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raymondjames.com/news-and-media/press-releases
October 25, 2017

Raymond James Financial reports 4th quarter and fiscal 2017 results

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  • Record quarterly net revenues of $1.69 billion, up 16 percent over the prior year’s fiscal fourth quarter and 4 percent over the preceding quarter
  • Record quarterly net income of $193.5 million, or $1.31 per diluted share, and adjusted quarterly net income of $217.3 million (1), or $1.47 per diluted share (1)
  • Record annual net revenues of $6.37 billion, record annual net income of $636.2 million, or $4.33 per diluted share, and adjusted annual net income of $768.1 million (1), or $5.23 per diluted share (1)
  • Records for client assets under administration of $692.9 billion, financial assets under management of $96.4 billion, and net loans at Raymond James Bank of $17.0 billion

ST. PETERSBURG, Fla - Raymond James Financial, Inc. (NYSE: RJF) today reported record net revenues of $1.69 billion and record net income of $193.5 million, or $1.31 per diluted share, for the fiscal fourth quarter ended September 30, 2017. Quarterly net income was up 13 percent over the prior year’s fiscal fourth quarter and 5 percent over the preceding quarter.  Excluding losses on extinguishment of debt and acquisition-related expenses, adjusted quarterly net income was $217.3 million (1), or $1.47 per diluted share (1). The record results generated in the quarter were largely attributable to substantial growth of Private Client Group assets in fee-based accounts, the benefit derived from higher short-term interest rates, and record investment banking revenues.

For fiscal year 2017, record net revenues of $6.37 billion increased 18 percent, record net income of $636.2 million increased 20 percent, and adjusted net income of $768.1 million (1) increased 35 percent compared to fiscal 2016.

“We are pleased that all four of our core segments generated record net revenues and pre-tax income in fiscal 2017,” said Chairman and CEO Paul Reilly. “Moreover, the records we achieved for the number of Private Client Group financial advisors, client assets under administration, financial assets under management, and net loans at Raymond James Bank should provide significant tailwinds for the start of fiscal 2018.”

Segment Results

Private Client Group

  • Record quarterly net revenues of $1.17 billion, up 21 percent over the prior year’s fiscal fourth quarter and 4 percent over the preceding quarter
  • Record quarterly pre-tax income of $142.3 million, a substantial increase of 34 percent over the prior year’s fiscal fourth quarter and 11 percent over the preceding quarter
  • Record annual net revenues of $4.42 billion and record annual pre-tax income of $373.0 million
  • Record Private Client Group assets under administration of $659.5 billion, an increase of 15 percent over September 2016 and 4 percent over June 2017
  • Private Client Group assets in fee-based accounts of $294.5 billion, representing growth of 27 percent over September 2016 and 6 percent over June 2017

Growth of assets in fee-based accounts and higher short-term interest rates helped the segment generate record results for both the fourth quarter and fiscal 2017. The number of financial advisors reached a record 7,346, lifted by exceptionally strong advisor recruiting and retention results as well as the successful integrations of Alex. Brown and 3Macs during the fiscal year.

“I am proud of our advisors for maintaining an unwavering focus on serving their clients, especially given the multitude of regulatory changes during the fiscal year,” said Reilly. “We plan to continue growing our investments in technology and our service offerings to facilitate stronger relationships through even more efficient and effective tools for use by our advisors and their clients.”

Capital Markets

  • Quarterly net revenues of $265.6 million, down 7 percent compared to the prior year’s fiscal fourth quarter and up 3 percent compared to the preceding quarter
  • Quarterly pre-tax income of $43.9 million, down 17 percent compared to the prior year’s fiscal fourth quarter and up 27 percent compared to the preceding quarter
  • Record quarterly investment banking revenues of $130.7 million, fueled by record M&A fees of $84.5 million
  • Record annual net revenues of $1.01 billion and record annual pre-tax income of $141.2 million

For the quarter, record M&A fees and a sequential increase in tax credit funds syndication fees resulted in an increase in investment banking revenues despite a decline in equity underwriting revenues. Due to lower equity underwritings and muted market volatility, institutional equity commissions declined significantly during the quarter. Similarly, a lack of interest rate volatility coupled with a flattening yield curve led to a decline in institutional fixed income commissions during the quarter, although net trading profits remained relatively resilient.

For the fiscal year, the segment’s record results were driven by strong investment banking revenues of $398.7 million, which increased 31 percent over fiscal 2016. Improved M&A and equity underwriting results more than offset both the decline in trading profits and the weakness in the tax credit funds syndication business resulting from uncertainty over corporate tax reform. Primarily due to the market headwinds mentioned above, both institutional equity and fixed income commissions were down in fiscal 2017.

“The record results generated by the Capital Markets segment in fiscal 2017 reinforce the value of our diversified, client-focused platform,” said Reilly.

Asset Management

  • Record quarterly net revenues of $131.4 million, up 24 percent compared to the prior year’s fiscal fourth quarter and 5 percent compared to the preceding quarter
  • Record quarterly pre-tax income of $48.8 million, representing significant increases of 39 percent compared to the prior year’s fiscal fourth quarter and 13 percent compared to the preceding quarter
  • Record annual net revenues of $487.7 million and record annual pre-tax income of $171.7 million
  • Record financial assets under management of $96.4 billion, reflecting growth of 25 percent compared to September 2016 and 6 percent compared to June 2017

Record financial assets under management led to record results in the Asset Management segment for both the fourth quarter and fiscal year. The increase in financial assets under management reflected market appreciation and increased utilization of fee-based accounts in the Private Client Group. Carillon Tower Advisers / Eagle generated modest net inflows during the fiscal year, despite the industry-wide headwinds for actively managed investments. The previously announced acquisition of Scout Investments and Reams Asset Management remains on track to close in the December 2017 calendar quarter.

Raymond James Bank

  • Record quarterly net revenues of $162.8 million, up 22 percent over the prior year’s fiscal fourth quarter and 8 percent over the preceding quarter
  • Record quarterly pre-tax income of $113.3 million, up 16 percent over the prior year’s fiscal fourth quarter and 13 percent over the preceding quarter
  • Record annual net revenues of $592.7 million and record annual pre-tax income of $409.3 million
  • Record net loans at Raymond James Bank of $17.0 billion, representing growth of 12 percent over September 2016 and 2 percent over June 2017

The Bank’s record results were lifted by loan growth, the expansion of the available-for-sale, agency-backed securities portfolio, and continued improvement of credit metrics. Despite the broad-based growth in the loan portfolio, the improving credit metrics resulted in a loan loss benefit for the Bank during the quarter. The Bank’s net interest margin for the quarter was 3.11 percent, which increased 7 basis points over the prior year’s fiscal fourth quarter but declined 3 basis points compared to the preceding quarter. The modest sequential decline in the Bank’s net interest margin was primarily attributable to an increase in the Bank’s excess cash balances.

Other

The Other segment included $6.7 million of private equity gains in the quarter, of which $6.0 million were attributable to noncontrolling interests. On September 25, all of the 8.60% Senior Notes due 2019 with an aggregate principal amount outstanding of $300 million were redeemed, resulting in a $37.5 million loss on extinguishment of debt.

The effective tax rate was 30.1 percent for the quarter and 31.2 percent for the fiscal year. The effective tax rate benefited from new accounting guidance associated with share-based compensation and non-taxable gains in our corporate-owned life insurance portfolio during the fiscal year.

A conference call to discuss the results will take place tomorrow morning, Thursday, October 26th, at 8:15 a.m. ET. For a listen only connection, please call: 877-671-8037 (conference code: 1845283), 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 April 26, 2018, 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 7,300 financial advisors in 3,000 locations throughout the United States, Canada and overseas. Total client assets are $693 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 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.

Raymond James Financial, Inc.
Selected financial highlights
(Unaudited)
Summary results of operations
  Three months ended
  September 30,
2017
September 30,
2016
%
Change
June 30,
2017
%
Change
  ($ in thousands, except per share amounts)
Total revenues $1,732,686 $1,492,156 (3) 16% $1,663,107 4%
Net revenues $1,690,111 $1,459,941 (3) 16% $1,624,547 4%
Pre-tax income (2) $278,440 $236,422 18% $275,014 1%
Net income (2) $193,489 $171,670 13% $183,424 5%
           
Earnings per common share:          
Basic $1.34 $1.21 11% $1.27 6%
Diluted $1.31 $1.19 10% $1.24 6%
           
Non-GAAP measures: (1)          
Adjusted pre-tax income (2) $316,781 $268,746 18% $278,380 14%
Adjusted net income (2) $217,260 $193,814 12% $185,511 17%
Adjusted basic earnings per common share $1.51 $1.37 10% $1.29 17%
Adjusted diluted earnings per common share $1.47 $1.34 10% $1.26 17%


  Twelve months ended
  September 30,
2017
September 30,
2016
%
Change
  ($ in thousands, except per share amounts)
Total revenues $6,524,875 $5,521,120 (3) 18%
Net revenues $6,371,097 $5,405,064 (3) 18%
Pre-tax income (2) $925,346 $800,643 16%
Net income (2) $636,235 $529,350 20%
       
Earnings per common share:      
Basic $4.43 $3.72 19%
Diluted $4.33 $3.65 19%
       
Non-GAAP measures: (1)      
Adjusted pre-tax income (2) $1,119,087 $861,349 30%
Adjusted net income (2) $768,107 $569,486 35%
Adjusted basic earnings per common share $5.35 $4.01 33%
Adjusted diluted earnings per common share $5.23 $3.93 33%


Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
  Three months ended
  September 30,
2017
September 30,
2016 (3)
%
Change
June 30,
2017
%
Change
  (in thousands, except per share amounts)
Revenues:          
     Securities commissions and fees $1,026,505 $923,859 11% $1,017,908 1%
     Investment banking 130,682 105,184 24% 104,191 25%
     Investment advisory and related administrative fees 127,088 104,530 22% 117,378 8%
     Interest 222,576 172,477 29% 204,224 9%
     Account and service fees 181,418 137,641 32% 174,084 4%
     Net trading profit 22,110 25,212 (12)% 23,404 (6)%
     Other 22,307 23,253 (4)% 21,918 2%
          Total revenues 1,732,686 1,492,156 16% 1,663,107 4%
     Interest expense (42,575) (32,215) 32% (38,560) 10%
          Net revenues 1,690,111 1,459,941 16% 1,624,547 4%
Non-interest expenses:          
     Compensation, commissions and benefits 1,103,824 961,388 15% 1,082,382 2%
     Communications and information processing 84,914 67,409 26% 77,819 9%
     Occupancy and equipment costs 50,680 43,950 15% 46,507 9%
     Clearance and floor brokerage 12,533 12,005 4% 12,296 2%
     Business development 38,740 35,884 8% 39,305 (1)%
     Investment sub-advisory fees 21,450 16,064 34% 20,133 7%
     Bank loan loss provision/(benefit) (110) 1,176 NM 6,209 NM
     Acquisition-related expenses 877 19,374 (95)% 3,366 (74)%
     Losses on extinguishment of debt 37,464 NM NM
     Other 57,520 59,782 (4)% 59,589 (3)%
          Total non-interest expenses 1,407,892 1,217,032 16% 1,347,606 4%
Income including noncontrolling interests and before provision for income taxes 282,219 242,909 16% 276,941 2%
     Provision for income taxes 84,951 64,752 31% 91,590 (7)%
          Net income including noncontrolling interests 197,268 178,157 11% 185,351 6%
          Net income attributable to noncontrolling interests 3,779 6,487 (42)% 1,927 96%
          Net income attributable to Raymond James Financial, Inc. $193,489 $171,670 13% $183,424 5%
           
Earnings per common share – basic $1.34 $1.21 11% $1.27 6%
Earnings per common share – diluted $1.31 $1.19 10% $1.24 6%
Weighted-average common shares outstanding – basic 143,913 141,381   143,712  
Weighted-average common and common equivalent shares outstanding – diluted 147,761 144,487   147,103  


Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
  Twelve months ended
  September 30,
2017
September 30,
2016 (3)
%
Change
  (in thousands, except per share amounts)
Revenues:      
     Securities commissions and fees $4,020,910 $3,498,615 15%
     Investment banking 398,675 304,155 31%
     Investment advisory and related administrative fees 462,989 393,346 18%
     Interest 802,126 640,397 25%
     Account and service fees 667,274 511,326 30%
     Net trading profit 81,880 91,591 (11)%
     Other 91,021 81,690 11%
          Total revenues 6,524,875 5,521,120 18%
     Interest expense (153,778) (116,056) 33%
          Net revenues 6,371,097 5,405,064 18%
Non-interest expenses:      
     Compensation, commissions and benefits 4,228,387 3,624,607 17%
     Communications and information processing 310,961 279,746 11%
     Occupancy and equipment costs 190,737 167,455 14%
     Clearance and floor brokerage 48,586 42,732 14%
     Business development 154,926 148,413 4%
     Investment sub-advisory fees 78,656 59,930 31%
     Bank loan loss provision 12,987 28,167 (54)%
     Acquisition-related expenses 17,995 40,706 (56)%
     Losses on extinguishment of debt 45,746 NM
     Other 354,138 201,364 76%
          Total non-interest expenses 5,443,119 4,593,120 19%
Income including noncontrolling interests and before provision for income taxes 927,978 811,944 14%
     Provision for income taxes 289,111 271,293 7%
          Net income including noncontrolling interests 638,867 540,651 18%
          Net income attributable to noncontrolling interests 2,632 11,301 (77)%
          Net income attributable to Raymond James Financial, Inc. $636,235 $529,350 20%
       
Earnings per common share – basic $4.43 $3.72 19%
Earnings per common share – diluted $4.33 $3.65 19%
Weighted-average common shares outstanding – basic 143,275 141,773  
Weighted-average common and common equivalent shares outstanding – diluted 146,647 144,513  


Raymond James Financial, Inc.
Segment Results
(Unaudited)
  Three months ended
  September 30,
2017
September 30,
2016
%
Change
June 30,
2017
%
Change
  ($ in thousands)
Net revenues:          
     Private Client Group $1,169,082 $963,349 21% $1,127,285 4%
     Capital Markets 265,587 285,835 (3) (7)% 258,909 3%
     Asset Management 131,432 106,371 24% 125,664 5%
     RJ Bank 162,797 133,726 22% 150,487 8%
     Other (4) (4,958) (7,313) 32% (7,251) 32%
     Intersegment eliminations (33,829) (22,027)   (30,547)  
          Total net revenues $1,690,111 $1,459,941 16% $1,624,547 4%
           
Pre-tax income/(loss): (2)          
     Private Client Group $142,269 $106,281 34% $127,951 11%
     Capital Markets 43,934 53,149 (17)% 34,607 27%
     Asset Management 48,760 35,162 39% 43,270 13%
     RJ Bank 113,281 97,367 16% 99,990 13%
     Other (4) (69,804) (55,537) (26)% (30,804) (127)%
          Pre-tax income $278,440 $236,422 18% $275,014 1%


  Twelve months ended
  September 30,
2017
September 30,
2016
%
Change
  ($ in thousands)
       
Net revenues:      
     Private Client Group $4,421,633 $3,616,479 22%
     Capital Markets 1,013,683 1,001,716 (3) 1%
     Asset Management 487,658 404,349 21%
     RJ Bank 592,670 493,966 20%
     Other (4) (29,870) (31,692) 6%
     Intersegment eliminations (114,677) (79,754)  
          Total net revenues $6,371,097 $5,405,064 18%
       
Pre-tax income/(loss): (2)      
     Private Client Group $372,950 $340,564 10%
     Capital Markets 141,236 139,173 1%
     Asset Management 171,736 132,158 30%
     RJ Bank 409,303 337,296 21%
     Other (4) (169,879) (148,548) (14)%
          Pre-tax income $925,346 $800,643 16%


Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
           
  Three months ended
  September 30,
2017
September 30,
2016
%
Change
June 30,
2017
%
Change
  ($ in thousands)
Securities commissions and fees by segment:          
Private Client Group $933,720 $792,279 18% $902,483 3%
Capital Markets:          
     Equity 40,112 53,102 (24)% 58,864 (32)%
     Fixed Income 61,895 84,997 (27)% 65,820 (6)%
Intersegment eliminations (9,222) (6,519)   (9,259)  
          Total securities commissions and fees $1,026,505 $923,859 11% $1,017,908 1%
           
Investment banking revenues:          
Equity:          
     Underwritings $16,892 $23,754 (29)% $19,172 (12)%
     Mergers & acquisitions and advisory fees 84,503 46,427 82% 62,983 34%
Fixed Income 11,540 10,779 7% 12,296 (6)%
Tax credit funds syndication fees 18,214 23,904 (24)% 9,581 90%
Other (467) 320 NM 159 NM
          Total investment banking revenues $130,682 $105,184 24% $104,191 25%
           
Other revenues:          
Realized/unrealized gain attributable to private equity investments $6,696 $5,851 14% $6,603 1%
Other 15,611 17,402 (3) (10)% 15,315 2%
     Total other revenues $22,307 $23,253 (3) (4)% $21,918 2%
           
Net income/(loss) attributable to noncontrolling interests:          
Private equity investments $5,958 $6,892 (14)% $3,536 68%
Consolidation of low-income housing tax credit funds (3,560) (1,896) (3) (88)% (2,820) (26)%
Other 1,381 1,491 (7)% 1,211 14%
     Total net income attributable to noncontrolling interests $3,779 $6,487 (3) (42)% $1,927 96%


Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
  Twelve months ended
  September 30,
2017
September 30,
2016
%
Change
  ($ in thousands)
Securities commissions and fees by segment:      
Private Client Group $3,566,304 $2,978,406 20%
Capital Markets:      
     Equity 222,942 228,346 (2)%
     Fixed Income 267,749 316,144 (15)%
Intersegment eliminations (36,085) (24,281)  
          Total securities commissions and fees $4,020,910 $3,498,615 15%
       
Investment banking revenues:      
Equity:      
     Underwritings $72,845 $54,492 34%
     Mergers & acquisitions and advisory fees 228,422 148,503 54%
Fixed Income 43,234 41,024 5%
Tax credit funds syndication fees 54,098 59,424 (9)%
Other 76 712 (89)%
     Total investment banking revenues $398,675 $304,155 31%
       
Other revenues:      
Realized/unrealized gain attributable to private equity investments $31,386 $23,735 32%
Other 59,635 57,955 (3) 3%
     Total other revenues $91,021 $81,690 (3) 11%
       
Net income/(loss) attributable to noncontrolling interests:      
Private equity investments $11,695 $15,701 (26)%
Consolidation of low-income housing tax credit funds (13,922) (9,865) (3) (41)%
Other 4,859 5,465 (11)%
     Total net income attributable to noncontrolling interests $2,632 $11,301 (3) (77)%


Raymond James Financial, Inc.
Selected Key Metrics
(Unaudited)
Financial metrics:
  For the period ended
  September 30,
2017
September 30,
2016 (3)
June 30,
2017
Total assets $34.9 bil. (5) $31.5 bil. $33.4 bil.
Total equity (2) $5.6 bil. $4.9 bil. $5.4 bil.
Book value per share $38.74 $34.73 $37.46
Return on equity - quarter (6) 14.1% 14.2% 13.8%
Adjusted return on equity - quarter (1) (6) 15.8% 16.0% 14.0%
Return on equity - year to date (6) 12.2% 11.3% 11.5%
Adjusted return on equity - year to date (1) (6) 14.5% 12.1% 14.1%
       
Common equity tier 1 capital ratio 23.0% (5) 20.6% 22.3%
Tier 1 capital ratio 23.0% (5) 20.6% 22.3%
Total capital ratio 23.9% (5) 21.6% 23.3%
Tier 1 leverage ratio 15.0% (5) 15.0% 15.1%
       
Total compensation ratio - quarter (7) 65.3% 65.9% 66.6%
Total compensation ratio - year to date (7) 66.4% 67.1% 66.8%
Pre-tax margin on net revenues - quarter (8) 16.5% 16.2% 16.9%
Adjusted pre-tax margin on net revenues - quarter (1) (8) 18.7% 18.4% 17.1%
Pre-tax margin on net revenues - year to date (8) 14.5% 14.8% 13.8%
Adjusted pre-tax margin on net revenues - year to date (1) (8) 17.6% 15.9% 17.1%
Effective tax rate - quarter 30.1% 27.4% 33.3%
Effective tax rate - year to date 31.2% 33.9% 31.6%
       
Private Client Group financial advisors:      
  As of
  September 30,
2017 (9)
September 30,
2016
June 30,
2017
Employees 3,041 3,098 2,996
Independent contractors 4,305 4,048 4,289
     Total advisors 7,346 7,146 7,285


Client asset metrics:
  As of
  September 30,
2017
September 30,
2016
%
Change
June 30,
2017
%
Change
  ($ in billions)
Client assets under administration $692.9 $604.4 15% $664.4 4%
Private Client Group assets under administration $659.5 $574.1 15% $631.5 4%
Private Client Group assets in fee-based accounts $294.5 $231.0 27% $276.9 6%
Financial assets under management $96.4 $77.0 25% $91.0 6%
Clients’ domestic cash sweep balances (10) $43.0 $43.9 (2)% $43.3 (1)%


Raymond James Bank
Selected Key Metrics
(Unaudited)
Selected operating data:
  Three months ended Twelve months ended
  September 30,
2017
September 30,
2016
%
Change
June 30,
2017
%
Change
September 30,
2017
September 30,
2016
%
Change
  ($ in thousands) ($ in thousands)
Net interest income $156,492 $127,518 23% $145,521 8% $574,796 $478,690 20%
Bank loan loss provision/(benefit) $(110) $1,176 NM $6,209 NM $12,987 $28,167 (54)%
Net charge-offs $1,606 $488 229% $1,161 38% $20,652 $3,009 586%
Net interest margin (% earning assets) 3.11% 3.04% 2% 3.14% (1)% 3.10% 3.04% 2%


Financial metrics: As of
  September 30,
2017
September 30,
2016
June 30,
2017
  ($ in thousands)
Total assets (11) $20,882,722 $17,012,686 $20,179,273
Total equity $1,823,342 $1,658,663 $1,772,418
Total loans, net $17,006,795 $15,210,735 $16,630,191
Total deposits (11) $17,975,833 $14,615,342 $17,418,127
Available-for-sale (AFS) securities, at fair value $2,082,111 $734,233 $1,878,802
       
Common equity tier 1 capital ratio 12.5% (5) 12.7% 12.4%
Tier 1 capital ratio 12.5% (5) 12.7% 12.4%
Total capital ratio 13.8% (5) 14.0% 13.7%
Tier 1 leverage ratio 8.9% (5) 9.9% 9.3%
       
Commercial and industrial loans $7,385,910 $7,470,373 $7,253,771
Commercial Real Estate (CRE) and CRE construction loans $3,218,971 $2,676,789 $3,194,555
Residential mortgage loans $3,148,730 $2,441,569 $2,962,917
Securities based loans $2,386,697 $1,904,827 $2,279,389
Tax-exempt loans $1,017,791 $740,944 $986,790
Loans held for sale $67,891 $202,967 $166,609
       
Credit Metrics:      
Allowance for loan losses $190,442 $197,378 $191,603
Allowance for loan losses (as % of loans) 1.11% 1.30% 1.15%
Total nonperforming assets $43,699 $85,704 $47,328
Nonperforming assets (as % of total assets) 0.21% 0.50% 0.23%
Total criticized loans (12) $264,664 $299,480 $270,659


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.  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. Non-GAAP measures for the three and twelve months ended September 30, 2016 have been revised from those previously reported to conform to our current presentation, which includes amounts related to the Jay Peak settlement.


  Three months ended Twelve months ended
  September 30,
2017
September 30,
2016
June 30,
2017
September 30,
2017
September 30,
2016
  ($ in thousands, except per share amounts)
Net income (2) $193,489 $171,670 $183,424 $636,235 $529,350
Non-GAAP adjustments:          
Acquisition-related expenses (13) 877 19,374 3,366 17,995 40,706
Losses on extinguishment of debt (14) 37,464 45,746
Jay Peak settlement (15) 12,950 130,000 20,000
          Sub-total pre-tax non-GAAP adjustments 38,341 32,324 3,366 193,741 60,706
     Tax effect of non-GAAP adjustments (14,570) (10,180) (1,279) (61,869) (20,570)
Non-GAAP adjustments, net of tax 23,771 22,144 2,087 131,872 40,136
Adjusted net income $217,260 $193,814 $185,511 $768,107 $569,486
           
Pre-tax income (2) $278,440 $236,422 $275,014 $925,346 $800,643
Pre-tax non-GAAP adjustments (as detailed above) 38,341 32,324 3,366 193,741 60,706
Adjusted pre-tax income $316,781 $268,746 $278,380 $1,119,087 $861,349
Pre-tax margin on net revenues (8) 16.5% 16.2% 16.9% 14.5% 14.8%
Adjusted pre-tax margin on net revenues (8) 18.7% 18.4% 17.1% 17.6% 15.9%
           
Earnings per common share:          
     Basic $1.34 $1.21 $1.27 $4.43 $3.72
     Diluted $1.31 $1.19 $1.24 $4.33 $3.65
Adjusted earnings per common share:          
     Adjusted basic $1.51 $1.37 $1.29 $5.35 $4.01
     Adjusted diluted $1.47 $1.34 $1.26 $5.23 $3.93
           
Average equity (16) $5,485,493 $4,833,227 $5,298,510 $5,235,231 $4,695,588
Adjusted average equity (16) $5,497,378 $4,844,300 $5,299,553 $5,310,489 $4,707,959
Return on equity (6) 14.1% 14.2% 13.8% 12.2% 11.3%
Adjusted return on equity (6) 15.8% 16.0% 14.0% 14.5% 12.1%

Footnotes

  1. These are non-GAAP measures. See the schedule on the previous page of this release for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures and for more information on these measures.
  2. Excludes noncontrolling interests.
  3. As a result of our October 1, 2016 adoption of the new consolidation guidance, we deconsolidated a number of tax credit fund VIEs that had been previously consolidated. Certain prior period amounts have been revised from those reported in the prior periods to conform to the current presentation. There was no net impact on our Condensed Consolidated Statements of Income and Comprehensive Income for the prior period as the net change in revenues, interest and other expenses were offset by the impact of the deconsolidation on the net income attributable to noncontrolling interests. See our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (available at www.sec.gov) for more information.
  4. The Other segment includes the results of our private equity activities, as well as certain corporate overhead costs of Raymond James Financial, Inc., including the interest costs on our public debt, losses on extinguishment of debt and the acquisition and integration costs associated with certain acquisitions.
  5. Estimated.
  6. Computed by dividing annualized net income attributable to Raymond James Financial, Inc. by average equity for each respective period or, in the case of adjusted return on equity, computed by dividing annualized adjusted net income attributable to Raymond James Financial, Inc. by adjusted average equity for each respective period.
  7. Computed by dividing compensation, commissions and benefits expense by net revenues for each respective period.
  8. Computed by dividing the pre-tax income attributable to Raymond James Financial, Inc. by net revenues for each respective period or, in the case of adjusted pre-tax margin on net revenues, computed by dividing adjusted pre-tax income attributable to Raymond James Financial, Inc. by net revenues for each respective period.
  9. During the year ended September 30, 2017, we refined the criteria to determine our financial advisor population, which resulted in a decrease in our previously reported counts of approximately 100 advisors as of our date of adoption. The impact of the change in our methodology did not have a significant impact on the prior periods, and thus we have not revised the number of financial advisors reported in prior periods.
  10. Domestic broker-dealer client cash sweep balances are deposited or invested in the Raymond James Bank Deposit Program, client interest program and/or money market funds, depending on the clients’ elections.
  11. Includes affiliate deposits.
  12. Represents the loan balance for all loans within the held for investment loan portfolio 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.
  13. Acquisition-related expenses associated with our announced acquisition of Scout Investments and Reams Asset Management as well as the 2016 acquisitions of the U.S. Private Client Services unit of Deutsche Bank Wealth Management, MacDougall, MacDougall & MacTier, Inc., and Mummert & Company Corporate Finance GmbH.
  14. Losses on extinguishment of debt include a make-whole premium and the acceleration of unamortized debt issuance costs associated with the early extinguishment of our 8.60% Senior Notes due 2019 (September 2017) and 6.90% Senior Notes due 2042 (March 2017), respectively.
  15. Other expenses include legal expenses associated with the Jay Peak settlement. For further information see our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (available at www.sec.gov).
  16. For the quarter, computed by adding the total equity attributable to Raymond James Financial, Inc. as of the date indicated to the prior quarter-end total, and dividing by two. For the year-to-date period, computed by adding the total equity attributable to Raymond James Financial, Inc. as of each quarter-end date during the indicated year-to-date period to the beginning of the year total and dividing by five. Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period.