Rockwater Capital Corp. net earnings for the second quarter ended June 30 were $2.7 million, up 61.7% from $1.6 million in the second quarter ended June 30. Revenue for the second quarter of 2006 increased 24.1% to $58.1 million from $46.8 million in the comparable period last year.

For the six months ended June 30, net earnings were $5.2 million, an increase of 92.9% from the $2.7 million recorded for the same six-month period in 2005. Revenue for the current six-month period was $118.9 million, up 23.2% from $96.5 million in the comparable period last year.

“Our reported earnings on a year-over-year and quarter-over-quarter basis further indicate the continued strength of Rockwater’s business model,” said Robert Schultz, chairman. “Notwithstanding a decline in equity markets in the latter part of the quarter, which negatively impacted revenue levels, we are pleased with our continued earnings growth.”

“During the quarter we made solid progress building our business,” added William Packham, president and CEO. “At Blackmont Capital, we added key professionals in Capital Markets and Wealth Management. Although we are disappointed in the asset decline in our Asset Management business, we are encouraged as the investment performance continues to be strong, particularly at KBSH. We believe this performance will provide solid opportunities to win future mandates.”

Rockwater’s asset management business is comprised of KBSH Capital Management Inc. and the Disciplined Leadership Group. Both groups delivered strong investment performance over the quarter.

Total assets under management were $4.9 billion, a decrease from $5.7 billion at March 31, and $6.3 billion at Dec. 31. The reduction primarily reflects the loss of certain third party and institutional mandates.

Rockwater announced during the quarter that its existing mutual fund platform, with funds managed by DLG, will be re-branded as Lakeview Asset Management and that new funds managed by KBSH will be added.

Management has three key initiatives to drive AUM growth in the asset management business:
– Re-branding of mutual fund platform and expanded product offerings in the fall;
– Recruiting of additional investment counsellors with established clients into Knight Bain Private Counsel;
– Hired head of institutional sales to leverage KBSH’s continued strong performance and augment opportunities to win new business.

Given the status of the above initiatives, the present level of AUM, recent market corrections and current market uncertainty, Rockwater indicated that it does not expect to achieve its stated AUM target for the end of 2006 of $7.3 billion.

As for its Blackmont Capital Inc. subsidiary, which is comprised of both the wealth management and capital markets groups, overall revenue for the second quarter increased 28.9% to $49.3 million and. For the current six-month period, revenue increased 28.9% to $101.5 million.

Its wealth management revenue increased 30.3% to $35.5 million from the second quarter of 2005. Assets under administration were $8.1 billion, down 4.7% from March 31, primarily due to market performance in the latter part of the quarter. AUA was up 3.8% from Dec. 31, 2005 and 30.6% from June 30, 2005

Average AUA per investment advisor was $47.4 million, consistent with $48 million as of March 31. Average AUA per investment advisor was up 37% year-over-year

Its capital markets revenue increased 25.3% to $13.8 million from the second quarter of 2005.