- Record client assets under administration of $1.37 trillion and record financial assets under management of $215 billion, up 17% and 16%, respectively, over December 2022
- Domestic Private Client Group net new assets(1) of $21.6 billion for the fiscal first quarter, annualized growth from beginning of period assets of 7.8%
- Quarterly net revenues of $3.01 billion, up 8% over the prior year's fiscal first quarter and down 1% compared to the preceding quarter
- Quarterly net income available to common shareholders of $497 million, or record $2.32 per diluted share; record quarterly adjusted net income available to common shareholders of $514 million(2), or record $2.40 per diluted share(2)
- Annualized return on common equity of 19.1% and annualized adjusted return on tangible common equity of 23.8%(2) for fiscal first quarter
- Total clients' domestic cash sweep and Enhanced Savings Program ("ESP") balances of $58.0 billion, down 4% compared to December 2022 and up 3% over September 2023
Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $3.01 billion and net income available to common shareholders of $497 million, or $2.32 per diluted share, for the fiscal first quarter ended December 31, 2023. Excluding $23 million of expenses related to acquisitions, quarterly adjusted net income available to common shareholders was record $514 million(2), or $2.40 per diluted share(2).
Quarterly net revenues increased 8% over the prior year's fiscal first quarter primarily driven by higher asset management and related administrative fees. Despite higher revenues, quarterly net income available to common shareholders declined 2% compared to the prior-year quarter largely due to the receipt of a $32 million insurance settlement in the year-ago period. Sequentially, quarterly net revenues decreased 1% primarily due to lower asset management and related administrative fees and investment banking revenues which were partially offset by higher brokerage revenues. Quarterly net income available to common shareholders increased 15% over the preceding quarter mainly resulting from lower legal and regulatory reserves and a lower bank loan loss provision for credit losses. Annualized return on common equity was 19.1% and annualized adjusted return on tangible common equity was 23.8%(2).
"High satisfaction between clients and advisors, along with solid financial advisor retention and recruiting in the Private Client Group segment drove record quarterly earnings per share and strong net new asset(1) annualized growth of 7.8% in the quarter," said Chair and CEO Paul Reilly. "We are well positioned entering the fiscal second quarter with record client assets and robust financial advisor recruiting activity."
Segment Results
Private Client Group
- Domestic Private Client Group net new assets(1) of $21.6 billion for the fiscal first quarter, annualized growth from beginning of period assets of 7.8%
- Quarterly net revenues of $2.23 billion, up 8% over the prior year's fiscal first quarter and down 2% compared to the preceding quarter
- Quarterly pre-tax income of $439 million, up 1% over the prior year's fiscal first quarter and down 8% compared to the preceding quarter
- Record Private Client Group assets under administration of $1.31 trillion and record Private Client Group assets in fee-based accounts of $746.6 billion, both up 18% over December 2022 and 9% over September 2023
- Total clients' domestic cash sweep and ESP balances of $58.0 billion, down 4% compared to December 2022 and up 3% over September 2023
Year-over-year, quarterly net revenues and pre-tax income grew 8% and 1%, respectively, predominantly driven by higher asset management and related administrative fees, reflecting growth of assets in fee-based accounts during the year. Sequentially, quarterly net revenues declined 2% primarily resulting from lower asset management and related administrative fees due to lower balances at the beginning of the current quarter compared to the preceding quarter.
Total clients' domestic cash sweep and ESP balances of $58 billion increased 3% over September 2023, driven by higher ESP and cash sweep balances. The average yield on Raymond James Bank Deposit Program third-party bank balances increased 6 basis points over the preceding quarter to 3.66% in the fiscal first quarter.
"Advisor recruiting and retention started the fiscal year off strong with domestic Private Client Group net new asset(1) annualized growth of 7.8% in the quarter," said Reilly. "Our robust technology capabilities, client-first values and our long-established multiple affiliation model continue to fuel the strength and quality of the recruiting pipeline."
Capital Markets
- Quarterly net revenues of $338 million, up 15% over the prior year's fiscal first quarter and down 1% compared to the preceding quarter
- Quarterly pre-tax income of $3 million
- Quarterly investment banking revenues of $170 million, up 28% over the prior year's fiscal first quarter and down 12% compared to the preceding quarter
Quarterly net revenues grew 15% over the prior-year quarter primarily the result of higher investment banking revenues. Sequentially, quarterly net revenues declined 1% driven by lower M&A and advisory revenues and affordable housing investments business revenues, largely offset by higher fixed income brokerage revenues.
"Fixed income brokerage revenues experienced strong quarterly growth due to higher client activity as well as a more favorable trading environment," said Reilly. "Investment banking activity industry-wide appears to be on a gradual recovery and our pipeline and new business activity remain healthy."
Asset Management
- Quarterly net revenues of $235 million, up 14% over the prior year's fiscal first quarter and flat compared to the preceding quarter
- Quarterly pre-tax income of $93 million, up 16% over the prior year's fiscal first quarter and down 7% compared to the preceding quarter
- Record financial assets under management of $215 billion, up 16% over December 2022 and 9% over September 2023
The increase in quarterly net revenues and pre-tax income over the prior year's fiscal first quarter was largely attributable to higher financial assets under management due to higher equity markets and net inflows into fee-based accounts in the Private Client Group.
Bank
- Quarterly net revenues of $441 million, down 13% compared to the prior year's fiscal first quarter and 2% compared to the preceding quarter
- Quarterly pre-tax income of $92 million, down 32% compared to the prior year's fiscal first quarter and up 18% over the preceding quarter
- Bank segment net interest margin ("NIM") of 2.74% for the quarter, down 62 basis points compared to the prior year's fiscal first quarter and 13 basis points compared to the preceding quarter
- Record net loans of $44.2 billion, up slightly over December 2022 and 1% over September 2023
Quarterly net revenues declined 13% year-over-year and 2% sequentially due to lower NIM. The Bank segment's NIM decreased 13 basis points during the quarter to 2.74%, largely the result of increased interest expense from higher-cost funding as ESP balances replaced a portion of lower-cost Raymond James Bank Deposit Program client cash sweep balances, which were swept to third-party banks. Quarterly results include an FDIC special assessment of $9 million.
The credit quality of the loan portfolio is solid, with criticized loans as a percent of total loans held for investment ending the quarter at 1.09%. Bank loan allowance for credit losses as a percent of total loans held for investment was 1.08%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 2.06%.
Other
Other segment pre-tax income increased sequentially primarily due to a large provision for litigation and regulatory matters in the preceding quarter. The effective tax rate for the quarter was 21.0%, reflecting a tax benefit recognized for share-based compensation that vested during the period.
In November, the Board of Directors increased the quarterly cash dividend on common shares 7% to $0.45 per share and authorized common stock repurchases of up to $1.5 billion, replacing the previous authorization. During the fiscal first quarter, the firm repurchased 1.41 million shares of common stock for $150 million at an average price of $107 per share. As of January 24, 2024, approximately $1.39 billion remained available under the Board's approved common stock repurchase authorization. At the end of the quarter, the total capital ratio was 23.0%(3) and the tier 1 leverage ratio was 12.1%(3), both well above regulatory requirements.
A conference call to discuss the results will take place today, Wednesday, January 24, at 5 p.m. ET. The live audio webcast, and the presentation which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. A replay of the call will be available at the same location until April 24, 2024. For a connection to the conference call, please dial: 877-400-4013 (conference code: 3778589).
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About Raymond James Financial, Inc.
Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has approximately 8,700 financial advisors. Total client assets are $1.37 trillion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at www.raymondjames.com.
Forward-Looking Statements
Certain statements made in this press release may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions (including changes in interest rates), demand for and pricing of our products (including cash sweep and deposit offerings), acquisitions, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, future or conditional verbs such as "may," "will," "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 and Current Reports on Form 8-K, 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.
