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Press Release
July 22, 2009
Printable version (PDF)
RAYMOND JAMES FINANCIAL, INC.
ANNOUNCES THIRD QUARTER RESULTS
ST. PETERSBURG, Fla. – Raymond James Financial, Inc. today reported a 39 percent decrease from the prior year’s quarterly net income to $42,595,000, or $0.36 per diluted share, for the third quarter ended June 30, 2009. In comparison, the firm earned $69,938,000, or $0.59 per diluted share, for the third quarter of fiscal year 2008. Net revenues decreased 16 percent to $624,799,000, while gross revenues decreased 22 percent to $632,252,000. Comparisons with the immediately preceding quarter were far more favorable as net income was up 600 percent on a 6 percent increase in net revenues.
“The market rally in the June quarter was sufficient to generate a material increase in profits from the second quarter, but not nearly enough to emulate the record revenues and net income attained in last year’s comparable quarter. Like the rest of corporate America, improved short-term profit results don’t reflect much revenue growth, symptomatic of the continuing deep recession,” stated Chairman and CEO Thomas A. James.
“In the non-bank aspects of our business, although securities commissions and fees were down 16 percent from last year’s remarkable June quarter, they were up 10 percent from the March quarter. Similarly, Investment Banking revenues increased 14 percent from the preceding quarter but trailed last year by 43 percent. The Fixed Income department continued its outstanding performance and enabled trading profits to exceed both last year’s and the preceding quarter’s very good results. As a reminder, we don’t maintain large proprietary inventories. Instead, trading results reflect excellent transaction volumes as well as a general increase in fixed income securities prices. I would conclude that this performance is indicative of the ability of our results to improve when market conditions and the general economy return to health.
“Raymond James Bank returned to profitability in the quarter as pre-tax profits were $27.4 million in spite of $29.8 million in loan loss provision expense. That figure compares to a $75 million provision expense last quarter, which was abnormally high relative to the experience in prior quarters due to unprecedented problems in the commercial real estate sector. The allowance for loan losses as a percentage of total loans increased from 1.84 percent to 1.90 percent in the quarter. Although quarterly profits were 28 percent below last year’s outstanding results, they represent a dramatic improvement from last quarter’s $12.4 million pre-tax loss. As larger banks’ recent results and announcements indicate, we expect loan losses to continue until the general economy improves. However, Raymond James Bank’s performance remains superior to most of the larger banks and our stress test results would suggest that its cumulative operating results should be profitable over the next two years, subject to the general assumption that economic conditions will not erode materially from current levels. Given Raymond James Bank’s relatively small size, quarter-to-quarter net income can be volatile. In light of the economic scenario, we added $35 million in additional capital to that segment in the quarter. We have also elected not to replace all loan payoffs, thereby reducing loans outstanding by $475 million during the quarter. Our plan is to achieve and maintain a ratio of total bank capital to risk-weighted assets in a range of approximately 11.5 to 12.5 percent. After that ratio is achieved, we will begin to grow the bank consistent with increases in its retained earnings,” James continued.
“My best guess is that volatility in the market will continue to be high by historical standards and that the general economic recovery will be protracted given the damage to the financial sector and the overall economy. During the June quarter, we added 150 financial advisors, which resulted in a total of 5,333 retail and institutional financial advisors. As we have continued to add producing personnel of all types aggressively, we are poised to participate in the recovery as it occurs.”
The company will conduct its quarterly conference call Thursday, July 23, at 8:15 a.m. EDT. Please logon to raymondjames.com/analystcall for a listen-only live audio webcast. The subjects to be covered may include forward-looking information. Questions may be posed to management by participants on the call, and in response the company may disclose additional material information.
Raymond James Financial (NYSE-RJF) is a Florida-based diversified holding company providing financial services to individuals, corporations and municipalities through its subsidiary companies. Its three wholly owned broker/dealers, (Raymond James & Associates, Raymond James Financial Services and Raymond James Ltd.) and Raymond James Investment Services Limited, a majority-owned independent contractor subsidiary in the United Kingdom, have more than 5,300 financial advisors serving approximately 1.8 million accounts in approximately 2,300 locations throughout the United States, Canada and overseas. In addition, total client assets are approximately $196 billion, of which approximately $29 billion are managed by the firm’s asset management subsidiaries.
To the extent that Raymond James makes or publishes forward-looking statements (regarding economic conditions, management expectations, strategic objectives, business prospects, anticipated expense savings, financial results, anticipated results of litigation and regulatory proceedings, and other similar matters), a variety of factors, many of which are beyond Raymond James’ control, could cause actual results and experiences to differ materially from the expectations and objectives expressed in these statements. These factors are described in Raymond James’ 2008 annual report on Form 10-K and quarterly report for the quarters ended December 31, 2008, and March 31, 2009, on Form 10-Q, which are available on raymondjames.com and sec.gov.
Raymond James Financial, Inc.
Unaudited Financial Data
For the third quarter ended June 30, 2009
(all data in thousands, except per share earnings) |
| |
Third Quarter |
Nine Months |
| |
2009 |
2008 |
% Change |
2009 |
2008 |
% Change |
Gross revenues |
$632,252 |
$808,748 |
(22%) |
$1,924,496 |
$2,445,073 |
(21%) |
Net revenues |
624,799 |
742,024 |
(16%) |
1,878,408 |
2,119,538 |
(11%) |
Net income |
42,595 |
69,938 |
(39%) |
109,781 |
185,970 |
(41%) |
| |
|
|
|
|
|
|
Net income per share – diluted |
0.36 |
0.59 |
(39%) |
0.93 |
1.56 |
(40%) |
Weighted average common
and common equivalent shares
outstanding – diluted |
119,460 |
118,272 |
|
118,411 |
119,212 |
|
| |
Balance Sheet Data |
| |
June
2009 |
March
2009 |
December
2008 |
June
2008 |
Total assets |
$ 17.8 bil. |
$ 18.1 bil. |
$ 18.3 bil. |
$ 18.3 bil. |
Shareholders' equity |
$1,962 mil. |
$1,896 mil. |
$1,865 mil. |
$1,847 mil. |
Book value per share |
$16.58 |
$16.05 |
$15.96 |
$15.95 |
| |
Management Data
Quarter Ended |
| |
June
2009 |
March
2009 |
December
2008 |
June
2008 |
Total financial advisors: |
|
|
|
|
United States |
4,749 |
4,616 |
4,559 |
4,453 |
Canada |
469 |
459 |
436 |
374 |
United Kingdom |
115 |
108 |
101 |
86 |
Total |
5,333 |
5,183 |
5,096 |
4,913 |
| |
|
|
|
|
# Lead managed/co-managed: |
|
|
|
|
Corporate public offerings in U.S. |
32 |
10 |
3 |
18 |
Corporate public offerings in Canada |
6 |
1 |
3 |
7 |
| |
|
|
|
|
Financial assets under management |
$28.6 bil. |
$26.1 bil. |
$28.3 bil. |
$36.0 bil. |
| |
|
|
|
|
Raymond James Bank Total Assets |
$8.3 bil. |
$9.1 bil. |
$9.5 bil. |
$8.3 bil. |
| |
|
|
|
|
Client Assets |
$196 bil. |
$172 bil. |
$170 bil. |
$212 bil. |
Client Margin Balances |
$1,187 mil. |
$1,089 mil. |
$1,168 mil. |
$1,675 mil. |
| |
Three Months Ended |
| |
June 30,
2009 |
June 30,
2008 |
% Change
(in 000’s) |
March 31,
2009 |
% Change |
Revenues: |
|
|
|
|
|
Private Client Group |
$370,719 |
$485,672 |
(24%) |
$351,042 |
6% |
Capital Markets |
138,524 |
147,114 |
(6%) |
124,013 |
12% |
Asset Management |
35,398 |
59,416 |
(40%) |
46,181 |
(23%) |
RJBank |
80,747 |
96,222 |
(16%) |
83,336 |
(3%) |
Emerging Markets |
3,208 |
10,389 |
(69%) |
3,097 |
4% |
Stock Loan/Borrow |
2,361 |
6,728 |
(65%) |
2,607 |
(9%) |
Proprietary Capital |
9,881 |
16,147 |
(39%) |
(639) |
1,646% |
Other |
3,203 |
4,320 |
(26%) |
298 |
975% |
Intersegment Eliminations |
(11,789) |
(17,260) |
32% |
(13,524) |
13% |
Total |
$632,252 |
$808,748 |
(22%) |
$596,411 |
6% |
Pre-tax Income: |
|
|
|
|
|
Private Client Group |
$18,321 |
$34,909 |
(48%) |
$11,681 |
57% |
Capital Markets |
20,224 |
27,253 |
(26%) |
15,982 |
27% |
Asset Management |
6,691 |
14,215 |
(53%) |
4,904 |
36% |
RJBank |
27,406 |
37,957 |
(28%) |
(12,416) |
321% |
Emerging Markets |
(1,311) |
(271) |
(384%) |
(2,289) |
43% |
Stock Loan/Borrow |
885 |
1,893 |
(53%) |
847 |
4% |
Proprietary Capital |
(308) |
5,855 |
(105%) |
(502) |
39% |
Other |
401 |
(6,693) |
106% |
(5,289) |
108% |
Pre-tax Income |
$72,309 |
$115,118 |
(37%) |
$12,918 |
460% |
| |
Nine Months Ended |
| |
June 30,
2009 |
June 30,
2008
(in 000’s) |
% Change |
Revenues: |
|
|
|
Private Client Group |
$1,136,305 |
$1,525,135 |
(25%) |
Capital Markets |
391,243 |
386,146 |
1% |
Asset Management |
132,870 |
184,702 |
(28%) |
RJBank |
273,322 |
303,945 |
(10%) |
Emerging Markets |
10,628 |
33,270 |
(68%) |
Stock Loan/Borrow |
8,258 |
29,015 |
(72%) |
Proprietary Capital |
9,780 |
18,560 |
(47%) |
Other |
4,587 |
19,378 |
(76%) |
Intersegment Eliminations |
(42,497) |
(55,078) |
23% |
Total |
$ 1,924,496 |
$ 2,445,073 |
(21%) |
| |
|
|
|
Pre-tax Income: |
|
|
|
Private Client Group |
$ 62,587 |
$144,227 |
(57%) |
Capital Markets |
50,495 |
36,381 |
39% |
Asset Management |
20,669 |
47,552 |
(57%) |
RJBank |
69,616 |
78,622 |
(11%) |
Emerging Markets |
(4,065) |
(1,720) |
(136%) |
Stock Loan/Borrow |
2,955 |
4,827 |
(39%) |
Proprietary Capital |
(1,354) |
4,578 |
(130%) |
Other |
(14,012) |
(10,774) |
(30%) |
Pre-tax Income |
$186,891 |
$303,693 |
(38%) |
|
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Quarter-to-Date
(in thousands, except per share amounts) |
| |
Three Months Ended |
| |
June 30,
2009 |
June 30,
2008 |
%
Change |
March. 31,
2009 |
%
Change |
Revenues: |
|
|
|
|
|
Securities commissions and fees |
$405,925 |
$483,225 |
(16%) |
$369,705 |
10% |
Investment banking |
20,586 |
36,236 |
(43%) |
18,001 |
14% |
Investment advisory fees |
27,558 |
51,492 |
(46%) |
38,961 |
(29%) |
Interest |
98,037 |
156,935 |
(38%) |
108,073 |
(9%) |
Net trading profits |
13,272 |
11,100 |
20% |
12,766 |
4% |
Financial service fees |
30,909 |
31,774 |
(3%) |
30,805 |
- |
Other |
35,965 |
37,986 |
(5%) |
18,100 |
99% |
| |
|
|
|
|
|
Total Revenues |
632,252 |
808,748 |
(22%) |
596,411 |
6% |
Interest Expense |
7,453 |
66,724 |
(89%) |
6,744 |
11% |
Net Revenues |
624,799 |
742,024 |
(16%) |
589,667 |
6% |
| |
|
|
|
|
|
Non-Interest Expenses: |
|
|
|
|
|
Compensation, commissions and benefits |
406,809 |
490,479 |
(17%) |
391,902 |
4% |
Communications and information processing |
26,690 |
30,899 |
(14%) |
29,956 |
(11%) |
Occupancy and equipment costs |
26,299 |
26,102 |
1% |
24,945 |
5% |
Clearance and floor brokerage |
8,377 |
7,969 |
5% |
7,464 |
12% |
Business development |
18,652 |
24,527 |
(24%) |
18,817 |
(1%) |
Investment advisory fees |
7,114 |
12,997 |
(45%) |
7,222 |
(1%) |
Bank loan loss provision |
29,790 |
12,366 |
141% |
74,979 |
(60%) |
Other |
24,378 |
21,992 |
11% |
28,156 |
(13%) |
Total Non-Interest Expenses |
548,109 |
627,331 |
(13%) |
583,441 |
(6%) |
| |
|
|
|
|
|
Minority Interest |
4,381 |
(425) |
1,131% |
(6,692) |
165% |
| |
|
|
|
|
|
Income before provision for income taxes |
72,309 |
115,118 |
(37%) |
12,918 |
460% |
| |
|
|
|
|
|
Provision for income taxes |
29,714 |
45,180 |
(34%) |
6,825 |
335% |
| |
|
|
|
|
|
Net Income |
$42,595 |
$69,938 |
(39%) |
$6,093 |
599% |
Net Income per share-basic |
$0.36 |
$0.60 |
(40%) |
$0.05 |
620% |
Net Income per share-diluted |
$0.36 |
$0.59 |
(39%) |
$0.05 |
620% |
Weighted average common shares
outstanding-basic |
118,177 |
115,633 |
|
117,391 |
|
Weighted average common and common
equivalent shares outstanding-diluted |
119,460 |
118,272 |
|
118,580 |
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Year-to-Date
(in thousands, except per share amounts) |
| |
Nine Months Ended |
| |
June 30,
2009 |
June 30,
2008 |
%
Change |
Revenues: |
|
|
|
Securities commissions and fees |
$1,193,855 |
$1,437,327 |
(17%) |
Investment banking |
59,320 |
87,323 |
(32%) |
Investment advisory fees |
110,954 |
161,416 |
(31%) |
Interest |
349,722 |
561,199 |
(38%) |
Net trading profits |
35,213 |
5,256 |
570% |
Financial service fees |
94,849 |
97,512 |
(3%) |
Other |
80,583 |
95,040 |
(15%) |
| |
|
|
|
Total Revenues |
1,924,496 |
2,445,073 |
(21%) |
Interest Expense |
46,088 |
325,535 |
(86%) |
Net Revenues |
1,878,408 |
2,119,538 |
(11%) |
| |
|
|
|
Non-Interest Expenses: |
|
|
|
Compensation, commissions and benefits |
1,217,965 |
1,434,389 |
(15%) |
Communications and information processing |
91,869 |
93,140 |
(1%) |
Occupancy and equipment costs |
77,679 |
71,600 |
8% |
Clearance and floor brokerage |
24,429 |
23,648 |
3% |
Business development |
62,193 |
70,130 |
(11%) |
Investment advisory fees |
24,058 |
38,490 |
(37%) |
Bank loan loss provision |
129,639 |
36,299 |
257% |
Other |
71,003 |
51,253 |
39% |
Total Non-Interest Expenses |
1,698,835 |
1,818,949 |
(7%) |
| |
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|
|
Minority Interest |
(7,318) |
(3,104) |
(136%) |
| |
|
|
|
Income before provision for income taxes |
186,891 |
303,693 |
(38%) |
Provision for income taxes |
77,110 |
117,723 |
(34%) |
| |
|
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|
Net Income |
$109,781 |
$185,970 |
(41%) |
Net Income per share-basic |
$0.94 |
$1.59 |
(41%) |
Net Income per share-diluted |
$0.93 |
$1.56 |
(40%) |
Weighted average common shares
outstanding-basic |
117,239 |
116,573 |
|
Weighted average common and common
equivalent shares outstanding-diluted |
118,411 |
119,212 |
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–30–
For more information, contact Anthea Penrose at 727-567-2824.
Please visit the Raymond James Press Center at raymondjames.com/media.
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