TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD

Transcription

1 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

2 SAFE HARBOR 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 forwardlooking 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, as amended, on Form 10-K/A, filed with the SEC on Feb. 4, 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. 2

3 OUR MISSION To Be The Better Investment Firm For Today s Investor 3

4 SIX INVESTMENT THEMES FOR TD AMERITRADE Long-Term Themes 1. Unique and differentiated business model 2. Market leadership in trading 3. Premier asset gatherer 4. Unique relationship with TD Key Takeaways Low financial risk conservative balance sheet and strong operating margins Significant operating leverage #1 in market share (1) thinkorswim Secular trends strong Target market focus: Retail clients <$1M Institutional clients <$1B Revised IDA (2) agreement creates asset liability management (ALM) flexibility Significant free cash flow 5. Well-positioned for rising interest rates $90B in interest rate sensitive assets (3) 6. Good stewards of shareholder capital Primary uses of cash: dividends, acquisitions and investments in the business CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE (1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available report s for E*Trade Financial and Charles Schwab. (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) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Balances as of 12/31/12. 4

5 1. UNIQUE AND DIFFERENTIATED BUSINESS MODEL 60% 50% 40% 30% 20% 10% 0% 46% 42 Operating Margin Forecasted Operating Margin Range 38% 38% Return on Avg. Client Assets (bps) (1) Forecasted Range 35% FY09 FY10 FY11 FY12 FY % EPS (3) $1.10 $1.00 $1.11 $1.06 $1.00-$1.20 (2) Business model combined with TD Bank (4) relationship drives: Low capital intensity High return on equity Strong cash and capital generation Cash generation approximates net income Industry-leading operating margin (5) Expense discipline (1) Return on average client assets (ROCA) = annualized pre-tax income divided by average client assets. (2) FY13 forecast per 10/29/12 outlook statement. (3) Earnings per diluted share (EPS). (4) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. (5) Source: based on last 12 months publicly available reports for E*Trade Financial and Charles Schwab. 5

6 2. MARKET LEADERSHIP IN TRADING (1) Client Trades Per Day & Activity Rate (2) Average Client Trades Per Day (K) / 5.8% (3) 200 FY09 FY10 FY11 FY12 (4) FY13 Activity 7.3% (5) 6.9% 7.2% 6.3% % Rate (2) 399 Forecasted Range (K) Challenging economic/market environment Low volatility and exchange volumes 387K / 6.6% in Jan 13 Historical range % Growth Strategies Tiered platform strategy Product proliferation: Derivatives (6) ~40% of Dec Q 12 trades per day Mobile nearly 8% of Dec Q 12 trades per day Investor Movement Index (IMX) (7) (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) FY13 DARTS and AR% year-to-date as of Dec. 31, (4) FY13 forecast per 10/29/12 outlook statement. (5) Pro-forma combined with thinkorswim funded activity rate (trades per day): FY09 8.1% (419K); Derivatives (trades per day): FY09 20%. (6) Derivatives include options, futures, and foreign exchange (Forex) trades per day. (7) The IMX is not a tradable index. The IMX should not be used as an indicator or predictor of future client trading volume or financial performance for TD Ameritrade. Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision. 6

7 3. PREMIER ASSET GATHERER $60 $50 $40 $30 $20 Net New Client Assets ($B) (1) $27 $34 Forecasted Range ($B) $41 $41 $33-52 $10 $15.6/ $0 13% (3) FY09 FY10 FY11 FY12 FY13 Annualized Growth (2) 10% 11% 12% 11% 7-11% (4) Industry leading asset gatherer (5) Four consecutive years of doubledigit growth Sales and service culture Strong momentum in both retail and institutional Strong retail contributions from cross-selling and TD Bank (6) initiative Robust breakaway brokers (BAB) trends Existing RIA 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) NNA growth rate is annualized net new assets as a % of client assets as of the beginning of the period. (3) NNA and NNA growth rate year-to-date as of Dec. 31, (4) FY13 forecast per 10/29/12 outlook statement. (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. (6) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. 7

8 MARKET FEE-BASED (1) REVENUE GROW THIRD REVENUE STREAM Market Fee-Based Revenue ($M) (1) Fiscal 2012 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 Forecasted Range ($M) CAGR: 36% $158 $119 $76 $250 $220 $193 $55 (2) FY09 FY10 FY11 FY12 FY13 (3) Strong growth trends Increased distribution capacity Principal products: Amerivest AdvisorDirect Mutual Funds Fiscal 2013 Outlook Target revenue growth: 15-25% growth annually Enhanced product set, sales process and training Amerivest/AdvisorDirect products now aligned with target markets (1) Investment product fee revenue less money market mutual fund revenue. (2) Market fee-based revenue year-to-date as of Dec. 31, (3) FY13 forecast per 10/29/12 outlook statement. 8

9 4. UNIQUE RELATIONSHIP WITH TD TD OWNS ~ 45% of TD AMERITRADE Ownership capped until end of shareholder agreement - January 2016 Implications on share repurchases Key relationships Insured deposit account (IDA) (1) agreement 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 IDA agreement a competitive differentiator Effective January 1, 2013 July 1, 2018 Downside protection to AMTD in current rate environment Management fee reduced on floating rate balances Increasing fee to TD on new extensions in higher rate environment Additional maximum fee of 10bps when fed funds 75bps and 5-year Swaps (LIBOR-based) 200bps Implementation period 7+ years after reaching thresholds Impact to strategy in current rate environment Flexibility to build floating rate balances Extensions at 5-7 yr. range on the LIBOR swap curve (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. 9

10 5. WELL-POSITIONED FOR RISING INTEREST RATES $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Ending Balances ($B) Money Market Mutual Funds Interest Earning Assets IDA (1) $60 $10 $16 $35 $68 $9 $13 $46 $79 $5 $15 $59 $90 $5 $16 $68 Dec '09 Dec '10 Dec '11 Dec '12 (3) Immediate benefit with Fed Funds increases, but capped Immediate benefit with Fed Funds increases Immediate benefit with additional benefit over time with re-pricing of laddered investment portfolio Interest rate sensitive assets (2) of $90B, up 14% year over year IDA (1) balances up 15% year-over-year Revised sensitivity estimated annual impact to EPS (4) on +100bps: Yr. 1=+$0.32 (from $0.28) Yr. 2=+$0.43 (from $0.39) Yr. 3=+$0.54 (from $0.50) (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 Dec. 31, (3) Ending balances as of Dec. 31, 2012 consisted of $8.6B in client margin balances, $4.7B in segregated cash, and $3.0 in other balances. (4) Earnings per diluted share (EPS). 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. * Certain totals may not foot due to rounding. 10

11 6. GOOD STEWARDS OF SHAREHOLDER CAPITAL STRONG CASH GENERATION AND STRONG FINANCIAL POSITION $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 Net Income ($B) Returned/Deployed ($B) $0.6 $0.6 $0.6 $0.5 $0.4 $0.3 $0.3 $0.1 73% 81% 56% 203% FY10 FY11 FY12 FY13 YTD (1) (2) S&P upgraded to A in Fiscal 2012 Third upgrade since 2009 Fiscal 2013 Repaid $250M tranche of debt in December Increased dividend by 50% to $0.09/quarter $0.50 special dividend in December ($273M); funded with revolving credit line (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. (2) FY13 YTD as of Dec. 31,

12 FISCAL 2013 FOCUS Challenging global environment Cautiously optimistic on U.S. economy Maintain our momentum in trading and asset gathering Grow third revenue stream, market fee-based revenue (1) Remain disciplined on expenses Lean will self-fund growth initiatives Return of capital strategy Fiscal 2013 EPS (2) Outlook Range: $1.00-$1.20 (3) CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE (1) Investment product fee revenue less money market mutual fund revenue. (2) Earnings per diluted share (EPS). (3) FY13 forecast per 10/29/12 outlook statement. 12

13 CREATING LONG-TERM SHAREHOLDER VALUE 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 CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE 13

14 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

15 SENSITIVITY ESTIMATED ANNUAL IMPACT TO EPS (1) 3K average client trades per day = $ % funded activity rate (2) = $0.01 $4.1B fee-based assets (3) = $0.01 $0.6B spread-based assets (4) = $ K new accounts = $ bps fed move = +$0.08 (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. 15

16 FISCAL 2013 OUTLOOK RANGE (1) Financial Macro Assumptions Key Metrics $1.20 EPS (2) 10% Market Growth NNA (4) $52B / 11% (5) High 38% Operating Margin Activity Rate (3) of 7.0% TPD 410K No change in Fed Funds NIM (6) 1.50% / IDA (7) 1.17% Increasing Yield Curve $1.00 EPS 0% Market Growth NNA $33B / 7% Low 36% Operating Margin Activity Rate of 6.0% TPD 355K No change in Fed Funds or Yield Curve NIM 1.40% / IDA 1.07% (1) See outlook statement published 10/29/2012. (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) Annual NNA growth rate 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. 16

17 CASH AS % OF CLIENT ASSETS CONSISTENTLY 15-20% Avg. Client Cash ($B) Avg. Client Cash as % of Client Assets $100 25% $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $ % $ % $ % 16.9% 21.1% 23.3% 21.5% $49.4 $50.5 $51.7 $52.0 $ % 18.8% Relatively high % s due to depressed market postcrash Fall % 17.9% 18.2% $56.4 $57.6 $58.8 $60.2 $61.3 $63.7 $66.2 $ % 16.5% 16.3% $ % $74.9 $75.8 $75.0 $76.8 $ % 17.6% 16.9% 16.8% 17.1% 20% 15% $40 $35 $30 DecQ '07 MarQ '08 JunQ '08 SepQ '08 DecQ '08 MarQ '09 JunQ '09 SepQ '09 DecQ '09 MarQ '10 JunQ '10 SepQ '10 DecQ '10 MarQ '11 JunQ '11 SepQ '11 DecQ '11 MarQ '12 JunQ '12 SepQ '12 DecQ '12 10% 17

18 ACTIVITY RATE (1) THREE YEAR AVERAGE 6.7% Activity Rate (1) Avg. Client Trades Per Day (K) 3 YR Avg. Activity Rate (1) 9.0% 439 FY13 Outlook Range (2) : Activity Rate (1) : 6%-7% Avg. Client Trades Per Day: % 7.0% 6.0% % 7.1% % % 8.0% % % % % % % % 5.7% 5.8% % DecQ '09 MarQ '10 JunQ '10 SepQ '10 DecQ '10 MarQ '11 JunQ '11 SepQ '11 DecQ '11 MarQ '12 JunQ '12 SepQ '12 DecQ ' (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 10/29/12. 18

19 IDA (1) NET REVENUE TREND GROWTH OFFSETTING RATE COMPRESSION ($B) $75 $70 $65 $60 $55 $50 $45 $40 $35 $155 Avg. IDA Balances ($B) Total Revenue FY10: $682 $170 $39.3 $180 $41.8 $177 $179 $43.1 (1) $44.7 IDA Revenue ($M) Total Revenue FY11: $763 12% YoY Growth $188 $46.8 $197 $48.6 $200 $54.0 Total Revenue FY12 : $828 9% YoY Growth $205 $209 $58.8 $58.4 $59.0 $206 $207 $61.4 $205 $64.2 ($M) $225 $200 $175 $150 $125 $30 $ % 1.32% 1.25% $25 DecQ '09 MarQ '10 JunQ '10 SepQ '10 DecQ '10 MarQ '11 JunQ '11 SepQ '11 DecQ '11 MarQ '12 JunQ '12 SepQ '12 DecQ '12 Net Yield 1.87% 1.73% 1.70% 1.61% 1.56% 1.60% 1.60% 1.45% 1.37% 1.42% Avg. Fed Funds (2) 0.12% 0.14% 0.19% 0.19% 0.19% 0.16% 0.09% 0.08% 0.07% 0.11% 0.16% 0.15% 0.16% 5YR Swap Rates (2) 2.65% 2.70% 2.49% 1.76% 1.74% 2.32% 2.07% 1.44% 1.32% 1.17% 1.08% 0.86% 0.83% (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. $100 19

20 REVISED IDA (1) AGREEMENT EFFECTIVE JANUARY 1, 2013 JULY 1, 2018 Better alignment with Dodd-Frank/Basel III Downside protection to AMTD in current rate environment TD servicing fee on floating rate balances is reduced when fed funds less FDIC fees are below 50bps At current rates, fee will be 7.5bps vs. current 25bps Increasing fee to TD on new extensions in higher rate environment Begins when fed 75bps and 5-year Swaps 150bps Not expected until early 2016 based on economists current projections (2) Up to an additional 10bps over time Enhances AMTD s ability to manage NIM (3) in a rising rate environment (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: Global Insight January 3, (3) NIM (net interest margin) is a measure of the net yield on our average spread-based assets. 20

21 REVISED IDA (1) AGREEMENT FLOATING RATE BALANCES Downside protection to AMTD in current rate environment Minimum fee of 3bps; Maximum fee of 25bps; At current rates, fee will be 7.5bps Servicing fee variable with fed funds rate ~$30M incremental revenue annually in current rate environment Servicing fee: (Earn rate (2) FDIC fee)/2 Illustrative Example 1 Example 2 Example 3 Example 4 Earn rate - FDIC fee 0.06% 0.15% 0.50% 0.65% TD Servicing fee 0.03% 0.075% 0.25% 0.25% * *Fee capped at 25bps when earn rate less FDIC fee at 50bps (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) Higher of the effective fed funds rate or the rate the Fed pays on excess reserves. 21

22 REVISED IDA (1) AGREEMENT NEW EXTENSIONS ONLY Increasing fee to TD on new extensions in higher rate environment Based on current economists forecast (2), increasing fee phase-in not expected until early 2016 Implementation period will be over several years Fee increase applies ONLY to new extensions Fee variable with 5-year Swaps (LIBOR-based) between bps Additional 10bps not reached until 5-year Swaps at 200bps Illustrative Example 1 Example 2 Example 3 Example 4 5-yr Swap rate 1.50% 1.75% 2.00% 2.50% Minimum 1.50% 1.50% 1.50% 1.50% Excess > 150bps 0.00% 0.25% 0.50% 1.00% 20% phase-in 20% 20% 20% n/a Additional fee 0.00% 0.05% 0.10% 0.10% (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: Global Insight January 3,

23 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.