Raymond James Finl Q3 2026 Earnings Call Transcript

Raymond James Finl (NYSE: RJF ) reported third-quarter financial results on Wednesday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

93 billion, up 16% year-over-year, with pre-tax income increasing by 33% to $750 million. 86 trillion in client assets under administration, with a 5% annualized growth rate in domestic net new assets. Strategic investments in technology and AI, including the rollout of the Raymond AI assistant, are aimed at enhancing advisor efficiency and client service. The company completed the acquisition of Clark Capital, adding $47 billion in assets, and continues to see strong recruiting momentum with high advisor retention.

Capital Markets revenues grew, supported by investment banking, though activity remains below a normalized environment; future outlook is optimistic with a strong pipeline. Record net income of $595 million, with adjusted net income excluding acquisition-related expenses at $620 million, leading to record earnings per share. 7%. Management highlighted the importance of culture and long-term relationships, emphasizing the firm's differentiated value proposition and commitment to client-first values.

Full Transcript Kristi Waugh, SVP Investor Relations Good evening and welcome to Raymond James Finl's fiscal third quarter 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 Kristi Waugh, Senior Vice President of Investor Relations. Thank you for joining us.

With me on the call today are Chief Executive Officer Paul Shukeri and Chief Financial Officer Butch Oorlog. The presentation being reviewed today is available on the Raymond James Finl 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 8-K, which are available on our website. Now, I'm happy to turn the call over to CEO, Paul Shukeri.

Paul Shukeri, CEO Thank you, Kristi. Good evening, and 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.

And 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 Finl. 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 Finl and helped us continue to be successful over time.

Turning to the quarter, our results for the third quarter 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. 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 than ever. But what sets Raymond James Finl 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. 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 Finl remains a destination of choice for financial advisors. 0% 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 fiscal 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 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 Finl 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. 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 Raymond, our proprietary AI assistant, following a thoughtful pilot program and phased deployment.

Raymond 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 remained below what we would have considered a normalized environment, especially in the middle-market and sponsor-driven client segments.

We entered the fourth quarter 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 the Raymond James Finl platform. We are excited to welcome Clark Capital to the Raymond James Finl family. 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 capital to shareholders.

6 billion of common stock, including $400 million during the quarter. 7%. Now I'll turn the call over to Butch Oorlog to review our financial results in detail. Butch.

Butch Oorlog, Chief Financial Officer Thank you, Paul. I'll begin on slide 6. 93 billion for the fiscal third quarter. 01.

14. 9%. 5%. Strong results for the quarter, particularly given our conservative capital base.

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. Pretax 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 pretax 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 pretax 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 pretax 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. 08 billion, up 20% over the prior year and 3% over the preceding quarter.

15 trillion, up 22% year over year and 11% over the preceding quarter. Looking ahead, we expect fiscal fourth quarter 2026 asset management and related administrative fees to increase approximately 11% from the third-quarter level, driven primarily by higher PCG assets in fee-based accounts at quarter end. 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.

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.

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. 1 billion, we would expect aggregate NII and RJBDP fees from third-party banks in the fourth quarter to be approximately flat with the third-quarter 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.

7%. 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 cost. 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 third quarter 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. 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 pretax margin trends for the past five quarters.

9%, in line with our guidance of approximately 20%.