SCHWAB CHARLES CORP
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
March 31, 2025
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
Commission File Number:
1-9700
THE CHARLES SCHWAB CORPORATION
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (
817
)
859-5000
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Non-accelerated filer ☐ Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
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THE CHARLES SCHWAB CORPORATION
Quarterly Report on Form 10-Q
For the Quarter Ended
March 31, 2025
Index
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30-31
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32-61
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| Item 2. |
1-24
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| Item 4. | ||||||||||||||
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Part I – FINANCIAL INFORMATION
THE CHARLES SCHWAB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Ratios, or as Noted)
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 $70 trillion, which means the Company’s $9.93 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, 2024 (2024 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,” “prioritize,” “will,” “may,” “estimate,” “appear,” “could,” “would,” “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 beliefs, objectives, and expectations as of the date hereof, are estimates 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);
•
Capital expenditures and expense management (see Results of Operations in Part I – Item 2);
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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);
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Funding sources and uses of liquidity (see Liquidity Risk in Part I – Item 2);
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Utilization of bank supplemental funding and expectations for repayment of outstanding balances (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);
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Capital management; potential migration of insured deposit account balances (IDA balances) to our balance sheet; capital accretion; expectations about capital requirements, including accumulated other comprehensive income (AOCI); 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 Part I – Item 1 – Financial Information – Notes to Condensed Consolidated Financial Statements (Item 1) – Note 10);
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The expected impact of proposed and final rules (see Current Regulatory and Other Developments in Part I – Item 2);
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The expected impact of new accounting standards not yet adopted (see New Accounting Standards in Item 1 – Note 2);
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The likelihood of indemnification and guarantee payment obligations and clients failing to fulfill contractual obligations (see Commitments and Contingencies in Item 1 – Note 10); and
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The outcome and impact of legal proceedings and regulatory matters (see Commitments and Contingencies in Item 1 – Note 10, and Legal Proceedings in Part II – Item 1).
Achievement of the expressed beliefs, objectives, and expectations described in these statements is subject to certain risks and uncertainties that could cause actual results to differ materially from the expressed beliefs, objectives, and expectations. 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;
•
Our ability to attract and retain clients, develop trusted relationships, and grow client assets;
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Client use of our advisory and lending solutions and other products and services;
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The level of client assets, including cash balances;
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Client cash allocations and sensitivity to deposit rates;
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Competitive pressure on
pricing, including deposit rates;
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The level and mix of client trading activity, including daily average trades, margin balances, and balance sheet cash;
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Regulatory guidance and adverse impacts from new or changed legislation, rulemaking or regulatory expectations;
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Capital and liquidity needs and management;
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Our ability to manage expenses;
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Our ability to attract and retain talent;
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Our ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance our infrastructure, in a timely and successful manner;
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Our ability to monetize client assets;
•
Our ability to support client activity levels;
- 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)
•
Increased compensation and other costs;
•
Re
al estate and workforce decisions;
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The timing and scope of technology projects;
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Balance sheet positioning relative to changes in interest rates;
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Interest-earning asset mix and growth;
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Our ability to access and use supplemental funding sources;
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Prepayment levels for mortgage-backed securities;
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Migrations of bank deposit account balances (BDA balances);
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Regulatory and legislative developments;
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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 2024 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 2025 and 2024 are as follows:
|
Three Months Ended
March 31, |
Percent
Change |
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| 2025 | 2024 | ||||||||||||||||
| Client Metrics | |||||||||||||||||
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Net new client assets (in billions)
(1)
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$ | 132.4 | $ | 88.2 | 50 | % | |||||||||||
| Core net new client assets (in billions) | $ | 137.7 | $ | 95.6 | 44 | % | |||||||||||
| Client assets (in billions, at quarter end) | $ | 9,929.7 | $ | 9,118.4 | 9 | % | |||||||||||
| Average client assets (in billions) | $ | 10,212.1 | $ | 8,761.1 | 17 | % | |||||||||||
| New brokerage accounts (in thousands) | 1,183 | 1,094 | 8 | % | |||||||||||||
| Active brokerage accounts (in thousands, at quarter end) | 37,011 | 35,301 | 5 | % | |||||||||||||
| Assets receiving ongoing advisory services (in billions, at quarter end) | $ | 5,061.1 | $ | 4,628.0 | 9 | % | |||||||||||
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Client cash as a percentage of client assets (at quarter end)
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10.6 | % | 10.0 | % | |||||||||||||
| Company Financial Information and Metrics | |||||||||||||||||
| Total net revenues | $ | 5,599 | $ | 4,740 | 18 | % | |||||||||||
| Total expenses excluding interest | 3,144 | 2,942 | 7 | % | |||||||||||||
| Income before taxes on income | 2,455 | 1,798 | 37 | % | |||||||||||||
| Taxes on income | 546 | 436 | 25 | % | |||||||||||||
| Net income | 1,909 | 1,362 | 40 | % | |||||||||||||
| Preferred stock dividends and other | 113 | 111 | 2 | % | |||||||||||||
| Net income available to common stockholders | $ | 1,796 | $ | 1,251 | 44 | % | |||||||||||
| Earnings per common share — diluted | $ | .99 | $ | .68 | 46 | % | |||||||||||
| Net revenue change from prior year | 18 | % | (7) | % | |||||||||||||
| Pre-tax profit margin | 43.8 | % | 37.9 | % | |||||||||||||
| Return on average common stockholders’ equity (annualized) | 18 | % | 15 | % | |||||||||||||
| Expenses excluding interest as a percentage of average client assets (annualized) | 0.12 | % | 0.14 | % | |||||||||||||
| Consolidated Tier 1 Leverage Ratio (at quarter end) | 9.9 | % | 8.8 | % | |||||||||||||
| Non-GAAP Financial Measures | |||||||||||||||||
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Adjusted total expenses
(2)
|
$ | 3,014 | $ | 2,802 | |||||||||||||
| Adjusted diluted earnings per common share | $ | 1.04 | $ | .74 | |||||||||||||
| Return on tangible common equity | 35 | % | 39 | % | |||||||||||||
(1)
The first quarter of 2025 and 2024 include net outflows of $5.3 billion and $7.4 billion, respectively, from off-platform brokered certificates of deposit (CDs) issued by CSB.
(2)
Adjusted total expenses is a non-GAAP financial measure adjusting total expenses excluding interest. See Non-GAAP Financial Measures.
The first quarter of 2025 presented investors with an increasingly uncertain macroeconomic environment. While equity markets rose early in the first quarter of 2025, uncertainty around the economic impacts of trade policy and increased volatility dampened equity markets and investor sentiment. The Standard & Poor’s
®
500 Index (S&P 500
®
) was down 5% during the first three months of 2025, and the NASDAQ Composite
®
declined 10%. The 10-year U.S. Treasury yield fell by 35 basis points to 4.23%, and the Federal Reserve left the federal funds overnight rate unchanged in the first quarter.
Against this backdrop, clients continued to turn to Schwab, as the Company saw strength in asset gathering, new accounts, and client engagement in the first quarter of the year. Core net new assets totaled $137.7 billion in the first quarter of 2025, up 44% from the same period in 2024, representing an annualized growth rate of 5.5%. Active brokerage accounts rose 5% year-over-year to 37.0 million at March 31, 2025, including 1.2 million new brokerage accounts in the first quarter of 2025, up 8% from the first quarter of 2024. Clients were highly engaged in the markets, especially amid market volatility late in the first quarter. Clients’ daily average trades (DATs) were up significantly year-over-year to 7.4 million in the first three months of 2025, an increase of 24% from the first quarter of 2024.
Schwab’s financial performance in the first quarter of 2025 reflected strength in asset gathering, increased client engagement, reduced reliance on higher-cost bank supplemental funding, and continued demand for margin and bank lending. Net income totaled $1.9 billion in the first quarter of 2025, rising 40% from the first quarter of 2024. Diluted earnings per common share
- 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)
(EPS) was $.99 in the first quarter of 2025, higher by 46% from the prior-year first quarter. Adjusted diluted EPS
(1)
was $1.04 in the first quarter of 2025, up 41% from the same period in 2024.
Total net revenues increased 18% year-over-year to $5.6 billion in the first quarter of 2025. Net interest revenue was $2.7 billion in the first quarter of 2025, increasing 21% from the first quarter of 2024, primarily due to lower interest expense and growth in margin and bank lending, which more than offset lower yields on interest-earning assets due to lower market rates. Asset management and administration fees were $1.5 billion in the first quarter of 2025, higher by 14% year-over-year due to continued growth in money market funds and managed investing solutions, and higher overall client asset balances due to strength of asset gathering and year-over-year equity market appreciation. Trading revenue was $908 million in the first quarter of 2025, an increase of 11% from the first quarter of the prior year, which was due primarily to higher trading volume. Bank deposit account fee revenue totaled $245 million in the first quarter of the year, rising 34% from the first quarter of 2024 due to improved net yield as a growing percentage of the balances have converted to floating rates. BDA balances decreased 4% from year-end 2024, ending the first quarter at $83.7 billion.
Total expenses excluding interest were $3.1 billion in the first quarter of 2025, higher by 7% from the first quarter of 2024. This increase was due primarily to higher compensation and benefits expense, inclusive of annual merit increases and a reduction in the prior year for a change in estimated restructuring costs, and higher other expense which was due to higher industry fees resulting from the SEC’s May 2024 fee rate increase and higher client trading volume. For the first quarter of 2025, adjusted total expenses
(1)
totaled $3.0 billion, up 8% from the same period in 2024 due to higher compensation and benefits and other expense.
Return on average common stockholders’ equity was 18% in the first quarter of 2025, up from 15% in the first quarter of 2024, due to growth in net income, which more than offset higher average common stockholders’ equity. Return on tangible common equity
(1)
was 35% in the first quarter of 2025, down from 39% in the first quarter of 2024, as higher average tangible common equity more than offset growth in net income. Average common stockholders’ equity increased primarily as a result of year-over-year growth in retained earnings and higher average AOCI. The increase in average AOCI was due to lower unrealized losses on available for sale (AFS) investment securities and securities previously transferred from AFS to held to maturity (HTM).
Schwab supported continued client-driven demand for margin and bank lending, while reducing bank supplemental funding and returning capital to stockholders. Total balance sheet assets decreased 4% from year-end 2024 to end the first quarter of 2025 at $462.9 billion. Principal and interest from our AFS and HTM securities portfolios supported further reduction in bank supplemental funding, which includes brokered CDs, Federal Home Loan Bank (FHLB) borrowings, and borrowings under repurchase agreements at our banks. The Company reduced total bank supplemental funding by $11.8 billion, or 24%, during the first three months of 2025, with $38.1 billion outstanding at March 31. Though investors reduced their leverage later in the first quarter following an increase in market volatility, the Company continued to see strong demand for margin lending, with margin loans ending the first quarter at $83.6 billion, largely flat with year-end 2024. Bank loans grew 4% during the first three months of 2025, ending the first quarter at $47.1 billion.
Concurrent with the completion of The Toronto-Dominion Bank’s (TD Bank) February 2025 secondary public offering of CSC common shares, the Company repurchased all remaining outstanding shares of nonvoting common stock directly from TD Group US Holdings, LLC, an affiliate of TD Bank, for a total repurchase of $1.5 billion (see Capital Management – Share Repurchases and Item 1 – Note 14). In addition, the Company increased its common dividend during the first quarter by 8% to $.27 per share. Inclusive of these capital actions, the Company’s consolidated Tier 1 Leverage Ratio was 9.9% for the first quarter of 2025, remaining consistent with year-end 2024 due to strong first-quarter net income. Our consolidated adjusted Tier 1 Leverage Ratio
(1)
rose to 7.1% due to the first quarter’s net income and higher AOCI.
(1)
Adjusted diluted EPS, adjusted total expenses, return on tangible common equity, and adjusted Tier 1 Leverage Ratio are non-GAAP financial measures. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results.
- 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)
Current Regulatory and
Other Developments
Refer to Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K for information regarding pending regulatory matters including:
•
The Federal Deposit Insurance Corporation’s (FDIC) July 2024 proposed rulemaking to amend the brokered deposits framework setting forth its conditions for when broker-dealers such as CS&Co qualify for the primary purpose exception (PPE) from the definition of a deposit broker and from attendant restrictions for brokered deposits;
•
The U.S. Department of Labor’s April 2024 final rule significantly broadening the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974 and related litigation;
•
The FDIC’s November 2023 and February 2024 special assessments on banks, including the Company’s banking subsidiaries, to recover losses incurred by the Deposit Insurance Fund (DIF) to protect uninsured depositors due to the March 2023 closures of two banks;
•
The U.S. federal banking agencies’ August 2023 proposed rulemaking on long-term debt requirements for certain large banking organizations;
•
The U.S. federal banking agencies’ July 2023 notice of proposed rulemaking with amendments to the regulatory capital rules, which, among other things, would require us to include AOCI in regulatory capital and to calculate our risk-weighted assets using a revised risk-based approach, a component of which is based on operational risk; and
•
The SEC’s December 2022 equity market structure rule proposals, “Order Competition Rule” and “Regulation Best Execution”.
RESULTS OF OPERATIONS
Total Net Revenues
The following tables present a comparison of revenue by category:
| 2025 | 2024 | ||||||||||||||||||||||||||||
| Three Months Ended March 31, |
Percent
Change |
Amount |
% of
Total Net Revenues |
Amount |
% of
Total Net Revenues |
||||||||||||||||||||||||
| Net interest revenue | |||||||||||||||||||||||||||||
| Interest revenue | (5) | % | $ | 3,757 | 67 | % | $ | 3,941 | 83 | % | |||||||||||||||||||
| Interest expense | (38) | % | (1,051) | (19) | % | (1,708) | (36) | % | |||||||||||||||||||||
| Net interest revenue | 21 | % | 2,706 | 48 | % | 2,233 | 47 | % | |||||||||||||||||||||
| Asset management and administration fees | |||||||||||||||||||||||||||||
|
Mutual funds, exchange-traded funds (ETFs), and collective trust
funds (CTFs) |
14 | % | 865 | 15 | % | 758 | 16 | % | |||||||||||||||||||||
| Managed investing solutions | 13 | % | 569 | 10 | % | 503 | 11 | % | |||||||||||||||||||||
| Other | 10 | % | 96 | 2 | % | 87 | 2 | % | |||||||||||||||||||||
| Asset management and administration fees | 14 | % | 1,530 | 27 | % | 1,348 | 29 | % | |||||||||||||||||||||
| Trading revenue | |||||||||||||||||||||||||||||
| Commissions | 4 | % | 431 | 8 | % | 413 | 9 | % | |||||||||||||||||||||
| Order flow revenue | 26 | % | 443 | 8 | % | 352 | 7 | % | |||||||||||||||||||||
| Principal transactions | (35) | % | 34 | — | 52 | 1 | % | ||||||||||||||||||||||
| Trading revenue | 11 | % | 908 | 16 | % | 817 | 17 | % | |||||||||||||||||||||
| Bank deposit account fees | 34 | % | 245 | 5 | % | 183 | 4 | % | |||||||||||||||||||||
| Other | 32 | % | 210 | 4 | % | 159 | 3 | % | |||||||||||||||||||||
| Total net revenues | 18 | % | $ | 5,599 | 100 | % | $ | 4,740 | 100 | % | |||||||||||||||||||
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, FHLB borrowings, other short-term
- 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)
borrowings, and other funding sources is impacted by market interest rates at the time of borrowing and changes in interest rates on floating-rate liabilities. See also Risk Management – Market Risk.
The Federal Reserve maintained the upper bound of the target overnight rate at 5.50% through most of 2024 before reducing the rate by 50 basis points during the third quarter of 2024 and another 50 basis points across two cuts during the fourth quarter of 2024. During the first quarter of 2025, the Federal Reserve maintained the upper bound of the target overnight rate at 4.50%.
Schwab’s average interest-earning assets in the first quarter of 2025 were lower compared with the same period in 2024; however, client demand for margin and bank lending continued to be strong during the first quarter of 2025, even as clients reduced leverage amid market volatility late in the first quarter. Margin and bank loan balances increased by 23% and 16%, respectively, from March 31, 2024 to the end of the first quarter of 2025. Following further deceleration in the pace of clients’ reallocation of cash from sweep products to higher-yielding investment solutions in 2024, client activity in the first quarter of 2025 reflected normalized cash behavior, inclusive of organic growth, seasonality, and investor sentiment against a backdrop of increased market volatility. Bank sweep deposits and payables to brokerage clients increased by a total of $11.5 billion, or 4%, from March 31, 2024 to the end of the first quarter of 2025. Principal and interest payments on AFS and HTM securities supported a further reduction in bank supplemental funding of $11.8 billion, or 24%, during the first quarter of 2025. Since March 31, 2024, the Company has reduced bank supplemental funding by $32.7 billion, or 46%.
The following table presents net interest revenue information corresponding to interest-earning assets and funding sources on the condensed consolidated balance sheets:
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| 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 | $ | 30,483 | $ | 328 | 4.31 | % | $ | 33,791 | $ | 454 | 5.31 | % | |||||||||||||||||||||||
| Cash and investments segregated | 38,611 | 412 | 4.27 | % | 29,297 | 388 | 5.24 | % | |||||||||||||||||||||||||||
| Receivables from brokerage clients | 83,137 | 1,382 | 6.65 | % | 63,804 | 1,260 | 7.81 | % | |||||||||||||||||||||||||||
|
Available for sale securities
(1)
|
84,590 | 433 | 2.05 | % | 111,867 | 594 | 2.12 | % | |||||||||||||||||||||||||||
|
Held to maturity securities
(1)
|
144,401 | 622 | 1.72 | % | 157,410 | 690 | 1.75 | % | |||||||||||||||||||||||||||
| Bank loans | 46,043 | 493 | 4.32 | % | 40,529 | 440 | 4.36 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 427,265 | 3,670 | 3.44 | % | 436,698 | 3,826 | 3.48 | % | |||||||||||||||||||||||||||
| Securities lending revenue | 60 | 76 | |||||||||||||||||||||||||||||||||
| Other interest revenue | 27 | 39 | |||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 427,265 | $ | 3,757 | 3.52 | % | $ | 436,698 | $ | 3,941 | 3.59 | % | |||||||||||||||||||||||
| Funding sources | |||||||||||||||||||||||||||||||||||
| Bank deposits | $ | 245,719 | $ | 436 | 0.72 | % | $ | 274,368 | $ | 921 | 1.35 | % | |||||||||||||||||||||||
|
Payables to brokers, dealers, and clearing organizations
(2)
|
14,177 | 137 | 3.88 | % | 5,513 | 55 | 3.96 | % | |||||||||||||||||||||||||||
| Payables to brokerage clients | 90,173 | 51 | 0.23 | % | 68,343 | 73 | 0.43 | % | |||||||||||||||||||||||||||
|
Other short-term borrowings
|
6,695 | 82 | 4.96 | % | 7,385 | 103 | 5.61 | % | |||||||||||||||||||||||||||
|
Federal Home Loan Bank borrowings
|
10,725 | 133 | 4.94 | % | 24,857 | 330 | 5.27 | % | |||||||||||||||||||||||||||
| Long-term debt | 22,281 | 212 | 3.81 | % | 25,000 | 224 | 3.59 | % | |||||||||||||||||||||||||||
|
Total interest-bearing liabilities
(2)
|
389,770 | 1,051 | 1.09 | % | 405,466 | 1,706 | 1.69 | % | |||||||||||||||||||||||||||
|
Non-interest-bearing funding sources
(2)
|
37,495 | 31,232 | |||||||||||||||||||||||||||||||||
|
Other interest expense
|
— | 2 | |||||||||||||||||||||||||||||||||
| Total funding sources | $ | 427,265 | $ | 1,051 | 0.99 | % | $ | 436,698 | $ | 1,708 | 1.57 | % | |||||||||||||||||||||||
| Net interest revenue | $ | 2,706 | 2.53 | % | $ | 2,233 | 2.02 | % | |||||||||||||||||||||||||||
(2)
Beginning in the fourth quarter of 2024, payables to brokers, dealers, and clearing organizations is presented separately from non-interest-bearing funding sources and included in total interest-bearing liabilities. This line item includes securities loaned and related interest expense. Prior period amounts have been reclassified to reflect this change.
- 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)
Net interest revenue increased $473 million, or 21%, in the first quarter of 2025, compared to the same period in 2024. This increase was primarily due to lower balances of bank supplemental funding, lower average rates paid on funding sources, and growth in margin and bank lending, partially offset by lower yields on floating-rate assets due to lower market rates. Average interest-earning assets declined by 2% in the first quarter of 2025 from the first quarter of 2024, as cash inflows from AFS and HTM securities were used to pay down bank supplemental funding amid improvement in client cash trends. The decrease was partially offset by growth in margin lending, which was supported by higher payables to brokerage clients and increased securities lending, and growth in bank loans.
Net interest margin increased to 2.53% in the first quarter of 2025, compared to 2.02% during the same period in 2024, as lower rates paid on funding sources and reduced balances of bank supplemental funding more than offset lower yields on floating-rate assets due to lower market interest rates.
The Company continues to prioritize repayment of bank supplemental funding balances and expects the total outstanding balance to continue to decrease over time to a level consistent with our diversified long-term funding profile. Our use and the financial impacts of such bank supplemental funding are dependent on several factors, including the volume and pace of clients’ cash allocation activity, which are driven primarily by changes in market interest rates, client engagement with equity markets, as well as asset gathering and the level of maturities and paydowns on our investment securities portfolios. The Company may rollover certain balances outstanding at March 31, 2025 into new borrowings, the amount and costs of which will depend on the above noted factors. See also Risk Management – Liquidity Risk, Capital Management, Item 1 – Notes 8, 9, and 12 for additional information on these and other funding sources.
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, | 2025 | 2024 | |||||||||||||||||||||
|
Average
Client Assets |
Revenue |
Average
Fee |
Average
Client Assets |
Revenue |
Average
Fee |
||||||||||||||||||
| Schwab money market funds | $ | 621,474 | $ | 418 | 0.27 | % | $ | 499,887 | $ | 336 | 0.27 | % | |||||||||||
| Schwab equity and bond funds, ETFs, and CTFs | 658,588 | 122 | 0.08 | % | 539,661 | 107 | 0.08 | % | |||||||||||||||
|
Mutual Fund OneSource
®
and other no-transaction-fee (NTF) funds
|
359,696 | 222 | 0.25 | % | 314,576 | 209 | 0.27 | % | |||||||||||||||
|
Other third-party mutual funds and ETFs
|
623,647 | 103 | 0.07 | % | 605,625 | 106 | 0.07 | % | |||||||||||||||
|
Total mutual funds, ETFs, and CTFs
(1)
|
$ | 2,263,405 | $ | 865 | 0.15 | % | $ | 1,959,749 | $ | 758 | 0.16 | % | |||||||||||
|
Managed investing solutions
(1)
|
|||||||||||||||||||||||
| Fee-based | $ | 590,483 | $ | 569 | 0.39 | % | $ | 506,133 | $ | 503 | 0.40 | % | |||||||||||
| Non-fee-based | 120,442 | — | — | 106,032 | — | — | |||||||||||||||||
| Total managed investing solutions | $ | 710,925 | $ | 569 | 0.32 | % | $ | 612,165 | $ | 503 | 0.33 | % | |||||||||||
|
Other balance-based fees
(2)
|
841,555 | 77 | 0.04 | % | 719,447 | 69 | 0.04 | % | |||||||||||||||
|
Other
(3)
|
19 | 18 | |||||||||||||||||||||
| Total asset management and administration fees | $ | 1,530 | $ | 1,348 | |||||||||||||||||||
(1)
Average client assets for managed investing solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above.
(2)
Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees.
(3)
Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.
Asset management and administration fees increased by $182 million, or 14%, in the first quarter of 2025 compared to the same period in 2024.
This increase was primarily a result of continued growth in Schwab money market funds amid the ongoing elevated interest rate environment.
The increase in asset management and administration fees in the first quarter of 2025 was also due to growth in fee-based managed investing solutions and Mutual Fund OneSource
®
. These increases reflected the Company’s asset gathering and net inflows into managed investing solutions, as well as year-over-year equity market appreciation, which more than offset equity market declines experienced in the first quarter of 2025.
- 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)
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% and 48% of the asset management and administration fees earned in the first quarter of 2025 and 2024, respectively:
|
Schwab Money
Market Funds |
Schwab Equity and
Bond Funds, ETFs, and CTFs |
Mutual Fund OneSource
®
and Other NTF funds |
|||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 596,531 | $ | 476,409 | $ | 627,166 | $ | 506,149 | $ | 347,798 | $ | 306,222 | |||||||||||||||||||||||
| Net inflows (outflows) | 38,477 | 30,940 | 9,088 | 7,719 | (7,046) | (4,161) | |||||||||||||||||||||||||||||
|
Net market gains (losses) and other
|
6,524 | 8,329 | (11,030) | 35,022 | (472) | 27,115 | |||||||||||||||||||||||||||||
| Balance at end of period | $ | 641,532 | $ | 515,678 | $ | 625,224 | $ | 548,890 | $ | 340,280 | $ | 329,176 | |||||||||||||||||||||||
Trading Revenue
The following tables present trading revenue, client trading activity, and related information:
|
Three Months Ended
March 31, |
Percent
Change |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Commissions | $ | 431 | $ | 413 | 4 | % | |||||||||||
| Order flow revenue | |||||||||||||||||
| Options | 270 | 242 | 12 | % | |||||||||||||
| Equities | 173 | 110 | 57 | % | |||||||||||||
| Total order flow revenue | 443 | 352 | 26 | % | |||||||||||||
| Principal transactions | 34 | 52 | (35) | % | |||||||||||||
| Total trading revenue | $ | 908 | $ | 817 | 11 | % | |||||||||||
|
Three Months Ended
March 31, |
Percent
Change |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| DATs (in thousands) | 7,391 | 5,958 | 24 | % | |||||||||||||
| Product as a percentage of DATs | |||||||||||||||||
| Equities | 56 | % | 51 | % | |||||||||||||
| Derivatives | 20 | % | 22 | % | |||||||||||||
| ETFs | 18 | % | 19 | % | |||||||||||||
| Mutual funds | 5 | % | 6 | % | |||||||||||||
| Fixed income | 1 | % | 2 | % | |||||||||||||
| Number of trading days | 60.0 | 61.0 | (2) | % | |||||||||||||
|
Revenue per trade
(1)
|
$ | 2.05 | $ | 2.25 | (9) | % | |||||||||||
(1)
Revenue per trade is calculated as trading revenue divided by the product of DATs multiplied by the number of trading days.
Trading revenue increased $91 million, or 11%, in the first quarter of 2025 compared to the same period in 2024, primarily driven by an increase in order flow revenue reflecting higher volume. Commission revenue increased due to higher volume, partially offset by changes in the mix of client trading activity. Offsetting the increase in commission revenue, principal transactions revenue decreased reflecting changes to the fair value of securities positions held to facilitate client activity and cash and investments segregated for regulatory purposes.
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). These fees are affected by changes in interest rates and the composition of balances designated as fixed- and floating-rate obligation amounts. See Item 1 – Note 10 for additional information.
- 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)
The following table presents bank deposit account fee revenue and related information:
| Three Months Ended March 31, |
Percent
Change |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Bank deposit account fees | $ | 245 | $ | 183 | 34 | % | |||||||||||
| Average BDA balances | $ | 84,186 | $ | 92,859 | (9) | % | |||||||||||
| Average net yield | 1.16 | % | 0.78 | % | |||||||||||||
| Percentage of average BDA balances designated as: | |||||||||||||||||
| Fixed-rate balances | 78 | % | 88 | % | |||||||||||||
| Floating-rate balances | 22 | % | 12 | % | |||||||||||||
Bank deposit account fees increased $62 million, or 34%, in the first quarter of 2025, compared to the same period in 2024, primarily due to a decrease in the amount paid to clients as a result of lower interest rates in the first quarter of 2025 compared to the same period in 2024, partially offset by lower average BDA balances. The decrease in average BDA balances in the first quarter of 2025 compared to the same period in 2024 was primarily due to client cash allocation decisions in 2024 in response to elevated short-term market interest rates through most of 2024.
Average net yield increased in the first quarter of 2025 compared to the same period in 2024 due to an increase in the average amount of floating-rate BDA balances, which was partially offset by a decrease in the average net yields on fixed-rate and floating-rate BDA balances. The percentages of BDA balances designated as fixed-rate and floating-rate obligation amounts as of March 31, 2025 were 77% and 23%, respectively.
Other Revenue
Other revenue includes industry fees, certain service fees, other gains and losses from the sale of assets, and the provision for credit losses on bank loans.
Other revenue increased $51 million, or 32%, in the first quarter of 2025 compared to the same period in 2024, primarily due to higher industry fees. Industry fees increased primarily due to higher SEC fee rates in effect during the first quarter of 2025 compared to the same period in 2024 and an increase in trading volumes.
Subsequent to March 31, 2025, the SEC announced that effective May 14, 2025, it would decrease the fee rate applicable to most securities transactions to zero from the rate in effect since May 22, 2024. This change will result in lower industry fees in other revenue and a corresponding decrease in other expense after the effective date, resulting in no impact to net income.
- 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)
Total Expenses Excluding Interest
The following table presents a comparison of expenses excluding interest:
|
Three Months Ended
March 31, |
Percent
Change |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Compensation and benefits | |||||||||||||||||
| Salaries and wages | $ | 923 | $ | 854 | 8 | % | |||||||||||
| Incentive compensation | 412 | 387 | 6 | % | |||||||||||||
| Employee benefits and other | 337 | 297 | 13 | % | |||||||||||||
| Total compensation and benefits | $ | 1,672 | $ | 1,538 | 9 | % | |||||||||||
| Professional services | 269 | 241 | 12 | % | |||||||||||||
| Occupancy and equipment | 274 | 265 | 3 | % | |||||||||||||
| Advertising and market development | 96 | 88 | 9 | % | |||||||||||||
| Communications | 153 | 141 | 9 | % | |||||||||||||
| Depreciation and amortization | 217 | 228 | (5) | % | |||||||||||||
| Amortization of acquired intangible assets | 130 | 130 | — | ||||||||||||||
| Regulatory fees and assessments | 89 | 125 | (29) | % | |||||||||||||
| Other | 244 | 186 | 31 | % | |||||||||||||
| Total expenses excluding interest | $ | 3,144 | $ | 2,942 | 7 | % | |||||||||||
| Expenses as a percentage of total net revenues | |||||||||||||||||
| Compensation and benefits | 30 | % | 32 | % | |||||||||||||
| Advertising and market development | 2 | % | 2 | % | |||||||||||||
| Full-time equivalent employees (in thousands) | |||||||||||||||||
| At quarter end | 32.1 | 32.6 | (2) | % | |||||||||||||
| Average | 32.1 | 32.7 | (2) | % | |||||||||||||
Expenses excluding interest increased by $202 million, or 7%, in the first quarter of 2025 compared to the same period in 2024. Adjusted total expenses, which excludes acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs, increased 8% in the first quarter of 2025 compared to the same period in 2024. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results. There were no acquisition and integration-related costs or restructuring costs in the first quarter of 2025.
Total compensation and benefits expense increased in the first quarter of 2025 compared to the same period in 2024, primarily due to annual merit increases and higher incentive compensation. In the first quarter of 2024, compensation and benefits included a $31 million benefit due to a change in estimated restructuring costs, and also acquisition and integration-related costs of $17 million.
Professional services expense increased in the first quarter of 2025 compared to the same period in 2024, reflecting increased utilization of technology and other professional services to support overall growth of the business. Professional services included acquisition and integration-related costs of $17 million in the first quarter of 2024.
Occupancy and equipment expense increased in the first quarter of 2025 compared to the same period in 2024, reflecting higher building expenses and technology equipment and software costs related to growth of the business. Occupancy and equipment included restructuring costs of $2 million in the first quarter of 2024.
Advertising and market development expense increased in the first quarter of 2025 compared to the same period in 2024, primarily due to higher client promotional spending.
Communications expense increased in the first quarter of 2025 compared to the same period in 2024, primarily as a result of higher exchange quotation services expenses.
Depreciation and amortization expense decreased in the first quarter of 2025 compared to the same period in 2024, primarily due to finance lease terminations in 2024 and lower depreciation on equipment due to abandonment of certain data centers in 2024 related to the integration of Ameritrade Holding LLC (Ameritrade Holding) and its consolidated subsidiaries (collectively, Ameritrade).
- 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)
Amortization of acquired intangible assets remained consistent in the first quarter of 2025 with the same period in 2024.
Regulatory fees and assessments decreased in the first quarter of 2025 compared to the same period in 2024. The decrease in the first quarter of 2025 was primarily due to a $25 million incremental FDIC special assessment in the first quarter of 2024 and lower FDIC deposit insurance assessments, reflecting a decrease in brokered CDs and a lower assessment base, compared to the first quarter of 2024.
Other expense increased in the first quarter of 2025 compared to the same period in 2024, primarily due to higher industry fees. Industry fees increased primarily due to higher SEC fee rates in effect during the first quarter of 2025 compared to the first quarter of 2024 and an increase in trading volumes. Subsequent to March 31, 2025, the SEC announced that effective May 14, 2025, it would decrease the fee rate applicable to most securities transactions to zero from the rate in effect since May 22, 2024. This change will result in lower industry fees in other expense and a corresponding decrease in other revenue after the effective date, resulting in no impact to net income.
Capital expenditures were $156 million and $122 million in the first quarter of 2025 and 2024, respectively. Capital expenditures increased in the first quarter of 2025 compared to the same period in 2024, primarily due to higher investment in purchased software and buildings, partially offset by lower internally developed software. We continue to anticipate capital expenditures for full-year 2025 will be approximately 3-5% of total net revenues.
Taxes on Income
Taxes on income were $546 million and $436 million for the first quarter of 2025 and 2024, respectively, resulting in effective tax rates of 22.2% and 24.2%, respectively. The decrease in the effective tax rate in the first quarter of 2025 compared to the same period in 2024 was primarily due to the reversal of tax reserves due to the resolution of certain state tax matters during the first quarter of 2025, an increase in equity compensation tax deduction benefits, and a decrease in non-deductible FDIC deposit insurance assessments.
- 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)
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 | 2025 | 2024 | Percent Change | 2025 | 2024 | Percent Change | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Net Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 22 | % | $ | 2,158 | $ | 1,766 | 17 | % | $ | 548 | $ | 467 | 21 | % | $ | 2,706 | $ | 2,233 | |||||||||||||||||||||||||||||||||||
| Asset management and administration fees | 14 | % | 1,114 | 975 | 12 | % | 416 | 373 | 14 | % | 1,530 | 1,348 | |||||||||||||||||||||||||||||||||||||||||
| Trading revenue | 12 | % | 805 | 717 | 3 | % | 103 | 100 | 11 | % | 908 | 817 | |||||||||||||||||||||||||||||||||||||||||
| Bank deposit account fees | 35 | % | 191 | 141 | 29 | % | 54 | 42 | 34 | % | 245 | 183 | |||||||||||||||||||||||||||||||||||||||||
| Other | 28 | % | 177 | 138 | 57 | % | 33 | 21 | 32 | % | 210 | 159 | |||||||||||||||||||||||||||||||||||||||||
| Total net revenues | 19 | % | 4,445 | 3,737 | 15 | % | 1,154 | 1,003 | 18 | % | 5,599 | 4,740 | |||||||||||||||||||||||||||||||||||||||||
| Expenses Excluding Interest | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 8 | % | $ | 1,285 | $ | 1,189 | 11 | % | $ | 387 | $ | 349 | 9 | % | $ | 1,672 | $ | 1,538 | |||||||||||||||||||||||||||||||||||
| Professional services | 10 | % | 214 | 194 | 17 | % | 55 | 47 | 12 | % | 269 | 241 | |||||||||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 4 | % | 215 | 206 | — | 59 | 59 | 3 | % | 274 | 265 | ||||||||||||||||||||||||||||||||||||||||||
|
Advertising and market development
|
3 | % | 64 | 62 | 23 | % | 32 | 26 | 9 | % | 96 | 88 | |||||||||||||||||||||||||||||||||||||||||
| Communications | 14 | % | 113 | 99 | (5) | % | 40 | 42 | 9 | % | 153 | 141 | |||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (11) | % | 165 | 186 | 24 | % | 52 | 42 | (5) | % | 217 | 228 | |||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets | (18) | % | 106 | 129 | N/M | 24 | 1 | — | 130 | 130 | |||||||||||||||||||||||||||||||||||||||||||
| Regulatory fees and assessments | (26) | % | 70 | 94 | (39) | % | 19 | 31 | (29) | % | 89 | 125 | |||||||||||||||||||||||||||||||||||||||||
| Other | 29 | % | 202 | 156 | 40 | % | 42 | 30 | 31 | % | 244 | 186 | |||||||||||||||||||||||||||||||||||||||||
| Total expenses excluding interest | 5 | % | 2,434 | 2,315 | 13 | % | 710 | 627 | 7 | % | 3,144 | 2,942 | |||||||||||||||||||||||||||||||||||||||||
| Income before taxes on income | 41 | % | $ | 2,011 | $ | 1,422 | 18 | % | $ | 444 | $ | 376 | 37 | % | $ | 2,455 | $ | 1,798 | |||||||||||||||||||||||||||||||||||
|
Net new client assets (in billions)
(2)
|
85 | % | $ | 69.5 | $ | 37.6 | 24 | % | $ | 62.9 | $ | 50.6 | 50 | % | $ | 132.4 | $ | 88.2 | |||||||||||||||||||||||||||||||||||
(1)
In connection with certain changes in Schwab’s organizational management structure, in the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment. Accordingly, amounts related to the Retirement Business Services business unit are included within Investor Services for the first quarter of 2025, and prior-year amounts have been recast to reflect this new basis of segmentation.
(2)
In the first quarter of 2025 and 2024, Investor Services includes net outflows of $5.3 billion and $7.4 billion, respectively, from off-platform brokered CDs issued by CSB.
N/M Not meaningful. Percentage changes greater than 200% are presented as not meaningful.
Segment Net Revenues
Investor Services and Advisor Services total net revenues increased by 19% and 15%, respectively, in the first quarter of 2025 compared to the same period in 2024. Net interest revenue increased for both segments, primarily as a result of lower balances of bank supplemental funding, lower average rates paid on funding sources, and growth in margin and bank lending, partially offset by lower average interest-earnings assets. Asset management and administration fees increased for both segments, primarily as a result of higher balances in money market funds, equity and bond funds, ETFs, CTFs, and Mutual Fund OneSource
®
, and, additionally for Investor Services, managed investing solutions. Trading revenue increased for both segments, primarily due to higher order flow revenue as a result of higher trading volume and increased commission revenue, partially offset by changes in the mix of client trading activity and lower principal transactions revenue. Bank deposit account fees increased for both segments, primarily due to an increase in average net yield partially offset by lower average BDA balances. Other revenue increased for both segments, primarily due to higher industry fees.
Segment Expenses Excluding Interest
Investor Services and Advisor Services total expenses excluding interest increased by 5% and 13%, respectively, in the first quarter of 2025, compared to the same period in 2024. Compensation and benefits expense increased in both segments, primarily due to annual merit increases, higher incentive compensation, and employee benefits and taxes. Professional services expense increased in both segments, due to increased utilization of technology and other professional services to support overall growth of the business. Regulatory fees and assessments decreased for both segments primarily due to a $25 million incremental FDIC special assessment in the first quarter of 2024 and lower FDIC assessments. Other expenses increased for both segments primarily due to higher industry fees driven by higher SEC fee rates coupled with higher trading volumes.
- 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)
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 2024 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 11.
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 loaned out as part of the brokerage securities lending activities. Equity market valuations may also affect the level of brokerage client trading activity, margin borrowing, and overall client engagement with Schwab. 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 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, and cash and cash equivalents. These assets are sensitive to changes in interest rates and changes in prepayment levels that tend to increase in a declining rate environment and decrease in a rising rate environment. Because we establish the rates paid on certain brokerage client cash balances and bank deposits and the rates charged on certain margin and bank loans, and control the composition of our
- 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)
investment securities, we have some ability to manage our net interest spread, depending on competitive factors and market conditions. When we have liquidity needs that exceed our primary sources of funding, the Company has needed to utilize higher-cost funding sources, which can reduce net interest margin and net interest revenue.
Higher prevailing short-term interest rates generally improve yields on shorter duration interest-earning assets. During periods of rapidly rising interest rates, clients tend to reallocate cash out of sweep products into higher-yielding, off-balance sheet, fixed income investments and money market funds within Schwab’s product offerings. This can result in lower interest-earning assets and/or may require supplemental funding with higher funding costs, which therefore tend to constrain net interest revenue when interest rates are moving rapidly higher. 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 12 months beginning March 31, 2025 and December 31, 2024 of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Increase of 200 basis points | 8.8% | 8.6% | |||||||||
| Increase of 100 basis points | 4.6% | 4.6% | |||||||||
| Increase of 50 basis points | 2.5% | 2.5% | |||||||||
| Decrease of 50 basis points | (2.2)% | (2.3)% | |||||||||
| Decrease of 100 basis points | (4.5)% | (4.6)% | |||||||||
| Decrease of 200 basis points | (8.8)% | (9.3)% | |||||||||
The Company’s simulated incremental increases in market interest rates had a largely consistent impact on net interest revenue as of March 31, 2025 compared to December 31, 2024. The Company’s simulated incremental decreases in market interest rates had a smaller impact on net interest revenue as of March 31, 2025 compared to December 31, 2024, primarily due to lower balances of floating-rate interest-earning assets.
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.
- 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)
The following table presents the Company’s estimated effective durations, which reflects anticipated future payments, by category:
| March 31, 2025 | March 31, 2024 | ||||||||||
| In years | |||||||||||
| Estimated effective duration, exclusive of derivatives: | |||||||||||
| Consolidated total assets | 2.1 | 2.5 | |||||||||
| AFS investment securities portfolio | 2.4 | 2.4 | |||||||||
| AFS and HTM investment securities portfolio | 3.9 | 3.9 | |||||||||
|
Long-term debt CSC Senior Notes
|
3.1 | 3.7 | |||||||||
|
Estimated effective duration, inclusive of derivatives
(1)
:
|
|||||||||||
| Consolidated total assets | 2.1 | 2.4 | |||||||||
| AFS investment securities portfolio | 1.9 | 2.1 | |||||||||
| AFS and HTM investment securities portfolio | 3.8 | 3.8 | |||||||||
|
Long-term debt CSC Senior Notes
|
2.2 | 3.7 | |||||||||
(1)
See Item 1 – Note 11 for additional discussion on the Company’s derivatives.
AFS and HTM securities comprised approximately 47% and 55% of the Company’s consolidated total assets as of March 31, 2025 and 2024, respectively. The estimated effective duration of the remaining balance sheet assets in aggregate was less than one year as of both March 31, 2025 and 2024.
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 is calculated by subjecting the balance sheet to hypothetical instantaneous shifts in the level of interest rates. This analysis is highly dependent upon asset and liability assumptions based on historical behaviors. 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 shows that there is greater exposure to rates decreasing.
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, 2025 and December 31, 2024, 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.
Liquidity Risk
Liquidity risk is the potential that Schwab will be unable to sell assets or meet cash flow obligations when they come due without incurring unacceptable losses.
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
- 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)
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, 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 37.0 million active brokerage accounts. More than 80% of our bank deposits qualified for FDIC insurance as of March 31, 2025. Our clients’ allocation of cash held on our balance sheet as bank deposits or payables to brokerage clients is sensitive to interest rate levels, with clients typically increasing their utilization of investment cash solutions, such as purchased money market funds and certain fixed income products when those yields are higher than those of cash sweep features.
As a participant in the financial services industry, Schwab relies on access to external financing in the normal course of business. Schwab’s use of external debt facilities may arise from timing differences between cash flow requirements, such as client cash outflows, cash flows from operations, payments on interest-earning assets, movements of cash to meet regulatory brokerage client cash segregation requirements, and general corporate purposes. Rollover risk is the risk that we will not be able to refinance or payoff borrowings as they mature. We maintain policies and procedures necessary to access funding, and test 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.
- 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)
The following table describes certain external debt facilities available at March 31, 2025:
| Description | Borrower | Outstanding | Available | Maturity of Amounts Outstanding | Weighted-Average Interest Rate on Amounts Outstanding | |||||||||||||||
| FHLB secured credit facilities | Banking subsidiaries | $ | 11,500 | $ | 65,028 |
(1)
|
April 2025 - September 2025 | 4.60% | ||||||||||||
| Federal Reserve discount window | Banking subsidiaries | — | 30,357 |
(1)
|
N/A | — | ||||||||||||||
| Repurchase agreements | Banking subsidiaries, CSC | 5,492 | — |
(2)
|
April 2025 - August 2025 | 4.65% | ||||||||||||||
|
Unsecured uncommitted lines of credit with
various external banks |
CSC, CS&Co | — | 1,692 | N/A | — | |||||||||||||||
| Unsecured commercial paper | CSC | 950 | 4,050 |
(3)
|
June 2025 - August 2025 | 4.53% | ||||||||||||||
|
Secured uncommitted lines of credit with
various external banks |
CS&Co | 500 | — |
(4)
|
July 2025 | 4.78% | ||||||||||||||
(1)
Amounts shown as available from the FHLB and Federal Reserve facilities represent remaining capacity based on assets pledged as of March 31, 2025. Incremental borrowing capacity may be made available by pledging additional assets, subject to applicable facility terms. See below and Item 1 – Note 9 for additional information.
(2)
Secured borrowing capacity is made available based on the banking subsidiaries’ or CSC’s ability to provide collateral deemed acceptable by each respective counterparty. See below and Item 1 – Note 12 for additional information.
(3)
Outstanding balance of unsecured commercial paper as of March 31, 2025 represents the gross par value before discount of $15 million.
(4)
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, 2025, the Company had additional investment securities with a par value of approximately $112 billion, or a fair value of approximately $104 billion, available to be pledged to obtain additional capacity. Additional details regarding availability and use of 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 (FHFA), in order to place new draws upon these credit facilities, and the Company manages capital with consideration of minimum tangible capital ratios at our banking subsidiaries. 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. 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 Fixed Income Clearing Corporation (FICC) in repurchase agreements collateralized by investment securities as another source of short-term liquidity. In addition, our banking subsidiaries are counterparties to the Standing Repo Facility with the Federal Reserve Bank of New York; other than de minimis tests performed to satisfy the Federal Reserve Bank of New York’s testing requirements, this facility was not used during the first three months of 2025 and there were no amounts outstanding at March 31, 2025. CSC maintains standing bilateral repurchase agreements with external banks. Other than de minimis tests, these facilities were not used during the first three months of 2025 and there were no amounts outstanding under these facilities at March 31, 2025.
CSC’s ratings for Commercial Paper Notes were P1 by Moody’s Investor Service (Moody’s), A2 by Standard & Poor’s Rating Group (Standard & Poor’s), and F1 by Fitch Ratings, Ltd (Fitch) at March 31, 2025.
CSC also has a universal automatic shelf registration statement on file with the SEC, which enables it to issue debt, equity, and other securities.
- 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)
CS&Co maintains unsecured uncommitted bank credit lines with a group of banks as a source of short-term liquidity, which can also be accessed by CSC. CS&Co also maintains secured uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements. CS&Co is also able to lend eligible securities held in client brokerage accounts in exchange for cash collateral as a source of short-term liquidity. As of March 31, 2025, liabilities for securities loaned totaled $14.7 billion and are included in payables to brokers, dealers, and clearing organizations on the condensed consolidated balance sheet. As of March 31, 2025, $9.4 billion of securities loaned had overnight and continuous remaining contractual maturities; $5.3 billion of securities loaned had contractual maturities of 35-95 days and had a weighted-average interest rate of 4.67%. See Item 1 – Note 12 for additional information on securities lending activities.
CSB issues brokered CDs as a supplemental funding source. The following table provides information about brokered CDs issued by CSB and outstanding as of March 31, 2025:
| Amount Outstanding | Maturity | Weighted-Average Interest Rate | |||||||||
| Brokered CDs | $ | 21,104 | April 2025 - November 2025 | 4.82% | |||||||
Cash Flow Activity
The Company’s cash and cash equivalents decreased $7.1 billion from year-end 2024 to $35.0 billion at March 31, 2025; cash and cash equivalents, including amounts restricted, decreased $3.5 billion from year-end 2024 to $62.0 billion at March 31, 2025. These decreases reflected a reduction of bank supplemental funding balances of $11.8 billion and maturities of long-term debt of $975 million. Bank deposits decreased during the first three months of 2025 by $13.0 billion, which reflected a $6.7 billion decrease in deposits swept from brokerage accounts due to typical first quarter seasonality and a decrease of $6.6 billion in brokered CDs, partially offset by client net equity selling towards the end of the quarter. The Company reduced FHLB borrowings and other short-term borrowings by a net total of $4.3 billion. Partially offsetting the decrease in bank deposits and repayment of borrowings, net investing cash inflows from our AFS and HTM securities totaled $12.4 billion in the first three months of 2025, and net cash inflows from operations totaled $6.4 billion.
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 2024 Form 10-K for additional information. The Company was in compliance with the LCR rule at March 31, 2025, and the table below presents information about our average daily LCR:
| Average for the Three Months Ended | |||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||
| Total eligible HQLA | $ | 55,383 | $ | 56,109 | |||||||
| Net cash outflows | 40,213 | 40,232 | |||||||||
| LCR | 138 | % | 140 | % | |||||||
To support growth in margin loan balances at our broker-dealer subsidiary while meeting our LCR requirements, the Company may issue commercial paper, draw on secured lines of credit, or engage in securities lending, in addition to capital markets issuances. 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, 2025.
- 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)
Long-Term Borrowings
The Company’s long-term debt is primarily comprised of Senior Notes and totaled $21.5 billion and $22.4 billion at March 31, 2025 and December 31, 2024, respectively.
The following table provides information about our Senior Notes outstanding at March 31, 2025:
| March 31, 2025 |
Par
Outstanding |
Maturity |
Weighted Average
Interest Rate
(1)
|
Moody’s |
Standard
& Poor’s |
Fitch | ||||||||||||||
| CSC Senior Notes | $ | 21,287 | 2025 - 2034 | 3.67% | A2 | A- | A | |||||||||||||
| Ameritrade Holding Senior Notes | 163 | 2025 - 2029 | 3.38% | A2 | A- | — | ||||||||||||||
(1)
Weighted average interest rates presented here exclude the impact of derivatives. See Note 11 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 2025.
Schwab enters into guarantees and other similar arrangements in the ordinary course of business. For information on these arrangements, see Item 1 – Notes 6, 7, 9, 10, and 12. 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 10 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 2024 Form 10-K. See also Item 1 – Condensed Consolidated Statements of Cash Flows, Item 1 – Note 8 for the Company’s bank deposits, Item 1 – Note 9 for the Company’s debt and borrowing facilities, Item 1 – Note 12 for the Company’s securities lending activities, and Item 1 – Note 14 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 over time, 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 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 2024 Form 10-K and in Item 1 – Note 17. As of March 31, 2025, CSC and our banking subsidiaries are considered well capitalized, and CS&Co is in compliance with its net capital requirements.
- 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 details the capital ratios for CSC (consolidated) and CSB:
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| CSC | CSB | CSC | CSB | ||||||||||||||||||||
| Total stockholders’ equity | $ | 49,511 | $ | 21,297 | $ | 48,375 | $ | 19,700 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Preferred stock | 9,191 | — | 9,191 | — | |||||||||||||||||||
| Common Equity Tier 1 Capital before regulatory adjustments | $ | 40,320 | $ | 21,297 | $ | 39,184 | $ | 19,700 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Goodwill, net of associated deferred tax liabilities | $ | 11,737 | $ | 13 | $ | 11,746 | $ | 13 | |||||||||||||||
| Other intangible assets, net of associated deferred tax liabilities | 6,125 | — | 6,232 | — | |||||||||||||||||||
| Deferred tax assets, net of valuation allowances and deferred tax liabilities | 50 | 41 | 50 | 41 | |||||||||||||||||||
|
AOCI adjustment
(1)
|
(13,614) | (11,835) | (14,839) | (12,938) | |||||||||||||||||||
| Common Equity Tier 1 Capital | $ | 36,022 | $ | 33,078 | $ | 35,995 | $ | 32,584 | |||||||||||||||
| Tier 1 Capital | $ | 45,213 | $ | 33,078 | $ | 45,186 | $ | 32,584 | |||||||||||||||
| Total Capital | 45,240 | 33,100 | 45,218 | 32,606 | |||||||||||||||||||
| Risk-Weighted Assets | 112,485 | 76,263 | 113,648 | 78,134 | |||||||||||||||||||
| Average Assets with regulatory adjustments | 457,495 | 272,273 | 458,119 | 280,701 | |||||||||||||||||||
| Total Leverage Exposure | 460,701 | 274,203 | 461,200 | 282,629 | |||||||||||||||||||
| Common Equity Tier 1 Capital/Risk-Weighted Assets | 32.0 | % | 43.4 | % | 31.7 | % | 41.7 | % | |||||||||||||||
| Tier 1 Capital/Risk-Weighted Assets | 40.2 | % | 43.4 | % | 39.8 | % | 41.7 | % | |||||||||||||||
| Total Capital/Risk-Weighted Assets | 40.2 | % | 43.4 | % | 39.8 | % | 41.7 | % | |||||||||||||||
| Tier 1 Leverage Ratio | 9.9 | % | 12.1 | % | 9.9 | % | 11.6 | % | |||||||||||||||
| Supplementary Leverage Ratio | 9.8 | % | 12.1 | % | 9.8 | % | 11.5 | % | |||||||||||||||
(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 at March 31, 2025 remained consistent with year-end 2024, ending the first quarter of 2025 at 9.9%. CSB’s Tier 1 Leverage Ratio increased from 11.6% at year-end 2024, ending the first quarter of 2025 at 12.1% primarily as a result of lower total assets as well as net income during the quarter.
In light of the Federal Reserve’s 2023 regulatory capital rule proposal, which, among other things, would require the Company to include AOCI in regulatory capital (see Part II – Item 7 – Current Regulatory and Other Developments in the 2024 Form 10-K), the Company has developed 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%. As of March 31, 2025, our adjusted Tier 1 Leverage Ratio, which includes AOCI in the ratio, was 7.1% for CSC (consolidated) and 8.2% for CSB (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results). The Company is continuing to accrete capital organically, and will continue to manage its capital as described above and in Part II – Item 7 – Capital Management of the 2024 Form 10-K. In evaluating returns of excess capital to stockholders, we will consider the amount of bank supplemental funding outstanding, and may choose to utilize the liquidity we would otherwise use for capital returns to repay outstanding bank supplemental funding balances.
IDA Agreement
Certain brokerage client deposits are swept off-balance sheet to the TD Depository Institutions pursuant to the 2023 IDA agreement. During the first three months of 2025, Schwab did not move IDA balances to its balance sheet. The Company’s overall capital management strategy includes supporting migration of IDA balances in future periods as available pursuant to the terms of the 2023 IDA agreement. The Company’s ability to migrate these balances to its balance sheet is dependent upon multiple factors including having sufficient capital levels to sustain these incremental deposits. See Item 1 – Note 10 for further information on the 2023 IDA agreement.
- 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)
Dividends
On January 29, 2025, the Board of Directors of the Company declared a two cent, or 8%, increase in the quarterly cash dividend to $.27 per common share.
Cash dividends paid and per share amounts for the first three months of 2025 and 2024 are as follows:
| 2025 | 2024 | ||||||||||||||||||||||
| Three Months Ended March 31, | Cash Paid |
Per Share
Amount |
Cash Paid |
Per Share
Amount |
|||||||||||||||||||
|
Common and Nonvoting Common Stock
(1)
|
$ | 492 | $ | .27 | $ | 459 | $ | .25 | |||||||||||||||
| Preferred Stock: | |||||||||||||||||||||||
|
Series D
(2)
|
11 | 14.88 | 11 | 14.88 | |||||||||||||||||||
|
Series F
(3)
|
— | — | — | — | |||||||||||||||||||
|
Series G
(2)
|
33 | 1,343.75 | 33 | 1,343.75 | |||||||||||||||||||
|
Series H
(2)
|
22 | 1,000.00 | 22 | 1,000.00 | |||||||||||||||||||
|
Series I
(2)
|
21 | 1,000.00 | 21 | 1,000.00 | |||||||||||||||||||
|
Series J
(2)
|
7 | 11.13 | 7 | 11.13 | |||||||||||||||||||
|
Series K
(2)
|
9 | 1,250.00 | 9 | 1,250.00 | |||||||||||||||||||
(1)
The Company had no nonvoting common stock outstanding as of the record date for the Company’s first quarter 2025 dividend and accordingly, no dividends were paid on nonvoting common stock during the three months ended March 31, 2025.
(2)
Dividends paid quarterly.
(3)
Dividends paid semi-annually until December 1, 2027 and quarterly thereafter.
Share Repurchases
On February 12, 2025, TD Group US Holdings LLC, an affiliate of TD Bank, completed a secondary public offering of the Company’s common shares through which TD Group US Holdings LLC sold 133.8 million shares of the Company’s common stock and 31.7 million shares of the Company’s nonvoting common stock, which automatically converted into common stock, for an aggregate amount of $13.1 billion. The Company did not receive any of the proceeds from the sale of shares. Concurrent with the completion of the secondary offering, and pursuant to a repurchase agreement dated February 9, 2025, the Company repurchased directly from TD Group US Holdings LLC its remaining 19.2 million shares of nonvoting common stock at a price of $77.982 per share for an aggregate repurchase amount of $1.5 billion, which settled on February 12, 2025. The shares of nonvoting common stock automatically converted into common stock upon repurchase and are now held in treasury stock, reducing the number of shares outstanding. These shares were purchased under CSC’s $15.0 billion share repurchase authorization. The share repurchase authorization does not have an expiration date and as of March 31, 2025, approximately $7.2 billion remained on the authorization. There were no repurchases of CSC’s common stock during the three months ended March 31, 2024.
Share repurchases, net of issuances, are subject to a nondeductible 1% excise tax which was recognized as a direct and incremental cost associated with these transactions. For repurchases of common stock, the tax is recorded as part of the cost basis of the treasury stock repurchased, resulting in no impact to the condensed consolidated statements of income.
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. See Item 1 – Note 14 for additional information.
OTHER
Foreign Exposure
At March 31, 2025, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries, as well as agencies of foreign governments. At March 31, 2025, the fair value of these holdings totaled $15.2 billion, with the top three exposures being to issuers and counterparties domiciled in France at $8.7 billion, the United Kingdom at $3.8 billion, and Norway at $750 million. At December 31, 2024, the fair value of these holdings totaled $10.6 billion, with the top three exposures being to issuers and counterparties domiciled in France at $5.1 billion, the United Kingdom at $2.1 billion, and Canada at $889 million. In addition, Schwab had outstanding margin loans to foreign residents of $3.5 billion at both March 31, 2025 and December 31, 2024.
- 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)
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 2024 Form 10-K. There have been no changes to critical accounting estimates during the first three months of 2025.
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.
- 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)
The following tables present reconciliations of GAAP measures to non-GAAP measures:
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Total expenses excluding interest (GAAP) | $ | 3,144 | $ | 2,942 | |||||||
| Amortization of acquired intangible assets | (130) | (130) | |||||||||
|
Acquisition and integration-related costs
(1)
|
— | (38) | |||||||||
|
Restructuring costs
(2)
|
— | 28 | |||||||||
| Adjusted total expenses (non-GAAP) | $ | 3,014 | $ | 2,802 | |||||||
(1)
There were no acquisition and integration-related costs for the three months ended March 31, 2025. Acquisition and integration-related costs for the three months ended March 31, 2024 primarily consist of $17 million of compensation and benefits and $17 million of professional services.
(2)
There were no restructuring costs for the three months ended March 31, 2025. Restructuring costs for the three months ended March 31, 2024 reflect a benefit due to a change in estimate of $31 million in compensation and benefits, partially offset by $2 million of occupancy and equipment expense and $1 million of other expense.
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Amount | Diluted EPS | Amount | Diluted EPS | |||||||||||
|
Net income available to common stockholders (GAAP),
Earnings per common share — diluted (GAAP) |
$ | 1,796 | $ | .99 | $ | 1,251 | $ | .68 | ||||||
| Amortization of acquired intangible assets | 130 | .07 | 130 | .07 | ||||||||||
| Acquisition and integration-related costs | — | — | 38 | .02 | ||||||||||
| Restructuring costs | — | — | (28) | (.01) | ||||||||||
|
Income tax effects
(1)
|
(31) | (.02) | (33) | (.02) | ||||||||||
|
Adjusted net income available to common stockholders
(non-GAAP), Adjusted diluted EPS (non-GAAP) |
$ | 1,895 | $ | 1.04 | $ | 1,358 | $ | .74 | ||||||
(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, | ||||||||
| 2025 | 2024 | |||||||
| Return on average common stockholders’ equity (GAAP) | 18 | % | 15 | % | ||||
| Average common stockholders’ equity | $ | 39,752 | $ | 32,493 | ||||
| Less: Average goodwill | (11,951) | (11,951) | ||||||
| Less: Average acquired intangible assets — net | (7,679) | (8,196) | ||||||
|
Plus: Average deferred tax liabilities related to goodwill and
acquired intangible assets — net
|
1,709 | 1,759 | ||||||
| Average tangible common equity | $ | 21,831 | $ | 14,105 | ||||
|
Adjusted net income available to common stockholders
(1)
|
$ | 1,895 | $ | 1,358 | ||||
| Return on tangible common equity (non-GAAP) | 35 | % | 39 | % | ||||
(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, 2025 | December 31, 2024 | ||||||||||||||||
| CSC | CSB | CSC | CSB | ||||||||||||||
|
Tier 1 Leverage Ratio (GAAP)
|
9.9 | % | 12.1 | % | 9.9 | % | 11.6 | % | |||||||||
|
Tier 1 Capital
|
$ | 45,213 | $ | 33,078 | $ | 45,186 | $ | 32,584 | |||||||||
| Plus: AOCI adjustment | (13,614) | (11,835) | (14,839) | (12,938) | |||||||||||||
| Adjusted Tier 1 Capital | 31,599 | 21,243 | 30,347 | 19,646 | |||||||||||||
|
Average assets with regulatory adjustments
|
457,495 | 272,273 | 458,119 | 280,701 | |||||||||||||
| Plus: AOCI adjustment | (14,165) | (12,419) | (14,831) | (13,037) | |||||||||||||
| Adjusted average assets with regulatory adjustments | $ | 443,330 | $ | 259,854 | $ | 443,288 | $ | 267,664 | |||||||||
|
Adjusted Tier 1 Leverage Ratio (non-GAAP)
|
7.1 | % | 8.2 | % | 6.8 | % | 7.3 | % | |||||||||
- 24 -
THE CHARLES SCHWAB CORPORATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For discussion of the quantitative and qualitative disclosures about market risk, see Risk Management in Item 2.
- 25 -
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Statements of Income
(In Millions, Except Per Share Amounts)
(Unaudited)
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Net Revenues | |||||||||||
| Interest revenue | $ |
|
$ |
|
|||||||
| Interest expense |
(
|
(
|
|||||||||
| Net interest revenue |
|
|
|||||||||
|
Asset management and administration fees
|
|
|
|||||||||
| Trading revenue |
|
|
|||||||||
| Bank deposit account fees |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total net revenues |
|
|
|||||||||
| Expenses Excluding Interest | |||||||||||
| Compensation and benefits |
|
|
|||||||||
| Professional services |
|
|
|||||||||
| Occupancy and equipment |
|
|
|||||||||
| Advertising and market development |
|
|
|||||||||
| Communications |
|
|
|||||||||
| Depreciation and amortization |
|
|
|||||||||
| Amortization of acquired intangible assets |
|
|
|||||||||
| Regulatory fees and assessments |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total expenses excluding interest |
|
|
|||||||||
| Income before taxes on income |
|
|
|||||||||
| Taxes on income |
|
|
|||||||||
| Net Income |
|
|
|||||||||
| Preferred stock dividends and other |
|
|
|||||||||
| Net Income Available to Common Stockholders | $ |
|
$ |
|
|||||||
| Weighted-Average Common Shares Outstanding: | |||||||||||
| Basic |
|
|
|||||||||
| Diluted |
|
|
|||||||||
|
Earnings Per Common Shares Outstanding
(1)
:
|
|||||||||||
| Basic | $ |
|
$ |
|
|||||||
| Diluted | $ |
|
$ |
|
|||||||
(1)
For additional information on earnings per common shares outstanding for both voting and nonvoting common stock, see Note 16.
See Notes to Condensed Consolidated Financial Statements.
- 26 -
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(In Millions)
(Unaudited)
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Net income | $ |
|
$ |
|
|||||||
| Other comprehensive income (loss), before tax: | |||||||||||
| Change in net unrealized gain (loss) on available for sale securities: | |||||||||||
| Net unrealized gain (loss) |
|
|
|||||||||
| Other reclassifications included in other revenue |
|
|
|||||||||
| Change in net unrealized gain (loss) on held to maturity securities: | |||||||||||
|
Amortization of amounts previously recorded upon transfer to held to maturity
from available for sale |
|
|
|||||||||
| Other |
|
(
|
|||||||||
| Other comprehensive income (loss), before tax |
|
|
|||||||||
| Income tax effect |
(
|
(
|
|||||||||
| Other comprehensive income (loss), net of tax |
|
|
|||||||||
| Comprehensive Income (Loss) | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements.
- 27 -
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Balance Sheets
(In Millions, Except Per Share and Share Amounts)
(Unaudited)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Cash and investments segregated and on deposit for regulatory purposes (including resale
agreements of $
respectively)
|
|
|
|||||||||
| Receivables from brokers, dealers, and clearing organizations |
|
|
|||||||||
| Receivables from brokerage clients — net |
|
|
|||||||||
|
Available for sale securities (amortized cost of $
$
respectively)
|
|
|
|||||||||
|
Held to maturity securities (including assets pledged of $
and $
|
|
|
|||||||||
| Bank loans — net |
|
|
|||||||||
| Equipment, office facilities, and property — net |
|
|
|||||||||
| Goodwill |
|
|
|||||||||
| Acquired intangible assets — net |
|
|
|||||||||
| Other assets |
|
|
|||||||||
| Total assets | $ |
|
$ |
|
|||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Bank deposits | $ |
|
$ |
|
|||||||
| Payables to brokers, dealers, and clearing organizations |
|
|
|||||||||
| Payables to brokerage clients |
|
|
|||||||||
| Accrued expenses and other liabilities |
|
|
|||||||||
| Other short-term borrowings |
|
|
|||||||||
| Federal Home Loan Bank borrowings |
|
|
|||||||||
| Long-term debt |
|
|
|||||||||
| Total liabilities |
|
|
|||||||||
| Stockholders’ equity: | |||||||||||
|
Preferred stock — $
at March 31, 2025 and December 31, 2024
|
|
|
|||||||||
|
Common stock —
respectively
|
|
|
|||||||||
|
Nonvoting common stock —
|
|
|
|||||||||
| Additional paid-in capital |
|
|
|||||||||
| Retained earnings |
|
|
|||||||||
|
Treasury stock, at cost —
and December 31, 2024, respectively
|
(
|
(
|
|||||||||
| Accumulated other comprehensive income (loss) |
(
|
(
|
|||||||||
| Total stockholders’ equity |
|
|
|||||||||
| Total liabilities and stockholders’ equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements.
- 28 -
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Statements of Stockholders
’
Equity
(In Millions)
(Unaudited)
| Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock |
Nonvoting
Common Stock |
Additional Paid-in Capital | Retained Earnings |
Treasury Stock,
at cost |
Total | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||
| Net income | — | — | — | — | — | — |
|
— | — |
|
||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — |
|
|
||||||||||||||||||||||
| Dividends declared on preferred stock | — | — | — | — | — | — |
(
|
— | — |
(
|
||||||||||||||||||||||
|
Dividends declared on common stock — $
per share
|
— | — | — | — | — | — |
(
|
— | — |
(
|
||||||||||||||||||||||
| Stock option exercises and other | — | — | — | — | — |
(
|
— |
|
— |
|
||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — |
|
— | — | — |
|
||||||||||||||||||||||
| Other | — | — | — | — | — |
|
— |
(
|
— |
(
|
||||||||||||||||||||||
| Balance at March 31, 2024 | $ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||
| Balance at December 31, 2024 | $ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||
| Net income | — | — | — | — | — | — |
|
— | — |
|
||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — |
|
|
||||||||||||||||||||||
| Dividends declared on preferred stock | — | — | — | — | — | — |
(
|
— | — |
(
|
||||||||||||||||||||||
|
Dividends declared on common stock — $
per share
|
— | — | — | — | — | — |
(
|
— | — |
(
|
||||||||||||||||||||||
| Repurchase of nonvoting common stock, inclusive of tax | — |
|
— |
(
|
— | — | — |
(
|
— |
(
|
||||||||||||||||||||||
| Conversion of nonvoting common stock to common stock | — |
|
|
(
|
(
|
— | — | — | — |
|
||||||||||||||||||||||
| Stock option exercises and other | — | — | — | — | — |
(
|
— |
|
— |
|
||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — |
|
— | — | — |
|
||||||||||||||||||||||
| Other | — | — | — | — | — |
|
— |
(
|
— |
(
|
||||||||||||||||||||||
| Balance at March 31, 2025 | $ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
- 29 -
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Statements of Cash Flows
(1)
(in Millions)
(Unaudited)
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ |
|
$ |
|
|||||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||||||
| Share-based compensation |
|
|
|||||||||
| Depreciation and amortization |
|
|
|||||||||
| Amortization of acquired intangible assets |
|
|
|||||||||
| Provision (benefit) for deferred income taxes |
(
|
(
|
|||||||||
| Premium amortization, net, on available for sale and held to maturity securities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Net change in: | |||||||||||
| Investments segregated and on deposit for regulatory purposes |
|
|
|||||||||
| Receivables from brokers, dealers, and clearing organizations |
(
|
(
|
|||||||||
| Receivables from brokerage clients |
|
(
|
|||||||||
| Other assets |
(
|
|
|||||||||
| Payables to brokers, dealers, and clearing organizations |
|
|
|||||||||
| Payables to brokerage clients |
(
|
(
|
|||||||||
| Accrued expenses and other liabilities |
(
|
(
|
|||||||||
| Net cash provided by (used for) operating activities |
|
(
|
|||||||||
| Cash Flows from Investing Activities | |||||||||||
| Purchases of available for sale securities |
(
|
(
|
|||||||||
| Proceeds from sales of available for sale securities |
|
|
|||||||||
| Principal payments on available for sale securities |
|
|
|||||||||
| Purchases of held to maturity securities |
(
|
|
|||||||||
| Principal payments on held to maturity securities |
|
|
|||||||||
| Net change in bank loans |
(
|
(
|
|||||||||
| Purchases of equipment, office facilities, and property |
(
|
(
|
|||||||||
| Purchases of FHLB stock |
(
|
(
|
|||||||||
| Proceeds from sales of FHLB stock |
|
|
|||||||||
| Purchases of Federal Reserve stock |
(
|
(
|
|||||||||
| Proceeds from sales of Federal Reserve stock |
|
|
|||||||||
| Other investing activities |
(
|
(
|
|||||||||
| Net cash provided by (used for) investing activities |
|
|
|||||||||
| Cash Flows from Financing Activities | |||||||||||
| Net change in bank deposits |
(
|
(
|
|||||||||
| Proceeds from FHLB borrowings |
|
|
|||||||||
| Repayments of FHLB borrowings |
(
|
(
|
|||||||||
| Proceeds from other short-term borrowings |
|
|
|||||||||
| Repayments of other short-term borrowings |
(
|
(
|
|||||||||
| Repayments of long-term debt |
(
|
(
|
|||||||||
| Dividends paid |
(
|
(
|
|||||||||
| Proceeds from stock options exercised |
|
|
|||||||||
| Repurchase of nonvoting common stock |
(
|
|
|||||||||
| Other financing activities |
(
|
(
|
|||||||||
| Net cash provided by (used for) financing activities |
(
|
(
|
|||||||||
| Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted |
(
|
(
|
|||||||||
| Cash and Cash Equivalents, including Amounts Restricted at Beginning of Year |
|
|
|||||||||
| Cash and Cash Equivalents, including Amounts Restricted at End of Period | $ |
|
$ |
|
|||||||
Continued on following page.
- 30 -
THE CHARLES SCHWAB CORPORATION
Condensed Consolidated Statements of Cash Flows
(1)
(in Millions)
(Unaudited)
Continued from previous page.
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Supplemental Cash Flow Information | |||||||||||
| Non-cash investing activity: | |||||||||||
| Changes in accrued equipment, office facilities, and property purchases | $ |
|
$ |
(
|
|||||||
| Other Supplemental Cash Flow Information: | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ |
|
$ |
|
|||||||
| Income taxes | $ |
|
$ |
|
|||||||
| Amounts included in the measurement of lease liabilities | $ |
|
$ |
|
|||||||
| Leased assets obtained in exchange for new operating lease liabilities | $ |
|
$ |
|
|||||||
| March 31, 2025 | March 31, 2024 | ||||||||||
|
Reconciliation of cash, cash equivalents and amounts reported within the balance sheet
(2)
|
|||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Restricted cash and cash equivalents amounts included in cash and investments segregated
and on deposit for regulatory purposes |
|
|
|||||||||
|
Total cash and cash equivalents, including amounts restricted shown in the
statement of cash flows |
$ |
|
$ |
|
|||||||
(1)
Certain prior year amounts have been reclassified to conform to the current year presentation. See Note 1 for additional information.
(2)
For more information on the nature of restrictions on restricted cash and cash equivalents, see Note 17.
See Notes to Condensed Consolidated Financial Statements.
- 31 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
1.
Introduction and Basis of Presentation
The Charles Schwab Corporation (CSC) is a savings and loan holding company. CSC engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.
Principal business subsidiaries of CSC include the following:
•
Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer;
•
Charles Schwab Bank, SSB (CSB), our principal banking entity; and
•
Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds
®
) and for Schwab’s exchange-traded funds (Schwab ETFs).
Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries.
These unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements and in the related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from these estimates. In the opinion of management, all normal, recurring adjustments have been included for a fair statement of this interim financial information.
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in Schwab’s 2024 Form 10-K.
Reclassifications
: Beginning in the fourth quarter of 2024, receivables from brokers, dealers, and clearing organizations and payables to brokers, dealers, and clearing organizations are presented separately from other assets and accrued expenses and other liabilities, respectively, in the consolidated balance sheets. Correspondingly, interest expense related to securities lending is now presented as interest expense on payables to brokers, dealers, and clearing organizations. Prior period amounts have been reclassified to reflect these changes. Corresponding presentation changes have been made to the condensed consolidated statements of cash flows and related notes also impacted.
The significant accounting policies are included in Item 8 – Note 2 in the 2024 Form 10-K. There have been no significant changes to these accounting policies during the first three months of 2025.
2.
New Accounting Standards
Adoption of New Accounting Standards
| Standard | Description | Date of Adoption | Effects on the Financial Statements or Other Significant Matters | ||||||||
| ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” |
Expands annual income tax disclosures, primarily by enhancing the rate reconciliation table and requiring additional disaggregated information about income taxes paid.
Adoption allows retrospective or prospective application.
|
January 1, 2025 | The Company does not expect this guidance will have a material impact on its financial statements or related disclosures. This guidance will be reflected in the annual financial statements for 2025. | ||||||||
New Accounting Standards Not Yet Adopted
| Standard | Description | Required Date of Adoption | Effects on the Financial Statements or Other Significant Matters | ||||||||
| ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” |
Requires additional disclosures about certain expenses including, but not limited to, employee compensation, depreciation, amortization of intangible assets, and selling expenses. Also requires annual disclosure of how selling expenses are defined.
Adoption allows retrospective or prospective application, with early adoption permitted. |
January 1, 2027 (applies to the annual financial statements for 2027 and interim periods thereafter) | The Company is evaluating the impact of this guidance on its financial statement disclosures. | ||||||||
- 32 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
3.
Revenue Recognition
Disaggregation of Schwab’s revenue by major source is as follows:
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Net interest revenue | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
| Cash and investments segregated |
|
|
|||||||||
| Receivables from brokerage clients |
|
|
|||||||||
| Available for sale securities |
|
|
|||||||||
| Held to maturity securities |
|
|
|||||||||
| Bank loans |
|
|
|||||||||
| Securities lending revenue |
|
|
|||||||||
| Other interest revenue |
|
|
|||||||||
| Interest revenue |
|
|
|||||||||
| Bank deposits |
(
|
(
|
|||||||||
|
Payables to brokers, dealers, and clearing organizations
(1)
|
(
|
(
|
|||||||||
| Payables to brokerage clients |
(
|
(
|
|||||||||
|
Other short-term borrowings
|
(
|
(
|
|||||||||
|
Federal Home Loan Bank borrowings
|
(
|
(
|
|||||||||
| Long-term debt |
(
|
(
|
|||||||||
| Other interest expense |
|
(
|
|||||||||
| Interest expense |
(
|
(
|
|||||||||
| Net interest revenue |
|
|
|||||||||
| Asset management and administration fees | |||||||||||
| Mutual funds, ETFs, and CTFs |
|
|
|||||||||
| Managed investing solutions |
|
|
|||||||||
| Other |
|
|
|||||||||
| Asset management and administration fees |
|
|
|||||||||
| Trading revenue | |||||||||||
| Commissions |
|
|
|||||||||
| Order flow revenue |
|
|
|||||||||
| Principal transactions |
|
|
|||||||||
| Trading revenue |
|
|
|||||||||
| Bank deposit account fees |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total net revenues | $ |
|
$ |
|
|||||||
(1)
Beginning in the fourth quarter of 2024, this line item includes interest expense related to securities loaned. Prior period amounts have been reclassified to reflect this change. See Note 1 for additional information.
For a summary of revenue provided by our reportable segments, see Note 18. The recognition of revenue is not impacted by the operating segment in which revenue is generated.
Contract balances
: Receivables from contracts with customers within the scope of Accounting Standards Codification (ASC) 606
Revenue From Contracts With Customers
(ASC 606), are included in other assets on the condensed consolidated balance sheets, and totaled $
752
million and $
694
million at March 31, 2025 and December 31, 2024, respectively.
The Company had net contract assets of $
210
million and $
216
million at March 31, 2025 and December 31, 2024, respectively, related to the buy down of fixed-rate obligation amounts pursuant to the 2023 IDA agreement. These amounts are included in other assets on the condensed consolidated balance sheets and are amortized on a straight-line basis over the remaining contractual term as a reduction to bank deposit account fee revenue. For additional discussion of the 2023 IDA agreement, see Note 10.
- 33 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
4.
Receivables from and Payables to Brokers, Dealers, and Clearing Organizations
Receivables from and payables to brokers, dealers, and clearing organizations are detailed below:
|
|
March 31, 2025 | December 31, 2024 | |||||||||
| Receivables | |||||||||||
| Receivables from clearing organizations | $ |
|
$ |
|
|||||||
| Securities borrowed |
|
|
|||||||||
| Receivables for securities failed to deliver |
|
|
|||||||||
| Other receivables from broker-dealers |
|
|
|||||||||
|
Receivables from brokers, dealers, and clearing organizations
|
$ |
|
$ |
|
|||||||
| Payables | |||||||||||
| Deposits for securities loaned | $ |
|
$ |
|
|||||||
| Other payables to broker-dealers |
|
|
|||||||||
| Payables to clearing organizations |
|
|
|||||||||
| Payables for securities failed to receive |
|
|
|||||||||
|
Payables to brokers, dealers, and clearing organizations
|
$ |
|
$ |
|
|||||||
See Note 12 for additional information regarding securities lending and borrowing activities.
- 34 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
5.
Investment Securities
The amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS and HTM investment securities are as follows:
| March 31, 2025 |
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||||||||
| Available for sale securities | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
||||||||||||||||||||||
|
Corporate debt securities
(1)
|
|
|
|
|
||||||||||||||||||||||
|
Asset-backed securities
(2)
|
|
|
|
|
||||||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
||||||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
||||||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
|
Unallocated portfolio layer method fair value basis adjustments
(3)
|
(
|
|
(
|
— | ||||||||||||||||||||||
|
Total available for sale securities
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Held to maturity securities | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Total held to maturity securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Available for sale securities | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
||||||||||||||||||||||
|
Corporate debt securities
(1)
|
|
|
|
|
||||||||||||||||||||||
|
Asset-backed securities
(2)
|
|
|
|
|
||||||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
||||||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
||||||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
||||||||||||||||||||||
| Other |
|
|
|
|
||||||||||||||||||||||
|
Unallocated portfolio layer method fair value basis adjustments
(3)
|
(
|
|
(
|
— | ||||||||||||||||||||||
|
Total available for sale securities
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Held to maturity securities | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
| Total held to maturity securities | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
(1)
As of March 31, 2025 and December 31, 2024, approximately
28
% and
35
%, respectively, of the total AFS in corporate debt securities were issued by institutions in the financial services industry. Approximately
22
% and
16
% of the holdings of these securities were issued by institutions in the information technology industry as of March 31, 2025 and December 31, 2024, respectively.
(2)
Approximately
72
% and
62
% of asset-backed securities held as of March 31, 2025 and December 31, 2024, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately
18
% and
25
% of the asset-backed securities held as of March 31, 2025 and December 31, 2024, respectively.
(3)
This represents the amount of portfolio layer method (PLM) fair value hedge basis adjustments related to AFS securities hedged in a closed portfolio. See Note 11 for more information on PLM hedge accounting.
At March 31, 2025, our banking subsidiaries had pledged investment securities with a fair value of $
63.0
billion (collateral value of $
58.1
billion) as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 9). Our banking subsidiaries also pledge investment securities as collateral to secure borrowing capacity at the Federal Reserve discount window, and had pledged securities with a fair value of $
31.6
billion (collateral value of $
30.4
billion) as collateral for this facility at March 31, 2025. The Company also pledges investment securities issued by federal agencies to secure certain trust deposits. The fair value and collateral value of these pledged securities was $
1.5
billion at March 31, 2025.
At March 31, 2025, 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 $
5.8
billion. Securities pledged as collateral under these repurchase agreements may be sold, repledged, or otherwise used by the counterparties. See Notes 9 and 12 for additional information on these repurchase agreements.
- 35 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
At March 31, 2025, the Company had pledged AFS securities consisting of U.S. Treasury securities with an aggregate fair value of $
371
million as initial margin on interest rate swaps (see Notes 11 and 12). All of Schwab’s interest rate swaps are cleared through central counterparty (CCP) clearing houses which require the Company to post initial margin as collateral against potential losses. Initial margin is posted through futures commission merchants (FCM) which serve as the intermediary between the CCPs and Schwab. The FCM agreements governing our swaps allow for securities pledged as initial margin to be sold, repledged, or otherwise used by the FCM.
AFS securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:
| Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||||||
| March 31, 2025 |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
|||||||||||||||||||||||||||||
| Available for sale securities | |||||||||||||||||||||||||||||||||||
|
U.S. agency mortgage-backed securities
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
|
U.S. Treasury securities
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Asset-backed securities
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total
(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Available for sale securities | |||||||||||||||||||||||||||||||||||
|
U.S. agency mortgage-backed securities
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
|
U.S. Treasury securities
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Asset-backed securities
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total
(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(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 $
28
million and $
47
million at March 31, 2025 and December 31, 2024, respectively.
At March 31, 2025, substantially all rated securities in the investment portfolios were investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises.
For a description of management’s quarterly evaluation of AFS securities in unrealized loss positions, see Item 8 – Note 2 in the 2024 Form 10-K.
No
amounts were recognized as credit loss expense and
no
securities were written down to fair value through earnings for the three months ended March 31, 2025 and the year ended December 31, 2024.
None
of the Company’s AFS securities held as of March 31, 2025 and December 31, 2024 had an allowance for credit losses. All HTM securities as of March 31, 2025 and December 31, 2024 were U.S. agency mortgage-backed securities and therefore had
no
allowance for credit losses because expected nonpayment of the amortized cost basis is zero.
The Company had $
418
million and $
455
million of accrued interest for AFS and HTM securities as of March 31, 2025 and December 31, 2024, respectively. These amounts are excluded from the amortized cost basis and fair market value of AFS and HTM securities and included in other assets on the condensed consolidated balance sheets. There were
no
writeoffs of accrued interest receivable on AFS and HTM securities during the three months ended March 31, 2025, or for the year ended December 31, 2024.
- 36 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The following table presents the Company’s estimated effective duration, which reflects anticipated future payments, by category at March 31, 2025:
| In years | |||||
| Estimated effective duration, exclusive of derivatives: | |||||
|
AFS investment securities portfolio
|
|
||||
| AFS and HTM investment securities portfolio |
|
||||
|
Estimated effective duration, inclusive of derivatives
(1)
:
|
|||||
|
AFS investment securities portfolio
|
|
||||
| AFS and HTM investment securities portfolio |
|
||||
(1)
See Note 11 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:
| March 31, 2025 |
Within
1 year |
After 1 year
through 5 years |
After 5 years
through 10 years |
After
10 years |
Total | ||||||||||||||||||||||||
| Available for sale securities | |||||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|
||||||||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|
||||||||||||||||||||||||
| Asset-backed securities |
|
|
|
|
|
||||||||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
|
||||||||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
|
||||||||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
|
||||||||||||||||||||||||
| Other |
|
|
|
|
|
||||||||||||||||||||||||
| Total fair value | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
|
Total amortized cost
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Held to maturity securities | |||||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Total fair value | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Total amortized cost | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
(1)
For purposes of this table, the amortized cost of AFS securities excludes the unallocated PLM fair value hedge basis adjustments of $
28
million at March 31, 2025.
Proceeds and gross realized gains and losses from sales of AFS investment securities are as follows:
|
Three Months Ended
March 31, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Proceeds | $ |
|
$ |
|
|||||||
| Gross realized gains |
|
|
|||||||||
| Gross realized losses |
|
|
|||||||||
- 37 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
6.
Bank Loans and Related Allowance for Credit Losses
The composition of bank loans and delinquency analysis by portfolio segment and class of financing receivable is as follows:
| March 31, 2025 | Current |
30-59 days
past due |
60-89 days
past due |
>
90 days past
due and other nonaccrual loans (3) |
Total past due
and other nonaccrual loans |
Total
loans |
Allowance
for credit losses |
Total
bank loans – net |
||||||||||||||||||
| Residential real estate: | ||||||||||||||||||||||||||
|
First Mortgages
(1,2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
HELOCs
(1,2)
|
|
|
|
|
|
|
|
|
||||||||||||||||||
| Total residential real estate |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Pledged asset lines |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Total bank loans | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Residential real estate: | ||||||||||||||||||||||||||
|
First Mortgages
(1,2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
HELOCs
(1,2)
|
|
|
|
|
|
|
|
|
||||||||||||||||||
| Total residential real estate |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Pledged asset lines |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Total bank loans | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(1)
First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $
115
million and $
112
million at March 31, 2025 and December 31, 2024, respectively.
(2)
At both March 31, 2025 and December 31, 2024,
42
% of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.
(3)
There were
no
loans accruing interest that were contractually 90 days or more past due at March 31, 2025 or December 31, 2024.
At March 31, 2025, CSB had pledged the full balance of First Mortgages and HELOCs pursuant to a blanket lien status collateral arrangement to secure borrowing capacity on a secured credit facility with the FHLB (see Note 9).
Changes in the allowance for credit losses on bank loans were as follows:
| First Mortgages | HELOCs | Total residential real estate | Pledged asset lines | Other | Total | |||||||||||||||
| Balance at December 31, 2023 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Charge-offs |
|
|
|
|
|
|
||||||||||||||
| Recoveries |
|
|
|
|
|
|
||||||||||||||
| Provision for credit losses |
(
|
(
|
(
|
|
|
(
|
||||||||||||||
| Balance at March 31, 2024 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Balance at December 31, 2024 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Charge-offs |
|
|
|
|
|
|
||||||||||||||
| Recoveries |
|
|
|
|
|
|
||||||||||||||
| Provision for credit losses |
|
|
|
|
|
|
||||||||||||||
| Balance at March 31, 2025 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Consistent with Schwab’s loan charge-off policy for pledged asset lines (PALs) as disclosed in Item 8 – Note 2 of the 2024 Form 10-K, the Company charges off any unsecured balances no later than 90 days past due. As of March 31, 2025, substantially all PALs are also subject to the collateral maintenance practical expedient under ASC 326
Financial Instruments — Credit Losses
. All PALs were fully collateralized by securities with fair values in excess of borrowings as of March 31, 2025 and December 31, 2024, and no allowance for credit losses for PALs as of those dates was required.
The U.S. economy saw steady hiring and moderating inflation in the first quarter of 2025, but continued to face tight monetary policy and geopolitical unrest amid a backdrop of elevated uncertainty around the economic impact of trade policy. Management’s macroeconomic outlook reflects sustained current benchmark lending rates, with unemployment remaining relatively flat and modest home price appreciation. Though higher mortgage rates are softening demand and reducing borrower
- 38 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
affordability, we expect constrained housing supply to keep home prices relatively stable. Furthermore, credit quality metrics in the Company’s bank loans portfolio remain very strong. As a result of these factors, we held projected loss rates constant at March 31, 2025, as compared to December 31, 2024.
Bank loan-related nonperforming assets consisted of nonaccrual loans of $
30
million and $
35
million at March 31, 2025 and December 31, 2024, respectively. Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02, “
Financial Instruments — Credit Losses
:
Troubled Debt Restructurings and Vintage Disclosures”
on January 1, 2023. At both March 31, 2025 and December 31, 2024, loan modifications to borrowers experiencing financial difficulty were not material.
Credit Quality
In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following:
•
Year of origination;
•
Borrower Fair Isaac Corporation (FICO) scores at origination (Origination FICO);
•
Updated borrower FICO scores (Updated FICO);
•
Loan-to-value (LTV) ratios at origination (Origination LTV); and
•
Estimated Current LTV ratios (Estimated Current LTV).
Borrowers’ FICO scores are provided by an independent third-party credit reporting service and are generally updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index.
- 39 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The credit quality indicators of the Company’s First Mortgages and HELOCs are detailed below:
| First Mortgages Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||||||||
| March 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | pre-2021 | Total First Mortgages | Revolving HELOCs amortized cost basis | HELOCs converted to term loans | Total HELOCs | ||||||||||||||||||||||
| Origination FICO | ||||||||||||||||||||||||||||||||
| <620 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| 620 – 679 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| 680 – 739 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| ≥740 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| Origination LTV | ||||||||||||||||||||||||||||||||
| ≤70% | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| >70% – ≤90% |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| >90% – ≤100% |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| Updated FICO | ||||||||||||||||||||||||||||||||
| <620 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| 620 – 679 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| 680 – 739 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| ≥740 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
|
Estimated Current LTV
(1)
|
||||||||||||||||||||||||||||||||
| ≤70% | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| >70% – ≤90% |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| >90% – ≤100% |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| >100% |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
|
Percent of Loans on
Nonaccrual Status |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% | ||||||||||||
(1)
Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs.
- 40 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
| First Mortgages Amortized Cost Basis by Origination Year | |||||||||||||||||||||||||||||
| December 31, 2024 | 2024 | 2023 | 2022 | 2021 | pre-2021 | Total First Mortgages | Revolving HELOCs amortized cost basis | HELOCs converted to term loans | Total HELOCs | ||||||||||||||||||||
| Origination FICO | |||||||||||||||||||||||||||||
| <620 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| 620 – 679 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| 680 – 739 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| ≥740 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| Origination LTV | |||||||||||||||||||||||||||||
| ≤70% | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| >70% – ≤90% |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| >90% – ≤100% |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| Updated FICO | |||||||||||||||||||||||||||||
| <620 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| 620 – 679 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| 680 – 739 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| ≥740 |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
|
Estimated Current LTV
(1)
|
|||||||||||||||||||||||||||||
| ≤70% | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| >70% – ≤90% |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| >90% – ≤100% |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| >100% |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
|
Percent of Loans on
Nonaccrual Status |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% | |||||||||||
At March 31, 2025, $
23.4
billion of First Mortgage loans had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for
to
ten years
and interest rates that typically adjust every
to
twelve months
pursuant to the terms of the loan thereafter. Approximately
25
% of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately
78
% of the balance of these interest-only loans are not scheduled to reset for
or more years.
At March 31, 2025 and December 31, 2024, Schwab had $
180
million and $
171
million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the condensed consolidated balance sheets.
The HELOC product has a
30-year
loan term with an initial draw period of
ten years
from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a
20-year
amortizing loan. The interest rate during the initial draw period and the
20-year
amortizing period is a floating-rate based on the prime rate plus a margin.
- 41 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The following table presents when current outstanding HELOCs will convert to amortizing loans:
| March 31, 2025 | Balance | ||||
|
Converted to an amortizing loan by period end
(1)
|
$ |
|
|||
| Within 1 year |
|
||||
| > 1 year – 3 years |
|
||||
| > 3 years – 5 years |
|
||||
| > 5 years |
|
||||
| Total | $ |
|
|||
(1)
Includes $
3
million of HELOCs converted to amortizing loans during the three months ended March 31, 2025.
At March 31, 2025, $
329
million of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At March 31, 2025, the borrowers on approximately
61
% of HELOC loan balances outstanding only paid the minimum amount due.
7.
Variable Interest Entities
As of March 31, 2025 and December 31, 2024, substantially all of Schwab’s involvement with variable interest entities (VIEs) is through CSB’s Community Reinvestment Act (CRA) related investments and most of these are related to Low-Income Housing Tax Credit (LIHTC) investments. As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties and receives tax credits and other tax benefits for these investments. During the three months ended March 31, 2025 and 2024, CSB recorded amortization of $
47
million and $
42
million, respectively, and recognized tax credits and other tax benefits of $
61
million and $
53
million, respectively, associated with these investments. The amortization, as well as the tax credits and other tax benefits, are included in taxes on income on the condensed consolidated statements of income. Tax credits and other tax benefits are reflected as cash flows from operating activities on the condensed consolidated statements of cash flows.
Aggregate assets, liabilities, and maximum exposure to loss
The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
|
Aggregate
assets |
Aggregate
liabilities |
Maximum
exposure to loss |
Aggregate
assets |
Aggregate
liabilities |
Maximum
exposure to loss |
|||||||||||||||||||||||||||||||||
|
LIHTC investments
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
|
Other investments
(2)
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||
(1)
Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the condensed consolidated balance sheets.
(2)
Other investments include non-LIHTC CRA investments that are accounted for as loans at amortized cost, equity method investments, AFS securities, or using the adjusted cost method. Aggregate assets are included in AFS securities, bank loans – net, or other assets on the condensed consolidated balance sheets.
- 42 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
8.
Bank Deposits
Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Interest-bearing deposits: | |||||||||||
| Deposits swept from brokerage accounts | $ |
|
$ |
|
|||||||
|
Time certificates of deposit
(1)
|
|
|
|||||||||
| Checking |
|
|
|||||||||
| Savings and other |
|
|
|||||||||
| Total interest-bearing deposits |
|
|
|||||||||
| Non-interest-bearing deposits |
|
|
|||||||||
| Total bank deposits | $ |
|
$ |
|
|||||||
(1)
Time certificates of deposit consist of brokered CDs. The weighted-average interest rates on outstanding time certificates of deposit at March 31, 2025 and December 31, 2024 were
4.82
% and
4.90
%, respectively. As of March 31, 2025 and December 31, 2024, there were
no
time deposits that were in excess of FDIC insurance limits or otherwise uninsured.
Time certificates of deposit outstanding at March 31, 2025 mature between April 2025 and November 2025.
9.
Borrowings
CSC Senior Notes
CSC’s Senior Notes are unsecured obligations. CSC may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes and quarterly for the floating-rate Senior Notes. Interest for the fixed-to-floating rate Senior Notes is payable semi-annually during the fixed-rate period of the notes and quarterly during the floating-rate period of the notes.
Ameritrade Holding Senior Notes
Ameritrade Holding’s Senior Notes are unsecured obligations. Ameritrade Holding may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes.
- 43 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The following table lists long-term debt by instrument outstanding as of March 31, 2025 and December 31, 2024:
| Date of Issuance | Principal Amount Outstanding | ||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||
| CSC Fixed-rate Senior Notes: | |||||||||||
|
|
03/10/15 | $ |
|
$ |
|
||||||
|
|
03/24/20 |
|
|
||||||||
|
|
09/24/21 |
|
|
||||||||
|
|
05/22/18 |
|
|
||||||||
|
|
11/13/15 |
|
|
||||||||
|
|
12/11/20 |
|
|
||||||||
|
|
05/13/21 |
|
|
||||||||
|
|
08/24/23 |
|
|
||||||||
|
|
03/02/17 |
|
|
||||||||
|
|
03/03/22 |
|
|
||||||||
|
|
09/24/21 |
|
|
||||||||
|
|
12/07/17 |
|
|
||||||||
|
|
03/18/21 |
|
|
||||||||
|
|
10/31/18 |
|
|
||||||||
|
|
05/22/19 |
|
|
||||||||
|
|
09/24/21 |
|
|
||||||||
|
|
03/24/20 |
|
|
||||||||
|
|
12/11/20 |
|
|
||||||||
|
|
05/13/21 |
|
|
||||||||
|
|
08/26/21 |
|
|
||||||||
|
|
03/03/22 |
|
|
||||||||
| CSC Floating-rate Senior Notes: | |||||||||||
|
SOFR +
|
05/13/21 |
|
|
||||||||
|
SOFR +
|
03/03/22 |
|
|
||||||||
| CSC Fixed-to-Floating rate Senior Notes: | |||||||||||
|
|
05/19/23 |
|
|
||||||||
|
|
11/17/23 |
|
|
||||||||
|
|
05/19/23 |
|
|
||||||||
|
|
08/24/23 |
|
|
||||||||
| Total CSC Senior Notes |
|
|
|||||||||
| Ameritrade Holding Fixed-rate Senior Notes: | |||||||||||
|
|
10/22/14 |
|
|
||||||||
|
|
04/27/17 |
|
|
||||||||
|
|
08/16/19 |
|
|
||||||||
| Total Ameritrade Holding Senior Notes |
|
|
|||||||||
| Finance lease liabilities |
|
|
|||||||||
| Unamortized premium — net |
|
|
|||||||||
| Debt issuance costs |
(
|
(
|
|||||||||
|
Fair value hedging basis adjustments
(5)
|
|
(
|
|||||||||
| Total long-term debt | $ |
|
$ |
|
|||||||
(1)
The May 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of
5.643
%, payable semi-annually, until the interest reset date on May 19, 2028. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus
2.210
%, payable quarterly.
(2)
The November 2029 fixed-to-floating rate Senior Notes bear interest at a fixed rate of
6.196
%, payable semi-annually, until the interest reset date on November 17, 2028. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus
1.878
%, payable quarterly.
(3)
The May 2034 fixed-to-floating rate Senior Notes bear interest at a fixed rate of
5.853
%, payable semi-annually, until the interest reset date on May 19, 2033. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus
2.500
%, payable quarterly.
(4)
The August 2034 fixed-to-floating rate Senior Notes bear interest at a fixed rate of
6.136
%, payable semi-annually, until the interest reset date on August 24, 2033. On and after this date, these notes will bear interest at an annual floating rate of SOFR plus
2.010
%, payable quarterly.
(5)
This represents the amount of fair value hedge basis adjustments related to Senior Notes hedged. See Note 11 for more information on hedging of Senior Notes.
- 44 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Annual maturities on all long-term debt outstanding at March 31, 2025 are as follows:
| Maturities | |||||
| 2025 | $ |
|
|||
| 2026 |
|
||||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| Thereafter |
|
||||
| Total maturities |
|
||||
| Unamortized premium — net |
|
||||
| Debt issuance costs |
(
|
||||
|
Fair value hedging basis adjustments
(1)
|
|
||||
| Total long-term debt | $ |
|
|||
(1)
This represents the amount of fair value hedge basis adjustments related to long-term debt hedged. See Note 11 for more information on hedging of long-term debt.
FHLB borrowings
:
Our banking subsidiaries maintain secured credit facilities with the FHLB. Amounts available under these facilities are dependent on the amount of bank loans and the value of certain investment securities that are pledged as collateral. There was $
11.5
billion and $
16.7
billion outstanding under these facilities as of March 31, 2025 and December 31, 2024, respectively, and these borrowings had a weighted-average interest rate of
4.60
% and
5.11
%, respectively. As of March 31, 2025 and December 31, 2024, the collateral pledged provided additional borrowing capacity of $
65.0
billion and $
59.8
billion, respectively.
Other short-term borrowings
: Total other short-term borrowings outstanding at March 31, 2025 and December 31, 2024 were $
6.9
billion and $
6.0
billion, respectively, and had a weighted-average interest rate of
4.65
% and
5.21
%, respectively. Additional information regarding our other short-term borrowings facilities is described below.
The Company may engage with external financial institutions and the FICC in repurchase agreements collateralized by investment securities as another source of short-term liquidity. The Company had $
5.5
billion outstanding pursuant to such repurchase agreements at March 31, 2025 and December 31, 2024, respectively. Repurchase agreements outstanding at March 31, 2025 mature between April 2025 and August 2025.
Our banking subsidiaries have access to funding through the Federal Reserve discount window. Amounts available are dependent upon the value of certain investment securities that are pledged as collateral. As of March 31, 2025 and December 31, 2024, our collateral pledged provided total borrowing capacity of $
30.4
billion and $
30.5
billion, respectively, of which
no
amounts were outstanding at the end of either period.
CSC has the ability to issue up to $
5.0
billion of commercial paper notes with maturities of up to
270
days. There was $
950
million gross par value before discount of $
15
million outstanding at March 31, 2025, and
no
amounts outstanding at December 31, 2024. CSC and CS&Co also have access to unsecured uncommitted lines of credit with external banks with total borrowing capacity of $
1.7
billion;
no
amounts were outstanding as of March 31, 2025 or December 31, 2024.
CS&Co maintains secured uncommitted lines of credit, under which CS&Co may borrow on a short-term basis and pledge either client margin securities or firm securities as collateral, based on the terms of the agreements, under which there was $
500
million outstanding at March 31, 2025 and December 31, 2024, respectively.
Annual maturities on FHLB borrowings and other short-term borrowings outstanding at March 31, 2025 are as follows:
| 2025 | |||||
| FHLB borrowings | $ |
|
|||
| Other short-term borrowings |
|
||||
| Total | $ |
|
|||
- 45 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
10.
Commitments and Contingencies
Loan portfolio
: CSB provides a co-branded loan origination program for CSB clients (the Program) with Rocket Mortgage, LLC. Pursuant to the Program, Rocket Mortgage, LLC originates and services First Mortgages and HELOCs for CSB clients. Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Rocket Mortgage, LLC. CSB purchased First Mortgages of $
963
million and $
680
million during the first quarter of 2025 and 2024, respectively. CSB purchased HELOCs with commitments of $
50
million and $
36
million during the first quarter of 2025 and 2024, respectively.
The Company’s commitments to extend credit on lines of credit and to purchase First Mortgages are as follows:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit | $ |
|
$ |
|
|||||||
| Commitments to purchase First Mortgage loans |
|
|
|||||||||
| Total | $ |
|
$ |
|
|||||||
Guarantees and indemnifications
: Schwab has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation – a clearing house that establishes margin requirements on these transactions. We satisfy the margin requirements of these transactions through pledging certain client securities. For additional information on these pledged securities, refer to Note 12. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral.
The Company also provides guarantees to securities clearing houses and exchanges under standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing houses and exchanges, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable and may exceed the amounts it has posted as collateral. The Company also engages third-party firms to clear clients’ futures and options on futures transactions and to facilitate clients’ foreign exchange trading, and has agreed to indemnify these firms for any losses that they may incur from the client transactions introduced to them by the Company. The potential requirement for the Company to make payments under these arrangements is remote. Accordingly,
no
liability has been recognized for these guarantees and indemnifications.
IDA agreement
: The 2023 IDA agreement with the TD Depository Institutions specifies responsibilities, including certain contingent obligations, of the Company. Pursuant to the 2023 IDA agreement, uninvested cash within eligible brokerage client accounts is swept off-balance sheet to deposit accounts at the TD Depository Institutions. Schwab provides recordkeeping and support services to the TD Depository Institutions with respect to the deposit accounts for which Schwab receives an aggregate monthly fee. Under the 2023 IDA agreement, the service fee on client cash deposits held at the TD Depository Institutions is 15 basis points. The Company’s ability to migrate these balances to its balance sheet is dependent on multiple factors including having sufficient capital levels to sustain these incremental deposits and certain binding limitations specified in the 2023 IDA agreement. During the first three months of 2025, Schwab did
not
move IDA balances to its balance sheet.
The 2023 IDA agreement extended the agreement term to sweep balances to the TD Depository Institutions through July 1, 2034, and requires that Schwab maintain minimum and maximum IDA balances as follows:
•
Through September 10, 2025, Schwab must maintain minimum balances above the total of then-outstanding unmatured fixed-rate obligation amounts, with a maximum of $
30
billion above this total amount. During this period, withdrawals of IDA balances by Schwab are generally permitted only to the extent of withdrawals initiated by Schwab customers, with limited exceptions, except to the extent necessary for Schwab to maintain balances below the applicable maximum.
•
After September 10, 2025, withdrawals of IDA balances are permitted at Schwab’s discretion, subject to an obligation to maintain IDA balances above a minimum of $
60
billion, with a maximum of $
90
billion.
Designation of deposit balances for investment in fixed- or floating-rate instruments under the 2023 IDA agreement is at Schwab’s sole discretion with certain limitations on the amount of fixed-rate obligation amounts. If IDA balances decline below the required IDA balance minimum as described above, Schwab would be required to make a nonperformance payment to the TD Depository Institutions pursuant to the terms of the 2023 IDA agreement.
As of March 31, 2025, the total ending IDA balance was $
83.7
billion, of which $
64.9
billion was fixed-rate obligation amounts and $
18.8
billion was floating-rate obligation amounts. As of December 31, 2024, the total ending IDA balance was $
87.6
billion, of which $
66.6
billion was fixed-rate obligation amounts and $
21.0
billion was floating-rate obligation amounts.
- 46 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Legal contingencies
: Schwab is subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. The Company is also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies.
Predicting the outcome of a litigation or regulatory matter is inherently difficult, requiring significant judgment and evaluation of various factors, including the procedural status of the matter and any recent developments; prior experience and the experience of others in similar cases; available defenses, including potential opportunities to dispose of a case on the merits or procedural grounds before trial (e.g., motions to dismiss or for summary judgment); the progress of fact discovery; the opinions of counsel and experts regarding potential damages; and potential opportunities for settlement and the status of any settlement discussions. It may not be reasonably possible to estimate a range of potential liability until the matter is closer to resolution – pending, for example, further proceedings, the outcome of key motions or appeals, or discussions among the parties. Numerous issues may have to be developed, such as discovery of important factual matters and determination of threshold legal issues, which may include novel or unsettled questions of law. Reserves are established or adjusted or further disclosure and estimates of potential loss are provided as the matter progresses and more information becomes available.
Schwab believes it has strong defenses in all significant matters currently pending and is contesting liability and any damages claimed. Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation. Described below are any matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results, or cash flows of the Company.
11.
Derivative Instruments and Hedging Activities
Risk Management Objective of Using Derivatives
The Company utilizes derivative instruments to manage interest rate risk exposures that arise from business activities related to changes in fair values or the receipt and payment of future known and uncertain cash amounts due to changes in interest rates. The Company uses derivative instruments to manage changes in the fair values of, as well as changes in the amounts and/or timing of known or expected cash receipts and payments related to, our AFS investment portfolio and Senior Notes.
For a description of how the Company accounts for derivative instruments, see Item 8 – Note 2 in the 2024 Form 10-K. For additional information on the basis of presentation for derivative instruments on the Company’s condensed consolidated balance sheets and related offsetting considerations, see Note 12. Cash flows associated with derivative instruments are reflected as cash flows from operating activities in the condensed consolidated statements of cash flows consistent with the treatment and nature of the items being hedged.
Fair Value Hedges of Interest Rate Risk
The Company is exposed to changes in the fair value of its fixed-rate AFS securities and Senior Notes, as well as its fixed-to-floating rate Senior Notes during the fixed-rate period, due to changes in benchmark interest rates. The Company uses cleared interest rate swaps to manage its exposure to changes in fair value of these instruments attributable to changes in the designated benchmark interest rate. Cleared interest rate swaps designated as fair value hedges of AFS securities involve the payment of fixed-rate amounts to a CCP in exchange for the Company receiving floating-rate payments over the life of the agreements.
- 47 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Cleared interest rate swaps designated as fair value hedges of Senior Notes involve the receipt of fixed-rate amounts from a CCP in exchange for the Company’s floating-rate payments over the life of the agreements.
The Company had outstanding interest rate swaps with aggregate notional amounts of $
33.9
billion and $
30.9
billion at March 31, 2025 and December 31, 2024, respectively, that were designated as fair value hedges of interest rate risk. The notional amount is the basis upon which the pay-fixed/receive-float and receive-fixed/pay-float payments are determined; however, the amount is not exchanged.
Fair Values of Derivative Instruments
The table below presents the gross fair values of the Company’s interest rate swaps designated as hedging instruments on the condensed consolidated balance sheets:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||
|
Interest rate swaps
(1,2)
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||
(1)
Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. Amounts were less than $
500
thousand as of December 31, 2024.
(2)
Includes reductions related to variation margin settlements. Settlements on derivative positions cleared through CCPs are reflected as reductions to the associated derivative asset and liability balances. As of March 31, 2025, there was a $
191
million reduction of derivative assets and a $
42
million reduction of derivative liabilities related to variation margin settlements. As of December 31, 2024, there was a $
295
million reduction of derivative assets and a $
10
million reduction of derivative liabilities related to variation margin settlements.
Effects of Fair Value Hedge Accounting
The following amounts are included on the condensed consolidated balance sheets related to fair value hedges:
|
Carrying Amount of the Hedged
Assets/(Liabilities)
|
Cumulative Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged
Assets and Liabilities
|
|||||||||||||
| March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | |||||||||||
| Line item in which the hedged item is included: | ||||||||||||||
|
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
||||||
| $ |
(
|
$ |
(
|
$ |
(
|
$ |
|
|||||||
(1)
Includes the amortized cost basis of closed portfolios of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At March 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $
2.4
billion and $
2.5
billion, respectively, of which $
2.0
billion was designated in a portfolio layer hedging relationship at both March 31, 2025 and December 31, 2024. The cumulative basis adjustments associated with these hedging relationships were a reduction of the amortized cost basis of the closed portfolios of $
28
million and $
47
million at March 31, 2025 and December 31, 2024, respectively.
(2)
Excludes the amortized cost and fair value hedging adjustment of AFS securities for which hedge accounting has been discontinued. The cumulative amount of fair value hedging adjustments remaining for these securities was a reduction of the amortized cost basis of $
2
million at March 31, 2025 and December 31, 2024, which is recorded in AFS securities on the condensed consolidated balance sheets and amortized to interest revenue as a yield adjustment over the lives of the securities.
The table below presents the effect of the Company’s interest rate swaps on the condensed consolidated statements of income:
|
Location and Amount of Gain (Loss) Recognized in Income
|
|||||||||||||||||
|
Interest Revenue
|
Interest Expense
|
||||||||||||||||
| Three Months Ended March 31, | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Gain (loss) on fair value hedging relationships: | |||||||||||||||||
| Hedged items | $ |
|
$ |
(
|
$ |
(
|
$ |
|
|||||||||
|
Derivatives designated as hedging instruments
(1)
|
(
|
|
|
|
|||||||||||||
(1)
Interest revenue excludes net income (expense) from periodic interest accruals and receipts (payments) of $
18
million and $
3
million for the three months ended March 31, 2025 and 2024, respectively. Interest expense excludes net income (expense) from periodic interest accruals and receipts (payments) of $(
10
) million for the three months ended March 31, 2025.
- 48 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
12.
Financial Instruments Subject to Off-Balance Sheet Credit Risk
Resale agreements
: Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value at or in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The collateral provided under these resale agreements is utilized to meet obligations under broker-dealer client protection rules, which place limitations on our ability to access such segregated securities. For Schwab to repledge or sell this collateral, we would be required to deposit cash and/or securities of an equal amount into our segregated reserve bank accounts in order to meet our segregated cash and investments requirement. Schwab’s resale agreements as of March 31, 2025 and December 31, 2024 were not subject to master netting arrangements.
Securities lending
: Schwab loans brokerage client securities temporarily to other broker-dealers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event a counterparty to these transactions does not return the loaned securities or provide additional cash collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy our client obligations. Schwab mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. In addition, most of our securities lending transactions are through a program with a clearing organization, which guarantees the return of cash to us. We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities. The fair value of these borrowed securities was $
550
million and $
674
million at March 31, 2025 and December 31, 2024, respectively. Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities lending transactions. Therefore, the securities loaned and securities borrowed are presented gross in the condensed consolidated balance sheets.
Repurchase agreements
:
Schwab enters into collateralized repurchase agreements with external financial institutions and the FICC in which the Company sells securities and agrees to repurchase these securities on a specified future date at a stated repurchase price. These repurchase agreements are collateralized by investment securities with a fair value equal to or in excess of the secured borrowing liability. Decreases in security prices posted as collateral for repurchase agreements may require Schwab to transfer cash and/or additional securities deemed acceptable by the counterparty. To mitigate this risk, Schwab monitors the fair value of underlying securities pledged as collateral compared to the related liability. Our collateralized repurchase agreements with each external financial institution are considered to be enforceable master netting arrangements. However, we do not net these arrangements. As such, the secured short-term borrowings associated with these collateralized repurchase agreements are presented gross in the condensed consolidated balance sheets.
Interest rate swaps
: Schwab uses interest rate swaps to manage certain interest rate risk exposures. Schwab’s interest rate swaps are cleared through CCPs which require the Company to post initial margin as collateral against potential losses. Schwab pledges investment securities as collateral in order to meet the CCP’s initial margin requirements. Initial margin is posted through FCMs which serve as the intermediary between CCPs and Schwab. Our interest rate swaps are subject to enforceable master netting arrangements allowing a right of setoff within each FCM-CCP relationship; however, we do not net these positions. Therefore, interest rate swaps are presented gross in the condensed consolidated balance sheets. See Note 11 for additional information on the Company’s interest rate swaps.
- 49 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The following table presents information about our interest rate swaps, resale agreements, securities lending, repurchase agreements, and other activity depicting the potential effect of rights of setoff between these recognized assets and liabilities:
|
Gross
Assets/ Liabilities |
Gross Amounts
Offset in the Condensed Consolidated Balance Sheets |
Net Amounts
Presented in the Condensed Consolidated Balance Sheets |
Gross Amounts Not Offset in the
Condensed Consolidated Balance Sheets |
Net
Amount |
||||||||||||||||||||||||||||||||||
|
Counterparty
Offsetting |
Collateral | |||||||||||||||||||||||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
|
Resale agreements
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
(2)
|
$ |
|
|||||||||||||||||||||||||
|
Securities borrowed
(3)
|
|
|
|
(
|
(
|
|
||||||||||||||||||||||||||||||||
|
Interest rate swaps
(4)
|
|
|
|
|
|
(5)
|
|
|||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
|
Repurchase agreements
(6)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
|
Securities loaned
(7)
|
|
|
|
(
|
(
|
|
||||||||||||||||||||||||||||||||
|
Secured short-term borrowings
(8)
|
|
|
|
|
(
|
|
||||||||||||||||||||||||||||||||
|
Interest rate swaps
(4)
|
|
|
|
|
(
|
(5)
|
|
|||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
|
Resale agreements
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
(2)
|
$ |
|
|||||||||||||||||||||||||
|
Securities borrowed
(3)
|
|
|
|
(
|
(
|
|
||||||||||||||||||||||||||||||||
|
Interest rate swaps
(4)
|
|
|
|
|
|
(5)
|
|
|||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
|
Repurchase agreements
(6)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
|
Securities loaned
(7)
|
|
|
|
(
|
(
|
|
||||||||||||||||||||||||||||||||
|
Secured short-term borrowings
(8)
|
|
|
|
|
(
|
|
||||||||||||||||||||||||||||||||
|
Interest rate swaps
(4)
|
|
|
|
|
|
(5)
|
|
|||||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||
(1)
Included in cash and investments segregated and on deposit for regulatory purposes in the condensed consolidated balance sheets.
(2)
Actual collateral was greater than or equal to the value of the related assets. At March 31, 2025 and December 31, 2024, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $
14.6
billion and $
10.3
billion, respectively.
(3)
Included in receivables from brokers, dealers, and clearing organizations in the condensed consolidated balance sheets.
(4)
Derivative assets are included in other assets and derivative liabilities are included in accrued expenses and other liabilities in the condensed consolidated balance sheets. Amounts were less than $
500
thousand as of December 31, 2024.
(5)
At March 31, 2025 and December 31, 2024, the fair value of initial margin pledged as collateral related to interest rate swaps was $
371
million and $
378
million, respectively. See Notes 5 and 11 for additional information.
(6)
Included in other short-term borrowings in the condensed consolidated balance sheets. Actual collateral value was greater than or equal to the value of the related liabilities. At March 31, 2025 and December 31, 2024, the fair value of collateral pledged in connection with repurchase agreements was $
5.8
billion and $
5.9
billion, respectively. See Note 9 for additional information.
(7)
Included in payables to brokers, dealers, and clearing organizations in the condensed consolidated balance sheets. Securities loaned are predominantly comprised of equity securities held in client brokerage accounts. At March 31, 2025, $
9.4
billion of securities loaned had overnight and continuous remaining contractual maturities and $
5.3
billion of securities loaned had contractual maturities of
35
-
95
days. At December 31, 2024, $
8.8
billion of securities loaned had overnight and continuous remaining contractual maturities and $
4.3
billion of securities loaned had contractual maturities of
35
-
95
days. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned at March 31, 2025 and December 31, 2024.
- 50 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Margin lending
: Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in their brokerage accounts in accordance with federal regulations.
The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, as well as the fair value of securities that we had pledged to third parties under such regulations and from securities borrowed transactions:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Fair value of client securities available to be pledged | $ |
|
$ |
|
||||||||||||||||||||||
| Fair value of securities pledged for: | ||||||||||||||||||||||||||
|
Fulfillment of requirements with the Options Clearing Corporation
(1)
|
$ |
|
$ |
|
||||||||||||||||||||||
| Fulfillment of client short sales |
|
|
||||||||||||||||||||||||
| Securities lending to other broker-dealers |
|
|
||||||||||||||||||||||||
| Collateral for secured short-term borrowings |
|
|
||||||||||||||||||||||||
| Total collateral pledged to third parties | $ |
|
$ |
|
||||||||||||||||||||||
Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $
138
million and $
105
million at March 31, 2025 and December 31, 2024, respectively.
13.
Fair Values of Assets and Liabilities
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, certain other assets, interest rate swaps, and certain accrued expenses and other liabilities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. Quoted prices for investments in exchange-traded securities represent end-of-day close prices published by exchanges. Quoted prices for money market funds and other mutual funds represent reported net asset values. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices in active markets do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets, and we generally obtain prices from
three
independent third-party pricing sources for such assets recorded at fair value.
Our primary independent pricing service provides prices for our fixed income investments such as commercial paper; certificates of deposit; U.S. government and agency securities; state and municipal securities; corporate debt securities; asset-backed securities; foreign government agency securities; and non-agency commercial mortgage-backed securities. Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded.
Liabilities measured at fair value on a recurring basis include interest rate swaps, securities sold but not yet purchased, and repurchase liabilities related to client-held fractional shares of equities, ETFs, and other securities, which are included in other assets on the condensed consolidated balance sheets. The fair values of securities sold but not yet purchased are based on quoted market prices or other observable market data. The Company has elected the fair value option pursuant to ASC 825
Financial Instruments
for the repurchase liabilities to match the measurement and accounting of the related client-held fractional shares. The fair values of the repurchase liabilities are based on quoted market prices or other observable market data consistent with the related client-held fractional shares. Unrealized gains and losses on client-held fractional shares offset the unrealized gains and losses on the corresponding repurchase liabilities, resulting in no impact to the condensed consolidated statements of income. The Company’s liabilities to repurchase client-held fractional shares do not have credit risk, and, as a result, the Company has not recognized any gains or losses in the condensed consolidated statements of income or comprehensive income attributable to instrument-specific credit risk for these repurchase liabilities. The repurchase liabilities are included in accrued expenses and other liabilities on the condensed consolidated balance sheets.
The fair values of interest rate swaps are based on market observable interest rate yield curves. Fair value measurements are priced considering the coupon rate of the fixed leg of the contract and the variable coupon rate on the floating leg of the
- 51 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
contract. Valuation is based on both spot and forward rates on the swap yield curve. See Note 11 for additional information on the Company’s interest rate swaps.
For a description of the fair value hierarchy and Schwab’s fair value methodologies, see Item 8 – Note 2 in the 2024 Form 10-K. The Company did not adjust prices received from the primary independent third-party pricing service at March 31, 2025 or December 31, 2024.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis:
| March 31, 2025 | Level 1 | Level 2 | Level 3 |
Balance at
Fair Value |
|||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Total cash equivalents |
|
|
|
|
|||||||||||||||||||
| Investments segregated and on deposit for regulatory purposes: | |||||||||||||||||||||||
| U.S. government securities |
|
|
|
|
|||||||||||||||||||
| Total investments segregated and on deposit for regulatory purposes |
|
|
|
|
|||||||||||||||||||
| Available for sale securities: | |||||||||||||||||||||||
| U.S. agency mortgage-backed securities |
|
|
|
|
|||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|||||||||||||||||||
| Asset-backed securities |
|
|
|
|
|||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
|||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
|||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
|||||||||||||||||||
| Other |
|
|
|
|
|||||||||||||||||||
| Total available for sale securities |
|
|
|
|
|||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Other securities owned: | |||||||||||||||||||||||
| Equity, corporate debt, and other securities |
|
|
|
|
|||||||||||||||||||
| Mutual funds and ETFs |
|
|
|
|
|||||||||||||||||||
| State and municipal debt obligations |
|
|
|
|
|||||||||||||||||||
| U.S. government securities |
|
|
|
|
|||||||||||||||||||
| Total other securities owned |
|
|
|
|
|||||||||||||||||||
| Interest rate swaps |
|
|
|
|
|||||||||||||||||||
| Total other assets |
|
|
|
|
|||||||||||||||||||
| Total assets | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Accrued expenses and other liabilities: | |||||||||||||||||||||||
| Interest rate swaps | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Other |
|
|
|
|
|||||||||||||||||||
| Total accrued expenses and other liabilities |
|
|
|
|
|||||||||||||||||||
| Total liabilities | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
- 52 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
| December 31, 2024 | Level 1 | Level 2 | Level 3 |
Balance at
Fair Value |
|||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Total cash equivalents |
|
|
|
|
|||||||||||||||||||
| Investments segregated and on deposit for regulatory purposes: | |||||||||||||||||||||||
| U.S. government securities |
|
|
|
|
|||||||||||||||||||
| Total investments segregated and on deposit for regulatory purposes |
|
|
|
|
|||||||||||||||||||
| Available for sale securities: | |||||||||||||||||||||||
| U.S. agency mortgage-backed securities |
|
|
|
|
|||||||||||||||||||
| U.S. Treasury securities |
|
|
|
|
|||||||||||||||||||
| Corporate debt securities |
|
|
|
|
|||||||||||||||||||
| Asset-backed securities |
|
|
|
|
|||||||||||||||||||
| U.S. state and municipal securities |
|
|
|
|
|||||||||||||||||||
| Foreign government agency securities |
|
|
|
|
|||||||||||||||||||
| Non-agency commercial mortgage-backed securities |
|
|
|
|
|||||||||||||||||||
| Other |
|
|
|
|
|||||||||||||||||||
| Total available for sale securities |
|
|
|
|
|||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Other securities owned: | |||||||||||||||||||||||
| Equity, corporate debt, and other securities |
|
|
|
|
|||||||||||||||||||
| Mutual funds and ETFs |
|
|
|
|
|||||||||||||||||||
| State and municipal debt obligations |
|
|
|
|
|||||||||||||||||||
| U.S. government securities |
|
|
|
|
|||||||||||||||||||
| Total other securities owned |
|
|
|
|
|||||||||||||||||||
| Total other assets |
|
|
|
|
|||||||||||||||||||
| Total assets | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Accrued expenses and other liabilities: | |||||||||||||||||||||||
| Other | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Total accrued expenses and other liabilities |
|
|
|
|
|||||||||||||||||||
| Total liabilities | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
- 53 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Fair Value of Other Financial Instruments
The following tables present the fair value hierarchy for other financial instruments:
| March 31, 2025 |
Carrying
Amount |
Level 1 | Level 2 | Level 3 |
Balance at
Fair Value |
||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
|
Cash and investments segregated and on deposit for
regulatory purposes |
|
|
|
|
|
||||||||||||||||||||||||
| Receivables from brokers, dealers, and clearing organizations |
|
|
|
|
|
||||||||||||||||||||||||
| Receivables from brokerage clients — net |
|
|
|
|
|
||||||||||||||||||||||||
| Held to maturity securities: | |||||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities |
|
|
|
|
|
||||||||||||||||||||||||
| Total held to maturity securities |
|
|
|
|
|
||||||||||||||||||||||||
| Bank loans — net: | |||||||||||||||||||||||||||||
| First Mortgages |
|
|
|
|
|
||||||||||||||||||||||||
| HELOCs |
|
|
|
|
|
||||||||||||||||||||||||
| Pledged asset lines |
|
|
|
|
|
||||||||||||||||||||||||
| Other |
|
|
|
|
|
||||||||||||||||||||||||
| Total bank loans — net |
|
|
|
|
|
||||||||||||||||||||||||
| Other assets |
|
|
|
|
|
||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Bank deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Payables to brokers, dealers, and clearing organizations |
|
|
|
|
|
||||||||||||||||||||||||
| Payables to brokerage clients |
|
|
|
|
|
||||||||||||||||||||||||
| Accrued expenses and other liabilities |
|
|
|
|
|
||||||||||||||||||||||||
| Other short-term borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Federal Home Loan Bank borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Long-term debt |
|
|
|
|
|
||||||||||||||||||||||||
- 54 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
| December 31, 2024 |
Carrying
Amount |
Level 1 | Level 2 | Level 3 |
Balance at
Fair Value |
||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
|
Cash and investments segregated and on deposit for
regulatory purposes |
|
|
|
|
|
||||||||||||||||||||||||
| Receivables from brokers, dealers, and clearing organizations |
|
|
|
|
|
||||||||||||||||||||||||
| Receivables from brokerage clients — net |
|
|
|
|
|
||||||||||||||||||||||||
| Held to maturity securities: | |||||||||||||||||||||||||||||
| U.S. agency mortgage-backed securities |
|
|
|
|
|
||||||||||||||||||||||||
| Total held to maturity securities |
|
|
|
|
|
||||||||||||||||||||||||
| Bank loans — net: | |||||||||||||||||||||||||||||
| First Mortgages |
|
|
|
|
|
||||||||||||||||||||||||
| HELOCs |
|
|
|
|
|
||||||||||||||||||||||||
| Pledged asset lines |
|
|
|
|
|
||||||||||||||||||||||||
| Other |
|
|
|
|
|
||||||||||||||||||||||||
| Total bank loans — net |
|
|
|
|
|
||||||||||||||||||||||||
| Other assets |
|
|
|
|
|
||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Bank deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Payables to brokers, dealers, and clearing organizations |
|
|
|
|
|
||||||||||||||||||||||||
| Payables to brokerage clients |
|
|
|
|
|
||||||||||||||||||||||||
| Accrued expenses and other liabilities |
|
|
|
|
|
||||||||||||||||||||||||
| Other short-term borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Federal Home Loan Bank borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Long-term debt |
|
|
|
|
|
||||||||||||||||||||||||
14.
Stockholders’ Equity
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 sold
133.8
million shares of the Company’s common stock and
31.7
million shares of the Company’s nonvoting common stock, which automatically converted into common stock. The offering was completed at a price of $
79.25
per share, for an aggregate amount of $
13.1
billion. The Company did not receive any of the proceeds from this sale.
Concurrent with the completion of the secondary offering, and pursuant to a repurchase agreement dated February 9, 2025, the Company repurchased directly from TD Group US Holdings LLC its remaining
19.2
million shares of nonvoting common stock at a price of $
77.982
per share for an aggregate repurchase amount of $
1.5
billion, which settled on February 12, 2025. The shares of nonvoting common stock automatically converted into common stock upon repurchase and are now held in treasury stock, reducing the number of shares outstanding. These shares were purchased under CSC’s $
15.0
billion share repurchase authorization. The share repurchase authorization does not have an expiration date and as of March 31, 2025, approximately $
7.2
billion remained on the authorization. There were
no
repurchases of CSC’s common stock during the three months ended March 31, 2024.
Share repurchases, net of issuances, are subject to a nondeductible excise tax which was recognized as a direct and incremental cost associated with these transactions. For repurchases of common stock, the tax is recorded as part of the cost basis of the treasury stock repurchased, resulting in no impact to the condensed consolidated statements of income.
Through the completion of the secondary offering and the Company’s repurchase of nonvoting common stock, TD Bank disposed of all of its common shares of CSC and as of March 31, 2025, the Company has
no
remaining nonvoting common stock outstanding.
- 55 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The Company’s preferred stock issued and outstanding is as follows:
| Liquidation Preference Per Share | Dividend Rate in Effect at March 31, 2025 | Earliest Redemption Date | Date at Which Dividend Rate Resets or Becomes Floating |
Reset / Floating-Rate
|
Margin Over Reset / Floating-Rate
|
||||||||||||||||||||||||||||||
| Shares Issued and Outstanding (in ones) at | Carrying Value at | ||||||||||||||||||||||||||||||||||
|
March 31, 2025
(1)
|
December 31, 2024
(1)
|
March 31, 2025 | December 31, 2024 | Issue Date | |||||||||||||||||||||||||||||||
| Fixed-rate: | |||||||||||||||||||||||||||||||||||
| Series D |
|
|
$ |
|
$ |
|
$ |
|
03/07/16 |
|
% | 06/01/21 | N/A | N/A | N/A | ||||||||||||||||||||
| Series J |
|
|
|
|
|
03/30/21 |
|
% | 06/01/26 | N/A | N/A | N/A | |||||||||||||||||||||||
| Fixed-to-floating rate/Fixed-rate reset: | |||||||||||||||||||||||||||||||||||
| Series F |
|
|
|
|
|
10/31/17 |
|
% | 12/01/27 | 12/01/27 |
|
|
% | ||||||||||||||||||||||
|
Series G
(2)
|
|
|
|
|
|
04/30/20 |
|
% | 06/01/25 | 06/01/25 |
|
|
% | ||||||||||||||||||||||
|
Series H
(3)
|
|
|
|
|
|
12/11/20 |
|
% | 12/01/30 | 12/01/30 |
|
|
% | ||||||||||||||||||||||
|
Series I
(2)
|
|
|
|
|
|
03/18/21 |
|
% | 06/01/26 | 06/01/26 |
|
|
% | ||||||||||||||||||||||
|
Series K
(2)
|
|
|
|
|
|
03/04/22 |
|
% | 06/01/27 | 06/01/27 |
|
|
% | ||||||||||||||||||||||
|
Total preferred
stock |
|
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||
(1)
Represented by depositary shares.
(2)
The dividend rate for Series G, Series I, and Series K resets on each
five-year
anniversary from the first reset date.
(3)
The dividend rate for Series H resets on each
ten-year
anniversary from the first reset date.
(4)
The reset/floating-rate for Series F will be determined by the calculation agent prior to the commencement of the floating-rate period using what the calculation agent determines to be the industry-accepted substitute or successor base rate to LIBOR.
N/A Not applicable.
Dividends declared on the Company’s preferred stock are as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
|
Total
Declared |
Per Share
Amount |
Total
Declared |
Per Share
Amount |
||||||||||||||||||||
|
Series D
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
|
Series F
(2)
|
|
|
|
|
|||||||||||||||||||
|
Series G
(1)
|
|
|
|
|
|||||||||||||||||||
|
Series H
(1)
|
|
|
|
|
|||||||||||||||||||
|
Series I
(1)
|
|
|
|
|
|||||||||||||||||||
|
Series J
(1)
|
|
|
|
|
|||||||||||||||||||
|
Series K
(1)
|
|
|
|
|
|||||||||||||||||||
| Total | $ |
|
$ |
|
|||||||||||||||||||
(1)
Dividends paid quarterly.
(2)
Dividends paid semi-annually until December 1, 2027 and quarterly thereafter.
- 56 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
15.
Accumulated Other Comprehensive Income
AOCI represents cumulative gains and losses that are not reflected in earnings. AOCI balances and the components of other comprehensive income (loss) are as follows:
| Total AOCI | |||||
| Balance at December 31, 2023 | $ |
(
|
|||
| Available for sale securities: | |||||
|
Net unrealized gain (loss), net of tax expense (benefit) of $
|
|
||||
|
Other reclassifications included in other revenue, net of tax expense (benefit) of $
|
|
||||
| Held to maturity securities: | |||||
|
Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $
|
|
||||
|
Other
(1)
|
(
|
||||
| Balance at March 31, 2024 | $ |
(
|
|||
| Balance at December 31, 2024 | $ |
(
|
|||
| Available for sale securities: | |||||
|
Net unrealized gain (loss), net of tax expense (benefit) of $
|
|
||||
|
Other reclassifications included in other revenue, net of tax expense (benefit) of $
|
|
||||
| Held to maturity securities: | |||||
|
Amortization of amounts previously recorded upon transfer from available for sale, net of tax expense (benefit) of $
|
|
||||
|
Other
(1)
|
|
||||
| Balance at March 31, 2025 | $ |
(
|
|||
(1)
Tax expense (benefit) was less than $
500
thousand.
As of March 31, 2025, the total remaining unamortized loss on securities transferred from AFS to HTM included in AOCI was $
9.3
billion net of tax effect ($
12.2
billion pre-tax). This loss is being amortized over the remaining lives of the securities, offsetting amortization of the securities’ premiums or discounts, and resulting in no impact to net income.
16.
Earnings Per Common Share
As described in Note 14, TD Bank disposed of all of its common shares of CSC during the first quarter of 2025, including its holdings of nonvoting common stock. As of February 12, 2025, the Company had
no
remaining nonvoting common stock outstanding and accordingly,
no
dividends were paid on nonvoting common stock during the three months ended March 31, 2025.
For the computations of basic and diluted EPS, undistributed net income of the Company was allocated on a proportionate basis to the voting and nonvoting common stock, as the distribution rights of the two classes were identical. Diluted EPS was calculated using the treasury stock method for outstanding stock options and non-vested restricted stock units and the if-converted method for the nonvoting common stock, which assumed conversion of all outstanding nonvoting common stock to common stock. For further details surrounding the EPS computations, see Item 8 – Note 26 in the 2024 Form 10-K.
- 57 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
The computations of basic and diluted EPS for common stock and nonvoting common stock for the three months ended March 31, 2025 are as follows:
| Three Months Ended March 31, | |||||||||||
| 2025 | |||||||||||
| Common Stock | Nonvoting Common Stock | Consolidated Common Stock | |||||||||
| Basic earnings per share: | |||||||||||
| Numerator | |||||||||||
| Net income | $ |
|
$ |
|
$ |
|
|||||
|
Preferred stock dividends and other
(1)
|
(
|
(
|
(
|
||||||||
| Net income available to common stockholders | $ |
|
$ |
|
$ |
|
|||||
| Denominator | |||||||||||
| Weighted-average common shares outstanding — basic |
|
|
|
||||||||
| Basic earnings per share | $ |
|
$ |
|
$ |
|
|||||
| Diluted earnings per share: | |||||||||||
| Numerator | |||||||||||
| Net income available to common stockholders | $ |
|
$ |
|
$ |
|
|||||
|
Reallocation of net income available to common stockholders as a result of
conversion of nonvoting to voting shares |
|
|
|
||||||||
| Allocation of net income available to common stockholders: | $ |
|
$ |
|
$ |
|
|||||
| Denominator | |||||||||||
| Weighted-average common shares outstanding — basic |
|
|
|
||||||||
| Conversion of nonvoting shares to voting shares |
|
|
|
||||||||
| Common stock equivalent shares related to stock incentive plans |
|
|
|
||||||||
|
Weighted-average common shares outstanding — diluted
(2)
|
|
|
|
||||||||
| Diluted earnings per share | $ |
|
$ |
|
$ |
|
|||||
(1)
Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.
(2)
Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled
14
million for the three months ended March 31, 2025.
As of March 31, 2024, the Company had voting and nonvoting common stock outstanding. The computations of basic and diluted EPS for the two classes for the three months ended March 31, 2024 are as follows:
| Three Months Ended March 31, | ||||||||
| 2024 | ||||||||
| Common Stock | Nonvoting Common Stock | |||||||
| Basic earnings per share: | ||||||||
| Numerator | ||||||||
| Net income | $ |
|
$ |
|
||||
|
Preferred stock dividends and other
(1)
|
(
|
(
|
||||||
| Net income available to common stockholders | $ |
|
$ |
|
||||
| Denominator | ||||||||
| Weighted-average common shares outstanding — basic |
|
|
||||||
| Basic earnings per share | $ |
|
$ |
|
||||
| Diluted earnings per share: | ||||||||
| Numerator | ||||||||
| Net income available to common stockholders | $ |
|
$ |
|
||||
|
Reallocation of net income available to common stockholders as a result of
conversion of nonvoting to voting shares
|
|
|
||||||
| Allocation of net income available to common stockholders: | $ |
|
$ |
|
||||
| Denominator | ||||||||
| Weighted-average common shares outstanding — basic |
|
|
||||||
|
Conversion of nonvoting shares to voting shares
|
|
|
||||||
| Common stock equivalent shares related to stock incentive plans |
|
|
||||||
|
Weighted-average common shares outstanding — diluted
(2)
|
|
|
||||||
| Diluted earnings per share | $ |
|
$ |
|
||||
(1)
Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.
(2)
Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled
18
million for the three months ended March 31, 2024.
- 58 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
17.
Regulatory Requirements
At March 31, 2025, CSC and its banking subsidiaries met all of their respective capital requirements.
Regulatory capital and ratios for CSC (consolidated) and CSB are as follows:
| Actual |
Minimum to be
Well Capitalized |
Minimum Capital Requirement | ||||||||||||||||||||||||||||||||||||
| March 31, 2025 | Amount | Ratio | Amount | Ratio | Amount |
Ratio
(1)
|
||||||||||||||||||||||||||||||||
| CSC | ||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Risk-Based Capital | $ |
|
|
% | N/A | $ |
|
|
% | |||||||||||||||||||||||||||||
| Tier 1 Risk-Based Capital |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Total Risk-Based Capital |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Tier 1 Leverage |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Supplementary Leverage Ratio |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| CSB | ||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Risk-Based Capital | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||||||||||||||||
| Tier 1 Risk-Based Capital |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Total Risk-Based Capital |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Tier 1 Leverage |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Supplementary Leverage Ratio |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| CSC | ||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Risk-Based Capital | $ |
|
|
% | N/A | $ |
|
|
% | |||||||||||||||||||||||||||||
| Tier 1 Risk-Based Capital |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Total Risk-Based Capital |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Tier 1 Leverage |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| Supplementary Leverage Ratio |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
| CSB | ||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Risk-Based Capital | $ |
|
|
% | $ |
|
|
% | $ |
|
|
% | ||||||||||||||||||||||||||
| Tier 1 Risk-Based Capital |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Total Risk-Based Capital |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Tier 1 Leverage |
|
|
% |
|
|
% |
|
|
% | |||||||||||||||||||||||||||||
| Supplementary Leverage Ratio |
|
|
% | N/A |
|
|
% | |||||||||||||||||||||||||||||||
(1)
Under risk-based capital rules, CSC and CSB are also required to maintain additional capital buffers above the regulatory minimum risk-based capital ratios. As of March 31, 2025, CSC was subject to a stress capital buffer of 2.5%. In addition, CSB is required to maintain a capital conservation buffer of 2.5%. CSC and CSB are also required to maintain a countercyclical capital buffer above the regulatory minimum risk-based capital ratios, which was zero for both periods presented. If a buffer falls below the minimum requirement, CSC and CSB would be subject to increasingly strict limits on capital distributions and discretionary bonus payments to executive officers. At March 31, 2025, the minimum capital ratio requirements for both CSC and CSB, inclusive of their respective buffers, were 7.0%, 8.5%, and 10.5% for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital, respectively.
N/A Not applicable.
Based on its regulatory capital ratios at March 31, 2025, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules. There are no conditions or events since March 31, 2025 that management believes have changed CSB’s capital category.
CSC’s other banking subsidiaries are Charles Schwab Premier Bank, SSB (CSPB) and Charles Schwab Trust Bank (Trust Bank). CSPB is a Texas-chartered state savings bank that provides banking and custody services, and Trust Bank is a Nevada state-chartered savings bank that provides trust and custody services. At March 31, 2025, the balance sheets of CSPB and Trust Bank consisted primarily of investment securities, and the entities held total assets of $
25.3
billion and $
9.8
billion, respectively. Based on their regulatory capital ratios, at March 31, 2025, CSPB and Trust Bank are considered well capitalized under their respective regulatory capital rules.
- 59 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Net capital and net capital requirements for CS&Co are as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||
| CS&Co | ||||||||||||||
| Net capital | $ |
|
$ |
|
||||||||||
| Minimum dollar requirement |
|
|
||||||||||||
| 2% of aggregate debit balances |
|
|
||||||||||||
| Net capital in excess of required net capital |
|
|
||||||||||||
Pursuant to the SEC’s Customer Protection Rule and other applicable regulations, Schwab had cash and investments segregated for the exclusive benefit of clients at March 31, 2025. The SEC’s Customer Protection Rule requires broker-dealers to segregate client fully-paid securities and cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts. Amounts included in cash and investments segregated and on deposit for regulatory purposes represent actual balances on deposit. Cash and cash equivalents included in cash and investments segregated and on deposit for regulatory purposes are presented as part of Schwab’s cash balances in the condensed consolidated statements of cash flows.
18.
Segment Information
Schwab’s
two
reportable segments are Investor Services and Advisor Services. Schwab structures the operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent RIAs, independent retirement advisors, and recordkeepers. Revenues and expenses are attributed to the
two
segments based on which segment services the client. Schwab’s chief operating decision makers (CODMs) are the President and Chief Executive Officer, and the Managing Director and Chief Financial Officer.
The accounting policies of the segments are the same as those described in Item 8 – Note 2 in the 2024 Form 10-K. For the computation of its segment information, Schwab utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues.
The CODMs evaluate the performance of the segments on a pre-tax basis and use income before taxes on income to allocate resources, including employees and capital, to the segments during the annual budgeting process. The CODMs consider budget-to-actual variances on a monthly basis when making decisions about allocating resources to the segments throughout the year. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are
no
revenues from transactions between the segments.
- 60 -
THE CHARLES SCHWAB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Ratios, or as Noted)
(Unaudited)
Financial information for the segments is presented in the following table
(1)
:
| Investor Services | Advisor Services | Total | |||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Net Revenues | |||||||||||||||||||||||||||||||||||
| Net interest revenue | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Asset management and administration fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Trading revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Bank deposit account fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total net revenues |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Expenses Excluding Interest | |||||||||||||||||||||||||||||||||||
| Compensation and benefits |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Professional services |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Occupancy and equipment |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Advertising and market development |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Communications |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Depreciation and amortization |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Amortization of acquired intangible assets |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Regulatory fees and assessments |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total expenses excluding interest |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Income before taxes on income | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(1)
In connection with certain changes in Schwab’s organizational management structure, in the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment. Accordingly, amounts related to the Retirement Business Services business unit are included within Investor Services for the first quarter of 2025, and prior-year amounts have been recast to reflect this new basis of segmentation.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
: The management of the Company, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2025. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.
Changes in internal control over financial reporting
: No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) was identified during the quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of legal proceedings, see Part I – Item 1 – Note 10.
Item 1A. Risk Factors
During the first three months of 2025, there have been no material changes to the risk factors in Part I – Item 1A – Risk Factors in the 2024 Form 10-K.
- 61 -
THE CHARLES SCHWAB CORPORATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On July 27, 2022, CSC publicly announced that its Board of Directors authorized the repurchase of up to $15.0 billion of common stock. The authorization does not have an expiration date. See also Part I – Item 1 – Note 14.
The following table summarizes purchases made by or on behalf of CSC of its common stock for each calendar month in the first quarter of 2025 (in millions, except number of shares, which are in thousands, and per share amounts):
| Month | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Program | ||||||||||||||||||||||
| January: | ||||||||||||||||||||||||||
| Share repurchase program | — | $ | — | — | $ | 8,723 | ||||||||||||||||||||
|
Employee transactions
(1)
|
10 | $ | 74.11 | N/A | N/A | |||||||||||||||||||||
| February: | ||||||||||||||||||||||||||
| Share repurchase program | 19,235 | $ | 77.98 | 19,235 | $ | 7,223 | ||||||||||||||||||||
|
Employee transactions
(1)
|
8 | $ | 83.00 | N/A | N/A | |||||||||||||||||||||
| March: | ||||||||||||||||||||||||||
| Share repurchase program | — | $ | — | — | $ | 7,223 | ||||||||||||||||||||
|
Employee transactions
(1)
|
1,133 | $ | 79.04 | N/A | N/A | |||||||||||||||||||||
| Total: | ||||||||||||||||||||||||||
| Share repurchase program | 19,235 | $ | 77.98 | 19,235 | $ | 7,223 | ||||||||||||||||||||
|
Employee transactions
(1)
|
1,151 | $ | 79.03 | N/A | N/A | |||||||||||||||||||||
(1)
Includes restricted shares withheld (under the terms of grants under employee stock incentive plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. CSC may receive shares delivered or attested to pay the exercise price and/or to satisfy tax withholding obligations by employees who exercise stock options granted under employee stock incentive plans, which are commonly referred to as stock swap exercises.
N/A Not applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2025, no director or officer of the Company
adopted
or
terminated
a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement as defined in Item 408 of Regulation S-K.
- 62 -
THE CHARLES SCHWAB CORPORATION
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
|
Exhibit
Number |
Exhibit | |||||||
| 10.435 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | (1) | |||||||
| 32.2 | (1) | |||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | (2) | ||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | (2) | ||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | (2) | ||||||
| 101.DEF | Inline XBRL Extension Definition | (2) | ||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label | (2) | ||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation | (2) | ||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
| (1) | Furnished as an exhibit to this Quarterly Report on Form 10-Q. | |||||||
| (2) |
Attached as Exhibit 101 to this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 are the following materials formatted in Inline XBRL (Extensible Business Reporting Language) (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
|
|||||||
- 63 -
THE CHARLES SCHWAB CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| THE CHARLES SCHWAB CORPORATION | |||||||||||
| (Registrant) | |||||||||||
| Date: | May 9, 2025 |
/s/ Michael Verdeschi
|
|||||||||
|
Michael Verdeschi
|
|||||||||||
| Managing Director and Chief Financial Officer | |||||||||||
- 64 -
TABLE OF CONTENTS
Part I - Financial InformationprintItem 1. Condensed Consolidated Financial StatementsprintItem 4. Controls and ProceduresprintPart II - Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 3. Defaults Upon Senior SecuritiesprintItem 4. Mine Safety DisclosuresprintItem 5. Other InformationprintItem 6. Exhibitsprint