RJF Falls as Q3 Earnings Lag on Legal Reserve, IB & Trading Stay Solid

Core Viewpoint - Raymond James (RJF) reported lower-than-expected third-quarter fiscal 2025 results, with adjusted earnings of $2.18 per share, missing the Zacks Consensus Estimate of $2.37, and a 9% decline from the prior-year quarter [1][10] Financial Performance - Quarterly net revenues increased by 9% year over year to $3.40 billion, surpassing the Zacks Consensus Estimate of $3.36 billion [4][10] - The Private Client Group saw a 36% growth in net revenues, while Asset Management and Capital Markets reported increases of 10% and 15%, respectively [4] - Non-interest expenses rose by 10% from the prior-year quarter to $2.85 billion, driven by increases across all cost components [5] - Net income available to common shareholders was $435 million or $2.12 per share, down from $491 million or $2.31 per share in the prior-year quarter [3] Legal and Operational Factors - The adjusted results included a $58 million reserve increase related to a legal settlement over bond underwritings, which significantly impacted the earnings [2][10] - The company recorded a bank loan provision for credit losses of $15 million in the reported quarter, contrasting with a provision benefit of $10 million in the year-ago quarter [5] Asset Management and Capital Ratios - As of June 30, 2025, client assets under administration reached $1.64 trillion, an 11% increase from the prior-year quarter, while financial assets under management grew by 15% to $263.2 billion [6] - Total assets were $84.82 billion, up 2% from the prior quarter, with total equity stable at $12.18 billion [7] - The total capital ratio improved to 24.3% from 23.6% a year ago, and the Tier 1 capital ratio increased to 23% from 22.2% [7] Share Repurchase Activity - In the reported quarter, RJF repurchased shares worth $451 million at an average price of $137 per share, with $749 million remaining under the repurchase authorization as of June 30, 2025 [11]