Raymond James Financial, Inc. 2026 Q4 Earnings Call

Good evening, and welcome to Raymond James Financial's fourth quarter and fiscal 2026 earnings call. This call is being recorded and will be available for replay for the next 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. 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 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, and thank you for joining us.

Some people like to tailgate and eat hamburgers and hot dogs prior to World Series games. Others like to listen to a really good earnings call. I want to thank all of you for being in that latter category and joining our call this evening. Us folks in Tampa Bay are rooting for the Rays to keep things alive tonight, but there are thousands of really great Brew Crew fans who have made the trip down and are ready to pop the champagne. We'll see how things shake out in the next few hours. But first, our results. Raymond James delivered record net revenues and record net income for both the fourth quarter and fiscal year 2026.

This was our sixth consecutive year of record annual results, underscoring the strength of our long-term approach and resilient, diversified business model, and most importantly, reflecting the commitment of our financial advisors, bankers, and associates to serving clients with integrity and putting people first every single day. In the quarter, we generated record quarterly revenues of $4.27 billion, representing growth of 15% over the prior year quarter and 9% above the preceding quarter. Record pre-tax income of $862 million increased 18% over the year-ago quarter and 15% over the preceding quarter. What has always set Raymond James apart is our ability to invest for the long term without losing sight of the deeply personal relationships at the heart of our business.

That was evident this fiscal year as our investments across the organization in people, technology, and capabilities enabled advisors, bankers, and associates to meet the increasingly complex needs of their clients. In the Private Client Group, we had record quarter-end client assets under administration of $1.87 trillion, up 1% from the preceding quarter and 12% year-over-year. Strong retention and continued recruiting momentum again demonstrated that Raymond James remains a destination of choice for financial advisors across our affiliation options, where our growth remains focused on quality over quantity. For the fiscal year, domestic PCG net new assets increased 88% to a record of more than $98 billion, representing 6.4% of beginning-of-year assets. Contributing to the excellent net new asset results were not only our record recruiting results, which far surpassed the previous year's records, but also increased net new assets from existing advisors and strong advisor retention.

Over the fiscal year, we recruited financial advisors to our domestic independent contractor and employee channels with trailing 12-month production totaling $538 million and more than $82 billion of client assets at their previous firms. The source of this year's recruiting success, as well as our current pipeline, remains diverse across all of our affiliation channels. Throughout the year, we remained focused on expanding capabilities and empowering advisors. For example, enhanced succession and capital solutions for advisors, streamlined branch workflows, and advisor productivity initiatives support practice continuity, growth planning, and advisor transitions. With regard to clients, we have expanded specialized resources available to business owners, high-net-worth families, and multi-generational households, helping advisors address clients' increasingly complex planning, succession, and liquidity needs. Lastly, we continue advancing automation, process improvement, and AI as part of our more than $1.1 billion annual technology spend.

These enhancements help advisors work more efficiently and deliver increasingly personalized advice, spending less time on administrative tasks and more time with clients. Tools such as our proprietary AI assistant, Raimond, an AI-powered integrated CRM solution meeting manager, improve access to institutional knowledge, client insights, and workflow support. In Capital Markets, revenues grew this quarter, driven primarily by stronger investment banking results, as well as higher affordable housing investment business revenues. We generated record consolidated investment banking revenues of more than $1.1 billion for the fiscal year. We achieved this milestone despite economic and global challenges and uncertainty, including concerns about disruption from emerging technologies. These results reflect the continued investments in our Capital Markets businesses. During the year, we acquired GreensLedge, which provides origination and structuring capabilities that complement our existing structured products distribution.

Additionally, we made strategic hires and expanded specialized practices to continue to deepen our expertise, including adding a leveraged finance and debt advisory practice and expanding our ESOP advisory team and our consumer franchise. In public finance, the addition of MBS Capital Markets increases our capabilities in land-secured finance and strengthens our ability to serve special districts, master-planned communities, and mixed-use developments. Our investment banking pipeline remains strong, and as we saw this quarter, we believe we are well-positioned for future growth. 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 growth from our successful recruiting efforts, as well as the cross-business collaboration with PCG to provide high-quality investment offerings, such as the newly launched Private Wealth Guided Portfolios that expand solutions for private wealth clients looking to add alternative investments in their managed portfolios.

Additionally, we experienced solid net flows into Raymond James Investment Management, including the recently acquired Clark Capital, which continues to grow assets by serving advisor-oriented channels with high-touch asset management and model portfolio capabilities. In the Bank segment, loans ended the quarter at a record $57.5 billion, driven predominantly by continued growth in securities-based lending balances. Those balances increased more than $6 billion, or 32%, from the year-ago period and 6% sequentially. This growth continues to reflect the synergy with our expanding Private Client Group business as we deploy our 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 capital to shareholders. Before I turn the call over to Butch, I want to highlight two things we are excited about.

First, and most importantly, our latest satisfaction survey showed that advisors' overall satisfaction with Raymond James' service levels reached an all-time high of 96%, with 87% of our advisors saying that they have experienced an improvement over our already strong service levels over the past year. These remarkable results reflect the collective efforts of our associates to serve advisors and their clients. Also, during the quarter, we announced a new partnership with the PGA TOUR as a title sponsor of the GO by Raymond James Golf Tournament in Greensboro, North Carolina. One of the tour's most historic tournaments, the event will become a championship-level competition featuring the best players in the world. This partnership provides a unique opportunity to invest in our brand and deepen relationships with clients and prospects. Now, 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 6.

The firm reported record net revenues of $4.27 billion for the fiscal fourth quarter. Net income available to common shareholders was $666 million, with record earnings per diluted share of $3.40. Adjusted net income available to common shareholders, which excludes acquisition-related expenses, equaled $703 million, resulting in record-adjusted earnings per diluted share of $3.59. Our pre-tax margin for the quarter was 20.2%, and adjusted pre-tax margin was 21.3%. We generated annualized return on common equity of 20.6% and annualized adjusted return on tangible common equity of 26.6%. Strong results for the quarter, particularly given our conservative capital base. Turning to slide 7. The Private Client Group generated pre-tax income of $458 million on record quarterly net revenues of $3.06 billion.