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raymondjames.com/news-and-media/press-releases
April 25, 2018

Raymond James Financial reports second quarter fiscal 2018 results

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  • Record quarterly net revenues of $1.81 billion, up 16% over the prior year’s fiscal second quarter and 5% over the preceding quarter
  • Record quarterly net income of $242.8 million, or $1.63 per diluted share
  • Quarter-end records for client assets under administration of $729.5 billion and financial assets under management of $132.3 billion despite the sequential decline in the S&P 500 Index
  • Record number of Private Client Group financial advisors of 7,604 and record net loans at Raymond James Bank of $18.2 billion
  • Annualized return on equity for the quarter of 16.7%

ST. PETERSBURG, Fla - Raymond James Financial, Inc. (NYSE: RJF) today reported record net revenues of $1.81 billion and record net income of $242.8 million, or $1.63 per diluted share, for the fiscal second quarter ended March 31, 2018. The record results generated in the quarter were primarily attributable to growth of Private Client Group assets in fee-based accounts, financial assets under management and net loans at Raymond James Bank. Results in the quarter were also helped by strong investment banking revenues and the effects of higher short-term interest rates.

For the first six months of the fiscal year, record net revenues of $3.54 billion increased 16%, record net income of $361.7 million increased 39%, and adjusted net income of $481.7 million(1)increased 32% compared to the first half of fiscal 2017.

“The record net revenues and net income generated in the quarter were the result of our consistent success retaining and recruiting financial advisors in the Private Client Group,” said Chairman and CEO Paul Reilly. “Furthermore, our results for the balance of the fiscal year should continue to be aided by higher short-term interest rates and a lower corporate tax rate.”

Segment Results

Private Client Group

  • Record quarterly net revenues of $1.27 billion, up 17% over the prior year’s fiscal second quarter and 3% over the preceding quarter
  • Record quarterly pre-tax income of $157.6 million, a substantial increase over the prior year’s fiscal second quarter, which included a large legal charge, and 2% over the preceding quarter
  • Private Client Group assets under administration of $694.8 billion, growth of 14% over March 2017 and flat compared to December 2017
  • Private Client Group assets in fee-based accounts of $325.1 billion, an increase of 25% over March 2017 and 3% over December 2017

Record quarterly results in the Private Client Group segment were largely driven by growth in Private Client Group assets in fee-based accounts and higher short-term interest rates, which lifted fees earned on balances in the Raymond James Bank Deposit Program. The number of financial advisors reached a record 7,604, reflecting net additions of 382 advisors over March 2017 and 67 over December 2017. At the end of the quarter, Private Client Group assets in fee-based accounts represented 47% of the segment’s total assets under administration.

“Our client-focused culture, robust product offering, and extensive technology investments resonate with our existing and prospective financial advisors across all our affiliation options,” said Reilly.

Capital Markets

  • Quarterly net revenues of $230.6 million, down 10% compared to the prior year’s fiscal second quarter and up 6% compared to the preceding quarter
  • Quarterly pre-tax income of $16.2 million, down 61% compared to the prior year’s fiscal second quarter and up 237% over the preceding quarter
  • Investment banking revenues of $105.8 million, up 3% over the prior year’s fiscal second quarter and 63% over the preceding quarter

Following a slow start, a rebound in M&A revenues in March led to growth in total investment banking revenues during the quarter. Meanwhile, the segment’s results were negatively impacted by continued market-driven weakness in both institutional equity and fixed income commissions.

“The flattening yield curve and relatively low interest rate volatility were significant headwinds for the Fixed Income business,” said Reilly. “However, the market environment remains conducive for the M&A business, and the pipelines for the public finance and tax credit funds businesses have started to recover following the passage of tax reform in December.”

Asset Management

  • Record quarterly net revenues of $163.2 million, up 40% over the prior year’s fiscal second quarter and 8% over the preceding quarter
  • Quarterly pre-tax income of $55.9 million, an increase of 48% over the prior year’s fiscal second quarter and down 3% compared to the preceding quarter
  • Financial assets under management of $132.3 billion, reflecting growth of 55% compared to March 2017 and 2% compared to December 2017

Increased utilization of managed accounts in the Private Client Group segment contributed to sequential growth of financial assets under management. The year-over-year increase in financial assets under management was aided by the addition of $27 billion of assets from the acquisition of Scout Investments and its Reams Asset Management division in November 2017.

Raymond James Bank

  • Record quarterly net revenues of $178.7 million, up 26% over the prior year’s fiscal second quarter and 8% over the preceding quarter
  • Record quarterly pre-tax income of $118.1 million, up 28% over the prior year’s fiscal second quarter and 3% over the preceding quarter
  • Record net loans at Raymond James Bank of $18.2 billion, representing growth of 13% over March 2017 and 3% over December 2017
  • The Bank’s net interest margin increased to 3.21% for the quarter, up 13 basis points over both the prior year’s fiscal second quarter and the preceding quarter

The Bank’s record results were lifted by broad-based loan growth and expansion of the Bank’s net interest margin. The Bank’s credit metrics continued to improve, with nonperforming assets declining to 0.17% of total assets and criticized loans declining to 1.30% of total loans. The bank loan loss provision of $7.5 million for the quarter was largely the result of strong net loan growth and additional reserves related to rising short-term interest rates.

“We are pleased with the record results this quarter, particularly given the seasonal factors that typically create headwinds at the beginning of each calendar year,” said Reilly.

A conference call to discuss the results will take place tomorrow morning, Thursday, April 26th, at 8:15 a.m. ET. For a listen-only connection, please call: 877-666-1952 (conference code: 5981299), 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 July 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 7,600 financial advisors in 3,000 locations throughout the United States, Canada and overseas. Total client assets are $730 billion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available atwww.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 changes in tax rules 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 % change from
$ in thousands, except per share amounts March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
Net revenues $1,812,632 $1,563,637 $1,726,161 16% 5%
Pre-tax income (2) $331,371 $165,513 $311,243 100% 6%
Net income (2) $242,847 $112,755 $118,842 115% 104%
           
Earnings per common share:          
Basic $1.67 $0.78 $0.82 114% 104%
Diluted $1.63 $0.77 $0.80 112% 104%
           
Non-GAAP measures: (1)          
Adjusted pre-tax income (2) (1) $274,881 $315,170 21% 5%
Adjusted net income (2) (1) $188,468 $238,838 29% 2%
Adjusted basic earnings per common share (1) $1.31 $1.65 27% 1%
Adjusted diluted earnings per common share (1) $1.28 $1.61 27% 1%
  Six months ended
$ in thousands, except per share amounts March 31,
2018
March 31,
2017
% change
Net revenues $3,538,793 $3,056,439 16%
Pre-tax income (2) $642,614 $371,892 73%
Net income (2) $361,689 $259,322 39%
       
Earnings per common share:      
Basic $2.49 $1.81 38%
Diluted $2.43 $1.77 37%
       
Non-GAAP measures: (1)      
Adjusted pre-tax income (2) $646,541 $523,926 23%
Adjusted net income (2) $481,685 $365,336 32%
Adjusted basic earnings per common share $3.32 $2.55 30%
Adjusted diluted earnings per common share $3.24 $2.49 30%


Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
  Three months ended % change from
$ in thousands, except per share amounts March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
Revenues:          
Securities commissions and fees $1,117,280 $992,112 $1,103,566 13% 1%
Investment banking 105,815 102,377 64,902 3% 63%
Investment advisory and related administrative fees 151,433 110,280 142,023 37% 7%
Interest income 248,846 192,544 231,729 29% 7%
Account and service fees 191,491 162,981 184,301 17% 4%
Net trading profit 14,037 15,811 19,870 (11)% (29)%
Other 28,332 24,209 19,201 17% 48%
     Total revenues 1,857,234 1,600,314 1,765,592 16% 5%
Interest expense (44,602) (36,677) (39,431) 22% 13%
     Net revenues 1,812,632 1,563,637 1,726,161 16% 5%
Non-interest expenses:          
Compensation, commissions and benefits 1,196,648 1,035,714 1,152,767 16% 4%
Communications and information processing 96,685 76,067 83,731 27% 15%
Occupancy and equipment costs 49,701 47,498 49,814 5%
Business development 42,806 41,519 33,793 3% 27%
Investment sub-advisory fees 23,121 17,778 22,321 30% 4%
Bank loan loss provision 7,549 7,928 1,016 (5)% 643%
Acquisition-related expenses 1,086 3,927 (100)% (100)%
Losses on extinguishment of debt 8,282 (100)%
Other 65,033 166,462 67,108 (61)% (3)%
     Total non-interest expenses 1,481,543 1,402,334 1,414,477 6% 5%
Income including noncontrolling interests and before provision for income taxes 331,089 161,303 311,684 105% 6%
Provision for income taxes 88,524 52,758 192,401 68% (54)%
Net income including noncontrolling interests 242,565 108,545 119,283 123% 103%
Net income/(loss) attributable to noncontrolling interests (282) (4,210) 441 93% NM
Net income attributable to Raymond James Financial, Inc. $242,847 $112,755 $118,842 115% 104%
           
Earnings per common share – basic $1.67 $0.78 $0.82 114% 104%
Earnings per common share – diluted $1.63 $0.77 $0.80 112% 104%
Weighted-average common shares outstanding – basic 145,385 143,367 144,469 1% 1%
Weighted-average common and common equivalent shares outstanding – diluted 149,037 146,779 148,261 2% 1%


Raymond James Financial, Inc.
Consolidated Statements of Income
(Unaudited)
  Six months ended
$ in thousands, except per share amounts March 31,
2018
March 31,
2017
% change
Revenues:      
Securities commissions and fees $2,220,846 $1,976,497 12%
Investment banking 170,717 163,802 4%
Investment advisory and related administrative fees 293,456 218,523 34%
Interest income 480,575 375,326 28%
Account and service fees 375,792 311,772 21%
Net trading profit 33,907 36,366 (7)%
Other 47,533 46,796 2%
     Total revenues 3,622,826 3,129,082 16%
Interest expense (84,033) (72,643) 16%
     Net revenues 3,538,793 3,056,439 16%
Non-interest expenses:      
Compensation, commissions and benefits 2,349,415 2,042,181 15%
Communications and information processing 180,416 148,228 22%
Occupancy and equipment costs 99,515 93,550 6%
Business development 76,599 76,881
Investment sub-advisory fees 45,442 37,073 23%
Bank loan loss provision 8,565 6,888 24%
Acquisition-related expenses 3,927 13,752 (71)%
Losses on extinguishment of debt 8,282 (100)%
Other 132,141 260,786 (49)%
     Total non-interest expenses 2,896,020 2,687,621 8%
Income including noncontrolling interests and before provision for income taxes 642,773 368,818 74%
Provision for income taxes 280,925 112,570 150%
Net income including noncontrolling interests 361,848 256,248 41%
Net income/(loss) attributable to noncontrolling interests 159 (3,074) NM
Net income attributable to Raymond James Financial, Inc. $361,689 $259,322 39%
Earnings per common share – basic $2.49 $1.81 38%
Earnings per common share – diluted $2.43 $1.77 37%
Weighted-average common shares outstanding – basic 144,920 142,732 2%
Weighted-average common and common equivalent shares outstanding – diluted 148,530 146,119 2%


Capital Markets
Raymond James Financial, Inc.
Segment Results
(Unaudited)
  Three months ended % change from
$ in thousands March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
Net revenues:          
     Private Client Group $1,271,815 $1,085,177 $1,233,051 17% 3%
     Capital Markets 230,616 256,171 216,665 (10)% 6%
     Asset Management 163,185 116,480 150,600 40% 8%
     RJ Bank 178,738 141,371 165,185 26% 8%
     Other (3) 1,832 (8,018) (2,920) NM NM
     Intersegment eliminations (33,554) (27,544) (36,420)    
          Total net revenues $1,812,632 $1,563,637 $1,726,161 16% 5%
           
Pre-tax income/(loss): (2)          
     Private Client Group $157,586 $29,372 $155,063 437% 2%
16,203 41,251 4,807 (61)% 237%
     Asset Management 55,866 37,797 57,399 48% (3)%
     RJ Bank 118,086 91,911 114,155 28% 3%
     Other (3) (16,370) (34,818) (20,181) 53% 19%
          Pre-tax income $331,371 $165,513 $311,243 100% 6%


  Six months ended
$ in thousands March 31,
2018
March 31,
2017
% change
Net revenues:      
     Private Client Group $2,504,866 $2,125,266 18%
     Capital Markets 447,281 489,187 (9)%
     Asset Management 313,785 230,562 36%
     RJ Bank 343,923 279,386 23%
     Other (3) (1,088) (17,661) 94%
     Intersegment eliminations (69,974) (50,301)  
          Total net revenues $3,538,793 $3,056,439 16%
Pre-tax income/(loss): (2)      
     Private Client Group $312,649 $102,730 204%
     Capital Markets 21,010 62,695 (66)%
     Asset Management 113,265 79,706 42%
     RJ Bank 232,241 196,032 18%
     Other (3) (36,551) (69,271) 47%
          Pre-tax income $642,614 $371,892 73%


Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
  Three months ended % change from
$ in thousands March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
Securities commissions and fees by segment:          
Private Client Group $1,022,209 $876,882 $991,054 17% 3%
Capital Markets:          
     Equity 46,164 59,647 53,371 (23)% (14)%
     Fixed Income 54,197 64,660 65,201 (16)% (17)%
Intersegment eliminations (5,289) (9,077) (6,060)    
          Total securities commissions and fees $1,117,281 $992,112 $1,103,566 13% 1%
           
Investment banking revenues:          
Equity:          
     Underwritings $12,811 $22,518 $8,955 (43)% 43%
     Mergers & acquisitions and advisory fees 72,474 53,762 42,998 35% 69%
Fixed Income 11,212 10,920 8,132 3% 38%
Tax credit funds syndication fees 9,318 15,177 4,817 (39)% 93%
          Total investment banking revenues $105,815 $102,377 $64,902 3% 63%
           
Other revenues:          
Realized/unrealized gains - private equity investments $10,641 $7,443 $6,940 43% 53%
Other 17,691 16,766 12,261 6% 44%
          Total other revenues $28,332 $24,209 $19,201 17% 48%
           
Net income/(loss) attributable to noncontrolling interests:          
Private equity investments $657 $166 $279 296% 135%
Low-income housing tax credit funds (2,817) (5,529) (2,779) 49% (1)%
Other 1,878 1,153 2,941 63% (36)%
          Total net income/(loss) attributable to noncontrolling interests $(282) $(4,210) $441 93% NM


Raymond James Financial, Inc.
Selected Operating Data
(Unaudited)
  Six months ended
$ in thousands March 31,
2018
March 31,
2017
% change
Securities commissions and fees by segment:      
Private Client Group $2,013,263 $1,730,101 16%
Capital Markets:      
     Equity 99,535 123,966 (20)%
     Fixed Income 119,398 140,034 (15)%
Intersegment eliminations (11,349) (17,604)
          Total securities commissions and fees $2,220,847 $1,976,497 12%
       
Investment banking revenues:      
Equity:      
     Underwritings $21,766 $37,165 (41)%
     Mergers & acquisitions and advisory fees 115,472 80,936 43%
Fixed Income 19,344 19,398
Tax credit funds syndication fees 14,135 26,303 (46)%
          Total investment banking revenues $170,717 $163,802 4%
       
Other revenues:      
Realized/unrealized gains - private equity investments $17,581 $18,087 (3)%
Other 29,952 28,709 4%
          Total other revenues $47,533 $46,796 2%
       
Net income/(loss) attributable to noncontrolling interests:      
Private equity investments $936 $2,201 (57)%
Low-income housing tax credit funds (5,596) (7,542) 26%
Other 4,819 2,267 113%
          Total net loss attributable to noncontrolling interests $159 $(3,074) NM


Raymond James Financial, Inc.
Selected Key Metrics
(Unaudited)
  For the period ended
Total company March 31,
2018
March 31,
2017
December 31,
2017
Total assets $36.0 bil.(4) $32.9 bil. $36.1 bil.
Total equity (2) $5.9 bil. $5.2 bil. $5.7 bil.
Book value per share (5) $40.82 $36.28 $39.25
Tangible book value per share (1) (5) $36.58 $33.04 $34.94
Return on equity - quarter (6) 16.7 % 8.8% 8.4%
Adjusted return on equity - quarter (1) (6) NA 14.4% 16.8%
Return on equity - year to date (6) 12.6% 10.2% 8.4%
Adjusted return on equity - year to date (1) (6) 16.6% 14.2% 16.8%
Total compensation ratio - quarter (7) 66.0% 66.2% 66.8%
Total compensation ratio - year to date (7) 66.4% 66.8% 66.8%
Pre-tax margin on net revenues - quarter (8) 18.3% 10.6% 18.0%
Adjusted pre-tax margin on net revenues - quarter (1) (8) NA 17.6% 18.3%
Pre-tax margin on net revenues - year to date (8) 18.2% 12.2% 18.0%
Adjusted pre-tax margin on net revenues - year to date (1) (8) 18.3% 17.1% 18.3%
Effective tax rate - quarter 26.7% 31.9% 61.7%(9)
Adjusted effective tax rate - quarter (1) NA NA 24.1%
       
Total company capital ratios:      
Tier 1 capital ratio 23.2%(4) 21.8% 22.3%
Total capital ratio 24.1%(4) 22.7% 23.3%
Tier 1 leverage ratio 15.0%(4) 14.5% 14.4%


Client asset metrics ($ in billions) As of % change from
  March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
Client assets under administration $729.5 $642.7 $727.2 14%
Private Client Group assets under administration $694.8 $611.0 $692.1 14%
Private Client Group assets in fee-based accounts $325.1 $260.5 $316.7 25% 3%
Financial assets under management $132.3 $85.6 $130.3 55% 2%


Private Client Group financial advisors As of
  March 31,
2018
March 31,
2017
December 31,
2017
Employees 3,053 3,001 3,038
Independent contractors 4,551 4,221 4,499
          Total advisors 7,604 7,222 7,537


Raymond James Financial, Inc.
Selected Key Metrics
(Unaudited)
Clients’ domestic cash balances ($ in millions) (10) As of
  March 31,
2018
March 31,
2017
December 31,
2017
Raymond James Bank Deposit Program (“RJBDP”)      
     RJ Bank $18,305 $16,002 $18,374
     Third-party banks 19,696 24,222 20,836
          Sub-total RJBDP 38,001 40,224 39,210
Money Market 2,004 1,874 1,710
Client Interest Program 3,367 3,743 3,334
          Total $43,372 $45,841 $44,254


Raymond James Bank ($ in thousands) As of
  March 31,
2018
March 31,
2017
December 31,
2017
Total assets (11) $21,939,760 $19,178,772 $21,866,592
Total equity $1,910,859 $1,732,882 $1,821,615
Bank loans, net $18,150,913 $15,994,689 $17,697,298
Allowance for loan losses $194,852 $186,234 $191,269
Allowance for loan losses (as % of loans) 1.07% 1.17% 1.08%
Total nonperforming assets $38,316 $51,128 $41,632
Nonperforming assets (as % of total assets) 0.17% 0.27% 0.19%
Total criticized loans (12) $237,845 $215,104 $235,809
Criticized loans (as % of loans) 1.30% 1.33% 1.32%


($ in thousands) Three months ended % change from Six months ended
  March 31,
2018
March 31,
2017
December 31,
2017
March 31,
2017
December 31,
2017
March 31,
2018
March 31,
2017
% change
Bank loan loss provision $7,549 $7,928 $1,016 (5)% 643% $8,565 $6,888 24%
Net charge-offs $3,621 $19,487 $94 (81)% NM $3,715 $17,885 (79)%


Raymond James Bank ($ in thousands) As of
  March 31,
2018
March 31,
2017
December 31,
2017
RJ Bank capital ratios:      
Tier 1 capital ratio 12.5%(4) 12.4% 12.2%
Total capital ratio 13.8%(4) 13.7% 13.4%
Tier 1 leverage ratio 8.8%(4) 9.3% 8.6%


Raymond James Bank
Net Interest Analysis
(Unaudited)
  Three months ended
  March 31, 2018 March 31, 2017 December 31, 2017
$ in thousands Average
balance
Interest
inc./exp.
Average
yield/
cost
Average
balance
Interest
inc./exp.
Average
yield/
cost
Average
balance
Interest
inc./exp.
Average
yield/
cost
Interest-earning banking assets:                  
Cash $1,104,647 $4,155 1.53% $963,676 $1,885 0.79% $1,354,464 $4,432 1.30%
Available-for-sale securities 2,374,621 11,815 1.99% 1,216,339 5,231 1.72% 2,168,610 10,143 1.87%
Bank loans, net of unearned income:                  
Loans held for investment:                  
     Commercial and industrial (“C&I”) loans 7,553,398 78,171 4.14% 7,364,683 68,956 3.75% 7,413,409 73,792 3.89%
     Commercial real estate (“CRE”) construction loans 176,430 2,207 5.00% 140,960 1,522 4.32% 140,472 1,723 4.80%
     CRE loans 3,186,221 32,249 4.05% 2,790,332 23,691 3.40% 3,036,603 28,759 3.71%
     Tax-exempt loans (13) 1,148,144 7,355 3.39% 855,636 5,494 3.95% 1,039,814 6,706 3.42%
     Residential mortgage loans 3,329,165 25,743 3.09% 2,738,798 20,412 2.98% 3,245,333 24,790 3.06%
     Securities-based loans 2,572,407 25,452 3.96% 2,033,862 16,550 3.25% 2,471,054 23,240 3.68%
Loans held for sale 145,247 1,347 3.75% 137,523 1,161 3.47% 115,882 1,010 3.46%
          Total loans, net 18,111,012 172,524 3.86% 16,061,794 137,786 3.51% 17,462,567 160,020 3.65%
Federal Home Loan Bank stock (“FHLB”), Federal Reserve Bank of Atlanta (“FRB”) stock and other 146,257 1,321 3.66% 131,517 935 2.88% 130,817 1,400 4.25%
          Total interest-earning banking assets 21,736,537 189,815 3.54% 18,373,326 145,837 3.24% 21,116,458 175,995 3.32%
          Total interest-bearing banking liabilities 19,896,933 17,692 0.36% 16,698,339 7,326 0.18% 19,377,759 12,956 0.26%
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income $1,839,604 $172,123   $1,674,987 $138,511   $1,738,699 $163,039  
Net interest margin (net yield on interest-earning banking assets) 3.21% 3.08% 3.08%


  Six months ended March 31,
  2018 2017
$ in thousands Average
balance
Interest
inc./exp.
Average
yield/cost
Average
balance
Interest
inc./exp.
Average
yield/cost
Interest-earning banking assets:            
Cash $1,230,928 $8,587 1.40% $934,459 $3,129 0.67%
Available-for-sale securities 2,270,483 21,958 1.93% 1,042,712 8,308 1.59%
Bank loans, net of unearned income            
Loans held for investment:            
     C&I loans 7,482,634 151,963 4.02% 7,421,700 140,262 3.75%
     CRE construction loans 158,254 3,930 4.91% 136,687 3,027 4.38%
     CRE loans 3,110,590 61,008 3.88% 2,668,802 45,945 3.41%
     Tax-exempt loans (13) 1,093,384 14,061 3.41% 831,637 10,740 3.97%
     Residential mortgage loans 3,286,788 50,533 3.08% 2,647,948 38,976 2.91%
     Securities-based loans 2,521,174 48,692 3.82% 1,992,301 31,939 3.17%
Loans held for sale 130,403 2,357 3.62% 159,021 2,422 3.08%
     Total loans, net 17,783,227 332,544 3.76% 15,858,096 273,311 3.49%
FHLB stock, FRB stock and other 138,452 2,721 3.94% 151,889 1,863 2.46%
     Total interest-earning banking assets 21,423,090 365,810 3.43% 17,987,156 286,611 3.22%
     Total interest-bearing banking liabilities 19,634,493 30,648 0.31% 16,339,357 13,828 0.17%
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income $1,788,597 $335,162 $1,647,799 $272,783    
Net interest margin (net yield on interest-earning banking assets)     3.15%     3.07%


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. In the case of tangible book value per share, we believe that this measure is meaningful as it is a measure we and investors use to assess capital strength. 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.

  Three months ended Six months ended
$ in thousands, except per share amounts March 31,
2017
December 31,
2017
March 31,
2018
March 31,
2017
Net income (2) $112,755 $118,842 $361,689 $259,322
Non-GAAP adjustments:        
Acquisition-related expenses (14) 1,086 3,927 3,927 13,752
Losses on extinguishment of debt (15) 8,282 8,282
Jay Peak settlement (16) 100,000 130,000
          Sub-total pre-tax non-GAAP adjustments 109,368 3,927 3,927 152,034
     Tax effect on non-GAAP adjustments above (33,655) (1,100) (1,100) (46,020)
     Discrete impact of the Tax Act (9) 117,169 117,169
Total non-GAAP adjustments, net of tax 75,713 119,996 119,996 106,014
Adjusted net income $188,468 $238,838 $481,685 $365,336
Pre-tax income (2) $165,513 $311,243 $642,614 $371,892
Pre-tax non-GAAP adjustments (as detailed above) 109,368 3,927 3,927 152,034
Adjusted pre-tax income $274,881 $315,170 $646,541 $523,926
Pre-tax margin on net revenues (8) 10.6% 18.0% 18.2% 12.2%
Adjusted pre-tax margin on net revenues (8) 17.6% 18.3% 18.3>% 17.1%
Earnings per common share:        
Basic $0.78 $0.82 $2.49 $1.81
Diluted $0.77 $0.80 $2.43 $1.77
Adjusted earnings per common share:        
Adjusted basic $1.31 $1.65 $3.32 $2.55
Adjusted diluted $1.28 $1.61 $3.24 $2.49
Average equity (17) $5,144,313 $5,639,231 $5,739,816 $5,068,391
Adjusted average equity (17) $5,252,609 $5,699,299 $5,819,814 $5,153,967
Return on equity (6) 8.8% 8.4% 12.6% 10.2%
Adjusted return on equity (6) 14.4% 16.8% 16.6% 14.2%
  As of
$ in thousands, except per share amounts March 31,
2018
March 31,
2017
December 31,
2017
Total equity (2) $5,940,987 $5,207,748 $5,696,748
Non-GAAP adjustments:      
Goodwill and identifiable intangible assets, net of related deferred taxes 616,922 464,680 $624,655
Tangible total equity $5,324,065 $4,743,068 $5,072,093
Common shares outstanding 145,552 143,543 145,154
Book value per share (5) $40.82 $36.28 $39.25
Tangible book value per share (5) $36.58 $33.04 $34.94
For the three months ended December 31, 2017($ in thousands) Pre-tax income including noncontrolling interests Provision for income taxes Effective tax rate
Less: discrete impact of the Tax Act (9) $311,684 $192,401 61.7%
As adjusted for discrete impact of the Tax Act   117,169  
    $75,232 24.1%


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. There are no non-GAAP adjustments for the three months ended March 31, 2018, therefore percent changes for the quarter are calculated based on GAAP results.
  2. Excludes noncontrolling interests.
  3. 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.
  4. Estimated.
  5. Computed by dividing total equity attributable to Raymond James Financial, Inc. by the number of common shares outstanding at the end of each respective period or, in the case of tangible book value, computed by dividing tangible total equity by the number of common shares outstanding at the end of each respective period. Tangible total equity is defined as total equity attributable to Raymond James Financial, Inc. less goodwill and intangible assets, net of related deferred taxes.
  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 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. The discrete impact of the Tax Act includes the estimated remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate and, to a lesser extent, a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. Our U.S. federal statutory tax rate will be 24.5% for the fiscal year ended September 30, 2018, which reflects a blended federal statutory rate of 35% for the fiscal first quarter and 21% for the remaining three fiscal quarters. The effective tax rate for the three months ended December 31, 2017 was 61.7% and reflected the $117 million estimated discrete impact of the Tax Act.
  10. Clients’ domestic cash balances are deposited or invested in the RJBDP, Client Interest Program and/or Money Markets, as a part of our sweep program, depending on 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. The average yield is presented on a tax-equivalent basis for each respective period.
  14. Represents acquisition-related expenses associated with our current year acquisition of Scout Investments and its Reams Asset Management division as well as our 2016 acquisitions of the U.S. Private Client Services unit of Deutsche Bank Wealth Management and MacDougall, MacDougall & MacTier, Inc.
  15. Losses on extinguishment of debt include the acceleration of unamortized debt issuance costs associated with the early extinguishment of our 6.90% Senior Notes due 2042.
  16. Other expenses include legal expenses associated with Jay Peak settlement. For further information see our Annual Report on Form 10-K for the year ended September 30, 2017 (available at www.sec.gov).
  17. 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 three. Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period.