SCHWAB CHARLES CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION The Charles Schwab Corporation (CSC) is a savings and loan holding company. CSC engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Principal business subsidiaries of CSC include the following: • Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer; • Charles Schwab Bank, SSB (CSB), our principal banking entity; and • Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds ® ) and for Schwab’s exchange-traded funds (Schwab ETFs). Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries. Schwab provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services. The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers. Schwab was founded on the belief that all Americans deserve access to a better investing experience. Although much has changed in the intervening years, our purpose remains clear – to champion every client’s goals with passion and integrity. Guided by this purpose and our vision of creating the most trusted leader in investment services, management has adopted a strategy described as “Through Clients’ Eyes.” This strategy emphasizes placing clients’ perspectives, needs, and desires at the forefront. Because investing plays a fundamental role in building financial security, we strive to deliver a better investing experience for our clients – individual investors and the people and institutions who serve them – by disrupting longstanding industry practices on their behalf and providing superior service. We also aim to offer a broad range of products and solutions to meet client needs with a focus on transparency, value, and trust. In addition, management works to couple Schwab’s scale and resources with ongoing expense discipline to keep costs low and ensure that products and solutions are affordable as well as responsive to client needs. In combination, these are the key elements of our “no trade-offs” approach to serving investors. We believe that following this strategy is the best way to maximize our market valuation and stockholder returns over time. Management estimates that investable wealth in the United States (U.S.) (consisting of assets in defined contribution, retail wealth management and brokerage, and registered investment advisor channels, along with bank deposits) currently exceeds $85 trillion, which means the Company’s $11.77 trillion in client assets leaves substantial opportunity for growth. Our strategy is based on the principle that developing trusted relationships will translate into more assets from both new and existing clients, ultimately driving more revenue, and along with expense discipline and thoughtful capital management, will generate earnings growth and build long-term stockholder value. This Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (2025 Form 10-K). On our website, https://www.aboutschwab.com , we post the following filings after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC or Commission): annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. In addition, we post to the website the Dodd-Frank stress test results, our regulatory capital disclosures based on Basel III, our average liquidity coverage ratio (LCR), and our average net stable funding ratio (NSFR). The SEC maintains a website at https://www.sec.gov that contains reports, proxy statements, and other information that we file electronically with the Commission. - 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) FORWARD-LOOKING STATEMENTS In addition to historical information, this Quarterly Report on Form 10-Q 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,” “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; 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 Introduction in Part I – Item 2); • Industry and competitive trends including artificial intelligence, digital assets, private company securities and other alternative investments; • The Company’s rollout of trading in select cryptocurrencies (see Overview in Part I – Item 2); • The integration of Forge Global Holdings, Inc. and its private market capabilities (see Overview in Part I – Item 2 and Business Acquisition in Part I – Item 1 – Financial Information – Notes to Condensed Consolidated Financial Statements (Item 1) – Note 3); • The Company’s development and deployment of artificial intelligence capabilities; • Opportunities for deepening and monetizing client relationships; • Capital expenditures and expense management (see Results of Operations in Part I – Item 2); • SEC transaction fee increases (see Results of Operations in Part I – Item 2); • Net interest revenue, client cash allocation behavior, and adjustment of rates paid on client-related liabilities (see Results of Operations in Part I – Item 2); • Wholesale funding and funding strategy (see Results of Operations in Part I – Item 2, and Liquidity Risk in Part I – Item 2); • 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 (EVE), and liability and asset duration (see Risk Management in Part I – Item 2); • Sources and uses of liquidity (see Liquidity Risk in Part I – Item 2); • Capital management; long-term operating objective; and uses of capital and return of excess capital to stockholders (see Capital Management in Part I – Item 2 and Commitments and Contingencies in Item 1 – Note 11); • The expected impact of proposed and final rules (see Current Regulatory and Other Developments in Part I – Item 2); • The expected impact of new accounting standards not yet adopted (see New Accounting Standards in Item 1 – Note 2); • The likelihood of indemnification and guarantee payment obligations and clients failing to fulfill contractual obligations (see Commitments and Contingencies in Item 1 – Note 11, and Financial Instruments Subject to Off-Balance Sheet Credit Risk in Item 1 – Note 13); and • The outcome and impact of legal proceedings and regulatory matters (see Commitments and Contingencies in Item 1 – Note 11, and Legal Proceedings in Part II – Item 1). 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 Quarterly Report on Form 10-Q 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 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 level of client assets, including cash balances; • Client cash allocations and sensitivity to deposit rates; - 2 - 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) • 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; • Regulatory guidance and adverse impacts from new or changed legislation, rulemaking or regulatory expectations; • Capital and liquidity needs and management; • Our ability to manage expenses; • Our ability to attract and retain talent; • Our ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance our infrastructure, in a timely and successful manner; • Our ability to monetize client assets through value-added products and services; • Our ability to support client activity levels; • Increased compensation and other costs; • Re al estate and workforce decisions; • The timing and scope of technology projects; • Balance sheet positioning relative to changes in interest rates; • Interest-earning asset mix and growth; • Our ability to access funding sources; • Prepayment levels for mortgage-backed securities; • Regulatory and legislative developments; • Adverse developments in litigation or regulatory matters and any related charges; and • Potential breaches of contractual terms for which we have indemnification and guarantee obligations. Certain of these factors, as well as general risk factors affecting the Company, are discussed in greater detail in Part I – Item 1A – Risk Factors in the 2025 Form 10-K. - 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) OVERVIEW Management focuses on several client activity and financial metrics in evaluating Schwab’s financial position and operating performance. Results for the first quarter of 2026 and 2025 are as follows: Three Months Ended March 31, Percent Change 2026 2025 Client Metrics Net new client assets (in billions) (1) $ 139.9 $ 132.4 6 % Core net new client assets (in billions) $ 140.0 $ 137.7 2 % Client assets (in billions, at quarter end) $ 11,767.9 $ 9,929.7 19 % Average client assets (in billions) $ 12,050.3 $ 10,212.1 18 % New brokerage accounts (in thousands) 1,299 1,183 10 % Active brokerage accounts (in thousands, at quarter end) 39,099 37,011 6 % Assets receiving ongoing advisory services (in billions, at quarter end) $ 6,042.8 $ 5,061.1 19 % Client cash as a percentage of client assets (at quarter end) 9.9 % 10.6 % Company Financial Information and Metrics Total net revenues $ 6,482 $ 5,599 16 % Total expenses excluding interest 3,294 3,144 5 % Income before taxes on income 3,188 2,455 30 % Taxes on income 709 546 30 % Net income 2,479 1,909 30 % Preferred stock dividends and other 82 113 (27) % Net income available to common stockholders $ 2,397 $ 1,796 33 % Earnings per common share — diluted $ 1.37 $ .99 38 % Net revenue change from prior year 16 % 18 % Pre-tax profit margin 49.2 % 43.8 % Return on average common stockholders’ equity (annualized) 23 % 18 % Expenses excluding interest as a percentage of average client assets (annualized) 0.11 % 0.12 % Consolidated Tier 1 Leverage Ratio (at quarter end) 8.9 % 9.9 % Non-GAAP Financial Measures (2) Adjusted total expenses $ 3,151 $ 3,014 Adjusted diluted earnings per common share $ 1.43 $ 1.04 Return on tangible common equity 40 % 35 % Adjusted tier 1 leverage ratio (consolidated) 6.8 % 7.1 % (1) The first quarter of 2026 and 2025 include net outflows of $0.1 billion and $5.3 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB. (2) See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results. In the first quarter of 2026, Schwab supported our clients through market volatility and heightened uncertainty. Equity markets retreated in March, giving up early-quarter gains, as the Standard and Poor’s ® 500 Index and NASDAQ Composite ® finished the first quarter of 2026 down 5% and 7%, respectively. Amid inflationary pressures and geopolitical uncertainty, the Federal Reserve kept the target federal funds overnight rate unchanged in the first quarter. Strong client asset gathering partially offset equity market declines, as total client assets ended the first quarter of the year at $11.77 trillion, down 1% from year-end 2025. Core net new assets rose 2% year-over-year in the first quarter of 2026 to $140.0 billion, which included a $17.5 billion outflow from a planned mutual fund clearing client deconversion. Clients opened 1.3 million new brokerage accounts in the first quarter of 2026, up 10% from the prior-year first quarter, and active brokerage accounts were 39.1 million at March 31, 2026, up 6% year-over-year. Clients were highly engaged in the markets to begin the year, as clients’ daily average trades (DATs) rose significantly year-over-year to 9.9 million for the first quarter of 2026. Schwab delivered strong financial performance in the first quarter of 2026, reflecting strong asset gathering and client engagement, sustained client demand for Schwab’s lending offerings and managed investing solutions, and lower wholesale bank borrowings. Net income was $2.5 billion in the first quarter of 2026, increasing 30% year-over-year. Diluted earnings per - 4 - 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) common share (EPS) and adjusted diluted EPS (1) for the first quarter of 2026 totaled $1.37 and $1.43, respectively, both rising 38% from the first quarter of the prior year. Total net revenues rose 16% year-over-year to $6.5 billion in the first quarter of 2026. Net interest revenue totaled $3.1 billion in the first quarter of 2026, rising 16% from the prior-year’s first quarter, which reflected growth in margin and bank lending as well as lower aggregate wholesale borrowings, partially offset by lower yields on floating-rate assets. Asset management and administration fees were $1.8 billion in the first quarter of 2026, an increase of 15% year-over-year, due primarily to higher average client asset balances, reflecting asset gathering, year-over-year market appreciation, and growth in managed investing solutions, money market funds, and other proprietary fund products. Trading revenue grew 20% year-over-year to $1.1 billion in the first quarter of 2026, reflecting higher order flow revenue and commissions amid market volatility and higher trading volume. Bank deposit account fee revenue totaled $295 million in the first quarter of 2026, higher by 20% from the prior-year period, due primarily to higher net yields, partially offset by lower average bank deposit account balances (BDA balances). Total expenses excluding interest in the first quarter of 2026 were $3.3 billion, and adjusted total expenses (1) were $3.2 billion, both higher by 5% year-over-year, reflecting strong client engagement and ongoing investments to support our key strategic initiatives including organic growth, new products, and ongoing scale and efficiency efforts. The increases were primarily attributable to higher compensation and benefits expense due to annual merit increases and growth in headcount, including financial consultants and wealth advisors to support our expanding client base, and higher professional services expense resulting from overall growth in the business, partially offset by lower industry fees within other expense. Return on average common stockholders’ equity was 23% in the first quarter of 2026, up from 18% in the first quarter of the prior year, primarily as a result of growth in net income, which more than offset higher average common stockholders’ equity. Return on tangible common equity (1) was 40% in the first quarter of 2026, increasing from 35% in the first quarter of 2025, 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 as a result of growth in retained earnings and improved average accumulated other comprehensive income (AOCI), partially offset by higher treasury stock due to repurchases of common stock in 2025 and the first quarter of 2026. The improvement in average AOCI resulted from lower unrealized losses on available for sale (AFS) investment securities, driven by lower market interest rates and lower investment holdings in 2026, and from amortization of losses on securities previously transferred from AFS to held to maturity (HTM). Schwab continued to support our clients’ evolving needs through effective balance sheet management, including supporting sustained demand for margin and bank lending. Total balance sheet assets were $493.3 billion at the end of the first quarter of 2026, increasing slightly from year-end 2025. Client demand for margin loans continued to be strong to start 2026, with margin loans ending the first quarter at $126.7 billion, up 13% from year-end 2025. This growth reflected ongoing demand for margin lending as a result of engagement in the markets and long/short strategies implemented by RIA clients, and was supported in part by wholesale funding. Bank loans totaled $60.9 billion at the end of the first quarter, rising 5% from year-end 2025 due to growth in pledged asset lines (PALs) and First Mortgages. During the first quarter, the Company repurchased $2.4 billion in common stock, and also increased its common dividend by 19% to $.32 per share. Inclusive of both returns of capital and organic capital generation during the quarter from earnings, the Company’s consolidated Tier 1 Leverage Ratio at March 31, 2026 was 8.9%, down from 9.3% at year-end 2025. Our consolidated adjusted Tier 1 Leverage Ratio (1) was 6.8% at March 31, down from 7.1% at year-end 2025, and within our long-term operating objective of 6.75% to 7.00%. In addition, subsequent to quarter-end, the Company issued $1.5 billion of Series L preferred stock on April 22, 2026. In April 2026, Schwab announced a spot crypto trading offer that will be offered to retail clients through a phased rollout. The Company plans to provide clients direct access to bitcoin and ethereum trading, combined with educational content and professional support with investment experience. Schwab’s subsidiary, Charles Schwab Premier Bank, SSB (CSPB), will serve as the custodian of clients’ digital assets, responsible for safekeeping and record-keeping. CSPB has engaged Paxos Trust Company, NA, a regulated blockchain infrastructure provider, to deliver sub-custody and trade execution services. Over time, CSPB plans to add additional cryptocurrencies to the platform, as well as transfer capabilities for in-kind deposits and withdrawals, allowing clients with existing digital asset investments to bring them to the Schwab platform alongside their other investments. See Part I – Item 1A – Risk Factors in the 2025 10-K for additional information. (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. - 5 - 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) Acquisition of Forge Global Holdings, Inc. On March 2, 2026, Schwab completed its acquisition of Forge Global Holdings, Inc. (Forge), an operator of a leading private market platform and trading marketplace, for $636 million of cash and other consideration. Integration work is underway, and we anticipate that incorporating Forge’s private company investment capabilities will enhance our ability to meet the evolving needs of investors across our growing client base. Our condensed consolidated financial statements include the financial condition and results of operations for Forge beginning on March 2, 2026. See also Item 1 – Note 3. CURRENT REGULATORY AND OTHER DEVELOPMENTS In March 2026, federal district courts reached final resolutions on pending litigation and formally vacated the U.S. Department of Labor’s April 2024 final rule to broaden the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974. Following the courts’ ruling, the U.S. Department of Labor’s Employee Benefits Security Administration removed the rule from the Code of Federal Regulations. In March 2026, the U.S. federal banking agencies issued a notice of proposed rulemaking regarding amendments to the regulatory capital rules. The March 2026 proposal would replace the banking agencies’ 2023 proposal, and, among other things would require us to include AOCI in regulatory capital under a revised standardized approach, subject to a five-year phase-in period. The comment period for the proposed rules ends on June 18, 2026. The Company’s capital management for consolidated CSC and our banking subsidiaries incorporates measures that are inclusive of AOCI, and we do not anticipate that the proposed rules will have a material impact to the Company’s business, financial condition, or results of operations. Refer to Part II – Item 7 – Current Regulatory and Other Developments in our 2025 Form 10-K for information regarding pending regulatory matters, including the U.S. federal banking agencies’ August 2023 proposed rulemaking on long-term debt requirements for certain large banking organizations. RESULTS OF OPERATIONS Total Net Revenues The following tables present a comparison of revenue by category: Three Months Ended March 31, 2026 2025 Percent Change Amount % of Total Net Revenues Amount % of Total Net Revenues Net interest revenue Interest revenue 5 % $ 3,962 61 % $ 3,757 67 % Interest expense (22) % (818) (12) % (1,051) (19) % Net interest revenue 16 % 3,144 49 % 2,706 48 % Asset management and administration fees Mutual funds, exchange-traded funds (ETFs), collective trust funds (CTFs), alternatives (1) 13 % 991 15 % 878 16 % Managed investing solutions 18 % 674 10 % 569 10 % Other 13 % 94 2 % 83 1 % Asset management and administration fees 15 % 1,759 27 % 1,530 27 % Trading revenue Commissions 13 % 489 8 % 431 8 % Order flow revenue 26 % 560 8 % 443 8 % Principal transactions 18 % 40 1 % 34 — Trading revenue 20 % 1,089 17 % 908 16 % Bank deposit account fees 20 % 295 5 % 245 5 % Other (7) % 195 2 % 210 4 % Total net revenues 16 % $ 6,482 100 % $ 5,599 100 % (1) Beginning in the first quarter of 2026, alternative investments revenue was moved from other asset management and administration fees to mutual funds, ETFs, CTFs, and alternatives. Prior period amounts have been reclassified to reflect this change. ​ - 6 - 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 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 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, Federal Home Loan Bank (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. 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 reflects the impacts of derivatives used to manage interest rate risk. See also Risk Management – Market Risk and Item 1 – Note 12 for additional information. See also Risk Management – Liquidity Risk, Item 1 – Notes 9, 10 and 13, and Part II – Item 7 – Results of Operations – Net Interest Revenue in the 2025 Form 10-K for additional information on the Company’s funding sources. During the first quarter of 2026, the Federal Reserve maintained the upper bound of the target overnight rate at 3.75%. In 2025, the Federal Reserve maintained the upper bound of the target overnight rate at 4.50% 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 increased 2% in the first quarter of 2026 from the same period in 2025, reflecting growth in margin lending, which was supported by higher payables to brokerage clients and payables to brokers, dealers, and clearing organizations, as well as increases in bank lending and cash and investments segregated, partially offset by lower balances of AFS and HTM securities. Client demand for margin and bank lending remained strong in the first quarter of 2026, reflecting client engagement and growth in long/short strategies implemented by RIA clients. Margin loan balances ended the first quarter at $126.7 billion, increasing 52% from March 31, 2025, including $21.3 billion related to long/short strategies implemented by RIA clients. Total bank loans finished the first quarter of 2026 at $60.9 billion, higher by 29% from March 31, 2025, due primarily to growth in PALs and First Mortgages. Client cash activity during the first quarter of 2026 reflected seasonality, organic growth from asset gathering, and client asset allocation decisions against a backdrop of increased market volatility. Bank sweep deposits and payables to brokerage clients increased by a total of $42.1 billion, or 14%, from March 31, 2025 to the end of the first quarter of 2026. - 7 - 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 presents net interest revenue information corresponding to interest-earning assets and funding sources on the condensed consolidated balance sheets: 2026 2025 Three Months Ended March 31, Average Balance Interest Revenue/ Expense Average Yield/Rate Average Balance Interest Revenue/ Expense Average Yield/Rate Interest-earning assets Cash and cash equivalents $ 32,477 $ 288 3.56 % $ 30,483 $ 328 4.31% Cash and investments segregated 43,946 397 3.61 % 38,611 412 4.27% Receivables from brokerage clients (1) 104,520 1,499 5.74 % 82,902 1,379 6.65% Available for sale securities (2) 65,255 326 2.00 % 84,590 433 2.05% Held to maturity securities (2) 132,192 567 1.72 % 144,401 622 1.72% Bank loans 59,285 627 4.27 % 46,043 493 4.32% Total interest-earning assets 437,675 3,704 3.39 % 427,030 3,667 3.44% Securities lending revenue 91 60 Other interest revenue (1) 167 30 Total interest-earning assets $ 437,675 $ 3,962 3.63 % $ 427,030 $ 3,757 3.52% Funding sources Bank deposits $ 242,679 $ 118 0.20 % $ 245,719 $ 436 0.72% Payables to brokers, dealers, and clearing organizations 25,508 217 3.40 % 14,177 137 3.88% Payables to brokerage clients (1) 105,095 56 0.22 % 90,173 49 0.22% Other short-term borrowings 9,103 92 4.07 % 6,695 82 4.96% Federal Home Loan Bank borrowings 1,277 12 3.85 % 10,725 133 4.94% Long-term debt 21,702 201 3.71 % 22,281 212 3.81% Total interest-bearing liabilities 405,364 696 0.69 % 389,770 1,049 1.08% Non-interest-bearing funding sources 32,311 37,260 Other interest expense (1) 122 2 Total funding sources $ 437,675 $ 818 0.75 % $ 427,030 $ 1,051 0.99% Net interest revenue $ 3,144 2.88 % $ 2,706 2.53% (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. Prior period amounts and average yields have been reclassified and recalculated to reflect this change. Average margin loans related to these client strategies totaled $14.1 billion and $235 million for the three months ended March 31, 2026 and 2025, respectively. Average short credits related to these client strategies totaled $14.4 billion and $237 million for the three months ended March 31, 2026 and 2025, respectively. Interest revenue and expense related to these client strategies are presented in other interest revenue and other interest expense, respectively. (2) Amounts have been calculated based on amortized cost. Interest revenue on investment securities is presented net of related premium amortization. ​ Net interest revenue increased $438 million, or 16%, in the first quarter of 2026, compared to the same period in 2025. This increase was primarily due to growth in margin and bank lending, lower aggregate balances of wholesale funding, and lower average rates paid on funding sources, partially offset by lower yields on floating-rate assets due to lower market rates and a decrease in AFS and HTM securities. Net interest margin increased to 2.88% in the first quarter of 2026 compared to 2.53% during the same period in 2025, as reduced aggregate use of wholesale funding and lower rates paid on funding sources more than offset lower yields on floating-rate assets due to lower market interest rates. - 8 - 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) Asset Management and Administration Fees The following table presents asset management and administration fees, average client assets, and average fee yields: Three Months Ended March 31, 2026 2025 Average Client Assets Revenue Average Fee Average Client Assets Revenue Average Fee Schwab money market funds $ 696,558 $ 468 0.27 % $ 621,474 $ 418 0.27 % Schwab equity and bond funds, ETFs, and CTFs 818,316 146 0.07 % 658,588 122 0.08 % Mutual Fund OneSource ® and other no-transaction-fee (NTF) funds 468,101 262 0.23 % 359,696 222 0.25 % Other third-party mutual funds, ETFs, and alternatives (1) 665,887 115 0.07 % 642,852 116 0.07 % Total mutual funds, ETFs, CTFs, and alternatives (1,2) $ 2,648,862 $ 991 0.15 % $ 2,282,610 $ 878 0.16 % Managed investing solutions (2) Fee-based $ 727,883 $ 674 0.38 % $ 590,483 $ 569 0.39 % Non-fee-based 145,628 — — 120,442 — — Total managed investing solutions $ 873,511 $ 674 0.31 % $ 710,925 $ 569 0.32 % Other balance-based fees (1,3) 963,502 69 0.03 % 822,350 64 0.03 % Other (4) 25 19 Total asset management and administration fees $ 1,759 $ 1,530 (1) Beginning in the first quarter of 2026, alternative investments and related revenue were moved from other balance-based fees to other third-party mutual funds, ETFs, and alternatives. Prior period amounts and average fees have been reclassified and recalculated to reflect this change. (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. (3) Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees. (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 $229 million, or 15%, in the first quarter of 2026 compared to the same period in 2025. This increase was primarily a result of continued growth in fee-based managed investing solutions and Schwab money market funds, 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 flows into managed investing solutions, which more than offset equity market declines experienced in the first quarter of 2026. 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. These funds generated 50% of the asset management and administration fees earned in both the first quarter of 2026 and 2025: Schwab Money Market Funds Schwab Equity and Bond Funds, ETFs, and CTFs Mutual Fund OneSource ® and Other NTF funds Three Months Ended March 31, 2026 2025 2026 2025 2026 2025 Balance at beginning of period $ 693,815 $ 596,531 $ 772,686 $ 627,166 $ 454,207 $ 347,798 Net inflows (outflows) 658 38,477 18,876 9,088 (9,070) (7,046) Net market gains (losses) and other 6,281 6,524 (7,210) (11,030) (1,876) (472) Balance at end of period $ 700,754 $ 641,532 $ 784,352 $ 625,224 $ 443,261 $ 340,280 - 9 - 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) Trading Revenue The following tables present trading revenue, client trading activity, and related information: Three Months Ended March 31, Percent Change 2026 2025 Commissions $ 489 $ 431 13 % Order flow revenue Options 363 270 34 % Equities 197 173 14 % Total order flow revenue 560 443 26 % Principal transactions 40 34 18 % Total trading revenue $ 1,089 $ 908 20 % Three Months Ended March 31, Percent Change 2026 2025 DATs (in thousands) 9,899 7,391 34 % Product as a percentage of DATs Equities 56 % 56 % Derivatives 20 % 20 % ETFs 19 % 18 % Mutual funds 4 % 5 % Fixed income 1 % 1 % Number of trading days 61.0 60.0 2 % Revenue per trade (1) $ 1.80 $ 2.05 (12) % (1) Revenue per trade is calculated as trading revenue divided by the product of DATs and the number of trading days. Trading revenue increased $181 million, or 20%, in the first quarter of 2026 compared to the same period in 2025, driven by an increase in order flow revenue, which resulted from market volatility and higher client options trading volume, as well as changes in the mix of equity securities trading. Commissions revenue increased primarily due to higher client trading volume. Bank Deposit Account Fees The Company earns bank deposit account fee revenue from TD Bank USA, National Association and TD Bank, National Association (together, the TD Depository Institutions), in accordance with the Second Amended and Restated Insured Deposit Account Agreement (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 1 – Note 11 for additional information. The following table presents bank deposit account fee revenue and related information: Three Months Ended March 31, Percent Change 2026 2025 Bank deposit account fees $ 295 $ 245 20 % Average bank deposit account balances $ 72,596 $ 84,186 (14) % Average net yield 1.63 % 1.16 % Percentage of average BDA balances designated as: Fixed-rate balances 81 % 78 % Floating-rate balances 19 % 22 % Bank deposit account fees increased $50 million, or 20%, in the first quarter of 2026 compared to the same period in 2025, primarily due to an increase in average net yield and 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 - 10 - 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) earned. The decrease in average BDA balances in the first quarter of 2026 compared to the same period in 2025 was primarily due to the transfer of $1.1 billion of BDA balances to Schwab’s balance sheet during the first three months of 2026 and $6.7 billion of BDA balances transferred in the prior year after September 10, 2025, as well as client cash allocation decisions. 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 the first quarter of 2026 compared to the same period in 2025 due to an increase in the average net yield on fixed-rate BDA balances, which was partially offset by decreases in the average amount of fixed-rate and floating-rate BDA balances and in the net yield on floating-rate BDA balances. The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of March 31, 2026 were 81% and 19%, respectively. Other Revenue Other revenue includes industry fees, certain service fees, other gains and losses, and the provision for credit losses on bank loans. Other revenue decreased $15 million, or 7%, in the first quarter of 2026 compared to the same period in 2025, primarily due to lower industry fees. This decrease was partially offset by higher other service fees and gains recognized on certain equity investments in the first quarter of 2026, and by losses recognized in the first quarter of 2025 on sales of AFS securities. Industry fees decreased primarily due to lower SEC fee rates in effect during the first quarter of 2026 compared to the same period in 2025. At the end of February 2026, the SEC announced that effective April 4, 2026, it would increase the fee rate applicable to most securities transactions from zero, which has been in effect since May 14, 2025. This change will result in higher industry fees in other revenue and a corresponding increase in other expense after the effective date, resulting in no impact to net income. - 11 - 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 The following table presents a comparison of expenses excluding interest: Three Months Ended March 31, Percent Change 2026 2025 Compensation and benefits Salaries and wages $ 1,001 $ 923 8 % Incentive compensation 453 412 10 % Employee benefits and other 358 337 6 % Total compensation and benefits $ 1,812 $ 1,672 8 % Professional services 303 269 13 % Occupancy and equipment 285 274 4 % Advertising and market development 101 96 5 % Communications 163 153 7 % Depreciation and amortization 201 217 (7) % Amortization of acquired intangible assets 132 130 2 % Regulatory fees and assessments 75 89 (16) % Other 222 244 (9) % Total expenses excluding interest $ 3,294 $ 3,144 5 % Expenses as a percentage of total net revenues Compensation and benefits 28 % 30 % Advertising and market development 2 % 2 % Full-time equivalent employees (in thousands) At quarter end 33.5 32.1 4 % Average 33.2 32.1 3 % Expenses excluding interest increased $150 million, or 5%, in the first quarter of 2026, compared to the same period in 2025. Adjusted total expenses, which excludes acquisition and integration-related costs and amortization of acquired intangible assets, increased $137 million, or 5%, in the first quarter of 2026 compared to the same period in 2025. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results. The Company’s first quarter 2026 results include expenses related to Forge subsequent to our March 2, 2026 acquisition (see also Item 1 – Note 3). Acquisition and integration-related costs related to Forge in the first quarter of 2026 totaled $11 million; there were no acquisition and integration-related costs in the first quarter of 2025 . Total compensation and benefits expense increased in the first quarter of 2026 compared to the same period in 2025, primarily due to annual merit increases and growth in headcount, higher incentive compensation, and higher other employee-related costs. Professional services expense increased in the first quarter of 2026 compared to the same period in 2025, reflecting overall growth of the business and increased utilization of other professional services. Professional services included acquisition and integration-related costs of $11 million in the first quarter of 2026. Occupancy and equipment expense increased in the first quarter of 2026 compared to the same period in 2025, primarily driven by higher software subscription costs related to growth of the business. Advertising and market development expense increased in the first quarter of 2026 compared to the same period in 2025, primarily driven by higher client promotional spending. Communications expense increased in the first quarter of 2026 compared to the same period in 2025, primarily due to higher proxy-related expenses, partially offset by lower exchange quotation services expenses. Depreciation and amortization expense decreased in the first quarter of 2026 compared to the same period in 2025, primarily due to lower amortization on internally developed software. - 12 - 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) Amortization of acquired intangible assets was largely consistent in the first quarter of 2026 compared to the same period in 2025. Regulatory fees and assessments decreased in the first quarter of 2026 compared to the same period in 2025, primarily due to lower Federal Deposit Insurance Corporation (FDIC) deposit insurance assessments driven by lower assessment rates due to a decrease in brokered CDs. Other expense decreased in the first quarter of 2026 compared to the same period in 2025, primarily as a result of lower industry fees 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. The decrease was partially offset by certain higher costs resulting from growth of the business and increased trading volume. At the end of February 2026, the SEC announced that effective April 4, 2026, it would increase the fee rate applicable to most securities transactions from zero. This change will result in higher industry fees in other expense and a corresponding increase in other revenue after the effective date, resulting in no impact to net income. Capital expenditures were $173 million and $156 million in the first quarter of 2026 and 2025, respectively. Capital expenditures increased 11% in the first quarter of 2026 compared to the same period in 2025, primarily due to leasehold improvements and telecommunications and information technology equipment related to certain office expansions, and higher investment in internally developed software. This was partially offset by lower investment in purchased software. Taxes on Income Taxes on income were $709 million and $546 million for the first quarter of 2026 and 2025, respectively, resulting in effective tax rates of 22.2% for both periods. The effective tax rate in the first quarter of 2026 remained consistent with the same period in 2025 primarily due to an increase in equity compensation tax deduction benefits and decreases in non-deductible FDIC deposit insurance assessments and in state tax reserves, offset by a decrease in certain tax credits. - 13 - 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 Financial information for our segments is presented in the following table (1) : Investor Services Advisor Services Total Three Months Ended March 31, Percent Change 2026 2025 Percent Change 2026 2025 Percent Change 2026 2025 Net Revenues Net interest revenue 12 % $ 2,425 $ 2,158 31 % $ 719 $ 548 16 % $ 3,144 $ 2,706 Asset management and administration fees 16 % 1,294 1,114 12 % 465 416 15 % 1,759 1,530 Trading revenue 22 % 980 805 6 % 109 103 20 % 1,089 908 Bank deposit account fees 18 % 226 191 28 % 69 54 20 % 295 245 Other (14) % 152 177 30 % 43 33 (7) % 195 210 Total net revenues 14 % 5,077 4,445 22 % 1,405 1,154 16 % 6,482 5,599 Expenses Excluding Interest Compensation and benefits 9 % $ 1,399 $ 1,285 7 % $ 413 $ 387 8 % $ 1,812 $ 1,672 Professional services 16 % 249 214 (2) % 54 55 13 % 303 269 Occupancy and equipment 4 % 223 215 5 % 62 59 4 % 285 274 Advertising and market development 23 % 79 64 (31) % 22 32 5 % 101 96 Communications — 113 113 25 % 50 40 7 % 163 153 Depreciation and amortization (7) % 153 165 (8) % 48 52 (7) % 201 217 Amortization of acquired intangible assets 3 % 109 106 (4) % 23 24 2 % 132 130 Regulatory fees and assessments (16) % 59 70 (16) % 16 19 (16) % 75 89 Other (9) % 184 202 (10) % 38 42 (9) % 222 244 Total expenses excluding interest 6 % 2,568 2,434 2 % 726 710 5 % 3,294 3,144 Income before taxes on income 25 % $ 2,509 $ 2,011 53 % $ 679 $ 444 30 % $ 3,188 $ 2,455 Net New Client Assets (in billions) (1) (22) % $ 54.1 $ 69.5 36 % $ 85.8 $ 62.9 6 % $ 139.9 $ 132.4 (1) In the first quarter of 2026 and 2025, Investor Services includes net outflows of $0.1 billion and $5.3 billion, respectively, from off-platform brokered CDs issued by CSB. Segment Net Revenues Investor Services and Advisor Services total net revenues increased by 14% and 22%, respectively, in the first quarter of 2026 compared to the same period in 2025. Net interest revenue increased for both segments primarily due to growth of margin and bank lending balances, lower aggregate wholesale borrowings, and lower average rates paid on funding sources, partially offset by lower yields on interest-earning assets. Asset management and administration fees increased for both segments primarily as a result of higher balances in managed investing services for Investor Services, coupled with higher balances in Schwab equity and bond funds, ETFs, and CTFs, Mutual Fund OneSource ® , and money market funds for both Investor Services and Advisor Services. Trading revenue increased for both segments primarily due to higher order flow revenue, and, for Investor Services, higher 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. Investor Services other revenue decreased due to lower industry fees, which were partially offset by higher other service fees, gains recognized from certain equity investments and losses recognized on the sale of AFS securities in the first quarter of 2025. Advisor Services other revenue increased as higher other service fees, gains from equity investments, and first quarter 2025 losses on the sale of AFS securities more than offset the impact of lower industry fees. Segment Expenses Excluding Interest Investor Services and Advisor Services total expenses excluding interest increased by 6% and 2%, respectively, in the first quarter of 2026 compared to the same period in 2025. Compensation and benefits expense increased for both segments primarily due to annual merit increases and growth in headcount, higher incentive compensation, and higher other employee-related costs. Professional services expense was largely flat for Advisor Services and increased for Investor Services due to overall growth of the business and increased utilization of other professional services . Occupancy and equipment expense increased for both segments primarily due to higher software subscription costs related to growth of the business . Communications expense increased for Advisor Services primarily due to higher proxy-related expenses, partially offset by - 14 - 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) lower exchange quotation services expenses. Regulatory fees and assessments decreased for both segments, primarily due to lower FDIC assessments driven by lower assessment rates. RISK MANAGEMENT Schwab’s business activities expose it to a variety of risks, including operational, compliance, credit, market, and liquidity risks. The Company has a comprehensive risk management program to identify and manage these risks and their associated potential for financial and reputational impact. For a discussion of our risk management programs, see Part II – Item 7 – Risk Management in the 2025 Form 10-K. Market Risk Market risk is the potential for changes in earnings or the value of financial instruments held by Schwab as a result of fluctuations in interest rates, equity prices, or market conditions. 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 EVE risk. To remain within these limits, we manage the maturity, repricing, and cash flow characteristics of the investment portfolios. Management monitors established guidelines to stay within the Company’s risk appetite. The Company utilizes interest rate swap derivative instruments to assist with managing interest rate risk, the effects of which are incorporated into the Company’s net interest revenue and EVE analyses. For further information on our interest rate risk management strategies utilizing interest rate swaps, see Item 1 – Note 12. 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. 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 used in securities lending and similar activities. Equity market valuations may also affect the level of brokerage client trading activity, margin borrowing, and overall client engagement with Schwab. Additionally, we earn mutual fund and ETF service fees and asset management fees based upon daily balances of certain client assets. Fluctuations in these client asset balances caused by changes in equity valuations directly impact the amount of fee revenue we earn. Our market risk related to financial instruments held for trading is not material. Net Interest Revenue Simulation For our net interest revenue sensitivity analysis, we use net interest revenue simulation modeling techniques to evaluate and manage the effect of changing interest rates. The simulations include all balance sheet interest rate-sensitive assets and liabilities, and include derivative instruments. 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 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. The Company’s net interest revenue sensitivity analyses utilize gradual parallel increases/decreases in interest rates over a twelve month period, though we also regularly simulate the effects of non-parallel shifts and instantaneous shifts of interest rates on net interest revenue. 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, 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 - 15 - 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) 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 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 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 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. While this approach is useful to isolate the impact of changes in interest rates on a statically-sized asset and liability structure, it does not capture changes to client cash allocations. We therefore also conduct dynamically-sized balance sheet compositions as a function of interest rates. 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 twelve months beginning March 31, 2026 and December 31, 2025 of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period: March 31, 2026 December 31, 2025 Increase of 200 basis points 7.3% 8.6% Increase of 100 basis points 3.5% 4.1% Increase of 50 basis points 1.4% 1.7% Decrease of 50 basis points (1.9)% (2.2)% Decrease of 100 basis points (3.7)% (4.4)% Decrease of 200 basis points (7.6)% (8.8)% The Company’s simulated incremental increases and decreases in market interest rates had an overall smaller impact on net interest revenue as of March 31, 2026 compared to December 31, 2025. These changes were primarily due to the use of cash flow hedges related to margin loans beginning in the first quarter of 2026. Effective Duration Effective duration measures price sensitivity relative to a change in prevailing interest rates, taking account of amortizing cash flows and prepayment optionality for mortgage-related securities and loans. Duration is measured in years and commonly interpreted as the average timing of principal and interest cash flows. We seek to manage the Company’s asset duration in relation to management’s estimate of the Company’s liability duration. The Company’s liability duration is impacted by the composition of funding sources and typically decreases in periods of rising market interest rates and increases in periods of declining market interest rates. The Company also utilizes derivative hedging instruments such as interest rate swaps in managing its asset and liability duration. - 16 - 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 presents the Company’s estimated effective durations, which reflect anticipated future payments, by category: March 31, 2026 March 31, 2025 In years Estimated effective duration, exclusive of derivatives: Consolidated total assets 1.7 2.1 Margin loans (1) — — AFS investment securities portfolio 2.3 2.4 AFS and HTM investment securities portfolios 3.7 3.9 Pledged asset lines (2) 0.1 — Long-term debt CSC Senior Notes 3.0 3.1 Estimated effective duration, inclusive of derivatives (3) : Consolidated total assets 1.9 2.1 Margin loans (1) 0.4 — AFS investment securities portfolio 2.0 1.9 AFS and HTM investment securities portfolios 3.6 3.8 Pledged asset lines (2) 1.3 — Long-term debt CSC Senior Notes 0.5 2.2 (1) The duration of margin loans exclusive of derivatives was less than 0.1 years at both March 31, 2026 and 2025. (2) The duration of PALs was less than 0.1 years at March 31, 2025. (3) See Item 1 – Note 12 for additional discussion of the Company’s derivatives. AFS and HTM securities comprised approximately 39% and 47% of the Company’s consolidated total assets as of March 31, 2026 and 2025, respectively. The estimated effective duration of the remaining balance sheet assets, excluding the effect of hedging, in aggregate was less than one year as of both March 31, 2026 and 2025. Economic Value of Equity Simulation Management also uses EVE simulations to measure interest rate risk. EVE sensitivity measures the long-term impact of interest rate changes on the net present value of assets and liabilities, and includes the impact of derivative instruments. 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 sensitivity 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 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. We use both proprietary and independent third-party models to simulate EVE sensitivity and related analyses. We develop and maintain client credits and deposits run-off models internally based on historical experience and prevailing client cash realignment behaviors. 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. Schwab’s EVE profile is characterized by a more stable asset duration relative to liabilities in both higher and lower interest rate environments. Currently, the EVE exposure to rates increasing or decreasing in a similar magnitude produces similar equity valuation changes, as margin loan hedging activities in the first quarter of 2026 have reduced exposure to decreasing rates. Bank Deposit Account Fees Simulation Consistent with the presentation on the consolidated statement of income, the sensitivity of bank deposit account fee revenue to interest rate changes is assessed separately from the net interest revenue simulation described above. As of March 31, 2026 and December 31, 2025, simulated changes in bank deposit account fee revenue from gradual changes in market interest rates relative to prevailing market rates, under the interest rate scenarios described above for net interest revenue, did not have a significant impact on the Company’s total net revenues. Our net interest revenue, EVE, and bank deposit account fee revenue simulations reflect the assumption of non-negative investment yields. - 17 - 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 Risk 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 CS&Co, our principal broker-dealer subsidiary; the capital needs of the banking subsidiaries; principal and interest due on corporate debt; and dividend payments on CSC’s preferred and common stock. The liquidity needs of our broker-dealer subsidiary are primarily driven by client activity, including trading and margin lending activities, and capital expenditures. The capital needs of the banking subsidiaries are primarily driven by client deposit levels and other borrowings. We have established liquidity policies to support the successful execution of business strategies, while ensuring ongoing and sufficient liquidity to meet operational needs and satisfy applicable regulatory requirements under both normal and stressed conditions. We seek to maintain client confidence in the balance sheet and the safety of client assets by maintaining liquidity and diversity of funding sources to allow the Company to meet its obligations. To this end, we have established limits and contingency funding plans to support liquidity levels during both business as usual and stressed conditions. We employ a variety of metrics to monitor and manage liquidity. We conduct regular liquidity stress testing to develop a view of liquidity risk exposures and to ensure our ability to maintain sufficient liquidity during market-related or company-specific liquidity stress events. Liquidity sources are also tested periodically and results are reported to the Financial Risk Oversight Committee. A number of early warning indicators are monitored to help identify emerging liquidity stresses in the market or within the organization and are reviewed with management periodically. Funding Sources Schwab’s primary source of funds is cash generated by client activity which includes bank deposits and cash balances in client brokerage accounts. 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 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. For unanticipated liquidity needs, we also maintain a buffer of highly liquid investments, including U.S. Treasury securities. Our clients’ bank deposits and brokerage cash balances primarily originate from our 39.1 million active brokerage accounts. More than 80% of our bank deposits qualified for FDIC insurance as of March 31, 2026. 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 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. - 18 - 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 describes certain external debt facilities available at March 31, 2026: Description Borrower Outstanding Available Maturity of Amounts Outstanding Weighted-Average Interest Rate on Amounts Outstanding FHLB secured credit facilities Banking subsidiaries $ — $ 33,463 (1) N/A — Federal Reserve discount window Banking subsidiaries — 28,610 (1) N/A — Repurchase agreements Banking subsidiaries, CSC, CS&Co 3,499 — (2) April 2026 - June 2026 (3) 3.89% Unsecured uncommitted lines of credit with various external banks CSC, CS&Co — 1,892 N/A — Unsecured commercial paper CSC, CS&Co 4,726 10,274 (4) May 2026 - August 2026 3.95% Secured uncommitted lines of credit with various external banks CS&Co 4,800 — (5) April 2026 - June 2026 4.11% (1) Amounts shown as available from the FHLB and Federal Reserve facilities represent remaining capacity based on assets pledged as of March 31, 2026. Incremental borrowing capacity may be made available by pledging additional assets, subject to applicable facility terms. See below and Item 1 – Note 10 for additional information. (2) Secured borrowing capacity is made available based on our borrower’s ability to provide collateral deemed acceptable by each respective counterparty. See below and Item 1 – Note 13 for additional information. (3) Repurchase agreements outstanding as of March 31, 2026 at CS&Co maintain continuous contractual maturities of 35-60 days and are included in payables to brokers, dealers, and clearing organizations on the condensed consolidated balance sheets. (4) Outstanding balance of unsecured commercial paper as of March 31, 2026 represents the gross par value before discount of $39 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. N/A Not applicable. Available borrowing capacity from the FHLB and Federal Reserve facilities maintained by our banking subsidiaries is dependent on the value of assets pledged and the terms of the borrowing arrangements. As of March 31, 2026, the Company had additional investment securities with a par value of approximately $149 billion, or a fair value of approximately $136 billion, available to be pledged to obtain additional capacity. 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, home equity lines of credit (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 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 and are counterparties to the Standing Repo 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 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. CSC’s ratings for Commercial Paper Notes were P1 by Moody’s, A2 by Standard & Poor’s, and F1 by Fitch at March 31, 2026. 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 has a variety of external debt facilities available. 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. At the end of the first quarter of 2026, CS&Co received authorization from its Board of Directors to issue unsecured Commercial Paper Notes of up to $10.0 billion. CS&Co’s ratings for Commercial Paper Notes were P1 by Moody’s and A1 by Standard & Poor’s at March 31, 2026. CS&Co also engages with - 19 - 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) 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 March 31, 2026, liabilities for securities loaned totaled $26.5 billion and are included in payables to brokers, dealers, and clearing organizations on the condensed consolidated balance sheets. As of March 31, 2026, $13.4 billion of securities loaned had overnight and continuous remaining contractual maturities; $13.1 billion of securities loaned had contractual maturities of 35-95 days and had a weighted-average interest rate of 3.96%. See Item 1 – Note 13 for additional information on securities lending activities. CSB issues brokered CDs as a source of funding. As of March 31, 2026, there were $2.4 billion brokered CDs issued by CSB outstanding with maturities ranging from April 2026 to June 2026 and a weighted-average interest of 3.77%. Cash Flow Activity The Company’s cash and cash equivalents decreased $1.1 billion from year-end 2025 to $45.0 billion at March 31, 2026; cash and cash equivalents, including amounts restricted, increased $3.6 billion from year-end 2025 to $73.3 billion at March 31, 2026. Net cash inflows from operations were $7.3 billion, reflecting growth in payables to brokerage clients and payables to brokers, dealers, and clearing organizations. Cash flows from investing activities were largely offsetting, as outflows of $3.0 billion from strong growth in bank loans and $853 million of net outflows related to our acquisition of Forge and other investing activities were largely offset by net inflows of $3.9 billion from our AFS and HTM securities. Net financing outflows were $3.7 billion, primarily driven by a net decrease of $2.7 billion in bank deposits, outflows of $3.0 billion for common stock repurchases and dividends paid, and repayments of $1.9 billion of FHLB borrowings and $1.6 billion of long-term debt, partially offset by $5.5 billion in net proceeds from other short-term borrowings. Liquidity Coverage Ratio Schwab is subject to the full LCR rule, which requires the Company to hold high quality liquid assets (HQLA) in an amount equal to at least 100% of the Company’s projected net cash outflows over a prospective 30-calendar-day period of acute liquidity stress, calculated on each business day. See Part I – Item 1 – Business – Regulation in the 2025 Form 10-K for additional information. The Company was in compliance with the LCR rule at March 31, 2026, and the table below presents information about our average daily LCR: Average for the Three Months Ended March 31, 2026 December 31, 2025 Total eligible HQLA $ 52,475 $ 55,450 Net cash outflows 38,895 42,415 LCR 135 % 131 % 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 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. Net Stable Funding Ratio Schwab is subject to disclosure requirements under the NSFR rule, which requires the semi-annual public disclosure of its NSFR levels. The NSFR rule stipulates that the Company’s available stable funding (ASF) must be at least 100% of the Company’s required stable funding (RSF). ASF is calculated by assessing the stability of the Company’s funding sources and RSF is calculated by evaluating the characteristics of the Company’s assets, derivatives, and off-balance-sheet exposures. The Company was in compliance with the NSFR rule at March 31, 2026. ​ ​ Long-Term Borrowings The Company’s long-term debt is primarily comprised of Senior Notes and totaled $20.5 billion and $22.2 billion at March 31, 2026 and December 31, 2025, respectively. - 20 - 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 provides information about our Senior Notes outstanding at March 31, 2026: March 31, 2026 Par Outstanding Maturity Weighted-Average Interest Rate (1) Moody’s Standard & Poor’s Fitch CSC Senior Notes $ 20,519 2026 - 2036 3.89% A2 A- A 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 12 for information on the Company’s hedging of Senior Notes. New Debt Issuances There were no new debt issuances of senior unsecured obligations in the first three months of 2026. Equity Issuances and Redemptions There were no new issuances of preferred stock in the first three months of 2026. On April 22, 2026, the Company issued $1.5 billion of Series L preferred stock. Additionally, on May 4, 2026, the Company announced it will redeem on June 1, 2026 all of the outstanding shares of its Series I preferred stock and the corresponding depositary shares. Schwab enters into guarantees and other similar arrangements in the ordinary course of business. For information on these arrangements, see Item 1 – Notes 7, 8, 10, 11, and 13. Pursuant to the 2023 IDA agreement, certain brokerage accounts are required to be swept off-balance sheet to the TD Depository Institutions. See Item 1 – Note 11 for additional information. Additional information regarding our sources and uses of liquidity and management of liquidity risk is included in Part II – Item 7 – Risk Management – Liquidity Risk in our 2025 Form 10-K. See also Item 1 – Condensed Consolidated Statements of Cash Flows, Item 1 – Note 9 for the Company’s bank deposits, Item 1 – Note 10 for the Company’s debt and borrowing facilities, Item 1 – Note 13 for the Company’s securities lending and collateralized financing activities, and Item 1 – Note 15 for the Company’s equity outstanding balances and activity. 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, 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 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, balance sheet growth, or declines in asset values, we have adopted a policy to remain well capitalized even in stressed scenarios. Regulatory Capital Requirements CSC and certain subsidiaries, including our banking and broker-dealer subsidiaries, are subject to various capital requirements set by regulatory agencies as discussed in further detail in Part II – Item 7 – Capital Management of the 2025 Form 10-K and in Item 1 – Note 18. As of March 31, 2026, CSC and our banking subsidiaries are considered well capitalized, and CS&Co is in compliance with its net capital requirements. 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 of such measures to GAAP reported results). - 21 - 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: March 31, 2026 December 31, 2025 CSC CSB CSC CSB Total stockholders’ equity $ 49,234 $ 18,260 $ 49,425 $ 18,658 Less: Preferred stock 6,763 — 6,763 — Common Equity Tier 1 Capital before regulatory adjustments $ 42,471 $ 18,260 $ 42,662 $ 18,658 Less: Goodwill, net of associated deferred tax liabilities $ 12,050 $ 13 $ 11,711 $ 13 Other intangible assets, net of associated deferred tax liabilities 5,941 — 5,811 — Deferred tax assets, net of valuation allowances and deferred tax liabilities 100 43 38 43 AOCI adjustment (1) (10,751) (9,270) (10,979) (9,524) Common Equity Tier 1 Capital $ 35,131 $ 27,474 $ 36,081 $ 28,126 Tier 1 Capital $ 41,894 $ 27,474 $ 42,844 $ 28,126 Total Capital 41,937 27,512 42,894 28,163 Risk-Weighted Assets 133,572 80,839 118,782 78,281 Average Assets with regulatory adjustments 471,426 252,021 462,473 252,828 Total Leverage Exposure 475,594 254,512 465,794 254,975 Common Equity Tier 1 Capital/Risk-Weighted Assets 26.3 % 34.0 % 30.4 % 35.9 % Tier 1 Capital/Risk-Weighted Assets 31.4 % 34.0 % 36.1 % 35.9 % Total Capital/Risk-Weighted Assets 31.4 % 34.0 % 36.1 % 36.0 % Tier 1 Leverage Ratio 8.9 % 10.9 % 9.3 % 11.1 % Supplementary Leverage Ratio 8.8 % 10.8 % 9.2 % 11.0 % (1) Changes in market interest rates can result in unrealized gains or losses on AFS securities, which are included in AOCI. 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 was 8.9% at March 31, 2026, down from 9.3% at year-end 2025. This decrease reflects returns of excess capital and higher total Company assets, partially offset by organic growth from net income. CSB’s Tier 1 Leverage Ratio decreased from 11.1% at year-end 2025, ending the first quarter of 2026 at 10.9%, primarily as a result of dividends to CSC, partially offset by lower total assets as well as net income during the quarter. As of March 31, 2026, 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 6.8% for CSC (consolidated), decreasing from 7.1% as of year-end 2025 as a result of returns of excess capital, partially offset by net income. CSB’s adjusted Tier 1 Leverage Ratio (see Non-GAAP Financial Measures) was 7.5%, down slightly from 7.6% as of year-end 2025 due to dividends to CSC, largely offset by net income. - 22 - 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) Dividends 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. Cash dividends paid and per share amounts for the first three months of 2026 and 2025 are as follows: 2026 2025 Three Months Ended March 31, Cash Paid Per Share Amount Cash Paid Per Share Amount Common Stock $ 562 $ .32 $ 492 $ .27 Preferred Stock: Series D (1) 11 14.88 11 14.88 Series F (2) — — — — Series G (3) — — 33 1,343.75 Series H (1) 22 1,000.00 22 1,000.00 Series I (1) 21 1,000.00 21 1,000.00 Series J (1) 7 11.13 7 11.13 Series K (1) 9 1,250.00 9 1,250.00 (1) Dividends are paid quarterly. (2) Dividends are paid semi-annually until December 1, 2027 and quarterly thereafter. (3) Series G was redeemed on June 2, 2025. Prior to redemption, dividends were paid quarterly. The final dividend was paid on June 2, 2025. Share Repurchases During the three months ended March 31, 2026, CSC repurchased 24.3 million shares of its common stock under its $20 billion authorization for $2.4 billion. As of March 31, 2026, approximately $12.1 billion remained on the $20 billion authorization. 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. Common stock repurchases, net of issuances, are subject to a nondeductible 1% excise tax which is recognized as a direct and incremental cost associated with these transactions. The tax is recorded as part of the cost basis of the treasury stock repurchased, resulting in no impact to the condensed consolidated statements of income. See Item 1 – Note 15 for additional information. OTHER Foreign Exposure At March 31, 2026, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries. At March 31, 2026, the fair value of these holdings totaled $12.7 billion, with the top three exposures being to issuers and counterparties domiciled in France at $8.0 billion, the United Kingdom at $2.8 billion, and Norway at $750 million. 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. In addition, - 23 - 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 had outstanding margin loans to foreign residents of $5.2 billion and $4.8 billion at March 31, 2026 and December 31, 2025, respectively. CRITICAL ACCOUNTING ESTIMATES Certain of our accounting policies that involve a higher degree of judgment and complexity are discussed in Part II – Item 7 – Critical Accounting Estimates in the 2025 Form 10-K. There have been no changes to critical accounting estimates during the first three months of 2026. NON-GAAP FINANCIAL MEASURES In addition to disclosing financial results in accordance with generally accepted accounting principles in the U.S. (GAAP), Management’s Discussion and Analysis of Financial Condition and Results of Operations contain references to the non-GAAP financial measures described below. We believe these non-GAAP financial measures provide useful supplemental information about the financial performance of the Company, and facilitate meaningful comparison of Schwab’s results in the current period to both historic and future results. These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAP financial measures presented by other companies. Schwab’s use of non-GAAP measures is reflective of certain adjustments made to GAAP financial measures as described below. Non-GAAP Adjustment or Measure Definition Usefulness to Investors and Uses by Management Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs Schwab adjusts certain GAAP financial measures to exclude the impact of acquisition and integration-related costs incurred as a result of the Company’s acquisitions, amortization of acquired intangible assets, restructuring costs, and, where applicable, the income tax effect of these expenses. Adjustments made to exclude amortization of acquired intangible assets are reflective of all acquired intangible assets, which were recorded as part of purchase accounting. These acquired intangible assets contribute to the Company’s revenue generation. Amortization of acquired intangible assets will continue in future periods over their remaining useful lives. We exclude acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs for the purpose of calculating certain non-GAAP measures because we believe doing so provides additional transparency of Schwab’s ongoing operations, and is useful in both evaluating the operating performance of the business and facilitating comparison of results with prior and future periods. Costs related to acquisition and integration or restructuring fluctuate based on the timing of acquisitions, integration and restructuring activities, thereby limiting comparability of results among periods, and are not representative of the costs of running the Company’s ongoing business. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of the Company’s underlying operating performance. Return on tangible common equity Return on tangible common equity represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets — net, and related deferred tax liabilities. Acquisitions typically result in the recognition of significant amounts of goodwill and acquired intangible assets. We believe return on tangible common equity may be useful to investors as a supplemental measure to facilitate assessing capital efficiency and returns relative to the composition of Schwab’s balance sheet. Adjusted Tier 1 Leverage Ratio Adjusted Tier 1 Leverage Ratio represents the Tier 1 Leverage Ratio as prescribed by bank regulatory guidance for the consolidated company and for CSB, adjusted to reflect the inclusion of AOCI in the ratio. Inclusion of the impacts of AOCI in the Company’s Tier 1 Leverage Ratio provides additional information regarding the Company’s current capital position. We believe Adjusted Tier 1 Leverage Ratio may be useful to investors as a supplemental measure of the Company’s capital levels. The Company also uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee of CSC’s Board of Directors maintains discretion in evaluating performance against these criteria. Additionally, the Company uses adjusted Tier 1 Leverage Ratio in managing capital, including its use of the measure as its long-term operating objective. - 24 - 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 tables present reconciliations of GAAP measures to non-GAAP measures: Three Months Ended March 31, 2026 2025 Total expenses excluding interest (GAAP) $ 3,294 $ 3,144 Amortization of acquired intangible assets (132) (130) Acquisition and integration-related costs (1) (11) — Adjusted total expenses (non-GAAP) $ 3,151 $ 3,014 (1) Acquisition and integration-related costs for the three months ended March 31, 2026 primarily consist of professional services. There were no acquisition and integration-related costs for the three months ended March 31, 2025. Three Months Ended March 31, 2026 2025 Amount Diluted EPS Amount Diluted EPS Net income available to common stockholders (GAAP), Earnings per common share — diluted (GAAP) $ 2,397 $ 1.37 $ 1,796 $ .99 Amortization of acquired intangible assets 132 .07 130 .07 Acquisition and integration-related costs 11 .01 — — Income tax effects (1) (34) (.02) (31) (.02) Adjusted net income available to common stockholders (non-GAAP), Adjusted diluted EPS (non-GAAP) $ 2,506 $ 1.43 $ 1,895 $ 1.04 (1) The income tax effects of the non-GAAP adjustments are determined using an effective tax rate reflecting the exclusion of non-deductible acquisition costs and are used to present the acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs on an after-tax basis. Three Months Ended March 31, 2026 2025 Return on average common stockholders’ equity (GAAP) 23 % 18 % Average common stockholders’ equity $ 42,567 $ 39,752 Less: Average goodwill (12,125) (11,951) Less: Average acquired intangible assets — net (7,323) (7,679) Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets — net 1,693 1,709 Average tangible common equity $ 24,812 $ 21,831 Adjusted net income available to common stockholders (1) $ 2,506 $ 1,895 Return on tangible common equity (non-GAAP) 40 % 35 % (1) See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP). March 31, 2026 December 31, 2025 March 31, 2025 CSC CSB CSC CSB CSC CSB Tier 1 Leverage Ratio (GAAP) 8.9 % 10.9 % 9.3 % 11.1 % 9.9 % 12.1 % Tier 1 Capital $ 41,894 $ 27,474 $ 42,844 $ 28,126 $ 45,213 $ 33,078 Plus: AOCI adjustment (10,631) (9,240) (11,017) (9,562) (13,614) (11,835) Adjusted Tier 1 Capital 31,263 18,234 31,827 18,564 31,599 21,243 Average assets with regulatory adjustments 471,426 252,021 462,473 252,828 457,495 272,273 Plus: AOCI adjustment (10,703) (9,341) (11,333) (9,875) (14,165) (12,419) Adjusted average assets with regulatory adjustments $ 460,723 $ 242,680 $ 451,140 $ 242,953 $ 443,330 $ 259,854 Adjusted Tier 1 Leverage Ratio (non-GAAP) 6.8 % 7.5 % 7.1 % 7.6 % 7.1 % 8.2 %