Online brokerage TD Ameritrade says 1Q profit fell 26 percent as expenses rose

TD Ameritrade 1Q profit falls 26 percent

OMAHA, Neb. — Online brokerage TD Ameritrade Holding Corp. said Tuesday lower interest rates and higher expenses contributed to a 26 percent drop in its first-quarter profit.

Healthy trading volume wasn’t enough to offset a decline of 10 percent in asset-based revenue and an increase of nearly 31 percent in expenses, the company said.

Expenses jumped to $384.2 million largely because of last year’s acquisition of options-trading specialist thinkorswim.

Ameritrade President and CEO Fred Tomczyk said the company remains focused on improving its long-term results, not on things it can’t control, such as interest rates.

“We remain committed to taking advantage of opportunities to grow our organization and are well-positioned for an improving economic environment,” Tomczyk said in a statement.

Ameritrade said it earned $136.2 million, or 23 cents per share, for the three months ended Dec. 31, down from $184.4 million, or 31 cents a share, a year ago.

Revenue for the brokerage based in Omaha grew about 2 percent to $624.6 million from $610.7 million a year ago.

Analysts expected earnings per share of 26 cents on $628.18 million in revenue.

Its shares fell 2.2 percent to $17.90 in premarket trading.

Ameritrade estimated the number of trades it handled increased 6 percent to an average of 378,561 trades per day during the quarter. That led to an 8 percent increase in transaction-based revenue to $309.4 million from last year’s $287.1 million.

Ameritrade’s asset-based revenue, which is linked to current interest rates, includes money earned on its clients’ deposit accounts and other investment products. Asset-based revenue fell to $284.2 million from $317.2 million in the quarter.

As part of its plan to survive the recession, Ameritrade continues to hold onto a substantial amount of cash and other liquid assets. The company had about $1.1 billion on hand at the end of December.

On the Net:

TD Ameritrade Holding Corp.: www.amtd.com