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Raymond James Tops Estimates, Reports Strong Revenue: Q2 Earnings

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Raymond James Financial (RJF) said profits of $125.5 million, or $0.87 per share for the quarter ending June 30, were down 6% from the year-ago period, when it reported net income of $133.2 million, or $0.91 per share.

Adjusted earnings of $134 million, or $0.93 cents per share, topped analysts’ expectations. In addition, revenue improved 3% to $1.39 billion, topping estimates.

“For the first three quarters of fiscal 2016, each of our core operating segments generated record revenues, enabling the firm to generate record net revenues of $3.94 billion during this period, which reinforces the value of our client-focused, diversified business model,” said CEO Paul Reilly in a statement. “Looking forward, our growth should continue to be aided by the new records we achieved for client assets under administration, financial assets under management, the number of Private Client Group financial advisors and net loans outstanding at Raymond James Bank.”

Private Client Group assets held in fee-based accounts ended the quarter at $206.7 billion, representing over 40% of total client assets in the segment and growth of 11% year over year. Total Private Client Group assets rose 7% from last year to $534.5 billion.

Revenues for the unit “were also helped by a rise in account and service fees, which was primarily attributable to higher fees earned on client cash balances in the Raymond James Bank Deposit Program as well as growth in mutual fund service fees,” the company says. Its total sales were $903.2 million, a 1% increase from the year-ago period.

Pre-tax net income for the Private Client Group was $81.9 million, down 5% from last year. According to Raymond James, the segment’s pre-tax income was hurt by “elevated legal and regulatory expenses.”

Its number of advisors grew to 6,834 from 6,507 a year ago and 6,765 as of March 31. Most advisors (4,013) are independent reps, with the remaining 2,821 working as employees.

“Record quarterly revenues in the Private Client Group segment were driven by record client assets and strong financial advisor recruiting and retention results,” explained Reilly. “We look forward to establishing the new Alex. Brown division of Raymond James upon closing the acquisition of the U.S. Private Client Services unit of Deutsche Bank Wealth Management, which is on track for September 2016. We are also excited about the pending 3Macs acquisition, which will be a high-quality addition to our Private Client Group in Canada.”

— Read Recruiting Roundup: Raymond James Adds $205M Wells Team on ThinkAdvisor.