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Southwest Securities Group, Inc. Reports Record 2nd Quarter Income
DALLAS, Jan. 29 /PRNewswire/ -- Southwest Securities Group, Inc. (NYSE: SWS - news) today reported the highest quarterly earnings and earnings per share in the company's history. The previous highs were established in the same quarter a year ago.
Net income for the second quarter ended Dec. 31, 1998, increased 14 percent to $6.1 million from $5.4 million in 1997. Diluted earnings per share rose 14 percent to $0.57 from $0.50, and revenues increased 13 percent to $79.3 million from $70.5 million in the second quarter of the prior year. For the six-month period, net income increased 4 percent to $10.8 million from $10.4 million in 1997. Diluted earnings per share rose 3 percent to $1.01, and revenues gained 12 percent to $152.5 million, compared with earnings per share of $0.98 and revenues of $135.8 million for the six-month period a year ago.
''We had an outstanding quarter,'' said David Glatstein, president and chief executive officer, ''especially when one considers that we spent over 60 percent more on technology and the CSS software implementation than we did a year ago.''
Comparing the December 1998 quarter with same period of 1997, net revenues from clearing increased 48 percent, commissions -- primarily as a result of fixed income sales -- increased 5 percent, and net interest revenues rose 8 percent. Net gains on principal transactions increased 126 percent due to the expansion of the company's equity trading area. Investment banking and advisory fees rose 10 percent reflecting growth in the municipal finance and investment advisory businesses.
Southwest achieved an 18 percent return on equity for the quarter and a 17 percent return for the six-month period. Tangible book value per share increased to $14.34 compared with $10.16 for the prior year period. The number of transactions cleared or executed for the quarter increased by approximately 2.9 million over the number for the prior year's second quarter.
CSS STATUS REPORT
Mr. Glatstein said the company has made substantial progress toward converting to the new CSS(TM) software system. CSS is a comprehensive software system designed to run all aspects of the firm. The software was built using 100 percent Microsoft® components and is designed to be Year 2000 compliant. Its functionality is delivered through a Microsoft Internet Explorer® browser over the Internet or the company's wide area network (WAN). Because the communications protocol is TCP/IP, all services can be delivered over the Internet worldwide.
''We're beginning to reap tangible benefits from the heavy expenditures we've made in technology over the past several years,'' Mr. Glatstein said. ''As of today, we have several branch offices and correspondents using CSS BrokerView(TM) and InvestorView(TM), including four correspondents with very high trading volume.'' He added that the company plans to have 100 percent of the CSS conversion completed by mid-1999. BrokerView provides the analytical tools and account access that investment executives need to prospect for new clients and improves their ability to serve existing clients.
''We are introducing CSS InvestorView to our online customers through mydiscountbroker.com (Southwest's online brokerage subsidiary) in February,'' Mr. Glatstein said. ''After customers install the software from a specially designed compact disc, they will be able to access real-time account updates and real-time market values, including both realized and unrealized profit and loss computations. The rollout of the product will continue to full-service clients through their investment executives and to correspondents.''
Mr. Glatstein said Southwest is transitioning from its mainframe computers to a family of Compaq® servers. The CSS database uses Microsoft SQL Server 7.0 and runs on three Compaq ProLiant(TM) 7000 servers using new Intel® Xeon(TM) processors. Each of the Quad/400-megahertz servers provides 50 gigabytes of disk space and a gigabyte of random access memory (RAM). The CSS applications also use 15 Compaq 1850R servers with Dual/350-megahertz processors and 512 megabytes of RAM.
In February, Southwest will begin migrating all of its operational activities, such as dividend and interest payment, account margin calculations and security reorganization transactions, to CSS from its current system. Most of the firm's order execution points are already functioning through CSS. By mid-year, CSS will be the firm's mission critical system.
Southwest Securities Group, Inc. is a Dallas-based holding company that offers a broad range of investment and financial services through its subsidiaries. The company's common stock is listed and traded on the New York Stock Exchange under the symbol, SWS. Wholly owned subsidiaries of the company include: |
