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Schwab Reports Fourth Quarter Net Income Up 29% Year-Over-Year

“By continuing to challenge the status quo in investing services we believe that both our clients and the company win,” Mr. Bettinger said. “Our progress in completing and delivering a number of significant innovations in our client service capabilities remained on track throughout 2012. For example, our new index-based 401(k) offering has 41 companies committed to participate and more than 200 actively considering enrollment; our new independent branches were open in 12 locations by year-end; and our expanded mobile and tablet solutions are already being utilized by over half a million clients.”

Mr. Bettinger added, “Just as clients trust us to find a better way to serve them, our stockholders trust us to use resources effectively as we work to grow the company and its earnings. With environmental pressures continuing to slow our revenue progress in 2012, our enduring commitment to expense discipline enabled Schwab to allocate over $160 million to projects across our businesses and still deliver a 30% pre-tax profit margin for the year.”

CFO Joe Martinetto noted, “In addition to successfully growing our client base in 2012, we made further progress in building non rate-sensitive sources of revenue, including an 11% increase in fees from rising balances in our proprietary advice solutions. As a result, despite further declines in interest rates and relatively muted investor trading activity, our full-year performance included increases in both net interest revenue and asset management and administration fees, and 4% overall revenue growth. Our fourth quarter results illustrate the company’s improved momentum heading into 2013, with year-over-year revenue growth of 9% and a 29% increase in net income. Looking ahead, we believe that Schwab’s financial story will remain driven by the three key themes of strong business growth, diversified revenue streams, and expense discipline.”

Mr. Martinetto concluded, “Our work to further strengthen the company’s balance sheet while maximizing its contribution to earnings power continued throughout 2012. During the fourth quarter, we acted to reduce the cost of outstanding long-term debt by redeeming the remaining $494 million of our 4.95% Senior Notes due in 2014, with the cost of the redemption offset by gains from the sale of selected investment portfolio securities. Our actions also included the issuance of $350 million of new Senior Notes with a coupon of 0.85% and a 2015 due date.”

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