TD Ameritrade Holding Corporation
) reported its fiscal first quarter 2013 (ended Dec 31, 2012) net
income of 27 cents per share, marginally beating the Zacks
Consensus Estimate of 24 cents. However, net income was in line
with the prior-year quarter.
Better-than-expected results for the quarter reflected a
decline in operating expenses. Further, an increase in total
client assets was a positive. However, decreases in total daily
average revenue trades (DARTs) and revenue were the
TD Ameritrade reported fiscal first-quarter net income of $147
million compared with $152 million reported in the prior-year
Performance in Detail
Net revenue declined 0.3% year over year to $651.0 million in
the quarter, primarily attributable to declines in
transaction-based revenues, partially offset by a rise in total
asset-based revenues and net interest revenue. However, the
reported revenues outpaced the Zacks Consensus Estimate of $635.0
The DARTs for the reported quarter decreased 9.1% year over
year to 334,035. Net new client assets reported were $15.6
billion, up 52.9% from $10.2 billion a year ago.
At the end of the quarter, TD Ameritrade reported $480.8
billion in total client assets, up 18.3% year over year.
Moreover, average spread-based balance was $79.3 billion, up 9.2%
from $72.6 billion in the prior-year quarter. Average fee-based
balances were recorded at $100.0 billion, soaring 28.4% year over
Net interest revenue was $116.0 million, up 6.4% year over
Operating income rose 5.7% year over year to $241.0 million in
the quarter under review. The rise was due to reduced operating
expenses, partly offset by a decrease in net revenue. Net
interest margin in the quarter was 1.58%, down 11 basis points
from 1.69% in the prior-year quarter.
Total operating expense moved down 3.5% year over year to
$410.0 million. The decline was mainly attributable to lower
employee compensation and benefits expenses, advertising
expenses, professional services as well as other expenses. These
were partially offset by a hike in clearing and execution costs,
occupancy and equipment costs along with higher depreciation and
As of Dec 31, 2012, TD Ameritrade's leverage ratio was 1.0,
compared with 1.2 as of Dec 31, 2011. Cash and cash equivalents
stood at $1.9 billion compared with $0.9 billion as of Dec 31,
Capital Deployment Update
TD Ameritrade declared a quarterly dividend of 9 cents per
share on its common stock. The dividend will be paid on Feb 15,
2013 to shareholders of record as of Feb 1, 2013.
Innovations in online trading and long-term investing products
and services, delivery of advanced customer service, creative as
well as cost-effective marketing and sales, along with expense
discipline, can be considered as the key factors behind TD
Ameritrade's strategy of boosting its trading and investing
Further, its association with
The Toronto-Dominion Bank
) provides an opportunity to cross-sell its products, which is
anticipated to be a significant growth driver of organic assets
for the company.
Amid a volatile operating environment, TD Ameritrade witnessed
a rise in organic client assets. However, the decline in trading
volumes is a matter of concern for the company. Further, a low
interest rate and stringent regulatory environment are expected
to be the dampeners.
TD Ameritrade currently retains a Zacks Rank #3 (Hold). Among
other investment brokers that are worth considering include
Arlington Asset Investment Corp.
Evercore Partners Inc.
). Both carry a Zacks Rank #1 (Strong Buy).
ARLINGTON ASSET (AI): Free Stock Analysis
TD AMERITRADE (AMTD): Free Stock Analysis
EVERCORE PARTNR (EVR): Free Stock Analysis
TORONTO DOM BNK (TD): Free Stock Analysis
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