Raymond James Financial(RJF) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Raymond James Financial, Inc. as of June 30, 2025, and for the three and nine-month periods then ended, including statements of financial condition, income, changes in shareholders' equity, and cash flows, along with detailed notes Condensed Consolidated Statements of Financial Condition - Total assets increased to $84.8 billion as of June 30, 2025, from $83.0 billion at September 30, 2024, primarily driven by an increase in Bank loans, net, which grew from $46.0 billion to $49.8 billion[9] - Total liabilities rose to $72.6 billion from $71.3 billion, mainly due to a $1.2 billion increase in Bank deposits. Total shareholders' equity grew from $11.7 billion to $12.3 billion[9] Key Balance Sheet Items ($ in millions) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Assets | $84,815 | $82,992 | | Cash and cash equivalents | $9,195 | $10,998 | | Bank loans, net | $49,840 | $45,994 | | Available-for-sale securities | $7,165 | $8,260 | | Total Liabilities | $72,554 | $71,325 | | Bank deposits | $57,249 | $56,010 | | Senior notes payable | $2,040 | $2,040 | | Total Shareholders' Equity | $12,261 | $11,667 | Condensed Consolidated Statements of Income and Comprehensive Income - For the three months ended June 30, 2025, net revenues increased 5% year-over-year to $3.40 billion, but pre-tax income decreased 13% to $563 million, resulting in a net income of $436 million[10] - For the nine months ended June 30, 2025, net revenues grew 10% year-over-year to $10.34 billion, and net income increased 4% to $1.53 billion[10] Quarterly and YTD Performance ($ in millions, except EPS) | Metric | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $3,398 | $3,228 | $10,338 | $9,359 | | Pre-tax Income | $563 | $644 | $1,983 | $1,883 | | Net Income | $436 | $492 | $1,531 | $1,466 | | Diluted EPS | $2.12 | $2.31 | $7.35 | $6.85 | Condensed Consolidated Statements of Changes in Shareholders' Equity - For the nine months ended June 30, 2025, retained earnings increased by $1.21 billion, driven by $1.53 billion in net income, offset by $321 million in cash dividends[12] - The company repurchased $766 million of treasury stock during the nine months ended June 30, 2025, compared to $618 million in the same period of the prior year[12] Condensed Consolidated Statements of Cash Flows - For the nine months ended June 30, 2025, net cash provided by operating activities was $1.64 billion, nearly flat compared to the prior year period[15] - Net cash used in investing activities significantly increased to $2.90 billion from $757 million in the prior year period, primarily due to a $4.04 billion increase in bank loans[15] - Net cash used in financing activities was $171 million, a substantial decrease from $756 million in the prior year period, mainly due to a $1.24 billion increase in bank deposits, which offset $914 million in common stock repurchases[15] Notes to Condensed Consolidated Financial Statements (Unaudited) - The notes provide detailed disclosures on accounting policies, fair value measurements, financial instruments, segment information, and regulatory capital, forming the basis for the consolidated financial statements[19] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the third quarter and first nine months of fiscal 2025, covering key results, segment performance, net interest income drivers, balance sheet changes, liquidity, capital, and risk management Executive Overview - For Q3 2025, net revenues grew 5% YoY to $3.40 billion, but pre-tax income fell 13% to $563 million, primarily due to a $58 million expense for a legal settlement[223][227] - Revenue growth was driven by higher asset management fees from increased client assets, while the decline in combined net interest income and RJBDP fees from lower short-term rates provided a partial offset[226] - The firm maintained a strong capital position with a Tier 1 leverage ratio of 13.1% and repurchased 3.3 million shares for $451 million during the quarter[229] Net Interest Analysis - The Fed funds target rate decreased from a range of 5.25%-5.50% at the start of fiscal 2024 to 4.25%-4.50% by the end of the current period, impacting interest-sensitive assets and liabilities[245] - For Q3 2025, combined net interest income and RJBDP fees from third-party banks decreased 2% YoY to $656 million, primarily due to lower short-term interest rates and reduced RJBDP balances at third-party banks[250] Results of Operations by Segment - Private Client Group (PCG) remains the largest segment, with Q3 2025 net revenues of $2.49 billion, up 3% YoY, driven by higher asset management fees[265] - Capital Markets segment reported a Q3 2025 pre-tax loss of $54 million, compared to a $14 million loss in the prior year, largely due to a $58 million legal expense, despite a 15% increase in net revenues[290][291][293] - Asset Management segment's pre-tax income grew 12% YoY to $125 million in Q3 2025, driven by higher financial assets under management[298] - Bank segment's pre-tax income increased 7% YoY to $123 million in Q3 2025, as an 8% rise in net interest income offset a higher provision for credit losses[319][320] Statement of Financial Condition Analysis - Total assets grew by $1.8 billion (2%) from September 30, 2024, to June 30, 2025, reaching $84.8 billion, primarily fueled by a $3.8 billion increase in net bank loans[336] - This asset growth was partially offset by a $1.8 billion decrease in cash and cash equivalents and a $1.1 billion decrease in available-for-sale securities[336] - Total liabilities increased by $1.2 billion (2%), mainly due to a $1.2 billion rise in bank deposits[337] Liquidity and Capital Resources - The company maintains a strong liquidity position with $2.35 billion of RJF corporate cash as of June 30, 2025[350] Regulatory Capital Ratios (RJF) | Ratio | June 30, 2025 | Required Ratio | | :--- | :--- | :--- | | Tier 1 leverage | 13.1% | 4.0% | | CET1 capital | 22.7% | 7.0% | | Total capital | 24.2% | 10.5% | - The company has access to significant additional liquidity, including a $750 million unsecured credit facility, $9.38 billion in immediate credit from the FHLB, and $7.2 billion from the FRB's discount window as of June 30, 2025[359][364][365] Risk Management - The firm's principal risks are identified as market, credit, liquidity, operational, model, and compliance, managed through a formal Enterprise Risk Management (ERM) program[395] - Market risk in trading portfolios is monitored using Value-at-Risk (VaR), with the average daily one-day VaR for all trading portfolios at $3 million for the nine months ended June 30, 2025[410] - Credit risk in the bank loan portfolio is managed through diversification and monitoring, with nonperforming loans low at 0.43% of total loans as of June 30, 2025[431][436] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section refers the reader to the 'Risk management' section within Management's Discussion and Analysis for quantitative and qualitative disclosures about market risk - The report directs readers to the 'Risk management' section in Item 2 (MD&A) for detailed disclosures on market risk[458] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the reporting period, with no material changes to internal control over financial reporting identified - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[460] - There were no material changes to the company's internal control over financial reporting during the third fiscal quarter of 2025[461] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no new legal proceedings in this section for the period, with ongoing matters discussed in Note 16 of the financial statements and MD&A - The company reported no new items under 'Legal Proceedings' for the quarter[463] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases, with approximately 3.3 million shares bought back in Q3 2025 and $749 million remaining under the current authorization Share Repurchases (Q3 2025) | Month | Shares Purchased (Public Plan) | Average Price Paid | | :--- | :--- | :--- | | April 2025 | 1,555,458 | $125.67 | | May 2025 | 711,957 | $147.48 | | June 2025 | 1,019,018 | $148.17 | - In December 2024, the Board of Directors authorized a new stock repurchase program for up to $1.5 billion, replacing the previous one, with $749 million remaining available under this authorization as of June 30, 2025[466]