Raymond James Financial Inc.
) fiscal second quarter 2012 (ended March 31) earnings per share
came in at 64 cents, surpassing the Zacks Consensus Estimate of 56
cents. Moreover, this exceeded the prior-quarter earnings of 53
cents and came at par with the prior-year quarter earnings of 64
Earnings for the reported quarter exclude one-time charge of $21
million (pre-tax) primarily related to acquisition. Considering
this charge, the company reported earnings of 52 cents per
Improving top line was the major contributor to the
better-than-expected results. In addition, asset growth served as a
positive catalyst. On the other hand, escalating non-interest
expense was the primary headwind.
Raymond James' net income in the fiscal second quarter stood at
$81.9 million, compared with $67.3 million in the previous quarter
and $80.9 million in the year-ago quarter.
Performance in Detail
Raymond James recorded fiscal second-quarter net revenue of
$871.9 million, up 11% sequentially and 2% year over year. Both the
elevations were largely driven by augmented investment advisory
fees, mounted interest income and higher other revenues. This also
compared favorably with the Zacks Consensus Estimate of $846.0
Non-interest expenses climbed 13% from the prior quarter and 5%
from the prior-year quarter to $764.0 million. Both the increases
were primarily attributable to elevated compensation, commissions
and benefits as well as higher occupancy and equipment costs. This
was partially offset by reduced loan loss provision.
As of March 31, 2012, assets under administration grew 8%
sequentially and 6% year over year to $292 billion. Similarly,
assets under management totaled $39 billion, up 11% from the prior
quarter and 8% from the year-ago quarter.
As of March 31, 2012, Raymond James reported total assets of
$19.0 billion and shareholders equity of $3.1 billion.
Book value per share at the end of fiscal second quarter was
$22.84, compared with $21.34 at the end of the prior quarter and
$20.42 at the end of the prior-year quarter.
On April 2, Raymond James completed the acquisition of the
securities brokerage arm of Morgan Keegan & Company Inc. Morgan
Keegan was acquired from
Regions Financial Corp.
) at the purchase price of about $1.2 billion. Raymond James and
Regions are expected to start several mutually beneficial business
relationships, including deposits, loan referrals and processing,
which would benefit the shareholders in the long run.
The quarter under review included several charges related with
the Morgan Keegan acquisition. Moreover, 11,075,000 of common
shares were issued in February 2012 as a component of financing of
Furthermore, in February, the company acquired $400 million of
the Canadian loan portfolio from Allied Irish Bank. Acquisition of
this loan portfolio boosted the company's net loans in the reported
Raymond James' efforts to boost the revenue growth by recruiting
experienced advisors combined with the market recovery could
further enhance its financials in the upcoming quarters. On the
other hand, the regulatory issues and the increasing expenses will
likely put the company's profitability under pressure.
Nevertheless, the acquisitions by Raymond James indicate that
its strategy is to grow through smaller acquisitions. Moreover, for
the company, Morgan Keegan is a significant opportunity, which
would help it to expand its brokerage and capital markets
Currently, Raymond James retains a Zacks #2 Rank, which
translates into a short-term Buy rating.
REGIONS FINL CP (
): Free Stock Analysis Report
RAYMOND JAS FIN (
): Free Stock Analysis Report
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