Raymond James posted record net revenues and strong net income, led by its private client and asset management units. The firm’s net revenues for the quarter grew 7 percent to $1.2 billion from a year ago, while net income was up 36 percent over the same period to $116.6 million.
The company started its fiscal first quarter strong, with earnings per share of $0.81, beating the consensus estimate of $0.73. In an analysts call Thursday, CEO Paul Reilly attributed the results to the record levels of client assets.
During the quarter, the firm grew client assets to $447 billion, an increase of 15 percent from the prior year levels. “The asset levels, both in under administration and under management, certainly give us a good tail wind going into next quarter,” said Jeffrey Julien, chief financial officer.
The private client group's net revenues grew 9 percent from a year ago to $776.6 million, while pre-tax income rose 34 percent from a year ago and 11 percent from last quarter to $71.5 million.
Fee-based assets grew 32 percent from a year ago to $151 billion, which account for 36 percent of the segment's total assets under administration. “The private client group was good news all around,” Reilly said, noting the unit experienced record client assets under management, as well as an improvement in margins and a strong recruiting pipeline.
But total advisor headcount at the firm is at 6,178, down from 6,197 last quarter and 6,181 a year ago. Reilly said that the firm recently reformatted its RIA business and expects interest there, but noted it was still early and that it took time to fill a pipeline.
Reilly also took time during Thursday’s call to praise Chet Helck, 61, who is set to retire as the chief executive of the private client group in February. “The private client group is in good hands due to his foresight,” Reilly said.
With the Morgan Keegan integration finished last quarter, Reilly says the firm is still interested in deals, but noted the lack of prospects. “If we could find more Morgan Keegans out there, we’d do them.” But Raymond James is not going to buy something just to grow, he says. “We’re only going to do the right deals at the right price.”