Raymond James Financial Analyst & Investor Day May 12, 2015 1
AGENDA 8:30 AM 9:00 AM Welcome & General Overview Paul Reilly CEO, Raymond James Financial 9:00 AM 9:30 AM Private Client Group Tash Elwyn President, Raymond James & Associates PCG 9:30 AM 10:00 AM Equity Capital Markets Jeff…
WELCOME AND GENERAL OVERVIEW Paul Reilly CEO, Raymond James Financial 4
OVERVIEW OF RAYMOND JAMES FINANCIAL FY 2014 Net Revenues* 4,861,369,000 KEY FACTS (as of March 31, 2015) Headquartered in St. Petersburg, FL Asset Mgmt. Founded in 1962; public in 1983 370mm RJ Bank Approximately 2,600 locations…
GROW: CAPITAL MARKETS 1,858,550,000 The Regents of the University of California General Revenue Bonds 2013 AI-AK September 2013 135,830,000 Los Angeles Unified School District 2014 General Obligation Bonds August…
GROW: ASSET MANAGEMENT INCREASE INSTITUTIONAL INTERNAL USE CONSULTING 16
GROW: RAYMOND JAMES BANK TAX-EXEMPT CANADIAN LENDING OPPORTUNITIES SECURITIES-BASED LENDING 17
GROW: ACQUISITIONS 18
PROTECT: REGULATORY ENVIRONMENT 19
PROTECT: VALUES-BASED CULTURE INTEGRITY CLIENT FIRST INDEPENDENCE CONSERVATISM 20
LOOKING FORWARD 21
CHALLENGES 22
CLIENT OF THE FUTURE 23
TECHNOLOGY PLATFORM OF THE FUTURE 24
ADVICE OF THE FUTURE 25
ADVISOR OF THE FUTURE 26
THE BIONIC ADVISOR 27
PREMIER ALTERNATIVE TO WALL STREET 28
PRIVATE CLIENT GROUP Tash Elwyn President, Raymond James & Associates PCG 29
PRIVATE CLIENT GROUP The Private Client Group segment includes multiple affiliation options referred to as AdvisorChoice as well as support functions including technology, operations, and practice management. 30
PRIVATE CLIENT GROUP Raymond James is one of the largest private client firms in the industry. Client Assets Rank Firm FAs (B) 1 Bank of America / Merrill Lynch 2,510 16,175 2 Morgan Stanley 2,047 15,915 3 Wells Fargo & Co.…
PRIVATE CLIENT GROUP Raymond James has consistently grown net revenues and pre-tax income in the Private Client Group segment. Net Revenues Pre-Tax Income ( millions) ( millions) 16% 5-YR 3,432* CAGR 3,267 2,919 2,474 2,182…
PRIVATE CLIENT GROUP Compared to 2009, the current mix between the employee (RJA) and independent (RJFS) channels is more balanced. Commissions and Fees ( millions) 2,876* 17% 5-YR CAGR 2,758 2,455 RJIS 2,056 RJL 1,818…
PRIVATE CLIENT GROUP Nearly 75% of the Private Client Groups revenues are considered recurring in nature, largely driven by a high concentration of fee-based accounts. SECURITIES COMMISSIONS AND FEES (quarter ended March 31,…
PRIVATE CLIENT GROUP Private Client Group client assets have grown on average 15% per year from FY 2009 to FY 2014. The number of financial advisors have grown steadily over this period as well . . . PCG AUA No. of ( billions)…
PRIVATE CLIENT GROUP . . . but Raymond James has always been more focused on quality of advisors instead of quantity of advisors. For example, in the first half of FY 2015, the average productivity of financial advisors recruited was…
PRIVATE CLIENT GROUP The near-term growth initiatives for the Private Client Group are largely unchanged from last year, as we have a significant opportunity to grow executing on our current strategy. . . NEAR-TERM GROWTH…
PRIVATE CLIENT GROUP . . . but we have already started thinking beyond the next 5 years, so we can begin making the investments necessary to be competitive 10 to 20+ years from now. THE CLIENT OF THE FUTURE 38
PRIVATE CLIENT GROUP Robo advice will commoditize lower-value parts of our business but can also serve as a resource to support advisors. HIGH Raymond James Value Proposition Clarity of need/complexity Value/pricing power…
PRIVATE CLIENT GROUP OUTLOOK Strong retention and recruiting results despite competitive environment Continued success leveraging synergies with other businesses (fee based accounts, securities based loans) Intensifying…
PRIVATE CLIENT GROUP INTEGRITY CLIENT FIRST INDEPENDENCE CONSERVATISM 41
EQUITY CAPITAL MARKETS Jeff Trocin President, Global Equities and Investment Banking 42
CAPITAL MARKETS SEGMENT The Capital Markets segment consists of several different divisions. The focus of this presentation is the Equity Capital Markets division in the U.S. and Europe, which represented 415 million of net revenues in…
CAPITAL MARKETS SEGMENT Raymond James has steadily grown net revenues and pre-tax income in the Capital Markets segment. . . Net Revenues Pre-Tax Income ( millions) ( millions) 12% 5-YR CAGR 938 966 934* 812 14% 5-YR 691…
EQUITY CAPITAL MARKETS . . . and net revenues for the equity capital markets business in the U.S. and Europe grew on average 15% per year from FY 2009 to FY 2014. . . Equity Capital Markets (United States / Europe) Net Revenues (…
EQUITY CAPITAL MARKETS . . . which is up substantially from when the equity capital markets division was formalized in 1996. Equity Capital Markets (United States / Europe) Net Revenues 415 ( millions) ECM Formalized: 1996…
EQUITY CAPITAL MARKETS A substantial driver of growth for the Equity Capital Market division has been growth in investment banking revenues, which has grown on average 27% per year from FY 2009 to FY 2014. U.S. Corporate Finance…
EQUITY CAPITAL MARKETS Investment banking growth has been lifted by substantial investments to strengthen our M&A capabilities over the past several years. M&A/PP1 Advisory Revenues Advisory Fees 1 million ( millions) 174* 64*…
EQUITY CAPITAL MARKETS The underwriting business has also benefitted from completing larger transactions, with a notable spike in the past two fiscal years. Common Equity Underwritings/ Registered Block Transaction Fees 1 Million…
EQUITY CAPITAL MARKETS Our investment banking platform has earned many accolades in the past few years. RECENT ACCOLADES IB Firm of the Year: Restructuring & Turnaround 2014 8 Deals of the Year: M&A, Advisory Services,…
EQUITY CAPITAL MARKETS Currently, there are approximately 75 managing directors in investment banking, including many high-quality additions from recent acquisitions. INVESTMENT BANKING MANAGING DIRECTORS 75 Managing Directors…
CAPITAL MARKETS Meanwhile, the market environment has been extremely challenging for institutional equity commissions over the past several years. Institutional Equity Commissions ( millions) 5% 5-YR CAGR 261 247 261 260* 226…
EQUITY CAPITAL MARKETS Global Equity Research U.S. Equity Research 52 Senior Analysts 1 Top Conferences1 1 Telecom Services Research 979 Covered Companies 1 Research Service - Calls & 1 Energy Services Research Visits 1 Energy E&P…
EQUITY CAPITAL MARKETS U.S. Equity Research Industry Focus Market-Cap Focus Industrial 70 Real Estate 78 Financial Services 2-5 billion Health Care 23% 93 211 5 billion 36% Consumer Technology 107 500mil-2 239…
EQUITY CAPITAL MARKETS 2015 MAJOR GROWTH INITIATIVES Build a meaningful Life Sciences/Biotech Life Sciences franchise 15-20% of recent U.S. Equity U/W fees are in the Life Sciences sector RJ has hired a senior banking team in the…
EQUITY CAPITAL MARKETS OUTLOOK Conducive environment for investment banking, particularly M&A Continued headwinds for institutional equity commissions Increased importance of balance sheet / lending capabilities relative…
ASSET MANAGEMENT GROUP Jeff Dowdle Executive Vice President, RJF 57
ASSET MANAGEMENT GROUP The Asset Management segment includes the Asset Management Services division, Eagle Asset Management (and affiliates), and Raymond James Trust. Overview of Asset Management Segment Asset Management Eagle Asset…
ASSET MANAGEMENT GROUP Raymond James has consistently grown net revenues and pre-tax income in the Asset Management segment. Net Revenues Pre-Tax Income ( millions) ( millions) 16% 5-YR 388* CAGR 370 293 34% 5-YR 227 237…
ASSET MANAGEMENT GROUP Financial assets under management have grown on average 20% per year from FY 2009 to FY 2014. Growth in Financial Assets under Management Eagle1 and AMS2 as of March 31, 2015 80 69.4 64.6 70 20% 5-YR 56.0…
ASSET MANAGEMENT GROUP Eagles assets are well diversified just under 50% are represented by small and mid cap strategies, and the products are distributed via multiple channels. Eagle Asset Management, Inc. (and affiliates) Financial…
ASSET MANAGEMENT GROUP Annualized net flows of financial assets under management have averaged about 8% per year since FY 2009. Net Flows of Financial Assets under Management Eagle1 and AMS2 as of March 31, 2015 For the first half…
ASSET MANAGEMENT GROUP Assets held in managed programs represent approximately 80% of the investment advisory fees recorded in the Asset Management segment. Managed assets in Eagle generate higher revenue yields for the segment than…
ASSET MANAGEMENT GROUP Managed assets in both AMS and Eagle have generated attractive investment performance. Asset Management Group Investment Performance Highlights AMS MANAGED EAGLE MANAGED PERFORMANCE PERFORMANCE VS. PEER…
ASSET MANAGEMENT GROUP There are significant growth opportunities for both AMS and Eagle. Asset Management Group Growth Opportunities Acquisitions and Lift Outs Product Development Leveraging Synergies 65
ASSET MANAGEMENT GROUP The outlook for the Asset Management segment is continued growth of assets, largely driven by growth in the Private Client Group, a structural trend towards fee based accounts, and a focus on acquisitions and lift…
RAYMOND JAMES BANK Steve Raney President & CEO, Raymond James Bank 67
RAYMOND JAMES BANK RJ Banks vision is to maximize shareholder value through prudent investing, efficient operations and delivery of selected banking products that enhance client relationships while providing mutually beneficial…
RAYMOND JAMES BANK RJ Bank has a targeted lending strategy focused on corporate, commercial real estate, and retail loans. Commercial Real Estate Securities Based Lending Corporate (C&I) (CRE) / Residential Mortgages Typically…
RAYMOND JAMES BANK RJ Bank has consistently grown revenues and pre-tax income, although compression of net interest margins has provided headwinds since FY 2012, although NIM compression has abated in the first half of fiscal 2015.…
RAYMOND JAMES BANK RJ Bank has grown its loan portfolio nearly 11% annually since FY 2009. RAYMOND JAMES BANK NET LOAN GROWTH ( millions) 11% 12,061 5 -YR 10,964 CAGR 8,821 7,992 6,594 6,548 6,095 FY 2009 FY 2010 FY…
RAYMOND JAMES BANK RJ Bank maintains a well-diversified loan portfolio, both in terms of type of loans. . . RAYMOND JAMES BANK LOAN COMPOSITION (% of total loans, Q2 FY 2015) Tax Exempt Loans, 3.0% Loans Held Securities for Sale,…
RAYMOND JAMES BANK . . . and industry diversification. RAYMOND JAMES BANK C&I INDUSTRY DIVERSIFICATION (Q2 FY 2015) Industry Outstandings as % of Bank Assets Pharmaceuticals 4.0% Consumer Products & Services 3.0%…
RAYMOND JAMES BANK The vast majority of RJ Banks corporate loans are shared national credits. OVERVIEW OF SHARED NATIONAL CREDITS Established in 1977, the Shared National Credit (SNC) designation is a loan commitment of 20 million or…
RAYMOND JAMES BANK The credit quality of RJ Banks Shared National Credits has consistently outperformed the industry by a wide margin. SHARED NATIONAL CREDITS CRITICIZED LOANS (% OF TOTAL SNC LOANS) 17.9% All Shared National Credits…
RAYMOND JAMES BANK The credit trends have improved significantly for RJ Banks loan portfolio since FY 2009. PROVISION EXPENSE NET CHARGE OFFS ( thousands) ( thousands) 169,341 107,224 80,413 83,601 33,655 34,995 24,214 25,894…
RAYMOND JAMES BANK RJ Banks growth initiatives continue to be focused on strengthening relationships with clients in the Private Client Group and Capital Markets segments. GROWTH INITIATIVES Expand Lending and Cash Management…
RAYMOND JAMES BANK OUTLOOK Continued growth in loan portfolio with focus on expanding synergies with PCG and Capital Markets More resilient net interest margins Higher levels of bank loan loss provision expense commensurate…
RAYMOND JAMES BANK SUMMARY OF STRATEGY Why does Raymond James have a bank Provides Cash Deepens Management Relationships and Lending with Capital Solutions to Markets Private Client Clients Group Attractive Provides…
FINANCIAL REVIEW & CLOSING Jeff Julien CFO, Raymond James Financial 80
TRACK RECORD OF PROFITABLE GROWTH Raymond James has grown its net revenues 14% per year, on average, since FY 2009. NET REVENUE GROWTH ( millions) 14% 5-YR 5,076** CAGR 4,861 4,485 3,807 3,334 2,917 61.3% Net Revenues 2,546…
TRACK RECORD OF PROFITABLE GROWTH Raymond James has grown its pre-tax income by 25% per year, on average, since FY 2009. PRE-TAX INCOME GROWTH NON-GAAP* ( millions; %) 15.1% 15.4% 15.1% 14.4% 14.0% 12.4% Pre-Tax Margin**…
TRACK RECORD OF PROFITABLE GROWTH All of the firms core segments have steadily grown pre-tax income over the past 5 years. PRE-TAX INCOME BY CORE SEGMENT ( millions) 330 336 Private Client Group 268 272 RJ Bank 240 243 220…
TRACK RECORD OF PROFITABLE GROWTH Diluted earnings per share has grown on average by 22% per year since FY 2009. DILUTED EARNINGS PER SHARE GROWTH GAAP AND NON-GAAP* GAAP Non-GAAP* 5-YR CAGR: 22% GAAP 3.32 3.28** 2.95 2.51…
TRACK RECORD OF PROFITABLE GROWTH Raymond James generated a 12.3% return on equity in FY 2014, just above the 12% target. RJF ANNUAL RETURN ON EQUITY NON-GAAP* 12.2% 12.0% 12.3% 11.0% 11.3% 11.3% 10.6% 10.6% 9.7% 7.9%…
TRACK RECORD OF PROFITABLE GROWTH Raymond James has a track record of generating much less volatile returns to our shareholders relative to other firms in our industry. RETURN ON EQUITY RJF VS. COMPETITOR GROUP* (%) RJF Competitor…
CONSERVATIVE FINANCIAL MANAGEMENT Raymond James maintains a very strong balance sheet. BALANCE SHEET DATA (as of March 31, 2015) Total Assets 25.0 billion Equity Attributable to RJF 4.375 billion Corporate Debt 1.2 billion…
CONSERVATIVE FINANCIAL MANAGEMENT The firm maintains a conservative level of corporate debt with a staggered maturity profile, with the first maturity in 2016. CORPORATE DEBT 350 6.90% 300 8.60% mm; 250 250 Coupon 4.25%…
CONSERVATIVE FINANCIAL MANAGEMENT Raymond James has maintained a disciplined and consistent approach to capital deployment, with a priority on deploying capital to grow the business. CAPITAL DISCUSSION Average Dividend Payout…
CONSERVATIVE FINANCIAL MANAGEMENT For the past several quarters, client cash balances to total client assets have remained below the historical averages. CLIENT CASH BALANCES* TO TOTAL CLIENT ASSETS UNDER ADMINISTRATION (%) 10.0%…
CONSERVATIVE FINANCIAL MANAGEMENT OVERVIEW OF SENSITIVITY TO CHANGES IN SHORT-TERM INTEREST RATES (as of March 31, 2015) CLIENT CASH BALANCES* CORRESPONDING ASSETS (33 B) Client Margin NII to PCG Loans Segment (2 B) Brokerage…
CONSERVATIVE FINANCIAL MANAGEMENT A 100 bps rise in short-term rates is expected to result in approximately 130 million of incremental annual pre-tax earnings. PROJECTED INCREASE IN ANNUAL PRE-TAX EARNINGS FROM A 100 BPS RISE IN…
FINANCIAL SUMMARY KEY TAKEAWAYS TRACK RECORD OF RELATIVELY LOW WELL CAPITALIZED AMPLE LIQUIDITY PROFITABLE VOLATILITY OF (LOW LEVERAGE) GROWTH EARNINGS 94
Appendix 95
SCHEDULE OF NON-GAAP INFORMATION Year ended September 30, 2011 2012 2013 (in thousands, except per share amounts) Pre-tax income attributable to RJF, Inc. - GAAP basis 461,247 471,525 564,187 Non-GAAP adjustments: Acquisition…
SCHEDULE OF NON-GAAP INFORMATION (continued from prior slide) Footnote Explanations: 1. The non-GAAP adjustment adds back to pre-tax income one-time acquisition and integration expenses associated with acquisitions that were…
EXECUTIVE COMMITTEE BIOS 98
EXECUTIVE COMMITTEE BIOS Presenting Tash Elwyn Prior to being appointed to his current position, Elwyn served for five years as divisional director, senior vice president of the Atlantic Division of RJ&A. In that President role, he…
EXECUTIVE COMMITTEE BIOS Presenting Jeffrey Trocin Mr. Trocin joined Raymond James & Associates in 1986 and has directed the firms Equity Capital Markets group, which includes the firms investment banking, President research,…
EXECUTIVE COMMITTEE BIOS Presenting Jeff Dowdle Serving as executive vice president of Raymond James Financial Inc.s asset management group, Jeff Dowdle oversees the firms investment management Executive Vice President subsidiaries…
EXECUTIVE COMMITTEE BIOS Presenting Steven Raney is a Tampa native and has worked in the areas banking community Steve Raney since 1988. He is currently the president and CEO of Raymond James Bank, a President and CEO wholly-owned…
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