Raymond James Financial(RJF) - 2025 Q2 - Quarterly Report

Part I: Financial Information This section presents the unaudited financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, with detailed notes Condensed Consolidated Statements of Financial Condition Total assets increased slightly to $83.13 billion, driven by bank loans, while liabilities decreased and equity grew to $12.23 billion Condensed Consolidated Statements of Financial Condition (in millions) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total assets | $83,132 | $82,992 | | Cash and cash equivalents | $9,662 | $10,998 | | Bank loans, net | $48,273 | $45,994 | | Total liabilities | $70,905 | $71,325 | | Bank deposits | $56,403 | $56,010 | | Accrued compensation, commissions and benefits | $1,914 | $2,325 | | Total shareholders' equity | $12,227 | $11,667 | Condensed Consolidated Statements of Income and Comprehensive Income Net revenues for Q2 2025 increased 9% to $3.40 billion, with net income rising 4% to $495 million, and diluted EPS at $2.36 Key Performance Indicators (in millions, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YoY Change | Six Months 2025 | Six Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net revenues | $3,403 | $3,118 | +9% | $6,940 | $6,131 | +13% | | Pre-tax income | $671 | $609 | +10% | $1,420 | $1,239 | +15% | | Net income | $495 | $476 | +4% | $1,095 | $974 | +12% | | Diluted EPS | $2.36 | $2.22 | +6% | $5.22 | $4.54 | +15% | Condensed Consolidated Statements of Cash Flows Operating activities provided $947 million in cash, while investing activities used $1.60 billion, and financing activities used $463 million Net Cash Flow for Six Months Ended March 31 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $947 | $934 | | Net cash used in investing activities | $(1,596) | $(109) | | Net cash provided by/(used in) financing activities | $(463) | $266 | Notes to Condensed Consolidated Financial Statements (Unaudited) Detailed notes cover fair value measurements, bank loan portfolio, deposits, and regulatory capital, providing context to financial statements - As of March 31, 2025, 11% of assets and 2% of liabilities were measured at fair value on a recurring basis. Level 3 assets represented less than 1% of assets measured at fair value[37] - The bank loan portfolio grew to $48.5 billion (held for investment) as of March 31, 2025, up from $46.3 billion at September 30, 2024. The Allowance for Credit Losses (ACL) as a percentage of total loans held for investment decreased to 0.93% from 0.99%[80] - Total bank deposits increased to $56.4 billion as of March 31, 2025, with 86% of these deposits being FDIC-insured[126][128] - The company and its bank subsidiaries were categorized as 'well-capitalized' as of March 31, 2025, with RJF's CET1 ratio at 23.3% against a 7.0% requirement[188][190] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial results, highlighting revenue growth, segment performance, liquidity, capital, and risk management practices Executive Overview Q2 2025 net revenues grew 9% to $3.40 billion, driven by asset management and investment banking, while maintaining a strong capital position Q2 2025 Financial Highlights vs. Q2 2024 (in millions, except per share) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net revenues | $3,403 | $3,118 | 9% | | Pre-tax income | $671 | $609 | 10% | | Net income available to common shareholders | $493 | $474 | 4% | | Earnings per common share – diluted | $2.36 | $2.22 | 6% | - Key revenue drivers for the quarter included higher asset management fees due to increased PCG client assets, stronger brokerage revenues from fixed income, and improved investment banking activity[219] - The firm repurchased 1.7 million shares for $250 million in Q2 2025 and maintained a strong capital position with a Tier 1 leverage ratio of 13.3% and $2.5 billion in corporate cash[223] Results of Operations by Segment Segment performance highlights include PCG revenue growth, increased Capital Markets activity, and significant pre-tax income growth in Asset Management and Bank segments Segment Pre-Tax Income for Q2 (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Private Client Group | $431 | $444 | (3)% | | Capital Markets | $36 | $(17) | NM | | Asset Management | $121 | $100 | +21% | | Bank | $117 | $75 | +56% | - PCG client assets under administration (AUA) reached $1.48 trillion, with assets in fee-based accounts at $872.8 billion as of March 31, 2025[259] - Capital Markets investment banking revenues increased 21% YoY to $207 million in Q2 2025, driven by more favorable market conditions[284][285] - Asset Management's total financial assets under management (AUM) grew to $245.0 billion as of March 31, 2025, up from $226.8 billion a year prior[298] Liquidity and Capital Resources The firm maintains a strong liquidity and capital position with $83.1 billion in assets, $12.2 billion in equity, and robust capital ratios RJF Regulatory Capital Ratios (March 31, 2025) | Ratio | Actual | Required | | :--- | :--- | :--- | | Tier 1 leverage | 13.3% | 4.0% | | CET1 | 23.3% | 7.0% | | Tier 1 capital | 23.5% | 8.5% | | Total capital | 24.8% | 10.5% | - As of March 31, 2025, the company had $2.49 billion in corporate cash, including cash held at the parent and loaned to its subsidiary RJ&A[345] - The company has significant available credit, with $9.49 billion from the FHLB and $3.4 billion from the FRB discount window as of March 31, 2025[359][360] - In December 2024, the Board authorized a new $1.5 billion share repurchase program. As of March 31, 2025, $1.2 billion remained available under this authorization[167][223] Risk Management The firm employs an ERM program to manage market, credit, liquidity, and operational risks, with focus on CRE loans Daily Value-at-Risk (VaR) for Trading Portfolios (Six months ended March 31, 2025) | $ in millions | High | Low | Period-end (Mar 31, 2025) | Average | | :--- | :--- | :--- | :--- | :--- | | Daily VaR | $4 | $1 | $3 | $3 | Bank Operations Net Interest Income Sensitivity (as of March 31, 2025) | Instantaneous Rate Change (bps) | Projected Change in NII | | :--- | :--- | | +200 | +3% | | +100 | +2% | | -100 | (4)% | | -200 | (9)% | - Nonperforming loans were $214 million, or 0.44% of total loans held for sale and investment, as of March 31, 2025[428] - The firm is closely monitoring risks in its CRE loan portfolio, especially office real estate, due to remote work policies and high interest rates. The office real estate concentration is 7% of the total corporate bank loan portfolio[443][445] Item 3. Quantitative and Qualitative Disclosures about Market Risk Quantitative and qualitative disclosures about market risk are referenced to the 'Risk Management' section of the MD&A - Disclosures about market risk are provided in the MD&A section of this report[452] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the period[455] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[456] Part II: Other Information This section provides additional information including legal proceedings, equity sales, and other disclosures Item 1. Legal Proceedings The company reported no new material legal proceedings for the period - The report states 'None' for this item, indicating no new material legal proceedings to disclose[459] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales but detailed common stock repurchases, including a new $1.5 billion authorization Share Repurchases for the Quarter Ended March 31, 2025 | Month | Total Shares Purchased | Average Price Per Share | Shares Purchased Under Program | Remaining Authorization (End of Month) | | :--- | :--- | :--- | :--- | :--- | | January 2025 | 23,435 | $162.69 | — | $1,450M | | February 2025 | 315,686 | $158.54 | 315,391 | $1,400M | | March 2025 | 1,402,024 | $142.78 | 1,399,870 | $1,200M | | Q2 Total | 1,741,145 | $145.91 | 1,715,261 | $1,200M | Item 5. Other Information The company reported that none of its directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[467]