Raymond James Financial Inc. has no immediate plans to buy back its common stock, given the continuing hard times in the markets, the retail-dominated brokerage's president said today.
Raymond James Financial Inc. has no immediate plans to buy back its common stock, given the continuing hard times in the markets, the retail-dominated brokerage's president said today.
“We probably will not get active on stock repurchases until such a time as we are really convinced that we are through the problems of the current market cycle,” Paul Reilly said at a conference in New York sponsored by Keefe Bruyette & Woods Inc. “Hopefully, that will be in the next year or so.”
Raymond James' net income in its fiscal-year 2009, ended Sept. 30, fell 35% from fiscal 2008 on a 19% decline in gross revenue, while its stock price plunged 29% over that period — far worse than the 9% fall in the S&P 500. In the first three calendar quarters of 2009, the company's stock rebounded 36%.
The company's return on equity for the fiscal year was 8%, its lowest level since it went public in 1983.
Despite the hard times, Mr. Reilly said, Raymond James is intent on continuing to pay its common-stock dividend in order to retain investor confidence and access to the capital markets.
Jeff Julien, the chief financial officer, said the company expects “some modest growth in 2010.”
While gross revenue and income at the company has been tumbling, its private-client group's assets under administration jumped to $223 billion, from $197 billion in fiscal 2008. The group — made up of the Raymond James & Associates Inc. retail-brokerage network and the Raymond James Financial Services Inc. division for independent brokers and financial advisers — fueled 60% of Raymond James Financial Inc.'s $2.6 billion of revenue in fiscal 2009, down from 62% in fiscal 2008.
Private-client pretax net income plunged to 34% of the company's total pretax profit of $248.7 million, down from 46% of the total in 2008. It remains Raymond James' largest sector.
The company added 43 advisers to its private-client group during the third quarter, bringing its total adviser head count in this unit to 5,376 at the end of September. During the summer, however, the company also fired the four salespeople and an assistant in the registered-investment-adviser business development area, consolidating their activities into the broader financial services group.
Michael Di Girolamo, head of the investment adviser business, said the combined recruiting function is helping Raymond James better target breakaway brokers. “We are stronger as one, rather than separate, competing recruiting entities,” he wrote in an e-mail.
The company derived about 20% of its total revenue last year from capital markets and investment banking, 13% from its retail-banking operations and 7% from its asset management division. Raymond James Bank, which has applied to convert from a thrift to a bank holding company to broaden its loan profile beyond real estate, generated 32% of the company's pretax income, nearly matching the private-client group's contribution.
Steve Raney, president of the bank, said its capital strength is sound, though he acknowledged that its residential-loan portfolio continues to deteriorate due to a significant backlog of loans that continue to enter into foreclosure. Nevertheless, he told the conference, the bank is doing “much better than what we are hearing from competitors.”
