Exhibit 99.1
SWS Reports Third Quarter Results;
Net Income Totaled $1.5 Million on Revenues of $69.7 Million
DALLAS, April 22 /PRNewswire-FirstCall/ -- SWS Group, Inc. (NYSE: SWS)
today reported net income of $1.5 million, or diluted earnings per share (EPS)
of 9 cents, on revenues of $69.7 million for the company's third quarter ended
March 26, compared with a net loss of $710,000, or a loss of 4 cents per
share, on revenues of $59.3 million in the prior year's third quarter.
For the first nine months of fiscal 2004, SWS recorded revenues of
$205.5 million, net income of $7 million and diluted EPS of 41 cents, compared
with revenues of $191.4 million, a net loss of $171,000 or a loss of 1 cent
per share in the same period of the prior fiscal year.
"The company has made significant financial progress this year," said
Chief Executive Officer Donald W. Hultgren. "Although market conditions
softened at the end of the quarter, the outlook for our businesses remains
positive."
Hultgren said Southwest Securities is beginning to see significant results
from its investment banking presence, which he believes can be an important
contributor to the company's bottom line, as evidenced by corporate finance
transaction fees of more than $2 million in the quarter. "Investment banking
is one of the areas we targeted for expansion, similar to the Private Client
Group," he said.
Commissions earned were up 26 percent from those recorded in the prior
year's third quarter, while net interest revenues increased 10 percent. "We
were able to take advantage of improving market conditions as we made progress
toward becoming a nationally recognized regional brokerage and banking firm,"
Hultgren said.
The third quarter also benefited from a $1 million gain on the sale of
$11.6 million in loans by FSB Financial, a subsidiary of First Savings Bank.
Fiscal-year-to-date transactions processed by Southwest Securities, Inc.
for correspondent broker/dealers totaled 22.7 million compared with
19.1 million in the prior year period. Book value per share was $14.92
compared with $14.57 a year ago. Return on equity (ROE) was 2.33 percent for
the quarter and 3.75 percent for the nine-month period compared with a
negative ROE for the prior year periods.
As previously disclosed, the company is continuing to cooperate with the
SEC in its inquiries regarding certain mutual fund trading practices.
Although SWS is unable to estimate the ultimate exposure related to the
inquiries, the company believes the results could be material. SWS recorded
an after-tax liability of $2 million in the third quarter for these issues.
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. SWS Group, Inc. subsidiaries 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 the ultimate resolution of the SEC inquiry discussed herein and
those other 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 TABLES FOLLOW
SWS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
March 26, 2004 and June 27, 2003
(In thousands, except par values and share amounts)
March June
(Unaudited)
Assets
Cash $ 95,270 $ 74,706
Assets segregated for regulatory
purposes 378,697 441,184
Marketable equity securities available
for sale 9,694 5,599
Receivable from brokers, dealers and
clearing organizations 3,265,530 2,488,008
Receivable from clients, net 441,253 297,238
Loans held for sale, net 99,759 201,265
Loans, net 420,947 366,008
Securities owned, at market value 194,143 122,693
Goodwill 8,097 7,558
Other assets 70,140 87,825
Total assets $4,983,530 $4,092,084
Liabilities and Stockholders' Equity
Short-term borrowings $ 15,600 $ ---
Payable to brokers, dealers and clearing
organizations 3,247,614 2,405,427
Payable to clients 700,347 705,474
Deposits 522,607 528,515
Securities sold, not yet purchased,
at market value 97,438 40,620
Drafts payable 30,551 29,331
Advances from Federal Home Loan Bank 20,142 49,885
Other liabilities 82,847 73,953
Exchangeable subordinated notes 9,500 7,284
Total liabilities 4,726,646 3,840,489
Minority interest in consolidated subsidiaries 2,333 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 17,810,674 outstanding
17,056,919 shares at March 26, 2004 issued
17,707,998 and outstanding 16,957,287 shares
at June 27, 2003 1,781 1,770
Additional paid-in capital 245,931 243,683
Retained Earnings 3,332 1,217
Accumulated other comprehensive income -
unrealized holding gain (loss), net of tax 13,891 12,673
Deferred compensation, net 792 1,549
Treasury stock (753,755 shares at March 26, 2004
and 750,711 shares at June 27, 2003, at cost) (11,176) (11,119)
Total stockholders' equity 254,551 249,773
Commitments and contingencies
Total liabilities and stockholders' equity $4,983,530 $4,092,084
SWS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income
For the three and nine months ended March 26, 2004 and March 28, 2003
(In thousands, except per share and share amounts)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
March 26, March 28, March 26, March 28,
2004 2003 2004 2003
Net revenues from
clearing operations $ 4,678 $ 4,034 $14,964 $14,208
Commissions 24,753 19,701 73,080 60,370
Interest 23,013 22,352 71,154 71,363
Investment banking,
advisory and
administrative fees 7,765 5,579 19,711 19,574
Net gains on principal
transactions 5,087 4,578 14,612 14,144
Other 4,404 3,017 11,966 11,747
Total revenue 69,700 59,261 205,487 191,406
Commissions and other
employee compensation 37,380 30,365 106,432 94,540
Interest 8,003 8,667 24,595 29,795
Occupancy, equipment
and computer service
costs 6,988 7,853 21,497 24,597
Communications 3,390 3,590 9,778 11,442
Floor brokerage and
clearing organization
charges 1,381 1,325 4,830 4,862
Advertising and
promotional 718 763 2,427 2,471
Other 8,254 7,413 23,470 23,356
Total expense 66,114 59,976 193,029 191,063
Income before income tax
expense and minority
interest in consolidated
subsidiaries 3,586 (715) 12,458 343
Income tax expense 1,806 (477) 4,618 (403)
Income before minority
interest in consolidated
subsidiaries 1,780 (238) 7,840 746
Minority interest in
consolidated
subsidiaries (299) (472) (820) (917)
Net income 1,481 (710) 7,020 (171)
Net income (loss)
recognized in other
comprehensive income,
net of tax (34) 55 1,218 (15)
Comprehensive income $ 1,447 $ (655) $ 8,238 $ (186)
Earnings per share
- basic
Net income $ 0.09 $(0.04) $ 0.41 $(0.01)
Weighted average
shares outstanding
- basic 17,056,661 16,866,511 17,033,225 16,969,887
Earnings per share
- diluted
Net income $ 0.09 $(0.04) $ 0.41 $(0.01)
Weighted average
shares outstanding
- diluted 17,225,618 16,866,511 17,227,870 16,969,887
SOURCE SWS Group, Inc.
-0- 04/22/2004
/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 /
/Web site: http://www.swsgroupinc.com /
(SWS)
CO: SWS Group, Inc.
ST: Texas
IN: FIN
SU: ERN