01—Abstract
Summary
Summary of the 10-K filed November 25, 2014. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. (RJF) reported record net revenues of $4.9 billiona for fiscal 2014 (year ended September 30, 2014), an $376 million, or 8%, increase over the prior year, and record net income of $480 million, up $113 million, or 31%.
Fully diluted EPS was $3.32b, up $0.74, or 29%. Three of the four operating segments reported record profitability. Total client assets under administration rose to $475 billion, a 12% increase.
Private Client Group net revenues reached a record $3.3 billionc, up 12%, with pre-tax income up 43% to $330 million. Capital Markets posted record net revenues of $966 million, up 3%, and pre-tax income of $131 million, up 28%, despite a 25% decline in institutional fixed income commissions. Asset Management reported record net revenues of $370 million, up 26%, with financial assets under management up 15% to $64.6 billion.
RJ Bank generated record net revenues of $352 milliond, up 1%, while its pre-tax income fell 9% to $243 million as the loan loss provision rose and the net interest margin declined to 2.98% from 3.25%. The filing also highlights regulatory and credit considerations. Dodd-Frank and Basel III rules, including the Volcker Rule and new capital requirements effective January 1, 2015, are cited as potential sources of cost and capital pressure.
Morgan Keegan legal matters remain subject to indemnification by Regions, with management estimating potential liability of $15 million to $210 million. Total corporate debt was $1.19 billion at year end, and the company declared a quarterly dividend of $0.18 per share for January 2015.
02—Key points
Key Highlights
- Record net revenues of $4.9 billion, up $376 million, or 8%, from $4.5 billion in fiscal 2013; the fifth consecutive year of record net revenues.
- Record net income attributable to RJF of $480 million, up $113 million, or 31%; diluted EPS of $3.32, up 29%.
- Private Client Group pre-tax income rose 43% to a record $330 million; client assets under administration reached $475 billion, up 12%.
- Asset Management financial assets under management rose 15% to $64.6 billion, with record net revenues of $370 million, up 26%.
- RJ Bank pre-tax income declined 9% to $243 million as the net interest margin fell to 2.98% from 3.25% and the loan loss provision increased.
- Total assets were $23.3 billion at September 30, 2014, and total equity was $4.43 billion; tangible book value per share was $26.98.
- Quarterly dividend declared at $0.16 per share during fiscal 2014 and raised to $0.18 per share in November 2014.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed November 25, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $4.97B$4.60B | +8.0% |
| Interest Expense | $104.09M$110.37M | −5.7% |
| Net Income | $480.25M$367.15M | +30.8% |
| EPS (Basic) | $3.41$2.64 | +29.2% |
| EPS (Diluted) | $3.32$2.58 | +28.7% |
| Shares Outstanding (Basic) | 139.94M137.73M | +1.6% |
| Shares Outstanding (Diluted) | 143.59M140.54M | +2.2% |
05—Questions
Frequently Asked Questions
How did Raymond James perform financially in fiscal 2014?
The company achieved record net revenues of $4.86 billion and record net income attributable to RJF of $480.2 million, with diluted EPS of $3.32, compared with $2.58 in fiscal 2013. All four operating segments reported record net revenues.
What are the main regulatory risks the company identified?
The filing cites Dodd-Frank Act rulemaking, including the Volcker Rule, which became effective April 1, 2014 with conformance required by July 21, 2015, and Basel III capital rules effective January 1, 2015. The company says these could increase costs, restrict growth, or require additional capital, though it does not expect the Volcker Rule to have a material impact on results.
What exposure does the company have from Morgan Keegan litigation?
Regions Financial is obligated to indemnify RJF for pre-closing Morgan Keegan legal matters. Management estimates the range of potential liability, including defense costs, at $15 million to $210 million, and a liability of about $154.4 million is recorded in trade and other payables with an offsetting indemnification asset of about $154.7 million.
How is the RJ Bank loan portfolio performing?
Total loans grew to $11.1 billion from $9.0 billion. Nonperforming loans fell to $80.7 million from $102.0 million, and net charge-offs were $1.7 million, down from $13.3 million. The allowance for loan losses was $147.6 million, or 1.33% of loans, versus 1.52% a year earlier.
What is the company's capital return policy?
The company paid $88.1 million in dividends on common stock during fiscal 2014 and declared $0.64 per share for the year. As of September 30, 2014, $49.4 million remained under the Board's share repurchase authorization, and no shares were repurchased under that authorization during the year.
06—Continue