5 Best & Worst Broker-Dealers: Q2 Earnings

Half of the largest broker-dealers reported positive earnings growth in the second quarter of 2011, while others reported losses due to one-time charges and other issues. According to Bloomberg, the average earnings growth reported by financial companies in the S&P 500 Index was 15.7% for the period.

Here are 10 companies that had the “high honor” of AdvisorOne selecting as five of the Best and five of the Worst performers in the second quarter.

5^th Best:  JPMorgan Chase

JPMorgan Chase, led by Jamie Dimon (left), reported a 17% year-over year increase in second-quarter profits, which were $5.4 billion, or $1.27 per share, in the latest period vs. $4.8 million, or $1.09 per share, a year ago. Revenue grew 7% to $27.4 billion.

The bank continues to grapple with legal problems in its home-lending unit, and its retail financial-services group recently set aside a $1.1 billion provision for credit losses.

4^th Best: 
Charles Schwab 

Charles Schwab said its second-quarter net income was $238 million, or 20 cents a share, up roughly 18% from $205 million, or 17 cents a share, in the year-ago period.

Net revenues were nearly $1.2 billion in the recent period, up about 10% from nearly $1.1 billion a year earlier. The total number of average daily trades declined 9% year over year and 16% quarter over quarter to about 397,000. Schwab says client assets in Schwab retail advisory offerings grew 20% year over year to $113 billion as of June 30.

3^rd Best: 
Wells Fargo

Wells Fargo reported record net income of $3.9 billion, or $0.70 per share, for the second quarter of 2011, up from $3.1 billion, or $0.55 per share, a year ago, for a roughly 27% improvement.

The Wealth, Brokerage and Retirement group—which includes Wells Fargo Advisors—had net income of $333 million in the June quarter, up from $270 million a year ago but down slightly from $339 in the quarter ending in March.

2^nd Best:  Ameriprise

Ameriprise Financial said net income from operations was $313 million, or $1.25 per share—a jump of 29% over last year’s results of $257 million, or $0.97 per share.

Revenues for the period were $2.62 billion. Operating earnings from continuing operations—which include 9,663 advisors and exclude results at its troubled broker-dealer Securities America—were $328 million, or $1.31 per share, up 21% from a year ago.

Best:  LPL

LPL Investment Holdings, parent company of LPL Financial—seen here celebrating it’s 2010 IPO— reported second-quarter net income of $45.5 million, or $0.40 per share, vs. year-ago net income of $ 8  million, or $0.08 per share—a jump in its profits of 470%.

Total advisory and brokerage assets hit $340.8 billion, while net new advisory assets were $3.1 billion. Also, the company says it added 594 new advisors during the past 12 months. 

Read next pages for 5 Worst Broker-Dealers for Q2.

5^th Worst:
TD Ameritrade

TD Ameritrade—being led by CEO Fred Tomczyk (purple tie) celebrating something other than this earnings report—said its fiscal third-quarter 2011 earnings fell 12% to $157.4 million, or $0.27 per share, from $179.4 million, or $0.30 per share, a year ago.

Revenue declined 1% year over year to $684.8 million. Average client trades per day were roughly 370,000, down from 440,000 in the previous quarter and 413,000 in the year-ago period (which included the May “flash crash.”) The company says it attracted 260 “breakaway brokers” from national firms in the past three quarters.

4^th Worst: 
Raymond James

Raymond James Financial, led by Paul Reilly (left) and Dick Averitt (center), reported net income of $46.8 million, or $0.37 per share, for the period ended June 30—a roughly 23% drop from net income of $60.7 million, or $0.48 per share, for the year-ago period.

Net revenues were $850.4 million, up 14% year over year, and “essentially flat” with the prior quarter, Raymond James said in a press release. The firm reported quarterly records for assets under management ($36.6 billion) and assets under administration ($278 billion) as of June 30, 2011.

3^rd Worst:  UBS

UBS reported that its second-quarter net income dropped 50% to 1 billion Swiss francs, or 0.26 Swiss francs per share, vs. 2 billion Swiss francs, or 0.52 Swiss francs per share.

The Swiss-based banks said the strengthening of the Swiss franc and lower trading income were largely to blame. Its wealth-management unit in the Americas with 6,862 advisors had net new money of 2.6 billion Swiss francs in the period vs. inflows of 3.6 billion Swiss francs in the first quarter and outflows of 2.6 billion Swiss francs in the year-ago quarter.

2^nd Worst: 
Morgan Stanley

Morgan Stanley, led by James Gorman (left), reported a net loss of $558 million, or $0.38 per share, for the second quarter vs. a gain of $1.578 billion, or $0.80 per share, a year ago. This represents a year-over-year decrease in profits of 135% and 148% in EPS.

Revenue, though, moved up 16% to $9.3 billion vs. $8 billion a year ago. Cuts in the global advisor force contributed to improvements in both average revenue (or fees and commissions) per advisor and average AUM per FA.

Worst:
Bank of America

Bank of America said it had a net loss of $8.8 billion, or $0.90 per share, for the second quarter vs. a gain of $3.1 billion, or $0.27 per share, a year ago—a drop of 383% for net income and 435% for EPS.

But total sales for wealth management, led by Sallie Krawcheck, were nearly $4.5 billion in the second quarter on net income of $506 million vs. sales of $4.2 billion a year ago and net income of $329 million. The number of Merrill Lynch advisors rose to 16,241 in the second quarter, up from 15,299 last year.

—————–

More Top 10 lists from AdvisorOne:
Top 10 Worst Tax States for Retirees;
Top 10 Biggest Tax Breaks: What to Cut to Trim Deficit?
Top 10 Wealthiest U.S Cities