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Operator
Good morning.
My name is Brooke and I'll be your conference operator today.
At this time I would like to welcome everyone to the Raymond James quarterly analyst conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session.
(Operator Instructions) To the extent that Raymond James makes forward-looking statements regarding Management expectations, strategic objectives, business prospects, anticipated expense savings, financial results anticipated results of litigation and regulatory proceedings, and other similar matters, a variety of factors many of which are beyond Raymond James' control, could cause actual results and experiences to differ materially from the expectations and objectives expressed in these statements.
These factors are described in Raymond James' 2011 annual report on Form 10-K which is available on www.RaymondJames.com and www.SEC.gov.
In addition to those factors in connection with the Morgan Keegan transaction, the following factors among others could cause actual results to differ materially from forward-looking or historical performance.
The possibility that regulatory and other approvals and conditions to the transaction are not received or satisfied on a timely basis, or at all.
The possibility that modifications to the terms of the transaction may be required to obtain or set aside such approvals or conditions, changes in the anticipated timing for closings, closing the transaction, difficulty integrating Raymond James and Morgan Keegan's businesses, or realizing the projected benefits of the transaction, the inability to sustain revenue and earnings growth, the changes in capital markets and diversion of Management's time on transaction related issues.
Thank you.
Mr.
Reilly, you may begin.
Paul Reilly - CEO
Great.
Well, good morning and thank you.
And now that Brooke has explained that we can't forecast the future, we would like to talk about, really, the first quarter of this year.
And what I'd call kind of a difficult quarter for the Capital Markets overall in our industry.
But I think solid results, given where we are.
As we've said, we reported net income of $67.325 million or $0.53 per diluted share.
Again, as compared to a record quarter a year ago, obviously down but fairly flattish with last quarter, as we put in our release.
We go through the business -- different business units.
I think you can see where the headwinds were, starting with the Private Client Group.
Our [rapi] assets were down 6% coming into the quarter.
As you know, we build in advance of our retail accounts and OSDs and that gave us a headwind.
In the PCG group, we just weren't able to make that up on the commission volume.
But if you look at this quarter, with the S&P up 11%, we'd estimate we'd reverse that and be up 6% or 7% this quarter as a starting point.
So although we had not over robust because of our beginnings, we couldn't make it up in the commissions area.
In the Private Client Group, we should be off -- reversed to a better start this quarter.
As you can see, our financial advisor count was up slightly in all of our segments as we continue to recruit.
So I think going into the quarter, we'll get better start there.
Probably really the story of the quarter was the Equity Capital Markets business.
As you know, the industry didn't have the best quarter in the world, and we weren't any different.
We kind of had a lot of pieces going against us, which isn't really reflective of backlog.
But just, I think of a more uncertain market last quarter.
Underwriting fees in the US were down slightly, but down more significantly in Canada.
We had last year, our commission volumes were down and ECM as they were overall in the market.
And M&A was down.
It was down, really because it's just a lumpier business for us.
I don't think again in backlog anything really stands out.
But they were down for the quarter.
And our tax credit funds last quarter had a very big quarter.
And not as good of a quarter this quarter.
So if you add that all together, we had a lot of headwinds into the equity Capital Markets segment.
But again, not backlog related.
But I do think market related.
Fixed income kind of started to recover from the fourth quarter.
The previous quarter, as it was in the industry.
Especially December was pretty strong and January is off to a good start also.
So most of that Capital Markets numbers you see are really focused on the Equity Capital Markets segment.
On the Asset Management business, again, we had a slight downdraft because of our billings.
But you can see that assets under Management are up 9%.
So a reasonable quarter given the start.
We do as you can see from the earnings from the segment, do have leverage in that segment.
So as the revenues up, we get a leverage up or down on the pretax profits from there.
So I think again we should bode well, a good start on the Asset Management business.
Also, if you start to move to the bank, very, very good quarter.
Probably our second best quarter of earnings.
And everything was kind of a positive for the bank this quarter.
Assets were up $467 million, or 7%, both from loan origination and secondary loan purchases.
You could see that we reported that the net loan loss provision was really related to growth.
That doesn't mean we didn't have some up-and-downs in the portfolio, but the credit was very -- still solid.
And really, the net part of that loan loss provision had to do with booking the new loans.
Now, that $467 million did not include the Allied Irish bank loan purchase, which we do expect to happen in this quarter.
And the reason we're more comfortable with that approval process is we finally have had our approval to convert to a national bank from the OCC.
And that will result us in becoming a bank holding company and then a financial holding company under the Federal Reserve.
And we plan that to happen on February 1.
So all in all, I think given the markets, a decent quarter.
We should have some where we had headwinds coming into this quarter, we should have some tailwinds in our favor.
Coming back to this quarter, Capital Markets are still uncertain, but we feel very good about our position.
Now, you can almost say if there's a seasonal quarter in this business, I'm not sure the last few years have showed any season.
It is the fourth quarter of the calendar year.
So I think the markets may have taken a little vacation, but the Management at Raymond James didn't take any vacation as we were working on the Morgan Keegan transaction.
And I will save the comments talking about that until after Jeff gives us some more color on some of the numbers.
So Jeff, I'm going to turn it back over to you.
Jeff Julien - SVP, Finance and CFO
In looking at the overall financials, margins actually held up pretty well relative to the previous quarter.
In fact, they were higher.
Just was really more a matter of lower revenue generation.
When you see the actual reported results next to last year, you need to bear in mind that last year's first quarter is our all-time record quarterly earnings of $81.7 million, so that one's going to be a tough one to compare against.
A couple of other comments.
The book value per share ended the quarter at $21.34 tangible book value, ended at $20.76.
There wasn't a whole lot of bouncing around in equity this particular quarter, it was pretty much earnings minus our dividend, which the Board elected to hold flat this year, by the way as you may have seen versus a $0.02 raise in the prior year.
And minus some stock repurchases that we did at the very beginning of the quarter, 394,000 shares in October for $10 million, that math works pretty, pretty close to where you ended equity.
ROE for the quarter was about 10.3%, trailing last quarter's 10.7% and last fiscal year's just by comparison inclusive of ARS charge was about 11.25%, 11.3%.
And exclusive of the ARS charge on an operating type basis was about 12.25%.
Two things that are going to fluctuate pretty much regularly with our revenue and pretax income generation up and down, are the comp ratio.
As you can see, comp ratio measured as a percent of revenues.
While a lot of the variable comp is self-adjusting, as the revenue items rise and fall.
We do have a fairly good level of embedded compensation expense.
So as revenues decline, that ratio's naturally going to creep up and that's sort of what happened this quarter as it crept up versus last year again, it was mainly a revenue-driven decline.
The other thing that's going to sort of have the same effect is the tax rate, because within our tax calculations, there are a couple of items that are relatively fixed, such as ISO expense and nondeductible meals and entertainment and things like that that don't vary as much is the revenues bounce around.
And that's also why the tax rate crept up.
So those two things -- and of course they would work just the opposite in a robust-revenue type quarter.
The one other thing I would mention on the comp ratio, is that for comparison to peers, I mentioned this before, didn't do the exact math this quarter, but just by rule of thumb right now, based on our relative mix, to adjust for peer comparison purposes, you'd have to adjust it downward by about 6 or 7 percentage points to account for the higher payout that we had to independent contractor financial advisors.
The last thing I would really like to talk about is net interest.
It was actually up $7.6 million, versus the preceding quarter, back to the mid-$80 millions for the quarter.
And this particular quarter was virtually all due to the bank, where we had some higher level of fees, recognized once again.
But we also were benefiting from some of the Corporate loan growth that we have put on, really starting the previous quarter, not the December quarter.
Where we're starting to see some good net loan growth again.
And just as a final comment, if there are questions, granular questions on the banks' results, Steve Raney is here with us as well.
Paul?
Paul Reilly - CEO
I'd just like to make some quick comments kind of on updating you on the Morgan Keegan transaction.
Although I think this is around the ninth business day since the announcement, which does seem like months ago because of our work.
That whole process has gone very well.
The top 13 Managers have agreed to stay with us through that.
I know that there was one group that made a comment they wondered if we'd have sufficient Management for this.
We take a little responsibility that we probably didn't give them enough information pretransaction.
We have their total Management team and our total Management team, if you want to default, I think we're kind of over-managed in this process.
Again, as we told you, we're very, very focused on the transition, getting people on board and moving forward.
The integration process is going well.
We had 85 of 85 branch managers meeting with us from Morgan Keegan, understanding our platform, going through the fit.
And what we find, both as in payout structures and cultures, very, very strong fit.
We've had our top [6%] of income managers from both groups have met here already.
And then had a further -- their second meeting going through what if integration challenges may be there.
Management teams have gelled very, very well.
And I think performing well.
ECM has made a tour of most of the banking groups already.
And has met with them one-on-one and going through the process as well as in Memphis.
And we've had their tax and ops group, I think 19 people down going through the various areas of integration from compliance to regulatory to ops, to tech.
And again, meetings are going very well and a good culture fit.
So we're very, very early in the process.
I'm sure there'll be some bumps in the road.
But so far very, very good and all indications are the culture fit that we were anticipating has been spot on.
As well as I've been to Memphis, addressing 800 of their people on the process.
We're going through our filings from the Hart Scott, the DOJ filing, the getting ready in the FINRA and Fed -- not really approvals, but going through the process of showing them where we are in this and the process and why we think it's a good fit.
So on that, all onboard, early days, and we feel very good about it.
And we realize it's a lot of work.
And we're making sure that Management is focused both on continuing to deliver results as we go through this integration.
So we are very, very busy.
And we'd hoped to close it at the end of the quarter.
It is our target date.
Because it fits in nicely with the quarter and what we think various approval timings and integration processes will be.
So with that, in the room you heard from Jeff.
We had our we have our Chairman, Tom James; Paul Matecki from Legal; Steve Raney from the Bank; and Jennifer Ackart, our Controller, all here, and let's go ahead, Brooke and open it up for questions.
Operator
(Operator Instructions) Joel Jeffrey, Keefe, Bruyette & Woods.
Joel Jeffrey - Analyst
Can you just -- I appreciate some of the color you gave on what was going on in the Capital Markets business.
Can you give us a break down more specifically on the revenues that came out I think you said Fixed Income business versus the Equity business on the trading side?
Paul Reilly - CEO
On the trading -- almost all of our trading profits, usually more than 100% of our trading profits are Fixed Income.
We don't take proprietary positions, so we just have facilitation losses in ECM.
And so the profits if you look at the trading profits numbers more than 100% is fixed income.
I can tell you it was skewed to December too.
The markets started picking up and have continued to pick up.
From a slower start at the beginning of the quarter and continued to gain speed.
But it's almost all Fixed Income.
Joel Jeffrey - Analyst
I'm sorry.
I probably should have said brokerage.
Not just --
Paul Reilly - CEO
I'm sorry.
Particularly Joel --
Jennifer Ackart - Controller, CAO
Are you referring to commissions or --
Joel Jeffrey - Analyst
Yes.
The institutional commissions for Fixed Income versus Equity?
Jeff Julien - SVP, Finance and CFO
Equity Capital Markets was relatively flat with last quarter, so was Fixed Income.
So not really a big variation versus the preceding quarter.
Jennifer Ackart - Controller, CAO
Commissions in Capital Markets were generally flat overall.
Jeff Julien - SVP, Finance and CFO
It was really more on a shortfall from the previous quarters on the banking side, not on the brokerage side.
Joel Jeffrey - Analyst
Okay.
And then just thinking about --
Paul Reilly - CEO
And -- I'm sorry, one more point.
There's another operation within Capital Markets called tax credit funds which you've heard us talk about in the past which had a very, very good quarter in September.
Which is pretty normal as they build throughout the year and there is much, much decline was probably $10 million swing in revenues between last quarter and this one.
And that's just net operation.
That exacerbates it to some extent.
Joel Jeffrey - Analyst
Okay.
And then just thinking about the growth you guys have had at the bank and the loan portfolio, are you doing anything differently in terms of the strategy on how you're growing the loan portfolio?
Is it still more acquired loans?
Or is there a push to do some sort of organic origination?
Paul Reilly - CEO
Strategy hasn't changed.
We don't have an originator but when we find times we go into the secondary market and get good loans, and usually to add onto positions, we continue to be opportunistic in that.
Jeff Julien - SVP, Finance and CFO
The only change I would mention as you've heard us say, is we're trying to get ourselves more into a lead position in some of these particularly, particularly with our own Equity Capital Markets.
Clients, they're getting more of a fee-generating type of role, with respect to some of these facilities instead of being just a participant.
Paul Reilly - CEO
And, Joel, we are doing more mode mortgage loan originations.
Residential mortgage loan originations on our own platform now too.
We had our biggest quarter ever in December in that business.
And that led to us -- our residential loans staying roughly flat quarter over quarter.
So that new production replaced the runoff in the quarter.
Joel Jeffrey - Analyst
And just sticking with the bank, I apologize if I missed it earlier, but what was the reason again for the pickup in net interest spread quarter over quarter?
Jeff Julien - SVP, Finance and CFO
Average loan balances were higher quarter over quarter.
We used more of the -- of our cash that was sitting there earning a very, very low spread.
And then there was incrementally some additional Corporate loan fees that were taken into income as a result of pay downs and payoffs of loans.
So those two factors contributed to the higher net interest margin.
Joel Jeffrey - Analyst
Okay.
And is this sort of a sustainable level or do you think it's -- if the fees were sort of one-time, does it come back down a little bit?
Jeff Julien - SVP, Finance and CFO
There's been a little volatility in that, Joel, quarter over quarter.
The December quarter was higher than September, but it was actually about equal to the prior December 2010 quarter.
Loan balances for this quarter, for the March quarter, actually are going to be higher than the prior quarter.
So we've been intentionally putting some of our liquidity to work.
I would mention that I would not expect our Corporate loan growth absent the closing of the Allied Irish purchase that Paul referenced that we are anticipating closing later on this month, absent that, excluding that we would anticipate loan balances to grow at a lower rate this quarter.
Joel Jeffrey - Analyst
And lastly on the Allied Irish, are you guys still expecting to take an upfront provision?
I think it was $7 million you talked about?
Jeff Julien - SVP, Finance and CFO
That will be impacted by the final loan balance that we're going to be closing on.
I think the loan balance may be a little bit lower now as it's taken more time to get disclosed.
It could be between $6 million and $7 million at this point, Joel.
Joel Jeffrey - Analyst
Okay.
Great.
Thanks for taking my questions.
Operator
Daniel Harris, Goldman Sachs.
Daniel Harris - Analyst
As the transition happens to the Fed versus your prior regulator, I was wondering if you see any changes in how you guys evaluate your loan portfolio, your capital, your ability to upstream capital in any way?
One of the things we saw last night in a bank that moved from the OTS to the OCC was a pretty big qualitative adjustments.
I was wondering if you can comment on anything like that.
Paul Reilly - CEO
First, we are already under Fed jurisdiction as a holding company, so that's not really a change.
It's just the form of going from a thrift holding company to a bank and financial holding company.
As far as the OCC, you have to remember that most of our loans are Shared National Credits and have been reviewed by the OCC always and the OTS has taken kind of those ratings because that's the Fed booked the Shared National Credits at the originators.
So the Feds been in here in the pre-exam, there back in, I'm sure there'll be slight differences but I think philosophically, we don't anticipate really, any changes of significance.
Daniel Harris - Analyst
Okay.
That's good.
Switching gears here to the recent transaction, how does that deal do two things?
First of all, impact your aggressiveness in pursuing new advisors this year in what could be a decent environment given retention bonus roll offs?
And then two, thoughts about the -- any potential acquisition in Asset Management, which you guys have been focused on for the last few years?
Paul Reilly - CEO
I think we look at both of those as independent.
I'm not going to say there's going to be zero Management distraction through the integration but our goal is always in organic growth.
We have our home office visits are up and we continue to bring people through.
We're very focused on recruiting.
And through this transaction and after, we're going to focus on organic growth as we always have.
So this was just an unusual opportunity to bring it in.
So we're going to continue to recruit on both sides, both of the employee side, which is what Morgan Keegan really is, and the independent side, where Management's not really involved as much on the integration, they're continuing to recruit.
So our focus on recruiting really hasn't changed.
Daniel Harris - Analyst
Okay.
And maybe stay here, is it right to think that this year should be on a relative basis better versus last year as the maturation of those retention bonuses sort of hits three plus years that were really granted in 2009?
And if anything, we should see an acceleration off of what seemed like a little bit of a decline in this current quarter of headcount?
Paul Reilly - CEO
Yes.
Those current quarter, actually up in headcount, but the home office visit numbers are up.
So we would anticipate that's usually a leading indicator of recruiting.
That people sign on.
And so we would anticipate it being improving this year over last year.
Daniel Harris - Analyst
Okay.
Thanks a lot, Paul.
Appreciate it.
Operator
Hugh Miller, Sidoti & Company.
Hugh Miller - Analyst
Had a couple questions on the bank.
I guess first, Steve, you sort of talk a little bit about the sustainability of the NIM, given the loan portfolio expansion.
Maybe some nonrecurring benefits from the pay downs in the quarter but also just an improvement in the level of nonperforming assets.
I was wondering though, I don't think you really mentioned about what your view is about the sustainability of the adjusted NIM from the current quarter?
Steve Raney - President and CEO, Raymond James Bank
I think that it's -- there's some pressure on that we've talked about that I think that it's -- within 10 or 15 basis points of that over the next 12 months is --
Jeff Julien - SVP, Finance and CFO
which is higher than we steered you to before.
And the Canadian acquisition will only help that.
Paul Reilly - CEO
That's correct.
That will help our yield.
Steve Raney - President and CEO, Raymond James Bank
We again, try to be conservative in our modeling, but it's held up higher than we would have forecast.
Hugh Miller - Analyst
Okay.
I appreciate that.
As we think about the dynamics of your operations, working out of the single office, your ability to purchase loans and participate in some of the Shared National Credits, where we're obviously seeing some improvement in operating margin, both from the leverage and also the improved asset quality.
How should we think about the incremental operating margin at the bank and kind of peak out margins as you look at that business?
Steve Raney - President and CEO, Raymond James Bank
I don't see a material change from this point forward.
We are going to close on the Allied Irish purchase.
We had a pretty dramatic growth in the December quarter, I think, the growth pattern's going to be slower going forward over the next few quarters.
We're going to obviously be integrating this Canadian acquisition.
We've already -- as I've mentioned in prior quarters here, we started doing some business in Canada.
We have a handful of loans to Canadian-based companies that we have an institutional relationship with.
We are growing our mortgage business.
But I think that it's going to be relatively nominal growth from this point forward over the next year or so.
Hugh Miller - Analyst
Okay.
Steve Raney - President and CEO, Raymond James Bank
And I think that our operating margins should be relatively consistent.
We been able to leverage a very unique business model.
We have a very low FTE and therefore, our operating efficiencies are pretty high at this point, but I don't anticipate dramatic improvement in that going forward.
Jeff Julien - SVP, Finance and CFO
We were kind of targeting net growth of $1 billion in loans for the year.
We've seen $450 million of it in the first quarter and Canada is going to be another $400 million.
So it won't take much in addition to that to get to our budgeted levels.
Hugh Miller - Analyst
Okay.
All right.
Appreciate the insight there.
Moving to some questions on the Retail segment, I know last year, in December, you kind of had a substantial lift in Retail commissions from the rollout of your Analyst's Best Ideas product.
Was wondering how much of a factor that kind of played for this December and whether or not it was a strong benefit?
Paul Reilly - CEO
That was actually down slightly.
So it's not a huge impact.
But it's about 50% of what it was last year.
Hugh Miller - Analyst
Okay.
And then I realize that there is typically kind of a lag between when we see a reduction in market volatility and when you might see clients start to kind of improve their interest in taking on some risk and possibly getting a little bit more positive about equity investing.
Just wondering whether or not in January if you're hearing anything from your advisors, the kind of sense of that that is maybe on the cusp of starting to happen or if that's not really much of a factor?
Paul Reilly - CEO
I think that's early to call.
Investors are conservative and have been investing not to lose money.
And certainly, up markets help and you see an increase, but I don't think you're going to take 20 days and change an attitude after people have been through the last year and certainly I think the elections adding a lot of uncertainty.
People are waiting.
So we're just anticipating kind of this zone of range of markets until things get sorted out.
Hugh Miller - Analyst
Okay.
And last question I had was on the Capital Markets business.
Obviously, you talked about the backlog.
You talked about the climate having to kind of improve in order to see some improvement in that business.
Was wondering I guess, what areas within the Equity Capital Markets do you really see poised for a rebound ahead of the other areas?
What are you a bit more excited about and what do you think has to happen at this point now in order to kind of get the ball rolling?
Paul Reilly - CEO
We've got obviously our energy and our REIT markets have performed relatively well.
The better markets, even the better activity in there because we're very well-positioned.
We've certainly made a bet on tech, and those markets are robust to the extent that tech rebounds, we'll do better there.
I think it's really across-the-board.
The M&A business, we're pretty broad.
And that backlog looks good.
And obviously the better market generally the better activity there right now.
We have been of course with the Howe Barnes, we've made a bet in the [fig's] basin.
This isn't a price range.
What happened in the last quarter, if you look at banking pricing, a lot of banks didn't want to sell at that price and a lot of banks didn't want to raise equity at that pricing.
So to the extent that market which has picked up since then, continues to be solid, I think we'll get better performance there too.
Hugh Miller - Analyst
Okay.
Appreciate it.
Thank you very much.
Operator
(Operator Instructions) Devin Ryan, Sandler O'Neill & Partners.
Devin Ryan - Analyst
Most of all of my questions have been asked here, but maybe just a follow-up to some prior questions.
So the Allied Irish portfolio acquisition, I think the yield that you guys had given before was a little bit over 7% on a hedge basis.
Is that still the case given a little bit of shrinkage there?
And how much hedging do you guys anticipate doing there?
Steve Raney - President and CEO, Raymond James Bank
Devin, good morning.
I would still say that's approximately the yield that we are anticipating on a portfolio on an unhedged basis.
We're going through as we're now getting a lot closer to closing on this, finalizing all of our hedging strategies.
We've been talking to some hedging consulting firms, relying on some expertise that we have because we do provide some hedging for our borrowing clients, with our Capital Markets professionals.
So we're working through that right now.
I don't really have an answer in terms of the execution of that hedging has not been finalized yet.
But the yield is still approximately in that 7% plus range.
Paul Reilly - CEO
I think it's a fair statement to say we would hedge it pretty substantially because we're not anxious to have FX gains and losses in the $5 million to $10 million to plus million dollar range bouncing around every quarter in the banks or loans.
Jeff Julien - SVP, Finance and CFO
Yes.
We're having to go through and forecast what we anticipate pay downs and new advances to be and new businesses --
Steve Raney - President and CEO, Raymond James Bank
Part art, part science.
Devin Ryan - Analyst
That's fair.
Okay.
And then just in terms of moving from the OTS to the OCC, is there any added or one-time expenses as a result of that?
Will that also free up any capital just given how some loans will be classified?
Paul Reilly - CEO
I think first there really aren't any one-time expenses outside of seeing like a perpetual filing cost -- perpetual expenses.
So there are no real changes and levels of expenses from there.
And in terms of capital, actually because we really have been operating more like a commercial bank, it does free up capital because we got in got into some thrift real estate test that actually added to capital that that frees up.
Steve Raney - President and CEO, Raymond James Bank
We're actually in the middle of our safety and soundness exam right now, Devin.
As you know, we went through a pre-conversion exam in the fall.
And we went through one a few years ago, so we've had a lot of prior dealings with the OCC.
Now it's a merged agency and we actually have some of our former examination team on the OTS that are still involved with us.
So not a terrible amount of change and we're certainly prepared for any -- we're well aware now of what to expect and how we'll be working with them.
Devin Ryan - Analyst
Got it.
So I'm assuming that the amount of capital is freed up was already contemplated prior to the Morgan Keegan deal and the capital raised plans for that?
Steve Raney - President and CEO, Raymond James Bank
Yes.
Yes.
Devin Ryan - Analyst
Got it.
Great.
And then just within other expenses, I know that item can bounce around quite a bit from quarter-to-quarter.
But it looked quite a bit lower than it has in recent quarters.
So I don't know if there's any color you can give there, whether or not that's sustainable or whether that should kind of tick back up and maybe where the upper $20 millions or $30 million a quarter where it has been?
Paul Reilly - CEO
Got us scrambling.
Jennifer Ackart - Controller, CAO
I would tell you it's running a little low this quarter.
Devin Ryan - Analyst
Yes.
Okay.
That's fine.
And then just lastly, another cleanup item here.
Just within the minority interests, I know that there's a number of items that can impact that.
But just wanted to see if there's anything given that that number was fairly high again this quarter, wanted to see maybe what was in there?
Paul Reilly - CEO
Interest -- was -- we're looking again here, Devin.
Jennifer Ackart - Controller, CAO
That wasn't something that stood out to me, Devin as being particularly out of line.
Paul Reilly - CEO
It was about the same as last as the preceding quarter, that's the minority holders share of loss in Latin America, and the UK.
Some of the consolidated tax credit funds.
Those three businesses.
And last year, we had some big banking fees and things in Latin America that caused that to actually go the other way more than we have in recent history.
Devin Ryan - Analyst
Yes.
Paul Reilly - CEO
But those are all add backs earnings as you can see.
Devin Ryan - Analyst
Yes.
Yes.
Okay.
That's fine.
And I'll circle back with a couple other items.
Appreciate it.
Operator
(Operator Instructions)
Steve Raney - President and CEO, Raymond James Bank
Let me make a clarification while we can, there seems to be some confusion in the room, when Joel Jeffrey got placed on the line, asked about Capital Markets commission volumes, we had said they were pretty flat.
We actually were comparing it to the immediately preceding quarter.
Not to the last year's first quarter, which was a much more active equity underwriting environment, et cetera.
They're down over 20% from last year's first quarter.
But they're about flat with the immediately preceding quarter.
I just can't remember which one of you was asking about, but we answered it relative to the preceding quarter.
Operator
At this time, there are no further questions.
Paul Reilly - CEO
Great.
We thank you for joining us this morning.
I think that we think we have some tailwinds starting this quarter, but the market's certainly uncertain, the businesses I do think are operating in good shape.
We're focused both still on delivering the numbers this quarter, and Morgan Keegan.
So we're busy over here.
But we're optimistic really about both.
So thank you for joining us this morning, and we'll talk you again soon.
Thank you.
Operator
Thank you.
This concludes the conference.
You may now disconnect.