LPL Q1 Earnings Rise on Strong Hybrid-RIA, Other Growth

LPL Financial (LPLA) said it had net revenue of $974.8 million for the first quarter of 2013, up 8% from a year ago.

Net income was $54.7 million, or $0.51 a share, vs. $41.2 million, or $0.37 a share—an EPS increase of 38%. On an adjusted basis, net income was $68.1 million, or $0.64 a share, vs. $63.2 million, or $0.56 a share, an EPS jump of 14%.

Analysts polled by Thomson Reuters had anticipated adjusted earnings of $0.55 per share on revenues of $978.92 million.

"Our positive financial performance in the first quarter was a direct reflection of the hard work of our advisors to position their clients as market conditions improved," said Mark Casady, chairman and CEO of LPL Financial, in a press release.

"Strong advisor productivity, rising markets and the accelerating production of advisors added in the last 12 months supported our revenue growth of 8%," he explained. "Our results this quarter underscore our ability to improve our profit margins when we experience gains in advisor productivity and manage our expense base."

The total number of advisors affiliated with LPL rose by about 3% year over year from 12,962 to 13,377. It also added 25 reps since Jan. 1. The broker-dealer's level of total advisory and brokerage assets jumped 11% to $394 billion, while the level of assets on its fee-based platforms grew close to 18% to $130.2 billion.

Net new advisory assets, excluding market movement, were $3 billion for the first quarter, driven by "strong advisor productivity and the growth in independent RIA assets," according to the company.

Assets under custody on LPL's independent RIA platform grew 72.3% to $46.7 billion as of March 31. These operations now include 199 RIA firms, compared with $27.1 billion and 152 RIA firms a year ago.

"This is a significant level of outperformance," said CFO Dan Arnold (left) in an interview with AdvisorOne. "While the hybrid-RIA platform is growing from a smaller base [than the corporate RIA platform], it's proving very popular with RIAs run by advisors. It's another way for advisors to plug into LPL's models and should continue to outpace other areas' growth rates."