Q1 2025 Charles Schwab Corp Earnings Call

April 17, 2025

Alright and were off good morning, everyone and welcome to Robs point 25 spring business update this is Jeff Edwards head of Investor Relations and I'm joined in our Westlake headquarters by our President and CEO, Rick Wurster and CFO, Mike protecting our.

Our earnings release crossed the wire is about an hour ago. So hopefully everyone has had an opportunity to review our strong <unk> results.

Before we jump in a few quick housekeeping items, the slide to the business update will be posted to their usual spot on the IR website at the conclusion of today's prepared remarks.

Q&A remains structured as one question no follow ups. Please with negative points awarded to though is posing questions with four to five separate questions nested within.

This approach enables us to address as many questions as possible during our time together this morning.

It's worth noting that questions may also be submitted via the online console and of course, please don't hesitate to reach out to the IR team with any follow up questions. After todays update.

And finally, the forward looking statements page are omnipresent wall of words, which reminds us that outcomes can differ from expectations. So please keep in touch with our disclosures alright with all that covered let me turn it over to Rick.

Rick: Thanks, Jeff and good morning, everyone welcome to our spring business update.

Rick: The first quarter of 2025 can be summed up in one word growth with our through clients' eyes strategy investors turned to us during the first quarter and trusting us with 138 billion and core net new assets, which is up 44% over the first quarter of last year clients open.

Rick: 1.2 million new accounts.

Rick: Our clients remain highly active with high levels of trading activity record engagement with our wealth solutions and strong utilization of margin.

Rick: And through it all we were there for our clients, we delivered strong service levels for advisors and retail investors.

Rick: Retail client promoter scores and our client easy score for advisors, both remained strong with legacy Ameritrade satisfaction increasing.

Rick: This sustained client momentum translated into strong financial performance to begin the year, including year over year revenue growth of 18%.

Rick: Record net revenues and a 41% year over year increase in adjusted earnings per share.

Rick: We're continuing to play offense and deliver on initiatives that support growth across multiple measures.

Rick: We're adding new financial consultants and opening up branches in our retail business.

Rick: Our advisor business continues to grow and delight clients and we've invested to continue to enhance the experience for advisers.

Rick: In the first quarter, we launched several new offers to help our clients take ownership of their financial futures.

Rick: And I'm going to talk more about these in a few minutes.

Rick: And we're not taking our foot off the gas, we're continuing to make investments to make it easier for clients to do business at Schwab, while conducting more of their financial lives with us.

Rick: As we shared in January and continue to believe we expect strong revenue and earnings expansion in 2025.

Rick: And after our recent capital actions were poised for additional capital return over the course of the year.

Rick: With through client size as our guide, we remain well positioned to accelerate our growth over the long term.

Rick: In the first quarter. The S&P 500 was down 5% the VIX increased and investor sentiment dampened through this volatility we were there when clients needed us retail calls to our service centers increased as clients had more questions about what to do during periods of uncertainty.

Rick: We consistently answered their calls in under 30 seconds.

Rick: And our retail advisor and workplace relationship teams stood by clients to help them navigate their personal financial situations. It.

Turn over the course of the year.

Rick: It is in periods like this where our Omnichannel client model really shines just as it did this quarter.

With through client size as our guide, we remain well positioned to accelerate our growth over the long term.

Rick: And it is in periods like this where it is so important to remember why we are here.

In the first quarter. The S&P 500 was down 5% the VIX increased and investors' sentiment dampened through this volatility we were there when clients needed us retail calls to our service centers increased as clients had more questions about what to do during periods of uncertainty.

Rick: Because behind every trade and every call to our service teams is a person who is watching the headlines and considering their next best financial decision, whether they are a new investor in active trader and engaged retiree or dedicated advisor supporting their clients.

We consistently answered their calls in under 30 seconds.

Rick: With through client sides as our guide we delivered an outstanding experience to our clients and powered growth across all fronts client growth solutions growth and financial growth.

In our retail advisor and workplace relationship teams stood by clients.

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It is in periods like this where our Omnichannel client model really shines just as it did this quarter.

Rick: Looking at client growth core net new assets grew 44% year over year to 138 billion, representing a five 5% annualized growth rate.

And it is in periods like this where it is so important to remember why we are here.

Because behind every trade and every call to our service teams is a person who is watching the headlines and considering their next best financial decision, whether they are a new investor in active trader and engage retiree or dedicated advisor supporting their clients.

Rick: This is driven by momentum across all three of our client businesses with each seeing strong growth at.

Rick: The momentum in our advisory services business continued from last year, while retail M&A increased 50% year over year as we move further away from the final client conversions.

With through client size as our guide we delivered an outstanding experience to our clients and powered growth across all fronts client growth solutions growth and financial growth.

Rick: At the same time, we also had a record quarter in our workplace business.

Rick: As we move further away from the Ameritrade integration, our M&A continues to move to our normal historical levels just as we suggested it would we.

Looking at client growth core net new assets grew 44% year over year to 138 billion, representing a five 5% annualized growth rate.

Rick: We continue to see M&A from legacy Ameritrade clients grow as we deepen those relationships over time.

Rick: New brokerage account openings grew to $1 2 million, an increase of 8% over the prior year quarter.

This is driven by momentum across all three of our client businesses with each seeing strong growth.

Rick: We continue to delight clients, earning strong client promoter scores in all of our businesses.

The momentum in our advisory services business continued from last year, while retail M&A increased 50% year over year as we move further away from the final client conversions.

Rick: Clients continue to turn to our wealth lending and trading solutions. Another key measure of our growth as we broaden and deepen relationships with clients.

At the same time, we also had a record quarter in our workplace business.

Rick: Managed investing net flows increased 15% over the same period last year to a new record with continued strong contribution from Ameritrade clients.

As we move further away from the Ameritrade integration, our M&A continues to move to our normal historical levels just as we suggested it would.

We continue to see M&A from legacy Ameritrade clients grow as we deepen those relationships over time.

Rick: We now have nearly 500 billion in assets under management, and our holistic wealth solutions Schwab wealth advisory and Schwab advisor network.

New brokerage account openings grew to $1 2 million.

Rick: We also attracted record net flows across several offers including our flagship Schwab wealth advisory as well as Schwab personalized indexing.

Instead of 8% over the prior year quarter.

We continue to delight clients, earning strong client promoter scores in all of our businesses.

Rick: Bank lending balances reached $47 1, billion% to 15% year over year increase.

Clients continue to turn to our wealth.

And train solutions, another key measure of our growth as we broaden and deepen relationships with clients.

Rick: Finally daily average trades increased 24% to $7 4 million for the quarter.

Management.

Flows increased 15% over the same period last year to a new record with continued clients.

Rick: Our early April numbers are well above even what we saw in the first quarter.

Rick: We are the number one firm traders turned to among competitors to report on those metrics and there isn't a close second as we bring the industry's leading platform research and education and trader support.

We now have nearly 500 billion in assets under management, and our holistic wealth solutions Schwab wealth advisory and Schwab advisor network.

We also attracted record net flows across several offers including our flagship Schwab wealth advisory as well as Schwab personalized indexing.

Rick: When we deliver for our clients it translates to healthy financial growth in the first quarter total revenue increased 18% year over year to $5 6 billion and adjusted earnings per share increased 41% over the first quarter of 2024.

Bank lending balances reached $47 1, billion% to 15% year over year increase.

Increased 24% to $7 4 million for the quarter.

Our early April numbers are well above even what we saw in the first quarter.

Rick: We are off to a strong start with growth across all key measures for the first quarter.

We are the number one firm traders turned to among competitors to report on those metrics and there as we bring the industry's leading platform research and education and trader support.

Rick: Looking ahead, we remain confident in our ability to accelerate our growth over this year and for the long term and we believe that is true even in a period of market uncertainty there.

When we deliver for our clients it translates to healthy financial growth in the first quarter total revenue increased 18% year over year to $5 6 billion and adjusted earnings per share increased 41% over the first quarter of 2024.

Rick: There are several reasons for our confidence.

Rick: First we have a strong competitive positioning we remain a leader in the two fastest growing segments of the financial services industry self directed investors and registered investment advisors.

Number one in total client assets for publicly reported peers number one in our eye, a custodial assets and number one and daily average trades and.

We are off to a strong start with growth across all key measures for the first quarter.

Looking ahead, we remain confident in our ability to accelerate our growth over this year and for the long term and we believe that is true even in a period of market uncertainty there.

Rick: We continue to receive third party recognition, including being named the number one overall broker by stockbrokers Dot com.

Rick: Second we have a healthy business fundamentals, our transfer of assets or T. O a ratio, which is a measure of how we stack up to competitors is 1.5 that means for every dollar that leaves schwab $1.50 comes to us from our competitors.

There are several reasons for our confidence.

First we have a strong competitive positioning we remain a leader in the two fastest growing segments of the financial services industry self directed investors and registered investment advisors.

Rick: Investors turned to us because our no tradeoffs approach means they get world class platforms solutions that meet the spectrum of wealth and trading needs access when and where they want it whether that's on their phone in a branch or through one of our advisor or workplace relationship managers, along with service there.

Number one in total client assets for publicly reported peers number one in our eye, a custodial assets and number one and daily average trades.

And we continue to receive third party recognition, including being named the number one overall broker by stockbrokers Dot com.

Rick: Can't be matched.

We have a healthy business fundamentals, our transfer of assets or T. O a ratio, which is a measure of how we stack up to competitors is 1.5 that means for every dollar that leaves schwab $1.50 comes to us from our competitors.

Rick: Our pledged asset line balances increased 34% year over year supported by strong digital adoption.

Rick: 95% of new loans originated through a digital channel and even with the increase in volumes, we're delivering industry, leading cycle times, averaging only 1.1 days.

Investors turn to us because our no tradeoffs approach means they get world class platforms solutions that meet the spectrum of wealth and trading needs access when and where they want it whether that's on their phone in a branch or through one of our advisor or workplace relationship managers along with service.

Rick: Third we have a growing and diverse client base. We serve are as of all sizes and attract healthy M&A from all segments as we delight them and meet their needs.

Rick: In our retail business new to firm households are up 14% over last year, and we're tracking clients across the spectrum of ages in life stages.

They can't be matched.

But asset line balances increased 34% year over year supported by strong digital adoption.

In the first quarter, 33% of new to firm clients were under 30, and nearly 60% were under the age of 40.

95% of new loans originated through a digital channel and even with the increase in volumes, we're delivering industry, leading cycle times, averaging only one one days.

Rick: Traders were a key part of the story in the first quarter and will remain so with volatility at higher levels.

Third we have a growing and diverse client base. We serve are as of all sizes and attract healthy M&A from all segments as we delight them and meet their needs.

Rick: We continue to attract traders to our leading offer the number of clients who have adopted thinker swim has more than doubled over the last year.

Rick: Traders are a highly engaged group we're number one in the industry and daily average trades and option contracts, where number one because of our outstanding platforms.

In our retail business new to firm households are up 14% over last year, and we're tracking clients across the spectrum of ages in life stages.

Rick: Multiple destinations for trading for all levels of investors educational content and insights combined with incredible trader support from trading professionals here at Schwab.

In the first quarter, 33% of new to firm clients were under 30, and nearly 60% were under the age of 40.

Traders were a key part of the story in the first quarter and will remain so with volatility at higher levels.

Rick: And then so last few weeks have shown we're meeting trader needs through market swings and record trading days.

We continue to attract traders to our leading offer the number of clients who have adopted thinkers swim has more than doubled over the last year.

Rick: Fourth we're continuing to deliver the capabilities experience and solutions that our clients want and expect we're investing in the four focus areas that you see here.

Traders are a highly engaged group we're number one in the industry and daily average trades and option contracts, where number one because of our outstanding platforms.

Our first priority is driving growth there are two aspects of our growth driving M&A with new and existing clients and deepening relationships with those clients and we delivered on these priorities across multiple fronts in the first quarter.

Multiple destinations for trading for all levels of investors educational content and insights combined with incredible trader support from trading professionals here at Schwab.

And then as the last few weeks have shown we're meeting trader needs through market swings and record trading days.

Rick: We're expanding our branch footprint and hiring hundreds of financial consultants and wealth consultants to deepen relationships with our higher net worth retail clients and their families.

Fourth we're continuing to deliver the capabilities experience and solutions that our clients want and expect we're investing in the four focus areas that you see here.

Rick: We're also investing in our support of self directed clients, including our AI powered capabilities. Our goal is to be the leader for clients that want to know omnichannel experience and those that may want limited interaction our AI investments are part of supporting both.

Our first priority is driving growth there are two aspects of our growth driving M&A with new and existing clients and deepening relationships with those clients.

Rick: We are investing in our marketing spend which drives approximately 40% of new to firm retail clients.

And we delivered on these priorities across multiple fronts in the first quarter.

Rick: We are firing on all cylinders in a S. As our client satisfaction continues to be at all time highs and.

We're expanding our branch footprint and hiring hundreds of financial consultants and wealth consultants to deepen relationships with our higher net worth retail clients and their families.

Rick: And we're working on a multi year investment in our workplace business to grow it over the long term and increase the client base to whom we can introduce schwab.

We are also investing in our support of self directed clients, including our AI powered capabilities. Our goal is to be the leader for clients that want an omnichannel experience and those that may want limited in her interaction our AI investments are part of supporting both.

Rick: We also advanced our efforts to deepen client relationships first we delivered several enhancements to our wealth offer we rolled out retail alternatives to all eligible clients, we launched the discretionary option for clients within Schwab wealth advisory and we continued to enhance both schwab personalized <unk>.

We are investing in our marketing spend which drives approximately 40% of new to firm retail clients.

We are firing on all cylinders in a S. As our client satisfaction continues to be at all time highs.

Rick: <unk> and our Wassmer Schroeder offers.

Rick: And just yesterday, we announced a strategic investment and wealth Dot com <unk> dot com as a leader in digital estate planning.

And we're working on a multi year investment in our workplace business to grow it over the long term and increase the client base to whom we can introduce schwab.

Rick: In addition to enhancing our estate planning capabilities and experience for clients.

Rick: This investment is one part of our broader effort to provide more of an ecosystem for our RIAA clients as we help them grow compete and succeed.

We also advanced our efforts to deepen client relationships first we delivered several enhancements to our wealth offer we rolled out retail alternatives to all eligible clients, we launched a discretionary option for clients within Schwab wealth advisory and we continued to enhance both schwab personalized <unk>.

Rick: The wealth enhancements I've just described to help us meet the full spectrum of our clients' needs. While also bolstering the company's fee based revenue overtime.

<unk> and our Wassmer Schroeder offers.

Rick: Second we expanded our trader offer with the delivery of a 24 by five trading capability on our Thinkorswim platform.

And just yesterday, we announced a strategic investment and wealth Dot com <unk> dot com as a leader in digital estate planning.

Rick: Olive schwab's retail clients can now trade 24 hours a day five days, a week and an expanded list of stocks and hundreds of additional Etfs. This capability comes with our specialized 24 hour service and support as well as tailored education.

In addition to enhancing our estate planning capabilities and experience for clients.

This investment is one part of our broader effort to provide more of an ecosystem.

Clients as we help them grow compete and succeed.

The wealth enhancements I've just described to help us meet the full spectrum of our clients' needs. While also bolstering the company's fee based revenue overtime.

Rick: Turning now to scale and efficiency. These are initiatives that benefit clients, while allowing us to operate more efficiently maintain our low cost to serve and reinvest in our growth initiatives.

Second we expanded our trader offer with the delivery of a 24 by five trading capability on our Thinkorswim platform.

Rick: In the first quarter, we launched Schwab knowledge assistant for advisor services clients.

Rick: We also just launched Schwab intelligent assistant for our international clients leveraging a large language model to provide on demand support and personalized assistance tailored to our international clients.

Olive schwab's retail clients can now trade 24 hours a day ended list of stocks and hundreds of additional Etfs. This capability comes with our specialized 24 hour service and support as well as tailored education.

Rick: We're continuing to invest in longer term efficiency initiatives, including a focus on removing paper from the system, which will make it easier and clients, while also helping us to operate even more efficiently.

Turning now to scale and efficiency. These are initiatives that benefit clients, while allowing us to operate more efficiently maintain our low cost to serve and reinvest in our growth initiatives.

Rick: Our third focus area is the brilliant basics, our biggest opportunity for growth over the long term is delighting our clients in the everyday interactions they have with us so they entrust more of their financial life to Schwab that means picking up the phone quickly answering questions efficiently and providing intuit.

In the first quarter, we launched Schwab knowledge assistant for advisor services clients.

We also just launched Schwab intelligent assistant for our international clients leveraging a large language model to provide on demand support and personalized assistance tailored to our international clients.

Rick: Of digital experiences in the first quarter service levels were strong across the board.

We're continuing to invest in longer term efficiency initiatives, including a focus on removing paper from the system, which will make it easier and clients, while also helping us to operate even more efficiently.

We continue to enhance our digital processes and our a S easy score reached 93%.

Rick: Finally, our fourth focus area is continuing to invest in our people our ability to serve our clients and fuel growth into the future. It comes down to our people and we're continuing to optimize workflows as well as talent development and recognition programs that help us foster our unique culture of service.

Our third focus area is the brilliant basics, our biggest opportunity for growth over the long term is delighting our clients in the everyday interactions they have with us so they entrust more of their financial life to Schwab that means picking up the phone quickly answering questions efficiently and providing them to.

Out of digital experiences.

Rick: I want to wrap up with some comments on April and our outlook for the year.

In the first quarter service levels were strong across the board.

Rick: We are seeing record trading levels with our two highest trading days ever and high levels of engagement digitally and with our reps. We have been there during this period when our clients needed us most our technology has performed well our service has been solid and our business metrics continue to perform well.

We continue to enhance our digital processes and our a S easy score reached 93%.

Finally, our fourth focus area is continuing to invest in our people our ability to serve our clients and fuel growth into the future. It comes down to our people and we're continuing to optimize workflows as well as talent.

Rick: We continue to track well to the financial scenario scenario, we outlined at the beginning of the year as Mike will expand upon shortly.

Talent development and recognition programs that help us foster our unique culture of service.

Rick: The combination of a strong first quarter and robust activity in April has us off to a strong start in 2025 with through client sizes. Our guide we're continuing to play offense by investing and focus areas that will drive both growth and efficiency, while delighting, our clients and supporting our employees.

I want to wrap up with some comments on April and our outlook for the year.

We are seeing record trading levels with our two highest trading days ever and high levels of engagement digitally and with our reps. We have been there during this period when our clients needed us most our technology has performed well our service has been solid in our business metrics continued to perform well.

Rick: <unk>.

Rick: With continued innovation around client solutions capabilities and experiences we are well positioned to accelerate profitable growth through the cycle.

We continue to track well to the financial serious scenario, we outlined at the beginning of the year as Mike will expand upon shortly.

Rick: And with that I will turn it over to Mike to share our financial picture.

Mike: Rick I'm looking forward to speaking with you all this morning about our strong start to 2025 to.

The combination of our strong first quarter and robust activity in Asia as I talked about.

<unk> start in 2025 with through client sizes, our guide I investing and focus areas that will drive both growth and efficiency, while delighting, our clients and supporting our employees.

Mike: To Echo Rick we saw solid growth across all fronts. During the first quarter as we continued to meet the evolving needs of our growing client base.

Mike: New account formation was approximately $1 2 million during the period, our highest total in several years.

With continued innovation around client solutions capabilities and experiences we are well positioned to accelerate profitable growth through the cycle.

Mike: The momentum in net asset gathering continued to build with core M&A, reaching 138 billion.

And with that I will turn it over to Mike to share our financial picture.

Mike: Clients utilize the full breadth of Schwab's Martin wealth management solutions during a period of increasing uncertainty across global markets, including $7 4 million daily average trades record net inflows into our managed investing solutions and sustained growth in our bank lending.

Mike: Rick I'm looking forward to speaking with you all this morning about our strong start to 2025 to.

Speaker Change: To Echo Rick we saw solid growth across all fronts. During the first quarter as we continued to meet the evolving needs of our growing client base.

Speaker Change: It would count formation, approximately $1.2 million during the period, our highest total in several years.

Mike: This combination of organic growth and increased client utilization of our leading products and solutions resulted in year over year revenue and adjusted earnings growth of 18% and 41% respectively.

Speaker Change: And momentum in net asset gathering continued to build with core M&A, reaching 138 billion.

Mike: Transactional cash levels continue to reflect normalized cash behaviors inclusive of organic growth seasonality and investor sentiment.

Speaker Change: She likes the full breadth of Schwab's Martin wealth management solutions during a period of increasing uncertainty across global markets.

Speaker Change: Including $7 4 million daily average trades record net inflows into our managed investing solutions and sustained growth in our bank lending products. This combination of organic growth and increased client utilization of our leading products and solutions resulted in year over year revenue.

Mike: And we made additional progress in reducing the level of bank supplemental funding to approximately 38 billion down more than 60% from peak levels.

Mike: We increase the return of capital due to the previously announced higher common stock dividends and stock buybacks in the first quarter and our capital ratios finished one two slightly above the upper end of our target range.

Speaker Change: And adjusted earnings growth of 18% and 41% respectively.

Speaker Change: Transactional cash levels continue to reflect normalized cash behaviors inclusive of organic growth seasonality and investor sentiment.

Mike: Given the shifting macroeconomic backdrop to begin this year there are plenty of moving pieces. So let's unpack some of the key factors influencing the first quarter.

Speaker Change: We made additional progress in reducing the level of bank supplemental funding to approximately 38 billion down more than 60% from peak levels.

Mike: First quarter revenue increased 18% year over year to a record $5 6 billion, including double digit growth across all line items versus <unk> 24.

Speaker Change: We increased awareness capital due to the previously announced higher common stock dividends and stock buybacks in the first quarter and our capital ratios finished one two slightly above the upper end of our target range.

Mike: The further reduction in higher cost bank supplemental funding drove sequential net interest margin expansion of 20 basis points, helping net interest revenue increased 21% year over year.

Speaker Change: Given the shifting macro economic backdrop to begin this year there are plenty of moving pieces. So let's unpack some of the key factors influencing the first quarter.

Mike: Asset management and administration fees grew by 14% year over year to one 5 billion for the quarter as robust asset gathering and sustained interest in schwab's wealth and asset management solutions more than offset the impact of recent equity market declines.

Speaker Change: First quarter revenue increased 18% year over year to a record $5 6 billion.

Speaker Change: Including double digit growth across all line items versus <unk> 24.

Mike: Building on the post election momentum observed in late 2024 daily average trading volume increased significantly during the first three months of the year as investors navigated an increasingly uncertain and volatile market. This uptick in trading activity pushed trading revenue up 11% year over year.

Speaker Change: The further reduction in higher cost bank supplemental funding drove sequential net 20 basis points, helping net interest revenue increased 21% year over year.

Speaker Change: Asset management and administration fees grew by 14% year over year to one 5 billion.

Mike: While bank deposit account fees moved higher due to an improved net yield as a growing percentage of the balances have converted to the floating rate bucket.

Speaker Change: Asset gathering and sustained interest in schwab's wealth and asset management solutions more than offset the impact of recent equity market declines.

Mike: And expenses adjusted expenses for the quarter were up 6% and 8% versus four Q24, and <unk> 24, respectively.

Speaker Change: Building on the post election momentum observed in late 2024 daily average trading volume increased significantly during the first three months of the year as investors navigated an increasingly uncertain and volatile market. This uptick in trading activity pushed trading revenue up 11% year over year.

Mike: This includes typical first quarter seasonality to start the year, which was accounted for within our full spending plan, a four and a half to five 5% outlined during the January business update.

We also began to make progress on a number of key focus areas for 2025, including investments to support sustainable organic growth and drive incremental scale and efficiency.

Speaker Change: While bank deposit account fees moved higher due to an improved net yield as a growing percentage of the balances have converted to the floating rate bucket.

Speaker Change: And expenses adjusted expenses for the quarter were up 6%.

Mike: This balanced approach to expense management has enabled us to drive expense on client assets down into the low double digits and improved cost per account by more than 20% over the last decade.

Speaker Change: And 8% versus four Q24, and <unk> 24, respectively. This.

Speaker Change: This includes typical first quarter seasonality to start the year, which was accounted for within our full spending plan, a four and a half to five 5% outlined during the January business update.

Mike: Strong top line growth plus a bounce expense management generated a 46, 2% adjusted pre tax profit margin representing over 500 basis points of expansion versus 124.

Speaker Change: We also began to make progress on a number of key focus areas for 2025, including investments to support sustainable organic growth and drive incremental scale and efficiency.

And earnings per share of a dollar for a year over year increase of over 40%.

Speaker Change: Balanced approach to expense management has enabled us to drive expense on client assets down.

Mike: Our first quarter financial results reflect the continued positive inflection in schwab's earnings trajectory as well as the durability of our diversified model to deliver across a wide range of environments.

Speaker Change: Low double digits.

Speaker Change: And improved cost per account by more than 20% over the last decade.

Mike: While we plan to provide a more comprehensive update on our full year 2025 financial scenario at the summer business update in July given all the moving pieces. We wanted to spend a few moments discussing what has changed since mid January.

Speaker Change: Strong top line growth plus a balance expense management generated a 46, 2% adjusted pre tax profit margin representing over 500 basis points of expansion versus 124.

Mike: Seen sizable movements across three of the inputs to our financial scenario, including a lower expected future path of interest rates lower equity markets and a sequential step up in client trading activity as the market pullback and volatility reemerged in terms of rates the outlook for 2025.

Speaker Change: And earnings per share of a dollar for a year over year increase of over 40% and.

Speaker Change: Our first quarter financial results reflect the continued positive inflection in schwab's earnings trajectory as well as the durability of our diversified model to deliver across a wide range of environments.

Mike: This dynamic with the forward curve moving between three to 425 basis point cuts to the feds target rate versus the one cut assumed back in January for our financial scenario at this point in time. These potential incremental cuts are expected to be mostly in the back half of the year and under such as.

Speaker Change: While we plan to provide a more comprehensive update on our full year 2025 financial scenario at the summer business update in July given all the moving pieces. We wanted to spend a few moments discussing what has changed since mid January we've seen sizable movements across three of the inputs to our financial scenario.

Scenario, we'd still expect full year 2025, net interest margin to expand into the $2 55 to $2 six 5% range.

Speaker Change: Including a lower expected future path of interest rates lower equity markets and a sequential step up in client trading activity as the market post in terms of rates.

Mike: You also could see average for Q NIM contracted slightly from the level indicated in our January financial scenario of course movements in a boat curve is nothing new and we would expect it to continue to change as investors assess the shifting macroeconomic picture.

Speaker Change: I'll look for 2025 remains dynamic with the forward curve moving between three to 425 basis point cuts to the feds target rate versus the one cut assumed back in January for our financial scenario.

Speaker Change: At this point in time these potential incremental cuts are expected to be mostly in the back half of the year and under such a scenario, we'd still expect full year 2025.

Mike: And while the drivers of earnings are evolving with strong cash levels and higher trading volumes versus lower equity markets and additional future rate cuts.

Mike: The combination of our strong one to 25 results and diversified model has is currently tracking around the upper end of the full year scenario outlined at the winter business update in January which implied earnings per share in the $4 10 to $4 20 range, excluding any impacts from buybacks.

Speaker Change: Net interest margin to expand into the $2 55 to $2 six 5% range.

Speaker Change: We also could see average for Q NIM contracted slightly from the level indicated.

Speaker Change: At our January financial scenario of course movements in a boat curve is nothing new and we would expect it to continue to change as investors assess the shifting macroeconomic picture.

Mike: However, given the current backdrop the key variables will likely continue to shift and so we'll provide a more comprehensive update on our full year 2025 financial scenario at the next business update in July, but we will have a better view of how key trends are shaping up halfway through the year.

Speaker Change: Okay.

Speaker Change: And while the drivers of earnings are evolving with stronger cash levels and higher trading volumes versus lower equity markets and additional future rate cuts. The combination of our strong one to twenty-five results and diversified model has is currently tracking around the upper end of the full.

Mike: Moving to our balance sheet, we continue to support our clients as their needs evolve through the quarter.

Speaker Change: You had a scenario outlined at the winter business update in January which impacted earnings per share in the $4 10 to $4 20 range, excluding any impacts from buybacks.

Mike: Following the deleveraging in late February and early March client margin balances at the broker dealer finished at $83 6 billion essentially flat with year end 2024 levels band.

Speaker Change: However, given the current backdrop the key variables will likely continue to shift and so we'll provide a more comprehensive update on our full year 2025 financial scenario at the next business update in July.

Mike: Bank loans grew with power balances, increasing 9% versus <unk> 24.

Mike: As expected we saw the seasonal outflow and client transactional sweep cash to begin the year and then cash building slightly during February and March.

Speaker Change: We'll have a better view of how key trends are shaping up halfway through the year.

Mike: This activity represents normal behavior in this type of environment as client redeployment of the four Q cash build was offset by net equity selling as investors chimney exposure to risk assets.

Speaker Change: Moving to our balance sheet, we continue to support our clients as their needs. Following the deleveraging in late February and early March client margin balances at the broker dealer finished at $83 6 billion essentially flat with year end 2024 levels.

Mike: With another quarter of encouraging cash performance, we use the cash flows coming off of the securities portfolio plus some cash on hand to further reduce high cost supplemental funding at the banks in terms of Q2, we still expect to see typical draw down in client cash due to tax disbursement payments in April.

Speaker Change: Loans grew with Pal balances, increasing 9% versus <unk> 24.

Speaker Change: As expected we saw the seasonal outflow and client transactional sweep cash to begin the year and then cash building slightly Japan in March.

Mike: And similar to past years, we expect this activity than tactical transactional sweep cash as well as other liquid cash alternatives such as purchase money market funds. However, it is possible that a continuation of market volatility in this quarter could influence client cash allocations.

Speaker Change: This activity.

Speaker Change: Normal behavior in this type of environment as client redeployment of the four key cash build was offset by net equity selling as investors exposure to risk assets.

Speaker Change: With another quarter of encouraging cash performance, we use the cash flows coming off of the securities portfolio plus some cash on hand to further reduce high cost supplemental funding at the banks.

Mike: Given the increasing uncertainty in today's environment, we're focusing on flexibility in managing the balance sheet to remain well positioned to navigate a wide range of potential outcomes.

Speaker Change: In terms of Q2, we still expect to see typical drawdown in client cash due to tax disbursement payments in April and similar to past years, we expect this activity impact as well as other liquid cash alternatives such as purchase money market funds. However.

Mike: Some additional thoughts on bank supplemental funding.

Mike: Following the $15 billion pay down during the fourth quarter, we reduced the balances by another $11 8 billion during the first quarter of 'twenty five bringing the outstanding balance as of March 31st $238 1 billion or down approximately 60% from the peak.

Speaker Change: It's possible that a continuation of market volatility in this quarter could influence client cash allocations.

Mike: As previously mentioned, we would not necessarily expect to reduce spending levels by the same magnitude every quarter. For example, sizable tax related outflows in Q2 will likely make it more challenging to replicate the level of pay down observed over the past two quarters. However, as we move forward, we still expect to make additional progress each.

Speaker Change: Given the increasing uncertainty in today's environment, we're focusing on flexibility in managing the balance sheet to remain well positioned to navigate a wide range of potential outcomes.

Speaker Change: Some additional thoughts on bank supplemental funding.

Speaker Change: Following the $15 billion pay down during the fourth quarter, we reduced the balances by another quarter of 25.

Mike: Quarter until the supplemental funding at the banks has reduced to a level consistent with our diversified long term funding profile.

Speaker Change: Bringing the outstanding balance as of March 31st two.

Mike: Finally, our capital levels finished the quarter slightly above the upper bound of the firm's adjusted tier one leverage objective of $6, 75% to 7%.

Speaker Change: $38 1 billion or down approximately 60% from the peak as previously mentioned, we would not necessarily expect to reduce spending levels by the same magnitude every quarter. For example, sizable tax related outflows in Q2 will likely make it more challenging to replicate the level of pay down.

Mike: Quarter over quarter build was primarily driven by earnings and the continued pull to par of unrealized marks with incremental benefit from the decline in interest rates.

Speaker Change: The observed over the past two quarters. However, it's removed no progress each quarter until the supplemental funding at the banks has reduced to a level consistent with our diversified long term funding profile.

Mike: The ratio also reflects our common dividend in the one 5 billion the opportunistic share repurchase completed in connection with T. D's secondary offering in mid February.

As we begin the second quarter the strong capital position continues to provide flexibility ahead of the pending decision regarding our $2 5 billion series G preferred that becomes redeemable later this quarter.

Speaker Change: Finally, our capital levels finished the quarter slightly above the upper bound.

Speaker Change: Of the firm's adjusted tier one leverage objective of $6, 75% to 7%.

Speaker Change: The quarter over quarter build was primarily driven by earnings and the continued pull to par of unrealized marks with incremental benefit from the decline in interest rates.

Mike: Moving beyond the decision regarding the preferred we expect to apply our familiar capital management framework as we prioritize maintaining capital to support the needs of our clients and the growth of our franchise, while at the same time, making progress on reducing the amount of higher cost funding at the bank and returning capital in multiple.

Speaker Change: The ratio in the one 5 billion the opportunistic share repurchase completed in connection with T. D's secondary offering in mid February.

Speaker Change: As we begin the second quarter, the strong capital position.

Mike: Forums as part of our through the cycle financial growth story.

Speaker Change: Continues to provide flexibility ahead of the pending decision regarding our $2 5 billion.

Mike: While there's more uncertainty today from a few months ago, we remain highly confident in our long term diversified model for over five decades are through clients' eyes strategy has focused on meeting the needs of individual investors either directly or by supporting the growth of independent advisors.

Speaker Change: Series G preferred that becomes redeemable later this quarter.

Speaker Change: Moving beyond the decision regarding the preferred we expect to apply our familiar capital management framework as we prioritize maintaining capital to support the needs of our clients and the growth of our franchise, while at the same time, making progress on reducing the amount of higher cost funding at the bank and returned capital in.

Mike: The ways in which Rob has met those needs has evolved over time, including expanding the available set of products dilutions and services.

Mike: <unk> set of capabilities, which stands wealth management trading banking asset management and much more helps us efficiently attract a wide range of investors driving sustainable organic growth.

Speaker Change: All forms as part of our through the cycle financial growth story.

Speaker Change: While there is more uncertainty today from a few months ago, we remain highly confident in our long term diversified model for over five decades are through clients' eyes strategy has focused on meeting the needs of individual investors either directly or by supporting the growth of independent advisors.

Mike: And allows us to deepen relationships with our clients as their needs change over time supporting greater revenue diversification through the cycle.

Mike: At the same time, our scale and efficiency is a significant competitive advantage, enabling us to maintain key investments and flexibility to navigate various macroeconomic environments of course, our capabilities are also supported by our enhanced approach to the balance sheet when we expect incrementals.

Speaker Change: The ways in which swap has met those needs has evolved over time, including expanding the available set of products solutions and services.

Speaker Change: The broadest set of capabilities, which stands wealth management trading banking asset management and much more helps us efficiently attract a wide range of investors driving sustainable organic growth.

Mike: <unk> moving forward not only does the balance sheet play a key role in deepening relationships with clients via lending cash management and other activities.

Speaker Change: And allows us to deepen relationships with our clients as their needs change over time supporting greater revenue diversification through the cycle.

Mike: But by further reducing outstanding high cost funding, we are able to expand NIM and increase the firm's earnings therefore, supporting robust capital formation, which helps position us to further enhance stockholder value through the increase return of excess capital in 2025 and beyond.

Speaker Change: At the same time, our scale and efficiency is a significant competitive advantage, enabling us to maintain key investments and flexibility to navigate various macroeconomic environments of course, our capabilities are also supported by our enhanced approach to the balance sheet, what do we expect incrementals.

Mike: So to wrap up this morning, our ability to support clients through a period of increasing uncertainty helped sustain our strong momentum into 2025, and we plan to stay on offense investing to support long term organic growth and importantly help ensure our best in class client experience continues to meet the.

Speaker Change: <unk> is moving forward at only does the balance sheet play a key role in deepening relationships with clients via lending cash management and other activities.

Speaker Change: But by further reducing outstanding high cost funding, we are able to expand NIM and increase the firm's earnings therefore supporting robust capital formation, which helps position are you due to the increase return of excess capital in 2025 and beyond.

Mike: The evolving needs of individual investors and the advisors who serve them.

Jeff: In doing so we also help further strengthen our diversified model, enabling us to deliver durable financial results through the cycle with that let's get onto Q&A, Jeff back to you.

Speaker Change: So to wrap up this morning.

Speaker Change: Already to support clients through a period of increasing uncertainty helped sustain our strong momentum into 2025, and we plan to stay on offense investing to support long term organic growth and importantly help ensure our best in class client experience continues to meet the evolving needs of individual investor.

Speaker Change: Operator can you please.

Jeff: Remind folks how they can ask a question.

Speaker Change: Thank you he would like to ask a question. Please press star One. Please press star two if you would like to withdraw your question again that is star one if you would like to ask a question.

Speaker Change: <unk> and Blizzard, who serve them.

Stephen Kim: Our first question comes from Stephen Kim with Wolfe Research. Your line is open.

Speaker Change: In doing so we also help further strengthen our diversified model, enabling us to deliver durable financial results through the cycle with that let's get onto Q&A, Jeff back to you.

Speaker Change: Hi, Good morning, Rick and Mike and thanks, So much for taking my question.

Stephen Kim: So.

Stephen Kim: Rick I did wanted to ask on the outlook for April.

Jeff: Operator can you please.

Operator: Remind folks how they can ask a question.

Speaker Change: The team delivered a really strong set of results of more than two but we've entered a very different operating environment starts to two I was hoping you could just speak to what you're seeing in terms of retail side of it.

Operator: Thank you he would like to ask a question. Please press star One. Please press star two if you would like to withdraw your question again that is star one if you would like to ask a question.

Speaker Change: How that's manifesting across different brokerage metrics, whether it's changes in transactional cash margin balances.

Speaker Change: Our first question comes from Stephen Kim with Wolfe Research. Your line is open.

Speaker Change: Yeah.

Speaker Change: Absolutely Stephen Thanks for the thanks for the question.

Stephen Kim: Hi, Good morning, Rick and Mike and thanks, So much for taking my question.

Speaker Change: <unk>.

Speaker Change: April has.

Speaker Change: Brought levels of engagement that our that our historical for US we saw our two highest trading days ever the Friday before the pausing of the tariffs and then and then the data that we pause terrorists.

Speaker Change: So.

Speaker Change: Rick I did want to ask on your outlook for April.

Speaker Change: We did 14 million trades and all time record that day and so it's been very busy I think we have been.

Speaker Change: And how that's manifesting across different brokerage metrics, whether it's changes in transactional cost us large imbalances and a day.

Speaker Change: Supporting clients through it all you we saw a 500 million logins in the first quarter, an all time record that that level of logging pace has continued and actually accelerated into the into the start of the second quarter.

Speaker Change: Absolutely Stephen Thanks for the thanks for the question.

Speaker Change: <unk>.

Speaker Change: April has.

Speaker Change: So it's it's been a period of robust activity in a period, where I think our model really sets itself apart the ability for a client to call up and quickly get an answer to walk into a branch and talk to someone to talk with their advisor and know that schwab stands behind them and supports that this is a period, where we shine and we've seen in the first.

Speaker Change: What levels of engagement that our that our historical for US we saw our two highest trading days ever the Friday before the pausing of the tariffs and then and then the data that we pause terrorists.

Speaker Change: We did 14 million trades and all time record that day and so it's it's been very busy I think we have been.

Speaker Change: Part of April two to three times the level of new accounts being opening for two reasons. We think there are some clients that want to get into Schwab and buy the dip and second because we're seeing clients that want to want a fuller service model and want to be able to talk to someone and want the advice and guidance that we can bring to the table. So we're.

Speaker Change: Supporting clients through it all you we saw a 500 million logins in the first quarter, an all time record that has continued and actually accelerated into the into the.

Speaker Change: Started the second quarter.

Speaker Change: So it's it's been a period of robust activity in a period where.

Speaker Change: We're just seeing high levels of engagement 40 times the consumption of our research that we typically see in terms of what that translates to in some of the metrics that you described in aggregate.

Speaker Change: Well I think our model really sets itself apart the ability for a client to call up and quickly get an answer to walk into a branch and talk to someone to talk with their advisor and know that schwab stands behind him in and supports that this is a period, where we shine and we've seen in the first part of April two to three times the level of new accounts being.

Speaker Change: We've seen a slight risk off tone from our investors in the first few weeks of April and by that we've seen.

Speaker Change: Higher levels of cash growth than we would've expected and in a month, where we've got April tax payments are due.

Speaker Change: Opening for two reasons, we think there are some clients who want to get into Schwab and buy the dip and second because we're seeing clients that want to want a fuller service model and want to be able to talk to someone and want the advice and guidance that we can bring to the table. So.

Speaker Change: Some slight reduction in AR and margin and net equity selling but with $44 million of client accounts, we see a wide range of behavior, but that's how I'd sum it up in terms of overall client activity I don't know Mike do you want to talk to what that means for our diversified business model sure I know Rick absolutely. So when you think about the volume.

Speaker Change: In aggregate.

Speaker Change: We've seen a slight risk off tone from our investors in the first few weeks of April and by that we've seen you know.

Speaker Change: Of of transactions that we're seeing and even though you see some of that margin coming back a bit are the.

Mike: The fact that we're picking up cash the cash alone more than offset the earnings impact of of some of that margin coming off. So when you look at just the beginning of April.

Speaker Change: Higher levels of cash growth than we would've expected and in a month, where we've got April tax payments are due.

Speaker Change: Some slight reduction in AR in margin and in net equity selling but with $44 million of client accounts, we see a wide range of behavior, but that's how I'd sum all client activity I don't know Mike do you want to talk to what that means for our group.

Mike: Continues to give us confidence about that that earnings range that I provided certainly the upper end of that range.

Speaker Change: Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Speaker Change: <unk> business model sure I know Rick absolutely. So when you think about the volume of transactions that we're seeing and even though you see some of that margin coming back a bit are the fact that we're picking up cash the cash alone more than offset the earnings impact of of some of that margin coming off so.

Thanks. Good morning, So wanted to talk about at a day, obviously it accelerated throughout the quarter.

Speaker Change: I wanted your thoughts on the longer term guide, but as you think about this type of backdrop with more volatility does that have any input in terms of the behavior and what the growth outlook.

Speaker Change: And also if you could mention several.

Speaker Change: When you look at just the beginning of April.

Speaker Change: Positives around what gives you confidence around that I guess, if you could just highlight the one or two as to why it's accelerating now in the first half of this year.

Speaker Change: Continues to give us confidence about that that earnings range that I provided certainly the upper end of that range.

Speaker Change: Thanks for the question Dan There's a few things that have driven the acceleration of our M&A first as we as we shared previously we expected M&A to accelerate the further and further we got away from the retail integration and we saw retail on and they grow year over year by 50% as we are now.

Dan Fannon: Thank you. Our next question comes from Dan Fannon with.

Speaker Change: It's Jefferies. Your line is open.

Speaker Change: Thanks. Good morning, So wanted to talk about M&A, obviously, it accelerated throughout the quarter, we reiterated your confidence in the longer term guide, but as you think about this type of backdrop with more volatility does that have any input in terms of the behavior and or the growth outlook and also if you could you mentioned several things.

Speaker Change: Further removed from the final Ameritrade integration, that's us deepening relationships with our legacy Ameritrade clients that shows legacy Ameritrade clients' learning, a new platform and become comfortable with it and sharing not only have they become comfortable with it they like it better than what they had before because of all we have around.

Speaker Change: Positives around what gives you confidence that you can just highlight the one or two as to why it's accelerating now in the first half of this year.

Speaker Change: What form so it's just a continuation of bringing the ameritrade clients.

Speaker Change: Into schwab and giving them the service the breadth of our offering that we've given to all our schwab clients and we've seen a real acceleration again as we would've expected in the way of Ameritrade clients or are engaging.

Speaker Change: Removed from the final Ameritrade integration, that's us deepening relationships with our legacy Ameritrade clients that shows legacy Ameritrade clients' learning, a new platform and become comfortable with it and sharing not only have they become comfortable with it that they like it better than what they had before because of all we have around.

Speaker Change: He looked at most of last year.

Speaker Change: Ameritrade retail clients legacy retail clients were roughly flat in terms of the M&A contribution and as we move towards the end of the year and moved away from the integration that inflected and it inflect it even more so in the first quarter, where we saw really robust and in a growth are not quite at the 5% level plus level that we see from.

Speaker Change: The platform. So it's just a continuation of bringing the ameritrade clients into schwab and giving them. The service the breadth of our offering that we have given all our schwab clients and we've seen a real acceleration again, as we would've expected and the way ameritrade clients or are engaging.

Speaker Change: Schwab retail clients, but they got roughly halfway there and that's a that's terrific progress and we're excited to see that and excited to see the impact we're having in how much they're loving being on our platform.

Speaker Change: The the retail Ameritrade clients was the place where we saw the greatest growth and retail client promoter scores at Schwab. So I think we're doing well there and that's part of the story in terms of the second thing I'd point to is the environment on balance is generally beneficial to net new asset growth, we have seen both at Schwab and in particular.

Speaker Change: If you looked at most of last year.

Speaker Change: Ameritrade retail clients legacy retail clients were roughly flat in terms of the M&A contribution and as we move towards the end of the year and moved away from the integration that inflected and it inflect it even more so in the first quarter, where we saw really robust M&A growth are not quite at the 5% level plus level that we see from.

Speaker Change: At Ameritrade, among our retail clients that volatility brings M&A and let me put into perspective, why that may or may have happened, particularly at ameritrade at Ameritrade are the our share of wallet remains with legacy Ameritrade clients still at around 30% at Schwab, It's it's well into the 50.

Speaker Change: Our schwab retail clients, but they've got roughly halfway there and that's a that's terrific progress and we're excited to see that and excited to see that the impact we're having in how much they're loving our being on our platform are the the retail ameritrade clients was the place where we saw the greatest growth and retail client promoter scores at Schwab.

Per cent range and so those clients have money elsewhere, and when markets become more volatile and they want to be more active in markets, they're bringing money into schwab and what's great about that is we have such a big opportunity with ameritrade clients to broaden the way we serve them to capture a greater share of their wallet and to be there not just for their trading assets.

Speaker Change: I think we're doing well there and that's part of the story in terms of the second thing I'd point to is the environment on balance is generally beneficial to net new asset growth. We have seen both at Schwab and in particular at Ameritrade, among our retail clients that volatility brings M&A and let me put into <unk>.

Speaker Change: But to be there for their whole financial life and that's one of the things I'm most excited about.

Speaker Change: I'll just end by commenting on advisor services that you know we saw robust growth throughout the year and an acceleration of growth in advisor services throughout the year and into the year and we just saw a continuation of that in the first quarter. It's in a really solid position. It grew I believe 19% year over year in terms of net new assets versus the first quarter of last year.

Speaker Change: Spec of why that May or may have happened, particularly at our share of wallet remains with legacy ameritrade clients still at around 30% at Schwab, It's it's well into a 50 plus percent range and so those clients have money elsewhere and when markets become more volatile and they want to be more active in markets, they're bringing money into schwab.

Speaker Change: It's just a continued solid growth story in advisor services, but the real uptick here was in retail as we move further away from the integration and continue to delight, our ameritrade clients as evidenced by their growing levels of satisfaction at Schwab.

Speaker Change: And what's great about that is we have such a big opportunity with ameritrade clients to broaden the way we serve them to capture a greater share of their wallet and to be there not just for their trading.

Speaker Change: Assets, but to be there for their whole financial life and that's one of the things I'm. Most excited about and I'll just end by commenting on advisor services that you know we saw robust growth throughout the year and an acceleration of growth in advisor services throughout the year and into the year and we just saw a continuation of position. It grew I believe 19% year over year.

Speaker Change: Thank you. Our next question comes from Ken Worthington with J P. Morgan. Your line is open hi, good morning. Thanks for taking the question can we talk about the build out that you mentioned in your prepared remarks on the branch network and the advisor base I think you've kind of indicated both this.

Speaker Change: In terms of net new assets versus the first quarter of last year. It's just a continued solid growth story in advisor services, but the real up check here was in retail as we move further away from the integration and continue to delight, our ameritrade clients as evidenced by their growing levels of satisfaction at Schwab.

Speaker Change: Priorities.

Speaker Change: Sort of numbers are we talking about in terms of additions expected. This here and what level do you expect to end the branch network and the advisor base by year end and ultimately how important is this adviser base in terms of capturing the opportunity that you see for yourself in the wealth Advisory services.

Speaker Change: Thank you. Our next question comes from Ken Worthington with J P. Morgan Your line is open.

Speaker Change: And your new alternative asset platform.

Ken Worthington: Hi, good morning, Thanks for taking the question.

Speaker Change: Thanks for the question Ken I. The branch network is critical to the success of our firm and an important part of our value proposition and what distinguishes distinguishes us as a firm we know that when we have a dedicated one to one relationship with a client and an.

Ken Worthington: Talk about the build out that you mentioned in your prepared remarks on the branch network and the advisor base I think you've kind of indicated both this priorities what sort of numbers are we talking about in terms of additions expected this year and what level do you expect to end the branch network and the advisor base by year end.

Speaker Change: It goes up appreciably.

Speaker Change: Satisfaction goes up and their engagement in other solutions outside of just pure investing increases they become bigger users of our wealth solutions, and our and our and our bank capabilities. So we believe that one to one relationship is important and then importantly, it's in.

Ken Worthington: And ultimately how important is this adviser base in terms of capturing the opportunity that you see for yourself in the wealth advisory services and their new alternative asset platform.

Ken Worthington: So the question can the branch network is critical to the success of our firm and an important part of our value proposition and what distinguishes distinguishes us as a firm we know that when we have a dedicated one to one relationship with a client M&A goes up appreciably.

Speaker Change: It's critical to helping our clients achieve success in us, helping helping us achieve our mission.

Speaker Change: We are in the business of championing, our clients' financial goals and doing everything we can to help them get to where they want to be in their financial life in that one to one relationship is so valuable we expect to open up around 16, new branches. This year. That's a that's a large number of new branches for us I think the most we've opened in.

Ken Worthington: Client satisfaction goes up.

Ken Worthington: And therein.

Ken Worthington: Engagement in other solutions outside of just pure investing increases they become bigger users of our wealth solutions, and our and our and our bank capabilities. So we believe that one to one relationship is important.

Speaker Change: In many years and and that's a reflection of the importance of the role the migration of well to different parts of the country, where we think we have an opportunity to to add more branches. The repositioning of some of our branches in some areas where money.

Ken Worthington: And then importantly, it's in.

Ken Worthington: It's critical to helping our clients achieve success and us helping helping us achieve our mission. We are in the business of championing, our clients' financial goals and doing everything we can to help them get to where they want to be in their financial life that one one.

Speaker Change: Money has moved in.

Speaker Change: In terms of where it's located within certain states and we want to be there for clients.

Speaker Change: And and so we expect to grow roughly 250, new financial and wealth consultants during the year and we believe that will have a meaningful impact on our ability over the long term.

Ken Worthington: So valuable.

Ken Worthington: Okay.

Ken Worthington: And up around 16, new branches this year.

Speaker Change: To grow net new assets and it's not this is not just a 2025 store you'll continue to see us invest in this in 26 and 27, because we think relationships are critical to our clients' success and critical to supporting our 5% to 7% organic growth rate.

Ken Worthington: A large number of new branches for us I think the most we've opened and in many years and that's a reflection of the importance of the role the migration of well to different parts of the country, where we think we have an opportunity to to add more branches. The repositioning of some of our branches in some areas where money has moved.

Bill Katz: Thank you. Our next question comes from Bill Katz of TD Cowen Your line is open.

Ken Worthington: In terms of where it's located within certain states and we want to be there for clients.

Bill Katz: Okay. Thank you very much for taking the question. Good morning, everybody I just wanted to maybe take a step back now that youre getting much closer in terms of normalizing the balance sheet in terms of paying down some of the higher cost deposits seems like client cash sorting has peaked for the cycle and your growth is accelerating and you ended the quarter slightly north of your cap rate.

Ken Worthington: And and so we expect to grow roughly 250, new financial and wealth consultants during the year and we believe that will have a meaningful impact on our ability over the long term to grow net new assets and it's not this is not just a 2025 store you'll continue to invest in this in 'twenty six.

Bill Katz: So it's sort of all begs the question of how are you thinking about balance sheet growth into the second half of this year, maybe 2026 with the sort of is it time to start remixing, the earning assets into more of a loan focus in terms of security based lending or residential mortgages and does that sort of free up a more consistent.

Ken Worthington: 27, because we think relationships are critical to our clients' success and critical to supporting our 5% to 7% organic growth rate.

Speaker Change: Thank you. Our next question comes from Bill Katz with TD Cowen Your line is open.

Speaker Change: Capital return story as we look at it thank you.

Bill Katz: Okay. Thank you very much for taking the question and good morning, everybody as far as to say take a step back now they're getting much closer in terms of normalizing the balance sheet in terms of paying down some of the higher cost deposits seems like client cash sorting has peaked for the cycle and your growth is accelerating and you ended the quarter slightly north of your capital ratio.

Bill Katz: Hi, Bill. Thank you for the question I'm sorry.

Bill Katz: As you highlight as we think about the the balance sheet. This year, yes, our focus continues to be managing a balance sheet in a way that can meet our client needs. While at the same time driving some of those broader objectives of bringing down the supplemental borrowings and we feel very confident about the continued progress that we'll make over.

Bill Katz: So it's sort of all begs the question of how are you thinking about balance sheet growth into the second half of this year or maybe 2026 with the sort of is it puts us into more of a loan focus in terms of security based lending or residential mortgages and does that sort of free up a more consistent capital return story as we look at it. Thank you.

Bill Katz: The course of the year of course, the or focus on supporting clients and and their engagement with US you know we've seen a good take up in lending certainly in the bank in our power product we.

Bill Katz: We talked about the margin growth recently as well and of course that will vary based on the market dynamics.

Bill Katz: Hi, Bill. Thank you for the question. So as you highlight is when you think about the balance sheet. This year, yes, our focus continues to be managing our balance sheet in a way that can meet our client needs. While at the same time driving some of those broader objectives of bringing down the supplemental borrowings and.

Bill Katz: If you are heading for a lower rate environment. It's possible you could see more growth in the mortgage portfolio, we haven't seen as much there, but we're going to continue to manage the balance sheet in a way to support that that lending activity and of course over time as we pay down the supplemental borrowings are we.

Bill Katz: We feel very confident about the continued progress that we'll make over the course of the year of course, the or focus on supporting clients and their engagement with us.

Bill Katz: Have a securities portfolio that we will begin to roll in and reinvest and of course, the the yield on that portfolio today is sub 2% and sell at least based on where the rates are today that would be accretive. So all those things continue to point to good earnings growth and the organic growth of capital.

Bill Katz: We've seen a good take up in lending certainly in the bank in our power products.

Bill Katz: We talked about the margin rose.

Bill Katz: We see as well and of course that will vary based on the market dynamics are.

Bill Katz: And that's why when we talk about capital in that framework, we're confident in returning capital whether it's through dividends of course, we have an important decision this quarter around the preferred security and whether we call that and then of course to be able to Opportunistically return capital in the form of buybacks as well.

Bill Katz: People are heading for a lower rate environment, it's possible you could see a.

Bill Katz: More growth and in the mortgage portfolio, we haven't seen as much there, but we're going to continue to manage the balance sheet in a way to support that that lending activity and of course over time as we pay down the supplemental borrowings.

Bill Katz: So it's all part of the set of considerations and again, we're going to continue to support that loan growth and in those client needs.

Bill Katz: We have a securities portfolio that we will begin to roll in and reinvest and of course.

Bill Katz: The yield on that portfolio today is sub 2% and sell at least based on where the rates are today that would be accretive. So all those things continue to point to good earnings growth and the organic growth of capital.

Speaker Change: We're going to insert a question from the console. This one comes from Michael Cyprus with Morgan Stanley a question for Mike around risk exposure can you talk a little bit about how the firm manages exposure in a more volatile environment, perhaps what steps, you're taking or on the balance sheet liquidity management client exposures et cetera.

Speaker Change: Thank you so around risk exposures, we feel really good about how we're managing in this environment, we continue to support clients and their great engagement and what's important is the capabilities that we've enhanced prior to this environment. You've heard me talk a lot about the balance sheet and the.

Bill Katz: So it's all part of the set of considerations and again, we're going to continue to support that loan growth and in those client needs.

Speaker Change: These around the balance sheet. It's so important that we do that work in advance of markets that become more volatile and you think about those wished skypes liquidity, we've talked about funding diversification that we now have both at the bank and the nonbank in capital in terms of the strength of capital we're growing that.

Speaker Change: We're going to insert a question from the console. This one comes from Michael Cyprus with Morgan Stanley a question for Mike around risk exposure can you talk a little bit about how the firm manages explode steps, we're taking around the balance sheet liquidity management client exposures et cetera.

Speaker Change: Ganic lead through strong earnings, but importantly to the impact of interest rates on the investment portfolio and the variability that could trade in the capital ratio keep in mind that our our securities portfolio is much more weighted now towards H T M versus a SaaS and what we do have an.

Speaker Change: So around risk exposures, we feel really good about how we're manpower clients and their great engagement and what's important is the capabilities that we've enhanced prior to this environment. You've heard me talk a lot about the balance sheet and the capabilities around the balance sheet. It's so important that we do that work in advance of.

Speaker Change: Available for sale securities or short dated around two years, so even shocks and interest rates are at that balance sheet remains very resilient and of course, an interest rate risk as well we've enhanced some of our tools are using simple interest rate swaps to help us reduce the sense.

Speaker Change: Markets that become more volatile and you think about those wish stripes liquidity, we've talked about funding diversification that we now have both at the bank and the nonbank.

Speaker Change: In capital in terms of the strength of capital, we're growing that organically through strong earnings, but importantly to the impact of interest rates on the investment portfolio and the variability that could trade in the capital ratio.

Speaker Change: <unk> to lower rates, so enhanced capabilities really helping us manage the balance sheet in a more efficient way and certainly protecting that safety and soundness in times of volatile periods.

Speaker Change: Keep in mind that our our securities portfolio is much more weighted now.

Speaker Change: It's H T M versus a SaaS and what we do have an available for sale securities or short dated around two years. So even shocks in interest rates that balance sheet remains very resilient and of course, an interest rate risk as well, we've enhanced some of our tools using sim.

Speaker Change: You know in terms of our a broader exposure.

Speaker Change: We're not exposed to meaningful credit risk I do want to touch on credit as well, where we do lend it is secured and our clients have strong credit profiles. For example in real estate, our clients have very high FICO scores and they have high equity levels in those positions to.

Speaker Change: Our interest rate swaps to help us reduce the sensitivity to lower rates, so enhance capabilities really helping us Manny.

Speaker Change: In other areas such as secured lending we have high visibility into the securities. They maintained but that so overall, we remain very well disciplined and well positioned.

Speaker Change: The balance sheet in a more efficient way and certainly protect I think that safety and soundness in times of volatile periods.

Speaker Change: Yeah.

Operator: Thank you. Our next question comes from Kyle Voigt with K B W.

Speaker Change: In terms of our a broader exposure you know, we're not exposed to meaningful credit risk I do want to touch on credit as well, where we do lend it is secured and our clients have strong credit profiles. For example in real estate, our clients have very high FICO scores and they have high equity levels in those positions too.

Speaker Change: Good thing.

Kyle Voigt: Hi, good morning, everyone and thanks for taking my question I, just wanted to dig in a bit more to your alternative investments platform. You noted last week that the platform is now available to all retail clients with more than $5 million in household as at the trough, which would put them in a qualified purchaser bucket.

Speaker Change: In other areas such as secured lending we have high visibility into the securities maintained but that so overall, we remain very well disciplined and well positioned.

Kyle Voigt: There are also a range of alternative products that are available to accredited investors as well I just wanted to get some sense as to how many industrial products are being offered on the platform today how are you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Kyle Voigt with K VW. Your line is open.

Kyle Voigt: Get that to grow over time that number of products to grow over time.

And whether you'd expect to be able to offer alternative asset products to accredited investors as well over time.

Kyle Voigt: Hi, good morning, everyone and thanks for taking my question.

Speaker Change: Wanted to dig in a bit more.

Kyle Voigt: Yeah. Thanks, Thanks for the questions, we want to meet clients no varied needs for alternatives in a range of ways and we have seen more innovation in the industry around making alternatives available to clients of any size and you've seen combinations of public and private firms putting together products that.

Speaker Change: To your alternative investments platform you noted last week that the platform is now available to all retail clients with more than $5 million in household as at the trough.

Speaker Change: Put them in a qualified purchaser bucket.

Speaker Change: However, there are also a range of alternative products that are available to accredited investors as well.

Kyle Voigt: The the trade like in like an exchange traded fund and so I do I do think you'll see the ability for all investors to participate in the in the theme around alternatives are more recent effort around alternatives has been geared towards meeting the demand that we see among higher network clients and among our advisor clients to increasingly add alternatives.

Speaker Change: Wanted to get some sense as to how many industrial products are being offered on the platform today.

Speaker Change: Do you expect that to grow over time that number of products to grow over time and.

Speaker Change: And whether you would expect to be able to offer alternative asset products to accredited investors as well over time.

Speaker Change: Yeah. Thanks, Thanks for the questions, we want clients no varied needs for alternatives in a range of ways and we have seen more innovation in the industry around making alternatives available to clients of any size and you've seen combinations of public and private firms putting together products that.

Kyle Voigt: To their portfolio and we have made that available to our <unk>.

Kyle Voigt: 5 million plus clients backed by a team of alternatives experts that have expertise in both the asset class and the particular funds and can help clients decide whether it's it's right for them, but we are firms started to drive accessibility to investing in our country and to make it something that anyone regardless of what they are.

Speaker Change: Ah the trade like in like an exchange traded fund and so I do I do think you'll see the ability for all investors to participate in that and the theme around alternatives are more recent effort around alternatives has been geared towards meeting the demand that we see among higher net worth clients and among our advisor clients to increasingly add alternatives.

Kyle Voigt: Wealth is could invest in and I think we've been very successful at that and I expect as these products innovate and launch.

Kyle Voigt: Peel to to investors of all asset sizes, we're gonna be we're gonna be at the front of the line, helping that are helping facilitate that.

Speaker Change: To their portfolio and we have made that available to our five.

Speaker Change: <unk> 5 million plus clients backed by a team of alternatives experts that have expertise in both the asset class and the particular funds and can help clients decide whether it's it's right for them, but we are firms started to drive accessibility to investing in our country and to make it something that anyone regardless of what the.

Speaker Change: Thank you. Our next question comes from Devin Ryan with citizens Bank. Your line is open.

Speaker Change: Thanks, Good morning, Rick Good morning, Mike.

Speaker Change: Would love to just unpack the NIM commentary a bit on the year I. Appreciate there's a lot of moving parts here and market expectations are kind of moving day to day, but just curious and it does it imply SaaS or supplemental pay down of transactional cash bullets here with volatility.

Speaker Change: Wealth is could invest in and I think we've been very successful at that and I expect as these products innovate and launch that appeal to a tier two investors of all asset sizes. We're gonna be we're gonna be at the front of the line, helping that are helping facilitate that.

Speaker Change: Changes in margin utilization it just seemed like the balance sheet is actually performing a bit better than we modeled at least at the beginning of the year.

Speaker Change: So it would just be great just get some thoughts on that and then just also just more broadly if fed funds due dropped faster than maybe the market baking a pain in the year some of the other areas in the model that might flex a bit. Thank you.

Speaker Change: Thank you. Our next question comes from Devin Ryan with citizens Bank. Your line is open.

Speaker Change: Thanks, Good morning, Rick Good morning, Mike.

Speaker Change: Sure Hey, Thanks for the question regarding NIM, we still feel good about the ability to expand them and of course, the interest rate environment is evolving as we as I mentioned in my prepared remarks, when we came into the year and our financial scenario.

Speaker Change: Would love to just unpack the NIM commentary a bit on the year I. Appreciate there's market expectations are kind of moving day to day, but just curious and it does it imply SaaS or supplemental pay down of transactional cash builds here with volatility doesn't reflect changes in margin utilization. It just seemed like the balance sheet is actually performing a bit better.

Speaker Change: We assumed one cut in May and now the market is you know as much as four cuts over the course of the year. So when you take some of the puts and takes here you're right.

Speaker Change: The new model at least at the beginning of the year. So.

Speaker Change: So it would just be great just get some thoughts on that and then just also just more broadly.

Speaker Change: They get paid in the year some of the other areas in the model that might flex a bit. Thank you.

Speaker Change: The pickup in cash are we performed a little bit better than cash that's enabled a.

Speaker Change: Sure Hey, Thanks for the question regarding NIM, we still feel good about the ability to extend them and of course, he interest rate environment.

Speaker Change: A faster reduction of supplemental borrowings of course that could continue over the course of the year remains to be seen how the environment evolves.

Speaker Change: Is is evolving as we as I mentioned in my prepared remarks, when we came into the year and our financial scenario. We assumed one cut in May and now the market is you know as much as four cuts over the course of the year.

Speaker Change: So that's a tailwind of course the headwind is the fact that we are still asset sensitive and therefore in a lower rate environment and some of those floating rate assets do reset lower but are.

Speaker Change: Putting that all together, we still feel very good about the ability to expand net interest margin over the course of the year and importantly, you know continue to grow learnings and we're growing them organically and building capital.

Speaker Change: So when you take some of the puts and takes here you're right. The pick up in cash are we performed a little bit better than cash that's enabled.

Speaker Change: A faster of course that could continue over the course it remains to be seen how the environment evolves.

Speaker Change: Thank you. Our next question comes from Ben Dish with Barclays. Your line is open.

Speaker Change: Ben Your line is open you may need to meet yourself apologies I was on mute good morning, and thanks for taking the question I was wondering Mike if you could give a little bit more color on the cadence of Opex growth over the course of the year. It sounds like there's no change at this point to your full year.

Speaker Change: Putting that altogether, we still feel very good about the ability to expand net interest margin over the course of the year and importantly, you know continue to grow learnings.

Speaker Change: But Q1 came in a little faster than expected. So how do we think about sort of the cadence of spend given the investments, you're making or the advisor network.

Speaker Change: <unk> them organically and building capital.

Speaker Change: And opening up more branches and what does that sort of imply for the exit rate I would assume next year is probably another investment and growth oriented year, but operating leverage has always been part of the financial formula. So any color you can give there would be helpful. Thank you.

Ben Dish: Thank you. Our next question comes from Ben Dish with Barclays. Your line is open.

Ben Dish: Ben Your line is open you may need to meet yourself apologies I was on mute good morning, and thanks for taking the question I was wondering Mike if you could give a little bit more color on the cadence of Opex growth over the course of the year. It sounds like there's no change at this point to your full year.

Speaker Change: Yeah, So I talked about the I mean first just that full year earnings per share range, which we feel very good about that range and in fact, the upper end of that range.

Speaker Change: Think about expenses, yes, we do see an uptick Q1I mean that is typical seasonality.

Ben Dish: But Q1 came in a little faster than expected. So how do we think about sort of the cadence of spend given the investments youre, making are the adviser network.

Speaker Change: Keep in mind that some of that cost also is a higher volumes and higher volume related costs, but that is a that is contemplated ah.

Ben Dish: And opening up more branches and what does that sort of imply for the exit rate I would assume next year is probably another investment and growth oriented year, but operating leverage has always been part of the financial formula. So any color you can give there would be helpful. Thank you.

Speaker Change: This kind of spend in the first quarter is contemplated in that full year range that we provided a four and a half to five 5% of expense growth and and again, we feel good about this expense growth even in this environment because we're investing in growth. We're investing in capabilities are we're going to do more for <unk>.

Ben Dish: Yeah, So I talked about the I mean first just that full year earnings per share range, which we feel very good about it.

Ben Dish: Of that range and in fact, the upper end of that range.

Ben Dish: When you think about expenses, yes, we do see an uptick Q1I mean that is typical seasonality I keep in mind that some of that cost also is a higher volumes and higher volume related costs, but that is a that is contemplated ah this kind of spend in the first quarter is.

Speaker Change: Well at the same time, we're investing in efficiency and that is going to ensure that we can maintain that low cost to serve and be able to continue to make progress in that area as well.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you. Our next question comes from Ben Rubin with UBS. Your line is open.

Ben Dish: <unk> in that full year range that we provided a four and a half to five 5% of expense growth and again, we feel good about this expense growth even in this environment because we're thinking about we're investing in capabilities are we're going to do more for clients while at the same time.

Ben Rubin: Hi, guys. Another question here for Mike on the balance sheet, you pay down nearly 30 billion of supplemental funding over the past two quarters alone, which was encouraging to see but in your prepared remarks, you spoke to achieving more funding diversity over the long term you know between sweep deposits other products like brokerage Cds.

Ben Dish: We're investing in efficiency and that's getting.

Ben Rubin: As well as potential third party arrangements. So just curious how do you view the optimal mix across your different funding sources over the long term. Thanks.

Ben Dish: Sure that we can maintain that low cost to serve and be able to continue to make progress in that area as well.

Mike: Hey, Thanks for the question Ben.

Ben Rubin: Funding diversity.

Ben Dish: Thank you.

Speaker Change: Vacation to me is just a basic capability that we.

Speaker Change: Thank you. Our next question comes from Banco UBS. Your line is open.

Ben Rubin: He.

Ben Rubin: Want to maintain but at the same time.

Ben Rubin: On that funding diversification is gonna be done in a way that is efficient and achieved the financial outcomes we want.

Speaker Change: Hi, guys. Another question here for Mike on the balance sheet.

Speaker Change: Pay down nearly $30 billion in supplemental funding over the past two quarters alone, which was encouraging to see it in your prepared remarks, you spoke to achieving more funding diversity over the long term you know between sweep deposits other products like brokered Cds as well as potential third party arrangements. So just curious how do you view the optimal mix across.

Ben Rubin: Really cheap.

Ben Rubin: Starting with the bank yes.

Ben Rubin: The progress in paying down that bank supplemental funding.

Ben Rubin: And we're going to continue to make progress.

Ben Rubin: Yeah, I think having some mix of.

Ben Rubin: Secured and unsecured borrowings are in.

Speaker Change: They're different funding sources over the long term thanks.

Ben Rubin: In the bank makes sense, how far do you bring that down.

Speaker Change: Hey, Thanks for the question Ben.

Ben Rubin: Is it single digit billions or something in the teens.

Speaker Change: Funding diversification to me is just a basic capability that we want.

Ben Rubin: You know I think those levels are makes sense and we're going to continue to progress against that I think in the non bank. This is where you can have a mix of funding sources as well, where we have obviously securities and financial financing does is a natural extension of that activity.

Speaker Change: Want to maintain but at the same time that funding diversification is going to be done in a way that is efficient and achieved the financial outcomes. We wanted to achieve.

Speaker Change: Starting with the bank, yes, good progress in paying down that bank supplemental funding.

Speaker Change: We're going to continue to make progress there I think having some mix of.

Ben Rubin: So that diversification creates efficiency and creates flexibility to meet the ongoing client need. So that's how I think about that our approach to funding diversification.

Secured and unsecured borrowings.

Speaker Change: How far do you bring that down is it single digit billions or something in the teens are like that.

Ben Rubin: Patient and again, we're going to continue to progress the pay down of that bank supplemental funding over the course of the year.

Speaker Change: Those levels are makes sense and we're going to continue to progress against that I think have been non bank. This is where you can have a major funding sources as well, where we have obviously security and finance financing does is a natural extension of that activity so that diversification creates a.

Speaker Change: Thank you. Our next question comes from Mike Brown with Wells Fargo Securities. Your line is open.

Mike Brown: Hi, good morning, Thanks for taking my question.

Speaker Change: So schweppes historic historically taken a cautious approach to the crypto ecosystem compared to some of your peers.

Speaker Change: Patiency and creates flexibility to meet the ongoing by a neat. So that's how I think about that our approach to funding.

Speaker Change: Now that you have a new head of digital assets I just wanted to check on him.

Speaker Change: Diversification and again, we're going to continue to progress the pay down of that bank supplemental funding over the course of the year.

Speaker Change: You have an update on how you're approaching the Spanish and maybe how you foresee adding capabilities and offerings. There. Thank you.

Mike Brown: Thank you. Our next question comes from Mike Brown with Wells Fargo Securities. Your line is open.

Mike Brown: Thanks for the question Mike can.

Mike Brown: First thing I'd say is what we are doing well in crypto already today in and doing well to me means a few things first we're seeing robust engagement with the existing crypto Etfs. It can be bought in the marketplace close end funds, who would make available on our platform and bitcoin futures, which are also available on our platform. So we.

Mike Brown: Hi, good morning, Thanks for taking my question.

Speaker Change: So schweppes historic historically taken a cautious approach.

Mike Brown: Yeah.

Mike Brown: Some of your peers.

Speaker Change: Now that you have a new head of digital assets I just wanted to check on it.

Speaker Change: If you have an update on how you're approaching the finish it maybe how do you foresee adding capabilities and offerings there.

Mike Brown: We do think we are a great destination for investors interested in crypto and we've seen that in our in the level of new account growth and the level of engagement and our crypto site, where we saw a 400% increase in traffic to it recently, 70% of whom were where prospects.

Mike Brown: Thanks for the question Mike.

Mike Brown: First thing I'd say is we are doing well in crypto already today in and doing well to me means a few things first we're seeing mobile engagement with the existing crypto Etfs. It can be bought in the market place close end funds that we make available on our platform.

Mike Brown: And what that would not not clients and what that says to us is that as <unk>.

Mike Brown: People in the industry are thinking about crypto they'd love to work with a trusted brand and a firm that can bring them a lot of capabilities and and where that firm. So as we rollout capable of more and more new capabilities. We're confident we will be a great destination for our investors interested in crypto our expectation is that with the change.

Mike Brown: Corn futures are also available on our part.

Mike Brown: We are a great destination for investors interested in crypto and we've seen that in our in the level of new account growth and the level of engagement and our crypto site, where we saw.

Mike Brown: 400% increase in traffic.

Mike Brown: Regulatory environment, we are hopeful and unlikely to be able to watch direct spot crypto and our goal is to do that are in the next 12 months in and we're on we're on a great path to be able to do that so works out where we're excited about meeting our clients' crypto needs. We believe we are doing a lot of that today, but will also.

Mike Brown: 70% of whom were where prospects.

Mike Brown: We're not not clients and what that says to us is that as <unk>.

Mike Brown: People in the industry are thinking about crypto they'd love to work with a trusted brand and a firm that can be.

Mike Brown: Abilities and and we're at the firm so as we rollout more and more new capabilities. We're confident we will be a great destination for our investors interested in crypto our expectation with the changing regulatory environment, we are hopeful in and likely to be able to launch direct spot.

Mike Brown: So add a.

Mike Brown: Capabilities in the near term.

Speaker Change: Alright, operator, it looks like I think we'll have time for one more question for wrap up.

Mike Brown: Thank you.

Mike Brown: My last question comes from David Smith with Truth set company.

Mike Brown: And our goal is to do that.

Speaker Change: Your line is open.

Mike Brown: The next 12 months and we're on we're on a great path to be able to do that so works out where we're excited about meeting our clients' crypto needs. We believe we are doing a lot of that today, but will also add.

Speaker Change: Good morning, you you've got legacy TD customers to bring in a day is now about half the pace of legacy Schwab. When you know they just kind of been treading water flat and in a.

Mike Brown: Capabilities in the near term.

Speaker Change: About a year ago do you think you can get the other half of the gap closed over the next year or does it get incrementally tougher from here as the gap continues to close and what are you what are the big initiatives that you have today that to keep that that gap narrowing.

Mike Brown: Alright, operator, it looks like I think with time for one more question.

Mike Brown: Okay.

Speaker Change: Our last question will come from simply terrific company.

Speaker Change: Thanks for the question I fully expect that we'll close the entire gap and at some point, possibly even see ameritrade clients grow at a level above the schwab right, because we're consolidating their assets and growing our share of wallet with ameritrade clients.

Mike Brown: Your line is open.

Mike Brown: Morning.

Mike Brown: You've got Lucky.

Mike Brown: Okay.

Mike Brown: About half the pace of legacy Schwab when.

Mike Brown: Hum.

Mike Brown: The other half of the gap closed over the next year or does it get incrementally tougher from here as they get to close and what are you. What are the big initiatives that you have data to keep that that gap narrowing.

Speaker Change: What we're seeing from Ameritrade clients is that every quarter they spend with us their satisfaction grows their level of engagement grows their knowledge and understanding of the platform grows and as a result, they're net new assets have been growing.

Mike Brown: Thanks for the question I fully expect that we'll close the entire gap and at some point, possibly even see ameritrade clients grow at a level above the schwab right, because we're consolidating our assets and growing our share of wallet with ameritrade clients.

Speaker Change: Either the way you know the analogy that I like to use for where we are with Ameritrade clients is it's like if you had been driving a b M. W. Your whole life and one day you went down in your garage and there was a Mercedes there that first day, you would feel a bit of confusion you wouldn't know how to turn on the radio if it was raining you'd have to figure out how to get the wipers on.

Mike Brown: What we're seeing from Ameritrade branches that every quarter they spend with us their satisfaction grows their level of engagement gross their knowledge and understanding of the platform grows and as a result, they're net new money.

Speaker Change: And you'd have a little bit of angst about that transition about the car being in there and then of course over time, you get really comfortable with the with the new car and realize how much it can how much. It can do for you in and that's where we are with our clients they've made the transition theyre getting more and more comfortable with our platform. We are building relationships with them and we are.

Mike Brown: Been growing.

Mike Brown: Either the way you know the analogy that I like to use for where we are with Ameritrade clients is it's like if you had been driving a b M. W. Your whole life and one day you went down into your garage and there was a Mercedes there a confusion you wouldn't know how to turn on the radio if it was raining you'd have to figure out how to get the wipers on and you'd have a little bit of angst.

Speaker Change: We're winning their hearts and and their wallets and supporting them in their financial journey in terms of what actions. We're taking you know it starts with the relationship building.

Mike Brown: About that.

Speaker Change: And that's why we're leaning into our financial consultant growth.

Mike Brown: That transition about the car being in there and then of course over time, you get really comfortable with the with the new car and realize how much it can how much. It can do for you in and that's where we are with our clients they've made the transition theyre getting more and more comfortable with our platform. We are building relationships with them and we are winning their hearts and.

Speaker Change: It starts with having the best trading platform in the industry and then surrounding that with a set of educational resources and training resources that have never been stronger than what we have today because of the combination of schwab and ameritrade and it and it ends with having a thousand trader professionals at Schwab that wake up every.

Mike Brown: And their wallets and supporting them in their financial journey in terms of what actions. We're taking you know it starts with relationship building.

Speaker Change: Day with the sole purpose and mission of supporting our more active traders and those active traders really value being able to work off the best platform in the industry, but then when they want to call someone who can talk about a trade or how to think about something or how to do something they love having a thousand people liked them at schwab to pick up the phones and want to help them. So I.

Mike Brown: And that's why we're leaning into our financial consultant growth. It starts with having the best trading platform in the industry and surrounding that with a set of educational resources and training resources that have never been stronger than what we have today because of the combination of schwab and ameritrade and it and it ends with having a.

Speaker Change: We're right, where we want to be on the right, where we expect it to be and right, where we want to be on the on the journey with a with ameritrade clients and I couldn't be more optimistic about our years ahead with them as we serve them support them and and and I expect consolidate their assets as schwab as they realize how much we can do for them.

Mike Brown: Thousand trader professionals at Schwab that wake up every day with the sole purpose and mission of supporting our more active traders and those active traders really value being able to work off the best platform in the industry, but then when they want to call someone who can talk about a trade or how to think about something or how to do something they love having a thousand.

Speaker Change: With that why don't I I know we're out of time. So thank you for your questions and all your engagement. This morning, and I want to leave you with just a few thoughts.

Mike Brown: People like them at Schwab that pick up the phones and want to help them. So I think we're right where we want to be on the right, where we expected to be in right, where we want to be on the on the journey with a with ameritrade clients and I couldn't be more optimistic about our years ahead with them as we serve them support them and and and I expect consolidate their assets with Schwab.

Speaker Change: We don't know exactly what's going to happen with policy or or how markets will react to developments in the near term all of those things are outside of our control, but what is in our control is maintaining our unwavering focus on serving our clients. We've been there for our clients during market ups and market downs for more than 50 years.

Rob: Rob as they realize how much we can do for them.

Rob: With that why don't I I know we're out of time. So thank you for your questions and all your engagement. This morning, and I want to leave you with just a few thoughts.

Speaker Change: Ours and they are turning to US now because we've earned their trust as a safe port in the storm.

Speaker Change: We look ahead, our priority and our focus remains on serving our clients in all markets and for the long term.

Rob: We don't know exactly what's going to happen with policy or or how markets will react to developments in the near term all of those things.

Speaker Change: We are in a position of strength today and with our through clients' eyes strategy as our guide we believe our future is even brighter. Thank you for joining and thank you for your time.

Rob: Yeah.

Rob: But what is in our control is maintaining our unwavering focus on serving our clients. We've been there for our clients during market ups and mark it down for more than 50 years and they are turning to US now because we've earned their trust and safe.

Rob: In the storm.

Rob: As we look ahead, our priority and our focus remains on serving our clients in all market environments and for the long term.

Rob: We are in a piece or through clients' eyes strategy as our guide we believe our future is even brighter.

Speaker Change: Fighter. Thank you for joining and thank you for your time.

Q1 2025 Charles Schwab Corp Earnings Call

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