RJF - Earnings call transcript Q2 2024 | Raymond James Financial, Inc.

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Kristina Waugh

Good evening, and welcome to Raymond James Financial's Fiscal 2024 Second Quarter Earnings Call. This call is being recorded and will be available for replay 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 Paul Reilly, Chair and Chief Executive Officer; and Paul Shoukry, President and Chief Financial Officer. today on reviewed Relations James' being website. presentation is Raymond available Investor The

remarks, litigation open level information certain operator anticipated benefits of questions. Calling the of are forward-looking the Following prepared include statements will this our concerning future may to financial regulatory but X. statements. These during prospects, anticipated limited your Slide and the Please business made note, to, and integrating statements results, industry not businesses, call constitute attention for and general timing our of and strategic objectives, or success acquired market economic conditions, developments, acquisitions results conditions. line

actual addition, or those would as consider statements. identify any In not no and be will plans, available future conditional intends, verbs differ and results depends subsequent can anticipates, described Forms risks other statement the urge from such that as well that will, materially recent We believes, which future website. to our XX-Q such in and intended words assurance Form there on necessarily events as are expects, are X-K, should forward-looking most and estimates, XX-K these projects, on in note forecasts you that Forms may, statements. Please expressed as could, our to

Now Paul I'm to Reilly. over happy CEO, to turn Chair Paul? and the call

Paul Reilly

we delivered Thank the the fiscal results you, record and we the months us results of strong Kristie. second diversified generated again, Good fiscal evening, Once in platform, everyone, Highlighting and X joining thank you year. for today. for first quarter quarter. the our

help all businesses. drive our in business, across invest people our our technology to continue to and We growth

an month. discussing results, highlight important made announcement last want Before quarterly I to

CFO, firm to contributor culture become only approach Executive Paul and laser of the helped a Directors am shape conservative firm's has history. Paul appointed becoming many and has success the as will company's stability. James. to CEO in following leader I he expected during period, exceptional Paul Raymond the the succession client-first Board major confident planning And year the fourth focus advisers process, fiscal financial XXXX, the growth the Shoukry, Following long-term transition James' XX-plus-year a a President sometime the an years. multiyear is Raymond over and that of our been with guide same steady our to on our and Chief continue

In leadership the and Global are Jim Equities financial confident, Jim contributions Tash achieve significant objectives. Markets clients mission and segment. These they addition, the of PCG; and of President Dowdle reflection at help roles X, to and become of Capital direct of COO the the along President, Bunn, the Scott, the Elwyn, with will take that XXXX. will appointments Scott key fiscal Client President, James proud we're the moving Financial, Group to Associates announce delivering role effect end that our their made Jeff Raymond on James to of become have leadership Investment am over October Private Curtis, into Banking year; I of will Tash will continue a CEO President retirement following expanded other years. become Raymond & current Paul,

was income quarter primarily increase an year $XXX diluted Now X. of preceding record per asset-based $X.XX Slide net X% share. of the results, to or to review second quarterly available $X.XX to common net the million firm starting quarter, revenues billion, The Quarterly revenues. higher over reported on due shareholders

a a on of the generated reduction acquisitions, the great tangible favorable common result, to share. The net impact quarter equity annualized on was Excluding driven income strong a per included of expenses given regulatory in off-platform common million and adjusted million, to of the net to reserve quarter shareholders with predominantly related communications and of returns legal $X.XX or strong release related $XXX reserve XX.X%, $XX capital diluted available XX.X% by return base. FCC matter. We particularly annualized adjusted for returns common our the equity

on rising grew Group were Group recruiting beginning Slide X.X% billion under and to the new Total $XXX Moving on under Client the markets to growth during adviser increased Private Private levels representing Client net by equity assets fee-based $X.XX and a administration of driven assets period Domestic X. Group. and in accounts sequentially domestic retention solid Private and Client assets record financial client annualized trillion. to assets. the quarter, $XXX grew assets billion, reached X% rate billion. Client assets management the to $X.X

calendar as And we advisers seasonality typical continues multiple net be robust to the the our advisers platform retire client-first to time. With onboard leave affiliated or before, seen capabilities, long-time new some high-quality we've in assets technology the advisers quarter. can from values and PCG newly-recruited reflect and does to as quarter attract quarter-to-quarter time first This volatile options, platform. have

channels, time financial XX-month production is advisers trailing XX% continues of fiscal but the of example, up far some billion with and client the recruited up previous $XX.X results $XX recruiting do platform, this these net recruiting a prior not contractor approximately and assets And of business custody our recruited independent administration. XX% Fiscal between as results quarter, Raymond For finished are XX-month domestic year. new clients during to assets quarter by at also production the over have we trailing the it which advisers $XXX the under include with employee RIA success year-to-date, services to to lag assets for James to encouraged period. There and so success takes we transition of billion client recruiting and assets is million X-month related their our and firm. and

$XX.X relatively to assets higher cash fiscal preceding as the growth sweep loans and billion, given billion, $XX.X billion net at Savings XXXX. Bank rate demand domestic results, from X.X% essentially Looking quarter over the quarter remains compared of balances up Program peers. Total a to flat result strong Enhanced assets, rates. our annualized December clients' were period at slightly representing our $XX.X ended loan year-to-date were domestic the muted new domestic on a beginning PCG

income billion Moving in driven on record million. fees, to pretax X. Markets of period. The of asset by of accounts Capital year higher $XX ago reflects assets the XX% Group and of the this debt compared higher impact Sequentially, revenues same prior underwriting proceeding $XX generated pretax at primarily were and revenues million partially due totaled $X.XX [indiscernible] loss advisory of fixed year income quarterly net net revenues, a to Client results million the segment deferred $XXX $XX to of Capital Markets the quarter, Slide beginning of revenues of and compensation the million grew with revenues reflecting management Private generated M&A current Year-over-year granted debt of nearly quarterly offset pretax million. a M&A fee-based Net lower compared quarter due brokerage amortization revenues. The by growth in to in higher and and underwriting which revenues. revenues quarter. X% loss $XXX periods

predict, While the timing the new closings and M&A. remains encouraged pipelines we to and business are of difficult activity healthy by

prior fee-based financial revenues recovery. The expect due with pretax revenues to assets quarter $XXX net of margin of We of portion to Program to Enhanced million. $XX revenues balances. due were the X.XX% generated segment largely basis market to compared continue balances Bank higher appreciation $XXX replaced inflows net of Management record Savings gradual investment mix attributable on interest Results along million income declined cash RJBDP and income banking and $XXX year under management points higher Asset preceding million. to deposits of net to into the quarter a to PCG generated million pretax segment Bank of improve as net primarily the of the the segment suite accounts. The X compared cost the lower-cost industry-wide

Slide generated to record. net $X.XX the common over billion, prior and of net to income respectively, million, X% revenues Looking shareholders and X. year-end record results the fiscal date year's available $XXX of X%, record up We on

now with robust for reflects turn Shoukry, equity Paul? equity and markets. And return Additionally, of and growth we of to the over Slide first results. X-month segment the an return strong of second adjusted common organic strong generated the PCG the common our for X, the primarily CEO annualized half XX.X% be to the in year quarter Asset strength equity and of period. On XX.X% Management I'll soon on the PCG CFO; tangible for on annualized Paul

Paul Shoukry

were and up year Starting Thank Consolidated in Slide Paul. on prior X% sequentially. XX. revenues billion the $X.XX second net you, X% the quarter, over up

Asset year prior related billion, to administrative $X.XX and X% grew quarter. the management preceding and growth fees representing over the over XX%

cash prior volatility, to XX% asset million in grew the fees have currency Banking shortly. Investment industry second be for well revenues PCG PCG a income in finance X% stronger sequentially. which of revenues both brokerage tailwind revenues related fiscal debt administrative higher to and I'll in of credit our quarter. larger which X% to and declined third during $XXX and that year-over-year, players in the increased fixed less our continue will business, underwriting management public quarter. Brokerage mostly advisory results to year strong higher interest year-over-year fee-based This Compared due and service income and revenues quarter, assets which X%, available as were income many be the brokerage to million securities. Remember, partially not account and in benefited same and in declining as of M&A flat discuss deposit revenues products and quarter, investing do net offset improvement to exposure fees the quarter $XXX experience subdued. from Fixed revenues clients have balances have increased the benefited continued by fixed depository for the Income we lower in as

the of X% about this preceding our tax call. Since Moving X.X% payments. were balances quarter to along domestic on PCG quarterly billion client have over XX. Enhanced declined slightly sequentially, mostly domestic and $XX.X and and $X.X with Program the due at last flat outperforming sweep cash cash balances Slide income Sweep expectations assets. up domestic ESP to balances the both billion, ended representing increased quarter, fee sweep balances essentially the Savings of billings, Clients' quarter beginning

net guidance call, one last outperformed interest largely the more cash X% fewer billable Turning day. quarter's to RJBDP fees income balances. preceding XX. our this banks reflecting Combined client the was Slide third-party given result stable million, quarter, down from from Again, $XXX on and

forward, subdued rate level growth the of rates, be the trajectory fees Going of and been client will balances loan income dependent third-party and net environment. largely cash stability has the RJBDP short-term this in which of interest on interest

eventual ample positioned with loan well and for growth the are Fortunately, capital recovery funding we flexibility. in

expenses Compensation $X.XX the ratio total Moving billion, on and XX. for XX.X%. Slide was expense was compensation the to quarter consolidated

was compensation acquisition-related ratio compensation the expenses, Excluding adjusted XX.X%.

reset line higher is a the is the is satisfactory with Paul compensation close impacted to our taxes. XX% quarter, provision, to ratio the due for As Capital and annual expenses partially the given Markets by largely in bank All compensation first increases favorable communications segment. Non-compensation of and expenses X% payroll adjusted of $XXX and offset loan million in increased million higher in, which reserve mentioned loss target in typical an environment release result the regulatory quarter, a salary information which calendar legal of current expenses and challenging were $XX were earlier. a processing sequentially, and net by

we the non-compensation and growth unexpected quarters. as expenses, still the over advisers throughout excluding around our year fees, For their revenue follows continue ensure to the for adjustments such shows items that non-compensation This non-GAAP growth. Slide be fiscal high investment year, businesses. Keep expect XX regulatory invest X of the our losses, growth and and for trend we corresponding incremental provision $X.X mind, clients sub-advisory in healthy as legal growth past billion. or service to levels credit non-compensation throughout many the pretax in represent margin implies expenses,

generated impacting result, a conditions strong given capital of adjusted we margin the especially market pretax margin pretax and XX.X% quarter, a This XX.X%, markets. of challenging

still Slide targets current provided quarter a of upcoming at the of our our billion will at for were May, $XX.X and strong. above XX%. reminder, XX, Tier As leverage we target. billion, are X% and update $X.X and of at ended remain our We Day very Investor assets capital $X Day the margin XX. On than increase. Liquidity XX% quarter our plus a remain these well a Investor capital less with XX.X% compensation billion, at RJF we balance X corporate total And appropriate, targets May XX.X%. and pretax Analyst sequential provide well parent last total ratio an capitalized and sheet cash for Analyst ratio needed at a are as end, ratio think scheduled of

opportunistic of the being provide Our for levels insurance to in quarter effective tax to capital life XX.X%, growth. The gains continue significant continue flexibility and nontaxable the the reflecting corporate-owned was in favorable rate quarter. invest impact

a provides appropriate an estimate believe rate. Slide of over summary the tax is effective X Looking for XX% ahead, the past our we XX actions capital quarters.

shares at expected fulfilled $XXX of the the share. per stock common average and million for the since in from $XX shares Including of January April, repurchases million share firm of During associated $XXX X $XXX commitment dilution repurchased an TriState million we price million the quarter, the with repurchase X.X of completed acquisition. repurchased the Capital these

XX, April authorization. approximately under billion common Board's stock XXXX, of As approved remained repurchase the $X.XX

Going compensation repurchases. opportunistic dilution offset forward, share-based we with to to to incremental expect continue be and

committed maintaining are to levels we'll on our with targets, We our line capital our Day. strategy upcoming overall more in and management discuss Analyst capital stated Investor at

loans from percentage held at for credit Slide for for quarter a up the believe reserve, credit corporate continue as is quarter TriState for and loans quarter. The represents The loan closely total held was X.XX%. monitor Criticized end. Capital preceding economic X.XX% factors of a Bank. investment quarter as James Bank for corporate our X.XX%, metrics loan total ended segment impact investment quality this ended loans our portfolio bank portfolios. losses X.XX% solid. on we that at percentage the the which key XX, to credit appropriate bank losses an loan from the includes the we for but The provide investment allowance Lastly, on as loans loans held loan of may of We credit percentage at a Bank Raymond of allowance

Gap] I to over to Before am I back [Audio named I say Paul be call President turn just the honored absolutely to that want

Paul Reilly

for and And Income the but our Fixed conditions. the pipeline the for pick dynamic levels, to next good to expectations overall influenced X up could recovery heavily expect engagement by we are gradual Gap] market activity business, months. And declining We X a in the [Audio once over cash of will pressure activity. have remain we available flat securities, putting balances start on investing cash to brokerage and unchanged. hope past clients year in Depository experiencing deposit stabilize, rate are and our to balances that less quarter, segment an starting the improvement. Overall, assets financial once segment, third the growth environment growth business which financial fiscal under market us have a despite made that Markets the up X% drive quarter, becomes confident assets near-term accounts assets Asset long-term conducive. In to investments in challenges, in management some preceding Private the we've provide see Capital over of Client the growth for are believe we the strong fee-based should positioned the rate remain We of Management the Group will revenues. management. tailwind of in under well

over expect remain we growth management drive the investment James sheet we and In assets addition, fortifying Raymond to sources to help client diverse growing funding on prudently segment, further balance support demand. with focused Bank time. In the

corporate of with decelerate, loan activity these level securities-based for recover demand loans muted. to the the current seen have clients payoffs We we been and get comfortable as growth rates. With has expect little market, in loan

risk guidelines. and balances conservative our [ cash increases ] client once we positioned ample with capital, to activity are well and lend However,

to we that meet growth. strong efforts are remain entering parameters. In of future In on may we solid businesses, focused capital liquidity development driving a disciplined quarter all and in positioned for our addition our third with fiscal opportunities invest and business closing, positioning to also competitive M&A base organic the corporate our the growth in well across

concludes to service As for providing business advisers prepared will continued you always, for their our you open this our line who thank all drive Operator, their and excellent for associates dedication you Thank questions. I please to want the to remarks. clients. do. That

Operator

Instructions] first to Goldman go We'll Sachs. Blostein, today [Operator Alex

Alexander Blostein

break little I the comp a year. than with deserved. what of then I down factors year, to maybe is kind still XX% the It normal. both you are to heavier bit that some seasonal, feels but around for I Paul, say said quarter, I of you quarter? then to XX% seasonal for you're And how impacted on below but there think specifically also shooting heard maybe. start a to understand you you're be help rate target the this question Well that much comp wanted Congrats guys.

where So full maybe ultimately you to help just up the year. of kind end reconcile expect for are guys

Paul Reilly

that What that. Investor appreciate I at said was the we Analyst target Alex, XX%. we that Yes, Day last was the announced

we've the first firm's X That's a rest the on the does that that's ratio wasn't driver. Typically overall to Capital of and And where with that's that lower ratio quarter, dependent case big would calculate. so going -- been largely capital but is year this have helped for the -- have of ratio, sort a the associated as it than comp you can segments in other be quarters, it the comp what going trending Markets segment. the to

to pleased comp the a be challenges in segment. to Markets close adjusted to So despite we that able ratio Capital are generate XX.X%

the the terms of $XX calendar say that's had impact of to In payroll around probably the quarter. increase taxes that each the in million reset quarter in for of million typical first I year, would the and salaries an $XX

So in a the meaningful impact quarter.

course, was throughout year. that calendar tax course But which the probably the the related salary Of throughout the reset, or increases so to of year. decline X/X will the continue payroll of will

Alexander Blostein

the you. trending you And range recruiting the we assets guys end in from organic My question a independent seen continues activity. from what it bound. to net around double-clicking historically. pretty I new lower into second we've at And disclosed got that, I if head guess the is at growth quarter, count looks look like be

the specifically, independent growth walk for seeing head this keeping of relatively been been asset the so count the So the of you're the maybe year, sort through kind in your pressuring of that's then year? rest what far flat? channel expectations what's us net new And

Paul Reilly

teams we're the hiring the think I seeing that are you're trends same larger.

to terms takes them out trailing XX. do We licensed. that assets. of RIA We're channel. great head And bringing moves a count So role not of in in head in count that because they're have on our we're assets more

we'll So on to more have we Day even but with granularity the we're head ins keeping give not that movement, Day. Then and Investor Analyst assets, count, you you the keep and try outs. --

we outs, to end, onboard. have So take some the in time do

usually So take assets quarter all the take get the [indiscernible] assets year a to like robust over. XX to you a those see when trailing months that X

about continue more to and struggled the need give And with transparencies little a strong. expectation those. I that you and will of think So we our so see through the you recruiting think RIA part We've the you to on can give measurement the is -- transparency that. to continues how

Operator

Next Wolfe Steven Chubak, question is Research.

Michael Anagnostakis

from This on to one the just appreciate cash I was is have things Michael did flat but your us. in of Anagnostakis to of maybe ask sweep cash balances tax positively? for And commentary, absolute now nice Steven. see Are built sweep that to signs confidence want it XQ, certainly level seeing was speak we behind cash I just building, season And how see start the sweep. sweeps here. you to inflecting quarter. on is trended cash could that

Paul Reilly

we had I tax season. mean

We already. balances a billing of also cash out record came had the quarterly that fee

And is down which are look so balances than less $X.X billings. in fee billion, cash far from today's April sweep report, I at so the the impact

we Now decline that far impacted. been have so -- and Program Savings Enhanced had the in able again, to some could is

tax significant tracked We the season payments with IRS here. have to the

flat look and last certainly quarter where are quarter-over-quarter, last shared you of quarter, couple So this the ended expectations which at that cash if build remain, throughout in -- and our saw kind that exceeded the call. after sweep quarters relatively of the balances past fee on we payments the cash you

continue from so are kind So we hopeful stabilizing, it here. that balances of and are monitoring we'll

Michael Anagnostakis

J's last on were Got just call, challenge rule. you to that [ ] industry that DOL. you with pivoting the I it. relatively to expected comfortable positioning the and Paul, recall And maybe new the Ray earnings

maybe can rule would With that the the your well update J finalized means views now in final published, as DOL its implications highlight? any terms rule you state the us on for industry in you as Ray what of for

Paul Reilly

-- the yes, even analyze to our of release, -- little question. it. trying get so pages is I complicated rule more Digesting earnings to XXX so in appreciate a Well, more a regulatory through

rule itself, actually is pops that's that So it's is problematic. out surprisingly there's -- read early from we early. The so. actually It nothing maybe overly the

really the we with have impact. concede industry's an even oversee complying the will regulator think But the or high authority interest that a I to of best there rule. the concern Department is why those extra think is the to do these for doesn't oversee the the rule another the X. to have other is that does accounts. And is rule itself Labor to do have want accounts, don't this rule, that regulator be and authority I about thing One standard with will statutory talking is

than is So think, -- the much more but I will [indiscernible]. manageable draft the rule itself

read. to rule So but what I doesn't itself always to an The the and look think again, early that's in at problematic do is the devil it be today don't detail, all. requires

Michael Anagnostakis

that. Totally congratulations appreciate to you And both.

Paul Reilly

Thank you.

Operator

Michael JPMorgan. from Next question comes Cho,

Y. Cho

can anything terms any out as one, ahead. some My talked color through? attrition curious talked just again. there's model nuanced in of looking through wanted talked out discipline, maybe maybe just healthy else call pipeline you some I first how and you trending to a quarter, [ on foliation is follow I some of more call And anything you again, maybe if in the I'm all M&A you well? up lumpiness. to the seasonality But through that mean just around ] or

Paul Reilly

If look pretty to [ the industry for in first X I think the well. compared did we the months, you ], Xs

that new of recruiting net itself, would was a little was it thought in of pretty terms And typically robust. growth lower but but growth this have maybe number, the assets to a the that in the number quarter is well, asset was lower lower So slower RIA, robust. the we pretty you can little going movement -- is terms see than

can't more we quarters just down than are it actually, I from quarters quarter, are it but the a what we up. where a in only -- have not good this anticipated where I think And in -- remain I and measurement things have So remember think a what pipeline, closing, it down little was of we think we things brought stronger. was chance in standpoint. But I relatively have we the recruiting,

impacted So that will by -- hopefully, to do with choose then will of to RIA go count, the be how terms adviser us. the stay the ones many numbers in and

it and far. -- on a had record so So we've pretty good

Y. Cho

potentially enough. Markets just comp I switching the to I in And the environment. here from gears Okay. to improving realize months? the and recovering basis talent I willingness next, guess you by to business. your Capital after then with talent maybe it, Raymond over that backdrop driven as James' investing frame you some and that with go I Fair history X so of incremental would called deferred XX advisory of how well. that mean, mean still M&A is in call the out

Paul Reilly

Yes.

of in of that the done cost in some and business, So hiring. terms lot done we've lowering we but a adjusting have also cost the

[indiscernible] So something. XX% the margin the business years now up. is comes very so upside mean mean it's so ago, or the X I leveraged to I revenue not. of

to the to that for really I margin. [ leverage So mean there's ] revenue grow with help

So the And in is just the question talent bring to we're all. always open market.

I is really paid and showed other growth whole hiring people you we for our worst for 'XX next off in think part decade. weren't when when the the were

it, us the business opportunity if in investment already from We've forward. public there's great do ] finance, I payoff public quarter the have ] at to last platform. some a is willing carry we [indiscernible] fixed you coming -- liquidity really blessing hiring great we're, done to out capitalize and And tough done And strong the that talent long-term that of the this on seeing just we're higher the so position. [ if in said results to [ quarter and markets bring take but to that this we're and there, believers have finance capital you and wouldn't looked of really in position the again, even that. talent a

Operator

The question is next Hawken, Brennan UBS.

Brennan Hawken

sense pick activity of How both we're business should get of would to profitability us But that incremental Curious dollar to mean revenue a think be now to in about would that margin assume Markets begin idea would get an incremental margins pretty see you up? going, good. could about the how week for has we the I been. starting incremental Capital you what Congrats given help they that perspective? of from you.

Paul Shoukry

Yes.

I we is can point out the only thing think peaking really maybe in the mid-XXs. margins to the

[ think And time XX% period. XX%, in that I it's in ] XX%. XX%,

lot today. there's months so And a of remember, margins from deferred those the are run this off the years from well, will upside XX XX quarter $XX by next the we comp over to record of typically. And as to amortization where of course just which impacted million was deferrals are because those X-year

So there's upside. a of lot

there's to very pipelines top Closings bottom Markets now franchise and upside in in good. have a of the line we the Capital a to We to activity strong our are leading Banking, the predict are think levels this difficult go lot Investment and just in segment. market environment. But

Paul Reilly

doing different did, taken we we we've so be would a if lot taking far. actions. And of -- we've And been

have do expenses payment well. think ] prudently great and we've cut we the think recovers, field, we but people [ have market believe very they'll on we I the the that making a we sure as right

Paul Shoukry

If and Sure. returns for recovering environment. the for Fair outlook enough. thinking see we And a capital would improve better businesses, continue increase strength the and buybacks? signs then improving to confidence of that in core about your likelihood

Paul Reilly

Yes.

which capital be dilution predict to certainly, that are to the that. them levels first. ongoing manage can't think and we investment, that hasn't buy invest don't committed to these would [ in don't to our want market levels, opportunities the add We investment. recruiting an large think in timing. love the and is the We're business And philosophy anyone [ ] I certainly, are active we're I ] our not of And certainly, looking changed the but thinks think business, we but in want for we've high, [ opportunistic, back we -- capital in. M&A ] and

we we than the robust and with is the do may have by think Board. capital to we we be to not the We will better that. how always pretty Analyst acknowledge Day, meeting higher And I a hoard probably level. firms. to trying [indiscernible] So may But this we're be profitability, But Investor insight that. will most

I commitment, I averaged our even done or quarter a we you a X have think that for $XXX this ago. have those plus, that on do would think call, buyback thought wouldn't we

trying we level. manage the to So are

Operator

Jefferies. The next question is Dan Fannon,

Daniel Fannon

up from terms in last talk think scale follow fit sense really and question. of a or you perspective? do Can you the about to Just strategic on M&A makes product, what that most geography

Paul Reilly

-- a Yes, I and in in best Private there's the into the answer quickly. long U.K. primary Client North our opportunities The we we hard America mean question geographies our each North Group, opportunities different, Europe that it's that's are go to could really for mean in America, -- look are I a business.

not in than Our capability more in M&A M&A have We on broader, much product. we're a it's on. particular group continent, on against on we today can and Asset is but the Management, really Asia, go not and

more areas than we detailed acquisition, that lot in are areas -- we it's that would can longer -- a through that the there all lot strategically firm, help but in general the a question. think grow So of that us be

focused growing think the are do needs. there think robustly. our areas could different more, in We've we're done but So really M&A., each we West, has The we business the on and in could Group, expand. Private In Client that more geographies. well we Northeast

lot a opportunities for reasonable the areas, a return if of right the answer could we make shareholders. [indiscernible]. and is So find

Daniel Fannon

mentioned then stabilization about kind NII And you and there. you of think going as and cash Understood. trends the some forward,

kind are down? Or that pickup what of the of sensitive the item up of factors you growth and there? the most about about of On side, think we loan this any think as line year, in signs demand terms as rest potential or

Paul Shoukry

Yes.

As months. you only this ] environment has over know, [ and lot the cash. rate to the for loan industry higher rates started the into corporations lot coming with a of flush been rising and growth banking investors sensitive that since to entire And not XX of last a us, due just is really environment but XX

back but hit, know and well Private inflection about that companies demand optimistic forward. that Group as in do eventually both growth exactly investors. going who there's we for think when Client will get don't other activities a are We will investing building engaged loan M&A as up point We

of reasons because loan a are when the positions a one of just growth growth and just be of recovers. lot when position in our that a of, flexibility maintaining to a matter So timing for in we loan strength capital minds, funding matter does that is resume strong that is of and it

don't will we're we're for We back, but optimistic when forward. growth positioned so going about well And the it. come know that

Operator

question a of from Bank is McLaughlin, Up America. Mark next

Mark McLaughlin

and you What seeing leaving out? call to competition to wire take movements. I to houses terms have to Congratulations your wanted your regard between with Is you in anything get advisers independent also of both. adviser end on guys there been broker-dealers.

Paul Shoukry

robust. adviser still is large competition that been movement, I -- the big. that Just the been focus has mean, team, has our especially of [indiscernible]

independent and private broker-dealers equity RIA outside the employee think of to broker-dealers. the investment into I caused movement has into space more

force. in factor new a of kind that's So

our So part investing have started channels, of could ago, a we reason -- the competitive. we be decade so to RIA why

has a I our time So yes, been movement we but there of competition, I where still see lot house remember in can't mean, wire favor. a

I people money. the it's the we of and reason. seeing just count But more that are But at end there not of adviser for competitive. day, you're not activity. think see There a lot it's people reporting out lot a that competing of

think good I the bidder is people [ what think ]. highest

firms we a most of by the so couple we're but industry If it's you years margin competition. a from the look assistance, up reflecting in -- ago, clearly still just at our source, than fair saw our latest lower transition

but we platform what our competitive, people our it's culture. believe on is lands So

work. continuing. hard not It's it's But far, so easy. it's so, And

Mark McLaughlin

size for of kind advisers wanting the advisers we'll of terms color. then an mass scale? ], I to sort sure of the and most I'm appreciate kind [ get the down RIA size of update moving, part, usually realize, especially they move I at this respect are to Day. on RCS, And the seeing the it's with a what seeing reach those in critical advisers? over of Investor are you once guys you move that of But advisers to

Paul Shoukry

that that lot and RIAs movements In have to the market, of become RIA. to big teams there's smaller movers want the a infrastructure certainly of and teams the the

across kind board, really movement the the of teams. is So larger

multi-custodians. firm, the and but affiliate a have is of positives you can One challenges that of with RIAs

So large sometimes. custodial still big of I if look and you move think the at that they RIAs that assets some firms,

have to you don't to be an So you have a affiliate too. firm with asset gainer

a much It's fight And in So kind of none the dynamic for the wallet RIA dynamic way. the on or rep side. side. it's registered in more it's of a that all industry that,

Operator

question Voigt, now Kyle a will We from take KBW.

Kyle Voigt

flexibility point, M&A couple like on to a enough I capital act the And first, current on you follow-ups. on question. have clear have ratios Dan's you capital just be Just the to a guess, today with leverage just of Maybe follow-up do that build market? to wanting flexibility and on is bit in you're you're of seeing? size due Or to the to opportunities opportunities more buybacks maybe imply near-term offset a the near-term that capital M&A guidance the dilution due the seeing acquisition feel continued

Paul Shoukry

just flexibility. we're think question. ballpark in that the question is of I The

something see We've and deals executed if with we remember it right, If are once, bigger, capital. XX% are wait it in doing? wait you be you that saying, you But people where had And up something. just X that but total drifted X or we down. can't I brought year what Paul, could

building been has it So up. back

decides almost sell. sometimes really, we M&A So someone blue come [indiscernible] [ if going deals could of fits the if a there of was or it ] But to just right? and they're forecast kind be out to

It's right. to for average discussion. agree have can we're and opportunities it's doesn't we up -- will if foreshadow, that another out but thing pick be close. -- why to mean we that's sometimes that we its we'll the thing enter to seller It's a time so into feel and And like a one market

on we So closing us, a that that's closed, and -- attractive the we could they challenge. But close leveraged we that was that an execute had and enough there can that only many were hand we're both of we closed were very not we not [indiscernible] that -- but we could cash have [indiscernible] as quickly. to certainty the financially in of we because very, deals the financing [indiscernible]

[ a can little to So to sell could I be it more to to would on this. early We you formula. in clear heart we we give [ love ] have science and we a let magic I there's that, [indiscernible]. as the terms ] But would wish [indiscernible] as of you know

Kyle Voigt

That's And on very a for then helpful. balances. the follow-up loan just

of in some commentary gave and paydown acceleration the the slowing. book think growth on actually ago SBLs quarter were that quarters the book to see decent or you calendar few a you third that due that demand you some in I that some of seeing was

bit surprising I last to the has stalled a So that here out quarter. growth see in guess

any think Just happening rates really on color demand which flatline SBL book, before the wondering if what's for provide well just is the specifically move here? And do could to you additional again? wait market to needs in broadens then you

Paul Shoukry

thus was flattish ] at it as you point the of rest far. who It I for as reported [ industry, least think sequentially us the out was, those

rates stabilization necessarily to need not of decrease. norm. get for to sort sure wait borrowers new just to maybe you a So used even the I'm of as rate It's

really historically our to still used rates. It's just we've that's pace. seeing we're a current lot to rates think level at from are I as low of used transitioned still what are levels companies getting this getting and where unprecedented of an people So to

Kyle Voigt

both Great. of you. congrats again to And

Paul Shoukry

Thanks, Kyle.

Paul Reilly

Thank you.

Operator

comes Cyprys, from Michael Stanley. question next Your Morgan

Michael Cyprys

organic to ask I just growth. on asset wanted

I to recruiting. and the I moves seeing that is adjusted past, you're from you think in the growth that think [ ]

you the Just efficiency same-store advisers curious installed services unlock adviser think to more an base time about set providing from growth with opportunity over their to and from enhance sales. how grow maybe

Paul Reilly

capabilities make much happy. and new their clients first the our cheapest with can they sure for the us. existing and our as focus think acquiring is they're It to internally as that's It means I are our advisers, time clients makes spending to clients. advisers both growth happy, technology

and focus to. want our other So still development advisers come to a platform to

a lot and get been has So for is frankly, of office lot we and we market the out, the and tools technology that and adviser a to help growth of [indiscernible] productivity the advisers somewhere -- market this while. money way start keeps for they do else, a [ but put We're our back leave the does adviser all in that. book and that here modernization, of what stay drive of a is here. This because ] we out, their put could

attention. lot rates growth and retention been And a of too ours. our is recruiting. part a think one rates big our That's of on that's So Number focus of we where pay our by retention. driven I have

question, if happy the advisers sure but of the not I'm to and one focus. make of Number So kind more existing productive. there's that's is

Michael Cyprys

just on then book. the And Great. loan

where the you look you're you Just over you of curious there to think and next today, need composition book as look feel out at the you couple capabilities any would you build the additional you do are the like And years, underpenetrated portfolio may to out? of evolve? sort if of how size

Paul Reilly

the to yes, say would compared is take pieces X with your we [ loans, if loans don't, thing mortgage our it's right we that. thing you in And are you but There's wire for a use -- are like, if ] it. advisers, loans to underpenetrated for them, There's you is clients, houses clients, terms job other our to if something to your else better our of use is do position clients. -- your

figure So clients products. the is competitive to our their appropriate adviser's what's job to job to for provide use. And is out

not we put We do So quotas. not incentives. put do

the best that. the just want to do Some their can we we then try quotas they to people develop to have help try of educate, selling business. use hit, could that to trips And and the none of have have product [ that We to ] client. top for services what's sort products advisers they incentives for managers

pushing but do We're do we are lower, incentives to industry-wide use through we're trying numbers education, our it. not through to So understand why it. -- to we them it get because not

is might our be have and can the So like news only our clients SBLs other mortgages, Group best return allocation from good that about flexible to good standpoint, different the the capital The they from or now risk-adjusted and we'd things Private clients. a not for they're you Client is like have they're for we side, talk grow. what loans, secured loans for that us SBLs,

So way. we're matched that up

more on commercial securities, it's financial other or more whether are to banking investments. are the challenges want a we how our we want long-term invest So do and where that to go of in section decision do much

-- penetration so So they're is good a question.

are the but it's their we right want don't We do force to if thing We it. our to lower, it for try advisers clients.

Operator

is Katz, Bill up TD Cowen. Next

William Katz

the the on Congratulations, interest for you just Question NIM, net everybody. margin.

about a Just what exit just might given could quarter? the just new sort be of rolling little of of And loan see backdrop on, and wondering be for what in if talk if playing the might a of sort rates you bit if reinvestment world that a rolling off -- out starts sort to ease well? for How of now. maybe level the bit the tepid of little type do you as a sorting

Paul Shoukry

to third-party shift the balances occurred that balance of would from in I in cash couple a say really quarters. the sheet last lot on banks of

rates and forward going level rates So heavy one, the happens NIM absolute with a of going we're to also asset balance the and to the to going right be extent now and balances. the is by, on little more short-term bank mix, cash what the driven sheet forward

be to earlier strength Going back when wanting loan to position the of recovers. demand in about comments I a made

all think being basis. at interest if on run in down else the drag than equal, a net would that NIM a a down does NIM the modest a push, rate it hold not we more income positive to So earnings. But the least we balances as it's NII, cash brings meantime, need we but bit and

balances quarters. is of over cash We're number third-party from quarter. where So as were banks like shifting not to off think doing proactively we this a off point, relatively balance sheet I jumping as were it last far the couple the we stable shifting

reflected fairly well quarter. So that's this all think I

William Katz

And of combination helpful. executive just changes. triangulate the to That's list [ Great. senior a ] trying of

Your of spot of might as comments, with a you And side? next or how the being right now the good strategic to Paul, very maybe Where investing are through the leaders? think of should evolving sort you scale. migrate platform comp agree about you sort as generation in the be noncomp vision

Paul Shoukry

we of investing consistently been our mean all I businesses. in have

and And Private by First don't Group the largest far we foremost, anticipate that Client business. our is business changing.

But So businesses. growth the we in Capital go. of great investment and Markets, Bank all They're that's dollars vast heavily invest in also Management our the where majority businesses. the Asset

testament of If environment generate this a even and first you market look model. a being a at has half in the last and and able to diversified different the year, reflection fiscal X years revenues very record -- of earnings business a having

service in more to with enhance So going and invest continue create so levels, for earlier. efficiencies continue clients, on to they time can the very in service levels to high we're invest technology to as was spend more advisers Paul touching

our going a since in working on a essentially saying there's because be that focused dramatic very and way founding is of the everything well been kind really of focused we're today. same businesses maybe on has [indiscernible], not XXXX, So change being long-winded to

And so kind the going sort of that's forward. plan of

William Katz

again. Congrats

Operator

final And come Ryan, today Devin from question our Citizens will JMP.

Devin Ryan

pretty Paul congratulations to to on Reilly Shoukry you about as XXXX. And remember trading call. think, leadership others stock, team obviously, on the I well. And days The was well I want now those Paul well. as in and on the echo when joined the I the at $XX

so successful And a well-earned transition. unquestionably, [indiscernible] and a

So congratulations.

fixed-income just quick, -- wanted here brokerage. just on real I a couple

the the second took the in something is of You had about I'm activity a there again shift maybe and to step then in the there going a a that very just quarter. point ]? the just [ first of else back XXXX, curious, with think or to in changes off relative half coming that that business rate significant and quarter on depositories just back in is how expectations quarter step-up just second

Paul Shoukry

repositioning episodic course a rates call throughout the talked quarter, quite quarter, Yes. came With depositories down on that yields somewhat a the the we couple rates actually I again. of in this nature. quarters about opportunity. came of And the being and think a ago, bit down last repositioning opportunity gave And quite, went up

or that discussed in factors Paul depositories balance on flat. And prepared are the to that remarks deposit balances grow struggling his call us to still deposit is so underlying

to so And slow in this in they're be prudent reinvest environment. to securities going and

that's of the largest our So -- and part business. Income Fixed

So [indiscernible] and again we that technology-enabled fixed-income its continue streams investing balances to growing start has deposit portfolio. Meanwhile, in confident their feel it securities headwinds trading nice there the been with in more expect has capability. until revenue banks some corporate diversified

spread drives past wasn't quarter, some volatility and that And significant. rate so this the as -- business but volatility in

quarters. sort that in So preceding they of had uplift have the didn't they

Operator

to or At Paul would any like I remarks. for to back this hand closing the time, conference Reilly additional

Paul Reilly

good got next on you tailwinds. We appreciate to good quarter we've all I the coming and already quarter. Great. on some And think

how look I look And is am, all followed, we sure, generational to about it. to old how So comments ready. but forward I he [indiscernible] hearing forward these

think I you're of good Raymond So things to going from lot a James. see

So thanks for joining us today.

Operator

does And today's Thank once that all you conclude again, gentlemen, ladies participation. and conference. for your

may You now disconnect.

Raymond James Financial (RJF) 24 Apr 242024 Q2 Earnings call transcript