RJF 8-K
Raymond James Financial Inc (RJF)
8-K
2021-04-28
For: 2021-04-28
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
(727 ) 567-1000
(Registrant’s telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition
On April 28, 2021, Raymond James Financial, Inc. (the "Company") issued a press release disclosing its results for the fiscal second quarter ended March 31, 2021. 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 fiscal second quarter ended March 31, 2021 are attached as Exhibits 99.2 and 99.3, respectively, to this Current Report and are incorporated by reference herein.
The information in this Current Report, including any exhibits hereto, is being "furnished" and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibit in this particular report is incorporated by reference).
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following are filed as exhibits to this report:
Exhibit No.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYMOND JAMES FINANCIAL, INC. | ||||||||
Date: April 28, 2021 | By: | /s/ Paul M. Shoukry | ||||||
| Paul M. Shoukry | ||||||||
| Chief Financial Officer and Treasurer | ||||||||
| April 28, 2021 | 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 SECOND QUARTER
OF FISCAL 2021 RESULTS
•Record quarterly net revenues of $2.37 billion, up 15% over the prior year’s fiscal second quarter and 7% over the preceding quarter
•Record quarterly net income of $355 million, or $2.51 per diluted share, up 110% over net income in the prior year’s fiscal second quarter and 14% over the preceding quarter
•Record client assets under administration of $1.09 trillion, financial assets under management of $178.2 billion, and net loans at Raymond James Bank of $22.9 billion
•Record Private Client Group assets in fee-based accounts of $567.6 billion, increases of 48% over March 2020 and 7% over December 2020
•Record Private Client Group financial advisors of 8,327, net increases of 179 over March 2020 and 94 over December 2020
•Annualized return on equity for the quarter of 19.0% and annualized return on tangible common equity for the quarter of 21.2%(1)
ST. PETERSBURG, Fla – Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $2.37 billion and net income of $355 million, or $2.51 per diluted share, for the fiscal second quarter ended March 31, 2021. The 15% increase in quarterly net revenues compared to the prior year’s fiscal second quarter was primarily driven by higher asset management and related administrative fees, investment banking revenues and brokerage revenues partially offset by the impact of lower short-term interest rates on net interest income and Raymond James Bank Deposit Program (“RJBDP”) fees from third-party banks. The 7% sequential increase in quarterly net revenues was primarily due to higher asset management and related administrative fees and brokerage revenues.
Record quarterly net income grew 110% over the prior year’s fiscal second quarter and 14% over the preceding quarter driven by the aforementioned record revenues and a $32 million bank loan benefit for credit losses. The effective tax rate of 20.6% for the quarter benefited from non-taxable gains on the corporate-owned life insurance portfolio.
For the first six months of the fiscal year, record net revenues of $4.59 billion increased 13% and record earnings per diluted share of $4.74 increased 53% over the first half of fiscal 2020. The Private Client Group, Capital Markets and Asset Management segments generated record net revenues and pre-tax income during the first six months of the fiscal year.
“Our continued focus on serving advisors and clients with industry-leading tools and resources led to record results for the first six months of the fiscal year, including record revenues and pre-tax income in our Private Client Group, Capital Markets and Asset Management segments,” said Chairman and CEO Paul Reilly. “Moreover, we are well positioned entering the second half of the fiscal year, with records for client assets under administration of $1.09 trillion, total number of Private Client Group financial advisors of 8,327, and net loans at Raymond James Bank of $22.9 billion.”
Please refer to the footnotes at the end of this press release for additional information.
1
RAYMOND JAMES FINANCIAL, INC.
Fiscal Second Quarter of 2021
Segment Results
Private Client Group
•Record quarterly net revenues of $1.65 billion, up 10% over the prior year’s fiscal second quarter and 12% over the preceding quarter
•Record quarterly pre-tax income of $192 million, up 13% compared to the prior year’s fiscal second quarter and 37% over the preceding quarter
•Record Private Client Group assets under administration of $1.03 trillion, up 40% over March 2020 and 6% over December 2020
•Record Private Client Group assets in fee-based accounts of $567.6 billion, up 48% over March 2020 and 7% over December 2020
•Record Private Client Group financial advisors of 8,327, net increases of 179 over March 2020 and 94 over December 2020
•Quarter-end record clients’ domestic cash sweep balances of $62.8 billion, up 19% over March 2020 and 2% over December 2020
Growth in quarterly net revenues was primarily attributable to record assets in fee-based accounts and higher brokerage revenues, largely driven by equity market appreciation and the net addition of financial advisors.
“With our continued focus on supporting, retaining and attracting high-quality financial advisors, we generated a solid net increase in the number of financial advisors during the quarter,” said Reilly. “Recruiting activity remains strong across all of our affiliation options, as prospective advisors continue to be attracted to our advisor- and client-focused culture, leading technology solutions, and robust product and service offerings.”
Capital Markets
•Quarterly net revenues of $433 million, up 49% over the prior year’s fiscal second quarter and down 4% compared to the preceding quarter
•Quarterly pre-tax income of $105 million, up 275% over the prior year’s fiscal second quarter and down 19% compared to the preceding quarter
•Quarterly investment banking revenues of $226 million, up 65% over the prior year’s fiscal second quarter and down 11% compared to the preceding quarter
•Record quarterly brokerage revenues of $176 million, up 35% over the prior year’s fiscal second quarter and 2% over the preceding quarter
Record brokerage revenues were driven by continued strength in fixed income brokerage revenues which increased 58% over the prior-year period and 8% over the preceding quarter. While lower than the record set in the preceding quarter, investment banking revenues grew 65% over the prior-year period primarily driven by record equity underwriting revenues and strong M&A revenues.
“The strong investment banking results reflect the significant investments made over the past several years to deepen and expand our platform,” said Reilly. “At quarter-end, we completed the previously-announced acquisition of Financo, further strengthening our M&A capabilities with its extensive expertise and relationships in the consumer sector. We are excited to welcome the Financo team to the Raymond James family.”
Please refer to the footnotes at the end of this press release for additional information.
2
RAYMOND JAMES FINANCIAL, INC.
Fiscal Second Quarter of 2021
Asset Management
•Record quarterly net revenues of $209 million, up 14% over the prior year’s fiscal second quarter and 7% over the preceding quarter
•Record quarterly pre-tax income of $87 million, up 19% over the prior year’s fiscal second quarter and 5% over the preceding quarter
•Record financial assets under management of $178.2 billion, up 39% over March 2020 and 5% over December 2020
Record quarterly results were primarily attributable to growth of financial assets under management driven by equity market appreciation and net inflows into fee-based accounts in the Private Client Group. Carillon Tower Advisers also generated significant net inflows during the quarter.
Raymond James Bank
•Quarterly net revenues of $160 million, down 24% compared to the prior year’s fiscal second quarter and 4% compared to the preceding quarter
•Quarterly pre-tax income of $111 million, up 693% compared to the prior year’s fiscal second quarter and 56% over the preceding quarter
•Record net loans of $22.9 billion, up 5% over March 2020 and 4% over December 2020
•Net interest margin (NIM) of 1.94% for the quarter, down 108 basis points compared to the prior year’s fiscal second quarter and 8 basis points compared to the preceding quarter
Quarterly net revenues declined 24% compared to the prior year’s fiscal second quarter primarily due to the impact of lower short-term interest rates. Pre-tax income growth was primarily due to the $32 million loan loss reserve release in the quarter compared to provision for credit losses in both comparative periods.
The Bank’s NIM declined 8 basis points during the quarter to 1.94%, largely due to the growth of the agency-backed securities portfolio. Nonperforming assets remained low at 0.09% of total assets. Net charge-offs of $2 million were related to opportunistic loan sales in the quarter. The bank loan loss benefit was largely attributable to improving macroeconomic conditions. The bank loan allowance for credit losses as a percent of total loans ended the quarter at 1.50%.
Other
In the fiscal second quarter, the firm repurchased 500,000 shares for $60 million, an average price of approximately $120 per share, leaving $680 million available under the authorization as of April 28, 2021. At the end of the quarter, the total capital ratio was 24.7% and the tier 1 leverage ratio was 12.2%, both well above the regulatory requirements.
A conference call to discuss the results will take place tomorrow morning, Thursday, April 29, at 8:15 a.m. ET. The live audio webcast, and the presentation which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. For a listen-only connection to the conference call, please dial: 800-757-5680 (conference code: 21993654). An audio replay of the call will be available at the same location until June 30, 2021.
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 8,300 financial advisors. Total client assets are $1.09 trillion. 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.
Please refer to the footnotes at the end of this press release for additional information.
3
| RAYMOND JAMES FINANCIAL, INC. Fiscal Second Quarter of 2021 | Selected Financial Highlights (Unaudited) | ||||
Summary results of operations
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Net revenues | $ | 2,372 | $ | 2,068 | $ | 2,222 | 15% | 7% | ||||||||||||||||||||||||
| Pre-tax income | $ | 447 | $ | 239 | $ | 399 | 87% | 12% | ||||||||||||||||||||||||
| Net income | $ | 355 | $ | 169 | $ | 312 | 110% | 14% | ||||||||||||||||||||||||
Earnings per common share: (2) | ||||||||||||||||||||||||||||||||
| Basic | $ | 2.58 | $ | 1.22 | $ | 2.27 | 111% | 14% | ||||||||||||||||||||||||
| Diluted | $ | 2.51 | $ | 1.20 | $ | 2.23 | 109% | 13% | ||||||||||||||||||||||||
Non-GAAP measures: (1) | ||||||||||||||||||||||||||||||||
Adjusted pre-tax income | NA | NA | $ | 401 | NA | 11% | ||||||||||||||||||||||||||
Adjusted net income | NA | NA | $ | 314 | NA | 13% | ||||||||||||||||||||||||||
Adjusted earnings per common share - basic (2) | NA | NA | $ | 2.29 | NA | 13% | ||||||||||||||||||||||||||
Adjusted earnings per common share - diluted (2) | NA | NA | $ | 2.24 | NA | 12% | ||||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions, except per share amounts | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Net revenues | $ | 4,594 | $ | 4,077 | 13% | |||||||||||||||
| Pre-tax income | $ | 846 | $ | 598 | 41% | |||||||||||||||
| Net income | $ | 667 | $ | 437 | 53% | |||||||||||||||
Earnings per common share: (2) | ||||||||||||||||||||
| Basic | $ | 4.85 | $ | 3.15 | 54% | |||||||||||||||
| Diluted | $ | 4.74 | $ | 3.09 | 53% | |||||||||||||||
Non-GAAP measures: (1) | ||||||||||||||||||||
| Adjusted pre-tax income | $ | 848 | NA | 42% | ||||||||||||||||
| Adjusted net income | $ | 669 | NA | 53% | ||||||||||||||||
Adjusted earnings per common share - basic (2) | $ | 4.87 | NA | 55% | ||||||||||||||||
Adjusted earnings per common share - diluted (2) | $ | 4.76 | NA | 54% | ||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
4
RAYMOND JAMES FINANCIAL, INC.
Fiscal Second Quarter of 2021
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| in millions, except per share amounts | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 1,173 | $ | 1,006 | $ | 1,067 | 17% | 10% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Securities commissions | 443 | 410 | 381 | 8% | 16% | |||||||||||||||||||||||||||
| Principal transactions | 148 | 105 | 147 | 41% | 1% | |||||||||||||||||||||||||||
| Total brokerage revenues | 591 | 515 | 528 | 15% | 12% | |||||||||||||||||||||||||||
| Account and service fees | 159 | 172 | 145 | (8)% | 10% | |||||||||||||||||||||||||||
| Investment banking | 242 | 148 | 261 | 64% | (7)% | |||||||||||||||||||||||||||
| Interest income | 200 | 285 | 203 | (30)% | (1)% | |||||||||||||||||||||||||||
Other (3) | 44 | (15) | 56 | NM | (21)% | |||||||||||||||||||||||||||
| Total revenues | 2,409 | 2,111 | 2,260 | 14% | 7% | |||||||||||||||||||||||||||
| Interest expense | (37) | (43) | (38) | (14)% | (3)% | |||||||||||||||||||||||||||
| Net revenues | 2,372 | 2,068 | 2,222 | 15% | 7% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation, commissions and benefits | 1,648 | 1,422 | 1,500 | 16% | 10% | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
| Communications and information processing | 107 | 99 | 99 | 8% | 8% | |||||||||||||||||||||||||||
| Occupancy and equipment | 57 | 56 | 57 | 2% | — | |||||||||||||||||||||||||||
| Business development | 21 | 41 | 23 | (49)% | (9)% | |||||||||||||||||||||||||||
| Investment sub-advisory fees | 31 | 26 | 28 | 19% | 11% | |||||||||||||||||||||||||||
| Professional fees | 24 | 23 | 30 | 4% | (20)% | |||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | (32) | 109 | 14 | NM | NM | |||||||||||||||||||||||||||
Acquisition-related expenses (5) | — | — | 2 | — | (100)% | |||||||||||||||||||||||||||
Other (3) | 69 | 53 | 70 | 30% | (1)% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 277 | 407 | 323 | (32)% | (14)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,925 | 1,829 | 1,823 | 5% | 6% | |||||||||||||||||||||||||||
Pre-tax income | 447 | 239 | 399 | 87% | 12% | |||||||||||||||||||||||||||
| Provision for income taxes | 92 | 70 | 87 | 31% | 6% | |||||||||||||||||||||||||||
| Net income | $ | 355 | $ | 169 | $ | 312 | 110% | 14% | ||||||||||||||||||||||||
Earnings per common share – basic (2) | $ | 2.58 | $ | 1.22 | $ | 2.27 | 111% | 14% | ||||||||||||||||||||||||
Earnings per common share – diluted (2) | $ | 2.51 | $ | 1.20 | $ | 2.23 | 109% | 13% | ||||||||||||||||||||||||
Weighted-average common shares outstanding – basic | 137.8 | 138.4 | 136.8 | — | 1% | |||||||||||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 141.2 | 141.1 | 139.7 | — | 1% | |||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
5
RAYMOND JAMES FINANCIAL, INC.
Fiscal Second Quarter of 2021
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| in millions, except per share amounts | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees | $ | 2,240 | $ | 1,961 | 14% | |||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Securities commissions | 824 | 773 | 7% | |||||||||||||||||
| Principal transactions | 295 | 202 | 46% | |||||||||||||||||
| Total brokerage revenues | 1,119 | 975 | 15% | |||||||||||||||||
| Account and service fees | 304 | 350 | (13)% | |||||||||||||||||
| Investment banking | 503 | 289 | 74% | |||||||||||||||||
| Interest income | 403 | 582 | (31)% | |||||||||||||||||
Other (3) | 100 | 14 | 614% | |||||||||||||||||
| Total revenues | 4,669 | 4,171 | 12% | |||||||||||||||||
| Interest expense | (75) | (94) | (20)% | |||||||||||||||||
| Net revenues | 4,594 | 4,077 | 13% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 3,148 | 2,773 | 14% | |||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||
| Communications and information processing | 206 | 193 | 7% | |||||||||||||||||
| Occupancy and equipment | 114 | 113 | 1% | |||||||||||||||||
| Business development | 44 | 85 | (48)% | |||||||||||||||||
| Investment sub-advisory fees | 59 | 52 | 13% | |||||||||||||||||
| Professional fees | 54 | 44 | 23% | |||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | (18) | 107 | NM | |||||||||||||||||
Acquisition-related expenses (5) | 2 | — | NM | |||||||||||||||||
Other (3) | 139 | 112 | 24% | |||||||||||||||||
| Total non-compensation expenses | 600 | 706 | (15)% | |||||||||||||||||
| Total non-interest expenses | 3,748 | 3,479 | 8% | |||||||||||||||||
Pre-tax income | 846 | 598 | 41% | |||||||||||||||||
| Provision for income taxes | 179 | 161 | 11% | |||||||||||||||||
| Net income | $ | 667 | $ | 437 | 53% | |||||||||||||||
Earnings per common share – basic (2) | $ | 4.85 | $ | 3.15 | 54% | |||||||||||||||
Earnings per common share – diluted (2) | $ | 4.74 | $ | 3.09 | 53% | |||||||||||||||
Weighted-average common shares outstanding – basic | 137.3 | 138.4 | (1)% | |||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 140.4 | 141.3 | (1)% | |||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
6
| RAYMOND JAMES FINANCIAL, INC. | Consolidated Selected Key Metrics | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| As of | % change from | ||||||||||||||||||||||||||||||||||
$ in millions, except per share amounts | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||||
| Total assets | $ | 56,066 | $ | 49,809 | $ | 53,657 | 13% | 4% | |||||||||||||||||||||||||||
| Total equity attributable to Raymond James Financial, Inc. | $ | 7,592 | $ | 6,798 | $ | 7,363 | 12% | 3% | |||||||||||||||||||||||||||
Book value per share (6) | $ | 55.34 | $ | 49.69 | $ | 53.59 | 11% | 3% | |||||||||||||||||||||||||||
Tangible book value per share (1) (6) | $ | 49.42 | $ | 45.50 | $ | 47.93 | 9% | 3% | |||||||||||||||||||||||||||
Capital ratios: | |||||||||||||||||||||||||||||||||||
| Tier 1 capital | 23.6 | % | (7) | 24.1 | % | 23.4 | % | ||||||||||||||||||||||||||||
| Total capital | 24.7 | % | (7) | 25.3 | % | 24.6 | % | ||||||||||||||||||||||||||||
| Tier 1 leverage | 12.2 | % | (7) | 14.2 | % | 12.9 | % | ||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | |||||||||||||||||||||||||||||||
Return on equity (8) | 19.0 | % | 9.9 | % | 17.2 | % | 18.1 | % | 13.0 | % | |||||||||||||||||||||||||
Adjusted return on equity (1) (8) | NA | NA | 17.3 | % | 18.2 | % | NA | ||||||||||||||||||||||||||||
Return on tangible common equity (1) (8) | 21.2 | % | 10.8 | % | 19.0 | % | 20.1 | % | 14.2 | % | |||||||||||||||||||||||||
Adjusted return on tangible common equity (1) (8) | NA | NA | 19.1 | % | 20.2 | % | NA | ||||||||||||||||||||||||||||
Pre-tax margin (9) | 18.8 | % | 11.6 | % | 18.0 | % | 18.4 | % | 14.7 | % | |||||||||||||||||||||||||
Adjusted pre-tax margin (1) (9) | NA | NA | 18.0 | % | 18.5 | % | NA | ||||||||||||||||||||||||||||
Total compensation ratio (10) | 69.5 | % | 68.8 | % | 67.5 | % | 68.5 | % | 68.0 | % | |||||||||||||||||||||||||
| Effective tax rate | 20.6 | % | 29.3 | % | 21.8 | % | 21.2 | % | 26.9 | % | |||||||||||||||||||||||||
Client asset metrics ($ in billions) | As of | % change from | |||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||
Client assets under administration | $ | 1,085.4 | $ | 773.9 | $ | 1,024.8 | 40% | 6% | |||||||||||||||||||||||||||
Private Client Group assets under administration | $ | 1,028.1 | $ | 734.0 | $ | 974.2 | 40% | 6% | |||||||||||||||||||||||||||
Private Client Group assets in fee-based accounts | $ | 567.6 | $ | 383.5 | $ | 532.7 | 48% | 7% | |||||||||||||||||||||||||||
Financial assets under management | $ | 178.2 | $ | 128.2 | $ | 169.6 | 39% | 5% | |||||||||||||||||||||||||||
Clients’ domestic cash sweep balances ($ in millions) | As of | % change from | |||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (11) | |||||||||||||||||||||||||||||||||||
| Raymond James Bank | $ | 28,174 | $ | 28,711 | $ | 26,697 | (2)% | 6% | |||||||||||||||||||||||||||
| Third-party banks | 25,110 | 20,379 | 26,142 | 23% | (4)% | ||||||||||||||||||||||||||||||
| Subtotal RJBDP | 53,284 | 49,090 | 52,839 | 9% | 1% | ||||||||||||||||||||||||||||||
| Client Interest Program | 9,517 | 3,782 | 8,769 | 152% | 9% | ||||||||||||||||||||||||||||||
Total clients’ domestic cash sweep balances | $ | 62,801 | $ | 52,872 | $ | 61,608 | 19% | 2% | |||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | |||||||||||||||||||||||||||||||
Average yield on RJBDP - third-party banks (12) | 0.30 | % | 1.33 | % | 0.31 | % | 0.31 | % | 1.48 | % | |||||||||||||||||||||||||
| Private Client Group financial advisors | As of | % change from | |||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||
| Employees | 3,375 | 3,376 | 3,387 | — | — | ||||||||||||||||||||||||||||||
| Independent contractors | 4,952 | 4,772 | 4,846 | 4% | 2% | ||||||||||||||||||||||||||||||
| Total advisors | 8,327 | 8,148 | 8,233 | 2% | 1% | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
7
| RAYMOND JAMES FINANCIAL, INC. | Consolidated Net Interest | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
The following tables present our consolidated average interest-earning asset and interest-bearing liability balances, interest income and expense and the related rates.
| Consolidated Net Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | Average balance | Interest | Annualized average rate | Average balance | Interest | Annualized average rate | Average balance | Interest | Annualized average rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 5,284 | $ | 2 | 0.20 | % | $ | 4,601 | $ | 16 | 1.40 | % | $ | 5,712 | $ | 4 | 0.25 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Assets segregated pursuant to regulations | 10,087 | 5 | 0.18 | % | 2,820 | 11 | 1.64 | % | 5,816 | 3 | 0.21 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale securities | 7,997 | 21 | 1.08 | % | 3,443 | 19 | 2.28 | % | 7,478 | 23 | 1.21 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage client receivables | 2,222 | 19 | 3.36 | % | 2,366 | 21 | 3.57 | % | 2,082 | 18 | 3.48 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank loans, net of unearned income and deferred expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for investment: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial (“C&I”) loans (13) | 7,540 | 48 | 2.56 | % | 8,017 | 81 | 3.99 | % | 7,535 | 51 | 2.63 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate (“CRE”) loans (13) | 2,665 | 17 | 2.54 | % | 2,620 | 26 | 3.93 | % | 2,582 | 17 | 2.59 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate investment trust (“REIT”) loans (13) | 1,309 | 8 | 2.50 | % | 1,322 | 12 | 3.69 | % | 1,235 | 8 | 2.43 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt loans (14) | 1,227 | 8 | 3.35 | % | 1,212 | 8 | 3.36 | % | 1,237 | 8 | 3.35 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans | 5,005 | 34 | 2.72 | % | 4,847 | 38 | 3.13 | % | 5,001 | 35 | 2.77 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities-based loans and other | 4,638 | 26 | 2.23 | % | 3,469 | 31 | 3.60 | % | 4,286 | 25 | 2.29 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 177 | 1 | 1.89 | % | 142 | 2 | 3.85 | % | 141 | 1 | 2.94 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total bank loans, net | 22,561 | 142 | 2.56 | % | 21,629 | 198 | 3.67 | % | 22,017 | 145 | 2.62 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other interest-earning assets | 2,201 | 11 | 1.87 | % | 2,487 | 20 | 2.96 | % | 2,288 | 10 | 2.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 50,352 | $ | 200 | 1.61 | % | $ | 37,346 | $ | 285 | 3.06 | % | $ | 45,393 | $ | 203 | 1.78 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings, money market and Negotiable Order of Withdrawal accounts | $ | 27,662 | $ | 2 | 0.02 | % | $ | 22,877 | $ | 6 | 0.12 | % | $ | 26,637 | $ | 1 | 0.02 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit | 898 | 4 | 1.88 | % | 1,094 | 6 | 2.03 | % | 952 | 5 | 1.93 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total bank deposits | 28,560 | 6 | 0.08 | % | 23,971 | 12 | 0.21 | % | 27,589 | 6 | 0.09 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage client payables | 11,485 | 1 | 0.02 | % | 3,827 | 3 | 0.35 | % | 7,324 | 1 | 0.06 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 862 | 5 | 2.18 | % | 895 | 5 | 2.23 | % | 866 | 5 | 2.19 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior notes payable | 2,045 | 24 | 4.80 | % | 1,556 | 19 | 4.74 | % | 2,045 | 24 | 4.70 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other interest-bearing liabilities | 600 | 1 | 0.88 | % | 911 | 4 | 1.82 | % | 574 | 2 | 1.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 43,552 | $ | 37 | 0.34 | % | $ | 31,160 | $ | 43 | 0.56 | % | $ | 38,398 | $ | 38 | 0.39 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 163 | $ | 242 | $ | 165 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
8
| RAYMOND JAMES FINANCIAL, INC. | Consolidated Net Interest | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Consolidated Net Interest | |||||||||||||||||||||||||||||||||||||||||
| Six months ended | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | Average balance | Interest | Annualized average rate | Average balance | Interest | Annualized average rate | |||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 5,500 | $ | 6 | 0.23 | % | $ | 4,227 | $ | 33 | 1.55 | % | |||||||||||||||||||||||||||||
| Assets segregated pursuant to regulations | 7,954 | 8 | 0.19 | % | 2,583 | 22 | 1.75 | % | |||||||||||||||||||||||||||||||||
| Available-for-sale securities | 7,735 | 44 | 1.14 | % | 3,265 | 37 | 2.29 | % | |||||||||||||||||||||||||||||||||
| Brokerage client receivables | 2,152 | 37 | 3.42 | % | 2,402 | 48 | 4.04 | % | |||||||||||||||||||||||||||||||||
| Bank loans, net of unearned income and deferred expenses: | |||||||||||||||||||||||||||||||||||||||||
| Loans held for investment: | |||||||||||||||||||||||||||||||||||||||||
C&I loans (13) | 7,537 | 99 | 2.60 | % | 8,039 | 167 | 4.07 | % | |||||||||||||||||||||||||||||||||
CRE loans (13) | 2,623 | 34 | 2.56 | % | 2,572 | 53 | 4.04 | % | |||||||||||||||||||||||||||||||||
REIT loans (13) | 1,272 | 16 | 2.47 | % | 1,330 | 25 | 3.77 | % | |||||||||||||||||||||||||||||||||
Tax-exempt loans (14) | 1,232 | 16 | 3.35 | % | 1,218 | 16 | 3.36 | % | |||||||||||||||||||||||||||||||||
| Residential mortgage loans | 5,003 | 69 | 2.75 | % | 4,743 | 75 | 3.16 | % | |||||||||||||||||||||||||||||||||
| Securities-based loans and other | 4,460 | 51 | 2.26 | % | 3,403 | 65 | 3.78 | % | |||||||||||||||||||||||||||||||||
| Loans held for sale | 159 | 2 | 2.36 | % | 151 | 3 | 3.97 | % | |||||||||||||||||||||||||||||||||
| Total bank loans, net | 22,286 | 287 | 2.59 | % | 21,456 | 404 | 3.76 | % | |||||||||||||||||||||||||||||||||
| All other interest-earning assets | 2,247 | 21 | 1.93 | % | 2,511 | 38 | 2.89 | % | |||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 47,874 | $ | 403 | 1.69 | % | $ | 36,444 | $ | 582 | 3.19 | % | |||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||
| Bank deposits: | |||||||||||||||||||||||||||||||||||||||||
| Savings, money market and Negotiable Order of Withdrawal accounts | $ | 27,144 | $ | 3 | 0.02 | % | $ | 22,260 | $ | 18 | 0.16 | % | |||||||||||||||||||||||||||||
| Certificates of deposit | 925 | 9 | 1.90 | % | 937 | 10 | 2.10 | % | |||||||||||||||||||||||||||||||||
| Total bank deposits | 28,069 | 12 | 0.08 | % | 23,197 | 28 | 0.24 | % | |||||||||||||||||||||||||||||||||
| Brokerage client payables | 9,403 | 2 | 0.04 | % | 3,513 | 6 | 0.40 | % | |||||||||||||||||||||||||||||||||
| Other borrowings | 864 | 10 | 2.21 | % | 894 | 10 | 2.23 | % | |||||||||||||||||||||||||||||||||
| Senior notes payable | 2,045 | 48 | 4.75 | % | 1,553 | 37 | 4.71 | % | |||||||||||||||||||||||||||||||||
| All other interest-bearing liabilities | 587 | 3 | 1.01 | % | 1,023 | 13 | 2.02 | % | |||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 40,968 | $ | 75 | 0.36 | % | $ | 30,180 | $ | 94 | 0.61 | % | |||||||||||||||||||||||||||||
| Net interest income | $ | 328 | $ | 488 | |||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
9
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 1,647 | $ | 1,495 | $ | 1,467 | 10% | 12% | ||||||||||||||||||||||||
| Capital Markets | 433 | 290 | 452 | 49% | (4)% | |||||||||||||||||||||||||||
| Asset Management | 209 | 184 | 195 | 14% | 7% | |||||||||||||||||||||||||||
| Raymond James Bank | 160 | 210 | 167 | (24)% | (4)% | |||||||||||||||||||||||||||
Other (3) (15) | (12) | (44) | 4 | 73% | NM | |||||||||||||||||||||||||||
| Intersegment eliminations | (65) | (67) | (63) | NM | NM | |||||||||||||||||||||||||||
Total net revenues | $ | 2,372 | $ | 2,068 | $ | 2,222 | 15% | 7% | ||||||||||||||||||||||||
Pre-tax income/(loss): | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 192 | $ | 170 | $ | 140 | 13% | 37% | ||||||||||||||||||||||||
| Capital Markets | 105 | 28 | 129 | 275% | (19)% | |||||||||||||||||||||||||||
| Asset Management | 87 | 73 | 83 | 19% | 5% | |||||||||||||||||||||||||||
| Raymond James Bank | 111 | 14 | 71 | 693% | 56% | |||||||||||||||||||||||||||
Other (3) (5) (15) | (48) | (46) | (24) | (4)% | (100)% | |||||||||||||||||||||||||||
Pre-tax income | $ | 447 | $ | 239 | $ | 399 | 87% | 12% | ||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Net revenues: | ||||||||||||||||||||
| Private Client Group | $ | 3,114 | $ | 2,909 | 7% | |||||||||||||||
| Capital Markets | 885 | 558 | 59% | |||||||||||||||||
| Asset Management | 404 | 368 | 10% | |||||||||||||||||
| Raymond James Bank | 327 | 426 | (23)% | |||||||||||||||||
Other (3) (15) | (8) | (52) | 85% | |||||||||||||||||
| Intersegment eliminations | (128) | (132) | NM | |||||||||||||||||
| Total net revenues | $ | 4,594 | $ | 4,077 | 13% | |||||||||||||||
| Pre-tax income/(loss): | ||||||||||||||||||||
| Private Client Group | $ | 332 | $ | 323 | 3% | |||||||||||||||
| Capital Markets | 234 | 57 | 311% | |||||||||||||||||
| Asset Management | 170 | 146 | 16% | |||||||||||||||||
| Raymond James Bank | 182 | 149 | 22% | |||||||||||||||||
Other (3) (5) (15) | (72) | (77) | 6% | |||||||||||||||||
| Pre-tax income | $ | 846 | $ | 598 | 41% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
10
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Private Client Group | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 979 | $ | 833 | $ | 885 | 18% | 11% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Mutual and other fund products | 183 | 163 | 148 | 12% | 24% | |||||||||||||||||||||||||||
| Insurance and annuity products | 109 | 99 | 98 | 10% | 11% | |||||||||||||||||||||||||||
| Equities, ETFs and fixed income products | 121 | 122 | 107 | (1)% | 13% | |||||||||||||||||||||||||||
| Total brokerage revenues | 413 | 384 | 353 | 8% | 17% | |||||||||||||||||||||||||||
| Account and service fees: | ||||||||||||||||||||||||||||||||
| Mutual fund and annuity service fees | 99 | 88 | 94 | 13% | 5% | |||||||||||||||||||||||||||
RJBDP fees: (11) | ||||||||||||||||||||||||||||||||
Third-party banks | 19 | 51 | 21 | (63)% | (10)% | |||||||||||||||||||||||||||
Raymond James Bank | 44 | 48 | 43 | (8)% | 2% | |||||||||||||||||||||||||||
| Client account and other fees | 42 | 35 | 32 | 20% | 31% | |||||||||||||||||||||||||||
| Total account and service fees | 204 | 222 | 190 | (8)% | 7% | |||||||||||||||||||||||||||
| Investment banking | 16 | 11 | 6 | 45% | 167% | |||||||||||||||||||||||||||
| Interest income | 30 | 45 | 30 | (33)% | — | |||||||||||||||||||||||||||
| All other | 8 | 7 | 5 | 14% | 60% | |||||||||||||||||||||||||||
| Total revenues | 1,650 | 1,502 | 1,469 | 10% | 12% | |||||||||||||||||||||||||||
| Interest expense | (3) | (7) | (2) | (57)% | 50% | |||||||||||||||||||||||||||
| Net revenues | 1,647 | 1,495 | 1,467 | 10% | 12% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Financial advisor compensation and benefits | 1,040 | 915 | 931 | 14% | 12% | |||||||||||||||||||||||||||
| Administrative compensation and benefits | 260 | 245 | 249 | 6% | 4% | |||||||||||||||||||||||||||
| Total compensation, commissions and benefits | 1,300 | 1,160 | 1,180 | 12% | 10% | |||||||||||||||||||||||||||
| Non-compensation expenses | 155 | 165 | 147 | (6)% | 5% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,455 | 1,325 | 1,327 | 10% | 10% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 192 | $ | 170 | $ | 140 | 13% | 37% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
11
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Private Client Group | ||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees | $ | 1,864 | $ | 1,615 | 15% | |||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Mutual and other fund products | 331 | 307 | 8% | |||||||||||||||||
| Insurance and annuity products | 207 | 200 | 4% | |||||||||||||||||
| Equities, ETFs and fixed income products | 228 | 224 | 2% | |||||||||||||||||
| Total brokerage revenues | 766 | 731 | 5% | |||||||||||||||||
| Account and service fees: | ||||||||||||||||||||
| Mutual fund and annuity service fees | 193 | 178 | 8% | |||||||||||||||||
RJBDP fees: (11) | ||||||||||||||||||||
| Third-party banks | 40 | 109 | (63)% | |||||||||||||||||
| Raymond James Bank | 87 | 95 | (8)% | |||||||||||||||||
| Client account and other fees | 74 | 64 | 16% | |||||||||||||||||
| Total account and service fees | 394 | 446 | (12)% | |||||||||||||||||
| Investment banking | 22 | 22 | — | |||||||||||||||||
| Interest income | 60 | 94 | (36)% | |||||||||||||||||
| All other | 13 | 16 | (19)% | |||||||||||||||||
| Total revenues | 3,119 | 2,924 | 7% | |||||||||||||||||
| Interest expense | (5) | (15) | (67)% | |||||||||||||||||
| Net revenues | 3,114 | 2,909 | 7% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Financial advisor compensation and benefits | 1,971 | 1,772 | 11% | |||||||||||||||||
| Administrative compensation and benefits | 509 | 492 | 3% | |||||||||||||||||
| Total compensation, commissions and benefits | 2,480 | 2,264 | 10% | |||||||||||||||||
| Non-compensation expenses | 302 | 322 | (6)% | |||||||||||||||||
| Total non-interest expenses | 2,782 | 2,586 | 8% | |||||||||||||||||
| Pre-tax income | $ | 332 | $ | 323 | 3% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
12
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Capital Markets | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Fixed income | $ | 142 | $ | 90 | $ | 131 | 58% | 8% | ||||||||||||||||||||||||
| Equity | 34 | 40 | 42 | (15)% | (19)% | |||||||||||||||||||||||||||
| Total brokerage revenues | 176 | 130 | 173 | 35% | 2% | |||||||||||||||||||||||||||
| Investment banking: | ||||||||||||||||||||||||||||||||
| Merger & acquisition and advisory | 122 | 72 | 149 | 69% | (18)% | |||||||||||||||||||||||||||
| Equity underwriting | 67 | 43 | 60 | 56% | 12% | |||||||||||||||||||||||||||
| Debt underwriting | 37 | 22 | 46 | 68% | (20)% | |||||||||||||||||||||||||||
| Total investment banking | 226 | 137 | 255 | 65% | (11)% | |||||||||||||||||||||||||||
| Interest income | 5 | 10 | 3 | (50)% | 67% | |||||||||||||||||||||||||||
| Tax credit fund revenues | 24 | 12 | 16 | 100% | 50% | |||||||||||||||||||||||||||
| All other | 4 | 7 | 7 | (43)% | (43)% | |||||||||||||||||||||||||||
| Total revenues | 435 | 296 | 454 | 47% | (4)% | |||||||||||||||||||||||||||
| Interest expense | (2) | (6) | (2) | (67)% | — | |||||||||||||||||||||||||||
| Net revenues | 433 | 290 | 452 | 49% | (4)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 259 | 184 | 252 | 41% | 3% | |||||||||||||||||||||||||||
| Non-compensation expenses | 69 | 78 | 71 | (12)% | (3)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 328 | 262 | 323 | 25% | 2% | |||||||||||||||||||||||||||
Pre-tax income | $ | 105 | $ | 28 | $ | 129 | 275% | (19)% | ||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||
| Fixed income | $ | 273 | $ | 171 | 60% | |||||||||||||||
| Equity | 76 | 74 | 3% | |||||||||||||||||
| Total brokerage revenues | 349 | 245 | 42% | |||||||||||||||||
| Investment banking: | ||||||||||||||||||||
| Merger & acquisition and advisory | 271 | 132 | 105% | |||||||||||||||||
| Equity underwriting | 127 | 82 | 55% | |||||||||||||||||
| Debt underwriting | 83 | 53 | 57% | |||||||||||||||||
| Total investment banking | 481 | 267 | 80% | |||||||||||||||||
| Interest income | 8 | 18 | (56)% | |||||||||||||||||
| Tax credit fund revenues | 40 | 30 | 33% | |||||||||||||||||
| All other | 11 | 10 | 10% | |||||||||||||||||
| Total revenues | 889 | 570 | 56% | |||||||||||||||||
| Interest expense | (4) | (12) | (67)% | |||||||||||||||||
| Net revenues | 885 | 558 | 59% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 511 | 350 | 46% | |||||||||||||||||
| Non-compensation expenses | 140 | 151 | (7)% | |||||||||||||||||
| Total non-interest expenses | 651 | 501 | 30% | |||||||||||||||||
| Pre-tax income | $ | 234 | $ | 57 | 311% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
13
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Asset Management | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
Asset management and related administrative fees: | ||||||||||||||||||||||||||||||||
| Managed programs | $ | 137 | $ | 124 | $ | 129 | 10% | 6% | ||||||||||||||||||||||||
| Administration and other | 64 | 53 | 59 | 21% | 8% | |||||||||||||||||||||||||||
Total asset management and related administrative fees | 201 | 177 | 188 | 14% | 7% | |||||||||||||||||||||||||||
| Account and service fees | 5 | 4 | 4 | 25% | 25% | |||||||||||||||||||||||||||
| All other | 3 | 3 | 3 | — | — | |||||||||||||||||||||||||||
| Net revenues | 209 | 184 | 195 | 14% | 7% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 50 | 45 | 45 | 11% | 11% | |||||||||||||||||||||||||||
| Non-compensation expenses | 72 | 66 | 67 | 9% | 7% | |||||||||||||||||||||||||||
| Total non-interest expenses | 122 | 111 | 112 | 10% | 9% | |||||||||||||||||||||||||||
Pre-tax income | $ | 87 | $ | 73 | $ | 83 | 19% | 5% | ||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Asset management and related administrative fees: | ||||||||||||||||||||
| Managed programs | $ | 266 | $ | 249 | 7% | |||||||||||||||
| Administration and other | 123 | 104 | 18% | |||||||||||||||||
| Total asset management and related administrative fees | 389 | 353 | 10% | |||||||||||||||||
| Account and service fees | 9 | 9 | — | |||||||||||||||||
| All other | 6 | 6 | — | |||||||||||||||||
| Net revenues | 404 | 368 | 10% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation, commissions and benefits | 95 | 90 | 6% | |||||||||||||||||
| Non-compensation expenses | 139 | 132 | 5% | |||||||||||||||||
| Total non-interest expenses | 234 | 222 | 5% | |||||||||||||||||
| Pre-tax income | $ | 170 | $ | 146 | 16% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
14
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Raymond James Bank | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 165 | $ | 223 | $ | 168 | (26)% | (2)% | ||||||||||||||||||||||||
| Interest expense | (10) | (18) | (11) | (44)% | (9)% | |||||||||||||||||||||||||||
| Net interest income | 155 | 205 | 157 | (24)% | (1)% | |||||||||||||||||||||||||||
| All other | 5 | 5 | 10 | — | (50)% | |||||||||||||||||||||||||||
| Net revenues | 160 | 210 | 167 | (24)% | (4)% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation and benefits | 13 | 13 | 12 | — | 8% | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | (32) | 109 | 14 | NM | NM | |||||||||||||||||||||||||||
RJBDP fees to Private Client Group (11) | 44 | 48 | 43 | (8)% | 2% | |||||||||||||||||||||||||||
| All other | 24 | 26 | 27 | (8)% | (11)% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 36 | 183 | 84 | (80)% | (57)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 49 | 196 | 96 | (75)% | (49)% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 111 | $ | 14 | $ | 71 | 693% | 56% | ||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Interest income | $ | 333 | $ | 454 | (27)% | |||||||||||||||
| Interest expense | (21) | (39) | (46)% | |||||||||||||||||
| Net interest income | 312 | 415 | (25)% | |||||||||||||||||
| All other | 15 | 11 | 36% | |||||||||||||||||
| Net revenues | 327 | 426 | (23)% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 25 | 25 | — | |||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | (18) | 107 | NM | |||||||||||||||||
RJBDP fees to Private Client Group (11) | 87 | 95 | (8)% | |||||||||||||||||
| All other | 51 | 50 | 2% | |||||||||||||||||
| Total non-compensation expenses | 120 | 252 | (52)% | |||||||||||||||||
| Total non-interest expenses | 145 | 277 | (48)% | |||||||||||||||||
| Pre-tax income | $ | 182 | $ | 149 | 22% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
15
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
| Other | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 3 | $ | 12 | $ | 3 | (75)% | — | ||||||||||||||||||||||||
Gains/(losses) on private equity investments (3) | 8 | (39) | 24 | NM | (67)% | |||||||||||||||||||||||||||
| All other | 2 | — | 1 | NM | 100% | |||||||||||||||||||||||||||
| Total revenues | 13 | (27) | 28 | NM | (54)% | |||||||||||||||||||||||||||
| Interest expense | (25) | (17) | (24) | 47% | 4% | |||||||||||||||||||||||||||
| Net revenues | (12) | (44) | 4 | 73% | NM | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation and all other (3) | 36 | 2 | 26 | 1,700% | 38% | |||||||||||||||||||||||||||
Acquisition-related expenses (5) | — | — | 2 | — | (100)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 36 | 2 | 28 | 1,700% | 29% | |||||||||||||||||||||||||||
Pre-tax loss | $ | (48) | $ | (46) | $ | (24) | (4)% | (100)% | ||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Interest income | $ | 6 | $ | 24 | (75)% | |||||||||||||||
Gains/(losses) on private equity investments (3) | 32 | (41) | NM | |||||||||||||||||
| All other | 3 | 2 | 50% | |||||||||||||||||
| Total revenues | 41 | (15) | NM | |||||||||||||||||
| Interest expense | (49) | (37) | 32% | |||||||||||||||||
| Net revenues | (8) | (52) | 85% | |||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
Compensation and all other (3) | 62 | 25 | 148% | |||||||||||||||||
Acquisition-related expenses (5) | 2 | — | NM | |||||||||||||||||
| Total non-interest expenses | 64 | 25 | 156% | |||||||||||||||||
Pre-tax loss | $ | (72) | $ | (77) | 6% | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
16
| RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
The following metrics are attributable to our banking subsidiary Raymond James Bank, N.A. which is a component of our Raymond James Bank segment.
| As of | % change from | |||||||||||||||||||||||||||||||
$ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
Total assets | $ | 33,221 | $ | 33,656 | $ | 31,580 | (1)% | 5% | ||||||||||||||||||||||||
Total equity | $ | 2,409 | $ | 2,263 | $ | 2,364 | 6% | 2% | ||||||||||||||||||||||||
Bank loans, net | $ | 22,879 | $ | 21,788 | $ | 21,957 | 5% | 4% | ||||||||||||||||||||||||
Bank loan allowance for credit losses (4) | $ | 345 | $ | 324 | $ | 378 | 6% | (9)% | ||||||||||||||||||||||||
Bank loan allowance for credit losses as a % of loans held for investment (4) | 1.50 | % | 1.47 | % | 1.71 | % | ||||||||||||||||||||||||||
| Total nonperforming assets | $ | 31 | $ | 27 | $ | 28 | 15% | 11% | ||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.09 | % | 0.08 | % | 0.09 | % | ||||||||||||||||||||||||||
| Total criticized loans | $ | 1,001 | $ | 387 | $ | 899 | 159% | 11% | ||||||||||||||||||||||||
Criticized loans as a % of loans held for investment | 4.35 | % | 1.76 | % | 4.06 | % | ||||||||||||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||||||
| Tier 1 capital | 13.1 | % | (7) | 12.7 | % | 13.1 | % | |||||||||||||||||||||||||
| Total capital | 14.4 | % | (7) | 13.9 | % | 14.4 | % | |||||||||||||||||||||||||
| Tier 1 leverage | 7.5 | % | (7) | 8.1 | % | 7.5 | % | |||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | $ | (32) | $ | 109 | $ | 14 | NM | NM | ||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||||||||
| Charge-offs related to loan sales | $ | 2 | $ | — | $ | — | NM | NM | ||||||||||||||||||||||||
| All other | — | — | — | — | — | |||||||||||||||||||||||||||
| Total net charge-offs | $ | 2 | $ | — | $ | — | NM | NM | ||||||||||||||||||||||||
| Net interest margin (net yield on interest-earning assets) | 1.94 | % | 3.02 | % | 2.02 | % | ||||||||||||||||||||||||||
| Six months ended | ||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | % change | |||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (4) | $ | (18) | $ | 107 | NM | |||||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||||||||
| Charge-offs related to loan sales | $ | 2 | $ | — | NM | |||||||||||||||||||||||||||
| All other | — | — | — | |||||||||||||||||||||||||||||
| Total net charge-offs | $ | 2 | $ | — | NM | |||||||||||||||||||||||||||
| Net interest margin (net yield on interest-earning assets) | 1.98 | % | 3.12 | % | ||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
17
| RAYMOND JAMES FINANCIAL, INC. | Non-GAAP Financial Measures | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
Reconciliation of non-GAAP financial measures to GAAP financial measures
We utilize certain non-GAAP financial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures have been separately identified in this document. We believe 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 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 tables, 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 tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures for those periods which include non-GAAP adjustments.
| Three months ended | Six months ended | |||||||||||||
| $ in millions, except per share amounts | December 31, 2020 | March 31, 2021 | ||||||||||||
Net income | $ | 312 | $ | 667 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition-related expenses (5) | 2 | 2 | ||||||||||||
| Pre-tax impact of non-GAAP adjustments | 2 | 2 | ||||||||||||
Tax effect of non-GAAP adjustments | — | — | ||||||||||||
Total non-GAAP adjustments, net of tax | 2 | 2 | ||||||||||||
Adjusted net income | $ | 314 | $ | 669 | ||||||||||
Pre-tax income | $ | 399 | $ | 846 | ||||||||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 2 | 2 | ||||||||||||
Adjusted pre-tax income | $ | 401 | $ | 848 | ||||||||||
Pre-tax margin (9) | 18.0 | % | 18.4 | % | ||||||||||
Adjusted pre-tax margin (9) | 18.0 | % | 18.5 | % | ||||||||||
Earnings per common share: (2) | ||||||||||||||
| Basic | $ | 2.27 | $ | 4.85 | ||||||||||
| Adjusted basic | $ | 2.29 | $ | 4.87 | ||||||||||
| Diluted | $ | 2.23 | $ | 4.74 | ||||||||||
| Adjusted diluted | $ | 2.24 | $ | 4.76 | ||||||||||
Please refer to the footnotes at the end of this press release for additional information.
18
| RAYMOND JAMES FINANCIAL, INC. | Non-GAAP Financial Measures | ||||
| Fiscal Second Quarter of 2021 | (Unaudited) | ||||
Reconciliation of non-GAAP financial measures to GAAP financial measures
(Continued from previous page)
| Book value per share | As of | |||||||||||||||||||
| $ in millions, except per share amounts | March 31, 2021 | March 31, 2020 | December 31, 2020 | |||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 7,592 | $ | 6,798 | $ | 7,363 | ||||||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 868 | 603 | 834 | |||||||||||||||||
| Deferred tax liabilities, net | (56) | (30) | (56) | |||||||||||||||||
| Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,780 | $ | 6,225 | $ | 6,585 | ||||||||||||||
| Common shares outstanding | 137.2 | 136.8 | 137.4 | |||||||||||||||||
Book value per share (6) | $ | 55.34 | $ | 49.69 | $ | 53.59 | ||||||||||||||
Tangible book value per share (6) | $ | 49.42 | $ | 45.50 | $ | 47.93 | ||||||||||||||
| Return on equity | Three months ended | Six months ended | |||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | ||||||||||||||||||||||||||||||
Average equity (16) | $ | 7,478 | $ | 6,820 | $ | 7,239 | $ | 7,356 | $ | 6,740 | |||||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Acquisition-related expenses (5) | NA | NA | 1 | 1 | NA | ||||||||||||||||||||||||||||||
Adjusted average equity (16) | NA | NA | $ | 7,240 | $ | 7,357 | NA | ||||||||||||||||||||||||||||
Average equity (16) | $ | 7,478 | $ | 6,820 | $ | 7,239 | $ | 7,356 | $ | 6,740 | |||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||
| Average goodwill and identifiable intangible assets, net | 851 | 606 | 717 | 767 | 608 | ||||||||||||||||||||||||||||||
| Average deferred tax liabilities, net | (56) | (31) | (45) | (49) | (30) | ||||||||||||||||||||||||||||||
Average tangible common equity (16) | $ | 6,683 | $ | 6,245 | $ | 6,567 | $ | 6,638 | $ | 6,162 | |||||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Acquisition-related expenses (5) | NA | NA | 1 | 1 | NA | ||||||||||||||||||||||||||||||
Adjusted average tangible common equity (16) | NA | NA | $ | 6,568 | $ | 6,639 | NA | ||||||||||||||||||||||||||||
Return on equity (8) | 19.0 | % | 9.9 | % | 17.2 | % | 18.1 | % | 13.0 | % | |||||||||||||||||||||||||
Adjusted return on equity (8) | NA | NA | 17.3 | % | 18.2 | % | NA | ||||||||||||||||||||||||||||
Return on tangible common equity (8) | 21.2 | % | 10.8 | % | 19.0 | % | 20.1 | % | 14.2 | % | |||||||||||||||||||||||||
Adjusted return on tangible common equity (8) | NA | NA | 19.1 | % | 20.2 | % | NA | ||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
19
RAYMOND JAMES FINANCIAL, INC.
Fiscal Second Quarter of 2021
Footnotes
| (1) | These are non-GAAP financial measures. See the schedules on the previous pages for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures and for more information on these measures. As there were no non-GAAP adjustments to earnings for the three months ended March 31, 2021, percent changes for earnings-related non-GAAP financial measures are calculated based on GAAP results for the three months ended March 31, 2021 as compared to non-GAAP results for the three months ended December 31, 2020. In addition, as there were no non-GAAP adjustments to earnings for the six months ended March 31, 2020, percent changes for earnings-related non-GAAP financial measures are calculated based on non-GAAP results for the six months ended March 31, 2021 as compared to GAAP results for the six months ended March 31, 2020. | |||||||
| (2) | Earnings per common share is computed by dividing net income (less allocation of earnings and dividends to participating securities) by weighted-average common shares outstanding (basic or diluted as applicable) for each respective period or, in the case of adjusted earnings per common 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) | Other revenues included $8 million of private equity valuation gains, $39 million of private equity valuation losses, and $24 million of private equity gains for the three months ended March 31, 2021, March 31, 2020 and December 31, 2020, respectively, which were included in our Other segment. Of these amounts, an insignificant amount of the gains for the three months ended March 31, 2021, $22 million of the losses for three months ended March 31, 2020 and $10 million of the gains for the three months ended December 31, 2020 were attributable to noncontrolling interests and were offset in Other expenses. Other revenues included $32 million of private equity valuation gains and $41 million of private equity valuation losses for the six months ended March 31, 2021 and 2020, respectively, which were included in our Other segment. Of these amounts, $10 million of the gains for the six months ended March 31, 2021 and $23 million of the losses for the six months ended March 31, 2020 were attributable to noncontrolling interests and were offset in Other expenses. | |||||||
| (4) | The allowance for credit losses as of March 31, 2021 was determined under the current expected credit loss (“CECL”) model as a result of our October 1, 2020 adoption of new accounting guidance related to the measurement of credit losses on financial instruments. The impact of adoption on October 1, 2020 resulted in an increase in our allowance for credit losses, including reserves for unfunded lending commitments, of approximately $45 million (primarily $25 million related to loans to financial advisors in the Private Client Group and approximately $10 million related to Bank loans outstanding) and a corresponding reduction in retained earnings of approximately $35 million, net of tax. The Bank loan provision/(benefit) for credit losses of $(32) million and $14 million for the three months ended March 31, 2021 and December 31, 2020, respectively, and $(18) million for the six months ended March 31, 2021, were determined under the CECL model and represented the provision/(benefit) for credit losses post the CECL adoption date. | |||||||
| (5) | The three months ended December 31, 2020 and the six months ended March 31, 2021 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was completed in December 2020, as well as our acquisition of Financo which was completed in March 2021. | |||||||
| (6) | Book value per share is computed by dividing total equity attributable to Raymond James Financial, Inc. by the number of common shares outstanding at the end of each respective period or, in the case of tangible book value per share, computed by dividing tangible common equity by the number of common shares outstanding at the end of each respective period. Tangible common equity is defined as total equity attributable to Raymond James Financial, Inc. less goodwill and intangible assets, net of related deferred taxes. | |||||||
| (7) | Estimated. | |||||||
| (8) | Return on equity is computed by dividing annualized net income by average equity for each respective period or, in the case of return on tangible common equity, computed by dividing annualized net income by average tangible common equity for each respective period. 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) | Pre-tax margin is 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) | Total compensation ratio is computed by dividing compensation, commissions and benefits expense by net revenues for each respective period. | |||||||
| (11) | We earn fees from RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at Raymond James Bank and various third-party banks. Fees earned by Private Client Group on Raymond James Bank deposits are eliminated in consolidation. | |||||||
| (12) | Average yield on RJBDP - third-party banks is computed by dividing annualized RJBDP fees - third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balances at third-party banks. | |||||||
| (13) | As a result of our adoption of CECL, we have redefined certain of our loan portfolio segments to align with the new methodology applied in determining the allowance for credit losses, including the combination of the CRE and CRE construction loan portfolios and the separation of loans to REITs into a separate portfolio segment (previously included in CRE loans and C&I loans). Prior period loan portfolio segments have been revised to conform to the current presentation. | |||||||
| (14) | The average yield is presented on a tax-equivalent basis for each respective period. | |||||||
| (15) | 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. | |||||||
| (16) | Average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. For the year-to-date period, average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three. 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. | |||||||
20
EARNINGS RELEASE FINANCIAL SUPPLEMENT
SECOND QUARTER
OF FISCAL 2021 RESULTS
RAYMOND JAMES FINANCIAL, INC.
Consolidated Statements of Income (Unaudited)
| Three months ended | % change from | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| in millions, except per share amounts | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 1,006 | $ | 867 | $ | 1,006 | $ | 1,067 | $ | 1,173 | 17 | % | 10 | % | $ | 1,961 | $ | 2,240 | 14 | % | ||||||||||||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities commissions | 410 | 343 | 352 | 381 | 443 | 8 | % | 16 | % | 773 | 824 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Principal transactions | 105 | 143 | 143 | 147 | 148 | 41 | % | 1 | % | 202 | 295 | 46 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 515 | 486 | 495 | 528 | 591 | 15 | % | 12 | % | 975 | 1,119 | 15 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Account and service fees | 172 | 134 | 140 | 145 | 159 | (8) | % | 10 | % | 350 | 304 | (13) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investment banking | 148 | 139 | 222 | 261 | 242 | 64 | % | (7) | % | 289 | 503 | 74 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 285 | 217 | 201 | 203 | 200 | (30) | % | (1) | % | 582 | 403 | (31) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | (15) | 33 | 57 | 56 | 44 | NM | (21) | % | 14 | 100 | 614 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 2,111 | 1,876 | 2,121 | 2,260 | 2,409 | 14 | % | 7 | % | 4,171 | 4,669 | 12 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (43) | (42) | (42) | (38) | (37) | (14) | % | (3) | % | (94) | (75) | (20) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | 2,068 | 1,834 | 2,079 | 2,222 | 2,372 | 15 | % | 7 | % | 4,077 | 4,594 | 13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation, commissions and benefits | 1,422 | 1,277 | 1,415 | 1,500 | 1,648 | 16 | % | 10 | % | 2,773 | 3,148 | 14 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Communications and information processing | 99 | 100 | 100 | 99 | 107 | 8 | % | 8 | % | 193 | 206 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 56 | 55 | 57 | 57 | 57 | 2 | % | — | 113 | 114 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Business development | 41 | 21 | 28 | 23 | 21 | (49) | % | (9) | % | 85 | 44 | (48) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investment sub-advisory fees | 26 | 23 | 26 | 28 | 31 | 19 | % | 11 | % | 52 | 59 | 13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Professional fees | 23 | 24 | 23 | 30 | 24 | 4 | % | (20) | % | 44 | 54 | 23 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | 109 | 81 | 45 | 14 | (32) | NM | NM | 107 | (18) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | — | — | 7 | 2 | — | — | (100) | % | — | 2 | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | — | — | 46 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | 53 | 55 | 76 | 70 | 69 | 30 | % | (1) | % | 112 | 139 | 24 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-compensation expenses | 407 | 359 | 408 | 323 | 277 | (32) | % | (14) | % | 706 | 600 | (15) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 1,829 | 1,636 | 1,823 | 1,823 | 1,925 | 5 | % | 6 | % | 3,479 | 3,748 | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax income | 239 | 198 | 256 | 399 | 447 | 87 | % | 12 | % | 598 | 846 | 41 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 70 | 26 | 47 | 87 | 92 | 31 | % | 6 | % | 161 | 179 | 11 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 169 | $ | 172 | $ | 209 | $ | 312 | $ | 355 | 110 | % | 14 | % | $ | 437 | $ | 667 | 53 | % | ||||||||||||||||||||||||||||||||||||||||||
Earnings per common share – basic (5) | $ | 1.22 | $ | 1.25 | $ | 1.53 | $ | 2.27 | $ | 2.58 | 111 | % | 14 | % | $ | 3.15 | $ | 4.85 | 54 | % | ||||||||||||||||||||||||||||||||||||||||||
Earnings per common share – diluted (5) | $ | 1.20 | $ | 1.23 | $ | 1.50 | $ | 2.23 | $ | 2.51 | 109 | % | 13 | % | $ | 3.09 | $ | 4.74 | 53 | % | ||||||||||||||||||||||||||||||||||||||||||
Weighted-average common shares outstanding – basic | 138.4 | 137.1 | 136.9 | 136.8 | 137.8 | — | 1 | % | 138.4 | 137.3 | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 141.1 | 139.4 | 139.6 | 139.7 | 141.2 | — | 1 | % | 141.3 | 140.4 | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
2
RAYMOND JAMES FINANCIAL, INC.
Consolidated Selected Key Metrics (Unaudited)
| As of | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
| Total assets | $ | 49,809 | $ | 44,682 | $ | 47,482 | $ | 53,657 | $ | 56,066 | 13 | % | 4 | % | ||||||||||||||||||||||||||||||
| Total equity attributable to Raymond James Financial, Inc. | $ | 6,798 | $ | 6,965 | $ | 7,114 | $ | 7,363 | $ | 7,592 | 12 | % | 3 | % | ||||||||||||||||||||||||||||||
Book value per share (6) | $ | 49.69 | $ | 50.84 | $ | 52.08 | $ | 53.59 | $ | 55.34 | 11 | % | 3 | % | ||||||||||||||||||||||||||||||
Tangible book value per share (6) (7) | $ | 45.50 | $ | 46.69 | $ | 47.94 | $ | 47.93 | $ | 49.42 | 9 | % | 3 | % | ||||||||||||||||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 24.1 | % | 24.8 | % | 24.2 | % | 23.4 | % | 23.6 | % | (8) | |||||||||||||||||||||||||||||||||
| Total capital | 25.3 | % | 26.0 | % | 25.4 | % | 24.6 | % | 24.7 | % | (8) | |||||||||||||||||||||||||||||||||
| Tier 1 leverage | 14.2 | % | 14.5 | % | 14.2 | % | 12.9 | % | 12.2 | % | (8) | |||||||||||||||||||||||||||||||||
| Three months ended | % change from | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted pre-tax income (7) | NA | NA | $ | 309 | $ | 401 | NA | NA | 11 | % | NA | $ | 848 | 42 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Adjusted net income (7) | NA | NA | $ | 249 | $ | 314 | NA | NA | 13 | % | NA | $ | 669 | 53 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Adjusted earnings per common share - basic (5) (7) | NA | NA | $ | 1.82 | $ | 2.29 | NA | NA | 13 | % | NA | $ | 4.87 | 55 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Adjusted earnings per common share - diluted (5) (7) | NA | NA | $ | 1.78 | $ | 2.24 | NA | NA | 12 | % | NA | $ | 4.76 | 54 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Return on equity (9) | 9.9 | % | 10.0 | % | 11.9 | % | 17.2 | % | 19.0 | % | 13.0 | % | 18.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted return on equity (7) (9) | NA | NA | 14.1 | % | 17.3 | % | NA | NA | 18.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity (7) (9) | 10.8 | % | 10.9 | % | 12.9 | % | 19.0 | % | 21.2 | % | 14.2 | % | 20.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted return on tangible common equity (7) (9) | NA | NA | 15.3 | % | 19.1 | % | NA | NA | 20.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax margin (10) | 11.6 | % | 10.8 | % | 12.3 | % | 18.0 | % | 18.8 | % | 14.7 | % | 18.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted pre-tax margin (7) (10) | NA | NA | 14.9 | % | 18.0 | % | NA | NA | 18.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total compensation ratio (11) | 68.8 | % | 69.6 | % | 68.1 | % | 67.5 | % | 69.5 | % | 68.0 | % | 68.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 29.3 | % | 13.1 | % | 18.4 | % | 21.8 | % | 20.6 | % | 26.9 | % | 21.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
3
RAYMOND JAMES FINANCIAL, INC.
Consolidated Selected Key Metrics (Unaudited)
| As of | % change from | ||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Client asset metrics ($ in billions): | |||||||||||||||||||||||||||||||||||||||||||||||
| Client assets under administration | $ | 773.9 | $ | 876.9 | $ | 930.1 | $ | 1,024.8 | $ | 1,085.4 | 40 | % | 6 | % | |||||||||||||||||||||||||||||||||
| Private Client Group assets under administration | $ | 734.0 | $ | 833.1 | $ | 883.3 | $ | 974.2 | $ | 1,028.1 | 40 | % | 6 | % | |||||||||||||||||||||||||||||||||
| Private Client Group assets in fee-based accounts | $ | 383.5 | $ | 443.0 | $ | 475.3 | $ | 532.7 | $ | 567.6 | 48 | % | 7 | % | |||||||||||||||||||||||||||||||||
| Financial assets under management | $ | 128.2 | $ | 145.4 | $ | 153.1 | $ | 169.6 | $ | 178.2 | 39 | % | 5 | % | |||||||||||||||||||||||||||||||||
Clients' domestic cash sweep balances ($ in millions): | |||||||||||||||||||||||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (12) | |||||||||||||||||||||||||||||||||||||||||||||||
| Raymond James Bank | $ | 28,711 | $ | 24,101 | $ | 25,599 | $ | 26,697 | $ | 28,174 | (2) | % | 6 | % | |||||||||||||||||||||||||||||||||
| Third-party banks | 20,379 | 24,661 | 25,998 | 26,142 | 25,110 | 23 | % | (4) | % | ||||||||||||||||||||||||||||||||||||||
| Subtotal RJBDP | 49,090 | 48,762 | 51,597 | 52,839 | 53,284 | 9 | % | 1 | % | ||||||||||||||||||||||||||||||||||||||
| Client Interest Program | 3,782 | 3,157 | 3,999 | 8,769 | 9,517 | 152 | % | 9 | % | ||||||||||||||||||||||||||||||||||||||
| Total clients’ domestic cash sweep balances | $ | 52,872 | $ | 51,919 | $ | 55,596 | $ | 61,608 | $ | 62,801 | 19 | % | 2 | % | |||||||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Average yield on RJBDP - third-party banks (13) | 1.33 | % | 0.33 | % | 0.33 | % | 0.31 | % | 0.30 | % | 1.48 | % | 0.31 | % | |||||||||||||||||||||||||||||||||
| As of | % change from | ||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Private Client Group financial advisors: | |||||||||||||||||||||||||||||||||||||||||||||||
| Employees | 3,376 | 3,379 | 3,404 | 3,387 | 3,375 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Independent contractors | 4,772 | 4,776 | 4,835 | 4,846 | 4,952 | 4 | % | 2 | % | ||||||||||||||||||||||||||||||||||||||
| Total advisors | 8,148 | 8,155 | 8,239 | 8,233 | 8,327 | 2 | % | 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 | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 833 | $ | 715 | $ | 832 | $ | 885 | $ | 979 | 18 | % | 11 | % | $ | 1,615 | $ | 1,864 | 15 | % | ||||||||||||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual and other fund products | 163 | 131 | 129 | 148 | 183 | 12 | % | 24 | % | 307 | 331 | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance and annuity products | 99 | 88 | 109 | 98 | 109 | 10 | % | 11 | % | 200 | 207 | 4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Equities, ETFs, and fixed income products | 122 | 100 | 95 | 107 | 121 | (1) | % | 13 | % | 224 | 228 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 384 | 319 | 333 | 353 | 413 | 8 | % | 17 | % | 731 | 766 | 5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Account and service fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mutual fund and annuity service fees | 88 | 82 | 88 | 94 | 99 | 13 | % | 5 | % | 178 | 193 | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
RJBDP fees: (12) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Third-party banks | 51 | 20 | 21 | 21 | 19 | (63) | % | (10) | % | 109 | 40 | (63) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Raymond James Bank | 48 | 43 | 42 | 43 | 44 | (8) | % | 2 | % | 95 | 87 | (8) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Client account and other fees | 35 | 32 | 33 | 32 | 42 | 20 | % | 31 | % | 64 | 74 | 16 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Total account and service fees | 222 | 177 | 184 | 190 | 204 | (8) | % | 7 | % | 446 | 394 | (12) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investment banking | 11 | 7 | 12 | 6 | 16 | 45 | % | 167 | % | 22 | 22 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 45 | 31 | 30 | 30 | 30 | (33) | % | — | 94 | 60 | (36) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other | 7 | 4 | 7 | 5 | 8 | 14 | % | 60 | % | 16 | 13 | (19) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 1,502 | 1,253 | 1,398 | 1,469 | 1,650 | 10 | % | 12 | % | 2,924 | 3,119 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (7) | (4) | (4) | (2) | (3) | (57) | % | 50 | % | (15) | (5) | (67) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | 1,495 | 1,249 | 1,394 | 1,467 | 1,647 | 10 | % | 12 | % | 2,909 | 3,114 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial advisor compensation and benefits | 915 | 783 | 873 | 931 | 1,040 | 14 | % | 12 | % | 1,772 | 1,971 | 11 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Administrative compensation and benefits | 245 | 235 | 244 | 249 | 260 | 6 | % | 4 | % | 492 | 509 | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Total compensation, commissions and benefits | 1,160 | 1,018 | 1,117 | 1,180 | 1,300 | 12 | % | 10 | % | 2,264 | 2,480 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-compensation expenses | 165 | 140 | 152 | 147 | 155 | (6) | % | 5 | % | 322 | 302 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Total non-interest expenses | 1,325 | 1,158 | 1,269 | 1,327 | 1,455 | 10 | % | 10 | % | 2,586 | 2,782 | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 170 | $ | 91 | $ | 125 | $ | 140 | $ | 192 | 13 | % | 37 | % | $ | 323 | $ | 332 | 3 | % | ||||||||||||||||||||||||||||||||||||||||||
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 | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | $ | 90 | $ | 125 | $ | 125 | $ | 131 | $ | 142 | 58 | % | 8 | % | $ | 171 | $ | 273 | 60 | % | ||||||||||||||||||||||||||||||||||||||||||
| Equity | 40 | 41 | 35 | 42 | 34 | (15) | % | (19) | % | 74 | 76 | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 130 | 166 | 160 | 173 | 176 | 35 | % | 2 | % | 245 | 349 | 42 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investment banking: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger & acquisition and advisory | 72 | 60 | 98 | 149 | 122 | 69 | % | (18) | % | 132 | 271 | 105 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity underwriting | 43 | 35 | 68 | 60 | 67 | 56 | % | 12 | % | 82 | 127 | 55 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Debt underwriting | 22 | 37 | 43 | 46 | 37 | 68 | % | (20) | % | 53 | 83 | 57 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment banking | 137 | 132 | 209 | 255 | 226 | 65 | % | (11) | % | 267 | 481 | 80 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 10 | 4 | 3 | 3 | 5 | (50) | % | 67 | % | 18 | 8 | (56) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Tax credit fund revenues | 12 | 20 | 33 | 16 | 24 | 100 | % | 50 | % | 30 | 40 | 33 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| All other | 7 | 3 | 7 | 7 | 4 | (43) | % | (43) | % | 10 | 11 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 296 | 325 | 412 | 454 | 435 | 47 | % | (4) | % | 570 | 889 | 56 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (6) | (2) | (2) | (2) | (2) | (67) | % | — | (12) | (4) | (67) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | 290 | 323 | 410 | 452 | 433 | 49 | % | (4) | % | 558 | 885 | 59 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 184 | 195 | 229 | 252 | 259 | 41 | % | 3 | % | 350 | 511 | 46 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-compensation expenses (3) | 78 | 66 | 75 | 71 | 69 | (12) | % | (3) | % | 151 | 140 | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 262 | 261 | 304 | 323 | 328 | 25 | % | 2 | % | 501 | 651 | 30 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 28 | $ | 62 | $ | 106 | $ | 129 | $ | 105 | 275 | % | (19) | % | $ | 57 | $ | 234 | 311 | % | ||||||||||||||||||||||||||||||||||||||||||
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 | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Managed programs | $ | 124 | $ | 109 | $ | 123 | $ | 129 | $ | 137 | 10 | % | 6 | % | $ | 249 | $ | 266 | 7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Administration and other | 53 | 48 | 55 | 59 | 64 | 21 | % | 8 | % | 104 | 123 | 18 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Total asset management and related administrative fees | 177 | 157 | 178 | 188 | 201 | 14 | % | 7 | % | 353 | 389 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Account and service fees | 4 | 3 | 4 | 4 | 5 | 25 | % | 25 | % | 9 | 9 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other | 3 | 3 | 2 | 3 | 3 | — | — | 6 | 6 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | 184 | 163 | 184 | 195 | 209 | 14 | % | 7 | % | 368 | 404 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 45 | 44 | 43 | 45 | 50 | 11 | % | 11 | % | 90 | 95 | 6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-compensation expenses | 66 | 59 | 63 | 67 | 72 | 9 | % | 7 | % | 132 | 139 | 5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 111 | 103 | 106 | 112 | 122 | 10 | % | 9 | % | 222 | 234 | 5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 73 | $ | 60 | $ | 78 | $ | 83 | $ | 87 | 19 | % | 5 | % | $ | 146 | $ | 170 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||
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 | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 223 | $ | 181 | $ | 165 | $ | 168 | $ | 165 | (26) | % | (2) | % | $ | 454 | $ | 333 | (27) | % | ||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (18) | (12) | (11) | (11) | (10) | (44) | % | (9) | % | (39) | (21) | (46) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 205 | 169 | 154 | 157 | 155 | (24) | % | (1) | % | 415 | 312 | (25) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| All other | 5 | 9 | 7 | 10 | 5 | — | (50) | % | 11 | 15 | 36 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | 210 | 178 | 161 | 167 | 160 | (24) | % | (4) | % | 426 | 327 | (23) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 13 | 13 | 13 | 12 | 13 | — | 8 | % | 25 | 25 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | 109 | 81 | 45 | 14 | (32) | NM | NM | 107 | (18) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||
RJBDP fees to Private Client Group (12) | 48 | 43 | 42 | 43 | 44 | (8) | % | 2 | % | 95 | 87 | (8) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| All other | 26 | 27 | 28 | 27 | 24 | (8) | % | (11) | % | 50 | 51 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-compensation expenses | 183 | 151 | 115 | 84 | 36 | (80) | % | (57) | % | 252 | 120 | (52) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 196 | 164 | 128 | 96 | 49 | (75) | % | (49) | % | 277 | 145 | (48) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 14 | $ | 14 | $ | 33 | $ | 71 | $ | 111 | 693 | % | 56 | % | $ | 149 | $ | 182 | 22 | % | ||||||||||||||||||||||||||||||||||||||||||
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 | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 12 | $ | 3 | $ | 3 | $ | 3 | $ | 3 | (75) | % | — | $ | 24 | $ | 6 | (75) | % | |||||||||||||||||||||||||||||||||||||||||||
Gains/(losses) on private equity investments (1) | (39) | 1 | 12 | 24 | 8 | NM | (67) | % | (41) | 32 | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||
| All other | — | 2 | — | 1 | 2 | NM | 100 | % | 2 | 3 | 50 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | (27) | 6 | 15 | 28 | 13 | NM | (54) | % | (15) | 41 | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (17) | (26) | (25) | (24) | (25) | 47 | % | 4 | % | (37) | (49) | 32 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | (44) | (20) | (10) | 4 | (12) | 73 | % | NM | (52) | (8) | 85 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and all other (1) | 2 | 9 | 30 | 26 | 36 | 1,700 | % | 38 | % | 25 | 62 | 148 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | — | — | 46 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition-related expenses (3) | — | — | — | 2 | — | — | (100) | % | — | 2 | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 2 | 9 | 76 | 28 | 36 | 1,700 | % | 29 | % | 25 | 64 | 156 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax loss | $ | (46) | $ | (29) | $ | (86) | $ | (24) | $ | (48) | (4) | % | (100) | % | $ | (77) | $ | (72) | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
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)
The following metrics are attributable to our banking subsidiary Raymond James Bank, N.A. which is a component of our Raymond James Bank segment.
| As of | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
| Total assets | $ | 33,656 | $ | 29,066 | $ | 30,610 | $ | 31,580 | $ | 33,221 | (1) | % | 5 | % | ||||||||||||||||||||||||||||||
| Total equity | $ | 2,263 | $ | 2,279 | $ | 2,315 | $ | 2,364 | $ | 2,409 | 6 | % | 2 | % | ||||||||||||||||||||||||||||||
| Bank loans, net | $ | 21,788 | $ | 21,223 | $ | 21,195 | $ | 21,957 | $ | 22,879 | 5 | % | 4 | % | ||||||||||||||||||||||||||||||
Bank loan allowance for credit losses (2) | $ | 324 | $ | 334 | $ | 354 | $ | 378 | $ | 345 | 6 | % | (9) | % | ||||||||||||||||||||||||||||||
Bank loan allowance for credit losses as a % of loans held for investment (2) | 1.47 | % | 1.56 | % | 1.65 | % | 1.71 | % | 1.50 | % | ||||||||||||||||||||||||||||||||||
| Total nonperforming assets | $ | 27 | $ | 23 | $ | 32 | $ | 28 | $ | 31 | 15 | % | 11 | % | ||||||||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.08 | % | 0.08 | % | 0.10 | % | 0.09 | % | 0.09 | % | ||||||||||||||||||||||||||||||||||
| Total criticized loans | $ | 387 | $ | 733 | $ | 933 | $ | 899 | $ | 1,001 | 159 | % | 11 | % | ||||||||||||||||||||||||||||||
| Criticized loans as a % of loans held for investment | 1.76 | % | 3.41 | % | 4.35 | % | 4.06 | % | 4.35 | % | ||||||||||||||||||||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 12.7 | % | 12.8 | % | 13.0 | % | 13.1 | % | 13.1 | % | (8) | |||||||||||||||||||||||||||||||||
| Total capital | 13.9 | % | 14.1 | % | 14.3 | % | 14.4 | % | 14.4 | % | (8) | |||||||||||||||||||||||||||||||||
| Tier 1 leverage | 8.1 | % | 7.6 | % | 7.7 | % | 7.5 | % | 7.5 | % | (8) | |||||||||||||||||||||||||||||||||
| Three months ended | % change from | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | December 31, 2020 | March 31, 2020 | March 31, 2021 | % change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | $ | 109 | $ | 81 | $ | 45 | $ | 14 | $ | (32) | NM | NM | $ | 107 | $ | (18) | NM | |||||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | — | $ | 72 | $ | 26 | $ | — | $ | 2 | NM | NM | $ | — | $ | 2 | NM | |||||||||||||||||||||||||||||||||||||||||||||
Net interest margin (net yield on interest-earning assets) | 3.02 | % | 2.29 | % | 2.09 | % | 2.02 | % | 1.94 | % | 3.12 | % | 1.98 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
10
RAYMOND JAMES FINANCIAL, INC.
Reconciliation of non-GAAP financial measures to 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 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 tables, 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 tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures for those periods which include non-GAAP adjustments.
| Three months ended | Six months ended | |||||||||||||||||||
| $ in millions | September 30, 2020 | December 31, 2020 | March 31, 2021 | |||||||||||||||||
Net income | $ | 209 | $ | 312 | $ | 667 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (3) | 7 | 2 | 2 | |||||||||||||||||
Reduction in workforce expenses (4) | 46 | — | — | |||||||||||||||||
| Pre-tax impact of non-GAAP adjustments | 53 | 2 | 2 | |||||||||||||||||
Tax effect of non-GAAP adjustments | (13) | — | — | |||||||||||||||||
Total non-GAAP adjustments, net of tax | 40 | 2 | 2 | |||||||||||||||||
Adjusted net income | $ | 249 | $ | 314 | $ | 669 | ||||||||||||||
Pre-tax income | $ | 256 | $ | 399 | $ | 846 | ||||||||||||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 53 | 2 | 2 | |||||||||||||||||
Adjusted pre-tax income | $ | 309 | $ | 401 | $ | 848 | ||||||||||||||
Pre-tax margin (10) | 12.3 | % | 18.0 | % | 18.4 | % | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (3) | 0.4 | % | — | % | 0.1 | % | ||||||||||||||
Reduction in workforce expenses (4) | 2.2 | % | — | % | — | % | ||||||||||||||
Total non-GAAP adjustments, net of tax | 2.6 | % | — | % | 0.1 | % | ||||||||||||||
Adjusted pre-tax margin (10) | 14.9 | % | 18.0 | % | 18.5 | % | ||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
11
RAYMOND JAMES FINANCIAL, INC.
Reconciliation of non-GAAP financial measures to GAAP financial measures (Unaudited)
(Continued from previous page)
| Three months ended | Six months ended | |||||||||||||||||||
Earnings per common share (5) | September 30, 2020 | December 31, 2020 | March 31, 2021 | |||||||||||||||||
| Basic | $ | 1.53 | $ | 2.27 | $ | 4.85 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (3) | 0.05 | 0.02 | 0.02 | |||||||||||||||||
Reduction in workforce expenses (4) | 0.34 | — | — | |||||||||||||||||
| Tax effect of non-GAAP adjustments | (0.10) | — | — | |||||||||||||||||
| Total non-GAAP adjustments, net of tax | 0.29 | 0.02 | 0.02 | |||||||||||||||||
| Adjusted basic | $ | 1.82 | $ | 2.29 | $ | 4.87 | ||||||||||||||
| Diluted | $ | 1.50 | $ | 2.23 | $ | 4.74 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (3) | 0.05 | 0.01 | 0.02 | |||||||||||||||||
Reduction in workforce expenses (4) | 0.33 | — | — | |||||||||||||||||
| Tax effect of non-GAAP adjustments | (0.10) | — | — | |||||||||||||||||
| Total non-GAAP adjustments, net of tax | 0.28 | 0.01 | 0.02 | |||||||||||||||||
| Adjusted diluted | $ | 1.78 | $ | 2.24 | $ | 4.76 | ||||||||||||||
| Book value per share | As of | |||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | |||||||||||||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,798 | $ | 6,965 | $ | 7,114 | $ | 7,363 | $ | 7,592 | ||||||||||||||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 603 | 602 | 600 | 834 | 868 | |||||||||||||||||||||||||||
| Deferred tax liabilities, net | (30) | (33) | (34) | (56) | (56) | |||||||||||||||||||||||||||
| Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,225 | $ | 6,396 | $ | 6,548 | $ | 6,585 | $ | 6,780 | ||||||||||||||||||||||
| Common shares outstanding | 136.8 | 137.0 | 136.6 | 137.4 | 137.2 | |||||||||||||||||||||||||||
Book value per share (6) | $ | 49.69 | $ | 50.84 | $ | 52.08 | $ | 53.59 | $ | 55.34 | ||||||||||||||||||||||
Tangible book value per share (6) | $ | 45.50 | $ | 46.69 | $ | 47.94 | $ | 47.93 | $ | 49.42 | ||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
12
RAYMOND JAMES FINANCIAL, INC.
Reconciliation of non-GAAP financial measures to GAAP financial measures (Unaudited)
(Continued from previous page)
| Return on equity | Three months ended | Six months ended | |||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | March 31, 2021 | March 31, 2020 | March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||
Average equity (15) | $ | 6,820 | $ | 6,882 | $ | 7,040 | $ | 7,239 | $ | 7,478 | $ | 6,740 | $ | 7,356 | |||||||||||||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | NA | NA | 4 | 1 | NA | NA | 1 | ||||||||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | NA | NA | 23 | — | NA | NA | — | ||||||||||||||||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | NA | NA | (7) | — | NA | NA | — | ||||||||||||||||||||||||||||||||||||||||
Adjusted average equity (15) | NA | NA | $ | 7,060 | $ | 7,240 | NA | NA | $ | 7,357 | |||||||||||||||||||||||||||||||||||||
Average equity (15) | $ | 6,820 | $ | 6,882 | $ | 7,040 | $ | 7,239 | $ | 7,478 | $ | 6,740 | $ | 7,356 | |||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Average goodwill and identifiable intangible assets, net | 606 | 603 | 601 | 717 | 851 | 608 | 767 | ||||||||||||||||||||||||||||||||||||||||
| Average deferred tax liabilities, net | (31) | (32) | (33) | (45) | (56) | (30) | (49) | ||||||||||||||||||||||||||||||||||||||||
Average tangible common equity (15) | $ | 6,245 | $ | 6,311 | $ | 6,472 | $ | 6,567 | $ | 6,683 | $ | 6,162 | $ | 6,638 | |||||||||||||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | NA | NA | 4 | 1 | NA | NA | 1 | ||||||||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | NA | NA | 23 | — | NA | NA | — | ||||||||||||||||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | NA | NA | (7) | — | NA | NA | — | ||||||||||||||||||||||||||||||||||||||||
Adjusted average tangible common equity (15) | NA | NA | $ | 6,492 | $ | 6,568 | NA | NA | $ | 6,639 | |||||||||||||||||||||||||||||||||||||
Return on equity (9) | 9.9 | % | 10.0 | % | 11.9 | % | 17.2 | % | 19.0 | % | 13.0 | % | 18.1 | % | |||||||||||||||||||||||||||||||||
Adjusted return on equity (9) | NA | NA | 14.1 | % | 17.3 | % | NA | NA | 18.2 | % | |||||||||||||||||||||||||||||||||||||
Return on tangible common equity (9) | 10.8 | % | 10.9 | % | 12.9 | % | 19.0 | % | 21.2 | % | 14.2 | % | 20.1 | % | |||||||||||||||||||||||||||||||||
Adjusted return on tangible common equity (9) | NA | NA | 15.3 | % | 19.1 | % | NA | NA | 20.2 | % | |||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
13
RAYMOND JAMES FINANCIAL, INC.
Footnotes
| (1) | Other revenues included $39 million of private equity valuation losses, $12 million of private equity valuation gains, $24 million of private equity valuation gains, and $8 million of private equity valuation gains for the three months ended March 31, 2020, September 30, 2020, December 31, 2020 and March 31, 2021, respectively, which were included in our Other segment. Of these amounts, $22 million of the losses for the three months ended March 31, 2020, $3 million of the gains for the three months ended September 30, 2020, $10 million of the gains for the three months ended December 31, 2020, and an insignificant amount of the gains for the three months ended March 31, 2021 were attributable to noncontrolling interests and were offset in Other expenses. Other revenues included approximately $41 million of private equity valuations losses and $32 million of private equity valuation gains for the six months ended March 31, 2020 and 2021, respectively. Of these amounts, $23 million of the losses for the six month ended March 31, 2020, and $10 million of the gains for the six months ended March 31, 2021 were attributable to noncontrolling interests and were offset in Other expenses. | |||||||
| (2) | The allowance for credit losses as of March 31, 2021 was determined under the current expected credit loss (“CECL”) model as a result of our October 1, 2020 adoption of new accounting guidance related to the measurement of credit losses on financial instruments. The impact of adoption on October 1, 2020 resulted in an increase in our allowance for credit losses, including reserves for unfunded lending commitments, of approximately $45 million (primarily $25 million related to loans to financial advisors in the Private Client Group and approximately $10 million related to Bank loans outstanding) and a corresponding reduction in retained earnings of approximately $35 million, net of tax. The Bank loan provision/(benefit) for credit losses of $14 million and $(32) million for the three months ended December 31, 2020 and March 31, 2021, respectively, and $(18) million for the six months ended March 31, 2021 were determined under the CECL model and represented the provision/(benefit) for credit losses post the CECL adoption date. | |||||||
| (3) | The three months ended September 30, 2020 included a $7 million loss in our Capital Markets segment related to the sale of our interests in certain entities that operated predominantly in France, which closed during our fiscal first quarter of 2021. The three months ended December 31, 2020 and the six months ended March 31, 2021 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was completed in December 2020, as well as our acquisition of Financo which was completed in March 2021. | |||||||
| (4) | The reduction in workforce expenses for the three months ended September 30, 2020 were associated with position eliminations in response to the economic environment. These expenses were included in our Other segment and primarily consisted of severance and related payroll expenses, as well as expenses related to company-paid benefits. | |||||||
| (5) | Earnings per common share is computed by dividing net income (less allocation of earnings and dividends to participating securities) by weighted-average common shares outstanding (basic or diluted as applicable) for each respective period or, in the case of adjusted earnings per common 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. | |||||||
| (6) | Book value per share is computed by dividing total equity attributable to Raymond James Financial, Inc. by the number of common shares outstanding at the end of each respective period or, in the case of tangible book value per share, computed by dividing tangible common equity by the number of common shares outstanding at the end of each respective period. Tangible common equity is defined as total equity attributable to Raymond James Financial, Inc. less goodwill and intangible assets, net of related deferred taxes. | |||||||
| (7) | These are non-GAAP financial measures. See the schedules on the previous pages for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures and for more information on these measures. As there were no non-GAAP adjustments to earnings for the three months ended March 31, 2021, percent changes for earnings-related non-GAAP financial measures are calculated based on GAAP results for the three months ended March 31, 2021 as compared to non-GAAP results for the three months ended December 31, 2020. In addition, as there were no non-GAAP adjustments to earnings for the six months ended March 31, 2020, percent changes for earnings-related non-GAAP financial measures are calculated based on non-GAAP results for the six months ended March 31, 2021 as compared to GAAP results for the six months ended March 31, 2020. | |||||||
| (8) | Estimated. | |||||||
| (9) | Return on equity is computed by dividing annualized net income by average equity for each respective period or, in the case of return on tangible common equity, computed by dividing annualized net income by average tangible common equity for each respective period. 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. | |||||||
| (10) | Pre-tax margin is 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. | |||||||
| (11) | Total compensation ratio is computed by dividing compensation, commissions and benefits expense by net revenues for each respective period. | |||||||
| (12) | 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. | |||||||
| (13) | Average yield on RJBDP - third-party banks is computed by dividing annualized RJBDP fees - third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balances at third-party banks. | |||||||
| (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) | Average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. For the year-to-date period, average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three. 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. | |||||||
14
FISCAL 2Q21 RESULTS April 28, 2021
2 Paul Reilly Chairman & CEO, Raymond James Financial OVERVIEW OF RESULTS
3 * 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. FISCAL 2Q21 HIGHLIGHTS $ in millions, except per share amounts 2Q21 vs. 2Q20 vs. 1Q21 As Reported: Net revenues RECORD $ 2,372 15% 7% Net income RECORD $ 355 110% 14% Earnings per common share - diluted RECORD $ 2.51 109% 13% 2Q20 1Q21 Return on equity 19.0 % 9.9% 17.2% Return on tangible common equity* 21.2 % 10.8% 19.0%
4 FISCAL 2Q21 KEY METRICS $ in billions 2Q21 vs. 2Q20 vs. 1Q21 Client assets under administration RECORD $ 1,085.4 40% 6% Private Client Group (PCG) assets under administration RECORD $ 1,028.1 40% 6% PCG assets in fee-based accounts RECORD $ 567.6 48% 7% Financial assets under management RECORD $ 178.2 39% 5% Total clients' domestic cash sweep balances RECORD $ 62.8 19% 2% PCG financial advisors RECORD 8,327 2% 1% Bank loans, net RECORD $ 22.9 5% 4% Note: Records indicated as of quarter-end date and do not reflect monthly reported data.
5 FISCAL 2Q21 SEGMENT RESULTS $ in millions 2Q21 vs. 2Q20 vs. 1Q21 Net Revenues: Private Client Group RECORD $ 1,647 10% 12% Capital Markets $ 433 49% (4)% Asset Management RECORD $ 209 14% 7% Raymond James Bank $ 160 (24)% (4)% Consolidated net revenues RECORD $ 2,372 15% 7% Pre-Tax Income: Private Client Group RECORD $ 192 13% 37% Capital Markets $ 105 275% (19)% Asset Management RECORD $ 87 19% 5% Raymond James Bank $ 111 693% 56% Consolidated pre-tax income RECORD $ 447 87% 12% Note: Segments do not total consolidated results because of the Other segment and intersegment eliminations not shown.
6 FYTD 2021 HIGHLIGHTS (6 months) $ in millions, except per share amounts FYTD 2021 vs. FYTD 2020 As Reported: Net revenues RECORD $ 4,594 13% Net income RECORD $ 667 53% Earnings per common share - diluted RECORD $ 4.74 53% FYTD 2020 Return on equity 18.1 % 13.0% vs. FYTD 2020 Non-GAAP Measures:* Adjusted net income RECORD $ 669 53% Adjusted earnings per common share - diluted RECORD $ 4.76 54% FYTD 2020 Adjusted return on equity 18.2 % NA Return on tangible common equity 20.1 % 14.2% Adjusted return on tangible common equity 20.2 % NA Note: FYTD 2021 is from the period October 1, 2020 to March 31, 2021; FYTD 2020 is from the period October 1, 2019 to March 31, 2020. * These are non-GAAP measures. 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.
7 FYTD 2021 SEGMENT RESULTS (6 months) $ in millions FYTD 2021 vs. FYTD 2020 Net Revenues: Private Client Group RECORD $ 3,114 7% Capital Markets RECORD $ 885 59% Asset Management RECORD $ 404 10% Raymond James Bank $ 327 (23)% Consolidated net revenues RECORD $ 4,594 13% Pre-Tax Income: Private Client Group RECORD $ 332 3% Capital Markets RECORD $ 234 311% Asset Management RECORD $ 170 16% Raymond James Bank $ 182 22% Consolidated pre-tax income RECORD $ 846 41% Note: FYTD 2021 is from the period October 1, 2020 to March 31, 2021; FYTD 2020 is from the period October 1, 2019 to March 31, 2020; Segments do not total consolidated results because of the Other segment and intersegment eliminations not shown.
8 Paul Shoukry Chief Financial Officer, Raymond James Financial FINANCIAL REVIEW
9 CONSOLIDATED NET REVENUES $ in millions 2Q21 vs. 2Q20 vs. 1Q21 Asset management and related administrative fees $ 1,173 17% 10% Brokerage revenues 591 15% 12% Account and service fees 159 (8)% 10% Investment banking 242 64% (7)% Interest income 200 (30)% (1)% Other 44 NM (21)% Total revenues 2,409 14% 7% Interest expense (37) (14)% (3)% Net revenues $ 2,372 15% 7%
10 Note: May not total due to rounding. * Raymond James Bank Deposit Program (RJBDP) is 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. C lie nt s' D om es tic C as h S w ee p B al an ce s ($ B ) C ash S w eep B alances as a % of D om estic P C G A U A Clients' Domestic Cash Sweep Balances as a % of Domestic PCG Assets Under Administration (AUA) 28.7 24.1 25.6 26.7 28.2 20.4 24.7 26.0 26.1 25.1 3.8 3.2 4.0 8.8 9.552.9 51.9 55.6 61.6 62.8 7.6% 6.6% 6.7% 6.7% 6.5% 2Q20 3Q20 4Q20 1Q21 2Q21 DOMESTIC CASH SWEEP BALANCES Year-over-year change: 19% Sequential change: 2% RJBDP- RJ Bank* RJBDP- Third-Party Banks* Client Interest Program
11 NET INTEREST INCOME & RJBDP FEES (THIRD-PARTY BANKS) * As reported in Account and Service Fees in the PCG segment. ** Computed by dividing annualized RJBDP fees - third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balance at third-party banks. Firmwide Net Interest Income RJBDP Fees (Third-Party Banks)* $ in m ill io ns 293 195 180 186 182 242 175 159 165 163 51 20 21 21 19 2Q20 3Q20 4Q20 1Q21 2Q21 Average Yield on RJBDP (Third-Party Banks)** 1.33% 0.33% 0.33% 0.31% 0.30% 2Q20 3Q20 4Q20 1Q21 2Q21 Net Interest Margin 3.02% 2.29% 2.09% 2.02% 1.94% 2.60% 1.75% 1.56% 1.45% 1.32% 2Q20 3Q20 4Q20 1Q21 2Q21 Firmwide Net Interest Margin RJ Bank Net Interest Margin
12 CONSOLIDATED EXPENSES $ in millions 2Q21 vs. 2Q20 vs. 1Q21 Compensation, commissions and benefits $ 1,648 16% 10% Non-compensation expenses: Communications and information processing 107 8% 8% Occupancy and equipment 57 2% —% Business development 21 (49)% (9)% Investment sub-advisory fees 31 19% 11% Professional fees 24 4% (20)% Bank loan provision/(benefit) for credit losses (32) NM NM Other 69 30% (1)% Total non-compensation expenses 277 (32)% (14)% Total non-interest expenses $ 1,925 5% 6% Total Compensation Ratio 68.8% 69.6% 68.1% 67.5% 69.5% 2Q20 3Q20 4Q20 1Q21 2Q21 Total Non-Compensation Expenses $ in millions 407 359 408 323 277 2Q20 3Q20 4Q20 1Q21 2Q21
13 * 4Q20 included a $7 M loss in our Capital Markets segment related to the sale of our interests in certain entities that operated predominantly in France, which closed during 1Q21, and $46 M in our Other segment related to the reduction in workforce expenses associated with position eliminations that occurred in response to the economic environment. ** 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. 11.6% 10.8% 12.3% 18.0% 18.8% 14.9% Pre-Tax Margin (GAAP) Pre-Tax Margin (Adjusted)** 2Q20 3Q20 4Q20* 1Q21 2Q21 CONSOLIDATED PRE-TAX MARGIN
14 OTHER FINANCIAL INFORMATION $ in millions, except per share amounts 2Q21 vs. 2Q20 vs. 1Q21 Total assets $ 56,066 13% 4% RJF corporate cash* $ 1,701 (12)% (5)% Total equity attributable to RJF $ 7,592 12% 3% Book value per share $ 55.34 11% 3% Tangible book value per share** $ 49.42 9% 3% Weighted-average common and common equivalent shares outstanding – diluted 141.2 —% 1% 2Q20 1Q21 Tier 1 capital ratio 23.6 % 24.1% 23.4% Total capital ratio 24.7 % 25.3% 24.6% Tier 1 leverage ratio 12.2 % 14.2% 12.9% Effective tax rate 20.6 % 29.3% 21.8% * This amount includes cash on hand at the parent, as well as parent cash loaned to Raymond James & Associates ("RJ&A"), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities. ** 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.
15 Dividends Paid and Share Repurchases* $ in millions 254 51 101 65 114 202 50 60 52 51 51 55 54 Share Repurchases* Dividends Paid 2Q20 3Q20 4Q20 1Q21 2Q21 CAPITAL MANAGEMENT $680 million remains under current share repurchase authorization Number of Shares Repurchased* (thousands) 2,548 — 678 108 500 Average Share Price of Shares Repurchased* $79.21 — $73.74 $92.79 $120.06 * Under the Board of Directors' share repurchase authorization. ** Share repurchases in 1Q21 totaled $10 million. Total of $585 million over the past 5 quarters **
16 RAYMOND JAMES BANK KEY CREDIT TRENDS $ in millions 2Q21 vs. 2Q20 vs. 1Q21 Bank loan provision/(benefit) for credit losses* $ (32) NM NM Net charge-offs: Charge-offs related to loan sales $ 2 NM NM All other — — — Total net charge-offs $ 2 NM NM 2Q20 1Q21 Nonperforming assets as a % of total assets 0.09 % 0.08% 0.09% Bank loan allowance for credit losses as a % of loans held for investment* 1.50 % 1.47% 1.71% Criticized loans as a % of loans held for investment 4.35 % 1.76% 4.06% * The allowance for credit losses as of March 31, 2021 was determined under the current expected credit loss (“CECL”) model as a result of our October 1, 2020 adoption of new accounting guidance related to the measurement of credit losses on financial instruments.
17 OUTLOOK
APPENDIX 18
19 Note: Please refer to the footnotes on slide 22 for additional information. Three months ended Six months ended $ in millions September 30, 2020 December 31, 2020 March 31, 2021 Net income $ 209 $ 312 $ 667 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 7 2 2 Reduction in workforce expenses (2) 46 — — Pre-tax impact of non-GAAP adjustments 53 2 2 Tax effect of non-GAAP adjustments (13) — — Total non-GAAP adjustments, net of tax 40 2 2 Adjusted net income $ 249 $ 314 $ 669 Pre-tax income $ 256 $ 399 $ 846 Pre-tax impact of non-GAAP adjustments (as detailed above) 53 2 2 Adjusted pre-tax income $ 309 $ 401 $ 848 Pre-tax margin (3) 12.3 % 18.0 % 18.4 % Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.4 % — % 0.1 % Reduction in workforce expenses (2) 2.2 % — % — % Total non-GAAP adjustments, net of tax 2.6 % — % 0.1 % Adjusted pre-tax margin (3) 14.9 % 18.0 % 18.5 % continued on next slide 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 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 tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures for those periods which include non-GAAP adjustments. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (UNAUDITED)
20 Note: Please refer to the footnotes on slide 22 for additional information. Book value per share As of $ in millions, except per share amounts March 31, 2020 December 31, 2020 March 31, 2021 Total equity attributable to Raymond James Financial, Inc. $ 6,798 $ 7,363 $ 7,592 Less non-GAAP adjustments: Goodwill and identifiable intangible assets, net 603 834 868 Deferred tax liabilities, net (30) (56) (56) Tangible common equity attributable to Raymond James Financial, Inc. $ 6,225 $ 6,585 $ 6,780 Common shares outstanding 136.8 137.4 137.2 Book value per share (5) $ 49.69 $ 53.59 $ 55.34 Tangible book value per share (5) $ 45.50 $ 47.93 $ 49.42 Three months ended Six months ended Earnings per common share (4) December 31, 2020 March 31, 2021 Basic $ 2.27 $ 4.85 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.02 0.02 Tax effect of non-GAAP adjustments — — Total non-GAAP adjustments, net of tax 0.02 0.02 Adjusted basic $ 2.29 $ 4.87 Diluted $ 2.23 $ 4.74 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.01 0.02 Tax effect of non-GAAP adjustments — — Total non-GAAP adjustments, net of tax 0.01 0.02 Adjusted diluted $ 2.24 $ 4.76 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (UNAUDITED) continued on next slide
21 Note: Please refer to the footnotes on slide 22 for additional information. Return on equity Three months ended Six months ended $ in millions March 31, 2020 December 31, 2020 March 31, 2021 March 31, 2020 March 31, 2021 Average equity (6) $ 6,820 $ 7,239 $ 7,478 $ 6,740 $ 7,356 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) NA 1 NA NA 1 Tax effect of non-GAAP adjustments NA — NA NA — Adjusted average equity (6) NA $ 7,240 NA NA $ 7,357 Average equity (6) $ 6,820 $ 7,239 $ 7,478 $ 6,740 $ 7,356 Less: Average goodwill and identifiable intangible assets, net 606 717 851 608 767 Average deferred tax liabilities, net (31) (45) (56) (30) (49) Average tangible common equity (6) $ 6,245 $ 6,567 $ 6,683 $ 6,162 $ 6,638 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) NA 1 NA NA 1 Tax effect of non-GAAP adjustments NA — NA NA — Adjusted average tangible common equity (6) NA $ 6,568 NA NA $ 6,639 Return on equity (7) 9.9 % 17.2 % 19.0 % 13.0 % 18.1 % Adjusted return on equity (7) NA 17.3 % NA NA 18.2 % Return on tangible common equity (7) 10.8 % 19.0 % 21.2 % 14.2 % 20.1 % Adjusted return on tangible common equity (7) NA 19.1 % NA NA 20.2 % RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (UNAUDITED) continued on next slide
22 FOOTNOTES (1) The three months ended September 30, 2020 included a $7 million loss in our Capital Markets segment related to the sale of our interests in certain entities that operated predominantly in France, which closed during our fiscal first quarter of 2021. The three months ended December 31, 2020 and the six months ended March 31, 2021 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was completed in December 2020, as well as our acquisition of Financo which was completed in March 2021. (2) The reduction in workforce expenses for the three months ended September 30, 2020 were associated with position eliminations in response to the economic environment. These expenses were included in our Other segment and primarily consisted of severance and related payroll expenses, as well as expenses related to company-paid benefits. (3) Pre-tax margin is 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) Earnings per common share is computed by dividing net income (less allocation of earnings and dividends to participating securities) by weighted-average common shares outstanding (basic or diluted as applicable) for each respective period or, in the case of adjusted earnings per common 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) Book value per share is computed by dividing total equity attributable to Raymond James Financial, Inc. by the number of common shares outstanding at the end of each respective period or, in the case of tangible book value per share, computed by dividing tangible common equity by the number of common shares outstanding at the end of each respective period. Tangible common equity is defined as total equity attributable to Raymond James Financial, Inc. less goodwill and intangible assets, net of related deferred taxes. (6) Average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. For the year-to-date period, average equity is computed by adding the total equity attributable to Raymond James Financial, Inc. as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated period to the beginning of year total, and dividing by three. 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) Return on equity is computed by dividing annualized net income by average equity for each respective period or, in the case of return on tangible common equity, computed by dividing annualized net income by average tangible common equity for each respective period. 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.