Schwab announced on May 4 2026 that it will redeem all 20,554 shares of its 4.000% fixed‑rate reset non‑cumulative perpetual preferred stock, Series I, and the 2,055,433 depositary shares that represent a 1/100th interest in each preferred share. The redemption will be completed on June 1 2026 at a price of $1,000 per depositary share, totaling $2.055 billion in cash outlay.
The transaction eliminates a $2.055 billion liability from Schwab’s balance sheet and removes the 4% annual interest expense—approximately $82 million per year—associated with the preferred stock. By removing this long‑term cost, the company improves its leverage ratios and frees capital that can be deployed to dividends, share repurchases, or other strategic initiatives.
Schwab’s decision aligns with its broader capital‑return strategy, which has included the recent Series L preferred offering and a focus on optimizing the capital mix. The redemption signals management’s confidence in the firm’s financial health and its ability to fund shareholder returns without compromising liquidity or regulatory capital buffers.
The move comes amid a favorable interest‑rate environment and a positive outlook from S&P Global Ratings, which upgraded Schwab’s rating outlook to positive in October 2025. The redemption also positions the company to meet evolving regulatory capital requirements while maintaining flexibility for future growth opportunities.
By eliminating preferred stock, Schwab simplifies its capital structure, potentially enhancing its credit profile and demonstrating prudent capital management. The action reflects a strategic effort to balance debt, equity, and preferred instruments in a way that supports long‑term shareholder value.
The redemption is a significant capital‑structure adjustment scheduled for June 1 2026, marking a key milestone in Schwab’s ongoing efforts to strengthen its balance sheet and optimize capital allocation.
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