<div id="subtitle">Online brokerage TD Ameritrade 1Q profit fell 26 pct on low interest rates, higher expenses</div><div><p>Online brokerage TD Ameritrade Holding Corp. said Tuesday lower interest rates and higher expenses drove its first-quarter profit down 26 percent, but the company will be ready to grow when rates rise.</p><p>Healthy trading volume wasn't enough to offset a decline of 10 percent in asset-based revenue and an increase of nearly 31 percent in expenses, the company said.</p><p>Expenses jumped to $384.2 million largely because of last year's acquisition of options-trading specialist thinkorswim and the launch of its new marketing campaign.</p><p>Ameritrade President and CEO Fred Tomczyk said the company remains focused on improving its long-term results, not on things it can't control, such as interest rates.</p><p>"I feel very good about where we're at," Tomczyk said in an interview.</p><p>Ameritrade, based in Omaha, earned $136.2 million, or 23 cents per share, for the three months ended Dec. 31, down from $184.4 million, or 31 cents a share, a year ago.</p><p>Revenue grew about 2 percent to $624.6 million from $610.7 million a year ago.</p><p>Analysts expected earnings per share of 26 cents on $628.18 million in revenue.</p><p>Credit Suisse analyst Howard Chen said in a research note that Ameritrade executives have managed the company well during the difficult economy, but he thinks that's largely reflected in the current stock price.</p><p>Its shares rose 68 cents, or 3.7 percent, to $19.00 in afternoon trading.</p><p>During the quarter, Ameritrade paid off $1.4 billion in bank debt, issued $1.25 billion in bonds and then refinanced $750 million of the debt at a low floating rate. So while low interest rates will continue to limit Ameritrade's revenue, the company will also see lower debt costs.</p><p>Tomczyk said Ameritrade decided to refinance most of its debt at the lower floating rate to boost 2010 profit and better align the company's revenue and expenses. But $500 million of Ameritrade's debt remains at a fixed 5.6 percent 10-year rate.</p><p>"We think we're very well-positioned for continued growth," Tomczyk said.</p><p>Isabella Fonseca, a senior analyst with Boston-based consulting firm Celent, said Ameritrade delivered solid financial results this quarter because of the options-trading volume it acquired with thinkorswim and its growing asset-management business.</p><p>Ameritrade estimated the number of trades it handled increased 6 percent to an average of 378,561 trades per day during the quarter. That led to an 8 percent increase in transaction-based revenue to $309.4 million from last year's $287.1 million.</p><p>Ameritrade's asset-based revenue, which is linked to current interest rates, includes money earned on its clients' deposit accounts and other investment products. Asset-based revenue to $284.2 million from $317.2 million in the quarter.</p><p>Company officials said they expect expenses to taper off in early fiscal 2011 after Ameritrade finishes upgrading its two main data centers and the thinkorswim acquisition is fully integrated.</p><p>As part of its plan to survive the recession, Ameritrade continues to hold onto a substantial amount of cash and other liquid assets. The company had about $1.1 billion on hand at the end of December.</p><p>___</p><p>On the Net:</p><p>TD Ameritrade Holding Corp.: http://www.amtd.com</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=67280428&bid=informcom" /></div><div id="copyright"><div>

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