Good morning, everyone, and welcome to Schwab's 2025 Summer Business Update, broadcasting live from our very warm and toasty Westlake headquarters. This is Jeff Edwards, Head of Investor Relations, and I'm joined by our President and CEO, Rick Wurster, and CFO, Mike Verdeschi. Hopefully, you've had the opportunity to peruse our strong earnings release that hit the wires about an hour ago. The team is excited to provide some additional color around those strong results as well as provide a broader strategic and financial update as we move into the back half of the year. Let's quickly hit on the typical housekeeping items. The slides for the business update will be posted to the usual spot on the IR website at the conclusion of today's prepared remarks. Q&A is structured as one question, no follow-up, thus allowing time to get as many questions from all of the interested parties as we can during today's meeting. As always, please don't hesitate to reach out to the IR team with any follow-up questions after today's business update. And yes, the wall of words, our forward-looking statements page, which reminds us that outcomes can differ from expectations, so please keep in touch with our disclosures.

Thank you, Jeff, and good morning, everyone. Thank you for joining us for our Summer Business Update. Our long-standing client-centered approach to serving investors powered strong results during the first half of 2025. Core net new assets reached $218 billion in the half of the year, up 39%. In the second quarter, investors opened 1.1 million new brokerage accounts, demonstrating that Schwab continues to be where Americans turn for investing because they know we will champion their goals with passion and integrity and help them achieve their financial dreams. We offer clients a differentiated value proposition, award-winning service, platforms, support, and expertise to support investors of every type, all at great value and with a firm they know puts them at the forefront of every decision. We are deepening relationships with our clients and serving more of their financial needs across our wealth, banking, trading, and asset management offers. Clients remain highly engaged in the markets. Daily average trades reached $7.6 million for the second quarter and margin balances were $83.4 billion, following record trading days in early April. Our focus on serving client needs, combined with our diversified model, resulted in robust year-over-year revenue growth and record earnings per share, and we continued to return capital in multiple forms. From a position of strength, we are continuing to play offense. We're investing in initiatives that will help fuel client growth and evolve the way we meet clients' needs. We continue to anticipate strong revenue and earnings growth in 2025, which Mike will elaborate on in just a few minutes. This is supported by our client growth and growing utilization of our wealth and lending capabilities alongside expense discipline and the pay down of supplemental borrowing. And we expect to continue opportunistic excess capital return as we move forward. In summary, we are moving full steam ahead to deliver long-term profitable growth. After a period of volatility at the start of April, both markets and investor sentiment rebounded throughout the second quarter. Periods like this are a great reminder of why we are different. Through a volatile market, we were there when and where our clients needed us. Year-to-date, we answered more than 14 million calls across all client-facing businesses and did so quickly in an average of under 30 seconds. With 1,000 trading experts answering the phone in 15 seconds on average, ready to support our trader clients every day. We help nearly 16,000 advisers support their clients. We welcome thousands of clients into our retail branches on a daily basis, and we produced hours of training, market insights, and coaching, providing value to our clients no matter where they are in their investing journey. Our mission is to make our clients' financial lives better, and we do this in many ways through the financial consultants and our branches, through our service professionals answering the phones, through our adviser services, relationship managers, and through our digital channels when that's how our clients want to engage. We offer so much more than just an app. Powered by our unwavering client-centric strategy, we are delivering strong growth across all fronts. With a relentless focus on serving our clients, we attracted $80.3 billion in core net new assets in the second quarter, an increase of 31% over the same period last year. Core NNA for June was $42.6 billion, a 46% increase over June of 2024. New brokerage accounts increased 11% over the second quarter of 2024 to 1.1 million. Turning now to Solutions Growth. Our clients remain highly engaged across wealth, lending, and trading. Managed investing net flows increased 37% year-over-year for the second quarter, and we reached an all-time record level of flows for the first 6 months of the year. Within managed investing, our flagship wealth offering, Schwab Wealth Advisory, had over $10 billion in net flows in the first half of 2025, and net flows in Schwab Personalized Indexing increased 44% over the first half of 2024. Bank lending balances increased 19% over the second quarter of last year and daily average trades increased 38% over Q2, supported by a headline-driven macro environment. These statistics show we are clearly a growth company. With strong client engagement and our diversified model, total revenue for the second quarter was $5.9 billion, up 25% over the same period last year. Q2 2025 adjusted earnings per share reached $1.14, a 56% increase over the second quarter of last year. As we look to the future, we remain confident we'll continue to drive growth across a range of environments. Our competitive position remains unmatched. We are number one in the industry across several key measures, including total client assets among peers that report on this data, RIA custodial assets, and daily average trades. We continue to receive industry recognition most recently for our investing platforms, our customer service, and our banking offer. Our business fundamentals are healthy, total client interactions across all channels in our branches, in our service centers, on our digital channels are up 17% over last year. Margin loans are up 16%. Our pledged asset line balances reached a record $21 billion and record managed investing flows and rebounding equity markets helped assets in both our Wealth and Asset Management businesses reach all-time highs. We're continuing to attract new clients across sizes and demographics. Our best-in-class RIA business supports advisers of all sizes. In our Retail business, we attracted 606,000 new-to-firm households in the first half of the year, and we're continuing to win with younger investors and traders. In fact, one in six new-to-firm retail households are under the age of 24. More than 30% of our new-to-firm clients are under the age of 30, and nearly 60% are under the age of 40. An increasing number of traders are turning to us for a best-in-class trading experience. New clients who exhibit more advanced trading behavior, such as complex options or high single option volume now account for one-third of new traders, up from about one-fifth just 2 years ago. Finally, it is worth highlighting that investors and traders of all ages are turning to us to invest in digital assets through ETFs, futures, and closed-end funds. Schwab is an industry leader in crypto exchange-traded products, with $25 billion of our clients' assets in those products today, representing around 20% of the total market. This is a reflection of a client base that wants exposure to digital assets in a straightforward, safe, low-cost, and low-tax way, all alongside an ecosystem of expertise, education, and support that our clients know they can expect from Schwab. As we build out our digital asset offering, which will include spot trading on Bitcoin and Ethereum, we are also focused on helping educate and support our millions of clients around how digital assets can fit within a diversified portfolio, as well as the opportunities and risks that define this asset class. We are continuing to invest in and deliver on our four strategic focus areas: growth, scale and efficiency, the brilliant basics, and our people. Our first strategic focus area is driving growth. We do this by attracting net new assets from new and existing clients as we provide the capabilities and solutions they need. At the same time, we are also deepening relationships to help our clients conduct more of their financial lives in one place here at Schwab, which also results in further diversification of our revenues. And we delivered on this in the second quarter. In our Advisor Services business, we launched Advisor Pro Direct, a fee-based membership-driven offering designed to support independence for new RIAs. In our Retail business, we continue to invest in deepening relationships. Clients with a financial consultant relationship bring in more than twice the net new assets and are more engaged in our managed investing and banking offers than clients without a relationship. These relationships are impactful, and we're on track to open more than 10 retail branches this year and to hire hundreds of financial consultants and wealth consultants to be there for our clients and connect them with the capabilities and solutions they need to meet their goals. In our Wealth business, we continue to invest in Schwab Wealth Advisory. We launched a discretionary version of our full-service wealth management capability, an important step in meeting the holistic needs of our clients. This quarter, we also broadly rolled out our retail alternatives platform to our eligible clients. We are enhancing our tax trust and estate capabilities including plans to offer estate planning tools to our retail clients. As we look to the future, we see a number of ways to monetize our product platforms beyond what we are doing today. We'll share more details in the coming quarters, but I want to highlight that we see a meaningful revenue opportunity here. Turning to our second strategic focus area. Our scale and efficiency efforts will not only help us keep our cost to serve clients low, so we can reinvest in new capabilities and experiences to serve their evolving needs, but will be a win for clients as well. These include investments in artificial intelligence. In the near term, these AI efforts will help power our client-facing representatives as they serve our clients and help make our internal teams more efficient. Today, we have 40 AI use cases in various stages of development, including in use. Over the longer term, we believe AI will meaningfully enhance the way we serve our clients and allow us to reach our clients in an even more personalized way. Our third focus area is the brilliant basics. When we deliver for clients on the basics and make every interaction they have with us feel easy, they will reward us with more business. We are delivering across the board. Our Schwab Wealth Advisory Client Promoter Scores are some of the highest in the firm. Legacy Ameritrade Client Promoter Scores continue to improve each quarter, approaching the consistently strong scores we see with legacy Schwab clients, and our Advisor Services easy score was 93% for the quarter. Last, but certainly not least, we are continuing to invest in our people. The more we can do to make our colleagues more efficient, their jobs easier, to make Schwab a place where they want to work, to help them develop professionally, the better we will be able to serve our clients. We are continuing to build momentum as we head into the second half of 2025. Guided by our client-centric strategy, we are playing offense. We're attracting net new assets and new clients to Schwab as we deepen relationships to serve even more of their wealth and financial needs. We're investing in scale and efficiency initiatives, delivering brilliantly on the basics, and continuing to invest in our people who are key to all we do here at Schwab. In short, we are well-positioned to continue growing on all fronts and for the long term. And with that, I'll turn it over to Mike for an overview of our financial picture and an updated view on our financial scenario.

Thank you, Rick. Good morning, everyone. This was indeed a dynamic quarter with markets very much on the move and a host of macroeconomic factors influencing investors around the globe. Against this shifting landscape, Schwab's strong momentum continued with growth across the franchises we serve our clients' needs with our broad array of modern wealth solutions. We posted our third consecutive quarter of over 1 million new brokerage accounts. Core net new assets during the second quarter exceeded $80 billion, bringing the year-to-date total to $218 billion, or an increase of nearly 40% versus the first half of 2024, and we saw robust flows into our managed investing and lending products as well as supported another strong quarter in trading with 7.6 million daily average trades. In addition to healthy organic growth and sustained product utilization, we delivered record financial results during the second quarter with year-over-year revenue growth of 25% to $5.9 billion. Adjusted pretax margins exceeding 50% and adjusted earnings per share of $1.14, an increase of 56% versus 2Q '24. Transactional cash levels continue to reflect normal cash behaviors, inclusive of organic growth, typical 2Q tax seasonality, and client engagement, albeit with investor sentiment remaining somewhat cautious. At the same time, we made further progress in reducing higher-cost funding at the banks, bringing the level down to approximately $28 billion. We also increased the return of capital via the redemption of our Series G preferred stock and the continuation of common stock repurchases. Inclusive of these actions, our capital ratios expanded versus the first quarter, finishing slightly above our target range. Before diving into our latest thinking regarding the remainder of 2025, let's take a moment to walk through some of the drivers influencing our strong 2Q results. Revenue increased 25% year-over-year to a record $5.9 billion for 2Q, representing a third consecutive quarter of double-digit year-over-year growth across all line items. The further reduction of high-cost borrowings at the bank, sequential build in client transactional sweep cash, and a late-quarter uptick in securities lending activity helped expand net interest margin and drive a 31% increase in net interest revenue versus 2Q '24. Asset Management Administration Fees of $1.6 billion represent a year-over-year increase of 14%, driven by rebounding equity markets, healthy organic growth, and continued client adoption of Schwab's Wealth and Asset Management Solutions. Client trading volumes remained robust in the second quarter, increasing 38% year-over-year to 7.6 million daily average trades, with client engagement across equities, ETFs, and index options accounting for the vast majority of the year-over-year uptick in trading activity. Bank deposit account fees moved higher due to an improved net yield as a growing percentage of the balances continue to convert to the floating rate bucket. Finally, the Other Revenue line reflected typical 2Q seasonal items related to corporate proxy season as well as elevated client trading volumes. Note that there was a slight offset in this other line due to the SEC's decision to lower exchange processing fees to 0 beginning in mid-May. Of course, this rate change is P&L neutral as there is a corresponding decrease in the other expense line as well. In terms of expenses, adjusted expenses for the quarter were up 5% versus 2Q '24 as we continue to make ongoing investments to support sustainable growth, including opening new branches and hiring financial consultants as well as evolving our suite of offerings to clients with new products and capabilities, such as our retail alternatives platform and further driving efficiencies by powering our client-facing representatives with AI as they serve our clients. Our continued progress in reducing high-cost borrowings at the banks and strong trading volumes powered record top-line growth. In conjunction with balanced expense management, adjusted pretax profit margin reached 50.1%. Adjusted earnings per share was $1.14, or a year-over-year increase of 56%. These second-quarter financial results reflect the continued positive inflection in Schwab's earnings trajectory through the first 6 months of 2025, as well as highlight the durability of our diversified model in delivering financial results across a range of environments. Moving on to our balance sheet, we continue to support our clients as their needs evolve through this dynamic environment. Following the deleveraging that began in late 1Q and extended into April, client margin balances at the broker-dealer rebounded during 2Q to finish at $83.4 billion, or down slightly from year-end 2024 levels. Bank loans grew, with pledged asset line balances up 24% versus the prior year-end. As anticipated, we saw seasonal tax-related outflows in client transactional sweep cash during April, and after another slight reduction in May, transactional sweep cash built during the month of June, bringing the quarter-over-quarter increase to approximately $4.3 billion. With the continuation of normal client cash trends, we were able to utilize a combination of cash flows coming off of the securities portfolio as well as excess cash on hand to further reduce high-cost funding at the banks. Looking ahead, we believe trends will continue to reflect normal client activity, and we plan to keep a close eye on a range of macro factors as shifts in market sentiment tend to influence client cash allocations. As I've noted previously, we are focused on maintaining flexibility in managing the balance sheet in a manner that keeps us well-positioned to navigate a wide range of potential environments. Turning to high-cost bank funding, following the nearly $12 billion paydown during the first quarter, we reduced the balances by another $10 billion during the second quarter of '25, bringing the outstanding balance as of June 30 to $27.7 billion, or down more than 70% from the peak. As previously mentioned, we are not planning to reduce bank wholesale funding levels to 0. However, as we move into the back half of the year, we expect to make additional progress each quarter until these higher-cost bank liabilities are in a range more consistent with our long-term diversified funding profile. Our capital levels finished the quarter slightly above the firm's adjusted Tier 1 leverage objective of 6.75% to 7%. The quarter-over-quarter build was primarily driven by earnings and continued pull of par of unrealized marks. The ratio also reflects the $5.3 billion in total capital return through the first 6 months, including an increased common dividend, the redemption of $2.5 billion Series G preferred stock, and the resumption of open market common stock repurchases in June, where we repurchased approximately $350 million worth of stock, bringing the year-to-date buyback total to $1.85 billion, including the $1.5 billion we repurchased back in February. Looking ahead, we will continue to prioritize maintaining capital to support the needs of our clients and the growth of our franchise, while returning excess capital in multiple forms as part of our through-the-cycle financial growth story. Now let's turn our attention to the full year 2025. Back in January, we outlined an initial financial scenario informed by a host of inputs, including a mid-January forward interest rate curve, which called for a single 25 basis point cut to Fed funds, 6.5% annualized equity market appreciation, and client trading volume generally consistent with the mix in volumes observed during 4Q '24. Obviously, things have evolved quite a bit. So as part of our updated full year 2025 scenario, we have refreshed these inputs. The interest rate forward curve currently calls for two 25 basis point cuts before year-end. Markets rebounded from early April lows to finish the quarter strong. Therefore, applying an annualized 6.5% equity market return from June 30 levels implies full year S&P returns of approximately 9% for 2025. While we have observed sustained strength in client trading over the first 6 months, the updated scenario allows for some pullback in volumes. Though we still anticipate full year 2025 daily average trading volume to finish significantly higher than the 4Q '24 levels used for the initial financial scenario discussed back in January. From a trading mix perspective, we expect first half trends to generally persist, though macro factors and client preference will inform the ultimate mix. Assuming these updated factors and keeping in mind the current macro backdrop, we would expect total revenue growth of 18.5% to 19.5% for the full year 2025. The scenario assumes further reduction in high-cost funding at the banks to a level generally consistent with our long-term diversified funding profile. Full year net interest margin of 2.65% to 2.75%, which is up slightly from the January scenario due to the pace of paydowns, year-to-date transactional sweep cash trends, and a recent pickup in securities lending activity. In this scenario, average 4Q NIM is expected to expand well into the 280 basis point range, and full year average interest-earning assets is still expected to decline slightly in 2025 versus 2024. Full year 2025 expenses are still trending towards the mid-single-digit zone though with a slightly tighter range of 4.75% to 5.25%. This reflects year-to-date investments across our key priorities aimed at supporting growth across all fronts, as well as the elevated level of client engagement, including transaction and related asset level fees, and the mid-May reduction of the SEC 31 fee rate to 0. We continue to feel good about this range of spending for 2025 and how it positions us to achieve our objectives. Of course, market levels and client trading levels during the second half will continue to shape the absolute dollar amount for the year. So putting the pieces together, the combination of strong top line growth and balanced expense management implies pretax margins in the very high 40s for the full year. If you follow the math all the way down to the bottom line, this full year scenario implies potential adjusted earnings in the $4.55 to $4.65 area excluding the impact of any incremental buybacks in the second half, representing potential year-over-year earnings growth into the very high 40% zone. The first half of this year served as a reminder that market expectations can change quickly. So we'd encourage you to continue to reference this static setup of revenue sensitivities included in today's summer business update to help you craft a high-level perspective of how changes from these assumptions could influence results. These directional figures have been refreshed and are based on June 30, 2025 levels. One additional item I'd flag for you is that the Fed fund sensitivity incorporates hedging programs we have set up over recent quarters to help manage through different interest rate environments. Please don't hesitate to reach out to the IR team with any questions about these sensitivities or the underlying assumptions for the firm's updated 2025 financial scenario. Throughout Schwab's history, the firm has made investments to support sustainable through-the-cycle growth across multiple fronts as well as further enhancing our capabilities. These capabilities help bolster our flexibility to manage the firm in a manner that enables us to serve the evolving needs of our clients with a growing suite of modern wealth solutions. While this most recent quarter highlights the power of our financial model when strategy, capabilities, and macroeconomic tailwinds intersect. History tells us that rates, markets, client engagement levels, and many other variables can change quickly. However, Schwab's client-centric strategy and our enhanced capabilities and diversified model keep us positioned to deliver strong financial outcomes across a wide range of environments. In closing, it has been a strong first half of 2025, helping to sustain the momentum that began last year following the completion of the Ameritrade integration. While the environment continues to evolve, we plan to stay on offense, investing to support long-term organic growth and continuing to ensure our value proposition and client experience remain best-in-class. While the environment can change quickly, Schwab's diversified model helps keep us well positioned heading into the months ahead and supports our confidence in the long-term trajectory for the firm beyond 2025. And with that, Jeff, let's move on to Q&A.

Operator, can you please walk everyone through the instructions for the Q&A session?

Can you please walk everyone through the instructions for the Q&A session?

Starting high level for Rick. So Chuck built this business, in part, by disrupting the incumbents, and we continue to see pockets of success or even outright success from emerging firms like Robinhood and Webull despite not having nearly the breadth or depth of the products and services offered by Schwab. This seems like classic Christensen, Innovator's Dilemma. In addition to spot crypto, can you talk about to what extent and how you're adjusting the strategy, the services, and the marketing to pursue some of the opportunities that these younger, smaller brokers are capitalizing on?

Thanks for the question, Ken. I would not trade positions with anyone. I think what we do is very much differentiated from others. The fact that we can deliver platforms far beyond our competitors in terms of the breadth of what you can trade in and invest in. We have service that can't be matched. We have in-person experiences in 400 locations across our country. We have 16,000 advisers in every community that you can walk in and talk to. For serious investors who want to—young investors who want to think about how to pay off their college debt, how to buy a house, there's no better place to be than here at Schwab. And that's true, we think, across all ages and all types of investors. And we're winning in the market. We see it with our TOA ratio, which has been really strong, and our net new assets, which continue to strengthen over last year. So we feel really good about our positioning. At the same time, as we've done for 50 years, we are always willing to disrupt ourselves and to do what's required to make sure that we are the firm meeting the needs of clients in our industry, and where that's necessary, we will do it. As it relates more specifically to your crypto question, we feel like meeting clients' needs in crypto today is the first thing I'd point out. We have more than a 20% share of all exchange-traded product assets in crypto sitting on our custody platform. What we're seeing and hearing from our clients is they're not sure about crypto, but they feel like they've shown a little and they want to do it through a product and through a firm that they trust. That's why we see those assets. Second, at the same time, we are working on launching Bitcoin and Ethereum. When those launch, I expect those to be a meaningful growth driver. The reason I believe that is that I talk to clients all the time who tell me the following: I've got 98% of my assets sitting at Schwab and 2% at a small firm that specializes in crypto, some digital native firm. They say, I can't wait until you have Bitcoin or Ethereum because I want to move those assets to Schwab because I trust you, and I want them sitting alongside my other assets. I feel great about where we are. We'll continue to be an innovative firm and disrupt ourselves where necessary, but we continue to win with investors of all sizes and ages.

Rick, I was hoping you could expand upon the current environment. You guys are seeing great account growth, elevated retail trading. And now in June, you had cash levels building despite the market grinding up. So I was hoping you could just talk about the sustainability of these trends as we think about the rest of this year and into next year given some of the strengths you're seeing?

Why don't I take the client side of that and maybe Mike could talk a little bit about the cash? On the client side, we're playing offense; we see continued acceleration of our net new assets. June was up, I believe, 46% over last June. Each month that goes by, we feel more and more solid about our net new asset growth. What gives us comfort about that? Some of the things happening underneath the surface behind the headline numbers, and I'll share a few of those. Number one, when you look at our net new asset growth year-over-year, we've seen a real acceleration in the retail side of our business. Coming out of the integration, that's what we expected to see, and that's exactly what we've seen. Our Advisor Services business continues to grow at a very healthy level, just as it last year, and now we're really seeing Retail kick in. Underneath that Retail number, we're really seeing tremendous progress with our legacy Ameritrade clients. Again, just as we expected, but now we're seeing it. We've seen over 100% growth in the last year in our net new assets from Ameritrade clients. What I hear from them when I meet with them or talk with our financial consultants working with them every day is that at first, they were dealing with a new system, a new platform, maybe a new relationship. They were getting used to it, and now they say they've never been happier in their investing life. They had everything they had at Ameritrade, and now they have so much more at Schwab, whether it's our wealth capabilities, our lending capabilities, the combination of our digital platforms, our award-winning service. Those clients have never been happier. You see it with the—every quarter, the Client Promoter Scores from that group of clients continue to go up and up, and their net new assets continue to go up and up. I couldn't be more excited about where we are today and the growth we've seen and at the same time, equally excited about the future in serving all of these clients. Mike, do you want to take the cash part?

Sure. Dan, related to cash, yes, we continue to see good trends in cash, allowing us to pay down those supplemental borrowings. If you look at the second quarter, of course, you had that tax-related outflows that we normally see, but that was offset by some selling in the quarter—and that selling was more pronounced in the beginning of the quarter, but we still saw some net selling in June, contributing to that pickup as well as some redemption-related activity. So we're really seeing that normalized cash environment allowing us to continue to progress the paydown of those supplemental borrowings nicely.

I was wondering if we could delve into maybe the balance strategy from here. If I think about a 5% to 7% organic growth rate on a $10 trillion denominator, you'd be in a vicinity of $500 billion, $600 billion plus of net new assets. If I then assume that cash holds about 10% of those assets, you're going to be generating $50 billion to $70 billion of cash per annum. Wondering how you think about maybe redeploying that to balance sheet growth versus other initiatives? And how we should think about how that would then tie into a more sustained buyback opportunity?

Bill, thanks for the question. So when we think about that balance sheet, taking a step back for a minute and those principles that I've often talked about, we're going to ensure the balance sheet supports our client needs. Secondly, we're going to manage that balance sheet on a foundation of safety and soundness. Of course, then we're going to manage that balance sheet in a way that is optimized to ensure durable earnings path. So when I think about where we are today, obviously, we've made a lot of progress in paying down those borrowings. At some point, we will be resuming, I would say, more securities purchases. When we think about that balance sheet growth, it will be to support our client needs. We've seen a good pickup in lending activities. That continues to be a strong factor for us, both in our margin lending activity as well as in the bank. But then again, the ability to continue to make those investments in securities will be a key part of the strategy. We feel like with that pickup in cash, we will be able to put that to work nicely in a way that's going to be accretive. More we're doing for clients broadly, that's leading to revenue diversification. The way we manage our expenses in that balanced fashion, we're going to continue to invest in our capabilities while investing in scale and efficiency as well. That's going to build us durable earnings, and that, to us, is going to continue to build capital organically, which will allow us to ensure we could build that capital to support the growth of the franchise, but also be able to return it in multiple forms as well.

Maybe talk a little bit about the organic growth backdrop for the second half. I mean 2025 started out quite nicely, up 5% in the first quarter. Obviously, tax affected in the second quarter, but ending June at like 4.9%. So if you can talk about your confidence in being within that 5% to 7% organic growth band for the full—on an annualized basis for the full second half, and some of the maybe potential incremental drivers coming from your—variety of growth initiatives, and I'll just layer in, do you expect to launch that—your spot crypto platform before year-end? Or is that more of a 2026—early '26 event?

Thanks for the question, Brian. First on the 5% to 7% we committed in our winter business update that we will make progress towards the 5% to 7%, and we're very confident that will be the case. We feel really confident in our second half NNA. I think once you get past the tax-related flows of April that went into May in many states because tax payments were delayed, and you get to June, you again see what I think is impressive acceleration of our net new assets. We're confident that we'll continue through the second half of the year and that we will demonstrate that progress that we talked about at the beginning of the year. More broadly, it's important to think about our growth as a firm in sort of two prongs. The first one is our net new asset growth, and we continue to think that 5% to 7% is the right assumption over the long term with 3% to 5% of it coming from existing clients and 1% to 2% of it coming from new-to-firm clients, just as we've done consistently historically. The second and important part of our growth, and I think people ought to think about this as analysts in terms of driving our future value is that there's a lot more we can do for our clients, and there's a lot more they want us to do for them. There is a bull market for convenience in our country. Our 45 million client accounts would love to handle more of their financial life here at Schwab. They already bring a lot of it to us across banking and lending and wealth and investing and trading. But we are seeing them do more with us in wealth, where we saw our managed investing flows increase 37% on top of what was an all-time record last year. Our loan originations and our pledged asset lines are up 100% year-over-year. We’ve made conscious efforts to do more for our clients to diversify our revenue at the same time. We’ve made those investments in the past few years, and they are really paying off. So I feel terrific about our growth picture as a company.

Question for you guys around profitability, really impressive margin in the quarter north of 50%, and I understand that obviously, there's some one-off events perhaps that could have benefited given the robust trading backdrop. But when you zoom out a bit, you talked about AI efficiencies. You talked about ways to further monetize the asset base. Obviously, NII trajectory is really accelerating here as well. So as you think about the margins of the business over time and where they could go off of this number, balancing with obviously reinvestment back in the business. How are you thinking about that? What do you think is the ultimate profitability destination for the firm?

Yes. Thank you for the question. When we think about this, yes, obviously, we're happy with that expansion of margin being driven by the top line, very strong revenue growth. In our scenario, we're still expecting that for the back half. When you think about our strategy, our strategy is growth and bringing new clients to the firm, evolving our suite of capabilities for them to meet their evolving needs. The more we do for clients that relate to a series of activities that we're engaged in, and the output of that is revenue diversification. The way you pair that with the way we're managing expenses is that we're investing in growth, investing in scale and efficiency as well—that's enabling us to expand margin rather nicely. That expense management objective, again, is that balanced approach where we will opportunistically continue to invest in those capabilities where we see the opportunity. I think a natural outcome of that approach is that expansion. Of course, as you point out, too, the environment is going to be a key factor in that as well. But we feel good about the balanced approach where we're maintaining investments, both in growth but also the ability to invest in that scale and efficiency as well to sustain margin.

So Mike, in your prepared remarks, you flagged newer hedging programs you've set up over the last few quarters to manage your interest rate exposure. Obviously, pledged asset lines and margin balances have continued to grow strongly, and still a significant portion of your assets on balance sheet and increasingly in the BDA are tied to the short end of the curve. I'm just curious if you could outline the recent steps you've taken on the hedging program to manage that short-end rate exposure and whether you think there's incrementally more that could be done with derivatives and the hedging program over the coming quarters to further reduce some of that earnings exposure to the short end as we're approaching cuts in the forward curve?

Thanks for the question. Yes, when we look at the interest rate risk profile, we think about that holistically. The multiple tools that we have to manage that interest rate risk position. Part of that is managed through the investment portfolio where we're maintaining a range of duration of 2 to 4 years. But the interest rate swap program is a nice complement to that, to ensure we have multiple tools to manage that interest rate risk profile. As we’ve been deploying these programs, we've done so in a way that builds some protection for earnings in that lower rate scenario. We've done it in two ways: either you're looking at your fixed-rate liabilities and converting those to float such that you get the benefit when rates reset lower, or you're looking at some of those floating-rate lending activities and converting them to fix such that you get that fixed coupon even in that lower interest rate environment. We've taken off roughly one-third of that interest rate risk profile in that downward rate environment. We will continue to evolve those hedging programs and capabilities to ensure we continue to build flexibility for ourselves. But we feel like we put ourselves in a good position.

I was just hoping to circle back on digital assets. I was hoping you can elaborate a little bit on your strategy in digital, how you see Schwab evolving over the next couple of years? You mentioned potential for Bitcoin and Ether spot trading. But what about staking noncustodial wallets and otherwise? How are you thinking about also partnering with others? Or would you envision custodying this all yourself on the Schwab platform like you do for other asset classes? And just also more curious broadly around tokenization and how you see the potential to accelerate growth, maybe even overseas.

Thanks, Michael. A lot in that question. I'll try to get to all of it, but I appreciate you asking. First, as it relates to crypto, we're going to start with Bitcoin and Ether. The reason we're doing that is we think about coins in three buckets. There's Bitcoin, which has sort of been established as the crypto for people that are engaged in crypto and trust and believe in it, and then they put their sort of full faith behind. I think that's an important one. I think there's a second category of cryptocurrencies that are built around the blockchains and being native to the blockchain. If you want to transact on that blockchain, you need that cryptocurrency, and I think those cryptocurrencies could be valuable. Then there's a third set of currencies that I would consider to be more meme-oriented, like Dogecoin, which I think was started as a joke to some extent, but I know a lot of people have bought. We're going to focus our efforts on those first two categories. Within those categories, you asked about stablecoins. Stablecoins are likely to play a role in transacting on blockchains, and that's something we do want to be able to offer. We will have a stablecoin at some point; we want to get Bitcoin and Ethereum out first, but stablecoins will come next. You asked about whether we're going to partner on that or how we're going to do it. We're looking at multiple ways. We have had conversations with the large banks around consortium efforts to handle stablecoin or deliver stablecoin to the market. At the same time, we are also exploring our own avenues, and we'll make a decision we think is best for our clients. On the tokenization front, it will be interesting to see how that plays out and in which asset classes it becomes more mainstream. I think for public equities, we've got to ask ourselves what problem is being solved? What are the externalities that come with tokenization? If you look at the problems, you could argue that are being solved, or the new features, you get 24/7 trading—arguably, that is a feature of tokenization. But we've gone to 24/5, and we see less than 1% of the trades on our platform being done outside of market hours. So I'm not sure that's a huge leap forward for investors, nor am I sure that we couldn't go to 24/7 via traditional trading paths. There are some externalities that come with tokenization. Our traditional markets have built up the safest, most transparent, most liquid, and deepest markets in the world that execute most efficiently. Tokenizing public equities, at the moment, I'm not sure you have access to all of those things. You don't have to publish where trades are being executed like we do. You don't have to deal with the Know Your Client and anti-money laundering rules that prevent nefarious actors from laundering money. We’ll see how much this picks up and how the regulatory environment plays out. Clearly, if clients want to transact via blockchain and tokenization, we're going to be there, and we're going to be the institution that people trust to do it. We’re not sitting here twiddling our thumbs regarding tokenization. If that's the way markets go, we're going to be there, but we want to ensure that the whole market goes there in a thoughtful way because for 50 years at Schwab, we have been a leader in innovation, where we've always done it from a standpoint of what's right for clients, and let's do it alongside regulators in a way that creates transparency, low-cost, and effective markets. Thankfully, we enjoy those today. Any new innovation would expand on that, not bring us backward.

I want to follow up on the balance sheet conversation, just kind of broader capital optimization. Going back last year, you all brought up kind of longer-term plans to deemphasize the balance sheet a bit over time, just increasingly sweeping customer cash off-balance sheet and to obviously lower the capital intensity, but you protect economics. I'm just curious whether that's still the plan, and the timing just after replacing short-term funding. How should we think about that and just the considerations there as you optimize between earnings and capital intensity?

We take a step back again, as we said before, our focus is growth, bringing new clients to the firm, evolving our suite of services for those clients. When we think about the bank as a platform, that is an important platform to help us achieve that strategy and support our ongoing clients' needs. So when we think about the balance sheet over time, of course, we're going to make that available to our clients and meet their borrowing needs. At the same time, there will be components of that balance sheet, which we've talked about as the reduction of the supplemental borrowings, but over time, what we've talked about is having the capability of moving some of those monies off-balance sheet as a capability. The strategy of the firm is growth, but if you find yourself in a situation where you have some excess cash and you might want to deploy that off-balance sheet, that's more a capability that we want to have. We had, of course, with the deposit program with TD. It's important that we think about that in a way that focuses on the client impact; might we want to offer more FDIC insurance, but also thinking about the economics. Cash on the balance sheet is quite accretive, so it’s really in those rare times where perhaps rates are extremely low. I think of that off-balance sheet activity as more of a tactical capability, not really a primary driver of our strategy, which is growth.

Okay. Operator, I think we have time for one final question.

And our last question comes from Ben Budish with Barclays.

I wanted to follow up on some earlier comments on the progress made with Ameritrade. You mentioned that the NNA growth is up over 100% year-over-year. I'm curious what the absolute number looks like relative to legacy Schwab blue, and also curious if you could maybe unpack some of the cross-sell comments you’ve made, where are you seeing particular levels of product adoption? Could it be things like bank loans, where we've seen a really meaningful pickup or anywhere else in particular that you're seeing strong resonance with that client base?

Sure. On Ameritrade, I don't believe we share that number. Our Schwab legacy blue are still the dominant part of our retail NNA. But Ameritrade is becoming a bigger contributor and growing nicely. If you go back over the past few years, I think we did the largest, I think, most consequential integration in the history of our industry—and we went from a period of losing assets with Ameritrade clients to pretty stable last year, and now we're seeing growth and expect that will accelerate over time and become an even more meaningful part of our NNA. As it relates to cross sales or cross-sells, I think of it more as doing more to help our clients across their financial lives. We're seeing it in our wealth business, where there is a bull market for advice; more and more of our clients are wanting someone to essentially take over their financial life or at a minimum, sit by their side and help guide them through their financial life. We're playing a bigger role there. We saw impressive growth in our overall wealth flows and in our proprietary Schwab Wealth Advisory business. The same thing is true on the lending side. Mike talked about how our earnings have been accelerated by the pay down of supplemental borrowing on the liability side, and there's still more earnings growth from the pay down on the liability side of our balance sheet. But the next wave of earnings growth after that is going to be more of an asset side story, both bonds maturing and being able to invest at higher rates, and also the growth of our lending. We are seeing that. Our pledged asset line originations are up more than 100%. I think that is a testament to the investment we made 3 or 4 years ago, making it a digital, more straightforward seamless process. It used to take 30 days to get a pledged asset line. Now it takes a day. We've had clients that called us up at the beginning of a house tour that they were doing, and by the end, they had money in their accounts. We're just investing in our capabilities, making them better and stronger, and as we do more and more clients returning to us for that aspect of their financial life, we couldn't be happier to serve them and make a difference. With that, why don't I close out the call. Thanks, everyone, for your questions, for your engagement this morning; we're grateful that you joined. I hope that you take away three things from today's call: number one, we are growing on all fronts in our client metrics, in our solutions, and in our financials; number two, a consistent focus on clients and our disciplined approach has enabled us to deliver record financial results during this quarter; number three, our competitive position has never been stronger, and our confidence has never been higher. Thanks, everyone.