Raymond James (RJF), which released its February performance data on Thursday, said that the Morgan Keegan acquisition would ‘unfavorably impact’ its quarterly earnings even as nearly all of Morgan Keegan’s reps would come over to Raymond James.
The company’s February data showed that securities commissions and fees rose 4.5% over last month and 5.1% from February of last year. Assets under administration grew nearly 3% and 6%, respectively, to $289 billion.
The company also says its integration of Morgan Keegan advisors “continues to progress steadily,” and that 98% of the roughly 600 reps and branch managers presented with retention offers have indicated that they will be joining Raymond James upon closing of the merger, which could be April 2.
At the same time, Raymond James says financing arrangements for the $930 million deal “will unfavorably impact this quarter’s earnings and earnings per share due to both the increased interest cost and common shares outstanding since they took place before the actual acquisition,” according to a press release.
The company would not elaborate on the specific impact of the three financing packages. It did say it completed an equity offering of close to 11.1 million common shares and a $350 million senior note offering in February. Also, the St. Petersburg, Fla.-based financial group said Thursday that it had priced its planned offering of $250 million of 5.625% senior notes due in 2024 at roughly 99.6% of principal.
Raymond James COO Dennis Zank (left) says most of the 1,000 Morgan Keegan advisors could join Raymond James by the expected close of the deal on April 2. Some 600 were given retention offers earlier this year based on their yearly production, which must be $300,000 or higher.
If every advisor came over, Zank added, Raymond James & Associates – the employee channel of the company – could expand to as many as 2,300 advisors from 1,320 in February. (Including its independent, bank and other reps in the United States and abroad, Raymond James now has some 5,400 FAs.
“We lost two in Pensacola, and that’s about it,” said Zank, in an interview with AdvisorOne. “Yes, I tend to be an optimist, but this could be the best retention in the brokerage business in a long time – 98% have signed their letters of intent to stay with us, and that’s with all the recruiters on the planet banging on their door. It’s a pretty amazing number.”