Raymond James Financial, Inc. - Investment Banking - Category Directory

(727) 567-1000

880 Carillon Parkway

St. Petersburg, Florida 33716

www.rjf.com

Sales

$1.5 billion

Business Description

Raymond James is a broker-dealer engaged in most aspects of securities distribution, trading, investment banking and asset management.  RJA also offers financial planning services for individuals and provides clearing services for RJFS, other affiliated entities and several unaffiliated broker-dealers.  RJA is a member of the New York Stock Exchange (“NYSE”), American Stock Exchange, and most regional exchanges.  It is also a member of the National Association of Securities Dealers (“NASD”) and Securities Investors Protection Corporation (“SIPC”).  Raymond James's website is and the relevant contact info. for the company is

Raymond James Financial, Inc. is a Florida-based holding company whose subsidiaries are engaged in various financial services businesses.  Its principal subsidiaries in addition to Raymond James & Associates, Inc. include Raymond James Financial Services, Inc., Raymond James Ltd, Eagle Asset Management, Inc.  Heritage Asset Management, Inc. (“Heritage”) and Raymond James Bank, FSB (“RJBank”). All of these subsidiaries are wholly-owned by Raymond James Financial Inc.

BUSINESS SEGMENTS

The Company's business has five segments: Private Client Group; Capital Markets; Asset Management; RJBank; and several operations combined in the "Other" segment.  

APITAL MARKETS

Capital Markets activities primarily consist of equity and fixed income products and services.  

Institutional Sales

The Company's institutional clients are serviced by the RJA and RJ Ltd. Institutional Equity Departments, the RJA Fixed Income Department, the European offices of RJFS, which is comprised of independent contractor Financial Advisors, and Raymond James Financial International Ltd, an institutional UK broker-dealer located in London.  In providing securities brokerage services to its institutional clients, the Company charges its commissions on equity transactions based on trade size and the amount of business conducted annually with each institution. 

The 95 domestic and overseas professionals in RJA's Institutional Equity Sales and Sales Trading Departmentsmaintain relationships with over 1,600 institutional clients, principally in North America and Europe. In addition to the Company's headquarters in St. Petersburg, FL, RJA has institutional equity sales offices in New York, Boston, Chicago, Los Angeles, London and Geneva. RJ Ltd. has 25 institutional equity sales and trading professionals servicing predominantly Canadian institutional investors from offices in Montreal, Toronto and Vancouver.  RJFS has institutional equity sales offices in Brussels, Dusseldorf, Luxembourg and Paris.

RJA distributes to its institutional clients both taxable and tax-exempt fixed income products, primarily municipal, corporate, government agency and mortgage-backed bonds.  RJA carries inventory positions of taxable and tax-exempt securities in both the primary and secondary markets to facilitate its institutional sales activities.  In addition to St. Petersburg, the Fixed Income Department maintains institutional sales and trading offices in New York, Chicago and thirteen other cities throughout the United States of America.  To assist institutional clients, the Fixed Income Research Group provides portfolio strategy analysis and municipal bond research. 

Equity Research Department

The 44 domestic senior analysts in RJA's research department supports the Company's institutional and retail sales efforts and publish research on approximately 500 predominantly U.S. companies.  This research primarily focuses on companies in specific industries including Technology, Telecommunications, Consumer, Financial Services, Healthcare, Real Estate, Energy and Industrial Growth.  Proprietary industry studies and company-specific research reports are made available to both institutional and individual clients.  RJ Ltd. has an additional 17 analysts who publish research on approximately 170 Canadian companies in the Biotechnology, Energy, Consumer, Industrial Growth, Financial Services, Paper and Forest Products, Real Estate and Technology sectors.

Equity Trading

Trading equity securities in the over-the-counter ("OTC") market involves the purchase of securities from, and the sale of securities to, clients of the Company or other dealers who may be purchasing or selling securities for their own account or acting as agent for their clients.  Profits and losses are derived from the spreads between bid and asked prices, as well as market trends for the individual securities during the holding period.  RJA makes markets in approximately 260 common stocks in the OTC market.  Similar to the equity research department, this operation serves to support the Company's institutional and Private Client Group sales efforts.

Equity Investment Banking

The 57 professionals of RJA's Investment Banking Group, located primarily in St. Petersburg with additional offices in Atlanta, Nashville, Chicago, Princeton, Dallas, and Houston, are involved in a variety of activities including public and private equity financing for corporate clients, andmerger and acquisition advisory services.  RJ Ltd.'s Investment Banking Group consists of 17 professionals located in Calgary, Toronto and Vancouver providing equity financing and financial advisory services to corporate clients. The Company's investment banking activities focus on the same industries as those followed by the Equity Research department.

Syndicate Department

The Syndicate Department coordinates the marketing, distribution, pricing and stabilization of RJA'slead and co-managed equity underwritings. In addition to RJA's managed and co-managed offerings, this department coordinates the firm's syndicate and selling group activities in transactions managed by other investment banking firms. 

Fixed Income Trading

RJA trades both taxable and tax-exempt fixed income products.  The 32 taxable and 24 tax exempt RJA fixed income traders purchase and sell corporate, municipal, government, government agency, and mortgage-backed bonds, asset backed securities, preferred stock and certificates of deposit from/to clients of the Company or other dealers who may be purchasing or selling securities for their own account or acting as an agent for their clients. RJA enters into future commitments such as forward contracts and “to be announced” securities (e.g. securities having a stated coupon and original term to maturity, although the issuer and/or the specific pool of mortgage loans is not known at the time of the transaction).  In addition, a subsidiary of the Company participates in the interest rate swaps market as a principal, both for economically hedging RJA fixed income inventory and in transactions with customers.

Fixed Income Investment Banking

Fixed income investment banking includes mortgage-backed securities, public finance and structured finance activities.  The 26 professionals in the RJA Public Finance division operate out of 11 offices (3 located in Florida, one each in Birmingham, New York, Pittsburgh, Chicago, Boston, Atlanta, Dallas and San Antonio).  The Company acts as a Financial Advisor or underwriter to various municipal agencies or political subdivisions, housing developers and non-profit health care institutions.  The Structured Finance Group, employing 3 bankers, works with a variety of issuers in the sale of asset backed securities.

In addition, RJA acts as an underwriter or selling group member for corporate bonds, mortgage-backed securities, agency bonds, preferred stock and unit investment trusts. When underwriting new issue securities, RJA agrees to purchase the issue through a negotiated sale or submits a competitive bid.

Partnership Syndication Activities

Raymond James Tax Credit Funds, Inc. (“RJTCF”) creates multi-family real estate partnerships that qualify for tax credits under Section 42 of the tax code.  RJTCF has been an active participant in the tax credit program since its inception in 1986, and currently sponsors institutional tax credit funds that invest in a portfolio of tax credit multi-family apartments.  The only expected return on investment from these funds for institutional investors are tax credits and tax losses that can be used to reduce federal tax liability.  The primary business functions of RJTCF consist of the following: identify real estate investment opportunities that meet a general set of institutional underwriting guidelines; raise equity from institutional investors for these investments; provide asset management (property oversight of the portfolio for a 15-year compliance period); and report financial results to the investors.  RJTCF currently invests approximately $150 million annually for major corporations in approximately 75 real estate transactions located throughout the United States of America.  To date, RJTCF has raised over $750 million in equity and sponsored 26 tax credit funds, with investments in over 850 tax credit projects in 43 states.

PRIVATE CLIENT GROUP

The Company provides securities transaction and financial planning services to over one million client accounts through the RJA, RJFS, RJ Ltd., and Raymond James Investment Services (“RJIS") Private Client Group branch systems.  The Company's Financial Advisors offer a broad range of financial alternatives and services, including both third party and proprietary products, while applying disciplines rooted in financial planning practices.  In most cases, the Company charges commissions for sales of investment products to its Private Client Group clients based on an established commission schedule.  Varying discounts, however, may be given, generally based upon the client's level of business, the trade size, service level provided, and other relevant factors.  An increasing number of clients are electing asset-based fee alternatives instead of the traditional commission structure; in fiscal year 2003 asset-based fees from such accounts represented 22% of the Private Client Group's commission and fees.

The majority of U.S. Financial Advisors are also licensed to sell insurance and annuity products through the Company's general insurance agency, Planning Corporation of America (“PCA”), a wholly-owned subsidiary of RJA.  Through the Financial Advisors of the Company's broker-dealer subsidiaries, PCA provides product and marketing support for a broad range of insurance products, principally fixed and variable annuities, life insurance, disability insurance and long-term care coverage.

The Company's Financial Advisors offer a number of professionally managed, load mutual funds as well as a selection of no-load funds.  RJA maintains dealer-sales agreements with most major distributors of mutual fund shares sold through broker-dealers, including funds managed by Heritage.  Commissions on such sales generally range from 1% to 5% of the dollar value of the transaction.  Alternative sales compensation structures typically include front-end charges, “back-end” or contingent deferred sales charges, and an annual charge in the form of a fund expense. 

Raymond James & Associates

RJA employs 838 Financial Advisors, with 72 retail branches and 17 satellites concentrated in the South, Midwest and Mid-Atlantic regions of the United States of America.  RJA's Financial Advisors work in a traditional branch setting supported by local management and administrative staffs.  The number of Financial Advisors per office ranges from one to 29, with the average branch supporting approximately 12 Financial Advisors.

Raymond James Financial Services

RJFS supports its 3,761 independent contractor Registered Representatives in providing products and services to their Private Client Group clients in 1,565 offices and 600 satellite offices throughout all 50 states.  The number of Financial Advisors in RJFS offices ranges from one to 21.  The independent contractor Financial Advisors offer individual securities and investment advice primarily to individual investors. Independent contractors are responsible for all of their direct costs and, accordingly, are paid a larger percentage of commissions and fees.  As independent contractors they are permitted to conduct other businesses such as offering fixed insurance products, independent registered investment advisory services, accounting and tax services, among others.  These activities are required to be disclosed to and approved by RJFS. 

RJFS operates through several domestic sales divisions.  In addition to the two primary retail sales divisions, the Financial Institutions Division offers securities to customers of financial institutions such as banks, thrifts and credit unions and has 676 Financial Advisors in 492 locations. The Investment Advisors Division supports 27 independent Registered Investment Advisory firms witha comprehensive clearing and custodial platform.  These Investment Advisors do not hold a securities license, charge for their services strictly on a fee basis and manage assets on a discretionary basis under their SEC registration.

Raymond James Ltd.

RJ Ltd. is a self-clearing broker-dealer with its own operations and information processing personnel.  RJ Ltd. recently launched an independent contractor operation in Canada.  RJ Ltd. has 32 private client branches with 181 employee Financial Advisors and 31 independent Financial Advisors, all located in Canada.

Raymond James Investment Services Limited

The Company is a 75% shareholder of Raymond James Investment Services Limited.  Thise ntity introduced an independent contractor network in the United Kingdom, and currently has 25 branch locations and 53 Financial Advisors.

OPERATIONS

Raymond James & Associates's operations personnel are responsible for the execution of orders, processing of securities transactions, custody of client securities, receipt, identification and delivery of funds and securities, compliance with certain regulatory and legal requirements, internal financial accounting and controls and general office administration for most of the Company's securities brokerage operations.  At September 26, 2003, RJA employed 938 persons in its operations areas.  Operations personnel provide services primarily to the Private Client Group, but also supports the Company's other segments. 

The Company's businesses are supported by, and are dependent upon, an extensive system of electronic data processing.  These computer systems are largely developed and maintained by the 655 employees in the Company’s information technology department, most of whom are located in St. Petersburg. 

The Company has developed a business continuity plan that is designed to permit continued operation of business critical functions in the event of disruptions to the St. Petersburg facility; all mission critical business departments have developed operational plans for such disruptions, and the Company has a staff who devote their full time to monitoring and facilitating those plans.  In that connection, the Company maintains redundant computer capacity at its Detroit location, and conducts some of its daily data processing activity from that site.  Systems have been designed so that the Company can transfer all mission critical processing activities to Detroit, and personnel have been identified who are assigned responsibility for this role, including some personnel who will be required to relocate to Detroit to carry out these activities if necessary. 

The Company conducts regular tests of its business continuity plan, and conducted a full data processing test in July 2003 and a subsequent data processing test in November 2003.  Based on the results of these on-going tests, the Company reviews and refines its systems and planning.

Clients' transactions in securities are effected on either a cash or margin basis.  In margin transactions, the client pays a portion of the purchase price, and RJA makes a loan to the client for the balance, collateralized by the securities purchased or by other securities owned by the client.  Interest is charged to clients on the amount borrowed to finance margin transactions. The financing of margin purchases is an important source of revenue to RJA, since the interest rate paid by the client on funds loaned by RJA exceeds RJA's cost of short-term funds. The interest rate charged to a client on a margin loan depends on the average loan balance in the client's account and ranges from prime plus 1% to prime minus .75%.

Typically, broker-dealers utilize bank borrowings and equity capital as the primary sources of funds to finance clients' margin account borrowings.  RJA's primary source of funds to finance clients' margin account balances has been cash balances in clients' accounts (Client Interest Program), which are funds awaiting investment.  In addition, pursuant to written agreements with clients, broker-dealers are permitted by the Securities and Exchange Commission (“SEC”) and NYSE rules to lend client securities in margin accounts to other financial institutions.  SEC regulations, however, restrict the use of clients' funds derived from pledging and lending clients' securities, as well as funds awaiting investment, to the financing of margin account balances, and to the extent not so used, such funds are required to be deposited in a special segregated account for the benefit of clients.  The regulations also require broker-dealers, within designated periods of time, to obtain possession or control of, and to segregate, clients' fully paid and excess margin securities.

C

ASSET MANAGEMENT

The Company's asset management segment includes proprietary asset management operations, internally sponsored mutual funds, non-affiliated private account portfolio management alternatives, and other asset-based wrap fee programs. No single client accounts for a material percentage of this segment's total business.

Eagle Asset Management, Inc.

Eagle is a registered investment advisor with approximately $7.2 billion under management at September 26, 2003 including approximately $878 million for the Heritage Family of Mutual Funds. Eagle's clients include individuals, pension and profit sharing plans, retirement funds, foundations, endowments, variable annuities and mutual fund portfolios. Accounts are managed on a discretionary basis in accordance with the investment objective(s) specified by the client. Eagle manages approximately $4.1 billion for institutional clients, including funds managed for Heritage, and approximately $3.1 billion for private client accounts.

Eagle's investment management fee generally ranges from .30% to 1.0% of asset balances per year depending upon the size and investment objective of the account.

At September 26, 2003 Eagle offered 20 investment objectives managed by 8 portfolio managers.

Heritage Asset Management, Inc.

Heritage serves as investment advisor to the Heritage Family of Mutual Funds.  Heritage also serves as transfer agent for all of the funds and as fund accountant for all Heritage funds except the International Equity Fund.  Heritage internally manages the largest of its portfolios, the Heritage Cash Trust money market fund, which has $5.3 billion.  Portfolio management for the Aggressive Growth Fund, Growth Equity Fund, Technology Fund and the Mid Cap Stock Fund are subcontracted to Eagle Asset Management, Inc. Portfolio management for the Small Cap Stock Fund is subcontracted to both Eagle and the Company's Awad Asset Management subsidiary.  Unaffiliated advisors are employed for the Municipal Money Market Fund, Capital Appreciation Trust, High Yield Bond Fund, Growth and Income Fund, Value Equity Fund, and the International Equity Fund.

Heritage also serves as an advisor to RJBank to make recommendations and monitor the Bank's investment portfolio of mortgage-backed securities.

Total assets under management at September 26, 2003 were $8.1 billion, of which $6.5 billion were Money Market funds.

Awad Asset Management, Inc.

Awad is a registered investment advisor, which primarily manages small cap equity portfolios. Management fees generally range from .375% to .75% of asset balances annually. At September 26, 2003 Awad had approximately $900 million under management including approximately $91 million for the Heritage Small Cap Stock Fund.

RJA - Asset Management Services

RJA's Asset Management Services (“AMS”) Department manages programs which offer primarily non-affiliated investment advisory services to clients, as well as certain non-advisory programs which offer fee-based alternatives to traditional commission charges for transactions.  The primary advisory service offered is the Investment Advisory Services (“IAS”) program.  IAS maintains an approved list of investment managers (only one of which is affiliated with the Company), establishes custodial facilities, monitors performance of client accounts, provides clients with accounting and other administrative services, and assists investment managers with certain trading management activities.  IAS earns fees generally ranging from 0.35% to 0.85% of asset balances per annum, a portion of which is paid to the investment managers who direct the investment of the clients' accounts. At September 26, 2003, this program had approximately $3.5 billion in assets under management through agreements with 38 independent investment advisors and Awad Asset Management.  Additional advisory programs offered through AMS are Freedom (managed portfolios of mutual funds) and the Managed Investment Program, where the Financial Advisor serves as the portfolio manager.

Passport and similar commission alternative programs, such as Ambassador and the Preferred Portfolio Account, offer a fee alternative that allows clients to pay a quarterly fee (and in some cases a low transaction charge) in lieu of commissions.  Fees are based on the individual account size and are also dependent on the type of securities in the accounts.  For these accounts, clients receive quarterly performance reporting and other services.  As of September 26, 2003, these programs, along with Freedom and the Managed Investment Program, had approximately $8.7 billion in assets serviced by Financial Advisors.

In addition to the foregoing programs, AMS also offers fee based programs to clients who have contracted for portfolio management services from outside money managers that are not a part of the IAS program. 

RJFS - Asset Management Services

RJFS offers a program similar to Passport called IMPAC.  As of September 26, 2003 IMPAC had $3.5 billion in assets serviced by RJFS Financial Advisors.

Raymond James Trust Company
Raymond James Trust Company West

Raymond James Trust Company and Raymond James Trust Company West provide personal trust services primarily to existing clients of the broker-dealer subsidiaries.  Portfolio management of trust assets is often subcontracted to the asset management operations of the Company.  These two subsidiaries had a combined total of approximately $806 million in client assets at September 26, 2003, including $17 million in the donor-advised Raymond James Charitable Endowment Fund.

Proprietary Private Equity Funds

The Company has two wholly-owned subsidiaries, which act as the general partners for a merchant banking and a venture capital limited partnership (the “Funds”).  Additionally, the Company owns limited partnership interests in the Funds through both direct investments and investments of its subsidiaries.  The Company, in its capacity as the general partner of the Funds, earns management fees for services provided and participates in the profits and losses of the Funds based on its general and limited partner interests in the Funds.

RAYMOND JAMES BANK

Raymond James Bank, FSB ("RJBank") provides residential, consumer and commercial loans, as well as FDIC-insured deposit accounts, to clients of the Company's broker-dealer subsidiaries and to the general public.

Access to RJBank's products and services is available nationwide through the offices of its affiliated broker-dealer firms as well as through convenient telephonic and electronic banking services.  As of September 26, 2003, RJBank had total assets in excess of $915 million, with 84% of the bank's $780 million in deposits representing cash balances swept from wrap fee ERISA and IRA accounts managed by Eagle and RJA - Asset Management Services.  Other than the foregoing, no single client accounts for a material percentage of the segment's total business.

SIC Code

6211 - Security Brokers, Dealers & Flotation Companies

Ticker

RJF

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