What changed in this filing

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Item 1. Business

2025-02-26 compared with 2024-02-23 · 120 added, 128 removed, 235 unchanged (51% of the section changed)

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(CS&Co), incorporated in 1971, a securities broker-dealer;

• TD Ameritrade, Inc., an introducing securities broker-dealer;

• TD Ameritrade Clearing, Inc.

(TDAC), a securities broker-dealer that provides trade execution and clearing services to TD Ameritrade, Inc.;

• Charles Schwab Bank, SSB (CSB), our principal banking entity;

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(CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds ® ) and for Schwab’s exchange-traded funds (Schwab ETFs).

In May 2024, the Company completed the final client account conversions to CS&Co from the Ameritrade broker-dealers, TD Ameritrade, Inc.

and TD Ameritrade Clearing, Inc.

Accordingly, these entities are no longer principal business subsidiaries.

See Business Acquisition below for additional information regarding the integration.

Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries.

Schwab provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services.

The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan services, as well as other corporate brokerage services, to businesses and their employees.

The Advisor Services segment provides custodial, trading, banking and trust, and support services, as well as retirement business services, to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers.

The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees.

The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers.

These services are further described in the segment discussion below.

Effective January 1, 2021, CSC changed the designation of its corporate headquarters from San Francisco, California to Westlake, Texas.

The Company maintains a nationwide presence across a network of branches and operations centers, as well as several international locations, and our Westlake location provides a centrally located hub for the Company.

Business Strategy and Competitive Environment

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Our strategy is based on the principle that developing trusted relationships will translate into more assets from both new and existing clients, ultimately driving more revenue, and along with expense discipline and thoughtful capital management, will generate earnings growth and build long-term stockholder value.

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Within Investor Services, our competition in serving individual investors spans brokerage, wealth management, and asset management firms, as well as banks, trust companies, financial technology companies, and retirement service providers.

In the Advisor Services arena, we compete with institutional custodians, wirehouses, regional and independent broker-dealers, banks, and trust companies.

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Across both segments, our key competitive advantages are:

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Business Acquisition

Acquisition of TD Ameritrade

Effective October 6, 2020, the Company completed its acquisition of TD Ameritrade Holding Corporation, now TD Ameritrade Holding LLC (TDA Holding) and its consolidated subsidiaries (collectively referred to as “TD Ameritrade” or “TDA”).

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

and futures and foreign exchange trade execution services.

TD Ameritrade has served individual retail investors and RIAs predominantly through the Internet, a national branch network, and relationships with RIAs.

TD Ameritrade’s sources of net revenues have primarily consisted of trading revenue, net interest revenue, bank deposit account fees, and asset management and administration fees, which are reflected in our consolidated results.

The acquisition of TD Ameritrade supports the Company’s ongoing efforts to enhance the client experience, to provide deeper resources for individual investors and RIAs including more robust trading capabilities, and to continue to improve our operating efficiency.

Over the course of 2023, the Company transitioned approximately $1.6 trillion in client assets across more than 15 million client accounts, including 7,000 RIAs, from TD Ameritrade to the Schwab platform across four transition groups.

The Company has now completed the transition of RIAs and approximately 90% of all TD Ameritrade client accounts, and we expect to complete the remaining client transitions from TD Ameritrade to Schwab in a final transition group in May 2024.

The Company has made significant progress in its efforts to reduce overlapping or redundant roles across the two firms and has largely completed the rationalization of CS&Co and TD Ameritrade, Inc.

branch locations.

Integration activities for the final client transition event and selective role reductions are expected to be completed in 2024.

The TD Ameritrade broker-dealers, TD Ameritrade, Inc.

and TDAC, will continue to serve their remaining clients prior to the final transition event, and the Company plans to subsequently wind-down the operations of the TD Ameritrade broker-dealers in 2024.

The Company has generally adopted Schwab platforms and systems, though we’ve leveraged certain material advantages in TD Ameritrade’s platforms, as exemplified by our comprehensive integration of TD Ameritrade’s thinkorswim ® and thinkpipes ® trading platforms, education, and tools into our offerings for retail and RIA clients.

Recently, we launched Schwab Trading Powered by Ameritrade™, a reimagined trading experience made possible by the combination of the thinkorswim trading platform with Schwab’s trading capabilities on Schwab.com and Schwab Mobile.

We have also incorporated TD Ameritrade Institutional’s customizable portfolio rebalancing solution, iRebal ® , as part of our offering for independent advisor clients.

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See Part II – Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7) – Overview and Part II – Item 8 – Financial Statements and Supplementary Date (Item 8) – Note 15 for additional information on our integration of TD Ameritrade.

Acquisition of Ameritrade

The Company acquired TD Ameritrade Holding Corporation, now Ameritrade Holding LLC (Ameritrade Holding) and its consolidated subsidiaries (collectively referred to as Ameritrade), effective October 6, 2020.

The Company’s integration of Ameritrade is now complete.

Through the integration, the Company generally adopted Schwab platforms and systems, though we’ve leveraged certain material advantages in Ameritrade’s platforms, including our comprehensive integration of Ameritrade’s thinkorswim ® and thinkpipes ® trading platforms, education, and tools into our offerings for retail and RIA clients.

In 2023, we launched Schwab Trading Powered by Ameritrade™, an enhanced trading experience made possible by the combination of the thinkorswim trading platform with Schwab’s trading capabilities on Schwab.com and Schwab Mobile.

We have also incorporated Ameritrade Institutional’s customizable portfolio rebalancing solution, iRebal ® , as part of our offering for independent advisor clients.

Over the course of five client transition groups in 2023 and 2024, we converted approximately $1.9 trillion in client assets across more than 17 million client accounts, including 7,000 RIAs, from Ameritrade to Schwab.

In May 2024, the Company completed the conversion of the final Ameritrade client transition group to the Schwab platform.

Following the completion of the final client account conversions to CS&Co, TD Ameritrade, Inc., and TDAC 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, and as of December 31, 2024, TD Ameritrade, Inc.

and TDAC are no longer registered as broker-dealers with the SEC and FINRA.

For additional information on our integration of Ameritrade, see Part II – Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7) – Overview and Part II – Item 8 – Financial Statements and Supplementary Data (Item 8) – Note 16.

IDA Agreement

Concurrently with the execution of the Agreement and Plan of Merger, dated as of November 24, 2019, as amended (the Merger Agreement), CSC entered into an amended and restated insured deposit account agreement with TD Bank USA, National Association and TD Bank, National Association (together, the TD Depository Institutions) (the 2019 IDA agreement), which became effective October 6, 2020.

Concurrently with the execution of the Agreement and Plan of Merger, dated as of November 24, 2019, as amended (the Merger Agreement) to acquire Ameritrade, CSC entered into an amended and restated insured deposit account agreement with TD Bank USA, National Association and TD Bank, National Association (together, the TD Depository Institutions) (the 2019 IDA agreement), which became effective October 6, 2020.

On May 4, 2023, the Company executed the Second Amended and Restated Insured Deposit Account Agreement (2023 IDA agreement) with the TD Depository Institutions that replaced and superseded the 2019 IDA agreement.

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Under the 2023 IDA agreement, the service fee on client cash deposits held at the TD Depository Institutions remains at 15 basis points, as it was in the 2019 IDA agreement.

See Part II – Item 7 – Capital Management and Item 8 – Note 14 for additional information on the 2023 IDA agreement.

For additional information on the 2023 IDA agreement, see Part II – Item 7 – Capital Management and Item 8 – Note 15.

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Products and Services

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• Exchange-traded funds (ETFs) – an extensive offering of ETFs, including both proprietary and third-party ETFs;

• Advice solutions – managed portfolios of both proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management;

• Managed investing solutions – managed portfolios of both proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management;

• Alternative investments – access to a variety of third-party alternative investments, such as private equity and real estate on Schwab’s alternative investment platforms – Schwab Alternative Investment OneSource ® and Schwab Alternative Investment Marketplace;

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Retail Investor;

Workplace Financial Services, which includes Stock Plan Services, Retirement Plan Services, and Designated Brokerage Services (formerly included in the Compliance Solutions business unit, a portion of which was sold to a third-party in 2022);

Workplace Financial Services, which includes Retirement Plan Services, Retirement Business Services (formerly part of Advisor Services), Stock Plan Services, and Designated Brokerage Services;

Mutual Fund Clearing Services;

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And we offer award-winning and 24/7 service to all our clients, regardless of asset levels, via a multi-channel service delivery model, which includes online, mobile, telephone, and branch support.

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We believe in the power of investing and the importance of planning in helping clients achieve their financial goals.

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Financial Consultants, Active Trader Financial Consultants, and Wealth Consultants in Schwab’s branches and regional centers focus on building client relationships.

We also have a range of roles to support clients with a broad set of specialized needs, including financial planning, managed investing, estate management, equity compensation and lending.

Additionally, we have teams focused on supporting the advice and education needs of all our clients irrespective of asset levels at Schwab.

We also have a range of roles to support clients with a broad set of specialized needs, including financial planning, managed investing, trading, trust, equity compensation, and lending.

Additionally, we have teams focused on supporting the advice and education needs of all our clients and corporate plan participants irrespective of asset levels at Schwab.

To better meet the differentiated needs of our more affluent clients, we offer Schwab Private Client Services™ for clients with $1 million – $10 million and Schwab Private Wealth Services™ for clients with $10 million or more in total assets.

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We offer referrals to independent RIAs in the Schwab Advisor Network ® for clients seeking personalized portfolio management, financial planning, and wealth management solutions.

We provide investors access to professional investment management in a diversified account that is invested exclusively in either mutual funds or ETFs through the Schwab Managed Portfolios™ and the Windhaven Investment Management ® Strategies, or equity securities and ETFs through the ThomasPartners ® Investment Management Strategies.

Through our acquisition of Wasmer Schroeder in 2020, more than 20 fixed income strategies and separately managed account offerings have been made available to retail clients beginning in 2021, including two positive impact strategies and a multi-sector income strategy.

We provide investors access to professional investment management in a diversified account that is invested exclusively in either

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mutual funds or ETFs through the Schwab Managed Portfolios™ and the Windhaven Investment Management ® Strategies, or equity securities and ETFs through the ThomasPartners ® Investment Management Strategies.

Through Wasmer Schroeder™ Strategies, more than 20 fixed income strategies and separately managed account offerings are available to retail clients, including two positive impact strategies, a multi-sector income strategy, and ultra-short-term U.S.

Treasury ladder strategies.

We also refer investors who want to utilize a specific third-party money manager to direct a portion of their investment assets to the Schwab Managed Account ™ program.

Schwab Personalized Indexing ® takes index investing a step further by allowing clients to own individual stocks that reflect the characteristics of an index in a professionally managed solution, enabling greater customization and tax efficiency.

Schwab Personalized Indexing ® allows clients to own individual stocks that reflect the characteristics of an index in a professionally managed solution, enabling greater customization and tax efficiency.

Schwab Intelligent Portfolios ® is available for clients who are looking to have their assets professionally managed via a fully automated online investment advisory service.

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Our solutions include simple, free digital retirement calculators, our complimentary digital Schwab Plan ® available to all Schwab clients, as well as more complex planning solutions that are delivered by a Schwab representative who takes into account a client’s personal and financial goals to build a tailored financial plan.

To meet the specific needs of trading clients, Schwab offers integrated web-, mobile-, and software-based trading platforms, real-time market data, options trading, premium research, and multi-channel access, as well as sophisticated account and trade management features, risk management tools, and dedicated service support – all at highly competitive pricing.

For example, clients that trade more actively can use these channels to access expert tools and extensive service capabilities – including experienced, knowledgeable teams of trading specialists, and integrated product offerings.

To meet the specific needs of trading clients, Schwab offers integrated web-, mobile-, and software-based trading platforms, real-time market data, access to an extensive set of tradeable products, premium research, and multi-channel access, as well as sophisticated account and trade management features, risk management tools, and dedicated service support – all at highly competitive pricing.

In addition to equities, ETFs, and 24/5 trading on select securities, qualified clients can trade options, futures, and forex.

In 2023, we introduced Schwab Trading Powered by Ameritrade™, which brings together the best of Schwab and Ameritrade’s trading platforms, comprehensive education, and specialized service.

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For all clients, it offers trading in foreign stocks.

In addition, Schwab serves both foreign investors and non-English-speaking U.S.

clients who wish to trade or invest in U.S.

In addition, Schwab serves both foreign investors and U.S.

clients with preferred language needs who wish to trade or invest in U.S.

dollar-based securities.

We also offer clients a range of self-service education and support tools, providing quick and efficient access to a broad lineup of information, research, tools, and administrative services, which clients can access according to their needs.

Educational tools include online and in-person workshops, live and on-demand webcasts, podcasts, interactive courses, and online information about investing.

Schwab Coaching delivers online and in-person workshops as well as live and on-demand webcasts.

In addition, we provide educational content including articles, videos, podcasts, and interactive courses covering a broad range of financial topics designed to support investors of all experience levels.

Additionally, we provide various online research and analysis tools that are designed to help clients achieve better investment outcomes.

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Schwab Equity Ratings International ® , an international ranking methodology, covers stocks of approximately 4,000 foreign companies.

Another example of expanding access to investing includes Schwab Stock Slices™, a service which enables investors to purchase a single stock slice, or up to 30 different stock slices at once, from the S&P 500 ® ,

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commission-free through our online channels.

Another example of expanding access to investing includes Schwab Stock Slices ® , a service which enables investors to purchase a single stock slice, or up to 30 different stock slices at once, from the Standard & Poor’s ® 500 Index (S&P 500 ® ), commission-free through our online channels.

We also offer Schwab Investing Themes ® , a thematic investing offer that uses proprietary research and technology to identify trends, opportunities, and relevant companies and group them into themes in which clients can invest in just a few clicks.

We also offer equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, stock appreciation rights, and a full range of participant support services through our Stock Plan Services business unit.

Specialized services for executive transactions and reporting, grant acceptance tracking, and other services are offered to employers to meet the needs of administering the reporting and compliance aspects of an equity compensation plan.

Retirement Plan Services offers a bundled 401(k) retirement plan product that provides retirement plan sponsors with extensive investment options, trustee or custodial services, and participant-level recordkeeping.

Retirement plan design features, which increase plan efficiency and achieve employer goals, are also offered, such as automatic enrollment, automatic fund mapping at conversion, and automatic contribution increases.

In addition to an open architecture investment platform, we offer access to low cost index mutual funds and ETFs.

Individuals investing for retirement through 401(k) plans can take advantage of bundled offerings of multiple investment choices, education, and third-party advice.

This third-party advice service is delivered online, by phone, or in person, including recommendations based on the core investment fund choices in their retirement plan and specific recommended savings rates.

Services also include support for Roth 401(k) accounts, profit sharing, defined benefit plans, non-qualified plans, and Schwab Personal Choice Retirement Account ® , a self-directed brokerage offering for retirement plans administered by Retirement Business Services within our Advisor Services segment.

Lastly, Mutual Fund Clearing Services provides open-end mutual fund trading, settlement, and related transactional services to banks, brokerage firms, and trust companies, and Off-Platform Sales offers proprietary mutual funds, ETFs, and collective trust funds (CTFs) outside the Company and not on the Schwab platform.

The Schwab Trading Activity Index™ is a proprietary, behavior-based index created by Schwab, designed to indicate the sentiment of retail investors’ portfolios.

It measures what investors are doing and how they are actually positioned in the markets.

Workplace Financial Services includes Retirement Plan Services, Retirement Business Services, Stock Plan Services, and Designated Brokerage Services.

Retirement Plan Services offers a bundled retirement plan product for a range of plan types that provides retirement plan sponsors with extensive investment options, trustee or custodial services, and plan participant-level recordkeeping.

Retirement plan design features, which increase plan efficiency and achieve plan sponsor goals, are also offered, including automatic enrollment, automatic fund mapping at conversion, and automatic contribution increases.

In addition to an open architecture investment platform, we offer a managed investing service to help plan participants work toward their retirement goals.

Individuals investing for retirement through 401(k) plans can take advantage of bundled offerings of multiple investment choices, education, third-party advice, and an integrated brokerage window.

Beginning in 2024, the Investor Services segment includes the Retirement Business Services business unit within Workplace Financial Services.

Retirement Business Services provides trust, custody, brokerage, and software services to independent

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retirement plan advisors and independent recordkeepers.

Through Retirement Business Services, retirement plan assets are held at Charles Schwab Trust Bank (Trust Bank) or trusteed by a separate, independent trustee, or through brokerage accounts at CS&Co.

Retirement Business Services also offers the Schwab Personal Choice Retirement Account ® , a self-directed brokerage offering for retirement plans.

The Company and independent retirement plan providers work together to serve plan sponsors, combining the consulting and administrative expertise of the administrator with our investment, technology, brokerage, trust, and custodial services.

Stock Plan Services offers equity compensation stock plan administrators full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, stock appreciation rights, and a full range of participant support services that includes education and investing services to individual equity plan participants.

Specialized services for executive transactions and reporting, corporate actions, grant acceptance tracking, and other services are offered to stock plan administrators to meet the needs of administering the reporting and compliance aspects of an equity compensation plan.

Designated Brokerage Services supports employers’ needs for employee account surveillance (trading and reporting) through a consultative and best practices approach.

Comprehensive single-custodian solutions combine technology with experienced service team members to help compliance professionals manage risk.

Single-custodian solutions provide Schwab account trading data via an outbound direct data feed to industry regulated companies’ proprietary compliance solutions or third-party compliance monitoring systems.

Lastly, we also offer Mutual Fund Clearing Services and Off-Platform Sales.

Mutual Fund Clearing Services provides open-end mutual fund trading, settlement, and related transactional services to banks, brokerage firms, and trust companies.

Off-Platform Sales offers proprietary mutual funds, ETFs, and collective trust funds (CTFs) outside the Company and not on the Schwab platform.

They are included within the Investor Services segment given their leveraging of the products and services offered to individual investors.

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Through the Advisor Services segment, Schwab has become one of the largest providers of custodial, trading, banking, and support services to RIAs and their clients.

We also provide retirement business services to independent retirement advisors and recordkeepers.

Management believes that we can maintain our competitive position primarily through the efforts of our sales, support, technology, and business consulting teams, which are dedicated to helping RIAs grow, compete, and succeed in serving their clients.

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Schwab provides extensive educational materials, programs, and events to RIAs seeking to expand their knowledge of industry issues and trends, as well as sharpen their individual expertise and practice management skills.

We conduct industry research on an ongoing basis, and hold a series of events and conferences every year to discuss topics of interest to RIAs, including business

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strategies and best practices.

We conduct industry research on an ongoing basis, and hold a series of events and conferences every year to discuss topics of interest to RIAs, including business strategies and best practices.

Schwab sponsors and hosts the annual IMPACT ® conference, which provides a national forum for the Company, RIAs, and other industry participants to gather and share information and insights, as well as a multitude of smaller events across the country each year.

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RIAs and their clients have access to our broad range of products and services, including individual securities, mutual funds, ETFs, fixed income products, managed accounts, cash products, bank lending, and trust services.

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In this capacity, we do not charge the RIA or end client a custody fee.

As part of our integration of TD Ameritrade, we have successfully added some of the best features from TD Ameritrade into our ongoing offerings.

The Company recently launched the thinkpipes ® trading platform, which offers real-time charting and efficient trading and allocation, into its ongoing offerings, as well as our customizable portfolio rebalancing solution, iRebal ® , as part of our offering for RIA clients.

The Advisor Services segment also includes the Retirement Business Services business unit.

Retirement Business Services provides trust, custody, brokerage, and software services to independent retirement plan advisors and independent recordkeepers.

Through Retirement Business Services, retirement plan assets are held at Charles Schwab Trust Bank (Trust Bank) or trusteed by a separate, independent trustee, or through brokerage accounts at CS&Co.

Retirement Business Services also offers the Schwab Personal Choice Retirement Account ® , a self-directed brokerage offering for retirement plans.

As part of our integration of Ameritrade, we have added some of the best features from Ameritrade into our ongoing offerings.

The Company’s thinkpipes ® trading platform offers real-time charting and efficient trading and allocation, and iRebal ® provides customizable portfolio rebalancing – both now part of our ongoing offering for RIA clients.

Sources of Net Revenues

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CSC is a savings and loan holding company and is regulated, supervised, and examined by the Board of Governors of the Federal Reserve System (Federal Reserve).

On March 16, 2021, CSC’s declaration electing to be treated as a Financial Holding Company (FHC) was deemed effective by the Federal Reserve.

In addition to the activities that a savings and loan holding

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company that has not elected to be treated as an FHC is permitted to conduct, an FHC may also engage in activities that are financial in nature or incidental to a financial activity (FHC Activities), including underwriting, dealing and making markets in securities, various insurance underwriting activities, and making merchant banking investments in non-financial companies.

CSC has elected to be treated as a Financial Holding Company (FHC) by the Federal Reserve.

In addition to the activities that a savings and loan holding company that has not elected to be treated as an FHC is permitted to conduct, an FHC may also engage in activities that are financial in nature or incidental to a financial activity (FHC Activities), including underwriting, dealing and making markets in securities, various insurance underwriting activities, and making merchant banking investments in non-financial companies.

The Federal Reserve has the authority to limit an FHC’s ability to conduct otherwise permissible FHC Activities if the FHC or any of its depository institution subsidiaries ceases to meet the applicable eligibility requirements, including requirements that the FHC and each of its depository institution subsidiaries maintain their status as “well-capitalized” and “well-managed.” If the Federal Reserve finds that an FHC fails to meet these requirements, the FHC and its subsidiaries may not commence any new FHC Activity, either de novo or through an acquisition, without prior Federal Reserve approval.

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If the FHC still fails to satisfy the applicable eligibility requirements 180 days after the Federal Reserve’s finding, the agency may require divestiture of all of the FHC’s depository institution subsidiaries or, alternatively, the FHC may elect to cease all of its FHC Activities.

In addition, if any depository institution controlled by an FHC fails to maintain at least a “Satisfactory” rating under the Community Reinvestment Act of 1977 (CRA), the FHC and its subsidiaries are prohibited from engaging in additional FHC Activities.

As a result of our election to be treated as an FHC and the election of our depository institution subsidiaries to be deemed savings associations under the Home Owners’ Loan Act (HOLA), a statutory prohibition limits those subsidiaries from making loans or other extensions of credit to any affiliate unless that affiliate engages, directly or indirectly, only in activities permissible under section 4(c) of the Bank Holding Company Act (BHC Act).

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engaging in additional FHC Activities.

As a result of our election to be treated as an FHC and the election of our depository institution subsidiaries to be deemed savings associations under the Home Owners’ Loan Act, a statutory prohibition limits those subsidiaries from making loans or other extensions of credit to any affiliate unless that affiliate engages, directly or indirectly, only in activities permissible under section 4(c) of the Bank Holding Company Act.

CSC’s three depository institution subsidiaries are CSB, CSC’s principal depository institution subsidiary, Charles Schwab Premier Bank, SSB (CSPB), and Trust Bank.

CSB and CSPB are Texas-chartered savings banks headquartered in Westlake, Texas, and Trust Bank is a Nevada-chartered savings bank.

Effective September 30, 2022, Trust Bank relocated its main office to Westlake, Texas and became a member of the Federal Reserve system.

CSB and CSPB are Texas-chartered state savings banks headquartered in Westlake, Texas, and Trust Bank is a Nevada state-chartered savings bank with its main office located in Westlake, Texas.

CSB and CSPB are currently regulated, supervised, and examined by the Federal Reserve, the Texas Department of Savings and Mortgage Lending (TDSML), the Consumer Financial Protection Bureau (CFPB), and the Federal Deposit Insurance Corporation (FDIC).

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Capital requirements for Category III banking organizations include the generally applicable risk-based capital and Tier 1 leverage ratio requirements (the “standardized approach” framework), the minimum 3.0% supplementary leverage ratio, the stress capital buffer (CSC), the capital conservation buffer (banking subsidiaries), and the countercyclical capital buffer, which is currently 0%.

As discussed below, starting in 2022, CSC, as a large savings and loan holding company became subject to the stress capital buffer requirement, which applies to risk-based capital ratios (Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital).

Under the currently applicable revised capital requirements, Category III organizations are not subject to the “advanced approaches” regulatory capital framework and are permitted to opt out of including accumulated other comprehensive income (AOCI) in their regulatory capital calculations.

CSC made this opt out election and excludes AOCI from its regulatory

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As a large savings and loan holding company, CSC is subject to the stress capital buffer requirement, which applies to risk-based capital ratios (Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital).

Under the currently applicable capital requirements, Category III organizations are not subject to the “advanced approaches” regulatory capital framework and are permitted to opt out of including most components of accumulated other comprehensive income (AOCI) in their regulatory capital calculations.

CSC made this opt out election and excludes most components of AOCI from its regulatory capital.

Category II organizations are not permitted to opt out of including AOCI in their regulatory capital calculations and have additional requirements for calculating risk-based capital ratios and risk-weighted assets.

In July 2023, the Federal Reserve, together with the Office of the Comptroller of the Currency and the FDIC, issued a notice of proposed rulemaking with amendments to the regulatory capital rules.

Among other things, the proposed rules would require us to include AOCI in regulatory capital and to calculate our risk-weighted assets using a revised risk-based approach, a component of which is based on operational risk , phased in over a three-year transition period beginning July 1, 2025 and ending July 1, 2028.

See Part II – Item 7 – Current Regulatory and Other Developments and Part II – Item 7 – Capital Management for additional information on these proposed regulatory changes.

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CSC is subject to the rule and the related Market Risk Rule required disclosures .

CSC began incorporating market risk capital for the period ending December 31, 2022, and while CSC is required to make adjustments to its risk-weighted assets related to de minimis positions, those adjustments have not significantly impacted our risk-based capital ratios nor have they had a current impact on CSC’s activities.

CSC began incorporating market risk capital for the period ending December 31, 2022, and while CSC is required to make adjustments to its

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risk-weighted assets related to de minimis positions, those adjustments have not significantly impacted our risk-based capital ratios nor have they had a current impact on CSC’s activities.

Liquidity Coverage Ratio (LCR) rule is designed to promote resiliency of the banking sector by requiring that certain large U.S.

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In addition, HQLA that are held at the Company’s bank subsidiaries in excess of the subsidiaries’ total net cash outflows, and are not transferable to non-bank affiliates, are excluded by rule from the Company’s eligible HQLA.

The final Net Stable Funding Ratio (NSFR) rule was jointly adopted by the Federal Reserve, the Office of the Comptroller of the Currency, and FDIC in 2020 to strengthen the resilience of large bank and savings and loan holding companies by requiring them to maintain a minimum level of stable funding based on the liquidity characteristics of the holding company’s assets, commitments, and derivative exposures over a one-year time horizon.

The final Net Stable Funding Ratio (NSFR) rule was jointly adopted by the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC to strengthen the resilience of large bank and savings and loan holding companies by requiring them to maintain a minimum level of stable funding based on the liquidity characteristics of the holding company’s assets, commitments, and derivative exposures over a one-year time horizon.

The requirement is expressed as a ratio of a banking organization’s available stable funding (ASF) to its required stable funding (RSF).

Under the NSFR rule, Schwab is required to maintain ASF in an amount equal to 100% of its RSF on an ongoing, daily basis.

Beginning with the first and second quarters of 2023, banking organizations subject to the rule are required to publicly disclose their quarterly NSFRs on a semi-annual basis.

Under the NSFR rule, CSC and our banking subsidiaries are required to maintain ASF in an amount equal to 100% of its RSF on an ongoing, daily basis.

CSC is also required to publicly disclose its quarterly NSFR on a semi-annual basis.

Capital Stress Testing

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This supervisory stress testing requirement went into effect for CSC beginning with the 2022 stress testing cycle.

Pursuant to the Federal Reserve’s 2021 rule, savings and loan holding companies with total consolidated assets of $100 billion or more, including CSC, are subject to an annual Comprehensive Capital Analysis and Review (CCAR) process, which requires submission of an annual capital plan to the Federal Reserve.

The rule also imposes a stress capital buffer requirement, floored at 2.5 percent of risk-weighted assets, that replaced CSC’s 2.5 percent capital conservation buffer.

The capital plan requirement became effective for CSC with the 2022 CCAR cycle, and in June 2022, the Company received the results of the Federal

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Reserve’s 2022 CCAR.

Pursuant to the Federal Reserve’s requirements, savings and loan holding companies with total consolidated assets of $100 billion or more, including CSC, are subject to an annual Comprehensive Capital Analysis and Review (CCAR) process, which requires submission of an annual capital plan to the Federal Reserve.

These requirements also impose a stress capital buffer requirement, floored at 2.5 percent of risk-weighted assets.

In June 2024, the Company received the results of the Federal Reserve’s 2024 CCAR.

These results included the Federal Reserve’s estimate of CSC’s minimum capital ratios under the supervisory severely adverse scenario for the nine-quarter horizon beginning December 31, 2023 and ending March 31, 2026.

Based on these results, CSC’s calculated stress capital buffer was below the 2.5% minimum, resulting in a stress capital buffer at the 2.5% floor.

Based on these results, CSC’s calculated stress capital buffer remains below the 2.5% minimum, resulting in a stress capital buffer at the 2.5% floor.

This 2.5% stress capital buffer became applicable on October 1, 2024.

Based on the results of the Federal Reserve’s 2023 CCAR, a 2.5% stress capital buffer continues to be applicable to Schwab for the four-quarter period that began October 1, 2023.

See Part II – Item 8 – Note 24 for additional information regarding our capital requirements.

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risk management and risk committee requirements;

liquidity risk management, stress testing, and buffer requirements;

and single counterparty credit limits.

CSC was required to comply with these risk management and risk committee requirements, as well as the liquidity risk-management, stress testing, and buffer requirements commencing on January 1, 2021.

The single counterparty credit limits went into effect for CSC on January 1, 2022.

liquidity risk management, liquidity stress testing, and liquidity buffer requirements;

THE CHARLES SCHWAB CORPORATION

counterparty credit limits.

CSC is required to comply with these risk management and risk committee requirements, the liquidity risk-management, stress testing, and buffer requirements, as well as the single counterparty credit limits.

In August 2023, the Federal Reserve, together with the Office of the Comptroller of the Currency and the FDIC, issued a proposed rulemaking on long-term debt requirements for certain large banking organizations.

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Insured Depository Institution Resolution Plans

The FDIC requires insured depository institutions with total consolidated assets of $50 billion or more to submit to the FDIC periodic plans providing for their resolution by the FDIC in the event of failure (resolution plans or so-called “living wills”) under the receivership and liquidation provisions of the Federal Deposit Insurance Act.

Under this requirement, CSB has been required to file with the FDIC a periodic resolution plan demonstrating how the bank could be resolved in an orderly and timely manner in the event of receivership such that the FDIC would be able to:

ensure that the bank’s depositors receive access to their deposits within one business day;

maximize the net present value of the bank’s assets when disposed of;

and minimize losses incurred by the bank’s creditors.

In June 2021, the FDIC announced a modified resolution plan approach for insured depository institutions with total consolidated assets of $100 billion or more which established a three-year cycle submission frequency, streamlined content requirements, and placed enhanced emphasis on engagement with firms.

CSB most recently submitted a resolution plan pursuant to these requirements in November 2022.

In August 2023, the FDIC issued a proposal to revise its rule on insured depository institution resolution planning.

The proposal would revise the requirements regarding the content and timing of resolution submissions.

Covered insured depository institutions would be required to file their respective resolution plans or informational filings biennially with supplemental information to be provided in off-years, starting in 2025 if the rule is finalized as proposed.

As a savings and loan holding company, CSC is not subject to a separate holding company resolution plan requirement.

The FDIC requires insured depository institutions (IDIs) with total consolidated assets of $50 billion or more to submit to the FDIC periodic plans providing for their resolution by the FDIC in the event of failure (IDI resolution plans) dating to a rule adopted in 2012.

In June 2024, the FDIC adopted a new final rule with additional requirements for IDI resolution plans.

Under the new final rule, large banks with total assets of at least $100 billion are required to submit comprehensive resolution plans that meet enhanced standards.

These IDIs generally are required to submit a full resolution plan every three years under the new final rule with limited supplements filed in the off years.

Among other requirements, the final rule requires periodic testing to validate capabilities and processing needed in resolution, and the FDIC will make certain credibility assessments of the IDI resolution plan.

Under the new final rule, CSB is required to submit an IDI resolution plan to the FDIC on or before July 1, 2025.

CSC is not subject to a separate holding company resolution plan requirement.

Deposit Insurance Assessments

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The deposit insurance assessment base is calculated as average consolidated total assets minus average tangible equity.

THE CHARLES SCHWAB CORPORATION

In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rates by two basis points, which became effective for the first quarterly assessment period of 2023.

The FDIC has stated that this change is intended to raise the FDIC’s DIF reserve ratio to the minimum threshold within the FDIC’s established DIF restoration plan, and will remain in effect until the DIF reserve ratio meets the FDIC’s long-term goal of 2%.

In November 2023, the FDIC approved a special assessment to recover losses incurred by the DIF in 2023;

In November 2023, the FDIC approved a special assessment to recover losses incurred by the DIF in 2023 to protect uninsured depositors due to the March 2023 closures of two banks.

See Part II – Item 7 – Current Regulatory and Other Developments for additional information regarding the special assessment.

Brokered Deposits

The FDIC’s amended brokered deposits rule became effective April 1, 2021, which established a new framework for determining whether deposits made through arrangements between third parties and depository institutions constitute brokered deposits and more specifically to clarify the circumstances under which broker-dealers that place deposits with depository institutions through brokerage sweep arrangements, such as CS&Co and TDAC, qualify for the “primary purpose exception” from the definition of a deposit broker.

The FDIC’s amended brokered deposits rule became effective April 1, 2021, which established a new framework for determining whether deposits made through arrangements between third parties and depository institutions constitute brokered deposits and more specifically to clarify the circumstances under which broker-dealers that place deposits with depository institutions through brokerage sweep arrangements, such as CS&Co, qualify for the “primary purpose exception” from the definition of a deposit broker.

Under this framework, the FDIC established a “25 percent” business relationship designated exception where a broker-dealer or other third party may qualify for the primary purpose exception by filing a notice with the FDIC indicating that less than 25 percent of its customer assets under administration for a particular business line are placed at depository institutions.

Funds swept by our broker-dealer subsidiaries to CSB and Schwab’s other depository institution subsidiaries continue to qualify for the primary purpose exception under this framework.

Funds swept by our broker-dealer subsidiary to Schwab’s depository institution subsidiaries and third-party banks continue to qualify for the primary purpose exception under this framework.

In July 2024, the FDIC issued a notice of proposed rulemaking to amend the brokered deposits framework;

see Part II – Item 7 – Current Regulatory and Other Developments for additional information regarding this proposed rulemaking.

THE CHARLES SCHWAB CORPORATION

Community Reinvestment Act

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The failure of an institution to receive at least a “satisfactory” rating could inhibit the institution or its holding company from undertaking certain activities, including acquisitions or opening branch offices.

In October 2023, the Federal Reserve, together with the Office of the Comptroller of the Currency and the FDIC, issued a final rule that makes extensive revisions to the regulations implementing the CRA.

See Part II – Item 7 – Current Regulatory and Other Developments for additional information.

CSC and its subsidiaries are subject to the Volcker Rule, which generally prohibits proprietary trading or acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with hedge funds and private equity funds, subject to certain exemptions, in each case as the applicable terms are defined in the Volcker Rule and the implementing regulations.

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sanctions programs administered by the Office of Foreign Assets Control.

THE CHARLES SCHWAB CORPORATION

Broker-Dealer, Futures Commission Merchant (FCM), Forex Dealer Member (FDM), and Investment Advisor Regulation

Our principal broker-dealer subsidiaries, CS&Co, TD Ameritrade, Inc., and TDAC, are each registered as a broker-dealer with the U.S.

Our principal broker-dealer subsidiary, CS&Co, is registered as a broker-dealer with the U.S.

Securities and Exchange Commission (SEC or Commission), the fifty states, the District of Columbia, the U.S.

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Much of the regulation of broker-dealers has been delegated to SROs.

Our principal broker-dealers are each members of the Financial Industry Regulatory Authority, Inc.

(FINRA) and the Municipal Securities Rulemaking Board (MSRB).

In addition, CS&Co and TDAC are members of Nasdaq Stock Market, Cboe EDGX, and MEMX LLC.

In addition to the SEC, the primary regulators of our principal broker-dealers are FINRA and, for municipal securities, the MSRB.

CS&Co is a member of FINRA and the Municipal Securities Rulemaking Board (MSRB).

In addition, CS&Co is a member of Nasdaq Stock Market, Cboe EDGX Exchange, Inc., and MEMX LLC.

In addition to the SEC, the primary regulators of CS&Co are FINRA and, for municipal securities, the MSRB.

The National Futures Association (NFA) is the primary regulator for CSFF’s futures, commodities, and forex trading activities.

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The regulations cover all aspects of the securities business, including, among other things, sales and trading practices, publication of research, margin lending, uses and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping and reporting, fee arrangements, order flow revenue from securities exchanges and market makers, disclosure to clients, fiduciary duties, and the conduct of directors, officers, and employees.

Our principal broker-dealer entities are subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule) and related SRO requirements.

CS&Co is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule) and related SRO requirements.

The CFTC and NFA also impose net capital requirements.

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CSC itself is not a registered broker-dealer and it is not subject to the Uniform Net Capital Rule.

The Uniform Net Capital Rule prohibits broker-dealers from paying cash dividends, making unsecured advances or loans or repaying subordinated loans if such payment would result in a net capital amount of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement.

In addition to net capital requirements, as a self-clearing broker-dealer, CS&Co, and as a clearing broker-dealer, TDAC, are subject to cash deposit and collateral requirements with clearing houses, such as the Depository Trust & Clearing Corporation and Options Clearing Corporation, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility.

THE CHARLES SCHWAB CORPORATION

less than 120% of its minimum dollar requirement.

See Part II – Item 8 – Note 24 for additional information regarding our net capital requirements.

In addition to net capital requirements, as a self-clearing broker-dealer, CS&Co is subject to cash deposit and collateral requirements with clearing houses, such as the Depository Trust & Clearing Corporation and Options Clearing Corporation, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility.

The structure and regulation of the securities markets have a significant impact on the Company’s business and operations, including its sources of net revenues.

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We also encourage and empower employees to volunteer in the communities where we live and work, offering paid time off for every employee to volunteer in his or her community.

The Company offers a hybrid work and

THE CHARLES SCHWAB CORPORATION

flexibility approach to work arrangements that is designed to balance the importance our employees place on workplace flexibility with the benefits of in-person interactions to train and learn from one another, build human connections, and maintain Schwab’s culture as we serve our clients.

We know that through workplace diversity, we gain a wider range of perspectives and experiences, which supports our strategy and helps us better serve our clients.

We focus on attracting a diversity of talent by maintaining a strong employer brand and expanding where and how we meet prospective employees.

We recruit from underrepresented communities through targeted campus recruiting, scholarship programs, and partnerships with professional organizations.

The Company offers a hybrid work and flexibility approach to work arrangements that is designed to balance the importance our employees place on workplace flexibility with the benefits of in-person interactions to train and learn from one another, build human connections, and maintain Schwab’s culture as we serve our clients.

We seek to build a workforce with a wide range of perspectives and experiences, which supports our strategy and helps us better serve our clients.

We focus on attracting highly qualified talent with varied backgrounds and perspectives by maintaining a strong employer brand and expanding where and how we meet prospective employees.

For Schwab employees, we support a number of Employee Resource Groups (ERGs), which are employee-driven and provide support, leadership development opportunities, and connection.

Our ERGs are centered around employees who share characteristics or life experiences and are committed to enhancing diversity and inclusion at Schwab.

Additionally, our leaders are explicitly responsible for creating an environment where all people can do their best work, and for fostering the development of high-performance teams that recognize the value of diverse perspectives, skills, and backgrounds.

Our ERGs are open to all employees, are not limited by affiliation, and help us build an inclusive culture.

Additionally, our leaders are responsible for creating an environment where all people can do their best work, and for fostering the development of high-performance teams that value the individual strengths of every employee.

We regularly request feedback from our employees through surveys.

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In addition, we post to the website the Dodd-Frank stress test results, our regulatory capital disclosures based on Basel III, our average LCR, and our average NSFR.

All such filings are available free of charge either on our website or by request via email ( investor.relations@schwab.com ), or mail (Charles Schwab Investor Relations at 211 Main Street, San Francisco, CA 94105).

All such filings are available free of charge either on our website or by request via email ( investor.relations@schwab.com ), or mail (Charles Schwab Investor Relations at 3000 Schwab Way, Westlake, TX 76262).

THE CHARLES SCHWAB CORPORATION

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-K

Item 1. Business