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.