8-K: Raymond James Posts Record Client Assets, Mixed Q1 Earnings

Raymond James Financial reported record client assets and net revenues for its fiscal first quarter of 2026, though net income and diluted earnings per share saw declines.

Summary

• Record client assets under administration reached $1.77 trillion, a 14% increase over December 2024.
• Record Private Client Group assets in fee-based accounts hit $1.04 trillion, up 19% from the prior year.
• Quarterly net revenues were a record $3.74 billion, a 6% increase over the prior year's fiscal first quarter and just above the preceding quarter.
• Net income available to common shareholders was $562 million, or $2.79 per diluted share, representing a 6% and 2% decrease year-over-year, respectively.
• Adjusted net income available to common shareholders was $577 million, or $2.86 per diluted share.
• Domestic Private Client Group generated $30.8 billion in net new assets for the fiscal first quarter, an annualized growth rate of 8.0%.
• Securities-based loans grew 28% year-over-year to $21.7 billion.
• The Board of Directors increased the quarterly cash dividend by 8% to $0.54 per share and authorized up to $2 billion in common stock repurchases, with $400 million executed during the quarter.
• The Capital Markets segment experienced a significant decline in net revenues by 21% and pre-tax income by 88% year-over-year, primarily due to lower investment banking revenues.
• The Bank segment reported record net bank loans of $53.4 billion and a net interest margin (NIM) of 2.81%, up 21 basis points over the prior year's fiscal first quarter.

Sentiment

Score: 7

Explanation: While Raymond James achieved record highs in client assets, revenues, and strong organic growth in its Private Client Group, the decline in net income and EPS, coupled with a significant downturn in the Capital Markets segment, presents a mixed financial picture. The increase in nonperforming assets also warrants attention, despite overall strong capital ratios.

Positives

• Record client assets under administration of $1.77 trillion, up 14% over December 2024.
• Record Private Client Group assets in fee-based accounts of $1.04 trillion, up 19% over December 2024.
• Record quarterly net revenues of $3.74 billion, up 6% over the prior year's fiscal first quarter.
• Domestic Private Client Group net new assets of $30.8 billion for the fiscal first quarter, representing an annualized growth rate of 8.0%.
• Securities-based loans increased 28% over the prior year's fiscal first quarter to $21.7 billion.
• Record financial assets under management of $280.8 billion, up 15% over December 2024.
• Record net bank loans of $53.4 billion, up 13% over December 2024.
• Bank segment net interest margin (NIM) of 2.81%, up 21 basis points over the prior year's fiscal first quarter.
• Quarterly cash dividend increased by 8% to $0.54 per share.
• Repurchased $400 million of common stock during the fiscal first quarter.
• Strong capital ratios with a total capital ratio of 24.3% and a tier 1 leverage ratio of 12.7%, both well above regulatory requirements.
• Acquisition of Clark Capital Management Group, Inc., an asset management firm with over $46 billion in combined assets, is expected to enhance the multi-boutique offering within Raymond James Investment Management.
• Credit quality of the loan portfolio remains strong.

Negatives

• Net income available to common shareholders decreased 6% year-over-year to $562 million.
• Diluted earnings per common share decreased 2% year-over-year to $2.79.
• Adjusted net income available to common shareholders decreased 6% year-over-year to $577 million.
• Adjusted diluted earnings per common share decreased 2% year-over-year to $2.86.
• Capital Markets net revenues decreased significantly by 21% year-over-year to $380 million.
• Investment banking revenues sharply declined by 37% year-over-year to $200 million.
• Capital Markets pre-tax income plummeted by 88% year-over-year to $9 million.
• Private Client Group pre-tax income declined 5% year-over-year, primarily due to lower interest-related revenues and costs associated with continued investments in growth.
• Total clients domestic cash sweep and Enhanced Savings Program balances decreased 3% year-over-year to $58.1 billion.
• The effective tax rate for the quarter was 22.7%, an increase from 19.9% in the prior year, largely due to an anticipated higher effective tax rate.
• Total nonperforming assets increased 29% year-over-year to $208 million.

Risks

• Forward-looking statements are not guarantees and involve risks, uncertainties, and assumptions.
• Actual results may differ materially from those expressed in forward-looking statements.
• Changes in interest rates, inflation, and international trade policies could impact financial results.
• Demand for and pricing of products, including cash sweep and deposit offerings, may fluctuate.
• The level of success in integrating acquired businesses, such as Clark Capital, is uncertain.
• Potential impacts from litigation and regulatory developments.
• General economic conditions could adversely affect business performance.

Future Outlook

Management plans to continue deploying capital with a focus on long-term growth, including robust organic growth and ongoing investments in technology and platform. The recently announced acquisition of Clark Capital Management Group is part of this strategy. Despite lower investment banking revenues in the current quarter, the pipeline for this segment remains strong.

Management Comments

• "Our focus on being the absolute best firm for financial professionals and their clients has contributed to record quarterly revenues of $3.74 billion, record client assets of $1.77 trillion and annualized net new asset growth of 8%." CEO Paul Shoukry.
• "We continue to deploy capital with a focus on the long term, as evidenced by our robust organic growth, continued investments in our technology and platform, and our recently announced acquisition of Clark Capital, an independent asset manager with a cultural and strategic fit and consistently strong growth." CEO Paul Shoukry.
• "We also increased our quarterly dividend by 8% and repurchased $400 million of shares during the quarter." CEO Paul Shoukry.
• "While investment banking revenues were lower in the fiscal first quarter largely due to the timing of closings, the pipeline remains strong."

Industry Context

The financial services industry is currently navigating a dynamic environment characterized by market appreciation, fluctuating interest rates, and strategic M&A activities. Raymond James's strong growth in client assets and fee-based accounts suggests effective client acquisition and retention strategies, potentially outperforming some peers in wealth management. The decline in investment banking revenues, while attributed to timing, could reflect broader industry trends of reduced M&A and underwriting activity. The expansion of the bank segment's net interest margin indicates adept management of funding costs amidst changing interest rate landscapes. The acquisition of Clark Capital aligns with a broader industry trend of consolidation and expansion in asset management to diversify offerings and capture market share.

Comparison to Industry Standards

• The annualized adjusted return on tangible common equity of 21.4% is a robust indicator of profitability relative to tangible capital, generally considered strong within the financial services sector.
• The 8.0% annualized growth in Domestic Private Client Group net new assets represents a strong organic growth rate, likely competitive with or exceeding many large wealth management firms.
• The 37% year-over-year decline in investment banking revenues should be benchmarked against industry averages for the same period, as a slowdown in M&A and underwriting activity has been a common theme across the industry in certain periods.

Corporate Governance

Stakeholder Impact

• Shareholders: Positive impact from increased dividends and share repurchase authorization, indicating a commitment to returning capital. Mixed impact from financial performance with record revenues but declining net income and EPS.
• Clients: Benefit from continued investments in technology and platform, and expanded asset management offerings through strategic acquisitions like Clark Capital.
• Employees/Financial Professionals: Continued investments in the firm and organic growth suggest stability and potential opportunities. Recruiting and retention-related compensation remains a significant expense, indicating ongoing investment in talent.

Next Steps

• A conference call to discuss the results will take place on January 28, 2026, at 5:00 p.m. ET.
• Continue deploying capital with a focus on long-term growth.
• Continue investments in technology and platform.
• Integrate the recently acquired Clark Capital Management Group, Inc. into the multi-boutique offering within Raymond James Investment Management.

Key Dates

Recommendation

Raymond James demonstrates robust organic growth in its Private Client Group and Asset Management segments, achieving record client assets and fee-based accounts. The increase in dividend and significant share repurchases signal confidence and a commitment to shareholder returns. However, the notable decline in net income and diluted EPS, coupled with a sharp downturn in the Capital Markets segment's revenues and pre-tax income, presents a mixed picture. While the investment banking pipeline is reported as strong, current performance is a concern. The increase in nonperforming assets, though small, warrants monitoring. The company's strong capital ratios provide a solid foundation, but the overall performance suggests a 'hold' recommendation as investors await clearer signs of sustained earnings growth and a rebound in the Capital Markets segment.

Keywords

Financial Services, Wealth Management, Investment Banking, Asset Management, Brokerage, SEC Filing, Earnings Report, Financial Results, Client Assets, Net Revenues, EPS, Dividends, Share Repurchases, Bank Loans, Net Interest Margin