January 22, 2025 | Premium Service | Earlier this week, The Charles Schwab Corp (SCHW) reported earnings and, once again, delivered the goods in term of increased AUM, revenue growth and managing the balance sheet. Yet SCHW remains unforgiven for the hiccup during COVID and continues to trail the thundering herd of large cap financials.
The ghost that haunts Schwab is that of Silicon Valley Bank. By no coincidence, the FDIC last week sued 17 former executives and directors of Silicon Valley Bank, alleging their gross negligence led to the collapse of the institution. As we noted previously, the SVB duration management from 2020 onward was recklessly negligent by any standard. The FDIC Receivership is seeking to recover damages for the third-largest bank failure in U.S. history, but the same mistakes in managing the balance sheet also nearly tipped over another large bank and damaged SCHW's standing with investors.
