SCHWAB CHARLES CORP

Previous wording

Management estimates that investable wealth in the United States (U.S.) (consisting of assets in defined contribution, retail wealth management and brokerage, and RIA channels, along with bank deposits) currently exceeds $90 trillion, which means the Company’s $13.08 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.

Current wording

Management estimates that investable wealth in the United States (U.S.) (consisting of assets in defined contribution, retail wealth management and brokerage, and RIA channels, along with bank deposits) currently exceeds $90 trillion, which means the Company’s $13.33 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.

Previous wording

•Growth of our client base and our business, strong client engagement, sustained demand for the Company’s offerings and solutions, and strategic initiatives (see Overview in Part I – Item 2);

Current wording

•Growth of our client base, client engagement, sustained demand for the Company’s offerings and solutions, and investments in strategic initiatives (see Overview in Part I – Item 2);

Previous wording

•Capital expenditures and expense management (see Results of Operations in Part I – Item 2);

Current wording

•Expense growth, capital expenditures, and expense management (see Results of Operations in Part I – Item 2);

Previous wording

•Net interest revenue, client cash allocation, and adjustment of rates paid on client-related liabilities (see Results of Operations in Part I – Item 2);

Current wording

•Net interest revenue, client cash activity, and adjustment of rates paid on client-related liabilities (see Results of Operations in Part I – Item 2);

Previous wording

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

Current wording

•Diversified funding sources and funding strategy (see Results of Operations in Part I – Item 2, and Liquidity Risk in Part I – Item 2);

Previous wording

•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);

Current wording

•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; and balance sheet composition (see Risk Management in Part I – Item 2);

Previous wording

Management focuses on several client activity and financial metrics in evaluating Schwab’s financial position and operating performance. Results for the second quarter and first six months of 2026 and 2025 are as follows:

Current wording

Management focuses on several client activity and financial metrics in evaluating Schwab’s financial position and operating performance. Results for the third quarter and first nine months of 2026 and 2025 are as follows:

Previous wording

(1) The second quarter and first six months of 2026 include net outflows of $1.1 billion and $1.2 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB. The second quarter and first six months of 2025 include net outflows of $6.7 billion and $12.0 billion, respectively, from off-platform brokered CDs issued by CSB.

Current wording

(1) The third quarter and first nine months of 2026 include net inflows of $2.0 billion and $0.8 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB. The third quarter and first nine months of 2025 include net outflows of $3.1 billion and $15.1 billion, respectively, from off-platform brokered CDs issued by CSB.

Previous wording

The second quarter and first six months of 2026 was a changing but generally positive macroeconomic environment for clients. While equity markets declined amid elevated volatility in the first quarter of 2026, market returns rebounded strongly positive and volatility eased in the second quarter, as the Standard and Poor’s® 500 Index and NASDAQ Composite® rose 15% and 21%, respectively, in the second quarter, finishing the first half of the year up 10% and 13%, respectively. The Federal Reserve kept the target federal funds overnight rate unchanged throughout the first six months of 2026, while the 10-year U.S. Treasury yield rose 25 basis points to 4.44% at June 30.

Current wording

The third quarter and first nine months of 2026 were characterized by a changing but generally positive macroeconomic environment for clients. Following equity market declines in the first quarter, market returns rebounded strongly in the second quarter and posted modest gains in the third quarter. The Standard and Poor’s® 500 Index and the NASDAQ Composite® both rose 2% in the third quarter, ending the first nine months of the year up 12% and 16%, respectively. The Federal Reserve held the upper bound of the target federal funds overnight rate at 3.75% for most of the first nine months of 2026 before increasing the rate by 25 basis points in September. The 10-year U.S. Treasury yield continued to rise in 2026, increasing 85 basis points in the third quarter and over 100 basis points for the year.

Previous wording

Supported by equity market growth and strong asset gathering, total client assets increased to $13.08 trillion at June 30, up 10% from year-end 2025. Schwab attracted core net new assets of $119.8 billion in the second quarter of 2026, up 49% from the same period in 2025, bringing the total for the first half of the year to $259.8 billion, up 19% from the first half of 2025. New brokerage accounts were 1.4 million and 2.7 million in the second quarter and first half of 2026, respectively, up 26% and 18% from the same prior-year periods, and active brokerage accounts reached 39.8 million at June 30, 2026, up 6% year-over-year. Clients continued to be highly engaged in the markets throughout the first half of 2026, with DATs reaching 11.9 million and 10.9 million in the second quarter and first six months of 2026, respectively, higher by 57% and 46% from the respective 2025 periods.

Current wording

Supported by equity market gains and strong asset gathering, total client assets increased to $13.33 trillion at September 30, up 2% in the third quarter and 12% from year-end 2025. Core net new assets were $190.4 billion in the third quarter, up 38% from the third quarter of 2025, bringing the total for the first nine months of 2026 to $450.2 billion, an increase of 27% from the same period in 2025. New brokerage accounts were 1.2 million and 3.9 million for the third quarter and first nine months of 2026, respectively, up 9% and 15% from the same periods in 2025, and active brokerage accounts grew 6% year-over-year to 40.3 million at September 30. Client engagement with the markets continued to be strong throughout the first nine months of the year, even as activity declined modestly from the second quarter to the third quarter. DATs were 10.7 million, up 44% from

Previous wording

Schwab’s financial results for the second quarter and first six months of 2026 reflected the growth of our client base, strong client engagement, and sustained demand for Schwab’s lending offerings and managed investing solutions. Net income increased to $2.8 billion and $5.3 billion in the second quarter and first six months of 2026, respectively, higher by 32% and 31% from the same periods in 2025. Diluted EPS was $1.54 and $2.91 in the second quarter and first six months of 2026, respectively, rising year-over-year 43% and 41%, respectively. Adjusted diluted EPS(1) was $1.62 and $3.05 in the second quarter and first six months of 2026, respectively, up 42% and 41% from the same prior-year periods.

Current wording

Schwab’s financial results for the third quarter and first nine months of 2026 reflected strong asset gathering and growth in our client base, client engagement, and sustained demand for Schwab’s lending offerings and managed investing solutions. Net income rose to $2.9 billion and $8.2 billion for third quarter and first nine months of 2026, respectively, higher by 23% and 28% from the same periods in 2025. Diluted EPS was $1.62 and $4.53 for the third quarter and first nine months of 2026, respectively, increasing year-over-year by 29% and 36%, respectively. Adjusted diluted EPS(1) was $1.69 and $4.73 for the third quarter and first nine months of 2026, respectively, rising 29% and 36% from the same prior-year periods.

Previous wording

Total net revenues were $7.1 billion and $13.6 billion in the second quarter and first six months of 2026, respectively, growing 21% and 18% from the same periods in 2025. Net interest revenue was $3.4 billion and $6.5 billion in the second quarter and first six months of the year, respectively, higher by 19% and 18% from the same periods in 2025, reflecting growth in margin and bank lending solutions and lower average wholesale borrowings, partially offset by lower yields on floating-rate assets, lower available for sale (AFS) and held to maturity (HTM) securities, and lower segregated cash and investments. Asset management and administration fees totaled $1.8 billion and $3.6 billion in the second quarter and first six months of 2026, respectively, increasing 16% from both comparable periods in 2025, due primarily to higher average client assets driven by asset gathering, market appreciation, and growth in managed investing solutions. Trading revenue was $1.2 billion and $2.3 billion in the second quarter and first half of 2026, respectively, increasing 28% and 24% from the comparable periods in 2025, reflecting higher order flow revenue and commissions due to higher trading volume and mix of trading activity. Bank deposit account fee revenue was $333 million and $628 million in the second quarter and first six months of 2026, respectively, increasing 35% and 28% from the same periods in 2025, due primarily to higher net yields, partially offset by lower average bank deposit account balances (BDA balances).

Current wording

Total net revenues for the third quarter and first nine months of 2026 were $7.2 billion and $20.7 billion, respectively, growing 17% and 18% from the same periods in 2025. Net interest revenue totaled $3.5 billion and $10.0 billion for the third quarter and first nine months of the year, respectively, rising 14% and 16% from the same prior-year periods. Third-quarter growth reflected strong demand for margin and bank lending solutions, partially offset by lower yields on floating-rate assets and higher average wholesale borrowings as robust demand for lending solutions outpaced deposit growth. The year-to-date increase in net interest revenue resulted primarily from growth in margin and bank lending and lower average wholesale borrowings, partially offset by lower yields on floating-rate assets. Asset management and administration fees totaled $1.9 billion and $5.5 billion for the third quarter and first nine months of 2026, respectively, increasing 14% and 15% from the comparable periods in 2025, due primarily to higher average client assets driven by market appreciation, asset gathering, and growth in managed investing solutions. Trading revenue was $1.2 billion and $3.5 billion for the third quarter and first nine months of 2026, respectively, up 16% and 21% from the same periods in 2025, resulting from higher order flow revenue and commissions reflecting the impacts of higher DATs and changes in the mix of client trading activity. Bank deposit account fee revenue was $345 million and $973 million for the third quarter and first nine months of 2026, respectively, rising 40% and 32% from the same periods in 2025 due primarily to higher net yields, partially offset by lower average bank deposit account balances (BDA balances).

Previous wording

Total expenses excluding interest were $3.4 billion and $6.7 billion in the second quarter and first six months of 2026, respectively, up 12% and 8% from the same prior-year periods. For the second quarter and first six months of 2026, adjusted total expenses(1) were $3.2 billion and $6.4 billion, respectively, increasing 11% and 8% from the comparable periods in 2025. These increases in expenses were driven by strong client engagement and the inclusion of Forge Global Holdings, Inc. (Forge) beginning in March 2026, as well as continued investments in key strategic initiatives including supporting organic growth, new products, and ongoing scale and efficiency efforts. These factors contributed to higher compensation and benefits expenses, reflecting growth in headcount, including financial consultants and wealth advisors, and higher incentive compensation, higher professional services and occupancy and equipment expenses, and, for the quarter-to-date period, higher industry fees within other expense.

Current wording

Total expenses excluding interest were $3.4 billion and $10.1 billion in the third quarter and first nine months of 2026, respectively, increasing 9% and 8% from the same periods in 2025. Adjusted total expenses(1) were $3.2 billion and $9.6 billion for the third quarter and first nine months of the year, respectively, also higher by 9% and 8% from the same prior-year periods. These increases in expenses were driven by higher compensation and benefits, professional services, occupancy and equipment expenses, and higher industry fees within other expense. The year-over-year growth also reflected higher volume-related costs and continued investments in key strategic initiatives including supporting organic growth, new products, and ongoing scale and efficiency efforts.

Previous wording

Schwab continued to support our clients’ evolving needs through effective management of the balance sheet and financial resources, including sustained demand for margin and bank lending in the first half of 2026. Total balance sheet assets were $517.3 billion at June 30, increasing 5% from year-end 2025. Client demand for margin loans was strong, with receivables from brokerage clients reaching $122.8 billion at June 30, rising 16% during the second quarter and 17% year-to-date. Bank loans totaled $67.0 billion at June 30, 2026, rising 16% year-to-date and 10% during the second quarter, reflecting growth in pledged asset lines (PALs) and first lien residential real estate mortgage loans (First Mortgages).

Current wording

Schwab continued to support our clients’ evolving needs, including continued strong demand for margin and bank lending, through effective management of the balance sheet and our diverse funding sources. Total balance sheet assets were $520.7 billion at the end of the third quarter, increasing 6% year-to-date. Receivables from brokerage clients increased to $128.1 billion at September 30, up 4% during the third quarter and up 22% from year-end 2025, reflecting robust client demand for margin loans. Bank loans totaled $72.3 billion at September 30, 2026, up 8% during the third quarter and up 25% year-to-date, driven by strong client demand for pledged asset lines (PALs) and first lien residential real estate mortgage loans (First Mortgages).

Previous wording

During the second quarter and first six months of 2026, the Company repurchased common stock of $1.0 billion and $3.4 billion, respectively, and also increased its common dividend by 19% to $.32 per share during the first quarter of the year. During the second quarter, the Company issued $1.5 billion of Series L preferred stock, and redeemed $2.1 billion of Series I preferred stock. Inclusive of both returns of capital and capital generation during the first half of 2026 from earnings, the Company’s consolidated Tier 1 Leverage Ratio at June 30, 2026 was 8.7%, down from 9.3% at year-end 2025. Our consolidated adjusted Tier 1 Leverage Ratio(1) was 6.8% at the end of the second quarter, down from 7.1% at year-end 2025, and within our long-term operating objective of 6.75% - 7.00%.

Current wording

During the third quarter and first nine months of 2026, the Company repurchased common stock totaling $500 million and $3.9 billion, respectively, and also increased its common dividend by 19% to $.32 per share during the first quarter of the year. During the second quarter, the Company issued $1.5 billion of Series L preferred stock, and redeemed $2.1 billion of Series I preferred stock. Inclusive of these capital actions and generation from earnings during the first nine months of 2026, the Company’s consolidated Tier 1 Leverage Ratio was 8.9% at September 30, down from 9.3% at year-end 2025. Our consolidated adjusted Tier 1 Leverage Ratio(1) was 7.0% at the end of the third quarter, down slightly from 7.1% at year-end 2025 and within our long-term operating objective of 6.75% - 7.00%.

Previous wording

Return on average common stockholders’ equity was 25% and 23% for the second quarter and first six months of 2026, respectively, up from 19% and 18% from the same periods in 2025. These increases were due primarily to growth in net income, which more than offset higher average common stockholders’ equity. Return on tangible common equity(1)was 44% and 41% for the second quarter and first half of 2026, respectively, rising from 35% and 34% from the same 2025 periods, 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 common stock repurchases in 2025 and the first half of 2026. The improvement in average AOCI resulted from amortization of losses on securities previously transferred from AFS to HTM and lower unrealized losses on AFS securities.

Current wording

Return on average common stockholders’ equity was 25% and 24% for the third quarter and first nine months of 2026, respectively, increasing from 21% and 20% for the same prior-year periods. These increases were due primarily to growth in net income, which more than offset higher average common stockholders’ equity. Return on tangible common equity(1) was 44% and 42% for the third quarter and first nine months of 2026, respectively, up from 38% and 37% for the same periods in 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 common stock

Previous wording

Acquisition of Forge

Current wording

Acquisition of Forge Global Holdings, Inc.

Previous wording

On March 2, 2026, Schwab completed its acquisition of Forge, an operator of a leading private market platform and trading marketplace, for $636 million of cash and other consideration. Integration work is progressing, 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 wording

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 progressing, 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.

Previous wording

In May 2026, Schwab began a phased rollout to retail clients of Schwab Crypto TM, our spot crypto trading offer. The Company provides clients direct access to bitcoin and ether trading, combined with educational content and professional support with investment experience. Charles Schwab Premier Bank, SSB (CSPB), serves as the custodian of clients’ digital assets, responsible for safekeeping and record-keeping. CSPB has engaged Paxos Trust Company, NA (sub-custodian), a regulated blockchain infrastructure provider, to deliver sub-custody and trade execution services, and we may engage one or more additional sub-custodians in the future. 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.

Current wording

In May 2026, Schwab began a phased rollout to retail clients of Schwab Crypto TM, our spot crypto trading offer. The Company provides clients direct access to bitcoin and ether trading, combined with educational content and professional support with investment experience. Charles Schwab Premier Bank, SSB (CSPB), serves as the custodian of clients’ digital assets, responsible for safekeeping and record-keeping. CSPB has engaged Paxos Trust Company, NA (sub-custodian), a regulated blockchain infrastructure provider, to deliver sub-custody and trade execution services, and we may engage one or more additional sub-custodians in the future. Over time, CSPB plans to add additional cryptocurrencies to the platform, and recently began a phased rollout of 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.

Previous wording

Schwab engages in securities lending and borrowing activities. Schwab temporarily loans client securities to other broker-dealers and clearinghouses and receives cash as collateral for securities loaned; liabilities for securities loaned are included in payables to brokers, dealers, and clearing organizations within funding sources in the presentation of net interest revenue. We may also borrow securities from other broker-dealers to fulfill short sales by clients and deliver cash to the lender in exchange for the securities, and receivables from securities borrowed are excluded from interest-earning assets.

Current wording

Schwab engages in securities lending and borrowing activities. Schwab temporarily loans eligible client securities to other broker-dealers and clearinghouses and receives cash as collateral for securities loaned; liabilities for securities loaned are included in payables to brokers, dealers, and clearing organizations within funding sources in the presentation of net interest revenue. We may also borrow securities from other broker-dealers to fulfill short sales by clients and deliver cash to the lender in exchange for the securities. Receivables from securities borrowed are excluded from interest-earning assets but the resulting fees and rebates are included in securities lending revenue or interest expense on payables to brokers, dealers, and clearing organizations.

Previous wording

During the first half of 2026, the Federal Reserve held the upper bound of the target overnight rate unchanged 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.

Current wording

The Federal Reserve held the upper bound of the target overnight rate at 3.75% for most of the first nine months of 2026 before increasing the rate by 25 basis points in the later part of the third quarter. 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.

Previous wording

Schwab’s average interest-earning assets increased 5% and 4% in the second quarter and first six months of 2026, respectively, from the same periods in 2025, primarily due to growth in margin lending, which was supported in part by wholesale funding, as well as increases in bank lending, partially offset by lower balances of AFS and HTM securities and cash and investments segregated. Client demand for margin and bank lending continued to grow in the second quarter and first six months of 2026. Receivables from brokerage clients, which are primarily comprised of margin loans, ended the second quarter at $122.8 billion, increasing 48% and 17% from June 30, 2025, and December 31, 2025, respectively. Total bank loans finished the second quarter of 2026 at $67.0 billion, higher by 33% and 16% from June 30, 2025 and December 31, 2025, respectively, due primarily to growth in PALs and First Mortgages.

Current wording

Schwab’s average interest-earning assets increased 8% and 5% in the third quarter and first nine months of 2026, respectively, from the same periods in 2025, primarily due to growth in margin lending, which was supported in part by wholesale funding, as well as increases in bank lending, partially offset by lower balances of AFS and HTM securities and cash and investments segregated. The Company continued to see strong client demand for margin and bank lending in the third quarter and first nine months of 2026. Receivables from brokerage clients, which are primarily comprised of margin loans, ended the third quarter at $128.1 billion, increasing 37% and 22% from September 30, 2025 and December 31, 2025, respectively. Total bank loans finished the third quarter of 2026 at $72.3 billion, higher by 35% and 25% from September 30, 2025 and December 31, 2025, respectively, due primarily to growth in PALs and First Mortgages.

Previous wording

Client cash activity during the second quarter and first six months of 2026 reflected seasonality, organic growth from asset gathering, and client asset allocation decisions. Bank sweep deposits and payables to brokerage clients increased by a total of $42.7 billion, or 14%, from June 30, 2025 to the end of the second quarter of 2026 and $3.6 billion, or 1%, from December 31, 2025. Clients’ use of long/short strategies is presented on a net basis on the condensed consolidated balance sheet. While timing differences can arise between long and short positions, these strategies typically result in limited direct increases to assets and liabilities due to netting in the clients’ accounts.

Current wording

Client cash activity during the third quarter and first nine months of 2026 reflected normal cash behavior, including organic growth from asset gathering and client asset allocation decisions. Bank sweep deposits and payables to brokerage clients increased by a total of $20.0 billion, or 6%, from September 30, 2025 to the end of the third quarter of 2026, and decreased $4.2 billion, or 1%, from December 31, 2025.

Previous wording

(1)Beginning in the fourth quarter of 2025, margin loans and short credits related to client long/short strategies from which the Company earns a fixed net yield are excluded from interest-earning assets and funding sources. Also beginning in the fourth quarter of 2025, related interest revenue and expense were moved from receivables from brokerage clients and payables to brokerage clients, respectively, to other interest revenue and other interest expense, respectively. Amounts and average yields have been reclassified and recalculated for 2025 periods to reflect these changes. Average margin loans related to these client strategies totaled $33.1 billion and $23.7 billion for the three and six months ended June 30, 2026, respectively, compared to $884 million and $562 million for the same periods in 2025. Average short credits related to these client strategies totaled $34.3 billion and $24.5 billion for the three and six months ended June 30, 2026, respectively, compared to $898 billion and $569 million for the same periods in 2025.

Current wording

(1)Beginning in the fourth quarter of 2025, margin loans and short credits related to client long/short strategies from which the Company earns a fixed net yield are excluded from interest-earning assets and funding sources. Also beginning in the fourth quarter of 2025, related interest revenue and expense were moved from receivables from brokerage clients and payables to brokerage clients, respectively, to other interest revenue and other interest expense, respectively. Amounts and average yields have been reclassified and recalculated for 2025 periods to reflect these changes. Average margin loans related to these client strategies totaled $51.4 billion and $33.0 billion for the three and nine months ended September 30, 2026, respectively, compared to $2.8 billion and $1.3 billion for the same periods in 2025. Average short credits related to these client strategies totaled $53.3 billion and $34.2 billion for the three and nine months ended September 30, 2026, respectively, compared to $2.8 billion and $1.3 billion for the same periods in 2025.

Previous wording

Net interest revenue increased $535 million, or 19%, and $973 million, or 18%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. These increases were primarily due to growth in margin and bank lending, lower average wholesale borrowings, and lower yields on most funding sources, partially offset by lower yields on floating-rate assets due to lower market rates, and lower balances of AFS and HTM securities and cash and investments segregated. Securities lending revenue increased in the second quarter and first six months of 2026, reflecting growth in fees received for securities borrowed transactions to facilitate certain client short sales related to long/short strategies, partially supported by growth in securities loaned.

Current wording

Net interest revenue increased $426 million, or 14%, and $1.4 billion, or 16%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. The year-over-year increase in the third quarter was primarily due to growth in margin and bank lending, partially offset by lower yields on floating-rate assets, lower average balances of cash and investments segregated, and higher average wholesale borrowings as strong demand for lending solutions outpaced deposit growth. The year-to-date increase in net interest revenue resulted primarily from growth in margin and bank lending and lower average wholesale borrowings, partially offset by lower yields on floating-rate assets due to lower market rates, and lower balances of AFS and HTM securities and cash and investments segregated. Securities lending revenue increased in the third quarter and first nine months of 2026, reflecting growth in rebates and fees received for securities borrowed transactions to facilitate certain client short sales related to long/short strategies.

Previous wording

Net interest margin increased to 3.00% and 2.94% in the second quarter and first six months of 2026, respectively, compared to 2.66% and 2.59% during the same periods in 2025, primarily due to the growth in margin and bank lending, along with the reduced aggregate use of wholesale funding and lower rates paid on most funding sources, which more than offset lower yields on floating-rate assets due to lower market interest rates.

Current wording

Net interest margin increased to 3.04% and 2.97% in the third quarter and first nine months of 2026, respectively, compared to 2.88% and 2.69% during the same periods in 2025. These increases were primarily due to growth in margin and bank lending and securities lending revenue, partially offset by lower yields on floating-rate assets due to lower market interest rates. The increase in the year-to-date period was also due in part to changes in the mix of funding sources.

Previous wording

(2)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.

Current wording

(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.

Previous wording

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

Current wording

(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.

Previous wording

(4)Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.

Current wording

(3)Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.

Previous wording

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

Current wording

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

Previous wording

10 - balances, reflecting year-over-year equity market appreciation, the Company’s asset gathering, and net flows into managed investing solutions.

Current wording

10 - continued growth in fee-based managed investing solutions, and growth in revenue from Mutual Fund OneSource®, Schwab equity and bond funds, ETFs, and CTFs, and Schwab money market funds. This growth was driven primarily by higher average client asset balances, reflecting year-over-year equity market appreciation, the Company’s asset gathering, and net flows into managed investing solutions.

Previous wording

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 49% and 50% of the asset management and administration fees earned in the second quarter and first six months of 2026, respectively, compared with 50% in both the second quarter and first six months of 2025:

Current wording

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 48% and 49% of the asset management and administration fees earned in the third quarter and first nine months of 2026, respectively, compared with 51% and 50% in the third quarter and first nine months of 2025, respectively:

Previous wording

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

Current wording

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

Previous wording

Trading revenue increased $263 million, or 28%, and $444 million, or 24%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025, driven by an increase in order flow revenue reflecting higher rates and volume, as well as changes in the mix of client trading activity. Commissions revenue increased during the second quarter and

Current wording

Trading revenue increased $163 million, or 16%, and $607 million, or 21%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025, driven by an increase in order flow revenue due to higher rates, partially offset by changes in the mix of client trading activity. Commissions revenue increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 due to higher volume, partially offset by changes in the mix of client trading activity.

Previous wording

Bank deposit account fees increased $86 million, or 35%, and $136 million, or 28%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025, primarily due to an increase in average net yield and decreases in the amount paid to clients as a result of lower interest rates and in other applicable fees paid. This was partially offset by lower average BDA balances, which reduced the base on which bank deposit account fees are earned. The decrease in average BDA balances in the second quarter and first six months of 2026 compared to the same periods in 2025 was primarily due to the transfer of $3.0 billion of BDA balances to Schwab’s balance sheet during the first six 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.

Current wording

Bank deposit account fees increased $98 million, or 40%, and $234 million, or 32%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025, primarily due to an increase in average net yield and decreases in the amount paid to clients as a result of lower interest rates and in other applicable fees paid. This was partially offset by lower average BDA balances, which reduced the base on which bank deposit account fees are earned. The decrease in average BDA balances in the third quarter and first nine months of 2026 compared to the same periods in 2025 was primarily due to the transfer of $3.0 billion of BDA balances to Schwab’s balance sheet during the first nine 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.

Previous wording

Average net yield increased in the second quarter and first six months of 2026 compared to the same periods in 2025 due to an increase in the average net yield on fixed-rate BDA balances, partially offset by decreases in the average amount of and net yield on floating-rate BDA balances. The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of June 30, 2026 were 85% and 15%, respectively.

Current wording

Average net yield increased in the third quarter and first nine months of 2026 compared to the same periods in 2025 due to an increase in the average net yield on fixed-rate BDA balances, partially offset by decreases in the average amount of and net yield on floating-rate BDA balances. The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of September 30, 2026 were 84% and 16%, respectively.

Previous wording

Other revenue increased $82 million, or 32%, and $67 million, or 14%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. The increase in the second quarter of 2026 compared to the same period in 2025 was largely driven by higher industry fees. Effective April 4, 2026, the SEC increased the fee rate applicable to most securities transactions from zero, which had 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. The timing of the increase in the fee rate resulted in only an incremental net increase in industry fees in the first six months of 2026 compared to the same period in 2025.

Current wording

Other revenue increased $109 million, or 64%, and $176 million, or 28%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. The increases in the third quarter and first nine months of 2026 compared to the same periods in 2025 were largely driven by higher industry fees, due to higher trading volumes and, in the third quarter, higher average fee rates. Effective April 4, 2026, the SEC increased the fee rate applicable to most securities transactions from zero, the rate in effect since May 14, 2025, resulting in higher industry fees in other revenue and a corresponding increase in other expense after the effective date, with no impact on net income.

Previous wording

Additionally, the increases in both the second quarter and first six months of 2026 compared to the same periods in 2025 were driven by gains recognized on certain equity investments, higher other service fees, and lower losses on sales of AFS securities in 2026.

Current wording

Additionally, the increases in both the third quarter and first nine months of 2026 compared to the same periods in 2025 were driven by gains recognized on certain equity investments, higher other service fees, and lower losses on sales of AFS securities in 2026.

Previous wording

Expenses excluding interest increased $355 million, or 12%, and $505 million, or 8%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. Adjusted total expenses, which excludes acquisition and integration-related costs and amortization of acquired intangible assets, increased 11% and 8% in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.

Current wording

Expenses excluding interest increased $280 million, or 9%, and $785 million, or 8%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. Adjusted total expenses, which excludes acquisition and integration-related costs and amortization of acquired intangible assets, increased 9% and 8% in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.

Previous wording

The Company’s second quarter and first six months of 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 totaled $28 million and $39 million in the second quarter and first six months of 2026, respectively. While underlying 2026 expense growth remains in-line with expectations communicated earlier in the year (see Part II – Item 7 – Results of Operations in the 2025 10-K), the Company now expects total expenses excluding interest for full-year 2026 will increase approximately 10% to 11%, inclusive of volume-related expenses to support strong business performance and trading activity, and expenses related to the operations and integration of Forge.

Current wording

The Company’s third quarter and first nine months of 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 totaled $10 million and $49 million in the third quarter and first nine months of 2026, respectively. While underlying 2026 expense growth remains in-line with expectations communicated earlier in the year (see Part II – Item 7 – Results of Operations in the 2025 10-K), the Company now expects total GAAP expenses excluding interest for full-year 2026 will increase approximately 10% to 11%, inclusive of volume-related expenses to support strong business performance and trading activity, and expenses related to the operations and integration of Forge.