Northern Financial reports third quarter of fiscal 2009 results



    (TSX: NFC)

    TORONTO, Feb. 13 /CNW/ - Northern Financial Corporation (TSX: NFC)
("Northern" or the "Company") today reported results for its third quarter and
nine month period ended December 31, 2008 of its 2009 fiscal year. Market
conditions remained challenging in the Company's third quarter. Continued
difficult liquidity conditions have resulted in equity market volatility and
lack of investor confidence. The economy has officially slipped into recession
and governments around the world are scrambling to implement recovery and
stimulus plans. Despite central bank intervention, global markets continued to
stagnate. With this backdrop, investor confidence in the capital markets
remains weak. Client trading volumes, investment banking activity, and equity
market pricing all failed to rally in the quarter.
    Net loss for the quarter ended December 31, 2008 was $2,153,499 compared
with net income of $1,384,561 in the third quarter of the prior year.
$1,506,261 of the loss was a non-cash loss which represented the Company's
share of the loss of Jaguar Financial Corporation ("Jaguar"), compared to a
share of the non-cash loss in Jaguar of $131,550 in the third quarter of the
prior year. The core brokerage results in Northern Securities, while down from
the prior year, were relatively strong despite the difficult market
environment, with substantial activity in mergers and acquisitions which has
been a primary driver of revenue.
    Total revenue for the quarter ended December 31, 2008 was $3,422,589
compared with $8,661,971 in the prior year. Commission revenue was $1,224,564
for the quarter ended December 31, 2008 compared to $2,766,768 in the prior
year. All areas of the business including retail, institutional and high net
worth were down year over year as the lack of confidence in the capital
markets continued to keep investors on the sidelines. Underwriting and
advisory revenue decreased to $991,288 compared to $3,371,237 in the prior
year. A reduced level of financings drove the decrease as issuers continued to
delay coming to market with depressed stock prices. A non-cash valuation
adjustment in the Company's broker warrant portfolio resulted in a loss of
$161,997 compared to a gain $444,967 in the prior year. The continued decline
in capital markets in the quarter produced a downward valuation of the broker
warrants portfolio compared to an increased valuation in the prior year.
Trading revenue was $358,570 in the current year compared to $126,509 in the
prior year as the Company's proprietary traders took advantage of volatile
markets. Interest revenue of $200,637 was down from $365,744 in the prior
year.
    Merchant banking revenue was $708,819 in the current quarter compared to
$1,599,905 in the prior year. The prior year included a gain on the sale of
the Company's investment in Lakeside Steel Corporation of $1,566,616.
    Total expenses for the three month period ended December 31, 2008, were
$4,069,827 compared with expenses of $7,155,114 in the prior year. Brokerage
operations costs decreased to $3,292,435 from $6,581,056. The decrease is
attributable to a decrease in variable compensation driven by lower revenue,
as well as expense reduction measures enacted by the Company to help mitigate
the reduction in revenue. Merchant banking expenses were $164,693 compared to
$113,614 in the prior year. Interest expense decreased to $139,694 from
$252,147. General and administrative expenses were $402,046 compared to
$16,635 in the prior year due to increased legal fees and the cost of the
Company's equity incentive plan.
    Net loss for the nine months ended December 31, 2008 was $6,315,089
compared with net income of $2,404,965 in the prior year. Results were
strongly influenced by the very difficult market conditions experienced over
the past nine months. Net income included a loss of $2,926,174, representing
the Company's share of the loss of Jaguar, compared to a gain of $656,007 in
the first nine months of the prior year.
    Total revenue for the nine months ended December 31, 2008 was $8,599,853
compared with $20,133,680 in the prior year. Traditional brokerage revenue,
the Company's primary business, was affected by the severe market conditions.
    Commission revenue was $4,420,808 for the nine months ended December 31,
2008 compared to $7,520,210 in the prior year. Underwriting and advisory
revenue was $3,175,089 compared to $7,179,277 in the prior year. Broker
warrant revenue was a loss of $1,235,346 compared to a gain of $2,178,025.
Trading revenue was $598,119 in the current year compared to $580,942 in the
prior year. Interest revenue of $817,633 was down from $1,137,550 in the prior
year. Merchant banking activities generated revenue of $725,465 in the nine
months compared to $1,661,237 in the prior year.
    Total expenses for the nine months ended December 31, 2008, were
$11,988,768, down considerably from the $18,089,339 of the prior year.
Brokerage operations costs decreased to $10,230,503 from $16,908,701. The
decrease is attributable to a decrease in variable compensation driven by
lower revenue, as well as expense reduction measures enacted by the Company.
Merchant banking expenses were $164,693 compared to $113,614 in the prior
year. Interest expense decreased to $500,537 from $704,694. General and
administrative expenses were $806,165 compared to $50,332 in the prior year,
which included an expense recovery from prior periods.

    Northern Financial Corporation wholly owns Northern Securities Inc., a
full service investment dealer that provides financial advisory services to
retail and institutional clients and investment banking services to small
capitalization companies.

    %SEDAR: 00004119E




For further information:

For further information: Ann Krallisch, Director, Business Development,
Northern Securities Inc., (416) 644-8113, Fax: (416) 644-0270, e-mail:
akrallisch@northernsi.com

Organization Profile

Northern Financial Corporation

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890