What changed in this filing

/stocks — the workspaceLOADING

Item 3. Quantitative and Qualitative Disclosures About Market Risk

2025-05-09 compared with 2024-11-08 · 342 added, 567 removed, 1112 unchanged (45% of the section changed)

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Interest revenue $ 3,757 $ 3,941

2 unchanged sentences

Asset management and administration fees

1,476 1,224 4,207 3,515

Trading revenue 908 817

24 unchanged sentences

Diluted $ .99 $ .68

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

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

See Note 16 for additional information.

(1) For additional information on earnings per common shares outstanding for both voting and nonvoting common stock, see Note 16.

See Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 1,909 $ 1,362

15 unchanged sentences

(In Millions, Except Per Share and Share Amounts)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 35,009 $ 42,083

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

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

agreements of $ 14,302 and $ 10,075 at March 31, 2025 and December 31, 2024,

respectively)

38,408 38,221

Receivables from brokers, dealers, and clearing organizations 2,938 2,440

Receivables from brokerage clients — net 84,449 85,374

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

Available for sale securities (amortized cost of $ 80,467 at March 31, 2025 and

$ 89,704 at December 31, 2024;

2 unchanged sentences

74,828 82,994

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

Held to maturity securities (including assets pledged of $ 5,756 at March 31, 2025

and $ 5,920 at December 31, 2024)

8 unchanged sentences

Bank deposits $ 246,160 $ 259,121

Payables to brokers, dealers, and clearing organizations 15,744 13,336

Payables to brokerage clients 100,579 101,559

7 unchanged sentences

aggregate liquidation preference of $ 9,329

at September 30, 2024 and December 31, 2023

at March 31, 2025 and December 31, 2024

Common stock — 3 billion shares authorized;

$ .01 par value per share;

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

2,074,188,875 and 2,023,295,180 shares issued at March 31, 2025 and December 31, 2024,

Nonvoting common stock — 300 million shares authorized;

$ .01 par value per share;

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

no shares issued at March 31, 2025 and 50,893,695 shares issued at December 31, 2024

Additional paid-in capital 27,664 27,639

Retained earnings 38,882 37,568

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

Treasury stock, at cost — 258,216,076 and 242,977,194 shares at March 31, 2025

and December 31, 2024, respectively

12 unchanged sentences

Shares Amount Shares Amount

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

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

Other comprehensive income (loss), net of tax — — — — — — — — ( 22 ) ( 22 )

Dividends declared on preferred stock — — — — — — ( 103 ) — — ( 103 )

Dividends declared on common stock — $ .25

— — — — — — ( 458 ) — — ( 458 )

Stock option exercises and other — — — — — ( 9 ) — 18 — 9

Share-based compensation — — — — — 60 — — — 60

Other — — — — — 22 — 4 — 26

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

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

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

Other comprehensive income (loss), net of tax — — — — — — — — 2,318 2,318

Dividends declared on preferred stock — — — — — — ( 103 ) — — ( 103 )

Dividends declared on common stock — $ .25

— — — — — — ( 460 ) — — ( 460 )

Stock option exercises and other — — — — — ( 6 ) — 16 — 10

Share-based compensation — — — — — 59 — — — 59

Other — — — — — 25 — 5 — 30

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

Accumulated Other Comprehensive Income (Loss)

Preferred Stock Common Stock Nonvoting

Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock,

at cost Total

Shares Amount Shares Amount

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

1 unchanged sentence

Other comprehensive income (loss), net of tax — — — — — — — — 555 555

Redemption and repurchase of preferred stock,

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

Dividends declared on preferred stock — — — — — — ( 103 ) — — ( 103 )

1 unchanged sentence

— — — — — — ( 459 ) — — ( 459 )

Repurchase of common stock, inclusive of tax — — — — — — — ( 2,869 ) — ( 2,869 )

Stock option exercises and other — — — — — ( 120 ) — 142 — 22

1 unchanged sentence

Other — — — — — 23 — ( 71 ) — ( 48 )

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

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

Balance at December 31, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,639 $ 37,568 $ ( 11,196 ) $ ( 14,848 ) $ 48,375

4 unchanged sentences

— — — — — — ( 492 ) — — ( 492 )

Repurchase of nonvoting common stock, inclusive of tax — 19 — ( 19 ) — — — ( 1,512 ) — ( 1,512 )

Conversion of nonvoting common stock to common stock — 32 1 ( 32 ) ( 1 ) — — — — —

Stock option exercises and other — — — — — ( 123 ) — 162 — 39

1 unchanged sentence

Other — — — — — 32 — ( 80 ) — ( 48 )

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

Balance at March 31, 2025 $ 9,191 2,074 $ 21 — $ — $ 27,664 $ 38,882 $ ( 12,626 ) $ ( 13,621 ) $ 49,511

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in Millions)

Nine Months Ended

September 30,

Three Months Ended

Cash Flows from Operating Activities

9 unchanged sentences

Investments segregated and on deposit for regulatory purposes 3,354 716

Receivables from brokers, dealers, and clearing organizations ( 488 ) ( 787 )

Receivables from brokerage clients 910 ( 2,515 )

Other assets ( 83 ) 692

Payables to brokers, dealers, and clearing organizations 2,408 56

Payables to brokerage clients ( 980 ) ( 782 )

5 unchanged sentences

Principal payments on available for sale securities 8,772 5,809

Purchases of held to maturity securities ( 381 ) —

Principal payments on held to maturity securities 3,432 3,509

13 unchanged sentences

Repayments of other short-term borrowings ( 7,574 ) ( 2,198 )

Issuances of long-term debt — 4,809

Repayments of long-term debt ( 981 ) ( 3,260 )

Redemption and repurchase of preferred stock — ( 467 )

Dividends paid ( 595 ) ( 562 )

Proceeds from stock options exercised 39 22

Repurchases of common stock and nonvoting common stock — ( 2,842 )

Repurchase of nonvoting common stock ( 1,500 ) —

Other financing activities ( 88 ) ( 85 )

8 unchanged sentences

Continued from previous page.

Nine Months Ended

September 30,

Three Months Ended

Supplemental Cash Flow Information

Non-cash investing activity:

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

Changes in accrued equipment, office facilities, and property purchases $ 39 $ ( 27 )

5 unchanged sentences

Leased assets obtained in exchange for new operating lease liabilities $ 15 $ 20

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (2)

4 unchanged sentences

statement of cash flows $ 61,981 $ 57,673

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

See Note 1 for additional information.

(2) For more information on the nature of restrictions on restricted cash and cash equivalents, see Note 17.

12 unchanged sentences

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

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

and TD Ameritrade Clearing, Inc.

Accordingly, these entities are no longer principal business subsidiaries.

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

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

4 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in Schwab’s 2024 Form 10-K.

Reclassifications :

Beginning in the fourth quarter of 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.

Corresponding presentation changes have been made to the condensed consolidated statements of cash flows and related notes also impacted.

The significant accounting policies are included in Item 8 – Note 2 in the 2024 Form 10-K.

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

There have been no significant changes to these accounting policies during the first three months of 2025.

New Accounting Standards

1 unchanged sentence

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

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

Improvements to Reportable Segment Disclosures”

Requires annual and interim disclosure of significant segment expenses that are provided to the chief operating decision maker (CODM) and included in segment profit or loss.

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 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.

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.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

Improvements to Income Tax Disclosures” Expands annual 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.

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

This guidance will be reflected in the annual financial statements for 2025.

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.

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

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

Notes to Condensed Consolidated Financial Statements

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

Revenue Recognition

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net interest revenue

9 unchanged sentences

Bank deposits ( 436 ) ( 921 )

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

( 137 ) ( 55 )

Payables to brokerage clients ( 51 ) ( 73 )

4 unchanged sentences

Long-term debt ( 212 ) ( 224 )

Securities lending expense ( 118 ) ( 46 ) ( 230 ) ( 96 )

Other interest expense — ( 2 )

3 unchanged sentences

Mutual funds, ETFs, and CTFs 865 758

Advice solutions 559 476 1,572 1,393

Other 90 82 265 241

Managed investing solutions 569 503

Asset management and administration fees 1,530 1,348

7 unchanged sentences

Total net revenues $ 5,599 $ 4,740

(1) Beginning in the fourth quarter of 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.

For a summary of revenue provided by our reportable segments, see Note 18.

The recognition of revenue is not impacted by the operating segment in which revenue is generated.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

Contract balances :

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

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

Receivables from contracts with customers within the scope of Accounting Standards Codification (ASC) 606 Revenue From Contracts With Customers (ASC 606), are included in other assets on the condensed consolidated balance sheets, and totaled $ 752 million and $ 694 million at March 31, 2025 and December 31, 2024, respectively.

The Company had net contract assets of $ 210 million and $ 216 million at March 31, 2025 and December 31, 2024, respectively, related to the buy down of fixed-rate obligation amounts pursuant to the 2023 IDA agreement.

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

For additional discussion of the 2023 IDA agreement, see Note 10.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

Unsatisfied performance obligations :

1 unchanged sentence

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

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

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

March 31, 2025 December 31, 2024

Receivables from clearing organizations $ 2,264 $ 1,670

Securities borrowed 564 695

Receivables for securities failed to deliver 72 40

Other receivables from broker-dealers 38 35

Receivables from brokers, dealers, and clearing organizations

$ 2,938 $ 2,440

Deposits for securities loaned $ 14,661 $ 13,068

Other payables to broker-dealers 832 37

Payables to clearing organizations 143 127

Payables for securities failed to receive 108 104

Payables to brokers, dealers, and clearing organizations

$ 15,744 $ 13,336

See Note 12 for additional information regarding securities lending and borrowing activities.

THE CHARLES SCHWAB CORPORATION

3 unchanged sentences

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

September 30, 2024 Amortized

March 31, 2025 Amortized

Available for sale securities

5 unchanged sentences

5,071 — 178 4,893

Foreign government agency securities 533 — 10 523

state and municipal securities 600 — 46 554

Foreign government agency securities 329 — 3 326

Non-agency commercial mortgage-backed securities 121 — 11 110

15 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

6 unchanged sentences

Total held to maturity securities $ 146,453 $ 146 $ 13,994 $ 132,605

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

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

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

(1) As of March 31, 2025 and December 31, 2024, approximately 28 % and 35 %, respectively, of the total AFS in corporate debt securities were issued by institutions in the financial services industry.

Approximately 22 % and 16 % of the holdings of these securities were issued by institutions in the information technology industry as of March 31, 2025 and December 31, 2024, respectively.

(2) Approximately 72 % and 62 % of asset-backed securities held as of March 31, 2025 and December 31, 2024, respectively, were Federal Family Education Loan Program Asset-Backed Securities.

Asset-backed securities collateralized by credit card receivables represented approximately 18 % and 25 % of the asset-backed securities held as of March 31, 2025 and December 31, 2024, respectively.

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

See Note 11 for more information on PLM hedge accounting.

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

Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a value of $ 32.5 billion as collateral for this facility at September 30, 2024.

At March 31, 2025, our banking subsidiaries had pledged investment securities with a fair value of $ 63.0 billion (collateral value of $ 58.1 billion) as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 9).

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 $ 30.4 billion) as collateral for this facility at March 31, 2025.

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 September 30, 2024.

At September 30, 2024, our banking subsidiaries had pledged HTM 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 March 31, 2025.

At March 31, 2025, 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

agency mortgage-backed securities with an aggregate amortized cost of $ 5.8 billion.

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

See Notes 9 and 12 for additional information on these repurchase agreements.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

amortized cost of $ 8.3 billion.

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

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

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

At March 31, 2025, the Company had pledged AFS securities consisting of U.S.

Treasury securities with an aggregate fair value of $ 371 million as initial margin on interest rate swaps (see Notes 11 and 12).

4 unchanged sentences

Less than 12 months 12 months or longer Total

September 30, 2024 Fair

March 31, 2025 Fair

Value Unrealized

9 unchanged sentences

230 — 4,530 178 4,760 178

Foreign government agency securities — — 523 10 523 10

state and municipal securities — — 554 46 554 46

Foreign government agency securities — — 326 3 326 3

Non-agency commercial mortgage-backed securities — — 110 11 110 11

6 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

2 unchanged sentences

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

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

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

(2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 28 million and $ 47 million at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025, substantially all rated securities in the investment portfolios were investment grade.

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

3 unchanged sentences

For a description of management’s quarterly evaluation of AFS securities in unrealized loss positions, see Item 8 – Note 2 in the 2024 Form 10-K.

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

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

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

No amounts were recognized as credit loss expense and no securities were written down to fair value through earnings for the three months ended March 31, 2025 and the year ended December 31, 2024.

None of the Company’s AFS securities held as of March 31, 2025 and December 31, 2024 had an allowance for credit losses.

All HTM securities as of March 31, 2025 and December 31, 2024 were U.S.

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

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

The Company had $ 418 million and $ 455 million of accrued interest for AFS and HTM securities as of March 31, 2025 and December 31, 2024, respectively.

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

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

There were no writeoffs of accrued interest receivable on AFS and HTM securities during the three months ended March 31, 2025, or for the year ended December 31, 2024.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

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

The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at March 31, 2025:

Estimated effective duration, exclusive of derivatives:

8 unchanged sentences

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

September 30, 2024 Within

March 31, 2025 Within

1 year After 1 year

7 unchanged sentences

Asset-backed securities — 627 1,078 3,188 4,893

Foreign government agency securities 523 — — — 523

state and municipal securities 2 138 398 16 554

Foreign government agency securities 326 — — — 326

Non-agency commercial mortgage-backed securities — — — 110 110

7 unchanged sentences

Total amortized cost $ 1,572 $ 13,484 $ 32,779 $ 95,980 $ 143,815

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

(1) For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 28 million at March 31, 2025.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Proceeds $ 1,621 $ 1,189

6 unchanged sentences

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

September 30, 2024 Current 30-59 days

March 31, 2025 Current 30-59 days

past due 60-89 days

22 unchanged sentences

Total bank loans $ 45,150 $ 45 $ 6 $ 35 $ 86 $ 45,236 $ 21 $ 45,215

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

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

(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $ 115 million and $ 112 million at March 31, 2025 and December 31, 2024, respectively.

(2) At both March 31, 2025 and December 31, 2024, 42 % of the First Mortgage and HELOC portfolios were concentrated in California.

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

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

At September 30, 2024, CSB had pledged the full balance of First Mortgages and HELOCs pursuant to a blanket lien status collateral arrangement to secure borrowing capacity on a secured credit facility with the FHLB (see Note 8).

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(3) There were no loans accruing interest that were contractually 90 days or more past due at March 31, 2025 or December 31, 2024.

At March 31, 2025, 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 9).

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

Three Months Ended

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

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

Charge-offs — — — — — —

Recoveries — — — — — —

Provision for credit losses — — — — — —

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

September 30, 2023

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

Charge-offs — — — — — —

Recoveries — — — — — —

Provision for credit losses ( 21 ) ( 1 ) ( 22 ) — 1 ( 21 )

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

Nine Months Ended

September 30, 2024

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

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

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

Charge-offs — — — — — —

1 unchanged sentence

Provision for credit losses ( 5 ) ( 1 ) ( 6 ) — — ( 6 )

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

September 30, 2023

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

Balance at March 31, 2024 $ 27 $ 1 $ 28 $ — $ 4 $ 32

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

Charge-offs — — — — — —

1 unchanged sentence

Provision for credit losses — — — — — —

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

Balance at March 31, 2025 $ 14 $ 1 $ 15 $ — $ 6 $ 21

Consistent with Schwab’s loan charge-off policy for pledged asset lines (PALs) as disclosed in Item 8 – Note 2 of the 2024 Form 10-K, the Company charges off any unsecured balances no later than 90 days past due.

As of September 30, 2024, substantially all PALs are also subject to the collateral maintenance practical expedient under ASC 326 Financial Instruments — Credit Losses .

All PALs were fully collateralized by securities with fair values in excess of borrowings as of September 30, 2024 and December 31, 2023, and no allowance for credit losses for PALs as of those dates was required.

economy continued to face tight monetary policy and geopolitical unrest.

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

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

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

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

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

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

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

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

As of March 31, 2025, 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 March 31, 2025 and December 31, 2024, and no allowance for credit losses for PALs as of those dates was required.

economy saw steady hiring and moderating inflation in the first quarter of 2025, but continued to face tight monetary policy and geopolitical unrest amid a backdrop of elevated uncertainty around the economic impact of trade policy.

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

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

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.

As a result of these factors, we held projected loss rates constant at March 31, 2025, as compared to December 31, 2024.

Bank loan-related nonperforming assets consisted of nonaccrual loans of $ 30 million and $ 35 million at March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024, loan modifications to borrowers experiencing financial difficulty were not material.

Credit Quality

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

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

First Mortgages Amortized Cost Basis by Origination Year

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

March 31, 2025 2025 2024 2023 2022 2021 pre-2021 Total First Mortgages Revolving HELOCs amortized cost basis HELOCs converted to term loans Total HELOCs

Origination FICO

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

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

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

At March 31, 2025, $ 23.4 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 25 % of the balance of these mortgages consisted of loans with interest-only payment terms.

The interest rates on approximately 78 % 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 September 30, 2024 and December 31, 2023, Schwab had $ 173 million and $ 157 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the condensed consolidated balance sheets.

At March 31, 2025 and December 31, 2024, Schwab had $ 180 million and $ 171 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the condensed consolidated balance sheets.

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

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

September 30, 2024 Balance

March 31, 2025 Balance

Converted to an amortizing loan by period end (1)

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> 5 years 196

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

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

(1) Includes $ 3 million of HELOCs converted to amortizing loans during the three months ended March 31, 2025.

At March 31, 2025, $ 329 million of the HELOC portfolio was secured by second liens on the associated properties.

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

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

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

At March 31, 2025, the borrowers on approximately 61 % of HELOC loan balances outstanding only paid the minimum amount due.

Variable Interest Entities

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

As of March 31, 2025 and December 31, 2024, substantially all of Schwab’s involvement with variable interest entities (VIEs) is through CSB’s Community Reinvestment Act (CRA) related investments and most of these are related to Low-Income Housing Tax Credit (LIHTC) investments.

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

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

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

During the three months ended March 31, 2025 and 2024, CSB recorded amortization of $ 47 million and $ 42 million, respectively, and recognized tax credits and other tax benefits of $ 61 million and $ 53 million, respectively, associated with these investments.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

assets Aggregate

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Schwab’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and Schwab expects to pay substantially all of these commitments between 2025 and 2028.

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

During the three months ended March 31, 2025 and year ended December 31, 2024, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide.

THE CHARLES SCHWAB CORPORATION

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Interest-bearing deposits:

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

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

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

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

2024 $ 12,401

Total $ 34,075

The weighted-average interest rates on outstanding time certificates of deposit at March 31, 2025 and December 31, 2024 were 4.82 % and 4.90 %, respectively.

As of March 31, 2025 and December 31, 2024, there were no time deposits that were in excess of FDIC insurance limits or otherwise uninsured.

Time certificates of deposit outstanding at March 31, 2025 mature between April 2025 and November 2025.

CSC Senior Notes

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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.

Ameritrade Holding LLC Senior Notes

Ameritrade Holding LLC’s (Ameritrade Holding) Senior Notes are unsecured obligations.

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.

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

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

The following table lists long-term debt by instrument outstanding as of March 31, 2025 and December 31, 2024:

Date of Issuance Principal Amount Outstanding

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

CSC Fixed-rate Senior Notes:

3.550 % due February 1, 2024

10/31/18 $ — $ 500

3.000 % due March 10, 2025

03/10/15 $ — $ 375

3.750 % due April 1, 2024

09/24/21 — 350

4.200 % due March 24, 2025

03/24/20 — 600

4.200 % due March 24, 2025

03/24/20 600 600

3.625 % due April 1, 2025

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CSC Floating-rate Senior Notes:

SOFR + 0.500 % due March 18, 2024

03/18/21 — 1,250

SOFR + 0.520 % due May 13, 2026

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04/27/17 56 56

3.300 % due April 1, 2027

04/27/17 56 56

2.750 % due October 1, 2029

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Debt issuance costs ( 86 ) ( 93 )

Fair value hedging basis adjustments (5)

Total long-term debt $ 21,471 $ 22,428

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

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

See Note 11 for more information on hedging of Senior Notes.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

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

Annual maturities on all long-term debt outstanding at March 31, 2025 are as follows:

Thereafter 6,500

2 unchanged sentences

Debt issuance costs ( 86 )

Fair value hedging basis adjustments (1)

Total long-term debt $ 21,471

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

See Note 11 for more information on hedging of long-term debt.

FHLB borrowings :

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

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

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

There was $ 11.5 billion and $ 16.7 billion outstanding under these facilities as of March 31, 2025 and December 31, 2024, respectively, and these borrowings had a weighted-average interest rate of 4.60 % and 5.11 %, respectively.

As of March 31, 2025 and December 31, 2024, the collateral pledged provided additional borrowing capacity of $ 65.0 billion and $ 59.8 billion, respectively.

Other short-term borrowings :

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

Total other short-term borrowings outstanding at March 31, 2025 and December 31, 2024 were $ 6.9 billion and $ 6.0 billion, respectively, and had a weighted-average interest rate of 4.65 % and 5.21 %, respectively.

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

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

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

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

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

The Company had $ 5.5 billion outstanding pursuant to such repurchase agreements at March 31, 2025 and December 31, 2024, respectively.

Repurchase agreements outstanding at March 31, 2025 mature between April 2025 and August 2025.

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

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

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

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

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

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

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

There were no borrowings outstanding at December 31, 2023.

As of March 31, 2025 and December 31, 2024, our collateral pledged provided total borrowing capacity of $ 30.4 billion and $ 30.5 billion, respectively, of which no amounts were outstanding at the end of either period.

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 September 30, 2024 or December 31, 2023.

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

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

There was $ 950 million gross par value before discount of $ 15 million outstanding at March 31, 2025, and no amounts outstanding at 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 as of September 30, 2024 or December 31, 2023.

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

TDAC also previously maintained secured uncommitted lines of credit.

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

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

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

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

2024 2025 Total

no amounts were outstanding as of March 31, 2025 or December 31, 2024.

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 March 31, 2025 and December 31, 2024, respectively.

Annual maturities on FHLB borrowings and other short-term borrowings outstanding at March 31, 2025 are as follows:

FHLB borrowings $ 11,500

1 unchanged sentence

Total $ 18,427

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

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

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 $ 963 million and $ 680 million during the first quarter of 2025 and 2024, respectively.

CSB purchased HELOCs with commitments of $ 50 million and $ 36 million during the first quarter of 2025 and 2024, respectively.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit $ 1,900 $ 1,895

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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 :

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.

The 2023 IDA agreement with the TD Depository Institutions specifies responsibilities, including certain contingent obligations, of the Company.

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.

Under the 2023 IDA agreement, the service fee on client cash deposits held at the TD Depository Institutions is 15 basis points.

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

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

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

During the first three months of 2025, Schwab did not move IDA balances to its balance sheet.

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

• 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

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

customers, with limited exceptions, except to the extent necessary for Schwab to maintain balances below the applicable maximum.

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.

1 unchanged sentence

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.

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 condensed consolidated balance sheet.

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

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

As of March 31, 2025, the total ending IDA balance was $ 83.7 billion, of which $ 64.9 billion was fixed-rate obligation amounts and $ 18.8 billion was floating-rate obligation amounts.

As of December 31, 2024, the total ending IDA balance was $ 87.6 billion, of which $ 66.6 billion was fixed-rate obligation amounts and $ 21.0 billion was floating-rate obligation amounts.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

Legal contingencies :

12 unchanged sentences

Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation.

Described below are matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders.

Described below are any matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders.

Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter.

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District Court for the Eastern District of Texas on behalf of a putative class of customers who purchased or sold securities through CS&Co or TD Ameritrade, Inc.

from October 26, 2020 to the present.

(now Ameritrade of New York, Inc.) from October 26, 2020 to the present.

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.

Ford Order Routing Litigation :

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

and its former CEO, Frederick J.

Tomczyk, were sued in the U.S.

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.

Plaintiff sought unspecified damages and injunctive and other relief.

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

On April 23, 2021, the U.S.

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

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

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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 in relation to a publicly reported, industry-wide sweep related to record retention and the use of unauthorized messaging channels.

The Company has accrued amounts in anticipation of resolving these matters and expects that any final resolution would not be material to the financial condition, operating results, or cash flows of the Company.

Exit and Other Related Liabilities

Integration of Ameritrade

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

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

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.

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

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

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

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

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

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

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

Investor Services

Employee Compensation and Benefits Advisor Services

Employee Compensation and Benefits Total

Balance at December 31, 2023 (1)

$ 42 $ 12 $ 54

Amounts recognized in expense (2)

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

Balance at September 30, 2024 (1)

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

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

condensed consolidated statements of income.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

Investor Services Advisor Services

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

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

Advisor Services Total Total

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

Occupancy and equipment — 1 1 — — — 1

Depreciation and amortization — 5 5 — 3 3 8

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

Investor Services Advisor Services

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

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

Advisor Services Total Total

Compensation and benefits $ 7 $ — $ 7 $ 3 $ — $ 3 $ 10

Occupancy and equipment — 2 2 — — — 2

Depreciation and amortization — 9 9 — 4 4 13

Other — 2 2 — — — 2

Total $ 7 $ 13 $ 20 $ 3 $ 4 $ 7 $ 27

(1) Costs related to facility closures.

These costs, which are primarily comprised of impairment and accelerated amortization of right-of-use (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 are included in occupancy and equipment on the condensed consolidated statements of income.

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

Investor Services Advisor Services

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

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

Advisor Services Total Total

Compensation and benefits $ 9 $ — $ 9 $ — $ — $ — $ 9

Occupancy and equipment — 3 3 — — — 3

Other — 4 4 — — — 4

Total $ 9 $ 7 $ 16 $ — $ — $ — $ 16

Investor Services Advisor Services

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

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

Advisor Services Total Total

Compensation and benefits $ 20 $ — $ 20 $ 3 $ — $ 3 $ 23

Occupancy and equipment — 6 6 — 2 2 8

Other — 18 18 — 7 7 25

Total $ 20 $ 24 $ 44 $ 3 $ 9 $ 12 $ 56

(1) Costs related to facility closures.

These costs, which are 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 condensed consolidated statements of income.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

Investor Services Advisor Services

Employee Compensation and Benefits Facility Exit Costs (1)

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

Advisor Services Total Total

Compensation and benefits $ 250 $ — $ 250 $ 68 $ — $ 68 $ 318

Occupancy and equipment — 42 42 — 9 9 51

Depreciation and amortization — 11 11 — 5 5 16

Professional services — 1 1 — — — 1

Other — 22 22 — 7 7 29

Total $ 250 $ 76 $ 326 $ 68 $ 21 $ 89 $ 415

(1) Costs related to facility closures.

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 are included in occupancy and equipment on the condensed consolidated statements of income.

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

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

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

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

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

Investor Services

Employee Compensation and Benefits Advisor Services

Employee Compensation and Benefits Total

Balance at December 31, 2023 (1)

$ 171 $ 63 $ 234

Amounts recognized in expense (2)

( 25 ) ( 9 ) ( 34 )

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

Balance at September 30, 2024 (1)

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

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

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

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

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

Investor Services Advisor Services

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

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

Advisor Services Total Total

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

Occupancy and equipment — 2 2 — 1 1 3

Other — 10 10 — 3 3 13

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

(1) Costs related to facility closures.

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

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

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

Investor Services Advisor Services

Three and Nine Months Ended September 30,

Employee Compensation and Benefits Facility Exit Costs (1)

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

Advisor Services Total Total

Compensation and benefits $ 202 $ — $ 202 $ 74 $ — $ 74 $ 276

Occupancy and equipment — 1 1 — 1 1 2

— 1 1 — — — 1

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

(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 properties.

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

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

Investor Services Advisor Services

Employee Compensation and Benefits Facility Exit Costs (1)

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

Advisor Services Total Total

Compensation and benefits $ 189 $ — $ 189 $ 69 $ — $ 69 $ 258

Occupancy and equipment — 15 15 — 5 5 20

Professional services — 4 4 — 1 1 5

Other — 144 144 — 50 50 194

Total $ 189 $ 163 $ 352 $ 69 $ 56 $ 125 $ 477

(1) Costs related to facility closures.

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

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

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.

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 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.

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.

For a description of how the Company accounts for derivative instruments, see Item 8 – Note 2 in the 2024 Form 10-K.

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

Cash flows associated with derivative instruments are

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

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.

THE CHARLES SCHWAB CORPORATION

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

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

Fair Value Hedges of Interest Rate Risk

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 $ 8.8 billion and $ 8.9 billion at September 30, 2024 and December 31, 2023, respectively, that were designated as fair value hedges of interest rate risk.

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 $ 33.9 billion and $ 30.9 billion at March 31, 2025 and December 31, 2024, 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 condensed consolidated balance sheets:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Assets Liabilities Assets Liabilities

2 unchanged sentences

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

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

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

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

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

As of March 31, 2025, there was a $ 191 million reduction of derivative assets and a $ 42 million reduction of derivative liabilities related to variation margin settlements.

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.

Effects of Fair Value Hedge Accounting

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

September 30, 2024 December 31, 2023

Amortized cost of hedged AFS securities (1,2)

$ 8,837 $ 8,765

Cumulative fair value hedging adjustment included in the amortized cost of hedged

AFS securities (1,2)

The following amounts are included on the condensed 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

March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

Line item in which the hedged item is included:

Available for sale securities (1,2)

$ 15,078 $ 15,686 $ ( 131 ) $ ( 292 )

Long-term debt $ ( 18,749 ) $ ( 14,908 ) $ ( 18 ) $ 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.

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

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

At March 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2.4 billion and $ 2.5 billion, respectively, of which $ 2.0 billion was designated in a portfolio layer hedging relationship at both March 31, 2025 and December 31, 2024.

The cumulative basis adjustments associated with these hedging relationships were a reduction of the amortized cost basis of the closed portfolios of $ 28 million and $ 47 million at March 31, 2025 and December 31, 2024, respectively.

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

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

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $ 2 million at March 31, 2025 and December 31, 2024, which is recorded in AFS securities on the condensed consolidated balance sheets and amortized to interest revenue as a yield adjustment over the lives of the securities.

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

Location and Amount of Gain (Loss) Recognized in Income

Interest Revenue

Interest Expense

Three Months Ended March 31, 2025 2024 2025 2024

Gain (loss) on fair value hedging relationships:

Hedged items $ 161 $ ( 157 ) $ ( 25 ) $ —

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( 161 ) 157 27 —

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

(1) Interest revenue excludes net income (expense) from periodic interest accruals and receipts (payments) of $ 18 million and $ 3 million for the three months ended March 31, 2025 and 2024, respectively.

Interest expense excludes net income (expense) from periodic interest accruals and receipts (payments) of $( 10 ) million for the three months ended March 31, 2025.

THE CHARLES SCHWAB CORPORATION

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

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

Schwab’s resale agreements as of March 31, 2025 and December 31, 2024 were not subject to master netting arrangements.

Securities lending :

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

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

The fair value of these borrowed securities was $ 550 million and $ 674 million at March 31, 2025 and December 31, 2024, respectively.

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

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Repurchase agreements :

Schwab enters into collateralized repurchase agreements with external financial institutions in which the Company sells securities and agrees to repurchase these securities on a specified future date at a stated repurchase price.

Schwab enters into collateralized repurchase agreements with external financial institutions and the FICC in which the Company sells securities and agrees to repurchase these securities on a specified future date at a stated repurchase price.

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

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Offsetting Collateral

September 30, 2024

March 31, 2025

Resale agreements (1)

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

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

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

At March 31, 2025 and December 31, 2024, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $ 14.6 billion and $ 10.3 billion, respectively.

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

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

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

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

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

(5) At March 31, 2025 and December 31, 2024, the fair value of initial margin pledged as collateral related to interest rate swaps was $ 371 million and $ 378 million, respectively.

See Notes 5 and 11 for additional information.

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

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

At March 31, 2025 and December 31, 2024, the fair value of collateral pledged in connection with repurchase agreements was $ 5.8 billion and $ 5.9 billion, respectively.

See Note 9 for additional information.

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

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

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

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

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

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

At March 31, 2025, $ 9.4 billion of securities loaned had overnight and continuous remaining contractual maturities and $ 5.3 billion of securities loaned had contractual maturities of 35 - 95 days.

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.

The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at March 31, 2025 and December 31, 2024.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Fair value of client securities available to be pledged $ 115,840 $ 116,258

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

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

The fair value of fully-paid client securities available and pledged was $ 138 million and $ 105 million at March 31, 2025 and December 31, 2024, respectively.

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

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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;

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

The fair values of interest rate swaps are based on market observable interest rate yield curves.

Fair value measurements are priced considering the coupon rate of the fixed leg of the contract and the variable coupon rate on the floating leg of the

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

The fair values of interest rate swaps are based on market observable interest rate yield curves.

Fair value measurements are priced considering the coupon rate of the fixed leg of the contract and the variable coupon rate on the floating leg of the contract.

Valuation is based on both spot and forward rates on the swap yield curve.

The Company validates its valuations with counterparty quotations from CCPs.

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

For a description of the fair value hierarchy and Schwab’s fair value methodologies, see Item 8 – Note 2 in the 2024 Form 10-K.

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

The Company did not adjust prices received from the primary independent third-party pricing service at March 31, 2025 or December 31, 2024.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

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

March 31, 2025 Level 1 Level 2 Level 3 Balance at

Cash equivalents:

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Asset-backed securities — 4,893 — 4,893

Foreign government agency securities — 523 — 523

state and municipal securities — 554 — 554

Foreign government agency securities — 326 — 326

Non-agency commercial mortgage-backed securities — 110 — 110

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Accrued expenses and other liabilities:

Interest rate swaps $ — $ 1 $ — $ 1

Other 2,152 33 — 2,185

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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

18 unchanged sentences

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

September 30, 2024 Carrying

March 31, 2025 Carrying

Amount Level 1 Level 2 Level 3 Balance at

2 unchanged sentences

regulatory purposes 16,811 2,563 14,248 — 16,811

Receivables from brokers, dealers, and clearing organizations 2,938 — 2,938 — 2,938

Receivables from brokerage clients — net 84,387 — 84,387 — 84,387

10 unchanged sentences

Bank deposits $ 246,160 $ — $ 246,160 $ — $ 246,160

Payables to brokers, dealers, and clearing organizations 15,744 — 15,744 — 15,744

Payables to brokerage clients 100,579 — 100,579 — 100,579

3 unchanged sentences

Long-term debt 21,428 — 20,894 — 20,894

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

December 31, 2024 Carrying

3 unchanged sentences

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

3 unchanged sentences

Long-term debt 22,379 — 21,621 — 21,621

Stockholders’ Equity

On February 12, 2025, TD Group US Holdings LLC, an affiliate of TD Bank, completed a secondary public offering of the Company’s common shares through which TD Group US Holdings 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.

The offering was completed at a price of $ 79.25 per share, for an aggregate amount of $ 13.1 billion.

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

Concurrent with 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 its 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, which settled on February 12, 2025.

The shares of nonvoting common stock automatically converted into common stock upon repurchase and are now held in treasury stock, reducing the number of shares outstanding.

These shares were purchased under CSC’s $ 15.0 billion share repurchase authorization.

The share repurchase authorization does not have an expiration date and as of March 31, 2025, approximately $ 7.2 billion remained on the authorization.

There were no repurchases of CSC’s common stock during the three months ended March 31, 2024.

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.

For repurchases of common stock, the tax is recorded as part of the cost basis of the treasury stock repurchased, resulting in no impact to the condensed consolidated statements of income.

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 and as of March 31, 2025, the Company has no remaining nonvoting common stock outstanding.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Stockholders’ Equity

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.

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

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

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

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

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

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

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.

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

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

Liquidation Preference Per Share Dividend Rate in Effect at March 31, 2025 Earliest Redemption Date Date at Which Dividend Rate Resets or Becomes Floating Reset / Floating-Rate

Margin Over Reset / Floating-Rate

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

September 30, 2024 (1)

March 31, 2025 (1)

December 31, 2024 (1)

September 30, 2024 December 31, 2023 Issue Date

March 31, 2025 December 31, 2024 Issue Date

Series D 750,000 750,000 $ 1,000 $ 728 $ 728 03/07/16 5.95 % 06/01/21 N/A N/A N/A

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N/A Not applicable.

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

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

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

2024 2023 2024 2023

Declared Per Share

Three Months Ended March 31,

Declared Per Share

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9.3 1,250.00 9.3 1,250.00

9.3 1,250.00 9.3 1,250.00 28.1 3,750.00 28.1 3,750.00

Total $ 103.1 $ 103.1

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

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

(1) Dividends paid quarterly.

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

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

Available for sale securities:

Net unrealized gain (loss), net of tax expense (benefit) of $( 182 )

Other reclassifications included in other revenue, net of tax expense (benefit) of $ 6

Held to maturity securities:

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

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

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

Available for sale securities:

Net unrealized gain (loss), net of tax expense (benefit) of $ 577

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

Held to maturity securities:

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

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

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

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Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 122

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

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

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

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

4 unchanged sentences

Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 128

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

Balance at March 31, 2025 $ ( 13,621 )

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

In 2022, the Company transferred a portion of its AFS securities 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 September 30, 2024, the total remaining unamortized loss on these securities transferred to HTM included in AOCI was $ 10.2 billion net of tax effect ($ 13.3 billion pre-tax).

As of March 31, 2025, the total remaining unamortized loss on securities transferred from AFS to HTM included in AOCI was $ 9.3 billion net of tax effect ($ 12.2 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.

Earnings Per Common Share

As described in Note 14, TD Bank disposed of all of its common shares of CSC during the first quarter of 2025, including its holdings of nonvoting common stock.

As of February 12, 2025, the Company had no remaining nonvoting common stock outstanding and accordingly, no dividends were paid on nonvoting common stock during the three months ended March 31, 2025.

For the computations of basic and diluted EPS, undistributed net income of the Company was allocated on a proportionate basis to the voting and nonvoting common stock, as the distribution rights of the two classes were identical.

Diluted EPS was calculated using the treasury stock method for outstanding stock options and non-vested restricted stock units and the if-converted method for the nonvoting common stock, which assumed conversion of all outstanding nonvoting common stock to common stock.

For further details surrounding the EPS computations, see Item 8 – Note 26 in the 2024 Form 10-K.

THE CHARLES SCHWAB CORPORATION

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

Earnings Per Common Share

The Company has voting and nonvoting common stock outstanding.

As the rights of the voting and nonvoting common stock are identical, except with respect to voting, the net income of the Company has been allocated on a proportionate basis to the two classes.

Diluted earnings per share is calculated using the treasury stock method for outstanding stock options and non-vested restricted stock units and the if-converted method for nonvoting common stock.

The if-converted method assumes conversion of all nonvoting common stock to common stock.

For further details surrounding the EPS computation, see Item 8 – Note 25 in the 2023 Form 10-K.

EPS under the basic and diluted computations for both common stock and nonvoting common stock are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Stock Nonvoting

Common Stock Common

Stock Nonvoting

Common Stock Common

Stock Nonvoting

Common Stock Common

Stock Nonvoting

The computations of basic and diluted EPS for common stock and nonvoting common stock for the three months ended March 31, 2025 are as follows:

Three Months Ended March 31,

Common Stock Nonvoting Common Stock Consolidated Common Stock

Basic earnings per share:

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Net income available to common stockholders $ 1,779 $ 17 $ 1,796

Weighted-average common shares outstanding

— basic 1,778 51 1,770 51 1,776 51 1,774 51

Weighted-average common shares outstanding — basic 1,794 51 1,817

Basic earnings per share $ .99 $ .33 $ .99

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Net income available to common stockholders $ 1,779 $ 17 $ 1,796

Reallocation of net income available to common

stockholders as a result of conversion of

nonvoting to voting shares 36 — 28 — 105 — 104 —

Allocation of net income available to common

stockholders:

Reallocation of net income available to common stockholders as a result of

conversion of nonvoting to voting shares 17 — —

Allocation of net income available to common stockholders:

$ 1,796 $ 17 $ 1,796

Weighted-average common shares outstanding —

basic 1,778 51 1,770 51 1,776 51 1,774 51

Weighted-average common shares outstanding — basic 1,794 51 1,817

Conversion of nonvoting shares to voting shares 23 — —

Common stock equivalent shares related to stock

incentive plans 5 — 6 — 6 — 7 —

Weighted-average common shares

outstanding — diluted (2)

Common stock equivalent shares related to stock incentive plans 5 — 5

Weighted-average common shares outstanding — diluted (2)

1,822 51 1,822

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

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

(2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 14 million for the three months ended March 31, 2025.

As of March 31, 2024, the Company had voting and nonvoting common stock outstanding.

The computations of basic and diluted EPS for the two classes for the three months ended March 31, 2024 are as follows:

Three Months Ended March 31,

Common Stock Nonvoting Common Stock

Basic earnings per share:

Net income $ 1,324 $ 38

Preferred stock dividends and other (1)

( 108 ) ( 3 )

Net income available to common stockholders $ 1,216 $ 35

Weighted-average common shares outstanding — basic 1,774 51

Basic earnings per share $ .69 $ .69

Diluted earnings per share:

Net income available to common stockholders $ 1,216 $ 35

Reallocation of net income available to common stockholders as a result of

conversion of nonvoting to voting shares

Allocation of net income available to common stockholders:

Weighted-average common shares outstanding — basic 1,774 51

Conversion of nonvoting shares to voting shares

Common stock equivalent shares related to stock incentive plans 6 —

Weighted-average common shares outstanding — diluted (2)

Diluted earnings per share $ .68 $ .68

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

(2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 18 million for the three months ended March 31, 2024.

THE CHARLES SCHWAB CORPORATION

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Regulatory Requirements

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

At March 31, 2025, CSC and its banking subsidiaries met all of their respective capital requirements.

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

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Well Capitalized Minimum Capital Requirement

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

March 31, 2025 Amount Ratio Amount Ratio Amount Ratio (1)

Common Equity Tier 1 Risk-Based Capital $ 36,022 32.0 % N/A $ 5,062 4.5 %

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

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

As of March 31, 2025, CSC was subject to a stress capital buffer of 2.5%.

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

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

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

At March 31, 2025, the minimum capital ratio requirements for both CSC and CSB, inclusive of their respective buffers, were 7.0%, 8.5%, and 10.5% for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital, respectively.

N/A Not applicable.

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

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

Based on its regulatory capital ratios at March 31, 2025, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules.

There are no conditions or events since March 31, 2025 that management believes have changed CSB’s capital category.

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

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

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

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

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 March 31, 2025, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities, and the entities held total assets of $ 25.3 billion and $ 9.8 billion, respectively.

Based on their regulatory capital ratios, at March 31, 2025, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules.

THE CHARLES SCHWAB CORPORATION

2 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Net capital $ 12,117 $ 11,112

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Net capital in excess of required net capital 10,109 9,063

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

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 March 31, 2025.

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.

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

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

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

(FINRA), and other applicable regulatory organizations.

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

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

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

Segment Information

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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, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees.

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

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

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

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 Item 8 – Note 2 in the 2024 Form 10-K.

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.

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.

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Investor Services Advisor Services Total

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

Three Months Ended March 31, 2025 2024 2025 2024 2025 2024

Net interest revenue $ 2,158 $ 1,766 $ 548 $ 467 $ 2,706 $ 2,233

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Expenses Excluding Interest

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

Nine Months Ended September 30,

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

Asset management and administration fees 2,966 2,523 1,241 992 4,207 3,515

Trading revenue 2,104 2,148 287 315 2,391 2,463

Bank deposit account fees 362 396 126 135 488 531

Compensation and benefits 1,285 1,189 387 349 1,672 1,538

Professional services 214 194 55 47 269 241

Occupancy and equipment 215 206 59 59 274 265

Advertising and market development 64 62 32 26 96 88

Communications 113 99 40 42 153 141

Depreciation and amortization 165 186 52 42 217 228

Amortization of acquired intangible assets 106 129 24 1 130 130

Regulatory fees and assessments 70 94 19 31 89 125

Other 202 156 42 30 244 186

Total net revenues 11,113 10,966 3,164 3,412 14,277 14,378

Expenses Excluding Interest 6,758 6,780 2,132 2,414 8,890 9,194

Total expenses excluding interest 2,434 2,315 710 627 3,144 2,942

Income before taxes on income $ 2,011 $ 1,422 $ 444 $ 376 $ 2,455 $ 1,798

(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 the first quarter of 2025, and prior-year amounts have been recast to reflect this new basis of segmentation.

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

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk