Securities America Up for Sale, Ameriprise Says

Ameriprise Financial said it was looking to sell Securities America, its troubled broker-dealer, and also shared that its first-quarter net income was $241 million, or $0.94 a share, vs. net income of $226 million, or $0.85 a share, a year ago. These results, which represent a 6 percent gain in net income and an 11 percent jump in EPS, include an after-tax charge of $77 million, or $0.30 a share, for a previously disclosed legal matter at Securities America. Excluding the charge, the company had EPS of $1.35. Analysts had expected the company to earn $1.33 per share on sales of $2.7 billion. The company’s actual revenue grew 22 percent to $2.6 billion in the first quarter of 2011 from $2.1 billion last year.

In disclosing this after-tax charge, management at Ameriprise also said it “has decided to identify an appropriate buyer for [Securities America]. A sale would allow SA to focus on growth opportunities in the independent channel and would allow Ameriprise to devote its resources to the Ameriprise branded-advisor business.”  The sale of Securities America came down to a decision to eliminate “excessive risk” that did not bring the company enough “related reward,” said Chip Roame, head of Tiburon Strategic Advisors in Northern California, in an interview.  “Ameriprise is a large company primarily involved in three businesses … all of which have far higher margins than an independent broker-dealer,” he explained.