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Schwab Reports Second Quarter Results



  Schwab Reports Second Quarter Results

        Core Net New Assets Total $22.6 Billion, up 41% Year-over-Year

Revenues Rise 10% Excluding One-Time Gain in 2012^(1); Growth is 4% Including
                                     Gain

Business Wire

SAN FRANCISCO -- July 16, 2013

The Charles Schwab Corporation announced today that its net income for the
second quarter of 2013 was $256 million, up 24% from $206 million for the
first quarter of 2013, and down 7% from $275 million for the second quarter of
2012. Net income for the six months ended June 30, 2013 was $462 million, down
2% from the year-earlier period. The company’s financial results for both the
second quarter and first half of 2012 include a pre-tax gain of $70 million,
or $44 million after-tax, relating to the resolution of a vendor dispute.
Excluding the gain, net income rose by 11% year-over-year for the second
quarter of 2013, and 8% for the first half of the year^(1).

                Three Months Ended      %        Six Months Ended        %
                --June 30,--                     --June 30,--
Financial       2013        2012        Change   2013        2012        Change
Highlights
                                                            
Net revenues    $ 1,337     $ 1,283     4%       $ 2,627     $ 2,472     6%
(in millions)
Net income      $ 256       $ 275       (7)%     $ 462       $ 470       (2)%
(in millions)
Diluted
earnings per    $ .18       $ .20       (10)%    $ .33       $ .36       (8)%
common share
Pre-tax           30.8  %     33.7  %              28.3  %     30.1  %
profit margin
Return on
average
common            10    %     13    %              10    %     11    %
stockholders’
equity
(annualized)
                                                                          
Excluding
one-time gain
in 2012^(1):
Net revenues    $ 1,337     $ 1,213     10%      $ 2,627     $ 2,402     9%
(in millions)
Net income      $ 256       $ 231       11%      $ 462       $ 426       8%
(in millions)
                                                                          

____________________________
     Net revenues and net income excluding one-time gain in 2012 are non-GAAP
(1)  financial measures. For a reconciliation of these measures to reported
     results, see page 8 of this News Release.
      

CEO Walt Bettinger said, “Schwab’s evolution from transaction specialist to
full-service investment firm reflects our deep understanding of the changing
needs of investors, as well as the advisors and employers who serve them. More
than ever, clients look to us for help as they take ownership of their
financial future. Over 430,000 accounts and $138 billion in assets are now
enrolled in our retail advisory offers, increases of 12 and 17%, respectively,
from a year ago. Including relationships under the guidance of independent
advisors, more than 2.6 million accounts and over $980 billion in client
assets at Schwab are currently receiving some form of ongoing advice.”

“We expanded our lineup of advised solutions during the second quarter by
adding Thomas Partners’ dividend growth strategy to our offerings for retail
and advisor-guided clients,” Mr. Bettinger said. “Our progress on other key
client initiatives remains in line with expectations as we move into the
middle of 2013. The Schwab ETF OneSource^™ platform, which offers
commission-free access to 105 ETFs from Schwab and 5 other providers, has
already grown by approximately $3 billion since its launch in February. Also
during the second quarter, we continued to build client awareness of
optionsXpress’ innovative options and futures capabilities by announcing the
Trading Patterns tool, which adds the ability to view the most popular
underlying and option symbols being traded to a lineup that already includes
the Idea Hub^™ and Walk Limit^™ tools. Additionally, we enhanced our platform
for independent advisors through Schwab OpenView MarketSquare^™, a venue for
the advisor community to rate and discuss industry vendors, and we announced a
new advisor lookup tool, which will enable individuals to search for local
advisors through Schwab.”

Mr. Bettinger added, “Overall, our continued success in serving investor needs
enabled the company to produce another quarter of combined strength in
business growth and financial performance. We ended June with $2.05 trillion
in total client assets, up 14% year-over-year, and our client base grew to
9.0 million active brokerage accounts, 910,000 banking accounts, and
1.6 million corporate retirement plan participants, up 3%, 11%, and 5%,
respectively. At the same time, we produced sequential improvement in all
three of our main revenue sources, expanded total revenue by 4% over the first
quarter of 2013, and delivered a 30.8% pre-tax profit margin. We continue to
believe our strong business momentum, combined with our operating and expense
discipline, will yield increasing operating leverage during the rest of 2013
and into 2014.”

CFO Joe Martinetto commented, “With no major surprises or disruptions from the
environment, we came through the second quarter about where we expected to be
financially – balance and spread-related revenues ran at or slightly above
plan, trading revenue remained relatively muted, and expenses reflected our
moves to ensure spending growth remains below revenue expansion.”

“While year-over-year growth in total revenues and net income for the second
quarter was limited by last year’s $70 million pre-tax gain, the signs of our
building earnings power are clear,” Mr. Martinetto said. “Strength in asset
gathering and advice enrollments helped asset management and administration
fees grow by 15% over the second quarter of 2012, net interest revenue rose by
3% even though short-term interest rates were below year-earlier levels, and a
modest rebound in client activity lifted trading revenues by 7%. The temporary
and seasonal factors that elevated compensation and benefits expense in the
first quarter faded largely as anticipated and we continue to expect that
careful headcount management will result in limited growth during the rest of
2013. We’re still aiming for full-year 2013 expense growth that allows for
both increased investment in our clients and improvement in profit margin and
earnings for the year.”

Mr. Martinetto concluded, “Recent increases in longer-term rates driven by the
ongoing economic recovery are certainly helpful in mitigating downward
pressure on our net interest margin, as we reinvest our fixed-rate assets at
maturity. Since our balance sheet is structured so that Schwab’s net interest
revenue is more sensitive to changes in short-term interest rates - which have
held relatively steady lately after dipping earlier in the year – more rapid
and significant revenue impacts will be visible as that end of the yield curve
begins to rise. With the economic recovery and overall rate environment
currently pointing towards continued easing of headwinds for the company, the
healthy balance sheet and solid capital base we’ve built keep us well
positioned to drive growth going forward.”

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.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial
services, with more than 300 offices and 9.0 million active brokerage
accounts, 1.6 million corporate retirement plan participants, 910,000 banking
accounts, and $2.05 trillion in client assets as of June 30, 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.

 
THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
                                                                      
                                 Three Months Ended      Six Months Ended
                                 June 30,                June 30,
                                 2013        2012        2013        2012
                                                                    
Net Revenues
Asset management and             $ 572       $ 496       $ 1,124     $ 980
administration fees
                                                                      
Interest revenue                   499         497         996         969
Interest expense                   (26   )     (39   )     (54   )     (77   )
Net interest revenue               473         458         942         892
                                                                      
Trading revenue                    235         219         458         462
Other                              59          121         115         167
Provision for loan losses          1           (4    )     (5    )     (4    )
Net impairment losses on           (3    )     (7    )     (7    )     (25   )
securities ^(1)
                                                                      
Total net revenues                 1,337       1,283       2,627       2,472  
                                                                      
Expenses Excluding Interest
Compensation and benefits          494         446         1,030       911
Professional services              106         93          205         189
Occupancy and equipment            77          80          154         156
Advertising and market             67          57          141         124
development
Communications                     56          55          110         113
Depreciation and amortization      51          48          102         96
Other                              74          72          142         138    
Total expenses excluding           925         851         1,884       1,727  
interest
                                                                      
Income before taxes on income      412         432         743         745
Taxes on income                    156         157         281         275    
                                                                      
Net Income                         256         275         462         470    
                                                                      
Preferred stock dividends          23          14          31          14     
                                                                      
Net Income Available to Common   $ 233       $ 261       $ 431       $ 456    
Stockholders
                                                                      
Weighted-Average Common Shares     1,288       1,274       1,285       1,273  
Outstanding — Diluted
                                                                      
Earnings Per Common Share —      $ .18       $ .20       $ .33       $ .36
Basic
                                                                      
Earnings Per Common Share —      $ .18       $ .20       $ .33       $ .36    
Diluted

    Net impairment losses on securities include total other-than-temporary
    impairment losses of $2 million and $12 million, net of $(1) million and
    $5 million reclassified from or recognized in other comprehensive income,
(1) for the three months ended June 30, 2013 and 2012, respectively. Net
    impairment losses on securities include total other-than-temporary
    impairment losses of $2 million and $14 million, net of $(5) million and
    $(11) million reclassified from other comprehensive income, for the six
    months ended June 30, 2013 and 2012, respectively.
 
See Note to Consolidated Statements of Income, Financial and Operating
Highlights, and Net Interest Revenue Information.
 

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)
                                      
                   Q2-13 % change      2013                    2012
(In millions,
except per share   vs.       vs.       Second      First       Fourth      Third       Second
amounts and as     Q2-12     Q1-13     Quarter     Quarter     Quarter     Quarter     Quarter
noted)
Net Revenues                                                                          
Asset management
and                15   %    4    %    $ 572       $ 552       $ 539       $ 524       $ 496
administration
fees
Net interest       3    %    1    %      473         469         433         439         458
revenue
Trading revenue    7    %    5    %      235         223         202         204         219
Other ^(1)         (51  %)   5    %      59          56          47          42          121
Provision for      (125 %)   (117 %)     1           (6    )     (2    )     (10   )     (4    )
loan losses
Net impairment
losses on          (57  %)   (25  %)     (3    )     (4    )     (4    )     (3    )     (7    )
securities
Total net          4    %    4    %      1,337       1,290       1,215       1,196       1,283  
revenues
Expenses
Excluding
Interest
Compensation and   11   %    (8   %)     494         536         450         442         446
benefits
Professional       14   %    7    %      106         99          101         98          93
services
Occupancy and      (4   %)   -           77          77          78          77          80
equipment
Advertising and
market             18   %    (9   %)     67          74          68          49          57
development
Communications     2    %    4    %      56          54          54          53          55
Depreciation and   6    %    -           51          51          50          50          48
amortization
Other              3    %    9    %      74          68          70          66          72     
Total expenses
excluding          9    %    (4   %)     925         959         871         835         851    
interest
Income before      (5   %)   24   %      412         331         344         361         432
taxes on income
Taxes on income    (1   %)   25   %      156         125         133         114         157    
^(2)
Net Income         (7   %)   24   %    $ 256       $ 206       $ 211       $ 247       $ 275    
Preferred stock    64   %    188  %      23          8           22          9           14     
dividends
Net Income
Available to       (11  %)   18   %    $ 233       $ 198       $ 189       $ 238       $ 261    
Common
Stockholders
Basic earnings     (10  %)   20   %    $ .18       $ .15       $ .15       $ .19       $ .20
per common share
Diluted earnings   (10  %)   20   %    $ .18       $ .15       $ .15       $ .19       $ .20
per common share
Dividends
declared per       -         -         $ .06       $ .06       $ .06       $ .06       $ .06
common share
Weighted-average
common shares      1    %    -           1,288       1,282       1,278       1,275       1,274  
outstanding -
diluted
Performance
Measures
Pre-tax profit                           30.8  %     25.7  %     28.3  %     30.2  %     33.7  %
margin
Return on
average common
stockholders’                            10    %     9     %     9     %     11    %     13    %
equity
(annualized)
^(3)
Financial
Condition (at
quarter end, in
billions)
Cash and
investments        19   %    -         $ 27.0      $ 26.9      $ 28.5      $ 25.0      $ 22.7
segregated
Receivables from
brokerage          7    %    2    %    $ 12.8      $ 12.5      $ 13.5      $ 11.9      $ 12.0
clients
Loans to banking   19   %    4    %    $ 11.7      $ 11.3      $ 10.7      $ 10.1      $ 9.8
clients
Total assets       22   %    2    %    $ 135.9     $ 133.3     $ 133.6     $ 117.7     $ 111.8
Deposits from      27   %    2    %    $ 84.3      $ 82.4      $ 79.4      $ 68.8      $ 66.3
banking clients
Payables to
brokerage          16   %    -         $ 36.9      $ 36.9      $ 40.3      $ 34.8      $ 31.8
clients
Long-term debt     (20  %)   -         $ 1.6       $ 1.6       $ 1.6       $ 1.8       $ 2.0
Stockholders'      7    %    (1   %)   $ 9.7       $ 9.8       $ 9.6       $ 9.5       $ 9.1    
equity ^(4)
Other
Full-time
equivalent
employees (at      1    %    (1   %)     13.9        14.0        13.8        13.6        13.7
quarter end, in
thousands)
Annualized net
revenues per
average
full-time          3    %    4    %    $ 385       $ 369       $ 355       $ 352       $ 372
equivalent
employee (in
thousands)
Capital
expenditures -
cash purchases
of equipment,      123  %    53   %    $ 69        $ 45        $ 40        $ 33        $ 31     
office
facilities, and
property, net
(in millions)
Clients’ Daily
Average Trades
(in thousands)
Revenue trades     6    %    1    %      301.5       298.7       265.7       261.5       285.2
^(5)
Asset-based        36   %    7    %      69.0        64.5        59.6        45.2        50.6
trades ^(6)
Other trades       27   %    (7   %)     126.7       135.7       124.7       95.7        99.8   
^(7)
Total              14   %    -           497.2       498.9       450.0       402.4       435.6  
Average Revenue
Per Revenue        -         (1   %)   $ 12.19     $ 12.34     $ 12.49     $ 12.44     $ 12.15  
Trade ^(5)
                    

(1) Includes a pre-tax gain of $70 million relating to a confidential
    resolution of a vendor dispute in the second quarter of 2012.
(2) Includes a non-recurring state tax benefit of $20 million in the third
    quarter of 2012.
    Return on average common stockholders' equity is calculated using net
(3) income available to common stockholders divided by average common
    stockholders' equity.
    In the second quarter of 2012, the Company issued non-cumulative perpetual
(4) preferred stock, Series B, for a total liquidation preference of $485
    million.
(5) Includes all client trades that generate either commission revenue or
    revenue from principal markups (i.e., fixed income); also known as DART.
(6) Includes eligible trades executed by clients who participate in one or
    more of the Company's asset-based pricing relationships.
(7) Includes all commission free trades, including Schwab Mutual Fund
    OneSource^® funds and ETFs, and other proprietary products.
     
See Note to Consolidated Statements of Income, Financial and Operating
Highlights, and Net Interest Revenue Information.
 

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions)
(Unaudited)
                                                                                          
                       Three Months Ended                                                Six Months Ended
                       June 30,                                                          June 30,
                       2013                             2012                             2013                             2012
                                   Interest   Average               Interest   Average               Interest   Average               Interest   Average
                       Average                          Average                          Average                          Average
                                   Revenue/   Yield/                Revenue/   Yield/                Revenue/   Yield/                Revenue/   Yield/
                       Balance                          Balance                          Balance                          Balance
                                   Expense    Rate                  Expense    Rate                  Expense    Rate                  Expense    Rate
                                                                                                                                                
Interest-earning
assets:
Cash and cash          $ 6,148     $   3      0.20  %   $ 5,721     $   4      0.28  %   $ 7,023     $   8      0.23  %   $ 6,134     $   8      0.26  %
equivalents
Cash and investments     26,438        9      0.14  %     25,429        11     0.17  %     27,011        21     0.16  %     26,140        21     0.16  %
segregated
Broker-related           398           -      0.12  %     306           -      0.06  %     379           -      0.13  %     311           -      0.07  %
receivables ^(1)
Receivables from         11,571        106    3.67  %     11,091        115    4.17  %     11,457        212    3.73  %     10,646        221    4.17  %
brokerage clients
Securities available     48,611        137    1.13  %     38,407        152    1.59  %     47,764        275    1.16  %     37,302        297    1.60  %
for sale ^(2)
Securities held to       22,857        133    2.33  %     15,240        108    2.85  %     21,965        264    2.42  %     15,106        207    2.76  %
maturity
Loans to banking         11,603        79     2.73  %     9,884         77     3.13  %     11,348        159    2.83  %     9,874         156    3.18  %
clients
Loans held for sale      -             -      -           18            -      4.04  %     -             -      -           36            1      4.12  %
^(1)
Total
interest-earning         127,626       467    1.47  %     106,096       467    1.77  %     126,947       939    1.49  %     105,549       911    1.74  %
assets
Other interest                         32                               30                               57                               58      
revenue
Total
interest-earning       $ 127,626   $   499    1.57  %   $ 106,096   $   497    1.88  %   $ 126,947   $   996    1.58  %   $ 105,549   $   969    1.85  %
assets
Funding sources:
Deposits from          $ 82,260    $   7      0.03  %   $ 62,560    $   10     0.06  %   $ 81,306    $   17     0.04  %   $ 61,833    $   20     0.07  %
banking clients
Payables to
brokerage clients ^      31,164        -      0.01  %     29,977        -      0.01  %     31,627        1      0.01  %     30,266        1      0.01  %
(1)
Long-term debt           1,630         17     4.18  %     1,999         27     5.43  %     1,631         34     4.20  %     2,000         54     5.43  %
Total
interest-bearing         115,054       24     0.08  %     94,536        37     0.16  %     114,564       52     0.09  %     94,099        75     0.16  %
liabilities
Non-interest-bearing     12,572                           11,560                           12,383                           11,450
funding sources
Other interest                         2                                2                                2                                2       
expense
Total funding          $ 127,626   $   26     0.08  %   $ 106,096   $   39     0.14  %   $ 126,947   $   54     0.08  %   $ 105,549   $   77     0.15  %
sources
Net interest revenue               $   473    1.49  %               $   458    1.74  %               $   942    1.50  %               $   892    1.70  %

(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.

See Note to Consolidated Statements of Income, Financial and Operating
Highlights, and Net Interest Revenue Information.
 

Note to Consolidated Statements of Income, Financial and Operating Highlights,
and Net Interest Revenue Information
(Unaudited)
 
The Company
The consolidated statements of income, financial and operating highlights, and
net interest revenue information include The Charles Schwab Corporation (CSC)
and its majority-owned subsidiaries (collectively referred to as the Company),
including Charles Schwab & Co., Inc. and Charles Schwab Bank. The consolidated
statements of income, financial and operating highlights, and net interest
revenue information should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2012.
 

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions)
(Unaudited)
                                                                                    
                 Three Months Ended                                                Six Months Ended
                 June 30,                                                          June 30,
                 2013                             2012                             2013                              2012
                 Average                          Average                          Average                           Average
                                        Average                          Average                           Average                          Average
                 Client      Revenue              Client      Revenue              Client      Revenue               Client      Revenue   
                                        Fee                              Fee                               Fee                              Fee
                 Assets                           Assets                           Assets                            Assets
                                                                                                                                           
Schwab money
market funds     $ 158,194   $ 226      0.57  %   $ 153,103   $ 220      0.58  %   $ 160,416   $ 456       0.57  %   $ 154,858   $ 442      0.57  %
before fee
waivers
Fee waivers                    (157 )                           (146 )                           (312  )                           (309 )    
Schwab money       158,194     69       0.17  %     153,103     74       0.19  %     160,416     144       0.18  %     154,858     133      0.17  %
market funds
Equity and
bond funds         61,276      38       0.25  %     46,375      31       0.27  %     58,408      73        0.25  %     46,003      63       0.28  %
^(1)
Mutual Fund        239,763     191      0.32  %     212,028     164      0.31  %     237,361     375       0.32  %     213,689     330      0.31  %
OneSource ^®
Total mutual     $ 459,233     298      0.26  %   $ 411,506     269      0.26  %   $ 456,185     592       0.26  %   $ 414,550     526      0.26  %
funds ^(2)
Advice
solutions ^      $ 142,181     177      0.50  %   $ 117,001     140      0.48  %   $ 138,827     340       0.49  %   $ 116,248     279      0.48  %
(2)
Other ^(3)                     97                               87                               192                               175       
Total asset
management and               $ 572                            $ 496                            $ 1,124                           $ 980       
administration
fees

(1) Includes Schwab ETFs.
    Advice solutions include separately managed accounts, customized personal
    advice for tailored portfolios, and specialized planning and full-time
    portfolio management offered through the Company's Schwab Private Client,
(2) Schwab Managed Portfolio and Managed Account Select programs. Advice
    solutions also include Schwab Advisor Network, Schwab Advisor Source,
    Windhaven, and ThomasPartners. Average client assets for advice solutions
    may also include the asset balances contained in the three categories of
    mutual funds listed above.
(3) Includes various asset based fees, such as trust fees, 401(k) record
    keeping fees, and mutual fund clearing and other service fees.
     

THE CHARLES SCHWAB CORPORATION
Reconciliation of Net Revenues and Net Income
Excluding Certain Items to Reported Amounts
(In millions)
(Unaudited)
 
               Three Months Ended               Six Months Ended
               June 30,                         June 30,
               2013      2012        % Change   2013      2012        % Change
                                                                     
Net Revenues
Excluding      $ 1,337   $ 1,213     10%        $ 2,627   $ 2,402     9%
Certain Items
^(1)
Other revenues   -         70        N/M          -         70        N/M
^(2)
                                                                       
Reported Net   $ 1,337   $ 1,283     4%         $ 2,627   $ 2,472     6%
Revenues
                                                                       
Net Income
Excluding      $ 256     $ 231       11%        $ 462     $ 426       8%
Certain Items
^(1)
Add: Other
revenues         -         70        N/M          -         70        N/M
excluded above
Tax expense      -         (26   )   N/M          -         (26   )   N/M
                                                                       
Reported Net   $ 256     $ 275       (7%)       $ 462     $ 470       (2%)
Income

    Management believes these non-GAAP financial measures are useful
    indicators of the Company's ongoing financial performance that can provide
(1) meaningful insight into financial performance without the effects of a
    certain material item that is not expected to be an ongoing part of
    operations.
(2) Relates to a confidential resolution of a vendor dispute, which was
    received in the second quarter of 2012.
N/M Not meaningful.
     

THE CHARLES SCHWAB CORPORATION
Growth in Client Assets and Accounts
(Unaudited)
                                  
                Q2-13 % Change     2013                        2012
(In billions,
at quarter      vs.      vs.       Second        First         Fourth        Third         Second
end, except     Q2-12    Q1-13     Quarter       Quarter       Quarter       Quarter       Quarter
as noted)
Assets in
client                                                                                    
accounts
Schwab One^®,
other cash
equivalents     23  %    2    %    $ 121.1       $ 119.2       $ 119.0       $ 103.7       $ 98.2
and deposits
from banking
clients
Proprietary
funds (Schwab
Funds^® and
Laudus
Funds^®):
Money market    6   %    1    %      161.6         159.3         167.9         155.7         152.9
funds
Equity and      30  %    5    %      59.0          56.3          49.6          48.4          45.3     
bond funds
Total
proprietary     11  %    2    %      220.6         215.6         217.5         204.1         198.2    
funds
Mutual Fund
Marketplace^®
^(1)
Mutual Fund     11  %    (2   %)     234.9         238.8         223.2         222.1         211.2
OneSource^®
Mutual fund
clearing        11  %    (23  %)     140.6         181.5         159.1         134.4         126.4
services
Other
third-party     18  %    -           388.3         388.4         360.1         350.0         328.7    
mutual funds
Total Mutual
Fund            15  %    (6   %)     763.8         808.7         742.4         706.5         666.3    
Marketplace
Total mutual    14  %    (4   %)     984.4         1,024.3       959.9         910.6         864.5    
fund assets
Equity and
other           16  %    1    %      779.5         772.3         702.4         705.5         670.4
securities
^(1)
Fixed income    (2  %)   (2   %)     177.6         180.5         181.8         181.8         180.5
securities
Margin loans    4   %    3    %      (11.7   )     (11.4   )     (11.5   )     (11.2   )     (11.2   )
outstanding
Total client    14  %    (2   %)   $ 2,050.9     $ 2,084.9     $ 1,951.6     $ 1,890.4     $ 1,802.4  
assets
                                                                                            
Client assets
by business
^(2)
Investor        12  %    (3   %)   $ 1,150.5     $ 1,190.2     $ 1,112.1     $ 1,078.4     $ 1,027.7
Services
Advisor         16  %    1    %      900.4         894.7         839.5         812.0         774.7    
Services
Total client
assets by       14  %    (2   %)   $ 2,050.9     $ 2,084.9     $ 1,951.6     $ 1,890.4     $ 1,802.4  
business
                                                                                            
Net growth in
assets in
client
accounts (for
the quarter
ended)
Net new
assets ^(2)
Investor
Services ^      N/M      N/M       $ (35.3   )   $ 27.5        $ 39.1        $ 10.0        $ 5.4
(3)
Advisor         28  %    (14  %)     13.6          15.9          25.3          10.4          10.6     
Services ^(4)
Total net new   N/M      (150 %)     (21.7   )     43.4          64.4          20.4          16.0     
assets
Net market
(losses)        74  %    (114 %)     (12.3   )     89.9          (3.2    )     67.6          (47.1   )
gains
Net (decline)   (9  %)   (126 %)   $ (34.0   )   $ 133.3       $ 61.2        $ 88.0        $ (31.1   )
growth
                                                                                            
New brokerage
accounts (in
thousands,      10  %    -           243           244           241           198           221
for the
quarter
ended)
Clients (in
thousands)
Active
Brokerage       3   %    1    %      8,962         8,865         8,787         8,736         8,720
Accounts ^(5)
Banking         11  %    2    %      910           888           865           844           822
Accounts
Corporate
Retirement      5   %    1    %      1,595         1,575         1,571         1,547         1,524    
Plan
Participants
                 

(1) Excludes all proprietary money market, equity, and bond funds.
    In the first quarter of 2013, the Company realigned its reportable
    segments as a result of organizational changes. The segment formerly
(2) reported as Institutional Services was renamed to Advisor Services.
    Additionally, the Retirement Plan Services and Corporate Brokerage
    Services business units are now part of the Investor Services segment.
    Prior period segment information has been recast to reflect these changes.
    Includes outflows of $44.3 billion relating to the planned transfer of a
    mutual fund clearing services client in the second quarter of 2013. The
    second quarter of 2013 also includes inflows of $2.6 billion from another
    mutual fund clearing services client. Includes inflows of $10.3 billion
(3) from certain mutual fund clearing services clients in the first quarter of
    2013. Includes inflows of $21.1 billion from certain mutual fund clearing
    services clients and outflows of $900 million related to a planned
    transfer from Corporate Brokerage Services in the fourth quarter of 2012.
    Includes outflows of approximately $100 million as a result of the sale of
    Open E Cry, LLC, in the third quarter of 2012.
    Includes inflows of approximately $900 million as a result of the
(4) acquisition of ThomasPartners, Inc., in the fourth quarter of 2012.
    Includes outflows of $1.2 billion as a result of the closure of
    brokersXpress LLC in the third quarter of 2012.
    Removed approximately 30,000 due to escheatment and other factors in the
(5) fourth quarter of 2012. Reduced by 19,000 as a result of the sale of Open
    E Cry, LLC, and the closure of brokersXpress LLC in the third quarter of
    2012.
N/M Not meaningful.

Contact:

Charles Schwab
Susan Forman, 415-667-0494 (Media)
Rich Fowler, 415-667-1841 (Investors/Analysts)
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