TD Ameritrade's 3rd-quarter profit up 19%

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Posted: Tuesday, July 23, 2013 12:00 am

TD Ameritrade, which just moved into a new corporate headquarters in Omaha, said Tuesday that third-quarter profit rose 19 percent on increased commissions from heavier customer trading.

The online stock brokerage said net income was $184 million, or 33 cents a share, up from $154 million, or 28 cents a share, a year earlier. Revenue rose 9 percent to $725 million.

The employer of about 2,000 people in the metro area said it averaged almost 400,000 client trades per day during the quarter, a two-year high, as the Dow Jones industrial average and Standard & Poor’s 500 reached records.

“The equity markets are turning more people bullish, and that is great for us,” Chief Executive Fred Tomczyk said in an interview. “We are primarily an equity and options shop.”

TD Ameritrade makes money by investing cash in customer accounts and by charging commissions when customers buy stocks. Commission revenue jumped 21 percent to $321 million, the company said. Interest income was little changed at $120 million, up from $118 million a year earlier.

TD Ameritrade is scheduled to hold a grand opening ceremony at the new headquarters next week; employees began moving into the new building in the Old Mill district in April.

“We came in ahead of schedule and under budget,” Tomczyk said of the new building.

He said the new building and three across the street get all of the Omaha employees in one place; it used to be, he said, that workers were scattered among several buildings all over town, a 20-minute commute from one another.

The company was founded in Omaha in the 1970s, offering telephone and computer trading at drastically lower commissions than charged by full-service brokers.

Shares of the company have risen about 83 percent in the past year. Part of the investment thesis is the company’s ability to earn money by investing the vast cash balances in customer accounts.

Higher interest rates, which some economists say are sure to follow after many years of low ones, would create higher earnings opportunities for TD Ameritrade, with no associated expenses.

“If interest rates start to change, there is a huge upside for us in earnings,” Tomczyk said.

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