Raymond James Financial Inc. reported a drop in earnings for the second quarter of fiscal 2012 that it mainly attributed to the cost of acquiring Morgan Keegan, a large retail broker and leading U.S. municipal underwriter.

The St. Petersburg, Fla.-based RJF reported net income of $68.9 million, or 52 cents a share, compared with $80.9 million, or 64 cents a share, for the fiscal 2011's second quarter. Net income in 2012's second quarter would have been flat, at 64 cents a share or $81.8 million, compared to the same period last year if a pretax charge of $21 million related to the acquisition had been excluded.

"Overall, I am delighted that the operating results were solid as we simultaneously worked on integrating Morgan Keegan, including closing on the acquisition April 2nd," said CEO Paul Reilly. "Our retention of people, which is key to our combination, has remained above our estimates. We have stayed within budget and continue to meet timelines. However, there is still much to accomplish before we can claim victory."

The company reported records for net revenue, assets under management and assets under administration. Net revenue for the quarter was $871.9 million, up 2 percent over the prior year's quarter and up 11 percent over the previous quarter. AUM rose 11 percent to $39 billion and AUA rose 8 percent over last quarter. The Private Client Group also reported record quarterly revenue of $567.8 million, up 7 percent from the previous quarter. Pretax income for the group was down 6 percent from the first quarter but up 1 percent from last year's second quarter.

"Our businesses all performed better this quarter, especially Raymond James Bank which reported record earnings driven by a significant increase in loans and improving credit metrics," Reilly said.

He also said RJF has continued to recruit advisors from other firms. "The combination of growth in advisors and market improvement drove revenue growth. However, the bottom line was impacted by a seasonal increase in compensation expenses (raises and employment taxes) and increased technology expenditures.  The increase in the S&P 500 during the second quarter should bode well for fee billing for our third quarter," added Reilly.