TD Ameritrade Holding Corp. (AMTD)
Q2 2010 Earnings Call Transcript
April 20, 2010 8:30 p.m. ET

Executives

Bill Murray – Managing Director, Investor Relations
Fredric J. Tomczyk – President and Chief Executive Officer
William J. Gerber – Executive Vice President and Chief Financial Officer

[Analysts

Patrick O''Shaughnessy – Raymond James
Celeste Brown – Morgan Stanley
Richard Repetto – Sandler O''Neill & Partners
Michael Vinciquerra – BMO Capital Markets
Michael Carrier – Deutsche Bank
Joel Jeffrey – Keefe, Bruyette & Woods
Matthew Snowling – Friedman, Billings, Ramsey Group, Inc.
Faye Elliott-Gurney – Banc of America/Merrill Lynch

Presentation

Operator

Good day, everyone and welcome to the TD Ameritrade Holding Corporation''s March Quarter 2010 Earnings Results Conference Call. This call is being recorded. With us today from the company is President and Chief Executive Officer, Fred Tomczyk and Chief Financial Officer, Bill Gerber. At this time, I would like to turn the call over to Bill Murray, Managing Director of Investor Relations. Please go ahead, sir.

Bill Murray

Thanks, operator. Good morning everyone. Welcome to the TD Ameritrade March quarter earnings call. If you haven''t had a chance to review them yet, our press release and today''s presentation can be found on amtd.com.

Before we begin, I would like to refer you to our Safe Harbor statement which is on slide two of the presentation, as we will be referring to forward-looking statements in today''s presentation. We would also like you to review our description of risk factors contained in our most recent annual and quarterly reports Forms, 10-Q and 10-K.

As usual, the call is intended for investors and analysts and may not be reproduced in the media in whole or in part without prior consent of TD Ameritrade. Once again, we have a large number of coverage analysts, so if you can keep your questions to two. We will try to get through most of you in the allotted time.

With that, we have Fred Tomczyk, Bill Gerber to review our March quarter results and major accomplishments. Fred?

Fredric J. Tomczyk

Thanks, Bill and good morning everyone and thanks for joining us today. As we communicated a few weeks ago, when we released our February metrics, the March quarter looks a lot like the December quarter. When this financial crisis started, we said we were going to manage for the other side of the cycle and take advantage of the dislocation we saw in the market.

We continued to execute on that strategy. The combination of continued near zero interest rates and not a low -- lower intraday volatility has created a difficult environment for short-term earnings. Having said that, the implementation of our new business model and the strategic investments we''ve made over the last 18 months have served us well in the face of that environment and have played a central role in driving the kind of organic growth we have been able to deliver.

We''re very proud of our net new assets over the first half of fiscal 2010 and we had a record $10 billion in net new assets in the quarter. And we are on pace for a record year in terms of assets gathered. With that said, let''s take a look at our quarterly financial review on slide three.

We ended the quarter with $0.27 in earnings per share or $0.23, if you exclude the benefit of certain tax items, which Bill will provide more details on later. On paper, these operating results are the same as last quarter, as well as what we delivered in the March quarter of last year. But if you take a closer look at each of these quarters, particularly March 2009 versus March 2010, you can see how the strategic decisions we''ve made have helped us maintain earnings even as operating conditions have become more difficult.

In the March quarter of last year, we''ve had near zero interest rates, but intraday volatility was very high. Our strong transaction base revenues helped offset the net interest rate margin compression we were seeing and it''s related impact on our asset base revenues.

Looking at the March 2010 quarter, it was the successful execution of our asset gathering strategy, in addition to the implementation of our new cash management strategy that has allowed us to grow our asset based revenues and maintain earnings in this environment, while positioning us well for a rising interest rate environment.