SCHWAB CHARLES CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - SCHWAB CHARLES CORP	a8kshell123118.htm



		EXHIBIT 99.1
News Release Contacts:
MEDIA: Mayura Hooper Charles Schwab Phone: 415-667-1525	INVESTORS/ANALYSTS: Rich Fowler Charles Schwab Phone: 415-667-1841

SCHWAB FOURTH QUARTER NET INCOME OF $935 MILLION CAPS RECORD YEAR

2018 Revenues Rise 18% to $10.1 Billion, Net Income Grows 49% to $3.5 Billion, Both Records

Core Net New Assets Reach a Record $227.8 Billion, up 15%

SAN FRANCISCO, January 16, 2019 – The Charles Schwab Corporation announced today that its net income for the fourth quarter of 2018 was $935 million, up 57% from $597 million for the fourth quarter of 2017. Net income for the twelve months ended December 31, 2018 was $3.5 billion, up 49% year-over-year.



	Three Months Ended December 31,						%	Twelve Months Ended December 31,						%
Financial Highlights	2018			2017			Change	2018			2017			Change

Net revenues (in millions)	$	2,669		$	2,242		19%	$	10,132		$	8,618		18%
Net income (in millions)	$	935		$	597		57%	$	3,507		$	2,354		49%
Diluted earnings per common share	$	.65		$	.41		59%	$	2.45		$	1.61		52%
Pre-tax profit margin	45.3		%	42.5		%		45.0		%	42.4		%
Return on average common
stockholders’ equity (annualized)	20		%	14		%		19		%	15		%

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.

CEO Walt Bettinger said, “Our ability to build stronger client relationships and set financial records through a volatile environment reaffirmed the power of Schwab’s ‘Virtuous Cycle’ in 2018. While the year began with strong market momentum, February saw a surge of volatility, including the largest-ever one-day increase in the Cboe Volatility Index^®. After a relatively stable summer, the S&P 500^® reached an all-time high in September, before dropping 580 points to ultimately end the year 6% lower than month-end December 2017. Throughout these ups and downs, disciplined execution of our ‘Through Clients’ Eyes’ strategy helped us succeed with clients – households new to Retail rose 20% compared to 2017, with 53% of those new clients under the age of 40. Another measure of our success is the willingness of new and existing clients to trust us with their hard-earned assets. Both of our primary businesses posted record inflows in 2018, with Retail and Advisor Services net new assets rising 37% and 7%, respectively. Altogether, investors rewarded Schwab with a record $227.8 billion in core net new assets, up 15% from the previous record in 2017 and more than twice the 2008 total – clear evidence of our asset gathering capabilities. These impressive flows were driven, in part, by our ability to win in a competitive marketplace as we continued attracting more than two dollars of inflow for every dollar out in 2018. Our strong net new assets largely offset lower market valuations and we ended the year at $3.25 trillion in total client assets.”

Mr. Bettinger continued, “We remain well-positioned to continue driving robust business growth; with less than 10% market share, we still have ample opportunity ahead of us even as our client base reaches new highs. Last year, clients opened a record 1.6 million new brokerage accounts, up 9% from the previous year. Record client activity and help from the broader environment contributed to our sixth straight year of record revenues, which totaled

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$10.1 billion, up 18% from 2017. Our ratio of expenses to client assets, a key measure of our efficiency and one of our core competitive advantages, remained at our all-time low of 16 basis points – the best we’ve seen among public investment services firms. By balancing near-term profitability with long-term investments for growth and efficiency, along with support from a more favorable tax rate, we achieved the fifth consecutive year of record net income, up 49% to $3.5 billion. These results were made possible by our employees’ commitment to championing our clients’ goals every day, and in the fourth quarter we rewarded our non-officer employees with a one-time stock award totaling $36 million.”

Mr. Bettinger added, “We seek to offer a ‘no trade-offs’ approach to investors and are dedicated to sharing the benefits of our scale with them. We expanded access to investing in the fourth quarter by removing minimums for individual U.S. brokerage and retirement accounts. We also lowered the operating expense ratios on five market cap index mutual funds, removed investment minimums, and consolidated share classes across a variety of our mutual funds. During 2018, we enhanced our product line-up, adding 23 ETFs to Schwab ETF OneSource™ to total 265 ETFs covering 70 Morningstar categories. Additionally, consistent with our focus on improving transparency in investing, we introduced order-by-order price improvement reporting, enabling our clients to see how much they save on their equity trades. As we continue to seek ways to enhance our value proposition, product offering, and transparency, we are also striving to serve our clients where and how they choose. Throughout the year we hired over 500 client-facing employees, relocated or renovated 21 company-owned branches, and expanded the number of independent branches from 40 to 53. And we were honored to receive the ‘Highest in Investor Satisfaction with Full Service Brokerage Firms’ by J.D. Power* for the third consecutive year. We see this recognition as an affirmation of the importance of building trust and loyalty with our clients. We know when we do right by them they will reward us by bringing their assets to Schwab, fueling our growth well into the future.”

CFO Peter Crawford commented, “Schwab’s 2018 record financial performance once again demonstrates the effectiveness of the company’s financial formula. By focusing on our clients’ needs, we attract assets, and then we translate that business growth into solid revenue growth while at the same time exercising expense discipline – all of which leads to enhanced bottom-line performance. With an organic asset growth rate of 7% and a supportive environment for much of the year, we crossed the $10 billion revenue mark for the first time, producing 18% growth over 2017. Net interest revenue set a record at $5.8 billion, up 36% year-over-year, due to the Fed’s rate normalization and higher interest-earning assets, which reflect growth from both client cash allocations and the transfer of sweep money market funds to bank and broker-dealer sweep. As we progressed with these transfers, the corresponding money fund revenue naturally declined, yet positive flows in our advice solutions kept asset management and administration fees at $3.2 billion, down just 5% from last year. Record trading activity from our clients resulted in trading revenue reaching $763 million, up 17% from 2017. Our 12% increase in expenses encompasses our expected investments to support and fuel our business growth, including additional client-facing employees and our 2018 priorities – Application Modernization, Business Process Transformation, and Digital Accelerator. Our spending also reflects our late-year decisions to increase marketing and reward our employees, somewhat offset by the elimination of the FDIC surcharge. Overall, we delivered a 550 basis point gap between revenue and expense growth and produced a record 45.0% pre-tax profit margin, a 260 basis point expansion over last year.”

Mr. Crawford concluded, “Throughout 2018 we effectively managed our balance sheet to drive a 19% return on equity – the company’s highest annual level in ten years. We grew our consolidated balance sheet 22% to end the year at $297 billion, reflecting client cash allocations through the year – including a December surge in the midst of heightened market volatility – and $72 billion of sweep transfers. We ended the year with $30 billion remaining in sweep money market fund balances. Even with these transfers, we continued to generate more than enough capital to support our ongoing business growth and began accelerating returns to our stockholders. During 2018, our Board of Directors raised the quarterly cash dividend 63% and authorized a $1 billion Share Repurchase Program in October, which we completed by year-end; our preliminary Tier 1 Leverage Ratio was 7.1% at December 31^st, just above our operating objective of 6.75%-7%. We will continue to utilize capital, as necessary, to fund and support balance sheet growth. At the same time, we are working with our Board to implement an approach for returning excess capital to stockholders, as Schwab’s story evolves to include both strong business growth and more meaningful capital returns.”

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Supporting schedules and selected balances are either attached or located at: http://www.aboutschwab.com/investor-relations/financial-reports.

*Disclaimer: Charles Schwab received the highest numerical score in the J.D. Power 2016-2018 Full Service Investor Satisfaction Study. 2018 study based on 4,419 total responses from 18 firms measuring opinions of investors who used full service investment institutions, surveyed November-December 2017. Your experiences may vary. Visit jdpower.com/awards.

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab’s financial picture at: http://www.aboutschwab.com/investor-relations/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.

Business Update

The company has scheduled a Business Update for institutional investors on Tuesday, February 5, 2019. The Update is scheduled to run from approximately 8:30 a.m. - 12:15 p.m. PT, 11:30 a.m. - 3:15 p.m. ET. Participants will include members of the company’s executive management. A simultaneous webcast of this Update will be accessible to the public at http://schwabevents.com/corporation.

Forward-Looking Statements

This press release contains forward-looking statements relating to growth in the client base, accounts and assets; growth in revenues, earnings and profits; expenses; capital returns to stockholders; Tier 1 Leverage Ratio operating objective; and balance sheet growth. 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 company’s ability to attract and retain clients and registered investment advisors and grow those relationships and client assets; general market conditions, including the level of interest rates, equity valuations, and trading activity; competitive pressures on pricing, including deposit rates; the company’s ability to develop and launch new products, services, infrastructure and capabilities in a timely and successful manner; client use of the company’s advisory solutions and other products and services; level of client assets, including cash balances; capital and liquidity needs and management; client sensitivity to interest rates; the company’s ability to manage expenses; the timing and amount of transfers to bank sweep; 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 355 offices and 11.6 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.3 million banking accounts, and $3.25 trillion in client assets as of December 31, 2018. 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, 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 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.

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THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)



	Three Months Ended December 31,						Twelve Months Ended December 31,
	2018			2017			2018			2017
Net Revenues
Interest revenue	$	1,914		$	1,266		$	6,680		$	4,624
Interest expense	(288		)	(119		)	(857		)	(342		)
Net interest revenue	1,626			1,147			5,823			4,282
Asset management and administration fees	755			863			3,229			3,392
Trading revenue	206			154			763			654
Other	82			78			317			290
Total net revenues	2,669			2,242			10,132			8,618
Expenses Excluding Interest
Compensation and benefits	805			711			3,057			2,737
Professional services	178			151			654			580
Occupancy and equipment	128			113			496			436
Advertising and market development	93			63			313			268
Communications	63			60			242			231
Depreciation and amortization	80			69			306			269
Regulatory fees and assessments	31			46			189			179
Other	81			76			313			268
Total expenses excluding interest	1,459			1,289			5,570			4,968
Income before taxes on income	1,210			953			4,562			3,650
Taxes on income ⁽¹⁾	275			356			1,055			1,296
Net Income	935			597			3,507			2,354
Preferred stock dividends and other	50			47			178			174
Net Income Available to Common Stockholders	$	885		$	550		$	3,329		$	2,180
Weighted-Average Common Shares Outstanding:
Basic	1,343			1,343			1,348			1,339
Diluted	1,354			1,358			1,361			1,353
Earnings Per Common Shares Outstanding:
Basic	$	.66		$	.41		$	2.47		$	1.63
Diluted	$	.65		$	.41		$	2.45		$	1.61

⁽¹⁾ Taxes on income were increased by approximately $46 million in December 2017 due to the enactment of the Tax Cuts and Jobs Act.

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THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)

	Q4-18 % change				2018												2017
	vs.		vs.		Fourth			Third			Second			First			Fourth
(In millions, except per share amounts and as noted)	Q4-17		Q3-18		Quarter			Quarter			Quarter			Quarter			Quarter
Net Revenues
Net interest revenue	42	%	6	%	$	1,626		$	1,527		$	1,407		$	1,263		$	1,147
Asset management and administration fees	(13	)%	(7	)%	755			809			814			851			863
Trading revenue	34	%	17	%	206			176			180			201			154
Other	5	%	22	%	82			67			85			83			78
Total net revenues	19	%	3	%	2,669			2,579			2,486			2,398			2,242
Expenses Excluding Interest
Compensation and benefits	13	%	9	%	805			737			745			770			711
Professional services	18	%	9	%	178			164			156			156			151
Occupancy and equipment	13	%	3	%	128			124			122			122			113
Advertising and market development	48	%	33	%	93			70			77			73			63
Communications	5	%	7	%	63			59			58			62			60
Depreciation and amortization	16	%	3	%	80			78			75			73			69
Regulatory fees and assessments	(33	)%	(46	)%	31			57			50			51			46
Other	7	%	14	%	81			71			72			89			76
Total expenses excluding interest	13	%	7	%	1,459			1,360			1,355			1,396			1,289
Income before taxes on income	27	%	(1	)%	1,210			1,219			1,131			1,002			953
Taxes on income	(23	)%	(7	)%	275			296			265			219			356
Net Income	57	%	1	%	$	935		$	923		$	866		$	783		$	597
Preferred stock dividends and other	6	%	32	%	50			38			53			37			47
Net Income Available to Common Stockholders	61	%	—		$	885		$	885		$	813		$	746		$	550
Earnings per common share:
Basic	61	%	—		$	.66		$	.66		$	.60		$	.55		$	.41
Diluted	59	%	—		$	.65		$	.65		$	.60		$	.55		$	.41
Dividends declared per common share	63	%	—		$	.13		$	.13		$	.10		$	.10		$	.08
Weighted-average common shares outstanding:
Basic	—		(1	)%	1,343			1,351			1,350			1,347			1,343
Diluted	—		(1	)%	1,354			1,364			1,364			1,362			1,358
Performance Measures
Pre-tax profit margin					45.3		%	47.3		%	45.5		%	41.8		%	42.5		%
Return on average common stockholders’ equity (annualized) ⁽¹⁾					20		%	20		%	19		%	18		%	14		%
Financial Condition (at quarter end, in billions)
Cash and investments segregated	(10	)%	60	%	$	13.6		$	8.5		$	11.0		$	12.8		$	15.1
Receivables from brokerage clients — net	5	%	(3	)%	21.7			22.4			22.4			21.2			20.6
Bank loans — net	1	%	—		16.6			16.6			16.6			16.4			16.5
Total assets	22	%	9	%	296.5			272.1			261.9			248.3			243.3
Bank deposits	36	%	8	%	231.4			213.4			199.9			190.2			169.7
Payables to brokerage clients	5	%	17	%	32.7			27.9			30.3			31.1			31.2
Short-term borrowings	(100	)%	—		—			—			—			—			15.0
Long-term debt	44	%	19	%	6.9			5.8			5.8			4.1			4.8
Stockholders’ equity	12	%	—		20.7			20.8			20.1			19.3			18.5
Other
Full-time equivalent employees (at quarter end, in thousands)	11	%	2	%	19.5			19.1			18.7			18.2			17.6
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)	13	%	2	%	$	159		$	156		$	126		$	135		$	141
Expenses excluding interest as a percentage of average client assets (annualized)					0.17		%	0.15		%	0.16		%	0.17		%	0.16		%
Clients’ Daily Average Trades (in thousands)
Revenue trades ⁽²⁾	35	%	22	%	466			382			376			462			345
Asset-based trades ⁽³⁾	57	%	46	%	188			129			149			139			120
Other trades ⁽⁴⁾	31	%	24	%	213			172			179			211			163
Total	38	%	27	%	867			683			704			812			628
Average Revenue Per Revenue Trade ⁽²⁾	(3	)%	(2	)%	$	7.13		$	7.27		$	7.30		$	7.24		$	7.33

⁽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.

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THE CHARLES SCHWAB CORPORATION

Net Interest Revenue Information

(In millions)

(Unaudited)



	Three Months Ended December 31,												Twelve Months Ended December 31,
	2018						2017						2018						2017
	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	$	22,590	$	131	2.27	%	$	11,582	$	37	1.27	%	$	17,783	$	348	1.93	%	$	9,931	$	109	1.10	%
Cash and investments segregated	9,854		57		2.28	%	15,307		46		1.19	%	11,461		206		1.78	%	18,525		166		0.90	%
Broker-related receivables	241		2		3.99	%	438		1		0.91	%	303		6		2.09	%	430		3		0.70	%
Receivables from brokerage clients	20,584		230		4.38	%	17,478		160		3.63	%	19,870		830		4.12	%	16,269		575		3.53	%
Available for sale securities ⁽¹⁾	59,720		382		2.52	%	47,016		200		1.69	%	54,542		1,241		2.26	%	53,040		815		1.54	%
Held to maturity securities	138,629		928		2.66	%	115,694		663		2.27	%	131,794		3,348		2.53	%	103,599		2,354		2.27	%
Bank loans	16,649		149		3.55	%	16,378		125		3.03	%	16,554		559		3.37	%	15,919		472		2.97	%
Total interest-earning assets	268,267		1,879		2.77	%	223,893		1,232		2.18	%	252,307		6,538		2.57	%	217,713		4,494		2.06	%
Other interest revenue			35						34						142						130
Total interest-earning assets	$	268,267	$	1,914	2.82	%	$	223,893	$	1,266	2.24	%	$	252,307	$	6,680	2.63	%	$	217,713	$	4,624	2.12	%
Funding sources
Bank deposits	$	217,325	$	206	0.38	%	$	165,552	$	50	0.12	%	$	199,139	$	545	0.27	%	$	163,998	$	148	0.09	%
Payables to brokerage clients	19,953		19		0.38	%	23,038		5		0.09	%	21,178		56		0.27	%	25,403		16		0.06	%
Short-term borrowings ⁽²⁾	5		—		1.69	%	9,520		30		1.25	%	3,359		54		1.59	%	3,503		41		1.17	%
Long-term debt	6,524		59		3.59	%	3,671		30		3.24	%	5,423		190		3.50	%	3,431		119		3.47	%
Total interest-bearing liabilities	243,807		284		0.46	%	201,781		115		0.23	%	229,099		845		0.37	%	196,335		324		0.17	%
Non-interest-bearing funding sources	24,460						22,112						23,208						21,378
Other interest expense			4						4						12						18
Total funding sources	$	268,267	$	288	0.43	%	$	223,893	$	119	0.21	%	$	252,307	$	857	0.34	%	$	217,713	$	342	0.15	%
Net interest revenue			$	1,626	2.39	%			$	1,147	2.03	%			$	5,823	2.29	%			$	4,282	1.97	%

⁽¹⁾Amounts have been calculated based on amortized cost.

⁽²⁾Interest expense was less than $500,000 in the period presented.

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THE CHARLES SCHWAB CORPORATION

Asset Management and Administration Fees Information

(In millions)

(Unaudited)



	Three Months Ended December 31,												Twelve Months Ended December 31,
	2018						2017						2018						2017
	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	$	137,541	$	117	0.34	%	$	162,249	$	200	0.49	%	$	141,018	$	568	0.40	%	$	160,735	$	875		0.54	%
Fee waivers			—						—						—						(10		)
Schwab money market funds	137,541		117		0.34	%	162,249		200		0.49	%	141,018		568		0.40	%	160,735		865			0.54	%
Schwab equity and bond funds and ETFs	211,367		63		0.12	%	179,764		60		0.13	%	207,385		258		0.12	%	158,625		223			0.14	%
Mutual Fund OneSource^® and other non- transaction fee funds	191,620		156		0.32	%	219,157		178		0.32	%	210,429		680		0.32	%	215,333		706			0.33	%
Other third-party mutual funds and ETFs ⁽¹⁾	325,497		71		0.09	%	309,007		69		0.09	%	328,150		287		0.09	%	286,111		251			0.09	%
Total mutual funds and ETFs ⁽²⁾	$	866,025	407		0.19	%	$	870,177	507		0.23	%	$	886,982	1,793		0.20	%	$	820,804	2,045			0.25	%
Advice solutions ⁽²⁾
Fee-based	$	226,184	280		0.49	%	$	216,546	278		0.51	%	$	227,790	1,139		0.50	%	$	203,794	1,043			0.51	%
Non-fee-based	64,085		—		—		55,368		—		—		62,813		—		—		48,936		—			—
Total advice solutions	$	290,269	280		0.38	%	$	271,914	278		0.41	%	$	290,603	1,139		0.39	%	$	252,730	1,043			0.41	%
Other balance-based fees ⁽³⁾	380,193		59		0.06	%	451,310		66		0.06	%	398,495		250		0.06	%	417,659		258			0.06	%
Other ⁽⁴⁾			9						12						47						46
Total asset management and administration fees			$	755					$	863					$	3,229					$	3,392

⁽¹⁾ Includes Schwab ETF OneSource^™.

⁽²⁾ Advice solutions include managed portfolios, specialized strategies, and customized investment advice such as Schwab Private Client, Schwab Managed Portfolios, 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 Advisory^®, launched in March 2017; as well as legacy non-fee advice solutions including Schwab Advisor Source and certain retirement plan balances. Beginning the fourth quarter of 2017, a prospective change was made to add non-fee based average assets from managed portfolios. 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.

⁽³⁾ Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.

⁽⁴⁾ Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

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THE CHARLES SCHWAB CORPORATION

Growth in Client Assets and Accounts

(Unaudited)



	Q4-18 % Change				2018												2017
	vs.		vs.		Fourth			Third			Second			First			Fourth
(In billions, at quarter end, except as noted)	Q4-17		Q3-18		Quarter			Quarter			Quarter			Quarter			Quarter
Assets in client accounts
Schwab One^®, certain cash equivalents and bank deposits	32	%	9	%	$	261.2		$	239.5		$	228.2		$	219.4		$	198.6
Proprietary mutual funds (Schwab Funds^® and Laudus Funds^®)
Money market funds ⁽¹⁾	(6	)%	19	%	153.5			128.5			134.2			145.0			163.6
Equity and bond funds ⁽²⁾	(3	)%	(13	)%	79.9			91.7			86.6			83.4			82.5
Total proprietary mutual funds	(5	)%	6	%	233.4			220.2			220.8			228.4			246.1
Mutual Fund Marketplace^{® (3)}
Mutual Fund OneSource^® and other non-transaction fee funds	(20	)%	(15	)%	180.5			212.6			212.5			221.6			225.2
Mutual fund clearing services	(38	)%	(10	)%	164.4			182.2			175.3			178.3			265.4
Other third-party mutual funds	(5	)%	(12	)%	650.4			740.1			716.1			693.4			682.6
Total Mutual Fund Marketplace	(15	)%	(12	)%	995.3			1,134.9			1,103.9			1,093.3			1,173.2
Total mutual fund assets	(13	)%	(9	)%	1,228.7			1,355.1			1,324.7			1,321.7			1,419.3
Exchange-traded funds (ETFs)
Proprietary ETFs ⁽²⁾	16	%	(8	)%	115.2			125.2			114.8			104.5			99.1
Schwab ETF OneSource™ ⁽³⁾	7	%	(8	)%	30.6			33.3			30.8			29.8			28.7
Other third-party ETFs	—		(8	)%	309.9			338.6			322.1			314.7			308.8
Total ETF assets	4	%	(8	)%	455.7			497.1			467.7			449.0			436.6
Equity and other securities	(6	)%	(15	)%	1,019.8			1,202.4			1,121.7			1,075.9			1,080.0
Fixed income securities	25	%	5	%	306.1			290.4			275.1			258.8			245.6
Margin loans outstanding	5	%	(7	)%	(19.3		)	(20.8		)	(20.4		)	(19.4		)	(18.3		)
Total client assets	(3	)%	(9	)%	$	3,252.2		$	3,563.7		$	3,397.0		$	3,305.4		$	3,361.8
Client assets by business
Investor Services	(6	)%	(9	)%	$	1,701.7		$	1,876.9		$	1,784.8		$	1,740.8		$	1,810.9
Advisor Services	—		(8	)%	1,550.5			1,686.8			1,612.2			1,564.6			1,550.9
Total client assets	(3	)%	(9	)%	$	3,252.2		$	3,563.7		$	3,397.0		$	3,305.4		$	3,361.8
Net growth in assets in client accounts (for the quarter ended)
Net new assets by business
Investor Services ⁽⁴⁾	(38	)%	3	%	$	28.7		$	27.8		$	13.7		$	(50.8	)	$	46.4
Advisor Services	(16	)%	4	%	26.6			25.7			30.2			32.0			31.7
Total net new assets	(29	)%	3	%	$	55.3		$	53.5		$	43.9		$	(18.8	)	$	78.1
Net market (losses) gains	N/M		N/M		(366.8		)	113.2			47.7			(37.6		)	102.5
Net (decline) growth	N/M		N/M		$	(311.5	)	$	166.7		$	91.6		$	(56.4	)	$	180.6
New brokerage accounts (in thousands, for the quarter ended)	(2	)%	3	%	380			369			384			443			386
Client Accounts (in thousands)
Active Brokerage Accounts ⁽⁵⁾	8	%	1	%	11,593			11,423			11,202			11,005			10,755
Banking Accounts	9	%	1	%	1,302			1,283			1,250			1,221			1,197
Corporate Retirement Plan Participants	6	%	2	%	1,655			1,627			1,599			1,594			1,568

⁽¹⁾ Total client assets in purchased money market funds are located at: http://www.aboutschwab.com/investor-relations.

⁽²⁾ Includes proprietary equity and bond funds and ETFs held on and off the Schwab platform. As of December 31, 2018, off-platform equity and bond funds and ETFs were $10.4 billion and $30.1 billion, respectively.

⁽³⁾ Excludes all proprietary mutual funds and ETFs.

⁽⁴⁾Second quarter of 2018 includes outflows of $9.5 billion from certain mutual fund clearing services clients. First quarter of 2018 includes outflows of $84.4 billion from certain mutual fund clearing services clients. Fourth quarter of 2017 includes an inflow of $16.2 billion from a mutual fund clearing services client.

⁽⁵⁾ 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.

N/M Not meaningful.

- 8 -

The Charles Schwab Corporation Monthly Activity Report For December 2018



	2017		2018																								Change
	Dec		Jan		Feb		Mar		Apr		May		Jun		Jul		Aug		Sep		Oct		Nov		Dec		Mo.		Yr.
Market Indices (at month end)
Dow Jones Industrial Average	24,719		26,149		25,029		24,103		24,163		24,416		24,271		25,415		25,965		26,458		25,116		25,538		23,327		(9	)%	(6	)%
Nasdaq Composite	6,903		7,411		7,273		7,063		7,066		7,442		7,510		7,672		8,110		8,046		7,306		7,331		6,635		(9	)%	(4	)%
Standard & Poor’s 500	2,674		2,824		2,714		2,641		2,648		2,705		2,718		2,816		2,902		2,914		2,712		2,760		2,507		(9	)%	(6	)%
Client Assets (in billions of dollars) ⁽¹⁾
Beginning Client Assets	3,318.8		3,361.8		3,480.5		3,328.8		3,305.4		3,312.1		3,378.1		3,397.0		3,447.9		3,555.9		3,563.7		3,388.1		3,431.9
Net New Assets ⁽¹⁾	27.0		11.5		(50.5	)	20.2		0.4		19.4		24.1		16.3		20.8		16.4		14.9		15.6		24.8		59	%	(8	)%
Net Market Gains (Losses)	16.0		107.2		(101.2	)	(43.6	)	6.3		46.6		(5.2	)	64.6		57.2		(8.6	)	(190.5	)	28.2		(204.5	)
Total Client Assets (at month end)	3,361.8		3,480.5		3,328.8		3,305.4		3,312.1		3,378.1		3,397.0		3,477.9		3,555.9		3,563.7		3,388.1		3,431.9		3,252.2		(5	)%	(3	)%
Core Net New Assets ⁽²⁾	27.0		18.7		21.3		25.6		9.9		19.4		24.1		16.3		20.8		16.4		14.9		15.6		24.8		59	%	(8	)%
Receiving Ongoing Advisory Services (at month end)
Investor Services	268.7		278.6		273.0		273.2		274.7		279.1		280.0		287.0		292.0		292.7		280.3		284.7		272.4		(4	)%	1	%
Advisor Services ⁽³⁾	1,431.1		1,483.7		1,449.5		1,444.4		1,451.6		1,478.0		1,488.7		1,525.5		1,555.3		1,559.2		1,485.8		1,510.1		1,436.1		(5	)%	—
Client Accounts (at month end, in thousands)
Active Brokerage Accounts ⁽⁴⁾	10,755		10,858		10,936		11,005		11,081		11,145		11,202		11,243		11,310		11,423		11,479		11,529		11,593		1	%	8	%
Banking Accounts	1,197		1,210		1,218		1,221		1,230		1,240		1,250		1,262		1,274		1,283		1,289		1,297		1,302		—		9	%
Corporate Retirement Plan Participants	1,568		1,580		1,580		1,594		1,599		1,599		1,599		1,611		1,621		1,627		1,634		1,639		1,655		1	%	6	%
Client Activity
New Brokerage Accounts (in thousands)	147		165		138		140		141		122		121		118		132		119		133		115		132		15	%	(10	)%
Inbound Calls (in thousands)	2,046		2,303		2,005		2,145		2,034		1,852		1,814		1,849		1,964		1,715		1,976		1,681		1,839		9	%	(10	)%
Web Logins (in thousands)	54,486		64,488		60,830		58,906		55,980		56,234		56,491		57,137		62,797		53,923		59,261		54,654		53,920		(1	)%	(1	)%
Client Cash as a Percentage of Client Assets ⁽⁵⁾	10.8	%	10.4	%	10.9	%	11.0	%	10.9	%	10.6	%	10.7	%	10.5	%	10.4	%	10.3	%	11.1	%	11.2	%	12.8	%	160 bp		200 bp
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) ^{(6, 7)} (in millions of dollars)
Large Capitalization Stock	1,023		496		715		(158	)	410		953		981		486		918		311		308		331		717
Small / Mid Capitalization Stock	274		(125	)	(167	)	130		359		753		1,195		768		(186	)	151		(1,344	)	(456	)	(1,414	)
International	1,852		4,306		2,685		1,546		809		372		(498	)	(529	)	186		(88	)	(109	)	(418	)	(2,163	)
Specialized	424		1,569		187		326		122		(19	)	383		520		(245	)	73		(914	)	(397	)	(2,105	)
Hybrid	307		978		(88	)	529		(541	)	(241	)	(288	)	(548	)	(678	)	(324	)	(1,313	)	(1,248	)	(2,985	)
Taxable Bond	2,561		3,284		155		2,117		1,661		1,002		928		879		965		1,371		(351	)	(836	)	(4,342	)
Tax-Free Bond	341		1,247		211		247		(113	)	449		588		306		559		262		(591	)	(407	)	(409	)
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds ⁽⁶⁾	775		4,843		(417	)	1,976		(36	)	(88	)	555		(522	)	(1,936	)	(1,538	)	(5,734	)	(7,955	)	(21,372	)
Exchange-Traded Funds ⁽⁷⁾	6,007		6,912		4,115		2,761		2,743		3,357		2,734		2,404		3,455		3,294		1,420		4,524		8,671
Money Market Funds	2,968		(5,730	)	(4,292	)	(9,100	)	(4,156	)	(2,245	)	(4,919	)	(4,801	)	704		(1,933	)	2,546		8,515		13,548
Average Interest-Earning Assets ⁽⁸⁾
(in millions of dollars)	228,540		234,619		239,922		241,049		239,833		242,584		249,432		254,211		259,137		261,741		264,156		265,648		274,913		3	%	20	%

⁽¹⁾April, March, February, and January 2018 include outflows of $9.5 billion, $5.4 billion, $71.8 billion, and $7.2 billion, respectively, from certain mutual fund clearing services clients.

⁽²⁾ 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.

⁽³⁾ Excludes Retirement Business Services.

⁽⁴⁾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.

⁽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 -

SCHWAB CHARLES CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 16, 2019

Attached files

SCHWAB CHARLES CORP Reports