Key Takeaways Schwab's client assets rose 15% y/y to $10.96T in July 2025.Core net new assets climbed 62% to $46.9B from the prior-year month.Schwab opened 377K new accounts in July, up 15% from last year.For July 2025, Charles Schwab (SCHW) recorded an increase in client assets. Total client assets at month end were $10.96 trillion, up 15% from July 2024 and 2% from June 2025. Client assets receiving ongoing advisory services were $5.51 trillion, growing 2% from the year-ago period and 14% from the previou ...

Group 1 - The Schwab U.S. Broad Market ETF (SCHB) closely resembles the S&P 500 in both composition and performance, leading to potential redundancy in investment strategy [1] - The analysis emphasizes the importance of understanding the ETF's structure to evaluate its investment potential effectively [1] Group 2 - The author has extensive experience in quantitative research, financial modeling, and risk management, focusing on equity valuation and market trends [1] - The investment research approach combines rigorous risk management with a long-term perspective on value creation, particularly interested in macroeconomic trends and corporate earnings [1]

Core Insights - The Charles Schwab Corporation (SCHW) shares have increased by 31.9% year-to-date, outperforming the S&P 500 Index's 8.5% growth and the industry's 20.4% rise, but lagging behind peers Robinhood Markets (HOOD) and Interactive Brokers (IBKR) [1][8] Performance Overview - Schwab has benefited from increased market volatility, leading to a year-over-year rise in trading revenues in the first half of 2025 due to higher client trading volume [3] - The company's performance has been supported by strong asset gathering, sustained client engagement, equity market appreciation, and effective expense management [4] Growth Factors - Improving Net Interest Margin (NIM): NIM increased to 2.59% in the first half of 2025 from 2.03% in the prior year, aided by a reduction in high-cost bank supplemental funding, which fell 70% to $27.7 billion from a peak of $97.1 billion in May 2023 [5][6][10] - Client assets have surged, with total managed investing solutions revenues growing at a compound annual growth rate (CAGR) of 12.2% from 2019 to 2024, and total client assets growing at a CAGR of 20.1% during the same period [11][12] - Strategic acquisitions, including TD Ameritrade, have strengthened Schwab's market position and diversified revenue streams [13] Revenue and Earnings Estimates - The Zacks Consensus Estimate for Schwab's 2025 revenues is $23.41 billion, indicating a year-over-year increase of 19.4% [14] - Earnings estimates for 2025 and 2026 have been revised upward by 4.6% and 4.7%, respectively, with projected earnings of $4.59 per share for 2025, reflecting a growth rate of 41.2% [16] Valuation and Returns - Schwab's current trailing 12-month price/book (P/B) ratio is 4.40, above the industry average of 2.08, but lower than Robinhood's 12.51 and Interactive Brokers' 6.04 [19][22] - The company has a return on equity (ROE) of 19.3%, exceeding the industry average of 11.89%, indicating effective utilization of shareholder funds [23] Shareholder Returns - Schwab has consistently increased capital distributions, including an 8% hike in the quarterly dividend to 27 cents per share in January 2025 and a $20 billion share repurchase plan announced in July 2025 [26]

Key Takeaways Schwab cut supplemental funding balances 70% to $27.7B, lifting NIR in early 2025.NIR rose 25.9% y/y to $5.53B in the first half of 2025.Management sees 2025 NIM between 2.65% and 2.75%, up from 2.59% in H1.The Charles Schwab Corporation’s (SCHW) efforts to repay high-cost bank supplemental funding balances have resulted in an improvement in net interest revenues (NIR) of late. By June 2025-end, the supplemental funding balance was down 70% to $27.7 billion from the peak of $97.1 billion recor ...

Core Viewpoint - The article emphasizes the importance of dividend stocks as a reliable income source amid economic uncertainty, highlighting the Schwab U.S. Dividend Equity ETF (SCHD) as a top choice for investors looking to add dividend-paying investments to their portfolios [1][9][11]. Summary by Sections Dividend ETFs Overview - Not all dividend ETFs are created equal, with significant differences in performance and underlying indices [3][4]. - The Vanguard High Dividend Yield ETF (VYM) and SPDR S&P Dividend ETF (SDY) both yield just under 2.6%, but VYM has outperformed SDY by approximately 40% over the past five years [4]. - The Schwab U.S. Dividend Equity ETF (SCHD) has a trailing yield of 3.9%, but has underperformed compared to VYM and SDY [5]. Performance Analysis - The Vanguard Dividend Appreciation ETF (VIG) has been the best performer over the past five years, focusing on consistent dividend growth with a trailing yield of 1.65% [7][8]. - SCHD is highlighted as a smart investment choice due to its potential for reversal in performance trends favoring value stocks over growth stocks [11][12]. Market Conditions and Predictions - Current market conditions are shifting from a growth stock environment to one favoring value stocks, which benefits dividend-paying stocks [11][14]. - Economic factors such as inflation, trade uncertainties, and labor issues are contributing to predictions of below-average returns for the U.S. stock market, with expected annual growth rates between 3.3% and 6% over the next decade [17][18]. Investment Strategy - Investors are encouraged to consider reallocating their portfolios towards dividend-paying value investments, as cash dividends may become increasingly valuable in a stagnant market [16][18]. - A gradual shift towards favoring dividends and value stocks is anticipated, suggesting that proactive adjustments to investment strategies may be beneficial [19][20].

Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=36&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for The Charles Schwab Corporation [Condensed Consolidated Statements of Income](index=36&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported significant year-over-year growth in net income for both the second quarter and first six months of 2025 Key Income Statement Figures (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total net revenues** | $5,851 million | $4,690 million | $11,450 million | $9,430 million | | **Net interest revenue** | $2,822 million | $2,158 million | $5,528 million | $4,391 million | | **Total expenses excluding interest** | $3,048 million | $2,943 million | $6,192 million | $5,885 million | | **Net Income** | $2,126 million | $1,332 million | $4,035 million | $2,694 million | | **Diluted Earnings Per Share** | $1.08 | $0.66 | $2.07 | $1.34 | [Condensed Consolidated Statements of Comprehensive Income](index=37&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q2 2025 increased significantly due to higher net income and positive changes in other comprehensive income Comprehensive Income Summary (Unaudited) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Net Income** | $2,126 million | $4,035 million | | **Other comprehensive income (loss), net of tax** | $1,030 million | $2,257 million | | **Comprehensive Income** | $3,156 million | $6,292 million | [Condensed Consolidated Balance Sheets](index=38&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased due to reduced bank deposits and borrowings, while stockholders' equity increased from retained earnings and improved AOCI Key Balance Sheet Figures (Unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | $458,936 million | $479,843 million | | **Available for sale securities** | $67,612 million | $82,994 million | | **Held to maturity securities** | $139,684 million | $146,453 million | | **Bank loans — net** | $50,405 million | $45,215 million | | **Total liabilities** | $409,485 million | $431,468 million | | **Bank deposits** | $233,058 million | $259,121 million | | **Total stockholders' equity** | $49,451 million | $48,375 million | [Condensed Consolidated Statements of Stockholders' Equity](index=39&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased due to net income and AOCI, partially offset by dividends, stock repurchases, and preferred stock redemption - Key equity changes in the first six months of 2025 include the repurchase of all remaining nonvoting common stock from TD Bank for **$1.5 billion** and an additional **$351 million** in common stock repurchases[120](index=120&type=chunk)[142](index=142&type=chunk) - The company redeemed its Series G preferred stock for **$2.5 billion** on June 2, 2025[108](index=108&type=chunk)[142](index=142&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=40&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating and investing activities was offset by significant cash used in financing activities, leading to a net decrease in cash and cash equivalents Cash Flow Summary for Six Months Ended June 30 (Unaudited) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by (used for) operating activities** | $9,536 million | ($5,601) million | | **Net cash provided by (used for) investing activities** | $19,546 million | $19,181 million | | **Net cash provided by (used for) financing activities** | ($39,027) million | ($40,938) million | | **Increase (Decrease) in Cash and Cash Equivalents** | ($9,945) million | ($27,358) million | [Notes to Condensed Consolidated Financial Statements](index=43&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, financial instruments, debt, and regulatory capital, highlighting preferred stock redemption and share repurchases - On June 2, 2025, the company redeemed all outstanding Series G preferred stock for **$2.5 billion**[108](index=108&type=chunk)[244](index=244&type=chunk) - In February 2025, the company repurchased all remaining **19.2 million** shares of nonvoting common stock from TD Group US Holdings LLC for **$1.5 billion**. An additional **3.9 million** common shares were repurchased for **$351 million** in Q2 2025[239](index=239&type=chunk)[241](index=241&type=chunk) - As of June 30, 2025, the company and its banking subsidiaries met all respective capital requirements and were considered **well capitalized**[254](index=254&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=3&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for Q2 and H1 2025, highlighting strong revenue and net income growth [Introduction](index=3&type=section&id=Introduction) The Charles Schwab Corporation provides wealth management, brokerage, banking, and asset management services through its subsidiaries - Schwab's principal business subsidiaries include Charles Schwab & Co., Inc. (broker-dealer), Charles Schwab Bank, SSB (banking), and Charles Schwab Investment Management, Inc. (asset management)[14](index=14&type=chunk) - The company serves clients through **two primary segments**: Investor Services and Advisor Services[9](index=9&type=chunk) - With **$10.76 trillion** in client assets, management sees substantial growth opportunity in the estimated **$70+ trillion** U.S. investable wealth market[11](index=11&type=chunk) [Overview](index=7&type=section&id=Overview) Schwab's strong H1 2025 performance saw significant revenue and net income growth, driven by asset gathering and reduced funding costs Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total net revenues** | $5,851 M | $4,690 M | 25% | | **Net income** | $2,126 M | $1,332 M | 60% | | **Diluted EPS** | $1.08 | $0.66 | 64% | | **Core net new client assets** | $80.3 B | $61.2 B | 31% | H1 2025 Financial Highlights (vs. H1 2024) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total net revenues** | $11,450 M | $9,430 M | 21% | | **Net income** | $4,035 M | $2,694 M | 50% | | **Diluted EPS** | $2.07 | $1.34 | 54% | | **Core net new client assets** | $218.0 B | $156.8 B | 39% | - The company reduced total bank supplemental funding by **$22.2 billion (44%)** in the first six months of 2025, with **$27.7 billion** remaining at June 30[25](index=25&type=chunk) - Significant capital actions in H1 2025 included repurchasing **$1.5 billion** of nonvoting common stock from TD Bank, increasing the common dividend by **8%**, redeeming **$2.5 billion** of Series G preferred stock, and repurchasing an additional **$351 million** of common stock[27](index=27&type=chunk) [Current Regulatory and Other Developments](index=10&type=section&id=Current%20Regulatory%20and%20Other%20Developments) Recent regulatory developments include SEC and FDIC rule withdrawals, with ongoing monitoring of other pending matters - The SEC withdrew its December 2022 equity market structure rule proposals, 'Order Competition Rule' and 'Regulation Best Execution', on June 12, 2025[28](index=28&type=chunk) - The FDIC withdrew its July 2024 proposal related to the brokered deposits framework on March 3, 2025[29](index=29&type=chunk) - The company continues to monitor pending regulatory matters, including the DOL's final rule on the definition of 'fiduciary', FDIC special assessments, and proposed rulemaking on long-term debt and regulatory capital (Basel III endgame)[30](index=30&type=chunk) [Results of Operations](index=11&type=section&id=Results%20of%20Operations) The company's operations showed strong year-over-year revenue growth, primarily from net interest revenue and asset management fees Revenue Breakdown - Q2 2025 vs Q2 2024 | Revenue Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net interest revenue** | $2,822 M | $2,158 M | 31% | | **Asset management & admin fees** | $1,570 M | $1,383 M | 14% | | **Trading revenue** | $952 M | $777 M | 23% | | **Bank deposit account fees** | $247 M | $153 M | 61% | | **Total net revenues** | $5,851 M | $4,690 M | 25% | Expense Breakdown - Q2 2025 vs Q2 2024 | Expense Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Compensation and benefits** | $1,536 M | $1,450 M | 6% | | **Professional services** | $291 M | $259 M | 12% | | **Depreciation and amortization** | $215 M | $233 M | (8)% | | **Total expenses excluding interest** | $3,048 M | $2,943 M | 4% | [Risk Management](index=22&type=section&id=Risk%20Management) Schwab manages market, liquidity, and credit risks through policies on interest rate sensitivity, maintaining strong funding, and robust regulatory liquidity ratios - A hypothetical gradual **100 basis point** increase in interest rates is simulated to increase net interest revenue by **4.1%** over the next 12 months, while a **100 basis point** decrease would lower it by **4.0%**[79](index=79&type=chunk) - The company's primary source of funds is cash from client activity (bank deposits and brokerage cash). Supplemental funding includes FHLB borrowings, repurchase agreements, and commercial paper[89](index=89&type=chunk) Regulatory Liquidity Ratios (Average for Q2 2025) | Ratio | Q2 2025 Average | | :--- | :--- | | **Liquidity Coverage Ratio (LCR)** | 143% | | **Net Stable Funding Ratio (NSFR)** | 132% | [Capital Management](index=30&type=section&id=Capital%20Management) Schwab manages capital to support strategy, meet regulatory requirements, and return excess capital, maintaining a well-capitalized status Key Capital Ratios (Consolidated) | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Common Equity Tier 1 Capital Ratio** | 33.0% | 31.7% | | **Tier 1 Capital Ratio** | 38.9% | 39.8% | | **Tier 1 Leverage Ratio** | 9.8% | 9.9% | | **Adjusted Tier 1 Leverage Ratio (Non-GAAP)** | 7.2% | 6.8% | - The Board of Directors increased the quarterly cash dividend by **8%** to **$0.27** per common share, effective January 29, 2025[117](index=117&type=chunk) - In Q1 2025, the company repurchased **$1.5 billion** of nonvoting common stock from TD Bank. In Q2 2025, it repurchased an additional **$351 million** of common stock. In July 2025, a new **$20.0 billion** share repurchase authorization was approved, replacing the previous one[120](index=120&type=chunk)[122](index=122&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines and reconciles non-GAAP financial measures used by management for clearer operational performance insights Reconciliation of GAAP to Non-GAAP EPS (Diluted) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Diluted EPS (GAAP)** | $1.08 | $2.07 | | **Adjustments (Amortization, etc.)** | $0.06 | $0.10 | | **Adjusted Diluted EPS (Non-GAAP)** | $1.14 | $2.17 | Reconciliation of GAAP to Non-GAAP Capital Ratio (Consolidated) | Metric | June 30, 2025 | | :--- | :--- | | **Tier 1 Leverage Ratio (GAAP)** | 9.8% | | **AOCI Adjustment** | (2.6)% | | **Adjusted Tier 1 Leverage Ratio (Non-GAAP)** | 7.2% | - Management uses non-GAAP measures like Adjusted Diluted EPS and ROTCE as components for employee and executive incentive compensation[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Disclosures about market risk are located in the Risk Management section of the MD&A - The disclosures about market risk are located in the Risk Management section of the MD&A[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the quarter[264](index=264&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[265](index=265&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings, including a pending settlement for the Corrente Antitrust Litigation, is detailed in Note 10 - For details on legal proceedings, the report refers to Note 10 of the Condensed Consolidated Financial Statements[266](index=266&type=chunk) - The Corrente Antitrust Litigation has a proposed settlement pending court approval, which involves non-monetary undertakings and an **immaterial payment** for plaintiffs' attorneys' fees[206](index=206&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the company's risk factors during the first six months of 2025 - There were **no material changes** to the company's risk factors during the first six months of 2025[267](index=267&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details on stock repurchase activities, including Q2 2025 repurchases and a new $20 billion authorization approved in July 2025 - On July 24, 2025, the Board of Directors approved a new share repurchase authorization of up to **$20.0 billion**, replacing the previous program[268](index=268&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Month | Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | **April** | — | — | | **May** | — | — | | **June** | 3,950 | $88.75 | [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[271](index=271&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to The Charles Schwab Corporation - Not applicable[272](index=272&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) Jonathan S. Beatty adopted a Rule 10b5-1 trading plan in May 2025 for the potential sale of common stock - Jonathan S. Beatty, Managing Director and Head of Advisor Services, adopted a Rule 10b5-1 trading plan on May 28, 2025, for the potential sale of up to **13,216 shares**[273](index=273&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including SOX certifications and Inline XBRL data files - Exhibits filed include certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[276](index=276&type=chunk) Signature - The report was signed on August 8, 2025, by Michael Verdeschi, Managing Director and Chief Financial Officer[280](index=280&type=chunk)

All the major indices tracking to close the week higher. The S&P and NASDAQ pacing for their third positive week in four and the Dow on course for its second positive week in three. Let's bring in Schwab Asset Management CEO and CIO Omar Agalar.Uh Omar, thanks for being here to round out the week. Uh there's been a lot of macro news over the past two weeks. Uh how do you kind of assess the market's reaction to all of it. Do you think it's it's moving in an appropriate function.Well, the market seems to be u ...

Industry Insights - Schwab's Head of Trading Services, James Kostulias, discusses retail traders' positioning for the second half of the year [1] Personnel - James Kostulias is the Head of Trading Services at Schwab [1]

Core Viewpoint - The current earnings season has seen several companies announce significant increases in share buyback authorizations, which can positively impact their earnings per share and share prices. Group 1: Charles Schwab - Charles Schwab reported strong earnings on July 18, beating estimates on both sales and adjusted EPS, leading to a 3% increase in share price [2][3] - On July 24, Schwab announced a new buyback authorization of $20 billion, nearly tripling its previous capacity of $6.9 billion, which represents 11.3% of its market capitalization [3][4] Group 2: D.R. Horton - D.R. Horton experienced a nearly 17% surge in shares after reporting fiscal Q3 2025 earnings on July 22, significantly exceeding sales and adjusted EPS estimates [7][9] - The company plans to increase buyback spending to between $4.2 billion and $4.4 billion for fiscal 2025, up from a previous forecast of $4 billion, indicating a commitment to reducing its share count by 1.4% to 1.9% next quarter [8][9] Group 3: Bank of America - Bank of America announced a substantial increase in its buyback capacity to $40 billion from $9.1 billion, which is approximately 11.1% of its market capitalization [10][11] - The bank reported solid earnings on July 16, beating adjusted EPS estimates but slightly missing on sales, with shares up around 5% since the report [12] Group 4: Teledyne Technologies - Teledyne Technologies reported record revenue of $1.5 billion for Q2, beating sales and adjusted EPS estimates, although shares fell slightly post-results [14][15] - The company announced a new $2 billion buyback authorization, doubling its previous capacity and representing 7.7% of its market capitalization [15][16] Group 5: Overall Market Implications - The trend of increasing buybacks among these firms reflects management confidence in their businesses and a commitment to returning capital to shareholders, which is seen as a positive signal for investors [16]

Core Viewpoint - The Charles Schwab Corporation (SCHW) is identified as a strong momentum stock with a Momentum Style Score of A and a Zacks Rank of 1 (Strong Buy), indicating potential for significant near-term gains [2][3][11]. Momentum Characteristics - Momentum investing involves following a stock's recent price trends, with the expectation that established trends will continue [1]. - SCHW's shares have increased by 4.16% over the past week, outperforming the Zacks Financial - Investment Bank industry, which rose by 1.42% during the same period [5]. - Over the past month, SCHW's price change is 8.52%, compared to the industry's 6.21% [5]. Long-Term Performance - In the last quarter, SCHW shares have risen by 19.08%, and over the past year, they have increased by 46.53% [6]. - In comparison, the S&P 500 has moved 16.04% in the last quarter and 19.71% over the past year, indicating SCHW's superior performance [6]. Trading Volume - SCHW's average 20-day trading volume is 8,598,255 shares, which is a bullish indicator when combined with rising stock prices [7]. Earnings Outlook - Over the past two months, 10 earnings estimates for SCHW have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $4.28 to $4.56 [9]. - For the next fiscal year, 11 estimates have also moved upwards without any downward revisions [9]. Conclusion - Given the strong momentum indicators and positive earnings outlook, SCHW is positioned as a compelling investment opportunity for those seeking stocks with potential for significant near-term growth [11].