SWS Group fiscal 4Q profit falls on charge

SWS Group fiscal 4th-quarter profit shrinks as value of equity investments slides

• On 6:03 pm EDT, Wednesday August 26, 2009

DALLAS (AP) -- SWS Group Inc. said Wednesday its fiscal fourth-quarter profit shrank by nearly 57 percent as the investment and financial services company recorded a charge related to a decline in the value of two stocks it holds.

SWS reported net income for the three months ended June 26 of $3.6 million, or 13 cents per share, down from a profit of $8.4 million, or 31 cents per share, in the year-ago period. Excluding a 12-cent accounting charge on the reduced value of two common stocks in its investment portfolio, NYSE Euronext and U.S. Home Systems Inc., the Dallas-based company would have earned 25 cents in the latest quarter.

In the year-ago quarter, SWS Group recorded a one-time gain of 4 cents per share from an acquisition.

Analysts surveyed by Thomson Reuters had expected profit of 20 cents per share, on average. Analysts' estimates typically exclude one-time charges and gains.

Total revenue fell about 4 percent to $122.1 million in the latest quarter from nearly $127.8 million. The total revenue figures do not include interest expenses, which dropped about 42 percent to $23.1 million from nearly $40 million in the year-ago quarter.

The latest quarter's charge from the decline in the value of the two stocks was partly offset by gains at SWS' institutional investment services, which recorded strong growth in commissions from the company's taxable fixed-income and municipal businesses. The company also reported gains on principal transactions, offset by declines in investment banking and clearing revenues and a higher loan-loss provision.

For the full year, SWS recorded net income of $23.6 million, or 87 cents per share, down from $31.9 million, or $1.17 per share, in the previous year. Revenue rose nearly 27 percent to $381.6 million from $301.6 million.

SWS issued its fiscal fourth-quarter and full-year financial results after the markets closed. Its shares rose 16 cents to close earlier at $14.75.

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