Heavy trading during volatile quarter lifts TD Ameritrade’s fiscal 3rd-qtr profit by 5 percent

Heavy trading boosts TD Ameritrade’s 3Q profit

OMAHA, Neb. — Record trading activity during a volatile quarter helped lift TD Ameritrade Holding Corp.’s fiscal third-quarter net income by 5 percent to beat expectations, the online brokerage said Tuesday.

During the quarter, which included the historic May 6 “flash crash,” average client trades per day rose 6 percent to 413,000. TD Ameritrade said it added about 175,000 new accounts during the quarter, flat with a year ago, bringing its total to 7.9 million. Total client assets reached $323.8 billion.

That was up 22 percent from $265 billion a year ago, but down 5 percent from $341.5 in the March quarter. That decrease reflected the fact that stocks had their worst quarterly performance since the financial crisis, including an 11.9 percent drop in the Standard & Poor’s 500 index and a 10 percent decline for the Dow Jones industrial average. Both indexes ended the period at lows for the year.

CEO Fred Tomczyk said the heavy customer activity reflected the market’s ups and downs. “Any time there’s good volatility in the market, we typically will do well,” he said in an interview.

For the three months ended June 30, TD Ameritrade posted net income of $179.4 million, or 30 cents per share, up from $170.5 million, or 30 cents per share, in the year-ago period. The company had 4 percent more shares outstanding in the most recent quarter, which trimmed earnings per share compared with last year.

Revenue jumped 13 percent to $691.8 million, from $613.8 million last year. Growth in asset-based revenue helped offset a slight decline in commissions and transaction fees. Discount brokers have been tamping down trading fees to attract more clients.

The results topped the average expectations of analysts polled by Thomson Reuters, who had expected profit of 28 cents per share, on revenue of $682 million.

Beginning during the quarter and through July 2, the company repurchased 15 million of its common shares at an average price of $17.25 each. That completed its current stock buyback program.

Tomczyk said the financial regulation bill President Obama is expected to sign tomorrow will have little effect on Ameritrade. The only aspect of the bill that directly impacts the company is the fiduciary standard that requires broker-dealers to provide advice that puts customer interests first. That is aimed at preventing investment banks from betting against their clients.

“We don’t feel like there’s much of an impact from the reform,” he said.

Shares of TD Ameritrade fell 60 cents to $15.22 in morning trading as the broader market declined.