- In terms of sensitivity, an additional cut of 25 basis points will likely cost the firm a penny in annualized EPS.
- All the other metrics will remain unchanged i.e. 3,000 trades per day, $2 billion in fee-based assets, $250 million in spread-based assets or 25,000 new accounts, each representing about 1 cent in annual EPS.

Operational Highlights:

- Last quarter, some of the investments that the firm was going to make where it was in effect going to reallocate some of the pre-tax margins into reinvestments in the business, because that would help better implement the asset gathering and strategy, and provide greater sustainable longer-term earnings.
- The current marketing campaign emphasizes retirement and emphasizes needs and tools for the long-term investor and is paying dividends as there is better productivity out of the branches than ever before with an average 400 referrals a day.

With the recent Fed cuts, the firm has actually been able to expand net interest margin by seven basis points over the same quarter last year, driven by the extension strategy put in place on the MMDA portfolio over the past two years.

- The earn rate on that portfolio has declined less than the pay rate to the clients resulting in a wider spread.
- As the earn rate on the MMDA portfolio continues to decline, since the reinvestment rate is much lower than the current earn rates, TD Ameritrade will likely see compression in the net interest margin from MMDA over the next few quarters.
- Additionally, the 200 basis points Fed cuts this quarter also affected the margin loan rates and will also reduce net interest margin for the rest of the year.

Business Highlights:

For Retail Clients:

- Bond Ladder a complement to the Company''s Bond Wizard tool, which contains an assortment of bonds that mature at regular intervals.
- It can help provide protection against interest rate changes and potentially help provide a reliable income stream.
- Clients can build their own ladder by searching for and selecting individual bonds and CDs using Bond Wizard, or they can select from a list of pre-packaged ladders.(3)

- The ""Easy IRA"" which is a three-step process that combines the personalized analysis of WealthRulerTM with the objective guidance of third-party research to help investors open a maintenance fee-free IRA account in 15 minutes or less.
- The ""Seminar Series"" which is a free educational opportunity for investors and traders of all experience levels to gain professional insight and develop investment strategies has expanded its line-up from 50 to 200 stops across the United States this year.

For Institutional Clients:

- TD AMERITRADE Institutional became one of the first custodians to formally commit to supporting the RIA industry, helping to publicize the fiduciary standard to which advisors are held.
- iRebal an Advisor rebalancing software, has a new tiered pricing structure that makes sophisticated across-account rebalancing even more accessible for high-end RIAs and their clients.
- FundQuest, which is a new alliance that expands the firm’s managed account offering, enabling advisors to develop client-specific recommendations for individual investors.

Fiscal 2008 Outlook:

- The firm reaffirming its guidance at $1.32, which is up 25% from a year ago.
- For the third and fourth quarter, trades per day are being left unchanged relative to the outlook.
- Net interest margin with the funds rate that may cut 200 basis points in the quarter, should impact the firm about 3 cents negatively.

Key questions and answers from the second quarter earnings call conducted by TD Ameritrade Holdings Corp. (AMTD: chart) on April 17, 2008.

Howard Chen (Credit Suisse): Is there any specific product or channel you are seeing outside the growth that you want share?

Joe Moglia: We are not going to be breaking out the breakdown in net new assets by either client segment or by product group but suffice to say that what happens here at TD AMERITRADE, when we go with a particular product or we go with a particular pilot or effort, if it does not work we eliminate it and we become more aggressive with some of the other things.

Howard Chen (Credit Suisse): Are you seeing any accelerated growth in the overall number of RIAs and advisors leaving the traditional broker houses?

Joe Moglia: We continue to see the type of growth that we have been seeing. As we go forward, that the Waterhouses will continue to see individual consultants that recognize, they are going to be better off on their own.

Howard Chen (Credit Suisse): Are you starting to see a higher the net worth of better customer coming?

Joe Moglia: Not necessarily. The customers that have been coming have been good solid accounts. Part of the reason why there has been a jump in the qualified accounts is because Fiserv has helped that.