CSC engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth

management, securities brokerage, banking, asset management, custody, and financial advisory
services. At December 31, 2022, Schwab had $7.05 trillion in client assets, 33.8 million active brokerage
accounts, 2.4 million corporate retirement plan participants, and 1.7 million banking accounts.

Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer;

TD Ameritrade, Inc., an introducing securities broker-dealer; •

TD Ameritrade Clearing, Inc. (TDAC), a securities broker-dealer that provides trade execution and
clearing services to TD Ameritrade, Inc.; •

Charles Schwab Bank, SSB (CSB), our principal banking entity; 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™).

Investor Services Segment

Business Units:

Retail Investor:
Workplace Financial Services
Mutual Fund Clearing Services
Off-Platform Sales

Investor Services: provides retail brokerage, investment advisory, and banking and trust services to
individual investors, and retirement plan services, as well as other corporate brokerage services, to
businesses and their employees.

Advisor Servcies: Provides custodial, trading, banking and trust, 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.

Schwab Wealth Advisory™

We also offer referrals to an independent RIA in the Schwab Advisor Network® .

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.
Through our acquisition of Wasmer Schroeder in 2020, more than 20 fixed income strategies and
separately managed account offerings have been made available to retail clients beginning in 2021,
including two positive impact strategies and a multi-sector income strategy

Sources of Revenues: Schwab’s largest sources of net revenues are net interest revenue, asset
management and administration fees, trading revenue, and bank deposit account fees. These revenue
streams are supported by the combination of our 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 seeking.

Net interest revenue is the difference between interest generated on interest-earning assets and
interest paid on funding sources. Schwab’s primary funding source for interest-earning assets is
uninvested client cash balances held on our balance sheet as part of clients’ overall relationship with the
Company. Schwab’s interest-earning assets are primarily comprised of high-quality fixed income
securities, margin loans, and bank loans.

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

primarily includes

unrealized gains and losses on available for sale (AFS) securities.

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 advice solutions at the end of the reporting
period.

Bank deposit account balances (BDA balances): Clients’ uninvested cash balances held off-balance sheet
in deposit accounts

at unconsolidated third-party financial institutions, pursuant to the IDA agreement and agreements with
other third-party

financial institutions. Average BDA balances represent the daily average balance for the reporting
period.

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 1/100th 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,
BDA balances, and proprietary products, which includes both cash and securities. Average client assets
are the daily average client asset balance for the reporting period.

Client cash as a percentage of client assets: Calculated as the value, at the end of the reporting period,
of all money market fund balances, bank deposits, Schwab One® balances, BDA balances, and certain
cash equivalents divided by client assets.

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.

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 Trades (DATs): Includes daily average revenue trades by clients, trades by clients in asset-
based pricing relationships, and all commission-free trades.

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 Act): 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.

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.

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)

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High Quality Liquid Assets (HQLA): HQLA is defined by the Federal Reserve, but includes assets that are
actively traded and

readily convertible to cash in times of stress.

Insured Deposit Account (IDA) Agreement: The IDA agreement with the TD Depository Institutions.

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

Interest-earning assets: Primarily includes cash and cash equivalents, cash and investments segregated,
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
“Baa3” 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: Money borrowed against the value of certain stocks, bonds, and mutual funds in a client
portfolio. The borrowed

money can be used to purchase additional securities or to meet short-term financial needs.

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): The ratio of the amount of available stable funding relative to the
amount of required stable

funding.

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: Payments received from trade execution venues to which our broker-dealer
subsidiaries send equity and

option orders.

Pledged Asset Line®

(PAL): A non-purpose revolving line of credit from a banking subsidiary 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.

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 period.

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)

- 28 -

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.

Broker Dealer

Bank

Trust

Custody

Commissions

Defined Benefits

Defined Contribution

Financial Processes (RTR, PTP,