Charles Schwab(SCHW) - 2025 Q1 - Quarterly Report

Financial Performance - Total net revenues rose 18% to $5.6 billion in Q1 2025, up from$4.7 billion in Q1 2024[23]. - Net income for Q1 2025 was $1.9 billion, a 40$1.36 billion in Q1 2024[22]. - Diluted earnings per common share increased by 46% to $0.99 in Q1 2025, compared to$0.68 in Q1 2024[23]. - Total net revenues for Q1 2025 were $5.6 billion, an 18$4.7 billion in Q1 2024[26]. - Adjusted net income available to common stockholders for Q1 2025 was $1,895 million, compared to$1,358 million in Q1 2024, reflecting a year-over-year increase of 39.5%[118]. - The diluted earnings per share (EPS) for Q1 2025 was $1.04, up from$0.74 in Q1 2024, marking an increase of 40.5%[118]. - Comprehensive income for Q1 2025 was $3,136 million, compared to$1,917 million in Q1 2024, indicating a substantial increase of 63.5%[125]. Client Growth and Assets - Net new client assets increased by 50% year-over-year to $132.4 billion in Q1 2025, compared to$88.2 billion in Q1 2024[21]. - Active brokerage accounts grew by 5% year-over-year to 37.0 million, with 1.2 million new accounts added in Q1 2025[21]. - Average client assets increased by 17% to $10.2 billion in Q1 2025, up from$8.76 billion in Q1 2024[21]. - Assets receiving ongoing advisory services increased by 9% to $5.06 trillion at the end of Q1 2025, compared to$4.63 trillion in Q1 2024[21]. - Average client assets for Schwab money market funds increased to $641.5 billion in Q1 2025 from$596.5 billion in Q1 2024, reflecting net inflows and market gains[37]. Revenue Sources - Net interest revenue increased by 21% to $2.7 billion in Q1 2025, primarily due to lower interest expense and growth in margin and bank lending[23]. - Trading revenue rose by 11$908 million in Q1 2025, driven by higher trading volume[23]. - Asset management and administration fees increased by $182 million, or 14$91 million, or 11%, in Q1 2025 compared to Q1 2024, with commissions increasing by 4% and total order flow revenue increasing by 26%[38]. - Other revenue grew by $51 million, or 32$3.1 billion in Q1 2025, up 7% from Q1 2024, with adjusted total expenses at $3.0 billion, an 8$202 million, or 7%, in Q1 2025 compared to Q1 2024, with total compensation and benefits rising by 9%[45]. - The company reported a decrease in principal transactions revenue by 35% in Q1 2025 compared to Q1 2024, reflecting changes in the fair value of securities positions[38]. - Other expenses increased in Q1 2025 to $546 million from$436 million in Q1 2024, with an effective tax rate decrease to 22.2% from 24.2%[55]. Capital Management - The common dividend was increased by 8% to $0.27 per share during Q1 2025[25]. - Schwab repurchased 19.2 million shares of nonvoting common stock for$1.5 billion, reducing the number of shares outstanding[110]. - The Board of Directors declared an 8% increase in the quarterly cash dividend to $0.27 per common share[108]. - Schwab's capital management strategy includes returning excess capital to stockholders through dividends and share repurchases[102]. Balance Sheet and Liquidity - The Company’s cash and cash equivalents decreased by$7.1 billion from year-end 2024 to $35.0 billion at March 31, 2025[95]. - Total assets decreased from$479.843 billion at December 31, 2024, to $462.903 billion at March 31, 2025, a decline of approximately 3.5$431.468 billion at December 31, 2024, to $413.392 billion at March 31, 2025, a reduction of approximately 4.2$6.359 billion for the three months ended March 31, 2025, compared to a net cash used of $1.349 billion for the same period in 2024[134]. Credit Quality and Risk Management - The company continues to monitor credit quality through various metrics, including FICO scores and loan-to-value ratios, ensuring robust portfolio management[171]. - The total provision for credit losses for bank loans was$6 million for the quarter ending March 31, 2024, reflecting proactive risk management[165]. - The company reported no charge-offs or recoveries for the periods ending March 31, 2024, and March 31, 2025, indicating effective credit risk management practices[165]. - Nonperforming assets related to bank loans were $30 million at March 31, 2025, down from$35 million at December 31, 2024, indicating a decrease of 14.3%[170]. Economic Environment - The U.S. economy experienced steady hiring and moderating inflation in Q1 2025, with sustained benchmark lending rates and flat unemployment[166]. - The company expects constrained housing supply to stabilize home prices despite higher mortgage rates softening demand[166].