Raymond James Financial, Inc.

Good morning and welcome to Raymond James Financial's fourth quarter and fiscal year 2020 earnings call. This call is being recorded and will be available for replay on the company's Investor Relations website. Now I will turn it over to Christy Waugh, Vice President of Investor Relations at Raymond James Financial.

Good morning. Thank you for joining us. Appreciate your time and interest in Raymond James Financial. With us on the call today are Paul Riley, Chairman and Chief Executive Officer, and Paul Schupry, Chief Financial Officer. The presentation being reviewed this morning is available on Raymond James' Investor Relations website. Following the prepared remarks, the operator will open the line for questions. Please note 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, anticipated results of litigation and regulatory development, impacts of the COVID-19 pandemic, or general economic conditions. In addition, words such as believes, expects, could, 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 the forward-looking statement. We urge you to consider the risk described in our most recent Form 10-K and subsequent Forms 10-Q, which are available on our investor relations website. During today's call, we will also use certain non-GAAPs management measures to provide information pertinent to our management's view of ongoing business performance. A reconciliation of these non-GAAP measures to the most comparable GAAP measures may be found in the schedules accompanying our press release and presentation. With that, I'm happy to turn the call over to Paul Reilly, Chairman and CEO of Raymond James Financial. Paul?

Thanks, Christy. And good morning, everyone. Thank you for joining us today. Fiscal year 2020 brought some incredible challenges. What a year. In many ways, I'm glad to get it behind us. First, we had the unfolding of the COVID-19 pandemic. Everyone started working from home almost overnight. We experienced social unrest in our country, uncertain economic outlooks, a presidential and congressional election, and a reduction in force, which is extremely rare at Raymond James. On the other hand, while this year was one of my more difficult years in my career, in many ways it was also more rewarding. because of the way our associates and advisors came together to respond to the crisis, really reinforced our unique culture at Raymond James. We kept true to our guiding principles, our core values of conservatism, looking long-term, and focusing on serving our clients. That resulted in great growth even during this period of time, and recruiting was very strong. Met new assets. great retention, all resulted in record client assets under administration. So I want to take this opportunity to say thank you. Thank you to all of our associates and advisors for their tremendous contributions and their unwavering commitment to serving their clients. Now let me turn to the financials, starting on slide three. In the fiscal fourth quarter, the firm reported net revenues of $2.08 billion. net income of $209 million, and earnings per diluted share of $1.50. Excluding expenses of $46 million associated with the reduction of workforce, any $7 million loss associated with the pending disposition of certain non-core operations in France, adjusted quarterly net income was $249 million, and adjusted earnings per diluted share was $1.78. Return on equity was 11.9%, and adjusted return on tangible common equity was 15.3%. Quarterly net revenues grew 3% over the prior year's period and 13% over the preceding quarter, primarily driven by higher asset management and related administrative fees, strong fixed income brokerage revenues, and record investment banking revenues. which were partially offset by the negative impact of lower short-term interest rates. Quarterly expenses were higher due mainly to compensation expense associated with higher compensation compensable revenues and reduction in workforce expense incurred during the quarter. While the loan loss provision was higher on a year-over-year basis, it declined significantly from the preceding two quarters as the economy and economic conditions tended to stabilize, and credit quality of the loan portfolio remained resilient. But given the high degree of market uncertainty, we still wanted to be prudent in adding to our reserves. Looking at the fiscal year 2020 results on slide 4, we generated record net revenues of nearly $8 billion, but lower short-term interest rates and higher loan launch reserves caused the net income to decline to $818 million. On an adjusted basis, net income was $585 million, down 20% compared to the adjusted net income in fiscal 2019. Record revenues grew over the prior year as the continued growth of client assets, along with record fixed income brokerage and investment banking revenues, offset the negative impact of lower interest rates. We generated record revenues in the private client group, capital markets, and asset management segments during the fiscal year, reinforcing the value of having diverse and complementary businesses. Moving on to slide five, we ended the quarter and fiscal year with perioded records for total client assets under administration of $930 billion, private client group assets and fee-based accounts of $475 billion, and financial assets under management of $153 billion. The strong client asset growth was predominantly driven by equity market appreciation and our continued success in recruiting and retaining financial advisors across all of our affiliation options. During the fiscal year, we had a net increase of 228 financial advisors to end with a record number of 8,239, a solid result, particularly given delays in recruiting and onboarding of advisors during the onset of the COVID-19 crisis. During the fiscal year, financial advisors with over $275 million of trailing 12 production and approximately $49 billion of assets at their prior firms affiliated with Raymond James domestically. That includes recruiting results during the fourth quarter of $82 million of trailing 12 production and $13.8 billion of assets at their prior firms, which was by far our best quarter for recruiting during the fiscal year. As for our net organic growth results in the private client group during the year, we generated domestic PCG net new assets of $49 billion, representing 6.5% of domestic PCG client assets at the beginning of the year. Based on what we've seen, we believe this to be amongst the very best in our industry, even including the e-brokers who benefited from the surge of day and online trading during the year. Looking forward, we are continuing to experience strong recruiting activity across all of our affiliation options as we enter fiscal year 2021. At the quarter end, net bank loans were $21.2 billion, as growth of loans to the PCG clients was offset by a decline in corporate loans. Moving to segment results on slide six. The private client group generated quarterly net revenues of $1.39 billion and pre-tax income of $125 million. Quarterly net revenues grew by 12% over the preceding quarter, predominantly driven by higher asset management and related administrative fees, reflecting higher assets and fee-based accounts, which will continue to be a tailwind for the first quarter of fiscal 2021. This strong revenue growth helped PCG's pre-tax income grow 37% sequentially, although it was down 13% on a year-over-year basis, primarily due to the negative impact of lower short-term interest rates. The capital market segment generated record quarterly net revenues of $410 million and record pre-tax income of $106 million, a truly amazing quarter for capital markets. driven by broad rate-based strength across fixed income, global equities, and investment banking, as well as the Raymond James tax credit funds. During the quarter, fixed income brokerage revenues continued to benefit from a high level of client activity, particularly with small and mid-sized depository clients. Record investment banking revenues were driven by the strength in equity underwriting, M&A, and debt underwriting. The asset management segment generated quarterly net revenues of $184 million and record pre-tax income of $78 million. Record quarterly pre-tax income was driven by the growth of financial assets under management as equity market appreciation and net inflows into the PCTT-based accounts more than offset the net outflows for Carillon Tower Associates. Lastly, Raymond James Bank generated quarterly net revenues of $161 million and pre-tax income of $33 million. Compared to a year ago quarter, net revenues declined primarily due to lower net interest income as lower short-term interest rates caused net interest margin to decline 121 basis points compared to a year ago period. The quarterly loan loss provision of $45 million increased the allowance for loan losses as a percentage of loans to 1.65%. On slide 7, you can see the fiscal year and results for all of our segments. The firm's record revenues were driven by record revenues in the private client group, capital markets, and asset management segments. a reflection of our attractive organic growth and consistent market share gains across businesses. Additionally, the capital market segment management segment generated record annual net pre-tax income, as both segments generated significant operating leverage during the year. Meanwhile, the pre-tax income declined in both private client group and Raymond James Bank segments due to lower short-term interest rates and higher loan loss provisions at the bank. And now for a more detailed review of the financial results, I'll turn the call over to Paul Shukri. Paul?