Schwab Reports Third Quarter Revenues Up 11% Year-Over-Year

Full Service Model Helps Clients Remain Engaged Despite Market Volatility; Core Net New Assets Rise 21%

Monday, October 17, 2011 5:45 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"Given the weakened environment, we’ll respond appropriately on the expense side while remaining true to our long-term strategy"

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation announced today that its net income was $220 million for the third quarter of 2011, up 77% from $124 million for the year-earlier period. The company’s third quarter 2010 net income was $218 million prior to the inclusion of certain charges relating to its money market mutual funds and affinity credit card program. Net income for the nine months ended September 30, 2011 was $701 million, up 109% year-over-year. Schwab’s year-to-date 2010 net income was $555 million prior to the inclusion of charges for the items noted above and the settlement of a civil class action lawsuit relating to the Schwab YieldPlus Fund®.

  Three Months Ended     Nine Months Ended  
--September 30,-- % --September 30,-- %
Financial Highlights   2011   2010   Change   2011   2010   Change
 
Net revenues (in millions) $ 1,181   $ 1,063 11 % $ 3,578   $ 3,121 15 %
Net income (in millions) $ 220 $ 124 77 % $ 701 $ 335 109 %
Diluted earnings per share $ .18 $ .10 80 % $ .57 $ .28 104 %
Pre-tax profit margin 30.5 % 18.7 % 31.9 % 17.6 %
Return on stockholders’ equity (annualized) 12 % 8 % 13 % 8 %
 

Third quarter 2011 results include non-recurring costs relating to the acquisition of optionsXpress Holdings, Inc. totaling $10 million after-tax.

President and CEO Walt Bettinger said, “Our unique combination of full-service, high-value brokerage continues to perform well and deliver growth despite a difficult economic environment. Although the environment weakened further during the third quarter, our clients stayed with their long-term investing plans. Their cash holdings at Schwab remained close to pre-crisis levels and they were consistently net purchasers of securities. Our full service capabilities were in demand during the recent quarter as enrollments in our advisory solutions continued at a strong pace. We ended September with a total of 2.4 million accounts at Schwab either enrolled in retail advisory offerings or under the guidance of an independent advisor, an increase of 153,000 over September 2010. During the quarter, we introduced new and enhanced features in our StreetSmart Edge® platform for our active trader clients, and executed a record 1,005,000 trades on a single day in August during the height of recent market volatility. We also handled a high volume of branch, phone and website interactions during the quarter. For example, our systems processed over 68 million log-ins to Schwab.com during the period, a 17% year-over-year increase, while retaining our #1 spot in the respected Keynote measurements for website speed. Net new assets totaled $86.0 billion for the third quarter – excluding the optionsXpress acquisition and major Clearing inflows, core net new assets totaled $17.6 billion, up 21% from last year. Clients opened 191,000 new brokerage accounts during the period, up 14%, and we ended the quarter with 8.5 million active brokerage accounts, 769,000 banking accounts, and 1.46 million retirement plan participants. Client assets totaled $1.58 trillion at month-end September, up 7%.”

“Given the weakened environment, we’ll respond appropriately on the expense side while remaining true to our long-term strategy,” Mr. Bettinger continued. “We recognize that effective expense discipline remains key to our ability to balance near-term profitability with investing in our clients to enhance their service experience and sustain our growth. Our ongoing willingness to make appropriate trade-off decisions helped us to deliver year-to-date revenue and operating income growth of 15% and 27%, respectively. At the same time, we are pushing forward with initiatives that will expand our non rate-sensitive revenues, such as our recent acquisitions of Windhaven and optionsXpress, as well as the development of an integrated technology platform for independent advisors and a new index-based 401(k) offering. Overall, we believe that disciplined, yet sustained, investment in our growing client base is the best path to absorb and offset the environmental pressure we face.”

CFO Joe Martinetto added, “We guard Schwab’s financial stability and flexibility by following our philosophy of near-term profitability / long-term value creation throughout market cycles. By applying the same rigor to managing credit and interest rate risk across all environments, we can keep the firm focused on serving our clients rather than getting pulled off course by financial dislocations. Our continued success with clients and our diversified revenue streams enabled us to keep revenues essentially flat sequentially – trading revenues rose by 21% over the second quarter, and our expanding client base limited the decline in net interest revenue to 2%. Asset management and administration fees declined by 7% sequentially due to lower equity markets and further deterioration in short-term rates, which pushed money market fund fee waivers up to $160 million from $128 million in the prior quarter. With our ongoing expense discipline helping us to achieve a 30.5% pre-tax profit margin in the third quarter, our financial performance remains where we’d expect it to be given the environment. We have a healthy balance sheet with a growing capital base, and we remain well positioned to continue delivering strong near-term profitability while investing for future growth, even if the current rate environment persists for an extended period.”

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

Investor Services

  • Net new accounts for the quarter totaled approximately 18,000, up 64% year-over-year excluding internal transfers in 2010. Total accounts reached 5.7 million as of September 30, 2011, up 2% year-over-year.
  • Introduced new and enhanced features for StreetSmart Edge®, including tools that increase visibility into real-time market movements, to help identify trading opportunities and simplify the overall trading experience.

Institutional Services

Advisor Services

  • Launched “RIA Stands for You,” a multi-media campaign designed to define the independent registered investment advisor category. The campaign includes digital advertising and a consumer-facing website, as well as a new toolkit that helps advisors use the campaign as part of their own marketing efforts.
  • Launched a comprehensive set of resources for advisors considering full independence, including a white paper and webcast focusing on legal and regulatory considerations, and dedicated website content for advisors currently at independent broker-dealers.
  • Established a new business, Schwab Intelligent Technologies, to work with best-in-class technology providers to create Schwab Intelligent Integration solutions for RIAs. Schwab Intelligent Technologies will deliver Schwab OpenView Gateway, a flexible, open-architecture technology platform that enables data integration between Schwab systems and those of the participating technology providers used by advisors.

Products and Infrastructure

  • For Charles Schwab Bank:
    • Balance sheet assets = $59.0 billion, up 11% year-over-year.
    • Outstanding mortgage and home equity loans = $9.0 billion, up 17% year-over-year.
    • First mortgage originations during the quarter = $806 million.
    • Delinquency, nonaccrual, and loss reserve ratios for Schwab Bank’s loan portfolio = 0.76%, 0.49% and 0.54%, respectively, at month-end September.
  • Achieved first place for our SER-based model portfolio in Barron’s latest stock selection competition (six- and 12-month categories).
  • Introduced the Schwab U.S. Aggregate Bond ETF (SCHZ), expanding the company’s existing proprietary offering to 14 equity and fixed income ETFs.
  • Schwab Bank High Yield Investor Checking® accounts = 584,000, with $10.2 billion in balances.
  • Client assets managed by Windhaven totaled $7.2 billion, up 9% from the second quarter of 2011.
  • Total assets under management in Schwab ETFs = $4.1 billion. Total assets in Schwab Managed Portfolios-ETFs = $2.4 billion.

Supporting schedules are either attached or located at: www.aboutschwab.com/images/uploads/q3_2011_schedule.xls

Forward Looking Statements

This press release contains forward looking statements relating to the company’s expansion of non rate-sensitive revenues, development and launch of new products, services and capabilities, growing capital base and 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, the company’s ability to successfully integrate acquisitions and achieve the expected benefits; develop and launch new products, services and capabilities in a timely and successful manner; 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; 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 June 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 active brokerage accounts, 1.46 million corporate retirement plan participants, 769,000 banking accounts, and $1.58 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.

THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
                 
  Three Months Ended   Nine Months Ended
September 30, September 30,
    2011   2010   2011   2010
   
Net Revenues
Asset management and administration fees $ 466 $ 468 $ 1,470 $ 1,325
Interest revenue 487 442 1,464 1,261
Interest expense   (44 )   (55 )   (134 )   (151 )
Net interest revenue 443 387 1,330 1,110
Trading revenue 248 182 694 624
Other 45 32 119 99
Provision for loan losses (8 ) (3 ) (13 ) (18 )
Net impairment losses on securities (1)     (13 )     (3 )     (22 )     (19 )
Total net revenues     1,181       1,063       3,578       3,121  
Expenses Excluding Interest
Compensation and benefits 423 381 1,290 1,176
Professional services 104 85 288 249
Occupancy and equipment 78 66 222 202
Advertising and market development 48 34 159 139
Communications 56 49 166 154
Depreciation and amortization 39 35 107 108
Class action litigation and regulatory reserve - - 7 196
Money market mutual fund charges - 132 - 132
Other     73       82       199       215  
Total expenses excluding interest     821       864       2,438       2,571  
Income before taxes on income 360 199 1,140 550
Taxes on income     (140 )     (75 )     (439 )     (215 )
Net Income   $ 220     $ 124     $ 701     $ 335  
Weighted-Average Common Shares Outstanding — Diluted     1,229       1,194       1,216       1,192  
Earnings Per Share — Basic $ .18 $ .10 $ .58 $ .28
Earnings Per Share — Diluted   $ .18     $ .10     $ .57     $ .28  
(1)   Net impairment losses on securities include total other-than-temporary impairment losses of $2 million and $0 million, net of $(11) million and $(3) million recognized in other comprehensive income, for the three months ended September 30, 2011 and 2010, respectively, and total other-than-temporary impairment losses of $13 million and $41 million, net of $(9) million and $22 million recognized in other comprehensive income, for the nine months ended September 30, 2011 and 2010, respectively.
 
See Notes to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.
 
THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
               
 

Q3-11 % change

2011 2010
vs. vs. Third Second First Fourth Third
(In millions, except per share amounts and as noted) Q3-10 Q2-11 Quarter   Quarter   Quarter   Quarter   Quarter
Net Revenues
Asset management and administration fees - (7%) $ 466 $ 502 $ 502 $ 497 $ 468
Net interest revenue 14% (2%) 443 451 436 414 387
Trading revenue 36% 21% 248 205 241 206 182
Other 41% 29% 45 35 39 36 32
Provision for loan losses 167% N/M (8 ) (1 ) (4 ) (9 ) (3 )
Net impairment losses on securities N/M N/M   (13 )     (2 )     (7 )     (17 )     (3 )
Total net revenues 11% (1%)   1,181       1,190       1,207       1,127       1,063  
Expenses Excluding Interest
Compensation and benefits 11% (2%) 423 430 437 397 381
Professional services 22% 13% 104 92 92 92 85
Occupancy and equipment 18% 7% 78 73 71 70 66
Advertising and market development 41% (6%) 48 51 60 57 34
Communications 14% 4% 56 54 56 53 49
Depreciation and amortization 11% 18% 39 33 35 38 35
Class action litigation and regulatory reserve (1) - N/M - 7 - 124 -
Money market mutual fund charges (2) N/M - - - - - 132
Other (3) (11%) 14%   73       64       62       67       82  
Total expenses excluding interest (5%) 2%   821       804       813       898       864  
Income before taxes on income 81% (7%) 360 386 394 229 199
Taxes on income 87% (5%)   (140 )     (148 )     (151 )     (110 )     (75 )
Net Income 77% (8%) $ 220     $ 238     $ 243     $ 119     $ 124  
Basic earnings per share 80% (10%) $ .18 $ .20 $ .20 $ .10 $ .10
Diluted earnings per share 80% (10%) $ .18 $ .20 $ .20 $ .10 $ .10
Dividends declared per common share $ .06 $ .06 $ .06 $ .06 $ .06
Weighted-average common shares outstanding - diluted 3% 2%   1,229       1,210       1,207       1,200       1,194  
Performance Measures
Pre-tax profit margin 30.5 % 32.4 % 32.6 % 20.3 % 18.7 %
Return on stockholders’ equity (annualized)   12 %     14 %     15 %     8 %     8 %
Financial Condition (at quarter end, in billions)
Cash and investments segregated 34% 13% $ 27.0 $ 23.8 $ 23.1 $ 22.7 $ 20.1
Receivables from brokerage clients 13% (4%) $ 11.1 $ 11.6 $ 11.3 $ 11.2 $ 9.8
Loans to banking clients 18% 2% $ 9.7 $ 9.5 $ 9.1 $ 8.7 $ 8.2
Total assets (4) 18% 5% $ 102.9 $ 97.6 $ 94.9 $ 92.6 $ 87.3
Deposits from banking clients 11% 3% $ 54.1 $ 52.3 $ 51.3 $ 50.6 $ 48.8
Payables to brokerage clients 32% 8% $ 36.6 $ 33.9 $ 32.1 $ 30.9 $ 27.7
Long-term debt - - $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0
Stockholders’ equity 28% 15% $ 7.7     $ 6.7     $ 6.5     $ 6.2     $ 6.0  
Other
Full-time equivalent employees (at quarter end, in thousands) 11% 5% 13.9 13.2 13.1 12.8 12.5

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

3% (3%) $ 350 $ 361 $ 371 $ 355 $ 340

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

100% 23% $ 54     $ 44     $ 37     $ 51     $ 27  
Clients’ Daily Average Trades (in thousands)
Revenue trades (5) 39% 22% 323.1 264.9 319.9 271.6 233.2
Asset-based trades (6) 38% 16% 50.6 43.6 48.8 39.3 36.8
Other trades (7) 23% 15%   101.7       88.6       103.8       84.6       82.6  
Total 35% 20%   475.4       397.1       472.5       395.5       352.6  
Average Revenue Per Revenue Trade (5) (2%) (2%) $ 12.04     $ 12.23     $ 12.12     $ 12.07     $ 12.32  
   
(1)   Includes a regulatory reserve relating to the Schwab YieldPlus Fund®.
(2) Includes charges relating to losses recognized by Schwab money market mutual funds.
(3) Includes charges of $21 million in the third quarter of 2010 relating to the termination of the Company's Invest First® and WorldPoints(a) Visa(b) credit card program.
(4)

Total assets as of September 30, 2011, reflect preliminary purchase accounting for the assignment of fair values to optionsXpress Holdings, Inc.'s assets and liabilities acquired. Amounts are subject to refinement as information relative to the closing date fair values becomes available.

(5) Includes all client trades that generate either commission revenue or revenue from principal markups (i.e., fixed income); also known as DART.
(6) Includes eligible trades executed by clients who participate in one or more of the Company's asset-based pricing relationships.
(7) Includes all commission free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.
N/M Not meaningful.
 
See Notes to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.
_______________________________________
(a)WorldPoints is a registered trademark of FIA Card Services, N.A.; (b)Visa is a registered trademark of Visa International Service Association.
 
THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions)
(Unaudited)
                                                         
    Three Months Ended

September 30,

Nine Months Ended

September 30,

2011     2010 2011     2010
      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 $ 6,025 $ 3 0.20 % $ 8,265 $ 6 0.29 % $ 5,496 $ 9 0.22 % $ 7,848 $ 16 0.27 %
Cash and investments segregated 26,597 7 0.10 % 19,286 16 0.33 % 25,120 30 0.16 % 19,046 41 0.29 %
Broker-related receivables (1) 300 - 0.03 % 287 - 0.12 % 346 - 0.05 % 297 - 0.04 %
Receivables from brokerage clients 10,749 117 4.32 % 9,151 111 4.81 % 10,784 356 4.41 % 8,720 322 4.94 %
Other securities owned (1) - - - - - - - - - 98 - 0.45 %
Securities available for sale (2) 27,947 116 1.65 % 25,148 124 1.96 % 26,373 332 1.68 % 23,841 376 2.11 %
Securities held to maturity 15,469 128 3.28 % 10,776 95 3.50 % 16,313 413 3.38 % 8,799 240 3.65 %
Loans to banking clients 9,646 79 3.25 % 8,052 69 3.40 % 9,343 231 3.31 % 7,802 204 3.50 %
Loans held for sale     49     1   4.27 %   69     1   4.72 %   63     2   4.11 %   69     3   4.84 %
Total interest-earning assets     96,782     451   1.85 %   81,034     422   2.07 %   93,838     1,373   1.96 %   76,520     1,202   2.10 %
Other interest revenue         36           20           91           59    
Total interest-earning assets   $ 96,782   $ 487   2.00 % $ 81,034   $ 442   2.16 % $ 93,838   $ 1,464   2.08 % $ 76,520   $ 1,261   2.20 %
Funding sources:
Deposits from banking clients $ 53,247 $ 16 0.12 % $ 46,942 $ 29 0.25 % $ 51,649 $ 49 0.13 % $ 43,434 $ 85 0.26 %
Payables to brokerage clients 30,962 1 0.01 % 22,882 1 0.02 % 29,288 2 0.01 % 22,103 2 0.01 %
Long-term debt     2,003     27   5.35 %   1,827     25   5.43 %   2,004     81   5.40 %   1,527     64   5.60 %
Total interest-bearing liabilities     86,212     44   0.20 %   71,651     55   0.30 %   82,941     132   0.21 %   67,064     151   0.30 %
Non-interest-bearing funding sources 10,570 9,383 10,897 9,456
Other interest expense         -           -           2           -    
Total funding sources   $ 96,782   $ 44   0.18 % $ 81,034   $ 55   0.27 % $ 93,838   $ 134   0.19 % $ 76,520   $ 151   0.26 %
Net interest revenue       $ 443   1.82 %     $ 387   1.89 %     $ 1,330   1.89 %     $ 1,110   1.94 %
(1)   Interest revenue was less than $500,000 in the period or periods presented.
(2) Amounts have been calculated based on amortized cost.
See Notes to Consolidated Statements of Income, Financial and Operating Highlights, and Net Interest Revenue Information.
 
  Notes 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 year amounts have been reclassified to conform to the 2011 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, 2010.
 
THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions)
(Unaudited)
       
  Three Months Ended

September 30,

Nine Months Ended

September 30,

2011     2010 2011     2010
    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

$ 154,459 $ 220 0.57 % $ 154,084 $ 214 0.55 % $ 152,171 $ 639 0.56 % $ 160,124 $ 653 0.55 %
Fee waivers         (160 )           (93 )           (400 )           (331 )    
Schwab money market funds 154,459 60 0.15 % 154,084 121 0.31 % 152,171 239 0.21 % 160,124 322 0.27 %
Equity and bond funds (1) 40,865 29 0.28 % 34,302 29 0.34 % 41,550 89 0.29 % 34,483 84 0.33 %
Mutual Fund OneSource ®     202,862     168     0.33 %   188,123     150     0.32 %   214,284     520     0.32 %   184,245     443     0.32 %
Total mutual funds (2)   $ 398,186     257     0.26 % $ 376,509     300     0.32 % $ 408,005     848     0.28 % $ 378,852     849     0.30 %
Advice solutions (2, 3) $ 108,699 129 0.47 % $ 94,937 99 0.41 % $ 110,254 392 0.48 % $ 96,648 265 0.37 %
Other (4)         80             69             230             211      
Total asset management and administration fees       $ 466           $ 468           $ 1,470           $ 1,325      
(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)

Revenue includes temporary fee rebates of $10 million and $62 million in the third quarter and first nine months of 2010, respectively, relating to client assets that participated in advisory and managed account programs under a rebate program that ended in 2010.

(4) 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
Reconciliation of Net Income Excluding Certain Charges to Reported Net Income
(In millions)
(Unaudited)
         
                       
Three Months Ended Nine Months Ended
September 30, September 30,
  2011   2010   % Change   2011   2010   % Change
 
 
Net Income Excluding Certain Charges $ 220 $ 218 1% $ 705 $ 555 27%
Class action litigation and regulatory reserve (1) - - - 7 196 N/M
Money market mutual fund charges (2) - 132 N/M - 132 N/M
Other expense (3)   -     21     N/M     -       30     N/M
Total charges - 153 N/M 7 358 N/M
Tax effect - (59 ) N/M (3 ) (138 ) N/M
Total charges, net of tax   -     94     N/M     4       220     N/M
 
Reported Net Income $ 220   $ 124     77%   $ 701     $ 335     109%
(1)   Relates to the Schwab YieldPlus Fund®.
(2) Relates to losses recognized by the Schwab money market mutual funds.
(3)

Includes charges of $21 million and $9 million in the third quarter and first quarter of 2010, respectively, relating to the termination of the Company's Invest First® and WorldPoints Visa credit card program.

N/M Not meaningful.
 
THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)
             
 

Q3-11 % Change

2011 2010
vs.   vs. Third Second First Fourth Third
(In billions, at quarter end, except as noted) Q3-10   Q2-11 Quarter   Quarter   Quarter   Quarter   Quarter
Assets in client accounts
Schwab One®, other cash equivalents and deposits
from banking clients 17% 5% $ 90.9 $ 86.5 $ 83.7 $ 81.1 $ 77.9
Proprietary funds (Schwab Funds® and Laudus Funds®):
Money market funds 2% 2% 155.5 152.0 152.2 154.5 152.4
Equity and bond funds (20%) (31%)   34.3       49.6       48.9       46.0       42.7  

Total proprietary funds

(3%) (6%)   189.8       201.6       201.1       200.5       195.1  
Mutual Fund Marketplace® (1)
Mutual Fund OneSource® (3%) (15%) 187.9 220.8 219.7 208.6 193.9
Mutual fund clearing services 163% 126% 98.6 43.7 42.8 42.1 37.5
Other third-party mutual funds 6% (8%)   290.4       314.2       307.7       291.8       275.0  
Total Mutual Fund Marketplace 14% -   576.9       578.7       570.2       542.5       506.4  
Total mutual fund assets 9% (2%)   766.7       780.3       771.3       743.0       701.5  
Equity and other securities (1) 5% (11%) 552.9 624.5 631.0 589.4 526.4
Fixed income securities 1% 1% 176.4 175.1 171.5 171.3 174.7
Margin loans outstanding 14% (4%)   (10.5 )     (10.9 )     (10.6 )     (10.3 )     (9.2 )
Total client assets 7% (5%) $ 1,576.4     $ 1,655.5     $ 1,646.9     $ 1,574.5     $ 1,471.3  
 
Client assets by business
Investor Services 2% (8%) $ 655.4 $ 711.6 $ 714.8 $ 686.5 $ 644.6
Advisor Services 5% (8%) 640.1 697.8 688.6 654.9 609.9
Other Institutional Services 30% 14%   280.9       246.1       243.5       233.1       216.8  
Total client assets by business 7% (5%) $ 1,576.4     $ 1,655.5     $ 1,646.9     $ 1,574.5     $ 1,471.3  
 
Net growth in assets in client accounts (for the quarter ended)
Net new assets
Investor Services (2) N/M N/M $ 11.6 $ 2.0 $ 5.7 $ 5.0 $ 2.3
Advisor Services (2) 33% - 10.6 10.6 14.2 16.4 8.0
Other Institutional Services (3) N/M N/M   63.8       2.8       3.1       4.8       4.3  
Total net new assets N/M N/M   86.0       15.4       23.0       26.2       14.6  
Net market (losses) gains N/M N/M   (165.1 )     (6.8 )     49.4       77.0       95.2  
Net (decline) growth N/M N/M $ (79.1 )   $ 8.6     $ 72.4     $ 103.2     $ 109.8  
 
New brokerage accounts (in thousands, for the quarter ended) (4) N/M N/M 506 205 224 225 168
Clients (in thousands)
Active Brokerage Accounts 7% 5% 8,510 8,140 8,072 7,998 7,919
Banking Accounts 16% 3% 769 745 719 690 665
Corporate Retirement Plan Participants (1%) 2%   1,462       1,439       1,444       1,477       1,473  
     
(1)   Excludes all proprietary money market, equity, and bond funds.
(2)

Includes inflows of $7.5 billion in Investor Services from the acquisition of optionsXpress Holdings, Inc. in the third quarter of 2011. Includes inflows of $520 million in Investor Services and $1.5 billion in Advisor Services from the acquisition of Windhaven in the fourth quarter of 2010.

(3)

Includes inflows of $60.9 billion from mutual fund clearing services clients in the third quarter of 2011. Includes outflows of $2.1 billion from a mutual fund clearing services client in the first quarter of 2011. Includes inflows of $1.2 billion from a mutual fund clearing services client in the fourth quarter of 2010.

(4) Includes 315,000 new brokerage accounts from the acquisition of optionsXpress Holdings, Inc. in the third quarter of 2011.
N/M Not meaningful.

Contact:

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

Corporate Public Relations
Contacts for Journalists Only

 

888-767-5432

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