Legg Mason Inc. yesterday reported record revenues of $111.3 million in the quarter that ended June 30, driven up by surges in commissions and its investment advisory business.
The Baltimore-based brokerage firm's net income also jumped during its 1995 first quarter to $7.8 million, a 56 percent gain over the corresponding period last year. Primary earnings per share rose at about the same rate, to 61 cents per share vs. 40 cents last year.
The $111.3 million posted in revenues represents a 24 percent increase from the $89.8 million generated in Legg Mason's first fiscal quarter of 1994.
Raymond A. "Chip" Mason, Legg Mason's chairman and chief executive, said the company's "healthy increase" in its securities brokerage and investment advisory businesses were primarily attributed to "the very positive recent investment climate for equity securities."
But with yesterday's slide in the Dow Jones industrial average -- which some analysts contend marks the beginning of a significant stock market correction -- Legg Mason's fortunes could be adversely affected.
"If this is a downswing and it lasts, obviously it could be a negative factor for us," said John F. Curley Jr., Legg Mason's vice chairman. "But to look at one or two days of activity doesn't make any sense. I've learned that you can't predict the future with any certainty, and I believe we're prepared for whatever happens."
Legg Mason's recent earnings history reflects its sensitivity to market swings. In its year ended March 31, the company reported net income of $16.3 million, a 55 percent decline resulting from a drop in brokerage fees brought on by a series of interest rate increases.
Mr. Mason also noted that the company's initial $54 million acquisition of Batterymarch Financial Management Corp. in January had a positive impact on its first-quarter 1995 performance, as did the opening of 14 brokerage offices as compared to the same time in 1994. The new offices brought Legg Mason's total to 100.
Batterymarch, a Boston-based firm that manages $5 billion on behalf of institutional clients, helped push Legg Mason's investment advisory revenues up by 48 percent from the prior first quarter. Legg Mason's total assets under management now stand at $26 billion.
"Their performance in the quarter shows what can be done when the retail side of the stock market is strong," said Perrin H. Long, a Brown Brothers Harriman analyst. "With such a good quarter, even if there's a drop in subsequent quarters, they'll still have a solid year."
Legg Mason's common stock closed at $27 per share yesterday, down 37 cents.