SchwabQ3-降息周期的机会
Investable wealth in the United States (U.S.) (consisting of assets in defined contribution, retail wealth management and brokerage, and registered investment advisor channels, along with bank deposits) currently exceeds $65 trillion
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Top Brokerage Firms by AUM and Number of Accounts |
|---|
Rank |
1 |
2 |
3 |
4 |
The rest brokerage firms are really small:
E-Trade: AUM 360 billion. 5.2 million customers. Morgan Stanley bought at $13 billion 2020.
Interactive Brokers: AUM , 2.6 million customers
Robinhood: $1.8B Revenue, 11 million customers
Brokerage industry is stable
$9.4 T client asset.
Daily Average Trades
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(in thousands) | 2,021 | 2,022 | 2023 |
|---|---|---|---|
DAT | 6,507 | 5,925 | 5394 |
35.9 million client brokerage accounts, 1.9 million bank accounts, and 5.4 million workplace plan participant accounts
~ 15,000 independent investment advisors
Merger with Ameritrade Oct 2020
a $26 billion all-stock deal
$2 T client asset
Margin balance up 15% vs Dec 2023 to end June at $71.7B.
Capital Strcuture
As of 2024 Q2:
MV: 1,824 million common shares. $117.8B
Preferred: 9.2B. Preferred dividend 414 million. Dividend rate: 4.54%.
Debt: FHLB 24B, Long-term debt: 22B, Brokered CD: 40B
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US Margin Loan Rates Comparison2
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$ 25K | $ 300K | $ 1.5M | $ 3.5M |
|---|---|---|---|
Interactive Brokers | 6.33% | 6.00% | 5.78% |
E-Trade | 13.20% | 11.70% | N/A |
Fidelity | 12.58% | 11.33% | 8.75% |
Schwab | 12.58% | 11.33% | N/A |
Vanguard | 12.75% | 11.25% | N/A |
Morgan Stanley Wealth Management:
Schwab的优势：
Good customer service.
300+ local branches
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robinhood touts rock-bottom fees for options trading. then come the hidden costs. - wsj.pdf
威胁
Bank Deposit kept decreasing in 2024 Q2.
Schwab is abandoning its banking business.
we envision the potential to increase our usage of third-party banks like TD Bank and others to achieve the following goals, deliver extended FDIC insurance for clients, lower our capital intensity, and improve liquidity, subject, of course, to obtaining economics from the third-party banks that make sense for us. Net, these various actions should lead, again, over time to a bank that is somewhat smaller than our bank has been in recent years
Interest rate cuts would decrease net interest revenue.
机会
todo
Essentially Schwab's asset is a long duration bond portfolio. Fed has cut the interest rate by 50 bps Sept. 18 and the bond market has anticipated that a few months ago by yields going down. However, the market doesn't reflect that on Schwab's share price.
As Schwab's bond portfolio matures, it should be able to pay off its FHLB loan and increase its NIM.
Current bond portfolio mature schedule.
11 billion a quarter flows off the investment portfolio.
Current FHLB loan. 34.8B by 2023 Q4 and 2023 Expense 1.8B at rate 5.14%.
NIM increase from management transcript.
our NIM reach the mid-2.20s in Q4 on its way to approaching 3% by the end of 2025
No more incentive for clients' cash relocation. Decreased $126B during 2023.
Now despite the influence of typical seasonal pressure to start the year coupled with atypically bullish, very bullish, investor sentiment, client cash balances have largely trended consistent with our expectations, despite rates remaining higher than the Fed and the market predicted earlier in the year. And all indications support that we are in the very late innings of client cash realignment activity. In fact, over the course of Q2, client-driven outflows from Bank Sweep despite the seasonal tax payments, have been less than the cash flow generated from our investment portfolio, which in the absence of any other actions on our part would have led to continued decline to supplemental borrowing.
No more TD acquisition related cost. 2024 $200 million. 20% of 1.6B-2.0B synergy is not done yet. Full year synergy realization beginning in 2025.
Is market overreacting?
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charles schwab ceo walt bettinger sits down with jim cramer.pdf
Walt Bettinger 指出，尽管分析师担心存款余额下降，但Charles Schwab的资产基础达到了9.4万亿美元的记录水平，表明公司实际上在增长而不是收缩。
Bettinger 解释说，关于客户现金余额的处理，存在误解。当查尔斯·施瓦布作为投资顾问时，确保客户的现金被投资于高收益的货币市场基金，而这一点被误解或误读。
他还反驳了关于公司缩减银行业务的错误报道，明确表示公司正在考虑在特定的利率周期内，将一部分存款转移到第三方银行以提高每股收益，这并不意味着公司正在缩小规模，而是在寻求增长和效率。
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charles schwab嘉信的错误决策：被短期现金迷惑的代价.pdf
问题清单
2023年的问题是暂时的还是永久的，在未来2年是否会修复？
查尔斯·施瓦布公司因疫情期间美联储大量放水，大幅增加了对长期债券的投资，导致在后来美联储加息对抗通胀时面临巨大的市值下跌和存款外流问题。
由于市场利率上升，公司的Sweep Program失去吸引力，导致客户大量提取存款，进一步加剧了公司的流动性压力。
管理层对于未来利率上升的风险估计不足，未能采取有效措施应对，目前面临的两难选择是立即实现债券的账面亏损或通过高成本的借款来补充流动性，均会对公司造成重大影响。