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Schwab Reports Second Quarter Results

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

Investor Services

  • Net new accounts for the quarter totaled approximately 47,000, up 18% year-over-year. Total accounts reached 6.2 million as of June 30, 2013, up 2% year-over-year.
  • Launched Secure Messaging, a communication channel that provides an alternative to fax and mail, enabling clients to log in to Schwab.com and send and receive messages securely, including transmitting documents electronically.
  • Enhanced options pairing logic at Schwab to optimize margin calculations, resulting in higher buying power for clients with certain multi-leg positions. Also introduced the optionsXpress-inspired All in One Trade Ticket and Trade & Probability Calculator for Schwab clients.
  • Announced Morningstar Associates, LLC as a managed account provider for Schwab Index Advantage ®.

Advisor Services

  • Launched Schwab PortfolioCenter Hosted , a full functionality, cloud-based version of Schwab’s PortfolioCenter ®, giving independent registered investment advisors (RIAs) the added benefit of outsourcing their technology infrastructure and management to Schwab.
  • Launched Schwab OpenView MarketSquare , a review site that compiles feedback and ratings from independent RIAs on some of the leading technology vendors and products in the industry.

Products and Infrastructure

  • For Charles Schwab Bank:
    • Balance sheet assets = $90.9 billion, up 26% year-over-year.
    • Outstanding mortgage and home equity loans = $10.6 billion, up 16% year-over-year.
    • First mortgage originations through its loan program during the quarter = $1.6 billion.
    • Delinquency, nonaccrual, and loss reserve ratios for Schwab Bank’s loan portfolio = 0.57%, 0.36% and 0.48%, respectively, at month-end June.
    • Schwab Bank High Yield Investor Checking ® accounts = 712,000, with $11.4 billion in balances.
  • Client assets managed by Windhaven ® totaled $17.3 billion, up 56% from the second quarter of 2012.
  • Total assets under management in Schwab ETFs = $12.2 billion. Total assets in Schwab Managed Portfolios-ETFs = $2.6 billion.
  • Introduced ThomasPartners ®, a dividend income-focused money management strategy available to retail and RIA clients.

The SMART report can be viewed in its entirety at www.aboutschwab.com/investor_relations/financial_reports.

Forward Looking Statements

This press release contains forward looking statements relating to the company’s client initiatives, client metrics, expense growth, operating leverage, earnings, headcount management, compensation and benefits expense, investment in clients, profit margin, net interest margin, revenue, headwinds and capital base. 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 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; 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; regulatory guidance; the level of field sales activity and related incentive compensation; net interest margin; acquisition integration costs; the impact of changes in market conditions on money market fund fee waivers, revenues, expenses and pre-tax margins; 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-K for the period ended December 31, 2012.

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