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Good morning, everyone, and welcome to Schwab's 2025 Winter Business Update. This is Jeff Edwards, Head of Investor Relations, and we're coming to you live from the frozen tundra of Westlake, Texas. I'm joined in the room today with a slightly different, but hopefully still very familiar group, President and now CEO, Rick Wurster, as well as our CFO, Mike Verdeschi. Hopefully, everyone has had an opportunity to review our strong results for the fourth quarter and full year 2024 that were posted earlier this morning. During our time together today, the team will take a look back at 2024 and discuss key drivers that helped us build momentum through the year, as well as highlight the opportunities they see to continue driving growth across the firm in 2025 and beyond. Before we dive into the good stuff, let's quickly run through a few housekeeping items. The slides for today's business update will be posted to the usual spot on the IR website at the end of the prepared remarks. During Q&A, please respect the "one question, no follow-up" rule. Though, as always, we encourage you to jump back into the queue to ask another question if time permits. And of course, the IR team is available to assist with any questions following today's update. Lastly, before we start, let's spend a minute on the ever important forward-looking statements page, which exists to remind us all that outcomes can differ from expectations, so please keep in touch with our disclosures. And with that, it looks like we're all set to begin. So, let me turn it over to Rick.

Thank you, Jeff. And hello, everyone. Welcome to the call. This is my first opportunity to speak with all of you in my new role. I'm very grateful to Walt, to Chuck, and the Board for entrusting me with this responsibility, and I know I have big shoes to fill. I love our company and the work we do for clients. And as you'll hear from me today, I couldn't be more excited about the opportunities we have in front of us. For the last 50 years, our purpose at Schwab has been to champion our clients' goals with passion and integrity, helping people invest and grow their wealth, whether investing directly or through an adviser. We've had a relentless focus on serving our clients and meeting their evolving needs across our retail, advisor services, and workplace businesses. I can assure you that our focus remains unchanged as we move into 2025 and beyond. I believe you should come away from this morning's discussion hearing three key messages. First, we delivered strong results across multiple measures in a transition year where we completed the largest integration in the history of the industry. The one word summary of our year quarter is growth. Net new assets growth was strong, up 20% for the year and 51% for the quarter. Total new brokerage accounts in 2024 were up 10% from the prior year. Revenue was up 4% for the year and up 20% over the fourth quarter of 2023. Fourth quarter earnings per share increased nearly 50% on an adjusted basis versus Q4. Clients were active. We had strong levels of trading activity, record engagement with our trading, coaching, and education, and record flows into our managed investing and lending solutions. Client promoter scores reached all-time highs for the firm. I'd also note that client cash grew in the fourth quarter and supplemental borrowing is down to $50 billion. Finally, we grew our capital ratios to our target levels. The second message I hope you take away is that with these strong results, momentum is continuing to build. We are in a position of strength and poised for liftoff in 2025. With integration behind us, we are focused on helping our clients while growing and deepening relationships. I'd highlight two points on client growth. First, we believe our NNA and account growth will accelerate in 2025 just as it did in 2024. As we move past the integration, we remain confident in our ability to progress back into our long-term 5% to 7% growth range. Second, we believe there is an opportunity to grow revenue by doing more for our existing 43 million client accounts in the areas of wealth, banking and trading. We also refer to this as win-win monetization. We have consistently demonstrated that when we have compelling Schwab capabilities, products and solutions for clients, our clients love to engage. Good examples are Wasmer, Schwab Wealth Advisory, and our lending solutions. And when you look at our traders, thinkorswim adoption is up over 60% year-over-year on desktop and mobile. As our clients engage, they achieve better outcomes and are more satisfied. We attract more of their assets and earn more revenue from the assets we do hold. NNA remains an important metric, and we are confident in our organic growth. And at the same time, we are also focused on new account growth, revenue on client assets, revenue growth and earnings growth. We expect strong growth for both revenue and earnings as we project our supplemental borrowing to diminish significantly in 2025 and our investments in deepening client relationships to continue to pay off. And we're poised for greater capital return during 2025. And the third message I hope you walk away with today is our future is bright. With a relentless focus on our clients, we are continuing to innovate with solutions, capabilities and experiences to meet clients' evolving needs, fueling our long-term profitable growth. 2024 was a strong year for markets, in part helped by the easing of rates by the Federal Reserve. Within Schwab, it was a year of client transitions as we successfully completed the largest brokerage conversion in the history of our industry. In total, through the integration, we welcomed over 17 million Ameritrade client accounts and brought nearly $2 trillion in assets to Schwab. We did so near flawlessly and with less client attrition than forecasted. It was also a year of leadership transitions where we executed on our long-standing and thoughtful succession planning. Through it all with "through client-size" as our guide, we delivered exceptional results across multiple measures. When we measure our growth, we look holistically at client growth, adoption and usage of our solutions and capabilities, as well as our financial growth. And 2024 was a year of robust growth across all major fronts. From a client perspective, we drove meaningful growth in NNA and new brokerage accounts in 2024 with good momentum into 2025. As you can see on the page, core NNA reached $367 billion for the year, up 20% over 2023. We attracted nearly $115 billion in NNA in the fourth quarter, up 51% from the prior year. We're more than a year out from the advisor services conversion, and we've seen NNA in that segment return to normalized growth levels. Within our retail segment, we're making progress in returning to normalized growth in NNA, as you would expect, only six months removed from the most complex part of the transition. Retail core NNA grew by over 50% versus the prior-year quarter and nearly 20% for the year. We are making solid progress in growing our relationships with legacy Ameritrade. Specifically, legacy Ameritrade NNA continues to increase, and these clients are engaging in advice and banking beyond our estimates, which is a positive sign for the future. And notably, Schwab clients are adopting the best of Ameritrade's offer. 25% of thinkorswim users are now legacy Schwab clients. This is exactly where we expected to be at this point past the integration, where legacy Ameritrade clients are now used to our platform, and we're building and deepening relationships. As this continues, we fully expect to return to our organic growth rate of 5% to 7%, and we are confident we'll see meaningful asset growth in 2025 that will bring us closer to these levels. The more time we spend with legacy Ameritrade clients, the more NNA they are bringing and the more they are engaging in our solutions. At the same time, we're continuing to deepen relationships with Schwab clients. It is an exciting time for our growth at Schwab. And it is important to emphasize, while NNA and account growth are important, we are also focused on other measures of growth for the firm. Clients continue to do more and more with us. This is a reflection of the trust they place in us, the success we are having in serving them, and an indicator of our ability to drive future profitable growth. In 2024, clients engaged strongly in our trading, wealth, and lending solutions. Daily average trades grew nearly 10% year-over-year. Managed investing net flows reached a record $55 billion in 2024, up nearly 70% over last year and 80% for the quarter. Our pledged asset line balances increased to $17 billion, up more than 25% year-over-year. These growth measures show we are broadening and deepening relationships with our clients, doing more to meet their evolving needs and helping them conduct more of their financial lives in one place with us. This is an important source of revenue growth for us in the future. And more importantly, it helps our clients achieve better financial outcomes for their families and for themselves. With meaningful client solutions growth, you can see on the page, we've also delivered growth in revenue and earnings. Fourth quarter total revenue was up 20% over the prior year and up 10% sequentially over the third quarter of 2024. Adjusted earnings per share were $1.01 for the fourth quarter, up 49% over the prior year and up 31% sequentially over Q3. Adjusted pre-tax margins came in at 46.6% for the fourth quarter and 42.5% for the full year, fueled by our revenue growth and disciplined expense management. As you can see with this holistic picture of our profitable growth, we are turning the page on our 2024 transition year in a position of strength. And we believe we are well positioned for liftoff in 2025 across the multiple measures I just discussed. There are several reasons for our confidence. First, we are a leader in the two fastest-growing segments in our industry, and we have a value proposition that we believe sets the standard for the industry. Second, our business fundamentals are healthy. Clients are clients are trading more, borrowing more and seeking more advised solutions. Third, our client base is diverse and growing across age groups and wealth segments. We are winning with RIAs of all sizes. We are attracting younger investors, with 33% of our new-to-firm retail households under the age of 30, and more than 50% under the age of 40. The percentage of new-to-firm retail households classified as trader is growing. And higher net-worth clients, who comprise 70% of our retail assets, continue to turn to Schwab for their more complex financial and wealth management needs. Fourth, with that backdrop and positive momentum, we're playing offense and leaning further into investments that will fuel our profitable growth across all measures. In combination, investments within our four strategic focus areas will help us serve our clients' evolving needs, make it easier for them to do business with us, and help us operate even more efficiently. Growing and deepening client relationships is our first focus area. Over the past couple of years, we've made investments in our trading, wealth and lending offers, and those efforts are paying off with the type of growth I've shared. In 2025, we'll make even more investments to deepen and expand relationships. We will hire hundreds of new financial consultants, and expand our physical branch network in a meaningful and thoughtful way in the year ahead. We're making incremental investments in marketing and advertising to raise awareness of Schwab among retail investors and advisors alike. We'll continue to enhance our capabilities and solutions for client segments with specific needs with investments in our trader offer, our wealth offer, and our ultra-high-net-worth capabilities for RIA and retail clients. This includes enhancing our alternative investment solutions and expanding our lending capabilities, as well as our tax, trust and estate tools. Our award-winning bank was purpose built for investors and helps us stand apart by offering among the lowest lending rates in the industry, FDIC insured cash, access to pledged asset lines in a day, and strong transactional capabilities. In combination with our fixed income and money fund capabilities, there is no better place for liquid assets than here at Schwab. We'll continue to invest in our industry-leading trader offer, including expanding 24/5 trading, launching spot crypto trading when and if regulations make it permissible, and continuing to invest in our trading, education and coaching, which is a key differentiator. In advisor services, we are adding support and capabilities for RIAs of all sizes while also helping new advisors transition to independence. And we'll continue our multiyear effort to introduce even more workplace clients to our investing and wealth management capabilities. Our second strategic focus area is creating value through scale and efficiency. In 2024, we captured 100% of the Ameritrade run rate expense synergies. We invested in new technologies and capabilities that help our employees do their jobs more efficiently. We increased usage of Schwab Knowledge Assistant by 90% in 2024, which is our AI technology supporting the efficiency of our service -- professionals. Through these efforts and others, we're able to drive down our cost per client account, which has decreased more than 25% in the last decade. On an inflation-adjusted basis, cost per account has decreased nearly 50%. This focus helps us keep costs low for our clients while also enabling us to invest in our highest priority growth opportunities. In 2025, these critical efforts will continue. We'll invest in continued process transformation and systems modernization. We'll continue to invest in AI and other technology to help employees across the firm do their jobs more efficiently. These efforts benefit our clients by making it easier to work with us, benefit our employees by making their jobs easier, and also free up expense capacity to fund our growth. Our third strategic focus area is delivering on the brilliant basics for our clients, which is one of the most effective ways we can build trust and nurture client loyalty. Simply put, we strive to make it easy for clients to work with us in every interaction, in every channel. And we delivered for clients in 2024, which you can see with our record client satisfaction scores. In 2025, delivering on the brilliant basics remains a top priority. Everything we do is oriented towards setting our client service and experience apart. Finally, we can't serve our clients without our highly engaged, dedicated employee base that provides our exceptional client service and experience. In 2025 and beyond, we'll continue to invest in our people to deliver the differentiated service that our clients value and that sets us apart. With a clear purpose and relentless focus on clients, it is an exciting time for Schwab. In 2024, we delivered strong growth across multiple measures during our transition year. With strong competitive positioning, healthy business fundamentals, and a growing and diverse client base, momentum is continuing to build. 2025 is a lift-off year. As we look to the long-term, we're confident our continued investments in innovation will drive client growth, solutions growth, and financial growth through the cycle. And with that, I will turn it over to Mike to share more detail on our financial picture.

Thank you, Rick. And I could not agree more about how exciting of a time it is for Schwab right now, both in terms of what the firm has accomplished during 2024 and the tremendous opportunity still ahead of us. As Rick mentioned, although 2024 was a year of transition, we were able to deliver meaningful growth across the firm. Investors opened over 4 million new accounts during the year and brought an increasing amount of assets to Schwab. Clients further deepened their relationships with us as they took advantage of the breadth of modern wealth solutions available on our platform. And we delivered strong revenue and earnings expansion over the course of the year. 2024 brought encouraging trends around transactional cash levels. Realignment activity continued to decelerate as we moved towards more business-as-usual client activity. At the same time, we made meaningful progress on reducing the level of bank supplemental funding to approximately $50 billion, down about 50% from peak levels. And our capital ratios increased within our targeted operating range. In summary, our success during 2024 enables us to enter this year with a lot of momentum, and we have a clear plan to drive meaningful business and financial growth in 2025 and beyond. Before we share some thoughts about the future, let's review our strong 2024 results. Revenue for 4Q totaled $5.3 billion, a year-over-year increase of 20% as we benefited from growth across all line items. The leveling-off of cash realignment activity, the continued reduction in higher cost bank supplemental funding and healthy margin balance growth helped 4Q net interest revenue increase 19% versus the prior year. While a second consecutive year of 20%-plus equity market appreciation, coupled with clients' increased utilization of our modern wealth solutions, pushed asset management and administration fees to a new record. 4Q trading revenue grew by 14% versus the fourth quarter of 2023, which benefited from a step-up in client trading volumes as investor sentiment improved further. While bank deposit account fees moved higher to an improved net yield as a growing percentage of the balances have converted to the floating rate bucket. Now, looking at expenses, fourth quarter adjusted expenses came in flat on both the sequential and year-over-year basis, helping full year 2024 adjusted expense growth to finish in line with our expectations of approximately 2%. During a transitional year, we continued to invest to drive growth and to enhance our client offering, while at the same time, drive incremental scale and efficiency. In all, the fourth quarter represented a strong finish to the year, with significant top-line growth plus expense discipline producing a quarterly adjusted pre-tax profit margin approaching 47% and adjusted earnings per share of $1.01 While 4Q EPS included $0.03 from certain items, exiting the year with a run rate of around $1 demonstrates the progress we made toward our financial objectives and sets the stage for strong growth in 2025 and beyond. Finally, the firm's full year financial results reflect the progress made across all aspects of the business during this past year. 2024 revenue reached $19.6 billion, up 4% year-over-year, which adjusted expense growth finished in line with expectations at approximately 2%, resulting in adjusted pre-tax margin expanding to 42.5% and earnings per share increasing to $3.25. Moving to our balance sheet. We continue to support our clients, with both margin and bank loans to clients up significantly during the year, including 34% growth in margin balances at the broker dealer and low-double-digit bank loan growth with an over $1 billion increase in PAL balances in the fourth quarter alone. We saw a continuation of the build in transactional sweep cash during the fourth quarter, including $25 billion of net inflows in December. This strong seasonal inflow during the last month of the year is consistent with the historical trends. And if history remains a guide, we would anticipate much of this seasonal build to flow back out into the markets during the first couple of months of 2025. The combination of the principal and interest coming off of the securities portfolio plus the cash inflow on the full quarter enabled us to reduce high cost supplemental funding at the banks. Double-clicking into our progress on reducing bank supplemental funding, following the $15 billion paydown during the fourth quarter, we have now cut the level of higher cost supplemental funding in half from its peak level in May 2023. Due to a range of factors, including typical seasonality, we would not necessarily expect to reduce funding levels by the same magnitude every quarter, however, as we move forward, we do expect to make additional progress each quarter until the supplemental funding at the banks is reduced to a level consistent with our diversified long-term funding profile. Finally, our capital levels moved to within the adjusted Tier 1 leverage objective of 6.75% to 7%. It is important to note the continued build of capital driven by our strong earnings as well as accretion of unrealized marks, even while long-term rates moved higher during the quarter. In 4Q, the pull to par of those unrealized marks alone offset the capital impact of the sharp rise in interest rates across the curve. Shifting the focus to 2025, we expect our momentum from 2024 to carry over into this year, with strong client growth and deeper relationships as we continue to meet the evolving needs of individual investors and the advisors who serve them. We expect this will translate into meaningful and diversified financial growth as well. As is the case in any year, our financial outcomes will be influenced by a range of factors, including the path of interest rates, equity market performance, as well as client engagement and activity levels. Therefore, our 2025 financial scenario is grounded in several key macroeconomic assumptions: we include one 25-basis-point cut to the Fed's target rate, bringing the upper bound to 4.25% by the end of 2025; equity market returns consistent with the long-term average of 6.5%; and client trading activity and mix remaining generally in-line with 4Q '24 levels. Against this type of macro backdrop, we would expect total revenue growth of 13% to 15% in 2025. This scenario also results in continued reduction of bank supplemental funding, full year net interest margin of 2.55% to 2.65%, with average 4Q 2025 NIM expanding through the 2.8% level. Also, full year 2025 interest-earning assets are expected to decline slightly year-over-year as we prioritize the continued paydown of higher cost supplemental funding at the banks. From a 2025 expense perspective, we still anticipate mid-single-digit growth relative to 2024 or somewhere within the 4.5% to 5.5% range. In terms of expense planning for the year, as Rick outlined earlier, we are playing offense and taking steps to further accelerate client, solution and financial growth. Therefore, we have aligned our spending plan to our key strategic initiatives with a significant portion earmarked for growth, including hiring FCs and other client-facing personnel, expanding the breadth of solutions we offer investors, as well as leaning into targeted marketing and advertising initiatives. Beyond growth, we are also continuing to invest in our firm scale and efficiency, which offers both near- and long-term benefits. And we will keep investing in other key fundamentals, such as continuing to advance our technology stack and, of course, our people who are foundational in driving our best-in-class service experience. One reminder on expenses, we'd expect outlays during the year to remain generally consistent with the historical cadence, with slightly higher levels in the first quarter due to typical seasonal factors. So, bringing this all together, the combination of strong top-line growth and balanced expense management implies healthy margin expansion into the upper 40%s, with fourth quarter adjusted pre-tax margins approaching 50%. If you follow the math all the way down to the bottom-line, this full year scenario implies potential adjusted earnings in the $4.10 to $4.20 area, which would represent year-over-year earnings growth of around 25% to 30%. While rates, client activity and other variables may differ from our financial scenario, we are confident in our ability to drive strong financial outcomes across a range of environments. Before we move away from the scenario, we thought it might be helpful to provide a set of static revenue sensitivities based on year-end 2024 levels in an effort to help you adjust estimates and shape your own view around 2025. Please don't hesitate to reach out to the IR team with any questions about these sensitivities or certain underlying assumptions for the 2025 financial scenario. As mentioned, now that we have moved to within our adjusted Tier 1 operating range, we expect to pivot and begin to look across our capital framework. To many of you, this will be a familiar framework. As always, our top capital priority is to support long-term business growth. To the extent we have excess capital beyond our needs, we have sought throughout our history to return to stockholders through a variety of means, including our common dividend, which historically has risen alongside GAAP earnings, preferred security redemptions considering costs and an optimized equity funding mix, as well as opportunistic stock buybacks. As I noted back in October, in the very near-term, there's another consideration, our continued progress on further reducing bank supplemental funding. To the extent we continue to make the expected progress on our key financial objectives, it is reasonable to believe we will commence various forms of capital return over the course of 2025. As excited as we are about 2025, we do not view this current year as our final destination. With our long-term diversified model intact, we are equally enthusiastic about the tremendous long-term opportunity in front of us. Given our attractive value proposition and leadership position within the two fastest-growing segments of the U.S. wealth market, we expect to generate healthy organic account and asset growth as we serve an increasing number of investors with our suite of modern wealth management solutions across advice, lending, trading and asset management. This enables us to deepen client relationships while further diversifying our revenues. And of course, we continue to invest to support our long-term growth trajectory, while at the same time, driving enhanced scale and efficiency, which helps to further enhance our leading cost to serve. This combination of diversified revenue growth and disciplined expense management positions us to drive incremental margin expansion through the cycle. Guided by our balance sheet principles, we'll maintain the resources needed to support client growth while returning excess capital to shareholders inclusive of opportunistic buybacks. To wrap up, during a transitional year, we achieved significant progress on all fronts in 2024, client base, product and solution set and financial results. This momentum has carried over into 2025 and helps position us for further substantial growth in the year ahead. And importantly, our confidence regarding 2025 stems from the durability of our model, meaning we can drive strong year-over-year financial growth across a wide range of environments and with the key components of our diversified financial model intact: healthy organic growth, deepening client relationships and, therefore, revenue from multiple sources, expense discipline and efficient deployment of the firm's capital and liquidity. We have a tremendous opportunity to continue to meet the evolving needs of our clients and deliver profitable growth through the cycle. With that, Jeff, I'll hand it back to you.

Thank you, Rick and Mike. Operator, can you please open up the line and remind everyone how they can ask a question?

Thank you. We will now begin our question-and-answer session. [Operator Instructions] Our first question comes from Steve Chubak with Wolfe Research. Your line is open.

Hi. Good morning, Rick. Good morning, Mike. So, wanted to start with a question on the NNA target. So, Rick, you noted RIA is delivering organic growth in line with the target range. You're seeing some recovery or normalization of retail flows. And just looking at the results this year, RIA hit 5%, retail was closer to 3.5%. Just given RIA is only at the lower end of that target range, the gap in retail is still fairly wide. Why is that 5% to 7% still the appropriate NNA target? And it might be helpful if you could just unpack some of the building blocks supporting the closure of that gap.

Steven, thanks for the question. I'll highlight a couple of points about our growth. The first thing is, this is where we expected to be following a historically large integration. We moved a quarter of our assets, nearly 50% of our brokerage accounts, we moved them from one experience to a completely different experience. And I think what you're noting in those numbers is a reflection of the fact that we have gone from negative flows with our Ameritrade clients as we expected some outflows at the beginning of the integration, towards slightly positive to more and more positive. And importantly, we're also seeing as we engage with these Ameritrade clients, that they are doing more and more business with us. In fact, roughly a third of the flows into our solutions were driven by Ameritrade clients. So, we're exactly where we thought we would be in this transition, which is taking a set of clients from -- that represent half of our brokerage accounts, from one experience to a different experience, getting them used to that, getting them comfortable with that, and importantly, building a relationship with those clients so they have the same trust and confidence that they had in the firm they worked with for years, that they have with Schwab. And that is paying off, and we're seeing growth of that group accelerate. And the reason that's so important, Steven, is because when we look broadly at our Schwab clients, our growth is consistent with the historical range we've talked about. So, it's really going to be important that we nail it for these Ameritrade clients. We are investing in more and more relationships and more in our physical footprint because we think that will help accelerate the building of trust between us and some of those legacy clients. Lastly, I would encourage investors to think about our growth picture broadly. We're not stepping away from our NNA historical range in any way. We continue to know how important that is and critical to the success and growth of our firm. At the same time, I really think it's important to broaden how we think about Schwab's growth. We have an enormous growth platform in front of us, serving the 43 million client accounts that we have -- actually 44 million client accounts that we have today, serving those more deeply. To me, it's a little bit akin to what Apple has done outside of the iPhone growth. They've found many, many ways to grow with their existing client base. And to me, we're in the exact same spot, with a multitude of ways we can help clients, whether it's helping them in the bull market for advice that exists, whether it's helping them meet their lending solutions where we lend to only a fraction of the clients at our firm and we could be doing more and we built and progress towards being able to do more. There's opportunities for us in trading. There's opportunities for us to support RIAs in tax, trust and estate like services. So, there is just a plethora of ways we can do more for our existing 44 million client accounts. So, I think it's really important, when you think about our growth, to think about both of those, getting to the 5% to 7%, which we expect to, and growing more broadly with our 44 million client accounts.

Thank you. Our next question comes from Ken Worthington with JPMorgan. Your line is open.

Hi. Good morning. Thanks for taking the question. I wanted to maybe dig into the alternative buildout for retail and the program that you're trying to build together. I think part of the plan was to begin launching alts for part of the retail customer base last quarter. So, what does Schwab currently offer for retail clients in alternatives today? How do you see the timetable for that buildout? And I know that the RIAs have access to alts already, but you do have more curated programs, like INTF, that could be impactful. What are your aspirations for alts on the advisor side?

Thanks for the question, Ken. Let me start by putting the retail alternatives launch into context. It is a really important part of our offering for high net worth and ultra-high net worth clients, an area where we are doing really well with clients and continue to broaden out how we serve them and what we can offer to them, to make sure that our offer for those clients continues to be the strongest in the industry. In October, we launched alternatives to a very limited group of clients. We will launch in the first half of this year much more broadly to our retail client base. In terms of what that offer entails, we have five or six different categories of alternatives that we're making available. That includes private equity, private credit, hedge funds, long/short and exchange funds, which allow you to exchange a concentrated position for a diversified portfolio. That's roughly the range of alts that we'll have. With each of those categories, we'll start with somewhere between one and three offerings within each of those categories. That will grow over time and the menu will broaden. Standing behind each of those categories, we've hired a team of alternative specialists that are available to spend time with our clients to help them answer their questions and to make sure they find their way to the investment that's most suitable for them and their goals and objectives, working with our financial consultants. In terms of the timetable, I think I highlighted it, first half of this year, we should be fully launched in retail. That's our expectation. As it relates to advisor services, there's lots of opportunities for there as well. As you mentioned, our advisor clients do custody a fair amount of alternative assets with us, and we also have different alternatives programs that we make available here at Schwab. I think the opportunity going forward is for us to be -- offer a more curated set of alternatives to our advisors and to be bringing them to those advisor clients as opposed to primarily being in a position of just custodying the assets. The reason that's important is that we can help our advisors find suitable alternatives, and at the same time, it's beneficial to our economics to be -- to offer that to our advisor clients. So, I think alts is a growing area for the industry, an area where we now see ourselves being quite competitive, and an area where we are bolstering our ability to be the leading place for high net worth and ultra-high net worth investors in our country.

Thank you. Our next question comes from Brennan Hawken with UBS. Your line is open.

Good morning. Thanks for taking my question. Mike, you spoke to capital returns increasing here in 2025, particularly given the adjusted leverage ratio inside your targeted range. Could you speak specifically to appetite if we end up seeing TD? TD has sort of made some public comments about their stake. And if they come to market, the appetite and ability to participate in any kind of secondary from a large [owner] (ph)? Thank you.

Hi, Brennan. Thank you for the question. And, again, not much I would say on this topic, for obvious reasons. And hard to comment in any definitive way on that, but if you look back at history at similar types of situations when we're given the appropriate time and opportunity to evaluate, this tends to be a situation we like to be part of. But again, I won't go beyond that at this point. We feel very good about the progress we've made broadly. And as you note, we are building capital, and we are now in that targeted operating range. Thank you for the question.

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Thanks. Good morning. Mike, I was hoping you could talk about client cash trends. We obviously saw the normal seasonality in December. And as I think you said in your prepared remarks, expect some of that to go back in as we start the year here. But as you look beyond the first couple of months, how are you thinking about client cash levels? And do you think the cash holding is still a theme here as we think about 2025 more broadly?

Thank you for the question. Really based on everything we've seen over the past couple of quarters, would be suggestive that we're entering that more normalized environment for client cash. If you just go back to the previous year, the first half of the year was really that continued normalization of realignment. And of course, the second half of the year, we did see two consecutive quarters of cash growth. And while that December number reflects seasonality, again, more indicative of that normalized environment, I think as you go forward, I think of that deposit level, of course, in part being influenced by new account growth. Of course, there will be other macroeconomic variables like the role of central banks as well impacting levels of liquidity in the system, but I do think we are in that more normalized environment at this time. Of course, as we've always seen month-to-month, quarter-to-quarter, you will see impacts of seasonality, but again, I would suggest we are in that more normalized environment, that's -- we're encouraged by the last couple of quarters.

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks. Good morning, folks. Maybe just to back -- maybe tie two questions together, just on the deposit formation, just the question you just answered, Mike. Maybe just -- what you envision as the organic contributor to that deposit formation given the efforts and the focus on generating greater NNA this year? And then, do you think you can get back to that 5% level at some point this year? I know the 5% to 7% is sort of the long-term target, but just looking at the development with that and the new products you're offering, including the alts platform, do you think you can get back to that 5% range, say, sometime as early as the second half?

Hi. Thanks for the question. It's Mike. I'll take the first part of that and then Rick can pick up the second part of that question. Again, we're encouraged by the trends we're seeing in deposits, two consecutive quarters of growth. And as I highlighted, I think the account growth that we've seen historically really is associated with that new account openings. And the portion of assets that come to us that's in the form of cash. And of course, there could be a percentage that's off-balance sheet versus on-balance sheet. But again, we're seeing indicators that the realignment activity has certainly has decelerated last year, and we're looking at that new account formation now being the driver of that cash. And keep in mind, it's been a long time since the Fed had hiked rates previously. Of course, the Fed began lowering rates at the back end of the year. And so, we think, again, that's represents a lower propensity to realign. So again, encouraging trends.

And Brian, I'll take the part on NNA and highlight two things. First, we expect to make progress this year. So, we finished the year at 4.3% for the year in terms of percentages. We expect that to be higher in 2025. We are also confident that over the long run, 5% to 7% remains the right number. And our goal this year is to make progress towards that, for all the reasons that I mentioned earlier.

Thank you. Our next question comes from David Smith with Truist Securities. Your line is open.

Good morning. Back on the topic of the buyback, can you give us a sense of how low supplemental funding has to get before you can resume that? And on a related note, is there an upper bound that you see to the adjusted AOCI above which just you would feel compelled to repurchase shares?

David, in terms of the supplemental borrowings, again, we saw very good progress in the reduction in the quarter. Again, that is a combination of the cash that came in over the course of the quarter as well as, of course, the principal and interest proceeds coming off of the investment portfolio. So, as I look out over the course of the year, we expect to make that steady progress in reducing that supplemental funding consistently. And I think -- what I would ask you to keep in mind is that we don't intend to bring supplemental funding down to zero. We want to see continued progress, but for the purpose of good liquidity management practices, we do want to keep funding diversification in place. We'll bring that bank supplemental funding down to minimum levels, but we want to keep that operational. We want to keep that flexibility. That's consistent with good, sound liquidity management. So, I don't look at that as a gating factor over the course of the year necessarily. We want to see that progress. But again, the endpoint is certainly not zero.

Thank you. Our next question comes from Ben Budish with Barclays. Your line is open.

Hi. Good morning, and thank you for taking the question. I wanted to just ask about the OpEx growth for next year. I think there's a couple of one-time items in 2024. I was under the impression there would be a little bit of expense synergies that will still be incremental going into next year. And the mid-single-digit sort of number feels a little bit more in line. I know there's some other factors too, like some of the exchange fees around trading volumes, but just curious if there's anything else going on. Any other sort of like one-time items to think about? And how you would compare next year's guide in the context of your sort of longer-term financial formula? Thank you.

Thank you. So, for that expense, we talked about mid-single-digits at 4.5% to 5.5%. We feel very good about that range. Again, we're in a position where we want to invest in growth. We want to invest the solutions and the capabilities that we're providing to clients. And importantly, we're also investing in that efficiency. And again, that is going to enable us to recycle that efficiency and to continue to grow, while at the same time, ensuring that we're maintaining that low cost to serve, while at the same time achieving our financial outcomes. I don't think there's anything too substantial in that range that really, when I look at that range, I'm thinking about that combination of investing in our growth, while at the same time, maintaining that discipline. Certainly, you did see some of a pickup given the volumes. So, of course, that is incorporated into that expense number. And of course, with the back end of the year with the continued good engagement and, certainly, what we're expecting this year, that continued engagement, that we'll see that as a component of the spend for 2025 as well.

Thank you. Our next question comes from Bill Katz with TD Cowen. Your line is open.

Okay. Thank you very much, and congrats again both you guys on your new positions, again. Just sticking with the balance sheet for a moment. I think you mentioned it's going to be about flattish year-on-year. Can you talk to us through a little bit in terms of the ins and outs, and how you sort of see it? I think on the prior management, there was sort of a conversation about potentially shrinking the balance sheet longer term. Just wondering how we should be thinking about that once you get on the other side of the supplemental reduction. And is this just a replacement opportunity of migrating down from securities into bank loans? And how should we think about maybe the long-term opportunity for NIM? Thank you.

Bill, thank you. First of all, when I think about the balance sheet over the course of 2025, again, that balance sheet is going to be a reflection of how our clients engage us. And of course, we've been very focused on meeting their evolving needs. We've seen good momentum in margin lending, good momentum in our bank offerings as well. So, we do believe, over the course of the year, we're going to see a reflection of that activity. Of course -- and we're also expecting to see that improved liability mix. Again, very focused on bringing down the supplemental borrowings. We're seeing that realignment. We're away from that stabilization to back to a more normalized environment. So, I think that's at the core of how I see the balance sheet evolving. When I think about the comments about the balance sheet size, just taking a step back. Again, we are a growth firm. We are focused on growth and meeting the evolving needs of our clients. That bank platform, as Rick mentioned earlier, that's an important platform for achieving our strategic objectives. So, we're going to grow client loans, we're going to meet those needs. Of course, there's a part of that balance sheet, the supplemental borrowings, that we are bringing down with intent. But might you find yourself in a situation one day, again, going back a few years where lots of liquidity is coming into the system, might you want to have the tactical flexibility to move some liquidity off balance sheet if it made sense for clients, if it made sense for the economics, that might be a capability that would give us some flexibility. But again, our strategy is growth. I think what that capability does of moving more liquidity off balance sheet, it just gives you flexibility to operate across a range of environments.

Thank you. Our next question comes from Devin Ryan with Citizens JMP. Your line is open.

Great. Good morning, Rick and Mike. Thanks for the update. So, a question on spot crypto. Obviously, fast-growing part the market, high percentage of trading revenue for some other brokerages. And I know Schwab clients currently have access to ETFs and some other proxies. But how are you guys thinking about the incremental opportunity for Schwab? Do you have any sense of the demand that you can frame for us? And then, from a timing perspective, what are you currently expecting? And are you ready to move forward once there is a green light or some sign that you can do this? Thank you.

Devin, thanks for the question on crypto. We're doing really well in crypto. We have a lot of ways to meet our clients' needs. ETFs, the crypto ETFs have really grown on our platform. You can buy futures, you can invest in a variety of closed-end funds and different products that will meet clients' needs. We have a crypto site that we attract clients to. And in fact, in the fourth quarter, we had a 400% increase in the number of visitors to our crypto site. 70% of those visitors were prospects. So, it just shows you that when investors in the marketplace are thinking about crypto, they want to be able to work with Schwab, and I think those numbers reflect that. We had a 200% increase in new account applications tied into clients that came to our crypto site. So, we're doing a lot for clients in this space today. We do want to have the ability to offer spot crypto. And our expectation is that at some point the regulations around crypto are going to allow us to do that. And when we do, we expect to launch not long after. So, from a timing perspective, some of that -- it will depend, one, on when that regulation is changed, and two, when we're ready to go, but our expectation would be it would be sometime in 2025. And we're excited to be in the marketplace because we think clients will want to hold crypto at Schwab because it's a place they can trust, it's a place where they do a lot of business. And we think that will drive clients to crypto, just as it did in the fourth quarter with a 400% increase in the number of clients hitting on our crypto sites. So, we think we're well positioned in this space.

Thank you. Our next question comes from Alex Blostein with Goldman Sachs. Your line is open.

Hey, good morning. Thank you for the question. Could you guys spend a minute on your securities portfolio strategy as you roll through 2025? I guess, maybe just a reminder how much principal and interest you expect the securities portfolio to generate? And ultimately, how do you expect that to flow down either to paying down supplemental borrowings? And I guess, at what point do you feel like you could start to reinvest back in the securities portfolio? Thanks.

Thank you. So, I would say on the quarter, we've been around that $10 billion range for the principal and interest coming off of the portfolio and, as we highlighted, being used to pay down the supplemental borrowings. And so, over the course of the year, that is going to be a priority for the continued use of those proceeds to pay down those borrowings, make continued progress there. Again, in this environment now where rates seemingly at least the latest forwards are indicating that perhaps the Fed target rate won't come down as much as perhaps was contemplated at some point last year. At some point in the future, we would be in a position where we're reinvesting in that portfolio. Again, the near-term though, we're going to be very focused on paying down the supplemental borrowings. Longer term, I would say that allocation, similar to what we've done in the past, we're going to stay in highly liquid, high-credit quality, treasuries, agencies. And I've talked about how we think about the range of that duration of that portfolio also operating in a range that really contemplates the composition of liability. So, I think we're in a real good position to continue to use those proceeds to pay down supplemental. And then, over time, investing -- reinvesting in that securities portfolio, which at these levels in market rates would be much more accretive than what the yields are today in that portfolio.

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

Thank you. Our last question comes from Kyle Voigt with KBW. Your line is open.

Hi, good morning. Mike, maybe I can just ask another follow-up on the securities portfolio. Just wondering if you could provide some updated thoughts on the potential for securities repositioning. Does the recent positive trajectory on sweep cash balances, lower supplemental funding and the current reinvestment rate levels with yields moving higher make this a more attractive option now than even compared to a quarter ago? And given the progress you've made with the balance sheet already, could you just outline any remaining concerns with potentially executing this in 2025?

Thank you for the question. As we've talked about in the past with the securities portfolio, we're just very mindful of doing something that creates headlines and disrupts the trust that we have with our -- that our clients have in us. So, we've been reluctant to do that at this time. That being said, we're keeping a close eye on that portfolio and its performance. Restructuring is not something we're taking off the table. We do evaluate that. But I think you raised an important point, which is, if you think about the proceeds of a portfolio sale, how might you use that? One of our priorities is to continue to make progress on the reduction of supplemental borrowings. And we are making that progress just after the principal and interest payments, and certainly, alongside cash stabilization. So, that is an important consideration. And of course, we're mindful of the level of rates in the marketplace as well and what the trajectory of that rate market may look like over the course of the year. So, I think at this point, we feel good about the strategy that is unfolding.