Schwab Reports Monthly Activity Highlights

Announces Expense Reduction Measures

Monday, December 15, 2008 5:45 am PST

Dateline:

SAN FRANCISCO

Public Company Information:

NASDAQ:
SCHW

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation released its Monthly Market Activity Report today. Company highlights for the month of November 2008 include:

  • Net new assets brought to the company by new and existing clients in November 2008 totaled $5.9 billion.
  • Total client assets were $1.112 trillion as of month-end November, down 23% from November 2007 and down 4% from October 2008.
  • Client daily average trades were 408.0 thousand in November 2008, up 18% from November 2007 and down 18% from October 2008.

CEO Walt Bettinger commented, “Our straightforward business model and clear focus on clients has served us well, and investors continue to come to us and stay with us in numbers that are the envy of many competitors. During November, net new assets totaled $5.9 billion despite the ongoing effects of declining equity valuations and a slowing economy, and net new brokerage and banking accounts totaled 20,000 and 11,000, respectively.”

Mr. Bettinger continued, “Schwab is in great financial shape – with multiple sources of liquidity, a sound capital position, and a high quality balance sheet that includes a mortgage portfolio with continued strong credit performance – and we’re ending 2008 with solid client metrics. At the same time, however, we expect to see stiff headwinds from an unprecedented financial environment – the stock market has fallen dramatically, impacting client assets at Schwab, and the Fed has moved repeatedly to lower interest rates, putting additional pressure on our revenues. Despite these pressures, we will continue investing to sustain and enhance the client experience at Schwab as we maintain our competitive momentum in the marketplace. Protecting our financial strength and operating performance under these circumstances requires us to manage expenses even more aggressively in the months ahead. We are therefore taking a number of steps aimed at reducing operating expenses by approximately 7 to 8% of our current annualized run rate. A portion of these savings may then be reinvested in our product and service offerings.”

Most immediately, the company has implemented organizational changes to improve operating efficiency by integrating and centralizing similar leadership roles across the firm. Management expects these changes to reduce overall staffing by approximately 100 positions – mostly at the officer level – and to result in severance charges totaling approximately $20 million pre-tax in the fourth quarter of 2008. Over the next 30 to 60 days, the company’s Operating Council will assess additional actions to improve productivity and efficiency, as well as sustain profitability, with implementation expected to occur during the first half of 2009. These actions will include further reductions in staffing (focused on non client service roles), along with reductions in professional services, development projects, and certain aspects of the company’s marketing activity. The actual measures to be taken, the number of positions to be eliminated, and the amount of any additional charges are all undetermined at this time.

Mr. Bettinger concluded, “We could have chosen to wait and react as the environment unfolds next year. We are convinced, however, that acting now provides us with the most flexibility in positioning the company for continued success in both serving our valued clients and delivering the superior performance our stockholders expect.”

This press release contains forward-looking statements relating to expense reductions, reinvestment of cost savings, staffing levels and severance charges that reflect management’s current expectations. Achievement of these expectations is subject to certain 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 ongoing ability to identify and implement expense savings without disrupting its operations and the final determination of staff reductions and related charges for the fourth quarter of 2008 and the first half of 2009, as well as other factors set forth in the company’s Form 10-Q for the period ended September 30, 2008.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.4 million client brokerage accounts, 1.4 million corporate retirement plan participants, 438,000 banking accounts, and $1.1 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 its Schwab Institutional division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com.

The Charles Schwab Corporation Monthly Market Activity Report For November 2008
                             
2007 2008

% change

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Mo.

Yr.

 
Change in Client Assets
(in billions of dollars)
Net New Assets 12.1 15.7 11.1 12.5 17.7 3.8 12.2 10.0 10.4 7.7 6.3 6.6 5.9 (11 %) (51 %)
Net Market (Losses) Gains (50.4 )   (15.7 )   (60.6 )   (17.8 )   (15.4 )   42.1     17.8     (82.0 )   (16.0 )   (1.4 )   (99.4 )   (151.5 ) (53.8 )
 
Total Client Assets
(at month end, in billions of dollars) 1,445.5     1,445.5     1,396.0     1,390.7     1,393.0     1,438.9     1,468.9     1,396.9     1,391.3     1,397.6     1,304.5     1,159.6   1,111.7   (4 %) (23 %)
 
New Brokerage Accounts
(in thousands) 74 78 94 69 83 94 67 65 64 57 72 91 60 (34 %) (19 %)
 
Clients (at month end, in thousands)
Active Brokerage Accounts 7,013 7,049 7,093 7,119 7,162 7,206 7,232 7,256 7,272 7,287 7,310 7,356 7,376 -- 5 %
Banking Accounts 247 262 286 302 318 332 344 355 367 377 399 427 438 3 % 77 %
Corporate Retirement Plan Participants 1,185 1,205 1,256 1,263 1,271 1,284 1,286 1,291 1,306 1,315 1,333 1,342 1,380 3 % 16 %
 
Market Indices (at month end)
Dow Jones Industrial Average 13,372 13,265 12,650 12,266 12,263 12,820 12,638 11,350 11,378 11,544 10,851 9,325 8,829 (5 %) (34 %)
Nasdaq Composite 2,661

2,652

2,390 2,271 2,279 2,413 2,523 2,293 2,326 2,368 2,092 1,721 1,536 (11 %) (42 %)
Standard & Poor's 500 1,481 1,468 1,379 1,331 1,323 1,386 1,400 1,280 1,267 1,283 1,166 969 896 (8 %) (40 %)
 
Clients' Daily Average Trades
(in thousands)
Revenue Trades (1) 297.2 250.7 311.2 242.7 268.1 250.6 258.4 255.3 282.1 227.0 339.7 415.0 348.5 (16 %) 17 %
Schwab Investor Services (2) 21.1 23.4 24.8 21.9 23.1 22.2 24.1 19.7 24.0 20.8 27.5 38.1 24.9 (35 %) 18 %
Schwab Institutional® (2) 24.9 22.2 32.0 23.5 28.0 21.5 20.9 22.0 29.4 20.6 29.0 43.4 33.2 (24 %) 33 %
Schwab Corporate & Retirement Services (2) 1.2     1.4     1.5     1.3     1.3     1.2     1.3     1.2     1.4     1.3     1.6     1.7   1.4   (18 %) 17 %
Total 344.4     297.7     369.5     289.4     320.5     295.5     304.7     298.2     336.9     269.7     397.8     498.2   408.0   (18 %) 18 %
 
Daily Average Market Share Volume
(in millions)
NYSE 1,630 1,320 1,927 1,514 1,727 1,310 1,218 1,400 1,531 1,081 1,603 1,699 1,525 (10 %) (6 %)
Nasdaq 2,367     1,900     2,696     2,344     2,294     1,982     2,069     2,261     2,355     1,894     2,537     2,795   2,089   (25 %) (12 %)
Total 3,997     3,220     4,623     3,858     4,021     3,292     3,287     3,661     3,886     2,975     4,140     4,494   3,614   (20 %) (10 %)
 
Mutual Fund Net Buys (Sells) (3)
(in millions of dollars)
Large Capitalization Stock (327.5 ) (130.3 ) (721.5 ) 819.1 (69.3 ) 689.1 738.5 284.5 (1,024.5 ) (88.2 ) (1,496.8 ) (2,070.5 ) (1,437.6 )
Small / Mid Capitalization Stock (641.9 ) (1,009.5 ) (1,168.7 ) (17.2 ) (410.0 ) 10.9 215.8 277.2 (306.5 ) 392.9 (243.7 ) (1,096.1 ) (507.5 )
International (80.6 ) 262.5 (800.2 ) 283.1 (229.8 ) 262.1 800.7 (184.6 ) (1,036.8 ) (743.9 ) (2,240.3 ) (3,022.2 ) (1,403.6 )
Specialized (191.3 ) (132.1 ) 53.0 206.6 (230.2 ) (20.7 ) 164.4 133.5 (192.1 ) (106.3 ) (571.8 ) (1,037.5 ) (328.0 )
Hybrid 117.9 199.2 202.0 601.8 457.2 457.1 405.7 273.0 227.1 289.5 (320.7 ) (1,229.5 ) (662.3 )
Taxable Bond (379.4 ) (585.3 ) 1,407.0 1,047.6 (845.3 ) 582.0 1,113.1 344.2 440.9 487.7 (894.9 ) (2,787.4 ) (729.7 )
Tax-Free Bond (152.1 ) (519.1 ) 204.1 (31.6 ) 10.9 158.6 459.4 358.4 179.7 263.4 (97.9 ) (622.6 ) (165.0 )
Money Market Funds 8,244.8 7,942.0 7,632.2 3,996.8 5,478.6 (7,347.2 ) (3,956.8 ) (2,378.1 ) 4,958.3 506.7 3,973.6 2,944.9 2,408.6  
 
 

(1) 

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

(2) 

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

(3) 

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.

Contact:

Charles Schwab
Greg Gable, 415-636-5847 (Media)
Rich Fowler, 415-636-9869 (Investors/Analysts)

Corporate Public Relations
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888-767-5432

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