Raymond James Financial Reports Fiscal First Quarter 2020 Results

Raymond James Financial, Inc. (NYSE: RJF) has reported net revenues of $2.01 billion and record net income of $268 million for the fiscal first quarter ended December 31, 2019. Net revenue growth of 4% over the prior year’s fiscal first quarter was largely attributable to higher Private Client Group assets in fee-based accounts. These assets grew 31% over December 2018 and 9% over September 2019. Net revenues declined 1% compared to the record set in the preceding quarter as sequential growth of asset management and related administrative fees and brokerage revenues was more than offset by the sequential decline of tax credit fund revenues, investment banking revenues, net interest income and Raymond James Bank Deposit Program (RJBDP) fees from third-party banks, which were negatively impacted by lower short-term interest rates.

“The consistent industry-leading net addition of experienced financial advisors contributed to the records we achieved for client assets during the quarter and is a testament to our client-first culture and best-in-class resources and technology offerings,” said Chairman and CEO Paul Reilly. “While lower interest rates are expected to be a headwind for the balance of the fiscal year, we remain focused on the long term by investing in growth across our businesses.”

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Black Monday

On 19 October 1987, the stock markets experienced a dramatic plunge that prompted many firms to shut down their trading desks and turn off their phones to minimize internal losses. Raymond James refused to do the same. Our desks stayed open to help meet clients’ needs, resulting in our first and only unprofitable quarter since the firm went public in 1983.

Who was Raymond James?

The Raymond in our name is actually from Edward Raymond, owner of a 15-employee mutual fund sales group, Raymond and Associates, along Florida’s west coast. He sold his company to Bob James on 15 July 1964, on condition that the surviving firm be called Raymond, James & Associates.

Three days after the sale, Ed Raymond was involved in a near-fatal automobile accident and never joined the firm.

Nonetheless, even after Raymond had passed away, Bob James insisted that his name remain on the door – ahead of James’ own. That was a promise he made to Ed Raymond three days before the accident, and Bob James was a man who kept his promises.

Bear Market of 1974

The severe bear market of 1974 threatened the existence of Raymond James, which was bleeding capital by the day. Tom James, his father and other leaders took extreme measures to keep the firm afloat, slashing costs, foregoing paychecks and even attempting to sell the firm for just enough capital to protect client assets and retain as many associates as possible. The story could have ended very differently if not for a sharp upturn and continued rebound in the stock markets late in the year.
This “fortunate near-death experience” (as Tom calls it) permanently marked his psyche, and has influenced our firm’s character and culture since, solidifying the conservative nature that emphasizes a determined focus on the long term – both for clients and the firm.

Taking Raymond James Public

When consideration was being given to taking Raymond James public, Tom James penned a letter to shareholders (largely employees at the time).
He wrote:

” … the public offering should be considered as a statement of our independence. While this is a psychological rather than an economic rationale, it is nonetheless very important. We have asserted for some time that we are not interested in becoming a small part of a very large corporation. That assertion results mainly from the inclinations of management rather than the economic benefits associated with either alternative. The public stock offering affords us the opportunity to enjoy a little bit of the best of both worlds. While shareholders will be given liquidity at fair market value, we will still have the ability to control our own destiny.”

After 40+ years of Tom’s leadership, upon becoming CEO, Paul Reilly was often questioned about whether the company might ultimately surrender its cherished independence and be acquired by some larger entity. His response: “Not while I’m around.” It’s a theme that continues today.