LPL Financial posted flat first-quarter earnings from the year-ago period, but results almost doubled from the fourth quarter. Commission revenue for the industry's largest independent broker-dealer slumped.

In a research report to clients, Credit Suisse analyst Christian Bolu said the firm delivered "solid results in what was a rough operating environment, highlighting the diversity of the company's earnings streams."

Net income for the quarter ended March 31 slipped to $50 million, from $51 million in the first quarter a year ago. The company had posted income of $27 million in the fourth quarter.

Commissions dropped 17% to $437 million, from $523 million a year ago. The decrease was driven by lower sales and trailing commissions "which declined due to lower average asset levels," the company said in its earnings release. Compared to the fourth quarter of 2015, commissions fell 6%.

LPL's net revenues declined 9% to $1.5 billion, from $1.2 billion for the year-ago quarter. The firm posted $479 billion in brokerage and advisory assets at the end of the first quarter, down 1% from $485 billion, a year ago.
The company did improve a key metric, however, adding 39 net new advisers compared to losing 19 advisers in the prior quarter.


In a conference call with analysts, LPL CEO Mark Casady said the company was pleased that its "balanced business model performed well" despite an "extremely volatile" and "challenging" market conditions in the first quarter.
Casady said the year got off to a "good start."

Credit Suisse's Bolu believes LPL's prospects are favorable going forward.

"Improving operating environment should support company fundamentals and the share price," Bolu said. "More so if we get another rate hike in 2016."

For the year so far, LPL's share price is off around 40%. Midday on Friday, shares were up 15 cents at $26.22.
Casady said "improvements" in the Department of Labor's fiduciary rule will make implementation costs "more manageable."

Credit Suisse was also bullish on the impact of the DoL rule on LPL.

"We believe LPL's scale and flexible product offering should allow it to weather the DoL storm and come out as a market share winner as the industry consolidates," the research report stated.

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