PresentationJeff EdwardsMD & Head of Investor Relations Good morning, everyone, and welcome to Schwab's 2026 Winter Business Update. This is Jeff Edwards, Head of Investor Relations. I'm joined in Westlake today by our President and CEO, Rick Wurster; as well as our CFO, Mike Verdeschi. During our time together this morning, the team will review 2025, a year where the business delivered growth across all fronts and discuss the growing set of opportunities we see to help clients even more in 2026 and beyond. ...

Charles Schwab's (SCHW) earnings and revenue narrowly missed analysts' expectations despite strong trading activity, but the stock held up at a critical level. The brokerage firm early today reported adjusted earnings of $1.39 a share, a year-over-year increase of 38%. Analysts' consensus estimate was $1.40 a share. Fourth-quarter revenue climbed 19% to $6.336 billion, just below projections for $6.38 billion,… ...

Since my last call in March 2025 at $77.64, The Charles Schwab Corporation ( SCHW ) has run up more than 30% to hit $101.44. Most of the recovery story I was betting on has already happened. MarginsWith over 15 years of experience in the markets and a degree in economics, I focus on breaking down companies with clarity and discipline. My goal is to give individual investors a straightforward, honest view—what’s working, what isn’t, and where the risks and opportunities actually are. I don’t chase narratives ...

Since my last call in March 2025 at $77.64, The Charles Schwab Corporation ( SCHW ) has run up more than 30% to hit $101.44. Most of the recovery story I was betting on has already happened. MarginsWith over 15 years of experience in the markets and a degree in economics, I focus on breaking down companies with clarity and discipline. My goal is to give individual investors a straightforward, honest view—what’s working, what isn’t, and where the risks and opportunities actually are. I don’t chase narratives ...

Core Insights - Charles Schwab's fourth-quarter 2025 adjusted earnings per share (EPS) of $1.39 exceeded the Zacks Consensus Estimate of $1.37, marking a 38% year-over-year increase [1][9] - Despite strong results, shares fell nearly 1.5% in pre-market trading due to rising expenses [1][9] Financial Performance - The quarterly results were bolstered by robust asset management performance and increased trading revenues, alongside higher net interest revenues (NIR) and solid brokerage account growth [2] - Net income on a GAAP basis reached $2.46 billion or $1.33 per share, up from $1.84 billion or 94 cents per share in the same quarter last year [2] - For the full year 2025, adjusted EPS was $4.87, surpassing the consensus estimate of $4.84, and net income increased by 49% to $8.85 billion [3] Revenue and Expenses - Quarterly net revenues hit a record $6.33 billion, a 19% increase year over year, driven by a 25% rise in NIR, 22% in trading revenue, and 15% in asset management and administration fees [4] - Total non-interest expenses on a GAAP basis rose 4% to $3.16 billion, with adjusted total expenses increasing 6% year over year to $3.03 billion [5] - The pre-tax profit margin improved to 50.2% from 43.3% in the prior-year quarter [5] Client Metrics - As of December 31, 2025, total client assets reached a record $11.9 trillion, an 18% increase year over year [6] - The company added 1.27 million new brokerage accounts during the quarter, bringing the total to 38.5 million active brokerage accounts [6] Share Repurchase - During the reported quarter, Schwab repurchased 29.2 million shares for $2.7 billion [7]

Financial Data and Key Metrics Changes - Total net revenues reached a record high of $23.9 billion, up 22% compared to 2024 [21][24] - Adjusted earnings per share were $4.87, representing a year-over-year growth of 50% [4][23] - Adjusted pre-tax profit margin expanded nearly 800 basis points to 50% [23] Business Line Data and Key Metrics Changes - Managed Investing net flows grew 36% over 2024, achieving a new record [3][14] - Bank lending balances reached an all-time high of $58 billion, a year-over-year increase of 28% [24] - Daily average trades reached a record 8.3 million, driving a 22% year-over-year increase in trading revenue [22] Market Data and Key Metrics Changes - The company attracted $519 billion in core net new assets (NNA), a 42% increase over the previous year [3][4] - The average retail client age has fallen to the 40s, with nearly a third of new retail client accounts opened by Gen Z investors [11][46] - The company ended the year with over 46 million client accounts and nearly $12 trillion in total client assets [8] Company Strategy and Development Direction - The company is focused on a holistic view of growth, emphasizing both attracting new clients and deepening relationships with existing clients [9][12] - Investments in wealth services, lending, and trading capabilities are aimed at enhancing client offerings and experiences [12][16] - The acquisition of Forge is expected to enhance access to alternative investments for clients [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum from 2025 into 2026, with expectations of organic asset growth around 5% [27][28] - The company anticipates total revenue growth of 9.5%-10.5% in 2026, despite potential pullbacks in trading volumes [29] - Management highlighted the importance of maintaining strong capital levels while returning excess capital to shareholders [26][60] Other Important Information - The company has made significant investments in technology, including leveraging artificial intelligence to improve client service efficiency [18][19] - The adjusted Tier 1 Leverage Ratio finished the year at 7.1%, reflecting strong capital management [25] Q&A Session Summary Question: Balance sheet and asset remixing - Management indicated strong lending opportunities in 2026 and plans to reinvest in the securities portfolio, primarily in U.S. Treasuries [36][38] Question: Alternatives platform engagement - The alternatives program is growing, particularly among higher net worth clients, with expectations of attracting new clients and assets [40][43] Question: Growth trends in Advisor Services vs. Investor Services - Both segments are experiencing strong growth, with retail growth driven by younger demographics and increased engagement [45][46] Question: Lending offerings penetration - There is significant upside potential in the lending business, with low penetration rates among existing clients [53][54] Question: Capital return assumptions into 2026 - Management confirmed that capital will support franchise growth, with a focus on returning capital through dividends and potential buybacks [57][60] Question: Tax-advantaged long-short strategies - The company sees growth potential in tax-advantaged strategies, which are fee-based and support client portfolio management [62][64] Question: Prediction markets interest - Management is open to exploring prediction markets related to financial aspects if there is client demand, but currently sees limited interest [70][73]

Financial Data and Key Metrics Changes - Total net revenues reached a record high of $23.9 billion, up 22% year-over-year [24] - Adjusted earnings per share grew by 50% year-over-year to a record $4.87 [24] - Adjusted pre-tax profit margin expanded by nearly 800 basis points to 50% [24] - Organic growth rate of core net new assets (NNA) reached 5.1% [11] Business Line Data and Key Metrics Changes - Managed investing net flows grew by 36% over 2024, achieving a new record [3] - Bank lending balances reached an all-time high of $58 billion, representing a year-over-year increase of 28% [25] - Daily average trades reached a record 7.7 million per day for the year [8] Market Data and Key Metrics Changes - Clients opened 4.7 million new brokerage accounts, a 13% increase over 2024 [3] - The average retail client is now in their 40s, with nearly 60% of new clients under the age of 40 [12] - Gen Z investors comprised nearly a third of new retail client accounts opened in 2025 [12] Company Strategy and Development Direction - The company is focused on a holistic view of growth, emphasizing both attracting new clients and deepening relationships with existing clients [9] - Strategic investments in wealth services, lending, and trading capabilities are being made to enhance client offerings [14] - The acquisition of Forge aims to provide clients with access to alternative investments, enhancing the company's alternatives platform [19] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in sustaining momentum from 2025 into 2026, expecting total revenue growth of 9.5%-10.5% [30] - The company anticipates a slight pullback in trading volumes to approximately 7.4 million daily average trades for the full year 2026 [30] - Management highlighted the importance of capital return and maintaining strong capital levels to support long-term growth [27] Other Important Information - The company supported 1.9 billion trades and over 30 million calls to service centers, reflecting high client engagement [6] - The average response time for client service calls was under 30 seconds [7] - The company plans to invest in expanding branches and hiring more financial consultants to enhance client relationships [31] Q&A Session Summary Question: Balance sheet and asset remixing - Management indicated strong lending momentum in 2026 and plans to reinvest in the securities portfolio, primarily in U.S. Treasuries [38][39] Question: Alternatives platform engagement - The alternatives program is growing and attracting interest from higher net worth clients, with expectations for net new asset growth [41][44] Question: Growth trends in advisor services vs. investor services - Both segments are experiencing strong growth, with retail growth driven by younger demographics and increased engagement [47][50] Question: Lending offerings penetration - There is significant upside potential in the lending business, particularly with the pledged asset line capability [54][56] Question: Capital return assumptions - The capital return framework remains unchanged, with expectations for a 20%-30% payout of GAAP earnings [60][61]

Summary of Charles Schwab's 2026 Winter Business Update Company Overview - **Company**: Charles Schwab (NYSE:SCHW) - **Event**: 2026 Winter Business Update - **Date**: January 21, 2026 Key Points Financial Performance - **Record Year**: 2025 was a record year for Schwab, with total net revenues reaching **$23.9 billion**, a **22% increase** from 2024 [3][4] - **Adjusted Earnings**: Adjusted earnings per share were **$4.87**, up **50%** year-over-year [4][24] - **Core Net New Assets (NNA)**: Schwab attracted **$519 billion** in core NNA, a **42% increase** over the previous year [3][42] - **New Accounts**: Clients opened **4.7 million** new brokerage accounts, a **13% increase** from 2024 [3] Client Engagement and Growth Strategies - **Client Engagement**: Supported **1.9 billion trades** and **30 million calls** to service centers, with **2.2 billion digital logins**, an **18% increase** from 2024 [6][8] - **Client Accounts**: Ended the year with over **46 million client accounts** and nearly **$12 trillion** in total client assets [9] - **Growth Levers**: Focus on attracting more clients and deepening relationships by serving more of their financial needs [10][12] Innovations and Services - **New Offerings**: Launched several new services, including Advisor ProDirect and a long-short separately managed accounts program [5] - **Acquisitions**: Entered an agreement to acquire Forge to enhance access to alternative investments and made a strategic investment in Carta [5][19] - **Wealth Management**: Expanded wealth services and improved capabilities in tax, trust, and estate planning [14][16] Market Position and Competitive Advantage - **Industry Leader**: Ranked number one among peers by total client assets and daily average trades, which reached **7.7 million** per day [9] - **Cost Efficiency**: Decreased cost per account by **20%** over the last five years, maintaining a competitive edge in expense on client assets [20][21] Future Outlook - **2026 Projections**: Anticipate total revenue growth of **9.5%-10.5%** and full-year organic asset growth of around **5%** [29][60] - **Interest Rates**: Expect interest rates to decrease, with a target Fed funds rate of **3.25%** by the end of 2026 [27] - **Earnings Growth**: Projected adjusted earnings of around **$5.70-$5.80**, representing upper teens year-over-year growth [32] Capital Management - **Capital Return**: Strong capital return strategy with **$11.8 billion** returned to shareholders in various forms [26][27] - **Tier 1 Ratio**: Adjusted Tier 1 leverage ratio finished at **7.1%**, above the target range of **6.75%-7%** [26][61] Additional Insights - **Client Demographics**: Average retail client age has decreased to the **40s**, with a significant portion of new clients being Gen Z [12][43] - **Lending Opportunities**: Significant growth potential in lending, with only **9%** penetration of Pledged Asset Line among ultra-high net worth clients [17][47] - **Alternative Investments**: Growing interest in alternative investments, with expectations of increased client engagement in this area [19][40] This summary encapsulates the key insights and data points from Charles Schwab's 2026 Winter Business Update, highlighting the company's strong performance, strategic initiatives, and future outlook.

Financial Data and Key Metrics Changes - Total net revenues reached a record high of $23.9 billion, up 22% year-over-year [4][21] - Adjusted earnings per share were $4.87, representing a 50% increase compared to the previous year [4][23] - The adjusted pre-tax profit margin expanded by nearly 800 basis points to 50% [23] Business Line Data and Key Metrics Changes - Managed investing net flows grew by 36% over 2024, achieving a new record [3][14] - Bank lending balances reached an all-time high of $58 billion, reflecting a 28% year-over-year increase [24] - Daily average trades reached a record of 7.7 million, with trading revenue increasing by 22% year-over-year [9][21] Market Data and Key Metrics Changes - The company attracted $519 billion in core net new assets (NNA), a 42% increase over the previous year [3][4] - The average retail client age has decreased to the 40s, with nearly a third of new retail client accounts opened by Gen Z investors [12][46] - The company ended the year with nearly $12 trillion in total client assets [9] Company Strategy and Development Direction - The company is focused on a holistic growth strategy, emphasizing both attracting new clients and deepening existing client relationships [10][12] - Significant investments have been made in wealth services, banking, and trading capabilities to enhance client offerings [13][14] - The acquisition of Forge aims to democratize private investing and expand access to alternative investments [5][18] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in sustaining momentum into 2026, with expectations of continued growth in NNA and client engagement [33] - The economic environment remains strong, with high market valuations, which has fueled record levels of client engagement [6][9] - The company anticipates total revenue growth of 9.5%-10.5% in 2026, with a focus on deepening relationships with existing clients [28][30] Other Important Information - The company has leveraged artificial intelligence to improve client service efficiency, with a 20% reduction in cost per account over the last five years [19] - The adjusted Tier-One Leverage Ratio finished the year at 7.1%, reflecting strong capital levels and a commitment to capital return [25][26] Q&A Session Summary Question: Balance sheet and asset remixing - Management highlighted strong lending momentum and plans for continued growth in lending opportunities, particularly in margin lending and bank products [35][36] Question: Alternatives platform engagement - The alternatives program is growing, particularly among higher net worth clients, with significant interest in new product capabilities [39][40] Question: Growth trends between advisor services and investor services - Both advisor and retail services are experiencing strong growth, with a notable increase in younger investors and active traders [44][46] Question: Lending offerings penetration - There is significant upside potential in the lending business, with low penetration rates among existing clients indicating room for growth [51][52] Question: Capital return assumptions - The company plans to maintain a capital return framework that supports franchise growth, with expectations for a 20%-30% payout of GAAP earnings [55][56] Question: Tax-advantaged long-short strategies - The company sees growth potential in tax-advantaged strategies, which are being utilized by advisors for high net worth clients [59][60]

Core Insights - The core viewpoint of the article is that Charles Schwab's fourth-quarter performance slightly missed revenue expectations while achieving record client assets. Group 1: Financial Performance - Revenue for the fourth quarter was reported at $6.33 billion, which is slightly below analysts' expectations of $6.37 billion [1] - Adjusted earnings per share were $1.39, meeting the expected figure [1] Group 2: Client Assets - Total client assets reached a record high of $11.9 trillion by the end of the quarter [1]