8-K/A
RAYMOND JAMES FINANCIAL INC (RJF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
June 1, 2022
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 |
| Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock | RJF PrA | New York Stock Exchange |
| Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock | RJF PrB | 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.
☐
Introductory Note
On June 1, 2022, Raymond James Financial, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Report”) with the Securities and Exchange Commission (the “SEC”), to report, among other things, the closing on June 1, 2022 of its previously announced acquisition of TriState Capital Holdings, Inc. (“TriState Capital”), by means of the mergers of TriState Capital with certain wholly-owned subsidiaries of the Company (the “Acquisition”), pursuant to the Agreement and Plan of Merger, dated October 20, 2021, among the Company, TriState Capital and certain wholly-owned subsidiaries of the Company.
This Amendment No. 1 (“Form 8-K/A”) amends and supplements the Original Report to include the historical and pro forma financial information required by Items 9.01(a) and 9.01(b) of Form 8-K, which were excluded from the Original Report in reliance on the instructions to such items.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of TriState Capital required by this Item 9.01(a) are filed as Exhibits 99.1-99.2 to this Form 8-K/A and incorporated herein by reference.
(b) Pro Forma Financial Information
The pro forma financial information required by this Item 9.01(b) are filed as Exhibit 99.3 to this Form 8-K/A and incorporated herein by reference.
The unaudited pro forma condensed combined consolidated statement of financial condition as of June 30, 2022 of the Company and TriState Capital has not been presented as the Acquisition has been fully reflected in the unaudited condensed consolidated statement of financial condition included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.
The pro forma financial information included in this Form 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that the Company and TriState Capital would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the Company may achieve following the Acquisition. Except as described in this Form 8-K/A, all other information in the Original Report remains unchanged and is incorporated by reference herein.
(d) Exhibits
Exhibit No.
99.1 AuditedConsolidatedFinancialStatements and accompanying notes of TriState Capital Holdings, Inc. for the year ended December 31, 2021 and 2020, and for each of the three years in the period ended December 31, 2021 (incorporated by referenceto Part II., Item 8 of theAnnual Report on Form 10-K of TriState Capital Holdings, Inc. filed with the Securities and Exchange Commission on March 1, 2022).
99.2 Unaudited Condensed Consolidated Financial Statements and accompanyingnotes of TriState Capital Holdings, Inc. for the three months ended March 31, 2022 (incorporated by referenceto Part I., Item 1 of theQuarterly Report on Form 10-Q of TriState Capital Holdings, Inc. filed with the Securities and Exchange Commission on May 9, 2022).
99.3UnauditedProFormaCondensedCombinedStatementsof Incomeof the Company and TriState Capital Holdings, Inc. for the twelve month period corresponding with each respective entity’s most recent year end and for the nine month period ended June 30, 2022.
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: August 12, 2022 | By: | /s/ Paul M. Shoukry |
| Paul M. Shoukry | ||
| Chief Financial Officer and Treasurer |
Document
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use of our reports dated March 1, 2022, with respect to the consolidated financial statements of TriState Capital Holdings, Inc., and the effectiveness of internal control over financial reporting, included herein in Amendment No. 1 to Raymond James Financial, Inc.’s Current Report on Form 8-K, which is incorporated herein by reference in the registration statements (Nos. 333-103280, 333-157516, 333-179683, 333-209628, 333-230065, 333-236605, 333-261647) on Form S-8 and (No. 333-256043) on Form S-3ASR of Raymond James Financial, Inc.
/s/ KPMG LLP
Pittsburgh, Pennsylvania
August 12, 2022
Document
EXHIBIT 99.3
RAYMOND JAMES FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On June 1, 2022, Raymond James Financial, Inc (“Raymond James” or “RJF”) completed its acquisition of TriState Capital Holdings Inc. (“TriState Capital” or “TSC”), including its wholly owned subsidiaries, TriState Capital Bank and Chartwell Investment Partners, LLC (“Chartwell”), in a cash and stock merger transaction valued at $1.4 billion (the “Acquisition”). TriState Capital’s results of operations have been included in Raymond James’ results prospectively from the closing date of June 1, 2022. Refer to Note 3 of Raymond James’ June 30, 2022 Quarterly Report on Form 10-Q (“Form 10-Q”) for more information related to the Acquisition.
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X (“Article 11”).
The Unaudited Pro Forma Condensed Combined Statements of Income for the nine months ended June 30, 2022 and the year ended September 30, 2021 give effect to the Acquisition as if it were completed on October 1, 2020, the first day of Raymond James’ fiscal year 2021. Raymond James and TriState Capital had different fiscal years within 93 days (September 30 and December 31, respectively). As a result, the Unaudited Pro Forma Condensed Combined Statement of Income for the year ended September 30, 2021 combines the historical audited Consolidated Statement of Income of Raymond James Financial, Inc. for the year ended September 30, 2021 and the historical audited Consolidated Statement of Income of TriState Capital Holdings, Inc. for the year ended December 31, 2021. TriState Capital’s historical unaudited statement of income for the period ended June 30, 2022 represents the eight months preceding the Acquisition and was prepared by adding the unaudited results for the two months ended May 31, 2022 (which is the date immediately preceding the Acquisition), the quarterly Unaudited Condensed Consolidated Statement of Income for the three months ended March 31, 2022 and the quarterly Unaudited Condensed Consolidated Statement of Income for the three months ended December 31, 2021. As a result of the Acquisition, TriState Capital’s results for the month of June 2022 are included in the Unaudited Condensed Consolidated Statement of Income of RJF. The unaudited pro forma condensed combined financial information prepared in accordance with Article 11 is not required to, and does not, include an unaudited pro forma condensed combined balance sheet because the Unaudited Condensed Consolidated Balance Sheet of RJF as of June 30, 2022, which was included in RJF’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed on August 8, 2022, already reflects the Acquisition.
The unaudited pro forma condensed combined financial information has been prepared for informational purposes only and is subject to the assumptions and uncertainties set forth in the notes thereto. The Unaudited Pro Forma Condensed Combined Statements of Income do not reflect the costs of any integration activities or benefits that may result from future cost savings due to revenue synergies, procurement savings or operational efficiency that may result from the Acquisition. The Unaudited Pro Forma Condensed Combined Statements of Income are not intended to represent or be indicative of the consolidated results of operations of the combined entity that would have been reported had the Acquisition been completed as of October 1, 2020, and should not be construed as representative of the future consolidated results of operations of the combined entity.
The unaudited pro forma condensed combined financial information should be read in conjunction with the following:
1.Unaudited Condensed Consolidated Financial Statements and accompanying Notes of Raymond James Financial, Inc., as filed in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 with the United States Securities and Exchange Commission (“SEC”) on August 8, 2022;
2.Audited Consolidated Financial Statements and accompanying Notes of Raymond James Financial Inc., as filed in its Annual Report on Form 10-K for the year ended September 30, 2021 with the SEC on November 23, 2021;
3.Unaudited Condensed Consolidated Financial Statements and accompanying Notes of TriState Capital Holdings, Inc. as filed in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 with the SEC on May 9, 2022 (which is included as Exhibit 99.2 to this Current Report on Form 8-K/A); and
4.Audited Consolidated Financial Statements and accompanying Notes of Tristate Capital Holdings, Inc. as filed in its Annual Report on Form 10-K for the year ended December 31, 2021 with the SEC on March 1, 2022 (which is included as Exhibit 99.1 to this Current Report on Form 8-K/A).
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the nine months ended June 30, 2022
| Historical | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in millions, except per share amounts | RJF | TriState Capital | Pro Forma and/or Transaction Accounting Adjustments | Adjustment Explanations<br><br>(Note 4) | Pro Forma Combined | (Note 5) | ||||
| Revenues: | ||||||||||
| Asset management and related administrative fees | $ | 4,273 | $ | 24 | $ | — | $ | 4,297 | ||
| Brokerage revenues: | ||||||||||
| Securities commissions | 1,232 | — | — | 1,232 | ||||||
| Principal transactions | 403 | 13 | — | 416 | ||||||
| Total brokerage revenues | 1,635 | 13 | — | 1,648 | ||||||
| Account and service fees | 567 | — | — | 567 | ||||||
| Investment banking | 883 | — | — | 883 | ||||||
| Interest income | 841 | 187 | 53 | (4a) (4b) | 1,081 | |||||
| Other | 108 | 6 | — | 114 | ||||||
| Total revenues | 8,307 | 230 | 53 | 8,590 | ||||||
| Interest expense | (135) | (43) | 2 | (4a) (4c) | (176) | |||||
| Net revenues | 8,172 | 187 | 55 | 8,414 | ||||||
| Non-interest expenses: | ||||||||||
| Compensation, commissions and benefits | 5,570 | 64 | 4 | (4d) | 5,638 | |||||
| Non-compensation expenses: | ||||||||||
| Communications and information processing | 368 | 13 | — | 381 | ||||||
| Occupancy and equipment | 186 | 4 | — | 190 | ||||||
| Business development | 127 | 5 | — | 132 | ||||||
| Investment sub-advisory fees | 116 | — | — | 116 | ||||||
| Professional fees | 93 | 18 | — | 111 | ||||||
| Bank loan provision/(benefit) for credit losses | 66 | 6 | (26) | (4e) | 46 | |||||
| Other | 240 | 19 | 1 | (4e) (4f) (4g) | 260 | |||||
| Total non-compensation expenses | 1,196 | 65 | (25) | 1,236 | ||||||
| Total non-interest expenses | 6,766 | 129 | (21) | 6,874 | ||||||
| Pre-tax income | 1,406 | 58 | 76 | 1,540 | ||||||
| Provision for income taxes | 336 | 10 | 19 | (4h) | 365 | |||||
| Net income | 1,070 | 48 | 57 | 1,175 | ||||||
| Preferred stock dividends | 2 | 8 | (2) | (4i) | 8 | |||||
| Net income available to common shareholders | $ | 1,068 | $ | 40 | $ | 59 | $ | 1,167 | ||
| Earnings per common share – basic | $ | 5.12 | $ | 5.40 | ||||||
| Earnings per common share – diluted | $ | 4.99 | $ | 5.27 | ||||||
| Weighted-average common shares outstanding – basic | 208.1 | 215.2 | (5) | |||||||
| Weighted-average common and common equivalent shares outstanding – diluted | 213.5 | 220.6 | (5) |
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the twelve months ended September 30, 2021
| Historical | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in millions, except per share amounts | RJF<br>(Note 2) | TriState Capital Reclassified (Note 2) | Pro Forma and/or Transaction Accounting Adjustments | Adjustment Explanations<br><br>(Note 4) | Pro Forma Combined | (Note 5) | ||||
| Revenues: | ||||||||||
| Asset management and related administrative fees | $ | 4,868 | $ | 37 | $ | — | $ | 4,905 | ||
| Brokerage revenues: | ||||||||||
| Securities commissions | 1,651 | — | — | 1,651 | ||||||
| Principal transactions | 561 | 14 | — | 575 | ||||||
| Total brokerage revenues | 2,212 | 14 | — | 2,226 | ||||||
| Account and service fees | 635 | — | — | 635 | ||||||
| Investment banking | 1,143 | — | — | 1,143 | ||||||
| Interest income | 823 | 232 | 81 | (4b) | 1,136 | |||||
| Other | 229 | 8 | — | 237 | ||||||
| Total revenues | 9,910 | 291 | 81 | 10,282 | ||||||
| Interest expense | (150) | (52) | 1 | (4c) | (201) | |||||
| Net revenues | 9,760 | 239 | 82 | 10,081 | ||||||
| Non-interest expenses: | ||||||||||
| Compensation, commissions and benefits | 6,584 | 84 | 7 | (4d) | 6,675 | |||||
| Non-compensation expenses: | ||||||||||
| Communications and information processing | 429 | 17 | — | 446 | ||||||
| Occupancy and equipment | 232 | 4 | — | 236 | ||||||
| Business development | 111 | 8 | — | 119 | ||||||
| Investment sub-advisory fees | 130 | — | — | 130 | ||||||
| Professional fees | 122 | 12 | — | 134 | ||||||
| Bank loan provision/(benefit) for credit losses | (32) | 1 | 26 | (4e) | (5) | |||||
| Losses on extinguishment of debt | 98 | — | — | 98 | ||||||
| Other | 295 | 22 | 21 | (4e) (4f) (4g) | 338 | |||||
| Total non-compensation expenses | 1,385 | 64 | 47 | 1,496 | ||||||
| Total non-interest expenses | 7,969 | 148 | 54 | 8,171 | ||||||
| Pre-tax income | 1,791 | 91 | 28 | 1,910 | ||||||
| Provision for income taxes | 388 | 13 | 7 | (4h) | 408 | |||||
| Net income | $ | 1,403 | $ | 78 | $ | 21 | $ | 1,502 | ||
| Preferred stock dividends | — | 12 | (4) | (4i) | 8 | |||||
| Net income available to common shareholders | $ | 1,403 | $ | 66 | $ | 25 | $ | 1,494 | ||
| Earnings per common share – basic | $ | 6.81 | $ | 6.96 | ||||||
| Earnings per common share – diluted | $ | 6.63 | $ | 6.79 | ||||||
| Weighted-average common shares outstanding – basic | 205.7 | 213.7 | (5) | |||||||
| Weighted-average common and common equivalent shares outstanding – diluted | 211.2 | 219.2 | (5) |
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The Unaudited Pro Forma Condensed Combined Statements of Income have been prepared in accordance with Article 11. Raymond James’ fiscal year end is September 30, and TriState Capital’s fiscal year end is December 31. The Unaudited Pro Forma Condensed Combined Statements of Income give effect to the Acquisition as if it were completed on October 1, 2020, the first day of Raymond James’ fiscal year 2021.
The Unaudited Pro Forma Condensed Combined Statement of Income for the year ended September 30, 2021 combines the historical audited Consolidated Statement of Income of Raymond James Financial, Inc. for the year ended September 30, 2021 and the historical audited Consolidated Statement of Income of TriState Capital Holdings, Inc. for the year ended December 31, 2021. TriState Capital’s historical unaudited statement of income for the period ended June 30, 2022 represents the eight months preceding the Acquisition and was prepared by adding the unaudited results for the two months ended May 31, 2022 (which is the date immediately preceding the Acquisition), the quarterly Unaudited Condensed Consolidated Statement of Income for the three months ended March 31, 2022 and the quarterly Unaudited Condensed Consolidated Statement of Income for the three months ended December 31, 2021. Therefore, TriState Capital’s historical three months ended December 31, 2021 are included in both the annual and interim Unaudited Pro Forma Condensed Combined Statements of Income. Total revenues and net income for TriState Capital’s three months ended December 31, 2021 were $80 million and $23 million, respectively. As a result of the Acquisition, TriState Capital’s results for the month of June are included in the Unaudited Condensed Consolidated Statement of Income of RJF.
The Acquisition has been accounted for under the Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under ASC 805, the total consideration transferred was calculated as described in Note 3 of Raymond James’ June 30, 2022 Form 10-Q.
The unaudited pro forma financial information has been prepared in a manner consistent with the accounting policies adopted by Raymond James. Refer to Note 2 of Raymond James’ June 30, 2022 Form 10-Q for information on RJF’s significant accounting policies.
As discussed in Note 2, certain reclassifications were made to align Raymond James and TriState Capital’s financial statement presentation.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 2 - RECLASSIFICATIONS
Certain reclassifications were made to TriState Capital’s historical consolidated statements of income in order to align TriState Capital’s presentation with that of Raymond James. Additionally, certain reclassifications were made to the Raymond James historical audited consolidated statement of income for the year ended September 30, 2021 to conform with Raymond James financial statement presentation in its most recent June 30, 2022 Form 10-Q.
The following table presents TriState Capital’s Reclassified Historical Unaudited Condensed Consolidated Statement of Income for the period ended June 30, 2022:
| For the Period Ended June 30, 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Presentation in TSC Historical Consolidated Financial Statements ($ in millions) | Presentation in Unaudited Pro Forma Condensed Combined Financial Statements | TSC Pre-Reclassifications | Reclassified Amounts | TSC as Reclassified | |||
| Interest income - interest-earning deposits | Interest income | $ | 1 | $ | — | $ | 1 |
| Interest income - investments | Interest income | 16 | — | 16 | |||
| Interest income - loans and leases | Interest income | 170 | — | 170 | |||
| Bank owned life insurance income | Other income | 2 | — | 2 | |||
| Service charges on deposits | Other income | 1 | — | 1 | |||
| Commitment and other loan fees | Other income | 2 | — | 2 | |||
| Net gain on the sale and call of debt securities | Other income | 1 | 1 | ||||
| Swap fees | Brokerage revenue - principal transactions | 13 | — | 13 | |||
| Interest expense - borrowings | Interest expense | (9) | — | (9) | |||
| Interest expense - deposits | Interest expense | (34) | — | (34) | |||
| Investment management fees | Asset management and related administrative fees | 24 | — | 24 | |||
| Compensation and employee benefits | (65) | 65 | — | ||||
| Compensation, commissions and benefits | — | (64) | (64) | ||||
| Other expenses | — | (1) | (1) | ||||
| FDIC insurance expense | Other expenses | (5) | — | (5) | |||
| General insurance expense | Other expenses | (1) | — | (1) | |||
| Intangible amortization expense | Other expenses | (1) | — | (1) | |||
| Marketing and advertising | Business development | (2) | — | (2) | |||
| Other operating expenses | (12) | 12 | — | ||||
| Business development | — | (1) | (1) | ||||
| Communication and information processing | — | (1) | (1) | ||||
| Other expenses | — | (9) | (9) | ||||
| Professional fees | — | (1) | (1) | ||||
| Premises and equipment expense | (5) | 5 | — | ||||
| Communication and information processing | — | (1) | (1) | ||||
| Occupancy and equipment | — | (4) | (4) | ||||
| Professional fees | Professional fees | (17) | — | (17) | |||
| State capital shares tax | Other expenses | (2) | — | (2) | |||
| Technology and data services | Communication and information processing | (11) | — | (11) | |||
| Travel and entertainment expense | Business development | (2) | — | (2) | |||
| Provision for credit losses | Bank loan provision/(benefit) for credit loss | (6) | — | (6) | |||
| Income tax expense | Provision for income taxes | (10) | — | (10) | |||
| Preferred stock dividends | Preferred stock dividends | (8) | — | (8) | |||
| Net income available to common shareholders | $ | 40 | $ | — | $ | 40 |
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following table presents TriState Capital’s Reclassified Historical Consolidated Statement of Income for the twelve-month period ended December 31, 2021:
| Twelve Months Ended December 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|
| Presentation in TSC Historical Consolidated Financial Statements ($ in millions) | Presentation in Unaudited Pro Forma Condensed Combined Financial Statements | TSC Pre-Reclassifications | Reclassified Amounts | TSC as Reclassified | |||
| Interest income - interest-earning deposits | Interest income | $ | 1 | $ | — | $ | 1 |
| Interest income - investments | Interest income | 16 | — | 16 | |||
| Interest income - loans and leases | Interest income | 215 | — | 215 | |||
| Bank owned life insurance income | Other income | 2 | — | 2 | |||
| Other income | Other income | 3 | — | 3 | |||
| Service charges on deposits | Other income | 1 | — | 1 | |||
| Commitment and other loan fees | Other income | 2 | — | 2 | |||
| Swap fees | Brokerage revenue - principal transactions | 14 | — | 14 | |||
| Interest expense - borrowings | Interest Expense | (10) | — | (10) | |||
| Interest expense - deposits | Interest Expense | (42) | — | (42) | |||
| Investment management fees | Asset management and related administrative fees | 37 | — | 37 | |||
| Compensation and employee benefits | (85) | 85 | — | ||||
| Compensation, commissions and benefits | — | (84) | (84) | ||||
| Other expenses | — | (1) | (1) | ||||
| FDIC insurance expense | Other expenses | (5) | — | (5) | |||
| General insurance expense | Other expenses | (1) | — | (1) | |||
| Intangible amortization expense | Other expenses | (2) | — | (2) | |||
| Marketing and advertising | Business development | (4) | — | (4) | |||
| Other operating expenses | (13) | 13 | — | ||||
| Business development | — | (1) | (1) | ||||
| Communication and information processing | — | (1) | (1) | ||||
| Other expenses | — | (10) | (10) | ||||
| Professional fees | — | (1) | (1) | ||||
| Premises and equipment expense | (5) | 5 | — | ||||
| Communication and information processing | — | (1) | (1) | ||||
| Occupancy and equipment | — | (4) | (4) | ||||
| Professional fees | Professional fees | (11) | — | (11) | |||
| State capital shares tax | Other expenses | (3) | — | (3) | |||
| Technology and data services | Communication and information processing | (15) | — | (15) | |||
| Travel and entertainment expense | Business development | (3) | — | (3) | |||
| Provision (credit) for credit losses | Bank loan provision/(benefit) for credit loss | (1) | — | (1) | |||
| Income tax expense | Provision for income taxes | (13) | — | (13) | |||
| Preferred stock dividends | Preferred stock dividends | (12) | — | (12) | |||
| Net income available to common shareholders | $ | 66 | $ | — | $ | 66 |
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Beginning with RJF’s fiscal third quarter of 2022, RJF reclassified acquisition-related expenses which were previously reported in “Acquisition-related expenses” on our Condensed Consolidated Statements of Income and Comprehensive Income to the respective income statement line items that align with the nature of the expense, including reclassifications to “Compensation, commissions, and benefits,” “Professional fees,” or “Other” expenses, as appropriate. The following table presents certain reclassifications necessary to make the presentation of Raymond James Historical Consolidated Statement of Income for the year ended September 30, 2021 conform with the financial statement presentation in the June 30, 2022 Form 10-Q.
| Year Ended September 30, 2021 | |||||||
|---|---|---|---|---|---|---|---|
| Presentation in RJF Historical Consolidated Financial Statements ($ in millions) | Presentation in Unaudited Pro Forma Condensed Combined Financial Statements | RJF Pre-Reclassifications | Reclassified Amounts | RJF as Reclassified | |||
| Acquisition and disposition-related expenses | $ | 19 | $ | (19) | $ | — | |
| Compensation, commissions and benefits | — | 1 | 1 | ||||
| Professional fees | — | 10 | 10 | ||||
| Other | — | 8 | 8 | ||||
| $ | 19 | $ | — | $ | 19 |
NOTE 3 - CONSIDERATION TRANSFERRED AND FAIR VALUE ESTIMATE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
RJF accounted for the completed Acquisition as a business combination in accordance with GAAP. Accordingly, the purchase price attributable to the Acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair values. Refer to Note 3 of the Raymond James’ June 30, 2022 Form 10-Q for information on the purchase consideration, fair value estimates of the assets acquired and liabilities assumed, and resulting goodwill as of the June 1, 2022 acquisition date.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 4 - ADJUSTMENTS TO UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME
Pro forma accounting adjustments related to the Acquisition in the accompanying Unaudited Pro Forma Condensed Combined Statements of Income are as follows:
(4a) Represents the elimination of interest income recorded by Raymond James and interest expense recorded by TriState Capital in the historical results of income related to a pre-acquisition $125 million par value debt security ($123 million fair value on the closing date) that was effectively settled upon closing of the Acquisition.
(4b) Represents the adjustments to interest income to eliminate TriState Capital’s historical amortization of net premiums on pre-closing date acquired loans and investments of $11 million and $18 million for the nine months ended June 30, 2022 and year ended September 30, 2021, respectively, and to record the estimated accretion of the discount resulting from the fair value determination as of the acquisition date on loans and investments of $43 million and $63 million for the nine months ended June 30, 2022 and year ended September 30, 2021, respectively.
(4c) Represents the adjustment to interest expense for the estimated accretion of the discount on the acquisition date deposits and other borrowings of $1 million for the period ended June 30, 2022 and $1 million for the year ended September 30, 2021.
(4d) Represents new retention-related compensation arrangements executed with certain employees of TriState Capital in connection with the Acquisition, resulting in increased compensation expense of $4 million for the nine months ended June 30, 2022 and $7 million for the year ended September 30, 2021.
(4e) The initial provision for credit losses on loans and lending commitments acquired in the Acquisition is $26 million (included in “Bank loan provision/(benefit) for credit losses”) and $5 million (included in “Other” expenses). Adjustments reflect those required to record them in the year ended September 30, 2021 to reflect the Acquisition as if it had occurred on October 1, 2020.
(4f) Represents the net increase in intangible amortization expense as a result of the fair value determination of intangible assets and the removal of historical amortization of $1 million and $2 million for the period ended June 30, 2022 and year ended September 30, 2021 associated with intangible assets previously recorded by TriState Capital. Refer to Note 3 of the Raymond James’ June 30, 2022 Form 10-Q for information on the estimated fair values as of the June 1, 2022 acquisition date and useful lives of acquired intangibles for TriState Capital, which are being amortized using a straight-line method.
(4g) Includes the removal of a $3 million loss on the pre-acquisition debt instrument mentioned in item 4(a) above where such loss reflects the difference between the par value of the instrument and its fair value at the Acquisition date as well as adjusting accrued interest income recorded in the period ended June 30, 2022. This amount was recorded in the year ended September 30, 2021 to reflect the Acquisition as if it had occurred on October 1, 2020.
(4h) Represents the income tax expense related to the pro forma transaction accounting adjustments made to the Unaudited Pro Forma Condensed Combined Statements of Income based on the RJF statutory rate of 25% and 24% for the nine months ended June 30, 2022 and year ended September 30, 2021, respectively.
(4i) Represents the removal of TriState Capital’s historical preferred dividends on the Series C Convertible Preferred Stock which were cash settled on the closing date as part of the Acquisition.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 5 - EARNINGS PER SHARE
The pro forma earnings per common share is computed by dividing combined pro forma net income available to common shareholders (less allocation of earnings and dividends to participating securities) by pro forma weighted-average common shares outstanding (basic or diluted as applicable). The pro forma weighted-average common shares outstanding is based on Raymond James’ historical weighted-average common shares adjusted for the issuance of 8.0 million shares of common stock to the TriState Capital stockholders, assuming the Acquisition occurred on October 1, 2020. As part of the Acquisition, approximately 551 thousand participating restricted stock awards (“TriState Capital RSAs”) were issued to certain TriState Capital employees. The pro forma allocation of earnings and dividends to participating securities in the table below represents dividends paid during the period to participating securities, including the TriState Capital RSAs, plus an allocation of undistributed earnings to such participating securities. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.
The following table sets forth a reconciliation of the weighted-average common shares outstanding used to compute pro forma basic and diluted earnings per share.
| Pro forma basic weighted average shares<br><br>(in millions, except per share amounts) | For the nine months ended June 30, 2022 | For the year ended <br>September 30, 2021 | |||
|---|---|---|---|---|---|
| Combined pro forma net income available to RJF common shareholders | $ | 1,167 | $ | 1,494 | |
| Less pro forma allocation of earnings and dividends to participating securities | 4 | 6 | |||
| Combined pro forma net income available to common shareholders, less allocation of earnings and dividends to participating securities: | $ | 1,163 | $ | 1,488 | |
| Historical RJF weighted average shares outstanding – basic | 208.1 | 205.7 | |||
| Impact of RJF common shares issued to TriState shareholders pursuant to the merger on this computation | 7.1 | (i) | 8.0 | ||
| Pro forma weighted average shares – basic | 215.2 | 213.7 | |||
| Pro forma basic EPS | $ | 5.40 | $ | 6.96 | |
| Pro forma diluted weighted average shares<br><br>(in millions, except per share amounts) | For the nine months ended June 30, 2022 | For the year ended <br>September 30, 2021 | |||
| --- | --- | --- | --- | --- | --- |
| Combined pro forma net income available to RJF common shareholders | $ | 1,167 | $ | 1,494 | |
| Less pro forma allocation of earnings and dividends to participating securities | 4 | 6 | |||
| Combined pro forma net income available to common shareholders, less allocation of earnings and dividends to participating securities: | $ | 1,163 | $ | 1,488 | |
| Historical RJF weighted average shares outstanding – diluted | 213.5 | 211.2 | |||
| Impact of RJF common shares issued to TriState shareholders pursuant to the merger on this computation | 7.1 | (i) | 8.0 | ||
| Pro forma weighted average shares – diluted | 220.6 | 219.2 | |||
| Pro forma diluted EPS | $ | 5.27 | $ | 6.79 |
(i) Because these shares were issued on June 1, 2022, they have been outstanding and included for one month in RJF's historical weighted average shares outstanding for the nine months ended June 30, 2022. Therefore, the number of common shares issued to TriState Capital shareholders is calculated by multiplying the total number of common shares issued of 8.0 million by 8 months / 9 months.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 6 - TRANSACTION COSTS
Raymond James and TriState Capital each incurred certain nonrecurring charges in connection with the Acquisition which are reflected in their respective historical consolidated statements of income, which are not adjusted in these pro-forma presentations. These costs consist primarily of legal and professional fees. These costs will not continue to be incurred after the closing date and therefore will not adversely affect the combined company’s statements of income beyond twelve months after the Acquisition. There are no material transaction costs related to the Acquisition expected to be incurred after June 30, 2022 that would trigger a pro forma adjustment. The following table sets forth the Acquisition related transaction costs incurred and the tax effects for both Raymond James and TriState Capital.
| Pro Forma Interim Period | Pro Forma Annual Period | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ in millions | RJF | TSC | RJF | TSC | ||||||||
| Acquisition related costs incurred: | ||||||||||||
| Compensation, commissions and benefits | $ | 2 | $ | — | $ | — | $ | — | ||||
| Professional fees | 6 | 12 | 2 | 3 | ||||||||
| Other expenses | 1 | — | — | — | ||||||||
| Total acquisition related transaction costs | $ | 9 | $ | 12 | $ | 2 | $ | 3 | ||||
| RJF statutory tax rate | 25 | % | 25 | % | 24 | % | 24 | % | ||||
| Tax effect | $ | (2) | $ | (3) | $ | — | $ | (1) | ||||
| Total acquisition related transaction costs, net of tax | $ | 7 | $ | 9 | $ | 2 | $ | 2 |
10