RAYMOND JAMES FINANCIAL, INC.
(Mark one)
or
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 1-9109
RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Florida
59-1517485
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716 (Address of principal executive offices) (Zip Code) (727) 567-1000 (Registrant's telephone number, including area code) None
(Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
Trading Symbol(s) Name of each exchange on which registered
Common Stock, $.01 par value
Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.75% Fixed-toFloating Rate Series A Non-Cumulative Perpetual Preferred Stock
Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.375% Fixed-toFloating Rate Series B Non-Cumulative Perpetual Preferred Stock
RJF RJF PrA RJF PrB
New York Stock Exchange New York Stock Exchange New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (?232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
215,824,993 shares of common stock as of August 4, 2022
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Financial Condition (Unaudited) Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Condensed Consolidated Statements of Cash Flows (Unaudited) Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 - Organization and basis of presentation Note 2 - Update of significant accounting policies Note 3 - Acquisitions Note 4 - Fair value Note 5 - Available-for-sale securities Note 6 - Derivative assets and derivative liabilities Note 7 - Collateralized agreements and financings Note 8 - Bank loans, net Note 9 - Loans to financial advisors, net Note 10 - Variable interest entities Note 11 - Goodwill and identifiable intangible assets, net Note 12 - Other assets Note 13 - Leases Note 14 - Bank deposits Note 15 - Other borrowings Note 16 - Senior notes payable Note 17 - Income taxes Note 18 - Commitments, contingencies and guarantees Note 19 - Shareholders' equity Note 20 - Revenues Note 21 - Interest income and interest expense Note 22 - Share-based compensation Note 23 - Regulatory capital requirements Note 24 - Earnings per share Note 25 - Segment information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Item 4. Controls and Procedures PART II OTHER INFORMATION Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits Signatures
2
PAGE
3 3 4 5 6
8 9 9 14 19 22 24 26 34 34 35 36 36 37 38 39 39 40 42 45 49 49 50 53 54 56 98 98
99 99 100 100 100 100 101 102
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
$ in millions, except per share amounts Assets: Cash and cash equivalents Assets segregated for regulatory purposes and restricted cash ($2,000 and $2,100 at fair value) Collateralized agreements Financial instruments, at fair value:
Trading assets ($349 and $326 pledged as collateral) Available-for-sale securities ($51 and $20 pledged as collateral) Derivative assets Other investments ($22 and $22 pledged as collateral) Brokerage client receivables, net Other receivables, net Bank loans, net Loans to financial advisors, net Deferred income taxes, net Goodwill and identifiable intangible assets, net Other assets
Total assets
June 30, 2022
September 30, 2021
$
5,958 $
7,201
16,251
11,348
631
480
458
610
10,464
8,315
152
255
365
357
2,954
2,831
1,230
999
41,843
24,994
1,125
1,057
479
305
1,810
882
2,391
2,257
$
86,111 $
61,891
Liabilities and shareholders' equity:
Bank deposits
$
Collateralized financings
Financial instrument liabilities, at fair value:
Trading liabilities
Derivative liabilities
Brokerage client payables
Accrued compensation, commissions and benefits
Other payables
Other borrowings
Senior notes payable
Total liabilities
Commitments and contingencies (see Note 18)
Shareholders' equity
Preferred stock
Common stock; $.01 par value; 650,000,000 shares authorized, 247,945,777 shares issued, and 215,478,025 shares outstanding as of June 30, 2022; 350,000,000 shares authorized, 239,062,254 shares issued, and 205,738,821 shares outstanding as of September 30, 2021
Additional paid-in capital
Retained earnings
Treasury stock, at cost; 32,467,752 and 33,323,433 common shares as of June 30, 2022 and September 30, 2021, respectively
Accumulated other comprehensive loss
Total equity attributable to Raymond James Financial, Inc.
Noncontrolling interests
Total shareholders' equity
Total liabilities and shareholders' equity
$
49,887 $ 437
158 379 19,055 1,604 1,708 1,353 2,038 76,619
120
2 2,948 8,478
(1,457) (576) 9,515 (23) 9,492
86,111 $
32,495 277
176 228 13,991 1,825 1,701 858 2,037 53,588
--
2 2,088 7,633
(1,437) (41)
8,245 58
8,303 61,891
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 3
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
in millions, except per share amounts Revenues: Asset management and related administrative fees Brokerage revenues:
Securities commissions Principal transactions
Total brokerage revenues Account and service fees Investment banking Interest income Other
Total revenues Interest expense
Net revenues Non-interest expenses: Compensation, commissions and benefits Non-compensation expenses:
Communications and information processing Occupancy and equipment Business development Investment sub-advisory fees Professional fees Bank loan provision/(benefit) for credit losses Losses on extinguishment of debt Other
Total non-compensation expenses Total non-interest expenses
Pre-tax income Provision for income taxes Net income Preferred stock dividends Net income available to common shareholders
Three months ended June 30,
2022
2021
Nine months ended June 30,
2022
2021
$
1,427 $
1,262 $
4,273 $
3,502
385 128 513 211 223 374 30 2,778 (60) 2,718
415 137 552 161 276 205 55 2,511 (40) 2,471
1,232 403
1,635 567 883 841 108
8,307 (135) 8,172
1,239 432
1,671 465 779 608 155
7,180 (115) 7,065
1,834
1,661
5,570
4,809
129
109
368
315
65
58
186
172
58
31
127
75
38
34
116
93
38
30
93
85
56
(19)
66
(37)
--
98
--
98
85
84
240
224
469
425
1,196
1,025
2,303
2,086
6,766
5,834
415
385
1,406
1,231
114
78
336
257
301
307
1,070
974
2
--
2
--
$
299 $
307 $
1,068 $
974
Earnings per common share ? basic
$
Earnings per common share ? diluted
$
Weighted-average common shares outstanding ? basic
Weighted-average common and common equivalent shares outstanding ? diluted
1.41 $ 1.38 $ 210.7
215.7
1.49 $ 1.45 $ 205.8
211.7
5.12 $ 4.99 $ 208.1
213.5
4.73 4.61 205.8
210.9
Net income
$
301 $
307 $
1,070 $
974
Other comprehensive income/(loss), net of tax:
Available-for-sale securities
(157)
25
(532)
(68)
Currency translations, net of the impact of net investment hedges
(40)
5
(51)
25
Cash flow hedges
10
(2)
48
22
Total other comprehensive income/(loss), net of tax
(187)
28
(535)
(21)
Total comprehensive income
$
114 $
335 $
535 $
953
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 4
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
$ in millions, except per share amounts Preferred stock: Balance beginning of period
Three months ended June 30,
2022
2021
Nine months ended June 30,
2022
2021
$
-- $
-- $
-- $
--
Preferred stock issued for TriState Capital Holdings, Inc. ("TriState Capital") acquisition
Balance end of period
120
--
120
--
120
--
120
--
Common stock, par value $.01 per share: Balance beginning of period
Share issuances Balance end of period
2
2
2
2
--
--
--
--
2
2
2
2
Additional paid-in capital: Balance beginning of period
Common stock issued for TriState Capital acquisition Restricted stock awards issued for TriState Capital acquisition Employee stock purchases Distributions due to vesting of restricted stock units and exercise of stock
options, net of forfeitures Share-based compensation amortization Balance end of period
2,093 778 28 13
(3) 39 2,948
2,028 -- -- 8
(4) 28 2,060
2,088 778 28 35
(125) 144 2,948
2,007 -- -- 23
(70) 100 2,060
Retained earnings: Balance beginning of period
Net income attributable to Raymond James Financial, Inc. Common stock cash dividends declared Preferred stock cash dividends declared Cumulative adjustments for changes in accounting principles Balance end of period
8,256 301 (77) (2) --
8,478
7,004 307 (54) -- --
7,257
7,633 1,070 (223)
(2) -- 8,478
6,484 974 (166) -- (35)
7,257
Treasury stock: Balance beginning of period
Purchases/surrenders
Reissuances due to vesting of restricted stock units and exercise of stock options
Balance end of period
(1,360) (100)
3 (1,457)
(1,404) (48)
6 (1,446)
(1,437) (110)
90 (1,457)
(1,390) (127)
71 (1,446)
Accumulated other comprehensive income/(loss): Balance beginning of period
Other comprehensive income/(loss), net of tax Balance end of period Total equity attributable to Raymond James Financial, Inc.
(389)
(38)
(41)
11
(187)
28
(535)
(21)
(576)
(10)
(576)
(10)
$
9,515 $
7,863 $
9,515 $
7,863
Noncontrolling interests: Balance beginning of period
Net income attributable to noncontrolling interests Deconsolidations and sales Balance end of period Total shareholders' equity
$
7 $
45 $
58 $
62
1
12
1
24
(31)
(2)
(82)
(31)
(23)
55
(23)
55
$
9,492 $
7,918 $
9,492 $
7,918
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 5
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
$ in millions Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization Deferred income taxes, net Premium and discount amortization on available-for-sale securities and net (gain)/loss on other investments Provisions/(benefits) for credit losses and legal and regulatory proceedings Share-based compensation expense Unrealized (gain)/loss on company-owned life insurance policies, net of expenses Losses on extinguishment of debt Other Net change in: Assets segregated for regulatory purposes excluding cash and cash equivalents Collateralized agreements, net of collateralized financings Loans provided to financial advisors, net of repayments Brokerage client receivables and other receivables, net Trading instruments, net Derivative instruments, net Other assets Brokerage client payables and other payables Accrued compensation, commissions and benefits Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale
Net cash provided by operating activities
Nine months ended June 30,
2022
2021
$
1,070 $
974
105
97
23
(24)
40
12
72
(29)
149
103
136
(159)
--
98
25
47
101 10 (85) (57) 126 246 (97) 2,985 (261) (18) 4,570
(3,000) (178) (69) (425) 42 41 (238) 4,694 160 (1) 2,145
Cash flows from investing activities: Increase in bank loans, net Proceeds from sales of loans held for investment Purchases of available-for-sale securities Available-for-sale securities maturations, repayments and redemptions Proceeds from sales of available-for-sale securities Cash and cash equivalents acquired in business acquisitions, including those segregated for regulatory purposes, net
of cash paid for acquisitions Additions to property and equipment Investment in note receivable (Purchases)/sales of other investments, net Other investing activities, net
Net cash used in investing activities
(5,377) 191
(2,743) 1,346
2
1,769 (68) (125) (33) (81)
(5,119)
(2,620) 248
(3,081) 1,658
969
(245) (99) -- 21 (8) (3,157)
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 6
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended June 30,
$ in millions
2022
2021
Cash flows from financing activities:
Proceeds from senior notes issuances, net of debt issuance costs paid
--
737
Extinguishment of senior notes payable
--
(844)
Increase in bank deposits
4,800
3,539
Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements
(160)
(148)
Dividends on common stock
(200)
(163)
Exercise of stock options and employee stock purchases
44
42
Proceeds from Federal Home Loan Bank advances
1,025
--
Repayments of Federal Home Loan Bank advances and other borrowed funds
(906)
(29)
Other financing, net
(5)
(6)
Net cash provided by financing activities
4,598
3,128
Currency adjustment:
Effect of exchange rate changes on cash
Net increase in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of
period
$
(289) 3,760 16,449 20,209 $
114 2,230 9,634 11,864
Cash and cash equivalents
$
Cash and cash equivalents segregated for regulatory purposes and restricted cash
Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end
of period
$
5,958 $ 14,251
20,209 $
5,982 5,882
11,864
Supplemental disclosures of cash flow information: Cash paid for interest Cash paid for income taxes, net Cash outflows for lease liabilities Non-cash right-of-use assets recorded for new and modified leases Common stock issued as consideration for TriState Capital acquisition Restricted stock awards issued as consideration for TriState Capital acquisition Issuance of preferred stock as consideration for TriState Capital acquisition Effective settlement of note receivable for TriState Capital acquisition
$
137 $
113
$
386 $
335
$
80 $
84
$
39 $
101
$
778 $
--
$
28 $
--
$
120 $
--
$
123 $
--
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 7
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) June 30, 2022
NOTE 1 ? ORGANIZATION AND BASIS OF PRESENTATION
Organization
Raymond James Financial, Inc. ("RJF" or the "firm") is a financial holding company which, together with its subsidiaries, is engaged in various financial services activities, including providing investment management services to retail and institutional clients, merger & acquisition and advisory services, the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of mutual funds and other investment products. The firm also provides corporate and retail banking services, and trust services.
As a result of our acquisition of TriState Capital Holdings, Inc. ("TriState Capital") on June 1, 2022, which included TriState Capital Bank, a Pennsylvania-chartered state bank, we renamed our Raymond James Bank segment to "Bank" segment. The Bank segment reflects the results of our banking operations and includes the results of Raymond James Bank and, since June 1, 2022, TriState Capital Bank. There were no changes to the prior period presentation of the Bank segment. For further information about the acquisition of TriState Capital and our business segments, see Note 3 and Note 25, respectively. As used herein, the terms "our," "we," or "us" refer to RJF and/or one or more of its subsidiaries.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of RJF and its consolidated subsidiaries that are generally controlled through a majority voting interest. We consolidate all of our 100%-owned subsidiaries. In addition, we consolidate any variable interest entity ("VIE") in which we are the primary beneficiary. Additional information on these VIEs is provided in Note 2 of our Annual Report on Form 10-K ("2021 Form 10-K") for the year ended September 30, 2021, as filed with the United States ("U.S.") Securities and Exchange Commission ("SEC") and in Note 10 of this Quarterly Report on Form 10-Q ("Form 10-Q"). When we do not have a controlling interest in an entity, but we exert significant influence over the entity, we apply the equity method of accounting. All material intercompany balances and transactions have been eliminated in consolidation.
Accounting estimates and assumptions
Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") but is not required for interim reporting purposes has been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of our consolidated financial position and results of operations for the periods presented.
The nature of our business is such that the results of any interim period are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in our 2021 Form 10-K. To prepare condensed consolidated financial statements in accordance with GAAP, we must make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements.
Reclassifications
Beginning with our fiscal third quarter of 2022, we reclassified acquisition-related expenses which were previously reported in "Acquisition-related expenses" on our Condensed Consolidated Statements of Income and Comprehensive Income to the respective income statement line items that align with the nature of the expenses, including reclassifications to "Compensation, commissions, and benefits," "Professional fees," or "Other" expenses, as appropriate. Prior periods have been conformed to the current presentation.
In addition to the reclassifications discussed above, certain other prior period amounts have been reclassified to conform to the current period's presentation.
8
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