Press Release

July 20, 2011
Printable version

RAYMOND JAMES FINANCIAL
REPORTS THIRD QUARTER RESULTS

ST. PETERSBURG, Fla. –Raymond James Financial, Inc. today reported net income of $46,786,000 or $0.37 per diluted share for the third quarter of fiscal 2011, compared with net income of $60,687,000 or $0.48 per diluted share for the third quarter of fiscal 2010. Excluding the $45 million pretax charge for the repurchase of auction rate securities, net income would have been $74,884,000⁽¹⁾ or $0.59⁽¹⁾ per diluted share for the third quarter of fiscal 2011, an increase of 23 percent over the prior year’s quarter, although a slight decrease from the strong second quarter.

Net revenues were $850,387,000 for the current quarter, up 14 percent over the prior year’s quarterly net revenues of $747,373,000 and essentially flat with the prior quarter. The firm reported quarterly records for assets under management ($36.6 billion) and assets under administration ($278 billion) as of June 30, 2011.

“Most of our businesses performed well this quarter,” said CEO Paul Reilly. “The Private Client Group and Raymond James Bank had particularly good quarters notwithstanding the choppy markets. Asset Management and Emerging Markets also had solid results.

“The difficult market conditions negatively impacted overall results in the Capital Markets segment. Although M&A and underwriting fees continued at a robust pace, institutional securities commissions were off 10 percent and trading profits were down compared to last quarter.

“We believe the resolution of the auction rate securities issue was in the best interests of our clients and the firm as the uncertainty has been resolved, even though the one-time earnings impact was significant. Although there can be no assurances, we anticipate that ultimate losses will be lower than the provision as additional refinancing by issuers occurs.

“The markets are unsettled due to issues related to the U.S. debt ceiling, budget deficits, solvency problems in several European countries and the slowdown of the U.S. economic recovery. As we have forecast, we expect the economic recovery to be irregular and sluggish as a result of the damage to our economic system.  However, our business is well positioned for continued growth as the economic recovery regains momentum.”

The company will conduct its quarterly conference call Thursday, July 21, at 8:15 a.m. ET. For a listen-only connection, visit raymondjames.com/analystcall for a live audio webcast. The subjects to be covered may include forward-looking information. Questions may be posed to management by participants on the analyst call-in line, and in response the company may disclose additional material information.

⁽¹⁾ Excluding the provision for loss on the purchase of Auction Rate Securities is a non-GAAP measure; see unaudited financial report below for further discussion.

About Raymond James Financial, Inc.

Raymond James Financial (NYSE-RJF) is a Florida-based diversified holding company providing financial services to individuals, corporations and municipalities through its subsidiary companies. Its three principal wholly owned broker/dealers, Raymond James & Associates, Raymond James Financial Services and Raymond James Ltd. have more than 5,400 financial advisors serving 1.9 million accounts in 2,400 locations throughout the United States, Canada and overseas. In addition, total client assets are approximately $278 billion, of which approximately $37 billion are managed by the firm’s asset management subsidiaries.

To the extent that Raymond James makes or publishes forward-looking statements (regarding management expectations, strategic objectives, business prospects, anticipated expense savings, financial results, anticipated results of litigation and regulatory proceedings, and other similar matters), a variety of factors, many of which are beyond Raymond James’ control, could cause actual results and experiences to differ materially from the expectations and objectives expressed in these statements. These factors are described in Raymond James’ 2010 annual report on Form 10-K and the quarterly report on Form 10-Q for the quarters ended December 31, 2010 and March 31, 2011, which are available on RAYMONDJAMES.COM and SEC.GOV.

For more information, contact Steve Hollister at 727-567-2824.
Please visit the Raymond James Press Center at raymondjames.com/media.

Raymond James Financial, Inc. Unaudited Report (in thousands, except per share amounts)
	Three Months Ended
	June 30, 2011	June 30, 2010	% Change	March 31, 2011	% Change
Total Revenues	$868,212	$763,612	14%	$866,744	-
Net Revenues	850,387	747,373	14%	852,057	-
Pre-Tax Income	78,667	97,511	(19)%	126,237	(38)%
Net Income	46,786	60,687	(23)%	80,917	(42)%
Income for basic earnings per common share:
Net income attributable to RJF, Inc. common shareholders	$45,394	$58,133	(22)%	$78,293	(42)%
Income for diluted earnings per common share:
Net income attributable to RJF, Inc. common shareholders	$45,399	$58,139	(22)%	$78,308	(42)%
Earnings per common share:
Basic	$0.37	$0.49	(24)%	$0.64	(42)%
Diluted	$0.37	$0.48	(23)%	$0.64	(42)%
Non-GAAP results excluding the $45 million pre-tax charge resulting from auction rate securities(1):
Non-GAAP Pre-Tax Income	$123,667	$97,511	27%	$126,237	(2)%
Non-GAAP Net Income	$  74,884	$  60,687	23%	$   80,917	(7)%
Non-GAAP Earnings per common share:
Non-GAAP Basic	$0.59	$0.49	20%	$0.64	(8)%
Non-GAAP Diluted	$0.59	$0.48	23%	$0.64	(8)%

	Nine Months Ended
	June 30, 2011	June 30, 2010	% Change
Total Revenues	$2,565,289	$2,216,268	16%
Net Revenues	2,516,273	2,168,779	16%
Pre-Tax Income	335,418	256,555	31%
Net Income	209,426	159,218	32%
Income for basic earnings per common share:
Net income attributable to RJF, Inc. common shareholders	$202,615	$152,492	33%
Income for diluted earnings per common share:
Net income attributable to RJF, Inc. common shareholders	$202,635	$152,503	33%
Earnings per common share:
Basic	$1.66	$1.28	30%
Diluted	$1.65	$1.28	29%
Non-GAAP results excluding the $45 million pre-tax charge resulting from auction rate securities(1):
Non-GAAP Pre-Tax Income	$380,418	$256,555	48%
Non-GAAP Net Income	$237,524	$159,218	49%
Non-GAAP Earnings per common share:
Non-GAAP Basic	$1.88	$1.28	47%
Non-GAAP Diluted	$1.87	$1.28	46%

(1) The non-GAAP calculations exclude the impact of the loss provision for auction rate securities from pre-tax income for the three and nine months ended June 30, 2011. Non-GAAP net income and earnings per common share computations also reflect adjustments to income tax expenses for the tax effect of this loss provision. The company believes that the non-GAAP measures provide useful information by excluding these items which may not be indicative of the company’s core operating results and business outlook. The company believes that GAAP measures and non-GAAP measures of the company’s financial performance should be considered together.

Balance Sheet Data
	June 30, 2011	September 30, 2010
Total Assets	$16.1 bil.	$17.9 bil.
Shareholders’ Equity	$2,559 mil.	$2,303 mil.
Book value per share	$20.74	$19.03

Management Data
	Quarter Ended
	June 30, 2011	June 30, 2010	March 31, 2011	December 31, 2010
PCG Financial Advisors:
United States	4,492	4,515	4,472	4,489
Canada	445	436	443	442
United Kingdom	156	144	151	149
Total	5,093	5,095	5,066	5,080
# Lead managed:
Corporate public offerings in U.S.	7	5	12	12
Corporate public offerings in Canada	8	9	16	14
Financial Assets Under Management:
Managed Accounts (excluding Money Market funds)	$36.6 billion	$27.5 billion	$35.6 billion	$33.4 billion
Client Assets Under Administration	$278 billion	$231 billion	$275 billion	$262 billion
Client Margin Balances	$1,551 million	$1,385 million	$1,537 million	$1,511 million

	Three Months Ended
	June 30, 2011	June 30, 2010	% Change	March 31, 2011	% Change
	(in thousands)
Revenues:
Private Client Group	$557,017	$486,566	14%	$556,632	-
Capital Markets	162,695	154,077	6%	177,409	(8)%
Asset Management	58,458	49,296	19%	55,341	6%
RJ Bank	67,836	69,647	(3)%	69,099	(2)%
Emerging Markets	14,449	4,391	229%	11,962	21%
Securities Lending	1,502	2,573	(42)%	1,479	2%
Proprietary Capital	13,716	4,445	209%	(275)	NM
Other	1,286	2,217	(42)%	3,574	(64)%
Intersegment Eliminations	(8,747)	(9,600)	9%	(8,477)	(3)%
Total Revenues	$868,212	$763,612	14%	$866,744	-
Pre-Tax Income:
Private Client Group	$53,317	$44,792	19%	$45,990	16%
Capital Markets	14,191	19,623	(28)%	33,689	(58)%
Asset Management	17,593	12,152	45%	15,227	16%
RJ Bank	42,093	29,185	44%	42,256	-
Emerging Markets	2,710	(1,109)	NM	1,192	127%
Securities Lending	323	720	(55)%	330	(2)%
Proprietary Capital	6,616	3,090	114%	(4,032)	264%
Other	(58,176)(1)	(10,942)	NM	(8,415)	NM
Pre-Tax Income	$ 78,667	$97,511	(19)%	$126,237	(38)%

	Nine Months Ended
	June 30, 2011	June 30, 2010	$ Change
	(in thousands)
Revenues:
Private Client Group	$1,633,080	$1,409,761	16%
Capital Markets	513,130	437,620	17%
Asset Management	169,386	147,910	15%
RJ Bank	214,376	210,099	2%
Emerging Markets	35,000	11,993	192%
Securities Lending	4,731	6,666	(29)%
Proprietary Capital	14,111	17,093	(17)%
Other	8,263	6,013	37%
Intersegment Eliminations	(26,788)	(30,887)	13%
Total Revenues	$2,565,289	$2,216,268	16%
Pre-Tax Income:
Private Client Group	$155,047	$113,047	37%
Capital Markets	72,526	53,016	37%
Asset Management	48,414	35,453	37%
RJ Bank	130,813	84,644	55%
Emerging Markets	4,223	(4,091)	203%
Securities Lending	1,177	2,053	(43)%
Proprietary Capital	2,442	2,236	9%
Other	(79,224)(1)	(29,803)	(166)%
Pre-Tax Income	$ 335,418	$256,555	31%

(1) The Other segment for the period ended June 30, 2011 includes a $45 million pre-tax loss provision for auction rate securities.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Quarter-to-Date (in thousands, except per share amounts)
	Three Months Ended
	June 30, 2011	June 30, 2010	% Change	March 31, 2011	% Change
Revenues:
Securities commissions and fees	$551,337	$505,246	9%	$563,710	(2)%
Investment banking	64,518	41,914	54%	63,131	2%
Investment advisory fees	55,016	44,512	24%	52,643	5%
Interest	95,832	92,780	3%	96,811	(1)%
Net trading profits	7,529	3,047	147%	15,246	(51)%
Financial service fees	38,954	41,524	(6)%	41,089	(5)%
Other	55,026	34,589	59%	34,114	61%
Total Revenues	868,212	763,612	14%	866,744	-
Interest expense	17,825	16,239	10%	14,687	21%
Net Revenues	850,387	747,373	14%	852,057	-
Non-interest expenses:
Compensation, commissions and benefits	575,726	513,676	12%	579,587	(1)%
Communications and information processing	36,156	29,995	21%	36,380	(1)%
Occupancy and equipment costs	27,140	26,679	2%	26,773	1%
Clearance and floor brokerage	10,277	9,480	8%	9,447	9%
Business development	24,800	18,878	31%	22,820	9%
Investment sub-advisory fees	7,703	6,988	10%	7,867	(2)%
Bank loan loss provision	8,363	17,098	(51)%	8,637	(3)%
Loss provision for auction rate securities	45,000	-	NM	-	NM
Other	34,143	29,232	17%	36,308	(6)%
Total Non-interest Expenses	769,308	652,026	18%	727,819	6%
Income including noncontrolling interests and before provision for income taxes	81,079	95,347	(15)%	124,238	(35)%
Provision for income taxes	31,881	36,824	(13)%	45,320	(30)%
Net income including noncontrolling interests	49,198	58,523	(16)%	78,918	(38)%
Net income (loss) attributable to noncontrolling interests	2,412	(2,164)	211%	(1,999)	221%
Net Income Attributable to Raymond James Financial, Inc.	$46,786	$60,687	(23)%	$80,917	(42)%
Net Income per Common Share-Basic	$0.37	$0.49	(24)%	$0.64	(42)%
Net Income per Common Share-Diluted	$0.37	$0.48	(23)%	$0.64	(42)%
Weighted-Average Common Shares Outstanding-Basic	123,238	119,622		122,396
Weighted-Average Common and Common Equivalent Shares Outstanding-Diluted	123,958	120,019		123,265

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Year-to-Date (in thousands, except per share amounts)
	Nine Months Ended
	June 30, 2011	June 30, 2010	% Change
Revenues:
Securities commissions and fees	$1,649,186	$1,453,699	13%
Investment banking	186,618	112,471	66%
Investment advisory fees	160,069	131,066	22%
Interest	297,029	277,427	7%
Net trading profits	29,097	24,854	17%
Financial service fees	121,637	117,231	4%
Other	121,653	99,520	22%
Total Revenues	2,565,289	2,216,268	16%
Interest expense	49,016	47,489	3%
Net Revenues	2,516,273	2,168,779	16%
Non-interest expenses:
Compensation, commissions and benefits	1,707,197	1,482,174	15%
Communications and information processing	103,681	90,514	15%
Occupancy and equipment costs	80,142	79,286	1%
Clearance and floor brokerage	29,641	26,810	11%
Business development	71,565	59,373	21%
Investment sub-advisory fees	22,474	20,373	10%
Bank loan loss provision	28,232	59,870	(53)%
Loss provision for auction rate securities	45,000	-	NM
Other	96,278	93,711	3%
Total Non-interest Expenses	2,184,210	1,912,111	14%
Income including noncontrolling interests and before provision for income taxes	332,063	256,668	29%
Provision for income taxes	125,992	97,337	29%
Net income including noncontrolling interests	206,071	159,331	29%
Net (loss) income attributable to noncontrolling interests	(3,355)	113	NM
Net Income Applicable to Raymond James Financial, Inc.	$209,426	$159,218	32%
Net Income per Common Share-Basic	$1.66	$1.28	30%
Net income per Common Share-Diluted	$1.65	$1.28	29%
Weighted-Average Common Shares Outstanding-Basic	122,200	119,180
Weighted-Average Common and Common Equivalent Shares Outstanding-Diluted	122,689	119,456

 

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