By Andrew Welsch

Charles Schwab's second-quarter earnings topped Wall Street's estimates, and its revenue set a record. The financial services giant also increased its revenue guidance for 2026.

Schwab can thank its customers for that performance as they opened more accounts, added more funds to their accounts, and used more of the company's services.

The company posted adjusted earnings per share of $1.62, up from $1.14 for the same period a year ago. That beat Wall Street estimates of $1.56, according to estimates compiled by FactSet. Revenue came in at a record $7.1 billion for the quarter. Analysts had forecast revenue of $6.9 billion. Schwab reported $5.9 billion for the same period a year ago.

Shares of the company were up 0.6% at about 10:55 a.m. ET, in line with the benchmark S&P 500 index. The stock is up 7.9% over the past 12 months.

"We are continuing to attract new clients, deepen client relationships, lower our cost to serve, and reinvest in our growth," CEO Rick Wurster said during the company's earnings call on Tuesday.

Robust customer activity this year is translating into higher revenue expectations. The company said it anticipates full-year 2026 revenue to increase by 17.5% to 18.5% versus the previous year; that is up from Schwab's earlier projection of revenue growth of 14% to 15%, which was shared as part of its investor day in May.

Schwab is one of the nation's largest brokerage and wealth management companies. It reported strong asset-gathering figures for the second quarter, with core net new assets coming in at $120 billion. That is up from $74 billion for the same period a year ago. That increase came even though the second quarter includes tax-season headwinds: Clients typically pull money from accounts to pay tax bills in April.

Customers opened 1.4 million new brokerage accounts during the quarter, bringing total client accounts to 48 million. Customers traded more, too. Daily average trading volume, a brokerage industry metric, reached a record 11.9 million, Schwab said. That is up 57% year over year.

Customers also increased their use of margin, meaning they borrowed from the brokerage firm to buy stocks. Margin loan balances reached $165.1 billion at the end of the quarter, up 30% quarter over quarter, according to Schwab.

Although there's been an uptick in companies going public, including SpaceX's historic IPO, Wurster ascribed his company's asset-gathering to broad-based growth among its customers. The chief executive said stock ownership is rising, people are investing at earlier ages, and customers are seeking to consolidate assets with a single company -- trends that can benefit Schwab. "We are uniquely positioned at the center of the investing ecosystem to meet client needs in the channel of their choice and in the form they prefer," he said during the company's earnings call.

Schwab has been seeking to serve more customer needs beyond investing, such as by offering them loans and wealth management services. The company saw growth in these other offerings. For example, Schwab said bank loan balances rose 33% year over year to $67 billion.

The Westlake, Texas-based company serves both individual investors and registered investment advisors, providing the latter group with technology and custodial services. Schwab's total client assets increased 22% year over year to $13.08 trillion because of the company's asset gathering and market appreciation. The latter is also spurring some clients to use Schwab's pledged asset line offering, a line of credit that allows customers to borrow against their nonretirement assets. Schwab said pledged asset line balances reached $33.4 billion for the quarter, an increase of 59% from the same period a year ago.

Wurster attributed the growth to improvements Schwab made to the user experience, expediting a customer's ability to access a loan. "Many clients have growing wealth and concentrated positions.... but they don't want to sell the position," Wurster said. "A [pledged asset line] is a way they can get access to money and quickly."

Growth in lending is important for Schwab as the company earns a significant chunk of its revenue from net interest income, which is the difference between what Schwab earns on interest-bearing assets, such as loans, and what it pays out to customers in interest on its sources of funding, such as cash deposits. For the second quarter, Schwab posted net interest income of $3.4 billion. That is up from $2.8 billion for the same period last year.

Revenue from asset management and administration fees also rose, climbing 16% year over year to $1.8 billion. Trading revenue increased 28% to $1.2 billion.

Other banks and brokerage firms with large wealth management operations that have reported second-quarter earnings, such as Morgan Stanley, have also posted large increases in total client assets and strong asset-gathering numbers because of a bull market for stocks that has enticed individual investors to add funds to their brokerage accounts. Morgan Stanley's and Schwab's results bode well for brokerage firm Interactive Brokers, which is expected to report quarterly earnings after the market close on Tuesday.

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 21, 2026 11:20 ET (15:20 GMT)