LPL Financial reported second quarter net income of $39.5 million, down $6 million compared to $45.5 million in the same quarter of 2011. Net revenues for the second quarter of 2012 increased 1.5% to $907 million, from $894.0 million in the prior year period.
"Investors are exhibiting more cautious behavior in light of the uncertain market conditions, which manifests itself in lower investment activity and reduced trading," Mark Casady, LPL's chairman and CEO, said in a statement. "At the same time, our performance has been impacted by our ongoing commitment to additional investment. This strategy is driven by our confidence in the strength of our underlying business and in our competitive position, but has placed further pressure on our bottom-line results this quarter.
Adjusted Earnings, which excludes certain non-cash charges and other adjustments, were $55 million, down $3.8 million or 6.5% compared to $58.8 million in the second quarter of 2011. Net revenues for the first six months of 2012 were $1.8 billion, an increase of 2.4% over the comparable period of 2011.
For the first six months of 2012, net income of $80.7 million was down $13.8 million or 14.6% compared to $94.5 million for the same period in 2011, due primarily to a $16.5 million pre-tax charge related to the completion of the refinancing of senior secured credit facilities in the first quarter of 2012. Adjusted Earnings through June 30, 2012 were $118.2 million, which were consistent with the comparable period in 2011.
"Year-over-year we dedicated additional transition assistance to support strong advisor growth, incurred incremental expenses from our acquisitions of Concord and Fortigent and made additional investments in the retirement and mass-market spaces," Casady also said. "Taken together this increase in investments reduced adjusted earnings by $4.1 million."
Total advisory and brokerage assets were $353 billion at the end of the quarter, which increased 3.6% from $340 billion as of June 30, 2011 and decreased 0.3% from $351 billion as of March 31, 2012. Supported by net new advisory assets of $2.8 billion during the second quarter, advisory assets under management were $111.4 billion at the end of the quarter.
"We have not wavered from managing the company for long-term growth," Casady continued in the statement. "The solid performance this quarter of several key metrics reinforces this strategy and positions the Company for future success."
LPL also added 223 net new advisors this quarter.
"When this cycle of cautious investor sentiment subsides," Casady said, "we are well positioned to deliver strong growth."