TenQ

The Charles Schwab story

Charles Schwab is the largest US retail broker and custodian, with a business built on client cash and a question of whether growing client relationships can strengthen bank funding while expanding wealth management fees.

Written from Charles Schwab's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $98.30share price, last close
  • $170.0Bmarket value
  • 20/36TenQ Score checks passed

The story in brief

  • Scale lifts earnings. In the quarter to June 2026, revenue rose 21% to $7.1 billion while GAAP expenses rose 12%, helping earnings per share reach $1.54.
  • Clients bring more assets. Core net new assets reached $119.8 billion in the quarter to June 2026, up 49% from a year earlier, while total client assets reached $13.08 trillion.
  • Cash recovery remains uneven. Transactional sweep cash increased by $24.2 billion to $485.7 billion in the quarter to June 2026, but bank deposits fell from $253.0 billion to $249.7 billion.

What drives the business

  • Schwab combines brokerage, banking, asset management and custody, using uninvested client cash to fund securities and loans while spreading operating costs across a large client base.
  • Investor Services serves individuals and workplace clients and generated $5.5 billion, or 78% of revenue, in the quarter to June 2026, while Advisor Services serves independent advisors and generated $1.5 billion.
  • The 2023 Insured Deposit Account Agreement with TD Bank USA and TD Bank places eligible brokerage cash in deposit accounts outside Schwab’s balance sheet, earning Schwab fees for recordkeeping and support.
  • Asset management and administration fees grew 16% to $1.8 billion in the quarter to June 2026, while net flows into Schwab Wealth Advisory increased 80%, reflecting greater use of its advice and investment services.
  • Schwab completed its Forge Global acquisition in March 2026, following an agreement valued at approximately $660 million, adding private company investment capabilities for eligible individuals and registered investment advisors.

What the price assumes

The growth assumption embedded in the $98.30 share price is not measured because TenQ excludes finance companies from its reverse DCF, where free cash flow may not represent earnings.

At 17.6x earnings, Schwab passes TenQ’s comparison with its own valuation history but fails the earnings valuation relative to growth check with a PEG of 1.99.

Revenue growth accelerated to 20.3% over the last twelve months from a three-year annual pace of 4.8%, but remained below the 26.2% sector benchmark used by TenQ.

What could change the story

  • Bank deposits of $249.7 billion at June 2026 remained below $465.8 billion at March 2022, with $500 million of Federal Home Loan Bank borrowings still supporting funding.
  • At June 2026, the gap between market value and book value on bonds held to maturity equaled 20% of equity, compared with 13% at March 2022, creating exposure if Schwab must dispose of those bonds before maturity.
  • Schwab fails TenQ’s leverage and debt trend checks, with debt to equity at 0.45 versus 0.34 five years earlier.
  • Capital returned to shareholders equaled 101.8% of free cash flow, failing TenQ’s cash coverage check, although free cash flow is a less reliable earnings measure for a financial company.

What to watch next

  • Schwab gave no numerical forward guidance in its release for the quarter to June 2026, leaving client cash, margins and flows as the main operating reference points.
  • Subsequent releases will show whether transactional sweep cash builds on $485.7 billion and net interest margin holds its improvement to 3.00%, alongside changes in bank deposits and Federal Home Loan Bank borrowings.
  • Core net new assets and wealth advisory flows will distinguish client gathering from market appreciation, while asset management fees will show how much those relationships contribute to revenue.
  • Trading revenue bears watching alongside activity, since daily average trades reached 11.9 million in the quarter to June 2026 while revenue per trade fell to $1.64 from $2.03 a year earlier.

Sources

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