Document
false0000720005 0000720005 2020-01-22 2020-01-22



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

January 22, 2020
Date of Report (date of earliest event reported)

RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)


Florida
1-9109
59-1517485
 
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
880 Carillon Parkway
St. Petersburg
Florida
33716
 
(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:

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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
Common Stock, $.01 par value
RJF
New York Stock Exchange

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.

99.1 Press release, dated January 22, 2020, issued by Raymond James Financial, Inc.
99.2 Financial Supplement First Quarter Fiscal Year 2020 of Raymond James Financial, Inc.
99.3 Earnings Presentation First Quarter Fiscal Year 2020 of Raymond James Financial, Inc.
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
 
 
 
 








rjflogo123119.gif

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
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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