Shares of
Charles Schwab
(ticker: SCHW) got clobbered last week. On Monday morning, the beating continued.
The stock fell 12% Monday to $53.57 per share, recovering from a low of $46 shortly after the market opened. The stock is down 41% for the year so far.
Charles Schwab’s share price tumbled alongside other bank stocks, a selloff sparked last week by the fall of
SVB Financial Group
’s
(SIVB) Silicon Valley Bank. Although Schwab is better known for its brokerage and investing services, the company also offers banking and lending to customers. As investors reallocate cash to earn higher yields, Charles Schwab’s earnings could suffer as a result. The Westlake, Texas-based company had $366.7 billion in deposits at the end of the fourth quarter.
Two statements put out by the company Monday midmorning that attest to the firm’s financial strength apparently soothed investor nerves as the stock started recovering shortly after their release.
CEO Walt Bettinger and Founder Charles Schwab issued a statement Monday emphasizing the company’s diversified business mix, “capital well in excess of regulatory requirements, a high-quality and relatively small loan book, and a conservative investment portfolio that is 80% comprised of securities backed by the U.S. Treasury and various government agencies.”
They further note the company brought in $41.7 billion in net new assets last month, its second-strongest February ever. More than 80% of client cash held at Charles Schwab’s bank is insured dollar-for-dollar by the FDIC, they said. In addition, the company has access to more than $80 billion in borrowing capacity with the Federal Home Loan Bank, an amount greater than all of its uninsured deposits.
“Schwab’s longstanding reputation as a safe port in a storm remains intact, driven by record-setting business performance, a conservative balance sheet, a strong liquidity position, and a diversified base of 34 million+ account holders who invest with Schwab every…
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