TD Ameritrade's executive vice president and CFO presented six investment themes for the company: 1) a unique and differentiated business model with high margins and returns, 2) market leadership in online trading, 3) premier asset gathering with double-digit growth, 4) a unique relationship with TD Bank that provides benefits without capital requirements, 5) being well-positioned for rising interest rates with $101B in interest rate sensitive assets, and 6) being good stewards of shareholder capital through investments, dividends, buybacks, and acquisitions. The presentation concluded with an fiscal 2015 outlook range of $1.45-1.70 EPS based on assumptions of market growth, trading activity, interest rates, and
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. 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.
2
Safe Harbor
4. Six Investment Themes for TD Ameritrade
4
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
Six 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 $101B 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 Dec 31, 2014.
Continue to build long-term earnings power and deploy/return capital to further
enhance shareholder value
5. 1. Unique and Differentiated Business Model
5
36% 37%
34%
39%
41%$1.00
$1.11 $1.06
$1.22
$1.42 $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%
FY10 FY11 FY12 FY13 FY14 FY15
41-43%
$1.70
(1)
EPSPre-Tax Margin
Forecasted Pre-Tax Margin Range Forecasted 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
Dec Q ’14:
EPS $0.39
Pre-Tax Margin 41%
(1) FY15 forecast per 10/28/14 outlook statement.
(2) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies.
6. Client Trades Per Day & Activity Rate(2)
372
399
360
374
427
28%
32%
36%
39%
41%
20%
25%
30%
35%
40%
45%
275
325
375
425
475
FY10 FY11 FY12 FY13 FY14 FY15
Avg. Client Trades Per Day (K)
2. Market Leadership in Trading(1)
6
% Derivatives(4) of Total Trades per Day
Forecasted Range (K)(3)
(1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab.
(2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period.
(3) FY15 forecast per 10/28/14 outlook statement.
(4) Derivatives include options, futures and foreign exchange (Forex) trades per day.
(5) FY15 DARTS and AR% year-to-date as of 12/31/14.
(6) Total revenue-generating trades divided by the number of trading days in the period. This metric is also known as average client trades per day.
465
Activity
Rate(2)
6.9% 7.2% 6.3% 6.3% 6.2-7.2%(3)
6.9%
400
Improved macroeconomic
environment
Dec Q ’14 DARTs(6) of
457K/7.2% activity rate
Institutional trading increasing
Growth strategies
Tiered platform strategy
Product proliferation: Derivatives
41% of Dec Q ’14 DARTs
Mobile record 14% of Dec Q ‘14
DARTS
Fiscal 2015 Outlook
Activity Rate 6.2%-7.2%
January DARTs of 493K/7.7%
activity rate
457/
7.2%(5)
7. 3. Premier Asset Gatherer
7
Net New Client Assets ($B)(1)
(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) FY15 forecast per 10/28/14 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 12/31/14.
(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.
$34
$41 $41
$50
$53
$46
$0
$10
$20
$30
$40
$50
$60
$70
$80
FY10 FY11 FY12 FY13 FY14 FY15
$72
Growth
Rate(3)
7-11%(2)
11% 10% 10%12%11%Growth
Rate(3)
Forecasted Range ($B)(2)
Industry leading asset gatherer(5)
Dec Q ’14 record $18.8B, 11% growth
rate, up 30% year-over-year
Six consecutive years of double-digit
growth
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 RIA growth
VEO open architecture
Fiscal 2015 Outlook
Long-term goal 7-11% growth
$18.8/
11%(4)
8. Investment Product Fees(1)
8
Forecasted Range ($M)(2)Investment Product Fees ($M)
(1) Market fee-based plus money market mutual fund revenue.
(2) FY15 forecast per 10/28/14 outlook statement.
(3) Investment Product Fees year-to-date as of 12/31/14.
$129
$166
$196
$250
$309
$100
$150
$200
$250
$300
$350
$400
FY10 FY11 FY12 FY13 FY14 FY15
CAGR: 24%
Avg. Bal. ($B) $62 $78 $86 $113 $137 $156-$168(2)
$385
$340
Dec Q ’14 update
Record average balances
Year-over-year growth:
average balances up 16%;
revenue up 15%
10% of total revenue
Guidance products
performing well
Strong mutual fund growth
Fiscal 2015 Outlook
Targeting 10-25% growth
$83(3)
9. 4. Unique Relationship with TD(1)
9
Continue to build long-term earnings power and deploy/return capital to further
enhance shareholder value
TD Owns ~ 41%(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 Dec. 31, 2014.
(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.
10. $46
$59 $68
$74 $76
$13
$15
$16
$18 $19
$9
$5
$5
$5
$6
$0
$20
$40
$60
$80
$100
$120
Dec '10 Dec '11 Dec '12 Dec '13 Dec '14
Money Market Mutual Funds
Interest Earning Assets
IDA
5. Well-Positioned for Rising Interest Rates
10
Ending Balances ($B)
Immediate benefit
with Fed Funds
increases
Benefit over time
with Yield
Curve due to
re-pricing of
laddered
investment
portfolio
(2)
Float
$19B
$90
$97
$79
$101
(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 Dec. 31, 2014 consisted of $11.5B in client margin balances, $4.5B in segregated cash, and $3.1B in other balances.
(3) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Dec. 31, 2014.
(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 with no sharing with the client. Sensitivity relates to first 100bps increase.
*Certain totals may not foot due to rounding.
(1)
Fixed
$57B
$68
Interest rate sensitive
assets(3) record $101B, up
4% year-over-year
Ending client cash as % of
client assets 14.4%
Overall consolidated
duration of 2.2 years
Sensitivity model -
estimated annual impact to
EPS on +100bps(4):
Yr. 1 =+$0.38
Yr. 2 =+$0.44
Yr. 3 =+$0.51
(2)
11. 6. Good Stewards of Shareholder Capital
11
Strong Cash Generation and Strong Financial Position
(3)
$0.6 $0.6
$0.7
$0.8
$0.2
$0.5
$0.3
$0.7
$0.5
$0.2
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
FY11 FY12 FY13 FY14 FY15 YTD
Net Income ($B) Returned/Deployed ($B)
81% 65%56% 107%
(1)
(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.
S&P “A”, Moody’s “A3”
Fiscal 2014
Paid $0.98 per share in cash
dividends ($540M)
Repurchased 6.0M shares at an
average of $31.37/share
($190M)
Fiscal 2015
Increased quarterly cash
dividend by 25% to $0.15/share
Share repurchases continue
Refinanced $500M debt which
matured 12/1/14
114%
12. Fiscal 2015 Outlook
12
Continued focus on organic growth
Asset gathering
Trading
Investment product fees and balances(1)
Continued investment in technology
Return of capital strategy
Increased quarterly cash dividend by 25% to $0.15/share
Share repurchases continue
Refinanced $500M debt which matured 12/1/14
Fiscal 2015 EPS Outlook Range: $1.45-$1.70(2)
(1) Market fee-based plus money market mutual fund revenue.
(2) FY15 forecast per 10/28/14 outlook statement.
Continue to build long-term earnings power and deploy/return capital to further
enhance shareholder value
13. 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.
15. Fiscal 2015 Outlook Range(1)
Financial Macro Assumptions Key Metrics
High
$1.70 EPS 10% Market Growth NNA(3) $72B / 11%(4)
43% Pre-Tax
Margin
Activity Rate(2) of 7.2% TPD 465K
Increasing Fed Funds
Increasing Yield Curve
NIM(5) 1.57% / IDA(6) 1.15%
Low
$1.45 EPS 0% Market Growth NNA $46B / 7%
41% Pre-Tax
Margin
Activity Rate of 6.2% TPD 400K
No change in Fed Funds or
Yield Curve
NIM 1.49% / IDA 1.10%
(1) See outlook statement published 10/28/2014.
(2) Funded account activity rate. Average client trades per day during the period divided by the average number of total funded accounts during the period.
(3) 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.
(4) NNA growth rate is annual net new assets as a % of client assets as of the beginning of 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.
15
16. Sensitivity
3K average client trades per day = $0.01
0.05% funded activity rate(1) = $0.01
$4.1B fee-based assets(2) = $0.01
$0.6B spread-based assets(3) = $0.01
+25bps fed move = +$0.08(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 with no sharing with the client. Sensitivity relates to first 25bps increase.
Estimated annual impact to EPS
16