Cash Sorting and Interest Rates Are Major Drivers of Near- to Medium-Term Earnings

We assess that Charles Schwab is fine from a liquidity and capital standpoint, but that it could take a couple of years before earnings are on a tenable upward trajectory. While Charles Schwab is best known for its retail investor and Registered Investment Advisor platforms, Charles Schwab Corporation is a savings and loan holding company that had over $300 billion of deposits at the end of 2022 and generates about half of its revenue from net interest income. The company has access to the Federal Reserve’s Bank Term Funding Program and the Federal Home Loan Bank system, which can provide the firm upward of $200 billion of cash to deal with any potential deposit withdrawals from clients.