Just yesterday, we heard how Charles Schwab (NYSE:SCHW) didn’t expect to see many problems out of the recent troubles in the banking industry. Now, we see that JPMorgan is backing that assertion up by declaring that there’s not much risk of a bank run at Schwab. Investors responded mildly at best, sending Schwab shares up fractionally in Friday afternoon trading.
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JPMorgan analyst Ken Worthington revealed that, in fact, there was “virtually no risk from a bank-type run” at Schwab. Of course, there were other risks to consider. Worthington pointed out that increased regulations or extra rules could weigh heavily on Schwab. Particularly the notion that Schwab might have to report “…accumulated other comprehensive income on available for sale investments.” Schwab can currently exclude that kind of thing as it’s a category-3 bank, but if it had to, like a category-2 bank would, that might mean a shortfall in capital ratios.
Still, the idea that Schwab is well-insulated from a bank run is sound enough. After all, we just saw how Charles Schwab’s asset count exploded upward as depositors shifted their assets around. We even saw Schwab’s backup plan that would allow it to function even if all of its deposits were lost. Schwab may not have the risk of a bank run, but it does have other risks to consider. Though at this point, widespread, sweeping changes to the banking system seem like a long shot at best.
Overall, analyst consensus calls Schwab stock a Moderate Buy. Better yet, it comes with 56.88% upside potential thanks to its average price target of $83.40.
