01:17 PM EDT, 07/16/2024 (MT Newswires) -- Charles Schwab's ( SCHW ) second-quarter sales rose less than expected as net interest revenue, which is its biggest top-line contributor, declined year over year.

Revenue rose to $4.69 billion for the three months ended June 30 from $4.67 billion a year ago but was short of the $4.70 billion average analyst estimate on Capital IQ. Shares of the financial services provider tumbled 8.8% in Tuesday trade.

Adjusted earnings per share dipped to $0.73 from $0.75 but topped Wall Street's view by a penny.

"Net new assets year-to-date were over $150 billion, including (second quarter) asset gathering of about $60 billion, up 17% from the same period last year, again, still somewhat below our long-term goal of 5% to 7% to an economic cycle but growing closer to that figure as the impact from former Ameritrade client attrition begins to wane," Chief Executive Walt Bettinger told analysts on a conference call, according to a Capital IQ transcript.

Net interest revenue dropped 6% from the same period of 2023 to $2.16 billion. Trading revenue and bank deposit account fees, which make up a smaller portion of total revenue, were down 3% and 13%, respectively. Asset management and administration fees jumped 18% from the year prior to $1.38 billion.

"Our clients' transactional cash balances are typically pressured in the first half of the year by engagement in the markets in January and February and then tax season in April and early May," Chief Financial Officer Peter Crawford said on the call. "And that was no different in 2024. But even so, we continue to see a moderation of the rate-driven client cash realignment activity."

Charles Schwab's ( SCHW ) total assets declined by 4% quarter to quarter due primarily to tax-related outflows and the continuation of client cash realignment that's been ongoing for more than two years but occurred at a "much slower pace," according to Crawford. On an annual basis, total assets were down 12%. Charles Schwab ( SCHW ) is in the "very late innings of client cash realignment activity," Crawford told analysts.

He said Charles Schwab ( SCHW ) now expects 2024 revenue to be flat to up 2%, compared with 2023's revenue of $18.84 billion, which was down 9% year to year. The revenue guidance was narrowed to be "roughly in the middle" of the illustration management shared in January, according to Crawford. The Capital IQ-polled consensus was for revenue of $19.05 billion for the ongoing year.

The company's first-half performance "lays the foundation for what we expect will be an even stronger end of the year, propelling us into growth through 2025 and beyond," he said. Charles Schwab ( SCHW ) is expecting flattish sequential earnings in the current quarter.

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