February 15, 2011

2010 Q4 Earnings: Investors Cap Reports Lower Income, Rising Sales

Average revenue per FA improved to $145,153 in the quarter, an increase of 12.5%.

Investors Capital Holdings, the parent company of the independent broker-dealer of the same name, said it had net income of roughly $350,000, or 5 cents a share, on total revenue of $21.43 million for the period ended Dec. 31, 2010, vs. net income of about $430,000, or 7 cents a share, on total revenue of $21.05 million for the year-ago period.

Total revenue for the most recent quarter grew by $380,000, or 1.8%, compared to the prior period. “The increase is due primarily to a rise in commissionable revenues as markets continue to rebound from the recent recession,” the company  said in a press release.

Adjusted EBITDA was $470,000 million for the quarter compared to $860,000 for the prior period.

Its stock moved up 2% to trade near $5.25 on Tuesday.

Commission revenue, which accounts for 81.5% of total revenue, increased 1.7% over the prior period to $17.47 million. Advisory fees, which account for 15.2% of total revenue, grew 3.4% to $3.27 million.

“The rise in advisory revenue reflects growth in market asset values, as well as new investment contributions,” the company explained in a statement.

Investors Capital had 566 financial advisors in the quarter vs. 577 a year ago.

"Our focus continues to be on quality advisors, assets, and profits," said President and CEO Timothy B. Murphy, in a statement. "Our net capital position remains strong; the markets and economy are improving; trading volume is increasing. We know where we want to go and how we want to get there. All we have to do is execute."

The firm's average revenue per representative, based on a rolling 12-month period, rose to $145,153 in the quarter ended Dec. 31, an increase of 12.5% over $129,006 for the prior rolling 12-month period.

“We are focusing on organic growth, retention, and recruitment of quality advisors to achieve our growth targets for revenues, assets, and profits," Murphy said.

At quarter end, the firm's net capital position strengthened to $2.99 million (an excess of $2.51 million) with a net capital ratio of 2.38:1.

On Feb. 1, Investors Capital Advisory, the registered investment advisor (RIA) division of Investors Capital Corporation, said it launched a new, advisor-directed program featuring the potential for lower fees and equity ticket charges.

“AMAP-FT simplifies the fee structure and provides more transparency, making it easier for clients, as well as advisors, to understand what they are paying for,” the company said in a statement.

The AMAP-FT can offer a lower cost profile by eliminating standard charges like the platform fee and miscellaneous fees, such as the IRA fee. AMAP-FT is totally advisor-directed, according to the company, and clients are subject to an additional $250 annual fee for using it.

“Cost has become a bigger issue with clients,” said Kenneth H. Aulbach, managing director of sales and marketing for Investors Capital Corporation, in a press release. “They wanted an easier, simpler structure, and AMAP-FT provides them with that.”

“By lowering the fees on our existing programs and creating new low-cost, no-cost solutions, we not only continue to attract many Investors Capital representatives to the advisory side of the business, from a recruiting standpoint, we continue to attract new advisors to the firm,” Aulbach added.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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