2023-04-26 05:33:00 ET
Following the collapse of SVB Financial 's Silicon Valley Bank and Signature Bank last month, many investors were looking for other financial firms that could be vulnerable to deposit flight. One company under scrutiny was Charles Schwab (NYSE: SCHW) , which has seen its deposit base shrink over the past year.
One reason for this deposit decline was client cash sorting, where customers moved funds from their bank accounts into higher-yielding investments like savings accounts or money market funds. While Schwab doesn't face the same concentration risk as Silicon Valley Bank or Signature Bank, investor fears resulted in a steep sell-off that has the stock trading down 32% since the beginning of March.
Fears over Schwab's deposit flight were put to rest (for now) following its recent quarterly earnings release. The company took steps to ensure it has plenty of liquidity to withstand further deposit shrinkage. Here's how it did that, and what investors will want to watch for next from the broker.
For further details see:
Schwab Proves Resilient, Dispels Fears Over Outflows