The Charles Schwab (SCHW), mcap=$92000m

SCHW pitch:
– SCHW unfairly sold off following the SVB fallout.
– Market’s concerns are misplaced.
– SCHW is unlikely to be required to raise cheap equity for regulatory reasons.
– 81% of deposits are FDIC insured while the remaining 19% are easily covered by SCHW’s liquid securities portfolio. Depositors are unlikely to flee.
– SCHW does not have a negative TBV after adjusting for taxation on unrealized HTM losses and YTD gains.

SCHW valuation:

– Set to earn $4.5bn in an extreme scenario of a pure brokerage (all deposits flee). – Or $8bn a year in another extreme of deposit sorting stopping today.
– This compares to $94bn market cap.

Exp. gain: Not specified.

Full write-up (free guest account required):