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VOL. 127 | NO. 147 | Monday, July 30, 2012

Raymond James Execs Pleased With Acquisition

By Andy Meek

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Executives with Raymond James Financial Inc. remain pleased with what their company got out of its $1.2 billion acquisition of Memphis-based investment firm Morgan Keegan & Co. Inc.

That’s the impression they left with analysts in recent days when presenting the results of Raymond James’ fiscal third quarter, the first reporting period that includes Morgan Keegan as part of the St. Petersburg, Fla.-based company.

Raymond James is now one of the country’s largest full-service wealth management and capital markets firms not based on Wall Street because of its purchase of Morgan Keegan. And the Florida firm reported higher quarterly earnings that were driven in part by the Morgan Keegan deal completed in April.

Speaking with analysts about the quarter’s results, Raymond James CEO Paul Reilly said the two companies still are operating on some redundancies, but that the integration is moving forward and, for Raymond James, there have generally been no surprises.

“All the things we thought we were acquiring with Morgan Keegan, we did,” Reilly said. “Morgan Keegan is performing as expected or slightly better. … Right now, we’re running redundant systems with two broker-dealers, and we will see cost savings once we consolidate those. So the cost synergies will come. Our focus is in keeping the people.”

Along those lines, Raymond James chief financial officer Jeffrey Paul Julien made the point with analysts that Morgan Keegan offices around the country weren’t in much of a recruiting mode before the Raymond James deal was announced, when Morgan Keegan’s future still looked cloudy and other suitors had come and gone.

“And they certainly now have the ability to recruit to the future Raymond James platform, so they’re learning some areas where we haven’t even been geographically,” Julien said.

Because of the addition of Morgan Keegan, it was tricky for Raymond James to make a smooth comparison from Q3 to the same quarter last year. But the company said the just-ended quarter’s numbers are important, because they establish a baseline to make future comparisons against.

In the week or so prior to reporting net income of $76.4 million for the quarter, up from $46.8 million during the same period in 2011, Raymond James began updating and replacing the signage at Morgan Keegan offices around the country. That includes at the Morgan Keegan Tower in Downtown Memphis. The completed installation of a sign in Memphis was expected by the end of July.

During Q3, Raymond James’ earnings rose 8 percent to almost $90 million after setting aside acquisition costs related to the Morgan Keegan deal.

Raymond James previously announced that of the Morgan Keegan financial advisers presented with retention incentive offers, 90-plus percent said they intend to remain with the combined companies.

“The retention rate of those that we wanted is extraordinarily high,” Reilly said.

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