RJF 8-K
Raymond James Financial Inc (RJF)
8-K
2021-01-27
For: 2021-01-27
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Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
(727 ) 567-1000
(Registrant’s telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition
On January 27, 2021, Raymond James Financial, Inc. (the "Company") issued a press release disclosing its results for the fiscal first quarter ended December 31, 2020. 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 first quarter ended December 31, 2020 are attached as Exhibits 99.2 and 99.3, respectively, to this Current Report and are incorporated by reference herein.
The information in this Current Report, including any exhibits hereto, is being "furnished" and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibit in this particular report is incorporated by reference).
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following are filed as exhibits to this report:
Exhibit No.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYMOND JAMES FINANCIAL, INC. | ||||||||
Date: January 27, 2021 | By: | /s/ Paul M. Shoukry | ||||||
| Paul M. Shoukry | ||||||||
| Chief Financial Officer and Treasurer | ||||||||
| January 27, 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 FIRST QUARTER
OF FISCAL 2021 RESULTS
•Record quarterly net revenues of $2.22 billion, up 11% over the prior year’s fiscal first quarter and 7% over the preceding quarter
•Record quarterly net income of $312 million, or $2.23 per diluted share, and record adjusted quarterly net income of $314 million(1), or $2.24 per diluted share(1)
•Records for client assets under administration of $1.02 trillion, financial assets under management of $169.6 billion, and net loans at Raymond James Bank of $22.0 billion
•Record Private Client Group assets in fee-based accounts of $532.7 billion, increases of 20% over December 2019 and 12% over September 2020
•Private Client Group financial advisors of 8,233, a net increase of 173 over December 2019 and a net decrease of 6 compared to September 2020
•Record quarterly investment banking revenues of $261 million, driven by record M&A results
•Annualized return on equity for the quarter of 17.2% and annualized return on tangible common equity for the quarter of 19.0%(1)
ST. PETERSBURG, Fla – Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $2.22 billion and net income of $312 million, or $2.23 per diluted share, for the fiscal first quarter ended December 31, 2020. Record quarterly net revenues grew 11% over the year-ago period and 7% over the preceding quarter, primarily driven by higher asset management and related administrative fees, investment banking revenues, and brokerage revenues.
Record quarterly net income grew 16% compared to the prior year’s fiscal first quarter primarily driven by the aforementioned higher revenues and a lower effective tax rate, which more than offset the negative impact of lower short-term interest rates on net interest income and RJBDP fees. Compared to the preceding quarter, net income increased 49% largely due to higher net revenues, combined with a lower provision for credit losses on bank loans and the reduction in workforce(2) expenses in the prior quarter. The effective tax rate of 21.8% in the quarter benefited from non-taxable gains in the corporate-owned life insurance portfolio.
“With strength across our businesses, we achieved record results this quarter including record revenues and pre-tax income in the Capital Markets and Asset Management segments, reinforcing the value of having diverse and complementary businesses,” said Chairman and CEO Paul Reilly. “Reflecting our focus on long-term growth and our commitment to deploying excess capital, we closed the acquisition of NWPS, a retirement plans solutions provider, at the end of the quarter, and announced the pending acquisition of Financo, a consumer-focused M&A advisory firm. Both of these firms represent great cultural and strategic fits, and we are excited about welcoming the teams to our Raymond James family.”
Please refer to the footnotes at the end of this press release for additional information.
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Segment Results
Private Client Group
•Quarterly net revenues of $1.47 billion, up 4% over the prior year’s fiscal first quarter and 5% over the preceding quarter
•Quarterly pre-tax income of $140 million, down 8% compared to the prior year’s fiscal first quarter and up 12% over the preceding quarter
•Record Private Client Group assets under administration of $974.2 billion, up 14% over December 2019 and 10% over September 2020
•Record Private Client Group assets in fee-based accounts of $532.7 billion, up 20% over December 2019 and 12% over September 2020
•Private Client Group financial advisors of 8,233, a net increase of 173 over December 2019 and a net decrease of 6 compared to September 2020
•Record clients’ domestic cash sweep balances of $61.6 billion, up 56% over December 2019 and 11% over September 2020
Quarterly net revenues grew 4% over the prior-year period and 5% over the preceding quarter, predominantly driven by higher asset management and related administrative fees, reflecting higher assets in fee-based accounts. While higher revenues helped pre-tax income increase 12% over the preceding quarter, pre-tax income decreased 8% compared to the prior-year quarter largely due to the negative impact of lower short-term interest rates.
“Our client-centric culture, multiple affiliation options, and robust support and solutions offerings continue to resonate with existing and prospective advisors, although the recruiting environment has become increasingly competitive, particularly in the employee affiliation option,” said Reilly. “However, we remain optimistic about the high level of interest from prospective advisors across all of our affiliation options.”
Capital Markets
•Record quarterly net revenues of $452 million, up 69% over the prior year’s fiscal first quarter and 10% over the preceding quarter
•Record quarterly pre-tax income of $129 million, up 345% over the prior year’s fiscal first quarter and 22% over the preceding quarter
•Record quarterly investment banking revenues of $255 million, up 96% over the prior year’s fiscal first quarter and 22% over the preceding quarter
•Record quarterly brokerage revenues of $173 million, up 50% over the prior year’s fiscal first quarter and 8% over the preceding quarter
Record investment banking revenues were driven by record M&A revenues, along with continued strength in debt and equity underwriting. Fixed income brokerage revenues increased 62% over the prior-year period and 5% over the preceding quarter.
“The Capital Markets segment generated another quarter of record results due to robust investment banking and brokerage activity,” said Reilly. “While there is still a significant amount of economic uncertainty due to the ongoing COVID-19 pandemic, the investment banking pipeline is strong and we expect fixed income brokerage results to remain elevated given current interest rates and economic conditions.”
Please refer to the footnotes at the end of this press release for additional information.
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Asset Management
•Record quarterly net revenues of $195 million, up 6% over both the prior year’s fiscal first quarter and the preceding quarter
•Record quarterly pre-tax income of $83 million, up 14% over the prior year’s fiscal first quarter and 6% over the preceding quarter
•Record financial assets under management of $169.6 billion, up 12% over December 2019 and 11% over September 2020
Record quarterly results were primarily attributable to growth of financial assets under management, as equity market appreciation and net inflows into fee-based accounts in the Private Client Group more than offset modest net outflows for Carillon Tower Advisers.
Raymond James Bank
•Quarterly net revenues of $167 million, down 23% compared to the prior year’s fiscal first quarter and up 4% over the preceding quarter
•Quarterly pre-tax income of $71 million, down 47% compared to the prior year’s fiscal first quarter and up 115% over the preceding quarter
•Record net loans of $22.0 billion, up 3% over December 2019 and 4% over September 2020
•Available-for-sale securities portfolio ended the quarter at $8.0 billion, up $4.8 billion over December 2019 and $350 million over September 2020
•Net interest margin (NIM) of 2.02% for the quarter, down 121 basis points compared to the prior year’s fiscal first quarter and 7 basis points compared to the preceding quarter
Quarterly net revenues declined 23% compared to the prior year’s fiscal first quarter primarily due to the impact of lower short-term interest rates. Sequentially, quarterly net revenues grew 4%, largely driven by higher asset balances. The Bank’s NIM declined 7 basis points during the quarter to 2.02%, largely due to asset mix given the growth of agency-backed securities. Nonperforming assets remained low at 0.09% of total assets, and there were no charge-offs during the quarter. While criticized loans declined during the quarter, the bank loan provision for credit losses of $14 million was largely attributable to the macroeconomic inputs in the CECL model, which assume a greater decline in commercial real estate values and resulted in higher allowances for the commercial real estate portfolio. The bank loan allowance for credit losses as a percent of total loans ended the quarter at 1.71%.
Other
The Other segment included $24 million of valuation gains on private equity investments during the quarter, of which $10 million were attributable to noncontrolling interests and were offset in Other expenses.
In December, the Board of Directors increased the quarterly dividend 5% to $0.39 per share and authorized share repurchases of up to $750 million, which replaced the previous authorization. In the fiscal first quarter, the firm repurchased approximately 108,000 shares for $10 million, an average price of approximately $92.80 per share, leaving $740 million available under the authorization as of January 26, 2021. At the end of the quarter, the total capital ratio was 24.6% and the tier 1 leverage ratio was 12.9%, both well above the regulatory requirements.
Please refer to the footnotes at the end of this press release for additional information.
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A conference call to discuss the results will take place tomorrow morning, Thursday, January 28, at 8:15 a.m. ET. The live audio webcast, and the presentation which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. For a listen-only connection to the conference call, please dial: 877-306-7075 (conference code: 21990176). An audio replay of the call will be available at the same location until March 31, 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 8,200 financial advisors. Total client assets are $1.02 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.
Forward-Looking Statements
Certain statements made in this press release may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions and divestitures, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.
Please refer to the footnotes at the end of this press release for additional information.
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| RAYMOND JAMES FINANCIAL, INC. Fiscal First Quarter of 2021 | Selected Financial Highlights (Unaudited) | |||||||
Summary results of operations
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Net revenues | $ | 2,222 | $ | 2,009 | $ | 2,079 | 11% | 7% | ||||||||||||||||||||||||
| Pre-tax income | $ | 399 | $ | 359 | $ | 256 | 11% | 56% | ||||||||||||||||||||||||
| Net income | $ | 312 | $ | 268 | $ | 209 | 16% | 49% | ||||||||||||||||||||||||
Earnings per common share: (3) | ||||||||||||||||||||||||||||||||
| Basic | $ | 2.27 | $ | 1.93 | $ | 1.53 | 18% | 48% | ||||||||||||||||||||||||
| Diluted | $ | 2.23 | $ | 1.89 | $ | 1.50 | 18% | 49% | ||||||||||||||||||||||||
Non-GAAP measures: (1) | ||||||||||||||||||||||||||||||||
Adjusted pre-tax income | $ | 401 | NA | $ | 309 | 12% | 30% | |||||||||||||||||||||||||
Adjusted net income | $ | 314 | NA | $ | 249 | 17% | 26% | |||||||||||||||||||||||||
Adjusted earnings per common share - basic (3) | $ | 2.29 | NA | $ | 1.82 | 19% | 26% | |||||||||||||||||||||||||
Adjusted earnings per common share - diluted (3) | $ | 2.24 | NA | $ | 1.78 | 19% | 26% | |||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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RAYMOND JAMES FINANCIAL, INC.
Fiscal First Quarter of 2021
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| in millions, except per share amounts | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 1,067 | $ | 955 | $ | 1,006 | 12% | 6% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Securities commissions | 381 | 363 | 352 | 5% | 8% | |||||||||||||||||||||||||||
| Principal transactions | 147 | 97 | 143 | 52% | 3% | |||||||||||||||||||||||||||
| Total brokerage revenues | 528 | 460 | 495 | 15% | 7% | |||||||||||||||||||||||||||
| Account and service fees | 145 | 178 | 140 | (19)% | 4% | |||||||||||||||||||||||||||
| Investment banking | 261 | 141 | 222 | 85% | 18% | |||||||||||||||||||||||||||
| Interest income | 203 | 297 | 201 | (32)% | 1% | |||||||||||||||||||||||||||
Other (4) | 56 | 29 | 57 | 93% | (2)% | |||||||||||||||||||||||||||
| Total revenues | 2,260 | 2,060 | 2,121 | 10% | 7% | |||||||||||||||||||||||||||
| Interest expense | (38) | (51) | (42) | (25)% | (10)% | |||||||||||||||||||||||||||
| Net revenues | 2,222 | 2,009 | 2,079 | 11% | 7% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation, commissions and benefits | 1,500 | 1,351 | 1,415 | 11% | 6% | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
| Communications and information processing | 99 | 94 | 100 | 5% | (1)% | |||||||||||||||||||||||||||
| Occupancy and equipment | 57 | 57 | 57 | — | — | |||||||||||||||||||||||||||
| Business development | 23 | 44 | 28 | (48)% | (18)% | |||||||||||||||||||||||||||
| Investment sub-advisory fees | 28 | 26 | 26 | 8% | 8% | |||||||||||||||||||||||||||
| Professional fees | 30 | 21 | 23 | 43% | 30% | |||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (5) | 14 | (2) | 45 | NM | (69)% | |||||||||||||||||||||||||||
Acquisition and disposition-related expenses (6) | 2 | — | 7 | NM | (71)% | |||||||||||||||||||||||||||
Reduction in workforce expenses (2) | — | — | 46 | — | (100)% | |||||||||||||||||||||||||||
Other (4) | 70 | 59 | 76 | 19% | (8)% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 323 | 299 | 408 | 8% | (21)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,823 | 1,650 | 1,823 | 10% | — | |||||||||||||||||||||||||||
Pre-tax income | 399 | 359 | 256 | 11% | 56% | |||||||||||||||||||||||||||
| Provision for income taxes | 87 | 91 | 47 | (4)% | 85% | |||||||||||||||||||||||||||
| Net income | $ | 312 | $ | 268 | $ | 209 | 16% | 49% | ||||||||||||||||||||||||
Earnings per common share – basic (3) | $ | 2.27 | $ | 1.93 | $ | 1.53 | 18% | 48% | ||||||||||||||||||||||||
Earnings per common share – diluted (3) | $ | 2.23 | $ | 1.89 | $ | 1.50 | 18% | 49% | ||||||||||||||||||||||||
Weighted-average common shares outstanding – basic | 136.8 | 138.3 | 136.9 | (1)% | — | |||||||||||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 139.7 | 141.5 | 139.6 | (1)% | — | |||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
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| RAYMOND JAMES FINANCIAL, INC. | Consolidated Selected Key Metrics | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| As of | % change from | ||||||||||||||||||||||||||||||||||
$ in millions, except per share amounts | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | ||||||||||||||||||||||||||||||
| Total assets | $ | 53,657 | $ | 40,154 | $ | 47,482 | 34% | 13% | |||||||||||||||||||||||||||
| Total equity attributable to Raymond James Financial, Inc. | $ | 7,363 | $ | 6,842 | $ | 7,114 | 8% | 4% | |||||||||||||||||||||||||||
Book value per share (7) | $ | 53.59 | $ | 49.26 | $ | 52.08 | 9% | 3% | |||||||||||||||||||||||||||
Tangible book value per share (1) (7) | $ | 47.93 | $ | 45.10 | $ | 47.94 | 6% | — | |||||||||||||||||||||||||||
Capital ratios: | |||||||||||||||||||||||||||||||||||
| Tier 1 capital | 23.4 | % | (8) | 24.8 | % | 24.2 | % | ||||||||||||||||||||||||||||
| Total capital | 24.6 | % | (8) | 25.7 | % | 25.4 | % | ||||||||||||||||||||||||||||
| Tier 1 leverage | 12.9 | % | (8) | 15.8 | % | 14.2 | % | ||||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 2020 | ||||||||||||||||||
Return on equity (9) | 17.2 | % | 16.0 | % | 11.9 | % | ||||||||||||||
Adjusted return on equity (1) (9) | 17.3 | % | NA | 14.1 | % | |||||||||||||||
Return on tangible common equity (1) (9) | 19.0 | % | 17.5 | % | 12.9 | % | ||||||||||||||
Adjusted return on tangible common equity (1) (9) | 19.1 | % | NA | 15.3 | % | |||||||||||||||
Pre-tax margin (10) | 18.0 | % | 17.9 | % | 12.3 | % | ||||||||||||||
Adjusted pre-tax margin (1) (10) | 18.0 | % | NA | 14.9 | % | |||||||||||||||
Total compensation ratio (11) | 67.5 | % | 67.2 | % | 68.1 | % | ||||||||||||||
| Effective tax rate | 21.8 | % | 25.3 | % | 18.4 | % | ||||||||||||||
Client asset metrics ($ in billions) | As of | % change from | |||||||||||||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||
Client assets under administration | $ | 1,024.8 | $ | 896.0 | $ | 930.1 | 14% | 10% | |||||||||||||||||||||||||||
Private Client Group assets under administration | $ | 974.2 | $ | 855.2 | $ | 883.3 | 14% | 10% | |||||||||||||||||||||||||||
Private Client Group assets in fee-based accounts | $ | 532.7 | $ | 444.2 | $ | 475.3 | 20% | 12% | |||||||||||||||||||||||||||
Financial assets under management | $ | 169.6 | $ | 151.7 | $ | 153.1 | 12% | 11% | |||||||||||||||||||||||||||
Clients’ domestic cash sweep balances ($ in millions) | As of | % change from | |||||||||||||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (12) | |||||||||||||||||||||||||||||||||||
| Raymond James Bank | $ | 26,697 | $ | 21,891 | $ | 25,599 | 22% | 4% | |||||||||||||||||||||||||||
| Third-party banks | 26,142 | 15,061 | 25,998 | 74% | 1% | ||||||||||||||||||||||||||||||
| Subtotal RJBDP | 52,839 | 36,952 | 51,597 | 43% | 2% | ||||||||||||||||||||||||||||||
| Client Interest Program | 8,769 | 2,528 | 3,999 | 247% | 119% | ||||||||||||||||||||||||||||||
Total clients’ domestic cash sweep balances | $ | 61,608 | $ | 39,480 | $ | 55,596 | 56% | 11% | |||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 2020 | ||||||||||||||||||
Average yield on RJBDP - third-party banks (13) | 0.31 | % | 1.64 | % | 0.33 | % | ||||||||||||||
| Private Client Group financial advisors | As of | % change from | |||||||||||||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||
| Employees | 3,387 | 3,331 | 3,404 | 2% | — | ||||||||||||||||||||||||||||||
| Independent contractors | 4,846 | 4,729 | 4,835 | 2% | — | ||||||||||||||||||||||||||||||
| Total advisors | 8,233 | 8,060 | 8,239 | 2% | — | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
7
| RAYMOND JAMES FINANCIAL, INC. | Consolidated Selected Key Metrics | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
Net Interest
The following table presents our consolidated average interest-earning asset and interest-bearing liability balances, interest income and expense and the related rates.
| Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | September 30, 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 | $ | 5,712 | $ | 4 | 0.25 | % | $ | 3,855 | $ | 17 | 1.72 | % | $ | 5,633 | $ | 4 | 0.27 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Assets segregated pursuant to regulations | 5,816 | 3 | 0.21 | % | 2,331 | 11 | 1.89 | % | 3,614 | 3 | 0.33 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale securities | 7,478 | 23 | 1.21 | % | 3,089 | 18 | 2.30 | % | 6,024 | 23 | 1.52 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage client receivables | 2,082 | 18 | 3.48 | % | 2,438 | 27 | 4.48 | % | 2,059 | 18 | 3.47 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank loans, net of unearned income and deferred expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for investment: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial (“C&I”) loans (14) | 7,535 | 51 | 2.63 | % | 8,061 | 86 | 4.16 | % | 7,404 | 49 | 2.57 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate (“CRE”) loans (14) | 2,582 | 17 | 2.59 | % | 2,538 | 27 | 4.14 | % | 2,578 | 16 | 2.46 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate investment trust loans (14) | 1,235 | 8 | 2.43 | % | 1,323 | 13 | 3.88 | % | 1,294 | 8 | 2.33 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt loans (15) | 1,237 | 8 | 3.35 | % | 1,225 | 8 | 3.36 | % | 1,274 | 8 | 3.35 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans | 5,001 | 35 | 2.77 | % | 4,641 | 37 | 3.19 | % | 5,026 | 36 | 2.87 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities-based loans and other | 4,286 | 25 | 2.29 | % | 3,337 | 34 | 3.97 | % | 3,852 | 23 | 2.38 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | 141 | 1 | 2.94 | % | 161 | 1 | 4.06 | % | 105 | 1 | 3.44 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total bank loans, net | 22,017 | 145 | 2.62 | % | 21,286 | 206 | 3.85 | % | 21,533 | 141 | 2.63 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other interest-earning assets | 2,288 | 10 | 2.00 | % | 2,534 | 18 | 2.82 | % | 2,167 | 12 | 2.29 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 45,393 | $ | 203 | 1.78 | % | $ | 35,533 | $ | 297 | 3.33 | % | $ | 41,030 | $ | 201 | 1.95 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings, money market and Negotiable Order of Withdrawal accounts | $ | 26,637 | $ | 1 | 0.02 | % | $ | 21,649 | $ | 12 | 0.21 | % | $ | 24,936 | $ | 1 | 0.02 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit | 952 | 5 | 1.93 | % | 782 | 4 | 2.19 | % | 1,047 | 5 | 1.96 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage client payables | 7,324 | 1 | 0.06 | % | 3,197 | 3 | 0.47 | % | 4,931 | 2 | 0.17 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 866 | 5 | 2.19 | % | 893 | 5 | 2.15 | % | 889 | 5 | 2.22 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior notes payable | 2,045 | 24 | 4.70 | % | 1,550 | 18 | 4.69 | % | 2,045 | 24 | 4.71 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| All other interest-bearing liabilities | 574 | 2 | 1.14 | % | 1,135 | 9 | 2.17 | % | 547 | 5 | 2.17 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 38,398 | $ | 38 | 0.39 | % | $ | 29,206 | $ | 51 | 0.66 | % | $ | 34,395 | $ | 42 | 0.47 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 165 | $ | 246 | $ | 159 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
8
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 1,467 | $ | 1,414 | $ | 1,394 | 4% | 5% | ||||||||||||||||||||||||
| Capital Markets | 452 | 268 | 410 | 69% | 10% | |||||||||||||||||||||||||||
| Asset Management | 195 | 184 | 184 | 6% | 6% | |||||||||||||||||||||||||||
| Raymond James Bank | 167 | 216 | 161 | (23)% | 4% | |||||||||||||||||||||||||||
Other (4) (16) | 4 | (8) | (10) | NM | NM | |||||||||||||||||||||||||||
| Intersegment eliminations | (63) | (65) | (60) | NM | NM | |||||||||||||||||||||||||||
Total net revenues | $ | 2,222 | $ | 2,009 | $ | 2,079 | 11% | 7% | ||||||||||||||||||||||||
Pre-tax income/(loss): | ||||||||||||||||||||||||||||||||
| Private Client Group | $ | 140 | $ | 153 | $ | 125 | (8)% | 12% | ||||||||||||||||||||||||
Capital Markets (6) | 129 | 29 | 106 | 345% | 22% | |||||||||||||||||||||||||||
| Asset Management | 83 | 73 | 78 | 14% | 6% | |||||||||||||||||||||||||||
| Raymond James Bank | 71 | 135 | 33 | (47)% | 115% | |||||||||||||||||||||||||||
Other (2) (4) (6) (16) | (24) | (31) | (86) | 23% | 72% | |||||||||||||||||||||||||||
Pre-tax income | $ | 399 | $ | 359 | $ | 256 | 11% | 56% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
9
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| Private Client Group | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Asset management and related administrative fees | $ | 885 | $ | 782 | $ | 832 | 13% | 6% | ||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Mutual and other fund products | 148 | 144 | 129 | 3% | 15% | |||||||||||||||||||||||||||
| Insurance and annuity products | 98 | 101 | 109 | (3)% | (10)% | |||||||||||||||||||||||||||
| Equities, ETFs and fixed income products | 107 | 102 | 95 | 5% | 13% | |||||||||||||||||||||||||||
| Total brokerage revenues | 353 | 347 | 333 | 2% | 6% | |||||||||||||||||||||||||||
| Account and service fees: | ||||||||||||||||||||||||||||||||
| Mutual fund and annuity service fees | 94 | 90 | 88 | 4% | 7% | |||||||||||||||||||||||||||
RJBDP fees: (12) | ||||||||||||||||||||||||||||||||
Third-party banks | 21 | 58 | 21 | (64)% | — | |||||||||||||||||||||||||||
Raymond James Bank | 43 | 47 | 42 | (9)% | 2% | |||||||||||||||||||||||||||
| Client account and other fees | 32 | 29 | 33 | 10% | (3)% | |||||||||||||||||||||||||||
| Total account and service fees | 190 | 224 | 184 | (15)% | 3% | |||||||||||||||||||||||||||
| Investment banking | 6 | 11 | 12 | (45)% | (50)% | |||||||||||||||||||||||||||
| Interest income | 30 | 49 | 30 | (39)% | — | |||||||||||||||||||||||||||
| All other | 5 | 9 | 7 | (44)% | (29)% | |||||||||||||||||||||||||||
| Total revenues | 1,469 | 1,422 | 1,398 | 3% | 5% | |||||||||||||||||||||||||||
| Interest expense | (2) | (8) | (4) | (75)% | (50)% | |||||||||||||||||||||||||||
| Net revenues | 1,467 | 1,414 | 1,394 | 4% | 5% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Financial advisor compensation and benefits | 931 | 857 | 873 | 9% | 7% | |||||||||||||||||||||||||||
| Administrative compensation and benefits | 249 | 247 | 244 | 1% | 2% | |||||||||||||||||||||||||||
| Total compensation, commissions and benefits | 1,180 | 1,104 | 1,117 | 7% | 6% | |||||||||||||||||||||||||||
| Non-compensation expenses | 147 | 157 | 152 | (6)% | (3)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 1,327 | 1,261 | 1,269 | 5% | 5% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 140 | $ | 153 | $ | 125 | (8)% | 12% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
10
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| Capital Markets | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||
| Fixed income | $ | 131 | $ | 81 | $ | 125 | 62% | 5% | ||||||||||||||||||||||||
| Equity | 42 | 34 | 35 | 24% | 20% | |||||||||||||||||||||||||||
| Total brokerage revenues | 173 | 115 | 160 | 50% | 8% | |||||||||||||||||||||||||||
| Investment banking: | ||||||||||||||||||||||||||||||||
| Merger & acquisition and advisory | 149 | 60 | 98 | 148% | 52% | |||||||||||||||||||||||||||
| Equity underwriting | 60 | 39 | 68 | 54% | (12)% | |||||||||||||||||||||||||||
| Debt underwriting | 46 | 31 | 43 | 48% | 7% | |||||||||||||||||||||||||||
| Total investment banking | 255 | 130 | 209 | 96% | 22% | |||||||||||||||||||||||||||
| Interest income | 3 | 8 | 3 | (63)% | — | |||||||||||||||||||||||||||
| Tax credit fund revenues | 16 | 18 | 33 | (11)% | (52)% | |||||||||||||||||||||||||||
| All other | 7 | 3 | 7 | 133% | — | |||||||||||||||||||||||||||
| Total revenues | 454 | 274 | 412 | 66% | 10% | |||||||||||||||||||||||||||
| Interest expense | (2) | (6) | (2) | (67)% | — | |||||||||||||||||||||||||||
| Net revenues | 452 | 268 | 410 | 69% | 10% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 252 | 166 | 229 | 52% | 10% | |||||||||||||||||||||||||||
Non-compensation expenses (6) | 71 | 73 | 75 | (3)% | (5)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 323 | 239 | 304 | 35% | 6% | |||||||||||||||||||||||||||
Pre-tax income | $ | 129 | $ | 29 | $ | 106 | 345% | 22% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
11
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| Asset Management | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
Asset management and related administrative fees: | ||||||||||||||||||||||||||||||||
| Managed programs | $ | 129 | $ | 125 | $ | 123 | 3% | 5% | ||||||||||||||||||||||||
| Administration and other | 59 | 51 | 55 | 16% | 7% | |||||||||||||||||||||||||||
Total asset management and related administrative fees | 188 | 176 | 178 | 7% | 6% | |||||||||||||||||||||||||||
| Account and service fees | 4 | 5 | 4 | (20)% | — | |||||||||||||||||||||||||||
| All other | 3 | 3 | 2 | — | 50% | |||||||||||||||||||||||||||
| Net revenues | 195 | 184 | 184 | 6% | 6% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 45 | 45 | 43 | — | 5% | |||||||||||||||||||||||||||
| Non-compensation expenses | 67 | 66 | 63 | 2% | 6% | |||||||||||||||||||||||||||
| Total non-interest expenses | 112 | 111 | 106 | 1% | 6% | |||||||||||||||||||||||||||
Pre-tax income | $ | 83 | $ | 73 | $ | 78 | 14% | 6% | ||||||||||||||||||||||||
| Raymond James Bank | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 168 | $ | 231 | $ | 165 | (27)% | 2% | ||||||||||||||||||||||||
| Interest expense | (11) | (21) | (11) | (48)% | — | |||||||||||||||||||||||||||
| Net interest income | 157 | 210 | 154 | (25)% | 2% | |||||||||||||||||||||||||||
| All other | 10 | 6 | 7 | 67% | 43% | |||||||||||||||||||||||||||
| Net revenues | 167 | 216 | 161 | (23)% | 4% | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation and benefits | 12 | 12 | 13 | — | (8)% | |||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (5) | 14 | (2) | 45 | NM | (69)% | |||||||||||||||||||||||||||
RJBDP fees to Private Client Group (12) | 43 | 47 | 42 | (9)% | 2% | |||||||||||||||||||||||||||
| All other | 27 | 24 | 28 | 13% | (4)% | |||||||||||||||||||||||||||
| Total non-compensation expenses | 84 | 69 | 115 | 22% | (27)% | |||||||||||||||||||||||||||
| Total non-interest expenses | 96 | 81 | 128 | 19% | (25)% | |||||||||||||||||||||||||||
| Pre-tax income | $ | 71 | $ | 135 | $ | 33 | (47)% | 115% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
12
| RAYMOND JAMES FINANCIAL, INC. | Segment Results | |||||||
| Fiscal First Quarter of 2021 | (Unaudited) | |||||||
| Other | ||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 3 | $ | 12 | $ | 3 | (75)% | — | ||||||||||||||||||||||||
Gains/(losses) on private equity investments (4) | 24 | (2) | 12 | NM | 100% | |||||||||||||||||||||||||||
| All other | 1 | 2 | — | (50)% | NM | |||||||||||||||||||||||||||
| Total revenues | 28 | 12 | 15 | 133% | 87% | |||||||||||||||||||||||||||
| Interest expense | (24) | (20) | (25) | 20% | (4)% | |||||||||||||||||||||||||||
| Net revenues | 4 | (8) | (10) | NM | NM | |||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
Compensation and all other (4) | 26 | 23 | 30 | 13% | (13)% | |||||||||||||||||||||||||||
Reduction in workforce expenses (2) | — | — | 46 | — | (100)% | |||||||||||||||||||||||||||
Acquisition-related expenses (6) | 2 | — | — | NM | NM | |||||||||||||||||||||||||||
| Total non-interest expenses | 28 | 23 | 76 | 22% | (63)% | |||||||||||||||||||||||||||
Pre-tax loss | $ | (24) | $ | (31) | $ | (86) | 23% | 72% | ||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
13
| RAYMOND JAMES FINANCIAL, INC. | Raymond James Bank Selected Key Metrics | |||||||
| Fiscal First 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 | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
Total assets | $ | 31,580 | $ | 26,469 | $ | 30,610 | 19% | 3% | ||||||||||||||||||||||||
Total equity | $ | 2,364 | $ | 2,300 | $ | 2,315 | 3% | 2% | ||||||||||||||||||||||||
Bank loans, net | $ | 21,957 | $ | 21,296 | $ | 21,195 | 3% | 4% | ||||||||||||||||||||||||
Bank loan allowance for credit losses (5) | $ | 378 | $ | 216 | $ | 354 | 75% | 7% | ||||||||||||||||||||||||
Bank loan allowance for credit losses as a % of loans held for investment (5) | 1.71 | % | 1.01 | % | 1.65 | % | ||||||||||||||||||||||||||
| Total nonperforming assets | $ | 28 | $ | 41 | $ | 32 | (32)% | (13)% | ||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.09 | % | 0.16 | % | 0.10 | % | ||||||||||||||||||||||||||
| Total criticized loans | $ | 899 | $ | 349 | $ | 933 | 158% | (4)% | ||||||||||||||||||||||||
Criticized loans as a % of loans held for investment | 4.06 | % | 1.64 | % | 4.35 | % | ||||||||||||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||||||
| Tier 1 capital | 13.1 | % | (8) | 13.3 | % | 13.0 | % | |||||||||||||||||||||||||
| Total capital | 14.4 | % | (8) | 14.5 | % | 14.3 | % | |||||||||||||||||||||||||
| Tier 1 leverage | 7.5 | % | (8) | 8.8 | % | 7.7 | % | |||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (5) | $ | 14 | $ | (2) | $ | 45 | NM | (69)% | ||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||||||||
| Charge-offs related to loan sales | $ | — | $ | — | $ | 26 | — | (100)% | ||||||||||||||||||||||||
| All other | — | — | — | — | — | |||||||||||||||||||||||||||
| Total net charge-offs | $ | — | $ | — | $ | 26 | — | (100)% | ||||||||||||||||||||||||
| Net interest margin (net yield on interest-earning assets) | 2.02 | % | 3.23 | % | 2.09 | % | ||||||||||||||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
14
| RAYMOND JAMES FINANCIAL, INC. | Non-GAAP Financial Measures | ||||
| Fiscal First 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 | ||||||||||||||
| $ in millions, except per share amounts | December 31, 2020 | September 30, 2020 | ||||||||||||
Net income | $ | 312 | $ | 209 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (6) | 2 | 7 | ||||||||||||
Reduction in workforce expenses (2) | — | 46 | ||||||||||||
| Pre-tax impact of non-GAAP adjustments | 2 | 53 | ||||||||||||
Tax effect of non-GAAP adjustments | — | (13) | ||||||||||||
Total non-GAAP adjustments, net of tax | 2 | 40 | ||||||||||||
Adjusted net income | $ | 314 | $ | 249 | ||||||||||
Pre-tax income | $ | 399 | $ | 256 | ||||||||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 2 | 53 | ||||||||||||
Adjusted pre-tax income | $ | 401 | $ | 309 | ||||||||||
Pre-tax margin (10) | 18.0 | % | 12.3 | % | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (6) | — | 0.4 | % | |||||||||||
Reduction in workforce expenses (2) | — | 2.2 | % | |||||||||||
Total non-GAAP adjustments, net of tax | — | 2.6 | % | |||||||||||
Adjusted pre-tax margin (10) | 18.0 | % | 14.9 | % | ||||||||||
Earnings per common share: (3) | ||||||||||||||
| Basic | $ | 2.27 | $ | 1.53 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (6) | 0.02 | 0.05 | ||||||||||||
Reduction in workforce expenses (2) | — | 0.34 | ||||||||||||
| Tax effect of non-GAAP adjustments | — | (0.10) | ||||||||||||
| Total non-GAAP adjustments, net of tax | 0.02 | 0.29 | ||||||||||||
| Adjusted basic | $ | 2.29 | $ | 1.82 | ||||||||||
| Diluted | $ | 2.23 | $ | 1.50 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (6) | 0.01 | 0.05 | ||||||||||||
Reduction in workforce expenses (2) | — | 0.33 | ||||||||||||
| Tax effect of non-GAAP adjustments | — | (0.10) | ||||||||||||
| Total non-GAAP adjustments, net of tax | 0.01 | 0.28 | ||||||||||||
| Adjusted diluted | $ | 2.24 | $ | 1.78 | ||||||||||
Please refer to the footnotes at the end of this press release for additional information.
15
| RAYMOND JAMES FINANCIAL, INC. | Non-GAAP Financial Measures | ||||
| Fiscal First 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 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 7,363 | $ | 6,842 | $ | 7,114 | ||||||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 834 | 609 | 600 | |||||||||||||||||
| Deferred tax liabilities, net | (56) | (31) | (34) | |||||||||||||||||
| Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,585 | $ | 6,264 | $ | 6,548 | ||||||||||||||
| Common shares outstanding | 137.4 | 138.9 | 136.6 | |||||||||||||||||
Book value per share (7) | $ | 53.59 | $ | 49.26 | $ | 52.08 | ||||||||||||||
Tangible book value per share (7) | $ | 47.93 | $ | 45.10 | $ | 47.94 | ||||||||||||||
| Return on equity | Three months ended | |||||||||||||||||||
| $ in millions | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||
Average equity (17) | $ | 7,239 | $ | 6,712 | $ | 7,040 | ||||||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (6) | 1 | NA | 4 | |||||||||||||||||
Reduction in workforce expenses (2) | — | NA | 23 | |||||||||||||||||
| Tax effect of non-GAAP adjustments | — | NA | (7) | |||||||||||||||||
Adjusted average equity (17) | $ | 7,240 | NA | $ | 7,060 | |||||||||||||||
Average equity (17) | $ | 7,239 | $ | 6,712 | $ | 7,040 | ||||||||||||||
Less: | ||||||||||||||||||||
| Average goodwill and identifiable intangible assets, net | 717 | 610 | 601 | |||||||||||||||||
| Average deferred tax liabilities, net | (45) | (30) | (33) | |||||||||||||||||
Average tangible common equity (17) | $ | 6,567 | $ | 6,132 | $ | 6,472 | ||||||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||
Acquisition and disposition-related expenses (6) | 1 | NA | 4 | |||||||||||||||||
Reduction in workforce expenses (2) | — | NA | 23 | |||||||||||||||||
| Tax effect of non-GAAP adjustments | — | NA | (7) | |||||||||||||||||
Adjusted average tangible common equity (17) | $ | 6,568 | NA | $ | 6,492 | |||||||||||||||
Return on equity (9) | 17.2 | % | 16.0 | % | 11.9 | % | ||||||||||||||
Adjusted return on equity (9) | 17.3 | % | NA | 14.1 | % | |||||||||||||||
Return on tangible common equity (9) | 19.0 | % | 17.5 | % | 12.9 | % | ||||||||||||||
Adjusted return on tangible common equity (9) | 19.1 | % | NA | 15.3 | % | |||||||||||||||
Please refer to the footnotes at the end of this press release for additional information.
16
RAYMOND JAMES FINANCIAL, INC.
Fiscal First Quarter of 2021
Footnotes
1.These are non-GAAP financial measures. See the schedules on the previous pages for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures and for more information on these measures. There were no non-GAAP adjustments to earnings for the three months ended December 31, 2019; therefore, percent changes for earnings-related non-GAAP financial measures are calculated based on non-GAAP results for the three months ended December 30, 2020 as compared to GAAP results for the three months ended December 31, 2019.
2.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.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.
4.Other revenues included $24 million and $12 million of private equity valuation gains for the three months ended December 31, 2020 and September 30, 2020, respectively, which were included in our Other segment. Of these gains, $10 million and $3 million for the three months ended December 31, 2020 and September 30, 2020, respectively, were attributable to noncontrolling interests and were offset in Other expenses.
5.The allowance for credit losses as of December 31, 2020 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 for credit losses of $14 million for the fiscal first quarter of 2021 was determined under the CECL model and represented the provision for credit losses post the CECL adoption date through December 31, 2020.
6.The three months ended December 31, 2020 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo. 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.
7.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.
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.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 real estate investment trusts 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.
15.The average yield is presented on a tax-equivalent basis for each respective period.
16.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.
17.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. 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.
17
EARNINGS RELEASE FINANCIAL SUPPLEMENT
FIRST QUARTER
OF FISCAL 2021 RESULTS
RAYMOND JAMES FINANCIAL, INC.
Consolidated Statements of Income (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| in millions, except per share amounts | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 955 | $ | 1,006 | $ | 867 | $ | 1,006 | $ | 1,067 | 12 | % | 6 | % | ||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Securities commissions | 363 | 410 | 343 | 352 | 381 | 5 | % | 8 | % | |||||||||||||||||||||||||||||||||||
| Principal transactions | 97 | 105 | 143 | 143 | 147 | 52 | % | 3 | % | |||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 460 | 515 | 486 | 495 | 528 | 15 | % | 7 | % | |||||||||||||||||||||||||||||||||||
| Account and service fees | 178 | 172 | 134 | 140 | 145 | (19) | % | 4 | % | |||||||||||||||||||||||||||||||||||
| Investment banking | 141 | 148 | 139 | 222 | 261 | 85 | % | 18 | % | |||||||||||||||||||||||||||||||||||
| Interest income | 297 | 285 | 217 | 201 | 203 | (32) | % | 1 | % | |||||||||||||||||||||||||||||||||||
Other (1) | 29 | (15) | 33 | 57 | 56 | 93 | % | (2) | % | |||||||||||||||||||||||||||||||||||
| Total revenues | 2,060 | 2,111 | 1,876 | 2,121 | 2,260 | 10 | % | 7 | % | |||||||||||||||||||||||||||||||||||
| Interest expense | (51) | (43) | (42) | (42) | (38) | (25) | % | (10) | % | |||||||||||||||||||||||||||||||||||
| Net revenues | 2,009 | 2,068 | 1,834 | 2,079 | 2,222 | 11 | % | 7 | % | |||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
| Compensation, commissions and benefits | 1,351 | 1,422 | 1,277 | 1,415 | 1,500 | 11 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Communications and information processing | 94 | 99 | 100 | 100 | 99 | 5 | % | (1) | % | |||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 57 | 56 | 55 | 57 | 57 | — | — | |||||||||||||||||||||||||||||||||||||
| Business development | 44 | 41 | 21 | 28 | 23 | (48) | % | (18) | % | |||||||||||||||||||||||||||||||||||
| Investment sub-advisory fees | 26 | 26 | 23 | 26 | 28 | 8 | % | 8 | % | |||||||||||||||||||||||||||||||||||
| Professional fees | 21 | 23 | 24 | 23 | 30 | 43 | % | 30 | % | |||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | (2) | 109 | 81 | 45 | 14 | NM | (69) | % | ||||||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | — | — | — | 7 | 2 | NM | (71) | % | ||||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | — | — | — | 46 | — | — | (100) | % | ||||||||||||||||||||||||||||||||||||
Other (1) | 59 | 53 | 55 | 76 | 70 | 19 | % | (8) | % | |||||||||||||||||||||||||||||||||||
| Total non-compensation expenses | 299 | 407 | 359 | 408 | 323 | 8 | % | (21) | % | |||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 1,650 | 1,829 | 1,636 | 1,823 | 1,823 | 10 | % | — | ||||||||||||||||||||||||||||||||||||
Pre-tax income | 359 | 239 | 198 | 256 | 399 | 11 | % | 56 | % | |||||||||||||||||||||||||||||||||||
| Provision for income taxes | 91 | 70 | 26 | 47 | 87 | (4) | % | 85 | % | |||||||||||||||||||||||||||||||||||
| Net income | $ | 268 | $ | 169 | $ | 172 | $ | 209 | $ | 312 | 16 | % | 49 | % | ||||||||||||||||||||||||||||||
Earnings per common share – basic (5) | $ | 1.93 | $ | 1.22 | $ | 1.25 | $ | 1.53 | $ | 2.27 | 18 | % | 48 | % | ||||||||||||||||||||||||||||||
Earnings per common share – diluted (5) | $ | 1.89 | $ | 1.20 | $ | 1.23 | $ | 1.50 | $ | 2.23 | 18 | % | 49 | % | ||||||||||||||||||||||||||||||
Weighted-average common shares outstanding – basic | 138.3 | 138.4 | 137.1 | 136.9 | 136.8 | (1) | % | — | ||||||||||||||||||||||||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 141.5 | 141.1 | 139.4 | 139.6 | 139.7 | (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 | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Total assets | $ | 40,154 | $ | 49,809 | $ | 44,682 | $ | 47,482 | $ | 53,657 | 34 | % | 13 | % | ||||||||||||||||||||||||||||||
| Total equity attributable to Raymond James Financial, Inc. | $ | 6,842 | $ | 6,798 | $ | 6,965 | $ | 7,114 | $ | 7,363 | 8 | % | 4 | % | ||||||||||||||||||||||||||||||
Book value per share (6) | $ | 49.26 | $ | 49.69 | $ | 50.84 | $ | 52.08 | $ | 53.59 | 9 | % | 3 | % | ||||||||||||||||||||||||||||||
Tangible book value per share (6) (7) | $ | 45.10 | $ | 45.50 | $ | 46.69 | $ | 47.94 | $ | 47.93 | 6 | % | — | |||||||||||||||||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 24.8 | % | 24.1 | % | 24.8 | % | 24.2 | % | 23.4 | % | (8) | |||||||||||||||||||||||||||||||||
| Total capital | 25.7 | % | 25.3 | % | 26.0 | % | 25.4 | % | 24.6 | % | (8) | |||||||||||||||||||||||||||||||||
| Tier 1 leverage | 15.8 | % | 14.2 | % | 14.5 | % | 14.2 | % | 12.9 | % | (8) | |||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
Adjusted pre-tax income (7) | NA | NA | NA | $ | 309 | $ | 401 | 12 | % | 30 | % | |||||||||||||||||||||||||||||||||
Adjusted net income (7) | NA | NA | NA | $ | 249 | $ | 314 | 17 | % | 26 | % | |||||||||||||||||||||||||||||||||
Adjusted earnings per common share - basic (5) (7) | NA | NA | NA | $ | 1.82 | $ | 2.29 | 19 | % | 26 | % | |||||||||||||||||||||||||||||||||
Adjusted earnings per common share - diluted (5) (7) | NA | NA | NA | $ | 1.78 | $ | 2.24 | 19 | % | 26 | % | |||||||||||||||||||||||||||||||||
Return on equity (9) | 16.0 | % | 9.9 | % | 10.0 | % | 11.9 | % | 17.2 | % | ||||||||||||||||||||||||||||||||||
Adjusted return on equity (7) (9) | NA | NA | NA | 14.1 | % | 17.3 | % | |||||||||||||||||||||||||||||||||||||
Return on tangible common equity (7) (9) | 17.5 | % | 10.8 | % | 10.9 | % | 12.9 | % | 19.0 | % | ||||||||||||||||||||||||||||||||||
Adjusted return on tangible common equity (7) (9) | NA | NA | NA | 15.3 | % | 19.1 | % | |||||||||||||||||||||||||||||||||||||
Pre-tax margin (10) | 17.9 | % | 11.6 | % | 10.8 | % | 12.3 | % | 18.0 | % | ||||||||||||||||||||||||||||||||||
Adjusted pre-tax margin (7) (10) | NA | NA | NA | 14.9 | % | 18.0 | % | |||||||||||||||||||||||||||||||||||||
Total compensation ratio (11) | 67.2 | % | 68.8 | % | 69.6 | % | 68.1 | % | 67.5 | % | ||||||||||||||||||||||||||||||||||
| Effective tax rate | 25.3 | % | 29.3 | % | 13.1 | % | 18.4 | % | 21.8 | % | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Client asset metrics ($ in billions): | |||||||||||||||||||||||||||||||||||||||||||||||
| Client assets under administration | $ | 896.0 | $ | 773.9 | $ | 876.9 | $ | 930.1 | $ | 1,024.8 | 14 | % | 10 | % | |||||||||||||||||||||||||||||||||
| Private Client Group assets under administration | $ | 855.2 | $ | 734.0 | $ | 833.1 | $ | 883.3 | $ | 974.2 | 14 | % | 10 | % | |||||||||||||||||||||||||||||||||
| Private Client Group assets in fee-based accounts | $ | 444.2 | $ | 383.5 | $ | 443.0 | $ | 475.3 | $ | 532.7 | 20 | % | 12 | % | |||||||||||||||||||||||||||||||||
| Financial assets under management | $ | 151.7 | $ | 128.2 | $ | 145.4 | $ | 153.1 | $ | 169.6 | 12 | % | 11 | % | |||||||||||||||||||||||||||||||||
Clients' domestic cash sweep balances ($ in millions): | |||||||||||||||||||||||||||||||||||||||||||||||
Raymond James Bank Deposit Program (“RJBDP”): (12) | |||||||||||||||||||||||||||||||||||||||||||||||
| Raymond James Bank | $ | 21,891 | $ | 28,711 | $ | 24,101 | $ | 25,599 | $ | 26,697 | 22 | % | 4 | % | |||||||||||||||||||||||||||||||||
| Third-party banks | 15,061 | 20,379 | 24,661 | 25,998 | 26,142 | 74 | % | 1 | % | ||||||||||||||||||||||||||||||||||||||
| Subtotal RJBDP | 36,952 | 49,090 | 48,762 | 51,597 | 52,839 | 43 | % | 2 | % | ||||||||||||||||||||||||||||||||||||||
| Client Interest Program | 2,528 | 3,782 | 3,157 | 3,999 | 8,769 | 247 | % | 119 | % | ||||||||||||||||||||||||||||||||||||||
| Total clients’ domestic cash sweep balances | $ | 39,480 | $ | 52,872 | $ | 51,919 | $ | 55,596 | $ | 61,608 | 56 | % | 11 | % | |||||||||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||||||||||||
| December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||
Average yield on RJBDP - third-party banks (13) | 1.64 | % | 1.33 | % | 0.33 | % | 0.33 | % | 0.31 | % | ||||||||||||||||||||||
| As of | % change from | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Private Client Group financial advisors: | |||||||||||||||||||||||||||||||||||||||||||||||
| Employees | 3,331 | 3,376 | 3,379 | 3,404 | 3,387 | 2 | % | — | |||||||||||||||||||||||||||||||||||||||
| Independent contractors | 4,729 | 4,772 | 4,776 | 4,835 | 4,846 | 2 | % | — | |||||||||||||||||||||||||||||||||||||||
| Total advisors | 8,060 | 8,148 | 8,155 | 8,239 | 8,233 | 2 | % | — | |||||||||||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
4
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Private Client Group (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees | $ | 782 | $ | 833 | $ | 715 | $ | 832 | $ | 885 | 13 | % | 6 | % | ||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Mutual and other fund products | 144 | 163 | 131 | 129 | 148 | 3 | % | 15 | % | |||||||||||||||||||||||||||||||||||
| Insurance and annuity products | 101 | 99 | 88 | 109 | 98 | (3) | % | (10) | % | |||||||||||||||||||||||||||||||||||
Equities, ETFs, and fixed income products | 102 | 122 | 100 | 95 | 107 | 5 | % | 13 | % | |||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 347 | 384 | 319 | 333 | 353 | 2 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Account and service fees: | ||||||||||||||||||||||||||||||||||||||||||||
Mutual fund and annuity service fees | 90 | 88 | 82 | 88 | 94 | 4 | % | 7 | % | |||||||||||||||||||||||||||||||||||
RJBDP fees: (12) | ||||||||||||||||||||||||||||||||||||||||||||
| Third-party banks | 58 | 51 | 20 | 21 | 21 | (64) | % | — | ||||||||||||||||||||||||||||||||||||
| Raymond James Bank | 47 | 48 | 43 | 42 | 43 | (9) | % | 2 | % | |||||||||||||||||||||||||||||||||||
| Client account and other fees | 29 | 35 | 32 | 33 | 32 | 10 | % | (3) | % | |||||||||||||||||||||||||||||||||||
Total account and service fees | 224 | 222 | 177 | 184 | 190 | (15) | % | 3 | % | |||||||||||||||||||||||||||||||||||
| Investment banking | 11 | 11 | 7 | 12 | 6 | (45) | % | (50) | % | |||||||||||||||||||||||||||||||||||
| Interest income | 49 | 45 | 31 | 30 | 30 | (39) | % | — | ||||||||||||||||||||||||||||||||||||
| All other | 9 | 7 | 4 | 7 | 5 | (44) | % | (29) | % | |||||||||||||||||||||||||||||||||||
| Total revenues | 1,422 | 1,502 | 1,253 | 1,398 | 1,469 | 3 | % | 5 | % | |||||||||||||||||||||||||||||||||||
| Interest expense | (8) | (7) | (4) | (4) | (2) | (75) | % | (50) | % | |||||||||||||||||||||||||||||||||||
| Net revenues | 1,414 | 1,495 | 1,249 | 1,394 | 1,467 | 4 | % | 5 | % | |||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Financial advisor compensation and benefits | 857 | 915 | 783 | 873 | 931 | 9 | % | 7 | % | |||||||||||||||||||||||||||||||||||
Administrative compensation and benefits | 247 | 245 | 235 | 244 | 249 | 1 | % | 2 | % | |||||||||||||||||||||||||||||||||||
Total compensation, commissions and benefits | 1,104 | 1,160 | 1,018 | 1,117 | 1,180 | 7 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Non-compensation expenses | 157 | 165 | 140 | 152 | 147 | (6) | % | (3) | % | |||||||||||||||||||||||||||||||||||
Total non-interest expenses | 1,261 | 1,325 | 1,158 | 1,269 | 1,327 | 5 | % | 5 | % | |||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 153 | $ | 170 | $ | 91 | $ | 125 | $ | 140 | (8) | % | 12 | % | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
5
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Capital Markets (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Brokerage revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | $ | 81 | $ | 90 | $ | 125 | $ | 125 | $ | 131 | 62 | % | 5 | % | ||||||||||||||||||||||||||||||
| Equity | 34 | 40 | 41 | 35 | 42 | 24 | % | 20 | % | |||||||||||||||||||||||||||||||||||
| Total brokerage revenues | 115 | 130 | 166 | 160 | 173 | 50 | % | 8 | % | |||||||||||||||||||||||||||||||||||
| Investment banking: | ||||||||||||||||||||||||||||||||||||||||||||
| Merger & acquisition and advisory | 60 | 72 | 60 | 98 | 149 | 148 | % | 52 | % | |||||||||||||||||||||||||||||||||||
| Equity underwriting | 39 | 43 | 35 | 68 | 60 | 54 | % | (12) | % | |||||||||||||||||||||||||||||||||||
| Debt underwriting | 31 | 22 | 37 | 43 | 46 | 48 | % | 7 | % | |||||||||||||||||||||||||||||||||||
| Total investment banking | 130 | 137 | 132 | 209 | 255 | 96 | % | 22 | % | |||||||||||||||||||||||||||||||||||
| Interest income | 8 | 10 | 4 | 3 | 3 | (63) | % | — | ||||||||||||||||||||||||||||||||||||
| Tax credit fund revenues | 18 | 12 | 20 | 33 | 16 | (11) | % | (52) | % | |||||||||||||||||||||||||||||||||||
| All other | 3 | 7 | 3 | 7 | 7 | 133 | % | — | ||||||||||||||||||||||||||||||||||||
| Total revenues | 274 | 296 | 325 | 412 | 454 | 66 | % | 10 | % | |||||||||||||||||||||||||||||||||||
| Interest expense | (6) | (6) | (2) | (2) | (2) | (67) | % | — | ||||||||||||||||||||||||||||||||||||
| Net revenues | 268 | 290 | 323 | 410 | 452 | 69 | % | 10 | % | |||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 166 | 184 | 195 | 229 | 252 | 52 | % | 10 | % | |||||||||||||||||||||||||||||||||||
Non-compensation expenses (3) | 73 | 78 | 66 | 75 | 71 | (3) | % | (5) | % | |||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 239 | 262 | 261 | 304 | 323 | 35 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 29 | $ | 28 | $ | 62 | $ | 106 | $ | 129 | 345 | % | 22 | % | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
6
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Asset Management (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
Asset management and related administrative fees: | ||||||||||||||||||||||||||||||||||||||||||||
| Managed programs | $ | 125 | $ | 124 | $ | 109 | $ | 123 | $ | 129 | 3 | % | 5 | % | ||||||||||||||||||||||||||||||
| Administration and other | 51 | 53 | 48 | 55 | 59 | 16 | % | 7 | % | |||||||||||||||||||||||||||||||||||
Total asset management and related administrative fees | 176 | 177 | 157 | 178 | 188 | 7 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Account and service fees | 5 | 4 | 3 | 4 | 4 | (20) | % | — | ||||||||||||||||||||||||||||||||||||
| All other | 3 | 3 | 3 | 2 | 3 | — | 50 | % | ||||||||||||||||||||||||||||||||||||
| Net revenues | 184 | 184 | 163 | 184 | 195 | 6 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Compensation, commissions and benefits | 45 | 45 | 44 | 43 | 45 | — | 5 | % | ||||||||||||||||||||||||||||||||||||
| Non-compensation expenses | 66 | 66 | 59 | 63 | 67 | 2 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 111 | 111 | 103 | 106 | 112 | 1 | % | 6 | % | |||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 73 | $ | 73 | $ | 60 | $ | 78 | $ | 83 | 14 | % | 6 | % | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
7
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Raymond James Bank (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 231 | $ | 223 | $ | 181 | $ | 165 | $ | 168 | (27) | % | 2 | % | ||||||||||||||||||||||||||||||
| Interest expense | (21) | (18) | (12) | (11) | (11) | (48) | % | — | ||||||||||||||||||||||||||||||||||||
| Net interest income | 210 | 205 | 169 | 154 | 157 | (25) | % | 2 | % | |||||||||||||||||||||||||||||||||||
| All other | 6 | 5 | 9 | 7 | 10 | 67 | % | 43 | % | |||||||||||||||||||||||||||||||||||
| Net revenues | 216 | 210 | 178 | 161 | 167 | (23) | % | 4 | % | |||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 12 | 13 | 13 | 13 | 12 | — | (8) | % | ||||||||||||||||||||||||||||||||||||
| Non-compensation expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | (2) | 109 | 81 | 45 | 14 | NM | (69) | % | ||||||||||||||||||||||||||||||||||||
RJBDP fees to Private Client Group (12) | 47 | 48 | 43 | 42 | 43 | (9) | % | 2 | % | |||||||||||||||||||||||||||||||||||
| All other | 24 | 26 | 27 | 28 | 27 | 13 | % | (4) | % | |||||||||||||||||||||||||||||||||||
| Total non-compensation expenses | 69 | 183 | 151 | 115 | 84 | 22 | % | (27) | % | |||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 81 | 196 | 164 | 128 | 96 | 19 | % | (25) | % | |||||||||||||||||||||||||||||||||||
| Pre-tax income | $ | 135 | $ | 14 | $ | 14 | $ | 33 | $ | 71 | (47) | % | 115 | % | ||||||||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
8
RAYMOND JAMES FINANCIAL, INC.
Segment Results - Other (14) (Unaudited)
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 12 | $ | 12 | $ | 3 | $ | 3 | $ | 3 | (75) | % | — | |||||||||||||||||||||||||||||||
Gains/(losses) on private equity investments (1) | (2) | (39) | 1 | 12 | 24 | NM | 100 | % | ||||||||||||||||||||||||||||||||||||
| All other | 2 | — | 2 | — | 1 | (50) | % | NM | ||||||||||||||||||||||||||||||||||||
| Total revenues | 12 | (27) | 6 | 15 | 28 | 133 | % | 87 | % | |||||||||||||||||||||||||||||||||||
| Interest expense | (20) | (17) | (26) | (25) | (24) | 20 | % | (4) | % | |||||||||||||||||||||||||||||||||||
| Net revenues | (8) | (44) | (20) | (10) | 4 | NM | NM | |||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||
Compensation and all other (1) | 23 | 2 | 9 | 30 | 26 | 13 | % | (13) | % | |||||||||||||||||||||||||||||||||||
Reduction in workforce expenses (4) | — | — | — | 46 | — | — | (100) | % | ||||||||||||||||||||||||||||||||||||
Acquisition-related expenses (3) | — | — | — | — | 2 | NM | NM | |||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 23 | 2 | 9 | 76 | 28 | 22 | % | (63) | % | |||||||||||||||||||||||||||||||||||
| Pre-tax loss | $ | (31) | $ | (46) | $ | (29) | $ | (86) | $ | (24) | 23 | % | 72 | % | ||||||||||||||||||||||||||||||
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 | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
| Total assets | $ | 26,469 | $ | 33,656 | $ | 29,066 | $ | 30,610 | $ | 31,580 | 19 | % | 3 | % | ||||||||||||||||||||||||||||||
| Total equity | $ | 2,300 | $ | 2,263 | $ | 2,279 | $ | 2,315 | $ | 2,364 | 3 | % | 2 | % | ||||||||||||||||||||||||||||||
| Bank loans, net | $ | 21,296 | $ | 21,788 | $ | 21,223 | $ | 21,195 | $ | 21,957 | 3 | % | 4 | % | ||||||||||||||||||||||||||||||
Bank loan allowance for credit losses (2) | $ | 216 | $ | 324 | $ | 334 | $ | 354 | $ | 378 | 75 | % | 7 | % | ||||||||||||||||||||||||||||||
Bank loan allowance for credit losses as a % of loans held for investment (2) | 1.01 | % | 1.47 | % | 1.56 | % | 1.65 | % | 1.71 | % | ||||||||||||||||||||||||||||||||||
| Total nonperforming assets | $ | 41 | $ | 27 | $ | 23 | $ | 32 | $ | 28 | (32) | % | (13) | % | ||||||||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.16 | % | 0.08 | % | 0.08 | % | 0.10 | % | 0.09 | % | ||||||||||||||||||||||||||||||||||
| Total criticized loans | $ | 349 | $ | 387 | $ | 733 | $ | 933 | $ | 899 | 158 | % | (4) | % | ||||||||||||||||||||||||||||||
| Criticized loans as a % of loans held for investment | 1.64 | % | 1.76 | % | 3.41 | % | 4.35 | % | 4.06 | % | ||||||||||||||||||||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital | 13.3 | % | 12.7 | % | 12.8 | % | 13.0 | % | 13.1 | % | (8) | |||||||||||||||||||||||||||||||||
| Total capital | 14.5 | % | 13.9 | % | 14.1 | % | 14.3 | % | 14.4 | % | (8) | |||||||||||||||||||||||||||||||||
| Tier 1 leverage | 8.8 | % | 8.1 | % | 7.6 | % | 7.7 | % | 7.5 | % | (8) | |||||||||||||||||||||||||||||||||
| Three months ended | % change from | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | September 30, 2020 | |||||||||||||||||||||||||||||||||||||
Bank loan provision/(benefit) for credit losses (2) | $ | (2) | $ | 109 | $ | 81 | $ | 45 | $ | 14 | NM | (69) | % | |||||||||||||||||||||||||||||||
| Net charge-offs | $ | — | $ | — | $ | 72 | $ | 26 | $ | — | — | (100) | % | |||||||||||||||||||||||||||||||
Net interest margin (net yield on interest-earning assets) | 3.23 | % | 3.02 | % | 2.29 | % | 2.09 | % | 2.02 | % | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||
| $ in millions | September 30, 2020 | December 31, 2020 | ||||||||||||
Net income | $ | 209 | $ | 312 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (3) | 7 | 2 | ||||||||||||
Reduction in workforce expenses (4) | 46 | — | ||||||||||||
| Pre-tax impact of non-GAAP adjustments | 53 | 2 | ||||||||||||
Tax effect of non-GAAP adjustments | (13) | — | ||||||||||||
Total non-GAAP adjustments, net of tax | 40 | 2 | ||||||||||||
Adjusted net income | $ | 249 | $ | 314 | ||||||||||
Pre-tax income | $ | 256 | $ | 399 | ||||||||||
Pre-tax impact of non-GAAP adjustments (as detailed above) | 53 | 2 | ||||||||||||
Adjusted pre-tax income | $ | 309 | $ | 401 | ||||||||||
Pre-tax margin (10) | 12.3 | % | 18.0 | % | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (3) | 0.4 | % | — | |||||||||||
Reduction in workforce expenses (4) | 2.2 | % | — | |||||||||||
Total non-GAAP adjustments, net of tax | 2.6 | % | — | |||||||||||
Adjusted pre-tax margin (10) | 14.9 | % | 18.0 | % | ||||||||||
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 | ||||||||||||||
Earnings per common share (5) | September 30, 2020 | December 31, 2020 | ||||||||||||
| Basic | $ | 1.53 | $ | 2.27 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (3) | 0.05 | 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 | ||||||||||||
| Adjusted basic | $ | 1.82 | $ | 2.29 | ||||||||||
| Diluted | $ | 1.50 | $ | 2.23 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Acquisition and disposition-related expenses (3) | 0.05 | 0.01 | ||||||||||||
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 | ||||||||||||
| Adjusted diluted | $ | 1.78 | $ | 2.24 | ||||||||||
| Book value per share | As of | |||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
Total equity attributable to Raymond James Financial, Inc. | $ | 6,842 | $ | 6,798 | $ | 6,965 | $ | 7,114 | $ | 7,363 | ||||||||||||||||||||||
Less non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Goodwill and identifiable intangible assets, net | 609 | 603 | 602 | 600 | 834 | |||||||||||||||||||||||||||
| Deferred tax liabilities, net | (31) | (30) | (33) | (34) | (56) | |||||||||||||||||||||||||||
| Tangible common equity attributable to Raymond James Financial, Inc. | $ | 6,264 | $ | 6,225 | $ | 6,396 | $ | 6,548 | $ | 6,585 | ||||||||||||||||||||||
| Common shares outstanding | 138.9 | 136.8 | 137.0 | 136.6 | 137.4 | |||||||||||||||||||||||||||
Book value per share (6) | $ | 49.26 | $ | 49.69 | $ | 50.84 | $ | 52.08 | $ | 53.59 | ||||||||||||||||||||||
Tangible book value per share (6) | $ | 45.10 | $ | 45.50 | $ | 46.69 | $ | 47.94 | $ | 47.93 | ||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
| $ in millions | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | |||||||||||||||||||||||||||
Average equity (15) | $ | 6,712 | $ | 6,820 | $ | 6,882 | $ | 7,040 | $ | 7,239 | ||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | NA | NA | NA | 4 | 1 | |||||||||||||||||||||||||||
Reduction in workforce expenses (4) | NA | NA | NA | 23 | — | |||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | NA | NA | NA | (7) | — | |||||||||||||||||||||||||||
Adjusted average equity (15) | NA | NA | NA | $ | 7,060 | $ | 7,240 | |||||||||||||||||||||||||
Average equity (15) | $ | 6,712 | $ | 6,820 | $ | 6,882 | $ | 7,040 | $ | 7,239 | ||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Average goodwill and identifiable intangible assets, net | 610 | 606 | 603 | 601 | 717 | |||||||||||||||||||||||||||
| Average deferred tax liabilities, net | (30) | (31) | (32) | (33) | (45) | |||||||||||||||||||||||||||
Average tangible common equity (15) | $ | 6,132 | $ | 6,245 | $ | 6,311 | $ | 6,472 | $ | 6,567 | ||||||||||||||||||||||
Impact on average equity of non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Acquisition and disposition-related expenses (3) | NA | NA | NA | 4 | 1 | |||||||||||||||||||||||||||
Reduction in workforce expenses (4) | NA | NA | NA | 23 | — | |||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | NA | NA | NA | (7) | — | |||||||||||||||||||||||||||
Adjusted average tangible common equity (15) | NA | NA | NA | $ | 6,492 | $ | 6,568 | |||||||||||||||||||||||||
Return on equity (9) | 16.0 | % | 9.9 | % | 10.0 | % | 11.9 | % | 17.2 | % | ||||||||||||||||||||||
Adjusted return on equity (9) | NA | NA | NA | 14.1 | % | 17.3 | % | |||||||||||||||||||||||||
Return on tangible common equity (9) | 17.5 | % | 10.8 | % | 10.9 | % | 12.9 | % | 19.0 | % | ||||||||||||||||||||||
Adjusted return on tangible common equity (9) | NA | NA | NA | 15.3 | % | 19.1 | % | |||||||||||||||||||||||||
Please refer to the footnotes at the end of this supplement for additional information.
13
RAYMOND JAMES FINANCIAL, INC.
Footnotes
1.Other revenues included approximately $40 million of private equity valuation losses, $12 million of private equity valuation gains, and $24 million of private equity valuation gains for the three months ended March 31, 2020, three months ended September 30, 2020 and three months ended December 31, 2020, respectively, which were included in our Other segment. Of these amounts, $23 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, 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.
2.The allowance for credit losses as of December 31, 2020 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 for credit losses of $14 million for the fiscal first quarter of 2021 was determined under the CECL model and represented the provision for credit losses post the CECL adoption date through December 31, 2020.
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 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo.
4.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 our non-GAAP financial measures to the most directly comparable GAAP measures and for more information on these measures. There were no non-GAAP adjustments to earnings for the three months ended December 31, 2019, March 31, 2020, and June 30, 2020; therefore, percent changes for earnings-related non-GAAP financial measures are calculated based on non-GAAP results for the three months ended December 31, 2020 as compared to GAAP results for the three months ended December 31, 2019.
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. 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 1Q21 RESULTS January 27, 2021
2 Paul Reilly Chairman & CEO, Raymond James Financial OVERVIEW OF RESULTS
3 * 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. FISCAL 1Q21 HIGHLIGHTS $ in millions, except per share amounts 1Q21 vs. 1Q20 vs. 4Q20 As Reported: Net revenues RECORD $ 2,222 11% 7% Net income RECORD $ 312 16% 49% Earnings per common share - diluted RECORD $ 2.23 18% 49% 1Q20 4Q20 Return on equity 17.2 % 16.0% 11.9% vs. 1Q20 vs. 4Q20 Non-GAAP Measures:* Adjusted net income RECORD $ 314 17% 26% Adjusted earnings per common share - diluted RECORD $ 2.24 19% 26% 1Q20 4Q20 Adjusted return on equity 17.3 % NA 14.1% Return on tangible common equity 19.0 % 17.5% 12.9% Adjusted return on tangible common equity 19.1 % NA 15.3%
4 FISCAL 1Q21 KEY METRICS $ in billions 1Q21 vs. 1Q20 vs. 4Q20 Client assets under administration RECORD $ 1,024.8 14% 10% Private Client Group (PCG) assets under administration RECORD $ 974.2 14% 10% PCG assets in fee-based accounts RECORD $ 532.7 20% 12% Financial assets under management RECORD $ 169.6 12% 11% Total clients' domestic cash sweep balances RECORD $ 61.6 56% 11% PCG financial advisors 8,233 2% —% Bank loans, net RECORD $ 22.0 3% 4%
5 FISCAL 1Q21 SEGMENT RESULTS $ in millions 1Q21 vs. 1Q20 vs. 4Q20 Net Revenues: Private Client Group $ 1,467 4% 5% Capital Markets RECORD $ 452 69% 10% Asset Management RECORD $ 195 6% 6% Raymond James Bank $ 167 (23)% 4% Consolidated net revenues RECORD $ 2,222 11% 7% Pre-Tax Income: Private Client Group $ 140 (8)% 12% Capital Markets(1) RECORD $ 129 345% 22% Asset Management RECORD $ 83 14% 6% Raymond James Bank $ 71 (47)% 115% Consolidated pre-tax income(1), (2) RECORD $ 399 11% 56% Note: Segments do not total consolidated results because of the Other segment and intersegment eliminations not shown. (1) 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. (2) 1Q21 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo. 4Q20 included $46 M related to the reduction in workforce expenses associated with position eliminations that occurred in response to the economic environment. These expenses were included in our Other segment.
6 RECENT ACQUISITIONS NWPS Holdings, Inc. • Independent provider of retirement plan administration, consulting, actuarial and administration services • Expands Raymond James' retirement services offerings, including retirement plan administration services, for advisors and clients • Combined with Raymond James' scale, enables managing the end-to-end experience for plan sponsors and participants • Over 400,000 participants with more than $35 billion in plan assets* • Transaction closed on December 24, 2020 Financo** • Boutique investment bank with strong expertise in a number of consumer and retail specialties • Combined team will offer enhanced product capabilities and deliver broader and deeper market coverage under Raymond James' full service platform • Positions the firm as a global market-leader in consumer and retail investment banking • More than 25 experienced professionals with offices in New York and London * Plan assets held outside Raymond James and therefore not included in firm client assets under administration. ** This transaction is anticipated to close in March or April 2021. The completion of the transaction is subject to certain regulatory and other closing conditions.
7 Paul Shoukry Chief Financial Officer, Raymond James Financial FINANCIAL REVIEW
8 CONSOLIDATED NET REVENUES $ in millions 1Q21 vs. 1Q20 vs. 4Q20 Asset management and related administrative fees $ 1,067 12% 6% Brokerage revenues 528 15% 7% Account and service fees 145 (19)% 4% Investment banking 261 85% 18% Interest income 203 (32)% 1% Other* 56 93% (2)% Total revenues 2,260 10% 7% Interest expense (38) (25)% (10)% Net revenues $ 2,222 11% 7% * Other revenues included $24 M and $12 M of private equity valuation gains in 1Q21 and 4Q20, respectively, which were included in our Other segment. Of these gains, $10 M and $3 M in 1Q21 and 4Q20, respectively, were attributable to noncontrolling interests and were offset in Other expenses.
9 Note: May not total due to rounding. * Raymond James Bank Deposit Program (RJBDP) is a multi-bank sweep program in which clients' cash deposits in their brokerage accounts are swept into interest- bearing deposit accounts at Raymond James Bank and various third-party banks. C lie nt s' D om es tic C as h S w ee p B al an ce s ($ 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) 21.9 28.7 24.1 25.6 26.7 15.1 20.4 24.7 26.0 26.12.5 3.8 3.2 4.0 8.8 39.5 52.9 51.9 55.6 61.6 4.9% 7.6% 6.6% 6.7% 6.7% 1Q20 2Q20 3Q20 4Q20 1Q21 DOMESTIC CASH SWEEP BALANCES Year-over-year change: 56% Sequential change: 11% RJBDP- RJ Bank* RJBDP- Third-Party Banks* Client Interest Program
10 NET INTEREST INCOME & RJBDP FEES (THIRD-PARTY BANKS) * As reported in Account and Service Fees in the PCG segment. ** Raymond James Bank represents a significant portion, but not all, of the firmwide Net Interest Income. Raymond James Bank Net Interest Margin represents the net yield on interest-earning banking assets. *** 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 304 293 195 180 186 246 242 175 159 165 58 51 20 21 21 1Q20 2Q20 3Q20 4Q20 1Q21 Average Yield on RJBDP (Third-Party Banks)*** 1.64% 1.33% 0.33% 0.33% 0.31% 1Q20 2Q20 3Q20 4Q20 1Q21 Raymond James Bank Net Interest Margin** 3.23% 3.02% 2.29% 2.09% 2.02% 1Q20 2Q20 3Q20 4Q20 1Q21
11 CONSOLIDATED EXPENSES $ in millions 1Q21 vs. 1Q20 vs. 4Q20(1) Compensation, commissions and benefits $ 1,500 11% 6% Non-compensation expenses: Communications and information processing 99 5% (1)% Occupancy and equipment 57 —% —% Business development 23 (48)% (18)% Investment sub-advisory fees 28 8% 8% Professional fees 30 43% 30% Bank loan provision for credit losses 14 NM (69)% Acquisition and disposition-related expenses(2) 2 NM (71)% Other(3) 70 19% (8)% Total non-compensation expenses 323 8% (21)% Total non-interest expenses $ 1,823 10% —% Total Compensation Ratio 67.2% 68.8% 69.6% 68.1% 67.5% 1Q20 2Q20 3Q20 4Q20 1Q21 Total Non-Compensation Expenses $ in millions 299 407 359 408 323 1Q20 2Q20 3Q20 4Q20 1Q21 (1) 4Q20 included $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. (2) 1Q21 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo. 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. (3) Other revenues included $24 M and $12 M of private equity valuation gains in 1Q21 and 4Q20, respectively, which were included in our Other segment. Of these gains, $10 M and $3 M in 1Q21 and 4Q20, respectively, were attributable to noncontrolling interests and were offset in Other expenses.
12 * 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. ** 1Q21 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo. *** 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. 17.9% 11.6% 10.8% 12.3% 18.0% 14.9% Pre-Tax Margin (GAAP) Pre-Tax Margin (Adjusted)*** 1Q20 2Q20 3Q20 4Q20* 1Q21** CONSOLIDATED PRE-TAX MARGIN
13 OTHER FINANCIAL INFORMATION $ in millions, except per share amounts 1Q21 vs. 1Q20 vs. 4Q20 Total assets $ 53,657 34% 13% RJF corporate cash* $ 1,788 25% (17)% Total equity attributable to RJF $ 7,363 8% 4% Book value per share $ 53.59 9% 3% Tangible book value per share** $ 47.93 6% —% Weighted-average common and common equivalent shares outstanding – diluted 139.7 (1)% —% 1Q20 4Q20 Tier 1 capital ratio 23.4 % 24.8% 24.2% Total capital ratio 24.6 % 25.7% 25.4% Tier 1 leverage ratio 12.9 % 15.8% 14.2% Effective tax rate 21.8 % 25.3% 18.4% * 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.
14 Dividends Paid and Share Repurchases* $ in millions 62 254 51 101 65 202 5051 52 51 51 55 Share Repurchases* Dividends Paid 1Q20 2Q20 3Q20 4Q20 1Q21 CAPITAL MANAGEMENT $740 million remains under current share repurchase authorization Number of Shares Repurchased* (thousands) 126 2,548 — 678 108 Average Share Price of Shares Repurchased* $89.30 $79.21 — $73.74 $92.79 * Under the Board of Directors' share repurchase authorization. ** Share repurchases in 1Q20 totaled $11 million. *** Share repurchases in 1Q21 totaled $10 million. Total of ~$533 million over the past 5 quarters ** ***
15 REIT Loa… Tax-Exempt Loans: 4% Loans … Cash … RAYMOND JAMES BANK ASSET COMPOSITION * 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 real estate investment trusts into a separate portfolio segment (previously included in CRE loans and C&I loans). Total assets: $31.6 billion Total loans, net: $22.0 billion Asset Mix as of December 31, 2020* Commercial & Industrial Portfolio (C&I) • All senior positions; no mezzanine lending • Highly diversified with no industry category representing more than 3.5% of total loans (e.g. Energy ~1.5%, Restaurants ~1.2%, Airlines ~1.0%, Gaming ~0.5%, and Entertainment/Leisure ~0.1%) • Typically loans to larger companies with EBITDA >$100 million and track record of access to other capital sources; 70% of commitments are to public companies Commercial Real Estate Portfolio (CRE) • Majority of project loans are to fully stabilized properties with average loan-to-value of 65%; construction loans represent ~1% of total loans Residential Mortgage Portfolio • Majority of mortgages to Private Client Group clients, diversified across the country • Average loan-to-value of 65%; average FICO score of 762 • Almost entire portfolio are first mortgages; no Alt. A / subprime / negative amortizing mortgages C&I Loans: 24% CRE Loans: 8% Residential Mortgage Loans: 16% SBL and Other Loans: 14% Available- For-Sale Securities: 25% REIT Loans: 4% Available-For-Sale Securities Portfolio • Primarily agency MBS and agency CMOs • Target average duration of ~3 years Real Estate Investment Trust Portfolio (REIT) • REITs that are typically more diversified, have a track record of access to other capital sources, and have at or near investment grade ratings Cash and Other Assets: 4% Loans Held For Sale: 1% Tax-Exempt Loans: 4%
16 RAYMOND JAMES BANK KEY CREDIT TRENDS $ in millions 1Q21 vs. 1Q20 vs. 4Q20 Bank loan provision for credit losses* $ 14 NM (69)% Net charge-offs** $ — —% (100)% 1Q20 4Q20 Nonperforming assets as a % of total assets 0.09 % 0.16% 0.10% Bank loan allowance for credit losses as a % of loans held for investment* 1.71 % 1.01% 1.65% Criticized loans as a % of loans held for investment 4.06 % 1.64% 4.35% * The allowance for credit losses as of December 31, 2020 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, which resulted in an approximately $10 million increase in the allowance for credit losses related to bank loans on the adoption date. The bank loan provision for credit losses of $14 million for the fiscal first quarter of 2021 was determined under the CECL model and represented the provision for credit losses post the CECL adoption date through December 31, 2020. ** Net charge-offs in 4Q20 were all attributable to the loan sales made in the quarter.
17 OUTLOOK
APPENDIX 18
19 Note: Please refer to the footnotes on slide 22 for additional information. Three months ended $ in millions September 30, 2020 December 31, 2020 Net income $ 209 $ 312 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 7 2 Reduction in workforce expenses (2) 46 — Pre-tax impact of non-GAAP adjustments 53 2 Tax effect of non-GAAP adjustments (13) — Total non-GAAP adjustments, net of tax 40 2 Adjusted net income $ 249 $ 314 Pre-tax income $ 256 $ 399 Pre-tax impact of non-GAAP adjustments (as detailed above) 53 2 Adjusted pre-tax income $ 309 $ 401 Pre-tax margin (3) 12.3 % 18.0 % Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.4 % — Reduction in workforce expenses (2) 2.2 % — Total non-GAAP adjustments, net of tax 2.6 % — Adjusted pre-tax margin (3) 14.9 % 18.0 % 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. continued on next slide Book value per share As of $ in millions, except per share amounts December 31, 2019 September 30, 2020 December 31, 2020 Total equity attributable to Raymond James Financial, Inc. $ 6,842 $ 7,114 $ 7,363 Less non-GAAP adjustments: Goodwill and identifiable intangible assets, net 609 600 834 Deferred tax liabilities, net (31) (34) (56) Tangible common equity attributable to Raymond James Financial, Inc. $ 6,264 $ 6,548 $ 6,585 Common shares outstanding 138.9 136.6 137.4 Book value per share (5) $ 49.26 $ 52.08 $ 53.59 Tangible book value per share (5) $ 45.10 $ 47.94 $ 47.93 Three months ended Earnings per common share (4) September 30, 2020 December 31, 2020 Basic $ 1.53 $ 2.27 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.05 0.02 Reduction in workforce expenses (2) 0.34 — Tax effect of non-GAAP adjustments (0.10) — Total non-GAAP adjustments, net of tax 0.29 0.02 Adjusted basic $ 1.82 $ 2.29 Diluted $ 1.50 $ 2.23 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) 0.05 0.01 Reduction in workforce expenses (2) 0.33 — Tax effect of non-GAAP adjustments (0.10) — Total non-GAAP adjustments, net of tax 0.28 0.01 Adjusted diluted $ 1.78 $ 2.24 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (UNAUDITED)
21 Note: Please refer to the footnotes on slide 22 for additional information. Return on equity Three months ended $ in millions December 31, 2019 September 30, 2020 December 31, 2020 Average equity (6) $ 6,712 $ 7,040 $ 7,239 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) NA 4 1 Reduction in workforce expenses (2) NA 23 — Tax effect of non-GAAP adjustments NA (7) — Adjusted average equity (6) NA $ 7,060 $ 7,240 Average equity (6) $ 6,712 $ 7,040 $ 7,239 Less: Average goodwill and identifiable intangible assets, net 610 601 717 Average deferred tax liabilities, net (30) (33) (45) Average tangible common equity (6) $ 6,132 $ 6,472 $ 6,567 Impact on average equity of non-GAAP adjustments: Acquisition and disposition-related expenses (1) NA 4 1 Reduction in workforce expenses (2) NA 23 — Tax effect of non-GAAP adjustments NA (7) — Adjusted average tangible common equity (6) NA $ 6,492 $ 6,568 Return on equity (7) 16.0 % 11.9 % 17.2 % Adjusted return on equity (7) NA 14.1 % 17.3 % Return on tangible common equity (7) 17.5 % 12.9 % 19.0 % Adjusted return on tangible common equity (7) NA 15.3 % 19.1 % continued on next slide RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (UNAUDITED)
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 included expenses in our Other segment associated with our acquisition of NWPS Holdings, Inc. and its wholly-owned subsidiaries, which was announced and completed in December 2020, as well as our announced acquisition of Financo. 2. 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 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. 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.