SCHWAB CHARLES CORP (Form: 10-Q, Received: 08/07/2017 16:52:04)

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, 2017

Commission File Number: 1-9700

THE CHARLES SCHWAB CORPORATION

(Exact name of registrant as specified in its charter)



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

211 Main Street, San Francisco, CA 94105

(Address of principal executive offices and zip code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

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



Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company ☐

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

Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

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

1,339,119,476 shares of $.01 par value Common Stock Outstanding on July 31, 2017

THE CHARLES SCHWAB CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2017

Index



Part I - Financial Information			Page


	Item 1.	Condensed Consolidated Financial Statements (Unaudited):

		Statements of Income	18
		Statements of Comprehensive Income	19
		Balance Sheets	20
		Statements of Stockholders’ Equity	21
		Statements of Cash Flows	22
		Notes	23-48

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1-17

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

	Item 4.	Controls and Procedures	48

Part II - Other Information

	Item 1.	Legal Proceedings	49

	Item 1A.	Risk Factors	49

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

	Item 3.	Defaults Upon Senior Securities	50

	Item 4.	Mine Safety Disclosures	50

	Item 5.	Other Information	50

	Item 6.	Exhibits	51

Signature			52

Part I – FINANCIAL INFORMATION

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

INTRODUCTION

The Charles Schwab Corporation (CSC) is a savings and loan holding company engaged, through its subsidiaries (collectively referred to as the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services.

Significant business subsidiaries of CSC include the following:


•	Charles Schwab & Co., Inc. (Schwab), a securities broker-dealer;


•	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 (ETFs), which are referred to as the Schwab ETFs™.

The Company provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services. The Advisor Services segment provides custodial, trading, banking, and support services as well as retirement business services.

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

Under this approach, the Company’s strategic goals are focused on putting clients’ perspectives, needs, and desires at the forefront. Because investing plays a fundamental role in building financial security, the Company strives to deliver a better investing experience for its clients – individual investors and the people and institutions who serve them – by disrupting longstanding industry practices on their behalf and providing superior service. The Company aims to offer a broad range of products and solutions to meet client needs with a focus on transparency and value. In addition, management works to couple the Company’s scale and resources with ongoing expense discipline to keep costs low and ensure that products and solutions are affordable as well as responsive to client needs. Finally, the Company aims to maximize its market valuation and stockholder returns over time.

Management estimates that investable wealth in the United States (U.S.) is currently well in excess of $30 trillion, which means the Company’s $3.04 trillion in client assets represents a market share of less than ten percent, leaving substantial opportunity for growth. The Company’s strategy is based on the principle that developing trusted relationships will translate into more assets from both new and existing clients, ultimately driving more revenue and, along with expense discipline, generating earnings growth and building long-term stockholder value.

This Form 10-Q is intended to provide an update on the activity and results of operations for the three and six months ended June 30, 2017 and should be read in conjunction with the 2016 Form 10-K. More information on the Company’s business operations, descriptions of revenue and expense categories, policies and procedures including the Company’s governance and monitoring programs is available in the 2016 Form 10-K. The Company’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the Securities and Exchange Commission (SEC), are available free of charge on the Company’s website, https://www.aboutschwab.com or by request via email (investor.relations@schwab.com), telephone (415-667-7000) or mail (Charles Schwab Investor Relations at 211 Main Street, San Francisco, CA 94105).

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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)

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 statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “estimate,” “appear,” “aim,” “target,” “could,” “would,” “continue,” 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 following sections of this Form 10-Q:


•	The Company’s aim to maximize its market valuation and stockholder returns over time; and the Company’s belief that developing trusted relationships will translate into more client assets which drives revenue and, along with expense discipline, earnings growth and stockholder value (see Introduction in Part I, Item 2);


•	The expected impact of new accounting standards not yet adopted (see New Accounting Standards in Part I, Item 1, Financial Information - Notes to Condensed Consolidated Financial Statements (Item 1) – Note 2);


•	The likelihood of indemnification and guarantee payment obligations (see Commitments and Contingencies in Item 1 – Note 8); and


•	The impact of legal proceedings and regulatory matters (see Commitments and Contingencies in Item 1 – Note 8 and Legal Proceedings in Part II, Item 1).

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:


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


•	The Company’s ability to attract and retain clients, develop trusted relationships, and grow client assets;


•	Client use of the Company’s investment advisory services and other products and services;


•	The level of client assets including cash balances;


•	Competitive pressure on pricing;


•	Client sensitivity to rates;


•	Regulatory guidance;


•	Timing, amount, and impact of migration of certain balances from brokerage accounts and sweep money market funds into Schwab Bank;


•	Capital and liquidity needs and management;


•	The Company’s ability to manage expenses;


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


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


•	Potential breaches of contractual terms for which the Company has indemnification and guarantee obligations.

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 2016 Form 10-K.

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THE CHARLES SCHWAB CORPORATION

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

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

OVERVIEW

Management focuses on several client activity and financial metrics in evaluating the Company’s financial position and operating performance. For a discussion of the key metrics and a glossary of terms, refer to the Company’s 2016 Form 10-K. Results for the second quarters and first halves of 2017 and 2016 are:



	Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Percent Change		2017			2016			Percent Change
Client Metrics:
Net new client assets (in billions)	$	64.5		$	26.6		142	%	$	103.4		$	58.6		76	%
Core net new client assets (in billions)	$	46.2		$	26.6		74	%	$	85.1		$	58.6		45	%
Client assets (in billions, at quarter end)	$	3,040.6		$	2,622.0		16	%
Average client assets (in billions)	$	2,979.2		$	2,585.4		15	%	$	2,925.5		$	2,515.4		16	%
New brokerage accounts (in thousands)	357			271			32	%	719			536			34	%
Active brokerage accounts (in thousands, at quarter end)	10,487			9,977			5	%
Assets receiving ongoing advisory services
(in billions, at quarter end)	$	1,539.8		$	1,315.5		17	%
Client cash as a percentage of client assets (at quarter end)	11.5		%	12.6		%
Company Financial Metrics:
Net revenues	$	2,130		$	1,828		17	%	$	4,211		$	3,592		17	%
Expenses excluding interest	1,221			1,108			10	%	2,459			2,217			11	%
Income before taxes on income	909			720			26	%	1,752			1,375			27	%
Taxes on income	334			268			25	%	613			511			20	%
Net income	575			452			27	%	1,139			864			32	%
Preferred stock dividends and other	45			46			(2	)%	84			66			27	%
Net income available to common stockholders	$	530		$	406		31	%	$	1,055		$	798		32	%
Earnings per common share – diluted	$	.39		$	.30		30	%	$	.78		$	.60		30	%
Net revenue growth from prior year	17		%	17		%			17		%	16		%
Pre-tax profit margin	42.7		%	39.4		%			41.6		%	38.3		%
Return on average common stockholders’ equity	15		%	13		%			15		%	13		%
Expenses excluding interest as a percentage of average client
assets (annualized)	0.16		%	0.17		%			0.17		%	0.18		%
Consolidated Tier 1 Leverage Ratio (at quarter end)	7.4		%	7.2		%

The Company experienced strong client engagement and demand for its contemporary approach to wealth management during the second quarter of 2017. Equity markets rose and volatility remained largely contained. While short-term interest rates increased, reflecting the Federal Reserve’s March and June 2017 interest rate hikes, the longer end of the yield curve softened. Against this backdrop, clients opened more than 350,000 new brokerage accounts during the second quarter, bringing year-to-date new accounts to 719,000 – up 34% from a year ago. Heightened client engagement resulted in core net new asset growth of $46.2 billion in the second quarter of 2017, up 74% year-over-year, bringing total client assets to $3.04 trillion at June 30, 2017. Assets enrolled in some form of ongoing advisory service totaled $1.54 trillion at quarter-end, up 17% from a year ago.

The Company’s financial model, with multiple revenue streams, operating leverage, and balance sheet strength resulted in a 27% increase in net income to $575 million in the second quarter of 2017, compared to the same period in 2016. Net income for the six months ended June 30, 2017 was $1.1 billion – an increase of 32% from the prior year. The pre-tax profit margins for the second quarter and first half of 2017 were over 40%, leading to a return on average common stockholders’ equity of 15% for the second quarter and first half of 2017 compared to 13% for the same periods in 2016.

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THE CHARLES SCHWAB CORPORATION

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

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

RESULTS OF OPERATIONS

Net Revenues

Net revenues of $2.1 billion and $4.2 billion for the second quarter and first half of 2017, respectively, grew 17% from the prior year periods, reflecting significant improvements in both net interest revenue and asset management and administration fees. The following tables and sections present a comparison of the Company’s major sources of net revenues:



Three Months Ended June 30,			2017					2016
	Percent Change		Amount			% of Total Net Revenues		Amount			% of Total Net Revenues
Asset management and administration fees
Mutual funds and ETF service fees	11	%	$	513		24	%	$	461		25	%
Advice Solutions	13	%	256			12	%	226			12	%
Other	9	%	76			4	%	70			4	%
Asset management and administration fees	12	%	845			40	%	757			41	%
Net interest revenue
Interest revenue	34	%	1,127			52	%	840			46	%
Interest expense	76	%	(74		)	(3	)%	(42		)	(2	)%
Net interest revenue	32	%	1,053			49	%	798			44	%
Trading revenue
Commissions	(25	)%	142			6	%	190			10	%
Principal transactions	36	%	15			1	%	11			1	%
Trading revenue	(22	)%	157			7	%	201			11	%
Other	7	%	75			4	%	70			4	%
Provision for loan losses	(100	)%	—			—		2			—
Total net revenues	17	%	$	2,130		100	%	$	1,828		100	%



Six Months Ended June 30,			2017					2016
	Percent Change		Amount			% of Total Net Revenues		Amount			% of Total Net Revenues
Asset management and administration fees
Mutual funds and ETF service fees	16	%	$	1,019		24	%	$	876		24	%
Advice solutions	13	%	500			12	%	441			12	%
Other	7	%	149			4	%	139			4	%
Asset management and administration fees	15	%	1,668			40	%	1,456			40	%
Net interest revenue
Interest revenue	32	%	2,182			52	%	1,650			46	%
Interest expense	61	%	(129		)	(3	)%	(80		)	(2	)%
Net interest revenue	31	%	2,053			49	%	1,570			44	%
Trading revenue
Commissions	(21	)%	320			7	%	405			11	%
Principal transactions	4	%	29			1	%	28			1	%
Trading revenue	(19	)%	349			8	%	433			12	%
Other	6	%	141			3	%	133			4	%
Provision for loan losses	—		—			—		—			—
Total net revenues	17	%	$	4,211		100	%	$	3,592		100	%

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THE CHARLES SCHWAB CORPORATION

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

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

Asset Management and Administration Fees

The following tables present a roll forward of client assets for the Schwab money market funds, Schwab equity and bond funds and ETFs, and Mutual Fund OneSource ^® . The following funds generated 54% of the asset management and administration fees earned during the second quarter and first half of 2017 , compared to 54% and 53% in the same periods in 2016:



	Schwab Money Market Funds						Schwab Equity and Bond Funds and ETFs				Mutual Fund OneSource ^®
Three Months Ended June 30,	2017			2016			2017		2016		2017			2016
Balance at beginning of period	$	162,887		$	167,427		$	139,412	$	104,953	$	204,887		$	203,759
Net inflows (outflows)	(6,861		)	(6,495		)	8,086		3,572		(5,648		)	(4,437		)
Net market gains (losses) and other ⁽¹⁾	160			19			3,838		2,197		25,510			4,030
Balance at end of period	$	156,186		$	160,951		$	151,336	$	110,722	$	224,749		$	203,352



	Schwab Money Market Funds						Schwab Equity and Bond Funds and ETFs				Mutual Fund OneSource ^®
Six Months Ended June 30,	2017			2016			2017		2016		2017			2016
Balance at beginning of period	$	163,495		$	166,148		$	125,813	$	102,112	$	198,924		$	207,654
Net inflows (outflows)	(7,585		)	(5,243		)	15,261		5,654		(10,239		)	(9,179		)
Net market gains (losses) and other ⁽¹⁾	276			46			10,262		2,956		36,064			4,877
Balance at end of period	$	156,186		$	160,951		$	151,336	$	110,722	$	224,749		$	203,352

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

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THE CHARLES SCHWAB CORPORATION

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

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

The following tables categorize asset management and administration fees, average client assets, and average fee yields by funds or revenue source:



Three Months Ended June 30,	2017							2016
	Average Client Assets		Revenue			Average Fee		Average Client Assets		Revenue			Average Fee
Schwab money market funds before fee waivers	$	158,974	$	224		0.57	%	$	163,929	$	239		0.59	%
Fee waivers			(1		)					(55		)
Schwab money market funds	158,974		223			0.56	%	163,929		184			0.45	%
Schwab equity and bond funds and ETFs	151,825		52			0.14	%	112,814		52			0.19	%
Mutual Fund OneSource ^®	220,680		179			0.33	%	201,034		169			0.34	%
Other third-party mutual funds and ETFs ⁽¹⁾	271,503		59			0.09	%	252,405		56			0.09	%
Total mutual funds and ETFs ⁽²⁾	$	802,982	513			0.26	%	$	730,182	461			0.25	%
Advice solutions ⁽²⁾ :
Fee-based	$	199,823	256			0.51	%	$	175,973	226			0.52	%
Intelligent Portfolios	17,796		—			—		6,620		—			—
Legacy Non-Fee	18,340		—			—		17,015		—			—
Total advice solutions	$	235,959	256			0.44	%	$	199,608	226			0.46	%
Other balance-based fees ⁽³⁾	406,307		64			0.06	%	338,529		58			0.07	%
Other ⁽⁴⁾			12							12
Total asset management and administration fees			$	845						$	757



Six Months Ended June 30,	2017							2016
	Average Client Assets		Revenue			Average Fee		Average Client Assets		Revenue			Average Fee
Schwab money market funds before fee waivers	$	160,881	$	455		0.57	%	$	166,184	$	485		0.59	%
Fee waivers			(9		)					(152		)
Schwab money market funds	160,881		446			0.56	%	166,184		333			0.40	%
Schwab equity and bond funds and ETFs	145,363		107			0.15	%	108,103		103			0.19	%
Mutual Fund OneSource ^®	211,548		349			0.33	%	197,839		333			0.34	%
Other third-party mutual funds and ETFs ⁽¹⁾	272,065		117			0.09	%	244,820		107			0.09	%
Total mutual funds and ETFs ⁽²⁾	$	789,857	1,019			0.26	%	$	716,946	876			0.25	%
Advice solutions ⁽²⁾ :
Fee-based	$	195,791	500			0.51	%	$	171,146	441			0.52	%
Intelligent Portfolios	16,020		—			—		5,868		—			—
Legacy Non-Fee	17,890		—			—		16,712		—			—
Total advice solutions	$	229,701	500			0.44	%	$	193,726	441			0.46	%
Other balance-based fees ⁽³⁾	397,523		125			0.06	%	328,278		114			0.07	%
Other ⁽⁴⁾			24							25
Total asset management and administration fees			$	1,668						$	1,456

⁽¹⁾ Includes Schwab ETF OneSource™.

⁽²⁾ Average client assets for advice solutions may also include the asset balances contained in the mutual fund and/or ETF categories listed above.

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

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

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THE CHARLES SCHWAB CORPORATION

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

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

Asset management and administration fees increased by $88 million , or 12% , and $212 million , or 15% in the second quarter and first half of 2017 compared to the same periods in 2016 , as a result of further improvement in net money fund revenue from rising rates and growing balances in advised solutions, equity and bond funds, and ETFs. By quarter-end, the yields on all proprietary money fund portfolios were at or above their respective operating expense ratios fully eliminating yield-related fee waivers for the first time since 2008.

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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)

Net Interest Revenue

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



Three Months Ended June 30,	2017						2016
	Average Balance		Interest Revenue/ Expense		Average Yield/ Rate		Average Balance		Interest Revenue/ Expense		Average Yield/ Rate
Interest-earning assets:
Cash and cash equivalents	$	8,562	$	22	1.03	%	$	10,888	$	14	0.52	%
Cash and investments segregated	19,703		41		0.83	%	19,155		22		0.46	%
Broker-related receivables ⁽¹⁾	435		1		0.68	%	685		—		0.20	%
Receivables from brokerage clients	15,827		138		3.50	%	15,027		124		3.32	%
Available for sale securities ⁽²⁾	48,154		177		1.47	%	71,431		211		1.19	%
Held to maturity securities	107,378		600		2.24	%	53,404		335		2.52	%
Bank loans	15,701		115		2.94	%	14,569		98		2.71	%
Total interest-earning assets	215,760		1,094		2.03	%	185,159		804		1.75	%
Other interest revenue			33						36
Total interest-earning assets	$	215,760	$	1,127	2.10	%	$	185,159	$	840	1.82	%
Funding sources:
Bank deposits	$	163,711	$	30	0.07	%	$	136,009	$	8	0.02	%
Payables to brokerage clients	26,125		3		0.05	%	25,302		1		0.01	%
Short-term borrowings	1,393		3		0.86	%	2,038		2		0.39	%
Long-term debt	3,518		31		3.53	%	2,876		26		3.64	%
Total interest-bearing liabilities	194,747		67		0.14	%	166,225		37		0.09	%
Non-interest-bearing funding sources	21,013						18,934
Other interest expense			7						5
Total funding sources	$	215,760	$	74	0.14	%	$	185,159	$	42	0.09	%
Net interest revenue			$	1,053	1.96	%			$	798	1.73	%



Six Months Ended June 30,	2017						2016
	Average Balance		Interest Revenue/ Expense		Average Yield/ Rate		Average Balance		Interest Revenue/ Expense		Average Yield/ Rate
Interest-earning assets:
Cash and cash equivalents	$	8,803	$	39	0.89	%	$	10,820	$	27	0.50	%
Cash and investments segregated	20,755		76		0.74	%	19,710		41		0.42	%
Broker-related receivables ⁽¹⁾	412		1		0.62	%	535		—		0.15	%
Receivables from brokerage clients	15,537		264		3.43	%	14,959		249		3.35	%
Available for sale securities ⁽²⁾	59,728		428		1.45	%	69,797		409		1.18	%
Held to maturity securities	95,439		1,085		2.29	%	51,830		657		2.55	%
Bank loans	15,615		225		2.91	%	14,487		197		2.73	%
Total interest-earning assets	216,289		2,118		1.97	%	182,138		1,580		1.74	%
Other interest revenue			64						70
Total interest-earning assets	$	216,289	$	2,182	2.03	%	$	182,138	$	1,650	1.82	%
Funding sources:
Bank deposits	$	163,696	$	49	0.06	%	$	133,814	$	16	0.02	%
Payables to brokerage clients	26,892		5		0.04	%	26,015		1		0.01	%
Short-term borrowings	1,363		5		0.74	%	1,029		2		0.39	%
Long-term debt	3,305		59		3.60	%	2,877		52		3.63	%
Total interest-bearing liabilities	195,256		118		0.12	%	163,735		71		0.09	%
Non-interest-bearing funding sources	21,033						18,403
Other interest expense			11						9
Total funding sources	$	216,289	$	129	0.12	%	$	182,138	$	80	0.09	%
Net interest revenue			$	2,053	1.91	%			$	1,570	1.73	%

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

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

- 8 -

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)

Net interest revenue increased $ 255 million , or 32% , and $483 million , or 31% , in the second quarter and first half of 2017 compared to the same periods in 2016 due to higher interest margins and interest-earning assets driven by growth in bank deposits. As of June 30, 2017 net interest revenue represented 49% of total net revenues, growing from 44% in the same period in the prior year.

Higher short-term interest rates reflecting the Federal Reserve’s March and June 2017 interest rate hikes, coupled with growth in interest-earning assets, have resulted in a 23 and 18 basis point improvement in net interest margins to 1.96% and 1.91% during the second quarter and first half of 2017 , respectively, compared to the same periods in 2016.

Compared to the prior year, the Company has grown bank deposits through a combination of:


•	Gathering additional assets from new and current clients;


•	Transferring uninvested cash balances in certain client brokerage accounts to Schwab Bank; and


•	Establishing the Schwab Bank sweep feature as the default investment option for uninvested cash balances within all new brokerage accounts as of June 2016.

While there has been significant growth in bank deposits and average interest-earning assets compared to the prior year periods, balances declined from the first quarter due to clients investing more of their cash into the markets.

In March 2017, the Company transferred $24.7 billion of debt securities from the available for sale (AFS) category to the held to maturity (HTM) category. The transfer had no effect on the overall net interest margin. For additional information on the transfer, see Item 1 – Note 3.

Trading Revenue

The following table presents trading revenue and the related drivers:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		Percent Change		2017		2016		Percent Change
Daily average revenue trades (in thousands)	311		279		11	%	314		303		4	%
Clients’ daily average trades (in thousands)	589		518		14	%	587		566		4	%
Number of trading days	63.0		64.0		(2	)%	125.0		125.0		—
Average revenue per revenue trade	$	7.96	$	11.27	(29	)%	$	8.91	$	11.36	(22	)%
Trading revenue	$	157	$	201	(22	)%	$	349	$	433	(19	)%

During the first quarter of 2017 , the Company announced two trading price reductions which lowered standard equity, ETF, and option trade commissions from $8.95 to $4.95 and lowered the per contract option fee from $.75 to $.65. Trading revenue decreased by $ 44 million , or 22% , and $84 million , or 19% , in the second quarter and first half of 2017 , respectively, compared to the same periods in 2016 , primarily due to these pricing reductions. These reductions in commission rates reflect both the Company’s belief that trade pricing should never be an obstacle for choosing Schwab and the Company’s commitment to share the benefits of its scale with clients. With these changes, trading revenue represented 8% of total net revenues through the first half of 2017 compared to 12% for the same period in 2016.

Other Revenue

Other revenue increased by $5 million , or 7% , in the second quarter of 2017 compared to the second quarter of 2016 largely due to an increase in realized gains on available for sale securities. Other revenue increased $8 million , or 6% , in the first half of 2017 compared to the same period in 2016, primarily due to the sublease of office space in San Francisco, a gain on the sale of a building in Indianapolis, and an increase in realized gains on available for sale securities.

Order flow revenue was $26 million and $25 million during the second quarters of 2017 and 2016 and $53 million and $52 million during the first halves of 2017 and 2016 , respectively.

- 9 -

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

The following table shows a comparison of expenses excluding interest:



	Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Percent Change		2017			2016			Percent Change
Compensation and benefits
Salaries and wages	$	371		$	339		9	%	$	738		$	675		9	%
Incentive compensation	191			166			15	%	393			339			16	%
Employee benefits and other	101			97			4	%	233			214			9	%
Total compensation and benefits	$	663		$	602		10	%	$	1,364		$	1,228		11	%
Professional services	144			125			15	%	277			241			15	%
Occupancy and equipment	107			101			6	%	212			199			7	%
Advertising and market development	71			70			1	%	142			140			1	%
Communications	58			62			(6	)%	115			122			(6	)%
Depreciation and amortization	66			57			16	%	131			113			16	%
Other	112			91			23	%	218			174			25	%
Total expenses excluding interest	$	1,221		$	1,108		10	%	$	2,459		$	2,217		11	%
Expenses as a percentage of total net revenues:
Compensation and benefits	31		%	33		%			32		%	34		%
Advertising and market development	3		%	4		%			3		%	4		%
Full-time equivalent employees (in thousands):
At quarter end	16.9			16.1			5	%
Average	16.7			15.9			5	%	16.6			15.7			6	%

Salaries and wages increased in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to an increase in employee headcount to support the growth in the business and annual salary increases.

Incentive compensation increased in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to higher field incentive plan costs relating to increased net client asset flows and increased employee headcount.

Employee benefits and other expenses increased in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to higher payroll taxes and employer 401(k) matching contributions, which resulted from increased salaries and wages and incentive compensation.

Professional services expense increased in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to higher spending on technology services and an increase in fees paid to outsourced service providers and consultants as the Company continued to invest in the ongoing growth of the business.

Depreciation and amortization expenses grew in the second quarter and first half of 2017 compared to the same periods in 2016 as a result of higher amortization of internally developed software as projects were completed and placed into production.

Other expenses increased in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to an increase in the Company’s Federal Deposit Insurance Corporation (FDIC) assessments. The FDIC assessments rose as a result of higher bank deposits and the effect of a new surcharge that commenced in the third quarter of 2016.

Taxes on Income

Effective January 1, 2017, the Company adopted Accounting Standards Update (ASU) 2016-09, which prospectively changes the accounting treatment of a portion of the tax deductions relating to equity compensation. These deductions were previously reflected directly in additional paid-in capital, a component of stockholders’ equity, and are now included in tax expense, a component of net income. As a result of this change, the Company’s tax expense was reduced by approximately $5 million and

- 10 -

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)

$36 million in the second quarter and first half of 2017 . Future effects will depend on the Company’s share price, restricted stock vesting, and the volume of equity incentive options exercised.

The Company’s effective income tax rate on income before taxes was 36.7% and 37.2% for the second quarters of 2017 and 2016 , respectively, and 35.0% and 37.2% for the first halves of 2017 and 2016 , respectively, which reflects the benefit in the first half of 2017 as discussed above.

Segment Information

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



	Investor Services						Advisor Services						Total
Three Months Ended June 30,	Percent Change		2017		2016		Percent Change		2017		2016		Percent Change		2017		2016
Net Revenues:
Asset management and administration fees	13	%	$	582	$	514	8	%	$	263	$	243	12	%	$	845	$	757
Net interest revenue	27	%	795		628		52	%	258		170		32	%	1,053		798
Trading revenue	(24	)%	98		129		(18	)%	59		72		(22	)%	157		201
Other	8	%	55		51		5	%	20		19		7	%	75		70
Provision for loan losses	(100	)%	—		2		—		—		—		(100	)%	—		2
Total net revenues	16	%	1,530		1,324		19	%	600		504		17	%	2,130		1,828
Expenses Excluding Interest	10	%	914		834		12	%	307		274		10	%	1,221		1,108
Income before taxes on income	26	%	$	616	$	490	27	%	$	293	$	230	26	%	$	909	$	720



	Investor Services						Advisor Services						Total
Six Months Ended June 30,	Percent Change		2017		2016		Percent Change		2017		2016		Percent Change		2017		2016
Net Revenues:
Asset management and administration fees	16	%	$	1,148	$	986	11	%	$	520	$	470	15	%	$	1,668	$	1,456
Net interest revenue	25	%	1,548		1,241		53	%	505		329		31	%	2,053		1,570
Trading revenue	(20	)%	217		272		(18	)%	132		161		(19	)%	349		433
Other	8	%	105		97		—		36		36		6	%	141		133
Provision for loan losses	—		—		—		—		—		—		—		—		—
Total net revenues	16	%	3,018		2,596		20	%	1,193		996		17	%	4,211		3,592
Expenses Excluding Interest	10	%	1,844		1,671		13	%	615		546		11	%	2,459		2,217
Income before taxes on income	27	%	$	1,174	$	925	28	%	$	578	$	450	27	%	$	1,752	$	1,375

Investor Services

Net revenues rose by 16% in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to increases in net interest revenue and asset management and administration fees, partially offset by a decrease in trading revenue. Net interest revenue increased primarily due to higher net interest margins and higher balances of interest-earning assets. Asset management and administration fees increased primarily due to higher net yields on money market fund assets and growth in client assets invested in equity and bond funds, ETFs and advisory solutions. Trading revenue decreased primarily due to the reductions in commissions rates announced earlier in the year.

Expenses excluding interest increased by 10% in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to higher compensation and benefits and other expenses. Incentive compensation increased as a result of growth in net client asset flows, while salaries and benefits grew, reflecting higher staffing levels to support growth in the business. Other expenses rose due to higher FDIC regulatory assessments and occupancy and equipment costs.

- 11 -

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)

Advisor Services

Net revenues rose by 19% and 20% , in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to increases in net interest revenue and asset management and administration fees, partially offset by a decrease in trading revenue. Net interest revenue increased primarily due to higher balances of interest-earning assets and higher net interest margins. This growth in interest-earning assets was aided by the migration of more uninvested client cash balances in the segment to Schwab Bank. Asset management and administration fees increased primarily due to higher net yields on money market fund assets and growth in client assets invested in equity and bond funds and ETFs. Trading revenue decreased primarily due to the reductions in commissions rates announced earlier in the year.

Expenses excluding interest increased by 12% and 13% , in the second quarter and first half of 2017 compared to the same periods in 2016 primarily due to higher compensation and benefits and other expenses. Incentive compensation increased as a result of growth in net client asset flows, while salaries and benefits grew, reflecting higher staffing levels to support growth in the business. Other expenses rose due to higher FDIC regulatory assessments and occupancy and equipment costs.

RISK MANAGEMENT

The Company’s business activities expose it to a variety of risks, including operational, credit, market, liquidity, and compliance risk. The Company has a comprehensive risk management program to identify and manage these risks and their associated potential for financial and reputational impact. For a discussion of the Company’s risk management programs, see Item 7 – Risk Management in the 2016 Form 10-K.

Credit Risk

Credit risk is the potential for loss due to a borrower, counterparty, or issuer failing to perform on its contractual obligations. The Company’s exposure to credit risk mainly results from margin lending and client option and futures activities, securities lending, mortgage lending, pledged asset lending, its role as a counterparty in financial contracts, and other investing activities. Client investing activities often include the use of leverage through margin, options, and futures positions. The Company manages collateral concentrations at the account level and across client portfolios.

The credit risk exposure related to the Company’s bank loans is actively managed through individual loan and portfolio reviews. Management regularly reviews asset quality, including concentrations, delinquencies, nonaccrual loans, charge-offs, and recoveries. All are factors in the determination of an appropriate allowance for loan losses. For more information on the Company’s credit quality indicators relating to its bank loans, see Item 1 – Note 4.

The Company also 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 within a particular industry or geographical area. The fair value of the Company’s investments in corporate debt securities and commercial paper totaled $10.1 billion at June 30, 2017 , with 46% issued by institutions in the financial services industry. For more information on the Company’s investment portfolios, see Item 1 – Note 3.

Market Risk

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

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. The majority of the Company’s interest-earning assets and interest-bearing liabilities are sensitive to changes in short-term interest rates. A portion of the Company’s investment portfolio is sensitive to changes in long-term interest rates.

Net Interest Revenue Simulation

- 12 -

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)

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

If the Company’s guidelines for its net interest revenue sensitivity are breached, management must report the breach to the Company’s Corporate Asset-Liability Management and Pricing Committee and establish a plan to address the interest rate risk. There were no breaches of the Company’s net interest revenue sensitivity risk limits during the second quarter of 2017 or year ended December 31, 2016 .

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.

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 additional interest rate exposure that could result from changes in the interest rate environment. The following table displays the simulated net interest revenue change over the next 12 months beginning June 30, 2017 and December 31, 2016 of a gradual 100 basis point increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:



	June 30, 2017		December 31, 2016
Increase of 100 basis points	5.3	%	6.5	%
Decrease of 100 basis points	(8.1	)%	(9.8	)%

The change in net interest revenue sensitivities as of June 30, 2017 reflects the increase in short-term interest rates. The increase of short-term interest rates positively impacts net interest revenue as yields on interest-earning assets rise faster than the cost of funding sources. A decline in interest rates could negatively impact the yield on the Company’s investment and loan portfolio to a greater degree than any offsetting reduction in interest expense from funding sources, compressing net interest margin.

Liquidity Risk

Liquidity risk is the potential that the Company will be unable to sell assets or meet cash flow obligations when they come due without incurring unacceptable losses. The Company’s primary source of funds is cash generated by client activity: bank deposits and cash balances in client brokerage accounts. Other sources of funds may include cash flows from operations, maturities and sales of investment securities, repayments on loans, lending securities held in client brokerage accounts, and cash provided by external financing.

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

- 13 -

THE CHARLES SCHWAB CORPORATION

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

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

In addition to internal sources of liquidity, the Company has sources of external funding. The following table describes debt facilities available to the Company:



		Available at
Description	Borrower	June 30, 2017 ⁽¹⁾
Committed, unsecured credit facility with various external banks ⁽²⁾	CSC	$	750
Uncommitted, unsecured lines of credit with various external banks	CSC, Schwab	829
Federal Reserve Bank discount window	Schwab Bank	3,488
Federal Home Loan Bank secured credit facility	Schwab Bank	17,507
Unsecured commercial paper	CSC	750

⁽¹⁾ See Item 1 – Note 7 for information on amounts outstanding. For additional information on the Company’s borrowing facilities, including financial covenants and other conditions of borrowing, see Item 7 – Liquidity Risk in the 2016 Form 10-K.

⁽²⁾ In June 2017, CSC entered into this facility, which is set to expire in June 2018. This facility replaced a similar facility that expired in June 2017. The funds under this facility are available for general corporate purposes.

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

On March 2, 2017, CSC issued $650 million aggregate principal amount of Senior Notes that mature in 2027 . The Senior Notes have a fixed interest rate of 3.200% with interest payable semi-annually. CSC intends to use the net proceeds from the sale of the Senior Notes for general corporate purposes, including, but not limited to, the repayment of $250 million aggregate principal amount of its 6.375% Senior Notes due September 1, 2017.

CSC’s ratings for commercial paper notes are P1 by Moody’s, A1 by Standard & Poor’s, and F1 by Fitch. CSC’s Senior Notes and Medium-Term Notes are rated A2 by Moody’s, A by Standard & Poor’s, and A by Fitch. CSC’s preferred stock is rated Baa2 by Moody’s, BBB by Standard & Poor’s, and BB+ by Fitch. For further discussion of CSC’s debt and equity, see Item 1 – Note 7 and Note 11.

Beginning on January 1, 2016, the Company became subject to the modified liquidity coverage ratio (LCR) rule which was fully phased in on January 1, 2017 and requires CSC to hold High Quality Liquid Assets equal to at least 70% of projected net cash outflows over a 30-day period, as defined by the rule. At June 30, 2017 , the Company was in compliance with the fully phased-in modified LCR rule. For additional information on the LCR rule, see Item 1 – Business – Regulation in the 2016 Form 10‑K.

CAPITAL MANAGEMENT

The Company seeks to manage capital to a level and composition sufficient to support execution of its business strategy, including anticipated balance sheet growth, providing financial support to its subsidiaries, and sustained access to the capital markets, while at the same time meeting its regulatory capital requirements and serving as a source of financial strength to Schwab Bank.

The Company’s primary sources of capital are funds generated by the operations of its subsidiaries and securities issuances by CSC in the capital markets. To ensure that it has a sufficient amount of capital to absorb unanticipated losses or declines in asset values, the Company has adopted a policy to remain well capitalized even in stressed scenarios. For a description of the Company’s internal guidelines, monitoring and governance processes, see Item 7 – Capital Management in the 2016 Form 10‑K.

- 14 -

THE CHARLES SCHWAB CORPORATION

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

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

Regulatory Capital Requirements

CSC and Schwab Bank are subject to various capital requirements set by regulatory agencies as discussed in further detail in the 2016 Form 10-K and in Item 1 – Note 14. As of June 30, 2017 , CSC and Schwab Bank are considered well capitalized.

The following table details CSC’s and Schwab Bank’s capital ratios as of June 30, 2017 and December 31, 2016 :



	June 30, 2017						December 31, 2016
	CSC			Schwab Bank			CSC			Schwab Bank
Total stockholders’ equity	$	17,489		$	12,888		$	16,421		$	11,726
Less:
Preferred Stock	2,783			—			2,783			—
Common Equity Tier 1 Capital before regulatory adjustments	$	14,706		$	12,888		$	13,638		$	11,726
Less:
Goodwill, net of associated deferred tax liabilities	$	1,175		$	11		$	1,175		$	11
Other intangible assets, net of associated deferred tax liabilities	53			—			52			—
Deferred tax assets, net of valuation allowances and deferred tax liabilities	1			—			—			—
AOCI adjustment ⁽¹⁾	(112		)	(110		)	(163		)	(163		)
Common Equity Tier 1 Capital	$	13,589		$	12,987		$	12,574		$	11,878
Tier 1 Capital	$	16,372		$	12,987		$	15,357		$	11,878
Total Capital	$	16,400		$	13,014		$	15,384		$	11,904
Risk-Weighted Assets	69,622			61,762			68,179			59,915
Common Equity Tier 1 Capital/Risk-Weighted Assets	19.5		%	21.0		%	18.4		%	19.8		%
Tier 1 Capital/Risk-Weighted Assets	23.5		%	21.0		%	22.5		%	19.8		%
Total Capital/Risk-Weighted Assets	23.6		%	21.1		%	22.6		%	19.9		%
Tier 1 Leverage Ratio	7.4		%	7.3		%	7.2		%	7.0		%

⁽¹⁾ CSC and Schwab Bank have elected to opt-out of the requirement to include most components of accumulated other comprehensive income (AOCI) in regulatory capital, including Common Equity Tier 1 (CET1) Capital. The year after the Company surpasses $250 billion in consolidated assets, it can no longer exclude AOCI from regulatory capital.

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

The Company’s broker-dealer subsidiaries (Schwab and optionsXpress, Inc. (optionsXpress)) are subject to regulatory requirements of the Uniform Net Capital Rule. At June 30, 2017 , Schwab and optionsXpress exceeded their net capital requirements.

In addition to the capital requirements above, the Company’s subsidiaries are subject to various regulatory requirements that are intended to ensure financial soundness and liquidity. See Item 1 – Note 14 for additional information on the components of stockholders’ equity and information on the capital requirements of each of the subsidiaries.

- 15 -

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)

Dividends

Cash dividends paid and per share amounts for the first halves of 2017 and 2016 are as follows:



Six Months Ended June 30,	2017				2016
	Cash Paid		Per Share Amount		Cash Paid		Per Share Amount
Common Stock	$	215	$	0.16	$	173	$	0.13
Series A Preferred Stock ⁽¹⁾	14		35.00		14		35.00
Series B Preferred Stock ⁽²⁾	15		30.00		15		30.00
Series C Preferred Stock ⁽²⁾	18		30.00		18		30.00
Series D Preferred Stock ^(2,3)	22		29.76		10		13.89
Series E Preferred Stock ⁽⁴⁾	9		1,554.51		N/A		N/A

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

⁽²⁾ Dividends paid quarterly.

⁽³⁾ Series D Preferred Stock was issued on March 7, 2016.

⁽⁴⁾ Series E Preferred Stock was issued on October 31, 2016. Dividends paid semi-annually until March 1, 2022 and quarterly thereafter.

N/A Not applicable.

OTHER

Foreign Holdings

At June 30, 2017 , the Company had exposure to non-sovereign financial and non-financial institutions in foreign countries of $6.1 billion , with the fair value of the top three exposures being to issuers and counterparties domiciled in France at $1.7 billion , Sweden at $1.1 billion , and Canada at $0.8 billion . The Company has no direct exposure to sovereign foreign governments. The Company does not have unfunded commitments to counterparties in foreign countries, nor does it have exposure as a result of credit default protection purchased or sold separately as of June 30, 2017 .

In addition to the direct holdings in foreign companies, the Company has indirect exposure to foreign countries through its investments in CSIM money market funds (collectively, the Funds) resulting from brokerage clearing activities. At June 30, 2017 , the Company had $78 million in investments in these Funds. Certain of the Funds’ positions include certificates of deposits, time deposits, commercial paper, and corporate debt securities issued by counterparties in foreign countries. Additionally, at June 30, 2017 , the Company had outstanding margin loans to foreign residents of $418 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 in the ordinary course of business. For information on each of these arrangements, see Item 1 – Note 4, Note 5, Note 7, and Note 8 , and Item 8 – Note 15 in the 2016 Form 10-K.

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 2016 Form 10-K. With the exception of adding Income Taxes, there have been no other changes to critical accounting estimates during the first six months of 2017 .

Income Taxes

The Company estimates income tax expense based on amounts expected to be owed to the various tax jurisdictions in which it operates, including federal, state and local domestic jurisdictions, and insignificant amounts owed to several foreign jurisdictions. The estimated income tax expense is reported in the Consolidated Statements of Income. Accrued taxes are reported in other assets or other liabilities on the Consolidated Balance Sheets and represent the net estimated amount due to or

- 16 -

THE CHARLES SCHWAB CORPORATION

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

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

to be received from taxing jurisdictions either currently or deferred to future periods. Deferred taxes arise from differences between assets and liabilities measured for financial reporting purposes versus income tax reporting purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit management believes is more likely than not to be realized upon settlement. In estimating accrued taxes, the Company assesses the relative merits and risks of the appropriate tax treatment considering statutory, judicial and regulatory guidance in the context of the tax position. Because of the complexity of tax laws and regulations, interpretation can be difficult and subject to legal judgment given specific facts and circumstances.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For discussion of the quantitative and qualitative disclosures about market risk, see Risk Management in Item 2.

- 17 -

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net Revenues
Asset management and administration fees ⁽¹⁾	$	845		$	757		$	1,668		$	1,456
Interest revenue	1,127			840			2,182			1,650
Interest expense	(74		)	(42		)	(129		)	(80		)
Net interest revenue	1,053			798			2,053			1,570
Trading revenue	157			201			349			433
Other	75			70			141			133
Provision for loan losses	—			2			—			—
Total net revenues	2,130			1,828			4,211			3,592
Expenses Excluding Interest
Compensation and benefits	663			602			1,364			1,228
Professional services	144			125			277			241
Occupancy and equipment	107			101			212			199
Advertising and market development	71			70			142			140
Communications	58			62			115			122
Depreciation and amortization	66			57			131			113
Other	112			91			218			174
Total expenses excluding interest	1,221			1,108			2,459			2,217
Income before taxes on income	909			720			1,752			1,375
Taxes on income ⁽²⁾	334			268			613			511
Net Income	575			452			1,139			864
Preferred stock dividends and other ⁽³⁾	45			46			84			66
Net Income Available to Common Stockholders	$	530		$	406		$	1,055		$	798
Weighted-Average Common Shares Outstanding:
Basic	1,338			1,322			1,337			1,322
Diluted	1,351			1,333			1,351			1,331
Earnings Per Common Share:
Basic	$	.40		$	.31		$	.79		$	.60
Diluted	$	.39		$	.30		$	.78		$	.60
Dividends Declared Per Common Share	$	.08		$	.07		$	.16		$	.13

⁽¹⁾ Includes the effect of fee waivers of $1 million and $55 million during the second quarters of 2017 and 2016 , respectively, and $9 million and $152 million during the first halves of 2017 and 2016 , respectively, relating to Schwab-sponsored money market funds.

⁽²⁾ Includes the prospective adoption of ASU 2016-09 in 2017. See New Accounting Standards in Note 2 for additional information.

⁽³⁾ Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.

See Notes to Condensed Consolidated Financial Statements.

- 18 -

THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In Millions)

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net Income	$	575		$	452		$	1,139		$	864
Other comprehensive income (loss), before tax:
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	29			168			81			189
Reclassification of net unrealized loss transferred to held to maturity	—			—			227			—
Other reclassifications included in other revenue	(6		)	(3		)	(7		)	(3		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss transferred from available for sale	—			—			(227		)	—
Amortization of amounts previously recorded upon transfer from available for sale	9			—			11			—
Other	—			—			(3		)	1
Other comprehensive income (loss), before tax	32			165			82			187
Income tax effect	(12		)	(62		)	(31		)	(70		)
Other comprehensive income (loss), net of tax	20			103			51			117
Comprehensive Income	$	595		$	555		$	1,190		$	981

See Notes to Condensed Consolidated Financial Statements.

- 19 -

THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Balance Sheets

(In Millions, Except Per Share and Share Amounts)

(Unaudited)



	June 30, 2017			December 31, 2016
Assets
Cash and cash equivalents	$	9,575		$	10,828
Cash and investments segregated and on deposit for regulatory purposes
(including resale agreements of $7,588 at June 30, 2017 and $9,547
at December 31, 2016)	18,483			22,174
Receivables from brokers, dealers, and clearing organizations	910			728
Receivables from brokerage clients — net	17,993			17,155
Other securities owned — at fair value	460			449
Available for sale securities	45,634			77,365
Held to maturity securities (fair value — $107,446 at June 30, 2017 and
$74,444 at December 31, 2016)	107,610			75,203
Bank loans — net	15,817			15,403
Equipment, office facilities, and property — net	1,335			1,299
Goodwill	1,227			1,227
Intangible assets — net	125			144
Other assets	1,432			1,408
Total assets	$	220,601		$	223,383
Liabilities and Stockholders’ Equity
Bank deposits	$	162,300		$	163,454
Payables to brokers, dealers, and clearing organizations	1,934			2,407
Payables to brokerage clients	33,039			35,894
Accrued expenses and other liabilities	2,021			2,331
Short-term borrowings	300			—
Long-term debt	3,518			2,876
Total liabilities	203,112			206,962
Stockholders’ equity:
Preferred stock — $.01 par value per share; aggregate liquidation preference
of $2,835 at June 30, 2017 and December 31, 2016	2,783			2,783
Common stock — 3 billion shares authorized; $.01 par value per share; 1,487,543,446
shares issued	15			15
Additional paid-in capital	4,336			4,267
Retained earnings	13,495			12,649
Treasury stock, at cost — 149,339,521 shares at June 30, 2017 and
154,793,560 shares at December 31, 2016	(3,028		)	(3,130		)
Accumulated other comprehensive income (loss)	(112		)	(163		)
Total stockholders’ equity	17,489			16,421
Total liabilities and stockholders’ equity	$	220,601		$	223,383

See Notes to Condensed Consolidated Financial Statements.

- 20 -

THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Stockholders' Equity

(In Millions)

(Unaudited)



															Accumulated Other Comprehensive Income (Loss)
	Preferred Stock		Common stock			Additional Paid-in Capital						Treasury Stock, at cost
	Preferred Stock		Shares	Amount		Additional Paid-in Capital			Retained Earnings			Treasury Stock, at cost						Total
Balance at December 31, 2015	$	1,459	1,488	$	15	$	4,152		$	11,253		$	(3,343	)	$	(134	)	$	13,402
Net income	—		—	—		—			864			—			—			864
Other comprehensive income (loss), net of tax	—		—	—		—			—			—			117			117
Issuance of preferred stock	730		—	—		—			—			—			—			730
Dividends declared on preferred stock	—		—	—		—			(57		)	—			—			(57		)
Dividends declared on common stock	—		—	—		—			(173		)	—			—			(173		)
Stock option exercises and other	—		—	—		(14		)	—			33			—			19
Share-based compensation and
related tax effects	—		—	—		76			—			—			—			76
Other	—		—	—		9			(5		)	8			—			12
Balance at June 30, 2016	$	2,189	1,488	$	15	$	4,223		$	11,882		$	(3,302	)	$	(17	)	$	14,990

Balance at December 31, 2016	$	2,783	1,488	$	15	$	4,267		$	12,649		$	(3,130	)	$	(163	)	$	16,421
Net income	—		—	—		—			1,139			—			—			1,139
Other comprehensive income (loss), net of tax	—		—	—		—			—			—			51			51
Dividends declared on preferred stock	—		—	—		—			(78		)	—			—			(78		)
Dividends declared on common stock	—		—	—		—			(215		)	—			—			(215		)
Stock option exercises and other	—		—	—		(26		)	—			98			—			72
Share-based compensation and
related tax effects	—		—	—		79			—			—			—			79
Other	—		—	—		16			—			4			—			20
Balance at June 30, 2017	$	2,783	1,488	$	15	$	4,336		$	13,495		$	(3,028	)	$	(112	)	$	17,489

See Notes to Condensed Consolidated Financial Statements.

- 21 -

THE CHARLES SCHWAB CORPORATION

Condensed Consolidated Statements of Cash Flows

(in Millions)

(Unaudited)



	Six Months Ended June 30,
	2017			2016
Cash Flows from Operating Activities
Net income	$	1,139		$	864
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for loan losses	—			—
Share-based compensation	84			75
Depreciation and amortization	131			113
Premium amortization, net, on available for sale securities and held to maturity securities	148			107
Other	19			17
Net change in:
Cash and investments segregated and on deposit for regulatory purposes	3,691			1,005
Receivables from brokers, dealers, and clearing organizations	(180		)	(431		)
Receivables from brokerage clients	(841		)	486
Other securities owned	(11		)	8
Other assets	(50		)	(37		)
Payables to brokers, dealers, and clearing organizations	(473		)	153
Payables to brokerage clients	(2,855		)	(506		)
Accrued expenses and other liabilities	(293		)	(331		)
Net cash provided by (used for) operating activities	509			1,523
Cash Flows from Investing Activities
Purchases of available for sale securities	(3,077		)	(16,598		)
Proceeds from sales of available for sale securities	5,485			4,074
Principal payments on available for sale securities	4,698			4,763
Purchases of held to maturity securities	(12,309		)	(7,582		)
Principal payments on held to maturity securities	4,469			2,198
Net increase in bank loans	(418		)	(362		)
Purchases of equipment, office facilities, and property	(164		)	(195		)
Purchases of Federal Home Loan Bank stock	(87		)	(118		)
Proceeds from sales of Federal Home Loan Bank stock	100			—
Other investing activities	(14		)	(14		)
Net cash provided by (used for) investing activities	(1,317		)	(13,834		)
Cash Flows from Financing Activities
Net change in bank deposits	(1,154		)	7,793
Net proceeds from short-term borrowings	300			5,000
Issuance of long-term debt	643			—
Repayment of long-term debt	(4		)	(3		)
Net proceeds from preferred stock offering	—			725
Dividends paid	(293		)	(230		)
Proceeds from stock options exercised and other	71			19
Other financing activities	(8		)	5
Net cash provided by (used for) financing activities	(445		)	13,309
Increase (Decrease) in Cash and Cash Equivalents	(1,253		)	998
Cash and Cash Equivalents at Beginning of Period	10,828			11,978
Cash and Cash Equivalents at End of Period	$	9,575		$	12,976
Supplemental Cash Flow Information
Cash paid during the period for:
Interest	$	117		$	74
Income taxes	$	597		$	505
Non-cash investing activity:
Securities purchased during the period but settled after period end	$	—		$	651

See Notes to Condensed Consolidated Financial Statements.

- 22 -

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

CSC is a savings and loan holding company engaged, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Schwab is a securities broker-dealer with over 340 domestic branch offices in 46 states, as well as a branch in each of the Commonwealth of Puerto Rico and London, England. In addition, Schwab serves clients in Hong Kong through one of CSC’s subsidiaries. Other subsidiaries include Schwab Bank, a federal savings bank, and 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 U.S., 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 (OTTI) of investment securities, valuation of goodwill, allowance for loan losses, legal and regulatory reserves, and income taxes. 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. 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 2016 Form 10-K.

The Company’s significant accounting policies are included in Note 2 in the 2016 Form 10-K. There have been no significant changes to these accounting policies during the first six months of 2017 except as described in Note 2 below.

Principles of Consolidation

The Company evaluates for consolidation all entities in which it has financial interests, except for money market funds which are specifically excluded from consolidation guidance. For an entity subject to consolidation, the Company evaluates whether the Company’s interest in the entity constitutes a controlling financial interest under either the variable interest entity (VIE) model or a voting interest entity (VOE) model. Based upon the Company’s assessments, the Company is not deemed to have a controlling financial interest in and, therefore, is not required to consolidate any VIEs. See Note 5 for further information about VIEs. The Company consolidates all VOEs in which it has majority-voting interests.

For investments in entities in which the Company does not have a controlling financial interest, the Company accounts for those investments under the equity method of accounting when the Company has the ability to exercise significant influence over operating and financing decisions of the entity. Investments in entities for which the Company does not have the ability to exercise significant influence are generally carried at cost. Both equity method and cost method investments are included in other assets on the condensed consolidated balance sheets.

2. New Accounting Standards

Adoption of New Accounting Standards

On January 1, 2017, the Company adopted, on a prospective basis, ASU 2016-09, “Stock Compensation – Improvements to Employee Share-Based Payment Accounting (Topic 718)”, which requires entities to recognize the income tax effects for the difference between generally accepted accounting principles (GAAP) and federal income tax treatment (i.e., excess tax benefit or deficiency) of share-based awards in the income statement when the awards vest or are settled, rather than recording such effects in additional paid-in capital. As a result, the Company’s tax expense was reduced by approximately $5 million and $ 36 million in the second quarter and first half of 2017 , respectively. Future effects will depend on the Company’s share price, restricted stock vesting, and the volume of equity incentive options exercised. For the purpose of recognizing compensation cost associated with share-based awards, ASU 2016-09 also provides entities with an accounting policy election to account for forfeitures of awards as they occur or continue with current practice of estimating forfeitures at the grant date to determine the

- 23 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

number of awards expected to vest and adjusting that estimate as necessary. The Company has elected to continue to follow the current practice.

New Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides new guidance on revenue recognition. The guidance clarifies that revenue from contracts with customers should be recognized in a manner that depicts the timing of the related transfer of goods or performance of services at an amount that reflects the expected consideration. The FASB has subsequently issued several amendments to the standard, including deferral of the effective date until January 1, 2018, clarification of principal versus agent considerations, narrow scope improvements and other technical corrections. Entities may elect either full or modified retrospective transition. Full retrospective transition will require a cumulative effect adjustment to retained earnings as of the earliest comparative period presented. Modified retrospective transition will require a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance.

The Company plans to adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective method with a cumulative effect adjustment to opening retained earnings. The guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP. Accordingly, the Company does not expect an impact to net interest revenue. The Company believes that the primary areas of potential impact of the guidance for the Company are (1) the impact on the income statement of the capitalization of costs to obtain a contract and (2) the presentation of certain revenue streams in the income statement (i.e., gross versus net reporting). With respect to the capitalization of costs to obtain a contract, the Company believes adoption of the standard will likely alter the timing, measurement and recognition of those costs in the income statement; however, the Company does not expect the impact to be material.

The American Institute of Certified Public Accountants has formed sixteen industry task forces to help assess industry specific implementation issues. Preliminary conclusions reached by the Company may be impacted by the finalized task-force papers, which have yet to be released. The next phase of the Company’s implementation work will be to evaluate any changes that may be required to the Company’s applicable disclosures. While the total revenue may be impacted by the adoption of the guidance, net income will not be affected.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10),” which will become effective January 1, 2018. This new guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions of the guidance include: (i) most equity investments are to be measured at fair value, with changes in fair value recognized in net income, except for those accounted for under the equity method or those that do not have readily determinable fair values for which a practical alternative can be elected; (ii) requires the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (iii) requires separate presentation of financial assets and liabilities by measurement category and form of instrument on the balance sheet or in the accompanying notes. The Company does not expect the adoption of ASU 2016-01 will have a material impact on its financial statements and EPS.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which amends the accounting for leases by lessees and lessors. The primary change as a result of the new standard is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. Additional changes include accounting for lease origination and executory costs, required lessee reassessments during the lease term due to changes in circumstances, and expanded lease disclosures. ASU 2016-02 will become effective January 1, 2019, with early adoption permitted, and requires entities to apply the new guidance using a modified retrospective transition. Modified retrospective transition requires entities to apply the new guidance as of the beginning of the earliest comparative period presented in the financial statements in which the entity first applies the new standard. Certain transition reliefs are permitted if elected by the entity. The adoption of ASU 2016-02 will result in the Company recognizing a right-of-use asset and lease liability on the consolidated balance sheet based on the present value of remaining operating lease payments (see Note 14 of the Company’s 2016 Form 10-K for the undiscounted future annual minimum rental commitments for operating leases). The Company does not expect the adoption of ASU 2016-02 will have a material impact on its EPS.

- 24 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which provides new guidance for recognizing impairment of most debt instruments measured at amortized cost, including loans and HTM debt securities. The new guidance will require estimating expected credit losses (CECL) over the remaining life of an instrument or a portfolio of instruments with similar risk characteristics based on relevant information about past events, current conditions, and reasonable forecasts. The initial estimate of, and the subsequent changes in, CECL will be recognized as credit loss expense through current earnings and will be reflected as an allowance for credit losses offsetting the carrying value of the financial instrument(s) on the balance sheet. The new guidance also amends the OTTI model for AFS debt securities by requiring the use of an allowance, rather than directly reducing the carrying value of the security, and eliminating consideration of the length of time such security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. ASU 2016-13 will become effective January 1, 2020, with early adoption permitted as of January 1, 2019. The new guidance will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the entity applies the new guidance except that a prospective transition is required for AFS debt securities for which an OTTI had been recognized before the effective date. The Company is currently evaluating the impact of this new guidance on its financial statements and EPS.

In March 2017, the FASB issued ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”, which shortens the amortization period for the premium on certain callable debt securities to the earliest call date. The amendments are applicable to any purchased individual debt security with an explicit and noncontingent call feature that is callable at a fixed price on a preset date. The amendments do not impact the accounting for callable debt securities held at a discount, which will continue to be accreted to maturity. ASU 2017-08 will become effective on January 1, 2019, with early adoption permitted including adoption in an interim period. The amendments will be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of adopting ASU 2017-08 on its financial statements and EPS.

- 25 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

3. Investment Securities

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



June 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities:
U.S. agency mortgage-backed securities	$	17,604	$	56	$	27	$	17,633
Asset-backed securities	9,858		40		4		9,894
Corporate debt securities	6,603		23		1		6,625
U.S. Treasury securities	7,740		8		51		7,697
Certificates of deposit	1,620		2		—		1,622
U.S. agency notes	1,914		—		7		1,907
Commercial paper	214		—		—		214
Non-agency commercial mortgage-backed securities	42		—		—		42
Total available for sale securities	$	45,595	$	129	$	90	$	45,634
Held to maturity securities:
U.S. agency mortgage-backed securities	$	89,250	$	499	$	805	$	88,944
Non-agency commercial mortgage-backed securities	995		12		3		1,004
Asset-backed securities	12,493		70		2		12,561
Corporate debt securities	3,181		23		—		3,204
U.S. Treasury securities	223		—		1		222
Commercial paper	100		—		—		100
U.S. state and municipal securities	1,168		43		—		1,211
Certificates of deposit	200		—		—		200
Total held to maturity securities	$	107,610	$	647	$	811	$	107,446



December 31, 2016
Available for sale securities:
U.S. agency mortgage-backed securities	$	33,167	$	120	$	92	$	33,195
Asset-backed securities	20,520		29		214		20,335
Corporate debt securities	9,850		20		18		9,852
U.S. Treasury securities	8,679		3		59		8,623
Certificates of deposit	2,070		2		1		2,071
U.S. agency notes	1,915		—		8		1,907
U.S. state and municipal securities	1,167		2		46		1,123
Commercial paper	214		—		—		214
Non-agency commercial mortgage-backed securities	45		—		—		45
Total available for sale securities	$	77,627	$	176	$	438	$	77,365
Held to maturity securities:
U.S. agency mortgage-backed securities	$	72,439	$	324	$	1,086	$	71,677
Non-agency commercial mortgage-backed securities	997		11		4		1,004
Asset-backed securities	941		—		—		941
Corporate debt securities	436		—		—		436
U.S. Treasury securities	223		—		4		219
Commercial paper	99		—		—		99
U.S. state and municipal securities	68		1		1		68
Total held to maturity securities	$	75,203	$	336	$	1,095	$	74,444

The increase in the HTM portfolio at June 30, 2017 compared to December 31, 2016 was primarily attributable to the transfer of $24.7 billion of investment securities from the AFS category to the HTM category during the first quarter of 2017 . These securities had a total net unrealized loss of $227 million before income tax in AOCI on the date of transfer. The transfer was made to mitigate the potential volatility in regulatory capital from changes in market values in the AFS securities portfolio and the related impact to AOCI once the Company crosses $250 billion in consolidated assets. The year after the Company

- 26 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

surpasses $250 billion in consolidated assets, it can no longer exclude AOCI from regulatory capital. The transfer included U.S. agency mortgage-backed securities, asset-backed securities, corporate debt securities, and U.S. state and municipal securities. The unrealized holding gains and losses on the date of transfer are reported as a separate component of AOCI and as an adjustment to the purchase premium and discount on the securities transferred. The separate component of AOCI will be amortized or accreted into interest income over the remaining life of the securities transferred, offsetting the revised premium or discount amortization or accretion on the transferred assets .

Schwab Bank pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $967 million at June 30, 2017 .

- 27 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale securities:
U.S. agency mortgage-backed securities	$	1,817	$	6	$	2,976	$	21	$	4,793	$	27
Asset-backed securities	866		—		550		4		1,416		4
Corporate debt securities	867		1		303		—		1,170		1
U.S. Treasury securities	6,418		51		—		—		6,418		51
U.S. agency notes	1,907		7		—		—		1,907		7
Total	$	11,875	$	65	$	3,829	$	25	$	15,704	$	90
Held to maturity securities:
U.S. agency mortgage-backed securities	$	174	$	—	$	48,699	$	805	$	48,873	$	805
Non-agency commercial mortgage-backed securities	—		—		535		3		535		3
Asset-backed securities	945		1		779		1		1,724		2
U.S. Treasury securities	—		—		222		1		222		1
Total	$	1,119	$	1	$	50,235	$	810	$	51,354	$	811
Total securities with unrealized losses ⁽¹⁾	$	12,994	$	66	$	54,064	$	835	$	67,058	$	901



December 31, 2016
Available for sale securities:
U.S. agency mortgage-backed securities	$	14,816	$	69	$	2,931	$	23	$	17,747	$	92
Asset-backed securities	1,670		13		9,237		201		10,907		214
Corporate debt securities	2,407		17		653		1		3,060		18
U.S. Treasury securities	6,926		59		—		—		6,926		59
Certificates of deposit	474		—		100		1		574		1
U.S. agency notes	1,907		8		—		—		1,907		8
U.S. state and municipal securities	956		46		—		—		956		46
Total	$	29,156	$	212	$	12,921	$	226	$	42,077	$	438
Held to maturity securities:
U.S. agency mortgage-backed securities	$	51,361	$	1,086	$	—	$	—	$	51,361	$	1,086
Non-agency commercial mortgage-backed securities	591		4		—		—		591		4
U.S. Treasury securities	219		4		—		—		219		4
U.S. state and municipal securities	14		1		—		—		14		1
Total	$	52,185	$	1,095	$	—	$	—	$	52,185	$	1,095
Total securities with unrealized losses ⁽²⁾	$	81,341	$	1,307	$	12,921	$	226	$	94,262	$	1,533


⁽¹⁾	The number of investment positions with unrealized losses totaled 205 for AFS securities and 625 for HTM securities.


⁽²⁾	The number of investment positions with unrealized losses totaled 627 for AFS securities and 612 for HTM securities.

At June 30, 2017 , substantially all securities in the investment portfolios were rated investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government-sponsored enterprises.

- 28 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Management evaluates whether investment securities are OTTI on a quarterly basis as described in Note 2 in the 2016

Form 10-K.

The maturities of AFS and HTM securities are as follows:



June 30, 2017	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years		Total
Available for sale securities:
U.S. agency mortgage-backed securities ⁽¹⁾	$	108	$	1,884	$	6,306	$	9,335	$	17,633
Asset-backed securities	23		8,019		1,126		726		9,894
Corporate debt securities	2,851		3,774		—		—		6,625
U.S. Treasury securities	1,619		6,078		—		—		7,697
Certificates of deposit	951		671		—		—		1,622
U.S. agency notes	847		1,060		—		—		1,907
Commercial paper	214		—		—		—		214
Non-agency commercial mortgage-backed securities ⁽¹⁾	—		—		—		42		42
Total fair value	$	6,613	$	21,486	$	7,432	$	10,103	$	45,634
Total amortized cost	$	6,612	$	21,476	$	7,427	$	10,080	$	45,595
Held to maturity securities:
U.S. agency mortgage-backed securities ⁽¹⁾	$	—	$	9,695	$	30,224	$	49,025	$	88,944
Non-agency commercial mortgage-backed securities ⁽¹⁾	—		—		363		641		1,004
Asset-backed securities	—		1,019		5,395		6,147		12,561
Corporate debt securities	—		3,204		—		—		3,204
U.S. Treasury securities	—		—		222		—		222
Commercial paper	100		—		—		—		100
U.S. state and municipal securities	—		—		88		1,123		1,211
Certificates of deposit	—		200		—		—		200
Total fair value	$	100	$	14,118	$	36,292	$	56,936	$	107,446
Total amortized cost	$	100	$	13,939	$	36,222	$	57,349	$	107,610


⁽¹⁾	Mortgage-backed securities have been allocated to 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 and losses from sales of AFS securities are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Proceeds	$	4,421	$	3,774	$	5,485	$	4,074
Gross realized gains	6		3		7		3

- 29 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

4. Bank Loans and Related Allowance for Loan Losses

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



June 30, 2017	Current		30-59 days past due		60-89 days past due		>90 days past due and other nonaccrual loans		Total past due and other nonaccrual loans		Total loans		Allowance for loan losses		Total bank loans - net
Residential real estate mortgages	$	9,549	$	14	$	1	$	17	$	32	$	9,581	$	17	$	9,564
Home equity loans and lines of credit	2,137		1		1		9		11		2,148		8		2,140
Pledged asset lines	4,000		1		—		—		1		4,001		—		4,001
Other	113		—		—		—		—		113		1		112
Total bank loans	$	15,799	$	16	$	2	$	26	$	44	$	15,843	$	26	$	15,817

December 31, 2016
Residential real estate mortgages	$	9,100	$	15	$	3	$	16	$	34	$	9,134	$	17	$	9,117
Home equity loans and lines of credit	2,336		2		2		10		14		2,350		8		2,342
Pledged asset lines	3,846		4		1		—		5		3,851		—		3,851
Other	94		—		—		—		—		94		1		93
Total bank loans	$	15,376	$	21	$	6	$	26	$	53	$	15,429	$	26	$	15,403

Residential real estate mortgages (First Mortgages) and home equity loans and lines of credit (HELOCs) include unamortized premiums and discounts and direct origination costs of $77 million and $78 million at June 30, 2017 and December 31, 2016 , respectively. The Company had commitments to extend credit related to unused HELOCs, pledged asset lines (PALs), and other lines of credit, which totaled $9.2 billion and $8.4 billion at June 30, 2017 and December 31, 2016 , respectively. The Company had commitments to purchase First Mortgage loans of $457 million and $466 million at June 30, 2017 and December 31, 2016 , respectively. All PALs were fully collateralized by securities with fair values in excess of borrowings at June 30, 2017 and December 31, 2016 .

Schwab Bank provides 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 First Mortgages and HELOCs for Schwab Bank clients. Under the Program, Schwab Bank purchases certain First Mortgages and HELOCs that are originated by Quicken Loans. Schwab Bank purchased First Mortgages of $683 million and $691 million during the second quarters of 2017 and 2016 , respectively, and $1.3 billion and $1.2 billion during the first halves of 2017 and 2016, respectively. Schwab Bank purchased HELOCs with commitments of $111 million and $112 million during the second quarters of 2017 and 2016 , respectively, and $229 million and $222 million during the first halves of 2017 and 2016 , respectively.

- 30 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Credit Quality

Changes in the allowance for loan losses were as follows:



Three Months Ended	June 30, 2017											June 30, 2016
	Residential real estate mortgages			Home equity loans and lines of credit			Other		Total			Residential real estate mortgages			Home equity loans and lines of credit			Other		Total
Balance at beginning of period	$	17		$	8		$	1	$	26		$	21		$	11		$	1	$	33
Charge-offs	(1		)	(1		)	—		(2		)	—			—			—		—
Recoveries	1			1			—		2			—			—			—		—
Provision for loan losses	—			—			—		—			(1		)	(1		)	—		(2		)
Balance at end of period	$	17		$	8		$	1	$	26		$	20		$	10		$	1	$	31



Six Months Ended	June 30, 2017											June 30, 2016
	Residential real estate mortgages			Home equity loans and lines of credit			Other		Total			Residential real estate mortgages			Home equity loans and lines of credit			Other		Total
Balance at beginning of period	$	17		$	8		$	1	$	26		$	20		$	11		$	—	$	31
Charge-offs	(1		)	(1		)	—		(2		)	(1		)	—			—		(1		)
Recoveries	1			1			—		2			1			—			—		1
Provision for loan losses	—			—			—		—			—			(1		)	1		—
Balance at end of period	$	17		$	8		$	1	$	26		$	20		$	10		$	1	$	31

Substantially all of the bank loans were collectively evaluated for impairment at June 30, 2017 and December 31, 2016 . There were no loans accruing interest that were contractually 90 days or more past due at June 30, 2017 or December 31, 2016 . Nonperforming assets, which include nonaccrual loans and other real estate owned, totaled $30 million and $31 million at June 30, 2017 and December 31, 2016 , respectively. Impaired assets, which include nonaccrual loans, other real estate owned and troubled debt restructurings, totaled $41 million and $45 million at June 30, 2017 and December 31, 2016 , respectively. Troubled debt restructurings were not material at June 30, 2017 or December 31, 2016 .

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


•	Year of origination;


•	Borrower FICO scores at origination (Origination FICO);


•	Updated borrower FICO scores (Updated FICO);


•	Loan-to-value 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 were last updated in June 2017. 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 estimated by reference to a home price appreciation index.

As of June 30, 2017 and December 31, 2016 , 48% of the Company’s HELOC and First Mortgage portfolio was concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.

- 31 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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



June 30, 2017	Balance		Weighted Average Updated FICO	Utilization Rate ⁽¹⁾		Percent of Loans on Nonaccrual Status
Residential real estate mortgages:
Estimated Current LTV
< 70%	$	8,648	775	N/A		0.03	%
>70% – < 90%	898		768	N/A		0.30	%
>90% – < 100%	16		740	N/A		2.93	%
>100%	19		698	N/A		17.07	%
Total	$	9,581	774	N/A		0.09	%
Home equity loans and lines of credit:
Estimated Current LTV ⁽²⁾
< 70%	$	1,893	772	33	%	0.10	%
>70% – < 90%	216		759	49	%	0.19	%
>90% – < 100%	23		743	65	%	0.98	%
>100%	16		730	73	%	8.87	%
Total	$	2,148	770	35	%	0.19	%
Pledged asset lines:
Weighted-Average LTV ⁽²⁾
=70%	$	4,001	767	43	%	—


⁽¹⁾	The Utilization Rate is calculated using the outstanding balance divided by the associated total line of credit.


⁽²⁾	Represents the LTV for the full line of credit (drawn and undrawn).

N/A Not applicable.



June 30, 2017	Residential real estate mortgages		Home equity loans and lines of credit
Year of origination
Pre-2013	$	1,808	$	1,553
2013	1,534		169
2014	599		137
2015	1,351		140
2016	3,037		104
2017	1,252		45
Total	$	9,581	$	2,148
Origination FICO
<620	$	7	$	—
620 – 679	85		11
680 – 739	1,491		396
> 740	7,998		1,741
Total	$	9,581	$	2,148
Origination LTV
< 70%	$	7,237	$	1,491
>70% – < 90%	2,336		646
>90% – < 100%	8		11
Total	$	9,581	$	2,148

- 32 -

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, 2016	Balance		Weighted Average Updated FICO	Utilization Rate ⁽¹⁾		Percent of Loans on Nonaccrual Status
Residential real estate mortgages:
Estimated Current LTV
< 70%	$	8,350	774	N/A		0.04	%
>70% – < 90%	743		768	N/A		0.35	%
>90% – < 100%	21		747	N/A		2.08	%
>100%	20		709	N/A		14.50	%
Total	$	9,134	773	N/A		0.10	%
Home equity loans and lines of credit:
Estimated Current LTV ⁽²⁾
< 70%	$	2,070	771	35	%	0.12	%
>70% – < 90%	234		757	50	%	0.40	%
>90% – < 100%	29		747	66	%	1.74	%
>100%	17		728	70	%	3.73	%
Total	$	2,350	769	36	%	0.20	%
Pledged asset lines:
Weighted-Average LTV ⁽²⁾
=70%	$	3,851	763	46	%	—


⁽¹⁾	The Utilization Rate is calculated using the outstanding balance divided by the associated total line of credit.


⁽²⁾	Represents the LTV for the full line of credit (drawn and undrawn).

N/A Not applicable.



December 31, 2016	Residential real estate mortgages		Home equity loans and lines of credit
Year of origination
Pre-2013	$	2,136	$	1,765
2013	1,746		193
2014	685		152
2015	1,458		146
2016	3,109		94
Total	$	9,134	$	2,350
Origination FICO
<620	$	8	$	—
620 – 679	92		13
680 – 739	1,427		432
> 740	7,607		1,905
Total	$	9,134	$	2,350
Origination LTV
< 70%	$	6,865	$	1,628
>70% – < 90%	2,260		709
>90% – < 100%	9		13
Total	$	9,134	$	2,350

The Company’s bank loans include $8.6 billion of adjustable rate First Mortgage loans at June 30, 2017 . The Company’s adjustable rate mortgages have initial fixed interest rates for three to ten years and interest rates that adjust annually thereafter. Approximately 34% of these mortgages consisted of loans with interest-only payment terms. The interest rates on

- 33 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

approximately 56% 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.

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

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



June 30, 2017	Balance
Converted to an amortizing loan by period end	$	454
Within 1 year	316
> 1 year – 3 years	566
> 3 years – 5 years	158
> 5 years	654
Total	$	2,148

At June 30, 2017 , $1.7 billion of the HELOC portfolio was secured by second liens on the associated properties. Second lien mortgage loans typically possess a higher degree of credit risk given the subordination to the first lien holder in the event of default. In addition to the credit monitoring activities described previously, the Company also monitors credit risk by reviewing the delinquency status of the first lien loan on the associated property. At June 30, 2017 , approximately 38% of the HELOC borrowers that had a balance only paid the minimum amount of interest due.

5. Variable Interest Entities

A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates all entities in which it has a financial interest to determine if the entity is a VIE and if so, whether the Company is the primary beneficiary. See Principles of Consolidation in Note 1 for discussion of the Company’s evaluations of VIEs and whether it is deemed to be the primary beneficiary of any VIEs in which it holds an interest. The Company was not the primary beneficiary of, and therefore not required to consolidate any VIEs at June 30, 2017 and December 31, 2016 .

As of June 30, 2017 and December 31, 2016 , the majority of the Company’s VIEs related to Schwab Bank’s Low-Income Housing Tax Credit (LIHTC) investments. Schwab Bank’s LIHTC investments are accounted for using the proportional amortization method. Amortization, tax credits, and other tax benefits recognized in relation to LIHTC investments are included in taxes on income in the condensed consolidated statements of income. For further information on the Community Reinvestment Act (CRA) and Schwab Bank’s LIHTC investments, see Note 2 and Note 10 in the 2016 Form 10-K.

The carrying value of the LIHTC investments was $213 million and $189 million as of June 30, 2017 and December 31, 2016 , respectively, which is included in other assets on the condensed consolidated balance sheets. Schwab Bank recorded liabilities of $145 million and $135 million for unfunded commitments related to LIHTC investments at June 30, 2017 and December 31, 2016 , respectively, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. Schwab Bank’s funding of these remaining commitments is dependent upon the occurrence of certain conditions and Schwab Bank expects to pay substantially all of these commitments between 2017 and 2020 .

- 34 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Aggregate assets, liabilities and maximum exposure to loss

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



	June 30, 2017						December 31, 2016
	Aggregate assets		Aggregate liabilities		Maximum exposure to loss		Aggregate assets		Aggregate liabilities		Maximum exposure to loss
LIHTC investments	$	213	$	145	$	213	$	189	$	135	$	189
Other CRA investments ⁽¹⁾	63		—		83		60		—		80
Total	$	276	$	145	$	296	$	249	$	135	$	269


⁽¹⁾	Other CRA investments are recorded using either the cost method or the equity method. Aggregate assets are included in either other assets or bank loans – net on the condensed consolidated balance sheets.

The Company’s maximum exposure to loss would result from the loss of the investments, including any committed amounts. During the six months ended June 30, 2017 and 2016 , the Company did not provide or intend to provide financial or other support to the VIEs that it was not contractually required to provide.

6. Bank Deposits

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



	June 30, 2017		December 31, 2016
Interest-bearing deposits:
Deposits swept from brokerage accounts	$	140,725	$	141,146
Checking	13,504		13,842
Savings and other	7,495		7,792
Total interest-bearing deposits	161,724		162,780
Non-interest-bearing deposits	576		674
Total bank deposits	$	162,300	$	163,454

7. Borrowings

Long-term debt was net of unamortized debt discounts/premiums and debt issuance costs of $27 million and $24 million at June 30, 2017 and December 31, 2016 , respectively.



	June 30, 2017		December 31, 2016
Senior Notes	$	3,204	$	2,558
Medium-Term Notes	250		250
Finance lease obligation	64		68
Total long-term debt	$	3,518	$	2,876

- 35 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

On March 2, 2017 , CSC issued $650 million aggregate principal amount of Senior Notes that mature in 2027 . The Senior Notes have a fixed interest rate of 3.200% with interest payable semi-annually.

The Company’s long-term debt at June 30, 2017 had a weighted-average interest rate of 3.34% .

Annual maturities on long-term debt outstanding at June 30, 2017 are as follows:



2017	$	254
2018	908
2019	8
2020	709
2021	9
Thereafter	1,657
Total maturities	3,545
Unamortized discount, net	(13		)
Debt issuance costs	(14		)
Total long-term debt	$	3,518

Short-term borrowings: Schwab Bank maintains a secured credit facility with the Federal Home Loan Bank of San Francisco (FHLB). Amounts available under this facility are dependent on the amount of Schwab Bank’s First Mortgages, HELOCs, and the fair value of certain of Schwab Bank’s investment securities that are pledged as collateral. As a condition of the borrowings, Schwab Bank is required to hold FHLB stock, with the investment recorded in other assets on the condensed consolidated balance sheets. The investment in FHLB was $68 million at June 30, 2017 and $81 million at December 31, 2016 . No funds were drawn under this facility as of June 30, 2017 and December 31, 2016 .

CSC has authorization from its Board of Directors to issue Commercial Paper Notes not to exceed $1.5 billion . Management has set a current limit for the commercial paper program not to exceed the amount of the committed, unsecured credit facility, which was $750 million at June 30, 2017 . CSC had no Commercial Paper Notes outstanding at June 30, 2017 and December 31, 2016 .

CSC and Schwab also have access to uncommitted, unsecured bank credit lines with several banks. Schwab had $300 million outstanding under these lines at June 30, 2017 and there were no borrowings outstanding under these lines at December 31, 2016 .

8. Commitments and Contingencies

Guarantees and indemnifications: The Company has clients that sell (i.e., write) listed option contracts that are cleared by the Options Clearing Corporation – a clearing house that establishes margin requirements on these transactions. The Company partially satisfies the margin requirements by arranging unsecured standby letter of credit agreements (LOCs), in favor of the Options Clearing Corporation, which are issued by several banks. At June 30, 2017 , the aggregate face amount of these LOCs totaled $295 million . There were no funds drawn under any of these LOCs at June 30, 2017 . In connection with its securities lending activities, the Company is required to provide collateral to certain brokerage clients. The Company satisfies the collateral requirements by providing cash as collateral.

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. 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.

- 36 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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. Unless otherwise noted, the Company is unable to provide a reasonable estimate of any potential liability given the stage of proceedings in the matter.

With respect to all other pending matters, based on current information and consultation with counsel, it does not appear reasonably possible that the outcome of any such matter would be material to the financial condition, operating results or cash flows of the Company. 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. It may not be 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.

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 ^™ . The lawsuit, which alleged violations of state law and federal securities law in connection with the fund’s investment policy, named CSIM, Schwab Investments (registrant and issuer of the fund’s shares) and certain current and former fund trustees 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 fundholder vote. Plaintiff seeks unspecified compensatory and rescission damages, unspecified equitable and injunctive relief, costs and attorneys’ fees. Plaintiff’s federal securities law claim and certain of plaintiff’s state law claims were dismissed. On August 8, 2011, the court dismissed plaintiff’s remaining claims with prejudice. Plaintiff appealed to the Ninth Circuit, which issued a ruling on March 9, 2015 reversing the district court’s dismissal of the case and remanding the case for further proceedings. Plaintiff filed a fourth amended complaint on June 25, 2015, and in decisions issued October 6, 2015 and February 23, 2016, the court dismissed all claims with prejudice. Plaintiff has appealed to the Ninth Circuit, where the case is again pending.

9. Offsetting Assets and Liabilities

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

Securities lending: The Company loans brokerage client securities temporarily to other brokers and clearing houses in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not return the loaned securities or provide additional cash collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its client obligations. The Company mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and

- 37 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

requiring additional cash as collateral when necessary. The Company borrows securities from other broker-dealers to fulfill short sales by brokerage clients and delivers cash to the lender in exchange for the securities. The fair value of these borrowed securities was $426 million at June 30, 2017 and $213 million at December 31, 2016 . All of the Company’s securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, the Company does not net securities lending transactions. Therefore, the Company’s securities loaned and securities borrowed are presented gross in the condensed consolidated balance sheets.

The following table presents information about the Company’s resale agreements and securities lending activity to enable the users of the Company’s financial statements to evaluate the potential effect of rights of setoff between these recognized assets and recognized liabilities at June 30, 2017 and December 31, 2016 .



							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Assets/ Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts Presented in the Condensed Consolidated Balance Sheets		Counterparty Offsetting			Collateral				Net Amount
June 30, 2017
Assets:
Resale agreements ⁽¹⁾	$	7,588	$	—	$	7,588	$	—		$	(7,588	)	⁽²⁾	$	—
Securities borrowed ⁽³⁾	584		—		584		(345		)	(237		)		2
Total	$	8,172	$	—	$	8,172	$	(345	)	$	(7,825	)		$	2
Liabilities:
Securities loaned ^(4,5)	$	1,684	$	—	$	1,684	$	(345	)	$	(1,210	)		$	129
Total	$	1,684	$	—	$	1,684	$	(345	)	$	(1,210	)		$	129
December 31, 2016
Assets:
Resale agreements ⁽¹⁾	$	9,547	$	—	$	9,547	$	—		$	(9,547	)	⁽²⁾	$	—
Securities borrowed ⁽³⁾	393		—		393		(200		)	(189		)		4
Total	$	9,940	$	—	$	9,940	$	(200	)	$	(9,736	)		$	4
Liabilities:
Securities loaned ^(4,5)	$	1,996	$	—	$	1,996	$	(200	)	$	(1,660	)		$	136
Total	$	1,996	$	—	$	1,996	$	(200	)	$	(1,660	)		$	136


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


⁽²⁾	Actual collateral was greater than or equal to 102% of the related assets. At June 30, 2017 and December 31, 2016 , the fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $7.7 billion and $9.8 billion , respectively.


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


⁽⁴⁾	Included in payables to brokers, dealers, and clearing organizations in the Company’s condensed consolidated balance sheets.


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

- 38 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Margin lending: Clients with margin loans have agreed to allow the Company to pledge collateralized securities in their brokerage accounts in accordance with federal regulations. The following table summarizes the fair value of client securities available, under such regulations, for the Company to utilize as collateral, and the amounts pledged by the Company:



	June 30, 2017		December 31, 2016
Fair value of client securities available to be pledged	$	23,023	$	21,516
Fair value of client securities pledged for:
Securities lending to other broker-dealers	1,295		1,626
Fulfillment of client short sales	2,225		2,048
Fulfillment of requirements with the Options Clearing Corporation ⁽¹⁾	1,969		1,519
Total collateral pledged	$	5,489	$	5,193

Note: Excludes amounts available and pledged for securities lending from fully-paid client securities. The fair value of fully-paid client securities available and pledged was $104 million as of June 30, 2017 and $58 million as of December 31, 2016 .

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

10. Fair Values of Assets and Liabilities

Assets and liabilities measured at fair value on a recurring basis

The Company’s assets and liabilities measured at fair value on a recurring basis include certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, other securities owned, and AFS securities. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. The Company generally obtains prices from at least three independent pricing sources for assets recorded at fair value.

The Company’s primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. The Company compares the prices obtained from its primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. 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.

Fair value of other financial instruments

Descriptions of the valuation methodologies and assumptions used to estimate the fair value of other financial instruments are described below. The Company’s financial instruments not recorded at fair value but for which fair value can be approximated and disclosed include:


•	Cash and cash equivalents are short-term in nature and accordingly are recorded at amounts that approximate fair value.

•

Cash and investments segregated and on deposit for regulatory purposes include cash and securities purchased under resale agreements. 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 values of these financial instruments approximate their fair values.


•	Receivables from/payables to brokers, dealers, and clearing organizations are short-term in nature, recorded at contractual amounts and historically have been settled at those values. Accordingly, the carrying values of these financial instruments approximate their fair values.

- 39 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)


•	Receivables from/payables to brokerage clients — net are short-term in nature, recorded at contractual amounts and historically have been settled at those values. Accordingly, the carrying values of these financial instruments approximate their fair values.


•	HTM securities – The fair values of HTM securities are obtained using an independent third-party pricing service similar to investment assets recorded at fair value as discussed above.


•	Bank loans – The fair values of the Company’s First Mortgages and HELOCs are estimated based on prices of mortgage-backed securities collateralized by similar types of loans. PALs are non-purpose revolving lines of credit secured by eligible assets; accordingly, the carrying values of these loans approximate their fair values.


•	Financial instruments included in other assets primarily consist of LIHTC investments, cost method investments, and FHLB stock, whose carrying values approximate their fair values. FHLB stock is recorded at par, which approximates its fair value.


•	Bank deposits have no stated maturity and are recorded at the amount payable on demand as of the balance sheet date. The Company considers the carrying values of these deposits to approximate their fair values.


•	Financial instruments included in accrued expenses and other liabilities consist of drafts payable and certain amounts due under contractual obligations, including unfunded LIHTC commitments. The carrying values of these instruments approximate their fair values.


•	Short-term borrowings consist of commercial paper, borrowings on Schwab’s uncommitted, unsecured bank credit lines, and funds drawn on Schwab Bank’s secured credit facility with the Federal Home Loan Bank of San Francisco. Due to the short-term nature of these borrowings, carrying value approximates fair value.


•	Long-term debt – Except for the finance lease obligation, the fair values of long-term debt 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 HELOCs and PALs. The Company considers the fair value of these unused commitments to not be material because the interest rates earned on these balances are based on floating interest rates that reset monthly.

For a description of the fair value hierarchy, see Note 2 in the 2016 Form 10-K. There were no significant changes in these policies and methodologies during the first six months of 2017 . The Company did not transfer any assets or liabilities between Level 1, Level 2, or Level 3 during the six months ended June 30, 2017 , or the year ended December 31, 2016 . In addition, the Company did not adjust prices received from the primary independent third-party pricing service at June 30, 2017 or December 31, 2016 .

- 40 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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



June 30, 2017	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	$	1,670	$	—	$	—	$	1,670
Total cash equivalents	1,670		—		—		1,670
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		2,026		—		2,026
U.S. Government securities	—		5,256		—		5,256
Total investments segregated and on deposit for regulatory purposes	—		7,282		—		7,282
Other securities owned:
Equity and bond mutual funds	300		—		—		300
Schwab Funds ^® money market funds	78		—		—		78
State and municipal debt obligations	—		41		—		41
Equity, U.S. Government and corporate debt, and other securities	2		39		—		41
Total other securities owned	380		80		—		460
Available for sale securities:
U.S. agency mortgage-backed securities	—		17,633		—		17,633
Asset-backed securities	—		9,894		—		9,894
Corporate debt securities	—		6,625		—		6,625
U.S. Treasury securities	—		7,697		—		7,697
Certificates of deposit	—		1,622		—		1,622
U.S. agency notes	—		1,907		—		1,907
Commercial paper	—		214		—		214
Non-agency commercial mortgage-backed securities	—		42		—		42
Total available for sale securities	—		45,634		—		45,634
Total	$	2,050	$	52,996	$	—	$	55,046

- 41 -

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, 2016	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	$	1,514	$	—	$	—	$	1,514
Total cash equivalents	1,514		—		—		1,514
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		2,525		—		2,525
U.S. Government securities	—		6,111		—		6,111
Total investments segregated and on deposit for regulatory purposes	—		8,636		—		8,636
Other securities owned:
Equity and bond mutual funds	272		—		—		272
Schwab Funds ^® money market funds	108		—		—		108
State and municipal debt obligations	—		41		—		41
Equity, U.S. Government and corporate debt, and other securities	2		26		—		28
Total other securities owned	382		67		—		449
Available for sale securities:
U.S. agency mortgage-backed securities	—		33,195		—		33,195
Asset-backed securities	—		20,335		—		20,335
Corporate debt securities	—		9,852		—		9,852
U.S. Treasury securities	—		8,623		—		8,623
Certificates of deposit	—		2,071		—		2,071
U.S. agency notes	—		1,907		—		1,907
U.S. state and municipal securities	—		1,123		—		1,123
Commercial paper	—		214		—		214
Non-agency commercial mortgage-backed securities	—		45		—		45
Total available for sale securities	—		77,365		—		77,365
Total	$	1,896	$	86,068	$	—	$	87,964

- 42 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Fair Value of Other Financial Instruments

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



June 30, 2017	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	$	7,905	$	—	$	7,905	$	—	$	7,905
Cash and investments segregated and on deposit for regulatory purposes	11,196		—		11,196		—		11,196
Receivables from brokers, dealers, and clearing organizations	910		—		910		—		910
Receivables from brokerage clients – net	17,990		—		17,990		—		17,990
Held to maturity securities:
U.S. agency mortgage-backed securities	89,250		—		88,944		—		88,944
Non-agency commercial mortgage-backed securities	995		—		1,004		—		1,004
Asset-backed securities	12,493		—		12,561		—		12,561
Corporate debt securities	3,181		—		3,204		—		3,204
U.S. Treasury securities	223		—		222		—		222
Commercial paper	100		—		100		—		100
U.S. state and municipal securities	1,168		—		1,211		—		1,211
Certificates of deposit	200		—		200		—		200
Total held to maturity securities	107,610		—		107,446		—		107,446
Bank loans – net:
Residential real estate mortgages	9,564		—		9,541		—		9,541
Home equity loans and lines of credit	2,140		—		2,249		—		2,249
Pledged asset lines	4,001		—		4,001		—		4,001
Other	112		—		112		—		112
Total bank loans – net	15,817		—		15,903		—		15,903
Other assets	337		—		337		—		337
Total	$	161,765	$	—	$	161,687	$	—	$	161,687
Liabilities:
Bank deposits	$	162,300	$	—	$	162,300	$	—	$	162,300
Payables to brokers, dealers, and clearing organizations	1,934		—		1,934		—		1,934
Payables to brokerage clients	33,039		—		33,039		—		33,039
Accrued expenses and other liabilities	911		—		911		—		911
Short-term borrowings	300		—		300		—		300
Long-term debt	3,518		—		3,591		—		3,591
Total	$	202,002	$	—	$	202,075	$	—	$	202,075

- 43 -

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, 2016	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	$	9,314	$	—	$	9,314	$	—	$	9,314
Cash and investments segregated and on deposit for regulatory purposes	13,533		—		13,533		—		13,533
Receivables from brokers, dealers, and clearing organizations	728		—		728		—		728
Receivables from brokerage clients – net	17,151		—		17,151		—		17,151
Held to maturity securities:
U.S. agency mortgage-backed securities	72,439		—		71,677		—		71,677
Non-agency commercial mortgage-backed securities	997		—		1,004		—		1,004
Asset-backed securities	941		—		941		—		941
Corporate debt securities	436		—		436		—		436
U.S. Treasury securities	223		—		219		—		219
Commercial paper	99		—		99		—		99
U.S. state and municipal securities	68		—		68		—		68
Total held to maturity securities	75,203		—		74,444		—		74,444
Bank loans – net:
Residential real estate mortgages	9,117		—		9,064		—		9,064
Home equity loans and lines of credit	2,342		—		2,458		—		2,458
Pledged asset lines	3,851		—		3,851		—		3,851
Other	93		—		94		—		94
Total bank loans – net	15,403		—		15,467		—		15,467
Other assets	328		—		328		—		328
Total	$	131,660	$	—	$	130,965	$	—	$	130,965
Liabilities:
Bank deposits	$	163,454	$	—	$	163,454	$	—	$	163,454
Payables to brokers, dealers, and clearing organizations	2,407		—		2,407		—		2,407
Payables to brokerage clients	35,894		—		35,894		—		35,894
Accrued expenses and other liabilities	1,169		—		1,169		—		1,169
Long-term debt	2,876		—		2,941		—		2,941
Total	$	205,800	$	—	$	205,865	$	—	$	205,865

- 44 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

11. Stockholders’ Equity

The Company’s preferred stock issued and outstanding is as follows:



	June 30, 2017							December 31, 2016
	Shares Issued and Outstanding (In thousands)	Liquidation Preference Per Share		Liquidation Preference		Carrying Value		Shares Issued and Outstanding (In thousands)	Liquidation Preference Per Share		Liquidation Preference		Carrying Value
Series A	400	$	1,000	$	400	$	397	400	$	1,000	$	400	$	397
Series B	485	1,000		485		482		485	1,000		485		482
Series C	600	1,000		600		585		600	1,000		600		585
Series D	750	1,000		750		728		750	1,000		750		728
Series E	6	100,000		600		591		6	100,000		600		591
Total Preferred Stock	2,241			$	2,835	$	2,783	2,241			$	2,835	$	2,783

12. Accumulated Other Comprehensive Income

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



Three Months Ended June 30,	2017									2016
	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	$	29		$	(11	)	$	18		$	168		$	(63	)	$	105
Other reclassifications included in other revenue	(6		)	3			(3		)	(3		)	1			(2		)
Change in net unrealized gain (loss) on held to maturity securities:
Amortization of amounts previously recorded upon transfer from available for sale	9			(4		)	5			—			—			—
Other comprehensive income (loss)	$	32		$	(12	)	$	20		$	165		$	(62	)	$	103



Six Months Ended June 30,	2017									2016
	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Change in net unrealized gain (loss) on available for sale securities:
Net unrealized gain (loss)	$	81		$	(30	)	$	51		$	189		$	(71	)	$	118
Reclassification of net unrealized loss on securities transferred to held to maturity ⁽¹⁾	227			(85		)	142			—			—			—
Other reclassifications included in other revenue	(7		)	3			(4		)	(3		)	1			(2		)
Change in net unrealized gain (loss) on held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale ⁽¹⁾	(227		)	85			(142		)	—			—			—
Amortization of amounts previously recorded upon transfer from available for sale	11			(5		)	6			—			—			—
Other	(3		)	1			(2		)	1			—			1
Other comprehensive income (loss)	$	82		$	(31	)	$	51		$	187		$	(70	)	$	117


⁽¹⁾	See Note 3 for discussion of the transfer of securities from the AFS category to the HTM category during the first quarter of 2017.

- 45 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Accumulated other comprehensive income balances are as follows:



	Total Accumulated Other Comprehensive Income
Balance at December 31, 2015	$	(134	)
Net unrealized gain (loss) on available for sale securities	116
Other	1
Balance at June 30, 2016	$	(17	)
Balance at December 31, 2016	$	(163	)
Available for sale securities:
Net unrealized gain (loss)	51
Reclassification of net unrealized loss on securities transferred to held to maturity	142
Other reclassifications included in other revenue	(4		)
Held to maturity securities:
Reclassification of net unrealized loss on securities transferred from available for sale	(142		)
Amortization of amounts previously recorded upon transfer to held to maturity from available for sale	6
Other	(2		)
Balance at June 30, 2017	$	(112	)

13. Earnings Per Common Share

EPS under the basic and diluted computations is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income	$	575		$	452		$	1,139		$	864
Preferred stock dividends and other ⁽¹⁾	(45		)	(46		)	(84		)	(66		)
Net income available to common stockholders	$	530		$	406		$	1,055		$	798
Weighted-average common shares outstanding — basic	1,338			1,322			1,337			1,322
Common stock equivalent shares related to stock incentive plans	13			11			14			9
Weighted-average common shares outstanding — diluted ⁽²⁾	1,351			1,333			1,351			1,331
Basic EPS	$	.40		$	.31		$	.79		$	.60
Diluted EPS	$	.39		$	.30		$	.78		$	.60


⁽¹⁾	Includes preferred stock dividends and undistributed earnings and dividends allocated to non-vested restricted stock units.


⁽²⁾	Antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS totaled 9 million and 19 million shares for the second quarters of 2017 and 2016 , respectively, and 10 million and 22 million shares for the first halves of 2017 and 2016, respectively.

14. Regulatory Requirements

At June 30, 2017 , both CSC and Schwab Bank met all of their respective capital requirements. Certain events, such as growth in bank deposits and regulatory discretion, could adversely affect CSC’s or Schwab Bank’s ability to meet future capital requirements.

- 46 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The regulatory capital and ratios for CSC and Schwab Bank are as follows:



	Actual				Minimum to be Well Capitalized				Minimum Capital Requirement
June 30, 2017	Amount		Ratio		Amount		Ratio		Amount		Ratio
CSC
Common Equity Tier 1 Risk-Based Capital	$	13,589	19.5	%	N/A				$	3,133	4.5	%
Tier 1 Risk-Based Capital	16,372		23.5	%	N/A				4,177		6.0	%
Total Risk-Based Capital	16,400		23.6	%	N/A				5,570		8.0	%
Tier 1 Leverage	16,372		7.4	%	N/A				8,843		4.0	%
Schwab Bank
Common Equity Tier 1 Risk-Based Capital	$	12,987	21.0	%	$	4,015	6.5	%	$	2,779	4.5	%
Tier 1 Risk-Based Capital	12,987		21.0	%	4,941		8.0	%	3,706		6.0	%
Total Risk-Based Capital	13,014		21.1	%	6,176		10.0	%	4,941		8.0	%
Tier 1 Leverage	12,987		7.3	%	8,934		5.0	%	7,148		4.0	%
December 31, 2016
CSC
Common Equity Tier 1 Risk-Based Capital	$	12,574	18.4	%	N/A				$	3,068	4.5	%
Tier 1 Risk-Based Capital	15,357		22.5	%	N/A				4,091		6.0	%
Total Risk-Based Capital	15,384		22.6	%	N/A				5,454		8.0	%
Tier 1 Leverage	15,357		7.2	%	N/A				8,516		4.0	%
Schwab Bank
Common Equity Tier 1 Risk-Based Capital	$	11,878	19.8	%	$	3,894	6.5	%	$	2,696	4.5	%
Tier 1 Risk-Based Capital	11,878		19.8	%	4,793		8.0	%	3,595		6.0	%
Total Risk-Based Capital	11,904		19.9	%	5,992		10.0	%	4,793		8.0	%
Tier 1 Leverage	11,878		7.0	%	8,456		5.0	%	6,765		4.0	%

N/A Not applicable.

Based on its regulatory capital ratios at June 30, 2017 , Schwab Bank is considered well capitalized (the highest category) under its respective regulatory capital rules. There are no conditions or events since June 30, 2017 that management believes have changed Schwab Bank’s capital category. At June 30, 2017 , both CSC’s and Schwab Bank’s capital levels exceeded the fully implemented capital conservation buffer requirement.

Net capital and net capital requirements for Schwab and optionsXpress are as follows:



June 30, 2017	Net Capital		Minimum Net Capital Required		2% of Aggregate Debit Balances		Net Capital in Excess of Required Capital
Schwab	$	1,951	$	0.250	$	385	$	1,566
optionsXpress	290		1		7		283
December 31, 2016
Schwab	$	1,846	$	0.250	$	355	$	1,491
optionsXpress	269		1		8		261

- 47 -

THE CHARLES SCHWAB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

15. Segment Information

The Company’s two reportable segments are Investor Services and Advisor Services. The Company structures its operating segments according to its clients and the services provided to those clients. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services. The Advisor Services segment provides custodial, trading, banking, and support services as well as retirement business services. Revenues and expenses are allocated to the Company’s two segments based on which segment services the client.

Management evaluates the performance of its segments on a pre-tax basis. Segment assets and liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments. There are no revenues from transactions between the segments.

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



	Investor Services				Advisor Services				Total
Three Months Ended June 30,	2017		2016		2017		2016		2017		2016
Net Revenues:
Asset management and administration fees	$	582	$	514	$	263	$	243	$	845	$	757
Net interest revenue	795		628		258		170		1,053		798
Trading revenue	98		129		59		72		157		201
Other	55		51		20		19		75		70
Provision for loan losses	—		2		—		—		—		2
Total net revenues	1,530		1,324		600		504		2,130		1,828
Expenses Excluding Interest	914		834		307		274		1,221		1,108
Income before taxes on income	$	616	$	490	$	293	$	230	$	909	$	720



	Investor Services				Advisor Services				Total
Six Months Ended June 30,	2017		2016		2017		2016		2017		2016
Net Revenues:
Asset management and administration fees	$	1,148	$	986	$	520	$	470	$	1,668	$	1,456
Net interest revenue	1,548		1,241		505		329		2,053		1,570
Trading revenue	217		272		132		161		349		433
Other	105		97		36		36		141		133
Provision for loan losses	—		—		—		—		—		—
Total net revenues	3,018		2,596		1,193		996		4,211		3,592
Expenses Excluding Interest	1,844		1,671		615		546		2,459		2,217
Income before taxes on income	$	1,174	$	925	$	578	$	450	$	1,752	$	1,375

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, 2017 . 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, 2017 .

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, 2017 , that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 48 -

THE CHARLES SCHWAB CORPORATION

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of legal proceedings, see Item 1 – Note 8.

Item 1A. Risk Factors

During the first six months of 2017 , there have been no material changes to the risk factors in Part I – Item 1A – Risk Factors in the 2016 Form 10-K.

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

Issuer Purchases of Equity Securities

At June 30, 2017 , approximately $596 million of future share repurchases are authorized under the Share Repurchase Program. There were no share repurchases during the second quarter of 2017 . There were two authorizations under this program 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.

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 2017 :



Month	Total number of shares Purchased (in thousands)	Average Price Paid per shares
April:
Employee transactions ⁽¹⁾	10	$	39.45
May:
Employee transactions ⁽¹⁾	7	$	39.70
June:
Employee transactions ⁽¹⁾	18	$	39.92
Total:
Employee Transactions ⁽¹⁾	35	$	37.75

⁽¹⁾ Includes restricted shares withheld (under the terms of grants under employee stock incentive plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. 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.

- 49 -

THE CHARLES SCHWAB CORPORATION

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

- 50 -

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

10.349		The Charles Schwab Severance Pay Plan, as Amended and Restated Effective May 1, 2012.	(1)

10.376		Credit Agreement (364 – Day Commitment) dated as of June 2, 2017, between the Registrant and financial institutions therein (supersedes Exhibit 10.368).

12.1		Computations 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, 2017 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 Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.

- 51 -

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 7, 2017	/s/ Peter Crawford
		Peter Crawford
		Executive Vice President and
		Chief Financial Officer

- 52 -

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 - PARTICIPATON	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

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.

“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

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.

“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.

“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.

“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.


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.

“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.

“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

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;

(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.


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.

“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.

“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.

“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

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.

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

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

(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

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

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

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 - ADMINISTRATIONARTICLE

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;

(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)

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.

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

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.

EXHIBIT 10.376

EXECUTION COPY

$750,000,000

CREDIT AGREEMENT

(364-DAY COMMITMENT)

dated as of June 2, 2017

Among

THE CHARLES SCHWAB CORPORATION

and

CITIBANK, N.A.

as Administrative Agent

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

and

BANK OF AMERICA, N.A.

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

THE BANK OF NEW YORK MELLON

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

JPMORGAN CHASE BANK, N.A.

as Joint Lead Arrangers and Bookrunners

NYDOCS02/119845



1.	DEFINITIONS.	1

2.	THE CREDIT FACILITY.	13

	2.1 The Revolving Credit Facility	13
	2.2 Term Loan Facility	14
	2.3 Evidence of Borrowing/Promissory Notes	14
	2.4 Making of Revolving Loans and Term Loans, Borrowings; Interest Periods;
	Notice	15
	2.5 Conversion and Continuation Elections.	16
	2.6 Interest Periods	18
	2.7 Interest Rates	18
	2.8 Substitute Rates	19
	2.9 Fees	19
	2.10 Reduction of Credit	20
	2.11 Termination Date; Extensions	20
	2.12 Payments by the Lenders to the Agent	21
	2.13 Sharing of Payments, Etc.	22
	2.14 Computation of Fees and Interest	22
	2.15 Defaulting Lenders	23

3.	PAYMENT.	24

	3.1 Repayment	24
	3.2 Method of Payment	24
	3.3 Optional Prepayment	24
	3.4 Taxes/Net Payments	25
	3.5 Illegality	25
	3.6 Increased Costs and Reduction of Return	26
	3.7 Funding Losses	27
	3.8 Certificates of Lenders	27
	3.9 Substitution of Lenders	27
	3.10 Survival	28

4.	CONDITIONS.	28

	4.1 Conditions Precedent to the Effectiveness of this Agreement	28
	4.2 Conditions Precedent to Revolving Loans and Term Loans	29

5.	REPRESENTATIONS AND WARRANTIES.	30

	5.1 Organization and Good Standing	30
	5.2 Corporate Power and Authority	30
	5.3 Enforceability	30
	5.4 No Violation of Laws or Agreements	30
	5.5 No Consents	30

NYDOCS02/1119845 i



	5.6 Financial Statements	31
	5.7 Broker Subsidiary Licenses, Etc	31
	5.8 Broker Subsidiary/Broker Registration	31
	5.9 Broker Subsidiary/SIPC	31
	5.10 Taxes	31
	5.11 ERISA	31
	5.12 No Extension of Credit for Default Remedy/Hostile Acquisition	31
	5.13 Use of Proceeds/Margin Regulations	32
	5.14 Authorized Persons	32
	5.15 Material Contracts	32
	5.16 Litigation	32
	5.17 Investment Company	32
	5.18 Designated Persons	32

6.	AFFIRMATIVE COVENANTS.	32

	6.1 Notice of Events of Default	32
	6.2 Financial Statements	33
	6.3 Insurance	33
	6.4 Books and Records	33
	6.5 Change in Business	33
	6.6 Capital Requirements	33
	6.7 Anti-Corruption Laws and Sanctions	33

7.	NEGATIVE COVENANTS.	34

	7.1 Net Capital	34
	7.2 Minimum Stockholders’ Equity	34
	7.3 Merger/Disposition of Assets	34
	7.4 Broker Subsidiary Indebtedness	34
	7.5 Indebtedness Secured by Subsidiary Stock	34
	7.6 Liens and Encumbrances	35
	7.7 Use of Proceeds	35

8.	EVENTS OF DEFAULT.	35

	8.1 Defaults	35
	8.2 Remedies	37

9.	THE AGENT.	37

	9.1 Appointment and Authorization	37
	9.2 Delegation of Duties	38
	9.3 Liability of Agent	38
	9.4 Reliance by Agent	38
	9.5 Notice of Default	39
	9.6 Credit Decision	39
	9.7 Indemnification of Agent	39

NYDOCS02/1119845 ii



	9.8 Agent in Individual Capacity	40
	9.9 Successor Agent	40
	9.10 Withholding Tax	40
	9.11 Co-Agents	42

10.	MISCELLANEOUS.	42

	10.1 Amendments and Waivers	42
	10.2 Notices	43
	10.3 No Waiver-Cumulative Remedies	44
	10.4 Costs and Expenses	44
	10.5 Borrower Indemnification	45
	10.6 Payments Set Aside	46
	10.7 Successors and Assigns	46
	10.8 Assignments, Participations Etc	46
	10.9 Confidentiality	49
	10.10 Notification of Addresses, Lending Offices, Etc	50
	10.11 Counterparts	51
	10.12 Severability	51
	10.13 No Third Parties Benefited	51
	10.14 Governing Law and Jurisdiction	51
	10.15 Waiver of Jury Trial	52
	10.16 Entire Agreement	53
	10.17 Headings	53
	10.18 USA Patriot Act	53
	10.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions	53

NYDOCS02/1119845 iii




	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

NYDOCS02/1119845 iv

CREDIT AGREEMENT (364-DAY COMMITMENT)

THIS CREDIT AGREEMENT (364-DAY COMMITMENT) (“ this Agreement ”) is entered into as of June 2, 2017, 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 1, 2018, and to make Term Loans to the Borrower on or before June 1, 2018 and maturing no later than May 31, 2019, 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.

Anti-Corruption


Laws	The U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, each as may be amended, and any rules or regulations thereunder.

NYDOCS02/1119845


Applicable Margin:	(i) with respect to Eurodollar Rate Loans, 0.875% per annum; and

(ii) with respect to Base Rate Loans, 0.00% per annum.


Arrangers:	Citigroup Global Markets Inc. and JPMorgan Chase Bank, N.A.


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.


Bail-In Action:	The meaning specified in Section 10.19 .


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 ICE Benchmark Administration Interest Settlement Rate (or the successor thereto if the ICE Benchmark Administration is no longer making such a rate available) 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); provided that, if One Month LIBOR shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. 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.

NYDOCS02/1119845


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.

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

NYDOCS02/1119845

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 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 2, 2017) 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, including any preferred stock, but excluding accumulated other comprehensive income (or loss).

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

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Seven Hundred Fifty Million and no/100 Dollars ($750,000,000.00), as the same may be reduced under Section 2.10 .


Debtor Relief Laws:	The Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.


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.

Defaulting Lender:

Subject to Section 2.15(b ), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower or the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Agent or the Borrower, to confirm in writing to the Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law or a Bail-In Action, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a

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Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(b )) upon delivery of written notice of such determination to the Borrower and each Lender.


Designated Person:	A Person named on (a) the list of Specially Designated Nationals and Blocked Persons issued by OFAC or any successor office or agency within the U.S. Department of the Treasury, or similar issuance by the U.S. Department of State, or (b) any similar list issued by the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

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 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

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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 ICE Benchmark Administration Interest Settlement Rate (or the successor thereto if the ICE Benchmark Administration is no longer making such a rate available) 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 ICE Benchmark Administration Interest Settlement Rate (or the successor thereto if the ICE Benchmark Administration is no longer making such a rate available) 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;

provided that, if the Eurodollar Base shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.


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

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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.

FATCA:

Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

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, 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; provided that, if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.


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.

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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 .

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

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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.

Minimum


Stockholders’ Equity:	As of the Closing Date, and the last day of each fiscal quarter thereafter, the greater of:

(a) $11,600,000,000, or

(b) the sum of –

(i) $11,600,000,000, plus

(ii) 50% of the sum of cumulative Net Earnings for each fiscal quarter commencing with the fiscal quarter ended June 30, 2017.


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

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for the applicable period, determined in accordance with GAAP, consistently applied.

Non-Defaulting


Lender:	At any time, each Lender that is not a Defaulting Lender at such time.


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.


OFAC:	The U.S. Department of the Treasury’s Office of Foreign Assets Control.


Person:	An individual, partnership, corporation, limited liability company, business trust, unincorporated association, trust, joint venture or other entity 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.


Reference Banks:	Citibank, N.A. 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. The Loans owing to, and Commitments of, any Defaulting Lender shall be disregarded in determining Required Lenders at any time.


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

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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 1, 2018; and


(b)	the date on which the Commitments terminate in accordance with the provisions of this Agreement.


Sanctions:	Economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) OFAC or any successor office or agency within the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.


SEC:	The Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

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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 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:	Seven Hundred Fifty Million and no/100 Dollars ($750,000,000.00), 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 in Dollars 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

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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 .

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 1, 2018, 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 1, 2018, 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 1, 2018, 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 Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Loans. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender, within ten Business Days after such Lender becomes a party to this

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Agreement, made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) promissory notes of the Borrower (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 such Lender in the principal amount of its Commitment, bearing interest as hereinafter specified, which shall evidence such Lender’s Revolving Loans and Term Loans, respectively, in addition to such accounts or records. Each Revolving Note and Term Note requested at least five Business Days prior to the date hereof shall be dated the date hereof and shall be delivered in accordance with Section 4.1(a ). Each other Revolving Note and Term Note shall be dated, and shall be delivered to each requesting Lender, not later than ten Business Days after the request therefor is delivered to the Borrower; provided that any failure to timely deliver any Note shall not constitute a Default hereunder and shall not excuse any Lender from the performance of its funding obligations hereunder. 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 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);

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(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.

With respect to any Borrowing having an Interest Period ending on or before June 1, 2018, 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 , (iii) 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 :

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(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;

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

(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.

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(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 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 May 31, 2019.

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

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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; or

(d) the applicable Reuters screen (or any successor page of such service, or any successor or substitute for such service, as provided in the definition herein for Eurodollar Base Rate) is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Base Rate for any Eurodollar Rate Loans, after the Agent has requested such information;

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 ”)

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between the Borrower and each of the Arrangers and between the Borrower and the Agent, each dated May 2, 2017.

(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 seven one hundredths of one percent (0.07%) 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, 2017 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 1, 2018, 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 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 1, 2018. At any time no earlier than forty-five (45) days and no later than thirty

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(30) days prior to the Termination Date then in effect (whether the initial Termination Date of June 1, 2018 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 1, 2018”, and “May 31, 2019” (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 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.

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(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 , (a) 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 and (b) the provisions of this paragraph shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply). 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 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) Each Reference Bank may, if requested by the Agent, furnish to the Agent timely information for the purpose of determining each Eurodollar Base Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks, subject to the provisions of Section 2.8 . The Agent shall give prompt notice to the Borrower and the Lenders

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of the applicable interest rate determined by the Agent for purposes of Section 2.7(a ) (it being understood that the Agent shall not be required to disclose to any party hereto (other than the Borrower) any information regarding any Reference Bank or any rate provided by such Reference Bank in accordance with this subsection, including, without limitation, whether a Reference Bank has provided a rate or the rate provided by any individual Reference Bank).

2.15 Defaulting Lenders .

(a) Defaulting Lender Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders.

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise) shall be applied at such time or times as may be determined by the Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second , as the Borrower may request (so long as no Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third , if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth , to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth , so long as no Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 4.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender

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(and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(b) Defaulting Lender Cure . If the Borrower and the Agent agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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 any Revolving Note and 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.

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3.4 Taxes/Net Payments . All payments by Borrower hereunder and under any Revolving Note and 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 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, (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 or (z) to any taxes imposed pursuant to FATCA.

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.

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(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 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.

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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:

(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;

(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 , or if any Lender is a Defaulting Lender (an Affected Lender or a Defaulting Lender is a “Replaceable Lender”), the Borrower may: (i) request the Replaceable 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 Replaceable 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 Replaceable 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

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(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.

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;

(a) This Agreement and, to the extent requested by such Lender at least five Business Days prior to the date hereof, the Notes, in each case 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, 2016 not reflected on its Quarterly Report on Form 10-Q filed with the SEC for the period ending March 31, 2017.

(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

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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.

(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 (other than the representation and warranty set forth in Section 5.16 ) 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

(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

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(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:

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

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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.

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

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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 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 8, 2017, 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.

5.18 Designated Persons . None of the Borrower, the Broker Subsidiary or any Bank Subsidiary, nor, to the knowledge of the Borrower, any of their respective directors or officers, is a Designated Person. No Borrowing or the use of proceeds thereof by the Borrower or any Subsidiary will, directly or, to the knowledge of the Borrower, indirectly, violate Anti- Corruption Laws or Sanctions.

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.

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6.2 Financial Statements . Deliver to the Agent, in form and detail satisfactory to the Agent and the Required Lenders, within ten Business Days after the filing with the SEC of each Form 10-Q and Form 10-K filed by the Borrower with the SEC under the Exchange Act, 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 Section 7.2 financial covenants; and also deliver to the Agent a copy of (i) each registration statement filed by the Borrower 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 Exchange Act, (iii) each Form 8-K (with exhibits) and proxy statement filed by the Borrower with the SEC under the Exchange Act, and (iv) any request filed by the Borrower with the SEC for an extension of the due date of any of the filings referred to in the foregoing clauses (i), (ii) or (iii); provided , however , that each of the filings referred to in the foregoing clauses (i) through (iv) shall automatically be deemed delivered by the Borrower to the Agent and the Lenders upon its filing by the Borrower with the SEC.

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.

6.7 Anti-Corruption Laws and Sanctions . The Borrower has implemented and will maintain in effect policies and procedures reasonably designed to ensure compliance with Anti-Corruption Laws and Sanctions.

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:

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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:

(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

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 obligations of the Borrower hereunder and under the Notes, if any, 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.

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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 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.

7.7 Use of Proceeds . The Borrower will not request any Borrowing, and shall not use the proceeds of any Borrowing, in any manner that, directly or, to the knowledge of the Borrower, indirectly, would result in the violation of any Anti-Corruption Laws or Sanctions.

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 Loans or the Term Loans 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 Loans or the Term Loans 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

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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.

(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

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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, if any, 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 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.

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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 .

(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.

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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 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

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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 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

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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.

(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

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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 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

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(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.

(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@citi.com. The Borrower agrees that the Agent may make such materials (collectively, the “Communications”) available to the Lenders by posting such

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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, if any, 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 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:

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(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.

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,

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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 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) (i) Any Lender may, with the written consent of the Agent and the Borrower, which consent shall not be unreasonably withheld or delayed (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

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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 (x) 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 and (y) no such assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender.

(ii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations, or other compensating actions, including funding, with the consent of the Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent, and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full Pro Rata Share of all Loans in accordance with its Pro Rata Share. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

(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) If requested by the Assignee and/or the Assignor, 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

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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 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, any 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 .

The Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in New Castle, Delaware a copy of each Assignment and Acceptance permitted by subparagraph (a) of this Section 10.8 and delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Assignment Register ”). The entries in the Assignment Register shall be conclusive absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Assignment Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Assignment Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(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 any 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.

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(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 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, however, that (i) as to any such Affiliate, such Affiliate has delivered to such Lender a written confidentiality agreement substantially similar to this Section 10.9 , and (ii) as to any such agent, such agent has been informed by such Lender of the confidential nature of such confidential information and has been instructed by such Lender to maintain the confidentiality of such confidential information; 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 Loans and/or the Term Loans, 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

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

The Agent agrees to provide to the Borrower, upon the Borrower’s request, each interest rate that is furnished by any Reference Bank to the Agent pursuant to Section 2.14(b ) (each, a “Reference Bank Rate”), which information is to be treated by the Borrower as confidential except (i) the Borrower may disclose any actual interest rate payable under this Agreement, and (ii) the Borrower may disclose any Reference Bank Rate (a) to legal counsel and accountants for Borrower; (b) to other professional advisors to Borrower, provided that the recipient has delivered to the Borrower a written confidentiality agreement substantially similar to this Section 10.9 ; (c) to regulatory officials having jurisdiction over the Borrower; (d) as required by applicable law, legal process, the New York Stock Exchange or any similar self-regulatory exchange of which Borrower is a member, or in connection with any legal proceeding in which any Lender and Borrower are adverse parties; (e) to Affiliates or agents of the Borrower to the extent the Affiliate or agent is involved in the administration of the credit facilities extended to the Borrower and its Subsidiaries hereunder, provided, however, that (i) as to any such Affiliate, such Affiliate has delivered to the Borrower a written confidentiality agreement substantially similar to this Section 10.9 , and (ii) as to any such agent, such agent has been informed by the Borrower of the confidential nature of such confidential information and has been instructed by the Borrower to maintain the confidentiality of such Reference Bank Rate. The Borrower further agrees that it will not use such confidential information in any activity or for any purpose other than the administration of this Agreement 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 the Borrower, or by an affiliate of the Borrower, who is not involved in the administration of this Agreement.

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

NYDOCS02/1119845

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. Delivery of an executed counterpart of a signature page to this Agreement by telecopier, email or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

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) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANY OTHER PARTY HERETO OR ANY AGENT-RELATED PARTY IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF CALIFORNIA THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF CALIFORNIA OR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA OR NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF

NYDOCS02/1119845

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 .

(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

NYDOCS02/1119845

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 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.

10.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

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(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

The following terms have the following meanings:


Bail-In Action:	The exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.


Bail-In Legislation:	With respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

EEA Financial

Institution:

(a) Any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member


Country:	Any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution


Authority:	Any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

EU Bail-In Legislation


Schedule:	The EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

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Loan Market


Association:	The London trade association, which is the self-described authoritative voice of the syndicated loan markets in Europe, the Middle East and Africa.

Write-Down and


Conversion Powers:	With respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

(SIGNATURE PAGE FOLLOWS)

NYDOCS02/1119845

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 P. Maroney
Name:	Maureen P. Maroney
Title:	Vice President

JPMORGAN CHASE BANK, N.A.

By:	/s/ Leo Lai
Name:	Leo Lai
Title:	Executive Director

BANK OF AMERICA, N.A.

By:	/s/ Maryanne Fitzmaurice
Name:	Maryanne Fitzmaurice
Title:	Director

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

By:	/s/ Doreen Barr
Name:	Doreen Barr
Title:	Authorized Signatory

By:	/s/ Warren Van Heyst
Name:	Warren Van Heyst
Title:	Authorized Signatory

THE BANK OF NEW YORK MELLON

By:	/s/ Stephen Manners
Name:	Stephen Manners
Title:	Vice President



WELLS FARGO BANK, NATIONAL ASSOCIATION

By:	/s/ Tracy Moosbrugger
Name:	Tracy Moosbrugger
Title:	Managing Director

GOLDMAN SACHS BANK USA

By:	/s/ Ryan Durkin
Name:	Ryan Durkin
Title:	Authorized Signatory

HSBC BANK USA, NATIONAL ASSOCIATION

By:	/s/ Johann Matthai
Name:	Johann Matthai
Title:	Director, Financial Institutions Group

LLOYDS BANK PLC

By:	/s/ Erin Walsh
Name:	Erin Walsh
Title:	Assistant Vice President

By:	/s/ Dennis McClellan
Name:	Dennis McClellan
Title:	Assistant Vice President

MORGAN STANLEY BANK, N.A.

By:	/s/ Michael King
Name:	Michael King
Title:	Authorized Signatory

STATE STREET BANK AND TRUST COMPANY

By:	/s/ Andrei Bourdine
Name:	Andrei Bourdine
Title:	Vice President



U.S. BANK NATIONAL ASSOCIATION

By:	/s/ Evan Glass
Name:	Evan Glass
Title:	Senior Vice President



Schedule 1

LENDER'S COMMITMENTS


The Charles Schwab Corporation $750,000,000 Credit Agreement (364-Day Commitment)
as of June 2, 2017.

	Lender Commitment Amount
1. Citibank, N.A.	1.	$75,000,000
2. JPMorgan Chase Bank, N.A.	2.	$75,000,000
3. Bank of America, N.A.	3.	$67,500,000
4. Credit Suisse AG, Cayman Islands Branch	4.	$67,500,000
5. The Bank of New York Mellon	5.	$67,500,000
6. Wells Fargo Bank, National Association	6.	$67,500,000
7. Goldman Sachs Bank USA	7.	$55,000,000
8. HSBC Bank USA, National Association	8.	$55,000,000
9. Lloyds Bank plc	9.	$55,000,000
10. Morgan Stanley Bank, N.A.	10.	$55,000,000
11. State Street Bank and Trust Company	11.	$55,000,000
12. U.S. Bank National Association	12.	$55,000,000


Total		$750,000,000

Schedule 2

LIST OF BORROWING AGREEMENTS

1. $750,000,000 Credit Agreement (364-Day Commitment) dated as of June 3, 2016 among the Borrower, the lenders party thereto, and Citibank, N.A., as administrative agent for such lenders.

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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 2, 2017 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:

NYDOCS02/1119845

The Charles Schwab Corporation

Credit Agreement (364-Day Commitment)

Dated as of June 2, 2017

Schedule I

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

the greater of (a) $11,600,000,000 or (b) $11,600,000,000 plus 50% of the sum of cumulative Net

Earnings for each fiscal quarter commencing with the fiscal quarter ended June 30, 2017.

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Schedule 10.2

NOTICES

TO BE UPDATED



If to the Borrower:

If by U.S. mail:	The Charles Schwab Corporation
	Treasury Department
	Attn: William F. Quinn or Successor
	211 Main Street (Mail Stop SF215FMT-04-100)
	San Francisco, CA 94105

If by hand delivery
(including courier
and overnight
messenger service):	The Charles Schwab Corporation
	Treasury Department
	Attn: William F. Quinn or Successor
	215 Fremont Street, 4th Floor
	San Francisco, CA 94105

Telephone:	(415) 667-7337
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. One Bryant Park, 18 ^th Floor New York, NY 10036 Attention: Maryanne Fitzmaurice Director (646) 556-0343 Fax: 704 683-9184	Bank of America, N.A. 901 S. Main St. Dallas, TX 75202 Attention: Tammi Reddy (415) 436-3685 ext. 65843 Fax: (312) 453-5129	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 225 Liberty Street New York, NY 10281 Attention: Steve Manners Vice President (212) 635-6316 Fax: (212) 635-4717	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 225 Liberty Street New York, NY 10281	The Bank of New York ABA #: 021-000-018 Acct #: GLA111-231 Acct name: Broker Services Attn: Bradley Fike Ref: Charles Schwab Corporation

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Credit Contact	Operations Contact	Lending Office	Payment Instructions
Citibank, N.A. 388 Greenwich Street New York, NY 10013 Attention: Dane Graham Director (212) 816-8219 Fax: (212) 816-1212	Citibank, N.A. 1615 Brett Road, Bldg #3 New Castle, DE 19720 Attention: Investor Relations (302) 894-6010 Fax: (212) 994-0961	Citibank, N.A. 399 Park Avenue New York, NY 10043	Citibank NA ABA #: 021-000-089 New York, NY Acct #: 36852248 Acct Name: Agency/Medium Term Finance Ref: The Charles Schwab Corporation
Credit Suisse AG, Cayman Islands Branch Eleven Madison Avenue New York, NY 10010 Attention: Doreen Barr / Michael Del Genio Phone: (212) 325-9914 / (212) 325- 7688 Fax: (212) 325-8615 /	Credit Suisse AG, Cayman Islands Branch 7033 Louis Stephens Drive PO Box 110047 Research Triangle Park, NC 27709 Attention: Fay Rollins Loan Closers / Tedrick Kelly Administrator Phone: (212) 325-9041 / (919) 994-6087 Fax: (866) 469-3871	Credit Suisse AG, Cayman Islands Branch Eleven Madison Avenue New York, NY 10010	Credit Suisse Bank Name: The Bank of New York ABA #: 021-000-018 New York, NY Acct #: 890-0492-627 Acct Name: CS Agency Cayman Ref: The Charles Schwab Corporation
Goldman Sachs Bank USA Michelle Latzoni c/o Goldman, Sachs & Co. 30 Hudson Street, 5th Floor Jersey City, NJ 07302 Email: gsd.link@gs.com Tel: (212)934-3921	Goldman Sachs Bank USA c/o Goldman, Sachs & Co. 30 Hudson Street, 5th Floor Jersey City, NJ 07302 gs-sbd-admin-contacts@ny.email.gs.com Tel: (212)902-1099 Fax: (917)977-3966	Goldman Sachs Bank USA 200 West Street New York, NY 10282	Goldman Sachs Bank USA Swift Code: CITIUS33 Aba: 021000089 Bank Name: Citibank N.A. City: New York A/C #: 30627664 Entity Name: Goldman Sachs Bank USA
HSBC Bank USA, National Association 452 Fifth Avenue New York, NY 10018 Attention: Jeffrey Roth / Stephen J. Contino Phone: (212) 525-4341 / (212) 525- 7054	HSBC Bank USA, New York 452 Fifth Avenue New York, NY 10018 Attention: CTLA Lan Admin Phone: (212) 525-1529 / Fax: (847) 793- 3415	HSBC Bank USA, National Association 452 fifth Avenue New York, NY 10018	HSBC Bank USA, National Association ABA #: 021-000-1088 Acct #: 713011777 Acct Name: NY Loan Agency Attn: CTLA Laon Admin Ref: The Charles Schwab Corporation
JPMorgan Chase Bank, N.A. 383 Madison Avenue, Floor 23 New York, NY 10179 Attention: Catherine Grossman Vice President / (212) 270-1153 Fax: (212) 270-1511	JPMorgan Chase Bank, N.A. JPM-Bangalore Loan Operations Prestige Tech Park, Floor 4 Sarjapur outer Ring Rd, Vathur Hobli Bangalore, India 560 087 91 80 66761709 Fax: (201) 244-3885	JPMorgan Chase Bank, N.A. 500 Stanton Christiana Road, Ops 2, Floor 3 Newark, DE 19713-2107	JPMorgan Chase Bank, N.A. New York, NY ABA #: 021000021 Acct #: 9008113381H2832 Acct Name: LS2 Incoming Account Attn: Loan & Agency Ref: Charles Schwab
Lloyds Bank plc 1095 Avenue of the Americas, 34th Floor New York , NY 10036 Attention: Sammy Asoli Vice President (212) 284-0418 Fax: (212) 930-5098	Lloyds 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 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 Bank plc, New York Ref: Charles Schwab

NYDOCS02/1119845



Credit Contact	Operations Contact	Lending Office	Payment Instructions
Morgan Stanley Bank, N.A. 750 Seventh Avenue New York, NY 10019 Attention: Joan Cho (212) 762-1190	Morgan Stanley Loan Servicing 1300 Thames Street Wharf, 4 ^th Floor Baltimore, MD 21231 443-627-4355 Fax: 718-233-2140	Morgan Stanley Bank, N.A. One Utah Center 201 South Main Street, 5 ^th Floor Salt Lake, City, UT 84111	MS BANK NA USD Citibank, N.A. New York, NY 10043 ABA #: 021-000-089 Acct #: 3044-0947 Acct Name: Morgan Stanley Bank, N.A. Ref: The Charles Schwab Corporation Attn: Morgan Stanley Loan Servicing
State Street Bank and Trust Company 1 Iron Street, M/S CCB 0900 Boston, MA 02210 Attention: Andrei Bourdine Vice President / Deirdre Holland Managing Director (617) 662-8827 / 8608	State Street Bank and Trust Company 1 Iron Street, M/S CCB 0901 Boston, MA 02210 Attention: Peter Connolly (617) 662-8588 Fax: (617) 988-6677	State Street Bank and Trust Company 1 Iron Street, M/S CCB 0900 Boston, MA 02210	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: Peter Connolly, ext 617-662- 8588
U.S. Bank National Association 461 Fifth Avenue, 7 ^th Floor New York, NY 10017-6234 Attention: Angela (Zhanglan) Cheng, Portfolio Manager (917) 326-3101 Angela.cheng@usbank.com	U.S. Bank National Association 400 City Center Oshkosh, WI 54901 CLS Syndication Services Team – East (920) 237-7601 Fax: (920) 237-7993	U.S. Bank National Association 800 Nicollet Mall Minneapolis, MN 55402	U.S. Bank National Association ABA#: 091000022 Acct. #: 0068542160600 Account Name: CLS Syndication Services GL Acct. Ref.: Charles Schwab Corporation (Type of pymt) Attn: CLS Syndication Team
Wells Fargo Bank, National Association 301 S. College Street, 11th Floor MAC D1053-115 Charlotte, NC 28202 Attention: Karen Hanke Managing Director / (704)-410-0855 Fax: 704-410-0331	Wells Fargo Bank, National Association 1700 Lincoln Street, 5 ^th Floor MAC C7300-059 Denver, CO 80203-4500 Attention: Dorothy Cardenas Loan Servicing Spec. (303) 863-5917 Fax: (303) 863-2729	Wells Fargo Bank, National Association 90 South 7 ^th Street, 7 ^th Floor MAC N9305-075 Minneapolis, MN 55402-3903	Wells Fargo Bank, National Association ABA #: 121000248 Acct #: 00029694050720 Account Name: WLS Denver Attn: Dorothy Cardenas Ref: Charles Schwab

NYDOCS02/1119845

EXHIBIT A-1

REVOLVING NOTE

$__________________________ Date: June 2, 2017

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 1, 2018. 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 2, 2017 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.

NYDOCS02/1119845

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:

NYDOCS02/1119845

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

NYDOCS02/1119845

EXHIBIT A-2

TERM NOTE

Date: June 2, 2017

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 2, 2017, 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:

NYDOCS02/1119845

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

NYDOCS02/1089152

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 2, 2017 (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]: _________________.

________ 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 will not exceed the aggregate amount of the Commitments.

NYDOCS02/1119845

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



BORROWER:

THE CHARLES SCHWAB CORPORATION,
a Delaware Corporation

By:
Name:
Title:

NYDOCS02/1119845

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 2, 2017 (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 _____________________.

NYDOCS02/1119845

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]

NYDOCS02/1119845

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 2, 2017 (“ 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:

NYDOCS02/1119845

EXHIBIT E

BORROWER’S OPINION OF COUNSEL

[Arnold & Porter Kaye Scholer LLP Letterhead]

[Date]

Citibank, N.A., as Agent

___________________________


Re:	Credit Agreement (364-Day Commitment), dated June 2, 2017, 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 2, 2017 (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 2, 2017 (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.

NYDOCS02/1119845

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;

NYDOCS02/1119845

(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 the foregoing shall not preclude any Lender from describing or otherwise disclosing the

NYDOCS02/1119845

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 KAYE SCHOLER LLP

By: _______________________________

NYDOCS02/1119845

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 2, 2017 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.

NYDOCS02/1119845

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 Contact:

	Assignee name:
	Address:

	Attention:
	Telephone:
	Telecopier:



(c)	Lending Office:

	Assignee name:
	Address:



(d)	Payment Instructions:

	Assignee name:
	ABA No.:
	Account No.:
	Attention:
	Reference:

NYDOCS02/1119845

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:

NYDOCS02/1119845

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 and Other

(Dollar Amounts in Millions)

(Unaudited)




	Six Months
	Ended
	June 30, 2017			2016		2015		2014		2013		2012
Earnings before taxes on earnings		$	1,752	$	2,993	$	2,279	$	2,115	$	1,705	$	1,450
Fixed charges
Interest expense:
Bank deposits		49		37		29		30		31		42
Payables to brokerage clients		5		3		2		2		3		3
Short-term borrowings		5		9		—		—		—		—
Long-term debt		59		104		92		73		69		103
Other		11		18		9		(3)		2		2
Total		129		171		132		102		105		150
Interest portion of rental expense		48		88		77		71		69		68
Total fixed charges (A)		177		259		209		173		174		218
Earnings before taxes on earnings and fixed charges (B)		$	1,929	$	3,252	$	2,488	$	2,288	$	1,879	$	1,668

Ratio of earnings to fixed charges (B) ÷ (A) ⁽¹⁾		10.9		12.6		11.9		13.2		10.8		7.7

Ratio of earnings to fixed charges, excluding
bank deposits and payables to brokerage
clients interest expense ⁽²⁾		15.2		14.7		13.8		16.0		13.2		9.4

Total fixed charges		$	177	$	259	$	209	$	173	$	174	$	218
Preferred stock dividends and other ⁽³⁾		129		227		131		96		97		70
Total fixed charges and preferred stock dividends and other (C)		$	306	$	486	$	340	$	269	$	271	$	288

Ratio of earnings to fixed charges and preferred
stock dividends and other (B) ÷ (C) ⁽¹⁾		6.3		6.7		7.3		8.5		6.9		5.8

Ratio of earnings to fixed charges and preferred stock
dividends and other, excluding bank deposits and
payables to brokerage clients interest expense ⁽²⁾		7.4		7.2		8.0		9.5		7.8		6.7

⁽¹⁾ The ratios of earnings to fixed charges and earnings to fixed charges and preferred stock dividends and other 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 property, equipment and software rental expense, which is estimated to be representative of the interest factor.

⁽²⁾ Because interest expense incurred in connection with both bank deposits 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 bank deposits and payables to brokerage clients interest expense, and the ratio of earnings to fixed charges and preferred stock dividends and other, excluding bank deposits and payables to brokerage clients interest expense, reflect the elimination of such interest expense as a fixed charge.

⁽³⁾ The preferred stock dividend and other amounts represent the pre-tax earnings that would be required to pay the dividends on outstanding preferred stock and undistributed earnings and dividends allocated to non-vested restricted stock units.

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 7, 2017	/s/ Walter W. Bettinger II
		Walter W. Bettinger II
		President and Chief Executive Officer

໿

THE CHARLES SCHWAB CORPORATION

໿ EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a‑14(a)/15d‑14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Crawford, certify that:


1.	I have reviewed this 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 7, 2017	/s/ Peter Crawford
		Peter Crawford
		Executive Vice President and Chief Financial Officer

໿

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, 2017 (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 7, 2017
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.

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, 2017 (the Report), I, Peter Crawford, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.



/s/ Peter Crawford	Date:	August 7, 2017
Peter Crawford
Executive Vice President and Chief Financial Officer