Charles Schwab Discloses Results of the Federal Reserve’s 2022 Comprehensive Capital Analysis and Review

The Charles Schwab Corporation (CSC or Schwab) announced today that it has received the results of the Federal Reserve’s 2022 Comprehensive Capital Analysis and Review (CCAR). These results included the Federal Reserve’s estimate of Schwab’s minimum capital ratios under the supervisory severely adverse scenario for the nine-quarter horizon beginning December 31, 2021 and ending March 31, 2024. Based on these results, Schwab’s calculated stress capital buffer (SCB) was well below the 2.5% minimum, resulting in an SCB at that floor.

This 2.5% SCB will be applicable to Schwab for the four-quarter period beginning October 1, 2022. Schwab’s Common Equity Tier 1 (CET1) ratio of 18.9% as of March 31, 2022 was well in excess of the regulatory minimum of 4.5% combined with the SCB of 2.5% due to the relatively low risk nature of our balance sheet assets.

Schwab ended the first quarter of 2022 with a consolidated Tier 1 Leverage Ratio of 6.1%, down slightly from 6.2% at year-end 2021. Though the consolidated Tier 1 Leverage Ratio is below the long-term operating objective for CSC, this ratio is well above the regulatory minimum. The pace of return to Schwab’s long-term operating objective over time depends on a number of factors including the overall size of the consolidated balance sheet, earnings, and capital issuance and deployment.

CFO Peter Crawford commented, “Schwab’s inaugural CCAR stress test results highlight our thoughtful approach to capital, and overall risk management. The strength of our ratios accentuates the durability of our all-weather model and reinforces our confidence that we are well positioned to serve our clients across a wide range of challenging macroeconomic environments. While there are no changes to our dividend or other capital actions to report today, we’ll provide updates going forward as conditions and our plans change. As always, we expect to manage our capital position in a manner consistent with supporting long-term business growth and enhancing stockholder value, using an effective combination of earnings, dividends, and other appropriate means of returning excess capital.”

Forward-looking Statements

This press release contains forward-looking statements relating to the company’s capital ratios; balance sheet assets; Tier 1 Leverage Ratio operating objective; all-weather model; positioning; dividend and other capital actions; capital management to support business growth and enhance stockholder value; and capital returns. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations, beliefs, 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 and the level of interest rates; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; competitive pressures on pricing; client cash sorting; client sensitivity to rates; the level of client assets, including cash balances; the migration of bank deposit account balances; capital and liquidity needs and management; market volatility; the level and mix of client trading activity; margin loan balances; securities lending; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and associated client assets; the company’s ability to monetize client assets; 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; the company’s ability to support client activity levels and attract and retain talent; the Ameritrade integration, including expected synergies; the company’s ability to manage expenses; the effect of adverse developments in litigation or regulatory matters and the extent of any charges associated with such matters; any adverse impact of financial reform legislation and related regulations; 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 33.8 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $7.30 trillion in client assets as of May 31, 2022. 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, 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 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.

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