10-K

UNITED STATES

SECURITIES  AND  EXCHANGE  COMMISSION

Washington, D.C. 20549

FORM  10-K

ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)

OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

For the fiscal year ended December 31, 2018 Commission file number 1-9700

THE  CHARLES  SCHWAB  CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 94-3025021 (I.R.S. Employer Identification No.)

211 Main Street, San Francisco, CA  94105

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code:  (415) 667-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock – $.01 par value per share	New York Stock Exchange
Depositary Shares, each representing a 1/40th ownership interest in a
share of 6.00% Non-Cumulative Preferred Stock, Series C	New York Stock Exchange
Depositary Shares, each representing a 1/40th ownership interest in a
share of 5.95% Non-Cumulative Preferred Stock, Series D	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒   No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐   No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10‑K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

As of June 30, 2018, the aggregate market value of the voting stock held by non-affiliates of the registrant was $62.1 billion. For purposes of this information, the outstanding shares of Common Stock owned by directors and executive officers of the registrant were deemed to be shares of the voting stock held by affiliates.

The number of shares of Common Stock outstanding as of January 31, 2019, was 1,332,893,531.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates certain information contained in the registrant’s definitive proxy statement for its annual meeting of stockholders, to be held May 15, 2019, by reference to that document.

THE CHARLES SCHWAB CORPORATION

Annual Report On Form 10-K

For Fiscal Year Ended December 31, 2018

TABLE OF CONTENTS

Part I
Item 1.	Business	1
	General Corporate Overview	1
	Business Strategy and Competitive Environment	1
	Sources of Net Revenues	2
	Products and Services	2
	Regulation	5
	Available Information	8
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	16
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of
	Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Forward-Looking Statements	20
	Glossary of Terms	22
	Overview	25
	Current Regulatory Environment and Other Developments	27
	Results of Operations	28
	Risk Management	35
	Capital Management	42
	Fair Value of Financial Instruments	46
	Critical Accounting Estimates	46
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 8.	Financial Statements and Supplementary Data	49
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	105
Item 9A.	Controls and Procedures	105
Item 9B.	Other Information	105
Part III
Item 10.	Directors, Executive Officers, and Corporate Governance	105
Item 11.	Executive Compensation	108
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	108
Item 13.	Certain Relationships and Related Transactions, and Director Independence	108
Item 14.	Principal Accountant Fees and Services	108
Part IV
Item 15.	Exhibits, Financial Statement Schedules	109
	Exhibit Index	110
	Signatures	114
	Statistical Disclosure by Bank Holding Companies	F-1

THE CHARLES SCHWAB CORPORATION

PART I

Item 1. Business

General Corporate Overview

The Charles Schwab Corporation (CSC) is a savings and loan holding company, headquartered in San Francisco, California. CSC was incorporated in 1986 and engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. At December 31, 2018, Schwab had $3.25 trillion in client assets, 11.6 million active brokerage accounts, 1.7 million corporate retirement plan participants, and 1.3 million banking accounts.

Significant business subsidiaries of CSC include the following:

• Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer with over 355 domestic branch offices in 47 states, as well as a branch in the Commonwealth of Puerto Rico. In addition, Schwab serves clients through branch offices in the United Kingdom (U.K.), Hong Kong, Singapore, and Australia through various subsidiaries;

• Charles Schwab Bank (CSB), a federal savings bank; and

• Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds^®) and Schwab’s exchange-traded funds (Schwab ETFs™).

Schwab provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services to individual investors, and retirement plan services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking, and support services, as well as retirement business services, to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers. These services are further described in the segment discussion below.

As of December 31, 2018, Schwab had full-time, part-time, temporary employees, and persons employed on a contract basis that represented the equivalent of approximately 19,500 full-time employees.

Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries.

Business Strategy and Competitive Environment

Schwab was founded on the belief that all Americans deserve access to a better investing experience. Although much has changed in the intervening years, our purpose remains clear – to champion every client’s goals with passion and integrity. Guided by this purpose and our vision of creating the most trusted leader in investment services, management has adopted a strategy described as “Through Clients’ Eyes.”

This strategy emphasizes placing clients’ perspectives, needs, and desires at the forefront. Because investing plays a fundamental role in building financial security, we strive to deliver a better investing experience for our clients – individual investors and the people and institutions who serve them – by disrupting longstanding industry practices on their behalf and providing superior service. We also aim to offer a broad range of products and solutions to meet client needs with a focus on transparency, value, and trust. In addition, management works to couple Schwab’s scale and resources with ongoing expense discipline to keep costs low and ensure that products and solutions are affordable as well as responsive to client needs. In combination, these are the key elements of our “no trade-offs” approach to serving investors. We believe that following this strategy is the best way to maximize our market valuation and stockholder returns over time.

Management estimates that investable wealth in the United States (U.S.) (consisting of assets in defined contribution, retail wealth management and brokerage, and registered investment advisor channels, along with bank deposits) currently exceeds $45 trillion, which means the Company’s $3.25 trillion in client assets leaves substantial opportunity for growth. Our strategy is based on the principle that developing trusted relationships will translate into more assets from both new and

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THE CHARLES SCHWAB CORPORATION

existing clients, ultimately driving more revenue, and along with expense discipline and thoughtful capital management, will generate earnings growth and build long-term stockholder value.

Within Investor Services, our competition in serving individual investors spans brokerage, wealth management, and asset management firms, as well as banks and trust companies. In the Advisor Services arena, we compete with institutional custodians, traditional and discount brokers, banks, and trust companies.

Across both segments, our key competitive advantages are:

• Scale and Size of the Business – As one of the largest investment services firms in the U.S., we are able to spread operating costs and amortize new investments over a large base of clients, and harness the resources to evolve capabilities to meet client needs.

• Operating Efficiency – Coupled with scale, our operating efficiency and sharing of infrastructure across different businesses creates a cost advantage that enables us to competitively price products and services while profitably serving many different client channels.

• Operating Structure – Providing bank and asset management services to broker-dealer clients helps serve a wider array of needs, thereby deepening relationships, enhancing the stability of client assets, and enabling diversified revenue streams.

• Brand and Corporate Reputation – In an industry dependent on trust, Schwab’s reputation and brand across multiple constituents enables us to attract clients and employees while credibly introducing new products to the market.

• Service Culture – Delivering a great client experience earns the trust and loyalty of clients and increases the likelihood that those clients will refer others.

• Willingness to Disrupt – Management’s willingness to challenge the status quo, including our own business practices, to benefit clients fosters innovation and continuous improvement, which helps to attract more clients and assets.

Sources of Net Revenues

Our major sources of net revenues are net interest revenue, asset management and administration fees, and trading revenue. These revenue streams are supported by the combination of bank, broker-dealer, and asset management operating subsidiaries, each of which brings specific capabilities that enable us to provide clients with the products and services they are looking for.

Net interest revenue is the difference between interest generated on interest-earning assets and interest paid on funding sources, the majority of which is derived from client cash balances awaiting investment, held by Schwab as part of clients’ overall relationship with the Company. While certain of these client cash balances are held on CS&Co’s balance sheet or swept to our money market funds, a substantial amount of existing balances – and most new inflows of cash awaiting investment – are swept to a banking subsidiary. Interest-earning assets are primarily comprised of high-quality fixed income securities, margin loans, and bank loans.

The majority of asset management and administration fees are earned from proprietary money market mutual funds, proprietary and third-party mutual funds and exchange-traded funds (ETFs), and fee-based advisory solutions.

Trading revenue includes commissions earned for executing trades for clients in individual equities, options, futures, fixed income securities, and certain third-party mutual funds and ETFs, as well as principal transaction revenue earned primarily from actions to support client trading in fixed income securities.

Products and Services

We offer a broad range of products through intuitive end-to-end solutions, including robust digital capabilities, to address our clients’ varying investment and financial needs. Examples of these product offerings include the following:

• Brokerage – an array of full-feature brokerage accounts with equity and fixed income trading, margin lending, options trading, and cash management capabilities including third-party certificates of deposit;

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THE CHARLES SCHWAB CORPORATION

• Mutual funds – third-party mutual funds through the Mutual Fund Marketplace^®, including non-transaction fee mutual funds through the Mutual Fund OneSource^® service, which also includes proprietary mutual funds, plus mutual fund trading and clearing services to broker-dealers;

• Exchange-traded funds – an extensive offering of ETFs, including many proprietary and third-party ETFs available without a commission through Schwab ETF OneSource™;

• Advice solutions – managed portfolios of both proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management;

• Banking – checking and savings accounts, first lien residential real estate mortgage loans (First Mortgages), home equity lines of credit (HELOCs), and pledged asset lines (PALs); and

• Trust – trust custody services, personal trust reporting services, and administrative trustee services.

These investing services are made available through two business segments – Investor Services and Advisor Services. Schwab’s major sources of revenues are generated by both of the reportable segments, based on their respective levels of client assets and activity. Revenue is attributable to a reportable segment based on which segment has the primary responsibility for serving the client. The accounting policies of the reportable segments are the same as those described in “Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements” (Item 8) – Note 2.

Investor Services

Charles Schwab initially founded the Company over 40 years ago to provide individual investors with access to the financial markets at a reasonable cost. The Company has been expanding offerings over time in response to client needs, aiming to provide a compelling and often disruptive solution in the marketplace. As products and services have evolved over the years, the Investor Services segment has expanded and now includes the Retail Investor, Retirement Plan Services, Mutual Fund Clearing Services, and Off-Platform Sales business units.

Through the Retail Investor business unit, we offer individual investors a multi-channel service delivery model, which includes online, mobile, telephone, and branch capabilities. We provide personalized service at competitive prices while giving clients the choice of where, when, and how they do business with us. Financial Consultants (FCs) in Schwab’s branches and regional telephone service centers focus on building and sustaining client relationships. We have the ability to meet client investing needs through a single ongoing point of contact, even as those needs change over time. We believe that this ability to give those clients seeking help, guidance, or advice with an individually tailored solution – ranging from occasional consultations to an ongoing relationship with a Schwab FC or an independent RIA in the Schwab Advisor Network^® – is a competitive strength compared to the more fragmented or limited offerings of other firms.

Our service delivery model provides quick and efficient access to a broad lineup of information, research, tools, trade execution, and administrative services, which clients can access according to their needs. For example, clients that trade more actively can use these channels to access highly competitive pricing, expert tools, and extensive service capabilities – including experienced, knowledgeable teams of trading specialists, and integrated product offerings. Management also believes the Company is able to compete with the wide variety of financial services firms striving to attract individual client relationships by complementing these capabilities with a range of investment and banking products.

Schwab strives to educate and assist clients in reaching their financial goals. Educational tools include workshops, webcasts, interactive courses, and online information about investing, from which Schwab does not earn revenue. Additionally, we provide various online research and analysis tools that are designed to help clients achieve better investment outcomes. As an example of such tools, Schwab Equity Ratings^® is a quantitative model-based stock rating system that provides all clients with ratings on approximately 3,000 stocks, assigning each equity a single grade: A, B, C, D, or F. Schwab Equity Ratings International^®, an international ranking methodology, covers stocks of approximately 4,000 foreign companies.

Clients may seek specific investment recommendations, either from time to time or on an ongoing basis. Schwab provides clients seeking advice with personalized solutions. Our approach to advice is based on long-term investment strategies and guidance on portfolio diversification and asset allocation. This approach is designed to be offered consistently across all of Schwab’s delivery channels.

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THE CHARLES SCHWAB CORPORATION

Schwab Private Client^™ features a personal advice relationship with a designated Portfolio Consultant, supported by a team of investment professionals who provide individualized service, a customized investment strategy developed in collaboration with the client, and ongoing guidance and execution.

For clients seeking a relationship in which investment decisions are fully delegated to a financial professional, Schwab offers several alternatives. We provide investors access to professional investment management in a diversified account that is invested exclusively in either mutual funds or ETFs through the Schwab Managed Portfolios and the Windhaven Investment Management^® Strategies, or equity securities and ETFs through the ThomasPartners Investment Management^® Strategies. We also refer investors who want to utilize a specific third-party money manager to direct a portion of their investment assets to the Schwab Managed Account program. Schwab Intelligent Portfolios^®, available since 2015, are for clients who are looking to have their assets professionally managed via a fully automated online investment advisory service. In late 2016, we introduced Schwab Intelligent Advisory^® to offer our clients a hybrid advisory service which combines live credentialed professionals and algorithm-driven technology to make financial and investment planning more accessible to investors. Finally, clients who want the assistance of an independent professional in managing their financial affairs may be referred to RIAs in the Schwab Advisor Network. These RIAs provide personalized portfolio management, financial planning, and wealth management solutions.

To meet the specific needs of clients who actively trade, Schwab offers integrated web- and software-based trading platforms, real-time market data, options trading, premium stock and futures research, and multi-channel access, as well as sophisticated account and trade management features, risk management and decision support tools, and dedicated personal support.

For U.S. clients wishing to invest in foreign equities, we offer a suite of global investing capabilities, including online access to certain foreign equity markets with the ability to trade in their local currencies. In addition, Schwab serves both foreign investors and non-English-speaking U.S. clients who wish to trade or invest in U.S. dollar-based securities. In the U.S., Schwab serves Mandarin-, Cantonese-, Spanish-, and Vietnamese-speaking clients through a combination of its branch offices, web-based and telephonic services.

We also offer equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights. Specialized services for executive transactions and reporting, grant acceptance tracking, and other services are offered to employers to meet the needs of administering the reporting and compliance aspects of an equity compensation plan. In addition, we provide software and services for compliance departments of regulated companies and firms with special requirements to monitor employee personal trading, including trade surveillance technology.

Our Retirement Plan Services business unit offers a bundled 401(k) retirement plan product that provides retirement plan sponsors with extensive investment options, trustee or custodial services, and participant-level recordkeeping. Retirement plan design features, which increase plan efficiency and achieve employer goals, are also offered, such as automatic enrollment, automatic fund mapping at conversion, and automatic contribution increases. In addition to an open architecture investment platform, we offer access to low cost index mutual funds and ETFs. Individuals investing for retirement through 401(k) plans can take advantage of bundled offerings of multiple investment choices, education, and third-party advice. This third-party advice service is delivered online, by phone, or in person, including recommendations based on the core investment fund choices in their retirement plan and specific recommended savings rates. Services also include support for Roth 401(k) accounts, profit sharing, and defined benefit plans.

Lastly, the Mutual Fund Clearing Services business unit provides custody, recordkeeping, and trading services to banks, brokerage firms, and trust companies, and the Off-Platform Sales business unit offers proprietary mutual funds, ETFs, and collective trust funds outside the Company. They are included within the Investor Services segment given their leveraging of the products and services offered to individual investors.

Advisor Services

More than thirty years ago, Schwab supported a small group of entrepreneurial advisors who challenged the industry by creating independent firms. Through the Advisor Services segment, Schwab has become the largest provider of custodial, trading, banking, and support services to RIAs and their clients. We also provide retirement business services to independent retirement advisors and recordkeepers. Management believes that we can maintain our market leadership position primarily

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THE CHARLES SCHWAB CORPORATION

through the efforts of our sales, support, technology, and business consulting service teams, which are dedicated to helping RIAs grow, compete, and succeed in serving their clients. In addition to focusing on superior service, we utilize technology to provide RIAs with a highly-developed, scalable platform for administering their clients’ assets easily and efficiently. Advisor Services sponsors and hosts a variety of national, regional, and local events designed to help RIAs identify and implement better ways to expand and efficiently manage their practices.

RIAs who custody client accounts at Schwab may use proprietary software that provides them with up-to-date client account information as well as trading capabilities. The Advisor Services website is the core platform for RIAs to conduct daily business activities online with Schwab, including viewing and managing client account information and accessing news and market information. The website provides account servicing capabilities for RIAs, including account opening, money movement, transfer of assets, trading, checking status, and communicating with our service team. The site provides multi-year archiving of statements, trade confirms, and tax reports, along with document search capabilities. We also provide access to integrations with select third-party platforms, which support a variety of advisor needs including client relationship management, portfolio management systems, trade order management, and financial planning.

The Advisor Services website also provides interactive tools, educational content, and thought leadership for advisors turning independent. We offer a variety of services to help RIAs grow and manage their practices, including business, technology, and operations consulting on a variety of topics critical to an RIA’s success, as well as an annual RIA benchmarking study to help firms understand key business metrics relative to peers. We also offer an array of services to help advisors establish their own independent practices through a robust prospect consulting offer. To support them throughout their transition, we offer access to business start-up and transition consultants, technology engineers, and dedicated service teams.

Schwab provides a variety of educational materials, programs, and events to RIAs seeking to expand their knowledge of industry issues and trends, as well as sharpen their individual expertise and practice management skills. We update and share market research on an ongoing basis, and hold a series of events and conferences every year to discuss topics of interest to RIAs, including business strategies and best practices. Schwab sponsors and hosts the annual IMPACT^® conference, which provides a national forum for the Company, RIAs, and other industry participants to gather and share information and insights, as well as a multitude of smaller events across the country each year.

RIAs and their clients have access to our broad range of products and services, including individual securities, mutual funds, ETFs, fixed income products, managed accounts, cash products, bank lending, and trust services. By functioning as the custodian, Schwab earns revenue associated with the underlying client assets invested in our products and utilization of the services we provide. In this capacity, we do not charge an explicit custodial fee.

The Advisor Services segment also includes the Retirement Business Services and Corporate Brokerage Retirement Services business units. Retirement Business Services provides trust, custody, and retirement business services to independent retirement plan advisors and independent recordkeepers. Retirement plan assets are held at the Business Trust division of CSB. The Company and independent retirement plan providers work together to serve plan sponsors, combining the consulting and administrative expertise of the administrator with our investment, technology, trust, and custodial services. Retirement Business Services also offers the Schwab Personal Choice Retirement Account^®, a self-directed brokerage offering for retirement plans.

Corporate Brokerage Retirement Services serves plan sponsors, advisors, and independent recordkeepers seeking a brokerage-based account to hold retirement plan assets. Retirement plans held at Schwab are either self-trusteed or trusteed by a separate, independent trustee. Corporate Brokerage Retirement Services also offers the Schwab Personal Choice Retirement Account^®, and the Company Retirement Account, both of which are self-directed brokerage-based solutions designed to hold the assets of company-sponsored retirement plans.

Regulation

As a participant in the securities, banking and financial services industries, Schwab is subject to extensive regulation under both federal and state laws by governmental agencies, supervisory authorities, and self-regulatory organizations (SROs). We are also subject to oversight by regulatory bodies in other countries in which we operate. These regulations affect our business operations and impose capital, client protection, and market conduct requirements.

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THE CHARLES SCHWAB CORPORATION

Holding Company and Bank Regulation

CSC is a savings and loan holding company and is regulated, supervised, and examined by the Board of Governors of the Federal Reserve System (Federal Reserve). CSC’s principal depository institution subsidiary, CSB, is a federal savings bank and is regulated, supervised, and examined by the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the Federal Deposit Insurance Corporation (FDIC). CSC and CSB are also subject to regulation and various requirements and restrictions under state and other federal laws.

This regulatory framework is designed to protect depositors and consumers, the safety and soundness of depository institutions and their holding companies, and the stability of the banking system as a whole. This framework affects the activities and investments of CSC and its subsidiaries and gives the regulatory authorities broad discretion in connection with their supervisory, examination and enforcement activities and policies. Below is a discussion of significant regulations. Also see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Current Regulatory Environment and Other Developments” for information regarding significant proposed rulemaking related to our regulation.

Basel III Capital and Liquidity Framework

Banking organizations are subject to the regulatory capital rules issued by the Federal Reserve and other U.S. banking regulators, including the OCC and the FDIC. In addition to minimum risk-based capital requirements, banking organizations must hold additional capital, referred to as a capital conservation buffer, to avoid being subject to limits on capital distributions and discretionary bonus payments to executive officers.

For the calculation of a banking organization’s regulatory capital and risk-weighted assets, the regulatory capital rules provide for a “standardized approach” framework and an “advanced approaches” framework. Depository institutions and their holding companies with consolidated total assets of $250 billion or more, or total on-balance-sheet foreign exposure of $10 billion or more, are required to calculate their regulatory capital and risk-weighted assets using an “advanced approaches” framework and must satisfy the minimum capital requirements under both approaches. Such companies must also maintain a minimum supplementary leverage ratio of at least 3.0%, must include accumulated other comprehensive income (AOCI) in their calculation of their capital ratios, are subject to an incremental capital buffer of up to 2.5% of common equity Tier 1 capital if imposed by the banking agencies, referred to as the countercyclical capital buffer, and are subject to certain other enhanced provisions, including additional reporting requirements. Once a banking organization becomes subject to the “advanced approaches” framework, the banking organization and its subsidiary depository institutions must adopt written implementation plans and complete satisfactory parallel runs of at least four consecutive quarters during which they must calculate their risk-weighted assets under both the “advanced approaches” and “standardized approach” framework. The Federal banking agencies will notify the banking organization and its subsidiaries when they determine that the banking organization and its subsidiaries have completed satisfactory parallel runs, which may take several years. The Federal Reserve, OCC, and FDIC have recently granted extensions and exemptions to CSC and its banking subsidiaries such that they will not be required to submit implementation plans until June 30, 2020. As a result of crossing the $250 billion threshold in 2018, CSC and its banking subsidiaries are subject to all other advanced approaches requirements – the supplementary leverage ratio, the inclusion of AOCI in the calculation of capital ratios, and the countercyclical capital buffer, which is currently 0%.

The liquidity coverage ratio (LCR) rule requires banking organizations with consolidated total assets of $250 billion or more, or total on-balance-sheet foreign exposure of $10 billion or more and their depository institution subsidiaries with $10 billion or more in total consolidated assets to hold high quality liquid assets (HQLA) in an amount equal to at least 100% of their projected net cash outflows over a prospective 30-calendar-day period of acute liquidity stress, calculated on each business day. Other bank and savings and loan holding companies with total consolidated assets of $50 billion or more are subject to a modified LCR rule requiring them to hold HQLA in an amount equal to at least 70% of their projected net cash outflows over the 30-day period, calculated as of the last business day of the month. While we are currently subject to the modified LCR rule, we will become subject to the full LCR rule at the beginning of the second quarter of 2019.

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Capital Stress Testing

Savings and loan holding companies and federal savings banks with total consolidated assets of more than $10 billion are required to conduct annual company-run stress tests using certain scenarios and prescribed stress-testing methodologies under the Dodd-Frank Act Stress Test (DFAST) rules. CSC reports the results to the Federal Reserve and CSB reports to the OCC. Both publish summaries of their stress test results.

As a savings and loan holding company, CSC is not subject to the annual Comprehensive Capital Analysis and Review (CCAR) process, which requires certain financial institutions to submit annual capital plans to the Federal Reserve.

Insured Depository Institution Resolution Plans

The FDIC requires insured depository institutions with total consolidated assets of $50 billion or more to submit to the FDIC periodic plans providing for their resolution by the FDIC in the event of failure (resolution plans or so-called “living wills”) under the receivership and liquidation provisions of the Federal Deposit Insurance Act. CSB is required to file with the FDIC a periodic resolution plan demonstrating how the bank could be resolved in an orderly and timely manner in the event of receivership such that the FDIC would be able to: ensure that the bank’s depositors receive access to their deposits within one business day; maximize the net present value of the bank’s assets when disposed of; and minimize losses incurred by the bank’s creditors.

Consumer Financial Protection

The CFPB has broad rulemaking, supervisory and enforcement authority for a wide range of federal consumer protection laws relating to financial products. The CFPB has examination and primary enforcement authority over depository institutions with $10 billion or more in consolidated total assets.

Deposit Insurance Assessments

The FDIC’s Deposit Insurance Fund (DIF) provides insurance coverage for certain deposits, generally up to $250,000 per depositor per account ownership type, and is funded by quarterly assessments on insured depository institutions. The FDIC uses a risk-based deposit premium assessment system that, for large insured depository institutions with at least $10 billion in total consolidated assets, uses a scorecard method based on a number of factors, including the institution’s regulatory ratings, asset quality and brokered deposits. The deposit insurance assessment base is calculated as average consolidated total assets minus average tangible equity.

In July 2016, the FDIC imposed a flat-rate quarterly surcharge on insured depository institutions with total assets of $10 billion or more and certain of their bank affiliates to pay for an increase to the DIF from 1.15% to 1.35% of the assessment base. As a result, Schwab’s banking subsidiaries became subject to an additional 4.5 basis point surcharge on the amount of their aggregate assessment base in excess of $10 billion. In the third quarter of 2018, the DIF ratio exceeded 1.35%, and the FDIC eliminated the surcharge beginning in the fourth quarter.

Community Reinvestment Act

The Community Reinvestment Act of 1977 (CRA) requires the primary federal bank regulatory agency for each of Schwab’s depository institution subsidiaries to assess the subsidiary’s record in meeting the credit needs of the communities served by the bank, including low- and moderate-income neighborhoods and persons. Institutions are assigned one of four ratings (“outstanding,” “satisfactory,” “needs to improve,” or “substantial noncompliance”). The failure of an institution to receive at least a “satisfactory” rating could inhibit the institution or its holding company from undertaking certain activities, including acquisitions or opening branch offices.

Source of Strength

The Dodd-Frank Act codified the Federal Reserve’s long-held position that a depository institution holding company must serve as a source of financial strength for its subsidiary depository institutions, the so-called “source of strength doctrine.” In effect, the holding company may be compelled to commit resources to support the subsidiary in the event the subsidiary is in financial distress.

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Broker-Dealer and Investment Advisor Regulation

Schwab’s principal broker-dealer is CS&Co. CS&Co is registered as a broker-dealer with the U.S. Securities and Exchange Commission (SEC), the fifty states, the District of Columbia and Commonwealth of Puerto Rico. CS&Co and CSIM are registered as investment advisors with the SEC. Additionally, CS&Co is regulated by the Commodities Futures Trading Commission (CFTC) with respect to the commodity futures and trading activities it conducts as an introducing broker.

Much of the regulation of broker-dealers has been delegated to SROs. CS&Co is a member of the Financial Industry Regulatory Authority, Inc. (FINRA), the Municipal Securities Rulemaking Board (MSRB), NYSE Arca, and the Chicago Board Options Exchange (CBOE). In addition to the SEC, the primary regulators of CS&Co are FINRA and, for municipal securities, the MSRB. The National Futures Association (NFA) is CS&Co’s primary regulator for futures and commodities trading activities.

The principal purpose of regulating broker-dealers and investment advisors is the protection of clients and securities markets. The regulations cover all aspects of the securities business, including, among other things, sales and trading practices, publication of research, margin lending, uses and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping and reporting, fee arrangements, disclosure to clients, fiduciary duties, and the conduct of directors, officers, and employees.

CS&Co is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule) and related SRO requirements. The CFTC and NFA also impose net capital requirements. The Uniform Net Capital Rule specifies minimum capital requirements intended to ensure the general financial soundness and liquidity of broker-dealers. CSC itself is not a registered broker-dealer and it is not subject to the Uniform Net Capital Rule. If CS&Co fails to maintain specified levels of net capital, such failure could constitute a default by CSC of certain debt covenants under its credit agreement.

The Uniform Net Capital Rule prohibits CS&Co from paying cash dividends, making unsecured advances or loans or repaying subordinated loans if such payment would result in a net capital amount of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement of $250,000.

In addition to net capital requirements, as a self-clearing broker-dealer, CS&Co is subject to cash deposit and collateral requirements with clearing houses, such as the Depository Trust & Clearing Corporation and Options Clearing Corporation, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility.

As a result of our operations in countries outside the U.S., we are also subject to rules and regulations issued by certain foreign authorities, including the Financial Conduct Authority (FCA) in the U.K., the Securities and Futures Commission (SFC) in Hong Kong, the Monetary Authority of Singapore (MAS) in Singapore, and the Australian Securities and Investments Commission (ASIC) in Australia.

Financial Services Regulation

Bank Secrecy Act of 1970 and USA PATRIOT Act of 2001

CSC and its subsidiaries that conduct financial services activities are subject to the Bank Secrecy Act of 1970 (BSA), as amended by the USA PATRIOT Act of 2001, which requires financial institutions to develop and implement programs reasonably designed to achieve compliance with these regulations. The BSA and USA PATRIOT Act include a variety of monitoring, recordkeeping and reporting requirements (such as currency transaction reporting and suspicious activity reporting), as well as identity verification and client due diligence requirements which are intended to detect, report and/or prevent money laundering, and the financing of terrorism. In addition, CSC and various subsidiaries of the Company are subject to U.S. sanctions programs administered by the Office of Foreign Assets Control.

Available Information

Schwab files annual, quarterly, and current reports, proxy statements, and other information with the SEC. The SEC filings are available to the public over the internet on the SEC’s website at https://www.sec.gov.

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THE CHARLES SCHWAB CORPORATION

On our website, https://www.aboutschwab.com, we post the following filings after they are electronically filed with or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. In addition, the website also includes the Dodd-Frank stress test results, our regulatory capital disclosures based on Basel III, and our quarterly average LCR.

All such filings are available free of charge either on our website or by request via email (investor.relations@schwab.com), telephone (415-667-7000), or mail (Charles Schwab Investor Relations at 211 Main Street, San Francisco, CA 94105).

Item 1A. Risk Factors

We face a variety of risks that may affect our operations, financial results, or stock price and many of those risks are driven by factors that we cannot control or predict. The following discussion addresses those risks that management believes are the most significant, although there may be other risks that could arise, or may prove to be more significant than expected, that may affect our operations or financial results.

For a discussion of our risk management, including operational risk, compliance risk, credit risk, market risk, and liquidity risk, see Risk Management and Capital Management in Part II, Item 7.

Developments in the business, economic, and geopolitical environment could negatively impact our business.

Our business can be adversely affected by the general environment – economic, corporate, securities market, regulatory, and geopolitical developments all play a role in client asset valuations, trading activity, interest rates, and overall investor engagement, and are outside of our control. Deterioration in the housing and credit markets, reduction in short-term interest rates, and decreases in securities valuations negatively impact our results of operations and capital resources.

Extensive regulation of our businesses may subject us to significant penaltiesor limitations on business activities.

As a participant in the securities, banking, and financial services industries, we are subject to extensive regulation under federal, state, and foreign laws by governmental agencies, supervisory authorities and SROs. The costs and uncertainty related to complying with such regulations continue to increase. These regulations affect our business operations and impose capital, client protection, and market conduct requirements on us.

In addition to specific banking laws and regulations, our banking regulators have broad discretion in connection with their supervisory and enforcement activities and examination policies and could require CSC and/or our banking subsidiaries to hold more capital, increase liquidity, or limit their ability to pay dividends or CSC’s ability to repurchase or redeem shares. The banking regulators could also limit our ability to grow, including adding assets, launching new products, making acquisitions, and undertaking strategic investments. Other potential regulatory actions include limiting our banking subsidiaries’ ability to accept deposits swept from client brokerage accounts and brokered deposits and preventing us from pursuing our business strategy.

Despite our efforts to comply with applicable legal requirements, there are a number of risks, particularly in areas where applicable laws or regulations may be unclear or where regulators could revise their previous guidance. Any enforcement actions or other proceedings brought by our regulators against us or our affiliates, officers or employees could result in fines, penalties, cease and desist orders, enforcement actions, suspension, disqualification or expulsion, or other disciplinary sanctions, including limitations on our business activities, any of which could harm our reputation and adversely affect our results of operations and financial condition.

While we maintain systems and procedures designed to ensure that we comply with applicable laws and regulations, violations could occur. In addition, some legal/regulatory frameworks provide for the imposition of fines or penalties for noncompliance even though the noncompliance was inadvertent or unintentional and even though systems and procedures reasonably designed to prevent violations were in place at the time. There may be other negative consequences resulting from a finding of noncompliance, including restrictions on certain activities. Such a finding may also damage our reputation and our relationships with our regulators and could restrict the ability of institutional investment managers to invest in our securities.

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THE CHARLES SCHWAB CORPORATION

Legislation or changes in rules and regulations could negatively affect our business and financial results.

New legislation, rules, regulations and guidance, or changes in the interpretation or enforcement of existing federal, state, foreign and SRO rules, regulations and guidance, including changes relating to mutual funds, broker-dealer fiduciary duties and regulatory treatment of deposit accounts, may directly affect the operation and profitability of Schwab or its specific business lines. Our profitability could also be affected by rules and regulations that impact the business and financial communities generally, including changes to the laws governing taxation, electronic commerce, client privacy and security of client data. In addition, the rules and regulations could result in limitations on the lines of business we conduct, modifications to our business practices, more stringent capital and liquidity requirements, increased deposit insurance assessments or additional costs and could limit our ability to return capital to stockholders. These changes may also require us to invest significant management attention and resources to evaluate and make necessary changes to our compliance, risk management, treasury and operations functions.

Failure to meet capital adequacy and liquidity guidelines could affect our financial condition.

CSC, together with its banking and broker-dealer subsidiaries, must meet certain capital and liquidity standards, subject to qualitative judgments by regulators about the adequacy of Schwab’s capital and Schwab’s internal assessment of its capital needs. The Uniform Net Capital Rule limits CS&Co’s ability to transfer capital to CSC and other affiliates. New regulatory capital, liquidity, and stress testing requirements may limit or otherwise restrict how we utilize our capital, including paying dividends, stock repurchases, and redemptions, and may require us to increase our capital and/or liquidity or to limit our growth. Failure by either CSC or its banking subsidiaries to meet minimum capital requirements could result in certain mandatory and additional discretionary actions by regulators that, if undertaken, could have a negative impact on us. In addition, failure by CSC or our banking subsidiaries to maintain a sufficient amount of capital to satisfy their capital conservation buffer and countercyclical capital buffer requirements would result in restrictions on our ability to make capital distributions and discretionary cash bonus payments to executive officers. Any requirement that we increase our regulatory capital, replace certain capital instruments which presently qualify as Tier 1 Capital, or increase regulatory capital ratios or liquidity, could require us to liquidate assets, deleverage or otherwise change our business and/or investment plans, which may adversely affect our financial results. Issuing additional common stock would dilute the ownership of existing stockholders.

In 2018, we crossed the threshold for becoming subject to the “advanced approaches” framework. We are currently subject to a supplementary leverage ratio and related disclosure requirements, the inclusion of AOCI in regulatory capital, and the countercyclical capital buffer, and will become subject to the full LCR in the second quarter of 2019. In addition, federal banking agencies have broad discretion and could require CSC or its banking subsidiaries to hold higher levels of capital or increase liquidity above the applicable regulatory requirements.

Significant interest rate changes could affect our profitability.

The direction and level of interest rates are important factors in our earnings. A decline in interest rates may have a negative impact on our net interest revenue. A low interest rate environment may also have a negative impact on our asset management and administration fee revenues if we have to waive a portion of our management fees for certain Schwab-sponsored money market mutual funds in order to continue providing a positive return to clients.

Although we believe we are positioned to benefit from a rising interest rate environment, a rise in interest rates may cause our funding costs to increase if market conditions or the competitive environment induces us to raise our interest rates to avoid losing deposits, or replace deposits with higher cost funding sources without offsetting increases in yields on interest-earning assets can reduce our net interest revenue.

The expected phase-out of LIBOR could negatively impact our net interest revenue and require significant operational work.

Certain securities in our investment portfolio and the floating rate loans we offer reference LIBOR as the benchmark rate to determine the applicable interest rate or payment amount. We also use LIBOR in many of our financial models, such as those used for capital stress testing, and to determine the dividend rates for certain of our series of preferred stock which begin to float in 2022 and later. If LIBOR is discontinued after 2021 as expected, there will be uncertainty or differences in the calculation of the applicable interest rate or payment amount depending on the terms of the governing instruments and

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there will be significant work required to transition to using the new benchmark rates and implement necessary changes to our systems and financial models. This could result in different financial performance for previously booked transactions and may impact our existing transaction data, products, systems, operations, and pricing processes. The calculation of interest rates under the replacement benchmarks could also impact our net interest revenue. In addition, LIBOR may perform differently during the phase-out period than in the past which could result in lower interest payments and a reduction in the value of certain securities in our investment portfolio.

A significant change in client cash allocations could negatively impact our net interest revenue.

We rely heavily on bank deposits as a low cost source of funding to extend loans to clients and purchase investment securities. Our bank deposits are primarily driven by our bank sweep feature when cash awaiting investment in our client brokerage accounts is swept to our banking subsidiaries. A significant reduction in our clients’ allocation to cash, a change in the allocation of that cash, or a transfer of cash away from the Company, could reduce net interest revenue.

Security breaches of our systems, or those of our clients or third parties, may subject us to significant liability and damage Schwab’s reputation.

Our business involves the secure processing, storage, and transmission of confidential information about our clients and us. Information security risks for financial institutions are increasing, in part because of the use of the internet and mobile technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, activists, hackers and other external parties, including foreign state actors. Our systems and those of other financial institutions have been and are likely to continue to be the target of cyber attacks, malicious code, computer virusesand denial of service attacks that could result in unauthorized access, misuse, loss or destruction of data (including confidential client information), account takeovers, unavailability of service or other events. Despite our efforts to ensure the integrity of our systems, we may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources. Data security breaches may also result from non-technical means, for example, employee misconduct.

Given the high volume of transactions that we process, the large number of clients, counterparties and third-party service providers with which we do business and the increasing sophistication of cyber attacks, a cyber attack could occur and persist for an extended period of time before being detected. The extent of a particular cyber attack and the steps we may need to take to investigate the attack may not be immediately clear, and it may take a significant amount of time before an investigation is completed and full and reliable information about the attack is known. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all or any of which would further increase the costs and consequences of a cyber attack.

Security breaches, including breaches of our security measures or those of our third-party service providers or clients, could result in a violation of applicable privacy and other laws and could subject us to significant liability or loss that may not be covered by insurance, actions by our regulators, damage to Schwab’s reputation, or a loss of confidence in our security measures which could harm our business. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures.

We also face risk related to external fraud involving the misappropriation and use of clients’ user names, passwords or other personal information to gain access to clients’ financial accounts at Schwab. This could occur from the compromise of clients’ personal electronic devices or as a result of a data security breach at an unrelated company where clients’ personal information is taken and then made available to fraudsters. Such risk has grown in recent years due to the increased sophistication and activities of organized crime and other external parties, including foreign state-sponsored parties. Losses reimbursed to clients under our guarantee against unauthorized account activity could have a negative impact on our business, financial condition and results of operations.

Technology and operational failures or errors could subject us to losses, litigation, regulatory actions, and reputational damage.

We must process, record and monitor a large number of transactions and our operations are highly dependent on the integrity of our technology systems and our ability to make timely enhancements and additions to our systems. System interruptions,

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errors or downtime can result from a variety of causes, including changes in client use patterns, technological failure, changes to our systems, linkages with third-party systems and power failures and can have a significant impact on our business and operations. Our systems are vulnerable to disruptions from human error, execution errors, errors in models such as those used for asset management, capital planning and management, risk management, stress testing and compliance, employee misconduct, unauthorized trading, external fraud, computer viruses, distributed denial of service attacks, cyber attacks, terrorist attacks, natural disaster, power outage, capacity constraints, software flaws, events impacting key business partners and vendors, and similar events. For example, Schwab and other financial institutions have been the target of various denial of service attacks that have, in certain circumstances, made websites, mobile applications and email unavailable for periods of time. It could take an extended period of time to restore full functionality to our technology or other operating systems in the event of an unforeseen occurrence, which could affect our ability to process and settle client transactions. Moreover, instances of fraud or other misconduct might also negatively impact Schwab’s reputation and client confidence in the Company, in addition to any direct losses that might result from such instances. Despite our efforts to identify areas of risk, oversee operational areas involving risk, and implement policies and procedures designed to manage these risks, there can be no assurance that we will not suffer unexpected losses, reputational damage or regulatory action due to technology or other operational failures or errors, including those of our vendors or other third parties.

While we devote substantial attention and resources to the reliability, capacity and scalability of our systems, extraordinary trading volumes could cause our computer systems to operate at unacceptably slow speeds or even fail, affecting our ability to process client transactions and potentially resulting in some clients’ orders being executed at prices they did not anticipate. Disruptions in service and slower system response times could result in substantial losses and decreased client satisfaction. We are also dependent on the integrity and performance of securities exchanges, clearing houses and other intermediaries to which client orders are routed for execution and settlement. System failures and constraints and transaction errors at such intermediaries could result in delays and erroneous or unanticipated execution prices, cause substantial losses for us and for our clients, and subject us to claims from our clients for damages.

Our investment management operations may subject us to fiduciary or other legal liability for client losses.

Fund and trust management and administration are complex activities and include functions such as recordkeeping and accounting, security pricing, corporate actions, compliance with investment restrictions, daily net asset value computations, account reconciliations, and required distributions to fund shareholders. Failure to properly perform operational tasks, or the misrepresentation of our services and products could subject us to regulatory sanctions, penalties or litigation and result in reputational damage, liability to clients, and the termination of investment management or administration agreements and the withdrawal of assets under our management.

In the management and administration of funds and client accounts, we use quantitative models and other tools and resources to support investment decisions and processes, including those related to risk assessment, portfolio management, trading and hedging activities and product valuations. Errors in the design, function, or underlying assumptions used in these models and tools, particularly if we fail to detect the errors over an extended period, could subject us to claims of a breach of fiduciary duty and potentially large liabilities for make-whole payments, litigation, and/or regulatory fines.

A significant decrease in our liquidity could negatively affect our business as well as reduce client confidence in Schwab.

Maintaining adequate liquidity is crucial to our business operations, including transaction settlement, custody requirements, and lending commitments, among other liquidity needs. We meet our liquidity needs primarily from working capital and cash generated by client activity, as well as external financing. Fluctuations in client cash or deposit balances, as well as market conditions or changes in regulatory treatment of client deposits, may affect our ability to meet our liquidity needs. A reduction in our liquidity position could reduce client confidence in Schwab, which could result in the transfer of client assets and accounts, or could cause us to fail to satisfy our liquidity requirements, including the LCR. In addition, if our broker-dealer or depository institution subsidiaries fail to meet regulatory capital guidelines, regulators could limit the subsidiaries’ operations or their ability to upstream funds to CSC, which could reduce CSC’s liquidity and adversely affect its ability to repay debt, pay dividends on CSC’s preferred stock, or return capital to common stockholders. In addition, CSC may need to provide additional funding to such subsidiaries.

Factors which may adversely affect our liquidity position include CS&Co having temporary liquidity demands due to timing differences between brokerage transaction settlements and the availability of segregated cash balances, fluctuations in cash

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held in banking or brokerage client accounts, a dramatic increase in our lending activities (including margin, mortgage-related, and personal lending), increased capital requirements, changes in regulatory guidance or interpretations, other regulatory changes, or a loss of market or client confidence in Schwab resulting in unanticipated withdrawals of client funds.

When available cash is not sufficient for our liquidity needs, we may seek external financing. During periods of disruptions in the credit and capital markets, potential sources of external financing could be reduced, and borrowing costs could increase. Although CSC and CS&Co maintain committed and uncommitted, unsecured bank credit lines and CSC has a commercial paper issuance program, as well as a universal shelf registration statement filed with the SEC which can be used to sell securities, financing may not be available on acceptable terms or at all due to market conditions or disruptions in the credit markets. In addition, a significant downgrade in the Company’s credit ratings could increase its borrowing costs and limit its access to the capital markets.

We may suffer significant losses from our credit exposures.

Our businesses are subject to the risk that a client, counterparty or issuer will fail to perform its contractual obligations, or that the value of collateral held to secure obligations will prove to be inadequate. While we have policies and procedures designed to manage this risk, the policies and procedures may not be fully effective. Our exposure mainly results from margin lending, clients’ options and futures trading, securities lending, mortgage lending, pledged asset lending, our role as a counterparty in financial contracts and investing activities, and indirectly from the investing activities of certain of the proprietary funds we sponsor.

When clients purchase securities on margin, borrow on lines of credit collateralized by securities, or trade options or futures, we are subject to the risk that clients may default on their obligations when the value of the securities and cash in their accounts falls below the amount of clients’ indebtedness. Abrupt changes in securities valuations and the failure of clients to meet margin calls could result in substantial losses.

We have exposure to credit risk associated with our investments. Those investments are subject to price fluctuations as a result of changes in the financial market’s assessment of credit quality. Loss of value of securities can negatively affect earnings if management determines that such securities are other than temporarily impaired. The evaluation of whether other-than-temporary impairment (OTTI) exists is a matter of judgment, which includes the assessment of several factors. If management determines that a security is OTTI, the cost basis of the security may be adjusted and a corresponding loss may be recognized in current earnings. Deterioration in the performance of available for sale (AFS) and held to maturity (HTM) securities could result in the recognition of future impairment charges. Even if a security is not considered OTTI, if we were ever forced to sell the security sooner than intended prior to maturity due to liquidity needs, we would have to recognize any unrealized losses at that time.

Our bank loans primarily consist of First Mortgages, HELOCs, and PALs. Increases in delinquency and default rates, housing and stock price declines, increases in the unemployment rate, and other economic factors can result in charges for loan loss reserves and write downs on such loans.

Heightened credit exposures to specific counterparties or instruments can increase our risk of loss. Examples include:

• Large positions in financial instruments collateralized by assets with similar economic characteristics or in securities of a single issuer or industry;

• Mortgage loans and HELOCs to banking clients which are secured by properties in the same geographic region; and

• Client margins, options or futures, pledged assets, and securities lending activities collateralized by or linked to securities of a single issuer, index, or industry.

We sponsor a number of proprietary money market mutual funds and other proprietary funds. Although we have no obligation to do so, we may decide for competitive or other reasons to provide credit, liquidity or other support to our funds in the event of significant declines in valuation of fund holdings or significant redemption activity that exceeds available liquidity. Such support could cause us to take significant charges, could reduce our liquidity and, in certain situations, could, with respect to proprietary funds other than money market mutual funds, result in us having to consolidate one or more

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funds in our financial statements. If we choose not to provide credit, liquidity or other support in such a situation, Schwab could suffer reputational damage and its business could be adversely affected.

We are subject to litigation and regulatory investigations and proceedings and may not be successful in defending against claims or proceedings.

The financial services industry faces significant litigation and regulatory risks. We are subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. We are also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies.

Litigation and arbitration claims include those brought by our clients and the clients of third party advisors whose assets are custodied at Schwab. Claims from clients of third party advisors may allege losses due to investment decisions made by the third party advisors or the advisors’ misconduct. Litigation claims also include claims from third parties alleging infringement of their intellectual property rights (e.g., patents). Such litigation can require the expenditure of significant company resources. If we were found to have infringed on a third-party patent, or other intellectual property rights, we could incur substantial damages, and in some circumstances could be enjoined from using certain technology, or providing certain products or services.

Actions brought against us may result in settlements, awards, injunctions, fines, penalties or other results adverse to us, including reputational harm. Even if we are successful in defending against these actions, the defense of such matters may result in us incurring significant expenses. A substantial judgment, settlement, fine, or penalty could be material to our operating results or cash flows for a particular future period, depending on our results for that period. In market downturns and periods of heightened volatility, the volume of legal claims and amount of damages sought in litigation and regulatory proceedings against financial services companies have historically increased.

We rely on outsourced service providers to perform key functions.

We rely on external service providers to perform certain key technology, processing, servicing, and support functions. These service providers face technology, operating, business, and economic risks, and any significant failures by them, including the improper use or disclosure of our confidential client, employee, or company information, could cause us to incur losses and could harm Schwab’s reputation. An interruption in or the cessation of service by any external service provider as a result of systems failures, capacity constraints, financial difficulties or for any other reason, and our inability to make alternative arrangements in a timely manner could disrupt our operations, impact our ability to offer certain products and services, and result in financial losses to us. Switching to an alternative service provider may require a transition period and result in less efficient operations.

Potential strategic transactions could have a negative impact on our financial position.

We evaluate potential strategic transactions, including business combinations, acquisitions, and dispositions. Any such transaction could have a material impact on our financial position, results of operations, or cash flows. The process of evaluating, negotiating, and effecting any such strategic transaction may divert management’s attention from other business concerns, and might cause the loss of key clients, employees, and business partners. Moreover, integrating businesses and systems may result in unforeseen expenditures as well as numerous risks and uncertainties, including the need to integrate operational, financial, and management information systems and management controls, integrate relationships with clients and business partners, and manage facilities and employees in different geographic areas. In addition, an acquisition may cause us to assume liabilities or become subject to litigation or regulatory proceedings. Further, we may not realize the anticipated benefits from an acquisition, and any future acquisition could be dilutive to our current stockholders’ percentage ownership or to earnings per common share (EPS).

Our acquisitions and dispositions are typically subject to closing conditions, including regulatory approvals and the absence of material adverse changes in the business, operations or financial condition of the entity being acquired or sold. To the extent we enter into an agreement to buy or sell an entity, there can be no guarantee that the transaction will close when expected, or at all. If a material transaction does not close, our stock price could decline.

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Our industry is characterized by aggressive price competition.

We continually monitor our pricing in relation to competitors and periodically adjust trade commission rates, interest rates on deposits and loans, fees for advisory services, expense ratios on mutual funds and ETFs, and other pricing to enhance our competitive position. Increased price competition from other financial services firms to attract clients, such as reduced commissions, higher deposit rates, or reduced mutual fund or ETF expense ratios, could impact our results of operations and financial condition.

We face competition in hiring and retaining qualified employees.

The market for qualified personnel in our business is highly competitive. At various times, different functions and roles are in especially high demand in the market, compelling us to pay more to attract talent. Our ability to continue to compete effectively will depend upon our ability to attract new employees and retain existing employees while managing compensation costs.

Our stock price has fluctuated historically, and may continue to fluctuate.

Our stock price can be volatile. Among the factors that may affect the volatility of our stock price are the following:

• Our exposure to changes in interest rates;

• Speculation in the investment community or the press about, or actual changes in, our competitive position, organizational structure, executive team, operations, financial condition, financial reporting and results, expense discipline, or strategic transactions;

• The announcement of new products, services, acquisitions, or dispositions by us or our competitors; and

• Increases or decreases in revenue or earnings, changes in earnings estimates by the investment community, and variations between estimated financial results and actual financial results.

Changes in the stock market generally, or as it concerns our industry, as well as geopolitical, corporate, regulatory, business, and economic factors may also affect our stock price.

Future sales of CSC’s equity securities may adversely affect the market price of CSC’s common stock and result in dilution.

CSC’s certificate of incorporation authorizes CSC’s Board of Directors, among other things, to issue additional shares of common or preferred stock or securities convertible or exchangeable into equity securities, without stockholder approval.

CSC may issue additional equity or convertible securities to raise additional capital or for other purposes. The issuance of any additional equity or convertible securities could be substantially dilutive to holders of CSC’s common stock and may adversely affect the market price of CSC’s common stock.

Item 1B.     Unresolved Staff Comments

None.

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THE CHARLES SCHWAB CORPORATION

Item 2.     Properties

A summary of Schwab’s significant locations is presented in the following table. Locations are leased or owned as noted below. The square footage amounts are presented net of space that has been subleased to third parties.

December 31, 2018	Square Footage
(amounts in thousands)	Leased	Owned
Location
Corporate headquarters:
San Francisco, CA	662	—
Service and other office space:
Phoenix, AZ	28	728
Denver, CO	—	731
Austin, TX	83	452
Dallas, TX	318	—
Indianapolis, IN	—	161
Orlando, FL	159	—
Chicago, IL	145	—
Richfield, OH	—	117
El Paso, TX	—	105

Substantially all of our branch offices are located in leased premises. The corporate headquarters, data centers, offices, and service centers support both of our segments.

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Item 3. Legal Proceedings

For a discussion of legal proceedings, see Item 8 – Note 14.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters,and Issuer Purchases of Equity Securities

CSC’s common stock is listed on The New York Stock Exchange under the ticker symbol SCHW. The number of common stockholders of record as of January 31, 2019, was 5,803. The closing market price per share on that date was $46.77.  

The following graph shows a five-year comparison of cumulative total returns for CSC’s common stock, the Standard & Poor’s 500 Index, and the Dow Jones U.S. Investment Services Index, each of which assumes an initial investment of $100 and reinvestment of dividends.

December 31,	2013		2014		2015		2016		2017		2018
The Charles Schwab Corporation	$	100	$	117	$	129	$	156	$	204	$	167
Standard & Poor’s 500 Index	$	100	$	114	$	115	$	129	$	157	$	150
Dow Jones U.S. Investment Services Index	$	100	$	115	$	114	$	144	$	180	$	159

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Issuer Purchases of Equity Securities

On October 25, 2018, CSC publicly announced that its Board of Directors authorized the repurchase of up to $1.0 billion of common stock, which was completed as of December 31, 2018 (see Item 8 – Note 17).

On January 30, 2019, CSC publicly announced that its Board of Directors authorized the repurchase of up to $4.0 billion of common stock. The authorization does not have an expiration date.

The following table summarizes purchases made by or on behalf of CSC of its common stock for each calendar month in the fourth quarter of 2018 (in millions, except number of shares, which are in thousands, and per share amounts):

Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Program (2)
October:
Share repurchase program	3,831	$	45.02	3,831	$	827
Employee transactions (1)	5	$	49.67	N/A	N/A
November:
Share repurchase program	11,862	$	47.03	11,862	$	269
Employee transactions (1)	651	$	46.59	N/A	N/A
December:
Share repurchase program	6,643	$	40.52	6,643	$	—
Employee transactions (1)	269	$	45.86	N/A	N/A
Total:
Share repurchase program	22,336	$	44.75	22,336	$	—
Employee transactions (1)	925	$	46.40	N/A	N/A

໿

⁽¹⁾ Includes restricted shares withheld (under the terms of grants under employee stock incentive plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. CSC may receive shares delivered or attested to pay the exercise price and/or to satisfy tax withholding obligations by employees who exercise stock options granted under employee stock incentive plans, which are commonly referred to as stock swap exercises.

⁽²⁾ All repurchases under the 2018 share repurchase program authorization were completed by the end of 2018.

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THE CHARLES SCHWAB CORPORATION

Item 6. Selected Financial Data

Selected Financial and Operating Data
(In Millions, Except Per Share Amounts, Ratios, or as Noted)
	Growth Rates
	Compounded 4-Year 2014-2018 (1)	Annual 1-Year 2017-2018	2018			2017			2016			2015			2014
Results of Operations
Net revenues	14%	18%	$	10,132		$	8,618		$	7,478		$	6,380		$	6,058
Expenses excluding interest	9%	12%	$	5,570		$	4,968		$	4,485		$	4,101		$	3,943
Net income	28%	49%	$	3,507		$	2,354		$	1,889		$	1,447		$	1,321
Net income available to common stockholders	27%	53%	$	3,329		$	2,180		$	1,746		$	1,364		$	1,261
Earnings per common share:
Basic	27%	52%	$	2.47		$	1.63		$	1.32		$	1.04		$	.96
Diluted	27%	52%	$	2.45		$	1.61		$	1.31		$	1.03		$	.95
Dividends declared per common share	18%	44%	$	.46		$	.32		$	.27		$	.24		$	.24
Weighted average common shares outstanding:
Basic	1%	1%	1,348			1,339			1,324			1,315			1,303
Diluted	1%	1%	1,361			1,353			1,334			1,327			1,315
Net interest revenue as a percentage of net revenues			57		%	50		%	44		%	40		%	38		%
Asset management and administration fees as a percentage of net revenues			32		%	39		%	41		%	41		%	42		%
Trading revenue as a percentage of net revenues			8		%	8		%	11		%	14		%	15		%
Effective income tax rate			23.1		%	35.5		%	36.9		%	36.5		%	37.5		%
Performance Measures
Net revenue growth			18		%	15		%	17		%	5		%	11		%
Pre-tax profit margin			45.0		%	42.4		%	40.0		%	35.7		%	34.9		%
Return on average common stockholders’ equity			19		%	15		%	14		%	12		%	12		%
Financial Condition (at year end)
Total assets	18%	22%	$	296,482		$	243,274		$	223,383		$	183,705		$	154,635
Short-term borrowings	N/M	(100)%	—			$	15,000		—			—			—
Long-term debt	38%	45%	$	6,878		$	4,753		$	2,876		$	2,877		$	1,892
Preferred stock	34%	—	$	2,793		$	2,793		$	2,783		$	1,459		$	872
Total stockholders’ equity	15%	12%	$	20,670		$	18,525		$	16,421		$	13,402		$	11,803
Assets to stockholders’ equity ratio			14			13			14			14			13
Debt to total capital ratio (2)			25		%	52		%	15		%	18		%	14		%
Employee Information
Full-time equivalent employees (in thousands, at year end)	8%	11%	19.5			17.6			16.2			15.3			14.6

⁽¹⁾ The Compounded 4-year growth rate is computed using the formula: Compound annual growth rate = (Ending Value / Beginning Value) ^.25– 1.

⁽²⁾ The Debt to total capital ratio is computed using the formula: Total Debt (short and long-term) / (Total Debt + Stockholders’ Equity).

N/M Not meaningful.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Item 7. Management’s Discussion and Analysisof Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimate,” “appear,” “could,” “would,” and other similar expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect management’s beliefs, objectives, and expectations as of the date hereof, are estimates based on the best judgment of Schwab’s senior management. These statements relate to, among other things:

• Maximizing our market valuation and stockholder returns over time; our belief that developing trusted relationships will translate into more client assets which drives revenue and, along with expense discipline and thoughtful capital management, generates earnings growth and builds stockholder value; and Schwab’s ability to pursue its business strategy and maintain its market leadership position; (see Business Strategy and Competitive Environment in Part I, Item 1);

• The impact of legal proceedings and regulatory matters (see Item 8 – Note 14);

• Effective capital management supporting business growth and capital returns to stockholders (see Overview in Part II, Item 7);

• The adjustment of rates paid on client-related liabilities; the stability, rate sensitivity, and duration of client-related liabilities; managing the duration of interest-earning assets; and Schwab’s positioning to benefit from an increase in interest rates and limit its exposure to falling rates (see Net Interest Revenue in Part II, Item 7);

• 2019 capital expenditures (see Total Expenses Excluding Interest in Part II, Item 7);

• Sources of liquidity, capital, and level of dividends (see Liquidity Risk in Part II, Item 7);

• Capital ratios (see Regulatory Capital Requirements in Part II, Item 7);

• The impact of changes in management’s estimates on Schwab’s results of operations (see Critical Accounting Estimates in Part II, Item 7);

• The expected impact of new accounting standards not yet adopted (see Item 8 – Note 2); and

• The impact of changes in the likelihood of indemnification and guarantee payment obligations on Schwab’s results of operations (see Item 8 – Note 14).

Achievement of the expressed beliefs, objectives and expectations described in these statements is subject to certain risks and uncertainties that could cause actual results to differ materially from the expressed beliefs, objectives, and expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or, in the case of documents incorporated by reference, as of the date of those documents.

Important factors that may cause actual results to differ include, but are not limited to:

• General market conditions, including the level of interest rates, equity valuations and trading activity;

• Our ability to attract and retain clients, develop trusted relationships, and grow client assets;

• Client use of our advisory solutions and other products and services;

• The level of client assets, including cash balances;

• Competitive pressure on pricing, including deposit rates;

• Client sensitivity to interest rates;

• Regulatory guidance;

• Timing and amount of transfers to bank sweep deposits;

• Capital and liquidity needs and management;

• Our ability to manage expenses;

• Our ability to develop and launch new products, services, and capabilities, as well as implement infrastructure, in a timely and successful manner;

• The timing of campus expansion work and technology projects;

• The effect of adverse developments in litigation or regulatory matters and the extent of any related charges; and

• Potential breaches of contractual terms for which we have indemnification and guarantee obligations.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Certain of these factors, as well as general risk factors affecting the Company, are discussed in greater detail in Risk Factors in Part I, Item 1A.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

GLOSSARY OF TERMS

Active brokerage accounts: Brokerage accounts with activity within the preceding 270 days.

Accumulated Other Comprehensive Income (AOCI): A component of stockholders’ equity which includes unrealized gains and losses on AFS securities and net gains or losses associated with pension obligations.

Asset-backed securities: Debt securities backed by financial assets such as loans or receivables.

Assets receiving ongoing advisory services: Market value of all client assets custodied at the Company under the guidance of an independent advisor or enrolled in one of Schwab’s retail or other advisory solutions.

Basel III: Global regulatory standards on bank capital adequacy and liquidity issued by the Basel Committee on Banking Supervision.

Basis point: One basis point equals 1/100^th of 1%, or 0.01%.

Client assets: The market value, as of the end of the reporting period, of all client assets in our custody and proprietary products, which includes both cash and securities. Average client assets are the daily average client asset balance for the period.

Client cash as a percentage of client assets: Calculated as money market fund balances, bank deposits, Schwab One^® balances, and certain cash equivalents as a percentage of client assets.

Clients’ daily average trades: Includes daily average revenue trades by clients, trades by clients in asset-based pricing relationships, and all commission-free trades.

Common Equity Tier 1(CET1) Capital: The sum of common stock and related surplus net of treasury stock, retained earnings, AOCI and qualifying minority interests, less applicable regulatory adjustments and deductions. Schwab made a one-time election to opt-out of the requirement to include most components of AOCI in CET1 Capital under the “standardized approach” framework. Beginning in 2019, Schwab must include AOCI in CET1 Capital.

Common Equity Tier 1 Risk-Based Capital Ratio: The ratio of CET1 Capital to total risk-weighted assets as of the end of the period.

Core net new client assets: Net new client assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than $10 billion) relating to a specific client. These flows may span multiple reporting periods. 

Customer Protection Rule: Refers to Rule 15c3-3 of the Securities Exchange Act of 1934.

Daily Average Revenue Trades (DARTs): Total revenue trades during a certain period, divided by the number of trading days in that period. Revenue trades include all client trades that generate trading revenue (i.e., commission revenue or principal transaction revenue).

Debt to total capital ratio: Calculated as total debt divided by stockholders’ equity and total debt.

Delinquency roll rates: The rates at which loans transition through delinquency stages, ultimately resulting in a loss. Schwab considers a loan to be delinquent if it is 30 days or more past due.

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank): Regulatory reform legislation containing numerous provisions which expanded prudential regulation of large financial services companies.

Duration: Duration is typically used to measure the expected change in value of a financial instrument for a 1% change in interest rates, expressed in years. 

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Final Regulatory Capital Rules: Refers to the regulatory capital rules issued by U.S. banking agencies which implemented Basel III and relevant provisions of Dodd-Frank, which apply to savings and loan holding companies, as well as federal savings banks.

First mortgages: Refers to first lien residential real estate mortgage loans.

Full-time equivalent employees: Represents the total number of hours worked divided by a 40-hour work week for the following categories: full-time, part-time and temporary employees and persons employed on a contract basis.

High Quality Liquid Assets (HQLA): Assets with a high potential to be converted easily and quickly into cash.

Interest-bearing liabilities: Includes bank deposits, payables to brokerage clients, short-term borrowings, and long-term debt on which Schwab pays interest.

Interest-earning assets: Includes cash and cash equivalents, cash and investments segregated, broker-related receivables, receivables from brokerage clients, investment securities, and bank loans on which Schwab earns interest.

Investment grade: Defined as a rating equivalent to a Moody’s Investors Service (Moody’s) rating of “Baa” or higher, or a Standard & Poor’s Rating Group (Standard & Poor’s) or Fitch Ratings, Ltd (Fitch) rating of “BBB-” or higher.

Liquidity Coverage Ratio (LCR): The ratio of HQLA to projected net cash outflows during a 30-day stress scenario.

Loan-To-Value(LTV)ratio: Calculated as the principal amount of a loan divided by the value of the collateral securing the loan.

Margin loans: Advances made to brokerage clients on a secured basis to purchase securities reflected in receivables from brokerage clients on the consolidated balance sheets.

Master netting arrangement: An agreement between two counterparties that have multiple contracts with each other that provides for net settlement of all contracts through a single cash payment in the event of default or termination of any one contract.

Mortgage-backed securities: A type of asset-backed security that is secured by a mortgage or group of mortgages.

Net interest margin: Net interest revenue (annualized for interim periods) divided by average interest-earning assets.

Net new client assets: Total inflows of client cash and securities to Schwab less client outflows. Inflows include dividends and interest; outflows include commissions and fees. Capital gains distributions are excluded.

Net Stable Funding Ratio (NSFR): Measures an organization’s “available” amount of stable funding relative to its “required” amount of stable funding over a one-year time horizon.

New brokerage accounts: All brokerage accounts opened during the period, as well as any accounts added via acquisition.

Nonperforming assets: The total of nonaccrual loans and other real estate owned.

Order flow revenue: Net compensation received from markets and firms to which CS&Co sends equity and options orders. The amount reflects rebates received for certain types of orders, less fees paid for orders where exchange fees or other charges apply.

Pledged Asset Line^® (PAL): A non-purpose revolving line of credit from CSB secured by eligible assets held in a separate pledged brokerage account maintained at CS&Co.

Return on average common stockholders’ equity: Calculated as net income available to common stockholders (annualized for interim periods) divided by average common stockholders’ equity.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Risk-weighted assets: Computed by assigning specific risk-weightings to assets and off-balance sheet instruments for capital adequacy calculations.

Tier 1 Capital: The sum of CET1 Capital and additional Tier 1 Capital instruments and related surplus, less applicable adjustments and deductions.

Tier 1 Leverage Ratio: End-of-period Tier 1 Capital divided by adjusted average total consolidated assets for the quarter.

Trading days: Days in which the markets/exchanges are open for the buying and selling of securities. Early market closures are counted as half-days.

U.S. federal banking agencies: Refers to the Federal Reserve, the OCC, the FDIC, and the CFPB.

Uniform Net Capital Rule: Refers to Rule 15c3-1 under the Securities Exchange Act of 1934, which specifies minimum capital requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers at all times.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

OVERVIEW

Management focuses on several client activity and financial metrics in evaluating Schwab’s financial position and operating performance. We believe that metrics relating to net new and total client assets, as well as client cash levels and utilization of advisory services, offer perspective on our business momentum and client engagement. Data on new and total client brokerage accounts provides additional perspective on our ability to attract and retain new business. Total net revenue growth, pre-tax profit margin, EPS, return on average common stockholders’ equity, and the Consolidated Tier 1 Leverage Ratio provide broad indicators of Schwab’s overall financial health, operating efficiency, and ability to generate acceptable returns. Total expenses, excluding interest, as a percentage of average client assets, is a measure of operating efficiency. Results for the years ended December 31, 2018, 2017, and 2016 are as follows:

	Growth Rate 1-Year 2017-2018	2018			2017			2016
Client Metrics
Net new client assets (in billions) (1)	(43)%	$	133.9		$	233.1		$	125.5
Core net new client assets (in billions)	15%	$	227.8		$	198.6		$	125.5
Client assets (in billions, at year end)	(3)%	$	3,252.2		$	3,361.8		$	2,779.5
Average client assets (in billions)	11%	$	3,409.6		$	3,060.2		$	2,614.7
New brokerage accounts (in thousands)	9%	1,576			1,441			1,093
Active brokerage accounts (in thousands, at year end)	8%	11,593			10,755			10,155
Assets receiving ongoing advisory services (in billions, at year end)	1%	$	1,708.5		$	1,699.8		$	1,401.4
Client cash as a percentage of client assets (at year end)		12.8		%	10.8		%	13.0		%
Company Financial Metrics
Total net revenues	18%	$	10,132		$	8,618		$	7,478
Total expenses excluding interest	12%	5,570			4,968			4,485
Income before taxes on income	25%	4,562			3,650			2,993
Taxes on income	(19)%	1,055			1,296			1,104
Net income	49%	$	3,507		$	2,354		$	1,889
Preferred stock dividends and other	2%	178			174			143
Net income available to common stockholders	53%	$	3,329		$	2,180		$	1,746
Earnings per common share — diluted	52%	$	2.45		$	1.61		$	1.31
Net revenue growth from prior year		18		%	15		%	17		%
Pre-tax profit margin		45.0		%	42.4		%	40.0		%
Return on average common stockholders’ equity		19		%	15		%	14		%
Expenses excluding interest as a percentage of average client assets		0.16		%	0.16		%	0.17		%
Consolidated Tier 1 Leverage Ratio (at year end)		7.1		%	7.6		%	7.2		%

⁽¹⁾ 2018 includes outflows of $93.9 billion from certain mutual fund clearing services clients. 2017 includes inflows of $34.5 billion from certain mutual fund clearing services clients.

2018 Compared to 2017

Net income increased by $1.2 billion, or 49%, in 2018, driven primarily by business momentum, a supportive economic environment for much of the year, and lower corporate tax rates. Continued execution of our ‘Through Clients’ Eyes’ strategy helped us succeed with clients. In 2018, clients opened 1.6 million new brokerage accounts, helping bring active brokerage accounts to 11.6 million at the end of the year, and core net new assets totaled $227.8 billion, up 15% from the 2017 total. Our strong net new assets largely offset lower market valuations, and we ended 2018 at $3.25 trillion in total client assets.

Total net revenue grew by $1.5 billion, or 18%, in 2018 primarily due to an increase of $1.5 billion, or 36%, in net interest revenue. The Fed raised the overnight federal funds target interest rate four times in 2018 for a total of 100 basis points. The growth of total net revenue resulted from higher interest rates due to the Fed’s rate normalization, and also from higher

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

interest-earning assets, which reflect both client cash allocations and the transfer of sweep money market funds to bank and broker-dealer sweep. As we progressed with these transfers, the corresponding money market fund asset management and administration fee revenue naturally declined, yet positive inflows in advice solutions, Schwab equity and bond funds and ETFs, and other third-party mutual funds and ETFs kept asset management fees at $3.2 billion, limiting the decrease to 5% from 2017. Record trading activity from our clients resulted in trading revenue reaching $763 million, an increase of 17% from the prior year.

Our increase in total expenses excluding interest of $602 million, or 12%, reflected our 2018 investments to support and fuel our business growth, including hiring additional client-facing and other employees and technology project spending, as well as an increase in marketing and a special stock award of $36 million to our employees. Even with these increases, expenses as a percentage of client assets remained consistent at 16 basis points, and pre-tax income increased 25% to $4.6 billion in 2018, resulting in a pre-tax profit margin of 45.0%. As a result of the Tax Cuts and Jobs Act of 2017 (the Tax Act), taxes on income decreased 19% in 2018, resulting in an effective tax rate of 23.1%. Overall, we generated a 19% return on equity and diluted EPS of $2.45 for the year.

During 2018, the Board of Directors raised the quarterly cash dividend 63% to $0.13 per share and authorized a $1.0 billion Share Repurchase Program, which we completed during the fourth quarter. These actions reflected the Company’s strong financial performance and our confidence in its long-term success; they also demonstrated that effective capital management at Schwab can support both healthy business growth and more meaningful capital returns to stockholders.

2017 Compared to 2016

Net income available to common stockholders rose in 2017 by $434 million, or 25%, from the prior year, resulting in diluted EPS of $1.61 in 2017 – an increase of 23% compared to $1.31 in 2016. Net revenues improved by $1.1 billion, or 15%, while expenses excluding interest increased $483 million, or 11%, compared to 2016.

Our steady focus on operating ‘through clients’ eyes’ and our goal to continually challenge the status quo helped Schwab achieve another strong growth year in 2017. Clients opened 1.4 million new brokerage accounts in 2017 and trusted Schwab with $198.6 billion of core net new assets in 2017, up 58% from 2016. Total assets receiving ongoing advisory services grew 21% in 2017 to $1.70 trillion. Our success with clients was bolstered by strength in the equity markets – the Standard & Poor’s 500^® Index (S&P 500) finished 2017 up 19% from the prior year end. Also in 2017, the Federal Reserve increased the overnight federal funds target interest rate three times for a total of 75 basis points. Strong client activity and the positive economic environment resulted in total client assets rising to $3.36 trillion as of December 31, 2017 – a 21% increase since the end of 2016.

Schwab’s 2017 financial results demonstrate the power of our financial formula working as designed: our robust business growth supported strong revenue growth through multiple sources in 2017, which we combined with continued expense discipline to drive significantly improved profitability.

Net revenues grew by 15% in 2017 compared to 2016 through contributions from our two largest revenue sources. Net interest revenue rose 29% while asset management and administration fees grew 11% in 2017 when compared to the prior year. Trading revenue declined in 2017 by 21% due to price reductions announced early in 2017.

Consistent with our expectations, expenses grew 11% in 2017 compared to the prior year. This increase was primarily due to higher incentive compensation and higher staffing related to our strong asset gathering, as well as expenses related to project spending and third-party fees tied to higher balances in our asset management business.

This combination of revenue growth and expense discipline drove the pre-tax profit margin to 42.4% – an increase of 240 basis points over the prior year. Earnings before income taxes rose 22% to $3.7 billion in 2017 compared to $3.0 billion in the prior year.

The effective tax rate in 2017 was 35.5% compared to 36.9% in 2016 reflecting the benefit from the adoption of new accounting standards requiring the recognition of a portion of tax deductions related to equity compensation partially offset by the remeasurement of deferred tax assets and other tax adjustments associated with the 2017 enactment of the Tax Act.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Subsequent Event

On January 30, 2019, CSC publicly announced that its Board of Directors authorized a new Share Repurchase Program to repurchase up to $4.0 billion of common stock, and declared a four cent, or 31%, increase in the quarterly cash dividend to $0.17 per common share. The share repurchase authorization does not have an expiration date.

Current Regulatory Environment and Other Developments

On October 31, 2018, the Federal Reserve issued a notice of proposed rulemaking and the Federal Reserve, the OCC and the FDIC jointly issued another notice of proposed rulemaking. The two proposals would establish a revised framework for applying enhanced prudential standards to large U.S. banking organizations, with four categories of standards that reflect the risks of banking organizations in each group. CSC would be in Category III based on having $250 billion – $700 billion in total assets.

The Federal Reserve proposal, which would make large savings and loan holding companies such as CSC subject to enhanced prudential standards, would tailor those regulatory requirements relating to capital stress testing, risk management, liquidity risk management, and single-counterparty credit limits based on the category of the banking organization. The proposal provides that Category III banking organizations would be subject to annual supervisory stress testing and biennial company-run stress testing. The interagency proposal would similarly tailor requirements under the agencies’ capital rule, LCR rule, and the proposed net stable funding ratio rule for banking organizations in each category. Under the proposal, banking organizations in Category III would not be required to calculate their risk-weighted assets using the “advanced approaches” framework or to include AOCI in calculating their regulatory capital; however, they would continue to be subject to the supplementary leverage ratio and any future countercyclical capital buffer imposed by the banking agencies.

Although the Federal Reserve announced in its proposal that additional capital planning and resolution planning proposals would be issued at a later date, the agency did indicate that all Category III firms, including savings and loan holding companies, would be required to submit annual capital plans that would be subject to qualitative and quantitative assessments evaluated as part of the CCAR process.

The comment period for both proposed rules ended on January 22, 2019 andthe impact to Schwab cannot be assessed until the final rule is released.

On December 22, 2017, P.L.115-97, the Tax Act, was signed into law, and became effective on January 1, 2018. Among other things, the Tax Act lowered the federal corporate income tax rate from 35% to 21%.

As a result of the reduction of the federal corporate income tax rate, generally accepted accounting principles in the U.S. (GAAP) require companies to remeasure their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. Schwab recorded a one-time non-cash charge to taxes on income associated with the remeasurement of net deferred tax assets and other tax adjustments related to the tax reform legislation in the fourth quarter of 2017. Our 2018 effective income tax rate was reduced as a result of these changes.

In May 2016, the Federal Reserve, the OCC and the FDIC jointly issued a notice of proposed rulemaking that would impose a minimum NSFR on certain banking organizations, including CSC. The comment period for the proposed rule ended on August 5, 2016 and the impact to the Company cannot be assessed until the final rule is released.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

RESULTS OF OPERATIONS

Total Net Revenues

Total net revenues of $10.1 billion and $8.6 billion for the years ended December 31, 2018 and 2017, respectively, represented growth of 18% and 15% from the prior periods, primarily due to increases in net interest revenue.

Year Ended December 31,			2018					2017					2016
	Growth Rate 2017-2018		Amount			% of Total Net Revenues		Amount			% of Total Net Revenues		Amount			% of Total Net Revenues
Net interest revenue
Interest revenue	44	%	$	6,680		66	%	$	4,624		54	%	$	3,493		46	%
Interest expense	151	%	(857		)	(9	)%	(342		)	(4	)%	(171		)	(2	)%
Net interest revenue	36	%	5,823			57	%	4,282			50	%	3,322			44	%
Asset management and administration fees
Mutual fund and ETF service fees	(12	)%	1,793			18	%	2,045			24	%	1,853			25	%
Advice solutions	9	%	1,139			11	%	1,043			12	%	915			12	%
Other	(2	)%	297			3	%	304			3	%	287			4	%
Asset management and administration fees	(5	)%	3,229			32	%	3,392			39	%	3,055			41	%
Trading revenue
Commissions	14	%	685			7	%	600			7	%	779			10	%
Principal transactions	44	%	78			1	%	54			1	%	46			1	%
Trading revenue	17	%	763			8	%	654			8	%	825			11	%
Other	9	%	317			3	%	290			3	%	276			4	%
Total net revenues	18	%	$	10,132		100	%	$	8,618		100	%	$	7,478		100	%

Net Interest Revenue

Schwab’s primary interest-earning assets include cash and cash equivalents; cash and investments segregated; margin loans, which constitute the majority of receivables from brokerage clients; investment securities; and bank loans. Revenue on interest-earning assets is affected by various factors, such as the composition of assets, prevailing interest rates at the time of origination or purchase, changes in interest rates on floating rate securities and loans, and changes in prepayment levels for mortgage-related securities and loans. Fees earned on securities borrowing and lending activities, which are conducted by CS&Co using assets held in client brokerage accounts, are included in other interest revenue and expense.

Schwab’s interest-bearing liabilities include bank deposits, payables to brokerage clients, short-term borrowings, and long-term debt. We establish the rates paid on client-related liabilities, and management expects that it will generally adjust the rates paid on these liabilities at some fraction of any movement in short-term rates. During 2018, these liabilities rose by a total of $63.3 billion, largely reflecting the effect of: our transferring a total of $72 billion sweep money market funds to bank and broker-dealer sweep; clients choosing to reallocate assets between cash, equities, fixed income and other investments; and the Company gathering additional flows from new and current clients.

Overall, management believes that the extended period of extraordinarily low interest rates running from the financial crisis until recently has likely resulted in certain sweep cash balances retaining some level of latent rate sensitivity. With the Federal Funds Target Rate having increased to 2.25 – 2.50%, management expects some sweep cash balances could migrate to alternatives, including purchased money market funds, that offer higher yields to clients but lower revenue to Schwab.

Given the general stability and relatively low rate sensitivity of client-related liabilities, management believes their duration is at least several years. We have positioned Schwab to benefit from an increase in interest rates, especially short-term interest rates, by managing the duration of interest-earning assets to be shorter than that of interest-bearing liabilities, so that asset yields are expected to move faster than liability costs.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

In order to keep interest-rate sensitivity within established limits, management monitors and responds to changes in the balance sheet. As Schwab builds its client base, we attract new client sweep cash, which, along with the transfers of existing sweep cash balances from money market funds, is a primary driver of balance sheet growth. By managing the duration of interest-earning assets as necessary, we are positioned to continue to gain from increasing rates while limiting exposure to falling rates to an acceptable level. Approximately half of our interest earning assets re-price or reset based on short-term interest rates such as one-month LIBOR. 

Non-interest-bearing funding sources include certain cash balances, stockholders’ equity and other miscellaneous assets and liabilities.

The following table presents net interest revenue information corresponding to interest-earning assets and funding sources on the consolidated balance sheets:

Year Ended December 31,	2018						2017						2016
	Average Balance		Interest Revenue/ Expense		Average Yield/ Rate		Average Balance		Interest Revenue/ Expense		Average Yield/ Rate		Average Balance		Interest Revenue/ Expense		Average Yield/ Rate
Interest-earning assets
Cash and cash equivalents	$	17,783	$	348	1.93	%	$	9,931	$	109	1.10	%	$	11,143	$	57	0.51	%
Cash and investments segregated	11,461		206		1.78	%	18,525		166		0.90	%	20,104		93		0.46	%
Broker-related receivables	303		6		2.09	%	430		3		0.70	%	558		1		0.22	%
Receivables from brokerage clients	19,870		830		4.12	%	16,269		575		3.53	%	15,001		497		3.31	%
Available for sale securities (1)	54,542		1,241		2.26	%	53,040		815		1.54	%	72,586		883		1.22	%
Held to maturity securities	131,794		3,348		2.53	%	103,599		2,354		2.27	%	57,451		1,402		2.44	%
Bank loans	16,554		559		3.37	%	15,919		472		2.97	%	14,715		400		2.72	%
Total interest-earning assets	252,307		6,538		2.57	%	217,713		4,494		2.06	%	191,558		3,333		1.74	%
Other interest revenue			142						130						160
Total interest-earning assets	$	252,307	$	6,680	2.63	%	$	217,713	$	4,624	2.12	%	$	191,558	$	3,493	1.82	%
Funding sources
Bank deposits	$	199,139	$	545	0.27	%	$	163,998	$	148	0.09	%	$	141,432	$	37	0.03	%
Payables to brokerage clients	21,178		56		0.27	%	25,403		16		0.06	%	26,311		3		0.01	%
Short-term borrowings	3,359		54		1.59	%	3,503		41		1.17	%	1,864		9		0.48	%
Long-term debt	5,423		190		3.50	%	3,431		119		3.47	%	2,876		104		3.62	%
Total interest-bearing liabilities	229,099		845		0.37	%	196,335		324		0.17	%	172,483		153		0.09	%
Non-interest-bearing funding sources	23,208						21,378						19,075
Other interest expense			12						18						18
Total funding sources	$	252,307	$	857	0.34	%	$	217,713	$	342	0.15	%	$	191,558	$	171	0.09	%
Net interest revenue			$	5,823	2.29	%			$	4,282	1.97	%			$	3,322	1.73	%

⁽¹⁾ Amounts have been calculated based on amortized cost.

Net interest revenue increased $1.5 billion or 36%, in 2018 from 2017, and $960 million, or 29%, in 2017 from 2016, primarily due to higher interest rates and growth in interest-earning assets.

Our net interest margin improved 32 basis points to 2.29% in 2018, primarily as a result of the Federal Reserve’s 2017 and 2018 interest rate increases, partially offset by higher interest rates paid on bank deposits and other interest-bearing liabilities. Our net interest margin was 1.97% in 2017, representing an improvement of 24 basis points compared to 2016, primarily due to the Federal Reserve’s interest rate increases in 2016 and 2017.

Average interest earning assets grew 16% and 14% during 2018 and 2017, respectively, compared with the sequential prior years. These increases primarily reflect higher bank deposits due to transfers from sweep money market funds to bank sweep balances, as well as changes in client cash allocations, partially offset by client purchases of other assets.

In March 2017, $24.7 billion of debt securities were transferred from the AFS category to the HTM category. The transfer had no effect on the overall net interest margin. For additional information on the transfer, see Item 8 – Note 6.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Asset Management and Administration Fees

Asset management and administration fees include mutual fund and ETF service fees and fees for other asset-based financial services provided to individual and institutional clients. Schwab earns mutual fund and ETF service fees for shareholder services, administration, and investment management provided to its proprietary funds, and recordkeeping and shareholder services provided to third-party funds. Asset management and administration fees are based upon the daily balances of client assets invested in these funds and do not include securities lending revenues earned by proprietary mutual funds and ETFs, as those amounts, net of program fees, are credited to the fund shareholders. The fair values of client assets included in proprietary and third-party mutual funds and ETFs are based on quoted market prices and other observable market data.

We also earn asset management fees for advice solutions, which include managed portfolios, specialized strategies, and customized investment advice. Other asset management and administration fees include various asset-based fees such as trust fees, 401(k) recordkeeping fees, mutual fund clearing fees, collective trust fund fees, and non-balance based service and transaction fees.

Asset management and administration fees vary with changes in the balances of client assets due to market fluctuations and client activity.

The following table presents asset management and administration fees, average client assets, and average fee yields:

Year Ended December 31,	2018						2017							2016
	Average Client Assets		Revenue		Average Fee		Average Client Assets		Revenue			Average Fee		Average Client Assets		Revenue			Average Fee
Schwab money market funds before fee waivers	$	141,018	$	568	0.40	%	$	160,735	$	875		0.54	%	$	164,120	$	962		0.59	%
Fee waivers			—						(10		)					(224		)
Schwab money market funds	141,018		568		0.40	%	160,735		865			0.54	%	164,120		738			0.45	%
Schwab equity and bond funds and ETFs	207,385		258		0.12	%	158,625		223			0.14	%	115,849		217			0.19	%
Mutual Fund OneSource® and other non-   transaction fee funds	210,429		680		0.32	%	215,333		706			0.33	%	199,389		676			0.34	%
Other third-party mutual funds and ETFs (1)	328,150		287		0.09	%	286,111		251			0.09	%	254,584		222			0.09	%
Total mutual funds and ETFs (2)	$	886,982	1,793		0.20	%	$	820,804	2,045			0.25	%	$	733,942	1,853			0.25	%
Advice solutions (2)
Fee-based	$	227,790	1,139		0.50	%	$	203,794	1,043			0.51	%	$	177,409	915			0.52	%
Non-fee-based	62,813		—		—		48,936		—			—		35,262		—			—
Total advice solutions	$	290,603	1,139		0.39	%	$	252,730	1,043			0.41	%	$	212,671	915			0.43	%
Other balance-based fees (3)	398,495		250		0.06	%	417,659		258			0.06	%	339,071		235			0.07	%
Other (4)			47						46							52
Total asset management and administration fees			$	3,229					$	3,392						$	3,055

⁽¹⁾ Includes Schwab ETF OneSource^™.

⁽²⁾ Beginning in the fourth quarter of 2017, a change was made to add non-fee based average assets from managed portfolios. Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above. Prior periods have been adjusted to accommodate this change.

⁽³⁾ Includes various asset-related fees, such as trust fees, 401(k) recordkeeping fees, and mutual fund clearing fees and other service fees. Beginning in the first quarter of 2017, a prospective methodology change was made to average client assets relating to 401(k) recordkeeping fees to provide improved insight into the associated fee driver, which resulted in an increase of approximately $25 billion. There was no impact to revenue or the average fee.

⁽⁴⁾ Includes miscellaneous service and transaction fees relating to mutual funds and ETFs that are not balance-based.

Asset management and administration fees decreased by $163 million, or 5%, in 2018 from 2017, primarily due to lower money market fund revenue as a result of transfers to bank sweep, client asset allocation choices, and our 2017 fee reductions. Part of the decline was offset by revenue from growing asset balances in advice solutions, Schwab equity and bond funds and ETFs, and other third-party mutual funds and ETFs.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Asset management and administration fees increased by $337 million, or 11%, in 2017 from 2016 due to higher average client assets invested in advice solutions, mutual funds and ETFs, and lower fee waivers on money market funds. Partially offsetting these increases were lower fee rates on proprietary money funds and other indexed mutual funds and ETFs due to fee reductions implemented by Schwab in 2017.

The following table presents a roll forward of client assets for the Schwab money market funds, Schwab equity and bond funds and ETFs, and Mutual Fund OneSource^® and other non-transaction fee (NTF) funds. The following funds generated 47%, 53%, and 53% of the asset management and administration fees earned during 2018, 2017, and 2016, respectively:

	Schwab Money									Schwab Equity and							Mutual Fund OneSource®
	Market Funds									Bond Funds and ETFs							and Other NTF Funds
Year Ended December 31,	2018			2017			2016			2018			2017		2016		2018			2017			2016
Balance at beginning of period	$	163,650		$	163,495		$	166,148		$	181,608		$	125,813	$	102,112	$	225,202		$	198,924		$	207,654
Net inflows (outflows)	(11,641		)	(486		)	(2,765		)	31,091			30,771		13,858		(37,513		)	(27,485		)	(22,469		)
Net market gains (losses) and other (1)	1,463			641			112			(17,589		)	25,024		9,843		(7,157		)	53,763			13,739
Balance at end of period	$	153,472		$	163,650		$	163,495		$	195,110		$	181,608	$	125,813	$	180,532		$	225,202		$	198,924

⁽¹⁾ Includes net inflows from other third-party mutual funds to Mutual Fund OneSource^® in the second quarter of 2017.

Trading Revenue

Trading revenue includes commission and principal transaction revenues. Commission revenue is affected by the number of revenue trades executed and the average revenue earned per revenue trade. Principal transaction revenue is primarily comprised of revenue from trading activity in fixed income securities with clients. To accommodate clients’ fixed income trading activity, Schwab maintains positions in fixed income securities, including U.S. state and municipal debt obligations, U.S. Government and corporate debt, and other securities. The difference between the price at which the Company buys and sells securities to and from its clients and other broker-dealers is recognized as principal transaction revenue. Principal transaction revenue also includes adjustments to the fair value of these securities positions.

The following table presents trading revenue and the related drivers:

Year Ended December 31,	Growth Rate 2017-2018		2018		2017		2016
DARTs (in thousands)	31	%	420.9		321.3		291.6
Clients’ daily average trades (in thousands)	26	%	765.4		608.8		561.8
Number of trading days	—		249.5		250.0		251.5
Daily average revenue per revenue trade	(12	)%	$	7.23	$	8.20	$	11.23
Trading revenue	17	%	$	763	$	654	$	825

Trading revenue increased by $109 million, or 17%, in 2018 compared to 2017. DART volumes increased 31% in 2018, which more than offset Schwab’s commission pricing reductions implemented in the first quarter of 2017. Trading revenue decreased by $171 million in 2017 from 2016, primarily due to lower commissions rates on DARTs.

During the first quarter of 2017, we announced two trading price reductions which lowered standard equity, ETF, and option trade commissions from $8.95 to $4.95 and lowered the per contract option fee from $.75 to $.65. These reductions in commission rates reflect our continuing belief that pricing should never be an obstacle for choosing Schwab and our commitment to share the benefits of scale with clients.

With these changes, trading revenue has declined from a peak of 50%-60% of total revenue in the early 1990’s to the current low of 8% in 2018, 8% in 2017, and 11% in 2016.

Other Revenue

Other revenue includes order flow revenue, other service fees, software fees from our portfolio management solutions, exchange processing fees, and non-recurring gains. Order flow revenue was $139 million during 2018, $114 million for 2017, and $103 million in 2016. These increases were primarily due to higher rebate rates received on certain types of

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

orders and higher volume of trades. In 2016, other revenue also included net litigation proceeds of $16 million related to our non-agency residential mortgage-backed securities portfolios.

Total Expenses Excluding Interest

The following table shows a comparison of total expenses excluding interest:

	Growth Rate 2017-2018		2018			2017			2016
Compensation and benefits
Salaries and wages	13	%	$	1,692		$	1,496		$	1,368
Incentive compensation	7	%	855			797			689
Employee benefits and other	15	%	510			444			409
Total compensation and benefits	12	%	$	3,057		$	2,737		$	2,466
Professional services	13	%	654			580			506
Occupancy and equipment	14	%	496			436			398
Advertising and market development	17	%	313			268			265
Communications	5	%	242			231			237
Depreciation and amortization	14	%	306			269			234
Regulatory fees and assessments	6	%	189			179			144
Other	17	%	313			268			235
Total expenses excluding interest	12	%	$	5,570		$	4,968		$	4,485
Expenses as a percentage of total net revenues
Compensation and benefits			30		%	32		%	33		%
Advertising and market development			3		%	3		%	4		%
Full-time equivalent employees (in thousands)
At year end	11	%	19.5			17.6			16.2
Average	11	%	18.7			16.9			15.9

໿

Expenses excluding interest increased in 2018 and 2017 from the prior years by 12% and 11%, respectively. The largest drivers of the increase in both years were compensation and benefits and professional services.

Total compensation and benefits increased in 2018 and 2017 from prior years, primarily due to increases in employee headcount to support our expanding client base. Additionally, in 2018 non-officer employees were issued special stock awards totaling $36 million.

Professional services expense increased in 2018 and 2017 from the prior years, primarily due to higher spending on technology projects as well as an increase in asset management and administration related expenses resulting from growth in the Schwab Funds^® and Schwab ETFs™.

Occupancy and equipment expense increased in 2018 and 2017 from the prior years, primarily due to an increase in software maintenance expenses and additional licenses to support growth in the business.

Advertising and market development expense rose in 2018, primarily reflecting management’s decision to increase television advertising and digital media spending in the fourth quarter.

Depreciation and amortization expenses grew in 2018 and 2017 from the prior years, primarily due to higher amortization of internally developed software associated with our investments in software and technology enhancements.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Regulatory fees assessments increased in 2018 and 2017 from the prior years, due to an increase in FDIC insurance assessments which rose as a result of higher average assets in deposit balances. This increase in 2018 was partially offset by the elimination of the FDIC surcharge in the fourth quarter of 2018.

Other expenses increased in 2018 from 2017 due to travel and entertainment and miscellaneous items due to overall growth in our business. Other expenses increased in 2017 from 2016 due to travel and entertainment, asset volume-related increases, and some miscellaneous items.

Capital expenditures were $576 million, $412 million, and $353 million in 2018, 2017, and 2016, respectively. The increase in capital expenditures in both 2018 and 2017 from the prior years was primarily due to the expansion of our campuses in the U.S. and investments in technology projects. The largest component of capital expenditures in 2018 was investment in buildings of $253 million. Capitalized costs for developing internal-use software totaled $167 million, $157 million, and $130 million in 2018, 2017, and 2016, respectively. Our capital expenditures for 2018 came in at the lower end of our estimated range of 6-7% of total net revenues, largely due to the timing of our campus expansion work. As we carry this work forward in 2019 and invest further in technology projects, we anticipate capital expenditures for the year will reach approximately 7-9% of total net revenues. Our longer term expectation for capital expenditures remains in the range of 3-5% of total net revenues.

Taxes on Income

As previously discussed under Current Regulatory Environment and Other Developments, the Tax Act was signed into law during 2017. Among other things, the Tax Act lowered the federal corporate income tax rate from 35% to 21%, beginning in 2018.

Also as a result of the Tax Act, Schwab recognized a $46 million one-time non-cash charge to taxes on income in the fourth quarter of 2017 associated with the remeasurement of net deferred tax assets and other tax adjustments related to the Tax Act.

Effective January 1, 2017, Schwab adopted Accounting Standards Update (ASU) 2016-09, which prospectively changed the accounting treatment of a portion of the tax deductions relating to equity compensation. These deductions were previously reflected directly in additional paid-in capital, a component of stockholders’ equity, and are now included in taxes on income, a component of net income. As a result of this change, our tax expense was reduced by approximately $46 million and $87 million in 2018 and 2017, respectively. Future effects will depend on our share price, restricted stock vesting, and the volume of equity incentive options exercised.

Schwab’s effective income tax rate on income before taxes was 23.1% in 2018, 35.5% in 2017, and 36.9% in 2016. The decrease in rates over this three-year time period was primarily due to the net impact of the above items.

Segment Information

Schwab provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services to individual investors. The Advisor Services segment provides custodial, trading, banking, and support services as well as retirement business services to independent RIAs, independent retirement advisors and recordkeepers. Revenues and expenses are attributed to the two segments based on which segment services the client. Management evaluates the performance of the segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. Net revenues in both segments are generated from the underlying client assets and trading activity; differences in the composition of net revenues between the segments are based on the composition of client assets, client trading frequency, and pricing unique to each. While both segments leverage the scale and efficiency of our platforms, segment expenses reflect the dynamics of serving millions of clients in Investor Services versus the thousands of RIAs on the advisor platform.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Financial information for our segments is presented in the following table:

	Investor Services								Advisor Services								Total
	Growth Rate 2017-2018		2018		2017		2016		Growth Rate 2017-2018		2018		2017		2016		Growth Rate 2017-2018		2018		2017		2016
Year Ended December 31,
Net Revenues
Net interest revenue	34	%	$	4,341	$	3,231	$	2,591	41	%	$	1,482	$	1,051	$	731	36	%	$	5,823	$	4,282	$	3,322
Asset management and administration fees	(4	)%	2,260		2,344		2,093		(8	)%	969		1,048		962		(5	)%	3,229		3,392		3,055
Trading revenue	16	%	475		408		524		17	%	288		246		301		17	%	763		654		825
Other	13	%	245		217		203		(1	)%	72		73		73		9	%	317		290		276
Total net revenues	18	%	7,321		6,200		5,411		16	%	2,811		2,418		2,067		18	%	10,132		8,618		7,478
Expenses Excluding Interest	11	%	4,145		3,725		3,380		15	%	1,425		1,243		1,105		12	%	5,570		4,968		4,485
Income before taxes on income	28	%	$	3,176	$	2,475	$	2,031	18	%	$	1,386	$	1,175	$	962	25	%	$	4,562	$	3,650	$	2,993

Investor Services

Total net revenues increased by $1.1 billion, or 18%, in 2018 from 2017 primarily due to an increase in net interest revenue, partially offset by lower asset management and administration fees. Net interest revenue increased primarily due to higher net interest margins and higher balances of interest-earning assets. Asset management and administration fees decreased primarily due to lower money market fund revenue as a result of transfers to bank sweep, client asset allocation choices, and our 2017 fee reductions. Expenses excluding interest increased by $420 million, or 11%, in 2018 from 2017 primarily due to higher compensation and benefits, technology project spend, and asset management and administration related expenses to support our expanding client base.

Total net revenues increased by $789 million, or 15%, in 2017 from 2016 primarily due to increases in net interest revenue and asset management and administration fees, partially offset by a decrease in trading revenue. Net interest revenue increased primarily due to higher net interest margins and higher balances of interest-earning assets. Asset management and administration fees increased primarily due to higher client assets enrolled in advisory solutions and higher net fees on money market fund assets. Trading revenue decreased primarily due to lower commission rates. Expenses excluding interest increased by $345 million, or 10%, in 2017 from 2016 primarily due to higher compensation and benefits, technology project spend, asset management and administration related expenses, and regulatory fee assessments.

Advisor Services

Total net revenues increased by $393 million or 16%, in 2018 from 2017 primarily due to an increase in net interest revenue, partially offset by lower asset management and administration fees. Net interest revenue increased primarily due to higher net interest margins and higher balances of interest-earning assets. Asset management and administration fees decreased primarily due to lower money market fund revenue as a result of transfers to bank sweep, client asset allocation choices, and our 2017 fee reductions. Expenses excluding interest increased by $182 million, or 15%, in 2018 from 2017 primarily due to higher compensation and benefits, technology project spend, and asset management and administration related expenses to support our expanding client base.

Total net revenues increased by $351 million, or 17%, in 2017 from 2016 primarily due to increases in net interest revenue and asset management and administration fees, partially offset by a decrease in trading revenue. Net interest revenue increased primarily due to higher balances of interest-earning assets and higher net interest margins. Asset management and administration fees increased primarily due to higher fees from growth in client assets invested in ETFs and equity and bond funds, and higher net fees on money market fund assets. Trading revenue decreased primarily due to lower commission rates. Expenses excluding interest increased by $138 million, or 12%, in 2017 from 2016 primarily due to higher compensation and benefits, technology project spend, asset management and administration related expenses, and regulatory fee assessments.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

RISK MANAGEMENT

Schwab’s business activities expose it to a variety of risks, including operational, credit, market, liquidity, and compliance risks. The Company has a comprehensive risk management program to identify and manage these risks and their associated potential for financial and reputational impact. Despite our efforts to identify areas of risk and implement risk management policies and procedures, there can be no assurance that Schwab will not suffer unexpected losses due to these risks.

Our risk management process is comprised of risk identification and assessment, risk measurement, risk monitoring and reporting, and risk mitigation. The activities and governance that comprise the risk management process are described below.

Culture

The Board of Directors has approved an Enterprise Risk Management (ERM) framework that incorporates our purpose, vision, and values, which form the bedrock of our corporate culture and set the tone for the organization.

We designed the ERM Framework to enable a comprehensive approach to managing risks encountered by Schwab in its business activities. The framework incorporates key concepts commensurate with the size, risk profile, complexity, and continuing growth of the Company. Risk appetite, which is defined as the amount of risk the Company is willing to accept in pursuit of its corporate strategy, is developed by executive management and approved by the Board of Directors.

Risk Governance

Senior management takes an active role in the risk management process and has developed policies and procedures under which specific business and control units are responsible for identifying, measuring, and controlling risks.

The Global Risk Committee, which is comprised of senior executives from each major business and control function, is responsible for the oversight of risk management. This includes identifying emerging risks, assessing risk management practices and the control environment, reinforcing business accountability for risk management, supervisory controls and regulatory compliance, supporting resource prioritization across the organization, and escalating significant issues to the Board of Directors.

We have established risk metrics and reporting that enable measurement of the impact of strategy execution against risk appetite. The risk metrics, with risk limits and tolerance levels, are established for key risk categories by the Global Risk Committee and its functional risk sub-committees.

The Chief Risk Officer regularly reports activities of the Global Risk Committee to the Risk Committee of the Board of Directors. The Board Risk Committee in turn assists the Board of Directors in fulfilling its oversight responsibilities with respect to our risk management program, including approving risk appetite statements and related key risk appetite metrics and reviewing reports relating to risk issues from functional areas of risk management, legal, compliance, and internal audit.

Functional risk sub-committees focusing on specific areas of risk report to the Global Risk Committee. These sub-committees include the:

• Compliance Risk Committee – provides oversight of compliance risk management programs and policies providing an aggregate view of compliance risk exposure, and includes a subcommittee covering Fiduciary Risk;

• Financial Risk Oversight Committee – provides oversight of and approves capital, credit, liquidity, and market risk policies, limits, and exposures;

• New Products and Services Risk Oversight Committee – provides oversight of, and approves corporate policy and procedures relating to the risk governance of new products and services; and

• Operational Risk Oversight Committee – provides oversight of and approves operational risk management policies, risk tolerance levels, and operational risk governance processes, and includes sub-committees covering Fraud, Data, Information Security, Model Governance, and Third-Party risk.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Senior management has also created an Incentive Compensation Risk Oversight Committee, which establishes policy and reviews and approves the Annual Risk Assessment of incentive compensation plans, and reports directly to the Compensation Committee of the Board of Directors.

The Company’s compliance, finance, internal audit, legal, and corporate risk management departments assist management and the various risk committees in evaluating, testing, and monitoring risk management.

In addition, the Disclosure Committee is responsible for monitoring and evaluating the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of the end of each fiscal quarter. The Disclosure Committee reports on this evaluation to the CEO and CFO prior to their certification required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002.

Operational Risk

Operational risks arise due to potential inadequacies or failures related to people, internal processes, and systems, or from external events or relationships impacting the Company and/or any of its key business partners and third parties. While operational risk is inherent in all business activities, we rely on a system of internal controls and risk management practices designed to keep operational risk and operational losses within the Company’s risk appetite. We have specific policies and procedures to identify and manage operational risk, and use periodic risk and control self-assessments, control testing programs, and internal audit reviews to evaluate the effectiveness of these internal controls. Where appropriate, we manage the impact of operational loss and litigation expense through the purchase of insurance. The insurance program is specifically designed to address our key operational risks and to maintain compliance with local laws and regulation.

Schwab’s operations are highly dependent on the integrity and resilience of our critical business functions and technology systems. To the extent Schwab experiences business or system interruptions, errors or downtime (which could result from a variety of causes, including natural disasters, terrorist attacks, technological failure, cyber attacks, changes to systems, linkages with third-party systems, and power failures), our business and operations could be negatively impacted. To minimize business interruptions and ensure the capacity to continue operations during an incident regardless of duration, Schwab maintains a backup and recovery infrastructure which includes facilities for backup and communications, a geographically dispersed workforce, and routine testing of business continuity and disaster recovery plans and a well-established incident management program.

Information Security risk is the risk of unauthorized access, use, disclosure, disruption, modification, recording or destruction of the firm’s information or systems. We have designed and implemented an information security program that knits together complementary tools, controls and technologies to protect systems, client accounts and data. We continuously monitor the systems and work collaboratively with government agencies, law enforcement and other financial institutions to address potential threats. We use advanced monitoring systems to identify suspicious activity and deter unauthorized access by internal or external actors. We limit the number of employees who have access to clients’ personal information and internal authentication measures are enforced to protect against the potential for social engineering. All employees who handle sensitive information are trained in privacy and security. Schwab’s fraud and cyber security teams monitor activity looking for suspicious behavior. These capabilities allow us to identify and quickly act on any attempted intrusions.

Schwab also faces operational risk when we employ the services of various third parties, including domestic and international outsourcing of certain technology, processing, servicing, and support functions. We manage the exposure to third party risk and promote a culture of resiliency through contractual provisions, control standards, ongoing monitoring of third party performance, and appropriate testing. We maintain policies and procedures regarding the standard of care expected with all data, whether the data is internal company information, employee information, or non-public client information. We clearly define for employees, contractors, and third parties the expected standards of care for confidential data. We also provide regular training on data security.

Model risk is the potential for adverse consequences from decisions based on incorrect or misused model outputs and reports. Models are owned by several business units throughout the organization, and are used for a variety of purposes. Model use includes, but is not limited to, calculating capital requirements for hypothetical stressful environments, estimating interest and credit risk for loans and other balance sheet assets, and providing guidance in the management of client portfolios. We have established a policy to describe the roles and responsibilities of all key stakeholders in model development, management, and use. All models are registered in a centralized database and classified into different risk

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

ratings depending on their potential financial, reputational, or regulatory impact to the Company. The model risk rating determines the scope of model governance activities.

Compliance Risk

Schwab faces compliance risk which is the potential exposure to legal or regulatory sanctions, fines or penalties, financial loss, or damage to reputation resulting from the failure to comply with laws, regulations, rules, or other regulatory requirements. Among other things, compliance risks relate to the suitability of client investments, conflicts of interest, disclosure obligations and performance expectations for products and services, supervision of employees, and the adequacy of our controls. The Company and its affiliates are subject to extensive regulation by federal, state and foreign regulatory authorities, including SROs.

We manage compliance risk through policies, procedures and controls reasonably designed to achieve and/or monitor compliance with applicable legal and regulatory requirements. These procedures address issues such as business conduct and ethics, sales and trading practices, marketing and communications, extension of credit, client funds and securities, books and records, anti-money laundering, client privacy, and employment policies.

Fiduciary risk is the potential for financial or reputational loss through breach of fiduciary duties to a client. Fiduciary activities include, but are not limited to, individual and institutional trust, investment management, custody, and cash and securities processing. We manage this risk by establishing policy and procedures to ensure that obligations to clients are discharged faithfully and in compliance with applicable legal and regulatory requirements. Business units have the primary responsibility for adherence to the policy and procedures applicable to their business. Guidance and control are provided through the creation, approval, and ongoing review of applicable policies by business units and various risk committees.

Credit Risk

Credit risk is the potential for loss due to a borrower, counterparty, or issuer failing to perform on its contractual obligations. Our exposure to credit risk mainly results from investing activities in our liquidity and investment portfolios, mortgage lending, margin lending and client option and futures activities, pledged asset lending, securities lending activities, and our role as a counterparty in other financial contracts. To manage the risks of such losses, we have established policies and procedures, which include establishing and reviewing credit limits, monitoring of credit limits and quality of counterparties, and adjusting margin, PAL, option, and futures requirements for certain securities and instruments.

Liquidity and Investment Portfolios

Schwab has exposure to credit risk associated with its investment portfolios, which include U.S. agency, and non-agency mortgage-backed securities, asset-backed securities, corporate debt securities, U.S. agency notes, U.S. Treasury securities, certificates of deposit, U.S. state and municipal securities, commercial paper, and foreign government agency securities.

At December 31, 2018, substantially all securities in the investment portfolios were rated investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises.

Mortgage Lending Portfolio

The bank loan portfolio includes First Mortgages, HELOCs, and other loans. The credit risk exposure related to loans is actively managed through individual loan and portfolio reviews. Management regularly reviews asset quality, including concentrations, delinquencies, nonaccrual loans, charge-offs, and recoveries. All are factors in the determination of an appropriate allowance for loan losses.

Our residential loan underwriting guidelines include maximum LTV ratios, cash out limits, and minimum Fair Isaac Corporation (FICO) credit scores. The specific guidelines are dependent on the individual characteristics of a loan (for example, whether the property is a primary or secondary residence, whether the loan is for investment property, whether the loan is for an initial purchase of a home or refinance of an existing home, and whether the loan size is conforming or jumbo).

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Schwab does not originate or purchase residential loans that allow for negative amortization and does not originate or purchase subprime loans (generally defined as extensions of credit to borrowers with a FICO score of less than 620 at origination), unless the borrower has compensating credit factors. For more information on credit quality indicators relating to Schwab’s bank loans, see Item 8 – Note 7. 

Securities and Instrument-Based Lending Portfolios

Collateral arrangements relating to margin loans, PALs, option and futures positions, securities lending agreements, and resale agreements include provisions that require additional collateral in the event of market fluctuations. Additionally, for margin loans, PALs, options and futures positions, and securities lending agreements, collateral arrangements require that the fair value of such collateral sufficiently exceeds the credit exposure in order to maintain a fully secured position.

Other Counterparty Exposures

Schwab performs clearing services for all securities transactions in its client accounts. Schwab has exposure to credit risk due to its obligation to settle transactions with clearing corporations, mutual funds, and other financial institutions even if Schwab’s clients or a counterparty fail to meet their obligations to Schwab.

Market Risk

Market risk is the potential for changes in earnings or the value of financial instruments held by Schwab as a result of fluctuations in interest rates, equity prices, or market conditions. We are exposed to interest rate risk primarily from changes in market interest rates on our interest-earning assets relative to changes in the costs of its funding sources that finance these assets.

Net interest revenue is affected by various factors, such as the distribution and composition of interest-earning assets and interest-bearing liabilities, the spread between yields earned on interest-earning assets and rates paid on interest-bearing liabilities, which may reprice at different times or by different amounts, and the spread between short and long-term interest rates. Interest-earning assets primarily include investment securities, margin loans and bank loans. These assets are sensitive to changes in interest rates and changes in prepayment levels that tend to increase in a declining rate environment and decrease in a rising rate environment. Because we establish the rates paid on certain brokerage client cash balances and bank deposits and the rates charged on certain margin and bank loans, and control the composition of our investment securities, we have some ability to manage our net interest spread, depending on competitive factors and market conditions.

To mitigate the risk of declining interest revenue, we have established policies and procedures, which include setting guidelines on the amount of net interest revenue at risk, and monitoring the net interest margin and average maturity of our interest-earning assets and funding sources. To remain within these guidelines, we manage the maturity, repricing, and cash flow characteristics of the investment portfolios.

Financial instruments are also subject to the risk that valuations will be negatively affected by changes in demand and the underlying market for a financial instrument. We are indirectly exposed to option, futures, and equity market fluctuations in connection with client option and futures accounts, securities collateralizing margin loans to brokerage customers, and client securities loaned out as part of the brokerage securities lending activities. Equity market valuations may also affect the level of brokerage client trading activity, margin borrowing, and overall client engagement with Schwab. Additionally, we earn mutual fund and ETF service fees and asset management fees based upon daily balances of certain client assets. Fluctuations in these client asset balances caused by changes in equity valuations directly impact the amount of fee revenue we earn.

Our market risk related to financial instruments held for trading is not material.

Net Interest Revenue Simulation

For Schwab’s net interest revenue sensitivity analysis, we use net interest revenue simulation modeling techniques to evaluate and manage the effect of changing interest rates. The simulation includes all interest-sensitive assets and liabilities. Key variables in the simulation include the repricing of financial instruments, prepayment, reinvestment, and product pricing assumptions. The simulations involve assumptions that are inherently uncertain and, as a result, cannot precisely estimate the impact of changes in interest rates on net interest revenue. Actual results may differ from simulated results due

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

to balance growth or decline and the timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and management strategies, including changes in asset and liability mix.

If our guidelines for net interest revenue sensitivity are breached, management must report the breach to the Financial Risk Oversight Committee and establish a plan to address the interest rate risk. There were no breaches of Schwab’s net interest revenue sensitivity risk limits during the years ended December 31, 2018 or 2017.

As represented by the simulations presented below, our investment strategy is structured to produce an increase in net interest revenue when interest rates rise and, conversely, a decrease in net interest revenue when interest rates fall.

The simulations in the following table assume that the asset and liability structure of the consolidated balance sheets would not be changed as a result of the simulated changes in interest rates. As we actively manage the consolidated balance sheets and interest rate exposure, in all likelihood we would take steps to manage additional interest rate exposure that could result from changes in the interest rate environment. The following table shows the simulated net interest revenue change over the next 12 months beginning December 31, 2018 and 2017 of a gradual 100 basis point increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period.

December 31,	2018		2017
Increase of 100 basis points	4.4	%	3.3	%
Decrease of 100 basis points	(4.9	)%	(6.2	)%

The year-over-year change in net interest revenue sensitivities reflects higher interest rates across the yield curve, and particularly, higher short-term interest rates.

Liquidity Risk

Liquidity risk is the potential that Schwab will be unable to meet cash flow obligations when they come due without incurring unacceptable losses.

Due to its role as a source of financial strength, CSC’s liquidity needs are primarily driven by the liquidity and capital needs of CS&Co, the capital needs of the banking subsidiaries, principal and interest due on corporate debt, dividend payments on CSC’s preferred stock, and returns of capital to common stockholders. The liquidity needs of CS&Co are primarily driven by client activity including trading and margin borrowing activities and capital expenditures. The capital needs of the banking subsidiaries are primarily driven by client deposits. We have established liquidity policies to support the successful execution of business strategies, while ensuring ongoing and sufficient liquidity to meet operational needs and satisfy applicable regulatory requirements under both normal and stressed conditions. We seek to maintain client confidence in the balance sheet and the safety of client assets by maintaining liquidity and diversity of funding sources to allow the Company to meet its obligations. To this end, we have established limits and contingency funding scenarios to support liquidity levels during both business as usual and stressed conditions.

We employ a variety of methodologies to monitor and manage liquidity. We conduct regular liquidity stress testing to develop a consolidated view of liquidity risk exposures and to ensure our ability to maintain sufficient liquidity during market-related or company-specific liquidity stress events. Liquidity is also tested at key subsidiaries and results are reported to the Financial Risk Oversight Committee. A number of early warning indicators are monitored to help identify emerging liquidity stresses in the market or within the organization and are reviewed with management as appropriate.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

The Company was subject to, and was in compliance with, the modified LCR rule at December 31, 2018. As Schwab’s consolidated balance sheet assets were above $250 billion at December 31, 2018, Schwab will become subject to the full LCR rule in the second quarter of 2019. The table below presents information about our average LCR:

	Average for the
	Three Months Ended December 31, 2018
Total eligible HQLA	$	38,881
Net cash outflows (1)	$	35,191
LCR	111		%

⁽¹⁾ This amount represents modified net cash outflows as defined by the LCR rule, which requires that HQLA cover 70% of total stressed net cash outflows.

Primary Funding Sources

Schwab’s primary source of funds is cash generated by client activity which includes bank deposits and cash balances in client brokerage accounts. These funds are used to purchase investment securities and extend loans to clients.

Other sources of funds may include cash flows from operations, maturities and sales of investment securities, repayments on loans, securities lending of assets held in client brokerage accounts, repurchase agreements, and cash provided by external financing.

To meet daily funding needs, we maintain liquidity in the form of overnight cash deposits and short-term investments. For unanticipated liquidity needs, a buffer of highly liquid investments, currently comprised of U.S. Treasury notes, is also maintained.

Additional Funding Sources

In addition to internal sources of liquidity, Schwab has access to external funding. The need for short-term borrowings from these facilities arises primarily from timing differences between cash flow requirements, scheduled liquidation of interest-earning investments, movements of cash to meet regulatory brokerage client cash segregation requirements and general corporate purposes. We maintain policies and procedures necessary to access funding and test discount window borrowing procedures on a periodic basis.

The following table describes external debt facilities available at December 31, 2018:

Description	Borrower	Outstanding		Available
Federal Home Loan Bank secured credit facility (1)	Banking subsidiaries	$	—	$	35,528
Uncommitted, unsecured lines of credit with various external banks	CSC, CS&Co	—		1,432
Unsecured commercial paper (2)	CSC	—		750
Committed, unsecured credit facility with various external banks (3)	CSC	—		750
Federal Reserve Bank discount window (4)	CSB	—		7,865

⁽¹⁾ Amounts available are dependent on the amount of First Mortgages, HELOCs, and the fair value of certain investment securities that are pledged as collateral.

⁽²⁾ CSC has authorization from its Board of Directors to issue Commercial Paper Notes to not exceed $1.5 billion. Management has set a current limit not to exceed the amount of the committed, unsecured credit facility.

⁽³⁾ Other than an overnight borrowing to test availability, this facility was unused during 2018.

⁽⁴⁾ Amounts available are dependent on the fair value of certain investment securities that are pledged as collateral.

Certain banking subsidiaries maintain secured credit facilities with the Federal Home Loan Bank of San Francisco (FHLB). Amounts available under these facilities are dependent on the value of our First Mortgages, HELOCs, and the fair value of certain of our investment securities that are pledged as collateral. During 2018, CSB used borrowings under this agreement to purchase investment securities in advance of bank sweep transfers. This credit facility is also available as backup financing in the event the outflow of client cash from the banking subsidiaries’ respective balance sheets is greater than maturities and paydowns on investment securities and bank loans.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

CSB also has access to short-term secured funding through the Federal Reserve’s discount window. Amounts available under the Federal Reserve discount window are dependent on the fair value of certain investment securities that are pledged as collateral.

CSC has a commercial paper program of which proceeds are used for general corporate purposes. The maturities of the Commercial Paper Notes may vary, but are not to exceed 270 days from the date of issue. CSC’s ratings for these short-term borrowings are P1 by Moody’s, A1 by Standard & Poor’s, and F1 by Fitch. CSC had no Commercial Paper Notes outstanding at December 31, 2018 or 2017.

The financial covenants for the $750 million committed credit facility require CS&Co to maintain a minimum net capital ratio, CSB to be well capitalized, and CSC to maintain a minimum level of stockholders’ equity, adjusted to exclude AOCI. At December 31, 2018, the minimum level of stockholders’ equity required under this facility was $14.5 billion (CSC’s stockholders’ equity, excluding AOCI, at December 31, 2018 was $20.9 billion). Management believes these restrictions will not have a material effect on CSC’s ability to meet foreseeable dividend or funding requirements.

To partially satisfy the margin requirement of client option transactions with the Options Clearing Corporation, CS&Co has unsecured standby letter of credit agreements (LOCs) with several banks in favor of the Options Clearing Corporation aggregating $225 million at December 31, 2018. There were no funds drawn under any of these LOCs during 2018 or 2017. In connection with its securities lending activities, the Company is required to provide collateral to certain brokerage clients. The collateral requirements were satisfied by providing cash as collateral.

CSC has a universal automatic shelf registration statement (Shelf Registration Statement) on file with the SEC, which enables it to issue debt, equity, and other securities.

Borrowings

Long-term debt outstanding was $6.9 billion and $4.8 billion at December 31, 2018 and 2017, respectively. No short-term borrowings were outstanding as of December 31, 2018. Short-term borrowings outstanding from the FHLB were $15.0 billion at December 31, 2017.

The following are details of the Senior Notes:

December 31, 2018	Par Outstanding		Maturity	Weighted Average Interest Rate	Moody’s	Standard & Poor’s	Fitch
Senior Notes	$	6,881	2020 - 2029	3.42%	A2	A	A

New Debt Issuances

All debt issuances in 2018 and 2017 were senior unsecured obligations with interest payable quarterly or semi-annually. Additional details are as follows:

Issuance Date	Issuance Amount		Maturity Date	Interest Rate	Interest Payable
March 2, 2017	$	650	3/2/2027	3.200%	Semi-annually
December 7, 2017	$	700	1/25/2028	3.200%	Semi-annually
December 7, 2017	$	800	1/25/2023	2.650%	Semi-annually
May 22, 2018	$	600	5/21/2021	Three-month LIBOR + 0.32%	Quarterly
May 22, 2018	$	600	5/21/2021	3.250%	Semi-annually
May 22, 2018	$	750	5/21/2025	3.850%	Semi-annually
October 31, 2018	$	500	2/1/2024	3.550%	Semi-annually
October 31, 2018	$	600	2/1/2029	4.000%	Semi-annually

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Equity Issuances and Redemptions

CSC did not issue any equity through external offerings during the year ended December 31, 2018. CSC’s preferred stock issued and net proceeds for the year ended December 31, 2017 are as follows:

	Date Issued and Sold	Net Proceeds
Series F	October 31, 2017	$	492

On December 1, 2017, CSC redeemed all of the 485,000 outstanding shares of its 6.00% Non-Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Stock”), and the corresponding 19,400,000 depositary shares, each representing a 1/40^th interest in a share of the Series B Preferred Stock.

For further discussion of CSC’s long-term debt and information on the equity offerings, see Item 8 – Note 13 and Note 17.

Off-Balance Sheet Arrangements

Schwab enters into various off-balance sheet arrangements in the ordinary course of business, primarily to meet the needs of our clients. These arrangements include firm commitments to extend credit. Additionally, Schwab enters into guarantees and other similar arrangements in the ordinary course of business. For information on each of these arrangements, see Item 8 – Note 7, Note 11, Note 13, Note 14, and Note 15. 

Contractual Obligations

Schwab’s principal contractual obligations as of December 31, 2018 are shown in the following table. Excluded from this table are liabilities recorded on the consolidated balance sheets that are generally short-term in nature (e.g., payables to brokers, dealers, and clearing organizations and short-term borrowings) or without contractual payment terms (e.g., bank deposits, payables to brokerage clients, and deferred compensation).

December 31, 2018	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Credit-related financial instruments (1)	$	1,592	$	3,162	$	5,093	$	1,698	$	11,545
Long-term debt (2)	237		2,325		1,370		4,330		8,262
Purchase obligations (3)	475		303		54		170		1,002
Leases (4)	128		219		150		282		779
Total	$	2,432	$	6,009	$	6,667	$	6,480	$	21,588

⁽¹⁾ Represents CSB’s commitments to extend credit to banking clients, purchase mortgage loans, and commitments to fund CRA investments.

⁽²⁾ Includes estimated future interest payments through 2029 for Senior Notes. Amounts exclude maturities under a finance lease obligation and unamortized discounts and premiums.

⁽³⁾ Consists of purchase obligations for services such as advertising and marketing, telecommunications, professional services, and hardware- and software-related agreements.

⁽⁴⁾ Represents minimum rental commitments, net of sublease commitments, and includes facilities under past restructuring initiatives and rental commitments under a finance lease obligation.

CAPITAL MANAGEMENT

Schwab seeks to manage capital to a level and composition sufficient to support execution of our business strategy, including anticipated balance sheet growth, providing financial support to the subsidiaries, and sustained access to the capital markets, while at the same time meeting our regulatory capital requirements and serving as a source of financial strength to our banking subsidiaries. Schwab’s primary sources of capital are funds generated by the operations of subsidiaries and securities issuances by CSC in the capital markets. To ensure that Schwab has sufficient capital to absorb unanticipated losses or declines in asset values, we have adopted a policy to remain well capitalized even in stressed scenarios.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

Internal guidelines are set, for both CSC and its regulated subsidiaries, to ensure capital levels are in line with our strategy and regulatory requirements. Capital forecasts are reviewed monthly at Asset-Liability Management and Pricing Committee and Financial Risk Oversight Committee meetings. A number of early warning indicators are monitored to help identify potential problems that could impact capital. In addition, we monitor the subsidiaries’ capital levels and requirements. Subject to regulatory capital requirements and any required approvals, any excess capital held by subsidiaries is transferred to CSC in the form of dividends and returns of capital. When subsidiaries have need of additional capital, funds are provided by CSC as equity investments and also as subordinated loans (in a form approved as regulatory capital by regulators) for CS&Co. The details and method used for each cash infusion are based on an analysis of the particular entity’s needs and financing alternatives. The amounts and structure of infusions must take into consideration maintenance of regulatory capital requirements, debt/equity ratios, and equity double leverage ratios.

Schwab conducts regular capital stress testing to assess the potential financial impacts of various adverse macroeconomic and company-specific events to which the Company could be subjected. The objective of the capital stress testing is (1) to explore various potential outcomes – including rare and extreme events and (2) to assess impacts of potential stressful outcomes on both capital and liquidity. Additionally, we have a comprehensive Capital Contingency Plan to provide action plans for certain low probability/high impact capital events that the Company might face. The Capital Contingency Plan is issued under the authority of the Financial Risk Oversight Committee and provides guidelines for sustained capital events. It does not specifically address every contingency, but is designed to provide a framework for responding to any capital stress. The results of the stress testing indicate there are two scenarios which could stress the Company’s capital: (1) inflows of balance sheet cash during a period of very low interest rates and (2) outflows of balance sheet cash when other sources of financing are not available and the Company is required to sell assets to fund the flows at a loss. The Capital Contingency Plan is reviewed annually and updated as appropriate.

For additional information, see Business – Regulation in Part I, Item 1.

Regulatory Capital Requirements

CSC is subject to capital requirements set by the Federal Reserve and is required to serve as a source of strength for our banking subsidiaries and to provide financial assistance if our banking subsidiaries experience financial distress. Schwab is required to maintain a Tier 1 Leverage Ratio for CSC of at least 4%; however, management seeks to maintain the ratio of at least 6%. Due to the relatively low risk of our balance sheet assets and risk-based capital ratios at CSC and CSB that are well in excess of regulatory requirements, the Tier 1 Leverage Ratio is the most restrictive capital constraint on CSC’s asset growth.

Our banking subsidiaries are subject to capital requirements set by their regulators that are substantially similar to those imposed on CSC by the Federal Reserve. Our banking subsidiaries’ failure to remain well capitalized could result in certain mandatory and possibly additional discretionary actions by the regulators that could have a direct material effect on the banks. Schwab’s principal banking subsidiary, CSB, is required to maintain a Tier 1 Leverage Ratio of at least 5% to be well capitalized, but seeks to maintain the ratio of at least 6.25%. Based on its regulatory capital ratios at December 31, 2018, CSB is considered well capitalized.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

The following table details CSC’s consolidated and CSB’s capital ratios:

December 31,	2018						2017
	CSC			CSB			CSC			CSB
Total stockholders’ equity	$	20,670		$	15,615		$	18,525		$	13,224
Less:
Preferred Stock	2,793			—			2,793			—
Common Equity Tier 1 Capital before regulatory adjustments	$	17,877		$	15,615		$	15,732		$	13,224
Less:
Goodwill, net of associated deferred tax liabilities	$	1,188		$	13		$	1,191		$	13
Other intangible assets, net of associated deferred tax liabilities	125			—			61			—
Deferred tax assets, net of valuation allowances and deferred tax liabilities	3			1			2			—
AOCI adjustment (1)	(252		)	(231		)	(152		)	(144		)
Common Equity Tier 1 Capital	$	16,813		$	15,832		$	14,630		$	13,355
Tier 1 Capital	$	19,606		$	15,832		$	17,423		$	13,355
Total Capital	19,628			15,853			17,452			13,382
Risk-Weighted Assets	95,441			80,513			75,866			66,519
Common Equity Tier 1 Capital/Risk-Weighted Assets	17.6		%	19.7		%	19.3		%	20.1		%
Tier 1 Capital/Risk-Weighted Assets	20.5		%	19.7		%	23.0		%	20.1		%
Total Capital/Risk-Weighted Assets	20.6		%	19.7		%	23.0		%	20.1		%
Tier 1 Leverage Ratio	7.1		%	7.2		%	7.6		%	7.1		%

⁽¹⁾ CSC and CSB elected to opt-out of the requirement to include most components of AOCI in CET1 Capital. Beginning in 2019, CSC is required to include all components of AOCI in regulatory capital.

CSB is also subject to regulatory requirements that restrict and govern the terms of affiliate transactions. In addition, CSB is required to provide notice to, and may be required to obtain approval from, the OCC and the Federal Reserve to declare dividends to CSC.

As a broker-dealer, CS&Co is subject to regulatory requirements of the Uniform Net Capital Rule, which is intended to ensure the general financial soundness and liquidity of broker-dealers. These regulations prohibit CS&Co from paying cash dividends, making unsecured advances and loans to the parent company and employees, and repaying subordinated borrowings from CSC if such payment would result in a net capital amount below prescribed thresholds. At December 31, 2018, CS&Co was in compliance with its net capital requirements.

In addition to the capital requirements above, Schwab’s subsidiaries are subject to other regulatory requirements intended to ensure financial soundness and liquidity. See Item 8 – Note 21 for additional information on the components of stockholders’ equity and information on the capital requirements of significant subsidiaries.

Dividends

Since the initial dividend in 1989, CSC has paid 119 consecutive quarterly dividends and has increased the quarterly dividend rate 23 times, resulting in a 21% compounded annual growth rate, excluding the special cash dividend of $1.00 per common share in 2007. While the payment and amount of dividends are at the discretion of the Board of Directors, subject to certain regulatory and other restrictions, CSC currently targets its common stock cash dividend at approximately 20% to 30% of net income.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

The Board of Directors of the Company declared quarterly cash dividend increases per common share during 2017 and 2018 as shown below:

	Quarterly Cash Increase				New Quarterly Dividend
Date of Declaration	Per Common Share		% Increase		Per Common Share
January 26, 2017	$	0.01	14	%	$	0.08
January 25, 2018	0.02		25	%	0.10
July 25, 2018	0.03		30	%	0.13

In addition, on January 30, 2019, the Board of Directors of the Company declared a four cent, or 31%, increase in the quarterly cash dividend to $0.17 per common share.

The following table details the CSC cash dividends paid and per share amounts:

Year Ended December 31,	2018				2017
	Cash Paid		Per Share Amount		Cash Paid		Per Share Amount
Common Stock	$	623	$	0.46	$	431	$	0.32
Series A Preferred Stock (1)	28		70.00		28		70.00
Series B Preferred Stock (2,5)	N/A		N/A		29		60.00
Series C Preferred Stock (2)	36		60.00		36		60.00
Series D Preferred Stock (2)	45		59.52		45		59.52
Series E Preferred Stock (3)	28		4,625.00		23		3,867.01
Series F Preferred Stock (4)	27		5,430.56		N/A		N/A

⁽¹⁾ Dividends paid semi-annually until February 1, 2022 and quarterly thereafter.

⁽²⁾ Dividends paid quarterly.

⁽³⁾ Dividends paid semi-annually until March 1, 2022 and quarterly thereafter.

⁽⁴⁾ Series F Preferred Stock was issued on October 31, 2017. Dividends paid semi-annually beginning on June 1, 2018 until December 1, 2027, and quarterly thereafter.

⁽⁵⁾ Series B Preferred Stock was redeemed on December 1, 2017.

N/A Not applicable.

Share Repurchases

On October 25, 2018, CSC publicly announced that its Board of Directors terminated the existing two share repurchase authorizations and replaced them with a new authorization to repurchase up to $1.0 billion of common stock. CSC repurchased 22 million shares of its common stock for $1.0 billion in 2018, completing all repurchases under this authorization. There were no repurchases of CSC’s common stock in 2018 prior to the fourth quarter, or in 2017.

On January 30, 2019, CSC publicly announced that its Board of Directors authorized the repurchase of up to $4.0 billion of common stock. The authorization does not have an expiration date.

FOREIGN HOLDINGS

At December 31, 2018, Schwab had exposure to non-sovereign financial and non-financial institutions in foreign countries, as well as agencies of foreign governments. At December 31, 2018, the fair value of these holdings totaled $7.6 billion, with the top three exposures being to issuers and counterparties domiciled in France at $2.8 billion, Sweden at $1.3 billion, and Canada at $0.8 billion.

In addition to the direct holdings in foreign companies and securities issued by foreign government agencies, Schwab has indirect exposure to foreign countries through its investments in CSIM money market funds (collectively, the Funds) resulting from brokerage clearing activities. At December 31, 2018, the Company had $21 million in investments in these Funds. Certain of the Funds’ positions include certificates of deposits, time deposits, commercial paper and corporate debt securities issued by counterparties in foreign countries. Schwab had outstanding margin loans to foreign residents of $746 million at December 31, 2018.

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schwab uses the market approach to determine the fair value of certain financial assets and liabilities recorded at fair value, and to determine fair value disclosures. See Item 8 – Note 2 and Note 16 for more information on our assets and liabilities recorded at fair value.

When available, Schwab uses quoted prices in active markets to measure the fair value of assets and liabilities. When utilizing market data and bid-ask spread, we use the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, prices are obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent pricing sources for assets recorded at fair value. Our primary third-party pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded. At December 31, 2018 and 2017, we did not adjust prices received from the primary independent third-party pricing service.

CRITICAL ACCOUNTING ESTIMATES

The consolidated financial statements of Schwab have been prepared in accordance with GAAP. Item 8 – Note 2 contains more information on our significant accounting policies made in connection with its application of these accounting principles.

While the majority of the revenues, expenses, assets and liabilities are not based on estimates, there are certain accounting principles that require management to make estimates regarding matters that are uncertain and susceptible to change where such change may result in a material adverse impact on Schwab’s financial position and reported financial results. These critical accounting estimates are described below. Management regularly reviews the estimates and assumptions used in the preparation of the financial statements for reasonableness and adequacy.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of the Board of Directors. Additionally, management has reviewed with the Audit Committee the Company’s significant estimates discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Income Taxes

Schwab estimates income tax expense based on amounts expected to be owed to the various tax jurisdictions in which we operate, including federal, state and local domestic jurisdictions, and immaterial amounts owed to several foreign jurisdictions. The estimated income tax expense is reported in the consolidated statements of income in taxes on income. Accrued taxes are reported in other assets or accrued expenses and other liabilities on the consolidated balance sheets and represent the net estimated amount due to or to be received from taxing jurisdictions either currently or deferred to future periods. Deferred taxes arise from differences between assets and liabilities measured for financial reporting purposes versus income tax reporting purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit management believes is more likely than not to be realized upon settlement. In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment considering statutory, judicial and regulatory guidance in the context of the tax position. Because of the complexity of tax laws and regulations, interpretation can be difficult and subject to legal judgment given specific facts and circumstances.  

Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations being conducted by various taxing authorities, and newly enacted statutory, judicial and regulatory guidance that impacts the relative merits and risks of tax positions. These changes, when they occur, affect accrued taxes and can be

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THE CHARLES SCHWAB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Millions, Except Ratios, or as Noted)

significant to the operating results of the Company. See Item 8 – Note 20 for more information on the Company’s income taxes.

Legal and Regulatory Reserves

Reserves for legal and regulatory claims and proceedings reflect an estimate of probable losses for each matter, after considering, among other factors, the progress of the case, prior experience and the experience of others in similar cases, available defenses, and the opinions and views of legal counsel. In many cases, including most class action lawsuits, it is not possible to determine whether a loss will be incurred, or to estimate the range of that loss, until the matter is close to resolution, in which case no accrual is made until that time. Reserves are adjusted as more information becomes available. Significant judgment is required in making these estimates, and the actual cost of resolving a matter may ultimately differ materially from the amount reserved. See Item 8 – Note 14 for more information on the Company’s contingencies related to legal and regulatory reserves.

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THE CHARLES SCHWAB CORPORATION

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of the quantitative and qualitative disclosures about market risk, see Risk Management in Part II, Item 7.

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THE CHARLES SCHWAB CORPORATION

Item 8. Financial Statements and Supplementary Data

TABLE OF CONTENTS

Consolidated Statements of Income		50
Consolidated Statements of Comprehensive Income		51
Consolidated Balance Sheets		52
Consolidated Statements of Cash Flows		53
Consolidated Statements of Stockholders’ Equity		55
Notes to Consolidated Financial Statements		56
Note 1.	Introduction and Basis of Presentation	56
Note 2.	Summary of Significant Accounting Policies	57
Note 3.	Revenue Recognition	67
Note 4.	Receivables from and Payables to Brokerage Clients	69
Note 5.	Other Securities Owned	69
Note 6.	Investment Securities	70
Note 7.	Bank Loans and Related Allowance for Loan Losses	74
Note 8.	Equipment, Office Facilities, and Property	78
Note 9.	Goodwill	79
Note 10.	Other Assets	79
Note 11.	Variable Interest Entities	79
Note 12.	Bank Deposits	80
Note 13.	Borrowings	81
Note 14.	Commitments and Contingencies	82
Note 15.	Financial Instruments Subject to Off-Balance Sheet Credit Risk	84
Note 16.	Fair Values of Assets and Liabilities	87
Note 17.	Stockholders’ Equity	91
Note 18.	Accumulated Other Comprehensive Income	92
Note 19.	Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans	93
Note 20.	Taxes on Income	95
Note 21.	Regulatory Requirements	97
Note 22.	Segment Information	99
Note 23.	The Charles Schwab Corporation – Parent Company Only Financial Statements	100
Note 24.	Quarterly Financial Information (Unaudited)	102
Note 25.	Subsequent Event	102
Report of Independent Registered Public Accounting Firm		103
Management’s Report on Internal Control Over Financial Reporting		104

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THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Income
(In Millions, Except Per Share Amounts)
Year Ended December 31,	2018			2017			2016
Net Revenues
Interest revenue	$	6,680		$	4,624		$	3,493
Interest expense	(857		)	(342		)	(171		)
Net interest revenue	5,823			4,282			3,322
Asset management and administration fees (1)	3,229			3,392			3,055
Trading revenue	763			654			825
Other	317			290			276
Total net revenues	10,132			8,618			7,478
Expenses Excluding Interest
Compensation and benefits	3,057			2,737			2,466
Professional services	654			580			506
Occupancy and equipment	496			436			398
Advertising and market development	313			268			265
Communications	242			231			237
Depreciation and amortization	306			269			234
Regulatory fees and assessments	189			179			144
Other	313			268			235
Total expenses excluding interest	5,570			4,968			4,485
Income before taxes on income	4,562			3,650			2,993
Taxes on income	1,055			1,296			1,104
Net Income	3,507			2,354			1,889
Preferred stock dividends and other (2)	178			174			143
Net Income Available to Common Stockholders	$	3,329		$	2,180		$	1,746
Weighted-Average Common Shares Outstanding:
Basic	1,348			1,339			1,324
Diluted (3)	1,361			1,353			1,334
Earnings Per Common Shares Outstanding:
Basic	$	2.47		$	1.63		$	1.32
Diluted (3)	$	2.45		$	1.61		$	1.31

⁽¹⁾ Includes fee waivers of $0, $10 million, and $224 million during the years ended December 31, 2018, 2017, and 2016, respectively, relating to Schwab-sponsored money market funds.

⁽²⁾ Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

⁽³⁾ Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 18 million, 15 million, and 26 million shares in 2018, 2017, and 2016, respectively.

See Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Comprehensive Income
(In Millions)
Year Ended December 31,	2018			2017			2016
Net income	$	3,507		$	2,354		$	1,889
Other comprehensive income (loss), before tax:
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	(123		)	13			(44		)
Reclassification of net unrealized loss transferred to held to maturity	—			227			—
Other reclassifications included in other revenue	—			(12		)	(4		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss transferred from available for sale	—			(227		)	—
Amortization of amounts previously recorded upon transfer from available for sale	35			31			—
Other	(1		)	(11		)	1
Other comprehensive income (loss), before tax	(89		)	21			(47		)
Income tax effect	22			(10		)	18
Other comprehensive income (loss), net of tax	(67		)	11			(29		)
Comprehensive Income	$	3,440		$	2,365		$	1,860

See Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Consolidated Balance Sheets
(In Millions, Except Per Share and Share Amounts)
December 31,	2018			2017
Assets
Cash and cash equivalents	$	27,938		$	14,217
Cash and investments segregated and on deposit for regulatory purposes (including resale agreements of $7,195 and $6,596 at December 31, 2018 and 2017, respectively)	13,563			15,139
Receivables from brokers, dealers, and clearing organizations	553			649
Receivables from brokerage clients — net	21,651			20,576
Other securities owned — at fair value	539			539
Available for sale securities	66,578			49,995
Held to maturity securities	144,009			120,926
Bank loans — net	16,609			16,478
Equipment, office facilities, and property — net	1,769			1,471
Goodwill	1,227			1,227
Other assets	2,046			2,057
Total assets	$	296,482		$	243,274
Liabilities and Stockholders’ Equity
Bank deposits	$	231,423		$	169,656
Payables to brokers, dealers, and clearing organizations	1,831			1,287
Payables to brokerage clients	32,726			31,243
Accrued expenses and other liabilities	2,954			2,810
Short-term borrowings	—			15,000
Long-term debt	6,878			4,753
Total liabilities	275,812			224,749
Stockholders’ equity:
Preferred stock — $.01 par value per share; aggregate liquidation preference of $2,850	2,793			2,793
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446 shares issued	15			15
Additional paid-in capital	4,499			4,353
Retained earnings	17,329			14,408
Treasury stock, at cost — 155,116,695 and 142,210,890 shares at December 31, 2018 and 2017, respectively	(3,714		)	(2,892		)
Accumulated other comprehensive income (loss)	(252		)	(152		)
Total stockholders’ equity	20,670			18,525
Total liabilities and stockholders’ equity	$	296,482		$	243,274

See Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Cash Flows
(In Millions)
Year Ended December 31,	2018			2017 (1)			2016 (1)
Cash Flows from Operating Activities
Net income	$	3,507		$	2,354		$	1,889
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Share-based compensation	197			153			141
Depreciation and amortization	306			269			234
Provision (benefit) for deferred income taxes	49			58			15
Premium amortization, net, on available for sale and held to maturity securities	350			342			266
Other	137			51			4
Net change in:
Investments segregated and on deposit for regulatory purposes	6,922			4,933			(1,635		)
Receivables from brokers, dealers, and clearing organizations	96			74			(147		)
Receivables from brokerage clients	(1,100		)	(3,428		)	150
Other securities owned	—			(90		)	84
Other assets	(104		)	(177		)	(93		)
Payables to brokers, dealers, and clearing organizations	573			(1,148		)	(181		)
Payables to brokerage clients	1,483			(4,651		)	2,709
Accrued expenses and other liabilities	40			421			167
Net cash provided by (used for) operating activities	12,456			(839		)	3,603
Cash Flows from Investing Activities
Purchases of available for sale securities	(32,801		)	(15,033		)	(29,248		)
Proceeds from sales of available for sale securities	115			8,617			5,537
Principal payments on available for sale securities	16,016			9,095			11,903
Purchases of held to maturity securities	(40,873		)	(32,925		)	(31,162		)
Principal payments on held to maturity securities	17,410			11,627			5,747
Net increase in bank loans	(129		)	(1,071		)	(1,103		)
Purchases of equipment, office facilities, and property	(570		)	(400		)	(346		)
Purchases of Federal Home Loan Bank stock	(156		)	(430		)	(152		)
Proceeds from sales of Federal Home Loan Bank stock	529			106			88
Other investing activities	(96		)	(59		)	(39		)
Net cash provided by (used for) investing activities	(40,555		)	(20,473		)	(38,775		)
Cash Flows from Financing Activities
Net change in bank deposits (2)	61,767			6,186			33,952
Net change in short-term borrowings	(15,000		)	15,000			—
Issuance of long-term debt	3,024			2,129			—
Repayment of long-term debt	(909		)	(257		)	(7		)
Repurchases of common stock	(1,000		)	—			—
Net proceeds from preferred stock offerings	—			492			1,316
Redemption of preferred stock	—			(485		)	—
Dividends paid	(787		)	(592		)	(486		)
Proceeds from stock options exercised	125			171			144
Other financing activities	(54		)	(45		)	44
Net cash provided by (used for) financing activities	47,166			22,599			34,963
Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted	19,067			1,287			(209		)
Cash and Cash Equivalents including Amounts Restricted at Beginning of Year	19,160			17,873			18,082
Cash and Cash Equivalents, including Amounts Restricted at End of Year	$	38,227		$	19,160		$	17,873

Continued on following page

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THE CHARLES SCHWAB CORPORATION

Continued from previous page

Year Ended December 31,	2018		2017 (1)		2016 (1)
Supplemental Cash Flow Information
Cash paid during the year for:
Interest	$	798	$	327	$	160
Income taxes	$	927	$	1,212	$	991
Non-cash investing activity:
Securities purchased during the period but settled after period end	$	—	$	29	$	—

December 31,	2018		2017		2016
Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (3)
Cash and cash equivalents	$	27,938	$	14,217	$	10,828
Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes	10,289		4,943		7,045
Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows	$	38,227	$	19,160	$	17,873

⁽¹⁾ Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

⁽²⁾ Includes transfers from other sweep features to bank sweep of $72 billion, $5 billion and $8 billion for the years ended December 31, 2018, 2017 and 2016, respectively.

⁽³⁾ For more information on the nature of restrictions on restricted cash and cash equivalents see Note 21.

See Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Consolidated Statements of Stockholders’ Equity
(In Millions)
							Additional Paid-In Capital									Accumulated Other Comprehensive Income (Loss)
	Preferred Stock			Common Stock						Retained Earnings			Treasury Stock, at cost
				Shares	Amount														Total
Balance at December 31, 2015	$	1,459		1,488	$	15	$	4,152		$	11,253		$	(3,343	)	$	(134	)	$	13,402
Net income	—			—	—		—			1,889			—			—			1,889
Other comprehensive income (loss), net of tax	—			—	—		—			—			—			(29		)	(29		)
Issuance of preferred stock, net	1,324			—	—		—			—			—			—			1,324
Dividends declared on preferred stock	—			—	—		—			(126		)	—			—			(126		)
Dividends declared on common stock — $.27 per share	—			—	—		—			(360		)	—			—			(360		)
Stock option exercises and other	—			—	—		(80		)	—			224			—			144
Share-based compensation and related tax effects	—			—	—		177			—			—			—			177
Other	—			—	—		18			(7		)	(11		)	—			—
Balance at December 31, 2016	2,783			1,488	15		4,267			12,649			(3,130		)	(163		)	16,421
Net income	—			—	—		—			2,354			—			—			2,354
Other comprehensive income (loss), net of tax	—			—	—		—			—			—			11			11
Issuance of preferred stock, net	492			—	—		—			—			—			—			492
Redemption of preferred stock	(482		)	—	—		—			(3		)	—			—			(485		)
Dividends declared on preferred stock	—			—	—		—			(161		)	—			—			(161		)
Dividends declared on common stock — $.32 per share	—			—	—		—			(431		)	—			—			(431		)
Stock option exercises and other	—			—	—		(88		)	—			259			—			171
Share-based compensation	—			—	—		144			—			—			—			144
Other	—			—	—		30			—			(21		)	—			9
Balance at December 31, 2017	2,793			1,488	15		4,353			14,408			(2,892		)	(152		)	18,525
Adoption of accounting standards (Note 2)	—			—	—		—			200			—			(33		)	167
Net income	—			—	—		—			3,507			—			—			3,507
Other comprehensive income (loss), net of tax	—			—	—		—			—			—			(67		)	(67		)
Dividends declared on preferred stock	—			—	—		—			(164		)	—			—			(164		)
Dividends declared on common stock — $.46 per share	—			—	—		—			(624		)	—			—			(624		)
Repurchase of common stock	—			—	—		—			—			(1,000		)	—			(1,000		)
Stock option exercises and other	—			—	—		(84		)	—			209			—			125
Share-based compensation	—			—	—		188			—			—			—			188
Other	—			—	—		42			2			(31		)	—			13
Balance at December 31, 2018	$	2,793		1,488	$	15	$	4,499		$	17,329		$	(3,714	)	$	(252	)	$	20,670

See Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

1. Introduction and Basis of Presentation

The Charles Schwab Corporation (CSC) is a savings and loan holding company, headquartered in San Francisco, California. CSC was incorporated in 1986 and engages, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.

Significant business subsidiaries of CSC include the following:

• Charles Schwab & Co., Inc. (CS&Co) is a securities broker-dealer with over 355 domestic branch offices in 47 states, as well as a branch in the Commonwealth of Puerto Rico. In addition, Schwab serves clients through branch offices in the U.K., Hong Kong, Singapore, and Australia through various subsidiaries;

• Charles Schwab Bank (CSB), a federal savings bank; and

• Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds^®), and for Schwab’s exchange-traded funds (Schwab ETFs™).

Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries.

The accompanying consolidated financial statements include CSC and its subsidiaries. Intercompany balances and transactions have been eliminated. These consolidated financial statements have been prepared in conformity with GAAP, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from those estimates. Certain estimates relate to taxes on income and legal and regulatory reserves. Actual results may differ from those estimates.

Principles of Consolidation

Schwab evaluates all entities in which it has financial interests for consolidation, except for money market funds, which are specifically excluded from consolidation guidance. When an entity is evaluated for consolidation, Schwab determines whether its interest in the entity constitutes a controlling financial interest under either the variable interest entity (VIE) model or the voting interest entity (VOE) model. In evaluating whether Schwab’s interest in a VIE is a controlling financial interest, we consider whether our involvement in the context of the design, purpose, and risks of the VIE, as well as any involvement of related parties, provides us with (i) the power to direct the most significant activities of the VIE, and (ii) the obligation to absorb losses or receive benefits that are significant to the VIE. If both of these conditions exist, then Schwab would be the primary beneficiary of that VIE, and consolidate it. Based upon the assessments for all of our interests in VIEs, there are no cases where the Company is the primary beneficiary; therefore, we are not required to consolidate any VIEs. See Note 11 for further information about VIEs. Schwab consolidates all VOEs in which it has majority-voting interests.

Investments in entities in which Schwab does not have a controlling financial interest are accounted for under the equity method of accounting when we have the ability to exercise significant influence over operating and financing decisions of the entity. Investments in entities for which Schwab does not have the ability to exercise significant influence are generally carried at cost and adjusted for impairment and observable price changes of the identical or similar investments of the same issuer (adjusted cost method), except for certain investments in qualified affordable housing projects which are accounted for under the proportional amortization method. All equity method, adjusted cost method, and proportional amortization method investments are included in other assets on the consolidated balance sheets.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

2. Summary of Significant Accounting Policies

Revenue recognition

Schwab’s accounting policies for revenue recognition are discussed in Note 3.

Cash and cash equivalents

Schwab considers all highly liquid investments that mature in three months or less from the time of acquisition and that are not segregated and on deposit for regulatory purposes to be cash and cash equivalents. Cash and cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury securities. Cash and cash equivalents also include balances that our banking subsidiaries maintain at the Federal Reserve.

Cash and investments segregated and on deposit for regulatory purposes

Cash and investments segregated and on deposit for regulatory purposesinclude securities purchased under agreements to resell (resale agreements), which are collateralized by U.S. Government and agency securities. Resale agreements are accounted for as collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The Company obtains collateral with a market value equal to or in excess of the principal amount loaned and accrued interest under resale agreements. Collateral is valued daily by the Company, with additional collateral obtained to ensure full collateralization. Cash and investments segregated also include certificates of deposit and U.S. Government securities. Certificates of deposit and U.S. Government securities are recorded at fair value. Pursuant to the SEC’s Customer Protection Rule, cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts, are segregated by Schwab for the exclusive benefit of clients.

Receivables from brokerage clients

Receivables from brokerage clients include margin loans to securities brokerage clients and other trading receivables from clients. Margin loans are collateralized by client securities and are carried at the amount receivable, net of an allowance for doubtful accounts. The Company monitors margin levels and requires clients to deposit additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. Receivables from brokerage clients that remain unsecured or partially secured for more than 30 days are fully reserved for in the allowance for doubtful accounts, except in the case of confirmed fraud, which is reserved immediately. Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in accordance with federal regulations. The collateral is not reflected in the consolidated financial statements. The allowance for doubtful accounts for brokerage clients and related activity was immaterial for all periods presented.

Other securities owned

Other securities owned are recorded at fair value based on quoted market prices or other observable market data. Unrealized gains and losses are included in earnings.

Investment securities

AFS securities are recorded at fair value and unrealized gains and losses are reported, net of taxes, in AOCI included in stockholders’ equity. HTM securities are recorded at amortized cost based on the Company’s positive intent and ability to hold these securities to maturity. Realized gains and losses from sales of AFS securities are determined on a specific identification basis and are included in other revenue.

Management evaluates whether investment securities are OTTI on a quarterly basis. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell such security before any anticipated recovery. If management determines that a security is OTTI under these circumstances, the impairment recognized in earnings is measured as the entire difference between amortized cost and fair value.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

A security is also OTTI if management does not expect to recover all of the amortized cost of the security. In this circumstance, the impairment recognized in earnings represents the estimated credit loss, and is measured by the difference between the present value of expected cash flows and the amortized cost of the security. Where appropriate, models are utilized to estimate the credit loss on a discounted cash flow basis using the security’s effective interest rate.

The evaluation of whether we expect to recover the amortized cost of a security is inherently judgmental. The evaluation considers multiple factors including: the magnitude and duration of the unrealized loss; the financial condition of the issuer; the payment structure of the security; external credit ratings; our internal credit ratings; for asset-backed securities, the amount of credit support provided by the structure of the security to absorb credit losses on the underlying collateral; recent events specific to the issuer and the issuer’s industry; and whether all scheduled principal and interest payments have been received.

Securities borrowed and securities loaned

Securities borrowed transactions require Schwab to deliver cash to the lender in exchange for securities; the receivables from these transactions are included in receivables from brokers, dealers, and clearing organizations. For securities loaned, Schwab receives collateral in the form of cash in an amount equal to or greater than the market value of securities loaned; the payables from these transactions are included in payables to brokers, dealers, and clearing organizations. The market value of securities borrowed and loaned are monitored, with additional collateral obtained or refunded to ensure full collateralization. Fees received or paid are recorded in interest revenue or interest expense.

Bank loans and related allowance for loan losses

Bank loans are recorded at their contractual principal amounts and include unamortized direct origination costs or net purchase discounts or premiums. Direct origination costs and premiums and discounts are recognized in interest revenue using the effective interest method over the contractual life of the loan and are adjusted for actual prepayments. Additionally, loans are recorded net of an allowance for loan losses. The loan portfolio includes four loan types: First Mortgages, HELOCs, PALs, and other loans. We use these segments when developing and documenting our methodology for determining the allowance for loan losses.

PALs are collateralized by marketable securities with liquid markets. Credit lines are over-collateralized dependent on the type of security pledged. Collateral market value is monitored on a daily basis and a borrower’s committed line may be reduced or collateral may be liquidated if the collateral is in danger of falling below specified levels. As such, the loss inherent within this portfolio is limited.

Schwab records an allowance for loan losses through a charge to earnings based on our estimate of probable losses in the existing portfolio. We review the allowance for loan losses quarterly, taking into consideration current economic conditions, the composition of the existing loan portfolio, past loss experience, and risks inherent in the portfolio to ensure that the allowance for loan losses is maintained at an appropriate level.

The methodology to establish an allowance for loan losses utilizes statistical models that estimate prepayments, defaults, and probable losses for the loan segments based on predicted behavior of individual loans within the segments. The methodology considers the effects of borrower behavior and a variety of factors including, but not limited to, interest rates, housing price movements as measured by a housing price index, economic conditions, estimated defaults and foreclosures measured by historical and expected delinquencies, changes in prepayment speeds, LTV ratios, past loss experience, estimates of future loss severities, borrower credit risk, and the adequacy of collateral. The methodology also evaluates concentrations in the loan types, including loan products within those types, year of origination, and geographical distribution of collateral.

Probable losses are forecast using a loan-level simulation of the delinquency status of the loans over the term of the loans. The simulation starts with the current relevant risk indicators, including the current delinquent status of each loan, the estimated current LTV ratio (Estimated Current LTV) of each loan, the term and structure of each loan, current key interest rates including U.S. Treasury and LIBOR rates, and borrower FICO scores. The more significant variables in the simulation include delinquency roll rates, loss severity, housing prices, and interest rates. Delinquency roll rates (i.e., the rates at which loans transition through delinquency stages and ultimately result in a loss) are estimated from our historical loss experience adjusted for current trends and market information. Loss severity estimates are based on our historical loss experience and

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

market trends. The estimated loss severity (i.e., loss given default) used in the allowance for loan loss methodology for HELOC loans is higher than that used in the methodology for First Mortgages. Housing price trends are derived from historical home price indices and econometric forecasts of future home values. Factors affecting the home price index include housing inventory, unemployment, interest rates, and inflation expectations. Interest rate projections are based on the current term structure of interest rates and historical volatilities to project various possible future interest rate paths. This methodology results in loss factors that are applied to the outstanding balances to determine the allowance for loan loss for each loan type.

Schwab considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be troubled debt restructurings (TDRs).

Nonaccrual, Nonperforming and Impaired loans

First Mortgages, HELOCs, PALs, and other loans are placed on nonaccrual status upon becoming 90 days past due as to interest or principal (unless the loans are well-secured and in the process of collection), or when the full timely collection of interest or principal becomes uncertain, including loans to borrowers who have filed for bankruptcy. HELOC loans secured by a second lien are placed on non-accrual status if the associated first lien is 90 days or more delinquent, regardless of the payment status of the HELOC. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the loan is accounted for on the cash or cost recovery method until qualifying for return to accrual status. Generally, a nonaccrual loan may be returned to accrual status when all delinquent interest and principal is repaid and the borrower demonstrates a sustained period of performance, or when the loan is both well-secured and in the process of collection and collectability is no longer doubtful. Loans on nonaccrual status and other real estate owned are considered nonperforming assets. Nonaccrual loans, other real estate owned, and TDRs are considered impaired assets, as it is probable we will not collect all amounts due.

Loan Charge-Offs

The Company charges off a loan in the period that it is deemed uncollectible and records a reduction in the allowance for loan losses and the loan balance. Our charge-off policy for First Mortgage and HELOC loans is to assess the value of the property when the loan has been delinquent for 180 days or has been discharged in bankruptcy proceedings, regardless of whether the property is in foreclosure, and charge-off the amount of the loan balance in excess of the estimated current value of the underlying property less estimated costs to sell.

Equipment, office facilities, and property

Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:

Equipment and office facilities	5 to 10 years
Buildings	20 to 40 years
Software	3 to 10 years (1)
Leasehold improvements	Lesser of useful life or lease term

⁽¹⁾ Amortized over contractual term if less than three years.

Equipment, office facilities, and property are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Goodwill

Goodwill represents the fair value of acquired businesses in excess of the fair value of the individually identified net assets acquired. Goodwill is not amortized but is tested for impairment annually or whenever indications of impairment exist. Impairment exists when the carrying amount of goodwill exceeds its implied fair value, resulting in an impairment charge for this excess. Our annual impairment testing date is April 1^st. Schwab can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. A qualitative assessment considers macroeconomic and other industry-specific factors, such as trends in short-term and long-term interest rates and the ability to access capital, and Company specific factors such as market capitalization in excess of net assets, trends in revenue generating activities, and merger or acquisition activity.

If the Company elects to bypass qualitatively assessing goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, management estimates the fair values of each of the Company’s reporting units (defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compares it to their carrying values. The estimated fair values of the reporting units are established using an income approach based on a discounted cash flow model that includes significant assumptions about the future operating results and cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis.

Intangible assets

Finite-lived intangible assets are amortized over their useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Low-Income Housing Tax Credit (LIHTC) Investments

We account for investments in qualified affordable housing projects using the proportional amortization method if the applicable requirements are met. The proportional amortization method amortizes the cost of the investment over the period in which the investor expects to receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of taxes on income. The carrying value of LIHTC investments is included in other assets on the consolidated balance sheets. Unfunded commitments related to LIHTC investments are included in accrued expenses and other liabilities on the consolidated balance sheets.

Guarantees and indemnifications

Schwab recognizes, at the inception of a guarantee, a liability equal to the estimated fair value of the obligation undertaken in issuing the guarantee. The fair values of obligations relating to guarantees are estimated based on transactions for similar guarantees or expected present value measures.

Advertising and market development

Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts. Such costs are generally expensed when incurred.

Income taxes

Schwab provides for income taxes on all transactions that have been recognized in the consolidated financial statements. Accordingly, deferred tax assets are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax assets and deferred tax liabilities, as well as other changes in income tax laws, are recorded in earnings in the period during which such changes are enacted. Uncertain tax positions are evaluated to determine whether they are more likely than not to be sustained upon examination. When tax positions are more likely than not to be sustained upon examination the difference between positions taken on tax return filings and estimated potential tax settlement outcomes are recognized in accrued expenses and other liabilities. If a position is not more likely than not to be sustained, then none of the tax benefit is recognized in Schwab’s financial statements. Accrued interest

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

and penalties relating to unrecognized tax benefits is recorded in taxes on income. Schwab records amounts within AOCI net of taxes. Income tax effects are released from AOCI using the specific-identification approach.

Share-based compensation

Share-based compensation includes employee and board of director stock options and restricted stock units. Schwab measures compensation expense for these share-based payment arrangements based on their estimated fair values as of the grant date. The fair value of the share-based award is recognized over the vesting period as share-based compensation. Share-based compensation expense is based on options or units expected to vest and therefore is reduced for estimated forfeitures. Per the Company’s accounting policy election, forfeitures are estimated at the time of grant and reviewed annually based on the Company’s historical forfeiture experience. Share-based compensation expense is adjusted in subsequent periods if actual forfeitures differ from estimated forfeitures. Beginning January 1, 2017, the excess tax benefits or deficiencies from the exercise of stock options and the vesting of restricted stock units are recorded in taxes on income.

Earnings per common share

EPS is computed using the two-class method. Preferred stock dividends and undistributed earnings and dividends allocated to participating securities are subtracted from net income in determining net income available to common stockholders. Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Dilutive potential common shares include, if dilutive, the effect of outstanding stock options and non-vested restricted stock units.

Fair values of assets and liabilities

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance describes the fair value hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from third-party sources independent of the Company. A quoted price in an active market provides the most reliable evidence of fair value and is generally used to measure fair value whenever available.

Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. Where inputs used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgment. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

• Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Assets and liabilities measured at fair value on a recurring basis

Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, other securities owned, and AFS securities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

prices in active markets to measure the fair value of assets and liabilities. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent third-party pricing sources for assets recorded at fair value.

Our primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

New Accounting Standards

Adoption of New Accounting Standards

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and related ASUs	Clarifies that revenue from contracts with clients should be recognized in a manner that depicts the timing of the related transfer of goods or performance of services at an amount that reflects the expected consideration. Adoption allows either full or modified retrospective transition. Full retrospective transition required a cumulative effect adjustment to retained earnings as of the earliest comparative period presented. Modified retrospective transition required a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance.	January 1, 2018	The guidance does not apply to revenue earned from the Company’s loans and securities. Accordingly, net interest revenue was not impacted. The primary impact for the Company was the capitalization on the consolidated balance sheets of sales commissions paid to employees for obtaining new contracts with clients. These capitalized costs resulted in an asset of $219 million and a related deferred tax liability of $52 million upon adoption. The asset is being amortized to expense over time as the related revenues are recognized. The Company adopted the revenue recognition guidance using the modified retrospective method for all contracts that were not completed as of January 1, 2018. Further details of the impact of adoption are included below in this Note as well as in Note 3.
ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)” and ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10)”	Requires: (i) equity investments to be measured at fair value, with changes in fair value recognized in net income, unless the equity method is applied or the equity investments do not have readily determinable fair values in which case a practical alternative may be elected; (ii) use of an exit price when measuring the fair value of financial instruments for disclosures; (iii) separate presentation of financial assets and liabilities by measurement category and form of instrument on the balance sheet or in the accompanying notes. Adoption requires a cumulative effect adjustment to the balance sheet as of the beginning of the year of initial application, except for certain changes that require prospective adoption.	January 1, 2018	The Company adopted this guidance on a prospective basis for its equity securities that do not have readily determinable fair values. No other significant changes resulted from adoption. Therefore, there was no material impact on the Company’s financial statements. The Company elected to use the alternative to fair value measurement for its equity securities that do not have readily determinable fair values. These equity securities will be adjusted for impairment and observable price changes of the identical or similar investments of the same issuer, as applicable. Schwab refers to this approach as the adjusted cost method. This method was applied to an immaterial amount of Community Reinvestment Act (CRA) investments included in other assets on the consolidated balance sheets.
ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash a Consensus of the Emerging Issues Task Force”	Requires that the statement of cash flows explain the change during the period in the total cash and cash equivalents, including restricted cash and cash equivalents. Adoption requires retrospective presentation of the statement of cash flows to include restricted cash and cash equivalents in the beginning and ending amounts.	January 1, 2018	The Company adopted this guidance on a retrospective basis. The Company has significant amounts of restricted cash and cash equivalents due to its business as a broker-dealer. As a result of the adoption, changes in restricted cash and cash equivalents included within cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets are now presented with changes in cash and cash equivalents throughout the consolidated statements of cash flows. The amount of restricted cash and cash equivalents is included in a separate table in the consolidated statement of cash flows.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”	Permits reclassification of the impacts on certain tax affected items included in AOCI that were adjusted through income from continuing operations rather than AOCI upon the effective date of the Tax Act. Adoption provides for retrospective adoption to all periods presented and impacted by the Tax Act or as of the beginning of the period of adoption.	January 1, 2018	The Company adopted this guidance as of January 1, 2018. The Company elected to reclassify the income tax effects of the Tax Act from items in AOCI into retained earnings as of the beginning of the period of adoption. Adoption resulted in a reduction in AOCI and a corresponding increase in retained earnings of $33 million.

New Accounting Standards Not Yet Adopted

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-02, “Leases (Topic 842)”	Amends the accounting for leases by lessees and lessors. The primary change from the new guidance is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. Additional changes include accounting for lease origination and executory costs, required lessee reassessments during the lease term due to changes in circumstances, and expanded lease disclosures. Adoption provides for modified retrospective transition as of the beginning of the earliest comparative period presented in the financial statements in which the entity first applies the new standard or prospectively with an adjustment as of the beginning of the period of adoption. Certain transition relief is permitted if elected by the entity.	January 1, 2019	The Company adopted the new lease accounting guidance prospectively as of January 1, 2019, which will result in a gross up of the consolidated balance sheet due to recognition of right-of-use assets and lease liabilities primarily related to CS&Co leases of office space and branches. These amounts will be based on the present value of our remaining operating lease payments. The Company's right of use assets and related lease liabilities upon adoption will be $596 million and $662 million, respectively.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”	Provides guidance for recognizing impairment of most debt instruments measured at amortized cost, including loans and HTM debt securities. Requires estimating current expected credit losses (CECL) over the remaining life of an instrument or a portfolio of instruments with similar risk characteristics based on relevant information about past events, current conditions, and reasonable forecasts. The initial estimate of, and the subsequent changes in, CECL will be recognized as credit loss expense through current earnings and will be reflected as an allowance for credit losses offsetting the carrying value of the financial instrument(s) on the balance sheet. Amends the OTTI model for AFS debt securities by requiring the use of an allowance, rather than directly reducing the carrying value of the security, and eliminating consideration of the length of time such security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Adoption requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the entity applies the new guidance except that a prospective transition is required for AFS debt securities for which an OTTI has been recognized prior to the effective date.	January 1, 2020 (early adoption permitted)	The Company continues to evaluate the impact of this guidance on its financial statements. The Company has finished the majority of its scoping work and assessment of the current state of data and systems. Work is transitioning to designing and building out approaches to address certain asset classes with a focus primarily on a subset of our securities, including corporate debt securities. The Company expects that a large portion of its securities will have zero expectation of credit losses based on industry and regulator views for U.S. treasury and certain government agency-backed securities. We are currently working on in-depth analysis for the other asset types that do not have zero expectation of credit losses to determine our methods and any needed changes to policies and procedures.
ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”	Shortens the amortization period for the premium on certain callable debt securities to the earliest call date. The amendments are applicable to any purchased individual debt security with an explicit and noncontingent call feature with a fixed price on a preset date. ASU 2017-08 does not impact the accounting for callable debt securities held at a discount. Adoption requires modified retrospective transition as of the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings.	January 1, 2019 (early adoption permitted)	The Company adopted this guidance as of January 1, 2019 using the modified retrospective method. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-15, “Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”	Aligns the criteria for capitalizing implementation costs for cloud computing arrangements (CCA) that are service contracts with internal-use software that is developed or purchased and CCAs that include an internal-use software license. This guidance requires that the capitalized implementation costs be recognized over the period of the CCA service contract, subject to impairment evaluation on an ongoing basis. The guidance prescribes the balance sheet, income statement, and statement of cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. Adoption provides for retrospective or prospective application to all implementation costs incurred after the date of adoption.	January 1, 2020 (early adoption permitted)	Historically, Schwab has expensed implementation costs as they are incurred for CCAs that are service contracts. Therefore, adopting this guidance will change the Company’s accounting treatment for these types of implementation costs. The Company is evaluating the impacts of this guidance on its financial statements.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09, “Revenue – Revenue from Contracts with Customers” and ASU 2018-02, “Other Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” were as follows:

	Balance at December 31, 2017			Adjustments Due to ASU 2014-09		Adjustments Due to ASU 2018-02			Balance at January 1, 2018
Assets
Other assets (1)	$	2,057		$	167	$	—		$	2,224
Stockholders’ Equity
Retained earnings	14,408			167		33			14,608
Accumulated other comprehensive income	(152		)	—		(33		)	(185		)

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of $219 million, partially offset by an increase in deferred tax liabilities of

$52 million.

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of income and consolidated balance sheet were as follows:

	Year Ended December 31, 2018
Statement of Income	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Expenses Excluding Interest
Compensation and benefits	$	3,057	$	3,088	$	(31	)
Taxes on income	1,055		1,047		8
Net Income	3,507		3,484		23

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

	As of December 31, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Assets
Other assets (1)	$	2,046	$	1,851	$	195
Liabilities
Accrued expenses and other liabilities (1)	2,954		2,949		5
Stockholders’ Equity
Retained earnings	17,329		17,139		190

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of$250 million, partially offset by an increase in deferred tax liabilities of

$60 million.

3.Revenue Recognition

Disaggregated Revenue

Disaggregation of Schwab’s revenue by major sourceis as follows:

Year Ended December 31,	2018			2017			2016
Net interest revenue
Interest revenue	$	6,680		$	4,624		$	3,493
Interest expense	(857		)	(342		)	(171		)
Net interest revenue	5,823			4,282			3,322
Asset management and administration fees
Mutual funds and ETF service fees	1,793			2,045			1,853
Advice solutions	1,139			1,043			915
Other	297			304			287
Asset management and administration fees	3,229			3,392			3,055
Trading revenue
Commissions	685			600			779
Principal transactions	78			54			46
Trading revenue	763			654			825
Other	317			290			276
Total net revenues	$	10,132		$	8,618		$	7,478

For a summary of revenue provided by our reportable segments, see Note 22. The recognition of revenue is not impacted by the operating segment in which revenue is generated.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Net interest revenue

Net interest revenue, which is generated from financial instruments covered by various other areas of GAAP, is not within the scope of Accounting Standards Codification (ASC) 606, Revenue From Contracts With Customers (ASC 606), and is included in the table above in order to reconcile to total net revenues per the consolidated statements of income. Net interest revenue is the difference between interest generated on interest earning assets and interest paid on funding sources. Our primary interest earning assets include cash and cash equivalents; segregated cash and investments; margin loans, which constitute the majority of receivables from brokerage clients; investment securities; and bank loans. Revenue on interest earning assets is affected by various factors, such as the composition of assets, prevailing interest rates at the time of origination or purchase, changes in interest rates on floating rate securities and loans, and changes in prepayment levels for mortgage related securities and loans. Fees earned and incurred on securities borrowing and lending activities, which are conducted by CS&Co on assets held in client brokerage accounts, are also included in interest revenue and expense.

Asset management and administration fees

The majority of asset management and administration fees are generated through our proprietary and third-party mutual fund and ETF offerings, as well as fee-based advisory solutions. Mutual fund and ETF service fees are charged for investment management, shareholder, and administration services provided to Schwab Funds^® and Schwab ETFs™, as well as recordkeeping, shareholder, and administration services provided to third-party funds. Advice solutions fees are charged for brokerage and asset management services provided to advice solutions clients. Both mutual fund and ETF service fees and advice solutions fees are earned and recognized over time. Fees are generally based on a percentage of the daily value of assets under management and are collected on a monthly or quarterly basis.

Trading revenue

Substantially all trading revenue is generated through commissions earned for executing trades for clients in individual equities, options, fixed income securities, and certain third-party mutual funds and ETFs. This revenue is earned and collected when the trades are executed.

Other revenue

Other revenue includes order flow revenue, other service fees, software fees from our portfolio management solutions, exchange processing fees, and nonrecurring gains. Generally, the most significant portion of other revenue is order flow revenue, which is comprised of rebate payments received from execution venues to which CS&Co sends equity and option orders. Order flow revenue is recognized when the trades are executed.

Capitalized contract costs

Capitalized contract costs relate to sales commissions paid to employees for obtaining contracts with clients and are included in other assets on the consolidated balance sheets. These costs are amortized to expense on a straight-line basis over a period that is consistent with how the related revenue is recognized. At December 31, 2018 and January 1, 2018, we had $250 million and $219 million of capitalized contract costs, respectively. Amortization expense related to capitalized contract costs was $47 million in 2018, which was recorded in compensation and benefits expense on the consolidated statements of income.

Contract balances

Receivables from contracts with customers within the scope of ASC 606 were$307 million at December 31, 2018 and $353 million at January 1, 2018 and were recorded in other assets on the consolidated balance sheets. Schwab does not have any other significant contract assets or contract liability balances as of December 31, 2018 and January 1, 2018.

Unsatisfied performance obligations

We do not have any unsatisfied performance obligations other than those that are subject to an elective practical expedient under ASC 606. The practical expedient applies to and is elected for contracts where we recognize revenue at the amount to which we have the right to invoice for services performed.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

4. Receivables from and Payables to Brokerage Clients

Receivables from and payables to brokerage clients are detailed below:

December 31,	2018		2017
Receivables
Margin loans, net of allowance for doubtful accounts	$	19,273	$	18,331
Other brokerage receivables	2,378		2,245
Receivables from brokerage clients — net	$	21,651	$	20,576
Payables
Interest-bearing payables	$	21,990	$	22,840
Non-interest-bearing payables	10,736		8,403
Payables to brokerage clients	$	32,726	$	31,243

At December 31, 2018 and 2017, approximately 22% of CS&Co’s total client accounts were located in California.

5. Other Securities Owned

A summary of securities ownedis as follows:

December 31,	2018		2017
Equity and bond mutual funds	$	441	$	318
State and municipal debt obligations	39		52
Equity, U.S. Government and corporate debt, and other securities	33		34
Schwab Funds® money market funds	26		135
Total other securities owned	$	539	$	539

Equity and bond mutual funds include inventory maintained to facilitate clients’ transactions in certain Schwab Funds and third-party mutual funds, and investments made relating to our deferred compensation plan. State and municipal debt obligations, equity, U.S. Government and corporate debt, and other securities include securities to meet clients’ trading activities. The positions in Schwab Funds^® money market funds arise from certain overnight funding of clients’ redemption, check-writing, and debit card activities.

- 69 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

6.    Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities are as follows:

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities
U.S. agency mortgage-backed securities	$	25,594	$	44	$	82	$	25,556
U.S. Treasury securities	18,410		—		108		18,302
Asset-backed securities (1)	10,086		14		15		10,085
Corporate debt securities (2)	7,477		10		20		7,467
Certificates of deposit	3,682		4		1		3,685
U.S. agency notes	900		—		2		898
Commercial paper (2,3)	522		—		—		522
Foreign government agency securities	50		—		1		49
Non-agency commercial mortgage-backed securities	14		—		—		14
Total available for sale securities	$	66,735	$	72	$	229	$	66,578
Held to maturity securities
U.S. agency mortgage-backed securities	$	118,064	$	217	$	2,188	$	116,093
Asset-backed securities (1)	18,502		83		39		18,546
Corporate debt securities (2)	4,477		2		47		4,432
U.S. state and municipal securities	1,327		24		3		1,348
Non-agency commercial mortgage-backed securities	1,156		3		17		1,142
U.S. Treasury securities	223		—		6		217
Certificates of deposit	200		1		—		201
Foreign government agency securities	50		—		1		49
Other	10		—		—		10
Total held to maturity securities	$	144,009	$	330	$	2,301	$	142,038
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	20,915	$	53	$	39	$	20,929
U.S. Treasury securities	9,583		—		83		9,500
Asset-backed securities (1)	9,019		34		6		9,047
Corporate debt securities (2)	6,154		16		1		6,169
Certificates of deposit	2,040		2		1		2,041
U.S. agency notes	1,914		—		8		1,906
Commercial paper (2)	313		—		—		313
Foreign government agency securities	51		—		1		50
Non-agency commercial mortgage-backed securities	40		—		—		40
Total available for sale securities	$	50,029	$	105	$	139	$	49,995
Held to maturity securities
U.S. agency mortgage-backed securities	$	101,197	$	290	$	1,034	$	100,453
Asset-backed securities (1)	12,937		127		2		13,062
Corporate debt securities (2)	4,078		13		5		4,086
U.S. state and municipal securities	1,247		57		—		1,304
Non-agency commercial mortgage-backed securities	994		10		5		999
U.S. Treasury securities	223		—		3		220
Certificates of deposit	200		—		—		200
Foreign government agency securities	50		—		1		49
Total held to maturity securities	$	120,926	$	497	$	1,050	$	120,373

⁽¹⁾ Approximately 36% and 42% of asset-backed securities held as of December 31, 2018 and 2017, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 42% and 40% of the asset-backed securities held as of December 31, 2018 and 2017, respectively.

⁽²⁾ As of December 31, 2018 and 2017, approximately 26% and 41%, respectively, of the total AFS and HTM investments in corporate debt securities and commercial paper were issued by institutions in the financial services industry. Approximately 18% and 22% of the holdings of these securities were issued by institutions in the information technology industry as of December 31, 2018 and 2017, respectively.

⁽³⁾ Included in cash and cash equivalents on the consolidated balance sheet, but excluded from this table is $4.9 billion of AFS commercial paper. These holdings have maturities of three months or less and an aggregate market value equal to amortized cost.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

During 2017, the Company transferred $24.7 billion of investment securities from the AFS category to the HTM category. These securities had a total net unrealized loss of $227 million before income tax in AOCI on the date of transfer. The transfer was made to mitigate the potential volatility in regulatory capital from changes in market values in the AFS securities portfolio and the related impact to AOCI in anticipation of Schwab crossing $250 billion in consolidated assets, which occurred in the second quarter of 2018. The year after a company surpasses $250 billion in consolidated assets, it can no longer exclude AOCI from regulatory capital. The transfer included U.S. agency mortgage-backed securities, asset-backed securities, corporate debt securities, and U.S. state and municipal securities. The unrealized holding gains and losses on the date of transfer, are reported as a separate component of AOCI and as an adjustment to the purchase premium and discount on the securities transferred. The separate component of AOCI is amortized or accreted into interest income over the remaining life of the securities transferred, offsetting the revised premium or discount amortization or accretion on the transferred assets.

At December 31, 2018, certain banking subsidiaries had pledged securities with a fair value of $27.2 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13). CSB also pledges certain investment securities as collateral to secure borrowing capacity at the Federal Reserve Bank discount window, and had pledged securities with a fair value of $7.9 billion as collateral for this facility at December 31, 2018. CSB also pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $906 million at December 31, 2018.

- 71 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:

	Less than 12 months				12 months or longer				Total
December 31, 2018	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale securities
U.S. agency mortgage-backed securities	$	9,529	$	32	$	4,257	$	50	$	13,786	$	82
U.S. Treasury securities	4,951		6		7,037		102		11,988		108
Asset-backed securities	4,050		9		837		6		4,887		15
Corporate debt securities	3,561		19		254		1		3,815		20
Certificates of deposit	1,217		1		150		—		1,367		1
U.S. agency notes	195		—		304		2		499		2
Foreign government agency securities	—		—		49		1		49		1
Total	$	23,503	$	67	$	12,888	$	162	$	36,391	$	229
Held to maturity securities
U.S. agency mortgage-backed securities	$	29,263	$	222	$	56,435	$	1,966	$	85,698	$	2,188
Asset-backed securities	6,795		35		376		4		7,171		39
Corporate debt securities	2,909		29		1,066		18		3,975		47
U.S. state and municipal securities	77		2		18		1		95		3
Non-agency commercial mortgage-backed securities	283		2		632		15		915		17
U.S. Treasury securities	—		—		218		6		218		6
Foreign government agency securities	—		—		49		1		49		1
Total	$	39,327	$	290	$	58,794	$	2,011	$	98,121	$	2,301
Total securities with unrealized losses (1)	$	62,830	$	357	$	71,682	$	2,173	$	134,512	$	2,530
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	5,696	$	21	$	2,548	$	18	$	8,244	$	39
U.S. Treasury securities	4,625		11		4,875		72		9,500		83
Asset-backed securities	904		3		424		3		1,328		6
Corporate debt securities	736		1		120		—		856		1
Certificates of deposit	799		1		—		—		799		1
U.S. agency notes	99		—		1,807		8		1,906		8
Foreign government agency securities	50		1		—		—		50		1
Total	$	12,909	$	38	$	9,774	$	101	$	22,683	$	139
Held to maturity securities
U.S. agency mortgage-backed securities	$	42,102	$	310	$	24,753	$	724	$	66,855	$	1,034
Asset-backed securities	1,124		2		72		—		1,196		2
Corporate debt securities	1,078		5		—		—		1,078		5
Non-agency commercial mortgage-backed securities	607		5		—		—		607		5
U.S. Treasury securities	220		3		—		—		220		3
Foreign government agency securities	49		1		—		—		49		1
Total	$	45,180	$	326	$	24,825	$	724	$	70,005	$	1,050
Total securities with unrealized losses (2)	$	58,089	$	364	$	34,599	$	825	$	92,688	$	1,189

⁽¹⁾ The number of investment positions with unrealized losses totaled 441 for AFS securities and 1,524 for HTM securities.

⁽²⁾ The number of investment positions with unrealized losses totaled 251 for AFS securities and 938 for HTM securities.

- 72 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

At December 31, 2018, substantially all securities in the investment portfolios were rated investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises.

Management evaluates whether investment securities are OTTI on a quarterly basis as described in Note 2. Amounts recognized as OTTI in earnings or other comprehensive income were immaterial in 2018, 2017, and 2016. As of December 31, 2018 and 2017, the Company did not hold any securities on which OTTI was previously recognized.

In the below table, mortgage-backed securities have been allocated to maturity groupings based on final contractual maturities. As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below.

The maturities of AFS and HTM securities are as follows:

December 31, 2018	Within 1 year			After 1 year through 5 years			After 5 years through 10 years			After 10 years			Total
Available for sale securities
U.S. agency mortgage-backed securities	$	153		$	3,481		$	12,100		$	9,822		$	25,556
U.S. Treasury securities	14,164			4,138			—			—			18,302
Asset-backed securities	—			8,445			1,240			400			10,085
Corporate debt securities	1,755			5,712			—			—			7,467
Certificates of deposit	1,984			1,701			—			—			3,685
U.S. agency notes	499			399			—			—			898
Commercial paper	522			—			—			—			522
Foreign government agency securities	—			49			—			—			49
Non-agency commercial mortgage-backed securities	—			—			—			14			14
Total fair value	$	19,077		$	23,925		$	13,340		$	10,236		$	66,578
Total amortized cost	$	19,111		$	24,010		$	13,382		$	10,232		$	66,735
Weighted-average yield (1)	1.80		%	2.71		%	2.61		%	2.70		%	2.43		%
Held to maturity securities
U.S. agency mortgage-backed securities	$	256		$	14,960		$	34,008		$	66,869		$	116,093
Asset-backed securities	—			2,106			9,144			7,296			18,546
Corporate debt securities	137			3,550			745			—			4,432
U.S. state and municipal securities	—			59			309			980			1,348
Non-agency commercial mortgage-backed securities	—			356			—			786			1,142
U.S. Treasury securities	—			—			217			—			217
Certificates of deposit	—			201			—			—			201
Foreign government agency securities	—			49			—			—			49
Other	—			—			—			10			10
Total fair value	$	393		$	21,281		$	44,423		$	75,941		$	142,038
Total amortized cost	$	395		$	21,446		$	44,925		$	77,243		$	144,009
Weighted-average yield (1)	1.97		%	2.56		%	2.69		%	2.63		%	2.63		%

⁽¹⁾ The weighted-average yield is computed using the amortized cost at December 31, 2018.

Proceeds and gross realized gains and losses from sales of AFS securities are as follows:

Year Ended December 31,	2018		2017		2016
Proceeds	$	115	$	8,617	$	5,537
Gross realized gains	—		12		4
Gross realized losses	—		—		—

- 73 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

7. Bank Loans and Related Allowance for Loan Losses

The composition of bank loans and delinquency analysis by loan type is as follows:

December 31, 2018	Current		30-59 days past due		60-89 days past due		>90 days past due and other nonaccrual loans (3)		Total past due and other nonaccrual loans		Total loans		Allowance for loan losses		Total bank loans – net
First Mortgages (1,2)	$	10,349	$	21	$	2	$	12	$	35	$	10,384	$	14	$	10,370
HELOCs (1,2)	1,493		3		1		8		12		1,505		5		1,500
Pledged asset lines	4,558		3		—		—		3		4,561		—		4,561
Other	180		—		—		—		—		180		2		178
Total bank loans	$	16,580	$	27	$	3	$	20	$	50	$	16,630	$	21	$	16,609
December 31, 2017
First Mortgages (1,2)	$	9,983	$	14	$	2	$	17	$	33	$	10,016	$	16	$	10,000
HELOCs (1,2)	1,928		—		3		12		15		1,943		8		1,935
Pledged asset lines	4,361		4		4		—		8		4,369		—		4,369
Other	176		—		—		—		—		176		2		174
Total bank loans	$	16,448	$	18	$	9	$	29	$	56	$	16,504	$	26	$	16,478

⁽¹⁾ First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $73 million and $77 million at December 31, 2018 and 2017, respectively.

⁽²⁾ At December 31, 2018 and 2017, 47% and 48%, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.

⁽³⁾ There were no loans accruing interest that were contractually 90 days or more past due at December 31, 2018 or 2017.

At December 31, 2018, CSB had pledged $11.1 billion of First Mortgages and HELOCs as collateral to secure borrowing capacity on a secured credit facility with the FHLB (see Note 13).

Substantially all of the bank loans were collectively evaluated for impairment at both December 31, 2018 and 2017.

Changes in the allowance for loan losses were as follows:

	December 31, 2018												December 31, 2017											December 31, 2016
	First Mortgages			HELOCs			Other			Total (1)			First Mortgages			HELOCs			Other		Total (1)			First Mortgages			HELOCs			Other		Total (1)
Balance at beginning of year	$	16		$	8		$	2		$	26		$	17		$	8		$	1	$	26		$	20		$	11		—		$	31
Charge-offs	—			—			(1		)	(1		)	(2		)	(1		)	—		(3		)	(1		)	(1		)	—		(2		)
Recoveries	1			1			—			2			1			1			1		3			1			1			—		2
Provision for loan losses	(3		)	(4		)	1			(6		)	—			—			—		—			(3		)	(3		)	1		(5		)
Balance at end of year	$	14		$	5		$	2		$	21		$	16		$	8		$	2	$	26		$	17		$	8		$	1	$	26

⁽¹⁾All PALs were fully collateralized by securities with fair values in excess of borrowings at December 31, 2018, 2017, and 2016.

A summary of impaired bank loan-related assets is as follows:

December 31,	2018		2017
Nonaccrual loans (1)	$	21	$	28
Other real estate owned (2)	3		3
Total nonperforming assets	24		31
Troubled debt restructurings	4		11
Total impaired assets	$	28	$	42

⁽¹⁾ Nonaccrual loans include nonaccrual troubled debt restructurings.

⁽²⁾ Included in Other assets on the consolidated balance sheets.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Credit Quality

In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following:

• Year of origination;

• Borrower FICO scores at origination (Origination FICO);

• Updated borrower FICO scores (Updated FICO);

• Loan-to-value (LTV) ratios at origination (Origination LTV); and

• Estimated current LTV ratios (Estimated Current LTV).

Borrowers’ FICO scores are provided by an independent third-party credit reporting service and updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index.

- 75 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The credit quality indicators of the bank loan portfolio are detailed below:

December 31, 2018	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,396	776	0.04	%
>70% – <90%	985		769	0.41	%
>90% – <100%	2		717	—
>100%	1		753	—
Total	$	10,384	775	0.07	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,416	770	0.13	%
>70% – <90%	80		752	0.60	%
>90% – <100%	6		729	3.36	%
>100%	3		702	—
Total	$	1,505	769	0.17	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,561	766	—
December 31, 2017	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,046	775	0.09	%
>70% – <90%	961		769	0.46	%
>90% – <100%	5		714	10.49	%
>100%	4		713	6.23	%
Total	$	10,016	775	0.14	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,773	772	0.18	%
>70% – <90%	148		755	0.84	%
>90% – <100%	14		742	2.85	%
>100%	8		718	4.91	%
Total	$	1,943	770	0.27	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,369	765	—

⁽¹⁾ Represents the LTV for the full line of credit (drawn and undrawn).

- 76 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

December 31, 2018	First Mortgages		HELOCs
Year of origination
Pre-2014	$	1,979	$	1,051
2014	408		89
2015	1,050		106
2016	2,606		95
2017	2,366		99
2018	1,975		65
Total	$	10,384	$	1,505
Origination FICO
<620	$	5	$	—
620 – 679	83		8
680 – 739	1,626		282
>740	8,670		1,215
Total	$	10,384	$	1,505
Origination LTV
<70%	$	7,815	$	1,064
>70% – <90%	2,564		434
>90% – <100%	5		7
Total	$	10,384	$	1,505
December 31, 2017	First Mortgages		HELOCs
Year of origination
Pre-2014	$	2,804	$	1,496
2014	530		116
2015	1,218		128
2016	2,886		111
2017	2,578		92
Total	$	10,016	$	1,943
Origination FICO
<620	$	6	$	1
620 – 679	89		10
680 – 739	1,569		365
>740	8,352		1,567
Total	$	10,016	$	1,943
Origination LTV
<70%	$	7,569	$	1,360
>70% – <90%	2,441		574
>90% – <100%	6		9
Total	$	10,016	$	1,943

At December 31, 2018, First Mortgage loans of $9.4 billion had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter. Approximately 31% of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 64% of the balance of these interest-only loans are not scheduled to reset for three or more years. Schwab’s mortgage loans do not include interest terms described as temporary introductory rates below current market rates.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The HELOC product has a 30-year loan term with an initial draw period of ten years from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a 20-year amortizing loan. The interest rate during the initial draw period and the 20-year amortizing period is a floating rate based on the prime rate plus a margin. HELOCs that convert to an amortizing loan may experience higher delinquencies and higher loss rates than those in the initial draw period. The allowance for loan loss methodology takes this increased inherent risk into consideration.

The following table presents when current outstanding HELOCs will convert to amortizing loans:

December 31, 2018	Balance
Converted to amortizing loan by period end	$	677
Within 1 year	83
> 1 year – 3 years	118
> 3 years – 5 years	173
> 5 years	454
Total	$	1,505

At December 31, 2018, $1.2 billion of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At December 31, 2018, the borrowers on approximately 51% of HELOC loan balances outstanding only paid the minimum amount due.

8. Equipment, Office Facilities, and Property

Equipment, office facilities, and property are detailed below:

December 31,	2018			2017
Software	$	1,699		$	1,490
Buildings	945			810
Leasehold improvements	367			357
Construction in progress	248			142
Furniture and equipment	219			193
Information technology equipment	206			326
Land	179			167
Telecommunications equipment	69			66
Total equipment, office facilities, and property	3,932			3,551
Accumulated depreciation and amortization	(2,163		)	(2,080		)
Total equipment, office facilities, and property — net	$	1,769		$	1,471

Depreciation and amortization expense for equipment, office facilities, and property was $277 million, $232 million, and $197 million in 2018, 2017, and 2016, respectively.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

9. Goodwill

The changes in the carrying amount of goodwill, as allocated to our reportable segments, are presented in the following table:

	Investor Services		Advisor Services		Total
Balance at December 31, 2016	$	1,096	$	131	$	1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2017	1,096		131		1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2018	$	1,096	$	131	$	1,227

As of our annual testing date, we performed a qualitative assessment of each of the Company’s reporting units. Based on the Company’s analysis, fair value significantly exceeded the carrying value for all reporting units and we concluded that goodwill was not impaired. Schwab did not recognize any goodwill impairment in any of the years presented.

10.    Other Assets

The components of other assets are as follows:

December 31,	2018		2017
Interest and dividends receivable	$	586	$	413
Other investments (1)	428		376
Accounts receivable (2)	410		461
Capitalized contract costs, net	250		—
Intangible assets, net of accumulated amortization of $299 and $270 (3)	152		108
Prepaid expenses	122		126
FHLB stock (4)	32		405
Deferred tax asset — net	3		76
Other	63		92
Total other assets	$	2,046	$	2,057

⁽¹⁾ Predominantly CRA-related, including LIHTC investments.

⁽²⁾ Accounts receivable predominantly includes receivables from contracts with customers and a receivable from our loan servicer.

⁽³⁾ Exclusive of indefinite-lived intangible assets of $74 million and $1 million at December 31, 2018 and 2017, respectively, future amortization over the next five years and thereafter is expected to total $77 million. Amortization expense for intangible assets was $29 million in 2018, and $37 million in both 2017 and 2016.

⁽⁴⁾ Investments in stock of the FHLB can only be sold to the issuer at its par value. Any cash dividends received from these investments are recognized as interest revenue in the consolidated statements of income.

11. Variable Interest Entities

As of December 31, 2018 and 2017, all of Schwab’s involvement with VIEs is through CSB’s CRA-related investments and most of those related to LIHTC investments. As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties. CSB receives tax credits and other tax benefits for these investments.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Aggregate assets, liabilities and maximum exposure to loss

The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:

	December 31, 2018						December 31, 2017
	Aggregate assets		Aggregate liabilities		Maximum exposure to loss		Aggregate assets		Aggregate liabilities		Maximum exposure to loss
LIHTC Investments (1)	$	338	$	188	$	338	$	304	$	203	$	304
Other CRA Investments (2)	70		—		124		69		—		125
Total	$	408	$	188	$	462	$	373	$	203	$	429

⁽¹⁾ Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets.

⁽²⁾ Other CRA investments are recorded using either the adjusted cost method, equity method, or as HTM securities. Aggregate assets are included in HTM securities, bank loans – net, or other assets on the consolidated balance sheets.

Schwab’s maximum exposure to loss would result from the loss of the investments, including any committed amounts. During the years ended December 31, 2018 and 2017, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide. CSB’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and CSB expects to pay substantially all of these commitments between 2019 and 2022.

12. Bank Deposits

Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows:

December 31,	2018		2017
Interest-bearing deposits:
Deposits swept from brokerage accounts	$	212,311	$	148,212
Checking	12,523		13,388
Savings and other	5,827		7,264
Total interest-bearing deposits	230,661		168,864
Non-interest-bearing deposits	762		792
Total bank deposits	$	231,423	$	169,656

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

13.    Borrowings

CSC’s Senior Notes are unsecured obligations and rank equally with the other unsecured senior debt. CSC may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes and quarterly for the floating-rate Senior Notes. The following table lists long-term debt by instrument outstanding as of December 31, 2018 and 2017.

	Date of	Principal Amount Outstanding
	Issuance	2018			2017
Fixed-Rate Senior Notes:
1.500% due March 10, 2018 (1)	03/10/15	$	—		$	625
2.200% due July 25, 2018 (2)	07/25/13	—			275
4.450% due July 22, 2020	07/22/10	700			700
3.250% due May 21, 2021	05/22/18	600			—
3.225% due September 1, 2022	08/29/12	256			256
2.650% due January 25, 2023	12/07/17	800			800
3.550% due February 1, 2024	10/31/18	500			—
3.000% due March 10, 2025	03/10/15	375			375
3.850% due May 21, 2025	05/22/18	750			—
3.450% due February 13, 2026	11/13/15	350			350
3.200% due March 2, 2027	03/02/17	650			650
3.200% due January 25, 2028	12/07/17	700			700
4.000% due February 1, 2029	10/31/18	600			—
Floating-rate Senior Notes:
Three-month LIBOR + 0.32% due May 21, 2021	05/22/18	600			—
Total Senior Notes		6,881			4,731
5.450% Finance lease obligation (3)	06/04/04	52			61
Unamortized discount — net		(15		)	(14		)
Debt issuance costs		(40		)	(25		)
Total long-term debt		$	6,878		$	4,753

໿

⁽¹⁾ Redeemed on February 8, 2018.

⁽²⁾ Redeemed on June 25, 2018.

⁽³⁾ Schwab has a finance lease obligation related to an office building and land under a 20-year lease. The remaining finance lease obligation is being reduced by a portion of the lease payments over the remaining lease term through June 30, 2024.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Annual maturities on long-term debt outstanding at December 31, 2018, are as follows:

	Maturities
2019	$	8
2020	709
2021	1,209
2022	266
2023	810
Thereafter	3,931
Total maturities	6,933
Unamortized discount — net	(15		)
Debt issuance costs	(40		)
Total long-term debt	$	6,878

Short-term borrowings: Certain banking subsidiaries maintain secured credit facilities with the FHLB. Amounts available under these facilities are dependent on the amount of our First Mortgages, HELOCs, and the fair value of certain of their investment securities that are pledged as collateral. As of December 31, 2018, the collateral pledged provided a total borrowing capacity of $35.5 billion of which no amounts were outstanding. As of December 31, 2017, the collateral pledged provided a total borrowing capacity of $32.3 billion of which $15.0 billion was outstanding, with a 1.53% weighted average fixed interest rate. The Company could increase its borrowing capacity by pledging additional securities.

As a condition of the FHLB borrowings, we are required to hold FHLB stock, with the investment recorded in other assets on the consolidated balance sheets. The investment in FHLB was $32 million and $405 million at December 31, 2018 and 2017, respectively.

14. Commitments and Contingencies

Loan Portfolio: CSB provides a co-branded loan origination program for CSB clients (the Program) with Quicken Loans, Inc. (Quicken Loans^®). Pursuant to the Program, Quicken Loans originates and services First Mortgages and HELOCs for CSB clients. Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Quicken Loans. CSB purchased First Mortgages of $2.1 billion and $2.8 billion during 2018 and 2017, respectively. CSB purchased HELOCs with commitments of $395 million and $461 million during 2018 and 2017, respectively.

The Company’s commitments to extend credit on bank lines of credit and to purchase First Mortgages are as follows:

December 31,	2018		2017
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit	$	11,046	$	10,060
Commitments to purchase First Mortgage loans	268		308
Total	$	11,314	$	10,368

- 82 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Operating leases: Schwab has non-cancelable operating leases for office space and equipment. As of December 31, 2018, future annual minimum rental commitments under these leases, net of contractual subleases are as follows:

	Operating Leases		Subleases		Net
2019	$	131	$	4	$	127
2020	125		4		121
2021	101		4		97
2022	79		2		77
2023	72		1		71
Thereafter	282		—		282
Total	$	790	$	15	$	775

Certain leases contain provisions for renewal options, purchase options, and rent escalations based on increases in certain costs incurred by the lessor. Rent expense relating to operating leases was $146 million, $136 million, and $123 million in 2018, 2017, and 2016, respectively.

Purchase obligations: Schwab has purchase obligations for services such as advertising and marketing, telecommunications, professional services, and hardware- and software-related agreements.As of December 31, 2018, the Company has purchase obligations as follows:

2019	$	475
2020	232
2021	71
2022	32
2023	22
Thereafter	170
Total	$	1,002

Guarantees and indemnifications: Schwab has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation– a clearing house that establishes margin requirements on these transactions. We partially satisfy the margin requirements by arranging unsecured standby LOCs, in favor of the Options Clearing Corporation, which are issued by several banks.At December 31, 2018, the aggregate face amount of these LOCs totaled $225 million. There were no funds drawn under any of these LOCs at December 31, 2018. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral.

Schwab also provides guarantees to securities clearing houses and exchanges under standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing houses and exchanges, other members would be required to meet shortfalls. Schwab’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. The potential requirement for the Company to make payments under these arrangements is remote. Accordingly, no liability has been recognized for these guarantees.

Legal contingencies: Schwab is subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. The Company is also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies.

Predicting the outcome of a litigation or regulatory matter is inherently difficult, requiring significant judgment and evaluation of various factors, including the procedural status of the matter and any recent developments; prior experience and the experience of others in similar cases; available defenses, including potential opportunities to dispose of a case on the merits or procedural grounds before trial (e.g., motions to dismiss or for summary judgment); the progress of fact discovery; the opinions of counsel and experts regarding potential damages; and potential opportunities for settlement and the status of

- 83 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

any settlement discussions. It may not be reasonably possible to estimate a range of potential liability until the matter is closer to resolution – pending, for example, further proceedings, the outcome of key motions or appeals, or discussions among the parties. Numerous issues may have to be developed, such as discovery of important factual matters and determination of threshold legal issues, which may include novel or unsettled questions of law. Reserves are established or adjusted or further disclosure and estimates of potential loss are provided as the matter progresses and more information becomes available.

Schwab believes it has strong defenses in all significant matters currently pending and is contesting liability and any damages claimed. Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation. Described below are certain matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results, or cash flows of the Company.

Crago Order Routing Litigation: On July 13, 2016, a securities class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of a putative class of customers executing equity orders through CS&Co. The lawsuit names CS&Co and CSC as defendants and alleges that an agreement under which CS&Co routed orders to UBS Securities LLC between July 13, 2011 and December 31, 2014 violated CS&Co’s duty to seek best execution. Plaintiffs seek unspecified damages, interest, injunctive and equitable relief, and attorneys’ fees and costs. After a first amended complaint was dismissed with leave to amend, plaintiffs filed a second amended complaint on August 14, 2017. Defendants again moved to dismiss, and in a decision issued December 5, 2017, the court denied the motion. Defendants have answered the complaint to deny all allegations, and intend to vigorously contest the lawsuit.

Total Bond Market Fund™ Litigation: As disclosed previously, the Company had been responding to a class action lawsuit in the U.S. District Court for the Northern District of California on behalf of investors in the Schwab Total Bond Market Fund. On December 13, 2018, following dismissal of its fourth amended complaint and unsuccessful appeals to the Ninth Circuit Court of Appeals, plaintiff stipulated and agreed to dismissal of all claims, concluding the case.

15. Financial Instruments Subject to Off-Balance Sheet Credit Risk

Off-Balance Sheet Credit Risk

Resale agreements: Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value at or in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The collateral provided under these resale agreements is utilized to meet obligations under broker-dealer client protection rules, which place limitations on our ability to access such segregated securities. For Schwab to repledge or sell this collateral, it would be required to deposit cash and/or securities of an equal amount into its segregated reserve bank accounts in order to meet its segregated cash and investment requirement. Schwab’s resale agreements are not subject to master netting arrangements.

Securities lending: Schwab loans brokerage client securities temporarily to other brokers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not return the loaned securities or provide additional cash collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy our client obligations. Schwab mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities. The fair value of these borrowed securities was$99 million and $215 million at December 31, 2018 and 2017, respectively. All of our securities lending transactions are

- 84 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

through a program with a clearing organization, which guarantees the return of cash to us and is subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities lending transactions. Therefore, the securities loaned and securities borrowed are presented gross in the consolidated balance sheets.

The following table presents information about our resale agreements and securities lending activity depicting the potential effect of rights of setoff between these recognized assets and recognized liabilities atDecember 31, 2018 and 2017.

							Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Counterparty Offsetting			Collateral				Net Amount
December 31, 2018
Assets
Resale agreements (1)	$	7,195	$	—	$	7,195	$	—		$	(7,195	)	(2)	$	—
Securities borrowed (3)	101		—		101		(98		)	(3		)		—
Total	$	7,296	$	—	$	7,296	$	(98	)	$	(7,198	)		$	—
Liabilities
Securities loaned (4,5)	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
Total	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
December 31, 2017
Assets
Resale agreements (1)	$	6,596	$	—	$	6,596	$	—		$	(6,596	)	(2)	$	—
Securities borrowed (3)	222		—		222		(199		)	(22		)		1
Total	$	6,818	$	—	$	6,818	$	(199	)	$	(6,618	)		$	1
Liabilities
Securities loaned (4,5)	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97
Total	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97

⁽¹⁾ Included in cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets.

⁽²⁾ Actual collateral was greater than or equal to 102% of the related assets.AtDecember 31, 2018 and 2017, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was$7.4 billion and $6.7 billion, respectively.

⁽³⁾ Included in receivables from brokers, dealers, and clearing organizations in the consolidated balance sheets.

⁽⁴⁾ Included in payables to brokers, dealers, and clearing organizations in the consolidated balance sheets. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned atDecember 31, 2018 and 2017.

⁽⁵⁾ Securities loaned are predominantly comprised of equity securities held in client brokerage accounts with overnight and continuous remaining contractual maturities.

Client trade settlement: Schwab is obligated to settle transactions with brokers and other financial institutions even if our clients fail to meet their obligations to us. Clients are required to complete their transactions on settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, we may incur losses. We have established procedures to reduce this risk by requiring deposits from clients in excess of amounts prescribed by regulatory requirements for certain types of trades, and therefore the potential to make payments under these client transactions is remote. Accordingly, no liability has been recognized for these transactions.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Margin lending: Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, and the amounts that we had pledged:

December 31,	2018		2017
Fair value of client securities available to be pledged	$	26,628	$	25,905
Fair value of client securities pledged for:
Fulfillment of requirements with the Options Clearing Corporation (1)	2,315		2,280
Fulfillment of client short sales	1,292		2,011
Securities lending to other broker-dealers	974		784
Total collateral pledged	$	4,581	$	5,075

Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $97 million as of December 31, 2018 and $78 million as of December 31, 2017.

⁽¹⁾   Client securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.

- 86 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

16.    Fair Values of Assets and Liabilities

For a description of the fair value hierarchy and Schwab’s fair value methodologies, including the use of independent third-party pricing services, see Note 2. The Company did not adjust prices received from the primary independent third-party pricing service at December 31, 2018 or 2017.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the fair value hierarchy for assets measured at fair value on a recurring basis.Liabilities recorded at fair value were not material, and therefore are not included in the following tables:

December 31, 2018	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	3,429	$	—	$	—	$	3,429
Commercial paper	—		4,863		—		4,863
Total cash equivalents	3,429		4,863		—		8,292
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		1,396		—		1,396
U.S. Government securities	—		3,275		—		3,275
Total investments segregated and on deposit for regulatory purposes	—		4,671		—		4,671
Other securities owned:
Equity and bond mutual funds	441		—		—		441
State and municipal debt obligations	—		39		—		39
Equity, U.S. Government and corporate debt, and other securities	3		30		—		33
Schwab Funds® money market funds	26		—		—		26
Total other securities owned	470		69		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		25,556		—		25,556
U.S. Treasury securities	—		18,302		—		18,302
Asset-backed securities	—		10,085		—		10,085
Corporate debt securities	—		7,467		—		7,467
Certificates of deposit	—		3,685		—		3,685
U.S. agency notes	—		898		—		898
Commercial paper	—		522		—		522
Foreign government agency securities	—		49		—		49
Non-agency commercial mortgage-backed securities	—		14		—		14
Total available for sale securities	—		66,578		—		66,578
Total	$	3,899	$	76,181	$	—	$	80,080

- 87 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

December 31, 2017	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	2,727	$	—	$	—	$	2,727
Total cash equivalents	2,727		—		—		2,727
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		2,198		—		2,198
U.S. Government securities	—		3,658		—		3,658
Total investments segregated and on deposit for regulatory purposes	—		5,856		—		5,856
Other securities owned:
Equity and bond mutual funds	318		—		—		318
Schwab Funds® money market funds	135		—		—		135
State and municipal debt obligations	—		52		—		52
Equity, U.S. Government and corporate debt, and other securities	2		32		—		34
Total other securities owned	455		84		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		20,929		—		20,929
U.S. Treasury securities	—		9,500		—		9,500
Asset-backed securities	—		9,047		—		9,047
Corporate debt securities	—		6,169		—		6,169
Certificates of deposit	—		2,041		—		2,041
U.S. agency notes	—		1,906		—		1,906
Commercial paper	—		313		—		313
Foreign government mortgage-backed securities	—		50		—		50
Non-agency commercial mortgage-backed securities	—		40		—		40
Total available for sale securities	—		49,995		—		49,995
Total	$	3,182	$	55,935	$	—	$	59,117

- 88 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Fair Value of Other Financial Instruments

The following tables present the fair value hierarchy for other financial instruments:

December 31, 2018	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	19,646	$	—	$	19,646	$	—	$	19,646
Cash and investments segregated and on deposit for regulatory purposes	8,886		—		8,886		—		8,886
Receivables from brokers, dealers, and clearing organizations	553		—		553		—		553
Receivables from brokerage clients — net	21,641		—		21,641		—		21,641
Held to maturity securities:
U.S. agency mortgage-backed securities	118,064		—		116,093		—		116,093
Asset-backed securities	18,502		—		18,546		—		18,546
Corporate debt securities	4,477		—		4,432		—		4,432
U.S. state and municipal securities	1,327		—		1,348		—		1,348
Non-agency commercial mortgage-backed securities	1,156		—		1,142		—		1,142
U.S. Treasury securities	223		—		217		—		217
Certificates of deposit	200		—		201		—		201
Foreign government agency securities	50		—		49		—		49
Other	10		—		10		—		10
Total held to maturity securities	144,009		—		142,038		—		142,038
Bank loans — net:
First Mortgages	10,370		—		10,193		—		10,193
HELOCs	1,500		—		1,583		—		1,583
Pledged asset lines	4,561		—		4,561		—		4,561
Other	178		—		178		—		178
Total bank loans — net	16,609		—		16,515		—		16,515
Other assets	460		—		460		—		460
Total	$	211,804	$	—	$	209,739	$	—	$	209,739
Liabilities
Bank deposits	$	231,423	$	—	$	231,423	$	—	$	231,423
Payables to brokers, dealers, and clearing organizations	1,831		—		1,831		—		1,831
Payables to brokerage clients	32,726		—		32,726		—		32,726
Accrued expenses and other liabilities	1,370		—		1,370		—		1,370
Long-term debt	6,878		—		6,827		—		6,827
Total	$	274,228	$	—	$	274,177	$	—	$	274,177

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

December 31, 2017	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	11,490	$	—	$	11,490	$	—	$	11,490
Cash and investments segregated and on deposit for regulatory purposes	9,277		—		9,277		—		9,277
Receivables from brokers, dealers, and clearing organizations	649		—		649		—		649
Receivables from brokerage clients — net	20,568		—		20,568		—		20,568
Held to maturity securities:
U.S. agency mortgage-backed securities	101,197		—		100,453		—		100,453
Asset-backed securities	12,937		—		13,062		—		13,062
Corporate debt securities	4,078		—		4,086		—		4,086
U.S. state and municipal securities	1,247		—		1,304		—		1,304
Non-agency commercial mortgage-backed securities	994		—		999		—		999
U.S. Treasury securities	223		—		220		—		220
Certificates of deposit	200		—		200		—		200
Foreign government agency securities	50		—		49		—		49
Total held to maturity securities	120,926		—		120,373		—		120,373
Bank loans — net:
First Mortgages	10,000		—		9,917		—		9,917
HELOCs	1,935		—		2,025		—		2,025
Pledged asset lines	4,369		—		4,369		—		4,369
Other	174		—		174		—		174
Total bank loans — net	16,478		—		16,485		—		16,485
Other assets	781		—		781		—		781
Total	$	180,169	$	—	$	179,623	$	—	$	179,623
Liabilities
Bank deposits	$	169,656	$	—	$	169,656	$	—	$	169,656
Payables to brokers, dealers, and clearing organizations	1,287		—		1,287		—		1,287
Payables to brokerage clients	31,243		—		31,243		—		31,243
Accrued expenses and other liabilities	1,463		—		1,463		—		1,463
Short-term borrowings	15,000		—		15,000		—		15,000
Long-term debt	4,753		—		4,811		—		4,811
Total	$	223,402	$	—	$	223,460	$	—	$	223,460

- 90 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

17.    Stockholders’ Equity

CSC did not issue any shares of common stock through external offerings during 2018, 2017, or 2016.

On October 25, 2018, CSC publicly announced that its Board of Directors terminated the existing two share repurchase authorizations and replaced them with a new authorization to repurchase up to $1.0 billion of common stock. CSC repurchased 22 million shares for $1.0 billion in 2018, completing all repurchases under this authorization. There were no repurchases of CSC’s common stock in 2018 prior to the fourth quarter, or in 2017.

CSC was authorized to issue 9,940,000 shares of preferred stock, $0.01 par value, at December 31, 2018 and 2017. The following is a summary of CSC’s non-cumulative perpetual preferred stock outstanding as of such dates:

										Dividend Rate in Effect at December 31, 2018			Date at Which Dividend Rate Becomes Floating	Floating Annual Rate of Three-month LIBOR plus:
	Shares Issued and Outstanding (In thousands) at December 31,		Liquidation Preference Per Share		Carrying Value at December 31,							Earliest Redemption Date
	2018 (1)	2017 (1)			2018		2017		Issue Date
Fixed-rate:
Series C	600	600	$	1,000	$	585	$	585	08/03/15	6.000	%	12/01/20	N/A	N/A
Series D	750	750	1,000		728		728		03/07/16	5.950	%	06/01/21	N/A	N/A
Fixed-to-floating-rate:
Series A	400	400	1,000		397		397		01/26/12	7.000	%	02/01/22	02/01/22	4.820	%
Series E	6	6	100,000		591		591		10/31/16	4.625	%	03/01/22	03/01/22	3.315	%
Series F	5	5	100,000		492		492		10/31/17	5.000	%	12/01/27	12/01/27	2.575	%
Total Preferred Stock	1,761	1,761			$	2,793	$	2,793

⁽¹⁾ Represented by depositary shares, except for Series A.

N/A Not applicable.

Dividends on CSC’s preferred stock are not cumulative and will only be paid on a series of preferred stock for a dividend period if declared by CSC’s Board of Directors. Under the terms of each series of preferred stock, CSC’s ability to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock or any preferred stock ranking on parity with or junior to the series of preferred stock, is subject to restrictions in the event that CSC does not declare and either pay or set aside a sum sufficient for payment of dividends on the series of preferred stock for the immediately preceding dividend period.

Dividends on fixed-rate preferred stock are payable quarterly. Dividends on fixed-to-floating-rate preferred stock are payable semiannually while at a fixed rate, and will become payable quarterly after converting to a floating rate.

Redemption Rights

Each series of CSC’s stock may be redeemed at CSC’s option on any dividend payment date on or after the earliest redemption date for that series. All outstanding preferred stock series may also be redeemed following a “capital treatment event,” as described in the terms of each series set forth in the relevant certificate of designations. Any redemption of CSC’s preferred stock is subject to approval from the Federal Reserve.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

18. Accumulated Other Comprehensive Income

AOCI represents cumulative gains and losses that are not reflected in earnings. The components of other comprehensive income (loss) are as follows:

Year Ended December 31,	2018									2017									2016
	Before tax			Tax effect			Net of tax			Before tax			Tax effect			Net of tax			Before tax			Tax effect		Net of tax
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	$	(123	)	$	30		$	(93	)	$	13		$	(7	)	$	6		$	(44	)	$	16	$	(28	)
Reclassification of net unrealized loss on securities transferred   to held to maturity (1)	—			—			—			227			(85		)	142			—			—		—
Other reclassifications included in other revenue	—			—			—			(12		)	4			(8		)	(4		)	2		(2		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred   from available for sale (1)	—			—			—			(227		)	85			(142		)	—			—		—
Amortization of amounts previously recorded upon transfer from available for sale	35			(8		)	27			31			(11		)	20			—			—		—
Other	(1		)	—			(1		)	(11		)	4			(7		)	1			—		1
Other comprehensive income (loss)	$	(89	)	$	22		$	(67	)	$	21		$	(10	)	$	11		$	(47	)	$	18	$	(29	)

⁽¹⁾ See Note 6 for discussion of the transfer of securities from the AFS category to the HTM category during the first quarter of 2017.

AOCI balances are as follows:

	Total AOCI
Balance at December 31, 2015	$	(134	)
Net unrealized gain (loss) on available for sale securities	(30		)
Other changes	1
Balance at December 31, 2016	$	(163	)
Available for sale securities:
Net unrealized gain (loss)	6
Reclassification of net unrealized loss on securities transferred to held to maturity	142
Other reclassifications included in other revenue	(8		)
Held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale	(142		)
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	20
Other	(7		)
Balance at December 31, 2017	$	(152	)
Adoption of accounting standards (Note 2)	(33		)
Available for sale securities:
Net unrealized gain (loss)	(93		)
Held to maturity securities:
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	27
Other	(1		)
Balance at December 31, 2018	$	(252	)

- 92 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

19. Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans

Schwab’s share-based incentive plans provide for granting options and restricted stock units to employees, officers, and directors. In addition, we offer retirement and employee stock purchase plans to eligible employees and sponsor deferred compensation plans for eligible officers and non-employee directors.

A summary of share-based compensation expense and related income tax benefit is as follows:

Year Ended December 31,	2018			2017			2016
Stock option expense	$	51		$	50		$	45
Restricted stock unit expense (1)	136			94			89
Employee stock purchase plan expense	10			9			7
Total share-based compensation expense	$	197		$	153		$	141
Income tax benefit on share-based compensation expense (2)	$	(47	)	$	(57	)	$	(53	)

⁽¹⁾ Restricted stock unit expense in 2018 includes $36 million related to special stock awards issued to non-officer employees.

⁽²⁾ Excludes income tax benefits due to the adoption of ASU 2016-09 of $46 million and $87 millionin 2018 and 2017, respectively.

The Company issues shares for stock options and restricted stock units from treasury stock. At December 31, 2018, the Company was authorized to grant up to 68 millioncommon shares under its existing stock incentive plans. Additionally, at December 31, 2018, the Company had 36 millionshares reserved for future issuance under its employee stock purchase plan.

As of December 31, 2018, there was $294 millionof total unrecognized compensation cost related to outstanding stock options and restricted stock units, which is expected to be recognized through 2022 with a remaining weighted-average service period of 1.8 years for stock options, 2.4 years for restricted stock units, and 0.3 years for performance stock units.

Stock Option Plan

Options are granted for the purchase of shares of common stock at an exercise price not less than market value on the date of grant, and expire ten years from the date of grant. Options generally vest annually over a one- to four-year period from the date of grant.

Stock option activity is summarized below:

	Number of Options (In millions)		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	32		$	26.16	6.38	$	814
Granted	4		47.98
Exercised	(6	)	21.65
Forfeited (1)	—		36.05
Expired (1)	—		19.05
Outstanding at December 31, 2018	30		$	30.19	6.27	$	373
Vested and expected to vest at December 31, 2018	30		$	30.05	6.24	$	373
Vested and exercisable at December 31, 2018	19		$	23.70	4.86	$	331

⁽¹⁾ Number of options were less than 500 thousand.

The aggregate intrinsic value in the table above represents the difference between CSC’s closing stock price and the exercise price of each in-the-money option on the last trading day of the period presented.

- 93 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Information on stock options granted and exercised is presented below:

Year Ended December 31,	2018		2017		2016
Weighted-average fair value of options granted per share	$	14.16	$	13.04	$	8.73
Cash received from options exercised	125		171		144
Tax benefit realized on options exercised	35		70		38
Aggregate intrinsic value of options exercised	189		241		149

We use an option pricing model to estimate the fair value of options granted. The model takes into account the contractual term of the stock option, expected volatility, dividend yield, and the risk-free interest rate. Expected volatility is based on the implied volatility of publicly-traded options on CSC’s stock. Dividend yield is based on the average historical CSC dividend yield. The risk-free interest rate is based on the yield of a U.S. Treasury zero-coupon issue with a remaining term similar to the contractual term of the option. We use historical option exercise data, which includes employee termination data, to estimate the probability of future option exercises. The assumptions used to value the options granted during the years presented and their expected lives were as follows:

Year Ended December 31,	2018		2017		2016
Weighted-average expected dividend yield	1.42	%	1.06	%	1.22	%
Weighted-average expected volatility	33	%	34	%	30	%
Weighted-average risk-free interest rate	3.0	%	2.1	%	1.8	%
Expected life (in years)	4.0 - 5.2		4.1 - 5.3		4.7 - 7.3

Restricted Stock Units

Restricted stock units are awards that entitle the holder to receive shares of CSC’s common stock following a vesting period. Restricted stock units are restricted from transfer or sale and generally vest annually over a one- to four-year period, while performance-based restricted stock units also require the Company achieve certain financial or other measures prior to vesting. The fair value of restricted stock units is based on the market price of the Company’s stock on the date of grant. The grant date fair value is amortized to compensation expense on a straight-line basis over the requisite service period. The fair value of the restricted stock units that vested during each of the years 2018, 2017, and 2016 was $166 million, $127 million, and $105 million, respectively.

The Company’s restricted stock units activity is summarized below:

	Number of Units (In millions)		Weighted- Average Grant Date Fair Value per Unit
Outstanding at December 31, 2017	7		$	35.16
Granted (1)	3		47.03
Vested (1)	(3	)	35.95
Forfeited (2)	—		36.10
Outstanding at December 31, 2018	7		$	40.64

⁽¹⁾ Includes 781 thousand units related to special non-officer employee stock awards, with a weighted-average grant date fair value of $45.87. All units granted vested immediately.

⁽²⁾ Number of units were less than 500 thousand.

Retirement Plan

Employeescan participate in Schwab’s qualified retirement plan, the SchwabPlan^® Retirement Savings and Investment Plan. The Company may match certain employee contributions or make additional contributions to this plan at its discretion. The Company’s total expense was $105 million, $92 million, and $83 million in 2018, 2017, and 2016, respectively.

- 94 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Deferred Compensation Plans

Schwab’s deferred compensation plan for officers permits participants to defer the receipt of certain cash compensation. The deferred compensation plan for non-employee directors permits participants to defer receipt of all or a portion of their director fees and to receive either a grant of stock options, or upon ceasing service as a director, the number of shares of CSC’s common stock that would have resulted from investing the deferred fee amount into CSC’s common stock. The deferred compensation liability was $144 million and $160 million at December 31, 2018 and 2017, respectively.

FC Career Achievement Plan

The FC career achievement plan is a noncontributory, unfunded, nonqualified plan for eligible FCs. An FC is eligible for earned cash payments after retirement contingent upon meeting certain performance levels, tenure, age, and client transitioning requirements. Allocations to the plan are calculated annually based on performance levels achieved and eligible compensation and are subject to general creditors of the Company. Full vesting occurs when an FC reaches 60 years of age and has at least ten years of service with the Company.

The following table presents the changes inprojected benefit obligation:

December 31,	2018		2017
Projected benefit obligation at beginning of year	$	44	$	26
Benefit cost (1)	11		9
Actuarial (gain)/loss (2)	1		9
Projected benefit obligation at end of year (3)	$	56	$	44

⁽¹⁾ Includes service cost and interest cost, which are recognized in compensation and benefits expense and other expense, respectively, in the consolidated statements of income.

⁽²⁾ Actuarial (gain)/loss is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets.

⁽³⁾ This amount is recognized as a liability on the consolidated balance sheets and also depicts the accumulated benefit obligation.

20. Taxes on Income

On December 22, 2017,the Tax Act was signed into law. Among other things, the Tax Act lowered the federal corporate income tax rate from 35% to 21%, effective for tax years including or commencing January 1, 2018. Schwab’s effective tax rate for the years ended December 31, 2018, 2017, and 2016 was 23.1%, 35.5%, and 36.9%, respectively, resulting from the impact of the Tax Act of 2017.

Also as a result of the Tax Act, Schwab recognized a $46 million one-time non-cash charge to taxes on income in the fourth quarter of 2017 associated with the remeasurement of net deferred tax assets and other tax adjustments related to the Tax Act. During 2018, we concluded our analysis and accounting for all remaining impacts of the Tax Act, including the state tax effect of adjustments made to federal temporary differences, resulting in no additional material impacts.

As of January 1, 2018, Schwab adopted new accounting guidance that decreased AOCI and increased retained earnings by $33 million for the reclassification of certain impacts of the Tax Act as described in Note 2. Schwab also adopted new revenue recognition guidance as of January 1, 2018, which resulted in recording an asset for capitalized contract costs of $219 million and a related deferred tax liability of $52 million as described in Note 2. As of December 31, 2018, the deferred tax liability related to the capitalized contract costs was $60 million.

- 95 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The components of taxes on incomeare as follows:

Year Ended December 31,	2018		2017		2016
Current:
Federal	$	847	$	1,132	$	980
State	159		106		109
Total current	1,006		1,238		1,089
Deferred:
Federal	42		58		13
State	7		—		2
Total deferred	49		58		15
Taxes on income	$	1,055	$	1,296	$	1,104

The temporary differences that created deferred tax assets and liabilitiesare detailed below:

December 31,	2018			2017
Deferred tax assets:
Employee compensation, severance, and benefits	$	132		$	133
Net unrealized loss on available for sale securities	79			57
Reserves and allowances	13			15
Facilities lease commitments	12			14
State and local taxes	21			12
Net operating loss carryforwards	5			5
Other	6			3
Total deferred tax assets	268			239
Valuation allowance	(3		)	(2		)
Deferred tax assets — net of valuation allowance	265			237
Deferred tax liabilities:
Capitalized internal-use software development costs	(98		)	(89		)
Depreciation and amortization	(108		)	(72		)
Capitalized contract costs	(60		)	—
Total deferred tax liabilities	(266		)	(161		)
Deferred tax asset/(liability) — net (1)	$	(1	)	$	76

⁽¹⁾ Amounts are included in accrued expenses and other liabilities and in other assets on the consolidated balance sheets at December 31, 2018 and in other assets at December 31, 2017.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

Year Ended December 31,	2018		2017		2016
Federal statutory income tax rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	3.0		2.2		2.4
Equity compensation benefit	(1.0	)	(2.4	)	—
Other (1)	0.1		0.7		(0.5	)
Effective income tax rate	23.1	%	35.5	%	36.9	%

⁽¹⁾ 2017 includes the impact of one-time charge to taxes on income associated with the Tax Act.

- 96 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

December 31,	2018			2017
Balance at beginning of year	$	111		$	93
Additions for tax positions related to the current year	3			22
Additions for tax positions related to prior years	3			15
Reductions for tax positions related to prior years	(4		)	(2		)
Reductions due to lapse of statute of limitations	—			—
Reductions for settlements with tax authorities	(1		)	(17		)
Balance at end of year	$	112		$	111

Unrecognized tax benefits totaled$112 million and $111 millionas ofDecember 31, 2018 and 2017, respectively, $108 million and $104 millionof which if recognized, would affect the annual effective tax rate.

Interest and penalties were accrued related to unrecognized tax benefits in tax expense. At December 31, 2018 and 2017, we had accrued approximately $9 million and $5 million, respectively, for the payment of interest and penalties.

The Company and its subsidiaries are subject to routine examinations by the respective federal, state and applicable local jurisdictions’ taxing authorities. Federal returns for 2011 through 2017 remain subject to examination. The years open to examination by state and local governments vary by jurisdiction.

21.    Regulatory Requirements

CSC is a savings and loan holding company and CSB, CSC’s primary depository institution subsidiary, is a federal savings bank. CSC is subject to examination, supervision, and regulation by the Federal Reserve. CSB is subject to examination, supervision, and regulation by the OCC, as its primary regulator, the FDIC as its deposit insurer, and the CFPB. CSC is required to serve as a source of strength for CSB.

CSB is subject to various requirements and restrictions under federal and state laws, including regulatory capital requirements and requirements that restrict and govern the terms of affiliate transactions, such as extensions of credit to, or asset purchases from CSC or its other subsidiaries by CSB. In addition, CSB is required to provide notice to and may be required to obtain approval of the OCC and the Federal Reserve to declare dividends to CSC. The federal banking agencies have broad powers to enforce these regulations, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver. Under the Federal Deposit Insurance Act, CSB could be subject to restrictive actions if it were to fall within one of the lowest three of five capital categories. CSC and CSB are required to maintain minimum capital levels as specified in federal banking regulations. Failure to meet the minimum levels could result in certain mandatory, and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on CSC and CSB. At December 31, 2018, both CSC and CSB met all of their respective capital requirements.

- 97 -

THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

The regulatory capital and ratios for CSC (consolidated) and CSB are as follows:

	Actual				Minimum to be Well Capitalized				Minimum Capital Requirement
December 31, 2018	Amount		Ratio		Amount		Ratio		Amount		Ratio (1)
CSC
Common Equity Tier 1 Risk-Based Capital	$	16,813	17.6	%	N/A				$	4,295	4.5	%
Tier 1 Risk-Based Capital	19,606		20.5	%	N/A				5,726		6.0	%
Total Risk-Based Capital	19,628		20.6	%	N/A				7,635		8.0	%
Tier 1 Leverage	19,606		7.1	%	N/A				11,058		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	15,832	19.7	%	$	5,233	6.5	%	$	3,623	4.5	%
Tier 1 Risk-Based Capital	15,832		19.7	%	6,441		8.0	%	4,831		6.0	%
Total Risk-Based Capital	15,853		19.7	%	8,051		10.0	%	6,441		8.0	%
Tier 1 Leverage	15,832		7.2	%	11,044		5.0	%	8,836		4.0	%
December 31, 2017
CSC
Common Equity Tier 1 Risk-Based Capital	$	14,630	19.3	%	N/A				$	3,414	4.5	%
Tier 1 Risk-Based Capital	17,423		23.0	%	N/A				4,552		6.0	%
Total Risk-Based Capital	17,452		23.0	%	N/A				6,069		8.0	%
Tier 1 Leverage	17,423		7.6	%	N/A				9,218		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	13,355	20.1	%	$	4,324	6.5	%	$	2,993	4.5	%
Tier 1 Risk-Based Capital	13,355		20.1	%	5,321		8.0	%	3,991		6.0	%
Total Risk-Based Capital	13,382		20.1	%	6,652		10.0	%	5,321		8.0	%
Tier 1 Leverage	13,355		7.1	%	9,462		5.0	%	7,569		4.0	%

⁽¹⁾ Under the Basel III capital rule, CSC and CSB are also required to maintain a capital conservation buffer above the regulatory minimum capital ratios. The capital conservation buffer was 1.875% in 2018, and became 2.5% on January 1, 2019. If the capital conservation buffer falls below the minimum requirement, the Company would be subject to limits on capital distributions and discretionary bonus payments to executive officers. For 2018, the minimum capital requirement plus capital conservation buffer for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 6.375%, 7.875%, and 9.875%, respectively. At December 31, 2018, both CSC’s and CSB’s capital levels exceeded the fully implemented capital conservation buffer requirement.

N/A Not applicable.

Based on its regulatory capital ratios at December 31, 2018, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules. There are no conditions or events since December 31, 2018 that management believes have changed CSB’s capital category.

The Federal Reserve requires CSB to maintain reserve balances at the Federal Reserve based on its deposits that are considered to be transaction accounts. CSB’s average reserve requirement was $1.6 billion in 2018 and 2017. In late 2017, Schwab acquired a federal savings bank charter which is now called Charles Schwab Premier Bank (formerly known as Charles Schwab Signature Bank). At December 31, 2018, the balance sheet of Charles Schwab Premier Bank consisted primarily of investment securities, and held total assets of $15.2 billion. Charles Schwab Premier Bank is subject to similar regulatory guidelines and requirements, and seeks to maintain a Tier 1 Leverage Ratio similar to CSB.

CS&Co, a securities broker-dealer, is subject to the Uniform Net Capital Rule. CS&Co computes its net capital under the alternative method permitted by the Uniform Net Capital Rule. This method requires the maintenance of minimum net capital, as defined, of the greater of 2% of aggregate debit balances arising from client transactions or a minimum dollar requirement of $250,000, which is based on the type of business conducted by the broker-dealer. Under the alternative method, a broker-dealer may not repay subordinated borrowings, pay cash dividends, or make any unsecured advances or loans if such payment would result in a net capital amount of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement.

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Net capital and net capital requirements for CS&Co are as follows:

December 31,	2018		2017
Net capital	$	2,304	$	2,118
Minimum net capital required	0.250		0.250
2% of aggregate debit balances	436		435
Net capital in excess of required net capital	$	1,868	$	1,683

In accordance with the SEC Customer Protection Rule, CS&Co had portions of its cash and investments segregated for the exclusive benefit of clients at December 31, 2018. The SEC Customer Protection Rule requires broker-dealers to segregate client fully-paid securities and cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts. Amounts included in cash and investments segregated and on deposit for regulatory purposes represent actual balances on deposit, whereas cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2018 for CS&Co totaled $16.7 billion. As of January 3, 2019, CS&Co had deposited $3.7 billion of cash and qualified securities into its segregated reserve accounts. Cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2017 for CS&Co totaled $15.3 billion. On January 3, 2018, $704 million of cash and qualified securities was deposited into the segregated reserve accounts.

22. Segment Information

Schwab’s two reportable segments are Investor Services and Advisor Services. Schwab structures the operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage and banking services to individual investors and retirement plan services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking, and support services, as well as retirement business services, to independent RIAs, independent retirement advisors, and recordkeepers. Revenues and expenses are allocated to the two segments based on which segment services the client.

The accounting policies of the segments are the same as those described in Note 2. For the computation of its segment information, Schwab utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues.

Management evaluates the performance of its segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are no revenues from transactions between the segments.

Financial information for the segments is presented in the following table:

	Investor Services						Advisor Services						Total
Year Ended December 31,	2018		2017		2016		2018		2017		2016		2018		2017		2016
Net Revenues
Net interest revenue	$	4,341	$	3,231	$	2,591	$	1,482	$	1,051	$	731	$	5,823	$	4,282	$	3,322
Asset management and administration fees	2,260		2,344		2,093		969		1,048		962		3,229		3,392		3,055
Trading revenue	475		408		524		288		246		301		763		654		825
Other	245		217		203		72		73		73		317		290		276
Total net revenues	7,321		6,200		5,411		2,811		2,418		2,067		10,132		8,618		7,478
Expenses Excluding Interest	4,145		3,725		3,380		1,425		1,243		1,105		5,570		4,968		4,485
Income before taxes on income	$	3,176	$	2,475	$	2,031	$	1,386	$	1,175	$	962	$	4,562	$	3,650	$	2,993
Capital expenditures	$	390	$	265	$	234	$	186	$	147	$	119	$	576	$	412	$	353
Depreciation and amortization	$	186	$	203	$	180	$	120	$	66	$	54	$	306	$	269	$	234

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

23. The Charles Schwab Corporation – Parent Company Only Financial Statements

Condensed Statements of Income

Year Ended December 31,	2018			2017			2016
Interest revenue	$	88		$	33		$	22
Interest expense	(184		)	(114		)	(100		)
Net interest expense	(96		)	(81		)	(78		)
Other	1			3			1
Expenses excluding interest	(85		)	(32		)	(21		)
Loss before income tax benefit and equity in net income of subsidiaries	(180		)	(110		)	(98		)
Income tax benefit	20			27			34
Loss before equity in net income of subsidiaries	(160		)	(83		)	(64		)
Equity in net income of subsidiaries:
Equity in undistributed net income of subsidiaries	2,590			1,479			1,690
Dividends from bank subsidiaries	750			625			—
Dividends from non-bank subsidiaries	327			333			263
Net Income	3,507			2,354			1,889
Preferred stock dividends and other (1)	178			174			143
Net Income Available to Common Stockholders	$	3,329		$	2,180		$	1,746

⁽¹⁾ Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

Condensed Balance Sheets

December 31,	2018		2017
Assets
Cash and cash equivalents	$	2,092	$	2,825
Receivables from subsidiaries	784		571
Available for sale securities	1,754		573
Held to maturity securities	223		223
Other securities owned — at fair value	109		76
Loans to non-bank subsidiaries	185		448
Investment in non-bank subsidiaries	5,507		5,393
Investment in bank subsidiaries	16,995		13,224
Other assets	228		160
Total assets	$	27,877	$	23,493
Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities	$	379	$	276
Payables to subsidiaries	2		—
Long-term debt	6,826		4,692
Total liabilities	7,207		4,968
Stockholders’ equity	20,670		18,525
Total liabilities and stockholders’ equity	$	27,877	$	23,493

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

Condensed Statements of Cash Flows

Year Ended December 31,	2018			2017			2016
Cash Flows from Operating Activities
Net income	$	3,507		$	2,354		$	1,889
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Equity in undistributed earnings of subsidiaries	(2,590		)	(1,479		)	(1,690		)
Other	13			5			(37		)
Net change in:
Other securities owned	(33		)	(1		)	(10		)
Other assets	28			(26		)	(27		)
Accrued expenses and other liabilities	28			44			30
Net cash provided by (used for) operating activities	953			897			155
Cash Flows from Investing Activities
Due from (to) subsidiaries — net	408			(374		)	95
Increase in investments in subsidiaries	(1,188		)	(342		)	(1,547		)
Repayments (Advances) of subordinated loan to CS&Co	(185		)	—			465
Purchases of available for sale securities	(1,751		)	(201		)	(2		)
Proceeds from sales of available for sale securities	—			197			2
Principal payments on available for sale securities	573			—			—
Other investing activities	(5		)	(6		)	(4		)
Net cash provided by (used for) investing activities	(2,148		)	(726		)	(991		)
Cash Flows from Financing Activities
Issuance of long-term debt	3,024			2,129			—
Repayment of long-term debt	(900		)	(250		)	—
Repurchases of common stock	(1,000		)	—			—
Net proceeds from preferred stock offerings	—			492			1,316
Redemption of preferred stock	—			(485		)	—
Dividends paid	(787		)	(592		)	(486		)
Proceeds from stock options exercised and other	125			171			144
Other financing activities	—			—			44
Net cash provided by (used for) financing activities	462			1,465			1,018
Increase (Decrease) in Cash and Cash Equivalents	(733		)	1,636			182
Cash and Cash Equivalents at Beginning of Year	2,825			1,189			1,007
Cash and Cash Equivalents at End of Year	$	2,092		$	2,825		$	1,189

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THE CHARLES SCHWAB CORPORATION

Notes to Consolidated Financial Statements

(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)

24.    Quarterly Financial Information (Unaudited)

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
Year Ended December 31, 2018:
Total Net Revenues	$	2,669	$	2,579	$	2,486	$	2,398
Total Expenses Excluding Interest	$	1,459	$	1,360	$	1,355	$	1,396
Net Income	$	935	$	923	$	866	$	783
Net Income Available to Common Stockholders	$	885	$	885	$	813	$	746
Weighted-Average Common Shares Outstanding — Basic	1,343		1,351		1,350		1,347
Weighted-Average Common Shares Outstanding — Diluted	1,354		1,364		1,364		1,362
Earnings Per Common Share — Basic	$	.66	$	.66	$	.60	$	.55
Earnings Per Common Share — Diluted	$	.65	$	.65	$	.60	$	.55
Dividends Declared Per Common Share	$	.13	$	.13	$	.10	$	.10
Year Ended December 31, 2017:
Total Net Revenues	$	2,242	$	2,165	$	2,130	$	2,081
Total Expenses Excluding Interest	$	1,289	$	1,220	$	1,221	$	1,238
Net Income	$	597	$	618	$	575	$	564
Net Income Available to Common Stockholders	$	550	$	575	$	530	$	525
Weighted-Average Common Shares Outstanding — Basic	1,343		1,339		1,338		1,336
Weighted-Average Common Shares Outstanding — Diluted	1,358		1,353		1,351		1,351
Earnings Per Common Share — Basic	$	.41	$	.43	$	.40	$	.39
Earnings Per Common Share — Diluted	$	.41	$	.42	$	.39	$	.39
Dividends Declared Per Common Share	$	.08	$	.08	$	.08	$	.08

໿

25.    Subsequent Event

On January 30, 2019, CSC publicly announced that its Board of Directors authorized a new Share Repurchase Program to repurchase up to $4.0 billion of common stock, and declared a four cent, or 31%, increase in the quarterly cash dividend to $0.17 per common share. The share repurchase authorization does not have an expiration date.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of The Charles Schwab Corporation:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Charles Schwab Corporation and subsidiaries (the "Company") as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California  

February 22, 2019  

We have served as the Company's auditor since 1976.

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THE CHARLES SCHWAB CORPORATION

Management’sReport on Internal Control Over Financial Reporting

Management of The Charles Schwab Corporation, together with its subsidiaries (the Company), is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of and effected by the Company’s chief executive officer and chief financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements in accordance with accounting principles generally accepted in the United States of America.

As of December 31, 2018, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting was effective as of December 31, 2018.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

The Company’s internal control over financial reporting as of December 31, 2018, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on the previous page.

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THE CHARLES SCHWAB CORPORATION

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None. 

Item 9A.     Controls and Procedures

Evaluation of disclosure controls and procedures: The management of the Company, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2018. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2018.

Changes in internal control over financial reporting: No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) was identified during the quarter ended December 31, 2018, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm are included in Item 8.

Item 9B.     Other Information

None.

PARTIII

Item 10. Directors, Executive Officers, and Corporate Governance

The information relating to directors of CSC required to be furnished pursuant to this item is incorporated by reference from portions of the Company’s definitive proxy statement for its annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A by April 30, 2019 (the Proxy Statement) under “Members of the Board of Directors,” “Corporate Governance,” “Director Nominations,” and “Section 16(a) Beneficial Ownership Reporting Compliance.” The Company’s Code of Conduct and Business Ethics, applicable to directors and all employees, including senior financial officers, is available on the Company’s website at https://www.aboutschwab.com/governance. If the Company makes any amendments to or grants any waivers from its Code of Conduct and Business Ethics, which are required to be disclosed pursuant to the Securities Exchange Act of 1934, the Company will make such disclosures on this website.

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THE CHARLES SCHWAB CORPORATION

SchwabExecutive Officers of the Registrant

The following table provides certain information about each of the Company’s executive officers as of December 31, 2018.

Executive Officers of the Registrant
	Name	Age	Title
	Charles R. Schwab	81	Chairman of the Board
	Walter W. Bettinger II	58	President and Chief Executive Officer
	Marie A. Chandoha	57	Chief Executive Officer – Charles Schwab Investment Management, Inc.
	Bernard J. Clark	60	Executive Vice President – Advisor Services
	Jonathan M. Craig	47	Senior Executive Vice President
	Peter B. Crawford	50	Executive Vice President and Chief Financial Officer
	David R. Garfield	62	Executive Vice President, General Counsel and Corporate Secretary
	Terri R. Kallsen	50	Executive Vice President – Investor Services
	Joseph R. Martinetto	56	Senior Executive Vice President and Chief Operating Officer
	Nigel J. Murtagh	55	Executive Vice President – Corporate Risk

Mr. Schwab has been Chairman of the Board and a director of CSC since its incorporation in 1986. He also served as Chief Executive Officer of CSC from 1986 to 1997 and as Co-Chief Executive Officer from 1998 until 2003. He was re-appointed Chief Executive Officer in 2004 and served in that role until 2008. He served as Chairman of the Board and a director of CS&Co until 2018. Mr. Schwab is also Chairman of CSB.

Mr. Bettinger has been President and Chief Executive Officer of CSC since 2008. He serves on the Board of Directors of CSC and CSB, and is Chairman of CS&Co, as well as Chairman and trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust, all registered investment companies and affiliates of CSC. Mr. Bettinger served as President and Chief Operating Officer of CSC from 2007 until 2008 and as Executive Vice President and President – Schwab Investor Services of CSC and CS&Co from 2005 to 2007. Mr. Bettinger joined Schwab in 1995.

Ms. Chandoha has been Chief Executive Officer of CSIM since 2011 and served as President of CSIM from 2011 until October 2018. She serves as a trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust. On September 25, 2018, Ms. Chandoha announced her decision to retire on March 29, 2019. Ms. Chandoha joined Schwab in 2010.

Mr. Clark has been Executive Vice President – Advisor Services of CSC since 2012. Mr. Clark has served as Executive Vice President – Advisor Services of CS&Co since 2010. From 2006 until 2010, Mr. Clark served as Senior Vice President – Schwab Institutional Sales of Charles Schwab & Co., Inc. Mr. Clark joined Schwab in 1998.

Mr. Craig has been Senior Executive Vice President of CSC and CS&Co since 2018. He served as Executive Vice President – Client and Marketing Solutions for CSC from 2017 until 2018 and served as Executive Vice President and Chief Marketing Officer of CS&Co from 2012 until 2018. Mr. Craig joined Schwab in 2000.

Mr. Crawford has been Executive Vice President and Chief Financial Officer of CSC and CS&Co since 2017. Prior to his appointment as Chief Financial Officer, Mr. Crawford was Executive Vice President of Finance from 2015 to 2017. He served as Senior Vice President of Schwab’s asset management and client solutions organization from 2008 to 2015. He has served on the Board of Directors of CS&Co since 2018. Mr. Crawford joined Schwab in 2001.

Mr. Garfield has been Executive Vice President, General Counsel and Corporate Secretary of CSC since 2014 and Executive Vice President and Corporate Secretary of CS&Co since 2015. Mr. Garfield served as Deputy General Counsel of Wells Fargo & Company from 1998 to 2014. Mr. Garfield joined Schwab in 2014.

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THE CHARLES SCHWAB CORPORATION

Ms. Kallsen has been Executive Vice President – Investor Services of CSC and CS&Co since 2014. She served as Senior Vice President – Portfolio Consulting of CS&Co from 2012 until 2014 and as Senior Vice President – Branch Network from June 2014 until December 2014. Ms. Kallsen joined Schwab in 2012.

Mr. Martinetto has been Senior Executive Vice President of CSC and CS&Co since 2015, and Chief Operating Officer of CSC and CS&Co since 2018. He served as Chief Financial Officer of CSC and CS&Co from 2007 until 2017, and Executive Vice President of CSC and CS&Co from 2007 until 2015. He also serves on the Board of Directors of CS&Co and CSB. Additionally, Mr. Martinetto is a trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust. Mr. Martinetto joined Schwab in 1997.

Mr. Murtagh has been Executive Vice President – Corporate Risk of CSC and CS&Co since 2012. He has served as Executive Vice President and Chief Risk Officer of CSB since 2018. He served as Senior Vice President and Chief Credit Officer of CS&Co from 2002 until 2012 and of CSC from 2008 until 2012. Mr. Murtagh joined Schwab in 2000.

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THE CHARLES SCHWAB CORPORATION

Item 11. Executive Compensation

The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement under “Compensation Discussion and Analysis,” “Executive Compensation Tables – 2018 Summary Compensation Table,” “Executive Compensation Tables – 2018 Grants of Plan-Based Awards Table,” “Executive Compensation Tables – Narrative to Summary Compensation and Grants of Plan-Based Awards Tables,” “Executive Compensation Tables – 2018 Termination and Change in Control Benefits Table,” “Executive Compensation Tables – Outstanding Equity Awards as of December 31, 2018,” “Executive Compensation Tables – 2018 Option Exercises and Stock Vested Table,” “Executive Compensation Tables – 2018 Nonqualified Deferred Compensation Table,” “Director Compensation,” and “Compensation Committee Interlocks and Insider Participation.” In addition, the information from a portion of the Proxy Statement under “Compensation Committee Report,” is incorporated by reference from the Proxy Statement and furnished on this Form 10-K, and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement under “Security Ownership of Certain Beneficial Owners and Management,” and “Securities Authorized for Issuance under Equity Compensation Plans.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement under “Transactions with Related Persons” and “Director Independence.”

Item 14. Principal Accountant Fees and Services

The information required to be furnished pursuant to this item is incorporated by reference from a portion of the Proxy Statement under “Auditor Fees.”

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THE CHARLES SCHWAB CORPORATION

PARTIV

Item 15. Exhibits, Financial Statement Schedules

(a)  Documents filed as part of this Report

1. Financial Statements

The financial statements and independent auditors’ report are included in Item 8 and are listed below:

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

2. Financial Statement Schedules

Other financial statement schedules required pursuant to this Item are omitted because of the absence of conditions under which they are required or because the information is included in the Company’s consolidated financial statements and notes in Item 8.

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THE CHARLES SCHWAB CORPORATION

(b)  Exhibits

The exhibits listed below are filed as part of this annual report on Form 10-K.

Exhibit Number	Exhibit
3.11	Fifth Restated Certificate of Incorporation, effective May 7, 2001, of the Registrant, filed as Exhibit 3.11 to the Registrant’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference.
3.14	Fourth Restated Bylaws, as amended on January 27, 2010, of the Registrant, filed as Exhibit 3.14 to the Registrant’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference.
3.15	Certificate of Designations of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A of The Charles Schwab Corporation, filed as Exhibit 3.15 to the Registrant’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference.
3.17	Certificate of Designations of 6.00% Non-Cumulative Perpetual Preferred Stock, Series C, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated August 3, 2015, and incorporated herein by reference.
3.18	Certificate of Designations of 5.95% Non-Cumulative Perpetual Preferred Stock, Series D, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated March 7, 2016, and incorporated herein by reference.
3.19	Certificate of Designations of 4.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated October 31, 2016, and incorporated herein by reference.
3.20	Certificate of Designations of 5.00% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated October 31, 2017, and incorporated herein by reference.
4.2	Deposit Agreement, dated August 3, 2015, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated August 3, 2015 and incorporated herein by reference.
4.3	Deposit Agreement, dated March 7, 2016, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated March 7, 2016, and incorporated herein by reference.
4.4	Deposit Agreement, dated October 31, 2016, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated October 31, 2016, and incorporated herein by reference.
4.5	Deposit Agreement, dated October 31, 2017, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated October 31, 2017, and incorporated herein by reference.
4.6	Neither the Registrant nor its subsidiaries are parties to any instrument with respect to long-term debt for which securities authorized thereunder exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. Copies of instruments with respect to long-term debt of lesser amounts will be provided to the SEC upon request.
10.4	Form of Release Agreement dated as of March 31, 1987 among BAC, Registrant, Schwab Holdings, Inc., Charles Schwab & Co., Inc., and former shareholders of Schwab Holdings, Inc., filed as the identically-numbered exhibit to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
10.57	Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between the Registrant and the holders of the Common Stock, filed as Exhibit 4.23 to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.

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THE CHARLES SCHWAB CORPORATION

Exhibit Number	Exhibit
10.72	Restatement of Assignment and License, as amended January 25, 1988, among Charles Schwab & Co., Inc., Charles R. Schwab and the Registrant, filed as Exhibit 10.72 to the Registrant’s Form 10-K for the year ended December 31, 2014 and incorporated herein by reference.
10.271	The Charles Schwab Corporation Directors’ Deferred Compensation Plan, as amended through December 8, 2004, filed as Exhibit 10.271 to the Registrant’s Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.	(2)
10.272	The Charles Schwab Corporation Deferred Compensation Plan, as amended through December 8, 2004, filed as Exhibit 10.272 to the Registrant’s Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.	(2)
10.314	Employment Agreement dated as of March 13, 2008, between the Registrant and Charles R. Schwab.	(1),(2)
10.338	The Charles Schwab Corporation 2004 Stock Incentive Plan, as approved at the Annual Meeting of Stockholders on May 17, 2011, filed as Exhibit 10.338 to the Registrant’s Form 10-Q for the quarter ended June 30, 2016, and incorporated herein by reference.	(2)
10.349	The Charles Schwab Severance Pay Plan, as Amended and Restated Effective May 1, 2012, filed as Exhibit 10.349 to the Registrant’s Form 10-Q for the quarter ended June 30, 2017, and incorporated herein by reference.	(2)
10.362	The Charles Schwab Corporation Directors’ Deferred Compensation Plan II, as amended and restated as of April 24, 2013.	(1),(2)
10.376	Credit Agreement (364 – Day Commitment) dated as of June 2, 2017, between the Registrant and financial institutions therein, filed as Exhibit 10.376 to the Registrant’s Form 10-Q for the quarter ended June 30, 2017, and incorporated herein by reference.	(2)
10.381	Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.381 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.	(2)
10.382	Form of Notice and Retainer Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.382 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.	(2)
10.383	Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.383 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.	(2)
10.384	Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.384 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.	(2)
10.385	The Charles Schwab Corporation Deferred Compensation Plan II, as amended and restated as of December 13, 2017, filed as Exhibit 10.385 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.	(2)
10.386	Form of Notice and Performance-Based Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.386 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.	(2)
10.387	Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.387 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.	(2)
10.388	Form of Notice and Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.388 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.	(2)

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THE CHARLES SCHWAB CORPORATION

Exhibit Number	Exhibit
10.389	The Charles Schwab Corporation Corporate Executive Bonus Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 13, 2015, as amended and restated as of December 13, 2017, filed as Exhibit 10.389 to the Registrant’s Form 10-K for the year ended December 31, 2017 and incorporated herein by reference.	(2)
10.390	Summary of Non-Employee Director Compensation, filed as Exhibit 10.390 to the Registrant’s Form 10-k for the year ended December 31, 2017, and incorporated herein by reference.	(2)
10.391	2013 Stock Incentive Plan, as amended and restated, filed as Exhibit 10.391 to the Registrant’s Form 8-K dated May 15, 2018, and incorporated herein by reference.	(2)
10.392	Credit Agreement (364 – Day Commitment) dated as of June 1, 2018, between the Registrant and financial institutions therein (supersedes Exhibit 10.376), filed as Exhibit 10.392 to the Registrant’s Form 8-K dated October 31, 2018, and incorporated herein by reference.
10.393	Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans (supersedes Exhibit 10.387).	(1),(2)
10.394	Form of Notice and Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans (supersedes Exhibit 10.388).	(1),(2)
21.1	Subsidiaries of the Registrant.
23.1	Independent Registered Public Accounting Firm’s Consent.
31.1	Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.	(1)
32.2	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.	(1)
101.INS	XBRL Instance Document	(3)
101.SCH	XBRL Taxonomy Extension Schema	(3)
101.CAL	XBRL Taxonomy Extension Calculation	(3)
101.DEF	XBRL Extension Definition	(3)
101.LAB	XBRL Taxonomy Extension Label	(3)
101.PRE	XBRL Taxonomy Extension Presentation	(3)

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THE CHARLES SCHWAB CORPORATION

Exhibit Number	Exhibit
(1)	Furnished as an exhibit to this annual report on Form 10-K.
(2)	Management contract or compensatory plan.
(3)	Attached as Exhibit 101 to this Annual Report on Form 10-K for the annual period ended December 31, 2018, are the following materials formatted in XBRL (Extensible Business Reporting Language) (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 22, 2019.

THE CHARLES SCHWAB CORPORATION
(Registrant)
BY:	/s/ Walter W. Bettinger II
	Walter W. Bettinger II
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on February 22, 2019.

Signature / Title	Signature / Title
/s/ Walter W. Bettinger II	/s/ Peter Crawford
Walter W. Bettinger II,	Peter Crawford,
President and Chief Executive Officer   and Director	Executive Vice President   and Chief Financial Officer   (principal financial and accounting officer)
/s/ Charles R. Schwab	/s/ John K. Adams, Jr.
Charles R. Schwab, Chairman of the Board	John K. Adams, Jr., Director
/s/ Joan T. Dea	/s/ Christopher V. Dodds
Joan T. Dea, Director	Christopher V. Dodds, Director
/s/ Stephen A. Ellis	/s/ Mark A. Goldfarb
Stephen A. Ellis, Director	Mark A. Goldfarb, Director
/s/ William S. Haraf	/s/ Frank C. Herringer
William S. Haraf, Director	Frank C. Herringer, Director
/s/ Stephen T. McLin	/s/ Charles A. Ruffel
Stephen T. McLin, Director	Charles A. Ruffel, Director
/s/ Arun Sarin	/s/ Paula A. Sneed
Arun Sarin, Director	Paula A. Sneed, Director
/s/ Roger O. Walther
Roger O. Walther, Director

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THE CHARLES SCHWAB CORPORATION

STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
The following table outlines the information required by the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies,” which is presented at the consolidated holding company level.
Required Disclosure	Page
Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential	F-2 – F-3
Investment Portfolio	F-4
Risk Elements – Cross-border Holdings	F-5
Loan Portfolio	F-6 – F-7
Summary of Loan Loss Experience	F-7
Deposits	F-7
Return on Equity and Assets	F-7

໿໿

F-1

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

The following supplemental financial data is consistent with the Securities Exchange Act of 1934, Industry Guide 3 – Statistical Disclosure by Bank Holding Companies.

1. Three-year Net Interest Revenue and Average Balances

For the Year Ended December 31,	2018						2017						2016
	Average				Average		Average				Average		Average				Average
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Cash and cash equivalents	$	17,783	$	348	1.93	%	$	9,931	$	109	1.10	%	$	11,143	$	57	0.51	%
Cash and investments segregated	11,461		206		1.78	%	18,525		166		0.90	%	20,104		93		0.46	%
Broker-related receivables	303		6		2.09	%	430		3		0.70	%	558		1		0.22	%
Receivables from brokerage clients	19,870		830		4.12	%	16,269		575		3.53	%	15,001		497		3.31	%
Available for sale securities (1)	54,542		1,241		2.26	%	53,040		815		1.54	%	72,586		883		1.22	%
Held to maturity securities	131,794		3,348		2.53	%	103,599		2,354		2.27	%	57,451		1,402		2.44	%
Bank loans (5)	16,554		559		3.37	%	15,919		472		2.97	%	14,715		400		2.72	%
Total interest-earning assets	252,307		6,538		2.57	%	217,713		4,494		2.06	%	191,558		3,333		1.74	%
Other interest revenue			142						130						160
Total interest-earning assets	252,307		6,680		2.63	%	217,713		4,624		2.12	%	191,558		3,493		1.82	%
Noninterest-earning assets (2,3)	11,681						9,968						9,354
Total assets	$	263,988					$	227,681					$	200,912
Liabilities and Stockholders’ Equity:
Bank deposits	$	199,139	$	545	0.27	%	$	163,998	$	148	0.09	%	$	141,432	$	37	0.03	%
Payables to brokerage clients	21,178		56		0.27	%	25,403		16		0.06	%	26,311		3		0.01	%
Short-term borrowings	3,359		54		1.59	%	3,503		41		1.17	%	1,864		9		0.48	%
Long-term debt	5,423		190		3.50	%	3,431		119		3.47	%	2,876		104		3.62	%
Total interest-bearing liabilities	229,099		845		0.37	%	196,335		324		0.17	%	172,483		153		0.09	%
Other interest expense			12						18						18
Noninterest-bearing liabilities (2,4)	14,883						13,787						13,375
Total liabilities (6)	243,982		857		0.34	%	210,122		342		0.15	%	185,858		171		0.09	%
Stockholders’ equity (2)	20,006						17,559						15,054
Total liabilities and stockholders’ equity	$	263,988					$	227,681					$	200,912
Net interest revenue			$	5,823					$	4,282					$	3,322
Net yield on interest-earning assets					2.29	%					1.97	%					1.73	%

⁽¹⁾ Amounts calculated based on amortized cost.

⁽²) Average balance calculation based on month end balances.

⁽³⁾ Noninterest-earning assets include equipment, office facilities, and property – net, goodwill, and other assets that do not generate interest income.

⁽⁴⁾ Noninterest-bearing liabilities consist of other liabilities that do not generate interest expense.

⁽⁵⁾ Includes average principal balances of nonaccrual loans.

⁽⁶⁾ Average rate calculation based on total funding sources.

F-2

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

2. Analysis of Change in Net Interest Revenue

An analysis of the year-to-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:

	2018 Compared to 2017 Increase (Decrease) Due to Change in:									2017 Compared to 2016 Increase (Decrease) Due to Change in:
	Average Volume			Average Rate			Total			Average Volume			Average Rate			Total
Interest-earning assets:
Cash and cash equivalents (1)	$	86		$	153		$	239		$	(6	)	$	58		$	52
Cash and investments segregated	(64		)	104			40			(7		)	80			73
Broker-related receivables	(1		)	4			3			—			2			2
Receivables from brokerage clients	127			128			255			42			36			78
Available for sale securities (2)	23			403			426			(238		)	170			(68		)
Held to maturity securities	640			354			994			1,126			(174		)	952
Bank loans (3)	19			68			87			33			39			72
Other interest revenue	—			12			12			—			(30		)	(30		)
Total interest-earning assets	$	830		$	1,226		$	2,056		$	950		$	181		$	1,131
Interest-bearing sources of funds:
Bank deposits	$	32		$	365		$	397		$	7		$	104		$	111
Payables to brokerage clients	(3		)	43			40			—			13			13
Short-term borrowings	(2		)	15			13			8			24			32
Long-term debt	69			2			71			20			(5		)	15
Other interest expense	—			(6		)	(6		)	—			—			—
Total sources on which interest is paid	96			419			515			35			136			171
Change in net interest revenue	$	734		$	807		$	1,541		$	915		$	45		$	960

Changes that are not due solely to volume or rate have been allocated to rate.

⁽¹⁾ Includes deposits with banks and short-term investments.

⁽²⁾ Amounts have been calculated based on amortized cost.

⁽³⁾ Includes average principal balances of nonaccrual loans.

໿

F-3

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

3. InvestmentSecurities

The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities for 2016 are as follows:

December 31, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities:
U.S. agency mortgage-backed securities	$	33,167	$	120	$	92	$	33,195
Asset-backed securities	20,520		29		214		20,335
Corporate debt securities	9,850		20		18		9,852
U.S. Treasury securities	8,679		3		59		8,623
Certificates of deposit	2,070		2		1		2,071
U.S. agency notes	1,915		—		8		1,907
U.S. state and municipal securities	1,167		2		46		1,123
Commercial paper	214		—		—		214
Non-agency commercial mortgage-backed securities	45		—		—		45
Total available for sale securities	$	77,627	$	176	$	438	$	77,365
Held to maturity securities:
U.S. agency mortgage-backed securities	$	72,439	$	324	$	1,086	$	71,677
Non-agency commercial mortgage-backed securities	997		11		4		1,004
Asset-backed securities	941		—		—		941
Corporate debt securities	436		—		—		436
U.S. Treasury securities	223		—		4		219
Commercial paper	99		—		—		99
U.S. state and municipal securities	68		1		1		68
Total held to maturity securities	$	75,203	$	336	$	1,095	$	74,444

For additional information on 2018 and 2017 investments, see Item 8 – Note 6.

As of December 31, 2018, in addition to holdings of securities issued by the U.S. Government and U.S. Government agencies and corporations, the Company’s holdings of investment securities from single issuers with aggregate book values in excess of ten percent of stockholders’ equity are detailed in the table below. These securities have performed in a manner consistent with the investment securities portfolio as a whole.

Issuer	Aggregate Amortized Cost		Aggregate Fair Value
Discover Card Execution Note Trust (1)	$	2,300	$	2,295
American Express Credit Account Master Trust Class A(1)	$	2,251	$	2,241
Capital One Multi-Asset Execution Trust Class A(1)	$	2,140	$	2,140

⁽¹⁾ Included in AFS and HTM securities in the Company’s consolidated balance sheets.

໿

F-4

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

4. Cross-border Holdings

The below information describes Schwab’s cross-border holdings, based on fair value, as of December 31, 2018, 2017, and 2016. Such holdings, by country, that exceed 0.75% of total assets are disclosed separately.

December 31, 2018	Banks and other financial institutions		Commercial and industrial institutions		Total		Exposure as a % of total assets
Country:
France	$	2,793	$	—	$	2,793	0.9	%
Total	$	2,793	$	—	$	2,793

There were no cross-border holdings that exceeded 0.75% of total assets at December 31, 2017.

December 31, 2016	Banks and other financial institutions		Commercial and industrial institutions		Total		Exposure as a % of total assets
Country:
France	$	1,784	$	110	$	1,894	0.8	%
Total	$	1,784	$	110	$	1,894

F-5

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

5. Bank Loans and Related Allowance for Loan Losses

The composition of the loan portfolio is as follows:

December 31,	2018		2017		2016		2015		2014
First Mortgages	$	10,384	$	10,016	$	9,134	$	8,334	$	8,127
HELOCs	1,505		1,943		2,350		2,735		2,955
Pledged asset lines	4,561		4,369		3,851		3,232		2,320
Other	180		176		94		64		39
Total bank loans	$	16,630	$	16,504	$	15,429	$	14,365	$	13,441

An analysis of nonaccrual loans is as follows:

December 31,	2018		2017		2016		2015		2014
Nonaccrual loans	$	21	$	28	$	26	$	28	$	35
Average nonaccrual loans	$	25	$	27	$	27	$	30	$	39

There were no loans accruing interest that were contractually 90 days or more past due as of any period presented.

Changes in the allowance for loan losses were as follows:

December 31,	2018			2017			2016			2015			2014
Balance at beginning of year	$	26		$	26		$	31		$	42		$	48
Charge-offs	(1		)	(3		)	(2		)	(3		)	(5		)
Recoveries	2			3			2			3			3
Provision for loan losses	(6		)	—			(5		)	(11		)	(4		)
Balance at end of year	$	21		$	26		$	26		$	31		$	42

The maturities of the loan portfolio are as follows:

December 31, 2018	Within 1 year		After 1 year through 5 years		After 5 years		Total
First Mortgages (1)	$	—	$	—	$	10,384	$	10,384
HELOCs (2)	760		291		454		1,505
Pledged asset lines	679		3,869		13		4,561
Other	6		169		5		180
Total	$	1,445	$	4,329	$	10,856	$	16,630

⁽¹⁾ Maturities are based upon the contractual terms of the loans.

⁽²⁾ Maturities are based on an initial draw period of ten years.

The interest sensitivity of loans with contractual maturities in excess of one year is as follows:

December 31, 2018	After 1 year
Loans with floating or adjustable interest rates	$	14,175
Loans with predetermined interest rates	1,010
Total	$	15,185

F-6

THE CHARLES SCHWAB CORPORATION

Supplemental Financial Data (Unaudited)

(Dollars in Millions)

6. Summary of Loan Loss on Banking Loans Experience

December 31,	2018			2017			2016			2015			2014
Average loans	$	16,554		$	15,919		$	14,715		$	13,973		$	12,906
Allowance to year end loans	.13		%	.16		%	.17		%	.21		%	.31		%
Allowance to nonperforming loans	100		%	93		%	101		%	110		%	120		%
Nonperforming assets to average loans and real estate owned	.14		%	.20		%	.21		%	.26		%	.31		%

7. Bank Deposits

The following table presents the average amount of and the average rate paid on deposit categories that are in excess of ten percent of average total deposits from banking clients:

December 31,	2018				2017				2016
	Amount		Rate		Amount		Rate		Amount		Rate
Analysis of average daily deposits:
Money market and other savings deposits	$	184,039	0.28	%	$	148,679	0.09	%	$	126,719	0.02	%
Interest-bearing demand deposits	15,100		0.25	%	15,319		0.14	%	14,713		0.07	%
Total	$	199,139			$	163,998			$	141,432

At December 31, 2018, there were no certificates of deposit of $100,000 or more included in bank deposits.

8. Ratios

December 31,	2018		2017		2016
Return on average total stockholders’ equity	17.53	%	13.41	%	12.55	%
Return on average total assets	1.33	%	1.03	%	0.94	%
Average total stockholders’ equity as a percentage of average total assets	7.58	%	7.71	%	7.49	%
Dividend payout ratio (1)	18.78	%	19.88	%	20.61	%

Note: Average balance calculations based on month end balances.

⁽¹⁾   Dividends declared per common share divided by diluted EPS.

F-7

EX-10.314

Exhibit 10.314

EMPLOYMENT AGREEMENT

This Agreement, as amended, is made and entered into effective as of March 13, 2008 by and between The Charles Schwab Corporation, a Delaware Corporation (hereinafter referred to as the "Company"), and Charles R. Schwab, an individual (hereinafter referred to as the "Executive") .

WITNESSETH:

WHEREAS, the Company desires to reward the Executive for his continuing contribution to the Company and provide additional security for the Executive and to provide an inducement to the Executive to remain with the Company and not to engage in competition with it.

NOW THEREFORE, in consideration of the mutual obligations herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1.    EMPLOYMENT

(a) The Company hereby employs the Executive to render services to the Company in the position of Chairman of the Board in the capacity defined in the Bylaws of the Company, as may be amended from time to time. The Executive shall perform such duties commensurate with his position and shall have authority and responsibility in working with the Chief Executive Officer, subject to the control of the Board of Directors, for the overall strategic direction and leadership of the Company.

(b) Throughout the term of this Agreement, the Executive shall devote his full business time and undivided attention to the business and affairs of the Company and its subsidiaries, except for reasonable vacations and except for illness or incapacity, but nothing in the Agreement shall preclude the Executive from devoting reasonable periods required for serving, as appropriate, on Boards of Directors of other companies, and from engaging in charitable and public service activities provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement.

2.    TERM

This Agreement shall commence on March 31, 2003, and shall continue through March 31, 2008, subject to the terms and conditions herein set forth. Beginning on March 31, 2004, and on each subsequent anniversary of this date, one year shall be added to the term of the Agreement, unless, prior to such anniversary, the Company or the Executive has notified the other party hereto that such extension will not become effective.

3.    COMPENSATION

For services rendered by the Executive during the term of this Agreement, and for his performance of all additional obligations of employment, the Company agrees to pay the Executive and the Executive

agrees to accept the following salary, other compensation, and benefits:

(a) Base Salary. During the term of this Agreement, the Company shall pay the Executive in periodic installments, a base salary at the annual rate of $900,000, such base salary to be reviewed on March 31, 2004, and on each subsequent anniversary the Board may adjust it up or down, taking into account, among other things, individual performance, competitive practice, and general business conditions.

(b) Annual Incentive. In addition to the base salary provided in Section 3(a) above, the Executive shall be eligible to receive an annual incentive award based upon the Company's attainment of pre-established performance targets relative to specified performance standards. The performance standards upon which annual incentive payments will be earned shall be adopted at the beginning of each year by the Compensation Committee of the Board of Directors (the "Committee"), to be selected by the Committee from among the following: revenue growth, net revenue growth, operating revenue growth, consolidated pretax profit margin, consolidated pretax operating margin, consolidated after-tax profit margin, consolidated after-tax operating profit margin, customer net new asset growth, stockholder return, return on assets, earnings per share, return on equity, and return on investment.

For each fiscal year during the term of this Agreement, the Executive's incentive opportunity shall be computed as the amount of total cash compensation earned pursuant to the formula-based matrix, which shall be adopted each year by the Compensation Committee of the Board of Directors of the Company, minus the Executive's actual base salary paid during that year. For the 2003 fiscal year, the target total annual cash compensation amount (including base salary) is $5,400,000; therefore, the incentive target is $4,500,000 for achieving specified objectives (see above).

The formula-based matrix, as amended at the sole discretion of the Committee, shall be the sole basis for determining the Executive's annual incentive award. The Committee shall annually review and approve the performance standards and targets with respect to the Executive's incentive opportunity, which review and approval shall be completed no later than the 90th day of the Company's fiscal year for which such incentive opportunity may be earned.

Notwithstanding anything to the contrary, the Executive's maximum annual cash compensation (including base salary and annual incentive) may not exceed $8,000,000.

(c) Long-Term Incentive. The Executive will be considered for stock options in accordance with the Company's 2001 Stock Incentive Plan, as amended, or any successor thereto ("Stock Option Program") and any other long-term incentives offered to other executives of the Company from time to time during the term of this Agreement.

(d) Benefits. The Executive shall be entitled to participate, as long as he is an employee of the Company, in any and all of the Company's present or future employee benefit plans, including without limitation pension plans, thrift and savings plans, insurance plans,

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and other benefits that are generally applicable to the Company's executives; provided, however, that the accrual and/or receipt by the Executive of benefits under and pursuant to any such present or future employee benefit plan shall be determined by the provisions of such plan.

(e) Perquisites. The Executive will be provided such additional perquisites as are customary for senior level executives of the Company provided that each perquisite is approved by the Board of Directors.

(f) Business Expenses. The Executive will be reimbursed for all reasonable expenses incurred in connection with the conduct of the Company's business upon presentation of evidence of such expenditures, including but not limited to travel expenses incurred by the Executive in the performance of his duties, security for the Executive, his family, and principal residence, professional organization dues, and club initiation fees, dues and expenses.

(g) Any annual incentive award earned by Executive under this Section 3 shall be paid on or after January 1^st and on or before March 15^th of the calendar year immediately following the end of the fiscal year on which the award is based; provided, however, that if any such payment would be nondeductible to the Company under Section 162(m) of the Internal Revenue Code (the “Code”), then any nondeductible amounts shall be deferred from year to year until the payment of such amounts is deductible by the Company.

4.    TERMINATION OF EMPLOYMENT

(a) Resignation. Notwithstanding Section 2 hereof, this Agreement may be terminated by the Executive at any time upon six (6) months written notice of resignation by the Executive to the Company, and in such event any payments pursuant to Section 3 and 4 of this Agreement shall automatically terminate (except for the Company's obligations relating to voluntary termination under its compensation and benefit plans, as specified in the various plan documents, and the Executive's obligations set forth in Section 5). Subsequent payments may be made to the Executive as provided pursuant to Section 6 of this Agreement.

Termination under this Section 4(a) shall continue to be a “Voluntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(b) Separation from Service Other Than for Cause. An involuntary Separation from Service (as defined below) other than for Cause, as defined in Section 4(c) below, shall cause the Company to make payments to the Executive hereunder pursuant to the provisions of this Section 4(b). Such involuntary Separation from Service shall require at least sixty (60) business days' prior notice and must be signed by at least three-fourths (3/4) of all the non-employee members of the Board of Directors.

Notwithstanding anything to the contrary contained in the Stock Option Program or any agreement or document related thereto, the Executive's total outstanding and unvested shares and/or options under the Stock Option Program shall at the date of Separation from Service

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under this Section 4(b) be 100% vested. No further grants of stock or options shall be made under the Stock Option Program after such termination.

With respect to base salary and annual incentive compensation, the Company's obligation shall be to pay the Executive, according to the terms of this Agreement and for a period of thirty-six (36) months, an amount equal to the annual salary and incentive paid to the Executive at the bonus level for the year prior to which such Separation from Service occurs unless performance of the Company as defined in the matrix referenced in Section 3(b) is better in the year of Separation from Service, in which event such bonus shall be based on the matrix calculation as described in Section 3(b), such annual amounts to be paid in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee (as defined below), a lump sum representing six (6) of the monthly installment payments under this Section 4(b) shall be paid, and the remaining thirty (30) monthly installments payable under this Section 4(b) shall commence upon the first day of the seventh month following the Executive's Separation from Service (or on the date of the Executive's death, if earlier).

If the Board of Directors fails to reelect the Executive to a position comparable to that described in Section 1(a) of this Agreement or, without terminating the Executive's employment, removes the Executive from his position for reasons other than Cause, substantively reduces the Executive's duties and responsibilities, reduces his pay and/or benefits without the written consent of the Executive, forces relocation, or requires excessive travel, then the Executive may, by notice to the Company, Separate from Service and treat such Separation from Service as an involuntary Separation from Service pursuant to this Section 4(b).

In the event of the Executive's death before the completion of the payments pursuant to this Section 4(b), the remaining payments hereunder shall be made to the beneficiary or beneficiaries designated by the Executive to the Company in writing or, absent such a designation, to his estate.

The term "Specified Employee" means an employee treated as a "specified employee" as defined under Code Section 409A as of the date of his Separation from Service. Generally, a specified employee is one of the top 50 most highly compensated officers.

The term "Separation from Service" or "Separate(s) from Service" shall mean a "separation from service" within the meaning of Code Section 409A. Generally, a separation from service occurs when an individual ceases to provide services for the Company and its affiliates.

Termination under this Section 4(b) shall continue to be an “Involuntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(i) Post-Employment Benefits. In the event the Executive’s employment terminates under Section 4(b), the Executive

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shall be entitled to all benefits and perquisites as provided for in this Agreement, including office space and secretarial support, comparable to that provided to the Executive during his employment by the Company for a period of thirty-six (36) months following his Separation from Service. All benefits or perquisites that the Executive receives following his Separation from Service that are covered under Code Section 409A ("409A Benefits") shall be administered consistent with the following requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (1) Executive's eligibility for benefits in one year will not affect Executive's eligibility for benefits in any other year; (2) any reimbursement of eligible expenses will be made on or before the last day of the year following the year in which the expense was incurred; and (3) Executive's right to benefits is not subject to liquidation or exchange for another benefit.

If the Executive is a Specified Employee, then the Executive shall pay all applicable costs associated with the provision of 409A Benefits during the first six (6) months following the Executive's Separation from Service. The Company shall reimburse the Executive for all expenses actually paid by the Executive under this Section 4(b) (i) upon the first day of the seventh month following the Executive's Separation from Service.

(c) Termination by the Company for Cause. The Company may terminate the Executive's employment for Cause if the Executive has committed a felonious act, or the Executive, in carrying out his duties hereunder has been willfully and grossly negligent or has committed willful and gross misconduct resulting, in either case, in material harm to the Company. An act or omission shall be deemed "willful" only if done, or omitted to be done, in bad faith and without reasonable belief that it was in the best interest of the Company. In the event of termination of the Executive by the Company for Cause, the Executive shall no longer be entitled to receive any payments or any other rights or benefits under this Agreement.

(d) Disability. In the event the Executive becomes Disabled (as defined below), he will continue to receive the same base salary and benefits which he was receiving prior to such disability for 36 months, offset by payments under the Company's Long-Term Disability Plan. Such payments shall commence within 90 days of such disability. In addition, he shall receive a pro-rated annual incentive payment for the year in which his employment is terminated, based on the formula described in Section 3(b). Such payment shall be made as soon as practicable following the Executive becoming Disabled, but in no event later than 90 days following the Executive becoming Disabled. The term “Disabled” under this Section 4(d) means disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Executive is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

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(e) Death. In the event of the death of the Executive during the term of this Agreement, the rights and benefits under employee benefit plans and programs of the Company, including life insurance, will be determined in accordance with the terms and conditions of such plans and programs as in effect on his date of death. In such event, the Company shall pay in a lump sum to the Executive's estate an amount equal to five times the then current rate of the Executive's base salary, and no further payments shall be required pursuant to this Agreement. The lump-sum described in this Section 4(e) shall be paid to the Executive’s estate as soon as practicable following the date of the Executive’s death, but in no event later than 90 days following the Executive’s death.

(f) Change in Control. In the event of a change in control of the Company, as set forth below, the Executive may at any time and in his complete discretion during a 24-month period following a change in control, elect to terminate his employment with the Company. For purposes of this Agreement, a "change in control" shall mean a change in ownership of the Company that would be required to be reported in response to Item 1(a) of a Current Report on Form 8-K pursuant to the Securities and Exchange Act of 1934 ("Exchange Act"), as in effect on the date hereof, except that any merger, consolidation or corporate reorganization in which the owners of the capital stock entitled to vote in the election of directors of the Employer or the Company ("Voting Stock") prior to said combination, own 75% or more of the resulting entity's Voting Stock shall not be considered a change in control for the purposes of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company is or becomes the beneficial owners (as that is used in Section 13(d) of the Exchange Act), directly or indirectly, of 30% or more of the Voting Stock of the Company or its successor; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company ("Incumbent Board") cease for any reason to constitute at least a majority thereof; provided, however, that any person becoming a director of the Company after the beginning of the period whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall, for the purposes hereof, be considered as though he were a member of the Incumbent Board; or (iii) there shall occur the sale of all or substantially all of the assets of the Company. Notwithstanding anything in the foregoing to the contrary, no change in control of the Company shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of persons which includes the Executive acquiring, directly or indirectly, more than 30 percent of the combined voting power of the Company's outstanding securities. If any of the events constituting a change in control shall have occurred during the term hereof, the Executive shall be entitled to the privilege provided in subparagraph (f) herein to terminate his employment.

Any termination by the Executive pursuant to this Section shall be communicated by a written "Notice of Termination."

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If, following a change in control, the Executive shall for any reason voluntarily terminate his employment during the 24-month period following a change in control, then the Company shall pay base salary up to the date of termination and a prorated annual incentive award based on the calculated bonus for the year in which termination occurred, as defined in Section 3(b), in a lump sum on the thirtieth (30th) day following the Date of Termination.

5.    COVENANT NOT TO COMPETE

(a) As a material inducement to the Company's entering into this Agreement, the Executive agrees that during the term of this Agreement, he will not become associated with, render service to or engage in any other business competitive with any existing or contemplated business of the Company or its subsidiaries, except that the Executive may serve as a member of the board of directors of other companies or organizations, provided that he provides written notice to the Board of each significant activity, and that he will do nothing inconsistent with his duties and responsibilities to the Company.

(b) If the Executive voluntarily resigns from the employ of the Company prior to the expiration of the term of this Agreement, he specifically agrees that for a period of five (5) years commencing with the date of his voluntary resignation he will not engage in or perform any services either on a full-time or a part-time or on a consulting or advisory basis for any business organization that is in competition with the Company at the time such services are being performed by Executive, with the exception that this Section 5(b) shall not apply in the event the Executive resigns voluntarily following a change in control of the Company as defined in Section 4(f).

(c) The Executive will not at any time, whether while employed by the Company or after voluntary or involuntary termination or after retirement, reveal to any person, firm or entity any trade or business secrets or confidential, secret, or privileged information about the business of the Company or its subsidiaries or affiliates except as shall be required in the proper conduct of the Company's business.

6.    CONSULTING ARRANGEMENT

Following the Executive’s Separation from Service pursuant to Section 4(a) or Separation from Service following a change in control under Section 4(f), or an involuntary Separation from Service subsequent to a change in control of the Company, for any reason but during a 24-month period following a change in control as defined in Section 4(f), after the Executive ceases to render services as the Chairman, he may in his sole discretion elect to act as a consultant to the Company for a period of five (5) years. During this period of consulting services, the Executive shall, at reasonable times and places, taking into account any other employment or activities he may then have, hold himself available to consult with and advise the officers, directors, and other representatives of the Company. As compensation therefore, the Executive shall be entitled to receive, and Company shall pay, an annual amount equal to seventy-five percent (75%) of his annual base salary rate in effect immediately prior to his Separation from Service, but in no event an annual amount to exceed

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$1,000,000, for each year of such period, payable in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee, a lump sum representing six (6) of the monthly installment payments under this Section 6 shall be paid, and the remaining monthly installments payable under this Section 6 shall commence upon the first day of the seventh month following the Executive's Separation from Service.

7.    WITHHOLDING

All amounts payable hereunder which are or may become subject to withholding under pertinent provisions of law or regulation shall be reduced for applicable income and/or employment taxes required to be withheld.

8.    MISCELLANEOUS

(a) This Agreement supersedes any prior agreements or understandings, oral or written, with respect to employment of the Executive and constitutes the entire Agreement with respect thereto; provided, however, that nothing contained herein shall supersede that certain Assignment and License Agreement entered into as of March 31, 1987, as amended. This Agreement cannot be altered or terminated orally and may be amended only by a subsequent written agreement executed by both of the parties hereto or their legal representatives, and any material amendment must be approved by a majority of the voting shareholders of the Company.

(b) This Agreement shall be governed by and construed in accordance with the laws of the State of California.

(c) This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns. In that this constitutes a personal service agreement, it may not be assigned by the Executive and any attempted assignment by the Executive in violation of this covenant shall be null and void.

(d) For the purpose of this Agreement, the phrase "designated beneficiary or beneficiaries" shall include the estates of such beneficiaries in the event of their death before the receipt of all payments under this Agreement and shall also include any alternate or successor beneficiaries designated in writing to the Company by the Executive.

(e) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions, which shall remain in full force and effect.

(f) The Section and Paragraph headings contained herein are for reference purposes only and shall not in any way affect the meanings or interpretation of this Agreement.

(g) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be

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entered on the arbitrators’ award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company.

(h) Any notices, requests or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices.

9.    COMPLIANCE WITH CODE SECTION 409A

With respect to any compensation payable or benefits to be provided under this Agreement that are subject to Code Section 409A, this Agreement is intended to comply with the provisions of Code Section 409A. In furtherance of this intent, to the extent that any compensation payable or benefits to be provided under this Agreement are subject to Code Section 409A, this Agreement shall be interpreted, operated, and administered in a manner consistent with these intentions, and the parties agree to amend this Agreement further (if necessary) in order to avoid the adverse tax consequences of Code Section 409A.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

ATTEST		Company: THE CHARLES SCHWAB CORPORATION
By:	/s/ Carrie Dwyer	By:	/s/ Jay Allen
	Carrie Dwyer		Jay Allen
	Corporate Secretary		Executive Vice President – Human Resources

Executive:	/s/ Charles R. Schwab
	Charles R. Schwab

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EX-10.362

Exhibit 10.362

THE CHARLES SCHWAB CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN II

(Effective December 9, 2004)

(Amended and Restated December 12, 2007)

(Amended and Restated October 23, 2008)

(Amended and Restated April 24, 2013)

	TABLE OF CONTENTS
Section		Page
Article I.	Purpose	1
1.1	Establishment of the Plan	1
1.2	Purpose of the Plan	1
Article II.	Definitions	1
2.1	Definitions	1
2.2	Gender and Number	3
Article III.	Administration	3
3.1	Committee and Administrator	3
Article IV.	Participants	3
4.1	Participants	3
Article V.	Deferrals	3
5.1	Deferrals	3
5.2	Timing of Elections	3
5.3	Deferral Procedures	4
5.4	Election of Time and Manner of Payment	4
5.5	Accounts and Earnings	5
5.6	Maintenance of Accounts	5
5.7	Change in Control	5
5.8	Payment of Deferred Amounts	7
5.9	Payment on Certain Events	7
Article VI.	General Provisions	8
6.1	Unfunded Obligation	8
6.2	Informal Funding Vehicles	8
6.3	Beneficiary	8
6.4	Incapacity of Participant or Beneficiary	8
6.5	Nonassignment	9
6.6	No Right to Continued Service	9
6.7	Tax Withholding	9
6.8	Claims Procedure and Arbitration	9
6.9	Termination and Amendment	10
6.10	Applicable Law	10

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THE CHARLES SCHWAB CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN II

Article I. Purpose

1.1        Establishment of the Plan. Effective as of December 9, 2004, The Charles Schwab Corporation (hereinafter, the “Company”) established The Charles Schwab Corporation Directors’ Deferred Compensation Plan II (the “Plan”), as set forth in this document. This Plan shall apply to cash compensation that is earned, deferred and accrued by eligible Participants after December 31, 2004. This Plan is adopted by the Committee pursuant to its authority under the Company’s Stock Incentive Plan to prescribe procedures for Directors to elect to receive cash retainer payments and/or meeting fees from the Company in the form of Nonqualified Stock Options and Restricted Stock Units, among other awards, to be issued under the Stock Incentive Plan.

1.2         Purpose of the Plan. The Plan permits Directors to defer the payment of directors’ fees that they may earn. The opportunity to elect such deferrals is provided in order to help the Company attract and retain outside directors. This Plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for its outside directors. It is intended to be exempt from the requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan also is intended to meet the requirements of section 409A of the Internal Revenue Code of 1986 and is to be construed in accordance with that section and any regulatory guidance issued thereunder.

Article II. Definitions

2.1        Definitions. The following definitions are in addition to any other definitions set forth elsewhere in the Plan. Whenever used in the Plan, the capitalized terms in this Section shall have the meanings set forth below unless otherwise required by the context in which they are used:

(a) “Administrator” means the administrator described in Section 3.1 that is selected by the Committee to assist in the administration of the Plan.

(b) “Beneficiary” means a person entitled to receive any benefit payments that remain to be paid after a Participant’s death, as determined under Section 6.3.

(c) “Board” means the Board of Directors of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Company” means The Charles Schwab Corporation, a Delaware corporation.

(f) “Committee” means the Compensation Committee of the Board.

(g) “Deferral Account” means the account representing deferrals of cash compensation, plus investment adjustments, as described in Sections 5.5 and 5.6.

(h) “Director” means each member of the Board who is not an employee of the Company or any of its subsidiaries. The term “Director” shall also include each member of the board of directors of any subsidiary of the Company who is not an employee of the Company or any of its subsidiaries, but only if the Committee has approved participation in the Plan for such subsidiary’s non-employee directors.

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(i) “Disability” means a condition such that an individual is “disabled” within the meaning of section 409A of the Code and any regulatory guidance promulgated thereunder. Generally, an individual who is disabled (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company or its subsidiaries.

(j) “Nonqualified Stock Options” means nonqualified stock options as defined in and issued under the Company’s Stock Incentive Plan.

(k) “Plan” means The Charles Schwab Corporation Directors’ Deferred Compensation Plan II, as in effect from time to time.

(l) “Plan Year” means the calendar year.

(m) “Restricted Stock Units” means restricted stock units as defined in and issued under the Company’s Stock Incentive Plan.

(n) “Separation from Service” or “Separate(s) from Service” means “Separation from Service” within the meaning of section 409A of the Code and any regulatory guidance promulgated thereunder. Generally, a separation from service occurs when an individual ceases to provide services for the Company and its affiliates.

(o) “Specified Employee” means a “specified employee” within the meaning of section 409A of the Code and any regulatory guidance promulgated thereunder, provided that in determining the compensation of individuals for this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(2) shall be used.

(p) “Stock Incentive Plan” means the Company’s 2004 Stock Incentive Plan, the Company’s 2013 Stock Incentive Plan, and any successor plan thereto.

(q) “Termination” means the date a Participant ceases to be a Director and otherwise incurs a “Separation from Service”.

(r) “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in section 152(a) of the Code); (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined in the sole discretion of the Administrator in accordance with section 409A of the Code.

(s) “Valuation Date” means each December 31 and any other date designated from time to time by the Committee for the purpose of determining the value of a Participant’s Deferral Account balance pursuant to Section 5.5.

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2.2        Gender and Number. Except when otherwise indicated by the context, any masculine or feminine terminology shall also include the neuter and other gender, and the use of any term in the singular or plural shall also include the opposite number.

Article III. Administration

3.1        Committee and Administrator. The Committee shall administer the Plan and may select one or more persons to serve as the Administrator. The Administrator shall perform such administrative functions as the Committee may delegate to it from time to time. Any person selected to serve as the Administrator may, but need not, be a Committee member or an officer or employee of the Company. However, if a person serving as Administrator or a member of the Committee is a Participant, such person may not vote on a matter affecting his or her interest as a Participant.

The Committee shall have discretionary authority to construe and interpret the Plan provisions and resolve any ambiguities thereunder; to prescribe, amend, and rescind administrative rules relating to the Plan; to determine eligibility for benefits under the Plan; and to take all other actions that are necessary or appropriate for the administration of the Plan. Such interpretations, rules, and actions of the Committee shall be final and binding upon all concerned and, in the event of judicial review, shall be entitled to the maximum deference allowable by law. Where the Committee has delegated its responsibility for matters of interpretation and Plan administration to the Administrator, the actions of the Administrator shall constitute actions of the Committee.

Article IV. Participants

4.1     Participants. Each Director shall be eligible to participate in this Plan.

Article V. Deferrals

5.1     Deferrals. Each Director may elect to defer up to 100 percent of the fees otherwise receivable from the Company for service as a Director. Any such election must be made by entering a deferred compensation agreement with the Company in accordance with the procedures established by the Administrator on or before the applicable deadline under Section 5.2. Deferral elections shall apply only to a single Plan Year and new deferral elections must be made with respect to each Plan Year.

5.2     Timing of Elections.

(a)     Except as otherwise provided under subparagraph (b) below, compensation for services performed during a Plan Year may be deferred at the Participant’s election only if the election to defer such compensation is made not later than the close of the preceding Plan Year or, if permitted by the Administrator in its sole discretion, at such other time permitted under the Code.

(b)     To the extent permitted under section 409A of the Code and any regulatory guidance promulgated thereunder, in the case of the first Plan Year in which a Participant becomes eligible to participate in the Plan, the Administrator may, in its sole discretion, provide that the Participant may make an election to defer compensation for services to be performed subsequent to the election provided that such election is made not later than 30 days after the date the Participant becomes eligible to participate in the Plan. The election

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shall only apply to compensation earned after the effective date of the election.

5.3     Deferral Procedures. Subject to Section 5.2, Participants shall have an opportunity to elect deferrals with respect to each Plan Year. Unless the Committee specifies other rules for the deferrals that may be elected, deferrals may be made in increments of 10 percent or in a fixed dollar amount. If a deferral is elected, the election shall be irrevocable with respect to the applicable Plan Year. Deferral elections shall be made by following the procedures adopted by the Committee or the Administrator. As provided in Section 6.7, any deferral is subject to any applicable tax withholding measures and may be reduced to satisfy any applicable tax withholding requirements.     

5.4        Election of Time and Manner of Payment.

(a)            When a Participant incurs a Separation from Service, the payment of the Participant’s entire Deferral Account of Restricted Stock Units shall be made in the year following the Participant’s Separation from Service in February. Notwithstanding anything in the Plan to the contrary, if (i) the Participant is a Specified Employee at the time of the Separation from Service, and (ii) the Separation from Service occurs after July, such payment shall be made in the year following the Participant’s Separation from Service in July.

(b)            Notwithstanding anything to the contrary in this Plan, except as otherwise permitted under section 409A of the Code, a Participant’s Deferral Account shall not be distributed earlier than (i) Separation from Service or, in the case of a Specified Employee, the date that is at least six (6) months after Separation from Service; (ii) Disability; (iii) death; (iv) a specified time or schedule; (v) to the extent permitted under section 409A of the Code and any regulatory guidance promulgated thereunder, a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company; or (vi) the occurrence of an Unforeseeable Emergency.

(c)            The acceleration of the time or schedule of any payment under the Plan shall not be permitted unless permitted by the Administrator in accordance with the requirements of section 409A of the Code and any regulatory guidance promulgated thereunder.

(d)            Under procedures approved by the Committee and communicated to Participants, a Participant shall elect between the following two alternatives with respect to the deferred amounts at the same time that the Participant elects to defer the fees payable for a Plan Year. Once made, a Participant’s election for the method of payment may not be changed; however, a Participant may make a different election with respect to amounts that the Participant elects to defer in subsequent Plan Years.

(1)      Payment in Shares. Under this alternative, a Participant automatically shall be granted fully vested Restricted Stock Units pursuant to the Company’s Stock Incentive Plan in a number equal to (i) the amounts deferred hereunder, divided by (ii) the closing price of the Common Stock of the Company on the date the fees deferred pursuant to Section 5.1 hereof would otherwise have been payable. The Company shall issue a number of shares of Common Stock equal to the number of such Restricted Stock Units to one or more grantor trusts formed by the Company (“rabbi trusts”) pursuant to Section 6.2 hereof. Any dividends paid on shares of the Common Stock of the Company issued to a rabbi trust shall be reinvested in Common Stock of the Company, which shall be credited to the Participant as additional Restricted Stock Units pursuant to the Company’s Stock Incentive Plan. Notwithstanding the foregoing, the issuance of shares of Common Stock to a rabbi trust and the crediting of assumed earnings shall not mean that any deferred compensation promised to a Participant is

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secured by particular investment assets or that the Participant is actually earning any form of investment income under the Plan.

(2) Issuance of Stock Options Under Company’s Stock Incentive Plan. Under this alternative, a Participant automatically shall be granted fully vested Nonqualified Stock Options pursuant to the Company’s Stock Incentive Plan. A Participant who elects this alternative shall, on the date the fees deferred pursuant to Section 5.1 hereof would otherwise have been payable, automatically be granted a number of Nonqualified Stock Options with a fair market value equal to the amounts deferred, as determined under the valuation method used by the Company to value stock options at the time of the deferral. The option price shall be the closing price of a share of Common Stock of the Company, which is the Fair Market Value as defined in the Company’s Stock Incentive Plan under which the Nonqualified Stock Options are issued, on the grant date. After the grant date an award of Nonqualified Stock Options shall be subject only to the requirements of the Company’s Stock Incentive Plan under which it is issued and the terms and conditions of the Nonqualified Stock Option award agreement.

(3) Requirements of the Company’s Stock Incentive Plan. The award of Restricted Stock Units and Nonqualified Stock Options shall be subject to all of the requirements of the Company’s Stock Incentive Plan under which such award is issued, including without limitation the limits on authorized shares and individual awards, and the terms and conditions of an individual Restricted Stock Unit or Nonqualified Stock Option award agreement in a form approved by the Committee pursuant to its authority under the Stock Incentive Plan.

5.5        Accounts and Earnings. The Company shall establish a Deferral Account for each Participant who has elected Restricted Stock Units under Section 5.1 above, and its accounting records for the Plan with respect to each such Participant shall include a separate Deferral Account or subaccount for each deferral election of the Participant involving Restricted Stock Units that could cause a payment made at a different time or in a different form from other payments of deferrals elected by the same Participant. Each Deferral Account balance of Restricted Stock Units shall reflect the Company’s obligation to pay a deferred amount to a Participant or Beneficiary as provided in this Article V.

5.6        Maintenance of Accounts. The Accounts of each Participant shall be entered on the books of the Company and shall represent a liability, payable when due under this Plan, from the general assets of the Company. Prior to benefits becoming due hereunder, the Company shall expense the liability for such accounts in accordance with policies determined appropriate by the Company’s auditors. Except to the extent provided under Section 5.4(d)(1), the Accounts created for a Participant by the Company shall not be funded by a trust or an insurance contract; nor shall any assets of the Company be segregated or identified to such account; nor shall any property or assets of the Company be pledged, encumbered, or otherwise subjected to a lien or security interest for payment of benefits hereunder.

5.7        Change in Control. In the event of a Change in Control (as defined below), the following rules shall apply:

(a) All Participants shall continue to have a fully vested, nonforfeitable interest in their Deferral Accounts.

(b) To the extent permitted under section 409A of the Code and any regulatory guidance issued thereunder when the Plan is terminated within 30 days preceding the Change in Control or the 12 months following the Change in Control, deferrals of amounts for the year that includes the Change in Control shall cease beginning with the first payment otherwise due that follows the termination of the Plan.

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(c) To the extent permitted under section 409A of the Code and any regulatory guidance issued thereunder and notwithstanding the Participant’s election pursuant to Section 5.4(d)(1), Restricted Stock Units shall be settled no later than 30 days following the Change in Control.

(d) Subject to section 409A and any regulatory guidance promulgated thereunder, nothing in this Plan shall prevent a Participant from enforcing any rules in a contract or another plan of the Company or any subsidiary concerning the method of determining the amount of fees or other form of compensation to which a Participant may become entitled following a Change in Control, or the time at which that compensation is to be paid in the event of a Change in Control.

(e) For purposes of this Plan, a “Change in Control” means any of the following but only to the extent that such change in control transaction is a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as defined in the regulations promulgated under Section 409A of the Code:

(1) The acquisition by any individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the then outstanding shares of common stock of the Company (the “Outstanding Corporation Common Stock”) or 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that for purposes of this paragraph (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph (3) hereof; or

(2) Individuals who, at the beginning of any one-year period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(3) Consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and

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Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

A Change of Control shall occur on the first day on which any of the preceding conditions has been satisfied. However, notwithstanding the foregoing, this Section 5.7 shall not apply to any Participant who alone or together with one or more other persons acting as a partnership, limited partnership syndicate, or other group for the purpose of acquiring, holding or disposing of securities of the Company, triggers a “Change in Control” within the meaning of paragraphs (1) or (2) above. Moreover, no acquisition by (i) Charles Schwab and/or his spouse or any of his or her lineal descendants or (ii) any trust created by or for the benefit of Charles Schwab and/or his spouse or any of his lineal descendants or (iii) the Schwab Family Foundation shall constitute a Change of Control.

5.8        Payment of Deferred Amounts. A Participant shall have a fully vested, nonforfeitable interest in his or her Deferral Account balance at all times. However, vesting does not confer a right to payment. At the time provided for in Section 5.4(a) for Restricted Stock Units, the Company shall pay to such Participant an amount equal to the balance of the Participant’s Deferral Account.

5.9    Payment on Certain Events. Notwithstanding any elections that have been made under Section 5.4(d)(1), a Participant’s Restricted Stock Units shall be paid in a lump sum within sixty (60) days in the event of the Participant’s death, Disability, or upon receipt of a written request from a Participant and the Administrator’s determination that the Participant has incurred an Unforeseeable Emergency; provided, that the amounts distributed because of an Unforeseeable Emergency shall not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the individual’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

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Article VI. General Provisions

6.1        Unfunded Obligation. The deferred amounts to be paid to Participants pursuant to this Plan constitute unfunded obligations of the Company. Except to the extent specifically provided hereunder, the Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments, including any grantor trust investments which the Company has determined and directed the Administrator to make to fulfill obligetions under this Plan, shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or Accounts shall not create or constitute a trust or a fiduciary relationship between the Administrator or the Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or his or her Beneficiary or his or her creditors in any assets of the Company whatsoever. The Participants shall have no claim for any changes in the value of any assets which may be invested or reinvested by the Company in an effort to match its liabilities under this Plan.

6.2        Informal Funding Vehicles. To the extent required pursuant to Section 5.4(d)(1), the Company shall arrange for the establishment and use of a grantor trust or other informal funding vehicle to facilitate the payment of benefits and to discharge the liability of the Company under this Plan to the extent of payments actually made from such trust or other informal funding vehicle. In addition, the Company may, but need not, arrange for the establishment and use of such a grantor trust or other informal funding vehicle to the extent otherwise permitted pursuant to the Plan.

Any investments and any creation or maintenance of memorandum accounts or a trust or other informal funding vehicle shall not create or constitute a trust or a fiduciary relationship between the Committee or the Company and a Participant, or otherwise confer on any Participant or Beneficiary or his or her creditors a vested or beneficial interest in any assets of the Company whatsoever. Participants and Beneficiaries shall have no claim against the Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to this Plan.

6.3    Beneficiary. The term “Beneficiary” shall mean the person or persons to whom payments are to be paid pursuant to the terms of the Plan in the event of the Participant’s death. A Participant may designate a Beneficiary by following the procedures established by the Administrator, executed by the Participant, and delivered to the Administrator. The Administrator may require the consent of the Participant’s spouse to a designation if the designation specifies a Beneficiary other than the spouse. Subject to the foregoing, a Participant may change a Beneficiary designation at any time. Subject to the property rights of any prior spouse, if no Beneficiary is designated, if the designation is ineffective, or if the Beneficiary dies before the balance of the Account is paid, the balance shall be paid to the Participant’s surviving spouse, or if there is no surviving spouse, to the Participant’s estate.

6.4    Incapacity of Participant or Beneficiary. Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the date on which the Administrator receives a written notice, in a form and manner acceptable to the Administrator, that such person is incompetent or a minor, for whom a guardian or other person legally vested with the care of his or her person or estate has been appointed; provided, however, that if the Administrator finds that any person to whom a benefit is payable under the Plan is unable to care for his or her affairs because of incompetency, or because he or she is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, a brother or

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sister, or to any person or institution considered by the Administrator to have incurred expense for such person otherwise entitled to payment. To the extent permitted by law, any such payment so made shall be a complete discharge of liability therefor under the Plan.

If a guardian of the estate of any person receiving or claiming benefits under the Plan is appointed by a court of competent jurisdiction, benefit payments may be made to such guardian provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Administrator. In the event a person claiming or receiving benefits under the Plan is a minor, payment may be made to the custodian of an account for such person under the Uniform Gifts to Minors Act. To the extent permitted by law, any such payment so made shall be a complete discharge of any liability therefor under the Plan.

6.5        Nonassignment. The right of a Participant or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process.

6.6        No Right to Continued Service. Nothing in the Plan shall be construed to confer upon any Participant any right to continue as a Director of the Company.

6.7        Tax Withholding. Any appropriate taxes shall be withheld from payments made to Participants pursuant to the Plan. To the extent tax withholding is payable in connection with the Participant’s deferral of income rather than in connection with the payment of deferred amounts, such withholding may be made from amounts currently payable to the Participant, or, as determined by the Administrator, the amount of the deferral elected by the Participant may be reduced in order to satisfy required tax withholding for any applicable taxes.

6.8        Claims Procedure and Arbitration. The Administrator shall establish a reasonable claims procedure. Following a Change in Control of the Company (as determined under Section 5.7) the claims procedure shall include the following arbitration procedure.

    Since time will be of the essence in determining whether any payments are due to the Participant under this Plan following a Change in Control, a Participant may submit any claim for payment to arbitration as follows: On or after the second day following the Change in Control or other event triggering a right to payment, the claim may be filed with an arbitrator of the Participant’s choice by submitting the claim in writing and providing a copy to the Company. The arbitrator must be:

(a) a member of the National Academy of Arbitrators or one who currently appears on arbitration panels issued by the Federal Mediation and Conciliation Service or the American Arbitration Association; or

(b) a retired judge of the State in which the claimant is a resident who served at the appellate level or higher.

The arbitration hearing shall be held within 72 hours (or as soon thereafter as possible) after filing of the claim unless the Participant and the Company agree to a later date. No continuance of said hearing shall be allowed without the mutual consent of the Participant and the Company. Absence from or nonparticipation at the hearing by either party shall not prevent the issuance of an award. Hearing procedures which will expedite the hearing may be ordered at the arbitrator’s discretion, and the arbitrator may close the hearing in his or her sole discretion upon deciding he or she has heard sufficient evidence to satisfy issuance of an award. In reaching a decision, the arbitrator shall have no authority to ignore, change, modify, add to or delete from any provision of

9

this Plan, but instead is limited to interpreting this Plan. The arbitrator’s award shall be rendered as expeditiously as possible, and unless the arbitrator rules within seven days after the close of the hearing, he will be deemed to have ruled in favor of the Participant. If the arbitrator finds that any payment is due to the Participant from the Company, the arbitrator shall order the Company to pay that amount to the Participant within 48 hours after the decision is rendered. The award of the arbitrator shall be final and binding upon the Participant and the Company.

Judgment upon the award rendered by the arbitrator may be entered in any court in any State of the United States. In the case of any arbitration regarding this Agreement, the Participant shall be awarded the Participant’s costs, including attorney’s fees. Such fee award may not be offset against the deferred compensation due hereunder. The Company shall pay the arbitrator’s fee and all necessary expenses of the hearing, including stenographic reporter if employed.

6.9     Termination and Amendment. The Committee may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended, the Committee may reinstate any or all of its provisions. The Executive Vice President - Human Resources has the authority to amend the Plan to comply with the requirements of the Code, to avoid a plan failure under section 409A of the Code and to facilitate administration of the Plan to the extent that any such amendments will not materially increase the cost of the Plan. Except as otherwise required by law, the Committee may delegate to the Administrator all or any of its foregoing powers to amend or suspend the Plan. Any such amendment or suspension may affect future deferrals without the consent of any Participant or Beneficiary. However, with respect to deferrals that have already occurred, no amendment or suspension may impair the right of a Participant or a designated Beneficiary to receive payment of the related deferred compensation in accordance with the terms of the Plan prior to the effective date of such amendment or suspension, unless the affected Participant or Beneficiary gives his or her express written consent to the change; provided that such consent shall not be required if an amendment is required to avoid a plan failure under section 409A of the Code.

Subject to the requirements of section 409A of the Code and any regulatory guidance promulgated thereunder, the Committee may terminate the Plan at any time and in the Committee’s discretion the Deferral Accounts of Participants may be distributed within the period beginning twelve months after the date the Plan was terminated and ending twenty-four months after the date the Plan was terminated, or pursuant to Section 5.4, 5.7 or 5.9, if earlier. If the Plan is terminated and Deferral Accounts are distributed, the Company shall terminate all account balance non-qualified deferred compensation plans that are aggregated with the Plan under section 409A of the Code with respect to all participants and shall not adopt a new account balance non-qualified deferred compensation plan that is aggregated with the Plan under section 409A of the Code for at least three years after the date the Plan was terminated.

The Committee, in its discretion, may terminate the Plan upon a corporate dissolution of the Company that is taxed under section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. section 503(b)(1(A), provided that the Participants’ Deferral Accounts are distributed and included in the gross income of the Participants at the time required under section 409A of the Code.

6.10    Applicable Law. The Plan shall be construed and governed in accordance with applicable federal law and, to the extent not preempted by such federal law, the laws of the State of California to the extent the application of such state laws would not result in the taxation of amounts deferred under the Plan until such amounts are distributed to participants under the Plan.

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EX-10.393

Exhibit 10.393

THE CHARLES SCHWAB CORPORATION

[2013 STOCK INCENTIVE PLAN]

NOTICE OF NONQUALIFIED STOCK OPTION GRANT

You have been granted the following option to purchase common stock (“Shares”) of The Charles Schwab Corporation (“Schwab”) under [The Charles Schwab Corporation 2013 Stock Incentive Plan] (the “Plan”). A stock option represents the right to purchase Shares at a fixed price, called the exercise price, within a certain period of time. Your option is granted subject to the following terms:

Name of Recipient:	<first_name> <last_name>
Total Number of Shares Granted:	<shares_awarded>
Exercise Price Per Share:	<award_price>
Grant Date:	<award_date>
Expiration Date:	<expire_date>
Vesting Schedule	So long as you remain employed in good standing by Schwab or its subsidiaries and subject to the terms of the Nonqualified Stock Option Agreement, you will acquire the right to exercise this option (become "vested" in this option) on the following dates and in the following amounts: Number of Shares on Vesting Date: <vesting_schedule>

You and Schwab agree that this option is granted under and governed by the terms and conditions of the Plan and the Nonqualified Stock Option Agreement, both of which are made a part of this notice. Please review the Plan and the Nonqualified Stock Option Agreement carefully, as they explain the terms and conditions of this option. You agree that Schwab may deliver electronically all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that Schwab is required to deliver to its stockholders.

THE CHARLES SCHWAB CORPORATION[2013 STOCK INCENTIVE PLAN]
NONQUALIFIED STOCK OPTION AGREEMENT

Tax Treatment	This option is a nonqualified stock option and is not intended to qualify as an incentive stock option under federal tax laws.
Vesting	Subject to the provisions of this Nonqualified Stock Option Agreement (“Agreement”), this option becomes vested in installments as described in the Notice of Nonqualified Stock Option Grant.
Accelerated Vesting	This option will become fully exercisable if your service with The Charles Schwab Corporation (“Schwab”) and its subsidiaries terminates on account of your death or disability. This option will become fully exercisable if your service with Schwab and its subsidiaries terminates on account of your retirement as defined below. If, prior to the date your service terminates, Schwab is subject to a “change in control” (as defined in [The Charles Schwab Corporation 2013 Stock Incentive Plan] (the “Plan”)), this option will become fully exercisable immediately preceding the change in control. If the Compensation Committee (or its delegate) (the “Compensation Committee”) of the Board of Directors of Schwab (the “Board”) determines that a change in control is likely to occur, Schwab will advise you and this option will become fully exercisable as of the date 10 days prior to the anticipated date of the change in control.
Definition of Disability	For all purposes of this Agreement, "disability" means that you have a disability such that you have been determined to be eligible for benefits under Schwab’s long-term disability plan or if you are not covered by Schwab’s long-term disability plan, you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which has lasted, or can be expected to last, for a continuous period of not less than 12 months or which can be expected to result in death as determined by Schwab in its sole discretion.
Definition of Retirement	For all purposes of this Agreement, “retirement” will mean any termination of employment with Schwab and its subsidiaries for any reason other than death at any time after the earlier of when you attain age 55, but only if, at the time of your termination, you have been credited with at least 10 years of service or when you attain age 65, but only if, at the time of your termination, you have been credited with at least 5 years of service.

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	The phrase "years of service" above has the same meaning given to it under the SchwabPlan Retirement Savings and Investment Plan (or any successor plan).
Exercise Procedures	You or your representative may exercise this option by following the procedures prescribed by Schwab. If this option is being exercised by your representative, your representative must furnish proof satisfactory to Schwab of your representative’s right to exercise this option. After completing the prescribed procedures, Schwab will cause to be issued the shares of common stock of Schwab (“Shares”) purchased, which will be registered in the name of the person exercising this option.
Forms of Payment	When you submit your notice of exercise, you must pay the option exercise price for the Shares you are purchasing. Payment may be made in one of the following forms: • Cash in your Schwab brokerage account in an amount sufficient to cover the option exercise price of the Shares and the required tax withholding. (This exercise method is sometimes referred to as “Exercise and Hold”). • Shares surrendered to Schwab. These Shares will be valued at their fair market value on the date when the new Shares are purchased. (This exercise method is sometimes referred to as a “Stock Swap.”) • By delivery (in a manner prescribed by Schwab) of an irrevocable direction to Charles Schwab & Co., Inc. to sell Shares (including Shares to be issued upon exercise of this option) and to deliver all or part of the sale proceeds to Schwab in payment of all or part of the exercise price. (This exercise method is sometimes referred to as “Exercise and Sell” or “Sell to Cover.”)
Term	This option expires no later than the Expiration Date specified in the Notice of Nonqualified Stock Option Grant but may expire earlier upon your termination of service, as described below.
Termination of Service	This option will expire on the date three months following the date of your termination of employment with Schwab and its subsidiaries for any reason other than on account of death, disability or retirement. The terms “disability” and “retirement” are defined above. If you cease to be an employee of Schwab and its subsidiaries by reason of your disability or death, then this option will expire on the first anniversary of the date of your death or disability.

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	If you cease to be an employee of Schwab and its subsidiaries by reason of your retirement and have been credited with at least 5 years of service, then this option will expire on the earlier of the fifth anniversary of the date of your termination or the Expiration Date specified in the Notice of Nonqualified Stock Option Grant. If you cease to be an employee of Schwab and its subsidiaries by reason of your retirement and have been credited with at least 15 years of service, then this option will expire on the Expiration Date specified in the Notice of Nonqualified Stock Option Grant.
Effect of Entitlement to Severance	If you are entitled to severance benefits under The Charles Schwab Severance Pay Plan (or any successor plan) and have signed your Severance Agreement, then vesting of this option shall be determined under the terms of that plan.
Cancellation of Options	To the fullest extent permitted by applicable laws, this option will immediately be cancelled and will expire in the event that Schwab terminates your employment on account of conduct contrary to the best interests of Schwab, including, without limitation, conduct constituting a violation of law or Schwab policy, fraud, theft, conflict of interest, dishonesty or harassment. The determination whether your employment has been terminated on account of conduct inimical to the best interests of Schwab shall be made by Schwab in its sole discretion.
Withholding Taxes and Stock Withholding	You will not be allowed to exercise this option unless you make arrangements acceptable to Schwab to pay any applicable withholding of income and employment taxes that may be due as a result of the option exercise. These arrangements may include without limitation withholding Shares that otherwise would be issued to you when you exercise this option. In the event you do not elect to pay applicable withholding taxes in cash, Schwab shall withhold Shares. Schwab may withhold the number of whole Shares, valued at the fair market value on the applicable date, required to satisfy such applicable withholding taxes. Schwab will round up to the next whole Share to cover the applicable withholding taxes, and any amounts in excess of the applicable withholding taxes resulting from rounding up to the next whole Share will be added to your federal income tax withholdings. While Schwab will withhold to satisfy applicable withholding taxes, you acknowledge that, regardless of any action taken by Schwab, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you, is and remains your responsibility and may exceed the amount, if any, actually withheld by Schwab.
Restrictions on Exercise and	You cannot exercise this option and no Shares may be issued under this option if the issuance of Shares at that time would violate any

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Issuance or Transfer of Shares	applicable law, regulation, or rule. Schwab may impose restrictions upon the sale, pledge, or other transfer of Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of Schwab and its counsel, such restrictions are necessary or desirable to comply with applicable law, regulations or rules.
No Stockholder Rights	You, or your estate or heirs, have no rights as a stockholder of Schwab until you have exercised this option by giving the required notice to Schwab and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan.
No Right to Employment	Nothing in this Agreement will be construed as giving you the right to be retained as an employee, consultant, or director of Schwab and its subsidiaries for any specific duration or at all.
Transfer of Option	In general, only you may exercise this option prior to your death. You may not transfer or assign this option, except as provided below. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may dispose of this option in your will or in a beneficiary designation. You may designate one or more beneficiaries by filing a beneficiary designation form with Schwab. You may change your beneficiary designation by filing a new form with Schwab at any time prior to your death. If you do not designate a beneficiary or if your designated beneficiary predeceases you, then your options will be exercisable by your estate. Schwab may, in its sole discretion, allow you to transfer this option under a domestic relations order in settlement of marital or domestic property rights. In order to transfer this option, you and the transferee(s) must follow the procedures prescribed by Schwab, and the transferee(s) must follow the terms of this Agreement.
Limitation on Payments	If a payment from the Plan would constitute an excess parachute payment or if there have been certain securities law violations, then your grant may be reduced or cancelled and you may be required to disgorge any profit that you have realized from your grant. If a disqualified individual receives a payment or transfer under the Plan that would constitute an excess parachute payment under the Internal Revenue Code of 1986, as amended (the “Code”), such payment will be reduced, as described below. Generally, someone is a

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“disqualified individual” under section 280G if he or she is (a) an officer of Schwab, (b) a member of the group consisting of the highest paid 1% of the employees of Schwab or, if less, the highest paid 250 employees of Schwab, or (c) a 1% stockholder of Schwab.

For purposes of this section on “Limitation on Payments,” the term “Schwab " will include affiliated corporations to the extent determined by the Auditors (as defined below) in accordance with section 280G(d)(5) of the Code.

In the event that the independent auditors most recently selected by the Board (the “Auditors”) determine that any payment or transfer in the nature of compensation to or for your benefit, whether paid or payable (or transferred or transferable) pursuant to the terms of the Plan or otherwise (a “Payment”), would be nondeductible for federal income tax purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments will be reduced (but not below zero) to the Reduced Amount (as defined below); provided, however, that the Compensation Committee may specify in writing that the grant will not be so reduced and will not be subject to reduction under this section.

For this purpose, the “Reduced Amount” will be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by Schwab because of section 280G of the Code.

If the Auditors determine that any Payment would be nondeductible because of section 280G of the Code, then Schwab will promptly give you notice to that effect and a copy of the detailed calculation and of the Reduced Amount. You may then elect, in your discretion, which and how much of the Payments will be eliminated or reduced (as long as after such election, the aggregate present value of the Payments equals the Reduced Amount, and your election is consistent with any mandatory eliminations or reductions that apply under other agreements or the Plan). You will advise Schwab in writing of your election within 10 days of receipt of the notice. If you do not make such an election within the 10-day period, then Schwab may elect which and how much of the Payments will be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount). Schwab will notify you promptly of its election. Present value will be determined in accordance with section 280G(d)(4) of the Code. The Auditors’ determinations will be binding upon you and Schwab and will be made within 60 days of the date when a Payment becomes payable or transferable.

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	As promptly as practicable following these determinations and elections, Schwab will pay or transfer to or for your benefit such amounts as are then due to you under the Plan, and will promptly pay or transfer to or for your benefit in the future such amounts as become due to you under the Plan. As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors, it is possible that Payments will have been made by Schwab that should not have been made (an “Overpayment”) or that additional Payments that will not have been made by Schwab could have been made (an “Underpayment”) consistent in each case with the calculation of the Reduced Amount. In the event the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against you or Schwab that the Auditors believe has a high probability of success determine that an Overpayment has been made, such Overpayment will be treated for all purposes as a loan to you that you will repay to Schwab on demand, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code. However, no amount will be payable by you to Schwab if and to the extent that such payment would not reduce the amount that is subject to taxation under section 4999 of the Code. In the event the Auditors determine that an Underpayment has occurred, such Underpayment will promptly be paid or transferred by Schwab to or for your benefit, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.
Plan Administration	The Plan administrator has discretionary authority to make all determinations related to this option and to construe the terms of the Plan, the Notice of Nonqualified Stock Option Grant, and this Agreement. The Plan administrator’s determinations are conclusive and binding on all persons, and they are entitled to deference upon any review.
Adjustments	In the event of a stock split, a stock dividend or a similar change in Shares, the Compensation Committee, in its discretion, may adjust the number of Shares covered by this option and the exercise price per Share.
Severability	In the event that any provision of this Agreement is held invalid or unenforceable, the provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.
Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions), as such laws are applied to contracts entered into and performed in Delaware.

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The Plan and Other Agreements The text of the Plan is incorporated in this Agreement by reference. This Agreement (including the Additional Terms and Conditions for Non-U.S. Recipients and the Country-Specific Provisions), the Notice of Nonqualified Stock Option Grant, and the Plan constitute the entire understanding between you and Schwab regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement approved by the Compensation Committee and signed by both parties. If there is any inconsistency or conflict between any provision of this Agreement and the Plan, the terms of the Plan will control. Nothing in this Agreement gives you the ability to negotiate or change the key terms and conditions described above, in the Notice of Nonqualified Stock Option Grant and in the Plan.

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ADDITIONAL TERMS AND CONDITIONS FOR NON-U.S. RECIPIENTS

The additional (or, if so indicated, different) terms and conditions set forth below are specifically incorporated into the Nonqualified Stock Option Agreement (the “Agreement”) for awards granted outside the United States (“U.S.”). These terms and conditions govern this option granted under the Plan if you reside or work outside of the U.S. Due to the complexities of legal, regulatory and tax issues, you should seek appropriate professional advice as to how the relevant laws in the applicable country may apply to your individual situation.

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan and/or the Agreement.

Withholding Taxes and Stock Withholding: The following provisions supplement the Withholding Taxes and Stock Withholding section of the Agreement:

You acknowledge that, regardless of any action taken by Schwabor, if different, your employer (“Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“withholding taxes”), is and remains your responsibility and may exceed the amount, if any, actually withheld by Schwab or your Employer. You further acknowledge that Schwab and/or your Employer (1) make no representations or undertakings regarding the treatment of any withholding taxes in connection with any aspect of this option, including, but not limited to, the grant, vesting or exercise of this option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this option to reduce or eliminate your liability for withholding taxes or achieve any particular tax result. Further, if you are subject to withholding taxes in more than one jurisdiction, you acknowledge that Schwaband/or your Employer (or former employer, as applicable) may be required to withhold or account for withholding taxes in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Schwab and/or the Employer to satisfy all withholding taxes.

In this regard, you authorize Schwab and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all withholding taxes by one or a combination of the following: (a) withholding from your wages or other cash compensation paid to you by Schwab and/or the Employer; (b) withholding from funds in your Schwab brokerage account; (c) requiring you to make a cash payment in an amount equal to the withholding obligations for withholding taxes; (d) withholding from proceeds of the sale of Shares acquired upon exercise of this option either through a voluntary sale or through a mandatory sale arranged by Schwab (on your behalf pursuant to this authorization without further consent); (e) withholding in Shares to be issued upon exercise of this option; or (f) any other method of withholding determined by Schwab and permitted by applicable law.

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Depending on the withholding method, Schwab may withhold or account for withholding taxes by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in your jurisdiction(s), in which case you may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for withholding taxes is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the exercised option, notwithstanding that a number of the Shares are held back solely for the purpose of paying the withholding taxes.

Nature of Grant: In accepting this option, you acknowledge, understand and agree that:

(1) the Plan is established voluntarily by Schwab, it is discretionary in nature and it may be modified, amended, suspended or terminated by Schwab at any time, to the extent permitted by the Plan;

(2) the grant of this option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(3) all decisions with respect to future options or other grants, if any, will be at the sole discretion of Schwab;

(4) you are voluntarily participating in the Plan;

(5) this option, any Shares acquired under this option, and the income and value of same, are not intended to replace any pension rights or compensation;

(6) this option and any Shares acquired under this option, and the income and value of same, are not part of normal or expected compensation for any purpose, including calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar mandatory payments;

(7) unless otherwise agreed with Schwab, this option and the Shares acquired under this option, and the income and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of a subsidiary of Schwab;

(8) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(9) if the underlying Shares do not increase in value, this option will have no value;

(10) if you exercise this option and acquire Shares, the value of such Shares may increase or decrease in value, even below the exercise price;

(11) for purposes of this option, your employment or service relationship will be considered terminated as of the date you are no longer actively providing

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services to Schwab and its subsidiaries (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by Schwab, (i) your right to vest in this option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); and (ii) the period (if any) during which you may exercise this option after such termination of your employment or service relationship will commence on the date you cease to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where you are employed or terms of your employment agreement, if any; the Plan administrator shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of this option grant (including whether you may still be considered to be providing services while on a leave of absence);

(12) unless otherwise provided in the Plan or by Schwabin its discretion, this option and the benefits evidenced by this Agreement do not create any entitlement to have this option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and

(13) neither Schwab, its subsidiaries nor your Employer shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of this option or of any amounts due to you pursuant to the exercise of this option or the subsequent sale of any Shares acquired upon exercise.

No Advice Regarding Grant: Schwab is not providing any tax, legal or financial advice, nor is Schwab making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.

Compliance with Law: Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Schwab shall not be required to deliver any Shares issuable upon exercise of this option prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Schwab shall, in its absolute discretion, deem necessary or advisable. You understand that Schwab is under no obligation to register or qualify the Shares with the SEC or any state or foreign

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securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that Schwabshall have unilateral authority to amend the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.

Insider Trading/Market Abuse Laws: You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell, attempt to sell or otherwise dispose of Shares, rights to Shares (e.g., this option) or rights linked to the value of Shares during such times you are considered to have “inside information” regarding Schwab (as defined in the laws or regulations in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed inside information. Furthermore, you could be prohibited from (i) disclosing the inside information to any third party, including fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Schwab insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions and are advised to speak to your personal advisor on this matter.

Foreign Asset/Account Reporting: Please be aware that your country may have certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside your country. You may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You acknowledge that it is your responsibility to be compliant with such regulations, and you should speak to your personal advisor on this matter.

Data Privacy:

(1) Declaration of Consent. You hereby agree with the data processing practices described in this Agreement and consent to the collection, processing and use, in electronic or other form, of your personal data as described herein and the transfer of such personal data to the recipients mentioned below, including recipients located in countries which may not have a similar level of protection from the perspective of your country’s data protection laws.

(2) Data Collection and Usage. Schwab and your Employer will collect, process and use certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any Shares or directorships held in Schwab, details of all options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for

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the processing of Data is your consent. Where required under applicable law, Data may also be disclosed to certain securities or other regulatory authorities where Schwab’s securities are listed or traded or regulatory filings are made and the legal basis, where required, for such disclosure are the applicable laws.

(3) Stock Plan Administration Service Providers. Schwab transfers Data to certain of its subsidiaries providing stock plan and broker services, or such other third party stock plan service provider as may be selected by Schwab in the future, which is assisting Schwab with the implementation, administration and management of the Plan. You may be asked to agree on separate terms and data processing practices, with such agreement being a condition of the ability to participate in the Plan.

(4) Other Service Provider Data Recipients. Schwab also may transfer Data to other third party service providers, if necessary to ensure compliance with applicable tax, exchange control, securities and labor law. Such third party service providers may include Schwab’s legal counsel as well as Schwab’s auditor, accountant, or other third party vendor (currently Deloitte & Touche LLP). Wherever possible, Schwab will anonymize Data, but you understand that your Data may need to be transferred to such providers to ensure compliance with applicable law and/or tax requirements.

(5) International Data Transfers. Schwab and its other service providers described above under (4) are located in the United States. The United States may have different data privacy laws and protections than your country. For example, the European Commission has issued a limited adequacy finding with respect to the United States that applies only to the extent companies register for the EU-U.S. Privacy Shield program, which is open to companies subject to Federal Trade Commission jurisdiction. Schwab’s legal basis, where required, for the transfer of Data is your consent.

(6) Data Retention. Schwab will hold and use the Data only as long as is necessary to implement, administer and manage your participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax and securities laws. When Schwab no longer needs the Data, Schwab will remove it from its systems. If Schwab keeps Data longer, it would be to satisfy legal or regulatory obligations and Schwab’s legal basis would be relevant laws or regulations.

(7) Data Subject Rights. You understand that data subject rights vary depending on applicable law and that, depending on where you are based and subject to the conditions set out under applicable law, you may have, without limitation, the rights to (i) request access to or copies of Data that Schwab processes, (ii) rectify or supplement Data that is incorrect, incomplete or out-of-date in light of the purposes underlying the processing, (iii) delete Data, (iv) restrict processing of Data, (v) restrict portability of Data, (vi) lodge complaints with competent authorities in your jurisdiction and/or (vii) receive a list with the

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names and addresses of any potential recipients of Data. To receive clarification regarding these rights or to exercise these rights, you understand that you can contact your local human resources representative.

(8) Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service with your Employer will not be affected; the only consequence of refusing or withdrawing your consent is that Schwab would not be able to grant you options or other equity awards or administer or maintain such awards.

(9) Declaration of Consent. By accepting the options and indicating consent via Schwab’s online acceptance procedure, you are declaring that you agree with the data processing practices described herein and consent to the collection, processing and use of Data by Schwab and the transfer of Data to the recipients mentioned above, including recipients located in countries which do not adduce an adequate level of protection from a European (or other non-U.S.) data protection law perspective, for the purposes described above.

(10) Alternative Basis for Data Processing and Transfer. You understand that Schwab may rely on a different legal basis for the processing or transfer of Data in the future and/or request that you provide another data privacy consent form. If applicable and upon request of Schwab, you agree to provide an executed acknowledgement or data privacy consent form to your Employer or Schwab (or any other acknowledgements, agreements or consents that may be required by your Employer or Schwab) that Schwab and/or your Employer may deem necessary to obtain under the data privacy laws in your country, either now or in the future. You understand that you will not be able to participate in the Plan if you fail to execute any such acknowledgement, agreement or consent requested by Schwab and/or your Employer.

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COUNTRY-SPECIFIC PROVISIONS

Terms and Conditions

These additional terms and conditions govern this option granted to you under the Plan if you are an employee and reside and/or work in one of the countries listed below.

Notifications

These provisions may also include information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of September 2018. These laws are often complex and change frequently. As a result, you should not rely on the information in these additional terms and conditions as the only source of information relating to your participation in the Plan.

In addition, the information contained herein is general in nature and may not apply to your particular situation, and Schwab is not in a position to assure you of a particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.

You understand that if you are a citizen or resident of a country other than the one in which you currently reside and/or work, transfer to another country after the date of grant, or are considered a resident of another country for local law purposes, Schwab shall, in its discretion, determine the extent to which the special terms and conditions contained herein shall be applicable to you. In addition, the notifications contained herein may not be applicable to you in the same manner.

AUSTRALIA

Notifications

Offer Document: The offer of the option is intended to comply with the provisions of the Corporations Act 2001, ASIC Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Offer Document for the Offer of Stock Options and Restricted Stock Units to Australian Residents, which was distributed to you with this Agreement.

Tax Information: Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) applies to the option granted under the Plan, such that this option is intended to be subject to deferred taxation.

Exchange Controls: If you are an Australian resident, exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report. If there is no Australian bank involved in the transfer, you will be required to file the report.

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HONG KONG

Terms and Conditions

Sale Restriction: Any Shares acquired pursuant to exercise of this option are accepted as a personal investment. In the event that you exercise this option and Shares are issued to you (or your heir) within 6 months of the date of grant, you (or your heir) agree that such Shares will not be offered to the public or otherwise disposed of prior to the 6-month anniversary of the date of grant.

Notifications

Securities Law: WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. Neither the grant of the options nor the issuance of Shares upon exercise constitutes a public offering of securities under Hong Kong law and are available only to employees of Schwab and its subsidiaries. This Agreement, the Plan and other incidental communication materials distributed in connection with the options (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong and (ii) are intended only for the personal use of each eligible employee of Schwab or its subsidiaries and may not be distributed to any other person.

Nature of Scheme. Schwab specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).

SINGAPORE

Terms and Conditions

Sale Restriction: You agree that any Shares acquired pursuant to this option will not be offered for sale in Singapore within 6 months from the date of grant, unless such offer or sale is made pursuant to one or more exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the Securities and Futures Act (Chap. 289, 2006 Ed.) (“SFA”) or pursuant to, and in accordance with the conditions of, any other applicable provision(s) of the SFA.

Notifications

Securities Law: This option grant is being made in reliance on section 273(1)(f) of the SFA, on which basis it is exempt from the prospectus and registration requirements under the SFA and is not made to you with a view to this option or the Shares being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.

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Chief Executive Officer and Director Notification Obligation. The Chief Executive Officer (“CEO”) and the directors of a Singapore subsidiary of Schwab are subject to certain notification requirements under the Singapore Companies Act. The CEO and the directors must notify the Singapore subsidiary in writing of an interest (e.g., this option, Shares) in Schwab or any subsidiary or parent of Schwab within two business days of (i) its acquisition or disposal, (ii) any change in a previously-disclosed interest (e.g., upon exercise of this option or subsequent sale of Shares acquired under the Plan), or (iii) becoming a director or the CEO.

UNITED KINGDOM

Terms and Conditions

Withholding Taxes and Stock Withholding: This section supplements the “Withholding Taxes and Stock Withholding” section of the Agreement:

Without limitation to the “Withholding Taxes and Stock Withholding” section of the Agreement, you agree that you are liable for all withholding taxes and hereby covenant to pay all such withholding taxes as and when requested by Schwab or your Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified Schwab and your Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on your behalf.

Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), you understand that you may not be able to indemnify Schwab or your Employer for the amount of any income tax not collected from or paid by you, as it may be considered a loan. In the event that you are an executive officer or director and income tax due is not collected from or paid by you within 90 days after the end of the United Kingdom tax year in which the event giving rise to the income tax occurs, the amount of any income tax due may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying Schwab or your Employer (as appropriate) for the value of any employee national insurance contributions due on this additional benefit, which Schwab or your Employer may recover from you by any means referred to in this Agreement.

Retirement: Notwithstanding the terms and conditions set forth in the Agreement, the options of employees in the United Kingdom will not vest upon retirement and any options that are vested prior to retirement will terminate on the earlier of the date three months following the date of your retirement or the Expiration Date specified in the Notice of Nonqualified Stock Option Grant.

BY ACCEPTING THIS OPTION GRANT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

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EX-10.394

Exhibit 10.394

THE CHARLES SCHWAB CORPORATION

[2013 STOCK INCENTIVE PLAN]

NOTICE OF RESTRICTED STOCK UNIT GRANT

You have been granted Restricted Stock Units. A Restricted Stock Unit represents the right to receive, subject to certain conditions, a share of common stock (a “Share”) of The Charles Schwab Corporation (“Schwab”) under [The Charles Schwab Corporation 2013 Stock Incentive Plan] (the “Plan”). Your Restricted Stock Units are granted subject to the following terms:

Name of Recipient:	<first_name> <last_name>
Total Number of Restricted Stock Units Granted:	<shares_awarded>
Grant Date:	<award_date>
Vesting Schedule:	So long as you remain in service in good standing and subject to the terms of the Restricted Stock Unit Agreement, the Restricted Stock Units subject to this grant will become vested and distributable on the following dates and in the following amounts, subject to the restrictions below: Number of Restricted Stock Units on Vesting Date: <vesting_schedule>

Restricted Stock Units are an unfunded and unsecured obligation of Schwab. Any vested Restricted Stock Units will be paid in Shares as provided in the Restricted Stock Unit Agreement.

You and Schwab agree that this grant is issued under and governed by the terms and conditions of the Plan and the Restricted Stock Unit Agreement, both of which are made a part of this notice. Please review the Plan and the Restricted Stock Unit Agreement carefully, as they explain the terms and conditions of this grant. You agree that Schwab may deliver electronically all documents relating to the Plan or this grant (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that Schwab is required to deliver to its stockholders. By accepting this grant, you agree to all of the terms and conditions described above, in the Restricted Stock Unit Agreement and in the Plan, and you have no right whatsoever to change or negotiate such terms and conditions.

THE CHARLES SCHWAB CORPORATION

[2013 STOCK INCENTIVE PLAN]

RESTRICTED STOCK UNIT AGREEMENT

Payment for Units	No payment is required for the Restricted Stock Units that you are receiving. Restricted Stock Units are an unfunded and unsecured obligation of The Charles Schwab Corporation (“Schwab”).
Vesting	Subject to the provisions of this Restricted Stock Unit Agreement (“Agreement”), a Restricted Stock Unit becomes vested and distributable as of the earliest of the following: (1) The applicable Vesting Date for the Restricted Stock Unit indicated in the Notice of Restricted Stock Unit Grant. (2) Your death. (3) Your disability. (4) Your separation from service, if the separation qualifies as a retirement or a severance eligible termination (provided that vesting shall occur upon a severance eligible termination only to the extent provided in The Charles Schwab Severance Pay Plan (or any successor plan)). (5) A change in control. Unvested units will be considered “Restricted Stock Units.” If your service terminates for any reason, then your Restricted Stock Units will be forfeited to the extent that they have not vested on or before the termination date and do not vest as a result of the termination. This means that the Restricted Stock Units will immediately revert to Schwab. You will receive no payment for Restricted Stock Units that are forfeited. Schwab determines when your service terminates for this purpose. For all purposes of this Agreement, “service” means continuous employment as a common-law employee of Schwab or a parent corporation or subsidiary of Schwab, and “subsidiary” means a subsidiary corporation as defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).
Definition of Fair Market Value	“Fair market value” means the average of the high and low price of a Share (as defined below) as reported on the New York Stock Exchange on the applicable determination date.
Definition of Disability	For all purposes of this Agreement, "disability" means that

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	you have a disability that qualifies as such under section 409A of the Code and due to which you have been determined to be eligible for benefits under Schwab’s long-term disability plan or if you are not covered by Schwab’s long-term disability plan, you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which has lasted, or can be expected to last, for a continuous period of not less than 12 months or which can be expected to result in death as determined by Schwab in its sole discretion.
Definition of Retirement	If you are an employee of Schwab and its subsidiaries, "retirement" means a separation from service for any reason other than death at any time after the earlier of when you attain age 55, but only if, at the time of your separation, you have been credited with at least 10 years of service or when you attain age 65, but only if, at the time of your termination, you have been credited with at least 5 years of service. The phrase "years of service" above has the same meaning given to it under The SchwabPlan Retirement Savings and Investment Plan (or any successor plan).
Definition of Severance Eligible Termination	For all purposes of this Agreement, "severance eligible termination" means a separation from service entitling you to severance benefits when you have signed your Severance Agreement under The Charles Schwab Severance Pay Plan (or any successor plan).
Definition of Change in Control	For all purposes of this Agreement, "change in control" means an event that qualifies as a change in control event under section 409A of the Code and as a change in control as defined in [The Charles Schwab Corporation 2013 Stock Incentive Plan] (the “Plan”).
Definition of Separation From Service	For all purposes of this Agreement, "separation from service" means a separation from service as defined under section 409A of the Code.
Payment of Shares	Any vested Restricted Stock Units will be paid in shares of common stock of Schwab (“Shares”) as provided herein. Shares that have become vested and distributable under this Agreement shall be distributed as follows: (1) Shares that vest and become distributable on a Vesting Date shall be distributed within 30 days of the Vesting Date.

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	(2) Shares that vest and become distributable on death, disability or a change in control, shall be distributable within 90 days of such event. (3) Shares that vest and become distributable on a separation from service (either a retirement or a severance eligible termination) shall be distributed within 90 days of the separation from service. Generally, for severance eligible terminations, the distribution date shall be the "termination date" specified in the notice under The Charles Schwab Severance Pay Plan. Notwithstanding the foregoing, if at the time of your separation from service, you are a “specified employee”, you will receive your Shares six months after your separation from service. "Specified Employee" means a "specified employee" within the meaning of section 409A of the Code and any regulatory guidance promulgated thereunder, provided that in determining the compensation of individuals for this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(2) shall be used.
Restrictions on Restricted Stock Units	You may not sell, transfer, pledge, or otherwise dispose of any Restricted Stock Units without Schwab’s written consent. Schwab will deliver Shares to you only after the Restricted Stock Units vest and after all other terms and conditions in this Agreement have been satisfied. Schwab may, in its sole discretion, allow you to transfer these Restricted Stock Units under a domestic relations order in settlement of marital or domestic property rights. In order to transfer these Restricted Stock Units, you and the transferee(s) must follow the procedures prescribed by Schwab, and the transferee(s) must follow the terms of this Agreement.
Delivery of Shares After Death	In the event that Shares are distributable upon your death, the Shares will be delivered to your beneficiary or beneficiaries. You may designate one or more beneficiaries by filing a beneficiary designation form with Schwab. You may change your beneficiary designation by filing a new form with Schwab at any time prior to your death. If you do not designate a beneficiary or if your designated beneficiary predeceases you, then your Shares will be delivered to your estate.

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Cancellation of Restricted Stock Units	To the fullest extent permitted by applicable laws, these Restricted Stock Units will immediately be cancelled and will expire in the event that Schwab terminates your employment on account of conduct contrary to the best interests of Schwab, including, without limitation, conduct constituting a violation of law or Schwab policy, fraud, theft, conflict of interest, dishonesty or harassment. The determination whether your employment has been terminated on account of conduct inimical to the best interests of Schwab shall be made by Schwab in its sole discretion, and will be entitled to deference upon any review.
Restrictions on Resale	You agree not to sell any Shares at a time when applicable laws, Schwab’s policies, or an agreement between Schwab and its underwriters prohibit a sale. This restriction will apply as long as your service continues and for such period of time after the termination of your service as Schwab may specify.
Withholding Taxes	Shares will not be distributed unless you have made acceptable arrangements to pay any applicable withholding taxes that may be due as a result of the vesting and or the distribution of the Shares. These arrangements may include withholding Shares. Schwab may withhold the number of whole Shares, valued at the fair market value on the applicable date, required to satisfy such applicable withholding taxes. Schwab will round up to the next whole Share to cover the applicable withholding taxes, and any amounts in excess of the applicable withholding taxes resulting from rounding up to the next whole Share will be added to your federal income tax withholdings. In the event you do not elect to pay applicable withholding taxes in cash, Schwab shall withhold Shares as noted above. While Schwab will withhold to satisfy applicable withholding taxes, you acknowledge that, regardless of any action taken by Schwab, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you, is and remains your responsibility and may exceed the amount, if any, actually withheld by Schwab.
	Applicable withholding taxes due on the distribution of Shares subject to this award following termination of employment will be withheld as noted above, unless you have made acceptable arrangements to pay any applicable withholding taxes in cash. If you elect to pay applicable withholding taxes due upon the distribution of Shares in cash, you are responsible for having sufficient funds in your Schwab brokerage account to cover the applicable

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	withholding taxes at the time they are due. Any withholding taxes due prior to distribution of Shares (e.g., under section 3121(v)(2) of the Code upon retirement eligibility) shall be paid by accelerating the vesting of and withholding of Shares payable in connection with such Restricted Stock Units for participants other than executive officers of Schwab (i.e., individuals holding the office of Executive Vice President or above), who shall pay such withholding taxes in cash upon Schwab’s request. Prior to the distribution of Shares, the number of Shares accelerated and withheld for withholding taxes will be rounded down to the next whole Share, and any amounts of less than the fair market value of a Share will be deducted from your pay to cover the applicable withholding taxes due prior to distribution of Shares. Participants may not make any election as to the payment of withholding taxes due prior to the distribution of Shares (e.g., under section 3121(v)(2) of the Code upon retirement eligibility).
No Stockholder Rights	Your Restricted Stock Units carry no voting or other stockholder rights. You have no rights as a Schwab stockholder until your Restricted Stock Units are settled by issuing Shares.
Contribution of Par Value	On your behalf, Schwab will contribute to its capital an amount equal to the par value of the Shares issued to you.
Dividend Equivalent Rights	If Schwab pays cash dividends on Shares, you will receive cash equal to the dividend per Share multiplied by the number of unvested Restricted Stock Units. Each such payment shall be made as soon as practicable following the payment of the actual dividend, but in no event beyond March 15 of the year following the year the actual dividend is paid.
No Right to Remain Employee	Nothing in this Agreement will be construed as giving you the right to be retained as an employee, contingent worker, or director of Schwab and its subsidiaries for any specific duration or at all.
Limitation on Payments	If a payment from the Plan would constitute an excess parachute payment under section 280G of the Code or if there have been certain securities law violations, then your grant may be reduced or forfeited and you may be required to disgorge any profit that you have realized from your grant. If a disqualified individual receives a payment or transfer

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under the Plan that would constitute an excess parachute payment under section 280G of the Code, such payment will be reduced, as described below. Generally, someone is a “disqualified individual” under section 280G if he or she is (a) an officer of Schwab, (b) a member of the group consisting of the highest paid 1% of the employees of Schwab or, if less, the highest paid 250 employees of Schwab, or (c) a 1% stockholder of Schwab. For purposes of this section on “Limitation on Payments,” the term “Schwab" will include affiliated corporations to the extent determined by the independent auditors most recently selected by the Board of Directors (the “Auditors”) in accordance with section 280G(d)(5) of the Code.

In the event that the Auditors determine that any payment or transfer in the nature of compensation to or for your benefit, whether paid or payable (or transferred or transferable) pursuant to the terms of the Plan or otherwise (a “Payment”), would be nondeductible for federal income tax purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments will be reduced (but not below zero) to the Reduced Amount (as defined below); provided, however, that the Compensation Committee (the “Compensation Committee”) of the Board of Directors may specify in writing that the grant will not be so reduced and will not be subject to reduction under this section.

For this purpose, the “Reduced Amount” will be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by Schwab because of section 280G of the Code.

If the Auditors determine that any Payment would be nondeductible because of section 280G of the Code, then Schwab will promptly give you notice to that effect and a copy of the detailed calculation of the Reduced Amount. The Auditors will determine which and how much of the Payments will be eliminated or reduced (such that the aggregate present value of the Payments equals the Reduced Amount and is consistent with any mandatory eliminations or reductions that apply under other agreements or the Plan). Schwab will notify you promptly of the Auditor's determination. Present value will be determined in accordance with section 280G(d)(4) of the Code. The Auditors’ determinations will be binding upon you and Schwab and will be made within 60 days of the date when a

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	Payment becomes payable or transferable. As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors, it is possible that Payments will have been made by Schwab that should not have been made (an “Overpayment”) or that additional Payments that will not have been made by Schwab could have been made (an “Underpayment”) consistent in each case with the calculation of the Reduced Amount. In the event the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against you or Schwab that the Auditors believe has a high probability of success, determine that an Overpayment has been made, the amount of such Overpayment will be paid by you to Schwab on demand, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code. However, no amount will be payable by you to Schwab if and to the extent that such payment would not reduce the amount that is subject to taxation under section 4999 of the Code. In the event the Auditors determine that an Underpayment has occurred, such Underpayment will promptly be paid or transferred by Schwab to or for your benefit, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code, provided that no such Underpayment related to Shares distributable under this Agreement shall be paid beyond the deadline for making such payments under section 409A of the Code.
Plan Administration	The Plan administrator has discretionary authority to make all determinations related to this grant and to construe the terms of the Plan, the Notice of Restricted Stock Unit Grant and this Agreement. The Plan administrator’s determinations are conclusive and binding on all persons, and they are entitled to deference upon any review.
Adjustments	In the event of a stock split, a stock dividend or a similar change in the Shares, the number of Restricted Stock Units that remain subject to forfeiture will be adjusted accordingly.
Severability	In the event that any provision of this Agreement is held invalid or unenforceable, the provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.
Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions), as such laws are applied to contracts entered into and performed in Delaware.

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The Plan and Other Agreements The text of the Plan is incorporated in this Agreement by reference. This Agreement (including the Additional Terms and Conditions for Non-U.S. Recipients and the Country-Specific Provisions), the Notice of Restricted Stock Unit Grant, and the Plan constitute the entire understanding between you and Schwab regarding this grant. Any prior agreements, commitments or negotiations concerning this grant are superseded. This Agreement may be amended only by another written agreement, signed by both parties and approved by the Compensation Committee. If there is any inconsistency or conflict between any provision of this Agreement and the Plan, the terms of the Plan will control.

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ADDITIONAL TERMS AND CONDITIONS FOR NON-U.S. RECIPIENTS

The additional (or, if so indicated, different) terms and conditions set forth below are specifically incorporated into the Restricted Stock Unit Agreement (the “Agreement”) for awards granted outside the United States (“U.S.”). These terms and conditions govern the Restricted Stock Units granted under the Plan if you reside or work outside of the U.S. Due to the complexities of legal, regulatory and tax issues, you should seek appropriate professional advice as to how the relevant laws in the applicable country may apply to your individual situation.

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan and/or the Agreement.

Withholding Taxes: the following provisions supplement the Withholding Taxes section of the Restricted Stock Unit Agreement:

You acknowledge that, regardless of any action taken by Schwabor, if different, your employer (“Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“withholding taxes”), is and remains your responsibility and may exceed the amount, if any, actually withheld by Schwab or your Employer. You further acknowledge that Schwab and/or your Employer (1) make no representations or undertakings regarding the treatment of any withholding taxes in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate your liability for withholding taxes or achieve any particular tax result. Further, if you are subject to withholding taxes in more than one jurisdiction, you acknowledge that Schwaband/or your Employer (or former employer, as applicable) may be required to withhold or account for withholding taxes in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Schwab and/or the Employer to satisfy all withholding taxes.

In this regard, you authorize Schwab and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all withholding taxes by one or a combination of the following: (a) withholding from your wages or other cash compensation paid to you by Schwab and/or the Employer; (b) withholding from funds in your Schwab brokerage account; (c) requiring you to make a cash payment in an amount equal to the withholding obligations for withholding taxes; (d) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by Schwab (on your behalf pursuant to this authorization without further consent); (e) withholding in Shares to be issued upon settlement of the Restricted Stock Units; or (f) any other method of withholding determined by Schwab and permitted by applicable law.

Depending on the withholding method, Schwab may withhold or account for withholding taxes by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates in your jurisdiction(s), in which case you may receive

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a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for withholding taxes is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the withholding taxes.

Nature of Grant: In accepting the grant, you acknowledge, understand and agree that:

(1) the Plan is established voluntarily by Schwab, it is discretionary in nature and it may be modified, amended, suspended or terminated by Schwab at any time, to the extent permitted by the Plan;

(2) the grant of the Restricted Stock Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;

(3) all decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole discretion of Schwab;

(4) you are voluntarily participating in the Plan;

(5) the Restricted Stock Units, the Shares subject to the Restricted Stock Units, and the income and value of same, are not intended to replace any pension rights or compensation;

(6) the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not part of normal or expected compensation for any purpose, including calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar mandatory payments;

(7) unless otherwise agreed with Schwab, the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of a subsidiary of Schwab;

(8) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(9) for purposes of the Restricted Stock Units, your service will be considered terminated as of the date you are no longer actively providing services to Schwab and its subsidiaries (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by Schwab, your right to vest in the Restricted Stock Units under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in

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the jurisdiction where you are employed or the terms of your employment agreement, if any); the Plan administrator shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of your Restricted Stock Unit grant (including whether you may still be considered to be providing services while on a leave of absence);

(10) unless otherwise provided in the Plan or by Schwabin its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and

(11) neither Schwab, its subsidiaries nor your Employer shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to you pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.

No Advice Regarding Grant: Schwab is not providing any tax, legal or financial advice, nor is Schwab making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.

Compliance with Law: Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Schwab shall not be required to deliver any Shares issuable upon settlement of the Restricted Stock Units prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Schwab shall, in its absolute discretion, deem necessary or advisable. You understand that Schwab is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that Schwabshall have unilateral authority to amend the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.

Insider Trading/Market Abuse Laws: You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions including the United States and your country or your broker’s country, if different, which may affect your ability to accept, acquire, sell, attempt to sell or otherwise dispose of Shares, rights to Shares (e.g., Restricted Stock Units) or rights linked to the value of Shares (e.g., dividend equivalents) during such times you are considered to have “inside information” regarding Schwab (as defined in the laws or regulations in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed inside information. Furthermore, you could be prohibited from (i) disclosing the inside information to any third party, including fellow

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employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Schwab insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions and are advised to speak to your personal advisor on this matter.

Foreign Asset/Account Reporting: Please be aware that your country may have certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or dividend equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside your country. You may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You acknowledge that it is your responsibility to be compliant with such regulations, and you should speak to your personal advisor on this matter.

Data Privacy:

(1) Declaration of Consent. You hereby agree with the data processing practices described in this Agreement and consent to the collection, processing and use, in electronic or other form, of your personal data as described herein and the transfer of such personal data to the recipients mentioned below, including recipients located in countries which may not have a similar level of protection from the perspective of your country’s data protection laws.

(2) Data Collection and Usage. Schwab and your Employer will collect, process and use certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any Shares or directorships held in Schwab, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is your consent. Where required under applicable law, Data may also be disclosed to certain securities or other regulatory authorities where Schwab’s securities are listed or traded or regulatory filings are made and the legal basis, where required, for such disclosure are the applicable laws.

(3) Stock Plan Administration Service Providers. Schwab transfers Data to certain of its subsidiaries providing stock plan and broker services, or such other third party stock plan service provider as may be selected by Schwab in the future, which is assisting Schwab with the implementation, administration and management of the Plan. You may be asked to agree on separate terms and data processing practices, with such agreement being a condition of the ability to participate in the Plan.

(4) Other Service Provider Data Recipients. Schwab also may transfer Data to other third party service providers, if necessary to ensure compliance with applicable tax, exchange control, securities and labor law. Such third party service providers may include Schwab’s legal counsel as well as Schwab’s auditor, accountant, or other third party vendor (currently Deloitte & Touche LLP). Wherever possible, Schwab

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will anonymize Data, but you understand that your Data may need to be transferred to such providers to ensure compliance with applicable law and/or tax requirements.

(5) International Data Transfers. Schwab and its other service providers described above under (4) are located in the United States. The United States may have different data privacy laws and protections than your country. For example, the European Commission has issued a limited adequacy finding with respect to the United States that applies only to the extent companies register for the EU-U.S. Privacy Shield program, which is open to companies subject to Federal Trade Commission jurisdiction. Schwab’s legal basis, where required, for the transfer of Data is your consent.

(6) Data Retention. Schwab will hold and use the Data only as long as is necessary to implement, administer and manage your participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax and securities laws. When Schwab no longer needs the Data, Schwab will remove it from its systems. If Schwab keeps Data longer, it would be to satisfy legal or regulatory obligations and Schwab’s legal basis would be relevant laws or regulations.

(7) Data Subject Rights. You understand that data subject rights vary depending on applicable law and that, depending on where you are based and subject to the conditions set out under applicable law, you may have, without limitation, the rights to (i) request access or copies of Data that Schwab processes, (ii) rectify or supplement Data that is incorrect, incomplete or out-of-date in light of the purposes underlying the processing, (iii) delete Data, (iv) restrict processing of Data, (v) portability of Data, (vi) lodge complaints with competent authorities in your jurisdiction and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receive clarification regarding these rights or to exercise these rights, you understand that you can contact your local human resources representative.

(8) Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service with your Employer will not be affected; the only consequence of refusing or withdrawing your consent is that Schwab would not be able to grant you Restricted Stock Units or other equity awards or administer or maintain such awards.

(9) Declaration of Consent. By accepting the Restricted Stock Units and indicating consent via Schwab’s online acceptance procedure, you are declaring that you agree with the data processing practices described herein and consent to the collection, processing and use of Data by Schwab and the transfer of Data to the recipients mentioned above, including recipients located in countries which do not adduce an adequate level of protection from a European (or other non-U.S.) data protection law perspective, for the purposes described above.

(10) Alternative Basis for Data Processing and Transfer. You understand that Schwab may rely on a different legal basis for the processing or transfer of Data in the future

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and/or request that you provide another data privacy consent form. If applicable and upon request of Schwab, you agree to provide an executed acknowledgement or data privacy consent form to your Employer or Schwab (or any other acknowledgements, agreements or consents that may be required by your Employer or Schwab) that Schwab and/or your Employer may deem necessary to obtain under the data privacy laws in your country, either now or in the future. You understand that you will not be able to participate in the Plan if you fail to execute any such acknowledgement, agreement or consent requested by Schwab and/or your Employer.

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COUNTRY-SPECIFIC PROVISIONS

Terms and Conditions

These additional terms and conditions govern the Restricted Stock Units granted to you under the Plan if you are an employee and reside and/or work in one of the countries listed below.

Notifications

These provisions may also include information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of September 2018. These laws are often complex and change frequently. As a result, you should not rely on the information in these additional terms and conditions as the only source of information relating to your participation in the Plan.

In addition, the information contained herein is general in nature and may not apply to your particular situation, and Schwab is not in a position to assure you of a particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.

You understand that if you are a citizen or resident of a country other than the one in which you currently reside and/or work, transfer to another country after the date of grant, or are considered a resident of another country for local law purposes, Schwab shall, in its discretion, determine the extent to which the special terms and conditions contained herein shall be applicable to you. In addition, the notifications contained herein may not be applicable to you in the same manner.

AUSTRALIA

Notifications

Offer Document: The offer of the Restricted Stock Units is intended to comply with the provisions of the Corporations Act 2001, ASIC Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Offer Document for the Offer of Stock Options and Restricted Stock Units to Australian Residents, which was distributed to you with this Agreement.

Tax Information: Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) applies to Restricted Stock Units granted under the Plan, such that the Restricted Stock Units are intended to be subject to deferred taxation.

Exchange Controls: If you are an Australian resident, exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report. If there is no Australian bank involved in the transfer, you will be required to file the report.

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HONG KONG

Terms and Conditions

Form of Payment:     Notwithstanding any discretion in Section 5(d) of the Plan to the contrary, if you reside in Hong Kong, the Restricted Stock Units shall be payable in Shares only.

Sale Restriction: Any Shares received at vesting are accepted as a personal investment. In the event that the Restricted Stock Units vest and Shares are issued to you (or your heir) within 6 months of the date of grant, you (or your heir) agree that the Shares will not be offered to the public or otherwise disposed of prior to the 6-month anniversary of the date of grant.

Notifications

Securities Law: WARNING: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. Neither the grant of the Restricted Stock Units nor the issuance of Shares upon vesting of the Restricted Stock Units constitutes a public offering of securities under Hong Kong law and are available only to employees of Schwab and its subsidiaries. This Agreement, the Plan and other incidental communication materials distributed in connection with the Restricted Stock Units (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, and (ii) are intended only for the personal use of each eligible employee of Schwab or its subsidiaries and may not be distributed to any other person.

Nature of Scheme. Schwab specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).

SINGAPORE

Terms and Conditions

Sale Restriction: You agree that any Shares acquired pursuant to the Restricted Stock Units will not be offered for sale in Singapore within 6 months from the date of grant, unless such offer or sale is made pursuant to one or more exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the Securities and Futures Act (Chap. 289, 2006 Ed.) (“SFA”) or pursuant to, and in accordance with the conditions of, any other applicable provision(s) of the SFA.

Notifications

Securities Law: This Restricted Stock Unit grant is being made in reliance on section 273(1)(f) of the SFA, on which basis it is exempt from the prospectus and registration requirements under the SFA and is not made to you with a view to the Restricted Stock Units or the Shares being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.

Chief Executive Officer and Director Notification Obligation. The Chief Executive Officer

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(“CEO”) and the directors of a Singapore subsidiary of Schwab are subject to certain notificationrequirements under the Singapore Companies Act. The CEO and the directors must notify the Singapore subsidiary in writing of an interest (e.g., Restricted Stock Units, Shares) in Schwab or any subsidiary or parent of Schwab within two business days of (i) its acquisition or disposal, (ii) any change in a previously-disclosed interest (e.g., upon vesting of the Restricted Stock Units or subsequent sale of Shares acquired under the Plan), or (iii) becoming a director or the CEO.

UNITED KINGDOM

Terms and Conditions

Withholding Taxes: This section supplements the “Withholding Taxes” section of the Agreement:

Without limitation to the “Withholding Taxes” section of the Agreement, you agree that you are liable for all withholding taxes and hereby covenant to pay all such withholding taxes as and when requested by Schwab or your Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified Schwab and your Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on your behalf.

Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), you understand that you may not be able to indemnify Schwab or your Employer for the amount of any income tax not collected from or paid by you, as it may be considered a loan. In the event that you are an executive officer or director and income tax due is not collected within 90 days of the end of the United Kingdom tax year in which the event giving rise to the income tax occurs, the amount of any income tax due may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying Schwab or your Employer (as appropriate) for the value of any employee national insurance contributions due on this additional benefit, which Schwab or your Employer may recover from you by any means referred to in this Agreement.

Retirement: Notwithstanding the terms and conditions set forth in the Agreement, the Restricted Stock Units of employees in the United Kingdom will not vest upon retirement.

BY ACCEPTING THIS GRANT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

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EX-21.1

THE CHARLES SCHWAB CORPORATION

EXHIBIT 21.1

Subsidiaries of the Registrant

Pursuant to Item 601 (b)(21)(ii) of Regulation S-K, certain subsidiaries of the Registrant have been omitted which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary (as defined in Rule 1-02(w) of Regulation S-X) as of December 31, 2018.

The following is a listing of the significant and certain other subsidiaries of the Registrant:

Schwab Holdings, Inc.* (holding company for Charles Schwab & Co., Inc.), a Delaware corporation

Charles Schwab & Co., Inc.,* a California corporation

Charles Schwab Bank,* a federal savings bank

Charles Schwab Investment Management, Inc.,* a Delaware corporation

Charles Schwab Futures, Inc., a Delaware corporation

Charles Schwab Premier Bank,a federal savings bank

Charles Schwab Trust Bank, a Nevada-chartered state savings bank

* Significant subsidiary

EX-23.1

THE CHARLES SCHWAB CORPORATION

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of our report dated February 22, 2019, relating to the consolidated financial statements of The Charles Schwab Corporation, and the effectiveness of The Charles Schwab Corporation’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of The Charles Schwab Corporation for the year ended December 31, 2018:

Filed on Form S-3:

Registration Statement No. 333-222063 (Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Purchase Contracts, Warrants, and Units Consisting of Two or More Securities)

Filed on Form S-8:

Registration Statement No. 333-205862	(The Charles Schwab Corporation 2013 Stock Incentive Plan)
Registration Statement No. 333-192893	(The Charles Schwab Corporation Financial Consultant Career Achievement Award Program)
Registration Statement No. 333-189553	(The Charles Schwab Corporation 2013 Stock Incentive Plan)
Registration Statement No. 333-175862	(The Charles Schwab Corporation 2004 Stock Incentive Plan)
Registration Statement No. 333-173635	(optionsXpress Holdings, Inc. 2005 Equity Incentive Plan)
Registration Statement No. 333-144303	(The Charles Schwab Corporation Employee Stock Purchase Plan)
Registration Statement No. 333-131502	(The Charles Schwab Corporation Deferred Compensation Plan II)
Registration Statement No. 333-101992	(The Charles Schwab Corporation 2004 Stock Incentive Plan)
Registration Statement No. 333-71322	(The SchwabPlan Retirement Savings and Investment Plan)
Registration Statement No. 333-63448	(The Charles Schwab Corporation 2004 Stock Incentive Plan)
Registration Statement No. 333-47107	(The Charles Schwab Corporation 2004 Stock Incentive Plan)
Registration Statement No. 333-44793	(Charles Schwab Profit Sharing and Employee Stock Ownership Plan)

/s/ Deloitte & Touche LLP

San Francisco, California

February 22, 2019

EX-31.1

THE CHARLES SCHWAB CORPORATION

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Walter W. Bettinger II, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Charles Schwab Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2019	/s/ Walter W. Bettinger II
		Walter W. Bettinger II
		President and Chief Executive Officer

EX-31.2

THE CHARLES SCHWAB CORPORATION

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Crawford, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Charles Schwab Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2019	/s/ Peter Crawford
		Peter Crawford
		Executive Vice President and Chief Financial Officer

EX-32.1

THE CHARLES SCHWAB CORPORATION

EXHIBIT32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of The Charles Schwab Corporation (the Company) on Form 10-K for the year ended December 31, 2018 (the Report), I, Walter W. Bettinger II, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

/s/ Walter W. Bettinger II	Date:	February 22, 2019
Walter W. Bettinger II
President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to The Charles Schwab Corporation and will be retained by The Charles Schwab Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

THE CHARLES SCHWAB CORPORATION

EXHIBIT32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of The Charles Schwab Corporation (the Company) on Form 10-K for the year ended December 31, 2018 (the Report), I, Peter Crawford, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that

to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

/s/ Peter Crawford	Date:	February 22, 2019
Peter Crawford
Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to The Charles Schwab Corporation and will be retained by The Charles Schwab Corporation and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2018	Jan. 31, 2019	Jun. 30, 2018
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	SCHW
Entity Registrant Name	SCHWAB CHARLES CORP
Entity Central Index Key	0000316709
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		1,332,893,531
Entity Public Float			$ 62.1

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Millions		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Net Revenues
Interest revenue		$ 6,680	$ 4,624		$ 3,493
Interest expense		(857)	(342)		(171)
Net interest revenue		5,823	4,282		3,322
Other		317	290		276
Total net revenues		10,132	8,618		7,478
Expenses Excluding Interest
Compensation and benefits		3,057	2,737		2,466
Professional services		654	580		506
Occupancy and equipment		496	436		398
Advertising and market development		313	268		265
Communications		242	231		237
Depreciation and amortization		306	269	[1]	234	[1]
Regulatory fees and assessments		189	179		144
Other		313	268		235
Total expenses excluding interest		5,570	4,968		4,485
Income before taxes on income		4,562	3,650		2,993
Taxes on income		1,055	1,296		1,104
Net Income		3,507	2,354	[1]	1,889	[1]
Preferred stock dividends and other	[2]	178	174		143
Net Income Available to Common Stockholders		$ 3,329	$ 2,180		$ 1,746
Weighted-Average Common Shares Outstanding:
Basic (in shares)		1,348,000	1,339,000		1,324,000
Diluted (in shares)	[3]	1,361,000	1,353,250		1,334,000
Earnings Per Common Shares Outstanding:
Basic (USD per share)		$ 2.47	$ 1.63		$ 1.32
Diluted (USD per share)		$ 2.45	$ 1.61		$ 1.31
Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS (n shares)		18,000	15,000		26,000
Asset Management and administration fees [Member]
Net Revenues
Asset management and administration fees and Trading revenue	[4]	$ 3,229	$ 3,392		$ 3,055
Trading revenue [Member]
Net Revenues
Asset management and administration fees and Trading revenue		763	654		825
Fee Waivers [Member] | Money market funds [Member]
Net Revenues
Asset management and administration fees and Trading revenue		$ 0	$ 10		$ 224

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

[3] Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 18 million, 15 million, and 26 million shares in 2018, 2017, and 2016, respectively.

[4] Includes fee waivers of $0, $10 million, and $224 million during the years ended December 31, 2018, 2017, and 2016, respectively, relating to Schwab-sponsored money market funds.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 3,507	$ 2,354	[1]	$ 1,889	[1]
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	(123)	13		(44)
Reclassification of net unrealized loss transferred to held to maturity	0	227		0
Other reclassifications included in other revenue	0	(12)		(4)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss transferred from available for sale	0	(227)		0
Amortization of amounts previously recorded upon transfer from available for sale	35	31		0
Other	(1)	(11)		1
Other comprehensive income (loss), before tax	(89)	21		(47)
Income tax effect	22	(10)		18
Other comprehensive income (loss), net of tax	(67)	11		(29)
Comprehensive Income	$ 3,440	$ 2,365		$ 1,860

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Consolidated Balance Sheets - USD ($) $ in Millions		Dec. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	[1]	$ 27,938	$ 14,217	[2]
Cash and investments segregated and on deposit for regulatory purposes (including resale agreements of $7,195 and $6,596 at December 31, 2018 and 2017, respectively)		13,563	15,139
Receivables from brokers, dealers, and clearing organizations		553	649
Receivables from brokerage clients — net		21,651	20,576
Other securities owned — at fair value		539	539
Available for sale securities		66,578	49,995
Held to maturity securities		144,009	120,926
Bank loans — net		16,609	16,478
Equipment, office facilities, and property — net		1,769	1,471
Goodwill		1,227	1,227
Other assets		2,046	2,057
Total assets		296,482	243,274
Liabilities and Stockholders’ Equity
Bank deposits		231,423	169,656
Payables to brokers, dealers, and clearing organizations		1,831	1,287
Payables to brokerage clients		32,726	31,243
Accrued expenses and other liabilities		2,954	2,810
Short-term borrowings		0	15,000
Long-term debt		6,878	4,753
Total liabilities		275,812	224,749
Stockholders’ equity:
Preferred stock — $.01 par value per share; aggregate liquidation preference of $2,850		2,793	2,793
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446 shares issued		15	15
Additional paid-in capital		4,499	4,353
Retained earnings		17,329	14,408
Treasury stock, at cost — 155,116,695 and 142,210,890 shares at December 31, 2018 and 2017, respectively		(3,714)	(2,892)
Accumulated other comprehensive income (loss)		(252)	(152)
Total stockholders’ equity		20,670	18,525
Total liabilities and stockholders’ equity		$ 296,482	$ 243,274

[1] Reconciliation of cash, cash equivalents and amounts reported within the balance sheet

[2] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Cash and investments segregated and on deposit for regulatory purposes, resale agreements	$ 7,195	$ 6,596
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Preferred stock, aggregate liquidation preference	$ 2,850	$ 2,850
Common stock, shares authorized (shares)	3,000,000,000	3,000,000,000
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares issued (shares)	1,487,543,446	1,487,543,446
Treasury stock (shares)	155,116,695	142,210,890

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
Cash Flows from Operating Activities
Net income		$ 3,507		$ 2,354	[1]	$ 1,889	[1]
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Share-based compensation		197		153	[1]	141	[1]
Depreciation and amortization		306		269	[1]	234	[1]
Provision (benefit) for deferred income taxes		49		58	[1]	15	[1]
Premium amortization, net, on available for sale and held to maturity securities		350		342	[1]	266	[1]
Other		137		51	[1]	4	[1]
Net change in:
Investments segregated and on deposit for regulatory purposes		6,922		4,933	[1]	(1,635)	[1]
Receivables from brokers, dealers, and clearing organizations		96		74	[1]	(147)	[1]
Receivables from brokerage clients		(1,100)		(3,428)	[1]	150	[1]
Other securities owned		0		(90)	[1]	84	[1]
Other assets		(104)		(177)	[1]	(93)	[1]
Payables to brokers, dealers, and clearing organizations		573		(1,148)	[1]	(181)	[1]
Payables to brokerage clients		1,483		(4,651)	[1]	2,709	[1]
Accrued expenses and other liabilities		40		421	[1]	167	[1]
Net cash provided by (used for) operating activities		12,456		(839)	[1]	3,603	[1]
Cash Flows from Investing Activities
Purchases of available for sale securities		(32,801)		(15,033)	[1]	(29,248)	[1]
Proceeds from sales of available for sale securities		115		8,617	[1]	5,537	[1]
Principal payments on available for sale securities		16,016		9,095	[1]	11,903	[1]
Purchases of held to maturity securities		(40,873)		(32,925)	[1]	(31,162)	[1]
Principal payments on held to maturity securities		17,410		11,627	[1]	5,747	[1]
Net increase in bank loans		(129)		(1,071)	[1]	(1,103)	[1]
Purchases of equipment, office facilities, and property		(570)		(400)	[1]	(346)	[1]
Purchases of Federal Home Loan Bank stock		(156)		(430)	[1]	(152)	[1]
Proceeds from sales of Federal Home Loan Bank stock		529		106	[1]	88	[1]
Other investing activities		(96)		(59)	[1]	(39)	[1]
Net cash provided by (used for) investing activities		(40,555)		(20,473)	[1]	(38,775)	[1]
Cash Flows from Financing Activities
Net change in bank deposits	[2]	61,767		6,186	[1]	33,952	[1]
Net change in short-term borrowings		(15,000)		15,000	[1]	0	[1]
Issuance of long-term debt		3,024		2,129	[1]	0	[1]
Repayment of long-term debt		(909)		(257)	[1]	(7)	[1]
Repurchases of common stock		(1,000)		0	[1]	0	[1]
Net proceeds from preferred stock offerings		0		492	[1]	1,316	[1]
Redemption of preferred stock		0		(485)	[1]	0	[1]
Dividends paid		(787)		(592)	[1]	(486)	[1]
Proceeds from stock options exercised		125		171	[1]	144	[1]
Other financing activities		(54)		(45)	[1]	44	[1]
Net cash provided by (used for) financing activities		47,166		22,599	[1]	34,963	[1]
Increase (Decrease) in Cash and Cash Equivalents, including Amounts Restricted		19,067		1,287	[1]	(209)	[1]
Cash and Cash Equivalents including Amounts Restricted at Beginning of Year	[1]	19,160	[3]	17,873	[3]	18,082
Cash and Cash Equivalents, including Amounts Restricted at End of Year	[3]	38,227		19,160	[1]	17,873	[1]
Cash paid during the year for:
Interest		798		327	[1]	160	[1]
Income taxes		927		1,212	[1]	991	[1]
Non-cash investing activity:
Securities purchased during the period but settled after period end		$ 0		$ 29	[1]	$ 0	[1]

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Includes transfers from other sweep features to bank sweep of $72 billion, $5 billion and $8 billion for the years ended December 31, 2018, 2017 and 2016, respectively.

[3] Reconciliation of cash, cash equivalents and amounts reported within the balance sheet

XML

Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Reconciliation of cash, cash equivalents and amounts reported within the balance sheet
Cash and cash equivalents	[1]	$ 27,938	$ 14,217	[2]	$ 10,828	[2]
Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes	[1]	10,289	4,943	[2]	7,045	[2]
Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows	[1]	38,227	19,160	[2]	17,873	[2]
Deposit transfers		$ 72,000	$ 5,000		$ 8,000

[1] Reconciliation of cash, cash equivalents and amounts reported within the balance sheet

[2] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total		Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock, at cost [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2015	$ 13,402		$ 1,459	$ 15	$ 4,152	$ 11,253	$ (3,343)	$ (134)
Beginning Balance (in shares) at Dec. 31, 2015				1,488
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,889	[1]				1,889
Other comprehensive income (loss), net of tax	(29)							(29)
Issuance of preferred stock, net	1,324		1,324
Dividends declared on preferred stock	(126)					(126)
Dividends declared on common stock	(360)					(360)
Stock option exercises and other	144				(80)		224
Share-based compensation	177				177
Other	0				18	(7)	(11)
Ending Balance (in shares) at Dec. 31, 2016				1,488
Ending Balance at Dec. 31, 2016	16,421		2,783	$ 15	4,267	12,649	(3,130)	(163)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,354	[1]				2,354
Other comprehensive income (loss), net of tax	11							11
Issuance of preferred stock, net	492		492
Redemption of preferred stock	(485)		(482)			(3)
Dividends declared on preferred stock	(161)					(161)
Dividends declared on common stock	(431)					(431)
Stock option exercises and other	171				(88)		259
Share-based compensation	144				144
Other	9				30	0	(21)
Ending Balance (in shares) at Dec. 31, 2017				1,488
Ending Balance at Dec. 31, 2017	18,525		2,793	$ 15	4,353	14,408	(2,892)	(152)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of accounting standards (Note 2) | Accounting Standards Update 2014-09 and 2018-02 [Member]	167					200		(33)
Net income	3,507					3,507
Other comprehensive income (loss), net of tax	(67)							(67)
Dividends declared on preferred stock	(164)					(164)
Dividends declared on common stock	(624)					(624)
Repurchase of common stock	(1,000)						(1,000)
Stock option exercises and other	125				(84)		209
Share-based compensation	188				188
Other	13				42	2	(31)
Ending Balance (in shares) at Dec. 31, 2018				1,488
Ending Balance at Dec. 31, 2018	$ 20,670		$ 2,793	$ 15	$ 4,499	$ 17,329	$ (3,714)	$ (252)

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]
Dividends Declared Per Common Share (USD per share)	$ 0.13	$ 0.13	$ 0.1	$ 0.1	$ 0.08	$ 0.08	$ 0.08	$ 0.08	$ 0.46	$ 0.32	$ 0.27

XML

Introduction and Basis of Presentation

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Introduction and Basis of Presentation

Introduction and Basis of Presentation

The Charles Schwab Corporation (CSC) is a savings and loan holding company, headquartered in San Francisco, California. CSC was incorporated in 1986 and engages, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.

Significant business subsidiaries of CSC include the following:

• Charles Schwab & Co., Inc. (CS&Co) is a securities broker-dealer with over 355 domestic branch offices in 47 states, as well as a branch in the Commonwealth of Puerto Rico. In addition, Schwab serves clients through branch offices in the U.K., Hong Kong, Singapore, and Australia through various subsidiaries;

• Charles Schwab Bank (CSB), a federal savings bank; and

• Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds (Schwab Funds^®), and for Schwab’s exchange-traded funds (Schwab ETFs™).

Unless otherwise indicated, the terms “Schwab,” “the Company,” “we,” “us,” or “our” mean CSC together with its consolidated subsidiaries.

The accompanying consolidated financial statements include CSC and its subsidiaries. Intercompany balances and transactions have been eliminated. These consolidated financial statements have been prepared in conformity with GAAP, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from those estimates. Certain estimates relate to taxes on income and legal and regulatory reserves. Actual results may differ from those estimates.

Principles of Consolidation

Schwab evaluates all entities in which it has financial interests for consolidation, except for money market funds, which are specifically excluded from consolidation guidance. When an entity is evaluated for consolidation, Schwab determines whether its interest in the entity constitutes a controlling financial interest under either the variable interest entity (VIE) model or the voting interest entity (VOE) model. In evaluating whether Schwab’s interest in a VIE is a controlling financial interest, we consider whether our involvement in the context of the design, purpose, and risks of the VIE, as well as any involvement of related parties, provides us with (i) the power to direct the most significant activities of the VIE, and (ii) the obligation to absorb losses or receive benefits that are significant to the VIE. If both of these conditions exist, then Schwab would be the primary beneficiary of that VIE, and consolidate it. Based upon the assessments for all of our interests in VIEs, there are no cases where the Company is the primary beneficiary; therefore, we are not required to consolidate any VIEs. See Note 11 for further information about VIEs. Schwab consolidates all VOEs in which it has majority-voting interests.

Investments in entities in which Schwab does not have a controlling financial interest are accounted for under the equity method of accounting when we have the ability to exercise significant influence over operating and financing decisions of the entity. Investments in entities for which Schwab does not have the ability to exercise significant influence are generally carried at cost and adjusted for impairment and observable price changes of the identical or similar investments of the same issuer (adjusted cost method), except for certain investments in qualified affordable housing projects which are accounted for under the proportional amortization method. All equity method, adjusted cost method, and proportional amortization method investments are included in other assets on the consolidated balance sheets.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Revenue recognition

Schwab’s accounting policies for revenue recognition are discussed in Note 3.

Cash and cash equivalents

Schwab considers all highly liquid investments that mature in three months or less from the time of acquisition and that are not segregated and on deposit for regulatory purposes to be cash and cash equivalents. Cash and cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury securities. Cash and cash equivalents also include balances that our banking subsidiaries maintain at the Federal Reserve.

Cash and investments segregated and on deposit for regulatory purposes

Cash and investments segregated and on deposit for regulatory purposesinclude securities purchased under agreements to resell (resale agreements), which are collateralized by U.S. Government and agency securities. Resale agreements are accounted for as collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The Company obtains collateral with a market value equal to or in excess of the principal amount loaned and accrued interest under resale agreements. Collateral is valued daily by the Company, with additional collateral obtained to ensure full collateralization. Cash and investments segregated also include certificates of deposit and U.S. Government securities. Certificates of deposit and U.S. Government securities are recorded at fair value. Pursuant to the SEC’s Customer Protection Rule, cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts, are segregated by Schwab for the exclusive benefit of clients.

Receivables from brokerage clients

Receivables from brokerage clients include margin loans to securities brokerage clients and other trading receivables from clients. Margin loans are collateralized by client securities and are carried at the amount receivable, net of an allowance for doubtful accounts. The Company monitors margin levels and requires clients to deposit additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. Receivables from brokerage clients that remain unsecured or partially secured for more than 30 days are fully reserved for in the allowance for doubtful accounts, except in the case of confirmed fraud, which is reserved immediately. Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in accordance with federal regulations. The collateral is not reflected in the consolidated financial statements. The allowance for doubtful accounts for brokerage clients and related activity was immaterial for all periods presented.

Other securities owned

Other securities owned are recorded at fair value based on quoted market prices or other observable market data. Unrealized gains and losses are included in earnings.

Investment securities

AFS securities are recorded at fair value and unrealized gains and losses are reported, net of taxes, in AOCI included in stockholders’ equity. HTM securities are recorded at amortized cost based on the Company’s positive intent and ability to hold these securities to maturity. Realized gains and losses from sales of AFS securities are determined on a specific identification basis and are included in other revenue.

Management evaluates whether investment securities are OTTI on a quarterly basis. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell such security before any anticipated recovery. If management determines that a security is OTTI under these circumstances, the impairment recognized in earnings is measured as the entire difference between amortized cost and fair value.

A security is also OTTI if management does not expect to recover all of the amortized cost of the security. In this circumstance, the impairment recognized in earnings represents the estimated credit loss, and is measured by the difference between the present value of expected cash flows and the amortized cost of the security. Where appropriate, models are utilized to estimate the credit loss on a discounted cash flow basis using the security’s effective interest rate.

The evaluation of whether we expect to recover the amortized cost of a security is inherently judgmental. The evaluation considers multiple factors including: the magnitude and duration of the unrealized loss; the financial condition of the issuer; the payment structure of the security; external credit ratings; our internal credit ratings; for asset-backed securities, the amount of credit support provided by the structure of the security to absorb credit losses on the underlying collateral; recent events specific to the issuer and the issuer’s industry; and whether all scheduled principal and interest payments have been received.

Securities borrowed and securities loaned

Securities borrowed transactions require Schwab to deliver cash to the lender in exchange for securities; the receivables from these transactions are included in receivables from brokers, dealers, and clearing organizations. For securities loaned, Schwab receives collateral in the form of cash in an amount equal to or greater than the market value of securities loaned; the payables from these transactions are included in payables to brokers, dealers, and clearing organizations. The market value of securities borrowed and loaned are monitored, with additional collateral obtained or refunded to ensure full collateralization. Fees received or paid are recorded in interest revenue or interest expense.

Bank loans and related allowance for loan losses

Bank loans are recorded at their contractual principal amounts and include unamortized direct origination costs or net purchase discounts or premiums. Direct origination costs and premiums and discounts are recognized in interest revenue using the effective interest method over the contractual life of the loan and are adjusted for actual prepayments. Additionally, loans are recorded net of an allowance for loan losses. The loan portfolio includes four loan types: First Mortgages, HELOCs, PALs, and other loans. We use these segments when developing and documenting our methodology for determining the allowance for loan losses.

PALs are collateralized by marketable securities with liquid markets. Credit lines are over-collateralized dependent on the type of security pledged. Collateral market value is monitored on a daily basis and a borrower’s committed line may be reduced or collateral may be liquidated if the collateral is in danger of falling below specified levels. As such, the loss inherent within this portfolio is limited.

Schwab records an allowance for loan losses through a charge to earnings based on our estimate of probable losses in the existing portfolio. We review the allowance for loan losses quarterly, taking into consideration current economic conditions, the composition of the existing loan portfolio, past loss experience, and risks inherent in the portfolio to ensure that the allowance for loan losses is maintained at an appropriate level.

The methodology to establish an allowance for loan losses utilizes statistical models that estimate prepayments, defaults, and probable losses for the loan segments based on predicted behavior of individual loans within the segments. The methodology considers the effects of borrower behavior and a variety of factors including, but not limited to, interest rates, housing price movements as measured by a housing price index, economic conditions, estimated defaults and foreclosures measured by historical and expected delinquencies, changes in prepayment speeds, LTV ratios, past loss experience, estimates of future loss severities, borrower credit risk, and the adequacy of collateral. The methodology also evaluates concentrations in the loan types, including loan products within those types, year of origination, and geographical distribution of collateral.

Probable losses are forecast using a loan-level simulation of the delinquency status of the loans over the term of the loans. The simulation starts with the current relevant risk indicators, including the current delinquent status of each loan, the estimated current LTV ratio (Estimated Current LTV) of each loan, the term and structure of each loan, current key interest rates including U.S. Treasury and LIBOR rates, and borrower FICO scores. The more significant variables in the simulation include delinquency roll rates, loss severity, housing prices, and interest rates. Delinquency roll rates (i.e., the rates at which loans transition through delinquency stages and ultimately result in a loss) are estimated from our historical loss experience adjusted for current trends and market information. Loss severity estimates are based on our historical loss experience and market trends. The estimated loss severity (i.e., loss given default) used in the allowance for loan loss methodology for HELOC loans is higher than that used in the methodology for First Mortgages. Housing price trends are derived from historical home price indices and econometric forecasts of future home values. Factors affecting the home price index include housing inventory, unemployment, interest rates, and inflation expectations. Interest rate projections are based on the current term structure of interest rates and historical volatilities to project various possible future interest rate paths. This methodology results in loss factors that are applied to the outstanding balances to determine the allowance for loan loss for each loan type.

Schwab considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be troubled debt restructurings (TDRs).

Nonaccrual, Nonperforming and Impaired loans

First Mortgages, HELOCs, PALs, and other loans are placed on nonaccrual status upon becoming 90 days past due as to interest or principal (unless the loans are well-secured and in the process of collection), or when the full timely collection of interest or principal becomes uncertain, including loans to borrowers who have filed for bankruptcy. HELOC loans secured by a second lien are placed on non-accrual status if the associated first lien is 90 days or more delinquent, regardless of the payment status of the HELOC. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the loan is accounted for on the cash or cost recovery method until qualifying for return to accrual status. Generally, a nonaccrual loan may be returned to accrual status when all delinquent interest and principal is repaid and the borrower demonstrates a sustained period of performance, or when the loan is both well-secured and in the process of collection and collectability is no longer doubtful. Loans on nonaccrual status and other real estate owned are considered nonperforming assets. Nonaccrual loans, other real estate owned, and TDRs are considered impaired assets, as it is probable we will not collect all amounts due.

Loan Charge-Offs

The Company charges off a loan in the period that it is deemed uncollectible and records a reduction in the allowance for loan losses and the loan balance. Our charge-off policy for First Mortgage and HELOC loans is to assess the value of the property when the loan has been delinquent for 180 days or has been discharged in bankruptcy proceedings, regardless of whether the property is in foreclosure, and charge-off the amount of the loan balance in excess of the estimated current value of the underlying property less estimated costs to sell.

Equipment, office facilities, and property

Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:

Equipment and office facilities	5 to 10 years
Buildings	20 to 40 years
Software	3 to 10 years (1)
Leasehold improvements	Lesser of useful life or lease term

⁽¹⁾ Amortized over contractual term if less than three years.

Equipment, office facilities, and property are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Goodwill

Goodwill represents the fair value of acquired businesses in excess of the fair value of the individually identified net assets acquired. Goodwill is not amortized but is tested for impairment annually or whenever indications of impairment exist. Impairment exists when the carrying amount of goodwill exceeds its implied fair value, resulting in an impairment charge for this excess. Our annual impairment testing date is April 1^st. Schwab can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. A qualitative assessment considers macroeconomic and other industry-specific factors, such as trends in short-term and long-term interest rates and the ability to access capital, and Company specific factors such as market capitalization in excess of net assets, trends in revenue generating activities, and merger or acquisition activity.

If the Company elects to bypass qualitatively assessing goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, management estimates the fair values of each of the Company’s reporting units (defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compares it to their carrying values. The estimated fair values of the reporting units are established using an income approach based on a discounted cash flow model that includes significant assumptions about the future operating results and cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis.

Intangible assets

Finite-lived intangible assets are amortized over their useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Low-Income Housing Tax Credit (LIHTC) Investments

We account for investments in qualified affordable housing projects using the proportional amortization method if the applicable requirements are met. The proportional amortization method amortizes the cost of the investment over the period in which the investor expects to receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of taxes on income. The carrying value of LIHTC investments is included in other assets on the consolidated balance sheets. Unfunded commitments related to LIHTC investments are included in accrued expenses and other liabilities on the consolidated balance sheets.

Guarantees and indemnifications

Schwab recognizes, at the inception of a guarantee, a liability equal to the estimated fair value of the obligation undertaken in issuing the guarantee. The fair values of obligations relating to guarantees are estimated based on transactions for similar guarantees or expected present value measures.

Advertising and market development

Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts. Such costs are generally expensed when incurred.

Income taxes

Schwab provides for income taxes on all transactions that have been recognized in the consolidated financial statements. Accordingly, deferred tax assets are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax assets and deferred tax liabilities, as well as other changes in income tax laws, are recorded in earnings in the period during which such changes are enacted. Uncertain tax positions are evaluated to determine whether they are more likely than not to be sustained upon examination. When tax positions are more likely than not to be sustained upon examination the difference between positions taken on tax return filings and estimated potential tax settlement outcomes are recognized in accrued expenses and other liabilities. If a position is not more likely than not to be sustained, then none of the tax benefit is recognized in Schwab’s financial statements. Accrued interest and penalties relating to unrecognized tax benefits is recorded in taxes on income. Schwab records amounts within AOCI net of taxes. Income tax effects are released from AOCI using the specific-identification approach.

Share-based compensation

Share-based compensation includes employee and board of director stock options and restricted stock units. Schwab measures compensation expense for these share-based payment arrangements based on their estimated fair values as of the grant date. The fair value of the share-based award is recognized over the vesting period as share-based compensation. Share-based compensation expense is based on options or units expected to vest and therefore is reduced for estimated forfeitures. Per the Company’s accounting policy election, forfeitures are estimated at the time of grant and reviewed annually based on the Company’s historical forfeiture experience. Share-based compensation expense is adjusted in subsequent periods if actual forfeitures differ from estimated forfeitures. Beginning January 1, 2017, the excess tax benefits or deficiencies from the exercise of stock options and the vesting of restricted stock units are recorded in taxes on income.

Earnings per common share

EPS is computed using the two-class method. Preferred stock dividends and undistributed earnings and dividends allocated to participating securities are subtracted from net income in determining net income available to common stockholders. Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Dilutive potential common shares include, if dilutive, the effect of outstanding stock options and non-vested restricted stock units.

Fair values of assets and liabilities

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance describes the fair value hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from third-party sources independent of the Company. A quoted price in an active market provides the most reliable evidence of fair value and is generally used to measure fair value whenever available.

Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. Where inputs used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgment. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

• Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Assets and liabilities measured at fair value on a recurring basis

Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, other securities owned, and AFS securities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent third-party pricing sources for assets recorded at fair value.

Our primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded.

New Accounting Standards

Adoption of New Accounting Standards

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and related ASUs	Clarifies that revenue from contracts with clients should be recognized in a manner that depicts the timing of the related transfer of goods or performance of services at an amount that reflects the expected consideration. Adoption allows either full or modified retrospective transition. Full retrospective transition required a cumulative effect adjustment to retained earnings as of the earliest comparative period presented. Modified retrospective transition required a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance.	January 1, 2018	The guidance does not apply to revenue earned from the Company’s loans and securities. Accordingly, net interest revenue was not impacted. The primary impact for the Company was the capitalization on the consolidated balance sheets of sales commissions paid to employees for obtaining new contracts with clients. These capitalized costs resulted in an asset of $219 million and a related deferred tax liability of $52 million upon adoption. The asset is being amortized to expense over time as the related revenues are recognized. The Company adopted the revenue recognition guidance using the modified retrospective method for all contracts that were not completed as of January 1, 2018. Further details of the impact of adoption are included below in this Note as well as in Note 3.
ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)” and ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10)”	Requires: (i) equity investments to be measured at fair value, with changes in fair value recognized in net income, unless the equity method is applied or the equity investments do not have readily determinable fair values in which case a practical alternative may be elected; (ii) use of an exit price when measuring the fair value of financial instruments for disclosures; (iii) separate presentation of financial assets and liabilities by measurement category and form of instrument on the balance sheet or in the accompanying notes. Adoption requires a cumulative effect adjustment to the balance sheet as of the beginning of the year of initial application, except for certain changes that require prospective adoption.	January 1, 2018	The Company adopted this guidance on a prospective basis for its equity securities that do not have readily determinable fair values. No other significant changes resulted from adoption. Therefore, there was no material impact on the Company’s financial statements. The Company elected to use the alternative to fair value measurement for its equity securities that do not have readily determinable fair values. These equity securities will be adjusted for impairment and observable price changes of the identical or similar investments of the same issuer, as applicable. Schwab refers to this approach as the adjusted cost method. This method was applied to an immaterial amount of Community Reinvestment Act (CRA) investments included in other assets on the consolidated balance sheets.
ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash a Consensus of the Emerging Issues Task Force”	Requires that the statement of cash flows explain the change during the period in the total cash and cash equivalents, including restricted cash and cash equivalents. Adoption requires retrospective presentation of the statement of cash flows to include restricted cash and cash equivalents in the beginning and ending amounts.	January 1, 2018	The Company adopted this guidance on a retrospective basis. The Company has significant amounts of restricted cash and cash equivalents due to its business as a broker-dealer. As a result of the adoption, changes in restricted cash and cash equivalents included within cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets are now presented with changes in cash and cash equivalents throughout the consolidated statements of cash flows. The amount of restricted cash and cash equivalents is included in a separate table in the consolidated statement of cash flows.

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”	Permits reclassification of the impacts on certain tax affected items included in AOCI that were adjusted through income from continuing operations rather than AOCI upon the effective date of the Tax Act. Adoption provides for retrospective adoption to all periods presented and impacted by the Tax Act or as of the beginning of the period of adoption.	January 1, 2018	The Company adopted this guidance as of January 1, 2018. The Company elected to reclassify the income tax effects of the Tax Act from items in AOCI into retained earnings as of the beginning of the period of adoption. Adoption resulted in a reduction in AOCI and a corresponding increase in retained earnings of $33 million.

New Accounting Standards Not Yet Adopted

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-02, “Leases (Topic 842)”	Amends the accounting for leases by lessees and lessors. The primary change from the new guidance is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. Additional changes include accounting for lease origination and executory costs, required lessee reassessments during the lease term due to changes in circumstances, and expanded lease disclosures. Adoption provides for modified retrospective transition as of the beginning of the earliest comparative period presented in the financial statements in which the entity first applies the new standard or prospectively with an adjustment as of the beginning of the period of adoption. Certain transition relief is permitted if elected by the entity.	January 1, 2019	The Company adopted the new lease accounting guidance prospectively as of January 1, 2019, which will result in a gross up of the consolidated balance sheet due to recognition of right-of-use assets and lease liabilities primarily related to CS&Co leases of office space and branches. These amounts will be based on the present value of our remaining operating lease payments. The Company's right of use assets and related lease liabilities upon adoption will be $596 million and $662 million, respectively.

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”	Provides guidance for recognizing impairment of most debt instruments measured at amortized cost, including loans and HTM debt securities. Requires estimating current expected credit losses (CECL) over the remaining life of an instrument or a portfolio of instruments with similar risk characteristics based on relevant information about past events, current conditions, and reasonable forecasts. The initial estimate of, and the subsequent changes in, CECL will be recognized as credit loss expense through current earnings and will be reflected as an allowance for credit losses offsetting the carrying value of the financial instrument(s) on the balance sheet. Amends the OTTI model for AFS debt securities by requiring the use of an allowance, rather than directly reducing the carrying value of the security, and eliminating consideration of the length of time such security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Adoption requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the entity applies the new guidance except that a prospective transition is required for AFS debt securities for which an OTTI has been recognized prior to the effective date.	January 1, 2020 (early adoption permitted)	The Company continues to evaluate the impact of this guidance on its financial statements. The Company has finished the majority of its scoping work and assessment of the current state of data and systems. Work is transitioning to designing and building out approaches to address certain asset classes with a focus primarily on a subset of our securities, including corporate debt securities. The Company expects that a large portion of its securities will have zero expectation of credit losses based on industry and regulator views for U.S. treasury and certain government agency-backed securities. We are currently working on in-depth analysis for the other asset types that do not have zero expectation of credit losses to determine our methods and any needed changes to policies and procedures.
ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”	Shortens the amortization period for the premium on certain callable debt securities to the earliest call date. The amendments are applicable to any purchased individual debt security with an explicit and noncontingent call feature with a fixed price on a preset date. ASU 2017-08 does not impact the accounting for callable debt securities held at a discount. Adoption requires modified retrospective transition as of the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings.	January 1, 2019 (early adoption permitted)	The Company adopted this guidance as of January 1, 2019 using the modified retrospective method. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption.

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-15, “Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”	Aligns the criteria for capitalizing implementation costs for cloud computing arrangements (CCA) that are service contracts with internal-use software that is developed or purchased and CCAs that include an internal-use software license. This guidance requires that the capitalized implementation costs be recognized over the period of the CCA service contract, subject to impairment evaluation on an ongoing basis. The guidance prescribes the balance sheet, income statement, and statement of cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. Adoption provides for retrospective or prospective application to all implementation costs incurred after the date of adoption.	January 1, 2020 (early adoption permitted)	Historically, Schwab has expensed implementation costs as they are incurred for CCAs that are service contracts. Therefore, adopting this guidance will change the Company’s accounting treatment for these types of implementation costs. The Company is evaluating the impacts of this guidance on its financial statements.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09, “Revenue – Revenue from Contracts with Customers” and ASU 2018-02, “Other Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” were as follows:

	Balance at December 31, 2017			Adjustments Due to ASU 2014-09		Adjustments Due to ASU 2018-02			Balance at January 1, 2018
Assets
Other assets (1)	$	2,057		$	167	$	—		$	2,224
Stockholders’ Equity
Retained earnings	14,408			167		33			14,608
Accumulated other comprehensive income	(152		)	—		(33		)	(185		)

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of $219 million, partially offset by an increase in deferred tax liabilities of

$52 million.

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of income and consolidated balance sheet were as follows:

	Year Ended December 31, 2018
Statement of Income	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Expenses Excluding Interest
Compensation and benefits	$	3,057	$	3,088	$	(31	)
Taxes on income	1,055		1,047		8
Net Income	3,507		3,484		23

	As of December 31, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Assets
Other assets (1)	$	2,046	$	1,851	$	195
Liabilities
Accrued expenses and other liabilities (1)	2,954		2,949		5
Stockholders’ Equity
Retained earnings	17,329		17,139		190

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of$250 million, partially offset by an increase in deferred tax liabilities of

$60 million.

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Revenue Recognition

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

3.Revenue Recognition

Disaggregated Revenue

Disaggregation of Schwab’s revenue by major sourceis as follows:

Year Ended December 31,	2018			2017			2016
Net interest revenue
Interest revenue	$	6,680		$	4,624		$	3,493
Interest expense	(857		)	(342		)	(171		)
Net interest revenue	5,823			4,282			3,322
Asset management and administration fees
Mutual funds and ETF service fees	1,793			2,045			1,853
Advice solutions	1,139			1,043			915
Other	297			304			287
Asset management and administration fees	3,229			3,392			3,055
Trading revenue
Commissions	685			600			779
Principal transactions	78			54			46
Trading revenue	763			654			825
Other	317			290			276
Total net revenues	$	10,132		$	8,618		$	7,478

For a summary of revenue provided by our reportable segments, see Note 22. The recognition of revenue is not impacted by the operating segment in which revenue is generated.

Net interest revenue

Net interest revenue, which is generated from financial instruments covered by various other areas of GAAP, is not within the scope of Accounting Standards Codification (ASC) 606, Revenue From Contracts With Customers (ASC 606), and is included in the table above in order to reconcile to total net revenues per the consolidated statements of income. Net interest revenue is the difference between interest generated on interest earning assets and interest paid on funding sources. Our primary interest earning assets include cash and cash equivalents; segregated cash and investments; margin loans, which constitute the majority of receivables from brokerage clients; investment securities; and bank loans. Revenue on interest earning assets is affected by various factors, such as the composition of assets, prevailing interest rates at the time of origination or purchase, changes in interest rates on floating rate securities and loans, and changes in prepayment levels for mortgage related securities and loans. Fees earned and incurred on securities borrowing and lending activities, which are conducted by CS&Co on assets held in client brokerage accounts, are also included in interest revenue and expense.

Asset management and administration fees

The majority of asset management and administration fees are generated through our proprietary and third-party mutual fund and ETF offerings, as well as fee-based advisory solutions. Mutual fund and ETF service fees are charged for investment management, shareholder, and administration services provided to Schwab Funds^® and Schwab ETFs™, as well as recordkeeping, shareholder, and administration services provided to third-party funds. Advice solutions fees are charged for brokerage and asset management services provided to advice solutions clients. Both mutual fund and ETF service fees and advice solutions fees are earned and recognized over time. Fees are generally based on a percentage of the daily value of assets under management and are collected on a monthly or quarterly basis.

Trading revenue

Substantially all trading revenue is generated through commissions earned for executing trades for clients in individual equities, options, fixed income securities, and certain third-party mutual funds and ETFs. This revenue is earned and collected when the trades are executed.

Other revenue

Other revenue includes order flow revenue, other service fees, software fees from our portfolio management solutions, exchange processing fees, and nonrecurring gains. Generally, the most significant portion of other revenue is order flow revenue, which is comprised of rebate payments received from execution venues to which CS&Co sends equity and option orders. Order flow revenue is recognized when the trades are executed.

Capitalized contract costs

Capitalized contract costs relate to sales commissions paid to employees for obtaining contracts with clients and are included in other assets on the consolidated balance sheets. These costs are amortized to expense on a straight-line basis over a period that is consistent with how the related revenue is recognized. At December 31, 2018 and January 1, 2018, we had $250 million and $219 million of capitalized contract costs, respectively. Amortization expense related to capitalized contract costs was $47 million in 2018, which was recorded in compensation and benefits expense on the consolidated statements of income.

Contract balances

Receivables from contracts with customers within the scope of ASC 606 were$307 million at December 31, 2018 and $353 million at January 1, 2018 and were recorded in other assets on the consolidated balance sheets. Schwab does not have any other significant contract assets or contract liability balances as of December 31, 2018 and January 1, 2018.

Unsatisfied performance obligations

We do not have any unsatisfied performance obligations other than those that are subject to an elective practical expedient under ASC 606. The practical expedient applies to and is elected for contracts where we recognize revenue at the amount to which we have the right to invoice for services performed.

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Receivables from and Payables to Brokerage Clients

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Receivables from and Payables to Brokerage Clients

Receivables from and Payables to Brokerage Clients

Receivables from and payables to brokerage clients are detailed below:

December 31,	2018		2017
Receivables
Margin loans, net of allowance for doubtful accounts	$	19,273	$	18,331
Other brokerage receivables	2,378		2,245
Receivables from brokerage clients — net	$	21,651	$	20,576
Payables
Interest-bearing payables	$	21,990	$	22,840
Non-interest-bearing payables	10,736		8,403
Payables to brokerage clients	$	32,726	$	31,243

At December 31, 2018 and 2017, approximately 22% of CS&Co’s total client accounts were located in California.

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Other Securities Owned

12 Months Ended

Dec. 31, 2018

Other Securities Owned [Abstract]

Other Securities Owned

Other Securities Owned

A summary of securities ownedis as follows:

December 31,	2018		2017
Equity and bond mutual funds	$	441	$	318
State and municipal debt obligations	39		52
Equity, U.S. Government and corporate debt, and other securities	33		34
Schwab Funds® money market funds	26		135
Total other securities owned	$	539	$	539

Equity and bond mutual funds include inventory maintained to facilitate clients’ transactions in certain Schwab Funds and third-party mutual funds, and investments made relating to our deferred compensation plan. State and municipal debt obligations, equity, U.S. Government and corporate debt, and other securities include securities to meet clients’ trading activities. The positions in Schwab Funds^® money market funds arise from certain overnight funding of clients’ redemption, check-writing, and debit card activities.

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Investment Securities

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities are as follows:

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities
U.S. agency mortgage-backed securities	$	25,594	$	44	$	82	$	25,556
U.S. Treasury securities	18,410		—		108		18,302
Asset-backed securities (1)	10,086		14		15		10,085
Corporate debt securities (2)	7,477		10		20		7,467
Certificates of deposit	3,682		4		1		3,685
U.S. agency notes	900		—		2		898
Commercial paper (2,3)	522		—		—		522
Foreign government agency securities	50		—		1		49
Non-agency commercial mortgage-backed securities	14		—		—		14
Total available for sale securities	$	66,735	$	72	$	229	$	66,578
Held to maturity securities
U.S. agency mortgage-backed securities	$	118,064	$	217	$	2,188	$	116,093
Asset-backed securities (1)	18,502		83		39		18,546
Corporate debt securities (2)	4,477		2		47		4,432
U.S. state and municipal securities	1,327		24		3		1,348
Non-agency commercial mortgage-backed securities	1,156		3		17		1,142
U.S. Treasury securities	223		—		6		217
Certificates of deposit	200		1		—		201
Foreign government agency securities	50		—		1		49
Other	10		—		—		10
Total held to maturity securities	$	144,009	$	330	$	2,301	$	142,038
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	20,915	$	53	$	39	$	20,929
U.S. Treasury securities	9,583		—		83		9,500
Asset-backed securities (1)	9,019		34		6		9,047
Corporate debt securities (2)	6,154		16		1		6,169
Certificates of deposit	2,040		2		1		2,041
U.S. agency notes	1,914		—		8		1,906
Commercial paper (2)	313		—		—		313
Foreign government agency securities	51		—		1		50
Non-agency commercial mortgage-backed securities	40		—		—		40
Total available for sale securities	$	50,029	$	105	$	139	$	49,995
Held to maturity securities
U.S. agency mortgage-backed securities	$	101,197	$	290	$	1,034	$	100,453
Asset-backed securities (1)	12,937		127		2		13,062
Corporate debt securities (2)	4,078		13		5		4,086
U.S. state and municipal securities	1,247		57		—		1,304
Non-agency commercial mortgage-backed securities	994		10		5		999
U.S. Treasury securities	223		—		3		220
Certificates of deposit	200		—		—		200
Foreign government agency securities	50		—		1		49
Total held to maturity securities	$	120,926	$	497	$	1,050	$	120,373

⁽¹⁾ Approximately 36% and 42% of asset-backed securities held as of December 31, 2018 and 2017, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 42% and 40% of the asset-backed securities held as of December 31, 2018 and 2017, respectively.

⁽²⁾ As of December 31, 2018 and 2017, approximately 26% and 41%, respectively, of the total AFS and HTM investments in corporate debt securities and commercial paper were issued by institutions in the financial services industry. Approximately 18% and 22% of the holdings of these securities were issued by institutions in the information technology industry as of December 31, 2018 and 2017, respectively.

⁽³⁾ Included in cash and cash equivalents on the consolidated balance sheet, but excluded from this table is $4.9 billion of AFS commercial paper. These holdings have maturities of three months or less and an aggregate market value equal to amortized cost.

During 2017, the Company transferred $24.7 billion of investment securities from the AFS category to the HTM category. These securities had a total net unrealized loss of $227 million before income tax in AOCI on the date of transfer. The transfer was made to mitigate the potential volatility in regulatory capital from changes in market values in the AFS securities portfolio and the related impact to AOCI in anticipation of Schwab crossing $250 billion in consolidated assets, which occurred in the second quarter of 2018. The year after a company surpasses $250 billion in consolidated assets, it can no longer exclude AOCI from regulatory capital. The transfer included U.S. agency mortgage-backed securities, asset-backed securities, corporate debt securities, and U.S. state and municipal securities. The unrealized holding gains and losses on the date of transfer, are reported as a separate component of AOCI and as an adjustment to the purchase premium and discount on the securities transferred. The separate component of AOCI is amortized or accreted into interest income over the remaining life of the securities transferred, offsetting the revised premium or discount amortization or accretion on the transferred assets.

At December 31, 2018, certain banking subsidiaries had pledged securities with a fair value of $27.2 billion as collateral to secure borrowing capacity on secured credit facilities with the FHLB (see Note 13). CSB also pledges certain investment securities as collateral to secure borrowing capacity at the Federal Reserve Bank discount window, and had pledged securities with a fair value of $7.9 billion as collateral for this facility at December 31, 2018. CSB also pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $906 million at December 31, 2018.

Securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:

	Less than 12 months				12 months or longer				Total
December 31, 2018	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale securities
U.S. agency mortgage-backed securities	$	9,529	$	32	$	4,257	$	50	$	13,786	$	82
U.S. Treasury securities	4,951		6		7,037		102		11,988		108
Asset-backed securities	4,050		9		837		6		4,887		15
Corporate debt securities	3,561		19		254		1		3,815		20
Certificates of deposit	1,217		1		150		—		1,367		1
U.S. agency notes	195		—		304		2		499		2
Foreign government agency securities	—		—		49		1		49		1
Total	$	23,503	$	67	$	12,888	$	162	$	36,391	$	229
Held to maturity securities
U.S. agency mortgage-backed securities	$	29,263	$	222	$	56,435	$	1,966	$	85,698	$	2,188
Asset-backed securities	6,795		35		376		4		7,171		39
Corporate debt securities	2,909		29		1,066		18		3,975		47
U.S. state and municipal securities	77		2		18		1		95		3
Non-agency commercial mortgage-backed securities	283		2		632		15		915		17
U.S. Treasury securities	—		—		218		6		218		6
Foreign government agency securities	—		—		49		1		49		1
Total	$	39,327	$	290	$	58,794	$	2,011	$	98,121	$	2,301
Total securities with unrealized losses (1)	$	62,830	$	357	$	71,682	$	2,173	$	134,512	$	2,530
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	5,696	$	21	$	2,548	$	18	$	8,244	$	39
U.S. Treasury securities	4,625		11		4,875		72		9,500		83
Asset-backed securities	904		3		424		3		1,328		6
Corporate debt securities	736		1		120		—		856		1
Certificates of deposit	799		1		—		—		799		1
U.S. agency notes	99		—		1,807		8		1,906		8
Foreign government agency securities	50		1		—		—		50		1
Total	$	12,909	$	38	$	9,774	$	101	$	22,683	$	139
Held to maturity securities
U.S. agency mortgage-backed securities	$	42,102	$	310	$	24,753	$	724	$	66,855	$	1,034
Asset-backed securities	1,124		2		72		—		1,196		2
Corporate debt securities	1,078		5		—		—		1,078		5
Non-agency commercial mortgage-backed securities	607		5		—		—		607		5
U.S. Treasury securities	220		3		—		—		220		3
Foreign government agency securities	49		1		—		—		49		1
Total	$	45,180	$	326	$	24,825	$	724	$	70,005	$	1,050
Total securities with unrealized losses (2)	$	58,089	$	364	$	34,599	$	825	$	92,688	$	1,189

⁽¹⁾ The number of investment positions with unrealized losses totaled 441 for AFS securities and 1,524 for HTM securities.

⁽²⁾ The number of investment positions with unrealized losses totaled 251 for AFS securities and 938 for HTM securities.

At December 31, 2018, substantially all securities in the investment portfolios were rated investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government or U.S. government-sponsored enterprises.

Management evaluates whether investment securities are OTTI on a quarterly basis as described in Note 2. Amounts recognized as OTTI in earnings or other comprehensive income were immaterial in 2018, 2017, and 2016. As of December 31, 2018 and 2017, the Company did not hold any securities on which OTTI was previously recognized.

In the below table, mortgage-backed securities have been allocated to maturity groupings based on final contractual maturities. As borrowers may have the right to call or prepay certain obligations underlying our investment securities, actual maturities may differ from the scheduled contractual maturities presented below.

The maturities of AFS and HTM securities are as follows:

December 31, 2018	Within 1 year			After 1 year through 5 years			After 5 years through 10 years			After 10 years			Total
Available for sale securities
U.S. agency mortgage-backed securities	$	153		$	3,481		$	12,100		$	9,822		$	25,556
U.S. Treasury securities	14,164			4,138			—			—			18,302
Asset-backed securities	—			8,445			1,240			400			10,085
Corporate debt securities	1,755			5,712			—			—			7,467
Certificates of deposit	1,984			1,701			—			—			3,685
U.S. agency notes	499			399			—			—			898
Commercial paper	522			—			—			—			522
Foreign government agency securities	—			49			—			—			49
Non-agency commercial mortgage-backed securities	—			—			—			14			14
Total fair value	$	19,077		$	23,925		$	13,340		$	10,236		$	66,578
Total amortized cost	$	19,111		$	24,010		$	13,382		$	10,232		$	66,735
Weighted-average yield (1)	1.80		%	2.71		%	2.61		%	2.70		%	2.43		%
Held to maturity securities
U.S. agency mortgage-backed securities	$	256		$	14,960		$	34,008		$	66,869		$	116,093
Asset-backed securities	—			2,106			9,144			7,296			18,546
Corporate debt securities	137			3,550			745			—			4,432
U.S. state and municipal securities	—			59			309			980			1,348
Non-agency commercial mortgage-backed securities	—			356			—			786			1,142
U.S. Treasury securities	—			—			217			—			217
Certificates of deposit	—			201			—			—			201
Foreign government agency securities	—			49			—			—			49
Other	—			—			—			10			10
Total fair value	$	393		$	21,281		$	44,423		$	75,941		$	142,038
Total amortized cost	$	395		$	21,446		$	44,925		$	77,243		$	144,009
Weighted-average yield (1)	1.97		%	2.56		%	2.69		%	2.63		%	2.63		%

⁽¹⁾ The weighted-average yield is computed using the amortized cost at December 31, 2018.

Proceeds and gross realized gains and losses from sales of AFS securities are as follows:

Year Ended December 31,	2018		2017		2016
Proceeds	$	115	$	8,617	$	5,537
Gross realized gains	—		12		4
Gross realized losses	—		—		—

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Bank Loans and Related Allowance for Loan Losses

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Bank Loans and Related Allowance for Loan Losses

Bank Loans and Related Allowance for Loan Losses

The composition of bank loans and delinquency analysis by loan type is as follows:

December 31, 2018	Current		30-59 days past due		60-89 days past due		>90 days past due and other nonaccrual loans (3)		Total past due and other nonaccrual loans		Total loans		Allowance for loan losses		Total bank loans – net
First Mortgages (1,2)	$	10,349	$	21	$	2	$	12	$	35	$	10,384	$	14	$	10,370
HELOCs (1,2)	1,493		3		1		8		12		1,505		5		1,500
Pledged asset lines	4,558		3		—		—		3		4,561		—		4,561
Other	180		—		—		—		—		180		2		178
Total bank loans	$	16,580	$	27	$	3	$	20	$	50	$	16,630	$	21	$	16,609
December 31, 2017
First Mortgages (1,2)	$	9,983	$	14	$	2	$	17	$	33	$	10,016	$	16	$	10,000
HELOCs (1,2)	1,928		—		3		12		15		1,943		8		1,935
Pledged asset lines	4,361		4		4		—		8		4,369		—		4,369
Other	176		—		—		—		—		176		2		174
Total bank loans	$	16,448	$	18	$	9	$	29	$	56	$	16,504	$	26	$	16,478

⁽¹⁾ First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $73 million and $77 million at December 31, 2018 and 2017, respectively.

⁽²⁾ At December 31, 2018 and 2017, 47% and 48%, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.

⁽³⁾ There were no loans accruing interest that were contractually 90 days or more past due at December 31, 2018 or 2017.

At December 31, 2018, CSB had pledged $11.1 billion of First Mortgages and HELOCs as collateral to secure borrowing capacity on a secured credit facility with the FHLB (see Note 13).

Substantially all of the bank loans were collectively evaluated for impairment at both December 31, 2018 and 2017.

Changes in the allowance for loan losses were as follows:

	December 31, 2018												December 31, 2017											December 31, 2016
	First Mortgages			HELOCs			Other			Total (1)			First Mortgages			HELOCs			Other		Total (1)			First Mortgages			HELOCs			Other		Total (1)
Balance at beginning of year	$	16		$	8		$	2		$	26		$	17		$	8		$	1	$	26		$	20		$	11		—		$	31
Charge-offs	—			—			(1		)	(1		)	(2		)	(1		)	—		(3		)	(1		)	(1		)	—		(2		)
Recoveries	1			1			—			2			1			1			1		3			1			1			—		2
Provision for loan losses	(3		)	(4		)	1			(6		)	—			—			—		—			(3		)	(3		)	1		(5		)
Balance at end of year	$	14		$	5		$	2		$	21		$	16		$	8		$	2	$	26		$	17		$	8		$	1	$	26

⁽¹⁾All PALs were fully collateralized by securities with fair values in excess of borrowings at December 31, 2018, 2017, and 2016.

A summary of impaired bank loan-related assets is as follows:

December 31,	2018		2017
Nonaccrual loans (1)	$	21	$	28
Other real estate owned (2)	3		3
Total nonperforming assets	24		31
Troubled debt restructurings	4		11
Total impaired assets	$	28	$	42

⁽¹⁾ Nonaccrual loans include nonaccrual troubled debt restructurings.

⁽²⁾ Included in Other assets on the consolidated balance sheets.

Credit Quality

In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following:

• Year of origination;

• Borrower FICO scores at origination (Origination FICO);

• Updated borrower FICO scores (Updated FICO);

• Loan-to-value (LTV) ratios at origination (Origination LTV); and

• Estimated current LTV ratios (Estimated Current LTV).

Borrowers’ FICO scores are provided by an independent third-party credit reporting service and updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index.

The credit quality indicators of the bank loan portfolio are detailed below:

December 31, 2018	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,396	776	0.04	%
>70% – <90%	985		769	0.41	%
>90% – <100%	2		717	—
>100%	1		753	—
Total	$	10,384	775	0.07	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,416	770	0.13	%
>70% – <90%	80		752	0.60	%
>90% – <100%	6		729	3.36	%
>100%	3		702	—
Total	$	1,505	769	0.17	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,561	766	—
December 31, 2017	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,046	775	0.09	%
>70% – <90%	961		769	0.46	%
>90% – <100%	5		714	10.49	%
>100%	4		713	6.23	%
Total	$	10,016	775	0.14	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,773	772	0.18	%
>70% – <90%	148		755	0.84	%
>90% – <100%	14		742	2.85	%
>100%	8		718	4.91	%
Total	$	1,943	770	0.27	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,369	765	—

⁽¹⁾ Represents the LTV for the full line of credit (drawn and undrawn).

December 31, 2018	First Mortgages		HELOCs
Year of origination
Pre-2014	$	1,979	$	1,051
2014	408		89
2015	1,050		106
2016	2,606		95
2017	2,366		99
2018	1,975		65
Total	$	10,384	$	1,505
Origination FICO
<620	$	5	$	—
620 – 679	83		8
680 – 739	1,626		282
>740	8,670		1,215
Total	$	10,384	$	1,505
Origination LTV
<70%	$	7,815	$	1,064
>70% – <90%	2,564		434
>90% – <100%	5		7
Total	$	10,384	$	1,505
December 31, 2017	First Mortgages		HELOCs
Year of origination
Pre-2014	$	2,804	$	1,496
2014	530		116
2015	1,218		128
2016	2,886		111
2017	2,578		92
Total	$	10,016	$	1,943
Origination FICO
<620	$	6	$	1
620 – 679	89		10
680 – 739	1,569		365
>740	8,352		1,567
Total	$	10,016	$	1,943
Origination LTV
<70%	$	7,569	$	1,360
>70% – <90%	2,441		574
>90% – <100%	6		9
Total	$	10,016	$	1,943

At December 31, 2018, First Mortgage loans of $9.4 billion had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter. Approximately 31% of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 64% of the balance of these interest-only loans are not scheduled to reset for three or more years. Schwab’s mortgage loans do not include interest terms described as temporary introductory rates below current market rates.

The HELOC product has a 30-year loan term with an initial draw period of ten years from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a 20-year amortizing loan. The interest rate during the initial draw period and the 20-year amortizing period is a floating rate based on the prime rate plus a margin. HELOCs that convert to an amortizing loan may experience higher delinquencies and higher loss rates than those in the initial draw period. The allowance for loan loss methodology takes this increased inherent risk into consideration.

The following table presents when current outstanding HELOCs will convert to amortizing loans:

December 31, 2018	Balance
Converted to amortizing loan by period end	$	677
Within 1 year	83
> 1 year – 3 years	118
> 3 years – 5 years	173
> 5 years	454
Total	$	1,505

At December 31, 2018, $1.2 billion of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At December 31, 2018, the borrowers on approximately 51% of HELOC loan balances outstanding only paid the minimum amount due.

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Equipment, Office Facilities, and Property

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Equipment, Office Facilities, and Property

Equipment, Office Facilities, and Property

Equipment, office facilities, and property are detailed below:

December 31,	2018			2017
Software	$	1,699		$	1,490
Buildings	945			810
Leasehold improvements	367			357
Construction in progress	248			142
Furniture and equipment	219			193
Information technology equipment	206			326
Land	179			167
Telecommunications equipment	69			66
Total equipment, office facilities, and property	3,932			3,551
Accumulated depreciation and amortization	(2,163		)	(2,080		)
Total equipment, office facilities, and property — net	$	1,769		$	1,471

Depreciation and amortization expense for equipment, office facilities, and property was $277 million, $232 million, and $197 million in 2018, 2017, and 2016, respectively.

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Goodwill

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The changes in the carrying amount of goodwill, as allocated to our reportable segments, are presented in the following table:

	Investor Services		Advisor Services		Total
Balance at December 31, 2016	$	1,096	$	131	$	1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2017	1,096		131		1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2018	$	1,096	$	131	$	1,227

As of our annual testing date, we performed a qualitative assessment of each of the Company’s reporting units. Based on the Company’s analysis, fair value significantly exceeded the carrying value for all reporting units and we concluded that goodwill was not impaired. Schwab did not recognize any goodwill impairment in any of the years presented.

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Other Assets

12 Months Ended

Dec. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

Other Assets

The components of other assets are as follows:

December 31,	2018		2017
Interest and dividends receivable	$	586	$	413
Other investments (1)	428		376
Accounts receivable (2)	410		461
Capitalized contract costs, net	250		—
Intangible assets, net of accumulated amortization of $299 and $270 (3)	152		108
Prepaid expenses	122		126
FHLB stock (4)	32		405
Deferred tax asset — net	3		76
Other	63		92
Total other assets	$	2,046	$	2,057

⁽¹⁾ Predominantly CRA-related, including LIHTC investments.

⁽²⁾ Accounts receivable predominantly includes receivables from contracts with customers and a receivable from our loan servicer.

⁽³⁾ Exclusive of indefinite-lived intangible assets of $74 million and $1 million at December 31, 2018 and 2017, respectively, future amortization over the next five years and thereafter is expected to total $77 million. Amortization expense for intangible assets was $29 million in 2018, and $37 million in both 2017 and 2016.

⁽⁴⁾ Investments in stock of the FHLB can only be sold to the issuer at its par value. Any cash dividends received from these investments are recognized as interest revenue in the consolidated statements of income.

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Variable Interest Entities

12 Months Ended

Dec. 31, 2018

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

As of December 31, 2018 and 2017, all of Schwab’s involvement with VIEs is through CSB’s CRA-related investments and most of those related to LIHTC investments. As part of CSB’s community reinvestment initiatives, CSB invests in funds that make equity investments in multifamily affordable housing properties. CSB receives tax credits and other tax benefits for these investments.

Aggregate assets, liabilities and maximum exposure to loss

The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:

	December 31, 2018						December 31, 2017
	Aggregate assets		Aggregate liabilities		Maximum exposure to loss		Aggregate assets		Aggregate liabilities		Maximum exposure to loss
LIHTC Investments (1)	$	338	$	188	$	338	$	304	$	203	$	304
Other CRA Investments (2)	70		—		124		69		—		125
Total	$	408	$	188	$	462	$	373	$	203	$	429

⁽¹⁾ Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets.

⁽²⁾ Other CRA investments are recorded using either the adjusted cost method, equity method, or as HTM securities. Aggregate assets are included in HTM securities, bank loans – net, or other assets on the consolidated balance sheets.

Schwab’s maximum exposure to loss would result from the loss of the investments, including any committed amounts. During the years ended December 31, 2018 and 2017, Schwab did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide. CSB’s funding of these remaining commitments is dependent upon the occurrence of certain conditions, and CSB expects to pay substantially all of these commitments between 2019 and 2022.

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Bank Deposits

12 Months Ended

Dec. 31, 2018

Banking and Thrift [Abstract]

Bank Deposits

Bank Deposits

Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows:

December 31,	2018		2017
Interest-bearing deposits:
Deposits swept from brokerage accounts	$	212,311	$	148,212
Checking	12,523		13,388
Savings and other	5,827		7,264
Total interest-bearing deposits	230,661		168,864
Non-interest-bearing deposits	762		792
Total bank deposits	$	231,423	$	169,656

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Borrowings

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Borrowings

Borrowings

CSC’s Senior Notes are unsecured obligations and rank equally with the other unsecured senior debt. CSC may redeem some or all of the Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. Interest is payable semi-annually for the fixed-rate Senior Notes and quarterly for the floating-rate Senior Notes. The following table lists long-term debt by instrument outstanding as of December 31, 2018 and 2017.

	Date of	Principal Amount Outstanding
	Issuance	2018			2017
Fixed-Rate Senior Notes:
1.500% due March 10, 2018 (1)	03/10/15	$	—		$	625
2.200% due July 25, 2018 (2)	07/25/13	—			275
4.450% due July 22, 2020	07/22/10	700			700
3.250% due May 21, 2021	05/22/18	600			—
3.225% due September 1, 2022	08/29/12	256			256
2.650% due January 25, 2023	12/07/17	800			800
3.550% due February 1, 2024	10/31/18	500			—
3.000% due March 10, 2025	03/10/15	375			375
3.850% due May 21, 2025	05/22/18	750			—
3.450% due February 13, 2026	11/13/15	350			350
3.200% due March 2, 2027	03/02/17	650			650
3.200% due January 25, 2028	12/07/17	700			700
4.000% due February 1, 2029	10/31/18	600			—
Floating-rate Senior Notes:
Three-month LIBOR + 0.32% due May 21, 2021	05/22/18	600			—
Total Senior Notes		6,881			4,731
5.450% Finance lease obligation (3)	06/04/04	52			61
Unamortized discount — net		(15		)	(14		)
Debt issuance costs		(40		)	(25		)
Total long-term debt		$	6,878		$	4,753

໿

⁽¹⁾ Redeemed on February 8, 2018.

⁽²⁾ Redeemed on June 25, 2018.

⁽³⁾ Schwab has a finance lease obligation related to an office building and land under a 20-year lease. The remaining finance lease obligation is being reduced by a portion of the lease payments over the remaining lease term through June 30, 2024.

Annual maturities on long-term debt outstanding at December 31, 2018, are as follows:

	Maturities
2019	$	8
2020	709
2021	1,209
2022	266
2023	810
Thereafter	3,931
Total maturities	6,933
Unamortized discount — net	(15		)
Debt issuance costs	(40		)
Total long-term debt	$	6,878

Short-term borrowings: Certain banking subsidiaries maintain secured credit facilities with the FHLB. Amounts available under these facilities are dependent on the amount of our First Mortgages, HELOCs, and the fair value of certain of their investment securities that are pledged as collateral. As of December 31, 2018, the collateral pledged provided a total borrowing capacity of $35.5 billion of which no amounts were outstanding. As of December 31, 2017, the collateral pledged provided a total borrowing capacity of $32.3 billion of which $15.0 billion was outstanding, with a 1.53% weighted average fixed interest rate. The Company could increase its borrowing capacity by pledging additional securities.

As a condition of the FHLB borrowings, we are required to hold FHLB stock, with the investment recorded in other assets on the consolidated balance sheets. The investment in FHLB was $32 million and $405 million at December 31, 2018 and 2017, respectively.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Loan Portfolio: CSB provides a co-branded loan origination program for CSB clients (the Program) with Quicken Loans, Inc. (Quicken Loans^®). Pursuant to the Program, Quicken Loans originates and services First Mortgages and HELOCs for CSB clients. Under the Program, CSB purchases certain First Mortgages and HELOCs that are originated by Quicken Loans. CSB purchased First Mortgages of $2.1 billion and $2.8 billion during 2018 and 2017, respectively. CSB purchased HELOCs with commitments of $395 million and $461 million during 2018 and 2017, respectively.

The Company’s commitments to extend credit on bank lines of credit and to purchase First Mortgages are as follows:

December 31,	2018		2017
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit	$	11,046	$	10,060
Commitments to purchase First Mortgage loans	268		308
Total	$	11,314	$	10,368

Operating leases: Schwab has non-cancelable operating leases for office space and equipment. As of December 31, 2018, future annual minimum rental commitments under these leases, net of contractual subleases are as follows:

	Operating Leases		Subleases		Net
2019	$	131	$	4	$	127
2020	125		4		121
2021	101		4		97
2022	79		2		77
2023	72		1		71
Thereafter	282		—		282
Total	$	790	$	15	$	775

Certain leases contain provisions for renewal options, purchase options, and rent escalations based on increases in certain costs incurred by the lessor. Rent expense relating to operating leases was $146 million, $136 million, and $123 million in 2018, 2017, and 2016, respectively.

Purchase obligations: Schwab has purchase obligations for services such as advertising and marketing, telecommunications, professional services, and hardware- and software-related agreements.As of December 31, 2018, the Company has purchase obligations as follows:

2019	$	475
2020	232
2021	71
2022	32
2023	22
Thereafter	170
Total	$	1,002

Guarantees and indemnifications: Schwab has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation– a clearing house that establishes margin requirements on these transactions. We partially satisfy the margin requirements by arranging unsecured standby LOCs, in favor of the Options Clearing Corporation, which are issued by several banks.At December 31, 2018, the aggregate face amount of these LOCs totaled $225 million. There were no funds drawn under any of these LOCs at December 31, 2018. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral.

Schwab also provides guarantees to securities clearing houses and exchanges under standard membership agreements, which require members to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearing houses and exchanges, other members would be required to meet shortfalls. Schwab’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. The potential requirement for the Company to make payments under these arrangements is remote. Accordingly, no liability has been recognized for these guarantees.

Legal contingencies: Schwab is subject to claims and lawsuits in the ordinary course of business, including arbitrations, class actions and other litigation, some of which include claims for substantial or unspecified damages. The Company is also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies.

Predicting the outcome of a litigation or regulatory matter is inherently difficult, requiring significant judgment and evaluation of various factors, including the procedural status of the matter and any recent developments; prior experience and the experience of others in similar cases; available defenses, including potential opportunities to dispose of a case on the merits or procedural grounds before trial (e.g., motions to dismiss or for summary judgment); the progress of fact discovery; the opinions of counsel and experts regarding potential damages; and potential opportunities for settlement and the status of any settlement discussions. It may not be reasonably possible to estimate a range of potential liability until the matter is closer to resolution – pending, for example, further proceedings, the outcome of key motions or appeals, or discussions among the parties. Numerous issues may have to be developed, such as discovery of important factual matters and determination of threshold legal issues, which may include novel or unsettled questions of law. Reserves are established or adjusted or further disclosure and estimates of potential loss are provided as the matter progresses and more information becomes available.

Schwab believes it has strong defenses in all significant matters currently pending and is contesting liability and any damages claimed. Nevertheless, some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, and the Company may also determine to settle a matter because of the uncertainty and risks of litigation. Described below are certain matters in which there is a reasonable possibility that a material loss could be incurred or where the matter may otherwise be of significant interest to stockholders. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results, or cash flows of the Company.

Crago Order Routing Litigation: On July 13, 2016, a securities class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of a putative class of customers executing equity orders through CS&Co. The lawsuit names CS&Co and CSC as defendants and alleges that an agreement under which CS&Co routed orders to UBS Securities LLC between July 13, 2011 and December 31, 2014 violated CS&Co’s duty to seek best execution. Plaintiffs seek unspecified damages, interest, injunctive and equitable relief, and attorneys’ fees and costs. After a first amended complaint was dismissed with leave to amend, plaintiffs filed a second amended complaint on August 14, 2017. Defendants again moved to dismiss, and in a decision issued December 5, 2017, the court denied the motion. Defendants have answered the complaint to deny all allegations, and intend to vigorously contest the lawsuit.

Total Bond Market Fund™ Litigation: As disclosed previously, the Company had been responding to a class action lawsuit in the U.S. District Court for the Northern District of California on behalf of investors in the Schwab Total Bond Market Fund. On December 13, 2018, following dismissal of its fourth amended complaint and unsuccessful appeals to the Ninth Circuit Court of Appeals, plaintiff stipulated and agreed to dismissal of all claims, concluding the case.

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Financial Instruments Subject to Off-Balance Sheet Credit Risk

12 Months Ended

Dec. 31, 2018

Offsetting [Abstract]

Financial Instruments Subject to Off-Balance Sheet Credit Risk

Financial Instruments Subject to Off-Balance Sheet Credit Risk

Off-Balance Sheet Credit Risk

Resale agreements: Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value at or in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The collateral provided under these resale agreements is utilized to meet obligations under broker-dealer client protection rules, which place limitations on our ability to access such segregated securities. For Schwab to repledge or sell this collateral, it would be required to deposit cash and/or securities of an equal amount into its segregated reserve bank accounts in order to meet its segregated cash and investment requirement. Schwab’s resale agreements are not subject to master netting arrangements.

Securities lending: Schwab loans brokerage client securities temporarily to other brokers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not return the loaned securities or provide additional cash collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy our client obligations. Schwab mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. We also borrow securities from other broker-dealers to fulfill short sales by brokerage clients and deliver cash to the lender in exchange for the securities. The fair value of these borrowed securities was$99 million and $215 million at December 31, 2018 and 2017, respectively. All of our securities lending transactions are through a program with a clearing organization, which guarantees the return of cash to us and is subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities lending transactions. Therefore, the securities loaned and securities borrowed are presented gross in the consolidated balance sheets.

The following table presents information about our resale agreements and securities lending activity depicting the potential effect of rights of setoff between these recognized assets and recognized liabilities atDecember 31, 2018 and 2017.

							Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Counterparty Offsetting			Collateral				Net Amount
December 31, 2018
Assets
Resale agreements (1)	$	7,195	$	—	$	7,195	$	—		$	(7,195	)	(2)	$	—
Securities borrowed (3)	101		—		101		(98		)	(3		)		—
Total	$	7,296	$	—	$	7,296	$	(98	)	$	(7,198	)		$	—
Liabilities
Securities loaned (4,5)	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
Total	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
December 31, 2017
Assets
Resale agreements (1)	$	6,596	$	—	$	6,596	$	—		$	(6,596	)	(2)	$	—
Securities borrowed (3)	222		—		222		(199		)	(22		)		1
Total	$	6,818	$	—	$	6,818	$	(199	)	$	(6,618	)		$	1
Liabilities
Securities loaned (4,5)	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97
Total	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97

⁽¹⁾ Included in cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets.

⁽²⁾ Actual collateral was greater than or equal to 102% of the related assets.AtDecember 31, 2018 and 2017, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was$7.4 billion and $6.7 billion, respectively.

⁽³⁾ Included in receivables from brokers, dealers, and clearing organizations in the consolidated balance sheets.

⁽⁴⁾ Included in payables to brokers, dealers, and clearing organizations in the consolidated balance sheets. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned atDecember 31, 2018 and 2017.

⁽⁵⁾ Securities loaned are predominantly comprised of equity securities held in client brokerage accounts with overnight and continuous remaining contractual maturities.

Client trade settlement: Schwab is obligated to settle transactions with brokers and other financial institutions even if our clients fail to meet their obligations to us. Clients are required to complete their transactions on settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, we may incur losses. We have established procedures to reduce this risk by requiring deposits from clients in excess of amounts prescribed by regulatory requirements for certain types of trades, and therefore the potential to make payments under these client transactions is remote. Accordingly, no liability has been recognized for these transactions.

Margin lending: Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, and the amounts that we had pledged:

December 31,	2018		2017
Fair value of client securities available to be pledged	$	26,628	$	25,905
Fair value of client securities pledged for:
Fulfillment of requirements with the Options Clearing Corporation (1)	2,315		2,280
Fulfillment of client short sales	1,292		2,011
Securities lending to other broker-dealers	974		784
Total collateral pledged	$	4,581	$	5,075

Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $97 million as of December 31, 2018 and $78 million as of December 31, 2017.

⁽¹⁾   Client securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.

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Fair Values of Assets and Liabilities

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Values of Assets and Liabilities

Fair Values of Assets and Liabilities

For a description of the fair value hierarchy and Schwab’s fair value methodologies, including the use of independent third-party pricing services, see Note 2. The Company did not adjust prices received from the primary independent third-party pricing service at December 31, 2018 or 2017.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the fair value hierarchy for assets measured at fair value on a recurring basis.Liabilities recorded at fair value were not material, and therefore are not included in the following tables:

December 31, 2018	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	3,429	$	—	$	—	$	3,429
Commercial paper	—		4,863		—		4,863
Total cash equivalents	3,429		4,863		—		8,292
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		1,396		—		1,396
U.S. Government securities	—		3,275		—		3,275
Total investments segregated and on deposit for regulatory purposes	—		4,671		—		4,671
Other securities owned:
Equity and bond mutual funds	441		—		—		441
State and municipal debt obligations	—		39		—		39
Equity, U.S. Government and corporate debt, and other securities	3		30		—		33
Schwab Funds® money market funds	26		—		—		26
Total other securities owned	470		69		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		25,556		—		25,556
U.S. Treasury securities	—		18,302		—		18,302
Asset-backed securities	—		10,085		—		10,085
Corporate debt securities	—		7,467		—		7,467
Certificates of deposit	—		3,685		—		3,685
U.S. agency notes	—		898		—		898
Commercial paper	—		522		—		522
Foreign government agency securities	—		49		—		49
Non-agency commercial mortgage-backed securities	—		14		—		14
Total available for sale securities	—		66,578		—		66,578
Total	$	3,899	$	76,181	$	—	$	80,080

December 31, 2017	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	2,727	$	—	$	—	$	2,727
Total cash equivalents	2,727		—		—		2,727
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		2,198		—		2,198
U.S. Government securities	—		3,658		—		3,658
Total investments segregated and on deposit for regulatory purposes	—		5,856		—		5,856
Other securities owned:
Equity and bond mutual funds	318		—		—		318
Schwab Funds® money market funds	135		—		—		135
State and municipal debt obligations	—		52		—		52
Equity, U.S. Government and corporate debt, and other securities	2		32		—		34
Total other securities owned	455		84		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		20,929		—		20,929
U.S. Treasury securities	—		9,500		—		9,500
Asset-backed securities	—		9,047		—		9,047
Corporate debt securities	—		6,169		—		6,169
Certificates of deposit	—		2,041		—		2,041
U.S. agency notes	—		1,906		—		1,906
Commercial paper	—		313		—		313
Foreign government mortgage-backed securities	—		50		—		50
Non-agency commercial mortgage-backed securities	—		40		—		40
Total available for sale securities	—		49,995		—		49,995
Total	$	3,182	$	55,935	$	—	$	59,117

Fair Value of Other Financial Instruments

The following tables present the fair value hierarchy for other financial instruments:

December 31, 2018	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	19,646	$	—	$	19,646	$	—	$	19,646
Cash and investments segregated and on deposit for regulatory purposes	8,886		—		8,886		—		8,886
Receivables from brokers, dealers, and clearing organizations	553		—		553		—		553
Receivables from brokerage clients — net	21,641		—		21,641		—		21,641
Held to maturity securities:
U.S. agency mortgage-backed securities	118,064		—		116,093		—		116,093
Asset-backed securities	18,502		—		18,546		—		18,546
Corporate debt securities	4,477		—		4,432		—		4,432
U.S. state and municipal securities	1,327		—		1,348		—		1,348
Non-agency commercial mortgage-backed securities	1,156		—		1,142		—		1,142
U.S. Treasury securities	223		—		217		—		217
Certificates of deposit	200		—		201		—		201
Foreign government agency securities	50		—		49		—		49
Other	10		—		10		—		10
Total held to maturity securities	144,009		—		142,038		—		142,038
Bank loans — net:
First Mortgages	10,370		—		10,193		—		10,193
HELOCs	1,500		—		1,583		—		1,583
Pledged asset lines	4,561		—		4,561		—		4,561
Other	178		—		178		—		178
Total bank loans — net	16,609		—		16,515		—		16,515
Other assets	460		—		460		—		460
Total	$	211,804	$	—	$	209,739	$	—	$	209,739
Liabilities
Bank deposits	$	231,423	$	—	$	231,423	$	—	$	231,423
Payables to brokers, dealers, and clearing organizations	1,831		—		1,831		—		1,831
Payables to brokerage clients	32,726		—		32,726		—		32,726
Accrued expenses and other liabilities	1,370		—		1,370		—		1,370
Long-term debt	6,878		—		6,827		—		6,827
Total	$	274,228	$	—	$	274,177	$	—	$	274,177

December 31, 2017	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	11,490	$	—	$	11,490	$	—	$	11,490
Cash and investments segregated and on deposit for regulatory purposes	9,277		—		9,277		—		9,277
Receivables from brokers, dealers, and clearing organizations	649		—		649		—		649
Receivables from brokerage clients — net	20,568		—		20,568		—		20,568
Held to maturity securities:
U.S. agency mortgage-backed securities	101,197		—		100,453		—		100,453
Asset-backed securities	12,937		—		13,062		—		13,062
Corporate debt securities	4,078		—		4,086		—		4,086
U.S. state and municipal securities	1,247		—		1,304		—		1,304
Non-agency commercial mortgage-backed securities	994		—		999		—		999
U.S. Treasury securities	223		—		220		—		220
Certificates of deposit	200		—		200		—		200
Foreign government agency securities	50		—		49		—		49
Total held to maturity securities	120,926		—		120,373		—		120,373
Bank loans — net:
First Mortgages	10,000		—		9,917		—		9,917
HELOCs	1,935		—		2,025		—		2,025
Pledged asset lines	4,369		—		4,369		—		4,369
Other	174		—		174		—		174
Total bank loans — net	16,478		—		16,485		—		16,485
Other assets	781		—		781		—		781
Total	$	180,169	$	—	$	179,623	$	—	$	179,623
Liabilities
Bank deposits	$	169,656	$	—	$	169,656	$	—	$	169,656
Payables to brokers, dealers, and clearing organizations	1,287		—		1,287		—		1,287
Payables to brokerage clients	31,243		—		31,243		—		31,243
Accrued expenses and other liabilities	1,463		—		1,463		—		1,463
Short-term borrowings	15,000		—		15,000		—		15,000
Long-term debt	4,753		—		4,811		—		4,811
Total	$	223,402	$	—	$	223,460	$	—	$	223,460

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Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

CSC did not issue any shares of common stock through external offerings during 2018, 2017, or 2016.

On October 25, 2018, CSC publicly announced that its Board of Directors terminated the existing two share repurchase authorizations and replaced them with a new authorization to repurchase up to $1.0 billion of common stock. CSC repurchased 22 million shares for $1.0 billion in 2018, completing all repurchases under this authorization. There were no repurchases of CSC’s common stock in 2018 prior to the fourth quarter, or in 2017.

CSC was authorized to issue 9,940,000 shares of preferred stock, $0.01 par value, at December 31, 2018 and 2017. The following is a summary of CSC’s non-cumulative perpetual preferred stock outstanding as of such dates:

										Dividend Rate in Effect at December 31, 2018			Date at Which Dividend Rate Becomes Floating	Floating Annual Rate of Three-month LIBOR plus:
	Shares Issued and Outstanding (In thousands) at December 31,		Liquidation Preference Per Share		Carrying Value at December 31,							Earliest Redemption Date
	2018 (1)	2017 (1)			2018		2017		Issue Date
Fixed-rate:
Series C	600	600	$	1,000	$	585	$	585	08/03/15	6.000	%	12/01/20	N/A	N/A
Series D	750	750	1,000		728		728		03/07/16	5.950	%	06/01/21	N/A	N/A
Fixed-to-floating-rate:
Series A	400	400	1,000		397		397		01/26/12	7.000	%	02/01/22	02/01/22	4.820	%
Series E	6	6	100,000		591		591		10/31/16	4.625	%	03/01/22	03/01/22	3.315	%
Series F	5	5	100,000		492		492		10/31/17	5.000	%	12/01/27	12/01/27	2.575	%
Total Preferred Stock	1,761	1,761			$	2,793	$	2,793

⁽¹⁾ Represented by depositary shares, except for Series A.

N/A Not applicable.

Dividends on CSC’s preferred stock are not cumulative and will only be paid on a series of preferred stock for a dividend period if declared by CSC’s Board of Directors. Under the terms of each series of preferred stock, CSC’s ability to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock or any preferred stock ranking on parity with or junior to the series of preferred stock, is subject to restrictions in the event that CSC does not declare and either pay or set aside a sum sufficient for payment of dividends on the series of preferred stock for the immediately preceding dividend period.

Dividends on fixed-rate preferred stock are payable quarterly. Dividends on fixed-to-floating-rate preferred stock are payable semiannually while at a fixed rate, and will become payable quarterly after converting to a floating rate.

Redemption Rights

Each series of CSC’s stock may be redeemed at CSC’s option on any dividend payment date on or after the earliest redemption date for that series. All outstanding preferred stock series may also be redeemed following a “capital treatment event,” as described in the terms of each series set forth in the relevant certificate of designations. Any redemption of CSC’s preferred stock is subject to approval from the Federal Reserve.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

AOCI represents cumulative gains and losses that are not reflected in earnings. The components of other comprehensive income (loss) are as follows:

Year Ended December 31,	2018									2017									2016
	Before tax			Tax effect			Net of tax			Before tax			Tax effect			Net of tax			Before tax			Tax effect		Net of tax
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	$	(123	)	$	30		$	(93	)	$	13		$	(7	)	$	6		$	(44	)	$	16	$	(28	)
Reclassification of net unrealized loss on securities transferred   to held to maturity (1)	—			—			—			227			(85		)	142			—			—		—
Other reclassifications included in other revenue	—			—			—			(12		)	4			(8		)	(4		)	2		(2		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred   from available for sale (1)	—			—			—			(227		)	85			(142		)	—			—		—
Amortization of amounts previously recorded upon transfer from available for sale	35			(8		)	27			31			(11		)	20			—			—		—
Other	(1		)	—			(1		)	(11		)	4			(7		)	1			—		1
Other comprehensive income (loss)	$	(89	)	$	22		$	(67	)	$	21		$	(10	)	$	11		$	(47	)	$	18	$	(29	)

⁽¹⁾ See Note 6 for discussion of the transfer of securities from the AFS category to the HTM category during the first quarter of 2017.

AOCI balances are as follows:

	Total AOCI
Balance at December 31, 2015	$	(134	)
Net unrealized gain (loss) on available for sale securities	(30		)
Other changes	1
Balance at December 31, 2016	$	(163	)
Available for sale securities:
Net unrealized gain (loss)	6
Reclassification of net unrealized loss on securities transferred to held to maturity	142
Other reclassifications included in other revenue	(8		)
Held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale	(142		)
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	20
Other	(7		)
Balance at December 31, 2017	$	(152	)
Adoption of accounting standards (Note 2)	(33		)
Available for sale securities:
Net unrealized gain (loss)	(93		)
Held to maturity securities:
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	27
Other	(1		)
Balance at December 31, 2018	$	(252	)

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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans

Schwab’s share-based incentive plans provide for granting options and restricted stock units to employees, officers, and directors. In addition, we offer retirement and employee stock purchase plans to eligible employees and sponsor deferred compensation plans for eligible officers and non-employee directors.

A summary of share-based compensation expense and related income tax benefit is as follows:

Year Ended December 31,	2018			2017			2016
Stock option expense	$	51		$	50		$	45
Restricted stock unit expense (1)	136			94			89
Employee stock purchase plan expense	10			9			7
Total share-based compensation expense	$	197		$	153		$	141
Income tax benefit on share-based compensation expense (2)	$	(47	)	$	(57	)	$	(53	)

⁽¹⁾ Restricted stock unit expense in 2018 includes $36 million related to special stock awards issued to non-officer employees.

⁽²⁾ Excludes income tax benefits due to the adoption of ASU 2016-09 of $46 million and $87 millionin 2018 and 2017, respectively.

The Company issues shares for stock options and restricted stock units from treasury stock. At December 31, 2018, the Company was authorized to grant up to 68 millioncommon shares under its existing stock incentive plans. Additionally, at December 31, 2018, the Company had 36 millionshares reserved for future issuance under its employee stock purchase plan.

As of December 31, 2018, there was $294 millionof total unrecognized compensation cost related to outstanding stock options and restricted stock units, which is expected to be recognized through 2022 with a remaining weighted-average service period of 1.8 years for stock options, 2.4 years for restricted stock units, and 0.3 years for performance stock units.

Stock Option Plan

Options are granted for the purchase of shares of common stock at an exercise price not less than market value on the date of grant, and expire ten years from the date of grant. Options generally vest annually over a one- to four-year period from the date of grant.

Stock option activity is summarized below:

	Number of Options (In millions)		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	32		$	26.16	6.38	$	814
Granted	4		47.98
Exercised	(6	)	21.65
Forfeited (1)	—		36.05
Expired (1)	—		19.05
Outstanding at December 31, 2018	30		$	30.19	6.27	$	373
Vested and expected to vest at December 31, 2018	30		$	30.05	6.24	$	373
Vested and exercisable at December 31, 2018	19		$	23.70	4.86	$	331

⁽¹⁾ Number of options were less than 500 thousand.

The aggregate intrinsic value in the table above represents the difference between CSC’s closing stock price and the exercise price of each in-the-money option on the last trading day of the period presented.

Information on stock options granted and exercised is presented below:

Year Ended December 31,	2018		2017		2016
Weighted-average fair value of options granted per share	$	14.16	$	13.04	$	8.73
Cash received from options exercised	125		171		144
Tax benefit realized on options exercised	35		70		38
Aggregate intrinsic value of options exercised	189		241		149

We use an option pricing model to estimate the fair value of options granted. The model takes into account the contractual term of the stock option, expected volatility, dividend yield, and the risk-free interest rate. Expected volatility is based on the implied volatility of publicly-traded options on CSC’s stock. Dividend yield is based on the average historical CSC dividend yield. The risk-free interest rate is based on the yield of a U.S. Treasury zero-coupon issue with a remaining term similar to the contractual term of the option. We use historical option exercise data, which includes employee termination data, to estimate the probability of future option exercises. The assumptions used to value the options granted during the years presented and their expected lives were as follows:

Year Ended December 31,	2018		2017		2016
Weighted-average expected dividend yield	1.42	%	1.06	%	1.22	%
Weighted-average expected volatility	33	%	34	%	30	%
Weighted-average risk-free interest rate	3.0	%	2.1	%	1.8	%
Expected life (in years)	4.0 - 5.2		4.1 - 5.3		4.7 - 7.3

Restricted Stock Units

Restricted stock units are awards that entitle the holder to receive shares of CSC’s common stock following a vesting period. Restricted stock units are restricted from transfer or sale and generally vest annually over a one- to four-year period, while performance-based restricted stock units also require the Company achieve certain financial or other measures prior to vesting. The fair value of restricted stock units is based on the market price of the Company’s stock on the date of grant. The grant date fair value is amortized to compensation expense on a straight-line basis over the requisite service period. The fair value of the restricted stock units that vested during each of the years 2018, 2017, and 2016 was $166 million, $127 million, and $105 million, respectively.

The Company’s restricted stock units activity is summarized below:

	Number of Units (In millions)		Weighted- Average Grant Date Fair Value per Unit
Outstanding at December 31, 2017	7		$	35.16
Granted (1)	3		47.03
Vested (1)	(3	)	35.95
Forfeited (2)	—		36.10
Outstanding at December 31, 2018	7		$	40.64

⁽¹⁾ Includes 781 thousand units related to special non-officer employee stock awards, with a weighted-average grant date fair value of $45.87. All units granted vested immediately.

⁽²⁾ Number of units were less than 500 thousand.

Retirement Plan

Employeescan participate in Schwab’s qualified retirement plan, the SchwabPlan^® Retirement Savings and Investment Plan. The Company may match certain employee contributions or make additional contributions to this plan at its discretion. The Company’s total expense was $105 million, $92 million, and $83 million in 2018, 2017, and 2016, respectively.

Deferred Compensation Plans

Schwab’s deferred compensation plan for officers permits participants to defer the receipt of certain cash compensation. The deferred compensation plan for non-employee directors permits participants to defer receipt of all or a portion of their director fees and to receive either a grant of stock options, or upon ceasing service as a director, the number of shares of CSC’s common stock that would have resulted from investing the deferred fee amount into CSC’s common stock. The deferred compensation liability was $144 million and $160 million at December 31, 2018 and 2017, respectively.

FC Career Achievement Plan

The FC career achievement plan is a noncontributory, unfunded, nonqualified plan for eligible FCs. An FC is eligible for earned cash payments after retirement contingent upon meeting certain performance levels, tenure, age, and client transitioning requirements. Allocations to the plan are calculated annually based on performance levels achieved and eligible compensation and are subject to general creditors of the Company. Full vesting occurs when an FC reaches 60 years of age and has at least ten years of service with the Company.

The following table presents the changes inprojected benefit obligation:

December 31,	2018		2017
Projected benefit obligation at beginning of year	$	44	$	26
Benefit cost (1)	11		9
Actuarial (gain)/loss (2)	1		9
Projected benefit obligation at end of year (3)	$	56	$	44

⁽¹⁾ Includes service cost and interest cost, which are recognized in compensation and benefits expense and other expense, respectively, in the consolidated statements of income.

⁽²⁾ Actuarial (gain)/loss is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets.

⁽³⁾ This amount is recognized as a liability on the consolidated balance sheets and also depicts the accumulated benefit obligation.

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Taxes on Income

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Taxes on Income

Taxes on Income

On December 22, 2017,the Tax Act was signed into law. Among other things, the Tax Act lowered the federal corporate income tax rate from 35% to 21%, effective for tax years including or commencing January 1, 2018. Schwab’s effective tax rate for the years ended December 31, 2018, 2017, and 2016 was 23.1%, 35.5%, and 36.9%, respectively, resulting from the impact of the Tax Act of 2017.

Also as a result of the Tax Act, Schwab recognized a $46 million one-time non-cash charge to taxes on income in the fourth quarter of 2017 associated with the remeasurement of net deferred tax assets and other tax adjustments related to the Tax Act. During 2018, we concluded our analysis and accounting for all remaining impacts of the Tax Act, including the state tax effect of adjustments made to federal temporary differences, resulting in no additional material impacts.

As of January 1, 2018, Schwab adopted new accounting guidance that decreased AOCI and increased retained earnings by $33 million for the reclassification of certain impacts of the Tax Act as described in Note 2. Schwab also adopted new revenue recognition guidance as of January 1, 2018, which resulted in recording an asset for capitalized contract costs of $219 million and a related deferred tax liability of $52 million as described in Note 2. As of December 31, 2018, the deferred tax liability related to the capitalized contract costs was $60 million.

The components of taxes on incomeare as follows:

Year Ended December 31,	2018		2017		2016
Current:
Federal	$	847	$	1,132	$	980
State	159		106		109
Total current	1,006		1,238		1,089
Deferred:
Federal	42		58		13
State	7		—		2
Total deferred	49		58		15
Taxes on income	$	1,055	$	1,296	$	1,104

The temporary differences that created deferred tax assets and liabilitiesare detailed below:

December 31,	2018			2017
Deferred tax assets:
Employee compensation, severance, and benefits	$	132		$	133
Net unrealized loss on available for sale securities	79			57
Reserves and allowances	13			15
Facilities lease commitments	12			14
State and local taxes	21			12
Net operating loss carryforwards	5			5
Other	6			3
Total deferred tax assets	268			239
Valuation allowance	(3		)	(2		)
Deferred tax assets — net of valuation allowance	265			237
Deferred tax liabilities:
Capitalized internal-use software development costs	(98		)	(89		)
Depreciation and amortization	(108		)	(72		)
Capitalized contract costs	(60		)	—
Total deferred tax liabilities	(266		)	(161		)
Deferred tax asset/(liability) — net (1)	$	(1	)	$	76

⁽¹⁾ Amounts are included in accrued expenses and other liabilities and in other assets on the consolidated balance sheets at December 31, 2018 and in other assets at December 31, 2017.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

Year Ended December 31,	2018		2017		2016
Federal statutory income tax rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	3.0		2.2		2.4
Equity compensation benefit	(1.0	)	(2.4	)	—
Other (1)	0.1		0.7		(0.5	)
Effective income tax rate	23.1	%	35.5	%	36.9	%

⁽¹⁾ 2017 includes the impact of one-time charge to taxes on income associated with the Tax Act.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

December 31,	2018			2017
Balance at beginning of year	$	111		$	93
Additions for tax positions related to the current year	3			22
Additions for tax positions related to prior years	3			15
Reductions for tax positions related to prior years	(4		)	(2		)
Reductions due to lapse of statute of limitations	—			—
Reductions for settlements with tax authorities	(1		)	(17		)
Balance at end of year	$	112		$	111

Unrecognized tax benefits totaled$112 million and $111 millionas ofDecember 31, 2018 and 2017, respectively, $108 million and $104 millionof which if recognized, would affect the annual effective tax rate.

Interest and penalties were accrued related to unrecognized tax benefits in tax expense. At December 31, 2018 and 2017, we had accrued approximately $9 million and $5 million, respectively, for the payment of interest and penalties.

The Company and its subsidiaries are subject to routine examinations by the respective federal, state and applicable local jurisdictions’ taxing authorities. Federal returns for 2011 through 2017 remain subject to examination. The years open to examination by state and local governments vary by jurisdiction.

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Regulatory Requirements

12 Months Ended

Dec. 31, 2018

Banking and Thrift [Abstract]

Regulatory Requirements

Regulatory Requirements

CSC is a savings and loan holding company and CSB, CSC’s primary depository institution subsidiary, is a federal savings bank. CSC is subject to examination, supervision, and regulation by the Federal Reserve. CSB is subject to examination, supervision, and regulation by the OCC, as its primary regulator, the FDIC as its deposit insurer, and the CFPB. CSC is required to serve as a source of strength for CSB.

CSB is subject to various requirements and restrictions under federal and state laws, including regulatory capital requirements and requirements that restrict and govern the terms of affiliate transactions, such as extensions of credit to, or asset purchases from CSC or its other subsidiaries by CSB. In addition, CSB is required to provide notice to and may be required to obtain approval of the OCC and the Federal Reserve to declare dividends to CSC. The federal banking agencies have broad powers to enforce these regulations, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver. Under the Federal Deposit Insurance Act, CSB could be subject to restrictive actions if it were to fall within one of the lowest three of five capital categories. CSC and CSB are required to maintain minimum capital levels as specified in federal banking regulations. Failure to meet the minimum levels could result in certain mandatory, and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on CSC and CSB. At December 31, 2018, both CSC and CSB met all of their respective capital requirements.

The regulatory capital and ratios for CSC (consolidated) and CSB are as follows:

	Actual				Minimum to be Well Capitalized				Minimum Capital Requirement
December 31, 2018	Amount		Ratio		Amount		Ratio		Amount		Ratio (1)
CSC
Common Equity Tier 1 Risk-Based Capital	$	16,813	17.6	%	N/A				$	4,295	4.5	%
Tier 1 Risk-Based Capital	19,606		20.5	%	N/A				5,726		6.0	%
Total Risk-Based Capital	19,628		20.6	%	N/A				7,635		8.0	%
Tier 1 Leverage	19,606		7.1	%	N/A				11,058		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	15,832	19.7	%	$	5,233	6.5	%	$	3,623	4.5	%
Tier 1 Risk-Based Capital	15,832		19.7	%	6,441		8.0	%	4,831		6.0	%
Total Risk-Based Capital	15,853		19.7	%	8,051		10.0	%	6,441		8.0	%
Tier 1 Leverage	15,832		7.2	%	11,044		5.0	%	8,836		4.0	%
December 31, 2017
CSC
Common Equity Tier 1 Risk-Based Capital	$	14,630	19.3	%	N/A				$	3,414	4.5	%
Tier 1 Risk-Based Capital	17,423		23.0	%	N/A				4,552		6.0	%
Total Risk-Based Capital	17,452		23.0	%	N/A				6,069		8.0	%
Tier 1 Leverage	17,423		7.6	%	N/A				9,218		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	13,355	20.1	%	$	4,324	6.5	%	$	2,993	4.5	%
Tier 1 Risk-Based Capital	13,355		20.1	%	5,321		8.0	%	3,991		6.0	%
Total Risk-Based Capital	13,382		20.1	%	6,652		10.0	%	5,321		8.0	%
Tier 1 Leverage	13,355		7.1	%	9,462		5.0	%	7,569		4.0	%

⁽¹⁾ Under the Basel III capital rule, CSC and CSB are also required to maintain a capital conservation buffer above the regulatory minimum capital ratios. The capital conservation buffer was 1.875% in 2018, and became 2.5% on January 1, 2019. If the capital conservation buffer falls below the minimum requirement, the Company would be subject to limits on capital distributions and discretionary bonus payments to executive officers. For 2018, the minimum capital requirement plus capital conservation buffer for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 6.375%, 7.875%, and 9.875%, respectively. At December 31, 2018, both CSC’s and CSB’s capital levels exceeded the fully implemented capital conservation buffer requirement.

N/A Not applicable.

Based on its regulatory capital ratios at December 31, 2018, CSB is considered well capitalized (the highest category) under its respective regulatory capital rules. There are no conditions or events since December 31, 2018 that management believes have changed CSB’s capital category.

The Federal Reserve requires CSB to maintain reserve balances at the Federal Reserve based on its deposits that are considered to be transaction accounts. CSB’s average reserve requirement was $1.6 billion in 2018 and 2017. In late 2017, Schwab acquired a federal savings bank charter which is now called Charles Schwab Premier Bank (formerly known as Charles Schwab Signature Bank). At December 31, 2018, the balance sheet of Charles Schwab Premier Bank consisted primarily of investment securities, and held total assets of $15.2 billion. Charles Schwab Premier Bank is subject to similar regulatory guidelines and requirements, and seeks to maintain a Tier 1 Leverage Ratio similar to CSB.

CS&Co, a securities broker-dealer, is subject to the Uniform Net Capital Rule. CS&Co computes its net capital under the alternative method permitted by the Uniform Net Capital Rule. This method requires the maintenance of minimum net capital, as defined, of the greater of 2% of aggregate debit balances arising from client transactions or a minimum dollar requirement of $250,000, which is based on the type of business conducted by the broker-dealer. Under the alternative method, a broker-dealer may not repay subordinated borrowings, pay cash dividends, or make any unsecured advances or loans if such payment would result in a net capital amount of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement.

Net capital and net capital requirements for CS&Co are as follows:

December 31,	2018		2017
Net capital	$	2,304	$	2,118
Minimum net capital required	0.250		0.250
2% of aggregate debit balances	436		435
Net capital in excess of required net capital	$	1,868	$	1,683

In accordance with the SEC Customer Protection Rule, CS&Co had portions of its cash and investments segregated for the exclusive benefit of clients at December 31, 2018. The SEC Customer Protection Rule requires broker-dealers to segregate client fully-paid securities and cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts. Amounts included in cash and investments segregated and on deposit for regulatory purposes represent actual balances on deposit, whereas cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2018 for CS&Co totaled $16.7 billion. As of January 3, 2019, CS&Co had deposited $3.7 billion of cash and qualified securities into its segregated reserve accounts. Cash and investments required to be segregated and on deposit for regulatory purposes at December 31, 2017 for CS&Co totaled $15.3 billion. On January 3, 2018, $704 million of cash and qualified securities was deposited into the segregated reserve accounts.

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Segment Information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

Schwab’s two reportable segments are Investor Services and Advisor Services. Schwab structures the operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage and banking services to individual investors and retirement plan services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking, and support services, as well as retirement business services, to independent RIAs, independent retirement advisors, and recordkeepers. Revenues and expenses are allocated to the two segments based on which segment services the client.

The accounting policies of the segments are the same as those described in Note 2. For the computation of its segment information, Schwab utilizes an activity-based costing model to allocate traditional income statement line item expenses (e.g., compensation and benefits, depreciation and amortization, and professional services) to the business activities driving segment expenses (e.g., client service, opening new accounts, or business development) and a funds transfer pricing methodology to allocate certain revenues.

Management evaluates the performance of its segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are no revenues from transactions between the segments.

Financial information for the segments is presented in the following table:

	Investor Services						Advisor Services						Total
Year Ended December 31,	2018		2017		2016		2018		2017		2016		2018		2017		2016
Net Revenues
Net interest revenue	$	4,341	$	3,231	$	2,591	$	1,482	$	1,051	$	731	$	5,823	$	4,282	$	3,322
Asset management and administration fees	2,260		2,344		2,093		969		1,048		962		3,229		3,392		3,055
Trading revenue	475		408		524		288		246		301		763		654		825
Other	245		217		203		72		73		73		317		290		276
Total net revenues	7,321		6,200		5,411		2,811		2,418		2,067		10,132		8,618		7,478
Expenses Excluding Interest	4,145		3,725		3,380		1,425		1,243		1,105		5,570		4,968		4,485
Income before taxes on income	$	3,176	$	2,475	$	2,031	$	1,386	$	1,175	$	962	$	4,562	$	3,650	$	2,993
Capital expenditures	$	390	$	265	$	234	$	186	$	147	$	119	$	576	$	412	$	353
Depreciation and amortization	$	186	$	203	$	180	$	120	$	66	$	54	$	306	$	269	$	234

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The Charles Schwab Corporation - Parent Company Only Financial Statements

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

The Charles Schwab Corporation - Parent Company Only Financial Statements

The Charles Schwab Corporation – Parent Company Only Financial Statements

Condensed Statements of Income

Year Ended December 31,	2018			2017			2016
Interest revenue	$	88		$	33		$	22
Interest expense	(184		)	(114		)	(100		)
Net interest expense	(96		)	(81		)	(78		)
Other	1			3			1
Expenses excluding interest	(85		)	(32		)	(21		)
Loss before income tax benefit and equity in net income of subsidiaries	(180		)	(110		)	(98		)
Income tax benefit	20			27			34
Loss before equity in net income of subsidiaries	(160		)	(83		)	(64		)
Equity in net income of subsidiaries:
Equity in undistributed net income of subsidiaries	2,590			1,479			1,690
Dividends from bank subsidiaries	750			625			—
Dividends from non-bank subsidiaries	327			333			263
Net Income	3,507			2,354			1,889
Preferred stock dividends and other (1)	178			174			143
Net Income Available to Common Stockholders	$	3,329		$	2,180		$	1,746

⁽¹⁾ Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

Condensed Balance Sheets

December 31,	2018		2017
Assets
Cash and cash equivalents	$	2,092	$	2,825
Receivables from subsidiaries	784		571
Available for sale securities	1,754		573
Held to maturity securities	223		223
Other securities owned — at fair value	109		76
Loans to non-bank subsidiaries	185		448
Investment in non-bank subsidiaries	5,507		5,393
Investment in bank subsidiaries	16,995		13,224
Other assets	228		160
Total assets	$	27,877	$	23,493
Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities	$	379	$	276
Payables to subsidiaries	2		—
Long-term debt	6,826		4,692
Total liabilities	7,207		4,968
Stockholders’ equity	20,670		18,525
Total liabilities and stockholders’ equity	$	27,877	$	23,493

Condensed Statements of Cash Flows

Year Ended December 31,	2018			2017			2016
Cash Flows from Operating Activities
Net income	$	3,507		$	2,354		$	1,889
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Equity in undistributed earnings of subsidiaries	(2,590		)	(1,479		)	(1,690		)
Other	13			5			(37		)
Net change in:
Other securities owned	(33		)	(1		)	(10		)
Other assets	28			(26		)	(27		)
Accrued expenses and other liabilities	28			44			30
Net cash provided by (used for) operating activities	953			897			155
Cash Flows from Investing Activities
Due from (to) subsidiaries — net	408			(374		)	95
Increase in investments in subsidiaries	(1,188		)	(342		)	(1,547		)
Repayments (Advances) of subordinated loan to CS&Co	(185		)	—			465
Purchases of available for sale securities	(1,751		)	(201		)	(2		)
Proceeds from sales of available for sale securities	—			197			2
Principal payments on available for sale securities	573			—			—
Other investing activities	(5		)	(6		)	(4		)
Net cash provided by (used for) investing activities	(2,148		)	(726		)	(991		)
Cash Flows from Financing Activities
Issuance of long-term debt	3,024			2,129			—
Repayment of long-term debt	(900		)	(250		)	—
Repurchases of common stock	(1,000		)	—			—
Net proceeds from preferred stock offerings	—			492			1,316
Redemption of preferred stock	—			(485		)	—
Dividends paid	(787		)	(592		)	(486		)
Proceeds from stock options exercised and other	125			171			144
Other financing activities	—			—			44
Net cash provided by (used for) financing activities	462			1,465			1,018
Increase (Decrease) in Cash and Cash Equivalents	(733		)	1,636			182
Cash and Cash Equivalents at Beginning of Year	2,825			1,189			1,007
Cash and Cash Equivalents at End of Year	$	2,092		$	2,825		$	1,189

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (Unaudited)

Quarterly Financial Information (Unaudited)

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
Year Ended December 31, 2018:
Total Net Revenues	$	2,669	$	2,579	$	2,486	$	2,398
Total Expenses Excluding Interest	$	1,459	$	1,360	$	1,355	$	1,396
Net Income	$	935	$	923	$	866	$	783
Net Income Available to Common Stockholders	$	885	$	885	$	813	$	746
Weighted-Average Common Shares Outstanding — Basic	1,343		1,351		1,350		1,347
Weighted-Average Common Shares Outstanding — Diluted	1,354		1,364		1,364		1,362
Earnings Per Common Share — Basic	$	.66	$	.66	$	.60	$	.55
Earnings Per Common Share — Diluted	$	.65	$	.65	$	.60	$	.55
Dividends Declared Per Common Share	$	.13	$	.13	$	.10	$	.10
Year Ended December 31, 2017:
Total Net Revenues	$	2,242	$	2,165	$	2,130	$	2,081
Total Expenses Excluding Interest	$	1,289	$	1,220	$	1,221	$	1,238
Net Income	$	597	$	618	$	575	$	564
Net Income Available to Common Stockholders	$	550	$	575	$	530	$	525
Weighted-Average Common Shares Outstanding — Basic	1,343		1,339		1,338		1,336
Weighted-Average Common Shares Outstanding — Diluted	1,358		1,353		1,351		1,351
Earnings Per Common Share — Basic	$	.41	$	.43	$	.40	$	.39
Earnings Per Common Share — Diluted	$	.41	$	.42	$	.39	$	.39
Dividends Declared Per Common Share	$	.08	$	.08	$	.08	$	.08

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Subsequent Event

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On January 30, 2019, CSC publicly announced that its Board of Directors authorized a new Share Repurchase Program to repurchase up to $4.0 billion of common stock, and declared a four cent, or 31%, increase in the quarterly cash dividend to $0.17 per common share. The share repurchase authorization does not have an expiration date.

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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Revenue recognition

Revenue recognition

Schwab’s accounting policies for revenue recognition are discussed in Note 3.

Cash and cash equivalents

Cash and cash equivalents

Schwab considers all highly liquid investments that mature in three months or less from the time of acquisition and that are not segregated and on deposit for regulatory purposes to be cash and cash equivalents. Cash and cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury securities. Cash and cash equivalents also include balances that our banking subsidiaries maintain at the Federal Reserve.

Cash and investments segregated and on deposit for regulatory purposes

Cash and investments segregated and on deposit for regulatory purposes

Cash and investments segregated and on deposit for regulatory purposesinclude securities purchased under agreements to resell (resale agreements), which are collateralized by U.S. Government and agency securities. Resale agreements are accounted for as collateralized financing transactions that are recorded at their contractual amounts plus accrued interest. The Company obtains collateral with a market value equal to or in excess of the principal amount loaned and accrued interest under resale agreements. Collateral is valued daily by the Company, with additional collateral obtained to ensure full collateralization. Cash and investments segregated also include certificates of deposit and U.S. Government securities. Certificates of deposit and U.S. Government securities are recorded at fair value. Pursuant to the SEC’s Customer Protection Rule, cash balances not collateralizing margin positions and not swept to money market funds or bank deposit accounts, are segregated by Schwab for the exclusive benefit of clients.

Receivables from brokerage clients

Receivables from brokerage clients

Receivables from brokerage clients include margin loans to securities brokerage clients and other trading receivables from clients. Margin loans are collateralized by client securities and are carried at the amount receivable, net of an allowance for doubtful accounts. The Company monitors margin levels and requires clients to deposit additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. Receivables from brokerage clients that remain unsecured or partially secured for more than 30 days are fully reserved for in the allowance for doubtful accounts, except in the case of confirmed fraud, which is reserved immediately. Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in accordance with federal regulations. The collateral is not reflected in the consolidated financial statements. The allowance for doubtful accounts for brokerage clients and related activity was immaterial for all periods presented.

Other securities owned

Other securities owned

Other securities owned are recorded at fair value based on quoted market prices or other observable market data. Unrealized gains and losses are included in earnings.

Investment securities

Investment securities

AFS securities are recorded at fair value and unrealized gains and losses are reported, net of taxes, in AOCI included in stockholders’ equity. HTM securities are recorded at amortized cost based on the Company’s positive intent and ability to hold these securities to maturity. Realized gains and losses from sales of AFS securities are determined on a specific identification basis and are included in other revenue.

Management evaluates whether investment securities are OTTI on a quarterly basis. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell such security before any anticipated recovery. If management determines that a security is OTTI under these circumstances, the impairment recognized in earnings is measured as the entire difference between amortized cost and fair value.

A security is also OTTI if management does not expect to recover all of the amortized cost of the security. In this circumstance, the impairment recognized in earnings represents the estimated credit loss, and is measured by the difference between the present value of expected cash flows and the amortized cost of the security. Where appropriate, models are utilized to estimate the credit loss on a discounted cash flow basis using the security’s effective interest rate.

The evaluation of whether we expect to recover the amortized cost of a security is inherently judgmental. The evaluation considers multiple factors including: the magnitude and duration of the unrealized loss; the financial condition of the issuer; the payment structure of the security; external credit ratings; our internal credit ratings; for asset-backed securities, the amount of credit support provided by the structure of the security to absorb credit losses on the underlying collateral; recent events specific to the issuer and the issuer’s industry; and whether all scheduled principal and interest payments have been received.

Securities borrowed and securities loaned

Securities borrowed and securities loaned

Securities borrowed transactions require Schwab to deliver cash to the lender in exchange for securities; the receivables from these transactions are included in receivables from brokers, dealers, and clearing organizations. For securities loaned, Schwab receives collateral in the form of cash in an amount equal to or greater than the market value of securities loaned; the payables from these transactions are included in payables to brokers, dealers, and clearing organizations. The market value of securities borrowed and loaned are monitored, with additional collateral obtained or refunded to ensure full collateralization. Fees received or paid are recorded in interest revenue or interest expense.

Bank loans and related allowance for loan losses

Bank loans and related allowance for loan losses

Bank loans are recorded at their contractual principal amounts and include unamortized direct origination costs or net purchase discounts or premiums. Direct origination costs and premiums and discounts are recognized in interest revenue using the effective interest method over the contractual life of the loan and are adjusted for actual prepayments. Additionally, loans are recorded net of an allowance for loan losses. The loan portfolio includes four loan types: First Mortgages, HELOCs, PALs, and other loans. We use these segments when developing and documenting our methodology for determining the allowance for loan losses.

PALs are collateralized by marketable securities with liquid markets. Credit lines are over-collateralized dependent on the type of security pledged. Collateral market value is monitored on a daily basis and a borrower’s committed line may be reduced or collateral may be liquidated if the collateral is in danger of falling below specified levels. As such, the loss inherent within this portfolio is limited.

Schwab records an allowance for loan losses through a charge to earnings based on our estimate of probable losses in the existing portfolio. We review the allowance for loan losses quarterly, taking into consideration current economic conditions, the composition of the existing loan portfolio, past loss experience, and risks inherent in the portfolio to ensure that the allowance for loan losses is maintained at an appropriate level.

The methodology to establish an allowance for loan losses utilizes statistical models that estimate prepayments, defaults, and probable losses for the loan segments based on predicted behavior of individual loans within the segments. The methodology considers the effects of borrower behavior and a variety of factors including, but not limited to, interest rates, housing price movements as measured by a housing price index, economic conditions, estimated defaults and foreclosures measured by historical and expected delinquencies, changes in prepayment speeds, LTV ratios, past loss experience, estimates of future loss severities, borrower credit risk, and the adequacy of collateral. The methodology also evaluates concentrations in the loan types, including loan products within those types, year of origination, and geographical distribution of collateral.

Probable losses are forecast using a loan-level simulation of the delinquency status of the loans over the term of the loans. The simulation starts with the current relevant risk indicators, including the current delinquent status of each loan, the estimated current LTV ratio (Estimated Current LTV) of each loan, the term and structure of each loan, current key interest rates including U.S. Treasury and LIBOR rates, and borrower FICO scores. The more significant variables in the simulation include delinquency roll rates, loss severity, housing prices, and interest rates. Delinquency roll rates (i.e., the rates at which loans transition through delinquency stages and ultimately result in a loss) are estimated from our historical loss experience adjusted for current trends and market information. Loss severity estimates are based on our historical loss experience and market trends. The estimated loss severity (i.e., loss given default) used in the allowance for loan loss methodology for HELOC loans is higher than that used in the methodology for First Mortgages. Housing price trends are derived from historical home price indices and econometric forecasts of future home values. Factors affecting the home price index include housing inventory, unemployment, interest rates, and inflation expectations. Interest rate projections are based on the current term structure of interest rates and historical volatilities to project various possible future interest rate paths. This methodology results in loss factors that are applied to the outstanding balances to determine the allowance for loan loss for each loan type.

Schwab considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be troubled debt restructurings (TDRs).

Nonaccrual, nonperforming and impaired loans

Nonaccrual, Nonperforming and Impaired loans

First Mortgages, HELOCs, PALs, and other loans are placed on nonaccrual status upon becoming 90 days past due as to interest or principal (unless the loans are well-secured and in the process of collection), or when the full timely collection of interest or principal becomes uncertain, including loans to borrowers who have filed for bankruptcy. HELOC loans secured by a second lien are placed on non-accrual status if the associated first lien is 90 days or more delinquent, regardless of the payment status of the HELOC. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the loan is accounted for on the cash or cost recovery method until qualifying for return to accrual status. Generally, a nonaccrual loan may be returned to accrual status when all delinquent interest and principal is repaid and the borrower demonstrates a sustained period of performance, or when the loan is both well-secured and in the process of collection and collectability is no longer doubtful. Loans on nonaccrual status and other real estate owned are considered nonperforming assets. Nonaccrual loans, other real estate owned, and TDRs are considered impaired assets, as it is probable we will not collect all amounts due.

Loan Charge-Offs

Loan Charge-Offs

The Company charges off a loan in the period that it is deemed uncollectible and records a reduction in the allowance for loan losses and the loan balance. Our charge-off policy for First Mortgage and HELOC loans is to assess the value of the property when the loan has been delinquent for 180 days or has been discharged in bankruptcy proceedings, regardless of whether the property is in foreclosure, and charge-off the amount of the loan balance in excess of the estimated current value of the underlying property less estimated costs to sell.

Equipment, office facilities, and property

Equipment, office facilities, and property are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Equipment, office facilities, and property

Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:

Goodwill

Goodwill

Goodwill represents the fair value of acquired businesses in excess of the fair value of the individually identified net assets acquired. Goodwill is not amortized but is tested for impairment annually or whenever indications of impairment exist. Impairment exists when the carrying amount of goodwill exceeds its implied fair value, resulting in an impairment charge for this excess. Our annual impairment testing date is April 1^st. Schwab can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. A qualitative assessment considers macroeconomic and other industry-specific factors, such as trends in short-term and long-term interest rates and the ability to access capital, and Company specific factors such as market capitalization in excess of net assets, trends in revenue generating activities, and merger or acquisition activity.

If the Company elects to bypass qualitatively assessing goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, management estimates the fair values of each of the Company’s reporting units (defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compares it to their carrying values. The estimated fair values of the reporting units are established using an income approach based on a discounted cash flow model that includes significant assumptions about the future operating results and cash flows of each reporting unit, a market approach which compares each reporting unit to comparable companies in their respective industries, as well as a market capitalization analysis.

Intangible assets

Intangible assets

Finite-lived intangible assets are amortized over their useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Low-Income Housing Tax Credit (LIHTC) Investments

Low-Income Housing Tax Credit (LIHTC) Investments

We account for investments in qualified affordable housing projects using the proportional amortization method if the applicable requirements are met. The proportional amortization method amortizes the cost of the investment over the period in which the investor expects to receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of taxes on income. The carrying value of LIHTC investments is included in other assets on the consolidated balance sheets. Unfunded commitments related to LIHTC investments are included in accrued expenses and other liabilities on the consolidated balance sheets.

Guarantees and indemnifications

Guarantees and indemnifications

Schwab recognizes, at the inception of a guarantee, a liability equal to the estimated fair value of the obligation undertaken in issuing the guarantee. The fair values of obligations relating to guarantees are estimated based on transactions for similar guarantees or expected present value measures.

Advertising and market development

Advertising and market development

Advertising and market development activities include the cost to produce and distribute marketing campaigns as well as client incentives and discounts. Such costs are generally expensed when incurred.

Income taxes

Income taxes

Schwab provides for income taxes on all transactions that have been recognized in the consolidated financial statements. Accordingly, deferred tax assets are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax assets and deferred tax liabilities, as well as other changes in income tax laws, are recorded in earnings in the period during which such changes are enacted. Uncertain tax positions are evaluated to determine whether they are more likely than not to be sustained upon examination. When tax positions are more likely than not to be sustained upon examination the difference between positions taken on tax return filings and estimated potential tax settlement outcomes are recognized in accrued expenses and other liabilities. If a position is not more likely than not to be sustained, then none of the tax benefit is recognized in Schwab’s financial statements. Accrued interest and penalties relating to unrecognized tax benefits is recorded in taxes on income. Schwab records amounts within AOCI net of taxes. Income tax effects are released from AOCI using the specific-identification approach.

Share-based compensation

Share-based compensation

Share-based compensation includes employee and board of director stock options and restricted stock units. Schwab measures compensation expense for these share-based payment arrangements based on their estimated fair values as of the grant date. The fair value of the share-based award is recognized over the vesting period as share-based compensation. Share-based compensation expense is based on options or units expected to vest and therefore is reduced for estimated forfeitures. Per the Company’s accounting policy election, forfeitures are estimated at the time of grant and reviewed annually based on the Company’s historical forfeiture experience. Share-based compensation expense is adjusted in subsequent periods if actual forfeitures differ from estimated forfeitures. Beginning January 1, 2017, the excess tax benefits or deficiencies from the exercise of stock options and the vesting of restricted stock units are recorded in taxes on income.

Earnings per common share

Earnings per common share

EPS is computed using the two-class method. Preferred stock dividends and undistributed earnings and dividends allocated to participating securities are subtracted from net income in determining net income available to common stockholders. Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Dilutive potential common shares include, if dilutive, the effect of outstanding stock options and non-vested restricted stock units.

Fair values of assets and liabilities

Fair values of assets and liabilities

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance describes the fair value hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from third-party sources independent of the Company. A quoted price in an active market provides the most reliable evidence of fair value and is generally used to measure fair value whenever available.

Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. Where inputs used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgment. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

• Level 1 inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to access.

• Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates, benchmark yields, issuer spreads, new issue data, and collateral performance.

• Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Assets and liabilities measured at fair value on a recurring basis

Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, other securities owned, and AFS securities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent third-party pricing sources for assets recorded at fair value.

Our primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded.

New Accounting Standards

New Accounting Standards

Adoption of New Accounting Standards

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606)” and related ASUs	Clarifies that revenue from contracts with clients should be recognized in a manner that depicts the timing of the related transfer of goods or performance of services at an amount that reflects the expected consideration. Adoption allows either full or modified retrospective transition. Full retrospective transition required a cumulative effect adjustment to retained earnings as of the earliest comparative period presented. Modified retrospective transition required a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance.	January 1, 2018	The guidance does not apply to revenue earned from the Company’s loans and securities. Accordingly, net interest revenue was not impacted. The primary impact for the Company was the capitalization on the consolidated balance sheets of sales commissions paid to employees for obtaining new contracts with clients. These capitalized costs resulted in an asset of $219 million and a related deferred tax liability of $52 million upon adoption. The asset is being amortized to expense over time as the related revenues are recognized. The Company adopted the revenue recognition guidance using the modified retrospective method for all contracts that were not completed as of January 1, 2018. Further details of the impact of adoption are included below in this Note as well as in Note 3.
ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)” and ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10)”	Requires: (i) equity investments to be measured at fair value, with changes in fair value recognized in net income, unless the equity method is applied or the equity investments do not have readily determinable fair values in which case a practical alternative may be elected; (ii) use of an exit price when measuring the fair value of financial instruments for disclosures; (iii) separate presentation of financial assets and liabilities by measurement category and form of instrument on the balance sheet or in the accompanying notes. Adoption requires a cumulative effect adjustment to the balance sheet as of the beginning of the year of initial application, except for certain changes that require prospective adoption.	January 1, 2018	The Company adopted this guidance on a prospective basis for its equity securities that do not have readily determinable fair values. No other significant changes resulted from adoption. Therefore, there was no material impact on the Company’s financial statements. The Company elected to use the alternative to fair value measurement for its equity securities that do not have readily determinable fair values. These equity securities will be adjusted for impairment and observable price changes of the identical or similar investments of the same issuer, as applicable. Schwab refers to this approach as the adjusted cost method. This method was applied to an immaterial amount of Community Reinvestment Act (CRA) investments included in other assets on the consolidated balance sheets.
ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash a Consensus of the Emerging Issues Task Force”	Requires that the statement of cash flows explain the change during the period in the total cash and cash equivalents, including restricted cash and cash equivalents. Adoption requires retrospective presentation of the statement of cash flows to include restricted cash and cash equivalents in the beginning and ending amounts.	January 1, 2018	The Company adopted this guidance on a retrospective basis. The Company has significant amounts of restricted cash and cash equivalents due to its business as a broker-dealer. As a result of the adoption, changes in restricted cash and cash equivalents included within cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets are now presented with changes in cash and cash equivalents throughout the consolidated statements of cash flows. The amount of restricted cash and cash equivalents is included in a separate table in the consolidated statement of cash flows.

Standard	Description	Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”	Permits reclassification of the impacts on certain tax affected items included in AOCI that were adjusted through income from continuing operations rather than AOCI upon the effective date of the Tax Act. Adoption provides for retrospective adoption to all periods presented and impacted by the Tax Act or as of the beginning of the period of adoption.	January 1, 2018	The Company adopted this guidance as of January 1, 2018. The Company elected to reclassify the income tax effects of the Tax Act from items in AOCI into retained earnings as of the beginning of the period of adoption. Adoption resulted in a reduction in AOCI and a corresponding increase in retained earnings of $33 million.

New Accounting Standards Not Yet Adopted

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-02, “Leases (Topic 842)”	Amends the accounting for leases by lessees and lessors. The primary change from the new guidance is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. Additional changes include accounting for lease origination and executory costs, required lessee reassessments during the lease term due to changes in circumstances, and expanded lease disclosures. Adoption provides for modified retrospective transition as of the beginning of the earliest comparative period presented in the financial statements in which the entity first applies the new standard or prospectively with an adjustment as of the beginning of the period of adoption. Certain transition relief is permitted if elected by the entity.	January 1, 2019	The Company adopted the new lease accounting guidance prospectively as of January 1, 2019, which will result in a gross up of the consolidated balance sheet due to recognition of right-of-use assets and lease liabilities primarily related to CS&Co leases of office space and branches. These amounts will be based on the present value of our remaining operating lease payments. The Company's right of use assets and related lease liabilities upon adoption will be $596 million and $662 million, respectively.

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”	Provides guidance for recognizing impairment of most debt instruments measured at amortized cost, including loans and HTM debt securities. Requires estimating current expected credit losses (CECL) over the remaining life of an instrument or a portfolio of instruments with similar risk characteristics based on relevant information about past events, current conditions, and reasonable forecasts. The initial estimate of, and the subsequent changes in, CECL will be recognized as credit loss expense through current earnings and will be reflected as an allowance for credit losses offsetting the carrying value of the financial instrument(s) on the balance sheet. Amends the OTTI model for AFS debt securities by requiring the use of an allowance, rather than directly reducing the carrying value of the security, and eliminating consideration of the length of time such security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Adoption requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the entity applies the new guidance except that a prospective transition is required for AFS debt securities for which an OTTI has been recognized prior to the effective date.	January 1, 2020 (early adoption permitted)	The Company continues to evaluate the impact of this guidance on its financial statements. The Company has finished the majority of its scoping work and assessment of the current state of data and systems. Work is transitioning to designing and building out approaches to address certain asset classes with a focus primarily on a subset of our securities, including corporate debt securities. The Company expects that a large portion of its securities will have zero expectation of credit losses based on industry and regulator views for U.S. treasury and certain government agency-backed securities. We are currently working on in-depth analysis for the other asset types that do not have zero expectation of credit losses to determine our methods and any needed changes to policies and procedures.
ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”	Shortens the amortization period for the premium on certain callable debt securities to the earliest call date. The amendments are applicable to any purchased individual debt security with an explicit and noncontingent call feature with a fixed price on a preset date. ASU 2017-08 does not impact the accounting for callable debt securities held at a discount. Adoption requires modified retrospective transition as of the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings.	January 1, 2019 (early adoption permitted)	The Company adopted this guidance as of January 1, 2019 using the modified retrospective method. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption.

Standard	Description	Required Date of Adoption	Effects on the Financial Statements or Other Significant Matters
ASU 2018-15, “Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”	Aligns the criteria for capitalizing implementation costs for cloud computing arrangements (CCA) that are service contracts with internal-use software that is developed or purchased and CCAs that include an internal-use software license. This guidance requires that the capitalized implementation costs be recognized over the period of the CCA service contract, subject to impairment evaluation on an ongoing basis. The guidance prescribes the balance sheet, income statement, and statement of cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. Adoption provides for retrospective or prospective application to all implementation costs incurred after the date of adoption.	January 1, 2020 (early adoption permitted)	Historically, Schwab has expensed implementation costs as they are incurred for CCAs that are service contracts. Therefore, adopting this guidance will change the Company’s accounting treatment for these types of implementation costs. The Company is evaluating the impacts of this guidance on its financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives

Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:

Equipment and office facilities	5 to 10 years
Buildings	20 to 40 years
Software	3 to 10 years (1)
Leasehold improvements	Lesser of useful life or lease term

⁽¹⁾ Amortized over contractual term if less than three years.

Equipment, office facilities, and property are detailed below:

December 31,	2018			2017
Software	$	1,699		$	1,490
Buildings	945			810
Leasehold improvements	367			357
Construction in progress	248			142
Furniture and equipment	219			193
Information technology equipment	206			326
Land	179			167
Telecommunications equipment	69			66
Total equipment, office facilities, and property	3,932			3,551
Accumulated depreciation and amortization	(2,163		)	(2,080		)
Total equipment, office facilities, and property — net	$	1,769		$	1,471

Schedule of New Accounting Pronouncements

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09, “Revenue – Revenue from Contracts with Customers” and ASU 2018-02, “Other Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” were as follows:

	Balance at December 31, 2017			Adjustments Due to ASU 2014-09		Adjustments Due to ASU 2018-02			Balance at January 1, 2018
Assets
Other assets (1)	$	2,057		$	167	$	—		$	2,224
Stockholders’ Equity
Retained earnings	14,408			167		33			14,608
Accumulated other comprehensive income	(152		)	—		(33		)	(185		)

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of $219 million, partially offset by an increase in deferred tax liabilities of

$52 million.

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of income and consolidated balance sheet were as follows:

	Year Ended December 31, 2018
Statement of Income	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Expenses Excluding Interest
Compensation and benefits	$	3,057	$	3,088	$	(31	)
Taxes on income	1,055		1,047		8
Net Income	3,507		3,484		23

	As of December 31, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Assets
Other assets (1)	$	2,046	$	1,851	$	195
Liabilities
Accrued expenses and other liabilities (1)	2,954		2,949		5
Stockholders’ Equity
Retained earnings	17,329		17,139		190

⁽¹⁾ Adjustment is comprised of an increase in capitalized contract costs of$250 million, partially offset by an increase in deferred tax liabilities of

$60 million.

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Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Schwab's Revenue

Disaggregation of Schwab’s revenue by major sourceis as follows:

Year Ended December 31,	2018			2017			2016
Net interest revenue
Interest revenue	$	6,680		$	4,624		$	3,493
Interest expense	(857		)	(342		)	(171		)
Net interest revenue	5,823			4,282			3,322
Asset management and administration fees
Mutual funds and ETF service fees	1,793			2,045			1,853
Advice solutions	1,139			1,043			915
Other	297			304			287
Asset management and administration fees	3,229			3,392			3,055
Trading revenue
Commissions	685			600			779
Principal transactions	78			54			46
Trading revenue	763			654			825
Other	317			290			276
Total net revenues	$	10,132		$	8,618		$	7,478

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Receivables from and Payables to Brokerage Clients (Tables)

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Summary of Receivables from and Payables to Brokerage Clients

Receivables from and payables to brokerage clients are detailed below:

December 31,	2018		2017
Receivables
Margin loans, net of allowance for doubtful accounts	$	19,273	$	18,331
Other brokerage receivables	2,378		2,245
Receivables from brokerage clients — net	$	21,651	$	20,576
Payables
Interest-bearing payables	$	21,990	$	22,840
Non-interest-bearing payables	10,736		8,403
Payables to brokerage clients	$	32,726	$	31,243

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Other Securities Owned (Tables)

12 Months Ended

Dec. 31, 2018

Other Securities Owned [Abstract]

Summary of Other Securities Owned

A summary of securities ownedis as follows:

December 31,	2018		2017
Equity and bond mutual funds	$	441	$	318
State and municipal debt obligations	39		52
Equity, U.S. Government and corporate debt, and other securities	33		34
Schwab Funds® money market funds	26		135
Total other securities owned	$	539	$	539

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities Available for Sale and Securities Held to Maturity

The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities are as follows:

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities
U.S. agency mortgage-backed securities	$	25,594	$	44	$	82	$	25,556
U.S. Treasury securities	18,410		—		108		18,302
Asset-backed securities (1)	10,086		14		15		10,085
Corporate debt securities (2)	7,477		10		20		7,467
Certificates of deposit	3,682		4		1		3,685
U.S. agency notes	900		—		2		898
Commercial paper (2,3)	522		—		—		522
Foreign government agency securities	50		—		1		49
Non-agency commercial mortgage-backed securities	14		—		—		14
Total available for sale securities	$	66,735	$	72	$	229	$	66,578
Held to maturity securities
U.S. agency mortgage-backed securities	$	118,064	$	217	$	2,188	$	116,093
Asset-backed securities (1)	18,502		83		39		18,546
Corporate debt securities (2)	4,477		2		47		4,432
U.S. state and municipal securities	1,327		24		3		1,348
Non-agency commercial mortgage-backed securities	1,156		3		17		1,142
U.S. Treasury securities	223		—		6		217
Certificates of deposit	200		1		—		201
Foreign government agency securities	50		—		1		49
Other	10		—		—		10
Total held to maturity securities	$	144,009	$	330	$	2,301	$	142,038
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	20,915	$	53	$	39	$	20,929
U.S. Treasury securities	9,583		—		83		9,500
Asset-backed securities (1)	9,019		34		6		9,047
Corporate debt securities (2)	6,154		16		1		6,169
Certificates of deposit	2,040		2		1		2,041
U.S. agency notes	1,914		—		8		1,906
Commercial paper (2)	313		—		—		313
Foreign government agency securities	51		—		1		50
Non-agency commercial mortgage-backed securities	40		—		—		40
Total available for sale securities	$	50,029	$	105	$	139	$	49,995
Held to maturity securities
U.S. agency mortgage-backed securities	$	101,197	$	290	$	1,034	$	100,453
Asset-backed securities (1)	12,937		127		2		13,062
Corporate debt securities (2)	4,078		13		5		4,086
U.S. state and municipal securities	1,247		57		—		1,304
Non-agency commercial mortgage-backed securities	994		10		5		999
U.S. Treasury securities	223		—		3		220
Certificates of deposit	200		—		—		200
Foreign government agency securities	50		—		1		49
Total held to maturity securities	$	120,926	$	497	$	1,050	$	120,373

⁽¹⁾ Approximately 36% and 42% of asset-backed securities held as of December 31, 2018 and 2017, respectively, were Federal Family Education Loan Program Asset-Backed Securities. Asset-backed securities collateralized by credit card receivables represented approximately 42% and 40% of the asset-backed securities held as of December 31, 2018 and 2017, respectively.

⁽²⁾ As of December 31, 2018 and 2017, approximately 26% and 41%, respectively, of the total AFS and HTM investments in corporate debt securities and commercial paper were issued by institutions in the financial services industry. Approximately 18% and 22% of the holdings of these securities were issued by institutions in the information technology industry as of December 31, 2018 and 2017, respectively.

⁽³⁾ Included in cash and cash equivalents on the consolidated balance sheet, but excluded from this table is $4.9 billion of AFS commercial paper. These holdings have maturities of three months or less and an aggregate market value equal to amortized cost.

Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss

Securities with unrealized losses, aggregated by category and period of continuous unrealized loss, are as follows:

	Less than 12 months				12 months or longer				Total
December 31, 2018	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale securities
U.S. agency mortgage-backed securities	$	9,529	$	32	$	4,257	$	50	$	13,786	$	82
U.S. Treasury securities	4,951		6		7,037		102		11,988		108
Asset-backed securities	4,050		9		837		6		4,887		15
Corporate debt securities	3,561		19		254		1		3,815		20
Certificates of deposit	1,217		1		150		—		1,367		1
U.S. agency notes	195		—		304		2		499		2
Foreign government agency securities	—		—		49		1		49		1
Total	$	23,503	$	67	$	12,888	$	162	$	36,391	$	229
Held to maturity securities
U.S. agency mortgage-backed securities	$	29,263	$	222	$	56,435	$	1,966	$	85,698	$	2,188
Asset-backed securities	6,795		35		376		4		7,171		39
Corporate debt securities	2,909		29		1,066		18		3,975		47
U.S. state and municipal securities	77		2		18		1		95		3
Non-agency commercial mortgage-backed securities	283		2		632		15		915		17
U.S. Treasury securities	—		—		218		6		218		6
Foreign government agency securities	—		—		49		1		49		1
Total	$	39,327	$	290	$	58,794	$	2,011	$	98,121	$	2,301
Total securities with unrealized losses (1)	$	62,830	$	357	$	71,682	$	2,173	$	134,512	$	2,530
December 31, 2017
Available for sale securities
U.S. agency mortgage-backed securities	$	5,696	$	21	$	2,548	$	18	$	8,244	$	39
U.S. Treasury securities	4,625		11		4,875		72		9,500		83
Asset-backed securities	904		3		424		3		1,328		6
Corporate debt securities	736		1		120		—		856		1
Certificates of deposit	799		1		—		—		799		1
U.S. agency notes	99		—		1,807		8		1,906		8
Foreign government agency securities	50		1		—		—		50		1
Total	$	12,909	$	38	$	9,774	$	101	$	22,683	$	139
Held to maturity securities
U.S. agency mortgage-backed securities	$	42,102	$	310	$	24,753	$	724	$	66,855	$	1,034
Asset-backed securities	1,124		2		72		—		1,196		2
Corporate debt securities	1,078		5		—		—		1,078		5
Non-agency commercial mortgage-backed securities	607		5		—		—		607		5
U.S. Treasury securities	220		3		—		—		220		3
Foreign government agency securities	49		1		—		—		49		1
Total	$	45,180	$	326	$	24,825	$	724	$	70,005	$	1,050
Total securities with unrealized losses (2)	$	58,089	$	364	$	34,599	$	825	$	92,688	$	1,189

⁽¹⁾ The number of investment positions with unrealized losses totaled 441 for AFS securities and 1,524 for HTM securities.

⁽²⁾ The number of investment positions with unrealized losses totaled 251 for AFS securities and 938 for HTM securities.

Maturities of Securities Available for Sale and Securities Held to Maturity

The maturities of AFS and HTM securities are as follows:

December 31, 2018	Within 1 year			After 1 year through 5 years			After 5 years through 10 years			After 10 years			Total
Available for sale securities
U.S. agency mortgage-backed securities	$	153		$	3,481		$	12,100		$	9,822		$	25,556
U.S. Treasury securities	14,164			4,138			—			—			18,302
Asset-backed securities	—			8,445			1,240			400			10,085
Corporate debt securities	1,755			5,712			—			—			7,467
Certificates of deposit	1,984			1,701			—			—			3,685
U.S. agency notes	499			399			—			—			898
Commercial paper	522			—			—			—			522
Foreign government agency securities	—			49			—			—			49
Non-agency commercial mortgage-backed securities	—			—			—			14			14
Total fair value	$	19,077		$	23,925		$	13,340		$	10,236		$	66,578
Total amortized cost	$	19,111		$	24,010		$	13,382		$	10,232		$	66,735
Weighted-average yield (1)	1.80		%	2.71		%	2.61		%	2.70		%	2.43		%
Held to maturity securities
U.S. agency mortgage-backed securities	$	256		$	14,960		$	34,008		$	66,869		$	116,093
Asset-backed securities	—			2,106			9,144			7,296			18,546
Corporate debt securities	137			3,550			745			—			4,432
U.S. state and municipal securities	—			59			309			980			1,348
Non-agency commercial mortgage-backed securities	—			356			—			786			1,142
U.S. Treasury securities	—			—			217			—			217
Certificates of deposit	—			201			—			—			201
Foreign government agency securities	—			49			—			—			49
Other	—			—			—			10			10
Total fair value	$	393		$	21,281		$	44,423		$	75,941		$	142,038
Total amortized cost	$	395		$	21,446		$	44,925		$	77,243		$	144,009
Weighted-average yield (1)	1.97		%	2.56		%	2.69		%	2.63		%	2.63		%

⁽¹⁾ The weighted-average yield is computed using the amortized cost at December 31, 2018.

Proceeds and Gross Realized Gains And Losses from Sales of Securities Available for Sale

Proceeds and gross realized gains and losses from sales of AFS securities are as follows:

Year Ended December 31,	2018		2017		2016
Proceeds	$	115	$	8,617	$	5,537
Gross realized gains	—		12		4
Gross realized losses	—		—		—

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Bank Loans and Related Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Composition of Bank Loans and Delinquency Analysis by Loan Segment

The composition of bank loans and delinquency analysis by loan type is as follows:

December 31, 2018	Current		30-59 days past due		60-89 days past due		>90 days past due and other nonaccrual loans (3)		Total past due and other nonaccrual loans		Total loans		Allowance for loan losses		Total bank loans – net
First Mortgages (1,2)	$	10,349	$	21	$	2	$	12	$	35	$	10,384	$	14	$	10,370
HELOCs (1,2)	1,493		3		1		8		12		1,505		5		1,500
Pledged asset lines	4,558		3		—		—		3		4,561		—		4,561
Other	180		—		—		—		—		180		2		178
Total bank loans	$	16,580	$	27	$	3	$	20	$	50	$	16,630	$	21	$	16,609
December 31, 2017
First Mortgages (1,2)	$	9,983	$	14	$	2	$	17	$	33	$	10,016	$	16	$	10,000
HELOCs (1,2)	1,928		—		3		12		15		1,943		8		1,935
Pledged asset lines	4,361		4		4		—		8		4,369		—		4,369
Other	176		—		—		—		—		176		2		174
Total bank loans	$	16,448	$	18	$	9	$	29	$	56	$	16,504	$	26	$	16,478

⁽¹⁾ First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $73 million and $77 million at December 31, 2018 and 2017, respectively.

⁽²⁾ At December 31, 2018 and 2017, 47% and 48%, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.

⁽³⁾ There were no loans accruing interest that were contractually 90 days or more past due at December 31, 2018 or 2017.

Changes in Allowance for Loan Losses

Changes in the allowance for loan losses were as follows:

	December 31, 2018												December 31, 2017											December 31, 2016
	First Mortgages			HELOCs			Other			Total (1)			First Mortgages			HELOCs			Other		Total (1)			First Mortgages			HELOCs			Other		Total (1)
Balance at beginning of year	$	16		$	8		$	2		$	26		$	17		$	8		$	1	$	26		$	20		$	11		—		$	31
Charge-offs	—			—			(1		)	(1		)	(2		)	(1		)	—		(3		)	(1		)	(1		)	—		(2		)
Recoveries	1			1			—			2			1			1			1		3			1			1			—		2
Provision for loan losses	(3		)	(4		)	1			(6		)	—			—			—		—			(3		)	(3		)	1		(5		)
Balance at end of year	$	14		$	5		$	2		$	21		$	16		$	8		$	2	$	26		$	17		$	8		$	1	$	26

⁽¹⁾All PALs were fully collateralized by securities with fair values in excess of borrowings at December 31, 2018, 2017, and 2016.

Impaired Bank Loan Assets

A summary of impaired bank loan-related assets is as follows:

December 31,	2018		2017
Nonaccrual loans (1)	$	21	$	28
Other real estate owned (2)	3		3
Total nonperforming assets	24		31
Troubled debt restructurings	4		11
Total impaired assets	$	28	$	42

⁽¹⁾ Nonaccrual loans include nonaccrual troubled debt restructurings.

⁽²⁾ Included in Other assets on the consolidated balance sheets.

Credit Quality Indicators of Bank Loan Portfolio

The credit quality indicators of the bank loan portfolio are detailed below:

December 31, 2018	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,396	776	0.04	%
>70% – <90%	985		769	0.41	%
>90% – <100%	2		717	—
>100%	1		753	—
Total	$	10,384	775	0.07	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,416	770	0.13	%
>70% – <90%	80		752	0.60	%
>90% – <100%	6		729	3.36	%
>100%	3		702	—
Total	$	1,505	769	0.17	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,561	766	—
December 31, 2017	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,046	775	0.09	%
>70% – <90%	961		769	0.46	%
>90% – <100%	5		714	10.49	%
>100%	4		713	6.23	%
Total	$	10,016	775	0.14	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,773	772	0.18	%
>70% – <90%	148		755	0.84	%
>90% – <100%	14		742	2.85	%
>100%	8		718	4.91	%
Total	$	1,943	770	0.27	%
Pledged asset lines
Weighted Average LTV (1)
=70%	$	4,369	765	—

⁽¹⁾ Represents the LTV for the full line of credit (drawn and undrawn).

December 31, 2018	First Mortgages		HELOCs
Year of origination
Pre-2014	$	1,979	$	1,051
2014	408		89
2015	1,050		106
2016	2,606		95
2017	2,366		99
2018	1,975		65
Total	$	10,384	$	1,505
Origination FICO
<620	$	5	$	—
620 – 679	83		8
680 – 739	1,626		282
>740	8,670		1,215
Total	$	10,384	$	1,505
Origination LTV
<70%	$	7,815	$	1,064
>70% – <90%	2,564		434
>90% – <100%	5		7
Total	$	10,384	$	1,505
December 31, 2017	First Mortgages		HELOCs
Year of origination
Pre-2014	$	2,804	$	1,496
2014	530		116
2015	1,218		128
2016	2,886		111
2017	2,578		92
Total	$	10,016	$	1,943
Origination FICO
<620	$	6	$	1
620 – 679	89		10
680 – 739	1,569		365
>740	8,352		1,567
Total	$	10,016	$	1,943
Origination LTV
<70%	$	7,569	$	1,360
>70% – <90%	2,441		574
>90% – <100%	6		9
Total	$	10,016	$	1,943

Convert to Amortizing Loans

The following table presents when current outstanding HELOCs will convert to amortizing loans:

December 31, 2018	Balance
Converted to amortizing loan by period end	$	677
Within 1 year	83
> 1 year – 3 years	118
> 3 years – 5 years	173
> 5 years	454
Total	$	1,505

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Equipment, Office Facilities, and Property (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Schedule of Equipment, Office Facilities, and Property

Equipment, office facilities, and property are recorded at cost net of accumulated depreciation and amortization, except for land, which is recorded at cost. Equipment, office facilities, and property include certain capitalized costs of acquired or internally developed software. Costs for internally developed software are capitalized when the costs relate to development of approved projects for our internal needs that result in additional functionality. Costs related to preliminary project and post-project activities are expensed as incurred. Equipment, office facilities, and property (other than land) are depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are as follows:

Equipment and office facilities	5 to 10 years
Buildings	20 to 40 years
Software	3 to 10 years (1)
Leasehold improvements	Lesser of useful life or lease term

⁽¹⁾ Amortized over contractual term if less than three years.

Equipment, office facilities, and property are detailed below:

December 31,	2018			2017
Software	$	1,699		$	1,490
Buildings	945			810
Leasehold improvements	367			357
Construction in progress	248			142
Furniture and equipment	219			193
Information technology equipment	206			326
Land	179			167
Telecommunications equipment	69			66
Total equipment, office facilities, and property	3,932			3,551
Accumulated depreciation and amortization	(2,163		)	(2,080		)
Total equipment, office facilities, and property — net	$	1,769		$	1,471

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill as Allocated to Reportable Segments

The changes in the carrying amount of goodwill, as allocated to our reportable segments, are presented in the following table:

	Investor Services		Advisor Services		Total
Balance at December 31, 2016	$	1,096	$	131	$	1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2017	1,096		131		1,227
Goodwill acquired and other changes during the period	—		—		—
Balance at December 31, 2018	$	1,096	$	131	$	1,227

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Other Assets

The components of other assets are as follows:

December 31,	2018		2017
Interest and dividends receivable	$	586	$	413
Other investments (1)	428		376
Accounts receivable (2)	410		461
Capitalized contract costs, net	250		—
Intangible assets, net of accumulated amortization of $299 and $270 (3)	152		108
Prepaid expenses	122		126
FHLB stock (4)	32		405
Deferred tax asset — net	3		76
Other	63		92
Total other assets	$	2,046	$	2,057

⁽¹⁾ Predominantly CRA-related, including LIHTC investments.

⁽²⁾ Accounts receivable predominantly includes receivables from contracts with customers and a receivable from our loan servicer.

⁽³⁾ Exclusive of indefinite-lived intangible assets of $74 million and $1 million at December 31, 2018 and 2017, respectively, future amortization over the next five years and thereafter is expected to total $77 million. Amortization expense for intangible assets was $29 million in 2018, and $37 million in both 2017 and 2016.

⁽⁴⁾ Investments in stock of the FHLB can only be sold to the issuer at its par value. Any cash dividends received from these investments are recognized as interest revenue in the consolidated statements of income.

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Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2018

Variable Interest Entities [Abstract]

Aggregate Assets, Liabilities and Maximum Exposure to Loss

The aggregate assets, liabilities, and maximum exposure to loss from those VIEs in which Schwab holds a variable interest, but is not the primary beneficiary, are summarized in the table below:

	December 31, 2018						December 31, 2017
	Aggregate assets		Aggregate liabilities		Maximum exposure to loss		Aggregate assets		Aggregate liabilities		Maximum exposure to loss
LIHTC Investments (1)	$	338	$	188	$	338	$	304	$	203	$	304
Other CRA Investments (2)	70		—		124		69		—		125
Total	$	408	$	188	$	462	$	373	$	203	$	429

⁽¹⁾ Aggregate assets and aggregate liabilities are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets.

⁽²⁾ Other CRA investments are recorded using either the adjusted cost method, equity method, or as HTM securities. Aggregate assets are included in HTM securities, bank loans – net, or other assets on the consolidated balance sheets.

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Bank Deposits (Tables)

12 Months Ended

Dec. 31, 2018

Banking and Thrift [Abstract]

Deposits from Banking Clients Consisting of Interest Bearing and Noninterest Bearing Deposits

Bank deposits consist of interest-bearing and non-interest-bearing deposits as follows:

December 31,	2018		2017
Interest-bearing deposits:
Deposits swept from brokerage accounts	$	212,311	$	148,212
Checking	12,523		13,388
Savings and other	5,827		7,264
Total interest-bearing deposits	230,661		168,864
Non-interest-bearing deposits	762		792
Total bank deposits	$	231,423	$	169,656

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Long-term Debt Including Unamortized Debt Discounts and Premiums

The following table lists long-term debt by instrument outstanding as of December 31, 2018 and 2017.

	Date of	Principal Amount Outstanding
	Issuance	2018			2017
Fixed-Rate Senior Notes:
1.500% due March 10, 2018 (1)	03/10/15	$	—		$	625
2.200% due July 25, 2018 (2)	07/25/13	—			275
4.450% due July 22, 2020	07/22/10	700			700
3.250% due May 21, 2021	05/22/18	600			—
3.225% due September 1, 2022	08/29/12	256			256
2.650% due January 25, 2023	12/07/17	800			800
3.550% due February 1, 2024	10/31/18	500			—
3.000% due March 10, 2025	03/10/15	375			375
3.850% due May 21, 2025	05/22/18	750			—
3.450% due February 13, 2026	11/13/15	350			350
3.200% due March 2, 2027	03/02/17	650			650
3.200% due January 25, 2028	12/07/17	700			700
4.000% due February 1, 2029	10/31/18	600			—
Floating-rate Senior Notes:
Three-month LIBOR + 0.32% due May 21, 2021	05/22/18	600			—
Total Senior Notes		6,881			4,731
5.450% Finance lease obligation (3)	06/04/04	52			61
Unamortized discount — net		(15		)	(14		)
Debt issuance costs		(40		)	(25		)
Total long-term debt		$	6,878		$	4,753

໿

⁽¹⁾ Redeemed on February 8, 2018.

⁽²⁾ Redeemed on June 25, 2018.

⁽³⁾ Schwab has a finance lease obligation related to an office building and land under a 20-year lease. The remaining finance lease obligation is being reduced by a portion of the lease payments over the remaining lease term through June 30, 2024.

Annual Maturities on Long-term Debt Outstanding

Annual maturities on long-term debt outstanding at December 31, 2018, are as follows:

	Maturities
2019	$	8
2020	709
2021	1,209
2022	266
2023	810
Thereafter	3,931
Total maturities	6,933
Unamortized discount — net	(15		)
Debt issuance costs	(40		)
Total long-term debt	$	6,878

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Commitments to Purchase or Sell

The Company’s commitments to extend credit on bank lines of credit and to purchase First Mortgages are as follows:

December 31,	2018		2017
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit	$	11,046	$	10,060
Commitments to purchase First Mortgage loans	268		308
Total	$	11,314	$	10,368

Future Annual Minimum Rental Commitments, Net of Contractual Subleases

As of December 31, 2018, future annual minimum rental commitments under these leases, net of contractual subleases are as follows:

	Operating Leases		Subleases		Net
2019	$	131	$	4	$	127
2020	125		4		121
2021	101		4		97
2022	79		2		77
2023	72		1		71
Thereafter	282		—		282
Total	$	790	$	15	$	775

Purchase Obligations

As of December 31, 2018, the Company has purchase obligations as follows:

2019	$	475
2020	232
2021	71
2022	32
2023	22
Thereafter	170
Total	$	1,002

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Financial Instruments Subject to Off-Balance Sheet Credit Risk (Tables)

12 Months Ended

Dec. 31, 2018

Offsetting [Abstract]

Offsetting Assets and Liabilities

The following table presents information about our resale agreements and securities lending activity depicting the potential effect of rights of setoff between these recognized assets and recognized liabilities atDecember 31, 2018 and 2017.

							Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Counterparty Offsetting			Collateral				Net Amount
December 31, 2018
Assets
Resale agreements (1)	$	7,195	$	—	$	7,195	$	—		$	(7,195	)	(2)	$	—
Securities borrowed (3)	101		—		101		(98		)	(3		)		—
Total	$	7,296	$	—	$	7,296	$	(98	)	$	(7,198	)		$	—
Liabilities
Securities loaned (4,5)	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
Total	$	1,184	$	—	$	1,184	$	(98	)	$	(975	)		$	111
December 31, 2017
Assets
Resale agreements (1)	$	6,596	$	—	$	6,596	$	—		$	(6,596	)	(2)	$	—
Securities borrowed (3)	222		—		222		(199		)	(22		)		1
Total	$	6,818	$	—	$	6,818	$	(199	)	$	(6,618	)		$	1
Liabilities
Securities loaned (4,5)	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97
Total	$	966	$	—	$	966	$	(199	)	$	(670	)		$	97

⁽¹⁾ Included in cash and investments segregated and on deposit for regulatory purposes in the consolidated balance sheets.

⁽²⁾ Actual collateral was greater than or equal to 102% of the related assets.AtDecember 31, 2018 and 2017, the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was$7.4 billion and $6.7 billion, respectively.

⁽³⁾ Included in receivables from brokers, dealers, and clearing organizations in the consolidated balance sheets.

⁽⁴⁾ Included in payables to brokers, dealers, and clearing organizations in the consolidated balance sheets. The cash collateral received from counterparties under securities lending transactions was equal to or greater than the market value of the securities loaned atDecember 31, 2018 and 2017.

⁽⁵⁾ Securities loaned are predominantly comprised of equity securities held in client brokerage accounts with overnight and continuous remaining contractual maturities.

Summary of the Fair Value of Client Securities Available to Utilize as Collateral and Amounts Pledged

Margin lending: Clients with margin loans have agreed to allow Schwab to pledge collateralized securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities that were available, under such regulations, that could have been used as collateral, and the amounts that we had pledged:

December 31,	2018		2017
Fair value of client securities available to be pledged	$	26,628	$	25,905
Fair value of client securities pledged for:
Fulfillment of requirements with the Options Clearing Corporation (1)	2,315		2,280
Fulfillment of client short sales	1,292		2,011
Securities lending to other broker-dealers	974		784
Total collateral pledged	$	4,581	$	5,075

Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $97 million as of December 31, 2018 and $78 million as of December 31, 2017.

⁽¹⁾   Client securities pledged to fulfill client margin requirements for open option contracts established with the Options Clearing Corporation.

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Fair Values of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2018	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	3,429	$	—	$	—	$	3,429
Commercial paper	—		4,863		—		4,863
Total cash equivalents	3,429		4,863		—		8,292
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		1,396		—		1,396
U.S. Government securities	—		3,275		—		3,275
Total investments segregated and on deposit for regulatory purposes	—		4,671		—		4,671
Other securities owned:
Equity and bond mutual funds	441		—		—		441
State and municipal debt obligations	—		39		—		39
Equity, U.S. Government and corporate debt, and other securities	3		30		—		33
Schwab Funds® money market funds	26		—		—		26
Total other securities owned	470		69		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		25,556		—		25,556
U.S. Treasury securities	—		18,302		—		18,302
Asset-backed securities	—		10,085		—		10,085
Corporate debt securities	—		7,467		—		7,467
Certificates of deposit	—		3,685		—		3,685
U.S. agency notes	—		898		—		898
Commercial paper	—		522		—		522
Foreign government agency securities	—		49		—		49
Non-agency commercial mortgage-backed securities	—		14		—		14
Total available for sale securities	—		66,578		—		66,578
Total	$	3,899	$	76,181	$	—	$	80,080

December 31, 2017	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	2,727	$	—	$	—	$	2,727
Total cash equivalents	2,727		—		—		2,727
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		2,198		—		2,198
U.S. Government securities	—		3,658		—		3,658
Total investments segregated and on deposit for regulatory purposes	—		5,856		—		5,856
Other securities owned:
Equity and bond mutual funds	318		—		—		318
Schwab Funds® money market funds	135		—		—		135
State and municipal debt obligations	—		52		—		52
Equity, U.S. Government and corporate debt, and other securities	2		32		—		34
Total other securities owned	455		84		—		539
Available for sale securities:
U.S. agency mortgage-backed securities	—		20,929		—		20,929
U.S. Treasury securities	—		9,500		—		9,500
Asset-backed securities	—		9,047		—		9,047
Corporate debt securities	—		6,169		—		6,169
Certificates of deposit	—		2,041		—		2,041
U.S. agency notes	—		1,906		—		1,906
Commercial paper	—		313		—		313
Foreign government mortgage-backed securities	—		50		—		50
Non-agency commercial mortgage-backed securities	—		40		—		40
Total available for sale securities	—		49,995		—		49,995
Total	$	3,182	$	55,935	$	—	$	59,117

Fair Value of Other Financial Instruments

The following tables present the fair value hierarchy for other financial instruments:

December 31, 2018	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	19,646	$	—	$	19,646	$	—	$	19,646
Cash and investments segregated and on deposit for regulatory purposes	8,886		—		8,886		—		8,886
Receivables from brokers, dealers, and clearing organizations	553		—		553		—		553
Receivables from brokerage clients — net	21,641		—		21,641		—		21,641
Held to maturity securities:
U.S. agency mortgage-backed securities	118,064		—		116,093		—		116,093
Asset-backed securities	18,502		—		18,546		—		18,546
Corporate debt securities	4,477		—		4,432		—		4,432
U.S. state and municipal securities	1,327		—		1,348		—		1,348
Non-agency commercial mortgage-backed securities	1,156		—		1,142		—		1,142
U.S. Treasury securities	223		—		217		—		217
Certificates of deposit	200		—		201		—		201
Foreign government agency securities	50		—		49		—		49
Other	10		—		10		—		10
Total held to maturity securities	144,009		—		142,038		—		142,038
Bank loans — net:
First Mortgages	10,370		—		10,193		—		10,193
HELOCs	1,500		—		1,583		—		1,583
Pledged asset lines	4,561		—		4,561		—		4,561
Other	178		—		178		—		178
Total bank loans — net	16,609		—		16,515		—		16,515
Other assets	460		—		460		—		460
Total	$	211,804	$	—	$	209,739	$	—	$	209,739
Liabilities
Bank deposits	$	231,423	$	—	$	231,423	$	—	$	231,423
Payables to brokers, dealers, and clearing organizations	1,831		—		1,831		—		1,831
Payables to brokerage clients	32,726		—		32,726		—		32,726
Accrued expenses and other liabilities	1,370		—		1,370		—		1,370
Long-term debt	6,878		—		6,827		—		6,827
Total	$	274,228	$	—	$	274,177	$	—	$	274,177

December 31, 2017	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	11,490	$	—	$	11,490	$	—	$	11,490
Cash and investments segregated and on deposit for regulatory purposes	9,277		—		9,277		—		9,277
Receivables from brokers, dealers, and clearing organizations	649		—		649		—		649
Receivables from brokerage clients — net	20,568		—		20,568		—		20,568
Held to maturity securities:
U.S. agency mortgage-backed securities	101,197		—		100,453		—		100,453
Asset-backed securities	12,937		—		13,062		—		13,062
Corporate debt securities	4,078		—		4,086		—		4,086
U.S. state and municipal securities	1,247		—		1,304		—		1,304
Non-agency commercial mortgage-backed securities	994		—		999		—		999
U.S. Treasury securities	223		—		220		—		220
Certificates of deposit	200		—		200		—		200
Foreign government agency securities	50		—		49		—		49
Total held to maturity securities	120,926		—		120,373		—		120,373
Bank loans — net:
First Mortgages	10,000		—		9,917		—		9,917
HELOCs	1,935		—		2,025		—		2,025
Pledged asset lines	4,369		—		4,369		—		4,369
Other	174		—		174		—		174
Total bank loans — net	16,478		—		16,485		—		16,485
Other assets	781		—		781		—		781
Total	$	180,169	$	—	$	179,623	$	—	$	179,623
Liabilities
Bank deposits	$	169,656	$	—	$	169,656	$	—	$	169,656
Payables to brokers, dealers, and clearing organizations	1,287		—		1,287		—		1,287
Payables to brokerage clients	31,243		—		31,243		—		31,243
Accrued expenses and other liabilities	1,463		—		1,463		—		1,463
Short-term borrowings	15,000		—		15,000		—		15,000
Long-term debt	4,753		—		4,811		—		4,811
Total	$	223,402	$	—	$	223,460	$	—	$	223,460

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Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Preferred Stock Issued and Outstanding

The following is a summary of CSC’s non-cumulative perpetual preferred stock outstanding as of such dates:

										Dividend Rate in Effect at December 31, 2018			Date at Which Dividend Rate Becomes Floating	Floating Annual Rate of Three-month LIBOR plus:
	Shares Issued and Outstanding (In thousands) at December 31,		Liquidation Preference Per Share		Carrying Value at December 31,							Earliest Redemption Date
	2018 (1)	2017 (1)			2018		2017		Issue Date
Fixed-rate:
Series C	600	600	$	1,000	$	585	$	585	08/03/15	6.000	%	12/01/20	N/A	N/A
Series D	750	750	1,000		728		728		03/07/16	5.950	%	06/01/21	N/A	N/A
Fixed-to-floating-rate:
Series A	400	400	1,000		397		397		01/26/12	7.000	%	02/01/22	02/01/22	4.820	%
Series E	6	6	100,000		591		591		10/31/16	4.625	%	03/01/22	03/01/22	3.315	%
Series F	5	5	100,000		492		492		10/31/17	5.000	%	12/01/27	12/01/27	2.575	%
Total Preferred Stock	1,761	1,761			$	2,793	$	2,793

⁽¹⁾ Represented by depositary shares, except for Series A.

N/A Not applicable.

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Components of Other Comprehensive Income (Loss)

AOCI represents cumulative gains and losses that are not reflected in earnings. The components of other comprehensive income (loss) are as follows:

Year Ended December 31,	2018									2017									2016
	Before tax			Tax effect			Net of tax			Before tax			Tax effect			Net of tax			Before tax			Tax effect		Net of tax
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	$	(123	)	$	30		$	(93	)	$	13		$	(7	)	$	6		$	(44	)	$	16	$	(28	)
Reclassification of net unrealized loss on securities transferred   to held to maturity (1)	—			—			—			227			(85		)	142			—			—		—
Other reclassifications included in other revenue	—			—			—			(12		)	4			(8		)	(4		)	2		(2		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred   from available for sale (1)	—			—			—			(227		)	85			(142		)	—			—		—
Amortization of amounts previously recorded upon transfer from available for sale	35			(8		)	27			31			(11		)	20			—			—		—
Other	(1		)	—			(1		)	(11		)	4			(7		)	1			—		1
Other comprehensive income (loss)	$	(89	)	$	22		$	(67	)	$	21		$	(10	)	$	11		$	(47	)	$	18	$	(29	)

⁽¹⁾ See Note 6 for discussion of the transfer of securities from the AFS category to the HTM category during the first quarter of 2017.

Accumulated Other Comprehensive Income Balances

AOCI balances are as follows:

	Total AOCI
Balance at December 31, 2015	$	(134	)
Net unrealized gain (loss) on available for sale securities	(30		)
Other changes	1
Balance at December 31, 2016	$	(163	)
Available for sale securities:
Net unrealized gain (loss)	6
Reclassification of net unrealized loss on securities transferred to held to maturity	142
Other reclassifications included in other revenue	(8		)
Held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale	(142		)
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	20
Other	(7		)
Balance at December 31, 2017	$	(152	)
Adoption of accounting standards (Note 2)	(33		)
Available for sale securities:
Net unrealized gain (loss)	(93		)
Held to maturity securities:
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	27
Other	(1		)
Balance at December 31, 2018	$	(252	)

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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Tables)

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

Stock-Based Compensation Expense and Related Income Tax Benefit

A summary of share-based compensation expense and related income tax benefit is as follows:

Year Ended December 31,	2018			2017			2016
Stock option expense	$	51		$	50		$	45
Restricted stock unit expense (1)	136			94			89
Employee stock purchase plan expense	10			9			7
Total share-based compensation expense	$	197		$	153		$	141
Income tax benefit on share-based compensation expense (2)	$	(47	)	$	(57	)	$	(53	)

⁽¹⁾ Restricted stock unit expense in 2018 includes $36 million related to special stock awards issued to non-officer employees.

⁽²⁾ Excludes income tax benefits due to the adoption of ASU 2016-09 of $46 million and $87 millionin 2018 and 2017, respectively.

Stock Option Activity

Stock option activity is summarized below:

	Number of Options (In millions)		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	32		$	26.16	6.38	$	814
Granted	4		47.98
Exercised	(6	)	21.65
Forfeited (1)	—		36.05
Expired (1)	—		19.05
Outstanding at December 31, 2018	30		$	30.19	6.27	$	373
Vested and expected to vest at December 31, 2018	30		$	30.05	6.24	$	373
Vested and exercisable at December 31, 2018	19		$	23.70	4.86	$	331

⁽¹⁾ Number of options were less than 500 thousand.

Information on Stock Options Granted and Exercised

Information on stock options granted and exercised is presented below:

Year Ended December 31,	2018		2017		2016
Weighted-average fair value of options granted per share	$	14.16	$	13.04	$	8.73
Cash received from options exercised	125		171		144
Tax benefit realized on options exercised	35		70		38
Aggregate intrinsic value of options exercised	189		241		149

Assumptions Used to Value Options Granted and Their Expected Lives

The assumptions used to value the options granted during the years presented and their expected lives were as follows:

Year Ended December 31,	2018		2017		2016
Weighted-average expected dividend yield	1.42	%	1.06	%	1.22	%
Weighted-average expected volatility	33	%	34	%	30	%
Weighted-average risk-free interest rate	3.0	%	2.1	%	1.8	%
Expected life (in years)	4.0 - 5.2		4.1 - 5.3		4.7 - 7.3

Restricted Stock Units Activity

The Company’s restricted stock units activity is summarized below:

	Number of Units (In millions)		Weighted- Average Grant Date Fair Value per Unit
Outstanding at December 31, 2017	7		$	35.16
Granted (1)	3		47.03
Vested (1)	(3	)	35.95
Forfeited (2)	—		36.10
Outstanding at December 31, 2018	7		$	40.64

⁽¹⁾ Includes 781 thousand units related to special non-officer employee stock awards, with a weighted-average grant date fair value of $45.87. All units granted vested immediately.

⁽²⁾ Number of units were less than 500 thousand.

Schedule of Changes in Projected Benefit Obligations

The following table presents the changes inprojected benefit obligation:

December 31,	2018		2017
Projected benefit obligation at beginning of year	$	44	$	26
Benefit cost (1)	11		9
Actuarial (gain)/loss (2)	1		9
Projected benefit obligation at end of year (3)	$	56	$	44

⁽¹⁾ Includes service cost and interest cost, which are recognized in compensation and benefits expense and other expense, respectively, in the consolidated statements of income.

⁽²⁾ Actuarial (gain)/loss is reflected in the consolidated statements of comprehensive income and is included in AOCI on the consolidated balance sheets.

⁽³⁾ This amount is recognized as a liability on the consolidated balance sheets and also depicts the accumulated benefit obligation.

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Taxes on Income (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Tax Expense

The components of taxes on incomeare as follows:

Year Ended December 31,	2018		2017		2016
Current:
Federal	$	847	$	1,132	$	980
State	159		106		109
Total current	1,006		1,238		1,089
Deferred:
Federal	42		58		13
State	7		—		2
Total deferred	49		58		15
Taxes on income	$	1,055	$	1,296	$	1,104

Temporary Differences That Created Deferred Tax Assets and Liabilities

The temporary differences that created deferred tax assets and liabilitiesare detailed below:

December 31,	2018			2017
Deferred tax assets:
Employee compensation, severance, and benefits	$	132		$	133
Net unrealized loss on available for sale securities	79			57
Reserves and allowances	13			15
Facilities lease commitments	12			14
State and local taxes	21			12
Net operating loss carryforwards	5			5
Other	6			3
Total deferred tax assets	268			239
Valuation allowance	(3		)	(2		)
Deferred tax assets — net of valuation allowance	265			237
Deferred tax liabilities:
Capitalized internal-use software development costs	(98		)	(89		)
Depreciation and amortization	(108		)	(72		)
Capitalized contract costs	(60		)	—
Total deferred tax liabilities	(266		)	(161		)
Deferred tax asset/(liability) — net (1)	$	(1	)	$	76

⁽¹⁾ Amounts are included in accrued expenses and other liabilities and in other assets on the consolidated balance sheets at December 31, 2018 and in other assets at December 31, 2017.

Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

Year Ended December 31,	2018		2017		2016
Federal statutory income tax rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	3.0		2.2		2.4
Equity compensation benefit	(1.0	)	(2.4	)	—
Other (1)	0.1		0.7		(0.5	)
Effective income tax rate	23.1	%	35.5	%	36.9	%

⁽¹⁾ 2017 includes the impact of one-time charge to taxes on income associated with the Tax Act.

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

December 31,	2018			2017
Balance at beginning of year	$	111		$	93
Additions for tax positions related to the current year	3			22
Additions for tax positions related to prior years	3			15
Reductions for tax positions related to prior years	(4		)	(2		)
Reductions due to lapse of statute of limitations	—			—
Reductions for settlements with tax authorities	(1		)	(17		)
Balance at end of year	$	112		$	111

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Regulatory Requirements (Tables)

12 Months Ended

Dec. 31, 2018

Banking and Thrift [Abstract]

Regulatory Capital and Ratios

The regulatory capital and ratios for CSC (consolidated) and CSB are as follows:

	Actual				Minimum to be Well Capitalized				Minimum Capital Requirement
December 31, 2018	Amount		Ratio		Amount		Ratio		Amount		Ratio (1)
CSC
Common Equity Tier 1 Risk-Based Capital	$	16,813	17.6	%	N/A				$	4,295	4.5	%
Tier 1 Risk-Based Capital	19,606		20.5	%	N/A				5,726		6.0	%
Total Risk-Based Capital	19,628		20.6	%	N/A				7,635		8.0	%
Tier 1 Leverage	19,606		7.1	%	N/A				11,058		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	15,832	19.7	%	$	5,233	6.5	%	$	3,623	4.5	%
Tier 1 Risk-Based Capital	15,832		19.7	%	6,441		8.0	%	4,831		6.0	%
Total Risk-Based Capital	15,853		19.7	%	8,051		10.0	%	6,441		8.0	%
Tier 1 Leverage	15,832		7.2	%	11,044		5.0	%	8,836		4.0	%
December 31, 2017
CSC
Common Equity Tier 1 Risk-Based Capital	$	14,630	19.3	%	N/A				$	3,414	4.5	%
Tier 1 Risk-Based Capital	17,423		23.0	%	N/A				4,552		6.0	%
Total Risk-Based Capital	17,452		23.0	%	N/A				6,069		8.0	%
Tier 1 Leverage	17,423		7.6	%	N/A				9,218		4.0	%
CSB
Common Equity Tier 1 Risk-Based Capital	$	13,355	20.1	%	$	4,324	6.5	%	$	2,993	4.5	%
Tier 1 Risk-Based Capital	13,355		20.1	%	5,321		8.0	%	3,991		6.0	%
Total Risk-Based Capital	13,382		20.1	%	6,652		10.0	%	5,321		8.0	%
Tier 1 Leverage	13,355		7.1	%	9,462		5.0	%	7,569		4.0	%

⁽¹⁾ Under the Basel III capital rule, CSC and CSB are also required to maintain a capital conservation buffer above the regulatory minimum capital ratios. The capital conservation buffer was 1.875% in 2018, and became 2.5% on January 1, 2019. If the capital conservation buffer falls below the minimum requirement, the Company would be subject to limits on capital distributions and discretionary bonus payments to executive officers. For 2018, the minimum capital requirement plus capital conservation buffer for Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 6.375%, 7.875%, and 9.875%, respectively. At December 31, 2018, both CSC’s and CSB’s capital levels exceeded the fully implemented capital conservation buffer requirement.

Net Capital and Net Capital Requirements for CS&Co

Net capital and net capital requirements for CS&Co are as follows:

December 31,	2018		2017
Net capital	$	2,304	$	2,118
Minimum net capital required	0.250		0.250
2% of aggregate debit balances	436		435
Net capital in excess of required net capital	$	1,868	$	1,683

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Financial Information for Reportable Segments

Financial information for the segments is presented in the following table:

	Investor Services						Advisor Services						Total
Year Ended December 31,	2018		2017		2016		2018		2017		2016		2018		2017		2016
Net Revenues
Net interest revenue	$	4,341	$	3,231	$	2,591	$	1,482	$	1,051	$	731	$	5,823	$	4,282	$	3,322
Asset management and administration fees	2,260		2,344		2,093		969		1,048		962		3,229		3,392		3,055
Trading revenue	475		408		524		288		246		301		763		654		825
Other	245		217		203		72		73		73		317		290		276
Total net revenues	7,321		6,200		5,411		2,811		2,418		2,067		10,132		8,618		7,478
Expenses Excluding Interest	4,145		3,725		3,380		1,425		1,243		1,105		5,570		4,968		4,485
Income before taxes on income	$	3,176	$	2,475	$	2,031	$	1,386	$	1,175	$	962	$	4,562	$	3,650	$	2,993
Capital expenditures	$	390	$	265	$	234	$	186	$	147	$	119	$	576	$	412	$	353
Depreciation and amortization	$	186	$	203	$	180	$	120	$	66	$	54	$	306	$	269	$	234

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The Charles Schwab Corporation - Parent Company Only Financial Statements (Tables)

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Statements of Income

Condensed Statements of Income

Year Ended December 31,	2018			2017			2016
Interest revenue	$	88		$	33		$	22
Interest expense	(184		)	(114		)	(100		)
Net interest expense	(96		)	(81		)	(78		)
Other	1			3			1
Expenses excluding interest	(85		)	(32		)	(21		)
Loss before income tax benefit and equity in net income of subsidiaries	(180		)	(110		)	(98		)
Income tax benefit	20			27			34
Loss before equity in net income of subsidiaries	(160		)	(83		)	(64		)
Equity in net income of subsidiaries:
Equity in undistributed net income of subsidiaries	2,590			1,479			1,690
Dividends from bank subsidiaries	750			625			—
Dividends from non-bank subsidiaries	327			333			263
Net Income	3,507			2,354			1,889
Preferred stock dividends and other (1)	178			174			143
Net Income Available to Common Stockholders	$	3,329		$	2,180		$	1,746

⁽¹⁾ Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

Condensed Balance Sheets

Condensed Balance Sheets

December 31,	2018		2017
Assets
Cash and cash equivalents	$	2,092	$	2,825
Receivables from subsidiaries	784		571
Available for sale securities	1,754		573
Held to maturity securities	223		223
Other securities owned — at fair value	109		76
Loans to non-bank subsidiaries	185		448
Investment in non-bank subsidiaries	5,507		5,393
Investment in bank subsidiaries	16,995		13,224
Other assets	228		160
Total assets	$	27,877	$	23,493
Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities	$	379	$	276
Payables to subsidiaries	2		—
Long-term debt	6,826		4,692
Total liabilities	7,207		4,968
Stockholders’ equity	20,670		18,525
Total liabilities and stockholders’ equity	$	27,877	$	23,493

Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

Year Ended December 31,	2018			2017			2016
Cash Flows from Operating Activities
Net income	$	3,507		$	2,354		$	1,889
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Equity in undistributed earnings of subsidiaries	(2,590		)	(1,479		)	(1,690		)
Other	13			5			(37		)
Net change in:
Other securities owned	(33		)	(1		)	(10		)
Other assets	28			(26		)	(27		)
Accrued expenses and other liabilities	28			44			30
Net cash provided by (used for) operating activities	953			897			155
Cash Flows from Investing Activities
Due from (to) subsidiaries — net	408			(374		)	95
Increase in investments in subsidiaries	(1,188		)	(342		)	(1,547		)
Repayments (Advances) of subordinated loan to CS&Co	(185		)	—			465
Purchases of available for sale securities	(1,751		)	(201		)	(2		)
Proceeds from sales of available for sale securities	—			197			2
Principal payments on available for sale securities	573			—			—
Other investing activities	(5		)	(6		)	(4		)
Net cash provided by (used for) investing activities	(2,148		)	(726		)	(991		)
Cash Flows from Financing Activities
Issuance of long-term debt	3,024			2,129			—
Repayment of long-term debt	(900		)	(250		)	—
Repurchases of common stock	(1,000		)	—			—
Net proceeds from preferred stock offerings	—			492			1,316
Redemption of preferred stock	—			(485		)	—
Dividends paid	(787		)	(592		)	(486		)
Proceeds from stock options exercised and other	125			171			144
Other financing activities	—			—			44
Net cash provided by (used for) financing activities	462			1,465			1,018
Increase (Decrease) in Cash and Cash Equivalents	(733		)	1,636			182
Cash and Cash Equivalents at Beginning of Year	2,825			1,189			1,007
Cash and Cash Equivalents at End of Year	$	2,092		$	2,825		$	1,189

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
Year Ended December 31, 2018:
Total Net Revenues	$	2,669	$	2,579	$	2,486	$	2,398
Total Expenses Excluding Interest	$	1,459	$	1,360	$	1,355	$	1,396
Net Income	$	935	$	923	$	866	$	783
Net Income Available to Common Stockholders	$	885	$	885	$	813	$	746
Weighted-Average Common Shares Outstanding — Basic	1,343		1,351		1,350		1,347
Weighted-Average Common Shares Outstanding — Diluted	1,354		1,364		1,364		1,362
Earnings Per Common Share — Basic	$	.66	$	.66	$	.60	$	.55
Earnings Per Common Share — Diluted	$	.65	$	.65	$	.60	$	.55
Dividends Declared Per Common Share	$	.13	$	.13	$	.10	$	.10
Year Ended December 31, 2017:
Total Net Revenues	$	2,242	$	2,165	$	2,130	$	2,081
Total Expenses Excluding Interest	$	1,289	$	1,220	$	1,221	$	1,238
Net Income	$	597	$	618	$	575	$	564
Net Income Available to Common Stockholders	$	550	$	575	$	530	$	525
Weighted-Average Common Shares Outstanding — Basic	1,343		1,339		1,338		1,336
Weighted-Average Common Shares Outstanding — Diluted	1,358		1,353		1,351		1,351
Earnings Per Common Share — Basic	$	.41	$	.43	$	.40	$	.39
Earnings Per Common Share — Diluted	$	.41	$	.42	$	.39	$	.39
Dividends Declared Per Common Share	$	.08	$	.08	$	.08	$	.08

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Introduction and Basis of Presentation (Details)	Dec. 31, 2018 state office
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Minimum number of domestic branch offices | office	355
States with domestic branch offices | state	47

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Summary of Significant Accounting Policies (Equipment, Office Facilities, and Property) (Details)	12 Months Ended
	Dec. 31, 2018
Equipment and office facilities [Member] | Minimum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, property, plant and equipment	5 years
Equipment and office facilities [Member] | Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, property, plant and equipment	10 years
Buildings [Member] | Minimum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, property, plant and equipment	20 years
Buildings [Member] | Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, property, plant and equipment	40 years
Software [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than	3 years
Software [Member] | Minimum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than	3 years
Software [Member] | Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful life, Software and certain costs incurred for purchasing or developing software, less than	10 years

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Summary of Significant Accounting Policies (New Accounting Standards) (Details) - USD ($) $ in Millions	Jan. 01, 2019	Dec. 31, 2018	Jan. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred tax liability		$ 1
ASU 2014-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Capitalized costs			$ 219
Deferred tax liability		$ 60	52
ASU 2018-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings			$ 33
ASU 2016-02 [Member] | Subsequent Event [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right-of-use asset	$ 596
Lease liability	$ 662

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Summary of Significant Accounting Policies (Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Assets
Other assets	$ 2,046	$ 2,224	$ 2,057
Equity
Retained earnings	17,329	14,608	14,408
Accumulated other comprehensive income (loss)	(252)	(185)	(152)	$ (163)	$ (134)
Capitalized contract cost	250	219	$ 0
Deferred tax liability	1
Accounting Standards Update 2014-09 and 2018-02 [Member]
Equity
Capitalized contract cost		219
Deferred tax liability	60	52
ASU 2014-09 [Member]
Equity
Capitalized contract cost	250
Deferred tax liability	$ 60	52
ASU 2014-09 [Member] | Adjustments [Member]
Assets
Other assets		167
Equity
Retained earnings		167
Accumulated other comprehensive income (loss)		0
ASU 2018-02 [Member] | Adjustments [Member]
Assets
Other assets		0
Equity
Retained earnings		33
Accumulated other comprehensive income (loss)		$ (33)

XML

Summary of Significant Accounting Policies (Statement of Income) (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Expenses Excluding Interest
Compensation and benefits									$ 3,057	$ 2,737		$ 2,466
Taxes on income									1,055	1,296		1,104
Net Income	$ 935	$ 923	$ 866	$ 783	$ 597	$ 618	$ 575	$ 564	3,507	$ 2,354	[1]	$ 1,889	[1]
Balances Without Adoption of ASC 606 [Member] | ASU 2014-09 [Member]
Expenses Excluding Interest
Compensation and benefits									3,088
Taxes on income									1,047
Net Income									3,484
Effect of Change Higher/(Lower) [Member] | ASU 2014-09 [Member]
Expenses Excluding Interest
Compensation and benefits									(31)
Taxes on income									8
Net Income									$ 23

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Summary of Significant Accounting Policies (Balance Sheet) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Assets
Other assets	$ 2,046	$ 2,224	$ 2,057
Liabilities [Abstract]
Accrued expenses and other liabilities	2,954		2,810
Stockholders’ Equity
Retained earnings	17,329	14,608	14,408
Accumulated other comprehensive income (loss)	(252)	(185)	(152)	$ (163)	$ (134)
Capitalized contract cost	250	219	$ 0
Deferred tax liability	1
ASU 2014-09 [Member]
Stockholders’ Equity
Capitalized contract cost	250
Deferred tax liability	60	52
Adjustments [Member] | ASU 2014-09 [Member]
Assets
Other assets		167
Stockholders’ Equity
Retained earnings		167
Accumulated other comprehensive income (loss)		0
Adjustments [Member] | ASU 2018-02 [Member]
Assets
Other assets		0
Stockholders’ Equity
Retained earnings		33
Accumulated other comprehensive income (loss)		$ (33)
Balances Without Adoption of ASC 606 [Member] | ASU 2014-09 [Member]
Assets
Other assets	1,851
Liabilities [Abstract]
Accrued expenses and other liabilities	2,949
Stockholders’ Equity
Retained earnings	17,139
Effect of Change Higher/(Lower) [Member] | ASU 2014-09 [Member]
Assets
Other assets	195
Liabilities [Abstract]
Accrued expenses and other liabilities	5
Stockholders’ Equity
Retained earnings	$ 190

XML

Revenue Recognition (Disaggregated Revenue) (Details) - USD ($) $ in Millions		3 Months Ended								12 Months Ended
		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue [Line Items]
Interest revenue										$ 6,680	$ 4,624	$ 3,493
Interest expense										(857)	(342)	(171)
Net interest revenue										5,823	4,282	3,322
Other										317	290	276
Total net revenues		$ 2,669	$ 2,579	$ 2,486	$ 2,398	$ 2,242	$ 2,165	$ 2,130	$ 2,081	10,132	8,618	7,478
Asset Management and administration fees [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue	[1]									3,229	3,392	3,055
Mutual funds and ETF service fees [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										1,793	2,045	1,853
Advice solutions [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										1,139	1,043	915
Other [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										297	304	287
Trading revenue [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										763	654	825
Commissions [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										685	600	779
Principal Transactions [Member]
Disaggregation of Revenue [Line Items]
Asset management and administration fees and Trading revenue										$ 78	$ 54	$ 46

[1] Includes fee waivers of $0, $10 million, and $224 million during the years ended December 31, 2018, 2017, and 2016, respectively, relating to Schwab-sponsored money market funds.

XML

Revenue Recognition (Capitalized Contract Costs and Contract Balances) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Capitalized contract costs, net	$ 250	$ 219	$ 0
Amortization expense	47
Receivables from contracts with customers	$ 307	$ 353

XML

Receivables from and Payables to Brokerage Clients (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Receivables [Abstract]
Margin loans, net of allowance for doubtful accounts	$ 19,273	$ 18,331
Other brokerage receivables	2,378	2,245
Receivables from brokerage clients — net	21,651	20,576
Payables
Interest-bearing payables	21,990	22,840
Non-interest-bearing payables	10,736	8,403
Payables to brokerage clients	$ 32,726	$ 31,243
California [Member] | Geographic Concentration Risk [Member] | Contract with Customer [Member]
Concentration Risk [Line Items]
Percent of client accounts	22.00%	22.00%

XML

Other Securities Owned (Summary of Other Securities Owned) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Other Securities Owned [Line Items]
Other securities owned	$ 539	$ 539
Equity and bond mutual funds [Member]
Other Securities Owned [Line Items]
Other securities owned	441	318
State and municipal debt obligations [Member]
Other Securities Owned [Line Items]
Other securities owned	39	52
Equity, U.S. Government and corporate debt, and other securities [Member]
Other Securities Owned [Line Items]
Other securities owned	33	34
Schwab Funds money market funds [Member]
Other Securities Owned [Line Items]
Other securities owned	$ 26	$ 135

XML

Investment Securities (Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities Available for Sale and Held to Maturity Securities) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Available for sale securities
Amortized Cost	$ 66,735	$ 50,029
Gross Unrealized Gains	72	105
Gross Unrealized Losses	229	139
Fair Value	66,578	49,995
Held to maturity securities
Amortized Cost	144,009	120,926
Gross Unrealized Gains	330	497
Gross Unrealized Losses	2,301	1,050
Fair Value	142,038	120,373
U.S. agency mortgage-backed securities [Member]
Available for sale securities
Amortized Cost	25,594	20,915
Gross Unrealized Gains	44	53
Gross Unrealized Losses	82	39
Fair Value	25,556	20,929
Held to maturity securities
Amortized Cost	118,064	101,197
Gross Unrealized Gains	217	290
Gross Unrealized Losses	2,188	1,034
Fair Value	116,093	100,453
U.S. Treasury securities [Member]
Available for sale securities
Amortized Cost	18,410	9,583
Gross Unrealized Gains	0	0
Gross Unrealized Losses	108	83
Fair Value	18,302	9,500
Held to maturity securities
Amortized Cost	223	223
Gross Unrealized Gains	0	0
Gross Unrealized Losses	6	3
Fair Value	217	220
Asset-backed securities [Member]
Available for sale securities
Amortized Cost	10,086	9,019
Gross Unrealized Gains	14	34
Gross Unrealized Losses	15	6
Fair Value	10,085	9,047
Held to maturity securities
Amortized Cost	18,502	12,937
Gross Unrealized Gains	83	127
Gross Unrealized Losses	39	2
Fair Value	18,546	13,062
Corporate debt securities [Member]
Available for sale securities
Amortized Cost	7,477	6,154
Gross Unrealized Gains	10	16
Gross Unrealized Losses	20	1
Fair Value	7,467	6,169
Held to maturity securities
Amortized Cost	4,477	4,078
Gross Unrealized Gains	2	13
Gross Unrealized Losses	47	5
Fair Value	4,432	4,086
Certificates of deposit [Member]
Available for sale securities
Amortized Cost	3,682	2,040
Gross Unrealized Gains	4	2
Gross Unrealized Losses	1	1
Fair Value	3,685	2,041
Held to maturity securities
Amortized Cost	200	200
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	0
Fair Value	201	200
U.S. agency notes [Member]
Available for sale securities
Amortized Cost	900	1,914
Gross Unrealized Gains	0	0
Gross Unrealized Losses	2	8
Fair Value	898	1,906
U.S. state and municipal securities [Member]
Held to maturity securities
Amortized Cost	1,327	1,247
Gross Unrealized Gains	24	57
Gross Unrealized Losses	3	0
Fair Value	1,348	1,304
Commercial paper [Member]
Available for sale securities
Amortized Cost	522	313
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	522	313
Available-for-sale securities, current	4,900
Foreign government agency securities [Member]
Available for sale securities
Amortized Cost	50	51
Gross Unrealized Gains	0	0
Gross Unrealized Losses	1	1
Fair Value	49	50
Held to maturity securities
Amortized Cost	50	50
Gross Unrealized Gains	0	0
Gross Unrealized Losses	1	1
Fair Value	49	49
Non-agency commercial mortgage-backed securities [Member]
Available for sale securities
Amortized Cost	14	40
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	14	40
Held to maturity securities
Amortized Cost	1,156	994
Gross Unrealized Gains	3	10
Gross Unrealized Losses	17	5
Fair Value	1,142	$ 999
Other [Member]
Held to maturity securities
Amortized Cost	10
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Fair Value	$ 10
Federal Family Education Loan Program Asset-Backed Securities [Member]
Held to maturity securities
Asset-backed securities percent	36.00%	42.00%
Collateralized credit card receivables [Member]
Held to maturity securities
Asset-backed securities percent	42.00%	40.00%
Corporate debt securities issued by financial services industry [Member]
Held to maturity securities
Available for sale and held to maturity securities	26.00%	41.00%
Information technology [Member]
Held to maturity securities
Available for sale and held to maturity securities	18.00%	22.00%

XML

Investment Securities (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2017
Schedule of Held-to-maturity Securities [Line Items]
Debt securities transferred from AFS to HTM			$ 24,700
Unrealized loss	$ 227
Assets	296,482		$ 243,274
Trust Deposits [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair value of pledged securities	906
Federal Reserve Bank [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair value of pledged securities	7,900
FHLB [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair value of pledged securities	$ 27,200
Scenario, Forecast [Member]
Schedule of Held-to-maturity Securities [Line Items]
Assets		$ 250,000

XML

Investment Securities (Available For Sale and Held to Maturity Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss) (Details) $ in Millions	Dec. 31, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Available for sale securities:
Less than 12 months Fair Value	$ 23,503	$ 12,909
Less than 12 months Unrealized Losses	67	38
12 months or longer Fair Value	12,888	9,774
12 months or longer Unrealized Losses	162	101
Total Fair Value	36,391	22,683
Total Unrealized Losses	229	139
Held to maturity securities:
Less than 12 months Fair Value	39,327	45,180
Less than 12 months Unrealized Losses	290	326
12 months or longer Fair Value	58,794	24,825
12 months or longer Unrealized Losses	2,011	724
Total Fair Value	98,121	70,005
Total Unrealized Losses	2,301	1,050
Total securities with unrealized losses
Less than 12 months Fair Value	62,830	58,089
Less than 12 months Unrealized Losses	357	364
12 months or longer Fair Value	71,682	34,599
12 months or longer Unrealized Losses	2,173	825
Total Fair Value	134,512	92,688
Total Unrealized Losses	$ 2,530	$ 1,189
Number of available for sale securities in unrealized loss positions | security	441	251
Number of held to maturity securities in unrealized loss positions | security	1,524	938
U.S. agency mortgage-backed securities [Member]
Available for sale securities:
Less than 12 months Fair Value	$ 9,529	$ 5,696
Less than 12 months Unrealized Losses	32	21
12 months or longer Fair Value	4,257	2,548
12 months or longer Unrealized Losses	50	18
Total Fair Value	13,786	8,244
Total Unrealized Losses	82	39
Held to maturity securities:
Less than 12 months Fair Value	29,263	42,102
Less than 12 months Unrealized Losses	222	310
12 months or longer Fair Value	56,435	24,753
12 months or longer Unrealized Losses	1,966	724
Total Fair Value	85,698	66,855
Total Unrealized Losses	2,188	1,034
U.S. Treasury securities [Member]
Available for sale securities:
Less than 12 months Fair Value	4,951	4,625
Less than 12 months Unrealized Losses	6	11
12 months or longer Fair Value	7,037	4,875
12 months or longer Unrealized Losses	102	72
Total Fair Value	11,988	9,500
Total Unrealized Losses	108	83
Held to maturity securities:
Less than 12 months Fair Value	0	220
Less than 12 months Unrealized Losses	0	3
12 months or longer Fair Value	218	0
12 months or longer Unrealized Losses	6	0
Total Fair Value	218	220
Total Unrealized Losses	6	3
Asset-backed securities [Member]
Available for sale securities:
Less than 12 months Fair Value	4,050	904
Less than 12 months Unrealized Losses	9	3
12 months or longer Fair Value	837	424
12 months or longer Unrealized Losses	6	3
Total Fair Value	4,887	1,328
Total Unrealized Losses	15	6
Held to maturity securities:
Less than 12 months Fair Value	6,795	1,124
Less than 12 months Unrealized Losses	35	2
12 months or longer Fair Value	376	72
12 months or longer Unrealized Losses	4	0
Total Fair Value	7,171	1,196
Total Unrealized Losses	39	2
Corporate debt securities [Member]
Available for sale securities:
Less than 12 months Fair Value	3,561	736
Less than 12 months Unrealized Losses	19	1
12 months or longer Fair Value	254	120
12 months or longer Unrealized Losses	1	0
Total Fair Value	3,815	856
Total Unrealized Losses	20	1
Held to maturity securities:
Less than 12 months Fair Value	2,909	1,078
Less than 12 months Unrealized Losses	29	5
12 months or longer Fair Value	1,066	0
12 months or longer Unrealized Losses	18	0
Total Fair Value	3,975	1,078
Total Unrealized Losses	47	5
Certificates of deposit [Member]
Available for sale securities:
Less than 12 months Fair Value	1,217	799
Less than 12 months Unrealized Losses	1	1
12 months or longer Fair Value	150	0
12 months or longer Unrealized Losses	0	0
Total Fair Value	1,367	799
Total Unrealized Losses	1	1
Non-agency commercial mortgage-backed securities [Member]
Held to maturity securities:
Less than 12 months Fair Value	283	607
Less than 12 months Unrealized Losses	2	5
12 months or longer Fair Value	632	0
12 months or longer Unrealized Losses	15	0
Total Fair Value	915	607
Total Unrealized Losses	17	5
U.S. agency notes [Member]
Available for sale securities:
Less than 12 months Fair Value	195	99
Less than 12 months Unrealized Losses	0	0
12 months or longer Fair Value	304	1,807
12 months or longer Unrealized Losses	2	8
Total Fair Value	499	1,906
Total Unrealized Losses	2	8
U.S. state and municipal securities [Member]
Held to maturity securities:
Less than 12 months Fair Value	77
Less than 12 months Unrealized Losses	2
12 months or longer Fair Value	18
12 months or longer Unrealized Losses	1
Total Fair Value	95
Total Unrealized Losses	3
Foreign government agency securities [Member]
Available for sale securities:
Less than 12 months Fair Value	0	50
Less than 12 months Unrealized Losses	0	1
12 months or longer Fair Value	49	0
12 months or longer Unrealized Losses	1	0
Total Fair Value	49	50
Total Unrealized Losses	1	1
Held to maturity securities:
Less than 12 months Fair Value	0	49
Less than 12 months Unrealized Losses	0	1
12 months or longer Fair Value	49	0
12 months or longer Unrealized Losses	1	0
Total Fair Value	49	49
Total Unrealized Losses	$ 1	$ 1

XML

Investment Securities (Maturities of Securities Available for Sale and Held to Maturity) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Available for sale securities, fair value
Within 1 year	$ 19,077
After 1 year through 5 years	23,925
After 5 years through 10 years	13,340
After 10 years	10,236
Fair Value	66,578	$ 49,995
Available for sale securities, amortized cost
Within 1 year	19,111
After 1 year through 5 years	24,010
After 5 years through 10 years	13,382
After 10 years	10,232
Amortized Cost	$ 66,735	50,029
Weighted-average yield
Within 1 year	1.80%
After 1 year through 5 years	2.71%
After 1 year through 5 years	2.61%
After 10 years	2.70%
Total	2.43%
Held to maturity securities, fair value
Within 1 year	$ 393
After 1 year through 5 years	21,281
After 5 years through 10 years	44,423
After 10 years	75,941
Fair Value	142,038	120,373
Held to maturity securities, amortized cost
Within 1 year	395
After 1 year through 5 years	21,446
After 5 years through 10 years	44,925
After 10 years	77,243
Amortized Cost	$ 144,009	120,926
Weighted-average yield
Within 1 year	1.97%
After 1 year through 5 years	2.56%
After 5 years through 10 years	2.69%
After 10 years	2.63%
Total	2.63%
U.S. agency mortgage-backed securities [Member]
Available for sale securities, fair value
Within 1 year	$ 153
After 1 year through 5 years	3,481
After 5 years through 10 years	12,100
After 10 years	9,822
Fair Value	25,556	20,929
Available for sale securities, amortized cost
Amortized Cost	25,594	20,915
Held to maturity securities, fair value
Within 1 year	256
After 1 year through 5 years	14,960
After 5 years through 10 years	34,008
After 10 years	66,869
Fair Value	116,093	100,453
Held to maturity securities, amortized cost
Amortized Cost	118,064	101,197
U.S. Treasury securities [Member]
Available for sale securities, fair value
Within 1 year	14,164
After 1 year through 5 years	4,138
After 5 years through 10 years	0
After 10 years	0
Fair Value	18,302	9,500
Available for sale securities, amortized cost
Amortized Cost	18,410	9,583
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	0
After 5 years through 10 years	217
After 10 years	0
Fair Value	217	220
Held to maturity securities, amortized cost
Amortized Cost	223	223
Asset-backed securities [Member]
Available for sale securities, fair value
Within 1 year	0
After 1 year through 5 years	8,445
After 5 years through 10 years	1,240
After 10 years	400
Fair Value	10,085	9,047
Available for sale securities, amortized cost
Amortized Cost	10,086	9,019
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	2,106
After 5 years through 10 years	9,144
After 10 years	7,296
Fair Value	18,546	13,062
Held to maturity securities, amortized cost
Amortized Cost	18,502	12,937
Corporate debt securities [Member]
Available for sale securities, fair value
Within 1 year	1,755
After 1 year through 5 years	5,712
After 5 years through 10 years	0
After 10 years	0
Fair Value	7,467	6,169
Available for sale securities, amortized cost
Amortized Cost	7,477	6,154
Held to maturity securities, fair value
Within 1 year	137
After 1 year through 5 years	3,550
After 5 years through 10 years	745
After 10 years	0
Fair Value	4,432	4,086
Held to maturity securities, amortized cost
Amortized Cost	4,477	4,078
Certificates of deposit [Member]
Available for sale securities, fair value
Within 1 year	1,984
After 1 year through 5 years	1,701
After 5 years through 10 years	0
After 10 years	0
Fair Value	3,685	2,041
Available for sale securities, amortized cost
Amortized Cost	3,682	2,040
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	201
After 5 years through 10 years	0
After 10 years	0
Fair Value	201	200
Held to maturity securities, amortized cost
Amortized Cost	200	200
U.S. agency notes [Member]
Available for sale securities, fair value
Within 1 year	499
After 1 year through 5 years	399
After 5 years through 10 years	0
After 10 years	0
Fair Value	898	1,906
Available for sale securities, amortized cost
Amortized Cost	900	1,914
Commercial paper [Member]
Available for sale securities, fair value
Within 1 year	522
After 1 year through 5 years	0
After 5 years through 10 years	0
After 10 years	0
Fair Value	522	313
Available for sale securities, amortized cost
Amortized Cost	522	313
U.S. state and municipal securities [Member]
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	59
After 5 years through 10 years	309
After 10 years	980
Fair Value	1,348	1,304
Held to maturity securities, amortized cost
Amortized Cost	1,327	1,247
Foreign government agency securities [Member]
Available for sale securities, fair value
Within 1 year	0
After 1 year through 5 years	49
After 5 years through 10 years	0
After 10 years	0
Fair Value	49	50
Available for sale securities, amortized cost
Amortized Cost	50	51
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	49
After 5 years through 10 years	0
After 10 years	0
Fair Value	49	49
Held to maturity securities, amortized cost
Amortized Cost	50	50
Non-agency commercial mortgage-backed securities [Member]
Available for sale securities, fair value
Within 1 year	0
After 1 year through 5 years	0
After 5 years through 10 years	0
After 10 years	14
Fair Value	14	40
Available for sale securities, amortized cost
Amortized Cost	14	40
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	356
After 5 years through 10 years	0
After 10 years	786
Fair Value	1,142	999
Held to maturity securities, amortized cost
Amortized Cost	1,156	$ 994
Other [Member]
Held to maturity securities, fair value
Within 1 year	0
After 1 year through 5 years	0
After 5 years through 10 years	0
After 10 years	10
Fair Value	10
Held to maturity securities, amortized cost
Amortized Cost	$ 10

XML

Investment Securities (Proceeds and Gross Realized Gains And Losses from Sales of Securities Available for Sale) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 115	$ 8,617	[1]	$ 5,537	[1]
Gross realized gains	0	12		4
Gross realized losses	$ 0	$ 0		$ 0

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Bank Loans and Related Allowance for Loan Losses (Composition of Bank Loans and Delinquency Analysis by Loan Segment) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 16,580,000,000	$ 16,448,000,000
Past due and other nonaccrual loans	50,000,000	56,000,000
Total loans	16,630,000,000	16,504,000,000
Allowance for loan losses	21,000,000	26,000,000	$ 26,000,000	$ 31,000,000
Total bank loans – net	16,609,000,000	16,478,000,000
Loans accruing interest contractually 90 days or more past due	0	0
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	27,000,000	18,000,000
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	3,000,000	9,000,000
>90 Days Past Due And Other Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	20,000,000	29,000,000
First Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	10,349,000,000	9,983,000,000
Past due and other nonaccrual loans	35,000,000	33,000,000
Total loans	10,384,000,000	10,016,000,000
Allowance for loan losses	14,000,000	16,000,000	17,000,000	20,000,000
Total bank loans – net	10,370,000,000	10,000,000,000
First Mortgage [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	21,000,000	14,000,000
First Mortgage [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	2,000,000	2,000,000
First Mortgage [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	12,000,000	17,000,000
HELOC's [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,493,000,000	1,928,000,000
Past due and other nonaccrual loans	12,000,000	15,000,000
Total loans	1,505,000,000	1,943,000,000
Allowance for loan losses	5,000,000	8,000,000	8,000,000	11,000,000
Total bank loans – net	1,500,000,000	1,935,000,000
HELOC's [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	3,000,000	0
HELOC's [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	1,000,000	3,000,000
HELOC's [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	8,000,000	12,000,000
Pledged asset lines [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	4,558,000,000	4,361,000,000
Past due and other nonaccrual loans	3,000,000	8,000,000
Total loans	4,561,000,000	4,369,000,000
Allowance for loan losses	0	0
Total bank loans – net	4,561,000,000	4,369,000,000
Pledged asset lines [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	3,000,000	4,000,000
Pledged asset lines [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	0	4,000,000
Pledged asset lines [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	0	0
Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	180,000,000	176,000,000
Past due and other nonaccrual loans	0	0
Total loans	180,000,000	176,000,000
Allowance for loan losses	2,000,000	2,000,000	$ 1,000,000	$ 0
Total bank loans – net	178,000,000	174,000,000
Other [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	0	0
Other [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	0	0
Other [Member] | >90 Days Past Due And Other Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due and other nonaccrual loans	0	0
First Mortgage And Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unamortized premiums and discounts and direct origination costs	$ 73,000,000	$ 77,000,000
First Mortgage And Home Equity [Member] | California [Member] | Loans Geographic Area [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Concentration risk percentage	47.00%	48.00%

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Bank Loans and Related Allowance for Loan Losses (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total bank loans	$ 16,630	$ 16,504
First Mortgage and Home Equity Loans and Lines of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans pledged as collateral	$ 11,100
HELOC's [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Loan Term	30 years
Financing Receivable, Initial Draw Period	10 years
Financing Receivable, Convert to Amortizing Loans, Period	20 years
Total bank loans	$ 1,505	$ 1,943
Percent of loan balance outstanding, borrowers paid only minimum interest due	51.00%
Adjustable Rate First Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying amount of mortgages	$ 9,400
Percent of loans with interest-only payments	31.00%
Percent of interest only adjustable rate	64.00%
Adjustable Rate First Mortgage [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate interest rate period	3 years
Interest-only reset period	3 years
Adjustable Rate First Mortgage [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed rate interest rate period	10 years
Home Equity Secured By Second Liens [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total bank loans	$ 1,200

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Bank Loans and Related Allowance for Loan Losses (Changes in Allowance for Loan Losses) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of year	$ 26	$ 26	$ 31
Charge-offs	(1)	(3)	(2)
Recoveries	2	3	2
Provision for loan losses	(6)	0	(5)
Balance at end of year	21	26	26
First Mortgage [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of year	16	17	20
Charge-offs	0	(2)	(1)
Recoveries	1	1	1
Provision for loan losses	(3)	0	(3)
Balance at end of year	14	16	17
HELOC's [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of year	8	8	11
Charge-offs	0	(1)	(1)
Recoveries	1	1	1
Provision for loan losses	(4)	0	(3)
Balance at end of year	5	8	8
Other [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of year	2	1	0
Charge-offs	(1)	0	0
Recoveries	0	1	0
Provision for loan losses	1	0	1
Balance at end of year	$ 2	$ 2	$ 1

XML

Bank Loans and Related Allowance for Loan Losses (Impaired Assets) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled debt restructurings	$ 4	$ 11
Impaired bank loan related assets	28	42
Nonperforming Financial Instruments [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total nonperforming assets	24	31
Nonperforming Financial Instruments [Member] | Nonaccrual Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total nonperforming assets	21	28
Nonperforming Financial Instruments [Member] | Other Real Estate Owned [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total nonperforming assets	$ 3	$ 3

XML

Bank Loans and Related Allowance for Loan Losses (Credit Quality Indicators of Bank Loan Portfolio) (Details) $ in Millions	Dec. 31, 2018 USD ($) credit_rating	Dec. 31, 2017 USD ($) credit_rating
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 16,630	$ 16,504
First Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 10,384	$ 10,016
Weighted Average Updated FICO | credit_rating	775	775
Percent of Loans that are on Nonaccrual Status	0.07%	0.14%
First Mortgage [Member] | Origination FICO Score Below 620 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 5	$ 6
First Mortgage [Member] | Origination FICO Score 620 Through 679 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	83	89
First Mortgage [Member] | Origination FICO Score 680 Through 739 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,626	1,569
First Mortgage [Member] | Origination FICO Score 740 And Above [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	8,670	8,352
First Mortgage [Member] | Year of origination Pre 2014 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,979	2,804
First Mortgage [Member] | Year of origination 2014 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	408	530
First Mortgage [Member] | Year of origination 2015 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,050	1,218
First Mortgage [Member] | Year of origination 2016 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	2,606	2,886
First Mortgage [Member] | Year of origination 2017 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	2,366	2,578
First Mortgage [Member] | Year of origination 2018 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,975
First Mortgage [Member] | Estimated Current LTV 70% And Below [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 9,396	$ 9,046
Weighted Average Updated FICO | credit_rating	776	775
Percent of Loans that are on Nonaccrual Status	0.04%	0.09%
First Mortgage [Member] | Estimated Current LTV Greater Than 70% through 90% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 985	$ 961
Weighted Average Updated FICO | credit_rating	769	769
Percent of Loans that are on Nonaccrual Status	0.41%	0.46%
First Mortgage [Member] | Estimated Current LTV Greater Than 90% through 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 2	$ 5
Weighted Average Updated FICO | credit_rating	717	714
Percent of Loans that are on Nonaccrual Status	0.00%	10.49%
First Mortgage [Member] | Estimated Current LTV Greater Than 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 1	$ 4
Weighted Average Updated FICO | credit_rating	753	713
Percent of Loans that are on Nonaccrual Status	0.00%	6.23%
First Mortgage [Member] | Origination Loan To Value Ratio 70% And Below [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 7,815	$ 7,569
First Mortgage [Member] | Origination Loan to Value Ratio Greater Than 70% Through 90% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	2,564	2,441
First Mortgage [Member] | Origination Loan to Value Ratio Greater Than 90% Through 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	5	6
HELOC's [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 1,505	$ 1,943
Weighted Average Updated FICO | credit_rating	769	770
Percent of Loans that are on Nonaccrual Status	0.17%	0.27%
HELOC's [Member] | Origination FICO Score Below 620 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 0	$ 1
HELOC's [Member] | Origination FICO Score 620 Through 679 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	8	10
HELOC's [Member] | Origination FICO Score 680 Through 739 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	282	365
HELOC's [Member] | Origination FICO Score 740 And Above [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,215	1,567
HELOC's [Member] | Year of origination Pre 2014 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	1,051	1,496
HELOC's [Member] | Year of origination 2014 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	89	116
HELOC's [Member] | Year of origination 2015 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	106	128
HELOC's [Member] | Year of origination 2016 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	95	111
HELOC's [Member] | Year of origination 2017 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	99	92
HELOC's [Member] | Year of origination 2018 [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	65
HELOC's [Member] | Estimated Current LTV 70% And Below [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 1,416	$ 1,773
Weighted Average Updated FICO | credit_rating	770	772
Percent of Loans that are on Nonaccrual Status	0.13%	0.18%
HELOC's [Member] | Estimated Current LTV Greater Than 70% through 90% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 80	$ 148
Weighted Average Updated FICO | credit_rating	752	755
Percent of Loans that are on Nonaccrual Status	0.60%	0.84%
HELOC's [Member] | Estimated Current LTV Greater Than 90% through 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 6	$ 14
Weighted Average Updated FICO | credit_rating	729	742
Percent of Loans that are on Nonaccrual Status	3.36%	2.85%
HELOC's [Member] | Estimated Current LTV Greater Than 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 3	$ 8
Weighted Average Updated FICO | credit_rating	702	718
Percent of Loans that are on Nonaccrual Status	0.00%	4.91%
HELOC's [Member] | Origination Loan To Value Ratio 70% And Below [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 1,064	$ 1,360
HELOC's [Member] | Origination Loan to Value Ratio Greater Than 70% Through 90% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	434	574
HELOC's [Member] | Origination Loan to Value Ratio Greater Than 90% Through 100% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	7	9
Pledged asset lines [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	4,561	4,369
Pledged asset lines [Member] | Weighted Average Loan to Value Ratio =70% [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance	$ 4,561	$ 4,369
Weighted Average Updated FICO | credit_rating	766	765
Percent of Loans that are on Nonaccrual Status	0.00%	0.00%

XML

Bank Loans and Related Allowance for Loan Losses (Convert to Amortizing Loans) (Details) - HELOC's [Member] $ in Millions	Dec. 31, 2018 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Converted to amortizing loan by period end	$ 677
Within 1 year	83
1 year – 3 years	118
3 years – 5 years	173
5 years	454
Total	$ 1,505

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Equipment, Office Facilities, and Property (Schedule of Equipment, Office Facilities, and Property) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	$ 3,932	$ 3,551
Accumulated depreciation and amortization	(2,163)	(2,080)
Total equipment, office facilities, and property — net	1,769	1,471
Software [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	1,699	1,490
Buildings [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	945	810
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	367	357
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	248	142
Furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	219	193
Information technology equipment [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	206	326
Land [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	179	167
Telecommunications equipment [Member]
Property, Plant and Equipment [Line Items]
Total equipment, office facilities, and property	$ 69	$ 66

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Equipment, Office Facilities, and Property (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense for equipment, office facilities, and property	$ 277	$ 232	$ 197

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Goodwill (Changes in Carrying Amount of Goodwill as Allocated to Reportable Segments) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Beginning balance	$ 1,227	$ 1,227
Goodwill acquired and other changes during the period	0	0
Ending balance	1,227	1,227
Investor Services [Member]
Goodwill [Roll Forward]
Beginning balance	1,096	1,096
Goodwill acquired and other changes during the period	0	0
Ending balance	1,096	1,096
Advisor Services [Member]
Goodwill [Roll Forward]
Beginning balance	131	131
Goodwill acquired and other changes during the period	0	0
Ending balance	$ 131	$ 131

XML

Goodwill (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment	$ 0	$ 0	$ 0

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Other Assets (Components of Other Assets) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Interest and dividends receivable	$ 586	$ 413
Other investments	428	376
Accounts receivable	410	461
Capitalized contract costs, net	250	0		$ 219
Intangible assets, net of accumulated amortization of $299 and $270	152	108
Prepaid expenses	122	126
FHLB stock	32	405
Deferred tax asset — net	3	76
Other	63	92
Total other assets	2,046	2,057		$ 2,224
Accumulated Amortization	299	270
Indefinite-lived intangible assets	74	1
Future amortization	77
Intangible asset, amortization expense	$ 29	$ 37	$ 37

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Variable Interest Entities (Aggregate Assets, Liabilities and Maximum Exposure to Loss) (Details) - Variable Interest Entity, Not Primary Beneficiary [Member] - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Variable Interest Entity [Line Items]
Aggregate assets	$ 408	$ 373
Aggregate liabilities	188	203
Maximum exposure to loss	462	429
LIHTC Investments [Member]
Variable Interest Entity [Line Items]
Aggregate assets	338	304
Aggregate liabilities	188	203
Maximum exposure to loss	338	304
Other CRA Investments [Member]
Variable Interest Entity [Line Items]
Aggregate assets	70	69
Aggregate liabilities	0	0
Maximum exposure to loss	$ 124	$ 125

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Variable Interest Entities (Narrative) (Details) - LIHTC Investments [Member]	12 Months Ended
	Dec. 31, 2018
Minimum [Member]
Variable Interest Entity [Line Items]
Commitment, expected payment date	2019
Maximum [Member]
Variable Interest Entity [Line Items]
Commitment, expected payment date	2022

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Bank Deposits (Deposits from Banking Clients Consisting of Interest Bearing and Noninterest Bearing Deposits) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Interest-bearing deposits:
Deposits swept from brokerage accounts	$ 212,311	$ 148,212
Checking	12,523	13,388
Savings and other	5,827	7,264
Total interest-bearing deposits	230,661	168,864
Non-interest-bearing deposits	762	792
Total bank deposits	$ 231,423	$ 169,656

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Borrowings (Long-term Debt Including Unamortized Debt Discounts and Premiums) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Senior Notes	$ 6,881	$ 4,731
Unamortized discount — net	(15)	(14)
Debt issuance costs	(40)	(25)
Total long-term debt	$ 6,878	4,753
Lease term	20 years
Senior Notes [Member] | Senior Notes Due March 2018 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	1.50%
Senior Notes	$ 0	625
Senior Notes [Member] | Senior Notes Due July 2018 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	2.20%
Senior Notes	$ 0	275
Senior Notes [Member] | Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	4.45%
Senior Notes	$ 700	700
Senior Notes [Member] | Senior Notes Due 2021 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.25%
Senior Notes	$ 600	0
Senior Notes [Member] | Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.225%
Senior Notes	$ 256	256
Senior Notes [Member] | Senior Notes Due 2023 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	2.65%
Senior Notes	$ 800	800
Senior Notes [Member] | Senior Notes Due 2024 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.55%
Senior Notes	$ 500	0
Senior Notes [Member] | Senior Notes Due March 2025 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.00%
Senior Notes	$ 375	375
Senior Notes [Member] | Senior Notes Due May 2025 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.85%
Senior Notes	$ 750	0
Senior Notes [Member] | Senior Notes Due 2026 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.45%
Senior Notes	$ 350	350
Senior Notes [Member] | Senior Notes Due 2027 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.20%
Senior Notes	$ 650	650
Senior Notes [Member] | Senior Notes Due 2028 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	3.20%
Senior Notes	$ 700	700
Senior Notes [Member] | Senior Notes Due 2029 [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	4.00%
Senior Notes	$ 600	0
Senior Notes [Member] | Floating Rate Senior Notes Due 2021 [Member]
Debt Instrument [Line Items]
Senior Notes	$ 600	0
Senior Notes [Member] | Floating Rate Senior Notes Due 2021 [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread rate	0.032%
Finance lease obligation [Member]
Debt Instrument [Line Items]
Fixed Interest Rate	5.45%
Finance lease obligation	$ 52	$ 61

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Borrowings (Annual Maturities on Long-term Debt Outstanding) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2019	$ 8
2020	709
2021	1,209
2022	266
2023	810
Thereafter	3,931
Total maturities	6,933
Unamortized discount — net	(15)	$ (14)
Debt issuance costs	(40)	(25)
Total long-term debt	$ 6,878	$ 4,753

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Borrowings (Narrative) (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
FHLB stock	$ 32,000,000	$ 405,000,000
Federal Home Loan Bank Advances [Member]
Line of Credit Facility [Line Items]
FHLB stock	32,000,000	405,000,000
Federal Home Loan Bank Advances [Member] | Secured Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity	35,500,000,000	32,300,000,000
Borrowings on line of credit	$ 0	$ 15,000,000,000
Weighted average interest rate		1.53%

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Commitments and Contingencies (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Rent expense	$ 146,000,000	$ 136,000,000	$ 123,000,000
Aggregate face amount of letter of credit agreements	225,000,000
Margin Requirements [Member]
Loss Contingencies [Line Items]
Funds drawn under LOC's	0
First Mortgage [Member]
Loss Contingencies [Line Items]
Loans purchased during period	2,100,000,000	2,800,000,000
Home Equity Line of Credit [Member]
Loss Contingencies [Line Items]
Loans purchased during period	$ 395,000,000	$ 461,000,000

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Commitments and Contingencies (Commitments to Extend/Purchase) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to purchase	$ 11,314	$ 10,368
Home Equity Loans and Lines of Credit, Pledged Asset Lines and Other Lines of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to extend credit related to unused HELOCs, PALs, and other lines of credit	11,046	10,060
First Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to purchase	$ 268	$ 308

XML

Commitments and Contingencies (Future Annual Minimum Rental Commitments, Net of Contractual Subleases) (Details) $ in Millions	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 131
2020	125
2021	101
2022	79
2023	72
Thereafter	282
Total	790
Subleases
2019	4
2020	4
2021	4
2022	2
2023	1
Thereafter	0
Total	15
Net
2019	127
2020	121
2021	97
2022	77
2023	71
Thereafter	282
Total	$ 775

XML

Commitments and Contingencies (Purchase Obligations) (Details) $ in Millions	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 475
2020	232
2021	71
2022	32
2023	22
Thereafter	170
Total	$ 1,002

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Financial Instruments Subject to Off-Balance Sheet Credit Risk (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Securities Financing Transaction, Fair Value [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair value of securities borrowed	$ 99	$ 215

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Financial Instruments Subject to Off-Balance Sheet Credit Risk (Offsetting Assets and Liabilities) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Resale agreements
Gross Assets	$ 7,195	$ 6,596
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts Presented in the Consolidated Balance Sheets	7,195	6,596
Counterparty Offsetting	0	0
Collateral	(7,195)	(6,596)
Net Amount	0	0
Securities borrowed
Gross Assets	101	222
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts Presented in the Consolidated Balance Sheets	101	222
Counterparty Offsetting	(98)	(199)
Collateral	(3)	(22)
Net Amount	0	1
Total Gross Assets	7,296	6,818
Total Assets, Gross Amounts Offset in the Condensed Consolidated Balance Sheets	0	0
Total Assets, Net Amounts Presented in the Condensed Consolidated Balance Sheets	7,296	6,818
Total Assets, Gross Amounts Not Offset in the Consolidated Balance Sheet, Counterparty Offsetting	(98)	(199)
Total Assets, Gross Amounts Not Offset in the Consolidated Balance Sheet, Collateral	(7,198)	(6,618)
Total Assets, Net Amount	0	1
Securities loaned
Gross Liabilities	1,184	966
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts Presented in the Consolidated Balance Sheets	1,184	966
Counterparty Offsetting	(98)	(199)
Collateral	(975)	(670)
Net Amount	111	97
Total Gross Liabilities	1,184	966
Total Liabilities, Net Amounts Presented in the Consolidated Balance Sheet	1,184	966
Total Liabilities, Gross Amounts Not Offset in the Consolidated Balance Sheet, Counterparty Offsetting	(98)	(199)
Total Liabilities, Gross Amounts Not Offset in the Consolidated Balance Sheet, Collateral	(975)	(670)
Total Liabilities, Net Amount	111	97
Offsetting Assets [Line Items]
Fair value of client securities available to be pledged	$ 26,628	$ 25,905
Resale And Repurchase Agreements [Member]
Offsetting Assets [Line Items]
Percentage of collateral to related assets	102.00%	102.00%
Fair value of client securities available to be pledged	$ 7,400	$ 6,700

XML

Financial Instruments Subject to Off-Balance Sheet Credit Risk (Summary of the Fair Value of Client Securities Available to Utilize as Collateral and Amounts Pledged) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Securities Financing Transaction [Line Items]
Fair value of client securities available to be pledged	$ 26,628	$ 25,905
Fair value of client securities pledged	4,581	5,075
Fulfillment of Requirements with the Options Clearing Corporation [Member]
Securities Financing Transaction [Line Items]
Fair value of client securities pledged	2,315	2,280
Fulfillment of Client Short Sales [Member]
Securities Financing Transaction [Line Items]
Fair value of client securities pledged	1,292	2,011
Securities Lending to Other Broker-Dealers [Member]
Securities Financing Transaction [Line Items]
Fair value of client securities pledged	974	784
Fully-Paid Client Securities [Member]
Securities Financing Transaction [Line Items]
Fair value of client securities pledged	$ 97	$ 78

XML

Fair Values of Assets and Liabilities (Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	$ 539	$ 539
Available for sale securities	66,578	49,995
Commercial paper [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	522	313
Certificates of deposit [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	3,685	2,041
Equity and bond mutual funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	441	318
State and municipal debt obligations [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	39	52
Equity, U.S. Government and corporate debt, and other securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	33	34
Schwab Funds money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	26	135
U.S. agency mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	25,556	20,929
U.S. Treasury securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	18,302	9,500
Asset-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	10,085	9,047
Corporate debt securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	7,467	6,169
U.S. agency notes [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	898	1,906
Foreign government agency securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	49	50
Non-agency commercial mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	14	40
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	8,292	2,727
Investments segregated and on deposit for regulatory purposes	4,671	5,856
Other securities owned	539	539
Available for sale securities	66,578	49,995
Total	80,080	59,117
Fair Value, Measurements, Recurring [Member] | Money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	3,429	2,727
Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	4,863
Available for sale securities	522	313
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	1,396	2,198
Available for sale securities	3,685	2,041
Fair Value, Measurements, Recurring [Member] | US Government securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	3,275	3,658
Fair Value, Measurements, Recurring [Member] | Equity and bond mutual funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	441	318
Fair Value, Measurements, Recurring [Member] | State and municipal debt obligations [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	39	52
Fair Value, Measurements, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	33	34
Fair Value, Measurements, Recurring [Member] | Schwab Funds money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	26	135
Fair Value, Measurements, Recurring [Member] | U.S. agency mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	25,556	20,929
Fair Value, Measurements, Recurring [Member] | U.S. Treasury securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	18,302	9,500
Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	10,085	9,047
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	7,467	6,169
Fair Value, Measurements, Recurring [Member] | U.S. agency notes [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	898	1,906
Fair Value, Measurements, Recurring [Member] | Foreign government agency securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	49	50
Fair Value, Measurements, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	14	40
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	3,429	2,727
Investments segregated and on deposit for regulatory purposes	0	0
Other securities owned	470	455
Available for sale securities	0	0
Total	3,899	3,182
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	3,429	2,727
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	0	0
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | US Government securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Equity and bond mutual funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	441	318
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | State and municipal debt obligations [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	3	2
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Schwab Funds money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	26	135
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency notes [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign government agency securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	4,863	0
Investments segregated and on deposit for regulatory purposes	4,671	5,856
Other securities owned	69	84
Available for sale securities	66,578	49,995
Total	76,181	55,935
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	4,863
Available for sale securities	522	313
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	1,396	2,198
Available for sale securities	3,685	2,041
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | US Government securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	3,275	3,658
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Equity and bond mutual funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | State and municipal debt obligations [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	39	52
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	30	32
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Schwab Funds money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	25,556	20,929
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	18,302	9,500
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	10,085	9,047
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	7,467	6,169
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency notes [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	898	1,906
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign government agency securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	49	50
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	14	40
Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Investments segregated and on deposit for regulatory purposes	0	0
Other securities owned	0	0
Available for sale securities	0	0
Total	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	0	0
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | US Government securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Equity and bond mutual funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | State and municipal debt obligations [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Equity, U.S. Government and corporate debt, and other securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Schwab Funds money market funds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | U.S. agency notes [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign government agency securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 0	$ 0

XML

Fair Values of Assets and Liabilities (Fair Value of Other Financial Instruments) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Assets:
Held to maturity securities	$ 142,038	$ 120,373
U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	116,093	100,453
Asset-backed securities [Member]
Assets:
Held to maturity securities	18,546	13,062
Corporate debt securities [Member]
Assets:
Held to maturity securities	4,432	4,086
U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	1,348	1,304
Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	1,142	999
U.S. Treasury securities [Member]
Assets:
Held to maturity securities	217	220
Certificates of deposit [Member]
Assets:
Held to maturity securities	201	200
Foreign government agency securities [Member]
Assets:
Held to maturity securities	49	49
Reported Value Measurement [Member]
Assets:
Cash and cash equivalents	19,646	11,490
Cash and investments segregated and on deposit for regulatory purposes	8,886	9,277
Receivables from brokers, dealers, and clearing organizations	553	649
Receivables from brokerage clients — net	21,641	20,568
Held to maturity securities	144,009	120,926
Bank loans, net	16,609	16,478
Other assets	460	781
Total	211,804	180,169
Liabilities:
Bank deposits	231,423	169,656
Payables to brokers, dealers, and clearing organizations	1,831	1,287
Payables to brokerage clients	32,726	31,243
Accrued expenses and other liabilities	1,370	1,463
Short-term borrowings		15,000
Long-term debt	6,878	4,753
Total	274,228	223,402
Reported Value Measurement [Member] | First Mortgage [Member]
Assets:
Bank loans, net	10,370	10,000
Reported Value Measurement [Member] | HELOC's [Member]
Assets:
Bank loans, net	1,500	1,935
Reported Value Measurement [Member] | Pledged asset lines [Member]
Assets:
Bank loans, net	4,561	4,369
Reported Value Measurement [Member] | Other [Member]
Assets:
Bank loans, net	178	174
Reported Value Measurement [Member] | U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	118,064	101,197
Reported Value Measurement [Member] | Asset-backed securities [Member]
Assets:
Held to maturity securities	18,502	12,937
Reported Value Measurement [Member] | Corporate debt securities [Member]
Assets:
Held to maturity securities	4,477	4,078
Reported Value Measurement [Member] | U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	1,327	1,247
Reported Value Measurement [Member] | Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	1,156	994
Reported Value Measurement [Member] | U.S. Treasury securities [Member]
Assets:
Held to maturity securities	223	223
Reported Value Measurement [Member] | Certificates of deposit [Member]
Assets:
Held to maturity securities	200	200
Reported Value Measurement [Member] | Foreign government agency securities [Member]
Assets:
Held to maturity securities	50	50
Reported Value Measurement [Member] | Other [Member]
Assets:
Held to maturity securities	10
Portion at Other than Fair Value Measurement [Member]
Assets:
Cash and cash equivalents	19,646	11,490
Cash and investments segregated and on deposit for regulatory purposes	8,886	9,277
Receivables from brokers, dealers, and clearing organizations	553	649
Receivables from brokerage clients — net	21,641	20,568
Held to maturity securities	142,038	120,373
Bank loans, net	16,515	16,485
Other assets	460	781
Total	209,739	179,623
Liabilities:
Bank deposits	231,423	169,656
Payables to brokers, dealers, and clearing organizations	1,831	1,287
Payables to brokerage clients	32,726	31,243
Accrued expenses and other liabilities	1,370	1,463
Short-term borrowings		15,000
Long-term debt	6,827	4,811
Total	274,177	223,460
Portion at Other than Fair Value Measurement [Member] | First Mortgage [Member]
Assets:
Bank loans, net	10,193	9,917
Portion at Other than Fair Value Measurement [Member] | HELOC's [Member]
Assets:
Bank loans, net	1,583	2,025
Portion at Other than Fair Value Measurement [Member] | Pledged asset lines [Member]
Assets:
Bank loans, net	4,561	4,369
Portion at Other than Fair Value Measurement [Member] | Other [Member]
Assets:
Bank loans, net	178	174
Portion at Other than Fair Value Measurement [Member] | U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	116,093	100,453
Portion at Other than Fair Value Measurement [Member] | Asset-backed securities [Member]
Assets:
Held to maturity securities	18,546	13,062
Portion at Other than Fair Value Measurement [Member] | Corporate debt securities [Member]
Assets:
Held to maturity securities	4,432	4,086
Portion at Other than Fair Value Measurement [Member] | U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	1,348	1,304
Portion at Other than Fair Value Measurement [Member] | Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	1,142	999
Portion at Other than Fair Value Measurement [Member] | U.S. Treasury securities [Member]
Assets:
Held to maturity securities	217	220
Portion at Other than Fair Value Measurement [Member] | Certificates of deposit [Member]
Assets:
Held to maturity securities	201	200
Portion at Other than Fair Value Measurement [Member] | Foreign government agency securities [Member]
Assets:
Held to maturity securities	49	49
Portion at Other than Fair Value Measurement [Member] | Other [Member]
Assets:
Held to maturity securities	10
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member]
Assets:
Cash and cash equivalents	0	0
Cash and investments segregated and on deposit for regulatory purposes	0	0
Receivables from brokers, dealers, and clearing organizations	0	0
Receivables from brokerage clients — net	0	0
Held to maturity securities	0	0
Bank loans, net	0	0
Other assets	0	0
Total	0	0
Liabilities:
Bank deposits	0	0
Payables to brokers, dealers, and clearing organizations	0	0
Payables to brokerage clients	0	0
Accrued expenses and other liabilities	0	0
Short-term borrowings		0
Long-term debt	0	0
Total	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | First Mortgage [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | HELOC's [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Pledged asset lines [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Other [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Asset-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Corporate debt securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | U.S. Treasury securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Certificates of deposit [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Foreign government agency securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 1 [Member] | Other [Member]
Assets:
Held to maturity securities	0
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member]
Assets:
Cash and cash equivalents	19,646	11,490
Cash and investments segregated and on deposit for regulatory purposes	8,886	9,277
Receivables from brokers, dealers, and clearing organizations	553	649
Receivables from brokerage clients — net	21,641	20,568
Held to maturity securities	142,038	120,373
Bank loans, net	16,515	16,485
Other assets	460	781
Total	209,739	179,623
Liabilities:
Bank deposits	231,423	169,656
Payables to brokers, dealers, and clearing organizations	1,831	1,287
Payables to brokerage clients	32,726	31,243
Accrued expenses and other liabilities	1,370	1,463
Short-term borrowings		15,000
Long-term debt	6,827	4,811
Total	274,177	223,460
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | First Mortgage [Member]
Assets:
Bank loans, net	10,193	9,917
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | HELOC's [Member]
Assets:
Bank loans, net	1,583	2,025
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Pledged asset lines [Member]
Assets:
Bank loans, net	4,561	4,369
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Other [Member]
Assets:
Bank loans, net	178	174
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	116,093	100,453
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Asset-backed securities [Member]
Assets:
Held to maturity securities	18,546	13,062
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Corporate debt securities [Member]
Assets:
Held to maturity securities	4,432	4,086
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	1,348	1,304
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	1,142	999
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | U.S. Treasury securities [Member]
Assets:
Held to maturity securities	217	220
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Certificates of deposit [Member]
Assets:
Held to maturity securities	201	200
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Foreign government agency securities [Member]
Assets:
Held to maturity securities	49	49
Portion at Other than Fair Value Measurement [Member] | Level 2 [Member] | Other [Member]
Assets:
Held to maturity securities	10
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member]
Assets:
Cash and cash equivalents	0	0
Cash and investments segregated and on deposit for regulatory purposes	0	0
Receivables from brokers, dealers, and clearing organizations	0	0
Receivables from brokerage clients — net	0	0
Held to maturity securities	0	0
Bank loans, net	0	0
Other assets	0	0
Total	0	0
Liabilities:
Bank deposits	0	0
Payables to brokers, dealers, and clearing organizations	0	0
Payables to brokerage clients	0	0
Accrued expenses and other liabilities	0	0
Short-term borrowings		0
Long-term debt	0	0
Total	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | First Mortgage [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | HELOC's [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Pledged asset lines [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Other [Member]
Assets:
Bank loans, net	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. agency mortgage-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Asset-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Corporate debt securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. state and municipal securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Non-agency commercial mortgage-backed securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | U.S. Treasury securities [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Certificates of deposit [Member]
Assets:
Held to maturity securities	0	0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Foreign government agency securities [Member]
Assets:
Held to maturity securities	0	$ 0
Portion at Other than Fair Value Measurement [Member] | Level 3 [Member] | Other [Member]
Assets:
Held to maturity securities	$ 0

XML

Stockholders' Equity (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Oct. 25, 2018
Class of Stock [Line Items]
Shares repurchased (in shares)	22,000,000
Shares repurchased	$ 1,000,000,000
Preferred stock, shares authorized (in shares)	9,940,000	9,940,000
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Common Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	0	0	0
Share repurchase, authorized amount				$ 1,000,000,000

XML

Stockholders' Equity (Preferred Stock Issued and Outstanding) (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Class of Stock [Line Items]
Shares issued (in shares)	1,761,000	1,761,000
Shares outstanding (in shares)	1,761,000	1,761,000
Carrying Value	$ 2,793	$ 2,793
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	600,000	600,000
Shares outstanding (in shares)	600,000	600,000
Liquidation preference (USD per share)	$ 1,000
Carrying Value	$ 585	$ 585
Dividend Rate in Effect	6.00%
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	750,000	750,000
Shares outstanding (in shares)	750,000	750,000
Liquidation preference (USD per share)	$ 1,000
Carrying Value	$ 728	$ 728
Dividend Rate in Effect	5.95%
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	400,000	400,000
Shares outstanding (in shares)	400,000	400,000
Liquidation preference (USD per share)	$ 1,000
Carrying Value	$ 397	$ 397
Dividend Rate in Effect	7.00%
Series A Preferred Stock [Member] | LIBOR [Member]
Class of Stock [Line Items]
Floating Annual Rate	4.82%
Series E Preferred Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	6,000	6,000
Shares outstanding (in shares)	6,000	6,000
Liquidation preference (USD per share)	$ 100,000
Carrying Value	$ 591	$ 591
Dividend Rate in Effect	4.625%
Series E Preferred Stock [Member] | LIBOR [Member]
Class of Stock [Line Items]
Floating Annual Rate	3.315%
Series F Preferred Stock [Member]
Class of Stock [Line Items]
Shares issued (in shares)	5,000	5,000
Shares outstanding (in shares)	5,000	5,000
Liquidation preference (USD per share)	$ 100,000
Carrying Value	$ 492	$ 492
Dividend Rate in Effect	5.00%
Series F Preferred Stock [Member] | LIBOR [Member]
Class of Stock [Line Items]
Floating Annual Rate	2.575%

XML

Accumulated Other Comprehensive Income (Components of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Other comprehensive income (loss) before tax
Net unrealized gain (loss)	$ (123)	$ 13	$ (44)
Reclassification of net unrealized loss transferred to held to maturity	0	227	0
Other reclassifications included in other revenue	0	(12)	(4)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss transferred from available for sale	0	(227)	0
Amortization of amounts previously recorded upon transfer from available for sale	35	31	0
Other	(1)	(11)	1
Other comprehensive income (loss), before tax	(89)	21	(47)
Tax effect
Net unrealized gain (loss)	30	(7)	16
Reclassification of net unrealized loss on securities transferred to held to maturity	0	(85)	0
Other reclassifications included in other revenue	0	4	2
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale (1)	0	85	0
Amortization of amounts previously recorded upon transfer from available for sale	(8)	(11)	0
Other	0	4	0
Other comprehensive income (loss)	22	(10)	18
Net of tax
Net unrealized gain (loss)	(93)	6	(28)
Reclassification of net unrealized loss on securities transferred to held to maturity	0	142	0
Other reclassifications included in other revenue	0	(8)	(2)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale	0	(142)	0
Amortization of amounts previously recorded upon transfer from available for sale	27	20	0
Other	(1)	(7)	1
Other comprehensive income (loss), net of tax	$ (67)	$ 11	$ (29)

XML

Accumulated Other Comprehensive Income (Accumulated Other Comprehensive Income Balances) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income
Beginning Balance	$ (152)	$ (163)	$ (134)
Other net changes	(67)	11	(29)
Ending Balance	(252)	(152)	(163)
Net unrealized gain (loss) on available for sale securities [Member]
Accumulated Other Comprehensive Income
Other net changes	(93)	6	(30)
Other [Member]
Accumulated Other Comprehensive Income
Other net changes	(1)	(7)	$ 1
Adoption of New Accounting Standards [Member] | ASU 2018-02 [Member]
Accumulated Other Comprehensive Income
Other net changes	(33)
Reclassification of net unrealized loss on securities transferred to held to maturity [Member]
Accumulated Other Comprehensive Income
Other net changes		142
Other Reclassifications Included In Other Revenue [Member]
Accumulated Other Comprehensive Income
Other net changes		(8)
Reclassification of net unrealized loss on securities transferred from available for sale [Member]
Accumulated Other Comprehensive Income
Other net changes		(142)
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale [Member]
Accumulated Other Comprehensive Income
Other net changes	$ 27	$ 20

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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Stock-Based Compensation Expense and Related Income Tax Benefit) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 197	$ 153	[1]	$ 141	[1]
Income tax benefit on share-based compensation expense	(47)	(57)		(53)
Income tax benefit	(1,055)	(1,296)		(1,104)
Accounting Standards Update 2016-09 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income tax benefit	46	87
Stock option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	51	50		45
Restricted stock unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	136	94		89
Restricted stock unit [Member] | Non-Officer Employee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	36
Employee stock purchase plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 10	$ 9		$ 7

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

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Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Employee Incentive Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized to be granted under the existing stock incentive plan (in shares)	68,000,000
Total unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units	$ 294
Stock option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units	1 year 9 months 24 days
Restricted stock unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units	2 years 4 months 24 days
Total fair value of restricted stock awards vested	$ 166	$ 127	$ 105
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining weighted-average period for unrecognized compensation cost, net of forfeitures, related to outstanding stock options, restricted stock awards, and restricted stock units	3 months 18 days
Employee stock purchase plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance under the ESPP (in shares)	36,000,000
Minimum [Member] | Restricted stock unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Minimum [Member] | Stock option plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Maximum [Member] | Restricted stock unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Maximum [Member] | Stock option plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period from the date of grant in which stock options expire	10 years
Award vesting period	4 years

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Number of Options
Beginning balance (in shares)	32,000
Granted (in shares)	4,000
Exercised (in shares)	(6,000)
Forfeited (in shares), less than	500
Expired (in shares), less than	500
Ending balance (in shares)	30,000	32,000
Vested and expected to vest (in shares)	30,000
Vested and exercisable (in shares)	19,000
Weighted- Average Exercise Price per Share
Beginning balance (USD per share)	$ 26.16
Granted (USD per share)	47.98
Exercised (USD per share)	21.65
Forfeited (USD per share)	36.05
Expired (USD per share)	19.05
Ending balance (USD per share)	30.19	$ 26.16
Vested and expected to vest (USD per share)	30.05
Vested and exercisable (USD per share)	$ 23.70
Weighted-Average Remaining Contractual Life
Outstanding	6 years 3 months 7 days	6 years 4 months 17 days
Vested and expected to vest	6 years 2 months 26 days
Vested and exercisable	4 years 10 months 9 days
Aggregate Intrinsic Value
Outstanding	$ 373	$ 814
Vested and expected to vest	373
Vested and exercisable	$ 331

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Information on Stock Options Granted and Exercised) (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Retirement Benefits [Abstract]
Weighted-average fair value of options granted per share (USD per share)	$ 14.16	$ 13.04		$ 8.73
Cash received from options exercised	$ 125	$ 171	[1]	$ 144	[1]
Tax benefit realized on options exercised	35	70		38
Aggregate intrinsic value of options exercised	$ 189	$ 241		$ 149

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Assumptions Used to Value Options Granted and Their Expected Lives) (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average expected dividend yield	1.42%	1.06%	1.22%
Weighted-average expected volatility	33.00%	34.00%	30.00%
Weighted-average risk-free interest rate	3.00%	2.10%	1.80%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	4 years	4 years 1 month 6 days	4 years 8 months 12 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	5 years 2 months 11 days	5 years 3 months 18 days	7 years 3 months 18 days

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Restricted Stock Units Activity) (Details) - Restricted stock unit [Member] shares in Thousands	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Number of Units
Outstanding Beginning Balance (in shares) | shares	7,000
Granted (in shares) | shares	3,000
Vested (in shares) | shares	(3,000)
Forfeited (in shares), less than | shares	500
Outstanding Ending Balance (in shares) | shares	7,000
Weighted- Average Grant Date Fair Value per Unit
Outstanding Beginning Balance (USD per share) | $ / shares	$ 35.16
Granted (USD per share) | $ / shares	47.03
Vested (USD per share) | $ / shares	35.95
Forfeited (USD per share) | $ / shares	36.10
Outstanding Ending Balance (USD per share) | $ / shares	$ 40.64
Non-Officer Employee [Member]
Number of Units
Granted (in shares) | shares	781
Weighted- Average Grant Date Fair Value per Unit
Granted (USD per share) | $ / shares	$ 45.87

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Retirement and Deferred Compensation Plans Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Retirement Benefits [Abstract]
Company's total contribution expense	$ 105	$ 92	$ 83
Deferred compensation liability	$ 144	$ 160

XML

Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans (Schedule of Changes in Projected Benefit Obligations) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Projected benefit obligation at beginning of year	$ 44	$ 26
Benefit cost	11	9
Actuarial (gain)/loss	1	9
Projected benefit obligation at the end of year	$ 56	$ 44

XML

Taxes on Income (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Effective tax rate		23.10%	35.50%	36.90%
Remeasurement of net deferred tax assets	$ 46
Capitalized contract cost	0	$ 250	$ 0		$ 219
Deferred tax liability		1
Unrecognized tax benefits	111	112	111	$ 93
Unrecognized tax benefits that, if recognized, would affect the annual effective tax rate	104	108	104
Unrecognized tax benefits, interest and penalties accrued	$ 5	9	$ 5
ASU 2018-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in retained earnings					33
Accounting Standards Update 2014-09 and 2018-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Capitalized contract cost					219
Deferred tax liability		$ 60			$ 52

XML

Taxes on Income (Income Tax Expense) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Current:
Federal	$ 847	$ 1,132		$ 980
State	159	106		109
Total current	1,006	1,238		1,089
Deferred:
Federal	42	58		13
State	7	0		2
Total deferred	49	58	[1]	15	[1]
Taxes on income	$ 1,055	$ 1,296		$ 1,104

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

XML

Taxes on Income (Temporary Differences That Created Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Employee compensation, severance, and benefits	$ 132	$ 133
Net unrealized loss on available for sale securities	79	57
Reserves and allowances	13	15
Facilities lease commitments	12	14
State and local taxes	21	12
Net operating loss carryforwards	5	5
Other	6	3
Total deferred tax assets	268	239
Valuation allowance	(3)	(2)
Deferred tax assets — net of valuation allowance	265	237
Deferred tax liabilities:
Capitalized internal-use software development costs	(98)	(89)
Depreciation and amortization	(108)	(72)
Capitalized contract costs	(60)	0
Total deferred tax liabilities	(266)	(161)
Deferred tax asset/(liability) — net	(1)
Deferred tax asset/(liability) — net	$ 3	$ 76

XML

Taxes on Income (Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate) (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Federal statutory income tax rate	21.00%	35.00%	35.00%
State income taxes, net of federal tax benefit	3.00%	2.20%	2.40%
Equity compensation benefit	(1.00%)	(2.40%)	(0.00%)
Other	0.10%	0.70%	(0.50%)
Effective income tax rate	23.10%	35.50%	36.90%

XML

Taxes on Income (Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 111	$ 93
Additions for tax positions related to the current year	3	22
Additions for tax positions related to prior years	3	15
Reductions for tax positions related to prior years	(4)	(2)
Reductions due to lapse of statute of limitations	0	0
Reductions for settlements with tax authorities	(1)	(17)
Balance at end of year	$ 112	$ 111

XML

Regulatory Requirements (Regulatory Capital and Ratios) (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
CSC [Member]
Common Equity Tier 1 Risk-Based Capital
Actual Amount	$ 16,813	$ 14,630
Actual Ratio	17.60%	19.30%
Minimum Capital Requirement	$ 4,295	$ 3,414
Minimum Capital Requirement Ratio	4.50%	4.50%
Tier 1 Risk-Based Capital
Actual Amount	$ 19,606	$ 17,423
Actual Ratio	20.50%	23.00%
Minimum Capital Requirement Amount	$ 5,726	$ 4,552
Minimum Capital Requirement Ratio	6.00%	6.00%
Total Risk-Based Capital
Actual Amount	$ 19,628	$ 17,452
Actual Ratio	20.60%	23.00%
Minimum Capital Requirement Amount	$ 7,635	$ 6,069
Minimum Capital Requirement Ratio	8.00%	8.00%
Tier 1 Leverage
Actual Amount	$ 19,606	$ 17,423
Actual Ratio	7.10%	7.60%
Minimum Capital Requirement Amount	$ 11,058	$ 9,218
Minimum Capital Requirement Ratio	4.00%	4.00%
CSB [Member]
Common Equity Tier 1 Risk-Based Capital
Actual Amount	$ 15,832	$ 13,355
Actual Ratio	19.70%	20.10%
Minimum to be Well Capitalized	$ 5,233	$ 4,324
Minimum to be Well Capitalized Ratio	6.50%	6.50%
Minimum Capital Requirement	$ 3,623	$ 2,993
Minimum Capital Requirement Ratio	4.50%	4.50%
Tier 1 Risk-Based Capital
Actual Amount	$ 15,832	$ 13,355
Actual Ratio	19.70%	20.10%
Minimum to be Well Capitalized Amount	$ 6,441	$ 5,321
Minimum to be Well Capitalized Ratio	8.00%	8.00%
Minimum Capital Requirement Amount	$ 4,831	$ 3,991
Minimum Capital Requirement Ratio	6.00%	6.00%
Total Risk-Based Capital
Actual Amount	$ 15,853	$ 13,382
Actual Ratio	19.70%	20.10%
Minimum to be Well Capitalized Amount	$ 8,051	$ 6,652
Minimum to be Well Capitalized Ratio	10.00%	10.00%
Minimum Capital Requirement Amount	$ 6,441	$ 5,321
Minimum Capital Requirement Ratio	8.00%	8.00%
Tier 1 Leverage
Actual Amount	$ 15,832	$ 13,355
Actual Ratio	7.20%	7.10%
Minimum to be Well Capitalized Amount	$ 11,044	$ 9,462
Minimum to be Well Capitalized Ratio	5.00%	5.00%
Minimum Capital Requirement Amount	$ 8,836	$ 7,569
Minimum Capital Requirement Ratio	4.00%	4.00%

XML

Regulatory Requirements (Narrative) (Details) - USD ($) $ in Millions	Jan. 03, 2019	Dec. 31, 2018	Jan. 03, 2018	Dec. 31, 2017
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Schwab Bank's average reserve requirement		$ 1,600		$ 1,600
Total assets		296,482		243,274
Cash and investments required to be segregated and on deposit for regulatory purposes		16,700		$ 15,300
Reserve Deposit [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Net amount of segregated cash deposited into segregated reserve bank accounts			$ 704
Reserve Deposit [Member] | Subsequent Event [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Net amount of segregated cash deposited into segregated reserve bank accounts	$ 3,700
CSSB [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total assets		$ 15,200

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Regulatory Requirements (Net Capital and Net Capital Requirements for CS&Co) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Banking and Thrift [Abstract]
Net capital	$ 2,304,000	$ 2,118,000
Minimum net capital required	250	250
2% of Aggregate Debit Balances	436,000	435,000
Net capital in excess of required net capital	$ 1,868,000	$ 1,683,000

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Segment Information (Narrative) (Details)	12 Months Ended
	Dec. 31, 2018 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information (Financial Information for Reportable Segments) (Details) - USD ($) $ in Millions		3 Months Ended								12 Months Ended
		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Net Revenues
Net interest revenue										$ 5,823	$ 4,282		$ 3,322
Other										317	290		276
Total net revenues		$ 2,669	$ 2,579	$ 2,486	$ 2,398	$ 2,242	$ 2,165	$ 2,130	$ 2,081	10,132	8,618		7,478
Total Expenses Excluding Interest		$ 1,459	$ 1,360	$ 1,355	$ 1,396	$ 1,289	$ 1,220	$ 1,221	$ 1,238	5,570	4,968		4,485
Income before taxes on income										4,562	3,650		2,993
Capital expenditures										576	412		353
Depreciation and amortization										306	269	[1]	234	[1]
Investor Services [Member]
Net Revenues
Net interest revenue										4,341	3,231		2,591
Other										245	217		203
Total net revenues										7,321	6,200		5,411
Total Expenses Excluding Interest										4,145	3,725		3,380
Income before taxes on income										3,176	2,475		2,031
Capital expenditures										390	265		234
Depreciation and amortization										186	203		180
Advisor Services [Member]
Net Revenues
Net interest revenue										1,482	1,051		731
Other										72	73		73
Total net revenues										2,811	2,418		2,067
Total Expenses Excluding Interest										1,425	1,243		1,105
Income before taxes on income										1,386	1,175		962
Capital expenditures										186	147		119
Depreciation and amortization										120	66		54
Asset Management and administration fees [Member]
Net Revenues
Asset management and administration fees and Trading revenue	[2]									3,229	3,392		3,055
Asset Management and administration fees [Member] | Investor Services [Member]
Net Revenues
Asset management and administration fees and Trading revenue										2,260	2,344		2,093
Asset Management and administration fees [Member] | Advisor Services [Member]
Net Revenues
Asset management and administration fees and Trading revenue										969	1,048		962
Trading revenue [Member]
Net Revenues
Asset management and administration fees and Trading revenue										763	654		825
Trading revenue [Member] | Investor Services [Member]
Net Revenues
Asset management and administration fees and Trading revenue										475	408		524
Trading revenue [Member] | Advisor Services [Member]
Net Revenues
Asset management and administration fees and Trading revenue										$ 288	$ 246		$ 301

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Includes fee waivers of $0, $10 million, and $224 million during the years ended December 31, 2018, 2017, and 2016, respectively, relating to Schwab-sponsored money market funds.

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The Charles Schwab Corporation – Parent Company Only Financial Statements (Condensed Statements of Income) (Details) - USD ($) $ in Millions		3 Months Ended								12 Months Ended
		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Condensed Income Statements, Captions [Line Items]
Interest revenue										$ 6,680	$ 4,624		$ 3,493
Interest expense										(857)	(342)		(171)
Net interest revenue										5,823	4,282		3,322
Other										317	290		276
Expenses excluding interest		$ (1,459)	$ (1,360)	$ (1,355)	$ (1,396)	$ (1,289)	$ (1,220)	$ (1,221)	$ (1,238)	(5,570)	(4,968)		(4,485)
Income tax benefit										(1,055)	(1,296)		(1,104)
Equity in net income of subsidiaries:
Net Income		935	923	866	783	597	618	575	564	3,507	2,354	[1]	1,889	[1]
Preferred stock dividends and other	[2]									178	174		143
Net Income Available to Common Stockholders		$ 885	$ 885	$ 813	$ 746	$ 550	$ 575	$ 530	$ 525	3,329	2,180		1,746
Parent Company [Member]
Condensed Income Statements, Captions [Line Items]
Interest revenue										88	33		22
Interest expense										(184)	(114)		(100)
Net interest revenue										(96)	(81)		(78)
Other										1	3		1
Expenses excluding interest										(85)	(32)		(21)
Loss before income tax benefit and equity in net income of subsidiaries										(180)	(110)		(98)
Income tax benefit										20	27		34
Loss before equity in net income of subsidiaries										(160)	(83)		(64)
Equity in net income of subsidiaries:
Equity in undistributed net income of subsidiaries										2,590	1,479		1,690
Dividends from bank subsidiaries										750	625		0
Dividends from non-bank subsidiaries										327	333		263
Net Income										3,507	2,354		1,889
Preferred stock dividends and other										178	174		143
Net Income Available to Common Stockholders										$ 3,329	$ 2,180		$ 1,746

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

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The Charles Schwab Corporation – Parent Company Only Financial Statements (Condensed Balance Sheets) (Details) - USD ($) $ in Millions		Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015
Assets
Cash and cash equivalents	[1]	$ 27,938		$ 14,217	[2]	$ 10,828	[2]
Available for sale securities		66,578		49,995
Held to maturity securities		144,009		120,926
Other securities owned — at fair value		539		539
Other assets		2,046	$ 2,224	2,057
Total assets		296,482		243,274
Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities		2,954		2,810
Long-term debt		6,878		4,753
Total liabilities		275,812		224,749
Stockholders’ equity		20,670		18,525		16,421		$ 13,402
Total liabilities and stockholders’ equity		296,482		243,274
Parent Company [Member]
Assets
Cash and cash equivalents		2,092		2,825		$ 1,189		$ 1,007
Receivables from subsidiaries		784		571
Available for sale securities		1,754		573
Held to maturity securities		223		223
Other securities owned — at fair value		109		76
Loans to non-bank subsidiaries		185		448
Investment in non-bank subsidiaries		5,507		5,393
Investment in bank subsidiaries		16,995		13,224
Other assets		228		160
Total assets		27,877		23,493
Liabilities and Stockholders’ Equity
Accrued expenses and other liabilities		379		276
Payables to subsidiaries		2		0
Long-term debt		6,826		4,692
Total liabilities		7,207		4,968
Stockholders’ equity		20,670		18,525
Total liabilities and stockholders’ equity		$ 27,877		$ 23,493

[1] Reconciliation of cash, cash equivalents and amounts reported within the balance sheet

[2] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

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The Charles Schwab Corporation – Parent Company Only Financial Statements (Condensed Statements of Cash Flows) (Details) - USD ($) $ in Millions		3 Months Ended									12 Months Ended
		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017		Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Cash Flows from Operating Activities
Net income		$ 935	$ 923	$ 866	$ 783	$ 597		$ 618	$ 575	$ 564	$ 3,507	$ 2,354	[1]	$ 1,889	[1]
Adjustments to reconcile net income to net cash provided by operating activities:
Other											137	51	[1]	4	[1]
Net change in:
Other securities owned											0	(90)	[1]	84	[1]
Other assets											(104)	(177)	[1]	(93)	[1]
Accrued expenses and other liabilities											40	421	[1]	167	[1]
Net cash provided by (used for) operating activities											12,456	(839)	[1]	3,603	[1]
Cash Flows from Investing Activities
Purchases of available for sale securities											(32,801)	(15,033)	[1]	(29,248)	[1]
Proceeds from sales of available for sale securities											115	8,617	[1]	5,537	[1]
Principal payments on available for sale securities											16,016	9,095	[1]	11,903	[1]
Other investing activities											(96)	(59)	[1]	(39)	[1]
Net cash provided by (used for) investing activities											(40,555)	(20,473)	[1]	(38,775)	[1]
Cash Flows from Financing Activities
Issuance of long-term debt											3,024	2,129	[1]	0	[1]
Repayment of long-term debt											(909)	(257)	[1]	(7)	[1]
Repurchases of common stock											(1,000)	0	[1]	0	[1]
Net proceeds from preferred stock offerings											0	492	[1]	1,316	[1]
Redemption of preferred stock											0	(485)	[1]	0	[1]
Dividends paid											(787)	(592)	[1]	(486)	[1]
Proceeds from stock options exercised											125	171	[1]	144	[1]
Other financing activities											(54)	(45)	[1]	44	[1]
Net cash provided by (used for) financing activities											47,166	22,599	[1]	34,963	[1]
Cash and Cash Equivalents at Beginning of Year	[1],[2]				14,217					10,828	14,217	10,828
Cash and Cash Equivalents at End of Year	[2]	27,938				14,217	[1]				27,938	14,217	[1]	10,828	[1]
Parent Company [Member]
Cash Flows from Operating Activities
Net income											3,507	2,354		1,889
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries											(2,590)	(1,479)		(1,690)
Other											13	5		(37)
Net change in:
Other securities owned											(33)	(1)		(10)
Other assets											28	(26)		(27)
Accrued expenses and other liabilities											28	44		30
Net cash provided by (used for) operating activities											953	897		155
Cash Flows from Investing Activities
Due from (to) subsidiaries — net											408	(374)		95
Increase in investments in subsidiaries											(1,188)	(342)		(1,547)
Repayments (Advances) of subordinated loan to CS&Co											(185)	0		465
Purchases of available for sale securities											(1,751)	(201)		(2)
Proceeds from sales of available for sale securities											0	197		2
Principal payments on available for sale securities											573	0		0
Other investing activities											(5)	(6)		(4)
Net cash provided by (used for) investing activities											(2,148)	(726)		(991)
Cash Flows from Financing Activities
Issuance of long-term debt											3,024	2,129		0
Repayment of long-term debt											(900)	(250)		0
Repurchases of common stock											(1,000)	0		0
Net proceeds from preferred stock offerings											0	492		1,316
Redemption of preferred stock											0	(485)		0
Dividends paid											(787)	(592)		(486)
Proceeds from stock options exercised											125	171		144
Other financing activities											0	0		44
Net cash provided by (used for) financing activities											462	1,465		1,018
Increase (Decrease) in Cash and Cash Equivalents											(733)	1,636		182
Cash and Cash Equivalents at Beginning of Year					$ 2,825					$ 1,189	2,825	1,189		1,007
Cash and Cash Equivalents at End of Year		$ 2,092				$ 2,825					$ 2,092	$ 2,825		$ 1,189

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Reconciliation of cash, cash equivalents and amounts reported within the balance sheet

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Quarterly Financial Information (Unaudited) (Schedule of Quarterly Financial Information) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Total Net Revenues	$ 2,669	$ 2,579	$ 2,486	$ 2,398	$ 2,242	$ 2,165	$ 2,130	$ 2,081	$ 10,132		$ 8,618		$ 7,478
Total Expenses Excluding Interest	1,459	1,360	1,355	1,396	1,289	1,220	1,221	1,238	5,570		4,968		4,485
Net Income	935	923	866	783	597	618	575	564	3,507		2,354	[1]	1,889	[1]
Net Income Available to Common Stockholders	$ 885	$ 885	$ 813	$ 746	$ 550	$ 575	$ 530	$ 525	$ 3,329		$ 2,180		$ 1,746
Weighted Average Common Shares Outstanding - Basic (in shares)	1,343,000	1,351,000	1,350,000	1,347,000	1,343,000	1,339,000	1,338,000	1,336,000	1,348,000		1,339,000		1,324,000
Weighted Average Common Shares Outstanding - Diluted (in shares)	1,354,000	1,364,000	1,364,000	1,362,000	1,358,000	1,353,000	1,351,000	1,351,000	1,361,000	[2]	1,353,250	[2]	1,334,000	[2]
Basic (USD per share)	$ 0.66	$ 0.66	$ 0.60	$ 0.55	$ 0.41	$ 0.43	$ 0.40	$ 0.39	$ 2.47		$ 1.63		$ 1.32
Diluted (USD per share)	0.65	0.65	0.60	0.55	0.41	0.42	0.39	0.39	2.45		1.61		1.31
Dividends Declared Per Common Share (USD per share)	$ 0.13	$ 0.13	$ 0.1	$ 0.1	$ 0.08	$ 0.08	$ 0.08	$ 0.08	$ 0.46		$ 0.32		$ 0.27

[1] Adjusted for the retrospective adoption of ASU 2016-18. See Note 2.

[2] Antidilutive stock options and restricted stock units excluded from the calculation of diluted EPS totaled 18 million, 15 million, and 26 million shares in 2018, 2017, and 2016, respectively.

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Subsequent Event (Details) - USD ($)		3 Months Ended								12 Months Ended
	Jan. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Oct. 25, 2018
Subsequent Event [Line Items]
Dividends Declared Per Common Share (USD per share)		$ 0.13	$ 0.13	$ 0.1	$ 0.1	$ 0.08	$ 0.08	$ 0.08	$ 0.08	$ 0.46	$ 0.32	$ 0.27
Common Stock [Member]
Subsequent Event [Line Items]
Share repurchase, authorized amount													$ 1,000,000,000
Common Stock [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Share repurchase, authorized amount	$ 4,000,000,000.0
Cash dividends increase (USD per share)	$ 0.04
Cash percent dividends increase	31.00%
Dividends Declared Per Common Share (USD per share)	$ 0.17