AMTD TD Ameritrade Holding Corporation

Investors re-engage with the markets; trading and asset gathering up year over year

Net New Client Assets of $19B

Diluted Earnings per Share of $0.41

Record Net Revenues of $859M

TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for the first quarter of fiscal 2017. The Company gathered approximately $19 billion in net new client assets and reported 487,000 client trades per day, on average, both healthy increases from the same period a year earlier.

The Company’s results for the quarter ended Dec. 31, 2016 include the following:(1)

• $0.41 in earnings per diluted share, up 5 percent year over year, on net income of $216 million
• Net new client assets of approximately $19 billion, an annualized growth rate of 10 percent
• Average client trades per day of approximately 487,000, up 11 percent year over year
• Record net revenues of $859 million, 57 percent of which were asset-based
• Pre-tax income of $339 million, or 39 percent of net revenues
• Record interest rate-sensitive assets(2) of $125 billion, up 14 percent year over year
• Record client assets of $797 billion, up 15 percent year over year

“It was a quarter of significant change. We announced plans to acquire Scottrade – the largest transaction in our history. The Federal Reserve raised interest rates for the first time in 12 months, and we witnessed an historic election, the outcome of which brought retail investors back to the markets,” said Tim Hockey, president and chief executive officer. “Organic growth was strong. Trading was up 11 percent from a year ago, and we brought in $19 billion in net new client assets, as independent advisors brought in assets at record levels. We’re making progress on our core strategic initiatives, and these results give us momentum as we work together to deliver on our goals in the quarters ahead.”

“Strong organic growth from net new client assets, rate-sensitive assets and new accounts, coupled with emerging tailwinds from the improving interest rate environment, provides a solid base for future earnings growth,” said Steve Boyle, executive vice president and chief financial officer. “Interest rate-sensitive assets, are at a record $125 billion, and the post-election environment has been positive for our business. We are taking advantage of the steepened yield curve, which should benefit future periods. Moving forward, we expect to make additional technology investments to enhance the client experience. It’s a good way to start the year – with plenty of opportunities to deliver on our goals and drive incremental value for our clients, employees and shareholders.”

Capital ManagementThe Company paid $95 million in its first fiscal quarter, or $0.18 per share, in cash dividends.

The Company has declared an $0.18 per share quarterly cash dividend, payable on Feb. 15, 2017 to all holders of record of common stock as of Feb. 1, 2017.

Company Hosts Conference CallTD Ameritrade will host its December Quarter conference call this morning, Jan. 18, 2017, at 8:30 a.m. EST (7:30 a.m. CST). Participants may listen to the conference call by dialing 877-648-7976. The Company will webcast the conference call through www.amtd.com, via the “Presentations & Events” page of the web site. A replay of the phone call will be available by dialing 855-859-2056 and entering the Conference ID 69450485 beginning at 12:00 p.m. EST (11:00 a.m. CST) on Jan. 18, 2017. The replay will be available until 11:59 p.m. EST (10:59 p.m. CST) on Jan. 25, 2017. A transcript of the call will be available on the Company’s corporate web site, www.amtd.com, via either the “Investor Relations” page or the “Presentations & Events” page beginning Thursday, Jan. 19, 2017.

Interested parties can visit or subscribe to newsfeeds at www.amtd.com for the most up-to-date corporate financial information, presentation announcements, transcripts and archives. The company also communicates this information via Twitter, @TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.

Source: TD Ameritrade Holding Corporation

About TD Ameritrade Holding CorporationMillions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (Nasdaq: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 40 years. TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information, or read our stories at Fresh Accounts.

Safe HarborThis document contains forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. In particular, any projections regarding our future revenues, expenses, earnings, capital expenditures, effective tax rates, client trading activity, accounts, stock price or any projections or expectations regarding the proposed business combination transaction between us and Scottrade Financial Services, Inc., as well as the assumptions on which such expectations are based, are forward-looking statements. These statements reflect only our current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: general economic and political conditions and other securities industry risks, fluctuations in interest rates, stock market fluctuations and changes in client trading activity, credit risk with clients and counterparties, increased competition, systems failures, delays and capacity constraints, network security risks, liquidity risks, new laws and regulations affecting our business, regulatory and legal matters, the ability to obtain regulatory approvals and meet other closing conditions to the proposed transaction, including the completion of the merger between Scottrade Bank and TD Bank, N.A., on the expected terms and schedule; delay in closing the transaction; difficulties and delays in integrating the TD Ameritrade and Scottrade businesses or fully realizing cost savings and other benefits; business disruption following the proposed transaction; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; TD Ameritrade’s and Scottrade’s businesses experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; the inability to realize synergies or to implement integration plans and other consequences associated with mergers, acquisitions and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 18, 2016. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.

1 Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated.

2 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Dec. 31, 2016.

Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org).

  TD AMERITRADE HOLDING CORPORATION CONSOLIDATED STATEMENTS OF INCOME In millions, except per share amounts (Unaudited)             Quarter Ended Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015 Revenues: Transaction-based revenues: Commissions and transaction fees $ 355 $ 336 $ 328   Asset-based revenues: Insured deposit account fees 245 230 227 Net interest revenue 151 151 154 Investment product fees   94   98   92 Total asset-based revenues 490 479 473   Other revenues   14   14   11 Net revenues   859   829   812   Operating expenses: Employee compensation and benefits 214 222 201 Clearing and execution costs 36 34 30 Communications 35 38 32 Occupancy and equipment costs 44 43 43 Depreciation and amortization 24 24 22 Amortization of acquired intangible assets 19 20 22 Professional services 53 57 37 Advertising 57 59 62 Other   24   49   20 Total operating expenses   506   546   469   Operating income 353 283 343   Other expense: Interest on borrowings   14   13   12 Total other expense   14   13   12   Pre-tax income 339 270 331 Provision for income taxes   123   85   119 Net income $ 216 $ 185 $ 212   Earnings per share - basic $ 0.41 $ 0.35 $ 0.39 Earnings per share - diluted $ 0.41 $ 0.35 $ 0.39   Weighted average shares outstanding - basic 527 526 537 Weighted average shares outstanding - diluted 530 529 540   Dividends declared per share $ 0.18 $ 0.17 $ 0.17     TD AMERITRADE HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS In millions (Unaudited)         Dec. 31, 2016 Sept. 30, 2016 Assets: Cash and cash equivalents $ 1,662 $ 1,855 Segregated cash and investments 9,263 8,729 Broker/dealer receivables 959 1,190 Client receivables, net 12,039 11,941 Investments available-for-sale, at fair value 747 757 Goodwill and intangible assets 3,023 3,042 Other   1,141   1,304 Total assets $ 28,834 $ 28,818   Liabilities and stockholders' equity:   Liabilities: Broker/dealer payables $ 2,028 $ 2,040 Client payables 19,062 19,055 Long-term debt 1,769 1,817 Other   776   855 Total liabilities 23,635 23,767 Stockholders' equity   5,199   5,051 Total liabilities and stockholders' equity $ 28,834 $ 28,818     TD AMERITRADE HOLDING CORPORATION SELECTED OPERATING DATA (Unaudited)             Quarter Ended Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015

Key Metrics:

Net new assets (in billions) $18.7 $15.1 $17.5 Net new asset growth rate (annualized) 10% 8% 10% Average client trades per day 486,801 444,281 438,108  

Profitability Metrics:

Operating margin 41.1% 34.1% 42.2% Pre-tax margin 39.5% 32.6% 40.8% Return on average stockholders' equity (annualized) 16.9% 14.7% 17.1% Net profit margin 25.1% 22.3% 26.1% EBITDA(1) as a percentage of net revenues 46.1% 39.4% 47.7%  

Liquidity Metrics:

Interest on borrowings (in millions) $14 $13 $12 Interest coverage ratio (EBITDA(1)/interest on borrowings) 28.3 25.2 32.3 Cash and cash equivalents (in billions) $1.7 $1.9 $1.7

Liquid assets available for corporate investing and financing activities(1) (in billions)

$0.9 $0.8 $0.6  

Transaction-Based Revenue Metrics:

Total trades (in millions) 30.4 28.4 27.6 Average commissions and transaction fees per trade $11.65 $11.82 $11.90 Trading days 62.5 64.0 63.0 Order routing revenue (in millions) $79 $75 $70  

Spread-Based Asset Metrics:

Average insured deposit account balances (in billions) $93.3 $87.1 $80.3 Average interest-earning assets (in billions) 24.4 23.8 22.2 Average spread-based balances (in billions) $117.7 $110.9 $102.5   Insured deposit account fee revenue (in millions) $245 $230 $227 Net interest revenue (in millions) 151 151 154 Spread-based revenue (in millions) $396 $381 $381   Avg. annualized yield - insured deposit account fees 1.03% 1.03% 1.10% Avg. annualized yield - interest-earning assets 2.42% 2.48% 2.71% Net interest margin (NIM) 1.32% 1.35% 1.45%  

Fee-Based Investment Metrics:

Money market mutual fund fees:

Average balance (in billions) $3.7 $5.3 $5.7 Average annualized yield 0.38% 0.28% 0.06% Fee revenue (in millions) $3 $4 $1  

Market fee-based investment balances:

Average balance (in billions) $166.7 $163.7 $152.9 Average annualized yield 0.21% 0.22% 0.23% Fee revenue (in millions) $91 $94 $91   Average fee-based investment balances (in billions) $170.4 $169.0 $158.6 Average annualized yield 0.22% 0.23% 0.23% Investment product fee revenue (in millions) $94 $98 $92   (1) See attached reconciliation of non-GAAP financial measures.   NOTE: See Glossary of Terms on the Company's website at www.amtd.com for definitions of the above metrics.     TD AMERITRADE HOLDING CORPORATION SELECTED OPERATING DATA (Unaudited)             Quarter Ended Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015

Client Account and Client Asset Metrics:

Funded accounts (beginning of period) 6,950,000 6,872,000 6,621,000 Funded accounts (end of period) 7,046,000 6,950,000 6,686,000 Percentage change during period 1% 1% 1%   Client assets (beginning of period, in billions) $773.8 $736.3 $667.4 Client assets (end of period, in billions) $797.0 $773.8 $695.3 Percentage change during period 3% 5% 4%  

Net Interest Revenue:

Segregated cash:

Average balance (in billions) $8.7 $8.0 $6.2 Average annualized yield 0.30% 0.27% 0.09% Interest revenue (in millions) $7 $5 $1  

Client margin balances:

Average balance (in billions) $11.9 $11.7 $12.3 Average annualized yield 3.56% 3.60% 3.54% Interest revenue (in millions) $108 $107 $111  

Securities borrowing/lending:

Average securities borrowing balance (in billions) $0.9 $1.2 $0.8 Average securities lending balance (in billions) $1.9 $1.9 $2.4 Net interest revenue - securities borrowing/lending (in millions) $33 $37 $41  

Other cash and interest-earning investments:

Average balance (in billions) $2.9 $2.9 $2.9 Average annualized yield 0.44% 0.28% 0.05% Interest revenue - net (in millions) $3 $2 $1  

Client credit balances:

Average balance (in billions) $16.1 $15.5 $14.0 Average annualized cost 0.01% 0.01% 0.01% Interest expense (in millions) ($0) ($0) ($0)   Average interest-earning assets (in billions) $24.4 $23.8 $22.2 Average annualized yield 2.42% 2.48% 2.71% Net interest revenue (in millions) $151 $151 $154   NOTE: See Glossary of Terms on the Company's website at www.amtd.com for definitions of the above metrics.     TD AMERITRADE HOLDING CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)                         Quarter Ended Dec. 31, 2016 Sept. 30, 2016 Dec. 31, 2015 $ % of Net Rev. $ % of Net Rev. $ % of Net Rev.

EBITDA (1)

Net income - GAAP $ 216 25.1 % $ 185 22.3 % $ 212 26.1 % Add:   Depreciation and amortization 24 2.8 % 24 2.9 % 22 2.7 % Amortization of acquired intangible assets 19 2.2 % 20 2.4 % 22 2.7 % Interest on borrowings 14 1.6 % 13 1.6 % 12 1.5 % Provision for income taxes   123   14.3 %   85   10.3 %   119   14.7 % EBITDA - non-GAAP $ 396   46.1 % $ 327   39.4 % $ 387   47.7 %   As of Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2016 2016 2016 2016 2015

Liquid Assets Available for Corporate Investing and Financing Activities (2)

Cash and cash equivalents - GAAP $ 1,662 $ 1,855 $ 1,917 $ 2,476 $ 1,735 Less: Non-corporate cash and cash equivalents   (1,220 )   (1,395 )   (1,088 )   (1,430 )   (934 ) Corporate cash and cash equivalents 442 460 829 1,046 801 Corporate investments 747 757 400 - 201 Less: Corporate liquidity maintained for operational contingencies   (773 )   (773 )   (764 )   (764 )   (764 ) Excess corporate cash and cash equivalents and investments 416 444 465 282 238 Excess broker-dealer regulatory net capital   485     369     263     431     346   Liquid assets available for corporate investing and financing activities - non-GAAP $ 901   $ 813   $ 728   $ 713   $ 584     Note: The term "GAAP" in the following explanation refers to generally accepted accounting principles in the United States.  

 

(1)

EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA an important measure of our financial performance and of our ability to generate cash flows to service debt, fund capital expenditures and fund other corporate investing and financing activities. EBITDA is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our senior revolving credit facility. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA should be considered in addition to, rather than as a substitute for, GAAP pre-tax income, net income and cash flows from operating activities.  

 

(2)

Liquid assets available for corporate investing and financing activities is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider "liquid assets available for corporate investing and financing activities" to be an important measure of our liquidity. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assets available for corporate investing and financing activities, rather than simply including broker-dealer cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer subsidiaries to the parent company. Liquid assets available for corporate investing and financing activities should be considered as a supplemental measure of liquidity, rather than as a substitute for GAAP cash and cash equivalents.   We define liquid assets available for corporate investing and financing activities as the sum of (a) corporate cash and cash equivalents and investments, excluding amounts being maintained to provide liquidity for operational contingencies, including lending to our broker-dealer and futures commission merchant/forex dealer member subsidiaries under intercompany credit agreements and (b) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 10% of aggregate debit items and (ii) our introducing broker-dealer subsidiary in excess of a minimum operational target established by management ($50 million in the case of our introducing broker-dealer, TD Ameritrade, Inc.). Liquid assets available for corporate investing and financing activities is based on more conservative measures of broker-dealer net capital than regulatory requirements because we generally manage to higher levels of net capital at the broker-dealer subsidiaries than the regulatory thresholds require.  

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TD Ameritrade Holding CorporationKim Hillyer, 402-574-6523Director, Communicationskim.hillyer@tdameritrade.comorJeff Goeser, 402-597-8464Director, Investor Relationsjeffrey.goeser@tdameritrade.com