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Wall Street, Fla.

Meet the third biggest i-bank left standing.


This was supposed to be a big winter for the Raymond James Financial brand: The St. Petersburg, Florida–based investment bank has its name plastered on the stadium where the Tampa Bay Buccaneers play, which will host Super Bowl XLIII. But suddenly, with the fall of Lehman and Merrill, Raymond James has become the third-biggest securities firm in the United States. Founded in 1962 and known for its attention to individual retail customers, it’s grown into a diversified investment bank worth $3.8 billion. So far it has largely avoided the catastrophic write-downs that have laid low so many on Wall Street. In July, it reported growth in profits, at a time when many firms were losing money and scrambling to raise capital. It made 59 cents per share, four cents higher than analysts expected. Of course, its success has attracted critics. The firm has become a favorite among shorts, who predict that its share price will drop when investors have a better understanding of the quality of its mortgage assets balance sheet. It has $2.2 billion worth of residential loans, 75 percent of which initially charged homeowners only for interest. So far, only a small percentage of them have gone bad. But as the principal payments on those loans will come due, the default rate will likely climb. Still, its loan portfolio is only 11 percent of its business; it makes most of its money by charging customers fees for managing their assets. And now it’s in the playoffs.

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