Press Release

October 21, 2009
Printable version (PDF)

RAYMOND JAMES FINANCIAL, INC.
ANNOUNCES FOURTH QUARTER RESULTS

ST. PETERSBURG, Fla. – Raymond James Financial, Inc. today reported a 13 percent decrease from the prior year’s quarterly net income to $42,969,000, or $0.36 per diluted share, for the fourth quarter ended September 30, 2009. In comparison, the firm earned $49,108,000, or $0.41 per diluted share, for the fourth quarter of fiscal 2008. Net revenues decreased 4 percent to $667,158,000, while total revenues decreased 11 percent to $678,023,000. Comparisons with the immediately preceding quarter were more favorable as net income was up 1 percent on a 7 percent increase in net revenues.

“In light of the extraordinary economic conditions in the last year, I’m pleased by the results in the fourth quarter and for the entire 2009 fiscal year. There are glimmerings of more stability in the financial markets, as well as a growing confidence among investors that the general economy is improving, albeit at a slow rate given the intractability of unemployment and the weakness in a few key sectors,” stated Chairman and CEO Thomas A. James.

“The most obvious manifestations are the rapid improvement in stock prices over the last two quarters and growing liquidity in the fixed income markets. The latter enabled us to complete a $300 million unsecured, 10-year senior note issue in August to provide additional liquidity in the event that the market or the economy suffers another setback, or to use the proceeds to capitalize on opportunities that dislocations like this one provide.

“Although the comparison to last year’s fourth quarter exhibits a 13 percent decline in net income, unlike many of our peers, we recorded our second best year in history in 2008, when investors hadn’t yet fully comprehended the degree of damage done to the financial markets and the economy. Furthermore, Raymond James Bank’s 2008 profits were higher as the majority of problems in the commercial real estate market hadn’t surfaced. Finally, this quarter benefited from an unusually low tax rate of 31 percent, reflecting the reversal of COLI benefit plan market losses earlier in the year, which were non-deductible, as plan investment values have recovered. As a result, the tax rate for the year is now more consistent with prior years.

“The trend in recent results is more encouraging and indicates that revenues are improving. Client assets under administration have grown 13 percent over last quarter and over last year. Securities commissions and fees are up 9 percent overall and 15 percent in the Private Client Group over the preceding quarter. Investment Banking activity has increased dramatically in the past two quarters. Fixed Income generated excellent results for the quarter, as well as record revenues and profits for the year.

“Raymond James Bank generated pre-tax profits of $10.4 million in the quarter, even though it continued to add to loan loss reserves. We expect banking industry results to improve over the coming year, assuming the economy maintains its current rate of recovery,” James continued.

“At year-end, the Raymond James Bank balance sheet was temporarily expanded by approximately $3.2 billion, which was funded by short-term borrowing from the Federal Home Loan Bank and temporary client deposits to enable Raymond James Bank to meet the thrift qualification test, as also occurred last year-end. This was necessary because our application to change our savings and loan charter to a national bank charter is still in process.

“During the quarter we moved investor cash deposits from the Eagle Money Market Fund and our Client Interest Program brokerage account to a bank waterfall (multiple-bank depository) program to obtain higher interest returns as well as to provide increased FDIC insurance on deposits.

“After the end of the quarter, Nuveen – whose issues comprise more than 60 percent of our clients’ remaining auction rate securities – completed its first auction rate securities refinancings in a new format utilizing five-year notes, which was well received. Nuveen anticipates that it will continue to issue this type of security to refinance its remaining funds serially.

“Although there is certainly a risk of a market correction as a result of the recent dramatic rally, the underlying improvement in fundamentals suggests a better environment for fiscal 2010. We will utilize the lessons learned in the last 18 months to modify our practices and continue to recruit productive personnel from our competitors who suffered more traumatic results during this period. The real message is that we are well-positioned to capitalize on the expected economic recovery.”

The company will conduct its quarterly conference call Thursday, October 22, at 8:15 a.m. ET. For a listen-only connection, visit raymondjames.com/analystcall 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.

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 three wholly owned broker/dealers (Raymond James & Associates, Raymond James Financial Services and Raymond James Ltd.) and Raymond James Investment Services Limited, a majority-owned independent contractor subsidiary in the United Kingdom, have a total of more than 5,300 financial advisors serving approximately 1.9 million accounts in more than 2,300 locations throughout the United States, Canada and overseas. In addition, total client assets are approximately $223 billion, of which $29 billion are managed by the firm’s asset management subsidiaries.

To the extent that Raymond James makes or publishes forward-looking statements (regarding economic conditions, management expectations, strategic objectives, business prospects, anticipated expense savings, loan reserves/losses, financial results, anticipated results of litigation and regulatory proceedings, and other similar matters), a variety of factors, many of which are beyond Raymond James’ control, could cause actual results and experiences to differ materially from the expectations and objectives expressed in these statements. These factors are described in Raymond James’ 2008 annual report on Form 10-K and quarterly reports for the quarters ended December 31, 2008, March 31, 2009 and June 30, 2009 on Form 10-Q, which are available on raymondjames.com and sec.gov.

* Total assets include $3.2 billion invested in qualifying assets comprised of $2.0 billion in reverse repurchase agreements (collateralized by GNMA and U.S. Treasury securities) and $1.2 billion in U.S. Treasury securities, offset by $900 million in overnight borrowing and $2.3 billion in customer deposits expected to be redirected to third party banks participating in the Raymond James Bank Deposit Program, to meet point-in-time regulatory balance sheet composition requirements related to RJ Bank’s qualifying as a thrift institution.

** Total assets include $1.9 billion in cash, offset by an equal amount in overnight borrowing to meet point-in-time regulatory balance sheet composition requirements related to RJ Bank’s qualifying as a thrift institution.

*** Approximately $3 billion of these balances moved out of the money market funds. The majority of which transferred into the multi-bank depository program.

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