Raymond James Posts 'Modest Improvement' in Private-Client Results

Fees & commissions for its 6,300 reps are up 2% from last quarter and 8% from last year to $615 million

Raymond James (RJF) said late Wednesday that it had net revenues of $1.11 billion for the period ending June 30, up 2% from the year-ago quarter but down 3% from the preceding quarter.

Net income was $84 million, or $0.59 per share, up 7% from the year-ago quarter and 5% from the preceding period.

Excluding acquisition expenses of $13.4 million, non-GAAP net income was $92.5 million, or $0.65 per share, an increase of 2% from a year ago but down 4% from the prior quarter.

Analysts had expected the company to have earnings of $0.66 per share on sales of $1.11 billion.

“Most of our businesses performed as expected in the June quarter with the exception of fixed income.  An upsurge in interest rates in June resulted in trading losses despite lower inventory levels,” said CEO Paul Reilly (left), in a press release.

Private Client Results

The company said its Private Client Group “showed modest improvement over the preceding quarter.” PCG securities fees & commissions were $624.3 million as of June 30, a nearly 2% increases from $615.2 million as of March 31 and a jump of 8% from $576.3 million a year earlier.

Total revenue for the Private Client Group was $741.6 million vs. $726.8 million in the prior quarter and $684.7 million a year ago.

Pretax net income for the unit declined 12% from the prior quarter but grew 8% from a year ago to $56.7 million.

Despite a 2.4% rise in the S&P 500 index during the most-recent quarter, the unit’s client assets under administration as of June 30, $405.8 billion, were slightly lower than as March 31, $406.8 billion. The company says this decline stemmed from a drop in Canadian-based client assets as measured in U.S.-dollar terms the impact of a rise in medium- and long-term interest rates on fixed-income investments in June.

Assets under management, however, improved to $52.5 billion vs. $51.0 billion in the prior quarter and $40.9 billion a year ago.

Advisor Headcount

The number of U.S. financial and investment advisors is 5,428, down slightly from 5,431 as of March 31 and a drop of 61 from 5,489 in the year-ago period.

The number of advisors in the U.S., Canada and United Kingdom stands at 6,301 vs. 6,297 three months prior and 6,367 in June 2012.

Earlier this month, Raymond James said it tapped four new regional directors to help boost its recruiting and advisor-related business results.

Other Results

The company says its Capital Markets unit results were relatively flat vs. the prior quarter, while Equity Capital Markets was “greatly improved as both M&A and new issue business rebounded from the slow March quarter.”

Fixed Income, though, had a tough quarter due to the upward trending volatility in long-term interest rates, which led to low commission volumes and a net trading loss. “The rise of yields on long-term municipal bonds rivaled those of October 2008 resulting in trading losses, particularly in the municipal bond inventories,” explained the firm.

Asset Management, however, had a 10% uptick in revenues from the prior period. Raymond James Bank results, meanwhile, declined modestly from the preceding quarter because of several factors, the company says, adding that its Proprietary Capital segment “continued to make a meaningful contribution to pretax earnings.”

“We are substantially complete with our various integration initiatives, highlighted most recently by a headcount reduction in Capital Markets at the end of June,” Reilly explained.

“We continue to operate at elevated support levels as the familiarization and utilization of our systems by our legacy Morgan Keegan advisors will take some time,” he added. We are proud of the retention and integration efforts of our associates. With a continuation of good equity markets and some improvement in Fixed Income results, we look forward to resuming revenue growth and improving our overall margins.”

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