8-KRegulation FDExhibits & Filings

SCHWAB CHARLES CORP 8-K Report, Regulation FD Disclosure (Feb 10, 2025)

Filed February 10, 2025For Securities:SCHWSCHW-PDSCHW-PJ

Summary

The Charles Schwab Corporation (SCHW) has announced a significant capital markets event through an 8-K filing on February 10, 2025. The core of the announcement is the commencement of a secondary offering of common stock by TD Group US Holdings LLC, an affiliate of The Toronto-Dominion Bank, signifying TD Group's complete exit from its investment in Schwab. Concurrently, Schwab has entered into a stock repurchase agreement to buy back $1.5 billion of its nonvoting common stock directly from the selling stockholder, executed at the offering price less underwriting discounts. This transaction is expected to close immediately after the offering is completed. The company has also provided preliminary estimates of the repurchase's impact on its capital ratios. Pro forma estimates indicate a slight decrease in both the Tier 1 Leverage Ratio (GAAP) from 9.9% to 9.5% and the Adjusted Tier 1 Leverage Ratio (non-GAAP) from 6.8% to 6.5% as of December 31, 2024, assuming the repurchase occurred on that date. Additionally, preliminary January 2025 metrics show robust growth in core net new assets, a healthy number of new brokerage accounts, and stable daily average trades. Client transactional sweep cash balances remain significant, while bank supplemental funding balances have been further reduced.

Key Highlights

  • 1TD Group US Holdings LLC is exiting its full investment in Schwab through a secondary offering of common stock.
  • 2Schwab has agreed to repurchase $1.5 billion of its nonvoting common stock from TD Group US Holdings LLC.
  • 3The repurchase is structured as a private transaction at the public offering price less underwriting discounts.
  • 4Preliminary pro forma estimates show a reduction in the Tier 1 Leverage Ratio from 9.9% to 9.5% and Adjusted Tier 1 Leverage Ratio from 6.8% to 6.5% due to the repurchase.
  • 5Preliminary January 2025 core net new assets increased approximately 75% year-over-year to $30 billion.
  • 6New brokerage accounts opened in January 2025 were approximately 430,000.
  • 7Client transactional sweep cash balances ended January 2025 at approximately $400 billion.

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