Form 8-K RAYMOND JAMES FINANCIAL For: Jun 02
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 2, 2015
Date of report (date of earliest event reported)
Raymond James Financial, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida
(State or Other Jurisdiction of Incorporation)
1-9109 | 59-1517485 | |
(Commission File Number) | (IRS Employer Identification No.) | |
880 Carillon Parkway St. Petersburg, FL 33716
(Address of Principal Executive Offices) (Zip Code)
(727) 567-1000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On June 2, 2015, Raymond James Financial, Inc. (the “Company”) made available on its website at www.raymondjames.com under "Our Company, Investor Relations, Financial Reports" its Second Quarter Report 2015 to Shareholders (the "Report") commenting on its results for the quarter ended March 31, 2015. A copy of the Report is attached hereto as Exhibit 99.1 and incorporated by reference herein. The financial information in the Report was previously disclosed in the Company’s most recent Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) on May 8, 2015 and/or the earnings release for the second fiscal quarter of 2015, furnished under cover of a Form 8-K, filed with the SEC on April 22, 2015.
The information furnished herein, including Exhibit 99.1, is not deemed to be "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Item 9.01 Financial Statements and Exhibits
(d) The following is filed as an exhibit to this report:
Exhibit No.
99.1 Second Quarter Report 2015 to Shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYMOND JAMES FINANCIAL, INC. | |||
Date: | June 2, 2015 | By: | /s/ Jeffrey P. Julien |
Jeffrey P. Julien | |||
Executive Vice President - Finance, | |||
Chief Financial Officer and Treasurer | |||
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Second Quarter Report 2015 to Shareholders |
Revenues: Private Client Group $ 873,634 $ 817,581 $ 1,722,877 $ 1,600,330 Capital Markets 238,921 225,226 474,095 466,666 Asset Management 94,022 87,534 193,652 183,550 Raymond James Bank 105,390 87,157 208,346 171,030 Other (2) 17,806 3,982 27,572 24,071 Intersegment eliminations (17,149) (16,855) (34,074) (32,248) Total revenues $ 1,312,624 $ 1,204,625 $ 2,592,468 $ 2,413,399 Pre-tax income (loss) (excluding noncontrolling interests): Private Client Group $ 75,420 $ 77,115 $ 168,164 $ 148,625 Capital Markets 20,848 29,571 48,501 63,016 Asset Management 31,095 29,864 70,891 61,700 Raymond James Bank 71,264 56,798 135,620 113,856 Other (2) (18,307) (27,884) (39,948) (42,809) Pre-tax income (excluding noncontrolling interests) $ 180,320 $ 165,464 $ 383,228 $ 344,388 (1) Certain prior period amounts have been reclassified to conform to the current period’s presentation. (2) The Other segment includes the results of our principal capital and private equity activities as well as various corporate overhead costs of RJF. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited – in 000s, Except per Share Amounts) CONSOLIDATED RESULTS BY SEGMENT (in 000s) (1) (1) Three Months Ended Six Months Ended March 31, 2015 March 31, 2014 March 31, 2015 March 31, 2014 Revenues: Securities commissions and fees $ 860,214 $ 805,719 $ 1,694,223 $ 1,587,899 Investment banking 74,240 67,311 151,778 147,108 Investment advisory fees 91,016 88,096 189,777 181,510 Interest 134,413 118,393 266,522 235,486 Account and service fees 111,966 101,024 223,124 194,598 Net trading profit 17,060 14,842 25,941 32,993 Other 23,715 9,240 41,103 33,805 Total revenues 1,312,624 1,204,625 2,592,468 2,413,399 Interest expense (26,846) (25,980) (54,230) (51,352) Net revenues 1,285,778 1,178,645 2,538,238 2,362,047 Non-interest expenses: Compensation, commissions and benefits 882,234 812,291 1,720,488 1,617,236 Communications and information processing 67,635 69,503 126,747 131,357 Occupancy and equipment costs 41,604 39,897 80,831 79,582 Clearance and floor brokerage 13,588 9,876 23,086 19,830 Business development 42,490 36,667 79,480 68,911 Investment sub-advisory fees 14,987 13,798 29,242 25,597 Bank loan loss provision 3,937 1,979 13,302 3,615 Other 43,670 41,635 90,780 84,108 Total non-interest expenses 1,110,145 1,025,646 2,163,956 2,030,236 Income including noncontrolling interests and before provision for income taxes 175,633 152,999 374,282 331,811 Provision for income taxes 66,857 60,904 143,469 123,195 Net income including noncontrolling interests 108,776 92,095 230,813 208,616 Net loss attributable to noncontrolling interests (4,687) (12,465) (8,946) (12,577) Net income attributable to Raymond James Financial, Inc. $ 113,463 $ 104,560 $ 239,759 $ 221,193 Net income per common share – diluted $ 0.77 $ 0.72 $ 1.64 $ 1.54 Weighted-average common and common equivalent shares outstanding – diluted 146,050 143,636 146,188 143,065 International Headquarters: The Raymond James Financial Center 880 Carillon Parkway // St. Petersburg, FL 33716 800.248.8863 // RaymondJames.com ©2015 Raymond James Financial Raymond James® is a registered trademark of Raymond James Financial, Inc. 15-Fin-Rep-0010 EK 5/15 Stock Traded: NEW YORK STOCK EXCHANGE Stock Symbol: RJF Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has nearly 6,400 financial advisors serving in excess of 2.6 million client accounts in more than 2,600 locations throughout the United States, Canada and overseas. Total client assets are approximately $496 billion. Public since 1983, the firm has been listed on the New York Stock Exchange since 1986 under the symbol RJF. Additional information is available at www.raymondjames.com. FORWARD LOOKING STATEMENTS Certain statements made in this report may constitute “forward- looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions and divestitures, anticipated results of litigation and regulatory developments or general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K and subsequent Forms 10-Q, which are available on www.raymondjames. com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise. About Raymond James Financial, Inc. SECOND QUARTER 2015 (1) (1)
Dear Fellow Shareholders, Since our fiscal first quarter report was issued in February, economic conditions have weakened. Expectations for 2015 GDP growth of 2.5-3% have not been met thus far. In fact, it was difficult to find growth at all. Employment growth has been weak like it was last year in the first calendar quarter until the hiring statistics released just before the date of this report. Moreover, lower gas prices didn’t generate higher consumer spending as expected. Oil prices, albeit still much lower than before their collapse, have also increased from the mid-$40s to near $60. The strength in the U.S. dollar has dampened foreign exports. In addition, the Federal Reserve Board seemed to waiver on its commitment to begin increasing interest rates. Nonetheless, our results in the March quarter continued to forge ahead in spite of the somewhat washed-out economic backdrop described above. Net revenues grew 9% to a record $1.29 billion from last year’s second quarter results and exceeded the December quarter by 3%. Net income of $113.5 million also exceeded last year’s March quarter by a healthy 9%, although it trailed the immediately preceding December quarter by 10% for a number of reasons. Contrasted to the preceding quarter, the March quarter included three less trading days and two fewer billing days of net interest and asset-based fees. Compensation expense was elevated in the second quarter contrasted to the preceding quarter due to the calendar year reset for payroll taxes. Commission expense also included a $6 million charge, which reversed the reduction to commission expense related to the mutual fund share class issue last quarter. Communication and information processing expense was elevated because of the normal seasonal increase in mailings in the quarter. Clearance and floor brokerage expense was higher as a result of a $3.3 million adjustment in the Capital Markets segment. Business development expense also increased by $5 million compared to the December quarter because of the timing of corporate advertising expense. Although there are always some timing differences and aberrational expenses in every quarter, the number and size of the second quarter’s differences from the first deserved an explanation and accounted for more than the negative variance from the December quarter. Last year’s second quarter report described some similar reasons for a net income decline from the first quarter so at least some of the difference is seasonal. Hence, this quarter’s net income was actually very good and the first six months’ results, discussed later in the report, give a more descriptive picture of our progress. Earnings per diluted share for the second quarter were $0.77 compared to $0.72 last year. The quarter’s pre-tax margin on net revenue was 14%, flat with last year’s second quarter. The March quarter’s annualized rate of return on average equity was 10.5%, down from 10.9% last year. Net revenues for the first six months of fiscal 2015, ended March 31, were $2.54 billion, representing a 7% increase over the prior year. Net income grew a somewhat better 8% to $239.8 million. Earnings per diluted share were $1.64 compared to $1.54 during the same period last year. The pre-tax margin on net revenues for the six-month period was 15.1% compared to 14.6% last year. The effective tax rate year-to-date was 37.4%, slightly higher than 35.8% last year for the six months ended March 31. On March 31, RJF’s total shareholder equity was $4.38 billion. Consequently, the book value per share was $30.69 and the tangible book value per share was $28.34. Segment results for the second quarter were remarkably similar in terms of net revenue growth for the three non-bank segments but net income varied materially reflecting idiosyncratic conditions in each. Private Client Group (PCG) net revenues of $871 million were up 7% over last year’s comparable three-month period, which produced a 2% decline in second quarter pre-tax income to $75.4 million, as most of the aforementioned income reductions and increased costs related to PCG. PCG’s commissions and fees grew 7% to $731 million as its assets under administration grew 9% to $471 billion, again driven by high levels of financial advisor recruiting and retention. In fact, the financial advisor count grew by 48 during the quarter to 6,384, an increase of 182 since last March. Net revenues in the Capital Markets segment (CM) increased by 6% over last year’s comparable quarter to $235 million. Unfortunately, CM’s pre-tax income declined by 29% to $20.8 million from last year’s second quarter, which reflected a lackluster underwriting calendar, a loss on a Canadian “bought” deal, which related to an energy deal in which Raymond James Ltd. participated, and the aforementioned $3.3 million clearing cost adjustment. Needless to say, Equity Capital Markets (ECM) was also impacted by the decline in energy prices. ECM also incurred expenses to hire MARCH 31, 2015 SEPTEMBER 30, 2014 Assets: Cash and cash equivalents $2,540,137 $2,199,063 Assets segregated pursuant to regulations and other segregated assets 2,560,449 2,489,264 Securities purchased under agreements to resell and other collateralized financings 469,503 446,016 Financial instruments, at fair value 2,181,241 1,992,436 Receivables 15,209,347 14,326,315 Property & equipment, net 242,071 245,401 Other assets 1,765,187 1,627,157 Total assets $24,967,935 $23,325,652 Liabilities and equity: Loans payable $1,945,609 $1,889,629 Payables 16,609,613 15,382,176 Trading instruments sold but not yet purchased, at fair value 372,340 238,400 Securities sold under agreements to repurchase 277,383 244,495 Other liabilities 1,111,080 1,137,696 Total liabilities $20,316,025 $18,892,396 Total equity attributable to Raymond James Financial, Inc. 4,375,425 4,141,236 Noncontrolling interests 276,485 292,020 Total equity $4,651,910 $4,433,256 Total liabilities and equity $24,967,935 $23,325,652 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited – in 000s) RAYMOND JAMES FINANCIAL SECOND QUARTER REPORT 2015 Sincerely, Thomas A. James Paul C. Reilly Chairman CEO May 13, 2015 research analysts and investment bankers in its nascent Life Science’s sector. On the other hand, an increase in Fixed Income institutional commissions offset some of the equity commission declines and lack of underwriting activity in both the energy and real estate sectors. Net revenues in the Asset Management (AM) segment grew 7% to $94 million, which produced a 4% increase in pre-tax income to $31 million. Financial assets under management grew 11% to a record $69.4 billion as a result of new sales and asset appreciation over the last year. In March, Eagle announced an agreement to purchase Canadian-based asset manager Cougar Global Investments Ltd. AM is already beginning to market Cougar’s investment products. Raymond James Bank (RJB) was the star segment in the second quarter. RJB grew net revenues 21% over the 2014 quarter to $102.9 million as a result of excellent loan growth of $2 billion over the last year, of which $251 million occurred in the second quarter. On March 31, net loans totaled a record $12.1 billion. Loan growth reflects a successful program to increase securities- based lending to our PCG clients as well as expansion of our corporate loan and residential mortgage loan portfolios, which also serve our client base. Furthermore, there was continued improvement in loan quality and a 12 basis point improvement in net spread to 3.09%. As a result, pre-tax income grew 25% to $71.3 million, the second highest level in history. Total revenues in the Other segment increased substantially to $17.8 million, which included $17.3 million of private equity gains, of which $5.7 million was attributable to non-controlling interests. That contrasts to only $4 million in total revenues in the second quarter last year. As a result, pre-tax losses were $18.3 million contrasted to $27.9 million last year. During the March quarter, a number of our financial advisors were recognized for outstanding achievements. In January, 12 Raymond James-affiliated financial advisors were named to REP. magazine’s list of the Top 50 NextGen IBD Advisors (independent broker-dealer advisors under 40 years old). In February, 31 Raymond James-affiliated advisors were recognized by Barron’s as top advisors in the nation. In the top 1,200 state-by- state rankings, four Raymond James-affiliated advisors were ranked number one in their respective states: John Moore in New Mexico, Mal Makin in Rhode Island, Judith McGee in Oregon and Gordon Wollman in South Dakota. In March, 24 Raymond James-affiliated advisors were named to the Financial Times’ FT 400 list of top financial advisors. Also in March, eight Raymond James branch managers were named to On Wall Street’s list of the Top 100 Branch Managers. These talented individuals combine years of advisory experience with leadership, recruiting and management skills that enable them to build successful local businesses. Raymond James Investment Banking was selected as the Investment Banking Firm of the Year at the M&A Advisor Turnaround Awards in January. Not to be outdone, Raymond James Public Finance was once again included in the Top 10 Municipal Underwriters by Thomson Reuters in February. In May, as part of our donation policy related to disasters that materially impact communities in which our associates live and work, Raymond James donated $50,000 to the American Red Cross in Tennessee for relief efforts in response to prolonged and severe winter weather conditions. Since March of 2009, we’ve been blessed with six years of a bull market which has dramatically increased stock prices. That recovery has been catalyzed by government policies, principally the Federal Reserve Bank’s maintenance of near-zero, short-term interest rates. That easy-money policy facilitated a recovery, which has been erratic but generally positive. Consequently, the market is susceptible to a correction and the economy to a recession, although not necessarily at the same time. The recent lack of GDP growth is attributable to surprisingly low levels of consumer purchasing in light of low gas prices, anemic housing sales despite low mortgage rates and a slowdown in corporate earnings growth. The latter factor, in conjunction with the prospect of the Fed’s imposition of higher rates, has also given rise to concerns about future stock prices. Although we share these concerns, we believe that it is somewhat more likely that GDP growth will resume based on a continuation of reasonable gas prices and a renewed demand for housing based on a combination of lower unemployment rates and accelerating rates of growth in compensation. Moreover, corporate earnings appear to be accelerating again. Thus, our immediate outlook is still generally favorable, which presages good results for the financial services industry, particularly since somewhat higher interest rates would benefit banks and securities firms. More importantly, we don’t pretend to have a crystal ball which would enable us to time the market in the short run, but we do have confidence that the U.S. economy and Raymond James’ business model will perform well over the long term.
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