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| 8-K - 8-K - RAYMOND JAMES FINANCIAL INC | a8-kseptember2016earningsr.htm |
October 26, 2016 FOR IMMEDIATE RELEASE
Media Contact: Steve Hollister, 727.567.2824
Investor Contact: Paul Shoukry, 727.567.5133
raymondjames.com/media
RAYMOND JAMES FINANCIAL REPORTS FOURTH QUARTER AND FISCAL 2016 RESULTS
• | Record quarterly net revenues of $1.46 billion, up 9 percent over the prior year’s fiscal fourth quarter and 7 percent over the preceding quarter |
• | Record quarterly net income of $171.7 million, or $1.19 per diluted share, and adjusted quarterly net income of $185.1 million(1), or $1.28 per diluted share (1) |
• | Record annual net revenues of $5.40 billion, record annual net income of $529.4 million, or $3.65 per diluted share, and adjusted annual net income of $556.3 million(1), or $3.84 per diluted share (1) |
• | Acquisitions of Deutsche Bank Wealth Management’s US Private Client Services Unit (rebranded as “Alex. Brown,” a division of Raymond James) and MacDougall, MacDougall & MacTier, Inc. (“3Macs”) completed during the quarter |
• | Augmented by the aforementioned acquisitions, achieved new records for client assets under administration of $604.4 billion, financial assets under management of $77.0 billion, Private Client Group financial advisors of 7,146 and RJ Bank net loans of $15.2 billion |
ST. PETERSBURG, Fla - Raymond James Financial, Inc. (NYSE: RJF) today reported record quarterly net revenues of $1.46 billion and record quarterly net income of $171.7 million, or $1.19 per diluted share, for the fiscal fourth quarter ended September 30, 2016. Quarterly net income of $171.7 million represents significant growth of 33 percent over last year’s fiscal fourth quarter and 37 percent over the preceding quarter. Excluding $19.4 million of acquisition-related expenses, adjusted net income for the quarter was $185.1 million(1), or $1.28 per diluted share(1), on a non-GAAP basis.
For fiscal year 2016, record net revenues of $5.40 billion increased 4 percent and record net income of $529.4 million, or $3.65 per diluted share, increased 5 percent over fiscal 2015. Adjusted net income for fiscal 2016 was $556.3 million(1), or $3.84 per diluted share(1).
“We are delighted that all four of our core operating segments generated record net revenues and the firm produced record net income for both the fiscal fourth quarter as well as fiscal 2016,” said CEO Paul Reilly. “Our dedication to always putting clients first allowed us to finish the fiscal year with our 115th consecutive quarter of profitability and records for nearly all of our key business metrics. The records we have reached for client assets under administration, financial assets under management, the number of Private Client Group financial advisors and RJ Bank net loans give us good reason to be optimistic about the future.”
1
Segment Results
Private Client Group
• | Record quarterly net revenues of $963.3 million, up 7 percent compared to both the prior year’s fiscal fourth quarter and the preceding quarter |
• | Record quarterly pre-tax income of $106.3 million, significant increases of 21 percent over the prior year’s fiscal fourth quarter and 30 percent over the preceding quarter |
• | Annual pre-tax income of $340.6 million on record annual net revenues of $3.62 billion |
• | Record Private Client Group assets under administration of $574.1 billion, rising 27 percent over September 2015 and 13 percent over June 2016 |
• | Record Private Client Group financial advisors of 7,146, representing net increases of 550 over September 2015 and 312 over June 2016 |
For the quarter, revenue growth in the Private Client Group segment was primarily attributable to starting the period with higher assets in fee-based accounts. Assets in fee-based accounts ended the quarter at a record $231.0 billion, 29 percent over September 2015 and 12 percent over June 2016, lifted by solid organic growth, market appreciation and the acquisitions of Alex. Brown as well as 3Macs in Canada. Record quarterly pre-tax income in the segment was a result of higher revenues as well as disciplined management of discretionary expenses, which helped the segment generate a pre-tax margin on net revenues of 11.0 percent for the quarter.
For fiscal 2016, record net revenues in the segment were lifted by higher assets in fee-based accounts as well as increased fees earned on client cash balances in the Raymond James Bank Deposit Program, which helped offset declines in transactional revenues during the year. While pre-tax income benefited from higher client asset balances and the increase in short-term rates in December 2015, the segment’s profitability for the fiscal year was negatively impacted by elevated legal and regulatory expenses.
“Our steadfast commitment to serving our clients and advisors enabled us to realize our second best year for financial advisor recruiting as well as exceptionally high retention of our existing advisors,” Reilly said. “We are also excited to welcome the 265 advisors from Alex. Brown and 3Macs and their teams to the Raymond James family.”
Capital Markets
• | Record quarterly net revenues of $284.7 million, increases of 10 percent over last year’s fiscal fourth quarter and 13 percent over the preceding quarter |
• | Record quarterly pre-tax income of $53.1 million, significant increases of 32 percent over last year’s fiscal fourth quarter and 62 percent over the preceding quarter |
• | Record annual net revenues of $999.9 million fueled by record revenues for both the Fixed Income division and RJ Tax Credit Funds. |
• | Record annual pre-tax income of $139.2 million, a substantial 30 percent improvement compared to fiscal 2015 |
Record revenues and pre-tax income in the quarter were lifted by a broad-based improvement in investment banking revenues as well as strong institutional commissions and net trading profits in the Fixed Income division.
For the fiscal year, record results in the Fixed Income division and RJ Tax Credit Funds helped the Capital Markets segment deliver record annual net revenues and pre-tax income, despite a 27 percent market-driven decline in revenues from equity underwritings.
“The record results achieved by our Capital Markets segment in fiscal 2016 reinforce the value of our diversified business model,” Reilly said. “During the fiscal year, we continued to strengthen our capital markets platform with key hires as well as the acquisition of Mummert & Company to enhance our cross-border M&A capabilities.”
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Asset Management
• | Record quarterly net revenues of $106.4 million, up 7 percent compared to the prior year’s fiscal fourth quarter and 5 percent compared to the preceding quarter |
• | Quarterly pre-tax income of $35.2 million, an increase of 8 percent compared to both last year’s fiscal fourth quarter as well as the preceding quarter |
• | Annual pre-tax income of $132.2 million on record annual net revenues of $404.3 million |
• | Record financial assets under management of $77.0 billion, up 18 percent compared to September 2015 and 7 percent compared to June 2016 |
Results in the Asset Management segment continue to benefit from growth of financial assets under management, which was mostly attributable to strong net inflows in managed fee-based accounts in the Private Client Group, market appreciation and the acquisition of the Alex. Brown division, which offset net institutional outflows in Eagle Asset Management during the year.
Raymond James Bank
• | Record quarterly net revenues of $133.7 million, a substantial increase of 25 percent over last year’s fiscal fourth quarter and 6 percent over the preceding quarter |
• | Record quarterly pre-tax income of $97.4 million, vaulting 50 percent over the prior year’s fiscal fourth quarter and up 9 percent over the preceding quarter |
• | Record annual net revenues of $494.0 million and record annual pre-tax income of $337.3 million, up 19 percent and 21 percent over fiscal 2015, respectively |
• | Record net loans at Raymond James Bank of $15.2 billion, growth of 17 percent over September 2015 and 3 percent over the preceding quarter |
The increase in the Bank’s earning assets during the quarter was driven by balanced loan growth as well as purchases of agency mortgage-backed securities. The bank loan loss provision for the quarter was low relative to the net loan growth, as repayments of criticized loans, particularly within the energy portfolio, offset a portion of the provisions associated with net loan growth and new downgrades during the quarter. The Bank’s net interest margin of 3.04 percent decreased 6 basis points compared to the preceding quarter, which was largely attributable to higher balances of excess cash on the Bank’s balance sheet for most of the quarter.
For the year, record results for the Bank were driven by robust loan growth, as diversification of the loan portfolio with a focus on lending to clients of the Private Client Group and Capital Markets segments, helped mitigate the deceleration of C&I growth. Despite diversification outside of the higher-yielding C&I portfolio, the increase in short-term interest rates in December 2015 helped the Bank’s net interest margin remain relatively stable on a year-over-year basis.
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Other
For the quarter, total revenues in the Other segment were $14.8 million, rising 41 percent compared to last year’s fiscal fourth quarter due to higher interest earnings on firm cash balances, but down 14 percent compared to the preceding quarter, which included a large valuation gain attributable to private equity investments. The Other segment also includes $19.4 million of acquisition-related expenses for the quarter, resulting in a total of $40.7 million for the fiscal year.
The effective tax rate for the quarter declined significantly to 27.4 percent, which was mainly driven by tax adjustments associated with the planned divestitures of our remaining businesses in South America, large nontaxable gains on the firm’s corporate-owned life insurance portfolio and favorable resolution of certain state tax issues.
On July 12, we announced the closing of a registered underwritten public offering of $500 million in aggregate principal amount of 3.625 percent senior notes due in 2026 and $300 million in aggregate principal amount of 4.95 percent senior notes due in 2046. The aggregate net proceeds after underwriting discounts and commissions and estimated expenses were approximately $791.4 million, and are expected to be used for working capital and for general corporate purposes.
(1) | “Adjusted net income” and “adjusted diluted earnings per share” are each non-GAAP financial measures. Please see the schedule on p.13 of this release for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures. |
A conference call to discuss the results will take place tomorrow morning, Thursday, October 27th, at 8:15 a.m. ET. For a listen only connection, please call: 877-666-1952 (conference code: 1402488), or visit raymondjames.com/about/earnings_conference_call for a live audio webcast. An audio replay of the call will be available until 5:00 p.m. ET on April 28, 2017, 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 7,100 financial advisors serving in excess of 2.9 million client accounts in more than 2,800 locations throughout the United States, Canada and overseas. Total client assets are approximately $604 billion. Public since 1983, the firm has been listed on the New York Stock Exchange since 1986 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 and regulatory developments or 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.
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Raymond James Financial, Inc. Selected financial highlights (Unaudited) | |||||||||||||||||
Summary results of operations | |||||||||||||||||
Three months ended | |||||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||||
($ in thousands, except per share amounts) | |||||||||||||||||
Total revenues | $ | 1,491,207 | $ | 1,366,983 | 9 | % | $ | 1,386,693 | 8 | % | |||||||
Net revenues | $ | 1,458,774 | $ | 1,340,983 | 9 | % | $ | 1,358,482 | 7 | % | |||||||
Pre-tax income | $ | 236,422 | $ | 206,816 | 14 | % | $ | 197,765 | 20 | % | |||||||
Net income | $ | 171,670 | $ | 129,186 | 33 | % | $ | 125,504 | 37 | % | |||||||
Earnings per common share: | |||||||||||||||||
Basic | $ | 1.21 | $ | 0.90 | 34 | % | $ | 0.89 | 36 | % | |||||||
Diluted | $ | 1.19 | $ | 0.88 | 35 | % | $ | 0.87 | 37 | % | |||||||
Non-GAAP measures:(1) | |||||||||||||||||
Adjusted pre-tax income | $ | 255,796 | — | $ | 211,210 | ||||||||||||
Adjusted net income | $ | 185,060 | — | $ | 134,030 | ||||||||||||
Non-GAAP earnings per common share:(1) | |||||||||||||||||
Non-GAAP basic | $ | 1.31 | — | $ | 0.95 | ||||||||||||
Non-GAAP diluted | $ | 1.28 | — | $ | 0.93 | ||||||||||||
Twelve months ended | ||||||||||
September 30, 2016 | September 30, 2015 | % Change | ||||||||
($ in thousands, except per share amounts) | ||||||||||
Total revenues | $ | 5,520,344 | $ | 5,308,164 | 4 | % | ||||
Net revenues | $ | 5,403,267 | $ | 5,200,210 | 4 | % | ||||
Pre-tax income | $ | 800,643 | $ | 798,174 | — | |||||
Net income | $ | 529,350 | $ | 502,140 | 5 | % | ||||
Earnings per common share: | ||||||||||
Basic | $ | 3.72 | $ | 3.51 | 6 | % | ||||
Diluted | $ | 3.65 | $ | 3.43 | 6 | % | ||||
Non-GAAP measures:(1) | ||||||||||
Adjusted pre-tax income | $ | 841,349 | — | |||||||
Adjusted net income | $ | 556,263 | — | |||||||
Non-GAAP earnings per common share:(1) | ||||||||||
Non-GAAP basic | $ | 3.91 | — | |||||||
Non-GAAP diluted | $ | 3.84 | — | |||||||
(1) | Refer to the reconciliation of net income to adjusted net income (GAAP to non-GAAP measures), on page 13. This computation utilizes the adjusted net income attributable to RJF non-GAAP and the average equity non-GAAP, as presented in the referenced reconciliation. There are no comparable non-GAAP measures for the three or twelve months ended September 30, 2015. |
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Raymond James Financial, Inc. Consolidated Statements of Income (Unaudited) | |||||||||||||||||
Three months ended | |||||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||||
($ in thousands, except per share amounts) | |||||||||||||||||
Revenues: | |||||||||||||||||
Securities commissions and fees | $ | 923,859 | $ | 874,209 | 6 | % | $ | 871,764 | 6 | % | |||||||
Investment banking | 105,184 | 94,894 | 11 | % | 72,714 | 45 | % | ||||||||||
Investment advisory and related administrative fees | 103,752 | 99,226 | 5 | % | 96,156 | 8 | % | ||||||||||
Interest | 172,477 | 139,538 | 24 | % | 163,810 | 5 | % | ||||||||||
Account and service fees | 137,641 | 120,923 | 14 | % | 129,334 | 6 | % | ||||||||||
Net trading profit | 25,212 | 16,355 | 54 | % | 29,795 | (15 | )% | ||||||||||
Other | 23,082 | 21,838 | 6 | % | 23,120 | — | |||||||||||
Total revenues | 1,491,207 | 1,366,983 | 9 | % | 1,386,693 | 8 | % | ||||||||||
Interest expense | (32,433 | ) | (26,000 | ) | 25 | % | (28,211 | ) | 15 | % | |||||||
Net revenues | 1,458,774 | 1,340,983 | 9 | % | 1,358,482 | 7 | % | ||||||||||
Non-interest expenses: | |||||||||||||||||
Compensation, commissions and benefits | 961,493 | 903,548 | 6 | % | 908,899 | 6 | % | ||||||||||
Communications and information processing | 67,409 | 70,382 | (4 | )% | 71,717 | (6 | )% | ||||||||||
Occupancy and equipment costs | 43,950 | 42,129 | 4 | % | 40,825 | 8 | % | ||||||||||
Clearance and floor brokerage | 12,005 | 10,014 | 20 | % | 10,214 | 18 | % | ||||||||||
Business development | 35,884 | 39,359 | (9 | )% | 36,488 | (2 | )% | ||||||||||
Investment sub-advisory fees | 16,064 | 15,034 | 7 | % | 15,030 | 7 | % | ||||||||||
Bank loan loss provision | 1,176 | 13,277 | (91 | )% | 3,452 | (66 | )% | ||||||||||
Acquisition-related expenses | 19,374 | — | NM | 13,445 | 44 | % | |||||||||||
Other | 67,877 | 46,105 | 47 | % | 66,962 | 1 | % | ||||||||||
Total non-interest expenses | 1,225,232 | 1,139,848 | 7 | % | 1,167,032 | 5 | % | ||||||||||
Income including noncontrolling interests and before provision for income taxes | 233,542 | 201,135 | 16 | % | 191,450 | 22 | % | ||||||||||
Provision for income taxes | 64,752 | 77,630 | (17 | )% | 72,261 | (10 | )% | ||||||||||
Net income including noncontrolling interests | 168,790 | 123,505 | 37 | % | 119,189 | 42 | % | ||||||||||
Net loss attributable to noncontrolling interests | (2,880 | ) | (5,681 | ) | 49 | % | (6,315 | ) | 54 | % | |||||||
Net income attributable to Raymond James Financial, Inc. | $ | 171,670 | $ | 129,186 | 33 | % | $ | 125,504 | 37 | % | |||||||
Net income per common share – basic | $ | 1.21 | $ | 0.90 | 34 | % | $ | 0.89 | 36 | % | |||||||
Net income per common share – diluted | $ | 1.19 | $ | 0.88 | 35 | % | $ | 0.87 | 37 | % | |||||||
Weighted-average common shares outstanding – basic | 141,381 | 143,172 | 141,165 | ||||||||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 144,487 | 146,279 | 143,952 | ||||||||||||||
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Raymond James Financial, Inc. Consolidated Statements of Income (Unaudited) | ||||||||||
Twelve months ended | ||||||||||
September 30, 2016 | September 30, 2015 | % Change | ||||||||
($ in thousands, except per share amounts) | ||||||||||
Revenues: | ||||||||||
Securities commissions and fees | $ | 3,498,615 | $ | 3,443,038 | 2 | % | ||||
Investment banking | 304,155 | 323,660 | (6 | )% | ||||||
Investment advisory and related administrative fees | 392,326 | 385,238 | 2 | % | ||||||
Interest | 640,325 | 543,207 | 18 | % | ||||||
Account and service fees | 511,326 | 457,913 | 12 | % | ||||||
Net trading profit | 91,591 | 58,512 | 57 | % | ||||||
Other | 82,006 | 96,596 | (15 | )% | ||||||
Total revenues | 5,520,344 | 5,308,164 | 4 | % | ||||||
Interest expense | (117,077 | ) | (107,954 | ) | 8 | % | ||||
Net revenues | 5,403,267 | 5,200,210 | 4 | % | ||||||
Non-interest expenses: | ||||||||||
Compensation, commissions and benefits | 3,624,747 | 3,525,378 | 3 | % | ||||||
Communications and information processing | 279,746 | 266,396 | 5 | % | ||||||
Occupancy and equipment costs | 167,455 | 163,229 | 3 | % | ||||||
Clearance and floor brokerage | 42,732 | 42,748 | — | |||||||
Business development | 148,413 | 158,966 | (7 | )% | ||||||
Investment sub-advisory fees | 59,930 | 59,569 | 1 | % | ||||||
Bank loan loss provision | 28,167 | 23,570 | 20 | % | ||||||
Acquisition-related expenses | 40,706 | — | NM | |||||||
Other | 234,000 | 183,642 | 27 | % | ||||||
Total non-interest expenses | 4,625,896 | 4,423,498 | 5 | % | ||||||
Income including noncontrolling interests and before provision for income taxes | 777,371 | 776,712 | — | |||||||
Provision for income taxes | 271,293 | 296,034 | (8 | )% | ||||||
Net income including noncontrolling interests | 506,078 | 480,678 | 5 | % | ||||||
Net loss attributable to noncontrolling interests | (23,272 | ) | (21,462 | ) | (8 | )% | ||||
Net income attributable to Raymond James Financial, Inc. | $ | 529,350 | $ | 502,140 | 5 | % | ||||
Net income per common share – basic | $ | 3.72 | $ | 3.51 | 6 | % | ||||
Net income per common share – diluted | $ | 3.65 | $ | 3.43 | 6 | % | ||||
Weighted-average common shares outstanding – basic | 141,773 | 142,548 | ||||||||
Weighted-average common and common equivalent shares outstanding – diluted | 144,513 | 145,939 | ||||||||
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Raymond James Financial, Inc. Segment Results (Unaudited) | |||||||||||||||||
Three months ended | |||||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||||
($ in thousands) | |||||||||||||||||
Total revenues: | |||||||||||||||||
Private Client Group | $ | 966,031 | $ | 901,954 | 7 | % | $ | 903,223 | 7 | % | |||||||
Capital Markets | 288,867 | 263,289 | 10 | % | 256,734 | 13 | % | ||||||||||
Asset Management | 106,387 | 99,827 | 7 | % | 100,954 | 5 | % | ||||||||||
RJ Bank | 140,458 | 110,398 | 27 | % | 132,747 | 6 | % | ||||||||||
Other (1) | 14,849 | 10,505 | 41 | % | 17,170 | (14 | )% | ||||||||||
Intersegment eliminations | (25,385 | ) | (18,990 | ) | (24,135 | ) | |||||||||||
Total revenues | $ | 1,491,207 | $ | 1,366,983 | 9 | % | $ | 1,386,693 | 8 | % | |||||||
Net revenues: | |||||||||||||||||
Private Client Group | $ | 963,349 | $ | 899,877 | 7 | % | $ | 900,527 | 7 | % | |||||||
Capital Markets | 284,668 | 259,855 | 10 | % | 251,572 | 13 | % | ||||||||||
Asset Management | 106,371 | 99,813 | 7 | % | 100,940 | 5 | % | ||||||||||
RJ Bank | 133,726 | 106,994 | 25 | % | 126,584 | 6 | % | ||||||||||
Other (1) | (7,313 | ) | (8,545 | ) | (14 | )% | 28 | NM | |||||||||
Intersegment eliminations | (22,027 | ) | (17,011 | ) | (21,169 | ) | |||||||||||
Total net revenues | $ | 1,458,774 | $ | 1,340,983 | 9 | % | $ | 1,358,482 | 7 | % | |||||||
Pre-tax income (loss) (excluding noncontrolling interests): | |||||||||||||||||
Private Client Group | $ | 106,281 | $ | 87,716 | 21 | % | $ | 81,911 | 30 | % | |||||||
Capital Markets | 53,149 | 40,221 | 32 | % | 32,769 | 62 | % | ||||||||||
Asset Management | 35,162 | 32,605 | 8 | % | 32,507 | 8 | % | ||||||||||
RJ Bank | 97,367 | 65,093 | 50 | % | 88,930 | 9 | % | ||||||||||
Other (1) | (55,537 | ) | (18,819 | ) | (195 | )% | (38,352 | ) | (45 | )% | |||||||
Pre-tax income (excluding noncontrolling interests) | $ | 236,422 | $ | 206,816 | 14 | % | $ | 197,765 | 20 | % | |||||||
Continued on next page | ||||
(the text of the footnote in the above table is on the following page) | ||||
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Raymond James Financial, Inc. Segment Results (Unaudited) (continued from previous page) | ||||||||||
Twelve months ended | ||||||||||
September 30, 2016 | September 30, 2015 | % Change | ||||||||
($ in thousands) | ||||||||||
Total revenues: | ||||||||||
Private Client Group | $ | 3,626,718 | $ | 3,519,558 | 3 | % | ||||
Capital Markets | 1,016,375 | 975,064 | 4 | % | ||||||
Asset Management | 404,421 | 392,378 | 3 | % | ||||||
RJ Bank | 517,243 | 425,988 | 21 | % | ||||||
Other (1) | 46,291 | 66,967 | (31 | )% | ||||||
Intersegment eliminations | (90,704 | ) | (71,791 | ) | ||||||
Total revenues | $ | 5,520,344 | $ | 5,308,164 | 4 | % | ||||
Net revenues: | ||||||||||
Private Client Group | $ | 3,616,479 | $ | 3,507,806 | 3 | % | ||||
Capital Markets | 999,919 | 960,035 | 4 | % | ||||||
Asset Management | 404,349 | 392,301 | 3 | % | ||||||
RJ Bank | 493,966 | 414,295 | 19 | % | ||||||
Other (1) | (31,692 | ) | (10,198 | ) | (211 | )% | ||||
Intersegment eliminations | (79,754 | ) | (64,029 | ) | ||||||
Total net revenues | $ | 5,403,267 | $ | 5,200,210 | 4 | % | ||||
Pre-tax income (loss) (excluding noncontrolling interests): | ||||||||||
Private Client Group | $ | 340,564 | $ | 342,243 | — | |||||
Capital Markets | 139,173 | 107,009 | 30 | % | ||||||
Asset Management | 132,158 | 135,050 | (2 | )% | ||||||
RJ Bank | 337,296 | 278,721 | 21 | % | ||||||
Other (1) | (148,548 | ) | (64,849 | ) | (129 | )% | ||||
Pre-tax income (excluding noncontrolling interests) | $ | 800,643 | $ | 798,174 | — | |||||
The text of the footnote to the above table and to the table on the previous page is as follows:
(1) | The Other segment includes the results of our principal capital and private equity activities as well as certain corporate overhead costs of RJF, including the interest costs on our public debt, and the acquisition and integration costs associated with certain acquisitions. |
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Raymond James Financial, Inc. Selected key metrics (Unaudited) | |||||||||||||||||
Details of certain key revenue and expense components: | |||||||||||||||||
Three months ended | |||||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||||
($ in thousands) | |||||||||||||||||
Securities commissions and fees: | |||||||||||||||||
PCG segment securities commissions and fees | $ | 792,279 | $ | 748,452 | 6 | % | $ | 739,546 | 7 | % | |||||||
Capital Markets segment institutional sales commissions: | |||||||||||||||||
Equity commissions | 53,102 | 62,712 | (15 | )% | 58,916 | (10 | )% | ||||||||||
Fixed Income commissions | 84,997 | 69,261 | 23 | % | 79,306 | 7 | % | ||||||||||
All other segments | 31 | 65 | (52 | )% | 32 | (3 | )% | ||||||||||
Intersegment eliminations | (6,550 | ) | (6,281 | ) | (6,036 | ) | |||||||||||
Total securities commissions and fees | $ | 923,859 | $ | 874,209 | 6 | % | $ | 871,764 | 6 | % | |||||||
Investment banking revenues: | |||||||||||||||||
Equity: | |||||||||||||||||
Underwritings | $ | 23,754 | $ | 17,947 | 32 | % | $ | 14,373 | 65 | % | |||||||
Mergers & acquisitions and advisory fees | 46,427 | 42,637 | 9 | % | 36,068 | 29 | % | ||||||||||
Fixed Income investment banking revenues | 10,779 | 13,742 | (22 | )% | 10,562 | 2 | % | ||||||||||
Tax credit funds syndication fees | 23,904 | 20,413 | 17 | % | 11,567 | 107 | % | ||||||||||
Other | 320 | 155 | 106 | % | 144 | 122 | % | ||||||||||
Total investment banking revenues | $ | 105,184 | $ | 94,894 | 11 | % | $ | 72,714 | 45 | % | |||||||
Other revenues: | |||||||||||||||||
Realized/unrealized gain attributable to private equity investments | $ | 5,851 | $ | 12,008 | (51 | )% | $ | 12,740 | (54 | )% | |||||||
All other revenues | 17,231 | 9,830 | 75 | % | 10,380 | 66 | % | ||||||||||
Total other revenues | $ | 23,082 | $ | 21,838 | 6 | % | $ | 23,120 | — | ||||||||
Other expenses: | |||||||||||||||||
Losses of real estate partnerships held by consolidated variable interest entities (1) | $ | 9,945 | $ | 8,636 | 15 | % | $ | 14,000 | (29 | )% | |||||||
All other expenses | 57,932 | 37,469 | 55 | % | 52,962 | 9 | % | ||||||||||
Total other expenses | $ | 67,877 | $ | 46,105 | 47 | % | $ | 66,962 | 1 | % | |||||||
Net (loss) income attributable to noncontrolling interests: | |||||||||||||||||
Private equity investments | $ | 6,892 | $ | 3,021 | 128 | % | $ | 7,369 | 6 | % | |||||||
Consolidation of low-income housing tax credit funds | (11,263 | ) | (10,173 | ) | (11 | )% | (14,527 | ) | 22 | % | |||||||
Other | 1,491 | 1,471 | 1 | % | 843 | 77 | % | ||||||||||
Total net loss attributable to noncontrolling interests | $ | (2,880 | ) | $ | (5,681 | ) | 49 | % | $ | (6,315 | ) | 54 | % | ||||
Continued on next page | ||||
(the text of the footnote in the above table are on the following page) | ||||
10
Raymond James Financial, Inc. Selected key metrics (Unaudited) (continued from previous page) | ||||||||||
Details of certain key revenue and expense components: | ||||||||||
Twelve months ended | ||||||||||
September 30, 2016 | September 30, 2015 | % Change | ||||||||
($ in thousands) | ||||||||||
Securities commissions and fees: | ||||||||||
PCG segment securities commissions and fees | $ | 2,978,406 | $ | 2,936,502 | 1 | % | ||||
Capital Markets segment institutional sales commissions: | ||||||||||
Equity commissions | 228,346 | 247,414 | (8 | )% | ||||||
Fixed Income commissions | 316,144 | 283,828 | 11 | % | ||||||
All other segments | 128 | 285 | (55 | )% | ||||||
Intersegment eliminations | (24,409 | ) | (24,991 | ) | ||||||
Total securities commissions and fees | $ | 3,498,615 | $ | 3,443,038 | 2 | % | ||||
Investment banking revenues: | ||||||||||
Equity: | ||||||||||
Underwritings | $ | 54,492 | $ | 74,229 | (27 | )% | ||||
Mergers & acquisitions and advisory fees | 148,503 | 162,270 | (8 | )% | ||||||
Fixed Income investment banking revenues | 41,024 | 42,149 | (3 | )% | ||||||
Tax credit funds syndication fees | 59,424 | 44,608 | 33 | % | ||||||
Other | 712 | 404 | 76 | % | ||||||
Total investment banking revenues | $ | 304,155 | $ | 323,660 | (6 | )% | ||||
Other revenues: | ||||||||||
Realized/unrealized gain attributable to private equity investments | $ | 23,735 | $ | 47,654 | (50 | )% | ||||
Realized gain on sale or redemptions of auction rate securities | 269 | 11,067 | (2) | (98 | )% | |||||
All other revenues | 58,002 | 37,875 | 53 | % | ||||||
Total other revenues | $ | 82,006 | $ | 96,596 | (15 | )% | ||||
Other expenses: | ||||||||||
Losses of real estate partnerships held by consolidated variable interest entities (1) | $ | 42,342 | $ | 38,319 | 10 | % | ||||
All other expenses | 191,658 | 145,323 | 32 | % | ||||||
Total other expenses | $ | 234,000 | $ | 183,642 | 27 | % | ||||
Net (loss) income attributable to noncontrolling interests: | ||||||||||
Private equity investments | $ | 15,701 | $ | 14,100 | 11 | % | ||||
Consolidation of low-income housing tax credit funds | (44,439 | ) | (41,681 | ) | (7 | )% | ||||
Other | 5,466 | 6,119 | (11 | )% | ||||||
Total net loss attributable to noncontrolling interests | $ | (23,272 | ) | $ | (21,462 | ) | (8 | )% | ||
The text of the footnotes to the above table and to the table on the previous page are as follows:
(1) Nearly all of these losses are attributable to noncontrolling interests. After adjusting for the portion attributable to noncontrolling interests, RJF’s share of these losses is insignificant in all periods presented.
(2) The total for the twelve months ended September 30, 2015 includes an $11 million realized gain on the sale of Jefferson County, Alabama Limited Obligation School Warrants auction rate securities.
11
Raymond James Financial, Inc. Selected key metrics (Unaudited) | |||||||||
Selected key financial metrics: | ||||||||||||
As of | ||||||||||||
September 30, 2016 | September 30, 2015 | June 30, 2016 | ||||||||||
Total assets | $ | 31.6 | bil. | (1) | $ | 26.5 | bil. | $ | 28.8 | bil. | ||
Shareholders’ equity (attributable to RJF) | $ | 4,914 | mil. | $ | 4,522 | mil. | $ | 4,747 | mil. | |||
Book value per share | $ | 34.72 | $ | 31.68 | $ | 33.58 | ||||||
Return on equity - quarter (annualized) | 14.2 | % | 11.5 | % | 10.7 | % | ||||||
Return on equity - quarter computed based on non-GAAP measures (annualized) | 15.3 | % | (2) | — | 11.4 | % | (2) | |||||
Return on equity - year to date (annualized) | 11.3 | % | 11.5 | % | 10.3 | % | ||||||
Return on equity - year to date computed based on non-GAAP measures (annualized) | 11.8 | % | (2) | — | 10.7 | % | (2) | |||||
Common equity tier 1 capital ratio | 20.5 | % | (1) | 22.1 | % | 21.3 | % | |||||
Tier 1 capital ratio | 20.5 | % | (1) | 22.1 | % | 21.3 | % | |||||
Total capital ratio | 21.5 | % | (1) | 23.1 | % | 22.3 | % | |||||
Tier 1 leverage ratio | 15.0 | % | (1) | 16.1 | % | 15.6 | % | |||||
Pre-tax margin on net revenues - quarter | 16.2 | % | 15.4 | % | 14.6 | % | ||||||
Pre-tax margin on net revenues - quarter - non-GAAP | 17.5 | % | (3) | — | 15.6 | % | (3) | |||||
Pre-tax margin on net revenues - year to date | 14.8 | % | 15.3 | % | 14.3 | % | ||||||
Pre-tax margin on net revenues - year to date - non-GAAP | 15.6 | % | (3) | — | 14.8 | % | (3) | |||||
Effective tax rate - quarter | 27.4 | % | 37.5 | % | 36.5 | % | ||||||
Effective tax rate - year to date | 33.9 | % | 37.1 | % | 36.6 | % | ||||||
Private Client Group financial advisors: | ||||||||
As of | ||||||||
September 30, 2016 | September 30, 2015 | June 30, 2016 | ||||||
Employees | 3,098 | (4) | 2,738 | 2,821 | ||||
Independent contractors | 4,048 | 3,858 | 4,013 | |||||
Total advisors | 7,146 | 6,596 | 6,834 | |||||
Selected client asset metrics: | |||||||||||||||||
As of | |||||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||||
($ in billions) | |||||||||||||||||
Client assets under administration | $ | 604.4 | (5) | $ | 480.0 | 26 | % | $ | 534.5 | 13 | % | ||||||
Private Client Group assets under administration | $ | 574.1 | $ | 453.3 | 27 | % | $ | 506.0 | 13 | % | |||||||
Private Client Group assets in fee-based accounts | $ | 231.0 | $ | 179.4 | 29 | % | $ | 206.7 | 12 | % | |||||||
Financial assets under management | $ | 77.0 | (6) | $ | 65.2 | 18 | % | $ | 71.7 | 7 | % | ||||||
Secured client lending (7) | $ | 4.3 | $ | 3.4 | 26 | % | $ | 3.5 | 23 | % | |||||||
(1) | Estimated. |
(2) | Refer to the reconciliation of net income to adjusted net income (GAAP to non-GAAP measures), on page 13. This computation utilizes the adjusted net income attributable to RJF non-GAAP and the average equity non-GAAP, as presented in the referenced reconciliation. |
(3) | Refer to the reconciliation of net income to adjusted net income (GAAP to non-GAAP measures), on page 13. This computation utilizes the adjusted pre-tax income non-GAAP, as presented in the referenced reconciliation. |
(4) | Includes 265 financial advisors from Alex. Brown and 3Macs, as of their respective acquisition closing dates. |
(5) | Includes approximately $50 billion in client assets under administration from Alex. Brown and 3Macs, as of their respective acquisition closing dates. |
(6) | Includes approximately $2 billion in assets under management from Alex. Brown and 3Macs, as of their respective acquisition closing dates. |
(7) | Includes client margin balances held by our broker-dealer subsidiaries and securities based loans available through RJ Bank. The September 2016 balance includes approximately $700 million in margin loans from Alex. Brown and 3Macs as of their respective acquisition closing dates. |
12
Raymond James Financial, Inc.
Reconciliation of net income to adjusted net income (GAAP to non-GAAP measures)
(Unaudited)
We believe that the non-GAAP measures provide useful information by excluding material items that may not be indicative of our core operating results and that the GAAP and the non-GAAP measures should be considered together. The non-GAAP adjustments include acquisition-related expenses (associated with our June 1st acquisition of Mummert & Company Corporate Finance GmbH, August 31st acquisition of MacDougall, MacDougall & MacTier, Inc., and September 6th acquisition of the US Private Client Services unit of Deutsche Bank Wealth Management) net of applicable taxes. There are no non-GAAP adjustments to net income in the three months, or twelve months, ended September 30, 2015. See the footnotes below for further explanation of each item.
The following table provides a reconciliation of the GAAP measures to the non-GAAP measures for the periods that include non-GAAP adjustments:
Three months ended | Twelve months ended | |||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2016 | ||||||||||
($ in thousands, except per share amounts) | ||||||||||||
Net income attributable to RJF - GAAP | $ | 171,670 | $ | 125,504 | $ | 529,350 | ||||||
Non-GAAP adjustments: | ||||||||||||
Acquisition-related expenses (1) | 19,374 | 13,445 | 40,706 | |||||||||
Tax effect of non-GAAP adjustments (2) | (5,984 | ) | (4,919 | ) | (13,793 | ) | ||||||
Non-GAAP adjustments, net of tax | 13,390 | $ | 8,526 | 26,913 | ||||||||
Adjusted net income attributable to RJF - non-GAAP | $ | 185,060 | $ | 134,030 | $ | 556,263 | ||||||
Non-GAAP earnings per common share: | ||||||||||||
Non-GAAP basic | $ | 1.31 | $ | 0.95 | $ | 3.91 | ||||||
Non-GAAP diluted | $ | 1.28 | $ | 0.93 | $ | 3.84 | ||||||
Average equity - GAAP(3) | $ | 4,830,777 | $ | 4,691,374 | $ | 4,693,138 | ||||||
Average equity - non-GAAP (3) (4) | $ | 4,850,995 | $ | 4,700,634 | $ | 4,702,461 | ||||||
Return on equity for the quarter (annualized) | 14.2 | % | 10.7 | % | N/A | |||||||
Return on equity for the quarter - non-GAAP (annualized) (5) | 15.3 | % | 11.4 | % | N/A | |||||||
Return on equity - year to date | N/A | N/A | 11.3 | % | ||||||||
Return on equity year to date - non-GAAP (5) | N/A | N/A | 11.8 | % | ||||||||
Pre-tax income attributable to RJF - GAAP | $ | 236,422 | $ | 197,765 | $ | 800,643 | ||||||
Total pre-tax non-GAAP adjustments (as detailed above) | 19,374 | 13,445 | 40,706 | |||||||||
Adjusted pre-tax income attributable to RJF non-GAAP | $ | 255,796 | $ | 211,210 | $ | 841,349 | ||||||
Pre-tax margin on net revenues - GAAP | 16.2 | % | 14.6 | % | 14.8 | % | ||||||
Pre-tax margin on net revenues non-GAAP (6) | 17.5 | % | 15.6 | % | 15.6 | % | ||||||
(1) | The non-GAAP adjustment adds back to pre-tax income acquisition-related expenses incurred during each respective period associated with our acquisitions described above. |
(2) | The non-GAAP adjustment reduces net income for the income tax effect of all the pre-tax non-GAAP adjustments, utilizing the year-to-date effective tax rate in such period to determine the current tax expense. |
(3) | For the quarter, computed by adding the total equity attributable to RJF as of the date indicated plus the prior quarter-end total, divided by two. For the year-to-date period, computed by adding the total equity attributable to RJF as of each quarter-end date during the indicated year-to-date period, plus the beginning of the year total, divided by five. |
(4) | The calculation of non-GAAP average equity includes the impact on equity of the non-GAAP adjustments described in the table above, as applicable for each respective period. |
(5) | Computed by utilizing the adjusted net income attributable to RJF non-GAAP and the average equity non-GAAP, for each respective period. See footnotes (3) and (4) above for the calculation of average equity non-GAAP. |
(6) | Computed by dividing the adjusted pre-tax income attributable to RJF by net revenues (GAAP basis), for each respective period. |
13
Raymond James Bank Selected financial highlights (Unaudited) | ||||
Selected operating data: | |||||||||||||||
Three months ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | % Change | June 30, 2016 | % Change | |||||||||||
($ in thousands) | |||||||||||||||
Net interest income | $ | 127,518 | $ | 104,945 | 22% | $ | 123,687 | 3% | |||||||
Net revenues | $ | 133,726 | $ | 106,994 | 25% | $ | 126,584 | 6% | |||||||
Bank loan loss provision | $ | 1,176 | $ | 13,277 | (91)% | $ | 3,452 | (66)% | |||||||
Pre-tax income | $ | 97,367 | $ | 65,093 | 50% | $ | 88,930 | 9% | |||||||
Net charge-offs | $ | 488 | $ | 995 | (51)% | $ | 682 | (28)% | |||||||
Net interest margin (% earning assets) | 3.04 | % | 3.03 | % | — | 3.10 | % | (2)% | |||||||
Twelve months ended | |||||||||
September 30, 2016 | September 30, 2015 | % Change | |||||||
($ in thousands) | |||||||||
Net interest income | $ | 478,690 | $ | 403,578 | 19% | ||||
Net revenues | $ | 493,966 | $ | 414,295 | 19% | ||||
Bank loan loss provision | $ | 28,167 | $ | 23,570 | 20% | ||||
Pre-tax income | $ | 337,296 | $ | 278,721 | 21% | ||||
Net charge-offs (recoveries) | $ | 3,009 | $ | (2,757 | ) | NM | |||
Net interest margin (% earning assets) | 3.04 | % | 3.07 | % | (1)% | ||||
RJ Bank Balance Sheet data: | |||||||||||
As of | |||||||||||
September 30, 2016 | September 30, 2015 | June 30, 2016 | |||||||||
($ in thousands) | |||||||||||
Total assets (1) | $ | 17,012,686 | $ | 14,665,433 | $ | 16,610,235 | |||||
Total equity | $ | 1,658,663 | $ | 1,519,263 | $ | 1,615,005 | |||||
Total loans, net | $ | 15,210,735 | $ | 12,988,021 | $ | 14,799,516 | |||||
Total deposits (1) | $ | 14,615,342 | $ | 12,377,599 | $ | 14,240,934 | |||||
Available for Sale (AFS) securities, at fair value | $ | 734,233 | $ | 374,966 | $ | 418,745 | |||||
Net unrealized loss on AFS securities, before tax | $ | (1,110 | ) | $ | (3,288 | ) | $ | (1,592 | ) | ||
Common equity tier 1 capital ratio | 12.7 | % | (2) | 13.0 | % | 12.7 | % | ||||
Tier 1 capital ratio | 12.7 | % | (2) | 13.0 | % | 12.7 | % | ||||
Total capital ratio | 14.0 | % | (2) | 14.3 | % | 14.0 | % | ||||
Tier 1 leverage ratio | 9.9 | % | (2) | 10.9 | % | 10.1 | % | ||||
Commercial and industrial loans (3) | $ | 7,470,373 | $ | 6,928,018 | $ | 7,319,194 | |||||
Commercial Real Estate (CRE) and CRE construction loans (3) | $ | 2,676,789 | $ | 2,216,510 | $ | 2,631,160 | |||||
Residential mortgage loans (3) | $ | 2,441,569 | $ | 1,962,654 | $ | 2,351,431 | |||||
Securities based loans (3) | $ | 1,904,827 | $ | 1,481,464 | $ | 1,827,446 | |||||
Tax-exempt loans (3) | $ | 740,944 | $ | 484,537 | $ | 701,339 | |||||
Loans held for sale (3) (4) | $ | 202,967 | $ | 108,872 | $ | 190,402 | |||||
Continued on next page | ||||
(the text of the footnotes in the above tables are on the following page) | ||||
14
Raymond James Bank Selected financial highlights (Unaudited) (continued from previous page) | ||||
Credit metrics: | |||||||||||
As of | |||||||||||
September 30, 2016 | September 30, 2015 | June 30, 2016 | |||||||||
($ in thousands) | |||||||||||
Allowance for loan losses | $ | 197,378 | $ | 172,257 | $ | 196,882 | |||||
Allowance for loan losses (as % of loans) | 1.30 | % | 1.32 | % | 1.33 | % | |||||
Nonperforming loans (5) | $ | 81,207 | $ | 52,619 | $ | 81,340 | |||||
Other real estate owned | $ | 4,497 | $ | 4,631 | $ | 4,760 | |||||
Total nonperforming assets | $ | 85,704 | $ | 57,250 | $ | 86,100 | |||||
Nonperforming assets (as % of total assets) | 0.50 | % | 0.39 | % | 0.52 | % | |||||
Total criticized loans (6) | $ | 299,480 | $ | 282,499 | $ | 275,345 | |||||
1-4 family residential mortgage loans over 30 days past due (as a % 1-4 family residential loans) | 1.21 | % | 1.69 | % | 1.23 | % | |||||
The text of the footnotes to the above table and the tables on the previous page are as follows:
(1) | Includes affiliate deposits. |
(2) | Estimated. |
(3) | Outstanding loan balances are shown gross of unearned income and deferred expenses. |
(4) | Primarily comprised of the guaranteed portions of Small Business Administration section 7(a) loans purchased from other financial institutions. |
(5) | Nonperforming loans includes 90+ days past due plus nonaccrual loans. |
(6) | Represents the loan balance for all loans in the Special Mention, Substandard, Doubtful and Loss classifications as utilized by the banking regulators. In accordance with its accounting policy, RJ Bank does not have any loan balances within the Loss classification as loans or any portion thereof, which are considered to be uncollectible, are charged-off prior to assignment to this classification. |
15