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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-26 · 411 added, 486 removed, 975 unchanged (48% of the section changed)

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In addition to historical information, this Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimate,” “appear,” “could,” “would,” “expand,” “aim,” “maintain,” “continue,” “seek,” and other similar expressions.

In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect management’s beliefs, objectives, and expectations as of the date hereof, are estimates based on the best judgment of Schwab’s senior management.

Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “prioritize,” “will,” “may,” “estimate,” “appear,” “could,” “would,” “expand,” “aim,” “maintain,” “continue,” “seek,” and other similar expressions.

In addition, any statements that refer to expectations, strategy, objectives, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect management’s expectations and objectives as of the date hereof, are based on the best judgment of Schwab’s senior management.

These statements relate to, among other things:

• Maximizing our market valuation and stockholder returns over time;

our belief that developing trusted relationships will translate into more client assets which drives revenue and, along with expense discipline and thoughtful capital management, generates earnings growth and builds stockholder value (see Business Strategy and Competitive Environment, and Products and Services in Part I – Item 1);

and our belief that developing trusted relationships will translate into more client assets which drives revenue and, along with expense discipline and thoughtful capital management, generates earnings growth and builds stockholder value (see Business Strategy and Competitive Environment, and Products and Services in Part I – Item 1);

• Industry and competitive trends including artificial intelligence, digital assets, private company securities and other alternative investments;

• The Company’s plan to provide increased access for clients to trade in digital assets including select cryptocurrencies (see Products and Services in Part I – Item 1);

• The acquisition and integration of Forge and its private markets capabilities (see Business Acquisition in Part I – Item 1;

Overview in Part II – Item 7, and Results of Operations in Part II – Item 7);

• Capital expenditures and expense management (see Results of Operations in Overview and Results of Operations – Total Expenses Excluding Interest in Part II – Item 7);

• Net interest revenue, the adjustment of rates paid on client-related liabilities, and client cash realignment activity (see Results of Operations – Net Interest Revenue in Part II – Item 7);

• Utilization of bank supplemental funding and expectations for repayment of outstanding balances (see Results of Operations in Part II – Item 7, and Liquidity Risk in Part II – Item 7);

• Net interest revenue, client cash allocation behavior, and adjustment of rates paid on client-related liabilities (see Results of Operations – Net Interest Revenue in Part II – Item 7);

• Wholesale funding and funding strategy (see Results of Operations in Part II – Item 7, and Liquidity Risk in Part II – Item 7);

• Management of interest rate risk;

modeling and assumptions, the impact of changes in interest rates on net interest margin and revenue, bank deposit account fee revenue, economic value of equity, and liability and asset duration (see Risk Management in Part II – Item 7);

modeling and assumptions, the impact of changes in interest rates on net interest margin and revenue, bank deposit account fee revenue, economic value of equity (EVE), and liability and asset duration (see Risk Management in Part II – Item 7);

• Sources and uses of liquidity (see Liquidity Risk in Part II – Item 7);

• Capital management;

potential migration of IDA balances to our balance sheet;

capital accretion;

expectations about capital requirements, including AOCI;

long-term operating objective;

and uses of capital and return of excess capital to stockholders, including dividends and repurchases (see Capital Management – Regulatory Capital Requirements in Part II – Item 7;

and uses of capital and return of excess capital to stockholders (see Capital Management in Part II – Item 7;

and Commitments and Contingencies in Part II – Item 8 – Note 15);

• The expected impact of proposed and final rules (see Current Regulatory and Other Developments in Part II – Item 7);

• The expected impact of proposed and final rules (see Current Regulatory and Other Developments in Part II – Item 7 and Regulation in Part I – Item 1);

• The expected impact of new accounting standards not yet adopted (see Summary of Significant Accounting Policies in Part II – Item 8 – Note 2);

• The likelihood of indemnification and guarantee payment obligations and clients failing to fulfill contractual obligations (see Commitments and Contingencies in Part II – Item 8 – Note 15, and Financial Instruments Subject to Off-Balance Sheet Credit Risk – Client Trade Settlement in Note 18);

• The outcome and impact of legal proceedings and regulatory matters (see Commitments and Contingencies in Part II – Item 8 – Note 15, and Legal Proceedings in Part I – Item 3).

Achievement of the expressed beliefs, objectives and expectations described in these statements is subject to certain risks and uncertainties that could cause actual results to differ materially from the expressed beliefs, objectives, and expectations.

Achievement of these expectations and objectives is subject to certain risks and uncertainties that could cause actual results to differ materially.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or, in the case of documents incorporated by reference, as of the date of those documents.

Important factors that may cause actual results to differ include, but are not limited to:

• General market conditions, including the level of interest rates, equity market valuations and volatility;

• General economic and market conditions, including the level of interest rates, equity market valuations and volatility;

• The impact of new and emerging technologies;

• Our ability to attract and retain clients, develop trusted relationships, and grow client assets;

• Client use of our advisory and lending solutions and other products and services;

THE CHARLES SCHWAB CORPORATION

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

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

• The level of client assets, including cash balances;

• Client cash allocations and sensitivity to deposit rates;

• Competitive pressure on pricing, including deposit rates;

• The level and mix of client trading activity, including daily average trades, margin balances, and balance sheet cash;

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• Capital and liquidity needs and management;

THE CHARLES SCHWAB CORPORATION

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

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

• Our ability to manage expenses;

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

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

• Our ability to monetize client assets;

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• Interest-earning asset mix and growth;

• Our ability to access and use supplemental funding sources;

• Our ability to access funding sources;

• Prepayment levels for mortgage-backed securities;

• Migrations of bank deposit account balances (BDA balances);

• Balance sheet positioning relative to changes in interest rates;

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Accumulated Other Comprehensive Income (AOCI):

A component of stockholders’ equity which primarily includes unrealized gains and losses on AFS securities and securities transferred from the AFS category to the held to maturity (HTM) category.

A component of stockholders’ equity which primarily includes unrealized gains and losses on available for sale (AFS) securities and securities transferred from the AFS category to the held to maturity (HTM) category.

Asset-backed securities:

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Calculated as the value, at the end of the reporting period, of all money market fund balances, bank deposits excluding brokered CDs issued by CSB, Schwab One ® balances, BDA balances, and certain cash equivalents divided by client assets.

Common Equity Tier 1 (CET1) Capital:

The sum of common stock and related surplus net of treasury stock, retained earnings, AOCI, and qualifying minority interests, less applicable regulatory adjustments and deductions.

As a Category III banking organization, CSC has elected to exclude most components of AOCI from CET1 Capital.

THE CHARLES SCHWAB CORPORATION

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

Common Equity Tier 1 (CET1) Capital:

The sum of common stock and related surplus net of treasury stock, retained earnings, AOCI, and qualifying minority interests, less applicable regulatory adjustments and deductions.

As a Category III banking organization, CSC has elected to exclude most components of AOCI from CET1 Capital.

Common Equity Tier 1 Risk-Based Capital Ratio:

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Core net new client assets:

Net new client assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion ($25 billion beginning in 2025)) relating to a specific client, and activity from off-platform brokered CDs issued by CSB.

Net new client assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $25 billion ($10 billion prior to 2025)) relating to a specific client, and activity from off-platform brokered CDs issued by CSB.

These flows may span multiple reporting periods.

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Interest-bearing liabilities:

Primarily includes bank deposits, payables to brokerage clients, payables to brokers, dealers, and clearing organizations, Federal Home Loan Bank borrowings, other short-term borrowings, and long-term debt on which Schwab pays interest.

Primarily includes bank deposits, payables to brokerage clients, payables to brokers, dealers, and clearing organizations, Federal Home Loan Bank (FHLB) borrowings, other short-term borrowings, and long-term debt on which Schwab pays interest.

Interest-earning assets:

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Investment grade:

Defined as a rating equivalent to a Moody’s Investors Service (Moody’s) rating of “Baa3” or higher, or a Standard & Poor’s Rating Group (Standard & Poor’s) or Fitch Ratings, Ltd (Fitch) rating of “BBB-” or higher.

Defined as a rating equivalent to a Moody’s Investors Service (Moody’s) rating of “Baa3” or higher, or a Standard & Poor’s Rating Group (Standard & Poor’s) or Fitch Ratings, Inc.

(Fitch) rating of “BBB-” or higher.

Liquidity Coverage Ratio (LCR):

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The borrowed money can be used to purchase additional securities or to meet short-term financial needs.

THE CHARLES SCHWAB CORPORATION

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

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

Master netting arrangement:

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A type of asset-backed security that is secured by a mortgage or group of mortgages.

THE CHARLES SCHWAB CORPORATION

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

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

Net interest margin:

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New brokerage accounts (in thousands) 13 % 4,692 4,170 3,806

10% 4,170 3,806 4,044

Active brokerage accounts (in thousands, at year end) 6 % 38,506 36,456 34,838

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Client cash as a percentage of client assets (at year end) 9.7 % 10.1 % 10.5 %

10.1 % 10.5 % 12.2 %

Company Financial Information and Metrics

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Adjusted total expenses $ 11,950 $ 11,269 $ 11,029

$ 11,269 $ 11,029 $ 10,386

Adjusted diluted EPS $ 4.87 $ 3.25 $ 3.13

Return on tangible common equity 38 % 35 % 54 %

(1) 2024 includes net outflows of $14.6 billion from off-platform brokered CDs issued by CSB and an inflow of $10.3 billion from a mutual fund clearing services client and an outflow of $1.0 billion from an international relationship.

Adjusted tier 1 leverage ratio (consolidated)

7.1 % 6.8 % 4.9 %

(1) 2025 includes net outflows of $20.8 billion from off-platform brokered CDs issued by CSB.

2024 includes net outflows of $14.6 billion from off-platform brokered CDs issued by CSB, an inflow of $10.3 billion from a mutual fund clearing services client, and an outflow of $1.0 billion from an international relationship.

2023 includes net inflows of $32.5 billion from off-platform brokered CDs issued by CSB and $12.0 billion from a mutual fund clearing services client and outflows of $13.0 billion from an international relationship.

2022 includes outflows of $20.8 billion from certain mutual fund clearing services clients.

(2) Beginning in 2023, adjustments made to GAAP financial measures also include restructuring costs.

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

(3) Adjusted total expenses is a non-GAAP financial measure adjusting total expenses excluding interest.

See Non-GAAP Financial Measures.

THE CHARLES SCHWAB CORPORATION

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2025 Compared to 2024

Through an evolving macroeconomic landscape in 2024, Schwab continued its “Through Clients’ Eyes” strategy, striving to meet the needs of our diverse client base, while driving growth across multiple fronts and successfully completing the integration of Ameritrade.

Guided by our “Through Clients’ Eyes” strategy, and with a generally supportive market and engaged clients, Schwab delivered growth in 2025 across multiple client metrics and in our financial results, and we continued to innovate to help our clients achieve their financial goals.

Equity markets finished 2025 with significant full-year gains, as the S&P 500 ® rose 16% in 2025, and the NASDAQ Composite ® rose 20% during the year.

The Federal Reserve reduced the target federal funds rate by a total of 75 basis points in the third and fourth quarters.

With equity market gains and strong client asset gathering, Schwab’s total client assets reached $11.90 trillion at December 31, 2025, up 18% on the year.

Core net new assets for 2025 totaled $519.4 billion, increasing 42% from the prior year, and resulting in an annualized organic growth rate of 5.1%.

In 2025, clients opened 4.7 million new brokerage accounts, an increase of 13% from the prior year, and active brokerage accounts totaled 38.5 million as of December 31, 2025, up 6% from year-end 2024.

Our clients were highly engaged with the markets in 2025;

clients’ DATs were 7.7 million for full-year 2025 and 8.3 million in the fourth quarter, increasing 31% over both the prior year-to-date and fourth-quarter periods.

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

Net income reached $8.9 billion in 2025, rising 49% from 2024, and diluted EPS was $4.65, an increase of 56% over the prior year.

Adjusted diluted EPS (1) rose to $4.87 in 2025, higher by 50% from 2024.

Total net revenues increased 22% year-over-year to $23.9 billion in 2025.

Net interest revenue was $11.8 billion in 2025, up 28% from 2024, due primarily to lower interest expense from reductions in bank supplemental funding and lower rates on funding sources, as well as growth in margin and bank lending and higher segregated cash and investments, which more than offset lower yields on interest-earning assets due to lower market rates.

Asset management and administration fees totaled $6.5 billion in 2025, increasing 14% from 2024, due primarily to higher client asset balances, reflecting market appreciation, asset gathering, and growth in managed investing solutions and money market funds.

Trading revenue was $3.9 billion in 2025, rising 20% from 2024, due primarily to higher trading volume.

Bank deposit account fee revenue increased to $977 million in 2025, up 34% from the prior year, due primarily to higher net yields, partially offset by lower BDA balances.

Total expenses excluding interest were $12.5 billion in 2025, higher by 5% from 2024, and adjusted total expenses (1) were $12.0 billion in 2025, increasing 6% from the prior year.

These increases reflect ongoing investments to support growth of the business and enhance client-serving capabilities while driving incremental efficiencies across the Company.

The year-over-year changes in expenses were primarily attributable to higher compensation and benefits and higher professional services expense, due largely to growth in the business and volume-related costs, including higher incentive compensation driven by the Company’s financial performance, partially offset by lower regulatory fees and assessments due to lower FDIC assessments.

Return on average common stockholders’ equity was 21% in 2025, rising from 15% in 2024 as a result of higher net income, which more than offset higher average common stockholders’ equity.

Return on tangible common equity (1) (ROTCE) was 38% in 2025, up from 35% in 2024, as growth in adjusted net income available to common stockholders (1) more than offset growth in average common stockholders’ equity.

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

The improvement in average AOCI was due to lower unrealized losses on AFS investment securities and securities previously transferred from AFS to HTM, reflecting decreases in market interest rates and lower investment holdings in 2025.

Schwab supported strong client demand for margin and bank lending in 2025, while significantly reducing bank supplemental funding to within a range generally consistent with our diversified funding strategy.

Balance sheet assets totaled $491.0 billion as of December 31, 2025, higher by 2% from year-end 2024.

Principal and interest from our AFS and HTM securities portfolios along with normal client cash behavior supported reduction of bank supplemental funding, which has included brokered CDs, FHLB borrowings, and borrowings under repurchase agreements at our banks.

The Company reduced bank supplemental funding in 2025 by $44.8 billion, or 90%, to $5.1 billion at year-end 2025.

Client sweep cash trends improved in 2025, with bank sweep deposits and payables to brokerage clients increasing by a total of $36.6 billion, or 12%.

Client demand for margin loans increased significantly in 2025, with margin loans ending the year at $112.3 billion, up 34% from year-end 2024 and up 16% during the fourth quarter alone, supported by growth in bank and broker-dealer sweep cash, as well as wholesale funding.

The growth in margin lending in 2025 reflects strong client demand and engagement amid rising equity markets and long/short strategies implemented by RIA clients.

Bank loans totaled $58.0 billion at year-end 2025, increasing 28% during the year due primarily to growth of PALs and First Mortgages, which ended the year at $26.6 billion and $30.5 billion, respectively.

THE CHARLES SCHWAB CORPORATION

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

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

The Company returned meaningful excess capital in 2025.

Total common stock repurchased during the year amounted to $7.3 billion.

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

Inclusive of these capital actions and organic capital generation from net income, the Company’s consolidated Tier 1 Leverage Ratio was 9.3% at year-end 2025, down from 9.9% at December 31, 2024.

Our consolidated adjusted Tier 1 Leverage Ratio (1) increased to 7.1% at December 31, 2025 from 6.8% at the prior year-end, driven by net income and improvement in AOCI in 2025.

Planned Acquisition of Forge

On November 6, 2025, Schwab announced that it had entered into a definitive agreement to acquire 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 company investment capabilities will enhance Schwab’s ability to meet the evolving needs of investors across our growing client base.

The transaction was approved by Forge’s stockholders in January 2026, and is expected to close in March 2026, subject to customary closing conditions, including regulatory approvals.

2024 Compared to 2023

Amid easing inflation, the Federal Reserve began in September to cut interest rates for the first time in over four years, reducing the federal funds overnight rate by a total of 100 basis points in the third and fourth quarters.

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Total expenses excluding interest were $11.9 billion in 2024, down 4% from 2023.

This decrease reflected lower restructuring costs, lower acquisition and integration-related costs, and lower regulatory fees and assessments due primarily to a $172 million FDIC special assessment recognized in the fourth quarter of 2023 (see Current Regulatory and Other Developments).

These lower expenses were partially offset by higher incentive compensation, higher depreciation and amortization due to continued investment to support growth of the business, and higher other expense.

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Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs totaled $645 million in 2024, down 55% from 2023, as substantially all of the Company’s costs related to its restructuring were incurred in 2023, and spending for the Ameritrade integration decreased in 2024 as we completed the final integration activities.

Return on average common stockholders’ equity was 15% in 2024, down from 16% in 2023, and return on tangible common equity (1) (ROTCE) was 35% in 2024, down from 54% in 2023.

THE CHARLES SCHWAB CORPORATION

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

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

Return on average common stockholders’ equity was 15% in 2024, down from 16% in 2023, and ROTCE (1) was 35% in 2024, down from 54% in 2023.

These changes reflect the benefit of higher net income in 2024 offset by higher average common stockholders’ equity.

Average common stockholders’ equity was higher year-over-year due to higher retained earnings as well as higher average AOCI.

The increase in average AOCI was driven by lower unrealized losses on our AFS investment securities portfolio and securities transferred in 2022 from AFS to HTM (see Item 8 – Note 21).

The increase in average AOCI was driven by lower unrealized losses on our AFS investment securities portfolio and securities transferred in 2022 from AFS to HTM.

Employing our diligent approach to managing the balance sheet, Schwab supported client-driven growth in margin and bank lending, while reducing our bank supplemental funding in 2024.

Total balance sheet assets decreased 3% during the year, though margin lending grew to $83.8 billion at year-end 2024, up 34%, and bank loans increased to $45.2 billion, rising 12% during the year.

Principal and interest from our AFS and HTM securities portfolios, along with deceleration of client cash realignment from sweep products to higher-yielding investment solutions, supported a reduction in bank supplemental funding, which includes brokered CDs, FHLB borrowings, and borrowings under repurchase agreements at our banks.

Total bank supplemental funding ended 2024 at $49.9 billion, down $29.7 billion, or 37%, from year-end 2023, and down 49% from peak

THE CHARLES SCHWAB CORPORATION

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

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

levels in May 2023.

Supported by strength of net income, our consolidated Tier 1 Leverage Ratio increased to 9.9% as of December 31, 2024, and our consolidated adjusted Tier 1 Leverage Ratio (1) , which includes AOCI in the ratio, rose to 6.8%, ending the year within our long-term operating objective of 6.75% - 7.00%.

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

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

2023 Compared to 2022

Through an uneven environment in 2023, with shifting views on the trajectory of the U.S.

economy, persistent geopolitical unrest, and turmoil beginning early in the year within the banking sector, our “no trade-offs” value proposition continued to resonate with investors.

The Federal Reserve raised the Federal Funds rate four times in the first three quarters of 2023 for a total of 100 basis points before holding rates unchanged from July through the end of 2023.

Although equity markets were volatile during 2023, ultimate returns were strong with the S&P 500 ® rising 24% and the NASDAQ Composite ® increasing 43%.

Investor sentiment was also volatile throughout 2023;

strongly bearish in the first quarter before recovering in the second, then declining again in the third quarter.

Investor sentiment recovered significantly in the fourth quarter to end 2023 with a solid bullish viewpoint.

Despite this mixed sentiment, our clients remained engaged with the markets and with Schwab.

Clients entrusted us with $305.7 billion in core net new assets in 2023.

Total client assets reached $8.52 trillion as of December 31, 2023, rising 21% from year-end 2022 as a result of asset gathering and market gains, partially offset by some expected deal-related attrition from clients originating at Ameritrade.

Trading volume declined somewhat from the prior year, as DATs were 5.4 million in 2023, down 9% from 2022.

Clients opened 3.8 million new brokerage accounts in 2023, bringing active brokerage accounts to 34.8 million at year-end, up 3% year-over-year.

Clients sought to take advantage of higher market interest rates in 2023, and we saw significant client cash reallocation from our sweep products into higher-yielding alternatives offered by Schwab.

While bank sweep deposits and payables to brokerage clients decreased by a total of $126.1 billion during 2023, client assets invested in Schwab’s proprietary money market funds and fixed income securities increased by a total of $383.8 billion.

Schwab’s financial performance during 2023 reflected the challenges of navigating a market environment shaped by the Federal Reserve’s interest rate tightening policy and the follow-on effects stemming from the regional banking crisis beginning in March 2023.

Schwab’s net income totaled $5.1 billion in 2023 and diluted EPS was $2.54, down 29% and 27%, respectively, from the prior year.

Adjusted diluted EPS (1) was $3.13 in 2023, down 20% from $3.90 in 2022.

Total net revenues were $18.8 billion in 2023, down 9% from the prior year as client cash realignment activity impacted our net interest revenue.

Net interest revenue was $9.4 billion in 2023, down 12% from the prior year, as the benefits of rising rates were more than offset by increased utilization of higher-cost supplemental funding and lower interest-earning assets.

Asset management and administration fees totaled $4.8 billion in 2023, rising 13% from 2022, primarily as a result of growth in money market funds, as well as improvement in equity markets and growth in our other proprietary fund products, partially offset by lower balances of certain third-party funds.

Trading revenue was $3.2 billion in 2023, down 12% from 2022, due primarily to mix of client trading activity and overall lower trading volume.

Bank deposit account fee revenue was $705 million in 2023, down 50% from the prior year due to lower average BDA balances and lower net yields, as well as $97 million in one-time breakage fees related to ending our arrangements with certain third-party banks in the first quarter of 2023.

BDA balances totaled $97.5 billion at December 31, 2023, down 23% from year-end 2022 due primarily to client cash allocation decisions.

Total expenses excluding interest were $12.5 billion in 2023, increasing 10% from 2022.

This increase was due primarily to restructuring charges incurred in the second half of 2023, higher regulatory fees and assessments due primarily to an increase in FDIC assessments including the recognition of a $172 million special assessment in the fourth quarter, as well as higher expenses for compensation and benefits and depreciation and amortization, due primarily to growth in average headcount and investment in technology to support growth in our client base and the Ameritrade integration.

Adjusted total expenses (1) were $11.0 billion in 2023, higher by 6% from 2022.

Acquisition and integration-related costs were $401 million in 2023, up 2% from 2022, and amortization of acquired intangibles was $534 million, down 10% from 2022 as certain assets from the Ameritrade acquisition were fully amortized beginning in the fourth quarter of 2022.

Beginning in the third quarter of 2023, adjusted total expenses (1) also excludes restructuring costs, which totaled $495 million in 2023, related to efforts to achieve run-rate cost savings in preparation for post-integration of Ameritrade.

Return on average common stockholders’ equity was 16% for 2023, down from 18% in 2022.

Return on tangible common equity (1) (ROTCE) was 54% in 2023, up from 42% in 2022.

These changes primarily reflected lower average stockholders’

THE CHARLES SCHWAB CORPORATION

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

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

equity and lower net income in 2023.

Average stockholders’ equity was lower in 2023 due to a year-over-year decrease in average AOCI driven by unrealized losses on our AFS investment securities portfolio and securities transferred from AFS to HTM in 2022 (see Item 8 – Note 21).

Throughout 2023, the Company continued its diligent approach to balance sheet management and sought to prioritize flexibility.

During 2023, we issued $6.2 billion in Senior Notes to prepare for upcoming maturities as well as provide additional liquidity during the larger Ameritrade conversion weekends.

Total balance sheet assets decreased 11% from year-end 2022 to $493.2 billion at December 31, 2023, due primarily to client cash realignment amid the higher interest rate environment.

To assist in facilitating these client cash movements from sweep products to high-yielding cash and fixed income alternatives, the Company utilized bank supplemental funding sources, including FHLB borrowings and issuances of brokered CDs.

As realignment activity significantly decreased in the second half of the year, by year-end 2023, we reduced the total outstanding balance of such supplemental sources by approximately 18% from the peak balances reached in May 2023.

Driven by a combination of the Company’s net income and also a smaller balance sheet in 2023, our consolidated Tier 1 Leverage Ratio increased to 8.5% as of year-end 2023.

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

Total bank supplemental funding ended 2024 at $49.9 billion, down $29.7 billion, or 37%, from year-end 2023, and down 49% from peak levels in May 2023.

Supported by strength of net income, our consolidated Tier 1 Leverage Ratio increased to 9.9% as of December 31, 2024, and our consolidated adjusted Tier 1 Leverage Ratio (1) rose to 6.8%, ending the year within our long-term operating objective of 6.75% - 7.00%.

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

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

Integration of Ameritrade

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

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

Integration of Ameritrade and Other Restructuring

The Company’s integration of Ameritrade was completed as of December 31, 2024.

In connection with these transitions, we experienced some expected attrition of client assets from retail accounts and RIAs, though such attrition was below our initial estimates when we announced the acquisition.

The integration of Ameritrade is now complete.

Throughout the integration, the Company incurred total acquisition and integration-related costs and capital expenditures of approximately $2.5 billion.

Acquisition and integration-related costs, which are inclusive of related exit costs, totaled $117 million, $401 million, and $392 million in 2024, 2023, and 2022, respectively.

Over the course of the integration, we realized annualized run-rate cost synergies of approximately $2.0 billion, with anticipated full-year synergy realization beginning in 2025.

See also Results of Operations – Total Expenses Excluding Interest, Non-GAAP Financial Measures, and Item 8 – Note 16.

In addition to cost synergies directly related to the integration of Ameritrade, the Company began taking incremental actions in 2023 to streamline its operations to prepare for post-integration, including through position eliminations and decreasing its real estate footprint.

Acquisition and integration-related costs, which are inclusive of related exit costs, totaled $117 million and $401 million in 2024 and 2023, respectively.

Over the course of the integration, we realized annualized run-rate cost synergies of approximately $2.0 billion.

In addition to cost synergies directly related to the integration of Ameritrade, the Company took incremental actions in 2023 and 2024 to streamline its operations to prepare for post-integration, including through position eliminations and decreasing its real estate footprint.

Through these actions, the Company has realized approximately $500 million of incremental run-rate cost savings in addition to integration synergies.

In order to achieve these cost savings, the Company incurred total exit and related costs, primarily related to employee compensation and benefits and facility exit costs, of approximately $500 million.

Actions under the plan have been completed as of December 31, 2024.

Refer to Results of Operations – Total Expenses Excluding Interest, Non-GAAP Financial Measures, and Item 8 – Note 16 for additional information.

Subsequent Events

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

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

Subsequent to the completion of the secondary offering, the Company repurchased directly from TD Group US Holdings LLC 19.2 million shares of nonvoting common stock, which automatically converted into common stock, for an aggregate repurchase of $1.5 billion.

The repurchase was completed under CSC’s 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.

See Item 8 – Note 28 for additional information.

THE CHARLES SCHWAB CORPORATION

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

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

Substantially all of these costs were recognized in 2023 and actions under the plan were completed as of December 31, 2024.

CURRENT REGULATORY AND OTHER DEVELOPMENTS

In September 2024, the SEC adopted amendments to Rules 610 and 612 of Regulation National Market System (NMS) to (i) establish an additional minimum price increment, or “tick size,” for the quoting and trading of certain NMS stocks, (ii) reduce the exchange access fee caps, and (iii) require transparency of odd-lots.

In March 2024, the SEC adopted amendments to Rule 605 of Regulation NMS requiring enhanced disclosures of order execution quality for large broker-dealers that handle retail orders.

We do not expect the new rules to have a material impact on the Company’s business, financial condition, or results of operations.

The following two related equity market structure rule proposals released in December 2022 by the SEC remain pending:

• The “Order Competition Rule” would require that, before most individual investors’ orders could be executed internally by a trading center (like wholesaler market makers), those orders must first be exposed to a qualifying order-by-order auction in which both market makers and institutional investors can participate.

• “Regulation Best Execution” would establish an SEC-level best execution standard (in addition to the existing FINRA and MSRB best execution rules) for broker-dealers and require them to establish, maintain, and enforce written policies and procedures addressing how the broker-dealer will comply with the best execution standard and make routing or execution decisions for customer orders.

Regulation Best Execution would apply not only to equities, but to all securities.

The comment periods for the proposed rules ended on March 31, 2023.

While the impacts to Schwab of the proposed rules cannot be fully assessed until final rules are released, as proposed, the rules would have a significant impact to numerous aspects of critical equity market structure and the execution of orders for retail investors.

Among other impacts, the proposed rules would likely result in increased transaction costs for retail investors which could affect client investment and trading decisions, and would require substantial operational changes for financial intermediaries including the Company.

In July 2024, the FDIC issued a notice of proposed rulemaking to amend the brokered deposits framework effective since 2021 (2021 framework) setting forth its conditions for when broker-dealers such as CS&Co that place deposits with depository institutions through brokerage sweep arrangements qualify for the primary purpose exception (PPE) from the definition of a deposit broker, and from attendant restrictions for brokered deposits, under Section 29 of the Federal Deposit Insurance Act.

Under the 2021 framework, a broker-dealer qualifies for the PPE if less than 25 percent of its customer assets under administration for a particular business line are placed at depository institutions.

Among other changes, the FDIC is proposing a new framework that would revert back to the 10 percent threshold it applied to broker-dealers prior to 2021.

The proposed new framework, certain alternatives, and other amendments described in the notice were subject to a public comment period that ended on November 21, 2024.

The impacts to Schwab from any ultimate changes will depend on further clarification of definitions and requirements in any final rule.

On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued between March 2022 and November 2023, which the Company had been evaluating.

The withdrawn proposals included the December 2022 equity market structure rule proposals, “Order Competition Rule” and “Regulation Best Execution”.

On March 3, 2025, the FDIC also withdrew certain notices of proposed rulemaking issued in 2023 and 2024 that the Company had been evaluating, including the July 2024 proposal related to the brokered deposits framework.

In April 2024, the U.S.

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The rule was scheduled to take effect September 23, 2024, with a one-year transition period for certain PTE provisions.

On July 25 and 26, 2024, in two separate industry lawsuits seeking to vacate the rule, federal district court judges stayed effectiveness of the rule pending resolution of litigation.

In November 2023, the FDIC approved a final special assessment to recover losses incurred by the Deposit Insurance Fund (DIF) to protect uninsured depositors due to the March 2023 closures of two banks, which was subject to potential extension and a potential one-time final special assessment for any shortfall in the DIF.

The pre-tax impact of the final rule’s initial assessment to the Company was $172 million, which was tax deductible and was recognized in earnings in the fourth quarter of 2023.

In late February 2024, the FDIC notified banks, including the Company’s banking subsidiaries, that the estimated assessed losses to the DIF increased.

Accordingly, the Company recognized additional pre-tax charges totaling $30 million during 2024, which are tax deductible.

The Company paid its first amount on the special assessment in the second quarter of 2024 and expects the remaining collection period to be the next 18 months.

The FDIC has indicated that its special assessments and related collection period remain subject to further refinement.

In August 2023, the U.S.

federal banking agencies issued a proposed rulemaking on long-term debt requirements for certain large banking organizations.

Among other things, the proposed rule would require CSC to maintain outstanding minimum levels of eligible long-term debt, as defined by the proposed rule, issued externally.

The proposed rule would also require our banking subsidiaries to maintain outstanding minimum levels of eligible long-term debt, which our banking subsidiaries would

In July 2024, in two separate industry lawsuits seeking to vacate the rule, federal district court judges stayed effectiveness of the rule pending resolution of litigation.

The stay was appealed by the Department of Labor in late 2024, and in November 2025 the Department of Labor formally withdrew its appeal and the stay remains in place.

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

The Company recognized a charge of $172 million in 2023 for its

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

be required to issue internally to CSC.

The proposed rule would be phased-in over a three-year transition period.

estimated portion of this special assessment.

The FDIC has since provided updates to its estimated losses to recover.

The Company has revised its estimates accordingly, resulting in an additional charge of $30 million recognized in 2024 and a subsequent reduction of $32 million recognized in 2025.

In August 2023, the U.S.

federal banking agencies issued a proposed rulemaking on long-term debt requirements for certain large banking organizations.

Among other things, the proposed rule would require CSC and our banking subsidiaries to maintain outstanding minimum levels of eligible long-term debt.

The comment period for the proposed rule ended on January 16, 2024 and the rule proposal is subject to further modification.

2 unchanged sentences

federal banking agencies issued a notice of proposed rulemaking with amendments to the regulatory capital rules.

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

The comment period for the proposed rules ended on January 16, 2024.

The impact of the proposal would be significant to Schwab, as the proposed rules could increase regulatory capital requirements for consolidated CSC and our banking subsidiaries.

In anticipation of the rules being adopted, the Company’s capital management for consolidated CSC and our banking subsidiaries now incorporates measures that are inclusive of AOCI.

The Company’s capital management for consolidated CSC and our banking subsidiaries now incorporates measures that are inclusive of AOCI.

See Capital Management for additional information.

In November 2022, the SEC proposed a rule which, among other provisions, would have required substantial changes to the liquidity risk management programs for open-end mutual funds other than money market funds (funds), including implementation of “swing pricing” adjustments to net asset value (NAV) upon exceeding a 2% redemption threshold;

and a daily “hard close” on the acceptance of purchase and redemption orders for pricing at that day’s NAV.

In August 2024, the SEC adopted portions of the proposed rule but declined to adopt the requirements for swing pricing and a hard close.

We do not expect the rule as adopted to have a material impact to the Company’s business, financial condition, or results of operations.

RESULTS OF OPERATIONS

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Mutual funds, ETFs, and CTFs 14 % 3,665 15 % 3,221 16 % 2,563 13 %

26 % 3,221 16 % 2,563 13 % 2,055 10 %

Managed investing solutions 15 % 2,440 10 % 2,129 11 % 1,868 10 %

14 % 2,129 11 % 1,868 10 % 1,854 9 %

Other 10 % 401 2 % 366 2 % 325 2 %

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Order flow revenue

31 % 1,930 8 % 1,477 7 % 1,404 7 %

Principal transactions (1) % 194 1 % 196 1 % 225 1 %

Trading revenue 20 % 3,921 17 % 3,264 16 % 3,230 17 %

1 % 3,264 16 % 3,230 17 % 3,673 18 %

Bank deposit account fees 34 % 977 4 % 729 4 % 705 4 %

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Total net revenues 22 % $ 23,921 100 % $ 19,606 100 % $ 18,837 100 %

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

THE CHARLES SCHWAB CORPORATION

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

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

Net Interest Revenue

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cash and investments segregated;

margin loans, which constitute the majority of receivables from brokerage clients;

margin loans;

investment securities;

and bank loans.

Schwab’s interest-bearing liabilities are comprised of bank deposits, which include brokered CDs issued by CSB;

payables to brokerage clients;

payables to brokers, dealers, and clearing organizations;

FHLB borrowings, other short-term borrowings (e.g., commercial paper, repurchase agreements, other secured borrowings);

Schwab’s interest-bearing liabilities are comprised of bank deposits and payables to brokerage clients, which together are the Company’s primary funding source;

payables to brokers, dealers, and clearing organizations (e.g., securities lending, broker-dealer repurchase agreements);

FHLB borrowings;

other short-term borrowings (e.g., commercial paper, bank repurchase agreements, other secured borrowings);

and long-term debt.

Schwab deploys the funds from these sources into the assets outlined above.

Net interest revenue also includes amounts earned and expenses incurred on securities lending and borrowing activities conducted by our broker-dealer subsidiary using assets held in client brokerage accounts.

As Schwab builds its client base, we attract new client sweep cash, which is a primary driver of funding balance sheet growth.

We do not use short-term, wholesale borrowings to support our long-term investment activity, but may use such funding for short-term liquidity purposes or to provide temporary funding as we have in recent years.

Non-interest-bearing funding sources include stockholders’ equity, certain client cash balances, and other miscellaneous liabilities.

Revenue on interest-earning assets is affected by various factors, such as the composition of assets, prevailing interest rates and spreads at the time of origination or purchase, changes in interest rates on cash and cash equivalents, floating-rate securities and loans, and changes in prepayment levels for mortgage-backed and other asset-backed securities and loans.

Schwab deploys the funds from these sources into the aforementioned interest-earning assets.

THE CHARLES SCHWAB CORPORATION

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

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

loans, and changes in prepayment levels for mortgage-backed and other asset-backed securities and loans.

Schwab establishes the rates paid on client-related liabilities, and management expects that it will generally adjust the rates paid on these liabilities at some fraction of any movement in short-term rates.

Interest expense on long-term debt, FHLB borrowings, other short-term borrowings, and other funding sources is impacted by market interest rates at the time of borrowing and changes in interest rates on floating-rate liabilities.

See also Risk Management – Market Risk.

Interest rates increased significantly beginning late in the first quarter of 2022 through the third quarter of 2023.

Short-term rates were near zero until the Federal Reserve began an aggressive tightening cycle in March 2022, ultimately increasing the federal funds target overnight rate eleven times between March 2022 and July 2023 for a total increase of 525 basis points.

Schwab’s use and the financial impacts of the Company’s various funding sources are dependent on a number of market and client activity factors.

Net interest revenue also reflects the impacts of derivatives used to manage interest rate risk.

See also Risk Management – Market Risk and Item 8 – Note 16 for additional information.

The Federal Reserve maintained the upper bound of the target overnight rate at 4.50% for most of the first nine months of 2025 before reducing the rate by 25 basis points in the third quarter and an additional 50 basis points across two cuts in the fourth quarter of 2025.

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

Client demand for margin and bank lending was strong during 2025, reflecting positive equity market performance and client engagement, as margin loan balances rebounded following market volatility in late March and early April, increasing in the third quarter and through the end of 2025.

Margin loan balances ended the year at $112.3 billion, increasing 34% from year-end 2024.

Total bank loans rose to $58.0 billion at year-end 2025, higher by 28% from December 31, 2024, due primarily to growth in PALs and First Mortgages.

Cash activity during 2025 reflected normal client cash behavior, inclusive of organic growth, and engagement in equity markets.

Bank sweep deposits and payables to brokerage clients increased by a total of $36.6 billion, or 12% during 2025.

Principal and interest payments on AFS and HTM securities, as well as transfers of $6.7 billion of BDA balances to our balance sheet (see Results of Operations – Bank Deposit Account Fees and Item 8 – Note 15), supported paydowns in bank supplemental funding of $44.8 billion, or 90% during 2025.

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

Long-term rates increased throughout 2022 and 2023, generally at a slower pace, thus leading to an inverted yield curve.

Long-term rates continued to increase during 2024, primarily in the fourth quarter of 2024 while short-term rates declined, resulting in an upward sloping yield curve as of year-end 2024.

Average interest-earning assets decreased $45.6 billion in 2024 from 2023;

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Deceleration of client cash reallocation activity, along with principal and interest payments on the AFS and HTM securities portfolios, supported a reduction in bank supplemental funding of $14.9 billion, or 23%, during the fourth quarter and $29.7 billion, or 37%, for the full year ended December 31, 2024.

Schwab’s average interest-earning assets in 2023 were lower compared with 2022, primarily due to clients’ reallocation of cash from sweep products to higher-yielding investment solutions in the second half of 2022 and during 2023, which resulted primarily from the rapid increases to the federal funds overnight rate.

These changes in client cash allocations reduced average balances of bank deposits and payables to brokerage clients.

To support this client cash allocation activity, the Company utilized bank supplemental funding beginning in the fourth quarter of 2022 and throughout 2023, including drawing upon FHLB secured lending facilities, engaging with external financial institutions in repurchase agreements at its banking subsidiaries, and issuing brokered CDs.

The average pace of client cash allocation out of sweep products into higher-yielding investment solutions decreased significantly beginning in the second quarter of 2023, and, apart from an increase in August following the Federal Reserve’s July rate increase, continued to decline during the second half of 2023.

In the fourth quarter of 2023, the Company saw bank deposits and payables to brokerage clients increase by a total of $17.5 billion, or 5%, due in part to typical seasonal cash inflows near year-end.

THE CHARLES SCHWAB CORPORATION

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Receivables from brokerage clients (1)

87,300 5,700 6.44 % 70,811 5,420 7.53 % 61,914 4,793 7.64 %

Available for sale securities (2)

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organizations 18,236 701 3.79 % 8,522 372 4.30 % 4,477 147 3.23 %

8,522 372 4.30 % 4,477 147 3.23 % 5,884 48 0.81 %

Payables to brokerage clients (1)

Other short-term borrowings

94,884 244 0.26 % 72,776 272 0.37 % 66,842 271 0.41 %

Other short-term borrowings 7,020 324 4.60 % 9,146 504 5.51 % 7,144 375 5.25 %

Federal Home Loan Bank borrowings 7,682 356 4.57 % 23,102 1,245 5.32 % 34,821 1,810 5.14 %

23,102 1,245 5.32 % 34,821 1,810 5.14 % 2,274 106 4.59 %

Long-term debt 21,093 836 3.91 % 23,083 846 3.66 % 22,636 715 3.16 %

Total interest-bearing liabilities 387,003 3,646 0.94 % 392,841 6,391 1.62 % 442,425 6,681 1.51 %

392,841 6,391 1.62 % 442,425 6,681 1.51 % 553,584 1,546 0.28 %

Non-interest-bearing funding sources 37,230 32,576 28,640

32,576 28,640 40,188

Other interest expense (1)

1 unchanged sentence

Net interest revenue $ 11,750 2.74 % $ 9,144 2.12 % $ 9,427 1.98 %

(1) Beginning in the fourth quarter of 2025, average balances of client margin loans and short credits related to certain client long/short strategies from which the Company earns a fixed net yield are excluded from interest-earning assets and funding sources.

Average margin loans and average short credits related to these client strategies totaled $2.8 billion for the year ended December 31, 2025.

Interest revenue and expense related to these client strategies are presented in other interest revenue and other interest expense, respectively.

The amounts and average yields for 2025 have been reclassified and recalculated to reflect this change.

Prior-year amounts were not impacted by this change.

(2) Amounts have been calculated based on amortized cost.

Interest revenue on investment securities is presented net of related premium amortization.

(2) Average balance includes $37.4 billion, $36.0 billion, and $437 million of brokered CDs in 2024, 2023 and 2022, respectively.

(3) Beginning in 2024, payables to brokers, dealers, and clearing organizations is presented separately from non-interest-bearing funding sources and included in total interest-bearing liabilities.

This line item includes securities loaned and related interest expense.

Prior period amounts have been reclassified to reflect this change.

(3) Average balance includes $15.0 billion, $37.4 billion, and $36.0 billion of brokered CDs in 2025, 2024 and 2023, respectively.

Net interest revenue increased $2.6 billion, or 28%, in 2025 from 2024 primarily due to lower balances of bank supplemental funding, lower average rates paid on funding sources, growth in margin and bank lending, and increases in securities lending revenue, partially offset by lower yields on floating-rate assets due to lower market rates.

Average interest-earning assets for 2025 decreased slightly compared to 2024.

This decrease was primarily due to lower average balances in AFS and HTM securities, as cash inflows from investment securities were used to pay down bank supplemental funding, largely offset by higher balances of cash and investments segregated, growth in margin lending which was supported by higher payables to brokerage clients and payables to brokers, dealers, and clearing organizations, and increased bank lending.

Net interest margin increased to 2.74% in 2025, from 2.12% in 2024, as reduced balances of bank supplemental funding and lower rates paid on funding sources more than offset lower yields on floating-rate assets due to lower market interest rates.

With the paydowns of bank supplemental funding during 2025, the outstanding balance of $5.1 billion as of December 31, 2025 is within a range generally consistent with our diversified funding strategy.

See also Risk Management – Liquidity Risk and Item 8 – Notes 12, 13, and 17 for additional information on these and other funding sources.

Net interest revenue decreased $283 million, or 3%, in 2024 from 2023 primarily due to lower average interest-earning assets, higher average rates paid on most funding sources, and lower net interest revenue contributed from securities lending, partially offset by growth in margin and bank lending and lower bank supplemental funding.

2 unchanged sentences

The decreases in average interest-earning assets in 2024 were partially offset by growth in margin lending, which was supported by higher payables to brokerage clients and increased securities lending, and growth in bank loans.

Net interest margin increased to 2.12% in 2024, from 1.98% in 2023, as improved average yields on interest-earning assets offset higher rates paid across interest-bearing funding sources.

The Company’s average balances of bank supplemental funding were lower in 2024 compared to 2023, which helped contribute to a 14-basis-point year-over-year improvement in net interest margin in 2024.

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

The total outstanding balance of bank supplemental funding decreased by $14.9 billion and $29.7 billion during the fourth quarter and full year of 2024, respectively.

Our use and the financial impacts of such bank supplemental funding is dependent on several factors, including the volume and pace of clients’ cash allocation activity, which is driven primarily by changes in market interest rates, as well as asset gathering and the level of maturities and paydowns on our investment securities portfolios.

While client cash realignment activity has continued to decline from peak levels, uncertainty remains, including the path of market interest rates and client behavior, which could significantly impact our utilization of bank supplemental funding sources.

The impacts to net interest revenue of using bank supplemental funding sources also depend on the type of funding source used, levels of interest rates, and the use of proceeds.

The Company currently expects its outstanding balances of bank supplemental funding sources to decrease over time.

Certain balances outstanding at December 31, 2024 will require rollover into new borrowings, the amount and costs of which will depend on the above noted factors.

See also Risk

Net interest margin increased to

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Management – Liquidity Risk, Capital Management, Item 8 – Note 12, Note 13, and Note 18 for additional information on these and other funding sources.

Net interest revenue decreased $1.3 billion, or 12%, in 2023 from 2022 primarily due to increased utilization of higher-cost bank supplemental funding sources to support client cash allocations in the rising rate environment, and lower average interest-earning assets, which more than offset the benefits of higher average yields on interest-earning assets.

Net premium amortization of investment securities decreased to $830 million in 2023 from $1.4 billion in 2022 as a result of increases in market interest rates and a smaller investment securities portfolio.

Average interest-earning assets for 2023 were lower by 21% compared to 2022, which was primarily due to lower bank deposits and payables to brokerage clients as a result of clients allocating cash out of sweep products into higher-yielding investment solutions due to higher market interest rates.

Net interest margin increased to 1.98% in 2023, from 1.78% in 2022, as higher market interest rates improved yields on interest-earning assets, which more than offset the higher rates paid across interest-bearing funding sources.

2.12% in 2024, from 1.98% in 2023, as improved average yields on interest-earning assets offset higher rates paid across interest-bearing funding sources.

Asset Management and Administration Fees

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The fair values of client assets included in proprietary and third-party mutual funds, ETFs, and CTFs are based on quoted market prices and other observable market data.

We also earn asset management fees for managed investing solutions (formerly referred to as advice solutions), which include managed portfolios, specialized strategies, and customized investment advice.

We also earn asset management fees for managed investing solutions, which include managed portfolios, specialized strategies, and customized investment advice.

Other asset management and administration fees include various asset-based fees, such as trust fees, 401(k) recordkeeping fees, mutual fund clearing fees, and non-balance based service and transaction fees.

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Assets Revenue Average

Schwab money market funds before fee

waivers $ 539,113 $ 1,461 0.27 % $ 391,864 $ 1,034 0.26 % $ 179,791 $ 499 0.28 %

Fee waivers — — (57)

Schwab money market funds $ 652,798 $ 1,783 0.27 % $ 539,113 $ 1,461 0.27 % $ 391,864 $ 1,034 0.26 %

10 unchanged sentences

Total managed investing solutions $ 759,293 $ 2,440 0.32 % $ 653,824 $ 2,129 0.33 % $ 554,747 $ 1,868 0.34 %

$ 653,824 $ 2,129 0.33 % $ 554,747 $ 1,868 0.34 % $ 530,861 $ 1,854 0.35 %

Other balance-based fees (3)

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Total asset management and administration fees $ 6,506 $ 5,716 $ 4,756

(1) In 2023 and 2022, includes transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF funds.

(1) 2025 and 2023 include transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and other NTF funds.

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

1 unchanged sentence

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

Asset management and administration fees increased by $790 million, or 14%, in 2025 from 2024, due primarily to growth in Schwab money market funds and f ee-based managed investing solutions, as well as growth in Mutual Fund OneSource ® , and Schwab equity and bond funds, ETFs, and CTFs.

This growth was driven primarily by higher client asset balances, reflecting year-over-year equity market appreciation, the Company’s asset gathering, and net inflows into managed investing solutions.

Asset management and administration fees increased by $960 million, or 20%, in 2024 from 2023, primarily as a result of higher balances in Schwab money market funds as clients shifted their cash allocations to higher-yielding investment solutions.

The increase in asset management and administration fees in 2024 was also due to growth in balances in fee-based managed investing solutions and Mutual Fund OneSource, as a result of strong equity markets and, for managed investing solutions, net inflows of client assets.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

The increase in asset management and administration fees in 2024 was also due to growth in balances in fee-based managed investing solutions and Mutual Fund OneSource ® , as a result of strong equity markets and, for managed investing solutions, net inflows of client assets.

Asset management and administration fees increased by $540 million, or 13%, in 2023 from 2022, primarily as a result of higher balances in Schwab money market funds and the elimination of fee waivers on those funds as well as higher average client asset balances due to stronger equity markets.

Money market fund balances increased in 2023 as clients shifted their cash allocations to higher-yielding investment solutions, and money market fund fee waivers were eliminated during 2022, both due primarily to the Federal Reserve’s increases to the federal funds target overnight rate.

The increases in asset management and administration fees in 2023 were also due to growth in Schwab equity and bond funds, ETFs, and CTFs, partially offset by lower balances of certain third-party mutual funds and ETFs.

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

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Balance at end of period $ 693,815 $ 596,531 $ 476,409 $ 772,686 $ 627,166 $ 506,149 $ 454,207 $ 347,798 $ 306,222

(1) Includes $39.8 billion and $77.7 billion of transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and Other NTF Funds in 2023 and 2022, respectively.

(1) 2025 and 2023 include $63.3 billion and $39.8 billion, respectively, of transfers from other third-party mutual funds and ETFs to Mutual Fund OneSource ® and Other NTF Funds.

Trading Revenue

15 unchanged sentences

Total trading revenue 20 % $ 3,921 $ 3,264 $ 3,230

THE CHARLES SCHWAB CORPORATION

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

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

Year Ended December 31, Percent Change

11 unchanged sentences

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

Trading revenue increased $657 million, or 20%, in 2025 compared to 2024, driven by an increase in order flow and commission revenue due primarily to higher client trading volume.

Trading revenue increased $34 million, or 1%, in 2024 compared to 2023, driven by an increase in order flow revenue reflecting higher volume and changes in the mix of client trading activity.

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Commission revenue was relatively flat due to higher volume offset by changes in the mix of client trading activity.

Trading revenue decreased $443 million, or 12%, in 2023 compared to 2022, primarily due to lower options order flow revenue from changes in the mix of client trading activity and narrower quoted spreads in the options market, and lower equity order flow revenue reflecting a shift toward more low-price securities and lower equity trading activity overall.

Additionally, commissions decreased as a result of lower client trading activity and fewer trading days.

Partially offsetting the decrease in 2023 compared to 2022, principal transactions revenue increased as a result of higher volume in clients’ fixed income trading and higher market interest rates.

THE CHARLES SCHWAB CORPORATION

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

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

Bank Deposit Account Fees

The Company earns bank deposit account fee revenue from the TD Depository Institutions.

These fees are affected by changes in interest rates and the composition of balances designated as fixed- and floating-rate obligation amounts.

The Company earns bank deposit account fee revenue from the TD Depository Institutions, in accordance with the 2023 IDA agreement.

Bank deposit account fee revenue is presented net of interest paid to clients, and other applicable fees, and is affected by changes in interest rates and the composition of balances designated as fixed- and floating-rate obligation amounts.

See Item 8 – Note 15 for additional information.

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

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Floating-rate balances 22 % 14 % 8 %

Bank deposit account fees increased $248 million, or 34%, in 2025 compared to 2024, primarily due to a decrease in the amount paid to clients as a result of lower interest rates.

This was partially offset by lower average BDA balances, which reduced the base on which bank deposit account fees are earned.

The decrease in average BDA balances in 2025 compared to 2024 was primarily due to the transfer of $6.7 billion of BDA balances to Schwab’s balance sheet after September 10, 2025, as well as client cash allocation decisions in 2024 in response to elevated short-term market interest rates through most of 2024.

Pursuant to the 2023 IDA agreement, after September 10, 2025, Schwab has broader discretion to withdraw balances, subject to certain constraints, as described in Item 8 – Note 15.

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

Average net yield increased in 2025 compared to 2024 due to an increase in the average amount of floating-rate BDA balances, which earned higher net yields relative to fixed-rate balances.

This was partially offset by a decrease in the average net yields earned on both fixed-rate and floating-rate BDA balances compared to 2024.

The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of December 31, 2025 were 78% and 22%, respectively.

Bank deposit account fees increased $24 million, or 3%, in 2024 compared to 2023.

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The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of December 31, 2024 were 76% and 24%, respectively.

Bank deposit account fees decreased by $704 million, or 50%, in 2023 compared to 2022.

The decrease was primarily due to lower average BDA balances, an increase in the amount paid to clients due to higher interest rates, and the breakage fees incurred in 2023.

These factors contributed to the decrease in average net yield in 2023 compared to 2022.

The decrease in average BDA balances in 2023 compared to 2022 was primarily due to client cash allocation decisions in response to rising short-term market interest rates throughout 2022 and through the first three quarters of 2023.

The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of December 31, 2023 were 86% and 14%, respectively.

THE CHARLES SCHWAB CORPORATION

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

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

Other Revenue

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

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

Other revenue increased $14 million, or 2%, in 2025 compared to 2024, primarily due to higher other service fees and gains recognized on certain equity investments, partially offset by higher losses recognized on sales of AFS securities, higher provision for credit losses on bank loans, and lower industry fees.

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

This change resulted in lower industry fees in 2025 compared to 2024.

Other revenue increased $34 million, or 5%, in 2024 compared to 2023 primarily due to higher industry fees and lower losses recognized on sales of AFS securities, partially offset by certain lower service and other fees and a smaller release from the provision for credit losses on bank loans.

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Effective May 22, 2024, the SEC increased its fee rate applicable to most securities transactions from the rate in effect since late February 2023.

Other revenue decreased $63 million, or 8%, in 2023 compared to 2022 primarily due to lower industry fees, net losses on sales of AFS securities, and certain lower service and other fees, partially offset by lower provision for credit losses on bank loans.

Industry fees decreased primarily due to a decrease in the SEC fee rate which became effective in the first quarter of 2023 and lower year-to-date options volume.

The provision for credit losses on bank loans was lower as loan loss factors decreased while the total balance of First Mortgages increased slightly compared to year-end 2022.

The Company’s provision for credit losses on bank loans in 2022 reflected increased loan loss factors driven primarily by higher forecasted interest rates earlier in the Federal Reserve’s monetary tightening, as well as growth in the loan portfolio.

In addition, other revenue in 2022 included $46 million in gains on the sale of Schwab Compliance Technologies, Inc.

and certain investments.

THE CHARLES SCHWAB CORPORATION

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

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

Total Expenses Excluding Interest

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Average 1 % 32.6 32.3 35.4

Total expenses excluding interest decreased $545 million, or 4%, in 2024 from 2023, and increased $1.1 billion, or 10%, in 2023 from 2022.

Adjusted total expenses, which excludes acquisition and integration-related costs, amortization of acquired intangible assets, and, beginning in the third quarter of 2023, restructuring costs, increased $240 million, or 2%, in 2024 from 2023 and $643 million, or 6%, in 2023 from 2022.

Total expenses excluding interest increased $548 million, or 5%, in 2025 from 2024, and decreased $545 million, or 4%, in 2024 from 2023.

Adjusted total expenses, which excludes acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs, increased $681 million, or 6%, in 2025 from 2024 and $240 million, or 2%, in 2024 from 2023.

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

The overall decrease in expenses in 2024 reflected lower restructuring costs and lower acquisition and integration-related costs, as substantially all costs related to the Company’s restructuring were incurred in 2023, and spending for the Ameritrade integration decreased in 2024 as we completed final integration activities.

We currently anticipate total expenses excluding interest in full-year 2025 will increase approximately 3.5% to 4.5% from 2024, and adjusted total expenses in full-year 2025 will increase approximately 4.5% to 5.5%.

See Non-GAAP Financial Measures.

THE CHARLES SCHWAB CORPORATION

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

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

We currently anticipate total expenses excluding interest in full-year 2026 will increase approximately 5.5% to 6.5% from 2025.

We currently expect the Company’s acquisition of Forge to close in March 2026, and costs related to the operations and integration of Forge would be in addition to the 5.5% to 6.5% expected growth in expenses.

Total compensation and benefits expense increased in 2025 compared to 2024, primarily due to annual merit increases and growth in headcount, higher incentive compensation, and higher other employee-related costs.

These increases reflect investments to support growth of the business and enhance client-serving capabilities, as well as higher incentive compensation driven by the Company’s financial performance.

Total compensation and benefits decreased in 2024 from 2023 primarily due to restructuring costs recognized in 2023, as well as lower headcount as a result of position eliminations from the restructuring and Ameritrade integration.

These decreases were partially offset by higher incentive compensation and annual merit increases.

The 2023 increase was a result of restructuring costs recognized during the second half of 2023 related to position eliminations, higher average employee headcount to support Ameritrade client account transitions, and annual merit increases, partially offset by lower incentive compensation.

Compensation and benefits included acquisition and integration-related costs of $54 million, $187 million, and $220 million in 2024, 2023, and 2022, respectively.

Compensation and benefits included acquisition and integration-related costs of $54 million and $187 million in 2024 and 2023, respectively.

Compensation and benefits also included a $34 million benefit in 2024, due to a change in estimated restructuring costs, and included restructuring costs of $292 million in 2023.

Professional services expense increased in 2025 compared to 2024, reflecting overall growth of the business and increased utilization of technology and other professional services.

Professional services expense remained consistent in 2024 compared to 2023.

The increase in 2023 from 2022 was primarily due to increased utilization of professional services to support overall growth of the business.

Professional services included acquisition and integration-related costs of $36 million, $135 million, and $140 million in 2024, 2023, and 2022, respectively.

Professional services included acquisition and integration-related costs of $36 million and $135 million in 2024 and 2023, respectively.

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

Occupancy and equipment expense decreased in 2024 from 2023, due to lower technology equipment and software costs, lower property tax expense, and lower occupancy costs as a result of facility closures in 2023 related to restructuring and the Ameritrade integration.

The increase in 2023 from 2022 was primarily due to an increase in software maintenance and other agreements as well as other technology equipment costs to support growth of the business and the integration of Ameritrade.

Occupancy and equipment included restructuring costs of $5 million and $17 million in 2024 and 2023, respectively, and acquisition and integration-related costs of $28 million and $21 million in 2023 and 2022, respectively.

Occupancy and equipment included restructuring costs of $5 million and $17 million in 2024 and 2023, respectively, and acquisition and integration-related costs of $28 million in 2023.

THE CHARLES SCHWAB CORPORATION

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

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

Advertising and market development expense increased in 2025 compared to 2024, primarily due to higher client promotional spending and digital advertising costs.

Advertising and market development expense remained consistent in 2024 compared to 2023, as higher client promotional spending was offset by lower spending on digital advertising.

The decrease in 2023 from 2022 was primarily a result of lower advertising costs and lower client promotional spending for Ameritrade.

Communications expense increased in 2025 compared to 2024 primarily due to higher exchange quotation services and proxy-related expenses, reflecting growth in the business, partially offset by lower telecommunications expenses.

Communications expense decreased in 2024 compared to 2023 due to lower exchange quotation services expenses.

The increase in 2023 compared to 2022 was primarily as a result of client communications related to Ameritrade account transitions completed during 2023.

Depreciation and amortization expense increased in 2024 from 2023, and in 2023 from 2022, primarily as a result of higher amortization of purchased and internally developed software and higher depreciation of hardware, driven by capital expenditures to support growth of the business and, in 2023, to support the Ameritrade integration.

Amortization of acquired intangible assets decreased in 2024 from 2023, and in 2023 from 2022, primarily as certain assets from the Ameritrade acquisition were fully amortized during 2023 and 2022.

Depreciation and amortization expense decreased in 2025 compared to 2024 primarily due to lower depreciation on equipment due to abandonment of certain data centers in 2024 related to the integration of Ameritrade, lower software amortization and lower finance lease amortization as a result of terminations in 2024.

Depreciation and amortization expense increased in 2024 from 2023 primarily as a result of higher amortization of purchased and internally developed software and higher depreciation of hardware, driven by capital expenditures to support growth of the business.

Amortization of acquired intangible assets was largely consistent in 2025 compared to 2024.

Amortization of acquired intangible assets decreased in 2024 from 2023, primarily as certain assets from the Ameritrade acquisition were fully amortized during 2023.

Regulatory fees and assessments decreased in 2025 compared to 2024 primarily due to $32 million of reductions in the FDIC special assessment in 2025 and $30 million of incremental FDIC special assessments in 2024, coupled with lower FDIC deposit insurance assessments primarily due to lower assessment rates driven by a decrease in brokered CDs.

Regulatory fees and assessments decreased in 2024 from 2023, primarily due to a $172 million FDIC special assessment recorded during the fourth quarter of 2023, partially offset by $30 million of incremental FDIC special assessments in 2024.

The increase in 2023 from 2022 was primarily as a result of the FDIC special assessment described above and higher FDIC deposit insurance assessments during 2023, reflecting greater use of brokered CDs and a 2-basis point increase to the FDIC deposit insurance assessment rate, which became effective for the first quarterly assessment period in 2023.

These increases were partially offset by a lower assessment base.

See Current Regulatory and Other Developments for discussion of the FDIC special assessments.

Other expense increased in 2025 compared to 2024, due to certain higher costs resulting from growth of the business and increased trading volume.

The increase was partially offset by a charge recognized in the second quarter of 2024 for the SEC’s industry-wide review of off-channel communications, and lower industry fees in 2025 compared to 2024 due to lower average fee rates stemming from the SEC decreasing the fee rate applicable to most securities transactions to zero effective May 14, 2025.

Other expense increased in 2024 from 2023, primarily due to higher industry fees, partially offset by impairment charges recorded in 2023 related to restructuring.

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Effective May 22, 2024, the SEC increased its fee rate applicable to most securities transactions from the rate in effect since late February 2023.

The increase in other expense in 2023 from 2022 was primarily due to impairment charges in 2023 related to closing certain leased corporate offices for restructuring and Ameritrade integration.

Other expense included restructuring costs of $37 million and $181 million in 2024 and 2023, respectively, and acquisition and integration-related costs of $27 million in 2023.

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Total capital expenditures were $602 million, $607 million, and $804 million in 2025, 2024, and 2023, respectively.

Capital expenditures decreased 1% in 2025 compared to 2024, primarily due to t he completion of certain construction projects in 2024 resulting in a decrease of land and building-related capital expenditures, offset by higher investment in purchased and internally developed software and telecommunications and information technology equipment.

Capital expenditures decreased 25% in 2024 compared to 2023, primarily due to lower purchased and internally developed software as we completed Ameritrade client account transitions in the second quarter of 2024 and completed the Ameritrade integration, partially offset by higher investment in buildings.

Capital expenditures decreased in 2023 compared to 2022, as lower capitalized information technology equipment and buildings more than offset an increase in capitalized software

THE CHARLES SCHWAB CORPORATION

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

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

We continued to invest in our technological infrastructure in 2023 to support the Ameritrade integration as well as greater capacity for our expanding client base.

Capital expenditures were 3.1% of total net revenues in 2024, within our estimated range for the year.

Capital expenditures were 2.5% of total net revenues in 2025, slightly lower than our previously disclosed expected range of approximately 3-5% of total net revenues.

We anticipate capital expenditures for 2026 to be within our longer term expectation of 3-5% of total net revenues.

Taxes on Income

Schwab’s effective income tax rate on income before taxes was 22.8% in 2024, 20.6% in 2023, and 23.5% in 2022.

Taxes on income were $2.6 billion, $1.8 billion, and $1.3 billion for 2025, 2024, and 2023, respectively, resulting in effective tax rates of 22.8% in 2025 and 2024, and 20.6% in 2023.

The effective tax rate in 2025 remained consistent with 2024 primarily due to a decrease in the state tax rate and in non-deductible FDIC deposit insurance assessments, offset by an increase in state tax reserves and a decrease in certain tax credits.

The increase in the effective tax rate in 2024 from 2023 was primarily due to an increase in state tax expense and the recognition of certain tax credits during 2023, partially offset by additional tax credits recognized and the reversal of tax reserves due to the resolution of certain state tax matters during 2024.

The decrease in the effective tax rate in 2023 from 2022 was primarily due to a decrease in state tax expense and the recognition of certain tax credits in 2023, partially offset by an increase in non-deductible FDIC deposit insurance assessments and a decrease in equity compensation tax deduction benefits.

THE CHARLES SCHWAB CORPORATION

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

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

Segment Information

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See Item 8 – Note 24 for additional segment information.

THE CHARLES SCHWAB CORPORATION

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

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

Financial information for our segments is presented in the following table:

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33% $ 213.8 $ 161.1 $ 181.3 42% $ 284.8 $ 200.5 $ 155.9 38% $ 498.6 $ 361.6 $ 337.2

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

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

(1) In 2025, Investor Services includes net outflows of $20.8 billion from off-platform brokered CDs issued by CSB.

In 2024, Investor Services includes net outflows of $14.6 billion from off-platform brokered CDs issued by CSB, an inflow of $10.3 billion from a mutual fund clearing services client, and outflows of $0.7 billion from an international relationship.

In 2023, Investor Services includes net inflows of $32.5 billion from off-platform brokered CDs issued by CSB, inflows of $12.0 billion from a mutual fund clearing services client, and outflows of $5.8 billion from an international relationship.

In 2022, Investor Services includes outflows of $20.8 billion from mutual fund clearing services clients.

In 2024 and 2023, Advisor Services includes outflows of $0.3 billion and $7.2 billion, respectively, from an international relationship.

Segment Net Revenues

Total net revenues increased by 22% for both Investor Services and Advisor Services in 2025 compared to 2024.

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

Asset management and administration fees increased for both segments primarily due to higher balances in money market funds, Schwab equity and bond funds, ETFs, and CTFs, and Mutual Fund OneSource ® , and, additionally for Investor Services, managed investing solutions.

Trading revenue increased for both segments primarily due to higher order flow revenue and commission revenue reflecting higher trading volume.

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

Other revenue was largely flat for Investor Services and increased for Advisor Services, due to higher other service fees and gains recognized on certain equity investments, partially

THE CHARLES SCHWAB CORPORATION

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

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

offset by losses recognized on the sale of AFS securities, higher provision for credit losses on bank loans, and lower industry fees.

Investor Services total net revenues increased by 6% in 2024 compared to 2023.

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Additionally, bank deposit account fees increased for both segments, primarily due to breakage fees incurred that resulted in lower bank deposit account fee revenue in 2023, partially offset by lower BDA balances.

Investor Services and Advisor Services total net revenues decreased by 8% and 15%, respectively, in 2023 compared to 2022.

Net interest revenue decreased for both segments due to higher-cost funding sources and lower average interest-earning asset balances, as described above.

Both segments saw a decrease in bank deposit account fees due to lower average BDA balances

THE CHARLES SCHWAB CORPORATION

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

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

and higher yields paid to clients, as well as breakage fees incurred as a result of ending certain third-party bank arrangements.

Trading revenue decreased for both segments, primarily as a result of lower order flow revenue and commissions, due to lower client trading activity and pricing, partially offset by higher fixed income trading activity.

Other revenue decreased for both segments primarily due to lower industry fees, net losses on sales of AFS securities, and gains on the sale of certain investments in 2022, partially offset by lower provision for credit losses on bank loans.

These decreases were partially offset by higher asset management and administration fees in both segments, primarily as a result of higher money market fund balances and the elimination of money market fund fee waivers during 2022 and growth in Schwab proprietary fund products, partially offset by lower balances in certain third-party funds.

Segment Expenses Excluding Interest

Investor Services and Advisor Services total expenses excluding interest increased by 5% and 4%, respectively, in 2025 compared to 2024.

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

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

Occupancy and equipment expense increased in both segments primarily due to higher technology equipment and software costs related to growth of the business, as well as building expenses, and a property tax benefit reflected in 2024.

Regulatory fees and assessments decreased in both segments, primarily due to a reduction in FDIC assessments in 2025 and lower FDIC special assessments from 2024 to 2025.

Investor Services and Advisor Services total expenses excluding interest decreased 2% and 11%, respectively, in 2024 compared to 2023.

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Other expense decreased for Advisor Services primarily due to impairment charges recorded in 2023 related to restructuring and lower clearing charges.

Investor Services and Advisor Services total expenses excluding interest increased by 8% and 13%, respectively, in 2023 compared to 2022.

Both segments saw higher compensation and benefits expenses due to restructuring costs recognized in the second half of 2023, higher average headcount to support Ameritrade client account transitions, and annual merit increases, partially offset by lower incentive compensation.

Regulatory fees and assessments increased in both segments, primarily due to an FDIC special assessment recorded during the fourth quarter of 2023 and higher FDIC deposit insurance assessments as described above.

Other expenses were also higher for both segments, primarily driven by impairment of certain leased corporate offices related to restructuring and Ameritrade integration.

Depreciation and amortization increased for both segments primarily due to higher amortization of purchased and internally developed software and higher depreciation of hardware, driven by capital expenditures in 2022 and 2023 to enhance our technological infrastructure to support the Ameritrade integration and growth of the business.

RISK MANAGEMENT

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The ERM Framework incorporates key concepts commensurate with the size, risk profile, complexity, and continuing growth of the Company.

While all personnel are responsible for risk management, the Company’s risk appetite, which is defined as the amount of risk the Company is willing to accept in pursuit of its corporate strategy, is developed by executive management and approved by the Board of Directors.

The Company’s “Through Clients’ Eyes” strategy guides our actions and behaviors at Schwab, and informs our corporate culture, our risk appetite, and approach to risk management.

Schwab is committed to the highest standards of ethical conduct and

While all personnel are

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

compliance with applicable laws, rules, and regulations, and our Code of Business Conduct and Ethics outlines the ethical conduct that we must demonstrate to deliver our strategy while retaining the trust of our stakeholders.

responsible for risk management, the Company’s risk appetite, which is defined as the amount of risk the Company is willing to accept in pursuit of its corporate strategy, is developed by executive management and approved by the Board of Directors.

The Company’s “Through Clients’ Eyes” strategy guides our actions and behaviors at Schwab, and informs our corporate culture, our risk appetite, and approach to risk management.

Schwab is committed to the highest standards of ethical conduct and compliance with applicable laws, rules, and regulations, and our Code of Business Conduct and Ethics outlines the ethical conduct that we must demonstrate to deliver our strategy while retaining the trust of our stakeholders.

Risk Governance

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• New Products and Services Risk Oversight Committee – provides oversight of and approves new products, including the policy, program, and process designed to oversee new products and services risks prior to and post launch.

Senior management created the Incentive Compensation Risk Oversight Committee to provide oversight of incentive compensation risks and achieve sound incentive compensation risk management practices;

it reports directly to the Compensation Committee of the Board of Directors.

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

Senior management created the Incentive Compensation Risk Oversight Committee to provide oversight of incentive compensation risks and achieve sound incentive compensation risk management practices;

it reports directly to the Compensation Committee of the Board of Directors.

The Company’s finance, internal audit, legal, and corporate risk management departments assist management and the various risk committees in evaluating, testing, and monitoring risk management.

In addition, the Disclosure Committee is responsible for monitoring and evaluating the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of the end of each fiscal quarter.

The Disclosure Committee reports on this evaluation to the CEO and CFO prior to their certification required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002.

The Disclosure Committee reports on this evaluation to the Chief Executive Officer and Chief Financial Officer prior to their certification required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002.

Operational Risk

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To minimize business interruptions and ensure the capacity to continue operations during an incident regardless of duration, Schwab maintains a backup and recovery infrastructure which includes facilities for backup and communications, a geographically dispersed workforce, and routine testing of business continuity and disaster recovery plans and a well-established incident management program.

Please see Part I – Item 1C.

See Part I – Item 1C.

Cybersecurity for additional information regarding information security risk, including cybersecurity risk management.

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Schwab manages model risk, including use of artificial intelligence, through use of policies, standards, and controls which evaluate the conceptual and technical soundness of models used by the Company.

Prior to the use of any artificial intelligence, we employ procedures which require cross-functional review from applicable oversight functions.

We maintain a model inventory that includes a distinct record and risk rating for each model, and we conduct independent validations, annual reviews, and performance monitoring of the Company’s models.

Compliance Risk

Schwab faces compliance risk which is the potential exposure to legal or regulatory sanctions, fines or penalties, financial loss, or damage to reputation resulting from the failure to comply with laws, regulations, rules, or other regulatory requirements.

Among other things, compliance risks relate to the suitability of client investments, consumer protection, conflicts of interest, disclosure obligations and performance expectations for products and services, supervision of employees, the retention of

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

required records, and the adequacy of our controls.

Compliance Risk

The Company and its affiliates are subject to extensive regulation by federal, state, and foreign regulatory authorities, including SROs.

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Conduct risk arises from inappropriate, unethical, or unlawful behavior of the Company, its employees or third parties acting on the Company’s behalf that may result in detriment to the Company’s clients, financial markets, the Company, and/or the Company’s employees.

We manage this risk through policies, procedures, a system of internal controls, including personnel monitoring and surveillance.

We manage this risk through policies, procedures, and a system of internal controls, including personnel monitoring and surveillance.

Conduct-related matters are escalated through appropriate channels by the Company’s Corporate Responsibility Officer.

9 unchanged sentences

To manage the risks of such losses, we have established policies and procedures, which include setting and reviewing credit limits, monitoring credit limits and quality of counterparties, and adjusting margin, PAL, option, and futures requirements for certain securities and instruments.

THE CHARLES SCHWAB CORPORATION

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

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

Liquidity and Investment Portfolios

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agency notes, U.S.

Treasury securities, certificates of deposit, U.S.

Treasury securities, CDs, U.S.

state and municipal securities, commercial paper, and foreign government agency securities.

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government-sponsored enterprises.

THE CHARLES SCHWAB CORPORATION

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

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

Mortgage Lending Portfolio

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Schwab is exposed to market risk primarily from changes in interest rates within our interest-earning assets relative to changes in the costs of funding sources that finance these assets.

To manage interest rate risk, we have established policies and procedures, which include setting limits on net interest revenue risk and economic value of equity (EVE) risk.

To manage interest rate risk, we have established policies and procedures, which include setting limits on net interest revenue risk and EVE risk.

To remain within these limits, we manage the maturity, repricing, and cash flow characteristics of the investment portfolios.

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Our measurement of interest rate risk involves assumptions that are inherently uncertain and, as a result, cannot precisely estimate the impact of changes in interest rates on net interest revenue, bank deposit account fees, or EVE.

Actual results may differ from simulated results due to balance growth or decline and the timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and management strategies, including changes in asset and liability mix.

Actual results may

THE CHARLES SCHWAB CORPORATION

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

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

differ from simulated results due to balance growth or decline and the timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and management strategies, including changes in asset and liability mix.

Financial instruments are also subject to the risk that valuations will be negatively affected by changes in demand and the underlying market for a financial instrument.

We are indirectly exposed to option, futures, and equity market fluctuations in connection with client option and futures accounts, securities collateralizing margin loans to brokerage customers, and client securities loaned out as part of the brokerage securities lending activities.

Equity market valuations may also affect the level of brokerage client trading activity, margin borrowing, and overall client engagement with Schwab.

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Fluctuations in these client asset balances caused by changes in equity valuations directly impact the amount of fee revenue we earn.

THE CHARLES SCHWAB CORPORATION

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

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

Our market risk related to financial instruments held for trading is not material.

3 unchanged sentences

Key assumptions include the projection of interest rate scenarios with rate floors, rates and balances of non-maturity client cash held on the balance sheet, prepayment speeds of mortgage-related investments, repricing of financial instruments, and reinvestment of matured or paid-down securities and loans.

We use independent third-party models to simulate net interest revenue sensitivity and related analyses.

We use both proprietary and independent third-party models to simulate net interest revenue sensitivity and related analyses.

Fixed income analytical vendors provide term structure models, prepayment speed models for mortgage-backed securities and mortgage loans, and cash flow projections based on interest income, contractual maturities, and prepayments.

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

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

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

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

Because we establish the rates paid on certain brokerage client cash balances and bank deposits and the rates charged on certain margin and bank loans, and control the composition of our investment securities, we have some ability to manage our net interest spread, depending on competitive factors and market conditions.

When we have liquidity needs that exceed our primary sources of funding, the Company has needed to utilize higher-cost funding sources, which can reduce net interest margin and net interest revenue.

Because we establish the rates paid on certain brokerage client cash balances and bank deposits and the rates charged on certain margin and bank loans, and control the composition of our investment securities, we are able to take certain actions to manage our net interest spread, depending on competitive factors and market conditions.

When liquidity needs exceed our primary sources of funding, the Company will utilize higher-cost funding sources, which can reduce net interest margin and net interest revenue.

Higher prevailing short-term interest rates generally improve yields on shorter duration interest-earning assets.

During periods of rapidly rising interest rates, clients tend to reallocate cash out of sweep products into higher-yielding, off-balance sheet, fixed income investments and money market funds within Schwab’s product offerings.

This can result in lower interest-earning assets and/or may require supplemental funding with higher funding costs, which therefore tend to constrain net interest revenue when interest rates are moving rapidly higher.

This can result in lower interest-earning assets and/or may require increased use of higher-cost funding sources, which therefore tend to constrain net interest revenue when interest rates are moving rapidly higher.

A decline in short-term interest rates could negatively impact the yield on the Company’s investment and loan portfolios to a greater degree than any offsetting reduction in interest expense from funding sources, compressing net interest margin.

Net interest revenue sensitivity analyses assume both static and dynamically-sized balance sheet composition.

Net interest revenue sensitivity analyses assume both statically and dynamically-sized balance sheet composition.

Statically-sized balance sheet modeling assumes the asset and liability structure of the consolidated balance sheet would not be changed as a result of the simulated changes in interest rates.

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We therefore also conduct dynamically-sized balance sheet compositions as a function of interest rates.

Dynamic net interest revenue simulations assume deposit and client credit balance runoff is supplemented with wholesale borrowing when needed to fund assets through the simulation horizon.

Dynamic net interest revenue simulations assume runoff of bank deposit and payables to brokerage client balances is supplemented with wholesale borrowing when needed to fund assets through the simulation horizon.

We also conduct similar simulations on EVE to capture the impact of client cash allocation changes on our balance sheet.

As we actively manage the consolidated balance sheet and interest rate exposure, we have taken and would typically seek to take steps to manage additional interest rate exposure that could result from changes in the interest rate environment.

The following table assumes a statically-sized balance sheet with simulated changes to net interest revenue over the next 12 months beginning December 31, 2024 and 2023 of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:

THE CHARLES SCHWAB CORPORATION

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

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

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

December 31, 2025

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Decrease of 50 basis points

(2.2)% (2.3)%

Decrease of 100 basis points (4.4)% (4.6)%

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(8.8)% (9.3)%

THE CHARLES SCHWAB CORPORATION

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

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

The Company’s simulated incremental increases in market interest rates had a smaller impact on net interest revenue as of December 31, 2024 compared to December 31, 2023, reflecting the impacts of hedging fixed-to-floating rate Senior Notes with receive-fixed-pay-floating interest rate swaps, resulting in higher interest expense in a higher rate environment, and lower cash balances held, partially offset by the benefit of a decreased allocation to shorter-term liabilities, which reduces interest expense in a higher rate environment.

The Company’s simulated incremental decreases in market interest rates had a larger impact on net interest revenue as of December 31, 2024 compared to December 31, 2023, primarily due to lower non-maturity deposit rates and a decreased allocation to shorter-term liabilities, both of which reduce interest expense savings in a lower rate environment, partially offset by interest expense savings from hedging fixed-to-floating rate Senior Notes.

The Company’s simulated incremental increases and decreases in market interest rates had an overall smaller impact on net interest revenue as of December 31, 2025 compared to December 31, 2024.

These changes were primarily due to the use of cash flow hedges related to PALs beginning in 2025 and additional hedging of Senior Notes, partially offset by higher concentrations of both margin loan and cash balances.

Effective Duration

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The Company also utilizes derivative hedging instruments such as interest rate swaps in managing its asset and liability duration.

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

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

December 31, 2025 December 31, 2024

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AFS investment securities portfolio 2.4 2.3

AFS and HTM investment securities portfolio 3.9 4.0

AFS and HTM investment securities portfolios 3.9 3.9

Pledged asset lines (1)

Long-term debt CSC Senior Notes

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AFS investment securities portfolio 2.0 1.8

AFS and HTM investment securities portfolio 3.7 3.9

AFS and HTM investment securities portfolios 3.7 3.7

Pledged asset lines (1)

Long-term debt CSC Senior Notes

(1) See Item 8 – Note 17 for additional discussion on the Company’s derivatives.

(2) In the fourth quarter of 2024, Schwab executed $15.0 billion of receive-fixed swaps on CSC’s Senior Notes to reduce interest expense exposure in a lower interest rate environment.

(1) The duration of PALs was less than 0.1 years at December 31, 2024.

(2) See Item 8 – Note 16 for additional discussion of the Company’s derivatives.

AFS and HTM securities comprised approximately 40% and 48% of the Company’s consolidated total assets as of December 31, 2025 and 2024, respectively.

The estimated effective duration of the remaining balance sheet assets in aggregate was less than one year as of both December 31, 2024 and 2023.

The estimated effective duration of the remaining balance sheet assets, excluding the effect of hedging, in aggregate was less than one year as of both December 31, 2025 and 2024.

Economic Value of Equity Simulation

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While EVE does not have a direct accounting relationship, the measure aims to capture a theoretical value of assets and liabilities under a variety of interest rate environments.

EVE is calculated by subjecting the balance sheet to hypothetical instantaneous shifts in the level of interest rates.

This analysis is highly dependent upon asset and liability assumptions based on historical behaviors.

EVE sensitivity is calculated by subjecting the balance sheet to hypothetical instantaneous shifts in

THE CHARLES SCHWAB CORPORATION

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

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

the level of interest rates.

This analysis is highly dependent upon asset and liability assumptions based on historical and certain expected behaviors.

Key assumptions in our EVE calculation include projection of interest rate scenarios with rate floors, prepayment speeds of mortgage-related investments, term structure models of interest rates, behavior of non-maturity client cash held on the balance sheet, and pricing assumptions.

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We rely on third-party models for interest rate term structure modeling, prepayment speed modeling for mortgage-backed securities and mortgage loans, and cash flow projections based on interest income, and contractual maturities.

THE CHARLES SCHWAB CORPORATION

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

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

Schwab’s EVE profile is characterized by a more stable asset duration relative to liabilities in both higher and lower interest rate environments.

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Liquidity Risk

Liquidity risk is the potential that Schwab will be unable to sell assets or meet cash flow obligations when they come due without incurring unacceptable losses.

Liquidity risk is the potential that Schwab will be unable to meet cash flow obligations when they come due without incurring unacceptable losses.

Due to its role as a source of financial strength, CSC’s liquidity needs are primarily driven by the liquidity and capital needs of:

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These funds are used to purchase investment securities and extend loans to clients.

Other sources of funds may include cash flows from operations, maturities and sales of investment securities, repayments on loans, securities lending of assets held in client brokerage accounts, FHLB borrowings, borrowings under repurchase agreements with external financial institutions, issuance of CDs, cash provided by securities issuances by CSC in the capital markets, and other facilities described below.

Other sources of funds may include cash flows from operations, maturities and sales of investment securities, repayments on loans, securities lending of assets held in client brokerage accounts, FHLB borrowings, borrowings under repurchase agreements with external financial institutions and the Fixed Income Clearing Corporation (FICC), issuance of CDs, cash provided by securities issuances by CSC in the capital markets, and other facilities described below.

To meet daily funding needs, we maintain liquidity in the form of overnight cash deposits and short-term investments.

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More than 80% of our bank deposits qualified for FDIC insurance as of December 31, 2025.

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

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

Schwab’s use of external debt facilities may arise from timing differences between cash flow requirements, such as client cash outflows, cash flows from operations, payments on interest-earning assets, movements of cash to meet regulatory brokerage client cash segregation requirements, and general corporate purposes.

Rollover risk is the risk that we will not be able to refinance or payoff borrowings as they mature.

We maintain policies and procedures necessary to access funding, and test

Our clients’ allocation of cash held on our

THE CHARLES SCHWAB CORPORATION

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

borrowing procedures on a periodic basis.

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

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

Rollover risk is the risk that we will not be able to refinance or payoff borrowings as they mature.

We maintain policies and procedures necessary to access funding and test borrowing procedures on a periodic basis.

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

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FHLB secured credit facilities Banking subsidiaries $ 1,850 $ 74,226 (1)

January 2025 - July 2025 5.11%

February 2026 - March 2026 3.90%

Federal Reserve discount window Banking subsidiaries — 29,327 (1)

Repurchase agreements Banking subsidiaries, CSC 5,499 — (2)

January 2025 - May 2025 5.26%

Unsecured uncommitted lines of credit with various external banks

CSC, CS&Co — 1,692 N/A —

Unsecured commercial paper CSC — 5,000 N/A —

Secured uncommitted lines of credit with various external banks CS&Co 500 — (3)

April 2025 5.13%

Unsecured committed revolving line of credit with various external banks CSC — 2,100 (4)

Repurchase agreements Banking subsidiaries, CSC, CS&Co 1,301 — (2)

February 2026 - April 2026 (3)

Unsecured uncommitted lines of credit with various external banks CSC, CS&Co — 1,892 N/A —

Unsecured commercial paper CSC 1,894 3,106 (4)

May 2026 - July 2026 4.03%

Secured uncommitted lines of credit with

various external banks CS&Co 3,800 — (5)

February 2026 - May 2026 4.18%

(1) Amounts shown as available from the FHLB and Federal Reserve facilities represent remaining capacity based on assets pledged as of December 31, 2025.

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See below and Item 8 – Note 13 for additional information.

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

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

See below and Item 8 – Note 17 for additional information.

(3) Repurchase agreements outstanding as of December 31, 2025 at CS&Co maintain continuous contractual maturities of 35 days and are included in payables to brokers, dealers, and clearing organizations on the consolidated balance sheets.

(4) Outstanding balance of unsecured commercial paper as of December 31, 2025 represents the gross par value before discount of $32 million.

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

(4) During the first quarter of 2024, CSC entered into an unsecured committed revolving line of credit with various external banks.

N/A Not applicable.

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As of December 31, 2025, the Company had additional investment securities with a par value of approximately $103 billion, or a fair value of approximately $97 billion, available to be pledged to obtain additional capacity.

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

Additional details regarding these facilities is described below.

Amounts available under secured credit facilities with the FHLB are dependent on the value of our First Mortgages, HELOCs, and the value of certain of our investment securities that are pledged as collateral.

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

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

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

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

Our banking subsidiaries also have access to short-term secured funding through the Federal Reserve discount window.

Our banking subsidiaries also have access to short-term secured funding through the Federal Reserve discount window and the Standing Repo Facility with the Federal Reserve Bank of New York.

Amounts available under the Federal Reserve discount window are dependent on the value of certain investment securities that are pledged as collateral.

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

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

other than de minimis tests performed to satisfy the Federal Reserve Bank of New York’s testing requirements, this facility was not used during 2024 and there were no amounts outstanding at December 31, 2024.

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

CSC maintains standing bilateral repurchase agreements with external banks.

Other than de minimis tests, these facilities were not used during 2024 and there were no amounts outstanding under these facilities at December 31, 2024.

CSC’s ratings for Commercial Paper Notes were P1 by Moody’s Investor Service (Moody’s), A2 by Standard & Poor’s Rating Group (Standard & Poor’s), and F1 by Fitch Ratings, Ltd (Fitch) at December 31, 2024.

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

THE CHARLES SCHWAB CORPORATION

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

Beginning in 2024, CSC had access to an unsecured committed revolving line of credit with various external banks.

This line expired in January 2025 and was not renewed.

Other than an overnight borrowing to test the availability, the facility was not used during 2024.

CSC’s ratings for Commercial Paper Notes were P1 by Moody’s, A2 by Standard & Poor’s, and F1 by Fitch at December 31, 2025.

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

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

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

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

As of December 31, 2024, liabilities for securities loaned totaled $13.1 billion and are included in payables to brokers, dealers, and clearing organizations on the consolidated balance sheet.

CS&Co also engages with external financial institutions in repurchase agreements collateralized by client margin securities as a source of liquidity.

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

As of December 31, 2025, liabilities for securities loaned totaled $25.1 billion and are included in payables to brokers, dealers, and clearing organizations on the consolidated balance sheets.

At December 31, 2025, $15.0 billion of securities loaned had overnight and continuous remaining contractual maturities;

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See Item 8 – Note 17 for additional information on securities lending activities.

CSB issues brokered CDs as a supplemental funding source.

The following table provides information about brokered CDs issued by CSB and outstanding as of December 31, 2024:

Amount Outstanding Maturity Weighted-Average Interest Rate

Brokered CDs $ 27,701 January 2025 - November 2025 4.90%

CSB issues brokered CDs as a source of funding.

As of December 31, 2025, there were $2.0 billion brokered CDs issued by CSB outstanding with maturities ranging from January 2026 to March 2026 and a weighted-average interest of 4.03%.

Cash Flow Activity

As a result of rapidly increasing short-term interest rates beginning in 2022, the Company saw an increase in the pace at which clients moved certain cash balances out of our sweep features and into higher-yielding investment cash alternatives at Schwab.

As a result of these outflows, our banking subsidiaries have supplemented excess cash on hand and cash generated by maturities and paydowns on our investment securities portfolios with fixed- and floating-rate FHLB advances, repurchase agreements, and issuances of brokered CDs.

The average pace of client cash allocations out of sweep products into higher-yielding investment solutions decreased significantly beginning in the second half of 2023, and continued to decrease through 2024.

In the fourth quarter of 2024, the Company saw an increase in client sweep cash, which, along with principal and interest on the AFS and HTM investment securities portfolio, supported the Company’s net reduction of $14.9 billion of aggregate bank supplemental funding.

Bank deposits increased $12.7 billion during the fourth quarter of 2024, which reflected a $17.7 billion increase in deposits swept from brokerage accounts, partially offset by a net decrease of $6.4 billion in brokered CDs.

The Company’s cash and cash equivalents increased $3.9 billion from year-end 2024 to $46.0 billion at December 31, 2025;

cash and cash equivalents, including amounts restricted, increased $4.1 billion from year-end 2024 to $69.7 billion at December 31, 2025.

These increases were due to net investing cash inflows of $24.5 billion, which were driven by net inflows of $37.6 billion from our AFS and HTM securities, partially offset by net outflows of $12.8 billion due to strong growth in bank loans.

Net cash inflows from operations during 2025 were $9.3 billion.

Increases in investing and operating cash flows were partially offset by net financing outflows of $29.7 billion, primarily due to paydowns of FHLB borrowings and other short-term borrowings by a net total of $14.0 billion, repurchases of common and nonvoting common stock for $7.3 billion, and the redemption of Series G preferred stock for $2.5 billion.

Additionally, net financing outflows related to decreases in bank deposits during 2025 were $3.4 billion, primarily due to a decrease of $25.7 billion in brokered CDs, partially offset by a $21.8 billion increase in deposits swept from brokerage accounts.

The Company’s cash and cash equivalents decreased $1.3 billion from year-end 2023 to $42.1 billion at December 31, 2024;

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Bank deposits decreased in 2024 by $30.8 billion, which reflected a net decrease in brokered CDs of $20.6 billion, as well as a $9.7 billion decrease in deposits swept from brokerage accounts due to client cash allocations and engagement with equity markets.

The average pace of client cash allocations out of sweep products into higher-yielding investment solutions decreased in 2024.

The Company reduced FHLB borrowings and other short-term borrowings by a net total of $10.3 billion.

Partially offsetting the decrease in bank deposits and repayment of borrowings, net investing cash inflows from our AFS and HTM securities totaled $40.9 billion in 2024 and net cash inflows from operations totaled $2.7 billion.

Cash and cash equivalents increased $3.1 billion from year-end 2022 to $43.3 billion at December 31, 2023;

cash and cash equivalents, including amounts restricted, increased $15.8 billion to $74.5 billion as of year-end 2023.

This increase was driven by net cash provided by investing and operating activities, partially offset by net cash used for financing activities.

Bank deposits decreased $76.8 billion in 2023, resulting primarily from a decrease of $113.5 billion in deposits swept from brokerage accounts due to client cash allocation decisions, partially offset by a net increase in brokered CDs of $42.3 billion.

Offsetting the decrease in bank deposits, investing cash flows from our AFS and HTM securities totaled $58.9 billion in 2023, cash flows from operating activities totaled $19.6 billion, and the Company increased FHLB borrowings and other short-term borrowings by a total of $15.9 billion in 2023.

THE CHARLES SCHWAB CORPORATION

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

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

Liquidity Coverage Ratio

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LCR 131 % 134 %

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

To support growth in margin loan balances at our broker-dealer subsidiary while meeting our LCR requirements, the Company may utilize wholesale funding sources, such as issuing commercial paper, drawing on secured lines of credit, borrowing under

THE CHARLES SCHWAB CORPORATION

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

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

repurchase agreements, or engaging in securities lending, in addition to capital markets issuances.

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

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The following table provides information about our Senior Notes outstanding at December 31, 2025:

Par Outstanding Maturity Weighted-Average

Interest Rate Moody’s Standard

December 31, 2025 Par Outstanding Maturity Weighted-Average

Interest Rate (1)

Moody’s Standard

& Poor’s Fitch

CSC Senior Notes $ 22,119 2026 - 2036 3.73% A2 A- A

Ameritrade Holding Senior Notes 163 2025 - 2029 3.38% A2 A- —

THE CHARLES SCHWAB CORPORATION

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

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

Ameritrade Holding LLC Senior Notes 81 2027 - 2029 3.13% A2 A- —

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

See Item 1 – Note 16 for information on the Company’s hedging of Senior Notes.

New Debt Issuances

During 2024, CSC did not issue new long-term debt.

The below debt issuances in 2023 and 2022 were senior unsecured obligations.

The long-term debt issuances below in 2025 and 2023 were senior unsecured obligations issued by CSC.

During 2024, no new long-term debt was issued by the Company.

Additional details are as follows:

Issuance Date Issuance Amount Maturity Date Interest Rate Interest Payable

March 3, 2022 $ 500 3/3/2027 SOFR + 1.050% Quarterly

March 3, 2022 $ 1,500 3/3/2027 2.450% Semi-annually

March 3, 2022 $ 1,000 3/3/2032 2.900% Semi-annually

May 19, 2023 $ 1,200 5/19/2029 5.643% Semi-annually (1)

May 19, 2023 $ 1,300 5/19/2034 5.853% Semi-annually (1)

August 24, 2023 $ 1,350 8/24/2034 6.136% Semi-annually (1)

November 14, 2025 $ 1,000 11/14/2031 4.343% (1)

Semi-annually

November 14, 2025 $ 1,000 11/14/2036 4.914% (1)

Semi-annually

November 17, 2023 $ 1,300 11/17/2029 6.196% (1)

Semi-annually

August 24, 2023 $ 1,350 8/24/2034 6.136% (1)

Semi-annually

August 24, 2023 $ 1,000 8/24/2026 5.875% Semi-annually

November 17, 2023 $ 1,300 11/17/2029 6.196% Semi-annually (1)

May 19, 2023 $ 1,200 5/19/2029 5.643% (1)

Semi-annually

May 19, 2023 $ 1,300 5/19/2034 5.853% (1)

Semi-annually

(1) Interest rates presented are those in effect at December 31, 2025.

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During 2025, 2024, and 2023, CSC did not issue preferred stock.

CSC’s preferred stock issued and net proceeds for 2022 are shown below:

Date Issued and Sold Net Proceeds

Series K March 4, 2022 $ 740

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

On December 1, 2022, the Company redeemed all of the fixed-to-floating rate non-cumulative perpetual preferred stock, Series E, and the corresponding depositary shares.

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

See also Item 8 – Consolidated Statements of Cash Flows, Item 8 – Note 12 for the Company’s bank deposits, Item 8 – Note 13 for the Company’s outstanding debt and borrowing facilities, Item 8 – Note 18 for the Company’s securities lending activities, and Item 8 – Note 20 for equity outstanding balances and activity.

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.

The depositary shares were redeemed at a redemption price of $1,000 per depositary share for a total of $2.5 billion.

THE CHARLES SCHWAB CORPORATION

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

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

See also Item 8 – Consolidated Statements of Cash Flows, Item 8 – Note 12 for the Company’s bank deposits, Item 8 – Note 13 for the Company’s debt and borrowing facilities, Item 8 – Note 17 for the Company’s securities lending and collateralized financing activities, and Item 8 – Note 19 for the Company’s equity outstanding balances and activity.

Contractual Obligations

Schwab’s principal contractual obligations as of December 31, 2024 include payments on brokered CDs;

payments on FHLB borrowings, other short-term borrowings, and long-term debt;

Schwab’s principal contractual obligations as of December 31, 2025 include payments on long-term debt;

payments on securities lending and wholesale borrowings, including brokered CDs, FHLB borrowings, and other short-term borrowings;

lease payments including legally-binding minimum lease payments for leases signed but not yet commenced;

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As of December 31, 2025, the Company had total short-term purchase obligations of $687 million and total long-term purchase obligations of $613 million.

Schwab also enters into guarantees and other similar arrangements in the ordinary course of business.

Schwab enters into guarantees and other similar arrangements in the ordinary course of business.

For information on these arrangements, see Item 8 – Notes 6, 7, 11, 13, 15, and 17.

Pursuant to the 2023 IDA agreement, certain brokerage client deposits are required to be swept off-balance sheet to the TD Depository Institutions.

See Item 8 – Note 15 for additional information on the 2023 IDA agreement.

THE CHARLES SCHWAB CORPORATION

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

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

See Item 8 – Note 15 for additional information.

CAPITAL MANAGEMENT

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

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

Schwab also seeks to return excess capital to stockholders.

We may return excess capital through such activities as dividends, repurchases of common shares, preferred stock redemptions, and repurchases of our preferred stock represented by depositary shares.

We may return excess capital through dividends, repurchases of common shares, preferred stock redemptions, and repurchases of our preferred stock represented by depositary shares.

Schwab’s primary sources of capital are funds generated by the operations of subsidiaries and securities issuances by CSC in the capital markets.

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

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

Internal guidelines are set, for both CSC and its regulated subsidiaries, to ensure capital levels are in line with our strategy and regulatory requirements.

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For additional information, see Business – Regulation in Part I – Item 1.

THE CHARLES SCHWAB CORPORATION

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

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

Regulatory Capital Requirements

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Based on its regulatory capital ratios at December 31, 2025, CSB is considered well capitalized.

In July 2023, the Federal Reserve issued a notice of proposed changes to the regulatory capital rules that would require us to include AOCI in regulatory capital, phased in over a three-year transition period, beginning July 1, 2025 (see Current Regulatory and Other Developments).

In anticipation of the rules being adopted, the Company’s capital management for CSC (consolidated), CSB, and our other banking subsidiaries now incorporates measures that are inclusive of AOCI.

During the second quarter of 2024, Schwab updated its long-term operating objective to be its consolidated adjusted Tier 1 Leverage Ratio of 6.75% - 7.00%.

See below and Non-GAAP Financial Measures for additional information.

THE CHARLES SCHWAB CORPORATION

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

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

Our banking subsidiaries are required to provide notice to, and may be required to obtain approval from, the Federal Reserve and the banking subsidiaries’ state regulators in order to declare and pay dividends to CSC.

In future periods, we may be required to obtain approval from the Federal Reserve for our banking subsidiaries to declare and pay dividends in excess of the amount of recent net income and retained earnings.

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

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

The Company maintains a long-term operating objective for its consolidated adjusted Tier 1 Leverage Ratio of 6.75% - 7.00% (see Non-GAAP Financial Measures for further details and a reconciliation to GAAP reported results).

The ability of our banking subsidiaries to distribute dividends to CSC is subject to regulatory oversight.

Our banking subsidiaries are required to notify, and in certain cases obtain approval from, the Federal Reserve and applicable state banking regulators prior to declaring or paying dividends.

For example, the Federal Reserve requires approval to declare or pay dividends that would be in excess of recent net income and retained earnings.

As a broker-dealer, CS&Co is subject to regulatory requirements of the Uniform Net Capital Rule, which are intended to ensure the general financial soundness and liquidity of broker-dealers.

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See Item 8 – Notes 19 and 23 for additional information on the components of stockholders’ equity and information on the capital requirements of significant subsidiaries and CSC (consolidated).

THE CHARLES SCHWAB CORPORATION

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

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

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

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

The Company’s consolidated Tier 1 Leverage Ratio increased to 9.9% at December 31, 2024 from 8.5% at year-end 2023.

This increase was due primarily to a decrease in the Company’s total assets and the benefit of net income earned during the year.

Total balance sheet assets decreased $13.3 billion, or 3%, during 2024, primarily driven by decreases of $30.8 billion in total bank deposits and $9.7 billion in FHLB borrowings due to repayments, offset by an increase in payables to brokerage clients and payables to brokers, dealers, and clearing organizations totaling $23.5 billion.

CSB’s Tier 1 Leverage Ratio also increased from year-end 2023, ending 2024 at 11.6%, primarily as a result of lower total assets and 2024 net income.

In light of the Federal Reserve’s 2023 regulatory capital rule proposal, which, among other things, would require the Company to include AOCI in regulatory capital, the Company has developed an adjusted Tier 1 Leverage Ratio, which is a non-GAAP and non-regulatory capital financial measure that includes AOCI in the ratio.

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

During the second quarter of 2024, Schwab updated its long-term operating objective to be its consolidated adjusted Tier 1 Leverage Ratio of 6.75% - 7.00%.

As of December 31, 2024, our adjusted Tier 1 Leverage Ratio, which includes AOCI in the

THE CHARLES SCHWAB CORPORATION

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

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

ratio, was 6.8% for CSC (consolidated) and 7.3% for CSB (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results).

The Company is continuing to accrete capital organically, and will continue to manage its capital as described above.

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

See also below and Item 8 – Note 28 for additional information regarding share repurchase activity subsequent to December 31, 2024.

IDA Agreement

Certain brokerage client deposits are swept off-balance sheet to the TD Depository Institutions pursuant to the 2023 IDA agreement.

During 2024 and 2023, Schwab did not move IDA balances to its balance sheet.

The Company’s overall capital management strategy includes supporting migration of IDA balances in future periods as available pursuant to the terms of the 2023 IDA agreement.

The Company’s ability to migrate these balances to its balance sheet is dependent upon multiple factors including having sufficient capital levels to sustain these incremental deposits.

See Item 8 – Note 15 for further information on the 2023 IDA agreement.

The Company’s consolidated Tier 1 Leverage Ratio decreased to 9.3% at December 31, 2025 from 9.9% at year-end 2024.

This decrease reflects returns of excess capital and higher total Company assets, partially offset by organic growth from net income earned during the year.

During 2025, the Company repurchased $7.3 billion of total voting and nonvoting common stock, increased its common stock dividend by 8% to $.27 per share, and redeemed its Series G preferred stock for $2.5 billion.

CSB’s Tier 1 Leverage Ratio decreased to 11.1% at December 31, 2025 from 11.6% at year-end 2024, primarily as a result of dividends to CSC, partially offset by 2025 net income.

As of December 31, 2025, our adjusted Tier 1 Leverage Ratio (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results) was 7.1% for CSC (consolidated) and 7.6% for CSB, increasing from 6.8% for CSC (consolidated) and 7.3% for CSB as of year-end 2024.

These increases were driven primarily by 2025 net income and improvement in AOCI.

Since the initial dividend in 1989, and as of December 31, 2025, CSC has paid 147 consecutive quarterly dividends and has increased the quarterly dividend rate 29 times, resulting in a 19% compounded annual growth rate, excluding the special cash dividend of $1.00 per common share in 2007.

While the payment and amount of dividends are at the discretion of the Board of Directors, subject to certain regulatory and other restrictions, CSC currently targets its common and nonvoting common stock cash dividend at approximately 20% to 30% of net income.

While the payment and amount of dividends are at the discretion of the Board of Directors, subject to certain regulatory and other restrictions, CSC currently targets its common stock cash dividend at approximately 20% to 30% of net income.

The Board of Directors of the Company declared a quarterly cash dividend increase per common share during 2025 as shown below:

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January 29, 2025 $ .02 8 % $ .27

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

In addition, on January 29, 2026, the Board of Directors of the Company declared a five cent, or 19%, increase in the quarterly cash dividend to $.32 per common share.

THE CHARLES SCHWAB CORPORATION

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

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

The following table details CSC’s cash dividends paid and per share amounts:

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Common and Nonvoting Common Stock (1)

$ 1,958 $ 1.08 $ 1,838 $ 1.00

Preferred Stock:

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37 5,000.00 37 5,000.00

(1) The Company had no nonvoting common stock outstanding as of the record date for the Company’s 2025 dividends and accordingly, no dividends were paid on nonvoting common stock during the year ended December 31, 2025.

(2) Dividends are paid quarterly.

(3) Dividends are paid semi-annually until December 1, 2027 and quarterly thereafter.

(4) Series G was redeemed on June 2, 2025.

Prior to redemption, dividends were paid quarterly.

The final dividend was paid on June 2, 2025.

Share Repurchases

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, for an aggregate amount of $13.1 billion.

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

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 transferred to treasury stock, reducing the number of shares outstanding.

These shares were purchased under CSC’s previous $15 billion share repurchase authorization.

Through the completion of the secondary offering and the Company’s repurchase of nonvoting common stock, TD Bank disposed of all of its common shares of CSC and the Company has no remaining nonvoting common stock outstanding.

CSC repurchased an additional 3.9 million shares of its common stock for $351 million under its previous $15 billion share repurchase authorization during the year ended December 31, 2025.

On July 24, 2025, CSC publicly announced that its Board of Directors approved a share repurchase authorization to repurchase up to $20 billion of common stock, replacing the previous and now terminated share repurchase authorization of up to $15 billion of common stock.

The share repurchase authorization does not have an expiration date.

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

During the year ended December 31, 2025, CSC repurchased 58.2 million shares of its common stock under the new authorization for $5.5 billion.

As of December 31, 2025, approximately $14.5 billion remained on the new authorization.

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

CSC repurchased 37 million shares of its common stock for

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

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

See Risk Management – Liquidity Risk for discussion of the 2025 redemption of certain of the Company’s preferred stock.

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

THE CHARLES SCHWAB CORPORATION

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

$2.8 billion during the year ended December 31, 2023.

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

Subsequent to December 31, 2024, pursuant to a repurchase agreement dated February 9, 2025, on February 12, 2025, the Company repurchased directly from TD Group US Holdings LLC 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.

The Company completed this repurchase under its share repurchase authorization, and following the repurchase, approximately $7.2 billion remains on the authorization.

See Item 8 – Note 28 for additional information.

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

During the year ended December 31, 2023, the Company repurchased 11,620 depositary shares representing interests in Series F preferred stock for $11 million, 42,036 depositary shares representing interests in Series G preferred stock for $42 million, 273,251 depositary shares representing interests in Series H preferred stock for $235 million, and 194,567 depositary shares representing interests in Series I preferred stock for $179 million on the open market.

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

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

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

For repurchases of preferred stock, the tax impact is included within preferred stock dividends and other on the consolidated statement of income.

FOREIGN EXPOSURE

At December 31, 2024, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries, as well as agencies of foreign governments.

At December 31, 2025, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries.

At December 31, 2025, the fair value of these holdings totaled $10.5 billion, with the top three exposures being to issuers and counterparties domiciled in France at $7.4 billion, the United Kingdom at $1.9 billion, and Japan at $600 million.

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

At December 31, 2023, the fair value of these holdings totaled $12.8 billion, with the top three exposures being to issuers and counterparties domiciled in the United Kingdom at $5.0 billion, France at $3.2 billion, and Canada at $1.5 billion.

In addition, Schwab had outstanding margin loans to foreign residents of $4.8 billion and $3.5 billion at December 31, 2025 and 2024, respectively.

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Additionally, management has reviewed with the Audit Committee the Company’s significant estimates discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

THE CHARLES SCHWAB CORPORATION

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

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

Schwab estimates income tax expense based on amounts expected to be owed to the various tax jurisdictions in which we operate, including federal, state, and local domestic jurisdictions, and immaterial amounts owed to several foreign jurisdictions.

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Reserves for legal and regulatory claims and proceedings reflect an estimate of probable losses for each matter, after considering, among other factors, the progress of the case, prior experience and the experience of others in similar cases, available defenses, and the opinions and views of legal counsel.

In many cases, including most class action lawsuits, it is not possible to determine whether a loss will be incurred, or to estimate the range of that loss, until the matter is close to resolution, in which case no accrual is made until that time.

Reserves are adjusted as more information becomes available.

Significant judgment is required in making these estimates, and the actual cost of resolving a matter may ultimately differ materially from the amount reserved.

See Item 8 – Note 15 for more information on the Company’s contingencies related to legal and regulatory reserves.

In many cases, including most class action lawsuits, it is not possible to determine

THE CHARLES SCHWAB CORPORATION

1 unchanged sentence

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

whether a loss will be incurred, or to estimate the range of that loss, until the matter is close to resolution, in which case no accrual is made until that time.

Reserves are adjusted as more information becomes available.

Significant judgment is required in making these estimates, and the actual cost of resolving a matter may ultimately differ materially from the amount reserved.

See Item 8 – Note 15 for more information on the Company’s contingencies related to legal and regulatory reserves.

NON-GAAP FINANCIAL MEASURES

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Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below.

Beginning in the third quarter of 2023, these adjustments also include restructuring costs, which the Company began incurring in connection with its previously announced plans to streamline its operations to prepare for post-integration of Ameritrade.

See Item 8 – Note 16 for additional information.

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

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Total expenses excluding interest (GAAP) $ 12,462 $ 11,914 $ 12,459

Amortization of acquired intangible assets (512) (519) (534)

Acquisition and integration-related costs (1)

— (117) (401)

Amortization of acquired intangible assets (519) (534) (596)

Restructuring costs (2)

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Acquisition and integration-related costs for 2023 primarily consist of $187 million of compensation and benefits, $135 million of professional services, $28 million of occupancy and equipment, and $27 million of other expense.

Acquisition and integration-related costs for 2022 primarily consist of $220 million of compensation and benefits, $140 million of professional services, and $21 million of occupancy and equipment.

(2) Restructuring costs for 2024 reflect a change in estimate of $34 million in compensation and benefits, offset by $5 million of occupancy and equipment and $37 million of other expense.

(2) Restructuring costs for 2024 reflect a benefit due to a change in estimate of $34 million in compensation and benefits, offset by $5 million of occupancy and equipment expense and $37 million of other expense.

Restructuring costs for 2023 primarily consist of $292 million of compensation and benefits, $17 million of occupancy and equipment, and $181 million of other expense.

There were no restructuring costs for 2022.

With the Ameritrade integration and restructuring programs complete as of December 31, 2024, non-GAAP adjustments to total expenses excluding interest in 2025 are anticipated to be solely comprised of amortization of acquired intangible assets, which is estimated to be $512 million for 2025.

Year Ended December 31,

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Earnings per common share — diluted (GAAP) $ 8,417 $ 4.65 $ 5,478 $ 2.99 $ 4,649 $ 2.54

Acquisition and integration-related costs 117 .06 401 .22 392 .21

Amortization of acquired intangible assets 512 .29 519 .28 534 .29

Acquisition and integration-related costs — — 117 .06 401 .22

Restructuring costs — — 9 — 495 .27

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

THE CHARLES SCHWAB CORPORATION

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

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

December 31, 2024 December 31, 2023

CSC CSB CSC CSB

December 31, 2025 December 31, 2024 December 31, 2023

CSC CSB CSC CSB CSC CSB

Tier 1 Leverage Ratio (GAAP) 9.3 % 11.1 % 9.9 % 11.6 % 8.5 % 10.1 %

9.9 % 11.6 % 8.5 % 10.1 %

Tier 1 Capital

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Adjusted Tier 1 Leverage Ratio (non-GAAP) 7.1 % 7.6 % 6.8 % 7.3 % 4.9 % 5.4 %

6.8 % 7.3 % 4.9 % 5.4 %

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-K

Item 7. Management’s Discussion and Analysis