TD Ameritrade 2nd quarter profit up 8 percent in volatile quarter

By Josh Funk
AP Business Writer

OMAHA, Neb. (AP) - Online brokerage TD Ameritrade reported an 8 percent profit rise for its latest quarter as it generated more revenue from asset-based fees and trading increased in a volatile quarter.

The Omaha, Nebraska-based company said it earned $205 million, or 38 cents per share, in its fiscal second quarter. That's up from $189 million, or 35 cents per share, a year ago.

The results matched the consensus forecast of 38 cents per share from nine analysts surveyed by Zacks Investment Research.

TD Ameritrade's revenue rose 5 percent to $846 million, but fell short of the $859.4 million that six analysts predicted.

The company handled an average of 509,120 trades per day, up from 476,590 a year ago.

"We continue to execute well, resulting in solid quarterly performances for each of our major revenue streams," CEO Fred Tomczyk said.

TD Ameritrade's expenses of $503 million were slightly lower than last year's $507 million, which helped profits. But the company didn't see a big boost from the Federal Reserve's interest rate increase because margin lending was low.

Citi Investment Research analyst William Katz said controlling expenses was a positive, but investors should watch closely how much TD Ameritrade generates from interest-based fees. He also advises to keep alert for a rebound from this quarter's lower average commission per trade of $11.60.

TD Ameritrade is working to make sure its brokers are following the new rule requiring financial advisers to put their clients' best interests above all, but it will take time to analyze the rule and decide how best to comply, Tomczyk said.

"It's a long, complex rule that's open to a lot of interpretation," Tomczyk said.

TD Ameritrade executives will be looking at whether the company needs to create a separate call center to support registered investment advisers differently than the way it works with individual investors now. But the company hasn't made any decisions yet since the rule was just published earlier this month.

The company is also preparing for Tomczyk's retirement in the fall at the end of its fiscal year. His successor, Tim Hockey, is serving as president of TD Ameritrade as he prepares to take over, and has begun managing more of the day-to-day operations.

Shares of TD Ameritrade Holding Corp. slipped 94 cents, or 3 percent, to $30.71 in afternoon trading. Its shares are down about 16 percent over the past year.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AMTD at http://www.zacks.com/ap/AMTD.

Published: Thu, Apr 21, 2016

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