Schwab funding concerns ‘significantly de-risked,’ says JPMorgan

JPMorgan analyst Kenneth Worthington says Charles Schwab shares again underperformed yesterday, largely due to the significant move in interest rates and less on the concerns that cash sorting would drive other more negative earnings side-effects. With the Federal Reserve’s establishment of the Bank Term Funding Program, short-term liquidity concerns, especially for Schwab as a forced seller of its securities portfolio, are "significantly de-risked if not outright eliminated for the next year," the analyst tells investors in a research note. The firm does not think Schwab will require access the BTFP facility, but says in the "extreme scenario" that the company does need to tap the facility, $200B will be available to Schwab at a fixed rate of 4.83%. JPMorgan keeps an Overweight rating on the shares, but notes there could be some level of regulatory overhang over the medium-term from incremental regulation resulting from recent bank failures.