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Raymond James

Raymond James Misses Estimates; Private Client Group a Bright Spot

Raymond James Financial announced net income of $104.6 million, or 72 cents a share, for the fiscal second quarter, missing analysts’ estimates by 5 cents a share. But the private client group provided a bright spot in the firm’s results, reporting record net revenue and pre-tax income.

On a conference call Thursday morning, CEO Paul Reilly said the company had a number of factors working against them during the quarter, including fewer trading days, fewer calendar days, which affected interest, and branch closures in the Southeast and Midwest due to weather.

There were also additional expenses associated with the relocation of the firm’s data center and increased airtime for its television ads. All told, these factors caused about $8 to $10 million of elevated expenses, which are non-recurring going forward, said Chief Financial Officer Jeff Julien.

The company’s net revenue for the quarter was up 3 percent from a year ago to $1.2 billion. (As of 11 a.m. eastern time, the firm's stock price was down 1.3 percent.)

“PCG was kind of the star performer this quarter, with a number of records,” Julien said.

PCG posted record pre-tax income of $77.1 million, up 44 percent year-over-year, on record revenue of $812.2 million, up 12 percent from a year ago. Advisor productivity also reached a record high, although the firm does not report average revenue per advisor. Assets under administration reached a record $434 billion, a 12 percent gain from a year ago and 8 percent sequentially.

After a dip in advisor headcount in the fiscal first quarter, the firm added 24 new advisors, bringing advisor count across the businesses to 6,202. This time last year, headcount was at 6,165.

The recruiting pipeline is stronger than last year, Reilly added. The pipeline is also strong in the RIA channel, although those deals take longer to close.

“The first of the year is probably the time, is probably the most active time in term of people coming down both cause the year-end change and it’s a nice place to come visit in the winter.”

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