Raymond James Financial Inc. blamed a widening "malaise" in the financial sector in posting a 90 percent drop in quarterly profits and the first-ever loss for its Raymond James Bank unit.
The St. Petersburg financial services company said late Wednesday that net income for its second fiscal quarter ended March 31 fell to $6.1 million, or 5 cents per diluted share, compared with $59.8 million, or 50 cents a share, in the year-ago quarter. Net revenue dropped 15 percent to $589.7 million.
"As we have been forecasting for some time, the malaise in the financial sector, which has migrated to the general economy, has manifested itself in Raymond James Bank's loan portfolio," chairman and chief executive Thomas A. James said in a statement.
Citing worsening conditions in both real estate and its corporate sector, Raymond James recorded a $75 million provision for loan losses, three times the $25 million set aside in the previous quarter. The provision included a $28 million chargeoff on a single loan to a commercial mortgage real estate investment trust, other smaller chargeoffs and additions to its reserves.
The company's pool of nonperforming loans swelled $79 million in the quarter to $143 million. The real estate downturn triggered a pretax loss of $12.4 million at Raymond James bank. About $1.4 billion of the bank's commercial loan portfolio is in real estate.
James declined to project future bank results, but said the bank expects to increase its loan loss reserves at least through this calendar year.
The company's shares are down approximately 19 percent since it previewed its dour quarter last week. It released earnings after the close of markets Wednesday.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.