Schwab Reports Monthly Activity Highlights

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Updated

Schwab Reports Monthly Activity Highlights

Core Net New Assets Total $22.3 Billion

SAN FRANCISCO--(BUSINESS WIRE)-- The Charles Schwab Corporation released its Monthly Market Activity Report today. Company highlights for the month of August 2013 include:

  • Core net new assets (before significant one-time flows) brought to the company by new and existing clients in August 2013 totaled $22.3 billion. Net new assets of negative $2.4 billion contained the following items:

    • Core flows of $22.3 billion, including inflows of $9.5 billion and $3.1 billion from certain mutual fund clearing services clients.

    • A reduction of $24.7 billion, reflecting changes to Schwab's retirement plan business as discussed below.

  • Also reflecting the retirement plan business changes, total client assets were $2.08 trillion as of month-end August, up 12% from August 2012 and down 2% compared to July 2013.

  • Client daily average trades were 467.3 thousand in August 2013, up 24% compared to August 2012 and down 6% compared to July 2013. August 2013 trading activity included a 2% sequential increase in daily average revenue trades.


Schwab has decided to consolidate its two retirement plan recordkeeping technology platforms. For the past six years, the company has supported both the platform operated by the former 401(k) Company, which was acquired in 2007, and the Schwab Retirement Information ("SRI") recordkeeping platform utilized under its primary full-service bundled retirement plan offering.

Certain clients serviced on the acquired platform will be transitioned to the SRI platform. Schwab will resign from providing recordkeeping services to certain other clients. The retirement plans sponsored by these clients are either unprofitable, include uniquely resource-intensive servicing provisions, or are otherwise not an appropriate fit for Schwab's retirement plan servicing strategy.

Accordingly, Schwab has reduced its reported totals for overall client assets and retirement plan participants (by $24.7 billion and 317,000, respectively) to reflect the estimated impact of these changes. Financial impacts are not expected to be material. Given the current interest rate environment and financial market conditions, management believes the company remains on track to deliver the 2013 financial performance discussed at its Business Update on July 26, including a pre-tax profit margin of at least 30% and earnings per share in the mid-$.70s for the year.

CFO Joe Martinetto commented, "This decision is part of the retirement plan business strategy we've been sharing for some time, which includes the development of a program combining low-cost, index-focused investment products with personalized advice to help create better outcomes for participants. Our current strategy also places a greater emphasis on client relationships that enable Schwab to bring more of its capabilities to bear in serving participants so we can maximize the value we deliver. With a more efficient and focused single recordkeeping system, we can better leverage our resources in serving both plan sponsors and participants, and we're excited about the opportunities for accelerating our growth in this arena."

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 reduction in client assets and retirement plan participants and the financial impact from the consolidation of two retirement plan recordkeeping technology platforms; growth in revenues, earnings and profits; gap between revenue and expense growth; expected revenues and expenses and offsets; expenses; and pre-tax profit margin. 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, the actual number of clients whose relationship with Schwab terminates as a result of the consolidation of two retirement plan recordkeeping technology platforms; 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 manage expenses; 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 company's ability to develop and launch new products, services and capabilities in a timely and successful manner; 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 (NYS: 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, 926,000 banking accounts, and $2.08 trillion in client assets as of August 31, 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, 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.



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

KEYWORDS: United States North America California

INDUSTRY KEYWORDS:

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