By Joseph A. Giannone
NEW YORK, April 25 (Reuters) - Raymond James Financial Inc on Wednesday said its fiscal second-quarter profit fell after reporting $21 million of pretax expenses related to its April 2 takeover of Morgan Keegan, offsetting strong improvement in brokerage and bank revenue.
The St. Petersburg, Florida-based regional investment bank and brokerage reported net income of $68.9 million, or 52 cents a share, in the three months ended March 31, down 15 percent from $80.9 million, or 64 cents, in the year-earlier period.
Net revenue rose 2 percent to a record $871.9 million from a year earlier, driven by record results in its private client business and its bank unit. Capital markets revenue fell 7 percent from a year earlier, driven by a slowdown in stock underwriting.
Analysts on average had forecast earnings of 56 cents a share and $843 million of revenue, according to Thomson Reuters I/B/E/S.
Excluding the acquisition-related costs, Raymond James said it earned $81.9 million, or 64 cents, in the period.
Earlier this month, Raymond James closed its largest takeover ever when it acquired Memphis-based Morgan Keegan, another Southeast U.S. investment bank and brokerage, from Regions Financial for $1.2 billion. Raymond James issued 11.1 million shares in February to help finance the deal.
Without the merger, Raymond James said its brokerage business grew thanks to the recruiting of more advisers and a rebound in the financial markets. Private client revenue in the quarter rose 2 percent to $568 million from the year-ago period.
The ranks of advisers climbed to 5,398 on March 31 from 5,356 at the end of December, while client assets rose 8 percent to a record $292 billion from $270 billion. With Morgan Keegan, the combined company has about 6,500 financial advisers.
RJBank, a unit that had dragged on performance during the financial crisis, reported record results in the second quarter thanks to an increase in loans driven by the purchase of $400 million of assets from Allied Irish Bank’s Canada unit.