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Bank Loans and Related Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
Bank Loans and Related Allowance for Credit Losses Bank Loans and Related Allowance for Credit Losses
The composition of bank loans and delinquency analysis by portfolio segment and class of financing receivable is as follows:
June 30, 2025Current30-59 days
past due		60-89 days
past due
>90 days past
due and other
nonaccrual loans (3)
Total past due
and other
nonaccrual loans		Total
loans		Allowance
for credit
losses		Total
bank
loans – net
Residential real estate:
First Mortgages (1,2)
$28,470 $32 $7 $33 $72 $28,542 $15 $28,527 
HELOCs (1,2)
420 1 — 2 3 423 1 422 
Total residential real estate28,890 33 7 35 75 28,965 16 28,949 
Pledged asset lines21,006 30 1 1 32 21,038 — 21,038 
Other423 — — 1 1 424 6 418 
Total bank loans$50,319 $63 $8 $37 $108 $50,427 $22 $50,405 
December 31, 2024        
Residential real estate:
First Mortgages (1,2)
$27,321 $37 $6 $25 $68 $27,389 $14 $27,375 
HELOCs (1,2)
421 — — 3 3 424 1 423 
Total residential real estate27,742 37 6 28 71 27,813 15 27,798 
Pledged asset lines17,010 8 — 6 14 17,024 — 17,024 
Other398 — — 1 1 399 6 393 
Total bank loans$45,150 $45 $6 $35 $86 $45,236 $21 $45,215 
(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $120 million and $112 million at June 30, 2025 and December 31, 2024, respectively.
(2) At both June 30, 2025 and December 31, 2024, 42% of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.
(3) There were no loans accruing interest that were contractually 90 days or more past due at June 30, 2025 or December 31, 2024.

At June 30, 2025, CSB had pledged the full balance of First Mortgages and HELOCs pursuant to a blanket lien status collateral arrangement to secure borrowing capacity on a secured credit facility with the FHLB (see Note 9).
Changes in the allowance for credit losses on bank loans were as follows:
First MortgagesHELOCsTotal residential real estatePledged asset linesOtherTotal
Balance at March 31, 2024$27 $1 $28 $— $4 $32 
Charge-offs— — — — — — 
Recoveries— — — — — — 
Provision for credit losses(13)— (13)— 1 (12)
Balance at June 30, 2024$14 $1 $15 $— $5 $20 
Balance at March 31, 2025$14 $1 $15 $— $6 $21 
Charge-offs— — — — — — 
Recoveries— — — — — — 
Provision for credit losses1 — 1 — — 1 
Balance at June 30, 2025$15 $1 $16 $— $6 $22 
Balance at December 31, 2023$32 $2 $34 $— $4 $38 
Charge-offs— — — — — — 
Recoveries— — — — — — 
Provision for credit losses(18)(1)(19)— 1 (18)
Balance at June 30, 2024$14 $1 $15 $— $5 $20 
Balance at December 31, 2024$14 $1 $15 $— $6 $21 
Charge-offs— — — — — — 
Recoveries— — — — — — 
Provision for credit losses1 — 1 — — 1 
Balance at June 30, 2025$15 $1 $16 $— $6 $22 

Consistent with Schwab’s loan charge-off policy for PALs as disclosed in Item 8 – Note 2 of the 2024 Form 10-K, the Company charges off any unsecured balances no later than 90 days past due. As of June 30, 2025, substantially all PALs are also subject to the collateral maintenance practical expedient under ASC 326 Financial Instruments — Credit Losses. All PALs were fully collateralized by securities with fair values in excess of borrowings as of June 30, 2025 and December 31, 2024, and no allowance for credit losses for PALs as of those dates was required.

The U.S. economy saw steady hiring and a modest inflation gain at the end of the second quarter of 2025, but continued to face tight monetary policy and geopolitical unrest amid a backdrop of elevated uncertainty relating to economic impacts of emerging trade policy. Management’s macroeconomic outlook reflects sustained current benchmark lending rates, with a softening labor market and modest home price appreciation. Though higher mortgage rates are easing demand and reducing borrower affordability, we expect constrained housing supply to keep home prices relatively stable. Furthermore, credit quality metrics in the Company’s bank loans portfolio remain very strong. As a result of these factors, we held projected loss rates constant at June 30, 2025, as compared to December 31, 2024.

Bank loan-related nonperforming assets consisted of nonaccrual loans of $37 million and $35 million at June 30, 2025 and December 31, 2024, respectively. Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02, “Financial Instruments — Credit Losses: Troubled Debt Restructurings and Vintage Disclosures” on January 1, 2023. At both June 30, 2025 and December 31, 2024, loan modifications to borrowers experiencing financial difficulty were not material.

Credit Quality

In addition to monitoring delinquency, Schwab monitors the credit quality of First Mortgages and HELOCs by stratifying the portfolios by the following:
•Year of origination;
•Borrower Fair Isaac Corporation (FICO) scores at origination (Origination FICO);
•Updated borrower FICO scores (Updated FICO);
•Loan-to-value (LTV) ratios at origination (Origination LTV); and
•Estimated Current LTV ratios (Estimated Current LTV).
Borrowers’ FICO scores are provided by an independent third-party credit reporting service and are generally updated quarterly. The Origination LTV and Estimated Current LTV for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is updated on a monthly basis by reference to a home price appreciation index.

The credit quality indicators of the Company’s First Mortgages and HELOCs are detailed below:
First Mortgages Amortized Cost Basis by Origination Year
June 30, 202520252024202320222021pre-2021Total First MortgagesRevolving HELOCs amortized cost basisHELOCs converted to term loansTotal HELOCs
Origination FICO
<620$— $1 $— $3 $1 $1 $6 $— $— $— 
620 – 67916 23 4 25 29 24 121 — 1 1 
680 – 739215 332 234 695 1,056 533 3,065 49 27 76 
≥7402,305 2,916 1,744 4,737 9,456 4,192 25,350 248 98 346 
Total$2,536 $3,272 $1,982 $5,460 $10,542 $4,750 $28,542 $297 $126 $423 
Origination LTV
≤70%$1,714 $2,248 $1,337 $4,057 $9,158 $3,886 $22,400 $279 $88 $367 
>70% – ≤90%822 1,024 645 1,403 1,384 863 6,141 18 37 55 
>90% – ≤100%— — — — — 1 1 — 1 1 
Total$2,536 $3,272 $1,982 $5,460 $10,542 $4,750 $28,542 $297 $126 $423 
Updated FICO
<620$1 $1 $5 $20 $20 $23 $70 $2 $4 $6 
620 – 67923 37 26 70 97 64 317 6 5 11 
680 – 739231 271 183 503 807 401 2,396 49 23 72 
≥7402,281 2,963 1,768 4,867 9,618 4,262 25,759 240 94 334 
Total$2,536 $3,272 $1,982 $5,460 $10,542 $4,750 $28,542 $297 $126 $423 
Estimated Current LTV (1)
≤70%$1,704 $2,357 $1,658 $4,942 $10,442 $4,735 $25,838 $294 $126 $420 
>70% – ≤90%831 915 324 508 99 13 2,690 3 — 3 
>90% – ≤100%1 — — 10 1 2 14 — — — 
Total$2,536 $3,272 $1,982 $5,460 $10,542 $4,750 $28,542 $297 $126 $423 
Gross charge-offs$— $— $— $— $— $— $— $— $— $— 
Percent of Loans on
  Nonaccrual Status		0.01%0.05%0.22%0.09%0.09%0.26%0.12%0.11%1.72%0.47%
(1) Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs.
First Mortgages Amortized Cost Basis by Origination Year
December 31, 20242024202320222021pre-2021Total First MortgagesRevolving HELOCs amortized cost basisHELOCs converted to term loansTotal HELOCs
Origination FICO
<620$1 $— $2 $1 $2 $6 $— $— $— 
620 – 67924 4 26 29 28 111 — 1 1 
680 – 739361 249 724 1,091 576 3,001 47 30 77 
≥7403,203 1,895 4,902 9,796 4,475 24,271 241 105 346 
Total$3,589 $2,148 $5,654 $10,917 $5,081 $27,389 $288 $136 $424 
Origination LTV
≤70%$2,471 $1,445 $4,197 $9,479 $4,159 $21,751 $267 $95 $362 
>70% – ≤90%1,118 703 1,457 1,438 920 5,636 21 40 61 
>90% – ≤100%— — — — 2 2 — 1 1 
Total$3,589 $2,148 $5,654 $10,917 $5,081 $27,389 $288 $136 $424 
Updated FICO
<620$— $3 $25 $15 $21 $64 $1 $5 $6 
620 – 67934 31 74 97 74 310 6 7 13 
680 – 739339 191 574 871 435 2,410 48 24 72 
≥7403,216 1,923 4,981 9,934 4,551 24,605 233 100 333 
Total$3,589 $2,148 $5,654 $10,917 $5,081 $27,389 $288 $136 $424 
Estimated Current LTV (1)
≤70%$2,402 $1,660 $4,942 $10,747 $5,057 $24,808 $285 $136 $421 
>70% – ≤90%1,187 487 693 166 20 2,553 3 — 3 
>90% – ≤100%— 1 17 3 4 25 — — — 
>100%— — 2 1 — 3 — — — 
Total$3,589 $2,148 $5,654 $10,917 $5,081 $27,389 $288 $136 $424 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Percent of Loans on
  Nonaccrual Status		0.01%0.12%0.16%0.04%0.18%0.09%0.07%2.33%0.71%
(1) Represents the LTV for the full line of credit (drawn and undrawn) for revolving HELOCs.

At June 30, 2025, $24.2 billion of First Mortgage loans had adjustable interest rates. Substantially all of these mortgages have initial fixed interest rates for three to ten years and interest rates that typically adjust every six to twelve months pursuant to the terms of the loan thereafter. Approximately 25% of the balance of these mortgages consisted of loans with interest-only payment terms. The interest rates on approximately 76% of the balance of these interest-only loans are not scheduled to reset for three or more years.

At June 30, 2025 and December 31, 2024, Schwab had $193 million and $171 million, respectively, of accrued interest on bank loans, which is excluded from the amortized cost basis of bank loans and included in other assets on the condensed consolidated balance sheets.

The HELOC product has a 30-year loan term with an initial draw period of ten years from the date of origination. After the initial draw period, the balance outstanding at such time is converted to a 20-year amortizing loan. The interest rate during the initial draw period and the 20-year amortizing period is a floating-rate based on the prime rate plus a margin.
The following table presents when current outstanding HELOCs will convert to amortizing loans:
June 30, 2025Balance
Converted to an amortizing loan by period end (1)
$126 
Within 1 year15 
> 1 year – 3 years38 
> 3 years – 5 years41 
> 5 years203 
Total$423 
(1) Includes $5 million and $9 million of HELOCs converted to amortizing loans during the three and six months ended June 30, 2025, respectively.

At June 30, 2025, $332 million of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, Schwab also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At June 30, 2025, the borrowers on approximately 62% of HELOC loan balances outstanding only paid the minimum amount due.