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Raymond James Tops Estimates as Profits, Sales Rise

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As the Dow Jones industrial average ended the day above 20,000 on Wednesday, Raymond James Financial reported earnings and revenue for the final three months of 2016 that beat analysts’ estimates.

The firm had net income of $146.6 million, or $1.00 per share, in the period ending Dec. 31 vs. $106.3 million, or $0.73 per share — a jump of 38%. Meanwhile, sales grew 17% year over year to $1.49 billion.

“We are proud that we were able to generate record quarterly net revenues enabled by record net revenues in several of our core operating segments,” said CEO Paul Reilly, in a statement. “We are also encouraged by ending the quarter with records for several of our key revenue drivers including client assets under administration, financial assets under management and net loans at RJ Bank.”

Private Client

The advisor division says it had quarterly net revenues of $1.04 billion, a jump of 19% over the year-ago period and 8% over the prior quarter.

Quarterly pretax income was $73.4 million, an increase of 6% from a year ago but down 31% from the preceding quarter; the company says this decline resulted primarily from “elevated reserves associated with legal matters.”

Assets under administration ended the year at $585.6 billion, a jump of 24% from December 2015 and 2% from September 2016. Private Client Group assets in fee-based accounts stand at $240.2 billion, or 41% of total AUA, representing a 26% increase from last year and a 4% jump from the earlier quarter.

The firm says revenues for the unit were driven by strong growth of assets in fee-based accounts, increased earnings on cash balances and higher transactional commissions. They also benefited from the Alex. Brown and 3Macs acquisitions, which closed during the quarter ended Sept. 30.

“We continue to enjoy solid financial advisor recruiting and retention results which, along with the additions of the Alex. Brown and 3Macs teams in the preceding quarter, helped us achieve record client assets,” Reilly explained in a press release. “The growth of client assets and the Federal Reserve’s decision to increase short-term interest rates in December should provide tailwinds for this segment’s results going forward.”

Rep Results

In terms of the number of advisors, Raymond James has 7,128, up from 6,687 a year ago — thanks in part to its Alex. Brown and 3Macs deals. The figure dropped 18, however, from the prior quarter.

The firm’s number of employee advisors — including those with Raymond James & Associate and Alex. Brown — stands at 2,985 vs. 2,771 a year ago and 3,098 in the earlier period.

In the independent channel, the firm has 4,143, up from 3,916 last year and 4,048 in the prior quarter.

According to the company’s earnings release, Raymond James “refined the criteria [used] to determine our financial advisor population, which resulted in a decrease of approximately 100 advisors” in the period ending Dec. 30; the firm did not revise earlier figures, because the changes in its methodology “did not have a significant impact” on this data, it adds.

On a conference call with equity analysts Thursday, company executives explained that the firm no longer includes non-producing branch managers in its advisor headcount figures.


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