10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

Commission File Number: 1-9700

THE CHARLES SCHWAB CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-3025021
(State or other jurisdiction of incorporation or organization)	(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

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

1,274,106,165 shares of $.01 par value Common Stock

Outstanding on July 24, 2012

THE CHARLES SCHWAB CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2012

Index

		Page
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited):
	Statements of Income		1
	Statements of Comprehensive Income		2
	Balance Sheets		3
	Statements of Cash Flows		4
	Notes		5 – 23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24 – 47
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48 – 49
Item 4.	Controls and Procedures		49
Part II - Other Information
Item 1.	Legal Proceedings		50
Item 1A.	Risk Factors		50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 3.	Defaults Upon Senior Securities		50
Item 4.	Mine Safety Disclosures		51
Item 5.	Other Information		51
Item 6.	Exhibits		52
Signature			53

Part I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net Revenues
Asset management and administration fees	$	496		$	502		$	980		$	1,004
Interest revenue		497			496			969			977
Interest expense		(39	)		(45	)		(77	)		(90	)
Net interest revenue		458			451			892			887
Trading revenue		219			205			462			446
Other		121			35			167			74
Provision for loan losses		(4	)		(1	)		(4	)		(5	)
Net impairment losses on securities (1)		(7	)		(2	)		(25	)		(9	)
Total net revenues		1,283			1,190			2,472			2,397
Expenses Excluding Interest
Compensation and benefits		446			430			911			867
Professional services		93			92			189			184
Occupancy and equipment		80			73			156			144
Advertising and market development		57			51			124			111
Communications		55			54			113			110
Depreciation and amortization		48			33			96			68
Class action litigation and regulatory reserve		—			7			—			7
Other		72			64			138			126
Total expenses excluding interest		851			804			1,727			1,617
Income before taxes on income		432			386			745			780
Taxes on income		157			148			275			299
Net Income		275			238			470			481
Preferred stock dividends		14			—			14			—
Net Income Available to Common Stockholders	$	261		$	238		$	456		$	481
Weighted-Average Common Shares Outstanding — Diluted		1,274			1,210			1,273			1,208
Earnings Per Common Share — Basic	$	.20		$	.20		$	.36		$	.40
Earnings Per Common Share — Diluted	$	.20		$	.20		$	.36		$	.40

⁽¹⁾  Net impairment losses on securities include total other-than-temporary impairment losses of $12 million and $11 million, net of $5 million and $9 million recognized in other comprehensive income, for the three months ended June 30, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $14 million and $11 million, net of $(11) million and $2 million recognized in other comprehensive income, for the six months ended June 30, 2012 and 2011, respectively.

See Notes to Condensed Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net Income	$	275		$	238		$	470		$	481
Other comprehensive income:
Change in net unrealized gain on securities available for sale:
Net unrealized gain		119			16			208			37
Reclassification of impairment charges included in earnings		7			2			25			9
Other reclassifications included in earnings		(1	)		1			(1	)		1
Income tax effect		(47	)		(8	)		(86	)		(18	)
Total other comprehensive income		78			11			146			29
Comprehensive Income	$	353		$	249		$	616		$	510

See Notes to Condensed Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Balance Sheets

(In millions, except per share and share amounts)

(Unaudited)

	June 30, 2012			December 31, 2011
Assets
Cash and cash equivalents	$	8,089		$	8,679
Cash and investments segregated and on deposit for regulatory purposes (including resale agreements of $15,300 at June 30, 2012 and $17,899 at December 31, 2011)		22,723			26,034
Receivables from brokers, dealers, and clearing organizations		317			230
Receivables from brokerage clients — net		11,955			11,072
Other securities owned — at fair value		425			593
Securities available for sale		40,049			33,965
Securities held to maturity (fair value — $16,009 at June 30, 2012 and $15,539 at December 31, 2011)		15,506			15,108
Loans to banking clients — net		9,837			9,812
Loans held for sale		2			70
Equipment, office facilities, and property — net		677			685
Goodwill		1,165			1,161
Intangible assets — net		304			326
Other assets		767			818
Total assets	$	111,816		$	108,553
Liabilities and Stockholders’ Equity
Deposits from banking clients	$	66,257		$	60,854
Payables to brokers, dealers, and clearing organizations		1,332			1,098
Payables to brokerage clients		31,833			35,489
Accrued expenses and other liabilities		1,285			1,397
Long-term debt		1,999			2,001
Total liabilities		102,706			100,839
Stockholders’ equity:
Preferred stock — $.01 par value per share; aggregate liquidation preference of $885 at June 30, 2012 and $0 at December 31, 2011		863			—
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446 shares issued		15			15
Additional paid-in capital		3,870			3,826
Retained earnings		8,280			7,978
Treasury stock, at cost — 213,494,172 shares at June 30, 2012 and 216,378,623 shares at December 31, 2011		(4,072	)		(4,113	)
Accumulated other comprehensive income		154			8
Total stockholders’ equity		9,110			7,714
Total liabilities and stockholders’ equity	$	111,816		$	108,553

See Notes to Condensed Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

	Six Months Ended June 30,
	2012			2011
Cash Flows from Operating Activities
Net income	$	470		$	481
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Provision for loan losses		4			5
Net impairment losses on securities		25			9
Stock-based compensation		54			47
Depreciation and amortization		96			68
Premium amortization, net, on securities available for sale and securities held to maturity		98			37
Other		1			(9	)
Originations of loans held for sale		(435	)		(809	)
Proceeds from sales of loans held for sale		505			954
Net change in:
Cash and investments segregated and on deposit for regulatory purposes		3,311			(1,093	)
Receivables from brokers, dealers, and clearing organizations		(86	)		(47	)
Receivables from brokerage clients		(885	)		(413	)
Other securities owned		168			(80	)
Other assets		49			(1	)
Payables to brokers, dealers, and clearing organizations		212			(33	)
Payables to brokerage clients		(3,656	)		3,056
Accrued expenses and other liabilities		(163	)		(254	)
Net cash (used for) provided by operating activities		(232	)		1,918
Cash Flows from Investing Activities
Purchases of securities available for sale		(14,114	)		(7,167	)
Proceeds from sales of securities available for sale		1,323			450
Principal payments on securities available for sale		6,904			3,548
Purchases of securities held to maturity		(3,029	)		—
Principal payments on securities held to maturity		2,566			1,926
Net increase in loans to banking clients		(62	)		(753	)
Purchase of equipment, office facilities, and property		(76	)		(77	)
Other investing activities		—			6
Net cash used for investing activities		(6,488	)		(2,067	)
Cash Flows from Financing Activities
Net change in deposits from banking clients		5,403			1,749
Repayment of long-term debt		(3	)		(3	)
Net proceeds from preferred stock offerings		864			—
Dividends paid		(154	)		(145	)
Proceeds from stock options exercised and other		20			73
Other financing activities		—			10
Net cash provided by financing activities		6,130			1,684
(Decrease) Increase in Cash and Cash Equivalents		(590	)		1,535
Cash and Cash Equivalents at Beginning of Period		8,679			4,931
Cash and Cash Equivalents at End of Period	$	8,089		$	6,466
Supplemental Cash Flow Information
Cash paid during the period for:
Interest	$	74		$	86
Income taxes	$	221		$	325

See Notes to Condensed Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

1. Introduction and Basis of Presentation

The Charles Schwab Corporation (CSC) is a savings and loan holding company engaged, through its subsidiaries, in securities brokerage, banking, and related financial services. Charles Schwab & Co., Inc. (Schwab) is a securities broker-dealer with over 300 domestic branch offices in 45 states, as well as a branch in each of the Commonwealth of Puerto Rico and London, U.K. In addition, Schwab serves clients in Hong Kong through one of CSC’s subsidiaries. Other subsidiaries include Charles Schwab Bank (Schwab Bank), a federal savings bank, and Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds, which are referred to as the Schwab Funds^®, and for Schwab’s exchange-traded funds, which are referred to as the Schwab ETFs™.

The accompanying unaudited condensed consolidated financial statements include CSC and its majority-owned subsidiaries (collectively referred to as the Company). Intercompany balances and transactions have been eliminated. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements. Certain estimates relate to other-than-temporary impairment of securities available for sale and securities held to maturity, valuation of goodwill, allowance for loan losses, and legal reserves. Actual results may differ from those estimates. These condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. These adjustments are of a normal recurring nature. Certain prior period amounts have been reclassified to conform to the 2012 presentation. The Company’s results for any interim period are not necessarily indicative of results for a full year or any other interim period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

2. New Accounting Standard

Adoption of New Accounting Standard

Testing Goodwill for Impairment: In September 2011, the Financial Accounting Standards Board issued new guidance allowing companies to consider qualitative factors before performing a quantitative assessment when determining whether goodwill is impaired, which was effective for goodwill impairment tests performed after January 1, 2012. Specifically, there is no longer a requirement to perform the two-step goodwill impairment test unless the entity determines that based on qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The adoption of this new guidance did not have a material impact on the Company’s financial position, results of operations, earnings per common share (EPS), or cash flows.

3. Business Acquisition

On September 1, 2011, the Company completed its acquisition of all of the outstanding common shares of optionsXpress Holdings, Inc. (optionsXpress) for total consideration of $714 million. optionsXpress is an online brokerage firm primarily focused on equity option securities and futures. The optionsXpress^® brokerage platform provides active investors and traders trading tools, analytics and education to execute a variety of investment strategies. The combination of optionsXpress and Schwab offers active investors an additional level of service and platform capabilities.

Under the terms of the merger agreement, optionsXpress stockholders received 1.02 shares of the Company’s common stock for each share of optionsXpress stock. As a result, the Company issued 59 million shares of the Company’s common stock valued at $710 million, based on the closing price of the Company’s common stock on September 1, 2011. The Company also assumed optionsXpress’ stock-based compensation awards valued at $4 million. In allocating the purchase price based on estimated fair values of assets and liabilities assumed as of the acquisition date, the Company preliminarily recorded $511 million of goodwill and $285 million of intangible assets. The allocation of the purchase price is preliminary and subject to further adjustment as information relative to closing date fair values and related tax balances are finalized. The results of optionsXpress’ operations have been included in the Company’s condensed consolidated statements of income

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

from the date of acquisition. The amounts of optionsXpress’ net revenues and net income for the second quarter of 2012 were $49 million and $6 million, respectively. The amounts of optionsXpress’ net revenues and net income for the first half of 2012 were $101 million and $8 million, respectively.

The following table presents pro forma financial information as if optionsXpress had been acquired prior to January 1, 2011. Pro forma net income reflects the impact of amortizing purchase accounting adjustments relating to intangible assets, net of tax, of $5 million and $10 million in the second quarter and first half of 2011, respectively.

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Net revenues	$	1,249	$	2,522
Net income	$	242	$	494
Basic EPS	$	.19	$	.39
Diluted EPS	$	.19	$	.39

The pro forma financial information above is presented for illustrative purposes only and is not necessarily indicative of the results that actually would have occurred had the acquisition been completed prior to January 1, 2011, nor is it indicative of the results of operations for future periods.

4. Securities Available for Sale and Securities Held to Maturity

The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale and securities held to maturity are as follows:

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	24,041	$	354	$	8	$	24,387
Non-agency residential mortgage-backed securities		923		1		148		776
Certificates of deposit		5,348		11		3		5,356
Corporate debt securities		4,825		23		3		4,845
U.S. agency notes		100		1		—		101
Asset-backed and other securities		4,565		21		2		4,584
Total securities available for sale	$	39,802	$	411	$	164	$	40,049
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	15,227	$	504	$	1	$	15,730
Other securities		279		1		1		279
Total securities held to maturity	$	15,506	$	505	$	2	$	16,009

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	20,666	$	269	$	14	$	20,921
Non-agency residential mortgage-backed securities		1,130		—		223		907
Certificates of deposit		3,623		2		3		3,622
Corporate debt securities		3,592		5		26		3,571
U.S. agency notes		1,795		5		—		1,800
Asset-backed and other securities		3,144		7		7		3,144
Total securities available for sale	$	33,950	$	288	$	273	$	33,965
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	14,770	$	430	$	2	$	15,198
Other securities		338		3		—		341
Total securities held to maturity	$	15,108	$	433	$	2	$	15,539

A summary of securities with unrealized losses, aggregated by category and period of continuous unrealized loss, is as follows:

	Less than 12 months				12 months or longer				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	860	$	4	$	243	$	4	$	1,103	$	8
Non-agency residential mortgage-backed securities		—		—		702		148		702		148
Certificates of deposit		321		2		399		1		720		3
Corporate debt securities		894		3		—		—		894		3
Asset-backed and other securities		1,555		2		—		—		1,555		2
Total	$	3,630	$	11	$	1,344	$	153	$	4,974	$	164
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	116	$	1	$	—	$	—	$	116	$	1
Other securities		99		1		—		—		99		1
Total	$	215	$	2	$	—	$	—	$	215	$	2
Total securities with unrealized losses (1)	$	3,845	$	13	$	1,344	$	153	$	5,189	$	166

⁽¹⁾  The number of investment positions with unrealized losses totaled 170 for securities available for sale and 3 for securities held to maturity.

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

	Less than 12 months				12 months or longer				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	5,551	$	14	$	—	$	—	$	5,551	$	14
Non-agency residential mortgage-backed securities		121		8		746		215		867		223
Certificates of deposit		2,158		3		—		—		2,158		3
Corporate debt securities		1,888		26		—		—		1,888		26
Asset-backed and other securities		1,376		6		152		1		1,528		7
Total	$	11,094	$	57	$	898	$	216	$	11,992	$	273
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	384	$	2	$	—	$	—	$	384	$	2
Total	$	384	$	2	$	—	$	—	$	384	$	2
Total securities with unrealized losses (1)	$	11,478	$	59	$	898	$	216	$	12,376	$	275

⁽¹⁾  The number of investment positions with unrealized losses totaled 296 for securities available for sale and 3 for securities held to maturity.

Unrealized losses in securities available for sale of $164 million as of June 30, 2012, were concentrated in non-agency residential mortgage-backed securities. Included in non-agency residential mortgage-backed securities are securities collateralized by loans that are considered to be “Prime” (defined as loans to borrowers with a Fair Isaac & Company credit score of 620 or higher at origination), and “Alt-A” (defined as Prime loans with reduced documentation at origination). At June 30, 2012, the amortized cost and fair value of Alt-A residential mortgage-backed securities were $343 million and $265 million, respectively.

Certain Alt-A and Prime residential mortgage-backed securities experienced continued credit deterioration in the first half of 2012, including increased payment delinquency rates and losses on foreclosures of underlying mortgages. In addition, the Company increased the projected default rates for modified loans in the first quarter of 2012. Based on the Company’s cash flow projections, management determined that it does not expect to recover all of the amortized cost of these securities and therefore determined that these securities were other-than-temporarily impaired (OTTI). The Company employs a buy and hold strategy relative to its mortgage-related securities, and does not intend to sell these securities and it will not be required to sell these securities before anticipated recovery of the unrealized losses on these securities. Further, the Company has adequate liquidity at June 30, 2012, with cash and cash equivalents totaling $8.1 billion, a loan-to-deposit ratio of 15%, adequate access to short-term borrowing facilities and regulatory capital ratios in excess of “well capitalized” levels. Because the Company does not intend to sell these securities and it is not “more likely than not” that the Company will be required to sell these securities, the Company recognized an impairment charge equal to the securities’ expected credit losses of $7 million and $25 million during the second quarter and first half of 2012, respectively. The expected credit losses were measured as the difference between the present value of expected cash flows and the amortized cost of the securities. Further deterioration in the performance of the underlying loans in the Company’s residential mortgage-backed securities portfolio could result in the recognition of additional impairment charges.

Actual credit losses on the Company’s residential mortgage-backed securities were not material during the second quarters or first halves of 2012 or 2011.

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following table is a rollforward of the amount of credit losses recognized in earnings for OTTI securities held by the Company during the period for which a portion of the impairment was recognized in other comprehensive income:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Balance at beginning of period	$	145	$	103	$	127	$	96
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was not previously recognized		4		2		5		2
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was previously recognized		3		—		20		7
Balance at end of period	$	152	$	105	$	152	$	105

The maturities of securities available for sale and securities held to maturity at June 30, 2012, are as follows:

	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years		Total
Securities available for sale:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	3,422	$	20,965	$	24,387
Non-agency residential mortgage-backed securities (1)		—		—		9		767		776
Certificates of deposit		3,575		1,781		—		—		5,356
Corporate debt securities		734		4,111		—		—		4,845
U.S. agency notes		—		101		—		—		101
Asset-backed and other securities		300		372		669		3,243		4,584
Total fair value	$	4,609	$	6,365	$	4,100	$	24,975	$	40,049
Total amortized cost	$	4,605	$	6,338	$	3,986	$	24,873	$	39,802
Securities held to maturity:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	5,725	$	10,005	$	15,730
Other securities		117		162		—		—		279
Total fair value	$	117	$	162	$	5,725	$	10,005	$	16,009
Total amortized cost	$	117	$	162	$	5,521	$	9,706	$	15,506

⁽¹⁾  Residential mortgage-backed securities have been allocated over maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

Proceeds and gross realized gains (losses) from sales of securities available for sale are as follows:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Proceeds	$	1,073	$	250	$	1,323	$	450
Gross realized gains	$	2	$	1	$	2	$	1
Gross realized losses	$	—	$	—	$	—	$	—

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THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

5. Loans to Banking Clients and Related Allowance for Loan Losses

The composition of loans to banking clients by loan segment is as follows:

	June 30, 2012			December 31, 2011
Residential real estate mortgages	$	5,674		$	5,596
Home equity lines of credit		3,408			3,509
Personal loans secured by securities		787			742
Other		19			19
Total loans to banking clients (1)		9,888			9,866
Allowance for loan losses		(51	)		(54	)
Total loans to banking clients – net	$	9,837		$	9,812

⁽¹⁾  All loans are evaluated for impairment by loan segment.

Changes in the allowance for loan losses were as follows:

Three Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	37		$	13		$	50		$	37		$	16		$	53
Charge-offs		(1	)		(2	)		(3	)		(3	)		(2	)		(5	)
Recoveries		—			—			—			—			1			1
Provision for loan losses		(2	)		6			4			—			1			1
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Six Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	40		$	14		$	54		$	38		$	15		$	53
Charge-offs		(4	)		(4	)		(8	)		(6	)		(3	)		(9	)
Recoveries		1			—			1			—			1			1
Provision for loan losses		(3	)		7			4			2			3			5
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Included in the loan portfolio are nonaccrual loans totaling $47 million and $52 million at June 30, 2012 and December 31, 2011, respectively. There were no loans accruing interest that were contractually 90 days or more past due at June 30, 2012 or December 31, 2011. The amount of interest revenue that would have been earned on nonaccrual loans, versus actual interest revenue recognized on these loans, was not material to the Company’s results of operations in the first halves of 2012 or 2011. Nonperforming assets, which include nonaccrual loans and other real estate owned, totaled $52 million and $56 million at June 30, 2012 and December 31, 2011, respectively. The Company considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be a troubled debt restructuring. Troubled debt restructurings were not material at June 30, 2012 or December 31, 2011.

In the first quarter of 2012, Schwab Bank launched a co-branded loan origination program for Schwab Bank clients (the Program) with Quicken Loans, Inc. (Quicken^® Loans^®). Pursuant to the Program, Quicken Loans originates and services loans for Schwab Bank clients and Schwab Bank sets the underwriting standards and pricing for those loans it intends to purchase for its portfolio. The first mortgage portion of the Program launched in March 2012 and these loans are included in the originated and purchased first mortgages loan class as of June 30, 2012, in the tables below. The home equity line of

- 10 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

credit (HELOC) portion of the Program was launched in May 2012. Under the Program, Schwab Bank purchases all HELOC loans to Schwab Bank clients that are originated by Quicken Loans.

The delinquency aging analysis by loan class is as follows:

June 30, 2012	Current		30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Total loans
Residential real estate mortgages:
Originated and purchased first mortgages	$	5,458	$	19	$	3	$	34	$	56	$	5,514
Other purchased first mortgages		153		2		1		4		7		160
Home equity lines of credit		3,392		5		2		9		16		3,408
Personal loans secured by securities		787		—		—		—		—		787
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,809	$	26	$	6	$	47	$	79	$	9,888
December 31, 2011
Residential real estate mortgages:
Originated first mortgages	$	5,380	$	16	$	2	$	39	$	57	$	5,437
Purchased first mortgages		152		2		—		5		7		159
Home equity lines of credit		3,494		5		2		8		15		3,509
Personal loans secured by securities		741		1		—		—		1		742
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,786	$	24	$	4	$	52	$	80	$	9,866

- 11 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

In addition to monitoring the delinquency characteristics as presented in the aging analysis in the previous table, the Company monitors the credit quality of residential real estate mortgages and HELOCs by stratifying the portfolios by the year of origination, borrower Fair Issac & Company (FICO) scores at origination, updated FICO scores, and loan-to-value ratios at origination (Origination LTV), as presented in the following tables. Borrowers’ FICO scores are provided by an independent third party credit reporting service and were last updated in June 2012.

	Residential real estate mortgages
June 30, 2012	Originated  and purchased first mortgages		Other purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	513	$	58	$	571	$	1,243
2008		464		7		471		1,212
2009		415		8		423		384
2010		1,374		15		1,389		289
2011		1,824		68		1,892		223
2012		924		4		928		57
Total	$	5,514	$	160	$	5,674	$	3,408
Origination FICO
< 620	$	10	$	2	$	12	$	1
620 - 679		96		18		114		24
680 - 739		1,029		42		1,071		652
³ 740		4,379		98		4,477		2,731
Total	$	5,514	$	160	$	5,674	$	3,408
Updated FICO
< 620	$	55	$	6	$	61	$	45
620 - 679		154		11		165		105
680 - 739		857		37		894		516
³ 740		4,448		106		4,554		2,742
Total	$	5,514	$	160	$	5,674	$	3,408
Origination LTV (1)
£ 70%	$	3,586	$	96	$	3,682	$	2,307
71% - 89%		1,903		55		1,958		1,063
³ 90%		25		9		34		38
Total	$	5,514	$	160	$	5,674	$	3,408

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

- 12 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

	Residential real estate mortgages
December 31, 2011	Originated first mortgages		Purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	569	$	60	$	629	$	1,306
2008		538		8		546		1,262
2009		553		10		563		412
2010		1,757		17		1,774		311
2011		2,020		64		2,084		218
Total	$	5,437	$	159	$	5,596	$	3,509
Origination FICO
< 620	$	9	$	2	$	11	$	—
620 - 679		108		19		127		24
680 - 739		1,030		43		1,073		667
³ 740		4,290		95		4,385		2,818
Total	$	5,437	$	159	$	5,596	$	3,509
Updated FICO
< 620	$	55	$	7	$	62	$	49
620 - 679		162		11		173		112
680 - 739		831		44		875		520
³ 740		4,389		97		4,486		2,828
Total	$	5,437	$	159	$	5,596	$	3,509
Origination LTV (1)
£ 70%	$	3,507	$	91	$	3,598	$	2,378
71% - 89%		1,904		60		1,964		1,091
³ 90%		26		8		34		40
Total	$	5,437	$	159	$	5,596	$	3,509

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

The Company monitors the credit quality of personal loans secured by securities by reviewing the fair value of collateral to ensure adequate collateralization of at least 100% of the principal amount of the loans. All of these personal loans were fully collateralized by securities with fair values in excess of borrowing amounts at June 30, 2012 and December 31, 2011.

6. Commitments and Contingencies

The Company has clients that sell (i.e., write) listed option contracts that are cleared by various clearing houses. The clearing houses establish margin requirements on these transactions. The Company partially satisfies the margin requirements by arranging unsecured standby letter of credit agreements (LOCs), in favor of the clearing houses, which are issued by multiple banks. At June 30, 2012, the aggregate face amount of these LOCs totaled $350 million. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. Schwab satisfies the collateral requirements by arranging LOCs in favor of these brokerage clients, which are issued by multiple banks. At June 30, 2012, the aggregate face amount of these LOCs totaled $110 million. There were no funds drawn under any of these LOCs at June 30, 2012.

The Company 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. The Company’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as

- 13 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

collateral. However, 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: The Company 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. In addition, the Company is responding to certain litigation claims brought against former subsidiaries pursuant to indemnities it has provided to purchasers of those entities.

The Company 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. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear that the outcome of any such matter could be material to the financial condition, operating results or cash flows of the Company. However, 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; potential opportunities for settlement and the status of any settlement discussions; and potential insurance coverage and indemnification. Often, as in the case of the Auction Rate Securities Regulatory Inquiries and Total Bond Market Fund Litigation matters described below, it is not possible to reasonably estimate potential liability, if any, or 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.

Auction Rate Securities Regulatory Inquiries: Schwab has been responding to industry wide inquiries from federal and state regulators regarding sales of auction rate securities to clients who were unable to sell their holdings when the normal auction process for those securities froze unexpectedly in February 2008. On August 17, 2009, a civil complaint was filed against Schwab in New York state court by the Attorney General of the State of New York (NYAG) alleging material misrepresentations and omissions by Schwab regarding the risks of auction rate securities, and seeking restitution, disgorgement, penalties and other relief, including repurchase of securities held in client accounts. As reflected in a statement issued August 17, 2009, Schwab has responded that the allegations are without merit, and has been contesting all charges. By order dated October 24, 2011, the court granted Schwab’s motion to dismiss the complaint. On November 30, 2011, the NYAG filed notice of its intention to appeal the ruling.

Total Bond Market Fund Litigation: On August 28, 2008, a class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of investors in the Schwab Total Bond Market Fund™ (Northstar lawsuit). The lawsuit, which alleges violations of state law and federal securities law in connection with the fund’s investment policy, names Schwab Investments (registrant and issuer of the fund’s shares) and CSIM as defendants. Allegations include that the fund improperly deviated from its stated investment objectives by investing in collateralized mortgage obligations (CMOs) and investing more than 25% of fund assets in CMOs and mortgage-backed securities without obtaining a shareholder vote. Plaintiffs seek unspecified compensatory and rescission damages, unspecified equitable and injunctive relief, and costs and attorneys’ fees. Plaintiffs’ federal securities law claim and certain of plaintiffs’ state law claims were dismissed in proceedings before the court and following a successful petition by defendants to the Ninth Circuit Court of Appeals. On August 8, 2011, the court dismissed plaintiffs’ remaining claims with prejudice. Plaintiffs have appealed to the Ninth Circuit, where the case is currently pending.

optionsXpress Regulatory Matters: optionsXpress entities and individual employees have been responding to certain pending regulatory matters which predate the Company’s acquisition of optionsXpress. On April 16, 2012, optionsXpress, Inc. was

- 14 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

charged by the Securities and Exchange Commission (SEC) in an administrative proceeding alleging violations of the firm’s close-out obligations under SEC Regulation SHO (short sale delivery rules) in connection with certain customer trading activity. Separately, on April 19, 2012, the SEC instituted an administrative proceeding alleging violations of the broker-dealer registration requirements by an unregistered optionsXpress entity. The Company disputes the allegations and is contesting the charges in the two matters. The Company recorded a contingent liability associated with these matters, which was not material at June 30, 2012.

7. 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 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. The Company did not transfer any assets or liabilities between Level 1 and Level 2 during the first half of 2012, or the year ended December 31, 2011.

• 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. The Company did not have any financial assets or liabilities utilizing Level 3 inputs as of June 30, 2012, or December 31, 2011.

Assets and Liabilities Recorded at Fair Value

The Company’s assets recorded at fair value include certain cash equivalents, investments segregated and on deposit for regulatory purposes, other securities owned, and securities available for sale. The Company uses the market and income approaches 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. 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. The Company validates prices received from the pricing services using various methods, including comparison to prices received from additional pricing services, comparison to quoted market prices, where available, comparison to internal valuation models, and review of other relevant market data. When comparing to relevant market data with a bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. The Company 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 a material difference in the recorded amounts. At June 30, 2012, and December 31, 2011, the Company did not adjust prices received from independent third-party pricing services. Liabilities recorded at fair value were not material, and therefore are not included in the following tables.

- 15 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following tables present the fair value hierarchy for assets measured at fair value:

June 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	162	$	—	$	—	$	162
Commercial paper		—		682		—		682
Total cash equivalents		162		682		—		844
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,624		—		2,624
Corporate debt securities		—		678		—		678
Total investments segregated and on deposit for regulatory purposes		—		3,302		—		3,302
Other securities owned:
Schwab Funds® money market funds		135		—		—		135
Equity and bond mutual funds		186		—		—		186
State and municipal debt obligations		—		71		—		71
Equity, U.S. Government and corporate debt, and other securities		3		30		—		33
Total other securities owned		324		101		—		425
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		24,387		—		24,387
Non-agency residential mortgage-backed securities		—		776		—		776
Certificates of deposit		—		5,356		—		5,356
Corporate debt securities		—		4,845		—		4,845
U.S. agency notes		—		101		—		101
Asset-backed and other securities		—		4,584		—		4,584
Total securities available for sale		—		40,049		—		40,049
Total	$	486	$	44,134	$	—	$	44,620

- 16 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	8	$	—	$	—	$	8
Commercial paper		—		814		—		814
Total cash equivalents		8		814		—		822
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,374		—		2,374
Corporate debt securities		—		767		—		767
U.S. Government securities		—		650		—		650
Total investments segregated and on deposit for regulatory purposes		—		3,791		—		3,791
Other securities owned:
Schwab Funds® money market funds		332		—		—		332
Equity and bond mutual funds		183		—		—		183
State and municipal debt obligations		—		46		—		46
Equity, U.S. Government and corporate debt, and other securities		12		20		—		32
Total other securities owned		527		66		—		593
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		20,921		—		20,921
Non-agency residential mortgage-backed securities		—		907		—		907
Certificates of deposit		—		3,622		—		3,622
Corporate debt securities		—		3,571		—		3,571
U.S. agency notes		—		1,800		—		1,800
Asset-backed and other securities		—		3,144		—		3,144
Total securities available for sale		—		33,965		—		33,965
Total	$	535	$	38,636	$	—	$	39,171

Financial Instruments Not Recorded at Fair Value

Descriptions of the valuation methodologies and assumptions used to estimate the fair value of financial instruments not recorded at fair value are described below. There were no significant changes in these methodologies or assumptions during the first half of 2012.

Cash and cash equivalents, receivables from/payables to brokers, dealers, and clearing organizations, and receivables from/payables to brokerage clients are short-term in nature and accordingly are recorded at amounts that approximate fair value. Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Receivables from/payables to brokers, dealers, and clearing organizations, and receivables from/payables to brokerage clients are recorded at or near transaction price and historically have been settled or converted to cash at approximately that value.

Cash and investments segregated and on deposit for regulatory purposes include securities purchased under resale agreements. Securities purchased under resale agreements are recorded at par value plus accrued interest. Securities purchased under resale agreements are short-term in nature and are backed by collateral that both exceeds the carrying value of the resale agreement and is highly liquid in nature. Accordingly, the carrying value approximates fair value.

Securities held to maturity include U.S. agency residential mortgage-backed securities, asset-backed securities collateralized by credit card and auto loans, and corporate debt securities. Securities held to maturity are recorded at amortized cost. The fair value of these securities is obtained using an independent third-party pricing service similar to investment assets recorded at fair value as discussed above.

- 17 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Loans to banking clients primarily include adjustable rate residential first-mortgage and HELOC loans. Loans to banking clients are recorded at carrying value net of an allowance for loan losses. The fair value of the Company’s loans to banking clients is estimated based on prices obtained from independent third-party pricing services for mortgage-backed securities collateralized by similar types of loans similar to investment assets recorded at fair value as discussed above. The Company may adjust the independent third-party prices to account for differences between the weighted average lives and coupon rates of comparable mortgage-backed securities and loans to banking clients.

Loans held for sale include fixed-rate and adjustable-rate residential first-mortgage loans intended for sale. Loans held for sale are recorded at the lower of cost or fair value. The fair value of the Company’s loans held for sale is estimated using quoted market prices for securities backed by similar types of loans.

Other assets – Financial instruments included in other assets primarily consist of cost method investments and Federal Home Loan Bank (FHLB) stock, whose carrying values approximate their fair values. FHLB stock is recorded at par, which approximates fair value as there is a quoted market price for this stock based on the requirements of the FHLB.

Deposits from banking clients – The Company considers the fair value of deposits with no stated maturity, such as deposits from banking clients, to be equal to the amount payable on demand as of the balance sheet date.

Accrued expenses and other liabilities – Financial instruments included in accrued expenses and other liabilities consist of drafts payable and certain amounts due under contractual obligations which are short-term in nature and accordingly are recorded at amounts that approximate fair value.

Long-term debt includes Senior Notes, Senior Medium-Term Notes, Series A, Junior Subordinated Notes, and a finance lease obligation. The fair values of the Senior Notes, Senior Medium-Term Notes, Series A, and Junior Subordinated Notes are estimated using indicative, non-binding quotes from independent brokers. The Company validates indicative prices for its debt through comparison to other independent non-binding quotes. The finance lease obligation is recorded at carrying value, which approximates fair value.

Firm commitments to extend credit – The Company extends credit to banking clients through HELOC and personal loans secured by securities. The Company considers the fair value of these unused commitments to be not material because the interest rates earned on these balances are based on market interest rate indices and reset monthly. Future utilization of HELOC and personal loan commitments will earn a then-current market interest rate. The Company does not charge a fee to maintain a HELOC or personal loan.

- 18 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following table presents the fair value hierarchy for financial instruments not recorded at fair value at June 30, 2012:

	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Assets:
Cash and cash equivalents	$	7,245	$	—	$	7,245	$	—	$	7,245
Cash and investments segregated and on deposit for regulatory purposes		19,417		—		19,417		—		19,417
Receivables from brokers, dealers, and clearing organizations		317		—		317		—		317
Receivables from brokerage clients – net		11,952		—		11,952		—		11,952
Securities held to maturity:
U.S. agency residential mortgage-backed securities		15,227		—		15,730		—		15,730
Other securities		279		—		279		—		279
Total securities held to maturity		15,506		—		16,009		—		16,009
Loans to banking clients – net:
Residential real estate mortgages		5,640		—		5,742		—		5,742
Home equity lines of credit		3,391		—		3,368		—		3,368
Personal loans secured by securities		787		—		787		—		787
Other		19		—		19		—		19
Total loans to banking clients – net		9,837		—		9,916		—		9,916
Loans held for sale		2		—		3		—		3
Other assets		62		—		62		—		62
Total	$	64,338	$	—	$	64,921	$	—	$	64,921
Liabilities:
Deposits from banking clients	$	66,257	$	—	$	66,257	$	—	$	66,257
Payables to brokers, dealers, and clearing organizations		1,332		—		1,332		—		1,332
Payables to brokerage clients		31,833		—		31,833		—		31,833
Accrued expenses and other liabilities		501		—		501		—		501
Long-term debt		1,999		—		2,189		—		2,189
Total	$	101,922	$	—	$	102,112	$	—	$	102,112

The following table presents the Company’s fair value estimates for financial instruments not recorded at fair value at December 31, 2011. The table excludes short-term financial assets and liabilities, for which carrying amounts approximate fair value, and financial instruments recorded at fair value.

	Carrying Amount		Fair Value
Financial Assets:
Securities held to maturity	$	15,108	$	15,539
Loans to banking clients – net	$	9,812	$	9,671
Loans held for sale	$	70	$	73
Financial Liabilities:
Long-term debt	$	2,001	$	2,159

- 19 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

8. Preferred Stock

The Company was authorized to issue 9,940,000 shares of preferred stock, $0.01 par value, at both June 30, 2012, and December 31, 2011. There were no shares of preferred stock issued and outstanding at December 31, 2011. The Company’s preferred stock issued and outstanding as of June 30, 2012, are as follows:

	Shares Issued and Outstanding (In thousands)		Liquidation Preference Per Share		Liquidation Preference		Carrying Value
Series A		400	$	1,000	$	400	$	394
Series B		485	$	1,000		485		469
Total Preferred Stock		885			$	885	$	863

In June 2012, the Company issued and sold 19,400,000 depositary shares, each representing a 1/40^th ownership interest in a share of 6.00% non-cumulative perpetual preferred stock, Series B, equivalent to $25 per depositary share (Series B Preferred Stock). Net proceeds received from the sale were $469 million. The Series B Preferred Stock has no stated maturity and has a fixed dividend rate of 6.00%. Dividends, if declared, will be payable quarterly in arrears. Under the terms of the Series B Preferred Stock, the Company’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 B Preferred Stock, is subject to restrictions in the event that the Company does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series B Preferred Stock for the immediately preceding dividend period. The Series B Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after September 1, 2017, or, in whole but not in part, within 90 days following a regulatory capital treatment event as defined in its Certificate of Designations.

In January 2012, the Company issued and sold 400,000 shares of fixed-to-floating rate non-cumulative perpetual preferred stock, Series A (Series A Preferred Stock). Net proceeds received from the sale were $394 million. The Series A Preferred Stock has no stated maturity and has a fixed dividend rate of 7.000% until February 2022 and a floating rate equal to three-month LIBOR plus 4.820% thereafter. During the fixed rate period, dividends, if declared, will be payable semi-annually in arrears. During the floating rate period, dividends, if declared, will be payable quarterly in arrears. Dividends will not be cumulative. Under the terms of the Series A Preferred Stock, the Company’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 A Preferred Stock, is subject to restrictions in the event that the Company does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series A Preferred Stock for the immediately preceding dividend period. The Series A Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after February 1, 2022, or, in whole but not in part, within 90 days following a regulatory capital treatment event as defined in its Certificate of Designations.

- 20 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

9. Accumulated Other Comprehensive Income

Accumulated other comprehensive income (loss) represents cumulative gains and losses that are not reflected in earnings. Accumulated other comprehensive income balances were:

	Net unrealized gain on securities available for sale		Other			Total accumulated other comprehensive income
Balance at December 31, 2010	$	17	$	(1	)	$	16
Other net changes		28		1			29
Balance at June 30, 2011	$	45	$	—		$	45
Balance at December 31, 2011	$	10	$	(2	)	$	8
Other net changes		145		1			146
Balance at June 30, 2012	$	155	$	(1	)	$	154

10. Earnings Per Common Share

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 the effect of outstanding stock options and unvested restricted stock awards and units. EPS under the basic and diluted computations is as follows:

	Three Months Ended June 30,							Six Months Ended     June 30,
	2012				2011			2012				2011
Net income		$	275			$	238		$	470			$	481
Preferred stock dividends			(14	)			—			(14	)			—
Net income available to common stockholders (1)		$	261			$	238		$	456			$	481
Weighted-average common shares outstanding — basic			1,273				1,207			1,272				1,205
Common stock equivalent shares related to stock incentive plans			1				3			1				3
Weighted-average common shares outstanding — diluted (2)			1,274				1,210			1,273				1,208
Basic EPS		$	.20			$	.20		$	.36			$	.40
Diluted EPS		$	.20			$	.20		$	.36			$	.40

⁽¹⁾  Net income available to participating securities (unvested restricted shares) was not material for the second quarters or first halves of 2012 or 2011.

⁽²⁾  Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 59 million and 42 million shares for the second quarters of 2012 and 2011, respectively, and 61 million and 43 million shares for the first halves of 2012 and 2011, respectively.

11. Regulatory Requirements

CSC is a savings and loan holding company and Schwab Bank, CSC’s depository institution subsidiary, is a federal savings bank. CSC is subject to supervision and regulation by the Board of Governors of the Federal Reserve System and Schwab Bank is subject to supervision and regulation by the Office of the Comptroller of the Currency. CSC is currently not subject to specific statutory capital requirements, however CSC is required to serve as a source of strength for Schwab Bank. Under the “Dodd-Frank Wall Street Reform and Consumer Protection Act”, CSC will be subject to new minimum leverage and

- 21 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

minimum risk-based capital ratio requirements that will be set by the Federal Reserve that are at least as stringent as the requirements generally applicable to insured depository institutions as of July 21, 2011.

Schwab Bank is required to maintain minimum capital levels as specified in federal banking laws and 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 Schwab Bank. At June 30, 2012, CSC and Schwab Bank met the capital level requirements.

The regulatory capital and ratios for Schwab Bank at June 30, 2012, are as follows:

	Actual					Minimum Capital Requirement					Minimum to be Well  Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 Risk-Based Capital	$	5,431		22.1	%	$	985		4.0	%	$	1,477		6.0	%
Total Risk-Based Capital	$	5,479		22.3	%	$	1,970		8.0	%	$	2,462		10.0	%
Tier 1 Leverage	$	5,431		7.6	%	$	2,876		4.0	%	$	3,595		5.0	%
Tangible Equity	$	5,431		7.6	%	$	1,438		2.0	%		N/A

N/A Not applicable.

Based on its regulatory capital ratios at June 30, 2012, Schwab Bank is considered well capitalized (the highest category) pursuant to banking regulatory guidelines. There are no conditions or events since June 30, 2012, that management believes have changed Schwab Bank’s capital category.

CSC’s principal U.S. broker-dealers are Schwab and optionsXpress, Inc. optionsXpress, Inc. is a wholly-owned subsidiary of optionsXpress. Schwab and optionsXpress, Inc. are both subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule). Schwab and optionsXpress, Inc. compute 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 ($250,000 for Schwab), 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 to its parent company or employees 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.

optionsXpress, Inc. is also subject to Commodity Futures Trading Commission Regulation 1.17 (Reg. 1.17) under the Commodity Exchange Act, which also requires the maintenance of minimum net capital. optionsXpress, Inc., as a futures commission merchant, is required to maintain minimum net capital equal to the greater of its net capital requirement under Reg. 1.17 ($1 million), or the sum of 8% of the total risk margin requirements for all positions carried in client accounts and 8% of the total risk margin requirements for all positions carried in non-client accounts (as defined in Reg. 1.17).

Net capital and net capital requirements for Schwab and optionsXpress, Inc. at June 30, 2012, are as follows:

	Net Capital		% of Aggregate Debit Balances			Minimum Net Capital Required		2% of Aggregate Debit Balances		Net Capital in Excess of Required Net Capital		Net Capital in Excess of 5% of Aggregate Debit Balances
Schwab	$	1,440		11	%	$	0.250	$	263	$	1,177	$	781
optionsXpress, Inc.	$	71		30	%	$	1	$	5	$	66	$	59

- 22 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

12. Segment Information

The Company structures its operating segments according to its clients and the services provided to those clients. The Company’s two reportable segments are Investor Services and Institutional Services.

The Company evaluates the performance of its segments on a pre-tax basis, excluding items such as significant nonrecurring gains, impairment charges on non-financial assets, discontinued operations, extraordinary items, and significant restructuring and other charges. 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 with other segments within the Company.

Financial information for the Company’s reportable segments is presented in the following table:

	Investor Services						Institutional Services						Unallocated						Total
Three Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	271		$	275		$	227		$	227		$	(2	)	$	—		$	496		$	502
Net interest revenue		385			387			73			64			—			—			458			451
Trading revenue		147			136			72			70			—			(1	)		219			205
Other (1)		27			16			21			19			73			—			121			35
Provision for loan losses		(3	)		(1	)		(1	)		—			—			—			(4	)		(1	)
Net impairment losses on securities		(6	)		(2	)		(1	)		—			—			—			(7	)		(2	)
Total net revenues		821			811			391			380			71			(1	)		1,283			1,190
Expenses Excluding Interest		587			547			264			258			—			(1	)		851			804
Income before taxes on income	$	234		$	264		$	127		$	122		$	71		$	—		$	432		$	386
Taxes on income																				157			148
Net Income																			$	275		$	238
	Investor Services						Institutional Services						Unallocated						Total
Six Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	531		$	551		$	450		$	453		$	(1	)	$	—		$	980		$	1,004
Net interest revenue		750			760			142			127			—			—			892			887
Trading revenue		310			296			152			150			—			—			462			446
Other (1)		54			36			41			38			72			—			167			74
Provision for loan losses		(3	)		(4	)		(1	)		(1	)		—			—			(4	)		(5	)
Net impairment losses on securities		(22	)		(8	)		(3	)		(1	)		—			—			(25	)		(9	)
Total net revenues		1,620			1,631			781			766			71			—			2,472			2,397
Expenses Excluding Interest		1,193			1,101			534			518			—			(2	)		1,727			1,617
Income before taxes on income	$	427		$	530		$	247		$	248		$	71		$	2		$	745		$	780
Taxes on income																				275			299
Net Income																			$	470		$	481

⁽¹⁾  Unallocated amount includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

13. Subsequent Event

On July 31, 2012, the Company announced its decision to redeem all of the fixed-to-floating rate trust preferred securities of $300 million issued by Schwab Capital Trust I (the Trust). The trust preferred securities are being redeemed, along with the common securities issued by the Trust and held by the Company, as a result of the concurrent redemption in whole by the Company of the Junior Subordinated Notes held by the Trust which underlie the trust preferred securities. The redemption date for the trust preferred securities will be August 31, 2012, and the redemption price will be 100% of the liquidation amount of each trust preferred security, plus accumulated and unpaid distributions up to and including the redemption date. After the redemption date, the trust preferred securities will no longer be outstanding and distributions will no longer accrue.

- 23 -

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

OVERVIEW

Management of The Charles Schwab Corporation (CSC) and its subsidiaries (collectively referred to as the Company) focuses on several key client activity and financial metrics in evaluating the Company’s financial position and operating performance. Results for the second quarters and first halves of 2012 and 2011 are:

	Three Months Ended June 30,						Percent Change			Six Months Ended June 30,						Percent Change
	2012			2011						2012			2011
Client Activity Metrics:
Net new client assets (1) (in billions)	$	16.0		$	15.4			4	%	$	54.9		$	38.4			43	%
Client assets (in billions, at quarter end)	$	1,802.4		$	1,655.5			9	%
Clients’ daily average trades (2) (in thousands)		435.6			397.1			10	%		455.8			434.5			5	%
Company Financial Metrics:
Net revenues (3)	$	1,283		$	1,190			8	%	$	2,472		$	2,397			3	%
Expenses excluding interest		851			804			6	%		1,727			1,617			7	%
Income before taxes on income		432			386			12	%		745			780			(4	%)
Taxes on income		157			148			6	%		275			299			(8	%)
Net income	$	275		$	238			16	%	$	470		$	481			(2	%)
Earnings per common share – diluted	$	.20		$	.20			—		$	.36		$	.40			(10	%)
Net revenue growth from prior year		8	%		10	%					3	%		16	%
Pre-tax profit margin		33.7	%		32.4	%					30.1	%		32.5	%
Return on average common stockholders’ equity (annualized) (4)		13	%		14	%					11	%		15	%
Annualized net revenue per average full-time equivalent employee (in thousands)	$	372		$	361			3	%	$	356		$	366			(3	%)

⁽¹⁾  Includes inflows of $12.0 billion in the first quarter of 2012 from a mutual fund clearing services client.

⁽²⁾  Amounts include revenue trades from commissions or principal mark-ups (i.e., fixed income), trades by clients in asset-based pricing relationships, and all commission-free trades, including the Company’s Mutual Fund OneSource^® funds and Exchange-Traded Funds, and other proprietary products.

⁽³⁾  Includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

⁽⁴⁾  Return on average common stockholders’ equity is calculated using net income available to common stockholders divided by average common stockholders’ equity.

The broad equity markets improved during the second quarter of 2012 compared to the second quarter of 2011, as the Nasdaq Composite Index, Dow Jones Industrial Average, and Standard & Poor’s 500 Index increased 6%, 4%, and 3%, respectively. While the federal funds target rate remained unchanged at a range of zero to 0.25%, the average three-month Treasury Bill yield increased by 4 basis points to 0.08% during the second quarter of 2012 compared to the second quarter of 2011. At the same time, the average 10-year Treasury yield decreased by 138 basis points to 1.81%.

While the economy and financial markets faced heightened challenges, including lower longer term interest rates and equity market volatility, the Company saw signs of sustained client engagement and demand for the Company’s full-service capabilities remained strong during the second quarter of 2012. Net new client assets totaled $16.0 billion and total client assets ended the quarter at $1.80 trillion, up 4% and 9%, respectively, from the second quarter of 2011. In addition, clients’ daily average trades were 435,600 in the second quarter of 2012, up 10% on a year-over-year basis.

For the second quarter of 2012, net revenues increased by 8% compared to the second quarter of 2011 primarily due to increases in trading revenue and other revenue. Trading revenue increased primarily due to higher daily average revenue trades as a result of the inclusion of optionsXpress Holdings, Inc.’s (optionsXpress) option, future, and equity trades from its acquisition in September 2011. Other revenue increased primarily due to a pre-tax gain of $70 million relating to a

- 24 -

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)

confidential resolution of a vendor dispute in the second quarter of 2012. Asset management and administration fees were relatively flat primarily due to a decrease in mutual fund service fees, offset by an increase in other asset management and administration fees. Net interest revenue was also relatively flat, reflecting higher balances of interest-earning assets offset by the effect of lower interest rate spreads during the second quarter of 2012 due to the continued low interest rate environment.

For the first half of 2012, net revenues increased by 3% compared to the first half of 2011 primarily due to increases in trading revenue and other revenue, partially offset by a decrease in asset management and administration fees and higher net impairment losses on securities. Trading revenue increased primarily due to higher daily average revenue trades as a result of the inclusion of optionsXpress’ option, future, and equity trades from its acquisition in September 2011. Other revenue increased primarily due to the pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute and the inclusion of revenues relating to education services and other service fees from the optionsXpress acquisition. Asset management and administration fees decreased primarily due to a decrease in mutual fund service fees, partially offset by an increase in other asset management and administration fees. Net impairment losses in the Company’s non-agency residential mortgage-backed securities portfolio were higher due to further credit deterioration of the securities’ underlying loans and an increase in projected default rates for modified loans. Net interest revenue was relatively flat, reflecting higher balances of interest-earning assets offset by the effect of lower interest rate spreads during the first half of 2012 due to the continued low interest rate environment.

Expenses excluding interest increased by 6% and 7% in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to the inclusion of optionsXpress. Overall, net income increased by 16% in the second quarter of 2012 compared to the second quarter of 2011 and was relatively flat in the first half of 2012 compared to the first half of 2011.

In comparison to the first quarter of 2012, both the broad equity markets and longer term interest rate environment declined in the second quarter of 2012 – the Nasdaq Composite Index, Dow Jones Industrial Average, and Standard & Poor’s 500 Index decreased 5%, 3%, and 3%, respectively, and the average 10-year Treasury yield decreased by 21 basis points to 1.81%. The three-month Treasury Bill yield increased by 2 basis points to 0.08% from the first quarter of 2012. Despite the challenging environment, the Company’s strong key client activity metrics and ongoing expense discipline helped net revenues grow 8% and expenses decrease by 3%, resulting in a 41% increase in net income for the second quarter of 2012 from the first quarter of 2012. The second quarter results include the pre-tax gain of $70 million (after-tax of $44 million) discussed above.

Equity Offerings

In June 2012, the Company issued and sold 485,000 shares of 6.00% non-cumulative perpetual preferred stock, Series B, with a liquidation preference of $1,000 per share for net proceeds of $469 million. In January 2012, the Company issued and sold 400,000 shares of fixed-to-floating rate (currently fixed at 7.000%) non-cumulative perpetual preferred stock, Series A, with a liquidation preference of $1,000 per share for net proceeds of $394 million. Net proceeds received from these sales are being used for general corporate purposes, which may include, without limitation, extending credit to, or funding investments in, the Company’s subsidiaries, and the possible refinancing of outstanding indebtedness. For further discussion of these equity offerings, see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 8. Preferred Stock.”

Subsequent Events

On August 1, 2012, the Company announced the commencement of a private offer to certain eligible holders of its outstanding 4.950% Senior Notes due 2014 to exchange those notes for new Senior Notes due 2022 and cash. The exchange is subject to certain conditions, which the Company may waive at its sole discretion.

On July 31, 2012, the Company announced its decision to redeem all of the fixed-to-floating rate trust preferred securities of $300 million issued by Schwab Capital Trust I (the Trust). The trust preferred securities are being redeemed, along with the common securities issued by the Trust and held by the Company, as a result of the concurrent redemption in whole by the Company of the Junior Subordinated Notes held by the Trust which underlie the trust preferred securities. The redemption

- 25 -

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)

date for the trust preferred securities will be August 31, 2012, and the redemption price will be 100% of the liquidation amount of each trust preferred security, plus accumulated and unpaid distributions up to and including the redemption date. After the redemption date, the trust preferred securities will no longer be outstanding and distributions will no longer accrue.

CURRENT MARKET AND REGULATORY ENVIRONMENT AND OTHER DEVELOPMENTS

The broad equity markets and short-term interest rates showed improvement from 2011, however the low interest rate environment continues to constrain growth in the Company’s net revenues.

As discussed above, interest rates remained at low levels during the second quarter of 2012. To the extent rates remain at these low levels, the Company’s net interest revenue will continue to be constrained, even as growth in average balances helps to increase such revenue. The low interest rate environment also affects asset management and administration fees. While net money market mutual fund fees improved in the second quarter of 2012 from the first quarter of 2012 primarily due to improved short-term interest rates, the overall yields on certain Schwab-sponsored money market mutual funds have remained at levels at or below the management fees on those funds. The Company continues to waive a portion of its management fees so that the funds can maintain a positive return to clients. These and other money market mutual funds may not be able to replace maturing securities with securities of equal or higher yields. As a result, the yields on such funds may remain around or decline from their current levels, and therefore below the management fees on those funds. To the extent this occurs, asset management and administration fees may be negatively affected.

The Company recorded net impairment losses of $7 million and $25 million related to certain non-agency residential mortgage-backed securities in the second quarter and first half of 2012, respectively, due to further credit deterioration of the securities’ underlying loans. Net impairment losses in the first half of 2012 were also due to an increase in projected default rates for modified loans in the first quarter of 2012. Further deterioration in the performance of the underlying loans in the Company’s residential mortgage-backed securities portfolio could result in the recognition of additional impairment charges.

The “Dodd-Frank Wall Street Reform and Consumer Protection Act” (the Dodd-Frank Act) was signed into law in July 2010. Among other things, the legislation transferred the supervision and regulation of CSC from the Office of Thrift Supervision (OTS) to the Board of Governors of the Federal Reserve System (the Federal Reserve) and supervision and regulation of Schwab Bank from the OTS to the Office of the Comptroller of the Currency; both transfers were effective July 21, 2011. The Federal Reserve recently issued notices of proposed rulemaking (NPRs) to meet certain requirements of the Dodd-Frank Act and to align current capital rules with the BASEL III capital standards. The NPRs would subject all savings and loan holding companies, including CSC, to consolidated capital requirements. In addition, the NPRs would establish more restrictive capital definitions, higher risk-weightings for certain asset classes, higher minimum capital ratios and capital buffers. The NPRs would also exclude trust preferred securities from tier 1 capital. The NPRs would be phased in under an extended timeframe, beginning January 2013. The NPRs are in a comment period and are subject to further modification. CSC is currently evaluating the impact of the NPRs but does not expect them to have a material impact on the Company’s business, financial condition, and results of operations.

The Company is pursuing lawsuits in state court in San Francisco for rescission and damages against issuers, underwriters, and dealers of 51 individual non-agency residential mortgage-backed securities on which the Company has experienced realized and unrealized losses. The lawsuits allege that offering documents for the securities contained material untrue and misleading statements about the securities and the underwriting standards and credit quality of the underlying loans. On January 27, 2012, the court denied defendants’ motions to dismiss the claims with respect to all but 4 of the 51 securities, and allowed the cases to proceed to discovery.

- 26 -

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

The following discussion presents an analysis of the Company’s results of operations for the second quarter and first half of 2012 compared to the same periods in 2011.

Net Revenues

The Company’s major sources of net revenues are asset management and administration fees, net interest revenue, and trading revenue. Asset management and administration fees and net interest revenue were relatively flat, while trading revenue increased in the second quarter of 2012 compared to the second quarter of 2011. Asset management and administration fees decreased and net interest revenue was relatively flat, while trading revenue increased in the first half of 2012 compared to the first half of 2011.

Three Months Ended June 30,				2012						2011
	Percent Change			Amount			% of Total Net  Revenues			Amount			% of Total Net  Revenues
Asset management and administration fees
Schwab money market funds before fee waivers		6	%	$	220					$	208
Fee waivers		14	%		(146	)					(128	)
Schwab money market funds after fee waivers		(8	%)		74			6	%		80			7	%
Equity and bond funds		—			31			2	%		31			3	%
Mutual Fund OneSource®		(10	%)		164			13	%		182			15	%
Total mutual funds		(8	%)		269			21	%		293			25	%
Advice solutions		4	%		140			11	%		134			11	%
Other		16	%		87			7	%		75			6	%
Asset management and administration fees		(1	%)		496			39	%		502			42	%
Net interest revenue
Interest revenue		—			497			39	%		496			42	%
Interest expense		(13	%)		(39	)		(3	%)		(45	)		(4	%)
Net interest revenue		2	%		458			36	%		451			38	%
Trading revenue
Commissions		8	%		205			16	%		189			16	%
Principal transactions		(13	%)		14			1	%		16			1	%
Trading revenue		7	%		219			17	%		205			17	%
Other		N/M			121			9	%		35			3	%
Provision for loan losses		N/M			(4	)		—			(1	)		—
Net impairment losses on securities		N/M			(7	)		(1	%)		(2	)		—
Total net revenues		8	%	$	1,283			100	%	$	1,190			100	%

N/M Not meaningful.

- 27 -

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)

Six Months Ended June 30,				2012						2011
	Percent Change			Amount			% of Total Net  Revenues			Amount			% of Total Net  Revenues
Asset management and administration fees
Schwab money market funds before fee waivers		5	%	$	442					$	419
Fee waivers		29	%		(309	)					(240	)
Schwab money market funds after fee waivers		(26	%)		133			5	%		179			7	%
Equity and bond funds		1	%		63			3	%		60			3	%
Mutual Fund OneSource®		(7	%)		330			13	%		356			15	%
Total mutual funds		(12	%)		526			21	%		595			25	%
Advice solutions		6	%		279			12	%		263			11	%
Other		20	%		175			7	%		146			6	%
Asset management and administration fees		(2	%)		980			40	%		1,004			42	%
Net interest revenue
Interest revenue		(1	%)		969			39	%		977			41	%
Interest expense		(14	%)		(77	)		(3	%)		(90	)		(4	%)
Net interest revenue		1	%		892			36	%		887			37	%
Trading revenue
Commissions		5	%		434			18	%		414			17	%
Principal transactions		(13	%)		28			1	%		32			2	%
Trading revenue		4	%		462			19	%		446			19	%
Other		126	%		167			6	%		74			3	%
Provision for loan losses		(20	%)		(4	)		—			(5	)		—
Net impairment losses on securities		178	%		(25	)		(1	%)		(9	)		(1	%)
Total net revenues		3	%	$	2,472			100	%	$	2,397			100	%

N/M Not meaningful.

Asset Management and Administration Fees

Asset management and administration fees include mutual fund service fees and fees for other asset-based financial services provided to individual and institutional clients. The Company earns mutual fund service fees for shareholder services, administration, and investment management provided to its proprietary funds, and recordkeeping and shareholder services provided to third-party funds. These fees are based upon the daily balances of client assets invested in these funds. The Company also earns asset management fees for advice solutions, which include advisory and managed account services that are based on the daily balances of client assets subject to the specific fee for service. The fair values of client assets included in proprietary and third-party mutual funds are based on quoted market prices and other observable market data. Other asset management and administration fees include various asset based fees, such as trust fees, 401k record keeping fees, and mutual fund clearing and other service fees. Asset management and administration fees may vary with changes in the balances of client assets due to market fluctuations and client activity. For discussion of the impact of current market conditions on asset management and administration fees, see “Current Market and Regulatory Environment and Other Developments.”

Asset management and administration fees were relatively flat in the second quarter of 2012 compared to the second quarter of 2011 and decreased by $24 million, or 2%, in the first half of 2012 compared to the first half of 2011, primarily due to a decrease in mutual fund service fees, partially offset by an increase in other asset management and administration fees.

Mutual fund service fees decreased by $24 million, or 8%, in the second quarter of 2012 compared to the second quarter of 2011 primarily due to a decrease in Mutual Fund OneSource fees. Mutual fund service fees decreased by $69 million, or 12%, in the first half of 2012 compared to the first half of 2011 primarily due to a decrease in net money market mutual fund

- 28 -

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)

fees as a result of lower yields on fund assets and a decrease in Mutual Fund OneSource fees. Given the low interest rate environment in the first half of 2012, the overall yields on certain Schwab-sponsored money market mutual funds have remained at levels at or below the management fees on those funds.

Advice solutions fees increased by $16 million, or 6%, in the first half of 2012 compared to the first half of 2011 primarily due to higher average balances of client assets enrolled in retail advisory and managed account programs, which includes Windhaven^®.

Other asset management and administration fees increased by $12 million, or 16%, and $29 million, or 20%, in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to an increase in third-party mutual fund service fees.

Net Interest Revenue

Net interest revenue is the difference between interest earned on interest-earning assets and interest paid on funding sources. Net interest revenue is affected by changes in the volume and mix of these assets and liabilities, as well as by fluctuations in interest rates and portfolio management strategies. The Company’s 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 (i.e., interest-earning assets generally reprice more quickly than interest-bearing liabilities). When interest rates fall, the Company may attempt to mitigate some of this negative impact by extending the maturities of assets in investment portfolios to lock in asset yields, and by lowering rates paid to clients on interest-bearing liabilities. Since the Company establishes the rates paid on certain brokerage client cash balances and deposits from banking clients, as well as the rates charged on receivables from brokerage clients, and also controls the composition of its investment securities, it has some ability to manage its net interest spread. The current low interest rate environment limits the extent to which the Company can reduce interest expense paid on funding sources. However, the spread is influenced by external factors such as the interest rate environment and competition. For discussion of the impact of current market conditions on net interest revenue, see “Current Market and Regulatory Environment and Other Developments.”

In clearing its clients’ trades, Charles Schwab & Co., Inc. (Schwab) and optionsXpress, Inc. hold cash balances payable to clients. In most cases, Schwab and optionsXpress, Inc. pay their clients interest on cash balances awaiting investment, and in turn invest these funds and earn interest revenue. Receivables from brokerage clients consist primarily of margin loans to brokerage clients. Margin loans are loans made to clients on a secured basis to purchase securities. Pursuant to applicable regulations, client cash balances that are not used for margin lending are generally segregated into investment accounts that are maintained for the exclusive benefit of clients, which are recorded in cash and investments segregated on the Company’s condensed consolidated balance sheet.

Schwab Bank maintains investment portfolios for liquidity as well as to invest funds from deposits in excess of loans to banking clients and liquidity limits. Schwab Bank’s securities available for sale include residential mortgage-backed securities, certificates of deposit, corporate debt securities, U.S. agency notes, and asset-backed and other securities. Schwab Bank’s securities held to maturity include residential mortgage-backed and other securities. Schwab Bank lends funds to banking clients primarily in the form of mortgage loans and HELOCs. These loans are largely funded by interest-bearing deposits from banking clients.

The Company’s interest-earning assets are financed primarily by brokerage client cash balances and deposits from banking clients. Non-interest-bearing funding sources include non-interest-bearing brokerage client cash balances and proceeds from stock-lending activities, as well as stockholders’ equity.

- 29 -

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 tables present net interest revenue information corresponding to interest-earning assets and funding sources on the condensed consolidated balance sheet:

Three Months Ended June 30,	2012							2011
	Average Balance		Interest Revenue/ Expense		Average Yield/ Rate			Average Balance		Interest Revenue/ Expense		Average Yield/ Rate
Interest-earning assets:
Cash and cash equivalents	$	5,721	$	4		0.28	%	$	5,318	$	3		0.23	%
Cash and investments segregated		25,429		11		0.17	%		23,478		9		0.15	%
Broker-related receivables (1)		306		—		0.06	%		367		—		—
Receivables from brokerage clients		11,091		115		4.17	%		10,880		122		4.50	%
Securities available for sale (2)		38,407		152		1.59	%		26,105		110		1.69	%
Securities held to maturity		15,240		108		2.85	%		16,350		145		3.56	%
Loans to banking clients		9,884		77		3.13	%		9,366		77		3.30	%
Loans held for sale		18		—		4.04	%		27		—		4.71	%
Total interest-earning assets		106,096		467		1.77	%		91,891		466		2.03	%
Other interest revenue				30							30
Total interest-earning assets	$	106,096	$	497		1.88	%	$	91,891	$	496		2.17	%
Funding sources:
Deposits from banking clients	$	62,560	$	10		0.06	%	$	51,338	$	16		0.13	%
Payables to brokerage clients		29,977		—		0.01	%		28,086		—		0.01	%
Long-term debt		1,999		27		5.43	%		2,004		27		5.40	%
Total interest-bearing liabilities		94,536		37		0.16	%		81,428		43		0.21	%
Non-interest-bearing funding sources		11,560							10,463
Other interest expense				2							2
Total funding sources	$	106,096	$	39		0.14	%	$	91,891	$	45		0.20	%
Net interest revenue			$	458		1.74	%			$	451		1.97	%

⁽¹⁾  Interest revenue was less than $500,000 in the period or periods presented.

⁽²⁾  Amounts have been calculated based on amortized cost.

- 30 -

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)

Six Months Ended June 30,	2012							2011
	Average Balance		Interest Revenue/ Expense		Average Yield/ Rate			Average Balance		Interest Revenue/ Expense		Average Yield/ Rate
Interest-earning assets:
Cash and cash equivalents	$	6,134	$	8		0.26	%	$	5,137	$	6		0.24	%
Cash and investments segregated		26,140		21		0.16	%		23,335		23		0.20	%
Broker-related receivables (1)		311		—		0.07	%		370		—		0.06	%
Receivables from brokerage clients		10,646		221		4.17	%		10,609		239		4.54	%
Securities available for sale (2)		37,302		297		1.60	%		25,563		216		1.70	%
Securities held to maturity		15,106		207		2.76	%		16,742		285		3.43	%
Loans to banking clients		9,874		156		3.18	%		9,188		152		3.34	%
Loans held for sale		36		1		4.12	%		70		1		4.50	%
Total interest-earning assets		105,549		911		1.74	%		91,014		922		2.04	%
Other interest revenue				58							55
Total interest-earning assets	$	105,549	$	969		1.85	%	$	91,014	$	977		2.16	%
Funding sources:
Deposits from banking clients	$	61,833	$	20		0.07	%	$	50,836	$	33		0.13	%
Payables to brokerage clients		30,266		1		0.01	%		27,573		1		0.01	%
Long-term debt		2,000		54		5.43	%		2,005		54		5.43	%
Total interest-bearing liabilities		94,099		75		0.16	%		80,414		88		0.22	%
Non-interest-bearing funding sources		11,450							10,600
Other interest expense				2							2
Total funding sources	$	105,549	$	77		0.15	%	$	91,014	$	90		0.20	%
Net interest revenue			$	892		1.70	%			$	887		1.96	%

⁽¹⁾  Interest revenue was less than $500,000 in the period or periods presented.

⁽²⁾  Amounts have been calculated based on amortized cost.

Net interest revenue was relatively flat in the second quarter and first half of 2012 compared to the same periods in 2011, reflecting higher average balances of interest-earning assets, primarily securities available for sale, offset by the effect of lower interest rate spreads due to the continued low interest rate environment. The growth in the average balance of deposits from banking clients funded the increase in the balance of securities available for sale.

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 client fixed income securities trading activity. Factors that influence principal transaction revenue include the volume of client trades and market price volatility.

- 31 -

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)

Trading revenue increased by $14 million, or 7%, and $16 million, or 4%, in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to higher daily average revenue trades. Daily average revenue trades increased in the second quarter and first half of 2012 primarily due to a higher volume of option and future trades as a result of the inclusion of optionsXpress, partially offset by a lower volume of equity and mutual fund trades. Average revenue earned per revenue trade remained relatively flat in the second quarter and first half of 2012 compared to the same periods in 2011.

	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,				Percent Change
	2012		2011					2012		2011
Daily average revenue trades (in thousands) (1)		285.2		264.9		8	%		301.7		292.2		3	%
Number of trading days		63.0		63.0		—			125.0		125.0		—
Average revenue earned per revenue trade	$	12.15	$	12.23		(1	%)	$	12.25	$	12.17		1	%

⁽¹⁾  Includes all client trades that generate trading revenue (i.e., commission revenue or revenue from fixed income securities trading).

Other Revenue

Other revenue includes nonrecurring gains, software fee revenue from the Company’s portfolio management services, education services revenue, exchange processing fee revenue, gains on sales of mortgage loans, and other service fee revenues. Other revenue increased by $86 million and $93 million in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012. The increase was also due to the inclusion of revenues relating to education services and other service fees from the optionsXpress acquisition.

Net Impairment Losses on Securities

Net impairment losses in the Company’s non-agency residential mortgage-backed securities portfolio were $7 million and $25 million in the second quarter and first half of 2012, respectively. Net impairment losses on securities were $2 million and $9 million in the second quarter and first half of 2011, respectively. These charges were higher in the second quarter and first half of 2012 primarily due to further credit deterioration of the securities’ underlying loans. Net impairment losses were also higher in the first half of 2012 due to an increase in projected default rates for modified loans in the first quarter of 2012. For further discussion, see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 4. Securities Available for Sale and Securities Held to Maturity.”

- 32 -

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)

Expenses Excluding Interest

As shown in the table below, expenses excluding interest increased in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to the inclusion of optionsXpress. optionsXpress’ expenses excluding interest were $49 million and $98 million in the second quarter and first half of 2012, respectively.

	Three Months Ended June 30,						Percent Change			Six Months Ended June 30,						Percent Change
	2012			2011						2012			2011
Compensation and benefits	$	446		$	430			4	%	$	911		$	867			5	%
Professional services		93			92			1	%		189			184			3	%
Occupancy and equipment		80			73			10	%		156			144			8	%
Advertising and market development		57			51			12	%		124			111			12	%
Communications		55			54			2	%		113			110			3	%
Depreciation and amortization		48			33			45	%		96			68			41	%
Class action litigation and regulatory reserve		—			7			N/M			—			7			N/M
Other		72			64			13	%		138			126			10	%
Total expenses excluding interest	$	851		$	804			6	%	$	1,727		$	1,617			7	%
Expenses as a percentage of total net revenues:
Total expenses excluding interest		66	%		68	%					70	%		67	%
Advertising and market development		4	%		4	%					5	%		5	%

N/M Not meaningful.

Compensation and Benefits

Compensation and benefits expense includes salaries and wages, incentive compensation, and related employee benefits and taxes. Incentive compensation includes variable compensation, discretionary bonus costs, and stock-based compensation. Variable compensation includes payments to certain individuals based on their sales performance. Discretionary bonus costs are based on the Company’s overall performance as measured by earnings per common share, and therefore will fluctuate with this measure. Stock-based compensation primarily includes employee and board of director stock options, restricted stock units, and restricted stock awards.

- 33 -

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)

Compensation and benefits expense increased by $16 million, or 4%, and $44 million, or 5%, in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to an increase in salaries and wages. The following table shows a comparison of certain compensation and benefits components and employee data:

	Three Months Ended June 30,						Percent Change			Six Months Ended June 30,						Percent Change
	2012			2011						2012			2011
Salaries and wages	$	259		$	247			5	%	$	530		$	498			6	%
Incentive compensation		115			114			1	%		231			224			3	%
Employee benefits and other		72			69			4	%		150			145			3	%
Total compensation and benefits expense	$	446		$	430			4	%	$	911		$	867			5	%
Compensation and benefits expense as a percentage of total net revenues:
Salaries and wages		20	%		21	%					22	%		21	%
Incentive compensation		9	%		10	%					9	%		9	%
Employee benefits and other		6	%		5	%					6	%		6	%
Total compensation and benefits expense		35	%		36	%					37	%		36	%
Full-time equivalent employees (in thousands) (1)
At quarter end		13.7			13.2			4	%
Average		13.8			13.2			5	%		13.9			13.1			6	%

⁽¹⁾  Includes full-time, part-time and temporary employees, and persons employed on a contract basis, and excludes employees of outsourced service providers.

Salaries and wages increased in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to an increase in full-time employees, which was partially due to the addition of full-time employees from the optionsXpress acquisition.

Expenses Excluding Compensation and Benefits

Occupancy and equipment expense increased in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to an increase in software maintenance expense relating to the Company’s information technology systems.

Advertising and market development expense increased in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to the inclusion of optionsXpress’ expenses, including electronic media and customer seminars.

Depreciation and amortization expense increased in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to higher amortization of intangible assets relating to the optionsXpress acquisition.

Taxes on Income

The Company’s effective income tax rate on income before taxes was 36.3% and 38.3% for the second quarters of 2012 and 2011, respectively. The Company’s effective income tax rate on income before taxes was 36.9% and 38.3% for the first halves of 2012 and 2011, respectively. The decrease in the second quarter and first half of 2012 was primarily due to the impact of a lower effective state income tax rate and the impact of non-recurring items on the computation of the effective income tax rate in the second quarter of 2012.

Segment Information

The Company provides financial services to individuals and institutional clients through two segments – Investor Services and Institutional Services. The Investor Services segment provides retail brokerage and banking services to individual investors. The Institutional Services segment provides custodial, trading, and support services to independent investment

- 34 -

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)

advisors. The Institutional Services segment also provides retirement plan services, specialty brokerage services, and mutual fund clearing services, and supports the availability of Schwab proprietary mutual funds and collective trust funds on third-party platforms. Banking revenues and expenses are allocated to the Company’s two segments based on which segment services the client. The Company evaluates the performance of its segments on a pre-tax basis, excluding items such as significant nonrecurring gains, impairment charges on non-financial assets, discontinued operations, extraordinary items, and significant restructuring and other charges.

Financial information for the Company’s reportable segments is presented in the following tables:

	Investor Services									Institutional Services
Three Months Ended June 30,	Percent Change			2012			2011			Percent Change			2012			2011
Net Revenues:
Asset management and administration fees		(1	%)	$	271		$	275			—		$	227		$	227
Net interest revenue		(1	%)		385			387			14	%		73			64
Trading revenue		8	%		147			136			3	%		72			70
Other		69	%		27			16			11	%		21			19
Provision for loan losses		N/M			(3	)		(1	)		N/M			(1	)		—
Net impairment losses on securities		N/M			(6	)		(2	)		N/M			(1	)		—
Total net revenues		1	%		821			811			3	%		391			380
Expenses Excluding Interest		7	%		587			547			2	%		264			258
Income before taxes on income		(11	%)	$	234		$	264			4	%	$	127		$	122
	Unallocated									Total
Three Months Ended June 30,	Percent Change			2012			2011			Percent Change			2012			2011
Net Revenues:
Asset management and administration fees		N/M		$	(2	)	$	—			(1	%)	$	496		$	502
Net interest revenue		N/M			—			—			2	%		458			451
Trading revenue		N/M			—			(1	)		7	%		219			205
Other		N/M			73			—			N/M			121			35
Provision for loan losses		N/M			—			—			N/M			(4	)		(1	)
Net impairment losses on securities		N/M			—			—			N/M			(7	)		(2	)
Total net revenues		N/M			71			(1	)		8	%		1,283			1,190
Expenses Excluding Interest		N/M			—			(1	)		6	%		851			804
Income before taxes on income		N/M		$	71		$	—			12	%	$	432		$	386
Taxes on income											6	%		157			148
Net Income											16	%	$	275		$	238

N/M Not meaningful.

- 35 -

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)

	Investor Services									Institutional Services
Six Months Ended June 30,	Percent Change			2012			2011			Percent Change			2012			2011
Net Revenues:
Asset management and administration fees		(4	%)	$	531		$	551			(1	%)	$	450		$	453
Net interest revenue		(1	%)		750			760			12	%		142			127
Trading revenue		5	%		310			296			1	%		152			150
Other		50	%		54			36			8	%		41			38
Provision for loan losses		(25	%)		(3	)		(4	)		N/M			(1	)		(1	)
Net impairment losses on securities		175	%		(22	)		(8	)		N/M			(3	)		(1	)
Total net revenues		(1	%)		1,620			1,631			2	%		781			766
Expenses Excluding Interest		8	%		1,193			1,101			3	%		534			518
Income before taxes on income		(19	%)	$	427		$	530			—		$	247		$	248
	Unallocated									Total
Six Months Ended June 30,	Percent Change			2012			2011			Percent Change			2012			2011
Net Revenues:
Asset management and administration fees		N/M		$	(1	)	$	—			(2	%)	$	980		$	1,004
Net interest revenue		N/M			—			—			1	%		892			887
Trading revenue		N/M			—			—			4	%		462			446
Other		N/M			72			—			126	%		167			74
Provision for loan losses		N/M			—			—			(20	%)		(4	)		(5	)
Net impairment losses on securities		N/M			—			—			178	%		(25	)		(9	)
Total net revenues		N/M			71			—			3	%		2,472			2,397
Expenses Excluding Interest		N/M			—			(2	)		7	%		1,727			1,617
Income before taxes on income		N/M		$	71		$	2			(4	%)	$	745		$	780
Taxes on income											(8	%)		275			299
Net Income											(2	%)	$	470		$	481

N/M Not meaningful.

Investor Services

Net revenues were relatively flat in the second quarter and first half of 2012 compared to the same periods in 2011 primarily due to an increase in trading revenue and other revenue, partially offset by a decrease in asset management and administration fees and higher net impairment losses on securities. Trading revenue increased primarily due to higher daily average trades as a result of the inclusion of optionsXpress’ option, future, and equity trades from its acquisition in September 2011. Other revenue increased primarily due to the inclusion of revenues relating to education services and other service fees from optionsXpress. Asset management and administration fees decreased primarily due to a decrease in mutual fund service fees, including net money market mutual fund fees and Mutual Fund OneSource fees, partially offset by an increase in revenue from the Company’s advice solutions relating to Windhaven. Net impairment losses in the Company’s non-agency residential mortgage-backed securities portfolio were higher primarily due to further credit deterioration of the securities’ underlying loans. Net impairment losses were also higher in the first half of 2012 due to an increase in projected default rates for modified loans in the first quarter of 2012. Expenses excluding interest increased by $40 million, or 7%, and $92 million, or 8%, in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to the inclusion of optionsXpress’ compensation and benefits, depreciation and amortization, and advertising and market development expenses.

Institutional Services

Net revenues increased by $11 million, or 3%, and $15 million, or 2%, in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to an increase in net interest revenue. Net interest revenue increased primarily due to higher average balances of interest-earning assets, partially offset by the effect of lower interest rate spreads

- 36 -

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)

due to the continued low interest rate environment in the second quarter and first half of 2012. Expenses excluding interest increased by $6 million, or 2%, and $16 million, or 3% in the second quarter and first half of 2012 compared to the same periods in 2011, respectively, primarily due to increases in occupancy and equipment and other expense.

Unallocated

Other revenue in the second quarter and first half of 2012 includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

LIQUIDITY AND CAPITAL RESOURCES

CSC conducts substantially all of its business through its wholly-owned subsidiaries. The Company’s capital structure is designed to provide each subsidiary with capital and liquidity to meet its operational needs and regulatory requirements.

CSC is a savings and loan holding company and Schwab Bank, CSC’s depository institution, is a federal savings bank. CSC is subject to supervision and regulation by the Federal Reserve and Schwab Bank is subject to supervision and regulation by the Office of the Comptroller of the Currency.

Liquidity

CSC

While CSC is not currently subject to specific statutory capital requirements, CSC is required to serve as a source of strength for Schwab Bank and must have the ability to provide financial assistance if Schwab Bank experiences financial distress. To manage capital adequacy, the Company currently utilizes a target Tier 1 Leverage Ratio, as defined by the Federal Reserve, of at least 6%. At June 30, 2012, CSC’s Tier 1 Leverage Ratio was 7.1%.

CSC’s liquidity needs are generally met through cash generated by its subsidiaries, as well as cash provided by external financing. CSC has a universal automatic shelf registration statement (Shelf Registration Statement) on file with the SEC which enables CSC to issue debt, equity and other securities. CSC maintains excess liquidity in the form of overnight cash deposits and short-term investments to cover daily funding needs and to support growth in the Company’s business. Generally, CSC does not hold liquidity at its subsidiaries in excess of amounts deemed sufficient to support the subsidiaries’ operations, including any regulatory capital requirements. Schwab, Schwab Bank, and optionsXpress, Inc. are subject to regulatory requirements that may restrict them from certain transactions with CSC, as further discussed below. Management believes that funds generated by the operations of CSC’s subsidiaries will continue to be the primary funding source in meeting CSC’s liquidity needs, providing adequate liquidity to meet Schwab Bank’s capital guidelines, and maintaining Schwab and optionsXpress, Inc.’s net capital.

In June and January 2012 the Company completed equity offerings of 485,000 and 400,000 shares of its preferred stock, Series B and Series A, respectively, under the Shelf Registration Statement. CSC’s preferred stock is rated Baa2 by Moody’s Investors Service (Moody’s), BBB+ by Standard & Poor’s Ratings Group (Standard & Poor’s), and BB+ by Fitch Ratings, Ltd (Fitch). For further discussion of these equity offerings, see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 8. Preferred Stock.”

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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)

CSC has liquidity needs that arise from the funding of cash dividends, acquisitions, and investments, as well as its Senior Notes, Senior Medium-Term Notes, Series A (Medium-Term Notes), and Junior Subordinated Notes. The following are details of CSC’s long-term debt:

June 30, 2012	Par Outstanding		Maturity	Interest Rate	Moody’s	Standard & Poor’s	Fitch
Senior Notes	$	1,450	2014 - 2020	4.45% to 4.950% fixed	A2	A	A
Medium-Term Notes	$	250	2017	6.375% fixed	A2	A	A
Junior Subordinated Notes (1)	$	202	2067	7.50% fixed until 2017, floating thereafter	Baa1	BBB+	BBB-

⁽¹⁾  The Junior Subordinated Notes themselves are not rated, however, the trust preferred securities related to these Junior Subordinated Notes are rated.

CSC has authorization from its Board of Directors to issue unsecured commercial paper notes (Commercial Paper Notes) not to exceed $1.5 billion. Management has set a current limit for the commercial paper program of $800 million. The maturities of the Commercial Paper Notes may vary, but are not to exceed 270 days from the date of issue. The commercial paper is not redeemable prior to maturity and cannot be voluntarily prepaid. The proceeds of the commercial paper program are to be used for general corporate purposes. There were no borrowings of Commercial Paper Notes outstanding at June 30, 2012. CSC’s ratings for these short-term borrowings are P1 by Moody’s, A1 by Standard & Poor’s, and F1 by Fitch.

CSC maintains an $800 million committed, unsecured credit facility with a group of 11 banks, which is scheduled to expire in June 2013. This facility replaced a similar facility that expired in June 2012 and was unused during the first half of 2012. The funds under this facility are available for general corporate purposes. The financial covenants under this facility require Schwab to maintain a minimum net capital ratio, as defined, Schwab Bank to be well capitalized, as defined, and CSC to maintain a minimum level of stockholders’ equity. At June 30, 2012, the minimum level of stockholders’ equity required under this facility was $5.5 billion (CSC’s stockholders’ equity at June 30, 2012 was $9.1 billion). Management believes that these restrictions will not have a material effect on CSC’s ability to meet foreseeable dividend or funding requirements.

CSC also has direct access to $755 million of the $930 million uncommitted, unsecured bank credit lines discussed below, that are primarily utilized by Schwab to manage short-term liquidity. These lines were not used by CSC during the first half of 2012.

In addition, Schwab provides CSC with a $1.0 billion credit facility, maturing December 2014. There were no funds drawn under this facility at June 30, 2012.

Schwab

Schwab is subject to regulatory requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers. These regulations prohibit Schwab from repaying subordinated borrowings from CSC, paying cash dividends, or making unsecured advances or loans to its parent company or employees 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. At June 30, 2012, Schwab’s net capital was $1.4 billion (11% of aggregate debit balances), which was $1.2 billion in excess of its minimum required net capital and $781 million in excess of 5% of aggregate debit balances.

Most of Schwab’s assets are readily convertible to cash, consisting primarily of short-term (i.e., less than 150 days) investment-grade, interest-earning investments (the majority of which are segregated for the exclusive benefit of clients pursuant to regulatory requirements), receivables from brokerage clients, and receivables from brokers, dealers, and clearing organizations. Client margin loans are demand loan obligations secured by readily marketable securities. Receivables from and payables to brokers, dealers, and clearing organizations primarily represent current open transactions, which usually settle, or can be closed out, within a few business days.

Liquidity needs relating to client trading and margin borrowing activities are met primarily through cash balances in brokerage client accounts, which were $29.9 billion and $33.5 billion at June 30, 2012 and December 31, 2011, respectively.

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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)

Management believes that brokerage client cash balances and operating earnings will continue to be the primary sources of liquidity for Schwab.

Schwab has a finance lease obligation related to an office building and land under a 20-year lease. The remaining finance lease obligation of $98 million at June 30, 2012, is being reduced by a portion of the lease payments over the remaining lease term of 12 years.

To manage short-term liquidity, Schwab maintains uncommitted, unsecured bank credit lines with a group of six banks totaling $930 million at June 30, 2012. The need for short-term borrowings arises primarily from timing differences between cash flow requirements, scheduled liquidation of interest-earning investments, and movements of cash to meet regulatory brokerage client cash segregation requirements. Schwab used such borrowings for 2 days during the first half of 2012, with average daily amounts borrowed of $88 million. There were no borrowings outstanding under these lines at June 30, 2012.

To partially satisfy the margin requirement of client option transactions with the Options Clearing Corporation (OCC), Schwab has unsecured standby letter of credit agreements (LOCs) with seven banks in favor of the OCC aggregating $350 million at June 30, 2012. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. Schwab satisfies the collateral requirements by arranging LOCs, in favor of these brokerage clients, which are issued by multiple banks. At June 30, 2012, the aggregate face amount of these LOCs totaled $110 million. There were no funds drawn under any of these LOCs during the first half of 2012.

To manage Schwab’s regulatory capital requirement, CSC provides Schwab with a $1.4 billion subordinated revolving credit facility, which is scheduled to expire in March 2014. The amount outstanding under this facility at June 30, 2012, was $315 million. Borrowings under this subordinated lending arrangement qualify as regulatory capital for Schwab.

In addition, CSC provides Schwab with a $2.5 billion credit facility, which is scheduled to expire in December 2014. Borrowings under this facility do not qualify as regulatory capital for Schwab. There were no funds drawn under this facility at June 30, 2012.

Schwab Bank

Schwab Bank is required to maintain capital levels as specified in federal banking laws and 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 Schwab Bank. Based on its regulatory capital ratios at June 30, 2012, Schwab Bank is considered well capitalized. Schwab Bank’s regulatory capital and ratios at June 30, 2012, are as follows:

	Actual					Minimum Capital Requirement					Minimum to be Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 Risk-Based Capital	$	5,431		22.1	%	$	985		4.0	%	$	1,477		6.0	%
Total Risk-Based Capital	$	5,479		22.3	%	$	1,970		8.0	%	$	2,462		10.0	%
Tier 1 Leverage	$	5,431		7.6	%	$	2,876		4.0	%	$	3,595		5.0	%
Tangible Equity	$	5,431		7.6	%	$	1,438		2.0	%		N/A

N/A Not applicable.

Management lowered its target Tier 1 Leverage Ratio for Schwab Bank from at least 7.5% to 6.25% in the third quarter of 2012. This change reflects Schwab Bank’s approach to lending and investing, which results in a lower risk profile relative to the industry and risk-based capital ratios significantly in excess of well capitalized levels. This will allow greater flexibility in managing capital resources to either support Schwab Bank’s balance sheet growth or return capital to CSC. Schwab Bank’s current liquidity needs are generally met through deposits from banking clients and equity capital.

The excess cash held in certain Schwab brokerage client accounts is swept into deposit accounts at Schwab Bank. At June 30, 2012, these balances totaled $46.4 billion.

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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 Bank has access to traditional funding sources such as deposits, federal funds purchased, and repurchase agreements. Additionally, Schwab Bank has access to short-term funding through the Federal Reserve Bank (FRB) discount window. Amounts available under the FRB discount window are dependent on the fair value of certain of Schwab Bank’s securities available for sale and securities held to maturity that are pledged as collateral. Schwab Bank maintains policies and procedures necessary to access this funding and tests discount window borrowing procedures annually. At June 30, 2012, $1.9 billion was available under this arrangement. There were no funds drawn under this arrangement during the first half of 2012.

Schwab Bank maintains a credit facility with the Federal Home Loan Bank System. Amounts available under this facility are dependent on the amount of Schwab Bank’s residential real estate mortgages and home equity lines of credit (HELOCs) that are pledged as collateral. At June 30, 2012, $5.2 billion was available under this facility. There were no funds drawn under this facility during the first half of 2012.

CSC provides Schwab Bank with a $100 million short-term credit facility, which is scheduled to expire in December 2014. Borrowings under this facility do not qualify as regulatory capital for Schwab Bank. There were no funds drawn under this facility during the first half of 2012.

optionsXpress

optionsXpress, Inc., a wholly-owned subsidiary of optionsXpress, is a registered broker-dealer and is subject to regulatory requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers. These regulations prohibit optionsXpress, Inc. from paying cash dividends or making unsecured advances or loans to its parent company or employees 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. At June 30, 2012, optionsXpress, Inc.’s net capital was $71 million (30% of aggregate debit balances), which was $66 million in excess of its minimum required net capital and $59 million in excess of 5% of aggregate debit balances.

optionsXpress, Inc. is also subject to Commodity Futures Trading Commission Regulation 1.17 (Reg. 1.17) under the Commodity Exchange Act, which also requires the maintenance of minimum net capital. optionsXpress, Inc. as a futures commission merchant, is required to maintain minimum net capital equal to the greater of its net capital requirement under Reg. 1.17 ($1 million), or the sum of 8% of the total risk margin requirements for all positions carried in customer accounts and 8% of the total risk margin requirements for all positions carried in non-customer accounts (as defined in Reg. 1.17).

Liquidity needs relating to client trading and margin borrowing activities are met primarily through cash balances in brokerage client accounts, which were $1.3 billion at June 30, 2012. Management believes that brokerage client cash balances and operating earnings will continue to be the primary sources of liquidity for optionsXpress, Inc.

CSC provides optionsXpress, Inc. with a $100 million credit facility, which is scheduled to expire in December 2014. Borrowings under this facility do not qualify as regulatory capital for optionsXpress, Inc. There were no borrowings outstanding under this facility at June 30, 2012.

optionsXpress has a term loan with CSC, of which $101 million was outstanding at June 30, 2012, and matures in December 2014.

Capital Resources

The Company monitors both the relative composition and absolute level of its capital structure. Management is focused on limiting the Company’s use of capital and currently targets a long-term debt to total financial capital ratio not to exceed 30%. The Company’s total financial capital (long-term debt plus stockholders’ equity) at June 30, 2012, was $11.1 billion, up $1.4 billion, or 14%, from December 31, 2011. At June 30, 2012, the Company had long-term debt of $2.0 billion, or 18% of total financial capital, that bears interest at a weighted-average rate of 5.24%. At December 31, 2011, the Company had long-term debt of $2.0 billion, or 21% of total financial capital. The Company repaid $3 million of long-term debt in the first half of 2012.

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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’s cash position (reported as cash and cash equivalents on its condensed consolidated balance sheet) and cash flows are affected by changes in brokerage client cash balances and the associated amounts required to be segregated under regulatory guidelines. Timing differences between cash and investments actually segregated on a given date and the amount required to be segregated for that date may arise in the ordinary course of business, and are addressed by the Company in accordance with applicable regulations. Other factors which affect the Company’s cash position and cash flows include investment activity in securities, levels of capital expenditures, acquisition and divestiture activity, banking client deposit activity, brokerage and banking client loan activity, financing activity in long-term debt, payments of dividends, and repurchases and issuances of CSC’s preferred and common stock. The combination of these factors can cause significant fluctuations in the cash position during specific time periods.

Equity Offerings

In June 2012, the Company issued and sold 485,000 shares of 6.00% non-cumulative perpetual preferred stock, Series B, with a liquidation preference of $1,000 per share for net proceeds of $469 million (Series B Preferred Stock). In January 2012, the Company issued and sold 400,000 shares of fixed-to-floating rate (currently fixed at 7.000%) non-cumulative perpetual preferred stock, Series A, with a liquidation preference of $1,000 per share for net proceeds of $394 million (Series A Preferred Stock). Net proceeds received from these sales are being used for general corporate purposes, which may include, without limitation, extending credit to, or funding investments in, the Company’s subsidiaries, and the possible refinancing of outstanding indebtedness. For further discussion of these equity offerings, see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 8. Preferred Stock.”

Capital Expenditures

The Company’s capital expenditures were $65 million and $81 million in the first halves of 2012 and 2011, respectively. Capital expenditures in the first half of 2012 were primarily for capitalized costs for developing internal-use software, software and equipment relating to the Company’s information technology systems, and leasehold improvements. Capital expenditures in the first half of 2011 were primarily for software and equipment relating to the Company’s information technology systems and capitalized costs for developing internal-use software. Capitalized costs for developing internal-use software were $31 million and $22 million in the first halves of 2012 and 2011, respectively.

As discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, management anticipated that 2012 capital expenditures would be 30% lower than 2011 spending. Due primarily to increased spending on capitalized costs for developing internal-use software and software relating to the Company’s information technology systems, management currently anticipates that full-year 2012 capital expenditures will be approximately 20% lower than 2011 levels.

Dividends

CSC paid common stock cash dividends of $154 million ($0.12 per share) and $145 million ($0.12 per share) in the first halves of 2012 and 2011, respectively.

On May 17, 2012, CSC declared a semi-annual dividend of $36.17 per share of Series A Preferred Stock that is payable August 1, 2012, to stockholders of record on July 17, 2012. On July 26, 2012, CSC declared a quarterly dividend of $14.17 per share of Series B Preferred Stock that is payable September 4, 2012, to stockholders of record on August 17, 2012. Under the respective terms of the Series A Preferred Stock and Series B Preferred Stock, the Company’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 relevant series of preferred stock, is subject to restrictions in the event that the Company does not declare and either pay or set aside a sum sufficient for payment of dividends on the relevant series of preferred stock for the immediately preceding dividend period. For further discussion of the Series A and Series B Preferred Stock offerings, see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 8. Preferred Stock.”

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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)

Share Repurchases

There were no repurchases of CSC’s common stock in the first halves of 2012 or 2011. As of June 30, 2012, CSC had remaining authority from the Board of Directors to repurchase up to $596 million of its common stock, which does not have an expiration date.

Business Acquisition

On September 1, 2011, the Company completed its acquisition of all of the outstanding common shares of optionsXpress, an online brokerage firm primarily focused on equity option securities and futures, for total consideration of $714 million. Under the terms of the merger agreement, optionsXpress stockholders received 1.02 shares of the Company’s common stock for each share of optionsXpress stock. As a result, the Company issued 59 million shares of the Company’s common stock valued at $710 million, based on the closing price of the Company’s common stock on September 1, 2011. The Company also assumed optionsXpress’ stock-based compensation awards valued at $4 million.

Off-Balance Sheet Arrangements

The Company enters into various off-balance sheet arrangements in the ordinary course of business, primarily to meet the needs of its clients. These arrangements include firm commitments to extend credit. Additionally, the Company enters into guarantees and other similar arrangements as part of transactions in the ordinary course of business. For discussion on the Company’s off-balance sheet arrangements, see “Part II – Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 6. Commitments and Contingencies.”

RISK MANAGEMENT

The Company’s business activities expose it to a variety of risks, including technology, operations, credit, market, liquidity, legal, and reputational risk. Identification and management of these risks are essential to the success and financial soundness of the Company.

For a discussion on risks that the Company faces and the policies and procedures for risk identification, assessment, and management, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. For updated information on the Company’s credit risk and concentration risk exposures, see below. See “Item 3 – Quantitative and Qualitative Disclosures About Market Risk” for additional information relating to market risk.

Risk is inherent in the Company’s business. Consequently, despite the Company’s efforts to identify areas of risk and implement risk management policies and procedures, there can be no assurance that the Company will not suffer unexpected losses due to operating or other risks.

Credit Risk Exposures

The Company has exposure to credit risk associated with the Company’s loans to banking clients. The Company’s mortgage loan portfolios primarily include first lien residential real estate mortgage loans (First Mortgage) of $5.7 billion and HELOCs of $3.4 billion at June 30, 2012.

The Company’s First Mortgage portfolio underwriting requirements are generally consistent with the underwriting requirements in the secondary market for loan portfolios. The Company’s guidelines include maximum loan-to-value (LTV) ratios, cash out limits, and minimum Fair Isaac & Company (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 is conforming or jumbo). These credit underwriting standards have limited the exposure to the 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)

loans that experienced high foreclosures and loss rates elsewhere in the industry in recent years. There have been no significant changes to the LTV ratio or FICO credit score guidelines related to the Company’s First Mortgage or HELOC portfolios during the first half of 2012. At June 30, 2012, the weighted-average originated LTV ratios were 60% and 59% for the First Mortgage and HELOC portfolios, respectively. The computation of the origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, 22% of HELOCs ($746 million of the HELOC portfolio) were in a first lien position. The weighted-average originated FICO credit scores were 766 and 768 for the First Mortgage and HELOC portfolios, respectively.

The Company does not offer 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 credit score of less than 620 at origination), unless the borrower has compensating credit factors. At June 30, 2012, approximately 1% of both the First Mortgage and HELOC portfolios consisted of loans to borrowers with FICO credit scores of less than 620.

The following table presents certain of the Company’s loan quality metrics as a percentage of total outstanding loans:

	June 30, 2012			December 31, 2011
Loan delinquencies (1)		0.80	%		0.81	%
Nonaccrual loans		0.48	%		0.53	%
Allowance for loan losses		0.52	%		0.55	%

⁽¹⁾  Loan delinquencies are defined as loans that are 30 days or more past due.

The Company has exposure to credit risk associated with its securities available for sale and securities held to maturity portfolios, whose fair values totaled $40.0 billion and $16.0 billion at June 30, 2012, respectively. These portfolios include U.S. agency and non-agency residential mortgage-backed securities, certificates of deposit, corporate debt securities, U.S. agency notes, and asset-backed and other securities. U.S. agency residential 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-sponsored enterprises. Included in non-agency residential mortgage-backed securities are securities collateralized by loans that are considered to be “Prime” (defined by the Company as loans to borrowers with a FICO credit score of 620 or higher at origination), and “Alt-A” (defined by the Company as Prime loans with reduced documentation at origination).

Residential mortgage-backed securities, particularly Alt-A securities, experienced continued credit deterioration in the first half of 2012, including increased payment delinquency rates and losses on foreclosures of underlying mortgages. For a discussion of the impact of current market conditions on residential mortgage-backed securities, see “Current Market and Regulatory Environment and Other Developments.” At June 30, 2012, the amortized cost of non-agency residential mortgage-backed securities represented 2% of the total residential mortgage-backed securities portfolio. These securities were originated between 2003 and 2007. At June 30, 2012, all of the corporate debt securities and non-mortgage asset-backed securities were rated investment grade (defined as a rating equivalent to a Moody’s rating of “Baa” or higher, or a Standard & Poor’s rating of “BBB-” or higher).

Concentration Risk Exposures

The Company has exposure to concentration risk when holding large positions in financial instruments collateralized by assets with similar economic characteristics or in securities of a single issuer or industry.

The fair value of the Company’s investments in residential mortgage-backed securities totaled $40.9 billion at June 30, 2012. Of these, $40.1 billion were issued by U.S. agencies and $776 million were issued by private entities (non-agency securities). The U.S. agency securities are included in securities available for sale and securities held to maturity and the non-agency securities are included in securities available for sale. Included in non-agency residential mortgage-backed securities are securities collateralized by Alt-A loans. At June 30, 2012, the amortized cost and fair value of Alt-A mortgage-backed securities were $343 million and $265 million, respectively.

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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’s investments in corporate debt securities and commercial paper totaled $6.7 billion at June 30, 2012, with the majority issued by institutions in the financial services industry. These securities are included in securities available for sale, securities held to maturity, cash and investments segregated and on deposit for regulatory purposes, cash and cash equivalents, and other securities owned in the Company’s condensed consolidated balance sheets. At June 30, 2012, the Company held $677 million of corporate debt securities issued by financial institutions and guaranteed under the FDIC Temporary Liquidity Guarantee Program.

The Company’s loans to banking clients include $5.7 billion of adjustable rate first lien residential real estate mortgage loans at June 30, 2012. The Company’s adjustable rate mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter. Approximately 55% of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 65% of these interest-only loans are not scheduled to reset for three or more years. The Company’s mortgage loans do not include interest terms described as temporary introductory rates below current market rates. At June 30, 2012, 44% of the residential real estate mortgages and 50% of the HELOC balances were secured by properties which are located in California.

The Company also has exposure to concentration risk from its margin and securities lending activities collateralized by securities of a single issuer or industry.

The Company has indirect exposure to U.S. Government and agency securities held as collateral to secure its resale agreements. The Company’s primary credit exposure on these resale transactions is with its counterparty. The Company would have exposure to the U.S. Government and agency securities only in the event of the counterparty’s default on the resale agreements. The fair value of U.S. Government and agency securities held as collateral for resale agreements totaled $15.6 billion at June 30, 2012.

European Holdings

The Company has exposure to non-sovereign financial institutions in Europe. The following table shows the amortized cost and fair values of cash equivalents, cash and investments segregated and on deposit for regulatory purposes, securities available for sale, and securities held to maturity by each country in Europe in which the issuer or counterparty is domiciled. The Company has no direct exposure to sovereign governments in Europe. The Company does not have unfunded commitments to counterparties in Europe, nor does it have exposure as a result of credit default protection purchased or sold separately as of June 30, 2012.

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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 as of June 30, 2012
	Denmark(1)		France		Germany		Netherlands		Norway		Sweden		Switzerland		United Kingdom(1)		Total
Cash equivalents:
Time deposits	$	—	$	461	$	—	$	—	$	200	$	—	$	—	$	200	$	861
Cash and investments segregated and on deposit for regulatory purposes:
Trust deposits		—		—		400		—		—		—		—		—		400
Securities available for sale:
Certificates of deposit		—		200		300		100		100		600		601		1,001		2,902
Corporate debt securities		213		—		—		192		—		100		—		602		1,107
Securities held to maturity:
Corporate debt securities		—		—		—		—		—		116		99		—		215
Total fair value	$	213	$	661	$	700	$	292	$	300	$	816	$	700	$	1,803	$	5,485
Total amortized cost	$	212	$	661	$	700	$	292	$	300	$	816	$	700	$	1,800	$	5,481
Maturities:
Overnight	$	—	$	461	$	400	$	—	$	200	$	—	$	—	$	200	$	1,261
1 day – < 6 months		—		100		150		—		—		116		275		651		1,292
6 months – < 1 year		113		100		150		70		100		200		125		600		1,458
1 year – 2 years		100		—		—		122		—		500		201		251		1,174
> 2 years		—		—		—		100		—		—		99		101		300
Total fair value	$	213	$	661	$	700	$	292	$	300	$	816	$	700	$	1,803	$	5,485

⁽¹⁾  Certain of the exposures in Denmark and the United Kingdom are also backed by the full faith and credit of the Denmark and United Kingdom governments.

In addition to the direct holdings of European companies listed above, the Company also has indirect exposure to Europe through its investments in Schwab sponsored money market funds (collectively, the Funds) resulting from clearing activities. At June 30, 2012, the Company had $135 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 Europe.

CRITICAL ACCOUNTING ESTIMATES

Certain of the Company’s accounting policies that involve a higher degree of judgment and complexity are discussed in “Part II – Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. There have been no changes to these critical accounting estimate categories during the first half of 2012.

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, the Company’s annual goodwill impairment testing date is April 1. In testing for a potential impairment of goodwill on April 1, 2012, management estimated the fair value of each of the Company’s reporting units (generally defined as the Company’s businesses for which financial information is available and reviewed regularly by management) and compared this value to the carrying value of the reporting unit. The estimated fair value of each reporting unit exceeded its carrying value, and therefore management concluded that goodwill was not impaired.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q 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

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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)

statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimate,” “appear,” “aim,” “target,” “could,” 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 necessarily estimates based on the best judgment of the Company’s senior management. These statements relate to, among other things:

• the impact of current market conditions on the Company’s results of operations (see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 4. Securities Available for Sale and Securities Held to Maturity” and “Current Market and Regulatory Environment and Other Developments”);

• the expected impact of the Federal Reserve’s NPRs (see “Current Market and Regulatory Environment and Other Developments”);

• the impact of changes in the likelihood of guarantee payment obligations on the Company’s results of operations (see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 6. Commitments and Contingencies”);

• the impact of legal proceedings and regulatory matters (see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 6. Commitments and Contingencies” and “Part II – Other Information – Item 1 – Legal Proceedings”);

• target capital ratios (see “Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 11. Regulatory Requirements” and “Liquidity and Capital Resources”);

• sources of liquidity, capital, and level of dividends (see “Liquidity and Capital Resources”); and

• capital expenditures (see “Liquidity and Capital Resources – Capital Resources”).

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 Quarterly Report on Form 10-Q 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:

• changes in general economic and financial market conditions;

• changes in revenues and profit margin due to changes in interest rates;

• the Company’s ability to attract and retain clients and grow client assets and relationships;

• the Company’s ability to develop and launch new products, services and capabilities in a timely and successful manner;

• fluctuations in client asset values due to changes in equity valuations;

• the Company’s ability to monetize client assets;

• the performance or valuation of securities available for sale and securities held to maturity;

• trading activity;

• the level of interest rates, including yields available on money market mutual fund eligible instruments;

• the adverse impact of financial reform legislation and related regulations;

• potential breaches of contractual terms for which the Company has guarantee obligations;

• adverse developments in litigation or regulatory matters;

• amounts recovered on insurance policies;

• the extent of any charges associated with litigation and regulatory matters;

• the amount of loans to the Company’s brokerage and banking clients;

• the level of the Company’s stock repurchase activity;

• capital needs;

• level of expenses;

• acquisition integration costs;

• the level of brokerage client cash balances and deposits from banking clients;

• the availability and terms of external financing; and

• timing and impact of changes in the Company’s level of investments in software.

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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 “Part I – Item 1A – Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and “Part II – Other Information – Item 1A – Risk Factors.”

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THE CHARLES SCHWAB CORPORATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for changes in revenue or the value of financial instruments held by the Company as a result of fluctuations in interest rates, equity prices or market conditions.

For the Company’s market risk related to interest rates, a sensitivity analysis, referred to as a net interest revenue simulation model, is shown below. The Company is exposed to interest rate risk primarily from changes in market interest rates on its 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 include residential real estate loans and mortgage-backed securities. These assets are sensitive to changes in interest rates and to changes to prepayment levels, which tend to increase in a declining rate environment.

To mitigate the risk of loss, the Company has 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 its interest-earning assets and funding sources. To remain within these guidelines, the Company manages the maturity, repricing, and cash flow characteristics of the investment portfolios. Because the Company establishes the rates paid on certain brokerage client cash balances and deposits from banking clients, the rates charged on margin loans, and controls the composition of its investment securities, it has some ability to manage its net interest spread, depending on competitive factors and market conditions.

The Company is also subject to market risk as a result of fluctuations in equity prices. The Company’s direct holdings of equity securities and its associated exposure to equity prices are not material. The Company is indirectly exposed to equity market fluctuations in connection with securities collateralizing margin loans to brokerage customers, and customer securities loaned out as part of the Company’s securities lending activities. Equity market valuations may also affect the level of brokerage client trading activity, margin borrowing, and overall client engagement with the Company. Additionally, the Company earns mutual fund 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 earned by the Company.

Financial instruments held by the Company are also subject to liquidity risk – that is, the risk that valuations will be negatively affected by changes in demand and the underlying market for a financial instrument. Recent conditions in the credit markets have significantly reduced market liquidity in a wide range of financial instruments, including the types of instruments held by the Company, and fair value can differ significantly from the value implied by the credit quality and actual performance of the instrument’s underlying cash flows.

Financial instruments held by the Company are also subject to valuation risk as a result of changes in valuations of the underlying collateral, such as housing prices in the case of residential real estate loans and mortgage-backed securities.

For discussion of the impact of current market conditions on asset management and administration fees, net interest revenue, and securities available for sale, see “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Current Market and Regulatory Environment and Other Developments.”

The Company’s market risk related to financial instruments held for trading and forward sale and interest rate lock commitments related to its loans held for sale portfolio is not material.

Net Interest Revenue Simulation

The Company uses net interest revenue simulation modeling techniques to evaluate and manage the effect of changing interest rates. The simulation model (the model) includes all interest-sensitive assets and liabilities. Key variables in the model include the repricing of financial instruments, prepayment, reinvestment, and product pricing assumptions. The Company uses constant balances and market rates in the model assumptions in order to minimize the number of variables

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THE CHARLES SCHWAB CORPORATION

and to better isolate risks. The simulations involve assumptions that are inherently uncertain and, as a result, cannot precisely estimate net interest revenue or predict the impact of changes in interest rates on net interest revenue. Actual results may differ from simulated results due 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.

As represented by the simulations presented below, the Company’s 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 (i.e., interest-earning assets generally reprice more quickly than interest-bearing liabilities).

The simulations in the following table assume that the asset and liability structure of the consolidated balance sheet would not be changed as a result of the simulated changes in interest rates. As the Company actively manages its consolidated balance sheet and interest rate exposure, in all likelihood the Company would take steps to manage any additional interest rate exposure that could result from changes in the interest rate environment. The following table shows the results of a gradual 100 basis point increase or decrease in market interest rates relative to the Company’s current market rates forecast on simulated net interest revenue over the next 12 months beginning June 30, 2012, and December 31, 2011.

	June 30, 2012			December 31, 2011
Increase of 100 basis points		16.6	%		19.1	%
Decrease of 100 basis points		(8.4	%)		(8.1	%)

The sensitivities shown in the simulation reflect the fact that short-term interest rates in the first half of 2012 remained at historically low levels, including the federal funds target rate, which was unchanged at a range of zero to 0.25%. The current low interest rate environment limits the extent to which the Company can reduce interest expense paid on funding sources in a declining interest rate scenario. A decline in interest rates could therefore negatively impact the yield on the Company’s investment portfolio to a greater degree than any offsetting reduction in interest expense, further compressing net interest margin. Any increases in short-term interest rates result in a greater impact as yields on interest-earning assets are expected to rise faster than the cost of funding sources.

Item 4. 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 June 30, 2012. 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 June 30, 2012.

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 June 30, 2012, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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THE CHARLES SCHWAB CORPORATION

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of legal proceedings, see “Part I – Financial Information – Item 1 – Condensed Consolidated Financial Statements (Unaudited) – Notes – 6. Commitments and Contingencies.”

Item 1A. Risk Factors

During the first half of 2012, there have been no material changes to the risk factors in “Part I – Item 1A – Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table summarizes purchases made by or on behalf of CSC of its common stock for each calendar month in the second quarter of 2012:

Month	Total Number of Shares Purchased (in thousands)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1) (in thousands)		Approximate Dollar Value of Shares that May Yet be  Purchased Under the Program (in millions)
April:
Share repurchase program (1)		—	$	—		—	$	596
Employee transactions (2)		28	$	14.12		N/A		N/A
May:
Share repurchase program (1)		—	$	—		—	$	596
Employee transactions (2)		32	$	12.98		N/A		N/A
June:
Share repurchase program (1)		—	$	—		—	$	596
Employee transactions (2)		8	$	12.58		N/A		N/A
Total:
Share repurchase program (1)		—	$	—		—	$	596
Employee transactions (2)		68	$	13.40		N/A		N/A

N/A Not applicable.

⁽¹⁾  There were no share repurchases under the Share Repurchase Program during the second quarter. Repurchases under this program would occur under two authorizations by CSC’s Board of Directors, each covering up to $500 million of common stock that were publicly announced by the Company on April 25, 2007, and March 13, 2008. The remaining authorizations do not have an expiration date.

⁽²⁾  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. The Company 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.

Item 3. Defaults Upon Senior Securities

None.

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THE CHARLES SCHWAB CORPORATION

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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THE CHARLES SCHWAB CORPORATION

Item 6. Exhibits

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Exhibit
3.16	Certificate of Designations of 6.00% Non-Cumulative Perpetual Preferred Stock, Series B, of the Charles Schwab Corporation filed as Exhibit 3.1 to the Registrant’s Form 8-K dated May 31, 2012 and incorporated herein by reference.
10.295	Form of Notice and Nonqualified Stock Option Agreement for Joseph R. Martinetto under The Charles Schwab Corporation 2004 Stock Incentive Plan dated May 18, 2007.	(1	)
10.349	The Charles Schwab Severance Pay Plan, as Amended and Restated Effective May 1, 2012 (supersedes Exhibit 10.340)	(1	)
10.350	Credit Agreement (364 – Day Commitment) dated as of June 8, 2012, between the Registrant and financial institutions listed therein (supersedes Exhibit 10.339).
12.1	Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
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.	(2	)
32.2	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.	(2	)
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	)

(1) Management contract or compensatory plan.

(2) Furnished as an exhibit to this Quarterly Report on Form 10-Q.

(3) Attached as Exhibit 101 to this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 are the following materials formatted in XBRL (Extensible Business Reporting Language) (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

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THE CHARLES SCHWAB CORPORATION

SIGNATURE

Pursuant to the requirements 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.

		THE CHARLES SCHWAB CORPORATION
			(Registrant)
Date:	August 6, 2012			/s/ Joseph R. Martinetto
				Joseph R. Martinetto
				Executive Vice President and Chief Financial Officer

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EX-10.295

Exhibit 10.295

THE CHARLES SCHWAB CORPORATION

2004 STOCK INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase Common Stock of The Charles Schwab Corporation (“Schwab”) under the Charles Schwab Corporation 2004 Stock Incentive Plan (the “Plan”):

Name of Grantee:	Joseph R. Martinetto
Total Number of Shares Granted:	33342
Exercise Price Per Share:	20.97
Grant Date:	May 18, 2007
Expiration Date:	May 18, 2014
Accelerated Vesting on Retirement:	Yes
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 that will vest on Vest Date

8335 on 05/18/2008

8336 on 05/18/2009

8335 on 05/18/2010

8336 on 05/18/2011

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 Nonqualified Stock Option Agreement and the Plan 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

2004 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 Agreement, this option becomes vested in installments as described in the Notice of Stock Option Grant.
Accelerated Vesting	This option will become fully exercisable if your service with Schwab and its subsidiaries terminates on account of your death or disability. If “Yes” appears next to “Accelerated Vesting on Retirement” in the Notice of Stock Option Grant, this option will become fully exercisable if your service with Schwab and its subsidiaries terminates on account of your retirement provided that your retirement occurs at least two years after the Grant Date indicated in the Notice of Stock Option Grant. If, prior to the date your service terminates, Schwab is subject to a “change in control” (as defined in the Plan document), this option will become fully exercisable immediately preceding the change in control. If Schwab’s Compensation Committee (or its delegate) (the “Compensation Committee”) 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.
Definition of Retirement	For all purposes of this Agreement, “retirement” will mean: •    any termination of employment with Schwab and its subsidiaries with the exception of U.S. Trust Corporation or its subsidiaries for any reason other than death at any time after you attain age 50, but only if, at the time of your termination, you have been credited with at least 7 years of service; and •    any termination of employment from U.S. Trust Corporation or its subsidiaries for any reason other than death at any time after (1) you attain age 65, (2) the sum of your age and credited years of service, at the time of your termination, is equal to or greater than 80, or (3) you attain age 60, but only if, at the time of your termination, you have been credited with at least 10 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).
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 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 include payment of the option exercise price for the shares you are purchasing. Payment may be made in one of the following forms: •    Cash, your personal check, a cashier’s check or a money order. •    Shares of Schwab stock that are surrendered to Schwab. These shares will be valued at their fair market value on the date when the new shares are purchased. •    By delivery (in a manner prescribed by Schwab) of an irrevocable direction to Charles Schwab & Co., Inc. to sell shares of Schwab stock (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.
Term	This option expires no later than the Expiration Date specified in the Notice of 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. If you cease to be an employee of Schwab and its subsidiaries by reason of your retirement, then this option will expire on the second anniversary of the date of your retirement.
Effect of Entitlement to Severance	If you are entitled to severance benefits under The Charles Schwab Severance Pay Plan (or any successor plan), 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 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.
Restrictions on Exercise and Issuance or Transfer of Shares	You cannot exercise this option and no shares of Schwab stock may be issued under this option if the issuance of shares at that time would violate any 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.
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, however, dispose of this option in your will or in a beneficiary designation. You may transfer this option as a gift to one or more family members. For this purpose, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father- in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household, e.g., a domestic partner, other than a tenant or employee, a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.

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 execute the forms prescribed by Schwab, which include the consent of the transferee(s) to be bound by 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 award may be reduced or cancelled and you may be required to disgorge any profit that you have realized from your award. 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 “disqualified individual” 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 the section on “Limitation on Payments,” the term “Schwab” will include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of the Code. In the event that the independent auditors most recently selected by the Schwab Board of Directors (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; provided, however, that the Compensation Committee may specify in writing that the award 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). 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. As promptly as practicable following these determination 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 which should not have been made (an “Overpayment”) or that additional Payments which 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 that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against you or Schwab which 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 which 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 which is subject to taxation under section 4999 of the Code. In the event that 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.

Claims Procedure

You may file a claim for benefits under the Plan by following the procedures prescribed by Schwab. If your claim is denied, generally you will receive written or electronic notification of the denial within 90 days of the date on which you filed the claim. If special circumstances require more time to make a decision about your claim, you will receive notification of when you may expect a decision. You may appeal the denial by submitting to the Plan Administrator a written request for review within 30 days of receiving notification of the denial. Your request should include all facts upon which your appeal is based. Generally, the Plan Administrator will provide you with written or electronic notification of its decision within 90 days after receiving the review request. If special circumstances require more time to make a decision about your request, you will receive notification of when you may expect a decision.

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 Stock Option Grant and this Agreement. The Plan Administrator’s determinations are conclusive and binding on all persons.
Right to Replace Option with SARs	The Compensation Committee shall have the right to replace this option (or any portion of this option) to the extent outstanding with a Stock Appreciation Right subject to substantially the same terms and conditions contained in this Agreement to be settled in shares of Schwab stock on a one-to-one basis; provided, that this provision shall not become effective if it would cause Schwab to recognize compensation expense.
Adjustments	In the event of a stock split, a stock dividend or a similar change in Schwab stock, 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 California (without regard to their choice-of-law provisions), as such laws are applied to contracts entered into and performed in California.
The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by reference. This Agreement 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 Stock Option Grant and in the Plan.

EX-10.349

Exhibit 10.349

THE CHARLES SCHWAB

SEVERANCE PAY PLAN

(As Amended and Restated Effective May 1, 2012)

TABLE OF CONTENTS

ARTICLE 1 - PURPOSE OF PLAN		1
ARTICLE 2 - DEFINITIONS		1
ARTICLE 3 - PARTICIPATION		7
3.1	Commencement of Participation	7
3.2	Termination of Participation	7
ARTICLE 4 - EFFECT ON OTHER BENEFITS		8
4.1	Eligibility for Benefits	8
4.2	Paid Time Off Benefits	8
ARTICLE 5 - NOTICE PERIOD		8
5.1	Notice Period	8
5.2	Participants Requested to Work During Notice Period	8
5.3	Acceleration of Termination Date	8
ARTICLE 6 - BENEFITS		9
6.1	Non-Officers Severance Pay	9
6.2	Officer Severance Pay	10
6.3	Group Health Plan Coverage Payment and Long-Term Awards	11
6.4	Additional Provisions Related to Severance Benefits	11
ARTICLE 7 - FUNDING		13
ARTICLE 8 - ADMINISTRATION		13
8.1	Administrator’s Authority	13
8.2	Claims for Benefits	14
8.3	Indemnification	14
ARTICLE 9 - AMENDMENT AND TERMINATION		15
ARTICLE 10 - MISCELLANEOUS		15
ARTICLE 11 - EXECUTION		16
APPENDIX A		A

i.

ARTICLE 1 - PURPOSE OF PLAN

The purpose of this Plan is to set forth the terms and conditions under which severance pay and other severance benefits will be provided to employees of the Company. This Plan is intended to constitute an employee welfare benefit plan within the meaning of section 3(1) of ERISA, and is intended to memorialize the provisions of the Company’s severance pay program.

The effective date of this restatement is May 1, 2012. The rights of any person whose Notice Period Start Date is prior to the Restated Effective Date shall be determined solely under the terms of the Plan provisions as in effect on such date, unless such person is thereafter reemployed and again becomes a Participant. The rights of any other person shall be determined solely under the terms of this restated Plan, except as may be otherwise required by law.

This Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). In the event that that any benefit hereunder is deemed by the Administrator to be subject to section 409A of the Code, the Administrator may modify such benefit as it deems necessary to comply with, or to qualify for an exemption from, Code section 409A.

ARTICLE 2 - DEFINITIONS

A. “Administrator” means Schwab or such person or committee as may be appointed from time to time by Schwab to supervise the administration of the Plan.

B. “Affiliate” means any company which is a member of a controlled group of corporations (within the meaning of section 414(b) of the Code) or a group of trades or businesses under common control (within the meaning of section 414(c) of the Code) that includes the Company.

C. “Base Salary” means the Participant’s annual “pay rate” maintained under the authoritative system of record used to produce the Participant’s regular semi-monthly pay. Base Salary shall be determined as of the Participant’s Notice Period Start Date. Unless included by the Company in a Participant’s “pay rate,” Base Salary shall exclude all other earnings or paid amounts such as bonuses, overtime, commissions, differentials, variable pay, incentive pay, the value of employee benefits, and any other amounts that are treated as “other earnings” under the Company’s payroll system. In the case of an Eligible Employee who is classified by the Administrator as a branch manager or a financial consultant of a retail, national or satellite branch, the Administrator may determine, in its sole discretion, that such individual’s Base Salary, for purposes of calculating Severance Benefits, shall be supplemented with the amount that the

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Administrator determines, in its sole discretion, to be the Participant’s “practice service” payment in effect as of the Participant’s Notice Period Start Date and as annualized by the Administrator. The Administrator shall have sole discretionary authority to determine a Participant’s Base Salary for all purposes, and the Administrator’s discretionary determinations shall be conclusive and binding on all persons.

D. “Code” means the Internal Revenue Code of 1986, as amended.

E. “Company” means The Charles Schwab Corporation, a Delaware corporation, and (unless the context requires otherwise) any Participating Company.

F. “Comparable Position” means a position that is comparable, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation the similarity of duties and salary and any increase in the commuting distance to the individual’s principal place of employment, provided that a position will not fail to be a “Comparable Position” unless it would result in a material negative change within the meaning of Treas. Reg. section 1.409A-1(n)(2)(i) or any successor thereto.

G. “Corporate Transaction” means a merger, acquisition, spin-off, stock sale, sale of assets or portions of a business, outsourcing of all or any portion of a business or any other similar corporate transaction.

H. “Eligible Employee” means an individual classified by the Administrator as a Regular Employee on a payroll in the United States who has incurred a Job Elimination. The term “Eligible Employee” shall not include (i) individuals employed pursuant to the terms of a collective bargaining agreement between the Company or an Affiliate and a bargaining unit representing such individuals; (ii) an employee who is on an unpaid leave of absence and has no right to reinstatement under applicable law upon completion of the leave; and (iii) any individual who the Administrator, in its sole discretion, determines to be covered by a Guaranteed Payments Arrangement or any arrangement that, by its terms, makes the individual ineligible for Plan benefits. Notwithstanding the foregoing, the Administrator may, in its sole discretion, determine that an individual who is a party to a Guaranteed Payments Arrangement may be eligible to receive benefits under Section 6.4(g).

I. “Guaranteed Payments Arrangement” is any guarantee or agreement, offer letter, policy, arrangement or plan (regardless of whether it is written or oral) that provides for guaranteed payments of any nature, severance benefits of any kind, cash payments representing the value of stock options or restricted stock, and/or similar amounts.

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J. “Job Elimination” means involuntary termination of employment solely on account of changes in the Company’s operations or organization that result in the elimination of the employee’s job, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation (i) a relocation or dissolution of a portion of the business of the Company; (ii) a withdrawal by the Company from a segment of a market served by the Company; (iii) the elimination of one or more Company product lines; (iv) an elimination, reduction, or change in the Company’s need for one or more specialized skills provided by the employee; (v) an organizational change in the Company, including without limitation a business redesign, reorganization or consolidation; (vi) a significant change in the Company’s systems or technology; and (vii) a reduction in the Company’s staffing levels. Notwithstanding anything to the contrary contained herein, a Job Elimination shall not result (A) from retirement, death or voluntary resignation (whether or not in response to changes in the Company’s operations or organization or in an individual’s title, duties, responsibilities, compensation or benefits) prior to Notice of Eligibility; (B) if the Company or any successor employer or successor organization offers the employee a Comparable Position; (C) from termination prior to or after Notice of Eligibility on account of unsatisfactory performance, failure of a condition of employment, breach of any agreement to which the employee and the Company are parties, or violation of any law, regulation, or Company policy (including but not limited to the Code of Business Conduct and Ethics, Compliance Manual, and HR Policies); (D) where, in connection with a Corporate Transaction, an employee is employed in the same or a substantially similar position at the closing of the Corporate Transaction or the employee is offered a Comparable Position; (E) from the employee’s failure to return to work within the time required following an approved leave of absence; (F) from a change in employment that results from a natural disaster, unforeseeable governmental action, act of war, or other similar unanticipated business disaster; (G) from a transfer of employment among the Company and any of its Affiliates; (H) where, in connection with the outsourcing of all or any a portion of a business, the employee is offered a Comparable Position; and (I) from the Company’s modification or termination of any telecommuting arrangement.

K. “Long-Term Award” means a long-term award outstanding as of the Participant’s Termination Date and granted under the plan of a Participating Company that provides for long-term or stock-based awards.

L. “Non-Officer” means an Eligible Employee who is not an Officer.

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M. “Notice of Eligibility” means a written or electronic notice, in a form approved by the Administrator, provided to an Eligible Employee that there will be a Job Elimination and that he or she is eligible for Severance Benefits under the Plan.

N. “Notice Period” means a sixty (60) calendar day period commencing on the date specified in the Notice of Eligibility. Except as provided in Section 5.2, Participants are relieved from job responsibilities during the Notice Period and generally are not required to report to work. Also during the Notice Period, all Compliance, Human Resources and Information Security policies and procedures that applied to Participants before receiving Notice of Eligibility continue in full force and effect and Participants remain subject to those policies and procedures. Participants will continue to receive Base Salary and to participate in certain employee benefits. Except as otherwise provided under the applicable bonus or incentive plan, Participants shall not be eligible for bonuses and other incentive pay during the Notice Period. In all cases, non-production-based bonuses will be pro-rated to reflect the Participant’s service prior to the Notice Period Start Date and will be subject to discretionary adjustments by the Company in its sole and absolute discretion.

O. “Notice Period Start Date” means the first day of the Notice Period.

P. “Officer” means an Eligible Employee who is classified by the Company as an “officer” based on job grade, designation and such other factors the Company deems relevant.

Q. “Participant” means any person who is participating in the Plan as provided in Article 3.

R. “Participating Company” means the Company and any Affiliate that participates in the Plan (as determined by the Company or Schwab in its sole discretion). A current list of Participating Companies is set forth in Appendix A. Notwithstanding the foregoing, if a Participating Company ceases to be an Affiliate by reason of a Corporate Transaction, then such entity shall cease to be a Participating Company upon the closing of such Corporate Transaction. Notwithstanding anything to the contrary in this Plan, no benefits shall be payable under the Plan on account of any employment termination (actual or constructive) that occurs on or after the closing of such Corporate Transaction in which such entity ceases to be a Participating Company.

S. “Plan” means The Charles Schwab Severance Pay Plan.

T. “Regular Employee” means an individual on a payroll in the United States who (i) is directly employed and paid by the Company and on whose

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behalf the Company withholds income tax from his or her compensation; (ii) has regular full-time or part-time employment with the Company; and (iii) is considered and classified by the Company as a “regular employee.” Notwithstanding the foregoing, a “Regular Employee” shall not include any of the following:

(A)    a temporary or seasonal employee, intern, co-op or floater;

(B)    an agency temporary or leased employee;

(C)    an employee on an unpaid leave of absence who does not have a job guarantee upon completion of the leave;

(D)    an individual who is not directly paid by the Company through its payroll system (without regard to his or her common law employment status);

(E)    consultants, contingent workers, independent contractors, persons who have signed independent contractor, consultant or vendor agreement(s) or provide services to the Company pursuant to an independent contractor, consultant or vendor agreement, or pursuant to an agreement with any third party, irrespective of whether any such individuals are determined by any third party (including without limitation any court, arbitrator or governmental or regulatory agency) to constitute an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee); and

(F)    persons (including but not limited to those identified in subparagraphs (A) through (E)) not otherwise considered by the Company to be a Regular Employee, irrespective of whether any such individuals are deemed by a court, arbitrator or government agency or other third party to be an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee).

If, during any period, the Company has not treated an individual as a common law employee and, for that reason, has not withheld income and employment taxes with respect to that individual, then that individual shall not be a Regular Employee for that period, even if the individual is determined, retroactively, to have been a common law employee during all or any portion of that period by the Internal Revenue Service or other third party or pursuant to a court decree, judgment or settlement in a judicial proceeding or otherwise.

U. “Restated Effective Date” means May 1, 2012.

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V. “Return Date” means the date specified in the Participant’s Notice of Eligibility by which the Participant must sign and return a Severance Agreement.

W. “Revocation Period” means the seven calendar day (or other longer legally required calendar day) period immediately following the date the Participant signs the Severance Agreement during which a Participant who is either: (i) at least forty (40) years old; or (ii) is under forty (40) years old and is employed in a state that requires a specific Revocation Period, may revoke his or her signed Severance Agreement. To be effective, a written request to revoke must be received by the Administrator (as defined by applicable law) no later than 5:00 p.m. PST on the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement or, if mailed, be postmarked no later than the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement.

X. “Schwab” means Charles Schwab & Co., Inc., a California corporation.

Y. “Severance Agreement” means a written agreement in a form satisfactory to the Administrator in exchange for payment of Severance Benefits as provided in Article 6. In the sole discretion of the Administrator, such agreement may include without limitation, but is not limited to, provisions relating to (i) non-disparagement and non-disclosure; (ii) non-solicitation of customers, clients and employees; (iii) use of confidential and proprietary information; (iv) return of company property; (v) cooperation with investigations, arbitrations, and litigation; (vi) release and waiver of all legal claims; and (vii) authorized deductions (if any). To be effective, a Severance Agreement must be signed and returned by the Return Date (and not revoked during any applicable Revocation Period). Severance Agreements are not required to be identical among Participants.

Z. “Severance Benefits” means all payments and benefits provided for in this Plan, including but not limited to all salary and benefits for periods during which a Participant remains an employee after being provided a Notice of Eligibility (such as the Notice Period), all forms of compensation and/or benefits of any kind for or in connection with such periods, and all other amounts paid or payable to Participants in accordance with the Plan. The Severance Benefits a Participant may be eligible for are gross amounts from which applicable taxes, withholding and appropriate deductions will be taken, including but not limited to, deduction of any outstanding amount owed to the Company by the Participant regardless of the reason for or source of the amount due. In order to receive Severance Benefits under Article 6, a Participant must timely sign and return (and not revoke, where a Revocation Period applies) a Severance Agreement. All Severance Benefits shall be applied toward satisfaction of the Company’s

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WARN obligations, if any, and shall constitute WARN notice and/or WARN benefits where WARN applies.

AA. “Severance Period” means the period of time determined by adding, to the Participant’s Termination Date, the number of business days or months for which the Participant is eligible to receive severance pay under Section 6.1 or 6.2.

BB. “Termination Date” means the earlier of (i) last day that the Participant is employed by the Company; or (ii) day that the Participant’s Notice Period ends (as it may be accelerated under Article 5).

CC. “WARN” means the Federal Worker Adjustment Retraining and Notification Act, as amended, and any applicable state plant or facility closing or mass layoff law. In the event WARN applies to a Participant, any Notice Period and/or Severance Period, and all compensation and all benefits of any kind due or paid with respect to either are also deemed to constitute WARN notice and/or WARN benefits, and will be applied toward satisfying the Company’s obligations under WARN.

DD. “Year of Service” means each 365 calendar day period of service completed by a Participant while a Regular Employee including any service commencing on the Participant’s date of hire and ending on (and including) the Participant’s Notice Period Start Date and any service prior to a break in service for any reason other than Job Elimination. Periods less than 365 calendar days will be calculated as a percentage of a 365-calendar day period. A Participant will receive credit for service with a predecessor employer that was acquired by the Company or an Affiliate if such service must be credited for purposes of an “employee benefit plan” within the meaning of ERISA under the applicable purchase agreement. Except as provided in Section 6.4(a), a Participant’s Years of Service shall exclude service previously used to determine a Participant’s severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement.

ARTICLE 3 – PARTICIPATION

3.1.    Commencement of Participation. An Eligible Employee will become a Participant as of the date he or she is issued a Notice of Eligibility.

3.2    Termination of Participation. A Participant’s participation in the Plan shall terminate on the earlier of (i) the date when his or her entire Plan benefit has been paid; (ii) the date that his or her participation ends under Section 5.3(b) or 6.4(b); or (iii) the date after the Return Date when the Participant does not sign and return his or her Severance Agreement or revokes his or her signed Severance Agreement in accordance with any applicable Revocation Period.

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ARTICLE 4 - EFFECT ON OTHER BENEFITS

4.1.    Eligibility for Benefits. A Participant’s eligibility for all employee benefits (including without limitation medical, dental and vision insurance) will cease in accordance with the terms of each respective plan no later than the last day of the month that includes the Termination Date except as may be otherwise required by applicable law.

4.2    Paid Time Off Benefits. A Participant will continue accruing paid time off benefits until the Termination Date. The rate of accrual during the Notice Period will be the same as the rate of accrual prior to the Participant’s Notice of Eligibility.

ARTICLE 5 - NOTICE PERIOD

5.1    Notice Period. Following an Eligible Employee’s Notice of Eligibility, the Participant will enter a Notice Period for a period of sixty (60) calendar days. Except as provided in Section 5.2, during the Notice Period Participants shall not be required to report to work but shall remain subject to the Company’s policies and procedures. If WARN is applicable to a Participant, the Notice Period and all compensation (including but not limited to salary/wages, benefits and benefit plan participation) attributable to the Notice Period shall constitute WARN notice and the payment of WARN benefits, respectively, and will be applied against any notice period or other payments that would otherwise be due to satisfy the Company’s obligations under WARN.

5.2    Participants Requested to Work During Notice Period. If a Participant is requested to work during the Notice Period, then the Participant will be entitled to Severance Benefits only if the Participant continues to perform his or her assigned duties and responsibilities to the satisfaction of the Company through the date established by the Company in its discretion.

5.3    Acceleration of Termination Date. The Termination Date, which is originally established as the end of the 60 day Notice Period, will be accelerated or otherwise changed if any of the following events occur:

(a)    If, prior to the end of the Notice Period, a Participant resigns or otherwise obtains an external position or acts as an employee, consultant or independent contractor or as a sole proprietor of a business or acts as an officer, director, or partner in another public or privately held company. In that case, the Participant is required to notify the Administrator immediately, the end of the Notice Period and the Termination Date will be accelerated to coincide with the next day after the Participant resigned or otherwise obtained that position. The Participant will receive a payment reflecting the balance of the Base Salary attributable to the unused portion of the original Notice Period; however, no payment will be made for the value of bonuses, or other incentive compensation or the value of other employee benefits that might otherwise have been received if the Termination Date had not been accelerated. The Participant remains

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eligible to sign and return the applicable Severance Agreement by the Return Date in order to obtain additional Severance Benefits under Article 6.

(b)    Except as provided in Section 5.2 as determined by the Administrator, if a Participant provides substantial services to the Company or any Affiliate as an employee (full-time, part-time or seasonal), consultant or independent contractor of the Company or any Affiliate within the Notice Period (without regard to whether the end of the Notice Period has been accelerated pursuant to Section 5.3(a)), his or her Termination Date under the Plan will be cancelled or accelerated (as appropriate), his or her participation will end, and the Participant will no longer be eligible to receive any Severance Benefits or any payment of any kind for compensation (including benefits) otherwise attributable to the unused portion of the Notice Period. If a Participant already received payment of lump sum severance pay under Section 6.1, 6.2 and/or 6.3 (as applicable), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, to repay the lump sum severance pay, including the COBRA payment, in full, as a condition of employment or providing services. In addition, if a Participant already received a lump sum payment for the unused portion of the Notice Period under Section 5.3(a), the Participant is required, except as the Administrator otherwise determines in its sole discretion, to repay the amount by which this lump sum payment exceeds the amount the Participant would have received if the payment had been calculated based on the number of business days that actually elapsed between the beginning of the Notice Period and the date of his or her commencement of service, as a condition of employment or providing services.

ARTICLE 6 - BENEFITS

Upon being provided with a Notice of Eligibility, a Participant becomes eligible to receive the Severance Benefits described in Sections 6.1, 6.2, and 6.3 (as applicable) only if the Participant returns to the Administrator a signed Severance Agreement no later than the Return Date. If a Revocation Period applies, a Participant’s eligibility to receive these Severance Benefits also is conditioned upon the Participant not revoking (or attempting to revoke) the Severance Agreement during the Revocation Period. Subject to those conditions and such other conditions set forth in this Plan, the Participant will be entitled to receive the benefits set forth in Sections 6.1, 6.2, and 6.3 (as applicable).

6.1    Non-Officer Severance Pay.

A Non-Officer Participant employed by a Participating Company as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit equal to the amount of the Participant’s Base Salary that would have been payable for ten business days multiplied by the Participant’s full Years of Service plus the number of business days for the Participant’s partial Years of Service shown in the table in (i) below, but in no event more than the amount of Base Salary that would have been payable to the Participant for 220 business days.

(i) The Participant will receive credit for a partial Year of Service

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(after aggregation of partial years), based on the following table:

Length of Partial Year	Number of Business Days
Less than 3 months	3 days
At least 3 months but less than 6 months	5 days
At least 6 months but less than 9 months	7 days
At least 9 months but less than 12 months	10 days

(ii) The minimum Severance Benefit shall be determined by the Participant’s job grade on the Notice Period Start Date based on the following table:

Job Grade	Minimum Severance Benefit
Individual Contributor (52-55)	22 business days
Sr. Individual Contributor/Team Lead (56)	44 business days
Manager (57)	66 business days
Sr. Manager (58 – 59)	88 business days
Director (60, U1 and U2)	110 business days

6.2    Officer Severance Pay.

An Officer Participant employed by a Participating Company as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit in the following amounts. For Vice Presidents, the amount of the Participant’s Base Salary that would have been payable for ten business days multiplied by the Participant’s full Years of Service, but in no event less than the amount of Base Salary that would have been payable to the Participant for five months (110 business days) and no more than the amount of Base Salary that would have been payable to the Participant for 10 months (220 business days). For Senior Vice Presidents or Executive Vice Presidents, the amount of the Participant’s Base Salary that would have been payable for 15 business days multiplied by the Participant’s full Years of Service, but in no event less than the amount of Base Salary that would have been payable to the Participant for seven months (154 business days) and no more than the amount of Base Salary that would have been payable to the Participant for 12 months (264 business days).

The Participant who is a Vice President also will receive credit for a partial Year of Service (after aggregation of partial years), based on the following table:

Length of Partial Year	Number of Business Days
Less than 3 months	3 days
At least 3 months but less than 6 months	5 days
At least 6 months but less than 9 months	7 days
At least 9 months but less than 12 months	10 days

The Participant who is a Senior Vice President or Executive Vice President also will receive credit for a partial Year of Service (after aggregation of partial years), based

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on the following table:

Length of Partial Year	Number of Business Days
Less than 3 months	3 days
At least 3 months but less than 6 months	7 days
At least 6 months but less than 9 months	11 days
At least 9 months but less than 12 months	15 days

6.3    Group Health Plan Coverage Payment and Long-Term Awards.

(a)    A Participant who becomes entitled to receive Severance Benefits will be eligible to receive a single lump sum payment to cover a portion of the cost of group health plan coverage for the Participant and his or her enrolled spouse, domestic partner and dependents (“Dependents”). The amount of such payment shall be based on the period of time for which the Participant is eligible to receive severance pay and COBRA rates for group health plan coverage in effect for the Participant and his or her Dependents as of the Participant’s Notice of Eligibility, without regard to changes in COBRA rates or coverage after Notice of Eligibility.

(b)    If an Officer Participant becomes entitled to Severance Benefits, then:

(i) The portion of each of the Participant’s Long-Term Awards, except performance-based restricted stock or similar awards designed to meet the requirements for performance-based compensation under Section 162(m) of the Code, that would have vested if the Participant had remained employed during the Severance Period shall be vested as soon as administratively practicable after the Participant’s Termination Date and the Participant shall be treated as if he or she continued in employment during the Severance Period for purposes of determining whether the Participant vests in any performance-based restricted stock or similar award, subject to subparagraph (iii) below; and

(ii) The determination of whether the Participant has satisfied the conditions of “retirement” under each Long-Term Award agreement (to the extent applicable) shall be made as of his or her Termination Date, without regard to the Participant’s Severance Period.

(iii) The Severance Period shall not modify or extend the exercise period of any Long-Term Award, and, except as set forth in Section 6.3(b)(i), the Plan shall not provide any benefit with respect to any Long-Term Award.

6.4    Additional Provisions Related to Severance Benefits.

(a)    If a Participant receives severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement and if the Participant subsequently provides services to the Company or an Affiliate, then any

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Severance Benefits that may become payable to the Participant under this Plan following the date of recommencement of service shall be based solely on the Participant’s Years of Service following the date of such recommencement; provided, however, the Administrator shall have the discretionary authority to suspend the application of this provision to a Participant who repaid more than 80% of his or her Severance Benefits pursuant to Section 5.3(b) or 6.4(d).

(b)    Notwithstanding anything to the contrary contained herein, (i) an employee or Participant whose employment with the Company (or an Affiliate) is terminated before or after receipt of Notice of Eligibility for any reason other than Job Elimination shall not be entitled to receive any Severance Benefits hereunder, and (ii) a Participant shall lose eligibility to receive Severance Benefits if (A) after receipt of Notice of Eligibility, the employee fails to work satisfactorily at the request of the Company through the date it specifies; or (B) the Company becomes aware of circumstances which could or would have caused a Participant’s termination from employment including but not limited to misconduct or any violation of law, regulation or Company policy.

(c)    Lump sum benefits payable pursuant to Section 6.1, 6.2 or 6.3(a) shall be paid during the next payroll processing cycle that follows the later of (i) the date the Severance Agreement is received, assuming it is signed and returned to the Administrator in the required time and is not revoked in accordance with any applicable Revocation Period; or (ii) the Termination Date, as it may be accelerated under Article 5 or 6. All payments made pursuant to this Plan shall be paid no later than March 15^th of the calendar year immediately following the year the Termination Date occurs.

(d)    If a Participant receives payment of any or all of his or her Severance Benefit under Section 6.1, 6.2 and/or 6.3 and after his Termination Date subsequently provides substantial services to the Company or any Affiliate as an employee, consultant or independent contractor (other than pursuant to a Corporate Transaction), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, as a condition of reemployment or otherwise providing services, to repay the amount (if any) by which the lump sum payment (including COBRA payments) exceeds the amount the Participant would have received if such payment had been calculated based on the number of business days that have actually elapsed between the Termination Date and the date that the Participant started to provide such services. The repayment obligation is applicable regardless of whether the Participant’s severance pay was paid under Section 6.1, 6.2 and/or 6.3(a); provided, however, the repayment obligation shall not apply to benefits provided under Section 6.3(b). Repayment of a pro rata share of severance benefits does not affect the validity of the Severance Agreement.

(e)    Notwithstanding anything to the contrary contained in this Plan, in the event WARN is applicable to a Participant: (i) any Notice Period and/or Severance Benefits paid or payable to the Participant will be deemed to constitute and shall be attributed to WARN notice and/or WARN benefits; (ii) all Severance Benefits under this Plan will be reduced and/or offset by any notice, payments or benefits to which the

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Participant may be entitled under WARN; and (iii) all Severance Benefits under this Plan will be reduced and/or offset by any amount of paid days and/or paid benefits in lieu of notice the Participant is given or is required to be given by the Company to satisfy its obligations under WARN. A Severance Agreement is not required for receipt of WARN benefits.

(f)    Notwithstanding anything to the contrary contained herein, the Company may revoke a Participant’s Severance Agreement during any applicable Revocation Period.

(g)    Notwithstanding anything to the contrary contained herein, the Administrator shall have the authority, in its sole discretion, to provide benefits under the Plan to an individual who is a party to a Guaranteed Payments Arrangement on such terms as determined in the Administrator’s sole discretion.

(h)    Notwithstanding anything to the contrary contained herein, a Participant shall be deemed to be employed by a Participating Company for purposes of benefits under Article 6 in the event that such Participant, as of his or her Notice of Eligibility, is designated by the Company, in its sole and absolute discretion, as a dual employee providing fund administration services to the Excelsior Funds.

ARTICLE 7 - FUNDING

The amount required to be paid as Severance Benefits under this Plan shall be paid from the general assets of the Company at the time such Severance Benefits are to be paid.

ARTICLE 8 - ADMINISTRATION

8.1    Administrator’s Authority. The administration of the Plan shall be under the supervision of the Administrator. It shall be the responsibility of the Administrator to assure that the Plan is carried out in accordance with its terms. The Administrator shall have full power and sole discretionary authority to administer, interpret and construe the Plan, and to determine all claims for benefits, subject to the requirements of ERISA. The Administrator’s actions, interpretations and determinations shall be final and binding on all concerned and, in the event of judicial review, shall be entitled to the maximum deference allowed by law. The Administrator shall have discretionary authority:

(a)    To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b)    To interpret and construe the Plan, its interpretation and construction thereof to be final and conclusive on all persons claiming benefits under the Plan;

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(c)    To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d)    To compute the amount of benefits which will be payable to any Participant in accordance with the provisions of the Plan, and to determine the person or persons to whom such benefits will be paid;

(e)    To authorize the payment of benefits;

(f)    To appoint such agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan; and

(g)    To allocate and delegate its responsibilities under the Plan and to designate other persons to carry out any of its responsibilities under the Plan, and such allocation, delegation or designation to be by written instrument and in accordance with Section 405 of ERISA.

The interpretations and determinations of the Administrator shall be final and binding and are not required to be uniform among similarly situated individuals. The Administrator also reserves the right to provide additional benefits, in the Administrator’s sole discretion. Determinations to be made in the discretion of the Company are made by the Company in its non-fiduciary capacity, with regard to the best interests of the Company, and are not required to be uniform among similarly situated individuals. In administering the Plan, the Administrator shall be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by any accountant, counsel or other expert who is employed or engaged by the Administrator. Schwab shall be the “named fiduciary” for purposes of section 402(a)(1) of ERISA with authority to control and manage the operation and administration of the Plan, and shall be responsible for complying with all of the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA.

8.2    Claims for Benefits. No person shall be entitled to benefits under this Plan unless the Administrator has determined that he or she is entitled to them. All applications for benefits, and all inquiries concerning the Plan or present or future rights to benefits under the Plan, must be submitted to the Administrator in accordance with the established claims procedure set forth in the summary plan description. Notwithstanding anything to the contrary in this Plan, no person shall have a colorable claim for vested or unvested benefits under this Plan unless the Administrator (i) has determined that the person has incurred a Job Elimination; and (ii) has issued to the person a Notice of Eligibility.

8.3    Indemnification. The Company agrees to indemnify, defend and hold harmless to the fullest extent permitted by law any employee serving as or on behalf of the Administrator or as a member of a committee designated as Administrator (including any employee or former employee who formerly served as Administrator or as a member of such committee) against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Company)

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occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

ARTICLE 9 - AMENDMENT AND TERMINATION

The Plan and/or any of its terms may be amended, suspended or terminated at any time with or without prior notice by action of the Board of Directors of Schwab or the Company or their respective delegates. Schwab’s Executive Vice President – Human Resources shall have the authority to adopt amendments that do not materially increase the cost of the Plan.

ARTICLE 10 - MISCELLANEOUS

Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

This Plan shall not be deemed to constitute a contract between the Company and any Eligible Employee or to be a consideration or an inducement for the employment of any Eligible Employee. Nothing contained in this Plan shall be deemed to give any Eligible Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Eligible Employee at any time, irrespective of the effect which such discharge shall have upon such individual as an Eligible Employee of this Plan.

This Plan shall be construed and enforced according to federal law, except where not preempted, by the laws of the State of California other than its laws respecting choice of law.

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ARTICLE 11 - EXECUTION

To record the amendment and restatement of the Plan to read as set forth herein effective as of May 1, 2012, Charles Schwab & Co., Inc. has caused its authorized officer to execute the same this 27th day of April 2012.

CHARLES SCHWAB & CO., INC.

By: Jay L. Allen         /s/ Jay L. Allen                     

Title: The Executive Vice President - Human Resources and Employee Services

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APPENDIX A

(May 1, 2012)

brokersXpress, LLC

Charles Schwab & Co., Inc.

Charles Schwab Bank

Charles Schwab Investment Advisory, Inc.

Charles Schwab Investment Management, Inc.

Compliance11, Inc.

Open E Cry, LLC

optionsXpress, Inc.

Optionetics, Inc.

Performance Technologies, Inc.

Schwab International Holdings, Inc.

Schwab Private Client Investment Advisory, Inc.

Schwab Retirement Plan Services Company

Schwab Retirement Plan Services, Inc.

Schwab Retirement Technologies, Inc.

Windhaven Investment Management, Inc.

A

EX-10.350

Exhibit 10.350

EXECUTION VERSION

$800,000,000

CREDIT AGREEMENT

(364-DAY COMMITMENT)

dated as of June 8, 2012

Among

THE CHARLES SCHWAB CORPORATION

and

CITIBANK, N.A.

as Administrative Agent

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

and

THE BANK OF NEW YORK MELLON

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

UBS SECURITIES LLC

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Co-Documentation Agents

and

JPMORGAN CHASE BANK, N.A.

as Syndication Agent

and

CITIGROUP GLOBAL MARKETS INC.

and

J.P. MORGAN SECURITIES LLC

as Joint Lead Arrangers and Book Managers

1.	DEFINITIONS		1
2.	THE CREDIT FACILITY		11
	2.1	The Revolving Credit Facility	11
	2.2	Term Loan Facility	12
	2.3	Evidence of Borrowing/Promissory Notes	12
	2.4	Making of Revolving Loans and Term Loans, Borrowings; Interest Periods; Notice	13
	2.5	Conversion and Continuation Elections	14
	2.6	Interest Periods	15
	2.7	Interest Rates	16
	2.8	Substitute Rates	16
	2.9	Fees	17
	2.10	Reduction of Credit	17
	2.11	Termination Date; Extensions	18
	2.12	Payments by the Lenders to the Agent	18
	2.13	Sharing of Payments, Etc.	19
	2.14	Computation of Fees and Interest	19
3.	PAYMENT		20
	3.1	Repayment	20
	3.2	Method of Payment	20
	3.3	Optional Prepayment	20
	3.4	Taxes/Net Payments	20
	3.5	Illegality	21
	3.6	Increased Costs and Reduction of Return	22
	3.7	Funding Losses	22
	3.8	Certificates of Lenders	23
	3.9	Substitution of Lenders	23
	3.10	Survival	23
4.	CONDITIONS		24
	4.1	Conditions Precedent to the Effectiveness of this Agreement	24
	4.2	Conditions Precedent to Revolving Loans and Term Loans	25
5.	REPRESENTATIONS AND WARRANTIES		25
	5.1	Organization and Good Standing	26
	5.2	Corporate Power and Authority	26
	5.3	Enforceability	26
	5.4	No Violation of Laws or Agreements	26
	5.5	No Consents	26
	5.6	Financial Statements	26

	5.7	Broker Subsidiary Licenses, Etc.	27
	5.8	Broker Subsidiary/Broker Registration	27
	5.9	Broker Subsidiary/SIPC	27
	5.10	Taxes	27
	5.11	ERISA	27
	5.12	No Extension of Credit for Default Remedy/Hostile Acquisition	27
	5.13	Use of Proceeds/Margin Regulations	27
	5.14	Authorized Persons	28
	5.15	Material Contracts	28
	5.16	Litigation	28
	5.17	Investment Company	28
6.	AFFIRMATIVE COVENANTS		28
	6.1	Notice of Events of Default	28
	6.2	Financial Statements	28
	6.3	Insurance	29
	6.4	Books and Records	29
	6.5	Change in Business	29
	6.6	Capital Requirements	29
7.	NEGATIVE COVENANTS		29
	7.1	Net Capital	29
	7.2	Minimum Stockholders’ Equity	29
	7.3	Merger/Disposition of Assets	29
	7.4	Broker Subsidiary Indebtedness	29
	7.5	Indebtedness Secured by Subsidiary Stock	30
	7.6	Liens and Encumbrances	30
8.	EVENTS OF DEFAULT		31
	8.1	Defaults	31
	8.2	Remedies	32
9.	THE AGENT		33
	9.1	Appointment and Authorization	33
	9.2	Delegation of Duties	33
	9.3	Liability of Agent	33
	9.4	Reliance by Agent	33
	9.5	Notice of Default	34
	9.6	Credit Decision	34
	9.7	Indemnification of Agent	35
	9.8	Agent in Individual Capacity	35
	9.9	Successor Agent	35
	9.10	Withholding Tax	36
	9.11	Co-Agents	37

10.	MISCELLANEOUS		37
	10.1	Amendments and Waivers	37
	10.2	Notices	38
	10.3	No Waiver-Cumulative Remedies	40
	10.4	Costs and Expenses	40
	10.5	Borrower Indemnification	41
	10.6	Payments Set Aside	41
	10.7	Successors and Assigns	42
	10.8	Assignments, Participations Etc.	42
	10.9	Confidentiality	44
	10.10	Notification of Addresses, Lending Offices, Etc.	45
	10.11	Counterparts	45
	10.12	Severability	45
	10.13	No Third Parties Benefited	45
	10.14	Governing Law and Jurisdiction	45
	10.15	Waiver of Jury Trial	45
	10.16	Entire Agreement	47
	10.17	Headings	47
	10.18	USA Patriot Act	47

SCHEDULES:

Schedule 1 - Lenders’ Commitments

Schedule 2 - List of Borrowing Agreements

Schedule 6.2 - Compliance Certificate

Schedule 10.2 - Notices

EXHIBITS:

Exhibit A-1 - Revolving Note

Exhibit A-2 - Term Note

Exhibit B - Borrowing Advice

Exhibit C - Notice of Conversion/Continuation

Exhibit D - Commitment and Termination Date Extension Request

Exhibit E - Borrower’s Opinion of Counsel

Exhibit F - Form of Assignment and Acceptance

CREDIT AGREEMENT (364-DAY COMMITMENT)

THIS CREDIT AGREEMENT (364-DAY COMMITMENT) (“this Agreement”) is entered into as of June 8, 2012, among The Charles Schwab Corporation, a Delaware corporation (the “Borrower”), the several financial institutions from time to time party to this Agreement (collectively the “Lenders”; individually each a “Lender”), and Citibank, N.A., as administrative agent for the Lenders (the “Agent”).

WHEREAS, the Lenders are willing to make from time to time Revolving Loans to the Borrower through June 7, 2013, and to make Term Loans to the Borrower on or before June 7, 2013 and maturing no later than June 6, 2014, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants herein contained, the parties hereto agree as follows:

1. DEFINITIONS.  The following terms have the following meanings:

Affiliate:	As to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.
Agent:	Citibank in its capacity as administrative agent for the Lenders hereunder and any successor agent appointed under Section 9.9.
Agent-Related
Persons:	Citibank and any successor agent appointed under Section 9.9, together with Citibank’s Affiliate, the Arranger, and the officers, directors, employees, agents and attorney-in-fact of such Persons and Affiliate.
Agreement:	This Credit Agreement.
Agent’s
Payment Office:	The address for payments set forth on the signature page hereto in relation to the Agent, or such other address as the Agent may from time to time specify.
Applicable Margin:	(i)    with respect to Eurodollar Rate Loans, the higher of 100% of the Index and 1.00% per annum; and
	(ii)    with respect to Base Rate Loans, the Applicable Margin set forth in clause (i) above minus 1.00% (but not less than 1.00%).

Arrangers:	Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.
Assignee:	The meaning specified in Section 10.8.
Attorney Costs:	Without duplication, (1) all fees and disbursements of any law firm or other external counsel, and (2) the allocated cost of internal legal services and all disbursements of internal counsel.
Bank Subsidiary:	Any Federal savings association (as defined in 12 U.S.C. §1813(b)(2), any national member bank (as defined in 12 U.S.C. §1813(d)(1)) or state member bank (as defined in 12 U.S.C. §1813(d)(2)) that is a subsidiary (as defined in 12 U.S.C. §1841(d)) of the Borrower.
Bankruptcy Code:	The Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended.
Base Rate:	For any day, the highest of: (a) 0.500% per annum above the Federal Funds Rate; (b) the rate of interest in effect for such day as publicly announced from time to time by Citibank, N.A. as its “Base Rate” and (c) the British Bankers Association Interest Settlement Rate applicable to Dollars for a period of one month (“One Month LIBOR”) plus 1.00% (for the avoidance of doubt, the One Month LIBOR for any day shall be based on the rate appearing on Reuters LIBOR01 Page (or other commercially available source providing such quotations as designated by the Agent from time to time) at approximately 11:00 a.m. London time on such day). The “Base Rate” described in clause (b) is a rate set by Citibank, N.A. based upon various factors including Citibank, N.A.’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Citibank, N.A. shall take effect at the opening of business on the day specified in the public announcement of such change.
Base Rate Loan:	A Revolving Loan or Term Loan that bears interest based on the Base Rate.
Borrowing:	A borrowing hereunder consisting of Revolving Loans or Term Loans of the same Type made to the Borrower on the same day by the Lenders under Section 2 and, other than in the case of a Base Rate Loan, having the same Interest Period.
Borrowing Advice:	A written request made by the Borrower with respect to any Loan substantially in the form of Exhibit B specifying the information required in Section 2.4 hereof and executed by the Borrower from time to time.

2

Borrowing
Agreements:	The credit agreement(s) between the Borrower and the lenders listed in Schedule 2.
Borrowing Date:	Any date on which a Borrowing occurs under Section 2.4.
Broker Subsidiary:	Charles Schwab & Co., Inc., a California corporation, and its successors and assigns.
Business Day:	A day other than a Saturday, Sunday or any other day on which commercial banks are authorized or required to close in California or New York and, if the applicable Business Day relates to a Eurodollar Rate Loan, such a day on which dealings are carried on in the applicable offshore dollar interbank market.
Capital Adequacy
Regulation:	Any guideline, directive or requirement of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. For the avoidance of doubt, Capital Adequacy Regulation shall include all rules, guidelines or directives concerning capital adequacy (x) issued in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act or (y) promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, regardless of the date enacted, adopted or issued.
Change in
Control:	The consummation of a reorganization, merger or consolidation by the Borrower or the sale or other disposition of all or substantially all of the assets of the Borrower (a “Business Combination”), unless, following such Business Combination, (i) no person or entity (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Borrower or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% 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 (ii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the board of directors of the Borrower as of the time of

3

	the action of the board of directors of the Borrower providing for such Business Combination.
Citibank:	Citibank, N.A., a national banking association.
Closing Date:	The date (not before June 8, 2012) on which all conditions precedent set forth in Section 4 are satisfied or waived by all Lenders or, in the case of subsection 4.1(g), waived by the person entitled to receive such payment.
Code:	The Internal Revenue Code of 1986, as amended, and Regulations promulgated thereunder.
Commitment:	The meaning specified in Section 2.1.
Commitment Fee:	The meaning specified in subsection 2.9(b).
Consolidated
Stockholders’ Equity:	With respect to any Person, as of any date of determination, all amounts that would, in accordance with GAAP, be included under shareholders’ equity on a consolidated balance sheet of such Person as at such date, plus any preferred stock.
Controlled
Subsidiary:	Any corporation 80% of whose voting stock (except for any qualifying shares) is owned directly or indirectly by the Borrower.
Conversion/
Continuation Date:	Any date on which under Section 2.5, the Borrower (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date.
Credit:	The aggregate amount of the Commitments of all Lenders to make Revolving Loans under the Revolving Credit Facility and Term Loans under the Term Loan Facility in an amount not to exceed Eight Hundred Million and no/100 Dollars ($800,000,000.00), as the same may be reduced under Section 2.10.
Default:	Any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.
Dollars, dollars, and $:	Each mean lawful money of the United States.
Effective Amount:	With respect to any Revolving Loans and Term Loans on any date, the aggregate outstanding principal amount thereof after giving

4

	effect to any Borrowings and prepayments or repayments of Revolving Loans and Term Loans occurring on such date.
Eligible Assignee:	(i) A commercial bank organized under the laws of the United States, or any state thereof, and having total equity capital of at least $1,000,000,000 and a senior debt rating of a least “A” by Standard & Poor’s Ratings Service, a Division of The McGraw-Hill Companies, Inc. or at least “A-2” by Moody’s Investors Service, Inc. or, if not rated by either of the foregoing organizations, an equivalent rating from a nationally recognized statistical rating organization; or (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the OECD), or a political subdivision of any such country, and having total equity capital of at least $1,000,000,000 and a senior debt rating of at least “A” by Standard & Poor’s Ratings Service, a Division of The McGraw-Hill Companies, Inc. or at least “A-2” by Moody’s Investors Service, Inc., or, if not rated by either of the foregoing organizations, an equivalent rating from a nationally recognized statistical rating organization; provided that such bank is acting through a branch or agency located in the United States.
Eurodollar
Base Rate:	For any Interest Period:
	(a)    the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on the page of the Reuters screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or
	(b)    in the event the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or
	(c)    in the event the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum equal

5

	to the average (rounded upward to the next 1/100th of 1%) of the rates of interest per annum notified to the Agent by each Reference Lender as the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by such Reference Lender in its capacity as a Lender and with a term equivalent to such Interest Period would be offered by its Offshore Lending Office to major banks in the offshore Dollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period.
Eurodollar Rate:	The rate obtained by dividing (i) Eurodollar Base Rate by (ii) a percentage (expressed as a decimal) equal to 1.00 minus the Eurodollar Rate Reserve Percentage.
Eurodollar Rate
Loan:	A Revolving Loan or Term Loan that bears interest based on the Eurodollar Rate.
Eurodollar Rate
Reserve Percentage:	For any Interest Period for any Loan for which the Eurodollar Rate has been selected or is applicable, the percentage (expressed as a decimal) as calculated by the Agent that is in effect on the first day of such Interest Period, as prescribed by the Board of Governors of the U.S. Federal Reserve System (or any successor), for determining reserve requirements to be maintained by the Agent under Regulation D (or any successor regulation thereof) as amended to the date hereof (including such reserve requirements as become applicable to the Agent pursuant to phase-in or other similar requirements of Regulation D at any time subsequent to the date hereof) in respect of “Eurocurrency liabilities” (as defined in Regulation D). The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Rate Reserve Percentage.
Event of Default:	Any of the events or circumstances specified in Section 8.1.
Exchange Act:	The Securities and Exchange Act of 1934, as amended, and regulations promulgated thereunder.
Federal Funds Rate:	For any day, the interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York.

6

Fee Letters:	The meaning specified in subsection 2.9(a).
FRB:	The Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions.
GAAP:	Generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.
Governmental
Authority:	Any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
Hedge Agreements:	Interest rate swap, interest rate cap or interest rate collar agreements.
Indebtedness:	As to any corporation, any obligation of, or guaranteed or assumed by, such corporation for (i) borrowed money evidenced by bonds, debentures, notes or other similar instruments, (ii) the deferred purchase price of property or services (excluding trade and other accounts payable), (iii) the leasing of tangible personal property under leases which, under any applicable Financial Accounting Standards Board Statement, have been or should be recorded as capitalized leases, (iv) direct or contingent obligations under letters of credit issued for the account of such corporation or (v) net obligations in respect of Hedge Agreements entered into with any counterparty.
Indemnified
Liabilities:	The meaning specified in Section 10.5.
Indemnified Person:	The meaning specified in Section 10.5.
Index:	The average of the Markit CDX.NA.IG Series 18 or any successor series (5 Year Period) for the preceding 30 days or, if fewer, the number of days for which the then current series is then in effect, determined (i) if used in respect of determining the Applicable

7

	Margin for Eurodollar Rate Loans, on the date that is two Business Days before the first day of the applicable Interest Period, and (ii) if used in respect of determining the Applicable Margin for Base Rate Loans, on the date of borrowing of such Loans and thereafter quarterly on the last day of each March, June, September and December.
Insolvency
Proceeding:	As to a debtor, (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other similar arrangement in respect of its creditors generally or any substantial portion of its creditors, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.
Interest
Payment Date:	As to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter, provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the date that falls three months after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date.
Interest Period:	Any period specified in accordance with Section 2.6 hereof.
Intermediate
Parent:	Schwab Holdings, Inc., a Delaware corporation and its successors and assigns.
Lender:	The meaning specified in the introductory clause hereto.
Lending Office:	As to any Lender, the office or offices of such Lender specified as its “Lending Office” or “Domestic Lending Office” or “Offshore Lending Office”, as the case may be, on Schedule 10.2, or such other office or offices as such Lender may from time to time notify the Borrower and the Agent.
Loan:	An extension of credit by a Lender to the Borrower under Section 2 in the form of a Revolving Loan or Term Loan.
Loan Document:	This Agreement, any Notes, the Fee Letters, and all other documents delivered to the Agent or any Lender in connection herewith.

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Minimum
Stockholders’ Equity:	As of the Closing Date, and the last day of each fiscal quarter thereafter, the greater of:
	(a)    $5,400,000,000, or
	(b)    the sum of –
	(i)    $5,400,000,000, plus
	(ii)    50% of the sum of cumulative Net Earnings for each fiscal quarter commencing with the fiscal quarter ended June 30, 2012.
Net Capital Ratio:	As of the date of determination, that percentage of net capital to aggregate debit items of any entity subject to the Net Capital Rule 15c3-1 promulgated by the Securities Exchange Commission pursuant to the Securities Exchange Act of 1934 and any successor or replacement rule or regulation therefor.
Net Earnings:	With respect to any fiscal period, the consolidated net income of the Borrower and its Subsidiaries, after taking into account all extraordinary items, taxes and other proper charges and reserves for the applicable period, determined in accordance with U.S. generally accepted accounting principles, consistently applied.
Note:	A promissory note executed by the Borrower in favor of a Lender pursuant to Section 2.3 in substantially the form of Exhibits A-1 and A-2.
Notice of Conversion/
Continuation:	A notice in substantially the form of Exhibit C.
Obligations:	All borrowings, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the Borrower to any Lender, the Agent, or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.
Person:	An individual, partnership, corporation, limited liability company, business trust, unincorporated association, trust, joint venture or Governmental Authority.
Pro Rata Share:	As to any Lender at any time, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Lender’s Commitment divided by the combined Commitments of all Lenders.

9

Reference Lenders:	Citibank and JPMorgan Chase Bank, N.A.
Replacement Lender:	The meaning specified in Section 3.9.
Required Lenders:	At any time at least two Lenders then holding in excess of 50% of the then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then outstanding, at least two Lenders then having in excess of 50% of the Commitments.
Requirement of Law:	As to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.
Responsible Officer:	Any senior vice president or more senior officer of the Borrower, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer, executive vice president-finance, controller or the treasurer of the Borrower, or any other officer having substantially the same authority and responsibility.
Revolving Credit
Facility:	The revolving credit facility available to the Borrower pursuant to Section 2.1 hereof.
Revolving Loan:	The meaning specified in Section 2.1, and may be a Base Rate Loan or a Eurodollar Rate Loan (each a “Type” of Revolving Loan).
Revolving Note:	The meaning specified in Section 2.3.
Revolving
Termination Date:	The earlier to occur of:
	(a)    June 7, 2013; and
	(b)    the date on which the Commitments terminate in accordance with the provisions of this Agreement.
SEC:	The Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Senior Medium-
Term Notes,
Series A:	Senior debt securities or senior subordinated debt securities issued by The Charles Schwab Corporation with a maturity between 9 months and 30 years in accordance with the Senior Indenture, as

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	amended, and the Senior Subordinated Indenture, as amended, both dated as of July 15, 1993 by and between The Charles Schwab Corporation and The Bank of New York Mellon Trust Company, N.A. as successor trustee to The Chase Manhattan Bank.
Subsidiary:	Any corporation or other entity of which a sufficient number of voting securities or other interests having power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Borrower.
Term Commitment:	Eight Hundred Million and no/100 Dollars ($800,000,000.00), as the same may be reduced under Section 2.10.
Term Loan:	The meaning specified in Section 2.2 and may be a Base Rate Loan or Eurodollar Rate Loan (each a “Type” of Term Loan).
Term Loan Facility:	The term loan facility available to the Borrower pursuant to Section 2.2 hereof.
Term Loan Maturity
Date:	The meaning specified in Section 2.2.
Term Note:	The meaning specified in Section 2.3.
Term Out Fee:	The meaning specified in subsection 2.9(c).
Type:	The meaning specified in the definition of “Revolving Loan”.

2. THE CREDIT FACILITY.

2.1    The Revolving Credit Facility Each Lender severally agrees, on the terms and conditions set forth herein, to make loans to the Borrower (each such loan, a “Revolving Loan”) from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding, together with the principal amount of Term Loans outstanding in favor of such Lender at such time, the amount set forth next to such Lender’s name on Schedule 1 (such amount together with the Lender’s Pro Rata Share of the Term Commitment, as the same may be reduced under Section 2.10 or as a result of one or more assignments under Section 10.8, the Lender’s “Commitment”); provided, however, that, after giving effect to any Borrowing of Revolving Loans, the Effective Amount of all outstanding Revolving Loans shall not at any time exceed the combined Commitments; and provided further that the Effective Amount of the Revolving Loans, together with all Term Loans outstanding at such time, of any Lender shall not at any time exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1, prepay under Section 3.3 and reborrow under this Section 2.1.

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2.2    Term Loan Facility. Each Lender severally agrees, on the terms and conditions set forth herein, to make Loans to the Borrower during the period from the Closing Date to June 7, 2013, in an aggregate amount not to exceed such Lender’s Pro Rata Share of the Term Commitment. The Borrower from time to time may borrow under the Term Loan Facility (and may reborrow any amount theretofore prepaid) until close of business on June 7, 2013, for a term not to exceed 364 days from the date of the Borrowing. Each such loan under the Term Loan Facility (a “Term Loan”) shall be in the minimum amount of $10,000,000 and shall become due and payable on the last day of the term selected by the Borrower for such Term Loan (the “Term Loan Maturity Date”), which shall in no event be later than 364 days from the date of such Term Loan. The maximum availability under the Term Loan Facility shall be the amount of the Credit minus the aggregate outstanding principal amount of Revolving Loans and Term Loans made by the Lenders; provided, however, that to the extent the proceeds of a Term Loan are used to repay an outstanding Revolving Loan (or a portion thereof), such Revolving Loan (or portion thereof) shall not be considered part of the aggregate principal amount of outstanding Revolving Loans made by the Lenders for purposes of this sentence (such maximum availability hereafter being referred to as the “Term Loan Availability”). Under no circumstances shall the aggregate outstanding principal amount of Term Loans and Revolving Loans made by the Lenders exceed the Credit, and under no circumstances shall any Lender be obligated (i) to make any Term Loan (nor may the Borrower reborrow any amount heretofore prepaid) after June 7, 2013, or (ii) to make any Term Loan in excess of the Term Loan Availability. Each Term Loan made hereunder shall fully and finally mature and be due and payable in full on the Term Loan Maturity Date specified in the Borrowing Advice for such Term Loan; provided, however, that to the extent the Borrowing Advice for any Term Loan selects an Interest Period that expires before the Term Loan Maturity Date specified in such Borrowing Advice, the Borrower may from time to time select additional interest rate options and Interest Periods (none of which shall extend beyond the Term Loan Maturity Date for such Term Loan) by delivering a Borrowing Advice or Notice of Conversion/Continuation, as applicable.

2.3    Evidence of Borrowing/Promissory Notes. The obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Loans and Term Loans shall be evidenced by promissory notes of the Borrower (respectively the “Revolving Note and the Term Note”) in substantially the form attached hereto as Exhibits A-1 and A-2, with the blanks appropriately completed, payable to the order of each Lender in the principal amount of its Commitment, bearing interest as hereinafter specified. Each Revolving Note and Term Note shall be dated, and shall be delivered to each Lender, on the date of the execution and delivery of this Agreement by the Borrower. Each Lender shall, and is hereby authorized by the Borrower to, endorse on the schedule contained on the Revolving Note and Term Note, or on a continuation of such schedule attached thereto and made a part thereof, appropriate notations regarding the Revolving Loans and Term Loans evidenced by such Note as specifically provided therein and such Lender’s record shall be conclusive absent manifest error; provided, however, that the failure to make, or error in making, any such notation shall not limit or otherwise affect the obligations of the Borrower hereunder or under the Revolving Note and Term Note. The Agent, by notice to the Borrower (to be given not later than two Business Days prior to the initial Borrowing or Term Loan hereunder) may request that Revolving Loans or Term Loans made hereunder for which the interest calculation is to be based on the Eurodollar Rate be evidenced

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by separate Revolving Notes (in the case of Revolving Loans) and Term Notes (in the case of Term Loans), substantially in the form of Exhibit A-1 hereto (in the case of Revolving Loans) and Exhibit A-2 hereto (in the case of Term Loans), payable to the order of each Lender for the account of its office, branch or affiliate it may designate as its Lending Office.

2.4    Making of Revolving Loans and Term Loans, Borrowings; Interest Periods; Notice.

(a)    Each Borrowing of Revolving Loans or Term Loans shall be made upon Borrower’s irrevocable written notice delivered to the Agent in the form of a Borrowing Advice (which notice must be received by the Agent prior to 10:00 a.m. San Francisco time for a Eurodollar Rate Loan, and prior to 11:00 a.m. San Francisco time for a Base Rate Loan) (i) the same Business Day as the requested Borrowing Date in the case of Base Rate Loans to be made on such Business Day, or (ii) three Business Days prior to the requested Borrowing Date in the case of Eurodollar Rate Loans, with each Borrowing Advice setting forth the following information:

(A)    the requested Borrowing Date, which shall be a Business Day, on which such Revolving Loan or Term Loan is to be made;

(B)    for a Eurodollar Rate Loan, the duration of the Interest Period selected in accordance with Section 2.6 hereof (if the Borrowing Advice fails to specify the duration of the Interest Period for any Borrowing comprised of a Eurodollar Rate Loan, such Interest Period shall be three months);

(C)    the Type of Loans comprising the Borrowing and the interest rate option selected in accordance with Section 2.7 hereof; and

(D)    the aggregate principal amount of the Revolving Loan or Term Loan (which shall be in an aggregate minimum amount of $10,000,000) to which such Interest Period and interest rate shall apply.

(b)    The Agent will promptly notify each Lender of its receipt of any Borrowing Advice and of the amount of such Lender’s Pro Rata Share of that Borrowing.

(c)    Each Lender will make the amount of its Pro Rata Share of each Borrowing available to the Agent for the account of the Borrower at the Agent’s Payment Office by 1:00 p.m. San Francisco time on the Borrowing Date requested by the Borrower in funds immediately available to the Agent. Each Loan to the Borrower under this Agreement shall be made by 1:30 p.m. (San Francisco time) on the date of the Requested Borrowing Date, and shall be in immediately available funds (in the aggregate amount made available to the Agent by the Lenders) wired to the Borrower’s account at Citibank, N.A. or such other account as may be designated by the Borrower in writing.

(d)    After giving effect to any Borrowing, there may not be more than ten (10) different Interest Periods in effect.

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With respect to any Borrowing having an Interest Period ending on or before June 7, 2013, if prior to the last day of the Interest Period for such Borrowing the Borrower fails timely to provide a Notice of Conversion/Continuation in accordance with Section 2.5, such Borrowing shall, on the last day of the then-existing Interest Period for such Borrowing, automatically convert into a Base Rate Loan. In the event of any such automatic conversion, the Borrower on the date of such conversion shall be deemed to make a representation and warranty to the Lenders that, to the best of the Borrower’s knowledge, (i) neither the Borrower nor any Bank Subsidiary is in violation of the capital requirements as described in Section 6.6, (ii) the Broker Subsidiary is not in violation of minimum net capital requirements as described in Section 7.1, (ii) the Borrower’s Consolidated Stockholders’ Equity is not below the Minimum Stockholders’ Equity as described in Section 7.2, and (iv) no amount owing with respect to any Commitment Fee, any outstanding Borrowing, or any interest thereon, or any other amount hereunder, is due and unpaid. If prior to the last day of the Interest Period applicable to any Term Loan the Borrower fails timely to provide a Notice of Conversion/Continuation in accordance with Section 2.5, such Term Loan shall, on the last day of the then-existing Interest Period for such Term Loan, automatically convert into a Base Rate Loan.

2.5    Conversion and Continuation Elections.

(a)    The Borrower may, upon irrevocable written notice to the Agent in accordance with this Section 2.5:

(i)    elect, as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of any other Type of Loan, to convert any such Loan (or any part thereof in an amount not less than $10,000,000), into Loans of any other Type; or

(ii)    elect as of the last day of the applicable Interest Period, to continue any Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $10,000,000);

provided, that if at any time the aggregate amount of Eurodollar Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $10,000,000, such Eurodollar Rate Loans shall automatically convert into Base Rate Loans.

(b)    The Borrower shall deliver a Notice of Conversion/Continuation to be received by the Agent not later than 10:00 a.m. San Francisco time for a Eurodollar Rate Loan, and not later than 11:00 a.m. San Francisco time for a Base Rate Loan, at least (i) three Business Days in advance of the Conversion/Continuation Date, as to any Loan that is to be converted into or continued as a Eurodollar Rate Loan; and (ii) the same Business Day as the Conversion/Continuation Date, as to any Loan that is to be converted into a Base Rate Loan, specifying:

(A)    the proposed Conversion/Continuation Date;

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(B)    the aggregate amount of the Loan or Loans to be converted or renewed;

(C)    the Type of Loan or Loans resulting from the proposed conversion or continuation; and

(D)    other than in the case of conversions into Base Rate Loans, the duration of the requested Interest Period.

(c)    If upon the expiration of any Interest Period applicable to Eurodollar Rate Loans, the Borrower has failed to select timely a new Interest Period to be applicable to such Eurodollar Rate Loans, or if any Default or Event of Default then exists, the Borrower shall be deemed to have elected to convert such Eurodollar Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period.

(d)    The Agent will promptly notify each Lender of its receipt of a Notice of Conversion/Continuation, or, if no timely notice is provided by the Borrower, the Agent will promptly notify each Lender of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was given as held by each Lender.

(e)    Unless the Required Lenders otherwise agree, during the existence of a Default or Event of Default, the Borrower may not elect to have a Loan converted into or continued as a Eurodollar Rate Loan.

(f)    After giving effect to any conversion or continuation of Loans, there may not be more than ten (10) different Interest Periods in effect.

2.6    Interest Periods. The Borrower may select for any Eurodollar Rate Loan the Interest Period (as defined in the next sentence) for each Borrowing, it being understood that the Borrower may request multiple Borrowings on the same day and may select a different Interest Period for each such Borrowing. An Interest Period shall be each period, as selected by the Borrower in accordance with the terms of this Agreement, beginning on the Borrowing Date of any Eurodollar Rate Loan, or on the Conversion/Continuation Date on which any Loan is converted into or continued as a Eurodollar Rate Loan, and ending on the date specified by the Borrower that is one, two, three or six months thereafter; provided that whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month; and provided further that if the last day of an Interest Period would be a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such next succeeding Business Day is in a different calendar month, in which case such interest period shall end on the next preceding Business Day; but provided, however, that (i) no Interest Period applicable to any Revolving Loan shall extend beyond the Revolving Termination Date; and (ii) no Interest Period

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applicable to any Term Loan shall extend beyond the Term Loan Maturity Date specified in the Borrowing Advice for such Term Loan, which in no event shall be later than June 6, 2014.

2.7    Interest Rates.

(a)    (i) Each Revolving Loan, while outstanding, shall bear interest from the applicable Borrowing Date at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the case may be, (and subject to the Borrower’s right to convert to other Types of Loans under Section 2.5) plus the Applicable Margin.

(ii) Each Term Loan, while outstanding, shall bear interest from the applicable Borrowing Date at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the case may be, (and subject to the Borrower’s right to convert to other Types of Loans under Section 2.5) plus the Applicable Margin.

(b)    Interest on each Revolving Loan and Term Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Loans under Section 3.3 for the portion of the Loan so prepaid and upon payment (including prepayment) in full thereof, and, during the existence of any Event of Default interest shall be paid on demand of the Agent at the request or with the consent of the Required Lenders.

(c)    After the principal amount of any Revolving Loan or Term Loan, accrued interest upon such Loan, the commitment fee, or any other amount hereunder shall have become due and payable by acceleration, or otherwise, it shall thereafter (until paid) bear interest, payable on demand, (i) until the end of the Interest Period with respect to such Loan at a rate per annum equal to 2% per annum in excess of the rate or rates in effect with respect to such Loan, and (ii) thereafter, at a rate per annum equal to 2% per annum in excess of the Base Rate.

2.8    Substitute Rates. If upon receipt by the Agent of a Borrowing Advice relating to any Borrowing or of a Notice of Conversion/Continuation:

(a)    the Agent shall determine that by reason of changes affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate with respect to any Interest Period; or

(b)    the Agent shall determine that by reason of any change since the date hereof in any applicable law or governmental regulation (other than any such change in the regulations described in the definition of Eurodollar Rate Reserve Percentage in Section 1 hereof), guideline or order (or any interpretation thereof), the adoption or enactment of any new law or governmental regulation or order or any other circumstance affecting the Lenders or the London interbank market, the Eurodollar Rate shall no longer represent the effective cost to the Lenders of U.S. dollar deposits in the relevant amount and for the relevant period; or

(c)    Agent shall determine that, as a result of any change since the date hereof in any applicable law or governmental regulation or as a result of the adoption of any new applicable law or governmental regulation, the applicable Eurodollar Rate would be unlawful;

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then, the Agent will promptly so notify the Borrower and each Lender, whereupon, the obligation of the Lenders to make or maintain Eurodollar Rate Loans hereunder shall be suspended until the Agent upon the instruction of the Required Lenders revokes such notice in writing. Upon receipt of such notice, the Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it and, at its election, submit a Borrowing Advice or Notice of Conversion/Continuation selecting another Type of Loan. If the Borrower does not revoke such Notice or give a Notice as provided herein, the Lenders shall make, convert or continue the Loans, as proposed by the Borrower in the amount specified in the applicable notice submitted by the Borrower, but such Loans shall be made, converted or continued as Base Rate Loans instead of Eurodollar Rate Loans.

2.9    Fees.

(a)    Arrangement, Agency Fees. The Borrower shall pay an arrangement fee to the Arrangers for their respective accounts, and shall pay an agency fee to the Agent for the Agent’s account, as required by the separate letter agreements (“Fee Letters”) between the Borrower and each of the Arrangers and between the Borrower and the Agent, each dated May 7, 2012.

(b)    Commitment Fee. The Borrower shall pay to the Agent for the account of each Lender a commitment fee (the “Commitment Fee”) on the actual daily unused portion of such Lender’s Commitment computed on a quarterly basis in arrears on the last Business Day of each quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to seventy-five one thousandths of one percent (0.075%) per annum. For purposes of calculating utilization under this subsection, the Commitments shall be deemed used to the extent of the Effective Amount of Revolving Loans and Term Loans then outstanding. Such Commitment Fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each quarter commencing on the quarter ending June 30, 2012 through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; provided that, in connection with any reduction or termination of Commitments under Section 2.10, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date.

(c)    Term Loan Fee. The Borrower shall pay to the Agent for the account of each Lender a term loan fee (the “Term Out Fee”) equal to one percent (1.00%) of the aggregate principal amount of all Term Loans outstanding on June 7, 2013, payable on such date.

2.10    Reduction of Credit. The Borrower, from time to time, upon at least three (3) Business Days’ written notice to the Agent, may terminate the commitments, or permanently reduce the Commitments by an aggregate minimum amount of $10,000,000, without penalty or premium; unless after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the Effective Amount of all Revolving Loans and Term Loans together would exceed the amount of the combined Commitments then in effect. Once reduced in accordance with this Section, the Commitments may not be increased. Any reduction of the

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Commitments shall be applied to each Lender’s Commitment according to its Pro Rata Share. All accrued Commitment Fees to, but not including, the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. During the continuation of the Credit, the computation of the Commitment Fee and the Lenders’ obligations to make Revolving Loans or Term Loans shall be based upon such reduced Commitments. In the event the Credit shall be reduced to zero pursuant to this Section, the Credit shall be deemed terminated, and any Commitment Fee or any other amount payable hereunder then accrued shall become immediately payable. Such termination of the Credit shall terminate the Borrower’s obligations with respect to the Commitment Fee to the extent not theretofore accrued and shall terminate the Lenders’ obligations to make any further Revolving Loans or Term Loans under this Agreement.

2.11    Termination Date; Extensions. The termination date of each Lender’s Commitment with respect to the Credit (the “Termination Date”), including both the Revolving Credit Facility under Section 2.1 hereof and the Term Loan Facility under Section 2.2 hereof, is initially June 7, 2013. At any time no earlier than forty-five (45) days and no later than thirty (30) days prior to the Termination Date then in effect (whether the initial Termination Date of June 7, 2013 or any later Termination Date as extended under this Section 2.11), the Borrower may, by written notice to the Agent in the form attached as Exhibit D hereto, request that the Termination Date be extended for a period of 364 calendar days. Such request shall be irrevocable and binding upon the Borrower. In no event will any Lender agree to approve any extension more than thirty (30) days before the Termination Date then in effect. Failure of any Lender to respond shall mean that such Lender has not approved such extension. If each Lender (in its sole discretion) agrees to so extend its Commitment and the Termination Date (which agreement may be given or withheld in such Lender’s sole and absolute discretion), the Agent shall evidence such agreement by executing and returning to the Borrower a copy of the Borrower’s written request no later than fifteen (15) days after the Agent’s receipt of the Borrower’s written request. If the Agent fails to so respond to and accept the Borrower’s request for extension of the Termination Date then in effect, the Lenders’ Commitments shall be terminated on the Termination Date then in effect. If, on the other hand, the Agent so responds to and accepts the Borrower’s request for extension of the Termination Date, then upon receipt by the Borrower of a copy of the Borrower’s written request countersigned by the Agent, (i) the Lenders’ Commitments then in effect and the Termination Date then in effect shall automatically be extended for the 364-day period specified in such written request, and (ii) each reference in this Agreement to “June 7, 2013”, and “June 6, 2014” (and any prior extension thereof pursuant to this Section 2.11) also shall automatically be correspondingly extended for 364 days.

2.12    Payments by the Lenders to the Agent.

(a)    Unless the Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day before the date of such Borrowing in the case of a Eurodollar Rate Loan, or, in the case of a Base Rate Loan, prior to noon (12:00) San Francisco time on the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent for the account of the Company the amount of that Lender’s Pro Rata Share of the Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available

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funds on the Borrowing Date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made a corresponding amount available to the Borrower such Lender shall on the Business Day following such Borrowing Date make such amount available to the Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Agent submitted to any Lender with respect to amounts owing under this subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Lender’s Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the Business Day following the Borrowing Date, the Agent will notify the Borrower of such failure to fund and, upon demand by the Agent, the Borrower shall pay such amount to the Agent for the Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing.

(b)    The failure of any Lender to make any Loan on any Borrowing Date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Borrowing Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Borrowing Date.

2.13    Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share, such Lender shall immediately (a) notify the Agent of such fact, and (b) purchase from the other Lenders such participation in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.5) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participation purchased under this Section and will in each case notify the Lenders following any such purchase or repayment.

2.14    Computation of Fees and Interest.

(a)    All computations of interest for Base Rate Loans when the Base Rate is determined by Citibank N.A.’s “Base Rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of interest, and all

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computation of fees under subsection 2.9(b) and (c) shall be made on the basis of a 360-day year and actual days elapsed. Interest and such fees shall accrue during each period during which interest or such fees are computed from and including the first day thereof to and excluding the last day thereof.

(b)    If any Reference Lender’s Commitment shall terminate (otherwise than on termination of all the Commitments), or for any reason whatsoever such Reference Lender shall cease to be a Lender hereunder, such Reference Lender shall thereupon cease to be a Reference Lender, and the determination of the Eurodollar Base Rate under subsection (c) of the definition of such term shall be determined on the basis of the rates as notified by the remaining Reference Lenders.

3. PAYMENT.

3.1    Repayment.

(a)    The Term Credit. The Borrower shall repay to the Agent for the account of the Lenders the aggregate principal amount of the Term Loans outstanding on each Term Loan Maturity Date, as applicable.

(b)    The Revolving Credit. The Borrower shall repay to the Agent, for the account of the Lenders, on the Revolving Termination Date the aggregate principal amount of Revolving Loans outstanding on such date.

3.2    Method of Payment. All payments hereunder and under the Revolving Note and the Term Note shall be payable in lawful money of the United States of America and in immediately available funds not later than 12:00 noon (San Francisco time) on the date when due at the principal office of the Agent or at such other place as the Agent may, from time to time, designate in writing to the Borrower.

3.3    Optional Prepayment. Subject to Section 3.7, the Borrower shall be entitled at any time or from time to time, upon not less than one (1) Business Day irrevocable notice to the Agent, to ratably prepay Loans in whole or in part in minimum amounts of $10,000,000 without premium or penalty. Each notice of payment shall specify the date and aggregate principal amount of any such prepayment and the Type(s) of Loans to be repaid. The Agent will promptly notify each Lender of its receipt of any such Notice and of such Lender’s Pro Rata Share of such prepayment. If such Notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount, specified in such Notice shall be due and payable on the date specified therein, together with all accrued interest to each such date on the amount prepaid, and any amounts required in accordance with Section 3.7 hereof as a result of such prepayment.

3.4    Taxes/Net Payments. All payments by Borrower hereunder and under the Revolving Note and the Term Note to the Agent or any Lender shall be made without set-off or counterclaim and in such amounts as may be necessary in order that all such payments, after deduction or withholding for or on account of any present or future taxes, levies, imposts, duties or other charges of whatsoever nature imposed by any Governmental Authority or taxing

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authority thereof (collectively, “Taxes”), shall not be less than the amounts otherwise specified to be paid under this Agreement. The Borrower shall pay all Taxes when due and shall promptly send to the Lender original tax receipts or copies thereof certified by the relevant taxing authority together with such other documentary evidence with respect to such payments as may be required from time to time by the Agent. If the Borrower fails to pay any Taxes to the appropriate taxing authorities when due or fails to remit to the Agent or Lender any such original tax receipts or certified copies thereof as aforesaid or other required documentary evidence, the Borrower shall indemnify the Agent or Lender within thirty (30) days of demand by the Lender or Agent for any taxes, interest or penalties that may become payable by the Agent or Lender as a result of such failure.

Notwithstanding the foregoing, (i) the Borrower shall not be liable for the payment of any tax on or measured by the net income of any Lender pursuant to the laws of the jurisdiction where an office of such Lender making any loan hereunder is located or does business, and (ii) the foregoing obligation to gross up the payments to any Lender so as not to deduct or offset any withholding taxes or Taxes paid or payable by the Borrower with respect to any payments to such Lender shall not apply (x) to any payment to any Lender which is a “foreign corporation, partnership or trust” within the meaning of the Code if such Lender is not, on the date hereof (or on the date it becomes a Lender under this Agreement pursuant to the assignment terms of this Agreement), or on any date hereafter that it is a Lender under this Agreement, entitled to submit either a Form W-8BEN or any successor form thereto (relating to such Lender and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of the Loans) or Form W-8ECI or any successor form thereto (relating to all interest to be received by such Lender hereunder in respect of the Loans) of the U.S. Department of Treasury, or (y) to any item referred to in the preceding sentence that would not have been imposed but for the failure by such Lender to comply with any applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections of such Lender with the United States if such compliance is required by statute or regulation of the United States as a precondition to relief or exemption from such item.

3.5    Illegality.

(a)    If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make Eurodollar Rate Loans, then, on notice thereof by the Lender to the Borrower through the Agent, any obligation of that Lender to make Eurodollar Rate Loans shall be suspended until the Lender notifies the Agent and the Borrower that the circumstances giving rise to such determination no longer exist.

(b)    If a Lender determines that it is unlawful to maintain any Eurodollar Rate Loan, the Borrower shall, upon its receipt of notice of such fact and demand from such Lender (with a copy to the Agent), prepay in full such Eurodollar Rate Loans of that Lender then outstanding, together with interest accrued thereon and amounts required under Section 3.7, either on the last day of the Interest Period thereof, if the Lender may lawfully

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continue to maintain such Eurodollar Rate Loans to such day, or immediately, if the Lender may not lawfully continue to maintain such Eurodollar Rate Loan. If the Borrower is required to so prepay any Eurodollar Rate Loan, then concurrently with such prepayment, the Borrower shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Loan.

(c)    If the obligation of any Lender to make or maintain Eurodollar Rate Loans has been so terminated or suspended, the Borrower may elect, by giving notice to the Lender through the Agent that all Loans which would otherwise be made by the Lender as Eurodollar Rate Loans shall be instead Base Rate Loans.

(d)    Before giving any notice to the Agent under this Section, the affected Lender shall designate a different Lending Office with respect to its Eurodollar Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Lender, be illegal or otherwise disadvantageous to the Lender.

3.6    Increased Costs and Reduction of Return.

(a)    If any Lender determines that, due to either (i) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Eurodollar Rate) in or in the interpretation of any law or regulation, or (ii) the compliance by that Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loan, then the Borrower shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs.

(b)    If any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Lender (or its Lending Office) or any corporation controlling the Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital or liquidity required or expected to be maintained by the Lender or any corporation controlling the Lender and determines that the amount of such capital or liquidity is increased as a consequence of its Commitment, Loans, credits or obligations under this Agreement then, upon demand of such Lender to the Borrower through the Agent, the Borrower shall pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient to compensate the Lender for the cost of such increase.

3.7    Funding Losses. The Borrower shall reimburse each Lender and hold each Lender harmless from any loss or expense which the Lender may sustain or incur as a consequence of:

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(a)    the failure of the Borrower to make on a timely basis any payment of principal of any Eurodollar Rate Loan;

(b)    the failure of the Borrower to borrow, continue or convert a Loan after the Borrower has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation;

(c)    the failure of the Borrower to make any prepayment in accordance with any notice delivered under Section 3.3;

(d)    the prepayment or other payment (including after acceleration thereof) of any Eurodollar Rate Loan on a day that is not the last day of the relevant Interest Period; or

(e)    the automatic conversion under Section 2.5 of any Eurodollar Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period,

including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Eurodollar Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section and under subsection 3.6(a), each Eurodollar Rate Loan made by a Lender and each related reserve, special deposit or similar requirement shall be conclusively deemed to have been funded at the LIBO-based rate used in determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan is in fact so funded,.

3.8    Certificates of Lenders. Any Lender claiming reimbursement or compensation under this Section 3 shall deliver to the Borrower (with a copy to the Agent) a certificate setting forth in reasonable detail the amount payable to the Lender hereunder and such certificate shall be conclusive and binding on the Borrower in the absence of manifest error.

3.9    Substitution of Lenders. Upon the receipt by the Borrower from any Lender (an “Affected Lender”) of a claim for compensation under Section 3.6, the Borrower may: (i) request the Affected Lender to use its best efforts to obtain a replacement bank or financial institution satisfactory to the Borrower to acquire and assume all or a ratable part of all of such Affected Lender’s Loans and Commitment (a “Replacement Lender”); (ii) request one or more of the other Lenders to acquire and assume all or part of such Affected Lender’s Loans and Commitment (but no other Lender shall be required to do so); or (iii) designate a Replacement Lender. Any such designation of a Replacement Lender under clause (ii) or (iii) shall be subject to the prior written consent of the Agent (which consent shall not be unreasonably withheld).

3.10    Survival. The agreements and obligations of the Borrower in this Section 3 shall survive the payment of all other Obligations.

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4. CONDITIONS.

4.1    Conditions Precedent to the Effectiveness of this Agreement. The obligation of each Lender to make its initial extension of credit hereunder is subject to the condition that the Agent has received on or before the Closing Date all of the following in form and substance satisfactory to the Agent and each Lender, in sufficient copies for each Lender;

(a)    This Agreement and the Notes executed by each party thereto.

(b)    A copy of a resolution or resolutions adopted by the Board of Directors or Executive Committee of the Borrower, certified by the Secretary or an Assistant Secretary of the Borrower as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and a copy of the Certificate of Incorporation and the By-Laws of the Borrower, similarly certified.

(c)    A certificate, signed by the Secretary or an Assistant Secretary of the Borrower and dated the date hereof, as to the incumbency of the person or persons authorized to execute and deliver this Agreement.

(d)    A certificate signed by the Chief Financial Officer, Treasurer or Corporate Controller of the Borrower that, as of the date hereof, there has been no material adverse change in its consolidated financial condition since December 31, 2011 not reflected on its Quarterly Report on Form 10-Q filed with the SEC for the period ending March 31, 2012.

(e)    A certificate, signed by the Secretary or an Assistant Secretary of the Borrower and dated the date hereof, as to the persons authorized to execute and deliver a Borrowing Advice, a Notice of Conversion/Continuation, and the Revolving Notes and the Term Notes. The Agent and each Lender may rely on such certificate with respect to the Revolving Loans and Term Loans hereunder unless and until it shall have received an updated certificate and, after receipt of such updated certificate, similarly may rely thereon.

(f)    A written opinion, dated the date hereof, of counsel for the Borrower, in the form of Exhibit E.

(g)    Evidence of payment by the Borrower of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney Costs of Citibank to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute Citibank’s reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between the Borrower and Citibank); including any such costs, fees and expenses arising under or referenced in Sections 2.9 and 10.4.

(h)    Written evidence that all of the Borrowing Agreements have been or concurrently herewith are being terminated.

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(i)    A certificate, signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower and dated as of the date hereof, which confirms that after giving effect to this Agreement, the aggregate principal amount of credit available under all of the Borrower’s committed unsecured revolving credit facilities combined will not exceed the amount authorized under the resolutions of the Borrower referenced in subsection 4.1(b).

4.2    Conditions Precedent to Revolving Loans and Term Loans. The obligation of each Lender to make any Revolving Loan or Term Loan to be made by it (including its initial Revolving Loan), or to continue or convert any Loan under Section 2.5 is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date or Conversion/Continuation Date:

The Agent shall have received a Borrowing Advice or a Notice of Conversion/Continuation, as applicable. Each Borrowing Advice or Notice of Conversion/Continuation given by the Borrower shall be deemed to be a representation and warranty by the Borrower to each Lender, effective on and as of the date of such Notice and as of such Borrowing Date for a Revolving Loan or Term Loan covered thereby, that (i) the representations and warranties set forth in Section 5 hereof are true and correct as of such date, and (ii) no Default or Event of Default has occurred and is continuing. No Lender shall be required to make any Loan hereunder if:

(a)    the Credit, the Revolving Credit Facility (in the case of a Revolving Loan) or the Term Loan Facility (in the case of a Term Loan) has been terminated; or

(b)    any of the representations or warranties of the Borrower set forth in Section 5 hereof shall prove to have been untrue in any material respect when made, or when any Default or Event of Default as defined in Section 8, has occurred; or

(c)    the Borrower or any Bank Subsidiary is in violation of the capital requirements as described in Section 6.6; or

(d)    the Broker Subsidiary is in violation of minimum net capital requirements as described in Section 7.1; or

(e)    the Borrower’s Consolidated Stockholders’ Equity is below the Minimum Stockholders’ Equity as described in Section 7.2; or

(f)    any amount owing with respect to any Commitment Fee or any outstanding Revolving Loan or Term Loan or any interest thereon or any other amount payable hereunder is due and unpaid.

5. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Agent and each Lender, as of the date of delivery of this Agreement and as of the date of any Revolving Loan or Term Loan, as follows:

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5.1    Organization and Good Standing. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has full power, authority and legal right and has all governmental licenses, authorizations, qualifications and approvals required to own its property and assets and to transact the business in which it is engaged, except where the failure to have any such license, authorization, qualification or approval, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the Borrower and its Subsidiaries taken as a whole on a consolidated basis; and all of the outstanding shares of capital stock of Borrower have been duly authorized and validly issued, are fully paid and non-assessable.

5.2    Corporate Power and Authority. The Borrower has full power, authority and legal right to execute and deliver, and to perform its obligations under, this Agreement, and to borrow hereunder, and has taken all necessary corporate and legal action to authorize the borrowings hereunder on the terms and conditions of this Agreement and to authorize the execution and delivery of this Agreement, and the performance of the terms thereof.

5.3    Enforceability. This Agreement has been duly authorized and executed by the Borrower, and when delivered to the Lenders will be a legal, valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, except, in each case, as enforcement thereof may be limited by bankruptcy, insolvency or other laws relating to or affecting enforcement of creditors’ rights or by general equity principles.

5.4    No Violation of Laws or Agreements. The execution and delivery of this Agreement by the Borrower and the performance of the terms hereof will not violate (i) any provision of any law or regulation or any judgment, order or determination of any court or governmental authority or of the charter or by-laws of the Borrower, or (ii) any securities issued by the Borrower or any provision of any mortgage, indenture, loan or security agreement, or other instrument, to which the Borrower is a party or which purports to be binding upon it or any of its assets, in each case in this clause (ii), in any respect that reasonably could be expected to have a material adverse effect on the Borrower and its Subsidiaries taken as a whole on a consolidated basis; nor will the execution and the delivery of this Agreement by the Borrower and the performance of the terms hereof result in the creation of any lien or security interest on any assets of the Borrower pursuant to the provisions of any of the foregoing.

5.5    No Consents. Except as disclosed in writing by Borrower, no consents of others (including, without limitation, stockholders and creditors of the Borrower) nor any consents or authorizations of, exemptions by, or registrations, filings or declarations with, any Governmental Authority are required to be obtained by the Borrower in connection with the execution and delivery of this Agreement and the performance of the terms thereof.

5.6    Financial Statements. The consolidated financial statements of the Borrower contained in the documents previously delivered to each Lender have been prepared in accordance with U.S. generally accepted accounting principles and present fairly the consolidated financial position of the Borrower.

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5.7    Broker Subsidiary Licenses, Etc. The Broker Subsidiary possesses all material licenses, permits and approvals necessary for the conduct of its business as now conducted and as presently proposed to be conducted as are required by law or the applicable rules of the SEC and the Financial Industry Regulatory Authority.

5.8    Broker Subsidiary/Broker Registration. The Broker Subsidiary is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended.

5.9    Broker Subsidiary/SIPC. The Broker Subsidiary is not in arrears with respect to any assessment made upon it by the Securities Investor Protection Corporation, except for any assessment being contested by the Broker Subsidiary in good faith by appropriate proceedings and with respect to which adequate reserves or other provisions are being maintained to the extent required by U.S. generally accepted accounting principles.

5.10    Taxes. The Borrower has paid and discharged or caused to be paid and discharged all taxes, assessments, and governmental charges prior to the date on which the same would have become delinquent, except to the extent that such taxes, assessments or charges are being contested in good faith and by appropriate proceedings by or on behalf of the Borrower and with respect to which adequate reserves or other provisions are being maintained to the extent required by U.S. generally accepted accounting principles.

5.11    ERISA. The Borrower is in all material respects in compliance with the provisions of and regulations under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Code applicable to any pension or other employee benefit plan established or maintained by the Borrower or to which contributions are made by the Borrower (the “Plans”). The Borrower has met all of the funding standards applicable to each of its Plans, and there exists no event or condition that would permit the institution of proceedings to terminate any of the Plans under Section 4042 of ERISA. The estimated current value of the benefits vested under each of the Plans does not, and upon termination of any of the Plans will not, exceed the estimated current value of any such Plan’s assets. The Borrower has not, with respect to any of the Plans, engaged in a prohibited transaction set forth in Section 406 of ERISA or Section 4975(c) of the Code that could be expected to have a material adverse effect on the Borrower and its Subsidiaries taken as a whole on a consolidated basis.

5.12    No Extension of Credit for Default Remedy/Hostile Acquisition. The Borrower will not use any amounts borrowed by it under this Agreement to remedy a default under any mortgage, indenture, agreement or instrument under which there may be issued any Indebtedness of the Borrower to any bank or bank holding company, or their respective assignees, for borrowed money. Further, the Borrower will not use any amounts advanced to it under this Agreement for the immediate purpose of acquiring a company where the Board of Directors or other governing body of the entity being acquired has made (and not rescinded) a public statement opposing such acquisition.

5.13    Use of Proceeds/Margin Regulations. The Borrower will use the proceeds for general corporate purposes. The Borrower will not use the proceeds of any loan provided hereby

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in such a manner as to result in a violation of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

5.14    Authorized Persons. The persons named for such purpose in the certificates delivered pursuant to subsection 4.1(e) hereof are authorized to execute Borrowing Advices.

5.15    Material Contracts. Borrower is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material contract, indenture, mortgage, loan agreement, note or lease to which the Borrower is a party or by which it may be bound.

5.16    Litigation. Except for any matter disclosed in the Form 10-Q filed by the Borrower with the SEC on May 7, 2012, there is no action, suit or proceeding pending against, or to the knowledge of the Borrower, threatened against or affecting, the Borrower or any of its Subsidiaries before any court, arbitrator, governmental body, agency or official in which there is a significant probability of an adverse decision which could have a material adverse effect on the business or the financial condition of the Borrower.

5.17    Investment Company. The Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

6. AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees that so long as any Lender shall have a Commitment hereunder or any Loan or other obligation hereunder shall remain outstanding, unpaid or unsatisfied and until full payment of all amounts due to the Lenders hereunder, it will, unless and to the extent the Required Lenders waive compliance in writing:

6.1    Notice of Events of Default. Give prompt notice to the Agent and each Lender, no later than three Business Days after becoming aware thereof, of any Default or Event of Default.

6.2    Financial Statements. Deliver to the Agent, in form and detail satisfactory to the Agent and the Required Lenders with sufficient copies for each Lender, within ten Business Days of the filing thereof with the SEC, a copy of (i) each registration statement filed under the Securities Act of 1933, (ii) each Form 10-Q and Form 10-K (in each case including exhibits) filed by the Borrower with the SEC under the Securities Exchange Act of 1934, as amended, accompanied by a compliance certificate with an attached schedule of calculations (in the form attached hereto as Schedule 6.2) demonstrating compliance with the Section 7.1 and 7.2 financial covenants, and (iii) each Form 8-K (with exhibits) and proxy statement filed by the Borrower with the SEC under the Securities Exchange Act of 1934, as amended; and, in the event the Borrower requests an extension of any such filing from the SEC, promptly (but not later than the second Business Day following the filing of such request) deliver a copy of such request to the Agent.

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6.3    Insurance. Maintain and keep in force in adequate amounts such insurance as is usual in the business carried on by the Borrower and cause the Broker Subsidiary to maintain and keep in force in adequate amounts such insurance as is usual in the business carried on by the Broker Subsidiary.

6.4    Books and Records. Maintain adequate books, accounts and records and prepare all financial statements required hereunder in accordance with U.S. generally accepted accounting principles and practices and in compliance with the regulations of any governmental regulatory body having jurisdiction thereof.

6.5    Change in Business. Advise the Agent and each Lender, in a timely manner, of material changes to the nature of business of the Borrower or the Broker Subsidiary as at present conducted. The Broker Subsidiary is at present engaged in the business of providing financial services, primarily to individual investors and/or their advisors.

6.6    Capital Requirements. The Borrower will maintain, and cause each Bank Subsidiary to maintain, at all times such amount of capital as may be prescribed by such entity’s prudential supervisor, from time to time, whether by regulation, agreement or order. The Borrower shall at all times ensure that all Bank Subsidiaries shall be “well capitalized” within the meaning of 12 U.S.C. §1831(o), as amended, reenacted or redesignated from time to time.

7. NEGATIVE COVENANTS.

The Borrower covenants and agrees that so long as any Lender shall have any Commitment hereunder, or any Loan or other obligation, shall remain outstanding, unpaid or unsatisfied and until full payment of all amounts due to the Lenders hereunder, unless and to the extent the Required Lenders waive compliance in writing:

7.1    Net Capital. The Borrower will not permit the Broker Subsidiary to allow any month-end Net Capital Ratio to be less than 5%.

7.2    Minimum Stockholders’ Equity. The Borrower will not allow its Consolidated Stockholders’ Equity to fall below the Minimum Stockholders’ Equity.

7.3    Merger/Disposition of Assets. The Borrower will not (i) permit either Broker Subsidiary or Intermediate Parent to (a) merge or consolidate, unless the surviving company is a Controlled Subsidiary, or (b) convey or transfer its properties and assets substantially as an entirety except to one or more Controlled Subsidiaries; or (ii) except as permitted by subsection 7.3(i) sell, transfer or otherwise dispose of any voting stock of Broker Subsidiary or Intermediate Parent, or permit either Broker Subsidiary or Intermediate Parent to issue, sell or otherwise dispose of any of its voting stock, unless, after giving effect to any such transaction, Broker Subsidiary or Intermediate Parent, as the case may be, remains a Controlled Subsidiary.

7.4    Broker Subsidiary Indebtedness. The Borrower will not permit the Broker Subsidiary to create, incur or assume any Indebtedness other than:

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(a)    (i) Indebtedness to customers, other brokers or dealers, securities exchanges or securities markets, self-regulatory organizations, clearing houses and like institutions (including, without limitation, letters of credit or similar credit support devices issued for the account of Broker Subsidiary and for the benefit of any of the foregoing in order to comply with any margin, collateral or similar requirements imposed by or for the benefit of any of the foregoing), (ii) “broker call” credit, (iii) indebtedness consisting of borrowings secured solely by margin loans made by Broker Subsidiary, together with any underlying collateral of Broker Subsidiary, (iv) stock loans, (v) obligations to banks for disbursement accounts, (vi) Indebtedness incurred for the purchase of tangible personal property on a non-recourse basis or for the leasing of tangible personal property under a capitalized lease, (vii) Indebtedness incurred for the purchase, installation or servicing of computer equipment and software, and (viii) Indebtedness incurred in the ordinary course of the Broker Subsidiary’s business, to the extent not already included in the foregoing clauses (i) through (vii);

(b)    intercompany Indebtedness; and

(c)    other Indebtedness in the aggregate not exceeding $100,000,000.

7.5    Indebtedness Secured by Subsidiary Stock. The Borrower will not, and will not permit any Subsidiary at any time directly or indirectly to create, assume, incur or permit to exist any Indebtedness secured by a pledge, lien or other encumbrance (hereinafter referred to as a “lien”) on the voting stock of any Subsidiary without making effective provision whereby the Revolving Notes and the Term Notes shall be secured equally and ratably with such secured Indebtedness so long as other Indebtedness shall be so secured; provided, however, that the foregoing covenant shall not be applicable to any liens permitted pursuant to subsections (a) through (d) in Section 7.6 below.

7.6    Liens and Encumbrances. The Borrower will not create, incur, assume or suffer to exist any lien or encumbrance upon or with respect to any of its properties, whether now owned or hereafter acquired, except the following:

(a)    liens securing taxes, assessments or governmental charges or levies, or in connection with workers’ compensation, unemployment insurance or social security obligations, or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like persons not yet delinquent or which are being contested in good faith by appropriate proceedings with respect to which adequate reserves or other provisions are being maintained to the extent required by U.S. generally accepted accounting principles;

(b)    liens not for borrowed money incidental to the conduct of its business or the ownership of property that do not materially detract from the value of any item of property;

(c)    attachment, judgment or other similar liens arising in the connection with court proceedings that do not, in the aggregate, materially detract from the value of its property, materially impair the use thereof in the operation of its businesses and (i) that are

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discharged or stayed within sixty (60) days of attachment or levy, or (ii) payment of which is covered in full (subject to customary and reasonable deductibles) by insurance or surety bonds;

(d)    liens existing at Closing Date provided that the obligations secured thereby are not increased; and

(e)    liens in respect of Hedge Agreements securing net payment obligations in an aggregate amount not to exceed $500,000,000 at any time outstanding.

8. EVENTS OF DEFAULT.

8.1    Defaults. The occurrence of any of the following events shall constitute an “Event of Default”:

(a)    The Borrower shall fail to pay any interest with respect to the Revolving Notes or the Term Notes or any Commitment Fee or Term Out Fee in accordance with the terms hereof within 10 days after such payment is due.

(b)    The Borrower shall fail to pay any principal with respect to the Revolving Notes or the Term Notes in accordance with the terms thereof on the date when due.

(c)    Any representation or warranty made by the Borrower herein or hereunder or in any certificate or other document furnished by the Borrower hereunder shall prove to have been incorrect when made (or deemed made) in any respect that is materially adverse to the interests of the Lenders or their rights and remedies hereunder.

(d)    Except as specified in (a) and (b) above, the Borrower shall default in the performance of, or breach, any covenant of the Borrower with respect to this Agreement, and such default or breach shall continue for a period of thirty days after there has been given, by registered or certified mail, to the Borrower by the Agent a written notice specifying such default or breach and requiring it to be remedied.

(e)    An event of default as defined in any mortgage, indenture, agreement or instrument under which there is issued, or by which there is secured or evidenced, any Indebtedness (other than in respect of Hedge Agreements) of the Borrower in a principal amount not less than $100,000,000 shall have occurred and shall result in such Indebtedness becoming or being declared due and payable prior to the date on which it otherwise would become due and payable, or an event of default or a termination event as defined in any Hedge Agreement shall have occurred and shall result in a net payment obligation of the Borrower thereunder of not less than $100,000,000 in aggregate for all such Hedge Agreements; provided, however, that if such event of default shall be remedied or cured by the Borrower, or waived by the holders of such Indebtedness, within twenty days after the Borrower has received written notice of such event of default and acceleration, then the Event of Default hereunder by reason thereof shall be deemed likewise to have thereupon been remedied, cured or waived without further action upon the part of either the Borrower or the Agent and Lenders.

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(f)     Any involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief against the Borrower or the Broker Subsidiary, or against all or a substantial part of the property of either of them, under Title 11 of the United States Code or any other federal, state or foreign bankruptcy, insolvency, reorganization or similar law, (ii) the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Borrower or the Broker Subsidiary or for all or a substantial part of the property of either of them, or (iii) the winding-up or liquidation of the Borrower or the Broker Subsidiary; and, in any such case, such involuntary proceeding or involuntary petition shall continue undismissed for 60 days, or, before such 60-day period has elapsed, there shall be entered an order or decree ordering the relief requested in such involuntary proceeding or involuntary petition.

(g)     The Borrower or the Broker Subsidiary shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Borrower or Broker Subsidiary or for any substantial part of its respective properties, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its respective debts as they become due or shall take any corporate action in furtherance of any of the foregoing.

(h)     A final judgment or judgments for the payment of money in excess of $100,000,000 in the aggregate shall be entered against the Borrower by a court or courts of competent jurisdiction, and the same shall not be discharged (or provisions shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Borrower shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal.

(i)     At any time after a Change in Control, the Borrower fails to maintain at least one of the following credit ratings for its Senior Medium-Term Notes, Series A: (a) BBB- (or better) by Standard & Poor’s Ratings Service, a Division of The McGraw-Hill Companies, Inc., or (b) Baa3 (or better) by Moody’s Investors Service, Inc.

8.2     Remedies. If an Event of Default occurs and is continuing, then and in every such case the Agent shall, at the request of, or may, with the consent of, the Required Lenders (i) declare the Commitment of each Lender to make Loans to be terminated whereupon such Commitments and obligation shall be terminated, and (ii) declare the unpaid principal of all outstanding Loans, any and all accrued and unpaid interest, any accrued and unpaid Commitment Fees, or any other amounts owing or payable under the Notes, to be immediately due and payable, by a notice in writing to the Borrower, and upon such declaration such principal, interest, Commitment Fees, or other amounts payable hereunder and accrued thereon shall become immediately due and payable, together with any funding losses that may result as a consequence of such declaration, without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower; provided, however, that in the case of any of the Events of Default specified in subsection (f) or (g) of Section 8.1, automatically

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without any notice to the Borrower or any other act by the Agent, the Credit and the obligations of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans, any accrued and unpaid interest, any accrued and unpaid Commitment Fees or any other amounts payable hereunder shall become immediately due and payable, together with any funding losses that may result as a consequence thereof, without further act of the Agent or any Lender and without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower.

9. THE AGENT.

9.1     Appointment and Authorization. Each Lender hereby irrevocably (subject to Section 9.9) appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities except those expressly set forth, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent.

9.2     Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

9.3     Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrower or any of the Borrower’s Subsidiaries or Affiliates.

9.4     Reliance by Agent.

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(a)     The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

(b)     For purposes of determining compliance with the conditions specified in Section 4.1, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender.

9.5     Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8; provided, however, that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.

9.6     Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action

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under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower which may come into the possession of any of the Agent-Related Persons.

9.7     Indemnification of Agent. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), pro rata, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting solely from any such Person’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share, of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent.

9.8     Agent in Individual Capacity. Citibank and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Borrower and its Subsidiaries and Affiliates as though Citibank were not the Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Citibank or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Subsidiary) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent.

9.9     Successor Agent. The Agent may, and at the request of the Required Lenders shall, resign as Agent upon 30 days’ notice to the Lenders and Borrower. If the Agent resigns under this Agreement, the Required Lenders, with the consent of the Borrower, which consent shall not be unreasonably withheld, shall appoint from among the Lenders a successor agent for the Lenders which successor agent shall be approved by the Borrower. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent with the consent of the Borrower, which consent shall not be unreasonably withheld, may appoint, after consulting with the Lenders and the Borrower, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall

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succeed to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 9 and Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. The retiring Agent shall refund to Borrower that portion of any agency fee paid to such Agent as is not earned due to such Agent’s resignation, prorated to the date of such Agent’s resignation.

9.10     Withholding Tax.

(a)     If any Lender is a “foreign corporation, partnership or trust” within the meaning of the Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Section 1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver to the Agent:

(i)     if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Form W-8BEN before the payment of any interest in the first calendar year and before the payment of any interest in any subsequent calendar year during which the Form W-8BEN (or any successor thereto) then in effect expires;

(ii)     if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed copies of IRS Form W-8ECI or any successor form thereto before the payment of any interest is due in the first taxable year of such Lender and before the payment of any interest in any subsequent calendar year during which the Form W-8ECI (or any successor thereto) then in effect expires; and

(iii)     such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances which would render invalid any claimed exemption or reduction.

(b)     If any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Lender. To the extent of such percentage amount, the Agent will treat such Lender’s IRS Form W-8BEN or any successor form thereto as no longer valid.

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(c) If any Lender claiming exemption from United States withholding tax by filing IRS Form W-8ECI or any successor form thereto with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

(d)     If any Lender is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to the Agent or if any Lender which is a “foreign corporation, partnership or trust” within the meaning of the Code is not entitled to claim exemption from or a reduction of U.S. withholding tax under Section 1441 or 1442 of the Code, then the Agent shall withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(e)     If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason other than the Agent’s gross negligence or willful misconduct) such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent.

9.11     Co-Agents. None of the Lenders identified on the facing page or signature pages of this Agreement as a “co-agent”, “managing agent”, “syndication agent” or “documentation agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders so identified as a “co-agent”, “syndication agent” or “documentation agent” shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

10.     MISCELLANEOUS.

10.1     Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Borrower or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Agent at the written request of the Required Lenders) and the Borrower and acknowledged by the Agent, and then any such waiver

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or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and the Borrower and acknowledged by the Agent, do any of the following:

(a)     increase or extend the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2);

(b)     postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document;

(c)     reduce the principal of, or the rate of interest specified herein on any Loan, or (subject to clause (ii) below) any fees or other amounts payable hereunder or under any other Loan Document;

(d)     change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Lenders or any of them to take any action hereunder; or

(e)     amend this Section, or Section 2.13, or any provision herein providing for consent or other action by all Lenders;

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Required Lenders or all the Lenders, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, and (ii) the respective Fee Letters may be amended or rights or privileges thereunder waived, in a writing executed by the parties thereto.

10.2     Notices.

(a)     All notices, requests and other communications shall be either (i) in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Borrower by facsimile shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 10.2) or (ii) as and to the extent set forth in clause (d) below, by electronic mail.

(b)     All such notices, requests and communications shall, when transmitted by overnight delivery, faxed or e-mailed, be effective when delivered for overnight (next-day) delivery, transmitted in legible form by facsimile machine (provided that the sender has retained its facsimile machine-generated confirmation of the receipt of such fax by the recipient’s facsimile machine) or transmitted by e-mail (provided that the e-mail was sent to the e-mail address provided by the recipient and that the e-mail was not returned to the sender as undeliverable), respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Section 2 or 9 shall not be effective until actually received by the Agent.

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(c)     The agreement of the Agent and the Lenders herein to receive certain notices by telephone, facsimile or e-mail is solely for the convenience of the Borrower, the Agent and the Lenders. The Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person who is named in the then-current certificate delivered pursuant to subsection 4.1(e) hereof as authorized to execute Borrowing Advices (each an “Authorized Person”) and the Lenders shall not have any liability to the Borrower or other Person on account of any action taken or not taken by the Agent or the Lenders in reliance upon such telephonic, facsimile or e-mail notice, provided the Agent and the Lenders reasonably believe such Person to be an Authorized Person. The obligation of the Borrower to repay the Loans shall not be affected in any way to any extent by any failure by the Agent and the Lenders to receive written confirmation of any telephonic, facsimile or e-mail notice or the receipt by the Agent and the Lenders of a confirmation which is at variance with the terms understood by the Agent and the Lenders to be contained in the telephonic, facsimile or e-mail notice.

(d)     The compliance certificate described in Section 6.2 shall be delivered to the Agent by the Borrower by mail or overnight delivery. Except for the compliance certificate described in Section 6.2, materials required to be delivered pursuant to Section 6.2 shall be delivered to the Agent in an electronic medium format reasonably acceptable to the Agent by e-mail at oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may make such materials (collectively, the “Communications”) available to the Lenders by posting such materials on Debt Domain or a substantially similar electronic transmission system (collectively, the “Platform”). In addition, to the extent the Borrower in its sole discretion so elects and confirms in writing or by e-mail to the Agent, any other written information, documents, instruments or other material relating to the Borrower, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby and supplied by the Borrower to the Agent (other than any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing (including any election of an interest rate or Interest Period relating thereto), (ii) relates to the payment of any principal or other amount due hereunder prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default or (iv) is required to be delivered to satisfy any condition precedent set forth in Section 4.1 or Section 4.2), shall, to the extent of such election and confirmation by the Borrower, constitute materials that are “Communications” for purposes of this subparagraph (d). The Borrower and each of the Lenders acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform (provided, as to such disclaimer, that the Agent and its Affiliates have not been grossly negligent or engaged in any willful misconduct in respect of the Platform). No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Agent or any of its Affiliates in connection with the Platform.

(e)     Each Lender agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such

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Lender for purposes of this Agreement. Each Lender agrees (i) to notify the Agent in writing of such Lender’s e-mail address to which a Notice may be sent by electronic transmission (including by electronic communication) on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

(f)     The Agent agrees to give to each Lender prompt notice of all materials delivered by the Borrower pursuant to Section 6.2.

10.3     No Waiver-Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

10.4     Costs and Expenses. The Borrower shall:

(a)     whether or not the transactions contemplated hereby are consummated, pay or reimburse Citibank including in its capacity as Agent and Lender within five Business Days after demand, subject to subsection 4.1(g) for all reasonable costs and expenses incurred by Citibank including in its capacity as Agent and Lender in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including reasonable Attorney Costs incurred by Citibank (including in its capacity as Agent and Lender with respect thereto); and

(b)     pay or reimburse the Agent, the Arranger and each Lender within five Business Days after demand (subject to subsection 4.1(g)) for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other Loan Document during the existence of an Event of Default or after acceleration of the Loans (including in connection with any “workout” or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding). In connection with any claim, demand, action or cause of action relating to the enforcement, preservation or exercise of any rights or remedies covered by this Section 10.4 against the Borrower, all Lenders shall be represented by the same legal counsel selected by such Lenders; provided, that if such legal counsel determines in good faith that representing all such Lenders would or could result in a conflict of interest under laws or ethical principles applicable to such legal counsel or that a claim is available to a Lender that is not available to all such Lenders, then to the extent reasonably necessary to avoid such a conflict of interest or to permit an unqualified assertion of such a claim, each Lender shall be entitled to separate representation by legal counsel selected by that Lender, with all such legal counsel using reasonable efforts to avoid unnecessary duplication of effort by counsel for all Lenders.

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10.5     Borrower Indemnification. Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold the Agent-Related Persons, and each Lender and each of its respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the termination, resignation or replacement of the Agent or replacement of any Lender) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, that the Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting from the gross negligence or willful misconduct of such Indemnified Person. If any claim, demand, action or cause of action is asserted against any Indemnified Person, such Indemnified Person shall promptly notify Borrower, but the failure to so promptly notify Borrower shall not affect Borrower’s obligations under this Section unless such failure materially prejudices Borrower’s right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. If requested by Borrower in writing, such Indemnified Person shall in good faith contest the validity, applicability and amount of such claim, demand, action or cause of action and shall permit Borrower to participate in such contest. Any Indemnified Person that proposes to settle or compromise any claim or proceeding for which Borrower may be liable for payment of indemnity hereunder shall give Borrower written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain Borrower’s prior consent. In connection with any claim, demand, action or cause of action covered by this Section 10.5 against more than one Indemnified Person, all such Indemnified Persons shall be represented by the same legal counsel selected by the Indemnified Persons and reasonably acceptable to Borrower; provided, that if such legal counsel determines in good faith that representing all such Indemnified Persons would or could result in a conflict of interest under laws or ethical principles applicable to such legal counsel or that a defense or counterclaim is available to an Indemnified Person that is not available to all such Indemnified Persons, then to the extent reasonably necessary to avoid such a conflict of interest or to permit unqualified assertion of such a defense or counterclaim, each Indemnified Person shall be entitled to separate representation by legal counsel selected by that Indemnified Person and reasonably acceptable to Borrower, with all such legal counsel using reasonable efforts to avoid unnecessary duplication of effort by counsel for all Indemnified Persons. The agreements in this Section shall survive payment of all other Obligations.

10.6     Payments Set Aside. To the extent that the Borrower makes a payment to the Agent or the Lenders, or the Agent or the Lenders exercise any right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any

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settlement entered into by the Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent.

10.7     Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Lender.

10.8     Assignments, Participations Etc.

(a)     Any Lender may, with the written consent of the Agent and the Borrower, which consent shall not be unreasonably withheld (except Borrower’s consent shall not be required if a Default or an Event of Default exists and is continuing), at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Agent shall be required in connection with any assignment and delegation by a Lender to an Eligible Assignee that is an Affiliate of such Lender) (each an “Assignee”) all, or any ratable part of all, of the Loans, the Commitments, and the other rights and obligations of such Lender hereunder, in a minimum amount of $10,000,000; provided, however, that the Borrower and, the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Borrower and the Agent by such Lender and the Assignee; (B) such Lender and its Assignee shall have delivered to the Borrower and the Agent an Assignment and Acceptance in the form of Exhibit F (“Assignment and Acceptance”) together with any Note or Notes subject to such assignment; and (C) the assignor Lender or Assignee has paid to the Agent a processing fee in the amount of $3,500.

(b)     From and after the date that the Agent notifies the assignor Lender and the Borrower that it has received (and the Borrower and the Agent have provided their consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents.

(c)     Within five Business Days after its receipt of notice by the Agent that it has received an executed Assignment and Acceptance and payment of the processing fee (and provided that it consents to such assignment in accordance with subsection 10.8(a)), the Borrower shall execute and deliver to the Agent, new Notes evidencing such Assignee’s assigned Loans and Commitment and, if the assignor Lender has retained a portion of its Loans and its

42

Commitment, replacement Notes in the principal amount of the Commitment retained by the assignor Lender (such Notes to be in exchange for, but not in payment of, the Notes held by such Lender). Immediately upon each Assignee’s making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assignor Lender pro tanto.

(d)     Any Lender may at any time sell to one or more commercial banks or other Persons not Affiliates of the Borrower (a “Participant”) participating interests in any Loans, the Commitment of that Lender and the other interests of that Lender (the “originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrower, and the Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender’s rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document. Any Lender that sells a participation to any Person that is a “foreign corporation, partnership or trust” within the meaning of the Code shall include in its participation agreement with such Person a covenant by such Person that such Person will comply with the provisions of Section 9.10 as if such Person were a Lender and provide that the Agent and the Borrower shall be third party beneficiaries of such covenant.

(e)     Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and the Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

(f)     Any Lender (a “Granting Lender”) may, with notice to the Agent, grant to a special purpose funding vehicle (an “SPC”) the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Agreement. The funding of a Loan by an SPC hereunder shall utilize the Revolving Credit Commitment of the Granting Lender to the same extent, and as if, such Loan were funded by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. Notwithstanding anything to the contrary contained in the foregoing or anywhere else in this Agreement, (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof, and (iii) the Borrower and Agent shall continue to deal exclusively with the Granting Lender and any funding by an SPC hereunder shall not constitute an assignment, assumption or participation of

43

any rights or obligations of the Granting Lender. Any SPC may disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee to such SPC, provided, as a condition precedent to such disclosure, (A) such agency, dealer or provider has delivered to such Granting Lender for the benefit of Borrower a written confidentiality agreement substantially similar to Section 10.9, and (B) simultaneous with or prior to such disclosure, such Granting Lender has given written notice to Borrower of the agency, dealer or provider to which such disclosure is being made and the contents of such disclosure. This Section may not be amended without the prior written consent of each Granting Lender, all or any part of whose Loan is being funded by an SPC at the time of such amendment.

10.9     Confidentiality. Each Lender agrees to hold any confidential information that it may receive from Borrower or from the Agent on such Borrower’s behalf, pursuant to this Agreement in confidence, except for disclosure: (a) to legal counsel and accountants for Borrower or any Lender; (b) to other professional advisors to Borrower or any Lender, provided that the recipient has delivered to such Lender a written confidentiality agreement substantially similar to this Section 10.9; (c) to regulatory officials having jurisdiction over any Lender; (d) as required by applicable law or legal process or in connection with any legal proceeding in which any Lender and Borrower are adverse parties; (e) to Affiliates or agents of such Lender to the extent the Affiliate or agent is involved in the administration of the credit facilities extended to Borrower and its Subsidiaries hereunder, provided that any such Affiliate or agent has delivered to such Lender a written confidentiality agreement substantially similar to this Section 10.9 and (f) to another financial institution in connection with a disposition or proposed disposition to that financial institution of all or part of any Lender’s interests hereunder or a participation interest in the Revolving Note and/or the Term Note, each in accordance with Section 10.8 hereof, provided that the recipient has delivered to such Lender a written confidentiality agreement substantially similar to this Section 10.9. Each Lender further agrees that it will not use such confidential information in any activity or for any purpose other than the administration of credit facilities extended to Borrower and its Subsidiaries and, without limitation, will take such steps as are reasonably appropriate to preclude access to any such confidential information to be obtained by any Person employed by any Lender, or by an affiliate of any Lender, who is not involved in the administration of credit facilities extended to Borrower and its Subsidiaries. For purposes of the foregoing, “confidential information” shall mean any information respecting Borrower or its Subsidiaries reasonably specified by Borrower as confidential, other than (i) information filed with any governmental agency and available to the public, and (ii) information disclosed by Borrower to any Person not associated with Borrower without a written confidentiality agreement substantially similar to this Section 10.9. Certain of the confidential information pursuant to this Agreement is or may be valuable proprietary information that constitutes a trade secret of Borrower or its Subsidiaries; neither the provision of such confidential information to any Lender or the limited disclosures thereof permitted by this Section 10.9 shall affect the status of any such confidential information as a trade secret of Borrower and its Subsidiaries. Each Lender, and each other Person who agrees to be bound by this Section 10.9, acknowledges that any breach of the agreements contained in this Section 10.9 would result in losses that could not be reasonably or adequately compensated by money damages. Accordingly, if any Lender or any other person breaches its obligations hereunder, such Lender or such other Person recognizes and consents to the right of Borrower, Intermediate Parent, and/or Broker Subsidiary to seek

44

injunctive relief to compel such Lender or other Person to abide by the terms of this Section 10.9.

10.10     Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the Agent in writing of any changes in the address to which notices to the Lender should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request.

10.11     Counterparts. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

10.12     Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

10.13     No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Borrower, the Lenders, the Agent and the Arranger, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.

10.14     Governing Law and Jurisdiction.

(a)     THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.

10.15     Waiver of Jury Trial.

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(a)     TO THE FULL EXTENT PERMITTED BY LAW, THE BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. TO THE FULL EXTENT PERMITTED BY LAW, THE BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

(b)     WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT IMMEDIATELY ABOVE TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if such waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between the Borrower, on the one hand, and any one or more of the other parties to this Agreement, on the other, arising out of this Agreement at any time shall be decided by a reference to a private judge, mutually selected by the parties to such dispute (or, if they cannot agree, by the Presiding Judge of the California Superior Court in and for the County of San Francisco) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in San Francisco County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential, and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the California Superior Court in and for the County of San Francisco for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private

46

judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral (if any), or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

10.16     Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Borrower, the Lenders and the Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof.

10.17     Headings. Articles and Section headings in this Agreement are included herein for the convenience of reference only.

10.18     USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each borrower, guarantor or grantor (the “Loan Parties”), which information includes the name and address of each Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Act.

(SIGNATURE PAGE FOLLOWS)

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written.

Borrower:
THE CHARLES SCHWAB CORPORATION
By:	/s/ William F. Quinn

Name:	William F. Quinn
Title:	Senior Vice President and Treasurer

Lenders: CITIBANK, N.A., as Agent and individually as Lender
By:	/s/ Maureen Maroney

Name:	Maureen Maroney
Title:	Vice President

JPMORGAN CHASE BANK, N.A.
By:	/s/ Catherine Grossman

Name:	Catherine Grossman
Title:	Vice President

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
By:	/s/ Doreen Barr

Name:	Doreen Barr
Title:	Director

By:   /s/ Michael D. Spaight

Name:	Michael D. Spaight
Title:	Associate

THE BANK OF NEW YORK MELLON
By:	/s/ Thomas Caruso

Name:	Thomas Caruso
Title:	Managing Director

UBS LOAN FINANCE LLC
By:	/s/ Irja R. Otsa

Name:	Irja R. Otsa
Title:	Associate Director

By:   /s/ Mary E. Evans

Name:	Mary E. Evans
Title:	Associate Director

2

WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ David J. Bendel

Name:	David J. Bendel
Title:	Director

BANK OF AMERICA, N.A.
By:	/s/ Michael F. Ugliarolo

Name:	Michael F. Ugliarolo
Title:	Assistant Vice President

GOLDMAN SACHS BANK USA
By:	/s/ Mark Walton

Name:	Mark Walton
Title:	Authorized Signatory

LLOYDS TSB BANK PLC
By:	/s/ Julia R. Franklin

Name:	Julia R. Franklin F014
Title:	Vice President

By:   /s/ Dennis McClellan

Name:	Dennis McClellan M040
Title:	Assistant Vice President

PNC BANK, NATIONAL ASSOCIATION
By:	/s/ Alaa Shraim

Name:	Alaa Shraim
Title:	Vice President

STATE STREET BANK AND TRUST COMPANY
By:	/s/ Carolyn Baker

Name:	Carolyn Baker
Title:	Vice President

3

Schedule 1

LENDERS’ COMMITMENTS

The Charles Schwab Corporation $800,000,000 Credit Agreement (364-Day Commitment) dated as of June 8, 2012.

	Lender Commitment Amount
1.     Citibank, N.A.	1.     $92,500,000
2.     JPMorgan Chase Bank, N.A.	2.     $92,500,000
3.     Credit Suisse AG, Cayman Islands Branch	3.     $85,000,000
4.     The Bank of New York Mellon	4.     $85,000,000
5.     UBS Loan Finance LLC	5.     $85,000,000
6.     Wells Fargo Bank, National Association	6.     $85,000,000
7.     Bank of America, N.A.	7.     $55,000,000
8.     Goldman Sachs Bank USA	8.     $55,000,000
9.     Lloyds TSB Bank plc	9.     $55,000,000
10.   PNC Bank, National Association	10.   $55,000,000
11.   State Street Bank and Trust Company	11.   $55,000,000
Total	$800,000,000

4

Schedule 2

LIST OF BORROWING AGREEMENTS

1.    $800,000,000 Credit Agreement (364-Day Commitment) dated as of June 10, 2011 among the Borrower, the lenders party thereto, and Citibank, N.A., as administrative agent for such lenders.

Schedule 6.2

COMPLIANCE CERTIFICATE

I,                                 , certify that I am the                                          of The Charles Schwab Corporation (the “Borrower”), and that as such I am authorized to execute this Compliance Certificate on behalf of the Borrower, and do hereby further certify on behalf of the Borrower that:

1.    I have reviewed the terms of that certain Credit Agreement (364-Day Commitment) dated as of June 8, 2012 among the Borrower, the financial institutions named therein (the “Lenders”) and Citibank, N.A., as Agent for the Lenders (the “Credit Agreement”), and I have made, or have caused to be made by employees or agents under my supervision, a detailed review of the transactions and conditions of the Borrower during the accounting period covered by the attached financial statements dated             , 20    .

2.    The examination described in paragraph 1 did not disclose, and I have no knowledge of the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below.

3.    Schedule I attached hereto sets forth financial data and computations evidencing compliance with the covenants set forth in Sections 7.1 and 7.2 of the Credit Agreement, all of which data and computations are true, complete and correct. Capitalized terms not otherwise defined herein are defined in the Credit Agreement.

4.    Described below are the exceptions, if any, to paragraph 2 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event.

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered this              day of              20    .

By:

Name:

Title:

The Charles Schwab Corporation

Credit Agreement (364-Day Commitment)

Dated as of June 8, 2012

Schedule I

to

Compliance Certificate

(Dollars in Thousands)

1. Net Capital Ratio of the Broker Subsidiary.

Requirement: Broker Subsidiary—month-end ratio not less than 5%.

Net Capital Ratio for Broker Subsidiary

Month Month-end Ratio

2. Minimum Stockholders’ Equity of Borrower.

Requirement: As of                     , 20        , required Minimum Stockholders’ Equity is $5,400,000,000 plus 50% of cumulative Net Earnings from June 30, 2012.

Schedule 10.2

NOTICES

If to the Borrower:
If by U.S. mail:	The Charles Schwab Corporation
	Treasury Department
	Attn: Bruce C. Marcellus or Successor
	211 Main Street (Mail Stop SF215FMT-04-120)
	San Francisco, CA 94105
If by hand delivery (including courier and overnight messenger service):	The Charles Schwab Corporation
	Treasury Department
	Attn: Bruce C. Marcellus or Successor
	215 Fremont Street, 4th Floor
	San Francisco, CA 94105
Telephone:	(415) 667-8880
Facsimile:	(415) 667-8565
If to the Agent:

See information under Citibank, N.A. in table below pertaining to Lenders.

If to the Lenders:

Credit Contact	Operations Contact	Lending Office	Payment Instructions
Bank of America, N.A. 335 Madison Ave. New York, NY 10017 Attention: Michael Ugliarolo                 Assistant Vice President (646) 556-0564 Fax:  704 409 0892	Bank of America, N.A. Building No, 5 Ste 5a Mindspace - Raheja It Park, Hitec City, Hyderabad 500081 Attention: Aditya Tha +91040 23145000 ext. 64675 Fax: (312) 453-2986	Bank of America, N.A. 2001 Clayton Road Concord, California 94520	Bank of America, N.A. ABA #: 026009593 Charlotte, NC Acct #: 4426457864 Attention: Bilateral Clearing Account Ref: Charles Schwab Corporation
The Bank of New York Mellon One Wall Street, 19th Floor New York, NY 10286 Attention: Thomas Caruso                 Managing Director (212) 635-6745 Fax:  (212) 635-1194	The Bank of New York Mellon 6023 Airport Road Oriskany, NY 13424 Attention: Richard Scalice (315) 765-4192 Fax: (315) 765-4783	The Bank of New York Mellon One Wall Street, 19th Floor New York, NY 10286	The Bank of New York ABA #: 021-000-018 Acct #: GLA111-231 Acct name: Broker Services Attn: Bradley Fike Ref: Charles Schwab Corporation

Credit Contact	Operations Contact	Lending Office	Payment Instructions
Citibank, N.A. 388 Greenwich Street New York, NY 10013 Attention: William Mandaro                 Vice President (212) 816-0852 Fax: (212) 816-1212	Citibank, N.A. 1615 Brett Road, Bldg #3 New Castle, DE 19720 Attention: Lee Ocasio                 Assistant Manager (302) 894-6065 Fax: (212) 994-0961	Citibank, N.A. 399 Park Avenue New York, NY 10043	Citibank NA ABA #: 021-000-089 New York, NY Acct #: 40610794 Acct Name: Wall Street Fees Attention: Lee Ocasio Ref: The Charles Schwab Corporation
Credit Suisse AG, Cayman Islands Branch Eleven Madison Avenue New York, NY 10010 Attention: Doreen Barr /                 Whitney Gaston Phone:     (212) 325-9914 /                 (212) 325-6643 Fax:         (212) 743-2737 /                 (212) 322-7433	Credit Suisse AG, Cayman Islands Branch One Madison Avenue New York, NY 10010 Attention: Jason Golz                   Loan Closers /                   Cecelia Harrison                   Administrator Phone:       (919) 994-6378 /                   (919) 994-6359 Fax:           (866) 469-3871	Credit Suisse AG, Cayman Islands Branch Eleven Madison Avenue New York, NY 10010	Credit Suisse ABA #: 021-000-018 New York, NY Acct #: 890-0492-627 Acct Name: CS Agency Cayman Ref: The Charles Schwab Corporation
Goldman Sachs USA [TO BE SUPPLIED]	Goldman Sachs USA [TO BE SUPPLIED]	Goldman Sachs USA [TO BE SUPPLIED]	Goldman Sachs USA [TO BE SUPPLIED]
JPMorgan Chase Bank, N.A. 277 Park Avenue, 11th Floor New York, NY 10172 Attention: Catherine Grossman                 Vice President /                 Thomas Poz                 Executive Director (212) 270-1153 / 1236 Fax: (212) 270-1511	JPMorgan Chase Bank, N.A. 500 Stanton Cristiana Road Ops 2, Floor 3 Newark, Delaware 19713-2107 Attention: Jenna Poore (302) 634-1574 Fax: (201) 244-3885	JPMorgan Chase Bank, N.A. 270 Park Avenue New York, NY 10017	JPMorgan Chase Bank, N.A. New York, NY ABA #: 021000021 Acct #: 9008113381H2602 Acct Name: Attn: Loan & Agency Ref: The Charles Schwab Corporation
Lloyds TSB Bank plc 1095 Avenue of the Americas, 34th Floor New York , NY 10036 Attention: Shane Klein                  Senior Vice President (212) 930-8967 / 8965 Fax: (212) 930-5098	Lloyds TSB Bank plc 1095 Avenue of the Americas, 34th Floor New York , NY 10036 Attention: Indira Girisankar /                   Ramona Rojas (212) 930-5051/8978 Fax: (212) 930-5098	Lloyds TSB Bank plc 1095 Avenue of the Americas, 34th Floor New York , NY 10036	Bank of America International, New York New York, NY ABA #: 026-009-593 Acct #: 655-010-1938 Acct Name: Lloyds TSB Bank plc, New York Ref: Charles Schwab
PNC Bank, N. A. One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15222 Attention: Howard Potter                 Senior Vice President /                 Van Paul                 Assistant Vice President (412) 762-7348 / (412) 768-3326 Fax: (412) 768-5151	PNC Bank, N. A. 6750 Miller Road Mail Stop: BR-YB58-01O Brecksville, OH 44141 Attention: Brian Kus                   Loan Administration (440) 546-7399 Fax: (877) 718-2651	PNC Bank, N. A. One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15222	PNC Bank, N.A. Pittsburgh, PA ABA #: 043-000-096 Acct #: 13076-0016-803 Acct Name: Commercial Loan Operations Attn: Brian Kus Ref: Charles Schwab Corp
State Street Bank and Trust Company Box 5303 Boston, MA 02206 Attention: Carolyn Baker                  Vice President /                 Charlie Garrity                 Vice President (617) 662-8625 / 8827 Fax: (617) 662-8664	State Street Bank and Trust Company Box 5302 Boston, MA 02206 Attention: Robyn Shepard (617) 662-8575 Fax: (617) 988-6677	State Street Bank and Trust Company 100 Huntington Ave., Tower 1, Floor 4 Boston, MA 02206	State Street Bank and Trust Company, Boston, MA ABA#: 011-000-028 Acct #: 0006-332-1 Acct. Name: IS Loan Operations / CSU Internal Ref: The Charles Schwab Corporation Attn: Robyn Shepard, ext 2-8575

2

Credit Contact	Operations Contact	Lending Office	Payment Instructions
UBS Loan Finance LLC 677 Washington Boulevard Stamford, CT 06901 Attention: Denise Bushee (203) 719-3167 Fax: (203) 719-3390	UBS Loan Finance LLC 677 Washington Boulevard Stamford, CT 06901 Attention: Denise Bushee (203) 719-3167 Fax: (203) 719-3390	UBS Loan Finance LLC 677 Washington Boulevard Stamford, CT 06901	UBS Loan Finance LLC Stamford, CT ABA #: 026 007 993 Acct #: WA-894001-001 Acct. Name: BPS Loan Finance Account Attn: Denise Bushee Ref: The Charles Schwab Corporation
Wells Fargo Bank, National Association 90 S. 7th Street Minneapolis, MN 55402 Attention: David Bendel                  Director /                  Beth McGinnis                  Managing Director (612) 667-3518 / (612) 667-9551 Fax: (612) 667-7251	Wells Fargo Bank, National Association 1700 Lincoln Street, 5th Floor Denver, CO 80203 Attention: Claire Gerndt, Jr.                  Loan Servicing Spec. (303) 863-5917 Fax: (303) 863-2729	Wells Fargo Bank, National Association 90 South 7th Street, 7th Floor MAC N9305-075 Minneapolis, MN 55402-3903	Wells Fargo Bank, National Association San Francisco, CA ABA #: 121000248 Acct #: 00029690050720 Account Name: WLS Denver Attn: Dorothy Cardenas Ref: The Charles Schwab Corporation (Obligor # 1582242431)

3

EXHIBIT A-1

REVOLVING NOTE

$                             (Amount of Commitment) Date: June 8, 2012

For Value Received, The Charles Schwab Corporation (“Schwab”) hereby promises to pay to the order of                      (the “Lender”) to Citibank, N.A., as Agent, at Agent’s office located at 388 Greenwich Street, New York, New York 10013, for the account of the applicable Lending Office of the Lender, the principal amount of                      ($            ) or the aggregate amount of all Revolving Loans made to Schwab by the Lender, whichever is less, on June 7, 2013. The undersigned also promises to pay interest on the unpaid principal amount of each Borrowing from the date of such Borrowing until such principal amount is paid, at the rates per annum, and payable at such times, as are specified in the Credit Agreement. This Note shall be subject to the terms of the Credit Agreement, and all principal and interest payable hereunder shall be due and payable in accordance with the terms of the Credit Agreement.

Schwab hereby authorizes the Lender to endorse on the Schedule attached to this Note the amount and Type of Revolving Loans made to Schwab by the Lender and all renewals, conversions, and payments of principal amounts in respect of such Revolving Loans, which endorsements shall, in the absence of manifest error, be conclusive as to the outstanding principal amount of all such Revolving Loans, provided, however, that the failure to make such notation with respect to any Revolving Loans or payments shall not limit or otherwise affect the obligation of Schwab under the Credit Agreement or this Note.

This Note is the Revolving Note referred to in the Credit Agreement (364-Day Commitment), dated as of June 8, 2012 among Schwab, the Lender, certain other Lenders party thereto, and Citibank, N.A., as Agent for the Lenders (the “Credit Agreement”). Terms defined in the Credit Agreement are used herein with the same meanings. The Credit Agreement, among other things, contains provisions for acceleration of the maturity of this Note, upon the happening of certain stated events and also for prepayments on account of the principal of this Note prior to the maturity of this Note upon the terms and conditions specified in the Credit Agreement.

Principal and interest payments shall be in money of the United States of America, lawful at such times for the satisfaction of public and private debts, and shall be in immediately available funds.

Schwab promises to pay the costs of collection, including reasonable attorney’s fees, if default is made in the payment of this Note.

The terms and provisions of this Note shall be governed by the applicable laws of the State of California.

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by its officers thereunto duly authorized and directed by appropriate corporate authority.

The Charles Schwab Corporation

By:

Name:

Title:

2

EXHIBIT A-1

SCHEDULE TO REVOLVING NOTE

Date
Made,
Continued,
Converted,
or Paid


Type of Loan


Amount
of Loan Amount of
Principal
Continued,
Converted,
or Paid Unpaid
Principal
Balance of
Revolving
Note
Name of
Person
Making
Notation

3

EXHIBIT A-2

TERM NOTE

Date: June 8, 2012

FOR VALUE RECEIVED, the undersigned, The Charles Schwab Corporation (“Schwab”) hereby promises to pay to the order of                              (the “Lender”) to Citibank, N.A., as Agent, at the Agent’s office located at 388 Greenwich Street, New York, New York 10013, for the account of the applicable Lending Office of the Lender, the principal amount of each Term Loan made by the Lender to Schwab pursuant to the terms of the Credit Agreement (364-Day Commitment), dated as of June 8, 2012, as amended, among Schwab, the Lender, certain other Lenders party thereto, and Citibank, N.A., as Agent for the Lenders (the “Credit Agreement”), as shown in the schedule attached hereto and any continuation thereof, in lawful money of the United States and in immediately available funds on the Term Loan Maturity Date for such Term Loan. The undersigned also promises to pay interest on the unpaid principal amount of each Term Loan from the date of such Term Loan until such principal amount is paid, in like money, at said office for the account of the Lender’s applicable Lending Office, at the rates per annum, and payable at such times as are specified in the Credit Agreement. This Term Note shall be subject to the terms of the Credit Agreement and all principal and interest payable hereunder should be due and payable in accordance with the terms of the Credit Agreement. Terms defined in the Credit Agreement are used herein with the same meanings.

This Term Note is one of the Term Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, contains provisions for acceleration of the maturity of this Term Note upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity of the Term Note upon the terms and conditions specified in the Credit Agreement.

Schwab promises to pay costs of collection, including reasonable attorney’s fees, if default is made in the payment of this Note.

The terms and provisions of this Term Note shall be governed by the applicable laws of the State of California.

IN WITNESS WHEREOF, the undersigned has caused this Term Note to be executed by its officer thereunto duly authorized and directed by appropriate corporate authority.

The Charles Schwab Corporation

By:

Name:

Title:

EXHIBIT A-2

SCHEDULE TO TERM NOTE

Date
Made,
Continued,
Converted,
or Paid

Type of
Loan

Amount
of Loan

Term Loan
Maturity Date Amount of
Principal
Continued,
Converted,
or Paid Unpaid
Principal
Balance of
Term Note
Name of
Person
Making
Notation

2

EXHIBIT B

BORROWING ADVICE

1.    This Borrowing Advice is executed and delivered by The Charles Schwab Corporation (“Borrower”) to you pursuant to that certain Credit Agreement dated as of June 8, 2012 (the “Credit Agreement”), entered into by Borrower, Citibank, N.A. (“Citibank”) and certain other Lenders parties thereto, collectively with Citibank (the “Lenders”) and Citibank as Agent for the Lenders (herein “Agent”). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as defined in the Credit Agreement.

2.    Borrower hereby requests that the Lenders make a Revolving [or Term Loan] for the account of Borrower (at                         , Account No.                             ) pursuant to Section 2.4 of the Credit Agreement as follows:

(a) Amount of Revolving [or Term Loan]:                             .

(b) Borrowing Date of Revolving [or Term Loan]:                             .

(c) [If a Revolving Loan] Type of Revolving Loan (check one only):

Eurodollar Rate with             - day Interest Period

Base Rate

(d) [If a Term Loan] Type of Term Loan (check one only):

Eurodollar Rate with initial             - day Interest Period

Base Rate

(e) [If a Term Loan] Maturity Date of Term Loan:                     .

3.    Following this request for a Revolving Loan [or Term Loan], the aggregate outstanding amount of all Revolving Loans and Term Loans under the Revolving Note will not exceed the aggregate amount of the Commitments.

4.    This Borrowing Advice is executed on                      by the Borrower.

BORROWER:

THE CHARLES SCHWAB CORPORATION,

a Delaware Corporation

By:

Name:

Title:

2

EXHIBIT C

NOTICE OF CONVERSION/CONTINUATION

Dated as of:                         

Citibank, N.A., as Agent

Ladies and Gentlemen:

This irrevocable Notice of Conversion/Continuation (this “Notice”) is delivered to you under the Credit Agreement (364-Day Commitment) dated as of June 8, 2012 (as amended, restated or otherwise modified, the “Credit Agreement”) by and among The Charles Schwab Corporation, a Delaware corporation (the “Company”) (herein “Borrower”); and Citibank, N.A., a Delaware corporation (herein “Citibank”) and the other Lenders signatory thereto (together with Citibank, collectively “Lenders”), and Citibank as agent for the Lenders (herein “Agent”).

1.    This Notice is submitted for the purpose of:

(check one and complete applicable information in accordance with the Credit Agreement)

[__] Converting or [__] continuing all or a portion of the following type of Loan:

(a) (check, as applicable)

Base Rate Loan                                 ;

Eurodollar Rate Loan                                 .

(b) The aggregate outstanding principal balance of the above Loan is $                    .

(c) As applicable, the last day of the current Interest Period for such Loan is                     .

(d) The principal amount of such Loan to be [converted or continued] is $                    .

(e) Such principal amount should be converted/continued into the following type of Loan:

Base Rate Loan                             ;

Eurodollar Rate Loan                             .

(f) The requested effective date of the [conversion/continuation] of such Loan is                     .

(g) As applicable, the requested Interest Period applicable to the new Loan is                     .

2.     No Default or Event of Default under the Credit Agreement has occurred and is continuing or will be caused by the advance requested hereby.

3.     The representations and warranties set forth in Section 5 of the Credit Agreement are true and correct as if made on the date hereof (except for such representations and warranties as expressly relate to a prior date).

Capitalized terms used herein which are not defined herein shall have the respective meanings set forth in the Credit Agreement.

IN WITNESS WHEREOF, the undersigned officer of the Company has executed this Notice of Conversion/Continuation this              day of             ,         .

THE CHARLES SCHWAB CORPORATION
By:
Name:
Title:
	[must be signed by an Authorized Officer]

2

EXHIBIT D

COMMITMENT AND TERMINATION DATE EXTENSION REQUEST

[Bank name and address] [Date]                    

Reference is made to that certain Credit Agreement (364-Day Commitment) dated as of June 8, 2012 (“Credit Agreement”) entered into by The Charles Schwab Corporation (“Borrower”), Citibank, N.A., as Agent and Lenders party thereto. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as defined in the Credit Agreement.

Pursuant to Section 2.11 of the Credit Agreement, Borrower hereby requests Agent to obtain each Lender’s agreement to the extension of such Lender’s Commitment presently in effect, in the amount of $[specify amount of existing Commitment], and the Termination Date presently in effect, for an additional 364 days.

Agent’s execution of a copy of this letter in the space provided below and the transmission of such executed copy to Borrower shall constitute all Lenders’ acceptance of Borrower’s request and all Lenders’ agreement to the 364-day extension sought herein. More specifically, upon the execution of a copy of this letter by Agent on behalf of Lenders and the transmission thereof to Borrower within 15 days after Agent’s receipt of this letter, (1) the Termination Date as defined in Section 2.11 of the Credit Agreement shall be extended 364 days and deemed changed to                     , and (2) all other dates appearing in the Credit Agreement that are referred to in Section 2.11 of the Credit Agreement shall correspondingly be extended 364 days.

This Commitment and Termination Date Extension Request is executed by Borrower on                     .

BORROWER:

THE CHARLES SCHWAB CORPORATION,

a Delaware Corporation

By:

Name:

Title:

ACCEPTED AND AGREED:

Agent, on Behalf of Lenders

By:

Name:

Title:

EXHIBIT E

BORROWER’S OPINION OF COUNSEL

[Arnold & Porter LLP Letterhead]

[Date]

Citibank, N.A., as Agent

Re: Credit Agreement (364-Day Commitment), dated June 8, 2012, among

The Charles Schwab Corporation, Citibank, N.A., as Agent

and the Lenders party thereto

Ladies and Gentlemen:

This opinion is delivered at the request of The Charles Schwab Corporation to you in your capacity as Agent, on behalf of the Lenders, under the Credit Agreement (364-Day Commitment) dated as of June 8, 2012 (the “Credit Agreement”) among The Charles Schwab Corporation, a Delaware corporation (“Borrower”), Citibank, N.A., as the Administrative Agent and the Lenders signatories thereto (each a “Lender” and collectively, the “Lenders”). This opinion letter speaks as of close of business on June 8, 2012 (hereafter the “operative date”).

We have acted as special counsel to Borrower in connection with the Credit Agreement. In such capacity we have examined originals, or copies represented to us by Borrower to be true copies, of the Credit Agreement; and we have obtained such certificates of such responsible officials of Borrower and of public officials as we have deemed necessary for purposes of this opinion. We have assumed without investigation the genuineness of all signatures on original documents, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as photostatic copies of originals, and the accuracy and completeness of all corporate records certified to us by the Borrower to be accurate and complete. We have further assumed that the Credit Agreement is binding upon and enforceable against the Agent and the Lenders. As to factual matters, we have relied upon the representations and warranties contained in and made pursuant to the Credit Agreement.

Capitalized terms not otherwise defined herein have the meanings given for such terms in the Credit Agreement. For the purpose of this opinion, “Loan Documents” as used herein means the Credit Agreement and the Notes.

Based upon the foregoing and in reliance thereon, and subject to the exceptions and qualifications set forth herein, we are of the opinion that:

1.     Borrower is a corporation duly formed, validly existing, and in good standing under the laws of Delaware.

2.     Borrower has all requisite corporate power and authority to execute, deliver and perform all of its obligations under the Loan Documents.

3.     Each Loan Document has been duly authorized, executed and delivered by Borrower. Each Loan Document constitutes the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such validity, binding nature or enforceability may be limited by:

(a)     the effect of applicable federal or state bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws and court decisions relating to or affecting creditors’ rights generally;

(b)     the effect of legal and equitable principles upon the availability of creditors’ remedies, regardless of whether considered in a proceeding in equity or at law;

(c)     the effect of California judicial decisions involving statutes or principles of equity which have held that certain covenants or other provisions of agreements, including without limitation those providing for the acceleration of indebtedness due under debt instruments upon the occurrence of events therein described, are unenforceable under circumstances where it cannot be demonstrated that the enforcement of such provisions is reasonably necessary for the protection of the lender, has been undertaken in good faith under the circumstances then existing, and is commercially reasonable;

(d)     the effect of Section 1670.5 of the California Civil Code, which provides that a court may refuse to enforce a contract or may limit the application thereof or any clause thereof which the court finds as a matter of law to have been unconscionable at the time it was made;

(e)     the unenforceability, under certain circumstances, of provisions purporting to require the award of attorneys’ fees, expenses, or costs, where such provisions do not satisfy the requirements of California Civil Code Section 1717 et seq., or in any action where the lender is not the prevailing party;

(f)     the unenforceability, under certain circumstances, of provisions waiving stated rights or unknown future rights and waiving defenses to obligations, where such waivers are contrary to applicable law or against public policy;

(g)     the unenforceability, under certain circumstances, of provisions which provide for penalties, late charges, additional interest in the event of a default by the borrower or fees or costs related to such charges;

(h)     the unenforceability, under certain circumstances, of provisions to the effect that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, or that the election of some particular remedy or remedies does not preclude recourse to one or another remedy;

(i)     the unenforceability of provisions prohibiting waivers of provisions of either of the Loan Documents otherwise than in writing to the extent that Section 1698 of the California Civil Code permits oral modifications that have been executed;

2

(j)     limitations on the enforceability of release, contribution, exculpatory, or nonliability provisions, under federal or state securities laws, Sections 1542 and 1543 of the California Civil Code, and any other applicable statute or court decisions;

(k)     limitations on the enforceability of any indemnity obligations imposed upon or undertaken by the borrower to the extent that such obligations do not satisfy the requirements of Sections 2772 et seq. of the California Civil Code and any judicial decisions thereunder; provided that the limitations and qualifications set forth in the immediately preceding sub-paragraphs (b) through (k) do not, in our opinion, render the remedies available to the Lenders under the Loan Documents inadequate for the practical realization of the primary rights and benefits reasonably expected by an institutional lender in a comparable unsecured credit facility transaction governed by California law; and

(l)     the effect of Grafton Partners L.P. v. Superior Court, 36 Cal. 4th 944, 2005 WL 1831995 (Cal. 2005), in which the California Supreme Court held that predispute contractual waivers of trial by jury are invalid, as well as the effect of Section 631(d) of the California Code of Civil Procedure, which provides that a court may, in its discretion upon just terms, allow a trial by jury although there may have been a waiver of trial by jury.

The foregoing opinions are subject to the following exceptions and qualifications:

a.     We have not been requested to verify and have not verified the validity, accuracy, or reasonableness of any of the factual representations contained in either or both of the Loan Documents, and we express no opinion with respect to any of such matters.

b.     We are members of the bar of the State of California. We are opining herein only concerning matters governed by the Federal laws of the United States of America, the substantive laws of the State of California, and the General Corporation Law of the State of Delaware, and only with respect to Borrower. We express no opinion concerning the applicability to either or both of the Loan Documents, or the effect thereon, of the laws of any other jurisdiction. Furthermore, we express no opinion with respect to choice of law or conflicts of law, and none of the opinions stated herein shall be deemed to include or refer to choice of law or conflict of law.

c.     We express no opinion on any Federal or state securities laws as they may relate to either or both of the Loan Documents.

d.     We express no opinion as to compliance with the usury laws of any jurisdiction.

The opinions set forth herein are given as of the operative date. We disclaim any obligation to notify you or any other person or entity after the operative date if any change in fact and/or law should change our opinion with respect to any matters set forth herein. This opinion letter is rendered to you in your capacity as the Agent on behalf of the Lenders under the Credit Agreement and may not be relied upon, circulated or quoted, in whole or in part, by any other person or entity (other than the Lenders and a person or entity who becomes an assignee or successor in interest of any Lender or acquires a participation from any Lender consistent with the terms of the Loan Documents) and shall not be referred to in any report or document furnished to any other person or entity without our prior written consent; provided, however, that

3

the foregoing shall not preclude any Lender from describing or otherwise disclosing the existence or contents of this letter to (i) any bank regulatory authority having jurisdiction over such Lender, as required by such authority, (ii) a person or entity who, in good-faith discussions between such Lender and such person or entity, is proposed to become an assignee or successor in interest of such Lender or to acquire a participation from the Bank consistent with the terms of the Loan Documents, and (iii) counsel to the Agent and the Lenders.

Very truly yours,

ARNOLD & PORTER LLP

By:

4

EXHIBIT F

FORM OF ASSIGNMENT AND ACCEPTANCE

To:     CITIBANK, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement (364-Day Commitment) dated as of June 8, 2012 between THE CHARLES SCHWAB CORPORATION, a Delaware corporation (“Borrower”), Lenders from time to time party thereto, and CITIBANK, N.A., as Administrative Agent (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”, the terms defined therein being used herein as therein defined).

1.     We hereby give you notice of, and request your consent to, the assignment by                                      (the “Assignor”) to                                      (the “Assignee”) of                   % of the right, title and interest of the Assignor in and to the Loan Documents, including, without limitation, the right, title and interest of the Assignor in and to the Commitment of the Assignor, and all outstanding Loans made by the Assignor. Before giving effect to such assignment:

(a) the aggregate amount of the Assignor’s Commitment is $                        .

(b) the aggregate principal amount of its outstanding Loans is $                        .

2.     The Assignee hereby represents and warrants that it has complied with the requirements of Section 10.8 of the Agreement in connection with this assignment and acknowledges and agrees that: (a) other than the representation and warranty that it is the legal and beneficial owner of the Pro Rata Share being assigned hereby free and clear of any adverse claim, the Assignor has made no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of the Agreement of any other Loan Document; (b) the Assignor had made no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance by Borrower of the Obligations; (c) it has received a copy of the Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.2 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (d) it will independently and without reliance upon Administrative Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Agreement; (e) it appoints and authorizes Administrative Agent to take such action and to exercise such powers under the Agreement and the other Loan Documents as are delegated to Administrative Agent by the Agreement and such other Loan Documents; and (f) it will perform in accordance with their terms all of the obligations which by the terms of the Agreement are required to be performed by it as a Lender.

3.     The Assignee agrees that, upon receiving your consent to such assignment and form and after             , the Assignee will be bound by the terms of the Loan Documents, with respect to the interest in the Loan Documents assigned to it as specified above, as fully and to the same extent as if the Assignee were a Lender originally holding such interest in the Loan Documents.

4.     The following administrative details apply to the Assignee:

(a) Credit Contact:

Assignee name:

Address:

Attention:

Telephone:

Telecopier:

(b) Operations Contract:

Assignee name:

Address:

Attention:

Telephone:

Telecopier:

(c) Lending Office:

Assignee name:

Address:

(d) Payment Instructions:

Assignee name:

ABA No.:

Account No.:

Attention:

Reference:

2

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

[ASSIGNOR]

By:

Name:

Title:

[ASSIGNEE]

By:

Name:

Title:

We hereby consent to the

foregoing assignment.

THE CHARLES SCHWAB CORPORATION,

as Borrower

By:

Name:

Title:

CITIBANK, N.A.,

as Administrative Agent

By:

Name:

Title:

3

EX-12.1

THE CHARLES SCHWAB CORPORATION

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges and

Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

(Dollar amounts in millions)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Earnings before taxes on earnings	$	432	$	386	$	745	$	780
Fixed charges
Interest expense :
Deposits from banking clients		10		16		20		33
Payables to brokerage clients		—		—		1		1
Long-term debt		27		27		54		54
Other		2		2		2		2
Total		39		45		77		90
Interest portion of rental expense		17		15		34		30
Total fixed charges (A)		56		60		111		120
Earnings before taxes on earnings and fixed charges (B)	$	488	$	446	$	856	$	900
Ratio of earnings to fixed charges (B) ÷ (A) (1)		8.7		7.4		7.7		7.5
Ratio of earnings to fixed charges, excluding deposits from banking clients and payables to brokerage clients interest expense (2)		10.4		9.8		9.3		10.1
Total fixed charges	$	56	$	60	$	111	$	120
Preferred stock dividends (3)		22		—		22		—
Total fixed charges and preferred stock dividends (C)	$	78	$	60	$	133	$	120
Ratio of earnings to fixed charges and preferred stock dividends (B) ÷ (C) (1)		6.3		7.4		6.4		7.5
Ratio of earnings to fixed charges and preferred stock dividends, excluding deposits from banking clients and payables to brokerage clients interest expense (2)		7.0		9.8		7.5		10.1

⁽¹⁾  The ratios of earnings to fixed charges and earnings to fixed charges and preferred stock dividends are calculated in accordance with SEC requirements. For such purposes, “earnings” consist of earnings before taxes on earnings and fixed charges. “Fixed charges” consist of interest expense as listed above, and one-third of rental expense, which is estimated to be representative of the interest factor.

⁽²⁾  Because interest expense incurred in connection with both deposits from banking clients and payables to brokerage clients is completely offset by interest revenue on related investments and loans, the Company considers such interest to be an operating expense. Accordingly, the ratio of earnings to fixed charges, excluding deposits from banking clients and payables to brokerage clients interest expense, and the ratio of earnings to fixed charges and preferred stock dividends, excluding deposits from banking clients and payables to brokerage clients interest expense, reflect the elimination of such interest expense as a fixed charge.

⁽³⁾  The preferred stock dividend amounts represent the pre-tax earnings that would be required to pay the dividends on outstanding preferred stock.

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 Quarterly Report on Form 10-Q 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 the 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:	August 6, 2012	/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, Joseph R. Martinetto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 the 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:	August 6, 2012	/s/ Joseph R. Martinetto
		Joseph R. Martinetto
		Executive Vice President and Chief Financial Officer

EX-32.1

THE CHARLES SCHWAB CORPORATION

Exhibit 32.1

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 Quarterly Report of The Charles Schwab Corporation (the Company) on Form 10-Q for the quarter ended June 30, 2012 (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:	August 6, 2012
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

Exhibit 32.2

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 Quarterly Report of The Charles Schwab Corporation (the Company) on Form 10-Q for the quarter ended June 30, 2012 (the Report), I, Joseph R. Martinetto, 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/ Joseph R. Martinetto	Date:	August 6, 2012
Joseph R. Martinetto
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.

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Proceeds and Gross Realized Gains (Losses) from Sales of Securities Available for Sale (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Proceeds	$ 1,073	$ 250	$ 1,323	$ 450
Gross realized gains	2	1	2	1
Gross realized losses

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EPS under Basic and Diluted Computations (Parenthetical) (Detail) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share Disclosure [Line Items]
Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS	59	42	61	43

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Fair Value Hierarchy for Financial Instruments Not Recorded at Fair Value (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Carrying Amount
Assets:
Cash and cash equivalents	$ 7,245
Cash and investments segregated and on deposit for regulatory purposes	19,417
Receivables from brokers, dealers, and clearing organizations	317
Receivables from brokerage clients - net	11,952
Securities held to maturity	15,506	15,108
Loans to banking clients - net	9,837	9,812
Loans held for sale	2	70
Other assets	62
Total	64,338
Liabilities:
Deposits from banking clients	66,257
Payables to brokers, dealers, and clearing organizations	1,332
Payables to brokerage clients	31,833
Accrued expenses and other liabilities	501
Long-term debt	1,999	2,001
Total	101,922
Carrying Amount | Residential real estate mortgages
Assets:
Loans to banking clients - net	5,640
Carrying Amount | Home equity lines of credit
Assets:
Loans to banking clients - net	3,391
Carrying Amount | Personal loans secured by securities
Assets:
Loans to banking clients - net	787
Carrying Amount | Other
Assets:
Loans to banking clients - net	19
Carrying Amount | U.S. agency residential mortgage-backed securities
Assets:
Securities held to maturity	15,227
Carrying Amount | Other securities
Assets:
Securities held to maturity	279
Fair Value
Assets:
Cash and cash equivalents	7,245
Cash and investments segregated and on deposit for regulatory purposes	19,417
Receivables from brokers, dealers, and clearing organizations	317
Receivables from brokerage clients - net	11,952
Securities held to maturity	16,009	15,539
Loans to banking clients - net	9,916	9,671
Loans held for sale	3	73
Other assets	62
Total	64,921
Liabilities:
Deposits from banking clients	66,257
Payables to brokers, dealers, and clearing organizations	1,332
Payables to brokerage clients	31,833
Accrued expenses and other liabilities	501
Long-term debt	2,189	2,159
Total	102,112
Fair Value | Residential real estate mortgages
Assets:
Loans to banking clients - net	5,742
Fair Value | Home equity lines of credit
Assets:
Loans to banking clients - net	3,368
Fair Value | Personal loans secured by securities
Assets:
Loans to banking clients - net	787
Fair Value | Other
Assets:
Loans to banking clients - net	19
Fair Value | U.S. agency residential mortgage-backed securities
Assets:
Securities held to maturity	15,730
Fair Value | Other securities
Assets:
Securities held to maturity	279
Fair Value | Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	7,245
Cash and investments segregated and on deposit for regulatory purposes	19,417
Receivables from brokers, dealers, and clearing organizations	317
Receivables from brokerage clients - net	11,952
Securities held to maturity	16,009
Loans to banking clients - net	9,916
Loans held for sale	3
Other assets	62
Total	64,921
Liabilities:
Deposits from banking clients	66,257
Payables to brokers, dealers, and clearing organizations	1,332
Payables to brokerage clients	31,833
Accrued expenses and other liabilities	501
Long-term debt	2,189
Total	102,112
Fair Value | Significant Other Observable Inputs (Level 2) | Residential real estate mortgages
Assets:
Loans to banking clients - net	5,742
Fair Value | Significant Other Observable Inputs (Level 2) | Home equity lines of credit
Assets:
Loans to banking clients - net	3,368
Fair Value | Significant Other Observable Inputs (Level 2) | Personal loans secured by securities
Assets:
Loans to banking clients - net	787
Fair Value | Significant Other Observable Inputs (Level 2) | Other
Assets:
Loans to banking clients - net	19
Fair Value | Significant Other Observable Inputs (Level 2) | U.S. agency residential mortgage-backed securities
Assets:
Securities held to maturity	15,730
Fair Value | Significant Other Observable Inputs (Level 2) | Other securities
Assets:
Securities held to maturity	$ 279

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Regulatory Capital and Ratios (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012
Tier 1 Risk-Based Capital
Actual Amount	$ 5,431
Minimum Capital Requirement Amount	985
Minimum to be Well Capitalized Amount	1,477
Actual Ratio	22.10%
Minimum Capital Requirement Ratio	4.00%
Minimum to be Well Capitalized Ratio	6.00%
Total Risk-Based Capital
Actual Amount	5,479
Minimum Capital Requirement Amount	1,970
Minimum to be Well Capitalized Amount	2,462
Actual Ratio	22.30%
Minimum Capital Requirement Ratio	8.00%
Minimum to be Well Capitalized Ratio	10.00%
Tier 1 Leverage
Actual Amount	5,431
Minimum Capital Requirement Amount	2,876
Minimum to be Well Capitalized Amount	3,595
Actual Ratio	7.60%
Minimum Capital Requirement Ratio	4.00%
Minimum to be Well Capitalized Ratio	5.00%
Tangible Equity
Actual Amount	5,431
Minimum Capital Requirement Amount	$ 1,438
Actual Ratio	7.60%
Minimum Capital Requirement Ratio	2.00%

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012 Margin Requirements	Jun. 30, 2012 Collateral Requirements	Aug. 28, 2008 Total Bond Market Fund Litigation
Commitments and Contingencies Disclosure [Line Items]
Aggregate face amount of letter of credit agreements	$ 350	$ 110
Alleged minimum percentage of fund assets invested in CMOs and mortgage-backed securities without obtaining shareholder vote			25.00%

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Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities Available for Sale and Securities Held to Maturity (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Investment [Line Items]
Securities available for sale Amortized Cost	$ 39,802		$ 33,950
Securities available for sale Gross Unrealized Gains	411		288
Securities available for sale Gross Unrealized Losses	164		273
Securities available for sale	40,049		33,965
Securities held to maturity	15,506		15,108
Securities held to maturity Gross Unrealized Gains	505		433
Securities held to maturity Gross Unrealized Losses	2		2
Securities held to maturity, fair value	16,009		15,539
U.S. agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale Amortized Cost	24,041		20,666
Securities available for sale Gross Unrealized Gains	354		269
Securities available for sale Gross Unrealized Losses	8		14
Securities available for sale	24,387	[1]	20,921
Securities held to maturity	15,227		14,770
Securities held to maturity Gross Unrealized Gains	504		430
Securities held to maturity Gross Unrealized Losses	1		2
Securities held to maturity, fair value	15,730	[1]	15,198
Non-agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale Amortized Cost	923		1,130
Securities available for sale Gross Unrealized Gains	1
Securities available for sale Gross Unrealized Losses	148		223
Securities available for sale	776	[1]	907
Certificates of deposit
Investment [Line Items]
Securities available for sale Amortized Cost	5,348		3,623
Securities available for sale Gross Unrealized Gains	11		2
Securities available for sale Gross Unrealized Losses	3		3
Securities available for sale	5,356		3,622
Corporate debt securities
Investment [Line Items]
Securities available for sale Amortized Cost	4,825		3,592
Securities available for sale Gross Unrealized Gains	23		5
Securities available for sale Gross Unrealized Losses	3		26
Securities available for sale	4,845		3,571
U.S. agency notes
Investment [Line Items]
Securities available for sale Amortized Cost	100		1,795
Securities available for sale Gross Unrealized Gains	1		5
Securities available for sale	101		1,800
Asset-backed and other securities
Investment [Line Items]
Securities available for sale Amortized Cost	4,565		3,144
Securities available for sale Gross Unrealized Gains	21		7
Securities available for sale Gross Unrealized Losses	2		7
Securities available for sale	4,584		3,144
Other securities
Investment [Line Items]
Securities held to maturity	279		338
Securities held to maturity Gross Unrealized Gains	1		3
Securities held to maturity Gross Unrealized Losses	1
Securities held to maturity, fair value	$ 279		$ 341

[1] Residential mortgage-backed securities have been allocated over maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

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Net Capital and Net Capital Requirements for Schwab and optionsXpress, Inc (Detail) (USD $)	Jun. 30, 2012
Schwab
Compliance with Regulatory Capital Requirements for Broker Dealers [Line Items]
Net Capital	$ 1,440,000,000
% of Aggregate Debit Balances	11.00%
Minimum Net Capital Required	250,000
2% of Aggregate Debit Balances	263,000,000
Net Capital in Excess of Required Net Capital	1,177,000,000
Net Capital in Excess of 5% of Aggregate Debit Balances	781,000,000
OptionsXpress, Inc.
Compliance with Regulatory Capital Requirements for Broker Dealers [Line Items]
Net Capital	71,000,000
% of Aggregate Debit Balances	30.00%
Minimum Net Capital Required	1,000,000
2% of Aggregate Debit Balances	5,000,000
Net Capital in Excess of Required Net Capital	66,000,000
Net Capital in Excess of 5% of Aggregate Debit Balances	$ 59,000,000

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Preferred Stock (Tables)

6 Months Ended

Jun. 30, 2012

Preferred Stock Issued and Outstanding

The Company’s preferred stock issued and outstanding as of June 30, 2012, are as follows:

	Shares Issued and Outstanding (In thousands)		Liquidation Preference Per Share		Liquidation Preference		Carrying Value
Series A		400	$	1,000	$	400	$	394
Series B		485	$	1,000		485		469
Total Preferred Stock		885			$	885	$	863

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Preferred Stock - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended		1 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jan. 31, 2012 Series A Preferred Stock Noncumulative Preferred Stock	Jan. 31, 2012 Series A Preferred Stock Noncumulative Preferred Stock Minimum	Jun. 30, 2012 Series B Preferred Stock Noncumulative Preferred Stock Fixed Rate	Jun. 30, 2012 Series B Preferred Stock Noncumulative Preferred Stock Minimum Fixed Rate
Class of Stock [Line Items]
Preferred stock, shares authorized	9,940,000	9,940,000
Preferred stock, par value	$ 0.01	$ 0.01
Depositary shares of non-cumulative perpetual preferred stock					19,400,000
Ownership interest percentage in a share of 6.00% non-cumulative perpetual preferred stock					2.50%
Value per depositary share					$ 25
Net proceeds from issuance of preferred stock offerings	$ 864		$ 394		$ 469
Fixed dividend rate on preferred stock			7.00%		6.00%
Preferred stock earliest redemption date				Feb. 01, 2022		Sep. 01, 2017
Fixed-to-floating rate non-cumulative perpetual preferred stock issued			400,000
End date of fixed dividend rate on Preferred stock			2022-02
Floating rate on 3-month LIBOR plus			4.82%

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Loans to Banking Clients and Related Allowance for Loan Losses - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total nonaccrual loans	$ 47	$ 52
Loans accruing interest contractually 90 days or more past due	0	0
Nonperforming assets, including nonaccrual loans and other real estate owned	$ 52	$ 56
Minimum fair value percentage of collateral to principal amount of loan	100.00%	100.00%

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Rollforward Amount of Credit Losses Recognized in Earnings for OTTI Securities Held by Company for Portion of Impairment Recognized in Other Comprehensive Income (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Balance at beginning of period	$ 145	$ 103	$ 127	$ 96
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was not previously recognized	4	2	5	2
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was previously recognized	3		20	7
Balance at end of period	$ 152	$ 105	$ 152	$ 105

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Accumulated Other Comprehensive Income Balances (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Beginning Balance	$ 8	$ 16
Other net changes	146	29
Ending Balance	154	45
Net unrealized gain on securities available for sale
Beginning Balance	10	17
Other net changes	145	28
Ending Balance	155	45
Other
Beginning Balance	(2)	(1)
Other net changes	1	1
Ending Balance	$ (1)

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Subsequent Event - Additional Information (Detail) (Subsequent Event, Trust Preferred Securities, USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2012
Subsequent Event | Trust Preferred Securities
Subsequent Event [Line Items]
Fixed-to-floating rate trust preferred securities issued by Schwab Capital Trust I to be redeemed	$ 300
Trust preferred securities redemption date	Aug. 31, 2012
Percentage of the liquidation amount of each trust preferred security included in the redemption	100.00%

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Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	$ 425	$ 593
Securities available for sale	40,049	33,965
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	844	822
Investments segregated and on deposit for regulatory purposes	3,302	3,791
Other securities owned	425	593
Securities available for sale	40,049	33,965
Total	44,620	39,171
Fair Value, Measurements, Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	162	8
Fair Value, Measurements, Recurring | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	682	814
Fair Value, Measurements, Recurring | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	2,624	2,374
Securities available for sale	5,356	3,622
Fair Value, Measurements, Recurring | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	678	767
Securities available for sale	4,845	3,571
Fair Value, Measurements, Recurring | Schwab Funds money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	135	332
Fair Value, Measurements, Recurring | Equity and bond mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	186	183
Fair Value, Measurements, Recurring | State and municipal debt obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	71	46
Fair Value, Measurements, Recurring | Equity, U.S. Government and corporate debt, and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	33	32
Fair Value, Measurements, Recurring | U.S. agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	24,387	20,921
Fair Value, Measurements, Recurring | Non-agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	776	907
Fair Value, Measurements, Recurring | U.S. agency notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	101	1,800
Fair Value, Measurements, Recurring | Asset-backed and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	4,584	3,144
Fair Value, Measurements, Recurring | U.S. Government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes		650
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	162	8
Other securities owned	324	527
Total	486	535
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	162	8
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Schwab Funds money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	135	332
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Equity and bond mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	186	183
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Equity, U.S. Government and corporate debt, and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	3	12
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	682	814
Investments segregated and on deposit for regulatory purposes	3,302	3,791
Other securities owned	101	66
Securities available for sale	40,049	33,965
Total	44,134	38,636
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	682	814
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	2,624	2,374
Securities available for sale	5,356	3,622
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes	678	767
Securities available for sale	4,845	3,571
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | State and municipal debt obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	71	46
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Equity, U.S. Government and corporate debt, and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other securities owned	30	20
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | U.S. agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	24,387	20,921
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Non-agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	776	907
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | U.S. agency notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	101	1,800
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Asset-backed and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	4,584	3,144
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | U.S. Government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments segregated and on deposit for regulatory purposes		$ 650

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New Accounting Standard

6 Months Ended

Jun. 30, 2012

New Accounting Standard

2. New Accounting Standard

Adoption of New Accounting Standard

Testing Goodwill for Impairment: In September 2011, the Financial Accounting Standards Board issued new guidance allowing companies to consider qualitative factors before performing a quantitative assessment when determining whether goodwill is impaired, which was effective for goodwill impairment tests performed after January 1, 2012. Specifically, there is no longer a requirement to perform the two-step goodwill impairment test unless the entity determines that based on qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The adoption of this new guidance did not have a material impact on the Company’s financial position, results of operations, earnings per common share (EPS), or cash flows.

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Delinquency Aging Analysis by Loan Class (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 9,809		$ 9,786
30-59 days past due	26		24
60-89 days past due	6		4
Greater than 90 days	47		52
Total past due	79		80
Total loans to banking clients	9,888	[1]	9,866	[1]
Residential real estate mortgages, originated and purchased first mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	5,458
30-59 days past due	19
60-89 days past due	3
Greater than 90 days	34
Total past due	56
Total loans to banking clients	5,514	[2]
Residential real estate mortgages, other purchased first mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	153
30-59 days past due	2
60-89 days past due	1
Greater than 90 days	4
Total past due	7
Total loans to banking clients	160	[2]
Residential real estate mortgages, originated first mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current			5,380
30-59 days past due			16
60-89 days past due			2
Greater than 90 days			39
Total past due			57
Total loans to banking clients			5,437	[3]
Residential real estate mortgages, purchased first mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current			152
30-59 days past due			2
Greater than 90 days			5
Total past due			7
Total loans to banking clients			159	[3]
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,392		3,494
30-59 days past due	5		5
60-89 days past due	2		2
Greater than 90 days	9		8
Total past due	16		15
Total loans to banking clients	3,408	[2]	3,509	[3]
Personal loans secured by securities
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	787		741
30-59 days past due			1
Total past due			1
Total loans to banking clients	787		742
Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	19		19
Total loans to banking clients	$ 19		$ 19

[1] All loans are evaluated for impairment by loan segment.

[2] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

[3] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Financial Information for Reportable Segments

Financial information for the Company’s reportable segments is presented in the following table:

	Investor Services						Institutional Services						Unallocated						Total
Three Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	271		$	275		$	227		$	227		$	(2	)	$	—		$	496		$	502
Net interest revenue		385			387			73			64			—			—			458			451
Trading revenue		147			136			72			70			—			(1	)		219			205
Other (1)		27			16			21			19			73			—			121			35
Provision for loan losses		(3	)		(1	)		(1	)		—			—			—			(4	)		(1	)
Net impairment losses on securities		(6	)		(2	)		(1	)		—			—			—			(7	)		(2	)
Total net revenues		821			811			391			380			71			(1	)		1,283			1,190
Expenses Excluding Interest		587			547			264			258			—			(1	)		851			804
Income before taxes on income	$	234		$	264		$	127		$	122		$	71		$	—		$	432		$	386
Taxes on income																				157			148
Net Income																			$	275		$	238
	Investor Services						Institutional Services						Unallocated						Total
Six Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	531		$	551		$	450		$	453		$	(1	)	$	—		$	980		$	1,004
Net interest revenue		750			760			142			127			—			—			892			887
Trading revenue		310			296			152			150			—			—			462			446
Other (1)		54			36			41			38			72			—			167			74
Provision for loan losses		(3	)		(4	)		(1	)		(1	)		—			—			(4	)		(5	)
Net impairment losses on securities		(22	)		(8	)		(3	)		(1	)		—			—			(25	)		(9	)
Total net revenues		1,620			1,631			781			766			71			—			2,472			2,397
Expenses Excluding Interest		1,193			1,101			534			518			—			(2	)		1,727			1,617
Income before taxes on income	$	427		$	530		$	247		$	248		$	71		$	2		$	745		$	780
Taxes on income																				275			299
Net Income																			$	470		$	481

⁽¹⁾  Unallocated amount includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

XML

Regulatory Requirements (Tables)

6 Months Ended

Jun. 30, 2012

Regulatory Capital and Ratios

The regulatory capital and ratios for Schwab Bank at June 30, 2012, are as follows:

	Actual					Minimum Capital Requirement					Minimum to be Well  Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 Risk-Based Capital	$	5,431		22.1	%	$	985		4.0	%	$	1,477		6.0	%
Total Risk-Based Capital	$	5,479		22.3	%	$	1,970		8.0	%	$	2,462		10.0	%
Tier 1 Leverage	$	5,431		7.6	%	$	2,876		4.0	%	$	3,595		5.0	%
Tangible Equity	$	5,431		7.6	%	$	1,438		2.0	%		N/A

N/A Not applicable.

Net Capital and Net Capital Requirements for Schwab and optionsXpress, Inc.

Net capital and net capital requirements for Schwab and optionsXpress, Inc. at June 30, 2012, are as follows:

	Net Capital		% of Aggregate Debit Balances			Minimum Net Capital Required		2% of Aggregate Debit Balances		Net Capital in Excess of Required Net Capital		Net Capital in Excess of 5% of Aggregate Debit Balances
Schwab	$	1,440		11	%	$	0.250	$	263	$	1,177	$	781
optionsXpress, Inc.	$	71		30	%	$	1	$	5	$	66	$	59

XML

Regulatory Requirements - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2012
Compliance with Regulatory Capital Requirements for Broker Dealers [Line Items]
Percentage of aggregate debit balances required as minimum net capital	2.00%
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 ($250,000 for Schwab), 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 to its parent company or employees 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.
Percentage of net capital to aggregate debit balances required for a broker-dealer to repay subordinated borrowings, pay cash dividends, or make any unsecured advances or loans to its parent company or employees	5.00%
Percentage of net capital to the Company's minimum dollar requirement required for a broker-dealer to repay subordinated borrowings, pay cash dividends, or make any unsecured advances or loans to its parent company or employees	120.00%
Description of Net Capital Requirements under Commodity Exchange Act	optionsXpress, Inc. is also subject to Commodity Futures Trading Commission Regulation 1.17 (Reg. 1.17) under the Commodity Exchange Act, which also requires the maintenance of minimum net capital. optionsXpress, Inc., as a futures commission merchant, is required to maintain minimum net capital equal to the greater of its net capital requirement under Reg. 1.17 ($1 million), or the sum of 8% of the total risk margin requirements for all positions carried in client accounts and 8% of the total risk margin requirements for all positions carried in non-client accounts (as defined in Reg. 1.17).
Net capital required for optionsXpress, Inc. under Reg 1.17 of the Commodity Exchange Act	$ 1,000,000
Minimum percentage of the total risk margin requirements for all positions carried in customer accounts to be added to the minimum percentage of the total risk margin requirements for all positions carried in non-customer accounts for optionsXpress, Inc. minimum net capital calculation	8.00%
Minimum percentage of the total risk margin requirements for all positions carried in non-customer accounts to be added to the minimum percentage of the total risk margin requirements for all positions carried in customer accounts for optionsXpress, Inc. minimum net capital calculation	8.00%
Schwab
Compliance with Regulatory Capital Requirements for Broker Dealers [Line Items]
Minimum capital requirement	$ 250,000

XML

Credit Quality of Residential Real Estate Mortgages and HELOCs by Reviewing FICO Scores at Origination, Current FICO Scores, Loan-To-Value Ratio (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	$ 9,888	[1]	$ 9,866	[1]
Residential real estate mortgages, originated and purchased first mortgages
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	5,514	[2]
Residential real estate mortgages, originated and purchased first mortgages | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	513
Residential real estate mortgages, originated and purchased first mortgages | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	464
Residential real estate mortgages, originated and purchased first mortgages | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	415
Residential real estate mortgages, originated and purchased first mortgages | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,374
Residential real estate mortgages, originated and purchased first mortgages | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,824
Residential real estate mortgages, originated and purchased first mortgages | Year of origination 2012
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	924
Residential real estate mortgages, originated and purchased first mortgages | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	10
Residential real estate mortgages, originated and purchased first mortgages | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	96
Residential real estate mortgages, originated and purchased first mortgages | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,029
Residential real estate mortgages, originated and purchased first mortgages | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	4,379
Residential real estate mortgages, originated and purchased first mortgages | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	55
Residential real estate mortgages, originated and purchased first mortgages | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	154
Residential real estate mortgages, originated and purchased first mortgages | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	857
Residential real estate mortgages, originated and purchased first mortgages | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	4,448
Residential real estate mortgages, originated and purchased first mortgages | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	3,586	[2]
Residential real estate mortgages, originated and purchased first mortgages | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,903	[2]
Residential real estate mortgages, originated and purchased first mortgages | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	25	[2]
Residential real estate mortgages, other purchased first mortgages
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	160	[2]
Residential real estate mortgages, other purchased first mortgages | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	58
Residential real estate mortgages, other purchased first mortgages | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	7
Residential real estate mortgages, other purchased first mortgages | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	8
Residential real estate mortgages, other purchased first mortgages | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	15
Residential real estate mortgages, other purchased first mortgages | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	68
Residential real estate mortgages, other purchased first mortgages | Year of origination 2012
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	4
Residential real estate mortgages, other purchased first mortgages | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	2
Residential real estate mortgages, other purchased first mortgages | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	18
Residential real estate mortgages, other purchased first mortgages | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	42
Residential real estate mortgages, other purchased first mortgages | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	98
Residential real estate mortgages, other purchased first mortgages | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	6
Residential real estate mortgages, other purchased first mortgages | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	11
Residential real estate mortgages, other purchased first mortgages | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	37
Residential real estate mortgages, other purchased first mortgages | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	106
Residential real estate mortgages, other purchased first mortgages | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	96	[2]
Residential real estate mortgages, other purchased first mortgages | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	55	[2]
Residential real estate mortgages, other purchased first mortgages | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	9	[2]
Residential real estate mortgages, originated first mortgages
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			5,437	[3]
Residential real estate mortgages, originated first mortgages | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			569
Residential real estate mortgages, originated first mortgages | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			538
Residential real estate mortgages, originated first mortgages | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			553
Residential real estate mortgages, originated first mortgages | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			1,757
Residential real estate mortgages, originated first mortgages | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			2,020
Residential real estate mortgages, originated first mortgages | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			9
Residential real estate mortgages, originated first mortgages | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			108
Residential real estate mortgages, originated first mortgages | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			1,030
Residential real estate mortgages, originated first mortgages | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			4,290
Residential real estate mortgages, originated first mortgages | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			55
Residential real estate mortgages, originated first mortgages | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			162
Residential real estate mortgages, originated first mortgages | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			831
Residential real estate mortgages, originated first mortgages | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			4,389
Residential real estate mortgages, originated first mortgages | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			3,507	[3]
Residential real estate mortgages, originated first mortgages | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			1,904	[3]
Residential real estate mortgages, originated first mortgages | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			26	[3]
Residential real estate mortgages, purchased first mortgages
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			159	[3]
Residential real estate mortgages, purchased first mortgages | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			60
Residential real estate mortgages, purchased first mortgages | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			8
Residential real estate mortgages, purchased first mortgages | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			10
Residential real estate mortgages, purchased first mortgages | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			17
Residential real estate mortgages, purchased first mortgages | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			64
Residential real estate mortgages, purchased first mortgages | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			2
Residential real estate mortgages, purchased first mortgages | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			19
Residential real estate mortgages, purchased first mortgages | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			43
Residential real estate mortgages, purchased first mortgages | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			95
Residential real estate mortgages, purchased first mortgages | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			7
Residential real estate mortgages, purchased first mortgages | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			11
Residential real estate mortgages, purchased first mortgages | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			44
Residential real estate mortgages, purchased first mortgages | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			97
Residential real estate mortgages, purchased first mortgages | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			91	[3]
Residential real estate mortgages, purchased first mortgages | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			60	[3]
Residential real estate mortgages, purchased first mortgages | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients			8	[3]
Residential real estate mortgages
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	5,674	[2]	5,596	[3]
Residential real estate mortgages | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	571		629
Residential real estate mortgages | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	471		546
Residential real estate mortgages | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	423		563
Residential real estate mortgages | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,389		1,774
Residential real estate mortgages | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,892		2,084
Residential real estate mortgages | Year of origination 2012
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	928
Residential real estate mortgages | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	12		11
Residential real estate mortgages | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	114		127
Residential real estate mortgages | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,071		1,073
Residential real estate mortgages | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	4,477		4,385
Residential real estate mortgages | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	61		62
Residential real estate mortgages | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	165		173
Residential real estate mortgages | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	894		875
Residential real estate mortgages | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	4,554		4,486
Residential real estate mortgages | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	3,682	[2]	3,598	[3]
Residential real estate mortgages | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,958	[2]	1,964	[3]
Residential real estate mortgages | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	34	[2]	34	[3]
Home equity lines of credit
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	3,408	[2]	3,509	[3]
Home equity lines of credit | Year of origination Pre 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,243		1,306
Home equity lines of credit | Year of origination 2008
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,212		1,262
Home equity lines of credit | Year of origination 2009
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	384		412
Home equity lines of credit | Year of origination 2010
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	289		311
Home equity lines of credit | Year of origination 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	223		218
Home equity lines of credit | Year of origination 2012
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	57
Home equity lines of credit | Origination FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1
Home equity lines of credit | Origination FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	24		24
Home equity lines of credit | Origination FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	652		667
Home equity lines of credit | Origination FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	2,731		2,818
Home equity lines of credit | Updated FICO Score Below 620
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	45		49
Home equity lines of credit | Updated FICO Score 620 Through 679
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	105		112
Home equity lines of credit | Updated FICO Score 680 Through 739
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	516		520
Home equity lines of credit | Updated FICO Score 740 And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	2,742		2,828
Home equity lines of credit | Origination Loan To Value Ratio 70 Percent And Below
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	2,307	[2]	2,378	[3]
Home equity lines of credit | Origination Loan to Value Ratio 71 Percent Through 89 Percent
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	1,063	[2]	1,091	[3]
Home equity lines of credit | Origination Loan to Value Ratio 90 Percent And Above
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	$ 38	[2]	$ 40	[3]

[1] All loans are evaluated for impairment by loan segment.

[2] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

[3] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

XML

Introduction and Basis of Presentation - Additional Information (Detail)	Jun. 30, 2012 State Location
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Minimum number of domestic branch offices	300
States with domestic branch offices	45

XML

Business Acquisition - Additional Information (Detail) (OptionsXpress Holdings, Inc., USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Sep. 01, 2011
OptionsXpress Holdings, Inc.
Business Acquisition [Line Items]
Business acquisition, consideration paid					$ 714
Common shares issued per each share of acquiree					1.02
Business acquisition, common stock issued share					59,000,000
Fair value of common stock issued					710
Business acquisition, other noncash consideration					4
Business acquisition purchase price allocation, goodwill					511
Business acquisition purchase price allocation, intangible assets					285
Net revenue, acquiree	49		101
Net income, acquiree	6		8
Amortization of purchase accounting adjustments related to intangible assets, net of tax		$ 5		$ 10

XML

Introduction and Basis of Presentation

6 Months Ended

Jun. 30, 2012

Introduction and Basis of Presentation

1. Introduction and Basis of Presentation

The Charles Schwab Corporation (CSC) is a savings and loan holding company engaged, through its subsidiaries, in securities brokerage, banking, and related financial services. Charles Schwab & Co., Inc. (Schwab) is a securities broker-dealer with over 300 domestic branch offices in 45 states, as well as a branch in each of the Commonwealth of Puerto Rico and London, U.K. In addition, Schwab serves clients in Hong Kong through one of CSC’s subsidiaries. Other subsidiaries include Charles Schwab Bank (Schwab Bank), a federal savings bank, and Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab’s proprietary mutual funds, which are referred to as the Schwab Funds^®, and for Schwab’s exchange-traded funds, which are referred to as the Schwab ETFs™.

The accompanying unaudited condensed consolidated financial statements include CSC and its majority-owned subsidiaries (collectively referred to as the Company). Intercompany balances and transactions have been eliminated. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements. Certain estimates relate to other-than-temporary impairment of securities available for sale and securities held to maturity, valuation of goodwill, allowance for loan losses, and legal reserves. Actual results may differ from those estimates. These condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. These adjustments are of a normal recurring nature. Certain prior period amounts have been reclassified to conform to the 2012 presentation. The Company’s results for any interim period are not necessarily indicative of results for a full year or any other interim period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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Pro Forma Results of Operations (Detail) (OptionsXpress Holdings, Inc., USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
OptionsXpress Holdings, Inc.
Business Acquisition [Line Items]
Net revenues	$ 1,249	$ 2,522
Net income	$ 242	$ 494
Basic EPS	$ 0.19	$ 0.39
Diluted EPS	$ 0.19	$ 0.39

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Composition of Loans to Banking Clients by Loan Segment (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Mar. 31, 2012	Dec. 31, 2011		Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to banking clients	$ 9,888	[1]		$ 9,866	[1]
Allowance for loan losses	(51)		(50)	(54)		(50)	(53)	(53)
Total loans to banking clients - net	9,837			9,812
Residential real estate mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to banking clients	5,674	[2]		5,596	[3]
Allowance for loan losses	(34)		(37)	(40)		(34)	(37)	(38)
Home equity lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to banking clients	3,408	[2]		3,509	[3]
Allowance for loan losses	(17)		(13)	(14)		(16)	(16)	(15)
Personal loans secured by securities
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to banking clients	787			742
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to banking clients	$ 19			$ 19

[1] All loans are evaluated for impairment by loan segment.

[2] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

[3] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

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EPS under Basic and Diluted Computations (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Earnings Per Share Disclosure [Line Items]
Net income	$ 275		$ 238		$ 470		$ 481
Preferred stock dividends	(14)				(14)
Net income available to common stockholders	$ 261	[1]	$ 238	[1]	$ 456	[1]	$ 481	[1]
Weighted-average common shares outstanding - basic	1,273		1,207		1,272		1,205
Common stock equivalent shares related to stock incentive plans	1		3		1		3
Weighted-average common shares outstanding - diluted	1,274	[2]	1,210	[2]	1,273	[2]	1,208	[2]
Basic EPS	$ 0.20		$ 0.20		$ 0.36		$ 0.40
Diluted EPS	$ 0.20		$ 0.20		$ 0.36		$ 0.40

[1] Net income available to participating securities (unvested restricted shares) was not material for the second quarters or first halves of 2012 or 2011.

[2] Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 59 million and 42 million shares for the second quarters of 2012 and 2011, respectively, and 61 million and 43 million shares for the first halves of 2012 and 2011, respectively.

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Condensed Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Net Revenues
Asset management and administration fees	$ 496		$ 502		$ 980		$ 1,004
Interest revenue	497		496		969		977
Interest expense	(39)		(45)		(77)		(90)
Net interest revenue	458		451		892		887
Trading revenue	219		205		462		446
Other	121	[1]	35	[1]	167	[1]	74	[1]
Provision for loan losses	(4)		(1)		(4)		(5)
Net impairment losses on securities	(7)	[2]	(2)	[2]	(25)	[2]	(9)	[2]
Total net revenues	1,283		1,190		2,472		2,397
Expenses Excluding Interest
Compensation and benefits	446		430		911		867
Professional services	93		92		189		184
Occupancy and equipment	80		73		156		144
Advertising and market development	57		51		124		111
Communications	55		54		113		110
Depreciation and amortization	48		33		96		68
Class action litigation and regulatory reserve			7				7
Other	72		64		138		126
Total expenses excluding interest	851		804		1,727		1,617
Income before taxes on income	432		386		745		780
Taxes on income	157		148		275		299
Net Income	275		238		470		481
Preferred stock dividends	14				14
Net Income Available to Common Stockholders	$ 261	[3]	$ 238	[3]	$ 456	[3]	$ 481	[3]
Weighted-Average Common Shares Outstanding - Diluted	1,274	[4]	1,210	[4]	1,273	[4]	1,208	[4]
Earnings Per Common Share - Basic	$ 0.20		$ 0.20		$ 0.36		$ 0.40
Earnings Per Common Share - Diluted	$ 0.20		$ 0.20		$ 0.36		$ 0.40

[1] Unallocated amount includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

[2] Net impairment losses on securities include total other-than-temporary impairment losses of $12 million and $11 million, net of $5 million and $9 million recognized in other comprehensive income, for the three months ended June 30, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $14 million and $11 million, net of $(11) million and $2 million recognized in other comprehensive income, for the six months ended June 30, 2012 and 2011, respectively.

[3] Net income available to participating securities (unvested restricted shares) was not material for the second quarters or first halves of 2012 or 2011.

[4] Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 59 million and 42 million shares for the second quarters of 2012 and 2011, respectively, and 61 million and 43 million shares for the first halves of 2012 and 2011, respectively.

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Credit Quality of Residential Real Estate Mortgages and HELOCs by Reviewing FICO Scores at Origination, Current FICO Scores, Loan-To-Value Ratio (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Loans to banking clients	$ 9,888	[1]	$ 9,866	[1]
Home equity lines of credit
Financing Receivable, Recorded Investment [Line Items]
Amount of home equity line of credit in a first lien position	746		755
Loans to banking clients	$ 3,408	[2]	$ 3,509	[3]

[1] All loans are evaluated for impairment by loan segment.

[2] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

[3] The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Cash and investments segregated and on deposit for regulatory purposes, resale agreements	$ 15,300	$ 17,899
Securities held to maturity, fair value	16,009	15,539
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, aggregate liquidation preference	$ 885	$ 0
Common stock, shares authorized	3,000,000,000	3,000,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	1,487,543,446	1,487,543,446
Treasury stock, shares	213,494,172	216,378,623

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Financial Information for Reportable Segments (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
Net Revenues:
Asset management and administration fees	$ 496		$ 502		$ 980		$ 1,004
Net interest revenue	458		451		892		887
Trading revenue	219		205		462		446
Other	121	[1]	35	[1]	167	[1]	74	[1]
Provision for loan losses	(4)		(1)		(4)		(5)
Net impairment losses on securities	(7)	[2]	(2)	[2]	(25)	[2]	(9)	[2]
Total net revenues	1,283		1,190		2,472		2,397
Expenses Excluding Interest	851		804		1,727		1,617
Income before taxes on income	432		386		745		780
Taxes on income	157		148		275		299
Net income	275		238		470		481
Investor Services
Net Revenues:
Asset management and administration fees	271		275		531		551
Net interest revenue	385		387		750		760
Trading revenue	147		136		310		296
Other	27	[1]	16	[1]	54	[1]	36	[1]
Provision for loan losses	(3)		(1)		(3)		(4)
Net impairment losses on securities	(6)		(2)		(22)		(8)
Total net revenues	821		811		1,620		1,631
Expenses Excluding Interest	587		547		1,193		1,101
Income before taxes on income	234		264		427		530
Institutional Services
Net Revenues:
Asset management and administration fees	227		227		450		453
Net interest revenue	73		64		142		127
Trading revenue	72		70		152		150
Other	21	[1]	19	[1]	41	[1]	38	[1]
Provision for loan losses	(1)				(1)		(1)
Net impairment losses on securities	(1)				(3)		(1)
Total net revenues	391		380		781		766
Expenses Excluding Interest	264		258		534		518
Income before taxes on income	127		122		247		248
Unallocated
Net Revenues:
Asset management and administration fees	(2)				(1)
Trading revenue			(1)
Other	73	[1]			72	[1]
Total net revenues	71		(1)		71
Expenses Excluding Interest			(1)				(2)
Income before taxes on income	$ 71				$ 71		$ 2

[1] Unallocated amount includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

[2] Net impairment losses on securities include total other-than-temporary impairment losses of $12 million and $11 million, net of $5 million and $9 million recognized in other comprehensive income, for the three months ended June 30, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $14 million and $11 million, net of $(11) million and $2 million recognized in other comprehensive income, for the six months ended June 30, 2012 and 2011, respectively.

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Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss (Parenthetical) (Detail)	Jun. 30, 2012 Investment	Dec. 31, 2011 Investment
Investment [Line Items]
Number of available for sale securities in unrealized loss positions	170	296
Number of held to maturity securities in unrealized loss positions	3	3

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Securities Available for Sale and Securities Held to Maturity (Tables)

6 Months Ended

Jun. 30, 2012

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 securities available for sale and securities held to maturity are as follows:

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	24,041	$	354	$	8	$	24,387
Non-agency residential mortgage-backed securities		923		1		148		776
Certificates of deposit		5,348		11		3		5,356
Corporate debt securities		4,825		23		3		4,845
U.S. agency notes		100		1		—		101
Asset-backed and other securities		4,565		21		2		4,584
Total securities available for sale	$	39,802	$	411	$	164	$	40,049
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	15,227	$	504	$	1	$	15,730
Other securities		279		1		1		279
Total securities held to maturity	$	15,506	$	505	$	2	$	16,009

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	20,666	$	269	$	14	$	20,921
Non-agency residential mortgage-backed securities		1,130		—		223		907
Certificates of deposit		3,623		2		3		3,622
Corporate debt securities		3,592		5		26		3,571
U.S. agency notes		1,795		5		—		1,800
Asset-backed and other securities		3,144		7		7		3,144
Total securities available for sale	$	33,950	$	288	$	273	$	33,965
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	14,770	$	430	$	2	$	15,198
Other securities		338		3		—		341
Total securities held to maturity	$	15,108	$	433	$	2	$	15,539

Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss

A summary of securities with unrealized losses, aggregated by category and period of continuous unrealized loss, is as follows:

	Less than 12 months				12 months or longer				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	860	$	4	$	243	$	4	$	1,103	$	8
Non-agency residential mortgage-backed securities		—		—		702		148		702		148
Certificates of deposit		321		2		399		1		720		3
Corporate debt securities		894		3		—		—		894		3
Asset-backed and other securities		1,555		2		—		—		1,555		2
Total	$	3,630	$	11	$	1,344	$	153	$	4,974	$	164
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	116	$	1	$	—	$	—	$	116	$	1
Other securities		99		1		—		—		99		1
Total	$	215	$	2	$	—	$	—	$	215	$	2
Total securities with unrealized losses (1)	$	3,845	$	13	$	1,344	$	153	$	5,189	$	166

⁽¹⁾  The number of investment positions with unrealized losses totaled 170 for securities available for sale and 3 for securities held to maturity.

	Less than 12 months				12 months or longer				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	5,551	$	14	$	—	$	—	$	5,551	$	14
Non-agency residential mortgage-backed securities		121		8		746		215		867		223
Certificates of deposit		2,158		3		—		—		2,158		3
Corporate debt securities		1,888		26		—		—		1,888		26
Asset-backed and other securities		1,376		6		152		1		1,528		7
Total	$	11,094	$	57	$	898	$	216	$	11,992	$	273
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	384	$	2	$	—	$	—	$	384	$	2
Total	$	384	$	2	$	—	$	—	$	384	$	2
Total securities with unrealized losses (1)	$	11,478	$	59	$	898	$	216	$	12,376	$	275

⁽¹⁾  The number of investment positions with unrealized losses totaled 296 for securities available for sale and 3 for securities held to maturity.

Rollforward Amount of Credit Losses Recognized in Earnings for OTTI Securities Held by Company for Portion of Impairment Recognized in Other Comprehensive Income

The following table is a rollforward of the amount of credit losses recognized in earnings for OTTI securities held by the Company during the period for which a portion of the impairment was recognized in other comprehensive income:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Balance at beginning of period	$	145	$	103	$	127	$	96
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was not previously recognized		4		2		5		2
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was previously recognized		3		—		20		7
Balance at end of period	$	152	$	105	$	152	$	105

Maturities of Securities Available for Sale and Securities Held to Maturity

The maturities of securities available for sale and securities held to maturity at June 30, 2012, are as follows:

	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years		Total
Securities available for sale:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	3,422	$	20,965	$	24,387
Non-agency residential mortgage-backed securities (1)		—		—		9		767		776
Certificates of deposit		3,575		1,781		—		—		5,356
Corporate debt securities		734		4,111		—		—		4,845
U.S. agency notes		—		101		—		—		101
Asset-backed and other securities		300		372		669		3,243		4,584
Total fair value	$	4,609	$	6,365	$	4,100	$	24,975	$	40,049
Total amortized cost	$	4,605	$	6,338	$	3,986	$	24,873	$	39,802
Securities held to maturity:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	5,725	$	10,005	$	15,730
Other securities		117		162		—		—		279
Total fair value	$	117	$	162	$	5,725	$	10,005	$	16,009
Total amortized cost	$	117	$	162	$	5,521	$	9,706	$	15,506

⁽¹⁾  Residential mortgage-backed securities have been allocated over maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

Proceeds and Gross Realized Gains (Losses) from Sales of Securities Available for Sale

Proceeds and gross realized gains (losses) from sales of securities available for sale are as follows:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Proceeds	$	1,073	$	250	$	1,323	$	450
Gross realized gains	$	2	$	1	$	2	$	1
Gross realized losses	$	—	$	—	$	—	$	—

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Securities Available for Sale and Securities Held to Maturity - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012 CreditScore		Jun. 30, 2011		Jun. 30, 2012 CreditScore		Jun. 30, 2011		Dec. 31, 2011	Dec. 31, 2010
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale Gross Unrealized Losses	$ 164				$ 164				$ 273
Fair Isaac & Company minimum credit score for Prime loan origination	620				620
Securities available for sale Amortized Cost	39,802				39,802				33,950
Securities available for sale	40,049				40,049				33,965
Cash and cash equivalents	8,089		6,466		8,089		6,466		8,679	4,931
Loan-to-deposit ratio	15.00%				15.00%
Net impairment losses on securities	7	[1]	2	[1]	25	[1]	9	[1]
Alt-A residential mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale Amortized Cost	343				343
Securities available for sale	$ 265				$ 265

[1] Net impairment losses on securities include total other-than-temporary impairment losses of $12 million and $11 million, net of $5 million and $9 million recognized in other comprehensive income, for the three months ended June 30, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $14 million and $11 million, net of $(11) million and $2 million recognized in other comprehensive income, for the six months ended June 30, 2012 and 2011, respectively.

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Fair Values of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value

The following tables present the fair value hierarchy for assets measured at fair value:

June 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	162	$	—	$	—	$	162
Commercial paper		—		682		—		682
Total cash equivalents		162		682		—		844
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,624		—		2,624
Corporate debt securities		—		678		—		678
Total investments segregated and on deposit for regulatory purposes		—		3,302		—		3,302
Other securities owned:
Schwab Funds® money market funds		135		—		—		135
Equity and bond mutual funds		186		—		—		186
State and municipal debt obligations		—		71		—		71
Equity, U.S. Government and corporate debt, and other securities		3		30		—		33
Total other securities owned		324		101		—		425
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		24,387		—		24,387
Non-agency residential mortgage-backed securities		—		776		—		776
Certificates of deposit		—		5,356		—		5,356
Corporate debt securities		—		4,845		—		4,845
U.S. agency notes		—		101		—		101
Asset-backed and other securities		—		4,584		—		4,584
Total securities available for sale		—		40,049		—		40,049
Total	$	486	$	44,134	$	—	$	44,620

December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	8	$	—	$	—	$	8
Commercial paper		—		814		—		814
Total cash equivalents		8		814		—		822
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,374		—		2,374
Corporate debt securities		—		767		—		767
U.S. Government securities		—		650		—		650
Total investments segregated and on deposit for regulatory purposes		—		3,791		—		3,791
Other securities owned:
Schwab Funds® money market funds		332		—		—		332
Equity and bond mutual funds		183		—		—		183
State and municipal debt obligations		—		46		—		46
Equity, U.S. Government and corporate debt, and other securities		12		20		—		32
Total other securities owned		527		66		—		593
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		20,921		—		20,921
Non-agency residential mortgage-backed securities		—		907		—		907
Certificates of deposit		—		3,622		—		3,622
Corporate debt securities		—		3,571		—		3,571
U.S. agency notes		—		1,800		—		1,800
Asset-backed and other securities		—		3,144		—		3,144
Total securities available for sale		—		33,965		—		33,965
Total	$	535	$	38,636	$	—	$	39,171

Fair Value Hierarchy for Financial Instruments Not Recorded at Fair Value

The following table presents the fair value hierarchy for financial instruments not recorded at fair value at June 30, 2012:

	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Assets:
Cash and cash equivalents	$	7,245	$	—	$	7,245	$	—	$	7,245
Cash and investments segregated and on deposit for regulatory purposes		19,417		—		19,417		—		19,417
Receivables from brokers, dealers, and clearing organizations		317		—		317		—		317
Receivables from brokerage clients – net		11,952		—		11,952		—		11,952
Securities held to maturity:
U.S. agency residential mortgage-backed securities		15,227		—		15,730		—		15,730
Other securities		279		—		279		—		279
Total securities held to maturity		15,506		—		16,009		—		16,009
Loans to banking clients – net:
Residential real estate mortgages		5,640		—		5,742		—		5,742
Home equity lines of credit		3,391		—		3,368		—		3,368
Personal loans secured by securities		787		—		787		—		787
Other		19		—		19		—		19
Total loans to banking clients – net		9,837		—		9,916		—		9,916
Loans held for sale		2		—		3		—		3
Other assets		62		—		62		—		62
Total	$	64,338	$	—	$	64,921	$	—	$	64,921
Liabilities:
Deposits from banking clients	$	66,257	$	—	$	66,257	$	—	$	66,257
Payables to brokers, dealers, and clearing organizations		1,332		—		1,332		—		1,332
Payables to brokerage clients		31,833		—		31,833		—		31,833
Accrued expenses and other liabilities		501		—		501		—		501
Long-term debt		1,999		—		2,189		—		2,189
Total	$	101,922	$	—	$	102,112	$	—	$	102,112

Fair Value Estimates for Financial Instruments Excluding Short Term Financial Assets and Liabilities and Financial Instruments Recorded at Fair Value

The following table presents the Company’s fair value estimates for financial instruments not recorded at fair value at December 31, 2011. The table excludes short-term financial assets and liabilities, for which carrying amounts approximate fair value, and financial instruments recorded at fair value.

	Carrying Amount		Fair Value
Financial Assets:
Securities held to maturity	$	15,108	$	15,539
Loans to banking clients – net	$	9,812	$	9,671
Loans held for sale	$	70	$	73
Financial Liabilities:
Long-term debt	$	2,001	$	2,159

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Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011
Cash Flows from Operating Activities
Net income	$ 470		$ 481
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Provision for loan losses	4		5
Net impairment losses on securities	25	[1]	9	[1]
Stock-based compensation	54		47
Depreciation and amortization	96		68
Premium amortization, net, on securities available for sale and securities held to maturity	98		37
Other	1		(9)
Originations of loans held for sale	(435)		(809)
Proceeds from sales of loans held for sale	505		954
Net change in:
Cash and investments segregated and on deposit for regulatory purposes	3,311		(1,093)
Receivables from brokers, dealers, and clearing organizations	(86)		(47)
Receivables from brokerage clients	(885)		(413)
Other securities owned	168		(80)
Other assets	49		(1)
Payables to brokers, dealers, and clearing organizations	212		(33)
Payables to brokerage clients	(3,656)		3,056
Accrued expenses and other liabilities	(163)		(254)
Net cash (used for) provided by operating activities	(232)		1,918
Cash Flows from Investing Activities
Purchases of securities available for sale	(14,114)		(7,167)
Proceeds from sales of securities available for sale	1,323		450
Principal payments on securities available for sale	6,904		3,548
Purchases of securities held to maturity	(3,029)
Principal payments on securities held to maturity	2,566		1,926
Net increase in loans to banking clients	(62)		(753)
Purchase of equipment, office facilities, and property	(76)		(77)
Other investing activities			6
Net cash used for investing activities	(6,488)		(2,067)
Cash Flows from Financing Activities
Net change in deposits from banking clients	5,403		1,749
Repayment of long-term debt	(3)		(3)
Net proceeds from preferred stock offerings	864
Dividends paid	(154)		(145)
Proceeds from stock options exercised and other	20		73
Other financing activities			10
Net cash provided by financing activities	6,130		1,684
(Decrease) Increase in Cash and Cash Equivalents	(590)		1,535
Cash and Cash Equivalents at Beginning of Period	8,679		4,931
Cash and Cash Equivalents at End of Period	8,089		6,466
Cash paid during the period for:
Interest	74		86
Income taxes	$ 221		$ 325

[1] Net impairment losses on securities include total other-than-temporary impairment losses of $12 million and $11 million, net of $5 million and $9 million recognized in other comprehensive income, for the three months ended June 30, 2012 and 2011, respectively. Net impairment losses on securities include total other-than-temporary impairment losses of $14 million and $11 million, net of $(11) million and $2 million recognized in other comprehensive income, for the six months ended June 30, 2012 and 2011, respectively.

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Condensed Consolidated Statements of Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Total other-than-temporary impairment losses	$ 12	$ 11	$ 14	$ 11
Other-than-temporary impairment losses recognized in other comprehensive income	$ 5	$ 9	$ (11)	$ 2

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2012

Earnings Per Common Share

10. Earnings Per Common Share

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 the effect of outstanding stock options and unvested restricted stock awards and units. EPS under the basic and diluted computations is as follows:

	Three Months Ended June 30,							Six Months Ended     June 30,
	2012				2011			2012				2011
Net income		$	275			$	238		$	470			$	481
Preferred stock dividends			(14	)			—			(14	)			—
Net income available to common stockholders (1)		$	261			$	238		$	456			$	481
Weighted-average common shares outstanding — basic			1,273				1,207			1,272				1,205
Common stock equivalent shares related to stock incentive plans			1				3			1				3
Weighted-average common shares outstanding — diluted (2)			1,274				1,210			1,273				1,208
Basic EPS		$	.20			$	.20		$	.36			$	.40
Diluted EPS		$	.20			$	.20		$	.36			$	.40

⁽¹⁾  Net income available to participating securities (unvested restricted shares) was not material for the second quarters or first halves of 2012 or 2011.

⁽²⁾  Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 59 million and 42 million shares for the second quarters of 2012 and 2011, respectively, and 61 million and 43 million shares for the first halves of 2012 and 2011, respectively.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 24, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Trading Symbol	SCHW
Entity Registrant Name	SCHWAB CHARLES CORP
Entity Central Index Key	0000316709
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,274,106,165

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Regulatory Requirements

6 Months Ended

Jun. 30, 2012

Regulatory Requirements

11. Regulatory Requirements

CSC is a savings and loan holding company and Schwab Bank, CSC’s depository institution subsidiary, is a federal savings bank. CSC is subject to supervision and regulation by the Board of Governors of the Federal Reserve System and Schwab Bank is subject to supervision and regulation by the Office of the Comptroller of the Currency. CSC is currently not subject to specific statutory capital requirements, however CSC is required to serve as a source of strength for Schwab Bank. Under the “Dodd-Frank Wall Street Reform and Consumer Protection Act”, CSC will be subject to new minimum leverage and minimum risk-based capital ratio requirements that will be set by the Federal Reserve that are at least as stringent as the requirements generally applicable to insured depository institutions as of July 21, 2011.

Schwab Bank is required to maintain minimum capital levels as specified in federal banking laws and 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 Schwab Bank. At June 30, 2012, CSC and Schwab Bank met the capital level requirements.

The regulatory capital and ratios for Schwab Bank at June 30, 2012, are as follows:

	Actual					Minimum Capital Requirement					Minimum to be Well  Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 Risk-Based Capital	$	5,431		22.1	%	$	985		4.0	%	$	1,477		6.0	%
Total Risk-Based Capital	$	5,479		22.3	%	$	1,970		8.0	%	$	2,462		10.0	%
Tier 1 Leverage	$	5,431		7.6	%	$	2,876		4.0	%	$	3,595		5.0	%
Tangible Equity	$	5,431		7.6	%	$	1,438		2.0	%		N/A

N/A Not applicable.

Based on its regulatory capital ratios at June 30, 2012, Schwab Bank is considered well capitalized (the highest category) pursuant to banking regulatory guidelines. There are no conditions or events since June 30, 2012, that management believes have changed Schwab Bank’s capital category.

CSC’s principal U.S. broker-dealers are Schwab and optionsXpress, Inc. optionsXpress, Inc. is a wholly-owned subsidiary of optionsXpress. Schwab and optionsXpress, Inc. are both subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule). Schwab and optionsXpress, Inc. compute 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 ($250,000 for Schwab), 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 to its parent company or employees 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.

optionsXpress, Inc. is also subject to Commodity Futures Trading Commission Regulation 1.17 (Reg. 1.17) under the Commodity Exchange Act, which also requires the maintenance of minimum net capital. optionsXpress, Inc., as a futures commission merchant, is required to maintain minimum net capital equal to the greater of its net capital requirement under Reg. 1.17 ($1 million), or the sum of 8% of the total risk margin requirements for all positions carried in client accounts and 8% of the total risk margin requirements for all positions carried in non-client accounts (as defined in Reg. 1.17).

Net capital and net capital requirements for Schwab and optionsXpress, Inc. at June 30, 2012, are as follows:

	Net Capital		% of Aggregate Debit Balances			Minimum Net Capital Required		2% of Aggregate Debit Balances		Net Capital in Excess of Required Net Capital		Net Capital in Excess of 5% of Aggregate Debit Balances
Schwab	$	1,440		11	%	$	0.250	$	263	$	1,177	$	781
optionsXpress, Inc.	$	71		30	%	$	1	$	5	$	66	$	59

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Net income	$ 275	$ 238	$ 470	$ 481
Change in net unrealized gain on securities available for sale:
Net unrealized gain	119	16	208	37
Reclassification of impairment charges included in earnings	7	2	25	9
Other reclassifications included in earnings	(1)	1	(1)	1
Income tax effect	(47)	(8)	(86)	(18)
Total other comprehensive income	78	11	146	29
Comprehensive Income	$ 353	$ 249	$ 616	$ 510

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Loans to Banking Clients and Related Allowance for Loan Losses

6 Months Ended

Jun. 30, 2012

Loans to Banking Clients and Related Allowance for Loan Losses

5. Loans to Banking Clients and Related Allowance for Loan Losses

The composition of loans to banking clients by loan segment is as follows:

	June 30, 2012			December 31, 2011
Residential real estate mortgages	$	5,674		$	5,596
Home equity lines of credit		3,408			3,509
Personal loans secured by securities		787			742
Other		19			19
Total loans to banking clients (1)		9,888			9,866
Allowance for loan losses		(51	)		(54	)
Total loans to banking clients – net	$	9,837		$	9,812

⁽¹⁾  All loans are evaluated for impairment by loan segment.

Changes in the allowance for loan losses were as follows:

Three Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	37		$	13		$	50		$	37		$	16		$	53
Charge-offs		(1	)		(2	)		(3	)		(3	)		(2	)		(5	)
Recoveries		—			—			—			—			1			1
Provision for loan losses		(2	)		6			4			—			1			1
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Six Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	40		$	14		$	54		$	38		$	15		$	53
Charge-offs		(4	)		(4	)		(8	)		(6	)		(3	)		(9	)
Recoveries		1			—			1			—			1			1
Provision for loan losses		(3	)		7			4			2			3			5
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Included in the loan portfolio are nonaccrual loans totaling $47 million and $52 million at June 30, 2012 and December 31, 2011, respectively. There were no loans accruing interest that were contractually 90 days or more past due at June 30, 2012 or December 31, 2011. The amount of interest revenue that would have been earned on nonaccrual loans, versus actual interest revenue recognized on these loans, was not material to the Company’s results of operations in the first halves of 2012 or 2011. Nonperforming assets, which include nonaccrual loans and other real estate owned, totaled $52 million and $56 million at June 30, 2012 and December 31, 2011, respectively. The Company considers loan modifications in which it makes an economic concession to a borrower experiencing financial difficulty to be a troubled debt restructuring. Troubled debt restructurings were not material at June 30, 2012 or December 31, 2011.

In the first quarter of 2012, Schwab Bank launched a co-branded loan origination program for Schwab Bank clients (the Program) with Quicken Loans, Inc. (Quicken^® Loans^®). Pursuant to the Program, Quicken Loans originates and services loans for Schwab Bank clients and Schwab Bank sets the underwriting standards and pricing for those loans it intends to purchase for its portfolio. The first mortgage portion of the Program launched in March 2012 and these loans are included in the originated and purchased first mortgages loan class as of June 30, 2012, in the tables below. The home equity line of credit (HELOC) portion of the Program was launched in May 2012. Under the Program, Schwab Bank purchases all HELOC loans to Schwab Bank clients that are originated by Quicken Loans.

The delinquency aging analysis by loan class is as follows:

June 30, 2012	Current		30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Total loans
Residential real estate mortgages:
Originated and purchased first mortgages	$	5,458	$	19	$	3	$	34	$	56	$	5,514
Other purchased first mortgages		153		2		1		4		7		160
Home equity lines of credit		3,392		5		2		9		16		3,408
Personal loans secured by securities		787		—		—		—		—		787
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,809	$	26	$	6	$	47	$	79	$	9,888
December 31, 2011
Residential real estate mortgages:
Originated first mortgages	$	5,380	$	16	$	2	$	39	$	57	$	5,437
Purchased first mortgages		152		2		—		5		7		159
Home equity lines of credit		3,494		5		2		8		15		3,509
Personal loans secured by securities		741		1		—		—		1		742
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,786	$	24	$	4	$	52	$	80	$	9,866

In addition to monitoring the delinquency characteristics as presented in the aging analysis in the previous table, the Company monitors the credit quality of residential real estate mortgages and HELOCs by stratifying the portfolios by the year of origination, borrower Fair Issac & Company (FICO) scores at origination, updated FICO scores, and loan-to-value ratios at origination (Origination LTV), as presented in the following tables. Borrowers’ FICO scores are provided by an independent third party credit reporting service and were last updated in June 2012.

	Residential real estate mortgages
June 30, 2012	Originated  and purchased first mortgages		Other purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	513	$	58	$	571	$	1,243
2008		464		7		471		1,212
2009		415		8		423		384
2010		1,374		15		1,389		289
2011		1,824		68		1,892		223
2012		924		4		928		57
Total	$	5,514	$	160	$	5,674	$	3,408
Origination FICO
< 620	$	10	$	2	$	12	$	1
620 - 679		96		18		114		24
680 - 739		1,029		42		1,071		652
³ 740		4,379		98		4,477		2,731
Total	$	5,514	$	160	$	5,674	$	3,408
Updated FICO
< 620	$	55	$	6	$	61	$	45
620 - 679		154		11		165		105
680 - 739		857		37		894		516
³ 740		4,448		106		4,554		2,742
Total	$	5,514	$	160	$	5,674	$	3,408
Origination LTV (1)
£ 70%	$	3,586	$	96	$	3,682	$	2,307
71% - 89%		1,903		55		1,958		1,063
³ 90%		25		9		34		38
Total	$	5,514	$	160	$	5,674	$	3,408

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

	Residential real estate mortgages
December 31, 2011	Originated first mortgages		Purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	569	$	60	$	629	$	1,306
2008		538		8		546		1,262
2009		553		10		563		412
2010		1,757		17		1,774		311
2011		2,020		64		2,084		218
Total	$	5,437	$	159	$	5,596	$	3,509
Origination FICO
< 620	$	9	$	2	$	11	$	—
620 - 679		108		19		127		24
680 - 739		1,030		43		1,073		667
³ 740		4,290		95		4,385		2,818
Total	$	5,437	$	159	$	5,596	$	3,509
Updated FICO
< 620	$	55	$	7	$	62	$	49
620 - 679		162		11		173		112
680 - 739		831		44		875		520
³ 740		4,389		97		4,486		2,828
Total	$	5,437	$	159	$	5,596	$	3,509
Origination LTV (1)
£ 70%	$	3,507	$	91	$	3,598	$	2,378
71% - 89%		1,904		60		1,964		1,091
³ 90%		26		8		34		40
Total	$	5,437	$	159	$	5,596	$	3,509

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

The Company monitors the credit quality of personal loans secured by securities by reviewing the fair value of collateral to ensure adequate collateralization of at least 100% of the principal amount of the loans. All of these personal loans were fully collateralized by securities with fair values in excess of borrowing amounts at June 30, 2012 and December 31, 2011.

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Securities Available for Sale and Securities Held to Maturity

6 Months Ended

Jun. 30, 2012

Securities Available for Sale and Securities Held to Maturity

4. Securities Available for Sale and Securities Held to Maturity

The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale and securities held to maturity are as follows:

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	24,041	$	354	$	8	$	24,387
Non-agency residential mortgage-backed securities		923		1		148		776
Certificates of deposit		5,348		11		3		5,356
Corporate debt securities		4,825		23		3		4,845
U.S. agency notes		100		1		—		101
Asset-backed and other securities		4,565		21		2		4,584
Total securities available for sale	$	39,802	$	411	$	164	$	40,049
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	15,227	$	504	$	1	$	15,730
Other securities		279		1		1		279
Total securities held to maturity	$	15,506	$	505	$	2	$	16,009

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	20,666	$	269	$	14	$	20,921
Non-agency residential mortgage-backed securities		1,130		—		223		907
Certificates of deposit		3,623		2		3		3,622
Corporate debt securities		3,592		5		26		3,571
U.S. agency notes		1,795		5		—		1,800
Asset-backed and other securities		3,144		7		7		3,144
Total securities available for sale	$	33,950	$	288	$	273	$	33,965
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	14,770	$	430	$	2	$	15,198
Other securities		338		3		—		341
Total securities held to maturity	$	15,108	$	433	$	2	$	15,539

A summary of securities with unrealized losses, aggregated by category and period of continuous unrealized loss, is as follows:

	Less than 12 months				12 months or longer				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	860	$	4	$	243	$	4	$	1,103	$	8
Non-agency residential mortgage-backed securities		—		—		702		148		702		148
Certificates of deposit		321		2		399		1		720		3
Corporate debt securities		894		3		—		—		894		3
Asset-backed and other securities		1,555		2		—		—		1,555		2
Total	$	3,630	$	11	$	1,344	$	153	$	4,974	$	164
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	116	$	1	$	—	$	—	$	116	$	1
Other securities		99		1		—		—		99		1
Total	$	215	$	2	$	—	$	—	$	215	$	2
Total securities with unrealized losses (1)	$	3,845	$	13	$	1,344	$	153	$	5,189	$	166

⁽¹⁾  The number of investment positions with unrealized losses totaled 170 for securities available for sale and 3 for securities held to maturity.

	Less than 12 months				12 months or longer				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available for sale:
U.S. agency residential mortgage-backed securities	$	5,551	$	14	$	—	$	—	$	5,551	$	14
Non-agency residential mortgage-backed securities		121		8		746		215		867		223
Certificates of deposit		2,158		3		—		—		2,158		3
Corporate debt securities		1,888		26		—		—		1,888		26
Asset-backed and other securities		1,376		6		152		1		1,528		7
Total	$	11,094	$	57	$	898	$	216	$	11,992	$	273
Securities held to maturity:
U.S. agency residential mortgage-backed securities	$	384	$	2	$	—	$	—	$	384	$	2
Total	$	384	$	2	$	—	$	—	$	384	$	2
Total securities with unrealized losses (1)	$	11,478	$	59	$	898	$	216	$	12,376	$	275

⁽¹⁾  The number of investment positions with unrealized losses totaled 296 for securities available for sale and 3 for securities held to maturity.

Unrealized losses in securities available for sale of $164 million as of June 30, 2012, were concentrated in non-agency residential mortgage-backed securities. Included in non-agency residential mortgage-backed securities are securities collateralized by loans that are considered to be “Prime” (defined as loans to borrowers with a Fair Isaac & Company credit score of 620 or higher at origination), and “Alt-A” (defined as Prime loans with reduced documentation at origination). At June 30, 2012, the amortized cost and fair value of Alt-A residential mortgage-backed securities were $343 million and $265 million, respectively.

Certain Alt-A and Prime residential mortgage-backed securities experienced continued credit deterioration in the first half of 2012, including increased payment delinquency rates and losses on foreclosures of underlying mortgages. In addition, the Company increased the projected default rates for modified loans in the first quarter of 2012. Based on the Company’s cash flow projections, management determined that it does not expect to recover all of the amortized cost of these securities and therefore determined that these securities were other-than-temporarily impaired (OTTI). The Company employs a buy and hold strategy relative to its mortgage-related securities, and does not intend to sell these securities and it will not be required to sell these securities before anticipated recovery of the unrealized losses on these securities. Further, the Company has adequate liquidity at June 30, 2012, with cash and cash equivalents totaling $8.1 billion, a loan-to-deposit ratio of 15%, adequate access to short-term borrowing facilities and regulatory capital ratios in excess of “well capitalized” levels. Because the Company does not intend to sell these securities and it is not “more likely than not” that the Company will be required to sell these securities, the Company recognized an impairment charge equal to the securities’ expected credit losses of $7 million and $25 million during the second quarter and first half of 2012, respectively. The expected credit losses were measured as the difference between the present value of expected cash flows and the amortized cost of the securities. Further deterioration in the performance of the underlying loans in the Company’s residential mortgage-backed securities portfolio could result in the recognition of additional impairment charges.

Actual credit losses on the Company’s residential mortgage-backed securities were not material during the second quarters or first halves of 2012 or 2011.

The following table is a rollforward of the amount of credit losses recognized in earnings for OTTI securities held by the Company during the period for which a portion of the impairment was recognized in other comprehensive income:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Balance at beginning of period	$	145	$	103	$	127	$	96
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was not previously recognized		4		2		5		2
Credit losses recognized into current period earnings on debt securities for which an other-than-temporary impairment was previously recognized		3		—		20		7
Balance at end of period	$	152	$	105	$	152	$	105

The maturities of securities available for sale and securities held to maturity at June 30, 2012, are as follows:

	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years		Total
Securities available for sale:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	3,422	$	20,965	$	24,387
Non-agency residential mortgage-backed securities (1)		—		—		9		767		776
Certificates of deposit		3,575		1,781		—		—		5,356
Corporate debt securities		734		4,111		—		—		4,845
U.S. agency notes		—		101		—		—		101
Asset-backed and other securities		300		372		669		3,243		4,584
Total fair value	$	4,609	$	6,365	$	4,100	$	24,975	$	40,049
Total amortized cost	$	4,605	$	6,338	$	3,986	$	24,873	$	39,802
Securities held to maturity:
U.S. agency residential mortgage-backed securities (1)	$	—	$	—	$	5,725	$	10,005	$	15,730
Other securities		117		162		—		—		279
Total fair value	$	117	$	162	$	5,725	$	10,005	$	16,009
Total amortized cost	$	117	$	162	$	5,521	$	9,706	$	15,506

⁽¹⁾  Residential mortgage-backed securities have been allocated over maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

Proceeds and gross realized gains (losses) from sales of securities available for sale are as follows:

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Proceeds	$	1,073	$	250	$	1,323	$	450
Gross realized gains	$	2	$	1	$	2	$	1
Gross realized losses	$	—	$	—	$	—	$	—

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Loans to Banking Clients and Related Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2012

Composition of Loans to Banking Clients by Loan Segment

The composition of loans to banking clients by loan segment is as follows:

	June 30, 2012			December 31, 2011
Residential real estate mortgages	$	5,674		$	5,596
Home equity lines of credit		3,408			3,509
Personal loans secured by securities		787			742
Other		19			19
Total loans to banking clients (1)		9,888			9,866
Allowance for loan losses		(51	)		(54	)
Total loans to banking clients – net	$	9,837		$	9,812

⁽¹⁾  All loans are evaluated for impairment by loan segment.

Changes in Allowance for Loan Losses

Changes in the allowance for loan losses were as follows:

Three Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	37		$	13		$	50		$	37		$	16		$	53
Charge-offs		(1	)		(2	)		(3	)		(3	)		(2	)		(5	)
Recoveries		—			—			—			—			1			1
Provision for loan losses		(2	)		6			4			—			1			1
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Six Months Ended	June 30, 2012									June 30, 2011
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	40		$	14		$	54		$	38		$	15		$	53
Charge-offs		(4	)		(4	)		(8	)		(6	)		(3	)		(9	)
Recoveries		1			—			1			—			1			1
Provision for loan losses		(3	)		7			4			2			3			5
Balance at end of period	$	34		$	17		$	51		$	34		$	16		$	50

Delinquency Aging Analysis by Loan Class

The delinquency aging analysis by loan class is as follows:

June 30, 2012	Current		30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Total loans
Residential real estate mortgages:
Originated and purchased first mortgages	$	5,458	$	19	$	3	$	34	$	56	$	5,514
Other purchased first mortgages		153		2		1		4		7		160
Home equity lines of credit		3,392		5		2		9		16		3,408
Personal loans secured by securities		787		—		—		—		—		787
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,809	$	26	$	6	$	47	$	79	$	9,888
December 31, 2011
Residential real estate mortgages:
Originated first mortgages	$	5,380	$	16	$	2	$	39	$	57	$	5,437
Purchased first mortgages		152		2		—		5		7		159
Home equity lines of credit		3,494		5		2		8		15		3,509
Personal loans secured by securities		741		1		—		—		1		742
Other		19		—		—		—		—		19
Total loans to banking clients	$	9,786	$	24	$	4	$	52	$	80	$	9,866

Credit Quality of Residential Real Estate Mortgages and HELOCs by Reviewing FICO Scores at Origination, Current FICO Scores, Loan-To-Value Ratio

In addition to monitoring the delinquency characteristics as presented in the aging analysis in the previous table, the Company monitors the credit quality of residential real estate mortgages and HELOCs by stratifying the portfolios by the year of origination, borrower Fair Issac & Company (FICO) scores at origination, updated FICO scores, and loan-to-value ratios at origination (Origination LTV), as presented in the following tables. Borrowers’ FICO scores are provided by an independent third party credit reporting service and were last updated in June 2012.

	Residential real estate mortgages
June 30, 2012	Originated  and purchased first mortgages		Other purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	513	$	58	$	571	$	1,243
2008		464		7		471		1,212
2009		415		8		423		384
2010		1,374		15		1,389		289
2011		1,824		68		1,892		223
2012		924		4		928		57
Total	$	5,514	$	160	$	5,674	$	3,408
Origination FICO
< 620	$	10	$	2	$	12	$	1
620 - 679		96		18		114		24
680 - 739		1,029		42		1,071		652
³ 740		4,379		98		4,477		2,731
Total	$	5,514	$	160	$	5,674	$	3,408
Updated FICO
< 620	$	55	$	6	$	61	$	45
620 - 679		154		11		165		105
680 - 739		857		37		894		516
³ 740		4,448		106		4,554		2,742
Total	$	5,514	$	160	$	5,674	$	3,408
Origination LTV (1)
£ 70%	$	3,586	$	96	$	3,682	$	2,307
71% - 89%		1,903		55		1,958		1,063
³ 90%		25		9		34		38
Total	$	5,514	$	160	$	5,674	$	3,408

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At June 30, 2012, $746 million of $3.4 billion in HELOCs were in a first lien position.

	Residential real estate mortgages
December 31, 2011	Originated first mortgages		Purchased first mortgages		Total		Home equity lines of credit
Year of origination
Pre-2008	$	569	$	60	$	629	$	1,306
2008		538		8		546		1,262
2009		553		10		563		412
2010		1,757		17		1,774		311
2011		2,020		64		2,084		218
Total	$	5,437	$	159	$	5,596	$	3,509
Origination FICO
< 620	$	9	$	2	$	11	$	—
620 - 679		108		19		127		24
680 - 739		1,030		43		1,073		667
³ 740		4,290		95		4,385		2,818
Total	$	5,437	$	159	$	5,596	$	3,509
Updated FICO
< 620	$	55	$	7	$	62	$	49
620 - 679		162		11		173		112
680 - 739		831		44		875		520
³ 740		4,389		97		4,486		2,828
Total	$	5,437	$	159	$	5,596	$	3,509
Origination LTV (1)
£ 70%	$	3,507	$	91	$	3,598	$	2,378
71% - 89%		1,904		60		1,964		1,091
³ 90%		26		8		34		40
Total	$	5,437	$	159	$	5,596	$	3,509

⁽¹⁾  The computation of the Origination LTV ratio for a HELOC includes any first lien mortgage outstanding on the same property at the time of origination. At December 31, 2011, $755 million of $3.5 billion in HELOCs were in a first lien position.

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information

12. Segment Information

The Company structures its operating segments according to its clients and the services provided to those clients. The Company’s two reportable segments are Investor Services and Institutional Services.

The Company evaluates the performance of its segments on a pre-tax basis, excluding items such as significant nonrecurring gains, impairment charges on non-financial assets, discontinued operations, extraordinary items, and significant restructuring and other charges. 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 with other segments within the Company.

Financial information for the Company’s reportable segments is presented in the following table:

	Investor Services						Institutional Services						Unallocated						Total
Three Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	271		$	275		$	227		$	227		$	(2	)	$	—		$	496		$	502
Net interest revenue		385			387			73			64			—			—			458			451
Trading revenue		147			136			72			70			—			(1	)		219			205
Other (1)		27			16			21			19			73			—			121			35
Provision for loan losses		(3	)		(1	)		(1	)		—			—			—			(4	)		(1	)
Net impairment losses on securities		(6	)		(2	)		(1	)		—			—			—			(7	)		(2	)
Total net revenues		821			811			391			380			71			(1	)		1,283			1,190
Expenses Excluding Interest		587			547			264			258			—			(1	)		851			804
Income before taxes on income	$	234		$	264		$	127		$	122		$	71		$	—		$	432		$	386
Taxes on income																				157			148
Net Income																			$	275		$	238
	Investor Services						Institutional Services						Unallocated						Total
Six Months Ended June 30,	2012			2011			2012			2011			2012			2011			2012			2011
Net Revenues:
Asset management and administration fees	$	531		$	551		$	450		$	453		$	(1	)	$	—		$	980		$	1,004
Net interest revenue		750			760			142			127			—			—			892			887
Trading revenue		310			296			152			150			—			—			462			446
Other (1)		54			36			41			38			72			—			167			74
Provision for loan losses		(3	)		(4	)		(1	)		(1	)		—			—			(4	)		(5	)
Net impairment losses on securities		(22	)		(8	)		(3	)		(1	)		—			—			(25	)		(9	)
Total net revenues		1,620			1,631			781			766			71			—			2,472			2,397
Expenses Excluding Interest		1,193			1,101			534			518			—			(2	)		1,727			1,617
Income before taxes on income	$	427		$	530		$	247		$	248		$	71		$	2		$	745		$	780
Taxes on income																				275			299
Net Income																			$	470		$	481

⁽¹⁾  Unallocated amount includes a pre-tax gain of $70 million relating to a confidential resolution of a vendor dispute in the second quarter of 2012.

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Preferred Stock

6 Months Ended

Jun. 30, 2012

Preferred Stock

8. Preferred Stock

The Company was authorized to issue 9,940,000 shares of preferred stock, $0.01 par value, at both June 30, 2012, and December 31, 2011. There were no shares of preferred stock issued and outstanding at December 31, 2011. The Company’s preferred stock issued and outstanding as of June 30, 2012, are as follows:

	Shares Issued and Outstanding (In thousands)		Liquidation Preference Per Share		Liquidation Preference		Carrying Value
Series A		400	$	1,000	$	400	$	394
Series B		485	$	1,000		485		469
Total Preferred Stock		885			$	885	$	863

In June 2012, the Company issued and sold 19,400,000 depositary shares, each representing a 1/40^th ownership interest in a share of 6.00% non-cumulative perpetual preferred stock, Series B, equivalent to $25 per depositary share (Series B Preferred Stock). Net proceeds received from the sale were $469 million. The Series B Preferred Stock has no stated maturity and has a fixed dividend rate of 6.00%. Dividends, if declared, will be payable quarterly in arrears. Under the terms of the Series B Preferred Stock, the Company’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 B Preferred Stock, is subject to restrictions in the event that the Company does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series B Preferred Stock for the immediately preceding dividend period. The Series B Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after September 1, 2017, or, in whole but not in part, within 90 days following a regulatory capital treatment event as defined in its Certificate of Designations.

In January 2012, the Company issued and sold 400,000 shares of fixed-to-floating rate non-cumulative perpetual preferred stock, Series A (Series A Preferred Stock). Net proceeds received from the sale were $394 million. The Series A Preferred Stock has no stated maturity and has a fixed dividend rate of 7.000% until February 2022 and a floating rate equal to three-month LIBOR plus 4.820% thereafter. During the fixed rate period, dividends, if declared, will be payable semi-annually in arrears. During the floating rate period, dividends, if declared, will be payable quarterly in arrears. Dividends will not be cumulative. Under the terms of the Series A Preferred Stock, the Company’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 A Preferred Stock, is subject to restrictions in the event that the Company does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series A Preferred Stock for the immediately preceding dividend period. The Series A Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after February 1, 2022, or, in whole but not in part, within 90 days following a regulatory capital treatment event as defined in its Certificate of Designations.

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Financial Information for Reportable Segments (Parenthetical) (Detail) (Unallocated, USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2012
Unallocated
Segment Reporting Information [Line Items]
Pretax gain related to confidential resolution of a vendor dispute	$ 70

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies

6. Commitments and Contingencies

The Company has clients that sell (i.e., write) listed option contracts that are cleared by various clearing houses. The clearing houses establish margin requirements on these transactions. The Company partially satisfies the margin requirements by arranging unsecured standby letter of credit agreements (LOCs), in favor of the clearing houses, which are issued by multiple banks. At June 30, 2012, the aggregate face amount of these LOCs totaled $350 million. In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients. Schwab satisfies the collateral requirements by arranging LOCs in favor of these brokerage clients, which are issued by multiple banks. At June 30, 2012, the aggregate face amount of these LOCs totaled $110 million. There were no funds drawn under any of these LOCs at June 30, 2012.

The Company 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. The Company’s liability under these arrangements is not quantifiable and may exceed the cash and securities it has posted as collateral. However, 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: The Company 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. In addition, the Company is responding to certain litigation claims brought against former subsidiaries pursuant to indemnities it has provided to purchasers of those entities.

The Company 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. With respect to all other pending matters, based on current information and consultation with counsel, it does not appear that the outcome of any such matter could be material to the financial condition, operating results or cash flows of the Company. However, 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; potential opportunities for settlement and the status of any settlement discussions; and potential insurance coverage and indemnification. Often, as in the case of the Auction Rate Securities Regulatory Inquiries and Total Bond Market Fund Litigation matters described below, it is not possible to reasonably estimate potential liability, if any, or 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.

Auction Rate Securities Regulatory Inquiries: Schwab has been responding to industry wide inquiries from federal and state regulators regarding sales of auction rate securities to clients who were unable to sell their holdings when the normal auction process for those securities froze unexpectedly in February 2008. On August 17, 2009, a civil complaint was filed against Schwab in New York state court by the Attorney General of the State of New York (NYAG) alleging material misrepresentations and omissions by Schwab regarding the risks of auction rate securities, and seeking restitution, disgorgement, penalties and other relief, including repurchase of securities held in client accounts. As reflected in a statement issued August 17, 2009, Schwab has responded that the allegations are without merit, and has been contesting all charges. By order dated October 24, 2011, the court granted Schwab’s motion to dismiss the complaint. On November 30, 2011, the NYAG filed notice of its intention to appeal the ruling.

Total Bond Market Fund Litigation: On August 28, 2008, a class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of investors in the Schwab Total Bond Market Fund™ (Northstar lawsuit). The lawsuit, which alleges violations of state law and federal securities law in connection with the fund’s investment policy, names Schwab Investments (registrant and issuer of the fund’s shares) and CSIM as defendants. Allegations include that the fund improperly deviated from its stated investment objectives by investing in collateralized mortgage obligations (CMOs) and investing more than 25% of fund assets in CMOs and mortgage-backed securities without obtaining a shareholder vote. Plaintiffs seek unspecified compensatory and rescission damages, unspecified equitable and injunctive relief, and costs and attorneys’ fees. Plaintiffs’ federal securities law claim and certain of plaintiffs’ state law claims were dismissed in proceedings before the court and following a successful petition by defendants to the Ninth Circuit Court of Appeals. On August 8, 2011, the court dismissed plaintiffs’ remaining claims with prejudice. Plaintiffs have appealed to the Ninth Circuit, where the case is currently pending.

optionsXpress Regulatory Matters: optionsXpress entities and individual employees have been responding to certain pending regulatory matters which predate the Company’s acquisition of optionsXpress. On April 16, 2012, optionsXpress, Inc. was charged by the Securities and Exchange Commission (SEC) in an administrative proceeding alleging violations of the firm’s close-out obligations under SEC Regulation SHO (short sale delivery rules) in connection with certain customer trading activity. Separately, on April 19, 2012, the SEC instituted an administrative proceeding alleging violations of the broker-dealer registration requirements by an unregistered optionsXpress entity. The Company disputes the allegations and is contesting the charges in the two matters. The Company recorded a contingent liability associated with these matters, which was not material at June 30, 2012.

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Fair Values of Assets and Liabilities

6 Months Ended

Jun. 30, 2012

Fair Values of Assets and Liabilities

7. 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 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. The Company did not transfer any assets or liabilities between Level 1 and Level 2 during the first half of 2012, or the year ended December 31, 2011.

• 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. The Company did not have any financial assets or liabilities utilizing Level 3 inputs as of June 30, 2012, or December 31, 2011.

Assets and Liabilities Recorded at Fair Value

The Company’s assets recorded at fair value include certain cash equivalents, investments segregated and on deposit for regulatory purposes, other securities owned, and securities available for sale. The Company uses the market and income approaches 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. 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. The Company validates prices received from the pricing services using various methods, including comparison to prices received from additional pricing services, comparison to quoted market prices, where available, comparison to internal valuation models, and review of other relevant market data. When comparing to relevant market data with a bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. The Company 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 a material difference in the recorded amounts. At June 30, 2012, and December 31, 2011, the Company did not adjust prices received from independent third-party pricing services. Liabilities recorded at fair value were not material, and therefore are not included in the following tables.

The following tables present the fair value hierarchy for assets measured at fair value:

June 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	162	$	—	$	—	$	162
Commercial paper		—		682		—		682
Total cash equivalents		162		682		—		844
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,624		—		2,624
Corporate debt securities		—		678		—		678
Total investments segregated and on deposit for regulatory purposes		—		3,302		—		3,302
Other securities owned:
Schwab Funds® money market funds		135		—		—		135
Equity and bond mutual funds		186		—		—		186
State and municipal debt obligations		—		71		—		71
Equity, U.S. Government and corporate debt, and other securities		3		30		—		33
Total other securities owned		324		101		—		425
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		24,387		—		24,387
Non-agency residential mortgage-backed securities		—		776		—		776
Certificates of deposit		—		5,356		—		5,356
Corporate debt securities		—		4,845		—		4,845
U.S. agency notes		—		101		—		101
Asset-backed and other securities		—		4,584		—		4,584
Total securities available for sale		—		40,049		—		40,049
Total	$	486	$	44,134	$	—	$	44,620

December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Cash equivalents:
Money market funds	$	8	$	—	$	—	$	8
Commercial paper		—		814		—		814
Total cash equivalents		8		814		—		822
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit		—		2,374		—		2,374
Corporate debt securities		—		767		—		767
U.S. Government securities		—		650		—		650
Total investments segregated and on deposit for regulatory purposes		—		3,791		—		3,791
Other securities owned:
Schwab Funds® money market funds		332		—		—		332
Equity and bond mutual funds		183		—		—		183
State and municipal debt obligations		—		46		—		46
Equity, U.S. Government and corporate debt, and other securities		12		20		—		32
Total other securities owned		527		66		—		593
Securities available for sale:
U.S. agency residential mortgage-backed securities		—		20,921		—		20,921
Non-agency residential mortgage-backed securities		—		907		—		907
Certificates of deposit		—		3,622		—		3,622
Corporate debt securities		—		3,571		—		3,571
U.S. agency notes		—		1,800		—		1,800
Asset-backed and other securities		—		3,144		—		3,144
Total securities available for sale		—		33,965		—		33,965
Total	$	535	$	38,636	$	—	$	39,171

Financial Instruments Not Recorded at Fair Value

Descriptions of the valuation methodologies and assumptions used to estimate the fair value of financial instruments not recorded at fair value are described below. There were no significant changes in these methodologies or assumptions during the first half of 2012.

Cash and cash equivalents, receivables from/payables to brokers, dealers, and clearing organizations, and receivables from/payables to brokerage clients are short-term in nature and accordingly are recorded at amounts that approximate fair value. Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Receivables from/payables to brokers, dealers, and clearing organizations, and receivables from/payables to brokerage clients are recorded at or near transaction price and historically have been settled or converted to cash at approximately that value.

Cash and investments segregated and on deposit for regulatory purposes include securities purchased under resale agreements. Securities purchased under resale agreements are recorded at par value plus accrued interest. Securities purchased under resale agreements are short-term in nature and are backed by collateral that both exceeds the carrying value of the resale agreement and is highly liquid in nature. Accordingly, the carrying value approximates fair value.

Securities held to maturity include U.S. agency residential mortgage-backed securities, asset-backed securities collateralized by credit card and auto loans, and corporate debt securities. Securities held to maturity are recorded at amortized cost. The fair value of these securities is obtained using an independent third-party pricing service similar to investment assets recorded at fair value as discussed above.

Loans to banking clients primarily include adjustable rate residential first-mortgage and HELOC loans. Loans to banking clients are recorded at carrying value net of an allowance for loan losses. The fair value of the Company’s loans to banking clients is estimated based on prices obtained from independent third-party pricing services for mortgage-backed securities collateralized by similar types of loans similar to investment assets recorded at fair value as discussed above. The Company may adjust the independent third-party prices to account for differences between the weighted average lives and coupon rates of comparable mortgage-backed securities and loans to banking clients.

Loans held for sale include fixed-rate and adjustable-rate residential first-mortgage loans intended for sale. Loans held for sale are recorded at the lower of cost or fair value. The fair value of the Company’s loans held for sale is estimated using quoted market prices for securities backed by similar types of loans.

Other assets – Financial instruments included in other assets primarily consist of cost method investments and Federal Home Loan Bank (FHLB) stock, whose carrying values approximate their fair values. FHLB stock is recorded at par, which approximates fair value as there is a quoted market price for this stock based on the requirements of the FHLB.

Deposits from banking clients – The Company considers the fair value of deposits with no stated maturity, such as deposits from banking clients, to be equal to the amount payable on demand as of the balance sheet date.

Accrued expenses and other liabilities – Financial instruments included in accrued expenses and other liabilities consist of drafts payable and certain amounts due under contractual obligations which are short-term in nature and accordingly are recorded at amounts that approximate fair value.

Long-term debt includes Senior Notes, Senior Medium-Term Notes, Series A, Junior Subordinated Notes, and a finance lease obligation. The fair values of the Senior Notes, Senior Medium-Term Notes, Series A, and Junior Subordinated Notes are estimated using indicative, non-binding quotes from independent brokers. The Company validates indicative prices for its debt through comparison to other independent non-binding quotes. The finance lease obligation is recorded at carrying value, which approximates fair value.

Firm commitments to extend credit – The Company extends credit to banking clients through HELOC and personal loans secured by securities. The Company considers the fair value of these unused commitments to be not material because the interest rates earned on these balances are based on market interest rate indices and reset monthly. Future utilization of HELOC and personal loan commitments will earn a then-current market interest rate. The Company does not charge a fee to maintain a HELOC or personal loan.

The following table presents the fair value hierarchy for financial instruments not recorded at fair value at June 30, 2012:

	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at Fair Value
Assets:
Cash and cash equivalents	$	7,245	$	—	$	7,245	$	—	$	7,245
Cash and investments segregated and on deposit for regulatory purposes		19,417		—		19,417		—		19,417
Receivables from brokers, dealers, and clearing organizations		317		—		317		—		317
Receivables from brokerage clients – net		11,952		—		11,952		—		11,952
Securities held to maturity:
U.S. agency residential mortgage-backed securities		15,227		—		15,730		—		15,730
Other securities		279		—		279		—		279
Total securities held to maturity		15,506		—		16,009		—		16,009
Loans to banking clients – net:
Residential real estate mortgages		5,640		—		5,742		—		5,742
Home equity lines of credit		3,391		—		3,368		—		3,368
Personal loans secured by securities		787		—		787		—		787
Other		19		—		19		—		19
Total loans to banking clients – net		9,837		—		9,916		—		9,916
Loans held for sale		2		—		3		—		3
Other assets		62		—		62		—		62
Total	$	64,338	$	—	$	64,921	$	—	$	64,921
Liabilities:
Deposits from banking clients	$	66,257	$	—	$	66,257	$	—	$	66,257
Payables to brokers, dealers, and clearing organizations		1,332		—		1,332		—		1,332
Payables to brokerage clients		31,833		—		31,833		—		31,833
Accrued expenses and other liabilities		501		—		501		—		501
Long-term debt		1,999		—		2,189		—		2,189
Total	$	101,922	$	—	$	102,112	$	—	$	102,112

The following table presents the Company’s fair value estimates for financial instruments not recorded at fair value at December 31, 2011. The table excludes short-term financial assets and liabilities, for which carrying amounts approximate fair value, and financial instruments recorded at fair value.

	Carrying Amount		Fair Value
Financial Assets:
Securities held to maturity	$	15,108	$	15,539
Loans to banking clients – net	$	9,812	$	9,671
Loans held for sale	$	70	$	73
Financial Liabilities:
Long-term debt	$	2,001	$	2,159

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2012

Accumulated Other Comprehensive Income

9. Accumulated Other Comprehensive Income

Accumulated other comprehensive income (loss) represents cumulative gains and losses that are not reflected in earnings. Accumulated other comprehensive income balances were:

	Net unrealized gain on securities available for sale		Other			Total accumulated other comprehensive income
Balance at December 31, 2010	$	17	$	(1	)	$	16
Other net changes		28		1			29
Balance at June 30, 2011	$	45	$	—		$	45
Balance at December 31, 2011	$	10	$	(2	)	$	8
Other net changes		145		1			146
Balance at June 30, 2012	$	155	$	(1	)	$	154

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Securities with Unrealized Losses, Aggregated by Category and Period of Continuous Unrealized Loss (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value	$ 3,630		$ 11,094
Securities available for sale Less than 12 months Unrealized Losses	11		57
Securities available for sale 12 months or longer Fair Value	1,344		898
Securities available for sale 12 months or longer Unrealized Losses	153		216
Total Securities available for sale with unrealized losses Total Fair Value	4,974		11,992
Total Securities available for sale with unrealized losses Total Unrealized Losses	164		273
Securities held to maturity Less than 12 months Fair Value	215		384
Securities held to maturity Less than 12 months Unrealized Losses	2		2
Securities held to maturity 12 months or longer Fair Value
Securities held to maturity 12 months or longer Unrealized Losses
Total Securities held to maturity with unrealized losses Total Fair Value	215		384
Total Securities held to maturity with unrealized losses Total Unrealized Losses	2		2
Securities Less than 12 months Fair Value	3,845	[1]	11,478	[2]
Securities Less than 12 months Unrealized Losses	13	[1]	59	[2]
Securities 12 months or longer Fair Value	1,344	[1]	898	[2]
Securities 12 months or longer Unrealized Losses	153	[1]	216	[2]
Total securities with unrealized losses Total Fair Value	5,189	[1]	12,376	[2]
Total securities with unrealized losses Total Unrealized Losses	166	[1]	275	[2]
U.S. agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value	860		5,551
Securities available for sale Less than 12 months Unrealized Losses	4		14
Securities available for sale 12 months or longer Fair Value	243
Securities available for sale 12 months or longer Unrealized Losses	4
Total Securities available for sale with unrealized losses Total Fair Value	1,103		5,551
Total Securities available for sale with unrealized losses Total Unrealized Losses	8		14
Securities held to maturity Less than 12 months Fair Value	116		384
Securities held to maturity Less than 12 months Unrealized Losses	1		2
Securities held to maturity 12 months or longer Fair Value
Securities held to maturity 12 months or longer Unrealized Losses
Total Securities held to maturity with unrealized losses Total Fair Value	116		384
Total Securities held to maturity with unrealized losses Total Unrealized Losses	1		2
Non-agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value			121
Securities available for sale Less than 12 months Unrealized Losses			8
Securities available for sale 12 months or longer Fair Value	702		746
Securities available for sale 12 months or longer Unrealized Losses	148		215
Total Securities available for sale with unrealized losses Total Fair Value	702		867
Total Securities available for sale with unrealized losses Total Unrealized Losses	148		223
Certificates of deposit
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value	321		2,158
Securities available for sale Less than 12 months Unrealized Losses	2		3
Securities available for sale 12 months or longer Fair Value	399
Securities available for sale 12 months or longer Unrealized Losses	1
Total Securities available for sale with unrealized losses Total Fair Value	720		2,158
Total Securities available for sale with unrealized losses Total Unrealized Losses	3		3
Corporate debt securities
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value	894		1,888
Securities available for sale Less than 12 months Unrealized Losses	3		26
Total Securities available for sale with unrealized losses Total Fair Value	894		1,888
Total Securities available for sale with unrealized losses Total Unrealized Losses	3		26
Asset-backed and other securities
Investment [Line Items]
Securities available for sale Less than 12 months Fair Value	1,555		1,376
Securities available for sale Less than 12 months Unrealized Losses	2		6
Securities available for sale 12 months or longer Fair Value			152
Securities available for sale 12 months or longer Unrealized Losses			1
Total Securities available for sale with unrealized losses Total Fair Value	1,555		1,528
Total Securities available for sale with unrealized losses Total Unrealized Losses	2		7
Other securities
Investment [Line Items]
Securities held to maturity Less than 12 months Fair Value	99
Securities held to maturity Less than 12 months Unrealized Losses	1
Securities held to maturity 12 months or longer Fair Value
Securities held to maturity 12 months or longer Unrealized Losses
Total Securities held to maturity with unrealized losses Total Fair Value	99
Total Securities held to maturity with unrealized losses Total Unrealized Losses	$ 1

[1] The number of investment positions with unrealized losses totaled 170 for securities available for sale and 3 for securities held to maturity.

[2] The number of investment positions with unrealized losses totaled 296 for securities available for sale and 3 for securities held to maturity.

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Preferred Stock Issued and Outstanding (Detail) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Class of Stock [Line Items]
Shares Issued and Outstanding (In thousands)	885
Liquidation Preference	$ 885	$ 0
Carrying Value	863
Series A Preferred Stock
Class of Stock [Line Items]
Shares Issued and Outstanding (In thousands)	400
Liquidation Preference Per Share	$ 1,000
Liquidation Preference	400
Carrying Value	394
Series B Preferred Stock
Class of Stock [Line Items]
Shares Issued and Outstanding (In thousands)	485
Liquidation Preference Per Share	$ 1,000
Liquidation Preference	485
Carrying Value	$ 469

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Business Acquisition (Tables)

6 Months Ended

Jun. 30, 2012

Pro Forma Results of Operations

The following table presents pro forma financial information as if optionsXpress had been acquired prior to January 1, 2011. Pro forma net income reflects the impact of amortizing purchase accounting adjustments relating to intangible assets, net of tax, of $5 million and $10 million in the second quarter and first half of 2011, respectively.

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Net revenues	$	1,249	$	2,522
Net income	$	242	$	494
Basic EPS	$	.19	$	.39
Diluted EPS	$	.19	$	.39

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2012

Accumulated Other Comprehensive Income Balances

Accumulated other comprehensive income balances were:

	Net unrealized gain on securities available for sale		Other			Total accumulated other comprehensive income
Balance at December 31, 2010	$	17	$	(1	)	$	16
Other net changes		28		1			29
Balance at June 30, 2011	$	45	$	—		$	45
Balance at December 31, 2011	$	10	$	(2	)	$	8
Other net changes		145		1			146
Balance at June 30, 2012	$	155	$	(1	)	$	154

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Fair Value Estimates for Financial Instruments Excluding Short Term Financial Assets and Liabilities and Financial Instruments Recorded at Fair Value (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Carrying Amount
Financial Assets:
Securities held to maturity	$ 15,506	$ 15,108
Loans to banking clients - net	9,837	9,812
Loans held for sale	2	70
Financial Liabilities:
Long-term debt	1,999	2,001
Fair Value
Financial Assets:
Securities held to maturity	16,009	15,539
Loans to banking clients - net	9,916	9,671
Loans held for sale	3	73
Financial Liabilities:
Long-term debt	$ 2,189	$ 2,159

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Changes in Allowance for Loan Losses (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	$ 50	$ 53	$ 54	$ 53
Charge-offs	(3)	(5)	(8)	(9)
Recoveries		1	1	1
Provision for loan losses	4	1	4	5
Balance at end of period	51	50	51	50
Residential real estate mortgages
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	37	37	40	38
Charge-offs	(1)	(3)	(4)	(6)
Recoveries			1
Provision for loan losses	(2)		(3)	2
Balance at end of period	34	34	34	34
Home equity lines of credit
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	13	16	14	15
Charge-offs	(2)	(2)	(4)	(3)
Recoveries		1		1
Provision for loan losses	6	1	7	3
Balance at end of period	$ 17	$ 16	$ 17	$ 16

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Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 8,089	$ 8,679
Cash and investments segregated and on deposit for regulatory purposes (including resale agreements of $15,300 at June 30, 2012 and $17,899 at December 31, 2011)	22,723	26,034
Receivables from brokers, dealers, and clearing organizations	317	230
Receivables from brokerage clients - net	11,955	11,072
Other securities owned - at fair value	425	593
Securities available for sale	40,049	33,965
Securities held to maturity (fair value - $16,009 at June 30, 2012 and $15,539 at December 31, 2011)	15,506	15,108
Loans to banking clients - net	9,837	9,812
Loans held for sale	2	70
Equipment, office facilities, and property - net	677	685
Goodwill	1,165	1,161
Intangible assets - net	304	326
Other assets	767	818
Total assets	111,816	108,553
Liabilities and Stockholders' Equity
Deposits from banking clients	66,257	60,854
Payables to brokers, dealers, and clearing organizations	1,332	1,098
Payables to brokerage clients	31,833	35,489
Accrued expenses and other liabilities	1,285	1,397
Long-term debt	1,999	2,001
Total liabilities	102,706	100,839
Stockholders' equity:
Preferred stock - $.01 par value per share; aggregate liquidation preference of $885 at June 30, 2012 and $0 at December 31, 2011	863
Common stock - 3 billion shares authorized; $.01 par value per share; 1,487,543,446 shares issued	15	15
Additional paid-in capital	3,870	3,826
Retained earnings	8,280	7,978
Treasury stock, at cost - 213,494,172 shares at June 30, 2012 and 216,378,623 shares at December 31, 2011	(4,072)	(4,113)
Accumulated other comprehensive income	154	8
Total stockholders' equity	9,110	7,714
Total liabilities and stockholders' equity	$ 111,816	$ 108,553

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Business Acquisition

6 Months Ended

Jun. 30, 2012

Business Acquisition

3. Business Acquisition

On September 1, 2011, the Company completed its acquisition of all of the outstanding common shares of optionsXpress Holdings, Inc. (optionsXpress) for total consideration of $714 million. optionsXpress is an online brokerage firm primarily focused on equity option securities and futures. The optionsXpress^® brokerage platform provides active investors and traders trading tools, analytics and education to execute a variety of investment strategies. The combination of optionsXpress and Schwab offers active investors an additional level of service and platform capabilities.

Under the terms of the merger agreement, optionsXpress stockholders received 1.02 shares of the Company’s common stock for each share of optionsXpress stock. As a result, the Company issued 59 million shares of the Company’s common stock valued at $710 million, based on the closing price of the Company’s common stock on September 1, 2011. The Company also assumed optionsXpress’ stock-based compensation awards valued at $4 million. In allocating the purchase price based on estimated fair values of assets and liabilities assumed as of the acquisition date, the Company preliminarily recorded $511 million of goodwill and $285 million of intangible assets. The allocation of the purchase price is preliminary and subject to further adjustment as information relative to closing date fair values and related tax balances are finalized. The results of optionsXpress’ operations have been included in the Company’s condensed consolidated statements of income from the date of acquisition. The amounts of optionsXpress’ net revenues and net income for the second quarter of 2012 were $49 million and $6 million, respectively. The amounts of optionsXpress’ net revenues and net income for the first half of 2012 were $101 million and $8 million, respectively.

The following table presents pro forma financial information as if optionsXpress had been acquired prior to January 1, 2011. Pro forma net income reflects the impact of amortizing purchase accounting adjustments relating to intangible assets, net of tax, of $5 million and $10 million in the second quarter and first half of 2011, respectively.

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Net revenues	$	1,249	$	2,522
Net income	$	242	$	494
Basic EPS	$	.19	$	.39
Diluted EPS	$	.19	$	.39

The pro forma financial information above is presented for illustrative purposes only and is not necessarily indicative of the results that actually would have occurred had the acquisition been completed prior to January 1, 2011, nor is it indicative of the results of operations for future periods.

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Segment Information - Additional Information (Detail)	1 Months Ended
	Jun. 30, 2012 Segment
Segment Reporting Information [Line Items]
Number of reportable segments	2

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2012

EPS under Basic and Diluted Computations

EPS under the basic and diluted computations is as follows:

	Three Months Ended June 30,							Six Months Ended     June 30,
	2012				2011			2012				2011
Net income		$	275			$	238		$	470			$	481
Preferred stock dividends			(14	)			—			(14	)			—
Net income available to common stockholders (1)		$	261			$	238		$	456			$	481
Weighted-average common shares outstanding — basic			1,273				1,207			1,272				1,205
Common stock equivalent shares related to stock incentive plans			1				3			1				3
Weighted-average common shares outstanding — diluted (2)			1,274				1,210			1,273				1,208
Basic EPS		$	.20			$	.20		$	.36			$	.40
Diluted EPS		$	.20			$	.20		$	.36			$	.40

⁽¹⁾  Net income available to participating securities (unvested restricted shares) was not material for the second quarters or first halves of 2012 or 2011.

⁽²⁾  Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 59 million and 42 million shares for the second quarters of 2012 and 2011, respectively, and 61 million and 43 million shares for the first halves of 2012 and 2011, respectively.

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Maturities of Securities Available for Sale and Securities Held to Maturity (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Investment [Line Items]
Securities available for sale fair value Within 1 year	$ 4,609
Securities available for sale fair value After 1 year through 5 years	6,365
Securities available for sale fair value After 5 years through 10 years	4,100
Securities available for sale fair value After 10 years	24,975
Securities available for sale	40,049		33,965
Securities available for sale Within 1 year amortized cost	4,605
Securities available for sale After 1 year through 5 years amortized cost	6,338
Securities available for sale After 5 years through 10 years amortized cost	3,986
Securities available for sale After 10 years amortized cost	24,873
Securities available for sale Amortized Cost	39,802		33,950
Securities held to maturity Within 1 year	117
Securities held to maturity After 1 year through 5 years	162
Securities held to maturity After 5 years through 10 years	5,725
Securities held to maturity After 10 years	10,005
Securities held to maturity, fair value	16,009		15,539
Securities held to maturity Within 1 year amortized cost	117
Securities held to maturity After 1 year through 5 years amortized cost	162
Securities held to maturity After 5 years through 10 years amortized cost	5,521
Securities held to maturity After 10 years amortized cost	9,706
Securities held to maturity	15,506		15,108
U.S. agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale fair value After 5 years through 10 years	3,422	[1]
Securities available for sale fair value After 10 years	20,965	[1]
Securities available for sale	24,387	[1]	20,921
Securities available for sale Amortized Cost	24,041		20,666
Securities held to maturity After 5 years through 10 years	5,725	[1]
Securities held to maturity After 10 years	10,005	[1]
Securities held to maturity, fair value	15,730	[1]	15,198
Securities held to maturity	15,227		14,770
Non-agency residential mortgage-backed securities
Investment [Line Items]
Securities available for sale fair value After 5 years through 10 years	9	[1]
Securities available for sale fair value After 10 years	767	[1]
Securities available for sale	776	[1]	907
Securities available for sale Amortized Cost	923		1,130
Certificates of deposit
Investment [Line Items]
Securities available for sale fair value Within 1 year	3,575
Securities available for sale fair value After 1 year through 5 years	1,781
Securities available for sale	5,356		3,622
Securities available for sale Amortized Cost	5,348		3,623
Corporate debt securities
Investment [Line Items]
Securities available for sale fair value Within 1 year	734
Securities available for sale fair value After 1 year through 5 years	4,111
Securities available for sale	4,845		3,571
Securities available for sale Amortized Cost	4,825		3,592
U.S. agency notes
Investment [Line Items]
Securities available for sale fair value After 1 year through 5 years	101
Securities available for sale	101		1,800
Securities available for sale Amortized Cost	100		1,795
Asset-backed and other securities
Investment [Line Items]
Securities available for sale fair value Within 1 year	300
Securities available for sale fair value After 1 year through 5 years	372
Securities available for sale fair value After 5 years through 10 years	669
Securities available for sale fair value After 10 years	3,243
Securities available for sale	4,584		3,144
Securities available for sale Amortized Cost	4,565		3,144
Other securities
Investment [Line Items]
Securities held to maturity Within 1 year	117
Securities held to maturity After 1 year through 5 years	162
Securities held to maturity, fair value	279		341
Securities held to maturity	$ 279		$ 338

[1] Residential mortgage-backed securities have been allocated over maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

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Subsequent Event

6 Months Ended

Jun. 30, 2012

Subsequent Event

13. Subsequent Event

On July 31, 2012, the Company announced its decision to redeem all of the fixed-to-floating rate trust preferred securities of $300 million issued by Schwab Capital Trust I (the Trust). The trust preferred securities are being redeemed, along with the common securities issued by the Trust and held by the Company, as a result of the concurrent redemption in whole by the Company of the Junior Subordinated Notes held by the Trust which underlie the trust preferred securities. The redemption date for the trust preferred securities will be August 31, 2012, and the redemption price will be 100% of the liquidation amount of each trust preferred security, plus accumulated and unpaid distributions up to and including the redemption date. After the redemption date, the trust preferred securities will no longer be outstanding and distributions will no longer accrue.