Raymond James Financial, Inc. · NYSE:RJF
Raymond James Financial — Investor Day (June 2017)
126 slides from Raymond James Financial's investor day presentation, Jun 7, 2017
Slide 1: Raymond James Financial Analyst & Investor Day
Raymond James Financial Analyst & Investor Day June 7, 2017 1
Slide 2: Agenda
8:30 am Welcome & General Overview Paul Reilly 9:00 am Raymond James Bank Steve Raney 9:30 am Financial Review Jeff Julien 10:00 am Break 10:15 am Asset Management Group Jeff Dowdle 10:45 am Equity Capital Markets Jeff Trocin 11:15 am Private Client Group Dennis Zank AGENDA 2
Slide 3: Forward Looking Statements / Non-GAAP Measures
FORWARD LOOKING STATEMENTS / NON-GAAP MEASURES Certain statements made in this presentation and the associated webcast may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic ob
Slide 4: Welcome and General Overview
WELCOME AND GENERAL OVERVIEW Paul Reilly Chairman and CEO, Raymond James Financial 4
Slide 5: Overview of Raymond James Financial
OVERVIEW OF RAYMOND JAMES FINANCIAL *Pie chart above does not include intersegment eliminations or the Other segment 5 KEY FACTS (March 31, 2017) • Headquartered in St. Petersburg, FL • Founded in 1962; public since 1983 • Over 2,900 locations • United States, Canada and overseas • Approximately 7,2
Slide 6: Consecutive Profitable Quarters
117 CONSECUTIVE PROFITABLE QUARTERS Earnings P er Share ( B a s ic ) Trailing 10 Years 6
Slide 7: Values-Based Culture
OVERVIEW OF RAYMOND JAMES FINANCIAL VALUES-BASED CULTURE INTEGRITY INDEPENDENCE CONSERVATISM CLIENT FIRST 7
Slide 8: Unique Competitive Position
UNIQUE COMPETITIVE POSITION 8
Slide 9: Unique Competitive Position
UNIQUE COMPETITIVE POSITION 9
Slide 10: Diverse and Complementary Businesses
DIVERSE AND COMPLEMENTARY BUSINESSES 10 RAYMOND JAMES BANK PRIVATE CLIENT GROUP CAPITAL MARKETS ASSET MANAGEMENT Loans to institutional clients Research opinions Referrals Economic and industry research and perspectives Product due diligence and selection (AMS) Investment options (Eagle) High-qualit
Slide 11: Long-Term, Conservative View
LONG-TERM, CONSERVATIVE VIEW 11 >2X Regulatory Requirement *Total Capital Ratio **Represents cash and cash equivalents as of March 31, 2017 (a portion of which resides in deposit accounts at RJ Bank) that was available to RJF without restrictions
Slide 12: Acquisitions
ACQUISITIONS 12 Note: The acquisition of Scout Investments and Reams Asset Management was announced in April 2017 and is expected to close by the end of calendar 2017
Slide 13: Recognition of Growth, Stability
RECOGNITION OF GROWTH, STABILITY 13 Rating
Slide 14: Areas of Focus
SYSTEM UPGRADES OPERATIONS SUPPORT RECRUITING ACQUISITIONS AREAS OF FOCUS 14
Slide 15: Areas of Focus
15 SYSTEM UPGRADES OPERATIONS SUPPORT ACQUISITIONS RECRUITING
Slide 16: DOL Fiduciary Rule: Our Approach
• Minimize disruption • Maintain choice • Support advisors OUR APPROACH DOL FIDUCIARY RULE 16
Slide 17: Private Client Group Ranking – 2011
Rank Firm Client Assets ($ billions) FAs Average/FA ($ millions) 1 Morgan Stanley Smith Barney $1,497 17,400 $86.0 2 Bank of America/Merrill Lynch $1,438 18,963 $75.8 3 Wells Fargo & Co. $1,100 21,057 $52.2 4 UBS $714 7,084 $100.7 5 Schwab Institutional $596 6,000 $99.3 6 Edward Jones & Co. $517 12,
Slide 18: Private Client Group Rankings – 2016
PRIVATE CLIENT GROUP RANKINGS – 2016 *Only includes AUA for PCG; Note: Data from various dates based on availability. The definitions for AUA and FAs may be inconsistent across companies; rankings exclude RIA custodians but include independent B/Ds. Sources: Various company reports, company presenta
Slide 19: Advisor Satisfaction – 2016
ADVISOR SATISFACTION – 2016 2016 J.D. Power Financial Advisor Satisfaction Study Results 19 J.D. POWER INDEPENDENT ADVISOR SATISFACTION SURVEY J.D. POWER EMPLOYEE ADVISOR SATISFACTION SURVEY 1 Edward Jones 928 2 Raymond James & Associates 901 3 LPL Financial 755 Industry Average 722 4 Merrill Lynch
Slide 20: Advisor Regretted Attrition
ADVISOR REGRETTED ATTRITION FIRM OF CHOICE 20
Slide 21: PCG Growth Initiatives
PCG GROWTH INITIATIVES Advisor Support New Advisor Training – Advisor Mastery Program Geographic Expansion 21
Slide 22: Continued Technology Investment
Automation Collaboration Sophistication CONTINUED TECHNOLOGY INVESTMENT 22
Slide 23: Municipal Underwriting Negotiated Financings Ranking
Source: Top Municipal Underwriting Firms; Thomson Reuters Illustrative of Negotiated financings Rank Firm Par Amount ($ millions) Market Share (%) # of Issues 1 Citi 154,834.8 14.9 1,127 2 Bank of America Merrill Lynch 143,796.8 13.8 1,487 3 J P Morgan Securities LLC 111,662.2 10.7 909 4 Morgan Stan
Slide 24: Fixed Income – 2016 Municipal Underwriting Rankings
24 FIXED INCOME – 2016 MUNICIPAL UNDERWRITING RANKINGS Source: Thomson Reuters, 01/03/2017, National Lead Managed, Full to Book Rank Firm Par Amount ($ millions) Market Share (%) # of Issues 1 Bank of America Merrill Lynch 65,567.6 15.5 518 2 Citi 47,707.0 11.3 529 3 J P Morgan Securities LLC 41,358
Slide 25: Fixed Income Capital Markets Growth Initiatives
FIXED INCOME CAPITAL MARKETS GROWTH INITIATIVES Continued Product Development Fortify Depository Franchise Targeted Geographic Expansion Strategic M&A 25
Slide 26: Lead/Co-Manager Ranking – 2016
LEAD/CO-MANAGER RANKING – 2016 Relative to All Banks Relative to Growth Company Focused Peers Source: Dealogic; Data from 01/30/16 to 01/30/17; includes US Marketed IPO’s & FO’s for US Issuers raising greater than $10 million, excludes CEF’s & SPAC’s Deal Value # Rank Lead/Co-manager ($MM) Offerings
Slide 27: Bookrunner Ranking – 2016
BOOKRUNNER RANKING – 2016 Source: Dealogic; Data from 01/30/16 to 01/30/17; includes US Marketed IPO’s & FO’s for US Issuers raising greater than $10 million, excludes CEF’s & SPAC’s Deal Value # Rank Bookrunner ($MM) Offerings 1 JPMorgan 86,031.0 182 2 Bank of America Merrill Lynch 63,564.9 140 3 G
Slide 28: ECM Growth Initiatives
ECM GROWTH INITIATIVES New Teams and Products Global M&A Bought Deals and Lending Opportunities 28
Slide 29: Asset Management Current Standing
ASSET MANAGEMENT CURRENT STANDING Portfolio Performance 29
Slide 30: Asset Management Growth Initiatives
ASSET MANAGEMENT GROWTH INITIATIVES Acquisitions Products and Support Fee-based Penetration 30
Slide 31: Raymond James Bank Current Standing
RAYMOND JAMES BANK CURRENT STANDING 6.78% 9.34% 14.25% 15.99% 2011 2016 0.76% 1.04% 1.48% 1.52% 2011 2016 RETURN ON ASSETS RETURN ON EQUITY COMPARED TO ALL INSURED INSTITUTIONS* All Insured Institutions* RJ Bank *Data obtained from FDIC.gov for all insured institutions as well as RJ Bank for the qua
Slide 32: Raymond James Bank Initiatives
RAYMOND JAMES BANK INITIATIVES 32 Securities Based Lending Private Wealth Mortgage Securities Portfolio
Slide 33: Client-First, Values-Based Culture
CLIENT-FIRST, VALUES-BASED CULTURE INTEGRITY INDEPENDENCE CONSERVATISM CLIENT FIRST 33
Slide 34: Raymond James Bank
RAYMOND JAMES BANK Steve Raney, President & CEO, Raymond James Bank 34
Slide 35: Raymond James Bank
RAYMOND JAMES BANK RJ Bank’s vision is to maximize shareholder value through prudent investing, efficient operations and delivery of selected banking products that enhance client relationships while providing mutually beneficial opportunities for financial advisors and affiliates. Conservative Credi
Slide 36: Raymond James Bank Lending Strategy
RAYMOND JAMES BANK Targeted lending strategy focused on corporate, commercial real estate and retail loans. Corporate (C&I) & Tax-Exempt Residential Mortgages Typically target: • Institutional / Capital Markets clients • Relatively mature industries • Near investment grade ratings • EBITDA greater t
Slide 37: Net Loan Growth
RAYMOND JAMES BANK 37 6,548 7,992 8,821 10,964 12,988 15,211 15,995 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FYTD 17 NET LOAN GROWTH ($ millions) 18% 5 -YR CAGR* FYTD 17 is as of March 31, 2017. *5-year CAGR for period FY 2011 – FY 2016.
Slide 38: Raymond James Bank Revenues and Pre-Tax Income
3.43% 3.50% 3.25% 2.98% 3.07% 3.04% 3.07% RAYMOND JAMES BANK 173 240 268 243 279 337 196 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 392* 269 336 347 352 414 494 279 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 Net Revenues ($ millions) Pre-Tax Income ($ millions) 14% 5-YR CAGR 559* Net Interest Marg
Slide 39: Loan Composition
RAYMOND JAMES BANK Commercial and Industrial, 44.9% Commercial Real Estate, 18.5% Residential Mortgages, 17.4% Securities Based Loans, 12.7% Tax Exempt Loans, 5.3% Loans Held for Sale, 1.2% LOAN COMPOSITION (% of total loans, Q2 FY 2017) 100% = $16.0 billion (net) YEAR-OVER-YEAR GROWTH RATES 39 24.0
Slide 40: Average Yield
RAYMOND JAMES BANK 40 Average Yield FYTD Q2-FY16 vs Q2-FY17 FYTD Q2-FY 16 FYTD Q2-FY 17 ($ millions) Average Balance Average Yield Average Balance Average Yield Cash $834 0.42% $934 0.67% Securities $421 1.55% $1,043 1.59% C&I $7,079 3.65% $7,422 3.75% CRE $2,333 3.03% $2,805 3.45% Mortgage $2,077 2
Slide 41: RJ Bank Securities Portfolio Strategy
RAYMOND JAMES BANK 41 RJ BANK SECURITIES PORTFOLIO STRATEGY Substantially increases balance sheet liquidity and stable funding by adding agency-backed MBS/CMOs and FDIC-insured retail deposits to the balance sheet over the next five years. Current Plan Focus on Credit Risk Which is subject to change
Slide 42: Key Credit Trends
33,655 25,894 2,565 13,565 23,570 28,167 6,888 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FYTD 17 1.64% 1.18% 0.99% 0.69% 0.39% 0.50% 0.27% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FYTD 17 2.18% 1.81% 1.52% 1.33% 1.32% 1.30% 1.17% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FYTD 17 R
Slide 43: Interest Rate Risk Management Overview
RAYMOND JAMES BANK 43 Establish and maintain interest rate risk measuring system Formulate and execute strategies to manage interest rate risk (e.g. hedging strategies) Identify potential interest rate risk arising from existing or new products or activities Monitoring economic conditions and rate e
Slide 44: Duration Profile
RAYMOND JAMES BANK 44 DURATION PROFILE (March 31, 2017) ($ millions) Balance Duration (years) Weighted Average Life (years) Cash $1,134 - - Securities $1,583 2.9 3.8 C&I $7,281 0.4 2.7 CRE $3,002 0.1 2.7 Mortgage $2,816 3.1 5.7 SBL $2,061 0.1 3.4 Tax-Exempt $852 4.8 6.9 Other $450 - - Total $19,179
Slide 45: Contractual Maturities of Loan Portfolio
RAYMOND JAMES BANK 45 CONTRACTUAL MATURITIES OF LOAN PORTFOLIO (March 31, 2017) Due In ($ millions) < 1 Year 1 – 5 Years > 5 Years Total* Loans Held for Sale 0.6 27.1 166.6 194.3 C&I Loans 54.6 4,115.9 3,110.7 7,281.2 CRE Loans** 491.7 1,943.2 566.8 3,001.8 Tax-exempt Loans - 5.3 846.8 852.0 Residen
Slide 46: Economic Value of Equity Summary
RAYMOND JAMES BANK 46 ECONOMIC VALUE OF EQUITY (EVE) SUMMARY (March 31, 2017) Point-in-time analysis of current interest- earning assets and interest-earning liabilities Incorporates all cash flows over their estimated remaining lives, discounted at current rates Provides an indicator of futur
Slide 47: Hedging Summary
RAYMOND JAMES BANK 47 HEDGING SUMMARY (March 31, 2017) $ thousands Balance as of 3/31/2017 Balance $1,582,968 Average Life 3.79 Effective Duration 2.87 TOTAL PORTFOLIO LOANS MORTGAGE BACKED SECURITIES $ thousands No Change Shock up 200 bps % Change 12 Month Net Interest Income $653,467 $612,835 -6.2
Slide 48: Raymond James Bank Outlook
RAYMOND JAMES BANK Growth in the securities portfolio Resilient net interest margins; poised for rising rates given contained fixed-rate exposure with some offset from growing the fixed-rate securities portfolio OUTLOOK Continued growth in loan portfolio with focus on expanding synergies with PCG an
Slide 49: Financial Review
FINANCIAL REVIEW Jeff Julien CFO, Raymond James Financial 49
Slide 50: Track Record of Profitable Growth: Net Revenue
TRACK RECORD OF PROFITABLE GROWTH NET REVENUE GROWTH ($ millions) 50 3,334 3,807 4,485 4,861 5,200 5,403 3,056 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 3.9% 14.3% 14.2% 17.8% Net Revenues* Recurring Revenues* (%) 55.0% 55.5% 56.3% 61.3% 8.4% 64.3% 7.0% 66.2% 10.1% 5-YR CAGR Annual Growth *Include
Slide 51: Track Record of Profitable Growth: Pre-Tax Income
461 472 564 748 798 801 372 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 27.5% 2.2% 19.7% 32.6% 11.7% 5-YR CAGR PRE-TAX INCOME GROWTH GAAP ($ millions; %) 6.7% Annual Growth 0.3% 13.8% 12.4% 12.6% 15.4% 15.4% 14.8% 12.2% Pre-Tax Income (GAAP) Pre-Tax Margin* (GAAP) *Based on net revenues. **First six
Slide 52: Pre-Tax Income Growth Non-GAAP
15.1% 14.0% 14.4% 15.4% 15.4% 15.6% 17.1% 503 533 644 748 798 841 524 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 1. For a reconciliation of the GAAP to non-GAAP measures, please see the Schedules of Non-GAAP Information in the Appendix. 2. Based on net revenues. 3. There were no non-GAAP adjustment
Slide 53: Pre-Tax Income by Core Segment
PRE-TAX INCOME BY CORE SEGMENT ($ millions) 220 215 230 330 342 341 83 76 102 131 107 139 66 67 96 128 135 132 173 240 268 243 279 337 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Note: Historical figures may not tie perfectly to other financial reports due to accounting changes, etc. 53 PCG RJ Bank Capital
Slide 54: Return on Equity vs. Competitor Group
15.7 15.6 13.0 7.9 10.6 11.3 9.7 10.6 12.3 11.5 11.3 23.2 8.9 5.4 8.1 8.7 9.6 10.3 10.6 11.1 9.9 11.0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 RJF Competitor Group Median* * All numbers represented in bar chart are GAAP (for both RJF and Competitor Grou
Slide 55: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Total Assets $32.9 billion Equity Attributable to RJF $5.2 billion Consolidated Cash $2.6 billion Shares Outstanding 143.5 million Book Value Per Share $36.28 Leverage (Assets / RJF Equity) 6.3x Leverage Ex. RJ Bank 4.0x Total Capital Ratio 22.7% Tier 1 Leverage Ratio 14.5%
Slide 56: Conservative Financial Management: Capital Management
CONSERVATIVE FINANCIAL MANAGEMENT 56 20.7% 23.4% 19.8% 20.5% 27.4% 23.0% 23.0% 16.8% 22.0% 28.6% Q1 FY 2015 Q2 FY 2015 Q3 FY 2015 Q4 FY 2015 Q1 FY 2016 Q2 FY 2016 Q3 FY 2016 Q4 FY 2016 Q1 FY 2017 Q2 FY 2017 Earnings per Diluted Share (GAAP) Dividend per Share** Average Dividend Payout 22.5% $0.22 $1
Slide 57: Corporate Debt
57 Notes: chart as of May 2017 to account for the May 2017 debt issuance. $ millions; Coupon CONSERVATIVE FINANCIAL MANAGEMENT 2019 2024 2026 2046 $300 @ 8.60% $250 @ 5.625% $500 @ 3.625% $800 @ 4.95% $500 ~$97.6 million of annual interest expense $1.85 billion of senior debt Maturity Interest Expen
Slide 58: Domestic Client Cash Sweep Balances
CONSERVATIVE FINANCIAL MANAGEMENT 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% DOMESTIC CLIENT CASH SWEEP BALANCES* TO TOTAL CLIENT ASSETS UNDER ADMINISTRATION (%) 8.0% Average * Does not include cash held through non-money market mutual funds or cash equivalents, etc. Domestic retail business only
Slide 59: Domestic Client Cash Sweep Balances Flow
CONSERVATIVE FINANCIAL MANAGEMENT Brokerage Client Cash / Client Interest Program (~$4) Raymond James Bank Deposit Program (RJBDP) (~$40) Client Margin Loans (~$2) Raymond James Bank’s Earning Assets (~$163) Off-Balance Sheet Assets Earning Fees (~$26) Segregated Assets (~$21) to Raymond James Bank
Slide 60: Deposit Rates for Bank Deposit Program
CONSERVATIVE FINANCIAL MANAGEMENT DEPOSIT RATES FOR RAYMOND JAMES BANK DEPOSIT PROGRAM AND CLIENT INTEREST PROGRAM (May 18, 2017) 60 Note: Additional information about these programs, as well as information regarding SIPC coverage and FDIC insurance, is available on www.raymondjames.com.
Slide 61: Projected Benefit from Increase in Short-Term Interest Rates
61 PROJECTED BENEFIT FROM INCREASE IN SHORT-TERM INTEREST RATES March 2017 increase of 25 basis points had a favorable impact of ~$4 million in the fiscal second quarter of 2017 (March 31, 2017) Domestic Client Cash Sweep Balances $45.8 billion Benefit Received in Quarter Ended 3/31/17 Expected Futu
Slide 62: Financial Targets
FINANCIAL TARGETS FIRM TARGETS: PRE-TAX MARGIN*, COMPENSATION RATIO*, AND RETURN ON EQUITY Metric Target** Commentary Pre-Tax Margin* >17% • Targets by segment: PCG (11%+), Capital Markets (15%), Asset Management (30%+) Compensation Ratio* <67% Return on Equity 14%-15% *On net revenues. Note: The fi
Slide 63: Asset Management Group
ASSET MANAGEMENT GROUP Jeff Dowdle, President, Asset Management Group 63
Slide 64: Asset Management Group
ASSET MANAGEMENT GROUP 64 Balances as of 3/31/2017 Asset Management Services (“AMS”) $61.5 billion of financial assets under management $135 billion of assets in non- discretionary asset-based programs Offers discretionary and non- discretionary fee-based programs – both managed and non-manage
Slide 65: Financial Assets Under Management
ASSET MANAGEMENT GROUP 65 FINANCIAL ASSETS UNDER MANAGEMENT ($ billions) Note: FYTD 17 includes first two quarters of fiscal year 2017. *Excludes non-managed AMS fee-based assets 19.6 27.0 32.9 40.6 43.4 54.5 61.5 16.1 20.0 27.9 28.8 25.7 27.2 29.2 (3.6) (4.2) (4.8) (4.8) (3.9) (4.7) (5.1) FY 11 FY
Slide 66: Asset Management Group Net Revenue and Pre-Tax Income
66 67 96 128 135 132 80 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 227 237 293 370 392 404 231 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 160* 66 * First two quarters of fiscal 2017, annualized. Notes: Charts not to scale; FYTD 17 includes first two quarters of fiscal year 2017. 462* ASSET MANAGEM
Slide 67: Carillon Tower Advisers Platform
ASSET MANAGEMENT GROUP 67 CARILLON TOWER ADVISERS PLATFORM Raymond James Financial Future Affiliates Eagle Asset Management, Inc. Multi-Boutique Corporate Structure Business Services Legal Compliance Accounting Real Estate Human Resources IT Mutual Fund Administration Carillon Tower Advisers (Est. 2
Slide 68: Diversification by Percentage of Assets
ASSET MANAGEMENT GROUP 68 DIVERSIFICATION BY PERCENTAGE OF ASSETS UNDER ADMINISTRATION U.S. Small Cap/SMID/Mid Cap FY 2011 FY 2017* U.S. Large Cap Fixed Income International 62% 15% 22% 1% 46% 24% 24% 5% * Period also includes 1% concentration of Other, which includes global, micro and tactical allo
Slide 69: CTA Financial Assets Under Management
U.S. Small Cap, 36% Fixed Income, 24% U.S. Large Cap, 24% U.S. SMID / Mid Cap, 10% International, 5% [CATEGORY NAME]*, [VALUE] CTA FINANCIAL ASSETS UNDER MANAGEMENT (March 31, 2017) ASSET MANAGEMENT GROUP 69 Institutional 39.1% Subadvisory 3.0% Eagle Funds 26.2% Retail SMA 31.7% BY DISTRIBUTION CHAN
Slide 70: Net Flows of Financial Assets Under Management
ASSET MANAGEMENT GROUP NET FLOWS OF FINANCIAL ASSETS UNDER MANAGEMENT – CTA AND AMS* *Excludes non-discretionary asset-based programs 70 **First two quarters of fiscal 2017, annualized. 9.7% 8.4% 9.1% 6.4% 4.0% 9.2% 5.3% FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 A n n u a liz e d 2011-2016 Average
Slide 71: Investment Performance Highlights vs. Peer Groups
INVESTMENT PERFORMANCE HIGHLIGHTS VS. PEER GROUPS FREEDOM EXCESS RETURNS 3Y 5Y 10Y Conservative Balanced (50%/50%) +0.7% +0.7% +0.5% Balanced (65/35) +0.6% +0.6% +0.7% Balanced with Growth (80/20) +0.2% +0.5% +0.3% Growth (100% Equity) -0.9% 0.0% -0.8% ASSET MANAGEMENT GROUP 71 Over the past five
Slide 72: Scout and Reams Acquisition Strategic Rationale
SCOUT AND REAMS ACQUISITION 72 STRATEGIC RATIONALE Fixed Income AUM by Style (% of Assets) Strategy CTA Scout and Reams Core <1% 4% Core Plus <1% 30% Balanced / MDA - - Gov’t Securities <1% - HQT / HQTF 49% - MMIS / TMIS 13% - Short-term Cons <1% - Special Fixed 11% - SIP 13% - Unconstrained - 29% L
Slide 73: Scout and Reams Acquisition Strategic Rationale
SCOUT AND REAMS ACQUISITION 73 STRATEGIC RATIONALE Strong Performance Track Record At-Scale Business with Opportunity for Margin Expansion $27-$28 billion of AUM* (~$23 billion in fixed income, ~$5 billion in equities) $10+ billion in mutual funds Significant growth capacity in fixed income, i
Slide 74: Scout and Reams Acquisition Integration Update
SCOUT AND REAMS ACQUISITION 74 INTEGRATION UPDATE CLIENTS EMPLOYEES Post announce – positive feedback from institutional clients, consultants, and intermediary platforms Currently expect very good asset retention based on positive indications from clients to date Most common feedback – deal ma
Slide 75: Asset Management Group Outlook
ASSET MANAGEMENT GROUP 75 OUTLOOK The outlook for the Asset Management segment is continued growth of assets, largely driven by growth in the Private Client Group and a focus on acquisitions and lift outs to diversify and strengthen the array of products for clients. A structural headwind expected t
Slide 76: Equity Capital Markets
EQUITY CAPITAL MARKETS Jeff Trocin, President, Global Equities & Investment Banking 76
Slide 77: Capital Markets Segment Net Revenue
ECM (US/Europe) 44% Fixed Income 41% Tax Credit Funds 8% ECM (Canada / Other) 7% FYTD 2017 CAPITAL MARKETS SEGMENT NET REVENUE 100% = $489 million CAPITAL MARKETS SEGMENT 77
Slide 78: Capital Markets Net Revenue and Pre-Tax Income
691 812 938 953 960 1,000 489 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 83 76 102 131 107 139 63 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 125* 78 * First two quarters of fiscal 2017, annualized. Notes: Charts not to scale; FYTD 17 includes first two quarters of fiscal year 2017. 978* CAPITAL MA
Slide 79: Equity Capital Markets Net Revenues
$53 $118 $226 $207 $366 FY 95 FY 99 FY 04 FY 09 FY 16 EQUITY CAPITAL MARKETS ECM Formalized: 1996 EQUITY CAPITAL MARKETS (UNITED STATES / EUROPE) Net Revenues ($ millions) 79
Slide 80: Equity Capital Markets Net Revenues
294 281 373 409 407 366 215 FY 11 FY 12 FY13 FY 14 FY 15 FY 16 FYTD 17 EQUITY CAPITAL MARKETS EQUITY CAPITAL MARKETS (UNITED STATES / EUROPE) Net Revenues ($ millions) 4% 5-YR CAGR 430* * First two quarters of fiscal 2017, annualized. Notes: FYTD 17 includes first two quarters of fiscal year 2017. A
Slide 81: Institutional Equity Commissions
261 230 247 261 247 228 124 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 EQUITY CAPITAL MARKETS INSTITUTIONAL EQUITY COMMISSIONS ($ millions) 248* * First two quarters of fiscal 2017, annualized. Notes: FYTD 17 includes first two quarters of fiscal year 2017. 81 A N N U A L IZ E D
Slide 82: U.S. Corporate Finance Department Revenues
139 126 194 215 214 189 107 FY 11 FY 12 FY13 FY 14 FY 15 FY 16 FYTD 17 EQUITY CAPITAL MARKETS U.S. CORPORATE FINANCE DEPARTMENT REVENUES ($ millions) 6% 5-YR CAGR 214* * First two quarters of fiscal 2017, annualized. Notes: FYTD 17 includes first two quarters of fiscal year 2017. A NNU A L IZE D A N
Slide 83: M&A/PP Advisory Revenues
87 80 132 148 161 156 86 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 EQUITY CAPITAL MARKETS 1 Merger and acquisition fees and private placement advisory fees 172* * First two quarters of fiscal 2017, annualized. **Merger & Acquisition and Private Placement Notes: FYTD 17 includes first two quarters
Slide 84: Recent Accolades
RECENT ACCOLADES EQUITY CAPITAL MARKETS 2016 Investment Bank of the Year Middle Market Medical Services and Materials Deal of the Year Middle Market Deal of the Year ($500 million - $1 billion) Divestiture Deal of the Year Out-of-court Restructuring of the Year 84
Slide 85: U.S. Equity Research
Tech 235 Consumer 99 Energy 157 Financial Services 220 Real Estate 76 Health Care 128 >$5 billion, 38% <$500 million, 14% $500mil-$2 billion, 26% $2-5 billion, 22% EQUITY CAPITAL MARKETS U.S. EQUITY RESEARCH* 949 Total Companies As of December 31, 2014 85 *As of March 31, 2017 Industry Focus Market-
Slide 86: Global Equity Research
50 Senior Analysts 949 Covered Companies Global Equity Research U.S. Equity Research EQUITY CAPITAL MARKETS 16 Senior Analysts 207 Covered Companies Canada Equity Research 9 Senior Analysts 114 Covered Companies Europe/LatAm Equity Research Note: Analyst and coverage data per Raymond Jam
Slide 87: Select Acquisitions
EQUITY CAPITAL MARKETS As of February 15, 2015 87 SELECT ACQUISITIONS 2011 2009 2012 PAST ACQUISITIONS Based in Munich Germany, a leading middle market M&A advisory firm focused on the technology, industrial, healthcare, consumer and business services sectors Founder serves as the Head of RJF”s
Slide 88: Powerful Cross-Border Capabilities
POWERFUL CROSS-BORDER CAPABILITIES Toronto Atlanta Nashville Chicago Denver Memphis Boston Houston Dallas San Francisco Raleigh New York St. Petersburg Washington, DC Vancouver Calgary HEADQUARTERS IB / ER OFFICE • 8 M&A transactions with Asian involvement closed since FY13 • Sell-side transaction f
Slide 89: Equity Capital Markets Outlook
EQUITY CAPITAL MARKETS OUTLOOK The investment banking pipeline for the second half of fiscal 2017 is strong for both underwriting and M&A Continued market pressure on secondary commissions amid potential outflows for both mutual funds and hedge funds (i.e. trend from active to passive) 89
Slide 90: Private Client Group
PRIVATE CLIENT GROUP Dennis Zank, COO, Raymond James Financial 90
Slide 91: Private Client Group
Over financial advisors PRIVATE CLIENT GROUP 91 Over 2,900 locations, including major financial centers in North America and abroad More than client accounts Approximately in PCG client assets under administration ~3 million 7,200 $611 billion As of March 31, 2017
Slide 92: Private Client Group Affiliation Options
PRIVATE CLIENT GROUP The Private Client Group segment includes multiple affiliation options – referred to as AdvisorChoice® – as well as support functions, including technology, operations and practice management. 92
Slide 93: Private Client Group Industry Ranking
PRIVATE CLIENT GROUP Raymond James is one of the largest private client firms in the industry. *Only includes AUA for PCG; RJF client assets and FA count are as of March 31, 2017; Note: Data from various dates based on availability. The definitions for client assets and FAs may be inconsistent acros
Slide 94: Client Satisfaction Net Promoter Score
PRIVATE CLIENT GROUP 94 CLIENT SATISFACTION NET PROMOTER SCORE 10% 20% 30% 40% 50% 60% 70% 80% Raymond James Client Raymond James Client >$1MM Financial Services Average “excellent” Source: 2016 Client Satisfaction Surveys; 2016 Temkin Study; Promoters rank satisfaction 9 or 10 on a scale of 1-10; d
Slide 95: Advisor Satisfaction Net Promoter Score
PRIVATE CLIENT GROUP 95 ADVISOR SATISFACTION NET PROMOTER SCORE Source: RJ 2016 “External Advisor Survey” and 2015/2016 Internal Satisfaction surveys; Promoters rank satisfaction 9 or 10 on a scale of 1-10; detractors rank 6 or lower. Net promoters are promoters minus detractors. -30% -20% -10% 0% 1
Slide 96: Recruiting
RECRUITING 96 Over 6,100 $1+ million producing advisors within 30 miles of an AB branch Over 1,300 of these advisors are closer to AB branches than their current office Note: Raymond James includes combined results from the firm’s two primary broker/dealers, Raymond James and Associates (RJA) an
Slide 97: Assets Under Administration and Number of Advisors
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Q2 17 Employees ICs 254 368 403 451 453 574 611 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Q2 17 PRIVATE CLIENT GROUP CAGR: 5-Year 2016 17.7% 5-YR CAGR 6.5% 5-YR CAGR 97 Assets Under Administration ($ billions) # of Advisors 5,216 6,210 6,197 6,265 6,596 7,222 7,146
Slide 98: Private Client Group Revenue and Pre-Tax Income
2,192 2,485 2,931 3,290 3,520 3,627 2,132 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 PRIVATE CLIENT GROUP Notes: FY 2012 and 2013 results were adversely impacted by acquisition-related and certain other expenses that were not included in the “Other” segment prior to retail platform consolidation in
Slide 99: Securities Commissions and Fees; Recurring Revenue
PRIVATE CLIENT GROUP Fee-Based Accounts, 55.3% Mutual Funds, 18.9% Equities and Fixed Income Securities, 12.3% Insurance and Annuity Products, 10.9% New Issue Sales Credits, 2.6% SECURITIES COMMISSIONS AND FEES (quarter ended March 31, 2017) * 78% of PCG’s total revenue was recurring for the quarter
Slide 100: Commissions and Fees
PRIVATE CLIENT GROUP 1,002 1,036 1,171 1,353 1,483 1,507 825 610 835 1,082 1,186 1,245 1,247 762 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FYTD 17 RJIS RJL RJA RJFS 1,818 2,056 2,455 1,730 * First two quarters of fiscal 2017, annualized. Note: RJA includes MK beginning in FY 2012. Charts not to scale 3,46
Slide 101: Successful Recent Acquisitions
PRIVATE CLIENT GROUP 101 SUCCESSFUL RECENT ACQUISITIONS ADVISOR RETENTION ADVISOR RETENTION Note: retention rates are at closing of transaction
Slide 102: Alex. Brown – Value Add to Raymond James
Geographic Expansion • Significantly accelerates strategic expansion in the Northeast • Increases presence in several markets with highest wealth concentration • Provides a strong foundation for continued growth Broader Product and Service Offerings • Alternative investments and structured products
Slide 103: Regulatory Expectations
PRIVATE CLIENT GROUP 103 REGULATORY EXPECTATIONS
Slide 104: Compliance with the DOL Fiduciary Rule
Maintain Choice COMPLIANCE WITH THE DOL FIDUCIARY RULE 104 Focus on serving advisors and their clients Continuing to offer both commission-based and fee-based IRA accounts OUR APPROACH Eliminate material conflicts Making changes so the Best Interest Contract is not required for fee-based IRA
Slide 105: Private Client Group Outlook
PRIVATE CLIENT GROUP OUTLOOK Continued success recruiting and retaining financial advisors Investing heavily in products, technology, supervision and compliance to help our advisors better serve their clients 105
Slide 106: Executive Committee Bios
106 EXECUTIVE COMMITTEE BIOS
Slide 107: Executive Committee Bios: Paul Reilly
EXECUTIVE COMMITTEE BIOS 107 Paul Reilly Chairman & Chief Executive Officer Raymond James Financial Presenting Paul Reilly became chief executive officer of Raymond James Financial in May 2010, after joining the firm’s management team as president and CEO-designate in May 2009. He has served on the
Slide 108: Steve Raney
108 Presenting Steve Raney is a Tampa native and has worked in the area’s banking community since 1988. He is the president and CEO of Raymond James Bank, a wholly owned subsidiary of Raymond James Financial. The bank’s core business includes a residential lending platform that supports the mortgage
Slide 109: Jeff Julien
109 Presenting In addition to his positions as executive vice president of finance and chief financial officer of Raymond James Financial, Inc., Jeff Julien serves as chairman of the board of both Raymond James Trust and Raymond James Bank. He also serves in a director capacity for many of the firm’
Slide 110: Jeff Dowdle
110 Presenting Serving as president of Raymond James Financial Inc.’s asset management group, Jeff Dowdle oversees the firm’s investment management subsidiaries and fee-based advisory programs. Mr. Dowdle was previously president of the Asset Management Services division and senior vice president of
Slide 111: Jeffrey Trocin
111 Presenting Jeffrey Trocin President Raymond James & Associates Global Equities and Investment Banking Jeff Trocin joined Raymond James in 1986 and serves as president of Global Equities and Investment Banking. He also serves as a member of the firm’s Executive Committee and Capital Markets Commi
Slide 112: Dennis Zank
112 Dennis Zank Chief Operating Officer Raymond James Financial Chief Executive Officer Raymond James & Associates Dennis Zank serves as chief operating officer of Raymond James Financial, Inc. as well as Chief Executive Officer of Raymond James & Associates (RJA). In his current role, he oversees o
Slide 113: Bella Allaire
113 Bella Allaire Executive Vice President Technology and Operations As executive vice president of technology and operations for Raymond James, Bella Loykhter Allaire oversees the firm’s technology and operations functions, including client service and the technology platforms for our advisors and
Slide 114: Paul Allison
114 Not Presenting Paul Allison Chairman and CEO Raymond James Ltd. As chairman and chief executive officer of Raymond James Ltd., Paul Allison oversees business-building efforts and strategic leadership of the firm’s Canadian operations, including Equity Capital Markets and Private Client and Corpo
Slide 115: John Carson
115 Not Presenting John Carson is president of Raymond James Financial, Inc. and a member of the firm’s executive committee. He also serves as head of the fixed income and public finance divisions, as well as head of corporate development for RJF. Mr. Carson joined Raymond James in April 2012 when M
Slide 116: Scott Curtis
116 Not Presenting As president of Raymond James Financial Services (RJFS), Scott Curtis directs Raymond James’ independent advisor business, including its Financial Institutions Division. The 3,900 financial advisors of RJFS generate approximately 30% of the firm's annual revenues. Mr. Curtis was p
Slide 117: Tash Elwyn
117 Not Presenting As President of Raymond James & Associates (RJA) since January 2012, Tash Elwyn supports the financial advisors in our employee Private Client Group. He also serves on the Board of Raymond James Bank and was formerly on the Board of Raymond James Trust. Prior to being appointed to
Slide 118: Jonathan N. Santelli
EXECUTIVE COMMITTEE BIOS 118 Jonathan N. Santelli Executive Vice President and General Counsel Raymond James Financial Prior to joining Raymond James as executive vice president and general counsel, Jonathan Santelli was senior vice president and deputy general counsel of First Republic Bank, where
Slide 119: Tom James
119 Tom James Chairman Emeritus Raymond James Financial Thomas A. James is Chairman Emeritus of the Raymond James Financial, Inc. (NYSE: RJF) Board of Directors. He was previously CEO and Chairman of the Board for more than 40 years before handing over those roles to Paul Reilly in 2010 and 2017, re
Slide 120: Appendix
APPENDIX 120
Slide 121: Schedule of Non-GAAP Information
SCHEDULE OF NON-GAAP INFORMATION (continued on next slide) Year ended September 30, 2016 Net Income attributable to RJF, Inc. (GAAP basis) 529,350$ Non-GAAP adjustments: Acquisition-related expenses (1) 40,706 Tax effect of non-GAAP adjustments (2) (13,793) Non-GAAP adjustments, net of tax 26,913 Ad
Slide 122: Footnote Explanations
Footnote Explanations: 1. The non-GAAP adjustment adds back to pre-tax income acquisition-related expenses incurred during the fiscal year associated with our acquisitions. 2. The non-GAAP adjustment reduces net income for the income tax effect of the pre-tax non-GAAP adjustments, utilizing the fisc
Slide 123: Schedule of Non-GAAP Information
SCHEDULE OF NON-GAAP INFORMATION (continued on next slide) 2011 2012 2013 Pre-tax income attributable to RJF, Inc. - GAAP basis 461,247$ 471,525$ 564,187$ Non-GAAP adjustments: Acquisition related expenses (1) - 59,284 73,454 RJF's share of Raymond James European Securities ("RJES") goodwill impairm
Slide 124: Footnote Explanations
Footnote Explanations: 1. The non-GAAP adjustment adds back to pre-tax income one-time acquisition and integration expenses associated with acquisitions that were incurred during each respective period. 2. The non-GAAP adjustment adds back to pre-tax income RJF’s share of the total goodwill impairme
Slide 125: Schedule of Non-GAAP Information
SCHEDULE OF NON-GAAP INFORMATION 125 Six months ended March 31, 2017 ($ in thousands, except per share amounts) Net income attributable to RJF, Inc. 259,322$ Non-GAAP adjustments: Acquisition-related expenses 13,752 Other Expenses: Extinguishment of senior notes payable 8,282 Jay Peak settlement 130
Slide 126: Schedule of Non-GAAP Information (continued)
(continued from prior slide) SCHEDULE OF NON-GAAP INFORMATION 126 Footnote Explanations: 1. The non-GAAP adjustments reduce net income for the income tax effect of all the pre-tax non-GAAP adjustments, utilizing the year-to-date effective tax rate in such period to determine the current tax expense.