(Bloomberg) — Charles Schwab Corp. jumped in early New York trading after reporting earnings per share that topped analyst estimates and curbing some of its expensive debt — a sign the firm has moved past a bout of turbulence last year.
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The company said adjusted earnings per share for the third quarter were 77 cents, beating analyst forecasts. Adjusted net income for the period was $1.5 billion, up slightly on the prior year.
Schwab’s client transactional cash sweep — which took a hit when customers shuffled funds in search of better-yielding options — climbed $9.2 billion sequentially, helping the firm reduce costly bank supplemental funding by $8.9 billion, it said in a statement Tuesday.
Shares of the firm were up 9.3% at 8:48 a.m. in early trading in New York.
Schwab is emerging from what it called one of its most challenging years in decades last year, as steep interest rate hikes took their toll on its businesses. Customers had yanked their deposits from Schwab’s bank in search of higher-yielding alternatives, causing the company to seek out more expensive funding sources. Higher rates also saddled the company with paper losses as the value of its bond investments took major hits.
Executives have since said the worst of those woes have subsided as it vowed to shrink the bank over time and prioritize paying down costlier debts.
Earlier this month, Schwab named Rick Wurster as the firm’s next chief executive officer, teeing him up to take over the retail brokerage business from long-time leader Bettinger who retires at the end of the year. Wurster’s appointment followed other leadership shuffles, including the appointment of Mike Verdeschi — a Citigroup Inc. veteran — to take over as chief financial officer from Peter Crawford.
“Third quarter net asset gathering of over $95 billion pushed year-to-date core net new assets to $252 billion – up 10% versus 2023 year-to-date,” said Schwab CEO Walt Bettinger.
The firm reported $90.8 billion of total net new assets in the quarter, an 88% increase on the same period a year ago. Client transactional sweep cash balances finished September at $384 billion, the firm said.
(Updates with additional metrics throughout, starting with net income in second paragraph.)
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