SCHWAB CHARLES CORP

6. Investment Securities

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

(1)As of December 31, 2024 and 2023, approximately 35% and 36%, respectively, of the total AFS corporate debt securities were issued by institutions in the financial services industry.

(2)Approximately 62% and 61% of asset-backed securities held as of December 31, 2024 and 2023, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 25% and 24% of the asset-backed securities held as of December 31, 2024 and 2023, respectively.

(3)This represents the amount of PLM fair value hedge basis adjustments related to AFS securities hedged in a closed portfolio. See Notes 2 and 17 for more information on PLM hedge accounting.

At December 31, 2024, our banking subsidiaries had pledged investment securities with a fair value of $62.7 billion (collateral value of $58.1 billion) as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13). Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $31.6 billion (collateral value of $30.5 billion) as collateral for this facility at December 31, 2024. The Company also pledges investment securities issued by federal agencies to secure certain trust deposits. The fair value and collateral value of these pledged securities was $1.5 billion at December 31, 2024.

At December 31, 2024, our banking subsidiaries had pledged HTM securities as collateral under repurchase agreements with external financial institutions. HTM securities pledged were U.S. agency mortgage-backed securities with an aggregate amortized cost of $5.9 billion. Securities pledged as collateral under these repurchase agreements may be sold, repledged, or otherwise used by the counterparties. See Notes 2, 13, and 18 for additional information on these repurchase agreements.

• 83 -

At December 31, 2024, the Company had pledged AFS securities consisting of U.S. Treasury securities with an aggregate fair value of $378 million as initial margin on interest rate swaps (see Notes 17 and 18). All of Schwab’s interest rate swaps are cleared through CCPs which require the Company to post initial margin as collateral against potential losses. Initial margin is posted through FCMs which serve as the intermediary between the CCPs and Schwab. The FCM agreements governing our swaps allow for securities pledged as initial margin to be sold, repledged, or otherwise used by the FCM.

AFS investment securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:

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

(2) For purposes of this table, unrealized losses on AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $47 million and $19 million at December 31, 2024 and 2023, respectively.

At December 31, 2024, substantially all rated securities in the investment portfolios were investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises.

For a description of management’s quarterly evaluation of AFS securities in unrealized loss positions, see Note 2. No amounts were recognized as credit loss expense andno securities were written down to fair value through earnings for the years ended December 31, 2024 and 2023. None of the Company’s AFS securities held as of December 31, 2024 and 2023 had an allowance for credit losses. All HTM securities as of December 31, 2024 and 2023 were U.S. agency mortgage-backed securities and therefore hadno allowance for credit losses because expected nonpayment of the amortized cost basis is zero.

The Company had $455 million and $565 million of accrued interest for AFS and HTM securities as of December 31, 2024 and 2023, respectively. These amounts are excluded from the amortized cost basis and fair market value of AFS and HTM securities and included in other assets on the consolidated balance sheets. There wereno writeoffs of accrued interest receivable on AFS and HTM securities during the years ended December 31, 2024 or 2023.

• 84 -

The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at December 31, 2024:

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

In the table below, mortgage-backed securities and other asset-backed securities have been allocated to maturity groupings based on final contractual maturities. As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below.

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

(1) For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $47 million at December 31, 2024.

(2) The weighted-average yield is computed using the amortized cost at December 31, 2024.

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

• 85 -