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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.

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

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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. 

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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.

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Q1 2025

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

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Raymond James Financial

raymond james financial

Good evening, welcome to Raymond James Financial's fiscal Q3 2026 earnings call. This call is being recorded and will be available for replay for 30 days on the company's investor relations website. I'm Kristie Waugh, Senior Vice President of Investor Relations. Thank you for joining us.

With me on the call today are Chief Executive Officer, Paul Shoukry, and Chief Financial Officer, Butch Oorlog. This presentation being reviewed today is available on Raymond James's investor relations website. Following the prepared remarks, the operator will open the line for questions. Calling your attention to slide two. 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 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-K and subsequent Forms 10-Q and Forms 8-K, which are available on our website.

Now, I'm happy to turn the call over to CEO Paul Shoukry. Paul?

Thank you, Kristie. Good evening, thank you for joining us. Over the past few weeks, we've had the opportunity to spend time with advisors and their teams at various conferences and recognition trips. These advisors exemplify the client-first values that have driven our consistent results since our founding in 1962.

Speaking about steadfast values, two weeks ago at our summer development conference, I had the opportunity to honor Tom James for celebrating his 60-year anniversary with Raymond James.

He still comes into the office almost every day and reinforces our long-term values that defined his 40-year tenure as CEO, and his incredible generosity of time, leadership, and community giving that serves as an example to us all. I want to thank Tom publicly again for establishing the unique culture that has differentiated Raymond James and helped us continue to be successful over time.

Turning to the quarter, our results for the Q3 were strong and contributed to our record results through the first nine months of the fiscal year. These results reflect the continued execution of our long-term strategies to drive growth, the resiliency of our diversified business model, and our conservative approach to managing the firm.

They also reflect the strength of our people-first culture and the commitment of our associates and advisors to serving clients with integrity. In the quarter, we generated record quarterly revenues of $3.93 billion, representing growth of 16% over the prior year quarter and 2% above the preceding quarter.

Pre-tax income of $750 million increased 33% compared to the year-ago quarter and 2% over the preceding quarter. Client expectations are changing, innovation is accelerating, and differentiation matters more now more than ever.

What sets Raymond James apart today is the same thing that has always set us apart, our culture and the way associates and advisors serve clients through deeply personal relationships. In the Private Client Group, we ended the quarter with a record $1.86 trillion of client assets under administration, up 9% from the preceding quarter and 18% year-over-year. Our growth remains focused on quality over quantity.

Strong retention and continued recruiting momentum again demonstrated that Raymond James remains a destination of choice for financial advisors across our affiliation options. Domestic net new assets were $21.7 billion in the fiscal Q3, representing a 5.5% annualized growth rate.

During the quarter, we recruited financial advisors to our domestic independent contractor and employee channels, with trailing 12-month production totaling $156 million and nearly $23 billion of client assets at their previous firms.

Through the first nine months of the fiscal year, we recruited advisors with trailing 12-month production totaling $393 million and more than $56 billion of client assets at their previous firms, putting us on a clear path to exceed the record results set in FY 2025. The source of this year's recruiting success as well as our current pipeline remains diverse across our affiliation options.

This strength in retaining and attracting high-quality advisors reflects our differentiated value proposition. Advisors do not have to choose between culture and capabilities. We offer a unique combination of an advisor and client-focused culture along with the leading technology products and solutions advisors need to serve clients at a high level.

Together with our strong balance sheet, long-term focus and commitment to independence, that combination continues to set Raymond James apart for advisors evaluating alternatives.

Our ability to scale and sustain this compelling value proposition is seen in our near record levels of advisor satisfaction. At the same time, advisors' expectations are high, and clients' needs are becoming more complex.

This is why we are investing to equip advisors and associates with private wealth tools and resources to deliver deeper, more tailored advice while keeping personal relationships at the center. To support that, we'll continue investing in automation, process improvement, and AI as part of our more than $1.1 billion annual technology spend.

These investments are designed to create efficiencies, give advisors more time to deepen client relationships, and further enhance the client experience. For example, this quarter, we completed the enterprise rollout of Rai, our proprietary AI assistant, following a thoughtful pilot program and phased deployment.

Rai gives our people a secure, plain language way to access institutional knowledge, ask follow-up questions, and receive more actionable answers. We are very encouraged by the strong initial feedback from the pilot and full rollout.

In Capital Markets, revenues grew this quarter, supported primarily by stronger investment banking results, though activity levels remain below what we would have considered a normalized environment, especially in the middle market and sponsor-driven client segments.

We entered the Q4 with an encouraging pipeline, reflecting the opportunities created by the strategic investments we have made in this segment over the past few years. While the timing of transaction activity remains difficult to predict, we are optimistic about our positioning as motivated buyers and sellers continue to engage us for the deep expertise across the industries we cover.

In the asset management segment, net inflows into managed fee-based programs in the Private Client Group were strong during the quarter. This reflected the complementary benefits of offering high-quality investment alternatives to financial advisors and their clients, as well as growth from our successful recruiting efforts.

We also completed our acquisition of Clark Capital during the quarter, adding its wealth-focused solutions and approximately $47 billion in combined assets under management and non-discretionary assets to Raymond James' platform. We are excited to welcome Clark Capital to the Raymond James family.

In the bank segment, loans ended the quarter at a record $56.2 billion, driven primarily by continued strong growth in securities-based lending balances. These balances increased more than $6 billion, or 34%, from the year-ago period and 8% sequentially.

This growth continues to reflect the synergy with our expanding Private Client Group business as we deploy our strong balance sheet in support of clients. Importantly, credit quality across the loan portfolio remains strong. Our capital deployment strategy remains disciplined and long-term focused, with priorities that include organic growth, technology and platform investments, strategic acquisitions, and returning capitals to shareholders.

Over the 12 months, we deployed capital through our share repurchase program to help manage capital levels, repurchasing approximately $1.6 billion of common stock, including $400 million during the quarter. We ended the quarter with a Tier 1 leverage ratio of 11.7%. I'll turn the call over to Butch Oorlog to review our financial results in detail. Butch?

Thank you, Paul. I'll begin on slide six. The firm reported record net revenues of $3.93 billion for the fiscal Q3. Net income available to common shareholders was $595 million, with record earnings per diluted share of $3.01. Adjusted net income available to common shareholders, which excludes acquisition-related expenses, equaled $620 million, resulting in record adjusted earnings per diluted share of $3.14.

Our pre-tax margin for the quarter was 19.1%, and adjusted pre-tax margin was 19.9%. We generated annualized return on common equity of 18.8% and annualized adjusted return on tangible common equity of 23.5%. Strong results for the quarter, particularly given our conservative capital base. Turning to slide seven. The Private Client Group generated pre-tax income of $423 million on record quarterly net revenues of $2.84 billion.

Revenues grew by 14% year-over-year, primarily driven by higher PCG assets under administration, resulting from market appreciation, strong retention, and the continued addition of net new assets. Pre-tax income grew 3% over the year ago quarter as the revenue growth was partially offset by the impact of lower interest rates and investments in leading growth, including record recruiting results.

The Capital Markets segment generated quarterly net revenues of $477 million and pre-tax income of $48 million. Segment net revenues increased year-over-year and sequentially, largely due to higher M&A and advisory revenues and higher debt underwriting revenues.

The Asset Management segment generated pre-tax income of $143 million on record net revenues of $362 million. Results were largely driven by higher financial assets under management compared with the prior year quarter, reflecting market appreciation over the past 12 months and strong net inflows into PCG fee-based accounts.

Results also included a partial quarter contribution from Clark Capital, which we acquired on April 30th. The bank segment generated net revenues of $488 million and record pre-tax income of $206 million.

Segment net revenues increased 7% year-over-year, largely due to net loan growth over the period. Results also benefited from a loan loss reserve release during the quarter, driven by a strengthening in credit quality as the loan portfolio continues to shift toward lower risk securities-based and residential mortgage loans.

Turning to consolidated revenues on Slide 8. Asset Management and related administrative fees were $2.08 billion, up 20% over the prior year and 3% over the preceding quarter. Record quarter end PCG fee-based assets were $1.15 trillion, up 22% year-over-year and 11% over the preceding quarter.

Looking ahead, we expect fiscal Q4 2026 Asset Management and related administrative fees to increase approximately 11% from the Q3 level, driven primarily by higher PCG assets in fee-based accounts at quarter end.

Moving to Slide 9. Clients' domestic cash sweep and Enhanced Savings Program balances ended the quarter at $58.8 billion, up 2% from the preceding quarter and 7% over the prior year level, representing 3.4% of domestic PCG client assets at quarter end.

Cash sweep balances grew 4% year-over-year and reflect the impact of organic and recruited growth over the period. We continue to diversify funding during the quarter, with strong growth in Enhanced Savings Program balances up $2.4 billion, or 19%, over the prior quarter level. This on-balance sheet increase in bank deposits enabled us to shift a portion of our cash sweep program balances from our banks to third-party banks.

This dynamic highlights the strength of our deposit gathering capabilities and the flexibility inherent in our funding model to move cash sweep balances on or off balance sheet, enabling us to better serve client needs. Turning to Slide 10. Combined net interest income and RJBDP fees from third-party banks were $658 million, up $8 million, or 1% from the prior quarter.

Fee revenues earned on RJBDP balances with third-party banks increased $5 million as a result of both an increase in the yield of five basis points to 2.75%, as well as an increase in average balances swept to third-party banks in the quarter.

Bank segment net interest income was flat sequentially as incremental interest from loan growth was offset by higher interest expense, primarily from the growth in the Enhanced Savings Program balances that I previously discussed.

Looking ahead, based on static interest rates and assuming unchanged quarter-end balances, net of the fiscal Q4 fee billing collection of $2.1 billion, we would expect aggregate NII and RJBDP fees from third-party banks in the Q4 to be approximately flat with the Q3 level.

Keep in mind, actual results could be influenced by several variables, including interest rate actions during the upcoming quarter and changes in loan and deposit balances. Turning to consolidated expenses on Slide 11. Compensation expense was $2.58 billion, and the total compensation ratio for the quarter was 65.7%.

The adjusted compensation ratio, which excludes acquisition-related compensation expenses, was 65.5%. This result is in line with our target of approximately 65% provided at our Analyst and Investor Day and is down 20 basis points sequentially. In a quarter with better M&A and advisory revenues, we would expect this ratio to improve.

Non-compensation expenses were $599 million, down 5% from the year ago quarter. Recall that the prior year quarter included a reserve increase associated with the settlement of a legal matter which did not recur this quarter. Sequentially, non-compensation expenses increased 3%, driven by higher professional fees and business development expenses, partially offset by a benefit for bank loan credit losses.

Professional fees during the quarter reflect elevated legal expenses, with the vast majority being defense costs incurred during the quarter associated with the previously disclosed putative class action lawsuit related to our cash sweep programs. We believe we have strong defenses to the claims asserted, and we are vigorously defending the action.

However, such defense is triggering an increase in our costs. Additionally, there were legal costs incurred this quarter related to our acquisitions of Clark Capital and GreensLedge.

Business development expenses were higher as the fiscal Q3 typically reflects seasonal costs as we host many of our largest annual conferences and invest more heavily in advertising during this time of the year. Certain non-compensation expenses are tied directly to our growth, and many of those expenses, particularly those associated with successful recruiting, benefit future periods.

For the fiscal year, we remain on track with our target level of non-compensation expenses of approximately $2.3 billion, even with the additional costs associated with our two recent acquisitions, which were not contemplated at the time the target was set.

This measure excludes the bank loan loss provision for credit losses, unexpected legal and regulatory items, and the non-GAAP adjustments presented in our non-GAAP financial measures. Slide 12 presents the pre-tax margin trends for the past five quarters.

This quarter, we achieved adjusted pre-tax margin of 19.9%, in line with our guidance of approximately 20%. Our long-term trend continues to highlight the stability and strength of our diversified businesses to consistently generate strong margins throughout various market cycles.

On slide 13, at quarter end, our total assets were $94.2 billion, up 3% from the preceding quarter, primarily due to the growth of the loan portfolio. Record bank loans of $56.2 billion grew 13% over the year ago quarter and 3% sequentially, with that loan growth largely in support of our clients.

Securities-based loans and residential mortgages represent 64% of our total loans held for investment, reflecting approximately 44% and 20% of the total, respectively.

We continue to have strong levels of liquidity and capital to support the continued pursuit of our capital deployment priorities of investing in organic growth through strategic acquisitions, providing sustainable and increasing dividends to our shareholders, and when appropriate, managing regulatory capital levels through share repurchases.

RJF corporate cash at the parent ended the quarter at $2.5 billion, providing excess liquidity of $1.3 billion above our $1.2 billion target. Corporate cash declined in the quarter, primarily due to our deployment of liquidity and capital in completing the acquisition of Clark Capital.

With a Tier One leverage ratio of 11.7% and a total capital ratio of 22.5%, we remain well above regulatory requirements with approximately $1.5 billion of excess capital capacity to deploy before reaching our conservative Tier One leverage ratio target of 10%.

The effective tax rate for the quarter was 20.7%, which includes the favorable impact of non-taxable gains on corporate-owned life insurance portfolio in the quarter. We estimate our effective tax rate for the fiscal year will approximate 24%. Slide 14 provides a summary of our capital actions over the past five quarters.

Through the combination of common dividends paid and share repurchases, we returned $506 million of capital to shareholders during the quarter. In the quarter, we repurchased $400 million of common shares at an average price of $152 per share.

Over the past 12 months, we repurchased 9.8 million common shares for approximately $1.6 billion. Including dividends, over that period, we returned nearly $2 billion to common shareholders, representing 86% of earnings.

Through successful execution on our capital deployment priorities over the past year with strategic balance sheet growth, completion of two acquisitions, and capital return to shareholders,

our Tier One leverage ratio has declined 140 basis points over that period to its still strong 11.7% level. We remain committed to operating our businesses over the long run at capital levels consistent with our established targets. I'll now turn the call back to Paul for his final remarks. Paul?

Thank you, Butch. I am pleased with our strong performance this quarter as we continue to focus on driving long-term growth across all of our businesses. Our steadfast commitment to prioritizing the client in every aspect of our business has resulted in record revenues, record pre-tax income, and record earnings per share in the first nine months of the fiscal year.

As we enter the fiscal Q4, we do so with significant momentum, supported by historically strong business drivers, robust financial advisor recruiting, and strong investment banking pipelines, along with ample capital and liquidity to support continued growth.

Our consistent performance reflects our long-term approach, the resiliency of our diversified business model, and the commitment of our people to serving clients with integrity. Before we conclude, I want to thank our financial professionals and associates across the firm for everything they do each day to serve clients.

The real value in this business has always been and always will be true personal relationships. Client expectations are changing, innovation is accelerating, and differentiation matters now more than ever. What sets Raymond James apart is the same thing that has always set us apart, our culture and the way our financial professionals and advisors serve clients through trusted relationships.

That can't be replicated by AI or technology, but it will be helped by AI and technology. We'll continue to invest in the people, platforms, and capabilities that help our financial professionals deliver more holistic and personalized advice while staying true to the culture and long-term approach that has always differentiated Raymond James.

Thank you for your interest in Raymond James. That concludes our prepared remarks. Operator, will you please open the line with questions?

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Dan Fannon with Jefferies. Please go ahead.

Thanks. Paul, I was hoping to just expand upon your comments around the robust recruiting backlog. Obviously, a lot of momentum in that business. Curious if this gives you confidence around maintaining these levels of organic growth you've put up so far year to date.

Thanks, Dan. We've been consistently a best-in-class recruiter of financial advisors in the industry year in and year out. While recruiting gets a lot of the limelight, I just want to remind everyone, the most important thing we can do to grow the firm is have high retention of our existing advisors and making sure that our advisors are satisfied with the firm as a partner to growing their business and developing deeper relationships with their clients.

We look at their satisfaction very closely. There's lots of ways we do that. I spend 70% of my time with advisors, getting to know them and understand what we could do better to help them grow their businesses. We have 97% advisor satisfaction rate.

97% advisor satisfaction rate with our surveys, which is the best I know of in the industry when I speak to other CEOs and other firms. That retention is the foundation for the growth. These advisors know each other in the communities, and they talk to each other, and that's helped us have that consistent growth. We have the largest addressable market in the industry because we have all the affiliation options that an advisor could possibly want.

We have advisor choice where we're agnostic into how you affiliate with Raymond James. We want you to fall in love with our culture, values, and the platform and capabilities. How you affiliate with us, we're indifferent to. That combination of factors is increasingly unique in the industry. There's very few firms in the industry that treat advisors like clients anymore.

We're one of those firms, and we couple that with the capabilities, and that's what's really driven our strong recruiting results. The pipeline remains strong. This is not a pipeline that is driven by one firm or one catalyst in the market, or one affiliation option. It's a broad-based pipeline from many different advisors from many different firms and many different communities across the country interested in all of the variety of our affiliation options.

We feel very good about the pipeline. We don't think it's idiosyncratic. Certainly, when you look at the net new asset growth for the fiscal year, so far in the fiscal year, it's up 119%. So $75 billion of net new assets for the fiscal year is up 119% from last year, which was a record. So it's truly phenomenal growth that we are driving.

Again, it starts with keeping our existing advisors satisfied and having high retention of our existing advisors.

Understood. Thank you for that. Just wanted to follow up on the investment banking commentary. That seems to be very consistent with what you've been saying the last few quarters. I guess, what do you think it takes to get you to that more normalized level you've been aspiring to?

There's a lot of pent-up energy, I would say, amongst financial sponsors to get deals done.

Pretty well documented in terms of the portfolio companies that are well beyond their original hold dates, as well as the dry powder that financial sponsors and buyers have out there that they want to deploy. There's been sort of idiosyncratic concerns impacting different industries like AI with software and fintech and that sort of thing.

I think as we get through those type of idiosyncratic concerns and some level of discovery and closing the gaps in valuations between what sellers expect and what buyers are willing to pay based on our sort of activity levels and dialogues and engagement letters that we're signing. We think that there's going to be significant room for upside in investment banking. Yeah, those factors need to all kind of align for that to happen.

Your next question comes from the line of-

Your next question comes from the line of Michael Cho with JPMorgan. Please go ahead.

Hi. Good evening. Thanks for taking my question. I'm going to just start with a recurring one as well. Paul, you just talked through the M&A and the success that you've had year to date. You also kind of talked through the robust pipeline.

I was just hoping you could touch a little bit more on that pipeline, maybe pipeline today relative to maybe where 2026 started. I recognize it's broad-based pipeline, but anything to kind of provide any color on the employee versus independent channel? Thank you.

Yeah, the pipeline is still strong and robust across the different affiliation options. There's a team yesterday with $5 million of production that came, and they're actually interested in understanding the various options and the various affiliation options, which those are the best conversations to have. Where it's like we don't necessarily know exactly how we want to affiliate with Raymond James and how we want to run our business going forward.

We know that Raymond James is the right partner for us and for our clients and our teams. Now that we figured that out, we want to do the homework on which is the right affiliation option and what are the pros and cons of the affiliation options. I would just say it's broad-based strength. The momentum is strong, and it's really across our affiliation options.

Great, understood. If I could just follow up just on AI. Paul, you referenced in your prepared remarks around the enterprise rollout of Rai. I guess, how do you envision the adoption of Rai? I believe you're partnering for models and some of the other capabilities out there. Can you just talk through the cost of these initiatives and the potential for pricing model changes? Again, just the adoption of how you envision across the firm. Thanks.

Yeah. The adoption has been fantastic. We just did the full rollout of Rai. We had it in pilot phase, but we did the full rollout in June 15th, so just a little over a month ago. We already have 6,500 unique users. The satisfaction rate is 99.5%, which is phenomenal. This is a sort of large language model that can answer many questions related to customer and client accounts.

The feedback has been overwhelmingly positive and the utilization has increased substantially, and there's still a lot of advisors and sales assistants that are learning about Rai that haven't even used it yet.

We also rolled out an AI academy. I think the first in the industry that I've heard of that's done this to educate advisors and their teams and associates on AI capabilities and how they can use it on a day-to-day basis.

In a very short period of time since our rollout, I think we have close to 20,000 folks who have completed the four-course module. We'll continue to build upon that to help educate people on how they could use AI to improve their efficiency and effectiveness of the various functions in serving clients. All of this is to help people spend more time on what we believe is the most valuable aspect of our business, which is developing relationships.

That could be internally but also externally. Financial advisors, the more time we could save their advisors and their teams on the administrative aspects of what they do on the sort of back and middle office aspects of what they do, then the more time they can spend developing personal relationships with their clients and prospects, which is going to win the day.

We say to our advisors, AI will not replace advisors. Advisors who use AI will replace advisors who do not use AI. That's what our goal is to ensure that all of our advisors have access and expertise in using AI to help them better serve their clients.

Of course, there's a cost to that, but we believe the long-term ROI, and we're managing that cost very closely, and the token costs and those type of things. We believe in the investments that we're focused on are investments that we have high conviction levels that the long-term ROI will exceed the cost of utilizing AI.

Raymond James Financial (RJF) Q3 2026 Earnings Call Transcript

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