* Firm has several small deals "in the hopper" -CEO
* Seeks large-cap stock manager for asset management arm
* CEO wants to expand presence in western U.S. states
By Joseph A. Giannone
NEW YORK, Dec 8 Raymond James Financial Inc
(RJF.N) has "half a dozen" potential acquisitions "in the
hopper" as the brokerage firm looks to expand its investment
banking and asset management businesses, Chief Executive Paul
Reilly told investors on Wednesday.
"We're looking at half a dozen (deals) in the hopper --
nothing transformative," Reilly said. "We're continuing to fill
the holes in our business lines."
The St. Petersburg, Florida-based brokerage just capped a
strong fiscal year marked by advances in its retail brokerage,
expansion in investment banking and a recovery in its
commercial banking unit.
Among the areas Reilly wants to bolster is asset
management, noting the company wants to capture the move by
investors into large-cap equities funds.
"We talked about making a niche acquisition in the
international large-cap business," he said.
Raymond James has one of the largest brokerage networks in
the United States with $254 billion in assets and more than
5,000 advisers, both company employees and independent
contractors affiliated with Raymond James.
Reilly said the firm added 750 recruits during the
financial market downturn, while at the same time suffering
little broker attrition. Raymond James says it had the largest
net increase among brokerages in its share of productive
"In the last few years, (revenue growth) has all been from
recruiting. This year, the markets helped while our recruiting
was down. Now recruiting is picking back up," he said.
Raymond James intends to expand the brokerage business by
adding offices, particularly in Western U.S. states where it
has little presence, and by making its existing advisers more
"Recruiting fell off at the end of last year, when the Wall
Street firms were offering big packages," Reilly said. "Now
it's way back up, as seen in home office visits. The big check
Training people from outside the industry also is up, he
said. Raymond James, like all brokerages, face a wave of
retirements in an aging advisory force.
"It will not be like 2009," a record year for recruiting
advisers from rivals, Reilly said, "but it will be stronger in
2011 for us."
The commercial bank unit, which suffered a spike in losses
and soured loans in the wake of the financial crisis, is on the
mend. Steve Raney, who runs Raymond James Bank, said the lender
paid a $75 million dividend to the holding company a few weeks
ago, a testament to its capital strength.
"We may have seen the peak in nonperforming loans and
nonperforming assets," Raney said. "We still see escalated
credit charges, but we are seeing an improvement in credit
Raney said the bank would start increasing its loan
balances again, targeting certain industries and focusing on
borrowers doing business elsewhere with Raymond James.
Chief Financial Officer Jeff Julien noted that an increase
in interest rates, from near-zero levels today, would provide
another boost to earnings. A 100 basis-point rise in short-term
rates would increase the firm's interest earnings by $90
million, he said.
(Reporting by Joseph A. Giannone, editing by Matthew Lewis)