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.

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