What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 271 added, 261 removed, 771 unchanged (41% of the section changed)

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• Funding sources and uses of liquidity (see Liquidity Risk in Part I – Item 2);

• Wholesale funding, targeted funding profile and expectations for paydown of bank supplemental funding (see Results of Operations in Part I – Item 2, and Liquidity Risk in Part I – Item 2);

• Wholesale funding, funding strategy, and expectations for paydown of bank supplemental funding (see Results of Operations in Part I – Item 2, and Liquidity Risk in Part I – Item 2);

• Management of interest rate risk;

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and uses of capital and return of excess capital to stockholders (see Capital Management in Part I – Item 2 and Commitments and Contingencies in Part I – Item 1 – Financial Information – Notes to Condensed Consolidated Financial Statements (Item 1) – Note 10);

• The acquisition of Forge Global Holdings, Inc.

(Forge) and our expectation that incorporating Forge’s private markets capabilities will enhance Schwab’s ability to meet the evolving needs of investors across our growing client base (see Subsequent Events in Overview and Item 1 – Note 19);

• The expected impact of proposed and final rules (see Current Regulatory and Other Developments in Part I – Item 2);

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• Our ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance our infrastructure, in a timely and successful manner;

• Our ability to monetize client assets;

• Our ability to support client activity levels;

• Increased compensation and other costs;

THE CHARLES SCHWAB CORPORATION

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

• Management’s ability to close the acquisition of Forge on the anticipated terms and timing;

required regulatory approvals and approval by Forge’s stockholders;

disruptions to Forge’s business as a result of the announcement and pendency of the acquisition;

and the ability and timeframe to integrate the business and realize the anticipated benefits;

• Our ability to monetize client assets;

• Our ability to support client activity levels;

• Increased compensation and other costs;

• Re al estate and workforce decisions;

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Management focuses on several client activity and financial metrics in evaluating Schwab’s financial position and operating performance.

Results for the second quarter and first six months of 2025 and 2024 are as follows:

Results for the third quarter and first nine months of 2025 and 2024 are as follows:

Three Months Ended

June 30, Percent

Change Six Months Ended

June 30, Percent

September 30, Percent

Change Nine Months Ended

September 30, Percent

2025 2024 2025 2024

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Return on tangible common equity 38 % 31 % 37 % 33 %

(1) The second quarter and first six months of 2025 include net outflows of $6.7 billion and $12.0 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB.

The second quarter and first six months of 2024 include net inflows of $2.7 billion and net outflows of $4.7 billion, respectively, from off-platform brokered CDs issued by CSB.

The second quarter and first six months of 2024 also include an inflow of $10.3 billion from a mutual fund clearing services client.

(1) The third quarter and first nine months of 2025 include net outflows of $3.1 billion and $15.1 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB.

The third quarter and first nine months of 2024 include net outflows of $4.4 billion and $9.1 billion, respectively, from off-platform brokered CDs issued by CSB and an outflow of $0.1 billion from an international relationship.

The first nine months of 2024 also includes an inflow of $10.3 billion from a mutual fund clearing services client.

(2) See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.

The first six months of 2025 presented an evolving macroeconomic landscape for investors.

With uncertainty around the economic impacts of trade policy, equity markets gave up some early 2025 gains late in the first quarter.

Though volatility continued into April, equity markets and investor sentiment rebounded during the second quarter.

The Standard and Poor’s ® 500 Index rose 11% and 5% during the second quarter and first six months of 2025, respectively, while the NASDAQ Composite ® gained 18% and 5% during the second quarter and year-to-date periods.

The Federal Reserve kept the federal funds overnight rate unchanged through the first six months of 2025.

Following some volatility during the second quarter, the 10-year U.S.

Treasury yield was 4.24% at June 30, 2025, largely consistent with March 31 and down 34 basis points year-to-date.

Amid the varying market conditions seen in the first six months of 2025, clients continued to turn to Schwab, resulting in strong asset gathering, year-over-year growth in new client accounts, and sustained client engagement.

Core net new assets, inclusive of seasonal tax payments, were $80.3 billion in the second quarter of 2025, up 31% year-over-year.

Year-to-date core net new assets totaled $218.0 billion, up 39% from the first half of 2024.

Clients opened 1.1 million and 2.3 million new brokerage accounts in the second quarter and first six months of the year, respectively, up 11% and 10% from the respective prior-year amounts, and active brokerage accounts rose 5% year-over-year to reach 37.5 million at June 30, 2025.

Client trading volume remained robust through the first six months of the year.

Reflecting the impact of increased market volatility late in the first

The first nine months of 2025 continued to present a changing landscape for investors.

Though macroeconomic uncertainty continued, during the third quarter of 2025, investor sentiment further improved and equity markets reached record levels.

The Standard and Poor’s ® 500 Index rose 8% and 14% during the third quarter and first nine months of 2025, respectively, and the NASDAQ Composite ® increased 11% and 17% during the third quarter and year-to-date periods.

The Federal Reserve reduced the target federal funds overnight rate 25 basis points in September, representing the first such rate cut since December 2024.

Schwab saw strong client asset gathering, growth in new client accounts, and sustained client engagement continue through the first nine months of 2025.

Core net new assets totaled $137.5 billion and $355.5 billion in the third quarter and first nine months of the year, respectively, increasing 44% and 41% from the comparative prior-year periods.

Clients opened 1.1 million and 3.4 million new brokerage accounts in the third quarter and first nine months of the year, respectively, up 18% and 12% from the respective periods in 2024, and active brokerage accounts reached 38.0 million at the end of the third quarter of 2025, up 6% year-over-year.

Though clients’ daily average trades (DATs) in third quarter of 2025 declined slightly from the second quarter, client engagement with the markets remained strong.

DATs were 7.4 million and 7.5 million for the third quarter and first nine months of 2025, respectively, up 30% and 31% from the same periods in 2024.

THE CHARLES SCHWAB CORPORATION

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

quarter and early in the second quarter, clients’ daily average trades (DATs) rose significantly year-over-year, reaching 7.6 million and 7.5 million in the second quarter and first six months of 2025, respectively, which represented increases of 38% and 31% from the same periods in the prior year.

Schwab’s financial performance in the second quarter and first six months of 2025 reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for margin and bank lending and Schwab’s managed investing solutions, and reduction of higher-cost bank supplemental funding as well as balanced expense management.

Net income grew to $2.1 billion and $4.0 billion in the second quarter and first six months of 2025, respectively, higher by 60% and 50% from the respective prior-year periods.

Diluted earnings per common share (EPS) was $1.08 and $2.07 in the second quarter and first six months of the year, respectively, up 64% and 54% from the same periods in 2024.

Adjusted diluted EPS (1) was $1.14 and $2.17 in the second quarter and first six months of 2025, respectively, rising 56% and 48% from the same periods in 2024.

Total net revenues increased 25% year-over-year in the second quarter of 2025 to $5.9 billion, bringing the year-to-date total to $11.5 billion, up 21% from the same period in 2024.

Net interest revenue was $2.8 billion and $5.5 billion in the second quarter and first six months of 2025, respectively, rising 31% and 26% from the comparable periods in 2024, primarily due to lower interest expense from reductions in bank supplemental funding and lower market rates, as well as growth in bank lending and higher cash and investments segregated, which more than offset lower yields on interest-earning assets due to lower market rates.

Asset management and administration fees were $1.6 billion and $3.1 billion in the second quarter and first six months of 2025, respectively, increasing 14% from both comparable prior-year periods due to continued growth in money market funds and also higher client asset balances reflecting asset gathering, equity market appreciation, and growth in managed investing solutions.

Trading revenue was $952 million and $1.9 billion in the second quarter and first six months of 2025, respectively, rising 23% and 17% from the comparable prior-year periods, due primarily to higher trading volume.

Bank deposit account fee revenue was $247 million and $492 million in the second quarter and first six months of 2025, respectively, up 61% and 46% from the same periods in 2024 due primarily to higher net yields.

Total expenses excluding interest were $3.0 billion and $6.2 billion in the second quarter and first six months of 2025, respectively, increasing 4% and 5% from the same periods in the prior year.

For the second quarter and first six months of 2025, adjusted total expenses (1) were $2.9 billion and $5.9 billion, respectively, up 5% and 7% from the comparable prior-year periods.

The increases in total expenses excluding interest and adjusted total expenses (1) reflect ongoing strategic investments to support growth of the business and enhance client-serving capabilities while driving incremental efficiencies.

The increases were primarily due to higher compensation and benefits expense, inclusive of annual merit increases, higher incentive compensation, and employee-related costs, higher professional services expense due to overall growth in the business, and higher industry fees within other expense due to increased client trading volume and the SEC’s May 2024 Section 31 fee rate increase, partially offset by lower regulatory fees and assessments.

Return on average common stockholders’ equity was 19% and 18% for the second quarter and first six months of 2025, respectively, up from 14% and 15% in the same prior-year periods, due to growth in net income, which more than offset higher average common stockholders’ equity.

Return on tangible common equity (1) (ROTCE) was 35% in the second quarter of 2025, up from 34% in the same period in 2024 due to higher adjusted net income available to common stockholders (1) .

ROTCE (1) was 34% for the six months ended June 30, 2025, down from 36% in the same period in 2024, as growth in average common stockholders’ equity for the year-to-date period more than offset growth in adjusted net income available to common stockholders (1) .

Average common stockholders’ equity increased in the second quarter and first six months of 2025 primarily as a result of year-over-year growth in retained earnings and improved average accumulated other comprehensive income (AOCI).

Schwab’s financial performance in the third quarter and first nine months of 2025 reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for Schwab’s lending offerings and managed investing solutions, as well as reduction of higher-cost bank supplemental funding and balanced expense management.

Net income was $2.4 billion and $6.4 billion in the third quarter and first nine months of 2025, respectively, growing 67% and 56% from the same prior-year periods.

Diluted earnings per common share (EPS) was $1.26 and $3.33 for the third quarter and first nine months of 2025, respectively, rising 77% and 62% from the same periods in 2024.

Adjusted diluted EPS (1) was $1.31 and $3.49 for the third quarter and first nine months of 2025, respectively, increasing 70% and 55% from the same periods in 2024.

Total net revenues grew 27% year-over-year in the third quarter of 2025 to reach $6.1 billion, resulting in a year-to-date total of $17.6 billion, an increase of 23% from the same period in 2024.

Net interest revenue was $3.1 billion and $8.6 billion in the third quarter and first nine months of 2025, respectively, up 37% and 30% from the same periods in 2024, primarily due to lower interest expense from reductions in bank supplemental funding and lower rates on funding sources, as well as growth in bank and margin lending and higher cash and investments segregated, which more than offset lower yields on interest-earning assets due to lower market rates.

Asset management and administration fees were $1.7 billion and $4.8 billion in the third quarter and first nine months of 2025, respectively, increasing 13% from both prior-year periods, due primarily to continued growth in money market funds and also higher client asset balances, reflecting asset gathering, equity market appreciation, and growth in managed investing solutions.

Trading revenue was $995 million and $2.9 billion in the third quarter and first nine months of 2025, respectively, higher by 25% and 19% from comparable prior-year periods, due primarily to higher trading volume.

Bank deposit account fee revenue rose to $247 million and $739 million in the third quarter and first nine months of the year, respectively, up 63% and 51% from the same periods in 2024 due primarily to higher net yields, partially offset by lower bank deposit account balances (BDA balances).

Total expenses excluding interest were $3.1 billion and $9.3 billion in the third quarter and first nine months of 2025, respectively, increasing 4% and 5% from the same periods in 2024.

For the third quarter and first nine months of 2025, adjusted total expenses (1) were $3.0 billion and $8.9 billion, respectively, up 5% and 6% from the comparable prior-year periods.

The increases in total expenses excluding interest and adjusted total expenses (1) reflect ongoing investments to support growth of the business and enhance client-serving capabilities while driving incremental efficiencies across the Company.

The increases were primarily attributable to higher compensation and benefits expense and higher professional services expense, partially offset by lower regulatory fees and assessments, and for the quarter-to-date period, lower industry fees within other expense.

Return on average common stockholders’ equity was 21% and 20% for the third quarter and first nine months of 2025, respectively, up from 14% in both comparable prior-year periods.

These increases were due to higher net income, which more than offset higher average common stockholders’ equity.

Return on tangible common equity (1) (ROTCE) was 38% and 37% for the third quarter and first nine months of 2025, respectively, up from 31% and 33% for the same periods in the prior year, as growth in adjusted net income available to common stockholders (1) more than offset growth in average common stockholders’ equity.

Average common stockholders’ equity increased primarily as a result of growth in retained earnings and improved average accumulated other comprehensive income (AOCI), partially offset by higher treasury stock due to common stock repurchases in 2025.

The improvement in average AOCI was due to lower unrealized losses on available for sale (AFS) investment securities and securities previously transferred from AFS to held to maturity (HTM).

Throughout the first six months of 2025, Schwab supported increased client activity in margin and bank lending, while further reducing bank supplemental funding and returning excess capital to stockholders.

Total balance sheet assets decreased 1% during the second quarter and 4% from year-end 2024 to $458.9 billion as of June 30, 2025.

Principal and interest from our AFS and HTM securities portfolios and excess cash on hand supported further reduction in bank supplemental funding, which includes brokered CDs, Federal Home Loan Bank (FHLB) borrowings, and borrowings under repurchase agreements at our banks.

Schwab reduced total bank supplemental funding by $22.2 billion, or 44%, in the first six months of 2025, including a reduction of $10.4 billion, or 27%, during the second quarter, with $27.7 billion remaining outstanding at June 30.

While investors reduced margin leverage in late March and April following market volatility, client margin loan balances rebounded later in the second quarter to $83.4 billion at June 30, 2025, down slightly from year-end 2024.

Bank loans rose 11% in the first

In the first nine months of 2025, Schwab supported strong client demand in margin and bank lending, while significantly reducing bank supplemental funding.

Balance sheet assets totaled $465.3 billion as of September 30, 2025, up 1% during the third quarter and down 3% from year-end 2024.

Principal and interest from our AFS and HTM securities portfolio along with normal client cash activity allowed for further reduction in bank supplemental funding, which includes brokered CDs, Federal Home Loan Bank (FHLB) borrowings, and borrowings under repurchase agreements at our banks.

In September, we transferred $3.0 billion of BDA balances to our balance sheet (see Item 1 – Note 10) to accelerate the paydown of bank supplemental borrowings.

In the first nine months of 2025, Schwab reduced the outstanding balance of total bank supplemental funding by $35.1 billion, or 70%, including a reduction of $12.9 billion during the third quarter.

As of September 30, 2025, remaining balances totaled $14.8 billion, which is within a range generally consistent with our diversified funding strategy.

Client margin loans increased during the third quarter to $97.2 billion at September 30, up 16% from year-end 2024, reflecting strong client demand amid rising equity markets and improved investor sentiment.

Bank loans totaled $53.6 billion as of the end of the third quarter, increasing 18% in the first nine months of 2025 due to growth of pledged asset lines (PALs) and First Mortgages.

The Company also returned meaningful excess capital in the first nine months of 2025.

During the third quarter, the Company repurchased $2.7 billion in common stock, bringing total year-to-date common stock repurchases to $4.6 billion.

In addition, the Company increased its common dividend by 8% to $.27 per share in the first quarter of the year, and redeemed its Series G preferred stock for $2.5 billion in the second quarter.

Inclusive of these capital actions and organic capital generation from net

THE CHARLES SCHWAB CORPORATION

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

six months of 2025, reflecting growth in pledged asset lines (PALs) and First Mortgages, ending the second quarter at $50.4 billion.

Concurrent with the completion of The Toronto-Dominion Bank’s (TD Bank) February 2025 secondary public offering of CSC common shares, the Company repurchased all remaining outstanding shares of nonvoting common stock directly from TD Group US Holdings, LLC, an affiliate of TD Bank, for a total repurchase of $1.5 billion (see Capital Management – Share Repurchases and Item 1 – Note 14).

Also during the first quarter of 2025, the Company increased its common dividend by 8% to $.27 per share.

During the second quarter of 2025, the Company redeemed its Series G preferred stock for $2.5 billion, and repurchased an additional $351 million in common stock.

Inclusive of these capital actions, the Company’s consolidated Tier 1 Leverage Ratio ended the second quarter at 9.8%, largely flat with year-end 2024 as a result of organic capital generation from net income in the first half of the year.

Our consolidated adjusted Tier 1 Leverage Ratio (1) rose to 7.2% as a result of net income in the first six months of 2025 and improvement in AOCI.

income in the first nine months of the year, the Company’s consolidated Tier 1 Leverage Ratio was 9.7% at September 30, 2025, down slightly from year-end 2024.

Our consolidated adjusted Tier 1 Leverage Ratio (1) increased to 7.3%, driven by net income in the first nine months of the 2025 and improvement in AOCI.

(1) Adjusted diluted EPS, adjusted total expenses, return on tangible common equity, adjusted net income available to common stockholders, and adjusted Tier 1 Leverage Ratio are non-GAAP financial measures.

See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.

Subsequent Events

On November 6, 2025, Schwab announced that it has entered into a definitive agreement to acquire Forge Global Holdings, Inc.

(Forge), operator of a leading private market platform and trading marketplace, in a transaction valued at approximately $660 million.

The Company anticipates that incorporating Forge’s private markets capabilities will enhance Schwab’s ability to meet the evolving needs of investors across our growing client base.

The transaction is expected to close in the first half of 2026, subject to customary closing conditions, including approval by Forge’s stockholders and regulatory approvals.

Current Regulatory and Other Developments

On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued by the SEC between March 2022 and November 2023, stating that the Commission does not intend to issue final rules with respect to these proposals.

Among the notices of proposed rulemaking withdrawn were the SEC’s December 2022 equity market structure rule proposals, “Order Competition Rule” and “Regulation Best Execution”, previously referenced in Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K.

On March 3, 2025, the Federal Deposit Insurance Corporation (FDIC) withdrew certain notices of proposed rulemaking issued by the FDIC in 2023 and 2024, stating that the FDIC no longer intends to issue final rules with respect to these proposals.

Among the proposed rulemaking withdrawn was the July 2024 proposal related to the brokered deposits framework, which proposed conditions for which broker-dealers such as CS&Co qualify for the primary purpose exception from the definition of a deposit broker and from attendant restrictions for brokered deposits, previously referenced in Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K.

On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued between March 2022 and November 2023, including the SEC’s December 2022 equity market structure rule proposals, “Order Competition Rule” and “Regulation Best Execution”, previously referenced in Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K.

On March 3, 2025, the Federal Deposit Insurance Corporation (FDIC) withdrew certain notices of proposed rulemaking issued in 2023 and 2024, including the July 2024 proposal related to the brokered deposits framework, previously referenced in Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K.

Refer to Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K for information regarding pending regulatory matters including:

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The following tables present a comparison of revenue by category:

Three Months Ended June 30, Percent

Three Months Ended September 30, Percent

Change Amount % of

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Total net revenues 27 % $ 6,135 100 % $ 4,847 100 %

Six Months Ended June 30, Percent

Nine Months Ended September 30, Percent

Change Amount % of

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The Federal Reserve maintained the upper bound of the target overnight rate at 5.50% through most of 2024 before reducing the rate by 50 basis points during the third quarter of 2024 and another 50 basis points across two cuts during the fourth quarter of 2024.

Throughout the first six months of 2025, the Federal Reserve maintained the upper bound of the target overnight rate at 4.50%.

Schwab’s average interest-earning assets in the second quarter of 2025 increased slightly compared to the same period in 2024, while average interest-earning assets in the first six months of 2025 decreased slightly compared with the same period in 2024.

Client demand for margin and bank lending continued to be strong in the first six months of 2025.

Though clients reduced leverage in late March and April following volatility, margin balances rebounded later in the second quarter as equity markets improved, and margin loan balances ended the second quarter at $83.4 billion, down slightly from year-end 2024, and up 16% from June 30, 2024.

Bank loan balances increased 11% in the first six months of 2025, finishing the second quarter at $50.4 billion, higher by 19% from June 30, 2024, due primarily to growth in PALs and First Mortgages.

Client cash activity during the first six months of 2025 reflected normal cash behavior, inclusive of seasonal tax payments in the second quarter, organic growth, and engagement in equity markets.

Bank sweep deposits and payables to brokerage clients increased by a total of $5.2 billion, or 2%, during the second quarter of 2025, and $37.5 billion, or 14%, from June 30, 2024 to June 30, 2025.

Principal and interest payments on AFS and HTM securities supported a further reduction in bank supplemental funding of $10.4 billion, or 27%, during the second quarter of 2025, and $22.2 billion, or 44%, during the first six months of 2025.

Since June 30, 2024, the Company has reduced bank supplemental funding by $46.0 billion, or 62%.

The Federal Reserve maintained the upper bound of the target overnight rate at 4.50% for most of the first nine months of 2025 before reducing the rate by 25 basis points in mid-September to 4.25%.

Schwab’s average interest-earning assets for the third quarter and first nine months of 2025 were relatively consistent in aggregate with the same periods in 2024, while the mix of interest-earning assets shifted year-over-year to reflect higher margin and bank lending, higher cash and investments segregated, and lower balances of AFS and HTM securities.

Client demand for margin and bank lending continued to be strong in the first nine months of 2025, reflecting positive equity market performance and client engagement, as margin loan balances rebounded following market volatility in late March and early April and rose further in the third quarter.

Margin loan balances ended the third quarter at $97.2 billion, increasing 16% from both the second quarter of 2025 and year-end 2024, and up 33% from September 30, 2024.

Total bank loans increased 6% and 18% in the third quarter and first nine months of 2025, respectively, finishing the third quarter at $53.6 billion, higher by 24% from September 30, 2024, due primarily to growth in PALs and First Mortgages.

Client cash activity during the first nine months of 2025 reflected normal cash behavior, inclusive of organic growth, engagement in equity markets, and seasonality.

Bank sweep deposits and payables to brokerage clients increased by a total of $15.0 billion, or 5%, during the third quarter of 2025, $12.5 billion, or 4%, during the first nine months of 2025, and $42.6 billion, or 15%, from September 30, 2024 to September 30, 2025.

Principal and interest payments on AFS and HTM securities, as well as September transfers of $3.0 billion of BDA balances to our balance sheet (see Results of Operations – Bank Deposit Account Fees and Item 1 – Note 10) supported paydowns in bank supplemental funding of $12.9 billion, or 47%, during the third quarter of 2025, and $35.1 billion, or 70%, during the first nine months of 2025.

Since September 30, 2024, the Company has reduced bank supplemental funding by $50.0 billion, or 77%.

THE CHARLES SCHWAB CORPORATION

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The following table presents net interest revenue information corresponding to interest-earning assets and funding sources on the condensed consolidated balance sheets:

Three Months Ended June 30, Average Balance Interest Revenue/ Expense Average Yield/Rate Average Balance Interest Revenue/ Expense Average Yield/Rate

Three Months Ended September 30, Average Balance Interest Revenue/ Expense Average Yield/Rate Average Balance Interest Revenue/ Expense Average Yield/Rate

Interest-earning assets

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Net interest revenue $ 3,050 2.86 % $ 2,222 2.08%

Six Months Ended June 30, Average Balance Interest Revenue/ Expense Average Yield/Rate Average Balance Interest Revenue/ Expense Average Yield/Rate

Nine Months Ended September 30, Average Balance Interest Revenue/ Expense Average Yield/Rate Average Balance Interest Revenue/ Expense Average Yield/Rate

Interest-earning assets

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

Net interest revenue increased $664 million, or 31%, and $1.1 billion, or 26%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.

These increases were primarily due to lower balances of bank supplemental funding, lower average rates paid on funding sources, and growth in bank lending, partially offset by lower yields on floating-rate assets due to lower market rates.

Average interest-earning assets remained relatively flat, increasing slightly in the second quarter of 2025, and decreasing slightly in the first six months of 2025, compared to the same periods in 2024.

Both the second quarter and first six months of 2025 had higher balances of cash and investments segregated, growth in margin lending supported by higher payables to brokerage clients, and an increase in bank loans compared to the same periods in 2024.

The decrease in average interest-earning assets during the first six months of 2025 was due primarily to lower average balances in AFS and HTM securities, as cash inflows from investment securities were used to pay down bank supplemental funding.

Net interest margin increased to 2.65% and 2.59% in the second quarter and first six months of 2025, respectively, compared to 2.03% during both the second quarter and first six months of 2024, as reduced balances of bank supplemental funding and lower rates paid on funding sources more than offset lower yields on floating-rate assets due to lower market interest rates.

The Company continues to prioritize repayment of bank supplemental funding balances.

Schwab expects the total outstanding balance of bank supplemental funding to continue to decrease and is nearing a level consistent with our diversified long-term funding profile that includes the strategic use of wholesale funding.

Our use and the financial impacts of such bank supplemental funding are dependent on a number of market and client activity factors.

Net interest revenue increased $828 million, or 37%, and $2.0 billion, or 30%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024.

These increases were primarily due to lower balances of bank supplemental funding, lower average rates paid on funding sources, growth in margin and bank lending, and increases in securities lending, partially offset by lower yields on floating-rate assets due to lower market rates.

Average interest-earning assets remained relatively flat, increasing slightly in the third quarter of 2025, and decreasing slightly in the first nine months of 2025, compared to the same periods in 2024.

Both the third quarter and first nine months of 2025 saw higher balances of cash and investments segregated, growth in margin lending supported by higher payables to brokerage clients, and an increase in bank loans compared to the same periods in 2024.

The decrease in average interest-earning assets during the first nine months of 2025 was due primarily to lower average balances in AFS and HTM securities, as cash inflows from investment securities were used to pay down bank supplemental funding.

Net interest margin increased to 2.86% and 2.68% in the third quarter and first nine months of 2025, respectively, compared to 2.08% and 2.04% during the same periods in 2024, as reduced balances of bank supplemental funding and lower rates paid on funding sources more than offset lower yields on floating-rate assets due to lower market interest rates.

Schwab’s diversified funding strategy includes the use of wholesale funding.

With the paydowns of bank supplemental funding in the first nine months of 2025, the outstanding balance of $14.8 billion is within a range generally consistent with our diversified funding strategy.

Our use and the financial impacts of wholesale funding are dependent on a number of market and client activity factors.

See also Risk Management – Liquidity Risk, Capital Management, Item 1 – Notes 8, 9, and 12, and Part II – Item 7 – Results of Operations – Net Interest Revenue in the 2024 Form 10-K for additional information on these and other funding sources.

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The following table presents asset management and administration fees, average client assets, and average fee yields:

Three Months Ended June 30, 2025 2024

Three Months Ended September 30, 2025 2024

Assets Revenue Average

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Total asset management and administration fees $ 1,673 $ 1,476

Six Months Ended June 30,

Nine Months Ended September 30,

Schwab money market funds $ 643,168 $ 1,318 0.27 % $ 525,166 $ 1,072 0.27 %

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Total asset management and administration fees $ 4,773 $ 4,207

(1) The second quarter and first six months of 2025 include transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF funds.

(1) Average client assets for managed investing solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above.

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(3) Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

Asset management and administration fees increased by $187 million, or 14%, and $369 million, or 14%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.

(4) The first nine months of 2025 include transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF funds.

Asset management and administration fees increased by $197 million, or 13%, and $566 million, or 13%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024.

These increases were primarily a result of continued growth in Schwab money market funds amid the ongoing elevated interest rate environment.

These increases were also due to growth in fee-based managed investing solutions, Schwab equity and bond funds, ETFs, and CTFs, and Mutual Fund OneSource ® , reflecting the Company’s asset gathering and net inflows into managed investing solutions, as well as year-over-year equity market appreciation.

These increases were also due to growth in fee-based managed investing solutions, Mutual Fund OneSource ® , and Schwab equity and bond funds, ETFs, and CTFs, reflecting the Company’s asset gathering and net inflows into managed investing solutions, as well as year-over-year equity market appreciation.

THE CHARLES SCHWAB CORPORATION

2 unchanged sentences

The following tables present a roll forward of client assets for the Schwab money market funds, Schwab equity and bond funds, ETFs, and CTFs, and Mutual Fund OneSource ® and other NTF funds.

These funds generated 50% of the asset management and administration fees earned in both the second quarter and first six months of 2025, compared with 49% in both the second quarter and first six months of 2024:

These funds generated 51% and 50% of the asset management and administration fees earned in the third quarter and first nine months of 2025, respectively, compared with 49% in both the third quarter and first nine months of 2024:

Market Funds Schwab Equity and

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and Other NTF funds

Three Months Ended June 30, 2025 2024 2025 2024 2025 2024

Three Months Ended September 30, 2025 2024 2025 2024 2025 2024

Balance at beginning of period $ 653,473 $ 533,586 $ 689,355 $ 564,002 $ 453,919 $ 344,813

3 unchanged sentences

Balance at end of period $ 666,422 $ 562,079 $ 745,696 $ 614,777 $ 473,535 $ 357,991

Six Months Ended June 30,

Nine Months Ended September 30,

Balance at beginning of period $ 596,531 $ 476,409 $ 627,166 $ 506,149 $ 347,798 $ 306,222

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Balance at end of period $ 666,422 $ 562,079 $ 745,696 $ 614,777 $ 473,535 $ 357,991

(1) Includes $63.3 billion of transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF Funds for the three and six months ended June 30, 2025.

(1) Includes $63.3 billion of transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF Funds for the nine months ended September 30, 2025.

Trading Revenue

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Three Months Ended

June 30, Percent

Change Six Months Ended

June 30, Percent

September 30, Percent

Change Nine Months Ended

September 30, Percent

2025 2024 2025 2024

7 unchanged sentences

Three Months Ended

June 30, Percent

Change Six Months Ended

June 30, Percent

September 30, Percent

Change Nine Months Ended

September 30, Percent

2025 2024 2025 2024

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(1) Revenue per trade is calculated as trading revenue divided by the product of DATs multiplied by the number of trading days.

Trading revenue increased $175 million, or 23%, and $266 million, or 17%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, primarily driven by an increase in order flow revenue reflecting higher volume.

Commission revenue increased during the second quarter and first six months of 2025 compared to the same periods of 2024 due to higher volume, partially offset by changes in the mix of client trading activity.

Principal transactions revenue increased

Trading revenue increased $198 million, or 25%, and $464 million, or 19%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024, driven by an increase in order flow and commissions revenue reflecting higher volume.

THE CHARLES SCHWAB CORPORATION

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

during the second quarter of 2025 compared to the same period in 2024, reflecting changes to the fair value of securities positions held to facilitate client activity and cash and investments segregated for regulatory purposes, and remained consistent during the first six months of 2025 compared to the same period in 2024.

Bank Deposit Account Fees

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The following table presents bank deposit account fee revenue and related information:

Three Months Ended June 30, Percent

Change Six Months Ended

June 30, Percent Change

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent Change

2025 2024 2025 2024

Bank deposit account fees $ 247 $ 152 63 % $ 739 $ 488 51 %

Average bank deposit account balances (BDA balances) $ 82,265 $ 87,016 (5) % $ 83,220 $ 89,938 (7) %

Average bank deposit account balances $ 80,030 $ 83,099 (4) % $ 82,145 $ 87,641 (6) %

Average net yield 1.21 % 0.72 % 1.19 % 0.73 %

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Floating-rate balances 23 % 13 % 22 % 12 %

Bank deposit account fees increased $94 million, or 61%, and $156 million, or 46%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, primarily due to a decrease in the amount paid to clients as a result of lower interest rates, partially offset by lower average BDA balances.

The decrease in average BDA balances in the second quarter and first six months of 2025 compared to the same periods in 2024 was primarily due to client cash allocation decisions in 2024 in response to elevated short-term market interest rates through most of 2024.

Average net yield increased in the second quarter and first six months of 2025 compared to the same periods in 2024 due to an increase in the average amount of floating-rate BDA balances, which was partially offset by a decrease in the average net yields on fixed-rate and floating-rate BDA balances.

The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of June 30, 2025 were 78% and 22%, respectively.

Bank deposit account fees increased $95 million, or 63%, and $251 million, or 51%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024, primarily due to a decrease in the amount paid to clients as a result of lower interest rates, partially offset by lower average BDA balances.

The decrease in average BDA balances in the third quarter and first nine months of 2025 compared to the same periods in 2024 was primarily due to client cash allocation decisions in 2024 in response to elevated short-term market interest rates through most of 2024, as well as the transfer of $3.0 billion of BDA balances to Schwab’s balance sheet in September 2025.

Pursuant to the 2023 IDA agreement, after September 10, 2025, Schwab has broader discretion to withdraw balances, subject to certain constraints, as described in Item 1 – Note 10.

Transfers of BDA balances to Schwab’s balance sheet result in lower balances upon which bank deposit account fee revenue is earned but provide a source of funding to invest in interest-earning assets or pay down borrowings to increase net interest revenue.

Average net yield increased in the third quarter and first nine months of 2025 compared to the same periods in 2024 due to an increase in the average amount of floating-rate BDA balances, which was partially offset by a decrease in the average net yields on fixed-rate and floating-rate BDA balances.

The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of September 30, 2025 were 76% and 24%, respectively.

Other Revenue

Other revenue includes industry fees, certain service fees, other gains and losses from the sale of assets, and the provision for credit losses on bank loans.

Other revenue increased $41 million, or 19%, and $92 million, or 24%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.

These increases were primarily due to higher industry fees and a gain from the sale of an equity investment.

Industry fees increased in the second quarter of 2025 primarily due to higher DATs, partially offset by lower average SEC fee rates in effect compared to the same period in 2024.

Industry fees increased in the first six months of 2025 primarily due to higher average SEC fee rates in effect compared to the same period in 2024.

Other revenue decreased $30 million, or 15%, in the third quarter of 2025 compared to the same period in 2024, primarily due to lower industry fees, partially offset by higher other service fees.

Effective May 14, 2025, the SEC decreased the fee rate applicable to most securities transactions to zero from the rate in effect since May 22, 2024.

This change will result in lower industry fees in other revenue and a corresponding decrease in other expense, resulting in no impact to net income.

This change resulted in lower industry fees in the third quarter of 2025 compared to the same period in 2024.

Other revenue increased $62 million, or 11%, in the first nine months of 2025 compared to the same period in 2024, primarily due to a gain from the sale of an equity investment, higher other service fees, and higher industry fees.

Industry fees increased primarily due to higher DATs, partially offset by the decrease in SEC fee rates.

THE CHARLES SCHWAB CORPORATION

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Three Months Ended

June 30, Percent

Change Six Months Ended

June 30, Percent

September 30, Percent

Change Nine Months Ended

September 30, Percent

2025 2024 2025 2024

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Average 32.8 32.3 2 % 32.4 32.4 —

Expenses excluding interest increased $105 million, or 4%, and $307 million, or 5%, in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.

Adjusted total expenses, which excludes acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs, increased 5% and 7% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.

Expenses excluding interest increased $109 million, or 4%, and $416 million, or 5%, in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024.

Adjusted total expenses, which excludes acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs, increased 5% and 6% in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024.

See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.

There were no acquisition and integration-related costs or restructuring costs in the second quarter and first six months of 2025.

Total compensation and benefits expense increased in the second quarter and first six months of 2025 compared to the same periods in 2024, primarily due to annual merit increases, higher incentive compensation, and higher other employee-related costs.

Compensation and benefits included a $3 million and $34 million benefit in the second quarter and first six months of 2024, respectively, due to a change in estimated restructuring costs.

Compensation and benefits also included acquisition and integration-related costs of $18 million and $35 million in the second quarter and first six months of 2024, respectively.

Professional services expense increased in the second quarter and first six months of 2025 compared to the same periods in 2024, reflecting overall growth of business and increased utilization of technology and other professional services.

Professional services included acquisition and integration-related costs of $12 million and $29 million in the second quarter and first six months of 2024, respectively.

Occupancy and equipment expense increased in the second quarter and first six months of 2025 compared to the same periods in 2024, primarily driven by higher technology equipment and software costs related to growth of the business and a benefit related to property taxes reflected in the second quarter of 2024.

Occupancy and equipment included restructuring costs of $1 million and $3 million in the second quarter and first six months of 2024, respectively.

Advertising and market development expense increased slightly in the second quarter and first six months of 2025 compared to the same period in 2024, primarily due to higher client promotional spending.

There were no acquisition and integration-related costs or restructuring costs in the third quarter and first nine months of 2025.

Total compensation and benefits expense increased in the third quarter and first nine months of 2025 compared to the same periods in 2024, primarily due to annual merit increases, higher incentive compensation, and higher other employee-related costs.

Compensation and benefits included a $34 million benefit in the first nine months of 2024 due to a change in estimated restructuring costs.

Compensation and benefits also included acquisition and integration-related costs of $9 million and $44 million in the third quarter and first nine months of 2024, respectively.

Professional services expense increased in the third quarter and first nine months of 2025 compared to the same periods in 2024, reflecting overall growth of the business and increased utilization of technology and other professional services.

Professional services included acquisition and integration-related costs of $3 million and $32 million in the third quarter and first nine months of 2024, respectively.

Occupancy and equipment expense increased in the third quarter and first nine months of 2025 compared to the same periods in 2024, primarily driven by higher technology equipment and software costs, as well as building expenses, related to growth of the business, and a benefit related to property taxes reflected in 2024.

Advertising and market development expense remained consistent in the third quarter and increased in the first nine months of 2025 compared to the same periods in 2024.

In the third quarter of 2025, higher digital advertising costs were largely offset by lower client promotional spending, and the increase in the first nine months of 2025 primarily reflected higher digital advertising costs.

THE CHARLES SCHWAB CORPORATION

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

Communications expense increased in the second quarter and first six months of 2025 compared to the same periods in 2024.

The increase in the second quarter was primarily due to higher proxy-related expenses reflecting growth in the business, partially offset by lower telecommunications expenses.

The increase in the year-to-date period reflected higher exchange quotation services and proxy-related expenses, partially offset by lower telecommunications expenses.

Depreciation and amortization expense decreased in the second quarter and first six months of 2025 compared to the same periods in 2024, primarily due to finance lease terminations in 2024 and lower depreciation on equipment due to abandonment of certain data centers in 2024 related to the integration of Ameritrade Holding LLC (Ameritrade Holding) and its consolidated subsidiaries (collectively, Ameritrade).

Depreciation and amortization expense included acquisition and integration-related costs of $5 million in the second quarter and first six months of 2024 .

Amortization of acquired intangible assets remained consistent in the second quarter and first six months of 2025 compared to the same periods in 2024.

Regulatory fees and assessments decreased in the second quarter and first six months of 2025 compared to the same periods in 2024.

The decrease in the second quarter of 2025 was primarily due to lower FDIC deposit insurance assessments.

The decrease in the first six months of 2025 was primarily due to a $25 million incremental FDIC special assessment in the first quarter of 2024 and lower FDIC deposit insurance assessments, reflecting a decrease in brokered CDs and a lower assessment base.

Other expense was largely consistent in the second quarter and increased in the first six months of 2025 compared to the same periods in 2024.

The year-over-year change in the second quarter of 2025 was due to several offsetting items, including a charge recognized in the second quarter of 2024 for the SEC’s industry-wide review of off-channel communications, and certain higher costs in 2025 related to growth of the business and increased client trading volume, including higher industry fees.

The increase in the first six months of 2025 from the same period in 2024 reflected higher industry fees due to increased trading volume and higher average SEC fee rates.

Effective May 14, 2025, the SEC decreased the fee rate applicable to most securities transactions to zero from the rate in effect since May 22, 2024.

This change will result in lower industry fees in other expense and a corresponding decrease in other revenue, resulting in no impact to net income.

Other expense included restructuring costs of $12 million and $13 million in the second quarter and first six months of 2024, respectively.

Capital expenditures were $136 million and $92 million in the second quarter of 2025 and 2024, respectively, and $292 million and $214 million in the first six months of 2025 and 2024, respectively.

Capital expenditures increased in the second quarter and first six months of 2025 compared to the same periods in 2024, primarily due to higher investment in purchased software, information technology and telecommunications equipment, and buildings, partially offset by lower internally developed software.

We continue to anticipate capital expenditures for full-year 2025 will be approximately 3-5% of total net revenues.

Communications expense increased in the third quarter and first nine months of 2025 compared to the same periods in 2024.

The increase in the third quarter was primarily due to higher proxy-related expenses reflecting growth in the business, partially offset by lower printing and telecommunications expenses.

The increase in the year-to-date period primarily reflected higher proxy-related expenses and exchange quotation services, partially offset by lower telecommunications expenses.

Depreciation and amortization expense decreased in the third quarter and first nine months of 2025 compared to the same periods in 2024, primarily due to finance lease terminations in 2024 and lower depreciation on equipment due to abandonment of certain data centers in 2024 related to the integration of Ameritrade Holding LLC (Ameritrade Holding) and its consolidated subsidiaries (collectively, Ameritrade).

Depreciation and amortization expense included acquisition and integration-related costs of $8 million and $13 million in the third quarter and first nine months of 2024, respectively .

Amortization of acquired intangible assets was largely consistent in the third quarter and first nine months of 2025 compared to the same periods in 2024.

Regulatory fees and assessments decreased in the third quarter and first nine months of 2025 compared to the same periods in 2024.

The decrease in the third quarter of 2025 was primarily due to a $13 million reduction in the FDIC special assessment coupled with lower FDIC deposit insurance assessments.

The decrease in the first nine months of 2025 was primarily due to a $30 million incremental FDIC special assessment in the first nine months of 2024 and the $13 million reduction in the special assessment in the third quarter of 2025, coupled with lower FDIC deposit insurance assessments reflecting a decrease in brokered CDs and a lower assessment base.

Other expense decreased in the third quarter and increased in the first nine months of 2025 compared to the same periods in 2024.

The decrease in the third quarter of 2025 was primarily driven by lower industry fees, partially offset by certain higher costs in 2025 related to growth of the business and increased client trading volume.

Effective May 14, 2025, the SEC decreased the fee rate applicable to most securities transactions to zero from the rate in effect since May 22, 2024, resulting in lower industry fees in the third quarter of 2025 compared to the same period in 2024.

The increase in the first nine months of 2025 from the same period in 2024 was primarily due to higher industry fees in the first half of the year and certain higher costs resulting from growth of the business and increased trading volume.

The increase was also partially offset by a charge recognized in the second quarter of 2024 for the SEC’s industry-wide review of off-channel communications.

Other expense included restructuring costs of $13 million in the first nine months of 2024.

Capital expenditures were $152 million and $135 million in the third quarter of 2025 and 2024, respectively, and $444 million and $349 million in the first nine months of 2025 and 2024, respectively.

Capital expenditures increased in the third quarter and first nine months of 2025 compared to the same periods in 2024, primarily due to higher investment in purchased software and telecommunications and other equipment, partially offset by lower internally developed software for the year-to-date period.

The completion of certain construction projects resulted in a decrease of building-related capital expenditures during the third quarter of 2025.

As a result of higher year-to-date total net revenues and lower spending, we now estimate capital expenditures for full-year 2025 will be on the lower end of our previously disclosed expected range of approximately 3-5% of total net revenues.

Taxes on Income

Taxes on income were $677 million and $415 million for the second quarter of 2025 and 2024, respectively, resulting in effective tax rates of 24.2% and 23.8%, respectively.

Taxes on income were $1.2 billion and $851 million for the first six months of 2025 and 2024 , respectively, resulting in tax rates of 23.3% and 24.0%, respectively.

The increase in the effective tax rate in the second quarter of 2025 compared to the same period in 2024 was primarily due to an increase in the state tax rate, partially offset by the recognition of certain tax credits, a decrease in non-deductible FDIC deposit insurance assessments, and the reversal of tax reserves due to the resolution of certain state tax matters during the second quarter of 2025.

The decrease in the effective tax rate in the first six months of 2025 compared to the same period in 2024 was primarily due to the reversal of tax reserves due to the resolution of certain state tax matters during 2025, a decrease in non-deductible FDIC deposit insurance assessments, an increase in equity compensation tax deduction benefits, and the recognition of certain tax credits, partially offset by an increase in the state tax rate.

Taxes on income were $663 million and $434 million for the third quarter of 2025 and 2024, respectively, resulting in effective tax rates of 21.9% and 23.6%, respectively.

Taxes on income were $1.9 billion and $1.3 billion for the first nine months of 2025 and 2024 , respectively, resulting in tax rates of 22.8% and 23.9%, respectively.

The decrease in the effective tax rate in the third quarter of 2025 compared to the same period in 2024 was primarily due to a decrease in state taxes and in non-deductible FDIC deposit insurance assessments, partially offset by a decrease in certain tax credits.

The decrease in the effective tax rate in the first nine months of 2025 compared to the same period in 2024 was primarily due to a decrease in the state tax rate and in non-deductible FDIC deposit insurance assessments, and an increase in equity compensation tax deduction benefits, partially offset by a decrease in certain tax credits.

THE CHARLES SCHWAB CORPORATION

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Investor Services Advisor Services Total

Three Months Ended June 30, Percent Change 2025 2024 Percent Change 2025 2024 Percent Change 2025 2024

Three Months Ended September 30, Percent Change 2025 2024 Percent Change 2025 2024 Percent Change 2025 2024

Net interest revenue 36 % $ 2,424 $ 1,777 41 % $ 626 $ 445 37 % $ 3,050 $ 2,222

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42 % $ 52.7 $ 37.2 52 % $ 81.7 $ 53.6 48 % $ 134.4 $ 90.8

Six Months Ended June 30,

Nine Months Ended September 30,

Net interest revenue 29 % $ 6,826 $ 5,279 31 % $ 1,752 $ 1,334 30 % $ 8,578 $ 6,613

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(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 second quarter and six months ended June 30, 2025, and prior-year amounts have been recast to reflect this new basis of segmentation.

(2) In the second quarter and first six months of 2025, Investor Services includes net outflows of $6.7 billion and $12.0 billion, respectively, from off-platform brokered CDs issued by CSB.

In the second quarter and first six months of 2024, Investor Services includes net inflows of $2.7 billion and net outflows of $4.7 billion, respectively, from off-platform brokered CDs issued by CSB.

Also in the second quarter and first six months of 2024, Investor Services includes an inflow of $10.3 billion from a mutual fund clearing services client.

Accordingly, amounts related to the Retirement Business Services business unit are included within Investor Services for the third quarter and nine months ended September 30, 2025, and prior-year amounts have been recast to reflect this new basis of segmentation.

(2) In the third quarter and first nine months of 2025, Investor Services includes net outflows of $3.1 billion and $15.1 billion, respectively, from off-platform brokered CDs issued by CSB.

In the third quarter and first nine months of 2024, Investor Services includes net outflows of $4.4 billion and $9.1 billion, respectively, from off-platform brokered CDs issued by CSB and an outflow of $0.1 billion from a large international relationship.

Also, in the first nine months of 2024, Investor Services includes an inflow of $10.3 billion from a mutual fund clearing services client.

THE CHARLES SCHWAB CORPORATION

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Segment Net Revenues

Investor Services and Advisor Services total net revenues increased by 25% for both segments, in the second quarter of 2025, and increased by 22% and 20%, respectively, in the first six months of 2025, compared to the same periods in 2024.

Schwab’s net revenues increased similarly for both segments in the second quarter and first six months of 2025 compared to the same periods in 2024.

Net interest revenue increased primarily due to continued paydowns of bank supplemental funding, lower average rates paid on funding sources, and growth of bank lending, partially offset by lower yields on interest-earning assets.

Investor Services and Advisor Services total net revenues increased by 27% and 25%, respectively, in the third quarter of 2025, and increased by 24% and 22%, respectively, in the first nine months of 2025, compared to the same periods in 2024.

Changes in Schwab’s net revenues were driven by similar factors for both segments in the third quarter and first nine months of 2025 compared to the same periods in 2024.

Net interest revenue increased primarily due to reductions in bank supplemental funding, lower average rates paid on funding sources, and growth of bank and margin lending balances, partially offset by lower yields on interest-earning assets.

Asset management and administration fees increased primarily as a result of higher balances in money market funds, Schwab equity and bond funds, ETFs, and CTFs, and Mutual Fund OneSource ® , and, additionally for Investor Services, managed investing solutions.

Trading revenue increased primarily due to higher order flow revenue and commission revenue due primarily to higher volume, and, in the second quarter, higher principal transactions revenue.

Trading revenue increased primarily due to higher order flow revenue and commission revenue reflecting higher volume.

Bank deposit account fees increased primarily due to improved net yields partially offset by lower average BDA balances.

Other revenue increased primarily due to higher industry fees and a recognized gain on an equity investment in the second quarter of 2025.

Other revenue increased for both segments in the first nine months of 2025, and in the third quarter of 2025 decreased for Investor Services while slightly increasing for Advisor Services.

Both segments saw growth in other revenue due to higher industry fees in the first half of 2025, higher other service fees, and a recognized gain on the sale of an equity investment, offset by lower industry fees in the third quarter of 2025.

Segment Expenses Excluding Interest

Investor Services and Advisor Services total expenses excluding interest increased by 3% and 4%, respectively, in the second quarter of 2025, and increased by 4% and 8%, respectively, in the first six months of 2025 compared to the same periods in 2024.

Most expenses changed similarly in the two segments in the second quarter and first six months of 2025 compared to the same periods in 2024.

Investor Services total expenses excluding interest increased by 5% and Advisor Services total expenses excluding interest remained consistent in the third quarter of 2025 compared to the same period in 2024.

Investor Services and Advisor Services total expenses excluding interest increased by 4% and 5%, respectively, in the first nine months of 2025 compared to the same periods in 2024.

Changes in expenses were driven by similar factors for the two segments in the third quarter and first nine months of 2025 compared to the same periods in 2024.

Compensation and benefits expense increased primarily due to annual merit increases, higher incentive compensation, and higher employee-related costs.

Professional services expense increased due to overall growth of business and increased utilization of technology and other professional services .

Occupancy and equipment expense increased primarily due to higher technology equipment and software costs related to growth of the business and a property tax benefit reflected in the second quarter of 2024.

Regulatory fees and assessments decreased for both segments during the second quarter and first six months of 2025 compared to the same periods in 2024, primarily due to lower FDIC fees.

Additionally, during the first six months of 2025, regulatory fees and assessments decreased due to a $25 million incremental FDIC special assessment in the first quarter of 2024.

Professional services expense increased due to overall growth of the business and increased utilization of technology and other professional services .

Occupancy and equipment expense increased in the first nine months of 2025 primarily due to higher technology equipment and software costs related to growth of the business and a property tax benefit reflected in 2024, while in the third quarter of 2025, both segments were relatively flat.

Regulatory fees and assessments decreased during the third quarter and first nine months of 2025 compared to the same periods in 2024, primarily due to lower FDIC assessments.

RISK MANAGEMENT

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Net interest revenue is affected by various factors, such as the distribution and composition of interest-earning assets and interest-bearing liabilities, the spread between yields earned on interest-earning assets and rates paid on interest-bearing liabilities, which may reprice at different times or by different amounts, and the spread between short- and long-term interest rates.

Interest-earning assets include investment securities, margin loans, bank loans, and cash and cash equivalents.

Interest-earning assets include investment securities, margin loans, bank loans, cash and investments segregated, and cash and cash equivalents.

These assets are sensitive to changes in interest rates and changes in prepayment levels that tend to increase in a declining rate environment and decrease in a rising rate environment.

15 unchanged sentences

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

The following table assumes a statically-sized balance sheet with simulated changes to net interest revenue over the next 12 months beginning June 30, 2025 and December 31, 2024 of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:

June 30, 2025 December 31, 2024

The following table assumes a statically-sized balance sheet with simulated changes to net interest revenue over the next twelve months beginning September 30, 2025 and December 31, 2024 of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:

September 30, 2025 December 31, 2024

Increase of 200 basis points 8.5% 8.6%

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Decrease of 200 basis points (8.2)% (9.3)%

The Company’s simulated incremental increases and decreases in market interest rates had a smaller impact on net interest revenue as of June 30, 2025 compared to December 31, 2024, primarily due to the use of cash flow hedges related to Schwab’s PALs beginning in the second quarter of 2025, and lower cash balances.

The Company’s simulated incremental increases and decreases in market interest rates had a smaller impact on net interest revenue as of September 30, 2025 compared to December 31, 2024, primarily due to the use of cash flow hedges related to Schwab’s PALs beginning in the second quarter of 2025, and lower cash balances.

Effective Duration

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The following table presents the Company’s estimated effective durations, which reflect anticipated future payments, by category:

June 30, 2025 June 30, 2024

September 30, 2025 September 30, 2024

Estimated effective duration, exclusive of derivatives:

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Long-term debt CSC Senior Notes 1.6 3.4

(1) The duration of PALs was less than 0.1 years at June 30, 2024.

(1) The duration of PALs was less than 0.1 years at September 30, 2024.

(2) See Item 1 – Note 11 for additional discussion of the Company’s derivatives.

AFS and HTM securities comprised approximately 45% and 55% of the Company’s consolidated total assets as of June 30, 2025 and 2024, respectively.

The estimated effective duration of the remaining balance sheet assets in aggregate was less than one year as of both June 30, 2025 and 2024.

AFS and HTM securities comprised approximately 43% and 51% of the Company’s consolidated total assets as of September 30, 2025 and 2024, respectively.

The estimated effective duration of the remaining balance sheet assets, excluding the effect of hedging, in aggregate was less than one year as of both September 30, 2025 and 2024.

Economic Value of Equity Simulation

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Consistent with the presentation on the consolidated statement of income, the sensitivity of bank deposit account fee revenue to interest rate changes is assessed separately from the net interest revenue simulation described above.

As of June 30, 2025 and December 31, 2024, simulated changes in bank deposit account fee revenue from gradual changes in market interest rates relative to prevailing market rates, under the interest rate scenarios described above for net interest revenue, did not have a significant impact on the Company’s total net revenues.

As of September 30, 2025 and December 31, 2024, simulated changes in bank deposit account fee revenue from gradual changes in market interest rates relative to prevailing market rates, under the interest rate scenarios described above for net interest revenue, did not have a significant impact on the Company’s total net revenues.

Our net interest revenue, EVE, and bank deposit account fee revenue simulations reflect the assumption of non-negative investment yields.

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Treasury securities.

Our clients’ bank deposits and brokerage cash balances primarily originate from our 37.5 million active brokerage accounts.

More than 80% of our bank deposits qualified for FDIC insurance as of June 30, 2025.

Our clients’ allocation of cash held on

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

our balance sheet as bank deposits or payables to brokerage clients is sensitive to interest rate levels, with clients typically increasing their utilization of investment cash solutions, such as purchased money market funds and certain fixed income products when those yields are higher than those of cash sweep features.

Our clients’ bank deposits and brokerage cash balances primarily originate from our 38.0 million active brokerage accounts.

More than 80% of our bank deposits qualified for FDIC insurance as of September 30, 2025.

Our clients’ allocation of cash held on our balance sheet as bank deposits or payables to brokerage clients is sensitive to interest rate levels, with clients typically increasing their utilization of investment cash solutions, such as purchased money market funds and certain fixed income products when those yields are higher than those of cash sweep features.

As a participant in the financial services industry, Schwab relies on access to external financing in the normal course of business.

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We manage rollover risk on borrowings, taking into account expected principal paydowns on our investment and loan portfolios along with expected deposit flows.

The following table describes certain external debt facilities available at June 30, 2025:

The following table describes certain external debt facilities available at September 30, 2025:

Description Borrower Outstanding Available Maturity of Amounts Outstanding Weighted-Average Interest Rate on Amounts Outstanding

FHLB secured credit facilities Banking subsidiaries $ 850 $ 75,342 (1)

July 2025 - October 2025 4.40%

February 2026 4.11%

Federal Reserve discount window Banking subsidiaries — 29,706 (1)

Repurchase agreements Banking subsidiaries, CSC 3,995 — (2)

July 2025 - October 2025 4.45%

October 2025 - November 2025 4.45%

Unsecured uncommitted lines of credit with

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Unsecured commercial paper CSC 800 4,200 (3)

July 2025 - November 2025 4.52%

October 2025 - November 2025 4.52%

Secured uncommitted lines of credit with

various external banks CS&Co 1,750 — (4)

July 2025 4.84%

(1) Amounts shown as available from the FHLB and Federal Reserve facilities represent remaining capacity based on assets pledged as of June 30, 2025.

December 2025 - January 2026 4.51%

(1) Amounts shown as available from the FHLB and Federal Reserve facilities represent remaining capacity based on assets pledged as of September 30, 2025.

Incremental borrowing capacity may be made available by pledging additional assets, subject to applicable facility terms.

See below and Item 1 – Note 9 for additional information.

(2) Secured borrowing capacity is made available based on the banking subsidiaries’ or CSC’s ability to provide collateral deemed acceptable by each respective counterparty.

(2) Secured borrowing capacity is made available based on our borrower’s ability to provide collateral deemed acceptable by each respective counterparty.

See below and Item 1 – Note 12 for additional information.

(3) Outstanding balance of unsecured commercial paper as of June 30, 2025 represents the gross par value before discount of $19 million.

(3) Outstanding balance of unsecured commercial paper as of September 30, 2025 represents the gross par value before discount of $4 million.

(4) Secured borrowing capacity is made available based on CS&Co’s ability to provide acceptable collateral to the lenders as determined by the credit agreements.

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Available borrowing capacity from the FHLB and Federal Reserve facilities maintained by our banking subsidiaries is dependent on the value of assets pledged and the terms of the borrowing arrangements.

As of June 30, 2025, the Company had additional investment securities with a par value of approximately $104 billion, or a fair value of approximately $97 billion, available to be pledged to obtain additional capacity.

As of September 30, 2025, the Company had additional investment securities with a par value of approximately $99 billion, or a fair value of approximately $93 billion, available to be pledged to obtain additional capacity.

Additional details regarding availability and use of these facilities is described below.

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These credit facilities are also available as backup financing in the event the outflow of client cash from the banking subsidiaries’ respective balance sheets is greater than maturities and paydowns on investment securities and bank loans.

CSC’s banking subsidiaries must each maintain positive tangible capital, as defined by the Federal Housing Finance Agency (FHFA), in order to place new draws upon these credit facilities, and the Company manages capital with consideration of minimum tangible capital ratios at our banking subsidiaries.

CSC’s banking subsidiaries must each maintain positive tangible capital, as defined by the Federal Housing Finance Agency, in order to place new draws upon these credit facilities, and the Company manages capital with consideration of minimum tangible capital ratios at our banking subsidiaries.

Tangible capital pursuant to the requirements of the FHLB borrowing facilities for our banking subsidiaries is common equity less goodwill and intangible assets.

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

In addition, our banking subsidiaries are counterparties to the Standing Repo Facility with the Federal Reserve Bank of New York;

other than de minimis tests performed to satisfy the Federal Reserve Bank of New York’s testing requirements, this

THE CHARLES SCHWAB CORPORATION

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

facility was not used during the first six months of 2025 and there were no amounts outstanding at June 30, 2025.

In addition, our banking subsidiaries are counterparties to the Standing Repo Facility with the Federal Reserve Bank of New York;

other than de minimis tests performed to satisfy the Federal Reserve Bank of New York’s testing requirements, this facility was not used during the first nine months of 2025 and there were no amounts outstanding at September 30, 2025.

CSC maintains standing bilateral repurchase agreements with external banks.

Other than de minimis tests, these facilities were not used during the first six months of 2025 and there were no amounts outstanding under these facilities at June 30, 2025.

CSC’s ratings for Commercial Paper Notes were P1 by Moody’s Investor Service (Moody’s), A2 by Standard & Poor’s Rating Group (Standard & Poor’s), and F1 by Fitch Ratings, Ltd (Fitch) at June 30, 2025.

CSC also has a universal automatic shelf registration statement on file with the SEC, which enables it to issue debt, equity, and other securities.

Other than de minimis tests, these facilities were not used during the first nine months of 2025 and there were no amounts outstanding under these facilities at September 30, 2025.

CSC’s ratings for Commercial Paper Notes were P1 by Moody’s Investor Service (Moody’s), A2 by Standard & Poor’s Rating Group (Standard & Poor’s), and F1 by Fitch Ratings, Inc.

(Fitch) at September 30, 2025.

CSC has a universal automatic shelf registration statement on file with the SEC, which enables it to issue debt, equity, and other securities.

CS&Co maintains unsecured uncommitted bank credit lines with a group of banks as a source of short-term liquidity, which can also be accessed by CSC.

CS&Co also maintains secured uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements.

CS&Co is also able to lend eligible securities held in client brokerage accounts in exchange for cash collateral as a source of short-term liquidity.

As of June 30, 2025, liabilities for securities loaned totaled $17.6 billion and are included in payables to brokers, dealers, and clearing organizations on the condensed consolidated balance sheet.

As of June 30, 2025, $13.4 billion of securities loaned had overnight and continuous remaining contractual maturities;

Additionally, CS&Co is able to lend eligible securities held in client brokerage accounts in exchange for cash collateral as a source of short-term liquidity.

As of September 30, 2025, liabilities for securities loaned totaled $21.7 billion and are included in payables to brokers, dealers, and clearing organizations on the condensed consolidated balance sheet.

As of September 30, 2025, $18.7 billion of securities loaned had overnight and continuous remaining contractual maturities;

$3.0 billion of securities loaned had contractual maturities of 35 - 95 days and had a weighted-average interest rate of 4.46%.

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CSB issues brokered CDs as a supplemental funding source.

The following table provides information about brokered CDs issued by CSB and outstanding as of June 30, 2025:

The following table provides information about brokered CDs issued by CSB and outstanding as of September 30, 2025:

Amount Outstanding Maturity Weighted-Average Interest Rate

Brokered CDs $ 12,720 July 2025 - December 2025 4.32%

Brokered CDs $ 9,936 October 2025 - January 2026 4.21%

Cash Flow Activity

The Company’s cash and cash equivalents decreased $9.9 billion from year-end 2024 to $32.2 billion at June 30, 2025;

cash and cash equivalents, including amounts restricted, decreased $9.9 billion from year-end 2024 to $55.6 billion at June 30, 2025.

These decreases reflected a reduction of bank supplemental funding balances of $22.2 billion, maturities of long-term debt of $2.2 billion, the redemption of Series G preferred stock for $2.5 billion, and repurchases of common and nonvoting common stock for $1.8 billion.

Bank deposits decreased during the first six months of 2025 by $26.1 billion, which reflected a decrease of $15.0 billion in brokered CDs and a $10.3 billion decrease in deposits swept from brokerage accounts due to typical seasonality, partially offset by client net equity selling during the second quarter.

The Company’s cash and cash equivalents decreased $11.5 billion from year-end 2024 to $30.6 billion at September 30, 2025;

cash and cash equivalents, including amounts restricted, decreased $10.6 billion from year-end 2024 to $54.9 billion at September 30, 2025.

These decreases reflected a reduction of bank supplemental funding of $35.1 billion, maturities of long-term debt of $2.2 billion, repurchases of common and nonvoting common stock for $4.6 billion, and the redemption of Series G preferred stock for $2.5 billion.

Bank deposits decreased during the first nine months of 2025 by $20.1 billion primarily due to a decrease of $17.8 billion in brokered CDs and a $1.4 billion decrease in deposits swept from brokerage accounts.

The Company reduced FHLB borrowings and other short-term borrowings by a net total of $15.3 billion.

Partially offsetting the decrease in bank deposits and repayment of borrowings, net investing cash inflows from our AFS and HTM securities totaled $24.8 billion in the first six months of 2025, and net cash inflows from operations totaled $9.5 billion.

Partially offsetting the repayment of borrowings and other financing activities, net investing cash inflows were $25.7 billion, driven by net inflows of $34.1 billion from our AFS and HTM securities partially offset by net outflows of $8.4 billion due to strong growth in bank loans;

net cash inflows from operations totaled $10.1 billion.

Liquidity Coverage Ratio

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See Part I – Item 1 – Business – Regulation in the 2024 Form 10-K for additional information.

The Company was in compliance with the LCR rule at June 30, 2025, and the table below presents information about our average daily LCR:

The Company was in compliance with the LCR rule at September 30, 2025, and the table below presents information about our average daily LCR:

Average for the Three Months Ended

June 30, 2025 March 31, 2025

September 30, 2025 June 30, 2025

Total eligible HQLA $ 53,281 $ 54,707

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LCR 134 % 143 %

To support growth in margin loan balances at our broker-dealer subsidiary while meeting our LCR requirements, the Company may issue commercial paper, draw on secured lines of credit, or engage in securities lending, in addition to capital markets issuances.

In managing compliance with our LCR requirements, the broker-dealer subsidiary may also retain client cash balances rather than sweeping such balances to our banking subsidiaries.

THE CHARLES SCHWAB CORPORATION

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

In managing compliance with our LCR requirements, the broker-dealer subsidiary may also retain client cash balances rather than sweeping such balances to our banking subsidiaries.

Net Stable Funding Ratio

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ASF is calculated by assessing the stability of the Company’s funding sources and RSF is calculated by evaluating the characteristics of the Company’s assets, derivatives, and off-balance-sheet exposures.

The Company was in compliance with the NSFR rule at June 30, 2025, and the table below presents information about our average NSFR:

Average for the Three Months Ended

June 30, 2025 March 31, 2025

ASF $ 198,858 $ 200,301

RSF 150,945 153,808

NSFR 132 % 130 %

The Company was in compliance with the NSFR rule at September 30, 2025.

Long-Term Borrowings

The Company’s long-term debt is primarily comprised of Senior Notes and totaled $20.2 billion and $22.4 billion at June 30, 2025 and December 31, 2024, respectively.

The following table provides information about our Senior Notes outstanding at June 30, 2025:

June 30, 2025 Par

The Company’s long-term debt is primarily comprised of Senior Notes and totaled $20.2 billion and $22.4 billion at September 30, 2025 and December 31, 2024, respectively.

The following table provides information about our Senior Notes outstanding at September 30, 2025:

September 30, 2025 Par

Outstanding Maturity Weighted-Average

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(1) Weighted-average interest rates presented here exclude the impact of derivatives.

See Note 11 for information on the Company’s hedging of Senior Notes.

See Item 1 – Note 11 for information on the Company’s hedging of Senior Notes.

New Debt Issuances

There were no new debt issuances of senior unsecured obligations in the first six months of 2025.

There were no new debt issuances of senior unsecured obligations in the first nine months of 2025.

Equity Issuances and Redemptions

There were no new issuances of preferred stock in the first six months of 2025.

There were no new issuances of preferred stock in the first nine months of 2025.

On June 2, 2025, the Company redeemed all of the 24,580 outstanding shares of its fixed-rate reset non-cumulative perpetual preferred stock, Series G, and the corresponding 2,457,964 depositary shares.

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See also Item 1 – Condensed Consolidated Statements of Cash Flows, Item 1 – Note 8 for the Company’s bank deposits, Item 1 – Note 9 for the Company’s debt and borrowing facilities, Item 1 – Note 12 for the Company’s securities lending activities, and Item 1 – Note 14 for the Company’s equity outstanding balances and activity.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

CAPITAL MANAGEMENT

Schwab seeks to manage capital to a level and composition sufficient to support execution of our business strategy, inclusive of balance sheet growth over time, financial support to our subsidiaries, sustained access to the capital markets, and regulatory capital requirements.

Schwab seeks to manage capital to a level and composition sufficient to support execution of our business strategy, inclusive of balance sheet growth, financial support to our subsidiaries, sustained access to the capital markets, and regulatory capital requirements.

Schwab also seeks to return excess capital to stockholders.

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To ensure that Schwab has sufficient capital to absorb unanticipated losses or declines in asset values, we have adopted a policy to remain well capitalized even in stressed scenarios.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Regulatory Capital Requirements

CSC and certain subsidiaries, including our banking and broker-dealer subsidiaries, are subject to various capital requirements set by regulatory agencies as discussed in further detail in Part II – Item 7 – Capital Management of the 2024 Form 10-K and in Item 1 – Note 17.

As of June 30, 2025, CSC and our banking subsidiaries are considered well capitalized, and CS&Co is in compliance with its net capital requirements.

As of September 30, 2025, CSC and our banking subsidiaries are considered well capitalized, and CS&Co is in compliance with its net capital requirements.

The following table details the capital ratios for CSC (consolidated) and CSB:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

CSC CSB CSC CSB

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As a Category III banking organization, CSC has elected to exclude most components of AOCI from regulatory capital.

The Company’s consolidated Tier 1 Leverage Ratio decreased to 9.8% at June 30, 2025 from 9.9% at both March 31, 2025 and year-end 2024.

This decrease during the second quarter of 2025 was primarily due to the redemption of Series G preferred stock for $2.5 billion, partially offset by lower total Company assets and also the benefit of net income earned in the second quarter and first six months of 2025.

Total balance sheet assets decreased $4.0 billion, or 1%, during the second quarter of 2025.

CSB’s Tier 1 Leverage Ratio increased from 12.1% at March 31, 2025 and 11.6% at year-end 2024, ending the second quarter of 2025 at 12.2%, primarily as a result of lower total assets as well as net income during the second quarter and first six months of 2025.

The Company’s consolidated Tier 1 Leverage Ratio was 9.7% at September 30, 2025, down slightly from 9.8% at June 30, 2025 and 9.9% at year-end 2024.

These changes reflect returns of excess capital, partially offset by organic growth from net income and lower average assets in the third quarter and first nine months of 2025.

The Company repurchased $2.7 billion of common stock in the third quarter and $4.6 billion total voting and nonvoting common stock in the first nine months of 2025.

The Company also increased its common dividend by 8% to $.27 per share in the first quarter and redeemed its Series G preferred stock for $2.5 billion in the second quarter of 2025.

CSB’s Tier 1 Leverage Ratio increased from 12.2% at June 30, 2025 and 11.6% at year-end 2024, ending the third quarter of 2025 at 12.4%, primarily as a result of lower total assets as well as net income during the third quarter and first nine months of 2025.

As a supplemental measure of capital, the Company utilizes an adjusted Tier 1 Leverage Ratio, which is a non-GAAP financial measure that includes AOCI in the ratio.

The primary component of AOCI for Schwab is unrealized gains and losses on our AFS investment securities portfolio and on securities transferred from AFS to the HTM category.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

The Company maintains a long-term operating objective for its consolidated adjusted Tier 1 Leverage Ratio of 6.75% - 7.00%.

As of June 30, 2025, our adjusted Tier 1 Leverage Ratio was 7.2% for CSC (consolidated) and 8.4% for CSB (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results).

As of September 30, 2025, our adjusted Tier 1 Leverage Ratio was 7.3% for CSC (consolidated) and 8.7% for CSB (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results).

The Company continues to manage its capital as described above and in Part II – Item 7 – Capital Management of the 2024 Form 10-K.

In evaluating returns of excess capital to stockholders, we will consider the amount of bank supplemental funding outstanding, and may choose to utilize the liquidity we would otherwise use for capital returns to repay outstanding bank supplemental funding balances.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

On January 29, 2025, the Board of Directors of the Company declared a two cent, or 8%, increase in the quarterly cash dividend to $.27 per common share.

Cash dividends paid and per share amounts for the first six months of 2025 and 2024 are as follows:

Six Months Ended June 30, Cash Paid Per Share

Cash dividends paid and per share amounts for the first nine months of 2025 and 2024 are as follows:

Nine Months Ended September 30, Cash Paid Per Share

Amount Cash Paid Per Share

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28 3,750.00 28 3,750.00

(1) The Company had no nonvoting common stock outstanding as of the record date for the Company’s 2025 dividends and accordingly, no dividends were paid on nonvoting common stock during the six months ended June 30, 2025.

(2) Dividends paid quarterly.

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The final dividend was paid on June 2, 2025.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Share Repurchases

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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 share repurchase authorization.

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

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 the Company has no remaining nonvoting common stock outstanding.

CSC repurchased an additional 3.9 million shares of its common stock for $351 million during the three months ended June 30, 2025.

These shares were purchased under CSC’s $15.0 billion share repurchase authorization and as of June 30, 2025, approximately $6.9 billion remained on the authorization.

On July 24, 2025, CSC publicly announced that its Board of Directors terminated the existing share repurchase authorization and replaced it with a new authorization to repurchase up to $20.0 billion of common stock.

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

On July 24, 2025, CSC publicly announced that its Board of Directors terminated the $15.0 billion share repurchase authorization and replaced it with a new authorization to repurchase up to $20.0 billion of common stock.

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

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

Share repurchases, net of issuances, are subject to a nondeductible 1% 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.

During the three months ended September 30, 2025, CSC repurchased 28.9 million shares of its common stock under the new authorization for $2.7 billion.

As of September 30, 2025, approximately $17.3 billion remained on the new authorization.

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

Common stock repurchases, net of issuances, are subject to a nondeductible 1% excise tax which is recognized as a direct and incremental cost associated with these transactions.

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.

See Item 1 – Note 14 for additional information.

THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Foreign Exposure

At June 30, 2025, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries, as well as agencies of foreign governments.

At June 30, 2025, the fair value of these holdings totaled $17.7 billion, with the top three exposures being to issuers and counterparties domiciled in France at $9.5 billion, the United Kingdom at $5.9 billion, and Japan at $600 million.

At September 30, 2025, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries.

At September 30, 2025, the fair value of these holdings totaled $15.0 billion, with the top three exposures being to issuers and counterparties domiciled in France at $8.4 billion, the United Kingdom at $5.1 billion, and Japan at $600 million.

At December 31, 2024, the fair value of these holdings totaled $10.6 billion, with the top three exposures being to issuers and counterparties domiciled in France at $5.1 billion, the United Kingdom at $2.1 billion, and Canada at $889 million.

In addition, Schwab had outstanding margin loans to foreign residents of $3.6 billion and $3.5 billion at June 30, 2025 and December 31, 2024, respectively.

In addition, Schwab had outstanding margin loans to foreign residents of $4.2 billion and $3.5 billion at September 30, 2025 and December 31, 2024, respectively.

CRITICAL ACCOUNTING ESTIMATES

Certain of our accounting policies that involve a higher degree of judgment and complexity are discussed in Part II – Item 7 – Critical Accounting Estimates in the 2024 Form 10-K.

There have been no changes to critical accounting estimates during the first six months of 2025.

There have been no changes to critical accounting estimates during the first nine months of 2025.

NON-GAAP FINANCIAL MEASURES

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Non-GAAP Adjustment or Measure Definition Usefulness to Investors and Uses by Management

Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs

Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, restructuring costs, and, where applicable, the income tax effect of these expenses.

Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, restructuring costs, and, where applicable, the income tax effect of these expenses.

Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting.

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The following tables present reconciliations of GAAP measures to non-GAAP measures:

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

Three Months Ended

September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Adjusted total expenses (non-GAAP) $ 2,987 $ 2,852 $ 8,921 $ 8,422

(1) There were no acquisition and integration-related costs for the three and six months ended June 30, 2025.

Acquisition and integration-related costs for the three and six months ended June 30, 2024 primarily consist of $18 million and $35 million of compensation and benefits, $12 million and $29 million of professional services, and $5 million of depreciation and amortization.

(2) There were no restructuring costs for the three and six months ended June 30, 2025.

Restructuring costs for the three and six months ended June 30, 2024 reflect a benefit due to a change in estimate of $3 million and $34 million in compensation and benefits, offset by $1 million and $3 million of occupancy and equipment expense and $12 million and $13 million of other expense.

(1) There were no acquisition and integration-related costs for the three and nine months ended September 30, 2025.

Acquisition and integration-related costs for the three and nine months ended September 30, 2024 primarily consist of $9 million and $44 million of compensation and benefits, $3 million and $32 million of professional services, and $8 million and $13 million of depreciation and amortization.

(2) There were no restructuring costs for the three and nine months ended September 30, 2025 and three months ended September 30, 2024.

Restructuring costs for the nine months ended September 30, 2024 reflect a benefit due to a change in estimate of $34 million in compensation and benefits, offset by $3 million of occupancy and equipment expense and $13 million of other expense.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Amount Diluted EPS Amount Diluted EPS Amount Diluted

Amount Diluted

EPS Amount Diluted

Net income available to common stockholders (GAAP),

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(1) The income tax effects of the non-GAAP adjustments are determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and are used to present the acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs on an after-tax basis.

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

Three Months Ended

September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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(1) See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP).

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

CSC CSB CSC CSB

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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 2. Management’s Discussion and Analysis