SCHW changes
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- Price
- $96.80 → $96.70(−0.1%)
- About
- Charles Schwab runs a large brokerage, banking, and wealth management business. Clients hold cash and investments at Schwab. Schwab earns net interest removed: income added: revenue on client removed: cash, much of added: cash that it removed: held added: holds on its own balance sheet. It invests this cash in added: securities and lends it as margin loans and bank added: loans. Schwab sweeps more client cash to TD Bank under an insured deposit removed: accounts. added: account agreement and earns a fee on these deposits. Schwab also earns asset-based fees on managed portfolios, mutual funds, and advisory accounts, plus trading removed: and service fees. added: revenue. In 2025, net interest revenue was about half of total net revenues.
- Thesis
- Schwab still trades as if client cash could sort back into money market funds and other higher-yielding places. That is the fear that hit the whole brokerage industry in 2023. That fear has kept fading. Net interest margin removed: has expanded for several straight quarters, added: rose from 2.86% in the third quarter of 2025 to 3.00% in the second quarter of 2026, and added: core net new assets keep growing faster than the year before. A new worry took its place in September 2026. Schwab stock fell about 6% added: in one day on fear that AI assistants built into rival apps, such as Meta's new Muse, could weaken the loyalty that keeps clients on one brokerage's platform. For the first fear to keep fading, Schwab needs net interest margin and net new asset growth to keep showing up in its results. removed: That includes added: The next test is the added: third quarter report and the fall business update on October 15, removed: 2026 business update. added: 2026. For the AI-loyalty fear to fade, Schwab needs to show added: that its own AI tools keep clients and advisors on its removed: platform rather than losing them to outside assistants. added: platform. These tools include added: Charley, its assistant for retail clients, and a removed: new partnership removed: bringing added: that brings Claude to removed: thousands of added: more than 16,000 independent advisor firms. The Federal Reserve raised rates in September removed: 2026 rather than cutting them. This removes, for now, added: 2026, and its officials expect one more increase this year. Higher rates help the removed: near-term risk that falling deposit costs lag falling asset yields. added: yield on Schwab's assets, but they also make money market funds more attractive than sweep cash. If both trends keep confirming in the next two to three quarters of earnings, the market's caution looks overdone and the gap can close. If deposit competition or client movement to AI-native tools shows up instead, the discount could persist into 2027.
- Risks
- Schwab holds a large fixed-income investment portfolio, built up when deposits were high. If the Federal Reserve cuts interest rates faster than expected, yields on this portfolio reprice down before deposit costs fall as much, which can compress net interest margin. The Fed removed: instead raised rates 0.25 points in September 2026, added: and the median projection of its removed: first increase since 2023, so added: officials keeps rates near that level through 2027. A change in this removed: risk did not play out this quarter, but added: outlook can bring the removed: Fed has signaled it could still cut later if the rate cycle turns. added: risk back. A large share of client cash sits in low-yielding bank sweep accounts. If money market fund yields pull further ahead of sweep rates, clients can move cash out of sweep and into higher-yielding funds. This lowers the low-cost deposit base Schwab lends against. added: Higher Fed rates make this gap larger. Schwab now competes directly with other platforms on commission-free trading, crypto trading, and cash yields. Its own crypto trading service only launched in 2026, so it is unproven against established crypto-focused competitors. AI assistants built into other companies' apps, such as Meta's Muse, could reduce the friction that keeps clients using a single brokerage's app and tools. The market sold Schwab stock on this fear in September 2026, even with no confirmed change to Schwab's own client or asset numbers.
- Balance sheet
- Schwab is a removed: bank added: savings and loan holding company. Client money, not borrowed money, funds most of its $517.3 billion balance sheet. At June 30, 2026, bank deposits were $249.7 billion and payables to brokerage clients were $124.0 billion. Schwab invests this money in securities, margin loans and bank loans. Its own long-term debt was $22.7 billion, mostly unsecured senior notes of the parent company at a weighted average rate of 4.17%. It also had $13.9 billion of other short-term removed: borrowings, mostly added: borrowings. About $7.4 billion of this was commercial paper, and added: the rest was bank repurchase agreements and secured credit lines. It also had $0.5 billion from the Federal Home Loan Bank. removed: In June and August 2026, the added: The parent removed: added $3.6 added: issued $5.85 billion of new senior notes removed: to fund added: in May, June and August 2026, for general corporate purposes. Some wholesale funding supported the fast growth in margin loans. Moody's, S&P and Fitch rate these notes A2, A- and A. For liquidity, Schwab had $40.6 billion of cash and $32.8 billion of unused Federal Home Loan Bank capacity. It could also use $28.0 billion at the Federal Reserve discount window. The liquidity coverage ratio was 135%. $33.0 billion of segregated cash and investments belongs to clients by regulation, so it is not free cash. Capital is the real limit. The Tier 1 leverage ratio was 8.7%. With the added: accumulated other comprehensive loss of $10.6 billion added: included, mostly unrealized removed: loss added: losses on removed: its securities included, added: securities, the ratio was removed: 6.8%, added: 6.8%. This is inside the company's 6.75% to 7.00% target. The company also has $6.2 billion of preferred stock. removed: Thus future added: Future buybacks must come mostly from new earnings. added: Schwab bought back $3.4 billion of its stock in the first half of 2026 and had about $11.1 billion left of its $20 billion authorization. The securities loss shrinks as bonds mature, so capital room grows slowly over time. As of Jun 30, 2026.
- Checkpoints
- Oct 15, 2026: Q3 2026 added: results and fall business update: margin, new assets, client cash. Pending. Watch: Net interest margin at or above the Q2 level of 3.00% and more added: core net new assets than a year earlier pass; a lower margin or client cash leaving sweep accounts fails. Q4 2026 (estimate): Charley AI assistant rollout and advisor AI tools. Pending. Watch: Client asset and account growth that holds up while Charley and the Claude advisor tools roll out pass; slower net new assets or account closures linked to outside AI apps fail. Jan 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with higher net interest revenue and the adjusted Tier 1 leverage ratio near 7% while buybacks continue passes; a lower margin outlook or a pause in buybacks fails.
- Recent events
- added: Oct 7, 2026: Schwab common stock started to trade on the Texas Stock Exchange as a second listing. The New York Stock Exchange stays its primary listing. Sep 30, 2026: Schwab announced Charley, a generative AI assistant for retail clients. It will roll out in phases on Schwab.com and Schwab Mobile, starting in October 2026. Sep 22, 2026: Schwab stock fell about 6% in one day. The market reacted to Meta's new Muse AI assistant app, which reached the top of the US App Store within two weeks of launch, on fear that AI assistants could weaken the customer loyalty that brokerage and wealth firms depend on. Sep removed: 22, added: 17, 2026: Schwab removed: Advisor Services is working with Anthropic to bring Claude added: announced its Fall Business Update for removed: Financial Advisors to more than 16,000 independent registered investment advisor firms on Schwab's platform. added: October 15, 2026, with CEO Rick Wurster and CFO Mike Verdeschi. Sep 16, 2026: The Federal Reserve raised its benchmark interest rate 0.25 percentage points, to a range of 3.75% to 4.00%, its first increase since removed: 2023, and pointed to at least added: 2023. The median projection of Fed officials shows one more increase removed: this year. added: before the end of 2026. Sep 15, 2026: Schwab reported core net new assets of $64.8 billion for August 2026, up 46% from August 2025. Total client assets were $13.41 trillion at the end of August, up 19% from a year earlier. added: Sep 14, 2026: Schwab and Anthropic announced that Schwab Advisor Services will bring Claude for Financial Advisors to more than 16,000 independent registered investment advisor firms on Schwab's platform. Jul 21, 2026: Schwab reported Q2 2026 results. Total net revenue was $7.07 billion, a removed: record. added: record and up 21% from a year earlier. Net interest margin was removed: 3.00%, and added: 3.00%. Core net new assets reached $62.7 billion in June alone. May 13, 2026: Schwab began rolling out direct spot trading in bitcoin and ether to retail clients.