Second Half 2024 (charles schwab net stable funding ratio disclosure H2 2024)

The Charles Schwab Corporation

Net Stable Funding Ratio

Disclosure Report

For the quarters ended September 30, 2024 and December 31, 2024

Table of Contents
I. About The Charles Schwab Corporation	3
II. Net Stable Funding Ratio	3
III. Net Stable Funding Ratio Quantitative Disclosures	3
A.	Q4 2024	4
B.	Q3 2024	5
IV.	Components and Drivers of the Net Stable Funding Ratio	6
A.	Available Stable Funding	6
B.	Required Stable Funding	6
V.	Funding Sources	6
A.	Primary Sources	6
B.	Supplemental Sources	6

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1. About The Charles Schwab Corporation

The Charles Schwab Corporation (CSC) is a savings and loan holding company, headquartered in Westlake, Texas. 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. CSC is regulated, supervised, and examined by the Board of Governors of the Federal Reserve System (Federal Reserve).

1. Net Stable Funding Ratio

The Net Stable Funding Ratio (NSFR) rule is a quantitative liquidity metric and requirement that measures the long-term funding stability of a covered institution. The rule intends to limit overreliance on short-term wholesale funding, encourage better assessment of funding risk across all on- and off- balance-sheet items, and promotes funding stability. The NSFR requirements in the rule are consistent with the requirements established by the Basel Committee on Banking Supervision.

Under the NSFR rule, Schwab is required to maintain Available Stable Funding (ASF) in an amount equal to 100% of its Required Stable Funding (RSF) on an ongoing, daily basis. ASF is calculated by evaluating the stability of an organization's funding sources, and RSF is calculated by evaluating the characteristics of an organization's assets, derivatives, and off-balance-sheet exposures as prescribed in the rule.

1. Excludes excess ASF at bank subsidiaries that are not transferable to non-bank affiliates.

The Company's average NSFR was 127.30% during the third quarter of 2024 and increased to 131.11% in the fourth quarter of 2024, primarily due to an increase in free credits at the broker-dealer subsidiary. Schwab's NSFR fluctuates period over period as a result of its liquidity profile, market conditions, client behavior, legal or regulatory developments, liquidity risk management limits, or other factors in the markets in which it operates.

Although not subject to a separate public disclosure requirement, Schwab's depository institution subsidiaries are subject to NSFR requirements, and were in compliance with their respective NSFR requirements during the periods presented.

1. NSFR Quantitative Disclosures

In the following tables, the figures reported in the "Average Weighted Amount" column reflect the prescribed, industry-wide assumptions and factors defined by the NSFR rule to determine a Covered Company's ASF and RSF. The figures reported in the "Average Unweighted Amount" column reflect gross values prior to the application of prescribed factors and are not included in the calculation used to determine the Company's compliance with NSFR requirements.

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1. Q3 2024

1. Amounts reported may not equal the calculation of those amounts reported in rows 1-14 as it excludes excess ASF at bank subsidiaries that are not transferable to non-bank affiliates subject to § 249.109 Rules for consolidation.
2. Figures may not sum due to rounding.

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IV. Components and Drivers of the Net Stable Funding Ratio

1. Available Stable Funding

The Company's total ASF was concentrated in retail funding which includes sweep deposits and brokered deposits from retail customers. These accounted for 50% and 49% of the Company's weighted ASF2 for the third and fourth quarters of 2024, respectively. The Company's ASF also includes other unsecured funding from retail customers at Schwab's broker-dealer and banking subsidiaries such as free credits, long term senior notes, Federal Home Loan Bank (FHLB) borrowings and regulatory capital. Together these accounted for 36% and 35% of the Company's weighted ASF2 in the third and fourth quarters of 2024, respectively.

ASF that is held at the banking subsidiaries in excess of the subsidiaries' total RSF, and are not transferable to non-bank affiliates, are excluded by rule from the Company's ASF.

1. Required Stable Funding

The Company's total RSF includes loans to retail customers or counterparties, which is concentrated in Schwab's broker-dealer business representing customer margin loans. These accounted for 29% and 31% of the Company's weighted RSF in the third and fourth quarters of 2024.

In addition, Company's RSF included loans to retail customers or counterparties at banking subsidiaries, level 2A assets, non HQLA and other assets. Together these account for 69% and 67% of the Company's RSF for the third and fourth quarters of 2024.

1. Funding Sources

1. Primary 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 and cash provided by other external financing including securities issuances by CSC in the capital markets.

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.

1. Supplemental Sources

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. We maintain policies and procedures necessary to access funding, and test borrowing procedures on a periodic basis.

2 Weighted ASF is prior to the exclusion of the non-transferrable subsidiary excess stable funding.

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The Company has a commercial paper program as well as a universal automatic shelf registration statement on file with the SEC which enables it to issue debt, equity, and other securities. In addition to this, CSC maintains a standing bilateral repurchase agreement with an external bank. Beginning in 2024, CSC has access to unsecured, committed revolving lines of credit with various external banks. This line expired in January 2025 and was not renewed. Other than an overnight borrowing to test the availability, the facility was not used during 2024.

The Company's banking subsidiaries have access to external financial institutions through repurchase agreements collateralized by investment securities and secured borrowing facilities with the FHLB. 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 fair value of certain of our investment securities that are pledged as collateral.

The banking subsidiaries also have access to short-term secured funding through the Federal Reserve Discount Window and are counterparties to the Standing Repo Facility with the Federal Reserve Bank of New York. These facilities were not utilized by the Company in the third and fourth quarters of 2024 outside of de-minimis test borrowings to establish operational readiness.

In the third and fourth quarters of 2024, Retail Brokered Certificates of Deposit were used as a supplemental funding source.

The broker dealer subsidiary maintains uncommitted, unsecured, and secured bank credit lines with a group of banks as a source of short-term liquidity.

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