(Bloomberg) — Charles Schwab Corp.’s merger with TD Ameritrade was hurt by the temporary impact from clients, which reduced net new money for the firm last month.
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The company reported $4.9 billion in total core net new assets in August, down 64 percent from July and 89 percent from a year ago, the company said in a statement Friday. Excluding Ameritrade’s brokerage clients, core net new assets equaled $28.1 billion for the month.
Chief Financial Officer Peter Crawford said in a statement that “strong new funds” were temporarily impacted by asset exposure from clients from Ameritrade.
Most of the deal-related expense flows were attributed to Ameritrade’s advisory clients, “including select relationships that did not meet our criteria for continuing service relationships,” Crawford said.
Shares of the Westlake, Texas-based brokerage fell 3.2% to $57.87 by 9:30 a.m. in New York. The stock is down about 30% this year.
Interest rate hikes by the Federal Reserve last year put pressure on the company’s banking arm, its main source of revenue. Higher rates have encouraged some Schwab clients to move money from the bank to other investment products, including money market funds, in a process known as “cash sorting.”
Company officials have previously said that the worst of this deposit activity is over and they expect growth to resume later this year. In the first half of September, Schwab saw neutral flows in cash after what Schwab said was a “short run” as Schwab shifted to higher-income investment options following the Federal Reserve’s latest rate hike.
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