Q2 2026 The Charles Schwab Corp Earnings Call

July 21, 2026

Speaker #1: Good morning, everyone, and welcome to SCHWAB's 2026 Summer Business Update. This is Jeff Edwards, and I'm joined this morning by our president and CEO, Rick Wurster, as well as our CFO, Mike Verdeschi.

Jeff Edwards: Good morning, everyone, welcome to Schwab's 2026 Summer Business Update. This is Jeff Edwards, I'm joined this morning by our President and CEO, Rick Wurster, as well as our CFO, Mike Verdeschi. Hopefully, you all had an opportunity to review our Q2 earnings release that crossed the wire earlier today. Similar to Alaba on the pitch this past Sunday, I don't think it's a stretch to frame Schwab's strong results as trophy worthy. Slides for today's business update will be posted to the IR website at the conclusion of today's prepared remarks.

Jeff Edwards: Good morning, everyone, welcome to Schwab's 2026 Summer Business Update. This is Jeff Edwards. I'm joined this morning by our president and CEO, Rick Wurster, as well as our CFO, Mike Verdeschi. Hopefully, you all had an opportunity to review our Q2 earnings release that crossed the wire earlier today. Similar to Alaba on the pitch this past Sunday, I don't think it's a stretch to frame Schwab's strong results as trophy worthy. Slides for today's business update will be posted to the IR website at the conclusion of today's prepared remarks.

Speaker #1: Hopefully you all had an opportunity to review our second-quarter earnings release that crossed the wire earlier today. Similar to La Roja on the pitch this past Sunday, I don't think it's a stretch to frame Schwab's strong results as trophy-worthy.

Speaker #1: Slides for today's business update will be posted to the IR website at the conclusion of today's prepared remarks. As always, we ask that you please adhere to the one-question, no-follow-up policy during the Q&A portion of the program. Do not hesitate to reach out to the IR team with any questions following today's update.

Jeff Edwards: As always, we ask that you please adhere to the one question and no follow-up policy during the Q&A portion of the program. Do not hesitate to reach out to the IR team with any questions following today's update. Lastly, a fan favorite on every deck, the forward-looking statements page, reminding us all that outcomes may differ from expectations, please stay up to date with our disclosures. With that, I'll turn it over to Rick.

Jeff Edwards: As always, we ask that you please adhere to the one question and no follow-up policy during the Q&A portion of the program. Do not hesitate to reach out to the IR team with any questions following today's update. Lastly, a fan favorite on every deck, the forward-looking statements page reminds us all that outcomes may differ from expectations; please stay up-to-date with our disclosures. With that, I'll turn it over to Rick.

Speaker #1: Lastly, a fan favorite of every deck: the Ford Mission Statements page. Reminding us all that outcomes may differ from expectations, so please, stay up to date with our disclosures.

Speaker #1: And with that, I'll turn it over to Rick.

Speaker #2: Thank you, Jeff, and good morning. Thank you for joining our Summer Business Update. We'll spend our time this morning sharing detail on our record performance and diving into the reasons SCHWAB is incredibly well-positioned to deliver for stockholders and clients well into the future.

Rick Wurster: Thank you, Jeff, good morning. Thank you for joining our summer business update. We'll spend our time this morning sharing detail on our record performance and diving into the reasons Schwab is incredibly well-positioned to deliver for stockholders and clients well into the future. The financial services landscape is becoming increasingly driven by investing. We occupy the trusted center of the investing ecosystem. We're both leading today and uniquely positioned to win in the future. There are several reasons for our confidence.

Rick Wurster: Thank you, Jeff, good morning. Thank you for joining our summer business update. We'll spend our time this morning sharing details on our record performance and diving into the reasons Schwab is incredibly well-positioned to deliver for stockholders and clients well into the future. The financial services landscape is becoming increasingly driven by investing. We occupy the trusted center of the investing ecosystem. We're both leading today and uniquely positioned to win in the future. There are several reasons for our confidence.

Speaker #2: The financial reliance services landscape is becoming increasingly driven by investing. We occupy the trusted center of the investing ecosystem. We're both leading today and uniquely positioned to win in the future.

Speaker #2: There are several reasons for our confidence. First, our record results speak for themselves. Our through-client-size strategy continues to fuel growth on all fronts. Second, Schwab is the trusted industry leader today. Our no-trade-offs value proposition is unmatched in the industry. As people increasingly consolidate their financial lives in one place and become even more engaged in investing, our unique combination of strengths puts us at the center of clients' financial lives.

Rick Wurster: First, our record results speak for themselves. Our through client size strategy continues to fuel growth on all fronts. Second, Schwab is the trusted industry leader today. Our no trade-offs value proposition is unmatched in the industry. As people increasingly consolidate their financial lives in one place and become even more engaged in investing, our unique combination of strengths puts us in the center of clients' financial lives. Third, we are winning today, our best days are still ahead of us. We have a clear strategy, we are innovating for clients at a rapid pace.

Rick Wurster: First, our record results speak for themselves. Our thorough client size strategy continues to fuel growth on all fronts. Second, Schwab is the trusted industry leader today. Our no trade-offs value proposition is unmatched in the industry. As people increasingly consolidate their financial lives in one place and become even more engaged in investing, our unique combination of strengths puts us in the center of clients' financial lives. Third, we are winning today; our best days are still ahead of us. We have a clear strategy; we are innovating for clients at a rapid pace.

Speaker #2: Third, we are winning today, and our best days are still ahead of us. We have a clear strategy, and we are innovating for clients at a rapid pace.

Speaker #2: We are continuing to attract new clients deepen client relationships, diversify our revenue, lower our cost to serve, and reinvest in our growth. I'll share more today about the opportunities ahead of us.

Rick Wurster: We are continuing to attract new clients, deepen client relationships, diversify our revenue, lower our cost to serve, and reinvest in our growth. I'll share more today about the opportunities ahead of us. Finally, our diversified financial model supports durable earnings growth across market cycles, Mike will dive into this along with our outlook for the year. In Q2 2026, we delivered record results and growth on all fronts. We're attracting new clients and assets with 1.4 million new brokerage accounts and $120 billion in core net new assets, up nearly 50% over last year. We're continuing to deepen relationships. Managed investing net flows increased to 53% over last year. Bank lending balances reached $67 billion, up 33%. All of this translated to record financial results. We delivered $7.1 billion in total revenue and adjusted earnings per share of $1.62, up 42% over last year. We are increasing our pace of innovation and adding to our breadth of capabilities as clients want to manage more of their financial life at Schwab. We've continued to expand our branch footprint and hire financial consultants, wealth advisors, and relationship managers for our RIA clients while advancing our AI capabilities. Our clients are happier, achieve better outcomes, and engage more with our combination of people and technology.

Speaker #2: Finally, our diversified financial model supports durable earnings growth across market cycles. Mike will dive into this, along with our outlook for the year.

Speaker #2: In the second quarter of 2026, we delivered record results and growth on all fronts. We're attracting new clients and assets, with 1.4 million new brokerage accounts and $120 billion in core net new assets, up nearly 50% over last year.

Speaker #2: We're continuing to deepen relationships, manage investing net flows increased 53% over last year, bank lending balances reached 67 billion, up 33%. All of this translated to record financial results.

Rick Wurster: Managed investing net flows increased to 53% over last year. Bank lending balances reached $67 billion, up 33%. All of this translated to record financial results. We delivered $7.1 billion in total revenue and adjusted earnings per share of $1.62, up 42% over last year. We are increasing our pace of innovation and adding to our breadth of capabilities as clients want to manage more of their financial life at Schwab. We've continued to expand our branch footprint and hire financial consultants, wealth advisors, and relationship managers for our RIA clients while advancing our AI capabilities.

Speaker #2: We delivered $7.1 billion in total revenue and adjusted earnings per share of $1.62, up 42% over last year. We are increasing our pace of innovation and adding to our breadth of capabilities, as clients want to manage more of their financial life at Schwab.

Speaker #2: We've continued to expand our branch footprint and hire financial consultants, wealth advisors, and relationship managers for our RIA clients, while advancing our AI capabilities.

Speaker #2: Our clients are happier, achieve better outcomes, and engage more with our combination of people and technology. AI is expanding our client capabilities and enabling us to serve our clients more efficiently.

Rick Wurster: Our clients are happier, achieve better outcomes, and engage more with our combination of people and technology. AI is expanding our client capabilities and enabling us to serve our clients more efficiently. We're delivering new products and solutions across our platform at a rapid pace. There are several examples on the page. I'll call out a few. Our Schwab Crypto rollout is going as planned. We are on track to start piloting our crypto transfer capability by the end of this month. We believe this capability creates an attractive NNA opportunity over time.

Rick Wurster: AI is expanding our client capabilities and enabling us to serve our clients more efficiently. We're delivering new products and solutions across our platform at a rapid pace. There are several examples on the page. I'll call out a few. Our Schwab Crypto rollout is going as planned. We are on track to start piloting our crypto transfers capability by the end of this month. We believe this capability creates an attractive NNA opportunity over time. We closed the Forge deal and are making progress on bringing their private market capabilities to our clients. When complete, we will be a premier destination for clients interested in investing in private markets, whether via a leading private manager, an index strategy, or investing directly in private companies. The scale of Schwab will allow us to become the destination of choice for private companies and venture capital firms seeking liquidity options.

Speaker #2: We're delivering new products and solutions across our platform at a rapid pace. There are several examples on the page, and I'll call out a few.

Speaker #2: Our SCHWAB crypto rollout is going as planned, and we are on track to start piloting our crypto transfers capability by the end of this month.

Speaker #2: We believe this capability creates an attractive M&A opportunity over time. We closed the Forge deal and are making progress on bringing their private market capabilities to our clients.

Rick Wurster: We closed the Forge deal and are making progress on bringing their private market capabilities to our clients. When complete, we will be a premier destination for clients interested in investing in private markets, whether via a leading private manager, an index strategy, or investing directly in private companies. The scale of Schwab will allow us to become the destination of choice for private companies and venture capital firms seeking liquidity options.

Speaker #2: When complete, we will be a premier destination for clients interested in investing in private markets whether via a leading private manager, an index strategy, or investing directly in private companies.

Speaker #2: The scale of Schwab will allow us to become the destination of choice for private companies and venture capital firms seeking liquidity options. We've made lots of progress in serving our clients' wealth and banking needs.

Rick Wurster: We've made lots of progress in serving our clients' wealth and banking needs. We've added the ability to complete tax filings for clients through our third-party tax prep introduction program. We've added to our banking capabilities, including the ability for clients to leverage private assets. With Wealth.com, we'll expand our tax capabilities and introduce tax planning in addition to the insights we already provide today on client trusts. We've made an investment in Paxos, a firm that is supporting the delivery of Schwab Crypto. These efforts continue to delight clients and earn industry recognition. Client promoter scores are at all-time highs in both investor services and advisor services, all of which solidifies our role as the trusted platform of choice for investors and RIAs. We are the trusted platform where investors, traders, and RIAs continue to turn.

Speaker #2: We've added the ability to complete tax filings for clients through our third-party tax prep introduction program, and we've expanded our banking capabilities, including the option for clients to leverage private assets.

Speaker #2: With wealth.com, we'll expand our tax capabilities and introduce tax planning in addition to the insights we already provide today on client trust. And we've made an investment in Paxos, a firm that is supporting the delivery of SCHWAB crypto.

Speaker #2: These efforts continue to delight clients and earn industry recognition. Client promoter scores are at all-time highs in both Investor Services and Advisor Services, all of which solidifies our role as the trusted platform of choice for investors and RIAs.

Rick Wurster: These efforts continue to delight clients and earn industry recognition. Client promoter scores are at all-time highs in both investor services and advisor services, all of which solidifies our role as the trusted platform of choice for investors and RIAs. We are the trusted platform where investors, traders, and RIAs continue to turn. We are number one in total client assets, RIA custodial assets, and daily average trades. Focusing on trading, we are the undisputed leader. We have the most activity on our platform and are growing faster than our peers. We're number one in daily average trades by a wide margin.

Speaker #2: We are the trusted platform where investors and traders and RIAs continue to turn. We are number one in total client assets; RIA custodial assets; and daily average trades.

Rick Wurster: We are number one in total client assets, RIA custodial assets, and daily average trades. Focusing on trading, we are the undisputed leader. We have the most activity on our platform and are growing faster than our peers. We're number one in daily average trades by a wide margin. We execute one-third of retail brokerage trades in the industry. We're number one in options contracts. Our clients remain highly engaged. We're continuing to invest to maintain our edge as the destination for traders. Leadership at this scale creates advantages that compound over time. As we look to the future, there is a convergence of forces reshaping our industry. We are uniquely positioned to lead. I discussed these trends at our Investor Day. We continue to see them play out. As we go through today's discussion, I will share how these forces are creating opportunity.

Speaker #2: Focusing on trading, we are the undisputed leader. We have the most activity on our platform and are growing faster than our peers. We're number one in daily average trades by a wide margin.

Speaker #2: We execute one-third of retail brokerage trades in the industry, and we're number one in options contracts. Our clients remain highly engaged, and we're continuing to invest to maintain our edge as the destination for traders.

Rick Wurster: We execute one-third of retail brokerage trades in the industry. We're number one in options contracts. Our clients remain highly engaged. We're continuing to invest to maintain our edge as the destination for traders. Leadership at this scale creates advantages that compound over time. As we look to the future, there is a convergence of forces reshaping our industry. We are uniquely positioned to lead. I discussed these trends at our Investor Day. We continue to see them play out. As we go through today's discussion, I will share how these forces are creating opportunity.

Speaker #2: Leadership at this scale creates advantages that compound over time. As we look to the future, there is a convergence of forces reshaping our industry, and we are uniquely positioned to lead.

Speaker #2: I discussed these trends at our Investor Day, and we continue to see them play out. As we go through today’s discussion, I will share how these forces are creating opportunity.

Speaker #2: The bull market for convenience is driving investors to increasingly consolidate their financial lives. Sixty-one percent of affluent clients ages 25 to 44 say they prefer to consolidate their wealth and banking relationships.

Rick Wurster: The broad market for convenience is driving investors to increasingly consolidate their financial lives. 61% of affluent clients ages 25 to 44 say they'd prefer to consolidate their wealth and banking relationships. Households with $1 to 5 million in assets using only one financial services firm jumped 11 percentage points year-over-year to 22%, and we expect this to grow as more investors seek the convenience of one-stop shopping in all aspects of their life. This consolidation is happening at a time when investing has never played a more important role in the broader financial ecosystem. As recently as a decade ago, investing skewed towards higher income, older, college-educated households. Today, stock ownership is at the highest levels we've seen in nearly 20 years. People are investing earlier in their life, and we're seeing engagement across a broader income and education spectrum.

Speaker #2: Households with $1 million to $5 million in assets using only one financial services firm jumped 11 percentage points year over year to 22%. And we expect this to grow as more investors seek the convenience of one-stop shopping in all aspects of their life.

Speaker #2: This consolidation is happening at a time when investing has never played a more important role in the broader financial ecosystem. As recently as a decade ago, investing skewed toward higher-income, older, college-educated households.

Rick Wurster: As recently as a decade ago, investing skewed towards higher income, older, college-educated households. Today, stock ownership is at the highest levels we've seen in nearly 20 years. People are investing earlier in their lives, and we're seeing engagement across a broader income and education spectrum. Investing is playing an increasingly central role in people's financial lives. We believe this trend has a long way to go.

Speaker #2: Today, stock ownership is at the highest levels we've seen in nearly 20 years. People are investing earlier in their lives, and we're seeing engagement across a broader income and education spectrum.

Speaker #2: Investing is playing an increasingly central role in people's financial lives, and we believe this trend has a long way to go. In a world where clients want to do more with one firm, and investing is more important than ever, we are uniquely positioned at the center of the investing ecosystem with the ability to support the breadth of clients' needs in the channel of their choice and in the form they prefer.

Rick Wurster: Investing is playing an increasingly central role in people's financial lives. We believe this trend has a long way to go. In a world where clients want to do more with one firm and investing is more important than ever, we are uniquely positioned at the center of the investing ecosystem with the ability to support the breadth of clients' needs in the channel of their choice and in the form they prefer. With our wealth offer, clients can access financial planning, full service advice, tax, trust, and estate services, tax-aware strategies, and more. With our bank, retail investors can manage their day-to-day financial lives with checking, savings, and bill pay, while also turning to us for lending needs. The RIAs we serve value our bank because they don't have to introduce another relationship to their clients.

Rick Wurster: In a world where clients want to do more with one firm and investing is more important than ever, we are uniquely positioned at the center of the investing ecosystem with the ability to support the breadth of clients' needs in the channel of their choice and in the form they prefer. With our wealth offer, clients can access financial planning, full-service advice, tax, trust, and estate services, tax-aware strategies, and more. With our bank, retail investors can manage their day-to-day financial lives with checking, savings, and bill pay, while also turning to us for lending needs.

Speaker #2: With our wealth offer, clients can access financial planning, full-service advice, tax, trust, and estate services, tax-aware strategies, and more. With our bank, retail investors can manage their day-to-day financial lives with checking, savings, and bill pay, while also turning to us for lending needs.

Speaker #2: The RIAs we serve value our bank because they don't have to introduce another relationship to their clients. We have the best trading platform in the industry, supported by industry-leading service as well as research, education, and coaching for traders of all sophistication levels.

Rick Wurster: The RIAs we serve value our bank because they don't have to introduce another relationship to their clients. We're the best trading platform in the industry, supported by industry-leading service as well as research, education, and coaching for traders of all sophistication levels. We offer our clients a choice of third-party and proprietary products. We continue to build out a compelling alternatives offer. We've launched crypto and are adding capabilities throughout the year.

Rick Wurster: We're the best trading platform in the industry, supported by industry-leading service as well as research, education, and coaching for traders of all sophistication levels. We offer our clients choice with third-party and proprietary products. We continue to build out a compelling alternatives offer. We've launched crypto and are adding capabilities throughout the year. Clients are turning to us because we simplify their financial life and help them achieve great outcomes across their investing, trading, wealth, banking, and lending needs. Legacy Ameritrade clients continue to engage in our wealth and lending capabilities. 27% of all thinkorswim users are now legacy Schwab clients. These capabilities are delivered in the ways our clients want to interact as they manage their financial lives. At different times in their lives and for different activities, clients engage with us in person, on the phone, web, mobile, or via AI. Our clients value that flexibility.

Speaker #2: We offer our clients choice. With third-party and proprietary products, we continue to build out a compelling alternatives offering. We've launched crypto and are adding capabilities throughout the year.

Speaker #2: Clients are turning to us because we simplify their financial lives and help them achieve great outcomes across their investing, trading, wealth, banking, and lending needs.

Rick Wurster: Clients are turning to us because we simplify their financial life and help them achieve great outcomes across their investing, trading, wealth, banking, and lending needs. Legacy Ameritrade clients continue to engage in our wealth and lending capabilities. 27% of all thinkorswim users are now legacy Schwab clients. These capabilities are delivered in the ways our clients want to interact as they manage their financial lives. At different times in their lives and for different activities, clients engage with us in person, on the phone, on the web, on mobile, or via AI. Our clients value that flexibility.

Speaker #2: Legacy Ameritrade clients continue to engage in our wealth and lending capabilities. And 27% of all thinkorswim users are now legacy Schwab clients.

Speaker #2: These capabilities are delivered in the ways our clients want to interact as they manage their financial lives. At different times in their lives, and for different activities, clients engage with us in person, on the phone, on the web, via mobile, or through AI.

Speaker #2: Our clients value that flexibility. In every interaction, across every channel, we are bringing them an experience that combines the best of people and the power of AI, using our scale to deliver exceptional value.

Rick Wurster: In every interaction across every channel, we are bringing them an experience that combines the best of people and the power of AI by using our scale to deliver exceptional value. Finally, we're building towards a technology platform that will support the industry well into the future. Whether that looks like it does today or if the industry moves more towards a digital markets infrastructure and blockchain technology. While there are clear pros and cons to tokenized securities, and it is unclear how much this market will take off, we're actively building the infrastructure to support client activity on the technology of clients' choice. With our product and capability breadth, combination of people and AI, and scale, we have a unique platform advantage that positions us to be the financial services provider of choice now and in the future, a position that is difficult for any competitor to match.

Speaker #2: Finally, we are building towards a technology platform that will support the industry well into the future, whether that looks like it does today or if the industry moves more towards a digital markets infrastructure and blockchain technology.

Speaker #2: Whether a clearly pros and cons to tokenized securities and it is unclear how much this market will take off, we're actively building the infrastructure to support client activity on the technology of clients' choice.

Rick Wurster: We're actively building the infrastructure to support client activity on the technology of clients' choice. With our product and capability breadth, combination of people and AI, and scale, we have a unique platform advantage that positions us to be the financial services provider of choice now and in the future, a position that is difficult for any competitor to match. All of this translates to delivering for stockholders. We're tackling our growth opportunities head-on. We have two equally important growth levers, serving more clients and deepening relationships.

Speaker #2: With our product and capability breadth, combination of people and AI, and scale, we have a unique platform advantage that positions us to be the financial services provider of choice now and in the future.

Speaker #2: A position that is difficult for any competitor to match. All of this translates to delivering for stockholders. We are tackling our growth opportunities head-on.

Rick Wurster: All of this translates to delivering for stockholders. We're tackling our growth opportunities head-on. We have two equally important growth levers, serving more clients and deepening relationships. We are continuing to attract new clients to Schwab, with 2.7 million new brokerage accounts opened in H1 of the year and $260 billion in core net new assets, representing year-over-year growth of nearly 20%. We're continuing to make investments that will support this growth in the future with more branches in local communities, more financial consultants, strategic marketing and advertising, including adapting our marketing to the increased influence of LLMs, to build out of an RIA support ecosystem and investments in bringing the breadth of Schwab to our workplace clients. At the same time, we are deepening relationships with clients, meeting more of their needs while diversifying our revenue streams.

Speaker #2: We have two equally important growth levers: serving more clients and deepening relationships. We are continuing to attract new clients to Schwab, with 2.7 million new brokerage accounts opened in the first half of the year and $260 billion in core net new assets.

Rick Wurster: We are continuing to attract new clients to Schwab, with 2.7 million new brokerage accounts opened in H1 of the year and $260 billion in core net new assets, representing year-over-year growth of nearly 20%. We're continuing to make investments that will support this growth in the future with more branches in local communities; more financial consultants; strategic marketing and advertising, including adapting our marketing to the increased influence of LLMs; building out an RIA support ecosystem; and investments in bringing the breadth of Schwab to our workplace clients.

Speaker #2: Representing year-over-year growth of nearly 20%. We're continuing to make investments that will support this growth in the future, with more branches in local communities, more financial consultants, and strategic marketing and advertising, including adapting our marketing to the increased influence of LLMs.

Speaker #2: The build-out of an RIA support ecosystem and investments in bringing the breadth of Schwab to our workplace clients. At the same time, we are deepening relationships with clients, meeting more of their needs while diversifying our revenue streams.

Rick Wurster: At the same time, we are deepening relationships with clients, meeting more of their needs while diversifying our revenue streams. I'll discuss the opportunities we have ahead in wealth and banking. There is a bull market for advice. We benefit from that in two ways. First, our RIA business continues to grow at a record pace as more investors seek advice and guidance. Second, more of our retail clients are seeking holistic financial advice delivered seamlessly on their terms through a combination of people and increasingly AI-enabled technology.

Speaker #2: I'll discuss the opportunities we have ahead in wealth and banking. There is a bull market for advice. We benefit from that in two ways.

Rick Wurster: I'll discuss the opportunities we have ahead in wealth and banking. There is a bull market for advice. We benefit from that in two ways. First, our RIA business continues to grow at a record pace as more investors seek advice and guidance. Second, more of our retail clients are seeking holistic financial advice delivered seamlessly on their terms through a combination of people and increasingly AI-enabled technology. We see consistently strong growth in net flows to both our Schwab Advisor Network and flagship proprietary wealth offer, Schwab Wealth Advisory. We're continuing to invest heavily in our Schwab Wealth Advisory offer, including in our tax, trust, and estate capabilities, to make sure we can meet the needs of retail clients that want more help and guidance in their life. It is working. The client promoter score for Schwab Wealth Advisory is the highest of any offer we have.

Speaker #2: First, our RIA business continues to grow at a record pace as more investors seek advice and guidance. Second, more of our retail clients are seeking holistic financial advice delivered seamlessly on their terms, through a combination of people and increasingly AI-enabled technology.

Speaker #2: We see consistently strong growth in net flows to both our SCHWAB advisor network and flagship proprietary wealth offer SCHWAB Wealth Advisory. We're continuing to invest heavily in our SCHWAB Wealth Advisory offer, including in our tax, trust, and estate capabilities to make sure we can meet the needs of retail clients that want more help and guidance in their life.

Rick Wurster: We see consistently strong growth in net flows to both our Schwab Advisor Network and flagship proprietary wealth offer, Schwab Wealth Advisory. We're continuing to invest heavily in our Schwab Wealth Advisory offer, including in our tax, trust, and estate capabilities, to make sure we can meet the needs of retail clients that want more help and guidance in their life. It is working. The client promoter score for Schwab Wealth Advisory is the highest of any offer we have.

Speaker #2: And it is working. The client promoter score for SCHWAB Wealth Advisory is the highest of any offer we have. While we have grown significantly, we barely scratched the surface on our opportunity and advice.

Rick Wurster: While we have grown significantly, we've barely scratched the surface on our opportunity and advice. The US retail market is $37 trillion and growing. We have just 2% market share. At the same time, just 5% of Schwab retail households are on a fee-based advice solution. 31% of Schwab clients say they are willing to pay for advice. Our opportunity to close this gap is a win-win for clients and Schwab. We're helping clients conduct more of their financial lives in one place, and clients in our Schwab Wealth Advisory offer generate three times the ROCA of our retail clients. The combination of the investments we're making in our wealth business, plus the sheer size of our self-directed investor base, creates an unmatched conversion funnel into advice that will delight clients, continue to fuel our growth, and diversify our economics over the long term.

Rick Wurster: While we have grown significantly, we've barely scratched the surface of our opportunity and advice. The US retail market is $37 trillion and growing. We have just 2% market share. At the same time, just 5% of Schwab retail households are on a fee-based advice solution. 31% of Schwab clients say they are willing to pay for advice. Our opportunity to close this gap is a win-win for clients and Schwab. We're helping clients conduct more of their financial lives in one place, and clients in our Schwab Wealth Advisory offer generate three times the ROCA of our retail clients.

Speaker #2: The US retail market is 37 trillion and growing. And we have just 2% market share. At the same time, just 5% of SCHWAB retail households earn a fee-based advice solution.

Speaker #2: Thirty-one percent of Schwab clients say they are willing to pay for advice. Our opportunity to close this gap is a win-win for clients and Schwab.

Speaker #2: We're helping clients conduct more of their financial lives in one place, and clients in our Schwab Wealth Advisory offer generate three times the ROCA of our retail clients.

Speaker #2: The combination of the investments we're making in our wealth business, plus the sheer size of our self-directed investor base, creates an unmatched conversion funnel into advice that will delight clients, continue to fuel our growth, and diversify our economics over the long term.

Rick Wurster: The combination of the investments we're making in our wealth business, plus the sheer size of our self-directed investor base, creates an unmatched conversion funnel into advice that will delight clients, continue to fuel our growth, and diversify our economics over the long term. Our bank is an important differentiator for us. Our ability to offer checking, payments, and lending makes it easy for clients to consolidate their financial lives with us. For our AS clients, this represents an opportunity to help the RIAs on our platform meet more of their clients' financial needs in one place.

Speaker #2: A bank is an important differentiator for us. Our ability to offer checking, payments, and lending makes it easy for clients to consolidate their financial lives with us.

Rick Wurster: Our bank is an important differentiator for us. Our ability to offer checking, payments, and lending makes it easy for clients to consolidate their financial lives with us. For our AS clients, this represents an opportunity to help the RIAs on our platform meet more of their clients' financial needs in one place. We've been focused on meeting both the asset and liability needs of our clients. Our lending balances have increased 33% year-over-year, driven in large part by adoption of our digital pledged asset line offer. Our digital PAL offer delights clients with consistently strong client promoter scores. We're continuing to make investments to enhance our lending offers, including the addition of structured asset lending, which allows clients to leverage their private investments and private shares. The growth opportunity in bank lending is meaningful.

Speaker #2: For our AS clients, this represents an opportunity to help the RIAs and our platform meet more of their clients' financial needs in one place.

Speaker #2: We've been focused on meeting both the asset and liability needs of our clients. Our lending balances have increased 33% year over year, driven in large part by adoption of our digital Pledged Asset Line offering.

Rick Wurster: We've been focused on meeting both the asset and liability needs of our clients. Our lending balances have increased 33% year-over-year, driven in large part by adoption of our digital pledged asset line offer. Our digital PAL offer delights clients with consistently strong client promoter scores. We're continuing to make investments to enhance our lending offers, including the addition of structured asset lending, which allows clients to leverage their private investments and private shares. The growth opportunity in bank lending is meaningful.

Speaker #2: Our digital PAL offer delights clients with consistently strong client promoter scores. We're continuing to make investments to enhance our lending offers. Including the addition of structured asset lending, which allows clients to leverage their private investments and private shares.

Speaker #2: The growth opportunity in bank lending is meaningful. Today at Schwab, 0.5% of clients use one of our lending products, versus 4% on average across the industry.

Rick Wurster: Today at Schwab, 0.5% of clients use one of our lending products, versus 4% on average across the industry. With an average spread to securities north of 100 basis points on PALs, as an example, narrowing the lending penetration gap as more investors consolidate their financial lives at Schwab is a win for clients and a win for our economics. Let's turn now to scale and efficiency. Our ability to execute at scale continues to drive efficiencies that allow us to reinvest in growth. Our cost per account continues to decrease, and our expense on client assets is the lowest in the industry. These efficiencies unlock dollars. We're investing in enhancing our AI experience, our global capabilities center, and our growth initiatives. In other words, our scale powers our reinvestment capacity and durable earnings power.

Speaker #2: With an average spread to securities north of 100 basis points on PALs as an example, narrowing the lending penetration gap as more investors consolidate their financial lives at Schwab is a win for clients and a win for our economics.

Speaker #2: Let's turn now to scale and efficiency. Our ability to execute at scale continues to drive efficiencies that allow us to reinvest in growth. Our cost per account continues to decrease, and our expense on client assets is the lowest in the industry.

Speaker #2: These efficiencies unlock dollars we are investing in enhancing our AI experience, our Global Capabilities Center, and our growth initiatives. In other words, our scale powers our reinvestment capacity and durable earnings power.

Rick Wurster: These efficiencies unlock dollars. We're investing in enhancing our AI experience, our global capabilities center, and our growth initiatives. In other words, our scale powers our reinvestment capacity and durable earnings power. We've talked about AI as part of our omnichannel experience. It is becoming more embedded in all we do, accelerating our strategy and amplifying our competitive advantages by personalizing client experiences, enhancing productivity, and driving scalable growth.

Speaker #2: We've talked about AI as part of our omnichannel experience. And it is becoming more embedded in all we do, accelerating our strategy and amplifying our competitive advantages by personalizing client experiences and enhancing productivity and driving scalable growth.

Rick Wurster: We've talked about AI as part of our omnichannel experience. It is becoming more embedded in all we do, accelerating our strategy and amplifying our competitive advantages by personalizing client experiences, enhancing productivity, and driving scalable growth. Importantly, we believe our greatest advantage comes from combining people with AI-powered capabilities to create deeper relationships that scale with our clients' needs. AI will help us attract new clients, deliver new capabilities to them, personalize more journeys, and create more opportunities to deepen relationships over time. We are making tangible progress here with the rollout of Portfolio Insights in May and the employee pilot for the first iteration of Schwab Assistant that launched earlier this month. With our combination of technology and people, our client easy scores are at or near all-time highs. AI is also driving efficiencies.

Rick Wurster: Importantly, we believe our greatest advantage comes from combining people with AI-powered capabilities to create deeper relationships that scale with our clients' needs. AI will help us attract new clients, deliver new capabilities to them, personalize more journeys, and create more opportunities to deepen relationships over time. We are making tangible progress here with the rollout of Portfolio Insights in May and the employee pilot for the first iteration of Schwab Assistant that launched earlier this month.

Speaker #2: Importantly, we believe our greatest advantage comes from combining people with AI-powered capabilities to create deeper relationships that scale with our clients' needs. AI will help us attract new clients, deliver new capabilities to them, personalize more journeys, and create more opportunities to deepen relationships over time.

Speaker #2: We are making tangible progress here with the rollout of portfolio insights in May and the employee pilot for the first iteration of SCHWAB Assistant that launched earlier this month.

Speaker #2: With our combination of technology and people, our client easy scores are at or near all-time highs. AI is also driving efficiencies. As an example, over the past year, developer team productivity has improved by 15 to 20 percent.

Rick Wurster: With our combination of technology and people, our client ease scores are at or near all-time highs. AI is also driving efficiencies. As an example, over the past year, developer team productivity has improved by 15% to 20%. With that, I'll turn it over to Mike to share our financial picture.

Rick Wurster: As an example, over the past year, developer team productivity has improved by 15% to 20%. With that, I'll turn it over to Mike to share our financial picture.

Speaker #2: And with that, I'll turn it over to Mike to share our financial picture.

Speaker #1: Thank you, Rick, and good morning, everyone. During my time today, I'll discuss how we converted our sustained business momentum into another quarter of record financial results.

Mike Verdeschi: Thank you, Rick, and good morning, everyone. During my time today, I'll discuss how we converted our sustained business momentum into another quarter of record financial results. In addition, I'll cover how our approach to managing the balance sheet and financial resources enables us to support robust engagement as we seek to meet the evolving needs of our clients across different environments. I will also share an updated perspective on the full year 2026 financial scenario. Finally, as we continue to do more for our clients across our platform, including incorporating emerging technologies such as AI, Schwab's model becomes increasingly diversified and scalable, helping to further enhance our financial durability through the cycle. In doing so, we remain positioned to continue providing individual investors and RIAs with an industry-leading value proposition.

Speaker #1: In addition, I'll cover how our approach to managing the balance sheet and financial resources enables us to support robust engagement as we seek to meet the evolving needs of our clients across different environments.

Speaker #1: I will also share an updated perspective on the full-year 2026 financial scenario. And finally, as we continue to do more for our clients across our platform, including incorporating emerging technologies such as AI, Schwab's model becomes increasingly diversified and scalable.

Mike Verdeschi: Finally, as we continue to do more for our clients across our platform, including incorporating emerging technologies such as AI, Schwab's model becomes increasingly diversified and scalable, helping to further enhance our financial durability through the cycle. In doing so, we remain positioned to continue providing individual investors and RIAs with an industry-leading value proposition.

Speaker #1: Helping to further enhance our financial durability through the cycle. In doing so, we've remained positioned to continue providing individual investors and RIAs with an industry-leading value proposition.

Speaker #1: Q2 was yet another strong quarter for Schwab. With a combination of our continued business momentum, client engagement, and diversified model, we were able to deliver strong outcomes well beyond the second quarter scenario we shared with you at Investor Day in May.

Mike Verdeschi: Q2 was yet another strong quarter for Schwab, where the combination of our continued business momentum, client engagement, and diversified model enable us to deliver strong outcomes well beyond the Q2 scenario we shared with you at Investor Day in May. This outperformance was a result of a number of factors, including a further acceleration in client trading activity through the end of the quarter. Total revenue grew 21% year over year to $7.1 billion, including a 19% increase in net interest revenue versus the prior year period due to increased utilization of our lending solutions by clients, the reduction of higher cost borrowings at the banks, and demand for long short strategies.

Mike Verdeschi: Q2 was yet another strong quarter for Schwab, where the combination of our continued business momentum, client engagement, and diversified model enabled us to deliver strong outcomes well beyond the Q2 scenario we shared with you at Investor Day in May. This outperformance was a result of a number of factors, including a further acceleration in client trading activity through the end of the quarter.

Speaker #1: This outperformance was a result of a number of factors, including a further acceleration in client trading activity through the end of the quarter. Total revenue grew 21% year over year to $7.1 billion.

Mike Verdeschi: Total revenue grew 21% year over year to $7.1 billion, including a 19% increase in net interest revenue versus the prior year period due to increased utilization of our lending solutions by clients, the reduction of higher-cost borrowings at the banks, and demand for long-short strategies. Momentum within the technology sector helped lift equity markets to their best quarterly performance since early 2020, which, in combination with robust asset gathering and client interest in Schwab's wealth and asset management offerings, drove 16% year-over-year growth in asset management and administration fees to $1.8 billion.

Speaker #1: Including a 19% increase in net interest revenue versus the prior year period due to increased utilization of our lending solutions by clients, the reduction of high-cost borrowings at the banks, and demand for long-short strategies.

Speaker #1: Momentum within the technology sector helped lift equity markets through their best quarterly performance since early 2020. Which in combination with robust asset gathering and client interest in SCHWAB's wealth and asset management offerings, drove 16% year over year growth in asset management and administration fees to $1.8 billion.

Mike Verdeschi: Momentum within the technology sector helped lift equity markets to their best quarterly performance since early 2020, which in combination with robust asset gathering and client interest in Schwab's wealth and asset management offerings, drove 16% year over year growth in asset management and administration fees to $1.8 billion. Schwab's industry-leading retail trading platform supported continued client engagement with daily average trades of 11.9 million, driving a 28% increase in trading revenue to $1.2 billion. Bank deposit account fees grew 35% year over year due to continued improvement in the net yield. Other revenue was up 32% versus Q2 2025, with stronger trading volumes as well as typical Q2 seasonality. Moving to expenses.

Speaker #1: Schwab's industry-leading retail trading platform supported continued client engagement with daily average trades of 11.9 million, driving a 28% increase in trading revenue to $1.2 billion.

Mike Verdeschi: Schwab's industry-leading retail trading platform supported continued client engagement with daily average trades of 11.9 million, driving a 28% increase in trading revenue to $1.2 billion. Bank deposit account fees grew 35% year over year due to continued improvement in the net yield. Other revenue was up 32% versus Q2 2025, with stronger trading volumes as well as typical Q2 seasonality. Moving to expenses.

Speaker #1: Bank deposit account fees grew 35% year over year due to continued improvement in the net yield, and other revenue was up 32% versus Q2 '25, with stronger trading volumes as well as typical second quarter seasonality.

Speaker #1: Moving to expenses. Adjusted expenses for the second quarter grew 11% year over year, reflecting strong client engagement across our trading, wealth, and banking solutions, and the first full quarter of FORGE.

Mike Verdeschi: Adjusted expenses for Q2 grew 11% year over year, reflecting strong client engagement across our trading, wealth, and banking solutions and the first full quarter of Forge, while underlying expenses remain in line with our initial expectations. We also continue to make investments in key strategic initiatives to support organic growth, new products, client experience, scale and efficiency, as well as artificial intelligence. Record quarterly revenue combined with balanced expense management delivered adjusted pre-tax profit margin of 54.3%, as Q2 adjusted earnings per share reached a record $1.62, a year over year increase of 42%. Moving to the balance sheet. Demand for our secured lending solutions remained strong. Total margin balances ended the quarter at $165.1 billion, including continued growth in long short related activity.

Speaker #1: While underlying expenses remain in line with our initial expectations. We also continue to make investments in key strategic initiatives to support organic growth, new products, client experience, scale and efficiency, as well as artificial intelligence.

Speaker #1: Record quarterly revenue combined with balance expense management delivered adjusted pre-tax profit margin of 54.3%. As second quarter adjusted earnings per share, reached a record $62, a year over year increase of 42%.

Mike Verdeschi: Record quarterly revenue combined with balanced expense management delivered an adjusted pre-tax profit margin of 54.3%, as Q2 adjusted earnings per share reached a record $1.62, a year-over-year increase of 42%. Moving to the balance sheet. Demand for our secured lending solutions remained strong. Total margin balances ended the quarter at $165.1 billion, including continued growth in long/short-related activity.

Speaker #1: Moving to the balance sheet. Demand for our secured lending solutions remained strong. Total margin balances ended the quarter at $165.1 billion, including continued growth in long-short related activity.

Speaker #1: Led by new pledged asset line originations, total bank loan balances grew to $67 billion, up 33% from Q4 '25 and 16% versus the prior year-end.

Mike Verdeschi: Led by new pledged asset line origination, total bank loan balances grew to $67 billion, up 33% from Q2 2025 and 16% versus the prior year end. While investment securities remain relatively flat as we continue to support client lending needs. Increased lending activity helps further deepen relationships with clients and drives relative improvements to both Schwab's revenue growth and mix, as we earn an incremental spread to the security we'd otherwise purchase. Client cash followed typical seasonal trends, including tax payments in April. While strong equity markets lifted sentiment and supported elevated trading activity, transactional sweep cash increased by $24.2 billion in Q2, largely driven by demand for long short strategies as well as organic asset gathering. Beyond the growth related to long short, client cash trends remained strong with year-to-date underlying cash performing better than our initial expectations coming into the year.

Mike Verdeschi: Led by new pledged asset line origination, total bank loan balances grew to $67 billion, up 33% from Q2 2025 and 16% versus the prior year-end. While investment securities remain relatively flat as we continue to support client lending needs. Increased lending activity helps further deepen relationships with clients and drives relative improvements to both Schwab's revenue growth and mix, as we earn an incremental spread to the security we'd otherwise purchase. Client cash followed typical seasonal trends, including tax payments in April.

Speaker #1: While investment securities remain relatively flat as we continue to support client lending needs, increased lending activity helps further deepen relationships with clients and drives relative improvements to both Schwab's revenue growth and mix.

Speaker #1: As we earn an incremental spread to the security we'd otherwise purchase. Client cash followed typical seasonal trends, including tax payments in April. And while strong equity markets lifted sentiment and supported elevated trading activity, transactional sweep cash increased by $24.2 billion in Q2, largely driven by demand for long-short strategies as well as organic asset gathering.

Mike Verdeschi: While strong equity markets lifted sentiment and supported elevated trading activity, transactional sweep cash increased by $24.2 billion in Q2, largely driven by demand for long-short strategies as well as organic asset gathering. Beyond the growth related to long short, client cash trends remained strong, with year-to-date underlying cash performing better than our initial expectations coming into the year. At the same time, we continue to optimize our funding mix to efficiently meet the client demand for our lending solutions.

Speaker #1: Beyond the growth related to long-short, client cash trends remained strong, with year-to-date underlying cash performing better than our initial expectations coming into the year.

Speaker #1: At the same time, we continue to optimize our funding mix to efficiently meet client demand for our lending solutions. Looking ahead, we'll keep prioritizing flexibility in managing the balance sheet to remain well positioned for different macroeconomic environments.

Mike Verdeschi: At the same time, we continue to optimize our funding mix to efficiently meet the client demand for our lending solutions. Looking ahead, we will keep prioritizing flexibility in managing the balance sheet to remain well-positioned for different macroeconomic environments. Capital levels remain strong, with our adjusted Tier 1 leverage ratio finishing the quarter within the 6.75% to 7% range. Our adjusted ratio of 6.8% reflects our support of business growth and client engagement, as well as the net redemption of preferred equity and the repurchase of $1 billion worth of common shares. Looking ahead, we will continue to apply our consistent capital management framework, including prioritizing our resources to support client activity and the growth of our franchise. The Q2 further demonstrated the strength of Schwab's model, positioning the firm to continue supporting clients while delivering strong financial outcomes over time. Now pivoting to the full-year 2026 scenario.

Mike Verdeschi: Looking ahead, we will keep prioritizing flexibility in managing the balance sheet to remain well-positioned for different macroeconomic environments. Capital levels remain strong, with our adjusted Tier 1 leverage ratio finishing the quarter within the 6.75% to 7% range. Our adjusted ratio of 6.8% reflects our support of business growth and client engagement, as well as the net redemption of preferred equity and the repurchase of $1 billion worth of common shares.

Speaker #1: Capital levels remain strong but our adjusted tier one leverage ratio finishing the quarter within the 6.75 to 7% range. Our adjusted ratio of 6.8% reflects our support of business growth and client engagement as well as the net redemption of preferred equity, and the repurchase of $1 billion worth of common shares.

Speaker #1: Looking ahead, we will continue to apply our consistent capital management framework, including prioritizing our resources to support client activity and the growth of our franchise.

Mike Verdeschi: Looking ahead, we will continue to apply our consistent capital management framework, including prioritizing our resources to support client activity and the growth of our franchise. The Q2 further demonstrated the strength of Schwab's model, positioning the firm to continue supporting clients while delivering strong financial outcomes over time. Now pivoting to the full-year 2026 scenario. Let's take a moment to review how certain key assumptions have evolved over the first six months of the year. At the Investor Day back in May, we spoke to a scenario that depicted flat sub-funds for the year.

Speaker #1: The second quarter further demonstrated the strength of Schwab's model, positioning the firm to continue supporting clients while delivering strong financial outcomes over time. Now, pivoting to the full year 2026 scenario.

Speaker #1: Let's take a moment to review how certain key assumptions have evolved over the first six months of the year. At Investor Day back in May, we spoke to a scenario that reflected flat Fed funds for the year, stronger equity markets, and increased client trading activity.

Mike Verdeschi: Let's take a moment to review how certain key assumptions have evolved over the first six months of the year. At the Investor Day back in May, we spoke to a scenario that reflected flat sub-funds for the year. Stronger equity markets and increased client trading activity. We also incorporated Forge's revenue and expenses following the acquisition's close in Q1. While the impact of that acquisition is not material to the 2026 scenario, it does influence the revenue and expense year-over-year growth rates. In terms of where we are today, market expectations for interest rates continue to evolve, with the forward curve pricing in one 25 basis point rate hike before the end of the year. Given the strong year-to-date equity market returns, we are now assuming approximately 13% full-year market appreciation.

Mike Verdeschi: Stronger equity markets and increased client trading activity. We also incorporated Forge's revenue and expenses following the acquisition's close in Q1. While the impact of that acquisition is not material to the 2026 scenario, it does influence the revenue and expense year-over-year growth rates. In terms of where we are today, market expectations for interest rates continue to evolve, with the forward curve pricing in one 25 basis point rate hike before the end of the year. Given the strong year-to-date equity market returns, we are now assuming approximately 13% full-year market appreciation.

Speaker #1: We also incorporated FORGE's revenue and expenses following the acquisition's close in one Q. And while the impact of that acquisition is not material to the 2026 scenario, it does influence the revenue and expense year over year growth rates.

Speaker #1: In terms of where we are today, market expectations for interest rates continue to evolve. With the forward curve pricing in 125 basis point rate hike, before the end of the year.

Speaker #1: Given the strong year-to-date equity market returns, we are now assuming approximately 13% full-year market appreciation. And our asset gathering momentum reinforces our confidence in the 5% organic growth rate we outlined for 2026.

Mike Verdeschi: Our asset gathering momentum reinforces our confidence in the 5% organic growth rate we outlined for 2026. Following another quarter of strong trading volumes, we have taken full-year daily average trades up to 10.6 million. This trading assumption does include a pullback from recent monthly levels, reflecting an expected moderation in activity, in part due to the seasonal slowdown during the summer. Therefore, we would anticipate revenue per trade to increase modestly from Q2 2026 levels as rate and volume tend to be inversely correlated. Finally, today's updated scenario includes Forge, but excludes the impact from any opportunistic share repurchases during the H2 2026.

Mike Verdeschi: Our assets gathering momentum reinforce our confidence in the 5% organic growth rate we outlined for 2026. Following another quarter of strong trading volumes, we have taken full-year daily average trades up to 10.6 million. This trading assumption does include a pullback from recent monthly levels, reflecting an expected moderation in activity, in part due to the seasonal slowdown during the summer. Therefore, we would anticipate revenue per trade to increase modestly from Q2 2026 levels as rate and volume tend to be inversely correlated.

Speaker #1: Following another quarter of strong trading volumes, we have taken full year daily average trades up to 10.6 million. This trading assumption does include a pullback from recent monthly levels reflecting an expected moderation in activity in part due to the seasonal slowdown during the summer.

Speaker #1: Therefore, we would anticipate revenue per trade to increase modestly from Q2 '26 levels, as rate and volume tend to be inversely correlated. Finally, today's updated scenario includes FORGE, but excludes the impact from any opportunistic share repurchases during the second half of 2026.

Mike Verdeschi: Finally, today's updated scenario includes Forge but excludes the impact from any opportunistic share repurchases during H2 2026. Using these updates, we would expect total revenue growth of 17.5% to 18.5% in 2026, with full-year net interest margin expanding to a range of 3% to 3.10%, and average Q4 2026 net interest margin expected to finish in the 3.25% to 3.30% range as the timing of the potential Fed rate hike late in the year limits the impact in 2026. Full-year 2026 interest-earning assets are expected to expand modestly year-over-year.

Speaker #1: Using these updates, we would expect total revenue growth of 17.5% to 18.5% in 2026, with full-year net interest margin expanding to a range of 3.00% to 3.10%. The average fourth quarter 2026 net interest margin is expected to finish in the 3.25% to 3.30% range, as the timing of the potential Fed rate hike late in the year limits the impact in 2026.

Mike Verdeschi: Using these updates, we would expect total revenue growth of 17.5% to 18.5% in 2026, with full-year net interest margin expanding to a range of 3% to 3.10%, and average Q4 2026 net interest margin expected to finish in the 3.25% to 3.30% range as the timing of the potential Fed rate hike late in the year limits the impact in 2026. Full-year 2026 interest earning assets are expected to expand modestly year-over-year. Given our sustained business momentum, we now anticipate annual expense growth to range from 9.5% to 10.5%. I would note that underlying expenses still remain in line with the 5.5% to 6.5% range we shared at the January winter business update. The higher expense view is driven by a couple of factors. First, volume-related expenses as we supported client engagement, where this increase is more than offset by stronger revenue.

Speaker #1: Full-year 2026 interest-earning assets are expected to expand modestly year over year. And, given our sustained business momentum, we now anticipate annual expense growth to range from 9.5% to 10.5%.

Mike Verdeschi: Given our sustained business momentum, we now anticipate annual expense growth to range from 9.5% to 10.5%. I would note that underlying expenses still remain in line with the 5.5% to 6.5% range we shared at the January winter business update. The higher expense view is driven by a couple of factors. First, volume-related expenses, as we supported client engagement, where this increase is more than offset by stronger revenue.

Speaker #1: And I would note that underlying expenses still remain in line with the 5.5% to 6.5% range we shared at the January Winter Business Update.

Speaker #1: The higher expense view is driven by a couple of factors. First, volume related expenses as we supported client engagement where this increase is more than offset by stronger revenue.

Speaker #1: And second, the inclusion of FORGE, which contributes approximately 100 basis points to the year-over-year growth rate. Putting it all together, today's scenario implies stronger positive operating leverage and expanded adjusted pre-tax margin levels versus our prior scenarios.

Mike Verdeschi: Second, the inclusion of Forge, which contributes approximately 100 basis points to the year-over-year growth rate. Putting it all together, today's scenario implies stronger positive operating leverage and expanded adjusted pre-tax margin levels versus our prior scenarios. Similar to past business updates, when we share a financial scenario, we have included a set of high-level static revenue sensitivities. Today's sensitivities are as of 30 June and are intended to complement the updated scenario we just walked through, helping you refine your estimates and shape your own perspective around the remainder of 2026. To wrap up, I wanted to revisit the financial formula slide from our investor day. Schwab's strong momentum and success over the past five decades has been driven by our focus on clients.

Speaker #1: Similar to past business updates, when we share financial scenarios, we have included a set of high-level static revenue sensitivities. Today's sensitivities are as of June 30.

Mike Verdeschi: Today's sensitivities are as of 30 June and are intended to complement the updated scenario we just walked through, helping you refine your estimates and shape your own perspective around the remainder of 2026. To wrap up, I wanted to revisit the financial formula slide from our investor day. Schwab's strong momentum and success over the past five decades have been driven by our focus on clients.

Speaker #1: And are intended to complement the updated scenario we just walked through, helping you refine your estimates and shape your own perspective around the remainder of 2026.

Speaker #1: So, to wrap up, I wanted to revisit the financial formula slide from our Investor Day. Schwab's strong momentum and success over the past five decades has been driven by our focus on clients.

Speaker #1: And as Rick noted upfront, we remain extremely well-positioned for the future, with an expanding set of wealth and investing solutions to help clients meet their financial goals.

Mike Verdeschi: As Rick noted upfront, we remain extremely well-positioned for the future with an expanding set of wealth and investing solutions to help clients meet their financial goals. In continuing to do more for our clients, we can drive long-term organic growth while further diversifying our revenue streams. Which when combined with Schwab's leading scale, as well as our disciplined approach to expense and balance sheet management, helps reinforce our confidence in delivering mid-teen earnings growth through the cycle. With that, let's move on to Q&A. Jeff?

Speaker #1: And in continuing to do more for our clients, we can drive long-term organic growth while further diversifying our revenue streams. Which, when combined with Schwab’s leading scale, as well as our disciplined approach to expense and balance sheet management, helps reinforce our confidence in delivering mid-teens earnings growth through the cycle.

Speaker #1: And with that, let's move on to Q&A. Jeff?

Speaker #2: Bob Peter, can you please kick off the Q&A portion of the program?

Rick Wurster: Operator, can you please kick off the Q&A portion of the program?

Jeff Edwards: Operator, can you please kick off the Q&A portiWhich, the program?

Speaker #3: Thank you. We will now begin our question-and-answer session. If you would like to ask a question, please press star one (*1). Please press star two (*2) if you would like to withdraw your question.

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 Dan Fannon with Jefferies. Your line is open.

Operator: Thank you. We will now begin our questiohavend 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 Dan Fannon with Jefferies. Your line is open.

Speaker #3: Again, that is star one to ask a question. Our first question will come from Dan Fannon with Jefferies. Your line is open.

Speaker #2: Thanks. Good morning. Rick, NNA accelerates throughout the quarter capped by a record June. Was hoping you could discuss the sustainability of these trends as well as provide some context on the contribution from new to firm clients versus increasing share of volatile existing customers.

Dan Fannon [Managing Director: Thanks. Good morning. Rick Wurster, NNA accelerated throughout the quarter, capped by a record June. Was hoping you could discuss the sustainability of these trends as well as provide some context on the contribution from new-to-firm clients versus increasing share of wallet of existing customers.

Dan Fannon: Thanks. Good morning. Rick Wurster, NNA accelerated througNNA,t the quarter, cis the firstped byecord June. Was hoping you could discuss the sustainability of these trends as well as provide some context on the contribution from new-to-firm clients versus increasing share of wallet of existing customers.

Speaker #4: Thanks for the question, Dan. I still believe 5% or higher is the right long-term expectation, and we remain bullish on NNA. I also expect we'll deepen relationships, and we really do see clients consolidating their financial life, with investing being more at the center.

Rick Wurster: Thanks for the question, Dan Fannon. I still believe 5% or higher is the right long-term expectation, and we remain bullish on NNA. I also expect we'll deepen relationships, and we really do see clients consolidating their financial life with investing being more at the center, and that puts us in a winning position. You see it in the growth of everything we're doing. Wealth, our proprietary wealth offer flows are up 86% year to date. Power originations are up 60%. Our number of bank accounts we have, I think, are up 12%. Look at all of these statistics, and it just shows that clients are doing more and more with us. I think that helps bring more NNA to the firm as well. It's a nice cycle. As I think about our three businesses,

Rick Wurster: Thanks for the question, Dan Fannon. I still believe 5% or higher is the right long-term expectation, and we remain bullish on NNA. I also expect we'll deepen relationships, and we really do see clients consolidating their financial life with investing being more at the center, and that puts us in a winning position. You see it in the growth of everything we're doing. Wealth, our proprietary wealth offer flows are up 86% year-to-date. Power originations are up 60%. The number of bank accounts we have, I think, is up 12%.

Speaker #4: And that puts us in a winning position. And you see it in the growth of everything we're doing—wealth, our proprietary wealth offer. Flows are up 86% year to date.

Speaker #4: Power originations are up 60%. Our number of bank accounts, I think, is up 12%. Look at all of these statistics—it just shows that clients are doing more and more with us.

Rick Wurster: Look at all of these statistics, and it just shows that clients are doing more and more with us. I think that helps bring more NNA to the firm as well. It's a nice cycle. As I think about our three businesses, starting with advisor services, I think we continue to distance ourselves from competition in the marketplace, and we see NNA and TOA both accelerating. I think the capabilities we have are becoming even more and more challenging to match.

Speaker #4: And I think that helps bring more NNA to the firm as well, so it's a nice cycle. As I think about our three businesses, starting with Advisor Services, I think we continue to distance ourselves from competition in the marketplace.

Rick Wurster: Starting with advisor services, I think we continue to distance ourselves from competition in the marketplace, and we see NNA and TOA both accelerating. I think the capabilities we have are becoming even more and more challenging to match. As independence continues to win and RIAs thrive, we're the natural leader in the advisor space, and I expect that to drive more than 5% NNA growth, just as it has for the last several quarters. I think we're 6% plus in that business the last 4 quarters or so. In IS, I think that we continue to do a nice job of driving NNA. We are investing in FCs and in AI. One of the things we observe is that even with the advent of AI, our NNA growth rates where we have a relationship far outpace those where we don't have a relationship.

Speaker #4: And we see NNA and TOA both accelerating. And I think the capabilities we have are becoming even more and more challenging to match. And as independents continues to win and RIAs thrive, we're the natural leader in the advisor space.

Rick Wurster: As independence continues to win and RIAs thrive, we're the natural leader in the advisor space, and I expect that to drive more than 5% NNA growth, just as it has for the last several quarters. I think we're 6% plus in that business for the last 4 quarters or so. In IS, I think that we continue to do a nice job of driving NNA. We are investing in FCs and in AI. One of the things we observe is that even with the advent of AI, our NNA growth rates where we have a relationship far outpace those where we don't have a relationship.

Speaker #4: And I expect that to drive more than 5% NNA growth, just as it has for the last several quarters. I think we’re 6% plus in that business the last four quarters or so.

Speaker #4: In IS, I think that we continue to do a nice job of driving NNA. We are investing in FCs and in AI. And one of the things we observe is that, even with the advent of AI, our NNA growth rates where we have a relationship far outpace those where we don't have a relationship.

Speaker #4: So, we continue to invest in making sure our clients have coverage or are having their needs met. And when we do that, again, our expectation is NNA growth should be 5% or higher.

Rick Wurster: We continue to invest in making sure our clients have coverage for having their needs met. When we do that, again, our expectation is NNA growth should be 5% or higher. Finally, our workplace business, our stock plan business, has been thriving and been a nice contributor to NNA. We have a big opportunity to increase NNA in our retirement business over time. That's an area where we could be doing more, where we have an opportunity to introduce ourselves to many working Americans for the first time, and I believe we have an opportunity to grow our NNA there. All in all, I'm bullish on our NNA. We remain positive about hitting 5% or higher and feel good about each of our three client-facing businesses in that regard.

Rick Wurster: We continue to invest in making sure our clients have coverage for having their needs met. When we do that, again, our expectation is NNA growth should be 5% or higher. Finally, our workplace business, our stock plan business, has been thriving and has been a nice contributor to NNA. We have a big opportunity to increase NNA in our retirement business over time. That's an area where we could be doing more, where we have an opportunity to introduce ourselves to many working Americans for the first time, and I believe we have an opportunity to grow our NNA there.

Speaker #4: Finally, our workplace business, our stock plan business has been thriving and been a nice contributor to NNA. We have a big opportunity to increase NNA in our retirement business over time.

Speaker #4: That's an area where we could be doing more, where we have an opportunity to introduce ourselves to many working Americans for the first time and I believe we have an opportunity to grow our NNA there.

Speaker #4: So all in all, I'm bullish on our NNA. We remain positive about hitting 5% or higher. And feel good about each of our three client facing businesses in that regard.

Rick Wurster: All in all, I'm bullish on our NNA. We remain positive about hitting 5% or higher and feel good about each of our three client-facing businesses in that regard.

Speaker #3: Thank you. Our next question comes from Patrick Moyley with Piper Sandler. Your line is open.

Operator: Thank you. Our next question comes from Brian Moynihan with Piper Sandler. Your line is open.

Speaker #4: Yes, good morning. Thanks for taking the question. So one of the hit on the record trading activity in the quarter 12 million daily average trade is pretty impressive.

Brian Moynihan: Yes, good morning. Thanks for taking the question. I wanted to hit on the record trading activity in the quarter. 12 million daily average trade is pretty impressive. I know you rolled out crypto trading. There were also some pretty high-profile IPOs that attracted lots of retail attention. Curious what you would characterize as normalized engagement here versus what's market environment driven, and just overall, how we should think about sustainability of the trading activity at these levels. Thanks.

Brian Moynihan: Yes, good morning. Thanks for taking the question. I wanted to hit on the record trading activity in the quarter. putmillion daily average trade is pretty impressive. I know you rolled out crypto trading. There were also some prA 12ty high-profile IPOs that attracted lots of retail attention. Curious what you would characterize as normalized engagement here versus what's market environment driven, and just overall, how we should think about sustainability of the trading activity at these levels. Thanks.

Speaker #4: I know you rolled out crypto trading. There were also some pretty high profile IPOs that attracted lots of retail attention. So curious what you would characterize as normalized engagement here versus what's market environment driven and just overall how we should think about sustainability of the trading activity.

Speaker #4: At these levels. Thanks. Yeah. Thanks for the question. We believe that the trading engagement you've seen is sustainable and it's supported by broad client participation.

Rick Wurster: Yeah, thanks for the question. We believe that the trading engagement you've seen is sustainable, and it's supported by broad client participation. We've really seen a growth in young investors. I think part of that was started with the removal of commissions, which brought more people into the market that had less money. We've also seen growth and comfort with options trading as people have become more familiar with that as a way to add income or hedge portfolios. I think there's been a structural shift in the amount of options trading that we'll see. The change in the pattern day trader rule is another factor that's likely to be in some of our numbers, but also likely to fuel our numbers in the future as the barriers for less wealthy clients continue to be removed and them being actively participating in markets.

Speaker #4: We've really seen a growth in young investors I think part of that was started with the removal of commissions which brought more people into the market that had less money.

Speaker #4: We've also seen growth and comfort with options trading, as people have become more familiar with that as a way to add income or hedge portfolios.

Speaker #4: I think there's been a structural shift in the amount of options trading that we'll see. The pattern to change and the pattern day trading rule is another factor that's likely to be in some of our numbers but also likely to fuel our numbers in the future as the barriers for less wealthy clients continue to be removed and them being actively participating in markets.

Rick Wurster: The change in the pattern day trader rule is another factor that's likely to be in some of our numbers but also likely to fuel our numbers in the future as the barriers for less wealthy clients continue to be removed and them actively participating in markets. I think AI has absolutely been a factor in our trading levels and will continue to drive trading as people use AI to both do research on how to position themselves and how to invest, as well as use AI in more of an algorithmic fashion to drive some of their trading. I think AI is a factor.

Speaker #4: I think AI is absolutely benefactor in our trading levels and will continue to drive trading as people use AI to both do research on how to position themselves and how to invest as well as use AI in more of an algorithmic fashion to drive some of their trading.

Rick Wurster: I think AI is absolutely been a factor in our trading levels and will continue to drive trading as people use AI to both do research on how to position themselves and how to invest, as well as use AI in more of an algorithmic fashion to drive some of their trading. I think AI is a factor. Finally, I do think the market environment is conducive, and it's conducive for a few reasons. Number one, returns have been good, but we actually find client behavior to be more driven by the volatility of markets and the interesting activities in the market. The fact that there's been the AI, the Magnificent Seven, SpaceX more recently, all those things drive client interest, and not just in those areas, but more broadly in investing.

Speaker #4: So I think AI is a factor. Finally, I do think the market environment is conducive and it's conducive for a few reasons. Number one, returns have been good but we actually find client behavior to be more driven by the volatility of markets and then the interesting activities in the market.

Rick Wurster: Finally, I do think the market environment is conducive, and it's conducive for a few reasons. Number one, returns have been good, but we actually find client behavior to be more driven by the volatility of markets and the interesting activities in the market. The fact that there's been AI, the Magnificent Seven, SpaceX more recently, and all those things drive client interest, and not just in those areas, but more broadly in investing.

Speaker #4: So the fact that there's been the AI, the Mag 7, SpaceX more recently—all of those things drive client interest, and not just in those areas, but more broadly in investing.

Speaker #4: So I think you've seen a structural shift in people wanting to be engaged and wanting to invest. Young investors, AI, all of that is leading towards a more sustained period of high levels of trading from our perspective.

Rick Wurster: I think you've seen a structural shift in people wanting to be engaged and wanting to invest. Young investors, AI, all of that is leading towards a more sustained period of high levels of trading from our perspective.

Rick Wurster: I think you've seen a structural shift in people wanting to be engaged and wanting to invest. Young investors, AI, and all of that are leading towards a more sustained period of high levels of trading from our perspective.

Speaker #3: Thank you. Our next question comes from Devin Ryan with Citizens Bank. Your line is open.

Operator: Thank you. Our next question comes from Devin Ryan with Citizens Bank. Your line is open.

Speaker #5: Thanks. Good morning, Eric and Mike. Another question just on the June strength, and I want to hit on SpaceX specifically and get a sense of how much that mattered for the June momentum and some of the behaviors you saw around it.

Devin Ryan: Thanks. Good morning, Rick and Mike. Another question just on the June strength and want to hit on SpaceX specifically and just get a sense of how much that mattered for the June momentum and some of the behaviors you saw around it. I guess the reason I'm asking is because if we think that's maybe the beginning of a broadening of kind of an IPO window opening, the type of multiplier you might see on that, some of the areas that maybe still are far away from getting back to where they could be, maybe like Securities lending or just other areas that have some upside. Thank you.

Devin Ryan: Thanks. Good morning, Rick and Mike. Another question is just on the June strength, and I want to hit on SpaceX specifically and just get a sense of how much that mattered for the June momentum and some of the behaviors you saw around it. I guess the reason I'm asking is because if we think that's maybe the beginning of a broadening of kind of an IPO window opening, the type of multiplier you might see on that, some of the areas that maybe still are far away from getting back to where they could be, maybe like Securities lending or just other areas that have some upside. Thank you.

Speaker #5: And I guess the reason I'm asking is because if we think that's maybe the beginning of a broadening of, kind of, an IPO window opening, the type of multiplier you might see on that—some of the areas that maybe still are far away from getting back to where they could be, maybe like sec lending or just other areas that have some upside.

Speaker #5: Thank you.

Rick Wurster: Let me start with SpaceX, and then Mike can cover Securities lending and some of the other benefits. There was tremendous interest in SpaceX from our client base in participating in the IPO, and we obviously made as many shares available to them as we could get. It drove high levels of volume into our service centers, high levels of engagement with financial consultants, with RIAs, and the like. It did not meaningfully impact our NNA in any way. The numbers you see in June, I know some other firms reported huge bounces in NNA from SpaceX-related activity. That was just not the case for us. It was more a factor of just broad-based strength in our client base.

Rick Wurster: Let me start with SpaceX, and then Mike can cover securities lending and some of the other benefits. There was tremendous interest in SpaceX from our client base in participating in the IPO, and we obviously made as many shares available to them as we could get. It drove high levels of volume into our service centers and high levels of engagement with financial consultants, RIAs, and the like. It did not meaningfully impact our NNA in any way. The numbers you see in June—I know some other firms reported huge bounces in NNA from SpaceX-related activity.

Speaker #4: Let me start with SpaceX and then Mike can cover sec lending and some of the other benefits. There was tremendous interest in SpaceX from our client base and participating in the IPO and we obviously made as many shares as available to them as we could get.

Speaker #4: It drove high levels of volume into our service centers, and high levels of engagement with financial consultants, RIAs, and the like. It did not meaningfully impact our NNA in any way.

Speaker #4: So the numbers you see in June I know some other firms reported huge bounces in NNA from SpaceX related activity. That was just not the case for us and it was more a factor of just broad brace strength in our client base.

Rick Wurster: That was just not the case for us. It was more a factor of just broad-based strength in our client base.

Speaker #2: In terms of the sec lending activity we're not expecting much there. From SpaceX and so that's been somewhat of a subdued set of activities in that space this year.

Mike Verdeschi: In terms of the Securities lending activity, we're not expecting much there from SpaceX. That's been somewhat of a subdued set of activities in that space this year. Not expecting much to come from that.

Mike Verdeschi: In terms of the securities lending activity, we're not expecting much there from SpaceX. That's been somewhat of a subdued set of activities in that space this year. Not expecting much to come from that.

Speaker #2: So, not expecting much to come from that.

Speaker #3: Thank you. Our next question comes from Bill Katz with TD Cowan. Your line is open.

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

Speaker #5: Okay. Thank you very much. Mike, maybe one for you. As I sort of pencil out your financial guidance, I think I get something like $665 million for the full year.

Bill Katz: Okay, thank you very much. Mike, maybe one for you. As I sort of pencil out your financial guidance, I think I get something like $665 for the full year if I just assume about a 23% tax rate and a flat share count from Q2. I'm just sort of curious if we could dive into the share count outlook and maybe the broader question on capital return. Here's my question. If you assume that the earning assets grow a little bit this year and your NIM expands the way you think it expands, your income margin seems you're running about 75%. How do we think about that use of free cash flow from here?

Speaker #5: If I just assume about 23% tax rate and a flat share count from the second quarter. So I'm just sort of curious we could dive into the share count outlook and maybe the broader question on capital return.

Speaker #5: So here's my question. If you assume that the earning assets grow a little bit this year and your NIM expands the way you think it expands your incremental margin seems to be running about 75%.

Speaker #5: How do we think about that use of free cash flow from here? Maybe you could unpack that between supporting loan growth, maybe more reduction on the preferred side and then common share buyback and anything you might be thinking about on the M&A side.

Bill Katz: Maybe you could unpack that between supporting loan growth, maybe more reduction on the preferred side, and common share buyback and anything you might be thinking about on the M&A side. Thank you.

Speaker #5: Thank you.

Speaker #2: Hey Bill, thank you for the question. We have seen tremendous growth this year, as you noted. Loan growth has been up—including margin lending as well as our bank product.

Mike Verdeschi: Hey, Bill. Thank you for the question. We have seen tremendous growth this year, as you noted. Loan growth has been up. That's including margin lending as well as our bank product. The pledged asset line up 59% year-over-year. That has been terrific, and we are, of course, happy to support that. We're meeting a client need. Clients are deepening their relationship with us, and obviously it comes with an incremental spread over security. You are seeing the year-over-year NIM expansion. Primary driver was that lending activity. Of course, we'll have to see where interest rates go from here. In the scenario, we assume that one hike, but that's very late in the year, that's December. It doesn't impact the financials for 2026. If that hike occurred, you would see further expansion in 2027.

Speaker #2: The pledged asset line up 59% year over year. So that has been terrific and we are of course happy to support that. We're meeting a client need clients are deepening their relationship with us and obviously it comes with an incremental spread over securities.

Speaker #2: So, you are seeing the year-over-year NIM expansion. The primary driver was that lending activity, and of course, we'll have to see where interest rates go from here. In the scenario, we assume that one hike, but that's very late in the year—that’s December.

Mike Verdeschi: Of course, we'll have to see where interest rates go from here. In the scenario, we assume one hike, but that's very late in the year; that's December. It doesn't impact the financials for 2026. If that hike occurred, you would see further expansion in 2027. Good expansion of that net interest margin, good engagement by our clients. When it comes to capital, the same framework that we continue to think about is where the resources of the firm, first and foremost, are going to support client needs and are going to continue to drive the expansion of the franchise. We feel very good about that use of resources.

Speaker #2: It doesn't impact the financials for 2026 if that hike occurred. You would see further expansion in 2027. So, good expansion of that net interest margin, good engagement by our clients when it comes to capital, same framework that we continue to think about—where the resources of the firm, first and foremost, are going to support client needs, going to continue to drive the expansion of the franchise. And so we feel very good about that use of resources, and so that is going to be our first priority. Beyond that, we continue to look to that capital framework and look to opportunistically return where it does make sense. We see value in returning capital in buybacks, but we see even greater value in deploying those resources into the franchise, like we've done this year. And you could see, as clients engage across our platform, that has been enormously profitable.

Mike Verdeschi: Good expansion of that net interest margin, good engagement by our clients. When it comes to capital, same framework that we continue to think about where the resources of the firm, first and foremost, are going to support client needs, are going to continue to drive the expansion of the franchise. We feel very good about that use of resources. That is going to be our first priority. Beyond that, we continue to look to that capital framework and look to opportunistically return where it does make sense. We see value in returning capital in buybacks, but we see even greater value of deploying those resources into the franchise like we've done this year. You can see as clients engage across our platform, that has been enormously profitable.

Mike Verdeschi: That is going to be our first priority. Beyond that, we continue to look to that capital framework and look to opportunistically return where it does make sense. We see value in returning capital in buybacks, but we see even greater value of deploying those resources into the franchise like we've done this year. You can see as clients engage across our platform, that has been enormously profitable.

Speaker #2: When we started the year in our financial scenario, the operating leverage in that first scenario was 400 basis points. The updated scenario has operating leverage of 800 basis points.

Mike Verdeschi: When we started the year in our financial scenario, that operating leverage in that first scenario was 400 basis points. The updated scenario has operating leverage of 800 basis points. Quite good. I think the last point of your question was around M&A. Again, we're growing organically very nicely. Again, we'll always look at our capabilities. We look at scale, so we never rule anything out. Again, we always think about that organic growth and continuing to deploy resources to carry out the firm's strategy. Thanks for the question, Bill.

Mike Verdeschi: When we started the year in our financial scenario, that operating leverage in that first scenario was 400 basis points. The updated scenario has operating leverage of 800 basis points. Quite good. I think the last point of your question was around M&A. Again, we're growing organically very nicely. Again, we'll always look at our capabilities.ine look at scale, so we never rule anfranchise,t. Again, we always think about that organic growth and continuing to deploy resources to carry out the firm's strategy. Thanks for the question, Bill.

Speaker #2: So quite good and I think the last point of your question was around M&A and again we're growing organically very nicely again we'll always look at our capabilities we look at scale so we never rule anything out but again we always think about that organic growth and continuing to deploy resources to carry out the firm strategy.

Speaker #2: Thanks for the question, Bill.

Speaker #3: Thank you. Our next question comes from Alex Blossing with Goldman Sachs. Your line is open.

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

Operator: Thank you. Our next question comes from Alex Blostein with Goldman Splatform thate is open.

Speaker #6: Hi, good morning. Thanks for the question, Mike. I was hoping we could drill down a little more into the updated guide as well and specifically zoning in on Q4 NIM guidance which I think you said 325 to 330.

Alex Blostein: Hi. Good morning. Thanks for the question. Mike, I was hoping we could drill down a little more into the updated guide as well, and specifically zoning in on Q4 NIM guidance, which I think you said 325 to 330. I think that's unchanged from the prior guide you guys provided, despite the fact obviously the environment's been healthier even excluding the potential rate hike. Whether it's margin balances, Securities lending perhaps, et cetera. Just curious, what are some of the potential offsets that you see in the H2 relative to what it feels like should be an improvement in the guide relative to the prior number? Thanks.

Alex Blostein: Hi. Good morning. Thanks for the question. Mike, I was hoping we could drill down a little more into the updated guide as well, specifically zoning in on Q4 NIM guidance, which I think you said is 325 to 330. I think that's unchanged from the prior guide you guys provided, despite the fact, obviously, the environment's been healthier even excluding the potential rate hike. Whether it's margin balances, securities lending, perhaps, et cetera.

Speaker #6: I think that's unchanged from the prior guide you guys provided, despite the fact that, obviously, the environment's been a bit healthier—even excluding the potential rate hike.

Speaker #6: So whether it's margin balances, sec lending perhaps, etc. So just curious what are some of the potential offsets that you see in the back half relative to what it feels like should be an improvement in the guide relative to the prior number.

Alex Blostein: Just curious, what are some of the potential offsets that you see in the H2 relative to what it feels like should be an improvement in the guide relative to the prior number? Thanks.

Speaker #6: Thanks.

Speaker #2: Thanks for the question. Keep in mind that we'll have to see how the rate path plays out, but right now, we were assuming one hike—and that hike was for the December meeting.

Mike Verdeschi: Thanks for the question. Keep in mind that we'll have to see how the rate path plays out, but right now we were assuming one hike. That hike was for the December meeting, you're not seeing that incremental pickup in 2026. If that hike were to occur, it's going to be impacting the financials in 2027. No, we feel good about the net interest margin expansion that we've seen so far. If rates resume a hiking pattern, you'll see even more expansion. Again, that lending activity has been strong. That comes with incremental spread relative to securities. We continue to see cash build organically as well. Again, we've seen growth in the H1 of the year despite the seasonality of 1Q and 2Q. We think we are well-positioned to see that continued margin expansion through the rest of the year and beyond.

Mike Verdeschi: Thanks for the question. Keep in mind that we'll have to see how the rate path plays out, but right now we are assuming one hike. That hike was for the December meeting; you're not seeing that incremental pickup in 2026. If that hike were to occur, it's going to impact the financials in 2027. No, we feel good about the net interest margin expansion that we've seen so far. If rates resume a hiking pattern, you'll see even more expansion. Again, that lending activity has been strong. That comes with incremental spread relative to securities. We continue to see cash build organically as well.

Speaker #2: So you're not seeing that incremental pickup in 2026. If that hike were to occur then it's going to be impacting the financials in 2027.

Speaker #2: So no, we feel good about the net interest margin expansion that we've seen so far. And if rates resume a hiking pattern you'll see even more expansion again that lending activity has been strong.

Speaker #2: That comes with incremental spread relative to securities. We continue to see cash build organically as well. Again, we've seen growth in the first half of the year despite the seasonality of Q1 and Q2.

Mike Verdeschi: Again, we've seen growth in the H1 of the year despite the seasonality of 1Q and 2Q. We think we are well-positioned to see that continued margin expansion through the rest of the year and beyond. Again, there'll be puts and takes; overall, we feel really good about the trajectory.

Speaker #2: So we think we are well positioned to see that continued margin expansion through the rest of the year and beyond. Again there'll be puts and takes but overall we feel really good about the trajectory.

Mike Verdeschi: Again, there'll be puts and takes, overall, we feel really good about the trajectory.

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

Speaker #3: Thank you. Our next question comes from Stephen Cheubak with Wolf Research. Excuse me. Your line is open.

Steven Chubak: Thanks for taking my question. Mike, you gave some helpful color with regards to what I wanted to unpack, which is looking at that higher NIM exit rate for the year. I was hoping you can contextualize just how much of the contribution to growth is really from asset repricing tailwinds and the core loan deposit growth you were just speaking to, versus some of the other sources like RIA Long Short and SEC lending that might be a bit tougher to predict. Just your appetite to grow the RIA Long Short

Steven Chubak: Thanks for taking my question. Mike, you gave some helpful color with regards to what I wanted to unpack, which is looking at that higher NIM exit rate for the year. I was hoping you could contextualize just how much of the contribution to growth is really from asset repricing tailwinds and the core loan deposit growth you were just speaking to, versus some of the other sources like RIA Long Short and SEC lending that might be a bit tougher to predict. Just your appetite to grow the RIA Long Short. Look further from here.

Speaker #7: Thanks for taking my question. Mike, you gave some helpful color with regards to what I wanted to unpack which is looking at that higher NIM exit rate for the year.

Speaker #7: I was hoping you can contextualize just how much of the contribution to growth is really from asset repricing tailwinds and the core loan and deposit growth you were just speaking to, versus some of the other sources like RIA, long-short, and sec lending, that might be a bit tougher to predict.

Speaker #7: And then just your appetite to grow the RIA long short book further from here.

Steven Chubak: Look further from here.

Speaker #2: Stephen, thank you for the question. When I look at that year over year growth in net interest margin the vast majority certainly was driven by that I'll call it that lending both at margin lending non long short as well as the bank lending which was primarily driven by the pledged asset line.

Mike Verdeschi: Stephen, thank you for the question. When I look at that year-over-year growth in net interest margin, the vast majority certainly was driven by that, I'll call it that, lending both at margin lending, non-long short, as well as the bank lending, which was primarily driven by the pledged asset line. Much of that is coming from that lending activity. Of course, as I mentioned, we've seen deposits perform well despite the first couple of quarters of seasonality. Now, in securities, we haven't grown that portfolio meaningfully. It's been relatively stable because, again, given the demand for lending, we've been happy to meet that client need. Again, I've talked about how it meets the client need, it deepens the relationship, and it comes with better economics.

Mike Verdeschi: Stephen, thank you for the question. When I look at that year-over-year growth in net interest margin, the vast majority certainly was driven by that, I'll call it that, lending, both at-margin lending and non-long short, as well as the bank lending, which was primarily driven by the pledged asset line. Much of that is coming from that lending activity. Of course, as I mentioned, we've seen deposits perform well despite the first couple of quarters of seasonality. Now, in securities, we haven't grown that portfolio meaningfully.

Speaker #2: So much of that is coming from that lending activity, and of course, as I mentioned, we've seen deposits perform well despite the first couple of quarters of seasonality.

Speaker #2: Now in securities we haven't grown that portfolio meaningfully. It's been relatively stable because again given the demand for lending we've been happy to meet that client need.

Mike Verdeschi: It's been relatively stable because, again, given the demand for lending, we've been happy to meet that client need. Again, I've talked about how it meets the client need, it deepens the relationship, and it comes with better economics. You are seeing some repricing of the securities book, but it's at a much slower pace given the demand for lending activities. In terms of the long, short, and RIA activities, we do see continued demand for that in the near term. We are well-positioned to continue to support that. We'll have the resources set aside to support that activity.

Speaker #2: Again I've talked about how it meets the client need to deepens the relationship and it comes with better economics. So you are seeing some repricing of the securities book but it's at a much slower pace given the demand for lending activities.

Mike Verdeschi: You are seeing some repricing of the securities book, but it's at a much slower pace given the demand for lending activities. In terms of the long short and RIA activities, we do see continued demand for that in the near term. We are well-positioned to continue to support that. We'll have the resources set aside to support that activity. Again, while it's grown very quickly, it's still a relatively small percentage, a very small percentage of our economics. It's roughly 1% of our revenue. We stand ready to support it. The expansion of the net interest margin is being driven by that lending activity and supported by our deposit base.

Speaker #2: And in terms of the long, short, and RIA activities, we do see continued demand for that in the near term. We are well positioned to continue to support that.

Speaker #2: We'll have the resources set aside to support that activity but again that's while it's grown very quickly it's still a relatively small percentage a very small percentage of our economics that's roughly 1% of our revenue but we stand ready to support it but the expansion of the net interest margin it's being driven by that lending activity and supported by our deposit base.

Mike Verdeschi: Again, while it's grown very quickly, it's still a relatively small percentage, a very small percentage of our economics. It's roughly 1% of our revenue. We stand ready to support it. The expansion of the net interest margin is being driven by that lending activity and supported by our deposit base.

Speaker #3: Thank you. Our next question comes from Ken Worthington with JP Morgan. Your line is open.

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

Speaker #5: Hi, good morning. Thanks for taking the question. Maybe digging in further into the long/short tax benefit strategies, how big do you think these can ultimately be?

Ken Worthington: Hi, good morning. Thanks for taking the question. Maybe digging in further into the long short tax benefit strategies, how big do you think these can ultimately be? Are you seeing demand accelerate here, or is it starting to satiate at all? Is this ultimately a good business for Schwab? I guess, is it good relative to the PAL and traditional margin lending business from a risk and economic perspective?

Ken Worthington: Hi, good morning. Thanks for taking the question. Maybe digging in further into the long-short tax benefit strategies, how big do you think these can ultimately be? Are you seeing demand accelerate here, or is it starting to satiate at all? Is this ultimately a good business for Schwab? I guess, is it good relative to the PAL and traditional margin lending business from a risk and economic perspective?

Speaker #5: Are you seeing demand accelerate here, or is it starting to satiate at all? And is this ultimately a good business for Schwab? I guess, is it good relative to the PAL and traditional margin lending business from a risk and economic perspective?

Speaker #6: Thanks for the question, Ken. Let me start with the growth of it. We continue to see client interest in long/short. I do think we've seen a particular surge, as if you look at the market dynamics, our bigger competitors were maybe not making this as available, which probably led to a little bit of a surge.

Rick Wurster: Thanks for the question, Ken. Let me start with the growth of it. We continue to see client interest in long short. I do think we've seen a particular surge as, if you look at the market dynamics, our bigger competitors were maybe not making this as available, which probably led to a little bit of a surge. I think we're past that and now in more of a stable growth environment. I think it's a strategy that makes a lot of sense for clients, particularly those that have sold a business or have a large and concentrated position that they want to diversify out of. Being able to generate and harvest losses against that while still largely tracking an index is quite a powerful strategy.

Rick Wurster: Thanks for the question, Ken. Let me start with the growth of it. We continue to see client interest in long/short. I do think we've seen a particular surge, as, if you look at the market dynamics, our bigger competitors were maybe not making this as available, which probably led to a little bit of a surge.

Speaker #6: But I think we're past that and now in more of a stable growth environment. I think it's a strategy that makes a lot of sense for clients particularly those that have sold the business or have a large and concentrated position that they want to diversify out of being able to generate and harvest losses against that while still largely tracking an index.

Rick Wurster: I think we're past that and now in more of a stable growth environment. I think it's a strategy that makes a lot of sense for clients, particularly those that have sold a business or have a large and concentrated position that they want to diversify out of. Being able to generate and harvest losses against that while still largely tracking an index is quite a powerful strategy.

Speaker #6: It's quite a powerful strategy. So over the coming 5 or 10 years I expect this strategy will get bigger than it is today and we want to find a way to support our RIA clients.

Rick Wurster: Over the coming five or 10 years, I expect this strategy will get bigger than it is today, and we want to find a way to support our RIA clients. In terms of whether it's good for the business, I'd answer that in a couple different ways. Number one, as we look at the economics and look at the ROE, we find it to be accretive, so it's good from a financial standpoint. Number two, we think it's beneficial to the end client of the RIA because it's helping them live their best financial life. Number three, we think it's good for the RIA as a way to differentiate themselves for the client and bring a great wealth strategy to their clients.

Speaker #6: In terms of whether it's good for the business I'd answer that in a couple different ways. Number one as we look at the economics and look at the ROE we find it to be accretive.

Speaker #6: So it's good from a financial standpoint. Number two, we think it's beneficial to the end client of the RIA because it's helping them live their best financial life.

Speaker #6: Number three we think it's good for the RIA as a way to differentiate themselves for the client and bring a great wealth strategy to their clients.

Speaker #6: And then finally it's great for our business because when we win the long short business not only do we win that business we tend to win the business not only of the whole household but we build the trust and confidence with the RIA.

Rick Wurster: Finally, it's great for our business because when we win the long-short business, not only do we win that business, we tend to win the business not only of the whole household, but we build the trust and confidence with the RIA. One of the reasons you've seen a nice acceleration in our RIA business is because we've been there, able to support them on this strategy as they've wanted to use it with their clients. I think this has been a win for the client, a win for the RIA, and a win for us and our economics and an ability to serve clients.

Rick Wurster: Finally, it's great for our business because when we win the long-short business, not only do we win that business, but we also tend to win the business not only of the whole household, but we also build the trust and confidence with the RIA. One of the reasons you've seen a nice acceleration in our RIA business is because we've been there, able to support them on this strategy as they've wanted to use it with their clients. I think this has been a win for the client, a win for the RIA, and a win for us and our economics and an ability to serve clients.

Speaker #6: And so one of the reasons you've seen a nice acceleration in our RIA business is because we've been there able to support them on this strategy as they wanted to use it with their clients.

Speaker #6: So I think this has been a win for the client a win for the RIA and a win for us in our economics and an ability to serve clients.

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

Speaker #3: Thank you. Our next question comes from Brian Biddell with Deutsche Bank. Your line is open.

Speaker #8: Great. Good morning, folks. Thanks for taking the question. Maybe to switch gears a little bit to prediction markets—can you just talk a little bit about the timing of your upcoming launch with CBO, REI, and the binary index options?

Brian Bedell: Great. Good morning, folks. Thanks for taking the question. Maybe to switch gears a little bit to prediction markets. Can you just talk a little bit about the timing of your upcoming launch with Cboe, re the binary index options. Also, they've announced that they've applied to the SEC for company financial KPI binary options. If that were to be approved by the SEC and Cboe does launch them, what's your interest in also launching them within your franchise and how are you seeing maybe initial client interest in that, both from the retail and advisor sides?

Brian Bedell: Great. Good morning, folks. Thanks for taking the question. Maybe to switch gears a little bit to prediction markets. Can you just talk a little bit about the timing of your upcoming launch with Cboe, re the binary index options. Also, they've announced that they've applied to the SEC for company financial KPI bCboe retions. If that weroptions?approved by the SEC and Cboe does launch them, what's your interest in also launching them within your franchise and how are you seeing maybe initial client interest in that, both from the retail and advisor sides?

Speaker #8: And then also they've announced that they've applied to the SEC for company financial KPI binary options. So if that were to be approved by the SEC and CBO does launch them what's your interest in also launching them within your franchise and how are you seeing maybe initial client interest in that both from the retail advisor retail and advisor sides?

Speaker #6: Thanks, Brian. Let me start with the first part. We are actively working with the CBOE on their rollout of binary options but we haven't yet put out a timeline.

Rick Wurster: Thanks, Brian. Let me start with the first part. We are actively working with the Cboe on their rollout of binary options, but we haven't yet put out a timeline. We'll be sure to keep you and the market updated. It is something of interest to us and we're working on it, but we haven't committed to a timeline. In terms of broadening that out, maybe I could just highlight the principles that I think about as it relates to prediction markets. Elements of prediction markets, two of which I think are interesting and relevant to our clients, and a third which I really do not. The three elements to me are, one, there's important information embedded in prediction markets about what's going to happen with employment, what's going to happen to inflation, what's the probability of a recession.

Rick Wurster: Thanks, Brian. Let me start with the first part. We are actively working with Cboe on their rollout of binary options, but we haven't yet put out a timeline. We'll be sure to keep you and the market updated. It is something of interest to us, and we're working on it, but we haven't committed to a timeline. In terms of broadening that out, maybe I could just highlight the principles that I think about as it relates to prediction markets. Elements of prediction markets, two of which I think are interesting and relevant to our clients, and a third, which I really do not.

Speaker #6: So we'll be sure to keep you and the market updated. It is something of interest to us and we're working on it but we haven't committed to a timeline.

Speaker #6: In terms of broadening that out, maybe I could just highlight the principles that I think about as it relates to prediction markets. I think there are three elements of prediction markets—two of which I think are interesting and relevant to our clients, and a third which I really do not.

Rick Wurster: The three elements to me are, one, there's important information embedded in prediction markets about what's going to happen with employment, what's going to happen to inflation, and what's the probability of a recession. Those kinds of things are interesting information to our clients as they are increasingly active in markets. That's information I think over time we'd like to make available to our clients. Second, there are financial-related events, and KPIs may well be one part of those that our clients care about that I think are relevant to our clients for either accentuating or hedging a position.

Speaker #6: The three elements to me are one there's important information embedded in prediction markets about what's going to happen with employment what's going to happen to inflation what's the probability of a recession.

Speaker #6: Those kinds of things are interesting information to our clients, as they are increasingly active in markets. That's information I think, over time, we'd like to make available to our clients.

Rick Wurster: Those kinds of things are interesting information to our clients as they are increasingly active in markets. That's information I think over time we'd like to make available to our clients. Second, there are financial-related events, and KPIs may well be one part of those that our clients care about that I think are relevant to our clients for either accentuating or hedging a position. If you have a big, say, position on Tesla and a KPI is how many cars they're putting out in that quarter, you can see how that would be relevant to that investor's financial life, and therefore, I think it is a good fit and of interest to our clients and something that over time we will take a hard look at and have a role in.

Speaker #6: Second, there are financial-related events, and KPIs may well be one part of those that our clients care about, but I think are relevant to our clients for either accentuating or hedging a position.

Speaker #6: If you have a big say position on Tesla and a KPI is how many cars are they putting out in that quarter you can see how that would be relevant to that investor's financial life and therefore I think it is a good fit and of interest to our clients and something that over time we will take a hard look at and have a role in.

Rick Wurster: If you have a big, say, position on Tesla and a KPI is how many cars they're putting out in that quarter, you can see how that would be relevant to that investor's financial life, and therefore, I think it is a good fit and of interest to our clients and something that over time we will take a hard look at and have a role in. The third part of prediction markets, where 90% to 95% of the volume exists today, is just really sports gambling. It's betting on the World Cup, the Super Bowl, Taylor Swift's engagement, and all of these things that capture the public's attention.

Speaker #6: The third part of prediction markets and where 90 to 95 percent of the volume exists today is just really sports gambling. And it's betting on the World Cup, the Super Bowl, Taylor Swift's engagement.

Rick Wurster: The third part of prediction markets and where 90% to 95% of the volume exists today is just really sports gambling. It's betting on the World Cup, the Super Bowl, Taylor Swift's engagement, all of these things that capture the public's attention. That's where all the volume is. We have no interest in it, and I think it's completely disingenuous for people to be out in the market calling this an asset class and a new way for young people to invest. It's gambling in another stripe. It's a way for people to lose money, and I have no problem with it. People want to gamble, terrific. Have fun, entertain yourself, gamble, be more engaged in the game. To me, it doesn't have a role in a client's financial life, and therefore, it doesn't make sense for Schwab to offer.

Speaker #6: All of these things capture the public's attention. That's where all the volume is. We have no interest in it, and I think it's completely disingenuous for people to be out in the market calling this an asset class and a new way for young people to invest.

Rick Wurster: That's where all the volume is. We have no interest in it, and I think it's completely disingenuous for people to be out in the market calling this an asset class and a new way for young people to invest. It's gambling of another stripe. It's a way for people to lose money, and I have no problem with it. People want to gamble, terrific. Have fun, entertain yourself, gamble, be more engaged in the game. To me, it doesn't have a role in a client's financial life, and therefore, it doesn't make sense for Schwab to offer.

Speaker #6: It's gambling in another stripe. It's a way for people to lose money, and I have no problem with it. People want to gamble—terrific, have fun, entertain yourself, gamble.

Speaker #6: Be more engaged in the game. But to me, it doesn't have a role in a client's financial life and, therefore, it doesn't make sense for Schwab to offer. And so, as I think about the three parts of prediction markets, that's our view.

Rick Wurster: As I think about the three parts of prediction markets, that's our view. Two of them we will support over time, one of them we will not. Thank you.

Speaker #6: Two of them we will support over time. One of them we will not. Thank you.

Operator: Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is open.

Operator: Thank you. Our next question ctime;from Michael Cyprys with Morgan Stanley. Your line is open.

Speaker #3: Thank you. Our next question comes from Michael Cypress with Morgan Stanley. Your line is open.

Speaker #7: Hey, good morning. Thanks for taking the question. Just wanted to ask about tokenization. I was hoping you could speak to how you're going about building the infrastructure to support client activity there which is something you had referenced.

Michael Cyprys: Hey, good morning. Thanks for taking the question. Just wanted to ask about tokenization. I was hoping you could speak to how you're going about building the infrastructure to support client activity there, which is something you had referenced. More broadly, I was hoping you could elaborate on your wallet strategy and potential use cases and utility for clients over time.

Michael Cyprys: Hey, good morning. Thanks for taking the question. Just wanted to ask about tokenization. I was hoping you could speak to how you're going about building the infrastructure to support client activity thea currentch is something you had referenced. More broadly, I was hoping you could elaborate on your wallet strategy and potential use cases and utility for clients over time.

Speaker #7: And then more broadly I was hoping you could elaborate on your wallet strategy and potential use cases and utility for clients over time.

Speaker #6: I think as it relates to tokenization my view and the way we've talked about it as a team is that we want to be able to deliver securities to clients in a way that they want those securities.

Rick Wurster: I think as it relates to tokenization, my view and the way we've talked about it as a team is that we want to be able to deliver securities to clients in the way that they want those securities. The analogy I've used with our team is it's a little bit like gas and electric cars. We're not, as a company, going to make a huge bet in one direction. We're going to have the ability to support both and let the client choose the way they want to engage. I think there are some benefits to tokenization and some real drawbacks, and it's unclear how much it's going to take off. If you look at the two main benefits, I think 24 by seven trading, and I don't know how valuable that truly is. We have 24 by five trading today.

Speaker #6: And the analogy I've used with our team is it's a little bit like gas and electric cars. We're not as a company going to make a huge bet in one direction.

Speaker #6: We're going to have the ability to support both and let the client choose the way they want to engage. I think there are some benefits to tokenization and some real drawbacks and it's unclear how much it's going to take off.

Rick Wurster: If you look at the two main benefits, I think 24/7 trading, and I don't know how valuable that truly is. We have a 24 by five trade today. 1% to 2% of trading actually happens outside of market hours, and that's for good reason. Having people in the market at one time creates more efficiency and more effectiveness in trading. It's been a good model for a long time. Again, we still support 24 by 5. If the market really wanted 24 by 7, we could do that on today's infrastructure. The other issue is settlement and doing it immediately.

Speaker #6: If you look at the two main benefits I think 24 by 7 trading I don't know how valuable that truly is. We have 24 by 5 trading today one to two percent of trading actually happens outside of market hours and that's for good reason.

Rick Wurster: 1% to 2% of trading actually happens outside of market hours, and that's for good reason. Having people in the market at one time creates more efficiency, more effectiveness to trading. It's been a good model for a long time. Again, we still support 24 by five. If the market really wanted 24 by seven, we could do that on today's infrastructure. The other issue is settlement and doing it immediately. I think, again, there's pros and cons to immediate settlement. Again, if the market wanted immediate settlement, we could find a way on today's rails, and when we went to T+1, we built the ability in our technology to go to T+0. For us, we're ready and able to do that if that's what the market wants. We're going to be excited to serve clients in whatever form they want.

Speaker #6: Having people in the market at one time, it's more efficient, more effective for trading. It's been a good model for a long time. But again, we still support 24 by 5.

Speaker #6: If the market really wanted 24 by 7 we could do that on today's infrastructure. The other issue is settlement and doing it immediately. And I think again there's pros and cons to immediate settlement.

Rick Wurster: I think, again, there are pros and cons to immediate settlement. Again, if the market wanted immediate settlement, we could find a way on today's rails, and when we went to T+1, we built the ability in our technology to go to T+0. For us, we're ready and able to do that if that's what the market wants. We're going to be excited to serve clients in whatever form they want. However they want to consume securities, I think there are real pros and cons in either direction.

Speaker #6: So again if the market wanted immediate settlement we could find a way on today's rails and when we went to T plus one we built the ability in our technology to go to T plus zero.

Speaker #6: So for us we're ready and able to do that if that's what the market wants. So we're going to be excited to serve clients in whatever form they want.

Speaker #6: I really want to consume securities. I think there are real pros and cons in either direction. In terms of getting into the details of the technology we're providing, our wallet strategy—we're not ready to share that, other than to say we're actively working on it.

Rick Wurster: However they want to consume securities, I think there's real pros and cons in either direction. In terms of getting into the details of the technology we're providing, our wallet strategy, we're not ready to share that other than to say we're actively working on it. We're testing different ways of going about it. We are going to be ready should clients want to hold securities in another form. We will be there. We will meet our clients' needs as we always have.

Rick Wurster: In terms of getting into the details of the technology we're providing, our wallet strategy, we're not ready to share that other than to say we're actively working on it. We're testing different ways of going about it. We are going to be ready should clients want to hold securities in another form. We will be there. We will meet our clients' needs as we always have.

Speaker #6: We're testing different ways of going about it. We are going to be ready should clients want to hold securities in another form. We will be there.

Speaker #6: We will meet our clients' needs, as we always have.

Speaker #3: Thank you. Our next question comes from Ben Budish with Barclays. Your line is open.

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

Speaker #7: Hi, good morning, and thanks for taking the question. Mike, I was wondering if you could give us an update on some of the revenue diversification initiatives and how we should be thinking about timing.

Ben Budish: Hi. Good morning, and thanks for taking the question. Mike, I was wondering if you could give us an update on some of the revenue diversification initiatives and how we should be thinking about timing. Obviously, the big one is sort of the ETF monetization strategy you guys have been talking about, things like Forge, the self-directed alts platform, crypto. When should we be thinking about seeing these things starting to materialize in the P&L? Thank you.

Speaker #7: Obviously, the big one is the ETF monetization strategy you guys have been talking about, but also things like Forge, the self-directed alts platform, and crypto.

Speaker #7: When should we be thinking about seeing these things starting to materialize in the P&L? Thank you.

Speaker #8: Ben thanks for the question. As we talk about revenue growth and diversification we covered a lot today some of those immediate drivers and that includes the momentum in lending that has been accelerating and has been even beyond what we had anticipated this year.

Mike Verdeschi: Ben, thanks for the question. As we talk about revenue growth and diversification, we covered a lot today, some of those immediate drivers, that includes the momentum in lending. That has been accelerating and has been even beyond what we had anticipated this year. That's welcomed, of course. Rick covered wealth and managed investing, those present enormous opportunities for us and are enabling us to not just grow revenue, but diversify revenue as well. Back at Investor Day, we talked about the concept of diversification within net interest revenue, where more of the economics are being driven by lending, outside of net interest revenue, including in areas like managed investing, of course, trading as well. We continue to invest in our industry-leading trading platform. We continue to see that engagement high.

Mike Verdeschi: Ben, thanks for the question. As we talk about revenue growth and diversification, we covered a lot today, including some of those immediate drivers, which include the momentum in lending. That has been accelerating and has been even beyond what we had anticipated this year. That's welcomed, of course. Rick covered wealth and managed investing; those present enormous opportunities for us and are enabling us to not just grow revenue but diversify revenue as well.

Speaker #8: That's welcomed, of course. And Rick covered wealth and managed investing, and so those present enormous opportunities for us and are enabling us to not just grow revenue but diversify revenue as well.

Speaker #8: And back at Investor Day, we talked about the concept of diversification within that interest revenue, where more of the economics are being driven by lending. And then outside of net interest revenue, including in areas like managed investing, and of course, trading as well.

Mike Verdeschi: Back at Investor Day, we talked about the concept of diversification within net interest revenue, where more of the economics are being driven by lending outside of net interest revenue, including in areas like managed investing, of course, and trading as well. We continue to invest in our industry-leading trading platform. We continue to see that engagement is high. We think engagement from that client set, again, with our platform, with the education, with traders supporting traders, that has been a very strong activity for us as well.

Speaker #8: We continue to invest in our industry-leading trading platform. We continue to see that engagement is high. We think engagement from that client set, again, with our platform, with the education, with trader supporting trader—that has been a very strong activity for us as well.

Mike Verdeschi: We think engagement from that client set, again, with our platform, with the education, with traders supporting traders, that has been a very strong activity for us as well. Beyond that, I think you get into some of the areas that you mentioned, those will continue to contribute over time. Whether that's ETF monetization, Forge, crypto, not as meaningful as what we're seeing in those other areas that I mentioned. Those are areas over time that are going to contribute to revenue. ETF is moving in line with where the industry either already is or is going, so just reflecting the value of our platform and the distribution. Of course, Rick touched on Forge earlier in terms of what that does for us from a strategic capability as well as crypto too.

Speaker #8: Beyond that then I think you get into some of the areas that you mentioned and those will continue to contribute over time. And whether that's ETF monetization Forge, crypto not as meaningful as what we're seeing in those other areas that I mentioned but those are areas over time that are going to contribute to revenue.

Mike Verdeschi: Beyond that, I think you get into some of the areas that you mentioned; those will continue to contribute over time. Whether that's ETF monetization, Forge, or crypto, it's not as meaningful as what we're seeing in those other areas that I mentioned. Those are areas over time that are going to contribute to revenue. ETF is moving in line with where the industry either already is or is going, so just reflecting the value of our platform and the distribution. Of course, Rick touched on Forge earlier in terms of what that does for us from a strategic capability as well as crypto.

Speaker #8: ETFs are moving in line with where the industry either already is or is going. They're just reflecting the value of our platform and our distribution. And of course, Rick touched on Forge earlier in terms of what that does for us from a strategic capability.

Speaker #8: As well as crypto, too. But those will continue to add over time to complement the very strong growth and diversification we already have underway.

Mike Verdeschi: Those will continue to add over time to complement the very strong growth and diversification we already have underway. Thanks for the question.

Speaker #8: Thanks for the question.

Speaker #3: Thank you. Our next question comes from Chris Allen with KBW. Your line is open.

Operator: Thank you. Our next question comes from Chris Allen with KBW. Your line is open.

Speaker #5: Good morning guys. Thanks for the question. I wanted to ask a positive maybe you talked this already but the rebound in SEC lending revenues this quarter 178 million strongest quarter we've seen since 3Q last year.

Chris Allen: Good morning, guys. Thanks for the question. I wanted to ask about, and possibly maybe you talked this already, the rebound in Securities lending revenues this quarter, $178 million, strongest quarter we've seen since Q3 last year with CoreWeave. Was there any special situations this quarter? Maybe you could talk to the growth drivers here in terms of the underlying book of business. Just remind us what's included in your NIM guidance for Securities lending for the full year.

Chris Allen: Good morning, guys. Thanks for the question. I wanted to ask about, and possibly maybe you talked this already, the rebound in Securitietalked abouting revenues this quarter, $17securities strongest quarter we've seen since Q3 last yethe strongestoreWeave. Was there any special situations this quarter? Maybe you could talk to the growth drivers here in terms of the underlying book of business. Just remind us what's included in your NIM guidance for securities lending for the full year.

Speaker #5: We had CoreWeave. Were there any special situations this quarter? Maybe you could talk to the growth drivers here in terms of the underlying book of business, and then just remind us what's included in your NIM guidance for SEC lending for the full year.

Speaker #8: Thanks for the question Chris. That SEC lending revenue just to bifurcate that for you. So that's hard to borrow activity that is the typical driver of SEC lending.

Mike Verdeschi: Thanks for the question, Chris. That Securities lending revenue, just to bifurcate that for you. That hard-to-borrow activity that is the typical driver of Securities lending, that has not been playing the role in that Securities lending revenue increase. That activity has been somewhat subdued this year. For our outlook, we assume that it will remain somewhat subdued. What you're seeing go through that Securities lending activity is part of that long-short set of activities. That is contributing to that Securities lending revenue. As I just mentioned, the broader Securities lending that hard-to-borrow we are anticipating that to remain subdued. Of course, if you see variations in IPO markets and more hard-to-borrow activity, that could be upside for us, but not contributing meaningfully to net interest margin in the back half of the year.

Mike Verdeschi: Thanks for the question, Chris. That securities lending revenue, just to bifurcate that for you. That hard-to-borrow activity that is the typical driver of securities lending has not been playing a role in that securities lending revenue increase. That activity has been somewhat subdued this year. For our outlook, we assume that it will remain somewhat subdued. What you're seeing go through that securities lending activity is part of that long-short set of activities. That is contributing to that securities lending revenue.

Speaker #8: That has not been playing the role in that SEC lending revenue increase. That activity has been somewhat subdued this year. For our outlook we assume that it will remain somewhat subdued.

Speaker #8: What you're seeing go through that SEC lending activity is part of that long short set of activities. So that is contributing to that SEC lending revenue.

Speaker #8: And as I just mentioned the broader SEC lending that hard to borrow we are anticipating that to remain subdued. Of course if you see variations in IPO markets and more hard to borrow activity that could be upside for us.

Mike Verdeschi: As I just mentioned, the broader securities lending that is hard-to-borrow, we are anticipating that to remain subdued. Of course, if you see variations in IPO markets and more hard-to-borrow activity, that could be upside for us, but not contribute meaningfully to net interest margin in the back half of the year. Again, a lot of the NIM drivers I covered already know that organic lending activity has been the primary driver. Thank you.

Speaker #8: But not contributing meaningfully to net interest margin in the back half of the year. So, again, a lot of the NIM drivers I covered already—that organic lending activity has been the primary driver.

Mike Verdeschi: Again, a lot of the NIM drivers I covered already that organic lending activity has been the primary driver. Thank you.

Speaker #8: Thank you.

Speaker #5: Okay. I think we have time for one final question.

Jeff Edwards: Operator, I think we have time for one final question.

Speaker #3: Thank you. Our final question will come from Mike Brown with UBS. Your line is open.

Operator: Thank you. Our final question will come from Michael Brown with UBS. Your line is open.

Speaker #7: Great, good morning. Thanks for squeezing me in here. I appreciate all the color on the NIM side. I guess I just wanted to ask maybe one more there on the growth.

Michael Brown: Great. Good morning. Thanks for squeezing me in here. Appreciate all the color on the NIM side. I guess I just wanted to ask maybe one more there on the PAL growth. It continues to be really impressive. Can you just expand on how that's generally being used by clients and what financing source are they kind of switching from as they opt into using more PAL loans? Then on the AFS yield that ticked up nicely this quarter. It's been kind of flat to down for the last six quarters. Is this some of the repricing starting to really come through and maybe any color you can add there, Mike, about the back half and as we exit the year, how that repricing can continue to play out?

Mike Brown: Great. Good morning. Thanks for squeezing me in here. Appreciate all the color on the NIM side. I guess I just wanted to ask maybe one more thing on the PAL growth. It continues to be really impressive. Can you just expand on how that's generally being used by clients and what financing sources they are kind of switching from as they opt into using more PAL loans? Then there's the AFS yield that ticked up nicely this quarter. It's been kind of flat to down for the last six quarters.

Speaker #7: It continues to be really impressive. Can you just expand on how that's generally being used by clients and what financing source are they kind of switching from as they opt into using more PAL loans?

Speaker #7: And then on the AFS yield, that ticked up nicely this quarter—I think kind of flat to down for the last six quarters. So is this some of the repricing starting to really come through? And maybe, any color you can add there, Mike, about the back half and as we exit the year, how that repricing can continue to play out?

Mike Brown: Is this some of the repricing starting to really come through, and maybe any color you can add there, Mike, about the back half and as we exit the year, how that repricing can continue to play out?

Speaker #5: Yeah. Mike thanks for the question. I'll cover the first part and then Mike will cover the second part. I think what's driving pledged asset line growth is a few things.

Rick Wurster: Mike, thanks for the question. I'll cover the first part, then Mike will cover the second part. I think what's driving pledged asset line growth is a few things. Number one, the experience is incredibly easy. You can get access to money in a day, and it's done very simply. Number two, we have clients that have large gains with big embedded capital gains, so they don't want to sell securities necessarily. They have growing wealth, and they have concentrated positions. They have a life they want to live. They're seeing their wealth grow, and they might want to buy a house, put their kid through college, whatever it may be, whatever they're spending money on. They have plenty of wealth to afford it, but they don't want to sell the position given the gains that they have.

Speaker #5: Number one, the experience is incredibly easy. You can get access to money in a day, and it's done very, very simply. Number two, we have clients that have large gains with big embedded capital gains, and so they don't want to sell security.

Speaker #5: You sell securities, necessarily. They have growing wealth, and they have concentrated positions. And they have a life they want to live. They're seeing their wealth grow, and they might want to buy a house, put their kid through college, whatever it may be—whatever they're spending money on.

Rick Wurster: They have a life they want to live. They're seeing their wealth grow, and they might want to buy a house, put their kid through college, or whatever it may be, whatever they're spending money on. They have plenty of wealth to afford it, but they don't want to sell the position given the gains that they have. They want to leverage that position; that pledged asset line is a great way to do it, it's incredibly easy, and they can have access to the money quickly.

Speaker #5: They have plenty of wealth to afford it but they don't want to sell the position given the gains that they have. And so they want to leverage that position in a pledged asset line is a great way to do it.

Rick Wurster: They want to leverage that position, that pledged asset line is a great way to do it, incredibly easy, and they can have access to the money quickly.

Speaker #5: Incredibly easy and they can have access to the money quickly.

Speaker #8: I think in terms of the securities yes we've seen good momentum in terms of that yield pick up. A couple of things I would say.

Mike Verdeschi: Mike, in terms of the securities, yes, we've seen good momentum in terms of that yield pickup. A couple of things I would say. You probably see $6-7-8 billion of cash flows coming off of that portfolio. Again, I touched on earlier how with lending that has been we've been happy to meet that client need given the pickup in economics. Within the investment portfolio, we are seeing that yield shift. We continue to allocate in a way that we've discussed before, U.S. Treasuries being the primary set of purchases. We also did some asset-backed securities as well, very high credit quality allocations just as a means of diversification. Given where rates are and where they're projected to be, we would expect to continue to see a lift in that yield as more of the securities are rolled over and reinvested.

Speaker #8: You probably see $6, $7, $8 billion of cash flows coming off of that portfolio. Again, I touched on earlier how, with lending, we have been happy to meet that client need given the pickup in economics.

Speaker #8: But within the investment portfolio we are seeing that yield shift we continue to allocate in a way that we've discussed before. US treasuries being the primary set of purchases.

Speaker #8: We also did some asset-backed securities as well—very high credit quality allocations, just as a means of diversification. So, given where rates are and where they're projected to be, we would expect to continue to see a lift in that yield as more of the securities are rolled over and reinvested.

Mike Verdeschi: We also did some asset-backed securities as well, very high credit quality allocations, just as a means of diversification. Given where rates are and where they're projected to be, we would expect to continue to see a lift in that yield as more of the securities are rolled over and reinvested. Again, if we're reinvesting less because we continue to meet lending needs such as PAL, we're more than happy to do that. It meets client needs, and the economics are even more favorable. Thank you for the question.

Speaker #8: And again if we're reinvesting less because we continue to meet lending needs such as PAL we're more than happy to do that. Meets client needs and the economics are even more favorable.

Mike Verdeschi: Again, if we're reinvesting less because we continue to meet lending needs such as PAL, we're more than happy to do that. It meets client needs, and the economics are even more favorable. Thank you for the question.

Speaker #8: So, thank you for the question.

Speaker #5: Well with that we'll wrap up. Thank you for your time this morning. I'll leave you where I started. SCHWAB is clearly leading the industry today and he's uniquely positioned to win tomorrow.

Rick Wurster: Well, with that, we'll wrap up. Thank you for your time this morning. I'll leave you where I started. Schwab is clearly leading the industry today and is uniquely positioned to win tomorrow. By seeing through clients' eyes and putting clients at the forefront of every decision, we have earned our place at the trusted center of the investing ecosystem, and we're uniquely positioned to win in the long term with our strong momentum, no trade-offs value proposition, clear client-focused strategy, and diversified financial model. Thank you.

Rick Wurster: Well, with that, we'll wrap up. Thank you for your time this morning. I'll leallocations,re I started. Schwab is clearly leading the industry today and is uniquely positioned to win tomorrow. By seeing through clients' eyes and putting clients at the forefront of every decision, we have earned our place at the trusted center of the investing ecosystem, and we're uniquely positioned to win in the long term with our strong momentum, no trade-offs value proposition, clear client-focused strategy, and diversified financial model. Thank you.

Speaker #5: I've seen through client size and putting clients at the forefront of every decision. We have earned our place at the trusted center. Of the investing ecosystem.

Speaker #5: And we're uniquely positioned to win in the long term with our strong momentum, no trade-offs value proposition, clear client focus strategy, and diversified financial model.

Q2 2026 The Charles Schwab Corp Earnings Call

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