Contacts: MEDIA: INVESTORS/ANALYSTS: Rich Fowler Charles ...

News Release

Contacts:

MEDIA:

INVESTORS/ANALYSTS:

Mayura Hooper

Charles Schwab

Phone: 415-667-1525

Rich Fowler

Charles Schwab

Phone: 415-667-1841

SCHWAB REPORTS RECORD EARNINGS PER SHARE OF $.70, UP 8%

Revenues Grow 5% to $2.7 Billion, Net Income Rises 3% to $951 Million, Both Third Quarter Records

Core Net New Assets Total $56.6 Billion, Representing a 7% Annualized Growth Rate

SAN FRANCISCO, October 15, 2019 ¨C The Charles Schwab Corporation announced today that its net income

for the third quarter of 2019 was $951 million, up 3% from $923 million for the third quarter of 2018. Net income for the

nine months ended September 30, 2019 was $2.9 billion, up 11% from the year-earlier period. The company¡¯s financial

results for the third quarter and first nine months of 2019 include severance charges described below.

Financial Highlights

Net revenues (in millions)

Net income (in millions)

Diluted earnings per common share

Pre-tax profit margin

Return on average common

stockholders¡¯ equity (annualized)

EPS impact of $62 million in severance charges

related to position eliminations (1)

Three Months Ended

September 30,

2019

2018

$ 2,711 $ 2,579

$

951 $

923

$

.70 $

.65

45.6%

47.3%

20%

$

(.04)

%

Change

5%

3%

8%

20%

¡ª

Nine Months Ended

September 30,

2019

2018

%

Change

$ 8,115 $ 7,463

$ 2,852 $ 2,572

$ 2.05 $ 1.79

46.0%

44.9%

20%

$ (.04)

9%

11%

15%

19%

¡ª

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

(1)

The pre-tax severance charges related to position eliminations, which reduced earnings per share by $.04, are included in Compensation and benefits expense.

CEO Walt Bettinger said, ¡°As we remain faithful to our ¡°Through Clients¡¯ Eyes¡± strategy, investors continue to

reward us with strong business growth. Our contemporary full-service model helps us remain a trusted partner as clients

navigate an environment that has only grown more cloudy in recent months. The equity markets have shown noteworthy

durability ¨C the S&P 500 remained up nearly 20% for the year as of quarter-end. Concerns persist, however, regarding

global trade and a generally softening economic outlook. The Federal Reserve has moved forward with expected midcycle easing, cutting short-term interest rates 25 bps in both July and September, and long-term rates have also shown

significant declines. Against this backdrop, clients brought us $56.6 billion in core net new assets, a third quarter record,

which brings our year-to-date total to $145.5 billion, representing a 6% annualized organic growth rate. In addition, we

attracted 363,000 new brokerage accounts in the quarter, helping raise active brokerage accounts to 12.1 million, up 6%

year-over-year. Client demand for help and guidance continued to grow, with assets receiving ongoing advisory services

reaching nearly $2.0 trillion at quarter end, up 7%. Assets in digital advisory solutions grew even faster, rising 20% to

$43.0 billion at the end of September. Overall, our client assets totaled a record $3.77 trillion at quarter end, up 6%.¡±

¡°Our commitment to challenge the status quo and disrupt the industry on behalf of clients endures through all

environments,¡± Mr. Bettinger added. ¡°Most recently, we eliminated online trade commissions for stocks, ETFs, and

-1-

options listed on U.S. or Canadian exchanges, a move that represents another significant investment in bringing ever

greater value to our clients. This action is consistent with the principles on which our company was founded, helping

realize Chuck Schwab¡¯s vision of making investing accessible to all. We also continue to extend our products and

platforms, including the recent launch of three new fixed-income ETFs. In support of our independent advisors, we¡¯ve

made enhancements to Institutional Intelligent Portfolios? including a paperless account conversion feature making it

simpler than ever to incorporate automated investing into their practices, while freeing up time to spend with investors and

scale their businesses. Additionally, on July 25th, we announced an agreement to acquire certain assets of USAA¡¯s

Investment Management Company, with closing targeted for the middle of next year. We are honored to have the

opportunity to serve USAA members as their exclusive wealth management and brokerage provider, and are looking

forward to exploring a new growth opportunity via the multi-year referral agreement included in this transaction.¡±

Mr. Bettinger concluded, ¡°Schwab¡¯s ¡®Virtuous Cycle¡¯ is renewed by bold steps like our recent price cuts, reflecting

our belief that investors will entrust us with more business as we do right by them. We are acting from a position of

strength ¨C both financial and competitive ¨C which allows us to take these steps with confidence, knowing we are able to

push forward as we choose, not as the current environment might dictate.¡±

CFO Peter Crawford commented, ¡°Our continued success with clients and full-service model enabled us to deliver

third quarter revenues of $2.7 billion, up 5% year-over-year. Net interest revenue rose 7% from a year ago to $1.6 billion,

largely a result of generally higher investment yields and higher client cash allocations. Growing client balances in

purchased money market funds, advisory solutions, and other third-party mutual funds and ETFs pushed asset

management and administration fees to $825 million, increasing 2% year-over-year. A pick-up in trading volumes was

more than offset by a decline in average revenue per trade, bringing trading revenue to $172 million, down 2% from a

year ago. Turning to expenses, our reported total of $1.5 billion includes $62 million in severance charges associated with

our decision to eliminate positions spanning approximately 3% of our workforce, as we work to ensure we remain

properly positioned to serve clients through what has become a more challenging environment. These charges contributed

roughly half of our 8% year-over-year expense growth. Ongoing expenses remained in line with management expectations

and we were able to report a pre-tax profit margin of 45.6% ¨C our sixth consecutive quarter of at least 45%.¡±

Mr. Crawford added, ¡°Consistent with the evolution of the Schwab story to include both business growth and

meaningful capital returns, we repurchased 19.9 million shares for approximately $770 million during the third quarter.

We have repurchased more than 49 million shares for $2 billion under our current $4 billion authorization. Our expanding

client base and related increases in their cash balances drove modest organic growth in our balance sheet during the third

quarter, with consolidated assets increasing $2.7 billion sequentially to $279 billion at September 30th. Our preliminary

Tier 1 Leverage Ratio ended the quarter at 7.3%, slightly above our operating objective of 6.75%-7.00%; our capital

management in coming quarters will incorporate preparations for the $1.8 billion USAA transaction next year. With a 20%

return on equity for the quarter and year-to-date, we remain well-positioned to drive strong profitable growth into the

future through a combination of sustained business momentum, thoughtful expense management, and a healthy balance

sheet.¡±

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab¡¯s financial picture at: https://

cfo-commentary. The most recent commentary, which provides perspective on our decision to

reduce online trade commissions for U.S. and Canadian-listed equities, ETFs, and options to $0, was posted on October 1,

2019.

Forward-Looking Statements

This press release contains forward-looking statements relating to business growth; enhancements to products and

platforms; the company¡¯s acquisition of certain assets of USAA¡¯s Investment Management Company (IMCO), including

timing of closing and entering into a referral agreement; financial and competitive strength; capital returns to

stockholders; growth in the client base, client accounts and assets; cash balances; Tier 1 Leverage Ratio operating

objective; profitable growth; expense management; and the balance sheet. Achievement of these expectations and

objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed

expectations.

-2-

Important factors that may cause such differences include, but are not limited to, general market conditions, including the

level of interest rates, equity valuations, and trading activity; the company¡¯s ability to attract and retain clients and

registered investment advisors and grow those relationships and client assets; competitive pressures on pricing, including

deposit rates; the company¡¯s ability to develop and launch new and enhanced products, services, and capabilities, as well

as implement infrastructure, in a timely and successful manner; client use of the company¡¯s advisory solutions and other

products and services; client sensitivity to rates; failure of the parties to satisfy the closing conditions in the USAA IMCO

purchase agreement in a timely manner or at all, including regulatory approvals and the implementation of conversion

plans; capital and liquidity needs and management; level of client assets, including cash balances; the company¡¯s ability to

manage expenses; 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 365 offices

and 12.1 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking

accounts, and $3.77 trillion in client assets as of September 30, 2019. 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, ), 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 and .

###

-3-

THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2019

2019

2018

2018

Net Revenues

Interest revenue

$

Interest expense

1,892

$

(261)

Net interest revenue

1,755

$

(228)

5,817

$

(896)

4,766

(569)

1,631

1,527

4,921

4,197

Asset management and administration fees

825

809

2,366

2,474

Trading revenue

172

176

531

557

Other

83

67

297

235

2,711

2,579

8,115

7,463

Compensation and benefits

857

737

2,514

2,252

Professional services

168

164

516

476

Occupancy and equipment

144

124

408

368

Advertising and market development

71

70

217

220

Communications

63

59

187

179

Depreciation and amortization

88

78

255

226

Regulatory fees and assessments

30

57

92

158

Other

54

71

190

232

1,475

1,360

4,379

4,111

Total net revenues

Expenses Excluding Interest

Total expenses excluding interest

Income before taxes on income

1,236

1,219

3,736

3,352

Taxes on income

285

296

884

780

Net Income

951

923

2,852

2,572

38

38

127

128

Preferred stock dividends and other

$

Net Income Available to Common Stockholders

913

$

885

$

2,725

$

2,444

Weighted-Average Common Shares Outstanding:

Basic

1,300

1,351

1,320

1,349

Diluted

1,308

1,364

1,329

1,363

Earnings Per Common Shares Outstanding:

Basic

$

.70

$

.66

$

2.06

$

1.81

Diluted

$

.70

$

.65

$

2.05

$

1.79

-4-

THE CHARLES SCHWAB CORPORATION

Financial and Operating Highlights

(Unaudited)

Q3-19 % change

(In millions, except per share amounts and as noted)

Net Revenues

Net interest revenue

Asset management and administration fees

Trading revenue

Other

Total net revenues

Expenses Excluding Interest

Compensation and benefits

Professional services

Occupancy and equipment

Advertising and market development

Communications

Depreciation and amortization

Regulatory fees and assessments

Other

Total expenses excluding interest

Income before taxes on income

Taxes on income

Net Income

Preferred stock dividends and other

Net Income Available to Common Stockholders

Earnings per common share:

Basic

Diluted

Dividends declared per common share

Weighted-average common shares outstanding:

Basic

Diluted

Performance Measures

Pre-tax profit margin

Return on average common stockholders¡¯ equity (annualized) (1)

Financial Condition (at quarter end, in billions)

Cash and cash equivalents

Cash and investments segregated

Receivables from brokerage clients ¡ª net

Available for sale securities

Held to maturity securities

Bank loans ¡ª net

Total assets

Bank deposits

Payables to brokerage clients

Long-term debt

Stockholders¡¯ equity

Other

Full-time equivalent employees (at quarter end, in thousands)

Capital expenditures ¡ª purchases of equipment, office facilities, and

property, net (in millions)

Expenses excluding interest as a percentage of average client assets

(annualized)

Clients¡¯ Daily Average Trades (in thousands)

Revenue trades (2)

Asset-based trades (3)

Other trades (4)

Total

Average Revenue Per Revenue Trade (2)

vs.

Q3-18

vs.

Q2-19

2019

Second

Quarter

First

Quarter

Fourth

Quarter

Third

Quarter

7%

2%

(2)%

24%

5%

1%

5%

(1)%

(26)%

1%

$ 1,631

825

172

83

2,711

$ 1,609

786

174

112

2,681

$ 1,681

755

185

102

2,723

$ 1,626

755

206

82

2,669

$ 1,527

809

176

67

2,579

16%

2%

16%

1%

7%

13%

(47)%

(24)%

8%

1%

(4)%

3%

¡ª

3%

6%

(6)%

8%

(8)%

2%

5%

¡ª

(27)%

2%

¡ª

(5)%

1%

(24)%

3%

857

168

144

71

63

88

30

54

1,475

1,236

285

$ 951

38

$ 913

807

178

133

77

62

84

30

74

1,445

1,236

299

$ 937

50

$ 887

850

170

131

69

62

83

32

62

1,459

1,264

300

$

964

39

$

925

805

178

128

93

63

80

31

81

1,459

1,210

275

$ 935

50

$ 885

737

164

124

70

59

78

57

71

1,360

1,219

296

$

923

38

$

885

6%

8%

31%

4%

6%

¡ª

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

(4)%

(4)%

(2)%

(2)%

.70

.70

.17

1,300

1,308

(7)%

91%

(6)%

(2)%

1%

2%

3%

(2)%

28%

28%

3%

(16)%

15%

(1)%

3%

1%

2%

1%

¡ª

15%

¡ª

¡ª

4%

(3)%

22%

10%

3%

(5)%

16%

5%

(5)%

1%

(11)%

8%

¡ª

¡ª

$

20.3

16.2

21.1

56.5

140.2

16.9

279.0

209.3

35.6

7.4

21.4

$

$

190

24.2

14.1

21.4

54.6

138.3

16.6

276.3

208.4

31.0

7.4

21.3

$

173

32.6

13.9

20.5

60.0

132.4

16.5

282.8

219.5

29.7

6.8

21.6

$

181

27.9

13.6

21.7

66.6

144.0

16.6

296.5

231.4

32.7

6.9

20.7

47.3%

20%

$

19.5

$

159

-5-

21.8

8.5

22.4

57.6

139.0

16.6

272.1

213.4

27.9

5.8

20.8

19.1

$

156

0.16%

0.16%

0.17%

0.17%

0.15%

395

123

200

718

6.94

392

138

186

716

6.94

418

149

210

777

7.19

466

188

213

867

7.13

382

129

172

683

7.27

$

$

$

$

Return on average common stockholders¡¯ equity is calculated using net income available to common stockholders divided by average common stockholders¡¯ equity.

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.

(2)

.66

.65

.13

1,351

1,364

45.3%

20%

20.0

$

.66

.65

.13

1,343

1,354

46.4%

20%

20.5

$

.69

.69

.17

1,333

1,344

46.1%

19%

19.8

$

.67

.66

.17

1,328

1,337

45.6%

20%

(1)

2018

Third

Quarter

 ................
................

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