Paul Shoukry
Chief Financial Officer at Raymond James
Thanks, Paul. I'll begin with consolidated revenues on Slide 8. Record quarterly net revenues of $2.78 billion grew 25% year-over-year and 3% sequentially. Record asset management fees grew 1% over the preceding quarter. I do want to touch on the 1% sequential decline of asset management fees in the Asset Management segment during the quarter, primarily due to a larger portion of certain client fees allocated to the Private Client Group segment, starting at the beginning of the fiscal year, which effectively resulted in nearly $9 million of managed account fees that shifted from the Asset Management segment to the Private Client Group segment during the quarter.
This change is the primary driver of the Asset Management segment's revenues and pre-tax income declining sequentially. Private Client Group assets in fee-based accounts were up 8% during the first fiscal quarter, providing a nice tailwind for this line item for the second quarter of fiscal 2022. But there are fewer days in the fiscal second quarter, so I expect somewhere around 5% to 6% sequential growth in this line item in the second quarter.
Consolidated brokerage revenues of $558 million grew 6% over the prior year and 3% sequentially, with 12% year-over-year growth in the Private Client Group segment and sequential growth in the Private Client Group segment and the Capital Markets segment. Account and service fees of $177 million increased 22% year-over-year and 4% sequentially, largely due to higher mutual fund in annuity services fees, as well as client account fees in the Private Client Group segment.
Paul already discussed our record investment banking results this quarter, so I'll touch on other revenues. Other revenues of $51 million were down 31% compared to the preceding quarter, primarily due to lower tax credit funds revenues which are typically highest in the fiscal fourth quarter. Gains on private equity investments also declined on a year-over-year and sequential basis.
Moving to Slide 9, client domestic cash sweep balances ended the quarter at a record $73.5 billion, up 10% over the preceding quarter and representing 6.5% of domestic PCG client assets. This growth in client cash balances should bode well for us in a rising interest rate environment, which I will describe in more detail on the next slide.
Turning to Slide 10. Combined net interest income and BDP fees from third party banks was $205 million, up 3.5% from the preceding quarter. This growth is largely attributable to strong asset growth and a resilient net interest margin at Raymond James Bank, which held flat at 1.92% for the quarter. Average yields on the bank loan portfolio actually increased slightly this quarter, which was fantastic to see. However, an increase in lower yielding cash balances kept the bank's net interest margin flat. We expect the bank's NIM to remain relatively stable at current interest rate and we expect a nice tailwind for net interest income going into the next quarter, given the strong growth of loans at Raymond James Bank. But net interest income will also be impacted by fewer days in the fiscal second quarter.
Related to loans, based on your feedback, we have added ending period loan balances by category in our supplemental earnings schedule. We hope you find this update helpful and as always thank you for your suggestions to continue enhancing our disclosures. The average yield of RJBDP balances with third party banks take lower to 28 basis points in the quarter, reflecting the low interest rate environment and a limited demand for cash from third party banks.
I want to provide an update to the interest rate sensitivity from what we provided last May during our Analyst and Investor Day. As of December 31st, clients' domestic cash sweep balances were $73.5 billion. Given our high concentration of floating-rate assets that are funded with these cash balances, we should have significant upside from increases in short-term interest rates.
Using the static balances and a instantaneous 100 basis point increase in short-term interest rate, we would expect incremental pre-tax income of approximately $570 million per year, with approximately 65% of that reflected as net interest income and 35% reflected as account and service fees. This scenario assumes a blended deposit beta of around 15% for the first 100 basis point increase, commensurate with what we experienced in the last rate cycle.
Moving to consolidated expenses on Slide 11, first, our largest expense compensation. The compensation ratio for the quarter of 67.7% was well below our 70% target and close to the compensation ratio we achieved in fiscal 2021 helped by record investment banking revenues. As explained on our prior calls, while our compensation ratio target is 70% or lower in this near zero short-term interest rate environment, we have demonstrated we can manage below that target closer to 67% to 68% when the Capital Markets segment generate at/or near these record levels of revenues.
And of course, we'll likely have to revisit this target if interest rates start increasing. Non-compensation expenses of $339 million decreased 6% sequentially, primarily driven by the bank loan loss reserve release this quarter, as well as lower professional fees. As you can see in these results, we have been very focused on the disciplined management of all compensation and non-compensation related expenses, while still investing in growth and ensuring very high service levels for advisers and their clients.
However, as we discussed last quarter, we expect expenses to increase throughout this fiscal year, as we continue investing in people and technology to support our tremendous growth as business development expenses increased with travel and conferences resuming and as net loan growth drives higher associated bank loan loss provisions for credit losses.
For example, you can see our communications and information processing expenses increased 13% year-over-year, as we continue to make critical investment in technologies. We would expect the year-over-year growth for this line item to be right around this level for the full-year in fiscal 2022.
Slide 12 shows the pretax margin trend over the past five quarters. While our pre-tax margin target in this near zero short-term interest rate environment is around 16%, we generated a pre-tax margin of 20.1% in the fiscal first quarter or 20.3% on an adjusted basis, boosted by record revenues particularly for investment banking, still relatively subdued business development expenses and a loan loss release during the quarter.
We will probably have to revisit our pre-tax margin and compensation ratio targets at our Analyst and Investor Day scheduled in May, if we start seeing increases in short-term interest rate. Hopefully by then, we will also have more clarity on other important variables such as the outlook for investment banking revenues, the level of business development expenses, travel and conferences resume more fully and the impact of recently closed and pending acquisition.
On slide 13, at the end of the quarter, total assets were approximately $68.5 billion, an 11% sequential increase reflecting solid growth of loans at Raymond James Bank, as well as a substantial increase in client cash balances that we're accommodating on the balance sheet.
Liquidity and capital remained very strong. RJF corporate cash at the parent ended the quarter at $1.4 billion, increasing 21% during the quarter. The total capital ratio of 26.9% and a Tier 1 leverage ratio of 12.1% both more than double the regulatory requirements to be well capitalized, providing significant flexibility to continue being opportunistic and grow the business.
Slide 14 provides a summary of our capital actions over the past five quarters. In December, the Board of Directors increased the quarterly dividend 31% to $0.34 per share per quarter which is not reflected on this chart until next quarter. The Board also authorized share repurchases of up to $1 billion, which replaced the previous authorization. As of January 25th, 2022, all $1 billion remained available under this authorization.
Due to regulatory restrictions following our pending acquisition of TriState Capital Holdings, we do not expect to repurchase common shares until after closing, but we believe this authorization signals our intention to repurchase the associated shares soon after closing. In the meantime, we expect our capital and our share count to continue growing between now and closing.
Lastly, on slide 15, we provide key credit metrics for Raymond James Bank. The credit quality of the bank's loan portfolio remains healthy, with most trends continuing to improve. Criticized loans declined and non-performing assets remained low at just 19 basis points. The bank loan loss reserve release of $11 million was primarily driven by improving macroeconomic assumptions used in the CECL models.
The bank loan allowance for credit losses as a percentage of loans held for investment declined from 1.27% in the preceding quarter to 1.18% at quarter-end. For corporate portfolios, these allowances are higher at around 2.13%.
Now, I'll turn the call back over to Paul Reilly to discuss our outlook. Paul?
