Raymond James Financial : Q4 2020 Earnings Supplement

EARNINGS RELEASE FINANCIAL SUPPLEMENT

FOURTH QUARTER AND

FISCAL YEAR 2020 RESULTS

RAYMOND JAMES FINANCIAL, INC.

Consolidated Statements of Income (Unaudited)

						Three months ended						% change from			Twelve months ended
in millions, except per share amounts		September 30,		December 31,		March 31,		June 30,		September 30,		September 30,		June 30,		September 30,		September 30,	%
	2019			2019			2020			2020			2020		2019		2020			2019			2020		change
Revenues:
Asset management and related administrative	$	924	$	955	$	1,006	$	867	$	1,006	9 %	16 %	$	3,451	$	3,834		11 %
fees
Brokerage revenues:
Securities commissions		355			363			410			343			352	(1)%	3 %			1,450			1,468		1 %
Principal transactions		95			97			105			143			143	51 %		-			357			488		37 %
Total brokerage revenues		450			460			515			486			495	10 %	2 %			1,807			1,956		8 %
Account and service fees		179			178			172			134			140	(22)%	4 %			738			624		(15)%
Investment banking		157			141			148			139			222	41 %	60 %			596			650		9 %
Interest income		320			297			285			217			201	(37)%	(7)%			1,281			1,000		(22)%
Other (1)		55			29			(15)			33			57	4 %	73 %			150			104		(31)%
Total revenues		2,085			2,060			2,111			1,876			2,121	2 %	13 %			8,023			8,168		2 %
Interest expense		(62)			(51)			(43)			(42)			(42)	(32)%		-			(283)			(178)		(37)%
Net revenues		2,023			2,009			2,068			1,834			2,079	3 %	13 %			7,740			7,990		3 %
Non-interest expenses:
Compensation, commissions and benefits		1,320			1,351			1,422			1,277			1,415	7 %	11 %			5,087			5,465		7 %
Non-compensation expenses:
Communications and information processing		95			94			99			100			100	5 %		-			373			393		5 %
Occupancy and equipment		59			57			56			55			57	(3)%	4 %			218			225		3 %
Business development		53			44			41			21			28	(47)%	33 %			194			134		(31)%
Investment sub-advisory fees		24			26			26			23			26	8 %	13 %			94			101		7 %
Professional fees		24			21			23			24			23	(4)%	(4)%			85			91		7 %
Bank loan loss provision/(benefit)		6			(2)			109			81			45	650 %	(44)%			22			233		959 %
Acquisition and disposition-related expenses (2)		-			-			-			-			7		NM		NM			15			7		(53)%
Reduction in workforce expenses (3)		-			-			-			-			46		NM		NM			-			46		NM
Other (1) (4)		88			59			53			55			76	(14)%	38 %			277			243		(12)%
Total non-compensation expenses		349			299			407			359			408	17 %	14 %			1,278			1,473		15 %
Total non-interest expenses		1,669			1,650			1,829			1,636			1,823	9 %	11 %			6,365			6,938		9 %
Pre-tax income		354			359			239			198			256	(28)%	29 %			1,375			1,052		(23)%
Provision for income taxes		89			91			70			26			47	(47)%	81 %			341			234		(31)%
Net income	$	265		$	268		$	169		$	172		$	209	(21)%	22 %		$	1,034		$	818		(21)%
Earnings per common share - basic (5)
$	1.90		$	1.93		$	1.22		$	1.25		$	1.53	(19)%	22 %		$	7.32		$	5.94		(19)%
Earnings per common share - diluted (5)	$	1.86	$	1.89	$	1.20	$	1.23	$	1.50	(19)%	22 %	$	7.17	$	5.83		(19)%
Weighted-average common shares outstanding -		138.6			138.3			138.4			137.1			136.9	(1)%		-			141.0			137.6		(2)%
basic
Weighted-average common and common
	141.8			141.5			141.1			139.4			139.6	(2)%		-			144.0			140.2		(3)%
equivalent shares outstanding - diluted

Please refer to the footnotes at the end of this supplement for additional information.

2

RAYMOND JAMES FINANCIAL, INC.

Consolidated Selected Key Metrics (Unaudited)

																					As of																% change from
$ in millions, except per share amounts						September 30,			December 31,				March 31,			June 30,		September 30,			September 30,	June 30,
						2019				2019						2020			2020					2020					2019			2020
Total assets				$	38,830	$	40,154			$		49,809	$	44,682			$	47,482						22 %			6 %
Total equity attributable to Raymond James Financial, Inc.	$		6,581	$	6,842			$		6,798	$	6,965			$	7,114						8 %			2 %
Book value per share (6)				$		47.76	$	49.26			$		49.69	$	50.84			$	52.08						9 %			2 %
Tangible book value per share (6) (7)				$		43.53	$	45.10			$		45.50	$	46.69			$	47.94						10 %			3 %
Capital ratios:
Tier 1 capital								24.8 %			24.8 %						24.1 %			24.8 %			24.2 % (8)
Total capital								25.8 %			25.7 %						25.3 %			26.0 %			25.4 % (8)
Tier 1 leverage								15.7 %			15.8 %						14.2 %			14.5 %			14.2 % (8)
								Three months ended							% change from					Twelve months ended
$ in millions		September 30,	December 31,		March 31,		June 30,			September 30,		September 30,		June 30,	September 30,		September 30,		% change
	2019		2019		2020		2020						2020			2019					2020			2019			2020
Adjusted pre-tax income (7)	$	373					NA			NA		NA			$	309			(17)%					56 %		$	1,409	$	1,105	(22)%
Adjusted net income (7)	$	284					NA			NA		NA			$	249			(12)%					45 %		$	1,068	$	858	(20)%
Adjusted earnings per common share -	$	2.04					NA			NA		NA			$	1.82			(11)%					46 %		$	7.56	$	6.23	(18)%
basic (5) (7)
Adjusted earnings per common share -	$	2.00					NA			NA		NA			$	1.78			(11)%					45 %		$	7.40	$	6.11	(17)%
diluted (5) (7)
Return on equity (9)		16.2 %					16.0 %			9.9 %	10.0 %				11.9 %											16.2 %			11.9 %
Adjusted return on equity (7) (9)		17.3 %					NA			NA		NA				14.1 %											16.7 %			12.5 %
Return on tangible common equity (7) (9)		17.8 %					17.5 %			10.8 %	10.9 %				12.9 %											17.8 %			13.0 %
Adjusted return on tangible common		19.1 %					NA			NA		NA				15.3 %											18.4 %			13.6 %
equity (7) (9)
Pre-tax margin (10)		17.5 %					17.9 %			11.6 %	10.8 %				12.3 %											17.8 %			13.2 %
Adjusted pre-tax margin (7) (10)		18.4 %					NA			NA		NA				14.9 %											18.2 %			13.8 %
Total compensation ratio (11)		65.2 %					67.2 %			68.8 %	69.6 %				68.1 %											65.7 %			68.4 %
Effective tax rate		25.1 %					25.3 %			29.3 %	13.1 %				18.4 %											24.8 %			22.2 %

Please refer to the footnotes at the end of this supplement for additional information.

3

RAYMOND JAMES FINANCIAL, INC.

Consolidated Selected Key Metrics (Unaudited)

										As of									% change from
		September 30,			December 31,				March 31,			June 30,		September 30,		September 30,		June 30,
			2019			2019				2020			2020			2020			2019		2020
Client asset metrics ($ in billions):
Client assets under administration	$	838.3	$	896.0	$	773.9	$	876.9	$	930.1		11 %	6 %
Private Client Group assets under administration	$	798.4	$	855.2	$	734.0	$	833.1	$	883.3		11 %	6 %
Private Client Group assets in fee-based accounts	$	409.1	$	444.2	$	383.5	$	443.0	$	475.3		16 %	7 %
Financial assets under management	$	143.1	$	151.7	$	128.2	$	145.4	$	153.1		7 %	5 %
Clients' domestic cash sweep balances ($ in millions):
Raymond James Bank Deposit Program ("RJBDP"): (12)
Raymond James Bank	$	21,649	$	21,891	$	28,711	$	24,101	$	25,599		18 %	6 %
Third-party banks		14,043			15,061				20,379			24,661			25,998		85 %	5 %
Subtotal RJBDP		35,692			36,952				49,090			48,762			51,597		45 %	6 %
Client Interest Program		2,022			2,528				3,782			3,157			3,999		98 %	27 %
Total clients' domestic cash sweep balances	$	37,714	$	39,480	$	52,872	$	51,919	$	55,596		47 %	7 %
							Three months ended							Twelve months ended
		September 30,			December 31,				March 31,			June 30,		September 30,		September 30,		September 30,
			2019			2019				2020			2020			2020			2019		2020
Average yield on RJBDP - third-party banks (13)		1.83 %			1.64 %			1.33 %			0.33 %			0.33 %		1.88 %	0.77 %
										As of									% change from
		September 30,			December 31,				March 31,			June 30,		September 30,		September 30,		June 30,
			2019			2019				2020			2020			2020		2019	2020
Private Client Group financial advisors:
Employees		3,301			3,331				3,376			3,379			3,404		3 %	1 %
Independent contractors		4,710			4,729				4,772			4,776			4,835		3 %	1 %
Total advisors		8,011			8,060				8,148			8,155			8,239		3 %	1 %

Please refer to the footnotes at the end of this supplement for additional information.

4

RAYMOND JAMES FINANCIAL, INC.

Segment Results - Private Client Group (Unaudited)

						Three months ended						% change from			Twelve months ended
$ in millions		September 30,		December 31,		March 31,			June 30,		September 30,		September 30,		June 30,		September 30,		September 30,	% change
	2019			2019			2020			2020			2020		2019		2020			2019			2020
Revenues:
Asset management and related	$	757	$	782	$	833	$	715	$	832	10 %	16 %	$	2,820	$	3,162			12 %
administrative fees
Brokerage revenues:
Mutual and other fund products		150			144			163			131			129	(14)%	(2)%			599			567			(5)%
Insurance and annuity products		104			101			99			88			109	5 %	24 %			412			397			(4)%
Equities, ETFs, and fixed income		87			102			122			100			95	9 %	(5)%			378			419			11 %
products
Total brokerage revenues		341			347			384			319			333	(2)%	4 %			1,389			1,383			-
Account and service fees:
Mutual fund and annuity service		84			90			88			82			88	5 %	7 %			334			348			4 %
fees
RJBDP fees: (12)
Third-party banks		65			58			51			20			21	(68)%	5 %			280			150			(46)%
Raymond James Bank		46			47			48			43			42	(9)%	(2)%			173			180			4 %
Client account and other fees		30			29			35			32			33	10 %	3 %			122			129			6 %
Total account and service fees		225			224			222			177			184	(18)%	4 %			909			807			(11)%
Investment banking		7			11			11			7			12	71 %	71 %			32			41			28 %
Interest income		55			49			45			31			30	(45)%	(3)%			225			155			(31)%
All other		7			9			7			4			7		-	75 %			26			27			4 %
Total revenues		1,392			1,422			1,502			1,253			1,398		-	12 %			5,401			5,575			3 %
Interest expense		(11)			(8)			(7)			(4)			(4)	(64)%		-			(42)			(23)			(45)%
Net revenues		1,381			1,414			1,495			1,249			1,394	1 %	12 %			5,359			5,552			4 %
Non-interest expenses:
Financial advisor compensation and		832			857			915			783			873	5 %	11 %			3,190			3,428			7 %
benefits
Administrative compensation and		233			247			245			235			244	5 %	4 %			933			971			4 %
benefits
Total compensation, commissions		1,065			1,104			1,160			1,018			1,117	5 %	10 %			4,123			4,399			7 %
and benefits
Non-compensation expenses		173			157			165			140			152	(12)%	9 %			657			614			(7)%
Total non-interest expenses		1,238			1,261			1,325			1,158			1,269	3 %	10 %			4,780			5,013			5 %
Pre-tax income	$	143	$	153	$	170	$	91	$	125	(13)%	37 %	$	579	$	539			(7)%

Please refer to the footnotes at the end of this supplement for additional information.

5

RAYMOND JAMES FINANCIAL, INC.

Segment Results - Capital Markets (Unaudited)

						Three months ended						% change from			Twelve months ended
$ in millions		September 30,		December 31,		March 31,			June 30,		September 30,		September 30,		June 30,		September 30,		September 30,	% change
	2019			2019			2020			2020			2020		2019		2020			2019			2020
Revenues:
Brokerage revenues:
Fixed income	$	82	$	81	$	90	$	125	$	125	52 %		-	$	283	$	421			49 %
Equity		26			34			40			41			35	35 %	(15)%			131			150			15 %
Total brokerage revenues		108			115			130			166			160	48 %	(4)%			414			571			38 %
Investment banking:
Merger & acquisition and advisory		93			60			72			60			98	5 %	63 %			379			290			(23)%
Equity underwriting		28			39			43			35			68	143 %	94 %			100			185			85 %
Debt underwriting		29			31			22			37			43	48 %	16 %			85			133			56 %
Total investment banking		150			130			137			132			209	39 %	58 %			564			608			8 %
Interest income		9			8			10			4			3	(67)%	(25)%			38			25			(34)%
Tax credit fund revenues		37			18			12			20			33	(11)%	65 %			86			83			(3)%
All other		6			3			7			3			7	17 %	133 %			15			20			33 %
Total revenues		310			274			296			325			412	33 %	27 %			1,117			1,307			17 %
Interest expense		(8)			(6)			(6)			(2)			(2)	(75)%		-			(34)			(16)			(53)%
Net revenues		302			268			290			323			410	36 %	27 %			1,083			1,291			19 %
Non-interest expenses:
Compensation, commissions and		179			166			184			195			229	28 %	17 %			665			774			16 %
benefits
Non-compensation expenses (2) (4)		90			73			78			66			75	(17)%	14 %			308			292			(5)%
Total non-interest expenses		269			239			262			261			304	13 %	16 %			973			1,066			10 %
Pre-tax income	$	33	$	29	$	28	$	62	$	106	221 %	71 %	$	110	$	225			105 %

Please refer to the footnotes at the end of this supplement for additional information.

6

RAYMOND JAMES FINANCIAL, INC.

Segment Results - Asset Management (Unaudited)

						Three months ended						% change from			Twelve months ended
$ in millions		September 30,		December 31,		March 31,			June 30,		September 30,		September 30,		June 30,		September 30,		September 30,	% change
	2019			2019			2020			2020			2020		2019		2020			2019			2020
Revenues:
Asset management and related
administrative fees:
Managed programs	$	121	$	125	$	124	$	109	$	123	2 %	13 %	$	467	$	481			3 %
Administration and other		49			51			53			48			55	12 %	15 %			178			207			16 %
Total asset management and		170			176			177			157			178	5 %	13 %			645			688			7 %
related administrative fees
Account and service fees		4			5			4			3			4		-	33 %			31			16			(48)%
All other		4			3			3			3			2	(50)%	(33)%			15			11			(27)%
Net revenues		178			184			184			163			184	3 %	13 %			691			715			3 %
Non-interest expenses:
Compensation, commissions and		44			45			45			44			43	(2)%	(2)%			179			177			(1)%
benefits
Non-compensation expenses		65			66			66			59			63	(3)%	7 %			259			254			(2)%
Total non-interest expenses		109			111			111			103			106	(3)%	3 %			438			431			(2)%
Pre-tax income	$	69	$	73	$	73	$	60	$	78	13 %	30 %	$	253	$	284			12 %

Please refer to the footnotes at the end of this supplement for additional information.

7