Topping the list of strongest US banks

Preparing for the worst-case scenario is just one part of the overall way people at Schwab work to make sure the company remains a strong place that clients can rely on. 

And it’s not just us making a bold declaration of durability. While we’d like to think you could take our word for it, there’s also a regulated test, or rather series of tests, to back up the claim. 

Recently, the Federal Reserve Bank released the results of their 2024 Annual Bank Stress Test and Schwab topped the Fed’s list of major US banks well positioned to weather economic stress.

It’s an annual exercise that helps large bank managers and regulators understand the biggest US bank’s financial strength and ability to absorb losses and withstand severe economic and market turmoil.

The real goal of the test is to help to ensure that banks have enough capital to absorb losses in a highly stressful scenario and evaluate how resilient they would be in continuing to serve households and businesses even in a recession.

To complete the test, banks run hypothetical, “what-if” scenarios to determine if they have sufficient capital to survive during periods of economic stress. This year’s exercise tested a spike in the jobless rate, severe market volatility, a severe crash in residential and commercial real estate prices, and sharp GDP declines.

Additionally, banks with more than $100 billion in assets, like Schwab, must also complete more rigorous supervisory stress testing called Comprehensive Capital Analysis and Review (CCAR).

You can read more about the Federal Reserve’s stress test process and 2024 Bank Stress Test Results here.

Similar to last year, Schwab performed extremely well with results reinforcing that we remain well positioned to serve our clients across a range of environments.  

Of the banks tested, Charles Schwab reported the highest capital levels under the test, posting a 25.2% capital ratio under that severe scenario. Schwab also came in as the bank with the lowest rate of loan losses.

Chief Financial Officer Peter Crawford said looking ahead, the firm’s priorities for managing capital remain unchanged: supporting profitable growth through-the-cycle, while also bolstering long-term stockholder value via our common dividend target and the opportunistic return of excess capital over time.