RAYMOND JAMES FINANCIAL REPORTS ANNUAL AND FOURTH RAYMOND JAMES FINANCIAL REPORTS ANNUAL AND FOURTH QUARTER RESULTS
October 24, 2012 FOR IMMEDIATE RELEASE
ST. PETERSBURG, Fla. - Raymond James Financial, Inc. today reported record annual net revenues
for the fiscal year 2012 of $3.8 billion, up 14 percent from last year, and record annual net income of
$295.9 million, up 6 percent from last year. The 2012 figures include six months of Morgan Keegan
operations, which was acquired April 2, 2012.
Earnings per share were $2.20 per diluted share, slightly more than last year's $2.19 per diluted
share. Excluding $59 million of pre-tax charges for acquisition-related expenses and other non-GAAP
items, net income would have been $334.2 million (1), or $2.51(1) per diluted share on a non-GAAP
basis. The firm achieved record assets under management and record assets under administration of
$43 billion and $390 billion, respectively.
“I am pleased with our results as we have so far successfully navigated our largest acquisition in a very
volatile market,” said CEO Paul Reilly. “With the exception of our Equity Capital Markets segment,
which faced headwinds most of the year, all of our businesses continued to grow while also integrating
Morgan Keegan. Our bank had an exceptionally strong year as we have successfully added $1.44
billion of net loans while maintaining our conservative lending strategy.”
For the quarter, net revenues were $1.07 billion, down 2 percent from the preceding quarter and up 30
percent from the prior year quarter. Net income of $83.3 million was up 9 percent from the preceding
quarter and up 21 percent from the prior year quarter. Earnings were $0.60 per diluted share, up 9
percent from the preceding quarter and up 11 percent from the prior year quarter. Excluding $19 million
of pretax charges for acquisition-related expenses, net income would have been $95.7 million(1), or
$0.69(1) per fully diluted share, up 8 percent from the preceding quarter and up 33 percent from the prior
year quarter on a non-GAAP basis.
“Results this quarter were lifted by a beneficial tax rate as overall operating results from our combined
segments were essentially flat with the preceding quarter,” stated Reilly. “Although the segment results
were impacted by Morgan Keegan integration efforts and increased technology spend, all of our
businesses performed largely as expected given our current cost structure and operating environment.”
Private Client Group revenues grew slightly this quarter, up 1 percent over the preceding quarter. This
segment was negatively impacted by the S&P 500 being down 3.3 percent in the preceding quarter,
which affected our advance billings. In the current quarter, the S&P 500 was up 5.8 percent, which will
provide a lift going forward. Integration and technology spend and certain one-time charges primarily
impacted the pre-tax income for this segment during this fiscal year. Technology and integration costs
(from headcount and consultants) will remain elevated throughout the system conversion targeted for
February 2013. Recruiting activity, as measured by the number of prospective experienced financial
advisors visiting the firm's home office, continues to pick up for both the employee and independent
contractor divisions. The financial advisor headcount decrease for the quarter was almost exclusively
related to lower producing Morgan Keegan advisors. Retention level remains extremely high for those
Morgan Keegan advisors offered retention packages.
The Capital Markets segment remains a “Tale of Two Cities.” The Equity Capital Markets division
continues to struggle as the market environment remains challenging. Investment banking activity
decreased this quarter and there is ongoing pressure on institutional securities commissions. “The
market is experiencing both a cyclical and structural change and we will closely examine our cost
structure as we have grown significantly over the past several years,” said Reilly.
“Our fixed income business continues to meet expectations following the acquisition of Morgan
Keegan. We are pleased with the results,” continued Reilly, “but more important, the strength of our
new platform and combined management team.” The Public Finance division had a drop in Investment
Banking fees this quarter due to a very weak July. However, since that month, both results and our
backlog are very promising.
Asset Management continued its steady growth in revenues and pre-tax income during the
quarter. More important, this segment announced two transactions that will further strengthen our
platform. Eagle Asset Management recruited a group of seasoned professionals to manage small- and
mid-cap equities. Additionally, Eagle announced the purchase of a substantial minority interest in
ClariVest Asset Management LLC, to bolster their strategies in the large-cap space.
Raymond James Bank closed out the year in record fashion. $70 million of pre-tax income for the
quarter represented a quarterly record, capping a record $240 million pre-tax earnings year.
“The Morgan Keegan integration remains on schedule as we continue to meet or exceed our internal
benchmarks. We have continued to err on the side of providing high service and support throughout the
integration, and are confident we will achieve synergy targets after the platform integration is completed
this fiscal year,” Reilly said.
“We are proud of our brand, our team and the strong platform we have built. However, with the
presidential election and fiscal cliff around the corner and uncertainty in global markets and economies,
the near-term outlook is difficult to predict,” concluded Reilly.
The company will conduct its quarterly conference call Thursday, October 25, at 8:15 a.m. ET. For a
listen-only connection, visit raymondjames.com/analyst call for a live audio webcast. The subjects to be
covered may include forward-looking information. Questions may be posed to management by
participants on the analyst call-in line, and in response the company may disclose additional material
information.
(1) Refer to the discussion and reconciliation of the GAAP results to the non-GAAP measures that follows the consolidated statement of income.
https://www.raymondjames.com/pr/121024.pdf
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