Business Context and Reporting Period
Company: The Charles Schwab Corporation (SCHW)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: Schwab operates as a savings and loan holding company providing wealth management, securities brokerage, banking, asset management, and financial advisory services through two primary segments: Investor Services and Advisor Services. The company reported total client assets of $13.08 trillion at quarter-end.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Net Revenues | $7.07 billion | $5.85 billion | $13.55 billion | $11.45 billion |
| Net Income | $2.80 billion | $2.13 billion | $5.28 billion | $4.04 billion |
| Diluted EPS | $1.54 | $1.08 | $2.91 | $2.07 |
| Net Interest Revenue | $3.36 billion | $2.82 billion | $6.50 billion | $5.53 billion |
| Trading Revenue | $1.22 billion | $0.95 billion | $2.30 billion | $1.86 billion |
| Expenses (Excl. Interest) | $3.40 billion | $3.05 billion | $6.70 billion | $6.19 billion |
| Pre-Tax Profit Margin | 51.9% | 47.9% | 50.6% | 45.9% |
| Return on Avg. Common Equity (Ann.) | 25% | 19% | 23% | 18% |
| Tier 1 Leverage Ratio | 8.7% | 9.8% | N/A | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Total net revenues increased 21% in Q2 2026 and 18% YTD compared to 2025. This was driven by a 19% increase in net interest revenue (due to growth in margin and bank lending) and a 28% increase in trading revenue (due to higher order flow and commissions).
- Profitability: Net income rose 32% in Q2 and 31% YTD. Diluted EPS increased 43% in Q2 and 41% YTD.
- Client Assets: Client assets grew to $13.08 trillion, a 22% increase from the prior year. Core net new client assets were $119.8 billion in Q2, up 49% year-over-year.
- Trading Activity: Daily average trades (DATs) surged 57% in Q2 to 11.9 million, reflecting strong client engagement.
- Expense Increases: Total expenses excluding interest rose 12% in Q2, primarily due to the inclusion of Forge Global Holdings, Inc. (acquired March 2026), higher compensation, and increased professional services.
Guidance, Outlook, and Risks
- Acquisition Integration: Schwab completed the acquisition of Forge Global Holdings, Inc. for $636 million in March 2026 to enhance private market capabilities. Integration costs and amortization of intangible assets impacted Q2 expenses.
- Crypto Trading: In May 2026, Schwab began a phased rollout of "Schwab Crypto," offering spot trading for Bitcoin and Ether. The company highlighted risks related to cybersecurity, sub-custodian failure, and regulatory uncertainty.
- Expense Outlook: Management now expects full-year 2026 expenses excluding interest to increase approximately 10% to 11%, inclusive of volume-related expenses and Forge integration costs.
- Capital Management: The company repurchased $1.0 billion of common stock in Q2 and $3.4 billion YTD. The quarterly dividend was increased by 19% to $0.32 per share in Q1 2026. The consolidated Tier 1 Leverage Ratio was 8.7% at quarter-end.
- Regulatory Environment: The filing notes the vacating of the DOL's 2024 fiduciary rule in March 2026 and ongoing monitoring of proposed regulatory capital rule amendments.
Investor Verification Checklist
- Forge Integration Impact: Verify the long-term revenue contribution and expense run-rate of the Forge acquisition against current integration costs.
- Crypto Risk Exposure: Assess the scale of client adoption for the new crypto offering and the specific risk mitigation strategies regarding the sub-custodian (Paxos Trust Company).
- Interest Rate Sensitivity: Review the net interest margin trajectory given the Federal Reserve's rate stance and the company's dynamic balance sheet modeling.
- Expense Discipline: Monitor whether the projected 10-11% full-year expense increase aligns with revenue growth to maintain historical profit margins.
- Capital Return Policy: Confirm the sustainability of the dividend increase and share repurchase pace relative to the adjusted Tier 1 Leverage Ratio target of 6.75% - 7.00%.