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Raymond James Financial and Wells Fargo Retail Brokerage Units Hang In There

Raymond James and Wells Fargo Advisors report decent results in a tough environment.

Raymond James Financial posted improved earnings in its fiscal third quarter compared to last year, with the private client group driving the results. Private Client Group revenue was up 31 percent over the previous year increasing from $371 million in 2009 to $485 million for the most recent quarter ending June 30. Pre-tax income for the unit jumped 144 percent from $18 million in 2009 to $45 million for the quarter just ended.

However, recruiting in the Private Client Group appears to have slowed down from the preceding quarter. Advisor headcount remained flat from the preceding quarter, but the number of financial advisors fell marginally in the June quarter compared to last year, dropping from 4,749 advisors in 2009 to 4,739 this year. Meanwhile, client assets at $231 billion are up year-over-year, growing by 18 percent, but dropping from $242 billion in the preceding quarter ending in March.

Advisors can affiliate as “independent contractor advisors” with Raymond James Financial Services, or as employee reps with Raymond James & Associates. For both divisions it seems the firm says recruiting pace has slowed, but the quality of reps going to the firm is being maintained.

“Year to date recruiting results, while certainly lower than the record pace of 2009, we continue to be strong by historical standards,” says Bill Van Law the national director of Business Development for Raymond JamesFinancial Services. In fact, year to date the independent arm of Raymond James headcount is up 14.1 percent, versus a very strong year in 2008, says Van Law.

Additionally, Van Law says Raymond James Financial Services continues to recruit experienced advisors, generally from the wirehouse firms.
Overall Raymond James Financial remains strong reporting net income of $60.7 million, or 48 cents a share, for the third quarter ended June 30, compared with net income of $42.6 million, or 35 cents a share, for the third quarter of fiscal 2009. Total revenue for the third quarter ending June 30 was $763.6 million, up 20 percent over total revenue of $636.9 million in the year-ago period. Raymond James Bank had lower net interest income; the bank incurred the lowest loan loss provision expense in two years.

In the release, Raymond James Inc. CEO Paul Reilly says the bank anticipates being able to resume growth in overall loan balances. Bank revenues dropped 14 percent compared with the same quarter last year.

Wells Fargo also reported its most recent earnings yesterday, with second quarter earnings improved from the first quarter. The San Francisco-based bank reported net income climbed 20 percent or $515 million from the prior quarter. However, net income was down year over year; dropping from the $6.2 billion in net income Wells generated in the first half of 2009 to $5.6 billion in net income for the six months ended June 30, 2010. Total revenue stayed flat at $21. 4 billion compared to preceding quarter.

Meanwhile, at the bank’s wealth, brokerage and retirement unit, which includes Wells Fargo Advisors (and legacy Wachovia Securities and AG Edwards advisors) results were mixed. Net income of $270 million, was down 4 percent from the prior quarter, but up $12 million from the prior year. Revenue for the unit was $2.9 billion, up two percent from the prior year offset by lower security gains and higher asset-based revenues. Meanwhile client assets rose six percent to $1.1 trillion from the prior year. Advisor headcount totaled 20,196, with 15,102 financial advisors and 5,094 licensed bankers in retail branches.

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