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TD Ameritrade Holding Corporation (Nasdaq: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2016 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Sandler O’Neill Global Exchange & Brokerage Conference New York, NY June 8, 2016
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Fred Tomczyk Chief Executive Officer
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. 20, 2015 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.
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Safe Harbor
Our Mission
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To Be The Better Investment Firm For Today’s Investor
Six Investment Themes for TD Ameritrade
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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) Growth in mobile thinkorswim platform
3. Premier asset gatherer Secular trends strong Seven consecutive years of double-digit
growth
4. Unique relationship with TD(2) Economics of deposit banking without
capital requirements Significant free cash flow
5. Well-positioned for rising interest rates $112B in interest rate sensitive assets(3)
6. Good stewards of shareholder capital Primary uses of cash: investments in
business, dividends, share repurchases and acquisitions
(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) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. (3) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Balances as of Mar. 31, 2016.
Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value
1. Unique and Differentiated Business Model
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37%
34%
39% 41% 40%
$1.11 $1.06
$1.22
$1.42 $1.49 $1.45
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
20%
30%
40%
50%
FY11 FY12 FY13 FY14 FY15 FY16
39-42%
$1.75
(1)
EPS Pre-Tax Margin Forecasted Pre-Tax Margin Range Outlook Range(1) Business model
combined with TD Bank(2) 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 ‘16: EPS $0.78 Pre-Tax Margin 40%
(1) FY16 forecast per 10/27/15 outlook statement. (2) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies.
Client Trades Per Day & Activity Rate(2)
399
360 374
427
462
32%
36%
39%
41% 43%
20%
25%
30%
35%
40%
45%
300
350
400
450
500
FY11 FY12 FY13 FY14 FY15 FY16
Avg. Client Trades Per Day (K)
2. Market Leadership in Trading(1)
6
% Derivatives(4) of Total Trades per Day
Outlook Range (K)(3)
490
Activity Rate(2)
7.2% 6.3% 6.3% 6.9% 6.6-7.2%(3) 7.1%
450
(1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab (2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) FY16 forecast per 10/27/15 outlook statement. (4) Derivatives include options, futures and foreign exchange (Forex) trades per day. (5) FY16 DARTS and AR% year-to-date as of 3/31/16. (6) Total revenue-generating client trades divided by the number of trading days in the period. This metric is also known as average client trades per day. (7) Jun QTD DARTS as of 5/31/16.
473/ 7.1%(5)
Mar Q ’16 Record average client trades
per day of 509K; activity rate of 7.6%
High intraday volatility Derivatives – 44% of DARTS(6),
record DARTS of 222K Mobile – record 18% of DARTS
Fiscal 2016 6.6-7.2% activity rate Jun QTD - DARTS 458K(7)
3. Premier Asset Gatherer
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Net New Client Assets ($B)(1)
$41 $41
$50 $53
$63
$47
$0
$10
$20
$30
$40
$50
$60
$70
$80
FY11 FY12 FY13 FY14 FY15 FY16
$73
Growth Rate(3)
7-11%(2) 10% 10% 10% 11% 12% Growth Rate(3)
Outlook Range ($B)(2)
Mar Q ’16 $14.1B NNA, 8% growth rate Retail
• Record NNA quarter • Good performance from new money
and strong retention levels
Institutional • Solid results • Slower growth from existing RIAs • Sales pipeline remains strong
Fiscal 2016 Long-term goal remains 7-11%
growth Mar YTD ‘16 $31.6B NNA, 10%
growth rate
(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) FY16 forecast per 10/27/15 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 3/31/16.
$31.6/ 10%(4)
Investment Product Fees(1)
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Outlook Range ($M)(2) Investment Product Fees ($M)
$166
$196
$250
$309
$334
$100
$150
$200
$250
$300
$350
$400
FY11 FY12 FY13 FY14 FY15 FY16
CAGR: 19%
Avg. Bal. ($B) $78 $86 $113 $137 $156 $160-$170(2)
$400
$365
Mar Q ’16 Update Revenue up 4% year over year Revenue growth driven primarily
by reduced money market fee waivers
Declines in average balances primarily driven by market
Fiscal 2016 Continued growth of guidance
products
(1) Market fee-based plus money market mutual fund revenue. (2) FY16 forecast per 10/27/15 outlook statement. (3) Investment Product Fees year-to-date as of 3/31/16.
$181(3)
4. Unique Relationship with TD(1)
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Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value
TD Owns ~ 42%(2) of TD Ameritrade(2)
Stockholders’ agreement amended and extended to 2021
Insured deposit account (IDA)(3) 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
(1) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. (2) TD Ameritrade Holding Corporation as of Mar. 31, 2016. (3) 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.
$75 $76 $80 $83 $84
$20 $21 $22 $22 $23 $6 $6 $6 $6 $6
$0
$20
$40
$60
$80
$100
$120
Mar '15 Jun '15 Sep '15 Dec '15 Mar '16
Money Market Mutual Funds
Interest Earning Assets
IDA
5. Well-Positioned for Rising Interest Rates
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Ending Balances ($B)
Immediate benefit with Fed Funds increases
Benefit over time with Yield Curve due to re-pricing of laddered investment portfolio
Float $22B
$108 $110 $102
$112
(1) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Mar. 31, 2016. (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. (3) Ending balances as of Mar. 31, 2016 consisted of $11.3B in client margin balances, $7.7B in segregated cash, and $4.0B in other balances. (4) 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. Range impacted by investments in the business and client sharing assumptions with greater sharing/investing anticipated after the first +50bps of increases. Over 90% of the benefit in year one is attributable to short-term rates.
*Certain totals may not foot due to rounding. *Changes based on rounding numbers to the nearest $ millions.
Balance of $112B, up 11% year over year Ending client cash as % of
client assets 15.0% Overall consolidated
duration of 2.1 years
Sensitivity model - estimated annual impact to EPS on +100bps: Yr. 1 =+$0.32-$0.48(4)
Yr. 2 =+$0.39-$0.55(4)
Yr. 3 =+$0.47-$0.63(4)
(2)
Fixed$62B
$101 (3)
6. Good Stewards of Shareholder Capital
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Strong Cash Generation and Strong Financial Position
(3)
$0.6 $0.7
$0.8
$0.9
$0.4
$0.3
$0.5
$0.7 $0.7
$0.5
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
FY12 FY13 FY14 FY15 FY16 YTD
Net Income excl. Amort. of Intangibles ($B)
Returned/Deployed ($B)
51% 79% 64% 87%
(2)
(1) See attached reconciliation of non-GAAP financial measures. (2) Cash used for share repurchases and dividends divided by net income excluding amortization of intangible assets. Excludes shares repurchased for payroll taxes on
equity award distributions. (3) FY16 forecast per 10/27/15 outlook statement.
S&P “A”, Moody’s “A3” Fiscal 2015
Paid $0.60 per share in cash dividends ($326M)
Repurchased 10.9M shares ($364M)
Fiscal 2016 Targeting 60-80%(3) of net income
excluding amortization of intangible assets
• Recurring dividend ~ 40% • Share repurchases ~20-40%
Increased quarterly cash dividend by 13% to $0.17/share
101%
(1)
Mar Q ‘16 Business Update
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Continued focus on organic growth Asset gathering Trading Investment product fees
Expenses – continued disciplined approach
Department of Labor update
Return of capital Paid $0.17/share in cash dividends ($91M) Repurchased 8M shares ($231M)
Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value
Six Investment Themes for TD Ameritrade
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Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value
1. Unique and differentiated business model
2. Market leadership in trading(1)
3. Premier asset gatherer
4. Unique relationship with TD(2)
5. Well-positioned for rising interest rates
6. Good stewards of shareholder capital
(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) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies.
TD Ameritrade Holding Corporation (Nasdaq: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2016 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Sandler O’Neill Global Exchange & Brokerage Conference New York, NY June 8, 2016
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Fred Tomczyk Chief Executive Officer
Fiscal 2016 Outlook Range(1)
Financial Macro Assumptions Key Metrics
High
$1.75 EPS 10% Market Growth NNA(2) $73B / 11%(3)
42% Pre-Tax Margin
Increasing Fed Funds, Increasing Yield Curve
Activity Rate(4) of 7.2% / TPD 490K
Operating expense growth of 6% NIM(5) 1.61% / IDA(6) 1.20%
Low
$1.45 EPS 0% Market Growth NNA $47B / 7%
39% Pre-Tax Margin
No change in Fed Funds, declining Yield Curve
Activity Rate of 6.6% / TPD 450K
Operating expense growth of 2%
NIM 1.53% / IDA 1.15%
(1) FY16 forecast per 10/27/15 outlook statement. (2) 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.
(3) NNA growth rate is annual net new assets as a % of client assets as of the beginning of the period. (4) Funded account activity rate. Average client trades per day during the period divided by the average number of total funded accounts during the period. (5) NIM (net interest margin) is a measure of the net yield on our average spread-based assets. (6) 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.
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Sensitivity
3K average client trades per day = $0.01
0.04% funded activity rate(1) = $0.01
$3.8B fee-based assets(2) = $0.01
$0.6B spread-based assets(3) = $0.01
+25bps interest rate move = +$0.08-$0.12(4)
Estimated annual impact to EPS
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(1) Funded account activity rate. Average client trades per day during the period divided by the average number of funded accounts during the period. (2) 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. (3) 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. (4) 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 and is the average impact of each +25bps interest rate move . Range impacted by components of interest rate sensitive balances, investments in the business and client sharing assumptions - more sharing/investing anticipated after the first +50bps of increases. Over 90% of the benefit in year one is attributable to short-term rates.
378
399
382
414
492
401 403
457
477
434
479
438
509
6.5% 6.7%
6.4%
6.9%
8.1%
6.5% 6.4%
7.2%
7.4%
6.7%
7.3%
6.6%
7.6%
300
325
350
375
400
425
450
475
500
525
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
Mar Q'13
Jun Q'13
Sep Q'13
Dec Q'13
Mar Q'14
Jun Q'14
Sep Q'14
Dec Q'14
Mar Q'15
Jun Q'15
Sep Q'15
Dec Q'15
Mar Q'16
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) FY16 forecast per 10/27/15 outlook statement.
Thirteen quarter average 6.9%
Activity Rate
13 Qtr. Avg. Activity Rate
6.9%
FY16 Outlook Range(2):
Activity Rate: 6.6%-7.2% Avg. Trades Per Day (K): 450-490
Avg. Trades Per Day (K)
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Cash as % of Client Assets Range 13-18% Based on Current Mix
Avg. Client Cash ($B) Avg. Client Cash as % of Avg. Client Assets
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$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 $91.7 $93.7
$95.7 $95.1 $95.1 $99.3
$102.6 $106.0
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%
14.5% 14.3% 14.4% 13.9% 13.5%
14.4% 14.8% 15.4%
10%
15%
20%
25%
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
$105
$110
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
Jun Q'14
Sep Q'14
Dec Q'14
Mar Q'15
Jun Q'15
Sep Q'15
Dec Q'15
Mar Q'16
(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.
IDA(1) Net Revenue Trend
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$67.1 $68.6
$72.0 $72.7 $73.0 $72.4 $73.6 $75.0 $74.9 $74.8
$78.2 $80.3
$84.0 $200 $199 $201
$208 $202 $202
$208 $207 $205 $209 $218
$227 $235
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
Mar Q '13 Jun Q '13 Sep Q '13 Dec Q '13 Mar Q '14 Jun Q '14 Sep Q '14 Dec Q '14 Mar Q '15 Jun Q '15 Sep Q '15 Dec Q '15 Mar Q '16
Avg. IDA Balances ($B) IDA Revenue ($M)
Net Yield 1.11% 1.08% 1.09% 1.10% 1.09%
5YR Swap Rates(2) 1.82% 1.74% 1.61% 1.66% 1.65%
Avg. Fed Funds(2) 0.09% 0.10% 0.11% 0.13% 0.14%
1.10%
1.56% 0.16%
1.19%
0.96% 0.15%
1.15%
1.08% 0.12%
Total Revenue FY13 : $804 -3% YoY Growth
1.09%
1.67% 0.09%
1.12%
1.54% 0.09%
1.10%
1.69% 0.07%
1.10%
1.74% 0.09%
Total Revenue FY14 : $820 2% YoY Growth
Total Revenue FY15: $839 2% YoY Growth
Total Revenue FY16 YTD: 12% YoY Growth
1.11%
1.31% 0.37%
0.81 0.90
0.75
1.18
0.85 0.90 0.95 1.01 1.06
1.53
1.79
1.39
1.73
1.17 1.21 1.26 1.32 1.37
1.79
2.15
1.70
1.95
1.39 1.41 1.46 1.51 1.55
0.06 0.08 0.07
0.34 0.36 0.39 0.45 0.51 0.56
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Mar Q '15 Jun Q '15 Sep Q '15 Dec Q '15 Mar Q '16 Jun Q '16 Sep Q '16 Dec Q '16 Mar Q '17
2 YR 5 YR 7 YR Fed Funds
Libor/Swap Yield Curve Nine quarter trend
(1) Assumes April 15, 2016 Forward curve. (2) Source: Bloomberg daily (end of period). (3) Source: Board of Governors of the Federal Reserve website Daily Fed Funds Effective Rate (end of period).
(3) (2) (2)
Ending Spreads Mar Q ’16 Dec Q ‘15 Mar Q ‘15
2 YR vs. 5 YR 0.32 0.55 0.72
2 YR vs. 7 YR 0.54 0.77 0.98
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(2)
Forecast per 4/15 Forwards(1)
Reconciliation of Non-GAAP Financial Measures
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22
Six Months Ended
Mar. 31, 2016 2015 2014 2013 2012
Net income, as reported 417$ 813$ 787$ 675$ 586$ Adjustments:
Amortization of acquired intangible assets 45 90 90 91 92 Income tax effect of above adjustment (17) (35) (35) (35) (35)
Net income excluding amortization of intangible assets 445$ 868$ 842$ 731$ 643$
Note: The term "GAAP" in the following explanations refers to generally accepted accounting principles in the United States.
(1)
TD AMERITRADE HOLDING CORPORATIONRECONCILIATION OF NON-GAAP FINANCIAL MEASURE
Dollars in millions(Unaudited)
Net income excluding amortization of intangible assets is a non-GAAP financial measure as defined by SEC Regulation G. We define net income excluding amortizationof intangible assets as net income adjusted to remove the after-tax effect of amortization of acquired intangible assets. We consider net income excluding amortization of intangible assets an important measure of our financial performance. Amortization of acquired intangible assets is excluded because management does not believe it isindicative of underlying business performance. Net income excluding amortization of intangible assets should be considered in addition to, rather than as a substitute for,GAAP net income.
Fiscal Year Ended
Net Income Excluding Amortization of Intangible Assets (1)
TD Ameritrade Holding Corporation (Nasdaq: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, and TD Ameritrade Clearing, Inc., member FINRA/SIPC, subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2016 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade
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