Charles Schwab 2015 Annual Report Download - page 44

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THE CHARLES SCHWAB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Ratios, or as Noted)
- 24 -
Delinquency roll rates: The rates at which loans transition through delinquency stages, ultimately resulting in a loss. The
Company considers a loan to be delinquent if it is 30 days or more past due.
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank): Regulatory reform legislation signed into
federal law in 2010 containing numerous provisions aimed at promoting financial stability in the U.S. financial system
through enhanced prudential regulation of large financial services companies.
Final Regulatory Capital Rules: Refers to the regulatory capital rules issued by U.S. banking agencies in July 2013 that
implemented Basel III and relevant provisions of Dodd-Frank, which apply to savings and loan holding companies, as well as
federal savings banks. Implementation began on January 1, 2015.
First Mortgages: Refers to first lien residential real estate mortgage loans, which include two loan classes: first mortgages
and purchased first mortgages.
Full-time equivalent employees: Includes full-time, part-time and temporary employees, and persons employed on a
contract basis, and excludes employees of outsourced service providers.
Interest rate risk: The risk to earnings or capital arising from changes in interest rates.
Interest-bearing liabilities: Includes bank deposits, payables to brokerage clients, and long-term debt on which the
Company pays interest.
Interest-earning assets: Includes cash and cash equivalents, cash and investments segregated, broker-related receivables,
receivables from brokerage clients, securities available for sale, securities held to maturity, and bank loans.
Investment grade: Defined as a rating equivalent to a Moody’s rating of “Baa” or higher, or a Standard & Poor’s or Fitch
rating of “BBB-” or higher.
Liquidity risk: Risk that the Company will be unable to meet obligations when they come due without incurring
unacceptable losses.
Loan-to-value ratio: Ratio shown as a percentage and calculated as the principal amount of a loan divided by the appraised
value of the collateral securing the loan.
Margin loans: Loans made to brokerage clients on a secured basis to purchase securities reflected in receivables from
brokerage clients on the Company’s balance sheet.
Market risk: The potential for changes in earnings or the value of financial instruments held by the Company as a result of
fluctuations in interest rates, equity prices or market conditions.
Master netting arrangement: An agreement between two counterparties that have multiple contracts with each other that
provides for net settlement of all contracts through a single cash payment in the event of default or termination of any one
contract.
Mortgage-backed securities: A type of asset-backed security that is secured by a mortgage or group of mortgages.
Net interest margin: Net interest revenue divided by average interest-earning assets.
Net new client assets: Total inflows of client cash and securities to the Company less client outflows. Management believes
that this metric depicts how well the Company’s products and services appeal to new and existing clients.
New brokerage accounts: All brokerage accounts opened during the period, as well as any accounts added via acquisition.
Nonperforming assets: The total of nonaccrual loans and other real estate owned.