rjflogosept20.gif

October 24, 2018
 
FOR IMMEDIATE RELEASE
 
 
Media Contact: Steve Hollister, 727.567.2824
 
 
Investor Contact: Paul Shoukry, 727.567.5133
 
 
raymondjames.com/news-and-media/press-releases


        
RAYMOND JAMES FINANCIAL REPORTS 4TH QUARTER AND
FISCAL YEAR 2018 RESULTS
 

Record quarterly net revenues of $1.90 billion, up 12% over the prior year’s fiscal fourth quarter and 3% over the preceding quarter
Record quarterly net income of $262.7 million, or $1.76 per diluted share, and adjusted quarterly net income of $250.8 million(1), or $1.68 per diluted share(1) 
Record annual net revenues of $7.27 billion, record annual net income of $856.7 million, or $5.75 per diluted share, and adjusted annual net income of $964.8 million(1), or $6.47 per diluted share(1) 
Quarter-end records for client assets under administration of $790.4 billion, financial assets under management of $140.9 billion and net loans at Raymond James Bank of $19.5 billion
Record number of Private Client Group financial advisors of 7,813, net increases of 467(2) over September 2017 and 94 over June 2018


ST. PETERSBURG, Fla - Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $1.90 billion and net income of $262.7 million, or $1.76 per diluted share, for the fiscal fourth quarter ended September 30, 2018. Excluding an $11.9 million adjustment to the estimated impact of the Tax Cuts and Jobs Act (the “Tax Act”), adjusted quarterly net income was $250.8 million(1), or $1.68 per diluted share(1). The record quarterly revenues and net income were driven by growth of Private Client Group assets in fee-based accounts, higher net interest income and record investment banking revenues. Results during the quarter were negatively impacted by $11.9 million of unrealized losses on private equity investments and an increase in other expenses, largely attributable to elevated legal and regulatory reserves.

For fiscal year 2018, record net revenues of $7.27 billion increased 14%, record net income of $856.7 million increased 35%, and adjusted net income of $964.8 million(1) increased 26% compared to fiscal year 2017. Pre-tax income for fiscal year 2018 of $1.31 billion increased 42% over the prior year’s GAAP pre-tax income, and adjusted pre-tax income increased 17% over the prior year. Return on equity for fiscal year 2018 was 14.4%, and the adjusted return on equity was 16.0%(1).
    
“Our focus on attracting and retaining client-centric financial advisors and providing them with industry-leading tools and resources continues to produce record results,” said Chairman and CEO Paul Reilly. “It is especially gratifying to deliver shareholders an attractive return on equity in fiscal 2018, particularly given our strong capital position and the significant investments we made during the year.”
  

Please refer to the footnotes at the end of this press release for additional information.
1




Segment Results

Private Client Group

Record quarterly net revenues of $1.31 billion, up 12% over the prior year’s fiscal fourth quarter and 2% over the preceding quarter
Quarterly pre-tax income of $131.2 million, down 8% compared to the prior year’s fiscal fourth quarter and down 1% compared to the preceding quarter
Record annual net revenues of $5.09 billion and record annual pre-tax income of $576.1 million
Record Private Client Group assets under administration of $755.7 billion, growth of 15% over September 2017 and 5% over June 2018
Private Client Group assets in fee-based accounts of $366.3 billion, an increase of 24% over September 2017 and 7% over June 2018
Record number of Private Client Group financial advisors of 7,813, net increases of 467(2) over September 2017 and 94 over June 2018

Record net revenues for both the quarter and fiscal year were primarily driven by growth of assets in fee-based accounts, which represented 48% of the segment’s total client assets under administration at the end of the quarter. While the segment generated record pre-tax income for the fiscal year, the quarterly pre-tax income was down compared to the prior year’s fiscal fourth quarter and the preceding quarter, largely due to higher compensation expense as well as elevated legal and regulatory reserves.

“Fiscal year 2018 was a record year for financial advisor recruiting, and retention of advisors remained excellent,” said Reilly. “Our focus on serving advisors and their clients continues to resonate with high-quality financial advisors across all of our affiliation options.”


Capital Markets

Quarterly net revenues of $274.8 million, up 3% over the prior year’s fiscal fourth quarter and 14% over the preceding quarter
Quarterly pre-tax income of $47.9 million, up 9% over the prior year’s fiscal fourth quarter and 120% over the preceding quarter
Annual net revenues of $963.8 million and annual pre-tax income of $90.6 million
Record quarterly and annual investment banking revenues of $155.0 million and $440.8 million, respectively

Record M&A results drove record total investment banking revenues for the fiscal fourth quarter and fiscal year 2018, despite declines in both equity and fixed income underwriting. Investment banking revenues during the quarter were also helped by a surge in tax credit funds syndication fees, which ended the year down just 5% compared to fiscal year 2017 despite significant disruption following corporate tax reform. The market environment for institutional equity and fixed income commissions remained difficult during the quarter.

“Record M&A results muted the declines in underwriting revenues and institutional commissions during the fiscal year,” said Reilly. “While the M&A pipeline remains robust, we continue to expect industry headwinds for institutional equity and fixed income commissions.”


Please refer to the footnotes at the end of this press release for additional information.
2




Asset Management

Record quarterly net revenues of $172.4 million, up 31% over the prior year’s fiscal fourth quarter and 3% over the preceding quarter
Record quarterly pre-tax income of $63.8 million, up 31% over the prior year’s fiscal fourth quarter and 9% over the preceding quarter
Record annual net revenues of $654.4 million and record annual pre-tax income of $235.3 million, representing increases of 34% and 37% over fiscal 2017, respectively
Quarter-end record for financial assets under management of $140.9 billion, representing growth of 46% over September 2017 and 4% over June 2018

Record quarterly and annual results for the Asset Management segment were attributable to the growth of financial assets under management, which reflected net inflows into fee-based accounts in the Private Client Group, equity market appreciation and the addition of $27 billion of assets from the Scout and Reams acquisition in November 2017.
  

Raymond James Bank

Record quarterly net revenues of $194.9 million, up 20% over the prior year’s fiscal fourth quarter and 4% over the preceding quarter
Record quarterly pre-tax income of $130.4 million, up 15% over the prior year’s fiscal fourth quarter and 1% over the preceding quarter
Record annual net revenues of $726.7 million and record annual pre-tax income of $491.8 million, representing increases of 23% and 20% over fiscal 2017, respectively
Record net loans of $19.5 billion, representing growth of 15% over September 2017 and 3% over June 2018
Net interest margin of 3.27% for the quarter, up 16 basis points over the prior year’s fiscal fourth quarter and down 3 basis points compared to the preceding quarter

Record results were lifted by broad-based loan growth and the year-over-year expansion of the net interest margin, which improved 12 basis points from 3.10% in fiscal 2017 to 3.22% in fiscal year 2018. Credit metrics continued to improve, with criticized loans decreasing 12% compared to September 2017 and 2% compared to June 2018. Criticized loans as a percentage of total loans of 1.18% improved from 1.54% in September 2017 and 1.24% in June 2018.


Other

Quarterly revenues in the Other segment were negatively impacted by $11.9 million of unrealized losses associated with private equity investments, of which $4.6 million is attributable to noncontrolling interests. During the quarter, there was an $11.9 million reduction to the estimated impact of the Tax Act, which lowered the effective tax rate for the quarter to 25.4%. The effective tax rate for fiscal year 2018 was 34.8%, which reflected the impact of the Tax Act. Excluding the impact of the Tax Act, the adjusted effective tax rate was 28.8%(1) for the quarter and 26.7%(1) for fiscal year 2018. During the quarter, the firm repurchased approximately 401,000 shares of common stock for $36.4 million, or approximately $90.60 per share.

“I am proud of our advisors and associates for their unwavering dedication to helping clients achieve their financial objectives,” said Reilly. “Our continued focus on serving clients has enabled Raymond James to generate record revenues and earnings in fiscal year 2018. We are well positioned entering fiscal year 2019, with records for almost all key business drivers, high levels of satisfaction from our financial advisors and strong interest from prospective financial advisors. However, the heightened market volatility in October and the industrywide pressure on client cash balances serve as a reminder that we should always remain prepared for potential headwinds.”


Please refer to the footnotes at the end of this press release for additional information.
3




A conference call to discuss the results will take place tomorrow morning, Thursday, October 25th, at 8:15 a.m. ET. For a listen-only connection, please call: 877-671-8037 (conference code: 5589865), or visit www.raymondjames.com/investor-relations/earnings/earnings-conference-call for a live audio webcast. An audio replay of the call will be available until January 25, 2019, on the Investor Relations page of our website at www.raymondjames.com.

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 7,800 financial advisors in 3,100 locations throughout the United States, Canada and overseas. Total client assets are $790 billion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at www.raymondjames.com.

Forward Looking Statements

Certain statements made in this press release and the associated conference call may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions and divestitures, anticipated results of litigation, changes in tax rules, 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.
4




Raymond James Financial, Inc.
Selected financial highlights
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Summary results of operations
 
 
 
 
 
 
 
 
 
Three months ended
 
% change from
$ in thousands, except per share amounts
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
Net revenues
 
$
1,898,930

 
$
1,690,111


$
1,836,595

 
12%
 
3%
Pre-tax income (3)
 
$
349,983

 
$
278,440

 
$
318,058

 
26%
 
10%
Net income (3)
 
$
262,748

 
$
193,489

 
$
232,258

 
36%
 
13%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic
 
$
1.80

 
$
1.34

 
$
1.59

 
34%
 
13%
Diluted
 
$
1.76

 
$
1.31

 
$
1.55

 
34%
 
14%
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP measures: (1)
 
 
 
 
 
 
 
 
 
 
Adjusted pre-tax income (3)
 
$
349,983

 
$
316,781

 
(1) 
 
10%
 
10%
Adjusted net income (3)
 
$
250,833

 
$
217,260

 
(1) 
 
15%
 
8%
Adjusted basic earnings per common share
 
$
1.72

 
$
1.51

 
(1) 
 
14%
 
8%
Adjusted diluted earnings per common share
 
$
1.68

 
$
1.47

 
(1) 
 
14%
 
8%
 
 
 
 
 
 
 
 
 
 
 



 
 
Twelve months ended
$ in thousands, except per share amounts
 
September 30,
2018
 
September 30,
2017
 
% change
Net revenues
 
$
7,274,318

 
$
6,371,097


14%
Pre-tax income (3)
 
$
1,310,655

 
$
925,346

 
42%
Net income (3)
 
$
856,695

 
$
636,235

 
35%
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
Basic
 
$
5.89

 
$
4.43

 
33%
Diluted
 
$
5.75

 
$
4.33

 
33%
 
 
 
 
 
 
 
Non-GAAP measures: (1)
 
 
 
 
 
 
Adjusted pre-tax income (3)
 
$
1,314,582

 
$
1,119,087

 
17%
Adjusted net income (3)
 
$
964,776

 
$
768,107

 
26%
Adjusted basic earnings per common share
 
$
6.63

 
$
5.35

 
24%
Adjusted diluted earnings per common share
 
$
6.47

 
$
5.23

 
24%










Please refer to the footnotes at the end of this press release for additional information.
5



Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
% change from
$ in thousands, except per share amounts
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
Revenues:
 
 
 
 
 
 
 
 
 
 
Securities commissions and fees
 
$
1,146,729

 
$
1,026,505

 
$
1,115,465

 
12%
 
3%
Investment banking
 
155,025

 
130,682

 
115,069

 
19%
 
35%
Investment advisory and related administrative fees
 
158,551

 
127,088

 
153,627

 
25%
 
3%
Interest income
 
292,076

 
222,576

 
271,342

 
31%
 
8%
Account and service fees
 
193,956

 
181,418

 
201,264

 
7%
 
(4)%
Net trading profit
 
11,444

 
22,110

 
11,371

 
(48)%
 
1%
Other
 
4,312

 
22,307

 
22,764

 
(81)%
 
(81)%
Total revenues
 
1,962,093

 
1,732,686

 
1,890,902

 
13%
 
4%
Interest expense
 
(63,163
)
 
(42,575
)
 
(54,307
)
 
48%
 
16%
Net revenues
 
1,898,930

 
1,690,111

 
1,836,595

 
12%
 
3%
Non-interest expenses:
 
 
 
 
 
 
 

 

Compensation, commissions and benefits
 
1,238,448

 
1,103,824

 
1,207,512

 
12%
 
3%
Communications and information processing
 
93,812

 
84,914

 
91,651

 
10%
 
2%
Occupancy and equipment costs
 
52,925

 
50,680

 
49,503

 
4%
 
7%
Business development
 
47,927

 
38,740

 
56,944

 
24%
 
(16)%
Investment sub-advisory fees
 
23,918

 
21,450

 
23,028

 
12%
 
4%
Bank loan loss provision/(benefit)
 
6,690

 
(110
)
 
5,226

 
NM
 
28%
Acquisition-related expenses
 

 
877

 

 
(100)%
 
Losses on extinguishment of debt
 

 
37,464

 

 
(100)%
 
Other
 
91,148

 
70,053

 
84,689

 
30%
 
8%
Total non-interest expenses
 
1,554,868

 
1,407,892

 
1,518,553

 
10%
 
2%
Income including noncontrolling interests and before provision for income taxes
 
344,062

 
282,219

 
318,042

 
22%
 
8%
Provision for income taxes
 
87,235

 
84,951

 
85,800

 
3%
 
2%
Net income including noncontrolling interests
 
256,827

 
197,268

 
232,242

 
30%
 
11%
Net income/(loss) attributable to noncontrolling interests
 
(5,921
)
 
3,779

 
(16
)
 
NM
 
NM
Net income attributable to Raymond James Financial, Inc.
 
$
262,748

 
$
193,489

 
$
232,258

 
36%
 
13%
Earnings per common share – basic
 
$
1.80

 
$
1.34

 
$
1.59

 
34%
 
13%
Earnings per common share – diluted
 
$
1.76

 
$
1.31

 
$
1.55

 
34%
 
14%
Weighted-average common shares outstanding – basic
 
145,620

 
143,913

 
145,634

 
1%
 
Weighted-average common and common equivalent shares outstanding – diluted
 
149,463

 
147,761

 
149,447

 
1%
 















Please refer to the footnotes at the end of this press release for additional information.
6



Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
 
 
 
 
 
Twelve months ended
$ in thousands, except per share amounts
 
September 30,
2018
 
September 30,
2017
 
% change
Revenues:
 
 
 
 
 
 
Securities commissions and fees
 
$
4,483,040

 
$
4,020,910

 
11%
Investment banking
 
440,811

 
398,675

 
11%
Investment advisory and related administrative fees
 
605,634

 
462,989

 
31%
Interest income
 
1,043,993

 
802,126

 
30%
Account and service fees
 
771,012

 
667,274

 
16%
Net trading profit
 
56,722

 
81,880

 
(31)%
Other
 
74,609

 
91,021

 
(18)%
Total revenues
 
7,475,821

 
6,524,875

 
15%
Interest expense
 
(201,503
)
 
(153,778
)
 
31%
Net revenues
 
7,274,318

 
6,371,097

 
14%
Non-interest expenses:
 
 
 
 
 
 
Compensation, commissions and benefits
 
4,795,375

 
4,228,387

 
13%
Communications and information processing
 
365,879

 
310,961

 
18%
Occupancy and equipment costs
 
201,943

 
190,737

 
6%
Business development
 
181,470

 
154,926

 
17%
Investment sub-advisory fees
 
92,388

 
78,656

 
17%
Bank loan loss provision
 
20,481

 
12,987

 
58%
Acquisition-related expenses
 
3,927

 
17,995

 
(78)%
Losses on extinguishment of debt
 

 
45,746

 
(100)%
Other
 
307,978

 
402,724

 
(24)%
Total non-interest expenses
 
5,969,441

 
5,443,119

 
10%
Income including noncontrolling interests and before provision for income taxes
 
1,304,877

 
927,978

 
41%
Provision for income taxes
 
453,960

 
289,111

 
57%
Net income including noncontrolling interests
 
850,917

 
638,867

 
33%
Net income/(loss) attributable to noncontrolling interests
 
(5,778
)
 
2,632

 
NM
Net income attributable to Raymond James Financial, Inc.
 
$
856,695

 
$
636,235

 
35%
 
 
 
 
 
 

Earnings per common share – basic
 
$
5.89

 
$
4.43

 
33%
Earnings per common share – diluted
 
$
5.75

 
$
4.33

 
33%
Weighted-average common shares outstanding – basic
 
145,271

 
143,275

 
1%
Weighted-average common and common equivalent shares outstanding – diluted
 
148,838

 
146,647

 
1%






















Please refer to the footnotes at the end of this press release for additional information.
7



Raymond James Financial, Inc.
Segment Results
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
% change from
$ in thousands
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
Net revenues:
 
 
 
 
 
 
 
 
 
 
Private Client Group
 
$
1,309,044

 
$
1,169,082

 
$
1,279,120

 
12%
 
2%
Capital Markets
 
274,806

 
265,587

 
241,686

 
3%
 
14%
Asset Management
 
172,437

 
131,432

 
168,155

 
31%
 
3%
RJ Bank
 
194,932

 
162,797

 
187,820

 
20%
 
4%
Other (4)
 
(11,833
)
 
(4,958
)
 
(2,235
)
 
(139)%
 
(429)%
Intersegment eliminations
 
(40,456
)
 
(33,829
)
 
(37,951
)
 

 

Total net revenues
 
$
1,898,930

 
$
1,690,111

 
$
1,836,595

 
12%
 
3%
 
 
 
 
 
 
 
 

 

Pre-tax income/(loss): (3)
 
 
 
 
 
 
 

 

Private Client Group
 
$
131,171

 
$
142,269

 
$
132,274

 
(8)%
 
(1)%
Capital Markets
 
47,850

 
43,934

 
21,787

 
9%
 
120%
Asset Management
 
63,799

 
48,760

 
58,272

 
31%
 
9%
RJ Bank
 
130,384

 
113,281

 
129,154

 
15%
 
1%
Other (4)
 
(23,221
)
 
(69,804
)
 
(23,429
)
 
67%
 
1%
Pre-tax income
 
$
349,983

 
$
278,440

 
$
318,058

 
26%
 
10%

 
 
Twelve months ended
$ in thousands
 
September 30,
2018
 
September 30,
2017
 
% change
Net revenues:
 
 
 
 
 
 
Private Client Group
 
$
5,093,030

 
$
4,421,633

 
15%
Capital Markets
 
963,773

 
1,013,683

 
(5)%
Asset Management
 
654,377

 
487,658

 
34%
RJ Bank
 
726,675

 
592,670

 
23%
Other (4)
 
(15,156
)
 
(29,870
)
 
49%
Intersegment eliminations
 
(148,381
)
 
(114,677
)
 

Total net revenues
 
$
7,274,318

 
$
6,371,097

 
14%
 
 
 
 
 
 

Pre-tax income/(loss): (3)
 
 
 
 
 

Private Client Group
 
$
576,094

 
$
372,950

 
54%
Capital Markets
 
90,647

 
141,236

 
(36)%
Asset Management
 
235,336

 
171,736

 
37%
RJ Bank
 
491,779

 
409,303

 
20%
Other (4)
 
(83,201
)
 
(169,879
)
 
51%
Pre-tax income
 
$
1,310,655

 
$
925,346

 
42%




Please refer to the footnotes at the end of this press release for additional information.
8



Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
% change from
$ in thousands
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
Securities commissions and fees by segment:
 
 
 
 
 
 
 
 
 
 
Private Client Group
 
$
1,052,825

 
$
933,720

 
$
1,014,665

 
13%
 
4%
Capital Markets:
 
 
 
 
 
 
 

 

Equity
 
46,481

 
40,112

 
56,793

 
16%
 
(18)%
Fixed Income
 
52,378

 
61,895

 
49,908

 
(15)%
 
5%
Intersegment eliminations
 
(4,955
)
 
(9,222
)
 
(5,901
)
 

 

Total securities commissions and fees
 
$
1,146,729

 
$
1,026,505

 
$
1,115,465

 
12%
 
3%
 
 
 
 
 
 
 
 

 

Investment banking revenues:
 
 
 
 
 
 
 

 

Equity:
 
 
 
 
 
 
 

 

Underwritings
 
$
14,931

 
$
16,425

 
$
16,614

 
(9)%
 
(10)%
Mergers & acquisitions and advisory fees
 
96,397

 
84,503

 
84,737

 
14%
 
14%
Fixed Income
 
10,139

 
11,540

 
9,947

 
(12)%
 
2%
Tax credit funds syndication fees
 
33,558

 
18,214

 
3,771

 
84%
 
790%
Total investment banking revenues
 
$
155,025

 
$
130,682

 
$
115,069

 
19%
 
35%
 
 
 
 
 
 
 
 
 
 
 
Account and service fees:
 
 
 
 
 
 
 
 
 
 
Mutual fund and annuity service fees (5)
 
$
86,181

 
$
80,091

 
$
85,239

 
8%
 
1%
RJBDP fees - third party banks (6)
 
64,680

 
61,139

 
70,381

 
6%
 
(8)%
Other
 
43,095

 
40,188

 
45,644

 
7%
 
(6)%
Total account and service fees
 
$
193,956

 
$
181,418

 
$
201,264

 
7%
 
(4)%
 
 
 
 
 
 
 
 
 
 
 
Other revenues:
 
 
 
 
 
 
 

 

Realized/unrealized gains/(losses) - private equity investments
 
$
(11,943
)
 
$
6,696

 
$
4,106

 
NM
 
NM
Other
 
16,255

 
15,611

 
18,658

 
4%
 
(13)%
Total other revenues
 
$
4,312

 
$
22,307

 
$
22,764

 
(81)%
 
(81)%


Please refer to the footnotes at the end of this press release for additional information.
9



Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
 
 
 
 
 
 
 
 
 
Twelve months ended
$ in thousands
 
September 30,
2018
 
September 30,
2017
 
% change
Securities commissions and fees by segment:
 
 
 
 
 
 
Private Client Group
 
$
4,080,753

 
$
3,566,304

 
14%
Capital Markets:
 
 
 
 
 
 
Equity
 
202,809

 
222,942

 
(9)%
Fixed Income
 
221,684

 
267,749

 
(17)%
Intersegment eliminations
 
(22,206
)
 
(36,085
)


Total securities commissions and fees
 
$
4,483,040

 
$
4,020,910

 
11%
 
 
 
 
 
 
 
Investment banking revenues:
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Underwritings
 
$
53,311

 
$
72,921

 
(27)%
Mergers & acquisitions and advisory fees
 
296,606

 
228,422

 
30%
Fixed Income
 
39,430

 
43,234

 
(9)%
Tax credit funds syndication fees
 
51,464

 
54,098

 
(5)%
Total investment banking revenues
 
$
440,811

 
$
398,675

 
11%
 
 
 
 
 
 
 
Account and service fees:
 
 
 
 
 
 
Mutual fund and annuity service fees (5)
 
$
335,430

 
$
296,386

 
13%
RJBDP fees - third party banks (6)
 
262,424

 
202,048

 
30%
Other
 
173,158

 
168,840

 
3%
Total account and service fees
 
$
771,012

 
$
667,274

 
16%
 
 
 
 
 
 
 
Other revenues:
 
 
 
 
 
 
Realized/unrealized gains - private equity investments
 
$
9,744

 
$
31,386

 
(69)%
Other
 
64,865

 
59,635

 
9%
Total other revenues
 
$
74,609

 
$
91,021

 
(18)%



Please refer to the footnotes at the end of this press release for additional information.
10



Raymond James Financial, Inc.
Selected Key Metrics
(Unaudited)
 
 
For the period ended
Total company
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
Total assets
 
$
37.4
 bil.
(7) 
$
34.9
 bil.
 
$
36.4
 bil.
Total equity (3)
 
$
6.4
 bil.
 
$
5.6
 bil.
 
$
6.2
 bil.
Book value per share (8)
 
$
43.73

 
$
38.74

 
$
42.24

Tangible book value per share (1) (8)
 
$
39.52

 
$
35.58

 
$
38.06

Return on equity - quarter (9)
 
16.8
%
 
14.1
%
 
15.4
%
Adjusted return on equity - quarter (1) (9)
 
16.0
%
 
15.8
%
 
NA

Return on equity - year to date (9)
 
14.4
%
 
12.2
%
 
13.6
%
Adjusted return on equity - year to date (1) (9)
 
16.0
%
 
14.5
%
 
16.0
%
Total compensation ratio - quarter (10)
 
65.2
%
 
65.3
%
 
65.7
%
Total compensation ratio - year to date (10)
 
65.9
%
 
66.4
%
 
66.2
%
Pre-tax margin on net revenues - quarter (11)
 
18.4
%
 
16.5
%
 
17.3
%
Adjusted pre-tax margin on net revenues - quarter (1) (11)
 
NA

 
18.7
%
 
NA

Pre-tax margin on net revenues - year to date (11)
 
18.0
%
 
14.5
%
 
17.9
%
Adjusted pre-tax margin on net revenues - year to date (1) (11)
 
18.1
%
 
17.6
%
 
17.9
%
Effective tax rate - quarter
 
25.4
%
 
30.1
%
 
27.0
%
Adjusted effective tax rate - quarter (1)
 
28.8
%
 
NA

 
NA

Effective tax rate - year to date
 
34.8
%
 
31.2
%
 
38.2
%
Adjusted effective tax rate - year to date (1)
 
26.7
%
 
NA

 
26.0
%
 
 
 
 
 
 
 
Total company capital ratios:
 
 
 
 
 
 
Tier 1 capital ratio
 
24.3
%
(7) 
23.0
%
 
23.8
%
Total capital ratio
 
25.3
%
(7) 
23.9
%
 
24.8
%
Tier 1 leverage ratio
 
15.8
%
(7) 
15.0
%
 
15.6
%
Client asset metrics ($ in billions)
 
As of
 
% change from
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
Client assets under administration
 
$
790.4

 
$
692.9

 
$
754.3

 
14%
 
5%
Private Client Group assets under administration
 
$
755.7

 
$
659.5

 
$
719.5

 
15%
 
5%
Private Client Group assets in fee-based accounts
 
$
366.3

 
$
294.5

 
$
343.1

 
24%
 
7%
Financial assets under management
 
$
140.9

 
$
96.4

 
$
135.5

 
46%
 
4%
Private Client Group financial advisors
 
As of
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
Employees
 
3,167

 
3,041

 
3,126

Independent contractors (2)
 
4,646

 
4,305

 
4,593

Total advisors
 
7,813

 
7,346

 
7,719


(continued on next page)

Please refer to the footnotes at the end of this press release for additional information.
11



Raymond James Financial, Inc.
Selected Key Metrics
(Unaudited)
(continued from previous page)
 Clients’ domestic cash sweep balances ($ in millions) (12)
 
As of
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
RJBDP
 
 
 
 
 
 
RJ Bank
 
$
19,446

 
$
17,387

 
$
19,014

Third-party banks
 
15,564

 
20,704

 
16,971

Subtotal RJBDP
 
35,010

 
38,091

 
35,985

Money Market Funds
 
3,240

 
1,818

 
2,687

Client Interest Program
 
2,807

 
3,101

 
2,784

Total clients’ domestic cash sweep balances
 
$
41,057

 
$
43,010

 
$
41,456

Raymond James Bank ($ in thousands)
 
As of
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
Total assets (13)
 
$
23,204,762

 
$
20,882,722

 
$
22,987,118

Total equity
 
$
2,020,709

 
$
1,823,342

 
$
1,967,577

Bank loans, net
 
$
19,518,100

 
$
17,006,795

 
$
18,987,806

Allowance for loan losses
 
$
202,750

 
$
190,442

 
$
196,157

Allowance for loan losses (as % of loans)
 
1.04
%
 
1.11
%
 
1.03
%
Total nonperforming assets
 
$
27,969

 
$
43,699

 
$
37,168

Nonperforming assets (as % of total assets)
 
0.12
%
 
0.21
%
 
0.16
%
Total criticized loans (14)
 
$
233,377

 
$
264,664

 
$
238,120

Criticized loans (as % of loans)
 
1.18
%
 
1.54
%
 
1.24
%
($ in thousands)
 
Three months ended
 
% change from
 
Twelve months ended
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2017
 
June 30,
2018
 
September 30,
2018
 
September 30,
2017
 
% change
Bank loan loss provision/ (benefit)
 
$
6,690

 
$
(110
)
 
$
5,226

 
NM

 
28
 %
 
$
20,481

 
$
12,987

 
58
 %
Net charge-offs
 
$
317

 
$
1,606

 
$
3,646

 
(80
)%
 
(91
)%
 
$
7,678

 
$
20,652

 
(63
)%
 
 
As of
 
 
September 30,
2018
 
September 30,
2017
 
June 30,
2018
RJ Bank capital ratios:
 
 
 
 
 
 
Tier 1 capital ratio
 
12.7
%
(7) 
12.5
%
 
12.5
%
Total capital ratio
 
13.9
%
(7) 
13.8
%
 
13.8
%
Tier 1 leverage ratio
 
8.8
%
(7) 
8.9
%
 
8.9
%



Please refer to the footnotes at the end of this press release for additional information.
12



Raymond James Bank
Net Interest Analysis
(Unaudited)
 
 
Three months ended
 
 
September 30, 2018
 
September 30, 2017
 
June 30, 2018
$ in thousands
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/
cost
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/
cost
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/
cost
Interest-earning banking assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
$
707,585

 
$
3,460

 
1.94
%
 
$
992,646

 
$
3,100

 
1.24
%
 
$
659,563

 
$
2,949

 
1.79
%
Available-for-sale securities
 
2,641,208

 
14,302

 
2.17
%
 
2,018,890

 
9,433

 
1.87
%
 
2,534,373

 
13,369

 
2.11
%
Bank loans, net of unearned income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial (“C&I”) loans
 
7,860,372

 
88,959

 
4.43
%
 
7,326,719

 
72,247

 
3.86
%
 
7,647,502

 
85,120

 
4.40
%
Commercial real estate (“CRE”) construction loans
 
165,050

 
2,216

 
5.25
%
 
120,400

 
1,455

 
4.73
%
 
181,571

 
2,401

 
5.23
%
CRE loans
 
3,443,414

 
37,702

 
4.28
%
 
3,042,657

 
29,472

 
3.79
%
 
3,258,551

 
34,188

 
4.15
%
Tax-exempt loans (15)
 
1,207,656

 
7,833

 
3.44
%
 
984,786

 
6,362

 
3.98
%
 
1,190,878

 
7,673

 
3.41
%
Residential mortgage loans
 
3,700,160

 
31,035

 
3.35
%
 
3,047,822

 
23,126

 
3.03
%
 
3,514,327

 
27,257

 
3.10
%
Securities-based loans
 
2,972,354

 
33,200

 
4.37
%
 
2,332,112

 
21,452

 
3.60
%
 
2,740,641

 
29,511

 
4.26
%
Loans held for sale
 
133,543

 
1,514

 
4.49
%
 
173,527

 
1,440

 
3.35
%
 
109,449

 
1,185

 
4.34
%
  Total loans, net
 
19,482,549

 
202,459

 
4.14
%
 
17,028,023

 
155,554

 
3.67
%
 
18,642,919

 
187,335

 
4.04
%
Federal Home Loan Bank stock (“FHLB”), Federal Reserve Bank of Atlanta (“FRB”) stock and other
 
143,991

 
1,778

 
4.90
%
 
185,559

 
1,250

 
2.68
%
 
133,586

 
1,508

 
4.53
%
Total interest-earning banking assets
 
22,975,333

 
221,999

 
3.85
%
 
20,225,118

 
169,337

 
3.36
%
 
21,970,441

 
205,161

 
3.75
%
Total interest-bearing banking liabilities
 
20,991,250

 
33,316

 
0.63
%
 
18,483,961

 
12,845

 
0.27
%
 
20,082,655

 
24,645

 
0.49
%
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income
 
$
1,984,083

 
$
188,683

 
 
 
$
1,741,157

 
$
156,492

 
 
 
$
1,887,786

 
$
180,516

 
 
Net interest margin (net yield on interest-earning banking assets)
 
 

 
 

 
3.27
%
 
 

 
 

 
3.11
%
 
 
 
 
 
3.30
%

 
 
Twelve months ended September 30,
 
 
2018
 
2017
$ in thousands
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/cost
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/cost
Interest-earning banking assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
$
956,567

 
$
14,996

 
1.57
%
 
$
859,020

 
$
7,696

 
0.90
%
Available-for-sale securities
 
2,429,718

 
49,628

 
2.04
%
 
1,462,938

 
25,970

 
1.78
%
Bank loans, net of unearned income
 
 
 
 
 
 
 
 
 
 
Loans held for investment:
 
 
 
 
 
 
 
 
 
 
 


C&I loans
 
7,618,949

 
326,042

 
4.22
%
 
7,340,052

 
281,274

 
3.78
%
CRE construction loans
 
165,780

 
8,547

 
5.08
%
 
129,073

 
6,184

 
4.73
%
CRE loans
 
3,231,369

 
132,898

 
4.06
%
 
2,831,870

 
100,563

 
3.50
%
Tax-exempt loans (15)
 
1,146,493

 
29,567

 
3.42
%
 
891,922

 
23,057

 
3.98
%
Residential mortgage loans
 
3,447,710

 
108,825

 
3.16
%
 
2,803,464

 
83,537

 
2.94
%
Securities-based loans
 
2,689,612

 
111,403

 
4.09
%
 
2,123,189

 
72,400

 
3.36
%
Loans held for sale
 
125,970

 
5,057

 
4.01
%
 
159,384

 
5,156

 
3.34
%
Total loans, net
 
18,425,883

 
722,339

 
3.93
%
 
16,278,954

 
572,171

 
3.55
%
FHLB stock, FRB stock and other
 
138,635

 
6,007

 
4.33
%
 
157,395

 
4,134

 
2.63
%
Total interest-earning banking assets
 
21,950,803

 
792,970

 
3.62
%
 
18,758,307

 
609,971

 
3.28
%
Total interest-bearing banking liabilities
 
20,088,204

 
88,609

 
0.44
%
 
17,089,491

 
35,175

 
0.20
%
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income
 
$
1,862,599

 
$
704,361

 
 
 
$
1,668,816

 
$
574,796

 
 
Net interest margin (net yield on interest-earning banking assets)
 
 

 
 

 
3.22
%
 
 

 
 

 
3.10
%

Please refer to the footnotes at the end of this press release for additional information.
13



Raymond James Financial, Inc.
Reconciliation of GAAP measures to non-GAAP measures
(Unaudited)

We utilize certain non-GAAP calculations as additional measures to aid in, and enhance, the understanding of our financial results and related measures. We believe that the non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. We believe that these non-GAAP measures will allow for better evaluation of the operating performance of the business and facilitate a meaningful comparison of our results in the current period to those in prior and future periods. In the case of tangible book value per share, we believe that this measure is meaningful as it is a measure we and investors use to assess capital strength. The non-GAAP financial information should be considered in addition to, not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following table provides a reconciliation of GAAP measures to non-GAAP measures for the periods which include non-GAAP adjustments.
 
 
Three months ended
 
Twelve months ended
$ in thousands, except per share amounts
 
September 30,
2018
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Net income: (3)
 
$
262,748

 
$
193,489

 
$
856,695

 
$
636,235

Non-GAAP adjustments:
 
 
 
 
 
 
 
 
Acquisition-related expenses (16)
 

 
877

 
3,927

 
17,995

Losses on extinguishment of debt (17)
 

 
37,464

 

 
45,746

Jay Peak settlement (18)
 

 

 

 
130,000

Sub-total pre-tax non-GAAP adjustments
 

 
38,341

 
3,927

 
193,741

Tax effect on non-GAAP adjustments above
 

 
(14,570
)
 
(1,100
)
 
(61,869
)
Impact of the Tax Act (19)
 
(11,915
)
 

 
105,254

 

Total non-GAAP adjustments, net of tax
 
(11,915
)
 
23,771

 
108,081

 
131,872

Adjusted net income
 
$
250,833

 
$
217,260

 
$
964,776

 
$
768,107

 
 
 
 
 
 
 
 
 
Pre-tax income: (3)
 
$
349,983

 
$
278,440

 
$
1,310,655

 
$
925,346

Pre-tax non-GAAP adjustments (as detailed above)
 

 
38,341

 
3,927

 
193,741

Adjusted pre-tax income
 
$
349,983

 
$
316,781

 
$
1,314,582

 
$
1,119,087

Pre-tax margin on net revenues (11)
 
18.4
%
 
16.5
%
 
18.0
%
 
14.5
%
Adjusted pre-tax margin on net revenues (11)
 
NA

 
18.7
%
 
18.1
%
 
17.6
%
Earnings per common share:
 
 
 
 
 
 
 
 
Basic
 
$
1.80

 
$
1.34

 
$
5.89

 
$
4.43

Diluted