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With that said, I will now turn the call over to Mr. Powell Brown, our President and Chief Executive Officer.Powell Brown Thank you, (Lisa). Good morning, everybody. We're here this morning in lovely San Diego with our board visiting Arrowhead and so it's 5:30 local time and we're glad everybody could join us. I'll turn it over to Cory for the financial report. Cory Walker Thanks, Powell. Now that we have two straight quarters of positive internal growth, we at least have the beginnings of a trend. Our net income for the second quarter of 2012 of $42.5 million was up 14.7% over last year's second quarter. Correspondingly, our net income per share for the quarter was $0.29, which is 11.5% over the $0.26 that we earned last year second quarter. From our revenue standpoint, commissions and fees for the quarter increased 17.9% or $289.9 million. That's up from the $246 million that we earned last year. In our press release is our normal table that summarizes our total growth rates and our internal growth rates from our core commissions and fees which excludes profit sharing contingencies as well as our guaranteed supplemental commissions, our GSCs. Relative to our profit sharing contingency commissions, we only received $1 million this year, which is a $1.3 million decrease from the $2.3 million that we received last year. The vast majority of this net decrease was from our wholesale brokerage division. We still estimate that we will receive around $10 million to $11 million of profit sharing contingencies in the third quarter and that for the fourth quarter of 2012 we may receive between $2 million and $3 million as long as there are no hurricanes that hit Florida this year. Additionally, we accrued $2.3 million of guaranteed supplemental commissions in the second quarter of 2012 and that's about $600,000 less than the $2.9 million that we accrued last year in the second quarter.
As we mentioned in our first quarter conference call, this reduction is primarily due to the fact that some of our insurance carrier partners have reverted back to their profit sharing contingent commission contracts beginning in 2012.Now looking at our internal growth schedule, we did have a strong positive internal growth rate of 3.2%. For the second quarter of 2012, our total core commissions and free fees increased 20.5% or $48.8 million of net additional core commissions and fees. However, within that net number was $41.1 million of acquired revenues. That means that we had $7.7 million of new commissions and fees on a same-stores sales basis and that is a first time – it's the first time in a long time that we had positive internal growth in each of our four divisions. Powell will talk about the activities in each of those business segments in a minute. Our investment income decreased by approximately $200,000 but correspondingly our other income increased by roughly $300,000. Our pre-tax margin for the second quarter of 2012 was 24.5% and that's compared to our pre-tax margin of 24.9% in the second quarter of last year, so 40 basis point differential. The employee compensation benefits as a percentage of total revenues was 51.8%. That's an increased from the 51.0% factor we had last year second quarter. The total dollar increase on a net basis in employee compensation benefits was approximately $24.9 million or 19.8% increase. Of that amount, $19.2 million was attributable to just the new, standalone acquisition since last year. Therefore, if you exclude the impact of the standalone acquisition, we had $5.7 million of additional compensation on kind of a semi same-store sales basis because obviously we had to have roll-ins that include that number. Of this increase, we had $1.5 million was due to a new one-time 2012 additional producer commissions that are going to be paid to our retail division commission producers for their growth of their 2012 production. In addition to that, we had another miscellaneous $300,000 other production bonuses that were paid out this quarter. Read the rest of this transcript for free on seekingalpha.com