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Raymond James Financial, Inc.
CEO : Mr. Paul Christopher Reilly

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q1	10.4% YoY	49.7%	9.3%	2022-10-27

Paul Shoukry says,

Consolidated Revenues

• Record quarterly net revenues of $2.83 billion grew 5% year-over-year and 4% sequentially.
• Asset management fees declined 6% compared to the prior year’s fiscal fourth quarter and 10% compared to the preceding quarter, in line with the guidance provided last quarter based on fee-based assets.
• Equity markets declined further during the quarter, resulting in a 3% sequential decline in private client group assets and fee-based accounts. This decline will create a headwind for asset management and related administrative fees in the fiscal first quarter, which is expected to be down close to 4% sequentially in the fiscal first quarter of 2023.
• Brokerage revenues of $481 million declined 11% compared to the prior year’s fiscal fourth quarter and 6% compared to the preceding quarter, as lower activity and asset-based trail revenues in PCG, as well as decreased fixed income brokerage revenues more than offset the addition of SumRidge.
• Investment banking revenues of $217 million declined 3% compared to the preceding quarter, however, pipelines remain strong.

Clients’ Domestic Cash Sweep Balances

• Clients’ domestic cash sweep balances ended the quarter at $67.1 billion, down 12% compared to the preceding quarter and representing 7% of domestic PCG client assets.
• Most of the decline in our sweep balances were experienced in the client interest program at the broker dealer.
• The Raymond James Bank Deposit Suite Program continues to be a relatively low cost source of stable funding and now with the addition of TriState Capital Bank’s independent deposit franchise.

Net Interest Income

• Combined net interest income and RJBDP fees from third-party banks was $606 million, up 206% over the prior year’s fiscal fourth quarter and 64% from the preceding quarter.
• Both the NIM and average yield from third-party banks are expected to increase further with the anticipated rate increases.
• For the fiscal first quarter, the average yield on RJBDP from third-party banks is expected to be somewhere around 2.5% and the bank segment’s NIM to average around 3.15%.

Expenses

• The total compensation ratio for the quarter was 62.1%, which decreased from 67.5% in the preceding quarter.
• Non-compensation expenses of $456 million, which includes $13 million of acquisition related expenses included in our non-GAAP earnings adjustments decreased 3% sequentially.
• The bank loan loss provision for credit losses decreased to $34 million, primarily due to the $26 million initial provision associated with the TriState Capital acquisition in the fiscal third quarter.
• Pre-tax margin trend over the past five quarters was strong with a pre-tax margin of 21.8% and an adjusted pre-tax margin of 22.8% in the fiscal fourth quarter.

Capital Actions and Credit Metrics

• Since the closing of the TriState acquisition, they’ve repurchased approximately 2.1 million common shares for $200 million or approximately $96 per share under their Board authorization.
• They remain committed to offset the share issuance associated with the acquisition of TriState, as well as share-based compensation dilution.
• Loan portfolio remains healthy with most trends continuing to improve.
• Bank loan allowance for credit losses as a percentage of total loans held for investment ended the quarter at 0.91%, down from 1.27% at September 2021 and nearly flat sequentially.

Paul Reilly says,

Impact of Hurricane Ian

• Over 200 associates on Florida Central Gulf Coast experienced a loss from Hurricane Ian.
• Raymond James family impacted by the storm is safe.
• The firm provided emotional and mental health resources to associates, delivered a $500 relief check to all associates in impacted counties, and provided additional time off to help them manage their personal situations.

Record Revenue and Net Income

• Despite the significant decline in equity markets during the year, the company generated record net revenues and record pre-tax income for the fourth quarter and fiscal year.
• The private client group had strong retention and recruiting of financial advisers contributed to industry-leading growth with domestic net new assets of 9% over the fiscal year.
• Annual investment banking results were very strong, only 3% lower than the record results achieved in fiscal 2021.
• The bank segment loans grew 73% year-over-year and 3% during the quarter, reflecting attractive growth across nearly all loan categories.

Acquisition and Expansion

• The acquisition of SumRidge Partners on July 1st has enhanced the fixed income platform with technology-driven capabilities and a fantastic team with extensive experience dealing with corporates.
• The Charles Stanley acquisition completed earlier in the year significantly expanded our presence in the U.K.
• The acquisition of TriState Capital Bank this year added a best-in-class third-party securities-based lending capability, while also diversifying our funding sources.

Quarterly and Full Year Results

• The firm reported record net revenues of $2.83 billion, record pre-tax income of $616 million and net income available to common shareholders of $437 million or earnings per diluted share of $1.98 in the fiscal fourth quarter.
• The company generated record net revenues of $11 billion and record pre-tax income of $2 billion, both up 13% over fiscal 2021 for the fiscal year.

Effect on Client Assets

• Equity market declines in the quarter negatively impacted client asset levels.
• We ended the quarter with 8,681 financial advisers in PCG, a net increase of 199 over the prior year period and 65 over the preceding quarter.
• Total client domestic cash sweep balances declined 12% to $67.1 billion or 7% of domestic PCG assets under administration.

Q & A sessions,

Private Client Group

• Expected 4% sequential decline in asset management fees and related administrative fees for next quarter
• Optimistic for industry-leading growth in the long-term with current and prospective advisers attracted to client focused values and leading technology
• Continued benefits from higher short-term interest rates despite expected cash sorting as the Fed increases short-term interest rates

Capital Markets

• M&A pipeline remains strong, but the pace and timing of closings heavily influenced by market conditions
• Confident for growth given significant investments made over the past five years

Fixed Income

• Challenging environment expected in fiscal 2023 due to shift in dynamic where depository clients have less cash available for investing in securities
• Expect SumRidge Partners to enhance current position in rapidly evolving fixed income and trading technology marketplace, which typically benefits from elevated rate volatility

Asset Management

• Financial assets under management starting the fiscal year lower due to decline in equity and fixed income markets
• Confident for strong growth of assets in fee-based accounts in private client group segment to drive long-term growth of financial assets under management
• Raymond James Investment Management expected to drive further growth through increased scale, distribution, operational, and marketing synergies

Bank Segment

• Well positioned for rising short-term interest rates with ample funding and capital to grow balance sheet prudently
• TriState Capital Bank to be operated separately with respect to its relationships with its clients, which coupled with strong capital and funding, should foster ongoing growth
• Credit quality of bank’s loan portfolio remains strong

Non-compensation Expenses

• Full quarter of results for TriState Capital and SumRidge, which sequentially added about $25 million of non-compensation expenses
• Technology investments to support advisers, clients, and all businesses and functions across the firm will continue to be a significant focus for growth
• Potential best guess for fiscal 2023 is $1.7 billion in non-compensation expenses, representing around 1.5% growth sequentially each quarter in 2023

Securities Portfolio

• Expect buildup in securities to run-off over the next year to fund loan growth
• Duration associated with mortgage portfolio gives same type of protection as securities
• Excess cash beyond loan growth would be invested in securities as good return, along with cash swept off to third-party banks