Broadpoint Securities grows revenues with expansions; fixed-income contributes heavily

By Jennifer Lanning Drey

Portland, Ore., April 28 - Broadpoint Securities Group Inc.'s first-quarter net revenues were more than four times higher than those of the comparable prior-year period, resulting from the additions of new professionals and products, as well as from spread widening, which helped reduce the balance sheet, Lee Fensterstock, chief executive officer of Broadpoint, said during its Tuesday earnings call.

First-quarter net revenues were $70.6 million, up from $17.3 million in the comparable prior-year quarter with the most significant contributors being Broadpoint's fixed-income businesses of debt capital markets and Descap, its mortgage- and asset-backed securities division.

Specifically, Broadpoint realized enhanced revenues during the quarter in structured mortgage products, investment-grade bonds, treasuries and agencies and bank debt, Fensterstock said.

In the future, emerging market debt may also provide a growth opportunity for the fixed income business, he said.

However, Broadpoint's largest growth opportunity currently lies in its investment banking business following the acquisition of financial advisory boutique Gleacher Partners Inc., which is expected to close in the second quarter, Fensterstock said.

In the near-term, Broadpoint's restructuring business is expected to benefit from the acquisition by taking advantage of Gleacher's corporate relationships, he said.

Ready for 'tsunami'

Longer term, as the financing window opens on debt, equity and asset-backed product capabilities, the company expects to find financing opportunities within the Gleacher client base.

"When the financing window fully opens there will be a tsunami of demand, and our goal is to be ready for it," Fensterstock said.

Broadpoint believes the competitive landscape is providing an unprecedented opportunity to acquire top talent and replace competitors as they go out of business or focus on resolving legacy issues, he said.

Broadpoint reported a net pre-tax profit of $9.3 million, compared with a loss before income taxes of $8.5 million in the prior-year first quarter.

Broadpoint is a New York-based independent investment bank.

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