01—Abstract
Summary
Summary of the 10-K filed November 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. (RJF) reported record net revenues of $5.2 billiona for fiscal year 2015 (ended September 30, 2015), a $339 million, or 7%, increase over the prior year, and net income attributable to RJF of $502 million, up $22 million, or 5%.
All four operating segments achieved record net revenues. Fully diluted earnings per share were $3.43b, up $0.11, or 3%. Total client assets under administration rose to $480 billion, a 1% increase, driven by strong financial advisor recruiting and retention, which offset a decline in U.S. equity markets in the fourth fiscal quarter.
Segment results were mixed. The Private Client Group reached record net revenues of $3.5 billionc and pre-tax income of $342 million, with 6,596 affiliated financial advisors. Capital Markets posted record net revenues of $960 million, but pre-tax income fell 18% to $107 million amid weaker equity underwriting in the energy and real estate sectors.
RJ Bank generated record net revenues of $414 milliond and pre-tax income of $279 million, while total assets grew to $14.2 billion. Total company assets rose to $26.5 billion, and the effective tax rate increased to 37.1% from 35.8%. The filing also highlights capital and regulatory matters.
Both RJF and RJ Bank were categorized as well capitalized under Basel III, which became effective January 1, 2015. The company completed two acquisitions in fiscal 2015, Cougar Global Investments and The Producers Choice.
Indemnification from Regions Financial covers certain pre-closing Morgan Keegan litigation, with a range of potential liability of $63 million to $224 million. Share repurchase authorization was increased to $150 million, and a quarterly dividend of $0.20 was declared in November 2015.
02—Key points
Key Highlights
- Record net revenues of $5.2 billion, up $339 million (7%) from fiscal 2014; all four operating segments achieved record net revenues.
- Net income attributable to RJF of $502 million, up $22 million (5%); diluted EPS of $3.43, up $0.11 (3%).
- Private Client Group pre-tax income reached a record $342 million on net revenues of $3.5 billion; affiliated financial advisors rose to 6,596, a net increase of 331.
- Capital Markets pre-tax income declined $24 million (18%) to $107 million, as equity underwriting revenues fell amid weakness in the energy and real estate sectors.
- RJ Bank net revenues rose 18% to a record $414 million, and pre-tax income rose 15% to a record $279 million; total loans reached $13.2 billion.
- Total client assets under administration grew 1% to $480 billion; financial assets under management in Asset Management reached $65.2 billion.
- Both RJF and RJ Bank met Basel III 'well capitalized' requirements as of September 30, 2015; the Board declared a $0.20 quarterly dividend in November 2015.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed November 25, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $5.31B$4.97B | +6.9% |
| Interest Expense | $106.07M$104.09M | +1.9% |
| Net Income | $502.14M$480.25M | +4.6% |
| EPS (Basic) | $3.51$3.41 | +2.9% |
| EPS (Diluted) | $3.43$3.32 | +3.3% |
| Shares Outstanding (Basic) | 142.55M139.94M | +1.9% |
| Shares Outstanding (Diluted) | 145.94M143.59M | +1.6% |
05—Questions
Frequently Asked Questions
How did Raymond James perform financially in fiscal 2015?
The company reported record net revenues of $5.2 billion, up 7% from the prior year, and net income attributable to Raymond James Financial of $502 million, up 5%. Fully diluted earnings per share were $3.43, compared with $3.32 in fiscal 2014. The pre-tax margin on net revenues was 15.3%, nearly equivalent to the 15.4% prior-year margin.
Which segments drove results, and which lagged?
The Private Client Group delivered record net revenues of $3.5 billion and pre-tax income of $342 million, driven mainly by fee-based accounts. Asset Management and RJ Bank also reached record pre-tax income. Capital Markets had record net revenues of $960 million, but pre-tax income fell 18% to $107 million due to lower equity underwriting activity, particularly in energy and real estate. The Other segment's pre-tax loss narrowed to $64.8 million.
What are the main risks flagged for investors?
The filing cites exposure to market and macroeconomic conditions, credit risk at RJ Bank (including loans in corporate and residential portfolios), and intense competition for financial advisors. It also highlights regulatory change under the Dodd-Frank Act, the Volcker Rule, and Basel III capital requirements. Indemnification from Regions Financial for pre-closing Morgan Keegan matters carries a risk that Regions may fail to honor its obligations.
How is the company managing capital and shareholder returns?
RJF and RJ Bank were both well capitalized at September 30, 2015. Dividends declared per share rose to $0.72 for the year from $0.64. The Board increased the share repurchase authorization to $150 million in May 2015 and reaffirmed that level in November 2015, with $93.1 million remaining at fiscal year-end. In August 2015 the company also entered a $300 million unsecured revolving credit facility.
What acquisitions did the company complete in fiscal 2015?
Raymond James completed two acquisitions in fiscal 2015: Cougar Global Investments Limited, an asset management firm based in Toronto, which closed on April 30, 2015, and The Producers Choice LLC, a private insurance and annuity marketing organization based in Troy, Michigan, which closed on July 31, 2015. Management stated that both were not considered material acquisitions under SEC rules.
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