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 | $ | |||||||||||||||