01—Abstract
Summary
Summary of the 10-Q filed May 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Raymond James Financial, Inc. reported fiscal second-quarter 2024 (quarter ended March 31, 2024) results with net revenues of $3.12 billiona, up 9% from the prior-year quarter, and pre-tax income of $609 million, also up 9%.
Net income available to common shareholders was $474 millionb, up 12%, and diluted earnings per share were $2.22, up 15%. For the six months, net revenues were $6.13 billion (up 8%), pre-tax income was $1.24 billion (up 2%), and diluted EPS was $4.54. Growth was driven mainly by higher asset management and related administrative fees on higher fee-based client assets, along with higher brokerage and investment banking revenues.
Combined net interest income and RJBDP fees from third-party banks declined as higher-cost deposit mix (ESP and certificates of deposit) raised interest expense; Bank segment pre-tax income fell 18%c in the quarter. Capital and liquidity remained strong. The Tier 1 leverage ratio was 12.3% and the total capital ratio 23.3% at March 31, 2024, both well above well-capitalized requirements.
The company repurchased 1.70 million shares for $207 milliond in the quarter and, after subsequent April repurchases, had repurchased $400 million year-to-date with $1.14 billion remaining under its authorization. Total assets were $81.23 billion. The filing also discloses a settlement in principle with the SEC's Division of Enforcement over records preservation, including a $50 million civil monetary penalty accrued at March 31, 2024, subject to definitive documentation and SEC approval.
Bank loan credit metrics were described as solid, though nonperforming loans rose to $187 million from $128 million, and management flagged possible higher provisions if economic conditions deteriorate. Looking ahead, management said it expects fiscal third-quarter results to benefit from higher asset management fees, citing a 7% sequential increase in PCG fee-based assets as of March 31, 2024. It also expects investment banking revenues to improve with industry recovery, while combined net interest income and RJBDP fees will depend on short-term interest rates, client cash balances, and loan growth.
02—Key points
Key Highlights
- Net revenues of $3.12 billion rose 9% year over year; pre-tax income of $609 million also rose 9%.
- Diluted EPS was $2.22, up 15% from the prior-year quarter; net income available to common shareholders was $474 million, up 12%.
- Private Client Group net revenues rose 9% to $2.34 billion, driven by asset management fees that increased 16% on higher fee-based assets.
- Bank segment net revenues fell 21% to $424 million and pre-tax income fell 18%, as higher-cost deposits (ESP and certificates of deposit) raised interest expense.
- Capital remained strong, with a 12.3% Tier 1 leverage ratio and 23.3% total capital ratio at March 31, 2024; $1.14 billion remained under the share repurchase authorization.
- Settlement in principle with the SEC over records preservation includes a $50 million civil penalty, accrued at March 31, 2024 and subject to final approval.
- Nonperforming loans increased to $187 million from $128 million at September 30, 2023, primarily from loans placed on nonaccrual status.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 7, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $3.64B$3.16B | +15.2% |
| Interest Expense | $520.00M$284.00M | +83.1% |
| Net Income | $476.00M$427.00M | +11.5% |
| EPS (Basic) | $2.27$1.97 | +15.2% |
| EPS (Diluted) | $2.22$1.93 | +15.0% |
| Shares Outstanding (Basic) | 208.30M214.30M | −2.8% |
| Shares Outstanding (Diluted) | 213.40M219.20M | −2.6% |
05—Questions
Frequently Asked Questions
How did Raymond James perform in the fiscal second quarter of 2024?
Net revenues were $3.12 billion, up 9%, and pre-tax income was $609 million, also up 9%. Net income available to common shareholders was $474 million, up 12%, and diluted EPS was $2.22, up 15%. Annualized return on common equity was 17.5%, compared with 17.3% a year earlier.
What drove revenue growth, and what held back results?
Higher asset management and related administrative fees, largely from higher fee-based client assets, drove growth, and brokerage and investment banking revenues also increased. Combined net interest income and RJBDP fees from third-party banks declined because interest expense rose sharply with a shift toward higher-cost deposits, and the compensation ratio increased to 65.5% from 63.3%.
What is the status of the SEC matter disclosed in the filing?
The company has reached a settlement in principle with the SEC's Division of Enforcement to resolve an investigation into compliance with records preservation requirements for business communications sent over unapproved electronic messaging channels. The settlement includes a $50 million civil monetary penalty, accrued at March 31, 2024, and remains subject to definitive documentation and final SEC approval.
How is the company managing its capital and shareholder returns?
Tier 1 leverage was 12.3% and total capital was 23.3% at March 31, 2024, both well above well-capitalized levels. The company repurchased 1.70 million shares for $207 million in the quarter, and subsequent to quarter end it had repurchased $400 million year-to-date, leaving $1.14 billion under its Board authorization. Quarterly common dividends declared were $0.45 per share.
What does management expect for the coming quarter?
Management expects higher asset management fees in the fiscal third quarter, citing a 7% sequential increase in PCG fee-based assets and a 5% sequential increase in financial assets under management as of March 31, 2024. It expects investment banking revenues to improve with the industry's gradual recovery, and says combined net interest income and RJBDP fees will depend on short-term interest rates, client cash balances, and loan growth.
06—Continue