On July 16, 2024, Charles Schwab Corp (SCHW, Financial) released its 8-K filing for the second quarter of 2024, showcasing significant growth in client assets and solid financial performance. The company, a leading provider of brokerage, wealth management, banking, and asset management services, reported a net income of $1.3 billion, or $0.66 diluted earnings per share (EPS). Adjusted for transaction-related and restructuring costs, net income was $1.5 billion, or $0.73 per share.
Company Overview
Charles Schwab Corp (SCHW, Financial) operates a vast network of brokerage branch offices, a comprehensive online investing platform, and mobile trading capabilities. The company also runs a bank and a proprietary asset-management business, offering services to independent investment advisors. As of December 2023, Schwab managed over $8 trillion in client assets, with nearly all revenue generated within the United States.
Performance Highlights
Charles Schwab Corp (SCHW, Financial) reported total client assets reaching a record $9.4 trillion, a 17% increase year-over-year. Core net new assets also rose by 17% to $61.2 billion, reflecting strong investor confidence in Schwab's value proposition. The company opened over 2 million new brokerage accounts this year, with second-quarter core asset gathering equaling $61.2 billion.
“Schwab’s no trade-offs value proposition continued to resonate with investors, as new brokerage accounts opened this year grew to over 2 million and second quarter core asset gathering equaled $61.2 billion – a year-over-year increase of 17%.” – Co-Chairman and CEO Walt Bettinger
Financial Achievements
Schwab's diversified operating model yielded a 41.0% adjusted pre-tax profit margin, supported by record asset management and administration fees. The company’s strong capital levels and balanced expense management were key contributors to this performance.
“Record asset management and administration fees, along with our balanced approach to expense management, helped Schwab produce a second quarter pre-tax margin of 41.0% – 37.2% adjusted.” – CFO Peter Crawford
Income Statement and Key Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Revenues (in millions) | $4,690 | $4,656 | 1% |
| Net Income (in millions) | $1,332 | $1,294 | 3% |
| Adjusted Net Income (in millions) | $1,465 | $1,494 | (2)% |
| Diluted EPS | $0.66 | $0.64 | 3% |
| Adjusted Diluted EPS | $0.73 | $0.75 | (3)% |
Analysis and Outlook
Charles Schwab Corp (SCHW, Financial) demonstrated resilience and growth in the second quarter of 2024, with record client assets and robust earnings. The company's ability to attract new assets and maintain strong profit margins highlights its competitive edge in the capital markets industry. However, challenges such as integration-related attrition and regulatory costs may impact future performance.
Overall, Schwab's strong financial health and strategic initiatives position it well for continued growth, making it a compelling consideration for value investors.
Explore the complete 8-K earnings release (here) from Charles Schwab Corp for further details.
