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TD Ameritrade said it continued to work on the planned merger with Charles Schwab, as the brokerage announced its fiscal second quarter earnings on Wednesday. It reported after market close that it missed earnings estimates but beat sales expectations in the quarter ending March 31.

TD Ameritrade’s net income in the latest quarter fell 11% to $446 million from a year ago, while per-share earnings dropped 8% to $0.82. Revenues, though, grew 2% to $1.48 billion; it had net interest revenue of $332 million, down 8% from last year, and total client assets of $1.2 trillion at the end of the period. 

Steve Boyle, interim president and CEO of TD Ameritrade, said in a statement about the planned merger, “While our top priority at the moment is managing our company through the challenges presented by the pandemic, teams remain focused on the most critical work needed for deal close, which we expect will happen in the second half of 2020.”

Boyle’s remarks echo those made Tuesday by Schwab CEO Walt Bettinger. “All three [acquisitions] remain on track,” Bettinger explained on a call with investors and analysts, 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.

TD Ameritrade’s Fiscal Q2 Earnings

TD Ameritrade’s net new assets, or NNA, in the first three months of 2020 were $45 billion. They were split between retail investors, 58%, and RIA-affiliated clients, 42%. That’s up from about $20 billion a year ago and $29 billion in  the prior quarter.

The pre-tax margin for its fiscal Q2 was 40.5% vs. 46% a year ago and 38% in the prior quarter.

“Institutional NNA also remained strong primarily due to resiliency from existing independent registered investment advisors, as advisors tend to pause efforts to break away or change custodians amid bear market volatility,” Boyle said. 

With current market conditions, TD Ameritrade expects “positive firmwide NNA trends to continue” into the quarter ending June 30, “though likely not to the same degree as the exceptional engagement levels this quarter,” he added.

At the height of the market volatility, daily average revenue trades averaged more than 3 million — and hit 3.7 million on March 25. This month, the average was 3 million through April 20, though the company estimates DARTs of 1.7 million for the remainder of its fiscal year (ending in September). 

Mobile trading averaged 690,000 per day as volatility peaked in the first quarter of 2020. It topped 1 million mobile DARTs on one day in March, Boyle said. 

“The TD Ameritrade Network also had historical viewership this quarter, up 90% from last year as investors sought consistent coverage and context on market conditions,” he added. 

In addition, the firm says it moved its remote work from 15% to nearly 100% over a 10-day period, and it gave employees $1,000 stipends.

Full-Year Guidance

In its presentation for stock analysts and investors, TD Ameritrade projected that its net new assets for the fiscal year ending Sept. 30 will be about 7-10% higher than last year, when they were $93 billion.

It expected revenue for the fiscal year to be about $5 billion vs. $6 billion in the 2019 fiscal period, which would represent a drop of nearly 17%; it gave a range of between $4.9 billion and $5.3 billion for this fiscal year.

Dividends per share should be $0.31 per quarter.