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May 16, 2012 at 07:06 AM
Companies in the financial industry tracked by Reuters saw their earnings fall by 85% on average in the first quarter of 2012, though their revenues improved 28%. A select group of industry players tracked by AdvisorOne saw their profits drop 97% on average over the same quarter in 2011, largely as a result of heavy losses suffered by a couple of firms in the early months of 2012.
As for stock performance, though, financial services companies had a strong period, and funds tracking their performance moved up about 18% in Q1 (topping consumer-services funds), according to Lipper.
For its rankings, AdvisorOne used the unadjusted profits of 10 of the top wirehouse broker-dealers, independent firms and related financial-advisor entities, and selected the five best and five worst performers in Q1, based on how they out- or underperformed their rivals in this group. Most of these companies appeared in AdvisorOne’s Best & Worst list for Q4.
This quarter, the name of the list has been changed to 5 Best & Worst Advisor Partner Firms from 5 Best & Worst Broker-Dealers, the title used for previous quarterly earnings slideshows.
Fifth Best:
RAYMOND JAMES
Raymond James (RJF) said its fiscal second-quarter net income was $68.9 million, or $0.52 per diluted share, versus $80.9 million or $0.64 per diluted share, for the year-ago period—a 17% year-over-year decline. Analysts had expected earnings of $0.56 per share.
Revenues for the period were $871.9 million, a jump of 3% from last year and ahead of analysts’ estimates of $848.3 million.
Excluding a $21 million pre-tax charge for costs associated with its acquisition of Morgan Keegan (which closed April 2), certain interest expenses and adjustments to shares issued for the purchase, its net income would have been $81.9 million, or $0.64 per diluted share.
Fourth Best:
LPL
LPL Financial (LPLA) said its first-quarter net income was $41.2 million, or $0.37 per share, down $7.8 million compared with net income of $49.0 million, or $0.43 per share, from a year earlier—a drop of about 16%. Earnings after adjustments, including a $16.5 million charge related to the refinancing of senior secured credit facilities, were $63.2 million, or $0.56 per share, vs. $59.4 million, or $0.52 per diluted share, in the first quarter of 2011.
The independent broker-dealer’s net revenue for the first quarter of 2012 increased 3.2% to $901.8 million, from $873.9 million in the prior-year period. Equity analysts had expected earnings of $0.54 a share and sales of $890.5 million.
The company also said that the private-equity firms Hellman & Friedman and TPG Capital, which each own about 31% of LPL, are selling a total of 14.5 million shares. This secondary offering represents about 14% of LPL’s total shares and should reduce each of the two private-equity stakes to about 24%.
Third Best:
CITIGROUP
Citigroup (C) posted stronger-than-expected first-quarter results as bond trading and underwriting revenue jumped compared with the 2011 fourth quarter. The results were better than the company’s report three months ago, but profits fell 2% from a year earlier, reflecting the bank’s difficulties as it works to boost its earnings in a sluggish global economy.
Citigroup made $2.9 billion in the first three months of the year, or $0.95 per share, which includes a $1.3 billion accounting charge that Citi took because the value of its debt increased.
Without that charge, its earnings per share would be $1.11, which beat estimates of $1.01 among analysts surveyed by FactSet, a provider of financial data.
Citigroup’s revenue in the quarter was $19.4 billion, down 2% from the year-ago quarter and roughly 3% from last year.
Second Best:
BNY MELLON
BNY Mellon (BK) reported first-quarter 2012 profits of $619 million, or $0.52 per share, versus $625 million, or $0.50 per share, in Q1 2011 and $505 million, or $0.42 per share, in Q4 2011—a drop of just 1%.
In the first quarter of 2012, higher clearing-services fees in the Bank of New York Mellon unit that includes the custody business for RIAs helped BNY Mellon offset lower trading volumes versus a year ago, including a 21% drop in foreign-exchange trading as the bank fights a number of forex lawsuits.
Fees for BNY Mellon’s Clearing Service unit, which includes Pershing Advisor Services’ (PAS) RIA custody business, totaled $303 million in Q1 compared with $292 million at this time a year ago, up 4%, and $278 million in the first quarter of 2011, up 9%.
Best:
WELLS FARGO
Wells Fargo (WFC) posted a 13% rise in net income, largely on the strength of its mortgage banking unit. The San Francisco-based bank reported income of $4.25 billion, or 75 cents per share, compared with $3.76 billion, or 67 cents per share, for first-quarter 2011, and $4.1 billion, or 73 cents per share, in the linked fourth quarter. That performance topped the 73 cents projected by analysts polled by Thomson Reuters. Wells improved upon its AdvisorOne ranking as the fourth-best company in Q4 2011 earnings.
