AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · A substantial established client base supplies funding at disclosed rates well below Schwab's borrowing costs, while strong net new assets support franchise relevance. This demonstrates a current funding advantage, although rival comparisons and comparative platform costs are missing.
durability · 2/4 · Continued asset gathering and managed-solution flows support persistence, but realized cash reallocation shows that clients need not leave Schwab to weaken its funding advantage. Exceptional long-term durability is not established.
customer dependency · 2/4 · Net new assets, managed-solution flows and greater trading activity indicate engagement and repeated use indirectly. They do not establish contractual dependency or costly switching, and clients have moved sweep cash into alternatives.
erosion resilience · 2/4 · Supplemental funding declined and lending-driven revenue growth continued into 2026, demonstrating recovery. Cash-rate sensitivity, declining revenue per trade and actual access disruptions leave meaningful erosion channels; prospective funding risks are not treated as realized losses.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Low client funding rates and higher order-flow rates support some monetization power. However, revenue per trade fell 19% in the second quarter and 16% in the first half of 2026. Mix and market-rate effects make the overall pricing outcome mixed rather than evidence of uniform price increases or cuts.
retention · 3/4 · Core net new assets of $519.4 billion, 6% growth in active brokerage accounts in 2025, subsequent managed-solution net flows and higher trading activity provide strong indirect evidence of continuing demand. These measures do not disclose a retention rate or prove individual customers stayed.
margin resilience · 3/4 · Funding-cost reductions supported 2025 recovery and continued net interest revenue growth in 2026. Both segments' revenue growth exceeded their expense growth in the supplied 2026 comparisons. This demonstrates resilience during the observed recovery, with material rate and funding sensitivity still present.
contractual freedom · 2/4 · Schwab explicitly establishes rates on certain client cash balances, deposits and loans, providing meaningful discretion. The disclosure limits that discretion to certain products and conditions it on competition and markets; broad freedom to reset all service fees or contractual terms is not established.
Predictability64
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 11.45
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 36.09
Financial strength—
Missing required inputs: currentRatioGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 75.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 9.48
- Debt / FCF (x)
- 2.75
- cashInterestPaid
- 4557.00
- cashInterestCoverage
- 2.04
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.44
- 3-year average SBC / revenue (%)
- 1.58
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual supplemental-funding reduction and completed integration support discipline. First-half 2026 cash flows disclose acquisition spending, repurchases, dividends, debt transactions and preferred financing, while adjusted leverage capital declined. These show active capital allocation but do not establish superior acquisition returns or repurchase value; financial-institution operating cash flow is not treated as freely distributable cash.
incentive alignment · 3/4 · Actual compensation decisions include multi-year performance equity, stock options and a completed three-year award payout. Ownership requirements and recoupment policies reinforce alignment. The broad 100% payout plateau in the PBRSU matrix weakens marginal performance sensitivity, and ownership compliance is not established.
execution · 3/4 · Completed Ameritrade integration, substantial net new assets, lower supplemental funding and continued lending and managed-investment growth demonstrate execution through operating outcomes. This is indirect evidence of management contribution, with market conditions also helping results and actual platform disruptions limiting the assessment.
governance · 2/4 · The proxy discloses 71% independent directors, independent sessions, standing oversight committees and recoupment policies. The classified board constrains annual accountability. Proposed declassification is not credited as adopted, and disclosed structures alone do not establish exceptional oversight effectiveness.
Evidence
At December 31, 2025, Schwab had $11.90 trillion in client assets, 38.5 million active brokerage accounts, 5.7 million workplace plan participant accounts, and 2.2 million banking accounts.
Business — General Corporate Overview; year-end client assets and accounts · Filed 25/02/2026
- 33 - THE CHARLES SCHWAB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) The following table presents net interest revenue information corresponding to interest-earning assets and funding sources on the consolidated balance sheets: Year Ended December 31, 2025 2024 2023 Average Balance Interest Revenue/ Expense Average Yield/ Rate Average Balance Interest Revenue/ Expense Average Yield/ Rate Average Balance Interest Revenue/ Expense Average Yield/ Rate Interest-earning assets Cash and cash equivalents $ 28,054 $ 1,189 4.18 % $ 29,676 $ 1,539 5.10 % $ 37,846 $ 1,894 4.94 % Cash and investments segregated 44,359 1,862 4.14 % 28,450 1,443 4.99 % 28,259 1,355 4.73 % Receivables from brokerage clients (1) 87,300 5,700 6.44 % 70,811 5,420 7.53 % 61,914 4,793 7.64 % Available for sale securities (2) 74,478 1,538 2.06 % 101,659 2,166 2.12 % 137,178 2,987 2.17 % Held to maturity securities (2) 139,447 2,386 1.71 % 152,566 2,636 1.72 % 165,634 2,872 1.73 % Bank loans 50,595 2,168 4.28 % 42,255 1,867 4.42 % 40,234 1,664 4.14 % Total interest-earning assets 424,233 14,843 3.47 % 425,417 15,071 3.51 % 471,065 15,565 3.28 % Securities lending revenue 437 330 419 Other interest revenue (1) 224 136 127 Total interest-earning assets $ 424,233 $ 15,504 3.62 % $ 425,417 $ 15,537 3.61 % $ 471,065 $ 16,111 3.39 % Funding sources Bank deposits (3) $ 238,088 $ 1,185 0.50 % $ 256,212 $ 3,152 1.23 % $ 306,505 $ 3,363 1.10 % Payables to brokers, dealers, and clearing organizations 18,236 701 3.79 % 8,522 372 4.30 % 4,477 147 3.23 % Payables to brokerage clients (1) 94,884 244 0.26 % 72,776 272 0.37 % 66,842 271 0.41 % Other short-term borrowings 7,020 324 4.60 % 9,146 504 5.51 % 7,144 375 5.25 % Federal Home Loan Bank borrowings 7,682 356 4.57 % 23,102 1,245 5.32 % 34,821 1,810 5.14 % Long-term debt 21,093 836 3.91 % 23,083 846 3.66 % 22,636 715 3.16 % Total interest-bearing liabilities 387,003 3,646 0.94 % 392,841 6,391 1.62 % 442,425 6,681 1.51 % Non-interest-bearing funding sources 37,230 32,576 28,640 Other interest expense (1) 108 2 3 Total funding sources $ 424,233 $ 3,754 0.88 % $ 425,417 $ 6,393 1.49 % $ 471,065 $ 6,684 1.41 % Net interest revenue $ 11,750 2.74 % $ 9,144 2.12 % $ 9,427 1.98 % (1) Beginning in the fourth quarter of 2025, average balances of client margin loans and short credits related to certain client long/short strategies from which the Company earns a fixed net yield are excluded from interest-earning assets and funding sources.
MD&A — net interest revenue table; 2023–2025 funding balances and rates · Filed 25/02/2026
THE CHARLES SCHWAB CORPORATION 2026 PROXY STATEMENT 3 Table of Contents PROXY STATEMENT SUMMARY 2025 Company Performance Highlights In pursuing the “Through Clients’ Eyes” strategy, the company achieved the following performance results for 2025: Total Client Assets $11.9 trillion 18% increase year-over-year Net Revenue $23.9 billion 22% increase year-over-year Active Brokerage Accounts 38.5 million 6% increase year-over-year Diluted EPS $4.65 56% increase year-over-year Adjusted Diluted EPS(1) $4.87 ROCE 21% ROTCE(1) 38% Core Net New Assets $519.4 billion 42% increase year-over-year (1) For reconciliation of our results as reported under U.S.
Proxy Statement Summary — 2025 Company Performance Highlights · Filed 06/04/2026
This growth was driven primarily by higher client asset - 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) balances, reflecting year-over-year equity market appreciation, the Company’s asset gathering, and net flows into managed investing solutions.
MD&A — Asset Management and Administration Fees; asset gathering and managed-solution net flows · Filed 07/08/2026
With the paydowns of bank supplemental funding during 2025, the outstanding balance of $5.1 billion as of December 31, 2025 is within a range generally consistent with our diversified funding strategy.
MD&A — 2025 bank supplemental funding paydowns · Filed 25/02/2026
Net interest revenue was $3.4 billion and $6.5 billion in the second quarter and first six months of the year, respectively, higher by 19% and 18% from the same periods in 2025, reflecting growth in margin and bank lending solutions and lower average wholesale borrowings, partially offset by lower yields on floating-rate assets, lower available for sale (AFS) and held to maturity (HTM) securities, and lower segregated cash and investments.
MD&A — second-quarter and first-half 2026 net interest revenue drivers · Filed 07/08/2026
Even as higher interest rates continued for much of the year, the pace of clients’ reallocation of cash from sweep products to higher-yielding investment solutions further decelerated in 2024, particularly in the second half of the year.
MD&A — realized client cash reallocation and its deceleration in 2024 · Filed 25/02/2026
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.
Risk Management — client sweep-cash sensitivity to rising interest rates · Filed 07/08/2026
This can result in lower interest-earning assets and/or may require increased use of higher-cost funding sources, which therefore tend to constrain net interest revenue when interest rates are moving rapidly higher.
Risk Management — higher-cost funding consequences of cash reallocation · Filed 07/08/2026
Trading Revenue The following tables present trading revenue, client trading activity, and related information: Three Months Ended June 30, Percent Change Six Months Ended June 30, Percent Change 2026 2025 2026 2025 Commissions $ 528 $ 431 23 % $ 1,017 $ 862 18 % Order flow revenue Options 434 268 62 % 797 538 48 % Equities 190 198 (4) % 387 371 4 % Total order flow revenue 624 466 34 % 1,184 909 30 % Principal transactions 63 55 15 % 103 89 16 % Total trading revenue $ 1,215 $ 952 28 % $ 2,304 $ 1,860 24 % Three Months Ended June 30, Percent Change Six Months Ended June 30, Percent Change 2026 2025 2026 2025 DATs (in thousands) 11,920 7,571 57 % 10,918 7,482 46 % Product as a percentage of DATs Equities 61 % 54 % 57 % 55 % Derivatives 19 % 20 % 20 % 20 % ETFs 16 % 20 % 18 % 19 % Mutual funds 3 % 5 % 4 % 5 % Fixed income 1 % 1 % 1 % 1 % Number of trading days 62.0 62.0 — 123.0 122.0 1 % Revenue per trade (1) $ 1.64 $ 2.03 (19) % $ 1.72 $ 2.04 (16) % (1) Revenue per trade is calculated as trading revenue divided by the product of DATs and the number of trading days.
MD&A — Trading Revenue; activity and revenue-per-trade comparisons · Filed 07/08/2026
Such disruptions, such as the broad-reaching cloud platform outages that impacted multiple industries in recent years, can and have hindered our clients’ access to our platforms.
Risk Factors — realized client access disruptions from cloud outages · Filed 25/02/2026
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, control the composition of our investment securities, and utilize derivative hedging instruments, we are able to take certain actions to manage our net interest spread, depending on competitive factors and market conditions.
Risk Management — discretion over certain client cash, deposit and lending rates · Filed 07/08/2026
Trading revenue increased $263 million, or 28%, and $444 million, or 24%, in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025, driven by an increase in order flow revenue reflecting higher rates and volume, as well as changes in the mix of client trading activity.
MD&A — Trading Revenue; higher order-flow rates, volume and mix · Filed 07/08/2026
- 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) Segment Net Revenues Investor Services and Advisor Services total net revenues increased by 19% and 27%, respectively, in the second quarter of 2026 and 17% and 24%, respectively, in the first six months of 2026 compared to the same periods in 2025.
MD&A — Investor Services and Advisor Services revenue growth · Filed 07/08/2026
Segment Expenses Excluding Interest Investor Services and Advisor Services total expenses excluding interest increased by 13% and 8%, respectively, in the second quarter of 2026, and 9% and 5%, respectively, in the first six months of 2026 compared to the same periods in 2025.
MD&A — Investor Services and Advisor Services expense growth · Filed 07/08/2026
- 33 - THE CHARLES SCHWAB CORPORATION Condensed Consolidated Statements of Cash Flows (in Millions) (Unaudited) Six Months Ended June 30, 2026 2025 Cash Flows from Operating Activities Net income $ 5,279 $ 4,035 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Share-based compensation 230 198 Depreciation and amortization 399 432 Amortization of acquired intangible assets 274 258 Provision (benefit) for deferred income taxes (20) (40) Premium amortization, net, on available for sale and held to maturity securities 321 351 Other 402 319 Net change in: Investments segregated and on deposit for regulatory purposes 14,911 (7,403) Receivables from brokers, dealers, and clearing organizations (14,814) (1,855) Receivables from brokerage clients (18,222) 2,551 Other assets (2,099) (665) Payables to brokers, dealers, and clearing organizations 18,137 5,247 Payables to brokerage clients 7,627 7,796 Accrued expenses and other liabilities (783) (1,688) Net cash provided by (used for) operating activities 11,642 9,536 Cash Flows from Investing Activities Purchases of available for sale securities (10,959) (1,887) Proceeds from sales of available for sale securities 6,091 4,205 Principal payments on available for sale securities 4,549 14,893 Purchases of held to maturity securities (2,336) (429) Principal payments on held to maturity securities 6,527 8,047 Net change in bank loans (9,065) (5,230) Cash paid for acquisition, net of cash acquired (577) — Purchases of equipment, office facilities, and property (325) (245) Purchases of FHLB stock (21) (317) Proceeds from sales of FHLB stock 83 644 Purchases of Federal Reserve stock (2) (9) Proceeds from sales of Federal Reserve stock 25 4 Other investing activities (414) (130) Net cash provided by (used for) investing activities (6,424) 19,546 Cash Flows from Financing Activities Net change in bank deposits (6,065) (26,063) Proceeds from FHLB borrowings 500 8,000 Repayments of FHLB borrowings (1,850) (15,700) Proceeds from other short-term borrowings 39,612 20,359 Repayments of other short-term borrowings (32,664) (17,906) Issuances of long-term debt 3,231 — Repayments of long-term debt (3,114) (2,237) Repurchases of common stock and nonvoting common stock (3,377) (1,833) Net proceeds from preferred stock offerings 1,480 — Redemption of preferred stock (2,055) (2,458) Dividends paid (1,275) (1,203) Proceeds from stock options exercised 58 109 Other financing activities (158) (95) Net cash provided by (used for) financing activities (5,677) (39,027) Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted (459) (9,945) Cash and Cash Equivalents, including Amounts Restricted at Beginning of Year 69,661 65,514 Cash and Cash Equivalents, including Amounts Restricted at End of Period $ 69,202 $ 55,569 Continued on following page.
Condensed Consolidated Statements of Cash Flows — first-half 2026 spending, funding and capital returns · Filed 07/08/2026
As of June 30, 2026, our adjusted Tier 1 Leverage Ratio (see Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results) was 6.8% for CSC (consolidated), decreasing from 7.1% as of year-end 2025 as a result of returns of excess capital and higher total Company assets, partially offset by growth from net income.
Capital Management — consolidated adjusted Tier 1 leverage ratio · Filed 07/08/2026
Capital expenditures decreased 25% in 2024 compared to 2023, primarily due to lower purchased and internally developed software as we completed Ameritrade client account transitions in the second quarter of 2024 and completed the Ameritrade integration, partially offset by higher investment in buildings.
MD&A — capital expenditures and completion of Ameritrade integration · Filed 25/02/2026
For 2025, the Compensation Committee: § assessed the competitiveness of executive compensation using peer group and industry survey data; § continued to use adjusted diluted EPS as the performance measure for the CEBP to align executives’ actions around operating performance and capital structure in support of long-term profitability: § set target for adjusted diluted EPS in alignment with the company’s board-approved 2025 financial plan; § provided for a payout of 50% of the target for a threshold level of performance with no payout for performance below the threshold; § approved annual cash incentive funding under the CEBP of 116.5% of the target set by the Compensation Committee, based on the company’s financial performance; § continued to award a mix of LTI comprising 60% PBRSUs and 40% stock options; § approved payout under the PBRSUs that vested based on the three-year performance period from January 1, 2023, through December 31, 2025 (the 2023 PBRSU award) at 100.00% of target based on the company’s financial performance as measured by ROTCE divided by COE for the three-year performance period; § granted PBRSUs with terms similar to prior years to ensure consistent executive focus on long-term performance: § cliff vesting and a three-year performance period; § performance measured by the amount by which ROTCE exceeds COE; this ratio is appropriate for measuring long-term company performance because it reflects the creation of financial value for stockholders above the cost of capital; § threshold level of performance that provides a payout of 50% of the target, providing a below target award opportunity in the event of positive performance that does not meet the target level.
Compensation Discussion and Analysis — actual 2025 compensation decisions and completed performance-period payout · Filed 06/04/2026
§ Stock Ownership Guidelines. CEO and other executive officers are required to maintain minimum stock ownership levels (5x and 3x base salary, respectively) to reinforce the alignment of their interests with stockholder interests.
Compensation Policies — executive stock ownership requirements · Filed 06/04/2026
§ Recoupment Policies. The Company maintains both the mandatory recoupment policy that aligns with NYSE requirements and a broader policy to ensure coverage of all executive incentive-based compensation.
Compensation Policies — incentive compensation recoupment policies · Filed 06/04/2026
PBRSU awards granted in 2025 will be earned according to the following matrix: PBRSU Performance Matrix ROTCE(1) Divided by COE(2) Result(3) Payout % ≤ 149.99% 0% 150.00% to 199.99% 50% - 100%(4) 200.00% to 600.00% 100% 600.01% to 799.99% 100% - 200%(4) ≥ 800.00% 200% (1) For purposes of the 2025 PBRSU awards, ROTCE is the simple average ROTCE determined separately for each calendar year in the three-year performance period.
Compensation Discussion and Analysis — 2025 PBRSU performance matrix · Filed 06/04/2026
Our practices to maintain board effectiveness include the following: Leadership Independence § Our Co-Chairmen lead our board § Our Nominating and Corporate Governance Committee Chair leads independent directors § 71% independent directors § Regular executive sessions of non-management directors Qualifications and Composition Structure and Committees § Annual review of skills and composition § Succession planning § Annual self-assessments § Audit Committee § Risk Committee § Compensation Committee § Nominating and Corporate Governance Committee Board Leadership Our Corporate Governance Guidelines provide that the roles of Chairman or Co-Chairman of the board and Chief Executive Officer (CEO) may be separated or combined, and our board exercises its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances.
Corporate Governance — independence, committees and board leadership practices · Filed 06/04/2026
Currently, the Certificate of Incorporation provides for the board to be divided into three classes, with each class elected every three years.
Proxy Statement Summary — existing classified board structure · Filed 06/04/2026
Declassification of the Board of Directors We ask that you approve amendments to the company’s Fifth Restated Certificate of Incorporation, as amended (the Certificate of Incorporation), and conforming amendments to the company’s Amended and Restated Bylaws (the Bylaws), to declassify the Board of Directors.
Proxy Statement Summary — proposed board declassification · Filed 06/04/2026
The peer group used for compensation analyses for 2025 was: Asset Management § Ameriprise Financial § Blackrock, Inc.
Compensation Discussion and Analysis — compensation peer group · Filed 06/04/2026
