SCHWAB CHARLES CORP 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk For discussion of the quantitative and qualitative disclosures about market risk, see Risk Management in Item 2. - 28 - Part I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Income (In Millions, Except Per Share Amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net Revenues Interest revenue $ 3,956 $ 3,928 $ 11,500 $ 11,686 Interest expense ( 906 ) ( 1,706 ) ( 2,922 ) ( 5,073 ) Net interest revenue 3,050 2,222 8,578 6,613 Asset management and administration fees 1,673 1,476 4,773 4,207 Trading revenue 995 797 2,855 2,391 Bank deposit account fees 247 152 739 488 Other 170 200 640 578 Total net revenues 6,135 4,847 17,585 14,277 Expenses Excluding Interest Compensation and benefits 1,653 1,522 4,861 4,510 Professional services 293 256 853 756 Occupancy and equipment 280 271 824 784 Advertising and market development 101 101 305 296 Communications 149 147 478 460 Depreciation and amortization 212 231 644 692 Amortization of acquired intangible assets 127 130 385 389 Regulatory fees and assessments 59 88 225 309 Other 240 259 731 694 Total expenses excluding interest 3,114 3,005 9,306 8,890 Income before taxes on income 3,021 1,842 8,279 5,387 Taxes on income 663 434 1,886 1,285 Net Income 2,358 1,408 6,393 4,102 Preferred stock dividends and other 81 109 343 341 Net Income Available to Common Stockholders $ 2,277 $ 1,299 $ 6,050 $ 3,761 Weighted-Average Common Shares Outstanding: Basic 1,806 1,829 1,815 1,827 Diluted 1,811 1,834 1,820 1,833 Earnings Per Common Shares Outstanding (1) : Basic $ 1.26 $ .71 $ 3.33 $ 2.06 Diluted $ 1.26 $ .71 $ 3.33 $ 2.05 (1) For additional information on earnings per common shares outstanding for both voting and nonvoting common stock, see Note 16. See Notes to Condensed Consolidated Financial Statements. - 29 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Comprehensive Income (In Millions) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income $ 2,358 $ 1,408 $ 6,393 $ 4,102 Other comprehensive income (loss), before tax: Change in net unrealized gain (loss) on available for sale securities: Net unrealized gain (loss) 592 2,434 2,270 2,807 Other reclassifications included in other revenue 10 10 50 30 Change in net unrealized gain (loss) on held to maturity securities: Amortization of amounts previously recorded upon transfer to held to maturity from available for sale 545 576 1,644 1,723 Change in net unrealized gain (loss) on derivatives designated as cash flow hedging instruments: Net unrealized gain (loss) 11 — ( 4 ) — Reclassifications included in interest revenue 28 — 45 — Other ( 1 ) 11 5 1 Other comprehensive income (loss), before tax 1,185 3,031 4,010 4,561 Income tax effect ( 392 ) ( 713 ) ( 960 ) ( 1,048 ) Other comprehensive income (loss), net of tax 793 2,318 3,050 3,513 Comprehensive Income (Loss) $ 3,151 $ 3,726 $ 9,443 $ 7,615 See Notes to Condensed Consolidated Financial Statements. - 30 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Balance Sheets (In Millions, Except Per Share and Share Amounts) (Unaudited) September 30, 2025 December 31, 2024 Assets Cash and cash equivalents $ 30,572 $ 42,083 Cash and investments segregated and on deposit for regulatory purposes (including resale agreements of $ 22,245 and $ 10,075 at September 30, 2025 and December 31, 2024, respectively) 47,754 38,221 Receivables from brokers, dealers, and clearing organizations 4,728 2,440 Receivables from brokerage clients — net 93,788 85,374 Available for sale securities (amortized cost of $ 66,698 and $ 89,704 at September 30, 2025 and December 31, 2024, respectively; including assets pledged of $ 311 and $ 378 , respectively) 62,308 82,994 Held to maturity securities (including assets pledged of $ 2,047 and $ 5,920 at September 30, 2025 and December 31, 2024, respectively) 136,693 146,453 Bank loans — net 53,570 45,215 Equipment, office facilities, and property — net 3,136 3,338 Goodwill 11,951 11,951 Acquired intangible assets — net 7,360 7,743 Other assets 13,395 14,031 Total assets $ 465,255 $ 479,843 Liabilities and Stockholders’ Equity Bank deposits $ 239,057 $ 259,121 Payables to brokers, dealers, and clearing organizations 22,407 13,336 Payables to brokerage clients 115,397 101,559 Accrued expenses and other liabilities 11,420 12,325 Other short-term borrowings 6,541 5,999 Federal Home Loan Bank borrowings 850 16,700 Long-term debt 20,199 22,428 Total liabilities 415,871 431,468 Stockholders’ equity: Preferred stock — $ .01 par value per share; aggregate liquidation preference of $ 6,871 and $ 9,329 at September 30, 2025 and December 31, 2024, respectively 6,763 9,191 Common stock — 3 billion shares authorized; $ .01 par value per share; 2,074,188,875 and 2,023,295,180 shares issued at September 30, 2025 and December 31, 2024, respectively 21 20 Nonvoting common stock — 300 million shares authorized; $ .01 par value per share; no shares issued at September 30, 2025 and 50,893,695 shares issued at December 31, 2024 — 1 Additional paid-in capital 27,910 27,639 Retained earnings 42,170 37,568 Treasury stock, at cost — 287,497,378 and 242,977,194 shares at September 30, 2025 and December 31, 2024, respectively ( 15,682 ) ( 11,196 ) Accumulated other comprehensive income (loss) ( 11,798 ) ( 14,848 ) Total stockholders’ equity 49,384 48,375 Total liabilities and stockholders’ equity $ 465,255 $ 479,843 See Notes to Condensed Consolidated Financial Statements. - 31 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Stockholders ’ Equity (In Millions) (Unaudited) Accumulated Other Comprehensive Income (Loss) Preferred Stock Common Stock Nonvoting Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock, at cost Total Shares Amount Shares Amount Balance at June 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,470 $ 35,458 $ ( 11,251 ) $ ( 16,936 ) $ 43,953 Net income — — — — — — 1,408 — — 1,408 Other comprehensive income (loss), net of tax — — — — — — — — 2,318 2,318 Dividends declared on preferred stock — — — — — — ( 103 ) — — ( 103 ) Dividends declared on common stock — $ .25 per share — — — — — — ( 460 ) — — ( 460 ) Stock option exercises and other — — — — — ( 6 ) — 16 — 10 Share-based compensation — — — — — 59 — — — 59 Other — — — — — 25 — 5 — 30 Balance at September 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,548 $ 36,303 $ ( 11,230 ) $ ( 14,618 ) $ 47,215 Balance at June 30, 2025 $ 6,763 2,074 $ 21 — $ — $ 27,813 $ 40,374 $ ( 12,929 ) $ ( 12,591 ) $ 49,451 Net income — — — — — — 2,358 — — 2,358 Other comprehensive income (loss), net of tax — — — — — — — — 793 793 Dividends declared on preferred stock — — — — — — ( 70 ) — — ( 70 ) Dividends declared on common stock — $ .27 per share — — — — — — ( 492 ) — — ( 492 ) Repurchase of common stock, inclusive of tax — — — — — — — ( 2,777 ) — ( 2,777 ) Stock option exercises and other — — — — — 13 — 19 — 32 Share-based compensation — — — — — 56 — — — 56 Other — — — — — 28 — 5 — 33 Balance at September 30, 2025 $ 6,763 2,074 $ 21 — $ — $ 27,910 $ 42,170 $ ( 15,682 ) $ ( 11,798 ) $ 49,384 Accumulated Other Comprehensive Income (Loss) Preferred Stock Common Stock Nonvoting Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock, at cost Total Shares Amount Shares Amount Balance at December 31, 2023 $ 9,191 2,023 $ 20 51 $ 1 $ 27,330 $ 33,901 $ ( 11,354 ) $ ( 18,131 ) $ 40,958 Net income — — — — — — 4,102 — — 4,102 Other comprehensive income (loss), net of tax — — — — — — — — 3,513 3,513 Dividends declared on preferred stock — — — — — — ( 321 ) — — ( 321 ) Dividends declared on common stock — $ .75 per share — — — — — — ( 1,379 ) — — ( 1,379 ) Stock option exercises and other — — — — — ( 122 ) — 175 — 53 Share-based compensation — — — — — 249 — — — 249 Other — — — — — 91 — ( 51 ) — 40 Balance at September 30, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,548 $ 36,303 $ ( 11,230 ) $ ( 14,618 ) $ 47,215 Balance at December 31, 2024 $ 9,191 2,023 $ 20 51 $ 1 $ 27,639 $ 37,568 $ ( 11,196 ) $ ( 14,848 ) $ 48,375 Net income — — — — — — 6,393 — — 6,393 Other comprehensive income (loss), net of tax — — — — — — — — 3,050 3,050 Redemption of preferred stock ( 2,428 ) — — — — — ( 30 ) — — ( 2,458 ) Dividends declared on preferred stock — — — — — — ( 288 ) — — ( 288 ) Dividends declared on common stock — $ .81 per share — — — — — — ( 1,477 ) — — ( 1,477 ) Repurchase of common stock, inclusive of tax — — — — — — — ( 3,130 ) — ( 3,130 ) Repurchase of nonvoting common stock, inclusive of tax — 19 — ( 19 ) — — — ( 1,512 ) — ( 1,512 ) Conversion of nonvoting common stock to common stock — 32 1 ( 32 ) ( 1 ) — — — — — Stock option exercises and other — — — — — ( 76 ) — 217 — 141 Share-based compensation — — — — — 237 — — — 237 Other — — — — — 110 4 ( 61 ) — 53 Balance at September 30, 2025 $ 6,763 2,074 $ 21 — $ — $ 27,910 $ 42,170 $ ( 15,682 ) $ ( 11,798 ) $ 49,384 See Notes to Condensed Consolidated Financial Statements. - 32 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Cash Flows (1) (in Millions) (Unaudited) Nine Months Ended September 30, 2025 2024 Cash Flows from Operating Activities Net income $ 6,393 $ 4,102 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Share-based compensation 259 267 Depreciation and amortization 644 692 Amortization of acquired intangible assets 385 389 Provision (benefit) for deferred income taxes 397 ( 163 ) Premium amortization, net, on available for sale and held to maturity securities 524 618 Other 525 370 Net change in: Investments segregated and on deposit for regulatory purposes ( 8,671 ) ( 818 ) Receivables from brokers, dealers, and clearing organizations ( 2,288 ) ( 119 ) Receivables from brokerage clients ( 8,509 ) ( 5,387 ) Other assets ( 1,038 ) 288 Payables to brokers, dealers, and clearing organizations 9,071 9,776 Payables to brokerage clients 13,838 4,378 Accrued expenses and other liabilities ( 1,456 ) ( 896 ) Net cash provided by (used for) operating activities 10,074 13,497 Cash Flows from Investing Activities Purchases of available for sale securities ( 2,746 ) ( 2,250 ) Proceeds from sales of available for sale securities 5,411 2,929 Principal payments on available for sale securities 20,405 19,582 Purchases of held to maturity securities ( 676 ) — Principal payments on held to maturity securities 11,707 10,888 Net change in bank loans ( 8,426 ) ( 2,935 ) Purchases of equipment, office facilities, and property ( 390 ) ( 366 ) Purchases of FHLB stock ( 589 ) ( 786 ) Proceeds from sales of FHLB stock 1,262 1,005 Purchases of Federal Reserve stock ( 9 ) ( 134 ) Proceeds from sales of Federal Reserve stock 8 — Other investing activities ( 268 ) ( 236 ) Net cash provided by (used for) investing activities 25,689 27,697 Cash Flows from Financing Activities Net change in bank deposits ( 20,064 ) ( 43,491 ) Proceeds from FHLB borrowings 16,760 20,001 Repayments of FHLB borrowings ( 32,610 ) ( 23,801 ) Proceeds from other short-term borrowings 27,528 18,225 Repayments of other short-term borrowings ( 27,023 ) ( 14,185 ) Repayments of long-term debt ( 2,243 ) ( 3,676 ) Redemption of preferred stock ( 2,458 ) — Repurchases of common stock and nonvoting common stock ( 4,581 ) — Dividends paid ( 1,765 ) ( 1,700 ) Proceeds from stock options exercised 141 53 Other financing activities ( 97 ) ( 90 ) Net cash provided by (used for) financing activities ( 46,412 ) ( 48,664 ) Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted ( 10,649 ) ( 7,470 ) Cash and Cash Equivalents, including Amounts Restricted at Beginning of Year 65,514 74,473 Cash and Cash Equivalents, including Amounts Restricted at End of Period $ 54,865 $ 67,003 Continued on following page. - 33 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Cash Flows (1) (in Millions) (Unaudited) Continued from previous page. Nine Months Ended September 30, 2025 2024 Supplemental Cash Flow Information Non-cash investing activity: Changes in accrued equipment, office facilities, and property purchases $ 54 $ ( 17 ) Non-cash financing activity: Common stock repurchased during the period but settled after period end $ 20 $ — Other Supplemental Cash Flow Information: Cash paid during the period for: Interest $ 3,572 $ 5,213 Income taxes $ 955 $ 1,313 Amounts included in the measurement of lease liabilities $ 186 $ 193 Leased assets obtained in exchange for new operating lease liabilities $ 239 $ 126 September 30, 2025 September 30, 2024 Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (2) Cash and cash equivalents $ 30,572 $ 34,850 Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes 24,293 32,153 Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows $ 54,865 $ 67,003 (1) Certain prior year amounts have been reclassified to conform to the current year presentation. See Note 1 for additional information. (2) For more information on the nature of restrictions on restricted cash and cash equivalents, see Note 17. See Notes to Condensed Consolidated Financial Statements. - 34 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 1. Introduction and Basis of Presentation The Charles Schwab Corporation (CSC) is a savings and loan holding company. CSC engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Principal business subsidiaries of CSC include the following: • Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer; • Charles Schwab Bank, SSB (CSB), our principal banking entity; and • Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds ® ) and for Schwab’s exchange-traded funds (Schwab ETFs). Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries. These unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements and in the related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from these estimates. In the opinion of management, all normal, recurring adjustments have been included for a fair statement of this interim financial information. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in Schwab’s 2024 Form 10-K. Reclassifications : Beginning in the fourth quarter of 2024, receivables from brokers, dealers, and clearing organizations and payables to brokers, dealers, and clearing organizations are presented separately from other assets and accrued expenses and other liabilities, respectively, in the consolidated balance sheets. Correspondingly, interest expense related to securities lending is now presented as interest expense on payables to brokers, dealers, and clearing organizations. Prior period amounts have been reclassified to reflect these changes. Corresponding presentation changes have been made to the condensed consolidated statements of cash flows and related notes also impacted. The significant accounting policies are included in Item 8 – Note 2 in the 2024 Form 10-K. There have been no significant changes to these accounting policies during the first nine months of 2025. 2. New Accounting Standards Adoption of New Accounting Standards Standard Description Date of Adoption Effects on the Financial Statements or Other Significant Matters Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” Expands annual income tax disclosures, primarily by enhancing the rate reconciliation table and requiring additional disaggregated information about income taxes paid. Adoption allows retrospective or prospective application. January 1, 2025 The Company does not expect this guidance will have a material impact on its financial statements or related disclosures. This guidance will be reflected in the annual financial statements for 2025. - 35 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) New Accounting Standards Not Yet Adopted Standard Description Required Date of Adoption Effects on the Financial Statements or Other Significant Matters ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” Requires additional disclosures about certain expenses including, but not limited to, employee compensation, depreciation, amortization of intangible assets, and selling expenses. Also requires annual disclosure of how selling expenses are defined. Adoption allows retrospective or prospective application, with early adoption permitted. January 1, 2027 (applies to the annual financial statements for 2027 and interim periods thereafter) The Company is evaluating the impact of this guidance on its financial statement disclosures. ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” Removes references to prescriptive and sequential software development stages. Requires an entity to begin capitalizing software costs when both of the following occur: 1) management has authorized and committed to funding the software project, and 2) it is probable that the project will be completed and the software will be used to perform the function intended. Adoption allows retrospective, prospective, or modified transition application, with early adoption permitted. January 1, 2028 (applies to the annual financial statements and interim periods within those annual reporting periods) The Company is evaluating the impact of this guidance on its financial statements. - 36 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 3. Revenue Recognition Disaggregation of Schwab’s revenue by major source is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net interest revenue Cash and cash equivalents $ 264 $ 369 $ 897 $ 1,205 Cash and investments segregated 494 345 1,412 1,014 Receivables from brokerage clients 1,490 1,431 4,204 4,042 Available for sale securities 360 531 1,198 1,680 Held to maturity securities 587 650 1,811 1,998 Bank loans 557 484 1,568 1,384 Securities lending revenue 183 87 339 258 Other interest revenue 21 31 71 105 Interest revenue 3,956 3,928 11,500 11,686 Bank deposits ( 248 ) ( 841 ) ( 1,010 ) ( 2,602 ) Payables to brokers, dealers, and clearing organizations (1) ( 188 ) ( 118 ) ( 492 ) ( 230 ) Payables to brokerage clients ( 97 ) ( 79 ) ( 217 ) ( 229 ) Other short-term borrowings ( 87 ) ( 150 ) ( 256 ) ( 382 ) Federal Home Loan Bank borrowings ( 79 ) ( 310 ) ( 322 ) ( 988 ) Long-term debt ( 207 ) ( 208 ) ( 625 ) ( 640 ) Other interest expense — — — ( 2 ) Interest expense ( 906 ) ( 1,706 ) ( 2,922 ) ( 5,073 ) Net interest revenue 3,050 2,222 8,578 6,613 Asset management and administration fees Mutual funds, ETFs, and CTFs 946 827 2,695 2,370 Managed investing solutions 619 559 1,777 1,572 Other 108 90 301 265 Asset management and administration fees 1,673 1,476 4,773 4,207 Trading revenue Commissions 453 388 1,315 1,184 Order flow revenue 490 357 1,399 1,066 Principal transactions 52 52 141 141 Trading revenue 995 797 2,855 2,391 Bank deposit account fees 247 152 739 488 Other 170 200 640 578 Total net revenues $ 6,135 $ 4,847 $ 17,585 $ 14,277 (1) Beginning in the fourth quarter of 2024, this line item includes interest expense related to securities loaned. Prior period amounts have been reclassified to reflect this change. See Note 1 for additional information. For a summary of revenue provided by our reportable segments, see Note 18. The recognition of revenue is not impacted by the operating segment in which revenue is generated. Contract balances : Receivables from contracts with customers within the scope of Accounting Standards Codification (ASC) 606 Revenue From Contracts With Customers (ASC 606), are included in other assets on the condensed consolidated balance sheets, and totaled $ 823 million and $ 694 million at September 30, 2025 and December 31, 2024, respectively. The Company had net contract assets of $ 199 million and $ 216 million at September 30, 2025 and December 31, 2024, respectively, related to the buy down of fixed-rate obligation amounts pursuant to the 2023 IDA agreement. These amounts are included in other assets on the condensed consolidated balance sheets and are amortized on a straight-line basis over the remaining contractual term as a reduction to bank deposit account fee revenue. For additional discussion of the 2023 IDA agreement, see Note 10. - 37 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Unsatisfied performance obligations : We do not have any unsatisfied performance obligations other than those that are subject to an elective practical expedient under ASC 606. The practical expedient applies to and is elected for contracts where we recognize revenue at the amount to which we have the right to invoice for services performed. 4. Receivables from and Payables to Brokers, Dealers, and Clearing Organizations Receivables from and payables to brokers, dealers, and clearing organizations are detailed below: September 30, 2025 December 31, 2024 Receivables Securities borrowed $ 2,342 $ 695 Receivables from clearing organizations 2,313 1,670 Receivables for securities failed to deliver 45 40 Other receivables from broker-dealers 28 35 Receivables from brokers, dealers, and clearing organizations $ 4,728 $ 2,440 Payables Deposits for securities loaned $ 21,690 $ 13,068 Payables for securities failed to receive 262 104 Other payables to broker-dealers 240 37 Payables to clearing organizations 215 127 Payables to brokers, dealers, and clearing organizations $ 22,407 $ 13,336 See Note 12 for additional information regarding securities lending and borrowing activities. - 38 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 5. Investment Securities The amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS and HTM investment securities are as follows: September 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale securities U.S. agency mortgage-backed securities $ 48,011 $ — $ 3,555 $ 44,456 U.S. Treasury securities 8,009 3 226 7,786 Corporate debt securities (1) 5,502 — 411 5,091 Asset-backed securities (2) 4,429 — 148 4,281 U.S. state and municipal securities 597 — 35 562 Non-agency commercial mortgage-backed securities 121 — 8 113 Other 21 — 2 19 Unallocated portfolio layer method (PLM) fair value basis adjustments (3) 8 — 8 — Total available for sale securities $ 66,698 $ 3 $ 4,393 $ 62,308 Held to maturity securities U.S. agency mortgage-backed securities $ 136,693 $ 1,672 $ 10,106 $ 128,259 Total held to maturity securities $ 136,693 $ 1,672 $ 10,106 $ 128,259 December 31, 2024 Available for sale securities U.S. agency mortgage-backed securities $ 57,262 $ — $ 5,429 $ 51,833 U.S. Treasury securities 14,939 1 471 14,469 Corporate debt securities (1) 10,166 — 587 9,579 Asset-backed securities (2) 6,106 — 196 5,910 U.S. state and municipal securities 603 — 54 549 Foreign government agency securities 533 — 6 527 Non-agency commercial mortgage-backed securities 121 — 12 109 Other 21 — 3 18 Unallocated PLM fair value basis adjustments (3) ( 47 ) — ( 47 ) — Total available for sale securities $ 89,704 $ 1 $ 6,711 $ 82,994 Held to maturity securities U.S. agency mortgage-backed securities $ 146,453 $ 146 $ 13,994 $ 132,605 Total held to maturity securities $ 146,453 $ 146 $ 13,994 $ 132,605 (1) As of September 30, 2025 and December 31, 2024, approximately 15 % and 35 %, respectively, of the total AFS in corporate debt securities were issued by institutions in the financial services industry. Approximately 25 % and 16 % of the holdings of these securities were issued by institutions in the information technology industry as of September 30, 2025 and December 31, 2024, respectively. Approximately 24 % and 18 % of the holdings of these securities were issued by companies in the consumer staples industry as of September 30, 2025 and December 31, 2024, respectively. (2) Approximately 71 % and 62 % of asset-backed securities held as of September 30, 2025 and December 31, 2024, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 21 % and 25 % of the asset-backed securities held as of September 30, 2025 and December 31, 2024, respectively. (3) This represents the amount of PLM fair value hedge basis adjustments related to AFS securities hedged in a closed portfolio. See Note 11 for more information on PLM hedge accounting. At September 30, 2025, our banking subsidiaries had pledged investment securities with a fair value of $ 60.7 billion (collateral value of $ 56.3 billion) as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 9). Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $ 30.8 billion (collateral value of $ 29.7 billion) as collateral for this facility at September 30, 2025. The Company also pledges investment securities issued by federal agencies to secure certain trust deposits. The fair value and collateral value of these pledged securities was $ 1.7 billion at September 30, 2025. At September 30, 2025, our banking subsidiaries had pledged HTM securities as collateral under repurchase agreements with external financial institutions and the FICC. HTM securities pledged were U.S. agency mortgage-backed securities with an aggregate amortized cost of $ 4.1 billion, of which $ 2.0 billion may be sold, repledged, or otherwise used by the counterparties. See Notes 9 and 12 for additional information on these repurchase agreements. - 39 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) At September 30, 2025, the Company had pledged AFS securities consisting of U.S. Treasury securities with an aggregate fair value of $ 311 million as initial margin on interest rate swaps (see Notes 11 and 12). All of Schwab’s interest rate swaps are cleared through central counterparty (CCP) clearing houses which require the Company to post initial margin as collateral against potential losses. Initial margin is posted through futures commission merchants (FCM) which serve as the intermediary between the CCPs and Schwab. The FCM agreements governing our swaps allow for securities pledged as initial margin to be sold, repledged, or otherwise used by the FCM. AFS securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows: Less than 12 months 12 months or longer Total September 30, 2025 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for sale securities U.S. agency mortgage-backed securities (1) $ 4 $ — $ 44,416 $ 3,555 $ 44,420 $ 3,555 U.S. Treasury securities (1) 757 — 5,380 226 6,137 226 Corporate debt securities — — 5,092 411 5,092 411 Asset-backed securities (1) 114 — 4,164 148 4,278 148 U.S. state and municipal securities 27 3 535 32 562 35 Non-agency commercial mortgage-backed securities — — 113 8 113 8 Other — — 19 2 19 2 Total (2) $ 902 $ 3 $ 59,719 $ 4,382 $ 60,621 $ 4,385 December 31, 2024 Available for sale securities U.S. agency mortgage-backed securities $ — $ — $ 51,833 $ 5,429 $ 51,833 $ 5,429 U.S. Treasury securities (1) 243 — 12,727 471 12,970 471 Corporate debt securities — — 9,579 587 9,579 587 Asset-backed securities (1) 12 — 5,888 196 5,900 196 U.S. state and municipal securities — — 549 54 549 54 Foreign government agency securities — — 527 6 527 6 Non-agency commercial mortgage-backed securities — — 109 12 109 12 Other — — 18 3 18 3 Total (2) $ 255 $ — $ 81,230 $ 6,758 $ 81,485 $ 6,758 (1) Unrealized losses less than 12 months amounts were less than $ 500 thousand. (2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 8 million and $( 47 ) million at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025, substantially all rated securities in the investment portfolios were investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises. For a description of management’s quarterly evaluation of AFS securities in unrealized loss positions, see Item 8 – Note 2 in the 2024 Form 10-K. No amounts were recognized as credit loss expense and no securities were written down to fair value through earnings for the nine months ended September 30, 2025 and the year ended December 31, 2024. None of the Company’s AFS securities held as of September 30, 2025 and December 31, 2024 had an allowance for credit losses. All HTM securities as of September 30, 2025 and December 31, 2024 were U.S. agency mortgage-backed securities and therefore had no allowance for credit losses because expected nonpayment of the amortized cost basis is zero. The Company had $ 372 million and $ 455 million of accrued interest for AFS and HTM securities as of September 30, 2025 and December 31, 2024, respectively. These amounts are excluded from the amortized cost basis and fair market value of AFS and HTM securities and included in other assets on the condensed consolidated balance sheets. There were no writeoffs of accrued interest receivable on AFS and HTM securities during the nine months ended September 30, 2025, or for the year ended December 31, 2024. - 40 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at September 30, 2025: In years Estimated effective duration, exclusive of derivatives: AFS investment securities portfolio 2.5 AFS and HTM investment securities portfolio 4.0 Estimated effective duration, inclusive of derivatives (1) : AFS investment securities portfolio 2.0 AFS and HTM investment securities portfolio 3.8 (1) See Note 11 for additional discussion of the Company’s derivatives. In the table below, mortgage-backed securities and other asset-backed securities have been allocated to maturity groupings based on final contractual maturities. As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below. The maturities of AFS and HTM investment securities are as follows: September 30, 2025 Within 1 year After 1 year through 5 years After 5 years through 10 years After 10 years Total Available for sale securities U.S. agency mortgage-backed securities $ 1,433 $ 7,445 $ 14,476 $ 21,102 $ 44,456 U.S. Treasury securities 4,021 3,765 — — 7,786 Corporate debt securities 877 3,744 470 — 5,091 Asset-backed securities 132 1,001 446 2,702 4,281 U.S. state and municipal securities 2 231 318 11 562 Non-agency commercial mortgage-backed securities — — — 113 113 Other — — — 19 19 Total fair value $ 6,465 $ 16,186 $ 15,710 $ 23,947 $ 62,308 Total amortized cost (1) $ 6,543 $ 17,192 $ 16,981 $ 25,974 $ 66,690 Held to maturity securities U.S. agency mortgage-backed securities $ 588 $ 19,789 $ 26,519 $ 81,363 $ 128,259 Total fair value $ 588 $ 19,789 $ 26,519 $ 81,363 $ 128,259 Total amortized cost $ 592 $ 20,357 $ 27,439 $ 88,305 $ 136,693 (1) For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $ 8 million at September 30, 2025. Proceeds and gross realized gains and losses from sales of AFS investment securities are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Proceeds $ 1,206 $ 886 $ 5,411 $ 2,929 Gross realized gains — — — — Gross realized losses 10 10 50 30 - 41 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 6. Bank Loans and Related Allowance for Credit Losses The composition of bank loans and delinquency analysis by portfolio segment and class of financing receivable is as follows: September 30, 2025 Current 30-59 days past due 60-89 days past due > 90 days past due and other nonaccrual loans (3) Total past due and other nonaccrual loans Total loans Allowance for credit losses Total bank loans – net Residential real estate: First Mortgages (1,2) $ 29,304 $ 18 $ 6 $ 33 $ 57 $ 29,361 $ 15 $ 29,346 HELOCs (1,2) 417 1 — 3 4 421 1 420 Total residential real estate 29,721 19 6 36 61 29,782 16 29,766 Pledged asset lines 23,380 4 3 3 10 23,390 — 23,390 Other 419 — — 1 1 420 6 414 Total bank loans $ 53,520 $ 23 $ 9 $ 40 $ 72 $ 53,592 $ 22 $ 53,570 December 31, 2024 Residential real estate: First Mortgages (1,2) $ 27,321 $ 37 $ 6 $ 25 $ 68 $ 27,389 $ 14 $ 27,375 HELOCs (1,2) 421 — — 3 3 424 1 423 Total residential real estate 27,742 37 6 28 71 27,813 15 27,798 Pledged asset lines 17,010 8 — 6 14 17,024 — 17,024 Other 398 — — 1 1 399 6 393 Total bank loans $ 45,150 $ 45 $ 6 $ 35 $ 86 $ 45,236 $ 21 $ 45,215 (1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $ 125 million and $ 112 million at September 30, 2025 and December 31, 2024, respectively. (2) At September 30, 2025 and December 31, 2024, 41 % and 42 %, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole. (3) There were no loans accruing interest that were contractually 90 days or more past due at September 30, 2025 or December 31, 2024. At September 30, 2025, CSB had pledged the full balance of First Mortgages and HELOCs pursuant to a blanket lien status collateral arrangement to secure borrowing capacity on a secured credit facility with the FHLB (see Note 9). - 42 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Changes in the allowance for credit losses on bank loans were as follows: First Mortgages HELOCs Total residential real estate Pledged asset lines Other Total Balance at June 30, 2024 $ 14 $ 1 $ 15 $ — $ 5 $ 20 Charge-offs — — — — — — Recoveries — — — — — — Provision for credit losses — — — — — — Balance at September 30, 2024 $ 14 $ 1 $ 15 $ — $ 5 $ 20 Balance at June 30, 2025 $ 15 $ 1 $ 16 $ — $ 6 $ 22 Charge-offs — — — — — — Recoveries — — — — — — Provision for credit losses — — — — — — Balance at September 30, 2025 $ 15 $ 1 $ 16 $ — $ 6 $ 22 Balance at December 31, 2023 $ 32 $ 2 $ 34 $ — $ 4 $ 38 Charge-offs — — — — — — Recoveries — — — — — — Provision for credit losses ( 18 ) ( 1 ) ( 19 ) — 1 ( 18 ) Balance at September 30, 2024 $ 14 $ 1 $ 15 $ — $ 5 $ 20 Balance at December 31, 2024 $ 14 $ 1 $ 15 $ — $ 6 $ 21 Charge-offs — — — — — — Recoveries — — — — — — Provision for credit losses 1 — 1 — — 1 Balance at September 30, 2025 $ 15 $ 1 $ 16 $ — $ 6 $ 22 Consistent with Schwab’s loan charge-off policy for PALs as disclosed in Item 8 – Note 2 of the 2024 Form 10-K, the Company charges off any unsecured balances no later than 90 days past due. As of September 30, 2025, substantially all PALs are also subject to the collateral maintenance practical expedient under ASC 326 Financial Instruments — Credit Losses . All PALs were fully collateralized by securities with fair values in excess of borrowings as of September 30, 2025 and December 31, 2024, and no allowance for credit losses for PALs as of those dates was required. The U.S. economy saw lower hiring, a modest inflation gain at the end of the third quarter of 2025, and continued to face a moderately restrictive monetary policy and geopolitical unrest amid a backdrop of elevated uncertainty relating to economic impacts of emerging trade policy. Management’s macroeconomic outlook reflects sustained current benchmark lending rates, with a softening labor market and modest home price appreciation. Though higher mortgage rates are easing demand and reducing borrower affordability, we expect constrained housing supply to keep home prices relatively stable. Furthermore, credit quality metrics in the Company’s bank loans portfolio remain very strong. As a result of these factors, we held projected loss rates constant at September 30, 2025, as compared to December 31, 2024. Bank loan-related nonperforming assets consisted of nonaccrual loans of $ 40 million and $ 35 million at September 30, 2025 and December 31, 2024, respectively. Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02, “ Financial Instruments — Credit Losses : Troubled Debt Restructurings and Vintage Disclosures” on January 1, 2023. At both September 30, 2025 and December 31, 2024, loan modifications to borrowers experiencing financial difficulty were not material. Credit Quality In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following: • Year of origination; • Borrower Fair Isaac Corporation (FICO) scores at origination (Origination FICO); • Updated borrower FICO scores (Updated FICO); • Loan-to-value (LTV) ratios at origination (Origination LTV); and • Estimated Current LTV ratios (Estimated Current LTV). - 43 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Borrowers’ FICO scores are provided by an independent third-party credit reporting service and are generally updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index. The credit quality indicators of the Company’s First Mortgages and HELOCs are detailed below: First Mortgages Amortized Cost Basis by Origination Year September 30, 2025 2025 2024 2023 2022 2021 pre-2021 Total First Mortgages Revolving HELOCs amortized cost basis HELOCs converted to term loans Total HELOCs Origination FICO <620 $ — $ — $ — $ 3 $ 1 $ 1 $ 5 $ — $ — $ — 620 – 679 19 23 4 24 28 22 120 — 1 1 680 – 739 363 306 230 680 1,032 513 3,124 50 25 75 ≥740 3,716 2,777 1,667 4,631 9,274 4,047 26,112 251 94 345 Total $ 4,098 $ 3,106 $ 1,901 $ 5,338 $ 10,335 $ 4,583 $ 29,361 $ 301 $ 120 $ 421 Origination LTV ≤70% $ 2,738 $ 2,130 $ 1,286 $ 3,960 $ 8,990 $ 3,753 $ 22,857 $ 284 $ 84 $ 368 >70% – ≤90% 1,360 976 615 1,378 1,345 829 6,503 17 35 52 >90% – ≤100% — — — — — 1 1 — 1 1 Total $ 4,098 $ 3,106 $ 1,901 $ 5,338 $ 10,335 $ 4,583 $ 29,361 $ 301 $ 120 $ 421 Updated FICO <620 $ 3 $ 4 $ 5 $ 26 $ 28 $ 23 $ 89 $ 3 $ 4 $ 7 620 – 679 36 34 34 64 103 64 335 6 6 12 680 – 739 355 248 167 491 790 352 2,403 41 20 61 ≥740 3,704 2,820 1,695 4,757 9,414 4,144 26,534 251 90 341 Total $ 4,098 $ 3,106 $ 1,901 $ 5,338 $ 10,335 $ 4,583 $ 29,361 $ 301 $ 120 $ 421 Estimated Current LTV (1) ≤70% $ 2,567 $ 2,205 $ 1,552 $ 4,796 $ 10,225 $ 4,570 $ 25,915 $ 298 $ 120 $ 418 >70% – ≤90% 1,527 901 345 534 109 13 3,429 3 — 3 >90% – ≤100% 4 — 4 8 1 — 17 — — — Total $ 4,098 $ 3,106 $ 1,901 $ 5,338 $ 10,335 $ 4,583 $ 29,361 $ 301 $ 120 $ 421 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Percent of Loans on Nonaccrual Status 0.01 % 0.05 % 0.11 % 0.14 % 0.11 % 0.24 % 0.11 % 0.06 % 2.01 % 0.71 % (1) Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs. - 44 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) First Mortgages Amortized Cost Basis by Origination Year December 31, 2024 2024 2023 2022 2021 pre-2021 Total First Mortgages Revolving HELOCs amortized cost basis HELOCs converted to term loans Total HELOCs Origination FICO <620 $ 1 $ — $ 2 $ 1 $ 2 $ 6 $ — $ — $ — 620 – 679 24 4 26 29 28 111 — 1 1 680 – 739 361 249 724 1,091 576 3,001 47 30 77 ≥740 3,203 1,895 4,902 9,796 4,475 24,271 241 105 346 Total $ 3,589 $ 2,148 $ 5,654 $ 10,917 $ 5,081 $ 27,389 $ 288 $ 136 $ 424 Origination LTV ≤70% $ 2,471 $ 1,445 $ 4,197 $ 9,479 $ 4,159 $ 21,751 $ 267 $ 95 $ 362 >70% – ≤90% 1,118 703 1,457 1,438 920 5,636 21 40 61 >90% – ≤100% — — — — 2 2 — 1 1 Total $ 3,589 $ 2,148 $ 5,654 $ 10,917 $ 5,081 $ 27,389 $ 288 $ 136 $ 424 Updated FICO <620 $ — $ 3 $ 25 $ 15 $ 21 $ 64 $ 1 $ 5 $ 6 620 – 679 34 31 74 97 74 310 6 7 13 680 – 739 339 191 574 871 435 2,410 48 24 72 ≥740 3,216 1,923 4,981 9,934 4,551 24,605 233 100 333 Total $ 3,589 $ 2,148 $ 5,654 $ 10,917 $ 5,081 $ 27,389 $ 288 $ 136 $ 424 Estimated Current LTV (1) ≤70% $ 2,402 $ 1,660 $ 4,942 $ 10,747 $ 5,057 $ 24,808 $ 285 $ 136 $ 421 >70% – ≤90% 1,187 487 693 166 20 2,553 3 — 3 >90% – ≤100% — 1 17 3 4 25 — — — >100% — — 2 1 — 3 — — — Total $ 3,589 $ 2,148 $ 5,654 $ 10,917 $ 5,081 $ 27,389 $ 288 $ 136 $ 424 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Percent of Loans on Nonaccrual Status 0.01 % 0.12 % 0.16 % 0.04 % 0.18 % 0.09 % 0.07 % 2.33 % 0.71 % (1) Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs. At September 30, 2025, $ 25.1 billion of First Mortgage loans had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that typically adjust every six to twelve months pursuant to the terms of the loan thereafter. Approximately 24 % of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 71 % of the balance of these interest-only loans are not scheduled to reset for three or more years. At September 30, 2025 and December 31, 2024, Schwab had $ 211 million and $ 171 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the condensed consolidated balance sheets. The HELOC product has a 30-year loan term with an initial draw period of ten years from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a 20-year amortizing loan. The interest rate during the initial draw period and the 20-year amortizing period is a floating-rate based on the prime rate plus a margin. - 45 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) The following table presents when current outstanding HELOCs will convert to amortizing loans: September 30, 2025 Balance Converted to an amortizing loan by period end (1) $ 120 Within 1 year 15 > 1 year – 3 years 38 > 3 years – 5 years 48 > 5 years 200 Total $ 421 (1) Includes $ 3 million and $ 11 million of HELOCs converted to amortizing loans during the three and nine months ended September 30, 2025, respectively. At September 30, 2025, $ 328 million of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At September 30, 2025, the borrowers on approximately 64 % of HELOC loan balances outstanding only paid the minimum amount due. 7. Variable Interest Entities As of September 30, 2025 and December 31, 2024, substantially all of Schwab’s involvement with variable interest entities (VIEs) is through CSB’s Community Reinvestment Act (CRA) related investments and most of these are related to Low-Income Housing Tax Credit (LIHTC) investments. As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties and receives tax credits and other tax benefits for these investments. During the three months ended September 30, 2025 and 2024, CSB recorded amortization of $ 48 million and $ 37 million, respectively, and recognized tax credits and other tax benefits of $ 62 million and $ 48 million, respectively, associated with these investments. During the nine months ended September 30, 2025 and 2024, CSB recorded amortization of $ 142 million and $ 117 million, respectively, and recognized tax credits and other tax benefits of $ 188 million and $ 150 million, respectively, associated with these investments. The amortization, as well as the tax credits and other tax benefits, are included in taxes on income on the condensed consolidated statements of income. Tax credits and other tax benefits are reflected as cash flows from operating activities on the condensed consolidated statements of cash flows. Aggregate assets, liabilities, and maximum exposure to loss The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below: September 30, 2025 December 31, 2024 Aggregate assets Aggregate liabilities Maximum exposure to loss Aggregate assets Aggregate liabilities Maximum exposure to loss LIHTC investments (1) $ 2,032 $ 1,109 $ 2,032 $ 1,729 $ 947 $ 1,729 Other investments (2) 248 — 341 224 — 340 Total $ 2,280 $ 1,109 $ 2,373 $ 1,953 $ 947 $ 2,069 (1) Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the condensed consolidated balance sheets. (2) Other investments include non-LIHTC CRA investments that are accounted for as loans at amortized cost, equity method investments, AFS securities, or using the adjusted cost method. Aggregate assets are included in AFS securities, bank loans – net, or other assets on the condensed consolidated balance sheets. Schwab’s maximum exposure to loss would result from the loss of the investments, including any committed amounts. Schwab’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and Schwab expects to pay substantially all of these commitments between 2025 and 2028. During the nine months ended September 30, 2025 and year ended December 31, 2024, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide. - 46 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 8. Bank Deposits Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows: September 30, 2025 December 31, 2024 Interest-bearing deposits: Deposits swept from brokerage accounts $ 209,205 $ 210,575 Checking 15,124 15,593 Time certificates of deposit (1) 9,936 27,701 Savings and other 3,569 4,015 Total interest-bearing deposits 237,834 257,884 Non-interest-bearing deposits 1,223 1,237 Total bank deposits $ 239,057 $ 259,121 (1) Time certificates of deposit consist of brokered CDs. The weighted-average interest rates on outstanding time certificates of deposit at September 30, 2025 and December 31, 2024 were 4.21 % and 4.90 %, respectively. As of September 30, 2025 and December 31, 2024, there were no time deposits that were in excess of FDIC insurance limits or otherwise uninsured. Time certificates of deposit outstanding at September 30, 2025 mature between October 2025 and January 2026. 9. Borrowings CSC Senior Notes CSC’s Senior Notes are unsecured obligations. CSC may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes and quarterly for the floating-rate Senior Notes. Interest for the fixed-to-floating rate Senior Notes is payable semi-annually during the fixed-rate period of the notes and quarterly during the floating-rate period of the notes. Ameritrade Holding Senior Notes Ameritrade Holding’s Senior Notes are unsecured obligations. Ameritrade Holding may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes. - 47 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) The following table lists long-term debt by instrument outstanding as of September 30, 2025 and December 31, 2024: Date of Issuance Principal Amount Outstanding September 30, 2025 December 31, 2024 CSC Fixed-rate Senior Notes: 3.000 % due March 10, 2025 03/10/15 $ — $ 375 4.200 % due March 24, 2025 03/24/20 — 600 3.625 % due April 1, 2025 09/24/21 — 418 3.850 % due May 21, 2025 05/22/18 — 750 3.450 % due February 13, 2026 11/13/15 350 350 0.900 % due March 11, 2026 12/11/20 1,250 1,250 1.150 % due May 13, 2026 05/13/21 1,000 1,000 5.875 % due August 24, 2026 08/24/23 1,000 1,000 3.200 % due March 2, 2027 03/02/17 650 650 2.450 % due March 3, 2027 03/03/22 1,500 1,500 3.300 % due April 1, 2027 09/24/21 744 744 3.200 % due January 25, 2028 12/07/17 700 700 2.000 % due March 20, 2028 03/18/21 1,250 1,250 4.000 % due February 1, 2029 10/31/18 600 600 3.250 % due May 22, 2029 05/22/19 600 600 2.750 % due October 1, 2029 09/24/21 475 475 4.625 % due March 22, 2030 03/24/20 500 500 1.650 % due March 11, 2031 12/11/20 750 750 2.300 % due May 13, 2031 05/13/21 750 750 1.950 % due December 1, 2031 08/26/21 850 850 2.900 % due March 3, 2032 03/03/22 1,000 1,000 CSC Floating-rate Senior Notes: SOFR + 0.520 % due May 13, 2026 05/13/21 500 500 SOFR + 1.050 % due March 3, 2027 03/03/22 500 500 CSC Fixed-to-Floating rate Senior Notes: 5.643 % due May 19, 2029 (1) 05/19/23 1,200 1,200 6.196 % due November 17, 2029 (2) 11/17/23 1,300 1,300 5.853 % due May 19, 2034 (3) 05/19/23 1,300 1,300 6.136 % due August 24, 2034 (4) 08/24/23 1,350 1,350 Total CSC Senior Notes 20,119 22,262 Ameritrade Holding Fixed-rate Senior Notes: 3.625 % due April 1, 2025 10/22/14 — 82 3.300 % due April 1, 2027 04/27/17 56 56 2.750 % due October 1, 2029 08/16/19 25 25 Total Ameritrade Holding Senior Notes 81 163 Finance lease liabilities 30 49 Unamortized premium — net 37 54 Debt issuance costs ( 74 ) ( 93 ) Fair value hedging basis adjustments (5) 6 ( 7 ) Total long-term debt $ 20,199 $ 22,428 (1) The May 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 5.643 %, payable semi-annually, until the interest reset date on May 19, 2028. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 2.210 %, payable quarterly. (2) The November 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 6.196 %, payable semi-annually, until the interest reset date on November 17, 2028. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 1.878 %, payable quarterly. (3) The May 2034 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 5.853 %, payable semi-annually, until the interest reset date on May 19, 2033. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 2.500 %, payable quarterly. (4) The August 2034 fixed-to-floating rate Senior Notes bear interest at a fixed rate of 6.136 %, payable semi-annually, until the interest reset date on August 24, 2033. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus 2.010 %, payable quarterly. (5) This represents the amount of fair value hedge basis adjustments related to Senior Notes hedged. See Note 11 for more information on hedging of Senior Notes. - 48 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Annual maturities on all long-term debt outstanding at September 30, 2025 are as follows: Maturities 2025 $ 5 2026 4,112 2027 3,463 2028 1,950 2029 4,200 Thereafter 6,500 Total maturities 20,230 Unamortized premium — net 37 Debt issuance costs ( 74 ) Fair value hedging basis adjustments (1) 6 Total long-term debt $ 20,199 (1) This represents the amount of fair value hedge basis adjustments related to long-term debt hedged. See Note 11 for more information on hedging of long-term debt. FHLB borrowings : Our banking subsidiaries maintain secured credit facilities with the FHLB. Amounts available under these facilities are dependent on the amount of bank loans and the value of certain investment securities that are pledged as collateral. There was $ 850 million and $ 16.7 billion outstanding under these facilities as of September 30, 2025 and December 31, 2024, respectively, and these borrowings had a weighted-average interest rate of 4.11 % and 5.11 %, respectively. As of September 30, 2025 and December 31, 2024, the collateral pledged provided additional borrowing capacity of $ 75.3 billion and $ 59.8 billion, respectively. Other short-term borrowings : Total other short-term borrowings outstanding at September 30, 2025 and December 31, 2024 were $ 6.5 billion and $ 6.0 billion, respectively, and had a weighted-average interest rate of 4.48 % and 5.21 %, respectively. Additional information regarding our other short-term borrowings facilities is described below. The Company may engage with external financial institutions and the FICC in repurchase agreements collateralized by investment securities as another source of short-term liquidity. The Company had $ 4.0 billion and $ 5.5 billion outstanding pursuant to such repurchase agreements at September 30, 2025 and December 31, 2024, respectively. Repurchase agreements outstanding at September 30, 2025 mature between October 2025 and November 2025. Our banking subsidiaries have access to funding through the Federal Reserve discount window. Amounts available are dependent upon the value of certain investment securities that are pledged as collateral. As of September 30, 2025 and December 31, 2024, our collateral pledged provided total borrowing capacity of $ 29.7 billion and $ 30.5 billion, respectively, of which no amounts were outstanding at the end of either period. CSC has the ability to issue up to $ 5.0 billion of commercial paper notes with maturities of up to 270 days. There was $ 800 million gross par value before discount of $ 4 million outstanding at September 30, 2025, and no amounts outstanding at December 31, 2024. CSC and CS&Co also have access to unsecured uncommitted lines of credit with external banks with total borrowing capacity of $ 1.7 billion; no amounts were outstanding as of September 30, 2025 or December 31, 2024. CS&Co maintains secured uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements, under which there was $ 1.8 billion and $ 500 million outstanding at September 30, 2025 and December 31, 2024, respectively. Annual maturities on FHLB borrowings and other short-term borrowings outstanding at September 30, 2025 are as follows: 2025 2026 Total FHLB borrowings $ — $ 850 $ 850 Other short-term borrowings 5,541 1,000 6,541 Total $ 5,541 $ 1,850 $ 7,391 - 49 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 10. Commitments and Contingencies Loan portfolio : CSB provides a co-branded loan origination program for CSB clients (the Program) with Rocket Mortgage, LLC. Pursuant to the Program, Rocket Mortgage, LLC originates and services First Mortgages and HELOCs for CSB clients. Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Rocket Mortgage, LLC. CSB purchased First Mortgages of $ 1.7 billion and $ 1.1 billion during the third quarter of 2025 and 2024, respectively, and $ 4.4 billion and $ 2.6 billion during the first nine months of 2025 and 2024, respectively. CSB purchased HELOCs with commitments of $ 52 million and $ 38 million during the third quarter of 2025 and 2024, respectively, and $ 181 million and $ 121 million during the first nine months of 2025 and 2024, respectively. The Company’s commitments to extend credit on lines of credit and to purchase First Mortgages are as follows: September 30, 2025 December 31, 2024 Commitments to extend credit related to unused HELOCs and other lines of credit $ 1,819 $ 1,895 Commitments to purchase First Mortgage loans 1,215 511 Total $ 3,034 $ 2,406 Guarantees and indemnifications : Schwab has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation – a clearing house that establishes margin requirements on these transactions. We satisfy the margin requirements of these transactions through pledging certain client securities. For additional information on these pledged securities, refer to Note 12. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral. The Company also provides guarantees to securities clearing houses and exchanges under standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing houses and exchanges, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable and may exceed the amounts it has posted as collateral. The Company also engages third-party firms to clear clients’ futures and options on futures transactions and to facilitate clients’ foreign exchange trading, and has agreed to indemnify these firms for any losses that they may incur from the client transactions introduced to them by the Company. The potential requirement for the Company to make payments under these arrangements is remote. Accordingly, no liability has been recognized for these guarantees and indemnifications. IDA agreement : The 2023 IDA agreement with the TD Depository Institutions specifies responsibilities, including certain contingent obligations, of the Company. Pursuant to the 2023 IDA agreement, uninvested cash within eligible brokerage client accounts is swept off-balance sheet to deposit accounts at the TD Depository Institutions. Schwab provides recordkeeping and support services to the TD Depository Institutions with respect to the deposit accounts for which Schwab receives an aggregate monthly fee. Under the 2023 IDA agreement, the service fee on client cash deposits held at the TD Depository Institutions is 15 basis points. The Company’s ability to migrate these balances to its balance sheet is dependent on multiple factors including having sufficient capital levels to sustain these incremental deposits and certain binding limitations specified in the 2023 IDA agreement. The 2023 IDA agreement extends the term to sweep balances to the TD Depository Institutions through July 1, 2034, and requires that Schwab maintain certain minimum and maximum insured deposit account balances (IDA balances). Pursuant to the terms of the agreement, after September 10, 2025, withdrawals of IDA balances are permitted at Schwab’s discretion, subject to an obligation to maintain IDA balances above a minimum of $ 60 billion, with a maximum of $ 90 billion. In accordance with the agreement, in September 2025, Schwab moved $ 3.0 billion of IDA balances to its balance sheet. Designation of deposit balances for investment in fixed- or floating-rate instruments under the 2023 IDA agreement is at Schwab’s sole discretion with certain limitations on the amount of fixed-rate obligation amounts. If IDA balances decline below the required IDA balance minimum as described above, Schwab would be required to make a nonperformance payment to the TD Depository Institutions pursuant to the terms of the 2023 IDA agreement. As of September 30, 2025, the total ending IDA balance was $ 78.6 billion, of which $ 59.7 billion was fixed-rate obligation amounts and $ 18.9 billion was floating-rate obligation amounts. As of December 31, 2024, the total ending IDA balance was $ 87.6 billion, of which $ 66.6 billion was fixed-rate obligation amounts and $ 21.0 billion was floating-rate obligation amounts. - 50 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Legal contingencies : Schwab is subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. The Company is also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies. Predicting the outcome of a litigation or regulatory matter is inherently difficult, requiring significant judgment and evaluation of various factors, including the procedural status of the matter and any recent developments; prior experience and the experience of others in similar cases; available defenses, including potential opportunities to dispose of a case on the merits or procedural grounds before trial (e.g., motions to dismiss or for summary judgment); the progress of fact discovery; the opinions of counsel and experts regarding potential damages; and potential opportunities for settlement and the status of any settlement discussions. It may not be reasonably possible to estimate a range of potential liability until the matter is closer to resolution – pending, for example, further proceedings, the outcome of key motions or appeals, or discussions among the parties. Numerous issues may have to be developed, such as discovery of important factual matters and determination of threshold legal issues, which may include novel or unsettled questions of law. Reserves are established or adjusted or further disclosure and estimates of potential loss are provided as the matter progresses and more information becomes available. Schwab believes it has strong defenses in all significant matters currently pending and is contesting liability and any damages claimed. Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation. Described below are any matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results, or cash flows of the Company. Corrente Antitrust Litigation : On June 6, 2022, CSC was sued in the U.S. District Court for the Eastern District of Texas on behalf of a putative class of customers who purchased or sold securities through CS&Co or TD Ameritrade, Inc. (now Ameritrade of New York, Inc.) from October 26, 2020 to the present. The lawsuit alleges that CSC’s acquisition of Ameritrade violated Section 7 of the Clayton Act because it has resulted in an anticompetitive market for the execution of retail customer orders. Plaintiffs seek unspecified damages, as well as injunctive and other relief. A motion by the Company to dismiss the lawsuit was denied by the court on February 24, 2023. On December 12, 2024, the parties filed a joint stipulation proposing a settlement of the lawsuit on a class basis under which defendants would commit to certain non-monetary undertakings and payments of plaintiffs’ attorneys’ fees and costs in an amount that would be immaterial. Approval of the settlement remains pending with the court. 11. Derivative Instruments and Hedging Activities Risk Management Objective of Using Derivatives The Company utilizes derivative instruments to manage interest rate risk exposures that arise from business activities related to changes in fair values or the receipt and payment of future known and uncertain cash amounts due to changes in interest rates. The Company uses derivative instruments to manage changes in the fair values of, as well as changes in the amounts and/or timing of known or expected cash receipts and payments related to, our AFS investment portfolio, PALs, and Senior Notes. For a description of how the Company accounts for derivative instruments, see Item 8 – Note 2 in the 2024 Form 10-K. For additional information on the basis of presentation for derivative instruments on the Company’s condensed consolidated balance sheets and related offsetting considerations, see Note 12. Cash flows associated with derivative instruments are reflected as cash flows from operating activities in the condensed consolidated statements of cash flows consistent with the treatment and nature of the items being hedged. Fair Value Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of its fixed-rate AFS securities and Senior Notes, as well as its fixed-to-floating rate Senior Notes during the fixed-rate period, due to changes in benchmark interest rates. The Company uses cleared interest rate swaps to manage its exposure to changes in fair value of these instruments attributable to changes in the designated benchmark interest rate. Cleared interest rate swaps designated as fair value hedges of AFS securities involve the payment of fixed-rate amounts to a CCP in exchange for the Company receiving floating-rate payments over the life of the agreements. - 51 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Cleared interest rate swaps designated as fair value hedges of Senior Notes involve the receipt of fixed-rate amounts from a CCP in exchange for the Company’s floating-rate payments over the life of the agreements. The Company had outstanding interest rate swaps with aggregate notional amounts of $ 40.8 billion and $ 30.9 billion at September 30, 2025 and December 31, 2024, respectively, that were designated as fair value hedges of interest rate risk. The notional amount is the basis upon which the pay-fixed/receive-float and receive-fixed/pay-float payments are determined; however, the amount is not exchanged. Cash Flow Hedges of Interest Rate Risk Beginning in the second quarter of 2025, the Company uses cleared interest rate swaps designated as cash flows hedges as part of its interest rate risk management strategy to add stability to interest revenue and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a CCP in exchange for the Company’s floating-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives are used to hedge the variable cash flows associated with Schwab’s PALs. The Company had outstanding interest rate swaps with aggregate notional amounts of $ 16.1 billion at September 30, 2025 that were designated as cash flow hedges of interest rate risk. Fair Values of Derivative Instruments The table below presents the gross fair values of the Company’s interest rate swaps designated as hedging instruments on the condensed consolidated balance sheets: September 30, 2025 December 31, 2024 Assets Liabilities Assets Liabilities Interest rate swaps (1,2) $ — $ — $ — $ — (1) Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. Derivative assets and liabilities as of September 30, 2025 and December 31, 2024 were less than $ 500 thousand. (2) Includes reductions related to variation margin settlements. Settlements on derivative positions cleared through CCPs are reflected as reductions to the associated derivative asset and liability balances. As of September 30, 2025, there was a $ 69 million reduction of derivative assets and a $ 139 million reduction of derivative liabilities related to variation margin settlements. As of December 31, 2024, there was a $ 295 million reduction of derivative assets and a $ 10 million reduction of derivative liabilities related to variation margin settlements. - 52 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Effects of Fair Value Hedge Accounting The following amounts are included on the condensed consolidated balance sheets related to fair value hedges: Carrying Amount of the Hedged Assets/(Liabilities) Cumulative Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets and Liabilities September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024 Line item in which the hedged item is included: Available for sale securities (1,2) $ 14,389 $ 15,686 $ 113 $ ( 292 ) Long-term debt (3) $ ( 18,733 ) $ ( 14,908 ) $ — $ 7 (1) Includes the amortized cost basis of closed portfolios of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At September 30, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2.6 billion and $ 2.5 billion, respectively, of which $ 2.1 billion and $ 2.0 billion was designated in a portfolio layer hedging relationship at September 30, 2025 and December 31, 2024, respectively. The cumulative basis adjustments associated with these hedging relationships were an increase of $ 8 million and a reduction of $ 47 million of the amortized cost basis of the closed portfolios at September 30, 2025 and December 31, 2024, respectively. (2) Excludes the amortized cost and fair value hedging adjustment of AFS securities for which hedge accounting has been discontinued. The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $ 141 million at September 30, 2025 and $ 2 million at December 31, 2024, which are recorded in AFS securities on the condensed consolidated balance sheets and amortized to interest revenue as a yield adjustment over the lives of the securities. (3) Excludes the carrying amount and fair value hedging adjustment of long-term debt for which hedge accounting has been discontinued. The cumulative amount of fair value hedging adjustments remaining for long-term debt was an increase of the carrying amount of $ 5 million at September 30, 2025, which is recorded in long-term debt on the condensed consolidated balance sheets and amortized to interest expense over the lives of the borrowings. The table below presents the effect of the Company’s interest rate swaps designated as fair value hedges on the condensed consolidated statements of income: Location and Amount of Gain (Loss) Recognized in Income Interest Revenue Interest Expense Three Months Ended September 30, 2025 2024 2025 2024 Gain (loss) on fair value hedging relationships: Hedged items $ ( 3 ) $ 216 $ 4 $ — Derivatives designated as hedging instruments (1) 3 ( 214 ) ( 4 ) — Nine Months Ended September 30, 2025 2024 2025 2024 Gain (loss) on fair value hedging relationships: Hedged items $ 252 $ 19 $ ( 12 ) $ — Derivatives designated as hedging instruments (1) ( 252 ) ( 19 ) 14 — (1) Interest revenue excludes net income (expense) from periodic interest accruals and receipts (payments) of $ 2 million and $ 34 million for the three and nine months ended September 30, 2025, respectively, and $ 20 million and $ 36 million for the three and nine months ended September 30, 2024, respectively. Interest expense excludes net income (expense) from periodic interest accruals and receipts (payments) of $( 20 ) million and $( 44 ) million, respectively, for the three and nine months ended September 30, 2025. We began designating swaps as fair value hedges of Senior Notes in the fourth quarter of 2024. As such, there was no impact to interest expense from periodic interest accruals and receipts (payments) for the three and nine months ended September 30, 2024. Effects of Cash Flow Hedge Accounting The table below presents the effect of the Company’s interest rate swaps designated as cash flow hedges on AOCI and the condensed consolidated statements of income: Three Months Ended Nine Months Ended September 30, 2025 September 30, 2025 Gain (loss) recognized in other comprehensive income (1) $ 11 $ ( 4 ) Gain (loss) reclassified from AOCI to interest revenue ( 28 ) ( 45 ) (1) Included in net unrealized gain (loss) on derivatives designated as cash flow hedging instruments on the condensed consolidated statements of comprehensive income. For the twelve months following September 30, 2025, the Company estimates that an additional $ 11 million will be reclassified from AOCI as a reduction to interest revenue. - 53 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 12. Financial Instruments Subject to Off-Balance Sheet Credit Risk Resale agreements : Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value at or in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The collateral provided under these resale agreements is utilized to meet obligations under broker-dealer client protection rules, which place limitations on our ability to access such segregated securities. For Schwab to repledge or sell this collateral, we would be required to deposit cash and/or securities of an equal amount into our segregated reserve bank accounts in order to meet our segregated cash and investments requirement. Schwab’s resale agreements as of September 30, 2025 and December 31, 2024 were not subject to master netting arrangements. Securities lending : Schwab loans brokerage client securities temporarily to other broker-dealers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event a counterparty to these transactions does not return the loaned securities or provide additional cash collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy our client obligations. Schwab mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. In addition, most of our securities lending transactions are through a program with a clearing organization, which guarantees the return of cash to us. We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities. The fair value of these borrowed securities was $ 2.3 billion and $ 674 million at September 30, 2025 and December 31, 2024, respectively. Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities lending transactions. Therefore, amounts related to securities loaned and securities borrowed are presented gross in the condensed consolidated balance sheets. Repurchase agreements : Schwab enters into collateralized repurchase agreements with external financial institutions and the FICC in which the Company sells securities and agrees to repurchase these securities on a specified future date at a stated repurchase price. These repurchase agreements are collateralized by investment securities with a fair value equal to or in excess of the secured borrowing liability. Decreases in security prices posted as collateral for repurchase agreements may require Schwab to transfer cash and/or additional securities deemed acceptable by the counterparty. To mitigate this risk, Schwab monitors the fair value of underlying securities pledged as collateral compared to the related liability. Our collateralized repurchase agreements with each external financial institution are considered to be enforceable master netting arrangements. However, we do not net these arrangements. As such, the secured short-term borrowings associated with these collateralized repurchase agreements are presented gross in the condensed consolidated balance sheets. Interest rate swaps : Schwab uses interest rate swaps to manage certain interest rate risk exposures. Schwab’s interest rate swaps are cleared through CCPs which require the Company to post initial margin as collateral against potential losses. Schwab pledges investment securities as collateral in order to meet the CCP’s initial margin requirements. Initial margin is posted through FCMs which serve as the intermediary between CCPs and Schwab. Our interest rate swaps are subject to enforceable master netting arrangements allowing a right of setoff within each FCM-CCP relationship; however, we do not net these positions. Therefore, interest rate swaps are presented gross in the condensed consolidated balance sheets. See Note 11 for additional information on the Company’s interest rate swaps. - 54 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) The following table presents information about our interest rate swaps, resale agreements, securities lending, repurchase agreements, and other activity depicting the potential effect of rights of setoff between these recognized assets and liabilities: Gross Assets/ Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheets Net Amounts Presented in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets Net Amount Counterparty Offsetting Collateral September 30, 2025 Assets Resale agreements (1) $ 22,245 $ — $ 22,245 $ — $ ( 22,245 ) (2) $ — Securities borrowed (3) 2,342 — 2,342 ( 1,615 ) ( 713 ) 14 Interest rate swaps (4) — — — — — (5) — Total $ 24,587 $ — $ 24,587 $ ( 1,615 ) $ ( 22,958 ) $ 14 Liabilities Repurchase agreements (6) $ 3,995 $ — $ 3,995 $ — $ ( 3,995 ) $ — Securities loaned (7) 21,690 — 21,690 ( 1,615 ) ( 19,449 ) 626 Secured short-term borrowings (8) 1,750 — 1,750 — ( 1,750 ) — Interest rate swaps (4) — — — — — (5) — Total $ 27,435 $ — $ 27,435 $ ( 1,615 ) $ ( 25,194 ) $ 626 December 31, 2024 Assets Resale agreements (1) $ 10,075 $ — $ 10,075 $ — $ ( 10,075 ) (2) $ — Securities borrowed (3) 695 — 695 ( 617 ) ( 77 ) 1 Interest rate swaps (4) — — — — — (5) — Total $ 10,770 $ — $ 10,770 $ ( 617 ) $ ( 10,152 ) $ 1 Liabilities Repurchase agreements (6) $ 5,499 $ — $ 5,499 $ — $ ( 5,499 ) $ — Securities loaned (7) 13,068 — 13,068 ( 617 ) ( 11,795 ) 656 Secured short-term borrowings (8) 500 — 500 — ( 500 ) — Interest rate swaps (4) — — — — — (5) — Total $ 19,067 $ — $ 19,067 $ ( 617 ) $ ( 17,794 ) $ 656 (1) Included in cash and investments segregated and on deposit for regulatory purposes in the condensed consolidated balance sheets. (2) Actual collateral was greater than or equal to the value of the related assets. At September 30, 2025 and December 31, 2024, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $ 22.7 billion and $ 10.3 billion, respectively. (3) Included in receivables from brokers, dealers, and clearing organizations in the condensed consolidated balance sheets. (4) Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities in the condensed consolidated balance sheets. Derivative assets and liabilities as of September 30, 2025 and December 31, 2024 were less than $ 500 thousand. (5) At September 30, 2025 and December 31, 2024, the fair value of initial margin pledged as collateral related to interest rate swaps was $ 311 million and $ 378 million, respectively. See Notes 5 and 11 for additional information. (6) Included in other short-term borrowings in the condensed consolidated balance sheets. Actual collateral value was greater than or equal to the value of the related liabilities. At September 30, 2025 and December 31, 2024, the fair value of collateral pledged in connection with repurchase agreements was $ 4.2 billion and $ 5.9 billion, respectively. See Note 9 for additional information. (7) Included in payables to brokers, dealers, and clearing organizations in the condensed consolidated balance sheets. Securities loaned are predominantly comprised of equity securities held in client brokerage accounts. At September 30, 2025, $ 18.7 billion of securities loaned had overnight and continuous remaining contractual maturities and $ 3.0 billion of securities loaned had contractual maturities of 35 - 95 days. At December 31, 2024, $ 8.8 billion of securities loaned had overnight and continuous remaining contractual maturities and $ 4.3 billion of securities loaned had contractual maturities of 35 - 95 days. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at September 30, 2025 and December 31, 2024. (8) Included in other short-term borrowings in the condensed consolidated balance sheets. See below for collateral pledged and Note 9 for additional information. - 55 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Margin lending : Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, as well as the fair value of securities that we had pledged to third parties under such regulations and from securities borrowed transactions: September 30, 2025 December 31, 2024 Fair value of client securities available to be pledged $ 134,727 $ 116,258 Fair value of securities pledged for: Fulfillment of requirements with the Options Clearing Corporation (1) $ 41,004 $ 24,011 Fulfillment of client short sales 12,117 5,179 Securities lending to other broker-dealers 20,768 12,282 Collateral for secured short-term borrowings 2,048 618 Total collateral pledged to third parties $ 75,937 $ 42,090 Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $ 237 million and $ 105 million at September 30, 2025 and December 31, 2024, respectively. (1) Securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation. 13. Fair Values of Assets and Liabilities Assets and Liabilities Measured at Fair Value on a Recurring Basis Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, certain other assets, interest rate swaps, and certain accrued expenses and other liabilities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. Quoted prices for investments in exchange-traded securities represent end-of-day close prices published by exchanges. Quoted prices for money market funds and other mutual funds represent reported net asset values. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices in active markets do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets, and we generally obtain prices from three independent third-party pricing sources for such assets recorded at fair value. Our primary independent pricing service provides prices for our fixed income investments such as commercial paper; certificates of deposit; U.S. government and agency securities; state and municipal securities; corporate debt securities; asset-backed securities; foreign government agency securities; and non-agency commercial mortgage-backed securities. Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded. Liabilities measured at fair value on a recurring basis include interest rate swaps, securities sold but not yet purchased, and repurchase liabilities related to client-held fractional shares of equities, ETFs, and other securities, which are included in other assets on the condensed consolidated balance sheets. The fair values of securities sold but not yet purchased are based on quoted market prices or other observable market data. The Company has elected the fair value option pursuant to ASC 825 Financial Instruments for the repurchase liabilities to match the measurement and accounting of the related client-held fractional shares. The fair values of the repurchase liabilities are based on quoted market prices or other observable market data consistent with the related client-held fractional shares. Unrealized gains and losses on client-held fractional shares offset the unrealized gains and losses on the corresponding repurchase liabilities, resulting in no impact to the condensed consolidated statements of income. The Company’s liabilities to repurchase client-held fractional shares do not have credit risk, and, as a result, the Company has not recognized any gains or losses in the condensed consolidated statements of income or comprehensive income attributable to instrument-specific credit risk for these repurchase liabilities. The repurchase liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. The fair values of interest rate swaps are based on market observable interest rate yield curves. Fair value measurements are priced considering the coupon rate of the fixed leg of the contract and the variable coupon rate on the floating leg of the - 56 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) contract. Valuation is based on both spot and forward rates on the swap yield curve. See Note 11 for additional information on the Company’s interest rate swaps. For a description of the fair value hierarchy and Schwab’s fair value methodologies, see Item 8 – Note 2 in the 2024 Form 10-K. The Company did not adjust prices received from the primary independent third-party pricing service at September 30, 2025 or December 31, 2024. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis: September 30, 2025 Level 1 Level 2 Level 3 Balance at Fair Value Cash equivalents: Money market funds $ 10,954 $ — $ — $ 10,954 Total cash equivalents 10,954 — — 10,954 Investments segregated and on deposit for regulatory purposes: U.S. government securities — 22,910 — 22,910 Total investments segregated and on deposit for regulatory purposes — 22,910 — 22,910 Available for sale securities: U.S. agency mortgage-backed securities — 44,456 — 44,456 U.S. Treasury securities — 7,786 — 7,786 Corporate debt securities — 5,091 — 5,091 Asset-backed securities — 4,281 — 4,281 U.S. state and municipal securities — 562 — 562 Non-agency commercial mortgage-backed securities — 113 — 113 Other — 19 — 19 Total available for sale securities — 62,308 — 62,308 Other assets: Other securities owned: Equity, corporate debt, and other securities 1,637 106 — 1,743 Mutual funds and ETFs 1,219 — — 1,219 State and municipal debt obligations — 38 — 38 U.S. government securities — 13 — 13 Total other securities owned 2,856 157 — 3,013 Total other assets 2,856 157 — 3,013 Total assets $ 13,810 $ 85,375 $ — $ 99,185 Accrued expenses and other liabilities: Other $ 2,647 $ 35 $ — $ 2,682 Total accrued expenses and other liabilities 2,647 35 — 2,682 Total liabilities $ 2,647 $ 35 $ — $ 2,682 - 57 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) December 31, 2024 Level 1 Level 2 Level 3 Balance at Fair Value Cash equivalents: Money market funds $ 11,005 $ — $ — $ 11,005 Total cash equivalents 11,005 — — 11,005 Investments segregated and on deposit for regulatory purposes: U.S. government securities — 25,740 — 25,740 Total investments segregated and on deposit for regulatory purposes — 25,740 — 25,740 Available for sale securities: U.S. agency mortgage-backed securities — 51,833 — 51,833 U.S. Treasury securities — 14,469 — 14,469 Corporate debt securities — 9,579 — 9,579 Asset-backed securities — 5,910 — 5,910 U.S. state and municipal securities — 549 — 549 Foreign government agency securities — 527 — 527 Non-agency commercial mortgage-backed securities — 109 — 109 Other — 18 — 18 Total available for sale securities — 82,994 — 82,994 Other assets: Other securities owned: Equity, corporate debt, and other securities 1,395 73 — 1,468 Mutual funds and ETFs 1,019 — — 1,019 State and municipal debt obligations — 38 — 38 U.S. government securities — 18 — 18 Total other securities owned 2,414 129 — 2,543 Total other assets 2,414 129 — 2,543 Total assets $ 13,419 $ 108,863 $ — $ 122,282 Accrued expenses and other liabilities: Other $ 2,161 $ 37 $ — $ 2,198 Total accrued expenses and other liabilities 2,161 37 — 2,198 Total liabilities $ 2,161 $ 37 $ — $ 2,198 - 58 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Fair Value of Other Financial Instruments The following tables present the fair value hierarchy for other financial instruments: September 30, 2025 Carrying Amount Level 1 Level 2 Level 3 Balance at Fair Value Assets Cash and cash equivalents $ 19,618 $ 19,618 $ — $ — $ 19,618 Cash and investments segregated and on deposit for regulatory purposes 24,729 2,594 22,135 — 24,729 Receivables from brokers, dealers, and clearing organizations 4,728 — 4,728 — 4,728 Receivables from brokerage clients — net 93,754 — 93,754 — 93,754 Held to maturity securities: U.S. agency mortgage-backed securities 136,693 — 128,259 — 128,259 Total held to maturity securities 136,693 — 128,259 — 128,259 Bank loans — net: First Mortgages 29,346 — 27,134 — 27,134 HELOCs 420 — 438 — 438 Pledged asset lines 23,390 — 23,390 — 23,390 Other 414 — 413 — 413 Total bank loans — net 53,570 — 51,375 — 51,375 Other assets 723 — 723 — 723 Liabilities Bank deposits $ 239,057 $ — $ 239,057 $ — $ 239,057 Payables to brokers, dealers, and clearing organizations 22,407 — 22,407 — 22,407 Payables to brokerage clients 115,397 — 115,397 — 115,397 Accrued expenses and other liabilities 1,359 — 1,359 — 1,359 Other short-term borrowings 6,541 — 6,541 — 6,541 Federal Home Loan Bank borrowings 850 — 850 — 850 Long-term debt 20,169 — 20,002 — 20,002 - 59 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) December 31, 2024 Carrying Amount Level 1 Level 2 Level 3 Balance at Fair Value Assets Cash and cash equivalents $ 31,078 $ 31,078 $ — $ — $ 31,078 Cash and investments segregated and on deposit for regulatory purposes 12,416 2,401 10,015 — 12,416 Receivables from brokers, dealers, and clearing organizations 2,440 — 2,440 — 2,440 Receivables from brokerage clients — net 85,343 — 85,343 — 85,343 Held to maturity securities: U.S. agency mortgage-backed securities 146,453 — 132,605 — 132,605 Total held to maturity securities 146,453 — 132,605 — 132,605 Bank loans — net: First Mortgages 27,375 — 24,336 — 24,336 HELOCs 423 — 441 — 441 Pledged asset lines 17,024 — 17,024 — 17,024 Other 393 — 393 — 393 Total bank loans — net 45,215 — 42,194 — 42,194 Other assets 1,405 — 1,405 — 1,405 Liabilities Bank deposits $ 259,121 $ — $ 259,121 $ — $ 259,121 Payables to brokers, dealers, and clearing organizations 13,336 — 13,336 — 13,336 Payables to brokerage clients 101,559 — 101,559 — 101,559 Accrued expenses and other liabilities 1,076 — 1,076 — 1,076 Other short-term borrowings 5,999 — 5,999 — 5,999 Federal Home Loan Bank borrowings 16,700 — 16,700 — 16,700 Long-term debt 22,379 — 21,621 — 21,621 14. Stockholders’ Equity Common and Nonvoting Common Stock On February 12, 2025, TD Group US Holdings LLC, an affiliate of TD Bank, completed a secondary public offering of the Company’s common shares through which TD Group US Holdings LLC sold 133.8 million shares of the Company’s common stock and 31.7 million shares of the Company’s nonvoting common stock, which automatically converted into common stock. The offering was completed at a price of $ 79.25 per share, for an aggregate amount of $ 13.1 billion. The Company did not receive any of the proceeds from this sale. Concurrent with the completion of the secondary offering, and pursuant to a repurchase agreement dated February 9, 2025, the Company repurchased directly from TD Group US Holdings LLC its remaining 19.2 million shares of nonvoting common stock at a price of $ 77.982 per share for an aggregate repurchase amount of $ 1.5 billion, which settled on February 12, 2025. The shares of nonvoting common stock automatically converted into common stock upon repurchase and are now held in treasury stock, reducing the number of shares outstanding. These shares were purchased under CSC’s $ 15.0 billion share repurchase authorization. Through the completion of the secondary offering and the Company’s repurchase of nonvoting common stock, TD Bank disposed of all of its common shares of CSC and as of February 12, 2025, the Company had 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. 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. 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. - 60 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 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 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. Preferred Stock 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, each representing a 1/100th interest in a share of the Series G preferred stock. The depositary shares were redeemed at a redemption price of $ 1,000 per depositary share for a total of $ 2.5 billion. The difference between the total redemption price and the prior carrying value of the Series G preferred stock resulted in a $ 30 million deemed dividend that was included in the calculation of EPS. There were no redemptions of CSC’s preferred stock during the three and nine months ended September 30, 2024. The Company’s preferred stock issued and outstanding is as follows: Liquidation Preference Per Share Dividend Rate in Effect at September 30, 2025 Earliest Redemption Date Date at Which Dividend Rate Resets or Becomes Floating Reset / Floating-Rate Margin Over Reset / Floating-Rate Shares Issued and Outstanding (in ones) at Carrying Value at September 30, 2025 (1) December 31, 2024 (1) September 30, 2025 December 31, 2024 Issue Date Fixed-rate: Series D 750,000 750,000 $ 1,000 $ 728 $ 728 03/07/16 5.95 % 06/01/21 N/A N/A N/A Series J 600,000 600,000 1,000 584 584 03/30/21 4.450 % 06/01/26 N/A N/A N/A Fixed-to-floating rate/Fixed-rate reset: Series F 4,884 4,884 100,000 481 481 10/31/17 5.000 % 12/01/27 12/01/27 3 M LIBOR (5) 2.575 % Series G (2) — 24,580 — — 2,428 04/30/20 — — — — — Series H (3) 22,267 22,267 100,000 2,200 2,200 12/11/20 4.000 % 12/01/30 12/01/30 10 -Year Treasury 3.079 % Series I (4) 20,554 20,554 100,000 2,030 2,030 03/18/21 4.000 % 06/01/26 06/01/26 5 -Year Treasury 3.168 % Series K (4) 7,500 7,500 100,000 740 740 03/04/22 5.000 % 06/01/27 06/01/27 5 -Year Treasury 3.256 % Total preferred stock 1,405,205 1,429,785 $ 6,763 $ 9,191 (1) Represented by depositary shares. (2) Series G was redeemed on June 2, 2025. (3) The dividend rate for Series H resets on each ten-year anniversary from the first reset date. (4) The dividend rate for Series I and Series K resets on each five-year anniversary from the first reset date. (5) The reset/floating-rate for Series F will be determined by the calculation agent prior to the commencement of the floating-rate period using what the calculation agent determines to be the industry-accepted substitute or successor base rate to LIBOR. N/A Not applicable. Dividends declared on the Company’s preferred stock are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total Declared Per Share Amount Total Declared Per Share Amount Total Declared Per Share Amount Total Declared Per Share Amount Series D (1) $ 11.2 $ 14.88 $ 11.2 $ 14.88 $ 33.5 $ 44.64 $ 33.5 $ 44.64 Series F (2) — — — — 12.2 2,500.00 12.2 2,500.00 Series G (3) — — 33.0 1,343.75 66.0 2,687.50 99.0 4,031.25 Series H (1) 22.2 1,000.00 22.2 1,000.00 66.7 3,000.00 66.7 3,000.00 Series I (1) 20.6 1,000.00 20.6 1,000.00 61.8 3,000.00 61.8 3,000.00 Series J (1) 6.7 11.13 6.7 11.13 20.1 33.39 20.1 33.39 Series K (1) 9.3 1,250.00 9.3 1,250.00 28.1 3,750.00 28.1 3,750.00 Total $ 70.0 $ 103.0 $ 288.4 $ 321.4 (1) Dividends paid quarterly. (2) Dividends paid semi-annually until December 1, 2027 and quarterly thereafter. (3) Series G was redeemed on June 2, 2025. Prior to redemption, dividends were paid quarterly. The final dividend was paid on June 2, 2025. - 61 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 15. Accumulated Other Comprehensive Income AOCI represents cumulative gains and losses that are not reflected in earnings. AOCI balances and the components of other comprehensive income (loss) are as follows: Total AOCI Balance at June 30, 2024 $ ( 16,936 ) Available for sale securities: Net unrealized gain (loss), net of tax expense (benefit) of $ 577 1,857 Other reclassifications included in other revenue, net of tax expense (benefit) of $ 2 8 Held to maturity securities: Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 134 442 Other (1) 11 Balance at September 30, 2024 $ ( 14,618 ) Balance at June 30, 2025 $ ( 12,591 ) Available for sale securities: Net unrealized gain (loss), net of tax expense (benefit) of $ 173 419 Other reclassifications included in other revenue, net of tax expense (benefit) of $ 2 8 Held to maturity securities: Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 207 338 Derivatives designated as cash flow hedging instruments: Net unrealized gain (loss), net of tax expense (benefit) of $ 3 8 Reclassifications included in interest revenue, net of tax expense (benefit) of $ 7 21 Other (1) ( 1 ) Balance at September 30, 2025 $ ( 11,798 ) Balance at December 31, 2023 $ ( 18,131 ) Available for sale securities: Net unrealized gain (loss), net of tax expense (benefit) of $ 654 2,153 Other reclassifications included in other revenue, net of tax expense (benefit) of $ 7 23 Held to maturity securities: Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 387 1,336 Other (1) 1 Balance at September 30, 2024 $ ( 14,618 ) Balance at December 31, 2024 $ ( 14,848 ) Available for sale securities: Net unrealized gain (loss), net of tax expense (benefit) of $ 542 1,728 Other reclassifications included in other revenue, net of tax expense (benefit) of $ 12 38 Held to maturity securities: Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $ 396 1,248 Derivatives designated as cash flow hedging instruments: Net unrealized gain (loss), net of tax expense (benefit) of $( 1 ) ( 3 ) Reclassifications included in interest revenue, net of tax expense (benefit) of $ 11 34 Other (1) 5 Balance at September 30, 2025 $ ( 11,798 ) (1) Tax expense (benefit) was less than $ 500 thousand. As of September 30, 2025, the total remaining unamortized loss on securities transferred from AFS to HTM included in AOCI was $ 8.5 billion net of tax effect ($ 11.1 billion pre-tax). This loss is being amortized over the remaining lives of the securities, offsetting amortization of the securities’ premiums or discounts, and resulting in no impact to net income. - 62 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 16. Earnings Per Common Share As described in Note 14, TD Bank disposed of all of its common shares of CSC during the first quarter of 2025, including its holdings of nonvoting common stock. As of February 12, 2025, the Company had no remaining nonvoting common stock outstanding and accordingly, no dividends were paid on nonvoting common stock during the nine months ended September 30, 2025. For the computations of basic and diluted EPS, undistributed net income of the Company was allocated on a proportionate basis to the voting and nonvoting common stock, as the distribution rights of the two classes were identical. Diluted EPS was calculated using the treasury stock method for outstanding stock options and non-vested restricted stock units and the if-converted method for the nonvoting common stock, which assumed conversion of all outstanding nonvoting common stock to common stock. For further details surrounding the EPS computations, see Item 8 – Note 26 in the 2024 Form 10-K. The computations of basic and diluted EPS for common stock and nonvoting common stock for the three and nine months ended September 30, 2025 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2025 Common Stock Nonvoting Common Stock Consolidated Common Stock Common Stock Nonvoting Common Stock Consolidated Common Stock Basic earnings per share: Numerator Net income $ 2,358 $ — $ 2,358 $ 6,373 $ 20 $ 6,393 Preferred stock dividends and other (1) ( 81 ) — ( 81 ) ( 342 ) ( 1 ) ( 343 ) Net income available to common stockholders $ 2,277 $ — $ 2,277 $ 6,031 $ 19 $ 6,050 Denominator Weighted-average common shares outstanding — basic 1,806 — 1,806 1,807 51 1,815 Basic earnings per share $ 1.26 $ — $ 1.26 $ 3.33 $ .37 $ 3.33 Diluted earnings per share: Numerator Net income available to common stockholders $ 2,277 $ — $ 2,277 $ 6,031 $ 19 $ 6,050 Reallocation of net income available to common stockholders as a result of conversion of nonvoting to voting shares — — — 19 — — Allocation of net income available to common stockholders: $ 2,277 $ — $ 2,277 $ 6,050 $ 19 $ 6,050 Denominator Weighted-average common shares outstanding — basic 1,806 — 1,806 1,807 51 1,815 Conversion of nonvoting shares to voting shares — — — 8 — — Common stock equivalent shares related to stock incentive plans 5 — 5 5 — 5 Weighted-average common shares outstanding — diluted (2) 1,811 — 1,811 1,820 51 1,820 Diluted earnings per share $ 1.26 $ — $ 1.26 $ 3.33 $ .37 $ 3.33 (1) Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units. (2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 9 million and 13 million for the three and nine months ended September 30, 2025, respectively. - 63 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) As of September 30, 2024, the Company had voting and nonvoting common stock outstanding. The computations of basic and diluted EPS for the two classes for the three and nine months ended September 30, 2024 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2024 2024 Common Stock Nonvoting Common Stock Common Stock Nonvoting Common Stock Basic earnings per share: Numerator Net income $ 1,369 $ 39 $ 3,988 $ 114 Preferred stock dividends and other (1) ( 106 ) ( 3 ) ( 332 ) ( 9 ) Net income available to common stockholders $ 1,263 $ 36 $ 3,656 $ 105 Denominator Weighted-average common shares outstanding — basic 1,778 51 1,776 51 Basic earnings per share $ .71 $ .71 $ 2.06 $ 2.06 Diluted earnings per share: Numerator Net income available to common stockholders $ 1,263 $ 36 $ 3,656 $ 105 Reallocation of net income available to common stockholders as a result of conversion of nonvoting to voting shares 36 — 105 — Allocation of net income available to common stockholders: $ 1,299 $ 36 $ 3,761 $ 105 Denominator Weighted-average common shares outstanding — basic 1,778 51 1,776 51 Conversion of nonvoting shares to voting shares 51 — 51 — Common stock equivalent shares related to stock incentive plans 5 — 6 — Weighted-average common shares outstanding — diluted (2) 1,834 51 1,833 51 Diluted earnings per share $ .71 $ .71 $ 2.05 $ 2.05 (1) Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units. (2) Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 14 million and 18 million for the three and nine months ended September 30, 2024, respectively. - 64 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) 17. Regulatory Requirements At September 30, 2025, CSC and its banking subsidiaries met all of their respective capital requirements. Regulatory capital and ratios for CSC (consolidated) and CSB are as follows: Actual Minimum to be Well Capitalized Minimum Capital Requirement September 30, 2025 Amount Ratio Amount Ratio Amount Ratio (1) CSC Common Equity Tier 1 Risk-Based Capital $ 36,728 32.8 % N/A $ 5,035 4.5 % Tier 1 Risk-Based Capital 43,491 38.9 % N/A 6,714 6.0 % Total Risk-Based Capital 43,552 38.9 % N/A 8,952 8.0 % Tier 1 Leverage 43,491 9.7 % N/A 17,884 4.0 % Supplementary Leverage Ratio 43,491 9.7 % N/A 13,513 3.0 % CSB Common Equity Tier 1 Risk-Based Capital $ 31,514 40.8 % $ 5,019 6.5 % $ 3,475 4.5 % Tier 1 Risk-Based Capital 31,514 40.8 % 6,177 8.0 % 4,633 6.0 % Total Risk-Based Capital 31,537 40.8 % 7,722 10.0 % 6,177 8.0 % Tier 1 Leverage 31,514 12.4 % 12,694 5.0 % 10,155 4.0 % Supplementary Leverage Ratio 31,514 12.3 % N/A 7,684 3.0 % December 31, 2024 CSC Common Equity Tier 1 Risk-Based Capital $ 35,995 31.7 % N/A $ 5,114 4.5 % Tier 1 Risk-Based Capital 45,186 39.8 % N/A 6,819 6.0 % Total Risk-Based Capital 45,218 39.8 % N/A 9,092 8.0 % Tier 1 Leverage 45,186 9.9 % N/A 18,325 4.0 % Supplementary Leverage Ratio 45,186 9.8 % N/A 13,836 3.0 % CSB Common Equity Tier 1 Risk-Based Capital $ 32,584 41.7 % $ 5,079 6.5 % $ 3,516 4.5 % Tier 1 Risk-Based Capital 32,584 41.7 % 6,251 8.0 % 4,688 6.0 % Total Risk-Based Capital 32,606 41.7 % 7,813 10.0 % 6,251 8.0 % Tier 1 Leverage 32,584 11.6 % 14,035 5.0 % 11,228 4.0 % Supplementary Leverage Ratio 32,584 11.5 % N/A 8,479 3.0 % (1) Under risk-based capital rules, CSC and CSB are also required to maintain additional capital buffers above the regulatory minimum risk-based capital ratios. As of September 30, 2025, CSC was subject to a stress capital buffer of 2.5%. In addition, CSB is required to maintain a capital conservation buffer of 2.5%. CSC and CSB are also required to maintain a countercyclical capital buffer above the regulatory minimum risk-based capital ratios, which was zero for both periods presented. If a buffer falls below the minimum requirement, CSC and CSB would be subject to increasingly strict limits on capital distributions and discretionary bonus payments to executive officers. At September 30, 2025, the minimum capital ratio requirements for both CSC and CSB, inclusive of their respective buffers, were 7.0%, 8.5%, and 10.5% for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital, respectively. N/A Not applicable. Based on its regulatory capital ratios at September 30, 2025, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules. There are no conditions or events since September 30, 2025 that management believes have changed CSB’s capital category. CSC’s other banking subsidiaries are Charles Schwab Premier Bank, SSB (CSPB) and Charles Schwab Trust Bank (Trust Bank). CSPB is a Texas-chartered state savings bank that provides banking and custody services, and Trust Bank is a Nevada state-chartered savings bank that provides trust and custody services. At September 30, 2025, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities, and the entities held total assets of $ 25.1 billion and $ 9.7 billion, respectively. Based on their regulatory capital ratios, at September 30, 2025, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules. - 65 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Net capital and net capital requirements for CS&Co are as follows: September 30, 2025 December 31, 2024 CS&Co Net capital $ 11,977 $ 11,112 Minimum dollar requirement 0.250 0.250 2% of aggregate debit balances 2,567 2,049 Net capital in excess of required net capital 9,410 9,063 Pursuant to the SEC’s Customer Protection Rule and other applicable regulations, Schwab had cash and investments segregated for the exclusive benefit of clients at September 30, 2025. The SEC’s Customer Protection Rule requires broker-dealers to segregate client fully-paid securities and cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts. Amounts included in cash and investments segregated and on deposit for regulatory purposes represent actual balances on deposit. Cash and cash equivalents included in cash and investments segregated and on deposit for regulatory purposes are presented as part of Schwab’s cash balances in the condensed consolidated statements of cash flows. 18. Segment Information Schwab’s two reportable segments are Investor Services and Advisor Services. Schwab structures the operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent RIAs, independent retirement advisors, and recordkeepers. Revenues and expenses are attributed to the two segments based on which segment services the client. Schwab’s chief operating decision makers (CODMs) are the President and Chief Executive Officer, and the Managing Director and Chief Financial Officer. The accounting policies of the segments are the same as those described in Item 8 – Note 2 in the 2024 Form 10-K. For the computation of its segment information, Schwab utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues. The CODMs evaluate the performance of the segments on a pre-tax basis and use income before taxes on income to allocate resources, including employees and capital, to the segments during the annual budgeting process. The CODMs consider budget-to-actual variances on a monthly basis when making decisions about allocating resources to the segments throughout the year. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are no revenues from transactions between the segments. - 66 - THE CHARLES SCHWAB CORPORATION Notes to Condensed Consolidated Financial Statements (Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted) (Unaudited) Financial information for the segments is presented in the following table (1) : Investor Services Advisor Services Total Three Months Ended September 30, 2025 2024 2025 2024 2025 2024 Net Revenues Net interest revenue $ 2,424 $ 1,777 $ 626 $ 445 $ 3,050 $ 2,222 Asset management and administration fees 1,221 1,074 452 402 1,673 1,476 Trading revenue 906 710 89 87 995 797 Bank deposit account fees 196 118 51 34 247 152 Other 136 169 34 31 170 200 Total net revenues 4,883 3,848 1,252 999 6,135 4,847 Expenses Excluding Interest Compensation and benefits 1,284 1,169 369 353 1,653 1,522 Professional services 235 202 58 54 293 256 Occupancy and equipment 220 211 60 60 280 271 Advertising and market development 60 59 41 42 101 101 Communications 105 103 44 44 149 147 Depreciation and amortization 161 175 51 56 212 231 Amortization of acquired intangible assets 104 105 23 25 127 130 Regulatory fees and assessments 51 70 8 18 59 88 Other 207 221 33 38 240 259 Total expenses excluding interest 2,427 2,315 687 690 3,114 3,005 Income before taxes on income $ 2,456 $ 1,533 $ 565 $ 309 $ 3,021 $ 1,842 Nine Months Ended September 30, Net Revenues Net interest revenue $ 6,826 $ 5,279 $ 1,752 $ 1,334 $ 8,578 $ 6,613 Asset management and administration fees 3,479 3,050 1,294 1,157 4,773 4,207 Trading revenue 2,563 2,115 292 276 2,855 2,391 Bank deposit account fees 581 378 158 110 739 488 Other 514 479 126 99 640 578 Total net revenues 13,963 11,301 3,622 2,976 17,585 14,277 Expenses Excluding Interest Compensation and benefits 3,760 3,480 1,101 1,030 4,861 4,510 Professional services 680 602 173 154 853 756 Occupancy and equipment 647 610 177 174 824 784 Advertising and market development 194 191 111 105 305 296 Communications 338 321 140 139 478 460 Depreciation and amortization 488 546 156 146 644 692 Amortization of acquired intangible assets 314 339 71 50 385 389 Regulatory fees and assessments 183 240 42 69 225 309 Other 618 583 113 111 731 694 Total expenses excluding interest 7,222 6,912 2,084 1,978 9,306 8,890 Income before taxes on income $ 6,741 $ 4,389 $ 1,538 $ 998 $ 8,279 $ 5,387 (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 third quarter and nine months ended September 30, 2025, and prior-year amounts have been recast to reflect this new basis of segmentation. 19. 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. - 67 - THE CHARLES SCHWAB CORPORATION