business

Ameriprise Financial Inc. shares surged 12 percent Thursday after the financial services company reported a near tripling of its second-quarter profits, propelled largely by stock market gains and a large acquisition.

The Minneapolis-based company got a big boost from its April 30 acquisition of Columbia Management from Bank of America, which nearly doubled the assets Ameriprise manages on behalf of its clients to $413 billion.

The $1 billion deal vaulted Ameriprise from 31st to eighth place among long-term mutual fund asset managers in the United States, and significantly expanded the network of institutions that distribute its funds.

"The Columbia deal gives them scale in a business -- asset management -- where scale really matters and where margins tend to be stronger," said Jim Ryan, a senior analyst at Morningstar.

The firm reported net income of $259 million, or 98 cents a share, compared with $95 million, or 41 cents a share, a year earlier. Though the Columbia deal drove much of this gain, Ameriprise's results were also lifted by stronger profits in both its annuities and insurance segments.

Excluding the acquisition, Ameriprise's operating revenue grew 18 percent over a year ago. Average revenue per adviser hit a new high of $83,000, the firm said.

The firm managed to generate the strong results even while reducing its ranks of investment advisers, suggesting the firm is weeding out its less-productive advisers. The firm had 11,684 advisers as of June 30, down 7 percent from the previous year.

The results were released late Wednesday and easily blew past Wall Street's earnings expectations, causing investors to pour into Ameriprise's stock when the market opened Thursday.

Shares rose $4.70 to close at $42.98. The stock is up 60 percent from a year ago, when it was hovering at $27 a share.

The impact of the Columbia acquisition was greater than many analysts had anticipated. In addition to bolstering Ameriprise's assets under management, the deal gave the firm a much larger platform for selling mutual funds.

Previously, Ameriprise distributed funds through its existing network of advisers. Now, it has access to Columbia's distribution network, which includes such large investment firms as U.S. Trust and Merrill Lynch, both subsidiaries of Bank of America.

However, Ameriprise's expansion into asset management leaves the firm more vulnerable to stock market swings.

In a conference call Thursday with analysts, Ameriprise CEO and Chairman James Cracchiolo sounded cautionary, noting that recent inflows into funds could reverse.

"Client confidence has rebounded somewhat," he said. "But given the depth and duration of the recession, we believe confidence is still quite fragile."

Chris Serres • 612-673-4308