Raymond James hikes loan loss provision
In the face of a one-third drop of net income, Raymond James Financial Inc. on Friday reported a steep increase in its loan loss provision as it prepared for rising loan losses at its fast growing banking unit, RJ Bank.
In the face of a one-third drop of net income, Raymond James Financial Inc. on Friday reported a steep increase in its loan loss provision as it prepared for rising loan losses at its fast growing banking unit, RJ Bank.
Raymond James said it increased its provision in fiscal 2009 for loan losses, legal proceedings, bad debts and other items to $186.4 million, from. $68.8 million a year earlier.
Raymond James, which closes its fiscal year at the end of September, said in its report that “a significant decline in commercial real estate values and an increase in the actual and projected loss experience on residential loans led to an increase in the provision for loan losses.” RJ Bank accounted for the clear majority — $169.3 million — of fiscal 2009’s loan loss set-aside.
In a conference call with analysts last month to discuss its fourth-quarter earnings, Raymond James said it saw a quarter-over-quarter increase of $17 million in total loans past due by more than 30 days,.
“We continue to be concerned that we have not seen decreases of these residential past-dues yet and it is also problematic in terms of loans being in the pipeline of over 90 days past due with the servicer going through the foreclosure process,” said Steve Raney, president and CEO of Raymond James Bank.
Meanwhile, Raymond James said that in fiscal 2009 net income dropped to $152.8 million, a decrease of 34% — approaching the level of 2005, when the company reported $151 million in earnings.
The firm continues to attract a number of financial advisers, and now has 5,127 registered reps and advisers across its various brokerage platforms, an increase of 6%.
Revenues at its private-client group, however, dropped 22% in fiscal 2009, compared with a year earlier, to $1.56 billion.
Average production for brokers who are employees of Raymond James and work at Raymond James & Associates decreased to $417,000 in fiscal 2009, down 19% from the $515,000 in fiscal 2008. Likewise, the average production of independent-contractor reps at Raymond James Financial Services Inc. decreased from $330,000 in fiscal 2008 to $273,000, a drop of 17%.
Raymond James continues to grapple with various lawsuits and inquiries from regulators about auction rate securities. The firm said its clients held about $800 million in auction rate securities at the end of September, compared with $1.9 billion in April 2008.
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