Key TakeawaysThe S&P 500 added 0.6% on Tuesday, July 16, 2024, amid stronger-than-expected retail sales data and greater certainty the Federal Reserve will lower interest rates in September.Shares of health insurers moved higher after UnitedHealth Group posted better-than-expected second-quarter profits.Charles Schwab shares plunged after the financial services firm warned it would be downsizing its bank to maintain profitability. Major U.S. equities traded higher after several companies posted strong earni ...

Client Assets and Growth - Total client assets reached a record $9.4 trillion, up 17% year-over-year[1] - Total Client Assets increased by 17% year-over-year to $9.4 trillion in June 2024[25] - Total client assets increased by 17% year-over-year to $9,407.5 billion in Q2-24, up from $8,015.8 billion in Q2-23[22] - Core net new assets grew 17% year-over-year to $61.2 billion[1] - Net New Assets grew by 7% month-over-month to $33.2 billion in June 2024[25] - Net new assets for Investor Services increased by 11% year-over-year to $39.9 billion in Q2-24, compared to $36.0 billion in Q2-23[22] - Net market gains contributed $214.9 billion to client asset growth in Q2-24, compared to $363.8 billion in Q2-23[22] - Investor Services assets increased by 16% year-over-year to $632.9 billion in June 2024[25] - Advisor Services Client Accounts grew by 16% year-over-year to 4.09 million in June 2024[25] - Active brokerage accounts increased 4% year-over-year to 35.6 million[3] - Active brokerage accounts grew by 4% year-over-year to 35,612 thousand in Q2-24, up from 34,382 thousand in Q2-23[22] - Active Brokerage Accounts increased by 4% year-over-year to 35.61 million in June 2024[25] - Client assets receiving ongoing advisory services are up 16% year-over-year[3] - Core Net New Assets Receiving Ongoing Advisory Services decreased by 6% month-over-month to $29.1 billion in June 2024[25] - Year-to-date net flows into Schwab Wealth Advisory and Wasmer Schroeder Strategies increased by 40% and 53%, respectively[3] - Proprietary mutual funds and CTFs grew by 32% year-over-year to $748.0 billion in Q2-24, compared to $565.5 billion in Q2-23[22] - Total ETF assets rose by 25% year-over-year to $2,088.2 billion in Q2-24, up from $1,674.6 billion in Q2-23[22] - Banking accounts increased by 8% year-over-year to 1,931 thousand in Q2-24, compared to 1,781 thousand in Q2-23[22] - Banking Accounts grew by 8% year-over-year to 1.93 million in June 2024[25] - Workplace Plan Participant Accounts rose by 7% year-over-year to 5,363 thousand in Q2-24, up from 5,003 thousand in Q2-23[22] - Workplace Plan Participant Accounts increased by 7% year-over-year to 5.36 million in June 2024[25] - New brokerage accounts decreased by 10% quarter-over-quarter to 985 thousand in Q2-24, down from 1,094 thousand in Q1-24[22] - Off-platform equity and bond funds, CTFs, and ETFs totaled $31.6 billion, $3.7 billion, and $117.3 billion respectively as of June 30, 2024[23] Financial Performance - Net income for the second quarter totaled $1.3 billion, or $0.66 diluted earnings per common share[1] - Adjusted net income and diluted common earnings per share equaled $1.5 billion and $0.73, respectively[1] - Net revenues for the second quarter were $4.69 billion, up 1% year-over-year[4] - Net revenues for the three months ended June 30, 2024, were $4.69 billion, compared to $4.656 billion in the same period in 2023[12] - Net interest revenue for the three months ended June 30, 2024, was $2.158 billion, down from $2.29 billion in 2023[12] - Asset management and administration fees increased to $1.383 billion in Q2 2024 from $1.173 billion in Q2 2023[12] - Total expenses excluding interest for the three months ended June 30, 2024, were $2.943 billion, slightly lower than $2.965 billion in 2023[12] - Net income available to common stockholders for the three months ended June 30, 2024, was $1.211 billion, up from $1.173 billion in 2023[12] - Earnings per diluted share for the three months ended June 30, 2024, were $0.66, compared to $0.64 in 2023[12] - Net revenues for the six months ended June 30, 2024, were $9.43 billion, down from $9.772 billion in the same period in 2023[12] - Net income available to common stockholders for the six months ended June 30, 2024, was $2.462 billion, compared to $2.706 billion in 2023[12] - Earnings per diluted share for the six months ended June 30, 2024, were $1.34, down from $1.48 in 2023[12] - Weighted-average common shares outstanding (diluted) for the six months ended June 30, 2024, were 1.832 billion, compared to 1.834 billion in 2023[12] - Net interest revenue decreased by 6% YoY to $2,158 million in Q2-24 compared to $2,290 million in Q2-23[14] - Asset management and administration fees increased by 18% YoY to $1,383 million in Q2-24[14] - Total net revenues remained flat with a 1% YoY increase to $4,690 million in Q2-24[14] - Net income available to common stockholders increased by 3% YoY to $1,211 million in Q2-24[14] - Clients' Daily Average Trades (DATs) increased by 4% YoY to 5,486 thousand in Q2-24[14] - Cash and cash equivalents decreased by 47% YoY to $25.4 billion in Q2-24[14] - Total assets decreased by 12% YoY to $449.7 billion in Q2-24[14] - Full-time equivalent employees decreased by 12% YoY to 32.3 thousand in Q2-24[14] - Revenue per trade decreased by 9% YoY to $2.25 in Q2-24[14] - Total expenses excluding interest (GAAP) for Q2 2024 were $2.943 billion, with net income (GAAP) at $1.332 billion[32] - Adjusted net income (non-GAAP) for Q2 2024 was $1.465 billion, reflecting adjustments for acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs[32] - Pre-tax profit margin (GAAP) for Q2 2024 was 37.2%, while the adjusted pre-tax profit margin (non-GAAP) was 41.0%[33] - Adjusted diluted EPS (non-GAAP) for Q2 2024 was $0.75, compared to GAAP diluted EPS of $0.64[33] - Acquisition and integration-related costs for Q2 2024 were $36 million, representing 0.8% of total net revenues[33] - Amortization of acquired intangible assets for Q2 2024 was $129 million, accounting for 2.8% of total net revenues[33] - Restructuring costs for Q2 2024 were $10 million, contributing 0.2% to total net revenues[33] - Return on average common stockholders' equity (GAAP) for Q2 2024 is 14%, down from 17% in Q2 2023[36] - Average common stockholders' equity increased to $33,991 million in Q2 2024 from $27,556 million in Q2 2023[36] - Adjusted net income available to common stockholders for Q2 2024 is $1,344 million, slightly down from $1,373 million in Q2 2023[36] - Return on tangible common equity (non-GAAP) for Q2 2024 is 34%, significantly lower than 62% in Q2 2023[36] - Tier 1 Leverage Ratio (GAAP) as of June 30, 2024 is 9.4% for CSC and 10.9% for CSB[36] - Tier 1 Capital increased to $42,624 million for CSC and $32,091 million for CSB as of June 30, 2024[36] - Adjusted Tier 1 Leverage Ratio (non-GAAP) as of June 30, 2024 is 5.9% for CSC and 6.2% for CSB[36] - Average tangible common equity for Q2 2024 is $15,720 million, up from $8,848 million in Q2 2023[36] - Adjusted average assets with regulatory adjustments increased to $434,003 million for CSC and $279,214 million for CSB as of June 30, 2024[36] - AOCI adjustment for CSC as of June 30, 2024 is -$16,926 million, compared to -$14,755 million for CSB[36] Asset Management and Fees - Asset management and administration fees totaled $1.4 billion, a new quarterly record[5] - Asset management and administration fees increased to $1.383 billion in Q2 2024 from $1.173 billion in Q2 2023[12] - Asset management and administration fees increased by 18% YoY to $1,383 million in Q2-24[14] - Total asset management and administration fees for the six months ended June 30, 2024, were $2,731 million[20] - Schwab money market funds generated $357 million in revenue in 2024, with an average fee of 0.27%[20] - Total mutual funds, ETFs, and CTFs generated $785 million in revenue in 2024, with an average fee of 0.16%[20] - Fee-based advice solutions generated $510 million in revenue in 2024, with an average fee of 0.39%[20] - Bank loans generated $460 million in interest revenue in 2024, with an average yield of 4.44%[18] - Receivables from brokerage clients generated $1,351 million in interest revenue in 2024, with an average yield of 7.78%[18] - Securities lending revenue for the six months ended June 30, 2024, was $171 million[18] Interest and Yield - Net interest margin expanded to 2.03%, up 1 basis point sequentially[5] - Total interest-earning assets for the six months ended June 30, 2024, were $428,020 million, generating $7,513 million in interest revenue at an average yield of 3.49%[18] - Net interest revenue for the six months ended June 30, 2024, was $4,391 million, representing a 2.03% yield[18] - Total funding sources for the six months ended June 30, 2024, were $428,020 million, with an average interest expense of 1.57%[18] - Average Interest-Earning Assets decreased by 13% year-over-year to $417.15 billion in June 2024[25] - Mutual Fund and Exchange-Traded Fund Net Buys (Sells) decreased by 17% year-over-year to $85.2 billion in June 2024[25] Capital and Efficiency Metrics - Adjusted Tier 1 Leverage Ratio includes accumulated other comprehensive income (AOCI) to provide a supplemental measure of the company's capital levels[28] - Return on tangible common equity is used as a supplemental measure to assess capital efficiency and returns relative to the composition of Schwab's balance sheet[28] - The company uses adjusted diluted EPS and return on tangible common equity as components of performance criteria for employee bonus and executive management incentive compensation arrangements[28] - Adjusted Tier 1 Leverage Ratio (non-GAAP) as of June 30, 2024 is 5.9% for CSC and 6.2% for CSB[36] - Average tangible common equity for Q2 2024 is $15,720 million, up from $8,848 million in Q2 2023[36] - Adjusted average assets with regulatory adjustments increased to $434,003 million for CSC and $279,214 million for CSB as of June 30, 2024[36] - AOCI adjustment for CSC as of June 30, 2024 is -$16,926 million, compared to -$14,755 million for CSB[36] Restructuring and Costs - Fourth quarter of 2023 included $16 million in restructuring costs[15] - Restructuring costs for Q2 2024 were $10 million, contributing 0.2% to total net revenues[33]

JHVEPhoto/iStock Editorial via Getty Images Charles Schwab overview July 16th ended up being a rather unpleasant day for shareholders of The Charles Schwab Corporation (NYSE:SCHW). I say this because, after the market opened, shares of the company plunged nearly 9%. This came about even though management exceeded analysts’ earnings forecasts when it came to second quarter earnings data that was released leading up to that point. The headline news was that this pain was driven by management's decision to ...

The Charles Schwab Corporation (SCHW) reported $4.69 billion in revenue for the quarter ended June 2024, representing a year-over-year increase of 0.7%. EPS of $0.73 for the same period compares to $0.75 a year ago.The reported revenue represents a surprise of -0.02% over the Zacks Consensus Estimate of $4.69 billion. With the consensus EPS estimate being $0.73, the company has not delivered EPS surprise.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Schwab says it wants to get smaller. Its stock price is already doing just that.Shares of online stockbroker The Charles Schwab Corporation (SCHW -9.03%) tumbled 8.8% through 12:55 p.m. EDT Tuesday despite beating analyst forecasts for the second quarter on both the top and bottom lines.Heading into the quarter, analysts expected Schwab to report a $0.72 per-share profit on sales of $4.68 billion. In fact, Schwab earned $0.73 on sales of $4.69 billion -- and with a bigger net-interest margin of 2.03%.Charle ...

JHVEPhoto Shares of Charles Schwab (NYSE:SCHW) fell 6% on Tuesday after reporting disappointing earnings, as the company continues to struggle with declining client cash utilization. While shares are still up about 20% from a year ago, the longer-term performance has been disappointing. Shares are actually still lower than when I last covered the company in October 2022, mistakenly rating shares a buy, as the regional banking crisis of 2023 damaged its business model, dependent on low-cost deposits. Wit ...

Key TakeawaysCharles Schwab intends to shrink by relying on off-balance sheet deals with partners, CEO Walt Bettinger said in the financial services firm's second-quarter earnings call Tuesday.The company reported 985,000 new brokerage accounts in the second quarter, below expectation.Schwab posted adjusted earnings per share (EPS) of 73 cents on revenue of $4.69 billion, essentially in line with analysts' expectations. Charles Schwab (SCHW) shares tumbled in intraday trading Tuesday after Chief Executive O ...

Financial Data and Key Metrics - Revenue in Q2 2024 increased by 1% year-over-year to $4.7 billion [28] - Adjusted expenses in Q2 were up just under 2% year-over-year, but would have been down more than 1% excluding onetime and unusual items [28] - Adjusted pretax margin was roughly 41% and adjusted EPS was $0.73 in Q2 [28] - Total assets dropped by 4% in Q2, driven by tax-related outflows and slower client cash realignment activity [29] - Net new assets year-to-date were over $150 billion, with Q2 asset gathering of about $60 billion, up 17% from the same period last year [10] - New brokerage accounts reached almost 1 million during the quarter [10] Business Line Data and Key Metrics - Managed Investing net flows year-to-date were nearly $25 billion, a 56% increase over last year [19] - Schwab Wealth Advisory grew by 40%, Wasmer Schroeder by 53%, and Schwab Personalized Indexing by 127% [19] - Total assets under management for Wasmer strategies reached $25 billion, with a compound annual growth rate of 23% since acquisition in 2020 [20] - Net flows in Wasmer strategies were $4 billion year-to-date [20] - Equity buy-sell ratio was about 1.1, and daily average trades remained at relatively high levels for Q2 [10] Market Data and Key Metrics - Former Ameritrade retail clients now make up about one-third of overall enrollments in advisory solutions [9] - Promoter Scores for former Ameritrade retail clients increased by about 50 points nine months post-conversion [9] - Promoter Scores for advisory services, including former Ameritrade adviser clients, returned to pre-conversion levels [9] - Client engagement was solid in Q2, with high interest in Managed Investing solutions [10] Company Strategy and Industry Competition - The company is transitioning from the Ameritrade integration, with strong client engagement and progress on strategic focus areas [24] - The company aims to increase emphasis on transactional bank deposits like checking balances to improve liquidity and stabilize the deposit base [15] - The company plans to use third-party banks like TD Bank to extend FDIC insurance, lower capital intensity, and improve liquidity [15] - The company is committed to offering quality lending services, including residential mortgages, HELOCs, and pledged asset lines [14] - The company is investing in technology, including artificial intelligence, to lower costs and improve operational efficiency [18] Management Commentary on Operating Environment and Future Outlook - The company expects full-year revenue to range between flat to up 2% versus 2023 [32] - Adjusted expenses are expected to be approximately 2% higher than 2023, with half of the change due to unanticipated onetime items [32] - The company anticipates a return to normal earnings power, with strong growth in revenue and earnings in the back half of 2024 and beyond [27] - The company expects NIM to reach the mid-2.20s in Q4 and approach 3% by the end of 2025 [33] - The company is confident in its long-term organic growth rate and expects to see 5% to 7% annualized NNA growth from existing and new clients [24] Other Important Information - The company completed the last client transition group from the Ameritrade acquisition in Q2, involving almost $2 trillion in assets and 17 million client accounts [8] - The company is focusing on enhancing the Schwab mobile app, which has a 4.8-star rating on the App Store and was ranked number one by Corporate Insight for the second year in a row [23] - The company is committed to maintaining zero custody fees for RIAs and has no intention of changing that [21] Q&A Session Summary Question: Deposit rates and Fed cuts [38] - The company's scenario assumes a single Fed rate cut in September, with deposit betas expected to be higher in the easing cycle than in the tightening cycle [39] Question: Use of third-party banks [41] - The company is exploring the use of third-party banks to reduce capital intensity and improve liquidity, with economics similar to the IDA agreement with TD Bank [42] - The company does not see the Wells Fargo issue as having meaningful implications for its fiduciary-driven investment advisory solutions [43] Question: Ameritrade attrition and net new assets [44] - The company expects to move Ameritrade clients from being net detractors to contributing at the same level as Schwab clients over time [47] Question: Sequential growth drivers [49] - The company expects sequential growth in Q4 to be driven by a single Fed cut, moderating client cash realignment activity, and continued margin balance growth [51] Question: Repositioning the securities portfolio [55] - The company is cautious about repositioning the securities portfolio to accelerate paydowns of high-cost liabilities, as it could jeopardize client trust [56] Question: Shift to third-party banks [58] - The company is considering a strategic shift to using third-party banks for deposits over the long term, with the goal of reducing capital intensity and improving liquidity [60] Question: Pace of securities maturing [63] - The company expects cash flows off the investment portfolio to be in the range of $10 billion to $11 billion per quarter over the next several quarters [64] Question: Normalized deposit growth framework [66] - The company expects client transactional cash to grow with the growth in accounts and total assets over the long term, with variability influenced by market engagement and rate-driven activity [70] Question: Ameritrade asset pools and bank size [72] - The company brought over about $2 trillion of Ameritrade client assets, with total assets now at $9.4 trillion [73] - The company is optimistic about future growth, with client satisfaction improving dramatically post-conversion [75] Question: Fiduciary accounts and money fund yields [77] - The company does not have the same exposure as Wells Fargo, as cash assets in fiduciary relationships are invested in a sweep government money fund [78] Question: NIM outlook for 2025 [79] - The company expects NIM to approach 3% by the end of 2025, driven by the moderation of client cash realignment activity and the paydown of supplemental borrowing [80] Question: Lending opportunities [82] - The company is focused on expanding its lending capabilities by creating a client-friendly process, with significant enhancements in pledged asset lines and mortgage processes [84] - The company sees lending as a way to deepen relationships with adviser clients and close the gap in lending assets [85]

Facade of Charles Schwab office with visible logo and electronic time and temperature display, ... [+] Rincon Hill, South of Market, San Francisco, California, June 7, 2024. (Photo by Smith Collection/Gado/Getty Images)Gado via Getty ImagesCharles Schwab (NYSE: SCHW) stock gained 10% YTD, as compared to an 18% rise in the S&P500 index. In sharp contrast, Charles Schwab’s peer BlackRock (NYSE: BLK) is up only 3% YTD. Overall, SCHW is scheduled to report its fiscal Q2 2024 results on Tuesday, July 16, 2024. W ...

Charles Schwab (SCHW) is scheduled to report second-quarter 2024 results on Jul 16, before market open. While the company’s earnings are expected to have declined in the quarter on a year-over-year basis, revenues are anticipated to have improved.In the first quarter of 2024, Schwab’s earnings beat the Zacks Consensus Estimate. Results benefited from the solid performance of the asset management business. The absence of fee waivers and solid brokerage account numbers acted as tailwinds. However, lower reven ...