The Charles Schwab Corporation Q1 FY2026 earnings call

• Through Clients' Eyes strategy drove record client growth and financial results in Q1, with strong engagement across brokerage, managed investing, and banking solutions. • Continuing to hire financial consultants and wealth advisers, expanding branch footprint with new branches planned. • Launched Schwab Team Investor account for teens, acquisition of Forge to provide access to pre-IPO company shares, increased strategic investment in Wealth.com for AI-powered tools. • Successfully rolled out structured asset line offer, accelerating AI application to fuel client service, deepen relationships, and drive scale and efficiency across the firm. • Enhanced digital experiences for clients in advisory services, retail, and workplace ecosystems, with high Client Promoter Scores.

In the first quarter, clients opened 1.3 million brokerage accounts, up 10% year-over-year. Excluding a one-time mutual fund clearing outflow, core net new assets attracted were $158 billion, a first quarter record, bringing total client assets to $11.8 trillion. Managed investing net flows were up 46%, reaching an all-time record. Bank lending was up 29% year-over-year with bank product balances and pledged asset line balances reaching all-time records. Daily average trades were a record 9.9 million. Revenues were up 16% and adjusted earnings per share reached a record $1.43, up nearly 40% year-over-year. Revenue contribution: Managed investing, bank lending, trading, etc. all contributed to the overall revenue growth.

• First quarter performance was strong with growth on all fronts. • Tracking higher than the $5.70 to $5.80 EPS range implied in January's winter business update, excluding buybacks and Forge impact. • Will provide a more comprehensive update on 2026 financial scenario at the next business update in July.

• Market volatility could influence client cash allocations. • Competitive environment changes may impact business. • Uncertainties in AI application and implementation.

Q: Steven Chubak from Wolfe Research asked about NIM and cash growth outlook.

A: Michael Verdeschi responded that the forward rate curve now is more favorable, expecting continued upward trajectory of cash driven by organic growth and strong client engagement, and feels good about NIM growth with more details to come in July.

Q: Ken Worthington from JPMorgan asked about Schwab's ETF distribution platform value.

A: Richard Wurster said they're in negotiation with asset managers, expect to have an ETF monetization strategy in place by end of year, with more value in active ETFs.

Q: Bill Katz from TD Cowen asked about balance sheet growth and capital return.

A: Michael Verdeschi said they feel good about client engagement, lending activity continues to be strong, prioritize capital for franchise growth while having flexibility to return capital through dividend, buybacks, etc.

Q: Brennan Hawken from BMO Capital asked about cash innovation.

A: Richard Wurster said they've made cash allocation easy for clients, launching agentic capability this summer, with many ways to monetize client relationships.

Q: Brian Bedell from Deutsche Bank asked about March metrics.

A: Richard Wurster said March was exceptional for NNA with strength across Investor Services and advisory services, Michael Verdeschi added cash pickup in March due to market sentiment shift and other activities.

Q: Michael Cyprys from Morgan Stanley asked about cash sweep monetization.

A: Richard Wurster said clients have intentionally allocated cash, they have multiple levers to monetize, including fee-based solutions.

Q: Mike Brown from UBS asked about digital asset offering.

A: Richard Wurster said launching crypto is for client choice, clients will proactively move assets, and it builds optionality for future tokenization.

Q: Daniel Fannon from Jefferies asked about trading pricing and crypto pricing.

A: Richard Wurster said traders are taking smaller positions due to uncertainty, crypto pricing is competitive with 75 basis points on dollar value.

Q: Devin Ryan from Citizens asked about prediction markets.

A: Richard Wurster said they focus on financial-related events, prediction markets not top client list but will consider intermediary offerings.

Q: Alex Blostein from Goldman Sachs asked about advisers' reception to alternative products and long short strategies.

A: Richard Wurster said advisers have potential for alternative investments, Michael Verdeschi said long short program is not capital-intensive and they can support it.

Q: Ben Budish from Barclays asked about trading engagement.

A: Michael Verdeschi said quarter had strong engagement with daily average trades at record, smaller trade size due to volatile and uncertain environment, impact on revenue per trade dependent on market evolution.