Charles Schwab 2015 Annual Report Download - page 45

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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)
- 25 -
Operational risk: Potential for loss due to inadequate or failed internal processes, systems, and firms or exchanges handling
client orders, or loss from external events and relationships impacting the Company and/or any of its key business partners
and vendors.
Order flow revenue: Net compensation received from markets and firms to which Schwab and optionsXpress, Inc. send
equity and options orders. Reflects rebates received for certain types of orders, minus fees paid for execution of orders for
which exchange fees or other charges apply.
Pledged Asset Line®: A non-purpose revolving line of credit from Schwab Bank secured by eligible assets held in a separate
pledged asset account maintained at Schwab.
Return on average common stockholders’ equity: Calculated as net income available to common stockholders divided by
average common stockholders’ equity.
Return on average total assets: Calculated as net income divided by average total assets for the period.
Risk-weighted assets: Primarily computed by assigning specific risk-weightings as determined by the regulators to assets
and off-balance sheet instruments for capital adequacy calculations.
Tier 1 Capital: The sum of CET1 Capital and additional Tier 1 Capital instruments and related surplus, less applicable
adjustments and deductions.
Tier 1 Leverage Ratio: Tier 1 capital divided by adjusted average total consolidated assets at the end of the quarter.
Trading days: Days in which the markets/exchanges are open for the buying and selling of securities. Early market closures
are counted as half-days.
U.S. federal banking agencies: Refers to the Board of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau.
Uniform Net Capital Rule: Refers to Rule 15c3-1 under the Securities Exchange Act of 1934 which specifies minimum
capital requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers.