Total Client Assets Exceed $8 Trillion

Maintained Strong Profitability With GAAP Pre-Tax Margin of 36.3%; 42.0% Adjusted ⁽¹⁾

The Charles Schwab Corporation announced today that its net income for the second quarter of 2023 was $1.3 billion compared with $1.8 billion for the second quarter of 2022. Net income for the six months ended June 30, 2023 was $2.9 billion, compared with $3.2 billion for the year-earlier period.

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	Three Months Ended June 30,						%		Six Months Ended June 30,						%
Financial Highlights ⁽¹⁾	2023			2022			Change		2023			2022			Change

Net revenues (in millions)	$	4,656		$	5,093		(9	)%	$	9,772		$	9,765		—
Net income (in millions)
GAAP	$	1,294		$	1,793		(28	)%	$	2,897		$	3,195		(9	)%
Adjusted ⁽¹⁾	$	1,494		$	1,981		(25	)%	$	3,274		$	3,572		(8	)%
Diluted earnings per common share
GAAP	$	.64		$	.87		(26	)%	$	1.48		$	1.54		(4	)%
Adjusted ⁽¹⁾	$	.75		$	.97		(23	)%	$	1.68		$	1.74		(3	)%
Pre-tax profit margin
GAAP		36.3	%		44.6	%				38.9	%		42.1	%
Adjusted ⁽¹⁾		42.0	%		49.5	%				44.0	%		47.2	%
Return on average common stockholders' equity (annualized)		17	%		19	%				20	%		15	%
Return on tangible common equity (annualized) ⁽¹⁾		62	%		45	%				71	%		32	%

Note: All per-share results are rounded to the nearest cent, based on weighted-average diluted common shares outstanding.
⁽¹⁾		Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

Co-Chairman and CEO Walt Bettinger noted, "Schwab's modern approach to wealth management continues to resonate with investors, helping to sustain our strong client momentum. During the second quarter, we gathered $52 billion in core net new assets – bringing year-to-date asset gathering to over $180 billion and keeping us squarely within our long-term organic growth range of 5% – 7%. While we observed signs of typical tax seasonality, as well as softer investor sentiment at the beginning of the quarter, we still attracted nearly 1 million new brokerage accounts and finished the period serving $8.02 trillion in total client assets across 34 million accounts."

"Against an improving, yet still somewhat unsettled backdrop, clients increased their utilization of help and advice at Schwab during the quarter, reflecting investors' continued trust in us to support them on their journey towards a better financial future," continued Mr. Bettinger. "Year-to-date net flows into our retail Managed Investing solutions were up 35%, and when including relationships with Registered Investment Advisors (RIAs), approximately half of the firm's client assets are now receiving some form of ongoing advisory service. More importantly, even with the still shifting environment, satisfaction within these areas remains strong as Client Promoter Scores for both Schwab Wealth Advisory™ and our RIAs have been near recent highs."

Mr. Bettinger added, "Further advancing our three strategic initiatives of scale and efficiency, win-win monetization, and segmentation helps reinforce our advantages within the marketplace. In late May, we completed the conversion of over 5 million Ameritrade accounts to the combined platform. Successfully transitioning what is believed to be the largest number of client accounts in the history of the industry over a single weekend is a testament to the team's diligent preparation and the tireless work of our dedicated employees. With approximately 30% of client accounts converted thus far, we are on-track to move nearly all of the remaining Ameritrade clients over before year-end – with the final transition group scheduled for the first half of 2024. During the quarter, we also took steps to supplement our asset management and personalized investing products by announcing a new proprietary high-yield bond exchange-traded fund and rolling-out enhancements to Schwab Personalized Indexing™ (SPI). The new features included a digital onboarding experience, expanded customization capabilities, and dynamic reporting tools for RIAs utilizing SPI. Most recently, we announced the launch of branded and differentiated experiences for our High Net Worth and Ultra-High Net Worth clients. While the go-forward service model is built upon the foundation of our firm-wide 'no trade-offs' approach, it includes many new benefits aimed at meeting the specific needs of these investors – including an integrated experience that offers specialized support and dedicated relationships across wealth management and banking."

Mr. Bettinger finished, "Schwab continues to operate from a position of strength, as our 'Through Clients' Eyes' strategy and distinct competitive advantages enable us to meet the ever-evolving needs of individual investors and the advisors who serve them. In addition, our consistency of mission and long-term management orientation allows us to stay focused on pursuing the tremendous growth opportunities still in front of us."

CFO Peter Crawford stated, "While navigating significant near-term headwinds, we generated second quarter revenues of $4.7 billion, down 9% on a year-over-year basis. This top-line result was driven primarily by a temporary increase in the utilization of supplemental funding to facilitate client cash allocation decisions during the current rising rate cycle. Net interest revenue declined 10% from the prior year to $2.3 billion as the incorporation of higher cost liabilities brought our net interest margin down by 32 basis points sequentially to 1.87%. While anticipated client cash realignment, along with net equity buying during June, pushed cash levels lower, we observed a continued and substantial deceleration in the daily pace of cash outflows versus prior months. The continuation of this trend through the end of the quarter further strengthens our conviction that this realignment activity will inflect before the end of 2023, unlocking growth in client cash held on the balance sheet."

"Managing expenses in a manner that allows us to balance appropriate investment to support long-term growth while generating near-term returns has been a core tenet of Schwab's business model since its inception over 50 years ago," Mr. Crawford added. "GAAP expenses for the quarter grew 5% year-over-year to $3.0 billion – including $130 million in acquisition and integration-related costs and $134 million in amortization of acquired intangibles. Exclusive of these items, adjusted total expenses ⁽¹⁾ equaled $2.7 billion, also up 5% versus the prior year. Our commitment to expense discipline yielded a pre-tax margin of 36.3%, or 42.0% adjusted ⁽¹⁾, as we continued to produce profitability levels beyond those observed at nearly all publicly-traded wealth management firms."

Mr. Crawford concluded, "Effective balance sheet management remains central to our strategy as we seek to optimize capital and liquidity levels to sustain ongoing business momentum. In May, we issued $2.5 billion in long-term debt which provided incremental liquidity to support growth and helped us further bolster our capital ratios at the banks. Concurrently, driven by a combination of healthy profitability and a smaller balance sheet, our consolidated Tier 1 Leverage Ratio moved higher to 7.5%. While recent results have been negatively influenced by a number of temporary factors, we remain extremely well-positioned heading into the years to come. As we look forward, our confidence in the future is based on the resiliency of Schwab's core earnings power as demonstrated by our diversified model's ability to deliver long-term value to all of our stakeholders – clients, employees, and owners – over the past five decades."

⁽¹⁾		Further details on non-GAAP financial measures and a reconciliation of such measures to GAAP reported results are included on pages 10-11 of this release.

Commentary from the CFO

Periodically, our Chief Financial Officer provides insight and commentary regarding Schwab's financial picture at: https://www.aboutschwab.com/cfo-commentary. The most recent commentary, which provides perspective on the recent client cash realignment trends and second quarter revenue expectations, was posted on June 14, 2023.

Summer Business Update

The company will host its Summer Business Update for institutional investors this morning from 7:30 a.m. - 8:30 a.m. CT, 8:30 a.m. - 9:30 a.m. ET. Registration for this Update webcast is accessible at https://www.aboutschwab.com/schwabevents.

Forward-Looking Statements

This press release contains forward-looking statements relating to the company's momentum; client asset growth; strategy and approach; competitive advantages; Ameritrade client transition; positioning; opportunities; success with clients; client cash realignment activity and trends; growth of client cash on the balance sheet; expense discipline; balancing investment to support long-term growth with generating near-term returns; profitability; balance sheet management; capital and liquidity; earnings power; and stakeholder value. These forward-looking statements reflect management's expectations as of the date hereof. 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, the company's ability to attract and retain clients and independent investment advisors and grow those relationships and client assets; develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire and retain talent; support client activity levels; successfully implement integration strategies and plans; monetize client assets; and manage expenses. Other important factors include client use of the company's advisory solutions and other products and services; general market conditions, including the level of interest rates and equity valuations; client cash allocation decisions; client sensitivity to rates; level of client assets, including cash balances; competitive pressures on pricing; the level and mix of client trading activity; market volatility; securities lending; margin loan balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; new or changed legislation, regulation or regulatory expectations; 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 34.4 million active brokerage accounts, 2.4 million corporate retirement plan participants, 1.8 million banking accounts, and $8.02 trillion in client assets. 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 subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their 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 primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com. TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.


THE CHARLES SCHWAB CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net Revenues
Interest revenue	$	4,104		$	2,710		$	8,120		$	5,029
Interest expense		(1,814	)		(166	)		(3,060	)		(302	)
Net interest revenue		2,290			2,544			5,060			4,727
Asset management and administration fees ⁽¹⁾		1,173			1,052			2,291			2,120
Trading revenue		803			885			1,695			1,848
Bank deposit account fees		175			352			326			646
Other		215			260			400			424
Total net revenues		4,656			5,093			9,772			9,765
Expenses Excluding Interest
Compensation and benefits		1,498			1,426			3,136			2,972
Professional services		272			258			530			502
Occupancy and equipment		319			294			618			563
Advertising and market development		103			105			191			207
Communications		188			169			334			313
Depreciation and amortization		191			159			368			309
Amortization of acquired intangible assets		134			154			269			308
Regulatory fees and assessments		80			67			163			135
Other		180			187			362			343
Total expenses excluding interest		2,965			2,819			5,971			5,652
Income before taxes on income		1,691			2,274			3,801			4,113
Taxes on income		397			481			904			918
Net Income		1,294			1,793			2,897			3,195
Preferred stock dividends and other		121			141			191			265
Net Income Available to Common Stockholders	$	1,173		$	1,652		$	2,706		$	2,930
Weighted-Average Common Shares Outstanding:
Basic		1,820			1,896			1,827			1,895
Diluted		1,825			1,904			1,834			1,905
Earnings Per Common Shares Outstanding ⁽²⁾:
Basic	$	.64		$	.87		$	1.48		$	1.55
Diluted	$	.64		$	.87		$	1.48		$	1.54

⁽¹⁾		No fee waivers were recognized for the three and six months ended June 30, 2023. Includes fee waivers of $3 million and $57 million for the three and six months ended June 30, 2022, respectively.
⁽²⁾		The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

THE CHARLES SCHWAB CORPORATION
Financial and Operating Highlights
(Unaudited)

	Q2-23 % change				2023						2022
	vs.		vs.		Second			First			Fourth			Third			Second
(In millions, except per share amounts and as noted)	Q2-22		Q1-23		Quarter			Quarter			Quarter			Quarter			Quarter
Net Revenues
Net interest revenue	(10	)%	(17	)%	$	2,290		$	2,770		$	3,029		$	2,926		$	2,544
Asset management and administration fees	12	%	5	%		1,173			1,118			1,049			1,047			1,052
Trading revenue	(9	)%	(10	)%		803			892			895			930			885
Bank deposit account fees	(50	)%	16	%		175			151			350			413			352
Other	(17	)%	16	%		215			185			174			184			260
Total net revenues	(9	)%	(9	)%		4,656			5,116			5,497			5,500			5,093
Expenses Excluding Interest
Compensation and benefits	5	%	(9	)%		1,498			1,638			1,488			1,476			1,426
Professional services	5	%	5	%		272			258			266			264			258
Occupancy and equipment	9	%	7	%		319			299			320			292			294
Advertising and market development	(2	)%	17	%		103			88			123			89			105
Communications	11	%	29	%		188			146			144			131			169
Depreciation and amortization	20	%	8	%		191			177			176			167			159
Amortization of acquired intangible assets	(13	)%	(1	)%		134			135			136			152			154
Regulatory fees and assessments	19	%	(4	)%		80			83			62			65			67
Other	(4	)%	(1	)%		180			182			184			187			187
Total expenses excluding interest	5	%	(1	)%		2,965			3,006			2,899			2,823			2,819
Income before taxes on income	(26	)%	(20	)%		1,691			2,110			2,598			2,677			2,274
Taxes on income	(17	)%	(22	)%		397			507			630			657			481
Net Income	(28	)%	(19	)%		1,294			1,603			1,968			2,020			1,793
Preferred stock dividends and other	(14	)%	73	%		121			70			147			136			141
Net Income Available to Common Stockholders	(29	)%	(23	)%	$	1,173		$	1,533		$	1,821		$	1,884		$	1,652
Earnings per common share ⁽¹⁾:
Basic	(26	)%	(24	)%	$	.64		$	.84		$	.98		$	1.00		$	.87
Diluted	(26	)%	(23	)%	$	.64		$	.83		$	.97		$	.99		$	.87
Dividends declared per common share	25	%	—		$	.25		$	.25		$	.22		$	.22		$	.20
Weighted-average common shares outstanding:
Basic	(4	)%	(1	)%		1,820			1,834			1,864			1,887			1,896
Diluted	(4	)%	(1	)%		1,825			1,842			1,873			1,895			1,904
Performance Measures
Pre-tax profit margin						36.3	%		41.2	%		47.3	%		48.7	%		44.6	%
Return on average common stockholders' equity (annualized) ⁽²⁾						17	%		23	%		27	%		25	%		19	%
Financial Condition (at quarter end, in billions)
Cash and cash equivalents	(26	)%	(3	)%	$	47.7		$	49.2		$	40.2		$	46.5		$	64.6
Cash and investments segregated	(53	)%	(19	)%		25.1			31.0			43.0			44.1			53.5
Receivables from brokerage clients — net	(14	)%	3	%		65.2			63.2			66.6			73.9			76.1
Available for sale securities	(53	)%	(11	)%		125.8			141.3			147.9			236.5			265.3
Held to maturity securities	66	%	(2	)%		166.3			169.9			173.1			96.3			100.1
Bank loans — net	1	%	—			40.1			40.0			40.5			40.4			39.6
Total assets	(20	)%	(4	)%		511.5			535.6			551.8			577.6			637.6
Bank deposits	(31	)%	(7	)%		304.4			325.7			366.7			395.7			442.0
Payables to brokerage clients	(26	)%	(3	)%		84.8			87.6			97.4			110.0			114.9
Other short-term borrowings ⁽³⁾	N/M		10	%		7.8			7.1			4.7			0.5			1.4
Federal Home Loan Bank borrowings ⁽³⁾	N/M		(10	)%		41.0			45.6			12.4			—			—
Long-term debt	7	%	13	%		22.5			20.0			20.8			20.8			21.1
Stockholders' equity	(17	)%	2	%		37.1			36.3			36.6			37.0			44.5
Other
Full-time equivalent employees (at quarter end, in thousands)	4	%	2	%		36.6			36.0			35.3			35.2			35.2
Capital expenditures — purchases of equipment, office facilities, and property, net (in millions)	(50	)%	(10	)%	$	168		$	187		$	211		$	193		$	339
Expenses excluding interest as a percentage of average client assets (annualized)						0.15	%		0.17	%		0.16	%		0.16	%		0.16	%
Clients' Daily Average Trades (DATs) (in thousands)	(15	)%	(11	)%		5,272			5,895			5,389			5,523			6,227
Number of Trading Days	—		—			62.0			62.0			62.5			64.0			62.0
Revenue Per Trade ⁽⁴⁾	7	%	1	%	$	2.46		$	2.44		$	2.66		$	2.63		$	2.29

⁽¹⁾		The Company has voting and nonvoting common stock outstanding. As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.
⁽²⁾		Return on average common stockholders' equity is calculated using net income available to common stockholders divided by average common stockholders' equity.
⁽³⁾		Beginning in the first quarter of 2023, Federal Home Loan Bank borrowings are presented separately from other short-term borrowings. Prior period amounts have been reclassified to reflect this change.
⁽⁴⁾		Revenue per trade is calculated as trading revenue divided by DATs multiplied by the number of trading days.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.

THE CHARLES SCHWAB CORPORATION
Net Interest Revenue Information
(In millions, except ratios or as noted)
(Unaudited)

	Three Months Ended June 30,														Six Months Ended June 30,
	2023							2022							2023						2022
	Average Balance		Interest Revenue/ Expense			Average Yield/ Rate		Average Balance		Interest Revenue/ Expense			Average Yield/ Rate		Average Balance		Interest Revenue/ Expense		Average Yield/ Rate		Average Balance		Interest Revenue/ Expense			Average Yield/ Rate
Interest-earning assets
Cash and cash equivalents	$	44,683	$	547		4.84	%	$	65,414	$	133		0.81	%	$	40,891	$	960	4.67	%	$	68,920	$	167		0.48	%
Cash and investments segregated		27,399		324		4.68	%		51,232		79		0.61	%		33,699		756	4.46	%		51,570		94		0.36	%
Receivables from brokerage clients		60,709		1,167		7.60	%		79,061		706		3.53	%		60,626		2,251	7.39	%		81,618		1,332		3.24	%
Available for sale securities ^(1,2)		145,032		791		2.18	%		287,313		1,088		1.51	%		150,382		1,616	2.15	%		285,927		2,035		1.42	%
Held to maturity securities		167,499		720		1.72	%		101,752		339		1.33	%		169,184		1,466	1.73	%		102,580		717		1.40	%
Bank loans		40,124		410		4.09	%		38,831		230		2.38	%		40,185		801	4.00	%		37,351		417		2.24	%
Total interest-earning assets		485,446		3,959		3.24	%		623,603		2,575		1.64	%		494,967		7,850	3.16	%		627,966		4,762		1.51	%
Securities lending revenue				124							130							236						259
Other interest revenue				21							5							34						8
Total interest-earning assets	$	485,446	$	4,104		3.36	%	$	623,603	$	2,710		1.73	%	$	494,967	$	8,120	3.27	%	$	627,966	$	5,029		1.60	%
Funding sources
Bank deposits	$	312,543	$	863		1.11	%	$	449,936	$	28		0.03	%	$	327,739	$	1,481	0.91	%	$	451,306	$	44		0.02	%
Payables to brokerage clients		64,892		64		0.40	%		101,784		4		0.02	%		70,997		139	0.40	%		103,846		6		0.01	%
Other short-term borrowings ⁽³⁾		7,622		97		5.08	%		2,587		4		0.69	%		7,272		183	5.06	%		3,646		8		0.46	%
Federal Home Loan Bank borrowings ^(3,4)		46,813		606		5.13	%		—		—		—			35,697		910	5.07	%		—		—		—
Long-term debt		21,237		157		2.95	%		21,119		124		2.34	%		20,766		296	2.85	%		20,495		232		2.26	%
Total interest-bearing liabilities		453,107		1,787		1.57	%		575,426		160		0.11	%		462,471		3,009	1.31	%		579,293		290		0.10	%
Non-interest-bearing funding sources		32,339							48,177							32,496						48,673
Securities lending expense				28							8							50						15
Other interest expense				(1	)						(2	)						1						(3	)
Total funding sources	$	485,446	$	1,814		1.49	%	$	623,603	$	166		0.11	%	$	494,967	$	3,060	1.24	%	$	627,966	$	302		0.10	%
Net interest revenue			$	2,290		1.87	%			$	2,544		1.62	%			$	5,060	2.03	%			$	4,727		1.50	%

⁽¹⁾		Amounts have been calculated based on amortized cost.
⁽²⁾		Beginning in the first quarter of 2023, amounts include the impact of derivative financial instruments and the related hedge accounting on our available for sale securities.
⁽³⁾		Beginning in the first quarter of 2023, Federal Home Loan Bank borrowings are presented separately from other short-term borrowings. Prior period amounts have been reclassified to reflect this change.
⁽⁴⁾		Average balance and interest expense was less than $500 thousand in the prior period.

THE CHARLES SCHWAB CORPORATION
Asset Management and Administration Fees Information
(In millions, except ratios or as noted)
(Unaudited)

	Three Months Ended June 30,													Six Months Ended June 30,
	2023						2022							2023						2022
	Average Client Assets		Revenue		Average Fee		Average Client Assets		Revenue			Average Fee		Average Client Assets		Revenue		Average Fee		Average Client Assets		Revenue			Average Fee
Schwab money market funds before fee waivers	$	375,898	$	252	0.27	%	$	146,009	$	106		0.29	%	$	346,145	$	465	0.27	%	$	145,371	$	208		0.29	%
Fee waivers				—						(3	)						—						(57	)
Schwab money market funds		375,898		252	0.27	%		146,009		103		0.28	%		346,145		465	0.27	%		145,371		151		0.21	%
Schwab equity and bond funds, exchange-traded funds (ETFs), and collective trust funds (CTFs)		465,079		94	0.08	%		431,747		92		0.09	%		457,830		185	0.08	%		444,036		189		0.09	%
Mutual Fund OneSource^® and other no-transaction-fee funds		229,207		151	0.26	%		192,435		149		0.31	%		225,822		299	0.27	%		202,538		314		0.31	%
Other third-party mutual funds and ETFs		681,486		133	0.08	%		795,727		171		0.09	%		678,915		266	0.08	%		833,969		350		0.08	%
Total mutual funds, ETFs, and CTFs⁽¹⁾	$	1,751,670		630	0.14	%	$	1,565,918		515		0.13	%	$	1,708,712		1,215	0.14	%	$	1,625,914		1,004		0.12	%
Advice solutions ⁽¹⁾
Fee-based	$	455,859		464	0.41	%	$	440,336		461		0.42	%	$	449,443		917	0.41	%	$	454,830		957		0.42	%
Non-fee-based		95,427		—	—			86,684		—		—			94,948