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Westwood Holdings Group Inc. Reports Operating Results (10-Q)

July 24, 2009 | About:

Westwood Holdings Group Inc. (WHG) filed Quarterly Report for the period ended 2009-06-30.

Westwood is a well-established investment management company that has built a strong reputation of providing superior investment results with the highest level of client service. Westwood Holdings Group Inc. has a market cap of $296.5 million; its shares were traded at around $41.37 with a P/E ratio of 27.2 and P/S ratio of 6.4. The dividend yield of Westwood Holdings Group Inc. stocks is 3%.

Highlight of Business Operations:

Assets under management increased $456 million to $8.2 billion at June 30, 2009, compared with $7.7 billion at June 30, 2008. The average of beginning and ending assets under management for the second quarter of 2009 were $7.7 billion compared to $7.6 billion for the second quarter of 2008, an increase of 1%. The increase in period ending assets under management was principally due to asset inflows from new and existing clients and was partially offset by market depreciation of assets under management and the withdrawal of assets by certain clients. The following table sets forth Westwood Managements and Westwood Trusts assets under management as of June 30, 2009 and 2008:

Total Revenues. Our total revenues increased by 3% to $10.0 million for the three months ended June 30, 2009 compared with $9.7 million for the three months ended June 30, 2008. Asset-based advisory fees increased by 9% to $7.2 million for the three months ended June 30, 2009 compared with $6.6 million for the three months ended June 30, 2008, as a result of increased average assets under management by Westwood Management due to inflows from new and existing clients, which was partially offset by the market depreciation of assets and the withdrawal of assets by certain clients. Trust fees decreased by 14% to $2.3 million for the three months ended June 30, 2009 compared with $2.7 million for the three months ended June 30, 2008, as a result of decreased average assets under management by Westwood Trust due to market depreciation of assets and the withdrawal of assets by certain clients. Inflows from new clients partially offset these decreases. Other revenues, which generally consist of interest and

investment income, increased by 58% to $454,000 for the three months ended June 30, 2009 compared with $288,000 for the three months ended June 30, 2008. Other revenues are presented net and increased primarily due to an increase of $317,000 in net realized and unrealized gains on investments, which was partially offset by a decrease of $151,000 in interest and dividend income due to lower interest rates, a shift into lower yielding U.S. Treasury Bills and lower dividends from Teton Advisors.

Employee Compensation and Benefits. Employee compensation and benefits costs generally consist of salaries, incentive compensation, equity based compensation expense and benefits. Employee compensation and benefits costs increased by 10% to $5.9 million for the three months ended June 30, 2009 compared with $5.4 million for the three months ended June 30, 2008. The increase was primarily due to increases of $297,000 in restricted stock expense due to additional employee restricted stock grants in February 2009, as well as the higher price at which these shares were granted compared to prior grants, $170,000 in salary expense due primarily to increased headcount and $72,000 in incentive compensation expense. In the second quarters of 2009 and 2008, we concluded that it was probable that we would meet the performance goals required in order for the applicable percentage of the performance-based restricted shares awarded to our Chief Executive Officer and Chief Investment Officer to vest in each year. As a result, we recognized expense of approximately $470,000 in both the current and prior year second quarters related to these performance-based restricted stock grants. We expect to recognize a similar amount in the third and fourth quarters of 2009 related to these performance-based restricted stock grants. We had 63 full-time employees as of June 30, 2009 compared to 57 full-time employees as of June 30, 2008.

Total Revenues. Our total revenues decreased by 3% to $18.2 million for the six months ended June 30, 2009 compared with $18.8 million for the six months ended June 30, 2008. Asset-based advisory fees increased by 3% to $13.3 million for the six months ended June 30, 2009 compared with $13.0 million for the six months ended June 30, 2008, as a result of increased average assets under management by Westwood Management due to inflows from new and existing clients, which was partially offset by the market depreciation of assets and the withdrawal of assets by certain clients. Trust fees decreased by 13% to $4.7 million for the six months ended June 30, 2009 compared with $5.4 million for the six months ended June 30, 2008, as a result of decreased average assets under management by Westwood Trust due to market depreciation of assets and the withdrawal of assets by certain clients. Inflows from new clients partially offset these decreases. Other revenues decreased by 57% to $120,000 for the six months ended June 30, 2009 compared with $277,000 for the six months ended June 30, 2008. Other revenues decreased primarily due to a decrease of $266,000 in interest and dividend income due to lower interest rates, a shift into lower yielding U.S. Treasury Bills and lower dividends from Teton Advisors, which was partially offset by a decrease in net realized and unrealized losses on investments of $109,000.

Employee Compensation and Benefits. Employee compensation and benefits costs increased by 6% to $10.6 million for the six months ended June 30, 2009 compared with $10.0 million for the six months ended June 30, 2008. The increase is primarily due to increases of $571,000 in restricted stock expense due to additional employee restricted stock grants in February 2009, as well as the higher price at which these shares were granted compared to prior grants, $357,000 in salary expense due primarily to increased headcount and $35,000 in health insurance expense. These increases were offset by decreased incentive compensation expense due to lower pretax income and decreased profit sharing expense. We had 63 full-time employees as of June 30, 2009 compared to 57 full-time employees as of June 30, 2008.

Read the The complete ReportWHG is in the portfolios of Third Avenue Management, John Keeley of Keeley Fund Management.

Rating: 2.4/5 (5 votes)

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