Exhibit 99.1
SWS Announces Financial Results for First Quarter of Fiscal 2004;
Company Reports Diluted Earnings of 7 Cents Per Share
DALLAS, Oct. 23 /PRNewswire-FirstCall/ -- SWS Group, Inc. (NYSE: SWS)
today announced net income of $1.3 million, or diluted earnings per share of
7 cents, on revenues of $63.8 million for its fiscal first quarter ended
Sept. 26, 2003. In the comparable quarter of the prior year, SWS reported a
net loss of $310,000, or 2 cents per share, on revenues of $65.8 million.
"We are encouraged by recent economic and market trends," said SWS Chief
Executive Officer Donald W. Hultgren. "As the financial performance of SWS
Group improves, we are continuing to focus on the growth of our business lines
and building revenue sources."
Hultgren said clearing revenues increased for the second quarter in a row
after declining for five consecutive quarters. In addition, commission
revenue increased 20 percent from the levels recorded in the company's first
quarter last year.
"We had a $3.7 million increase in commission business that was mostly
offset by an interest rate driven decline of more than $3 million in fixed
income trading revenues," Hultgren said. "The increased commission revenues
show that we are on track with our corporate focus. We intend to leverage our
expertise and capabilities to expand our clearing business and grow our
distribution network as we become a nationally recognized, full-service
regional brokerage firm."
The company's correspondent count was 229 at the end of the quarter
compared with 226 last year. SWS' recruiting effort produced a net of 11 new
financial advisors in the firm's Southwest Securities subsidiary and 14
additional independent contractor financial advisors over the totals from last
year's first quarter.
The company's First Savings Bank subsidiary also reported significant
growth during the quarter. Net interest revenue was up 43 percent from
revenue recorded in the prior fiscal year. Average loans grew 16 percent to
$550 million from $474 million, average deposits increased 112 percent to $612
million from $288 million and average capital grew 14 percent to $54 million
from $48 million as compared with the same period a year ago.
Southwest Securities processed 9.1 million securities transactions in the
quarter compared with 7.1 million in the same period a year ago, representing
a 28 percent increase. Book value per share was $14.76.
As previously disclosed, the results for the prior year's first quarter
included an after-tax charge of $2.2 million, or 13 cents per share, to
establish a reserve for fraudulent mortgages that were purchased by First
Savings Bank. Without the reserve, SWS would have reported net income of $1.9
million, or 11 cents per share, in that quarter.
SWS 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. Subsidiaries of the company include Southwest
Securities, Inc., First Savings Bank, SWS Financial Services, Inc., SWS
Capital Corporation and Southwest Insurance Agency.
This release contains forward-looking statements regarding the company's
future overall performance. Readers are cautioned that any forward-looking
statements, including those predicting or forecasting future events or
results, which depend on future events for their accuracy, embody projections
or assumptions, or express the intent, belief or current expectations of the
company or management, are not guarantees of future performance and involve
risks and uncertainties. Actual results may differ materially as a result of
various factors, some of which are out of our control, including, but not
limited to those factors discussed in our Annual Report on Form 10-K and in
our other reports filed with and available from the Securities and Exchange
Commission.
(Financial Statements Follow)
SWS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
September 26, 2003 and June 27, 2003
(In thousands, except par values and share amounts)
September 26, June 27,
2003 2003
Assets
Cash and cash equivalents $233,690 $74,706
Assets segregated for regulatory
purposes 505,310 441,184
Marketable equity securities
available for sale 8,640 5,599
Receivable from brokers, dealers
and clearing organizations 2,868,283 2,488,008
Receivable from clients, net 362,122 297,238
Loans held for sale, net 105,379 201,265
Loans, net 362,350 366,008
Securities owned, at market value 136,416 122,693
Other assets 89,622 95,383
Total assets $4,671,812 $4,092,084
Liabilities and Stockholders' Equity
Short-term borrowings $48,400 $---
Payable to brokers, dealers and
clearing organizations 2,795,337 2,405,427
Payable to clients 738,644 705,474
Deposits 632,757 528,515
Securities sold, not yet purchased,
at market value 70,584 40,620
Drafts payable 32,857 29,331
Advances from Federal Home Loan Bank 18,010 49,885
Other liabilities 74,788 73,953
Exchangeable subordinated notes 9,086 7,284
Total liabilities 4,420,463 3,840,489
Minority interest in consolidated
subsidiaries 150 1,822
Stockholders' equity:
Preferred stock of $1.00 par value.
Authorized 100,000 shares;
none issued --- ---
Common stock of $.10 par value.
Authorized 60,000,000 shares,
issued 17,773,849 and outstanding
17,020,079 shares at
September 26, 2003; issued
17,707,998 and outstanding
16,957,287 shares at
June 27, 2003 1,777 1,770
Additional paid-in capital 244,155 243,683
Retained earnings 1,272 1,217
Accumulated other comprehensive
income - unrealized holding
gain (loss), net of tax 13,566 12,673
Deferred compensation, net 1,611 1,549
Treasury stock (753,770 shares at
September 26, 2003 and
750,711 shares at
June 27, 2003, at cost) (11,182) (11,119)
Total stockholders' equity 251,199 249,773
Commitments and contingencies
Total liabilities and
stockholders' equity $4,671,812 $4,092,084
SWS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
For the three months ended September 26, 2003 and September 27, 2002
(In thousands, except per share and share amounts)
September 26, September 27,
2003 2002
Net revenues from clearing operations $5,276 $5,310
Commissions 21,858 18,150
Interest 24,403 24,817
Investment banking, advisory and
administrative fees 6,045 6,970
Net gains on principal transactions 3,453 6,762
Other 2,735 3,780
Total revenue 63,770 65,789
Commissions and other employee
compensation 32,620 30,991
Interest 8,469 10,780
Occupancy, equipment and computer
service costs 7,364 8,829
Communications 3,095 3,983
Floor brokerage and clearing
organization charges 1,768 1,782
Advertising and promotional 771 747
Other 7,873 8,909
Total expense 61,960 66,021
Income (loss) before income tax expense
(benefit) and minority interest in
consolidated subsidiaries 1,810 (232)
Income tax expense (benefit) 527 (251)
Income before minority interest
in consolidated subsidiaries 1,283 19
Minority interest in consolidated
subsidiaries --- (329)
Net income (loss) 1,283 (310)
Net income (loss) recognized in other
comprehensive income (loss),
net of tax 893 (380)
Comprehensive income (loss) $2,176 $(690)
Earnings per share - basic
Net income (loss) $0.08 (0.02)
Weighted average shares
outstanding - basic 17,001,684 17,125,507
Earnings per share - diluted
Net income (loss) $0.07 $(0.02)
Weighted average shares
outstanding - diluted 17,206,521 17,125,507
SOURCE SWS Group, Inc.
-0- 10/23/2003
/NOTE TO EDITORS: A Company background is available upon request. Please
call the contact./
/CONTACT: Jim Bowman, Vice President - Corporate Communications of SWS
Group, Inc., +1-214-859-9335, or jbowman@swst.com /
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/Web site: http://www.swsgroupinc.com /
(SWS)
CO: SWS Group, Inc.
ST: Texas
IN: FIN
SU: ERN