Raymond James Financial, Inc. · NYSE:RJF
Raymond James Financial — Q2 FY2020 Earnings Presentation
28 slides from Raymond James Financial's earnings presentation, Apr 29, 2020
Slide 1: Fiscal 2Q20 Results
FISCAL 2Q20 RESULTS April 29, 2020
Slide 2: Fiscal 2Q20 Overview
FISCAL 2Q20 OVERVIEW Paul Reilly Chairman & CEO, Raymond James Financial 2
Slide 3: Our Priorities in Response to COVID-19
OUR PRIORITIES IN RESPONSE TO COVID-19 Ensure the health and Maintain continuous Continue supporting safety of our associates service and support for our communities during and advisors clients these challenging times 3
Slide 4: Fiscal 2Q20 Highlights
FISCAL 2Q20 HIGHLIGHTS vs. vs. $ in millions, except per share amounts 2Q20 2Q19 1Q20 Net revenues RECORD $ 2,068 11% 3% Net income $ 169 (35)% (37)% Earnings per common share - diluted $ 1.20 (34)% (37)% 2Q19 1Q20 Return on equity 9.9% 16.7% 16.0% Return on tangible common equity* 10.8% 18.5% 17.5%
Slide 5: Fiscal 2Q20 Key Metrics
FISCAL 2Q20 KEY METRICS vs. vs. $ in billions 2Q20 2Q19 1Q20 Client assets under administration $ 773.9 (3)% (14)% Private Client Group (PCG) assets under administration $ 734.0 (3)% (14)% PCG assets in fee-based accounts $ 383.5 1% (14)% Financial assets under management $ 128.2 (7)% (15)% Total cl
Slide 6: Private Client Group
PRIVATE CLIENT GROUP Net Revenues Pre-Tax Income $ in millions $ in millions 1,495 170 1,414 1,351 1,381 153 1,271 140 143 132 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Year-over-year change: 18% Year-over-year change: 29% Sequential change: 6% Sequential change: 11% Number of Financial Advi
Slide 7: Capital Markets
CAPITAL MARKETS Net Revenues Pre-Tax Income $ in millions $ in millions 302 290 41 277 268 33 29 28 251 24 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19* 1Q20 2Q20 Year-over-year change: 5% Year-over-year change: (32)% Sequential change: 8% Sequential change: (3)% Investment Banking Revenues Brokerage Rev
Slide 8: Asset Management
ASSET MANAGEMENT Net Revenues Pre-Tax Income $ in millions $ in millions 184 184 73 73 177 178 69 65 162 55 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Year-over-year change: 14% Year-over-year change: 33% Sequential change: 0% Sequential change: 0% Financial Assets Under Management $ in billi
Slide 9: Raymond James Bank
RAYMOND JAMES BANK Net Revenues Pre-Tax Income $ in millions $ in millions 215 216 216 136 138 131 135 212 210 14 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Year-over-year change: (1)% Year-over-year change: (90)% Sequential change: (3)% Sequential change: (90)% Bank Loans, Net $ in billions
Slide 10: Raymond James Bank Key Credit Trends
RAYMOND JAMES BANK KEY CREDIT TRENDS Loan Loss Provision Net Charge-Offs/(Recoveries) $ in millions $ in millions 107 169 84 107 35 80 24 14 13 21 55 2 3 8 6 0 34 26 28 14 24 20 22 3 13 -3 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FYTD20 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 11: FYTD 2020 Highlights
FYTD 2020 HIGHLIGHTS Compared to Compared to GAAP Adjusted* Results Results vs. vs. $ in millions, except per share amounts FYTD 2020 FYTD 2019 FYTD 2019 Net revenues RECORD $ 4,077 8% NA Net income $ 437 (14)% (17)% Earnings per common share - diluted $ 3.09 (12)% (14)% FYTD 2019 FYTD 2019 Return o
Slide 12: Financial Review
FINANCIAL REVIEW Paul Shoukry Chief Financial Officer, Raymond James Financial 12
Slide 13: Consolidated Net Revenues
CONSOLIDATED NET REVENUES vs. vs. $ in millions 2Q20 2Q19 1Q20 Asset management and related administrative fees $ 1,006 28% 5% Brokerage revenues 515 17% 12% Account and service fees 172 (10)% (3)% Investment banking 148 (9)% 5% Interest income 285 (12)% (4)% Other* (15) NM NM Total revenues 2,111 9
Slide 14: Domestic Cash Sweep Balances
DOMESTIC CASH SWEEP BALANCES Clients' Domestic Cash Sweep Balances as a % of Domestic PCG Assets Under Administration (AUA) A U ) A B 7.6% G $ ( C s P e c c 5.8% i t n s a 5.1% 5.0% l 4.9% 52.9 e a m B 3.8 o p D e f e 41.7 o w 39.5 % S 38.2 2.3 37.7 a h 20.4 s 2.5 4.0 2.1 s a 2.0 a C s c e i c t 14.
Slide 15: Net Interest Income & RJBDP Fees (Third-Party Banks)
NET INTEREST INCOME & RJBDP FEES (THIRD-PARTY BANKS) Firmwide Net Interest Income RJBDP Fees (Third-Party Banks)* 329 315 323 304 293 s 80 65 n 67 58 51 o i l l i m n i 249 248 258 246 242 $ 2Q19 3Q19 4Q19 1Q20 2Q20 Raymond James Bank Average Yield on RJBDP Net Interest Margin** (Third-Party Banks)*
Slide 16: Consolidated Expenses
CONSOLIDATED EXPENSES Total Compensation Ratio vs. vs. $ in millions 2Q20 2Q19 1Q20 68.8% 67.2% 66.3% Compensation, commissions and benefits $ 1,422 16% 5% 65.9% 65.2% Non-compensation expenses: Communications and information processing 99 5% 5% Occupancy and equipment 56 6% (2)% 2Q19 3Q19 4Q19 1Q20
Slide 17: Consolidated Pre-Tax Margin
CONSOLIDATED PRE-TAX MARGIN 18.7% 18.4% 17.7% 17.9% 17.5% 11.6% 2Q19 3Q19 4Q19* 1Q20 2Q20 Pre-tax margin (GAAP) Pre-tax margin (Adjusted)** * 4Q19 included a $19 million goodwill impairment charge associated with our Canadian Capital Markets business. 17 ** This is a non-GAAP measure. See the schedu
Slide 18: Other Financial Information
OTHER FINANCIAL INFORMATION vs. vs. $ in millions, except per share amounts 2Q20 2Q19 1Q20 Total assets $ 49,809 30% 24% RJF corporate cash* $ 1,925 63% 35% Total equity attributable to RJF $ 6,798 7% (1)% Book value per share $ 49.69 10% 1% Tangible book value per share** $ 45.50 11% 1% Weighted-av
Slide 19: Capital Management
CAPITAL MANAGEMENT Dividends Paid and Share Repurchases* $ in millions Total of ~$750 million Share Repurchases* Dividends Paid over the past 5 quarters 254 209 52 48 133 95 48 202 ** 48 161 62 85 51 47 2Q19 3Q19 4Q19 1Q20 2Q20 Number of Shares Repurchased* 603 1,044 2,127 126 2,546 (thousands) Aver
Slide 20: Raymond James Bank Asset Composition
RAYMOND JAMES BANK ASSET COMPOSITION RJ Bank Asset Mix* Commercial & Industrial Portfolio (C&I) • All senior positions; no mezzanine lending • Highly diversified with no industry category representing more than 4.1% of total loans (e.g. Energy ~1.7%, Airlines ~1.5%, Entertainment/Leisure ~1.2%, Cash
Slide 21: Energy Exposure
ENERGY EXPOSURE Energy (Oil & Gas) • Energy outstandings only represent Oilfield Services: 0.2% ~1.7% of total loans Convenience • No exploration and production (E&P) & Gas / Fuel loans Distribution: • Mostly to midstream distribution and 34.8% convenience stores • Portfolio has minimal direct Midst
Slide 22: Outlook
OUTLOOK RAYMOND JAMES
Slide 23: Appendix
APPENDIX * RAYMOND JAMES
Slide 24: Reconciliation of GAAP Measures to Non-GAAP Financial Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) We utilize certain non-GAAP financial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures have been separately identified
Slide 25: Reconciliation of GAAP Measures to Non-GAAP Financial Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Three months ended Six months ended $ in millions, except per share amounts September 30, 2019 March 31, 2019 Net income $ 265 $ 510 Non-GAAP adjustments: Acquisition and disposition-related expenses (1) — 15 Goodwill impairm
Slide 26: Reconciliation of GAAP Measures to Non-GAAP Financial Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Book value per share As of $ in millions, except per share amounts March 31, 2019 December 31, 2019 March 31, 2020 Total equity attributable to Raymond James Financial, Inc. $ 6,366 $ 6,842 $ 6,798 Less non-GAAP adjustments:
Slide 27: Reconciliation of GAAP Measures to Non-GAAP Financial Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) Return on equity Three months ended Six months ended March 31, December 31, March 31, March 31, March 31, $ in millions 2019 2019 2020 2019 2020 Average equity (6) $ 6,255 $ 6,712 $ 6,820 $ 6,292 $ 6,740 Impact on average equ
Slide 28: Footnotes
FOOTNOTES 1. The six months ended March 31, 2019 included a $15 million loss in our Capital Markets segment on the sale of our operations related to research, sales and trading of European equities. 2. The three months ended September 30, 2019 included a $19 million goodwill impairment charge associ
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