RJF 8-K
Raymond James Financial Inc (RJF)
8-K
2020-01-22
For: 2020-01-22
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) | (Zip Code) | |||
(727 ) 567-1000
(Registrant’s telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition
On January 22, 2020, Raymond James Financial, Inc. (the “Company”) issued a press release disclosing its results for the first fiscal quarter ended December 31, 2019. A copy of this press release is attached to this Current Report as Exhibit 99.1 and incorporated by reference herein. In addition, a copy of the Company’s Financial Supplement and Earnings Presentation for the first fiscal quarter ended December 31, 2019 are attached as Exhibits 99.2 and 99.3, respectively, to this Current Report and are incorporated by reference herein.
The information in this Current Report, including any exhibits hereto, is being “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibit in this particular report is incorporated by reference).
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following are filed as exhibits to this report:
Exhibit No.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYMOND JAMES FINANCIAL, INC. | |||
Date: | January 22, 2020 | By: | /s/ Paul M. Shoukry |
Paul M. Shoukry | |||
Chief Financial Officer and Treasurer | |||
January 22, 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 FIRST QUARTER
FISCAL YEAR 2020 RESULTS
• | Quarterly net revenues of $2.01 billion and record quarterly net income of $268 million, or $1.89 per diluted share |
• | Record quarterly net revenues for the Private Client Group, Asset Management and Raymond James Bank segments |
• | Records for client assets under administration of $896.0 billion, financial assets under management of $151.7 billion and net loans at Raymond James Bank of $21.3 billion |
• | Record Private Client Group assets in fee-based of accounts of $444.2 billion, substantial increases of 31% over December 2018 and 9% over September 2019 |
• | Record number of Private Client Group financial advisors of 8,060, net increases of 245 over December 2018 and 49 over September 2019 |
• | Annualized return on equity for the quarter of 16.0% and annualized return on tangible common equity for the quarter of 17.5%(1) |
ST. PETERSBURG, Fla - Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $2.01 billion and record net income of $268 million, or $1.89 per diluted share, for the fiscal first quarter ended December 31, 2019. Net revenue growth of 4% over the prior year’s fiscal first quarter was largely attributable to higher Private Client Group assets in fee-based accounts. These assets grew 31% over December 2018 and 9% over September 2019. Net revenues declined 1% compared to the record set in the preceding quarter as sequential growth of asset management and related administrative fees and brokerage revenues was more than offset by the sequential decline of tax credit fund revenues, investment banking revenues, net interest income and Raymond James Bank Deposit Program (RJBDP) fees from third-party banks, which were negatively impacted by lower short-term interest rates.
“The consistent industry-leading net addition of experienced financial advisors contributed to the records we achieved for client assets during the quarter and is a testament to our client-first culture and best-in-class resources and technology offerings,” said Chairman and CEO Paul Reilly. “While lower interest rates are expected to be a headwind for the balance of the fiscal year, we remain focused on the long term by investing in growth across our businesses.”
Please refer to the footnotes at the end of this press release for additional information.
1
Segment Results
Private Client Group
• | Record quarterly net revenues of $1.41 billion, up 4% over the prior year’s fiscal first quarter and 2% over the preceding quarter |
• | Quarterly pre-tax income of $153 million, down 7% compared to the prior year’s fiscal first quarter and up 7% over the preceding quarter |
• | Record Private Client Group assets under administration of $855.2 billion, significant increases of 24% over December 2018 and 7% over September 2019 |
• | Record Private Client Group assets in fee-based accounts of $444.2 billion, substantial increases of 31% over December 2018 and 9% over September 2019 |
• | Record number of Private Client Group financial advisors of 8,060, net increases of 245 over December 2018 and 49 over September 2019 |
Record quarterly net revenues were primarily attributable to higher assets in fee-based accounts driven by the net addition of financial advisors, equity market appreciation and the increased utilization of fee-based accounts. Private Client Group assets in fee-based accounts reached a new record of $444.2 billion, representing 52% of the segment’s total client assets under administration at the end of the fiscal quarter. The 7% year-over-year decrease in quarterly pre-tax income was largely attributable to the negative impact of lower short-term interest rates on net interest income and RJBDP fees from third-party banks, which contributed to a higher ratio of compensation to net revenues for both the segment and firm overall, as there are no direct payouts associated with those revenue streams. Sequentially, quarterly pre-tax income increased despite the higher ratio of compensation to net revenues, helped by higher net revenues related to increased client assets and a seasonal decrease in non-compensation expenses.
Clients’ domestic cash sweep balances of $39.5 billion decreased 16% compared to December 2018 and increased 5% over September 2019.
“We continue to retain and attract high-quality financial advisors across all of our affiliation options,” said Reilly. “During the quarter we added a net 49 financial advisors to reach a record 8,060 financial advisors, a solid result particularly given the number of planned retirements typical in the fiscal first quarter.”
Capital Markets
• | Quarterly net revenues of $268 million, up 6% over the prior year’s fiscal first quarter and down 11% compared to the preceding quarter |
• | Quarterly pre-tax income of $29 million, up 142% over the prior year’s fiscal first quarter and down 12% compared to the preceding quarter |
• | Quarterly investment banking revenues of $130 million, up 1% over the prior year’s fiscal first quarter and down 13% compared to the preceding quarter |
The year-over-year increase in quarterly net revenues was primarily driven by increases in fixed income brokerage revenues and both debt and equity underwriting revenues, which more than offset lower M&A revenues and equity brokerage revenues. Sequentially, net revenues decreased from the preceding quarter, primarily due to lower M&A revenues and tax credit fund revenues.
“Fixed income results were strong once again this quarter primarily due to continued rate volatility fueling client activity,” said Reilly. “Despite a healthy pipeline, M&A revenues during the quarter were lower than the results generated in the comparative periods.”
Please refer to the footnotes at the end of this press release for additional information.
2
Asset Management
• | Record quarterly net revenues of $184 million, up 6% over the prior year’s fiscal first quarter and 3% over the preceding quarter |
• | Record quarterly pre-tax income of $73 million, up 14% over the prior year’s fiscal first quarter and 6% over the preceding quarter |
• | Record financial assets under management of $151.7 billion, up 20% over December 2018 and 6% over September 2019 |
Record results for the Asset Management segment were attributable to the growth of financial assets under management, as equity market appreciation and net inflows into fee-based accounts in the Private Client Group more than offset modest net outflows at Carillon Tower Advisers.
Raymond James Bank
• | Record quarterly net revenues of $216 million, up 6% over the prior year’s fiscal first quarter and essentially flat compared to the preceding quarter |
• | Quarterly pre-tax income of $135 million, up 23% over the prior year’s fiscal first quarter and 3% over the preceding quarter |
• | Record net loans of $21.3 billion, up 7% over December 2018 and 2% over September 2019 |
• | Net interest margin of 3.23% for the quarter, down 2 basis points compared to the prior year’s fiscal first quarter and 7 basis points compared to the preceding quarter |
Record net revenues for the first quarter were primarily driven by loan growth, which was helped by the strong growth of residential mortgage loans to Private Client Group clients. The Bank’s net interest margin of 3.23% declined 7 basis points in the quarter due to lower short-term interest rates. Despite loan growth and an increase in criticized loans during the quarter, the Bank generated a loan loss benefit of $2 million, largely due to payoffs of certain corporate loans and a higher mix of residential mortgages, which have lower allowances for loan losses than corporate and industrial loans, on average.
A conference call to discuss the results will take place tomorrow morning, Thursday, January 23, 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: 877-671-8037 (conference code: 3241448). An audio replay of the call will be available at the same location until April 29, 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 8,100 financial advisors. Total client assets are $896 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 and the associated conference call 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 “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” 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.
3
RAYMOND JAMES FINANCIAL, INC. 1st Quarter Fiscal 2020 | Selected Financial Highlights (Unaudited) | |
Summary results of operations
Three months ended | % change from | |||||||||||||||
$ in millions, except per share amounts | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Net revenues | $ | 2,009 | $ | 1,931 | $ | 2,023 | 4% | (1)% | ||||||||
Pre-tax income | $ | 359 | $ | 332 | $ | 354 | 8% | 1% | ||||||||
Net income | $ | 268 | $ | 249 | $ | 265 | 8% | 1% | ||||||||
Earnings per common share: (2) | ||||||||||||||||
Basic | $ | 1.93 | $ | 1.73 | $ | 1.90 | 12% | 2% | ||||||||
Diluted | $ | 1.89 | $ | 1.69 | $ | 1.86 | 12% | 2% | ||||||||
Non-GAAP measures: (1) | ||||||||||||||||
Adjusted pre-tax income | NA | $ | 347 | $ | 373 | 3% | (4)% | |||||||||
Adjusted net income | NA | $ | 264 | $ | 284 | 2% | (6)% | |||||||||
Adjusted earnings per common share - basic (2) | NA | $ | 1.83 | $ | 2.04 | 5% | (5)% | |||||||||
Adjusted earnings per common share - diluted (2) | NA | $ | 1.79 | $ | 2.00 | 6% | (6)% | |||||||||
Please refer to the footnotes at the end of this press release for additional information.
4
RAYMOND JAMES FINANCIAL, INC.
1st Quarter Fiscal 2020
Consolidated Statements of Income (Unaudited) | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
in millions, except per share amounts | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Asset management and related administrative fees | $ | 955 | $ | 865 | $ | 924 | 10% | 3% | ||||||||
Brokerage revenues: | ||||||||||||||||
Securities commissions | 363 | 388 | 355 | (6)% | 2% | |||||||||||
Principal transactions | 97 | 76 | 95 | 28% | 2% | |||||||||||
Total brokerage revenues | 460 | 464 | 450 | (1)% | 2% | |||||||||||
Account and service fees | 178 | 185 | 179 | (4)% | (1)% | |||||||||||
Investment banking | 141 | 137 | 157 | 3% | (10)% | |||||||||||
Interest income | 297 | 316 | 320 | (6)% | (7)% | |||||||||||
Other | 29 | 37 | 55 | (22)% | (47)% | |||||||||||
Total revenues | 2,060 | 2,004 | 2,085 | 3% | (1)% | |||||||||||
Interest expense | (51 | ) | (73 | ) | (62 | ) | (30)% | (18)% | ||||||||
Net revenues | 2,009 | 1,931 | 2,023 | 4% | (1)% | |||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation, commissions and benefits | 1,351 | 1,265 | 1,320 | 7% | 2% | |||||||||||
Non-compensation expenses: | ||||||||||||||||
Communications and information processing | 94 | 92 | 95 | 2% | (1)% | |||||||||||
Occupancy and equipment | 57 | 51 | 59 | 12% | (3)% | |||||||||||
Business development | 44 | 43 | 53 | 2% | (17)% | |||||||||||
Investment sub-advisory fees | 26 | 24 | 24 | 8% | 8% | |||||||||||
Professional fees | 21 | 22 | 24 | (5)% | (13)% | |||||||||||
Bank loan loss provision/(benefit) | (2 | ) | 16 | 6 | NM | NM | ||||||||||
Acquisition and disposition-related expenses (3) | — | 15 | — | (100)% | — | |||||||||||
Other (4) (5) | 59 | 71 | 88 | (17)% | (33)% | |||||||||||
Total non-compensation expenses | 299 | 334 | 349 | (10)% | (14)% | |||||||||||
Total non-interest expenses | 1,650 | 1,599 | 1,669 | 3% | (1)% | |||||||||||
Pre-tax income | 359 | 332 | 354 | 8% | 1% | |||||||||||
Provision for income taxes | 91 | 83 | 89 | 10% | 2% | |||||||||||
Net income | $ | 268 | $ | 249 | $ | 265 | 8% | 1% | ||||||||
Earnings per common share – basic (2) | $ | 1.93 | $ | 1.73 | $ | 1.90 | 12% | 2% | ||||||||
Earnings per common share – diluted (2) | $ | 1.89 | $ | 1.69 | $ | 1.86 | 12% | 2% | ||||||||
Weighted-average common shares outstanding – basic | 138.3 | 144.2 | 138.6 | (4)% | — | |||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 141.5 | 147.3 | 141.8 | (4)% | — | |||||||||||
Please refer to the footnotes at the end of this press release for additional information.
5
RAYMOND JAMES FINANCIAL, INC. | Selected Key Metrics | |
1st Quarter Fiscal 2020 | (Unaudited) | |
As of | % change from | |||||||||||||||||
Total company ($ in millions, except per share amounts) | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||
Total assets | $ | 40,154 | $ | 38,544 | $ | 38,830 | 4 | % | 3 | % | ||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,842 | $ | 6,143 | $ | 6,581 | 11 | % | 4 | % | ||||||||
Book value per share (6) | $ | 49.26 | $ | 43.69 | $ | 47.76 | 13 | % | 3 | % | ||||||||
Tangible book value per share (1) (6) | $ | 45.10 | $ | 39.43 | $ | 43.53 | 14 | % | 4 | % | ||||||||
Capital ratios: | ||||||||||||||||||
Tier 1 capital | 24.8 | % | (7) | 23.6 | % | 24.8 | % | |||||||||||
Total capital | 25.7 | % | (7) | 24.7 | % | 25.8 | % | |||||||||||
Tier 1 leverage | 15.8 | % | (7) | 14.6 | % | 15.7 | % | |||||||||||
Three months ended | ||||||||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||||||
Return on equity (8) | 16.0 | % | 15.9 | % | 16.2 | % | ||||||||||||
Adjusted return on equity (1) (8) | NA | 16.9 | % | 17.3 | % | |||||||||||||
Return on tangible common equity (1) (8) | 17.5 | % | 17.6 | % | 17.8 | % | ||||||||||||
Adjusted return on tangible common equity (1) (8) | NA | 18.7 | % | 19.1 | % | |||||||||||||
Pre-tax margin (9) | 17.9 | % | 17.2 | % | 17.5 | % | ||||||||||||
Adjusted pre-tax margin (1) (9) | NA | 18.0 | % | 18.4 | % | |||||||||||||
Total compensation ratio (10) | 67.2 | % | 65.5 | % | 65.2 | % | ||||||||||||
Effective tax rate | 25.3 | % | 25.2 | % | 25.1 | % | ||||||||||||
Client asset metrics ($ in billions) | As of | % change from | ||||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||
Client assets under administration | $ | 896.0 | $ | 725.4 | $ | 838.3 | 24% | 7% | ||||||||
Private Client Group assets under administration | $ | 855.2 | $ | 690.7 | $ | 798.4 | 24% | 7% | ||||||||
Private Client Group assets in fee-based accounts | $ | 444.2 | $ | 338.8 | $ | 409.1 | 31% | 9% | ||||||||
Financial assets under management | $ | 151.7 | $ | 126.5 | $ | 143.1 | 20% | 6% | ||||||||
Clients’ domestic cash sweep balances ($ in millions) | As of | % change from | ||||||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (11) | ||||||||||||||||||
Raymond James Bank | $ | 21,891 | $ | 21,138 | $ | 21,649 | 4 | % | 1 | % | ||||||||
Third-party banks | 15,061 | 18,320 | 14,043 | (18 | )% | 7 | % | |||||||||||
Subtotal RJBDP | 36,952 | 39,458 | 35,692 | (6 | )% | 4 | % | |||||||||||
Money market funds (12) | — | 4,436 | — | (100 | )% | — | ||||||||||||
Client Interest Program | 2,528 | 2,935 | 2,022 | (14 | )% | 25 | % | |||||||||||
Total clients’ domestic cash sweep balances | $ | 39,480 | $ | 46,829 | $ | 37,714 | (16 | )% | 5 | % | ||||||||
Average yield on RJBDP - third-party banks (13) | 1.64 | % | 1.74 | % | 1.83 | % | ||||||||||||
Private Client Group financial advisors | As of | % change from | |||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Employees | 3,331 | 3,166 | 3,301 | 5 | % | 1 | % | ||||||||
Independent contractors | 4,729 | 4,649 | 4,710 | 2 | % | — | |||||||||
Total advisors | 8,060 | 7,815 | 8,011 | 3 | % | 1 | % | ||||||||
Please refer to the footnotes at the end of this press release for additional information.
6
RAYMOND JAMES FINANCIAL, INC. | Segment Results | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Net revenues: | ||||||||||||||||
Private Client Group | $ | 1,414 | $ | 1,356 | $ | 1,381 | 4% | 2% | ||||||||
Capital Markets | 268 | 253 | 302 | 6% | (11)% | |||||||||||
Asset Management | 184 | 174 | 178 | 6% | 3% | |||||||||||
Raymond James Bank | 216 | 203 | 216 | 6% | — | |||||||||||
Other (14) | (8 | ) | 2 | 7 | NM | NM | ||||||||||
Intersegment eliminations | (65 | ) | (57 | ) | (61 | ) | NM | NM | ||||||||
Total net revenues | $ | 2,009 | $ | 1,931 | $ | 2,023 | 4% | (1)% | ||||||||
Pre-tax income/(loss): | ||||||||||||||||
Private Client Group | $ | 153 | $ | 164 | $ | 143 | (7)% | 7% | ||||||||
Capital Markets | 29 | 12 | 33 | 142% | (12)% | |||||||||||
Asset Management | 73 | 64 | 69 | 14% | 6% | |||||||||||
Raymond James Bank | 135 | 110 | 131 | 23% | 3% | |||||||||||
Other (14) | (31 | ) | (18 | ) | (22 | ) | 72% | 41% | ||||||||
Pre-tax income | $ | 359 | $ | 332 | $ | 354 | 8% | 1% | ||||||||
Please refer to the footnotes at the end of this press release for additional information.
7
RAYMOND JAMES FINANCIAL, INC. | Segment Results | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Private Client Group | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Asset management and related administrative fees | $ | 782 | $ | 707 | $ | 757 | 11% | 3% | ||||||||
Brokerage revenues: | ||||||||||||||||
Mutual and other fund products | 144 | 157 | 150 | (8)% | (4)% | |||||||||||
Insurance and annuity products | 101 | 104 | 104 | (3)% | (3)% | |||||||||||
Equities, ETFs and fixed income products | 102 | 103 | 87 | (1)% | 17% | |||||||||||
Total brokerage revenues | 347 | 364 | 341 | (5)% | 2% | |||||||||||
Account and service fees: | ||||||||||||||||
Mutual fund and annuity service fees | 90 | 83 | 84 | 8% | 7% | |||||||||||
RJBDP fees: (11) | ||||||||||||||||
Third-party banks | 58 | 68 | 65 | (15)% | (11)% | |||||||||||
Raymond James Bank | 47 | 41 | 46 | 15% | 2% | |||||||||||
Client account and other fees | 29 | 33 | 30 | (12)% | (3)% | |||||||||||
Total account and service fees | 224 | 225 | 225 | — | — | |||||||||||
Investment banking | 11 | 7 | 7 | 57% | 57% | |||||||||||
Interest income | 49 | 56 | 55 | (13)% | (11)% | |||||||||||
All other | 9 | 7 | 7 | 29% | 29% | |||||||||||
Total revenues | 1,422 | 1,366 | 1,392 | 4% | 2% | |||||||||||
Interest expense | (8 | ) | (10 | ) | (11 | ) | (20)% | (27)% | ||||||||
Net revenues | 1,414 | 1,356 | 1,381 | 4% | 2% | |||||||||||
Non-interest expenses: | ||||||||||||||||
Financial advisor compensation and benefits | 857 | 803 | 832 | 7% | 3% | |||||||||||
Administrative compensation and benefits | 247 | 229 | 233 | 8% | 6% | |||||||||||
Total compensation, commissions and benefits | 1,104 | 1,032 | 1,065 | 7% | 4% | |||||||||||
Non-compensation expenses | 157 | 160 | 173 | (2)% | (9)% | |||||||||||
Total non-interest expenses | 1,261 | 1,192 | 1,238 | 6% | 2% | |||||||||||
Pre-tax income | $ | 153 | $ | 164 | $ | 143 | (7)% | 7% | ||||||||
Pre-tax margin | 10.8 | % | 12.1 | % | 10.4 | % | ||||||||||
Please refer to the footnotes at the end of this press release for additional information.
8
RAYMOND JAMES FINANCIAL, INC. | Segment Results | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Capital Markets | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Brokerage revenues: | ||||||||||||||||
Fixed income | $ | 81 | $ | 57 | $ | 82 | 42% | (1)% | ||||||||
Equity | 34 | 42 | 26 | (19)% | 31% | |||||||||||
Total brokerage revenues | 115 | 99 | 108 | 16% | 6% | |||||||||||
Investment banking: | ||||||||||||||||
Merger & acquisition and advisory | 60 | 85 | 93 | (29)% | (35)% | |||||||||||
Equity underwriting | 39 | 27 | 28 | 44% | 39% | |||||||||||
Debt underwriting | 31 | 17 | 29 | 82% | 7% | |||||||||||
Total investment banking | 130 | 129 | 150 | 1% | (13)% | |||||||||||
Interest income | 8 | 10 | 9 | (20)% | (11)% | |||||||||||
Tax credit fund revenues | 18 | 19 | 37 | (5)% | (51)% | |||||||||||
All other | 3 | 4 | 6 | (25)% | (50)% | |||||||||||
Total revenues | 274 | 261 | 310 | 5% | (12)% | |||||||||||
Interest expense | (6 | ) | (8 | ) | (8 | ) | (25)% | (25)% | ||||||||
Net revenues | 268 | 253 | 302 | 6% | (11)% | |||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation, commissions and benefits | 166 | 158 | 179 | 5% | (7)% | |||||||||||
Non-compensation expenses (3) (4) (5) | 73 | 83 | 90 | (12)% | (19)% | |||||||||||
Total non-interest expenses | 239 | 241 | 269 | (1)% | (11)% | |||||||||||
Pre-tax income | $ | 29 | $ | 12 | $ | 33 | 142% | (12)% | ||||||||
Pre-tax margin | 10.8 | % | 4.7 | % | 10.9 | % | ||||||||||
Please refer to the footnotes at the end of this press release for additional information.
9
RAYMOND JAMES FINANCIAL, INC. | Segment Results | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Asset Management | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Asset management and related administrative fees | ||||||||||||||||
Managed programs | $ | 125 | $ | 117 | $ | 121 | 7% | 3% | ||||||||
Administration and other | 51 | 44 | 49 | 16% | 4% | |||||||||||
Total asset management and related administrative fees | 176 | 161 | 170 | 9% | 4% | |||||||||||
Account and service fees | 5 | 9 | 4 | (44)% | 25% | |||||||||||
All other | 3 | 4 | 4 | (25)% | (25)% | |||||||||||
Net revenues | 184 | 174 | 178 | 6% | 3% | |||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation, commissions and benefits | 45 | 43 | 44 | 5% | 2% | |||||||||||
Non-compensation expenses (4) | 66 | 67 | 65 | (1)% | 2% | |||||||||||
Total non-interest expenses | 111 | 110 | 109 | 1% | 2% | |||||||||||
Pre-tax income | $ | 73 | $ | 64 | $ | 69 | 14% | 6% | ||||||||
Pre-tax margin | 39.7 | % | 36.8 | % | 38.8 | % | ||||||||||
Raymond James Bank | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Interest income | $ | 231 | $ | 239 | $ | 243 | (3)% | (5)% | ||||||||
Interest expense | (21 | ) | (42 | ) | (33 | ) | (50)% | (36)% | ||||||||
Net interest income | 210 | 197 | 210 | 7% | — | |||||||||||
All other | 6 | 6 | 6 | — | — | |||||||||||
Net revenues | 216 | 203 | 216 | 6% | — | |||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation and benefits | 12 | 11 | 13 | 9% | (8)% | |||||||||||
Non-compensation expenses: | ||||||||||||||||
Loan loss provision/(benefit) | (2 | ) | 16 | 6 | NM | NM | ||||||||||
RJBDP fees to Private Client Group (11) | 47 | 41 | 46 | 15% | 2% | |||||||||||
All other | 24 | 25 | 20 | (4)% | 20% | |||||||||||
Total non-compensation expenses | 69 | 82 | 72 | (16)% | (4)% | |||||||||||
Total non-interest expenses | 81 | 93 | 85 | (13)% | (5)% | |||||||||||
Pre-tax income | $ | 135 | $ | 110 | $ | 131 | 23% | 3% | ||||||||
Pre-tax margin | 62.5 | % | 54.2 | % | 60.6 | % | ||||||||||
Please refer to the footnotes at the end of this press release for additional information.
10
RAYMOND JAMES FINANCIAL, INC. | Segment Results | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Other | ||||||||||||||||
Three months ended | % change from | |||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||
Revenues: | ||||||||||||||||
Interest income | $ | 12 | $ | 16 | $ | 21 | (25)% | (43)% | ||||||||
Gains/(losses) on private equity investments | (2 | ) | 4 | 6 | NM | NM | ||||||||||
All other | 2 | 1 | (2 | ) | 100% | NM | ||||||||||
Total revenues | 12 | 21 | 25 | (43)% | (52)% | |||||||||||
Interest expense | (20 | ) | (19 | ) | (18 | ) | 5% | 11% | ||||||||
Net revenues | (8 | ) | 2 | 7 | NM | NM | ||||||||||
Non-interest expenses (4) | 23 | 20 | 29 | 15% | (21)% | |||||||||||
Pre-tax loss | $ | (31 | ) | $ | (18 | ) | $ | (22 | ) | 72% | 41% | |||||
Please refer to the footnotes at the end of this press release for additional information.
11
RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Raymond James Bank ($ in millions) | As of | % change from | ||||||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||||
Total assets | $ | 26,469 | $ | 25,140 | $ | 25,705 | 5 | % | 3 | % | ||||||||
Total equity | $ | 2,300 | $ | 2,072 | $ | 2,248 | 11 | % | 2 | % | ||||||||
Bank loans, net | $ | 21,296 | $ | 19,887 | $ | 20,891 | 7 | % | 2 | % | ||||||||
Allowance for loan losses | $ | 216 | $ | 219 | $ | 218 | (1 | )% | (1 | )% | ||||||||
Allowance for loan losses as a % of loans held for investment | 1.01 | % | 1.10 | % | 1.04 | % | ||||||||||||
Total nonperforming assets | $ | 41 | $ | 52 | $ | 46 | (21 | )% | (11 | )% | ||||||||
Nonperforming assets as a % of total assets | 0.16 | % | 0.21 | % | 0.18 | % | ||||||||||||
Total criticized loans | $ | 349 | $ | 227 | $ | 285 | 54 | % | 22 | % | ||||||||
Criticized loans as a % of loans held for investment | 1.64 | % | 1.13 | % | 1.36 | % | ||||||||||||
Capital ratios: | ||||||||||||||||||
Tier 1 capital | 13.3 | % | (7) | 12.7 | % | 13.2 | % | |||||||||||
Total capital | 14.5 | % | (7) | 13.9 | % | 14.5 | % | |||||||||||
Tier 1 leverage | 8.8 | % | (7) | 8.5 | % | 8.8 | % | |||||||||||
Three months ended | % change from | |||||||||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||
Bank loan loss provision/(benefit) | $ | (2 | ) | $ | 16 | $ | 6 | NM | NM | |||||||||
Net charge-offs/(recoveries) | $ | — | $ | (1 | ) | $ | 2 | 100 | % | (100 | )% | |||||||
Please refer to the footnotes at the end of this press release for additional information.
12
RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | |
1st Quarter Fiscal 2020 | (Unaudited) | |
Raymond James Bank Net Interest Analysis
Three months ended | |||||||||||||||||||||||||||||||||
December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||||||||||||||
$ 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 | $ | 1,201 | $ | 5 | 1.64 | % | $ | 1,304 | $ | 7 | 2.24 | % | $ | 1,262 | $ | 7 | 2.16 | % | |||||||||||||||
Available-for-sale securities | 3,089 | 18 | 2.30 | % | 2,717 | 16 | 2.32 | % | 2,995 | 18 | 2.37 | % | |||||||||||||||||||||
Bank loans, net of unearned income: | |||||||||||||||||||||||||||||||||
Loans held for investment: | |||||||||||||||||||||||||||||||||
Commercial and industrial loans | 8,078 | 86 | 4.15 | % | 7,763 | 91 | 4.58 | % | 8,082 | 92 | 4.47 | % | |||||||||||||||||||||
Commercial real estate construction loans | 233 | 3 | 4.87 | % | 171 | 2 | 5.62 | % | 268 | 3 | 5.36 | % | |||||||||||||||||||||
Commercial real estate loans | 3,611 | 37 | 4.00 | % | 3,558 | 41 | 4.55 | % | 3,507 | 39 | 4.32 | % | |||||||||||||||||||||
Tax-exempt loans (15) | 1,225 | 8 | 3.36 | % | 1,284 | 9 | 3.33 | % | 1,281 | 9 | 3.40 | % | |||||||||||||||||||||
Residential mortgage loans | 4,641 | 37 | 3.19 | % | 3,891 | 32 | 3.32 | % | 4,364 | 35 | 3.26 | % | |||||||||||||||||||||
Securities-based loans and other | 3,337 | 34 | 3.97 | % | 3,102 | 36 | 4.58 | % | 3,261 | 36 | 4.35 | % | |||||||||||||||||||||
Loans held for sale | 161 | 1 | 4.06 | % | 186 | 3 | 5.39 | % | 155 | 2 | 4.33 | % | |||||||||||||||||||||
Total loans, net | 21,286 | 206 | 3.85 | % | 19,955 | 214 | 4.27 | % | 20,918 | 216 | 4.12 | % | |||||||||||||||||||||
Federal Home Loan Bank stock, Federal Reserve Bank stock and other | 215 | 2 | 3.00 | % | 169 | 2 | 3.97 | % | 198 | 2 | 3.38 | % | |||||||||||||||||||||
Total interest-earning banking assets | 25,791 | 231 | 3.56 | % | 24,145 | 239 | 3.94 | % | 25,373 | 243 | 3.81 | % | |||||||||||||||||||||
Total interest-bearing banking liabilities | 23,493 | 21 | 0.36 | % | 22,085 | 42 | 0.75 | % | 23,087 | 33 | 0.56 | % | |||||||||||||||||||||
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income | $ | 2,298 | $ | 210 | $ | 2,060 | $ | 197 | $ | 2,286 | $ | 210 | |||||||||||||||||||||
Net interest margin (net yield on interest-earning banking assets) | 3.23 | % | 3.25 | % | 3.30 | % | |||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
13
RAYMOND JAMES FINANCIAL, INC.
1st Quarter Fiscal 2020
Reconciliation of GAAP measures to non-GAAP financial measures (Unaudited)
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 certain of these non-GAAP financial measures provides useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a more meaningful comparison of current- and prior-period results. 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. In the following table, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. 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 table provides a reconciliation of GAAP measures to non-GAAP financial measures for those periods which include non-GAAP adjustments.
Three months ended | ||||||||
$ in millions, except per share amounts | December 31, 2018 | September 30, 2019 | ||||||
Net income | $ | 249 | $ | 265 | ||||
Non-GAAP adjustments: | ||||||||
Acquisition and disposition-related expenses (3) | 15 | — | ||||||
Goodwill impairment (5) | — | 19 | ||||||
Pre-tax impact of non-GAAP adjustments | 15 | 19 | ||||||
Tax effect of non-GAAP adjustments | — | — | ||||||
Total non-GAAP adjustments, net of tax | 15 | 19 | ||||||
Adjusted net income | $ | 264 | $ | 284 | ||||
Pre-tax income | $ | 332 | $ | 354 | ||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 15 | 19 | ||||||
Adjusted pre-tax income | $ | 347 | $ | 373 | ||||
Pre-tax margin (9) | 17.2 | % | 17.5 | % | ||||
Adjusted pre-tax margin (9) | 18.0 | % | 18.4 | % | ||||
Earnings per common share (2) | ||||||||
Basic | $ | 1.73 | $ | 1.90 | ||||
Adjusted basic | $ | 1.83 | $ | 2.04 | ||||
Diluted | $ | 1.69 | $ | 1.86 | ||||
Adjusted diluted | $ | 1.79 | $ | 2.00 | ||||
Please refer to the footnotes at the end of this press release for additional information.
14
RAYMOND JAMES FINANCIAL, INC.
1st Quarter Fiscal 2020
Book value per share | As of | |||||||||||
$ in millions, except per share amounts | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,842 | $ | 6,143 | $ | 6,581 | ||||||
Less non-GAAP adjustments: | ||||||||||||
Goodwill and identifiable intangible assets, net | 609 | 633 | 611 | |||||||||
Deferred tax liabilities, net | (31 | ) | (34 | ) | (28 | ) | ||||||
Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,264 | $ | 5,544 | $ | 5,998 | ||||||
Common shares outstanding | 138.9 | 140.6 | 137.8 | |||||||||
Book value per share (6) | $ | 49.26 | $ | 43.69 | $ | 47.76 | ||||||
Tangible book value per share (6) | $ | 45.10 | $ | 39.43 | $ | 43.53 | ||||||
Return on equity | Three months ended | |||||||||||
$ in millions | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||
Average equity (16) | $ | 6,712 | $ | 6,256 | $ | 6,542 | ||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||
Acquisition and disposition-related expenses (3) | NA | 7 | — | |||||||||
Goodwill impairment (5) | NA | — | 9 | |||||||||
Adjusted average equity (16) | NA | $ | 6,263 | $ | 6,551 | |||||||
Average equity (16) | $ | 6,712 | $ | 6,256 | $ | 6,542 | ||||||
Less: | ||||||||||||
Average goodwill and identifiable intangible assets, net | 610 | 636 | 623 | |||||||||
Average deferred tax liabilities, net | (30 | ) | (33 | ) | (27 | ) | ||||||
Average tangible common equity (16) | $ | 6,132 | $ | 5,653 | $ | 5,946 | ||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||
Acquisition and disposition-related expenses (3) | NA | 7 | — | |||||||||
Goodwill impairment (5) | NA | — | 9 | |||||||||
Adjusted average tangible common equity (16) | NA | $ | 5,660 | $ | 5,955 | |||||||
Return on equity (8) | 16.0 | % | 15.9 | % | 16.2 | % | ||||||
Adjusted return on equity (8) | NA | 16.9 | % | 17.3 | % | |||||||
Return on tangible common equity (8) | 17.5 | % | 17.6 | % | 17.8 | % | ||||||
Adjusted return on tangible common equity (8) | NA | 18.7 | % | 19.1 | % | |||||||
Please refer to the footnotes at the end of this press release for additional information.
15
RAYMOND JAMES FINANCIAL, INC.
1st Quarter Fiscal 2020
Footnotes
1. | These are non-GAAP measures. See the schedules on the previous pages of this document for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures and for more information on these measures. There were no non-GAAP adjustments to earnings for the three months ended December 31, 2019; therefore, percent changes for earnings-related measures are calculated based on GAAP results for the three months ended December 31, 2019 as compared to non-GAAP results for the three months ended September 30, 2019 and December 31, 2018. |
2. | 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 or, in the case of adjusted earnings per share, computed by dividing adjusted 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. |
3. | The three months ended December 31, 2018 included a loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of European equities. |
4. | 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. |
5. | The three months ended September 30, 2019 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business. |
6. | 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. |
7. | Estimated. |
8. | 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. Adjusted return on equity is computed by dividing annualized adjusted net income by adjusted average equity for each respective period, or in the case of adjusted return on tangible common equity, computed by dividing annualized adjusted net income by adjusted average tangible common equity for each respective period. |
9. | Computed by dividing pre-tax income by net revenues for each respective period or, in the case of adjusted pre-tax margin, computed by dividing adjusted pre-tax income by net revenues for each respective period. |
10. | 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. | Money market funds were discontinued as a sweep option during the third fiscal quarter of 2019. Balances in those funds were converted to RJBDP or reinvested by the client. |
13. | Computed by dividing 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 balance at third-party banks. |
14. | 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. |
15. | The average yield is presented on a tax-equivalent basis for each respective period. |
16. | 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. Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period. |
16
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
EARNINGS RELEASE FINANCIAL SUPPLEMENT
FIRST QUARTER
FISCAL YEAR 2020 RESULTS
_______________________________________________________________________________________________________
RAYMOND JAMES FINANCIAL, INC.
Consolidated Statements of Income (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
in millions, except per share amounts | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 865 | $ | 783 | $ | 879 | $ | 924 | $ | 955 | 10 | % | 3 | % | ||||||||||||
Brokerage revenues: | ||||||||||||||||||||||||||
Securities commissions | 388 | 349 | 358 | 355 | 363 | (6 | )% | 2 | % | |||||||||||||||||
Principal transactions | 76 | 93 | 93 | 95 | 97 | 28 | % | 2 | % | |||||||||||||||||
Total brokerage revenues | 464 | 442 | 451 | 450 | 460 | (1 | )% | 2 | % | |||||||||||||||||
Account and service fees | 185 | 191 | 183 | 179 | 178 | (4 | )% | (1 | )% | |||||||||||||||||
Investment banking | 137 | 163 | 139 | 157 | 141 | 3 | % | (10 | )% | |||||||||||||||||
Interest income | 316 | 324 | 321 | 320 | 297 | (6 | )% | (7 | )% | |||||||||||||||||
Other | 37 | 31 | 27 | 55 | 29 | (22 | )% | (47 | )% | |||||||||||||||||
Total revenues | 2,004 | 1,934 | 2,000 | 2,085 | 2,060 | 3 | % | (1 | )% | |||||||||||||||||
Interest expense | (73 | ) | (75 | ) | (73 | ) | (62 | ) | (51 | ) | (30 | )% | (18 | )% | ||||||||||||
Net revenues | 1,931 | 1,859 | 1,927 | 2,023 | 2,009 | 4 | % | (1 | )% | |||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||
Compensation, commissions and benefits | 1,265 | 1,225 | 1,277 | 1,320 | 1,351 | 7 | % | 2 | % | |||||||||||||||||
Non-compensation expenses: | ||||||||||||||||||||||||||
Communications and information processing | 92 | 94 | 92 | 95 | 94 | 2 | % | (1 | )% | |||||||||||||||||
Occupancy and equipment | 51 | 53 | 55 | 59 | 57 | 12 | % | (3 | )% | |||||||||||||||||
Business development | 43 | 41 | 57 | 53 | 44 | 2 | % | (17 | )% | |||||||||||||||||
Investment sub-advisory fees | 24 | 22 | 24 | 24 | 26 | 8 | % | 8 | % | |||||||||||||||||
Professional fees | 22 | 17 | 22 | 24 | 21 | (5 | )% | (13 | )% | |||||||||||||||||
Bank loan loss provision/(benefit) | 16 | 5 | (5 | ) | 6 | (2 | ) | NM | NM | |||||||||||||||||
Acquisition and disposition-related expenses (1) | 15 | — | — | — | — | (100 | )% | — | ||||||||||||||||||
Other (2) (3) | 71 | 55 | 63 | 88 | 59 | (17 | )% | (33 | )% | |||||||||||||||||
Total non-compensation expenses | 334 | 287 | 308 | 349 | 299 | (10 | )% | (14 | )% | |||||||||||||||||
Total non-interest expenses | 1,599 | 1,512 | 1,585 | 1,669 | 1,650 | 3 | % | (1 | )% | |||||||||||||||||
Pre-tax income | 332 | 347 | 342 | 354 | 359 | 8 | % | 1 | % | |||||||||||||||||
Provision for income taxes | 83 | 86 | 83 | 89 | 91 | 10 | % | 2 | % | |||||||||||||||||
Net income | $ | 249 | $ | 261 | $ | 259 | $ | 265 | $ | 268 | 8 | % | 1 | % | ||||||||||||
Earnings per common share – basic (4) | $ | 1.73 | $ | 1.85 | $ | 1.84 | $ | 1.90 | $ | 1.93 | 12 | % | 2 | % | ||||||||||||
Earnings per common share – diluted (4) | $ | 1.69 | $ | 1.81 | $ | 1.80 | $ | 1.86 | $ | 1.89 | 12 | % | 2 | % | ||||||||||||
Weighted-average common shares outstanding – basic | 144.2 | 140.8 | 140.4 | 138.6 | 138.3 | (4 | )% | — | ||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 147.3 | 143.9 | 143.6 | 141.8 | 141.5 | (4 | )% | — | ||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
2
RAYMOND JAMES FINANCIAL, INC.
Selected Key Metrics (Unaudited)
As of | % change from | |||||||||||||||||||||||||
Total company ($ in millions, except per share amounts) | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Total assets | $ | 38,544 | $ | 38,176 | $ | 38,677 | $ | 38,830 | $ | 40,154 | 4 | % | 3 | % | ||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,143 | $ | 6,366 | $ | 6,502 | $ | 6,581 | $ | 6,842 | 11 | % | 4 | % | ||||||||||||
Book value per share (5) | $ | 43.69 | $ | 45.34 | $ | 46.54 | $ | 47.76 | $ | 49.26 | 13 | % | 3 | % | ||||||||||||
Tangible book value per share (5) (6) | $ | 39.43 | $ | 41.10 | $ | 42.18 | $ | 43.53 | $ | 45.10 | 14 | % | 4 | % | ||||||||||||
Capital ratios: | ||||||||||||||||||||||||||
Tier 1 capital | 23.6 | % | 24.3 | % | 24.2 | % | 24.8 | % | 24.8 | % | (7) | |||||||||||||||
Total capital | 24.7 | % | 25.3 | % | 25.2 | % | 25.8 | % | 25.7 | % | (7) | |||||||||||||||
Tier 1 leverage | 14.6 | % | 15.1 | % | 15.7 | % | 15.7 | % | 15.8 | % | (7) | |||||||||||||||
Three months ended | % change from | |||||||||||||||||||||||||
December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||||||||||
Adjusted pre-tax income (6) | $ | 347 | NA | NA | $ | 373 | NA | 3 | % | (4 | )% | |||||||||||||||
Adjusted net income (6) | $ | 264 | NA | NA | $ | 284 | NA | 2 | % | (6 | )% | |||||||||||||||
Adjusted earnings per common share - basic (4) (6) | $ | 1.83 | NA | NA | $ | 2.04 | NA | 5 | % | (5 | )% | |||||||||||||||
Adjusted earnings per common share - diluted (4) (6) | $ | 1.79 | NA | NA | $ | 2.00 | NA | 6 | % | (6 | )% | |||||||||||||||
Return on equity (8) | 15.9 | % | 16.7 | % | 16.1 | % | 16.2 | % | 16.0 | % | ||||||||||||||||
Adjusted return on equity (6) (8) | 16.9 | % | NA | NA | 17.3 | % | NA | |||||||||||||||||||
Return on tangible common equity (6) (8) | 17.6 | % | 18.5 | % | 17.8 | % | 17.8 | % | 17.5 | % | ||||||||||||||||
Adjusted return on tangible common equity (6) (8) | 18.7 | % | NA | NA | 19.1 | % | NA | |||||||||||||||||||
Pre-tax margin (9) | 17.2 | % | 18.7 | % | 17.7 | % | 17.5 | % | 17.9 | % | ||||||||||||||||
Adjusted pre-tax margin (6) (9) | 18.0 | % | NA | NA | 18.4 | % | NA | |||||||||||||||||||
Total compensation ratio (10) | 65.5 | % | 65.9 | % | 66.3 | % | 65.2 | % | 67.2 | % | ||||||||||||||||
Effective tax rate | 25.2 | % | 25.4 | % | 24.4 | % | 25.1 | % | 25.3 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
3
RAYMOND JAMES FINANCIAL, INC.
Selected Key Metrics (Unaudited)
As of | % change from | |||||||||||||||||||||||||
December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | ||||||||||||||||||||
Client asset metrics ($ in billions): | ||||||||||||||||||||||||||
Client assets under administration | $ | 725.4 | $ | 796.0 | $ | 824.2 | $ | 838.3 | $ | 896.0 | 24 | % | 7 | % | ||||||||||||
Private Client Group assets under administration | $ | 690.7 | $ | 760.0 | $ | 787.4 | $ | 798.4 | $ | 855.2 | 24 | % | 7 | % | ||||||||||||
Private Client Group assets in fee-based accounts | $ | 338.8 | $ | 378.4 | $ | 398.0 | $ | 409.1 | $ | 444.2 | 31 | % | 9 | % | ||||||||||||
Financial assets under management | $ | 126.5 | $ | 138.5 | $ | 143.1 | $ | 143.1 | $ | 151.7 | 20 | % | 6 | % | ||||||||||||
Clients' domestic cash sweep balances ($ in millions): | ||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (11) | ||||||||||||||||||||||||||
Raymond James Bank | $ | 21,138 | $ | 21,023 | $ | 21,600 | $ | 21,649 | $ | 21,891 | 4 | % | 1 | % | ||||||||||||
Third-party banks | 18,320 | 14,343 | 14,425 | 14,043 | 15,061 | (18 | )% | 7 | % | |||||||||||||||||
Subtotal RJBDP | 39,458 | 35,366 | 36,025 | 35,692 | 36,952 | (6 | )% | 4 | % | |||||||||||||||||
Money market funds (12) | 4,436 | 4,001 | — | — | — | (100 | )% | — | ||||||||||||||||||
Client Interest Program | 2,935 | 2,349 | 2,130 | 2,022 | 2,528 | (14 | )% | 25 | % | |||||||||||||||||
Total clients’ domestic cash sweep balances | $ | 46,829 | $ | 41,716 | $ | 38,155 | $ | 37,714 | $ | 39,480 | (16 | )% | 5 | % | ||||||||||||
Average yield on RJBDP - third-party banks (13) | 1.74 | % | 2.00 | % | 1.95 | % | 1.83 | % | 1.64 | % | (6 | )% | (10 | )% | ||||||||||||
Private Client Group financial advisors: | ||||||||||||||||||||||||||
Employees | 3,166 | 3,192 | 3,228 | 3,301 | 3,331 | 5 | % | 1 | % | |||||||||||||||||
Independent contractors | 4,649 | 4,670 | 4,676 | 4,710 | 4,729 | 2 | % | — | ||||||||||||||||||
Total advisors | 7,815 | 7,862 | 7,904 | 8,011 | 8,060 | 3 | % | 1 | % | |||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
4
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Private Client Group (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 707 | $ | 638 | $ | 718 | $ | 757 | $ | 782 | 11 | % | 3 | % | ||||||||||||
Brokerage revenues: | ||||||||||||||||||||||||||
Mutual and other fund products | 157 | 145 | 147 | 150 | 144 | (8 | )% | (4 | )% | |||||||||||||||||
Insurance and annuity products | 104 | 99 | 105 | 104 | 101 | (3 | )% | (3 | )% | |||||||||||||||||
Equities, ETFs, and fixed income products | 103 | 94 | 94 | 87 | 102 | (1 | )% | 17 | % | |||||||||||||||||
Total brokerage revenues | 364 | 338 | 346 | 341 | 347 | (5 | )% | 2 | % | |||||||||||||||||
Account and service fees: | ||||||||||||||||||||||||||
Mutual fund and annuity service fees | 83 | 82 | 85 | 84 | 90 | 8 | % | 7 | % | |||||||||||||||||
RJBDP fees: (11) | ||||||||||||||||||||||||||
Third-party banks | 68 | 80 | 67 | 65 | 58 | (15 | )% | (11 | )% | |||||||||||||||||
Raymond James Bank | 41 | 42 | 44 | 46 | 47 | 15 | % | 2 | % | |||||||||||||||||
Client account and other fees | 33 | 27 | 32 | 30 | 29 | (12 | )% | (3 | )% | |||||||||||||||||
Total account and service fees | 225 | 231 | 228 | 225 | 224 | — | — | |||||||||||||||||||
Investment banking | 7 | 8 | 10 | 7 | 11 | 57 | % | 57 | % | |||||||||||||||||
Interest income | 56 | 58 | 56 | 55 | 49 | (13 | )% | (11 | )% | |||||||||||||||||
All other | 7 | 9 | 3 | 7 | 9 | 29 | % | 29 | % | |||||||||||||||||
Total revenues | 1,366 | 1,282 | 1,361 | 1,392 | 1,422 | 4 | % | 2 | % | |||||||||||||||||
Interest expense | (10 | ) | (11 | ) | (10 | ) | (11 | ) | (8 | ) | (20 | )% | (27 | )% | ||||||||||||
Net revenues | 1,356 | 1,271 | 1,351 | 1,381 | 1,414 | 4 | % | 2 | % | |||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||
Financial advisor compensation and benefits | 803 | 750 | 805 | 832 | 857 | 7 | % | 3 | % | |||||||||||||||||
Administrative compensation and benefits | 229 | 234 | 237 | 233 | 247 | 8 | % | 6 | % | |||||||||||||||||
Total compensation, commissions and benefits | 1,032 | 984 | 1,042 | 1,065 | 1,104 | 7 | % | 4 | % | |||||||||||||||||
Non-compensation expenses | 160 | 155 | 169 | 173 | 157 | (2 | )% | (9 | )% | |||||||||||||||||
Total non-interest expenses | 1,192 | 1,139 | 1,211 | 1,238 | 1,261 | 6 | % | 2 | % | |||||||||||||||||
Pre-tax income | $ | 164 | $ | 132 | $ | 140 | $ | 143 | $ | 153 | (7 | )% | 7 | % | ||||||||||||
Pre-tax margin | 12.1 | % | 10.4 | % | 10.4 | % | 10.4 | % | 10.8 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
5
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Capital Markets (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Brokerage revenues: | ||||||||||||||||||||||||||
Fixed income | $ | 57 | $ | 71 | $ | 73 | $ | 82 | $ | 81 | 42 | % | (1 | )% | ||||||||||||
Equity | 42 | 32 | 31 | 26 | 34 | (19 | )% | 31 | % | |||||||||||||||||
Total brokerage revenues | 99 | 103 | 104 | 108 | 115 | 16 | % | 6 | % | |||||||||||||||||
Investment banking: | ||||||||||||||||||||||||||
Merger & acquisition and advisory | 85 | 121 | 80 | 93 | 60 | (29 | )% | (35 | )% | |||||||||||||||||
Equity underwriting | 27 | 18 | 27 | 28 | 39 | 44 | % | 39 | % | |||||||||||||||||
Debt underwriting | 17 | 17 | 22 | 29 | 31 | 82 | % | 7 | % | |||||||||||||||||
Total investment banking | 129 | 156 | 129 | 150 | 130 | 1 | % | (13 | )% | |||||||||||||||||
Interest income | 10 | 9 | 10 | 9 | 8 | (20 | )% | (11 | )% | |||||||||||||||||
Tax credit fund revenues | 19 | 14 | 16 | 37 | 18 | (5 | )% | (51 | )% | |||||||||||||||||
All other | 4 | 3 | 2 | 6 | 3 | (25 | )% | (50 | )% | |||||||||||||||||
Total revenues | 261 | 285 | 261 | 310 | 274 | 5 | % | (12 | )% | |||||||||||||||||
Interest expense | (8 | ) | (8 | ) | (10 | ) | (8 | ) | (6 | ) | (25 | )% | (25 | )% | ||||||||||||
Net revenues | 253 | 277 | 251 | 302 | 268 | 6 | % | (11 | )% | |||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||
Compensation, commissions and benefits | 158 | 168 | 160 | 179 | 166 | 5 | % | (7 | )% | |||||||||||||||||
Non-compensation expenses (1) (2) (3) | 83 | 68 | 67 | 90 | 73 | (12 | )% | (19 | )% | |||||||||||||||||
Total non-interest expenses | 241 | 236 | 227 | 269 | 239 | (1 | )% | (11 | )% | |||||||||||||||||
Pre-tax income | $ | 12 | $ | 41 | $ | 24 | $ | 33 | $ | 29 | 142 | % | (12 | )% | ||||||||||||
Pre-tax margin | 4.7 | % | 14.8 | % | 9.6 | % | 10.9 | % | 10.8 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
6
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Asset Management (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Asset management and related administrative fees | ||||||||||||||||||||||||||
Managed programs | $ | 117 | $ | 109 | $ | 120 | $ | 121 | $ | 125 | 7 | % | 3 | % | ||||||||||||
Administration and other | 44 | 40 | 45 | 49 | 51 | 16 | % | 4 | % | |||||||||||||||||
Total asset management and related administrative fees | 161 | 149 | 165 | 170 | 176 | 9 | % | 4 | % | |||||||||||||||||
Account and service fees | 9 | 10 | 8 | 4 | 5 | (44 | )% | 25 | % | |||||||||||||||||
All other | 4 | 3 | 4 | 4 | 3 | (25 | )% | (25 | )% | |||||||||||||||||
Net revenues | 174 | 162 | 177 | 178 | 184 | 6 | % | 3 | % | |||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||
Compensation, commissions and benefits | 43 | 45 | 47 | 44 | 45 | 5 | % | 2 | % | |||||||||||||||||
Non-compensation expenses (2) | 67 | 62 | 65 | 65 | 66 | (1 | )% | 2 | % | |||||||||||||||||
Total non-interest expenses | 110 | 107 | 112 | 109 | 111 | 1 | % | 2 | % | |||||||||||||||||
Pre-tax income | $ | 64 | $ | 55 | $ | 65 | $ | 69 | $ | 73 | 14 | % | 6 | % | ||||||||||||
Pre-tax margin | 36.8 | % | 34.0 | % | 36.7 | % | 38.8 | % | 39.7 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
7
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Raymond James Bank (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Interest income | $ | 239 | $ | 247 | $ | 246 | $ | 243 | $ | 231 | (3 | )% | (5 | )% | ||||||||||||
Interest expense | (42 | ) | (42 | ) | (38 | ) | (33 | ) | (21 | ) | (50 | )% | (36 | )% | ||||||||||||
Net interest income | 197 | 205 | 208 | 210 | 210 | 7 | % | — | ||||||||||||||||||
All other | 6 | 7 | 7 | 6 | 6 | — | — | |||||||||||||||||||
Net revenues | 203 | 212 | 215 | 216 | 216 | 6 | % | — | ||||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||
Compensation and benefits | 11 | 12 | 13 | 13 | 12 | 9 | % | (8 | )% | |||||||||||||||||
Non-compensation expenses: | ||||||||||||||||||||||||||
Loan loss provision/(benefit) | 16 | 5 | (5 | ) | 6 | (2 | ) | NM | NM | |||||||||||||||||
RJBDP fees to Private Client Group (11) | 41 | 42 | 44 | 46 | 47 | 15 | % | 2 | % | |||||||||||||||||
All other | 25 | 17 | 25 | 20 | 24 | (4 | )% | 20 | % | |||||||||||||||||
Total non-compensation expenses | 82 | 64 | 64 | 72 | 69 | (16 | )% | (4 | )% | |||||||||||||||||
Total non-interest expenses | 93 | 76 | 77 | 85 | 81 | (13 | )% | (5 | )% | |||||||||||||||||
Pre-tax income | $ | 110 | $ | 136 | $ | 138 | $ | 131 | $ | 135 | 23 | % | 3 | % | ||||||||||||
Pre-tax margin | 54.2 | % | 64.2 | % | 64.2 | % | 60.6 | % | 62.5 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
8
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Other (14) (Unaudited)
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Interest income | $ | 16 | $ | 14 | $ | 12 | $ | 21 | $ | 12 | (25 | )% | (43 | )% | ||||||||||||
Gains/(losses) on private equity investments | 4 | 2 | 2 | 6 | (2 | ) | NM | NM | ||||||||||||||||||
All other | 1 | 3 | 1 | (2 | ) | 2 | 100 | % | NM | |||||||||||||||||
Total revenues | 21 | 19 | 15 | 25 | 12 | (43 | )% | (52 | )% | |||||||||||||||||
Interest expense | (19 | ) | (19 | ) | (19 | ) | (18 | ) | (20 | ) | 5 | % | 11 | % | ||||||||||||
Net revenues | 2 | — | (4 | ) | 7 | (8 | ) | NM | NM | |||||||||||||||||
Non-interest expenses (2) | 20 | 17 | 21 | 29 | 23 | 15 | % | (21 | )% | |||||||||||||||||
Pre-tax loss | $ | (18 | ) | $ | (17 | ) | $ | (25 | ) | $ | (22 | ) | $ | (31 | ) | 72 | % | 41 | % | |||||||
Please refer to the footnotes at the end of this supplement for additional information.
9
RAYMOND JAMES FINANCIAL, INC.
Raymond James Bank Selected Key Metrics (Unaudited)
As of | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Total assets | $ | 25,140 | $ | 24,925 | $ | 25,668 | $ | 25,705 | $ | 26,469 | 5 | % | 3 | % | ||||||||||||
Total equity | $ | 2,072 | $ | 2,136 | $ | 2,198 | $ | 2,248 | $ | 2,300 | 11 | % | 2 | % | ||||||||||||
Bank loans, net | $ | 19,887 | $ | 20,135 | $ | 20,691 | $ | 20,891 | $ | 21,296 | 7 | % | 2 | % | ||||||||||||
Allowance for loan losses | $ | 219 | $ | 218 | $ | 215 | $ | 218 | $ | 216 | (1 | )% | (1 | )% | ||||||||||||
Allowance for loan losses as a % of loans held for investment | 1.10 | % | 1.08 | % | 1.03 | % | 1.04 | % | 1.01 | % | ||||||||||||||||
Total nonperforming assets | $ | 52 | $ | 61 | $ | 56 | $ | 46 | $ | 41 | (21 | )% | (11 | )% | ||||||||||||
Nonperforming assets as a % of total assets | 0.21 | % | 0.25 | % | 0.22 | % | 0.18 | % | 0.16 | % | ||||||||||||||||
Total criticized loans | $ | 227 | $ | 246 | $ | 197 | $ | 285 | $ | 349 | 54 | % | 22 | % | ||||||||||||
Criticized loans as a % of loans held for investment | 1.13 | % | 1.21 | % | 0.95 | % | 1.36 | % | 1.64 | % | ||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||||
Tier 1 capital | 12.7 | % | 12.8 | % | 12.8 | % | 13.2 | % | 13.3 | % | (7) | |||||||||||||||
Total capital | 13.9 | % | 14.1 | % | 14.1 | % | 14.5 | % | 14.5 | % | (7) | |||||||||||||||
Tier 1 leverage | 8.5 | % | 8.6 | % | 8.8 | % | 8.8 | % | 8.8 | % | (7) | |||||||||||||||
Three months ended | % change from | |||||||||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | September 30, 2019 | |||||||||||||||||||
Bank loan loss provision/(benefit) | $ | 16 | $ | 5 | $ | (5 | ) | $ | 6 | $ | (2 | ) | NM | NM | ||||||||||||
Net charge-offs/(recoveries) | $ | (1 | ) | $ | 6 | $ | (1 | ) | $ | 2 | $ | — | 100 | % | (100 | )% | ||||||||||
Net interest margin (net yield on interest-earning banking assets) | 3.25 | % | 3.35 | % | 3.37 | % | 3.30 | % | 3.23 | % | ||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
10
RAYMOND JAMES FINANCIAL, INC.
Reconciliation of GAAP measures to non-GAAP financial measures (Unaudited)
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 certain of these non-GAAP financial measures provides useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a more meaningful comparison of current- and prior-period results. 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. In the following table, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. 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 table provides a reconciliation of GAAP measures to non-GAAP financial measures for those periods which include non-GAAP adjustments.
Three months ended | ||||||||
$ in millions, except per share amounts | December 31, 2018 | September 30, 2019 | ||||||
Net income | $ | 249 | $ | 265 | ||||
Non-GAAP adjustments: | ||||||||
Acquisition and disposition-related expenses (1) | 15 | — | ||||||
Goodwill impairment (3) | — | 19 | ||||||
Pre-tax impact of non-GAAP adjustments | 15 | 19 | ||||||
Tax effect of non-GAAP adjustments | — | — | ||||||
Total non-GAAP adjustments, net of tax | 15 | 19 | ||||||
Adjusted net income | $ | 264 | $ | 284 | ||||
Pre-tax income | $ | 332 | $ | 354 | ||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 15 | 19 | ||||||
Adjusted pre-tax income | $ | 347 | $ | 373 | ||||
Pre-tax margin (9) | 17.2 | % | 17.5 | % | ||||
Adjusted pre-tax margin (9) | 18.0 | % | 18.4 | % | ||||
Earnings per common share (4) | ||||||||
Basic | $ | 1.73 | $ | 1.90 | ||||
Adjusted basic | $ | 1.83 | $ | 2.04 | ||||
Diluted | $ | 1.69 | $ | 1.86 | ||||
Adjusted diluted | $ | 1.79 | $ | 2.00 | ||||
Please refer to the footnotes at the end of this supplement for additional information.
11
RAYMOND JAMES FINANCIAL, INC.
Book value per share | As of | |||||||||||||||||||
$ in millions, except per share amounts | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | |||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,143 | $ | 6,366 | $ | 6,502 | $ | 6,581 | $ | 6,842 | ||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 633 | 630 | 635 | 611 | 609 | |||||||||||||||
Deferred tax liabilities, net | (34 | ) | (35 | ) | (26 | ) | (28 | ) | (31 | ) | ||||||||||
Tangible common equity attributable to Raymond James Financial, Inc. | $ | 5,544 | $ | 5,771 | $ | 5,893 | $ | 5,998 | $ | 6,264 | ||||||||||
Common shares outstanding | 140.6 | 140.4 | 139.7 | 137.8 | 138.9 | |||||||||||||||
Book value per share (5) | $ | 43.69 | $ | 45.34 | $ | 46.54 | $ | 47.76 | $ | 49.26 | ||||||||||
Tangible book value per share (5) | $ | 39.43 | $ | 41.10 | $ | 42.18 | $ | 43.53 | $ | 45.10 | ||||||||||
Return on equity | Three months ended | |||||||||||||||||||
$ in millions | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | |||||||||||||||
Average equity (15) | $ | 6,256 | $ | 6,255 | $ | 6,434 | $ | 6,542 | $ | 6,712 | ||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (1) | 7 | NA | NA | — | NA | |||||||||||||||
Goodwill impairment (3) | — | NA | NA | 9 | NA | |||||||||||||||
Adjusted average equity (15) | $ | 6,263 | NA | NA | $ | 6,551 | NA | |||||||||||||
Average equity (15) | $ | 6,256 | $ | 6,255 | $ | 6,434 | $ | 6,542 | $ | 6,712 | ||||||||||
Less: | ||||||||||||||||||||
Average goodwill and identifiable intangible assets, net | 636 | 632 | 633 | 623 | 610 | |||||||||||||||
Average deferred tax liabilities, net | (33 | ) | (35 | ) | (31 | ) | (27 | ) | (30 | ) | ||||||||||
Average tangible common equity (15) | $ | 5,653 | $ | 5,658 | $ | 5,832 | $ | 5,946 | $ | 6,132 | ||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (1) | 7 | NA | NA | — | NA | |||||||||||||||
Goodwill impairment (3) | — | NA | NA | 9 | NA | |||||||||||||||
Adjusted average tangible common equity (15) | $ | 5,660 | NA | NA | $ | 5,955 | NA | |||||||||||||
Return on equity (8) | 15.9 | % | 16.7 | % | 16.1 | % | 16.2 | % | 16.0 | % | ||||||||||
Adjusted return on equity (8) | 16.9 | % | NA | NA | 17.3 | % | NA | |||||||||||||
Return on tangible common equity (8) | 17.6 | % | 18.5 | % | 17.8 | % | 17.8 | % | 17.5 | % | ||||||||||
Adjusted return on tangible common equity (8) | 18.7 | % | NA | NA | 19.1 | % | NA | |||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
12
RAYMOND JAMES FINANCIAL, INC.
Footnotes
1. | The three months ended December 31, 2018 included a loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of European equities. |
2. | 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. |
3. | The three months ended September 30, 2019 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business. |
4. | 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 or, in the case of adjusted earnings per share, computed by dividing adjusted 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. |
5. | 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 measures. See the schedules on the previous pages of this document for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures and for more information on these measures. There were no non-GAAP adjustments to earnings for the three months ended December 31, 2019; therefore, percent changes for earnings-related measures are calculated based on GAAP results for the three months ended December 31, 2019 as compared to non-GAAP results for the three months ended September 30, 2019 and December 31, 2018. |
7. | Estimated. |
8. | 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. Adjusted return on equity is computed by dividing annualized adjusted net income by adjusted average equity for each respective period, or in the case of adjusted return on tangible common equity, computed by dividing annualized adjusted net income by adjusted average tangible common equity for each respective period. |
9. | Computed by dividing pre-tax income by net revenues for each respective period or, in the case of adjusted pre-tax margin, computed by dividing adjusted pre-tax income by net revenues for each respective period. |
10. | 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. | Money market funds were discontinued as a sweep option during the third fiscal quarter of 2019. Balances in those funds were converted to RJBDP or reinvested by the client. |
13. | Computed by dividing 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 balance at third-party banks. |
14. | 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. |
15. | 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. Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period. |
13
FISCAL 1Q20 RESULTS January 22, 2020
FISCAL 1Q20 OVERVIEW Paul Reilly Chairman & CEO, Raymond James Financial 2
FISCAL 1Q20 HIGHLIGHTS Compared to Compared to GAAP Results Adjusted* Results vs. vs. vs. vs. $ in millions, except per share amounts 1Q20 1Q19 4Q19 1Q19 4Q19 Net revenues $ 2,009 4% (1)% NA NA Net income RECORD $ 268 8% 1% 2% (6)% Earnings per common share - diluted RECORD $ 1.89 12% 2% 6% (6)% 1Q19 4Q19 1Q19 4Q19 Return on equity 16.0% 15.9% 16.2% 16.9% 17.3% Return on tangible common equity* 17.5% 17.6% 17.8% 18.7% 19.1% * These are non-GAAP measures. See the schedule in the Appendix of this presentation for a reconciliation of our non-GAAP measures to the 3 most directly comparable GAAP measures and for more information on these measures.
FISCAL 1Q20 KEY METRICS vs. vs. $ in billions 1Q20 1Q19 4Q19 Client assets under administration RECORD $ 896.0 24% 7% Private Client Group (PCG) assets under administration RECORD $ 855.2 24% 7% PCG assets in fee-based accounts RECORD $ 444.2 31% 9% Financial assets under management RECORD $ 151.7 20% 6% Total clients' domestic cash sweep balances $ 39.5 (16)% 5% PCG financial advisors RECORD 8,060 3% 1% Bank loans, net RECORD $ 21.3 7% 2% 4
PRIVATE CLIENT GROUP Net Revenues Pre-Tax Income $ in millions $ in millions 1,414 12.1% 1,381 10.8% 1,356 1,351 10.4% 10.4% 10.4% 1,271 164 143 153 132 140 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 4% Year-over-year change: (7)% Sequential change: 2% Pre-Tax Income Pre-Tax Margin Sequential change: 7% Number of Financial Advisors PCG Assets Under Administration $ in billions 8,060 8,011 855.2 7,904 787.4 798.4 7,815 7,862 760.0 690.7 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 245 Year-over-year change: 24% Sequential change: 49 Sequential change: 7% 5
CAPITAL MARKETS Net Revenues Pre-Tax Income $ in millions $ in millions 14.8% 302 9.6% 10.9% 10.8% 277 268 253 251 4.7% 41 33 24 29 12 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19* 2Q19 3Q19 4Q19* 1Q20 Year-over-year change: 6% Year-over-year change: 142% Sequential change: (11)% Pre-Tax Income Pre-Tax Margin Sequential change: (12)% Investment Banking Revenues Brokerage Revenues $ in millions $ in millions 156 150 115 129 129 130 99 103 104 108 17 29 17 18 26 34 22 28 31 32 31 27 27 42 39 121 93 71 73 82 81 85 80 60 57 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 M&A and Advisory Year-over-year change: 1% Year-over-year change: 16% Sequential change: (13)% Fixed Income Equity Sequential change: 6% Equity Underwriting Debt Underwriting * 1Q19 included a $15 million loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of 6 European equities. 4Q19 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business.
ASSET MANAGEMENT Net Revenues Pre-Tax Income $ in millions $ in millions 38.8% 39.7% 184 36.8% 34.0% 36.7% 174 177 178 162 69 73 64 65 55 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 6% Year-over-year change: 14% Sequential change: 3% Pre-Tax Income Pre-Tax Margin Sequential change: 6% Financial Assets Under Management $ in billions 151.7 143.1 143.1 138.5 126.5 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 20% Sequential change: 6% 7
RAYMOND JAMES BANK Net Revenues Pre-Tax Income $ in millions $ in millions 216 216 64.2% 64.2% 62.5% 212 215 60.6% 203 54.2% 136 138 131 135 110 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 6% Year-over-year change: 23% Sequential change: 0% Pre-Tax Income Pre-Tax Margin Sequential change: 3% Bank Loans, Net Nonperforming Assets $ in billions as % of Total Assets 21.3 20.7 20.9 20.1 0.25% 19.9 0.21% 0.22% 0.18% 0.16% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Year-over-year change: 7% Sequential change: 2% 8
FINANCIAL REVIEW Paul Shoukry Chief Financial Officer, Raymond James Financial 9
CONSOLIDATED NET REVENUES vs. vs. $ in millions 1Q20 1Q19 4Q19 Asset management and related administrative fees $ 955 10% 3% Brokerage revenues 460 (1)% 2% Account and service fees 178 (4)% (1)% Investment banking 141 3% (10)% Interest income 297 (6)% (7)% Other 29 (22)% (47)% Total revenues 2,060 3% (1)% Interest expense (51) (30)% (18)% Net revenues $ 2,009 4% (1)% 10
DOMESTIC CASH SWEEP BALANCES Clients' Domestic Cash Sweep Balances as a % of Domestic PCG Assets Under Administration (AUA) 7.2% A U ) A B G $ ( C s 5.8% P e c c i t n 5.1% 5.0% s a 4.9% l e a m B 46.8 o p D e f e 2.9 41.7 o w 39.5 % S 38.2 4.4 2.3 37.7 a h s 2.5 4.0 2.1 s a 2.0 a C s c e i 18.3 c t 14.4 14.0 15.1 s 14.3 n e a l a m o B D p ' e s e t n w e S i 21.1 21.0 21.6 21.6 21.9 l h C s a C 1Q19 2Q19 3Q19 4Q19 1Q20 RJBDP- RJBDP- Year-over-year change: (16)% Money Market Funds** Client Interest Program RJ Bank* Third-Party Banks* Sequential change: 5% * Raymond James Bank Deposit Program (RJBDP) is a multi-bank sweep program in which clients' cash deposits in their brokerage accounts 11 are swept into interest-bearing deposit accounts at Raymond James Bank and various third-party banks. ** Money market funds were discontinued as a sweep option during the third fiscal quarter of 2019. Balances in those funds were converted to RJBDP or reinvested by the client.
NET INTEREST INCOME & RJBDP FEES (THIRD-PARTY BANKS) Firmwide Net Interest Income RJBDP Fees (Third-Party Banks)* 329 323 311 315 304 s n 80 67 65 o 68 58 i l l i m n i $ 243 249 248 258 246 1Q19 2Q19 3Q19 4Q19 1Q20 Raymond James Bank Average Yield on RJBDP Net Interest Margin** (Third-Party Banks)*** 3.35% 3.37% 2.00% 3.30% 1.95% 1.83% 3.25% 3.23% 1.74% 1.64% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 * As reported in Account and Service Fees in the PCG segment. ** Raymond James Bank represents a significant portion, but not all, of the firmwide 12 Net Interest Income. RJ Bank Net Interest Margin represents the net yield on interest-earning banking assets. *** Computed by dividing 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 balance at third-party banks.
CONSOLIDATED EXPENSES Total Compensation Ratio vs. vs. $ in millions 1Q20 1Q19 4Q19 67.2% 65.5% 65.9% 66.3% Compensation, commissions and benefits $ 1,351 7% 2% 65.2% Non-compensation expenses: Communications and information processing 94 2% (1)% Occupancy and equipment 57 12% (3)% 1Q19 2Q19 3Q19 4Q19 1Q20 Business development 44 2% (17)% Investment sub-advisory fees 26 8% 8% Total Non-Compensation Expenses $ in millions Professional fees 21 (5)% (13)% 334 349 Bank loan loss provision/(benefit) (2) NM NM 308 287 299 Other 59 (17)%* (33)%* Total non-compensation expenses 299 (10)% (14)% Total non-interest expenses $ 1,650 3% (1)% 1Q19* 2Q19 3Q19 4Q19* 1Q20 * 1Q19 included a $15 million loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of 13 European equities. 4Q19 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business.
CONSOLIDATED PRE-TAX MARGIN 18.7% 18.4% 18.0% 17.9% 17.7% 17.5% 17.2% 1Q19* 2Q19 3Q19 4Q19* 1Q20 Pre-tax margin (GAAP) Pre-tax margin (Adjusted)** * 1Q19 included a $15 million loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of 14 European equities. 4Q19 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business. ** This is a non-GAAP measure. See the schedule in the Appendix of this presentation for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures and for more information on these measures.
CAPITAL MANAGEMENT Dividends Paid and Share Repurchases* $ in millions Share Repurchases* Dividends Paid 505 47 Total of ~$1 billion over the past 5 quarters 458 209 48 133 95 48 62** 48 161 85 47 51 1Q19 2Q19 3Q19 4Q19 1Q20 Number of Shares Repurchased* 6,053 603 1,044 2,127 126 (thousands) Average Share Price of Shares Repurchased $75.76 $78.19 $81.68 $75.75 $89.30 $739 million remains under current share repurchase authorization * Under the Board of Directors' share repurchase authorization. 15 ** Share repurchases in 1Q20 totaled $11 million.
OUTLOOK 16
APPENDIX 17
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) 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 certain of these non-GAAP financial measures provides useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a more meaningful comparison of current- and prior-period results. 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. In the following table, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. 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 table provides a reconciliation of GAAP measures to non-GAAP financial measures for those periods which include non-GAAP adjustments. continued on next slide Note: Please refer to the footnotes on slide 22 for additional information. 18
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Three months ended $ in millions, except per share amounts December 31, 2018 September 30, 2019 Net income $ 249 $ 265 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 15 — Goodwill impairment (2) — 19 Pre-tax impact of non-GAAP adjustments 15 19 Tax effect of non-GAAP adjustments — — Total non-GAAP adjustments, net of tax 15 19 Adjusted net income $ 264 $ 284 Pre-tax income $ 332 $ 354 Pre-tax impact of non-GAAP adjustments (as detailed above) 15 19 Adjusted pre-tax income $ 347 $ 373 Pre-tax margin (3) 17.2% 17.5% Adjusted pre-tax margin (3) 18.0% 18.4% Earnings per common share (4) Basic $ 1.73 $ 1.90 Adjusted basic $ 1.83 $ 2.04 Diluted $ 1.69 $ 1.86 Adjusted diluted $ 1.79 $ 2.00 continued on next slide Note: Please refer to the footnotes on slide 22 for additional information. 19
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Book value per share As of $ in millions, except per share amounts December 31, 2018 September 30, 2019 December 31, 2019 Total equity attributable to Raymond James Financial, Inc. $ 6,143 $ 6,581 $ 6,842 Less non-GAAP adjustments: Goodwill and identifiable intangible assets, net 633 611 609 Deferred tax liabilities, net (34) (28) (31) Tangible common equity attributable to Raymond James Financial, Inc. $ 5,544 $ 5,998 $ 6,264 Common shares outstanding 140.6 137.8 138.9 Book value per share (5) $ 43.69 $ 47.76 $ 49.26 Tangible book value per share (5) $ 39.43 $ 43.53 $ 45.10 continued on next slide Note: Please refer to the footnotes on slide 22 for additional information. 20
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Return on equity Three months ended $ in millions December 31, 2018 September 30, 2019 December 31, 2019 Average equity (6) $ 6,256 $ 6,542 $ 6,712 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) 7 — NA Goodwill impairment (2) — 9 NA Adjusted average equity (6) $ 6,263 $ 6,551 NA Average equity (6) $ 6,256 $ 6,542 $ 6,712 Less: Average goodwill and identifiable intangible assets, net 636 623 610 Average deferred tax liabilities, net (33) (27) (30) Average tangible common equity (6) $ 5,653 $ 5,946 $ 6,132 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) 7 — NA Goodwill impairment (2) — 9 NA Adjusted average tangible common equity (6) $ 5,660 $ 5,955 NA Return on equity (7) 15.9% 16.2% 16.0% Adjusted return on equity (7) 16.9% 17.3% NA Return on tangible common equity (7) 17.6% 17.8% 17.5% Adjusted return on tangible common equity (7) 18.7% 19.1% NA continued on next slide Note: Please refer to the footnotes on slide 22 for additional information. 21
FOOTNOTES 1. The three months ended December 31, 2018 included a loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of European equities. 2. The three months ended September 30, 2019 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business. 3. Computed by dividing pre-tax income by net revenues for each respective period or, in the case of adjusted pre-tax margin, computed by dividing adjusted pre-tax income by net revenues for each respective period. 4. 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 or, in the case of adjusted earnings per share, computed by dividing adjusted 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. 5. 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. 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. Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period. 7. 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. Adjusted return on equity is computed by dividing annualized adjusted net income by adjusted average equity for each respective period, or in the case of adjusted return on tangible common equity, computed by dividing annualized adjusted net income by adjusted average tangible common equity for each respective period. 22