Q4 2025 Charles Schwab Corp Earnings Call

January 21, 2026

I had a investor relations I'm joined Westlake today by our President and CEO, Rick Wurster as well as our CFO Mike pedestrian.

During our time together this morning, the team more of your 2025, a year, where the business delivered growth across all fronts and discuss the growing set of opportunities we see to help clients even more in 2026 and beyond a quick rundown on the housekeeping front. The slides for today's business update will be posted to their usual spot on the IR website at the end of the prepared remarks.

Q&A remains one question no follow ups then please try to limit the nested babushka dog questions. If you have multiple questions. We encourage you to simply hop back into the queue and ask another one if time allows and as always the IR team is here to assist with any questions. Following today's update and.

And last but not least the ever present forward looking statements stage or the artist formerly known as the wall of words, which reminds us that outcomes may differ from expectations. So please keep in touch with our disclosures.

That's the way I'll turn it over to Rick Thank.

Thank you, Jeff and good morning, everyone. Thanks for joining our winter business update.

Probably 25 was a record year for Schwab.

By our through clients' eyes strategy.

Sort of market.

<unk> clients and strong execution, we delivered growth on all fronts with clients across our solutions and in our financial results.

We attracted 519 billion and core net new assets or M&A, it's 42% increase over last year.

In 2025 clients opened 4.7 million, new brokerage accounts, a 13% increase over 2024.

Solutions growth, one measure of deepening our relationships with clients by helping them conduct more of their financial lives at Schwab.

New records.

Managed investing net flows grew 36% over 2024, achieving a new record.

Bank lending balances reached an all time high of 58 billion.

This diversified combination of client and solutions growth supported by our disciplined financial management approach resulted in record financial growth.

Total net revenues reached a new record high of $23 9 billion and we delivered record adjusted earnings of $4 87 up 50%.

Over last year.

With strong execution across our strategic focus areas growth scale and efficiency brilliant basics and our people. We continue to innovate to help our clients grow manage enjoy protect and pass on their wealth.

This is how we've always approached innovation at Schwab with a focus on helping our clients achieve better financial outcomes.

I'll share just a few examples from 'twenty to 'twenty five.

We opened 10, new branches and hired hundreds of financial consultants and wealth advisors.

Clients with NFC bring in more than two times. The M&A are more engaged with our wealth solutions and have higher client promoter scores.

We strengthened our lending wealth and trading offers we leveraged artificial intelligence to serve clients more efficiently.

And our advisor services business, we launched advisor pro direct it subscription service supporting <unk> wherever they are in their journey to independents, we launched a long short separately managed accounts program and nearly doubled the size of our institutional no transaction fee mutual fund platform we.

Entered a definitive agreement to acquire forge, which will help us provide clients with multiple ways to access alternatives, while democratizing private investor.

We also made a strategic investment in capita a complete equity management solution designed to support private companies in the late stages prior to IPO.

With Fortune capita we're creating an ecosystem, where we can administer private stock plans, while providing access to liquidity for private company employees investors, all while creating a pre IPO pipeline of future stock plan services clients for Schwab.

We took an ownership stake in wealth dotcom and began rolling out their estate analysis capability to our specialists, giving us more tools to help clients integrate their state planning into their investment life.

We delivered this all of this in a year, where our clients achieved record levels of wealth through market ups and downs as the year came to a close and from where we stand today market valuations are high but the economy remains strong.

All of this fueled record levels of client engagement, we supported one 9 billion trades more than 30 million calls to our service centers and about 2.2 billion digital logins up approximately 18% from 2024.

Clients, reaching out to our service centers had their calls answered in less than 30 seconds on average as our professionals feel that client questions ranging from weather stocks were overvalued to how to navigate market volatility the inquiries about crypto currencies to how to protect their wealth.

Millions of investors consumed our educational content.

Well clients embraced our easy and intuitive digital experiences they showed us they want more than an app when what's at stake is their financial future.

In short we were there for our clients, when where and how they needed us.

You can see this in our third party recognition and more importantly in strong and improving client promoter scores across retail advisor services and our workplace business.

We ended the year with more than 46 million client accounts, and nearly 12 trillion and total client assets reinforcing our position as an industry leader and ranking number one among peers by total client assets RIAA custodial assets and daily average trades.

Which reached a record $7.7 million a day for the year.

We are entering 2026, and a leading competitive position and our momentum is strong I want to spend a few minutes laying out what collectively positions us to continue delivering earnings growth through the cycle.

Most importantly, we are taking a holistic view of growth we have two important levers serving more clients and deepening relationships by serving more of their financial needs.

Attracting more clients will always be important, but with nearly 12 trillion in assets and more than 46 million client accounts.

More for our clients is that importantly, sort the choice of growth as acquiring new clients.

We are equally focused on growing it in a in growing our wealth lending and product areas. This grow.

It is key to our revenue growth and our revenue diversification.

There are two more critical pieces to the puzzle first our sheer scale combined with efficiency efforts that make it easier for clients to do business with us keeps our cost to serve clients low.

This also allows us to invest in client capabilities that will fuel our growth.

And pure experiences to drive more efficiencies.

Second our disciplined financial management approach and capital return underpins at all.

Taken together when we deliver on each of these effectively we're able to deliver earnings growth through the cycle.

I'll spend the next few minutes unpacking growth and scale and efficiency and Mike will dive into our financials.

Serving a growing number of clients and attracting net new assets is our first growth lever and in 2025, the organic growth rate of core M&A reached five 1%.

And advisor services, we are attracting net new assets from new and existing advisors of all sizes as we help them serve their clients grow their businesses and succeed in an increasingly competitive industry.

No matter the size, we serve them all in a way no competitor can.

No.

Retail households turned to schwab in 2020 five.

There's no new households represent a broad and diverse client base.

Our average retail client is now in their forties and our average unit from retail client is in their thirties Gen.

Investors comprised nearly a third of new retail client accounts opened in 2025 and nearly 60% are under the age of 40.

About one third new clients or affluent and the volume of new trader clients continues to increase.

To sum it up we are winning with investors of all ages wealth tears and time horizons.

Clients expect all aspects of their lives to be more convenient and then want to conduct more of their financial lives in one place at.

At our scale, we have an incredible opportunity to do more for existing clients at a magnitude that can't be easily replicated.

When existing clients entrust more of their assets to Schwab.

For clients because it makes their financial lives easier and we're delivering the value that they want.

It is the one for the firm because it helps us diversify our revenue streams.

Guided by our through clients' eyes strategy, we have a diverse set of monetization opportunities that are providing value to clients across both advisor services and retail.

I want to specifically call out the priority I already opportunities, we see in advisory services.

First as well.

Expanding our wealth services offer which is designed to simplify processes and help advisors compete and serve their clients comprehensive needs. This includes a growing model market center platform and alternative investments.

Second we're focused on expanding our lending in trust services to our advisors through Charles Schwab Bank. Finally, we're delivering industry, leading trading capabilities at a later date I'll share more on the high touch trading service for block trades, we're launching in Q1.

I'll share more detail on the opportunities we have across wealth banking trading and alternative investments.

We have made significant investments in our wealth offer over the last several years, including rounding out our product offer with solutions like Roger Schroeder fixed income strategies and Schwab Personalised indexing.

Within our flagship offer Schwab wealth advisory we've reduced the practice size of our wealth advisors and hired to serve more clients with creative business development officer role focused solely on growing the business. The wealth advisors can focus on their clients with improved our tax trust and estate capabilities and we've built out specialty.

Teams catering to the unique needs of our higher net worth clients.

These investments are paying off Madison best in net flows have nearly quadrupled since 2022 and.

And we still have a meaningful opportunity ahead of us.

Approximately 5% of retail households at Schwab engaged with our managed investing solutions you had about 31% say, they're willing to pay for advice.

The reason we have confidence will continue to close this gap is quiet promoter scores for our managed investing solutions are among the highest at the firm.

At the same time return on client assets or Roca for managed investing solutions is two times that of retail, which diversifies our revenue streams as we delight clients, we expect <unk> to be a critical future driver of M. A F growth.

We've also made significant investments in our banking offer.

Just a few years ago. It took about a month for a client to access their line of credit today with the investments. We've made are pledged asset line client experience is best in class with average digital cycle times of about a day and nearly three quarters of originations completed in less than a day.

With these investments and client experience our balances have nearly doubled since 2023.

Given the opportunity we have ahead of US we are not taking our foot off the gas client penetration of al remains relatively low within retail only 9% of ultra high net worth clients have originated a pal.

23% have a pal.

We are continuing to invest in the experience with expanded pal collateral capabilities, including borrowing against Schwab managed investing solutions and more enhancements to follow in the year ahead.

Average securities North of 100 basis points. This is a win for clients and for our economics.

Yeah.

[laughter] Traub is the place for traders of all experience levels.

We're one firm by daily average trades with no close second had like about 10% of the total U S notional trading volume in 2025.

I just come to Schwab, because we provide the platform's capabilities education coaching and service they need to grow their well engage in markets take advantage of opportunities and hedge their portfolios.

In 2025 about half of new to firm retail clients initiated access to our industry, leading thinkorswim platform.

Trump clients hold about a 20% share of spot crypto exchange traded products and we remain on track for launch spot trading on bitcoin and ethereum in the first half of this year.

Traders are highly engaged bringing nine times more M&A than retail clients and two times the roka.

We'll continue to enhance our offer to meet their unique needs.

We are also deepening relationships with our higher net worth clients by continuing to strengthen our alternatives offer.

With our acquisition of <unk>, which we expect will close in the coming months.

I'm going to provide retail and <unk> clients.

Clients with alternatives from losing managers.

As you have exposure to alternatives funds and direct investing in private companies.

The opportunity is meaningful.

In a recent survey of clients with a million dollars or more in assets.

Our clients said, they expect to allocate approximately 5% of their portfolios to alternatives.

And today less than 40% of our Orion clients have an allocation to arch.

Building out our alternatives offer in helping more people participate directly in the growth of private companies provides opportunities for wealth creation and diversification that we believe will be attractive attractive to qualified individual investors and the advisors who serve them.

I spent quite a bit of time talking about our two growth levers are scaling efficiency initiatives make it easier for clients to do business with us while keeping our cost to serve low and enabling us to reinvest in capabilities for clients.

With more than 200, and plenty use cases, we're leveraging artificial intelligence to help our professionals to serve clients more efficiently.

We also continue to automate high volume client requests improving accuracy speed and our client experience.

We progressed efforts to improve status notifications to clients and remove more paper from our system, reducing not in good order errors and saving time for our clients and professionals.

Our scale combined with our expense discipline have allowed us to decrease our cost per account.

<unk> percent over the last five years, while driving our ability to remain the industry leader as measured by expense on client assets or E. OCA, which you can see is a clear competitive differentiator for us.

Richard Wurster: While keeping our cost-to-serve low and enabling us to reinvest in capabilities for clients. With more than 220 use cases, we are leveraging artificial intelligence to help our professionals serve clients more efficiently. We also continue to automate high-volume client requests, improving accuracy, speed, and our client experience. We've progressed efforts to improve status notifications to clients and remove more paper from our system, reducing not-in-good-order errors and saving time for our clients and professionals. Our scale, combined with our expense discipline, has allowed us to decrease our cost per account 20% over the last five years while driving our ability to remain the industry leader as measured by expense on client assets, or EOCA, which you can see is a clear competitive differentiator for us. On an adjusted basis, EOCA has decreased from about 15 basis points in 2020 to about 11 basis points today.

Rick Wurster: While keeping our cost-to-serve low and enabling us to reinvest in capabilities for clients. With more than 220 use cases, we are leveraging artificial intelligence to help our professionals serve clients more efficiently. We also continue to automate high-volume client requests, improving accuracy, speed, and our client experience. We've progressed efforts to improve status notifications to clients and remove more paper from our system, reducing not-in-good-order errors and saving time for our clients and professionals.

On an adjusted basis. He OCA has decreased from about 15 basis points in 2020 to about 11 basis points today.

Capabilities.

With more than 100 each.

Use cases, we're leveraging artificial intelligence.

The first lever that positions us for earnings growth through the cycle is our disciplined financial management and capital return.

Professional should've clients more efficient.

Okay.

Yeah.

I'll turn it to Mike now to speak more in detail on our approach.

High volume client requests improving accuracy speed and our client experience.

Thank you Rick and good morning, everyone.

We've got.

During today's call I will discuss how we converted our strong business momentum into record financial results for 2025.

That improved notification decline.

But from our side.

No.

And saving time for our clients and professionals.

I'll highlight some of the steps we took to further enhance our capabilities to meet our clients' evolving needs through a range of environments.

Our scale, combined with our expense discipline, has allowed us to decrease our cost per account 20% over the last five years while driving our ability to remain the industry leader as measured by expense on client assets, or EOCA, which you can see is a clear competitive differentiator for us. On an adjusted basis, EOCA has decreased from about 15 basis points in 2020 to about 11 basis points today.

Our scale combined with our expense discipline have allowed us to decrease our cost per account.

And finally outline our financial scenario for 2026.

<unk> percent over the last five years, while driving our ability to remain the industry leader as measured by expense on client assets or E. Okay.

Starting with the fourth quarter results.

Total revenue was up 19% year over year to a record $6 3 billion.

You can see is a clear competitive differentiator for us on an adjusted basis. He okay has decreased from about 15 basis points in 2020 to about 11 basis points today.

Net interest revenue increased 25% versus the prior year.

As we further reduce wholesale funding at the bank to the lower end of our <unk> range and clients increase their utilization.

The first lever that positions us for earnings growth through the cycle is.

Richard Wurster: The fourth lever that positions us for earnings growth through the cycle is our discipline, financial management, and capital return. I'll turn it to Mike now to speak more in detail on our approach.

The fourth lever that positions us for earnings growth through the cycle is our discipline, financial management, and capital return. I'll turn it to Mike now to speak more in detail on our approach.

Margin and bank loan offerings.

Financial and capital.

Robust equity markets, plus client demand for our wealth and asset management solutions.

Okay.

To speak more in detail on our approach.

<unk> asset management and administration fees grew by 15% versus 14 24.

Thank you Rick and good morning, everyone.

Michael Verdeschi: Thank you, Rick, and good morning, everyone. During today's call, I'll discuss how we converted our strong business momentum into record financial results for 2025. I'll highlight some of the steps we took to further enhance our capabilities to meet our clients' evolving needs through a range of environments, and finally, outline our financial scenario for 2026. Starting with the fourth quarter results, total revenue was up 19% year-over-year to a record $6.3 billion. Net interest revenue increased 25% versus the prior year. As we further reduced wholesale funding at the bank to the lower end of our BAU range, clients increased their utilization of our margin and bank loan offerings. Robust equity markets, plus client demand for our wealth and asset management solutions, helped asset management and administration fees grow by 15% versus Q4 2024.

Mike Verdeschi: Thank you, Rick, and good morning, everyone. During today's call, I'll discuss how we converted our strong business momentum into record financial results for 2025. I'll highlight some of the steps we took to further enhance our capabilities to meet our clients' evolving needs through a range of environments, and finally, outline our financial scenario for 2026. Starting with the fourth quarter results, total revenue was up 19% year-over-year to a record $6.3 billion.

During today's call I'll discuss how we converted our strong business momentum into record financial results for 2025.

Daily average trades of $8 3 million.

Second highest quarter on record drove a 22% year over year increase in trading revenue.

I'll highlight some of the steps we took to further enhance our capabilities to meet our clients' evolving needs through a range of environments.

Now looking at expenses adjusted expenses for the fourth quarter were up 6% versus four Q 'twenty four.

Finally outline our financial scenario for 2026.

Starting with the fourth quarter results.

Bringing full year adjusted expense growth to 6%.

Total revenue was up 19% year over year to a record $6 3 billion.

We supported record levels of investor engagement across our suite of trading well.

Mike Verdeschi: Net interest revenue increased 25% versus the prior year. As we further reduced wholesale funding at the bank to the lower end of our BAU range, clients increased their utilization of our margin and bank loan offerings. Robust equity markets, plus client demand for our wealth and asset management solutions, helped asset management and administration fees grow by 15% versus Q4 2024.

Net interest revenue increased 25% versus the prior year.

<unk> and asset management solutions.

While we had anticipated some moderation in client trading activity towards the back end of the year. We instead saw an acceleration in activity, which contributed to higher volume related costs inclusive of performance based compensation.

As we further reduced wholesale funding at the bank to the lower end of our B, a you range and clients increase their utilization.

Margin and bank loan offerings.

Robust equity markets, plus client demand for our wealth and asset management solutions.

This incremental expense was more than offset by the significant pick up in revenues and therefore supported stronger earnings.

The asset management and administration fees grew by 15% versus <unk> 24.

Yeah.

Daily average trades of $8 3 million.

Putting everything together, we recorded an adjusted pretax profit margin of just over 52% in the fourth quarter and grew adjusted earnings per share by 38% year over year to a record dollar 39.

Michael Verdeschi: Daily average trades of 8.3 million, the second-highest quarter on record, drove a 22% year-over-year increase in trading revenue. Now, looking at expenses, adjusted expenses for the fourth quarter were up 6% versus Q4 2024, bringing full-year adjusted expense growth to 6% as we supported record levels of investor engagement across our suite of trading, wealth, banking, and asset management solutions. While we had anticipated some moderation in client trading activity towards the back end of the year, we instead saw an acceleration in activity, which contributed to higher volume-related costs, inclusive of performance-based compensation. This incremental expense was more than offset by the significant pickup in revenues and therefore supported stronger earnings. Putting everything together, we recorded an adjusted pre-tax profit margin of just over 52% in the fourth quarter and grew adjusted earnings per share by 38% year-over-year to a record $1.39.

Daily average trades of 8.3 million, the second-highest quarter on record, drove a 22% year-over-year increase in trading revenue. Now, looking at expenses, adjusted expenses for the fourth quarter were up 6% versus Q4 2024, bringing full-year adjusted expense growth to 6% as we supported record levels of investor engagement across our suite of trading, wealth, banking, and asset management solutions. While we had anticipated some moderation in client trading activity towards the back end of the year, we instead saw an acceleration in activity, which contributed to higher volume-related costs, inclusive of performance-based compensation. This incremental expense was more than offset by the significant pickup in revenues and therefore supported stronger earnings. Putting everything together, we recorded an adjusted pre-tax profit margin of just over 52% in the fourth quarter and grew adjusted earnings per share by 38% year-over-year to a record $1.39.

Second highest quarter on record drove a 22% year over year increase in trading revenue.

Now looking at expenses adjusted expenses for the fourth quarter were up 6% versus four Q 'twenty four.

This strong finish to the year helped us record financial results for 2025 include.

Bringing full year adjusted expense growth to 6% as we supported record levels of investor engagement across our suite of trading wealth banking and asset management solutions.

Including total revenue of $23 9 billion up 22% versus 2024.

Adjusted pre tax profit margin expansion of nearly 800 basis points to 50% and.

While we had anticipated some moderation in client trading activity towards the back a year. We instead saw an acceleration in activity, which contributed to higher volume related costs inclusive of performance based compensation.

And adjusted earnings per share, reaching a record $4.87.

Presenting year over year earnings growth of 50% and putting earnings above the upper end of the updated scenario range. We shared during the fall business update in October.

This improvement was more than offset by the significant pick up in revenues and are supported stronger earnings.

Yeah.

Moving onto our balance sheet, we continue to support our clients as their needs evolve.

Putting everything together, we recorded an adjusted pretax profit margin of just over 52% in the quarter and grew adjusted earnings per share by 38% year over year to a record dollar 39.

Demand for our lending solutions increased during the quarter.

Led by Paul total bank loan balances grew to 58 billion, representing a year over year increase of 28%.

The strong finish to the year helped us record financial results for 2025.

Client margin loan balances exceeded 112 billion at quarter end up 34% versus year end 2024, reflecting equity market strength and investor engagement.

Michael Verdeschi: This strong finish to the year helped us print record financial results for 2025, including total revenue of $23.9 billion, up 22% versus 2024, adjusted pre-tax profit margin expansion of nearly 800 basis points to 50%, and adjusted earnings per share reaching a record $4.87, representing year-over-year earnings growth of 50%. And putting earnings above the upper end of the updated scenario range we shared during the fall business update in October. Moving on to our balance sheet, we continue to support our clients as their needs evolved. Demand for our lending solutions increased during the quarter. Led by PAL, total bank loan balances grew to $58 billion, representing a year-over-year increase of 28%. Client margin loan balances exceeded $112 billion at quarter end, up 34% versus year-end 2024, reflecting equity market strength and investor engagement.

This strong finish to the year helped us print record financial results for 2025, including total revenue of $23.9 billion, up 22% versus 2024, adjusted pre-tax profit margin expansion of nearly 800 basis points to 50%, and adjusted earnings per share reaching a record $4.87, representing year-over-year earnings growth of 50%. And putting earnings above the upper end of the updated scenario range we shared during the fall business update in October. Moving on to our balance sheet, we continue to support our clients as their needs evolved. Demand for our lending solutions increased during the quarter. Led by PAL, total bank loan balances grew to $58 billion, representing a year-over-year increase of 28%. Client margin loan balances exceeded $112 billion at quarter end, up 34% versus year-end 2024, reflecting equity market strength and investor engagement.

Including total revenue of $23 9 billion up 22% versus 2024.

On the cash front, we observed typical fourth quarter seasonality, including over 26 billion of cash inflows in December to bring the quarter end balance to $453 7 billion.

Adjusted pre tax profit margin expansion of nearly 800 basis points to 50% and.

And adjusted earnings per share, reaching a record $4 87.

Representing year over year earnings growth of 50% and putting earnings above the upper end of the updated scenario range. We shared during the fall business update each other.

Which represents a sequential quarter increase of $28 1 billion or approximately 7%.

It's building cash along with the use of investment portfolio proceeds and balances transferred from the BDA allowed us to further reduce high cost funding at the bank to 5 billion. The lower end of our $5 billion to $15 billion business as usual range.

Our balance sheet.

Continued to support our clients as their needs evolve.

Demand for our lending solutions increased during the quarter.

Led by Paul total bank loan balances grew to 58 billion, representing a year over year increase of 28%.

We'd expect normal cash behavior to continue in 2026 with cash levels generally growing in proportion with the franchise with his three suggesting we could pick up some modest amounts of incremental cash its interest rates moved lower from current levels.

Client margin loan balances exceeded 112 billion at quarter end up 34% versus year end 2024, reflecting equity market strength and investor engagement.

On the cash front, we observed typical fourth quarter seasonality, including over 26 billion of cash inflows in December to bring the quarter end balance to $453 7 billion.

We also expect typical intra year cash seasonality trends to persist in 2026.

Michael Verdeschi: On the cash front, we observed typical fourth-quarter seasonality, including over $26 billion of cash inflows in December to bring the quarter-end balance to $453.7 billion, which represents a sequential quarter increase of $28.1 billion, or approximately 7%. This building cash, along with the use of investment portfolio proceeds and balances transferred from the BDA, allowed us to further reduce high-cost funding at the bank to $5 billion, the lower end of our $5 to 15 billion business-as-usual range. We'd expect normal cash behavior to continue in 2026, with cash levels generally growing in proportion with the franchise, with history suggesting we could pick up some modest amounts of incremental cash if interest rates move lower from current levels.

On the cash front, we observed typical fourth-quarter seasonality, including over $26 billion of cash inflows in December to bring the quarter-end balance to $453.7 billion, which represents a sequential quarter increase of $28.1 billion, or approximately 7%. This building cash, along with the use of investment portfolio proceeds and balances transferred from the BDA, allowed us to further reduce high-cost funding at the bank to $5 billion, the lower end of our $5 to 15 billion business-as-usual range. We'd expect normal cash behavior to continue in 2026, with cash levels generally growing in proportion with the franchise, with history suggesting we could pick up some modest amounts of incremental cash if interest rates move lower from current levels.

Including clients redeploying the fourth quarter cash build early in the first quarter as well as seasonal tax payments during two killed.

Which represents a sequential quarter increase of $28 1 billion or approximately 7%.

Capital levels remained strong with our adjusted tier one leverage ratio, finishing the year just above the upper bound of our $6, 75% to 7% objective.

This building cash along with the use of investment portfolio proceeds and balances transferred from the BDA allowed us to further reduce high cost funding at the bank to 5 billion. The lower end of our $5 billion to $15 billion business as usual range.

At seven 1% our adjusted ratio also reflects the repurchase of common shares for $2 7 billion during the fourth quarter brings.

Bringing year to date total capital return across all forms to 11 8 billion.

We'd expect normal cash behavior to continue in 2026 with cash levels generally growing in proportion with the franchise with history suggests.

As we move into the new year, our capital management framework remains unchanged.

We'll continue to prioritize capital levels that support long term business growth and the evolving needs of our clients across a range of environments.

Modest amounts of incremental cash if interest rates move lower from current levels.

We also expect typical intra year cash seasonality trends to persist in 2026.

Michael Verdeschi: We also expect typical intra-year cash seasonality trends to persist in 2026, including clients redeploying the fourth-quarter cash build early in the first quarter, as well as seasonal tax payments during Q2. Capital levels remain strong with our adjusted Tier 1 leverage ratio, finishing the year just above the upper bound of our 6.75 to 7% objective. At 7.1%, our adjusted ratio also reflects the repurchase of common shares for $2.7 billion during the fourth quarter, bringing year-to-date total capital return across all forms to $11.8 billion. As we move into the new year, our capital management framework remains unchanged. We will continue to prioritize capital levels that support long-term business growth and the evolving needs of our clients across a range of environments. Beyond that, we would seek to opportunistically return excess capital to stockholders in multiple forms.

We also expect typical intra-year cash seasonality trends to persist in 2026, including clients redeploying the fourth-quarter cash build early in the first quarter, as well as seasonal tax payments during Q2. Capital levels remain strong with our adjusted Tier 1 leverage ratio, finishing the year just above the upper bound of our 6.75 to 7% objective. At 7.1%, our adjusted ratio also reflects the repurchase of common shares for $2.7 billion during the fourth quarter, bringing year-to-date total capital return across all forms to $11.8 billion. As we move into the new year, our capital management framework remains unchanged. We will continue to prioritize capital levels that support long-term business growth and the evolving needs of our clients across a range of environments. Beyond that, we would seek to opportunistically return excess capital to stockholders in multiple forms.

Beyond that we would seek to opportunistically return excess capital to stockholders in multiple forms.

Including clients redeploying the fourth quarter cash build early in the first quarter as well as seasonal tax payments during two two.

While the absolute level of capital return may vary over time, we believe catheter return will continue to be a meaningful part of our through the cycle financial growth story.

Capital levels remained strong with our adjusted tier one leverage ratio, finishing the year just above the upper bound of our 675% to 7% objective.

Transitioning to the setup for 2026.

As is the case in any year, our financial outcomes will be influenced by a range of factors.

At seven 1% our adjusted ratio also reflects the repurchase of common shares for $2 7 billion during the fourth quarter, bringing year to date total capital return across all forms to 11 8 billion.

Anyway select macroeconomic factors, our 2026 financial scenario assumes interest rates follow the current forward curve expectations, which called for 225 basis point cuts to the fed target rate, bringing the country down to 3.25% by the end of 2026.

As we move into the new year, our capital management framework remains unchanged.

We will continue to prioritize capital levels that support long term business growth and the evolving needs of our clients across a range of environments.

<unk>.

And six 5% equity market returns, which is consistent with the long term average on the business side, we expect to sustain our momentum from 2025 into the new year with strong new account formation and full year organic asset growth of around 5%.

Beyond that we would seek to opportunistically return excess capital to stockholders in multiple forms.

While the absolute level of capital return May vary over time, we believe capital return will continue to be a meaningful part of our through the cycle financial growth story.

Michael Verdeschi: While the absolute level of capital return may vary over time, we believe capital return will continue to be a meaningful part of our through-the-cycle financial growth story. Transitioning to the setup for 2026, as is the case in any year, our financial outcomes will be influenced by a range of factors. Beginning with select macroeconomic factors, our 2026 financial scenario assumes interest rates follow the current forward curve expectations, which call for 225 basis points cuts to the Fed's target rate, bringing the funds rate down to 3.25% by the end of 2026, and 6.5% equity market returns, which is consistent with the long-term average. On the business side, we expect to sustain our momentum from 2025 into the new year, with strong new account formation and full-year organic asset growth of around 5%.

While the absolute level of capital return may vary over time, we believe capital return will continue to be a meaningful part of our through-the-cycle financial growth story. Transitioning to the setup for 2026, as is the case in any year, our financial outcomes will be influenced by a range of factors. Beginning with select macroeconomic factors, our 2026 financial scenario assumes interest rates follow the current forward curve expectations, which call for 225 basis points cuts to the Fed's target rate, bringing the funds rate down to 3.25% by the end of 2026, and 6.5% equity market returns, which is consistent with the long-term average. On the business side, we expect to sustain our momentum from 2025 into the new year, with strong new account formation and full-year organic asset growth of around 5%.

At the same time, we will continue to deepen relationships with the 46 million total accounts.

Only 12 trillion of client assets already on schwab's platform today.

Transitioning to the set up for 2020 six.

As is the case in any year, our financial outcomes will be influenced by a range of factors.

Increased investor utilization of our expanding set of solutions across trading wealth banking and more helps us further diversify our revenue as well as support franchise growth over time as clients with deeper relationships tend to consolidate more of their assets at schwab.

Beginning with select macroeconomic factors, our 2026 financial scenario assumes interest rates follow the current forward curve expectations, which called for 225 basis point cuts to the fed target rate, bringing the funds rate down to 3.25% by the end of 2020.

Specifically on trading activity given the record volumes, we supported last year. Our 2026 scenario does allow for a slight pullback in volumes to roughly seven 4 million daily average trades for the full year.

<unk> and.

Level aligns more closely with volumes observed in early 2025.

Under this scenario, we would expect total revenue growth of nine 5% to 10, 5% in 2026.

At the same time, we will continue to deepen relationships with the 46 million total accounts.

Michael Verdeschi: At the same time, we will continue to deepen relationships with the 46 million total accounts and nearly 12 trillion of client assets already on Schwab's platform today. Increased investor utilization of our expanding set of solutions across trading, wealth, banking, and more helps to further diversify our revenue, as well as support franchise growth over time as clients with deeper relationships tend to consolidate more of their assets at Schwab. Specifically on trading activity, given the record volumes we supported last year, our 2026 scenario does allow for a slight pullback in volumes to roughly 7.4 million daily average trades for the full year. This level aligns more closely with volumes observed in early 2025. Under this scenario, we would expect total revenue growth of 9.5% to 10.5% in 2026.

At the same time, we will continue to deepen relationships with the 46 million total accounts and nearly 12 trillion of client assets already on Schwab's platform today. Increased investor utilization of our expanding set of solutions across trading, wealth, banking, and more helps to further diversify our revenue, as well as support franchise growth over time as clients with deeper relationships tend to consolidate more of their assets at Schwab. Specifically on trading activity, given the record volumes we supported last year, our 2026 scenario does allow for a slight pullback in volumes to roughly 7.4 million daily average trades for the full year. This level aligns more closely with volumes observed in early 2025. Under this scenario, we would expect total revenue growth of 9.5% to 10.5% in 2026.

Full year net interest margin expanded to a range of 2.85% to $2 95 per cent.

Nearly 12 trillion of client assets already on schwab's platform today.

The average for Q 'twenty 'twenty six NIM expected to finish about two 9%. Despite assuming the fed funds rate comes down by another 50 basis points.

Full year 2026 interest, earning assets are expected to expand modestly year over year. Following the pay down of supplemental borrowings at the bank.

Specifically on trading activity given the record volumes, we supported last year. Our 2026 scenario does allow for a slight pullback in volumes to roughly 7.4 million daily average trades for the full year.

From an expense planning perspective, we had initially anchored to mid single digit year over year growth.

And I, just heard a range of factors, including macroeconomic backdrop.

Engagement levels, our strategic initiatives and of course, the revenue outlook. Therefore within this financial scenario for 2026th we anticipate annual expense growth to range from five 5% to six 5%.

Level aligns more closely with volumes observed in early 2025.

Under this scenario, we would expect total revenue growth of nine 5% to 10, 5% in 2026.

Our spending plan aligned to our key strategic initiatives and aim to help us continue delivering financial growth through the cycle by driving new client growth and deepening relationships with individual investors and ria's by further expanding our leading suite of offerings to serve their evolving needs.

Full year net interest margin expanded to a range of 2.85% to $2, 95% with average for Q 'twenty 'twenty six NIM expected to finish about 2.9%. Despite assuming the fed funds rate comes down by another 50 basis points.

Michael Verdeschi: Full-year net interest margin expands to a range of 2.85% to 2.95%, with average Q4 2026 NIM expected to finish above 2.9%, despite assuming the Fed Funds Rate comes down by another 50 basis points. Full-year 2026 interest-earning assets are expected to expand modestly year-over-year following the paydown of supplemental borrowings at the bank. From an expense planning perspective, we initially anchored to mid-single-digit year-over-year growth, and adjusted for a range of factors, including the macroeconomic backdrop, client engagement levels, our strategic initiatives, and of course, the revenue outlook. Therefore, within this financial scenario for 2026, we anticipate annual expense growth to range from 5.5% to 6.5%.

Full-year net interest margin expands to a range of 2.85% to 2.95%, with average Q4 2026 NIM expected to finish above 2.9%, despite assuming the Fed Funds Rate comes down by another 50 basis points. Full-year 2026 interest-earning assets are expected to expand modestly year-over-year following the paydown of supplemental borrowings at the bank. From an expense planning perspective, we initially anchored to mid-single-digit year-over-year growth, and adjusted for a range of factors, including the macroeconomic backdrop, client engagement levels, our strategic initiatives, and of course, the revenue outlook. Therefore, within this financial scenario for 2026, we anticipate annual expense growth to range from 5.5% to 6.5%.

Full year 2026 interest, earning assets are expected to expand modestly year over year. Following the pay down of supplemental borrowings at the bank.

Bolstering our best in class service experience, while also harnessing incremental scale and efficiency.

Select examples for 2020 six include investing in branches.

From an expense planning perspective, we had initially anchored to mid single digit year over year growth and adjust for a range of factors, including macroeconomic backdrop client engagement levels, our strategic initiatives and of course, the revenue outlook. Therefore within this financial scenario for 'twenty two.

Adding more financial consultants and wealth advisors.

Advertising and marketing expanding our digital asset offering to include spot crypto trading and incorporating more AI across the firm, particularly within our service and technology organizations, so putting all the pieces together.

Six we anticipate annual expense growth to range from five 5% to six 5%.

Combination of strong topline growth and balanced expense management implies meaningful operating leverage within this scenario with further pretax margin expansion into the low Fifty's. If you follow the math down to the bottom line, it's full year scenario implies potential adjusted earnings of around.

Our spending plan aligned to our key strategic initiatives and aims to help us continue delivering financial growth through the cycle by driving new client growth and deepening relationships with individual investors and our eye as by further expanding our leading suite of offerings to serve their evolving needs.

Michael Verdeschi: Our spending plan aligns to our key strategic initiatives and aims to help us continue delivering financial growth through the cycle by driving new client growth and deepening relationships with individual investors, and RIAs by further expanding our leading suite of offerings to serve their evolving needs, bolstering our best-in-class service experience while also harnessing incremental scale and efficiency. Selected examples for 2026 include investing in branches, adding more financial consultants and wealth advisors, advertising and marketing, expanding our digital asset offering to include spot crypto trading, and incorporating more AI across the firm, particularly within our service and technology organizations. So putting all the pieces together, the combination of strong top-line growth and balanced expense management implies meaningful operating leverage within this scenario, with further pre-tax margin expansion into the low 50s.

Our spending plan aligns to our key strategic initiatives and aims to help us continue delivering financial growth through the cycle by driving new client growth and deepening relationships with individual investors, and RIAs by further expanding our leading suite of offerings to serve their evolving needs, bolstering our best-in-class service experience while also harnessing incremental scale and efficiency. Selected examples for 2026 include investing in branches, adding more financial consultants and wealth advisors, advertising and marketing, expanding our digital asset offering to include spot crypto trading, and incorporating more AI across the firm, particularly within our service and technology organizations. So putting all the pieces together, the combination of strong top-line growth and balanced expense management implies meaningful operating leverage within this scenario, with further pre-tax margin expansion into the low 50s.

The $5 70 to $5 80 range, which would represent year over year earnings growth in the upper teens.

Bolstering our best in class service experience, while also harnessing incremental scale and efficiency.

As always well rates client activity and other variables may differ from what we have outlined within today's scenario. We are confident in our ability to drive strong financial outcomes across a range of environments.

Selected examples for 'twenty 'twenty six include investing in branches and.

Adding more financial consultants and wealth advisors.

Similar to last year, we have provided a set of static revenue sensitivities based on year end 2025 levels.

These high level sensitivities are intended to serve as a complement to the scenario. We just walked through helping you adjust estimates and shape your own perspective around 2026.

Combination of strong topline growth and balanced expense management implies meaningful operating leverage within this scenario with further pretax margin expansion into the low Fifty's. If you follow the math down to the bottom line. This full year scenario implies potential adjusted earnings of around.

While most of you are quite familiar with this page given the focus on the potential path of interest rates. It may be worth spending a moment on the net interest revenue sensitivity to.

Michael Verdeschi: If you follow the math down to the bottom line, this full-year scenario implies potential adjusted earnings of around the $5.70 to $5.80 range, which would represent year-over-year earnings growth in the upper teens. As always, while rates, client activity, and other variables may differ from what we have outlined within today's scenario, we are confident in our ability to drive strong financial outcomes across a range of environments. Similar to last year, we have provided a set of static revenue sensitivities based on year-end 2025 levels. These high-level sensitivities are intended to serve as a complement to the scenario we just walked through, helping you adjust estimates and shape your own perspective around 2026. While most of you are quite familiar with this page, given the focus on the potential path of interest rates, it may be worth spending a moment on the net interest revenue sensitivity.

If you follow the math down to the bottom line, this full-year scenario implies potential adjusted earnings of around the $5.70 to $5.80 range, which would represent year-over-year earnings growth in the upper teens. As always, while rates, client activity, and other variables may differ from what we have outlined within today's scenario, we are confident in our ability to drive strong financial outcomes across a range of environments. Similar to last year, we have provided a set of static revenue sensitivities based on year-end 2025 levels. These high-level sensitivities are intended to serve as a complement to the scenario we just walked through, helping you adjust estimates and shape your own perspective around 2026. While most of you are quite familiar with this page, given the focus on the potential path of interest rates, it may be worth spending a moment on the net interest revenue sensitivity.

Around 2025, we took a number of steps to further enhance our flexibility and financial management capabilities, including standing up a hedge program that helped to reduce our interest rate sensitivity by about one third.

The $5 70 to $5 80 range, which would represent year over year earnings growth in the upper teens.

We have continued to build out these capabilities in the early days of 2026 by putting in place a modest amount of income hedges against our margin loan book.

Therefore, if you were to assume the fed funds rate moves much lower in the current market expectations, perhaps approaching the 2% level, we would still anticipate delivering year over year earnings growth of at least 10%, probably a bit better holding all else equal.

Similar to last year, we have provided a set of static revenue sensitivities based on year end 2025 levels.

These high level sensitivities are intended to serve as a complement to the scenario, we just walked through.

And you are just estimates and shape your own perspective around 2026.

Of course, there would be other moving pieces to consider in that environment.

While most of you are quite familiar with this page given the focus on the potential path of interest rates. It may be worth spending a moment on the net interest revenue sensitivity throughout 2025, we took a number of steps to further enhance our flexibility and financial management capabilities, including standing up a hedge.

And although interest rates are important macro factor.

Combination of our enhanced balance sheet management and inherent offsets within our model keeps us well positioned for financial growth across a range of environments.

Michael Verdeschi: Throughout 2025, we took a number of steps to further enhance our flexibility and financial management capabilities, including standing up a hedge program that helped reduce our interest rate sensitivity by about 1/3. We have continued to build out these capabilities in the early days of 2026 by putting in place a modest amount of income hedges against our margin loan book. Therefore, if you were to assume the Fed Funds Rate moves much lower than the current market expectations, perhaps approaching the 2% level, we would still anticipate delivering year-over-year earnings growth of at least 10%, probably a bit better, holding all else equal. Of course, there would be other moving pieces to consider in that environment.

Throughout 2025, we took a number of steps to further enhance our flexibility and financial management capabilities, including standing up a hedge program that helped reduce our interest rate sensitivity by about 1/3. We have continued to build out these capabilities in the early days of 2026 by putting in place a modest amount of income hedges against our margin loan book. Therefore, if you were to assume the Fed Funds Rate moves much lower than the current market expectations, perhaps approaching the 2% level, we would still anticipate delivering year-over-year earnings growth of at least 10%, probably a bit better, holding all else equal. Of course, there would be other moving pieces to consider in that environment.

So in closing we are entering 2026 with strong momentum following a record 2025, where we delivered growth in all fronts, yet as Rick outlined earlier on the call we have tremendous opportunities still in front of us across nearly all areas of our business.

That helped to reduce our interest rate sensitivity by about one third.

We have continued to build out these capabilities every.

Early days of 2026 by putting in place a modest amount of income hedges against our margin loan book.

Robs combination of an increasingly diverse revenue next industry, leading scale enhance financial capabilities to manage across a range of environments as well as capital return position us to deliver meaningful earnings growth through the cycle with that Jeff, let's turn to Q&A.

Operator can you please remind everyone how they can ask a question today.

Of course, there would be other moving pieces to consider in that environment.

Thank you we will now begin our question and answer session. If he would like to ask a question. Please press star One. Please press star two if you would like to withdraw your question again that is star one to ask a question.

And although interest rates are important macro factor.

Michael Verdeschi: And although interest rates are an important macro factor, the combination of our enhanced balance sheet management and inherent offsets within our model keeps us well-positioned for financial growth across a range of environments. So in closing, we are entering 2026 with strong momentum, following a record 2025 where we delivered growth on all fronts. Yet, as Rick outlined earlier on the call, we have tremendous opportunities still in front of us across nearly all areas of our business. Schwab's combination of an increasingly diverse revenue mix, industry-leading scale, enhanced financial capabilities to manage across a range of environments, as well as capital return, positions us to deliver meaningful earnings growth through the cycle. And with that, Jeff, let's turn to Q&A. Operator, can you please remind everyone how they can ask a question today?

And although interest rates are an important macro factor, the combination of our enhanced balance sheet management and inherent offsets within our model keeps us well-positioned for financial growth across a range of environments. So in closing, we are entering 2026 with strong momentum, following a record 2025 where we delivered growth on all fronts. Yet, as Rick outlined earlier on the call, we have tremendous opportunities still in front of us across nearly all areas of our business. Schwab's combination of an increasingly diverse revenue mix, industry-leading scale, enhanced financial capabilities to manage across a range of environments, as well as capital return, positions us to deliver meaningful earnings growth through the cycle. And with that, Jeff, let's turn to Q&A. Operator, can you please remind everyone how they can ask a question today?

Combination of our enhanced balance sheet management and inherent offsets within our model keeps us well positioned for financial growth across a range of environments.

Our first question will come from Devin Ryan with citizens Bank. Your line is open.

So in closing we are entering 2026 with strong momentum following a record 2025, where we delivered growth on all fronts, yet as Rick outlined earlier on the call we have tremendous opportunities still in front of us across nearly all areas of our business.

Great. Good morning, everyone. Thanks for taking my question a question just on on the balance sheet, obviously, great work on the supplemental funding normalization, there with that largely complete and where capital ratios are right now how should we think about the next phase of asset Remixing as we looked at even beyond.

Bob's combination of an increasingly diverse revenue mix industry, leading scale enhance financial capabilities to manage across a range of environments as well as capital return position us to deliver meaningful earnings growth through the cycle with that Jeff, let's turn to Q&A.

I'm kind of pledge assay growth margin lending what should we be thinking about the securities portfolio growing again.

How do we think about the timing size, maybe duration of that as well. Thank you.

Hey, good morning. Thank you for the question. So yes, 2025, we certainly saw the aggressive pay down of supplemental borrowings and from here I think about the the story more on the asset side, we saw a terrific lending.

Operator can you please remind everyone how they can ask a question today.

Operator: Thank you. We will now begin our question-and-answer session. If you would like to ask a question, please press star one. Please press star two if you would like to withdraw your question. Again, that is star one to ask a question. Our first question will come from Devin Ryan with Citizens Bank. Your line is open.

In 2025, we're looking for a strong lending opportunities in 2026 as well and.

Our first question will come from Devin Ryan with citizens Bank. Your line is open.

And that would be with our bank product as well is in margin lending.

Devin Ryan: Great. Good morning, everyone. Thanks for taking the question. Question just on the balance sheet, obviously great work on the supplemental funding normalization there. With that largely complete and where capital ratios are right now, how should we think about the next phase of asset remixing? And as we look maybe even beyond kind of the pledged asset growth and margin lending, what should we be thinking about for the securities portfolio potentially growing again? How do we think about the timing, size, maybe duration of that as well? Thank you.

So I think the the growth of our lending will continue on in terms of securities now that we pay down those supplemental borrowings as those proteins become available. Yes, we do have the opportunity not just to again support the loan growth, but also reinvest in the securities portfolio a couple of <unk>.

And in terms of the pledge assay growth in bogs in London, what should we be thinking about for the securities portfolio, but that's a growing again.

What's on that as I've talked about the securities portfolio before.

How do we think about the timing size, maybe duration of bad as well. Thank you.

And it has two purposes, one it's a store of liquidity so with that in mind, yeah, we're going to maintain highly liquid product. The majority of that allocation would go to U S. Treasuries I would say short dated.

Michael Verdeschi: Hey, good morning. Thank you for the question. So yes, 2025, we certainly saw the aggressive paydown of supplemental borrowings. From here, I think about the story more on the asset side, meaning we saw a terrific lending momentum in 2025. We're looking for strong lending opportunities in 2026 as well. That would be with our bank product as well as in margin lending. So I think the growth of lending will continue. In terms of securities, now that we've paid down those supplemental borrowings, as those proceeds become available, yes, we do have the opportunity not just to, again, support the loan growth, but also reinvest in the securities portfolio. A couple of thoughts on that. As I've talked about the securities portfolio before, it serves as two purposes. One, it's a store of liquidity. So with that in mind, we're going to maintain highly liquid product.

Mike Verdeschi: Hey, good morning. Thank you for the question. So yes, 2025, we certainly saw the aggressive paydown of supplemental borrowings. From here, I think about the story more on the asset side, meaning we saw a terrific lending momentum in 2025. We're looking for strong lending opportunities in 2026 as well. That would be with our bank product as well as in margin lending. So I think the growth of lending will continue. In terms of securities, now that we've paid down those supplemental borrowings, as those proceeds become available, yes, we do have the opportunity not just to, again, support the loan growth, but also reinvest in the securities portfolio. A couple of thoughts on that. As I've talked about the securities portfolio before, it serves as two purposes. One, it's a store of liquidity. So with that in mind, we're going to maintain highly liquid product.

And then perhaps some allocation to high quality asset backed securities, but the main driver would be investing in U S. Treasuries and we talked about that duration range being the overall portfolio in that two to four year range. So the expectation would be that those treasury investments would be at.

Mentor them in 2025, we're looking for strong lending opportunities in 2026 as well and.

And that would be with our bank product as well is in margin lending.

On the shorter end of the curve. So we feel good about how the balance sheet has evolved we're in very good position to continue to support our client needs and certainly that activity will help us support strong earnings growth going forward.

So I think the the growth of our lending will continue in terms of securities now that we pay down no supplemental borrowing.

As those proceeds become available yes, we do have the opportunity not just to again support the loan growth, but also reinvest in the securities portfolio. A couple of thoughts on that as I've talked about the securities portfolio before surfaces has two purposes. One is a store of liquidity so with that in my.

Thank you. Our next question comes from Ken Worthington with Jpmorgan. Your line is open hi, good morning. Thanks for taking the question I Love in all an update on the alternatives platform. How is engagement in the new platform if possible I'd love to get a sense of assets.

And we're going to maintain highly liquid product. The majority of that allocation would go to U S. Treasuries I would say short dated and then perhaps some allocation to high quality asset backed securities, but the the main driver would be investing in U S treasuries and we talked about that duration.

Michael Verdeschi: The majority of that allocation would go to US Treasuries. I would say short-dated, and then perhaps some allocation to high-quality asset-backed securities. But the main driver would be investing in US Treasuries. And we talked about that duration range being the overall portfolio in that two to four-year range. So the expectation would be that those Treasury investments would be on the shorter end of the curve. So we feel good about how the balance sheet has evolved. We're in very good position to continue to support our client needs. And certainly, that activity will help us support strong earnings growth going forward.

The majority of that allocation would go to US Treasuries. I would say short-dated, and then perhaps some allocation to high-quality asset-backed securities. But the main driver would be investing in US Treasuries. And we talked about that duration range being the overall portfolio in that two to four-year range. So the expectation would be that those Treasury investments would be on the shorter end of the curve. So we feel good about how the balance sheet has evolved. We're in very good position to continue to support our client needs. And certainly, that activity will help us support strong earnings growth going forward.

And the initiatives very young but have there been any indications or do you anticipate that the <unk> program pricing is disruptive enough to attract either new customers or assets to schwab.

Hi, Ken Thanks for the thanks for the question, we are seeing the arts program grow and succeed in and most importantly delight our clients and in particular, our higher net worth clients and our goal has been to be the premier destination for all clients, including those higher network clients and over the past few years.

Range being the overall portfolio into that two to four year range. So the expectation would be that those treasury investments would be on the shorter end of the curve. So we feel good about how the balance sheet has evolved we're in very good position to continue to support.

We've rolled out new product capabilities for them, including alternatives, we rolled out tax loss harvesting capabilities for them to manage their capital gains we've rolled out a concentrated position management for them, we've done more to help them integrate their financial life, we've gone out and hired a bunch of.

Okay.

And and made that actually will help us to transform ourselves going forward.

Thank you. Our next question from Ken Worthington with Jpmorgan. Your line is open tie again, thanks for taking the question 11 at all an update on the alternative.

Operator: Thank you. Our next question comes from Ken Worthington with J.P. Morgan. Your line is open.

Ken Worthington: Hi, good morning. Thanks for taking the question. I'd love an update on the alternative platform. How is engagement in the new platform? If possible, I'd love to get a sense of options. Or do you anticipate that the ALT program pricing is disruptive enough to attract either new customers or assets to Schwab?

Our wealth consultants who are.

Experienced in helping the higher net worth clients.

Yeah.

If possible I'd love to get a set of churn or do you anticipate that the program pricing is.

Obligate their financial life all of those things are leading to a more robust ultra high net worth offer than we've ever had in alternatives has proven to be an important part of that.

To attract either new customers or assets to schwab.

We see a real backlog for wanting to speak with our alternative investment consultants, meaning there's been more interest than we would've expected, a where we're dealing with that but but that's that's a good situation of being there is theres a lot of a lot of interest and we are seeing clients engaged in it we're not putting out any asset numbers, yet I think it's it's it's so.

I can't actually thanks for the question, we are seeing the auto program grow and succeed in and most importantly delight our clients and in particular, our higher net worth clients and our goal has been to be the premier destination for all clients, including those higher network clients and over the past few years.

Richard Wurster: Hi, Ken. Thanks for the question. We are seeing the ALT program grow and succeed, and most importantly, delight our clients, and in particular, our higher-net-worth clients. Our goal has been to be the premier destination for all clients, including those higher-net-worth clients. Over the past few years, we've rolled out new product capabilities for them, including alternatives. We rolled out tax-loss harvesting capabilities for them to manage their capital gains. We've rolled out concentrated position management for them. We've done more to help them integrate their financial life. We've gone out and hired a bunch of wealth consultants who are experienced in helping the higher-net-worth clients navigate their financial life. All of those things are leading to a more robust ultra-high-net-worth offer than we've ever had. Alternatives have proven to be an important part of that.

Rick Wurster: Hi, Ken. Thanks for the question. We are seeing the ALT program grow and succeed, and most importantly, delight our clients, and in particular, our higher-net-worth clients. Our goal has been to be the premier destination for all clients, including those higher-net-worth clients. Over the past few years, we've rolled out new product capabilities for them, including alternatives. We rolled out tax-loss harvesting capabilities for them to manage their capital gains. We've rolled out concentrated position management for them. We've done more to help them integrate their financial life. We've gone out and hired a bunch of wealth consultants who are experienced in helping the higher-net-worth clients navigate their financial life. All of those things are leading to a more robust ultra-high-net-worth offer than we've ever had. Alternatives have proven to be an important part of that.

We rolled out new product capabilities.

Early in the process of rolling all of this out.

Putting alternatives we rolled out.

But I think ultimately this will be the place for the ultra high net worth investor and the place for them to get alternatives, because we will have a great platform of leading alternatives managers, we will supplement that with a fund based structure to access.

Okay.

Capital gains.

We've rolled out a concentrated position management for them.

One of them and a great there.

We've gone out and hired a bunch of.

Our wealth consultants, who are experienced in helping them.

Alternatives in a in a passive way or privates in a passive way and then for those clients who want to buy an individual private company through our forge acquisition, we'll be able to be able to allow them to do that and.

Artwork clients navigate their financial life all of those things are leading to a more robust ultra high net worth offer than we've ever had in alternatives has proven to be an important part of that we see a real backlog for wanting to speak of our alternative investment consultants, meaning there's been more interest than we would provide.

We want to be the industry the place in the industry, where the private companies come because they know they can get liquidity and we want to be the place where clients come and I do think over time.

Richard Wurster: We see a real backlog for wanting to speak with our alternative investment consultants, meaning there's been more interest than we would have expected. We're dealing with that. But that's a good situation to be in. There's a lot of interest, and we are seeing clients engage in it. We're not putting out any asset numbers yet. I think it's so early in the process of rolling all this out. But I think ultimately, this will be the place for the ultra-high-net-worth investor and the place for them to get alternatives because we will have a great platform of leading alternatives managers. We will supplement that with a fund-based structure to access alternatives in a passive way or privates in a passive way. And then for those clients who want to buy an individual private company through our Forge acquisition, we'll be able to allow them to do that.

We see a real backlog for wanting to speak with our alternative investment consultants, meaning there's been more interest than we would have expected. We're dealing with that. But that's a good situation to be in. There's a lot of interest, and we are seeing clients engage in it. We're not putting out any asset numbers yet. I think it's so early in the process of rolling all this out. But I think ultimately, this will be the place for the ultra-high-net-worth investor and the place for them to get alternatives because we will have a great platform of leading alternatives managers. We will supplement that with a fund-based structure to access alternatives in a passive way or privates in a passive way. And then for those clients who want to buy an individual private company through our Forge acquisition, we'll be able to allow them to do that.

Okay.

That will help our net new asset growth because I do think it will attract clients to schwab and we'll get more of them to.

But that's that's a good situation of being there's there's a lot of a lot of interest and we are seeing clients engaged in it we're not putting out any asset numbers yet I think it's it's it's so early in the process of rolling all of this out.

Bring all of their assets to us, whereas in the past some of our higher net worth clients might go elsewhere for their alternatives now they're finding it at Schwab. So I think it will help our net new asset formation. So thanks for the question Ken.

Thank you. Our next question comes from Brennan Hawken with BMO capital Michael Your line is open.

Hi, Good morning, Thanks for taking my question I'd like to maybe hear a little bit of color and context around the growth recently and could you maybe speak to the differences that you've seen in trends between advisory services and Investor services in recent quarters and your expectation and then.

Alternatives in a in a passive way or or privates in a passive way and then for those clients who want to buy an individual private company through our forge acquisition, we'll be able to we'll be able to allow them to do that and.

And maybe how these recent investments in the high net worth offering my might have an impact on the investor services side.

Richard Wurster: And we want to be the place in the industry where the private companies come because they know they can get liquidity. And we want to be the place where clients come. And I do think over time, that will help our net new asset growth because I do think we'll attract clients to Schwab, and we'll get more of them to bring all of their assets to us. Whereas in the past, some of our higher-net-worth clients might go elsewhere for their alternatives. Now they're finding it at Schwab. So I think it will help our net new asset formation. So thanks for the question, Ken.

And we want to be the place in the industry where the private companies come because they know they can get liquidity. And we want to be the place where clients come. And I do think over time, that will help our net new asset growth because I do think we'll attract clients to Schwab, and we'll get more of them to bring all of their assets to us. Whereas in the past, some of our higher-net-worth clients might go elsewhere for their alternatives. Now they're finding it at Schwab. So I think it will help our net new asset formation. So thanks for the question, Ken.

That will help our net new asset growth, we do think it will.

Yeah.

Thanks for the question, we have a we've seen our growth accelerated across the board are net new outset. So 519 billion last year was up 42% increase year over year. So where are we where we were pleased with that rate of growth. If you break it down we grew about 33 ish percent in retail and in <unk>.

Cracked clients to Schwab and we'll get more of them do.

Bring all of their assets to us, whereas in the past.

That's about $4 on a 12, so I think it will help our net new asset formation. So thanks for the question Ken.

Thank you. Our next question comes from Brennan Hawken with BMO capital markets. Your line is open.

More than the 42% and our advisor business. So both are growing really strongly.

Operator: Thank you. Our next question comes from Brennan Hawken with BMO Capital Markets. Your line is open.

Good morning, Thanks for taking my question.

What's so exciting to me about our retail growth is that we are winning with every demographic in every type of investor for winning the young investor Our average age of our client has fallen by about 10 years in the last decade and is now in our in the forties, a third of our new to firm clients last year, where Genesis.

I'd like to maybe hear a little bit of color and context around the growth recently and could you maybe speak to the differences that you've seen in trends between advisory services and Investor services in recent quarters and your expectation and then and then maybe how these recent investments in the high net worth offering.

[Analyst]: Hi, good morning. Thanks for taking my question. I'd like to maybe hear a little bit of color and context around the growth recently. And could you maybe speak to the differences that you've seen in trends between advisor services and investor services in recent quarters and your expectation? And then maybe how these recent investments in the high-net-worth offering might have an impact on the investor services side. Thanks.

Brennan Hawken: Hi, good morning. Thanks for taking my question. I'd like to maybe hear a little bit of color and context around the growth recently. And could you maybe speak to the differences that you've seen in trends between advisor services and investor services in recent quarters and your expectation? And then maybe how these recent investments in the high-net-worth offering might have an impact on the investor services side. Thanks.

Investors and we're going in attracting them in the places they are where we're all over tick tock and Instagram and where the most followed financial services company on Youtube, So where where are were gone to where they are and we're sending a message about the power of compounding the power saving and investing and how we can help you a part of.

My my.

Hi.

Services side.

Okay.

Thanks for the question, we have a we've seen our growth accelerated across the board our net new asset. So 519 billion last year was a 42% increase year over year. So where are we where we were pleased with that rate of growth.

Richard Wurster: Thanks for the question. We've seen our growth accelerate across the board. Our net new assets of $519 billion last year was a 42% increase year over year. So we were pleased with that rate of growth. If you break it down, we grew about 33-ish% in retail and a little more than the 42% in our advisor business. So both are growing really strongly. What's so exciting to me about our retail growth is that we are winning with every demographic and every type of investor. We're winning the young investor. Our average age of our client has fallen by about 10 years in the last decade and is now in the 40s. A third of our new-to-firm clients last year were Gen Z investors. And we're going and attracting them in the places they are.

Rick Wurster: Thanks for the question. We've seen our growth accelerate across the board. Our net new assets of $519 billion last year was a 42% increase year over year. So we were pleased with that rate of growth. If you break it down, we grew about 33-ish% in retail and a little more than the 42% in our advisor business. So both are growing really strongly. What's so exciting to me about our retail growth is that we are winning with every demographic and every type of investor. We're winning the young investor. Our average age of our client has fallen by about 10 years in the last decade and is now in the 40s. A third of our new-to-firm clients last year were Gen Z investors. And we're going and attracting them in the places they are.

Enriching their financial life, and that's winning we're winning with active traders were winning with buy and hold investors and we're winning with the high net worth and retail and as I look forward I think in the coming years Theres a number of things that will that will power an acceleration of our investor services.

If you break it down we grew about 33 ish percent in retail and in a little more than the 42% and our advisor business. So both are growing really strongly about what.

So exciting to me about our retail growth is that we are winning with every demographic in every type of investor for winning the young investor Our average age of our client has fallen by about 10 years in the last decade and is now in our in the forties, a third of our new to firm clients last year, where gen Z's.

Number one I think when we generally launch crypto and have the ability for our clients to transfer assets I do expect us to see our long standing clients had a couple of other places.

Bring that back.

That'll be a source of growth I think that.

Investors and we're going in attracting them in the places they are where we're all over.

Gotta get bigger and workplace in and that would be a source of growth and then.

And Instagram and where the most followed financial services company on Youtube so well.

We continue to add branches and I've seen says that we see M&A will accelerate when theres a dedicated relationship when theres a financial quarterback on the client's life.

Richard Wurster: We're all over TikTok and Instagram, and we're the most followed financial services company on YouTube. So we're going to where they are, and we're sending a message about the power of compounding, the power of saving and investing, and how we can help be a part of enriching their financial life. And that's winning. We're winning with active traders. We're winning with buy-and-hold investors, and we're winning with the high-net-worth in retail. And as I look forward, I think in the coming years, there's a number of things that will power an acceleration of our investor services and in a number one, I think when we fully launch crypto and have the ability for clients to transfer assets, I do expect us to see our long-standing clients that have held crypto at other places bring that back. That'll be a source of growth.

We're all over TikTok and Instagram, and we're the most followed financial services company on YouTube. So we're going to where they are, and we're sending a message about the power of compounding, the power of saving and investing, and how we can help be a part of enriching their financial life. And that's winning. We're winning with active traders. We're winning with buy-and-hold investors, and we're winning with the high-net-worth in retail. And as I look forward, I think in the coming years, there's a number of things that will power an acceleration of our investor services and in a number one, I think when we fully launch crypto and have the ability for clients to transfer assets, I do expect us to see our long-standing clients that have held crypto at other places bring that back. That'll be a source of growth.

Where they are and we're sending a message about the power of compounding the power saving and investing and how we can help you a part of of enriching their financial life and that's winning we're winning with active traders were winning with buy and hold investors and we're winning with the high net worth and retail and as I look forward I think in the coming years.

They can they can help steer them to help them achieve their financial dreams and so we are investing in those relationships. We did share last year will continue in the coming years, and I think that would accelerate our retail growth. So in the coming years I don't expect to see retail and our in restaurant services M&A accelerate.

There are things that will that will power an acceleration of our investor services.

On the advisory services side I know, we're winning across every dimension that I think it's hard for other firms to compete with our size scale and the breadth and strength of our capabilities, whether it's the custody offering which we continue to make better we continue to make it easier and more straightforward for advisors, whether it's the.

And a number around it I think when we generally launch crypto and have the ability for our clients to transfer assets I do expect us to see our long standing clients.

Places.

Right.

That's sort of the growth.

Gotta get bigger in workplace and in Alberta.

You know the consulting and advice and expertise that we bring.

Most of our growth and then.

Richard Wurster: I think that we've got to get bigger in the workplace, and that will be a source of growth. Then our advantages in FCs is that we see NNA really accelerate when there's a dedicated relationship, when there's a financial quarterback in the client's life that can help steer them to help them achieve their financial dreams. So we're investing in those relationships. We did so last year. We'll continue to do in the coming years. I think that will really accelerate our retail growth. In the coming years, I do expect to see retail and our investor services NNA accelerate. On the advisor services side, we're winning across every dimension. I think it's hard for other firms to compete with our size, scale, and the breadth and strength of our capabilities, whether it's the custody offering, which we continue to make better.

I think that we've got to get bigger in the workplace, and that will be a source of growth. Then our advantages in FCs is that we see NNA really accelerate when there's a dedicated relationship, when there's a financial quarterback in the client's life that can help steer them to help them achieve their financial dreams. So we're investing in those relationships. We did so last year. We'll continue to do in the coming years. I think that will really accelerate our retail growth. In the coming years, I do expect to see retail and our investor services NNA accelerate. On the advisor services side, we're winning across every dimension. I think it's hard for other firms to compete with our size, scale, and the breadth and strength of our capabilities, whether it's the custody offering, which we continue to make better.

Our branch.

Bring to help them in their drive to independents.

And then.

When there was a definitely a relationship there's a financial quarterbacking the client's life.

I think the.

Product capabilities and platform when you when you add it all up it's really hard for anyone to match, what we can do in that customer space, which is why we continue to see such strong organic growth levels.

They can help steer them to help them achieve their financial dreams, and so we're investing in those relationships. We did show last year will continue in the coming years, and I think that would accelerate our retail growth. So in the coming years I don't expect to see retail and our in restaurant services M&A accelerate.

That said six 5% organically last year or roughly around that level. So we were winning on all fronts and advisor services I couldn't be more pleased about the internet growth in 2020 five and yet at the same time as I take a three to five year.

Mhm services side I know, we're running across every dimension that I think it's hard for other firms to compete with our size scale and the breadth and strength of our capabilities, whether it's the car city offering, which we continue to make better we can do and are making it easier and more straightforward for advisors, whether it's the.

Look I think there's a lot of things to be excited about in terms of accelerants to our growth over the longer term.

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Oh. Thanks. Good morning, just wanted to ask you about your lending offerings, clearly a focus and an area of growth what do you see as a reasonable level of penetration of your existing clients. You know in the next couple of years for these offerings.

Yeah.

Shopping and advice and expertise that we bring.

Richard Wurster: We continue to make it easier and more straightforward for advisors, whether it's the consulting, advice, and expertise that we bring, the support we bring to help them in their drive to independence. I think the product capabilities and platform, when you add it all up, it's really hard for anyone to match what we can do in that custody space, which is why we continue to see such strong organic growth levels. I think we grew that business at 6.5% organically last year or roughly around that level. So we're winning on all fronts in advisor services. I couldn't be more pleased about the NNA growth in 2025. And yet, at the same time, as I take a three- or five-year look, I think there's a lot of things to be excited about in terms of accelerants to our growth over the longer term.

We continue to make it easier and more straightforward for advisors, whether it's the consulting, advice, and expertise that we bring, the support we bring to help them in their drive to independence. I think the product capabilities and platform, when you add it all up, it's really hard for anyone to match what we can do in that custody space, which is why we continue to see such strong organic growth levels. I think we grew that business at 6.5% organically last year or roughly around that level. So we're winning on all fronts in advisor services. I couldn't be more pleased about the NNA growth in 2025. And yet, at the same time, as I take a three- or five-year look, I think there's a lot of things to be excited about in terms of accelerants to our growth over the longer term.

Our support and you bring to help them in their drive to independents I think the.

I think there's still tremendous upside on our lending business with existing products and one we may consider in the future as I shared earlier, our our higher net worth clients, there's only 9% penetration of other pledged asset line capability and I and I think that number could be far higher is it.

The product capabilities and platform when you when you add it all up it's really hard for anyone to match, where we can do on that customer space, which is why we continue to see such strong organic growth levels.

That said six 5% organically last year or roughly around that level. So we were winning on all fronts and advisor services I couldn't be more pleased about the internet growth from 'twenty to 'twenty five and yet at the same time as I take a three to five year look I think there's a lot of things to be excited about in terms of accelerants to our drug.

A convenient.

Easy way to borrow and and if clients have assets at Schwab.

The rates they can access.

I think.

Among the best in the industry and yet for us are still an attractive spread the security. So it's a win on all fronts.

But over the longer term.

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

On the advisory front when I when I go around and speed as you picked a hundreds of advisers every single year to hear what are we doing well what can we improve.

Thanks. Good morning, just wanted to ask about your lending offerings clearly a focus area of growth what do you see as a reasonable level of penetration of your existing clients. You know in the next couple of years for these offerings.

Operator: Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

The number one thing I often hear about us is doing more for them and banking and lending and I think the French asset line has been a wonderful start you see the penetration rate up to 23% I think that number will go higher and at the same time I think in the years to come we will find other ways to bank and lend to the clients of our is you put yourself in a position of on raw.

[Analyst]: Thanks. Good morning. I just wanted to ask about your lending offerings, clearly a focus in an area of growth. What do you see as a reasonable level of penetration of your existing clients in the next couple of years for these offerings?

Brennan Hawken: Thanks. Good morning. I just wanted to ask about your lending offerings, clearly a focus in an area of growth. What do you see as a reasonable level of penetration of your existing clients in the next couple of years for these offerings?

I think there's still tremendous upside on our on our lending business with existing products and one we may consider in the future.

Richard Wurster: I think there's still tremendous upside on our lending business, both with existing products and one we may consider in the future. As I shared earlier, our higher-net-worth clients, there's only 9% penetration of our pledged asset line capability. I think that number could be far higher as it's such a convenient, easy way to borrow. If clients have assets at Schwab, the rates they can access are, I think, best or among the best in the industry. And yet, for us, are still an attractive spread to security. So it's a win on all fronts. I think on the advisor front, when I go around and speak, and I speak to hundreds of advisors every single year to hear, what are we doing well? What can we improve? The number one thing I often hear about is doing more for them in banking and lending.

Rick Wurster: I think there's still tremendous upside on our lending business, both with existing products and one we may consider in the future. As I shared earlier, our higher-net-worth clients, there's only 9% penetration of our pledged asset line capability. I think that number could be far higher as it's such a convenient, easy way to borrow. If clients have assets at Schwab, the rates they can access are, I think, best or among the best in the industry. And yet, for us, are still an attractive spread to security. So it's a win on all fronts. I think on the advisor front, when I go around and speak, and I speak to hundreds of advisors every single year to hear, what are we doing well? What can we improve? The number one thing I often hear about is doing more for them in banking and lending.

We are our higher net worth clients, there's only 9% penetration of our pledge asset line capability and I and I think that number could be far higher is it such a convenient.

Their fiduciary, they're bringing that independence and to the client relationship and clients love that aspect of it.

And any way to borrow and and if clients have assets at Schwab.

They do.

From time to time compete against the wealth divisions of warehouses and that independence. It means a lot to clients and this is why there are why they have grown their share at the same time I think the warehouses are doing a better job of leveraging their banking capabilities and the aura is gonna be able to match that and what are the natural provider of that so while I think we are.

The rates they can access.

I think.

Among the best in the industry and yet for us are still an attractive spread the security. So it's a it's a win on all fronts.

On the advisory front when I when I go around and speed as you picked a hundreds of advisers every single year to hear what are we doing well what can we improve.

<unk> doing extremely well growing our lending today and you see it with the <unk>.

The number one thing that I, often hear about us is doing more for them and banking and lending and I think the pledged asset line has been a wonderful start and then you see the penetration rate up to 23% I think that number will go higher and at the same time I think in the years to come we will find other ways to bank and lend to the clients of our as you put yourself in a position of on raw.

85% growth in our Richard originations in the last year of our pledged asset line I think we're just getting started with our banking journey and I and I couldn't be more excited about it.

Richard Wurster: I think the Pledged Asset Line has been a wonderful start. You see the penetration rate up to 23%. I think that number will go higher. At the same time, I think in the years to come, we will find other ways to bank and lend to the clients of our RIAs. If you put yourself in a position of an RIA, they're a fiduciary. They're bringing that independence to the client relationship, and clients love that aspect of it. They do, from time to time, compete against the wealth divisions of wirehouses. That independence means a lot to clients and is why they have grown their share. At the same time, I think the wirehouses are doing a better job of leveraging their banking capabilities. The RIAs want to be able to match that. We're the natural provider of that.

I think the Pledged Asset Line has been a wonderful start. You see the penetration rate up to 23%. I think that number will go higher. At the same time, I think in the years to come, we will find other ways to bank and lend to the clients of our RIAs. If you put yourself in a position of an RIA, they're a fiduciary. They're bringing that independence to the client relationship, and clients love that aspect of it. They do, from time to time, compete against the wealth divisions of wirehouses. That independence means a lot to clients and is why they have grown their share. At the same time, I think the wirehouses are doing a better job of leveraging their banking capabilities. The RIAs want to be able to match that. We're the natural provider of that.

Thank you. Our next question comes from Alex Blaustein with Goldman Sachs. Your line is open.

Hey, good morning. Thank you for the question I was hoping you could touch on your capital return assumptions on into 2026, but also beyond when.

Their fiduciary, they're bringing that independence and to the client relationship and clients love that aspect of it.

When you're thinking about sort of a $5 70 to 518 earnings that you suggested in your areas of 26, maybe just level set us what do you assume for buybacks done and again, how you're thinking about longer term trajectory.

They do from time to time compete against the wealth divisions of warehouses and that independence. It means a lot to clients and this is why there are why they have grown their share at the same time I think the warehouses are doing a better job of leveraging their banking capabilities and they are I just want to be able to match that and what are the natural provider of that so well.

Hey, good morning. Thank you for the question so that.

What we provided in that scenario and the implied math does not include buybacks.

We are doing.

Doing extremely well growing our lending today and you see it with the with the 85% growth in our Richard originations in the last year of a pledged asset line I think we're just getting started with our banking journey and I and I couldn't be more excited about it.

But in terms of our thoughts on capital are the framework remains unchanged, where capital is going to be there to support the growth of the franchise the needs of their clients.

Richard Wurster: While I think we are doing extremely well growing our lending today, and you see it with the 85% growth in originations in the last year of a Pledged Asset Line, I think we're just getting started with our banking journey, and I couldn't be more excited about it.

While I think we are doing extremely well growing our lending today, and you see it with the 85% growth in originations in the last year of a Pledged Asset Line, I think we're just getting started with our banking journey, and I couldn't be more excited about it.

And beyond that the capital framework that we have in place and will continue as we think across the capital forms and in a way in which we can return. It forgive. It ends are we still thinking in terms of about 20% to 30% payout of GAAP earnings.

Thank you. Our next question comes from Alex Blaustein with Goldman Sachs. Your line is open.

Hi, Good morning. Thank you for the question I was hoping you could touch on your capital return assumptions.

Operator: Thank you. Our next question comes from Alex Blasting with Goldman Sachs. Your line is open.

We'll look at our preferred securities and and over the course of this year. We will look at a couple of securities in terms of perhaps might we wish to redeem those or leave those outstanding or perhaps a replace and so that will be a function of how we want the capital stack to look and the inclusion of.

Into 2026, but also beyond.

[Analyst]: Hi, good morning. Thank you for the question. I was hoping we could touch on your capital return assumptions into 2026, but also beyond. When you're thinking about sort of the 570 to 580 in earnings that you suggested in your scenarios of 2026, maybe just level set us where you assume for 5x then and again, how you're thinking about longer-term trajectory. Thanks.

Alex Blostein: Hi, good morning. Thank you for the question. I was hoping we could touch on your capital return assumptions into 2026, but also beyond. When you're thinking about sort of the 570 to 580 in earnings that you suggested in your scenarios of 2026, maybe just level set us where you assume for 5x then and again, how you're thinking about longer-term trajectory. Thanks.

When you're thinking about sort of a $5 70 to 518 earnings that you suggested in your scenarios of 26, maybe.

Maybe just level set us what you assume for buybacks done and again, how you're thinking about longer term trajectory. Thanks.

Hey, good morning. Thank you for the question so that.

What we provided in that scenario and the implied math does not include buybacks.

Those preferred securities.

And then lastly, with buybacks are again, well talk about are things like where we are in the ratio and of course you know.

Michael Verdeschi: Hey, good morning. Thank you for the question. So what we provided in that scenario and the implied math does not include buybacks. But in terms of our thoughts on capital, the framework remains unchanged, where capital is going to be there to support the growth of the franchise, the needs of the clients. And beyond that, the capital framework that we have in place and will continue as we think across the capital forms and the way in which we can return it for dividends. We still think in terms of a 20% to 30% payout of GAAP earnings. We'll look at our preferred securities. And over the course of this year, we'll look at a couple of securities in terms of perhaps might we wish to redeem those or leave those outstanding or perhaps replace.

Mike Verdeschi: Hey, good morning. Thank you for the question. So what we provided in that scenario and the implied math does not include buybacks. But in terms of our thoughts on capital, the framework remains unchanged, where capital is going to be there to support the growth of the franchise, the needs of the clients. And beyond that, the capital framework that we have in place and will continue as we think across the capital forms and the way in which we can return it for dividends. We still think in terms of a 20% to 30% payout of GAAP earnings. We'll look at our preferred securities. And over the course of this year, we'll look at a couple of securities in terms of perhaps might we wish to redeem those or leave those outstanding or perhaps replace.

But in terms of our thoughts on capital are the framework remains unchanged, where capital is going to be there to support the growth of the franchise the needs of their clients.

The growth of the overall franchise and making sure our capital.

We'll be there to support the growth of the franchise, but again with our strong earnings momentum that we've seen are we feel good about returning capital and multiple multiple forms over the course of 'twenty six.

And beyond that the capital framework that we have in place and will continue as we think across the capital forms and in a way in which we can return it for dividends.

Thank you. Our next question comes from Stephen Quebec with Wolfe Research. Your line is open.

We still think in terms of about 20% to 30% payout of GAAP earnings.

We'll look at our preferred securities and and over the course of this year. We will look at a couple of securities in terms of perhaps might we wish to redeem those or at least those outstanding or perhaps a replace and so that will be a function of how we want the capital stack to look and the inclusion of.

Hi, good morning, and thanks for taking my questions.

So I wanted to ask on some of the tax advantage long short strategy is it's an area, where you've seen tremendous growth there.

Alan says or NII accretive, but they do come in at lower spreads and just wanted to better understand how much further you can deepen penetration rates across the RIAA channel given such strong demand.

Those preferred securities.

And then lastly, with buybacks are again, well talk about are things like where we are in the ratio and of course, you know the growth of the overall franchise and making sure our capital will be there to support the growth of the franchise, but again with our strong earnings momentum that we've seen are we feel good about where.

Michael Verdeschi: And so that will be a function of how we want the capital stack to look and the inclusion of those preferred securities. And then lastly, with buybacks, again, we'll talk about things like where we are in the ratio and, of course, the growth of the overall franchise and making sure capital will be there to support the growth of the franchise. But again, with the strong earnings momentum that we've seen, we feel good about returning capital in multiple forms over the course of 2026.

And so that will be a function of how we want the capital stack to look and the inclusion of those preferred securities. And then lastly, with buybacks, again, we'll talk about things like where we are in the ratio and, of course, the growth of the overall franchise and making sure capital will be there to support the growth of the franchise. But again, with the strong earnings momentum that we've seen, we feel good about returning capital in multiple forms over the course of 2026.

And the types of returns you're generating on the balances relative to power and other potential balance sheet growth opportunities.

Steven Thank you for the question, Yes. This is a.

This is a product that our advisors are using this strategy with high net worth clients.

Turning capital in multiple multiple forms over the course of 'twenty six.

A way to drive enhanced returns through leverage and so it's a it's a pairing of AV along with with some short it's been a good tactical solution for those clients.

Thank you. Our next question comes from Stephen Quebec with Wolfe Research. Your line is open.

And you're right. This is something that yeah, theres, a net balance sheet treatment from it so from our perspective, we're providing a service it doesn't gross up that balance sheet. If you will and so there's a fee associated with that so I think that is a win win where we're supporting clients and end there.

Hi, good morning, and thanks for taking my questions.

Operator: Thank you. Our next question comes from Steven Chubak with Wolfe Research. Your line is open.

So I wanted to ask on some of the tax advantage long short strategies, it's an area, where you've seen tremendous growth. The balances are NII accretive, but they do come in at lower spreads and just wanted to better understand how much further you can deepen penetration rates across the our E channel given such strong demand.

[Analyst]: Hi, good morning. Thanks for taking my questions. I wanted to ask on some of the tax advantage long-short strategies. It's an area where you've seen tremendous growth. The balances, their NII are attractive, but they do come in at lower spreads. Just wanted to better understand how much further you can deepen penetration rates across the RIA channel given such strong demand and the types of returns you're generating on the balances relative to PAL and other potential balance sheet growth opportunities.

Steven Chubak: Hi, good morning. Thanks for taking my questions. I wanted to ask on some of the tax advantage long-short strategies. It's an area where you've seen tremendous growth. The balances, their NII are attractive, but they do come in at lower spreads. Just wanted to better understand how much further you can deepen penetration rates across the RIA channel given such strong demand and the types of returns you're generating on the balances relative to PAL and other potential balance sheet growth opportunities.

Need to manage their portfolio positions. There are some tax optimization that they can utilize with this portfolio. It helps them with concentration as well, but this is something that we still see a is likely to grow in 2026. It is fee base again.

And the types of returns you're generating on the balances relative to power and other potential balance sheet growth opportunities.

Steven Thank you for the question. Yes. This is a this is a product that our advisors are using this strategy with high net worth clients.

One of those revenue diversification opportunities that we have and so again, it's a it's a win win from our perspective I might just add a couple of things that are really well set up a couple of things as we.

Michael Verdeschi: Steven, thank you for the question. Yes, this is a product that our advisors are using this strategy with high-net-worth clients as a way to drive enhanced returns through leverage. And so it's a pairing of a long with some shorts. It's been a good tactical solution for those clients. And you're right. This is something that there's a net balance sheet treatment from it. So from our perspective, we're providing a service. It doesn't gross up that balance sheet, if you will. And so there's a fee associated with that. So I think of it as a win-win. We're supporting clients and their need to manage their portfolio positions. There's some tax optimization that they can utilize with this portfolio. It helps them with concentration as well. But this is something that we still see is likely to grow in 2026. It is fee-based.

Mike Verdeschi: Steven, thank you for the question. Yes, this is a product that our advisors are using this strategy with high-net-worth clients as a way to drive enhanced returns through leverage. And so it's a pairing of a long with some shorts. It's been a good tactical solution for those clients. And you're right. This is something that there's a net balance sheet treatment from it. So from our perspective, we're providing a service. It doesn't gross up that balance sheet, if you will. And so there's a fee associated with that. So I think of it as a win-win. We're supporting clients and their need to manage their portfolio positions. There's some tax optimization that they can utilize with this portfolio. It helps them with concentration as well. But this is something that we still see is likely to grow in 2026. It is fee-based.

Way to drive enhanced returns through leverage and so it's a it's a pairing of a long way with some short it's been a good tactical solution for those clients.

As we broaden this out to the retail side as well, but we'll see a couple of things number one we will have.

And you're right. This is something that yeah, theres, a net balance sheet treatment from it so from our perspective, we're providing a service it doesn't gross up that balance sheet. If you will and so there's a fee associated with that so I think that it's a win win where we're supporting clients and their need to manage there.

The ability to offer this on a proprietary basis in our schwab personalized indexing capability has been something that our clients are absolutely loved and it has had added tremendous client value.

As we go to a long short I think again I think there's a win win opportunity here are related to that.

Portfolio positions there are some tax optimization that they can utilize with this portfolio. It helps them with concentration as well, but this is something that we still see a is likely to grow.

Also seeing the opportunity to have broader discussions with our clients and to have four wealth relationships. When we see clients with large concentrated positions when we see them with big tax gains that they want to manage over time and in those conversations and those situations are part of what is powering our record growth in our wealth business.

In 2026, it is fee base again, it's one of those revenue diversification opportunities that we have and so again, it's a it's a win win from our perspective I might just add a couple of things that are really well set up a couple of things as we are.

With nearly $70 billion of flows into our managing managed investing solutions last year that was up 36% or so over the prior year. So all of these capabilities need to be viewed within the lens of a much broader relationship that is a huge win for our clients because our highest client promoter scores at the firm are those ones, where we have.

Michael Verdeschi: Again, it's one of those revenue diversification opportunities that we have. And so again, it's a win-win from our perspective.

Again, it's one of those revenue diversification opportunities that we have. And so again, it's a win-win from our perspective.

As we broaden this out to the retail side as well, but we'll see a couple of things number one we will have.

Richard Wurster: I might just add a couple of things. Mike, that was really well said. A couple of things. As we broaden this out to the retail side as well, we'll see a couple of things. Number one, we will have the ability to offer this on a proprietary basis. And our Schwab Personalized Indexing capability has been something that our clients have absolutely loved, and that has added tremendous client value. As we go to a long-short, again, I think there's a win-win opportunity here related to that. We're also seeing the opportunity to have broader discussions with our clients and to have fuller wealth relationships when we see clients with large concentrated positions, when we see them with big tax gains that they want to manage over time. And those conversations and those situations are part of what is powering our record growth in our wealth business.

Rick Wurster: I might just add a couple of things. Mike, that was really well said. A couple of things. As we broaden this out to the retail side as well, we'll see a couple of things. Number one, we will have the ability to offer this on a proprietary basis. And our Schwab Personalized Indexing capability has been something that our clients have absolutely loved, and that has added tremendous client value. As we go to a long-short, again, I think there's a win-win opportunity here related to that. We're also seeing the opportunity to have broader discussions with our clients and to have fuller wealth relationships when we see clients with large concentrated positions, when we see them with big tax gains that they want to manage over time. And those conversations and those situations are part of what is powering our record growth in our wealth business.

The ability to offer this on a proprietary basis in our schwab personalized indexing capability has it been something that our clients are absolutely loved and it has had added tremendous client value.

Have a broader relationship and and the economics for us are compelling because we're growing our fee based revenue on our in our wealth business. So we love these conversations because they help clients and they're a part of our strategy of continuing to grow and diversify how we generate our economics.

We go to a long short I again, I think there's a win win opportunity here are related to that.

Also seeing the opportunity to have broader discussions with our clients and to have for wealth relationships. When we see clients with large concentrated positions when we see them with big tax gains that they want to manage over time and in those conversations and those situations are part of what is powering our record growth in our wealth business.

Okay.

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks. Thanks. Good morning, Thanks for taking my question, maybe Rick could you just comment on your views on prediction markets I know you've talked about this a.

With nearly $70 billion.

You know in the press and in interviews clearly you know as a sports betting and.

Flows into our managing managed investing solutions last year that was up 36% or so over the prior year. So all of these capabilities need to be viewed within the lens of a much broader relationship that is a huge win for our clients because our highest client promoter scores at the firm are those ones, where we have a broader relationship and and the.

Richard Wurster: We had nearly $70 billion of flows into our managed investing solutions last year. That was up 36% or so over the prior year. So all of these capabilities need to be viewed within the lens of a much broader relationship that is a huge win for a client because our highest client promoter scores at the firm are those ones where we have a broader relationship. And the economics for us are compelling because we're growing our fee-based revenue in our wealth business. So we love these conversations because they help clients, and they're part of our strategy of continuing to grow and diversify how we generate our economics.

We had nearly $70 billion of flows into our managed investing solutions last year. That was up 36% or so over the prior year. So all of these capabilities need to be viewed within the lens of a much broader relationship that is a huge win for a client because our highest client promoter scores at the firm are those ones where we have a broader relationship. And the economics for us are compelling because we're growing our fee-based revenue in our wealth business. So we love these conversations because they help clients, and they're part of our strategy of continuing to grow and diversify how we generate our economics.

Protection markets on an unmentioned and culture.

It's clearly something you're not interested in but it's it's the contracts were to develop and more broadly in fundamental investing and other.

Other economic types of contracts is that something you would be interested in launching on on the platform and and you know how how would you evaluate that and what are you hearing from some trading clients on that.

<unk> for us are compelling because we're growing our fee based revenue in our in our wealth business. So we love these conversations because they help clients and they're a part of our strategy of continuing to grow and diversify how we generate our economics.

Thanks for the question, Brian I'd Love to expand on this one a couple of principles that will drive my response number one is we we always sit through client size and we want to deliver what's important to them and what they want and need to be successful.

Okay.

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Oh, great. Thanks. Thanks. Good morning, Thanks for taking my question, maybe Rick could you just comment on your views on prediction markets I know you've talked about this.

Operator: Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Number two our mission is to champion our clients' financial goals with passion integrity and help them live their best financial life and those two things guide the way, we're thinking about prediction markets. So first as we think about prediction markets. The ones that are related to financial aspects like you know, what's going to happen to unemployment, what's going to happen.

[Analyst]: Great. Thanks. Good morning. Thanks for taking my question. Maybe, Rick, can you just comment on your views on prediction markets? I know you've talked about this in the press and in interviews. Clearly, sports betting and prediction markets on elections and culture is clearly something you're not interested in. But if the contracts were to develop more broadly in fundamental investing and other economic types of contracts, is that something you would be interested in launching on the platform? And how would you evaluate that, and what are you hearing from trading clients on that?

Brian Bedell: Great. Thanks. Good morning. Thanks for taking my question. Maybe, Rick, can you just comment on your views on prediction markets? I know you've talked about this in the press and in interviews. Clearly, sports betting and prediction markets on elections and culture is clearly something you're not interested in. But if the contracts were to develop more broadly in fundamental investing and other economic types of contracts, is that something you would be interested in launching on the platform? And how would you evaluate that, and what are you hearing from trading clients on that?

You know in the press and in interviews clearly you know as a.

Sports betting and.

Construction markets on an unmentioned in culture is.

Clearly something you're not interested in but it's it's the contracts were to develop and you know more broadly and fundamental investing and other.

Inflation or whether at some point a developed market, where you can take a position on the stock going up or down all those kinds of things those are related to building an investment portfolio and certainly if there is client demand we are going to make them available as we work with our particularly our active traders to identify the things that are most of them.

Thanks for the question, Brian I'd Love to expand on this one a couple of principles that will drive my response number one is we we always see through client size and we want to deliver what's of importance to them and what they want and need to be successful.

Of most importance to them, it's not high on the list today, we're just not seeing a lot of client interest from our clients for those kinds of prediction markets and I think that's true more broadly in the industry, where 95% of the volume that we observed is all sports gambling and it has nothing to do with the so called friction market. So.

Richard Wurster: Thanks for the question, Brian. I'd love to expand on this one. A couple of principles that will drive my response. Number one is we always serve clients of all sizes, and we want to deliver what's of importance to them and what they want and need to be successful. Number two, our mission is to champion our clients' financial goals with passion and integrity and help them live their best financial life. And those two things guide the way we're thinking about prediction markets. So first, as we think about prediction markets, the ones that are related to financial aspects like what's going to happen to employment, what's going to happen to inflation, or whether at some point it develops a market where you can take a position on a stock going up or down, all those kinds of things. Those are related to building an investment portfolio.

Rick Wurster: Thanks for the question, Brian. I'd love to expand on this one. A couple of principles that will drive my response. Number one is we always serve clients of all sizes, and we want to deliver what's of importance to them and what they want and need to be successful. Number two, our mission is to champion our clients' financial goals with passion and integrity and help them live their best financial life. And those two things guide the way we're thinking about prediction markets. So first, as we think about prediction markets, the ones that are related to financial aspects like what's going to happen to employment, what's going to happen to inflation, or whether at some point it develops a market where you can take a position on a stock going up or down, all those kinds of things. Those are related to building an investment portfolio.

Number two our mission is to champion our clients' financial goals with passion integrity and help them live their best financial life and those two things guide the way, we're thinking about prediction markets. So first as we think about prediction markets. The ones that are related to financial aspects like you know whats going to happen to unemployment, what's going to happen.

As you know the things that we're hearing from our active traders as you know keep pushing on the mobile app keep giving us more research keep our you know keep giving us different futures and options capabilities, but we're not hearing a lot about about prediction markets that said, we you know we're looking at this and if it becomes a client interests we will have.

Inflation or whether at some point a developed market, where you can take a position on a stock going up or down all those kinds of things those are related to building an investment portfolio and certainly if there is client demand we are going to make them available as we work with our particularly our active traders to identify the things that are most of them.

Diction markets were not bearing our nose in the sand on this.

A strong stance against prediction markets I have nothing against prediction markets that are related to a clients portfolio and answers client interest or industry interests, we will absolutely be there should there be interest.

Richard Wurster: Certainly, if there is client demand, we are going to make them available. As we work with particularly our active traders to identify the things that are of most importance to them, it's not high on the list today. We're just not seeing a lot of client interest from our clients for those kinds of prediction markets. I think that's true more broadly in the industry where 95% of the volume that we observe is all sports gambling and has nothing to do with these so-called prediction markets. The things that we're hearing from our active traders is keep pushing on the mobile app, keep giving us more research, keep giving us different futures and options capabilities, but we're not hearing a lot about prediction markets. That said, we're looking at this, and if it becomes of client interest, we will have prediction markets.

Certainly, if there is client demand, we are going to make them available. As we work with particularly our active traders to identify the things that are of most importance to them, it's not high on the list today. We're just not seeing a lot of client interest from our clients for those kinds of prediction markets. I think that's true more broadly in the industry where 95% of the volume that we observe is all sports gambling and has nothing to do with these so-called prediction markets. The things that we're hearing from our active traders is keep pushing on the mobile app, keep giving us more research, keep giving us different futures and options capabilities, but we're not hearing a lot about prediction markets. That said, we're looking at this, and if it becomes of client interest, we will have prediction markets.

Expanding into the sports gambling aspects of things.

The second principle I mentioned of our focus being on doing everything we can to help our clients grow attack manage their wealth sports gambling is contradictory to that end and so our view has been let the sports betting houses like draft Kings and Robin Hood than sandal.

As you know the things that we're hearing from our active traders as you know keep pushing on the mobile app keep giving us more research.

Let them take take that and we know.

You know keep giving us.

Futures and options capability.

There's a lot of data on this and less than 5% of clients that put money into these gambling houses are these gambling apps live with more money than they put in.

But we're not hearing a lot about about prediction markets that said, we you know we're looking at this and if it becomes a client interests. We will have prediction markets were not bearing our nose. On this we don't have a strong chance against prediction markets I have nothing against prediction markets that are related to a clients portfolio and answers client interest or industry interests, we will absolutely be.

And I contrast that to the all time record high wealth that our clients hold it's just a fundamental different fundamentally different mission and so that's that's our thoughts were open to prediction markets should their big client and industry enjoy interest we're not interested in and are in the sports gambling, we'll leave that to the two.

Richard Wurster: We're not burying our nose in the sand on this. We don't have a strong stance against prediction markets. I have nothing against prediction markets that are related to a client's portfolio. And as there's client interest or industry interest, we will absolutely be there should there be interest. Expanding into the sports gambling aspects of things, the second principle I mentioned of our focus being on doing everything we can to help our clients grow, protect, and manage their wealth. Sports gambling is contradictory to that. And so our view has been let the sports betting houses like DraftKings, Robinhood, and FanDuel, let them take that. And we know there's a lot of data on this. And less than 5% of clients that put money into these gambling houses or these gambling apps leave with more money than they put in.

We're not burying our nose in the sand on this. We don't have a strong stance against prediction markets. I have nothing against prediction markets that are related to a client's portfolio. And as there's client interest or industry interest, we will absolutely be there should there be interest. Expanding into the sports gambling aspects of things, the second principle I mentioned of our focus being on doing everything we can to help our clients grow, protect, and manage their wealth. Sports gambling is contradictory to that. And so our view has been let the sports betting houses like DraftKings, Robinhood, and FanDuel, let them take that. And we know there's a lot of data on this. And less than 5% of clients that put money into these gambling houses or these gambling apps leave with more money than they put in.

There should there be interest.

Expanding into the sports gambling aspect of things.

Second principle, I mentioned of our our folks being on doing everything we can.

Sandals, and Robin hoods, and we'll stay away from that.

Thank you. Our next question comes from Bill Katz with TD Cowen Your line is open.

To help our clients grow Tac manage their wealth sports gambling is contradictory to that end and so our view has been let the sports betting houses like draft Kings, and Robinhood and sandal, let them take take that and we know.

Okay. Thank you very much taking the questions. This morning, just wanted to talk to you guys. A little more you mentioned that you'd be right around 5% organic growth for 2026 that would be a bit of a deceleration just factually from the 5.1, you put up a 25 and this was supposed to be a transition year. So you beat your goal for this year, despite being a transition year.

There's a lot of data on this and less than 5% of clients put money into these gambling houses are these gambling apps leave with more money than they've put in.

So maybe you can unpack why only 5% I still think of five to seven is the right long term goal.

And I contrast that to the all time record high wealth that our clients hold it's just a fundamental different fundamentally different mission and so that's that's our thoughts were opened production markets should their big client and industry enjoy interest we're not interested in and are in the sports gambling, we'll leave that to the.

And then separately just coming back to your commentary on the buyback.

How should we be thinking about your adjusted tier one leverage ratio.

Richard Wurster: I contrast that to the all-time record high wealth that our clients hold. It's just a fundamentally different mission. So that's our thoughts. We're open to prediction markets should there be client and industry interest. We're not interested in the sports gambling. We'll leave that to the FanDuals and Robinhoods, and we'll stay away from that.

I contrast that to the all-time record high wealth that our clients hold. It's just a fundamentally different mission. So that's our thoughts. We're open to prediction markets should there be client and industry interest. We're not interested in the sports gambling. We'll leave that to the FanDuals and Robinhoods, and we'll stay away from that.

675 to seven is still the right way to think about that otherwise if you don't buy back a ton of stock that ratio is going to ramp pretty dramatically given your guidance. Thank you.

The Vandals and Robin hoods, and we'll stay away from that.

Yeah.

I'll start with the M&A.

Okay.

Thank you. Our next question comes from Bill Katz with TD Cowen Your line is open okay.

Numbers that Mike highlighted and then Mike you can take the second part of that question, but rather than in a.

Okay. Thank you very much taking the questions. This morning, just wanted to talk to you guys. A little more you mentioned that you'd be right around 5% organic growth for 2026 that would be a bit of a deceleration just factually from the five point why you put up a 25 and this was supposed to be a transition year. So you beat your goal for this year, despite being a transition year.

Operator: Thank you. Our next question comes from Bill Katz with TD Cowen. Your line is open.

I still believe 5% or higher is the is the right long term expectation in the near term we're focused on 5% I think that's a realistic target it's important to keep in mind that you know our total client assets grew by 18% year over year. So the target.

[Analyst]: Okay. Thank you very much for taking the question this morning. Just want to unpack two of your guides. Number one, you mentioned that you'd be right around 5% organic growth for 2026. That would be a bit of a deceleration just factually from the 5.1 you put up to 25. And this was supposed to be a transition year. So you beat your goal for this year despite being a transition year. So maybe you can unpack why only 5%. Are you still thinking 5% to 7% is the right long-term goal? And then separately, just coming back to your commentary on the buyback, how should we be thinking about your adjusted Tier 1 leverage ratio? Is 6.75 to 7 still the right way to think about that? Otherwise, if you don't buy back a ton of stock, that ratio is going to ramp pretty dramatically given your guidance.

Bill Katz: Okay. Thank you very much for taking the question this morning. Just want to unpack two of your guides. Number one, you mentioned that you'd be right around 5% organic growth for 2026. That would be a bit of a deceleration just factually from the 5.1 you put up to 25. And this was supposed to be a transition year. So you beat your goal for this year despite being a transition year. So maybe you can unpack why only 5%. Are you still thinking 5% to 7% is the right long-term goal? And then separately, just coming back to your commentary on the buyback, how should we be thinking about your adjusted Tier 1 leverage ratio? Is 6.75 to 7 still the right way to think about that? Otherwise, if you don't buy back a ton of stock, that ratio is going to ramp pretty dramatically given your guidance.

So maybe you can unpack why only 5% are you still thinking five to seven is the right long term goal.

Despite being similar to what we delivered last year, it keeps going keeps going up and the longer term as we you know as I mentioned earlier as we invest in our workplace business will be fully launched crypto, we add more retail relationships.

And then separately just coming back to your commentary on the buyback.

So how should we be thinking about your adjusted tier one leverage ratio.

Is 675 to seven is still the right way to think about that otherwise if you don't buy back a ton of stock that ratio is going to ramp pretty dramatically given your guidance. Thank you.

Many of them in the right market environment that that you know.

About 5% still remains very much possible, but in the near term that 5%, but with the asset growth we've seen from clients.

Yeah.

That's the number we're we're shooting for.

I'll start with the M&A.

In terms of that second part a $6 75% to 7%.

In a numbers that Mike highlighted and then Mike you can take the second part of that question, but put on M&A.

[Analyst]: Thank you.

Thank you.

The tier one ratio that that is still our objective and keep in mind that obviously as you know we see the growth of the franchise. There is a component of that ratio as interest rates move around it will change the value of the securities portfolio that change in value added tax the adjusted tier one ratio.

Richard Wurster: I'll start with the N&A numbers that Mike highlighted. Then, Mike, you can take the second part of that question. But on N&A, I still believe 5% or higher is the right long-term expectation. In the near term, we're focused on 5%. I think that's a realistic target. It's important to keep in mind that our total client assets grew by 18% year over year. So the target, despite being similar to what we delivered last year, keeps going up. In the longer term, as I mentioned earlier, as we invest in our workplace business, we fully launch crypto, we add more retail relationships, I believe in the right market environment, that above 5% still remains very much possible. But in the near term, that 5% with the asset growth we've seen from clients, that's the number we're shooting for.

Rick Wurster: I'll start with the N&A numbers that Mike highlighted. Then, Mike, you can take the second part of that question. But on N&A, I still believe 5% or higher is the right long-term expectation. In the near term, we're focused on 5%. I think that's a realistic target. It's important to keep in mind that our total client assets grew by 18% year over year. So the target, despite being similar to what we delivered last year, keeps going up. In the longer term, as I mentioned earlier, as we invest in our workplace business, we fully launch crypto, we add more retail relationships, I believe in the right market environment, that above 5% still remains very much possible. But in the near term, that 5% with the asset growth we've seen from clients, that's the number we're shooting for.

So while you could find out its operating above that from time to time, but theres no change in that operating objective that is still very much a where we intend to date.

Despite being similar to what we delivered last year it keeps going keeps going up.

Longer term as we you know as I mentioned earlier as we invest in our workplace business will be fully launched crypto.

Add more retail relationships.

Thank you. Our next question comes from Benjamin Dish with Barclays. Your line is open.

Many of them in the right market environment.

About 5% still remains very much possible, but in the near term that 5% whether it would be.

Hi, good morning, and thanks for taking my question, maybe just a follow up on Bill's first question. There just on the 5% expectation for the year could you give an update on the legacy Ameritrade customer base I know in the past you've indicated that that cohort has been quite a bit.

Asset growth, we've seen from clients.

That's the number we're we're shooting for.

In terms of that second part a $6, 75% to 7% for the jet to tier one ratio that that is still our objective then and keep in mind that obviously as you know we see.

Slower than the legacy Schwab base. So what are you seeing lately, there and maybe unpack that a 5% a little bit in terms of Investor services versus advisory services are you expecting any kind of mix shift mix shift any acceleration or does that still remain for the longer term expectation. Thank you.

Michael Verdeschi: In terms of that second part, 6.75% to 7% for the adjusted T1 ratio, that is still our objective. And keep in mind, obviously, as we see the growth of the franchise, there is a component of that ratio. As interest rates move around, it will change the value of the securities portfolio. That change in value impacts the adjusted T1 ratio. So you could find us operating above that from time to time. But there's no change in that operating objective. That is still very much where we intend to be.

Mike Verdeschi: In terms of that second part, 6.75% to 7% for the adjusted T1 ratio, that is still our objective. And keep in mind, obviously, as we see the growth of the franchise, there is a component of that ratio. As interest rates move around, it will change the value of the securities portfolio. That change in value impacts the adjusted T1 ratio. So you could find us operating above that from time to time. But there's no change in that operating objective. That is still very much where we intend to be.

The growth of the franchise there is a component of that ratio as interest rates move around it will change the value of the securities portfolio that change in value impacts.

Yeah. Thanks for the question I want to sing Ameritrade behavior, right, where we'd want to see it which is it has accelerated meaningfully in terms of net new assets in terms of engagement with the platform and engaging with their other solutions they've been between a third and 40% of the flows that are going into a wall solutions into our lending.

Tier one ratio so while you could find out its operating above that from time to time, but theres no change in that operating objective that is still very much a where we intend to date.

Thank you. Our next question comes from Benjamin Dish with Barclays. Your line is open.

Solutions. So it's just it's great to see the transformation of where we've gone with Ameritrade clients and it's as expected we expected during the transition that it would be a challenging time period and it was we saw ameritrade clients that are you know what.

Operator: Thank you. Our next question comes from Benjamin Budish with Barclays. Your line is open.

[Analyst]: Hi, good morning. Thanks for taking my question. Maybe just a follow-up on Bill's first question there, just on the 5% expectation for the year. Could you give an update on the legacy Ameritrade customer base? I know in the past you've indicated that that cohort has been quite a bit more inflowing slower than the legacy Schwab base. What are you seeing lately there? Maybe unpack that 5% a little bit in terms of investor services versus advisory services. Are you expecting any kind of shift, any acceleration, or does that still remain sort of the longer-term expectation? Thank you.

Benjamin Budish: Hi, good morning. Thanks for taking my question. Maybe just a follow-up on Bill's first question there, just on the 5% expectation for the year. Could you give an update on the legacy Ameritrade customer base? I know in the past you've indicated that that cohort has been quite a bit more inflowing slower than the legacy Schwab base. What are you seeing lately there? Maybe unpack that 5% a little bit in terms of investor services versus advisory services. Are you expecting any kind of shift, any acceleration, or does that still remain sort of the longer-term expectation? Thank you.

Net new assets were slightly negative as a as a group and nowadays moved meaningfully positive and are very much in line with both what we expect and what we see from Schwab clients and so we're right where we want to be it's very encouraging and again.

Our inflow and slower than the legacy Schwab base. So what are you seeing lately, there and maybe unpack that 5% a little bit in terms of industrial services versus advisory services are you expecting any kind of mix shift mix shift any acceleration or does that still remains sort of the longer term expectation. Thank you.

The outlook on M&A.

Yeah. Thanks for the question I want to sing Ameritrade behavior, right, where we'd want to see it which is it has accelerated meaningfully in terms of net new assets in terms of engagement with the platform and engage with our solutions they've been between a third and 40% of the flows that are going into our wealth solutions into our lending.

We're very bullish about our growth.

I think you saw that this year, we continue to be both and then you know as.

Particularly as I think longer term, there's a number of areas that we can invest in that are gonna be accelerants to our M&A, whether it's our workplace business, our crypto business, our retail relationships, our wealth business and equally as important to that growth with justice folks since spending just as much time on doing more for our clients because with 12 trillion in assets.

Richard Wurster: Yep. Thanks for the question. We're seeing Ameritrade behavior right where we'd want to see it, which is, it has accelerated meaningfully in terms of net new assets, in terms of engagement with the platform, and engagement with our other solutions. They've been between 1/3 and 40% of the flows that are going into our wealth solutions, into our lending solutions. So it's great to see the transformation of where we've gone with Ameritrade clients. It's as expected. We expected during the transition that it would be a challenging time period, and it was. We saw Ameritrade clients, with net new assets that were slightly negative as a group, and now they've moved meaningfully positive and are very much in line with both what we expect and what we see from Schwab clients. So we're right where we want to be. It's very encouraging.

Rick Wurster: Yep. Thanks for the question. We're seeing Ameritrade behavior right where we'd want to see it, which is, it has accelerated meaningfully in terms of net new assets, in terms of engagement with the platform, and engagement with our other solutions. They've been between 1/3 and 40% of the flows that are going into our wealth solutions, into our lending solutions. So it's great to see the transformation of where we've gone with Ameritrade clients. It's as expected. We expected during the transition that it would be a challenging time period, and it was. We saw Ameritrade clients, with net new assets that were slightly negative as a group, and now they've moved meaningfully positive and are very much in line with both what we expect and what we see from Schwab clients. So we're right where we want to be. It's very encouraging.

So it's just it's great to see the transformation of where we've gone with Ameritrade clients and it's as expected we expected during the transition that it would be a challenging time period and it was we saw ameritrade clients that are you know work with net.

46 million client accounts.

Huge source of our growth can be doing more for clients. They want that from us they're happier when we do that and it diversifies our growth rate's stickier longer lasting relationships that ultimately build more wealth for our clients and that's what we're in the business to do.

Net new assets that were slightly negative as a as a group.

And now they've moved meaningfully positive and are very much in line with both what we expect and what we see from Schwab clients and so we're right where we want to be it's very encouraging and I'm thinking I.

Okay, I'm, sorry, you're looking at the clock I think come at a time for one final question.

The outlook on M&A.

We're very bullish about our growth and I think I think you saw that this year, we continue to be both in the U S.

Thank you our final question comes from Mike Brown with UBS.

Richard Wurster: Again, the outlook on NNA, we're very bullish about our growth. I think you saw that this year. We continue to be both in the, particularly as I think longer term, there's a number of areas that we can invest in that are going to be accelerants to our NNA, whether it's our workplace business, our crypto business, our retail relationships, our wealth business. Equally, it is important to that growth. We're just as focused on spending just as much time on doing more for our clients because with 12 trillion in assets, 46 million client accounts, a huge source of our growth can be doing more for clients. They want that from us. They're happier when we do that. It diversifies our growth, creates stickier, longer-lasting relationships that ultimately build more wealth for our clients. That's what we're in the business to do.

Again, the outlook on NNA, we're very bullish about our growth. I think you saw that this year. We continue to be both in the, particularly as I think longer term, there's a number of areas that we can invest in that are going to be accelerants to our NNA, whether it's our workplace business, our crypto business, our retail relationships, our wealth business. Equally, it is important to that growth. We're just as focused on spending just as much time on doing more for our clients because with 12 trillion in assets, 46 million client accounts, a huge source of our growth can be doing more for clients. They want that from us. They're happier when we do that. It diversifies our growth, creates stickier, longer-lasting relationships that ultimately build more wealth for our clients. That's what we're in the business to do.

Line is open.

Particularly as I think longer term, there's a number of areas that we can invest in that are gonna be accelerants to our M&A, whether it's our workplace business, our crypto business, our retail relationships, our wealth business and equally as important to that growth. We're just as focused and spending just as much time on doing more for our clients because with 12 trillion in assets.

Great. Good morning, Thanks for squeezing me in here.

So I just wanted to ask about on the margin here. So you got to look at these for 2026, great to see that the margin continues to March higher here, how should we think about that longer term potential what's the ceiling. There and then specifically on the AI opportunity can you maybe talk about some of the measurable ROI.

46 million client accounts.

And the lift that we could see in terms of conversions retention buys of productivity.

Service Triage, you know what and what are kind of the key kpis, we should track here to know how well it's working and then how your key proprietary data. It gives you an advantage over some of the.

New entrants in the Fintech space.

Okay, but are you looking at the clock and they come in at a time for one final question.

Good morning, Mike Thanks for the question so.

Thank you. Our final question comes from Mike Brown with UBS. Your line is open.

So first on the the margin lending growth.

[Analyst]: Okay. After you're looking at the clock, I think we've got time for one final question.

Okay. After you're looking at the clock, I think we've got time for one final question.

So margin growth.

Right.

The way, we think about that is we've seen a good margin expansion again that is the result of a well balanced approach to how we're managing our financials as you heard Greg and I talk about today, we're doing more for clients. We're seeing good take up of our broader suite of products and with that comes.

Great. Good morning, Thanks for squeezing me in here.

Operator: Thank you. Our final question comes from Mike Brown with UBS. Your line is open.

So I just wanted to ask about on the margin here. So you got to the low Fifty's for 2026, great to see that the margin continues to March higher here, how should we think about that longer term potential what's the ceiling there and then specifically.

[Analyst]: Great. Good morning. Thanks for squeezing me in here. So I just wanted to ask about on the margin here. So guys for low 50s for 2026, great to see that the margin continues to march higher here. How should I be thinking about that longer-term potential? What's the ceiling there? And then specifically on the AI opportunity, can you maybe talk about some of the measurable revenue lifts that we could see in terms of conversions, retention, advisor productivity, and service triage? What are kind of the key KPIs we should track here to know how well it's working and then how your key proprietary data gives you an advantage over some of the new entrants in the fintech space?

Mike Brown: Great. Good morning. Thanks for squeezing me in here. So I just wanted to ask about on the margin here. So guys for low 50s for 2026, great to see that the margin continues to march higher here. How should I be thinking about that longer-term potential? What's the ceiling there? And then specifically on the AI opportunity, can you maybe talk about some of the measurable revenue lifts that we could see in terms of conversions, retention, advisor productivity, and service triage? What are kind of the key KPIs we should track here to know how well it's working and then how your key proprietary data gives you an advantage over some of the new entrants in the fintech space?

Specifically on the AI opportunity can you maybe talk about some of the measurable revenue lift that we could see in terms of conversions retention Pfizer productivity. Our service triage you know what and what are kind of key kpis. We should track here to know how well it's working and then how your key proprietary data. It gives you an advantage over <unk>.

Good revenue diversification and that supports the durability of those revenues are put that alongside it balanced approach to our expense management, we're investing.

In our strategic priorities at the same time, we're investing in efficiency and ensuring that we can maintain a low cost to serve that also helps to grow strong financials and see that margin expand from here.

Some of the new.

New entrants in the Fintech space.

Good morning, Mike Thanks for the question so.

We could see a greater margin expansion.

So first on the the margin lending growth.

So margin growth I'm sorry.

But again, there's no arbitrary target on that or ceiling on that per se. It is the result of that approach that we take to managing the financials.

Michael Verdeschi: Good morning, Mike. Hey, thanks for the question. So first on the margin lending growth, margin growth, sorry. The way we think about that is we've seen good margin expansion. Again, that is the result of a well-balanced approach to how we're managing our financials. As you've heard Rick and I talk about today, we're doing more for clients. We're seeing good take-up of our broader suite of products. And with that comes good revenue diversification. And that supports the durability of those revenues. I'll put that alongside a balanced approach to our expense management. We're investing in our strategic priorities, but at the same time, we're investing in efficiency. And that's ensuring that we can maintain a low cost to serve, that also helps to grow strong financials and see that margin expand. From here, we could see greater margin expansion.

Mike Verdeschi: Good morning, Mike. Hey, thanks for the question. So first on the margin lending growth, margin growth, sorry. The way we think about that is we've seen good margin expansion. Again, that is the result of a well-balanced approach to how we're managing our financials. As you've heard Rick and I talk about today, we're doing more for clients. We're seeing good take-up of our broader suite of products. And with that comes good revenue diversification. And that supports the durability of those revenues. I'll put that alongside a balanced approach to our expense management. We're investing in our strategic priorities, but at the same time, we're investing in efficiency. And that's ensuring that we can maintain a low cost to serve, that also helps to grow strong financials and see that margin expand. From here, we could see greater margin expansion.

The way, we think about that is we've seen a good margin expansion again that is the result of a well balanced approach to how we're managing our financials as you heard Rick and I talked about today, we're doing more for clients. We're seeing good take up of our broader suite of products and with that comes.

N a I, we're already seeing efficiencies.

Where we've invested in and having our client facing reps use AI, we've grown client accounts, we've grown assets and we've been able to moderate the amount of client facing reps that we'd grown. So we are already seeing efficiency, we want to continue to roll out AI, especially in our technology organization continued in our <unk>.

Good revenue diversification and that supports the durability of those revenues I'll put that alongside a balance approach to our expense management, we're investing.

Service areas I think the key metrics that will continue to focus on is that a yoga is that our cost per account I think you'll see that come through and continue to be relevant and we plan to continue to maintain that low cost to serve in and continue to drive those those costs lower thank you for the question.

In our strategic priorities that the same time, we're investing in efficiency and ensuring that we can maintain a low cost to serve that also helps to grow strong financials and see that margin expand from here are we could see a greater margin expansion.

Thank you for your questions and engagement, we have an incredible opportunity ahead of us to deliver for clients and stockholders.

But again, there's no arbitrary target on that or ceiling on that per se. It is a result of that approach that we take to managing the financials.

Right, because when you look to 2026 and beyond.

Michael Verdeschi: But again, there's no arbitrary target on that or ceiling on that per se. It is a result of that approach that we take to managing the financials. In AI, we're already seeing efficiencies. Where we've invested in having our client-facing reps use AI, we've grown client accounts, we've grown assets, and we've been able to moderate the amount of client-facing reps that we've grown. So we are already seeing efficiency. We want to continue to roll out AI, especially in our technology organization, continued in our service areas. I think the key metrics that we'll continue to focus on is that EOCA, is that cost per account. I think you'll see that come through and continue to be relevant. We plan to continue to maintain that low cost to serve and continue to drive those costs lower. Thank you for the question.

But again, there's no arbitrary target on that or ceiling on that per se. It is a result of that approach that we take to managing the financials. In AI, we're already seeing efficiencies. Where we've invested in having our client-facing reps use AI, we've grown client accounts, we've grown assets, and we've been able to moderate the amount of client-facing reps that we've grown. So we are already seeing efficiency. We want to continue to roll out AI, especially in our technology organization, continued in our service areas. I think the key metrics that we'll continue to focus on is that EOCA, is that cost per account. I think you'll see that come through and continue to be relevant. We plan to continue to maintain that low cost to serve and continue to drive those costs lower. Thank you for the question.

N a I, we're already seeing efficiencies are where we've invested in and having our client facing reps use AI. We've grown client accounts, we've grown assets and we've been able to moderate the amount of client facing reps that we've grown. So we are already seeing efficiency, we want to continue to rollout.

We have two equally powerful levers for growth attracting more clients and doing more for the 46 million client accounts that we have.

Our scale and efficiency initiatives will continue to fuel our ability to invest in our clients, while keeping our cost to serve them below taken together with a disciplined approach to financial management and capital return that Mike. Just described we are confident they will continue to deliver earnings growth.

AI, especially in our technology organization continued in our service areas I think the key metrics that will continue to focus on is that a yoga is that our cost per account I think you'll see that come through and continue to be relevant and we plan to continue to maintain that low cost to serve in and continue to drive those.

Cycle. Thank you.

Those costs lower thank you for the question.

Thank you for your questions and engagement, we have an incredible opportunity ahead of us to deliver for clients and stockholders.

Right, because when you look to 2026 and beyond.

Richard Wurster: Thank you for your questions and engagement. We have an incredible opportunity ahead of us to deliver for clients and stockholders alike as we look to 2026 and beyond. We have two equally powerful levers for growth, attracting more clients and doing more for the 46 million client accounts that we have. Our scale and efficiency initiatives will continue to fuel our ability to invest in our clients while keeping our cost to serve them low. Taken together with this disciplined approach to financial management and capital return that Mike just described, we are confident that we'll continue to deliver earnings growth through the cycle. Thank you.

Rick Wurster: Thank you for your questions and engagement. We have an incredible opportunity ahead of us to deliver for clients and stockholders alike as we look to 2026 and beyond. We have two equally powerful levers for growth, attracting more clients and doing more for the 46 million client accounts that we have. Our scale and efficiency initiatives will continue to fuel our ability to invest in our clients while keeping our cost to serve them low. Taken together with this disciplined approach to financial management and capital return that Mike just described, we are confident that we'll continue to deliver earnings growth through the cycle. Thank you.

Have to equally powerful levers for growth attracting more clients and doing more for the 46 million client accounts that we have.

Our scale and efficiency initiatives will continue to fuel our ability to invest in our clients, while keeping our cost to serve them below.

Taken together with this disciplined approach to financial management and capital return that Mike. Just described we are confident they will continue to deliver earnings growth through the cycle. Thank you.

Q4 2025 Charles Schwab Corp Earnings Call

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