Schwab Reports Monthly Activity Highlights

Wednesday, December 14, 2011 5:45 am PST

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"At the same time, the U.S. equity markets have remained volatile and asset valuations have been under pressure in the fourth quarter"

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation released its Monthly Market Activity Report today. Company highlights for the month of November 2011 include:

  • Net new assets brought to the company by new and existing clients in November 2011 totaled $6.0 billion.
  • Total client assets were $1.67 trillion as of month-end November, up 10% from November 2010 and flat from October 2011.
  • Client daily average trades were 433.5 thousand in November 2011, up 5% from November 2010 and down 15% from October 2011. October 2011 trading activity was elevated by a seasonal rise in Schwab Mutual Fund OneSource® transactions.

CFO Joe Martinetto commented, “We continue to grow our client base in the midst of an environment that has gotten tougher in recent months. We ended November serving a record 8.5 million active brokerage accounts and $1.67 trillion in client assets, up 7% and 10%, respectively, from year-earlier levels, while our initiatives to drive further growth, including the integration of optionsXpress and our index-based 401(k) offering, remained on track.”

“At the same time, the U.S. equity markets have remained volatile and asset valuations have been under pressure in the fourth quarter,” Mr. Martinetto continued. “Consistent with broader market trends, client trading activity has continued to slow thus far in December – average daily trades are down approximately 8% from November. Additionally, as described in our most recent Business Update on October 22, further declines in interest rates caused by Fed actions earlier this year have accelerated prepayment activity in the agency-issued mortgage backed securities held in our investment portfolio. Prepayment activity has trended higher than our earlier forecasts, which in turn is driving higher than anticipated amortization of related purchase premiums in the current quarter. As a result, we believe our fourth quarter 2011 net interest margin will be lower than our prior expectation of approximately 165 basis points. Given the current operating environment, we expect the company’s fourth quarter earnings per share will be $.04 to $.06 per share lower than the prior quarter.”

Mr. Martinetto concluded, “We believe the incremental pressure on our net interest margin is transitory and expect it to ease as prepayment activity slows. With our strong business momentum, ongoing investment in our clients and sustained expense discipline, we remain well positioned to deliver improving revenues and earnings as the environment stabilizes or improves.”

The SMART report can be viewed with its accompanying 12-month data at www.aboutschwab.com/investor_relations/financial_reports.

Forward Looking Statements

This press release contains forward looking statements relating to the company’s expected fourth quarter financial results, including net interest margin and earnings, and the company’s financial performance. 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, 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, successfully integrate acquisitions and achieve the expected benefits, develop and launch new products, services and capabilities in a timely and successful manner; the impact of changes in market conditions on money market fund fee waivers, revenue, expenses and pre-tax margins; competitive pressures on rates and fees; the level of client assets, including cash balances; capital needs; level of expenses; adverse developments in litigation or regulatory matters and the extent of any charges associated with legal matters; the 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, 2011.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.5 million client brokerage accounts, 1.5 million corporate retirement plan participants, 777,000 banking accounts, and $1.67 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, 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 mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com.

Contact:

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

Corporate Public Relations
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888-767-5432

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