Charles Schwab 2007 Annual Report Download

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2007 Annual Report

Table of contents

  • Page 1
    2007 Annual Report

  • Page 2
    ... Overview Social Responsibility Management Committee Letter from the CFO Financial Highlights Growth in Client Assets and Accounts Form 10-K i Board of Directors ii Corporate Contacts iii Corporate Information Forward-Looking Statements: In addition to historical information, this Annual Report...

  • Page 3
    LETTER FROM THE CEO | 1 In cities and towns around the country, people are making choices about new ways of living, working, and managing money. As they go through the day, there are moments when they wonder how their decisions will shape their future. ...

  • Page 4
    2 | LETTER FROM THE CEO A guy at work asked me what I'm doing about retirement planning. I kept thinking that when my father retired, he had his pension. The house - everything - was paid off. That was then.

  • Page 5
    LETTER FROM THE CEO | 3

  • Page 6
    4 | LETTER FROM THE CEO Some people, all they do is study finance. They have the tools. They have the skill set. I'm glad I have someone to help me figure it out.

  • Page 7
    LETTER FROM THE CEO | 5 Can I really stay at home after the baby is born? Our income will drop by more than half.

  • Page 8
    6 | LETTER FROM THE CEO Retirement? That lasted six months. It's fun when you start, but after going where you want to go and seeing what you want to see, it's not a big deal anymore. Plus, I've got the longevity gene.

  • Page 9
    LETTER FROM THE CEO | 7 Getting into the marriage game again, it's a little scary. I don't want to say, let's keep things mine and yours - but sort of.

  • Page 10
    8 | LETTER FROM THE CEO People used to see their house as a piggy bank. That's going away now.

  • Page 11
    LETTER FROM THE CEO | 9 When Blake and I met, we didn't think about the future. Today is different, and when the kids get out of college, it's going to be even more different.

  • Page 12
    10 | LETTER FROM THE CEO Starting a business isn't as easy as crossing the street, but it can't be as tough as climbing Mount Everest either.

  • Page 13
    LETTER FROM THE CEO | 11 I can't wait to get my own place after graduation. Mom says when you rent, you're throwing money away. But I'm not sure I can pay off student loans and a mortgage, too.

  • Page 14
    12 | LETTER FROM THE CEO

  • Page 15
    LETTER FROM THE CEO | 13 We understand. Schwab recognizes the changes that have taken place in recent decades - changes that open up all kinds of new options, but make people wonder how the financial pieces fit together. Our purpose is to help everyone be financially fit. That's what guides our...

  • Page 16
    ... $1,120 2005 2006 2007 2005 2006 2007 DILUTED EARNINGS PER SHARE (2) PRE-TAX PROFIT MARGIN (2) $.92 $.69 $.48 28.4% 34.3% 37.1% 2005 2006 2007 2005 2006 2007 (1) Effective 2007, amounts include the Company's mutual fund clearing services business' daily net settlements. All prior...

  • Page 17
    LETTER FROM THE CEO | 15 To my fellow stockholders, Charles R. Schwab Founder, Chairman, and Chief Executive Officer Many people have asked about Schwab's "secret to success" as we posted incredible 2007 results during a tough time in the financial markets. But it's really no secret. All of us ...

  • Page 18
    ... sides of the balance sheet as we help our clients navigate their many financial needs. We performed well during tough financial times. We attracted net new assets at record levels. In 2007, clients brought in $160 billion in net new assets to Schwab, up an incredible 92 percent over the prior...

  • Page 19
    ... everything from hiring and retaining employees to opening an account with Schwab. We also launched two new trust services to help independent advisors sustain client relationships across generations. As a further sign of our leadership in this fast-growing industry segment, our annual IMPACT...

  • Page 20
    18 | OPERATIONS OVERVIEW we believe in the individual by Walt Bettinger President and Chief Operating Officer

  • Page 21
    ... demands a new model for financial services. In 2007, Schwab continued to forge a new, client-focused business model. We restructured our business, found new ways to make financial services easier and more affordable, and continued to build client relationships based on a high level of trust. Ful...

  • Page 22
    ...which provides professional Innovation was also key to several new mutual fund offerings, including three new Fundamental Index* funds and the first Schwab Global Real Estate Fund™. At year end 2007, total client assets held in mutual funds rose 24 percent to $730 billion, including $242 billion...

  • Page 23
    ... our schwab.com website and consolidated our active investor services into the StreetSmar tPro ® advanced trading platform and StreetSmart.com™. SCHWAB INSTITUTIONAL Annual Revenues: $1.1 billion Pre-Tax Margin: 43 percent "The independent advisor business is an incredible success story, and...

  • Page 24
    ... Schwab - founder of The Charles Schwab Corporation and chairman of Charles Schwab Foundation - was named chairman of the newly formed President's Advisory Council on Financial Literacy. In this role, he will focus national attention on the need for better financial education and help find ways...

  • Page 25
    ... Matters: Make It Count in collaboration with Boys & Girls Clubs of America, to help teens learn the basics of money management. Since the program's inception in May 2004, nearly 70,000 teens have completed the program, and Charles Schwab Foundation has awarded $108,000 in college scholarship grants...

  • Page 26
    24 || LETTER MANAGEMENT COMMITTEE 24 FROM THE CEO BENJAMIN L. BRIGEMAN Executive Vice President, Schwab Investor Services LISA K. HUNT Executive Vice President, Schwab Investor Development JAMES D. McCOOL Executive Vice President, Corporate & Retirement Services REBECCA SAEGER Executive Vice ...

  • Page 27
    ... Operating Officer CHARLES R. SCHWAB Chairman, Chief Executive Officer, and Director GIDEON SASSON Executive Vice President and Chief Information Officer JOHN S. CLENDENING Executive Vice President, Client Experience, Schwab Investor Services JAN HIER-KING Executive Vice President and Chief...

  • Page 28
    ... in our revenue relative to client There's a cornerstone principle that asset levels. In 1997, our revenues still guides our approach to financial equaled approximately 0.75 percent of management even after 30-plus years average client assets; by 2007, that ratio of storied history: Schwab is, and...

  • Page 29
    ... the capital we need to support business growth, thereby facilitating the return of excess amounts to stockholders. Aided by the sale of U.S. Trust, we were able to return a total of $4.2 billion in excess equity during 2007 via a combination of regular and special dividends, share repurchases, and...

  • Page 30
    ...mutual funds 23% 30% Total Mutual Fund Marketplace 20% 23% Total mutual fund assets 18% 24% Equity and other securities (1) 14% 12% Fixed income securities 8% 3% Margin loans outstanding 8% 12% Total client assets 15% 17% Client assets by business Schwab Investor Services 8% 10% Schwab Institutional...

  • Page 31
    Strategy + Design by Unboundary, Inc., Atlanta, GA l Printing by Insync Marketing Solutions Illustrations by Christopher Kasch and George Angelini I Executive Photography by Doug Adesko l This entire report is printed on recycled paper.

  • Page 32
    The Charles Schwab Corporation 101 Montgomery Street San Francisco, CA 94104 (415) 636-7000 www.schwab.com www.aboutschwab.com MKT10448-20 (3/08)