Charles Schwab 2011 Annual Report Download - page 29

THE CHARLES SCHWAB CORPORATION
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PART I
Item 1. Business
General Corporate Overview
The Charles Schwab Corporation (CSC), headquartered in San Francisco, California, was incorporated in 1986 and engages,
through its subsidiaries (together referred to as the Company, and primarily located in San Francisco except as indicated), in
securities brokerage, banking, and related financial services. At December 31, 2011, the Company had $1.68 trillion in client
assets, 8.6 million active brokerage accounts(a), 1.5 million corporate retirement plan participants, and 780,000 banking
accounts.
Significant business subsidiaries of CSC include:
 Charles Schwab & Co., Inc. (Schwab), which was incorporated in 1971, is a securities broker-dealer with over 300
domestic branch offices in 45 states, as well as a branch in each of the Commonwealth of Puerto Rico and London,
U.K., and serves clients in Hong Kong through one of CSC’s subsidiaries;
 Charles Schwab Bank (Schwab Bank), which commenced operations in 2003, is a federal savings bank located in
Reno, Nevada; and
 Charles Schwab Investment Management, Inc. (CSIM), which is the investment advisor for Schwab’s proprietary
mutual funds, referred to as the Schwab Funds, and Schwab’s exchange-traded funds, referred to as the Schwab
ETFs™.
The Company provides financial services to individuals and institutional clients through two segments – Investor Services
and Institutional Services. The Investor Services segment provides retail brokerage and banking services to individual
investors. The Institutional Services segment provides custodial, trading, and support services to independent investment
advisors (IAs). The Institutional Services segment also provides retirement plan services, specialty brokerage services, and
mutual fund clearing services. For financial information by segment for the three years ended December 31, 2011, see “Item
8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – 25. Segment Information.”
As of December 31, 2011, the Company had full-time, part-time and temporary employees, and persons employed on a
contract basis that represented the equivalent of about 14,100 full-time employees.
Acquisitions and Divestiture
On September 1, 2011, the Company completed its acquisition of all of the outstanding common shares of optionsXpress
Holdings, Inc. (optionsXpress), an online brokerage firm primarily focused on equity option securities and futures. The
optionsXpress brokerage platform provides active investors and traders trading tools, analytics and education to execute a
variety of investment strategies. The combination of optionsXpress and Schwab offers active investors an additional level of
service and platform capabilities. optionsXpress, Inc., a wholly-owned subsidiary of optionsXpress, is a securities broker-
dealer.
On November 9, 2010, the Company acquired substantially all of the assets of Windward Investment Management, Inc.
(Windward), which was an investment advisory firm that managed diversified investment portfolios comprised primarily of
exchange-traded fund securities. As a result of the acquisition, Windhaven Investment Management, Inc. (Windhaven) was
formed as a wholly-owned subsidiary of Schwab Holdings, Inc.
In July 2007, the Company sold all of the outstanding stock of U.S. Trust Corporation, which was a subsidiary that provided
wealth management services.
In March 2007, the Company acquired The 401(k) Company, which offers retirement plan services. The acquisition enhanced
the Company’s ability to meet the needs of retirement plans of all sizes. The acquisition also provided the opportunity to
(a) Accounts with balances or activity within the preceding eight months.