| July 29, 2020 | FOR IMMEDIATE RELEASE | |||||||
| Media Contact: Steve Hollister, 727.567.2824 | ||||||||
| Investor Contact: Kristina Waugh, 727.567.7654 | ||||||||
| raymondjames.com/news-and-media/press-releases | ||||||||
RAYMOND JAMES FINANCIAL REPORTS THIRD QUARTER
FISCAL YEAR 2020 RESULTS
•Quarterly net revenues of $1.83 billion, down 5% compared to the prior year’s fiscal third quarter and 11% compared to the preceding quarter
•Quarterly net income of $172 million, or $1.23 per diluted share, down 34% compared to net income in the prior year’s fiscal third quarter and up 2% over the preceding quarter
•Record quarterly net revenues and pre-tax income in the Capital Markets segment driven by record fixed income results
•Private Client Group assets in fee-based accounts of $443.0 billion, up 11% over the prior year’s fiscal third quarter and 16% over the preceding quarter
•Record number of Private Client Group financial advisors of 8,155, net increases of 251 over June 2019 and 7 over March 2020
ST. PETERSBURG, Fla – Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $1.83 billion and net income of $172 million, or $1.23 per diluted share, for the fiscal third quarter ended June 30, 2020. The 5% decline in quarterly net revenues compared to the prior year’s fiscal third quarter was largely driven by the impact of lower short-term interest rates on both net interest income and Raymond James Bank Deposit Program (“RJBDP”) fees from third-party banks. The 11% sequential decline in quarterly net revenues was primarily due to both lower short-term interest rates and lower asset management and related administrative fees, which are primarily based on Private Client Group assets in fee-based accounts at the beginning of the quarter.
The 34% decline in quarterly net income compared to the prior year’s fiscal third quarter was largely due to the bank loan loss provision of $81 million during the quarter compared to a $5 million benefit in the prior year’s fiscal third quarter. Despite a sequential decline in quarterly pre-tax income, net income increased 2% sequentially as significant non-taxable gains in the corporate-owned life insurance portfolio reduced the effective tax rate to 13.1% for the quarter compared to 29.3% in the preceding quarter.
For the first nine months of the fiscal year, record net revenues of $5.91 billion increased 3% and earnings per diluted share of $4.33 declined 18% compared to the first nine months of fiscal 2019. The Private Client Group, Capital Markets and Asset Management segments generated record net revenues during the first nine months of the fiscal year.
“Our highest priority during the COVID-19 crisis continues to be the health and safety of our associates and advisors. Our team has persevered through the many changes and uncertainties over the past few months to continue providing excellent service to advisors and clients,” said Chairman and CEO Paul Reilly. “While financial advisor transitions were initially disrupted by the crisis, particularly for our employee affiliation as offices were closed, recruiting activity is now strong for all of our affiliation options, facilitated by our significant technology investments over the past several years. Although lower interest rates have negatively affected our financial performance, the record results generated in our fixed income business during the quarter highlight the benefit of having diverse and complementary businesses.”
Please refer to the footnotes at the end of this press release for additional information.
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Segment Results
Private Client Group
•Quarterly net revenues of $1.25 billion, down 8% compared to the prior year’s fiscal third quarter and 16% compared to the preceding quarter
•Quarterly pre-tax income of $91 million, down 35% compared to the prior year’s fiscal third quarter and 46% compared to the preceding quarter
•Private Client Group assets under administration of $833.1 billion, up 6% over June 2019 and 14% over March 2020
•Private Client Group assets in fee-based accounts of $443.0 billion, up 11% over June 2019 and 16% over March 2020
•Record number of Private Client Group financial advisors of 8,155, net increases of 251 over June 2019 and 7 over March 2020
•Clients’ domestic cash sweep balances of $51.9 billion, up 36% over June 2019 and down 2% compared to March 2020
Quarterly net revenues declined 8% compared to the prior year’s fiscal third quarter predominantly due to lower RJBDP fees from third-party banks, a decline in net interest income and lower brokerage revenues. The 16% sequential decline in quarterly net revenues was attributable to the aforementioned items as well as lower asset management and related administrative fees, which were primarily based on the Private Client Group assets in fee-based accounts at the beginning of the quarter. As assets in fee-based accounts are billed on balances at the beginning of the quarter, the 16% sequential increase during the fiscal third quarter will positively impact asset management fees in the fiscal fourth quarter.
While clients’ domestic cash sweep balances remained relatively stable from the prior quarter, the average yields earned on RJBDP balances at third-party banks were negatively affected by the Federal Reserve’s interest rate cuts in March 2020.
“While recruited production increased sequentially, the net addition of both experienced financial advisors and trainees was negatively impacted by the COVID-19 crisis. As home office visits for prospective advisors have transitioned to virtual meetings, advisor recruiting activity has continued to recover and the pipeline remains solid across all affiliation options,” said Reilly. “Near-zero interest rates continue to be a headwind for results in the Private Client Group segment, but the 16% sequential increase of assets in fee-based accounts should boost asset management fees in the fiscal fourth quarter.”
Capital Markets
•Record quarterly net revenues of $323 million, up 29% over the prior year’s fiscal third quarter and 11% over the preceding quarter
•Record quarterly pre-tax income of $62 million, up 158% over the prior year’s fiscal third quarter and 121% over the preceding quarter
•Quarterly brokerage revenues of $166 million, up 60% over the prior year’s fiscal third quarter and 28% over the preceding quarter
The record results were primarily driven by higher fixed income brokerage revenues and debt underwriting revenues, which more than offset lower M&A revenues.
“The fixed income business generated record revenues and pre-tax income during the quarter, driven by a high level of client activity, which has continued thus far in July,” said Reilly. “M&A revenues were negatively impacted by economic uncertainty and decreased activity across the industry; however, clients remain engaged in evaluating opportunities.”
Please refer to the footnotes at the end of this press release for additional information.
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Asset Management
•Quarterly net revenues of $163 million, down 8% compared to the prior year’s fiscal third quarter and 11% compared to the preceding quarter
•Quarterly pre-tax income of $60 million, down 8% compared to the prior year’s fiscal third quarter and 18% compared to the preceding quarter
•Financial assets under management of $145.4 billion, up 2% over June 2019 and 13% over March 2020
The growth in financial assets under management was primarily attributable to the increase in the equity markets, as the S&P 500 index appreciated 20% during the quarter, which was partially offset by net outflows for Carillon Tower Advisers.
Raymond James Bank
•Quarterly net revenues of $178 million, down 17% compared to the prior year’s fiscal third quarter and 15% compared to the preceding quarter
•Quarterly pre-tax income of $14 million, down 90% compared to the prior year’s fiscal third quarter and flat with the preceding quarter
•Net loans of $21.2 billion, up 3% over June 2019 and down 3% compared to March 2020
•Agency-backed securities portfolio of $5.6 billion, up 90% over June 2019 and 32% over March 2020
•Net interest margin (“NIM”) of 2.29% for the quarter, down 108 basis points compared to the prior year’s fiscal third quarter and 73 basis points compared to the preceding quarter
Net revenues for the third quarter declined 17% compared to the prior year’s fiscal third quarter and 15% sequentially as higher average loan balances were offset by a lower net interest margin. The Bank’s NIM declined 73 basis points during the quarter to 2.29%, mainly due to the significant decline in LIBOR. The quarterly loan loss provision of $81 million declined 26% from the prior quarter. While nonperforming assets declined, net charge-offs in the quarter were $72 million, including $61 million related to proactive sales of corporate loans during the quarter. Allowance for loan losses as a percent of total loans increased to 1.56% from 1.47% in the preceding quarter.
“During the quarter, we opportunistically sold approximately $355 million of corporate loans associated with industries we believe are most vulnerable to the COVID-19 crisis, resulting in higher net charge-offs in the quarter,” said Reilly. “Given the high degree of uncertainty associated with the COVID-19 pandemic, we plan to continue selectively selling corporate loans in the secondary market to further reduce exposure to certain sectors.”
Other
Share buybacks have been suspended since mid-March and $537 million remains available under the Board’s previously-disclosed repurchase authorization. At the end of the quarter, the total capital ratio was 26.0% and the tier 1 leverage ratio was 14.5%, well above the regulatory requirements.
Please refer to the footnotes at the end of this press release for additional information.
3
A conference call to discuss the results will take place tomorrow morning, Thursday, July 30, at 8:15 a.m. ET. The live audio webcast and the presentation, which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. For a listen-only connection to the conference call, please dial: 800-754-1382 (conference code: 21966467). An audio replay of the call will be available at the same location until October 30, 2020.
About Raymond James Financial, Inc.
Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has approximately 8,200 financial advisors. Total client assets are $877 billion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at www.raymondjames.com.
Forward-Looking Statements
Certain statements made in this press release may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions and divestitures, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, words such as “plans” and future or conditional verbs such as “will” and “should,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.
Please refer to the footnotes at the end of this press release for additional information.
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| RAYMOND JAMES FINANCIAL, INC. Third Quarter Fiscal 2020 | Selected Financial Highlights (Unaudited) | |||||||
Summary results of operations
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Net revenues | $ | 1,834 | $ | 1,927 | $ | 2,068 | (5)% | (11)% | ||||||||||||||||||||||||
| Pre-tax income | $ | 198 | $ | 342 | $ | 239 | (42)% | (17)% | ||||||||||||||||||||||||
| Net income | $ | 172 | $ | 259 | $ | 169 | (34)% | 2% | ||||||||||||||||||||||||
Earnings per common share: (1) | ||||||||||||||||||||||||||||||||
| Basic | $ | 1.25 | $ | 1.84 | $ | 1.22 | (32)% | 2% | ||||||||||||||||||||||||
| Diluted | $ | 1.23 | $ | 1.80 | $ | 1.20 | (32)% | 3% | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions, except per share amounts | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Net revenues | $ | 5,911 | $ | 5,717 | 3% | |||||||||||||||
| Pre-tax income | $ | 796 | $ | 1,021 | (22)% | |||||||||||||||
| Net income | $ | 609 | $ | 769 | (21)% | |||||||||||||||
Earnings per common share: (1) | ||||||||||||||||||||
| Basic | $ | 4.41 | $ | 5.42 | (19)% | |||||||||||||||
| Diluted | $ | 4.33 | $ | 5.30 | (18)% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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RAYMOND JAMES FINANCIAL, INC.
Third Quarter Fiscal 2020
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| in millions, except per share amounts | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 867 | $ | 879 | $ | 1,006 | (1)% | (14)% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Securities commissions | 343 | 358 | 410 | (4)% | (16)% | |||||||||||||||||||||||||||
| Principal transactions | 143 | 93 | 105 | 54% | 36% | |||||||||||||||||||||||||||
| Total brokerage revenues | 486 | 451 | 515 | 8% | (6)% | |||||||||||||||||||||||||||
| Account and service fees | 134 | 183 | 172 | (27)% | (22)% | |||||||||||||||||||||||||||
| Investment banking | 139 | 139 | 148 | — | (6)% | |||||||||||||||||||||||||||
| Interest income | 217 | 321 | 285 | (32)% | (24)% | |||||||||||||||||||||||||||
Other (2) | 33 | 27 | (15) | 22% | NM | |||||||||||||||||||||||||||
| Total revenues | 1,876 | 2,000 | 2,111 | (6)% | (11)% | |||||||||||||||||||||||||||
| Interest expense | (42) | (73) | (43) | (42)% | (2)% | |||||||||||||||||||||||||||
| Net revenues | 1,834 | 1,927 | 2,068 | (5)% | (11)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation, commissions and benefits | 1,277 | 1,277 | 1,422 | — | (10)% | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
| Communications and information processing | 100 | 92 | 99 | 9% | 1% | |||||||||||||||||||||||||||
| Occupancy and equipment | 55 | 55 | 56 | — | (2)% | |||||||||||||||||||||||||||
| Business development | 21 | 57 | 41 | (63)% | (49)% | |||||||||||||||||||||||||||
| Investment sub-advisory fees | 23 | 24 | 26 | (4)% | (12)% | |||||||||||||||||||||||||||
| Professional fees | 24 | 22 | 23 | 9% | 4% | |||||||||||||||||||||||||||
| Bank loan loss provision/(benefit) | 81 | (5) | 109 | NM | (26)% | |||||||||||||||||||||||||||
Other (2) (3) | 55 | 63 | 53 | (13)% | 4% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 359 | 308 | 407 | 17% | (12)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,636 | 1,585 | 1,829 | 3% | (11)% | |||||||||||||||||||||||||||
Pre-tax income | 198 | 342 | 239 | (42)% | (17)% | |||||||||||||||||||||||||||
| Provision for income taxes | 26 | 83 | 70 | (69)% | (63)% | |||||||||||||||||||||||||||
| Net income | $ | 172 | $ | 259 | $ | 169 | (34)% | 2% | ||||||||||||||||||||||||
Earnings per common share – basic (1) | $ | 1.25 | $ | 1.84 | $ | 1.22 | (32)% | 2% | ||||||||||||||||||||||||
Earnings per common share – diluted (1) | $ | 1.23 | $ | 1.80 | $ | 1.20 | (32)% | 3% | ||||||||||||||||||||||||
Weighted-average common shares outstanding – basic | 137.1 | 140.4 | 138.4 | (2)% | (1)% | |||||||||||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 139.4 | 143.6 | 141.1 | (3)% | (1)% | |||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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RAYMOND JAMES FINANCIAL, INC.
Third Quarter Fiscal 2020
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| in millions, except per share amounts | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees | $ | 2,828 | $ | 2,527 | 12% | |||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Securities commissions | 1,116 | 1,095 | 2% | |||||||||||||||||
| Principal transactions | 345 | 262 | 32% | |||||||||||||||||
| Total brokerage revenues | 1,461 | 1,357 | 8% | |||||||||||||||||
| Account and service fees | 484 | 559 | (13)% | |||||||||||||||||
| Investment banking | 428 | 439 | (3)% | |||||||||||||||||
| Interest income | 799 | 961 | (17)% | |||||||||||||||||
Other (2) | 47 | 95 | (51)% | |||||||||||||||||
| Total revenues | 6,047 | 5,938 | 2% | |||||||||||||||||
| Interest expense | (136) | (221) | (38)% | |||||||||||||||||
| Net revenues | 5,911 | 5,717 | 3% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 4,050 | 3,767 | 8% | |||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||
| Communications and information processing | 293 | 278 | 5% | |||||||||||||||||
| Occupancy and equipment | 168 | 159 | 6% | |||||||||||||||||
| Business development | 106 | 141 | (25)% | |||||||||||||||||
| Investment sub-advisory fees | 75 | 70 | 7% | |||||||||||||||||
| Professional fees | 68 | 61 | 11% | |||||||||||||||||
| Bank loan loss provision | 188 | 16 | 1,075% | |||||||||||||||||
Acquisition and disposition-related expenses (4) | — | 15 | (100)% | |||||||||||||||||
Other (2) (3) | 167 | 189 | (12)% | |||||||||||||||||
| Total non-compensation expenses | 1,065 | 929 | 15% | |||||||||||||||||
| Total non-interest expenses | 5,115 | 4,696 | 9% | |||||||||||||||||
Pre-tax income | 796 | 1,021 | (22)% | |||||||||||||||||
| Provision for income taxes | 187 | 252 | (26)% | |||||||||||||||||
| Net income | $ | 609 | $ | 769 | (21)% | |||||||||||||||
Earnings per common share – basic (1) | $ | 4.41 | $ | 5.42 | (19)% | |||||||||||||||
Earnings per common share – diluted (1) | $ | 4.33 | $ | 5.30 | (18)% | |||||||||||||||
Weighted-average common shares outstanding – basic | 137.9 | 141.8 | (3)% | |||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 140.5 | 144.8 | (3)% | |||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
7
| RAYMOND JAMES FINANCIAL, INC. | Consolidated Selected Key Metrics | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| As of | % change from | ||||||||||||||||||||||||||||||||||
$ in millions, except per share amounts | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | ||||||||||||||||||||||||||||||
| Total assets | $ | 44,682 | $ | 38,677 | $ | 49,809 | 16% | (10)% | |||||||||||||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,965 | $ | 6,502 | $ | 6,798 | 7% | 2% | |||||||||||||||||||||||||||
Book value per share (5) | $ | 50.84 | $ | 46.54 | $ | 49.69 | 9% | 2% | |||||||||||||||||||||||||||
Tangible book value per share (5) (6) | $ | 46.69 | $ | 42.18 | $ | 45.50 | 11% | 3% | |||||||||||||||||||||||||||
Capital ratios: | |||||||||||||||||||||||||||||||||||
| Tier 1 capital | 24.8 | % | (7) | 24.2 | % | 24.1 | % | ||||||||||||||||||||||||||||
| Total capital | 26.0 | % | (7) | 25.2 | % | 25.3 | % | ||||||||||||||||||||||||||||
| Tier 1 leverage | 14.5 | % | (7) | 15.7 | % | 14.2 | % | ||||||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2020 | June 30, 2019 | |||||||||||||||||||||||||||||||
Return on equity (8) | 10.0 | % | 16.1 | % | 9.9 | % | 11.9 | % | 16.2 | % | |||||||||||||||||||||||||
Return on tangible common equity (6) (8) | 10.9 | % | 17.8 | % | 10.8 | % | 13.1 | % | 17.9 | % | |||||||||||||||||||||||||
Pre-tax margin (9) | 10.8 | % | 17.7 | % | 11.6 | % | 13.5 | % | 17.9 | % | |||||||||||||||||||||||||
Total compensation ratio (10) | 69.6 | % | 66.3 | % | 68.8 | % | 68.5 | % | 65.9 | % | |||||||||||||||||||||||||
| Effective tax rate | 13.1 | % | 24.4 | % | 29.3 | % | 23.5 | % | 25.1 | % | |||||||||||||||||||||||||
Client asset metrics ($ in billions) | As of | % change from | |||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||||||
Client assets under administration | $ | 876.9 | $ | 824.2 | $ | 773.9 | 6% | 13% | |||||||||||||||||||||||||||
Private Client Group assets under administration | $ | 833.1 | $ | 787.4 | $ | 734.0 | 6% | 14% | |||||||||||||||||||||||||||
Private Client Group assets in fee-based accounts | $ | 443.0 | $ | 398.0 | $ | 383.5 | 11% | 16% | |||||||||||||||||||||||||||
Financial assets under management | $ | 145.4 | $ | 143.1 | $ | 128.2 | 2% | 13% | |||||||||||||||||||||||||||
Clients’ domestic cash sweep balances ($ in millions) | As of | % change from | |||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (11) | |||||||||||||||||||||||||||||||||||
| Raymond James Bank | $ | 24,101 | $ | 21,600 | $ | 28,711 | 12% | (16)% | |||||||||||||||||||||||||||
| Third-party banks | 24,661 | 14,425 | 20,379 | 71% | 21% | ||||||||||||||||||||||||||||||
| Subtotal RJBDP | 48,762 | 36,025 | 49,090 | 35% | (1)% | ||||||||||||||||||||||||||||||
| Client Interest Program | 3,157 | 2,130 | 3,782 | 48% | (17)% | ||||||||||||||||||||||||||||||
Total clients’ domestic cash sweep balances | $ | 51,919 | $ | 38,155 | $ | 52,872 | 36% | (2)% | |||||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2020 | June 30, 2019 | |||||||||||||||||||||||||||||||
Average yield on RJBDP - third-party banks (12) | 0.33 | % | 1.95 | % | 1.33 | % | 0.97 | % | 1.90 | % | |||||||||||||||||||||||||
| Private Client Group financial advisors | As of | % change from | |||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||||||
| Employees | 3,379 | 3,228 | 3,376 | 5% | — | ||||||||||||||||||||||||||||||
| Independent contractors | 4,776 | 4,676 | 4,772 | 2% | — | ||||||||||||||||||||||||||||||
| Total advisors | 8,155 | 7,904 | 8,148 | 3% | — | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 1,249 | $ | 1,351 | $ | 1,495 | (8)% | (16)% | ||||||||||||||||||||||||
| Capital Markets | 323 | 251 | 290 | 29% | 11% | |||||||||||||||||||||||||||
| Asset Management | 163 | 177 | 184 | (8)% | (11)% | |||||||||||||||||||||||||||
| Raymond James Bank | 178 | 215 | 210 | (17)% | (15)% | |||||||||||||||||||||||||||
Other (2) (13) | (20) | (4) | (44) | (400)% | 55% | |||||||||||||||||||||||||||
| Intersegment eliminations | (59) | (63) | (67) | NM | NM | |||||||||||||||||||||||||||
Total net revenues | $ | 1,834 | $ | 1,927 | $ | 2,068 | (5)% | (11)% | ||||||||||||||||||||||||
Pre-tax income/(loss): | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 91 | $ | 140 | $ | 170 | (35)% | (46)% | ||||||||||||||||||||||||
| Capital Markets | 62 | 24 | 28 | 158% | 121% | |||||||||||||||||||||||||||
| Asset Management | 60 | 65 | 73 | (8)% | (18)% | |||||||||||||||||||||||||||
| Raymond James Bank | 14 | 138 | 14 | (90)% | — | |||||||||||||||||||||||||||
Other (2) (13) | (29) | (25) | (46) | (16)% | 37% | |||||||||||||||||||||||||||
Pre-tax income | $ | 198 | $ | 342 | $ | 239 | (42)% | (17)% | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Net revenues: | ||||||||||||||||||||
| Private Client Group | $ | 4,158 | $ | 3,978 | 5% | |||||||||||||||
| Capital Markets | 881 | 781 | 13% | |||||||||||||||||
| Asset Management | 531 | 513 | 4% | |||||||||||||||||
| Raymond James Bank | 604 | 630 | (4)% | |||||||||||||||||
Other (2) (13) | (72) | (2) | (3,500)% | |||||||||||||||||
| Intersegment eliminations | (191) | (183) | NM | |||||||||||||||||
| Total net revenues | $ | 5,911 | $ | 5,717 | 3% | |||||||||||||||
| Pre-tax income/(loss): | ||||||||||||||||||||
| Private Client Group | $ | 414 | $ | 436 | (5)% | |||||||||||||||
| Capital Markets | 119 | 77 | 55% | |||||||||||||||||
| Asset Management | 206 | 184 | 12% | |||||||||||||||||
| Raymond James Bank | 163 | 384 | (58)% | |||||||||||||||||
Other (2) (13) | (106) | (60) | (77)% | |||||||||||||||||
| Pre-tax income | $ | 796 | $ | 1,021 | (22)% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
9
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Private Client Group | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 715 | $ | 718 | $ | 833 | — | (14)% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Mutual and other fund products | 131 | 147 | 163 | (11)% | (20)% | |||||||||||||||||||||||||||
| Insurance and annuity products | 88 | 105 | 99 | (16)% | (11)% | |||||||||||||||||||||||||||
| Equities, ETFs and fixed income products | 100 | 94 | 122 | 6% | (18)% | |||||||||||||||||||||||||||
| Total brokerage revenues | 319 | 346 | 384 | (8)% | (17)% | |||||||||||||||||||||||||||
| Account and service fees: | ||||||||||||||||||||||||||||||||
| Mutual fund and annuity service fees | 82 | 85 | 88 | (4)% | (7)% | |||||||||||||||||||||||||||
RJBDP fees: (11) | ||||||||||||||||||||||||||||||||
Third-party banks | 20 | 67 | 51 | (70)% | (61)% | |||||||||||||||||||||||||||
Raymond James Bank | 43 | 44 | 48 | (2)% | (10)% | |||||||||||||||||||||||||||
| Client account and other fees | 32 | 32 | 35 | — | (9)% | |||||||||||||||||||||||||||
| Total account and service fees | 177 | 228 | 222 | (22)% | (20)% | |||||||||||||||||||||||||||
| Investment banking | 7 | 10 | 11 | (30)% | (36)% | |||||||||||||||||||||||||||
| Interest income | 31 | 56 | 45 | (45)% | (31)% | |||||||||||||||||||||||||||
| All other | 4 | 3 | 7 | 33% | (43)% | |||||||||||||||||||||||||||
| Total revenues | 1,253 | 1,361 | 1,502 | (8)% | (17)% | |||||||||||||||||||||||||||
| Interest expense | (4) | (10) | (7) | (60)% | (43)% | |||||||||||||||||||||||||||
| Net revenues | 1,249 | 1,351 | 1,495 | (8)% | (16)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Financial advisor compensation and benefits | 783 | 805 | 915 | (3)% | (14)% | |||||||||||||||||||||||||||
| Administrative compensation and benefits | 235 | 237 | 245 | (1)% | (4)% | |||||||||||||||||||||||||||
| Total compensation, commissions and benefits | 1,018 | 1,042 | 1,160 | (2)% | (12)% | |||||||||||||||||||||||||||
| Non-compensation expenses | 140 | 169 | 165 | (17)% | (15)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,158 | 1,211 | 1,325 | (4)% | (13)% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 91 | $ | 140 | $ | 170 | (35)% | (46)% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
10
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Private Client Group | ||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees | $ | 2,330 | $ | 2,063 | 13% | |||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Mutual and other fund products | 438 | 449 | (2)% | |||||||||||||||||
| Insurance and annuity products | 288 | 308 | (6)% | |||||||||||||||||
| Equities, ETFs and fixed income products | 324 | 291 | 11% | |||||||||||||||||
| Total brokerage revenues | 1,050 | 1,048 | — | |||||||||||||||||
| Account and service fees: | ||||||||||||||||||||
| Mutual fund and annuity service fees | 260 | 250 | 4% | |||||||||||||||||
RJBDP fees: (11) | ||||||||||||||||||||
| Third-party banks | 129 | 215 | (40)% | |||||||||||||||||
| Raymond James Bank | 138 | 127 | 9% | |||||||||||||||||
| Client account and other fees | 96 | 92 | 4% | |||||||||||||||||
| Total account and service fees | 623 | 684 | (9)% | |||||||||||||||||
| Investment banking | 29 | 25 | 16% | |||||||||||||||||
| Interest income | 125 | 170 | (26)% | |||||||||||||||||
| All other | 20 | 19 | 5% | |||||||||||||||||
| Total revenues | 4,177 | 4,009 | 4% | |||||||||||||||||
| Interest expense | (19) | (31) | (39)% | |||||||||||||||||
| Net revenues | 4,158 | 3,978 | 5% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Financial advisor compensation and benefits | 2,555 | 2,358 | 8% | |||||||||||||||||
| Administrative compensation and benefits | 727 | 700 | 4% | |||||||||||||||||
| Total compensation, commissions and benefits | 3,282 | 3,058 | 7% | |||||||||||||||||
| Non-compensation expenses | 462 | 484 | (5)% | |||||||||||||||||
| Total non-interest expenses | 3,744 | 3,542 | 6% | |||||||||||||||||
| Pre-tax income | $ | 414 | $ | 436 | (5)% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
11
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Capital Markets | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Fixed income | $ | 125 | $ | 73 | $ | 90 | 71% | 39% | ||||||||||||||||||||||||
| Equity | 41 | 31 | 40 | 32% | 3% | |||||||||||||||||||||||||||
| Total brokerage revenues | 166 | 104 | 130 | 60% | 28% | |||||||||||||||||||||||||||
| Investment banking: | ||||||||||||||||||||||||||||||||
| Merger & acquisition and advisory | 60 | 80 | 72 | (25)% | (17)% | |||||||||||||||||||||||||||
| Equity underwriting | 35 | 27 | 43 | 30% | (19)% | |||||||||||||||||||||||||||
| Debt underwriting | 37 | 22 | 22 | 68% | 68% | |||||||||||||||||||||||||||
| Total investment banking | 132 | 129 | 137 | 2% | (4)% | |||||||||||||||||||||||||||
| Interest income | 4 | 10 | 10 | (60)% | (60)% | |||||||||||||||||||||||||||
| Tax credit fund revenues | 20 | 16 | 12 | 25% | 67% | |||||||||||||||||||||||||||
| All other | 3 | 2 | 7 | 50% | (57)% | |||||||||||||||||||||||||||
| Total revenues | 325 | 261 | 296 | 25% | 10% | |||||||||||||||||||||||||||
| Interest expense | (2) | (10) | (6) | (80)% | (67)% | |||||||||||||||||||||||||||
| Net revenues | 323 | 251 | 290 | 29% | 11% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 195 | 160 | 184 | 22% | 6% | |||||||||||||||||||||||||||
Non-compensation expenses (3) | 66 | 67 | 78 | (1)% | (15)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 261 | 227 | 262 | 15% | — | |||||||||||||||||||||||||||
Pre-tax income | $ | 62 | $ | 24 | $ | 28 | 158% | 121% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
12
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Capital Markets | ||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Fixed income | $ | 296 | $ | 201 | 47% | |||||||||||||||
| Equity | 115 | 105 | 10% | |||||||||||||||||
| Total brokerage revenues | 411 | 306 | 34% | |||||||||||||||||
| Investment banking: | ||||||||||||||||||||
| Merger & acquisition and advisory | 192 | 286 | (33)% | |||||||||||||||||
| Equity underwriting | 117 | 72 | 63% | |||||||||||||||||
| Debt underwriting | 90 | 56 | 61% | |||||||||||||||||
| Total investment banking | 399 | 414 | (4)% | |||||||||||||||||
| Interest income | 22 | 29 | (24)% | |||||||||||||||||
| Tax credit fund revenues | 50 | 49 | 2% | |||||||||||||||||
| All other | 13 | 9 | 44% | |||||||||||||||||
| Total revenues | 895 | 807 | 11% | |||||||||||||||||
| Interest expense | (14) | (26) | (46)% | |||||||||||||||||
| Net revenues | 881 | 781 | 13% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 545 | 486 | 12% | |||||||||||||||||
Non-compensation expenses (3) (4) | 217 | 218 | — | |||||||||||||||||
| Total non-interest expenses | 762 | 704 | 8% | |||||||||||||||||
| Pre-tax income | $ | 119 | $ | 77 | 55% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
13
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Asset Management | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
Asset management and related administrative fees: | ||||||||||||||||||||||||||||||||
| Managed programs | $ | 109 | $ | 120 | $ | 124 | (9)% | (12)% | ||||||||||||||||||||||||
| Administration and other | 48 | 45 | 53 | 7% | (9)% | |||||||||||||||||||||||||||
Total asset management and related administrative fees | 157 | 165 | 177 | (5)% | (11)% | |||||||||||||||||||||||||||
| Account and service fees | 3 | 8 | 4 | (63)% | (25)% | |||||||||||||||||||||||||||
| All other | 3 | 4 | 3 | (25)% | — | |||||||||||||||||||||||||||
| Net revenues | 163 | 177 | 184 | (8)% | (11)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 44 | 47 | 45 | (6)% | (2)% | |||||||||||||||||||||||||||
Non-compensation expenses (3) | 59 | 65 | 66 | (9)% | (11)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 103 | 112 | 111 | (8)% | (7)% | |||||||||||||||||||||||||||
Pre-tax income | $ | 60 | $ | 65 | $ | 73 | (8)% | (18)% | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees: | ||||||||||||||||||||
| Managed programs | $ | 358 | $ | 346 | 3% | |||||||||||||||
| Administration and other | 152 | 129 | 18% | |||||||||||||||||
| Total asset management and related administrative fees | 510 | 475 | 7% | |||||||||||||||||
| Account and service fees | 12 | 27 | (56)% | |||||||||||||||||
| All other | 9 | 11 | (18)% | |||||||||||||||||
| Net revenues | 531 | 513 | 4% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 134 | 135 | (1)% | |||||||||||||||||
Non-compensation expenses (3) | 191 | 194 | (2)% | |||||||||||||||||
| Total non-interest expenses | 325 | 329 | (1)% | |||||||||||||||||
| Pre-tax income | $ | 206 | $ | 184 | 12% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
14
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Raymond James Bank | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 181 | $ | 246 | $ | 223 | (26)% | (19)% | ||||||||||||||||||||||||
| Interest expense | (12) | (38) | (18) | (68)% | (33)% | |||||||||||||||||||||||||||
| Net interest income | 169 | 208 | 205 | (19)% | (18)% | |||||||||||||||||||||||||||
| All other | 9 | 7 | 5 | 29% | 80% | |||||||||||||||||||||||||||
| Net revenues | 178 | 215 | 210 | (17)% | (15)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation and benefits | 13 | 13 | 13 | — | — | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
| Loan loss provision/(benefit) | 81 | (5) | 109 | NM | (26)% | |||||||||||||||||||||||||||
RJBDP fees to Private Client Group (11) | 43 | 44 | 48 | (2)% | (10)% | |||||||||||||||||||||||||||
| All other | 27 | 25 | 26 | 8% | 4% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 151 | 64 | 183 | 136% | (17)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 164 | 77 | 196 | 113% | (16)% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 14 | $ | 138 | $ | 14 | (90)% | — | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Interest income | $ | 635 | $ | 732 | (13)% | |||||||||||||||
| Interest expense | (51) | (122) | (58)% | |||||||||||||||||
| Net interest income | 584 | 610 | (4)% | |||||||||||||||||
| All other | 20 | 20 | — | |||||||||||||||||
| Net revenues | 604 | 630 | (4)% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 38 | 36 | 6% | |||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||
| Loan loss provision | 188 | 16 | 1,075% | |||||||||||||||||
RJBDP fees to Private Client Group (11) | 138 | 127 | 9% | |||||||||||||||||
| All other | 77 | 67 | 15% | |||||||||||||||||
| Total non-compensation expenses | 403 | 210 | 92% | |||||||||||||||||
| Total non-interest expenses | 441 | 246 | 79% | |||||||||||||||||
| Pre-tax income | $ | 163 | $ | 384 | (58)% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
15
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
| Other | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 3 | $ | 12 | $ | 12 | (75)% | (75)% | ||||||||||||||||||||||||
Gains/(losses) on private equity investments (2) | 1 | 2 | (39) | (50)% | NM | |||||||||||||||||||||||||||
| All other | 2 | 1 | — | 100% | NM | |||||||||||||||||||||||||||
| Total revenues | 6 | 15 | (27) | (60)% | NM | |||||||||||||||||||||||||||
| Interest expense | (26) | (19) | (17) | 37% | 53% | |||||||||||||||||||||||||||
| Net revenues | (20) | (4) | (44) | (400)% | 55% | |||||||||||||||||||||||||||
Non-interest expenses (2) (3) | 9 | 21 | 2 | (57)% | 350% | |||||||||||||||||||||||||||
Pre-tax loss | $ | (29) | $ | (25) | $ | (46) | (16)% | 37% | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Interest income | $ | 27 | $ | 42 | (36)% | |||||||||||||||
Gains/(losses) on private equity investments (2) | (40) | 8 | NM | |||||||||||||||||
| All other | 4 | 5 | (20)% | |||||||||||||||||
| Total revenues | (9) | 55 | NM | |||||||||||||||||
| Interest expense | (63) | (57) | 11% | |||||||||||||||||
| Net revenues | (72) | (2) | (3,500)% | |||||||||||||||||
Non-interest expenses (2) (3) | 34 | 58 | (41)% | |||||||||||||||||
Pre-tax loss | $ | (106) | $ | (60) | (77)% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
16
| RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
$ in millions | As of | % change from | ||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | ||||||||||||||||||||||||||||
Total assets | $ | 29,066 | $ | 25,668 | $ | 33,656 | 13% | (14)% | ||||||||||||||||||||||||
Total equity | $ | 2,279 | $ | 2,198 | $ | 2,263 | 4% | 1% | ||||||||||||||||||||||||
Bank loans, net | $ | 21,223 | $ | 20,691 | $ | 21,788 | 3% | (3)% | ||||||||||||||||||||||||
| Allowance for loan losses | $ | 334 | $ | 215 | $ | 324 | 55% | 3% | ||||||||||||||||||||||||
Allowance for loan losses as a % of loans held for investment | 1.56 | % | 1.03 | % | 1.47 | % | ||||||||||||||||||||||||||
| Total nonperforming assets | $ | 23 | $ | 56 | $ | 27 | (59)% | (15)% | ||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.08 | % | 0.22 | % | 0.08 | % | ||||||||||||||||||||||||||
| Total criticized loans | $ | 733 | $ | 197 | $ | 387 | 272% | 89% | ||||||||||||||||||||||||
Criticized loans as a % of loans held for investment | 3.41 | % | 0.95 | % | 1.76 | % | ||||||||||||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||||||
| Tier 1 capital | 12.8 | % | (7) | 12.8 | % | 12.7 | % | |||||||||||||||||||||||||
| Total capital | 14.1 | % | (7) | 14.1 | % | 13.9 | % | |||||||||||||||||||||||||
| Tier 1 leverage | 7.6 | % | (7) | 8.8 | % | 8.1 | % | |||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||||||||||||
| Bank loan loss provision/(benefit) | $ | 81 | $ | (5) | $ | 109 | NM | (26)% | ||||||||||||||||||||||||
| Net charge-offs/(recoveries): | ||||||||||||||||||||||||||||||||
| Charge-offs related to loan sales | $ | 61 | $ | — | $ | — | NM | NM | ||||||||||||||||||||||||
| All other | 11 | (1) | — | NM | NM | |||||||||||||||||||||||||||
| Total net charge-offs/(recoveries) | $ | 72 | $ | (1) | $ | — | NM | NM | ||||||||||||||||||||||||
| Nine months ended | ||||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | % change | |||||||||||||||||||||||||||||
| Bank loan loss provision | $ | 188 | $ | 16 | 1,075% | |||||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||||||||
| Charge-offs related to loan sales | $ | 61 | $ | 2 | 2,950% | |||||||||||||||||||||||||||
| All other | 11 | 2 | 450% | |||||||||||||||||||||||||||||
| Total net charge-offs | $ | 72 | $ | 4 | 1,700% | |||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
17
| RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | |||||||
| Third Quarter Fiscal 2020 | (Unaudited) | |||||||
Raymond James Bank Net Interest Analysis
| Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | Average balance | Interest inc./exp. | Average yield/ cost | Average balance | Interest inc./exp. | Average yield/ cost | Average balance | Interest inc./exp. | Average yield/ cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning banking assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | $ | 2,990 | $ | — | 0.11 | % | $ | 998 | $ | 5 | 2.36 | % | $ | 2,052 | $ | 5 | 0.89 | % | ||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale securities | 4,437 | 23 | 2.01 | % | 2,901 | 18 | 2.41 | % | 3,443 | 19 | 2.28 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank loans, net of unearned income and deferred expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for investment: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial loans | 7,994 | 59 | 2.93 | % | 8,278 | 98 | 4.68 | % | 8,043 | 81 | 3.99 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate construction loans | 212 | 2 | 3.60 | % | 248 | 4 | 5.45 | % | 181 | 2 | 4.58 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate loans | 3,773 | 25 | 2.66 | % | 3,359 | 39 | 4.53 | % | 3,735 | 36 | 3.81 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt loans (14) | 1,272 | 9 | 3.34 | % | 1,291 | 9 | 3.35 | % | 1,212 | 8 | 3.36 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans | 4,983 | 37 | 2.97 | % | 4,127 | 34 | 3.32 | % | 4,847 | 38 | 3.13 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities-based loans and other | 3,576 | 24 | 2.59 | % | 3,125 | 36 | 4.64 | % | 3,469 | 31 | 3.60 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 111 | 1 | 3.22 | % | 118 | 1 | 4.78 | % | 142 | 2 | 3.85 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total bank loans, net | 21,921 | 157 | 2.87 | % | 20,546 | 221 | 4.30 | % | 21,629 | 198 | 3.67 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank stock, Federal Reserve Bank stock and other | 217 | 1 | 1.50 | % | 168 | 2 | 4.42 | % | 230 | 1 | 2.48 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning banking assets | 29,565 | 181 | 2.45 | % | 24,613 | 246 | 4.00 | % | 27,354 | 223 | 3.28 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing banking liabilities | 27,233 | 12 | 0.17 | % | 22,445 | 38 | 0.69 | % | 25,032 | 18 | 0.29 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income | $ | 2,332 | $ | 169 | $ | 2,168 | $ | 208 | $ | 2,322 | $ | 205 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin (net yield on interest-earning banking assets) | 2.29 | % | 3.37 | % | 3.02 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine months ended | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | Average balance | Interest inc./exp. | Average yield/cost | Average balance | Interest inc./exp. | Average yield/ cost | |||||||||||||||||||||||||||||||||||
| Interest-earning banking assets: | |||||||||||||||||||||||||||||||||||||||||
Cash | $ | 2,078 | $ | 10 | 0.66 | % | $ | 1,231 | $ | 21 | 2.33 | % | |||||||||||||||||||||||||||||
Available-for-sale securities | 3,654 | 60 | 2.18 | % | 2,831 | 51 | 2.39 | % | |||||||||||||||||||||||||||||||||
Bank loans, net of unearned income and deferred expenses: | |||||||||||||||||||||||||||||||||||||||||
Loans held for investment: | |||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial loans | 8,039 | 226 | 3.69 | % | 8,065 | 286 | 4.67 | % | |||||||||||||||||||||||||||||||||
| Commercial real estate construction loans | 209 | 7 | 4.36 | % | 205 | 9 | 5.58 | % | |||||||||||||||||||||||||||||||||
| Commercial real estate loans | 3,706 | 98 | 3.49 | % | 3,433 | 120 | 4.60 | % | |||||||||||||||||||||||||||||||||
Tax-exempt loans (14) | 1,236 | 25 | 3.35 | % | 1,285 | 26 | 3.34 | % | |||||||||||||||||||||||||||||||||
| Residential mortgage loans | 4,823 | 112 | 3.09 | % | 3,999 | 100 | 3.32 | % | |||||||||||||||||||||||||||||||||
| Securities-based loans and other | 3,460 | 89 | 3.37 | % | 3,098 | 109 | 4.64 | % | |||||||||||||||||||||||||||||||||
| Loans held for sale | 138 | 4 | 3.77 | % | 149 | 5 | 4.87 | % | |||||||||||||||||||||||||||||||||
Total bank loans, net | 21,611 | 561 | 3.46 | % | 20,234 | 655 | 4.32 | % | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank stock, Federal Reserve Bank stock and other | 220 | 4 | 2.33 | % | 163 | 5 | 4.27 | % | |||||||||||||||||||||||||||||||||
| Total interest-earning banking assets | 27,563 | 635 | 3.07 | % | 24,459 | 732 | 3.99 | % | |||||||||||||||||||||||||||||||||
| Total interest-bearing banking liabilities | 25,246 | 51 | 0.27 | % | 22,307 | 122 | 0.73 | % | |||||||||||||||||||||||||||||||||
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income | $ | 2,317 | $ | 584 | $ | 2,152 | $ | 610 | |||||||||||||||||||||||||||||||||
Net interest margin (net yield on interest-earning banking assets) | 2.82 | % | 3.32 | % | |||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
18
| RAYMOND JAMES FINANCIAL, INC. | Non-GAAP Financial Measures | ||||
| Third Quarter Fiscal 2020 | (Unaudited) | ||||
Reconciliation of GAAP measures to non-GAAP financial measures
We utilize certain non-GAAP financial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures have been separately identified in this document. We believe that return on tangible common equity and tangible book value per share are meaningful to investors as they facilitate comparisons of our results to the results of other companies. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP financial measures.
| Book value per share | As of | |||||||||||||||||||
| $ in millions, except per share amounts | June 30, 2020 | June 30, 2019 | March 31, 2020 | |||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,965 | $ | 6,502 | $ | 6,798 | ||||||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 602 | 635 | 603 | |||||||||||||||||
| Deferred tax liabilities, net | (33) | (26) | (30) | |||||||||||||||||
| Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,396 | $ | 5,893 | $ | 6,225 | ||||||||||||||
| Common shares outstanding | 137.0 | 139.7 | 136.8 | |||||||||||||||||
Book value per share (5) | $ | 50.84 | $ | 46.54 | $ | 49.69 | ||||||||||||||
Tangible book value per share (5) | $ | 46.69 | $ | 42.18 | $ | 45.50 | ||||||||||||||
| Return on equity | Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||
| $ in millions | June 30, 2020 | June 30, 2019 | March 31, 2020 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||
Average equity (15) | $ | 6,882 | $ | 6,434 | $ | 6,820 | $ | 6,797 | $ | 6,345 | |||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||
| Average goodwill and identifiable intangible assets, net | 603 | 633 | 606 | 606 | 634 | ||||||||||||||||||||||||||||||
| Average deferred tax liabilities, net | (32) | (31) | (31) | (30) | (32) | ||||||||||||||||||||||||||||||
Average tangible common equity (15) | $ | 6,311 | $ | 5,832 | $ | 6,245 | $ | 6,221 | $ | 5,743 | |||||||||||||||||||||||||
Return on equity (8) | 10.0 | % | 16.1 | % | 9.9 | % | 11.9 | % | 16.2 | % | |||||||||||||||||||||||||
Return on tangible common equity (8) | 10.9 | % | 17.8 | % | 10.8 | % | 13.1 | % | 17.9 | % | |||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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RAYMOND JAMES FINANCIAL, INC.
Third Quarter Fiscal 2020
Footnotes
1.Earnings per common share is computed by dividing net income (less allocation of earnings and dividends to participating securities) by weighted-average common shares outstanding (basic or diluted as applicable) for each respective period.
2.Other revenues for the three months ended March 31, 2020 and the nine months ended June 30, 2020 each included approximately $40 million of private equity valuation losses, which are included in our Other segment. Of these losses, approximately $23 million were attributable to noncontrolling interests and are presented as an offset in Other expenses.
3.The offset for the net gain/(loss) attributable to noncontrolling interests is in Other expenses. Prior period results have been conformed to the current presentation.
4.The nine months ended June 30, 2019 included a $15 million loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of European equities.
5.Book value per share is computed by dividing total equity attributable to Raymond James Financial, Inc. by the number of common shares outstanding at the end of each respective period or, in the case of tangible book value per share, computed by dividing tangible common equity by the number of common shares outstanding at the end of each respective period. Tangible common equity is defined as total equity attributable to Raymond James Financial, Inc. less goodwill and intangible assets, net of related deferred taxes.
6.These are non-GAAP financial measures. See the schedules on the previous page of this document for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures and for more information on these measures.
7.Estimated.
8.Return on equity is computed by dividing annualized net income by average equity for each respective period or, in the case of return on tangible common equity, computed by dividing annualized net income by average tangible common equity for each respective period.
9.Pre-tax margin is computed by dividing pre-tax income by net revenues for each respective period.
10.Total compensation ratio is computed by dividing compensation, commissions and benefits expense by net revenues for each respective period.
11.We earn fees from RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at Raymond James Bank and various third-party banks. Fees earned by Private Client Group on Raymond James Bank deposits are eliminated in consolidation.
12.Average yield on RJBDP - third-party banks is computed by dividing annualized RJBDP fees - third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balances at third-party banks.
13.The Other segment includes the results of our private equity investments, interest income on certain corporate cash balances, and certain corporate overhead costs of Raymond James Financial, Inc., including the interest costs on our public debt.
14.The average yield is presented on a tax-equivalent basis for each respective period.
15.Average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. For the year-to-date period, computed by adding the total equity attributable to Raymond James Financial, Inc. as of each quarter-end date during the indicated year-to-date period to the beginning of year total, and dividing by four, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated year-to-date period to the beginning of year total, and dividing by four.
20
