What changed in this filing

/stocks — the workspaceLOADING

Item 3. Quantitative and Qualitative Disclosures About Market Risk

2024-11-08 compared with 2024-08-08 · 232 added, 212 removed, 1447 unchanged (23% of the section changed)

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

38 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

16 unchanged sentences

(In Millions, Except Per Share and Share Amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 34,850 $ 43,337

Cash and investments segregated and on deposit for regulatory purposes (including resale

agreements of $ 9,290 and $ 8,844 at June 30, 2024 and December 31, 2023,

agreements of $ 13,591 and $ 8,844 at September 30, 2024 and December 31, 2023,

respectively)

1 unchanged sentence

Receivables from brokerage clients — net 74,016 68,667

Available for sale securities (amortized cost of $ 101,859 at June 30, 2024 and $ 116,336

Available for sale securities (amortized cost of $ 95,871 at September 30, 2024 and

$ 116,336 at December 31, 2023;

including assets pledged of $ 1,612 and $ 1,733 , respectively)

including assets pledged of $ 188 and $ 1,733 ,

respectively)

90,018 107,646

Held to maturity securities (including assets pledged of $ 8,211 at June 30, 2024

Held to maturity securities (including assets pledged of $ 8,340 at September 30, 2024

and $ 3,703 at December 31, 2023)

17 unchanged sentences

aggregate liquidation preference of $ 9,329

at June 30, 2024 and December 31, 2023

at September 30, 2024 and December 31, 2023

Common stock — 3 billion shares authorized;

$ .01 par value per share;

2,023,295,180 shares issued at June 30, 2024 and December 31, 2023

2,023,295,180 shares issued at September 30, 2024 and December 31, 2023

Nonvoting common stock — 300 million shares authorized;

$ .01 par value per share;

50,893,695 shares issued at June 30, 2024 and December 31, 2023

50,893,695 shares issued at September 30, 2024 and December 31, 2023

Additional paid-in capital 27,548 27,330

Retained earnings 36,303 33,901

Treasury stock, at cost — 245,678,570 and 250,678,452 shares at June 30, 2024

Treasury stock, at cost — 244,640,081 and 250,678,452 shares at September 30, 2024

and December 31, 2023, respectively

12 unchanged sentences

Shares Amount Shares Amount

Balance at March 31, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,136 $ 32,144 $ ( 11,455 ) $ ( 20,690 ) $ 36,347

Balance at June 30, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,220 $ 32,865 $ ( 11,420 ) $ ( 20,730 ) $ 37,147

Net income — — — — — — 1,125 — — 1,125

6 unchanged sentences

Other — — — — — 22 — 4 — 26

Balance at September 30, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,293 $ 33,429 $ ( 11,398 ) $ ( 20,752 ) $ 37,784

Balance at June 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,470 $ 35,458 $ ( 11,251 ) $ ( 16,936 ) $ 43,953

Balance at March 31, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,358 $ 34,701 $ ( 11,283 ) $ ( 17,576 ) $ 42,412

Net income — — — — — — 1,408 — — 1,408

6 unchanged sentences

Other — — — — — 25 — 5 — 30

Balance at June 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,470 $ 35,458 $ ( 11,251 ) $ ( 16,936 ) $ 43,953

Balance at September 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,548 $ 36,303 $ ( 11,230 ) $ ( 14,618 ) $ 47,215

Accumulated Other Comprehensive Income (Loss)

15 unchanged sentences

Other — — — — — 86 — ( 33 ) — 53

Balance at June 30, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,220 $ 32,865 $ ( 11,420 ) $ ( 20,730 ) $ 37,147

Balance at September 30, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,293 $ 33,429 $ ( 11,398 ) $ ( 20,752 ) $ 37,784

Balance at December 31, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,330 $ 33,901 $ ( 11,354 ) $ ( 18,131 ) $ 40,958

7 unchanged sentences

Other — — — — — 91 — ( 51 ) — 40

Balance at June 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,470 $ 35,458 $ ( 11,251 ) $ ( 16,936 ) $ 43,953

Balance at September 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,548 $ 36,303 $ ( 11,230 ) $ ( 14,618 ) $ 47,215

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in Millions)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Operating Activities

49 unchanged sentences

Continued from previous page.

Six Months Ended

Nine Months Ended

September 30,

Supplemental Cash Flow Information

Non-cash investing activity:

Securities matured during the period but settled after period end $ — $ 415

Changes in accrued equipment, office facilities, and property purchases $ ( 17 ) $ ( 32 )

5 unchanged sentences

Leased assets obtained in exchange for new operating lease liabilities $ 126 $ 88

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (1)

29 unchanged sentences

The significant accounting policies are included in Item 8 – Note 2 in the 2023 Form 10-K.

There have been no significant changes to these accounting policies during the first six months of 2024.

There have been no significant changes to these accounting policies during the first nine months of 2024.

New Accounting Standards

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

39 unchanged sentences

Contract balances :

Receivables from contracts with customers within the scope of Accounting Standards Codification (ASC) 606 Revenue From Contracts With Customers (ASC 606), are included in other assets on the condensed consolidated balance sheets, and totaled $ 684 million and $ 599 million at June 30, 2024 and December 31, 2023, respectively.

The Company had net contract assets of $ 227 million and $ 239 million at June 30, 2024 and December 31, 2023, respectively, related to the buy down of fixed-rate obligation amounts pursuant to the 2023 IDA agreement.

The Company had net contract assets of $ 222 million and $ 239 million at September 30, 2024 and December 31, 2023, respectively, related to the buy down of fixed-rate obligation amounts pursuant to the 2023 IDA agreement.

These amounts are included in other assets on the condensed consolidated balance sheets and are amortized on a straight-line basis over the remaining contractual term as a reduction to bank deposit account fee revenue.

8 unchanged sentences

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

June 30, 2024 Amortized

September 30, 2024 Amortized

Available for sale securities

36 unchanged sentences

Total held to maturity securities $ 159,452 $ 1,435 $ 13,796 $ 147,091

(1) As of June 30, 2024 and December 31, 2023, approximately 34 % and 36 %, respectively, of the total AFS in corporate debt securities were issued by institutions in the financial services industry.

(2) Approximately 57 % and 61 % of asset-backed securities held as of June 30, 2024 and December 31, 2023, respectively, were Federal Family Education Loan Program Asset-Backed Securities.

Asset-backed securities collateralized by credit card receivables represented approximately 30 % and 24 % of the asset-backed securities held as of June 30, 2024 and December 31, 2023, respectively.

(1) As of September 30, 2024 and December 31, 2023, approximately 34 % and 36 %, respectively, of the total AFS in corporate debt securities were issued by institutions in the financial services industry.

(2) Approximately 57 % and 61 % of asset-backed securities held as of September 30, 2024 and December 31, 2023, respectively, were Federal Family Education Loan Program Asset-Backed Securities.

Asset-backed securities collateralized by credit card receivables represented approximately 28 % and 24 % of the asset-backed securities held as of September 30, 2024 and December 31, 2023, respectively.

(3) This represents the amount of portfolio layer method (PLM) fair value hedge basis adjustments related to AFS securities hedged in a closed portfolio.

See Note 11 for more information on PLM hedge accounting.

At June 30, 2024, our banking subsidiaries had pledged investment securities with a value of $ 60.7 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 8).

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 value of $ 35.9 billion as collateral for this facility at June 30, 2024.

At September 30, 2024, our banking subsidiaries had pledged investment securities with a value of $ 61.7 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 8).

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 value of $ 32.5 billion as collateral for this facility at September 30, 2024.

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

The value of these pledged securities was $ 1.6 billion at June 30, 2024.

At June 30, 2024, our banking subsidiaries had pledged HTM and AFS securities as collateral under repurchase agreements with external financial institutions.

The value of these pledged securities was $ 1.6 billion at September 30, 2024.

At September 30, 2024, our banking subsidiaries had pledged HTM 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 $ 8.2 billion, and AFS securities pledged were U.S.

agency mortgage-backed securities with an aggregate fair

agency mortgage-backed securities with an aggregate

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

value of $ 1.4 billion.

amortized cost of $ 8.3 billion.

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

See Notes 8 and 12 for additional information on these repurchase agreements.

At June 30, 2024, our banking subsidiaries had pledged AFS securities consisting of U.S.

At September 30, 2024, our banking subsidiaries had pledged AFS securities consisting of U.S.

Treasury securities with an aggregate fair value of $ 188 million as initial margin on interest rate swaps (see Notes 11 and 12).

2 unchanged sentences

The FCM agreements governing our swaps allow for securities pledged as initial margin to be sold, repledged, or otherwise used by the FCM.

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

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

Less than 12 months 12 months or longer Total

June 30, 2024 Fair

September 30, 2024 Fair

Value Unrealized

5 unchanged sentences

Treasury securities (1)

242 — 13,878 516 14,120 516

Corporate debt securities — — 10,246 544 10,246 544

20 unchanged sentences

(1) Unrealized losses less than 12 months amounts were less than $ 500 thousand.

(2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 53 million and $ 19 million at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024, substantially all rated securities in the investment portfolios were investment grade.

(2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 14 million and $ 19 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, substantially all rated securities in the investment portfolios were investment grade.

agency mortgage-backed securities do not have explicit credit ratings;

3 unchanged sentences

For a description of management’s quarterly evaluation of AFS securities in unrealized loss positions, see Item 8 – Note 2 in the 2023 Form 10-K.

No amounts were recognized as credit loss expense and no securities were written down to fair value through earnings for the six months ended June 30, 2024 and the year ended December 31, 2023.

None of the Company’s AFS securities held as of June 30, 2024 and December 31, 2023 had an allowance for credit losses.

All HTM securities as of June 30, 2024 and December 31, 2023 were U.S.

No amounts were recognized as credit loss expense and no securities were written down to fair value through earnings for the nine months ended September 30, 2024 and the year ended December 31, 2023.

None of the Company’s AFS securities held as of September 30, 2024 and December 31, 2023 had an allowance for credit losses.

All HTM securities as of September 30, 2024 and December 31, 2023 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 $ 507 million and $ 565 million of accrued interest for AFS and HTM securities as of June 30, 2024 and December 31, 2023, respectively.

The Company had $ 464 million and $ 565 million of accrued interest for AFS and HTM securities as of September 30, 2024 and December 31, 2023, respectively.

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 condensed consolidated balance sheets.

There were no writeoffs of accrued interest receivable on AFS and HTM securities during the six months ended June 30, 2024, or for the year ended December 31, 2023.

There were no writeoffs of accrued interest receivable on AFS and HTM securities during the nine months ended September 30, 2024, or for the year ended December 31, 2023.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at June 30, 2024:

The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at September 30, 2024:

Estimated effective duration, exclusive of derivatives:

8 unchanged sentences

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

June 30, 2024 Within

September 30, 2024 Within

1 year After 1 year

18 unchanged sentences

Total amortized cost $ 1,667 $ 10,037 $ 37,043 $ 101,115 $ 149,862

(1) For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 53 million at June 30, 2024.

(1) For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 14 million at September 30, 2024.

Proceeds and gross realized gains and losses from sales of AFS investment securities are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

The composition of bank loans and delinquency analysis by portfolio segment and class of financing receivable is as follows:

June 30, 2024 Current 30-59 days

September 30, 2024 Current 30-59 days

past due 60-89 days

22 unchanged sentences

Total bank loans $ 40,414 $ 45 $ 3 $ 15 $ 63 $ 40,477 $ 38 $ 40,439

(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $ 104 million and $ 100 million at June 30, 2024 and December 31, 2023, respectively.

(2) At June 30, 2024 and December 31, 2023, 42 % and 43 %, respectively, of the First Mortgage and HELOC portfolios were concentrated in California.

(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $ 107 million and $ 100 million at September 30, 2024 and December 31, 2023, respectively.

(2) At September 30, 2024 and December 31, 2023, 42 % and 43 %, respectively, of the First Mortgage and HELOC portfolios were concentrated in California.

These loans have performed in a manner consistent with the portfolio as a whole.

(3) There were no loans accruing interest that were contractually 90 days or more past due at June 30, 2024 or December 31, 2023.

At June 30, 2024, 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 8).

(3) There were no loans accruing interest that were contractually 90 days or more past due at September 30, 2024 or December 31, 2023.

At September 30, 2024, 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 8).

THE CHARLES SCHWAB CORPORATION

3 unchanged sentences

Three Months Ended

June 30, 2024 First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total

September 30, 2024 First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total

Balance at beginning of period $ 14 $ 1 $ 15 $ — $ 5 $ 20

3 unchanged sentences

Balance at end of period $ 14 $ 1 $ 15 $ — $ 5 $ 20

June 30, 2023

September 30, 2023

Balance at beginning of period $ 68 $ 3 $ 71 $ — $ 4 $ 75

3 unchanged sentences

Balance at end of period $ 47 $ 2 $ 49 $ — $ 5 $ 54

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

Balance at beginning of period $ 32 $ 2 $ 34 $ — $ 4 $ 38

3 unchanged sentences

Balance at end of period $ 14 $ 1 $ 15 $ — $ 5 $ 20

June 30, 2023

September 30, 2023

Balance at beginning of period $ 66 $ 4 $ 70 $ — $ 3 $ 73

4 unchanged sentences

Consistent with Schwab’s loan charge-off policy for pledged asset lines (PALs) as disclosed in Item 8 – Note 2 of the 2023 Form 10-K, the Company charges off any unsecured balances no later than 90 days past due.

As of June 30, 2024, substantially all 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 June 30, 2024 and December 31, 2023, and no allowance for credit losses for PALs as of those dates was required.

economy continued to be challenged by elevated inflation, tight monetary policy, and geopolitical unrest.

However, amid sustained economic growth, supply and demand moved to a more balanced state.

While the Federal Reserve held the policy rate steady during the first half of the year, management’s macroeconomic outlook reflects a near-term continuation of elevated interest rates, with only a slight increase in unemployment and modest home price appreciation.

As of September 30, 2024, substantially all 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 September 30, 2024 and December 31, 2023, and no allowance for credit losses for PALs as of those dates was required.

economy continued to face tight monetary policy and geopolitical unrest.

Amid slower hiring and moderating inflation, the Federal Reserve lowered the federal funds target overnight rate in mid-September.

However, management’s macroeconomic outlook continues to reflect a near-term continuation of elevated interest rates, with unemployment remaining relatively flat and modest home price appreciation.

Though higher mortgage rates are softening demand and reducing borrower affordability, we expect constrained housing supply will keep home prices relatively stable.

Furthermore, credit quality metrics in the Company’s bank loans portfolio remain very strong and have improved in recent quarters.

As a result of these factors, we decreased projected loss rates at June 30, 2024, as compared to December 31, 2023.

Bank loan-related nonperforming assets consisted of nonaccrual loans of $ 18 million and $ 15 million at June 30, 2024 and December 31, 2023, respectively.

As a result of these factors, we decreased projected loss rates at September 30, 2024, as compared to December 31, 2023.

Bank loan-related nonperforming assets consisted of nonaccrual loans of $ 24 million and $ 15 million at September 30, 2024 and December 31, 2023, respectively.

Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02, “ Financial Instruments — Credit Losses :

10 unchanged sentences

• Estimated Current LTV ratios (Estimated Current LTV).

Borrowers’ FICO scores are provided by an independent third-party credit reporting service and generally updated quarterly.

Borrowers’ FICO scores are provided by an independent third-party credit reporting service and are generally updated quarterly.

The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination.

2 unchanged sentences

First Mortgages Amortized Cost Basis by Origination Year

June 30, 2024 2024 2023 2022 2021 2020 pre-2020 Total First Mortgages Revolving HELOCs amortized cost basis HELOCs converted to term loans Total HELOCs

September 30, 2024 2024 2023 2022 2021 2020 pre-2020 Total First Mortgages Revolving HELOCs amortized cost basis HELOCs converted to term loans Total HELOCs

Origination FICO

55 unchanged sentences

(1) Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs.

At June 30, 2024, First Mortgage loans of $ 21.9 billion had adjustable interest rates.

At September 30, 2024, First Mortgage loans of $ 22.4 billion had adjustable interest rates.

Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter.

2 unchanged sentences

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

At June 30, 2024 and December 31, 2023, Schwab had $ 167 million and $ 157 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 condensed consolidated balance sheets.

At September 30, 2024 and December 31, 2023, Schwab had $ 173 million and $ 157 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 condensed 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.

5 unchanged sentences

The following table presents when current outstanding HELOCs will convert to amortizing loans:

June 30, 2024 Balance

September 30, 2024 Balance

Converted to an amortizing loan by period end (1)

3 unchanged sentences

> 5 years 203

(1) Includes $ 3 million and $ 6 million of HELOCs converted to amortizing loans during the three and six months ended June 30, 2024, respectively.

At June 30, 2024, $ 352 million of the HELOC portfolio was secured by second liens on the associated properties.

(1) Includes $ 4 million and $ 9 million of HELOCs converted to amortizing loans during the three and nine months ended September 30, 2024, respectively.

At September 30, 2024, $ 344 million of the HELOCs portfolio was secured by second liens on the associated properties.

Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default.

In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property.

At June 30, 2024, the borrowers on approximately 60 % of HELOC loan balances outstanding only paid the minimum amount due.

At September 30, 2024, the borrowers on approximately 61 % of HELOC loan balances outstanding only paid the minimum amount due.

Variable Interest Entities

As of June 30, 2024 and December 31, 2023, substantially all of Schwab’s involvement with variable interest entities (VIEs) was through CSB’s Community Reinvestment Act (CRA) related investments and most of these are related to Low-Income Housing Tax Credit (LIHTC) investments.

As of September 30, 2024 and December 31, 2023, substantially all of Schwab’s involvement with variable interest entities (VIEs) was through CSB’s Community Reinvestment Act (CRA) related investments and most of these are related to Low-Income Housing Tax Credit (LIHTC) investments.

As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties and receives tax credits and other tax benefits for these investments.

During the three months ended June 30, 2024 and 2023, CSB recorded amortization of $ 38 million and $ 25 million, respectively, and recognized tax credits and other tax benefits of $ 49 million and $ 35 million, respectively, associated with these investments.

During the six months ended June 30, 2024 and 2023, CSB recorded amortization of $ 80 million and $ 66 million, respectively, and recognized tax credits and other tax benefits of $ 102 million and $ 89 million, respectively, associated with these investments.

During the three months ended September 30, 2024 and 2023, CSB recorded amortization of $ 37 million and $ 30 million, respectively, and recognized tax credits and other tax benefits of $ 48 million and $ 35 million, respectively, associated with these investments.

During the nine months ended September 30, 2024 and 2023, CSB recorded amortization of $ 117 million and $ 96 million, respectively, and recognized tax credits and other tax benefits of $ 150 million and $ 124 million, respectively, associated with these investments.

The amortization, as well as the tax credits and other tax benefits, are included in taxes on income on the condensed consolidated statements of income.

2 unchanged sentences

The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

assets Aggregate

13 unchanged sentences

Schwab’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and Schwab expects to pay substantially all of these commitments between 2024 and 2027.

During the six months ended June 30, 2024 and year ended December 31, 2023, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide.

During the nine months ended September 30, 2024 and year ended December 31, 2023, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide.

THE CHARLES SCHWAB CORPORATION

3 unchanged sentences

Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Interest-bearing deposits:

8 unchanged sentences

(1) Time certificates of deposit consist of brokered CDs.

The weighted-average interest rates on outstanding time certificates of deposit at June 30, 2024 and December 31, 2023 were 5.26 % and 5.15 %, respectively.

As of June 30, 2024 and December 31, 2023, there were no time deposits that were in excess of FDIC insurance limits or otherwise uninsured.

Annual maturities on time certificates of deposit outstanding at June 30, 2024 are as follows:

The weighted-average interest rates on outstanding time certificates of deposit at September 30, 2024 and December 31, 2023 were 5.18 % and 5.15 %, respectively.

As of September 30, 2024 and December 31, 2023, there were no time deposits that were in excess of FDIC insurance limits or otherwise uninsured.

Annual maturities on time certificates of deposit outstanding at September 30, 2024 are as follows:

2024 $ 12,401

12 unchanged sentences

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

The following table lists long-term debt by instrument outstanding as of June 30, 2024 and December 31, 2023:

The following table lists long-term debt by instrument outstanding as of September 30, 2024 and December 31, 2023:

Date of Issuance Principal Amount Outstanding

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

CSC Fixed-rate Senior Notes:

89 unchanged sentences

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

Annual maturities on all long-term debt outstanding at June 30, 2024 are as follows:

Annual maturities on all long-term debt outstanding at September 30, 2024 are as follows:

Thereafter 10,700

6 unchanged sentences

Amounts available under these facilities are dependent on the amount of bank loans and the value of certain investment securities that are pledged as collateral.

There was $ 24.4 billion and $ 26.4 billion outstanding under these facilities as of June 30, 2024 and December 31, 2023, respectively, and these borrowings had a weighted-average interest rate of 5.38 % and 5.34 %, respectively.

As of June 30, 2024 and December 31, 2023, the collateral pledged provided additional borrowing capacity of $ 54.4 billion and $ 63.1 billion, respectively.

There was $ 22.6 billion and $ 26.4 billion outstanding under these facilities as of September 30, 2024 and December 31, 2023, respectively, and these borrowings had a weighted-average interest rate of 5.34 % at both September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, the collateral pledged provided additional borrowing capacity of $ 57.1 billion and $ 63.1 billion, respectively.

Other short-term borrowings :

Total other short-term borrowings outstanding at June 30, 2024 and December 31, 2023 were $ 10.0 billion and $ 6.6 billion, respectively, and had a weighted-average interest rate of 5.49 % and 5.57 %, respectively.

Total other short-term borrowings outstanding at September 30, 2024 and December 31, 2023 were $ 10.6 billion and $ 6.6 billion, respectively, and had a weighted-average interest rate of 5.38 % and 5.57 %, respectively.

Additional information regarding our other short-term borrowings facilities is described below.

The Company may engage with external financial institutions in repurchase agreements collateralized by investment securities as another source of short-term liquidity.

The Company had $ 9.0 billion and $ 4.9 billion outstanding pursuant to such repurchase agreements at June 30, 2024 and December 31, 2023, respectively.

Repurchase agreements outstanding at June 30, 2024 mature between July 2024 and February 2025.

The Company had $ 8.1 billion and $ 4.9 billion outstanding pursuant to such repurchase agreements at September 30, 2024 and December 31, 2023, respectively.

Repurchase agreements outstanding at September 30, 2024 mature between October 2024 and May 2025.

Our banking subsidiaries have access to funding through the Federal Reserve discount window.

Amounts available are dependent upon the value of certain investment securities that are pledged as collateral.

As of June 30, 2024 and December 31, 2023, our collateral pledged provided total borrowing capacity of $ 35.9 billion and $ 6.2 billion, respectively, of which no amounts were outstanding at the end of either period.

As of September 30, 2024 and December 31, 2023, our collateral pledged provided total borrowing capacity of $ 32.5 billion and $ 6.2 billion, respectively, of which no amounts were outstanding at the end of either period.

During the first quarter of 2024 and the year ended December 31, 2023, our banking subsidiaries had access to funding through the Federal Reserve Bank Term Funding Program (BTFP).

This program offered loans through March 11, 2024 of up to one year in length, and amounts available were dependent upon the par value of certain investment securities pledged as collateral.

As of June 30, 2024, there was no collateral pledged or borrowings outstanding under the BTFP.

As of September 30, 2024, there was no collateral pledged or borrowings outstanding under the BTFP.

As of December 31, 2023, our collateral pledged provided total borrowing capacity of $ 39.2 billion.

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CSC has the ability to issue up to $ 5.0 billion of commercial paper notes with maturities of up to 270 days.

There were no amounts outstanding at June 30, 2024 or December 31, 2023.

There were no amounts outstanding at September 30, 2024 or December 31, 2023.

Beginning in 2024, CSC has access to an unsecured, committed revolving line of credit with various external banks with a total borrowing capacity of $ 2.1 billion.

There were no amounts outstanding as of June 30, 2024.

There were no amounts outstanding as of September 30, 2024.

CSC and CS&Co also have access to unsecured, uncommitted lines of credit with external banks with total borrowing capacity of $ 1.7 billion;

no amounts were outstanding as of June 30, 2024 or December 31, 2023.

CS&Co maintains secured, uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements, under which there was $ 1.0 billion outstanding at June 30, 2024 and $ 950 million outstanding as of December 31, 2023.

TDAC also maintains secured uncommitted lines of credit, under which TDAC may borrow on either a demand or short-term basis and pledge client margin securities as collateral.

There were no amounts outstanding at June 30, 2024 and there was $ 700 million outstanding at December 31, 2023.

no amounts were outstanding as of September 30, 2024 or December 31, 2023.

CS&Co maintains secured, uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements, under which there was $ 2.5 billion outstanding at September 30, 2024 and $ 950 million outstanding as of December 31, 2023.

TDAC also previously maintained secured uncommitted lines of credit.

Prior to the final client account conversions to CS&Co from the Ameritrade broker-dealers, TDAC could borrow on either a demand or short-term basis and pledged client margin securities as collateral.

The TDAC lines of credit were terminated as of September 30, 2024.

There was $ 700 million outstanding under the TDAC lines of credit at December 31, 2023.

THE CHARLES SCHWAB CORPORATION

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

Annual maturities on FHLB borrowings and other short-term borrowings outstanding at June 30, 2024 are as follows:

Annual maturities on FHLB borrowings and other short-term borrowings outstanding at September 30, 2024 are as follows:

2024 2025 Total

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Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Rocket Mortgage.

CSB purchased First Mortgages of $ 851 million and $ 854 million during the second quarters of 2024 and 2023, respectively, and $ 1.5 billion and $ 1.6 billion during the first six months of 2024 and 2023, respectively.

CSB purchased HELOCs with commitments of $ 47 million and $ 52 million during the second quarters of 2024 and 2023, respectively, and $ 83 million and $ 95 million during the first six months of 2024 and 2023, respectively.

CSB purchased First Mortgages of $ 1.1 billion and $ 765 million during the third quarters of 2024 and 2023, respectively, and $ 2.6 billion and $ 2.4 billion during the first nine months of 2024 and 2023, respectively.

CSB purchased HELOCs with commitments of $ 38 million and $ 49 million during the third quarters of 2024 and 2023, respectively, and $ 121 million and $ 144 million during the first nine months of 2024 and 2023, respectively.

The Company’s commitments to extend credit on lines of credit and to purchase First Mortgages are as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit $ 1,962 $ 2,996

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The Company’s ability to migrate these balances to its balance sheet is dependent on multiple factors including having sufficient capital levels to sustain these incremental deposits and certain binding limitations specified in the 2023 IDA agreement.

During the first six months of 2024, Schwab did not move IDA balances to its balance sheet.

During the first nine months of 2024, Schwab did not move IDA balances to its balance sheet.

The 2023 IDA agreement extends the agreement term to sweep balances to the TD Depository Institutions through July 1, 2034, and requires that Schwab maintain minimum and maximum IDA balances as follows:

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For additional information on these contract assets, see Note 3.

As of June 30, 2024, the total ending IDA balance was $ 84.5 billion, of which $ 74.8 billion was fixed-rate obligation amounts and $ 9.7 billion was floating-rate obligation amounts.

As of September 30, 2024, the total ending IDA balance was $ 84.0 billion, of which $ 70.2 billion was fixed-rate obligation amounts and $ 13.8 billion was floating-rate obligation amounts.

As of December 31, 2023, the total ending IDA balance was $ 97.5 billion, of which $ 83.7 billion was fixed-rate obligation amounts and $ 13.8 billion was floating-rate obligation amounts.

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clients alleging that defendants failed to seek best execution and made misrepresentations and omissions regarding its order routing practices.

Plaintiff seeks unspecified damages and injunctive and other relief.

Plaintiff sought unspecified damages and injunctive and other relief.

On September 14, 2018, the District Court granted plaintiff’s motion for class certification, and defendants petitioned for an immediate appeal of the District Court’s class certification decision.

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Court of Appeals, 8th Circuit, issued a decision reversing the District Court’s certification of a class and remanding the case back to the District Court for further proceedings.

Plaintiff renewed his motion for class certification, which the District Court granted on September 20, 2022.

THE CHARLES SCHWAB CORPORATION

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

Plaintiff renewed his motion for class certification, which the District Court granted on September 20, 2022.

Defendants are appealing the District Court’s ruling before the U.S.

Court of Appeals, 8th Circuit.

appealed, and in a decision filed on September 3, 2024, the Court of Appeals again reversed the District Court’s certification of a class.

Plaintiff is now pursuing his claims individually in arbitration.

The likelihood such claims would be material to the financial condition, operating results, or cash flows of the Company is remote.

Other Matters :

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Integration of Ameritrade

The Company’s integration work continued during the first six months of 2024, including completion of the final client transition group from the Ameritrade broker-dealers to CS&Co in May 2024.

The Company’s integration work continued during the first nine months of 2024, including completion of the final client transition group from the Ameritrade broker-dealers to CS&Co in May 2024.

The Company expects to continue to incur acquisition and integration-related costs throughout the remainder of 2024 to decommission duplicative platforms and complete integration work.

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Exit and other related costs are a component of the Company’s overall acquisition and integration-related spending, and support the Company’s ability to achieve integration objectives including expected synergies.

Inclusive of costs recognized through June 30, 2024, Schwab currently expects to incur total exit and other related costs for the integration of Ameritrade ranging from $ 500 million to $ 550 million, consisting of employee compensation and benefits, facility exit costs, and certain other costs.

Inclusive of costs recognized through September 30, 2024, Schwab currently expects to incur total exit and other related costs for the integration of Ameritrade ranging from $ 475 million to $ 525 million, consisting of employee compensation and benefits, facility exit costs, and certain other costs.

Our estimates of the nature, amounts, and timing of recognition of acquisition and integration-related costs remain subject to change as we work to complete the integration.

During the three months ended June 30, 2024 and 2023, the Company recognized $ 10 million and $ 30 million of acquisition-related exit costs, respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized $ 13 million and $ 40 million of acquisition-related exit costs, respectively.

During the three months ended September 30, 2024 and 2023, the Company recognized $ 14 million and $ 16 million of acquisition-related exit costs, respectively.

During the nine months ended September 30, 2024 and 2023, the Company recognized $ 27 million and $ 56 million of acquisition-related exit costs, respectively.

The Company expects that remaining exit and other related costs will be incurred and charged to expense over the next 3 months.

In addition to ASC 420 Exit or Disposal Cost Obligations (ASC 420), certain of the costs associated with these activities are accounted for in accordance with ASC 360 Property, Plant and Equipment (ASC 360), ASC 712 Compensation — Nonretirement Post Employment Benefits (ASC 712), ASC 718 Compensation — Stock Compensation (ASC 718), and ASC 842 Leases (ASC 842).

The following is a summary of the Ameritrade integration activity in the Company’s exit and other related liabilities as of June 30, 2024 and activity for the six months ended June 30, 2024:

The following is a summary of the Ameritrade integration activity in the Company’s exit and other related liabilities as of September 30, 2024 and activity for the nine months ended September 30, 2024:

Investor Services

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Costs paid or otherwise settled ( 47 ) ( 13 ) ( 60 )

Balance at June 30, 2024 (1)

Balance at September 30, 2024 (1)

(1) Included in accrued expenses and other liabilities on the condensed consolidated balance sheets.

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

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the three and six months ended June 30, 2024:

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the three and nine months ended September 30, 2024:

Investor Services Advisor Services

Three Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Three Months Ended September 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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Compensation and benefits $ 3 $ — $ 3 $ 2 $ — $ 2 $ 5

Occupancy and equipment — 1 1 — — — 1

Depreciation and amortization — 5 5 — 3 3 8

Total $ 3 $ 6 $ 9 $ 2 $ 3 $ 5 $ 14

Six Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Advisor Services

Nine Months Ended September 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the condensed consolidated statements of income.

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the three and six months ended June 30, 2023:

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the three and nine months ended September 30, 2023:

Investor Services Advisor Services

Three Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Three Months Ended September 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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Occupancy and equipment — 3 3 — — — 3

— 14 14 — 7 7 21

Other — 4 4 — — — 4

Total $ 9 $ 7 $ 16 $ — $ — $ — $ 16

Investor Services Advisor Services

Six Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Nine Months Ended September 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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

The following table summarizes the Ameritrade integration exit and other related costs incurred from October 6, 2020 through June 30, 2024:

The following table summarizes the Ameritrade integration exit and other related costs incurred from October 6, 2020 through September 30, 2024:

Investor Services Advisor Services

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With significant progress made in the integration of Ameritrade, the Company took incremental actions in 2023 to streamline its operations to prepare for post-integration, including through position eliminations and decreasing its real estate footprint.

In order to achieve anticipated cost savings through these actions, the Company expects to incur exit and related costs, primarily related to employee compensation and benefits and facility exit costs, of approximately $ 500 million inclusive of costs recognized through June 30, 2024 as described below.

The Company anticipates the remaining costs, primarily related to real estate, will be incurred during 2024.

In addition to ASC 420, certain of the costs associated with these activities are accounted for in accordance with ASC 360, ASC 712, ASC 718, and ASC 842.

The following is a summary of the restructuring activity in the Company’s exit and other related liabilities as of June 30, 2024 and activity for the six months ended June 30, 2024:

The following is a summary of the restructuring activity in the Company’s exit and other related liabilities as of September 30, 2024 and activity for the nine months ended September 30, 2024:

Investor Services

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Costs paid or otherwise settled ( 146 ) ( 54 ) ( 200 )

Balance at June 30, 2024 (1)

Balance at September 30, 2024 (1)

(1) Included in accrued expenses and other liabilities on the condensed consolidated balance sheets.

(2) Amounts recognized in expense for severance pay and other termination benefits are included in compensation and benefits on the condensed consolidated statements of income.

The six months ended June 30, 2024 includes a reduction of the liability resulting from changes in estimates of $ 27 million and $ 9 million in Investor Services and Advisor Services, respectively.

The nine months ended September 30, 2024 includes a reduction of the liability resulting from changes in estimates of $ 27 million and $ 9 million in Investor Services and Advisor Services, respectively.

THE CHARLES SCHWAB CORPORATION

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

The following table summarizes the restructuring exit and other related costs (benefits) recognized in expense for the three and six months ended June 30, 2024:

The were no restructuring exit and other related costs recognized in expense for the three months ended September 30, 2024.

The following table summarizes the restructuring exit and other related costs (benefits) recognized in expense for the nine months ended September 30, 2024:

Investor Services Advisor Services

Three Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Nine Months Ended September 30, Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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Total $ ( 25 ) $ 12 $ ( 13 ) $ ( 9 ) $ 4 $ ( 5 ) $ ( 18 )

(1) Costs related to facility closures.

These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and impairment of fixed assets, relate to the impact of abandoning leased and other properties.

Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the condensed consolidated statements of income.

The following table summarizes the restructuring exit and other related costs recognized in expense for the three and nine months ended September 30, 2023:

Investor Services Advisor Services

Six Months Ended June 30, Employee Compensation and Benefits Facility Exit Costs (1)

Three and Nine Months Ended September 30,

Employee Compensation and Benefits Facility Exit Costs (1)

Investor Services Total Employee Compensation and Benefits Facility Exit Costs (1)

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Occupancy and equipment — 1 1 — 1 1 2

Other — 10 10 — 3 3 13

— 1 1 — — — 1

Total $ 202 $ 2 $ 204 $ 74 $ 1 $ 75 $ 279

(1) Costs related to facility closures.

These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and impairment of fixed assets, relate to the impact of abandoning leased and other properties.

Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the condensed consolidated statements of income.

The following table summarizes the restructuring exit and other related costs incurred from July 1, 2023 through June 30, 2024:

These costs, which are primarily comprised of accelerated amortization of ROU assets, relate to the impact of abandoning leased properties.

Accelerated amortization of ROU assets are included in occupancy and equipment on the condensed consolidated statements of income.

The following table summarizes the restructuring exit and other related costs incurred from July 1, 2023 through September 30, 2024:

Investor Services Advisor Services

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For additional information on the basis of presentation for derivative instruments on the Company’s condensed consolidated balance sheets and related offsetting considerations, see Note 12.

Cash flows associated with derivative instruments are reflected as cash flows from operating activities in the condensed consolidated statements of cash flows consistent with the treatment and nature of the items being hedged.

Cash flows associated with derivative instruments are

THE CHARLES SCHWAB CORPORATION

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

reflected as cash flows from operating activities in the condensed consolidated statements of cash flows consistent with the treatment and nature of the items being hedged.

Fair Value Hedges of Interest Rate Risk

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Cleared interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a CCP in exchange for the Company receiving floating-rate payments over the life of the agreements without the exchange of the underlying notional amount.

The Company had outstanding interest rate swaps with aggregate notional amounts of $ 8.8 billion and $ 8.9 billion at June 30, 2024 and December 31, 2023, respectively, that were designated as fair value hedges of interest rate risk.

The Company had outstanding interest rate swaps with aggregate notional amounts of $ 8.8 billion and $ 8.9 billion at September 30, 2024 and December 31, 2023, respectively, that were designated as fair value hedges of interest rate risk.

Fair Values of Derivative Instruments

The table below presents the gross fair values of the Company’s interest rate swaps designated as hedging instruments on the condensed consolidated balance sheets:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Assets Liabilities Assets Liabilities

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(1) Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets.

Derivative liabilities as of June 30, 2024 and derivative assets and liabilities as of December 31, 2023 were less than $ 500 thousand.

Derivative liabilities as of September 30, 2024 and derivative assets and liabilities as of December 31, 2023 were less than $ 500 thousand.

(2) Includes reductions related to variation margin settlements.

Settlements on derivative positions cleared through CCPs are reflected as reductions to the associated derivative asset and liability balances.

As of June 30, 2024, there was a $ 278 million reduction of derivative assets related to variation margin settlements.

As of September 30, 2024, there was a $ 73 million reduction of derivative assets and an $ 8 million reduction of derivative liabilities related to variation margin settlements.

As of December 31, 2023, there was an $ 87 million reduction of derivative assets and a $ 2 million reduction of derivative liabilities related to variation margin settlements.

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The following amounts were recorded in AFS securities on the condensed consolidated balance sheets related to fair value hedges:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Amortized cost of hedged AFS securities (1,2)

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(1) Includes the amortized cost basis of closed portfolios of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period.

At June 30, 2024 and December 31, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2.0 billion and $ 2.1 billion, respectively, of which $ 1.6 billion was designated in a portfolio layer hedging relationship.

The cumulative basis adjustments associated with these hedging relationships were a reduction of the amortized cost basis of the closed portfolios of $ 53 million and $ 19 million, respectively, at June 30, 2024 and December 31, 2023.

At September 30, 2024 and December 31, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2.0 billion and $ 2.1 billion, respectively, of which $ 1.5 billion and $ 1.6 billion, respectively, was designated in a portfolio layer hedging relationship.

The cumulative basis adjustments associated with these hedging relationships were a reduction of the amortized cost basis of the closed portfolios of $ 14 million and $ 19 million at September 30, 2024 and December 31, 2023, respectively.

(2) Excludes the amortized cost and fair value hedging adjustment of AFS securities for which hedge accounting has been discontinued.

The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $ 2 million at June 30, 2024, which is recorded in AFS securities on the condensed consolidated balance sheets and amortized to interest revenue as a yield adjustment over the lives of the securities.

The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $ 2 million at September 30, 2024, which is recorded in AFS securities on the condensed consolidated balance sheets and amortized to interest revenue as a yield adjustment over the lives of the securities.

At December 31, 2023, the cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of less than $ 500 thousand.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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( 214 ) 182 ( 19 ) 304

(1) Excludes net income from periodic interest accruals and receipts of $ 13 million and $ 16 million, respectively, for the three and six months ended June 30, 2024.

(1) Excludes net income from periodic interest accruals and receipts of $ 20 million and $ 36 million for the three and nine months ended September 30, 2024, respectively.

THE CHARLES SCHWAB CORPORATION

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Financial Instruments Subject to Off-Balance Sheet Credit Risk

Interest rate swaps :

Schwab uses interest rate swaps to manage certain interest rate risk exposures.

Schwab’s interest rate swaps are cleared through CCPs which require the Company to post initial margin as collateral against potential losses.

Schwab pledges investment securities as collateral in order to meet the CCP’s initial margin requirements.

Initial margin is posted through FCMs which serve as the intermediary between CCPs and Schwab.

Our interest rate swaps are subject to enforceable master netting arrangements allowing a right of setoff within each FCM-CCP relationship;

however, we do not net these positions.

Therefore, interest rate swaps are presented gross in the condensed consolidated balance sheets.

See Note 11 for additional information on the Company’s interest rate swaps.

Resale agreements :

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For Schwab to repledge or sell this collateral, we would be required to deposit cash and/or securities of an equal amount into our segregated reserve bank accounts in order to meet our segregated cash and investments requirement.

Schwab’s resale agreements as of June 30, 2024 and December 31, 2023 were not subject to master netting arrangements.

Schwab’s resale agreements as of September 30, 2024 and December 31, 2023 were not subject to master netting arrangements.

Securities lending :

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We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities.

The fair value of these borrowed securities was $ 1.4 billion and $ 1.5 billion at June 30, 2024 and December 31, 2023, respectively.

The fair value of these borrowed securities was $ 1.3 billion and $ 1.5 billion at September 30, 2024 and December 31, 2023, respectively.

Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers;

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These repurchase agreements are collateralized by investment securities with a fair value equal to or in excess of the secured borrowing liability.

Decreases in security prices posted as collateral for repurchase agreements may require Schwab to transfer cash or additional securities deemed acceptable by the counterparty.

Decreases in security prices posted as collateral for repurchase agreements may require Schwab to transfer cash and/or additional securities deemed acceptable by the counterparty.

To mitigate this risk, Schwab monitors the fair value of underlying securities pledged as collateral compared to the related liability.

2 unchanged sentences

As such, the secured short-term borrowings associated with these collateralized repurchase agreements are presented gross in the condensed consolidated balance sheets.

Interest rate swaps :

Schwab uses interest rate swaps to manage certain interest rate risk exposures.

Schwab’s interest rate swaps are cleared through CCPs which require the Company to post initial margin as collateral against potential losses.

Schwab pledges investment securities as collateral in order to meet the CCP’s initial margin requirements.

Initial margin is posted through FCMs which serve as the intermediary between CCPs and Schwab.

Our interest rate swaps are subject to enforceable master netting arrangements allowing a right of setoff within each FCM-CCP relationship;

however, we do not net these positions.

Therefore, interest rate swaps are presented gross in the condensed consolidated balance sheets.

See Note 11 for additional information on the Company’s interest rate swaps.

THE CHARLES SCHWAB CORPORATION

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Offsetting Collateral

June 30, 2024

September 30, 2024

Resale agreements (1)

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(2) Actual collateral was greater than or equal to the value of the related assets.

At June 30, 2024 and December 31, 2023, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $ 9.4 billion and $ 9.0 billion, respectively.

At September 30, 2024 and December 31, 2023, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $ 13.8 billion and $ 9.0 billion, respectively.

(3) Included in other assets in the condensed consolidated balance sheets.

(4) Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets.

Derivative liabilities as of June 30, 2024 and derivative assets and liabilities as of December 31, 2023 were less than $ 500 thousand.

(5) At June 30, 2024 and December 31, 2023, the fair value of initial margin pledged as collateral related to interest rate swaps was $ 188 million and $ 195 million, respectively.

(4) Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities in the condensed consolidated balance sheets.

Derivative liabilities as of September 30, 2024 and derivative assets and liabilities as of December 31, 2023 were less than $ 500 thousand.

(5) At September 30, 2024 and December 31, 2023, the fair value of initial margin pledged as collateral related to interest rate swaps was $ 188 million and $ 195 million, respectively.

See Notes 4 and 11 for additional information.

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Actual collateral value was greater than or equal to the value of the related liabilities.

At June 30, 2024 and December 31, 2023, the fair value of collateral pledged in connection with repurchase agreements was $ 9.6 billion and $ 5.3 billion, respectively.

At September 30, 2024 and December 31, 2023, the fair value of collateral pledged in connection with repurchase agreements was $ 8.6 billion and $ 5.3 billion, respectively.

See Note 8 for additional information.

(7) Included in accrued expenses and other liabilities in the condensed consolidated balance sheets.

Securities loaned are predominantly comprised of equity securities held in client brokerage accounts with overnight and continuous remaining contractual maturities.

The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at June 30, 2024 and December 31, 2023.

Securities loaned are predominantly comprised of equity securities held in client brokerage accounts.

At September 30, 2024, $ 7.5 billion of securities loaned had overnight and continuous remaining contractual maturities and $ 5.0 billion of securities loaned had contractual maturities of 30 - 95 days.

At December 31, 2023, remaining contractual maturities of securities loaned were predominantly overnight and continuous.

The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at September 30, 2024 and December 31, 2023.

(8) Included in other short-term borrowings in the condensed consolidated balance sheets.

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The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, as well as the fair value of securities that we had pledged to third-parties under such regulations and from securities borrowed transactions:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Fair value of client securities available to be pledged $ 101,320 $ 86,911

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Excludes amounts available and pledged for securities lending from fully-paid client securities.

The fair value of fully-paid client securities available and pledged was $ 202 million and $ 179 million at June 30, 2024 and December 31, 2023, respectively.

The fair value of fully-paid client securities available and pledged was $ 163 million and $ 179 million at September 30, 2024 and December 31, 2023, respectively.

(1) Securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.

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For a description of the fair value hierarchy and Schwab’s fair value methodologies, see Item 8 – Note 2 in the 2023 Form 10-K.

The Company did not adjust prices received from the primary independent third-party pricing service at June 30, 2024 or December 31, 2023.

The Company did not adjust prices received from the primary independent third-party pricing service at September 30, 2024 or December 31, 2023.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis:

June 30, 2024 Level 1 Level 2 Level 3 Balance at

September 30, 2024 Level 1 Level 2 Level 3 Balance at

Cash equivalents:

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The following tables present the fair value hierarchy for other financial instruments:

June 30, 2024 Carrying

September 30, 2024 Carrying

Amount Level 1 Level 2 Level 3 Balance at

47 unchanged sentences

The share repurchase authorization does not have an expiration date.

There were no repurchases of CSC’s common stock during the three and six months ended June 30, 2024, and for the three months ended June 30, 2023.

CSC repurchased 37 million shares of its common stock for $ 2.8 billion during the six months ended June 30, 2023.

As of June 30, 2024, approximately $ 8.7 billion remained on the authorization.

There were no repurchases of CSC’s preferred stock during the three and six months ended June 30, 2024 , and for the three months ended June 30, 2023 .

The Company repurchased 11,620 depositary shares representing interests in Series F preferred stock for $ 11 million, 42,036 depositary shares representing interests in Series G preferred stock for $ 42 million, 273,251 depositary shares representing interests in Series H preferred stock for $ 235 million, and 194,567 depositary shares representing interests in Series I preferred stock for $ 179 million on the open market during the six months ended June 30, 2023 .

There were no repurchases of CSC’s common stock during the three and nine months ended September 30, 2024, and for the three months ended September 30, 2023.

CSC repurchased 37 million shares of its common stock for $ 2.8 billion during the nine months ended September 30, 2023.

As of September 30, 2024, approximately $ 8.7 billion remained on the authorization.

There were no repurchases of CSC ’s preferred stock during the three and nine months ended September 30, 2024 , and for the three months ended September 30, 2023 .

The repurchase prices are inclusive of $ 3 million of dividends accrued by the stockholders as of the repurchase date.

1 unchanged sentence

The Company’s preferred stock issued and outstanding is as follows:

Liquidation Preference Per Share Dividend Rate in Effect at June 30, 2024 Earliest Redemption Date Date at Which Dividend Rate Resets or Becomes Floating Reset / Floating Rate Margin Over Reset / Floating Rate

Liquidation Preference Per Share Dividend Rate in Effect at September 30, 2024 Earliest Redemption Date Date at Which Dividend Rate Resets or Becomes Floating Reset / Floating-Rate

Margin Over Reset / Floating -Rate

Shares Issued and Outstanding (in ones) at Carrying Value at

June 30, 2024 (1)

September 30, 2024 (1)

December 31, 2023 (1)

June 30, 2024 December 31, 2023 Issue Date

September 30, 2024 December 31, 2023 Issue Date

Series D 750,000 750,000 $ 1,000 $ 728 $ 728 03/07/16 5.950 % 06/01/21 N/A N/A N/A

17 unchanged sentences

Dividends declared on the Company’s preferred stock are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 unchanged sentences

(1) Excludes $ 3 million of dividends declared on Series G, H and I, and accrued by stockholders as of the repurchase date.

Such dividends were part of the consideration paid upon repurchase of the depositary shares during the six months ended June 30, 2023.

Such dividends were part of the consideration paid upon repurchase of the depositary shares during the nine months ended September 30, 2023.

(2) Dividends paid quarterly.

6 unchanged sentences

AOCI balances and the components of other comprehensive income (loss) are as follows:

Balance at March 31, 2023 $ ( 20,690 )

Balance at June 30, 2023 $ ( 20,730 )

Available for sale securities:

3 unchanged sentences

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 147

Balance at September 30, 2023 $ ( 20,752 )

Balance at June 30, 2024 $ ( 16,936 )

Balance at March 31, 2024 $ ( 17,576 )

Available for sale securities:

3 unchanged sentences

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 134

Balance at June 30, 2024 $ ( 16,936 )

Balance at September 30, 2024 $ ( 14,618 )

Balance at December 31, 2022 $ ( 22,621 )

5 unchanged sentences

Other, net of tax expense (benefit) of $( 2 )

Balance at June 30, 2023 $ ( 20,730 )

Balance at September 30, 2023 $ ( 20,752 )

Balance at December 31, 2023 $ ( 18,131 )

4 unchanged sentences

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 387

Balance at June 30, 2024 $ ( 16,936 )

Balance at September 30, 2024 $ ( 14,618 )

(1) Tax expense (benefit) was less than $ 500 thousand.

2 unchanged sentences

The unrealized loss at the time of transfer is amortized over the remaining life of the security, offsetting the amortization of the security’s premium or discount, and resulting in no impact to net income.

As of June 30, 2024, the total remaining unamortized loss on these securities transferred to HTM included in AOCI was $ 10.6 billion net of tax effect ($ 13.9 billion pre-tax).

As of September 30, 2024, the total remaining unamortized loss on these securities transferred to HTM included in AOCI was $ 10.2 billion net of tax effect ($ 13.3 billion pre-tax).

THE CHARLES SCHWAB CORPORATION

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

32 unchanged sentences

(1) Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

(2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 13 million and 18 million for the three and six months ended June 30, 2024, respectively, and 15 million and 18 million for the three and six months ended June 30, 2023, respectively.

(2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 14 million and 18 million for the three and nine months ended September 30, 2024, respectively, and 15 million and 18 million for the three and nine months ended September 30, 2023, respectively.

THE CHARLES SCHWAB CORPORATION

2 unchanged sentences

Regulatory Requirements

At June 30, 2024, CSC and its banking subsidiaries met all of their respective capital requirements.

At September 30, 2024, CSC and its banking subsidiaries met all of their respective capital requirements.

Regulatory capital and ratios for CSC (consolidated) and CSB are as follows:

1 unchanged sentence

Well Capitalized Minimum Capital Requirement

June 30, 2024 Amount Ratio Amount Ratio Amount Ratio (1)

September 30, 2024 Amount Ratio Amount Ratio Amount Ratio (1)

Common Equity Tier 1 Risk-Based Capital $ 34,501 29.1 % N/A $ 5,338 4.5 %

20 unchanged sentences

(1) Under risk-based capital rules, CSC and CSB are also required to maintain additional capital buffers above the regulatory minimum risk-based capital ratios.

As of June 30, 2024, CSC was subject to a stress capital buffer of 2.5%.

As of September 30, 2024, CSC was subject to a stress capital buffer of 2.5%.

In addition, CSB is required to maintain a capital conservation buffer of 2.5%.

1 unchanged sentence

If a buffer falls below the minimum requirement, CSC and CSB would be subject to increasingly strict limits on capital distributions and discretionary bonus payments to executive officers.

At June 30, 2024, the minimum capital ratio requirements for both CSC and CSB, inclusive of their respective buffers, were 7.0%, 8.5%, and 10.5% for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital, respectively.

At September 30, 2024, the minimum capital ratio requirements for both CSC and CSB, inclusive of their respective buffers, were 7.0%, 8.5%, and 10.5% for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital, respectively.

N/A Not applicable.

Based on its regulatory capital ratios at June 30, 2024, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules.

There are no conditions or events since June 30, 2024 that management believes have changed CSB’s capital category.

Based on its regulatory capital ratios at September 30, 2024, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules.

There are no conditions or events since September 30, 2024 that management believes have changed CSB’s capital category.

CSC’s other banking subsidiaries are Charles Schwab Premier Bank, SSB (CSPB) and Charles Schwab Trust Bank (Trust Bank).

CSPB is a Texas-chartered state savings bank that provides banking and custody services, and Trust Bank is a Nevada-state chartered savings bank that provides trust and custody services.

At June 30, 2024, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities, and the entities held total assets of $ 25.5 billion and $ 9.5 billion, respectively.

Based on their regulatory capital ratios, at June 30, 2024, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules.

CSPB is a Texas state-chartered savings bank that provides banking and custody services, and Trust Bank is a Nevada state-chartered savings bank that provides trust and custody services.

At September 30, 2024, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities, and the entities held total assets of $ 25.8 billion and $ 9.6 billion, respectively.

Based on their regulatory capital ratios, at September 30, 2024, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Net capital and net capital requirements for CS&Co, TDAC, and TD Ameritrade, Inc., are as follows:

June 30, 2024 December 31, 2023

Net capital $ 8,798 $ 5,629

Minimum dollar requirement 0.250 0.250

2% of aggregate debit balances 1,742 1,069

Net capital in excess of required net capital $ 7,056 $ 4,560

Net capital $ 221 $ 3,634

Minimum dollar requirement 1.500 1.500

2% of aggregate debit balances — 440

Net capital in excess of required net capital $ 220 $ 3,194

TD Ameritrade, Inc.

Net capital and net capital requirements for CS&Co are as follows:

September 30, 2024 December 31, 2023

Net capital $ 9,888 $ 5,629

2 unchanged sentences

Net capital in excess of required net capital $ 8,102 $ 4,560

(1) As part of Schwab’s integration of Ameritrade, in May 2024, the Company completed the final client account conversions to CS&Co from TD Ameritrade, Inc.

See Note 10 for additional information regarding the Company’s integration of Ameritrade.

Pursuant to the SEC’s Customer Protection Rule and other applicable regulations, Schwab had cash and investments segregated for the exclusive benefit of clients at June 30, 2024.

Pursuant to the SEC’s Customer Protection Rule and other applicable regulations, Schwab had cash and investments segregated for the exclusive benefit of clients at September 30, 2024.

The SEC’s Customer Protection Rule requires broker-dealers to segregate client fully-paid securities and cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts.

1 unchanged sentence

Cash and cash equivalents included in cash and investments segregated and on deposit for regulatory purposes are presented as part of Schwab’s cash balances in the condensed consolidated statements of cash flows.

Following the completion of the final client account conversions to CS&Co from the Ameritrade broker-dealers in May 2024, TD Ameritrade, Inc.

and TDAC subsequently submitted Uniform Requests for Broker-Dealer Withdrawal (BDW) to terminate their registration as broker-dealers with the SEC, the Financial Industry Regulatory Authority, Inc.

(FINRA), and other applicable regulatory organizations.

As of September 30, 2024, TDAC continued to be registered as a broker-dealer and was in compliance with its respective net capital requirements.

As of September 30, 2024, TD Ameritrade, Inc.

was no longer registered as a broker-dealer with the SEC and FINRA and was not subject to the Uniform Net Capital Rule.

Segment Information

12 unchanged sentences

Investor Services Advisor Services Total

Three Months Ended June 30, 2024 2023 2024 2023 2024 2023

Three Months Ended September 30, 2024 2023 2024 2023 2024 2023

Net interest revenue $ 1,755 $ 1,710 $ 467 $ 527 $ 2,222 $ 2,237

6 unchanged sentences

Income before taxes on income $ 1,525 $ 1,204 $ 317 $ 179 $ 1,842 $ 1,383

Six Months Ended June 30,

Nine Months Ended September 30,

Net interest revenue $ 5,212 $ 5,448 $ 1,401 $ 1,849 $ 6,613 $ 7,297

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk