All right. We are live. Good morning, everyone. Welcome to Schwab's Fall 2021 Business Update. This is Rich Fowler, Head of Investor Relations, coming to you on a not quite top-down day. No, I'm not talking about the Giants losing to the Dodgers. I'm not talking about the rather, I don't know, lackluster, Jeff, unfortunate football seasons that both Stanford and Cal seem to be having. I am talking about the fact that we're actually, finally, seeing a few drops of rain out here, which will at least help settle the dust. Given the drought we've been living through, I guess I can't whine too much, but there are people here who have said they didn't think my car had a top. Now there's proof otherwise. As always, we hope everyone on the call and your families remain safe and well. We thank you for spending time with us today. We were talking about this earlier, I think today's program is about as straightforward as an interim update can get. Hopefully we'll have a good chunk of time for discussion at the end. Joining me, both virtually and literally, are Schwab CEO Walt Bettinger and Chief Financial Officer Peter Crawford. We'll plan to spend around an hour with these two to bring you up to date on life at Schwab right now. Starting off with some prepared comments and then following up with Q&A until it's time to wrap up. We'll follow established practice on questions, so we'll take them via the dial-in as well as the webcast console. To help us get to as many folks as possible, we very much appreciate your sticking to our evergreen 1+ follow-on question approach to questions. Walt will start us off today to discuss our strategic picture. Peter will review our recent financial performance, move to discussing the current financial outlook before taking us into Q&A, which Jeff Edwards will once again moderate. Before that, it's time for our moment on the wonderful Wall of Words, which we continue to battle to a single riveting page. Main point as always is to remind us that outcomes can differ from expectations. Please keep an eye on our disclosures and stay in touch. Finally, the slides will be posted on the IR site during Peter's prepared remarks per our recent practice. With that, I think we're ready to get going. Walt, over to you. Well, thank you, Rich, and good morning, everyone. Thank you for joining us. I continue to be impressed, Rich, that you have that Wall of Words on a single page. As I get older, the font gets a little smaller, but still congrats are in order. When I evaluate the client-oriented and financial performance of Schwab, my high-level thoughts tend to gravitate toward three areas. First, are clients and prospects voting with their wallets by bringing their hard-earned dollars to us? Second, are clients engaging with our platforms, our education, and various solutions? Third, in the context of serving our clients well, are we generating quality earnings for our stockholders? The order of those is not by accident. At Schwab, it starts with serving our clients well. If we do so and we make prudent decisions to continually enhance our services, both for today and for the longer term, then earnings follow. As all of you know, we've referred to that as the virtuous cycle for many years. Our Q3 results are really a perfect illustration of this approach in action. Our momentum was strong across our core businesses. Client engagement was relatively high. We continue to make the right investments for today and the future. Of course, our financial results were outstanding. Let's go ahead and dive into some of the details here on page five. It was an uneven quarter from a macro standpoint. We saw the equity markets reach new highs intra-quarter, and then by quarter- end they had fallen so that the quarter ended up relatively flat. Client sentiment, driven at least in part by growing concern about inflation issues in the country, reflected this as it slid actually into bear territory by year- end, its lowest level anytime within the past 12 months. Despite the uneven quarter, our organic growth was really exceptional. Core net new assets in the quarter were almost $140 billion. That takes us to nearly $400 billion year- to- date, about an 8% organic growth rate. This is almost 50% ahead of the same period for 2020 when looking at the combined Schwab and former Ameritrade. It also means that in the first 12 months as a combined company, that clients have entrusted us with over a half a trillion dollars in core net new assets. A pretty remarkable number, particularly when one considers that the primary source of our core net new assets are really retail investors, those that come to us directly or via the independent investment advisor model, which again, principally serves retail investors themselves. Of course, new brokerage accounts remained quite strong also. We exceeded $1 million for the fourth consecutive quarter. We've done a lot over the last several years to make our offerings more appealing to younger and newer investors. There's a lot more to come on that. We have removed barriers. We've enhanced digital capabilities, expanded access to advice. We continued to enhance our award-winning checking account. It's gratifying to see that those investments have been noticed by younger and newer investors. We're now at about 60% of our new-to-firm households are under age 40, more than half of those under 30. Some of these clients have come to us because they've been attracted to tremendous value, others by our industry-leading service, others by the quality of our trade execution. Regardless of why they came to Schwab, we are confident that with our broad set of solutions, quality advice, our client orientation, we're well-positioned to continue to serve these clients as their needs evolve over their lifetimes. Over in the RIA custody space, we've built a platform and a business that's viewed as best in class by a diverse array of clients. If you look at our net new assets in the RIA business to date, firms with less than $500 million in client assets contributed almost 40% of our overall net new asset growth. I think this validates the long-standing statements as well as commitment that we have made, striving to be the top RIA custodian for firms of all sizes. While I mentioned that client engagement did moderate a bit from really what were extraordinary and record-breaking levels earlier this year, trade levels remained quite strong. As our client calls moderated, our level of customer service has returned to its historic high levels. You can see the chart on the right here on page eight. It shows just how dramatic that Q1 was in terms of client calls and of course, the pressure that that contributed to from a service standpoint. On page nine, clients continued to take advantage of borrowing opportunities with us. They utilized different types of borrowing that best fit their personal needs. When a client capitalizes on our attractive mortgage or Pledged Asset Line pricing, it's good for the client. It's also good for us, both strategically and financially. It strengthens our relationship with the client. Often, it lowers the cost of borrowing for our client. It also provides us with an attractive yield relative to what we might otherwise be able to invest that cash in. It is a perfect example of what I talk about often, a win-win monetization. In terms of volumes, mortgage volumes remained quite strong. Client usage of Pledged Asset Lines and margin lending continued to grow, as you can see in the middle column and the right column here on page nine. Talking a little bit about the trading side, we continued to see growth in retail trading activity, certainly relative to the advisor business. We also saw higher levels of trading by investors under the age of 40. Very importantly, clients continued to take advantage of our educational opportunities, helping them become more effective traders and investors. I also think one of the important factors on this slide as I was studying these metrics is that it's not simply brand-new clients that are driving the volume of trading activity. Actually, the largest increase in trading occurred from existing clients. Maybe a bit surprising to some folks who maybe have followed some of the trading activity here throughout 2021. Given the discussions in the marketplace around order flow, I wanted to provide a slide and talk for a bit about our approach to order routing. It remains consistent with prior periods, and we think it's a balanced approach that serves our clients well. Let me first emphasize by saying we do not route orders based on which third party pays us the most. We set a rate for order flow payment and then allow the third parties to compete for our flow, based on the quality of their execution for our clients. When you bring that down into math, for every dollar in order flow revenue we received from third parties to date this year in 2021, those same third- parties generated $6.50 in price improvement for our clients. Also, another important metric that maybe is not always well understood. Over 80% of the revenue that we generated from order flow came via orders that were executed on exchanges. Now, again, as I mentioned, we recognize that the idea of payment for order flow is actively being debated today in various venues. We hope that these metrics help inform that debate. Moving over to page 12. Any discussion of our growth, success, and future opportunities as a company has to revolve around our dedicated employees, or Schwabies as we like to call ourselves. We are committed to continue investing in our workforce, whether it be via training, hiring, appropriate levels of compensation and benefits, work location flexibility, diversity, as well as a culture that we believe is second- to- none in our industry. Of course, many third- parties view it in the same way. Earlier this year, we were proud to share with our dedicated Schwabies a 5% base salary increase in recognition of their hard work and to help offset some of the increases that many are experiencing in their cost of living. Of course, that increase will also filter through and lift our Schwabies' bonuses in future years. These dedicated Schwabies, who now number in excess of 30,000, are helping ensure we deliver on our three key strategic initiatives, scale and efficiency, win-win monetization, and client segmentation. Of course, many are fast at work on the integration of our TD Ameritrade acquisition. It is on track for our clients, and as we have shared with you a number of times, delivering financial results that are measurably in excess of what was anticipated at the time we announced that transaction. For all that's happening in and around Schwab, all the changes in the market, the growth of the firm, the evolving regulatory and competitive landscapes, I think what's important is what doesn't change. We remain consistent in the areas that matter most. A strategy based on seeing the world through Clients' Eyes, a set of competitive advantages that we continue to enhance, and a commitment, as I referenced earlier, to the virtuous cycle that continually rewards our clients, our employees, and our long-term stockholders. It's been a winning approach for almost five decades at Charles Schwab, and with modest overall market share in the U.S., we believe that great days are ahead of us. Just, Peter Crawford, before I turn it over to you, I wanted to spend one moment and comment on our recent announcement of Rick Wurster to the position of President of the company. When I assumed the dual role of President and CEO in 2008, Charles Schwab was a vastly different company. Our market cap was between 10% and 15% of what it is today. Our workforce was a fraction of what it is today, as was our revenue and earnings. Of course, our regulatory oversight was relatively simple and straightforward. Today, it makes sense to begin allocating some of the duties that I've carried for the last 13 or 14 years to a colleague, and Rick Wurster is the ideal person for me to partner with. I feel very confident that for those of you who don't know Rick, as you get the opportunity to know him in the future, you'll recognize his intellect, his leadership skills, his passion for clients, and at the top of the list, his personal integrity. Peter, let me turn it over to you to cover your slides. All right. Well, thank you very much, Walt. Walt talked about the success we're having winning clients of all shapes and sizes, the continued strong engagement by those clients, both in the market generally and with many of our solutions, the tremendous progress we've made in the year since we closed the TD Ameritrade acquisition, and finally, about the exciting opportunities we see to continue to take market share and advance our strategic priorities. In my time today, I'll talk about how we're able to translate that strong client engagement and business momentum into record financial performance in Q3. I'll provide an update on the growth of our balance sheet and our thinking about capital management. Finally, I'll provide an outlook for the Q4 and some early thinking on 2022. The message you should hear is one of consistency. This company is driving consistently strong operating and financial performance despite an anticipated moderation of trading activity and continued low interest rates. That itself is, we believe, an outcome of the consistency with which we operate the company, which starts, as Walt mentioned, and ends with our unwavering focus on clients. It also includes that the durable business model we've created and our strong competitive position. In short, while the prospects are increasing for higher interest rates in the future, which will be an enormous benefit to our clients and our business, we have demonstrated that we don't need high interest rates to be successful. That's why we continue to navigate through this period with a lot of momentum and a lot of confidence. Let's talk about some of the dynamics that influenced our financial performance in the Q3. Relative to the Q2 and really the H1 of the year, we faced, frankly, more headwinds than tailwinds. As Walt mentioned, the equity markets interrupted their march higher due to various concerns about the economy, the pandemic, and the political situation. Client trading activity continued to moderate, though the sequential drop-off I'd note from the Q2 was less than we typically have seen during prior summer months. We actually saw a significant increase in margin utilization. Interest rates fell for most of the quarter before climbing towards the end, and of course, in the early part of the Q4, but they still finished the Q3 below Q2 levels. Now, the one tailwind that we've always been able to count on is our ability to drive robust organic growth. Nearly $400 billion in core net new assets year- to- date, and nearly 6 million new accounts. Despite some of those challenging dynamics, we were able to deliver very strong financial performance across the board. Revenue increased 1% sequentially, driven by slight increases across all three primary sources. Net interest revenue increased for the fourth consecutive quarter. Despite a decline in securities lending activity and reinvestment rates that remained lower than our overall portfolio yield, as interest earning assets and margin utilization increased and premium amortization fell sharply from the Q2. Asset management and admin fees increased due to higher balances and a stabilization of money fund waivers. Defying the often seasonal slowdown, trading revenue actually increased 1% despite a reduction in daily average trades or DATS. This was due to a quarter-over-quarter increase in derivatives trades, which produced a higher revenue per trade than equities. Our adjusted expenses decreased 8% sequentially, reflecting the $200 million reserve we recorded in the Q2 related to an ongoing SEC investigation and relatively flat compensation and benefits expense due to mostly flat headcount through the quarter. With an increase in revenue and a significant decrease in expenses from the Q2, our key profitability metrics rose substantially. Our adjusted pre-tax margin finished just shy of 50%, and our return on tangible common equity reached 23%, both measures that would have seemed unimaginable the last time we were in the midst of a ZIRP environment. Turning our attention to the balance sheet. Our balance sheet grew 6% sequentially to over $600 billion, reflecting increased client cash balances as well as the initial migrations from the IDA to our balance sheet. We continue to see increasing margin utilization despite a slight decrease in investor sentiment that Walt alluded to and a slowdown in equity trading. As Walt mentioned, we are gratified that clients have turned to Schwab Bank, increasing numbers for their borrowing needs. Bank loans were up 9% sequentially and 42% over the last 12 months. We issued another $850 million in long-term debt at a coupon of under 2% and also completed our exchange of some TD Ameritrade debt for equivalent debt of The Charles Schwab Corporation. Stockholders' equity stayed flat as our organic capital formation was offset by a decrease in AOCI, resulting from the increase in interest rates at the end of the quarter. With a sharp increase in our balance sheet assets, we saw a slight decline in our T 1 leverage ratio, which however, remains well above the regulatory minimum. I mentioned that client cash balances were up sharply in the quarter, and that was a function of continued strong asset gathering and a reduction in net equity purchases reflecting the somewhat more subdued investor sentiment. With the flattish equity markets, client cash allocations increased to 10.8% of assets. We thought it might be interesting now that we're three-quarters of the way through the year to take a step back and look at how our business has performed relative to the so-called, quote, "mathematical illustrations" we unveiled with the winter business update back in February. That seems like a long time ago. As you may recall, we just closed the books on our Q1 as a newly combined company and experienced in Q4 2020 what at the time was an unprecedented level of client engagement represented by trading activity, margin utilization, et cetera. In early Q1, we had the beginning of the vaccine rollout and then the meme stock craze. Given the uncertainty around how key drivers of our performance would unfold, we shared three illustrations based on different levels of trading, margin balances, and client cash balance growth. What those three illustrations shared in common were assumptions about moderate equity market appreciation, rates that followed the forward curve at the time, securities lending revenue consistent with recent quarters, and the expectation that we begin to move balances from TD Bank to our balance sheet in July. I think it's safe to say that the year has generally unfolded in a way that has been beneficial to our performance. With equity markets up sharply based off of reopening enthusiasm, long-term rates that have bounced around, but on average have been above the level of the forward curve, or levels of the forward curve anticipated at that time. A somewhat stronger securities lending revenue due to interest and some hard to borrow stocks and some early synergies from combining the Schwab and TD Ameritrade operations. The initial IDA migrations occurring in July as expected. What happened with the three variables about which there was less certainty? Well, those have unfolded in a way that was, on balance, most similar to that upside illustration, with trading levels and balance sheet growth just under the level of the highest illustration and margin utilization well above. Given that performance, it should not be surprising that our revenue growth has been significantly higher than the top level outlined in those illustrations, with adjusted expense growth falling just above the range before the impact of the SEC reserve. Our adjusted pre-tax margin thus far well above the 40% level that we've communicated. We achieved those results even as we improved service levels and invested appropriately in the TD Ameritrade integration and our other strategic priorities, which I think reinforces the tremendous operating leverage we retain in our business through the cycle. Now, with three quarters of the year now behind us and some of the major uncertainties regarding client engagement and operating with somewhat more predictability, at least in the near term, we're now in a position to return to our historic practice of sharing with all of you a specific scenario rather than the three mathematical illustrations. We now expect revenue to increase by 9.5%-10.5% for the full year relative to Q4 2020 annualized. Now, very importantly, that assumes trading activity similar to the Q3, 13%-15% balance sheet expansion over the course of the year, including Q4 growth consistent with what we typically see at the end of the year, which tends to be a stronger quarter for cash balance growth. A Q4 net interest margin in the mid-140s, so near the recent level, and equity markets to grow modestly from here and rates to follow the forward curve. We'd also expect full- year adjusted expenses to be in the 6%- 7% higher than our Q4 annualized level under those same set of assumptions. Those expenses will reflect the impact of the 5% across the board salary increase we announced earlier, and Walt referenced in his remarks, which took effect in early October. That combination would produce an adjusted pre-tax margin near where we have trended year to date. As we look ahead to 2022, our strategic agenda remains quite consistent. Focused on working towards a successful TD Ameritrade client conversion in 2023, while advancing our other priorities around scale and efficiency, win-win monetization, and segmentation. Our financial outlook, however, continues to evolve with changes in the environment, expectations for interest rates, and client activity. We'll share our specific scenario, or perhaps scenarios, with you at the winter business update in February, but a few thoughts in the meantime. If the market is correct in predicting that the first Fed increase will be in the middle of the year, we clearly see a material benefit on the roughly 40% of our balance sheet tied to short rates and on the amount of money fund fee waivers. In the appendix that we've shared, you'll see that we size that combination at $750 million-$950 million of revenue lift over the 12 months following the increase. We'll continue to monitor trends and trading activity, margin utilization, securities lending. The longer we maintain these high levels, the more confident we'll be that we may, in fact, be seeing something akin to a new normal. On the expense side, we're likely to enter a bit of a transitional year, with our expenses being influenced by some unusual items, including the full- year impact of the base salary increases we announced earlier, the resetting of our bonus funding back to 100% from the much higher level we've been accruing in 2021, some infrastructure and software amortization and depreciation that is related to client conversion, but per accounting rules, will still be included in our adjusted expense numbers, and the continued realization of expense synergies related to the integration. Finally, our priorities in terms of capital management remain the same, ensuring we have sufficient capital to support the growth in our client base. The timing to return those capital levels back to our operating objective depends in large part on the path of interest rates, with higher rates bringing the date forward due to stronger capital formation, as well as a likely return of client cash sorting. Let me close with a few thoughts. We're certainly encouraged about the improvement in the environment and very excited about what the prospect of higher rates will mean for our clients and our business. That excitement is fueled by the success we're enjoying today. Our ability to continue driving strong organic growth, in part by appealing to the next generation of investors. The continued engagement of our clients, even as the markets have become somewhat more choppy, and their increased usage of our broad array of solutions. The progress we're making across all of our strategic priorities and the success we're having in continuing to drive greater efficiency and productivity throughout our business. The strength and resilience of our business model. Finally, the considerable opportunities we have in front of us. Remaining focused on the items within our control, most importantly, maintaining our Through Clients' Eyes strategy, that is the mechanism that has enabled us to deliver for clients and stockholders for close to 50 years. Jeff, let me turn it over to you to facilitate our Q&A. Great. Thank you so much, Peter and Walt. Operator, let's turn to the phones and see if we have any questions. Excellent. As we begin the question- and- answer session, if you'd like to ask a question over the phone, please dial star one and record your name when prompted. Our first question today comes from Daniel Fannon. Your line is now open. Thanks. Good morning. Peter, I was hoping we could follow- up on the outlook for 2022, just in terms of, I know it's early around expenses. It might be helpful just to remind us where you are in terms of realized synergies and then kind of what's left and maybe the time period for that realization for the remaining level of expense synergies. Thank you for the question. As Walt mentioned, we've achieved roughly 40% of the $1.8 billion-$2 billion of expense synergies in the first year, post legal day one. We'd expect to realize probably roughly a third maybe or so on a run- rate basis between that period and client conversion, then maybe the last third or so at client conversion in the months following. There's sort of a significant amount in that first year, a bit of a slowdown, if you will, on a kind of a monthly basis, then a big chunk at the end with the actual client conversion and moving from two platforms down to one platform. Great. That's helpful. As a follow-up, Walt, I was hoping we could talk about the advisor business. You just wrapped up your kind of big IMPACT conference, and could you talk about kind of the outlook for advisor assets and maybe what advisors are looking for you to add in terms of capabilities or services they're hoping that you can expand and offer going forward? Sure. Thanks. We continue to really like that business. The independent investment advisor model continues to win in the marketplace, and the organizations that they compete with continue to try to adjust their business models to look more and more like independent advisors. I think any discussion of our services for them begins with stability and never being in a position to have to say to their clients any concern around the safety of their assets at a custodian. We move into ensuring they have competitive capabilities, whether it's on the lending side, whether it's quality of trading and execution. An area that there is tremendous interest in right now is personalization, and I spoke about that a bit at IMPACT. RIAs have always done a degree of personalization. I think we're getting close to a step function in terms of what RIAs and others can do for their clients to personalize investing. Along with that will be a great focus on tax-efficient investing. I think we all probably agree that taxes are likely to be higher at some point in the future. The opportunity to more efficiently manage portfolios, taking into consideration taxes, is also something that a lot of advisors are looking for and counting on us to deliver. Thank you. Our next question comes from Kenneth Worthington. Your line is now open. Hi, good morning. Walt, in the past, you suggested a closer relationship with certain third-party asset manager partners. Rick Wurster has commented on a more curated experience that might distinguish third-party managers. We saw the news about Fidelity and Vanguard funds sold on the Schwab platform this quarter. I guess the question is, how is the evolution of these relationships with your third-party managers developing? Does the great market environment that you highlighted alter these plans to work more closely and better monetize these third-party manager relationships? Yeah. I'm not able to go into any detail at this point, but those conversations are progressing, and I certainly hope that by the time we are meeting again next time, that I'll be able to share a fair amount of detail around this. We continue to think that opportunities to help curate for investors can lead them to better outcomes, quality performance, keeping costs as low as reasonably possible. We remain very committed to the strategies that I've spoken of and that Rick has spoken of. We're just a little bit early in being able to communicate some of the details around that. Okay. That's fair. Maybe just separately, Schwab has dedicated significant resources to growing advice and digital advice services. It is a big business for you, it's also one that seems to be growing maybe a bit faster or maybe in line with the overall franchise rather than seeing noticeably faster growth. Is advice an offering that should be relatively bigger at Schwab than it is today? If so, what is sort of holding it back? Is it the environment? Is it the need for new products and innovation? What are your thoughts here on growth of advice at Schwab? I think all your assumptions are fair. What I might add is that if you look at the type when you're speaking of advice, I think you're speaking on the retail side because virtually all the assets on the RIA side are under advisory relationships. I think you have to look at the clients who come to Schwab retail. Generally speaking, those clients come to us as more on the self-directed side, whereas some of the firms you might be comparing advisory growth rates to their clients may more traditionally come to them looking for advice. There's also a somewhat different relationship model, and compensation structures at some of the firms you might be comparing to. We've got a different type of client, on average, and a somewhat different type of relationship model, which probably means that our growth rate on the advice side is not going to align with some of the firms that you're thinking of. That said, I think there is a tremendous opportunity for us to continue to grow our advice business as our clients age and have increasing levels of wealth. They do tend to turn to who they trust, and that is often us for those advisory services that they want. The other thing I would encourage you to think about is that the lines are going to be blurring. When I referenced in the earlier question around personalization, let's just talk briefly about direct indexing. Direct indexing, depends on how you think of it. It's not necessarily advice, right? I mean, direct indexing appeals significantly to individuals who are historically self-directed and are index-oriented. It, in many cases, can be a more effective way to be self-directed in an index that maybe historically they just bought a fund or an ETF. The lines between advice and self-directed are also on the cusp of starting to blur. I think as you see over the next 12 months, the quality of the offering that we'll put out there and the enhancements that it will bring over its first 12 months after introduction, you'll see some of what I'm referring to showing up in the numbers. Great. Thank you very much. Our next question comes from Richard Repetto. Your line is now open. Good morning, Walt. Good morning, Peter. I guess my question goes to Peter. We had a significant change in rates towards the end of the quarter, the 10-year popping into the 120s, 130s, and now we're at close to 170, and the five-year popped too. I guess the question is, can you give us a feel for reinvestment rates? I don't want to say real time, but given the rate levels we're seeing. When you did give the guidance for the full- year, I know the change in rates doesn't really impact. What sort of NIM are we sort of factor in for, I guess, for 4Q? Thanks, Rich. Certainly these numbers are changing in real time. Even as I had been preparing with the team over the last several days or weeks for the update today, we're putting together sort of thoughts on reinvestment rates and frankly, even some of that information may be a little bit old now. I'd say is up until probably a week or so ago, would've said reinvestment rates are probably in the 120-130 basis point range. That's a combination of maybe 30-ish basis points on floating rate securities, kind of 130+ on some of the MBS, the fixed rate MBS that we buy, and a little bit on the lower end of that range for treasuries, which we've been leaning into a little bit more recently to build up our level one purchases as we are subject to the full LCR on October 1st. In the last week though, with rates moving even higher, I would say we're a little bit north of that range as we're sitting here right now today on the reinvestment. It's probably more in the 130s range overall. Great. That's helpful, Peter. Walt, I apologize up front for the detailed question here. It's got to do with the regulatory scenario out there. You did highlight that 80% of your flow goes to exchanges. I guess that has to assume or take into account that option flow goes to option exchanges. I guess the question is, if you're highlighting the 80% flow, which includes the option flow, do you think option flow is immune or won't be the impact of the same as potentially equity flow, if anything, if the SEC did anything on payment for order flow? Yeah. Thanks, Rich. Very difficult for me to say on that or to speculate on what might happen from a regulatory standpoint, from a challenge standpoint. I wish I had a better answer to share with you, Rich. Unfortunately, I really don't. Okay. Thank you. Our next question comes from Steven Chubak. Hi, good morning. Maybe just to start off, a follow-up question for Peter just on the securities yield. You had mentioned the significant benefit from premium am contracting in the quarter. Just given some signs of continued prepayment normalization and rates moving higher at the long- end, I was hoping you could help size the potential impact to the overall securities yield if prepayment speeds reverted to pre-pandemic levels. Just to frame what normal might actually look like in terms of the go forward yield. How big of a drag is premium am on your securities portfolio today on a dollar basis? Thanks for the question. Let me say a couple things maybe, and then I'll try to get into the meat of the question here. I think it's safe to say that we think the worst of the premium amortization is behind us. If you look at the roughly 60% now, I think I heard recently, 60% of the mortgage universe now was originated in 2020 and 2021. Obviously very low rates during that period of time. We saw going from Q2 to Q3, we saw about a 7 or 8 basis point reduction in the premium amortization flow through the investment portfolio. We said back in July, at the July update, that with a 25 basis point increase in rates, we'd expect to see roughly 5- 7 basis point reduction in the premium amortization effect. Frankly, the decrease we saw from Q2- Q3 doesn't really reflect that because rates, of course, moved towards the end of the quarter. That benefit that you see from higher rates, it takes a couple months typically, a few months typically, to work its way through the system. We'd expect the benefit from the most recent increase in rates to start being translated into lower premium amortization in probably the latter part of Q4 and then heading into Q1. We think that that number, that rule of thumb, if you will, is still quite valid. Now, the reason it's hard to answer your question and get you exactly back to sort of where we were previously is that the premiumization is, as you buy more security, as you grow your securities portfolio and you buy securities that have an embedded premium in them, there is just some amount of premium amortization you're going to get that's kind of normal. When you buy at a premium, that's how you amortize it per the accounting guidance. I can give you a number. It's in the hundreds of millions of dollars per quarter. To tell you exactly what that's going to be in the future depends on what securities we're buying and the relative premium in those securities. We think there could be certainly a material benefit, and it'll be embedded as we share our 2022 outlook with you. We'll have a more specific perspective on that, and that will show up in our revenue scenario that we share with you in February. Thanks for all that color, Peter. Maybe just a follow-up on securities lending. You reported a pretty meaningful sequential decline in the quarter, and relative to the guidance, not the start of the year, which I know you guys provided, but just at the summer update, it came in a bit below that $200 million per quarter assumption. I don't want to call it a target. Just wanted to better understand what were the drivers of the decline, where are you in terms of harmonizing the two securities lending platforms, and what do you see as a sustainable run- rate for securities lending, just for modeling purposes? Yeah. I appreciate you clarifying your question because we try to be very clear when we talk about the securities lending numbers, that it wasn't per se guidance, but more was an assumption, for sake of simplicity, to talk about it in terms of an average of the previous two quarters. Because quarter- to- quarter, it is hard to predict the exact amount of securities lending because it's really a function very heavily in terms of the relative interest, and oftentimes, a very small number of hard-to-borrow stocks that create a lot of the revenue. What I can say is, over a longer timeframe, we believe that securities lending revenue should grow with the growth of our client base, our growth of our total client assets, and the growth of margin balances. We have taken steps to bring together the two operations from TD Ameritrade and Charles Schwab together. We are now passing through the entire TD Ameritrade inventory through the Schwab tools and systems and presenting one unified box to the street. That allows us to capture some of early synergies to harmonize our pricing, to take advantage of the greater automation that we've had on the Schwab sec lending side of things, which allows our traders to spend more of their time on the smaller number of securities that generate higher returns and really work those and optimize the price on those. Also, over time, to capitalize on some of the capabilities that we've had on the Schwab side for a longer period of time, such as the Fully Paid Program. We think that there's going to continue to be opportunities to bring out the best of both of those respective businesses and operations and capture additional synergies. We think that over time, we should see, through the cycle over time, a meaningful increase in sec lending as our overall client base grows. Is this new jumping off point? Should we contemplate growth off the roughly $160 million? I think in terms of as you're thinking about modeling this, I think the best bet is to look at it over the previous several quarters and kind of take an average, because you've seen it can jump around from one quarter to the next. If you're modeling something over three years, five years, seven years, I think it's fair to assume that that grows with the growth of the client base. That's great, Peter. Thanks so much for taking my questions. Our next question comes from Bill Katz your line is now open. Okay. Thank you very much. Just maybe a couple of things to unpack. Didn't see a transfer of asset ratio this particular quarter, and I was sort of wondering if you'd be willing to sort of answer the question of how are some of these trends playing through when you look at wire house share gain versus maybe fintech share gain? Sure. I can talk a little bit about that. Our TOA numbers are relatively consistent. There weren't any big changes from Q2 to Q3. Weren't any significant changes in terms of who we're winning from. Again, very significant wins from the fintech side, very significant wins from the traditional firms, on average. A lot of swapping, at least in the retail side, among the more traditional firms that started as discounters. What's different is that in the RIA side, the numbers continue to get better and better, and are exceptionally strong against all competitors in the RIA side. The traditional custodians that we compete against for independent RIAs, as well as the wins from the wire houses. Relatively consistent across the board with particular strength in the RIA side. I think you saw that reflected a bit in some of the net new asset numbers. The last thing I'd share is that as you would probably expect. The Ameritrade business model is a little bit different in that clients tend to come to Ameritrade with cash, and if they do leave, they leave with securities. When we look back historically, many years at the TOA ratios at Ameritrade, they're very different than Schwab's because of the nature of the client base. Those numbers, if you isolate them, they're softer now than Schwab's. They were softer three years ago, five years ago, 10 years ago. They've always been softer at Ameritrade. Our overall corporate numbers remain quite consistent with some degree of outperformance relative to recent past in the RIA side. Okay. Thank you for that. Maybe one for Peter, just coming back to sort of the sensitivity to the first rate hike. Can you sort of unpack that a little bit and how should we think about the incremental margin on that? What is the deposit beta assumption that underlies the revenue pickup? Thank you. Well, I think if you look in our history, in terms of deposit betas, and I don't think that in this rising rate environment, I don't know anything that would suggest that deposit betas would be certainly any higher than what they were previously. We tended to keep those deposit betas very, very low for certainly the first couple of rate hikes. In fact, I think last time we didn't move our deposit rates until we had seen maybe two or even three rate hikes. That's the assumption that would be built into there. The first part of your question was, oh, the incremental margin on that. The nice thing about the benefit from higher rates is it doesn't come with any incremental expense. Certainly the incremental margin on that is very high. Now you've seen, of course, in periods of time in our history, when we get periods of time where we get significant revenue growth. I think we had one year back in, I don't know, 2016, 2017, maybe we were in the upper teens in terms of revenue growth. We have tended to take advantage of that opportunity to lean a little bit more heavily into some of our growth initiatives. That's a conscious decision that we make as a management team. The incremental margin on the revenue itself is very, very high because, as I say, it doesn't come with incremental expense. Okay. Thank you. Our next question comes from Devin Ryan. Your line is now open. Great. Thanks very much. Good morning. I guess first question here, numerous announcements over the past couple of months, on both the brokerage side and also neobanks that are either entering the crypto markets or they're expanding an existing offering. I'm just curious whether you're seeing increasing demand from Schwab customers for either more access and functionality, and I guess also, how you're just more broadly thinking about the space and the evolution and ability to offer those types of products to your customers, and whether you would potentially do an acquisition there to scale up. We do offer a variety of means by which investors can get crypto exposure at Schwab. What we don't offer at this point is direct trading. I think if you look at the firms that are offering direct trading and those that are not, there is consistency in terms of the regulatory oversight of the firms that are not. You can take the cue from that some issues need to be resolved there for firms like us to consider offering direct trading. Yeah, in terms of crypto as an investment, I don't have any opinion on that any more than I do an opinion on any other item that prices based on supply and demand, whether it be art or baseball cards. I think we've all read people commenting that if there's a willing buyer and seller, they set the price for an item. If and when there is greater regulatory clarity for firms under our regulatory regime, we would look forward to being able to offer direct trading, again, subject to all appropriate regulatory oversight for our clients. As I believe I said last time we were together, we would look to do so in a Schwab manner, which would be great service, great experience, and disruptive value. Okay. Great. Thank you. Just quick follow-up here on order routing and kind of the harmonization opportunity. Where are you right now in terms of what you've actually already done? Just give us an update on timing of kind of the procedure here just to kind of close that gap on the revenue synergy. Yeah, Walt, you want me to take that one? Yeah. Peter, why don't you go ahead? Sure. Yeah, we actually already harmonized our rates as of the end of the Q2, beginning of the Q3. The rates are harmonized. That's in our numbers for the Q3 going forward. Okay. Thank you. There's no additional opportunity from here or just trying to make sure I understand that kind of where we are, if there's anything else that could potentially be moving forward? Nothing else on the harmonization front to be looking ahead to, no. Okay. Thank you. Looking at the clock, operator, I think we have time for maybe one last question. Our final question comes from Brian Bedell. Your line is now open. Great. Thanks very much for squeezing me in there. Just want to come back to the NIM for the Q4, Peter, on the mid 140s. I guess, what would be holding that back given what we're seeing in the rate environment? Is that maybe a function a little bit more of that quarterly or seasonal surge in deposits that would maybe not be deployed yet into securities at that time, or a view that that premium AM won't be nearly as strong of a delta in the Q4 as it was in the third? Thanks for the question. There's, I think, a couple things. Again, this is rapidly evolving, so even that perspective is probably a few days old even. I would say a couple things. One is it's a little bit of a NIM versus NIR dynamic, as you allude to, which is we typically get much stronger growth in client cash balances over the course of the Q4. We tend to keep a little bit more of that liquid because it tends to get deployed in the early part of the following year. We want to make sure we increase our liquidity profile a little bit. That's one of them. The second is, as I mentioned, while we expect a significant improvement in premium amortization, our current thinking is that that'll be a little bit backloaded into the Q1, so the quarter-over-quarter benefit may be less from Q3- Q4 than we expect from Q4- Q1. I think those might be the two dynamics that are at play there. Remember, of course, that net interest margin is heavily influenced now by also the relative trends in margin utilization and securities lending. Of course, those have an influence as well. Yep. That's super clear. Just on expenses, you mentioned next year is more of a transitional year, that's for obvious reasons. I think you also said, or at least it was in the deck, that the intention is for the longer-term expense trajectory to be more scalable and a little bit lower than the Schwab's historical expense growth. I'm just looking back, say, over the last 10 years. If I'm doing my math right, it's ballpark 7% type of annual average expense growth rate, obviously with a lot of volatility around that. As we think about the transitional year, I assume it would be something higher than that. Would it be a double digits, I guess, depending on revenue? The lower than historical expense trajectory later on is that, I guess, is that 7% accurate? We should think of more of a mid-single-digit type of expense growth rate longer- term? I'm not going to get into the specific numbers for 2022 yet. We're still working through that, and I want to give you a good reason to come to our winter business update in February. We've talked about core expense growth as being in that mid-single digit level over the course of the cycle. The period that you talked about, we consciously decided to make some significant investments that in certain years pushed the expense growth above that level. As we think about over the cycles or the core expense growth in that mid-single digit level, and we think that very much is still quite valid. A lot of the investments we're making to get to client conversion on the TD Ameritrade integration are things like digital transformation and technology modernization that we think will help us deliver some significant efficiencies both at conversion but also in the years following to make an even more scalable business than we have today. We feel very good about getting back to that trend or even potentially a little bit lower in the out years. It totally makes sense. Yep. Thank you. All right. Well, I think that takes us to our hour. I just want to thank all of you for your time today. This has clearly been a year that has tested our company and tested our employees. As we sit here approaching the end of the year, we feel very proud, as Walt mentioned, of the team's performance and gratified by the results of their hard work. At the same time, we have a lot of work ahead of us, and we know that the environment can change quickly. We're confident we're on the right track, and if we stay true to our mission, to our strategy, our operating priorities, we will continue to be successful over the long- term. Thank you all, and we'll look forward to seeing you in February.