* 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 advisers.
"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 productive.
"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 wasn't enough."
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 quality."
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)