EX-99.1 2 exhibit991063019.htm EXHIBIT 99.1 Exhibit
 
 
EXHIBIT 99.1

News Release

Contacts:
 
cslogoa03.jpg
MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Rich Fowler
Charles Schwab
Phone: 415-667-1841

SCHWAB REPORTS NET INCOME OF $937 MILLION, UP 8%, POSTING THE STRONGEST SECOND QUARTER IN COMPANY HISTORY
Revenues Grow 8% Year-Over-Year to $2.7 Billion, Marking Sustained Business Momentum
Core Net New Assets Total $37.2 Billion and Client Assets Reach a Record $3.70 Trillion
 
SAN FRANCISCO, July 16, 2019 – The Charles Schwab Corporation announced today that its net income for the second quarter of 2019 was $937 million, down 3% from $964 million for the prior quarter, and up 8% from $866 million for the second quarter of 2018. Net income for the six months ended June 30, 2019 was a record $1.9 billion, up 15% from the year-earlier period.
 
 
Three Months Ended June 30,
 
%
 
Six Months Ended June 30,
 
%
Financial Highlights
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues (in millions)
 
$
2,681

 
$
2,486

 
8%
 
$
5,404

 
$
4,884

 
11%
Net income (in millions)
 
$
937

 
$
866

 
8%
 
$
1,901

 
$
1,649

 
15%
Diluted earnings per common share
 
$
.66

 
$
.60

 
10%
 
$
1.35

 
$
1.14

 
18%
Pre-tax profit margin
 
46.1
%
 
45.5
%
 
 
 
46.3
%
 
43.7
%
 
 
Return on average common
 
 
 
 
 
 
 
 
 
 
 
 
    stockholders’ equity (annualized)
 
19
%
 
19
%
 
 
 
20
%
 
19
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
 
 
 
 
 
 
CEO Walt Bettinger said, “Our ‘no trade-offs’ approach to combining value, service, transparency, and trust continues to resonate with clients, as they are drawn to our contemporary full-service model through all environments. Thus far in 2019, a challenging mix of geopolitical, economic, and market dynamics has persisted, with investors facing unresolved trade negotiations, the Brexit debate and signals that the Fed may be moving towards a reversal in rate policy, all while U.S. equity markets have rallied to record territory. Amidst this backdrop, we drove sustained business momentum. Clients opened nearly 400,000 new brokerage accounts during the second quarter, bringing year-to-date new accounts to 772,000, helping push active accounts to the 12 million mark by quarter-end, up 7% year-over-year. This includes 3.5 million accounts under the guidance of the 7,500+ independent advisors who custody with us; those accounts are up 8% as advisors successfully build their businesses with our assistance.”

Mr. Bettinger continued, “Both advisors and individual clients contributed to our total core net new assets of $37.2 billion during the second quarter. With first half core net new assets of $88.9 billion, we sustained an annualized organic growth rate in excess of 5% throughout the period despite seasonal tax outflows in April. These strong flows reflect our ability to win in a competitive marketplace – clients have transferred nearly two dollars of assets in for every dollar out over the past six months, helping total client assets climb to a record $3.70 trillion as of June 30th, an increase of $305 billion, or 9% from a year ago.”

- 1 -

“Our “Through Clients’ Eyes” strategy includes serving our clients’ evolving needs where and how they prefer,” Mr. Bettinger added. “We recently opened our 61st independent branch, up from 53 at year end. These offices help extend our traditional branch network, delivering Schwab’s capabilities through local, community-based professionals. For clients exploring our lending capabilities, we have introduced new features to our Pledged Asset Line® offering, including loans with no preset term, streamlined origination and underwriting criteria, and a new application process available via any web-enabled device, with access to a new loan in as little as 24 hours. To aid advisors with growing and managing their practices, we are implementing digital alternatives to traditionally paper-based processes; by eliminating manual touch points and enabling automated status updates, these tools improve efficiency for both advisors and the company. We know that investing in these and other initiatives to build an ever more capable and efficient Schwab is important to our clients and our ability to continue winning in the marketplace. Through consistent strategic focus and disciplined execution, we expect to sustain our track record of delivering profitable growth and long-term value creation while putting clients first.”

CFO Peter Crawford commented, “Our sustained business momentum helped us achieve our strongest second quarter ever, even as we weathered shifts in client asset allocations and activity levels, as well as the interest rate environment. Overall, revenues were up 8% from a year ago at $2.7 billion, which was just under last quarter’s record mark. Net interest revenue rose 14% year-over-year to $1.6 billion, largely driven by higher interest-earning assets relating to the transfer of sweep money market fund balances to bank and broker-dealer sweep. In addition, our net interest margin rose 10 bps from a year ago to 2.40%, reflecting the Fed’s 2018 rate hikes. Asset management and administration fees decreased 3% year-over-year to $786 million as a result of lower money market fund revenue due to the sweep transfers as well as ongoing declines in Mutual Fund OneSource® balances, partially offset by growing enrollment in our advisory solutions. Trading revenue declined 3% to $174 million due to a decrease in average revenue per trade, which more than offset higher activity. Finally, other revenue rose 32%, driven primarily by a gain on the sale of PortfolioCenter®, a portfolio management and reporting software solution for advisors, to Tamarac Inc. Looking at expenses, our 7% increase reflects planned growth in staffing and our investments to drive efficiency and scale as we support our expanding client base. Our ongoing focus on driving efficiency while managing our spending in a disciplined manner enabled us to maintain our ratio of expenses to client assets at 16 bps for the quarter and achieve a pre-tax profit margin of 46.1% – our 5th consecutive quarter of at least 45%.”

Mr. Crawford concluded, “Effective balance sheet management remains a priority as we aim to maintain appropriate liquidity and support business growth. During the second quarter, we issued $600 million in senior notes with a 10-year maturity. Additionally, we transferred just under $200 million from sweep money market fund balances to bank and broker-dealer sweep, marking the completion of a 12-year process during which we moved approximately $130 billion. With sweep transfers done, tax season disbursements and some client sorting between invested and transactional cash allocations contributed to consolidated balance sheet assets declining by approximately $6 billion during the quarter to $276 billion. Consistent with our intent to return excess capital to stockholders, we repurchased 29.1 million shares for $1.2 billion during the quarter, leaving us with an outstanding authorization of $2.8 billion. The company’s preliminary Tier 1 Leverage ratio at quarter-end was 7.3%, somewhat above our operating objective of 6.75% - 7%. Our 19% return on equity for the second quarter marked our 5th consecutive quarter of at least 19% – our best sustained performance since 2009.”

Commentary from the CFO
Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on crossing the $250 billion consolidated asset threshold for heightened regulatory requirements, was posted on August 14, 2018.

Forward-Looking Statements
This press release contains forward-looking statements relating to client demand for the company’s full-service model, including advisory solutions; growth in the client base, accounts and assets; investments to drive efficiency and scale; profitable growth; long-term value creation; expenses; liquidity; capital returns to stockholders; and Tier 1 Leverage Ratio operating objective. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.


- 2 -

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; client use of the company’s advisory solutions and other products and services; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; competitive pressures on pricing, including deposit rates; the company’s ability to develop and launch new products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner; the level of client assets, including cash balances; capital and liquidity needs and management; the company’s ability to manage expenses; client sensitivity to interest rates; and other factors set forth in the company’s most recent report on Form 10-K.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 365 offices and 12.0 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.3 million banking accounts, and $3.70 trillion in client assets as of June 30, 2019. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://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 https://www.schwab.com and https://www.aboutschwab.com.

###

- 3 -


THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)





 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Net Revenues
 
 
 
 
 
 
 
Interest revenue
$
1,927

 
$
1,590

 
$
3,925

 
$
3,011

Interest expense
(318
)
 
(183
)
 
(635
)
 
(341
)
Net interest revenue
1,609

 
1,407

 
3,290

 
2,670

Asset management and administration fees
786

 
814

 
1,541

 
1,665

Trading revenue
174

 
180

 
359

 
381

Other
112

 
85

 
214

 
168

Total net revenues
2,681

 
2,486

 
5,404

 
4,884

Expenses Excluding Interest
 
 
 
 
 
 
 
Compensation and benefits
807

 
745

 
1,657

 
1,515

Professional services
178

 
156

 
348

 
312

Occupancy and equipment
133

 
122

 
264

 
244

Advertising and market development
77

 
77

 
146

 
150

Communications
62

 
58

 
124

 
120

Depreciation and amortization
84

 
75

 
167

 
148

Regulatory fees and assessments
30

 
50

 
62

 
101

Other
74

 
72

 
136

 
161

Total expenses excluding interest
1,445

 
1,355

 
2,904

 
2,751

Income before taxes on income
1,236

 
1,131

 
2,500

 
2,133

Taxes on income
299

 
265

 
599

 
484

Net Income
937

 
866

 
1,901

 
1,649

Preferred stock dividends and other
50

 
53

 
89

 
90

Net Income Available to Common Stockholders
$
887

 
$
813

 
$
1,812

 
$
1,559

Weighted-Average Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
1,328

 
1,350

 
1,331

 
1,349

Diluted
1,337

 
1,364

 
1,340

 
1,363

Earnings Per Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
$
.67

 
$
.60

 
$
1.36

 
$
1.16

Diluted
$
.66

 
$
.60

 
$
1.35

 
$
1.14



         


- 4 -

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2-19 % change
 
 
2019
 
2018
 
vs.
 
vs.
 
 
Second
 
First
 
Fourth
 
Third
 
Second
(In millions, except per share amounts and as noted)
Q2-18
 
Q1-19
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Net Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest revenue
14
%
 
(4
)%
 
 
$
1,609

 
$
1,681

 
$
1,626

 
$
1,527

 
$
1,407

Asset management and administration fees
(3
)%
 
4
%
 
 
786

 
755

 
755

 
809

 
814

Trading revenue
(3
)%
 
(6
)%
 
 
174

 
185

 
206

 
176

 
180

Other
32
%
 
10
%
 
 
112

 
102

 
82

 
67

 
85

Total net revenues
8
%
 
(2
)%
 
 
2,681

 
2,723

 
2,669

 
2,579

 
2,486

Expenses Excluding Interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
8
%
 
(5
)%
 
 
807

 
850

 
805

 
737

 
745

Professional services
14
%
 
5
%
 
 
178

 
170

 
178

 
164

 
156

Occupancy and equipment
9
%
 
2
%
 
 
133

 
131

 
128

 
124

 
122

Advertising and market development
—

 
12
%
 
 
77

 
69

 
93

 
70

 
77

Communications
7
%
 
—

 
 
62

 
62

 
63

 
59

 
58

Depreciation and amortization
12
%
 
1
%
 
 
84

 
83

 
80

 
78

 
75

Regulatory fees and assessments
(40
)%
 
(6
)%
 
 
30

 
32

 
31

 
57

 
50

Other
3
%
 
19
%
 
 
74

 
62

 
81

 
71

 
72

Total expenses excluding interest
7
%
 
(1
)%
 
 
1,445

 
1,459

 
1,459

 
1,360

 
1,355

Income before taxes on income
9
%
 
(2
)%
 
 
1,236

 
1,264

 
1,210

 
1,219

 
1,131

Taxes on income
13
%
 
—

 
 
299

 
300

 
275

 
296

 
265

Net Income
8
%
 
(3
)%
 
 
$
937

 
$
964

 
$
935

 
$
923

 
$
866

Preferred stock dividends and other
(6
)%
 
28
%
 
 
50

 
39

 
50

 
38

 
53

Net Income Available to Common Stockholders
9
%
 
(4
)%
 
 
$
887

 
$
925

 
$
885

 
$
885

 
$
813

Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
12
%
 
(3
)%
 
 
$
.67

 
$
.69

 
$
.66

 
$
.66

 
$
.60

Diluted
10
%
 
(4
)%
 
 
$
.66

 
$
.69

 
$
.65

 
$
.65

 
$
.60

Dividends declared per common share
70
%
 
—

 
 
$
.17

 
$
.17

 
$
.13

 
$
.13

 
$
.10

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
(2
)%
 
—

 
 
1,328

 
1,333

 
1,343

 
1,351

 
1,350

Diluted
(2
)%
 
(1
)%
 
 
1,337

 
1,344

 
1,354

 
1,364

 
1,364

Performance Measures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax profit margin
 
 
 
 
 
46.1
%
 
46.4
%
 
45.3
%
 
47.3
%
 
45.5
%
Return on average common stockholders’ equity (annualized) (1)
 
 
 
 
 
19
%
 
20
%
 
20
%
 
20
%
 
19
%
Financial Condition (at quarter end, in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
82
%
 
(26
)%
 
 
$
24.2

 
$
32.6

 
$
27.9

 
$
21.8

 
$
13.3

Cash and investments segregated
28
%
 
1
%
 
 
14.1

 
13.9

 
13.6

 
8.5

 
11.0

Receivables from brokerage clients — net
(4
)%
 
4
%
 
 
21.4

 
20.5

 
21.7

 
22.4

 
22.4

Available for sale securities
(2
)%
 
(9
)%
 
 
54.6

 
60.0

 
66.6

 
57.6

 
55.5

Held to maturity securities
1
%
 
4
%
 
 
138.3

 
132.4

 
144.0

 
139.0

 
136.8

Bank loans — net
—

 
1
%
 
 
16.6

 
16.5

 
16.6

 
16.6

 
16.6

Total assets
5
%
 
(2
)%
 
 
276.3

 
282.8

 
296.5

 
272.1

 
261.9

Bank deposits
4
%
 
(5
)%
 
 
208.4

 
219.5

 
231.4

 
213.4

 
199.9

Payables to brokerage clients
2
%
 
4
%
 
 
31.0

 
29.7

 
32.7

 
27.9

 
30.3

Long-term debt
28
%
 
9
%
 
 
7.4

 
6.8

 
6.9

 
5.8

 
5.8

Stockholders’ equity
6
%
 
(1
)%
 
 
21.3

 
21.6

 
20.7

 
20.8

 
20.1

Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees (at quarter end, in thousands)
10
%
 
3
%
 
 
20.5

 
20.0

 
19.5

 
19.1

 
18.7

Capital expenditures — purchases of equipment, office facilities, and
property, net (in millions)
37
%
 
(4
)%
 
 
$
173

 
$
181

 
$
159

 
$
156

 
$
126

Expenses excluding interest as a percentage of average client assets
(annualized)
 
 
 
 
 
0.16
%
 
0.17
%
 
0.17
%
 
0.15
%
 
0.16
%
Clients’ Daily Average Trades (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue trades (2)
4
%
 
(6
)%
 
 
392

 
418

 
466

 
382

 
376

Asset-based trades (3)
(7
)%
 
(7
)%
 
 
138

 
149

 
188

 
129

 
149

Other trades (4)
4
%
 
(11
)%
 
 
186

 
210

 
213

 
172

 
179

Total
2
%
 
(8
)%
 
 
716

 
777

 
867

 
683

 
704

Average Revenue Per Revenue Trade (2)
(5
)%
 
(3
)%
 
 
$
6.94

 
$
7.19

 
$
7.13

 
$
7.27

 
$
7.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.
(2) Includes all client trades that generate trading revenue (i.e., commission revenue or principal transaction revenue); also known as DART.
(3) Includes eligible trades executed by clients who participate in one or more of the company’s asset-based pricing relationships.
(4) Includes all commission-free trades, including Schwab Mutual Fund OneSource® funds and ETFs, and other proprietary products.

- 5 -

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions)
(Unaudited)

 
Three Months Ended
June 30,
 
 
Six Months Ended
June 30,
 
2019
 
 
2018
 
 
2019
 
 
2018
 
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
$
26,146

 
$
158

 
2.39
%
 
 
$
12,764

 
$
57

 
1.80
%
 
 
$
25,568

 
$
309

 
2.41
%
 
 
$
14,912

 
$
123

 
1.65
%
Cash and investments segregated
14,588

 
89

 
2.41
%
 
 
11,825

 
50

 
1.68
%
 
 
14,075

 
172

 
2.43
%
 
 
12,891

 
98

 
1.51
%
Broker-related receivables (1)
199

 
—

 
1.38
%
 
 
378

 
2

 
1.58
%
 
 
228

 
2

 
2.15
%
 
 
333

 
3

 
1.47
%
Receivables from brokerage clients
19,423

 
217

 
4.42
%
 
 
19,775

 
204

 
4.09
%
 
 
19,199

 
431

 
4.46
%
 
 
19,326

 
383

 
3.95
%
Available for sale securities (2)
56,020

 
386

 
2.74
%
 
 
52,682

 
291

 
2.19
%
 
 
61,407

 
837

 
2.72
%
 
 
51,533

 
531

 
2.06
%
Held to maturity securities
132,738

 
899

 
2.70
%
 
 
129,825

 
812

 
2.49
%
 
 
132,583

 
1,815

 
2.73
%
 
 
125,641

 
1,533

 
2.44
%
Bank loans
16,560

 
148

 
3.58
%
 
 
16,530

 
138

 
3.32
%
 
 
16,569

 
297

 
3.59
%
 
 
16,493

 
268

 
3.25
%
Total interest-earning assets
265,674

 
1,897

 
2.84
%
 
 
243,779

 
1,554

 
2.54
%
 
 
269,629

 
3,863

 
2.86
%
 
 
241,129

 
2,939

 
2.43
%
Other interest revenue
 
 
30

 
 
 
 
 
 
36

 
 
 
 
 
 
62

 
 
 
 
 
 
72

 
 
Total interest-earning assets
$
265,674

 
$
1,927

 
2.88
%
 
 
$
243,779

 
$
1,590

 
2.60
%
 
 
$
269,629

 
$
3,925

 
2.90
%
 
 
$
241,129

 
$
3,011

 
2.49
%
Funding sources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bank deposits
$
210,811

 
$
224

 
0.43
%
 
 
$
193,029

 
$
117

 
0.24
%
 
 
$
215,374

 
$
450

 
0.42
%
 
 
$
185,052

 
$
181

 
0.20
%
Payables to brokerage clients
23,034

 
24

 
0.42
%
 
 
21,729

 
14

 
0.26
%
 
 
22,611

 
47

 
0.42
%
 
 
22,097

 
21

 
0.20
%
Short-term borrowings (1)
3

 
—

 
2.68
%
 
 
1,429

 
7

 
1.94
%
 
 
17

 
—

 
2.50
%
 
 
6,770

 
54

 
1.59
%
Long-term debt
7,090

 
63

 
3.58
%
 
 
4,961

 
43

 
3.47
%
 
 
6,968

 
125

 
3.60
%
 
 
4,678

 
80

 
3.42
%
Total interest-bearing liabilities
240,938

 
311

 
0.52
%
 
 
221,148

 
181

 
0.33
%
 
 
244,970

 
622

 
0.51
%
 
 
218,597

 
336

 
0.31
%
Non-interest-bearing funding sources
24,736

 
 
 
 
 
 
22,631

 
 
 
 
 
 
24,659

 
 
 
 
 
 
22,532

 
 
 
 
Other interest expense
 
 
7

 
 
 
 
 
 
2

 
 
 
 
 
 
13

 
 
 
 
 
 
5

 
 
Total funding sources
$
265,674

 
$
318

 
0.48
%
 
 
$
243,779

 
$
183

 
0.30
%
 
 
$
269,629

 
$
635

 
0.47
%
 
 
$
241,129

 
$
341

 
0.28
%
Net interest revenue
 
 
$
1,609

 
2.40
%
 
 
 
 
$
1,407

 
2.30
%
 
 
 
 
$
3,290

 
2.43
%
 
 
 
 
$
2,670

 
2.21
%
(1) Interest revenue or expense was less than $500,000 in the period or periods presented.
(2) Amounts have been calculated based on amortized cost.



- 6 -

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions)
(Unaudited)


 
Three Months Ended
June 30,
 
 
Six Months Ended
June 30,
 
2019
 
 
2018
 
 
2019
 
 
2018
 
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
$
161,998

 
$
123

 
0.30
%
 
 
$
139,968

 
$
147

 
0.42
%
 
 
$
160,133

 
$
245

 
0.31
%
 
 
$
148,165

 
$
329

 
0.45
%
Schwab equity and bond funds, ETFs, and
  collective trust funds (CTFs) (1)
261,773

 
74

 
0.11
%
 
 
218,877

 
76

 
0.14
%
 
 
253,048

 
144

 
0.11
%
 
 
215,153

 
150

 
0.14
%
Mutual Fund OneSource® and other non-
  transaction fee funds
192,227

 
152

 
0.32
%
 
 
217,867

 
175

 
0.32
%
 
 
189,725

 
299

 
0.32
%
 
 
220,268

 
353

 
0.32
%
Other third-party mutual funds and ETFs (2)
471,638

 
79

 
0.07
%
 
 
325,061

 
71

 
0.09
%
 
 
462,050

 
154

 
0.07
%
 
 
322,391

 
141

 
0.09
%
Total mutual funds, ETFs, and CTFs (3)
$
1,087,636

 
428

 
0.16
%
 
 
$
901,773

 
469

 
0.21
%
 
 
$
1,064,956

 
842

 
0.16
%
 
 
$
905,977

 
973

 
0.22
%
Advice solutions (3) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-based
$
243,050

 
295

 
0.49
%
 
 
$
225,879

 
283

 
0.50
%
 
 
$
236,722

 
573

 
0.49
%
 
 
$
225,320

 
565

 
0.51
%
Non-fee-based
69,274

 
—

 
—

 
 
62,109

 
—

 
—

 
 
68,015

 
—

 
—

 
 
60,964

 
—

 
—

Total advice solutions
$
312,324

 
295

 
0.38
%
 
 
$
287,988

 
283

 
0.39
%
 
 
$
304,737

 
573

 
0.38
%
 
 
$
286,284

 
565

 
0.40
%
Other balance-based fees (1,4)
408,929

 
54

 
0.05
%
 
 
372,029

 
51

 
0.05
%
 
 
400,560

 
106

 
0.05
%
 
 
391,236

 
106

 
0.05
%
Other (5)
 
 
9

 
 
 
 
 
 
11

 
 
 
 
 
 
20

 
 
 
 
 
 
21

 
 
Total asset management and administration fees
 
 
$
786

 
 
 
 
 
 
$
814

 
 
 
 
 
 
$
1,541

 
 
 
 
 
 
$
1,665

 
 
(1) Beginning in the first quarter of 2019, a change was made to move CTFs from other balance-based fees. Prior periods have been recast to reflect this change.
(2) Includes Schwab ETF OneSourceTM.
(3) Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private ClientTM, Schwab Managed PortfoliosTM, Managed Account Select®, Schwab Advisor Network®, Windhaven® Strategies, ThomasPartners® Strategies, Schwab Index Advantage® advised retirement plan balances, Schwab Intelligent Portfolios®, Institutional Intelligent Portfolios®, and Schwab Intelligent Portfolios PremiumTM; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. For the total end of period view, please see the Monthly Activity Report.
(4) Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(5) Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.
 

- 7 -

THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)


 
Q2-19 % Change
 
 
2019
 
2018
 
vs.
 
vs.
 
 
Second
 
First
 
Fourth
 
Third
 
Second
(In billions, at quarter end, except as noted)
Q2-18
 
Q1-19
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Assets in client accounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Schwab One®, certain cash equivalents and bank deposits
4
%
 
(4
)%
 
 
$
237.3

 
$
247.0

 
$
261.2

 
$
239.5

 
$
228.2

Proprietary mutual funds (Schwab Funds® and Laudus Funds®) and CTFs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds (1)
25
%
 
5
%
 
 
168.1

 
159.7

 
153.5

 
128.5

 
134.2

Equity and bond funds and CTFs (2,3)
9
%
 
4
%
 
 
110.9

 
106.2

 
94.3

 
107.4

 
102.1

Total proprietary mutual funds and CTFs
18
%
 
5
%
 
 
279.0

 
265.9

 
247.8

 
235.9

 
236.3

Mutual Fund Marketplace® (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual Fund OneSource® and other non-transaction fee funds
(7
)%
 
1
%
 
 
197.8

 
195.1

 
180.5

 
212.6

 
212.5

Mutual fund clearing services
10
%
 
6
%
 
 
192.9

 
182.7

 
164.4

 
182.2

 
175.3

Other third-party mutual funds
7
%
 
4
%
 
 
767.3

 
737.2

 
650.4

 
740.1

 
716.1

Total Mutual Fund Marketplace
5
%
 
4
%
 
 
1,158.0

 
1,115.0

 
995.3

 
1,134.9

 
1,103.9

Total mutual fund assets
7
%
 
4
%
 
 
1,437.0

 
1,380.9

 
1,243.1

 
1,370.8

 
1,340.2

Exchange-traded funds (ETFs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proprietary ETFs (3)
25
%
 
7
%
 
 
143.6

 
134.7

 
115.2

 
125.2

 
114.8

Schwab ETF OneSource™ (4)
186
%
 
7
%
 
 
88.1

 
82.5

 
30.6

 
33.3

 
30.8

Other third-party ETFs
(2
)%
 
4
%
 
 
315.7

 
303.7

 
309.9

 
338.6

 
322.1

Total ETF assets
17
%
 
5
%
 
 
547.4

 
520.9

 
455.7

 
497.1

 
467.7

Equity and other securities (2)
6
%
 
3
%
 
 
1,168.3

 
1,131.3

 
1,005.4

 
1,186.7

 
1,106.2

Fixed income securities
21
%
 
2
%
 
 
332.1

 
324.1

 
306.1

 
290.4

 
275.1

Margin loans outstanding
(3
)%
 
5
%
 
 
(19.7
)
 
(18.8
)
 
(19.3
)
 
(20.8
)
 
(20.4
)
Total client assets
9
%
 
3
%
 
 
$
3,702.4

 
$
3,585.4

 
$
3,252.2

 
$
3,563.7

 
$
3,397.0

Client assets by business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services
9
%
 
3
%
 
 
$
1,946.5

 
$
1,886.7

 
$
1,701.7

 
$
1,876.9

 
$
1,784.8

Advisor Services
9
%
 
3
%
 
 
1,755.9

 
1,698.7

 
1,550.5

 
1,686.8

 
1,612.2

Total client assets
9
%
 
3
%
 
 
$
3,702.4

 
$
3,585.4

 
$
3,252.2

 
$
3,563.7

 
$
3,397.0

Net growth in assets in client accounts (for the quarter ended)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net new assets by business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services (5)
31
%
 
(39
)%
 
 
$
17.9

 
$
29.2

 
$
28.7

 
$
27.8

 
$
13.7

Advisor Services
(36
)%
 
(14
)%
 
 
19.3

 
22.5

 
26.6

 
25.7

 
30.2

Total net new assets
(15
)%
 
(28
)%
 
 
$
37.2

 
$
51.7

 
$
55.3

 
$
53.5

 
$
43.9

Net market gains (losses)
67
%
 
(72
)%
 
 
79.8

 
281.5

 
(366.8
)
 
113.2

 
47.7

Net growth (decline)
28
%
 
(65
)%
 
 
$
117.0

 
$
333.2

 
$
(311.5
)
 
$
166.7

 
$
91.6

New brokerage accounts (in thousands, for the quarter ended)
1
%
 
—

 
 
386

 
386

 
380

 
369

 
384

Client accounts (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active brokerage accounts (6)
7
%
 
2
%
 
 
11,967

 
11,787

 
11,593

 
11,423

 
11,202

Banking accounts
7
%
 
3
%
 
 
1,336

 
1,300

 
1,302

 
1,283

 
1,250

Corporate retirement plan participants
6
%
 
1
%
 
 
1,698

 
1,684

 
1,655

 
1,627

 
1,599

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Total client assets in purchased money market funds are located at: https://www.aboutschwab.com/investor-relations.
(2) Beginning in the first quarter of 2019, a change was made to move CTFs from equity and other securities. Prior periods have been recast to reflect this change.
(3) Includes balances held on and off the Schwab platform. As of June 30, 2019, off-platform equity and bond funds, CTFs, and ETFs were $12.5 billion, $4.7 billion, and $38.2 billion, respectively.
(4) Excludes all proprietary mutual funds and ETFs.
(5) Second quarter of 2018 includes outflows of $9.5 billion from certain mutual fund clearing services clients.
(6) In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.


- 8 -

The Charles Schwab Corporation Monthly Activity Report For June 2019
 
2018
 
 
 
 
 
 
2019
 
 
 
 
 
Change
 
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Mo.
Yr.
Market Indices (at month end)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dow Jones Industrial Average
24,271

25,415

25,965

26,458

25,116

25,538

23,327

25,000

25,916

25,929

26,593

24,815

26,600

7
%
10
%
Nasdaq Composite
7,510

7,672

8,110

8,046

7,306

7,331

6,635

7,282

7,533

7,729

8,095

7,453

8,006

7
%
7
%
Standard & Poor’s 500
2,718

2,816

2,902

2,914

2,712

2,760

2,507

2,704

2,784

2,834

2,946

2,752

2,942

7
%
8
%
Client Assets (in billions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Client Assets
3,378.1

3,397.0

3,477.9

3,555.9

3,563.7

3,388.1

3,431.9

3,252.2

3,447.7

3,533.0

3,585.4

3,668.5

3,530.6

 
 
Net New Assets
24.1

16.3

20.8

16.4

14.9

15.6

24.8

15.1

18.3

18.3

(0.3
)
17.3

20.2

17
%
(16
)%
Net Market Gains (Losses)
(5.2
)
64.6

57.2

(8.6
)
(190.5
)
28.2

(204.5
)
180.4

67.0

34.1

83.4

(155.2
)
151.6

 
 
Total Client Assets (at month end)
3,397.0

3,477.9

3,555.9

3,563.7

3,388.1

3,431.9

3,252.2

3,447.7

3,533.0

3,585.4

3,668.5

3,530.6

3,702.4

5
%
9
%
Core Net New Assets (1)
24.1

16.3

20.8

16.4

14.9

15.6

24.8

15.1

18.3

18.3

(0.3
)
17.3

20.2

17
%
(16
)%
Receiving Ongoing Advisory Services (at month end)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investor Services
280.0

287.0

292.0

292.7

280.3

284.7

272.4

286.9

294.2

298.4

305.7

298.5

311.6

4
%
11
%
Advisor Services (2)
1,488.7

1,525.5

1,555.3

1,559.2

1,485.8

1,510.1

1,436.1

1,514.2

1,551.6

1,572.8

1,608.0

1,554.6

1,626.6

5
%
9
%
Client Accounts (at month end, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active Brokerage Accounts (3)
11,202

11,243

11,310

11,423

11,479

11,529

11,593

11,653

11,712

11,787

11,870

11,929

11,967

—

7
%
Banking Accounts (4)
1,250

1,262

1,274

1,283

1,289

1,297

1,302

1,312

1,313

1,300

1,310

1,323

1,336

1
%
7
%
Corporate Retirement Plan Participants
1,599

1,611

1,621

1,627

1,634

1,639

1,655

1,679

1,685

1,684

1,690

1,699

1,698

—

6
%
Client Activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Brokerage Accounts (in thousands)
121

118

132

119

133

115

132

131

115

140

147

123

116

(6
)%
(4
)%
Inbound Calls (in thousands)
1,814

1,849

1,964

1,715

1,976

1,681

1,839

1,924

1,742

1,882

1,966

1,671

1,595

(5
)%
(12
)%
Web Logins (in thousands)
56,491

57,137

62,797

53,923

59,261

54,654

53,920

64,563

60,121

63,692

65,669

61,522

60,824

(1
)%
8
%
Client Cash as a Percentage of Client Assets (5)
10.7
%
10.5
%
10.4
%
10.3
%
11.1
%
11.2
%
12.8
%
11.7
%
11.5
%
11.3
%
10.9
%
11.3
%
10.9
%
 (40) bp

20 bp

Mutual Fund and Exchange-Traded Fund
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net Buys (Sells) (6, 7) (in millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Large Capitalization Stock
981

486

918

311

308

331

717

1,343

1,109

1,045

980

1,114

206

 
 
Small / Mid Capitalization Stock
1,195

768

(186
)
151

(1,344
)
(456
)
(1,414
)
1,329

638

302

136

(190
)
18

 
 
International
(498
)
(529
)
186

(88
)
(109
)
(418
)
(2,163
)
2,212

1,086

1,274

863

(100
)
225

 
 
Specialized
383

520

(245
)
73

(914
)
(397
)
(2,105
)
124

609

750

(109
)
(440
)
341

 
 
Hybrid
(288
)
(548
)
(678
)
(324
)
(1,313
)
(1,248
)
(2,985
)
(321
)
(309
)
(357
)
(228
)
(316
)
(181
)
 
 
Taxable Bond
928

879

965

1,371

(351
)
(836
)
(4,342
)
3,956

2,871

1,923

3,029

1,821

2,378

 
 
Tax-Free Bond
588

306

559

262

(591
)
(407
)
(409
)
1,184

1,111

1,133

760

1,057

682

 
 
Net Buy (Sell) Activity (in millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual Funds (6)
555

(522
)
(1,936
)
(1,538
)
(5,734
)
(7,955
)
(21,372
)
6,740

2,312

1,850

1,860

86

7

 
 
Exchange-Traded Funds (7)
2,734

2,404

3,455

3,294

1,420

4,524

8,671

3,087

4,803

4,220

3,571

2,860

3,662

 
 
Money Market Funds
(4,919
)
(4,801
)
704

(1,933
)
2,546

8,515

13,548

4,944

(1,577
)
1,785

(2,097
)
5,067

4,570

 
 
Average Interest-Earning Assets (8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions of dollars)
249,432

254,211

259,137

261,741

264,156

265,648

274,913

277,068

270,718

272,727

270,308

263,718

262,759
—

5
%
 
(1) Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods.
(2) Excludes Retirement Business Services.
(3) In September 2018, the definition of active brokerage accounts was standardized across all account types as accounts with activity within the preceding 270 days. This change increased active accounts by approximately 63,000.
(4) In March 2019, banking accounts were reduced by approximately 23,000 as a result of inactive account closures.
(5) Schwab One®, certain cash equivalents, bank deposits, and money market fund balances as a percentage of total client assets.
(6) 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. Excludes money market fund transactions.
(7) Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.
(8) Represents average total interest-earning assets on the company’s balance sheet.

- 9 -