TD Ameritrade BofA Merrill Lynch Conference New York, NY November 13, 2014 Fred Tomczyk President and CEO 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. 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. 1
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 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 forwardlooking 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 forwardlooking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws. 2
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Six Investment Themes for TD Ameritrade Long-Term Themes 1. Unique and differentiated business model Key Takeaways 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 Economics of deposit banking without 4. Unique relationship with TD (2) capital requirements Significant free cash flow 5. Well-positioned for rising interest rates $100B in interest rate sensitive assets (3) 6. Good stewards of shareholder capital Primary uses of cash: investments in business, dividends, share repurchases and acquisitions 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 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, 2014. 4
1. Unique and Differentiated Business Model Pre-Tax Margin EPS (1) 50% 40% 30% $1.00 36% $1.11 $1.06 37% 34% $1.22 39% $1.70 $1.42 $1.45 41% 41-43% $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 Forecasted Pre-Tax Margin Range Forecasted Range (2) 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 20% FY10 FY11 FY12 FY13 FY14 FY15 (2) $0.20 $0.00 Scalable business model 97+% of transactions are online Lean/sourcing initiatives (1) Earnings per diluted share (EPS). (2) FY15 forecast per 10/28/14 outlook statement. (3) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. 5
2. Market Leadership in Trading (1) Client Trades Per Day & Activity Rate (2) 475 425 375 325 372 28% Avg. Client Trades Per Day (K) % Derivatives (4) of Total Trades per Day 399 32% 36% 360 39% 374 Forecasted Range (K) (3) 41% 427 45% 40% 35% 30% 25% 275 20% FY10 FY11 FY12 FY13 FY14 FY15 Activity 6.9% 7.2% 6.3% 6.3% 6.9% 6.2-7.2% (3) Rate (2) 465 400 Fiscal 2014 Record average client trades per day of 427K; activity rate 6.9% Record derivatives - 41% of DARTS (5) Record mobile - 13% of DARTS Fiscal 2015 Outlook Activity Rate 6.2-7.2% October DARTS 494K; Activity Rate 7.8% (1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab. (2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) FY15 forecast per 10/28/14 outlook statement. (4) Derivatives include options, futures and foreign exchange (Forex) trades per day. (5) Total revenue trades divided by the number of trading days in the period. This metric is also known as average client trades per day. 6
3. Premier Asset Gatherer 6 th Consecutive Year of Double-Digit Growth Net New Client Assets ($B) (1) Forecasted Range ($B) (2) $80 $70 $60 $50 $40 $30 $20 $34 $41 $41 $50 $53 $72 $46 Fiscal 2014 Record $53B NNA, 10% growth rate Retail driven by: New relationships Cross-selling High asset retention rates Institutional driven by: New and existing RIAs VEO open architecture $10 $0 FY10 FY11 FY12 FY13 FY14 FY15 Growth 11% 12% 11% 10% 10% 7-11% (2) Rate (3) Fiscal 2015 Outlook Long-term goal 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) FY15 forecast per 10/28/14 outlook statement. (3) NNA growth rate is annual net new assets as a % of client assets as of the beginning of the period. 7
Investment Product Fees (1) $400 $350 $300 $250 $200 CAGR: 24% $166 $196 $250 $309 $385 $340 Investment Product Fees ($M) Forecasted Range ($M) (2) Fiscal 2014 Record revenue and average balances Year-over-year growth: average balances up 21%; revenue up 24% Amerivest and AdvisorDirect performing well Strong mutual fund growth $150 $129 $100 FY10 FY11 FY12 FY13 FY14 FY15 Avg. Bal. ($B) $62 $78 $86 $113 $137 $156-$168 (2) Fiscal 2015 Outlook Targeting 10-25% growth (1) Market fee-based plus money market mutual fund revenue. (2) FY15 forecast per 10/28/14 outlook statement. 8
4. Unique Relationship with TD TD Owns ~ 41% (1) of TD Ameritrade 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 Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value (1) As of Sep. 30, 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. 9
5. Well-Positioned for Rising Interest Rates Reached $100B in FY14 $100 $80 $60 $40 $20 Money Market Mutual Funds Interest Earning Assets IDA (1) $83 $77 $5 $66 $8 $15 $9 $12 $13 $57 $63 $44 Ending Balances ($B) $96 $5 $17 $100 $6 $19 $73 $75 (2) Float $18B Fixed $57B Immediate benefit with Fed Funds increases Benefit over time with Yield Curve due to re-pricing of laddered investment portfolio $100B balances, up 5% year-over-year Ending client cash as % of client assets 14.7% Overall consolidated duration of 2.2 years Updated sensitivity model - estimated annual impact to EPS (3) Yr. 1 =+$0.38 (4) (from $0.36) Yr. 2 =+$0.44 (4) (from $0.44) Yr. 3 =+$0.51 (4) (from $0.50) $0 Sep '10 Sep '11 Sep '12 Sep '13 Sep '14 (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, 2014 consisted of $11.5B in client margin balances, $5.1B in segregated cash, and $2.6B in other balances. (3) Earnings per diluted share (EPS). (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. *Changes based on rounding numbers to the nearest millions. 10
6. Good Stewards of Shareholder Capital Strong Cash Generation and Strong Financial Position S&P A, Moody s A3 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 Net Income ($B) $0.6 $0.6 $0.6 $0.4 73% $0.5 Returned/Deployed ($B) $0.3 $0.7 $0.7 (3) $0.8 FY10 FY11 FY12 FY13 FY14 $0.5 81% 56% 107% 65% (1) 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 Outlook Increasing quarterly cash dividend by 25% to $0.15/share Share repurchases continue Refinanced $500M debt maturing 12/1/14 (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. 11
Fiscal 2015 Outlook Continued focus on organic growth Asset gathering Trading Investment product fees and balances (1) Continued investment in technology Return of capital strategy Increasing quarterly cash dividend by 25% to $0.15/share Share repurchases continue Refinanced $500M debt maturing 12/1/14 Fiscal 2015 EPS (2) Outlook Range: $1.45-$1.70 (3) Continue to build long-term earnings power and deploy/return capital to further enhance shareholder value (1) Market fee-based plus money market mutual fund revenue. (2) Earnings per diluted share (EPS). (3) FY15 forecast per 10/28/14 outlook statement. 12
Six Investment Themes for TD Ameritrade 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 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 reports for E*Trade Financial and Charles Schwab. (2) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. 13
TD Ameritrade BofA Merrill Lynch Conference New York, NY November 13, 2014 Fred Tomczyk President and CEO 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. 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. 14
Fiscal 2015 Outlook Range (1) Financial Macro Assumptions Key Metrics $1.70 EPS (2) 10% Market Growth NNA (4) $72B / 11% (5) High 43% Pre-Tax Activity Rate (3) of 7.2% TPD 465K Margin Increasing Fed Funds Increasing Yield Curve NIM (6) 1.57% / IDA (7) 1.15% $1.45 EPS 0% Market Growth NNA $46B / 7% Low 41% Pre-Tax Margin Activity Rate of 6.2% No change in Fed Funds or Yield Curve TPD 400K NIM 1.49% / IDA 1.10% (1) See outlook statement published 10/28/2014. (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 annual 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. 15
Sensitivity Estimated annual impact to EPS (1) 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 = +$0.08 (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 with no sharing with the client. Sensitivity relates to first 25bps increase. 16
Activity Rate (1) Thirteen quarter average 6.6% Activity Rate Avg. Trades Per Day (K) 13 Qtr. Avg. Activity Rate FY15 Outlook Range (2) : Activity Rate: 6.2%-7.2% Avg. Trades Per Day (K): 400-465 8.5% 492 500 8.0% 6.6% 8.1% 475 450 7.5% 7.0% 6.5% 6.0% 5.5% 7.4% 416 Sep Q '11 367 6.5% Dec Q '11 388 6.8% Mar Q '12 355 6.2% Jun Q '12 328 5.7% Sep Q '12 334 5.8% Dec Q '12 378 6.5% Mar Q '13 399 6.7% Jun Q '13 382 6.4% Sep Q '13 414 6.9% Dec Q '13 Mar Q '14 401 403 6.5% Jun Q '14 6.4% Sep Q '14 425 400 375 350 325 300 (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 10/28/14. 17
Cash as % of Client Assets Historic 15-20% Range Shifting Downward due to Mix $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $45 19.8% 18.8% $56.4 $57.6 $58.8 Avg. Client Cash ($B) Avg. Client Cash as % of Client Assets 18.1% 17.9% 18.2% $60.2 $61.3 $63.7 17.2% $66.2 $68.2 16.5% 16.3% $72.5 $74.9 18.1% 18.8% 17.6% $75.8 $75.0 $76.8 $80.9 $83.6 16.9% 16.8% 17.1% 16.7% $85.8 $90.2 16.4% 16.7% 15.9% $91.6 $91.8 $91.7 15.2% $93.7 14.5% 14.3% 25% 20% 15% $40 $35 $30 Sep Q '09 Dec Q '09 Mar Q '10 Jun Q '10 Sep Q '10 Dec Q '10 Mar Q '11 Jun Q '11 Sep Q '11 Dec Q '11 Mar Q '12 Jun Q '12 Sep Q '12 Dec Q '12 Mar Q '13 Jun Q '13 Sep Q '13 Dec Q '13 Mar Q '14 Jun Q '14 Sep Q '14 10% 18
IDA (1) Net Revenue Trend Avg. IDA Balances ($B) IDA Revenue ($M) $80 $75 $70 $65 $60 $55 $50 $200 $54.0 Total Revenue FY12 : $828 9% YoY Growth $205 $209 $206 $207 $205 $58.8 $58.4 $59.0 $61.4 Total Revenue FY13 : $804-3% YoY Growth $64.2 $200 $199 $201 $67.1 $68.6 Total Revenue FY14 : $820 2% YoY Growth $208 $202 $202 $72.0 $72.7 $73.0 $72.4 $208 $73.6 $225 $200 $175 $150 $125 $45 $100 $40 $75 $35 $30 $50 $25 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 Net Yield 1.45% 1.37% 1.42% 1.38% 1.32% 1.25% 1.19% 1.15% 1.09% 1.12% 1.10% 1.10% 1.11% Avg. Fed Funds (2) 0.08% 0.08% 0.11% 0.16% 0.15% 0.16% 0.15% 0.12% 0.09% 0.09% 0.07% 0.09% 0.09% 5YR Swap Rates (2) 1.44% 1.32% 1.17% 1.08% 0.86% 0.81% 0.96% 1.08% 1.67% 1.54% 1.69% 1.74% 1.82% (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. $25 19
Libor/Swap Yield Curve Nine quarter trend 3.00 Forecast per October GI (1) 2.73 2.90 2.50 2.00 2.16 2.48 2.36 1.79 1.80 2.18 1.70 2.30 1.93 2.06 (4) 2.40 2.05 2.56 2.14 2.32 2.51 1.50 1.54 Ending Spreads Sep Q 13 Sep Q 14 Sep Q 15 1.67 (4) 1.26 1.51 1.00 2 YR vs. 5 YR 1.08 1.11 1.00 2 YR vs. 7 YR 1.70 1.48 1.39 0.82 0.90 0.99 0.50 0.46 0.49 0.55 0.58 0.64 (4) 0.35 0.61 0.06 0.07 0.06 0.09 0.07 0.09 (4) 0.10 0.16 0.00 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 2 YR(2) 5 YR(2) 7 YR(2) Fed Funds (3) (1) Assumes October 2014 Global Insight UST rate forecast adjusted for the current 30-day avg. swap spread as of Oct. 2, 2014. (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). (4) Source: Bloomberg close of business as of 10/24/14. 20
TD Ameritrade 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. 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. 21