What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-23 · 520 added, 450 removed, 2046 unchanged (32% of the section changed)

9 unchanged sentences

Revenue Recognition

Receivables from and Payables to Brokers, Dealers, and Clearing Organizations

Receivables from and Payables to Brokerage Clients

7 unchanged sentences

Exit and Other Related Liabilities

D erivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Financial Instruments Subject to Off-Balance Sheet Credit Risk

8 unchanged sentences

The Charles Schwab Corporation – Parent Company Only Financial Statements

Subsequent Events

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

35 unchanged sentences

Diluted $ 2.99 $ 2.54 $ 3.50

(1) No fee waivers were recognized for the year ended December 31, 2023.

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

(1) No fee waivers were recognized for the years ended December 31, 2024 and 2023.

Includes fee waivers of $ 57 million for the year ended December 31, 2022.

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

30 unchanged sentences

38,221 31,836

Receivables from brokers, dealers, and clearing organizations 2,440 3,327

Receivables from brokerage clients — net 85,374 68,667

14 unchanged sentences

Bank deposits $ 259,121 $ 289,953

Payables to brokers, dealers, and clearing organizations 13,336 6,648

Payables to brokerage clients 101,559 84,786

7 unchanged sentences

Preferred stock — $ .01 par value per share;

aggregate liquidation preference of $ 9,329 and

$ 9,850 at December 31, 2023 and 2022, respectively

aggregate liquidation preference of $ 9,329

at December 31, 2024 and 2023

Common stock — 3 billion shares authorized;

30 unchanged sentences

— — — — — — ( 1,592 ) — — ( 1,592 )

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

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

Conversion of nonvoting common stock to

common stock — 13 — ( 13 ) — — — — — —

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

4 unchanged sentences

Other comprehensive income (loss), net of tax — — — — — — — — 4,490 4,490

Issuance of preferred stock, net 740 — — — — — — — — 740

Redemption of preferred stock ( 988 ) — — — — — ( 12 ) — — ( 1,000 )

Redemption and repurchase of preferred stock,

inclusive of tax ( 515 ) — — — — — 44 — — ( 471 )

Dividends declared on preferred stock — — — — — — ( 438 ) — — ( 438 )

1 unchanged sentence

— — — — — — ( 1,838 ) — — ( 1,838 )

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

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

Conversion of nonvoting common stock to

common stock — 13 — ( 13 ) — — — — — —

Repurchase of common stock, inclusive of tax — — — — — — — ( 2,866 ) — ( 2,866 )

Stock option exercises and other — — — — — ( 145 ) — 194 — 49

6 unchanged sentences

inclusive of tax — — — — — — — — — —

Issuance of preferred stock, net — — — — — — — — — —

Dividends declared on preferred stock — — — — — — ( 437 ) — — ( 437 )

1 unchanged sentence

— — — — — — ( 1,838 ) — — ( 1,838 )

Repurchase of common stock, inclusive of tax — — — — — — — ( 2,866 ) — ( 2,866 )

Stock option exercises and other — — — — — ( 123 ) — 207 — 84

18 unchanged sentences

Investments segregated and on deposit for regulatory purposes ( 14,090 ) 23,759 ( 874 )

Receivables from brokers, dealers, and clearing organizations 887 ( 451 ) 172

Receivables from brokerage clients ( 16,779 ) ( 2,135 ) 23,947

Other assets 92 ( 1,569 ) ( 73 )

Payables to brokers, dealers, and clearing organizations 6,688 1,808 ( 2,849 )

Payables to brokerage clients 16,773 ( 12,652 ) ( 28,233 )

69 unchanged sentences

(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;

1 unchanged sentence

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

Schwab’s securities broker-dealers have over 380 domestic branch offices in 48 states and the District of Columbia, as well as locations in Puerto Rico, the United Kingdom, Hong Kong, and Singapore.

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 Note 16 for additional information regarding the Company’s integration of Ameritrade.

Schwab’s securities broker-dealer has over 380 domestic branch offices in 48 states and the District of Columbia, as well as locations in Puerto Rico, the United Kingdom, Hong Kong, and Singapore.

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

7 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current period presentation.

Beginning in 2023, Federal Home Loan Bank borrowings are presented separately from other short-term borrowings in the consolidated balance sheets.

Beginning in 2024, receivables from brokers, dealers, and clearing organizations and payables to brokers, dealers, and clearing organizations are presented separately from other assets and accrued expenses and other liabilities, respectively, in the consolidated balance sheets.

Correspondingly, interest expense related to securities lending is now presented as interest expense on payables to brokers, dealers, and clearing organizations.

Prior period amounts have been reclassified to reflect these changes.

10 unchanged sentences

Investments in entities in which Schwab does not have a controlling financial interest are accounted for under the equity method of accounting when we have the ability to exercise significant influence over operating and financing decisions of the entity or by accounting policy for investments in certain types of limited liability entities.

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

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

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

housing projects which are accounted for under the proportional amortization method.

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

Summary of Significant Accounting Policies

8 unchanged sentences

and bank loans.

Fees earned and incurred on securities borrowing and lending activities, which are conducted by the Company’s broker-dealer subsidiaries on assets held in client brokerage accounts, are also included in interest revenue and expense.

Fees earned and incurred on securities borrowing and lending activities, which are conducted by the Company’s broker-dealer subsidiary on assets held in client brokerage accounts, are also included in interest revenue and expense.

Asset management and administration fees

1 unchanged sentence

Mutual fund and ETF service fees are charged for investment management, shareholder, and administration services provided to Schwab Funds ® and Schwab ETFs, as well as recordkeeping, shareholder, and administration services provided to third-party funds.

Advice solutions fees are charged for brokerage and asset management services provided to advice solutions clients.

Both mutual fund and ETF service fees and advice solutions fees are earned and recognized over time.

Managed investing solutions (formerly referred to as advice solutions) fees are charged for brokerage and asset management services provided to managed investing solutions clients.

Both mutual fund and ETF service fees and managed investing solutions fees are earned and recognized over time.

Fees are generally based on a percentage of the daily value of assets under management and are collected on a monthly or quarterly basis.

2 unchanged sentences

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

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

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

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

5 unchanged sentences

Other revenue

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

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

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

Other revenue includes industry fees (formerly referred to as exchange processing fees), service fees, the provision for credit losses on bank loans, and other gains and losses from the sale of assets.

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

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

Unsatisfied performance obligations

88 unchanged sentences

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

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

the receivables from these transactions are

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

the receivables from these

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

included in other assets on the consolidated balance sheets.

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

the payables from these transactions are included in accrued expenses and other liabilities on the consolidated balance sheets.

transactions are included in receivables from brokers, dealers, and clearing organizations on the consolidated balance sheets.

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

the payables from these transactions are included in payables to brokers, dealers, and clearing organizations on the consolidated balance sheets.

In instances where the Company is acting as the lender and receives securities that can be sold or pledged as collateral, the Company recognizes the collateral received at fair value and the obligation to return the collateral in the consolidated balance sheets.

The market value of securities borrowed and loaned is monitored and collateral is adjusted to ensure full collateralization.

3 unchanged sentences

Bank loans held for investments are recorded at amortized cost, which is comprised of the contractual principal amounts adjusted for unamortized direct origination costs or net purchase discounts or premiums.

Interest income on bank loans is recognized using the effective interest method based on the contractual terms of the loan.

Direct origination costs and premiums and discounts are recognized in interest revenue using the effective interest method over the contractual life of the loan and are adjusted for actual prepayments.

5 unchanged sentences

First Mortgages and HELOCs.

Schwab records an allowance for credit losses through a charge to earnings based on our estimate of current expected credit losses for the existing portfolio.

Schwab records an allowance for credit losses through a charge to provision for credit losses, included in other revenue, based on our estimate of current expected credit losses for the existing portfolio.

We review the allowance for credit losses quarterly, taking into consideration current economic conditions, reasonable and supportable forecasts, the composition of the existing loan portfolio, past loss experience, and any other risks inherent in the portfolio to ensure that the allowance for credit losses is maintained at an appropriate level.

PALs are collateralized by marketable securities with liquid markets.

Substantially all PALs are collateralized by marketable securities with liquid markets.

Credit lines are over-collateralized and borrowers are required to maintain collateral at specified levels at all times.

17 unchanged sentences

The methodology described above results in loss factors that are applied to the amortized cost basis of loans, exclusive of accrued interest receivable, to determine the allowance for credit losses for First Mortgages and HELOCs.

Management also estimates a liability for expected credit losses on the Company’s commitments to extend credit related to unused HELOCs and commitments to purchase First Mortgages.

See Note 14 for additional information on these commitments.

The liability is calculated by applying the loss factors described above to the commitments expected to be funded and is included

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

in accrued expenses and other liabilities on the consolidated balance sheets.

Management also estimates a liability for expected credit losses on the Company’s commitments to extend credit related to unused HELOCs and commitments to purchase First Mortgages.

See Note 15 for additional information on these commitments.

The liability is calculated by applying the loss factors described above to the commitments expected to be funded and is included in accrued expenses and other liabilities on the consolidated balance sheets.

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

29 unchanged sentences

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

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

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

their carrying values.

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

30 unchanged sentences

Once the Company has committed to a plan to abandon the lease, the amortization period of the ROU asset is shortened to the abandonment date.

Advertising and market development

Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts.

Where it applies to these costs, the Company’s accounting policy is to expense when incurred.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Advertising and market development

Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts.

Where it applies to these costs, the Company’s accounting policy is to expense when incurred.

Schwab provides for income taxes on all transactions that have been recognized in the consolidated financial statements.

18 unchanged sentences

Derivative instruments and hedging activities

As discussed further in Note 16, beginning in 2023, the Company utilizes derivative instruments as part of its interest rate risk management.

The Company utilizes derivative instruments as part of its interest rate risk management.

The Company records all derivatives on the balance sheet at fair value.

1 unchanged sentence

Hedge accounting generally matches the timing of gain or loss recognition on the derivatives with the recognition of the changes in the fair values or cash flows attributable to the risk being hedged .

Schwab’s policy is to designate all eligible derivatives in hedge accounting relationships.

Economic hedges do not qualify for hedge accounting or the Company elects not to apply hedge accounting.

To qualify for hedge accounting, among other requirements, a derivative must be highly effective at reducing exposure to the hedged risk.

2 unchanged sentences

Schwab applies the “shortcut method” of hedge accounting for a portion of its fair value hedges, which assumes perfect effectiveness.

Alternatively, when quantitative effectiveness assessments are required, the Company uses regression analysis, which is the method employed for the rest of our hedging relationships.

For the Company’s fair value hedges of interest rate risk, the gain or loss on the derivatives and the changes in fair values of the hedged assets attributable to benchmark interest rates (basis adjustments) are both recorded in interest revenue on the consolidated statements of income.

If the hedging relationship is terminated, any remaining basis adjustment is included in the amortized cost of the hedged asset and amortized to interest revenue over its remaining life as a yield adjustment using the effective interest method.

Alternatively, when quantitative effectiveness assessments are required, the Company uses regression analysis.

For the Company’s fair value hedges of interest rate risk, the gain or loss on the derivatives and the changes in fair values of the hedged assets and liabilities attributable to benchmark interest rates (basis adjustments) are both recorded in interest revenue or interest expense on the consolidated statements of income.

If the hedging relationship is terminated, any remaining basis adjustment is included in the carrying amount of the hedged asset or liability and amortized to interest revenue or interest expense over its remaining life as a yield adjustment.

The Company does not amortize basis adjustments prior to termination of the hedging relationship.

Certain fair value hedges may be designated under the portfolio layer method (PLM) of hedge accounting, which allows the Company to hedge the interest rate risk of prepayable and non-prepayable financial assets by designating a stated amount of a closed portfolio that is expected to be outstanding for the designated hedge period (a hedged layer) as the hedged item.

A PLM hedging relationship may include multiple hedged layers.

If at any point during the hedge period the aggregate amount of the hedged layers exceeds the amount of the closed portfolio (i.e., a breach of the hedged layer(s) has occurred) or is expected to exceed the amount of the closed portfolio at a future date during the hedge period (i.e., a breach of the hedged layer is anticipated), the PLM hedging relationship must be fully or partially terminated to cure the breach or anticipated breach.

Basis adjustments for active PLM hedges are maintained at the closed portfolio level and are only allocated to individual assets remaining in the closed portfolio when the hedging relationship is terminated, except for any portion of the basis adjustment related to a breach of the hedged layer(s) that has occurred, which is recognized in interest revenue immediately.

Allocated PLM

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

basis adjustments are included in the amortized cost of the hedged assets and amortized to interest revenue over their respective remaining lives as a yield adjustment using the effective interest method.

hedging relationship may include multiple hedged layers.

Allocated PLM basis adjustments are included in the amortized cost of the hedged assets and amortized to interest revenue over their respective remaining lives as a yield adjustment.

For the Company’s cash flow hedges of interest rate risk, the gain or loss on the derivatives is recorded in AOCI and subsequently reclassified into interest revenue or interest expense, depending on where the hedged cash flows are recognized, on the consolidated statements of income when the hedged transactions affect earnings.

Amounts reported in AOCI for cash flow hedges of interest rate risk on recognized financial assets and liabilities are reclassified into interest revenue or interest expense as interest payments are accrued or made.

If the hedging relationship is terminated and transactions that were hedged are no longer probable of occurring, the gain or loss on the derivative recorded in AOCI prior to termination is reclassified into interest revenue or interest expense immediately.

If the hedging relationship is terminated and it becomes probable that the transactions that were hedged will not occur, the gain or loss on the derivative recorded in AOCI prior to termination is reclassified into interest revenue or interest expense immediately.

Otherwise, the derivative gain or loss in AOCI will continue to be reclassified into interest revenue or interest expense in the periods during which the previously hedged transactions affect earnings.

For the Company’s economic hedges, the gain or loss on the derivatives is recorded in earnings and provides an offset to the gains or losses recognized on the hedged items.

The Company did not have any economic hedges during the years ended December 31, 2024 and 2023.

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

14 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis

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

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

Schwab’s assets and liabilities measured at fair value on a recurring basis include certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, certain other assets, interest rate swaps, and certain accrued expenses and other liabilities.

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

When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities.

Quoted prices for investments in exchange-traded securities represent end-of-day close prices published by exchanges.

3 unchanged sentences

Our primary independent pricing service provides prices for our fixed income investments such as commercial paper;

certificates of deposits;

certificates of deposit;

government and agency securities;

4 unchanged sentences

and non-agency commercial mortgage-backed securities.

Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities.

Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities.

We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable.

19 unchanged sentences

Effects on the Financial Statements or Other Significant Matters

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

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

Eliminates the accounting guidance for TDRs.

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

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

Vintage Disclosures

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

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

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

The adoption of this guidance did not have a material impact on the Company’s financial statements.

New Accounting Standards Not Yet Adopted

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

ASU 2023-07, “Segment Reporting (Topic 280):

Accounting Standards Update (ASU) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”

1 unchanged sentence

Also requires disclosure of the CODM’s title and position and how the CODM uses reported segment profit or loss information in assessing segment performance and allocating resources.

All currently required annual segment disclosures will be required for interim periods as well.

All required segment disclosures will be presented both on an interim and annual basis.

Adoption requires retrospective application as of the earliest comparative period presented in the financial statements.

Early adoption is permitted.

January 1, 2024 (applies to the annual financial statements for 2024 and interim periods thereafter)

The Company does not expect this guidance will have a material impact on its financial statements or disclosures.

January 1, 2024 (applied to the annual financial statements for 2024 and interim periods thereafter)

The Company adopted this guidance on January 1, 2024 on a retrospective basis for all periods presented within these 2024 annual financial statements.

The impact of adoption was the additional segment disclosures included in Note 25.

New Accounting Standards Not Yet Adopted

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

ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”

Expands income tax disclosures, primarily by enhancing the rate reconciliation table and requiring additional disaggregated information about income taxes paid.

Improvements to Income Tax Disclosures” Expands income tax disclosures, primarily by enhancing the rate reconciliation table and requiring additional disaggregated information about income taxes paid.

Adoption allows retrospective or prospective application, with early adoption permitted.

January 1, 2025 The Company does not expect this guidance will have a material impact on its financial statements or disclosures.

January 1, 2025 (applies to the annual financial statements for 2025 and interim periods thereafter)

The Company does not expect this guidance will have a material impact on its financial statements or related disclosures.

ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses”

Requires additional disclosures about certain expenses including, but not limited to, employee compensation, depreciation, amortization of intangible assets, and selling expenses.

Also requires annual disclosure of how selling expenses are defined.

Adoption allows retrospective or prospective application, with early adoption permitted.

January 1, 2027 (applies to the annual financial statements for 2027 and interim periods thereafter)

The Company is evaluating the impact of this guidance on its financial statement disclosures.

THE CHARLES SCHWAB CORPORATION

16 unchanged sentences

Bank deposits ( 3,152 ) ( 3,363 ) ( 723 )

Payables to brokers, dealers, and clearing organizations (1)

( 372 ) ( 147 ) ( 48 )

Payables to brokerage clients ( 272 ) ( 271 ) ( 123 )

4 unchanged sentences

Long-term debt ( 846 ) ( 715 ) ( 498 )

Securities lending expense ( 147 ) ( 48 ) ( 24 )

Other interest expense ( 2 ) ( 3 ) 1

3 unchanged sentences

Mutual funds, ETFs, and CTFs 3,221 2,563 2,055

Advice solutions 1,868 1,854 1,993

Managed investing solutions (2)

2,129 1,868 1,854

Other 366 325 307

8 unchanged sentences

Total net revenues $ 19,606 $ 18,837 $ 20,762

(1) Certain prior year amounts have been reclassified to conform to the current year presentation.

(1) Beginning in 2024, this line item includes interest expense related to securities loaned.

Prior period amounts have been reclassified to reflect this change.

See Note 1 for additional information.

(2) Managed investing solutions was formerly referred to as “Advice solutions”.

For additional discussion of contract balances, see Note 10.

4 unchanged sentences

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

Receivables from and Payables to Brokers, Dealers, and Clearing Organizations

Receivables from and payables to brokers, dealers, and clearing organizations are detailed below:

December 31, 2024 2023

Receivables from clearing organizations $ 1,670 $ 1,645

Securities borrowed 695 1,563

Receivables for securities failed to deliver 40 92

Other receivables from broker-dealers 35 27

Receivables from brokers, dealers, and clearing organizations

$ 2,440 $ 3,327

Deposits for securities loaned $ 13,068 $ 5,397

Payables to clearing organizations 127 122

Payables for securities failed to receive 104 263

Other payables to broker-dealers 37 866

Payables to brokers, dealers, and clearing organizations $ 13,336 $ 6,648

See Note 18 for additional information regarding securities lending and borrowing activities.

Receivables from and Payables to Brokerage Clients

9 unchanged sentences

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

At December 31, 2023 and 2022, approximately 17 % of total CS&Co and TD Ameritrade, Inc.

At December 31, 2024, approximately 16 % of CS&Co’s total client accounts were located in California.

As of December 31, 2023, approximately 17 % of CS&Co and TD Ameritrade, Inc.

client accounts were located in California.

14 unchanged sentences

6,106 — 196 5,910

Foreign government agency securities 1,035 — 33 1,002

state and municipal securities 603 — 54 549

Foreign government agency securities 533 — 6 527

Non-agency commercial mortgage-backed securities 121 — 12 109

Certificates of deposit 100 — — 100

Other 21 — 3 18

10 unchanged sentences

Treasury securities 22,459 1 989 21,471

Asset-backed securities (2)

13,672 — 649 13,023

Corporate debt securities (1)

13,344 — 860 12,484

Certificates of deposit 2,245 — 14 2,231

Asset-backed securities (2)

9,465 — 378 9,087

Foreign government agency securities 1,035 — 33 1,002

1 unchanged sentence

Non-agency commercial mortgage-backed securities

Certificates of deposit 100 — — 100

Other 22 — 3 19

Unallocated portfolio layer method fair value basis adjustments (3)

( 19 ) — ( 19 ) —

Total available for sale securities

6 unchanged sentences

Asset-backed securities collateralized by credit card receivables represented approximately 25 % and 24 % of the asset-backed securities held as of December 31, 2024 and 2023, respectively.

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

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

See Notes 2 and 17 for more information on PLM hedge accounting.

(4) Included in cash and cash equivalents on the consolidated balance sheets, but excluded from this table, is $ 48 million of AFS commercial paper as of December 31, 2022 ( none as of December 31, 2023).

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

During 2022, the Company transferred a total of $ 188.6 billion of U.S.

agency mortgage-backed securities with a total net pre-tax unrealized loss at the times of transfer of $ 18.2 billion from the AFS category to the HTM category.

The transfer of these securities to the HTM category reduces the Company’s exposure to fluctuations in AOCI that can result from unrealized losses on AFS securities due to changes in market interest rates.

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 December 31, 2023, the total remaining unamortized loss on these securities transferred to HTM included in AOCI was $ 11.5 billion net of tax effect ($ 15.0 billion pre-tax).

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

At December 31, 2023, our banking subsidiaries had pledged investment securities with a value of $ 70.1 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 12).

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 $ 6.2 billion as collateral for this facility at December 31, 2023.

Beginning in 2023, our banking subsidiaries pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve through the Bank Term Funding Program, and had pledged securities with a par value of $ 39.2 billion as collateral for this facility at December 31, 2023 .

At December 31, 2024, our banking subsidiaries had pledged investment securities with a fair value of $ 62.7 billion (collateral value of $ 58.1 billion) as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13).

Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $ 31.6 billion (collateral value of $ 30.5 billion) as collateral for this facility at December 31, 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 December 31, 2023.

At December 31, 2023, our banking subsidiaries had pledged HTM and AFS securities as collateral under repurchase agreements with external financial institutions.

The fair value and collateral value of these pledged securities was $ 1.5 billion at December 31, 2024.

At December 31, 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 $ 3.7 billion, and AFS securities pledged were U.S.

agency mortgage-backed securities with an aggregate fair value of $ 1.5 billion.

agency mortgage-backed securities with an aggregate amortized cost of $ 5.9 billion.

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

See Notes 2, 13, and 18 for additional information on these repurchase agreements.

At December 31, 2023, our banking subsidiaries had pledged AFS securities consisting of U.S.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

At December 31, 2024, the Company had pledged AFS securities consisting of U.S.

Treasury securities with an aggregate fair value of $ 378 million as initial margin on interest rate swaps (see Notes 17 and 18).

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

Initial margin is posted through futures commission merchants (FCM) which serve as the intermediary between CCPs and Schwab.

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

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

10 unchanged sentences

Treasury securities (1)

243 — 12,727 471 12,970 471

Corporate debt securities — — 9,579 587 9,579 587

1 unchanged sentence

12 — 5,888 196 5,900 196

Foreign government agency securities — — 1,002 33 1,002 33

state and municipal securities — — 549 54 549 54

Foreign government agency securities — — 527 6 527 6

Non-agency commercial mortgage-backed securities — — 109 12 109 12

4 unchanged sentences

agency mortgage-backed securities (1)

$ 1 $ — $ 62,794 $ 6,378 $ 62,795 $ 6,378

Treasury securities — — 19,450 989 19,450 989

Asset-backed securities 6,717 217 6,299 432 13,016 649

Corporate debt securities — — 12,484 860 12,484 860

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

Asset-backed securities (1)

29 — 9,058 378 9,087 378

Foreign government agency securities — — 1,002 33 1,002 33

2 unchanged sentences

Other — — 19 3 19 3

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

$ 30 $ — $ 105,495 $ 8,710 $ 105,525 $ 8,710

(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 $ 19 million at December 31, 2023.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

(2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 47 million and $ 19 million at December 31, 2024 and 2023, respectively.

At December 31, 2024, substantially all rated securities in the investment portfolios were investment grade.

8 unchanged sentences

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 $ 565 million and $ 685 million of accrued interest receivable for AFS and HTM securities as of December 31, 2023 and 2022, respectively.

The Company had $ 455 million and $ 565 million of accrued interest for AFS and HTM securities as of December 31, 2024 and 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 consolidated balance sheets.

There were no write-offs of accrued interest receivable on AFS and HTM securities during the years ended December 31, 2023 or 2022.

There were no writeoffs of accrued interest receivable on AFS and HTM securities during the years ended December 31, 2024 or 2023.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at December 31, 2024:

Estimated effective duration, exclusive of derivatives:

AFS investment securities portfolio 2.3

AFS and HTM investment securities portfolio 3.9

Estimated effective duration, inclusive of derivatives (1) :

AFS investment securities portfolio 1.8

AFS and HTM investment securities portfolio 3.7

(1) See Note 17 for additional discussion on the Company’s derivatives.

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

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

As of December 31, 2023, the estimated effective duration, which reflects anticipated future payments, of our total AFS and HTM investment securities portfolio is approximately 4.0 years.

The estimated effective duration of our AFS investment securities portfolio is approximately 2.5 years as of December 31, 2023.

Including the impact of the Company’s use of derivative instruments to manage changes in the fair values of our AFS investment portfolio, the effective duration of our total AFS and HTM investments securities as of December 31, 2023 is approximately 3.9 years and for our AFS investment securities is approximately 2.2 years (see Note 16).

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

9 unchanged sentences

Asset-backed securities 8 1,345 1,273 3,284 5,910

Foreign government agency securities 495 507 — — 1,002

state and municipal securities — 127 395 27 549

Foreign government agency securities 527 — — — 527

Non-agency commercial mortgage-backed securities — — — 109 109

Certificates of deposit 100 — — — 100

Other — — — 18 18

12 unchanged sentences

(2) The weighted-average yield is computed using the amortized cost at December 31, 2024.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

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

3 unchanged sentences

Gross realized losses 40 62 166

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Bank Loans and Related Allowance for Credit Losses

8 unchanged sentences

loans Allowance for credit

losses Total bank

Residential real estate:

16 unchanged sentences

(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $ 112 million and $ 100 million at December 31, 2024 and 2023, respectively.

(2) At both December 31, 2023 and 2022, 43 % of the First Mortgage and HELOC portfolios were concentrated in California.

(2) At December 31, 2024 and 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.

1 unchanged sentence

At December 31, 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 13).

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

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

December 31, 2023 First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total

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

First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total

Balance at December 31, 2021 $ 13 $ 2 $ 15 $ — $ 3 $ 18

Charge-offs — — — ( 4 ) — ( 4 )

1 unchanged sentence

Provision for credit losses 53 1 54 4 — 58

Balance at end of year $ 32 $ 2 $ 34 $ — $ 4 $ 38

December 31, 2022

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

Balance at December 31, 2022 $ 66 $ 4 $ 70 $ — $ 3 $ 73

Charge-offs — — — — — —

1 unchanged sentence

Provision for credit losses ( 34 ) ( 2 ) ( 36 ) — 1 ( 35 )

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

December 31, 2021

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

Balance at December 31, 2023 $ 32 $ 2 $ 34 $ — $ 4 $ 38

Charge-offs — — — — — —

1 unchanged sentence

Provision for credit losses ( 18 ) ( 1 ) ( 19 ) — 2 ( 17 )

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

Balance at December 31, 2024 $ 14 $ 1 $ 15 $ — $ 6 $ 21

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

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

All PALs were fully collateralized by securities with fair values in excess of borrowings as of December 31, 2023 and 2022, respectively.

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

During 2023, the U.S.

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

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

While the Federal Reserve held the policy rate steady during the last quarter of the year, our allowance assumes a near term continuation of elevated interest rates with only a slight increase in unemployment and modest home price depreciation.

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

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

As a result of these factors, we decreased projected loss rates at December 31, 2023, as compared to December 31, 2022.

A summary of bank loan-related nonperforming assets is as follows:

December 31, 2023 2022

Nonaccrual loans (1)

Other real estate owned (2)

Total nonperforming assets $ 15 $ 25

(1) Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02.

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

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

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

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 by 100 basis points in the second half of 2024.

Management’s macroeconomic outlook reflects sustained current benchmark lending 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 to 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 December 31, 2024, as compared to December 31, 2023.

Bank loan-related nonperforming assets consisted of nonaccrual loans of $ 35 million and $ 15 million at December 31, 2024 and 2023, respectively.

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

Troubled Debt Restructurings and Vintage Disclosures ” on January 1, 2023.

At both December 31, 2024 and 2023, loan modifications to borrowers experiencing financial difficulty were not material.

Credit Quality

5 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.

1 unchanged sentence

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

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

First Mortgages Amortized Cost Basis by Origination Year

53 unchanged sentences

Total $ 2,694 $ 6,069 $ 11,630 $ 3,974 $ 1,786 $ 26,153 $ 311 $ 168 $ 479

Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Percent of Loans on

1 unchanged sentence

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

At December 31, 2023, First Mortgage loans of $ 21.5 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.

At December 31, 2024, $ 23.0 billion of First Mortgage loans had adjustable interest rates.

Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that typically adjust every six to twelve months pursuant to the terms of the loan thereafter.

Approximately 26 % of the balance of these mortgages consisted of loans with interest-only payment terms.

The interest rates on approximately 80 % of the balance of these interest-only loans are not scheduled to reset for three or more years.

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

At December 31, 2023 and 2022, Schwab had $ 157 million and $ 134 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and is included in other assets on the consolidated balance sheets.

At December 31, 2024 and 2023, Schwab had $ 171 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 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.

28 unchanged sentences

Total equipment, office facilities, and property — net $ 3,338 $ 3,690

As a result of its TDA integration and restructuring efforts, the Company recognized impairment losses on fixed assets of $ 47 million during the year ended December 31, 2023.

As a result of its Ameritrade integration and restructuring efforts, the Company recognized impairment losses on fixed assets of $ 47 million during the year ended December 31, 2023.

These losses are included in other expense on the consolidated statements of income.

1 unchanged sentence

The fair value of the asset group was not material at December 31, 2023.

See Note 15 for additional information regarding the Company’s exit costs related to its TDA integration and restructuring activities.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

See Note 16 for additional information regarding the Company’s exit costs related to its Ameritrade integration and restructuring activities.

Goodwill and Acquired Intangible Assets

6 unchanged sentences

Goodwill acquired and other changes during the period (1)

114 ( 114 ) —

December 31, 2024 $ 8,083 $ 3,868 $ 11,951

(1) In the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment.

Related goodwill amounts were transferred from the Advisor Services segment to the Investor Services segment.

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

2 unchanged sentences

Schwab did not recognize any goodwill impairment in any of the years presented.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Acquired intangible assets are detailed below:

14 unchanged sentences

The above schedule excludes indefinite-lived intangible assets of $ 91 million.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

The components of other assets are as follows:

2 unchanged sentences

Other investments (1)

Receivables — interest, dividends, and other 2,538 1,919

Other securities owned at fair value (2)

Other receivables from brokers, dealers, and clearing organizations 1,764 2,171

Securities borrowed

Operating lease ROU assets 630 894

Receivables — interest, dividends, and other 1,952 2,538

Customer contract receivables (3)

Operating lease ROU assets 591 630

Capitalized contract costs 487 416

2 unchanged sentences

(1) Includes LIHTC investments and certain other CRA-related investments (see Note 11).

This item also includes investments in FHLB stock of $ 1.1 billion and $ 528 million at December 31, 2023 and 2022, respectively, which are required to be held as a condition of borrowing with the FHLB (see Note 12) and can only be sold to the issuer at its par value.

This item also includes investments in FHLB stock of $ 703 million and $ 1.1 billion at December 31, 2024 and 2023, respectively, which are required to be held as a condition of borrowing with the FHLB (see Note 13) and can only be sold to the issuer at its par value.

Any cash dividends received from investments in FHLB stock are recognized as interest revenue in the consolidated statements of income.

4 unchanged sentences

See also Notes 2 and 19.

(3) Represents substantially all receivables from contracts with customers within the scope of ASC 606.

(3) Represents receivables from contracts with customers within the scope of ASC 606.

Capitalized contract costs

6 unchanged sentences

For additional discussion of the 2023 IDA agreement, see Note 15.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Variable Interest Entities

3 unchanged sentences

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

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Tax credits and other tax benefits are reflected as cash flows from operating activities on the consolidated statements of cash flows.

Aggregate assets, liabilities, and maximum exposure to los s

22 unchanged sentences

Time certificates of deposit (1)

27,701 48,297

Checking 15,593 15,691

6 unchanged sentences

As of December 31, 2024 and 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 December 31, 2023 are as follows:

2024 $ 46,659

Total $ 48,297

Time certificates of deposit outstanding at December 31, 2024 mature between January 2025 and November 2025.

THE CHARLES SCHWAB CORPORATION

6 unchanged sentences

Interest for the fixed-to-floating rate Senior Notes is payable semi-annually during the fixed-rate period of the notes and quarterly during the floating-rate period of the notes.

TDA Holding Senior Notes

TDA Holding’s Senior Notes are unsecured obligations.

TDA Holding may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.

Ameritrade Holding Senior Notes

Ameritrade Holding’s Senior Notes are unsecured obligations.

Ameritrade Holding may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.

Interest is payable semi-annually for the fixed-rate Senior Notes.

During 2021, we completed an offer to exchange certain senior notes issued by TDA Holding for senior notes issued by CSC.

Of the approximately $ 2.2 billion in aggregate principal amount of TDA Holding’s senior notes offered in the exchange, 90 %, or approximately $ 2.0 billion, were tendered and accepted.

The new senior notes issued by CSC have the same interest rates and maturity dates as the TDA Holding senior notes.

At December 31, 2023, $ 213 million not exchanged remained outstanding across four series of senior notes issued by TDA Holding.

The debt exchange was treated as a debt modification for accounting purposes.

THE CHARLES SCHWAB CORPORATION

5 unchanged sentences

CSC Fixed-rate Senior Notes:

2.650 % due January 25, 2023

12/07/17 $ — $ 800

3.550 % due February 1, 2024

18 unchanged sentences

05/13/21 1,000 1,000

5.875 % due August 24, 2026

08/24/23 1,000 1,000

3.200 % due March 2, 2027

24 unchanged sentences

03/03/22 1,000 1,000

5.875 % due August 24, 2026

08/24/23 1,000 —

CSC Floating-rate Senior Notes:

8 unchanged sentences

05/19/23 1,200 1,200

6.196 % due November 17, 2029 (2)

11/17/23 1,300 1,300

5.853 % due May 19, 2034 (3)

2 unchanged sentences

08/24/23 1,350 1,350

6.196 % due November 17, 2029 (5)

11/17/23 1,300 —

Total CSC Senior Notes 22,262 25,862

TDA Holding Fixed-rate Senior Notes:

Ameritrade Holding Fixed-rate Senior Notes:

3.750 % due April 1, 2024

6 unchanged sentences

08/16/19 25 25

Total TDA Holding Senior Notes 213 213

Total Ameritrade Holding Senior Notes 163 213

Finance lease liabilities 49 85

1 unchanged sentence

Debt issuance costs ( 93 ) ( 119 )

Fair value hedging basis adjustments (5)

Total long-term debt $ 22,428 $ 26,128

(1) On February 18, 2024, the Company redeemed all of these outstanding floating-rate Senior Notes.

(1) The May 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 5.643 %, payable semi-annually, until the interest reset date on May 19, 2028.

On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 2.210 %, payable quarterly.

(2) The November 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 6.196 %, payable semi-annually, until the interest reset date on November 17, 2028.

On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 1.878 %, payable quarterly.

(3) The May 2034 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 5.853 %, payable semi-annually, until the interest reset date on May 19, 2033.

2 unchanged sentences

On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 2.010 %, payable quarterly.

(5) The November 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 6.196 %, payable semi-annually, until the interest reset date on November 17, 2028.

On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 1.878 %, payable quarterly.

(5) This represents the amount of fair value hedge basis adjustments related to Senior Notes hedged.

See Notes 2 and 17 for more information on hedging of Senior Notes.

THE CHARLES SCHWAB CORPORATION

6 unchanged sentences

Debt issuance costs ( 93 )

Fair value hedging basis adjustments (1)

Total long-term debt $ 22,428

(1) This represents the amount of fair value hedge basis adjustments related to long-term debt hedged.

See Notes 2 and 17 for more information on hedging of long-term debt.

FHLB borrowings:

6 unchanged sentences

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

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

CSC had no amounts outstanding at December 31, 2023 and $ 250 million outstanding at December 31, 2022.

CSC and CS&Co also have access to uncommitted lines of credit with external banks with total borrowing capacity of $ 1.8 billion;

no amounts were outstanding as of December 31, 2023 or 2022.

CS&Co also 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 $ 950 million outstanding at December 31, 2023.

There were no borrowings outstanding at December 31, 2022.

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 $ 5.5 billion and $ 4.9 billion outstanding pursuant to such repurchase agreements at December 31, 2024 and 2023, respectively.

Repurchase agreements outstanding at December 31, 2024 mature between January 2025 and May 2025.

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

1 unchanged sentence

As of December 31, 2024 and 2023, our collateral pledged provided total borrowing capacity of $ 30.5 billion and $ 6.2 billion, respectively, of which no amounts were outstanding at the end of either year.

Beginning in 2023, our banking subsidiaries have access to funding through the Federal Reserve Bank Term Funding Program.

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

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.

This facility was not used in 2024 or 2023, and as of December 31, 2024, there was no collateral pledged under the BTFP.

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

This facility was not used during 2023;

there were no borrowings outstanding at December 31, 2023.

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 $ 4.9 billion and $ 4.4 billion outstanding pursuant to such repurchase agreements at December 31, 2023 and 2022, respectively.

Repurchase agreements outstanding at December 31, 2023 mature between January 2024 to July 2024.

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

There was $ 700 million outstanding at December 31, 2023 and no balance outstanding at December 31, 2022.

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 December 31, 2024 or 2023.

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

This line expired in January 2025 and was not renewed, and there were no amounts outstanding as of December 31, 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 at December 31, 2024 or 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 $ 500 million outstanding at December 31, 2024 and $ 950 million outstanding at 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 during 2024.

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

THE CHARLES SCHWAB CORPORATION

7 unchanged sentences

December 31, 2024 2023

Lease assets:

Balance Sheet Classification

Lease assets:

Operating lease ROU assets Other assets $ 591 $ 630

11 unchanged sentences

The Company had immaterial finance lease cost and sublease income for the years ended December 31, 2024, 2023, and 2022.

In addition to the costs noted above and as a result of its TDA integration and restructuring efforts, the Company recognized impairment losses on ROU assets of $ 157 million for the year ended December 31, 2023.

In addition to the costs noted above and as a result of its Ameritrade integration and restructuring efforts, the Company recognized impairment losses on ROU assets of $ 157 million for the year ended December 31, 2023.

These losses are included in other expense on the consolidated statements of income.

1 unchanged sentence

The fair value of the asset group was not material at December 31, 2023.

See Note 15 for additional information regarding the Company’s exit costs related to its TDA integration and restructuring activities.

See Note 16 for additional information regarding the Company’s exit costs related to its Ameritrade integration and restructuring activities.

The following tables present supplemental operating lease information:

3 unchanged sentences

Weighted-average discount rate 3.96 % 3.64 %

Maturity of Lease Liabilities Operating Leases

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Annual Maturities of Lease Liabilities

Operating Leases

Thereafter 194

2 unchanged sentences

(1) Lease payments exclude $ 33 million of legally binding minimum lease payments for leases signed, but not yet commenced.

These leases will commence between 2024 and 2025 with lease terms of 7 to 15 years.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

These leases will commence in 2025 with lease terms of 10 to 11 years.

Commitments and Contingencies

Loan Portfolio:

CSB provides a co-branded loan origination program for CSB clients (the Program) with Rocket Mortgage, LLC (Rocket Mortgage ® ).

Pursuant to the Program, Rocket Mortgage originates and services First Mortgages and HELOCs for CSB clients.

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

CSB provides a co-branded loan origination program for CSB clients (the Program) with Rocket Mortgage, LLC.

Pursuant to the Program, Rocket Mortgage, LLC originates and services First Mortgages and HELOCs for CSB clients.

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

CSB purchased First Mortgages of $ 4.2 billion and $ 2.9 billion during 2024 and 2023, respectively.

16 unchanged sentences

The potential requirement for the Company to make payments under these arrangements is remote.

Accordingly, no liability has been recognized for these guarantees.

Accordingly, no liability has been recognized for these guarantees and indemnifications.

IDA agreement:

The 2019 IDA agreement with the TD Depository Institutions became effective on October 6, 2020 and created responsibilities of the Company, including certain contingent obligations.

On May 4, 2023, the 2019 IDA agreement was replaced and superseded by the 2023 IDA agreement, which specifies responsibilities, including certain contingent obligations, of the Company going forward.

On May 4, 2023, the Company executed the 2023 IDA agreement with the TD Depository Institutions that replaced and superseded the previous agreement dated November 24, 2019, as amended.

The 2023 IDA agreement specifies responsibilities, including certain contingent obligations, of the Company going forward.

Pursuant to the 2023 IDA agreement, uninvested cash within eligible brokerage client accounts is swept off-balance sheet to deposit accounts at the TD Depository Institutions.

Schwab provides recordkeeping and support services to the TD Depository Institutions with respect to the deposit accounts for which Schwab receives an aggregate monthly fee.

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, and, prior to May 4, 2023, the 2019 IDA agreement.

The 2019 IDA agreement provided that, as of July 1, 2021, Schwab had the option to migrate up to $ 10 billion of IDA balances every 12 months to Schwab’s balance sheet, subject to certain limitations and adjustments.

The Company migrated balances to the balance sheet in 2021 and 2022, subject to the terms of the 2019 IDA agreement.

During 2024, Schwab did not move IDA balances to its balance sheet.

1 unchanged sentence

• Through September 10, 2025, Schwab must maintain minimum balances above the total of then-outstanding unmatured fixed-rate obligation amounts, with a maximum of $ 30 billion above this total amount.

During this period, withdrawals of IDA balances by Schwab are generally permitted only to the extent of withdrawals initiated by Schwab customers, with limited exceptions, except to the extent necessary for Schwab to maintain balances below the applicable maximum.

• After September 10, 2025, withdrawals of IDA balances are permitted at Schwab’s discretion, subject to an obligation to maintain IDA balances above a minimum of $ 60 billion, with a maximum of $ 90 billion.

The 2023 IDA agreement eliminates the requirement of the 2019 IDA agreement that at least 80 % of the IDA balances must be designated as fixed-rate obligation amounts.

Designation of deposit balances for investment in fixed- or floating-rate instruments

During this period, withdrawals

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

under the 2023 IDA agreement is now at Schwab’s sole discretion with certain limitations on the amount of fixed-rate obligation amounts.

Pursuant to the 2023 IDA agreement, Schwab has the option to buy down up to $ 5 billion of fixed-rate obligation amounts by paying a market-based fee during the agreement term, subject to certain limits.

of IDA balances by Schwab are generally permitted only to the extent of withdrawals initiated by Schwab customers, with limited exceptions, except to the extent necessary for Schwab to maintain balances below the applicable maximum.

Designation of deposit balances for investment in fixed- or floating-rate instruments under the 2023 IDA agreement is at Schwab’s sole discretion with certain limitations on the amount of fixed-rate obligation amounts.

If IDA balances decline below the required IDA balance minimum as described above, Schwab would be required to make a nonperformance payment to the TD Depository Institutions pursuant to the terms of the 2023 IDA agreement.

In 2023, Schwab opted to buy down $ 5.0 billion of fixed-rate obligation amounts, incurring market-based fees of $ 249 million, which were capitalized as contract assets and included in other assets on the consolidated balance sheet.

Pursuant to the 2023 IDA agreement, in 2023, Schwab opted to buy down $ 5.0 billion of fixed-rate obligation amounts, incurring market-based fees of $ 249 million, which were capitalized as contract assets and included in other assets on the consolidated balance sheet.

For additional information on these contract assets, see Note 10.

22 unchanged sentences

from October 26, 2020 to the present.

The lawsuit alleges that CSC’s acquisition of TD Ameritrade violated Section 7 of the Clayton Act because it has resulted in an anticompetitive market for the execution of retail customer orders.

The lawsuit alleges that CSC’s acquisition of Ameritrade violated Section 7 of the Clayton Act because it has resulted in an anticompetitive market for the execution of retail customer orders.

Plaintiffs seek unspecified damages, as well as injunctive and other relief.

A motion by the Company to dismiss the lawsuit was denied by the court on February 24, 2023, and discovery is proceeding.

Crago Order Routing Litigation :

On July 13, 2016, a securities class action lawsuit was filed in the U.S.

District Court for the Northern District of California on behalf of a putative class of customers executing equity orders through CS&Co.

The lawsuit names CS&Co and CSC as defendants and alleges that an agreement under which CS&Co routed orders to UBS Securities LLC between July 13, 2011 and December 31, 2014 violated CS&Co’s duty to seek best execution.

Plaintiffs seek unspecified damages, interest, injunctive and equitable relief, and attorneys’ fees and costs.

After a first amended complaint was dismissed with leave to amend, plaintiffs filed a second amended complaint on August 14, 2017.

Defendants again moved to dismiss, and in a decision issued December 5, 2017, the District Court denied the motion.

Plaintiffs filed a motion for class certification on April 30, 2021, and in a decision on October 27, 2021, the court denied the motion and held that certification of a class action is inappropriate.

Plaintiffs sought review of the order denying class certification by the U.S.

Court of Appeals, 9th Circuit, which was denied.

On February 2, 2023, the District Court denied a renewed motion by plaintiffs for class certification and ruled that

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

any claims plaintiffs may pursue in their individual capacity must be brought in arbitration.

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

A motion by the Company to dismiss the lawsuit was denied by the court on February 24, 2023.

On December 12, 2024, the parties filed a joint stipulation proposing a settlement of the lawsuit on a class basis under which defendants would commit to certain non-monetary undertakings and payments of plaintiffs’ attorneys’ fees and costs in an amount that would be immaterial.

Approval of the settlement remains pending with the court.

Ford Order Routing Litigation :

On September 15, 2014, TDA Holding, TD Ameritrade, Inc.

On September 15, 2014, Ameritrade Holding, TD Ameritrade, Inc.

and its former CEO, Frederick J.

1 unchanged sentence

District Court for the District of Nebraska on behalf of a putative class of TD Ameritrade, Inc.

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

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

Plaintiff seeks 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.

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

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

District Court’s class certification decision.

On April 23, 2021, the U.S.

1 unchanged sentence

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.

Defendants 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 :

Certain of the Company’s registered subsidiaries have been responding to inquiries from the SEC and Commodity Futures Trading Commission (CFTC) in relation to a publicly reported, industry-wide sweep related to record retention and the use of unauthorized messaging channels.

The Company had accrued an immaterial amount in anticipation of a settlement with the SEC to resolve its inquiry, which was finalized and announced on January 13, 2025.

The likelihood any outcome in the CFTC inquiry would be material to the financial condition, operating results, or cash flows of the Company is remote.

Exit and Other Related Liabilities

Integration of TD Ameritrade

The Company completed its acquisition of TD Ameritrade effective October 6, 2020 and integration work continued during the year ended December 31, 2023, including the completion of four client transition groups.

The Company expects to complete the remaining client transitions from TD Ameritrade to Schwab in a final transition group in May 2024.

The Company expects to continue to incur significant acquisition and integration-related costs and integration-related capital expenditures throughout the remaining integration process.

Such costs have included, and are expected to continue to include, professional fees, such as legal, advisory, and accounting fees, compensation and benefits expenses for employees and contractors involved in the integration work, and costs for technology enhancements.

The Company has also incurred exit and other related costs to attain anticipated synergies, which are primarily comprised of employee compensation and benefits such as severance pay, other termination benefits, and retention costs, as well as costs related to facility closures, such as accelerated amortization and depreciation or impairments of assets in those locations.

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.

Our estimates of the nature, amounts, and timing of recognition of acquisition and integration-related costs remain subject to change based on certain factors, including the duration and complexity of the remaining integration process and the continued uncertainty of the economic environment.

More specifically, factors that could cause variability in our expected acquisition and integration-related costs as we prepare for the last transition group and remaining integration work include the level of employee attrition, the complexity to wind-down the operations of the TD Ameritrade broker-dealers and related technology, and real estate-related exit cost variability.

Inclusive of costs recognized through December 31, 2023, Schwab currently expects to incur total exit and other related costs for the integration of TD Ameritrade ranging from $ 500 million to $ 600 million, consisting of employee compensation and benefits, facility exit costs, and certain other costs.

Integration of Ameritrade

The Company completed its acquisition of Ameritrade effective October 6, 2020 and integration work concluded during 2024, including completion of the final client transition group from the Ameritrade broker-dealers to CS&Co in May and, thereafter, completion of overall integration work including decommissioning of duplicative platforms.

The Company incurred acquisition and integration-related costs including professional fees, compensation and benefits expenses for employees and contractors involved in the integration work, and costs for technology enhancements.

The Company also incurred exit and other related costs to attain anticipated synergies, which are primarily comprised of employee compensation and benefits such as severance pay, other termination benefits, and retention costs, as well as costs related to facility closures, such as accelerated amortization and depreciation or impairments of assets in those locations.

Exit and other related costs are a component of the Company’s overall acquisition and integration-related spending.

Inclusive of costs recognized through December 31, 2024, Schwab incurred total exit and other related costs for the integration of Ameritrade of $ 430 million, consisting of employee compensation and benefits, facility exit costs, and certain other costs.

During each of the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 42 million, $ 60 million, and $ 34 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 12 months, with some costs expected to be incurred after client transition to decommission duplicative platforms and complete integration work.

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 CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

The following is a summary of the TD Ameritrade integration activity in the Company’s exit and other related liabilities as of December 31, 2023 and 2022 and activity for the years ended December 31, 2023 and 2022:

In addition to ASC 420 Exit or Disposal Cost Obligations (ASC 420) , certain of the costs associated with these activities were 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 integration of Ameritrade is complete and the exit and other related liabilities as of December 31, 2024 are anticipated to be paid in early 2025.

The following table is a summary of the Ameritrade integration activity in the Company’s exit and other related liabilities as of December 31, 2024 and 2023 and activity for the years then ended:

Investor Services

Employee Compensation and Benefits Advisor Services

Employee Compensation and Benefits Total

Employee Compensation and Benefits

Advisor Services

Employee Compensation and Benefits

Balance at December 31, 2022 (1)

7 unchanged sentences

Balance at December 31, 2024 (1)

$ 42 $ 12 $ 54

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

(2) Amounts recognized in expense for severance pay and other termination benefits, as well as retention costs, are primarily included in compensation and benefits on the consolidated statements of income.

The following table summarizes the TD Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2023:

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2024:

Investor Services Advisor Services

5 unchanged sentences

Occupancy and equipment — 2 2 — — — 2

Depreciation and amortization — 14 14 — 6 6 20

Other — 2 2 — — — 2

1 unchanged sentence

(1) Costs related to facility closures.

These costs, which are primarily comprised of impairment and accelerated amortization of ROU 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 consolidated statements of income.

The following table summarizes the TD Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2022:

Investor Services Advisor Services

These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and accelerated depreciation 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 and accelerated depreciation of fixed assets are included in occupancy and equipment and depreciation expense, respectively, on the consolidated statements of income.

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2023:

Investor Services

Advisor Services

and Benefits Facility Exit Costs (1)

Investor Services Total Employee

and Benefits Facility Exit Cost (1)

and Benefits Facility Exit Costs (1)

Advisor Services Total Total

1 unchanged sentence

Occupancy and equipment — 9 9 — 2 2 11

Other — 18 18 — 7 7 25

Total $ 20 $ 27 $ 47 $ 4 $ 9 $ 13 $ 60

(1) Costs related to facility closures.

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

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

The following table summarizes the TD Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2021:

Investor Services Advisor Services

and Benefits Facility Exit Cost (1)

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

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

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2022:

Investor Services

Advisor Services

and Benefits Facility Exit Costs (1)

Investor Services Total Employee

and Benefits Facility Exit Cost (1)

and Benefits Facility Exit Costs (1)

Advisor Services Total Total

1 unchanged sentence

Occupancy and equipment — 7 7 — 2 2 9

Professional services — 1 1 — — — 1

Other — 2 2 — — — 2

Total $ 19 $ 7 $ 26 $ 6 $ 2 $ 8 $ 34

5 unchanged sentences

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

The following table summarizes the TD Ameritrade integration exit and other related costs incurred from October 6, 2020 through December 31, 2023:

Investor Services Advisor Services

The following table summarizes the Ameritrade integration exit and other related costs incurred from the acquisition closing date through December 31, 2024:

Investor Services

Advisor Services

Employee Compensation and Benefits Facility Exit Costs (1)

10 unchanged sentences

With significant progress now made in the integration of TD Ameritrade, the Company has begun to take incremental actions 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 total exit and related costs, primarily related to employee compensation and benefits and facility exit costs, of approximately $ 500 million inclusive of costs recognized through December 31, 2023 of $ 495 million.

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 December 31, 2023 and activity for the year ended December 31, 2023:

When significant progress had been made in the integration of Ameritrade, the Company undertook incremental actions beginning 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 incurred total exit and related costs, primarily related to employee compensation and benefits and facility exit costs, of $ 504 million inclusive of costs recognized through December 31, 2024.

During each of the years ended December 31, 2024 and 2023, the Company recognized $ 9 million and $ 495 million of restructuring-related exit costs, respectively.

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

Actions under the plan have been completed and there are no remaining exit and other related liabilities as of December 31, 2024.

The following table is a summary of the restructuring activity in the Company’s exit and other related liabilities as of December 31, 2024 and 2023 and activity for the years then ended:

Investor Services

Employee Compensation and Benefits Advisor Services

Employee Compensation and Benefits Total

Employee Compensation and Benefits

Advisor Services

Employee Compensation and Benefits

Balance at December 31, 2022 (1)

3 unchanged sentences

$ 171 $ 63 $ 234

Amounts recognized in expense (2)

( 25 ) ( 9 ) ( 34 )

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

Balance at December 31, 2024 (1)

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

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

The following table summarizes the restructuring exit and other related costs recognized in expense for the year ended December 31, 2023, which represents cumulative costs incurred to date:

The year ended December 31, 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

Notes to Consolidated Financial Statements

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

The following table summarizes the restructuring exit and other related costs recognized in expense for the year ended December 31, 2024:

Investor Services Advisor Services

and Benefits Facility Exit Costs (1)

Investor Services Total Employee

and Benefits Facility Exit Costs (1)

Advisor Services Total Total

Compensation and benefits $ ( 25 ) $ — $ ( 25 ) $ ( 9 ) $ — $ ( 9 ) $ ( 34 )

Occupancy and equipment — 4 4 — 1 1 5

Professional services — 1 1 — — — 1

Other — 28 28 — 9 9 37

Total $ ( 25 ) $ 33 $ 8 $ ( 9 ) $ 10 $ 1 $ 9

(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 consolidated statements of income.

The following table summarizes the restructuring exit and other related costs recognized in expense for the year ended December 31, 2023:

Investor Services

Advisor Services

and Benefits Facility Exit Costs (1)

Investor Services Total Employee

and Benefits Facility Exit Costs (1)

Advisor Services Total Total

Compensation and benefits $ 214 $ — $ 214 $ 78 $ — $ 78 $ 292

Occupancy and equipment — 13 13 — 4 4 17

Professional services — 4 4 — 1 1 5

Other — 134 134 — 47 47 181

Total $ 214 $ 151 $ 365 $ 78 $ 52 $ 130 $ 495

(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 consolidated statements of income.

The following table summarizes the restructuring exit and other related costs recognized in expense from initiation of the plan through December 31, 2024:

Investor Services

Advisor Services

Employee Compensation and Benefits Facility Exit Costs (1)

9 unchanged sentences

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

In the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment.

See Note 25 for more information.

The impact of the transfer on integration-related and restructuring-related exit costs was not material and prior-year amounts in the relevant tables above have not been recast.

Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

The Company utilizes derivative instruments to manage interest rate risk exposures that arise from business activities related to changes in fair values or the receipt and payment of future known and uncertain cash amounts due to changes in interest rates.

The Company uses derivative instruments to manage changes in the fair values of, as well as changes in the amounts and/or timing of known or expected cash receipts and payments related to, our AFS investment portfolio and Senior Notes.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

Beginning in 2023, the Company utilizes derivative instruments to manage interest rate risk exposures that arise from business activities related to changes in fair values or the receipt of future known and uncertain cash amounts due to changes in interest rates.

The Company uses derivative instruments to manage changes in the fair values of, as well as changes in the amounts and/or timing of known or expected cash receipts related to, our AFS investment portfolio.

For a description of how the Company accounts for derivative instruments, see Note 2.

1 unchanged sentence

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of its fixed-rate AFS securities due to changes in benchmark interest rates.

The Company uses cleared interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate.

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 $ 8.9 billion at December 31, 2023 that were designated as fair value hedges of interest rate risk.

The Company is exposed to changes in the fair value of its fixed-rate AFS securities and Senior Notes, as well as its fixed-to-floating rate Senior Notes during the fixed-rate period, due to changes in benchmark interest rates.

The Company uses cleared interest rate swaps to manage its exposure to changes in fair value of these instruments attributable to changes in the designated benchmark interest rate.

Cleared interest rate swaps designated as fair value hedges of AFS securities 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.

Cleared interest rate swaps designated as fair value hedges of Senior Notes involve the receipt of fixed-rate amounts from a CCP in exchange for the Company’s floating-rate payments over the life of the agreements.

The Company had outstanding interest rate swaps with aggregate notional amounts of $ 30.9 billion and $ 8.9 billion at December 31, 2024 and 2023, respectively, that were designated as fair value hedges of interest rate risk.

The notional amount is the basis upon which the pay-fixed/receive-float and receive-fixed/pay-float payments are determined;

however, the amount is not exchanged.

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 consolidated balance sheet:

December 31, 2023

Assets Liabilities

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

December 31, 2024 December 31, 2023

Assets Liabilities Assets Liabilities

Interest rate swaps (1,2)

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

Amounts were less than $ 500 thousand as of December 31, 2023.

(2) Includes an $ 87 million and $ 2 million reduction of derivative assets and liabilities, respectively, related to variation margin settlements on derivatives cleared through CCPs.

$ — $ — $ — $ —

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

Amounts were less than $ 500 thousand as of December 31, 2024 and 2023.

(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 December 31, 2024, there was a $ 295 million reduction of derivative assets and a $ 10 million reduction of derivative liabilities related to variation margin settlements.

At 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.

Effects of Fair Value Hedge Accounting

The following amounts are included in AFS securities on the consolidated balance sheet related to fair value hedges:

The following amounts are included on the consolidated balance sheets related to fair value hedges:

Carrying Amount of the Hedged

Assets/(Liabilities) Cumulative Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged

Assets and Liabilities

December 31, 2024 2023 2024 2023

Amortized cost of hedged AFS securities (1,2)

Cumulative fair value hedging adjustment included in the amortized cost of hedged AFS securities (1,2)

Line item in which the hedged item is included:

Available for sale securities (1,2)

$ 15,686 $ 8,765 $ ( 292 ) $ ( 85 )

Long-term debt ( 14,908 ) — 7 —

(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.

The amortized cost basis of the closed portfolios used in these hedging relationships is $ 2.1 billion, of which $ 1.6 billion is designated in a portfolio layer hedging relationship.

The cumulative basis adjustments associated with these hedging relationships are a reduction of the amortized cost basis of the closed portfolios of $ 19 million.

At December 31, 2024 and 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2.5 billion and $ 2.1 billion, respectively, of which $ 2.0 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 $ 47 million and $ 19 million at December 31, 2024 and 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 is a reduction of the amortized cost basis of less than $ 500 thousand, which is recorded in AFS securities on the consolidated balance sheet and amortized to interest revenue as a yield adjustment over the lives of the securities.

The table below presents the effect of the Company’s interest rate swaps designated as fair value hedges on the consolidated statement of income:

Year Ended December 31, 2023

Gain (loss) on fair value hedging relationships recognized in interest revenue:

Hedged items $ ( 85 )

Derivatives designated as hedging instruments (1)

(1) Excludes net income (expense) from periodic interest accruals and receipts (payments) of $ 2 million.

The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $ 2 million at December 31, 2024, which is recorded in AFS securities on the 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.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

The table below presents the effect of the Company’s interest rate swaps on the consolidated statements of income:

Location and Amount of Gain (Loss) Recognized in Income

Interest Revenue

Interest Expense

Year Ended December 31, 2024 2023 2024 2023

Gain (loss) on fair value hedging relationships:

Hedged items $ ( 207 ) $ ( 85 ) $ 7 $ —

Derivatives designated as hedging instruments (1)

206 85 ( 7 ) —

(1) Interest revenue excludes net income (expense) from periodic interest accruals and receipts (payments) of $ 55 million and $ 2 million for the years ended December 31, 2024 and 2023, respectively.

Financial Instruments Subject to Off-Balance Sheet Credit Risk

Interest rate swaps:

Beginning in 2023, 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 16 for additional information on the Company’s interest rate swaps.

Resale agreements:

12 unchanged sentences

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 $ 1.5 billion and $ 685 million at December 31, 2023 and 2022, respectively.

The fair value of these borrowed securities was $ 674 million and $ 1.5 billion at December 31, 2024 and 2023, respectively.

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

4 unchanged sentences

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 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 consolidated balance sheets.

See Note 17 for additional information on the Company’s interest rate swaps.

THE CHARLES SCHWAB CORPORATION

29 unchanged sentences

1,563 — 1,563 ( 1,307 ) ( 253 ) 3

Interest rate swaps (4)

— — — — — (5)

Total $ 10,407 $ — $ 10,407 $ ( 1,307 ) $ ( 9,097 ) $ 3

3 unchanged sentences

5,397 — 5,397 ( 1,307 ) ( 3,619 ) 471

Secured short-term borrowings (8)

1,650 — 1,650 — ( 1,650 ) —

Interest rate swaps (4)

— — — — — (5)

Total $ 11,950 $ — $ 11,950 $ ( 1,307 ) $ ( 10,172 ) $ 471

2 unchanged sentences

At December 31, 2024 and 2023, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $ 10.3 billion and $ 9.0 billion, respectively.

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

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

Amounts were less than $ 500 thousand during the periods presented.

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

(3) Included in receivables from brokers, dealers, and clearing organizations in the consolidated balance sheets.

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

Amounts were less than $ 500 thousand as of December 31, 2024 and 2023.

(5) At December 31, 2024 and 2023, the fair value of initial margin pledged as collateral related to interest rate swaps was $ 378 million and $ 195 million, respectively.

See Notes 6 and 17 for additional information.

3 unchanged sentences

See Note 13 for additional information.

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

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

(7) Included in payables to brokers, dealers, and clearing organizations in the consolidated balance sheets.

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

At December 31, 2024, $ 8.8 billion of securities loaned had overnight and continuous remaining contractual maturities and $ 4.3 billion of securities loaned had contractual maturities of 35 - 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 December 31, 2024 and 2023.

3 unchanged sentences

Schwab is obligated to settle transactions with brokers and other financial institutions even if our clients fail to meet their obligations to us.

Clients are required to complete their transactions on settlement date, generally two business days after the trade date.

Clients are required to complete their transactions on settlement date, generally one business day after the trade date.

If clients do not fulfill their contractual obligations, we may incur losses.

19 unchanged sentences

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

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Fair Values of Assets and Liabilities

15 unchanged sentences

Asset-backed securities — 5,910 — 5,910

Foreign government agency securities — 1,002 — 1,002

state and municipal securities — 549 — 549

Foreign government agency securities — 527 — 527

Non-agency commercial mortgage-backed securities — 109 — 109

Certificates of deposit — 100 — 100

Other — 18 — 18

19 unchanged sentences

Money market funds $ 14,573 $ — $ — $ 14,573

Commercial paper — 48 — 48

Total cash equivalents 14,573 — — 14,573

1 unchanged sentence

government securities — 20,358 — 20,358

Certificates of deposit — 1,000 — 1,000

Total investments segregated and on deposit for regulatory purposes — 20,358 — 20,358

2 unchanged sentences

Treasury securities — 21,471 — 21,471

Asset-backed securities — 13,023 — 13,023

Corporate debt securities — 12,484 — 12,484

Certificates of deposit — 2,231 — 2,231

Asset-backed securities — 9,087 — 9,087

Foreign government agency securities — 1,002 — 1,002

1 unchanged sentence

Non-agency commercial mortgage-backed securities — 109 — 109

Certificates of deposit — 100 — 100

Other — 19 — 19

22 unchanged sentences

Cash and investments segregated and on deposit for regulatory purposes 12,416 2,401 10,015 — 12,416

Receivables from brokers, dealers, and clearing organizations 2,440 — 2,440 — 2,440

Receivables from brokerage clients — net 85,343 — 85,343 — 85,343

10 unchanged sentences

Bank deposits $ 259,121 $ — $ 259,121 $ — $ 259,121

Payables to brokers, dealers, and clearing organizations 13,336 — 13,336 — 13,336

Payables to brokerage clients 101,559 — 101,559 — 101,559

7 unchanged sentences

Cash and investments segregated and on deposit for regulatory purposes 11,438 2,628 8,810 — 11,438

Receivables from brokers, dealers, and clearing organizations 3,327 — 3,327 — 3,327

Receivables from brokerage clients — net 68,629 — 68,629 — 68,629

10 unchanged sentences

Bank deposits $ 289,953 $ — $ 289,953 $ — $ 289,953

Payables to brokers, dealers, and clearing organizations 6,648 — 6,648 — 6,648

Payables to brokerage clients 84,786 — 84,786 — 84,786

9 unchanged sentences

CSC did not issue common shares through external offerings during the years ended December 31, 2024, 2023, or 2022.

In conjunction with its acquisition of TD Ameritrade in 2020, the Company issued shares of a nonvoting class of CSC common stock to TD Bank and its affiliates.

In conjunction with its acquisition of Ameritrade in 2020, the Company issued shares of a nonvoting class of CSC common stock to TD Bank and its affiliates.

Each share of nonvoting common stock has identical rights to common stock, including liquidation and dividend rights, except that holders of nonvoting common stock have no voting rights other than over matters that significantly and adversely affect the rights or preferences of the nonvoting common stock, or as required by applicable law.

2 unchanged sentences

On August 1, 2022, an affiliate of TD Bank executed a permitted outside transfer of 13 million shares of CSC nonvoting common stock, upon which the shares of nonvoting common stock automatically converted to shares of common stock.

Following this transfer and CSC’s repurchase of nonvoting common stock described below, TD Bank and its affiliates held approximately 51 million shares of nonvoting common stock as of December 31, 2023.

Share Repurchase Program

On July 27, 2022, CSC publicly announced that its Board of Directors approved a new share repurchase authorization to repurchase up to $ 15.0 billion of common stock, replacing the previous and now terminated share repurchase authorization of up to $ 4.0 billion of common stock.

The new share repurchase authorization does not have an expiration date.

On July 27, 2022, CSC publicly announced that its Board of Directors approved a share repurchase authorization to repurchase up to $ 15.0 billion of common stock, replacing the previous and now terminated share repurchase authorization of up to $ 4.0 billion of common stock.

The share repurchase authorization does not have an expiration date.

On August 1, 2022, CSC purchased, directly from an affiliate of TD Bank, 15 million shares of nonvoting common stock for a total of $ 1.0 billion, or approximately $ 66.53 per share.

The shares of nonvoting common stock automatically converted into common stock and were purchased under CSC’s new share repurchase authorization.

The shares of nonvoting common stock automatically converted into common stock and were purchased under CSC’s share repurchase authorization.

The purchase price paid by CSC was equal to the lowest price per share that the affiliate of TD Bank received in a contemporaneous share sale facilitated by a third-party market maker, which resulted in a purchase price lower than the closing price on August 1, 2022.

CSC repurchased an additional 32 million shares of its common stock under the new authorization for $ 2.4 billion during the year ended December 31, 2022.

CSC repurchased an additional 32 million shares of its common stock under the authorization for $ 2.4 billion during the year ended December 31, 2022.

CSC repurchased 37 million shares of its common stock for $ 2.8 billion during the year ended December 31, 2023.

There were no repurchases of CSC’s common stock during the year ended December 31, 2024.

As of December 31, 2024, approximately $ 8.7 billion remained on the new authorization.

Beginning in 2023, share repurchases, net of issuances, are subject to a nondeductible excise tax which was recognized as a direct and incremental cost associated with these transactions.

Share repurchases, net of issuances, are subject to a nondeductible excise tax which was recognized as a direct and incremental cost associated with these transactions.

Subsequent to December 31, 2024, TD Bank and its affiliates sold all remaining common and nonvoting common stock holdings through a secondary public offering and a direct repurchase.

See Note 28 for additional information regarding the secondary offering and repurchase.

Preferred Stock

On March 18, 2021, the Company issued and sold 2,250,000 depositary shares, each representing a 1/100th ownership interest in a share of 4.000 % fixed-rate reset non-cumulative perpetual preferred stock, Series I, $ .01 par value per share, with a liquidation preference of $ 100,000 per share (equivalent of $ 1,000 per depositary share).

The net proceeds of the offering were $ 2.2 billion, after deducting the underwriting discount and offering expenses.

On March 30, 2021, the Company issued and sold 24,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.450 % fixed-rate non-cumulative perpetual preferred stock, Series J, $ .01 par value, with a liquidation preference of $ 1,000 per share (equivalent of $ 25 per depositary share).

On March 4, 2022, the Company issued and sold 750,000 depositary shares, each representing a 1/100th ownership interest in a share of 5.000 % fixed-rate reset non-cumulative perpetual preferred stock, Series K, $ .01 par value, with a liquidation preference of $ 100,000 per share (equivalent of $ 1,000 per depositary share).

The net proceeds of the offering were $ 740 million, after deducting the underwriting discount and offering expenses.

On June 1, 2021, the Company redeemed all of the 600,000 outstanding shares of its 6.00 % non-cumulative perpetual preferred stock, Series C, and the corresponding 24,000,000 depositary shares, each representing a 1/40th interest in a share of the Series C preferred stock.

On November 1, 2022, the Company redeemed all of the 400,000 outstanding shares of its fixed-to-floating rate non-cumulative perpetual preferred stock, Series A at a redemption price of $ 1,000 per share for a total of $ 400 million.

On December 1, 2022, the Company redeemed all of the 6,000 outstanding shares of its fixed-to-floating rate non-cumulative perpetual preferred stock, Series E, and the corresponding 600,000 depositary shares, each representing a 1/100th interest in a share of the Series E preferred stock.

The depositary shares were redeemed at a redemption price of $ 1,000 per depositary share for a total of $ 600 million.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

of $ 100,000 per share (equivalent of $ 1,000 per depositary share).

The net proceeds of the offering were $ 740 million, after deducting the underwriting discount and offering expenses.

The depositary shares were redeemed at a redemption price of $ 1,000 per depositary share for a total of $ 600 million.

During the year ended December 31, 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 .

1 unchanged sentence

The share repurchases, net of issuances, are subject to a nondeductible excise tax which was recognized as a direct and incremental cost associated with these transactions.

There were no repurchases of CSC’s preferred stock during the year ended December 31, 2024.

CSC was authorized to issue 9,940,000 shares of preferred stock, $ .01 par value, at December 31, 2024 and 2023.

19 unchanged sentences

N/A Not applicable.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

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

Year Ended December 31, 2024 2023 2022

(in millions)

(in millions) Per Share

(in millions)

(in millions) Per Share

N/A N/A $ 19.1 $ 47.73 $ 28.0 $ 70.00

N/A N/A N/A N/A $ 19.1 $ 47.73

Series D $ 44.6 $ 59.52 $ 44.6 $ 59.52 44.6 59.52

N/A N/A 37.0 6,161.42 27.8 4,625.00

N/A N/A N/A N/A 37.0 6,161.42

Series F 24.3 5,000.00 24.3 5,000.00 25.0 5,000.00

3 unchanged sentences

26.7 44.52 26.7 44.52 26.7 44.52

37.4 5,000.00 27.8 3,708.33 N/A N/A

37.4 5,000.00 37.4 5,000.00 27.8 3,708.33

Total $ 436.6 $ 438.4 $ 504.6

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

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

Such dividends are part of the consideration paid upon repurchase of the depositary shares during the year ended December 31, 2023.

2 unchanged sentences

The final dividend was paid on November 1, 2022.

(3) Series C was redeemed on June 1, 2021.

Prior to redemption, dividends were paid quarterly and the final dividend was paid on June 1, 2021.

(3) Series E was redeemed on December 1, 2022.

1 unchanged sentence

The final dividend was paid on December 1, 2022.

(5) Series H was issued on December 11, 2020.

Dividends are paid quarterly, and the first dividend was paid on March 1, 2021.

(6) Series I was issued on March 18, 2021.

Dividends are paid quarterly, and the first dividend was paid on June 1, 2021.

(7) Series J was issued on March 30, 2021.

Dividends are paid quarterly, and the first dividend was paid on June 1, 2021.

(4) Series K was issued on March 4, 2022.

1 unchanged sentence

N/A Not applicable.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Dividends on CSC’s preferred stock are not cumulative and will only be paid on a series of preferred stock for a dividend period if declared by CSC’s Board of Directors.

7 unchanged sentences

Any redemption of CSC’s preferred stock is subject to approval from the Federal Reserve.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

Accumulated Other Comprehensive Income

3 unchanged sentences

Available for sale securities:

Net unrealized gain (loss), net of tax expense (benefit) of $( 2,029 )

Net unrealized gain (loss), excluding transfers to held to maturity, net of tax expense (benefit) of $( 6,994 )

Net unrealized loss on securities transferred to held to maturity, net of tax benefit of $ 4,377

Other reclassifications included in other revenue, net of tax expense (benefit) of $ 2

Held to maturity securities:

Net unrealized loss on securities transferred from available for sale, net of tax benefit of $ 4,377

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 165

Other, net of tax expense (benefit) of $ 15

1 unchanged sentence

Available for sale securities:

Net unrealized gain (loss), excluding transfers to held to maturity, net of tax expense (benefit) of $( 6,994 )

Net unrealized loss on securities transferred to held to maturity, net of tax benefit of $ 4,377

Net unrealized gain (loss), net of tax expense (benefit) of $ 886

Other reclassifications included in other revenue, net of tax expense (benefit) of $ 15

Held to maturity securities:

Net unrealized loss on securities transferred from available for sale, net of tax benefit of $ 4,377

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 657

8 unchanged sentences

Balance at December 31, 2024 $ ( 14,848 )

In 2022, the Company transferred a portion of its AFS securities to the HTM category.

As of December 31, 2023, the total remaining unamortized loss on these securities transferred to HTM included in AOCI was $ 11.5 billion net of tax effect ($ 15.0 billion pre-tax).

See Note 5 for additional discussion on the 2022 transfers of AFS securities to HTM.

As of December 31, 2024, the total remaining unamortized loss on securities transferred from AFS to HTM included in AOCI was $ 9.7 billion net of tax effect ($ 12.8 billion pre-tax).

This loss is being amortized over the remaining lives of the securities, offsetting amortization of the securities’ premiums or discounts, and resulting in no impact to net income.

THE CHARLES SCHWAB CORPORATION

6 unchanged sentences

Year Ended December 31, 2024 2023 2022

Stock option expense $ 33 $ 30 $ 36

Restricted stock unit expense $ 266 $ 262 $ 311

Stock option expense 47 33 30

Employee stock purchase plan expense 24 25 25

81 unchanged sentences

Benefit cost (1)

Actuarial loss (gain) (2)

Actuarial (gain) loss (2)

Projected benefit obligation at end of year (3)

(1) Includes service cost and interest cost, which are recognized in compensation and benefits expense and other expense, respectively, in the consolidated statements of income.

(2) Actuarial loss (gain) is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets.

(2) Actuarial (gain) loss is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets.

The portion, if any, beyond certain thresholds is subsequently amortized over the participants’ expected remaining service period into other expense on the consolidated statements of income.

29 unchanged sentences

Operating lease ROU assets ( 146 ) ( 156 )

Equipment, office facilities, and property ( 109 ) ( 151 )

Capitalized contract costs ( 116 ) ( 99 )

Other ( 107 ) ( 159 )

2 unchanged sentences

$ 3,527 $ 4,300

(1) Amounts are included in other assets on the consolidated balance sheet at December 31, 2023 and 2022.

(1) Amounts are included in other assets on the consolidated balance sheets at December 31, 2024 and 2023.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

3 unchanged sentences

Research and development credits ( 0.5 ) ( 1.2 ) —

Equity compensation benefit ( 0.5 ) ( 0.5 ) ( 1.2 )

Other ( 0.6 ) ( 0.8 ) ( 1.0 )

68 unchanged sentences

There are no conditions or events since December 31, 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).

CSC’s other banking subsidiaries are CSPB and 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 December 31, 2023 and 2022, the balance sheets of CSPB and Trust Bank primarily consisted of investment securities.

At December 31, 2024 and 2023, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities.

At December 31, 2024 and 2023, CSPB held total assets of $ 26.5 billion and $ 27.7 billion, respectively, and Trust Bank held total assets of $ 10.1 billion and $ 10.2 billion, respectively.

Based on their regulatory capital ratios at December 31, 2024 and 2023, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules.

As securities broker-dealers, CS&Co, TDAC, and TD Ameritrade, Inc.

are subject to the SEC’s Uniform Net Capital Rule.

CS&Co, TDAC, and TD Ameritrade, Inc.

each compute net capital under the alternative method permitted by the Uniform Net Capital Rule, which requires the maintenance of minimum net capital, as defined, of the greater of 2% of aggregate debit balances arising from client transactions or a minimum dollar requirement, which is based on the type of business conducted by the broker-dealer.

As a securities broker-dealer, CS&Co is subject to the SEC’s Uniform Net Capital Rule.

CS&Co computes net capital under the alternative method permitted by the Uniform Net Capital Rule, which requires the maintenance of minimum net capital, as defined, of the greater of 2% of aggregate debit balances arising from client transactions or a minimum dollar requirement, which is based on the type of business conducted by the broker-dealer.

Under the alternative method, a broker-dealer may not repay subordinated borrowings, pay cash dividends, or make any unsecured advances or 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.

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

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

December 31, 2024 2023

3 unchanged sentences

Net capital in excess of required net capital 9,063 4,560

Net capital $ 3,634 $ 5,291

Minimum dollar requirement 1.500 1.500

2% of aggregate debit balances 440 626

Net capital in excess of required net capital $ 3,194 $ 4,665

TD Ameritrade, Inc.

Net capital $ 444 $ 806

Minimum dollar requirement 0.250 0.250

2% of aggregate debit balances — —

Net capital in excess of required net capital $ 444 $ 806

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 December 31, 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.

Amounts included in cash and investments segregated and on deposit for regulatory purposes represent actual balances on deposit, whereas cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2023 for CS&Co totaled $ 24.1 billion and for TDAC totaled $ 9.7 billion.

As of January 3, 2025, CS&Co had deposited $ 1.8 billion of cash into its segregated reserve accounts.

As of January 2, 2024, TDAC had deposited $ 767 million of cash into its segregated reserve accounts.

Cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2022 for CS&Co totaled $ 22.7 billion and for TDAC totaled $ 19.9 billion.

Cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2023 for CS&Co totaled $ 24.1 billion.

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 consolidated statements of cash flows.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

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 December 31, 2024, TD Ameritrade, Inc.

and TDAC were no longer registered as broker-dealers with the SEC and FINRA and were not subject to the Uniform Net Capital Rule.

Segment Information

1 unchanged sentence

Schwab structures the operating segments according to its clients and the services provided to those clients.

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 RIAs, independent retirement advisors, and recordkeepers.

The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, 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 RIAs, independent retirement advisors, and recordkeepers.

Revenues and expenses are attributed to the two segments based on which segment services the client.

Schwab’s chief operating decision makers (CODMs) are the President and Chief Executive Officer, and the Managing Director and Chief Financial Officer.

The accounting policies of the segments are the same as those described in Note 2.

For the computation of its segment information, Schwab utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues.

Management evaluates the performance of the segments on a pre-tax basis.

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

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

The CODMs evaluate the performance of the segments on a pre-tax basis and use income before taxes on income to allocate resources, including employees and capital, to the segments during the annual budgeting process.

The CODMs consider budget-to-actual variances on a monthly basis when making decisions about allocating resources to the segments throughout the year.

Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments.

10 unchanged sentences

Expenses Excluding Interest

Income before taxes on income $ 5,188 $ 7,056 $ 6,172 $ 1,190 $ 2,332 $ 1,541 $ 6,378 $ 9,388 $ 7,713

Capital expenditures $ 586 $ 702 $ 771 $ 218 $ 250 $ 270 $ 804 $ 952 $ 1,041

Compensation and benefits 4,656 4,779 4,551 1,387 1,536 1,385 6,043 6,315 5,936

Professional services 834 824 809 219 234 223 1,053 1,058 1,032

Occupancy and equipment 823 951 889 237 303 286 1,060 1,254 1,175

Advertising and market development 256 296 316 141 101 103 397 397 419

Communications 415 441 411 176 188 177 591 629 588

Depreciation and amortization 716 609 483 200 195 169 916 804 652

Amortization of acquired intangible assets 445 449 489 74 85 107 519 534 596

Regulatory fees and assessments 311 387 197 87 160 65 398 547 262

Other 782 703 568 155 218 146 937 921 714

Total expenses excluding interest 9,238 9,439 8,713 2,676 3,020 2,661 11,914 12,459 11,374

Income before taxes on income $ 6,320 $ 5,211 $ 7,133 $ 1,372 $ 1,167 $ 2,255 $ 7,692 $ 6,378 $ 9,388

Capital expenditures $ 465 $ 600 $ 718 $ 142 $ 204 $ 234 $ 607 $ 804 $ 952

(1) In connection with certain changes in Schwab’s organizational management structure, in the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment.

Accordingly, amounts related to the Retirement Business Services business unit are included within Investor Services for full-year 2024, and prior-year amounts have been recast to reflect this new basis of segmentation.

Earnings Per Common Share

76 unchanged sentences

Payables to subsidiaries 78 66

Short-term borrowings — 248

Long-term debt 22,212 25,822

18 unchanged sentences

Due from (to) subsidiaries — net 862 ( 174 ) 333

Increase in investments in subsidiaries ( 2,720 ) ( 2,139 ) ( 10,926 )

Return of (increase in) investments in subsidiaries 2,205 ( 2,720 ) ( 2,139 )

Purchases of available for sale securities ( 2,985 ) ( 1,486 ) ( 5,699 )

19 unchanged sentences

Non-cash investing and financing activity:

Exchange of TDA Holding-issued senior notes for CSC-issued senior notes $ — $ — $ 1,987

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

Subsequent Events

On February 12, 2025, the Company completed a secondary public offering of common shares through which TD Group US Holdings LLC, an affiliate of TD Bank, sold 133.8 million shares of the Company’s common stock and 31.7 million shares of the Company’s nonvoting common stock, which automatically converted into common stock, at $ 79.25 per share, for an aggregate amount of $ 13.1 billion.

The Company did not receive any of the proceeds from this sale.

Subsequent to the completion of the secondary offering, and pursuant to a repurchase agreement dated February 9, 2025, the Company repurchased directly from TD Group US Holdings LLC the remaining 19.2 million shares of nonvoting common stock at a price of $ 77.982 per share for an aggregate repurchase amount of $ 1.5 billion.

This repurchase closed on February 12, 2025, and shares of nonvoting common stock automatically converted into common stock and are now held in treasury stock, reducing the number of shares outstanding.

These shares were purchased under CSC’s share repurchase authorization, which, following the repurchase, has approximately $ 7.2 billion remaining.

Through the completion of the secondary offering and the Company’s repurchase of nonvoting common stock, TD Bank disposed of all of its common shares of CSC.

As a result, and pursuant to the terms of the Company’s stockholder agreement with TD Bank (the TD Bank Stockholder Agreement) dated as of November 24, 2019, TD Bank is no longer entitled to designate members of the Board of Directors of the Company.

Accordingly, as of February 12, 2025, Brian M.

Levitt and Bharat B.

Masrani resigned from the Company’s Board of Directors.

Finally, the TD Bank Stockholder Agreement terminated in accordance with its terms.

THE CHARLES SCHWAB CORPORATION

32 unchanged sentences

Critical Audit Matter Description

Net revenues from the third-party mutual funds and advice solutions components of AMAF are generated through third-party mutual fund offerings, and fee-based advisory solutions, respectively.

Net revenues from the third-party mutual funds and managed investing solutions components of AMAF are generated through third-party mutual fund offerings, and fee-based managed investing solutions, respectively.

Commissions within trading revenue are generated through fees earned for executing trades for clients in individual equities, options, and certain third-party mutual funds and exchange-traded funds (ETFs).

Third-party mutual funds, advice solutions, and commissions are made up of a significant volume of low-dollar transactions, and use automated systems to process and record these transactions based on underlying information sourced from multiple systems and contractual terms with individual investors and third-party mutual funds.

Given that the Company’s processes to record revenue from third-party mutual funds, advice solutions, and commissions are highly automated and involve multiple systems and databases, auditing these revenue components was complex and challenging due to the extent of audit effort required and involvement of professionals with expertise in information technology (IT) necessary for us to identify, test, and evaluate the Company’s systems, software applications, and automated controls.

Third-party mutual funds, managed investing solutions, and commissions are made up of a significant volume of low-dollar transactions, and use automated systems to process and record these transactions based on underlying information sourced from multiple systems and contractual terms with individual investors and third-party mutual funds.

Given that the Company’s processes to record revenue from third-party mutual funds, managed investing solutions, and commissions are highly automated and involve multiple systems and databases, auditing these revenue components was complex and challenging due to the extent of audit effort required and involvement of professionals with expertise in information technology (IT) necessary for us to identify, test, and evaluate the Company’s systems, software applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process the third-party mutual funds and advice solutions within AMAF, and commissions within trading revenue transactions included the following, among others:

Our audit procedures related to the Company’s systems to process the third-party mutual funds and managed investing solutions within AMAF, and commissions within trading revenue transactions included the following, among others:

• With the assistance of our IT specialists, we:

◦ Identified the significant systems used to process third-party mutual funds, advice solutions, and commissions revenue transactions and, using a risk-based approach, tested the relevant general IT controls over each of these systems.

◦ Performed testing of automated business controls and system interface controls (including batch processing) within the relevant third-party mutual funds, advice solutions, and commissions revenue streams.

◦ For a sample of pricing rules, inspected configuration and ascertained that the relevant systems applied appropriate rates and calculated advice solutions and commissions revenue completely and accurately.

• We tested internal controls within the relevant third-party mutual funds, advice solutions, and commissions revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.

• We created data visualizations to evaluate recorded third-party mutual funds, advice solutions, and commissions revenue and evaluate trends in the data.

• For a sample of third-party mutual funds, advice solutions, and commissions revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to contractual agreements and testing the mathematical accuracy of the recorded revenue.

◦ Identified the significant systems used to process third-party mutual funds, managed investing solutions, and commissions revenue transactions and, using a risk-based approach, tested the relevant general IT controls over each of these systems.

◦ Performed testing of automated business controls and system interface controls (including batch processing) within the relevant third-party mutual funds, managed investing solutions, and commissions revenue streams.

◦ For a sample of pricing rules, inspected configuration and ascertained that the relevant systems applied appropriate rates and calculated third-party mutual funds, managed investing solutions, and commissions revenue completely and accurately.

• We tested internal controls within the relevant third-party mutual funds, managed investing solutions, and commissions revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.

• We created data visualizations to evaluate recorded third-party mutual funds, managed investing solutions, and commissions revenue and evaluate trends in the data.

• For a sample of third-party mutual funds, managed investing solutions, and commissions revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to contractual agreements and testing the mathematical accuracy of the recorded revenue.

• For a sample of accounts, we tested the accuracy and completeness of assets under management by obtaining independent pricing support and reconciling total positions to third-party statements.

15 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-K

Item 8. Financial Statements and Supplementary Data