Raymond James Financial, Inc.

Good morning and welcome to Raymond James Financial's fourth quarter fiscal 2021 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, everyone, and thank you for joining us. We 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 Shukri, 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. Calling your attention to slide two. 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 timing and benefits of our acquisitions, including our proposed acquisitions of Charles Stanley PLC and Tri-State Capital Holdings, and our level of success in integrating acquired businesses, anticipated results of litigation and regulatory developments, impacts of the COVID-19 pandemic, or general economic conditions. In addition, words such as may, will, should, could, scheduled, plans, intends, anticipates, expects, believes, estimates, potential, or continue, or negatives of such terms or other comparable terminology, 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 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 Investor Relations website. During today's call, we will also use certain non-GAAP financial 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 gap measures may be found in the schedules accompanying our press release and presentation. With that, I'm happy to turn it over to Chairman and CEO, Paul Riley. Paul?

Good morning, and thank you for joining us today. I want to first, by apologizing, I'll sound like a broken record using the word record over and over again. It really was an outstanding year and quarter. I wish management could take credit. but it was really the work of our advisors and associates that delivered these results. Their dedication and perseverance during the fiscal year was amazing. We've proven once again that focusing on our time-tested client-first strategy and providing outstanding service to our advisors and their clients will guide us through uncertain economic and global conditions, in this case, in record-setting fashion. The record results we generated would not have been possible without everyone's contribution, so thanks again. Starting on slide four with our quarterly results, the fiscal fourth quarter capped off what was a record fiscal year on a number of fronts. The firm reported record quarterly net revenues of $2.7 billion and record quarterly net income of $429 million, or earnings per diluted share of $2.02, which reflects the impact of the three-for-two stock split in September. Excluding the $10 million of acquisition-related expenses, quarterly adjusted net income was $437 million, and adjusted earnings per diluted share equal $2.06. The increase in quarterly net revenues was largely driven by record investment banking revenues and record assets under management and related administrative fees, primarily due to higher private client group assets and fee-based accounts. Annualized return on equity for the quarter was 21.3%. An adjusted annualized return on tangible common equity was 24.1%, a very impressive result, especially in the near zero rate environment and given our strong capital position. Moving to slide five, we ended the quarter with record total client assets under administration of $1.18 trillion, up 27% on a year-over-year basis and 1% sequentially. We also achieved record PCG assets and fee-based accounts of $627 billion and record financial assets under management of $192 billion. We continue to focus on supporting advisors and their clients through leading technology solutions and a client-focused culture. As a result, we had a fantastic year in terms of advisor retention, as well as record results in recruiting new advisors to the Raymond James platform through our multiple affiliation options. We enter the quarter with records of 8,482 financial advisors, net increases of 243 over the prior period, and 69 over the preceding quarter. Representing a new record during the fiscal year, we recruited financial advisors with approximately $330 million of trailing 12-month production and approximately $54 billion of client assets to our domestic independent contractor and employee channels. Also in the private client group, advisors generated domestic net new assets of approximately $83 billion in fiscal 2021, representing 10% of domestic PCG assets at the beginning of the fiscal year, a very strong result, reflecting our excellent retention and record recruiting. Additionally, this year, new account openings and advisor productivity were very strong, contributing to the excellent net new asset results. Also worth noting on the slide is the impressive loan growth at Raymond James Bank during the quarter, up 5% sequentially to a record $25 billion. This growth was driven by securities-based loans to the private client group clients as well as a strong corporate loan growth. Moving to segment results on slide six, the private client group generated record quarterly net revenues of $1.8 billion and pre-tax income of $222 million, a 12.3% pre-tax margin reflecting significant operating leverage over the past year. The capital market segment generated record quarterly net revenues of $554 million and pre-tax income of $183 million, representing an extremely impressive 33% pre-tax margin to net revenues. These record results were driven by record investment banking revenues, strong tax credit fund revenues, and solid fixed income brokerage revenues. The asset management segment generated record net revenues of $238 million and record pre-tax income of $114 million, up 29% and 46% over the year-ago period, respectively. These results were primarily due to growth in financial assets under management, driven by net inflows to fee-based accounts in the private client group, partially offset by market depreciation and net outflows for the Carillon Tower advisors during the quarter. Raymond James Bank generated quarterly net revenues of $176 million and pre-tax income of $81 million. Quarterly net revenues increased 9%. over the year-ago quarter as higher levels of earning assets offset year-over-year compression in the bank's net interest margin. Sequentially, net revenues grew 4% due to higher asset balances during the quarter. The free tax income growth year-over-year was due to the aforementioned revenue growth and lower bank loan provision for credit losses in the current quarter. Compared to the preceding quarter, the bank's pre-tax income declined largely due to a reserve release in the preceding quarter compared to a loan loss provision primarily associated with the strong loan growth during the fiscal fourth quarter. Looking at the fiscal year 2021 results on slide 7, we generated record net revenues of $9.76 billion, up 22% over fiscal year 2020. and record net income of $1.4 billion, up 72% over fiscal 2020. Excluding losses on the extinguishment of debt and acquisition-related expenses during the year, adjusted net income was $1.49 billion, up 74% over adjusted net income in fiscal 2020. Moving to the fiscal year results on slide eight, the private client group, capital markets, and asset management segments generated record net revenues and record pre-tax income, and all of our segments realized substantial operating leverage during the fiscal year. Once again, these results reinforce the value of our diverse and complementary businesses. And now, for a more detailed review of the fourth quarter financial results, I'm going to turn the call over to Paul Shukri.