10-Q: Schwab Reports Strong Q3 2025 Growth, Client Assets Soar

The Charles Schwab Corporation announced robust third-quarter and year-to-date 2025 results, driven by significant client asset growth, increased trading activity, and strategic funding management.

Summary

• Net income for Q3 2025 surged by 67% to $2.4 billion, with diluted EPS rising 77% to $1.26 compared to Q3 2024.
• Total net revenues increased 27% year-over-year in Q3 2025 to $6.1 billion, reaching $17.6 billion for the first nine months of 2025, up 23%.
• Core net new client assets grew 44% to $137.5 billion in Q3 2025 and 41% to $355.5 billion year-to-date.
• Client assets at quarter-end reached $11.59 trillion, a 17% increase from September 30, 2024.
• New brokerage accounts opened totaled 1.1 million in Q3 2025, an 18% increase, bringing active brokerage accounts to 38.0 million.
• Daily average trades (DATs) increased 30% to 7.4 million in Q3 2025 and 31% to 7.5 million year-to-date.
• Net interest revenue rose 37% to $3.1 billion in Q3 2025, primarily due to lower interest expense from reduced bank supplemental funding and growth in lending.
• Bank supplemental funding was reduced by $12.9 billion in Q3 2025 and $35.1 billion year-to-date, now totaling $14.8 billion.
• Schwab repurchased $2.7 billion in common stock during Q3 2025, contributing to $4.6 billion in year-to-date repurchases.
• The company announced an agreement to acquire Forge Global Holdings, Inc. for approximately $660 million, expected to close in the first half of 2026.

Sentiment

Score: 9

Explanation: The filing indicates exceptionally strong financial performance across key metrics, significant client growth, effective capital management, and strategic expansion into new market segments. The positive trends in revenue, net income, EPS, and client assets, coupled with proactive debt reduction and capital returns, suggest a very healthy and well-managed company. The only minor negatives are a slight decrease in other revenue and average BDA balances, which are overshadowed by overall robust growth.

Positives

• Net income increased by 67% to $2.4 billion in Q3 2025 and 56% to $6.4 billion year-to-date 2025.
• Diluted EPS grew 77% to $1.26 in Q3 2025 and 62% to $3.33 year-to-date 2025.
• Total net revenues increased 27% to $6.1 billion in Q3 2025 and 23% to $17.6 billion year-to-date 2025.
• Core net new client assets saw substantial growth, up 44% to $137.5 billion in Q3 2025 and 41% to $355.5 billion year-to-date.
• Client assets at quarter-end reached $11.59 trillion, a 17% increase year-over-year.
• New brokerage accounts increased by 18% to 1.1 million in Q3 2025, with active accounts reaching 38.0 million.
• Daily average trades (DATs) rose 30% to 7.4 million in Q3 2025, indicating strong client engagement.
• Net interest revenue increased 37% to $3.1 billion in Q3 2025, driven by lower interest expense from reduced bank supplemental funding.
• Bank supplemental funding was significantly reduced by $35.1 billion (70%) year-to-date 2025, bringing balances to a diversified funding strategy range.
• Return on average common stockholders equity improved to 21% in Q3 2025 from 14% in Q3 2024.
• Return on tangible common equity (ROTCE) increased to 38% in Q3 2025 from 31% in Q3 2024.
• The company repurchased $2.7 billion in common stock in Q3 2025, totaling $4.6 billion year-to-date, and increased its common dividend by 8% to $0.27 per share.
• Acquisition of Forge Global Holdings, Inc. is expected to enhance private markets capabilities and meet evolving investor needs.

Negatives

• Other revenue decreased by 15% to $170 million in Q3 2025, primarily due to lower industry fees.
• Client cash as a percentage of client assets slightly decreased to 9.4% at quarter-end 2025 from 9.5% in the prior year.
• Average bank deposit account balances decreased by 4% in Q3 2025 and 6% year-to-date 2025, partially offsetting higher net yields.

Risks

• General economic and market conditions, including interest rate levels, equity market valuations, and volatility.
• Ability to attract and retain clients, develop trusted relationships, and grow client assets.
• Client use of advisory and lending solutions and other products and services.
• Level of client assets, including cash balances, and client cash allocations and sensitivity to deposit rates.
• Competitive pressure on pricing, including deposit rates.
• Level and mix of client trading activity, including daily average trades, margin balances, and balance sheet cash.
• Regulatory guidance and adverse impacts from new or changed legislation, rulemaking, or regulatory expectations.
• Capital and liquidity needs and management.
• Ability to manage expenses and attract and retain talent.
• Ability to develop and launch new and enhanced products, services, and capabilities, and enhance infrastructure in a timely and successful manner.
• Management's ability to close the acquisition of Forge on anticipated terms and timing, including required regulatory and stockholder approvals, and the ability to integrate the business and realize anticipated benefits.
• Ability to monetize client assets and support client activity levels.
• Increased compensation and other costs, real estate and workforce decisions, and timing and scope of technology projects.
• Balance sheet positioning relative to changes in interest rates, interest-earning asset mix and growth, and ability to access funding sources.
• Prepayment levels for mortgage-backed securities.
• Adverse developments in litigation or regulatory matters and any related charges.
• Potential breaches of contractual terms for which the company has indemnification and guarantee obligations.

Future Outlook

Management anticipates that incorporating Forge's private markets capabilities will enhance Schwab's ability to meet the evolving needs of investors. The company expects full-year 2025 capital expenditures to be on the lower end of its previously disclosed range of approximately 3-5% of total net revenues. Schwab's diversified funding strategy aims to maintain outstanding bank supplemental funding within a consistent range. The company continues to manage its capital to support business strategy, including balance sheet growth and regulatory requirements, while seeking to return excess capital to stockholders through dividends and share repurchases.

Management Comments

• Our purpose remains clear – to champion every client's goals with passion and integrity.
• Our strategy, 'Through Clients Eyes,' emphasizes placing clients' perspectives, needs, and desires at the forefront.
• We aim to offer a broad range of products and solutions with a focus on transparency, value, and trust.
• Management works to couple Schwab's scale and resources with ongoing expense discipline to keep costs low and ensure products are affordable.
• We believe that following this strategy is the best way to maximize our market valuation and stockholder returns over time.
• The first nine months of 2025 continued to present a changing landscape for investors, with improved sentiment and record equity markets.
• Schwab saw strong client asset gathering, growth in new client accounts, and sustained client engagement continue through the first nine months of 2025.
• Schwab's financial performance reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for lending offerings and managed investing solutions, as well as reduction of higher-cost bank supplemental funding and balanced expense management.
• The company returned meaningful excess capital in the first nine months of 2025.

Industry Context

The financial services industry experienced a changing landscape in the first nine months of 2025, marked by improved investor sentiment and record equity market levels (S&P 500 up 8% in Q3, NASDAQ Composite up 11% in Q3). The Federal Reserve initiated its first rate cut since December 2024, reducing the target federal funds overnight rate by 25 basis points in September. Schwab's strong performance in client asset gathering, new account openings, and trading activity aligns with this positive market environment. The reduction in bank supplemental funding and strategic capital management reflect a proactive approach to navigating interest rate dynamics and optimizing funding costs, a key challenge and opportunity for financial institutions in a fluctuating rate environment. The acquisition of Forge Global Holdings, Inc. indicates a strategic move to expand into private markets, a growing area of interest for investors.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• Corrente Antitrust Litigation: A class-action lawsuit alleging that Schwab's acquisition of Ameritrade violated Section 7 of the Clayton Act due to anticompetitive market effects. A motion to dismiss was denied. A proposed settlement, involving non-monetary undertakings and immaterial attorneys' fees, is pending court approval.

Related Party Transactions

• TD Group US Holdings LLC, an affiliate of TD Bank, completed a secondary public offering of Schwab's common shares, selling 133.8 million common shares and 31.7 million nonvoting common shares for $13.1 billion. Schwab did not receive proceeds from this sale.
• Concurrent with the secondary offering, Schwab repurchased TD Group US Holdings LLC's remaining 19.2 million nonvoting common shares for $1.5 billion, which automatically converted to common stock and are now held in treasury stock. This completed TD Bank's disposition of all its common shares of Schwab.
• Schwab has an Insured Deposit Account (IDA) agreement with TD Depository Institutions, where uninvested client cash is swept off-balance sheet. Schwab receives a monthly fee of 15 basis points for recordkeeping and support services. After September 10, 2025, Schwab has broader discretion to withdraw IDA balances, subject to maintaining balances between $60 billion and $90 billion. In September 2025, Schwab moved $3.0 billion of IDA balances to its balance sheet.

Stakeholder Impact

• Shareholders: Significant increase in net income and EPS, along with substantial share repurchases and an increased common dividend, indicate strong returns and commitment to shareholder value.
• Clients: Growth in client assets, new accounts, and trading activity suggests continued client trust and engagement. The acquisition of Forge aims to enhance services for investors.
• Employees: Increased compensation and benefits expense reflects annual merit increases and higher incentive compensation, indicating positive employee-related investments.
• Creditors: Reduction in bank supplemental funding and strong capital ratios (Tier 1 Leverage Ratio, Adjusted Tier 1 Leverage Ratio) demonstrate robust financial health and ability to meet obligations.
• Regulatory Bodies: Compliance with LCR and NSFR rules, and engagement with regulatory developments, show adherence to regulatory standards.

Next Steps

• Close the acquisition of Forge Global Holdings, Inc. in the first half of 2026, subject to customary closing conditions and regulatory/stockholder approvals.
• Continue to manage capital to support business strategy, including balance sheet growth and financial support to subsidiaries.
• Return excess capital to stockholders through dividends and common share repurchases under the new $20.0 billion authorization.
• Monitor and manage interest rate risk, including the impact of changes in interest rates on net interest margin and revenue.
• Evaluate the impact of new accounting standards (ASU 2024-03 and ASU 2025-06) on financial statement disclosures.

Key Dates

Recommendation

The Charles Schwab Corporation demonstrates exceptional financial health and growth, with significant increases in net income, EPS, and total net revenues. Client asset gathering and new account growth are robust, indicating strong market position and client trust. The company is actively managing its balance sheet by reducing higher-cost supplemental funding and returning substantial capital to shareholders through dividends and an expanded share repurchase program. The strategic acquisition of Forge Global Holdings, Inc. positions Schwab for future growth in private markets. While some expenses increased, overall profitability and efficiency metrics are highly favorable. The combination of strong operational performance, strategic initiatives, and shareholder-friendly capital allocation makes Schwab a compelling 'strong buy' for long-term investors.

Keywords

Financial Services, Wealth Management, Brokerage, Banking, Asset Management, SEC Filing, 10-Q, Earnings, Client Assets, Net Interest Revenue, EPS, Share Repurchase, Acquisition, Forge Global, Regulatory Compliance, Liquidity Risk, Capital Management, SCHW