The Jefferies Group is ending its life as an independent firm on a pleasant note: with a solid quarterly profit.
The investment bank said on Tuesday that it earned about $71.6 million in profit for the fourth quarter, up 48 percent from the same time a year ago as its core businesses showed marked improvement.
It is the firm's last earnings report before Jefferies expects to complete its takeover by the Leucadia National Corporation, a conglomerate that patterned itself after Warren E. Buffett‘s Berkshire Hathaway. Under the terms of that deal, the Wall Street firm will become a subsidiary of the bigger company, but will remain essentially intact.
The firm's top managers are staying in place, although Richard B. Handler, Jefferies' chief executive, will assume that role for all of Leucadia.
“As we end 2012, a new era is on the horizon for Jefferies,†Mr. Handler said on a call with analysts. “We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us more distinguished from our bank holding company competitors.â€
The management team spent much of the call talking about how well the firm performed in the three months that ended Nov. 30. Excluding a number of onetime expenses, including costs and do nations to Hurricane Sandy relief efforts, Jefferies earned about $81 million. That amounts to 35 cents a share.
Analysts on average expected a quarterly profit of 34 cents a share, according to Standard & Poor's Capital IQ.
The firm's trading division reported a more than sixfold increase in revenue, to $242.1 million, with its mainstay of buying and selling fixed-income products doubling its revenue from the year-ago period.
Investment banking posted a smaller 8 percent increase, to $283 million, as raising equity and debt financing for clients more than covered a drop in deal advisory fees.
Jefferies' management team said on the call that being owned by Leucadia would present new opportunities, principally by giving the firm a much bigger balance sheet to extend its banking and trading businesses. The deep pockets of its new owner, executives said, would help bolster the firm at a time when bigger rivals were facing tougher regulatory pressure that could limit their profitability.
And the environment for Jefferies is improving as well. Mr. Handler cited a calming of the European debt crisis, an emerging recovery in the United States economy and companies having big cash piles to invest as positive factors for growth.
