Charles Schwab(SCHW) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Third Quarter 2025 Performance Overview The Charles Schwab Corporation reported record revenue and earnings for the third quarter of 2025, driven by strong client asset growth, diversified revenue streams, and effective balance sheet management 3Q25 Key Financial Highlights (YoY Change) | Metric | 3Q25 Value | YoY Change | | :-------------------------- | :----------- | :--------- | | Net Income (GAAP) | $2.4 billion | +67% | | Net Income (Adjusted) | $2.5 billion | +61% | | Diluted EPS (GAAP) | $1.26 | +77% | | Diluted EPS (Adjusted) | $1.31 | +70% | | Net Revenues | $6.1 billion | +27% | | Core Net New Assets | $137.5 billion | +44% | - Client transactional sweep cash grew by $13.5 billion versus 2Q25, helping to reduce higher cost bank funding by $12.9 billion to $14.8 billion at quarter-end[1][9] - During 3Q25, the company repurchased 28.9 million shares for $2.7 billion, bringing year-to-date capital return across all forms to $8.5 billion[1][9] Client and Business Highlights The company achieved record total client assets and strong organic growth in client accounts and managed investing solutions, alongside increased trading activity and industry recognition for trust and service - Total client assets increased 17% year-over-year to a record $11.59 trillion[3] - Core net new assets of $137.5 billion brings year-to-date asset gathering to $355.5 billion, up 41% year-over-year[3] - New brokerage account openings exceeded 1 million for the 4th consecutive quarter, pushing active brokerage accounts to 38.0 million and total client accounts to 45.7 million[3] - Managed Investing Solutions net inflows grew 40% versus 3Q24[3] - Daily average trading volume was 7.4 million, up 30% versus 3Q24[3] - Charles Schwab was named one of the most trusted financial services companies by Investor's Business Daily and recognized by Kiplinger as 1 in education and service for 2025[3] Financial Commentary Third quarter 2025 saw significant year-over-year growth in net revenues, driven by expanded net interest margin, increased asset management fees, and robust trading activity - Quarterly net revenues grew year-over-year by 27% to a record $6.1 billion[9] - Net interest margin expanded sequentially by 21 basis points to 2.86%[9] - Asset management and administration fees increased by 13% year-over-year to $1.7 billion[9] - Trading revenue increased 25% versus 3Q24 due to robust volumes and stronger client interest in derivatives[9] - GAAP expenses for the quarter increased 4% year-over-year; adjusted total expenses were up 5% relative to 3Q24[9] - Capital ratios remained strong, with preliminary consolidated Tier 1 Leverage at 9.7% and adjusted Tier 1 Leverage at 7.3%[9] Consolidated Financial Statements Consolidated Statements of Income The consolidated statements of income show a substantial increase in net income and earnings per share for both the three and nine months ended September 30, 2025, primarily driven by higher net interest revenue and asset management fees, despite increased operating expenses Consolidated Statements of Income (3 Months Ended September 30) | Metric (in millions) | 2025 | 2024 | % Change | | :---------------------------------- | :----- | :----- | :------- | | Net Revenues | $6,135 | $4,847 | 27% | | Net Interest Revenue | $3,050 | $2,222 | 37% | | Asset Management and Administration Fees | $1,673 | $1,476 | 13% | | Trading Revenue | $995 | $797 | 25% | | Total Expenses Excluding Interest | $3,114 | $3,005 | 4% | | Net Income | $2,358 | $1,408 | 67% | | Diluted EPS | $1.26 | $0.71 | 77% | Consolidated Statements of Income (9 Months Ended September 30) | Metric (in millions) | 2025 | 2024 | % Change | | :---------------------------------- | :----- | :----- | :------- | | Net Revenues | $17,585 | $14,277 | 23% | | Net Interest Revenue | $8,578 | $6,613 | 30% | | Asset Management and Administration Fees | $4,773 | $4,207 | 13% | | Trading Revenue | $2,855 | $2,391 | 19% | | Total Expenses Excluding Interest | $9,306 | $8,890 | 5% | | Net Income | $6,393 | $4,102 | 56% | | Diluted EPS | $3.33 | $2.05 | 62% | Financial and Operating Highlights This section provides a detailed breakdown of quarterly and year-over-year changes across various revenue and expense categories, performance measures, and financial condition metrics, illustrating the company's operational and financial trends Key Revenue Growth (Q3-25 vs Q3-24) | Revenue Category | % Change vs Q3-24 | % Change vs Q2-25 | | :-------------------------------- | :---------------- | :---------------- | | Net interest revenue | 37% | 8% | | Asset management and administration fees | 13% | 7% | | Trading revenue | 25% | 5% | | Bank deposit account fees | 63% | — | | Total net revenues | 27% | 5% | Key Expense Growth (Q3-25 vs Q3-24) | Expense Category | % Change vs Q3-24 | % Change vs Q2-25 | | :-------------------------------- | :---------------- | :---------------- | | Compensation and benefits | 9% | 8% | | Professional services | 14% | 1% | | Total expenses excluding interest | 4% | 2% | Financial Condition (at Q3-25 quarter end, in billions) | Asset/Liability | Value | % Change vs Q3-24 | % Change vs Q2-25 | | :-------------------------------- | :---- | :---------------- | :---------------- | | Total assets | $465.3 | — | 1% | | Available for sale securities | $62.3 | (31)% | (8)% | | Held to maturity securities | $136.7 | (9)% | (2)% | | Bank loans — net | $53.6 | 24% | 6% | | Bank deposits | $239.1 | (3)% | 3% | | Total liabilities | $415.9 | (1)% | 2% | | Stockholders' equity | $49.4 | 5% | — | - Clients' Daily Average Trades (DATs) were 7,421 thousand, up 30% versus 3Q24[16] Detailed Financial Information Net Interest Revenue Information This section details the composition of net interest revenue, showing average balances, interest revenue/expense, and yield/rate for various interest-earning assets and funding sources Average Interest Earning Assets (3 Months Ended September 30) | Asset Category | 2025 Average Balance (millions) | 2025 Interest Revenue (millions) | 2025 Yield | 2024 Average Balance (millions) | 2024 Interest Revenue (millions) | 2024 Yield | | :-------------------------------- | :------------------------------ | :------------------------------- | :--------- | :------------------------------ | :------------------------------- | :--------- | | Cash and cash equivalents | $24,298 | $264 | 4.26% | $27,623 | $369 | 5.24% | | Receivables from brokerage clients | $90,121 | $1,490 | 6.47% | $73,102 | $1,431 | 7.66% | | Available for sale securities | $69,794 | $360 | 2.05% | $98,645 | $531 | 2.14% | | Held to maturity securities | $137,672 | $587 | 1.70% | $151,004 | $650 | 1.71% | | Bank loans | $51,849 | $557 | 4.27% | $42,653 | $484 | 4.52% | | Total interest earning assets | $419,780 | $3,956 | 3.71% | $419,247 | $3,928 | 3.69% | Average Funding Sources (3 Months Ended September 30) | Funding Source | 2025 Average Balance (millions) | 2025 Interest Expense (millions) | 2025 Rate | 2024 Average Balance (millions) | 2024 Interest Expense (millions) | 2024 Rate | | :-------------------------------- | :------------------------------ | :------------------------------- | :-------- | :------------------------------ | :------------------------------- | :-------- | | Bank deposits | $229,281 | $248 | 0.43% | $248,405 | $841 | 1.35% | | Federal Home Loan Bank borrowings | $7,103 | $79 | 4.35% | $22,621 | $310 | 5.38% | | Long-term debt | $20,204 | $207 | 4.01% | $22,446 | $208 | 3.71% | | Total interest bearing liabilities | $379,376 | $906 | 0.94% | $386,818 | $1,706 | 1.75% | - Net interest revenue for 3Q25 was $3,050 million, with a net interest margin of 2.86%, up from 2.08% in 3Q24[19] Asset Management and Administration Fees Information This section provides a breakdown of asset management and administration fees, categorized by product type, including proprietary and third-party funds, and managed investing solutions, along with their average client assets and fee rates Asset Management and Administration Fees (3 Months Ended September 30, 2025) | Category | Average Client Assets (millions) | Revenue (millions) | Average Fee Rate | | :------------------------------------------------ | :------------------------------- | :----------------- | :--------------- | | Schwab money market funds | $663,218 | $458 | 0.27% | | Schwab equity and bond funds, ETFs, and CTFs | $735,519 | $132 | 0.07% | | Mutual Fund OneSource and other no transaction fee funds | $443,660 | $259 | 0.23% | | Other third party mutual funds and ETFs | $618,032 | $97 | 0.06% | | Total mutual funds, ETFs, and CTFs | $2,460,429 | $946 | 0.15% | | Managed investing solutions (fee-based) | $654,220 | $619 | 0.38% | | Total asset management and administration fees | N/A | $1,673 | N/A | - Total asset management and administration fees increased to $1,673 million in 3Q25 from $1,476 million in 3Q24, a 13% year-over-year increase[14][22] Growth in Client Assets and Accounts This section details the growth and composition of client assets across various product categories and business segments, along with trends in new and total client accounts, highlighting strong organic growth and market appreciation Client Assets (at Quarter End, in billions) | Asset Category | Q3-25 | Q3-24 | % Change vs Q3-24 | | :-------------------------------- | :---- | :---- | :---------------- | | Total client assets | $11,593.9 | $9,920.5 | 17% | | Proprietary mutual funds and CTFs | $936.1 | $791.0 | 18% | | Total Mutual Fund Marketplace | $2,030.9 | $1,875.3 | 8% | | Total ETF assets | $2,871.7 | $2,274.1 | 26% | | Equity and other securities | $4,624.7 | $3,839.6 | 20% | Net Growth in Assets (for Q3-25, in billions) | Metric | Value | % Change vs Q3-24 | | :-------------------- | :---- | :---------------- | | Total net new assets | $134.4 | 48% | | Net market gains (losses) | $702.2 | N/A | | Net growth (decline) | $836.6 | N/A | Client Accounts (at Quarter End, in thousands) | Account Type | Q3-25 | Q3-24 | % Change vs Q3-24 | | :-------------------------- | :---- | :---- | :---------------- | | Active brokerage accounts | 37,963 | 35,982 | 6% | | Banking accounts | 2,150 | 1,954 | 10% | | Workplace Plan Participant Accounts | 5,619 | 5,388 | 4% | | New brokerage accounts (for Q3-25) | 1,143 | 972 | 18% | Monthly Activity Report Market Indices and Client Assets This section presents monthly trends for major market indices and client asset movements, including net new assets and market gains/losses, providing a granular view of asset flows and market impact Market Indices (at September 2025 month end) | Index | Sep 2025 | Sep 2024 | Mo. Change | Yr. Change | | :-------------------- | :------- | :------- | :--------- | :--------- | | Dow Jones Industrial Average | 46,398 | 42,330 | 2% | 10% | | Nasdaq Composite | 22,660 | 18,189 | 6% | 25% | | Standard & Poor's 500 | 6,688 | 5,762 | 4% | 16% | Client Assets (in billions of dollars, at month end) | Metric | Sep 2025 | Sep 2024 | Mo. Change | Yr. Change | | :-------------------- | :------- | :------- | :--------- | :--------- | | Beginning Client Assets | 11,228.1 | 9,737.7 | N/A | N/A | | Net New Assets | 45.4 | 30.3 | 5% | 50% | | Net Market Gains (Losses) | 320.4 | 152.5 | N/A | N/A | | Total Client Assets | 11,593.9 | 9,920.5 | 3% | 17% | | Core Net New Assets | 46.2 | 33.5 | 4% | 38% | Client Accounts and Activity This section tracks monthly changes in client accounts, including active brokerage, banking, and workplace plan participant accounts, as well as new brokerage account openings and key client activity metrics like cash percentage and derivative trades Client Accounts (at September 2025 month end, in thousands) | Account Type | Sep 2025 | Sep 2024 | Mo. Change | Yr. Change | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Active Brokerage Accounts | 37,963 | 35,982 | — | 6% | | Banking Accounts | 2,150 | 1,954 | 1% | 10% | | Workplace Plan Participant Accounts | 5,619 | 5,388 | — | 4% | Client Activity (September 2025) | Metric | Sep 2025 | Sep 2024 | Mo. Change (bp) | Yr. Change (bp) | | :------------------------------------ | :------- | :------- | :-------------- | :-------------- | | New Brokerage Accounts (thousands) | 384 | 321 | 1% | 20% | | Client Cash as a Percentage of Client Assets | 9.4% | 9.5% | (10) bp | (10) bp | | Derivative Trades as a Percentage of Total Trades | 22.3% | 21.5% | (20) bp | 80 bp | Selected Average Balances and Net Buy/Sell Activity This section provides monthly average balances for interest-earning assets, margin balances, and bank deposit accounts, alongside net buy/sell activity for various investment products like equities, bonds, mutual funds, ETFs, and money market funds Selected Average Balances (September 2025, in millions of dollars) | Metric | Sep 2025 | Sep 2024 | Mo. Change | Yr. Change | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Average Interest Earning Assets | 423,629 | 420,203 | 2% | 1% | | Average Margin Balances | 94,609 | 72,755 | 5% | 30% | | Average Bank Deposit Account Balances | 79,308 | 82,336 | (1)% | (4)% | Net Buy (Sell) Activity (September 2025, in millions of dollars) | Product Type | Sep 2025 | Sep 2024 | | :-------------------------- | :------- | :------- | | Equities | 8,832 | 5,217 | | Hybrid | (452) | (432) | | Bonds | 12,502 | 11,015 | | Mutual Funds | (4,754) | (1,261) | | Exchange Traded Funds | 25,636 | 17,061 | | Money Market Funds | (517) | 9,672 | Non-GAAP Financial Measures Explanation of Non-GAAP Measures This section defines the non-GAAP financial measures used by Schwab, including adjustments for acquisition and integration-related costs, amortization of acquired intangibles, restructuring costs, return on tangible common equity, and adjusted Tier 1 Leverage Ratio, explaining their usefulness for investors and management - Schwab uses non-GAAP financial measures to provide useful supplemental information about financial performance, facilitate meaningful comparisons, and offer additional transparency of ongoing operations[29][31] - Acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs are excluded from certain non-GAAP measures to better reflect ongoing business performance, as these costs fluctuate based on timing and are not indicative of underlying operating performance[31] - Return on tangible common equity is used as a supplemental measure to assess capital efficiency and returns, calculated as adjusted net income available to common stockholders as a percentage of average tangible common equity[31] - Adjusted Tier 1 Leverage Ratio, which includes accumulated other comprehensive income (AOCI), provides additional information on the company's capital position and is used in managing capital[31] Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP reported results to non-GAAP measures for key financial metrics such as total expenses, net income, pre-tax profit margin, diluted EPS, return on common stockholders' equity, and Tier 1 Leverage Ratio, showing the impact of various adjustments Reconciliation of GAAP to Adjusted Net Income (3 Months Ended September 30, in millions) | Metric | GAAP 2025 | Adjustments 2025 | Adjusted 2025 | GAAP 2024 | Adjustments 2024 | Adjusted 2024 | | :-------------------------------- | :-------- | :--------------- | :------------ | :-------- | :--------------- | :------------ | | Total expenses excluding interest | $3,114 | $(127) | $2,987 | $3,005 | $(153) | $2,852 | | Net income | $2,358 | $98 | $2,456 | $1,408 | $117 | $1,525 | Reconciliation of GAAP to Adjusted Diluted EPS (3 Months Ended September 30) | Metric | GAAP 2025 | Adjustments 2025 | Adjusted 2025 | GAAP 2024 | Adjustments 2024 | Adjusted 2024 | | :-------------------------------- | :-------- | :--------------- | :------------ | :-------- | :--------------- | :------------ | | Diluted EPS | $1.26 | $0.05 | $1.31 | $0.71 | $0.06 | $0.77 | Reconciliation of GAAP to Adjusted Capital Ratios (September 30, 2025) | Metric | CSC (Consolidated) | CSB (Bank) | | :------------------------------------ | :----------------- | :--------- | | Tier 1 Leverage Ratio (GAAP) | 9.7% | 12.4% | | Adjusted Tier 1 Leverage Ratio (non-GAAP) | 7.3% | 8.7% | Additional Information Fall Business Update The company announced it will host a Fall Business Update for institutional investors, providing details on the webcast access - The Charles Schwab Corporation will host its Fall Business Update for institutional investors on October 16, 2025, from 7:30 a.m. - 8:30 a.m. CT[7] - Registration for the webcast is available at https://www.aboutschwab.com/schwabevents[8](index=8&type=chunk) Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, noting that actual results may differ due to various risks and uncertainties described in SEC filings - The press release contains forward-looking statements regarding client adoption of wealth solutions, organic growth, capital ratios, and return of capital, which are subject to risks and uncertainties[10] - Important factors causing differences are described in the company's Form 10-K and 10-Q reports filed with the Securities and Exchange Commission[10] About Charles Schwab The Charles Schwab Corporation is a leading financial services provider offering a comprehensive range of wealth management, brokerage, banking, and advisory services to individual investors and independent advisors, with significant client assets and accounts - The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, offering wealth management, securities brokerage, banking, asset management, custody, and financial advisory services[11] Key Client Metrics (as of September 30, 2025) | Metric | Value | | :----- | :---- | | Active brokerage accounts | 38.0 million | | Workplace plan participant accounts | 5.6 million | | Banking accounts | 2.2 million | | Total client assets | $11.59 trillion | Contact Information Contact details for media and investor relations are provided for inquiries - Media inquiries can be directed to Mayura Hooper at 415-667-1525 or public.relations@schwab.com[12] - Investors and analysts can contact Jeff Edwards at 817-854-6177 or investor.relations@schwab.com[12]