The Charles Schwab Corporation Corporate Overview Data as of

The Charles Schwab Corporation Corporate Overview Data as of September 2004

The Charles Schwab Corporation Corporate Overview Table of Contents Page I. Description of Business 3 A. Mission, Vision and Values 6 B. Competitive Advantages 8 C. Strategic Priorities 16 D. Corporate Structure 19 II. Financial Management 26 III. Selected Financial and Operating Data 34 IV. Earnings Release and SMART Report 45 2

Description of Business 3

Description of Business Schwab is a distributor and manufacturer of financial services focusing on a core client base of individual investors and the investment advisors who serve them. The Company has the: vision and values, competitive advantages, strategic focus and corporate structure needed to remain an industry leader. 4

Description of Business The financial services marketplace is experiencing profound change. 75 million “baby boomers” are entering their prime saving and investing years. U.S. investable wealth is estimated at nearly 18 trillion. Social security is expected to lack adequate funding. Company-sponsored retirement plans have largely shifted from defined benefit to defined contribution. Clients are willing to use the PC and telephone to take charge of their personal investing, but many need guidance. 5

Description of Business Our Mission: “To provide the most useful and ethical financial services in the world.” 6

Description of Business Our vision is supported by a strong set of values. Vision: To be recognized by our service quality, investment insight and client relationships as the most trusted firm in the financial services business. To be fair, To respect and To always earn To strive empathetic, reinforce our and be worthy relentlessly to and colleagues of our innovate what responsive in and the spirit clients’ trust. we do and serving our of teamwork. how we do it. clients. 7

Description of Business Schwab has a distinct set of competitive advantages that make it uniquely capable of winning in the marketplace. Broad product line at a superior value National brand names Ability to combine people and technology in unique ways Full-choice model for the individual investor Continued significant insider ownership 8

Description of Business We offer clients access to a broad array of products, including: Stocks, Options and Futures Mutual Fund Marketplace OneSource, SchwabFunds - Money Market Funds, Stock & Bond Funds, Index Funds, Fund of Funds. Excelsior & Laudus. Certificates of Deposit (CDs) Bonds and Treasuries Corporate, Municipal, Mortgage-backed, Agencies, Bond funds. Preferred stocks, Unit Investment Trusts (UITs). Annuities and Term Life Insurance Managed Accounts 9

Description of Business Schwab also provides products and services that complement its core offerings. Asset Management Products and Services (AMPS) and Fixed Income continually look for ways to enhance the broad range of investment alternatives available to clients. Schwab’s Corporate Services (SCS) enterprise provides individuals with investment services and advice through their workplace. Schwab Bank provides access to mortgage, HELOC, deposit and credit card products. 1 0

Description of Business Our brands resonate well with the full spectrum of investors. Since 1Q99, we have ranked first or second for new account consideration among affluent investors. Investors with more than 100,000 in investable assets were asked which major brokerage firm they would most likely consider when opening an account.* U.S. Trust is the premier brand for the ultra high net worth, specializing in comprehensive wealth management, private banking and multi-generational relationships. We are recognized for the comprehensive services offered to self-directed clients. Watchfire GomezPro and Forbes have named us the #1 or #2 Online Broker since 1Q00 in recognition of our range of services, planning tools and research. *Source: Brand Tracking Survey 11

Description of Business Combining people and technology means: Providing multiple distribution channels. Clients can visit one of our 321 offices or access Schwab via telephonic, online and wireless channels. Schwab remains an online leader – 88% of our total trades are placed through online channels. Building scaleable product and service offerings while maintaining a competitive cost structure. Advice is offered through our branch network, call centers and online tools. Web-enabled tools, interactive web-based advice seminars, Marketplace internal Web site, Schwab Equity Ratings, solutions for investment advisors. Actively-trading investors have access to state of the art order entry, routing and management technology through Schwab and CyberTrader. 1 2

Description of Business Our ability to build a full-choice firm focused on the individual investor has made us the industry leader in gathering assets. Client Assets ( in billions) 1,000 750 500 250 Active Trader Services 0 Strategic Heritage Equity Transactions Lower Commissions Branch Network & 18 x 7 Service Market Access Mutual Fund Investing More Choice Independent Investment Advisors Affluent Advice & Relationships Schwab Personal Choice Online Investing Money Lower Management Commissions Direct Access Investment Insight Full Choice 1 3

Description of Business Schwab is supported by continued significant insider ownership. Data as of June 2004: Chuck Schwab and other Executive Committee members control over 260 million shares, or just under 20% of shares outstanding. Including other officers, employees and directors, insider ownership totals over 350 million shares, or 26% of shares outstanding. 1 4

Description of Business Leveraging our competitive advantages to win in the marketplace means gathering and retaining client assets through long-term relationships. Our fundamental strength indicators include: Net new client assets Total client assets New accounts 1 5

Description of Business Our strategic priorities currently include: Build and maintain our differentiation as the firm that delivers the most ethical and useful services in the world, with a focus on independent investors and the advisors who serve them. Improve the Company’s financial performance by enhancing the value delivered to clients, simplifying and streamlining the organization and expanding returns on capital. Combine people and technology to deliver high value, unconflicted investing, trading, and banking services. Add products where we can provide higher client value, increase our profitability, and mitigate our cyclicality. 1 6

Description of Business The strategic “blueprint” below illustrates how we think about our strategy overall, and how we evaluate our growth opportunities. More Services, Offers, Pricing Options, Advising Capabilities, Relationship Options Active (48 ) Core ( 50- 500k) Advisors Affluent ( 500k ) Advisors The Expanded “Core” Strengthening our Foundational Capabilities Adding New Investment Instruments and Banking Products 1 7

Description of Business Recent strategic progress includes: Schwab Personal Choice , launched in February 2004, provides investors with a full range of trading, investing and advice services tailored and priced to their needs and preferences. We reduced online equity trade commissions in June 2004. We also announced further price reductions in October 2004. Lower-cost trades are now available for individual investor and investment advisor clients based on either their household asset level or their trading activity. We launched Schwab Bank in April 2003 with an initial focus on mortgages, pledged-asset mortgages, HELOCs and deposits. Our banking offer is aimed at complementing our existing capabilities and facilitating household asset consolidation. Clients now have access to a VISA credit card. Our acquisition of State Street’s Private Asset Management group strengthens U.S. Trust’s presence in the New England wealth market. 1 8

Description of Business Schwab is structured as a set of enterprises. Segments Serve individual investors directly Serve individual investors indirectly Develop product solutions for all investors Client Enterprises Independent & Advised Investing Individual Investor Active Trader Global Dollar U.S. Trust U.S. Trust Institutional Investor Schwab Institutional Schwab Bank Corporate Services Fixed Income Administrative/Support Enterprises Schwab Technology Finance, Risk & Strategy Schwab Operations Marketing Asset Management Products and Services Human Resources Business Strategy 1 9

Description of Business that combine to form a full-choice financial services firm designed to meet the needs of all types of individual investors. Schwab Personal Choice Offers Active Trading Cyber Trader Schwab Signature Trading Independent Investing Tiered service levels Advised Investing Foundational Signature Schwab Private Client Self-Directed Schwab Advisor Network Validator U.S. Trust Delegator A La Carte Advice Schwab Comprehensive Consultation Schwab Personal Financial Plan Schwab Equity Compensation Consultation Schwab Retirement Consultation 2 0

Description of Business The Individual Investor Group utilizes multiple channels to serve actively trading and independent investors, as well as investors who seek some level of advice. Provide help and advice through 283 branch offices. 45% of new accounts are opened through our branch offices. 19 offices and our automated telephone system provide Chinese, Korean, Spanish and Vietnamese language services. Handle trades and account administration through four telephone service centers. Includes several electronic channels such as the website, TeleBroker , Schwab by Phone and wireless channels. Active traders have access to schwab.com, StreetSmart Pro and CyberTrader platforms. 32% of employees, 53% of revenues, 5.8 million active accounts 2 1

Description of Business Schwab Institutional provides over 5,000 independent fee-based investment advisory firms (IAs) with back-office business solutions. Includes securities brokerage, record keeping and additional services, such as transition support, along with market and regulatory updates. Partners with IAs through the Advisor Network referral service. Client assets associated with referral programs total 23 billion to-date. Promotes advisor growth by: Allowing them to outsource technology - Advisor branded web services, portfolio accounting, reconciliation and reporting. Expanding the wealth management services and investment alternatives available to IAs and their clients. – Working with U.S. Trust to develop the trust and private banking services, research and specialized products IAs need. 5% of employees, 17% of revenues, 1.3 million active sub-accounts 2 2

Description of Business Corporate Services serves individuals through their workplace. Leverages the brand, breadth, distribution and values of Schwab for the benefit of corporations and their employees. Combines retirement plan, equity compensation plan and retail group sales; provides a single point of contact and a seamless experience for plan participants. Offers 401(k) recordkeeping, advice and other retirement plan services directly through SchwabPlan and indirectly through alliances with third-party administrators. Assets in employer-sponsored retirement plans total 122 billion. Provides stock option plan administration to corporate clients and trade execution and education services to their employees. 5% of employees, 4% of revenues 2 3

Description of Business U.S. Trust provides investment management, fiduciary and private banking services to high net worth individuals and institutional clients. Provides premier client service to our most affluent clients and their families. Receives referrals from Schwab investment consultants. Combines Schwab’s high-tech capabilities with their traditional high-touch service to create a comprehensive set of wealth management services for emerging affluent and affluent investors. Serves clients through 38 offices located in most major wealth centers in the U.S. 17% of employees, 20% of revenues 2 4

Description of Business Asset Management Products and Services (AMPS) continually seeks to enhance our already broad range of investment alternatives. Manages Schwab’s relationship with third party mutual funds as well as proprietary SchwabFunds. Clients now have access to just under 1,900 third party funds from over 300 families, including nearly 1,100 OneSource funds. SchwabFunds include money market, bond, index and quantitativelyoriented equity funds, as well as our “fund of funds” and sector fund series. AXA Rosenberg adoption (Laudus) provides more choice. Continually explores expanding proprietary funds and developing research capabilities. Invests in the OneSource and Laudus brands. 2 5

Financial Management 2 6

Financial Management For Schwab, financial success means achieving superior growth rates and consistent margins. Annual Corporate Objectives Operating Revenue Growth After-tax Operating Profit Margin Return on Equity 20% 1998 - 2003 Average YTD September 2004 6% 10% 12% 12.5% 12.0% 20%14% 7% 2 7

Financial Management Schwab’s expense management is guided by an investment philosophy that continually balances long-term investment with short-term profitability. Development spending is adjusted but not stopped throughout market cycles which, in our experience, follow three different patterns: Seasonality Temporary Slowdowns Extended Slowdowns 2 8

Financial Management Schwab’s track record in managing its variable revenue stream. Seasonality slowdowns: Revenues Expenses After-Tax Margin 1Q94 288 224 13.3% 2Q94 258 205 12.4% % Change (10)% (8)% 2Q96 492 373 14.3% 3Q96 430 333 13.3% % Change (13)% (11)% 2002 4,091 3,442 10.0% 2003 4,070 3,291 12.0% % Change (1)% (4)% Temporary slowdowns (pre-election): Revenues Expenses After-Tax Margin Extended slowdowns: Revenues Expenses After-Tax Margin Note: Dollars in millions. Based on operating results. 1994 and 1996 data excludes U.S. Trust. 2 9

Financial Management The development spending evaluation process is a rigorous annual process, which is refined quarterly. The process includes: Alignment with our strategic focus. Peer review by finance executives. Evaluation using multiple benchmarks. Quarterly review of various projects by the Executive Committee. Review of projects after completion. 3 0

Financial Management What’s included in development spending? 2004 Plan Personal Choice, US Trust Personal Wealth Solutions, Fixed Income Initiatives, Corporate Services Initiatives, Banking Initiatives Revenue Productivity & Process Improvement (e.g., workflow enhancements, Imaging, New cost accounting system) 23% 55% 22% Productivity Compliance, Regulatory, Technology Enhancement Infrastructure Note: Development spending on this slide refers to “project” development only and excludes advertising and marketing. 3 1

Financial Management Schwab’s liquidity and capital management reflect a straightforward balance sheet. Size is driven by liabilities. Over 90% of the balance sheet is client-related. Credit balances are used to fund client activity. One complication: Cash and Equivalents does not equate to available Corporate resources. A substantial portion relates to ongoing operations (supporting margin loans). Trade Settlement. 3 2

Financial Management that does not require significant external funding. Substantial cash flow is used to support: Low, growth-oriented common stock dividend, Opportunistic, dilution-linked share repurchases, Debit-driven incremental capital requirements, Capital expenditures of about 5% of Net Revenues and Corporate acquisitions. Our A2/A- Medium Term Note program is used to provide flexibility and manage our cost of capital. 3 3

Selected Financial and Operating Data 3 4

Selected Financial & Operating Data Components of Client Assets 12/31/93 * 95.8 Billion Fixed Income Securities 10.0 OneSource 8.3 10% 9/30/04 1,000.9 Billion Schwab Money Market Funds & Schwab One 20.1 21% 9% Other Mutual Fund Marketplace 16.6 Other Mutual Fund Marketplace 103.6 Schwab Proprietary Funds 38.4 17% 1% Schwab Proprietary Funds 1.3 Mutual Fund Clearing Services 38.1 41% Equities 39.5 ** OneSource 114.5 11% Fixed Income Securities 155.7 16% 15% 10% Schwab Money Market Funds & Schwab One 149.7 4% 4% 40% Equities 400.9 ** * Excludes U.S. Trust ** Stocks Net of Margin Loans 3 5

Selected Financial & Operating Data Client Assets (billions) 1,200 Total Client Assets 1,000 (billions) 30 Net New Assets 1,000.9 (1) 25 800 768 20 600 18 15 (3) 13 400 10 (2) 200 5 0 0 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 (1) Includes 12 billion related to the acquisition of State Street Corporation’s Private Asset Management group. (2) Includes a one-time 6 billion outflow related to our mutual fund clearing business. (3) Includes a one-time 2 billion inflow related to our mutual fund clearing business. 3 6

Selected Financial & Operating Data Client Accounts (millions) 10 Total Client Accounts (000s) 250 New Accounts 9 8 7 7.8 7.4 200 184 6 150 5 4 114 100 3 2 50 1 0 0 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 3 7

Selected Financial & Operating Data Trading Activity Daily Average Revenue Trades Frequency Proxy* 250 8 7 150 6 134 5-year average frequency proxy 128 5 4 100 3.8 3 2.8 2 50 Frequency Proxy DART (000s) 200 1 0 0 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 * Annualized Revenue Trades per 100K in Average Client Assets. 3 8

Selected Financial & Operating Data Offices and Employees (end of period) 30 415 20 376 368 315 291 15 15.1 377 374 375 321 20.1 19.6 300 19.6 14.3 450 429 422 26.3 25 Offices Offices Full-Time Equivalents (000s) Full-Time Equivalents 16.3 16.9 16.7 14.8 10 225 150 1997 1998 1999 2000 2001 2002 2003 1Q04 2Q04 3Q04 3 9

Selected Financial & Operating Data Components of Net Revenues % of Total Revenues 3Q04 2Q04 1Q04 17% 23% 30% 29% 29% 29% 25% 29% 29% 2 2 2 2 2 3 3 2 3 19% 25% 32% 31% 31% 32% 28% 31% 32% Asset Management & Administration Fees 53% 50% 46% 47% 47% 46% 50% 46% 44% Net Interest Income 25 22 19 18 18 18 20 20 21 3 3 3 4 4 4 2 3 3 81% 75% 68% 69% 69% 68% 72% 69% 68% 100% 100% Commissions Principal Transactions Trading Related Other Non-trading Related Total 4Q03 3Q03 2Q03 1Q03 4Q02 3Q02 100% 100% 100% 100% 100% 100% 100% Note: Revenues have been restated to reflect Schwab Soundview Capital Markets and Charles Schwab Europe as discontinued operations in accordance with GAAP. 4 0

Selected Financial & Operating Data Operating Expenses as a % of Net Revenues % of Total Revenues 3Q04 2Q04 1Q04 4Q03 3Q03 2Q03 1Q03 4Q02 3Q02 Compensation & Benefits 46% 48% 42% 42% 43% 45% 43% 45% Occupancy & Equipment 10 10 9 10 11 11 12 12 11 Depreciation & Amortization 6 5 5 6 7 7 9 8 8 Communications 5 5 6 6 6 6 6 6 6 Professional Services 6 6 5 5 4 4 4 4 4 Advertising & Market Development 4 4 6 4 3 2 5 6 5 Commissions, Clearance & Floor Bkg. 1 1 1 1 1 1 1 1 1 4 82% 4 83% 3 79% 4 78% 3 77% 4 78% 4 86% 5 85% 4 84% Other Total 44% Note: Revenues and expenses have been restated to reflect Schwab Soundview Capital Markets and Charles Schwab Europe as discontinued operations in accordance with GAAP. 4 1

Selected Financial & Operating Data Operating Revenues, Expenses and Profitability Basis Points 150 % Expenses/Client Assets Revenues/Client Assets 20 Profit Margin 16 120 12 90 10.9% 10.4% 8 60 52bps 40 bps 33 bps 43 bps 30 3Q02 4 0 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 Note: Results exclude non-operating items, such as gains or losses from discontinued operations, a nonrecurring gain on the sale of an investment, restructuring charges, impairment charges, acquisition-related costs, as well as a non-recurring tax benefit. 4 2

Selected Financial & Operating Data Selected Cash Flow Data 2003 Net Income Depreciation/Amortization Non-cash restructuring and Impairment Charges Total 2002 2001 2000 1999 472 109 199 718 666 284312 404 307182 18 79 80 774500 683 1,025848 0 0 Capital Expenditures (86)(89) (222) (596)(302) Capitalized Software Development Costs (67)(71) (79) (109) (68) Debit Capital (207)295 671 72 (742) Free Cash Flow 414635 1,053 392 (264) Share Repurchases Dividends Paid Net Long-Term Borrowings (32)(299) (368) 0(54) (67)(60) (61) (62)(61) (100)(114) (40) 25299 4 3

Selected Financial & Operating Data Mutual Fund Market Share Based on Direct-Marketed Stock and Bond Funds Share of Assets Share of Net Flows 45% 16% 14.1% 14.3% 14.4% 14.6% 15.5% 15.5% 15.1% 15.0% 15.2% 39.1% 40% 34.9% 34.4% 35% 12% 30% 26.0% 25% 8% 25.7% 23.8% 24.3% 20% 15% 4% 10% 5% 0% 0% 3Q02 1Q03 3Q03 1Q04 3Q04 N/A 3Q02 N/A 1Q03 3Q03 1Q04 3Q04 Source: Strategic Insight/Mutual Funds Finance Note: Share Values Include Schwab Only 4 4