AddedRisk Factors
than the net interest revenue that we could have earned if the deposit balances were used to extend margin loans or swept to our banking subsidiaries rather than the TD Depository Institutions.
The 10-K against last year's
217 changes: 34 added, 36 removed, 144 reworded, 3 quiet changes
10-K 0000316709-26-000009 (2026-02-25) vs 10-K 0000316709-25-000010 (2025-02-26)
The redline
The paragraph that changed most in each section
Marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
MD&A 260 words changed in this paragraph; it is 35% similar to last year's version.
Source: Item 7, 10-K 0000316709-26-000009 vs Item 7, 10-K 0000316709-25-000010
Risk Factors 249 words changed in this paragraph; it is 33% similar to last year's version.
Source: Item 1A, 10-K 0000316709-26-000009 vs Item 1A, 10-K 0000316709-25-000010
Accounting Policies 159 words changed in this paragraph; it is 53% similar to last year's version.
Expected credit losses are estimated using a loan-level model that projects each loan’s behavior over its term based on forecasted voluntary housing turnover, the rates of refinancing, delinquency transition rates, and severity of loss. The model takes into account the current relevant risk indicators, including each loan’s term and structure, current delinquency status, and the estimated current refreshed LTV ratio, as well as borrower FICO scores and current key interest rates including U.S. Treasury, SOFR, Prime, and mortgage rates. The more significant variables in the model include delinquency roll rates, housing prices, interest rates, and the unemployment rate. Delinquency roll rates (i.e., the rates at which loans transition through delinquency stages and ultimately result in a loss) are estimated from our historical loss experience over a full economic cycle. Loss severity (i.e., loss given default) estimates are based on forecasted net equity associated with each loan and property, as well as loss experience and market trends, both current and forecasted. Housing price trends are derived from historical home price indices and econometric forecasts of future home values. Factors affecting the home price index include housing inventory, unemployment, interest rates, and inflation expectations. Mortgage rates are estimated based on forecasted spread, while the rest of the interest rates used by the model are projected based on the forward rates. The unemployment rate forecast is typically based on the recent consensus of regularly published economic surveys. Linear interpolation is applied to revert to long-term trends after the reasonable and supportable forecast period.
Source: Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0000316709-26-000009 vs Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0000316709-25-000010
Legal Proceedings 62 words changed in this paragraph; it is 77% similar to last year's version.
IDA agreement: On May 4, 2023, the Company executed the The 2023 IDA agreement with the TD Depository Institutions that replaced and superseded the previous agreement dated November 24, 2019, as amended. The 2023 IDA agreement specifies responsibilities, including certain contingent obligations, of the Company going forward. 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 2024, Schwab did not move IDA balances to its balance sheet.
Source: Item 3, via Note 15 – Commitments and Contingencies, 10-K 0000316709-26-000009 vs Item 3, via Note 15 – Commitments and Contingencies, 10-K 0000316709-25-000010
Every change, by type
Sentences and paragraphs added, removed or reworded
Sentences and paragraphs of SCHW's Risk Factors and MD&A, 10-K 2026-02-25 against 10-K 2025-02-26. Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier (may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, wouldAddedRisk Factors
We must process, record and monitor a large number of transactions and our operations are highly dependent on the integrity of our technology systems and our ability to make timely enhancements and additions to our systems. System interruptions, errors or downtime can result from a variety of causes, including changes in client use patterns, technological failure, changes to our
AddedRisk Factors
We rely on outsourced service providers and financial intermediaries to perform key functions, and failure of these entities to perform as expected could result in financial or reputational harm to us or financial harm to our clients.
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We also face risks arising from clients who intentionally engage in fraudulent or deceptive conduct. In some instances, clients may knowingly authorize or initiate transactions under false pretenses, misuse payment channels, submit fraudulent checks or ACH items, or provide misleading information to facilitate fraudulent transfers or trading activity. Schwab also faces risk of fraud by employees who misuse authorized access to critical information or systems. Such insider misconduct may involve misappropriation of Company or client assets, misuse or theft of Company or client information, insider trading, operational sabotage, circumvention of internal controls, or other actions that could harm the Company or our clients.
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financial contracts and investing activities, and indirectly from the investing activities of certain of the proprietary funds that the Company sponsors.
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or other disciplinary sanctions, including limitations on our business activities, any of which could harm our reputation and adversely affect our results of operations and financial condition.
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We intend to offer clients direct access to select digital assets, which exposes us to new and uncertain financial, operational, legal, and regulatory risks that could adversely affect our business and financial results.
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In 2026, the Company anticipates it will begin offering expanded client access to trading in digital assets including spot trading in select cryptocurrencies. Expansion of digital asset client offerings presents significant new risks to the Company, including risks related to digital asset custody, trading, settlement, and liquidity, and increased risk related to fraud and other illicit activity. Client demand for digital assets is uncertain and may fluctuate significantly due to market volatility, regulatory developments, or changes in investor sentiment. The regulatory landscape for cryptocurrencies is evolving and uncertain, and changes in laws, regulations, or regulatory interpretations could prohibit or limit our ability to offer these products, increase compliance costs, or expose us to increased regulatory scrutiny.
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Digital assets function as bearer instruments controlled with private keys, and transactions in digital assets are generally irreversible. Due to the unique nature of digital assets, the loss, theft, compromise, or destruction of private keys could result in
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the permanent loss of digital assets with no practical means of recovery. Because blockchain technology is relatively new, it is difficult to predict how it might be vulnerable to cybersecurity and fraud risks that could affect our business.
AddedRisk Factors
We expect to engage with third-party service providers to facilitate certain activities related to digital assets. These relationships present additional risks, including operational, reputational, and compliance risks that could adversely affect our business. Internal and third-party systems needed to effect client activity in digital assets are vulnerable to operational failures, cyberattacks, and fraud, and we may be held responsible for deficiencies in the controls or regulatory compliance of third-party service providers, even where we do not have direct oversight of their operations. Failure or breach of our or third-party service providers’ systems, cybersecurity controls, or operational processes could result in loss of client digital assets, which may not be recoverable in full or at all. Many crypto industry participants are relatively early-stage companies with limited history. There is no guarantee they will perform as reliably or efficiently as anticipated. Regulatory change could also affect the ability of third-party service providers to continue to operate or provide services for Schwab clients. Such events could result in material financial losses, legal or regulatory claims, and reputational harm, even if we are not at fault.
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When these outflows outpace excess cash on hand and cash generated by maturities and paydowns on our investment and loan portfolios, as they have we experienced in recent years, 2022 and 2023, we may need to rely on supplemental funding, such as advances under Federal Home Loan Bank (FHLB) secured credit facilities, borrowings under repurchase agreements with external financial institutions, issuances increased levels of brokered certificates of deposit (CDs), or other sources of higher-cost funding, which have higher costs and could be subject to limitations on availability. availability and additional regulatory requirements.
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An interruption in or the cessation of service by any external service provider as a result of systems failures, capacity constraints, financial difficulties, natural disasters, extreme weather, power outage, public health crises, political developments, war, international disputes, or for any other reason, and our inability to make alternative arrangements in a timely manner could disrupt our operations, impact our ability to offer certain products and services, and result in financial losses to us.
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Factors which may adversely affect our liquidity position include CS&Co having temporary liquidity demands due to timing differences between brokerage transaction settlements and the availability of segregated cash balances, fluctuations in cash held in banking or brokerage client accounts, such as the significant client reallocation from sweep cash to higher-yielding investments that as we experienced in recent years in response to rapid interest rate increases, a dramatic increase in our lending activities (including margin, mortgage-related, and personal lending), increased capital requirements, changes in regulatory guidance or interpretations, other regulatory changes, or a loss of market or client confidence in us resulting in unanticipated withdrawals of client funds.
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The bank deposit account fee revenue that we earn related to the 2023 IDA agreement may be less than the net interest revenue that we could have earned if the deposit balances were swept to our banking subsidiaries rather than the TD Depository Institutions.
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Any enforcement actions or other proceedings brought by our regulators against us or our affiliates, officers or employees could result in fines, penalties, cease and desist orders, enforcement actions, suspension, disqualification or expulsion, or other disciplinary sanctions, including limitations on our business activities, any of which could harm our reputation and adversely affect our results of operations and financial condition.
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We continue to take steps to implement new controls, strengthen capabilities in how we authenticate our clients, and enhance monitoring protocols to help prevent and detect fraud and ultimately protect our clients, but the ways that fraudulent activity is attempted is are continuously evolving.
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Problems encountered by other financial institutions and responsive measures to manage such problems could adversely affect have direct adverse effects on financial markets generally, could have an adverse effect on generally and our financial position or results of operations, and have as well as indirect adverse effects on us.
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Our exposure mainly results from margin lending, clients’ options and futures trading, securities lending, mortgage lending, pledged asset lending, our role as a counterparty in financial contracts and investing activities, and indirectly from the investing activities of certain of the proprietary funds that the Company sponsors.
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Our margin, options and futures business has materially increased in recent years as a result of market-driven factors and overall growth of our Ameritrade acquisition, business including growth in our trader client base, and market liquidity represents an increased risk.
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Quiet changesRisk Factors
A decline in interest rates may also negatively impact our bank deposit account fee revenue, which is earned primarily pursuant to the 2023 IDA agreement.
AddedMD&A
•Industry and competitive trends including artificial intelligence, digital assets, private company securities and other alternative investments;
AddedMD&A
•The Company’s plan to provide increased access for clients to trade in digital assets including select cryptocurrencies (see Products and Services in Part I – Item 1);
AddedMD&A
•Management’s ability to close the acquisition of Forge on the anticipated terms and timing;
AddedMD&A
Total expenses excluding interest were $12.5 billion in 2025, higher by 5% from 2024, and adjusted total expenses (1) were $12.0 billion in 2025, increasing 6% from the prior year. These increases reflect ongoing investments to support growth of the business and enhance client-serving capabilities while driving incremental efficiencies across the Company. The year-over-year changes in expenses were primarily attributable to higher compensation and benefits and higher professional services expense, due largely to growth in the business and volume-related costs, including higher incentive compensation driven by the Company’s financial performance, partially offset by lower regulatory fees and assessments due to lower FDIC assessments.
AddedMD&A
The Company returned meaningful excess capital in 2025. Total common stock repurchased during the year amounted to $7.3 billion. In addition, the Company increased its common dividend by 8% to $.27 per share in the first quarter of 2025, and redeemed its Series G preferred stock for $2.5 billion in the second quarter. Inclusive of these capital actions and organic capital generation from net income, the Company’s consolidated Tier 1 Leverage Ratio was 9.3% at year-end 2025, down from 9.9% at December 31, 2024. Our consolidated adjusted Tier 1 Leverage Ratio (1) increased to 7.1% at December 31, 2025 from 6.8% at the prior year-end, driven by net income and improvement in AOCI in 2025.
AddedMD&A
On November 6, 2025, Schwab announced that it had entered into a definitive agreement to acquire Forge, operator of a leading private market platform and trading marketplace, in a transaction valued at approximately $660 million. The Company anticipates that incorporating Forge’s private company investment capabilities will enhance Schwab’s ability to meet the evolving needs of investors across our growing client base. The transaction was approved by Forge’s stockholders in January 2026, and is expected to close in March 2026, subject to customary closing conditions, including regulatory approvals.
AddedMD&A
On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued between March 2022 and November 2023, which the Company had been evaluating. The withdrawn proposals included the December 2022 equity market structure rule proposals, “Order Competition Rule” and “Regulation Best Execution”.
AddedMD&A
On March 3, 2025, the FDIC also withdrew certain notices of proposed rulemaking issued in 2023 and 2024 that the Company had been evaluating, including the July 2024 proposal related to the brokered deposits framework.
AddedMD&A
In November 2023, the FDIC approved a special assessment to recover losses incurred by the DIF to protect uninsured depositors due to the March 2023 closures of two banks. The Company recognized a charge of $172 million in 2023 for its
AddedMD&A
estimated portion of this special assessment. The FDIC has since provided updates to its estimated losses to recover. The Company has revised its estimates accordingly, resulting in an additional charge of $30 million recognized in 2024 and a subsequent reduction of $32 million recognized in 2025.
AddedMD&A
Schwab’s average interest-earning assets in 2025 were relatively consistent in aggregate with 2024, while the mix of interest-earning assets shifted year-over-year to reflect higher margin and bank lending, higher cash and investments segregated, and lower balances of AFS and HTM securities. Client demand for margin and bank lending was strong during 2025, reflecting positive equity market performance and client engagement, as margin loan balances rebounded following market volatility in late March and early April, increasing in the third quarter and through the end of 2025. Margin loan balances ended the year at $112.3 billion, increasing 34% from year-end 2024. Total bank loans rose to $58.0 billion at year-end 2025, higher by 28% from December 31, 2024, due primarily to growth in PALs and First Mortgages.
AddedMD&A
Cash activity during 2025 reflected normal client cash behavior, inclusive of organic growth, and engagement in equity markets. Bank sweep deposits and payables to brokerage clients increased by a total of $36.6 billion, or 12% during 2025. Principal and interest payments on AFS and HTM securities, as well as transfers of $6.7 billion of BDA balances to our balance sheet (see Results of Operations – Bank Deposit Account Fees and Item 8 – Note 15), supported paydowns in bank supplemental funding of $44.8 billion, or 90% during 2025.
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Percent Change 2024-2023 2025-2024 2025 2024 2023 2022 Client Metrics Net new client assets (in billions) (1) 7% 38% $ 498.6 $ 361.6 $ 337.2 $ 406.9 Core net new client assets (in billions) 20% 42% $ 519.4 $ 366.9 $ 305.7 $ 427.7 Client assets (in billions, at year end) 19% 18% $ 11,903.0 $ 10,101.3 $ 8,516.6 $ 7,049.8 Average client assets (in billions) 21% 15% $ 10,809.0 $ 9,400.4 $ 7,793.8 $ 7,292.8 New brokerage accounts (in thousands) 10% 13% 4,692 4,170 3,806 4,044 Active brokerage accounts (in thousands, at year end) 5% 6% 38,506 36,456 34,838 33,758 Assets receiving ongoing advisory services (in billions, at year end) 17% 19% $ 6,020.3 $ 5,061.7 $ 4,338.8 $ 3,673.2 Client cash as a percentage of client assets (at year end) 9.7 % 10.1 % 10.5 % 12.2 % Company Financial Information and Metrics Total net revenues 4% 22% $ 23,921 $ 19,606 $ 18,837 $ 20,762 Total expenses excluding interest (4)% 5% 12,462 11,914 12,459 11,374 Income before taxes on income 21% 49% 11,459 7,692 6,378 9,388 Taxes on income 33% 49% 2,607 1,750 1,311 2,205 Net income 17% 49% 8,852 5,942 5,067 7,183 Preferred stock dividends and other 11% (6)% 435 464 418 548 Net income available to common stockholders 18% 54% $ 8,417 $ 5,478 $ 4,649 $ 6,635 Earnings per common share — diluted 18% 56% $ 4.65 $ 2.99 $ 2.54 $ 3.50 Net revenue growth from prior year 22 % 4 % (9) % 12 % Pre-tax profit margin 47.9 % 39.2 % 33.9 % 45.2 % Return on average common stockholders’ equity 21 % 15 % 16 % 18 % Expenses excluding interest as a percentage of average client assets 0.12 % 0.13 % 0.16 % 0.16 % Consolidated Tier 1 Leverage Ratio (at year end) 9.3 % 9.9 % 8.5 % 7.2 % Non-GAAP Financial Measures (2) Adjusted total expenses (3) $ 11,950 $ 11,269 $ 11,029 $ 10,386 Adjusted diluted EPS $ 4.87 $ 3.25 $ 3.13 $ 3.90 Return on tangible common equity 38 % 35 % 54 % 42 Adjusted tier 1 leverage ratio (consolidated) 7.1 % 6.8 % 4.9 %
RewordedMD&A
Description Borrower Outstanding Available Maturity of Amounts Outstanding Weighted-Average Interest Rate on Amounts Outstanding Federal Reserve discount window Banking subsidiaries — 30,512 29,327 (1) N/A — FHLB secured credit facilities Banking subsidiaries $ 16,700 1,850 $ 59,810 74,226 (1) January 2025 February 2026 - July 2025 5.11% March 2026 3.90% Repurchase agreements Banking subsidiaries, CSC 5,499 CSC, CS&Co 1,301 — (2) January 2025 February 2026 - May 2025 5.26% April 2026 (3) 3.94% Unsecured uncommitted lines of credit with various external banks CSC, CS&Co — 1,692 1,892 N/A — Unsecured commercial paper CSC — 5,000 N/A — 1,894 3,106 (4) May 2026 - July 2026 4.03% Secured uncommitted lines of credit with CS&Co 3,800 — (5) February 2026 - May 2026 4.18% various external banks CS&Co 500 — (3) April 2025 5.13% Unsecured committed revolving line of credit with various external banks CSC — 2,100 (4) N/A —
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The following table shows a comparison of total expenses excluding interest:Percent Change 2024-2023 2025-2024 2025 2024 2023 2022 Compensation and benefits Salaries and wages (13)% 7% $ 3,770 $ 3,530 $ 4,046 $ 3,527 Incentive compensation 20% 5% 1,565 1,488 1,239 1,458 Employee benefits and other — 13% 1,156 1,025 1,030 951 Total compensation and benefits (4)% 7% $ 6,491 $ 6,043 $ 6,315 $ 5,936 Professional services — 14% 1,197 1,053 1,058 1,032 Occupancy and equipment (15)% 5% 1,117 1,060 1,254 1,175 Advertising and market development — 6% 420 397 397 419 Communications (6)% 5% 620 591 629 588 Depreciation and amortization 14% (7)% 850 916 804 652 Amortization of acquired intangible assets (3)% (1)% 512 519 534 596 Regulatory fees and assessments (27)% (28)% 287 398 547 262 Other 2% 3% 968 937 921 714 Total expenses excluding interest (4)% 5% $ 12,462 $ 11,914 $ 12,459 $ 11,374 Expenses as a percentage of total net revenues Compensation and benefits 27 % 31 % 34 % 29 % Advertising and market development 2 % 2 % 2 % Full-time equivalent employees (in thousands) At year end (3)% 3% 33.0 32.1 33.0 35.3 Average (9)% 1% 32.6 32.3 35.4 34.7
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Year Ended December 31, 2025 2024 2023 2022 Amount Diluted EPS Amount Diluted EPS Amount Diluted EPS Net income available to common stockholders (GAAP), $ 8,417 $ 4.65 $ 5,478 $ 2.99 $ 4,649 $ 2.54 $ 6,635 $ 3.50 Earnings per common share — diluted (GAAP) Acquisition and integration-related costs 117 .06 401 .22 392 .21 Amortization of acquired intangible assets 512 .29 519 .28 534 .29 596 .31 Acquisition and integration-related costs — — 117 .06 401 .22 Restructuring costs — — 9 — 495 .27 — — Income tax effects (1) (122) (.07) (154) (.08) (338) (.19) (237) (.12) Adjusted net income available to common stockholders $ 8,807 $ 4.87 $ 5,969 $ 3.25 $ 5,741 $ 3.13 $ 7,386 $ 3.90 (non-GAAP), Adjusted diluted EPS (non-GAAP)
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Other revenue increased $34 $14 million, or 5%, 2%, in 2024 2025 compared to 2023 2024, primarily due to higher industry other service fees and lower gains recognized on certain equity investments, partially offset by higher losses recognized on sales of AFS securities, partially offset by certain lower service and other fees and a smaller release from the higher provision for credit losses on bank loans. loans, and lower industry fees.
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Net interest revenue increased for Investor Services both segments primarily due to reductions in bank supplemental funding, lower average rates paid on funding sources, and growth of margin and bank lending and lower average balances of FHLB borrowings, balances, partially offset by lower average yields on interest-earning assets and higher average rates paid on most funding sources. assets.
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Occupancy and equipment expense decreased increased in both segments, segments primarily due to lower higher technology equipment and software costs, lower costs related to growth of the business, as well as building expenses, and a property tax expense, and facility closures benefit reflected in 2023 related to restructuring and the Ameritrade integration. 2024.
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Regulatory fees and assessments decreased in both segments in 2024, segments, primarily due to an a reduction in FDIC special assessment recorded during the fourth quarter of 2023, partially offset by additional assessments in 2025 and lower FDIC special assessments in 2024, as described above. from 2024 to 2025.
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The decrease in average BDA balances in 2024 2025 compared to 2023 2024 was primarily due to the transfer of $6.7 billion of BDA balances to Schwab’s balance sheet after September 10, 2025, as well as client cash allocation decisions in 2024 in response to higher elevated short-term market interest rates. rates through most of 2024.
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(1) 2025 includes net outflows of $20.8 billion from off-platform brokered CDs issued by CSB. 2024 includes net outflows of $14.6 billion from off-platform brokered CDs issued by CSB and CSB, an inflow of $10.3 billion from a mutual fund clearing services client client, and an outflow of $1.0 billion from an international relationship. 2023 includes net inflows of $32.5 billion from off-platform brokered CDs issued by CSB and $12.0 billion from a mutual fund clearing services client and outflows of $13.0 billion from an international relationship. 2022 includes outflows of $20.8 billion from certain mutual fund clearing services clients.
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The following tables present trading revenue, client trading activity, and related information:Year Ended December 31, Percent Change 2025 2024 2023 2022 2024-2023 2025-2024 Commissions (1)% 13% $ 1,797 $ 1,591 $ 1,601 $ 1,787 Order flow revenue Options 6% 16% 1,167 1,010 949 1,170 Equities 3% 63% 763 467 455 568 Total order flow revenue 5% 31% 1,930 1,477 1,404 1,738 Principal transactions (13)% (1)% 194 196 225 148 Total trading revenue 1% 20% $ 3,921 $ 3,264 $ 3,230 $ 3,673
Quiet changesMD&A
Total bank supplemental funding ended 2024 at $49.9 billion, down $29.7 billion, or 37%, from year-end 2023, and down 49% from peak levels in May 2023.
Quiet changesMD&A
This analysis is highly dependent upon asset and liability assumptions based on historical and certain expected behaviors.