What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-24 · 507 added, 369 removed, 1906 unchanged (31% of the section changed)

66 unchanged sentences

Diluted $ 3.50 $ 2.83 $ 2.12

(1) Includes fee waivers of $ 326 million and $ 127 million for the years ended December 31, 2021 and 2020, respectively.

(2) For the years ended December 31, 2021 and 2020, the Company had voting and nonvoting common stock outstanding.

(1) Includes fee waivers of $ 57 million, $ 326 million, and $ 127 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) T he Company has voting and nonvoting common stock outstanding.

As the participation rights, including dividend and liquidation rights, are identical between the voting and nonvoting stock classes, basic and diluted earnings per share are the same for each class.

8 unchanged sentences

Change in net unrealized gain (loss) on available for sale securities:

Net unrealized gain (loss) ( 8,521 ) 6,961 430

Net unrealized gain (loss) excluding transfers to held to maturity ( 29,100 ) ( 8,521 ) 6,961

Reclassification of net unrealized loss transferred to held to maturity 18,228 — —

Other reclassifications included in other revenue 9 ( 4 ) ( 4 )

Change in net unrealized gain (loss) on held to maturity securities:

Reclassification of net unrealized loss transferred from available for sale ( 18,228 ) — —

Amortization of amounts previously recorded upon transfer to held to maturity

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Available for sale securities (amortized cost of $ 160,162 and $ 391,482 at December 31, 2022 and 2021, respectively;

including assets pledged of $ 41 at December 31, 2022)

147,871 390,054

Held to maturity securities (including assets pledged of $ 4,522 at December 31, 2022)

Bank loans — net 40,505 34,636

17 unchanged sentences

$ .01 par value per share;

1,994,895,180 shares issued at December 31, 2021 and 2020

2,023,295,180 and 1,994,895,180 shares issued at December 31, 2022 and 2021, respectively

Nonvoting common stock — 300 million shares authorized;

$ .01 par value per share;

79,293,695 shares issued at December 31, 2021 and 2020

50,893,695 and 79,293,695 shares issued at December 31, 2022 and 2021, respectively

Additional paid-in capital 27,075 26,741

10 unchanged sentences

Common Stock Additional

Capital Accumulated Other Comprehensive

Income (Loss)

Capital Accumulated Other Comprehensive Income (Loss)

Stock Common Stock Retained

4 unchanged sentences

Other comprehensive income (loss), net of tax — — — — — — — — 5,306 5,306

Acquisition of TD Ameritrade — 509 5 77 1 21,757 — ( 5 ) — 21,758

Issuance of preferred stock, net 4,940 — — — — — — — — 4,940

Dividends declared on preferred stock — — — — — — ( 240 ) — — ( 240 )

1 unchanged sentence

— — — — — — ( 1,040 ) — — ( 1,040 )

Repurchase of common stock — — — — — — — ( 2,220 ) — ( 2,220 )

Stock option exercises and other — — — — — ( 121 ) — 200 — 79

4 unchanged sentences

Other comprehensive income (loss), net of tax — — — — — — — — ( 6,503 ) ( 6,503 )

Acquisition of TD Ameritrade — 509 5 77 1 21,757 — ( 5 ) — 21,758

Issuance of preferred stock, net 2,806 — — — — — — — — 2,806

Redemption of preferred stock ( 585 ) — — — — — ( 15 ) — — ( 600 )

Dividends declared on preferred stock — — — — — — ( 456 ) — — ( 456 )

12 unchanged sentences

— — — — — — ( 1,592 ) — — ( 1,592 )

Repurchase of common stock — — — — — — — ( 2,435 ) — ( 2,435 )

Repurchase of nonvoting common stock — 15 — ( 15 ) — — — ( 1,000 ) — ( 1,000 )

Conversion of nonvoting common stock to common stock — 13 — ( 13 ) — — — — — —

Stock option exercises and other — — — — — ( 124 ) — 188 — 64

14 unchanged sentences

Provision (benefit) for deferred income taxes ( 18 ) 53 ( 138 )

Premium amortization, net, on available for sale securities 2,346 1,586 446

Premium amortization, net, on available for sale and held to maturity securities 1,375 2,346 1,586

Other 490 372 349

10 unchanged sentences

Principal payments on available for sale securities 49,944 94,912 63,247

Purchases of held to maturity securities — — ( 19,441 )

Principal payments on held to maturity securities 15,712 — —

5 unchanged sentences

Purchases of Federal Reserve stock ( 106 ) ( 245 ) ( 191 )

Proceeds from sales of Federal Reserve stock 197 — —

Other investing activities ( 136 ) ( 143 ) 15

3 unchanged sentences

Proceeds from commercial paper and secured lines of credit 1,900 11,107 1,234

Repayment of commercial paper and secured lines of credit ( 6,255 ) ( 1,234 ) ( 1,400 )

Issuance of long-term debt 7,036 3,070 593

Repayment of long-term debt ( 1,822 ) ( 700 ) —

Repurchases of common stock — — ( 2,220 )

Repayments of commercial paper and secured lines of credit ( 6,511 ) ( 6,255 ) ( 1,234 )

Net change in other short-term borrowings 16,802 — —

Issuances of long-term debt 2,971 7,036 3,070

Repayments of long-term debt ( 1,036 ) ( 1,822 ) ( 700 )

Repurchases of common stock and nonvoting common stock ( 3,395 ) — —

Net proceeds from preferred stock offerings 740 2,806 4,940

14 unchanged sentences

Securities transferred from held to maturity to available for sale, at fair value $ — $ — $ 136,099

Additions of equipment, office facilities, and property $ 125 $ 110 $ 45

Securities transferred from available for sale to held to maturity, at fair value $ 188,555 $ — $ —

Changes in accrued equipment, office facilities, and property purchases $ ( 19 ) $ 125 $ 110

Acquisition of TD Ameritrade $ — $ — $ 21,758

Non-cash financing activity:

Extinguishment of finance lease obligation through an assignment agreement $ — $ — $ 52

Common stock repurchased during the period but settled after period end $ 40 — $ —

Other Supplemental Cash Flow Information

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These estimates are based on information available as of the date of the consolidated financial statements.

While management makes its best judgment, actual amounts or results could differ from those estimates.

While management makes its best judgment, actual amounts or results could differ from these estimates.

Certain estimates relate to taxes on income, legal and regulatory reserves, and fair values of assets acquired and liabilities assumed, as well as goodwill recognized, in business combinations.

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Investments in entities for which Schwab does not apply the equity method are generally carried at cost and adjusted for impairment and observable price changes of the identical or similar investments of the same issuer (adjusted cost method), except for certain investments in qualified affordable housing projects which are accounted for under the proportional amortization method.

All equity method,

All equity method, adjusted cost method, and proportional amortization method investments are included in other assets on the consolidated balance sheets.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

adjusted cost method, and proportional amortization method investments are included in other assets on the consolidated balance sheets.

Summary of Significant Accounting Policies

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Commissions revenue is earned when the trades are executed and collected when the trades are settled.

Order flow revenue is comprised of rebate payments received from execution venues to which our broker-dealer subsidiaries send equity and option orders.

Order flow revenue is comprised of payments received from trade execution venues to which our broker-dealer subsidiaries send equity and option orders.

Order flow revenue is recognized when the trades are executed and is collected on a monthly or quarterly basis.

5 unchanged sentences

Other revenue

Other revenue includes exchange processing fees, certain service fees, software fees, and non-recurring gains.

Other revenue includes exchange processing fees, service fees, and other gains and losses from the sale of assets.

Generally, the most significant portion of other revenue is exchange processing fees, which are comprised of fees the Company’s broker-dealer subsidiaries charge clients to offset the exchange processing fees imposed on us by third-parties.

Exchange processing fees are earned and collected when the trade is executed and are recognized gross of amounts remitted to the third-parties, which are included in other expenses.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Unsatisfied performance obligations

1 unchanged sentence

The practical expedient applies to and is elected for contracts where we recognize revenue at the amount to which we have the right to invoice for services performed.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Cash and cash equivalents

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Cash and investments segregated and on deposit for regulatory purposes

Pursuant to Rule 15c3-3 of the Securities Exchange Act of 1934 and other applicable regulations, Schwab maintains cash or qualified securities in segregated reserve accounts for the exclusive benefit of clients.

Cash and investments segregated and on deposit for regulatory purposes include resale agreements, which are collateralized by U.S.

Government and agency securities.

Resale agreements are accounted for as collateralized financing transactions that are recorded at their contractual amounts plus accrued interest.

Under these resale agreements, the Company obtains collateral with a market value equal to or in excess of the principal amount loaned and the interest accrued.

Collateral is valued daily by the Company, with additional collateral obtained to ensure full collateralization.

Cash and investments segregated also include certificates of deposit and U.S.

Pursuant to the Customer Protection Rule and other applicable regulations, Schwab maintains cash or qualified securities in segregated reserve accounts for the exclusive benefit of clients.

Cash and investments segregated and on deposit for regulatory purposes include resale agreements, certificates of deposit, and U.S.

Government securities.

See Resale and repurchase agreements below in this Note 2 for further information on the resale agreements.

Certificates of deposit and U.S.

Government securities are recorded at fair value and unrealized gains and losses are included in earnings.

Schwab applies the practical expedient based on collateral maintenance provisions under ASC 326 Financial Instruments – Credit Losses (ASC 326), in estimating an allowance for credit losses for resale agreements.

This practical expedient can be applied for financial assets with collateral maintenance provisions requiring the borrower to continually adjust the amount of the collateral securing the financial assets as a result of fair value changes in the collateral.

In accordance with the practical expedient, when the Company reasonably expects that borrowers (or counterparties, as applicable) will replenish the collateral as required, there is no expectation of credit losses when the collateral’s fair value is greater than the amortized cost of the financial asset.

If the amortized cost exceeds the fair value of collateral, then credit losses are estimated only on the unsecured portion.

Receivables from brokerage clients

Receivables from brokerage clients include margin loans to securities brokerage clients and other trading receivables from clients.

Receivables from brokerage clients include margin loans and other trading receivables from brokerage clients.

Margin loans are collateralized by client securities and are carried at the amount receivable, net of an allowance for credit losses.

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The Company monitors margin levels and requires clients to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes.

Schwab applies the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for margin loans.

If the amortized cost exceeds the fair value of collateral, then credit losses are estimated only on the unsecured portion.

An allowance for credit losses on unsecured or partially secured receivables from brokerage clients is estimated based on the aging of those receivables.

Unsecured balances due to confirmed fraud are reserved immediately.

The Company’s policy is to charge off any delinquent margin loans, including the accrued interest on such loans, no later than at 90 days past due.

The Company’s policy is to charge off any unsecured margin loans, including the accrued interest on such loans, no later than at 90 days past due.

Accrued interest charged off is recognized as credit loss expense and is included in other expenses in the consolidated statements of income.

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Client-held fractional shares are included in other securities owned for client positions for which off-balance sheet treatment pursuant to ASC 940 Financial Services – Brokers and Dealers is not applicable and the derecognition criteria in ASC 860 Transfers and Servicing, are not met.

These client-held fractional shares have related repurchase liabilities that are accounted for at fair value

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

with unrealized gains and losses included in earnings.

These client-held fractional shares have related repurchase liabilities that are accounted for at fair value with unrealized gains and losses included in earnings.

See Fair values of assets and liabilities below in this Note 2 for further information on these repurchase liabilities.

AFS investment securities

Investment securities

AFS investment securities are recorded at fair value and unrealized gains and losses, other than losses related to credit factors, are reported, net of taxes, in AOCI included in stockholders’ equity.

HTM investment securities are recorded at amortized cost, net of any allowance for credit losses, based on the Company’s positive intent and ability to hold these securities to maturity.

Realized gains and losses from sales of AFS investment securities are determined using the specific-identification method and are included in other revenue.

Interest income is recognized using the effective interest method based on the contractual terms of the security.

Interest income on investment securities is recognized using the effective interest method based on the contractual terms of the security.

Where applicable, prepayments are accounted for as they occur (i.e., prepayments are not estimated).

Accrued interest receivable for AFS and HTM investment securities are included in other assets in the Company’s consolidated balance sheets.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

An AFS investment security is impaired if the fair value of the security is less than its amortized cost basis.

Management evaluates AFS investment securities with unrealized losses to determine whether the security impairment has resulted from a credit loss or other factors.

Management evaluates AFS investment securities with unrealized losses to determine whether the security’s impairment has resulted from a credit loss or other factors.

This evaluation is performed quarterly on an individual security basis.

The evaluation of whether credit loss exists is inherently judgmental.

The evaluation of whether the AFS security impairment has resulted from a credit loss is inherently judgmental.

This evaluation considers multiple factors including:

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If management determines that the impairment of an AFS investment security (or a portion of the impairment) is related to credit losses, an allowance for credit losses is recorded for that security through a charge to earnings.

The allowance for credit losses is measured as the difference between the amortized cost and the present value of expected cash flows and is limited to the difference between amortized cost and the fair value of the security.

The allowance for credit losses on AFS investment securities is measured as the difference between the amortized cost and the present value of expected cash flows and is limited to the difference between amortized cost and the fair value of the security.

The Company estimates credit losses on a discounted cash flow basis using the security’s effective interest rate.

Changes in the allowance for credit losses are recorded through earnings in the period of the change.

If it is determined that the Company intends to sell the impaired security or if it is more likely than not that the Company will be required to sell the security before any anticipated recovery of the amortized cost basis, any allowance for credit losses of that security will be written off and the amortized cost basis of the security will be written down to fair value with any incremental impairment recorded through earnings.

The Company excludes accrued interest from the fair value and the amortized cost basis of the AFS investment securities for the purposes of identifying and measuring impairment of the securities.

AFS investment securities are placed on nonaccrual status on a timely basis and any accrued interest receivable is reversed through interest income.

The Company separately evaluates its HTM investment securities for any expected credit losses.

If HTM investment securities share risk characteristics, management evaluates those securities on a collective basis.

An allowance for credit losses is recorded through a charge to earnings based on an estimate of current expected credit losses over the remaining expected lives of the HTM investment securities.

Management reviews the allowance for credit losses quarterly, taking into consideration current conditions, reasonable and supportable forecasts, past events, and historical experience that affect the expected collectability of the reported amounts.

For the purposes of identifying and measuring impairment of AFS investment securities and for the purposes of estimating the allowance for credit losses on all investment securities, the Company excludes accrued interest from the amortized cost basis and when applicable, the fair value, of investment securities.

Changes in the allowance for credit losses on investment securities are recorded through earnings in the period of the change.

For some of the AFS and HTM investment securities the Company has an expectation that nonpayment of the amortized cost basis is zero based on a long history with no credit losses and considering current conditions and reasonable and supportable forecasts.

This applies to a limited set of securities that are guaranteed by the U.S.

Treasury, U.S.

government agencies, and sovereign entities of high credit quality.

The expectation that nonpayment of the amortized cost basis is zero is continually reevaluated.

AFS and HTM investment securities are placed on nonaccrual status on a timely basis and any accrued interest receivable is reversed through interest income.

Resale and repurchase agreements

Resale and repurchase agreements are accounted for as collateralized financing transactions with a receivable or payable recorded at their contractual amounts plus accrued interest.

Schwab’s resale agreements are typically collateralized by U.S.

Government and agency securities and the receivable is included in cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets.

Securities received under resale agreements are not recorded on the consolidated balance sheets.

Securities transferred to counterparties under repurchase agreements continue to be recognized on the Company’s consolidated balance sheets in the respective financial statement line item and at the respective measurement basis.

Payables for repurchase agreements are included in short-term borrowings on the consolidated balance sheets.

The Company monitors its collateral requirements under these agreements daily and collateral is adjusted to ensure full collateralization.

Interest received or paid is recorded in interest revenue or interest expense, respectively.

Schwab applies the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for resale agreements.

Securities borrowed and securities loaned

Securities borrowing and lending transactions are accounted for as collateralized financing transactions.

Securities borrowed transactions require Schwab to deliver cash to the lender in exchange for securities;

the receivables from these transactions are included in other assets on the consolidated balance sheets.

the receivables from these transactions are

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

included in other assets on the consolidated balance sheets.

For securities loaned, Schwab receives collateral in the form of cash in an amount equal to or greater than the market value of securities loaned;

10 unchanged sentences

We use these segments when developing and documenting our methodology for determining the allowance for credit losses.

The residential real estate portfolio segment is

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

divided into two classes of financing receivables for purposes of monitoring and assessing credit risk:

The residential real estate portfolio segment is divided into two classes of financing receivables for purposes of monitoring and assessing credit risk:

First Mortgages and HELOCs.

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Loss severity (i.e., loss given default) estimates are based on our historical loss experience and market trends, both current and forecasted.

The loss severity estimate used in the allowance for credit loss methodology for HELOCs is higher than that used in the methodology for First Mortgages.

Housing price trends are derived from historical home price indices and econometric forecasts of future home values.

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The liability for expected credit losses on these commitments and related activity were immaterial for all periods presented.

Schwab considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be troubled debt restructurings (TDRs).

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Nonaccrual, nonperforming and impaired loans

2 unchanged sentences

When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the loan is accounted for on the cash or cost recovery method until qualifying for return to accrual status.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Generally, a nonaccrual loan may be returned to accrual status when all delinquent interest and principal is repaid and the borrower demonstrates a sustained period of performance, or when the loan is both well-secured and in the process of collection and collectability is no longer doubtful.

3 unchanged sentences

Our charge-off policy for First Mortgage and HELOC loans is to assess the value of the property when the loan has been delinquent for 180 days or has been discharged in bankruptcy proceedings, regardless of whether the property is in foreclosure, and charge off the amount of the loan balance in excess of the estimated current value of the underlying property less estimated costs to sell.

The Company’s policy for PALs is to charge off any delinquent loans no later than at 90 days past due.

The Company’s policy for PALs is to charge off any unsecured balances no later than at 90 days past due.

Equipment, office facilities, and property

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A qualitative assessment considers macroeconomic and other industry-specific factors, such as trends in short-term and long-term interest rates and the ability to access capital, and Company specific factors such as market capitalization in excess of net assets, trends in revenue generating activities, and merger or acquisition activity.

If the Company elects to bypass qualitatively assessing goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, management estimates the fair values of each of the Company’s reporting units (defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compares it to their carrying values.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis.

The estimated fair values of the reporting units are established using an income approach based on a discounted cash flow model that includes significant assumptions about the future operating results and cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis.

Intangible assets

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Unfunded commitments related to LIHTC investments are included in accrued expenses and other liabilities on the consolidated balance sheets.

The Company primarily has operating leases for corporate offices, branch locations, and server equipment and determines if an arrangement is a lease at inception.

Leases primarily consist of operating leases for corporate offices, branch locations, and server equipment.

We determine if an arrangement is a lease at inception.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

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Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

At the commencement date, we determine classification as either an operating lease or finance lease and the ROU asset and lease liability is recognized based on the present value of lease payments over the lease term.

The lease liability may include payments that depend on a rate or index (such as the Consumer Price Index), measured using the rate or index at the commencement date.

1 unchanged sentence

These payments are not recognized as part of the lease liability and are expensed in the period incurred.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The amortization of finance lease ROU assets and the interest expense on finance lease liabilities are recognized over the lease term.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We have lease agreements with lease and non-lease components.

For the majority of our leases (real estate leases), the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component.

We have not elected the practical expedient for equipment leases and account for lease and non-lease components separately for those classes of leases.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

We have lease agreements with lease and non-lease components.

For the majority of our leases (real estate leases), the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component.

We have not elected the practical expedient for equipment leases and account for lease and non-lease components separately for that class of leases.

As the rates implicit in our leases are not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

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Schwab measures compensation expense for these share-based payment arrangements based on their estimated fair values as of the grant date.

The fair value of the share-based award is recognized over the service period as share-based compensation.

The grant date fair value is amortized to compensation expense on a straight-line basis over the requisite service period.

Share-based compensation expense is based on options or units expected to vest and therefore is reduced for estimated forfeitures.

1 unchanged sentence

Share-based compensation expense is adjusted in subsequent periods if actual forfeitures differ from estimated forfeitures.

For share-based payment awards with performance conditions, management assesses and estimates their expected level of achievement.

Share-based compensation expense is recognized based on the level of achievement deemed probable and changes in the estimated outcome are reflected as a cumulative adjustment to expense in the period of the change in estimate.

The excess tax benefits or deficiencies from the exercise of stock options and the vesting of restricted stock units are recorded in taxes on income.

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Where inputs used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety.

Assessing the significance of a particular input requires judgment.

The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

• Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets,

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.

the significance of a particular input requires judgment.

The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

• Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

1 unchanged sentence

Schwab’s assets and liabilities measured at fair value on a recurring basis include:

certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, and certain other assets and accrued expenses and other liabilities.

certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, certain other assets, and accrued expenses and other liabilities.

The Company uses the market approach to determine the fair value of assets and liabilities.

22 unchanged sentences

The repurchase liabilities are included in accrued expenses and other liabilities on the consolidated balance sheet.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

New Accounting Standards

Adoption of New Accounting Standards

No new accounting standards that are material to the Company were adopted during the year ended December 31, 2022.

There are currently no new accounting standards not yet adopted that are material to the Company.

New Accounting Standards Not Yet Adopted

Standard Description Required Date of Adoption Effects on the Financial Statements or Other Significant Matters

Accounting Standards Update (ASU) 2022-02, “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” Troubled Debt Restructurings (TDRs)

Eliminates the accounting guidance for TDRs.

Rather than applying the specific guidance for TDRs, creditors will apply the recognition and measurement guidance for loan refinancings and restructurings to determine whether a modification results in a new loan or a continuation of an existing loan.

The guidance requires enhanced disclosures for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Vintage Disclosures

Requires that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.

Adoption provides for prospective application, with an option to apply the modified retrospective transition method for the change in recognition and measurement of TDRs.

January 1, 2023 The Company adopted this guidance prospectively on January 1, 2023.

As such, there was no impact to the Company’s consolidated financial statements upon initial adoption.

Adopting this guidance changed the Company’s accounting treatment for the loan modifications in scope of ASU 2022-02 prospectively from the adoption date.

The Company’s vintage disclosures in Note 7, Bank Loans and Related Allowance for Credit Losses, will be updated prospectively to include gross write offs.

Business Acquisitions

TD Ameritrade

On October 6, 2020 Schwab completed its previously announced acquisition of TD Ameritrade for $ 21.8 billion in stock.

On October 6, 2020, Schwab completed its acquisition of TD Ameritrade for $ 21.8 billion in stock.

As a result of the acquisition, TDA Holding became a wholly-owned subsidiary of CSC.

TD Ameritrade provides securities brokerage services, including trade execution, clearing services, and margin lending, through its broker-dealer subsidiaries,

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

and futures and foreign exchange trade execution services through its FCM and FDM subsidiary.

TD Ameritrade provides securities brokerage services, including trade execution, clearing services, and margin lend ing;

a nd futures and foreign exchange trade execution services.

In exchange for each share of TD Ameritrade common stock, TD Ameritrade stockholders received 1.0837 shares of CSC common stock, except for TD Bank and its affiliates which received a portion in nonvoting common stock.

In connection with the transaction, Schwab issued approximately 586 million common shares to TD Ameritrade stockholders consisting of approximately 509 million shares of common stock and approximately 77 million shares of nonvoting common stock, as described below.

Subsequently, TD Bank and its affiliates exchanged common stock for nonvoting common stock and held approximately 79 million shares of nonvoting common stock as of December 31, 2021.

For further details on the new class of nonvoting common stock, see Note 19.

For further details on nonvoting common stock, see Note 19.

The fair value of the purchase price transferred upon completion of the acquisition includes the fair value of CSC common stock and nonvoting common stock that was issued to TD Ameritrade stockholders, as well as the fair value of assumed TD Ameritrade equity awards attributable to pre-combination services.

6 unchanged sentences

The portion of the fair value of the share-based awards that relates to services performed by the employees prior to the acquisition date is included in the purchase price.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The Company accounted for the TD Ameritrade acquisition as a business combination under GAAP and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values, except for certain exceptions to the recognition principle of acquisition accounting, such as leases, share-based payments, and income taxes, as of the date of acquisition.

18 unchanged sentences

Goodwill $ 10,215

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The identifiable tangible and intangible assets of $ 470 million and $ 8.9 billion, respectively, are subject to depreciation and amortization.

16 unchanged sentences

The goodwill assigned to the Investor Services and Advisor Services segments were $ 6.4 billion and $ 3.8 billion, respectively.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The Company’s consolidated statements of income include total net revenues and net income attributable to the TD Ameritrade acquisition of $ 1.7 billion and $ 583 million, respectively, for the period October 6, 2020 through December 31, 2020.

In connection with the TD Ameritrade acquisition, the Company incurred various professional fees and other costs such as advisory, legal, and accounting fees.

In total, the Company incurred acquisition costs of $ 56 million and $ 11 million for the years ended December 31, 2020 and 2019, respectively, which are primarily included in professional services on the consolidated statements of income.

In total, the Company incurred acquisition costs of $ 56 million for the year ended December 31, 2020, which are primarily included in professional services on the consolidated statement of income.

On May 26, 2020, the Company completed its acquisition of the assets of USAA-IMCO for $ 1.6 billion in cash.

5 unchanged sentences

The Company finalized the valuation of assets and liabilities during the three months ended December 31, 2020, resulting in no additional adjustments to the estimated fair values as of the date of acquisition.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The following table summarizes the purchase price, fair values of the assets acquired and liabilities assumed, and resulting goodwill as of the May 26, 2020 acquisition date, adjusted for the post-closing adjustments described above:

18 unchanged sentences

(1) The brokerage referral agreement has an initial term of 5 years and is automatically renewable for one-year increments thereafter.

Goodwill recorded of $ 472 million, primarily attributable to the additional scale and anticipated synergies from the USAA-IMCO acquisition, was assigned to the Investor Services segment and is deductible for tax purposes.

Goodwill of $ 472 million, primarily attributable to the additional scale and anticipated synergies from the USAA-IMCO acquisition, was assigned to the Investor Services segment and is deductible for tax purposes.

The Company’s consolidated statements of income include total net revenues and net loss attributable to the USAA-IMCO acquisition of $ 235 million and $ 51 million, respectively, for the period May 26, 2020 through December 31, 2020.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

In connection with the acquisition, the Company agreed to reimburse USAA for certain contract termination and other fees and severance costs incurred by USAA.

1 unchanged sentence

Additionally, the Company incurred various professional fees and other costs related to the USAA-IMCO acquisition, such as advisory, legal, and accounting fees.

In total, the Company incurred acquisition costs of $ 54 million and $ 14 million for the years ended December 31, 2020 and 2019, respectively, which are primarily included in professional services, other expense, and compensation and benefits on the consolidated statements of income.

In total, the Company incurred acquisition costs of $ 54 million for the year ended December 31, 2020, which are primarily included in professional services, other expense, and compensation and benefits on the consolidated statement of income.

Pro Forma Financial Information (Unaudited)

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The unaudited pro forma results reflect after-tax adjustments for acquisition costs, amortization and depreciation of acquired intangible and tangible assets, the impact of the amended IDA agreement which reduced the service fee on client cash deposits held at the TD Depository Institutions to 15 basis points from the 25 basis points paid by TD Ameritrade under its previous IDA agreement, and other immaterial adjustments for the effects of purchase accounting, and do not reflect potential revenue growth or cost savings that may be realized as a result of the acquisitions.

Pro forma net income for the year ended December 31, 2020 excludes after-tax acquisition costs for both Schwab and the acquirees of $ 156 million.

These costs and after-tax acquisition costs of $ 40 million incurred in 2019 by Schwab and the acquirees are included in pro forma net income for the year ended December 31, 2019.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

In accordance with ASC 805 Business Combinations , pro forma net income for the year ended December 31, 2020 excludes after-tax acquisition costs for both Schwab and the acquirees of $ 156 million.

The unaudited pro forma financial information is presented for informational purposes only, and is not necessarily indicative of future operations or results had the TD Ameritrade and USAA-IMCO acquisitions been completed as of January 1, 2019.

1 unchanged sentence

Net income available to common stockholders 4,617

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Revenue Recognition

48 unchanged sentences

Payables to brokerage clients $ 97,438 $ 125,671

(1) The allowance for credit losses for receivables from brokerage clients and related activity were immaterial for all periods presented.

(1) The allowance for credit losses for receivables from brokerage clients and related activity was immaterial for all periods presented.

At December 31, 2022 and 2021, approximately 17 % of total CS&Co and TD Ameritrade, Inc.

4 unchanged sentences

Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS investment securities are as follows:

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS and HTM investment securities are as follows:

December 31, 2022 Amortized

8 unchanged sentences

13,830 — 1,275 12,555

state and municipal securities 1,611 81 5 1,687

Non-agency commercial mortgage-backed securities 1,170 20 — 1,190

Certificates of deposit 2,245 — 14 2,231

Foreign government agency securities 1,033 — 64 969

Commercial paper 200 — — 200

state and municipal securities 713 — 75 638

Non-agency commercial mortgage-backed securities 473 — 23 450

Other 323 — 8 315

Total available for sale securities (3)

$ 160,162 $ — $ 12,291 $ 147,871

Held to maturity securities

agency mortgage-backed securities $ 173,074 $ 1,442 $ 15,580 $ 158,936

Total held to maturity securities $ 173,074 $ 1,442 $ 15,580 $ 158,936

December 31, 2021

1 unchanged sentence

agency mortgage-backed securities $ 335,803 $ 3,141 $ 4,589 $ 334,355

Treasury securities 21,394 13 125 21,282

Asset-backed securities (1)

2 unchanged sentences

12,310 143 109 12,344

Treasury securities 10,631 25 — 10,656

state and municipal securities 1,611 81 5 1,687

Foreign government agency securities 1,411 2 — 1,413

Non-agency commercial mortgage-backed securities 1,170 20 — 1,190

Certificates of deposit 1,000 — 1 999

Foreign government agency securities 425 — — 425

Commercial paper 200 — — 200

Other 22 4 — 26

2 unchanged sentences

Asset-backed securities collateralized by credit card receivables represented approximately 18 % and 30 % of the asset-backed securities held as of December 31, 2022 and 2021, respectively.

(2) As of December 31, 2021 and 2020 approximately 31 % and 46 %, respectively of the total AFS in corporate debt securities were issued by institutions in the financial services industry.

On January 1, 2019 the Company transferred certain U.S.

agency mortgage-backed securities with a fair value of $ 8.8 billion from the HTM category to the AFS category as permitted by ASU 2017-12, “ Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12).

This transfer resulted in a net of tax increase to AOCI of $ 19 million.

In October 2019, the Federal Reserve issued a final enhanced prudential standards rule, and the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC jointly issued a final regulatory capital and liquidity rule.

With total consolidated assets of $ 294.0 billion at December 31, 2019, CSC was designated as a Category III firm pursuant to the framework established by the final rules.

Accordingly, the Company opted to exclude AOCI from its regulatory capital as permitted by the regulatory capital and liquidity rule beginning January 1, 2020.

In accordance with ASC 320 Investment – Debt Securities and as of January 1, 2020, the Company transferred all of its investment securities designated as HTM to the AFS category without tainting our intent to hold other debt securities to maturity.

At the date of transfer, these securities had a total amortized cost of $ 134.7 billion and a total net unrealized gain of $ 1.4 billion.

(2) As of December 31, 2022 and 2021, approximately 37 % and 31 %, respectively, of the total AFS corporate debt securities were issued by institutions in the financial services industry.

(3) Included in cash and cash equivalents on the condensed consolidated balance sheets, but excluded from this table, is $ 48 million of AFS commercial paper as of December 31, 2022 ( none as of December 31, 2021).

These holdings have maturities of three months or less at the time of acquisition, and an aggregate market value equal to amortized cost.

In January and November 2022, the Company transferred $ 108.8 billion and $ 79.8 billion, respectively, of U.S.

agency mortgage-backed securities with a total net unrealized loss at the time of transfer of $ 2.4 billion and $ 15.8 billion, respectively, from the AFS category to the HTM category.

At December 31, 2022, our banking subsidiaries had pledged securities with a fair value of $ 63.1 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13).

Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

In January 2022, the Company transferred $ 108.8 billion of U.S.

agency mortgage-backed securities with a total net unrealized loss at the time of transfer of $ 2.4 billion from the AFS category to the HTM category.

At December 31, 2021, our banking subsidiaries had pledged securities with a fair value of $ 49.6 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13).

Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $ 12.0 billion as collateral for this facility at December 31, 2021.

fair value of $ 7.8 billion as collateral for this facility at December 31, 2022.

The Company also pledges securities issued by federal agencies to secure certain trust deposits.

The fair value of these pledged securities was $ 1.3 billion at December 31, 2022.

At December 31, 2022, our banking subsidiaries had pledged HTM and AFS securities as collateral under repurchase agreements with external financial institutions.

HTM securities pledged were U.S.

agency mortgage-backed securities with an aggregate amortized cost of $ 4.5 billion, and AFS securities pledged were U.S.

Treasury securities with an aggregate fair value of $ 41 million.

Securities pledged as collateral under these repurchase agreements may be sold, repledged, or otherwise used by the counterparties.

See Notes 2, 13, and 17 for additional information on these repurchase agreements.

Securities with unrealized losses, aggregated by category and period of continuous unrealized loss, of AFS investment securities are as follows:

11 unchanged sentences

Certificates of deposit 2,033 10 196 4 2,229 14

Foreign government agency securities 756 50 214 14 970 64

state and municipal securities 482 31 157 44 639 75

Non-agency commercial mortgage-backed securities 443 23 — — 443 23

Other 315 8 — — 315 8

Total $ 81,299 $ 3,622 $ 65,941 $ 8,669 $ 147,240 $ 12,291

2 unchanged sentences

agency mortgage-backed securities $ 186,955 $ 3,216 $ 38,007 $ 1,373 $ 224,962 $ 4,589

Treasury securities 16,658 125 21 — 16,679 125

Asset-backed securities 6,093 58 2,708 22 8,801 80

Corporate debt securities 4,713 99 197 10 4,910 109

Certificates of deposit 799 1 — — 799 1

state and municipal securities 191 4 5 1 196 5

Total $ 215,409 $ 3,503 $ 40,938 $ 1,406 $ 256,347 $ 4,909

7 unchanged sentences

None of the Company’s AFS securities held as of December 31, 2022 and 2021 had an allowance for credit losses.

Prior to the Company’s adoption of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (ASU 2016-13) on January 1, 2020, no amount was recognized as other-than-temporary impairment in earnings or other comprehensive income during the year ended December 31, 2019.

The Company had $ 683 million and $ 634 million of accrued interest receivable as of December 31, 2021 and 2020, respectively, for AFS securities.

These amounts are excluded from the amortized cost basis of AFS securities and included in other assets on the consolidated balance sheets.

There were no write-offs of accrued interest receivable on AFS securities during the years ended December 31, 2021 and 2020.

All HTM securities as of December 31, 2022 were U.S.

agency mortgage-backed securities and therefore had no allowance for credit losses because expected nonpayment of the amortized cost basis is zero.

The Company had $ 685 million of accrued interest receivable for AFS and HTM securities as of December 31, 2022 and $ 683 million of accrued interest receivable for AFS securities as of December 31, 2021.

These amounts are excluded from the amortized cost basis and fair market value of AFS and HTM securities and included in other assets on the consolidated balance

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

There were no write-offs of accrued interest receivable on AFS and HTM securities during the year ended December 31, 2022, or for AFS securities for the year ended December 31, 2021.

In the table below, mortgage-backed securities and other asset-backed securities have been allocated to maturity groupings based on final contractual maturities.

As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below.

The maturities of AFS investment securities are as follows:

The maturities of AFS and HTM investment securities are as follows:

December 31, 2022 Within

3 unchanged sentences

10 years Total

Available for sale securities

agency mortgage-backed securities $ 1,202 $ 14,515 $ 14,721 $ 47,250 $ 77,688

2 unchanged sentences

Corporate debt securities 382 9,138 3,035 — 12,555

state and municipal securities 23 150 1,010 504 1,687

Non-agency commercial mortgage-backed securities — — — 1,190 1,190

Certificates of deposit 2,134 97 — — 2,231

Foreign government agency securities — 969 — — 969

Commercial paper 200 — — — 200

state and municipal securities 37 30 417 154 638

Non-agency commercial mortgage-backed securities — — — 450 450

Other 295 — — 20 315

3 unchanged sentences

2.27 % 1.94 % 1.99 % 2.29 % 2.13 %

Held to maturity securities

agency mortgage-backed securities $ 409 $ 5,441 $ 38,888 $ 114,198 $ 158,936

Total fair value $ 409 $ 5,441 $ 38,888 $ 114,198 $ 158,936

Total amortized cost $ 420 $ 5,839 $ 42,235 $ 124,580 $ 173,074

Weighted-average yield (1)

2.51 % 2.39 % 1.72 % 1.71 % 1.74 %

(1) The weighted-average yield is computed using the amortized cost at December 31, 2022.

39 unchanged sentences

At December 31, 2022, CSB had pledged the full balance of First Mortgages and HELOCs pursuant to a blanket lien status collateral arrangement to secure borrowing capacity on a secured credit facility with the FHLB (see Note 13).

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Changes in the allowance for credit losses on bank loans were as follows:

December 31, 2021 December 31, 2020 December 31, 2019

First Mortgages HELOCs Total residential real estate Other Total First Mortgages HELOCs Total residential real estate Other Total First Mortgages HELOCs Total residential real estate Other Total

December 31, 2022 First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total

Balance at beginning of year $ 13 $ 2 $ 15 $ — $ 3 $ 18

Adoption of ASU 2016-13 — — — — — 1 — 1 — 1 — — — — —

Charge-offs — — — ( 4 ) — ( 4 )

2 unchanged sentences

Balance at end of year $ 66 $ 4 $ 70 $ — $ 3 $ 73

As discussed in Note 2, PALs are subject to the collateral maintenance practical expedient under ASC 326.

December 31, 2021

Balance at beginning of year $ 22 $ 5 $ 27 $ — $ 3 $ 30

Charge-offs — — — — ( 1 ) ( 1 )

Recoveries — 1 1 — — 1

Provision for credit losses ( 9 ) ( 4 ) ( 13 ) — 1 ( 12 )

Balance at end of year $ 13 $ 2 $ 15 $ — $ 3 $ 18

December 31, 2020

Balance at beginning of year $ 11 $ 4 $ 15 $ — $ 3 $ 18

Adoption of ASU 2016-13 1 — 1 — — 1

Recoveries 1 — 1 — — 1

Provision for credit losses 9 1 10 — — 10

Balance at end of year $ 22 $ 5 $ 27 $ — $ 3 $ 30

As discussed in Note 2, the Company charges off any unsecured PAL balances no later than 90-days past due.

PALs are also subject to the collateral maintenance practical expedient under ASC 326 Financial Instruments — Credit Losses .

All PALs were fully collateralized by securities with fair values in excess of borrowings as of December 31, 2022 and 2021, respectively.

Therefore, no allowance for credit losses for PALs as of those dates was required.

The economy continued to strengthen overall in 2021, however, COVID-19 has continued to affect the pace of recovery.

Management’s macroeconomic outlook reflects continued moderate growth in home prices and lower unemployment anticipated over the near term.

This macroeconomic outlook, along with the continued strong credit quality metrics in the bank loans portfolio, result in a lower modeled projection of loss rates compared to December 31, 2020.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

economy continues to be challenged by elevated inflation, tightening monetary policy, and geopolitical unrest.

Management’s macroeconomic outlook reflects a near-term home price depreciation, which combined with increases in Treasury yields and mortgage rates, have extended the expected life of the portfolio and reduced borrower affordability.

These changes to the macroeconomic outlook resulted in higher modeled projections of loss rates at December 31, 2022, compared to December 31, 2021, even as credit quality metrics continued to be strong in the Company’s bank loans portfolio.

A summary of bank loan-related nonperforming assets and troubled debt restructurings is as follows:

7 unchanged sentences

(2) Included in other assets on the consolidated balance sheets.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Credit Quality

8 unchanged sentences

The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The credit quality indicators of the Company’s First Mortgages and HELOCs are detailed below:

12 unchanged sentences

Total $ 6,444 $ 12,293 $ 4,270 $ 929 $ 143 $ 1,119 $ 25,198 $ 382 $ 215 $ 597

Weighted Average

<620 $ 11 $ 12 $ 7 $ 2 $ 2 $ 11 $ 45 $ 2 $ 5 $ 7

28 unchanged sentences

Total $ 12,990 $ 5,004 $ 1,200 $ 207 $ 1,689 $ 21,090 $ 369 $ 279 $ 648

Weighted Average

<620 $ 5 $ 2 $ 1 $ — $ 14 $ 22 $ 2 $ 6 $ 8

17 unchanged sentences

Schwab’s mortgage loans do not include interest terms described as temporary introductory rates below current market rates.

At December 31, 2021 and 2020, Schwab had $ 57 million and $ 43 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the consolidated balance sheets.

At December 31, 2022 and 2021, Schwab had $ 134 million and $ 57 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and is included in other assets on the consolidated balance sheets.

The HELOC product has a 30 -year loan term with an initial draw period of ten years from the date of origination.

45 unchanged sentences

Trade names 120 ( 32 ) 88 116 ( 26 ) 90

Total acquired intangible assets $ 10,510 $ ( 1,131 ) $ 9,379 $ 10,507 $ ( 516 ) $ 9,991

Total acquired intangible

assets $ 10,504 $ ( 1,715 ) $ 8,789 $ 10,510 $ ( 1,131 ) $ 9,379

Estimated future annual amortization expense for acquired intangible assets as of December 31, 2022 is as follows:

6 unchanged sentences

Balance at December 31, 2020 $ 7,970 $ 3,982 $ 11,952

Goodwill acquired in TD Ameritrade acquisition 6,380 3,835 10,215

Goodwill acquired in other acquisitions 494 16 510

Goodwill acquired and other changes during the period — — —

December 31, 2021 7,970 3,982 11,952

2 unchanged sentences

See Note 3 for additional information on the Company’s acquisitions.

As of our annual testing date, we performed an assessment of each of the Company’s reporting units.

We performed an assessment of each of the Company’s reporting units as of our annual testing date.

Based on this analysis, we concluded that goodwill was not impaired.

6 unchanged sentences

December 31, 2022 2021

Deferred tax assets (1)

Other receivables from brokers, dealers, and clearing organizations 2,171 2,475

Other investments (2)

Receivables — interest, dividends, and other 1,919 1,615

Other securities owned at fair value (3)

Other investments (2)

Operating lease ROU assets 894 842

Customer contract receivables (3)

Securities borrowed 705 582

Customer contract receivables (4)

Capitalized contract costs 379 344

1 unchanged sentence

Total other assets $ 16,099 $ 10,318

(1) Includes fractional shares held in client brokerage accounts.

Corresponding repurchase liabilities in an equal amount for these client-held fractional shares are included in accrued expenses and other liabilities on the consolidated balance sheet.

What changed 10-K

Item 8. Financial Statements and Supplementary Data