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SCHW, Charles Schwab Corporation (The)
Charles Schwab holds the money and investments of individual savers and of the independent financial advisers who manage other people's accounts. It makes money two ways at once: it runs a brokerage and asset manager that earns fees for trading, custody, advice, and funds; and it runs a bank that takes the idle cash sitting in those accounts and earns the spread by lending and investing it. The work splits between serving investors directly and serving the advisers who serve them.
The business
What it sells, where the money comes from, the kind of company it is.
Next report By 11/8 · the 10-Q for the quarter ended late September · due within 40 days of period end · has filed ~39 days after · the wire records it on arrival
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- What it is
- Revenue is Investor Services (79%) and Advisor Services (21%).
- What moves the needle
- The first test is whether scale buys a real cost advantage: in a brokerage where trading is largely free, the low-cost operator with the most accounts holds the whip, so watch whether size keeps the cost per dollar held below rivals who, the filing notes, run from large integrated banks to venture-backed startups. The second, and the one that can bite, is the bank hidden inside the broker: profits lean on the cheap cash clients leave in their accounts, and if that cash turns restless — chasing higher rates elsewhere — the spread compresses and funding gets dear, the deposit and funding strain the company flags. Weigh against that the stickiness of money in custody and of an adviser's whole book parked on the platform, both slow and costly to move. Whether these hold shows in the margins, the returns on capital, and the funding mix in the record below.
- Is it a good business?
- Return on equity has hovered around the cost of equity (median 13%, above 12% in 7 of 10 years). A bank that earns above its cost of equity through the cycle compounds book value; whether this one did it by underwriting discipline or by reaching for risk is what the 10-K, and the worst years in the record, will tell you.
Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.
Where the money comes from
read the 10-K →Investor Services is 79% of revenue, with Advisor Services the other meaningful segment at 21%.
- Investor Services79%$19.0B
- Advisor Services21%$4.9B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record
Ten years of arithmetic, read across the cycle.
The record, 2016–2025
realized figures from each filing · older years to the left| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMJun 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | |||||||||||
| $7.5B | $8.6B | $10.1B | $10.7B | $11.7B | $18.5B | $20.8B | $18.8B | $19.6B | $23.9B | $26.0B | RevenueRevenue |
| $3.5B | $4.6B | $6.7B | $7.6B | $6.5B | $8.5B | $12.2B | $16.1B | $15.5B | $15.5B | — | Interest incomeInt. inc. |
| $171M | $342M | $857M | $1.1B | $418M | $476M | $1.5B | $6.7B | $6.4B | $3.8B | — | Interest expenseInt. exp. |
| $3.3B | $4.3B | $5.8B | $6.5B | $6.1B | $8.0B | $10.7B | $9.4B | $9.1B | $11.8B | $12.7B | Net interest incomeNet int. |
| ($5M) | $0 | ($6M) | ($5M) | $10M | ($12M) | $58M | ($35M) | ($17M) | $15M | $15M | Credit-loss provisionProvision |
| $3.0B | $3.6B | $4.6B | $4.8B | $4.3B | $7.7B | $9.4B | $6.4B | $7.7B | $11.5B | — | Pretax incomePretax |
| $1.9B | $2.4B | $3.5B | $3.7B | $3.3B | $5.9B | $7.2B | $5.1B | $5.9B | $8.9B | $10.1B | Net incomeNet inc. |
| 37% | 36% | 23% | 24% | 23% | 24% | 23% | 21% | 23% | 23% | 23% | Effective tax rateTax rate |
| Cash flow & returns | |||||||||||
| 0.8% | 1.0% | 1.2% | 1.3% | 0.6% | 0.9% | 1.3% | 1.0% | 1.2% | 1.8% | 2.0% | Return on assetsROA |
| 12% | 13% | 17% | 17% | 6% | 10% | 20% | 12% | 12% | 18% | 20% | Return on equityROE |
| 9% | 10% | 13% | 12% | 4% | 7% | 14% | 7% | 8% | 13% | 15% | Retained to equityRetained/eq |
| 13% | 14% | 18% | 18% | 10% | 17% | 45% | 24% | 21% | 29% | 33% | Return on tangible equityROTCE |
| $486M | $592M | $787M | $1.1B | $1.3B | $1.8B | $2.1B | $2.3B | $2.3B | $2.3B | $2.4B | Dividends paidDiv. paid |
| $0 | $0 | $1.0B | $2.2B | $0 | $0 | $3.4B | $2.8B | $0 | $7.3B | — | BuybacksBuybacks |
| ($38.8B) | ($20.5B) | ($40.6B) | $12.0B | ($125.9B) | ($75.7B) | $32.0B | $57.4B | $35.4B | $24.5B | — | Investing cash flowInv. cash |
| $35.0B | $22.6B | $47.2B | ($13.9B) | $144.0B | $96.3B | ($68.7B) | ($61.2B) | ($47.1B) | ($29.7B) | — | Financing cash flowFin. cash |
| — | — | $19.1B | $7.3B | $25.0B | $22.8B | ($34.6B) | $15.8B | ($9.0B) | $4.1B | — | Change in cashΔ cash |
| Balance sheet | |||||||||||
| $15.4B | $16.5B | $16.6B | $18.2B | $23.8B | $34.7B | $40.6B | $40.5B | $45.2B | $58.0B | — | Loans held for investmentLoans |
| $223.4B | $243.3B | $296.5B | $294.0B | $549.0B | $667.3B | $551.8B | $493.2B | $479.8B | $491.0B | $517.3B | Total assetsAssets |
| $163.5B | $169.7B | $231.4B | $220.1B | $358.0B | $443.8B | $366.7B | $290.0B | $259.1B | $255.7B | $249.7B | DepositsDeposits |
| $1.2B | $1.2B | $1.2B | $1.2B | $12.0B | $12.0B | $12.0B | $12.0B | $12.0B | $12.0B | $12.3B | GoodwillGoodwill |
| $207.0B | $224.7B | $275.8B | $272.3B | $492.9B | $611.0B | $515.2B | $452.2B | $431.5B | $441.6B | — | Total liabilitiesTotal liab. |
| $16.4B | $18.5B | $20.7B | $21.7B | $56.1B | $56.3B | $36.6B | $41.0B | $48.4B | $49.4B | $50.1B | Shareholders’ equityEquity |
| Per share | |||||||||||
| 1.33B | 1.35B | 1.36B | 1.32B | 1.44B | 1.90B | 1.89B | 1.83B | 1.83B | 1.81B | 1.75B | Shares out (diluted)Shares |
| $1.42 | $1.74 | $2.58 | $2.81 | $2.30 | $3.09 | $3.79 | $2.77 | $3.24 | $4.89 | $5.79 | EPS (diluted)EPS |
| $0.36 | $0.44 | $0.58 | $0.80 | $0.89 | $0.96 | $1.11 | $1.24 | $1.24 | $1.29 | $1.38 | Dividends / shareDiv/sh |
| $12.31 | $13.69 | $15.19 | $16.47 | $39.07 | $29.66 | $19.33 | $22.37 | $26.38 | $27.32 | $28.74 | Book value / shareBVPS |
| $11.28 | $12.71 | $14.17 | $15.45 | $23.77 | $18.41 | $8.38 | $11.33 | $15.64 | $16.72 | $17.52 | Tangible book / shareTBVPS |
| 9-yr | 5-yr | |
|---|---|---|
| Revenue / share | +10.0%/yr | +10.2%/yr |
| Owner earnings / share | +7.5%/yr | +1.5%/yr |
| EPS | +14.8%/yr | +16.3%/yr |
| Dividends / share | +15.1%/yr | +7.6%/yr |
| Capital spending / share | +1.7%/yr | −7.2%/yr |
| Book value / share | +9.3%/yr | −6.9%/yr |
The year, in the company's words
the filing →Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.
- Trading revenue+20.1%
“Trading revenue was $3.9 billion in 2025, rising 20% from 2024, due primarily to higher trading volume.”
✓ figure matches the filed record
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
Is it a good business?
- Return on equity 18%Very high (≥17%)Net income $8.9B ÷ equity $49.4BIndustry peers: median 12%
What this means
The bank's north star, what it earns on shareholders' capital. Cost of equity is roughly 10%, so a return durably above that builds value and below it destroys it. One year is noisy; the durability across a full credit cycle is what counts.
- Very high (≥18%)Net income ÷ (equity − goodwill $12.0B − intangibles $7.2B)Industry peers: median 15%
What this means
The cleaner return, stripping out the goodwill paid for past acquisitions. This is the number a buyer of the whole bank actually earns on the hard capital.
- Not enough dataIndustry peers: median 72%
What this means
Noninterest expense or revenue missing.
Is it sound?
- Capital (equity / assets) 10.1%Well capitalizedEquity $49.4B ÷ assets $491.0B
What this means
A plain-English leverage read: how much of the balance sheet is the owners' own money. This is a rough proxy; the regulatory figure is the CET1 ratio, which is risk-weighted and reported in the filing. The point is the same, how much loss the bank can absorb before depositors are at risk.
- Deposit funding 52%Mostly deposit-fundedDeposits $255.7B ÷ assets $491.0B
What this means
Low-cost, sticky deposits are a bank's real moat, the cheap raw material it lends out at a spread. A bank funded mostly by deposits earns more durably than one that rents its money in the wholesale market.
- Credit cost (provision / NII) 0%LowProvision for credit losses $15M ÷ net interest income $11.8B
What this means
What the bank set aside this year against loans going bad, as a share of its lending income. This swings hard with the cycle, low in good years and spiking in recessions, so read it across the record, not in one year. Disciplined underwriting shows up as low, stable provisions through a downturn.
The franchise and the credit cycle
- Rate-sensitive fundingNoninterest-bearing deposits $1.2B ÷ deposits $255.7B · pays 0.46% on the interest-bearing rest (avg of year-ends)
What this means
The share of deposits the bank pays nothing for — checking accounts that stay through rate cycles. This is the deposit moat in one number: a high share means cheap, sticky raw material for lending; a low share means the funding reprices with every rate move. Buffett's Wells letter is built on exactly this economics.
- Not enough data
What this means
Not derivable from the filings' structured data — some filers carry recoveries only on segment axes, and a gross figure dressed as net would be a wrong number.
- Large if ever realizedPre-tax, as filed for FY2025: HTM at cost $134.0B − fair value $126.1B = $7.9B, against tangible common equity $23.5B · widest on record FY2022: $14.1B (44% accreted back since)
What this means
Bonds held to maturity are carried at cost, so rate rises open a gap that only shows in this disclosure. Stated equity already carries every available-for-sale mark through accumulated other comprehensive income; the held-to-maturity book's gap sits outside equity, which is why it is read here. The figure is pre-tax as the filer states it — the true after-tax dent depends on a deferred-tax position the record does not carry. The gap never hits earnings if the bank can hold on, which is precisely why the reader checks whether it could be forced to sell: the 2023 bank failures were this number meeting deposit flight. The record carries no stated uninsured figure for this filer; its franchise leg: noninterest-bearing deposits, 0% of the base. Measured across every US bank on the record today: 2 carry a mark above 30% of tangible-basis equity, 5 state an uninsured share above 40%, and none carries both — the configuration that failed in 2023.
All figures as filed; the source filing is linked above.
Debt maturity
the debt note, SEC EDGAR →Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.
Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.
Against what the business has and earns
Cash on hand as of Jun 30, 2026 plus a year’s owner earnings comes to $49.3B against the $4.1B due in the twelve months after the Dec 31, 2025 schedule: 12 times it.
Maturity schedule extracted from the company’s Dec 31, 2025 annual report and reconciled to the total the table states.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.
| Fiscal year | Chief executive | Pay, as filed | “Actually paid” | Owner earnings |
|---|---|---|---|---|
| 2021 | Walter W. Bettinger II | $21.9M | $41.6M | $1.6B |
| 2022 | Walter W. Bettinger II | $24.4M | $57.9M | $1.4B |
| 2023 | Walter W. Bettinger II | $23.9M | $4.2M | $18.9B |
| 2024 | Walter W. Bettinger II | $26.4M | $29.4M | $2.0B |
| 2025 | Walter W. Bettinger II | $18.8M | $27.2M | $8.8B |
Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.
- Insider ownership6.3%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
- CEO pay ratio143:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
- Stock-based compensation$317M
The slice of the business handed to employees in shares in fiscal 2025, 1.3% of revenue, equal to 2.1% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
What an owner would ask, FY2025
read the 10-K →- Which reported numbers are a judgment call?Management names Income taxes as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →
The questions the record and the charts do not answer on their own; each carries the figure and the place to look.
Peers, Capital Markets & Asset Management
The same industry, side by side on the bank lens. Each column names the period it is read over, and a median resting on fewer than three years carries that count beside it; the group median at the foot is the line to read each figure against.
| Company | Revenuelatest FY, USD | ROEmedian over the record | ROTCEmedian over the record | Efficiencymedian over the record | NII / assetsmedian over the record | Noninterest-bearing sharelatest FY |
|---|---|---|---|---|---|---|
| MSMorgan Stanley | $70.6B | 11% | 13% | 72% | 0.6% | — |
| GSGoldman Sachs Group Inc. (The) | $58.3B | 10% | 10% | 65% | 0.4% | — |
| SCHWCharles Schwab Corporation (The) | $23.9B | 13% | 18% | — | 1.9% | 0% |
| SYFSynchrony Financial | $19.0B | — | — | 27%1y | 15.5%1y | 0% |
| RJFRaymond James Financial Inc. | $14.1B | 16% | 18% | 82% | 2.1% | 1% |
| NMRNomura Holdings Inc ADR | $13.6B | 7% | 7% | 79% | 0.1% | — |
| SFStifel Financial | $6.3B | 12% | 17% | — | — | 1% |
| FRHCFreedom Holding Corp. | $2.2B | 17% | 18% | — | 1.5% | 64% |
| Group median | — | 12% | 17% | — | 1.5% | 1% |
The price
What a price has to assume.
What the price implies
price / tangible bookA bank is worth a multiple of its tangible book value, and the multiple it deserves is set by the return it earns on that book. Type today’s price; we show what you would be paying against what Charles Schwab Corporation (The)’s record justifies.
Tangible book / share, delivered−5%/yr’20→’25
The justified multiple is (return on tangible equity − growth) ÷ (cost of equity − growth). A bank earning exactly its cost of equity is worth about one times tangible book; the premium above that prices each point of durable excess return. A higher cost of equity lowers the justified multiple for a bank.
Enter a price above to run it.
Graham applied the same standards to financial enterprises (Intelligent Investor ch.14): the 15× multiple cap on averaged earnings, and P/E times price-to-book at most 22.5. The gate marks the bargain-hunter’s floor, not a verdict.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Tangible book $30.6B on 1729M shares, a 18% normalized return on it. The dials set the multiple such a return would justify; your price sets the multiple you are paying. It assumes the bank keeps earning that return; a credit cycle, a rate shock or a bad acquisition changes it, which is what the record and the 10-K are for.
Manual order: ← SCHL its page in the Manual SCI →
Industry order: ← SBET the Capital Markets & Asset Management chapter SEIC →