Financial Data and Key Metrics Changes - Core EPS for Q4 2025 was $0.79, representing an 88% increase year-over-year, driven by record total revenues of $124 million for the quarter [5][23] - NIM increased by 10 basis points to 311 basis points, with average earning assets up over $650 million on a linked-quarter basis [6][24] - Core deposits rose by $1.2 billion year-over-year, with strong growth across all channels [6][24] Business Line Data and Key Metrics Changes - Business loans grew over $175 million on a linked-quarter basis and over $500 million year-over-year, with significant contributions from new specialized industry verticals [8][44] - Non-interest income for the quarter was $11.5 million, exceeding guidance [28] - The loan loss provision declined to $10.9 million, with the allowance to loans increasing to 91 basis points [28] Market Data and Key Metrics Changes - The company reported a total capital ratio of over 16%, indicating strong capital levels compared to local peers [10][28] - Non-interest-bearing deposits reached nearly 31% of total deposits, with a goal to increase this ratio over time [66][68] Company Strategy and Development Direction - The company is focused on organic growth, with plans to expand its commercial banking platform and industry verticals [10][11] - A significant amount of repricing assets is expected in the next two years, providing a tailwind for revenue growth [12][30] - The company aims to operate at a sub-50% efficiency ratio by growing revenues faster than expenses [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong organic growth environment and the ability to capitalize on lending opportunities [11][14] - The company anticipates modest NIM expansion in the first half of 2026, with more substantial growth expected in the latter half due to loan repricing [30][34] - The management highlighted the importance of maintaining a strong liquidity position to support future growth [31][75] Other Important Information - The company has added new capabilities in various commercial banking sectors, including Fund Finance and Lender Finance, to enhance its service offerings [18][21] - The Manhattan branch is operational, with additional locations expected to open by the end of the first year [11] Q&A Session Summary Question: What industries accounted for the growth in business loan balances this quarter? - The growth primarily came from new specialized industries, with healthcare being a significant contributor [44] Question: How much business do you have in New Jersey? - Approximately 8% to 10% of the loan portfolio is in Northern New Jersey, with a deposit-to-loan ratio of about 15%-20% [46] Question: Are you caught up on the SBA loan pipeline? - The company is caught up on the pipeline, but Q1 activity levels may not match Q4 due to the previous quarter's backlog [47] Question: What does the deposit pipeline look like? - The company is seeing strong inflows, with new customers requiring competitive rates to attract deposits [50][51] Question: What is the current status of the rent-regulated loan book? - The rent-regulated book is stable, with maturities and repricings expected to be around $250 million for 2026 [58] Question: What is the strategy for deploying cash and securities? - There is no rush to deploy cash; the company is focused on maintaining flexibility and will consider opportunities as they arise [72][74] Question: What is the current percentage of floating-rate loans? - Floating-rate loans currently make up about 35%-40% of the balance sheet, with expectations for this to increase as new business is generated [76]

Core Thesis - The Charles Schwab Corporation is experiencing strong operational momentum, with a bullish outlook supported by robust financial results and strategic initiatives [1][7]. Financial Performance - Total net revenue reached a record $6.1 billion, reflecting a 5% sequential increase and a 27% year-over-year growth, primarily driven by an 8% quarter-over-quarter rise in net interest income [3]. - Adjusted EPS was reported at $1.31, up 15% quarter-over-quarter and 70% year-over-year, exceeding consensus estimates by 5% [3]. - The company achieved a pre-tax margin of 51.3%, with adjusted operating expenses rising only 2% quarter-over-quarter [3]. Operating Trends - Net Interest Margin (NIM) expanded by 21 basis points to 2.86%, and client assets reached a record $11.6 trillion [4]. - Asset management balances grew by 9% quarter-over-quarter, with net new assets of $138 billion indicating strong organic growth [4]. - Despite a slight softening in trading activity quarter-over-quarter, it remained significantly higher year-over-year, with continued attraction of younger households [4]. Strategic Initiatives - Schwab expects full-year EPS to finish approximately 2% above its prior outlook, implying around $4.75 [5]. - The company executed $2.7 billion in buybacks during the quarter, maintaining strong capital return and leverage ratios above targets [5]. - Plans to launch spot crypto trading in the first half of 2026 and ongoing investment in branch expansion are expected to support strategic positioning [5].

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