Raymond James Financial, Inc. · NYSE:RJF
Raymond James Financial — Investor Day (May 2014)
120 slides from Raymond James Financial's investor day presentation, May 12, 2014
Slide 1: 2014 Analyst / Investor Day
2014 Analyst / Investor Day May 12, 2014 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 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 objectives, business p
Slide 3: Overview of Raymond James Financial
OVERVIEW OF RAYMOND JAMES FINANCIAL Paul Reilly CEO, Raymond James Financial 3
Slide 4: Overview of Raymond James Financial
Private Client Group $1,589mm 67% Capital Markets $466mm 20% Asset Mgmt. $184mm 8% RJ Bank $167mm 7% FYTD 2014 Net Revenues* $2,362,047,000 OVERVIEW OF RAYMOND JAMES FINANCIAL KEY FACTS • Headquartered in St. Petersburg, FL • Founded in 1962; public in 1983 • Approximately 2,500 locations • United S
Slide 5: Client-First, Values-Based Culture
CLIENT-FIRST, VALUES-BASED CULTURE 5 INTEGRITY INDEPENDENCE CONSERVATISM CLIENT FIRST
Slide 6: Continued Profitability
CONTINUED PROFITABILITY 6 Trailing 10 Years E a rni n gs P e r Sha re (B a si c ) 105 Consecutive Profitable Quarters $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 J un-0 4 Sep -0 4 D e c -0 4 M ar-0 5 J un-0 5 Sep -0 5 D e c -0 5 M ar-0 6 J un-0 6 Sep -0 6 D e c -0 6 M ar-0 7 J un-0 7
Slide 7: RJF Stock Price vs. Sector, Five-Year Change
7 RAYMOND JAMES FINANCIAL RJF Stock Price vs. Sector, Five-Year Change 183.9% 134.7% 146.5% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0% RJF S&P 500 DJ US Financials Index Pe rcen t Cha n g e Five Years Ended March 31, 2014
Slide 8: Why Invest in Raymond James?
WHY INVEST IN RAYMOND JAMES? UNIQUE COMPETITIVE POSITIONING Values-Based Culture w Client-Focused w Private Client Group-Driven with Complementary Businesses OPPORTUNITY FOR GROWTH In All Businesses w Organic Growth w Niche Acquisitions DISIPLINED FINANCIAL MANAGEMENT Long-Term Profitability w Relat
Slide 9: Unique Competitive Positioning
UNIQUE COMPETITIVE POSITIONING 9
Slide 10: Unique Competitive Positioning
10 UNIQUE COMPETITIVE POSITIONING
Slide 11: Revenue Mix vs. Bank of America and Wells Fargo
Wealth Management 20% Consumer Real Estate 10% Global Banking 20% Global Markets 16% Consumer Business Banking 34% BANK OF AMERICA MERRILL LYNCH 11 *Sources include: Bank of America 2012 Annual Report and Wells Fargo 2012 Annual Report, Raymond James as of FYTD 2014 (six months ended March 31, 2014)
Slide 12: Private Client Group Rankings
Private Client Group Rankings 12 UNIQUE COMPETITIVE POSITIONING *Only includes AUA for PCG Note: All data is as of 3/31/2014 except for Edward Jones and UBS. The definitions for AUA and FAs may be inconsistent across companies; rankings exclude RIA custodians but include independent B/Ds. Sources: V
Slide 13: Private Client Group: Advisor Perceptions
#1 Raymond James Financial 2 Fidelity 3 Charles Schwab 4 Wells Fargo FiNet 5 Wells Fargo Advisors 6 Merrill Lynch 7 Edward Jones 8 UBS 9 LPL Financial 10 Stifel Nicolaus External FA Survey – Winter 2013(1) RANKED HIGHEST IN EXTERNAL ADVISOR PERCEPTION Private Client Group: Advisor Perceptions 13 RAN
Slide 14: Diverse and Complementary Businesses
14 UNIQUE COMPETITIVE POSITIONING Diverse and Complementary Businesses
Slide 15: Fixed Income: League of Top Municipal Underwriting Firms
Fixed Income: League of Top Municipal Underwriting Firms Source: Thompson Reuters, 1/1/12 – 12/31/13; #24 ranking was for the period 2008-2010 Rank Firm Par Amount ($B) Market Share (%) # of Issues 1 Bank of America Merrill Lynch 54.8 14.8 458 2 J P Morgan Securities LLC 44.2 11.9 370 3 Citi 43.8 11
Slide 16: U.S. Capital Markets: Underwriting League Table
U.S. Capital Markets: Underwriting League Table Raymond James Relative to Growth Company Focused Peers Source: Dealogic; Data is LTM as of 3/31/14; includes US Marketed IPOs & follow-on’s for US and Foreign Issuers raising greater than $25 million, excludes CEF’s & SPAC’s; “Growth Company Focused Pe
Slide 17: Asset Management Services Fee Based Asset Growth Relative to Peers
Asset Management Services1 Total Fee Based Asset Growth Relative to Peers as of December 31, 2013 1. RJF AMS growth rates exclude Morgan Keegan Source: Cerulli as of December 31, 2013 UNIQUE COMPETITIVE POSITIONING 17 9.7% 32.0% 59.9% 6.5% 25.3% 48.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% F
Slide 18: Comparing RJ Bank to Median Benchmark Performance Measures
18 UNIQUE COMPETITIVE POSITIONING Comparing RJ Bank to Median Benchmark Performance Measures Category Assets ROAA ROAE NPAs/Assets Top 20 U.S. Banks by Assets $198.7B 1.02% 9.46% 1.37% U.S. Banks >$10B in Assets 24.9B 0.95% 8.66% 1.04% U.S. Banks >$2B in Assets 5.0B 0.97% 8.77% 1.25% FL Banks >$2B i
Slide 19: RJF: Balanced Growth Strategy
OPPORTUNITY FOR GROWTH ORGANIC GROWTH NICHE ACQUISITIONS 19 RJF: Balanced Growth Strategy
Slide 20: Opportunity for Growth
OPPORTUNITY FOR GROWTH RAYMOND JAMES?
Slide 21: Geographic Expansion
OPPORTUNITY FOR GROWTH 21 Geographic Expansion
Slide 22: Invest in People
OPPORTUNITY FOR GROWTH 22 ADVISOR TRAINING SUCCESSION PLANNING Invest in People TEAM & LEADERSHIP ADDITIONS
Slide 23: Better Leverage Synergies
23 Better Leverage Synergies OPPORTUNITY FOR GROWTH ASSET MANAGEMENT PRODUCTS LENDING TO INSTITUTIONAL CLIENTS INCREASE LENDING IN CANADA FINANCIAL ADVISOR PLATFORM
Slide 24: Optimize Margins
OPPORTUNITY FOR GROWTH FA PRODUCTIVITY Optimize Margins TECHNOLOGY & MOBILITY OPERATIONAL EFFICIENICIES CLIENT PRICING 24
Slide 25: Business Update
BUSINESS UPDATE 25 Industry Trends / Competitive Environment Capital Deployment Regulation
Slide 26: Raymond James Canada
RAYMOND JAMES CANADA Paul Allison CEO, Raymond James Ltd. 26
Slide 27: Overview of Raymond James Canada
OVERVIEW OF RAYMOND JAMES CANADA Private Client Group Capital Markets • Nearly 400 financial advisors with nearly C$24 billion of total client assets • Over 90 branches throughout Canada, with a concentration in Alberta, British Columbia, and Ontario • AdvisorChoice® platform offering the employee a
Slide 28: Canada Total Revenues and Pre-Tax Income
28 254 187 256 339 297 311 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 22 (1) 13 42 30 28 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Notes: Charts not to scale; Figures represent total revenues and pre-tax income generated in Canada, primarily including but not limited to Raymond James Ltd. Total Revenues ($ milli
Slide 29: Canada Market Commentary: TSX & S&P 500
29 Sources: SNL Financial; Investor Economics; S&P Dow Jones Indices In terms of total population (~35 million) and nominal GDP (~$1.8 trillion), Canada is about one tenth the size of the USA. Over the past twelve months, the TSX has appreciated similarly to the S&P 500. Market Commentary TSX & S&P
Slide 30: TSX Composite vs. S&P 500 Industry Weighting
30 Financials, 34.1% Energy, 26.1% Materials, 12.4% Industrials, 7.6% Con. Discretionary, 5.5% Telecom, 4.8% Healthcare, 3.0% Con. Staples, 2.7% Utilities, 2.0% Info Tech, 1.8% Canada – TSX Composite Index Industry Weighting Financials, 16.4% Energy, 10.1% Materials, 3.5% Industrials, 10.7% Con. Dis
Slide 31: Overview of Raymond James Canada
31 OVERVIEW OF RAYMOND JAMES CANADA
Slide 32: Canadian Brokerage Client Assets Ranking
Rank Brokerage Client Assets (C$ billions) 1 RBC Dominion Securities $217.01 2 BMO Nesbitt Burns $135.02 3 CIBC Wood Gundy $125.93 4 ScotiaMcleod ~$1004 5 National Bank Financial $80.05 6 TD Waterhouse Private Investment Advice ~$506 7 Richardson GMP $27.77 8 Desjardins Securities $25.08 9 Raymond J
Slide 33: Raymond James Canada Private Client Group
33 RAYMOND JAMES CANADA PRIVATE CLIENT GROUP 12.2 14.4 16.8 18.0 20.7 21.5 23.8 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Q2 14 Number of Financial Advisors 391 424 407 417 438 406 Client Assets (C$ billions) Raymond James Canada has nearly C$24 billion in total client assets, representing a 13% annual gr
Slide 34: Canada Financial Advisor Productivity
34 Since FY 2008, the average productivity of financial advisors in Canada – in both the employee and independent contractor channels – has increased significantly. RAYMOND JAMES CANADA PRIVATE CLIENT GROUP 15 25 35 45 55 65 75 85 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Q2 14 A s s e ts p e r A d v is o
Slide 35: Raymond James Ltd. League Tables
Raymond James Ltd. M&A League Table Full Credit to Bookrunner (2013) Rank Bank Proceeds (C$mm) Market Share (%) 1 RBC Capital Markets 5,329.4 15.6% 2 BMO Capital Markets 4,708.3 13.8% 3 TD Securities 3,281.3 9.6% 4 Scotia Bank 2,941.3 8.6% 5 CIBC World Markets 2,591.5 7.6% 6 GMP Capital Group 2,504.
Slide 36: Equity Capital Markets: Underwriting Deals by Industry
36 RAYMOND JAMES CANADA EQUITY CAPITAL MARKETS The majority of the firm’s underwriting deals in Canada are in the Real Estate, Energy, and Mining industries, which is relatively consistent with the overall market activity in Canada. Real Estate, 37.4% Energy, 20.9% Mining, 20.0% Industrial, 7.0% Tec
Slide 37: Equity Capital Markets: Companies Under Coverage
37 RAYMOND JAMES CANADA EQUITY CAPITAL MARKETS Raymond James covers over 260 companies in Canada. The median market capitalization of the covered companies in Canada is C$861 million. 206 207 240 250 260 271 263 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Q2 14 2,436 2,234 2,657 2,041 2,657 2,965 3,702 FY 0
Slide 38: Industry Secondary Commissions in Canada
38 RAYMOND JAMES CANADA EQUITY CAPITAL MARKETS 958 814 741 683 522 425 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Industry Secondary Commissions in Canada (C$ millions) (15%) CAGR Raymond James Market Share 2.5% 2.2% 3.1% 3.9% 4.0% 4.0% 3.7% Sources: Brendan Wood International Similarly to the USA, industr
Slide 39: Synergies with Other Businesses
39 RAYMOND JAMES CANADA SYNERGIES WITH OTHER BUSINESSES • Over $1 billion of loans to institutions in Canada*, 60% of which are to institutional clients • Top 15 lender among non-Canadian commercial lenders (top 25 among all commercial lenders in Canada) • Leverage firmwide capabilities for underwri
Slide 40: Strategic Growth Initiatives
40 RAYMOND JAMES CANADA STRATEGIC GROWTH INITIATIVES Strengthen the Core Businesses and Develop Adjacency Businesses Expand Geographically (Quebec) Selectively Pursue Acquisitions
Slide 41: Summary of Strategy
41 RAYMOND JAMES CANADA SUMMARY OF STRATEGY Expands Presence in Attractive Market Leverages Capabilities of Raymond James Strengthens Global Platform Provides Diversification The long-term target is to grow Raymond James Canada to 10% of the firm’s overall revenues and pre-tax earnings. Why is Raymo
Slide 42: Private Client Group
PRIVATE CLIENT GROUP Dennis Zank COO, Raymond James Financial 42
Slide 43: Overview of Private Client Group
OVERVIEW OF PRIVATE CLIENT GROUP RJA RJFS IAD • Raymond James & Associates – Employee Channel • Raymond James Financial Services – Independent and Bank Channels • Investment Advisor Division – RIA Channel International • Raymond James Limited – Canada • Raymond James Investment Services – United Kin
Slide 44: Multiple Affiliation Options for Advisors
OVERVIEW OF PRIVATE CLIENT GROUP 44 Raymond James offers multiple employee and independent affiliation options for advisors . . . ADVISORCHOICE®
Slide 45: High Advisor Satisfaction with Low Attrition
HIGH ADVISOR SATISFACTION WITH VERY LOW REGRETTABLE ATTRITION BOOK OWNERSHIP INDEPENDENCE for advisors to run their own businesses 45 Highest possible level of SERVICE . . . and treats all advisors as clients, which results in relatively low levels of regrettable attrition . . . PRIVATE CLIENT GROUP
Slide 46: J.D. Power Advisor Satisfaction Rankings
46 1 Edward Jones 907 #2 Raymond James & Associates 891 3 UBS Financial Services 751 4 Merrill Lynch 719 5 Wells Fargo 705 6 Chase Investment Services 703 7 Employee Segment Average 695 RANKED SECOND IN J.D. POWER ADVISOR SATISFACTION SURVEY (EMPLOYEE CHANNEL) Source: 2013 J.D. Power and Associates
Slide 47: Ranked Highest in External Advisor Perception
#1 Raymond James Financial 2 Fidelity 3 Charles Schwab 4 Wells Fargo FiNet 5 Wells Fargo Advisors 6 Merrill Lynch 7 Edward Jones 8 UBS 9 LPL Financial 10 Stifel Nicolaus External FA Survey – Winter 2013(1) RANKED HIGHEST IN EXTERNAL ADVISOR PERCEPTION 47 (1) Overall score created by combining Extern
Slide 48: One of the Largest Private Client Firms
48 Rank Firm Client Assets FAs ($B) 1 Bank of America / Merrill Lynch $2,396 15,323 2 Morgan Stanley 1,943 16,426 3 Wells Fargo & Co. 1,400 15,146 4 UBS Americas 1,025 7,137 5 Edward Jones & Co. 746 12,996 6 LPL Financial 447 13,726 7 RAYMOND JAMES* 434 6,202 8 Ameriprise 418 9,704 Raymond James is
Slide 49: Private Client Group Net Revenues and Pre-Tax Income
185 88 163 220 215 230 149 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 298* 49 1,869 1,549 1,901 2,182 2,474 2,919 1,589 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 * First two quarters of fiscal 2014, annualized. ** FY 2012 and 2013 results were adversely impacted by acquisition-related and redunda
Slide 50: Private Client Group Commissions and Fees
50 917 717 882 1,002 1,036 1,171 654 478 432 539 610 835 1,082 578 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 RJIS RJL RJA RJFS 1,263 1,585 1,818 2,056 2,456 658 1,341 PRIVATE CLIENT GROUP 1,532 * First two quarters of fiscal 2014, annualized. Notes: RJA includes MK beginning in FY 2012. Charts not
Slide 51: Private Client Group Pre-Tax Margin
51 * Pre-tax margins is to net revenues While the segment’s stated pre-tax margin appears lower than its peers, there are several accounting differences – not true economic differences – that account for the vast majority of the variance. 9.9% 5.7% 8.6% 10.1% 8.7% 7.9% 9.4% FY 08 FY 09 FY 10 FY 11 F
Slide 52: Private Client Group AUA and Advisors
*Excludes RIAs with custody-only relationships 52 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Q2 14 RJIS RJL RJA RJFS MK 5,182 5,216 6,197 6,202 6,210 4,927 5,154 197 223 249 254 368 403 434 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Q2 14 PRIVATE CLIENT GROUP PCG AUA ($ billions) No. of Advisors* 15% 5½ -YR CAGR
Slide 53: Securities Commissions and Fees; Recurring Revenue
Fee-Based Accounts, 44.8% Mutual Funds, 25.0% Equities and Fixed Income Securities, 14.0% Insurance and Annuity Products, 13.1% New Issue Sales Credits, 3.1% PRIVATE CLIENT GROUP SECURITIES COMMISSIONS AND FEES (quarter ended March 31, 2014) 53 * 71% of PCG’s total revenue was recurring for FYTD end
Slide 54: Key Issues Facing the Industry
54 AGING ADVISOR DEMOGRAPHIC and SUCCESSION PLANNING Provide Support w Client-Focused w Advisor Training TECHNOLOGY INNOVATIONS and CLIENT COMMUNICATION PREFERENCES/EXPECTATIONS Boosts Advisor Productivity w Strategic Differentiator w Support for Advisors REGULATORY CHANGES/DEVELOPMENTS and FIDUCIAR
Slide 55: Private Client Group Outlook
PRIVATE CLIENT GROUP OUTLOOK 55 Strong recruiting pipeline Reasonable improvement in client engagement Very high retention of existing advisors
Slide 56: Private Client Group Strategic Growth Initiatives
Expand Geographic Footprint Help Advisors Grow Their Business 56 Attract and Retain Highest-Quality Advisors PRIVATE CLIENT GROUP STRATEGIC GROWTH INITIATIVES Expand Training Program
Slide 57: Private Client Group Summary of Strategy
57 PRIVATE CLIENT GROUP SUMMARY OF STRATEGY
Slide 58: Fixed Income
FIXED INCOME John Carson President, Raymond James Financial 58
Slide 59: Fixed Income Divisions
FIXED INCOME Sales and Trading Research and Strategies Public Finance / Debt Investment Banking • Over 200 institutional salespersons and 150 trading professionals in 36 offices • Over 50 experts providing industry-leading research on both taxable and tax-exempt fixed income products • Over 100 seni
Slide 60: Fixed Income Operating Model
Intellectual Capital as a Core Asset Client First, Distribution Focused Model Full-Service Platform Prudent Risk Management High-Grade Product Franchise FIXED INCOME 60 The fixed income operating model is highly conservative and client-focused.
Slide 61: Fixed Income Institutional Sales and Trading
FIXED INCOME INSTITUTIONAL SALES AND TRADING 61 Fixed Income Institutional Sales and Trading Retail Trading MBS Trading Government Trading Corporate Trading Municipal Trading Structured Products Trading Whole Loan & SBA Trading Fixed Income Sales Fixed Income Research & Portfolio Strategies
Slide 62: Fixed Income Institutional Sales and Trading
62 FIXED INCOME INSTITUTIONAL SALES AND TRADING
Slide 63: Institutional Client Base: Depositories and Non-Depositories
FIXED INCOME INSTITUTIONAL SALES AND TRADING The institutional sales and trading business is primarily driven by two broadly-defined client segments – depositories and non-depositories – which have distinct characteristics. 63 Depositories (48%*) Non- Depositories: Investment Managers and Insurance
Slide 64: High Quality, Low Risk Inventory
64 The institutional sales and trading business is supported by relatively high quality / low risk inventory. . . Municipals, 29.5% Government / Agency, 26.7% Agency MBS and CMOs, 25.6% Corporates, 16.5% Other, 1.7% TOTAL RJF DEBT INSRUMENTS (as of 12/31/2013) FIXED INCOME INSTITUTIONAL SALES AND TR
Slide 65: Average Inventory Balances
65 . . . and has been managed conservatively to optimize capital utilization. FIXED INCOME INSTITUTIONAL SALES AND TRADING $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2007 2008 2009 2010 2011 2012 2013 2014 M ill io n s Pro Forma Actual Average Inventory Balances (Raymond James and Mor
Slide 66: Institutional Fixed Income Commissions
31,512 35,984 100,862 97,156 91,903 86,995 79,012 68,005 65,068 62,165 Q1 FY 2012 Q2 FY 2012 Q3 FY 2012 Q4 FY 2012 Q1 FY 2013 Q2 FY 2013 Q3 FY 2013 Q4 FY 2013 Q1 FY 2014 Q2 FY 2014 66 Since the Morgan Keegan acquisition, Raymond James’s institutional fixed income commissions have declined by 38%, as
Slide 67: Estimated Middle Market Peer Market Share
67 . . . meanwhile, Raymond James continues to gain market share. RAYMOND JAMES FINANCIAL ESTIMATED MIDDLE MARKET PEER* MARKET SHARE (% of Total Estimated Peer Revenues*) FIXED INCOME INSTITUTIONAL SALES AND TRADING * Peers include FTN Capital, Piper Jaffrey, Stifel, and Raymond James. Peer Revenues
Slide 68: Net Trading Profits
9,339 12,979 14,544 18,672 9,339 8,128 -1,456 18,058 18,151 14,842 Q1 FY 2012 Q2 FY 2012 Q3 FY 2012 Q4 FY 2012 Q1 FY 2013 Q2 FY 2013 Q3 FY 2013 Q4 FY 2013 Q1 FY 2014 Q2 FY 2014 *Includes Net Trading Profits from all sources across the firm (Fixed Income, Equity Capital Markets, PCG, etc.); however,
Slide 69: Public Finance / Debt Investment Banking Platform
TOTAL DEBT INVESTMENT BANKING PUBLIC FINANCE HEALTHCARE FINANCE PROJECT FINANCE NATIONAL HOUSING FINANCIAL PRODUCTS GROUP STRUCTURED FINANCE CORPORATE DEBT 69 FIXED INCOME PUBLIC FINANCE / DEBT INVESTMENT BANKING The debt investment banking platform includes public finance and six specialty groups.
Slide 70: League of Top Municipal Underwriting Firms
70 . . . and is a top 10 platform in the country. FIXED INCOME PUBLIC FINANCE / DEBT INVESTMENT BANKING Rank Firm Par Amount ($B) Market Share (%) # of Issues 1 Bank of America Merrill Lynch 54.8 14.8 458 2 J P Morgan Securities LLC 44.2 11.9 370 3 Citi 43.8 11.8 451 4 Morgan Stanley 22.1 6.0 641 5
Slide 71: Public Finance Issuance Trends
71 The market environment for public finance has been challenged by extremely low issuance volumes. . . FIXED INCOME PUBLIC FINANCE / DEBT INVESTMENT BANKING 333.0 348.7 357.2 217.6 293.1 242.5 46.1 2008 2009 2010 2011 2012 2013 YTD 2014 184.6* * First three months of 2014, annualized. Source: Thoms
Slide 72: Fixed Income Investment Banking Revenues
72 . . . which has had an adverse impact on revenues in Raymond James’s public finance / debt investment banking business since the Morgan Keegan acquisition. FIXED INCOME PUBLIC FINANCE / DEBT INVESTMENT BANKING 2,106 2,604 18,479 13,800 14,157 11,072 9,906 12,999 10,833 14,240 Q1 FY 2012 Q2 FY 201
Slide 73: Fixed Income Outlook
FIXED INCOME OUTLOOK 73 Continued economic uncertainty Low interest rates Intense regulatory pressure: Dodd-Frank, Municipal Advisory Rule, Volcker Rule, Basel III
Slide 74: Fixed Income Strategic Growth Initiatives
74 FIXED INCOME STRATEGIC GROWTH INITIATIVES Fortify Strengths in Core Businesses Diversify Revenue Base of Fixed Income Sales and Trading Expand Public Finance Penetration in Higher-Issuance Geographies and Higher-Margin Specialty Lines
Slide 75: Fixed Income Summary of Strategy
75 FIXED INCOME SUMMARY OF STRATEGY Continue to Invest in Down Markets Recruit and Retain the Best Talent Maintain Conservative Risk Management Manage Expenses and Optimize Margins Even in a challenging environment, the objective for Fixed Income is to maintain “mid-teens” pre-tax margins, which has
Slide 76: Raymond James Bank
RAYMOND JAMES BANK Steve Raney CEO, Raymond James Bank 76
Slide 77: Overview of Raymond James Bank
Conservative Credit Standards Prudent Financial / Capital Management Strong Internal Controls / Regulatory Compliance Sustainable, Profitable Growth Serve Financial Advisors, Retail & Institutional Clients OVERVIEW OF RAYMOND JAMES BANK RJ Bank’s vision is to maximize shareholder value through prude
Slide 78: Targeted Lending Strategy
Corporate (C&I) Securities Based Lending / Residential Mortgages Typically target: • Institutional / Capital Markets clients • Relatively mature industries • Near investment grade ratings • EBITDA greater than $25 - $50 million • No mezzanine lending • Mostly floating rate facilities • Target debt s
Slide 79: RJ Bank Net Revenues and Pre-Tax Income
79 214 317 258 269 336 347 167 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 112 80 112 173 240 268 114 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 * First two quarters of fiscal 2014, annualized. ** Not adjusted for the impact of excess RJ Bank Deposit Program deposits held during the respective peri
Slide 80: Overview of Shared National Credits
RAYMOND JAMES BANK OVERVIEW OF SHARED NATIONAL CREDITS • Established in 1977, the Shared National Credit (“SNC”) designation is a loan commitment of $20 million or more shared by three or more supervised institutions. • SNCs allow for consistent and efficient regulatory reviews and assessments of la
Slide 81: Shared National Credits Criticized Loans
17.9% 12.7% 10.6% 10.0% 15.7% 6.4% 5.6% 6.6% 2010 2011 2012 2013 All Shared National Credits (Industrywide) RJ Bank Shared National Credits Notes: Time period denotes exam date; Figures are estimates for Raymond James Bank ‘s shared national credits portfolio for the various time periods. 81 RJ Bank
Slide 82: Loan Portfolio Composition
82 RJ Bank maintains a well-diversified loan portfolio, both in terms of type of loans. . . Commercial and Industrial, 58.3% Commercial Real Estate, 15.9% Residential Mortgages, 17.1% Securities Based Loans, 7.6% Loans Held for Sale, 1.1% RAYMOND JAMES BANK LOAN COMPOSITION (% of total loans, Q2 FY
Slide 83: C&I Industry Diversification
83 RAYMOND JAMES BANK C&I INDUSTRY DIVERSIFICATION (Q2 FY 2014) RAYMOND JAMES BANK LOAN PORTFOLIO COMPOSITION . . . and industry diversification. Industry Outstandings as % of Bank Assets Technology 4.1% Media Communications 4.1% Business Systems and Services 3.6% Pharmaceuticals 3.3% Automotive/Tra
Slide 84: Raymond James Bank Loan Growth
7,183 6,781 6,281 6,730 8,196 8,992 10,193 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Q2 2014 84 RAYMOND JAMES BANK LOAN GROWTH RAYMOND JAMES BANK LOAN GROWTH* ($ millions, gross loans) RJ Bank has grown it’s loan portfolio nearly 7% annually since FY 2008. . . * Includes loans held for sale. 7
Slide 85: Loan Portfolio Credit Quality
85 . . . and the credit trends have improved significantly over this period. PROVISION EXPENSE ($ thousands) RAYMOND JAMES BANK LOAN PORTFOLIO CREDIT QUALITY NET CHARGE OFFS ($ thousands) NONPERFORMING ASSETS (% of total assets) ALLOWANCE FOR LOAN LOSSES (% of loans) 57,749 169,341 80,413 33,655 25,
Slide 86: Methodology for Calculating Loan Reserves
• Each corporate loan is rated individually on a 15-point scale. New corporate loans add approximately 140 – 170 bps to the reserve, based on loan grades, while new retail/residential loans add less • Loans are monitored regularly to ensure they are appropriately rated • Loans with more adverse rati
Slide 87: Raymond James Bank Outlook
RAYMOND JAMES BANK OUTLOOK 87 Modest growth in loan portfolio Deceleration of net interest margin compression Higher levels of provision expense
Slide 88: Raymond James Bank Strategic Growth Initiatives
88 RAYMOND JAMES BANK STRATEGIC GROWTH INITIATIVES Lending to Capital Markets Clients (e.g., Tax Exempt Lending to Public Finance Clients) Grow Loans in Canada Expand Lending and Cash Management Solutions to Private Client Group
Slide 89: Raymond James Bank Summary of Strategy
89 RAYMOND JAMES BANK SUMMARY OF STRATEGY Provides Cash Management and Lending Solutions to Private Client Group Deepens Relationships with Capital Markets Clients Provides Business Diversification Attractive Risk-Adjusted Returns on Cash and Capital The long-term target is to grow RJ Bank at the sa
Slide 90: Financial Review and Closing
90 FINANCIAL REVIEW AND CLOSING Jeff Julien CFO, Raymond James Financial
Slide 91: Track Record of Profitable Growth: Net Revenue
2,813 2,546 2,917 3,334 3,807 4,485 2,362 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 4,724** TRACK RECORD OF PROFITABLE GROWTH (9.5%) 14.6% 14.3% 14.2% 17.8% – Net Revenues Recurring Revenues* (%) 60.7% 52.8% 53.9% 55.0% 55.5% 56.3% * Includes fee-based accounts, investment advisory fees, interest
Slide 92: Pre-Tax Income Growth (Non-GAAP)
387 249 362 503 533 644 344 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 13.8% 9.8% 12.4% 15.1% 14.0% 14.4% 14.6% Pre-Tax Income (Non-GAAP*) Pre-Tax Margin** (Non-GAAP) *For a reconciliation of the GAAP to the Non-GAAP measures, please see the schedule of Non-GAAP Information contained in the Appendi
Slide 93: Pre-Tax Income by Segment
TRACK RECORD OF PROFITABLE GROWTH 93 PRE-TAX INCOME BY SEGMENT ($ millions) 185 89 163 220 215 230 40 69 79 83 76 102 112 80 112 173 240 268 62 30 47 66 67 96 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 RJ Bank Private Client Group Capital Markets Asset Management Annualized* * First two quarters of
Slide 94: Diluted Earnings Per Share Growth
1.93 1.25 1.83 2.19 2.20 2.58 1.54 2.39 2.51 2.95 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FYTD 14 GAAP Non-GAAP* *For a reconciliation of the GAAP to the Non-GAAP measures, please see the schedule of Non-GAAP Information contained in the Appendix. TRACK RECORD OF PROFITABLE GROWTH 94 5-YR CAGR: 6% GAAP
Slide 95: Return on Equity vs. Competitor Group
16.1 21.0 13.3 9.7 9.7 12.8 13.1 15.7 15.6 13.0 7.9 10.6 11.3 9.7 10.6 23.8 23.9 11.5 11 11.9 15.5 13.5 23.2 13.4 6.7 3.9 8.9 7.8 8.0 10.2 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 RJF Competitor Group Median* * Except as
Slide 96: Conservative Financial Management: Balance Sheet Data
CONSERVATIVE FINANCIAL MANAGEMENT Total Assets $22.9 billion Total Shareholders’ Equity $3.9 billion Leverage (Assets/Equity) 5.9x $1.2 billion Corporate Debt Corporate Debt / Book Capitalization Total Capital to Risk Weighted Assets Tier 1 Capital to Adjusted Assets 23.5% 20.0% 15.8% Regulatory Req
Slide 97: RJF Parent Liquidity
* Either held directly by RJF or are otherwise invested by one of the subsidiaries on behalf of RJF; available without restrictions. $1.1 B RJF Cash on Hand* Total Cash Available to RJF*** Immediate Cash Available to RJF** $1.4 B CONSERVATIVE FINANCIAL MANAGEMENT $1.8 B 97 RJF PARENT LIQUIDITY (as o
Slide 98: Client Cash Balances and Corresponding Assets
98 CONSERVATIVE FINANCIAL MANAGEMENT Brokerage Client Cash / Cash Interest Program (~$3 B) Raymond James Bank Deposit Program (~$26 B) Client Margin Loans (~$1.6 B) Raymond James Bank’s Earning Assets (~$10 B***) Off-Balance Sheet Assets Earning Fees (~$19 B) Segregated Assets (~$2.2 B) to Raymond J
Slide 99: Client Cash Balances to Total Client Assets
6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 99 CONSERVATIVE FINANCIAL MANAGEMENT CLIENT CASH BALANCES* TO TOTAL CLIENT ASSETS UNDER ADMINISTRATION (%) 8.4% Average * Does not include cash held through non-money market mutual funds or cash equivalents, etc. Domestic retail business only.
Slide 100: Projected Increase in Pre-Tax Earnings from 100 bps Rate Rise
100 ~$25-$30 ~$35-40 ~$80-$90 ~$140-$160 mm Raymond James Bank Rest of Firm* (excl. Raymond James Bank) Account and Service Fees in PCG (RJBDP to Unaffiliated Banks & Money Market Funds) Projected Incremental Pre-Tax Earnings CONSERVATIVE FINANCIAL MANAGEMENT NET INTEREST INCOME * Mostly attributabl
Slide 101: Capital Discussion
CAPITAL DISCUSSION CONSERVATIVE FINANCIAL MANAGEMENT 101 25.0% 23.6% 21.7% 23.0% 25.0% 23.7% 17.1% 19.8% 22.2% Q2 FY 2012 Q3 FY 2012 Q4 FY 2012 Q1 FY 2013 Q2 FY 2013 Q3 FY 2013 Q4 FY 2013 Q1 FY 2014 Q2 FY 2014 $0.55 $0.61 $0.59 $0.82 Earnings per Diluted Share (GAAP) $0.52 $0.60 $0.56 $0.13 $0.14 $0
Slide 102: Financial Targets: Pre-Tax Margin, Compensation Ratio, ROE
FINANCIAL TARGETS 102 FIRM TARGETS: PRE-TAX MARGIN, COMPENSATION RATIO, AND RETURN ON EQUITY Metric Target** Commentary Pre-Tax Margin* 15% • Assumes similar revenue level and mix as Q2 FY 2014 • Targeted to achieve starting in Q4 FY 2014 • Targets by segment: PCG (10%), Capital Markets (15%), Asset
Slide 103: Compensation Ratio Discussion
FINANCIAL TARGETS 103 COMPENSATION RATIO DISCUSSION *On net revenues. ** Using FYTD results; the 250-300 bps estimate based on adjusting the compensation in the independent contractor business during this period to the compensation ratio in the employee branch business (RJA-PCG). 67.8% 65.7% 68.4% 6
Slide 104: Financial Summary: Key Takeaways
FINANCIAL SUMMARY WELL CAPITALIZED (LOW LEVERAGE) AMPLE LIQUIDITY RELATIVELY LOW VOLATILITY OF EARNINGS TRACK RECORD OF PROFITABLE GROWTH 104 KEY TAKEAWAYS
Slide 105: Appendix
Appendix 105 A. Non-GAAP Reconciliation B. Executive Committee Bios
Slide 106: Schedule of Non-GAAP Information
A. SCHEDULE OF NON-GAAP INFORMATION (continued on next slide) 106 2011 2012 2013 Pre-tax income attributable to RJF, Inc. - GAAP basis 461,247$ 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
Slide 107: Non-GAAP 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 108: Executive Committee Bios: Paul Reilly
B. EXECUTIVE COMMITTEE BIOS 108 Paul Reilly 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 firm’s b
Slide 109: Executive Committee Bios: Paul Allison
Paul Allison Chairman and CEO Raymond James Ltd. 109 Presenting 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, Private Client and Corporate Se
Slide 110: Executive Committee Bios: Dennis Zank
Dennis Zank Chief Operating Officer Raymond James Financial Chief Executive Officer Raymond James & Associates 110 Presenting 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
Slide 111: Executive Committee Bios: John Carson Jr.
111 Presenting John C. Carson, Jr. joined Raymond James in April 2012 when Morgan Keegan, where he was CEO, was acquired by Raymond James. Prior to that, he served as president of the Fixed Income Capital Markets division for over four years, overseeing sales, trading, research and investment bankin
Slide 112: Executive Committee Bios: Steven Raney
112 Presenting Steven Raney is a Tampa native and has worked in the area’s banking community since 1988. He is currently the president and CEO of Raymond James Bank, a wholly-owned subsidiary of Raymond James Financial. RJ Bank’s core business includes a residential lending platform that supports th
Slide 113: Executive Committee Bios: Jeff Julien
113 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 Company and Raymond James Bank. He also serves in a director capacity for many of t
Slide 114: Executive Committee Bios: Bella Allaire
114 Not Presenting 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 ou
Slide 115: Executive Committee Bios: Scott Curtis
115 Not Presenting As president of Raymond James Financial Services, Mr. Curtis directs Raymond James’ independent contractor business that includes approximately 3,200 retail financial advisors. He was promoted to his current position following six years as senior vice president of Raymond James &
Slide 116: Executive Committee Bios: Jeff Dowdle
116 Not Presenting As Executive Vice President of the Asset Management Group, Jeff Dowdle is responsible for overseeing the firms asset management businesses. In 1987, Mr. Dowdle entered the financial services industry as a financial analyst for Simmons & Company International in Houston, Texas. He
Slide 117: Executive Committee Bios: Elwyn
117 Prior to being appointed to his current position, Elwyn served for five years as divisional director, senior vice president of the Atlantic Division of RJ&A. In that role, he devoted his energies to attracting new advisors to the firm and supporting advisors’ growth plans and adoption of best pr
Slide 118: Executive Committee Bios: Jeffrey Trocin
118 Jeffrey Trocin President Raymond James & Associates Global Equities and Investment Banking Mr. Trocin joined Raymond James & Associates in 1986 and has directed the firm’s Equity Capital Markets group, which includes the firm’s investment banking, research, institutional sales, trading and syndi
Slide 119: Executive Committee Bios: Tom James
Tom James Executive Chairman Raymond James Financial 119 Not Presenting Thomas A. James is executive chairman of Raymond James Financial, Inc. (NYSE-RJF), and chairman of its subsidiary, Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. Until May of 2010, he served as chief exec
Slide 120: 2014 Analyst / Investor Day
2014 Analyst / Investor Day May 12, 2014 120