LOM’s assets under administration top $1bn
Investment firm LOM Financial Ltd's assets under administration have topped the $1 billion mark this year.
The company reported the milestone in a letter to shareholders from Scott Lines, the company's chairman and chief executive officer, as the firm reported net income of $2.08 million for 2018, up 37 per cent from 2017.
With its clientele growing, the business is in the process of adding another financial adviser and a settlements staff member in its Bermuda office.
LOM has also recruited a global human resources manager to be based in its UK office and also plans to add another chartered financial analyst to its management team, to be based in its Cayman office.
“Our assets under administration rose from $875 million at the beginning of the year to $954 million by the end of 2018,” Mr Lines wrote. “Since the end of the year, asset growth has continued and now stands at $1.02 billion.” Total revenues rose 31.5 per cent to $14.16 million. The increase was driven by a 65 per cent spike in broking fees, which made up $5.26 million, or 37 per cent of revenues.
Management and advisory fee revenues rose 14.1 per cent to $4.75 million and made up 34 per cent of total revenue.
“We are continuing our focus on winning new clients and recruiting top-level financial advisers and private bankers,” Mr Lines wrote.
“We are pleased to report that our Bahamas office has seen a strong upswing in onboarding new clients and assets, and expect that trend to continue through 2019. Growth in our new Cayman office has been slower than we initially anticipated, although we remain optimistic on its long-term potential.”
The additional staff will impact earnings in the coming year, Mr Lines wrote.
“We additionally plan to make some investments in our facilities in Bermuda, and will continue to invest in technology across the group,” he added.
Mr Lines conceded that brokerage activity was “highly volatile” and tends to fall off when markets dip or become volatile. “As a result, we may experience a decline in the coming year in these revenues,” he added.
LOM's asset management area is growing and winning new customers, Mr Lines wrote. “Our performance continues to be best in class and we will be looking to increase our number of professionals in this division over the upcoming quarters,” he added.
Other highlights of LOM's year include:
• Fees from corporate finance work rose 33 per cent to $40,762.
• Foreign exchange revenues rose 15 per cent to $389,628.
• Net interest earnings rose 23 per cent to $1,401,954.
• Gains on securities held in inventory rose 37 per cent to $831,741.
LOM's operating expenses rose 30.5 per cent to $12.08 million. This was driven by a 32 per cent increase in employee compensation and benefits, which totalled $4.12 million.
LOM's net income broke down to 35 cents per common share, up from 25 cents in 2017. Net return on equity was 10.1 per cent.
Net equity was $20.3 million, of which cash and equivalents were $6.21 million, or 31 per cent.
LOM's book value as at the end of 2018 was $3.44 per share. It last traded at $2.75 on the Bermuda Stock Exchange, which equates to 80 per cent of its year-end book value.
The LOM board decided to pay a dividend of one cent per share to shareholders of record on May 6.
The board has also given approval for LOM to continue to buy back shares for cancellation for a total not to exceed 500,000 shares. Over the whole of 2018, the company purchased 57,600 shares for cancellation.
Mr Lines was optimistic for a positive year for the markets.
“There were three main issues that worried the financial markets last year: the Federal Reserve on an upward rate cycle, a US-China trade war, and Brexit,” he wrote.
“Of those three, it is now apparent that the Fed has had a change of view and is on hold as regards to further rate increases.
“The US and China are in advanced talks to come up with a trade deal. Once the US-China trade deal is agreed and we have some sort of short-term clarity on the Brexit situation, it is likely we will see positive returns over the full year.”