Charles Schwab (NYSE: SCHW) has grappled with deposit outflows for the past couple of years, and its recent earnings didn't do much to quell investor concerns. The financial services titan reported earnings on July 16, and investors reacted with a steep sell-off, as the stock plummeted 19% in the following days.

During its earnings call, CEO Walt Bettinger told investors that Schwab would shrink its bank and use third-party banks to help reduce its capital and funding-related risks. Analysts, including those at Bank of America, lowered their price target on the Charles Schwab and believe its earnings upside could be limited over the next couple of years. Here's why.

For years, Charles Schwab has outperformed peers across key metrics like return on equity (ROE) and delivered excellent returns for longtime shareholders. One component of Schwab's strong performance was its use of low-cost deposits as a cheap funding source. This strategy worked well in the early 2010s when interest rates were relatively low with less volatility.

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Source Fool.com