Charles Schwab executives are upbeat about its pending purchase of TD Ameritrade and about its business overall, despite expected declines in its net interest margin and pretax margin this year.
“All three [acquisitions] remain on track,” said CEO Walt Bettinger on a call with investors and analysts Tuesday, referring to deals with TD Ameritrade, USAA Investment Management and Wasmer Schroeder.
As the Department of Justice continues its “responsible and thorough review” of the $26 billion TD transaction, “we remain optimistic,” Bettinger said.
In late March, the DOJ asked firms involved in mergers and acquisitions to add 30 days to their “deal timing agreements,” saying it needed extra time to check documents; it also postponed depositions and moved meetings to phone and video “whenever possible.”
When asked about RIA business and advisor movement, Bettinger said Schwab “doesn’t expect a slowdown” after its “strong” first-quarter performance.
“The RIA community continues to have success,” especially those advisors with less than $300 million, he added, who now have “the highest organic growth rate.”
In terms of a possible slowdown during the time when TD Ameritrade advisors and their accounts are being moved over to Schwab, assuming the deal is approved, “that isn’t likely to unfold,” Bettinger said. “We have deep, positive relationships with the vast, vast, vast majority of RIAs we work with — as does TD Ameritrade.
“We do not anticipate a meaningful change in this business as that date approaches,” the CEO said, though he didn’t give a rough estimate of when that would be.
Latest Quarterly Results
Charles Schwab said April 15 that its net income for the first quarter of 2020 was $795 million, down 18% from a year ago. Revenues weakened 4% from Q1’19 to hit $2.6 billion.
Earnings per share were $0.58, down 16% from last year and included $0.04 per share for M&A and COVID-19 costs.