Wealth management remained a bright spot on Southwest Securities’ earnings even as the firm as a whole struggled to net a profit for the third quarter.

Overall, Dallas-based Southwest Securities Group reported a net loss of $5.7 million, but the retail segment impressed with a profit of $308,000, up from a net loss of $1.039 million a year ago. The division continued to build on momentum from the second quarter as revenue rose 7% from the second quarter to hit $27.8 million.

“While market conditions and reduced customer demand in the fiscal 2013 third quarter contributed to a 26% decline in primary operating revenue in our fixed income business compared to the same quarter last year, we remain encouraged by the underlying strength of our core business,” Southwest Securities’ chief executive, James H. Ross, said in a statement. “Our retail segment recorded a strong performance with gains in both net revenues and pre-tax profits compared to last year’s quarter, and the banking segment’s loan portfolio, excluding purchased mortgage loans, increased by $6.0 million in the quarter, marking the first increase since the fourth quarter of fiscal 2010.”

The uptick in revenue was driven by a $716,000 increase in advisory fees, which was helped by an increase in assets under management. Total customer assets were $14.3 billion for the third quarter as compared to $12.8 billion a year ago.

Net income fell from the previous quarter’s $528,000, however, as expenses rose two percent to $27.5 million last quarter. That was due to a $1.1 million increase in commission and other employee compensation expenses.

The largest hit to the firm’s overall revenue came from other divisions, including a $3.1 million decrease in commission revenue “primarily due to a decline in the taxable fixed income business, and a $2.7 million decrease in net interest revenue, primarily due to reduced loan balances and net yield on interest earning assets at the company’s banking subsidiary,” the firm said in a release.

According to Ross, the firm made a $20 million capital infusion to its retail, clearing and institutional business operations during the third quarter in order “to support daily operations,” he said.

“We hold $30 million at the parent company to be used for general corporate purposes when appropriate, and we will continue to evaluate opportunities to deploy our capital to businesses in order to facilitate growth an increase shareholder value,” Ross said in the release. “We believe our strong capital levels will provide a competitive advantage as the industry landscape continues to evolve and market conditions improve.”

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