Raymond James Financial, Inc.

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 Kristi 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 two. 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, 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, Christy. Good evening, and thank you for joining us. Some people like to tailgate and eat hamburgers and hot dogs prior to a World Series game. 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. 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 remain 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 Raymond, 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 six. 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 seven. The private client group generated pre-tax income of $458 million on record quarterly net revenues of $3.06 billion. Revenues grew 15% 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. The pre-tax income grew 10% over the year-ago quarter as the revenue growth was partially offset by higher financial advisor commissions tied to strong compensable revenue growth and increased expense supporting the record recruiting results Paul mentioned earlier. The capital market segment generated quarterly net revenues of $549 million and pre-tax income of $106 million. Segment net revenues increased year-over-year and sequentially, driven by higher M&A and advisory revenues. This growth was partially offset by lower fixed-income brokerage revenues, as rising interest rates and increased market volatility created a challenging environment, especially for municipal securities. Fourth quarter results also benefited from seasonally high revenues in our affordable housing investments business. The asset management segment generated record pre-tax income of $170 million on record net revenues of $409 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 as well as the addition of Clark Capital. The bank segment generated net revenues of $483 million and pre-tax income of $180 million. Segment net revenues increased 5% 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 continued strength in credit quality measures as the loan portfolio continues to shift towards lower credit risk securities-based loans and residential mortgages. Turning to consolidated revenues on slide eight. Asset management and related administrative fees were $2.31 billion, up 23% over the prior year and 11% over the preceding quarter. Record quarter-end PCG fee-based assets were $1.16 trillion, up 15% year-over-year and 1% over the preceding quarter. Looking ahead, we expect fiscal first quarter 2027 asset management and related administrative fees to increase approximately 1% from the fourth quarter level, driven by higher PCG assets and fee-based accounts at quarter end. Brokerage revenues were $614 million, down 2% from the preceding quarter as higher PCG retail brokerage revenues were more than offset by a decline in fixed income trading revenues described earlier. Moving to slide nine. Clients' domestic cash sweep and enhanced savings program balances ended the quarter at $58 billion, up 3% over the year-ago quarter and down 1% from the preceding quarter. Our client deposit balance mix continues to highlight our diverse funding sources through both the sweep program and the enhanced savings program through Raymond James Bank, as well as Tri-State Capital's deposit gathering capabilities. Additionally, a portion of the suite balances held off balance sheet with third-party banks, which totaled over $16 billion at quarter end, is immediately available to fund future loan growth as client demand warrants. Turning to slide 10. Combined net interest income and RJBDP fees from third-party banks were $674 million, up $16 million, or 2% from the prior quarter. Fee revenues earned on RJBDP balances with third-party banks increased $12 million as a result of both an increase in average balances swept to third-party banks in the quarter, as well as a six-basis point increase in the yield on such balances to 2.81%. Firm net interest income increased year over year and sequentially as higher interest income driven primarily by higher bank segment interest earning assets more than offset higher interest expense. Looking ahead, based on interest rates that include the full impact of the September rate increase and assuming unchanged quarter-end balances, net of the fiscal first quarter fee billing collection of $2.1 billion, we would expect aggregate NII and RJBDP fees from third-party banks in the first quarter to be up approximately 1% over the fourth quarter level. Keep in mind, actual results could be influenced by several variables, including any interest rate actions during the upcoming quarter, as well as changes in loan and deposit balances. Turning to consolidated expenses on slide 11. Compensation expense was $2.77 billion, and the total compensation ratio for the quarter was 65%. The adjusted compensation ratio, which excludes acquisition-related compensation expenses, was 64.6%, a really strong result given the business mix and robust compensable revenue growth in PCG. As we said at our analyst day in June, we expect to achieve an adjusted compensation ratio of approximately 65% based on our revenue mix. And as evident this quarter, improvement in that ratio can result from strong performance of the capital markets segment. Non-compensation expenses were $633 million, up 5% from the year-ago quarter. Sequentially, non-compensation expenses increase 6%, driven primarily by a lower bank loan benefit for credit losses compared to the preceding quarter, as well as higher investment sub-advisory fees that align with higher fee-based assets. Certain non-compensation expenses are tied directly to our growth, and many of those expenses, particularly those associated with successful recruiting, benefit future periods. For the fiscal year, we delivered adjusted non-compensation expenses, excluding the bank loan benefit for credit losses, of approximately $2.3 billion in line with our target. Importantly, We achieved this while absorbing incremental operating expenses from businesses acquired during the year, which were not contemplated in our target. Excluding those expenses, we would have come in below our target. Looking ahead to fiscal 2027, we expect non-compensation expenses, excluding the bank loan loss provision for credit losses, non-GAAP adjustments presented in our non-GAAP financial measures, and any unexpected legal and regulatory items to be approximately $2.5 billion, representing about an 8% increase year over year. This target reflects the full-year impact of the businesses acquired in fiscal 2026, contributing approximately 100 basis points of the expected expense increase. Slide 12 presents the pre-tax margin trends for the past five quarters. This quarter, we achieved adjusted pre-tax margin of 21.3%. A strong result and above our guidance of approximately 20%, helped by higher capital markets results and also reflecting an increase in operating leverage in our PCG segment. Our long-term trend in profitability continues to highlight the stability and strength of our diversified businesses to consistently generate strong margins throughout various market cycles. On slide 13, at quarter end, our total assets were $94.4 billion, which approximated the preceding quarter end level. Record bank loans of $57.5 billion grew 11% over the year-ago quarter and 2% sequentially, with that loan growth largely in support of our clients. Securities-based loans and residential mortgages represent 65% of our total loans held for investment, reflecting 45% and 20% of the total, respectively. Our JF corporate cash at the parent ended the quarter at $2.9 billion, providing excess liquidity of $1.7 billion above our $1.2 billion targets. With a Tier 1 leverage ratio of 12.1% and a total capital ratio of 24.2%, we remain well above regulatory requirements with approximately $1.9 billion of excess capital capacity to deploy before reaching our conservative Tier 1 leverage ratio target of 10%. The effective tax rate for the year was 23%. Looking ahead, we estimate our effective tax rate for the fiscal 2027 to be approximately 25%, which excludes any impact the corporate-owned life insurance, or COLI, portfolio valuation could have on the rate during the year. Slide 14 provides a summary of our capital actions. Through the combination of common dividends paid and share repurchases, we returned $154 million of capital to shareholders during the quarter. In the quarter, we repurchased $50 million of common shares at an average price of $166 per share. Over the past 12 months, we repurchased 8 million common shares for approximately $1.25 billion. Over that period, we returned $1.7 billion to common shareholders, representing 71% of earnings. Thank you for joining us today. We remain committed to operating our businesses over the long run at capital levels consistent with our established targets. I'll now turn the call back to Paul for his final remarks. Paul?