The coronavirus and its associated fallout have prompted one large broker-dealer to put its in-person recruiting efforts and the related movement of some new advisors on hold.
“We discontinued in-person advisor recruiting meetings and deferred numerous advisor transitions to Raymond James due to COVID-19,” said Chairman & CEO Paul Reilly, in a statement.
The news comes about 10 days after the firm decided to limit visits to the home office and branches “by non-associates for the health and safety of associates, advisors and clients.”
It also ended “nonessential” travel until further notice and canceled (or postponed) events through at least April 30, including its yearly independent advisor conference, Elevate, which had been set for April 20-23 in Orlando.
The firm, which has about 8,100 independent and employee advisors, says total client assets under administration was $855 billion as of Feb. 29.
That’s down 5% from Jan. 31, but up 9% from February 2019. The firm says the month-to-month drop was mainly due to “the decline in equity markets, which has accelerated thus far in March.”
In other negative news, Reilly said: “We are also experiencing disruption in our investment banking business … [and] while trading volumes in fixed income are elevated in March, dislocation in the fixed income markets has negatively impacted principal transaction revenues.”
The executive added: “I am proud of the dedication and commitment of our associates and advisors as we execute on our business continuity plans to continue providing service to clients.”
Net loans at Raymond James Bank were $21.5 billion in February, a 1% increase from January and a 7% jump from February 2019.
“As a result of rapid and widespread economic deterioration, we expect the entire banking industry to experience substantial increases in bank loan loss provisions. We will be appropriately proactive in adding to allowance for loan losses, similar to our approach during the previous financial crisis,” Reilly said in a statement.
Its domestic cash sweep balances were some $39 billion in February, up 2% from January. “Due to the surge in market volatility since the beginning of March, cash sweep balances have increased significantly to over $48 billion as of March 20,” the firm said, noting that spreads earned on its cash balances have been hurt by the two recent emergency rate cuts.
The firm also said it repurchased about 2.5 million shares for roughly $202 million from the beginning of the quarter through March 11. As of March 20, $537 million remained available under its repurchase authorization. “We temporarily suspended share buybacks as we assess capital needs and market liquidity,” said Reilly.
As of March 20, Raymond James has some $1.4 billion of cash and a $500 million revolving credit facility, “which we could access to provide additional flexibility,” he added.