services. Additionally, the Retirement Plan Services and Corporate Brokerage Services business units are now part of the Investor Services segment. Prior period segment information has been recast to reflect these changes.

⁽³⁾

In third quarter of 2013, the Company reduced its reported totals for overall client assets and retirement plan participants by $24.7 billion and 317,000, respectively, to reflect the estimated impact of the consolidation of its retirement plan recordkeeping platforms and subsequent resignation from certain retirement plan clients.

⁽⁴⁾

Includes inflows of $17.5 billion and outflows of $2.1 billion from certain mutual fund clearing services clients in the third quarter of 2013. Includes outflows of $44.3 billion relating to the planned transfer of a mutual fund clearing services client in the second quarter of 2013. The second quarter of 2013 also includes inflows of $2.6 billion from another mutual fund clearing services client. Includes inflows of $10.3 billion from certain mutual fund clearing services clients in the first quarter of 2013. Includes inflows of $21.1 billion from certain 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 approximately $100 million as a result of the sale of Open E Cry, LLC, in the third quarter of 2012.

⁽⁵⁾	Includes inflows of approximately $900 million as a result of the acquisition of ThomasPartners, Inc., 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.

⁽⁶⁾	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.

- 8 -

The Charles Schwab Corporation Monthly Market Activity Report For September 2013


	2012												2013																											% change
	Sep			Oct			Nov			Dec			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Mo.			Yr.
Change in Client Assets
(in billions of dollars)
Net New Assets ^(1,2)		6.1			24.7			16.2			23.5			12.1			18.3			13.0			—			(1.9	)		(19.8	)		8.8			(2.4	)		11.7			N/M			92	%
Net Market Gains (Losses)		27.8			(17.3	)		6.8			7.3			50.8			6.0			33.1			21.3			5.5			(39.1	)		62.3			(38.1	)		51.8

Total Client Assets
(at month end, in billions of dollars)		1,890.4			1,897.8			1,920.8			1,951.6			2,014.5			2,038.8			2,084.9			2,106.2			2,109.8			2,050.9			2,122.0			2,081.5			2,145.0			3	%		13	%

New Brokerage Accounts
(in thousands)		64			74			70			97			87			75			82			96			78			69			75			78			70			(10	%)		9	%
Clients
(at month end, in thousands)
Active Brokerage Accounts ⁽³⁾		8,736			8,726			8,746			8,787			8,819			8,840			8,865			8,911			8,942			8,962			8,974			8,999			9,013			—			3	%
Banking Accounts		844			851			857			865			874			881			888			895			903			910			918			926			930			—			10	%
Corporate Retirement Plan Participants ⁽¹⁾		1,547			1,557			1,560			1,571			1,554			1,557			1,575			1,595			1,594			1,595			1,602			1,294			1,297			—			(16	%)
Clients' Daily Average Trades⁽⁴⁾
(in thousands)		441.3			439.7			431.8			480.2			504.7			506.1			486.0			470.0			505.4			518.1			498.9			467.3			469.2			—			6	%
Market Indices
(at month end)
Dow Jones Industrial Average		13,437			13,097			13,026			13,104			13,861			14,055			14,579			14,840			15,116			14,910			15,500			14,810			15,130			2	%		13	%
Nasdaq Composite		3,116			2,977			3,010			3,020			3,142			3,160			3,268			3,329			3,456			3,403			3,626			3,590			3,771			5	%		21	%
Standard & Poor's 500		1,441			1,412			1,416			1,426			1,498			1,515			1,569			1,598			1,631			1,606			1,686			1,633			1,682			3	%		17	%
Daily Average Market Share Volume
(in millions)
NYSE		3,666			3,415			3,398			3,311			3,595			3,635			3,414			3,501			3,480			3,745			3,089			2,947			3,303			12	%		(10	%)
Nasdaq		1,787			1,740			1,763			1,684			1,868			1,887			1,695			1,685			1,781			1,870			1,633			1,504			1,756			17	%		(2	%)
Total US Exchanges		6,490			6,084			6,165			5,951			6,408			6,550			6,101			6,346			6,357			7,090			5,718			5,454			6,115			12	%		(6	%)
Mutual Fund Net Buys (Sells)⁽⁵⁾
(in millions of dollars)
Large Capitalization Stock		(873.0	)		(726.6	)		(1,429.1	)		(1,547.7	)		1,079.8			235.7			339.2			1,068.7			(233.3	)		213.1			838.6			(185.6	)		(88.1	)
Small / Mid Capitalization Stock		(593.2	)		(392.6	)		(559.0	)		(639.1	)		746.3			421.9			358.0			(451.6	)		(122.9	)		68.5			402.1			179.1			154.5
International		(112.7	)		224.8			278.5			431.0			2,714.3			1,752.0			1,623.4			1,148.6			1,249.0			850.2			1,205.1			1,482.2			1,188.7
Specialized		(177.5	)		67.8			(220.4	)		(415.3	)		544.8			434.3			453.5			76.5			473.7			120.1			431.3			320.1			339.6
Hybrid		188.5			90.7			35.7			(24.6	)		1,205.4			931.1			927.5			636.6			762.3			349.0			582.6			316.9			230.2
Taxable Bond		2,693.1			2,583.1			1,888.1			1,153.9			3,402.2			1,456.4			2,216.0			1,884.0			1,362.8			(5,150.4	)		(705.0	)		(2,117.4	)		(1,088.3	)
Tax-Free Bond		539.7			467.0			327.8			(286.7	)		728.3			259.3			53.4			(538.8	)		(263.7	)		(1,227.3	)		(562.5	)		(921.8	)		(381.0	)
Money Market Funds		810.5			315.3			3,933.4			7,902.5			(6,031.3	)		(1,610.4	)		(945.2	)		(3,781.8	)		1,042.7			5,043.6			710.2			1,917.0			846.3

⁽¹⁾

In August 2013, the Company reduced its reported totals for overall client assets and retirement plan participants by $24.7 billion and 317,000, respectively, to reflect the estimated impact of the consolidation of its retirement plan recordkeeping platforms and subsequent resignation from certain retirement plan clients.

⁽²⁾

September 2013 includes inflows of $4.9 billion and outflows of $2.1 billion from certain mutual fund clearing services clients. August 2013 includes inflows of $9.5 billion and $3.1 billion from certain mutual fund clearing services clients. June, May and April 2013 include outflows of $26.7 billion, $10.3 billion, and $7.3 billion, respectively, relating to the planned transfer of a mutual fund clearing services client. April 2013 also includes inflows of $2.6 billion from another mutual fund clearing services client. February and January 2013 include inflows of $8.1 billion and $2.2 billion, respectively, from certain mutual fund clearing services clients. 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.

⁽³⁾

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.

⁽⁴⁾

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.

⁽⁵⁾	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.

N/M	Not meaningful.

- 9 -

SCHWAB CHARLES CORP - FORM 8-K - EX-99.1 - October 15, 2013

Attached files

SCHWAB CHARLES CORP Reports