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TD Ameritrade Holding Corporation (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC/NFA, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corp. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Sandler O’Neill Global Exchange and Brokerage Conference New York, NY June 4, 2014
Safe Harbor
2
This 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 or stock price, 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 and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 22, 2013 and our latest Quarterly Report on Form 10-Q filed thereafter. 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.
Our Mission
3
To Be The Better Investment Firm For Today’s Investor
Six Investment Themes for TD Ameritrade
4
Continue to Build Long-term Earnings Power and Deploy/Return Capital to Further Enhance Shareholder Value
Long-Term Themes Key Takeaways
1. Unique and differentiated business model • Low financial risk – conservative balance
sheet and strong pre-tax margins • Significant operating leverage
2. Market leadership in trading • #1 in market share(1) • thinkorswim platform
3. Premier asset gatherer • Secular trends strong • Five consecutive years of double-digit growth
4. Unique relationship with TD • Economics of deposit banking without capital
requirements • Significant free cash flow
5. Well-positioned for rising interest rates • $96B in interest rate sensitive assets(2)
6. Good stewards of shareholder capital • Primary uses of cash: dividends, buybacks, acquisitions and investments in the business
(1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab. (2) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Balances as of Mar. 31, 2014.
36% 37% 34%
39% $1.00
$1.11 $1.06
$1.22
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
0%
10%
20%
30%
40%
50%
FY10 FY11 FY12 FY13 FY14
1. Unique and Differentiated Business Model
5
• Business model combined with TD Bank(3) relationship drives: – Low capital intensity – High return on equity – Strong cash and capital
generation • Cash generation
approximates net income
• Scalable business model – 97+% of transactions are
online – Lean/sourcing initiatives
• Mar YTD ‘14 update: ‒ EPS $0.70, up 32% year-
over-year ‒ Pre-Tax margin 40%
EPS(1) Pre-Tax Margin
38-40%
$1.20
Forecasted Pre-Tax Margin Range
(1) Earnings per diluted share (EPS). (2) FY14 forecast per 10/29/13 outlook statement. (3) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies.
(2) Forecasted Range
$1.40
(2)
(2)
2. Market Leadership in Trading(1)
372
399
360 374
365 28%
32%
36% 39%
10%
15%
20%
25%
30%
35%
40%
45%
200
250
300
350
400
450
FY10 FY11 FY12 FY13 FY14
6
• Improved macroeconomic environment
– Record Mar Q ’14 DARTS(6) up 30% year-over-year
– Activity rate 8.1% in Mar Q’14; highest activity rate in a decade
• Growth Strategies – Tiered platform strategy – Product proliferation: Derivatives
~39% of Mar Q ’14 DARTs – Record Mobile ~13% of Mar Q
’14 DARTs
• Fiscal 2014 Outlook – Activity Rate 6.0–7.0% – April DARTs of 448K
Average Client Trades Per Day (K)
425
Forecasted Range (K)(3)
Activity Rate 6.9% 7.2% 6.3% 6.3% 6.0-7.0%(3)
(1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab. (2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) FY14 forecast per 10/29/13 outlook statement. (4) Derivatives include options, futures, and foreign exchange (Forex) trades per day. (5) FY14 DARTS and AR% year-to-date as of Mar. 31, 2014. (6) Total trades divided by the number of trading days in the period. This metric is also known as average client trades per day.
Client Trades Per Day & Activity Rate(2)
452/ 7.5%(5)
% Derivatives(4) of Total Trades per Day
(3)
3. Premier Asset Gatherer
$27 $34
$41 $41
$50
$39
$0
$10
$20
$30
$40
$50
$60
$70
FY09 FY10 FY11 FY12 FY13 FY14
7
• Industry leading asset gatherer(5)
– Record net new client assets of $50B fiscal 2013
– Five consecutive years of double-digit growth – Record client assets of $617B Mar Q ‘14, up
19% year-over-year
• Sales and service culture • Strong momentum in both retail and
institutional • Retail driven by:
‒ New relationships ‒ Cross-selling ‒ High asset retention rates
• Institutional driven by new and existing RIAs • Fiscal 2014 Outlook
– Long-term goal 7-11% growth
Net New Client Assets ($B)(1)
$61
Forecasted Range ($B)(2)
(1) Net new assets (NNA) consists of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows.
(2) FY14 forecast per 10/29/13 outlook statement. (3) NNA growth rate is annualized net new assets as a % of client assets as of the beginning of the period. (4) NNA and NNA growth rate year-to-date as of Mar. 31, 2014. (5) Source: Annual NNA growth rate as a % of client assets as of the beginning of the period based on last twelve months of publicly available reports for E*Trade Financial and
Charles Schwab.
Growth Rate(3)
10% 11% 12% 11% 7-11%(2) 10%
$26.7/10%(4)
Investment Product Fees(1)
8
Investment Product Fees ($M)(1)
(1) Market fee-based plus money market mutual fund revenue. (2) FY14 forecast per 10/29/13 outlook statement. (3) Investment Product Fees year-to-date as of Mar. 31, 2014.
$129
$166
$196
$250
$75
$100
$125
$150
$175
$200
$225
$250
$275
$300
$325
FY10 FY11 FY12 FY13 FY14
$310
(2)
Forecasted Range ($M)(2)
$285 CAGR: 25%
• Fiscal 2013 – Year-over-year average
balance growth of 31%; revenue growth of 28%
– Amerivest and AdvisorDirect performing well
– Strong mutual fund growth
• Fiscal 2014 Outlook – Targeting 15-25%(2) growth
$147(3)
• Stockholders’ agreement amended and extended to 2021 • Insured deposit account (IDA)(2) agreement
– Revised agreement effective January 1, 2013 – July 1, 2018
• Money market mutual funds provided by TD Asset Management • Cross-selling to TD Bank customers • Access to U.S. markets for TD Waterhouse Canada/UK clients
9
4. Unique Relationship with TD TD Owns ~ 40%(1) of TD Ameritrade
(1) As of Mar. 31, 2014. (2) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A., and TD Bank USA, N.A. are affiliated
through The Toronto-Dominion Bank.
$48 $58
$67 $73
$14
$17 $16
$18
$9
$5 $5
$5
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Mar '11 Mar '12 Mar '13 Mar '14
Money Market Mutual Funds
Interest Earning Assets
IDA
5. Well-Positioned for Rising Interest Rates
10
$80 $88
$96
$71
Ending Balances ($B)
(1)
(1) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A., and TD Bank USA, N.A. are affiliated through The Toronto-Dominion Bank.
(2) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Mar. 31, 2014. (3) Ending balances as of Mar. 31, 2014 consisted of $11.2B in client margin balances, $5.1B in segregated cash, and $2.2B in other balances. (4) Earnings per diluted share (EPS). (5) Impact on spread-based and money market mutual fund revenues in the next twelve months following an interest rate increase. Assumes fed funds increase results in a parallel
shift to the LIBOR/SWAP yield curve. Sensitivity relates to first 100bps increase. * Certain totals may not foot due to rounding.
• Interest rate sensitive assets(2) of $96B, up 9% year over year
– Ending client cash as % of client assets at 14.8%
– Overall consolidated duration of 2.4 years
• Sensitivity model – estimated annual impact to EPS(4)
– Yr. 1 =+$0.36(5)
– Yr. 2 =+$0.44(5)
– Yr. 3 =+$0.50(5)
(3) Immediate benefit with Fed Funds increases
Benefit over time with Yield Curve due to re-pricing of laddered investment portfolio
Float $15B
Fixed $57B
Approaching $100B
6. Good Stewards of Shareholder Capital
$0.6 $0.6 $0.7
$0.4
$0.5
$0.3
$0.7
$0.3
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
FY11 FY12 FY13 FY14 YTD
Net Income ($B) Returned/Deployed ($B)
81%
11
Strong Cash Generation and Strong Financial Position
(1) Cash used for M&A, debt repayments, share repurchases, and dividends divided by net income. Excludes shares repurchased for payroll taxes on equity award distributions.
(1)
76%
• S&P “A”, Moody’s “A3”
• Fiscal 2013 – Returned/deployed 107% of
earnings • Paid $0.86 per share cash
dividends • Paid down $250M of maturing
debt
• Fiscal 2014 Outlook ‒ Increased quarterly cash
dividend by 33% to $0.12/share ‒ Paid special cash dividend of
$0.50/share 56% 107%
Strategy Update
• Broad-based client engagement ‒ Trading at record levels ‒ Margin balances at record levels
• Continued strong asset gathering • Continued strong growth in investment product fees(1)
and balances • Declared quarterly cash dividend of $0.12/share
(1) Market fee-based plus money market mutual fund revenue.
Continue to Build Long-term Earnings Power and Deploy/Return Capital to Further Enhance Shareholder Value
12
Six Investment Themes for TD Ameritrade
1. Unique and differentiated business model 2. Market leadership in trading 3. Premier asset gatherer 4. Unique relationship with TD 5. Well-positioned for rising interest rates 6. Good stewards of shareholder capital
13
Continue to Build Long-term Earnings Power and Deploy/Return Capital to Further Enhance Shareholder Value
TD Ameritrade Holding Corporation (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC/NFA, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corp. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Sandler O’Neill Global Exchange and Brokerage Conference New York, NY June 4, 2014
Fiscal 2014 Outlook Range(1)
15
Financial Macro Assumptions Key Metrics
High
$1.40 EPS(2) 10% Market Growth NNA(4) $61B / 11%(5)
40% Pre-Tax Margin
Activity Rate(3) of 7.0% TPD 425K
No change in Fed Funds Increasing Yield Curve
NIM(6) 1.50% / IDA(7) 1.18%
Low
$1.20 EPS 0% Market Growth NNA $39B / 7%
38% Pre-Tax Margin
Activity Rate of 6.0% TPD 365K
No change in Fed Funds or Yield Curve
NIM 1.40% / IDA 1.08%
(1) See outlook statement published 10/29/2013. (2) Earnings per diluted share (EPS). (3) Funded account activity rate. Average client trades per day during the period divided by the average number of total funded accounts during the period. (4) NNA (net new assets) consists of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and
dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows.
(5) NNA growth rate is annualized net new assets as a % of client assets as of the beginning of the period. (6) NIM (net interest margin) is a measure of the net yield on our average spread-based assets. (7) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA N.A. TD Ameritrade, TD Bank, N.A. and TD Bank USA, N.A. are affiliated through
The Toronto Dominion Bank.
Sensitivity
16
• 3K average client trades per day = $0.01
• 0.05% funded activity rate(2) = $0.01
• $4.1B fee-based assets(3) = $0.01
• $0.6B spread-based assets(4) = $0.01
• +25bps fed move = +$0.09(5)
(1) Earnings per diluted share (EPS). (2) Funded account activity rate. Average client trades per day during the period divided by the average number of funded accounts during the period. (3) Client assets invested in money market mutual funds, other mutual funds and Company programs such as AdvisorDirect and Amerivest, on which we earn fee revenues. (4) Client and brokerage-related asset balances, including client margin balances, segregated cash, insured deposit account balances, deposits paid on securities borrowing and other
cash and interest-earning investment balances. (5) Impact on spread-based and money market mutual fund revenues in the first twelve months following an interest rate increase. Assumes fed funds increase results in a parallel shift to
the LIBOR/SWAP yield curve. Sensitivity relates to first 100bps increase.
Estimated Annual Impact to EPS(1)
439
370
416
367
388
355
328 334
378
399
382
414
492
8.0%
6.6%
7.4%
6.5% 6.8%
6.2%
5.7% 5.8%
6.5%
6.7%
6.4%
6.9%
8.1%
300
325
350
375
400
425
450
475
500
5.5%
6.5%
7.5%
8.5%
Mar Q'11
Jun Q'11
Sep Q'11
Dec Q'11
Mar Q'12
Jun Q'12
Sep Q'12
Dec Q'12
Mar Q'13
Jun Q'13
Sep Q'13
Dec Q'13
Mar Q'14
Activity Rate(1)
(1) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (2) Per outlook statement published 10/29/13.
Thirteen quarter average 6.7% Activity Rate
13 Qtr. Avg. Activity Rate
6.7%
FY14 Outlook Range(2):
Activity Rate: 6.0%-7.0% Avg. Trades Per Day (K): 365-425
Avg. Trades Per Day (K)
17
$52.0 $53.5 $56.4 $57.6 $58.8 $60.2 $61.3
$63.7 $66.2 $68.2
$72.5 $74.9 $75.8 $75.0 $76.8
$80.9 $83.6 $85.8
$90.2 $91.6 $91.8 23.3%
21.5%
19.8%
18.8% 18.1% 17.9% 18.2%
17.2% 16.5% 16.3%
18.1% 18.8%
17.6% 16.9% 16.8% 17.1%
16.7% 16.4% 16.7% 15.9%
15.2%
10%
15%
20%
25%
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Mar Q'09
Jun Q'09
Sep Q'09
Dec Q'09
Mar Q'10
Jun Q'10
Sep Q'10
Dec Q'10
Mar Q'11
Jun Q'11
Sep Q'11
Dec Q'11
Mar Q'12
Jun Q'12
Sep Q'12
Dec Q'12
Mar Q'13
Jun Q'13
Sep Q'13
Dec Q'13
Mar Q'14
Cash as % of Client Assets Consistently 15-20%
Avg. Client Cash ($B) Avg. Client Cash as % of Client Assets
Relatively high %’s due to depressed market post-crash Fall 2008
10%
18
$46.8 $48.6
$54.0
$58.8 $58.4 $59.0 $61.4
$64.2 $67.1
$68.6 $72.0 $72.7 $73.0
$187 $197 $200 $205 $209 $206 $207 $205 $200 $199 $201
$208 $202
$25
$50
$75
$100
$125
$150
$175
$200
$225
$25
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
MarQ '11 JunQ '11 SepQ '11 DecQ '11 MarQ '12 JunQ '12 SepQ '12 DecQ '12 MarQ '13 JunQ '13 SepQ '13 DecQ '13 MarQ '14
Avg. IDA Balances ($B) IDA Revenue ($M)
IDA(1) Net Revenue Trend
19
Net Yield
(1) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A., and TD Bank USA, N.A. are affiliated through The Toronto-Dominion Bank.
(2) Source: Bloomberg quarterly average. *Certain totals may not foot due to rounding.
1.60% 1.60% 1.45% 1.37% 1.42%
5YR Swap Rates(2) 2.32% 2.07% 1.44% 1.32% 1.17%
($B) ($M) Total Revenue FY12 : $828 9% YoY Growth
Avg. Fed Funds(2) 0.16% 0.09% 0.08% 0.08% 0.11%
1.38%
1.08% 0.16%
1.32%
0.86% 0.15%
1.25%
0.81% 0.16%
1.19%
0.96% 0.15%
Total Revenue FY13 : $804 -3% YoY Growth
1.15%
1.08% 0.12%
1.09%
1.67% 0.09%
1.12%
1.54% 0.09%
1.10%
1.69% 0.07%
Total Revenue YTD FY14 : $410 1% YoY Growth
0.58 0.55
0.37 0.39 0.42 0.51 0.46 0.49 0.55
1.27
0.97
0.76 0.86
0.95
1.57 1.54
1.79 1.80 1.78
1.35 1.19
1.31 1.44
2.15 2.16
2.48 2.36
0.09 0.09 0.09 0.09 0.13 0.07 0.06 0.07 0.06
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
2.20
2.40
2.60
2.80
Mar Q '12 Jun Q '12 Sep Q '12 Dec Q '12 Mar Q '13 Jun Q '13 Sep Q '13 Dec Q '13 Mar Q '14
2 YR 5 YR 7 YR Fed Funds
Libor/Swap Yield Curve Nine quarter trend
(1) Source: Bloomberg daily (end of period). (2) Source: Board of Governors of the Federal Reserve website Daily Fed Funds Effective Rate (end of period).
Ending Spreads Mar Q ‘14 Dec Q ‘13 Mar Q ‘13
2 YR vs. 5 YR 1.25 1.30 0.53
2 YR vs. 7 YR 1.81 1.99 1.02
(2) (1) (1) (1)
20
TD Ameritrade Holding Corporation (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC/NFA, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corp. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade