Charles Schwab Corp. SCHW,
It moved on Monday to reassure investors that it has plenty of liquidity and does not need to sell any of its maturing securities at unrealized losses. Chief financial officer Peter Crawford said the business is performing “exceptionally well” and expects first-quarter revenue to rise 10% from a year earlier. The company has estimated cash flow of $100 billion and more than $8 billion in potential retail CD issuance a month. The company’s approach to managing its assets is different from traditional banks, he said. “As a reminder, our banks’ loan-to-deposit ratio is approximately 10% and almost all loans are over-collateralized by first-lien mortgages or securities. The remainder of our assets are either held in our available-for-sale (AFS) Portfolio, working capital in parent or broker-dealer subsidiaries, or invested in high-quality, liquid securities in our HTM portfolio. Focusing on HTM’s unrealized losses is flawed, as the company may need to sell assets before they mature. There is no need.” Second, given the unrealized losses among HTM securities, but not doing so for the loan portfolios of traditional banks, the analysis penalizes firms such as Schwab, which are actually higher quality, more liquid and more Have a transparent balance sheet,” he said.