Knight Capital Beats Earnings Estimates, Cites Reverse Mortgage Benefit

Knight Capital Group (NYSE Euronext: KCG), owner of top-10 reverse mortgage lender Urban Financial, reported first-quarter earnings Wednesday of $33.1 million, or 36 cents per share, beating analysts’ estimates and citing institutional sales and trading including Urban’s performance as a growth driver.

The company reported $349.1 million in revenues from continuing operations, up slightly from $339.8 million from continuing operations in the first quarter of 2011.

“In Institutional Sales and Trading, Knight grew revenues 12% year over year and posted a healthy pre-tax gain after a loss a year ago,” said Tom Joyce, Knight Chairman and CEO. “The improved financial results were driven by secondary trading of [exchange traded funds] and fixed income. Knight realized further benefits from continuing efforts to reduce the cost structure and reconfigure the client offering. In addition, Urban performed well due to generally favorable market conditions in reverse mortgage lending and HMBS issuance.”

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In terms of the reverse mortgage landscape, Joyce said recent changes in the industry have benefited Urban Financial and Knight in turn.

“You have seen, certainly, some changes in the landscape in the reverse mortgage world, which we benefited from,” Joyce said in a conference call with analysts. “Some of the bigger players are getting out or reducing their profile.”

Knight surpassed analysts’ earnings estimates, at an average of 30 cents per share, according to estimates compiled by Yahoo!.

Written by Elizabeth Ecker