Raymond James Financial’s earnings for the quarter fell short of expectations.

On Wednesday, after the market closed, the company reported adjusted net income of $399 million for the quarter ended June 30, 2023, or $1.85 per diluted share, which was well below average analyst estimates of $2.16 per share.

The company’s capital markets businesses were the weakest spots. Quarterly investment banking revenue fell 35% from the previous year, to $141 million, with a quarterly pretax loss of $34 million.

At a time when M&A activity has slowed everywhere, at least until recently, the company’s overall capital markets operations suffered a year-over-year decline of 28% in quarterly net revenue, to $276 million.

The company attributed the disappointing numbers to lower investment banking activity and lackluster fixed-income brokerage intake. The results seem to be in keeping with similar earnings releases from larger rivals such as Goldman Sachs and Morgan Stanley, which reported earlier this month.

But in an earnings call, the company accentuated the positive.

“We generated record net revenues and record net income to common shareholders during the first nine months of the fiscal year, up 5% and 22%, respectively, over fiscal 2022, despite challenging macroeconomic conditions,” said Paul Reilly, chair and CEO of Raymond James Financial, in a statement.

The banking business was a bright spot, with an 86% year-over-year rise in quarterly net revenue to $514 million, driven by higher asset balances and the impact of short-term interest rate increases. Fees from third-party banks soared 91% year over year to $708 billion during the quarter, which was 3% greater than it was in the preceding quarter.

Not that the company’s banking operations weren’t entirely untouched by the general banking malaise. Quarterly pretax income for banking was down 11% from the prior year, to $66 million.

In an earnings call, Reilly emphasized that overall net revenue for the quarter had jumped 7% year over year to a record $2.91 billion. Net income available to common shareholders leapt 23% over the corresponding quarter a year ago, to $369 million, or $1.71 per diluted share. These gains were attributed to higher short-term interest rates and fees from third-party banks in the Raymond James Bank Deposit Program.

That net income figure, however, represented a decrease of 13% from the immediately preceding quarter, largely due to elevated legal fees, "regulatory matters" totaling some $65 million, and another $54 million in funds set aside for problem loans and defaults, a standard banking practice.

Reilly also praised the firm’s advisors, saying he was proud of them for their ability to “navigate in volatile and uncertain times.”

The total number of advisors in the Private Client Group rose just 1% from last year to 8,704, a head-count increase of 88 from a year ago. That’s a decrease of 22, though, from the prior quarter and doesn’t include those in Raymond James’s RIA channel.

Nevertheless, in the press release, Reilly added that advisor retention and recruiting are “strong across our multiple affiliation options, driven by our advisor and client-focused culture and leading technology and product solutions.”

During the quarter, the firm’s financial assets under management grew 10% year over year to $200.7 billion, while the company’s client assets under administration jumped nearly 14% from the previous year to $1.28 trillion. Its Private Client Group assets under administration rose 15% year over year to $1.23 trillion, matching the percentage gain in the Private Client Group’s assets in fee-based accounts, which totaled $697 billion.

Quarterly net revenue for asset management dropped 1% from the prior year, to $226 million, and quarterly pretax income for asset management fell 4% to $89 million.

Still, the domestic Private Client Group brought in $14.4 billion in net new assets, representing an annualized growth rate of 5.4% from the beginning of the quarter. That’s taking into account the departure of 60 financial advisors and approximately $4.6 billion of assets under administration during the quarter.

Shareholders fared well during the quarter if not for the entire year so far. The adjusted return on common equity was 16% for the quarter, outstripping the S&P 500 benchmark by about 7.5 percentage points. The total for the year, however, is a different story. Before the announcement, Raymond James’s stock was up about 2.5% for the year while the S&P 500 had advanced about 19%. Quarterly returns might have been helped by Raymond James’s repurchase of 3.31 million shares of common stock during the quarter, at an average price of $91 a share. The company still has some $750 million available in its stock buyback program.