01—Abstract
Summary
Summary of the 10-K filed November 24, 2010. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. (RJF) reported fiscal 2010 (year ended September 30, 2010) net income attributable to the company of $228.3 milliona, or $1.83 per diluted share, up from $152.8 million in fiscal 2009.
Total revenues were $2.98 billionb, and net revenues were $2.92 billion, compared with $2.55 billion in the prior year. The filing attributes the improvement mainly to improved equity markets, which lifted Private Client Group net revenues by 23% to $1.90 billion, and to Capital Markets underwriting fees, which doubled. Net interest income fell $78.6 million, or 20%, to $308.0 million, reflecting lower loan balances and spreads at RJ Bank and a full year of interest on $300 million of 8.60% senior notes issued in August 2009.
The bank loan loss provision declined to $80.4 millionc from $169.3 million. The balance sheet shows total assets of $17.88 billion and shareholders' equity of $2.30 billion, with book value per share of $19.03. Major risks disclosed include the auction rate securities (ARS) investigations by the SEC, FINRA and state regulators, with client ARS holdings of about $600 million at year-end; a pending class action (Defer LP); the pending Federal Reserve bank holding company application; and the Dodd-Frank Act, whose implementing rules are still uncertain.
RJ Bank's total capital ratio was 13.0% at year-end, and the company disclosed a $1.0 billiond cash use in operating activities, driven largely by assets segregated under regulations. The company declared a quarterly dividend of $0.13 per share on November 23, 2010, payable January 19, 2011, up from $0.11 paid in each quarter of fiscal 2010.
02—Key points
Key Highlights
- Net income attributable to Raymond James Financial, Inc. rose to $228.3 million ($1.83 per diluted share) from $152.8 million in fiscal 2009.
- Total revenues were $2.98 billion and net revenues were $2.92 billion, up from $2.55 billion in the prior year.
- Private Client Group net revenues increased 23% to $1.90 billion, and Capital Markets underwriting fees increased 100% to $104.2 million.
- Net interest income fell 20% to $308.0 million, reflecting lower RJ Bank loan balances and spreads and a full year of interest on $300 million of 8.60% senior notes.
- The bank loan loss provision decreased to $80.4 million from $169.3 million, and RJ Bank pre-tax income rose to $112.0 million.
- Auction rate securities remain under SEC, FINRA and state investigation, with about $600 million of client ARS outstanding at September 30, 2010.
- The quarterly dividend was raised to $0.13 per share, declared November 23, 2010, from $0.11 paid in each quarter of fiscal 2010.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed November 24, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.98B$2.60B | +14.5% |
| Net Income | $228.28M$152.75M | +49.4% |
| EPS (Basic) | $1.83$1.25 | +46.4% |
| EPS (Diluted) | $1.83$1.25 | +46.4% |
| Shares Outstanding (Basic) | 119.33M117.19M | +1.8% |
| Shares Outstanding (Diluted) | 119.59M117.29M | +2.0% |
05—Questions
Frequently Asked Questions
How did Raymond James perform in fiscal 2010?
Net income attributable to Raymond James Financial, Inc. was $228.3 million, or $1.83 per diluted share, compared with $152.8 million, or $1.25 per diluted share, in fiscal 2009. Net revenues rose to $2.92 billion from $2.55 billion, and the filing attributes the gain mainly to improved equity markets and higher commissions in the Private Client Group.
What are the main risks around the auction rate securities matter?
RJ&A and RJFS are under ongoing investigations by the SEC, the New York Attorney General's Office and Florida's Office of Financial Regulation, and the company is named in a class action (Defer LP). Client ARS holdings were about $600 million at September 30, 2010, and the company states it does not currently have sufficient cash or borrowing capacity to repurchase all of them. The filing says it is unable to estimate the amount of any loss related to the ARS matter.
What does the RJ Bank regulatory change mean for the company?
RJ Bank applied to convert to a national bank, which would make Raymond James Financial a bank holding company and subject it to Federal Reserve oversight. The company anticipates this change becoming effective in mid-2011. Until then, RJ Bank must meet qualified thrift lender tests, and at September 30, 2010 it used a $2.4 billion overnight FHLB advance and affiliate and RJBDP deposits to meet point-in-time requirements, all of which were unwound on October 1, 2010.
How much cash does the company return to shareholders?
Cash dividends were $0.44 per share in fiscal 2010, paid at $0.11 per quarter, totaling $56.0 million. On November 23, 2010, the Board declared a quarterly dividend of $0.13 per share payable January 19, 2011. About $61.9 million remained available under the $150 million share repurchase authorization, and no shares were bought in open market transactions during fiscal 2010.
What were the company's total assets and equity at year-end?
Total assets were $17.88 billion at September 30, 2010, compared with $18.23 billion a year earlier. Total shareholders' equity attributable to Raymond James Financial, Inc. was $2.30 billion, and total equity including noncontrolling interests was $2.60 billion. Book value per share was $19.03.
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