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TD Ameritrade Holding Corporation (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, 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. © 2015 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Bank of America Merrill Lynch Banking and Financial Services Conference New York, NY November 17, 2015
1
President and Chief Executive Officer Fred Tomczyk
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. 21, 2014 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 $108B 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 Sep. 30, 2015.
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
Fiscal 2015: EPS $1.49 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
Fiscal 2015 Record average client
trades per day of 462K; activity rate 7.1%
Record derivatives - 43% of DARTS(5)
Record mobile - 16% of DARTS
Fiscal 2016 6.6-7.2% activity rate Commissions per trade(6)
of $11.75-$12.00(3)
October DARTS 437K; Activity Rate 6.6%
(1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab (2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) FY16 forecast per 10/27/15 outlook statement. (4) Derivatives include options, futures and foreign exchange (Forex) trades per day. (5) Total revenue-generating client trades divided by the number of trading days in the period. This metric is also known as average client trades per day. (6) Average commissions and transaction fees per trade.
3. Premier Asset Gatherer
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Net New Client Assets ($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)
Fiscal 2015 Record $63B NNA, 10%
growth rate Retail NNA up 22% year over
year driven by: Sales funnel/branch network
Institutional NNA up 16% year over year driven by: New and existing RIAs
Fiscal 2016 Long-term goal remains 7-
11% growth
(1) Net new assets (NNA) consists of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows.
(2) FY16 forecast per 10/27/15 outlook statement. (3) NNA growth rate is annual net new assets as a % of client assets as of the beginning of the period.
Investment Product Fees(1)
8
Outlook Range ($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
Fiscal 2015 Record revenue and
average balances Year-over-year growth:
average balances up 14%; revenue up 8%
Amerivest and AdvisorDirect continue to drive growth
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.
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
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) As of Sep. 30, 2015. (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.
$57 $63 $73 $75 $80
$12 $15
$17 $19 $22
$8 $5
$5 $6 $6
$0
$20
$40
$60
$80
$100
$120
Sep '11 Sep '12 Sep '13 Sep '14 Sep '15
Money Market Mutual FundsInterest Earning AssetsIDA
5. Well-Positioned for Rising Interest Rates
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Ending Balances ($B)
Immediate benefit with Fed Funds (FF) increases
Benefit over time with Yield Curve due to re-pricing of laddered investment portfolio
Float $21B
$96 $100
$83
$108
(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) Ending balances as of Sep. 30, 2015 consisted of $12.6B in client margin balances, $6.3B in segregated cash, and $3.4B in other balances. (3) 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. 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.
(1)
Fixed$59B
$77
(2)
$108B balances, up 8% year over year Ending client cash as % of
client assets 15.3% Overall consolidated
duration of 2.1 years
Updated sensitivity model - estimated annual impact to EPS on first +100bps: Yr. 1 =+$0.32-$0.48(3)
Yr. 2 =+$0.39-$0.55(3)
Yr. 3 =+$0.47-$0.63(3)
6. Good Stewards of Shareholder Capital
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Strong Cash Generation and Strong Financial Position
(3)
$0.7
$0.6 $0.7
$0.8
$0.9
$0.5
$0.3
$0.5
$0.7 $0.7
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
FY11 FY12 FY13 FY14 FY15
Net Income excl. Amort. of Intangibles ($B)
Returned/Deployed ($B)
73% 87% 51% 64%
(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%
Increasing quarterly cash dividend by 13% to $0.17/share
79%
(1)
Fiscal 2016 Outlook
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Continued focus on organic growth Asset gathering – continue momentum in retail and institutional channels Trading – volatility expected to continue Guidance offerings a strategic priority
Continued expense discipline
Return of capital strategy Targeting 60-80% of net income excluding amortization of intangible assets Increasing quarterly cash dividend to $0.17/share
Fiscal 2016 EPS Outlook Range: $1.45 - $1.75(1)
Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value
(1) FY16 forecast per 10/27/15 outlook statement.
Six Investment Themes for TD Ameritrade
13
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 (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, 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. © 2015 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade Bank of America Merrill Lynch Banking and Financial Services Conference New York, NY November 17, 2015
14
President and Chief Executive Officer Fred Tomczyk
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
$4.2B fee-based assets(2) = $0.01
$0.6B spread-based assets(3) = $0.01
+25bps interest rate move = +$0.08-$0.12(4)
(1) Funded account activity rate. Average client trades per day during the period divided by the average number of funded accounts during the period. (2) Client assets invested in money market mutual funds, other mutual funds and Company programs such as AdvisorDirect and Amerivest, on which we earn fee revenues. (3) Client and brokerage-related asset balances, including client margin balances, segregated cash, insured deposit account balances, deposits paid on securities borrowing and other
cash and interest-earning investment balances. (4) Impact on spread-based and money market mutual fund revenues in the first twelve months following an interest rate increase. Assumes fed funds increase results in a parallel shift
to the LIBOR/SWAP yield curve. Sensitivity relates to first 100bps increase and is the average impact of each +25bps interest rate move . Range impacted by components of interest rate sensitive balances, investments in the business and client sharing assumptions - more sharing/investing anticipated after the first +50bps of increases. Over 90% of the benefit in year one is attributable to short-term rates.
Estimated annual impact to EPS
16
328 334
378
399
382
414
492
401 403
457
477
434
479
5.7% 5.8%
6.5%
6.7%
6.4%
6.9%
8.1%
6.5% 6.4%
7.2%
7.4%
6.7%
7.3%
300
325
350
375
400
425
450
475
500
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
Sep Q'12
Dec Q'12
Mar Q'13
Jun Q'13
Sep Q'13
Dec Q'13
Mar Q'14
Jun Q'14
Sep Q'14
Dec Q'14
Mar Q'15
Jun Q'15
Sep Q'15
Activity Rate(1)
(1) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (2) FY16 forecast per 10/27/15 outlook statement.
Thirteen quarter average 6.7%
Activity Rate
13 Qtr. Avg. Activity Rate
6.7%
Avg. Trades Per Day (K)
17
FY16 Outlook Range(2):
Activity Rate: 6.6-7.2% Avg. Trades Per Day (K): 450-490
Cash as % of Client Assets Range 13-18% Based on Current Mix
Avg. Client Cash ($B) Avg. Client Cash as % of Client Assets
18
$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 $91.7 $93.7
$95.7 $95.1 $95.1 $99.3
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%
14.5% 14.3% 14.4% 13.9% 13.5%
14.9%
10%
15%
20%
25%
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
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
Jun Q'14
Sep Q'14
Dec Q'14
Mar Q'15
Jun Q'15
Sep Q'15
(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
19
$61.4 $64.2
$67.1 $68.6
$72.0 $72.7 $73.0 $72.4 $73.6 $75.0 $74.9 $74.8 $78.2
$207 $205 $200 $199 $201 $208
$202 $202 $208 $207 $205 $209
$218
$25
$50
$75
$100
$125
$150
$175
$200
$225
$25
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
Sep Q '12 Dec Q '12 Mar Q '13 Jun Q '13 Sep Q '13 Dec Q '13 Mar Q '14 Jun Q '14 Sep Q '14 Dec Q '14 Mar Q '15 Jun Q '15 Sep Q '15
Avg. IDA Balances ($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%
1.32%
0.86% 0.15%
1.25%
0.81% 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: $839 2% YoY Growth
2.06(4) 1.67(4) 0.64(4) 0.09(4)
0.82 0.90
0.81 0.90
0.75 0.88
1.01 1.13
1.26
1.93 1.77
1.53
1.79
1.39 1.48
1.58 1.68
1.77
2.30
2.04
1.79
2.15
1.70 1.78
1.86 1.94
2.01
0.07 0.06 0.06 0.08 0.07 0.21
0.31 0.41
0.51
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Sep Q '14 Dec Q '14 Mar Q '15 Jun Q '15 Sep Q '15 Dec Q '15 Mar Q '16 Jun Q '16 Sep Q '16
2 YR 5 YR 7 YR Fed Funds
Forecast per September Forwards(1)
Libor/Swap Yield Curve Nine quarter trend
(1) Assumes September 30th 2015 Forward curve. (2) Source: Bloomberg daily (end of period). (3) Source: Board of Governors of the Federal Reserve website Daily Fed Funds Effective Rate (end of period).
(3) (2) (2) (2)
Ending Spreads Sep Q ’14 Sep Q ‘15 Sep Q ‘16
2 YR vs. 5 YR 1.11 0.64 0.51
2 YR vs. 7 YR 1.48 0.95 0.75
20
Reconciliation of Non-GAAP Financial Measure
21
22
2015 2014 2013 2012 2011
Net income, as reported 813$ 787$ 675$ 586$ 638$ Adjustments:
Amortization of acquired intangible assets 90 90 91 92 97 Income tax effect of above adjustment (35) (35) (35) (35) (37)
Net income excluding amortization of intangible assets 868$ 842$ 731$ 643$ 698$
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 excludingamortization of intangible assets as net income adjusted to remove the after-tax effect of amortization of acquired intangible assets. We consider net incomeexcluding amortization of intangible assets an important measure of our financial performance. Amortization of acquired intangible assets is excluded becausemanagement does not believe it is indicative of underlying business performance. Net income excluding amortization of intangible assets should be considered inaddition 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 (NYSE: AMTD). Brokerage services provided by TD Ameritrade, Inc., member FINRA/SIPC, 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. © 2015 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
TD Ameritrade
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