With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

Based in St. Petersburg, Fla., the company offers financial planning services and employs 8,300 advisors. In May, Raymond James Financial reached an agreement to acquire Cebile Capital, a secondary market advisor to private equity firms, indicating its interest in growing its investment banking business.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

Headquartered in St. Petersburg, Fla., the financial services firm serves clients through 8,100 financial advisers throughout the U.S., Canada, and overseas.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Raymond James Financial is an American investment bank and financial services company with over $1.5 trillion in client assets under administration. The multinational bank offers financial planning, private client group, and capital markets services to individuals, companies, and municipalities.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Raymond James Financial (RJF): Company Profile, Stock Price, News, Rankings

legacy

Raymond James Financial

raymond james financial

Good evening, and welcome to Raymond James Financial's Fiscal 2025 First Quarter Earnings Call. This call is being recorded and will be available for replay on the company's Investor Relations website. I'm Christie Waugh, Senior Vice President of Investor Relations. Thank you for joining us. With me on the call today are Chair and Chief Executive Officer, Paul Reilly President, Paul Shuckery and Chief Financial Officer, Butch Orlov.

The presentation being reviewed today is available on Raymond James Investor Relations website. Following the prepared remarks, the operator will open the line for questions. Calling your attention to slide 2. Please note that certain statements made during this call may constitute forward looking statements. These statements include, but are not limited to, information concerning future strategic objectives, business prospects, financial results, industry or market conditions, anticipated timing and benefits of our acquisitions and our level of success in integrating acquired businesses, anticipated results of litigation and regulatory developments, and general economic conditions.

In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts and the future or conditional verbs such as may, will, could, should and would as well as any other statement that necessarily depends on future events are intended to identify forward looking statements. Please note that there can be no assurance that actual results will not differ materially from those expressed in these statements. We urge you to consider the risks described in our most recent Form 10 ks and subsequent Forms 8 ks, which are available on our website. Now, I'm happy to turn the call over to Chair and CEO, Paul Reilly. Paul?

Thank you, Christy. Good evening. Thank you for joining us today. As we begin my 61st and final earnings call as CEO, I want to take a moment to thank you all. These quarterly conversations have always been constructive and the dialogue has helped informed our investors and shareholders, and I'm sure they have appreciated it over the years.

I'm excited for the future. I believe Paul Shukri and his leadership team will deliver leading results when he takes over next month following our annual meeting. He, along with the leadership team, bring both deep experience and a commitment to our culture and how it translates to our performance. The Board and I have great confidence in their collective abilities and believe the future is very bright. I'm not riding off to the sunset though.

As Executive Chairman, I will be supporting Paul when he needs it, just as Tom James supported me when he handed me the reins 15 years ago. The continuity of experience and counsel are important components of any transition. With that, let's get into the fiscal Q1. We achieved strong results in the quarter. We generated record net revenues and the 2nd highest net income, showcasing the strength of our diverse and complementary businesses.

We ended the period with quarter end record levels of PCG assets and fee based accounts and a very healthy pipeline. With ample capital and funding, we remain well positioned to continue to invest in our business, our people and technology to help drive growth across all our businesses. Beginning on slide 4, the firm reported record net revenues of $3,540,000,000 for the 1st fiscal quarter, with net income available to common shareholders amounting to $599,000,000 slightly below the previous quarter's record, resulting in record earnings per diluted share of $2.86 Excluding expenses related to acquisitions, adjusted net income available to common shareholders equaled $614,000,000 or $2.93 per diluted share. We generated strong returns for the quarter with annualized return on common equity of 20.4 percent and annualized adjusted return on tangible common equity of 24.6 percent, a great result, particularly given our strong capital base. Moving to Slide 5, total client assets under administration increased 14% year over year to $1,560,000,000,000 Sequentially, client assets were negatively impacted by foreign exchange rates and by one large departure we previously discussed.

Private client group assets and fee based accounts were up to a quarter end record of $877,000,000,000 and financial assets under management were nearly unchanged at $244,000,000,000 Over time, net new assets is primarily driven by our ongoing efforts in retaining and recruiting high quality financial advisors. Domestic net new assets during the quarter equaled $14,000,000,000 representing a 4% annualized growth rate on the beginning of the period domestic PCG assets. As we described on our last earnings call, impacting this quarter's performance was a departure of primarily 1 large branch in our independent contractor division. The impact was approximately $5,000,000,000 of AUA. Adjusting for those assets, domestic net new asset growth in the quarter would have been approximately 5.4%, a strong result.

Over the prior 12 months, we recruited financial advisors with approximately $318,000,000 of trailing 12 month production and $51,000,000,000 of client assets at their previous firms to our domestic independent contractor and employee channels. Including assets recruited into our RIA and custody services division, which we refer to as RCS, we recruited total client assets over the past 12 months of nearly $61,000,000,000 across all of our platforms. RCS finished the quarter with $188,000,000,000 of client assets under administration, up 28% year over year. Following the strong recruitment results we achieved in fiscal 2024 and in particular the fiscal Q4, our recruiting momentum continues to be strong under Jody Perry's leadership. Jody previously ran our ICD division, previously ran our ICD division and took the role to lead our firm wide PCG recruiting.

We remain optimistic about both the near term and long term growth given the pipeline of high quality advisors and large teams. Overall, we remain focused on serving advisors across our multiple affiliation options. Despite our record high advisor satisfaction score, I have watched Paul Shukri continue to double down on our service capabilities during the transition period, believing we can continue to do more. Our robust technology capabilities and client first values continue to enable us to retain and attract high quality advisors, making Raymond James a destination of choice for advisors. Total clients domestic cash sweep and enhanced savings program balances at the end of the quarter were $59,700,000,000 reflecting a 3% increase over September 2024.

Of note, sweep balances grew 5% in the quarter. Bank loans grew 3% over the preceding quarter to a record $47,200,000,000 primarily due to higher securities based loans, which grew 4% in the quarter, as well as continued residential mortgage growth. Moving to Slide 6, Private Client Group generated pre tax income of $462,000,000 on record quarterly net revenue of $2,550,000,000 Results were bolstered by higher PCG assets under administration compared to the previous year due to a strong equity market and the addition of net new assets to the firm. Our Capital Markets segment generated quarterly net revenues of $480,000,000 and a pre tax income of $74,000,000 Net revenues grew 42% year over year, driven primarily by higher M and A revenues. Result this quarter marked the 2nd best for M and A revenues and the 3rd best quarter for Investment Banking revenues.

The Asset Management segment generated record pre tax income of 125,000,000 on record net revenues of $294,000,000 Results were largely attributable to higher financial assets under management compared to the prior year quarter due to market appreciation and net inflows into PCG fee based accounts. The bank segment generated net revenues of $425,000,000 and pre tax income of $118,000,000 On a sequential basis, bank segment net interest income increased 1%, while net interest margin of 2.6% declined 2 basis points compared to the preceding quarter. And now, I'll turn the call over to our CFO, Butch Orlog to review the financial results in detail. Butch?

Thank you, Paul. Turning to Slide 8. Consolidated net revenues reached a record $3,540,000,000 in the Q1, representing a 17% increase over the prior year and a 2% rise sequentially. Asset management and related administrative fees grew to $1,740,000,000 representing 24% growth over the prior year and 5% over the preceding quarter. PCG domestic fee based assets grew to 877,000,000,000 dollars up 17% over the prior year and slightly above the preceding quarter.

As we look ahead, given 2 fewer billing days, asset management and related administrative fees are expected to decrease by approximately 2% in our fiscal Q2. Brokerage revenues of $559,000,000 grew 7% year over year, primarily due to higher brokerage revenues in PCG. I'll discuss account and service fees and net interest income shortly. Investment Banking Revenues of $325,000,000 increased 80% year over year and 3% sequentially. Following a strong result in the preceding quarter, 1st quarter results continued to benefit from very strong M and A revenues, which grew 92% year over year and 10% sequentially.

Other revenues declined $21,000,000 sequentially, primarily due to lower affordable housing investments business revenues, where we typically see a slowdown in the fiscal Q1 following its seasonal high in the preceding quarter. Moving to Slide 9. Clients' domestic cash sweep and enhanced savings program balances ended the quarter at $59,700,000,000 up 3% compared to the preceding quarter and representing 4.3% of domestic PCG client assets. So far in the fiscal second quarter, domestic cash sweep balances have decreased by approximately $1,800,000,000 primarily due to quarterly fee billings of nearly $1,600,000,000 Turning to Slide 10. Combined net interest income and RJ BDP fees from 3rd party banks was $673,000,000 down 1% compared to the preceding quarter.

The bank segment net interest margin was down 2 basis points to 2.6% for the quarter, while the average yield on RJ BDP balances with 3rd party banks decreased 22 basis points to 3.12 percent, primarily due to the 2 25 basis point Fed rate cuts that occurred during the quarter as well as the 50 basis point rate cut that occurred late in the preceding quarter. Based on current rates and quarter end balances, net of 2nd quarter fee billings, we would expect the aggregate of NII and RJBDP third party fees to be down 2% to 3% in the fiscal second quarter, in large part driven by 2 fewer billing days. Keep in mind, there are many variables that will impact actual results, including any rate actions during the upcoming quarter and factors impacting our balance sheet, including loan and deposit balances. Turning to consolidated expenses on Slide 11. Compensation expense was $2,270,000,000 and the total compensation ratio for the quarter was 64.2%.

Excluding acquisition related compensation expenses, the adjusted compensation ratio was 64%. As a reminder, the impact of salary increases arising from our annual cycle and effective on January 1, along with the reset of payroll taxes at the beginning of the calendar year, will each be reflected in our fiscal 2nd quarter compensation expense. Non compensation expenses of $516,000,000 decreased 5% sequentially, largely due to a lower bank loan provision for credit losses and a decrease in professional fees. For the fiscal year, we expect non compensation expenses, excluding the bank loan loss provision for credit losses, unexpected legal and regulatory items and non GAAP adjustments presented in our non GAAP financial measures to be approximately $2,100,000,000 representing about 10% growth over the same adjusted non compensation figure for the prior year. Importantly, we will continue to invest to support growth across the business, while maintaining discipline over controllable expenses.

As such, the majority of this projected increase reflects our continued investment in leading technology supporting our financial advisors, as well as our expectations for overall growth in the business, which drives, for example, higher sub advisory fees, FDIC insurance premiums and recruiting costs. Slide 12 shows the pre tax margin trend over the past 5 quarters. This quarter, we generated a pre tax margin of 21.2% and adjusted pre tax margin of 21.7 percent, achieving our target of 20% plus margin. On Slide 13, at quarter end, our total assets were $82,300,000,000 a 1% sequential decline. Liquidity and capital each remained very strong.

RJF corporate cash at the parent ended the quarter at $2,300,000,000 well above our $1,200,000,000 target. With a Tier 1 leverage ratio of 13% and total capital ratio of 25%, we remain well capitalized. Our capital levels provide significant flexibility to continue being opportunistic and invest in growth. The effective tax rate for the quarter was 19.9%, reflecting a tax benefit recognized for share based compensation that vested during the period. For fiscal 2025, we still estimate our effective tax rate to be approximately 24% to 25%.

Slide 14 provides a summary of our capital actions over the past 5 quarters. In December, the Board of Directors increased the quarterly cash dividend on common shares 11% to $0.50 per share and authorized common stock repurchases of up to $1,500,000,000 replacing the previous authorization. During the quarter, the firm repurchased 310,000 shares of common stock for $50,000,000 at an average price of $161 per share. As of January 24, approximately $1,450,000,000 remained under the Board's approved common stock repurchase authorization. Going forward, we expect to continue to offset share based compensation dilution and will be opportunistic with incremental share repurchases.

Given our present capital and liquidity levels, we remain committed to maintain capital levels in line with our stated targets. Lastly, on Slide 15, we provide key credit metrics for our bank segment. The credit quality of the loan portfolio remains solid. Non performing assets remain low at 26 basis points of bank segment assets and criticized loans as a percentage of total loans held for investment ended the quarter at 1.26%. The bank allowance for credit losses as a percentage of total loans held from investment ended the quarter at 95 basis points, down 4 basis points from the prior quarter.

The allowance percentage has trended lower largely due to a loan mix shift toward more securities based loans and residential mortgages, which carry lower allowance levels and now account for 36% 20%, respectively, of the total bank loan portfolio balances. The bank loan balance for credit losses on corporate loans as a percentage of corporate loans held for investment was 1.93%, down 6 basis points from the preceding quarter. We believe our allowance represents an appropriate reserve, but we continue to closely monitor economic factors that may impact our loan portfolios. Now, I'll turn the call over to Paul Chukri to discuss our outlook. Paul?

Thank you, Butch. We are pleased with our strong results this quarter. And while the 1st calendar quarter always had some seasonal headwinds with the reset of payroll taxes and fewer billable days, I am optimistic about fiscal 2025 beyond. In the Private Client Group, next quarter's results will be negatively impacted by 2 fewer billable days, which we expect to result in an approximate 2% decline in asset management and related fees. But advisor recruiting activity remains solid and we're encouraged by the number of large team joining us and it's still in the pipeline.

In the Capital Markets segment, we are pleased to see a continuation of improved results this quarter as the market environment became more constructive for Investment Banking results and particularly for M and A, which had a 2nd best quarter in our history. Our results in Capital Markets over the past two quarters reinforce our patient, long term approach and strategic investments we have made over the past several years, even during a challenging market backdrop. The near record levels in M and A and Investment Banking this quarter were outstanding, And we remain optimistic for the rest of the fiscal year given our healthy pipeline along with a more conducive market environment and our well positioned platform and capabilities. In the fixed income business, the market is still challenging, but we've begun to see some improvement in the depository sector of our business. With the outlook for short term rates moderating and the yield curve steepening, depository clients are starting to be more engaged in managing their securities portfolio.

In the Asset Management segment, we are confident that strong growth of assets and fee based accounts in the Private Client Group will drive a long term growth of financial assets under management. In addition, we expect Raymond James Investment Management to help drive further growth over time. In the bank segment, we have seen securities based loan demand continue to increase as clients get more comfortable with the current level of rates, further supported by the Fed's recent rate cuts. With ample client cash balances and capital, we are well positioned to lend across the loan segment as activities increases within our disciplined risk guidelines. And speaking of our strong capital position, we are well positioned to continue investing in organic growth and will be front footed in pursuing acquisitions that meet our criteria of being a good cultural fit and strategic fit.

And while we decelerated the pace of share buybacks this particular quarter, our commitment to repurchase shares remains unchanged if we cannot deploy capital in those aforementioned growth initiatives. Meanwhile, the Board did increase our dividend by 11% to $0.50 per share per quarter and authorized common stock repurchases of up to $1,500,000,000 Over the past 9 months, I have been spending much of my time traveling across the country meeting with our financial advisors, investment bankers, associates and clients. I could not be more energized and excited about our future. We have really great people who focus every day on helping their clients achieve their financial objectives. And our best of both worlds value proposition continues to be more and more differentiated across all of our businesses.

We are unique in having the scope and breadth of products and capabilities to serve complex needs of clients, combined with our strong culture that is anchored on putting people first. This makes us a preferred destination for both current and prospective advisors, bankers and associates, which we believe will drive industry leading growth over the long term. The most powerful thing I hear consistently from financial advisors and associates is the best decision they ever made in their career was affiliating with Raymond James. And the biggest regret they have is they did not do it a few years earlier. That is really a testament to our unique values and all the great work our associates do each and every day to help financial professionals serve their clients.

For that, on behalf of our entire leadership team, I want to thank our advisors and associates for making Raymond James such a special place. That concludes our prepared remarks. Operator, will you please open the line for questions?

Your first question comes from the line of Devin Ryan with Citizens JMP. Your line is now open. Please go ahead.

Thanks so much. Hi, Paul, Paul and Butch. And before I ask a question, just want to say congratulations to Paul Reilly on a great career. And obviously, I know you'll still be there, but it's really been a pleasure. So thank you.

First question just on capital, and I know you guys hit on this quite a bit in the call, but 13% Tier 1 leverage ratio, that's $2,500,000,000 above 10% ratio. You're going to generate probably a couple of $1,000,000,000 more of capital through earnings over the next year. You only need about $400,000,000 for the dividend. So maybe call that $4,000,000,000 of excess over the next year. So just want to think about obviously, you're growing loans at a pretty good pace.

So can you talk about the level of loan demand, because it would seem that you can support a lot of growth there? And then just beyond that, how you would kind of rank the other priorities or most attractive priorities for capital use? And do you think you can actually work down that Tier 1 ratio over the next year without acquisitions? Thanks.

Thanks, Devin. Yes, our target is still to get to that 10% ratio, which is still twice the regulatory requirement to be well capitalized. And so your analysis was quite good in that we have excess capital now, not a bad position to be in. But we are looking at the same levers that we have always told you that we prioritize, which 1st and foremost is organic growth, investing in our business and our advisors, clients and associates. The recruiting pipeline is still very strong across all of our affiliation options and also recruiting across all of our businesses as well, investment banking and asset management in the bank.

And then speaking of the bank growing the balance sheet, the loan growth, particularly securities based loans to private client group clients has really rebounded and been strong over the last couple of quarters as clients get used to the new level of rates and short term rates have declined. And so we are seeing that growth there, which is the loan category that we feel has the best risk adjusted returns and the most synergy with our private client group clients. And then outside of organic growth, we have been front footed and looking for acquisitions. We can't say much about that topic other than there has been a lot of activity there. And the last thing we want to do, we don't know whether or not we will close any of them or we'll get to the finish line.

That's we have tight filters of it has to be a good cultural fit, strategic fit and at a price that makes sense for our shareholders. But the last thing we want to do is a large amount of buybacks while we're doing due diligence on a few acquisitions and then go have to turn around and raise capital to fund the acquisitions. And so buybacks, which is sort of our behind dividends, sort of the last lever that we prioritize for capital deployment, is something that we can turn up or turn down depending on what we see with the other uses that I just described. And you saw the deceleration there in the last quarter. If those other levers don't drive the kind of capital consumption that we're hoping over the next several quarters, then we will take up buybacks take buybacks back up to the pace that we saw in the preceding quarter.

Got it. Really appreciate the thorough response there, Paul. Just as a follow-up on a segment basis, it would be great to just think about what a potential recovery will look like for the Capital Markets segment margin, assuming business activity continues to recover to something more normal. Just trying to think about obviously, we're mid single digits last year in 2021, 2022, you were north of 20%. So do you feel like you can get back to above 20%?

Or just how would you guys frame what a recovery looks like based on the business composition today? Thanks.

I would tell you above 20% would most likely for capital markets require both sides of the business, broadly speaking, the equities and the fixed income side of the business to be running on most cylinders. And so a good capital market result, if both businesses are not running, one of the 2 is strong and the other one is okay, is probably what we saw this quarter at around 15% to 16%. That's a pretty reasonable result for the Capital Markets segment. We had a stronger result in M and A and Investment Banking, whereas for fixed income, it was a little bit of a softer quarter. But the over 20% numbers we saw during COVID really was record levels of revenues of pre tax for both the equities and fixed income side of the businesses, which is atypical because they're sort of natural hedges or kind of they typically don't run on all cylinders at the same time given the macroeconomic backdrop.

So long winded way of saying 15 ish percent, 15% to 20% is something that we would be very happy with over cycles.

Okay, terrific. Really helpful. Thanks guys. Really appreciate it.

Your next question comes from the line of Kyle Vogt with KBW. Your line is now open. Please go ahead.

Hi, good evening. Maybe a first question on the comp ratio. I wanted to focus on the advisor compensation as a percentage of compensable revenues. The last two quarters have been right around 74%. I think you've generally been in the range of 75% to 76% during that zone for the better part of the last 7 years or so.

I know the mix of advisors on platform has recently been shifting towards employees a bit. Just wondering if that's having an impact on that advisor comp ratio and whether this lower level near 74% is kind of a better run rate?

Yes. Hard to look at 1 or 2 quarters and call that a new run rate. I think if you look at the entire fiscal year for 2024, it was right around 74.5% or something like that. So that's probably what I would point to. It bounces around from quarter to quarter.

But over a long period of time, there's the mix dynamic that you're describing. But there's also as you grow the production, there is sort of a more fixed base that grows as you recruit advisors that amortizes over time of the transition assistance. So there is some scale advantage there as you grow the production relative to the transition assistance that you kind of could see some modest benefit in. Now we're still recruiting heavily, so that transition assistance will still come on and grow as well, but the revenue has been growing with the S and P 500 and the recruiting results, 17% for fee based assets year over year. The transition assistance amortization is not growing that

fast. Great. Thank you. Just a follow-up on net new asset growth. I think you noted 5.4% ex the $5,000,000,000 large branch that off boarded.

Obviously still a really healthy rate. But wondering what you think would need to happen to kind of accelerate back to that high single digit NNA growth rate similar to what you're generating in 20222023. Just wondering whether you think that's simply industry churn related or there's competition, higher competition in certain channels for recruiting?

Yes. I think it's just going to take our recruiting can be a little lumpy as it is. We came off a record year and had a lot of advisors join at year end and the pipeline is very, very healthy. So a lot of that is pushed by just how and when we bring recruits on. And then when you recruit and they come, it takes a while, a good year for a lot of them to build up their asset base.

So, we feel really good about the trend. It looks like if you look up and down the industry, it's been a little slower, but we expect I think we should expect strong M and A still for a while as long as the advisors are moving and joining us and we're optimistic with the pipeline.

Your next question comes from the line of Bill Katz with TD Cowen. Please go ahead.

Thank you very much for taking the questions. And Paul and Paul again, congrats to both of you guys. Just in terms of the front footed comment that sort of caught my ear, you've said it twice now on this call, is the significant amount of capital as you discussed. Wondering when you can sort of prioritize where you're most interested in growing the platform, Maybe if you could talk either at the segment level or geographically? I'd be curious as to where you think you need to sort of further scale.

Yes. I would say, again, our priorities have been pretty consistent. The Private Client Group business is our biggest business. And so that is sort of our top priority both in terms of organic deployment and also our pursuits on acquisitions. But that's also a very difficult from an acquisition perspective space to find a good strategic fit, cultural fit, and also a value that makes sense for shareholders, especially with private equity firms being so aggressive in the space right now.

So but that's our top priority. And then the capital markets continuing to look at M and A firms to strengthen our platform, form various verticals. Those have been more team kind of team hires and lift niche acquisitions and lift outs. And so those have been very accretive for us over the past several of years. And also looking at asset managers, but again, on the asset management front, most of the deals that we look at that are shown to us are not necessarily showing us good organic growth profiles, and that's something that we would be looking for on the asset management front.

So really looking across all of our businesses, we have a lot of headroom to continue growing and expanding our market share and expanding the solutions that we provide to clients in each one of our businesses. And so that's those are sort of aligned with the priorities that we have from an acquisition perspective.

mean, absolutely agree. You asked about geography too. First, we'll take a good advisor anywhere. We're looking trying to get the best advisors on the platform. But if you look at market share, we've grown in the Northeast, but certainly have a lot of room for gaining market share behind a lot of our other markets.

And the West Coast is really still wide open. We were growing at a fast percentage pace, but it's our smallest market share. And so we believe we have a lot of opportunity to continue to grow in that business organically through recruiting.

And also in Canada and the UK as well. So those are markets that in Canada, we

have a lot of headroom to continue growing there as well. So those are markets that we're interested in.

Okay, terrific. And as a follow-up, you mentioned non comp, non provision being about $2,100,000,000 So maybe a 2 part question. How much flex is that if the revenue backdrop were to potentially decay a little bit just from a macro perspective? Then how should we be thinking about a more sustainable operating margin, just given the further scaling of the business? Thank you.

Yes, we there is some flex, not necessarily flex we want to experience because a lot of that those expenses grow right in line with revenues. So investment sub advisory group fees grow with fee based assets and the branch expense grows as we expand branches and open up new branches. And so FDIC insurance expenses grow as we grow the banks. And so we want those expenses to grow because that means revenues are growing. So to your answer, I guess the answer to your question is there is flex, but not necessarily flex that we want to experience.

Outside of that, in terms of discretionary flex, there always is discretionary flex short term, but we're really committed to investing in the long term. We don't try to manage the expense growth from quarter to quarter. We're looking at the next our needs over the next 3, 5 years and beyond. And so we want to stay committed to those investment objectives independent of what the short term macroeconomic backdrop looks like or what the short term revenue profile looks like.

Your next question comes from the line of Dan Fannon with Jefferies. Please go ahead.

Thanks. Just wanted to follow-up on that last question. It sounds like that's a normal course in terms of some of the investments and growth in the business. As we think about non comp on a multiyear basis, is 10% a reasonable run rate? Or do you view this level as a bit elevated given some of your priorities around spending and investing in the business?

Again, investment sub advisory fees grow with the fee based assets, that was up 33% year over year. So we would love to see that continue to grow 33% year over year because that means our fee based assets are growing that much. And so I would say you have to look at each piece of it. But overall, with the revenue growth that we've been experiencing and the correlated expenses, 10% has certainly been reasonable over the last couple of years. But that will naturally decelerate if the associated revenue drivers decelerate.

Understood. And then just following up on organic growth, sounds like the backlog in recruiting is still quite strong. Wondering if you could characterize that today versus prior periods last quarter or the start of last year? And then you've also had some headwinds on some of the attrition that you had noted. As you look forward here in 2025, do you anticipate are there other kind of known platforms or things that might be leaving or some that you had already noted that aren't fully gone just to quantify that?

Yes. No, the large one is essentially almost totally gone. This was the big quarter. That one has even received publicity. So, that's behind us.

We think that there is always some attrition. We know we've historically had that 1% type of regretted attrition, but we don't see anything big on the leaving side. The biggest movement of people that have gone to RIA fortunately have gone to RIA, so we kept the assets. And then pipeline, I think we'll you might have seen a little bit this quarter, but normally when we have a really strong year and just like Investment Banking, when you close in the Q4, your fiscal quarter, we had a very big join in that Q4. Usually, the Q1 is a little slower because you burned off the backlog and you're just going through it and people hop in.

So, the timing is always a little off. But if you look, we the pipeline is very strong. Team is up to $20,000,000,000 in assets. Again, the teams keep seeing to get bigger and bigger. And so we're very, very confident in it.

But it will be lumpy quarter to quarter. It's not always it's not a straight line business, but we feel really good about the pipeline. It's as strong as it's

Your next question comes from the line of Brennan Hawken with UBS. Please go ahead.

Hi, good afternoon. Thanks for taking my calls for my question. So curious on the average yield on RJDDP, 3rd party bank, down about 22 basis points this quarter. I wanted to confirm, number 1, the revenue side of that is really primarily moves with the policy rate. And so therefore, the offset partial offset would be the deposit beta that you have tied to those balances.

Should we continue to think that, that deposit beta offset will remain roughly at the level you've experienced so far? And maybe if you could let us know what the beta has been on ESP and the Fed cuts?

Yes. I mean, I think that's a reasonable assumption going forward. And we'll of course next quarter have the full impact of the rate the 2 rate cuts in this quarter. And so I think the deposit beta has been averaging around 35% on the sweep balances, but much higher than that on the highest yielding products like ESP, closer to 100%. And so and that's what we anticipated was sort of that the deposit beta would look similar for the various products on the way down as it did as on the way up for rates.

Got it. Thanks for that, Paul. And then understanding that SBL growth has been pretty strong, but given the increasing optimism in the environment and business, it seems confidence is improving. Should we how should we think about C and I loan growth going forward? And how are you thinking about that as you think about moving into the fiscal through fiscal year 2025?

Yes. I mean, we're still active in the space certainly and especially for client relationships. But it's been challenging. New origination flow in the spaces that we cover have been still relatively muted. We expect that to hopefully pick up in 2025, just given the macro backdrop.

And then the flow we have seen have been really extremely tight spreads. And so we're not going to force growth by pursuing spreads that don't meet our thresholds in terms of risk adjusted returns. And so hopefully when volume gets to more normal levels, we'll see spreads kind of recover to more normal levels, but time will tell over the course of the year. In the meantime, we would hope for a continued growth in the securities based loan portfolio as clients continue to establish new lines and tap into their existing lines.

Great. That makes a lot of sense. Thanks and congrats to 3 of you on your new roles.

Your next question comes from the line of Alex Bostin with Goldman Sachs. Please go ahead.

Hi, good evening everybody. Thank you for taking the question as well. I'd like to go back to the capital management discussion. It feels like it's been very consistent, I guess, over the quarters years, but here we are and capital continues to build. I know your target intent and I know it's over time, but can you give us a sense of realistically when you expect to get there not to bring you down to any particular quarter, but as a framework, right?

And it sounds like you're closer to deals and that's kind of held you back, but then you also named a lot of things that are interesting on the deal front, again, similar to what you've said in the past. So what is more likely, at least in terms of the type of businesses that you're looking to add inorganically? And if not, when should we expect to that capital ratio to walk down to your target?

Yes, let me because Paul, I think, answered the question pretty thoroughly and I understand why you're asking for clarification.

a road of buybacks because we felt that was the best use of capital. And when we felt that there may be other uses, we held back on it. And so we're going to we're not going to acquire something to lower the capital ratio. We're going to do it because if we do something, it's because of the strategic and long term shareholder benefit. And we feel like when there's an opportunity, it's prudent to have the capital if we do it.

And if we don't do it, we're just going to have to catch back up quickly. We're committed to the ratio. I think people were surprised when we actually hit the buyback targets. Last time, it showed our commitment and we didn't slow up for fun, we slowed up for prudency. So, but it's kind of hard on the timing, right?

So, 13% we don't like operating at 13%. We think Tenish is comfortable and that's where we prefer to operate. But again, we don't want to use capital and have to

I know it perhaps feels and seems like eternity since we were at 10%, but it was just over 2 years ago. And in our time horizon, 2 years, it's not a short period of time, but it's not an extremely long period of time, especially when you consider what's happened over the last 2 years with balance sheet growth being harder to come by across the entire industry. And the acquisitions were very low velocity in terms of potential acquisitions out there over the last couple of years. And the ones that were done didn't meet our criteria of being a good cultural fit or strategic fit or at evaluation that made sense for us. So I know it seemed like a long time.

We agree with you, 13% is over our 10% target. But last time we were here just over 2 years ago, we did 6 acquisitions in 2 years. And so what we're telling you is that we're committed to getting back down to 10%, but we're also asking you to kind of be patient with us in the context of 2 years. We will be prudent and we'll be disciplined and we'll be front footed on deploying that capital.

Raymond James Financial (RJF) Q1 2025 Earnings Call Transcript

Company Participants