Raymond James Financial (RJF) said it had net income of $106.3 million, or $0.73 per share, in the period ending Dec. 31, down 16% from the year-ago period. Net revenues of $1.27 billion improved 2% from the prior year. Both results, however, missed analysts’ estimates.
Weakness in the most-recent results, the company says, was mainly due to lower assets in fee-based accounts at the start of the quarter as a result of earlier equity market declines, along with “an extremely challenging environment for equity investment banking.” Also affecting net income were expenses related to growth, as well as higher increased reserves for legal and regulatory matters in the Private Client Group.
“While we continue to benefit from very strong financial advisor recruiting and retention results, several factors impaired our financial results in the December quarter,” said CEO Paul Reilly, in a statement. “Nonetheless, our long-term results should benefit from the recent rise in short-term interest rates as well as the quarter-end records we achieved for client assets under administration and net loans at Raymond James Bank.”
Private Client Results
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Quarterly net revenues for the group were $872.3 million, up 3% from a year earlier. Quarterly pre-tax income of $69.1 million, however, was down 25% year over year.
Private Client Group assets under administration topped $473 billion, up 3% from December 2014.
The number of financial advisors affiliated with or employed by Raymond James hit 6,687 in the United States and overseas, increases of 351 over December 2014 and 91 over September 2015. The number of independent reps is 3,916, with the remainder being employee advisors.
“The segment’s pretax income in the quarter was negatively impacted by the sequential decline in revenues and by expenses associated with strengthening the technology platform and recruiting financial advisors,” the company said in a press release.
Assets in fee-based accounts grew 9% year over year and now represent more than 40% of the group’s total client assets, or about $190 billion.
During the quarter, Raymond James announced that it is acquiring the U.S. Private Client Services unit of Deutsche Asset & Wealth Management. The unit includes some 200 advisors with $50 billion of client assets. The transaction is expected to close by Sept. 30, and the advisors are set to do business as the Alex. Brown division of Raymond James.