Alex. Brown, Legg Mason earnings up Revenues also rose sharply in quarter

October 20, 1993|By David Conn | David Conn,Staff Writer Bloomberg Business News contributed to this article.

Two of Baltimore's biggest investment banking companies turned in another quarter of sharply higher revenues and earnings, the result of unabated investor enthusiasm in the stock market.

But the equity markets, from which Alex. Brown Inc. and Legg Mason Inc. make their living, ended recent gains in the companies' stocks yesterday. Apparently, it's an example of the market buying on the rumor of good news, and selling when the facts come out.

"They're both nice reports," said Michael Flanagan, an analyst with Lipper Analytical Services. For Legg Mason, "it's clearly a case of a company hitting on all cylinders for the quarter."

Alex. Brown Inc.

Alex. Brown, parent of the Alex. Brown & Sons brokerage firm, said third-quarter profits rose 37 percent, to $15.2 million, or 95 cents a share, from $11.1 million, or 71 cents a share a year ago. Revenues in the quarter which ended Sept. 24 climbed 33 percent, to $139.7 million, from $104.7 million last year.

Investment banking, the largest component of the company's business, generated $52.4 million in revenues, up 32 percent from a year ago. Revenues from "principal transactions," in which the company sells securities from its own inventories, were up 45 percent, to $32.1 million in the quarter. Less risky commission revenues, generated from trades in which the company does not put its own capital at risk but merely acts as an agent for clients, grew 37 percent to $30.4 million.

Legg Mason Inc.

Legg Mason, parent of the Legg Mason Wood Walker brokerage and other subsidiaries, celebrated its second fiscal quarter, which ended Sept. 30, with a milestone: its first quarter with revenues more than $100 million.

Revenues rose 37 percent, to $106.8 million, from $77.7 million a year ago. Profits likewise hit a record, rising 66 percent, to $11.4 million, or 94 cents a share, from $6.8 million, or 60 cents a share, in last year's second quarter.

Revenues increased in all business lines, including asset-management fees, which rose to $15.8 million. The company's chairman and chief executive officer, Raymond A. "Chip" Mason, has been trying to boost that segment of the business to 25 percent of revenues, but they fell slightly to 14.8 percent in the latest quarter.

That's because investment banking revenues have nearly doubled since last year to $26.8 million.

Alex. Brown Inc.

Ticker .. ... ... ...Yesterday's

Symbol .. ... ... ... Cls... Chg.

AB .. ... ... ... ... 28 1/4 .. .-1 1/2

Period ended

Sept. 24 .. ... ...3rd qtr. .. .. .Year ago* .. ... .Chg.

Revenue .. ... ... $139,674 .. ... $104,654 .. ... +33.5%

Net Income .. ... .$15,228 .. ... .$11,126 .. ... .+36.9%

Primary EPS ... ...$0.95 .. ... .. $0.71 .. ... ...+33.8%

.. ... ... ... ... 9 mos. .. ... ..Year ago* .. ... .Chg.

Revenue .. ... .. .$409,429 .. ... $327,669 .. ... +25.0%

Net Income .. ... .$50,312 .. ... .$37,554 .. ... .+34.0%

Primary EPS .. ... $3.18 .. ... .. $2.37 .. ... ...+34.2%

Figures in thousands (except per share data.)

* Period ended Sept. 25, 1992.

Legg

Mason Inc.

Ticker .. ... ... ... ....Yesterday's Symbol .. ... ... ... ..Cls... ..Chg.

.. ... ..... ... ... 24 5/8 .. -

Period ended

Sept. 30 .. ... .. ..2nd qtr. .. Year ago .. ..Chg.

Revenue .. .. ... ...$106,767 .. $77,728 .. .+37.4%

Net Income ... ... ..$11,360 .. .$6,844 .. ..+66.0%

Primary EPS .. .. .. $0.94 .. ...$0.60 .. .. +56.7%

.. ... ... ... ... ..6 mos. .. ..Year ago .. ..Chg.

Revenue .. ... ... .$198,115 .. .$158,947 .. +24.6%

Net Income .. ... ..$19,492 .. ..$14,448 .. .+34.9%

Primary EPS .. ... .$1.62 .. ... $1.26 .. .. +28.6%

Figures in thousands (except per share data.)

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