Helped by the rising stock market, the Baltimore-based investment banking company of Alex. Brown Inc. yesterday reported its net income rocketed by 58.6 percent as revenues jumped by 39.8 percent.
The 195-year-old Baltimore-based company also boosted the quarterly dividend to 20 cents per share, a 14 percent increase from the 17.5 cents paid in the last quarter. It is the eighth dividend increase since Alex. Brown became a publicly traded company nine years ago.
Alex. Brown's per-share earnings of $1.50 per share exceeded analysts' estimates of 98 cents a share, according to a survey by Zacks Investment Research.
The earnings report was released after the stock market closed yesterday. The company's stock rose by $1.625, to $48.75 a share, bringing the rise so far this year to 60 percent.
But realizing that what the market giveth, it can taketh away, Alex. Brown tempered its reaction to the good news.
"While we are obviously pleased by our second quarter's results, we are also mindful of the challenges that lie ahead," said A.B. Krongard, chairman and chief executive officer. "Consequently, we shall continue to adhere to our focused strategy and conservative mien," he said.
Alex. Brown's good fortune is also being shared by another major Baltimore stockbrokerage, Legg Mason Inc., which last week reported record quarter revenues of $111.3 million and a 56 percent rise in earnings.
Alex. Brown's net income for the second quarter reached $23 million, compared with $14.5 million, or 93 cents per share, for the same period a year ago. Revenues rose to $201.1 million from $143.9 million a year ago.
For the first six months, earnings increased by 5 percent to $39.4 million, or $2.61 per share, from $37.5 million, or $2.39 per share, for the same period a year ago. Revenues grew by 15 percent to $352.5 million from $306.3 million.
The revenue growth was powered by the following:
* Investment banking revenues for taking companies public increased by 41 percent to $75.4 million. The company ranked second in the number of common stock offerings managed during the second quarter.
* Commissions from stock sales rose by 30 percent to $44.1 million, spurred by business generated by institutional and private clients.
* Transaction revenues from over-the-counter trading increased 35 percent to $36.1 million.
* Interest and dividends rose by 59 percent to $24.1 million because of increased margin loans to private investors and increased interest rates.
* Advisory and other revenues increased 46 percent, reaching $21.4 million.