Welcome!

Microsoft Cloud Authors: Pat Romanski, Srinivasan Sundara Rajan, Glenn Rossman, Janakiram MSV, Steven Mandel

News Feed Item

SWS Group, Inc. Reports Fiscal 2013 First Quarter Results

Broker-dealer and Banking Segments Post Pre-tax Profits; Bank Reduces Classified Assets by 51 Percent from Last Year

DALLAS, Nov. 6, 2012 /PRNewswire/ -- SWS Group, Inc. (NYSE: SWS) (the "Company") today reported a net loss of $5.6 million, or $0.17 per diluted share, for its fiscal 2013 first quarter ended September 28, 2012, compared with net income of $1.7 million, or $0.05 per diluted share, for the first quarter of fiscal 2012. Net revenues (total revenue less interest expense) in the first quarter of fiscal 2013 were $74.1 million, compared to $76.7 million in the first quarter of last fiscal year.

"Though economic conditions remain challenging, SWS reported pre-tax profits in each of our four business segments – clearing, retail, institutional and banking – while continuing to reduce classified assets at our banking subsidiary in the first quarter of fiscal 2013," said James H. Ross, chief executive officer of SWS Group, Inc. "While there is still work to be done to improve results, we are encouraged by the underlying strength demonstrated by our core operating units and will continue to look for opportunities to increase efficiency and expand our presence in both new and existing markets."

Net revenues decreased by $2.6 million in the first quarter of fiscal 2013, as compared to the same period last fiscal year. The primary contributors to the decrease were a $3.5 million decrease in net interest revenue and a $3.3 million decrease in commissions, due in part to five fewer trading days in the fiscal 2013 first quarter as compared to the fiscal 2012 first quarter. These decreases were partially offset by increases in net gains on principal transactions and other revenue.

Operating expenses increased $10.1 million to $83.1 million for the first quarter of fiscal 2013, as compared to $73.0 million for the same period last fiscal year. The increase was primarily due to an $8.1 million increase in the value of the warrants held by Hilltop Holdings Inc. and Oak Hill Capital Partners, as compared to an increase of $171,000 in the first quarter of fiscal 2012.

Clearing Segment

The clearing segment reported pre-tax income of $195,000 for the first quarter of fiscal 2013, as compared to a pre-tax loss of $76,000 for the first quarter of fiscal 2012. Net revenues of $5.0 million in the segment remained flat as compared to the same period last fiscal year. A $520,000 decrease in clearing fee revenue for the fiscal 2013 first quarter was offset by a $434,000 increase in other revenue and a $78,000 increase in net interest revenue, as compared to the same period last fiscal year. The decrease in clearing fee revenue was driven primarily by a reduction in daily general securities transaction volumes and the decrease in the number of trading days in the fiscal 2013 first quarter, as compared to the same quarter last fiscal year.

Clearing segment operating expenses decreased to $4.8 million for the first quarter of fiscal 2013, from $5.0 million for the first quarter of fiscal 2012, primarily due to a decrease in operations and information technology expense.

Total customer assets under custody increased to $15.2 billion at September 28, 2012 from $13.5 billion at September 30, 2011.

Retail Segment

The retail segment posted pre-tax income of $319,000 for the first quarter of fiscal 2013, as compared to pre-tax income of $1.3 million for the first quarter of fiscal 2012. Net revenues decreased 4 percent to $28.1 million for the three months ended September 28, 2012, from $29.2 million for the three months ended September 30, 2011, in part because of the decrease in the number of trading days in the fiscal 2013 first quarter, as compared to the same period last fiscal year. In addition, the departure of two producers in the independent channel contributed to a $1.7 million decline in commission revenue in the retail segment, as compared to the first quarter of fiscal 2012.

Retail segment operating expenses were flat in the first quarter of fiscal 2013, as compared to the same period last fiscal year. A $1.0 million decrease in commission and other employee compensation expense in the quarter was offset by increases in legal expense, licenses and fees, and operations and information technology expense.

Institutional Segment

For the fiscal 2013 first quarter, the institutional segment posted pre-tax income of $9.9 million on net revenues of $32.9 million, compared to pre-tax income of $10.2 million on net revenues of $33.3 million in the first quarter of fiscal 2012. The slight decrease in net revenues in the segment was driven by a $1.6 million decline in commissions and the decrease in the number of trading days in the fiscal 2013 first quarter, as compared to the same quarter last fiscal year. Taxable fixed income accounted for $1.8 million of the decrease in commissions and municipal finance accounted for $934,000. These decreases were partially offset by a $1.1 million increase in portfolio trading commissions, as compared to the same period last fiscal year.

Investment banking fees decreased 12 percent to $6.5 million, from $7.4 million in the first quarter of fiscal 2012, due to a $1.7 million decrease in corporate finance fees. This decrease was due to a decline in merger and acquisition activity in the quarter, and was partially offset by a $734,000 increase in municipal finance fees during the quarter, as compared to the same period last fiscal year.

Net gains on principal transactions increased 52 percent to $10.1 million for the fiscal 2013 first quarter, from $6.6 million for the first quarter of fiscal 2012. The increase was primarily due to a $3.9 million increase in taxable fixed income trading gains, partially offset by a $447,000 decrease in municipal finance trading gains.

Institutional segment operating expenses decreased 1 percent for the first quarter of fiscal 2013, as compared to last fiscal year's first quarter, primarily due to a decline in commission and other employee compensation expense.

Banking Segment

The banking segment reported pre-tax income of $1.3 million in the first quarter of fiscal 2013, on net revenues of $11.6 million, as compared to pre-tax income of $2.7 million on net revenues of $13.0 million in the first quarter of fiscal 2012. The primary contributor to the decrease in net revenues was a $1.1 million decline in net interest revenue. This decline was due to a 16 percent decrease in average loan balances and a 20-basis point decrease in the net yield on interest-earning assets at the Company's banking subsidiary, Southwest Securities, FSB (the "Bank"), as compared to the same period last fiscal year. Other revenue for the Bank decreased $281,000, primarily due to a $227,000 increase in net losses on the sale of real estate owned.

The Bank's operating expenses remained flat for the three-month period ended September 30, 2012, as compared to the three months ended September 30, 2011.

The Bank did not record a provision for loan losses in the first quarters of fiscal 2013 or 2012. At September 30, 2012, the Bank's allowance for loan losses was $20.9 million, or 4.28 percent of loans held for investment, excluding purchased mortgage loans, as compared to $39.7 million, or 4.90 percent of loans held for investment, excluding purchased mortgage loans, at September 30, 2011.

Total classified assets at the Bank were $100.7 million, or 52.7 percent of capital plus allowance for loan losses, at September 30, 2012, down 51 percent from $206.7 million, or 111.0 percent of capital plus allowance for loan losses, at September 30, 2011.  Non-performing assets were $67.8 million at September 30, 2012, down 13 percent from $78.3 million, at September 30, 2011.

At September 30, 2012, the Bank's Tier 1 core capital ratio was 12.7 percent and total risk-based capital ratio was 19.2 percent, as compared to a Tier 1 core capital ratio of 10.4 percent and total risk-based capital ratio of 15.4 percent at September 30, 2011.

Conference Call

SWS Group will hold a conference call to discuss its results for the fiscal 2013 first quarter on Wednesday, November 7, 2012, at 10 a.m. Eastern Time (9 a.m. Central Time). The conference call will be broadcast live over the internet at http://www.videonewswire.com/event.asp?id=89873 or www.swst.com. An archive of the webcast will also be posted to the Company's website at www.swst.com.

Forward-Looking Statements

This news release contains forward-looking statements.  Readers are cautioned that any forward-looking statements, including those predicting or forecasting future events or results, which depend on future events for their accuracy, embody projections or assumptions, or express the intent, belief or current expectations of the company or management, are not guarantees of future performance and involve risks and uncertainties.  Actual results may differ materially as a result of various factors, some of which are out of the Company's control, including, but not limited to, volume of trading in securities, volatility of securities prices and interest rates, liquidity in capital and credit markets, availability of lines of credit, customer margin loan activity, creditworthiness of the Company's correspondents and customers, demand for housing, general economic conditions, especially in Texas and New Mexico, changes in the commercial lending and regulatory environments and other factors discussed in the Company's Annual Report on Form 10-K and in the Company's other reports filed with and available from the Securities and Exchange Commission.

 

Segment Results


(In thousands)













Net Revenues


Pre-Tax Income



Three Months Ended


Three Months Ended



Sept. 28, 2012


Sept. 30, 2011


Sept. 28, 2012


Sept. 30, 2011











Clearing

$ 4,958


$ 4,966


$ 195


$ (76)


Retail

28,066


29,210


319


1,279


Institutional

32,895


33,272


9,925


10,160


Bank

11,633


13,021


1,281


2,748


Other consolidated entities

(3,443)


(3,730)


(20,752)


(10,415)


Consolidated

$ 74,109


$ 76,739


$ (9,032)


$ 3,696


 

 

SWS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

September 28, 2012 and June 29, 2012

(In thousands, except par values and share amounts)






September 28,

   2012


June 29,

2012

Assets

 (Unaudited)



Cash and cash equivalents

$         71,153


$         81,826

Restricted cash and cash equivalents

30,045


30,044

Assets segregated for regulatory purposes

213,636


176,299

Receivable from brokers, dealers and clearing organizations

1,261,812


1,425,697

Receivable from clients, net of allowances

251,328


256,840

Loans, net

796,578


833,640

Securities owned, at fair value

265,562


231,151

Securities held to maturity

23,880


25,904

Securities purchased under agreements to resell

21,823


25,186

Goodwill

7,552


7,552

Securities available for sale

356,713


307,789

Other assets

145,118


144,915

     Total assets

$     3,445,200


$     3,546,843





Liabilities and Stockholders' Equity




Short-term borrowings

$         126,500


$           67,500

Payable to brokers, dealers and clearing organizations

1,167,808


1,349,370

Payable to clients

378,074


347,574

Deposits

1,059,250


1,062,233

Securities sold under agreements to repurchase

23,173


27,465

Securities sold, not yet purchased, at fair value

77,046


70,155

Drafts payable

24,586


24,970

Advances from Federal Home Loan Bank

67,318


68,641

Long-term debt, net

80,027


79,076

Warrants

35,995


27,810

Other liabilities

52,787


66,347

     Total liabilities

3,092,564


3,191,141





Commitments and contingencies








Stockholders' equity:




Preferred stock of $1.00 par value.  Authorized 100,000 shares; none issued


Common stock of $0.10 par value.  Authorized 60,000,000 shares, issued 33,312,140 and outstanding 32,557,735 shares at September 28, 2012; issued 33,312,140 and outstanding 32,576,307 shares at June 29, 2012

3,331


3,331

   Additional paid-in capital

324,895


324,556

Retained earnings

24,440


30,084

Accumulated other comprehensive income – unrealized holding gain, net of tax

5,043


2,745

   Deferred compensation, net

3,436


3,427

   Treasury stock (754,405 shares at September 28, 2012 and 735,833 shares at June 29, 2012, at cost)

(8,509)


(8,441)

           Total stockholders' equity

352,636


355,702

     Total liabilities and stockholders' equity

$     3,445,200


$     3,546,843

 

 

 

SWS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

For the three months ended September 28, 2012 and September 30, 2011

(In thousands, except per share and share amounts)

(Unaudited)





Three Months

Ended

September 28, 2012

Three Months

Ended

September 30, 2011

Revenues:



     Net revenues from clearing operations

$             2,139

$             2,660

     Commissions

32,323

35,639

     Interest

26,625

33,661

     Investment banking, advisory and administrative fees

9,794

9,876

     Net gains on principal transactions

9,358

6,271

     Other

6,185

4,490

Total revenue

86,424

92,597




     Interest expense

12,315

15,858

          Net revenues

74,109

76,739




Non-interest expenses:



     Commissions and other employee compensation

54,259

53,158

     Occupancy, equipment and computer service costs

7,697

7,877

     Communications

3,219

2,919

     Floor brokerage and clearing organization charges

1,023

1,073

     Advertising and promotional

668

549

     Unrealized loss on Warrant valuation

8,185

171

     Other

8,090

7,296

Total non-interest expenses

83,141

73,043




Income (loss) before income tax expense (benefit)

(9,032)

3,696

Less: Income tax expense (benefit)

(3,388)

2,044

Net income (loss)

(5,644)

1,652

Net gain (loss) recognized in other comprehensive income

2,298

(78)

Comprehensive income (loss)

$        (3,346)

$        1,574

 Earnings (loss) per share – basic



   Net income (loss)

$           (0.17)

$           0.05

   Weighted average shares outstanding – basic

32,801,381

32,506,613




 Earnings (loss) per share – diluted



   Net income (loss)

$          (0.17)

$          0.05

   Weighted average shares outstanding – diluted

 

32,801,381

 

32,506,613

 

 

SOURCE SWS Group, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue an...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
Digital transformation is too big and important for our future success to not understand the rules that apply to it. The first three rules for winning in this age of hyper-digital transformation are: Advantages in speed, analytics and operational tempos must be captured by implementing an optimized information logistics system (OILS) Real-time operational tempos (IT, people and business processes) must be achieved Businesses that can "analyze data and act and with speed" will dominate those t...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
I'm a lonely sensor. I spend all day telling the world how I'm feeling, but none of the other sensors seem to care. I want to be connected. I want to build relationships with other sensors to be more useful for my human. I want my human to understand that when my friends next door are too hot for a while, I'll soon be flaming. And when all my friends go outside without me, I may be left behind. Don't just log my data; use the relationship graph. In his session at @ThingsExpo, Ryan Boyd, Engi...
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
WebRTC adoption has generated a wave of creative uses of communications and collaboration through websites, sales apps, customer care and business applications. As WebRTC has become more mainstream it has evolved to use cases beyond the original peer-to-peer case, which has led to a repeating requirement for interoperability with existing infrastructures. In his session at @ThingsExpo, Graham Holt, Executive Vice President of Daitan Group, will cover implementation examples that have enabled ea...
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, provided tips on how to be successful in large scale machine learning...
In his session at @ThingsExpo, Kausik Sridharabalan, founder and CTO of Pulzze Systems, Inc., will focus on key challenges in building an Internet of Things solution infrastructure. He will shed light on efficient ways of defining interactions within IoT solutions, leading to cost and time reduction. He will also introduce ways to handle data and how one can develop IoT solutions that are lean, flexible and configurable, thus making IoT infrastructure agile and scalable.
SYS-CON Events announced today that Numerex Corp, a leading provider of managed enterprise solutions enabling the Internet of Things (IoT), will exhibit at the 19th International Cloud Expo | @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Numerex Corp. (NASDAQ:NMRX) is a leading provider of managed enterprise solutions enabling the Internet of Things (IoT). The Company's solutions produce new revenue streams or create operating...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.