Charles Schwab Corp. (SCHW) announced on Monday that it experienced a loss of $41 billion in deposits during the first quarter of 2023, meeting investor expectations. The brokerage giant reported a first-quarter profit of $1.6 billion and revenue of $5.1 billion, representing an increase from Q1 2022 but a decrease when compared to Q4 2022.
The company's shares have lost nearly 40% so far this year, including over 30% in March alone. Investors took action against Schwab following the March 10 failure of Silicon Valley Bank, seeking out other institutions that could face similar outflows or exhibit significant paper losses on debt securities due to rising interest rates.
In response to these concerns, Schwab reassured investors about its liquidity strength by publicly stating that it could continue operations even if most deposits were lost within the next year "without having to sell a single security." In an interview with The Wall Street Journal CEO went further saying:
Schwab's deposit decline marked a staggering drop of 30% from last year's first quarter as the firm found itself amidst the worst US banking crisis since2008.
Despite facing ongoing issues related to cash sorting and experiencing substantial deposit losses, Charles Schwab still managed to report robust overall results for Q1. Net income rose14%, reaching $1.6 billion compared to one year ago; adjusted earnings per share reached93 cents—surpassing FactSet consensus estimates90 cents.
Early Monday trading saw Charles Schwab stock slipping after beating those Q1 earnings projections Meanwhile M&T Bank and State Street are expectedto release their own financial reports amid growing concerns followingthe recent bank panic.