8-KRegulation FD

SCHWAB CHARLES CORP 8-K Report, Regulation FD Disclosure (Sep 29, 2008)

Filed September 29, 2008For Securities:SCHWSCHW-PDSCHW-PJ

Summary

This Form 8-K filing from The Charles Schwab Corporation (SCHW), dated September 29, 2008, addresses the impact of significant financial market turmoil on the company. In response to extraordinary events involving other financial services firms, Schwab disclosed its expectation to record other-than-temporary impairments in its Schwab Bank portfolio for the quarter ending September 30, 2008. Specifically, the company anticipates charges related to its holdings of Lehman Brothers Holdings, Inc. and Washington Mutual Bank (WaMu) senior floating rate notes.

Key Highlights

  • 1Schwab expects to record other-than-temporary impairments for the quarter ending September 30, 2008.
  • 2These impairments relate to corporate debt securities held in Schwab Bank's portfolio.
  • 3The company will record an estimated pre-tax charge of $40 million related to $50 million in Lehman Brothers Holdings, Inc. senior floating rate notes.
  • 4An estimated pre-tax charge of $35 million is expected for $39 million in Washington Mutual Bank (WaMu) senior floating rate notes.
  • 5The Lehman Brothers notes were valued at approximately 15% of par as of September 26, 2008, following Lehman's Chapter 11 bankruptcy.
  • 6The WaMu notes were valued at approximately 10% of par as of September 26, 2008, following the FDIC seizure of WaMu.
  • 7Schwab explicitly states it does not hold any debt securities issued by Merrill Lynch & Co., Inc. (Merrill) or American International Group, Inc. (AIG).

Frequently Asked Questions

This filing is primarily to disclose anticipated other-than-temporary impairments on certain corporate debt securities held by Schwab Bank due to the severe financial market events and the distress or bankruptcy of the issuers, Lehman Brothers and Washington Mutual Bank.

The company estimates a pre-tax charge of approximately $40 million related to Lehman Brothers debt and $35 million related to Washington Mutual Bank debt, totaling an estimated $75 million in pre-tax charges.

No, the filing explicitly states that The Charles Schwab Corporation does not hold any debt securities issued by Merrill Lynch & Co., Inc. (Merrill) or American International Group, Inc. (AIG).

The final amounts recorded will be based on the market value of these securities as of the end of the quarter (September 30, 2008).