NEW YORK (Reuters) - Brokerage and investment bank Raymond James Financial Inc (RJF.N) said on Wednesday its third-quarter earnings grew by nearly two-thirds, driven by its April acquisition of Morgan Keegan, but that results still fell short of analyst expectations.
Choppy markets hit underwriting and trading. Brokerage results rose only "modestly" from the March period, even with the addition of more than 900 Morgan Keegan brokers.
The St. Petersburg, Florida-based company reported net income of $76.4 million, or 55 cents a share, in the three months ended June 30, up from $46.8 million, or 37 cents, in the year-earlier period.
Excluding charges related to the Morgan Keegan takeover, earnings rose 8 percent to $89.2 million, or 64 cents. On that basis, analysts on average had forecast earnings of 67 cents a share, according to Thomson Reuters I/B/E/S.
Net revenue rose 28 percent to $1.09 billion from a year earlier, exceeding analyst expectations of $975 million.
Year-over-year comparisons are skewed by the firm's $1.2 billion takeover of Memphis-based Morgan Keegan from Regions Financial Corp (RF.N), which expanded its network of brokers by about 20 percent and added to Raymond James' fixed-income business.
Brokerage revenue rose 23 percent to $685 million from the prior year, fueled by an increase in fee-based assets. Total client assets slipped 1.5 percent to $376 billion - including $20 billion in institutional assets - during the quarter, reflecting declines in the stock market.
The firm's ranks of U.S. advisers rose to 5,489 from 4,532 at the end of March, driven by Morgan Keegan's 900 advisers and recruiting. Including the UK, Canada and custody businesses, the firm had 6,367 advisers and representatives.
Capital markets revenue surged 58 percent to $257 million, but the company cited weakness in stock underwriting and challenging fixed-income markets.
Reporting By Joseph A. Giannone; editing by Andre Grenon