TD Ameritrade CEO Tomczyk says uncertainty is shackling the economy

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Posted: Tuesday, October 29, 2013 12:00 am

The inability of federal elected officials to decide on permanent U.S. government borrowing and spending plans is hurting the economy, TD Ameritrade Chief Executive Fred Tomczyk said Tuesday, even as the Omaha-based company sprinted to record results in the fiscal fourth quarter.

“We have to stop moving from crisis to crisis in Washington,” Tomczyk said in an interview. “To get the economy moving again we have to remove the cloud of uncertainty.”

Tomczyk’s company said Tuesday that fourth-quarter profits rose 40 percent after it earned higher fee income and swept up $10 billion of new customer assets.

The online stockbroker said net income was $200 million, or 36 cents a share, up from $143 million, or 26 cents a share, a year earlier. Revenue rose 10 percent to $709 million. Fees, such as those collected for advising people on their investments, rose 29 percent to $67 million.

Analysts surveyed by FactSet expected TD Ameritrade earnings of 35 cents per share on revenue of $715.4 million.

The company, which employs about 2,000 in the Omaha metro area, said it plans to pay a special dividend of 50 cents a share, payable in December, the second such payout in a year. TD Ameritrade also said the regular quarterly dividend in November will be 12 cents a share, a 33 percent increase.

“We expect to continue generating significant free cash flow, which we will either invest in growth or return to our shareholders,” Tomczyk said.

The shares of the company founded in Omaha in 1975 have almost doubled in the past year. Tomczyk said that the government shutdown and lack of a permanent budget mean the Federal Reserve interest-rate increases expected by many analysts will be delayed.

Key Fed funds rates have been at or near zero for many years. TD Ameritrade stands to gain when they rise, as it collects interest income from depositing customer balances with TD Bank, the company’s largest shareholder, which invests them on its behalf.

Industry analyst Richard Repetto of New York-based Sandler O’Neill said in a note to investors that he expected the company to earn 37 cents a share, or a penny more than it did, take in an additional $7.5 million of revenue and earn $5 million more from one-time gains on the sale of a stake in New Jersey-based Knight Capital Group.

“Bottom line, it was a miss versus our estimate, based on spread revenue and lower Knight gains,” Repetto wrote, referring to the “spread” between what the company pays investors on their cash balances and what it earns from investing them.

For the year, TD Ameritrade profit rose 15 percent to $675 million, or $1.22 a share. Full fiscal-year revenue rose 4.5 percent to $2.7 billion.

TD Ameritrade said it handled an average of 381,657 trades per day during the quarter that ended Sept. 30, up 16 percent from 328,280 a year ago.

Customer assets rose to $555.9 billion at the end of the quarter, up 18 percent from $472.3 billion a year ago.

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