Schwab Reports Monthly Activity Highlights

The Charles Schwab Corporation released its Monthly Activity Report today. Company highlights for the month of August 2020 include:

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• Core net new assets brought to the company by new and existing clients totaled $20.0 billion. Net new assets excluding mutual fund clearing totaled $19.3 billion.
• Total client assets were $4.49 trillion as of month-end August, up 21% from August 2019 and up 5% compared to July 2020.
• Client cash as a percentage of assets was 12.5% as of month-end August, compared with 11.3% in August 2019 and 13.0% in July 2020.

CFO Peter Crawford commented, “We continue to drive strong business momentum; August new accounts and core net new assets were among the highest we’ve seen for a summer month in recent years, and client assets reached a record $4.49 trillion at month-end, up $773 billion, or 21%, year-over-year. Thus far in the third quarter, equity market returns have been quite strong and client trading activity very robust relative to prior years. At the same time, continued compression of interest rates has been pressuring investment yields. In addition, while we’ve taken steps to mitigate prepayment risk by reshaping our investment portfolio over recent years to include significantly expanded allocations to less-prepayable securities, the sharp reduction in long-term rates has led to an acceleration of prepayment activity in the mortgage-backed securities held within our investment portfolio. These dynamics are pushing our third quarter net interest margin into the upper 130s basis point range, and therefore our third quarter total net revenues are running slightly lower than the company’s second quarter results.”

Forward-Looking Statements

This press release contains forward-looking statements relating to business momentum; mitigation of prepayment risk in our investment portfolio; and third quarter net interest margin and total net revenues. 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, general market conditions, including equity valuations, trading activity, the level of interest rates - which can impact money market fund fee waivers - and credit spreads; 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 enhance its infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; changes in prepayment levels for mortgage-backed and other asset-backed securities and loans; client cash allocations; client sensitivity to rates; the level of client assets, including cash balances; the company’s ability to monetize client assets; capital and liquidity needs and management; the impact of changes in market conditions on revenues, expenses, and pre-tax profit margin; the company’s ability to manage expenses; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; and other factors set forth in the company’s most recent reports on Form 10-K and Form 10-Q.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 360 offices and 14.3 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.5 million banking accounts, and $4.5 trillion in client assets as of August 31, 2020. 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, https://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 https://www.schwab.com and https://www.aboutschwab.com.

The Charles Schwab Corporation Monthly Activity Report For August 2020
				2019															2020																								Change
				Aug			Sep			Oct			Nov			Dec			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Mo.		Yr.
Market Indices (at month end)
Dow Jones Industrial Average				26,403			26,917			27,046			28,051			28,538			28,256			25,409			21,917			24,346			25,383			25,813			26,428			28,430			8%		8%
Nasdaq Composite				7,963			7,999			8,292			8,665			8,973			9,151			8,567			7,700			8,890			9,490			10,059			10,745			11,775			10%		48%
Standard & Poor’s 500				2,926			2,977			3,038			3,141			3,231			3,226			2,954			2,585			2,912			3,044			3,100			3,271			3,500			7%		20%
Client Assets (in billions of dollars)
Beginning Client Assets				3,746.7			3,716.5			3,768.4			3,854.6			3,942.2			4,038.8			4,051.6			3,862.8			3,496.9			3,778.3			4,009.0			4,110.1			4,278.0
Net New Assets (1)				19.9			17.4			35.2			12.0			30.1			20.9			24.4			27.9			15.3			97.5			24.6			11.2			20.0			79%		1%
Net Market (Losses) Gains				(50.1	)		34.5			51.0			75.6			66.5			(8.1	)		(213.2	)		(393.8	)		266.1			133.2			76.5			156.7			191.7
Total Client Assets (at month end)				3,716.5			3,768.4			3,854.6			3,942.2			4,038.8			4,051.6			3,862.8			3,496.9			3,778.3			4,009.0			4,110.1			4,278.0			4,489.7			5%		21%
Core Net New Assets (2)				19.9			17.4			24.1			12.0			30.1			20.9			24.4			27.9			15.3			17.6			13.7			2.7			20.0			N/M		1%
Receiving Ongoing Advisory Services (at month end)
Investor Services				314.2			318.5			324.6			330.8			337.1			336.8			323.2			291.5			309.9			339.8			345.2			355.6			366.8			3%		17%
Advisor Services (3)				1,635.7			1,659.4			1,691.6			1,728.2			1,769.7			1,773.2			1,694.0			1,531.3			1,647.9			1,711.7			1,747.5			1,818.5			1,900.5			5%		16%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts				12,085			12,118			12,189			12,247			12,333			12,431			12,521			12,736			12,866			14,007			14,107			14,220			14,311			1%		18%
Banking Accounts				1,361			1,361			1,374			1,384			1,390			1,403			1,411			1,426			1,439			1,448			1,463			1,480			1,493			1%		10%
Corporate Retirement Plan Participants				1,711			1,718			1,735			1,743			1,748			1,732			1,726			1,721			1,696			1,714			1,716			1,712			1,715			-		-
Client Activity
New Brokerage Accounts (in thousands) (4)				126			108			142			127			164			167			159			283			201			1,250			201			206			202			(2%)		60%
Inbound Calls (in thousands)				1,759			1,570			1,771			1,605			1,884			1,947			1,831			2,366			1,824			1,736			2,128			2,105			2,025			(4%)		15%
Web Logins (in thousands)				63,928			63,530			72,547			66,394			69,733			77,716			76,941			97,523			92,491			93,803			106,720			103,474			104,468			1%		63%
Client Cash as a Percentage of Client Assets (5)				11.3	%		11.4	%		11.3	%		11.3	%		11.3	%		11.3	%		12.0	%		15.1	%		14.3	%		14.0	%		13.6	%		13.0	%		12.5	%		(50) bp		120 bp
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (6, 7) (in millions of dollars)
Large Capitalization Stock				328			23			900			1,406			991			845			(178	)		984			(693	)		(768	)		(1,254	)		(2,536	)		(1,422	)
Small / Mid Capitalization Stock				(374	)		(212	)		(458	)		73			201			(314	)		(531	)		(954	)		151			(401	)		(1,063	)		(1,476	)		(441	)
International				(1,390	)		(355	)		340			735			993			1,360			132			(2,116	)		(2,207	)		(1,953	)		(1,580	)		(773	)		230
Specialized				353			583			618			484			455			762			397			333			2,059			1,512			1,020			1,505			906
Hybrid				(569	)		(372	)		(202	)		(290	)		(96	)		615			(257	)		(4,790	)		(860	)		(518	)		(97	)		(769	)		(124	)
Taxable Bond				2,725			2,935			2,813			2,274			4,710			5,714			3,830			(23,142	)		1,642			5,469			9,215			7,314			7,680
Tax-Free Bond				760			593			809			860			1,255			1,481			1,066			(5,229	)		(242	)		805			1,710			1,297			1,648
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (6)				(1,281	)		(573	)		(473	)		(761	)		1,097			2,684			(565	)		(34,382	)		(3,863	)		(564	)		1,768			(147	)		2,568
Exchange-Traded Funds (7)				3,114			3,768			5,293			6,303			7,412			7,779			5,024			(532	)		3,713			4,710			6,183			4,709			5,909
Money Market Funds				6,068			5,833			7,059			4,768			1,515			1,911			1,312			(1,233	)		8,465			4,833			(5,673	)		(9,039	)		(5,614	)
Average Interest-Earning Assets (8)
(in millions of dollars)				265,005			266,430			266,089			268,254			274,911			279,437			278,966			317,850			353,018			361,814			373,986			379,521			384,690			1%		45%

(1)		July 2020 includes an inflow of $8.5 billion related to the acquisition of Wasmer, Schroeder & Company, LLC. June 2020 includes an inflow of $10.9 billion from a mutual fund clearing services client. May 2020 includes an inflow of $79.9 billion related to the acquisition of the assets of USAA's Investment Management Company. October 2019 includes an inflow of $11.1 billion from a mutual fund clearing services client.
(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)		May 2020 includes 1.1 million new brokerage accounts related to the acquisition of the assets of USAA's Investment Management Company.
(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.
		N/M - Not meaningful

 

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