Raymond James CEO Paul Reilly

Raymond James (RJF) missed earnings estimates, reporting a 5% drop in net income to $129.2 million, or $0.88 per share, compared with $136.4 million, or $0.94 per share, a year ago for the quarter ending Sept. 30. Revenues in the latest period, though, jumped 4% to $1.34 billion.

The company says the decline in net income was “largely attributable to a substantial increase in the loan loss provision associated with significant loan growth at Raymond James Bank.” Overall, expenses grew 6% year over year to $1.14 billion.

CEO Paul Reilly explained the dichotomy in an interview on CNBC following the company’s earnings release: “It was a great quarter … The bottom line was impacted by growth … Really, we think it’s a very, very solid quarter.”

Overall, the company’s core segments “generated record net revenues in fiscal 2015,” Reilly said earlier in a statement. “Additionally, despite significant growth investments made during the year, the Private Client Group segment, Asset Management segment and Raymond James Bank generated record pretax income in fiscal 2015.”

Reilly added that the firm remains committed to expanding the Asset Management segment’s product offering, “both organically and through acquisitions. Continued Private Client Group recruiting momentum also bodes well for growth in this segment.”

There is speculation that the company could move to acquire the U.S. private wealth business of Deutsche Bank – a matter on which Raymond James declined to comment. In mid-August, Charles von Arentschildt, the former chairman of Global Markets, North America, at Deutsche Bank Securities, joined the Raymond James board of directors.

Private Client Results

The unit, which includes nearly 6,600 advisors in the U.S., U.K. and Canada, had total revenue of $900 million, up 4% from $864 million a year ago. Net income, though, fell 12% to $87.7 million from $100.2 million.

Private Client Group assets under administration rose 1% year over year to $453.3 billion; they declined 5% from the prior quarter, however. About 40% of total assets, $179.4 billion, are held in fee-based accounts.

The number of employee advisors in the U.S. stands at 2,571, while Raymond James also has 3,544 affiliated independent U.S.-based reps.

“For fiscal 2015, record results in the segment were driven by strong growth in assets in fee-based accounts and a significant net increase in the number of financial advisors to a record 6,596,” the company explained in a press release. “Compared to fiscal 2014, the pretax margin in the segment declined slightly to 9.8% of net revenues, which was driven by the upfront costs associated with adding new advisors, as well as continued investments in technology, products and services to help advisors expand their businesses.

“Our intense focus on serving financial advisors and their clients led to another record year of revenues and earnings in the Private Client Group segment,” Reilly explained. “We continue to experience significant interest from prospective financial advisors who are attracted by our unique culture and robust platform.”

— Check out 4 Takeaways From Raymond James Women’s Symposium on ThinkAdvisor.