* Adjusted earnings $0.63/share vs est. $0.58
* Advisory revenue up 12 pct at $308.9 mln
* Raises quarterly dividend to 24 cents per share from 19
* Shares fall as much as 4 pct
(Adds CEO and analysts' comments, background and share move)
By Avik Das
Feb 11 LPL Financial Holdings Inc, the
largest U.S. independent broker-dealer, reported a
higher-than-expected 20 percent rise in quarterly profit, and
said it was dropping its plan to turn itself into a bank-holding
LPL's shares fell 4 percent despite the strong results and a
26 percent dividend increase. Analysts said the decision not to
pursue its banking plans may have dragged down the company's
"Given the complexity of operating a bank in today's
environment, we took a thoughtful approach to our review to
insure the full impact of the capital and operational
commitments were understood," Chief Executive Mark Casady said
on a conference call on Tuesday.
The company said in July that it was considering starting a
bank, citing the revenue potential of keeping 100 percent of the
investment income from deposits.
Casady had then said the company had about $6 billion in
deposits invested in money funds that could have gone into bank
"Many investors have looked at LPL and said that if they go
into the banking side, it is going to substantially increase
their revenue," said Sanford Bernstein analyst Brad Hintz.
If LPL had turned into a bank-holding company, it would have
added up to $1 per share in earnings, Hintz estimated.
UBS analyst Alex Kramm said in his morning note that the
company's shares could take a pause partly due to the update on
the bank strategy.
LPL, which offers financial products and operational
services to independent stockbrokers, said net profit rose to
$44.4 million, or 43 cents per share, in the fourth quarter from
$36.9 million, or 34 cents per share, a year earlier.
Net revenue rose 16 percent to $1.09 billion.
On an operating basis, LPL earned 63 cents per share.
Analysts on an average had expected earnings of 58 cents per
share on revenue of $1.07 billion, according to Thomson Reuters
The company's advisory revenue rose 12 percent to $308.9
million in the quarter ended Dec. 31, driven by strong net new
advisory asset flows and buoyant stock market.
Commission revenue rose 19 percent to $556.2 million as LPL
hired new advisers.
LPL said its adviser headcount rose by 110 to 13,673 during
The Boston-based company also raised its quarterly dividend
to 24 cents per share from 19.
LPL's shares were down about 2 percent at $51.49 in
afternoon trade on the Nasdaq.
(Reporting by Avik Das and Anil D'Silva in Bangalore; Editing
by Kirti Pandey and Sriraj Kalluvila)