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        Message from the Chairman and CEO

        From our beginning, Raymond James has been a different kind of financial services firm – focused on clients’ unique needs instead of offering only conventional solutions, and remaining focused on the long term, whether in times of uncertainty or prosperity.

        Paul Reilly CEOThat’s why, despite commencing fiscal 2019 with elevated market volatility and a 14% drop in the S&P 500 index in December, we were able to complete the year with record annual revenues and earnings, a testament to our conservative and diversified business model. We also achieved records for several of our key business metrics, including client assets, number of financial advisors and net loans. Nevertheless, we expect headwinds in fiscal 2020 due to the three recent interest rate cuts by the Federal Reserve and ongoing political and economic uncertainties.

        Record net revenues of $7.74 billion increased 6%, record pre-tax income of $1.38 billion increased 5%, and record net income of $1.03 billion increased 21% over fiscal 2018. Adjusted net income(1) of $1.07 billion, which excludes a $15 million loss related to the sale of our European equity research business and the $19 million goodwill impairment associated with our Canadian Capital Markets business, increased 11% compared to the adjusted net income(1) generated in fiscal 2018. Record financial results were driven by growth of client assets, record investment banking revenues and the benefit from higher short-term interest rates. Client assets under administration increased 6% during the year to $838.3 billion, another record, lifted by equity market appreciation and the net addition of financial advisors in the Private Client Group segment. For the fiscal year, we generated a return on equity of 16.2% and an adjusted return on equity(1) of 16.7%, both fantastic results given the challenging start to the year and our superlative capital position. We ended the year with shareholders’ equity of $6.6 billion and book value per share of $47.76, which increased 3% and 9%, respectively, over September 2018.

        We also increased our quarterly dividend to $0.34 per quarter from $0.30 per quarter, an increase of 13%. In addition, in November 2019 the quarterly dividend was further increased to $0.37 per quarter, a 9% increase over the preceding quarterly dividend. Under the share repurchase authorization, we were opportunistic in repurchasing our common shares, buying back 9.83 million shares for $752 million, an average price of approximately $76.50 per share. In total, the firm repurchased approximately 6.5% of shares outstanding at the beginning of the fiscal year and returned total capital of nearly $945 million to shareholders through the combination of dividends and share repurchases. On August 15, 2019, the Board of Directors authorized repurchases of up to $750 million, of which the full amount remained available as of September 30, 2019. Even with these actions, our capital ratios continued to grow, with a total capital ratio of 25.8% and Tier 1 leverage ratio of 15.7% at the end of the year.

        Drilling down to our segment results, the Private Client Group (PCG) generated record net revenues of $5.36 billion, an increase of 5% over fiscal 2018, and record pre-tax income of $579 million, a 1% increase over 2018. Profitability growth would have been higher but we made investments in technology and risk management infrastructure to strengthen our platform for clients, financial advisors and future growth. Fiscal 2019 concluded with records for PCG assets under administration of $798.4 billion, up 6%, and PCG assets in fee-based accounts of $409.1 billion, up 12% over the end of fiscal 2018.

        Our focus on serving advisors and their clients with industry-leading tools and resources continues to deliver strong retention and recruitment of advisors across our affiliation options. We ended the year with more than 8,000 advisors affiliated with the firm – a new record and up a net 198 advisors. On a gross recruited basis, our domestic PCG business had its second best year, just behind 2018, with nearly $300 million of trailing 12-month production and $43.5 billion of assets under administration at the prior firms of those financial advisors joining Raymond James. This is an excellent result, especially given the slow start to the year and the increasingly competitive environment. In addition to attracting experienced advisors, we continued investing in the future by expanding our financial advisor training program, with over 290 trainees starting the program during fiscal 2019, an increase of 12% from the prior year.

        In addition, we further strengthened our PCG management team with the hiring of Greg Bruce and promotion of Kim Jenson. Greg joined Raymond James as senior vice president and head of PCG’s Investment Advisors Division and has an impressive track record in the RIA business. Under Greg’s leadership, we are committed to supporting independent RIA firms and providing them with the best tools and resources available. Kim, who served as chief operating officer (COO) of Raymond James & Associates Private Client Group, was promoted to COO of the domestic Private Client Group division. Consequently, she is responsible for U.S. PCG business development, education, strategy and support functions across all affiliation options.

        In the Capital Markets segment, record net revenues of $1.08 billion and pre-tax income of $110 million increased 12% and 21%, respectively, over fiscal 2018, driven by strong M&A results and improved fixed income brokerage revenues. M&A results reflect the significant investments we have made over the past several years to deepen and expand our platform, including the niche acquisition of Silver Lane Advisors, which has extensive expertise and relationships in the asset and wealth management sectors. Despite the flat yield curve, increased rate volatility during the second half of the year helped boost fixed income results. However, equity brokerage revenues continue to be negatively impacted by both structural and cyclical factors.

        The Asset Management segment drove record net revenues of $691 million, which were up 6%, and record pre-tax income of $253 million, which increased 8% over fiscal 2018, based upon financial assets under management, which ended the fiscal year up 2% at $143.1 billion.

        The increase in financial assets under management reflected market appreciation and increased utilization of fee-based accounts in PCG, which more than offset net outflows for Carillon Tower Advisers. Additionally, we purchased the remaining 55% of ClariVest Asset Management, which has over $7 billion of assets under management across a broad range of equities strategies, up from $3 billion when we first invested in the company in 2012.

        Raymond James Bank produced record net revenues of $846 million and record pre-tax income of $515 million, increasing 16% and 5% over fiscal 2018, respectively. Record net loans of $20.9 billion grew 7% from fiscal 2018, driven by the bank’s continued focus on providing solutions to clients in our PCG and Capital Markets segments. The bank’s credit metrics remained strong throughout the year, with nonperforming assets of 0.18% of total assets and criticized loans of 1.36% of total loans as of September 30. We remain extremely diligent as we add any new loans to our balance sheet, especially given the competitive lending environment. Net interest margin expanded 10 basis points to 3.32% in fiscal 2019, helped by increases in short-term interest rates. However, the two 25 basis point rate cuts late in the fiscal year and the additional rate cut in October are expected to negatively impact this margin in fiscal 2020.

        Complementing strong performance within our businesses, we also achieved several other notable accomplishments during the fiscal year:

        • Giving back to our communities is an essential aspect of our mission, and we upheld that again in fiscal 2019. Between associate contributions and a company match, Raymond James raised nearly $6.25 million for communities across the country through its annual United Way campaign. Additionally, our associates raised more than $350,000 for the American Heart Association through the 2018 Heart Walk, and during the firm’s annual Raymond James Cares Month, more than 3,300 advisors and associates volunteered over 10,400 hours to benefit 333 charitable organizations across the United States, Canada and the United Kingdom. Raymond James also donated $650,000 to the American Red Cross to support relief efforts related to several natural disasters including Hurricane Michael, Hurricane Dorian, tornadoes, flooding, and wildfires in California.
        • Consistent with our long-term focus on attaining a more inclusive and diverse workforce, I signed the CEO Action for Diversity and Inclusion pledge in support of advancing diversity and inclusion in the workplace.
        • The firm appointed Raj Seshadri, president, U.S. Issuers, at Mastercard, to our Board of Directors and its Audit and Risk Committee. She possesses a rare combination of skills and experience including roles at global brands in marketing, sales, business strategy, asset management, wealth management and business-to-business partnerships. I am confident her talents and proven creativity will result in important contributions to the firm’s growth strategy in this rapidly evolving marketplace.
        • Chairman Emeritus Tom James was honored as an Industry Champion at the SIFMA Foundation Tribute Dinner, held annually to celebrate SIFMA’s success in advancing youth financial literacy and to honor those who help make that work possible.

        After an impressive tenure, Jeff Julien will retire as chief financial officer (CFO), effective December 31. Paul Shoukry, current treasurer and senior vice president of finance and investor relations, will become CFO. Jeff will continue to serve as executive vice president of finance and as a senior adviser for a period of time to ensure the successful transition of responsibilities. Jeff has had an extraordinary career, serving as Raymond James’ CFO for over 32 years – the longest serving CFO of any S&P 500 or Fortune 500 company. His contributions, including his management oversight of Raymond James Bank and Raymond James Trust since inception, are many, and I want to thank him for his unwavering dedication to the firm. Also in the fiscal year, Chris Aisenbrey was promoted to chief human resources officer. In his nearly five years at Raymond James, Chris has made a meaningful impact – most notably in support of the firm’s talent development, and diversity and inclusion programs. I’m confident he’ll continue to support the strategic direction of the firm in this expanded role. Rooted in our conservative approach and long-term focus, succession planning is critical to ensuring a deep, experienced management team that remains true to our culture and values, and these two examples highlight such focus.

        Reflecting back on the year, I’m proud of our many accomplishments. We are beginning fiscal 2020 with records for our key revenue drivers including client assets under administration, the number of PCG financial advisors and net loans at Raymond James Bank. Additionally, we are particularly well-positioned with robust levels of capital and strong liquidity. Nevertheless, we are keenly aware of the challenges potential market volatility, overall uncertainty and lower interest rates will present in the coming year. Moreover, we are acutely cognizant that economies and markets don’t always rise. Hence, we are focused on continuing to manage costs across the business, but we also know it’s critical to continue investing for the future in areas such as advisor training and recruiting, risk management, compliance and technology.

        Regardless of the market environment, our long-term success reflects our mission of always putting the financial well-being of clients first, which ultimately serves the best interests of our shareholders, associates and communities.

        Thank you for your continued trust and confidence in Raymond James.


        Paul C. Reilly
        Chairman and Chief Executive Officer Raymond James Financial
        November 26, 2019

        (1) “Adjusted net income” and “adjusted return on equity” are each non-GAAP financial measures. Please see the “Reconciliation of GAAP measures to non-GAAP measures” on page 37 of Form 10-K for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures.