27.

The Charles Schwab Corporation – Parent Company Only Financial Statements

Condensed Statements of Income


Year Ended December 31,	2012			2011			2010
Interest revenue	$	6		$	4		$	3
Interest expense		(97	)		(103	)		(86	)


Net interest revenue		(91	)		(99	)		(83	)
Other revenues – net		(30	)		8			6
Expenses excluding interest		(23	)		(30	)		(18	)

Loss before income tax benefit and equity in net income of subsidiaries		(144	)		(121	)		(95	)
Income tax benefit		58			43			36

Loss before equity in net income of subsidiaries		(86	)		(78	)		(59	)
Equity in net income of subsidiaries:
Equity in undistributed net income of subsidiaries		662			600			478
Dividends from bank subsidiary		50			150			—
Dividends from non-bank subsidiaries		302			192			35

Net Income		928			864			454

Preferred stock dividends		45			—			—

Net Income Available to Common Stockholders	$	883		$	864		$	454

Condensed Balance Sheets


December 31,	2012		2011
Assets
Cash and cash equivalents	$	1,339	$	852
Receivables from subsidiaries		80		57
Other securities owned – at fair value		74		77
Loans to non-bank subsidiaries		404		363
Investment in non-bank subsidiaries		3,615		3,363
Investment in bank subsidiary		6,022		5,009
Other assets		88		68

Total assets	$	11,622	$	9,789

Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities	$	482	$	158
Payables to subsidiaries		14		16
Long-term debt		1,537		1,901

Total liabilities		2,033		2,075

Stockholders’ equity		9,589		7,714

Total liabilities and stockholders’ equity	$	11,622	$	9,789

Condensed Statements of Cash Flows


Year Ended December 31,	2012			2011			2010
Cash Flows from Operating Activities
Net income	$	928		$	864		$	454
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries		(662	)		(591	)		(478	)
Provision for deferred income taxes		9			3			3
Other		39			1			(3	)
Net change in:
Receivables from brokers, dealers, and clearing organizations		—			—			11
Other securities owned		3			6			422
Other assets		(21	)		26			40
Accrued expenses and other liabilities		(5	)		(76	)		(2	)

Net cash provided by operating activities		291			233			447


Cash Flows from Investing Activities
Due from subsidiaries – net		43			24			63
Increase in investments in subsidiaries		(307	)		(366	)		(1,025	)
Other investing activities		—			8			4

Net cash used for investing activities		(264	)		(334	)		(958	)


Cash Flows from Financing Activities
Issuance of commercial paper		300			—			—
Issuance of long-term debt		350			—			701
Repayment of long-term debt		(727	)		—			(200	)
Premium paid on debt exchange		(19	)		—			—
Net proceeds from preferred stock offering		863			—			—
Net proceeds from common stock offering		—			—			543
Dividends paid		(337	)		(295	)		(288	)
Proceeds from stock options exercised and other		35			96			35
Other financing activities		(5	)		3			(6	)

Net cash provided by (used for) financing activities		460			(196	)		785

Increase (Decrease) in Cash and Cash Equivalents		487			(297	)		274
Cash and Cash Equivalents at Beginning of Year		852			1,149			875

Cash and Cash Equivalents at End of Year	$	1,339		$	852		$	1,149