EX-99.1 2 rjf2012_1231q113earnings.htm RJF FIRST QUARTER 2013 EARNINGS RELEASE RJF2012_1231Q113Earnings
EXHIBIT 99.1


JANUARY 23, 2013                                FOR IMMEDIATE RELEASE


RAYMOND JAMES FINANCIAL REPORTS
FIRST QUARTER RESULTS, 100 CONSECUTIVE PROFITABLE QUARTERS


ST. PETERSBURG, Fla. - Raymond James Financial, Inc. today reported record quarterly net revenues of $1.1 billion for the first fiscal quarter of 2013, up 4 percent from the preceding quarter and up 42 percent from the prior year's first quarter.

Net income for the quarter was a record $85.9 million, or $0.61 per diluted share, up from $0.60 per diluted share from the preceding quarter and up from $0.53 per diluted share, or 15 percent, from the prior year's quarter. Excluding $17.4 million of pretax acquisition-related expenses, net income would have been $96.6(1) million or $0.69(1) per fully diluted share, flat with the preceding quarter but up 30 percent over last year's quarter.

“The company generated impressive revenue given the market environment,” said CEO Paul Reilly. “This quarter, the bottom line was satisfactory given that we continue to operate as planned at elevated support levels while we move toward completion of the Morgan Keegan integration.

“More important, this represents the firm's 100th consecutive quarter of profitability, dating back to Black Monday in 1987. This is a testament to our strength and stability derived from conservative management principles instilled by Bob and Tom James and practiced throughout our 50-year history.”
 
Although the S&P 500 was down 1 percent for the quarter, financial assets under management grew to $46.5 billion, up 8.6 percent from the preceding quarter and up 33 percent from the previous year's quarter, aided by the $3.1 billion of assets from the acquired interest in ClariVest Asset Management, LLC. Assets under administration also reached a new record of $392.0 billion, up slightly from the preceding quarter and up 45.4 percent from last year's quarter.

The Private Client Group reported solid results as revenue grew 3 percent over the preceding quarter. Pretax income was up 5 percent over the preceding quarter as compensation and technology expenses continue to remain elevated during the Morgan Keegan integration. Recruiting activity remains robust. The decrease in financial advisors was once again driven in large part by attrition of lower producing Morgan Keegan advisors. Retention levels remain extremely high for those Morgan Keegan advisors offered retention packages. Productivity for financial advisors reached record highs for both our employee and independent contractor divisions.

Capital Markets recorded 4 percent revenue growth over the preceding quarter driven by an impressive performance by the Equity Capital Markets division, which set a quarterly record for investment banking revenues. This was driven by both a vibrant underwriting calendar and record M&A activity. The Fixed Income division had a sequentially weaker quarter in both commission volume and trading profits. Trading profits were adversely impacted by the sudden increase in tax-free interest rates during the month of December.

Asset Management continued its steady performance. Revenue was up 7 percent over the preceding quarter while pretax income increased 18 percent. Additionally, the investment in ClariVest and the addition of a small/mid-cap team in the quarter should help continue its growth trajectory.

Raymond James Bank continued its growth as net loans grew by $468 million, or 5.9 percent, over the preceding quarter. Despite that increase, the provision for loan losses was relatively low as the credit quality of the overall loan portfolio continues to improve.

The Morgan Keegan integration remains on schedule and we expect to convert the Private Client Group to the Raymond James system next month. “Morgan Keegan advisors are excited about getting access to our systems and products,” said Reilly. “We will continue to run at elevated support levels through the conversion and look to achieve our efficiency targets after integration is completed late in this fiscal year,” he continued.

“I am proud of our team of professionals and support staff and all they have accomplished during this integration,” stated Reilly. “I am confident that this combination will result in a stronger and better positioned organization.”

(1)
Refer to the discussion and reconciliation of the GAAP results to the non-GAAP measures that follows the consolidated statement of income.

1



The company will conduct its quarterly conference call Thursday, January 24, 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.

About Raymond James Financial, Inc.

Raymond James Financial (NYSE-RJF) is a Florida-based diversified holding company providing financial services to individuals, corporations and municipalities through its subsidiary companies. Its four principal wholly owned broker/dealers, Raymond James & Associates, Raymond James Financial Services, Morgan Keegan & Co., Inc. (branded as Raymond James | Morgan Keegan) and Raymond James Ltd., has more than 6,200 financial advisors serving more than 2.4 million accounts in more than 2,600 locations throughout the United States, Canada and overseas. In addition, total client assets are approximately $392 billion.

Forward Looking Statements

Certain statements made in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements regarding management expectations, strategic objectives, business prospects, anticipated expense savings, financial results, anticipated results of litigation and regulatory proceedings, and other similar matters are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Those results or outcomes could occur as a result of a number of factors, which include, but are not limited to, the risks inherent in the integration of Raymond James’ and Morgan Keegan’s businesses including the  diversion of management time on integration issues, or in realizing the projected benefits of the acquisition, the inability to sustain revenue and earnings growth, changes in the capital markets, and other risk factors discussed in documents filed by Raymond James with the Securities and Exchange Commission from time to time, including Raymond James’ 2012 Annual Report on Form 10-K which is available on RAYMONDJAMES.COM and SEC.GOV. Any forward-looking statement speaks only as of the date on which that statement is made. Raymond James will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.



For more information, please contact Steve Hollister at 727-567-2824
Please visit the Raymond James Press Center at raymondjames.com/media.


2


Raymond James Financial, Inc.
Selected financial highlights (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary results of operations
 
 
 
 
 
 
 
 
Three months ended
 
December 31, 2012
 
December 31, 2011
 
% Change
 
September 30, 2012
 
% Change
 
($ in thousands, except per share amounts)
Total revenues
$
1,137,509

 
$
798,817

 
42
%
 
$
1,093,468

 
4
%
Net revenues
$
1,109,488

 
$
782,777

 
42
%
 
$
1,065,609

 
4
%
Pre-tax income
$
139,147

 
$
110,851

 
26
%
 
$
124,307

 
12
%
Net income
$
85,874

 
$
67,325

 
28
%
 
$
83,325

 
3
%
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic
$
0.62

 
$
0.53

 
17
%
 
$
0.60

 
3
%
Diluted
$
0.61

 
$
0.53

 
15
%
 
$
0.60

 
2
%
 
 
 
 
 
 
 
 
 
 
Non-GAAP results:(1)
 
 
 
 
 
 
 
 
 
Non-GAAP pre-tax income
$
156,529

 
$
110,851

 
41
%
 
$
143,032

 
9
%
Non-GAAP net income
$
96,600

 
$
67,325

 
43
%
 
$
95,722

 
1
%
Non-GAAP earnings per common share:(1)
 
 
 
 
 
 
 
 
Non-GAAP basic
$
0.70

 
$
0.53

 
32
%
 
$
0.69

 
1
%
Non-GAAP diluted
$
0.69

 
$
0.53

 
30
%
 
$
0.69

 


(1) Refer to the discussion and reconciliation of the GAAP results to the non-GAAP results that follows the consolidated statement of income.

Selected Balance Sheet data:
 
 
 
 
 
 
 
 
 
 
As of
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
Client margin balances
$
1,850
 mil.
 
$
1,868
 mil.
 
$
1,902
 mil.
 
$
1,494
 mil.
 
$
1,521
 mil.
 
 
 
 
 
 
 
 
 
 
Total assets
$
22.3
 bil.
 
$
21.2
 bil.
 
$
21.2
 bil.
 
$
19.3
 bil.
 
$
17.9
 bil.
Shareholders’ equity
$
3,380
 mil.
 
$
3,269
 mil.
 
$
3,158
 mil.
 
$
3,088
 mil.
 
$
2,637
 mil.
 
 
 
 
 
 
 
 
 
 
Book value per share
$
24.59

 
$
24.02

 
$
23.29

 
$
22.84

 
$
21.34

Tangible book value per share (a non-GAAP measure) (1)
$
21.92

 
$
21.42

 
$
20.63

 
$
22.36

 
$
20.80

 
 
 
 
 
 
 
 
 
 
Return on equity for the quarter (annualized)
10.3
%
 
10.4
%
 
9.8
%
 
9.6
%
 
10.3
%
Return on equity for the quarter - computed based on non-GAAP measures (annualized) (2)
11.6
%
 
12.0
%
 
11.5
%
 
11.6
%
 
10.3
%



(1) Tangible book value per share (a non-GAAP measure) is computed by dividing shareholders’ equity, less goodwill and other intangible assets in the amount of $375 million, $361 million, $367 million, $73 million, and $73 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively, which are net of their related deferred tax balance in the amounts of $6.8 million, $7.6 million $6.7 million, $7 million and $6.8 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively, by the number of common shares outstanding. Management believes tangible book value per share is a measure that the Company and investors use to assess capital strength and that the GAAP and non-GAAP measures should be considered together.

(2) Refer to the discussion and reconciliation of the GAAP results to the non-GAAP results that follows the consolidated statement of income. This computation utilizes the net income attributable to RJF, Inc. - non-GAAP basis and the average equity - non-GAAP basis, as presented in the referenced reconciliation, in the computation.
  

3


Raymond James Financial, Inc.
Selected key metrics (Unaudited)
Details of certain key revenue components:
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
 
(in thousands)
Securities commissions and fees:
 
 
 
 
 
 
 
 
 
PCG securities commissions and fees
$
595,537

 
$
578,602

 
$
576,252

 
$
468,663

 
$
432,703

Capital Markets institutional sales commissions:
 
 
 
 
 
 
 
 
 
Equity commissions
54,207

 
59,185

 
58,275

 
55,879

 
49,357

Fixed Income commissions
90,954

 
96,389

 
100,862

 
35,984

 
31,512

All other segments
2,718

 
2,409

 
2,554

 
2,503

 
2,414

Intersegment eliminations
(4,832
)
 
(4,142
)
 
(4,763
)
 
(4,502
)
 
(4,652
)
Total securities commissions and fees
$
738,584

 
$
732,443

 
$
733,180

 
$
558,527

 
$
511,334

 
 
 
 
 
 
 
 
 
 
Investment banking revenues:
 
 
 
 
 
 
 
 
 
Underwritings
$
27,257

 
$
22,856

 
$
35,519

 
$
26,962

 
$
14,512

Tax credit funds syndication fees
4,269

 
8,162

 
7,854

 
11,202

 
4,475

Advisory services (1)
53,344

 
23,005

 
28,893

 
19,790

 
20,349

Total investment banking revenues
$
84,870

 
$
54,023

 
$
72,266

 
$
57,954

 
$
39,336


(1) Comprised of private placement and merger and acquisition fees.

PCG financial advisors and investment advisor representatives:
 
 
 
 
 
 
 
 
 
As of
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
United States (1)
5,427

 
5,452

 
5,489

 
4,532

 
4,495

Canada
463

 
473

 
471

 
458

 
454

United Kingdom
65

 
66

 
64

 
64

 
61

Investment advisor representatives(2)
334

 
339

 
343

 
344

 
346

Total advisors
6,289

 
6,330

 
6,367

 
5,398

 
5,356


(1) Includes 869, 892, and 938 Morgan Keegan financial advisors at December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

(2) Investment advisor representatives with custody only relationships located in the United States and the United Kingdom.

Selected client asset metrics:
 
 
 
 
 
 
 
 
 
 
As of
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
 
 
 
 
 
 
 
 
 
 
Financial assets under management
$
46.5
 bil.
(1) 
$
42.8
 bil.
 
$
40.9
 bil.
 
$
39.3
 bil.
 
$
34.9
 bil.
 
 
 
 
 
 
 
 
 
 
Client assets under administration (2)
$
392.0
 bil.
 
$
390.3
 bil.
 
$
376.0
 bil.
 
$
292.0
 bil.
 
$
269.6
 bil.


(1) Includes approximately $3.1 billion in assets from our December 24, 2012 acquisition of a 45% interest in Clarivest.

(2) Includes institutional assets of approximately $21.8 billion at December 31, 2012, $22.5 billion at September 30, 2012, $19.9 billion at June 30, 2012 and approximately $2.5 billion as of the March 31, 2012 and December 31, 2011 period end.

4



Raymond James Financial, Inc.
Segment Results (Unaudited)
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31,
2012
 
December 31,
2011
 
% Change
 
September 30,
2012
 
% Change
Revenues:
 
 
 
 
 
 
 
 
 
Private Client Group
$
712,814

 
$
528,618

 
35
 %
 
$
694,122

 
3
 %
Capital Markets
247,554

 
136,165

 
82
 %
 
238,359

 
4
 %
Asset Management
65,629

 
56,795

 
16
 %
 
61,601

 
7
 %
RJ Bank
92,050

 
77,416

 
19
 %
 
94,852

 
(3
)%
Emerging Markets
5,589

 
4,652

 
20
 %
 
5,658

 
(1
)%
Securities Lending
1,488

 
2,442

 
(39
)%
 
1,981

 
(25
)%
Proprietary Capital
20,616

 
473

 
NM

 
7,276

 
183
 %
Other
5,304

 
2,661

 
99
 %
 
3,718

 
43
 %
Intersegment eliminations
(13,535
)
 
(10,405
)
 
 
 
(14,099
)
 
 
Total revenues
$
1,137,509

 
$
798,817

 
42
 %
 
$
1,093,468

 
4
 %
 
 
 
 
 
 
 
 
 
 
Pre-tax income:
 
 
 
 
 
 
 
 
 
Private Client Group
$
52,911

 
$
49,408

 
7
 %
 
$
50,443

 
5
 %
Capital Markets
31,607

 
10,001

 
216
 %
 
23,016

 
37
 %
Asset Management
20,943

 
15,813

 
32
 %
 
17,777

 
18
 %
RJ Bank
67,943

 
53,003

 
28
 %
 
70,041

 
(3
)%
Emerging Markets
(2,354
)
 
(2,549
)
 
8
 %
 
(1,340
)
 
(76
)%
Securities Lending
539

 
1,206

 
(55
)%
 
875

 
(38
)%
Proprietary Capital
5,720

 
(65
)
 
NM

 
6,211

 
(8
)%
Other
(38,162
)
(1) 
(15,966
)
 
(139
)%
 
(42,716
)
(1) 
11
 %
Pre-tax income
$
139,147

 
$
110,851

 
26
 %
 
$
124,307

 
12
 %

(1) The Other segment for the three month period ended December 31, 2012 and September 30, 2012 include acquisition and integration expenses with respect to acquisitions in the amount of $17 million and $19 million, respectively. These expenses are primarily associated with the Morgan Keegan acquisition.


5



Raymond James Financial, Inc.
Consolidated Statement of Income
(Unaudited)
(in thousands, except per share amounts)
 
 
 
Three months ended
 
December 31, 2012
 
December 31, 2011
 
%
Change
 
September 30, 2012
 
%
Change
Revenues:
 
 
 
 
 
 
 
 
 
Securities commissions and fees
$
738,584

 
$
511,334

 
44
 %
 
$
732,443

 
1
 %
Investment banking
84,870

 
39,336

 
116
 %
 
54,023

 
57
 %
Investment advisory fees
62,070

 
53,505

 
16
 %
 
58,189

 
7
 %
Interest
123,126

 
102,096

 
21
 %
 
121,124

 
2
 %
Account and service fees
88,451

 
74,010

 
20
 %
 
87,771

 
1
 %
Net trading profits
9,339

 
9,343

 

 
18,672

 
(50
)%
Other
31,069

 
9,193

 
238
 %
 
21,246

 
46
 %
Total revenues
1,137,509

 
798,817

 
42
 %
 
1,093,468

 
4
 %
 
 
 
 
 
 
 
 
 
 
Interest expense
28,021

 
16,040

 
75
 %
 
27,859

 
1
 %
Net revenues
1,109,488

 
782,777

 
42
 %
 
1,065,609

 
4
 %
 
 
 
 
 
 
 
 
 
 
Non-interest expenses:
 
 
 
 
 
 
 
 
 
Compensation, commissions and benefits
762,548

 
541,622

 
41
 %
 
745,495

 
2
 %
Communications and information processing
60,366

 
37,567

 
61
 %
 
59,305

 
2
 %
Occupancy and equipment costs
39,478

 
25,937

 
52
 %
 
39,944

 
(1
)%
Clearance and floor brokerage
10,168

 
7,454

 
36
 %
 
11,873

 
(14
)%
Business development
30,629

 
27,839

 
10
 %
 
30,393

 
1
 %
Investment sub-advisory fees
8,050

 
6,562

 
23
 %
 
7,740

 
4
 %
Bank loan loss provision
2,923

 
7,456

 
(61
)%
 
3,969

 
(26
)%
Acquisition related expenses
17,382

 

 
NM

 
18,725

 
(7
)%
Other
30,777

 
23,692

 
30
 %
 
30,785

 

Total non-interest expenses
962,321

 
678,129

 
42
 %
 
948,229

 
1
 %
 
 
 
 
 
 
 
 
 
 
Income including noncontrolling interests and before provision for income taxes
147,167

 
104,648

 
41
 %
 
117,380

 
25
 %
Provision for income taxes
53,273

 
43,526

 
22
 %
 
40,982

 
30
 %
Net income including noncontrolling interests
93,894

 
61,122

 
54
 %
 
76,398

 
23
 %
Net income (loss) attributable to noncontrolling interests
8,020

 
(6,203
)
 
229
 %
 
(6,927
)
 
216
 %
Net income attributable to Raymond James Financial, Inc.
$
85,874

 
$
67,325

 
28
 %
 
$
83,325

 
3
 %
 
 
 
 
 
 
 
 
 


Net income per common share – basic
$
0.62

 
$
0.53

 
17
 %
 
$
0.60

 
3
 %
Net income per common share – diluted
$
0.61

 
$
0.53

 
15
 %
 
$
0.60

 
2
 %
Weighted-average common shares outstanding – basic
136,524

 
123,225

 
 
 
135,797

 
 
Weighted-average common and common equivalent shares outstanding – diluted
138,694

 
123,712

 
 
 
137,490

 
 




6



Raymond James Financial, Inc.
Reconciliation of the GAAP results to the non-GAAP measures (Unaudited)


The company believes that the non-GAAP measures provide useful information by excluding those items that may not be indicative of the company’s core operating results and that the GAAP and the non-GAAP measures should be considered together.

The non-GAAP adjustments include: (1) the incremental interest expense the company incurred on financings it executed in anticipation of the closing of the Morgan Keegan acquisition. The adjustment is the interest from the date of issuance of the debt up to the April 2, 2012 closing date of the Morgan Keegan acquisition, (2) one-time acquisition and integration costs incurred which are non-recurring expenses (primarily associated with the Morgan Keegan acquisition), and (3) the impact of additional common shares issued in anticipation of the closing date of the Morgan Keegan transaction. The share adjustment is computed as the impact of the new shares issued from the date of their issuance until the closing date of the Morgan Keegan acquisition, on the weighted average common shares outstanding utilized in the computation of basic and diluted earnings per share.

The following table provides a reconciliation of the GAAP basis to the non-GAAP measures:
 
Three months ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
(in thousands, except per share amounts)
Net income attributable to RJF, Inc. - GAAP basis
$
85,874

 
$
83,325

 
$
76,350

 
$
68,869

 
$
67,325

 
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments :
 
 
 
 
 
 
 
 
 
     Interest expense (1)

 

 

 
1,738

 

     Acquisition related expenses (2)
17,382

 
18,725

 
20,955

 
19,604

 

Sub-total pre-tax non-GAAP adjustments
17,382

 
18,725

 
20,955

 
21,342

 

Tax effect of non-GAAP adjustments (3)
(6,656
)
 
(6,328
)
 
(8,133
)
 
(8,270
)
 

Net income attributable to RJF, Inc. - Non-GAAP basis
$
96,600

 
$
95,722

 
$
89,172

 
$
81,941

 
$
67,325

 
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments to common shares outstanding:
 
 
 
 
 
 
 
 
    Effect of February 2012 share issuance on weighted average common shares outstanding (4)

 

 

 
(5,538
)
 

 
 
 
 
 
 
 
 
 
 
Non-GAAP earnings per common share:
 
 
 
 
 
 
 
 
 
Non-GAAP basic
$
0.70

 
$
0.69

 
$
0.65

 
$
0.65

 
$
0.53

Non-GAAP diluted
$
0.69

 
$
0.69

 
$
0.64

 
$
0.64

 
$
0.53

 
 
 
 
 
 
 
 
 
 
Average equity - GAAP basis (5)
$
3,324,370

 
$
3,213,318

 
$
3,122,774

 
$
2,770,713

 
$
2,612,144

Average equity - non-GAAP basis (6)
$
3,322,744

 
$
3,192,258

 
$
3,105,209

 
$
2,822,614

 
$
2,612,144

 
 
 
 
 
 
 
 
 
 
Return on equity for the quarter (annualized)
10.3
%
 
10.4
%
 
9.8
%
 
9.6
%
 
10.3
%
Return on equity for the quarter - non-GAAP basis (annualized) (7)
11.6
%
 
12.0
%
 
11.5
%
 
11.6
%
 
10.3
%

(1) The non-GAAP adjustment adds back to pre-tax income the incremental interest expense incurred during the March 31, 2012 quarter on debt financings that occurred in March, 2012, prior to and in anticipation of, the closing of the Morgan Keegan acquisition.
(2) The non-GAAP adjustment adds back to pre-tax income one-time acquisition and integration expenses associated with acquisitions that were incurred during each respective period.
(3) The non-GAAP adjustment reduces net income for the income tax effect of all the pre-tax non-GAAP adjustments, utilizing the effective tax rate applicable to each respective period.
(4) The non-GAAP adjustment to the weighted average common shares outstanding in the basic and diluted non-GAAP earnings per share computation reduces the actual shares outstanding for the effect of the 11,075,000 common shares issued by RJF in February 2012 as a component of our financing of the Morgan Keegan acquisition.
(5) Computed as total equity attributable to Raymond James Financial, Inc. as of the date indicated plus the prior quarter-end total, divided by two.
(6) The calculation of non-GAAP average equity includes the impact on equity of the non-GAAP adjustments described in the table above, as applicable for each respective period.
(7) Computed by utilizing the net income attributable to RJF, Inc.-non-GAAP basis and the return on equity-non-GAAP basis, for each respective period.

7



Raymond James Bank
Selected financial highlights (Unaudited)

Selected operating data:
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31, 2012
 
December 31, 2011
 
% Change
 
September 30, 2012
 
% Change
 
($ in thousands)
Net interest income
$
87,746

 
$
72,729

 
21%
 
$
86,486

 
1%
Net revenues(1)
$
89,422

 
$
75,052

 
19%
 
$
92,333

 
(3)%
Loan loss provision expense
$
2,923

 
$
7,456

 
(61)%
 
$
3,969

 
(26)%
Pre-tax income
$
67,943

 
$
53,003

 
28%
 
$
70,041

 
(3)%
Net charge-offs
$
2,380

 
$
5,697

 
(58)%
 
$
5,667

 
(58)%
Net interest margin (% earning assets)
3.52
%
 
3.60
%
(2) 
(2)%
 
3.55
%
 
(1)%
Net interest spread (interest-earning assets yield - cost of funds)
3.50
%
 
3.59
%
(2) 
(3)%
 
3.53
%
 
(1)%

See footnote explanations on the following page.

RJ Bank Balance Sheet data:
 
 
 
 
 
 
 
 
 
 
As of
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
 
($ in thousands)
Total assets(3)
$
10,101,796

 
$
9,715,724

 
$
9,383,687

 
$
8,953,779

 
$
8,794,499

Total equity
$
1,058,370

 
$
1,038,449

 
$
981,657

 
$
973,636

 
$
977,109

Total loans, net
$
8,459,998

 
$
7,991,512

 
$
7,838,574

 
$
7,445,828

 
$
7,015,204

Total deposits(3)
$
8,947,413

 
$
8,600,491

 
$
8,277,658

 
$
7,916,864

 
$
7,707,869

Available for Sale (AFS) securities, at fair value
$
476,604

 
$
500,110

 
$
511,191

 
$
402,128

 
$
296,840

Net unrealized loss on AFS securities, before tax
$
(12,288
)
 
$
(16,797
)
 
$
(33,621
)
 
$
(32,986
)
 
$
(50,130
)
Total capital (to risk-weighted assets)
13.0
%
(4) 
13.4
%
 
12.8
%
 
13.3
%
 
14.3
%
Tier I capital (to adjusted assets)
10.7
%
(4) 
10.9
%
 
10.9
%
 
11.3
%
 
11.4
%
Commercial Real Estate (CRE) and CRE construction loans (5)
$
1,107,433

 
$
985,924

 
$
980,673

 
$
987,580

 
$
831,708

Commercial and industrial loans(5)
$
5,428,102

 
$
5,163,467

 
$
5,253,411

 
$
4,905,275

 
$
4,604,548

Residential mortgage loans(5)
$
1,699,373

 
$
1,694,446

 
$
1,721,228

 
$
1,731,952

 
$
1,756,834

Securities based loans(5)
$
414,010

 
$
352,431

 
$
89,585

 
$
40,553

 
$
9,086


See footnotes explanations on the following page.
(continued on next page)



8



Raymond James Bank
Selected financial highlights (Unaudited)
(continued from previous page)

Management data:
 
 
 
 
 
 
 
 
 
 
As of
 
December 31, 2012
 
September 30, 2012
 
June 30, 2012
 
March 31, 2012
 
December 31, 2011
 
($ in thousands)
Allowance for loan losses
$
148,021

 
$
147,541

 
$
149,084

 
$
144,678

 
$
147,503

Allowance for loan losses (as % of loans)
1.72
%
 
1.81
%
 
1.87
%
 
1.91
%
 
2.06
%
Nonperforming loans(6)
$
110,627

 
$
106,660

 
$
99,896

 
$
102,812

 
$
111,523

Other real estate owned
$
3,666

 
$
8,218

 
$
9,057

 
$
13,983

 
$
12,289

Total nonperforming assets
$
114,293

 
$
114,878

 
$
108,953

 
$
116,795

 
$
123,812

Nonperforming assets (as % of total assets)
1.13
%
 
1.18
%
 
1.16
%
 
1.30
%
 
1.41
%
Total criticized loans(7)
$
394,946

 
$
474,340

 
$
506,086

 
$
430,772

 
$
488,851

1-4 family residential mortgage loans over 30 days past due (as a % residential loans)
3.61
%
 
3.58
%
 
3.90
%
 
4.55
%
 
4.40
%

(1) Net Revenues equal gross revenue, which includes interest income and non-interest income (including securities losses), less interest expense.
(2) Adjusted net interest margin and spread, which excludes the impact of excess Raymond James Bank Deposit Program (”RJBDP”) deposits held during the quarter ended December 31, 2011. These deposits arise from higher cash balances in firm client accounts due to the market volatility, thus exceeding the RJBDP capacity at outside financial institutions in the program. These deposits were invested in short term liquid investments producing very little interest rate spread. Had the impact of excess RJBDP deposits not been excluded, the net interest margin and spread for the quarter would have been 3.21% and 3.20%.
(3) Includes affiliate deposits.
(4) Estimated for the current quarter.
(5) Outstanding loan balances are shown gross of unearned income and deferred expenses and include any held for sale loans in the respective loan category.
(6) Nonperforming Loans includes 90+ days Past Due plus Nonaccrual Loans.
(7) Represents the loan balance for all loans in the Special Mention, Substandard, Doubtful and Loss classifications as utilized by the banking regulators. In accordance with its accounting policy, RJ Bank does not have any loan balances within the Loss classification as loans or a portion thereof, which are considered to be uncollectible, are charged-off prior to the assignment to this classification.

Asset Quality

Continued improvement in both corporate and residential mortgage lending credit quality favorably impacted the comparison to the prior quarter's loan loss provision expense. Due to these credit quality improvements, the impact to provision expense driven by loan growth was also diminished. The percentage of over 30 day past-due residential mortgage loans were relatively flat during the current quarter, with delinquencies at 3.61% compared to 3.58% in the prior quarter, and well below 4.40% at the prior year quarter. Other real estate owned (OREO) balances were reduced by more than half to $3.7 million as the largest corporate OREO asset was sold during the quarter.





9