0000720005rjf:AccountAndServiceFeeRevenueMemberus-gaap:OperatingSegmentsMemberrjf:RjBankMember2019-04-012019-06-30

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
			THE SECURITIES EXCHANGE ACT OF 1934



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
			THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from						to

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	RJF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(232.405~~(§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerx

Non-accelerated filero ~~(Do not check if a smaller reporting company)~~

Smaller reporting companyo

Emerging growth companyo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

~~145,614,962~~137,159,781 shares of common stock as of ~~February 7, 2018~~August 6, 2020



INDEX
				PAGE
PART I			FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)	3
			Condensed Consolidated Statements of Financial Condition as of ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017~~2019 (Unaudited)	3
			Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended ~~December 31, 2017~~June 30, 2020 and ~~December 31, 2016~~June 30, 2019 (Unaudited)	4
			Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended ~~December 31, 2017~~June 30, 2020 and ~~December 31, 2016~~June 30, 2019 (Unaudited)	5
			Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2020 and ~~December~~June 30, ~~2016~~2019 (Unaudited)	6
			Notes to Condensed Consolidated Financial Statements (Unaudited)
			Note 1 - Organization and basis of presentation	8
			Note 2 - Update of significant accounting policies	89
			Note 3 - ~~Acquisitions~~Fair value	11
			Note 4 - ~~Fair value~~Available-for-sale securities	1317
			Note 5 - ~~Available-for-sale securities~~Derivative assets and derivative liabilities	2219
			Note 6 ~~- Derivative financial instruments~~	24
	~~Note 7~~ - Collateralized agreements and financings	2721
			Note 87 - Bank loans, net	2922
			Note 98 - Variable interest entities	3529
			Note 109 - Goodwill and identifiable intangible assets, net	3730
			Note 10 - Leases	30
			Note 11 - Bank deposits	3932
			Note 12 - Other borrowings	4033
			Note 13 - ~~Income taxes~~Senior notes payable	4034
			Note 14 - Income taxes	34
			Note 15 - Commitments, contingencies and guarantees	4235
			Note 1516 - Accumulated other comprehensive income/(loss)	4538
			Note 1617 - Revenues	39
			Note 18 - Interest income and interest expense	4843
			Note 1719 - Share-based ~~and other~~ compensation	4843
			Note 1820 - Regulatory capital requirements	5044
			Note 1921 - Earnings per share	5346
			Note 2022 - Segment information	5346
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	5649
Item 3.			Quantitative and Qualitative Disclosures about Market Risk	8887
Item 4.			Controls and Procedures	8987
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings	8988
Item 1A.			Risk Factors	8988
Item 2.			~~Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases~~Unregistered Sales of Equity Securities and Use of Proceeds	9091
Item 3.			Defaults Upon Senior Securities	9091
Item 4.			Mine Safety ~~Disclosure~~Disclosures	9091
Item 5.			Other Information	9091
Item 6.			Exhibits	9192
			Signatures	9192

PART I. FINANCIAL INFORMATION

~~Item~~ITEM 1. FINANCIAL STATEMENTS

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


$ in millions, except per share amounts	June 30, 2020		September 30, 2019
Assets:
Cash and cash equivalents	$	5,632	$	3,957
Cash and cash equivalents segregated pursuant to regulations	3,205		2,014
Securities purchased under agreements to resell	193		343
Securities borrowed	300		248
Financial instruments, at fair value:
Trading instruments ($270 and $535 pledged as collateral)	361		708
Available-for-sale securities ($24 and $24 pledged as collateral)	5,630		3,093
Derivative assets	452		338
Other investments ($40 and $32 pledged as collateral)	327		365
Brokerage client receivables, net	2,346		2,671
Receivables from brokers, dealers and clearing organizations	472		281
Other receivables	616		549
Bank loans, net	21,223		20,891
Loans to financial advisors, net	992		983
Property and equipment, net	537		527
Deferred income taxes, net	222		231
Goodwill and identifiable intangible assets, net	602		611
Other assets	1,572		1,020
Total assets	$	44,682	$	38,830

Liabilities and shareholders’ equity:
Bank deposits	$	25,372	$	22,281
Securities sold under agreements to repurchase	228		150
Securities loaned	88		323
Financial instruments sold but not yet purchased, at fair value:
Trading instruments	154		296
Derivative liabilities	394		313
Brokerage client payables	5,955		4,361
Payables to brokers, dealers and clearing organizations	190		229
Accrued compensation, commissions and benefits	1,109		1,272
Other payables	1,243		518
Other borrowings	890		894
Senior notes payable	2,044		1,550
Total liabilities	37,667		32,187
Commitments and contingencies (see Note 15)
Shareholders’ equity
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding	—		—
Common stock; $.01 par value; 350,000,000 shares authorized; 158,909,194 and 158,435,030 shares issued as of June 30, 2020 and September 30, 2019, respectively, and 137,025,724 and 137,841,952 shares outstanding as of June 30, 2020 and September 30, 2019, respectively	2		2
Additional paid-in capital	1,984		1,938
Retained earnings	6,326		5,874
Treasury stock, at cost; 21,883,470 and 20,593,078 common shares as of June 30, 2020 and September 30, 2019, respectively	(1,348)		(1,210)
Accumulated other comprehensive income/(loss)	1		(23)
Total equity attributable to Raymond James Financial, Inc.	6,965		6,581
Noncontrolling interests	50		62
Total shareholders’ equity	7,015		6,643
Total liabilities and shareholders’ equity	$	44,682	$	38,830

$ in thousands, except per share amounts December 31, 2017 September 30, 2017
Assets:

Cash and cash equivalents $ 3,897,529
$ 3,669,672
Assets segregated pursuant to regulations and other segregated assets 3,569,414
3,476,085
Securities purchased under agreements to resell 307,742
404,462
Securities borrowed 184,971
138,319
Financial instruments, at fair value:
Trading instruments (includes $302,713 and $357,099 pledged as collateral)
597,579
564,263
Available-for-sale securities 2,393,321
2,188,282
Derivative assets 292,140
318,775
Private equity investments 189,033
198,779
Other investments (includes $38,591 and $6,640 pledged as collateral)
265,170
220,980
Brokerage client receivables, net 2,666,268
2,766,771
Receivables from brokers, dealers and clearing organizations 219,036
268,021
Other receivables 642,542
652,769
Bank loans, net 17,697,298
17,006,795
Loans to financial advisors, net 890,072
873,272
Investments in real estate partnerships held by consolidated variable interest entities 110,662
111,743
Property and equipment, net 454,115
437,374
Deferred income taxes, net 199,507
313,486
Goodwill and identifiable intangible assets, net 651,339
493,183
Other assets 857,161
780,425
Total assets $ 36,084,899
$ 34,883,456

Liabilities and equity:
Bank deposits $ 18,725,545
$ 17,732,362
Securities sold under agreements to repurchase 229,036
220,942
Securities loaned 290,307
383,953
Financial instruments sold but not yet purchased, at fair value:
Trading instruments 213,024
221,449
Derivative liabilities 356,505
356,964
Brokerage client payables 5,820,347
5,411,829
Payables to brokers, dealers and clearing organizations 189,144
172,714
Accrued compensation, commissions and benefits 793,687
1,059,996
Other payables 582,548
567,045
Other borrowings 1,532,826
1,514,012
Senior notes payable 1,548,975
1,548,839
Total liabilities 30,281,944

29,190,105
Commitments and contingencies (see Note 14)

Equity
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding —
—
Common stock; $.01 par value; 350,000,000 shares authorized; 155,497,352 and 154,228,235 shares issued as of December 31, 2017 and September 30,2017, respectively, and 145,153,686 and 144,096,521 shares outstanding as of December 31, 2017 and September 30, 2017, respectively
1,555
1,542
Additional paid-in capital 1,705,308
1,645,397
Retained earnings 4,420,368
4,340,054
Treasury stock, at cost; 10,311,191 and 10,084,038 common shares as of December 31, 2017 and September 30, 2017, respectively
(410,029 ) (390,081 )
Accumulated other comprehensive loss (20,454 ) (15,199 )
Total equity attributable to Raymond James Financial, Inc. 5,696,748
5,581,713
Noncontrolling interests 106,207
111,638
Total equity 5,802,955
5,693,351
Total liabilities and equity $ 36,084,899
$ 34,883,456

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Revenues:
Securities commissions and fees $ 1,103,566
$ 984,385
Investment banking 64,902
61,425
Investment advisory and related administrative fees 142,023
108,243
Interest 231,729
182,782
Account and service fees 184,301
148,791
Net trading profit 19,870
20,555
Other 19,201
22,587
Total revenues 1,765,592
1,528,768
Interest expense (39,431 ) (35,966 )
Net revenues 1,726,161
1,492,802
Non-interest expenses:

Compensation, commissions and benefits 1,152,767
1,006,467
Communications and information processing 83,731
72,161
Occupancy and equipment costs 49,814
46,052
Business development 33,793
35,362
Investment sub-advisory fees 22,321
19,295
Bank loan loss provision/(benefit) 1,016
(1,040 )
Acquisition-related expenses 3,927
12,666
Other 67,108
94,324
Total non-interest expenses 1,414,477
1,285,287
Income including noncontrolling interests and before provision for income taxes 311,684
207,515
Provision for income taxes 192,401
59,812
Net income including noncontrolling interests 119,283
147,703
Net income attributable to noncontrolling interests 441
1,136
Net income attributable to Raymond James Financial, Inc. $ 118,842
$ 146,567

Earnings per common share – basic $ 0.82
$ 1.03
Earnings per common share – diluted $ 0.80
$ 1.00
Weighted-average common shares outstanding – basic 144,469
142,110
Weighted-average common and common equivalent shares outstanding – diluted 148,261
145,675

Net income attributable to Raymond James Financial, Inc. $ 118,842
$ 146,567
Other comprehensive income/(loss), net of tax: ⁽¹⁾

Unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses (11,953 ) (4,146 )
Unrealized gain/(loss) on currency translations, net of the impact of net investment hedges (187 ) 1,001
Unrealized gain on cash flow hedges 6,885
25,738
Total comprehensive income $ 113,587
$ 169,160


	Three months ended June 30,						Nine months ended June 30,
in millions, except per share amounts	2020		2019		2020		2019
Revenues:
Asset management and related administrative fees	$	867	$	879	$	2,828	$	2,527
Brokerage revenues:
Securities commissions	343		358		1,116		1,095
Principal transactions	143		93		345		262
Total brokerage revenues	486		451		1,461		1,357
Account and service fees	134		183		484		559
Investment banking	139		139		428		439
Interest income	217		321		799		961
Other	33		27		47		95
Total revenues	1,876		2,000		6,047		5,938
Interest expense	(42)		(73)		(136)		(221)
Net revenues	1,834		1,927		5,911		5,717
Non-interest expenses:
Compensation, commissions and benefits	1,277		1,277		4,050		3,767
Non-compensation expenses:
Communications and information processing	100		92		293		278
Occupancy and equipment	55		55		168		159
Business development	21		57		106		141
Investment sub-advisory fees	23		24		75		70
Professional fees	24		22		68		61
Bank loan loss provision/(benefit)	81		(5)		188		16
Acquisition and disposition-related expenses	—		—		—		15
Other	55		63		167		189
Total non-compensation expenses	359		308		1,065		929
Total non-interest expenses	1,636		1,585		5,115		4,696
Pre-tax income	198		342		796		1,021
Provision for income taxes	26		83		187		252
Net income	$	172	$	259	609		769

Earnings per common share – basic	$	1.25	$	1.84	$	4.41	$	5.42
Earnings per common share – diluted	$	1.23	$	1.80	$	4.33	$	5.30
Weighted-average common shares outstanding – basic	137.1		140.4		137.9		141.8
Weighted-average common and common equivalent shares outstanding – diluted	139.4		143.6		140.5		144.8

Net income	$	172	$	259	$	609	$	769
Other comprehensive income/(loss), net of tax:
Available-for-sale securities	5		24		67		65
Currency translations, net of the impact of net investment hedges	11		6		(6)		1
Cash flow hedges	(4)		(19)		(37)		(49)
Total other comprehensive income, net of tax	12		11		24		17
Total comprehensive income	$	184	$	270	$	633	$	786

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


	Three months ended June 30,						Nine months ended June 30,
$ in millions, except per share amounts	2020		2019		2020		2019
Common stock, par value $.01 per share:
Balance beginning of period	$	2	$	2	$	2	$	2
Share issuances	—		—		—		—
Balance end of period	2		2		2		2

Additional paid-in capital:
Balance beginning of period	1,953		1,917		1,938		1,808
Employee stock purchases	12		7		29		27
Exercise of stock options and vesting of restricted stock units, net of forfeitures	(3)		2		(74)		27
Restricted stock, stock option and restricted stock unit expense	22		21		91		85
Acquisition of noncontrolling interest and other	—		(32)		—		(32)
Balance end of period	1,984		1,915		1,984		1,915

Retained earnings:
Balance beginning of period	6,205		5,448		5,874		5,032
Net income attributable to Raymond James Financial, Inc.	172		259		609		769
Cash dividends declared (see Note 21)	(51)		(47)		(157)		(146)
Other	—		(1)		—		4
Balance end of period	6,326		5,659		6,326		5,659

Treasury stock:
Balance beginning of period	(1,351)		(976)		(1,210)		(447)
Purchases/surrenders	—		(86)		(222)		(598)
Exercise of stock options and vesting of restricted stock units, net of forfeitures	3		2		84		(15)
Balance end of period	(1,348)		(1,060)		(1,348)		(1,060)

Accumulated other comprehensive income/(loss):
Balance beginning of period	(11)		(25)		(23)		(27)
Other comprehensive income, net of tax	12		11		24		17
Other	—		—		—		(4)
Balance end of period	1		(14)		1		(14)
Total equity attributable to Raymond James Financial, Inc.	$	6,965	$	6,502	$	6,965	$	6,502

Noncontrolling interests:
Balance beginning of period	$	36	$	69	$	62	$	84
Net loss attributable to noncontrolling interests	(2)		(2)		(26)		(16)
Capital contributions	—		—		—		2
Distributions and other	16		(5)		14		(8)


Balance end of period	50		62		50		62
Total shareholders’ equity	$	7,015	$	6,564	$	7,015	$	6,564

Accumulated other comprehensive loss: ⁽¹⁾

~~(1) All components of other comprehensive loss, net of tax, are attributable to Raymond James Financial, Inc.~~

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine months ended June 30,
$ in millions	2020		2019
Cash flows from operating activities:
Net income	$	609	$	769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	88		81
Deferred income taxes	(13)		(22)
Premium and discount amortization on available-for-sale securities and loss on other investments	53		14
Provisions for loan losses, legal and regulatory proceedings and bad debts	209		45
Share-based compensation expense	97		88
Unrealized gain on company-owned life insurance policies, net of expenses	(10)		(9)
Other	4		31
Net change in:
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase	226		(61)
Securities loaned, net of securities borrowed	(287)		(44)
Loans provided to financial advisors, net of repayments	(23)		(28)
Brokerage client receivables and other accounts receivable, net	126		679
Trading instruments, net	216		(52)
Derivative instruments, net	(68)		(137)
Other assets	(64)		(83)
Brokerage client payables and other accounts payable	1,621		(1,300)
Accrued compensation, commissions and benefits	(161)		(99)
Proceeds from sales of securitizations and loans held for sale, net of purchases and originations of loans held for sale	32		27
Net cash provided by/(used in) operating activities	2,655		(101)

Cash flows from investing activities:
Additions to property and equipment	(97)		(102)
Increase in bank loans, net	(978)		(1,226)
Proceeds from sales of loans held for investment	272		210
Purchases of available-for-sale securities	(3,147)		(689)
Available-for-sale securities maturations, repayments and redemptions	744		456
Proceeds from sales of available-for-sale securities	222		—
Business acquisition, net of cash acquired	(5)		(5)
Other investing activities, net	(31)		(30)
Net cash used in investing activities	(3,020)		(1,386)

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three months ended December 31,
$ in thousands 2017 2016
Cash flows from operating activities:
Net income attributable to Raymond James Financial, Inc. $ 118,842
$ 146,567
Net income attributable to noncontrolling interests 441
1,136
Net income including noncontrolling interests 119,283
147,703
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:

Depreciation and amortization 23,289
19,941
Deferred income taxes 121,273
10,928
Premium and discount amortization on available-for-sale securities and unrealized gain on other investments (496 ) (10,185 )
Provisions for loan losses, legal and regulatory proceedings and bad debts 9,265
33,017
Share-based compensation expense 34,417
32,572
Compensation expense payable in common stock of an acquiree 3,925
7,973
Unrealized gain on company owned life insurance, net of expenses (16,859 ) (5,088 )
Other 5,693
(5,724 )
Net change in:

Assets segregated pursuant to regulations and other segregated assets (96,759 ) 1,006,933
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase 104,290
120,393
Securities loaned, net of securities borrowed (140,229 ) (232,438 )
Loans provided to financial advisors, net of repayments (21,928 ) (14,554 )
Brokerage client receivables and other accounts receivable, net 123,512
83,887
Trading instruments, net (46,547 ) 152,474
Derivative instruments, net 30,449
38,447
Other assets (18,799 ) 84,289
Brokerage client payables and other accounts payable 466,763
(481,542 )
Accrued compensation, commissions and benefits (266,453 ) (216,889 )
Proceeds from sales of securitizations and loans held for sale, net of purchases and originations of loans held for sale (108,470 ) 35,162
Net cash provided by operating activities 325,619
807,299

Cash flows from investing activities:

Additions to property, buildings and equipment, including software (35,949 ) (78,371 )
Increase in bank loans, net (645,197 ) (774,376 )
Proceeds from sales of loans held for investment 21,580
54,163
Purchases of available-for-sale securities (339,580 ) (377,235 )
Available-for-sale securities maturations, repayments and redemptions 114,139
56,647
Proceeds from sales of available-for-sale securities —
7,308
Business acquisition, net of cash acquired (159,200 ) —
Other investing activities, net (29,669 ) 17,124
Net cash used in investing activities (1,073,876 ) (1,094,740 )

(continued on next page)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued from previous page)
Three months ended December 31,
$ in thousands 2017 2016
Cash flows from financing activities:
Proceeds from borrowings on the RJF Credit Facility 300,000
—
Proceeds from/(repayments of) short-term borrowings, net (280,000 ) 208,400
Proceeds from Federal Home Loan Bank advances —
100,000
Repayments of Federal Home Loan Bank advances and other borrowed funds (1,186 ) (1,138 )
Exercise of stock options and employee stock purchases 25,954
24,143
Increase in bank deposits 993,183
927,243
Purchases of treasury stock (20,243 ) (26,058 )
Dividends on common stock (32,499 ) (31,255 )
Distributions to noncontrolling interests, net (5,977 ) (26,557 )
Net cash provided by financing activities 979,232
1,174,778

Currency adjustment:

Effect of exchange rate changes on cash (3,118 ) (9,514 )
Net increase in cash and cash equivalents 227,857
877,823
Cash and cash equivalents at beginning of year 3,669,672
1,650,452
Cash and cash equivalents at end of period $ 3,897,529
$ 2,528,275

Supplemental disclosures of cash flow information:

Cash paid for interest $ 28,026
$ 32,442
Cash paid for income taxes $ 8,515
$ 13,710

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).



RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine months ended June 30,
$ in millions	2020		2019
Cash flows from financing activities:
Proceeds from borrowings on the RJF Credit Facility	—		300
Repayments of borrowings on the RJF Credit Facility	—		(300)
Proceeds from short-term borrowings, net	—		50
Proceeds from Federal Home Loan Bank advances	850		850
Repayments of Federal Home Loan Bank advances and other borrowed funds	(854)		(854)
Proceeds from senior notes issuances, net of debt issuance costs paid	494		—
Exercise of stock options and employee stock purchases	55		53
Increase in bank deposits	3,091		2,224
Purchases of treasury stock	(222)		(616)
Dividends on common stock	(154)		(143)
Acquisitions of and distributions to noncontrolling interests, net	(2)		(54)
Net cash provided by financing activities	3,258		1,510

Currency adjustment:
Effect of exchange rate changes on cash	(27)		(12)
Net increase in cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations	2,866		11
Cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at beginning of year	5,971		5,941
Cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at end of period	$	8,837	$	5,952

Cash and cash equivalents	$	5,632	$	3,596
Cash and cash equivalents segregated pursuant to regulations	3,205		2,356
Total cash and cash equivalents and cash and cash equivalents segregated pursuant to regulations at end of period	$	8,837	$	5,952

Supplemental disclosures of cash flow information:
Cash paid for interest	$	118	$	208
Cash paid for income taxes, net	$	202	$	295

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~December 31, 2017~~June 30, 2020

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Raymond James Financial, Inc. (“RJF,” the “firm” or the “Company”) is a financial holding company ~~whose broker-dealer~~which, together with its subsidiaries, ~~are~~is engaged in various financial services ~~businesses,~~activities, including providing investment management services for retail and institutional clients, the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of mutual funds and other investment products. ~~In addition, other subsidiaries of RJF provide investment management services for retail and institutional clients,~~The firm also provides corporate and retail banking services, and trust services. For further information about our business segments, see Note ~~20.~~22 of this Form 10-Q. As used herein, the terms “our,” “we,” ~~“our”~~ or “us” refer to RJF and/or one or more of its subsidiaries.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of RJF and its consolidated subsidiaries that are generally controlled through a majority voting interest. We consolidate all of our 100% owned subsidiaries. In addition, we consolidate any variable interest entity (“VIE”) in which we are the primary beneficiary. Additional information on these VIEs is provided in Note 2 ~~and Note 10~~ of our Annual Report on Form 10-K ~~(the “2017~~(“2019 Form 10-K”) for the year ended September 30, ~~2017,~~2019, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and in Note ~~9 herein.~~8 of this Form 10-Q. When we do not have a controlling interest in an entity, but we exert significant influence over the entity, we apply the equity method of accounting. All material intercompany balances and transactions have been eliminated in consolidation.

Accounting estimates and assumptions

Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) but is not required for interim reporting purposes has been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of ~~the~~our consolidated financial position and results of operations for the periods presented.

The nature of our business is such that the results of any interim period are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the ~~consolidated financial statements~~Consolidated Financial Statements and ~~notes~~Notes thereto included in our ~~2017~~2019 Form 10-K. To prepare condensed consolidated financial statements in ~~conformity~~accordance with GAAP, we must make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements.

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 2 – UPDATE OF SIGNIFICANT ACCOUNTING POLICIES

A summary of our significant accounting policies is included in Note 2 of our ~~2017~~2019 Form 10-K. ~~There have been~~During the nine months ended June 30, 2020, there were no significant changes into our significant accounting policies ~~since September 30, 2017.~~

~~Loans to financial advisors, net~~

~~As more fully described in Note 2~~other than the accounting policies adopted or modified as part of our ~~2017 Form 10-K, we offer loans to financial advisors and certain other key revenue producers, primarily for recruiting, transitional cost assistance, and retention purposes. We present~~implementation of new or amended accounting guidance, as noted in the outstanding balance of “Loans to financial advisors, net” on our Condensed Consolidated Statements of Financial Condition, net of the allowance for doubtful accounts. Of the gross balance outstanding, the portion associated with financial advisors who are no longer affiliated with us was approximately $26 million and $22 million at December 31, 2017 and September 30, 2017, respectively. Our allowance for doubtful accounts was approximately $9 million and $8 million at December 31, 2017 and September 30, 2017, respectively.following sections.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Accounting guidance ~~not yet~~recently adopted

~~Revenue recognition -~~ In May 2014, the FASB issued new guidance regarding revenue recognition (ASU 2014-09). The new guidance is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. It also provides guidance on accounting for certain contract costs and requires additional disclosures. This new revenue recognition guidance, including subsequent amendments, is first effective for our fiscal year beginning on October 1, 2018 and allows for full retrospective adoption or modified retrospective adoption. Although, early adoption is permitted for fiscal years beginning after December 15, 2016, we do not plan to early adopt. Upon adoption, we plan to use a modified retrospective approach, with a cumulative effect adjustment to opening retained earnings. Our implementation efforts include identifying revenues and costs within the scope of the standard, analyzing contracts and reviewing potential changes to our existing revenue recognition accounting policies. Based on our implementation efforts to date, we expect that we will be required to change our current presentation of certain costs from a net presentation within revenues to a gross presentation, particularly with respect to merger & acquisitions advisory transactions and underwriting transactions. We are still evaluating the impact the adoption of this new guidance will have on our financial position and results of operations. We are also still evaluating the impact to our disclosures as a result of adopting this new guidance.

~~Financial instruments -~~ ~~In January 2016, the FASB issued new guidance related to the accounting for financial instruments (ASU 2016-01). Among its provisions, this new guidance:~~

This new guidance is effective for our fiscal year beginning on October 1, 2018, generally under a modified retrospective approach, with the exception of the amendments related to equity investments without a readily determinable fair value and the use of an exit price notion to measure financial instruments for disclosure purposes, which will be applied prospectively as of the date of adoption. Early adoption is generally not permitted. We are evaluating the impact, if any, the adoption of this new guidance will have on our financial position and results of operations.

Lease accounting - In February 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued new guidance related to the accounting for leases (ASU 2016-02). The new guidance and subsequent amendments requires the recognition of assets and liabilities on the balance sheet related to the rights and obligations created by lease agreements with terms greater than twelve months, regardless of whether they are classified as finance or operating leases. ~~Consistent with current~~We adopted this guidance ~~the recognition, measurement and presentation~~as of expenses and cash flows arising from a lease will primarily depend upon its classification as a finance or operating lease. The new guidance requires new disclosures to help financial statement users better understand the amount, timing and cash flows arising from leases. This new guidance, including subsequent amendments, is first effective for our fiscal year beginning on October 1, ~~2019. Although early adoption is permitted, we do not plan to early adopt. Upon adoption, we will use a~~2019 using the alternative modified retrospective approach, with ~~a cumulative~~no adjustments to prior periods presented. In addition, we elected the practical expedients permitted under the transition guidance which, among other things, allowed us to carry forward historical lease classification determinations. On the adoption date, we recognized right-of-use assets (“ROU assets”) and lease liabilities of $333 million and $357 million, respectively, in “Other assets” and “Other payables” on our Condensed Consolidated Statements of Financial Condition. The ROU assets and lease liabilities were primarily related to operating leases. The adoption had no effect ~~adjustment~~on our results of operations or cash flows. The impact of the adoption on our regulatory capital measures was insignificant. See Note 10 for further information.

Derivatives and hedging (interest rate) - In October 2018, the FASB issued guidance amending Derivatives and Hedging (Topic 815) to ~~opening retained earnings. Our implementation efforts include reviewing existing leases~~add the overnight index swap rate based on the Secured Overnight Financing Rate (“SOFR”) to the list of U.S. benchmark interest rates that are eligible during the early stages of the market transition from the London Interbank Offered Rate (“LIBOR”) to SOFR (ASU 2018-16). The amendments to this guidance will provide adequate lead time for entities to prepare for changes to interest rate hedging strategies. We adopted the guidance October 1, 2019 and ~~service contracts, which may include embedded leases. This~~will apply the guidance prospectively for qualifying new ~~guidance will~~or re-designated hedging relationships. The adoption did not impact our financial position ~~and~~or results of operations.

Reference rate reform - In March 2020, the FASB issued guidance to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR (ASU 2020-04). The guidance simplifies the accounting for modifying contracts (including those in hedging relationships) that refer to LIBOR and other interbank offered rates. In addition, the guidance allows for changes to the critical terms of a hedging relationship affected by reference rate reform without having to dedesignate the relationship. The guidance was effective upon issuance and generally can be applied through December 31, 2022. We ~~are evaluating~~have elected certain expedients for cash flow hedges to assert that the ~~magnitude~~hedged forecasted transaction remains probable, regardless of ~~such impact.~~any expected modification in terms related to reference rate reform. The expedients elected did not impact our financial position or results of operations.

Accounting guidance not yet adopted as of June 30, 2020

Credit losses - In June 2016, the FASB issued new guidance related to the measurement of credit losses on financial instruments (ASU 2016-13). The amended guidance involves several aspects of the accounting for credit losses related to certain financial instruments including assets measured at amortized cost, available-for-sale debt securities and certain off-balance sheet commitments. The new guidance, and subsequent updates, broadens the information that an entity must consider in developing its estimated credit losses expected to occur over the

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

remaining life of assets measured either collectively or individually to include historical experience, current conditions and reasonable and supportable forecasts, replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (“CECL”) model. The new guidance expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating credit losses and requires new disclosures of the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. This new guidance is first effective for our fiscal year beginning on October 1, 2020 and will be adopted under a modified retrospective approach. ~~Early~~Although permitted, we do not plan to early adopt. Our cross-functional team continues with the implementation efforts. We are in the process of validating our credit loss models and establishing formal procedures and control documentation related to this new guidance. In addition, we are finalizing required disclosures and policies. We continue to evaluate the impact the adoption of this new guidance will have on our financial position and results of operations. The impact will ultimately depend on, among other things, our methodologies, management judgments, current and expected macroeconomic conditions, and the nature and characteristics of financial assets held by us on the date of adoption.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Internal use software (cloud computing) - In August 2018, the FASB issued guidance on the accounting for implementation costs incurred by customers in cloud computing arrangements (ASU 2018-15). This guidance requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the non-cancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is ~~permitted although not prior to~~controlled by the cloud service provider. This amended guidance is first effective for our fiscal year beginning on October 1, ~~2019.~~2020, with early adoption permitted, and may be adopted using either a prospective or retrospective approach. We ~~have begun our~~plan to adopt this standard prospectively effective for annual periods beginning October 1, 2020. The impact of this amended guidance is dependent on implementation ~~and evaluation efforts by establishing a cross-functional team~~costs incurred subsequent to ~~assess~~adoption.

Consolidation (decision making fees) - In October 2018, the ~~required changes to our credit loss estimation methodologies and systems, as well as determine additional data and resources required to comply with~~FASB issued guidance on how all entities evaluate decision-making fees under the VIE guidance (ASU 2018-17). Under the new ~~guidance.~~guidance, to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis, rather than in their entirety. This guidance is first effective for our fiscal year beginning on October 1, 2020. Although permitted, we do not plan to early adopt. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of ~~operations, which will depend on, among other things, the current and expected macroeconomic conditions and the nature and characteristics of financial assets held by us on the date of adoption.~~operations.

~~Statement of Cash Flows (classification of certain cash receipts and cash payments) -~~ In August 2016, the FASB issued amended guidance related to the Statement of Cash Flows (ASU 2016-15). The amended guidance involves several aspects of the classification of certain cash receipts and cash payments including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This amended guidance is first effective for our fiscal year beginning October1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. The adoption of this new guidance will impact our Statement of Cash Flows and will not have an impact on our financial position and results of operations.

~~Income tax impact of intra-entity transfers of assets -~~ In October 2016, the FASB issued new guidance related to the accounting for income tax consequences of intra-entity transfers of assets (ASU 2016-16). Current GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset has been sold to an outside party. Under this new guidance, an entity should recognize the income tax consequences of an inter-entity transfer of an asset when the transfer occurs. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of operations.

~~Statement of Cash Flows (restricted cash) -~~ In November 2016, the FASB issued new guidance related to the classification and presentation of changes in restricted cash on the Statement of Cash Flows (ASU 2016-18). Current GAAP does not provide guidance to address how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. Under the new guidance, an entity should present in their Statement of Cash Flows the changes during the period in the total of cash and cash equivalents and amounts described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and ending-of-period total amounts shown on the statement of cash flows. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our Consolidated Statements of Cash Flows.

~~Definition of a business -~~ In January 2017, the FASB issued amended guidance related to the definition of a business (ASU 2017-01). This amended guidance clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. Given the adoption of this amended guidance is dependent upon the nature of future events and circumstances, we are unable to estimate the impact, if any, the adoption of this new guidance will have on our financial position and results of operations.

~~Goodwill -~~ In January 2017, the FASB issued amended guidance to simplify the subsequent measurement of goodwill, eliminating “Step 2” from the goodwill impairment test (ASU 2017-04). In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this amended guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and subsequently recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is first effective for our fiscal year beginning October 1, 2019 and will be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We will adopt this simplification guidance in the earliest period it applies to our facts and circumstances.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Callable debt securities -~~ In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date instead of the contractual life of the security (ASU 2017-08). Discounts on callable debt securities will continue to be amortized to the contractual maturity date. This guidance is first effective for our fiscal year beginning on October 1, 2019 and will be adopted using a modified retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of operations.

~~Share-based payment awards -~~ In May 2017, the FASB issued amended guidance that clarifies when changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting (ASU 2017-09). The amended guidance states an entity should account for the effects of a modification unless certain criteria are met which include that the modified award has the same fair value, vesting conditions and classification as the original award. This amended guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. Given that this guidance applies to specific transactions and would only become relevant in certain circumstances, we are unable to estimate the impact, if any, this amended guidance may have on our financial position and results of operations.

~~Derivatives and hedging (accounting for hedging activities) -~~ ~~In August 2017, the FASB issued new guidance amending its hedge accounting model (ASU 2017-12). Among other things, the new guidance:~~

The new guidance is first effective for our fiscal year beginning October 1, 2019 and the amendments are required to be applied to cash flow and net investment hedges that exist on the date of adoption on a modified retrospective basis. Changes to presentation and disclosure requirements are only required on a prospective basis. Early adoption is permitted. We are considering whether we will early adopt this new guidance and the timing thereof, as well as the impact it will have on our financial position and results of operations.

NOTE 3 – ~~ACQUISITIONS~~

~~Acquisitions completed during fiscal year 2018~~

In November 2017, we completed our acquisition of 100% of the outstanding shares of Scout Investments, Inc. (the “Scout Group”), an asset management and distribution entity, from UMB Financial Corporation. The Scout Group includes Scout Investments (“Scout”) and its Reams Asset Management division (“Reams”), as well as Scout Distributors. The addition of Scout, an equity asset manager, and Reams, an institutional-focused fixed income specialist, broadened the investment solutions available to our clients and has been integrated into our Asset Management segment. For purposes of certain acquisition-related financial reporting requirements, the Scout Group acquisition was not considered a material acquisition. We accounted for this acquisition under the acquisition method of accounting with the assets and liabilities of the Scout Group recorded as of the acquisition date at their respective fair values in our condensed consolidated financial statements. The Scout Group’s results of operations have been included in our results prospectively from November 17, 2017.

~~Acquisition-related expenses~~

~~The “Acquisition-related expenses” presented in our Condensed Consolidated Statements of Income and Comprehensive Income for~~

the three months ended December 31, 2017 pertain to certain incremental expenses incurred in connection with the Scout Group acquisition. Acquisition-related expenses for the three months ended December 31, 2016 primarily related to our fiscal year 2016 acquisitions of the U.S. Private Client Services unit of Deutsche Bank Wealth Management (“Alex. Brown”) and MacDougall, MacDougall & MacTier Inc. (“3Macs”), which are described further in Note 3 of our 2017 Form 10-K.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~The table below presents a summary of acquisition-related expenses incurred in each respective period.~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~NOTE 4 –~~ FAIR VALUE

Our “Financial instruments owned” and “Financial instruments sold but not yet purchased” on our Condensed Consolidated Statements of Financial Condition are recorded at fair value under GAAP. For further information about such instruments and our significant accounting policies related to fair value, see Note 2 and Note 4 of our ~~2017~~2019 Form 10-K. ~~There have been no material changes to our valuation methodologies or our fair value accounting policies since our year ended September 30, 2017.~~

The following tables ~~below presents~~present assets and liabilities measured at fair value on a recurring ~~and nonrecurring~~ basis. Netting adjustments represent the impact of counterparty and collateral netting on our derivative balances included inon our Condensed Consolidated Statements of Financial Condition. See Note 65 for additional information.


$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of June 30, 2020
Assets at fair value on a recurring basis:
Trading instruments
Municipal and provincial obligations	$	5	$	77	$	—	$	—	$	82
Corporate obligations	6		46		—		—		52
Government and agency obligations	16		66		—		—		82
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”)	—		102		—		—		102
Non-agency CMOs and asset-backed securities (“ABS”)	—		7		—		—		7
Total debt securities	27		298		—		—		325
Equity securities	9		—		—		—		9
Brokered certificates of deposit	—		12		—		—		12
Other	—		—		15		—		15
Total trading instruments	36		310		15		—		361
Available-for-sale securities ⁽¹⁾	16		5,614		—		—		5,630
Derivative assets
Interest rate - matched book	—		351		—		—		351
Interest rate - other	15		239		—		(153)		101

Total derivative assets	15		590		—		(153)		452
Other investments - private equity - not measured at net asset value (“NAV”)	—		—		30		—		30
All other investments	201		1		22		—		224
Subtotal	268		6,515		67		(153)		6,697
Other investments - private equity - measured at NAV									73
Total assets at fair value on a recurring basis	$	268	$	6,515	$	67	$	(153)	$	6,770

Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased
Municipal and provincial obligations	$	1	$	—	$	—	$	—	$	1
Corporate obligations	—		3		—		—		3
Government and agency obligations	105		—		—		—		105
Non-agency CMOs and ABS	—		3		—		—		3
Total debt securities	106		6		—		—		112
Equity securities	42		—		—		—		42

Total trading instruments sold but not yet purchased	148		6		—		—		154
Derivative liabilities
Interest rate - matched book	—		351		—		—		351
Interest rate - other	17		154		—		(141)		30
Foreign exchange	—		12		—		—		12
Other	—		1		—		—		1
Total derivative liabilities	17		518		—		(141)		394
Total liabilities at fair value on a recurring basis	$	165	$	524	$	—	$	(141)	$	548

$ in thousands Quoted prices
in active
markets for
identical
instruments
(Level 1)
Significant
other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Netting
adjustments
Balance as of
December 31,
2017
Assets at fair value on a recurring basis
Trading instruments
Municipal and provincial obligations $ 122
$ 197,580
$ —
$ —
$ 197,702
Corporate obligations 11,069
33,723
—
—
44,792
Government and agency obligations 6,376
17,929
—
—
24,305
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”) 2,128
214,680
—
—
216,808
Non-agency CMOs and asset-backed securities (“ABS”) —
52,244
5
—
52,249
Total debt securities 19,695

516,156
5
—
535,856
Equity securities 18,497
803
—
—
19,300
Brokered certificates of deposit —
32,173
—
—
32,173
Other 27
7,511
2,712
—
10,250
Total trading instruments 38,219
556,643
2,717
—
597,579
Available-for-sale securities

Agency MBS and CMOs —
2,285,051
—
—
2,285,051
Other securities 787
—
—
—
787
Auction rate securities (“ARS”) preferred securities —
—
107,483
—
107,483
Total available-for-sale securities 787
2,285,051
107,483
—
2,393,321
Derivative assets
Interest rate contracts
Matched book —
263,851
—
—
263,851
Other —
58,660
—
(30,375 ) 28,285
Foreign exchange contracts —
4
—
—
4
Total derivative assets —
322,515
—
(30,375 ) 292,140
Private equity investments ⁽¹⁾

Not measured at NAV —
—
88,810
—
88,810
Measured at NAV 100,223
Total private equity investments —
—
88,810
—
189,033
Other investments ⁽²⁾
263,978
859
333
—
265,170
Total assets at fair value on a recurring basis $ 302,984

$ 3,165,068

$ 199,343

$ (30,375 )
$ 3,737,243

Assets at fair value on a nonrecurring basis

Bank loans, net

Impaired loans $ —
$ 16,347
$ 23,418
$ —
$ 39,765
Loans held for sale ⁽³⁾
—
69,057
—
—
69,057
Total assets at fair value on a nonrecurring basis $ —
$ 85,404
$ 23,418
$ —
$ 108,822

(continued on next page)

(1) Substantially all of our available-for-sale securities consist of agency MBS and CMOs. See Note 4 for further information.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of September 30, 2019
Assets at fair value on a recurring basis:
Trading instruments
Municipal and provincial obligations	$	—	$	267	$	—	$	—	$	267
Corporate obligations	8		95		—		—		103
Government and agency obligations	12		67		—		—		79
Agency MBS and CMOs	—		147		—		—		147
Non-agency CMOs and ABS	—		51		—		—		51
Total debt securities	20		627		—		—		647
Equity securities	12		1		—		—		13
Brokered certificates of deposit	—		45		—		—		45
Other	—		—		3		—		3
Total trading instruments	32		673		3		—		708
Available-for-sale securities ⁽¹⁾	10		3,083		—		—		3,093
Derivative assets
Interest rate - matched book	—		280		—		—		280
Interest rate - other	3		182		—		(127)		58

Total derivative assets	3		462		—		(127)		338
Other investments - private equity - not measured at NAV	—		—		63		—		63
All other investments	194		1		24		—		219
Subtotal	239		4,219		90		(127)		4,421
Other investments - private equity - measured at NAV									83
Total assets at fair value on a recurring basis	$	239	$	4,219	$	90	$	(127)	$	4,504

Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased

Corporate obligations	$	2	$	20	$	—	$	—	$	22
Government and agency obligations	269		—		—		—		269

Total debt securities	271		20		—		—		291
Equity securities	4		—		—		—		4
Other	—		—		1		—		1
Total trading instruments sold but not yet purchased	275		20		1		—		296
Derivative liabilities
Interest rate - matched book	—		280		—		—		280
Interest rate - other	4		142		—		(121)		25
Foreign exchange	—		2		—		—		2
Other	—		6		—		—		6
Total derivative liabilities	4		430		—		(121)		313
Total liabilities at fair value on a recurring basis	$	279	$	450	$	1	$	(121)	$	609

(1) Substantially all of our available-for-sale securities consist of agency MBS and CMOs. See Note 4 for further information.

(continued from previous page)

$ in thousands
Quoted prices
in active
markets for
identical
instruments
(Level 1)

Significant
other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Netting
adjustments
Balance as of
December 31,
2017
Liabilities at fair value on a recurring basis
Trading instruments sold but not yet purchased
Municipal and provincial obligations $ 742
$ 3,082
$ —
$ —
$ 3,824
Corporate obligations 608
7,394
—
—
8,002
Government obligations 183,510
—
—
—
183,510
Agency MBS and CMOs 328
—
—
—
328
Non-agency MBS and CMOs —
—
—
—
—
Total debt securities 185,188
10,476
—
—
195,664
Equity securities 16,294
4
—
—
16,298
Other 4
—
1,058
—
1,062
Total trading instruments sold but not yet purchased 201,486
10,480
1,058
—
213,024
Derivative liabilities
Interest rate contracts
Matched book —
263,851
—
—
263,851
Other —
86,815
—
(42,284 ) 44,531
Foreign exchange contracts —
19,710
—
—
19,710
Deutsche Bank restricted stock unit (“DBRSU”) obligation (equity) —
28,413
—
—
28,413
Total derivative liabilities —
398,789
—
(42,284 ) 356,505
Total liabilities at fair value on a recurring basis $ 201,486

$ 409,269

$ 1,058

$ (42,284 )
$ 569,529


~~(1)~~	Of the total private equity investments, the portion we owned was $138 million as of December 31, 2017. The portion of the private equity investments we did not own was $51 million as of December 31, 2017 and was included as a component of noncontrolling interests in our Condensed Consolidated Statements of Financial Condition.


~~(2)~~	Includes $45 million of financial instruments that are related to obligations to perform under certain deferred compensation plans and Deutsche Bank AG (“DB”) shares with a fair value of $21 million as of December 31, 2017 which we hold as an economic hedge against the DBRSU obligation. See Notes 2 and 20 in our 2017 Form 10-K for additional information.


~~(3)~~	~~Loans classified as held for sale recorded at a fair value lower than cost.~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

$ in thousands Quoted prices
in active
markets for
identical
instruments
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3) Netting
adjustments Balance as of
September 30,
2017
Assets at fair value on a recurring basis
Trading instruments
Municipal and provincial obligations $ 83
$ 221,884
$ —
$ —
$ 221,967
Corporate obligations 9,361
81,577
—
—
90,938
Government and agency obligations 6,354
28,977
—
—
35,331
Agency MBS and CMOs 913
133,070
—
—
133,983
Non-agency CMOs and ABS —
28,442
5
—
28,447
Total debt securities 16,711
493,950
5
—
510,666
Equity securities 16,090
389
—
—
16,479
Brokered certificates of deposit —
31,492
—
—
31,492
Other 32
—
5,594
—
5,626
Total trading instruments 32,833
525,831
5,599
—
564,263
Available-for-sale securities

Agency MBS and CMOs —
2,081,079
—
—
2,081,079
Other securities 1,032
—
—
—
1,032
ARS preferred securities —
—
106,171
—
106,171
Total available-for-sale securities 1,032
2,081,079
106,171
—
2,188,282
Derivative assets
Interest rate contracts
Matched book —
288,035
—

—
288,035
Other —
86,436
—
(55,728 ) 30,708
Foreign exchange contracts —
32
—
—
32
Total derivative assets —

374,503

—

(55,728 )
318,775
Private equity investments ⁽¹⁾

Not measured at NAV —
—
88,885
—
88,885
Measured at NAV 109,894
Total private equity investments —
—
88,885
—
198,779
Other investments ⁽²⁾
220,312
332
336
—
220,980
Total assets at fair value on a recurring basis $ 254,177
$ 2,981,745
$ 200,991
$ (55,728 ) $ 3,491,079

Assets at fair value on a nonrecurring basis

Bank loans, net
Impaired loans $ —
$ 17,474
$ 23,994
$ —
$ 41,468
Loans held for sale ⁽³⁾
—
11,285
—
—
11,285
Total bank loans, net —
28,759
23,994
—
52,753
Other assets: other real estate owned —
880
—
—
880
Total assets at fair value on a nonrecurring basis $ —
$ 29,639
$ 23,994
$ —
$ 53,633

(continued on next page)

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

(continued from previous page)

$ in thousands
Quoted prices
in active
markets for
identical
instruments
(Level 1)

Significant
other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Netting
adjustments
Balance as of
September 30,
2017
Liabilities at fair value on a recurring basis

Trading instruments sold but not yet purchased

Municipal and provincial obligations $ 304
$ —
$ —
$ —
$ 304
Corporate obligations 1,286
35,272
—
—
36,558
Government obligations 167,622
—
—
—
167,622
Agency MBS and CMOs 2,477
—
—
—
2,477
Non-agency MBS and CMOs —
5,028
—
—
5,028
Total debt securities 171,689
40,300
—
—
211,989
Equity securities 8,118
1,342
—
—
9,460
Total trading instruments sold but not yet purchased 179,807
41,642
—
—
221,449
Derivative liabilities
Interest rate contracts

Matched book —
288,035
—
—
288,035
Other —
101,893
—
(59,410 ) 42,483
Foreign exchange contracts —
646
—
—
646
DBRSU obligation (equity) —
25,800
—
—
25,800
Total derivative liabilities —
416,374
—
(59,410 ) 356,964
Total liabilities at fair value on a recurring basis $ 179,807
$ 458,016
$ —
$ (59,410 ) $ 578,413


~~(1)~~	Of the total private equity investments, the portion we owned was $145 million as of September 30, 2017. The portion of the private equity investments we did not own was $54 million as of September 30, 2017, and was included as a component of noncontrolling interests in our Condensed Consolidated Statements of Financial Condition.


~~(2)~~	Includes $44 million of financial instruments that are related to obligations to perform under certain deferred compensation plans and DB shares with a fair value of $19 million as of September 30, 2017, which we hold as an economic hedge against the DBRSU obligation. See Notes 2 and 20 in our 2017 Form 10-K for additional information.


~~(3)~~	~~Loans classified as held for sale recorded at a fair value lower than cost.~~

~~Transfers between levels~~

We had $1 million in transfers of financial instruments from Level 1 to Level 2 during both the three months ended December 31, 2017 and 2016. These transfers were a result of decreased market activity in these instruments. There were no transfers from Level 2 to Level 1 during the three months ended December 31, 2017 and $1 million in transfers of financial instruments from Level 2 to Level 1 during the three months ended December 31, 2016. These transfers were a result of increased market activity in these instruments. Our policy is to treat transfers between levels of the fair value hierarchy as having occurred at the end of the reporting period.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~Changes in~~ Level 3 recurring fair value measurements

The following tables ~~below~~ present the changes in fair value for Level 3 assets and liabilities measured at fair value on a recurring basis. The realized and unrealized gains and losses in the tables ~~below~~ may include changes in fair value that were attributable to both observable and unobservable inputs. ~~Our policy is~~In the following tables, gains/(losses) on trading instruments are reported in “Principal transactions” and gains/(losses) on other investments are reported in “Other” revenues.


Three months ended June 30, 2020 Level 3 instruments at fair value
	Financial assets									Financial liabilities
	Trading instruments		Other investments						Trading instruments
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	21	$	30	$	22	$	—
Total gains/(losses) included in earnings	(5)		—		—		—
Purchases and contributions	11		—		—		—
Sales and distributions	(12)		—		—		—
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	15	$	30	$	22	$	—
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	2	$	—	$	—	$	—


Nine Months Ended June 30, 2020 Level 3 instruments at fair value
	Financial assets									Financial liabilities
	Trading instruments		Other investments						Trading instruments
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	3	$	63	$	24	$	(1)
Total gains/(losses) included in earnings	(2)		(32)		(2)		—
Purchases and contributions	64		—		—		2
Sales and distributions	(50)		(1)		—		(1)
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	15	$	30	$	22	$	—
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	1	$	(32)	$	(2)	$	—


Three months ended June 30, 2019 Level 3 instruments at fair value
	Financial assets									Financial liabilities
	Trading instruments		Other investments						Trading instruments
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	2	$	59	$	67	$	(7)
Total gains/(losses) included in earnings	(1)		—		(2)		—
Purchases and contributions	26		—		—		7
Sales and distributions	(26)		—		—		(3)
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	1	$	59	$	65	$	(3)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	1	$	—	$	(2)	$	—

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to ~~treat transfers between levels~~Condensed Consolidated Financial Statements (Unaudited)


Nine Months Ended June 30, 2019 Level 3 instruments at fair value
	Financial assets									Financial liabilities
	Trading instruments		Other investments						Trading instruments
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	1	$	56	$	67	$	(7)
Total gains/(losses) included in earnings	(1)		—		(2)		2
Purchases and contributions	86		3		—		16
Sales and distributions	(85)		—		—		(14)
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	1	$	59	$	65	$	(3)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	1	$	—	$	(2)	$	—

The net unrealized losses on our Level 3 private equity investments for the nine months ended June 30, 2020 were primarily driven by the negative impact of the coronavirus (“COVID-19”) pandemic on certain of our investments.

As of June 30, 2020, 15% of our assets and 1% of our liabilities were measured at fair value ~~hierarchy~~on a recurring basis. In comparison, as ~~having occurred at the end~~ of ~~the reporting period.~~

Three months ended December 31, 2017
Level 3 instruments at fair value
Financial assets
Financial
liabilities
Trading instruments Available-for-sale securities Private equity and other investments Trading instruments
$ in thousands
Non-agency
CMOs & ABS
Other
ARS - preferred
securities

Private
equity
investments

Other
investments
Other
Fair value beginning of period $ 5
$ 5,594
$ 106,171
$ 88,885
$ 336
$ —
Total gains/(losses) for the period

Included in earnings —
(1,207 ) —
2
(3 ) (1,058 )
Included in other comprehensive income —
—
1,312
—
—
—
Purchases and contributions —
20,279
—
—
—
—
Sales —
(21,954 ) —
(77 ) —
—
Distributions —
—
—
—
—
—
Transfers

Into Level 3 —
—
—
—
—
—
Out of Level 3 —
—
—
—
—
—
Fair value end of period $ 5
$ 2,712
$ 107,483
$ 88,810
$ 333
$ (1,058 )
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ —
$ (243 ) $ 1,312
$ —
$ (3 ) $ (1,058 )

Three months ended December 31, 2016 Level 3 instruments at fair value
Financial assets
Financial
liabilities
Trading instruments Available-for-sale securities Private equity and other investments Trading instruments
$ in thousands
Non-agency
CMOs &
ABS
Other
ARS –
municipals obligations

ARS -
preferred
securities

Private
equity
investments

Other
investments
Other
Fair value beginning of period $ 7
$ 6,020
$ 25,147
$ 100,018
$ 83,165
$ 441
$ —
Total gains/(losses) for the period

Included in earnings —
(2,589 ) —
1
301
(8 ) (1,792 )
Included in other comprehensive income —
—
217
3,857
—
—
—
Purchases and contributions —
18,683
—
—
—
—
—
Sales —
(11,062 ) —
(23 ) —
(15 ) —
Distributions —
—
—
—
—
—
—
Transfers
Into Level 3 —
—
—
—
—
—
—
Out of Level 3 —
—
—
—
—
(195 ) —
Fair value end of period $ 7
$ 11,052
$ 25,364
$ 103,853
$ 83,466
$ 223
$ (1,792 )
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ —
$ (124 ) $ 217
$ 3,856
$ 301
$ —
$ (1,792 )

~~As of both~~ ~~December 31, 2017~~ ~~and~~ September 30, ~~2017, 10%~~2019, 12% of our assets and 2% of our liabilities were ~~instruments~~ measured at fair value on a recurring basis. ~~Instruments~~As of June 30, 2020 and September 30, 2019, instruments measured at fair value on a recurring basis categorized as Level 3 ~~as of December 31, 2017~~represented 1% and ~~September 30, 2017 represented 5% and 6%~~2%, respectively, of our assets measured at fair value. Level 3 instruments as a percentage of total financial instruments decreased as compared to September 30, 2017, primarily as a result of the increase in total assets measured at fair value since September 30, 2017.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~The following table presents the gains/(losses) related to Level 3 recurring fair value measurements included in our Condensed Consolidated Statements of Income and Comprehensive Income.~~

$ in thousands Net trading profit Other revenues Other comprehensive income
For the three months ended December 31, 2017
Total gains/(losses) included in earnings $ (2,265 ) $ (1 ) $ 1,312
Unrealized gains/(losses) for assets held at the end of the reporting period $ (1,301 ) $ (3 ) $ 1,312

For the three months ended December 31, 2016
Total gains/(losses) included in earnings $ (4,381 ) $ 294
$ 4,074
Unrealized gains/(losses) for assets held at the end of the reporting period $ (1,916 ) $ 301
$ 4,073

Quantitative information about level 3 fair value measurements

The following tables ~~below~~ present the valuation techniques and significant unobservable inputs used in the valuation of ~~a significant majority~~certain of our ~~financial instruments~~private equity investments classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments. Weighted averages are calculated by weighting each input by the relative fair value of the related financial instrument. Certain investments are valued initially at transaction price and updated as other investment-specific events take place which indicate that a change in the carrying values of these investments is appropriate. Other investment-specific events include such events as our periodic review, significant transactions occur or new developments become known.

Recurring measurements

$ in millions

Fair value at June 30, 2020

Valuation technique(s)

Unobservable input

Range
(weighted-average)

Other investments - private equity investments (not measured at NAV)

Discounted cash flow, transaction price or other investment-specific events

Discount rate

25%

Terminal earnings before interest, tax, depreciation and amortization (“EBITDA”) multiple

9.0x

Terminal year

2021 - 2042 (2024)

Fair value at September 30, 2019

Other investments - private equity investments (not measured at NAV)

Discounted cash flow, transaction price or other investment-specific events

Discount rate

25%

Terminal EBITDA multiple

12.5x

Terminal year

2021 - 2042 (2022)

Level 3 financial instrument
$ in thousands
Fair value at December 31, 2017 Valuation technique(s) Unobservable input
Range
(weighted-average)
Recurring measurements
ARS preferred securities $ 107,483
Discounted cash flow Average discount rate 5.76% - 7.03% (6.32%)

Average interest rates applicable to future interest income on the securities ⁽¹⁾
2.97% - 3.96% (3.12%)

Prepayment year ⁽²⁾
2018 - 2021 (2021)
Private equity investments (not measured at NAV) $ 68,454
Income or market approach
Scenario 1 - income approach - discounted cash flow Discount rate 13% - 25% (22.4%)
Terminal growth rate of cash flows 3% - 3% (3%)
Terminal year 2020 - 2042 (2021)
Scenario 2 - market approach - market multiple method EBITDA Multiple 5.25 - 7.0 (5.8)
Weighting assigned to outcome of scenario 1/scenario 2 87%/13%
$ 20,356

Transaction price or other investment-specific events ⁽³⁾

Not meaningful ⁽³⁾

Not meaningful ⁽³⁾
Nonrecurring measurements
Bank loans: impaired loans - residential $ 20,421
Discounted cash flow Prepayment rate 7 yrs - 12 yrs (10.3 yrs)
Bank loans: impaired loans - corporate $ 2,997

Appraisal or discounted cash flow value ⁽⁴⁾

Not meaningful ⁽⁴⁾

Not meaningful ⁽⁴⁾

~~(continued on next page)~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~(continued from previous page)~~

Level 3 financial instrument
$ in thousands

Fair value at
September 30,
2017
Valuation technique(s) Unobservable input Range (weighted-average)
Recurring measurements
ARS preferred securities $ 106,171
Discounted cash flow Average discount rate 5.46% - 6.81% (6.03%)

Average interest rates applicable to future interest income on the securities ⁽¹⁾
2.58% - 3.44% (2.72%)

Prepayment year ⁽²⁾
2017 - 2021 (2021)
Private equity investments (not measured at NAV) $ 68,454
Income or market approach:
Scenario 1 - income approach - discounted cash flow Discount rate 13% - 25% (22.4%)
Terminal growth rate of cash flows 3% - 3% (3%)
Terminal year 2020 - 2042 (2021)
Scenario 2 - market approach - market multiple method EBITDA Multiple 5.25 - 7.0 (5.8)
Weighting assigned to outcome of scenario 1/scenario 2 87%/13%
$ 20,431

Transaction price or other investment-specific events ⁽³⁾

Not meaningful ⁽³⁾

Not meaningful ⁽³⁾
Nonrecurring measurements

Bank loans: impaired loans - residential $ 20,736
Discounted cash flow Prepayment rate 7 yrs. - 12 yrs. (10.4 yrs.)
Bank loans: impaired loans - corporate $ 3,258

Appraisal or discounted cash flow value ⁽⁴⁾

Not meaningful ⁽⁴⁾

Not meaningful ⁽⁴⁾


~~(1)~~	Future interest rates are projected based upon a forward interest rate path, plus a spread over such projected base rate that is applicable to each future period for each security within this portfolio segment. The interest rates presented represent the average interest rate over all projected periods for securities within the portfolio segment.


~~(2)~~	~~Assumed calendar year of at least a partial redemption of the outstanding security by the issuer.~~


~~(3)~~	Certain private equity investments are valued initially at the transaction price until either our periodic review, significant transactions occur, new developments become known, or we receive information from the fund manager that allows us to update our proportionate share of net assets, when any of which indicate that a change in the carrying values of these investments is appropriate.


~~(4)~~	The valuation techniques used for the impaired corporate loan portfolio are appraisals less selling costs for the collateral dependent loans and discounted cash flows for impaired loans that are not collateral dependent.

Qualitative ~~disclosure~~information about unobservable inputs

For our recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs are described ~~below:~~

~~Auction rate securities:~~

~~One of the significant unobservable inputs used~~ in the fair value measurement of auction rate securities presented within our available-for-sale securities portfolio relates to judgments regarding whether the level of observable trading activity is sufficient to conclude markets are active. Where insufficient levels of trading activity are determined to exist as of the reporting date, then management’s assessment of how much weight, if any, to apply to trading prices in inactive markets versus management’s own valuation models could significantly impact the valuation conclusion. The valuation of the securities impacted by changes in management’s assessment of market activity levels could be either higher or lower, depending upon the relationship of the inactive trading prices compared to the outcome of management’s internal valuation models.following section.

The future interest rate and maturity assumptions impacting the valuation of the auction rate securities are directly related. These securities generally have embedded penalty interest rate provisions in the event auctions fail to set the security’s interest rate. These penalty rates are based upon a stated interest rate spread over what is typically a short-term base interest rate index. As short-term

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

interest rates rise, the penalty rate that is specified in the security increases. Changes in interest rates impact the fair value of our ARS portfolio, as we estimate that at some level of increase in short-term interest rates, issuers of the securities will have the economic incentive to refinance (and thus prepay) the securities. The faster and steeper short-term interest rates rise, the earlier prepayments will likely occur and the higher the fair value of the security. Therefore, the short-term interest rate assumption directly impacts the input related to the timing of any projected prepayment.

Private equity ~~investments:~~investments

The significant unobservable inputs used in the fair value measurement of private equity investments generally relate to the financial performance of the investment entity and the market’s required return on investments from entities in industries in which we hold investments. ~~Significant increases/(decreases)~~Increases in ~~our investment entities’ future economic performance will~~the discount rate would have resulted in a ~~corresponding increase/(decrease) on~~lower fair value measurement. Increases in the ~~valuation results. The~~terminal EBITDA multiple would have resulted in a higher fair value ~~of our investment moves inversely with~~measurement. Increases in the ~~market’s expectation of returns from such investments. Should the market require higher returns from industries~~terminal year are dependent upon each investment’s strategy, but generally result in ~~which we are invested, all other factors held constant, our investments will decrease in value. Should the market accept~~a lower ~~returns from industries in which we are invested, all other factors held constant, our investments will increase in value.~~fair value measurement.

Investments in private equity measured at net asset value per share

As more fully described in Note 2 of our ~~2017~~2019 Form 10-K, as a practical expedient, we utilize ~~net asset value (“NAV”)~~NAV or its equivalent to determine the recorded value of a portion of our private equity investments portfolio. We utilize NAV when the fund investment does not have a readily determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.

Our private equity portfolio ~~as of December 31, 2017 included~~includes various direct ~~and third party~~investments, as well as investments in third-party private equity ~~investments~~funds and various legacy private equity funds which we sponsor. The portfolio is primarily invested in a broad range of industries including leveraged buyouts, growth capital, distressed capital, venture capital and mezzanine capital.

Due to the closed-end nature of certain of our fund investments, such investments cannot be redeemed directly with the funds. Our investment is monetized ~~through~~by distributions received through the liquidation of the underlying assets of those ~~funds. We anticipate 90%~~funds, the timing of ~~these underlying assets will be liquidated over a period of five years or less, with the remaining 10% to be liquidated over a period of nine years.~~which is uncertain.

The following table ~~below~~ presents the recorded value and unfunded commitments related to our private equity investments portfolio.


$ in millions	Recorded value		Unfunded commitment
June 30, 2020
Private equity investments measured at NAV	$	73	$	9
Private equity investments not measured at NAV	30
Total private equity investments	$	103

September 30, 2019
Private equity investments measured at NAV	$	83	$	15
Private equity investments not measured at NAV	63
Total private equity investments	$	146

Unfunded commitment
$ in thousands Recorded value RJF Noncontrolling interests Total
December 31, 2017
Private equity investments measured at NAV $ 100,223
$ 20,739
$ 2,256
$ 22,995
Private equity investments not measured at NAV 88,810

Total private equity investments
$ 189,033

September 30, 2017
Private equity investments measured at NAV $ 109,894
$ 20,973
$ 2,273
$ 23,246
Private equity investments not measured at NAV 88,885

Total private equity investments $ 198,779

Of the total private equity investments, the portions we owned were ~~$138~~$81 million and ~~$145~~$99 million as of ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, respectively.The portions of the private equity investments we did not own were ~~$51~~$22 million and ~~$54~~$47 million as of ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, respectively, and were included as a component of noncontrolling interests inon our Condensed Consolidated Statements of Financial Condition.

Many of these fund investments meet the definition of prohibited ~~“covered funds”~~covered funds as defined by the Volcker Rule ofenacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of ~~2010 (the “Dodd-Frank Act”).~~2010. We have received approval from the Board of Governors of the Federal Reserve System (the “Fed”) to continue to hold the majority of our ~~“covered fund”~~covered fund investments ~~for up to an additional five-year conformance period, thereby extending our applicable holding period~~ until July ~~2022 for such investments.~~2022. However, our current focus is on the divestiture of this portfolio.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Fair value option~~

~~The~~Financial instruments measured at fair value ~~option is an accounting election that allows the reporting entity to apply~~on a nonrecurring basis

The following table presents assets measured at fair value ~~accounting for certain financial~~on a nonrecurring basis along with the valuation techniques and significant unobservable inputs used in the valuation of the assets ~~and liabilities on an instrument~~classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments. Weighted averages are calculated by ~~instrument basis. As of~~ ~~December 31, 2017~~,weighting each input by the ~~amount of financial instruments for which we had elected the~~relative fair value ~~option was~~of the related financial instrument.


$ in millions	Level 2		Level 3		Total fair value		Valuation technique(s)	Unobservable input	Range (weighted-average)
June 30, 2020
Bank loans, net:
Impaired loans: residential	$	5	$	13	$	18	Discounted cash flow	Prepayment rate	7 yrs. - 12 yrs. (10.4 yrs.)
Impaired loans: corporate	$	—	$	7	$	7	Collateral or discounted cash flow ⁽¹⁾	Not meaningful ⁽¹⁾	Not meaningful ⁽¹⁾
Loan held for sale	$	21	$	—	$	21	N/A	N/A	N/A
Other assets: other real estate owned	$	1	$	—	$	1	N/A	N/A	N/A

September 30, 2019
Bank loans, net:
Impaired loans: residential	$	7	$	14	$	21	Discounted cash flow	Prepayment rate	7 yrs. - 12 yrs. (10.4 yrs.)
Impaired loans: corporate	$	—	$	21	$	21	Collateral or discounted cash flow ⁽¹⁾	Not meaningful ⁽¹⁾	Not meaningful ⁽¹⁾
Loan held for sale	$	66	$	—	$	66	N/A	N/A	N/A
Other assets: other real estate owned	$	1	$	—	$	1	N/A	N/A	N/A

(1) The valuation techniques used for the corporate loans are based on collateral value less selling costs for the collateral dependent loans and discounted cash flows for impaired loans that are not ~~material.~~collateral dependent.

~~Other~~Financial instruments not recorded at fair value ~~disclosures~~

Many, but not all, of the financial instruments we hold ~~are~~were recorded at fair value inon the Condensed Consolidated Statements of Financial Condition. The following table presents the estimated fair value and fair value hierarchy of financial assets and liabilities that are not recorded at fair value in accordance with GAAP on the Condensed Consolidated Statements of Financial Condition at June 30, 2020 and September 30, 2019. This table excludes financial instruments that are carried at amounts which approximate fair value. Refer to Note 4 of our ~~2017~~2019 Form 10-K for a discussion of the ~~methods and assumptions we apply to the determination of~~ fair value hierarchy classification of our financial instruments that are not recorded at fair value.


$ in millions	Level 2		Level 3		Total estimated fair value		Carrying amount
June 30, 2020
Financial assets:
Bank loans, net	$	65	$	21,278	$	21,343	$	21,177

Financial liabilities:
Bank deposits - certificates of deposit	$	—	$	1,126	$	1,126	$	1,088
Senior notes payable	$	2,413	$	—	$	2,413	$	2,044

September 30, 2019
Financial assets:
Bank loans, net	$	75	$	20,710	$	20,785	$	20,783

Financial liabilities:
Bank deposits - certificates of deposit	$	—	$	617	$	617	$	605
Senior notes payable	$	1,760	$	—	$	1,760	$	1,550

The table below presents the estimated fair values by level within the fair value hierarchy and the carrying amounts of certain of our financial instruments not carried at fair value. The carrying amounts below exclude financial instruments which have been recorded at fair value and those recorded at amounts which approximate fair value in the Condensed Consolidated Statements of Financial Condition.

$ in thousands
Quoted prices
in active
markets for
identical
instruments
(Level 1)

Significant
other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)
Total estimated fair value Carrying amount
December 31, 2017
Financial assets:
Bank loans, net $ —
$ 104,044
$ 17,353,626
$ 17,457,670
$ 17,588,476
Loans to financial advisors, net $ —
$ —
$ 704,853
$ 704,853
$ 879,929
Financial liabilities:

Bank deposits $ —
$ 18,392,535
$ 329,977
$ 18,722,512
$ 18,725,545
Other borrowings $ —
$ 28,030
$ —
$ 28,030
$ 27,627
Senior notes payable $ —
$ 1,693,153
$ —
$ 1,693,153
$ 1,548,975

September 30, 2017
Financial assets:
Bank loans, net $ —
$ 23,001
$ 16,836,745
$ 16,859,746
$ 16,954,042
Loans to financial advisors, net $ —
$ —
$ 698,862
$ 698,862
$ 863,647
Financial liabilities:

Bank deposits $ —
$ 17,417,678
$ 313,359
$ 17,731,037
$ 17,732,362
Other borrowings $ —
$ 29,278
$ —
$ 29,278
$ 28,813
Senior notes payable $ —
$ 1,647,696
$ —
$ 1,647,696
$ 1,548,839

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 54 – AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities are primarily comprised of agency MBS and CMOs owned by Raymond James Bank ~~N.A.~~ (“RJ Bank”) ~~and ARS owned by one of our non-broker-dealer subsidiaries.~~. Refer to the discussion of our available-for-sale securities accounting policies, including the fair value determination process, in Note 2 of our ~~2017~~2019 Form 10-K.

The following table details the amortized cost and fair values of our available-for-sale ~~securities were as follows:~~securities.


$ in millions	Cost basis		Gross unrealized gains		Gross unrealized losses		Fair value
June 30, 2020
Agency residential MBS	$	2,895	$	69	$	(1)	$	2,963
Agency commercial MBS	570		20		—		590
Agency CMOs	2,032		29		—		2,061
Other securities	15		1		—		16
Total available-for-sale securities	$	5,512	$	119	$	(1)	$	5,630

September 30, 2019
Agency residential MBS	$	1,555	$	20	$	(1)	$	1,574
Agency commercial MBS	305		5		—		310
Agency CMOs	1,195		7		(3)		1,199
Other securities	10		—		—		10
Total available-for-sale securities	$	3,065	$	32	$	(4)	$	3,093

$ in thousands Cost basis
Gross
unrealized gains

Gross
unrealized losses
Fair value
December 31, 2017
Agency MBS and CMOs $ 2,309,741
$ 180
$ (24,870 ) $ 2,285,051
Other securities 1,575
—
(788 ) 787
Total RJ Bank available-for-sale securities 2,311,316
180
(25,658 ) 2,285,838
ARS preferred securities 101,674
5,809
—
107,483
Total available-for-sale securities $ 2,412,990

$ 5,989

$ (25,658 )
$ 2,393,321
September 30, 2017

Agency MBS and CMOs $ 2,089,153
$ 1,925
$ (9,999 ) $ 2,081,079
Other securities 1,575
—
(543 ) 1,032
Total RJ Bank available-for-sale securities 2,090,728
1,925
(10,542 ) 2,082,111
ARS preferred securities 101,674
4,497
—
106,171
Total available-for-sale securities $ 2,192,402

$ 6,422

$ (10,542 )
$ 2,188,282

See Note 43 for additional information regarding the fair value of available-for-sale securities.

The following table details the contractual maturities, amortized ~~cost,~~costs, carrying values and current yields for our available-for-sale ~~securities are as presented below.~~securities. Since ~~RJ Bank’s~~our MBS and CMO available-for-sale securities ~~(MBS and CMOs)~~ are backed by mortgages, actual maturities ~~will~~may differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. ~~Expected maturities~~As of ~~ARS may differ significantly from contractual maturities, as issuers may have~~June 30, 2020, the ~~right to call or prepay obligations with or without call or prepayment penalties.~~duration of our available-for-sale securities portfolio was approximately three years.


	June 30, 2020
$ in millions	Within one year			After one but within five years			After five but within ten years			After ten years			Total
Agency residential MBS
Amortized cost	$	—		$	27		$	1,130		$	1,738		$	2,895
Carrying value	$	—		$	28		$	1,160		$	1,775		$	2,963
Agency commercial MBS
Amortized cost	$	12		$	170		$	285		$	103		$	570
Carrying value	$	12		$	175		$	298		$	105		$	590
Agency CMOs
Amortized cost	$	—		$	11		$	81		$	1,940		$	2,032
Carrying value	$	—		$	11		$	82		$	1,968		$	2,061
Other securities
Amortized cost	$	—		$	3		$	12		$	—		$	15
Carrying value	$	—		$	4		$	12		$	—		$	16
Total available-for-sale securities
Amortized cost	$	12		$	211		$	1,508		$	3,781		$	5,512
Carrying value	$	12		$	218		$	1,552		$	3,848		$	5,630
Weighted-average yield	1.99		%	2.29		%	2.05		%	1.82		%	1.90		%

December 31, 2017
$ in thousands Within one year
After one but
within five years

After five but
within ten years
After ten years Total
Agency MBS and CMOs:
Amortized cost $ —
$ 143,299
$ 745,234
$ 1,421,208
$ 2,309,741
Carrying value —
142,159
737,410
1,405,482
2,285,051
Weighted-average yield —
2.09 % 1.94 % 2.01 % 1.99 %
Other securities:
Amortized cost $ —
$ —
$ —
$ 1,575
$ 1,575
Carrying value —
—
—
787
787
Weighted-average yield —
—
—
—
—
Sub-total agency MBS and CMOs and other securities:

Amortized cost $ —
$ 143,299
$ 745,234
$ 1,422,783
$ 2,311,316
Carrying value —
142,159
737,410
1,406,269
2,285,838
Weighted-average yield —
2.09 % 1.94 % 2.01 % 1.99 %
ARS Preferred securities:

Amortized cost $ —
$ —
$ —
$ 101,674
$ 101,674
Carrying value —
—
—
107,483
107,483
Weighted-average yield —
—
—
2.52 % 2.52 %
Total available-for-sale securities:

Amortized cost $ —
$ 143,299
$ 745,234
$ 1,524,457
$ 2,412,990
Carrying value —
142,159
737,410
1,513,752
2,393,321
Weighted-average yield —
2.09 % 1.94 % 2.05 % 2.01 %

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table details the gross unrealized losses and fair ~~value,~~values of securities that were in a loss position at the reporting period end, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss ~~position, are as follows:~~position.


	Less than 12 months						12 months or more						Total
$ in millions	Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses
June 30, 2020
Agency residential MBS	$	284	$	(1)	$	—	$	—	$	284	$	(1)

Agency CMOs	149		—		—		—		149		—

Total	$	433	$	(1)	$	—	$	—	$	433	$	(1)

September 30, 2019
Agency residential MBS	$	166	$	—	$	114	$	(1)	$	280	$	(1)
Agency commercial MBS	—		—		44		—		44		—
Agency CMOs	145		(1)		351		(2)		496		(3)
Other securities	2		—		—		—		2		—
Total	$	313	$	(1)	$	509	$	(3)	$	822	$	(4)

Less than 12 months 12 months or more Total
$ in thousands
Estimated
fair value

Unrealized
losses

Estimated
fair value

Unrealized
losses

Estimated
fair value

Unrealized
losses
December 31, 2017
Agency MBS and CMOs $ 1,691,798
$ (14,157 ) $ 535,183
$ (10,713 ) $ 2,226,981
$ (24,870 )
Other securities —
—
787
(788 ) 787
(788 )
Total $ 1,691,798
$ (14,157 ) $ 535,970
$ (11,501 ) $ 2,227,768
$ (25,658 )

Less than 12 months 12 months or more Total
$ in thousands
Estimated
fair value

Unrealized
losses

Estimated
fair value

Unrealized
losses

Estimated
fair value

Unrealized
losses
September 30, 2017
Agency MBS and CMOs $ 1,119,715
$ (5,621 ) $ 295,528
$ (4,378 ) $ 1,415,243
$ (9,999 )
Other securities —
—
1,032
(543 ) 1,032
(543 )
Total $ 1,119,715
$ (5,621 ) $ 296,560
$ (4,921 ) $ 1,416,275
$ (10,542 )

The reference point for determining when securities are in a loss position is the reporting period end. As such, it is possible that a security had a fair value that exceeded its amortized cost on other days during the period.

~~Agency MBS and CMOs and Non-agency CMOs~~

~~The Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Associations (“GNMA”) guarantee the~~ contractual cash flows of our available-for-sale securities are guaranteed by the ~~agency MBS and CMOs.~~U.S. government or its agencies. At ~~December 31, 2017~~,June 30, 2020, of the ~~195 U.S. government-sponsored enterprise MBS and CMOs~~26 available-for-sale securities in an unrealized loss position, ~~133~~all were in a continuous unrealized loss position for less than 12 months and 62 were for 12 months or more. We do not consider these securities to be other-than-temporarily impaired due to the guarantee provided by FNMA, FHLMC, and GNMA of the full payment of principal and interest, and the fact that we have the ability and intent to hold these securities.months. At ~~December 31, 2017,~~June 30, 2020, debt securities we held ~~from FNMA~~in excess of ten percent of our equity included Federal National Home Mortgage Association (“FNMA”) and ~~FHLMC~~Federal Home Loan Mortgage Corporation (“FHLMC”) which had an amortized cost of ~~$1.56~~$3.78 billion and ~~$626 million,~~$1.44 billion, respectively, and a fair value of ~~$1.54~~$3.86 billion and ~~$617 million,~~$1.47 billion, respectively.

During the three and nine months ended ~~December 31, 2017, there were no sales~~June 30, 2020, we received proceeds of ~~agency MBS and CMO available-for-sale securities. During the three months ended December 31, 2016, there were $7~~$222 million, ~~in proceeds from the sale of non-agency CMO available-for-sale securities. These sales resulted~~resulting in an insignificant ~~loss, which~~gain, from sales of available-for-sale securities. The gain from the sales was included in ~~“Other revenues”~~“Other” revenues on our Condensed Consolidated Statements of Income and Comprehensive Income.

~~ARS~~

Our cost basis in the ARS we hold is the fair value of the securities in the period in which we acquired them. The par value of the ARS we held as of December 31, 2017 was $120 million. Only those ARS whose amortized cost basis we do not expect to recover in full are considered to be other-than-temporarily impaired, as we have the ability and intent to hold these securities. All of our ARS securities are evaluated for OTTI on a quarterly basis. As of December 31, 2017, there were no ARS preferred securities with a fair value less than cost basis.

During the three and nine months ended ~~December 31, 2017,~~June 30, 2019, there were no0 sales of ~~ARS. During the three months ended December 31, 2016, sales of ARS were insignificant.~~available-for-sale securities.

~~Other-than-temporarily impaired securities~~

~~There is no intent to sell our ARS and it was not more likely than not that we would be required to sell these securities as of December 31, 2017.~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Changes in the amount of OTTI related to credit losses recognized in “Other revenues” on available-for-sale securities were as follows:~~

Three months ended December 31,
$ in thousands 2017 2016
Amount related to credit losses on securities we held at the beginning of the period $ —
$ 8,107
Decreases to the amount related to credit losses for securities sold during the period —
(2,353 )
Amount related to credit losses on securities we held at the end of the period $ —
$ 5,754

NOTE 65 – DERIVATIVE ~~FINANCIAL INSTRUMENTS~~ASSETS AND DERIVATIVE LIABILITIES

Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative liabilities” inon our Condensed Consolidated Statements of Financial Condition. Cash flows related to our ~~derivative contracts~~derivatives are included within operating activities inon the Condensed Consolidated Statements of Cash Flows. The significant accounting policies governing our ~~derivative financial instruments,~~derivatives, including our methodologies for determining fair value, are described in Note 2 of our ~~2017~~2019 Form 10-K.

~~Derivatives arising from our fixed income business operations~~

We enter into interest rate contracts as part of our fixed income business to facilitate client transactions or to actively manage risk exposures that arise from our client activity, including a portion of our trading inventory. The majority of these derivatives are traded in the over-the-counter market and are executed directly with another counterparty or are cleared and settled through a clearing organization.

We also facilitate matched book derivative transactions in which Raymond James Financial Products, Inc. (“RJFP”), a wholly owned subsidiary, enters into interest rate derivative transactions with clients. For every derivative transaction RJFP enters into with a client, it also enters into an offsetting derivative on terms that mirror the client transaction with a credit support provider, which is a third-party financial institution. Any collateral required to be exchanged under these derivative contracts is administered directly between the client and the third-party financial institution. Due to this pass-through transaction structure, RJFP has completely mitigated the market and credit risk on these derivative contracts. As a result, derivatives for which the fair value is in an asset position have an equal and offsetting derivative liability. RJFP only has credit risk on its uncollected derivative transaction fee revenues. The receivable for uncollected derivative transaction fee revenues of RJFP was $5 million at both December 31, 2017 and September 30, 2017, and is included in “Other receivables” on our Condensed Consolidated Statements of Financial Condition.

~~Derivatives arising from RJ Bank’s business operations~~

We enter into forward foreign exchange contracts and interest rate swaps to hedge certain exposures arising out of RJ Bank’s business operations (see Note 2 of the 2017 Form 10-K for the accounting policies associated with these transactions). Each of these activities is described further below.

We enter into three-month forward foreign exchange contracts primarily to hedge the risks related to RJ Bank’s investment in their Canadian subsidiary as well as their risk resulting from transactions denominated in currencies other than the U.S. dollar. The majority of these derivatives are designated as net investment hedges.

The cash flows associated with certain assets held by RJ Bank provide interest income at fixed interest rates. Therefore, the value of these assets, absent any risk mitigation, is subject to fluctuation based upon changes in market rates of interest over time. RJ Bank enters into floating-rate advances from the Federal Home Loan Bank of Atlanta (“FHLB”) to, in part, fund these assets and then enters into interest rate swaps which swap variable interest payments on this debt for fixed interest payments. These interest rate swaps are designated as cash flow hedges and effectively fix RJ Bank’s cost of funds associated with these assets to mitigate a portion of the market risk.

~~Derivative arising from our acquisition of Alex. Brown~~

As part of our acquisition of Alex. Brown (see Note 3 of the 2017 Form 10-K for additional information regarding the acquisition), we assumed certain DBRSU awards, including the associated plan terms and conditions. The DBRSU awards contain performance conditions based on Deutsche Bank and subsidiaries attaining certain financial results and will ultimately be settled in DB common shares, provided the performance metrics are achieved. The DBRSU obligation results in a derivative, the fair value and notional of

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

which is measured by multiplying the number of outstanding DBRSU awards to be settled in DB common shares as of the end of the reporting period by the end of reporting period DB share price, as traded on the New York Stock Exchange.

~~Counterparty netting and collateral related to derivative contracts~~

To reduce credit exposure on certain of our derivative transactions, we may enter into a master netting arrangement that allows for net settlement of all derivative transactions with each counterparty. In addition, the credit support annex allows parties to the master netting agreement to mitigate their credit risk by requiring the party which is out of the money to post collateral. We accept collateral in the form of cash or other marketable securities. Where permitted, we elect to net-by-counterparty certain derivative contracts entered into under a legally enforceable master netting agreement and, therefore, the fair value of those derivative contracts are netted by counterparty in the Condensed Consolidated Statements of Financial Condition. As we elect to net-by-counterparty the fair value of such derivative contracts, we also net-by-counterparty cash collateral exchanged as part of those derivative agreements. We may also require certain counterparties to make a deposit at the inception of a derivative agreement, referred to as “initial margin.” This initial margin is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition.

We are also required to maintain cash or marketable security deposits with the clearing organizations we utilize to clear certain of our interest rate derivative transactions. This initial margin is included as a component of “Receivables from brokers, dealers and clearing organizations” for cash initial margin or “Other investments” for marketable securities initial margin in our Condensed Consolidated Statements of Financial Condition. On a daily basis we also pay cash to or receive cash from these clearing organizations due to changes in the fair value of the derivatives which they clear. Such payments are referred to as “variation margin” and are considered to be settlement of the related derivatives.

RJ Bank provides to counterparties for the benefit of its U.S. subsidiaries, a guarantee of payment in the event of the subsidiary’s default under forward foreign exchange contracts. Due to this RJ Bank guarantee and the short-term nature of these derivatives, RJ Bank’s U.S. subsidiaries are generally not required to post collateral with and do not generally receive collateral from the respective counterparties.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Derivative balances included inon our financial statements

The following table ~~below~~ presents the gross fair value and notional amount of ~~derivative contracts~~derivatives by product type, the amounts of counterparty and cash collateral netting inon our Condensed Consolidated Statements of Financial Condition, as well as collateral posted and received under credit support agreements that do not meet the criteria for netting under GAAP.


	June 30, 2020										September 30, 2019
$ in millions	Derivative assets		Derivative liabilities		Notional amount		Derivative assets		Derivative liabilities		Notional amount
Derivatives not designated as hedging instruments
Interest rate - matched book	$	351	$	351	$	2,182	$	280	$	280	$	2,296
Interest rate - other ⁽¹⁾	254		171		15,443		184		146		10,690
Foreign exchange	—		5		623		—		1		573
Other	—		1		516		—		6		272
Subtotal	605		528		18,764		464		433		13,831
Derivatives designated as hedging instruments
Interest rate	—		—		850		1		—		850
Foreign exchange	—		7		842		—		1		856
Subtotal	—		7		1,692		1		1		1,706
Total gross fair value/notional amount	605		535		$	20,456	465		434		$	15,537
Offset on the Condensed Consolidated Statements of Financial Condition
Counterparty netting	(41)		(41)				(24)		(24)
Cash collateral netting	(112)		(100)				(103)		(97)
Total amounts offset	(153)		(141)				(127)		(121)
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	452		394				338		313
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
Financial instruments ⁽²⁾	(373)		(351)				(297)		(280)
Total	$	79	$	43			$	41	$	33

December 31, 2017 September 30, 2017
$ in thousands Derivative assets Derivative liabilities Notional amount Derivative assets Derivative liabilities Notional amount
Derivatives not designated as hedging instruments
Interest rate contracts:
Matched book $ 263,851
$ 263,851
$ 2,687,828
$ 288,035
$ 288,035
$ 2,766,488
Other 58,660
85,579
5,093,255
86,436
100,503
4,931,809
Foreign exchange contracts 4
7,032
529,000
3
530
437,783
DBRSU obligation (equity) ⁽¹⁾
—
28,413
28,413
—
25,800
25,800
Subtotal 322,515

384,875

8,338,496

374,474

414,868

8,161,880
Derivatives designated as hedging instruments
Interest rate contracts —
1,236
850,000
—
1,390
850,000
Foreign exchange contracts —
12,678
893,317
29
116
1,048,646
Subtotal —

13,914

1,743,317

29

1,506

1,898,646
Total gross fair value/notional amount 322,515

398,789

$ 10,081,813

374,503

416,374

$ 10,060,526
Offset in the Statements of Financial Condition
Counterparty netting (6,471 ) (6,471 ) (6,045 ) (6,045 )
Cash collateral netting (23,904 ) (35,813 ) (49,683 ) (53,365 )
Total amounts offset (30,375 ) (42,284 ) (55,728 ) (59,410 )
Net amounts presented in the Statements of Financial Condition 292,140
356,505
318,775
356,964

Gross amounts not offset in the Statements of Financial Condition
Financial instruments ⁽²⁾
(267,938 ) (263,851 ) (293,340 ) (288,035 )
Total $ 24,202
$ 92,654
$ 25,435
$ 68,929

(1) ~~The DBRSU obligation is not subject~~Substantially all relates to ~~an enforceable master netting arrangement or other similar arrangement. However, we held shares~~interest rate derivatives entered into as part of DBour fixed income business operations, including to be announced (“TBA”) security contracts that are accounted for as an economic hedge against this obligation with a fair value of $21 million and $19 million as of December 31, 2017 and September 30, 2017, respectively, which are a component of “Other investments” on our Condensed Consolidated Statements of Financial Condition. See additional discussion of the DBRSUs in Note 17.derivatives.

(2) Although the matched book derivative arrangements do not meet the definition of a master netting arrangement as specified by GAAP, the agreement with the third-party intermediary includes terms that are similar to a master netting agreement. As a result, we present the matched book amounts net in the preceding table.

The following table ~~above.~~

~~Gains recognized~~details the gains/(losses) included in accumulated other comprehensive ~~income/(loss)~~income (“AOCI”), net of income taxes, on derivatives designated as hedging ~~instruments are as follows (see~~instruments. These gains/(losses) included any amounts reclassified from AOCI to net income during the period. See Note 1516 for additional ~~information):~~information.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Interest rate (cash flow hedges)	$	(4)	$	(19)	$	(37)	$	(49)
Foreign exchange (net investment hedges)	(21)		(12)		18		14
Total gains/(losses) in AOCI, net of taxes	$	(25)	$	(31)	$	(19)	$	(35)

Three months ended December 31,
$ in thousands 2017 2016
Interest rate contracts (cash flow hedges) $ 6,885
$ 25,738
Foreign exchange contracts (net investment hedges) 5,573
11,326
Total gains recognized in AOCI, net of taxes $ 12,458
$ 37,064

There ~~was no hedge ineffectiveness and no~~were 0 components of derivative gains or losses ~~were~~ excluded from the assessment of hedge effectiveness for each of the three and nine months ended ~~December 31, 2017~~June 30, 2020 and ~~2016.~~2019. We expect to reclassify ~~an estimated $1~~$15 million ~~as additional~~of interest expense out of AOCI and into earnings within the next 12 months. The maximum length of time over which forecasted transactions are or will be hedged is 107 years.

2619

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Gains/~~The following table details the gains/(losses) on derivatives not designated as hedging instruments recognized on the Condensed Consolidated Statements of Income and Comprehensive ~~Income were as follows:~~Income.


$ in millions			Three months ended June 30,									Nine months ended June 30,
		Location of gain/(loss)			2020			2019			2020			2019
Interest rate	Principal transactions/other revenues		$	—		$	2		$	5		$	4
Foreign exchange	Other revenues		$	(19)		$	(8)		$	13		$	14
Other	Compensation, commissions and benefits expense		$	—		$	—		$	(1)		$	5

$ in thousands
Location of gain/(loss) included in the
Condensed Consolidated Statements of Income and Comprehensive Income
Gain/(loss) recognized during the period
Three months ended December 31,
2017 2016
Interest rate contracts:
Matched book Other revenues $ 38
$ (26 )
Other Net trading profit $ 1,562
$ 2,229
Foreign exchange contracts Other revenues $ (1,366 ) $ 7,914
DBRSUs Compensation, commissions and benefits expense $ (2,613 ) $ (6,725 )
DBRSUs Acquisition-related expenses $ —
$ 350

Risks associated with our derivatives and ~~our~~related risk mitigation ~~related to, our derivative contracts~~

Credit risk

We are exposed to credit losses in the event of nonperformance by the counterparties to ~~forward foreign exchange derivative agreements and interest rate contracts~~derivatives that are not cleared through a clearing organization. Where we are subject to credit exposure, we perform a credit evaluation of counterparties prior to entering into derivative transactions and we monitor their credit standings. ~~Currently, we anticipate that all of the counterparties will be able to fully satisfy their obligations under those agreements.~~ We may require initial margin or collateral from counterparties in the form of cash deposits or other marketable securities to support certain of these obligations as established by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties.

Our only exposure to credit risk in the matched book derivatives operations is related to our uncollected derivative transaction fee ~~revenues.~~revenues, which were insignificant as of both June 30, 2020 and September 30, 2019. We are not exposed to market risk ~~as it relates to~~on these ~~derivative contracts~~derivatives due to the pass-through transaction structure ~~previously described.~~described in Note 2 of our 2019 Form 10-K.

Interest rate and foreign exchange risk

We are exposed to interest rate risk related to certain of our interest rate ~~derivative agreements.~~derivatives. We are also exposed to foreign exchange risk related to our forward foreign exchange ~~derivative agreements.~~derivatives. On a daily basis, we monitor our risk exposure inon our ~~derivative agreements~~derivatives based on established limits with respect to a number of factors, including interest rate, foreign exchange spot and forward rates, spread, ratio, basis and volatility ~~risks. These exposures are monitored~~risks, both ~~on a~~for the total portfolio ~~basis~~ and ~~separately for each agreement for selected~~by maturity ~~periods.~~period.

Derivatives with credit-risk-related contingent features

Certain of ~~the~~our derivative ~~instruments arising from our interest rate contracts and forward foreign exchange~~ contracts contain provisions that require our debt to maintain an investment-grade rating from ~~one~~1 or more of the major credit rating agencies. If our debt were to fall below investment-grade, the counterparties to the derivative instruments could terminate and request immediate payment or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position was ~~$10 million at~~ ~~December 31, 2017, for which we had posted $1 million~~insignificant as of ~~collateral. Such amounts were not material at~~both June 30, 2020 and September 30, ~~2017.~~2019.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 76 – COLLATERALIZED AGREEMENTS AND FINANCINGS

Collateralized agreements are securities purchased under agreements to resell (“reverse repurchase agreements”) and securities borrowed. Collateralized financings are securities sold under agreements to repurchase (“repurchase agreements”) and securities loaned. We enter into these transactions in order to facilitate client activities, invest excess cash, acquire securities to cover short positions and finance certain firm activities. The significant accounting policies governing our collateralized agreements and financings are described in Note 2 of our ~~2017~~2019 Form 10-K.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

For financial statement purposes, we do not offset our reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions because the conditions for netting as specified by GAAP are not met. Our reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions are governed by master agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the parties to the transaction. Although not offset on the Condensed Consolidated Statements of Financial Condition, these transactions are included in the following table.


	Assets						Liabilities
$ in millions	Reverse repurchase agreements		Securities borrowed		Repurchase agreements		Securities loaned
June 30, 2020
Gross amounts of recognized assets/liabilities	$	193	$	300	$	228	$	88
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	193		300		228		88
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(193)		(293)		(228)		(78)
Net amounts	$	—	$	7	$	—	$	10

September 30, 2019
Gross amounts of recognized assets/liabilities	$	343	$	248	$	150	$	323
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	343		248		150		323
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(343)		(243)		(150)		(311)
Net amounts	$	—	$	5	$	—	$	12

Assets Liabilities
$ in thousands Reverse repurchase agreements Securities borrowed Repurchase agreements Securities loaned
December 31, 2017
Gross amounts of recognized assets/liabilities $ 307,742
$ 184,971
$ 229,036
$ 290,307
Gross amounts offset in the Condensed Consolidated Statements of Financial Condition —
—
—
—
Net amounts presented in the Condensed Consolidated Statements of Financial Condition 307,742

184,971

229,036

290,307
Gross amounts not offset in the Condensed Consolidated Statements of Financial Condition (307,742 ) (178,524 ) (229,036 ) (277,154 )
Net amount $ —
$ 6,447
$ —
$ 13,153
September 30, 2017
Gross amounts of recognized assets/liabilities $ 404,462
$ 138,319
$ 220,942
$ 383,953
Gross amounts offset in the Condensed Consolidated Statements of Financial Condition —
—
—
—
Net amounts presented in the Condensed Consolidated Statements of Financial Condition 404,462

138,319

220,942

383,953
Gross amounts not offset in the Condensed Consolidated Statements of Financial Condition (404,462 ) (134,304 ) (220,942 ) (373,132 )
Net amount $ —
$ 4,015
$ —
$ 10,821

~~The required market value of the collateral associated with collateralized agreements and financings generally exceeds the amount financed. Accordingly, the total~~Total collateral received under reverse repurchase agreements and the total amount of collateral posted under repurchase agreements exceeds the carrying value of these agreements inon our Condensed Consolidated Statements of Financial Condition. In the event the market value of the securities we pledge as collateral in these activities declines, we may have to post additional collateral or reduce the borrowing amounts. We monitor such levels daily.

Collateral received and pledged

We receive cash and securities as collateral, primarily in connection with reverse repurchase agreements, securities borrowed, derivative transactions ~~not transacted through a clearing organization,~~ and client margin loans. The collateral we receive reduces our credit exposure to individual counterparties.

In many cases, we are permitted to deliver or repledge financial instruments we have received as collateral ~~for~~to satisfy our ~~own use in~~collateral requirements under our repurchase agreements, securities lending agreements or other secured borrowings, ~~satisfaction of~~to satisfy deposit requirements with clearing organizations, or to otherwise ~~meeting~~meet either our or our clients’ settlement requirements.

The following table ~~below~~ presents financial instruments at fair value that we received as collateral, ~~are~~were not included on our Condensed Consolidated Statements of Financial Condition, and that were available to be delivered or repledged, along with the balances of such instruments that were delivered or repledged, to satisfy one of our purposes ~~described above:~~previously described.


$ in millions	June 30, 2020		September 30, 2019
Collateral we received that was available to be delivered or repledged	$	2,516	$	2,931
Collateral that we delivered or repledged	$	723	$	897

$ in thousands December 31,
2017 September 30,
2017
Collateral we received that is available to be delivered or repledged $ 2,891,841
$ 3,030,736
Collateral that we delivered or repledged $ 957,943
$ 1,068,912

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Encumbered assets

We pledge certain of our ~~financial instruments~~assets to collateralize either repurchase agreements or other secured borrowings, maintain lines of credit, or to satisfy our collateral or settlement requirements with counterparties or clearing organizations who may or may not have the right to deliver or repledge such ~~securities.~~instruments. The following table ~~below~~ presents information about ~~the fair value of~~ our assets that have been pledged for one of the purposes ~~described above:~~previously described.


$ in millions	June 30, 2020		September 30, 2019
Had the right to deliver or repledge	$	334	$	591
Did not have the right to deliver or repledge	$	65	$	65
Bank loans, net pledged at Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank (“FRB”)	$	5,352	$	4,653

$ in thousands December 31,
2017 September 30,
2017
Financial instruments owned, at fair value, pledged to counterparties that:
Had the right to deliver or repledge $ 341,304
$ 363,739
Did not have the right to deliver or repledge $ 129,260
$ 44,930

Repurchase agreements, repurchase-to-maturity transactions and securities loaned accounted for as secured borrowings

The following table presents the remaining contractual maturity of repurchase agreements and securities lending transactions accounted for as secured ~~borrowings:~~borrowings.


$ in millions	Overnight and continuous		Up to 30 days		30-90 days		Greater than 90 days		Total
June 30, 2020
Repurchase agreements:
Government and agency obligations	$	104	$	—	$	—	$	—	$	104
Agency MBS and CMOs	124		—		—		—		124
Total repurchase agreements	228		—		—		—		228
Securities loaned:
Equity securities	88		—		—		—		88
Total	$	316	$	—	$	—	$	—	$	316



September 30, 2019
Repurchase agreements:
Government and agency obligations	$	70	$	—	$	—	$	—	$	70
Agency MBS and CMOs	80		—		—		—		80
Total repurchase agreements	150		—		—		—		150
Securities loaned:
Equity securities	323		—		—		—		323
Total	$	473	$	—	$	—	$	—	$	473

$ in thousands Overnight and continuous Up to 30 days 30-90 days Greater than 90 days Total
As of December 31, 2017:
Repurchase agreements
Government and agency obligations $ 48,281
$ —
$ —
$ —
$ 48,281
Agency MBS and CMOs 180,755
—
—
—
180,755
Total Repurchase Agreements 229,036

—

—

—

229,036

Securities loaned
Equity securities 290,307
—
—
—
290,307
Total $ 519,343

$ —

$ —

$ —

$ 519,343
Gross amounts of recognized liabilities for repurchase agreements and securities loaned included in the table within this footnote $ 519,343
Amounts related to repurchase agreements and securities loaned not included in the table within this footnote $ —

As of September 30, 2017:
Repurchase agreements
Government and agency obligations $ 107,284
$ —
$ —
$ —
$ 107,284
Agency MBS and CMOs 113,658
—
—
—
113,658
Total Repurchase Agreements 220,942

—

—

—

220,942

Securities loaned
Equity securities 383,953
—
—
—
383,953
Total $ 604,895
$ —
$ —
$ —
$ 604,895
Gross amounts of recognized liabilities for repurchase agreements and securities loaned included in the table within this footnote $ 604,895
Amounts related to repurchase agreements and securities loaned not included in the table within this footnote $ —

As of both ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, we did ~~not~~0t have any “repurchase-to-maturity” agreements, which are repurchase agreements where a security is transferred under an agreement to repurchase and the maturity date of the repurchase agreement matches the maturity date of the underlying security.

NOTE 87 – BANK LOANS, NET

Bank client receivables are comprised of loans originated or purchased by RJ Bank and include commercial and industrial (“C&I”) loans, tax-exempt loans, ~~securities based loans (“SBL”), and~~ commercial and residential real estate loans, securities-based loans (“SBL”) and other loans. These receivables are collateralized by first orand, to a lesser extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue or are unsecured. See Note 2 of our 2019 Form 10-K for a discussion of accounting policies related to bank loans and allowances for losses.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

We segregate our loan portfolio into ~~six~~6 loan portfolio segments: C&I, commercial real estate (“CRE”), CRE construction, tax-exempt, residential mortgage, and ~~SBL.~~SBL and other. These portfolio segments also serve as the portfolio loan classes for purposes of credit analysis, except for residential mortgage loans which are further disaggregated into residential first mortgage and residential home equity classes.

~~See Note 2 of our 2017 Form 10-K for a discussion of our accounting policies related~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to bank loans and allowances for losses, including the policies regarding loans held for investment, loans held for sale, off-balance sheet loan commitments, nonperforming assets, troubled debt restructurings (“TDRs”), impaired loans, the allowance for loan losses and reserve for unfunded lending commitments, and loan charge-off policies.Condensed Consolidated Financial Statements (Unaudited)

The following table presents the balances for both the held for sale and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in RJ Bank’s total loan portfolio. “Loans held for sale, net” and “Total loans held for investment, net” in the following table ~~below~~ are presented net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs.


	June 30, 2020						September 30, 2019
$ in millions	Balance		%		Balance		%
Loans held for investment:
C&I loans	$	7,731	36	%	$	8,098	38	%
CRE construction loans	219		1	%	185		1	%
CRE loans	3,695		17	%	3,652		17	%
Tax-exempt loans	1,290		6	%	1,241		6	%
Residential mortgage loans	4,917		23	%	4,454		21	%
SBL and other	3,631		17	%	3,349		16	%
Total loans held for investment	21,483				20,979
Net unearned income and deferred expenses	(12)				(12)
Total loans held for investment, net	21,471				20,967
Loans held for sale, net	86		—		142		1	%
Total loans held for sale and investment	21,557		100	%	21,109		100	%
Allowance for loan losses	(334)				(218)
Bank loans, net	$	21,223			$	20,891

December 31, 2017 September 30, 2017
$ in thousands Balance % Balance %
Loans held for investment:

C&I loans $ 7,490,219
42 % $ 7,385,910
43 %
CRE construction loans 164,847
1 % 112,681
1 %
CRE loans 3,136,101
18 % 3,106,290
18 %
Tax-exempt loans 1,136,468
6 % 1,017,791
6 %
Residential mortgage loans 3,270,780
18 % 3,148,730
18 %
SBL 2,530,521
14 % 2,386,697
14 %
Total loans held for investment 17,728,936

17,158,099

Net unearned income and deferred expenses (30,231 )
(31,178 )
Total loans held for investment, net 17,698,705

17,126,921

Loans held for sale, net 189,862
1 % 70,316
—
Total loans held for sale and investment 17,888,567
100 % 17,197,237
100 %
Allowance for loan losses (191,269 )
(190,442 )
Bank loans, net $ 17,697,298

$ 17,006,795

At ~~December 31, 2017,~~June 30, 2020, the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. See Note 12 for more information regarding borrowings from the FHLB.

Loans held for sale

RJ Bank originated or purchased ~~$358~~$185 million and ~~$522 million~~$1.33 billion of loans held for sale during the three and nine months ended ~~December 31, 2017~~June 30, 2020, respectively, and ~~2016,~~$522 million and $1.79 billion during the three and nine months ended June 30, 2019, respectively. Proceeds from the sale of these held for sale loans amounted to ~~$92~~$130 million and ~~$150~~$564 million during the three and nine months ended ~~December 31, 2017~~June 30, 2020, respectively, and ~~2016,~~$159 million and $516 million during the three and nine months ended June 30, 2019, respectively. Net gains resulting from such sales amounted to $1 million in both the three months ended December 31, 2017 and 2016. Unrealized losses recorded in the Condensed Consolidated Statements of Income and Comprehensive Income to reflect the loans held for sale at the lower of cost or market value were insignificant in ~~both~~all periods during the three and nine months ended ~~December 31, 2017~~June 30, 2020 and ~~2016.~~2019.

Purchases and sales of loans held for investment

The following table presents purchases and sales of any loans held for investment by portfolio ~~segment:~~

segment.


$ in thousands	C&I		CRE		Residential mortgage		Total
Three months ended December 31, 2017
$ in millions									$ in millions	C&I loans		CRE loans		Residential mortgage loans		Total
Three months ended June 30, 2020									Three months ended June 30, 2020
Purchases	$	147,442	$	20,087	$	45,011	$	212,540	Purchases	$	—	$	—	$	113	$	113
Sales	$	31,143	$	—	$	—	$	31,143	Sales	$	265	$	27	$	—	$	292
Three months ended December 31, 2016
Nine months ended June 30, 2020									Nine months ended June 30, 2020
Purchases	$	114,649	$	38,980	$	81,662	$	235,291	Purchases	$	363	$	5	$	371	$	739
Sales	$	81,579	$	—	$	—	$	81,579	Sales	$	285	$	27	$	—	$	312
Three months ended June 30, 2019									Three months ended June 30, 2019
Purchases									Purchases	$	247	$	10	$	132	$	389
Sales									Sales	$	7	$	—	$	—	$	7
Nine months ended June 30, 2019									Nine months ended June 30, 2019
Purchases									Purchases	$	937	$	35	$	254	$	1,226
Sales									Sales	$	100	$	—	$	—	$	100

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Sales in the preceding table ~~above~~ represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period. As more fully described in Note 2 of our ~~2017~~2019 Form 10-K, corporate loan (C&I, CRE and CRE construction) sales generally occur as part of ~~a loan workout situation.~~our credit management activities.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Aging analysis of loans held for investment

The following table presents an analysis of the payment status of loans held for ~~investment:~~investment. Amounts in the table exclude any net unearned income and deferred expenses.


$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual		Current and accruing		Total loans held for investment
June 30, 2020
C&I loans	$	—	$	—	$	—	$	1	$	7,730	$	7,731
CRE construction loans	—		—		—		—		219		219
CRE loans	—		—		—		6		3,689		3,695
Tax-exempt loans	—		—		—		—		1,290		1,290
Residential mortgage loans:
First mortgage loans	4		—		4		14		4,875		4,893
Home equity loans/lines	—		—		—		—		24		24
SBL and other	—		—		—		—		3,631		3,631
Total loans held for investment	$	4	$	—	$	4	$	21	$	21,458	$	21,483

September 30, 2019
C&I loans	$	—	$	—	$	—	$	19	$	8,079	$	8,098
CRE construction loans	—		—		—		—		185		185
CRE loans	—		—		—		8		3,644		3,652
Tax-exempt loans	—		—		—		—		1,241		1,241
Residential mortgage loans:
First mortgage loans	2		—		2		16		4,409		4,427
Home equity loans/lines	—		—		—		—		27		27
SBL and other	—		—		—		—		3,349		3,349
Total loans held for investment	$	2	$	—	$	2	$	43	$	20,934	$	20,979

$ in thousands
30-89
days and accruing
90 days or more and accruing Total past due and accruing
Nonaccrual ⁽¹⁾
Current and accruing
Total loans held for investment ⁽²⁾
As of December 31, 2017:
C&I loans $ 113
$ —
$ 113
$ 4,843
$ 7,485,263
$ 7,490,219
CRE construction loans —
—
—
—
164,847
164,847
CRE loans —
—
—
—
3,136,101
3,136,101
Tax-exempt loans —
—
—
—
1,136,468
1,136,468
Residential mortgage loans:

First mortgage loans 5,886
—
5,886
32,364
3,205,513
3,243,763
Home equity loans/lines 75
—
75
126
26,816
27,017
SBL 66
—
66
—
2,530,455
2,530,521
Total loans held for investment, net $ 6,140
$ —
$ 6,140
$ 37,333
$ 17,685,463
$ 17,728,936

As of September 30, 2017:
C&I loans $ —
$ —
$ —
$ 5,221
$ 7,380,689
$ 7,385,910
CRE construction loans —
—
—
—
112,681
112,681
CRE loans —
—
—
—
3,106,290
3,106,290
Tax-exempt loans —
—
—
—
1,017,791
1,017,791
Residential mortgage loans:
First mortgage loans 1,853
—
1,853
33,718
3,086,701
3,122,272
Home equity loans/lines 248
—
248
31
26,179
26,458
SBL —
—
—
—
2,386,697
2,386,697
Total loans held for investment, net $ 2,101
$ —
$ 2,101
$ 38,970
$ 17,117,028
$ 17,158,099

The preceding table includes $6 million and $32 million at June 30, 2020 and September 30, 2019, respectively, of nonaccrual loans which were current pursuant to their contractual terms.


~~(1)~~	~~Includes $15 million and $18 million of nonaccrual loans at December 31, 2017 and September 30, 2017, respectively, which are performing pursuant to their contractual terms.~~


~~(2)~~	~~Excludes any net unearned income and deferred expenses.~~

Other real estate owned, included in “Other assets” on our Condensed Consolidated Statements of Financial Condition, was $4$2 million and $5$3 million at ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, respectively. The recorded investment in mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was ~~$17~~$6 million and ~~$18~~$7 million at ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, respectively.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Impaired loans and troubled debt restructurings

The following table provides a summary of RJ Bank’s impaired ~~loans:~~

loans.


															June 30, 2020										September 30, 2019
		December 31, 2017						September 30, 2017
$ in thousands		Gross recorded investment		Unpaid principal balance		Allowance for losses		Gross recorded investment		Unpaid principal balance		Allowance for losses
$ in millions														$ in millions	Gross recorded investment		Unpaid principal balance		Allowance for losses		Gross recorded investment		Unpaid principal balance		Allowance for losses
Impaired loans with allowance for loan losses:	Impaired loans with allowance for loan losses:													Impaired loans with allowance for loan losses:
C&I loans		$	4,843	$	5,910	$	1,846	$	5,221	$	6,160	$	1,963	C&I loans	$	1	$	1	$	1	$	19	$	20	$	6

Residential - first mortgage loans		22,663		29,403		2,375		23,977		31,100		2,504		Residential - first mortgage loans	8		10		1		11		13		1

Total		27,506		35,313		4,221		29,198		37,260		4,467		Total	9		11		2		30		33		7
Impaired loans without allowance for loan losses:	Impaired loans without allowance for loan losses:													Impaired loans without allowance for loan losses:

CRE loans		—		—		—		—		—		—		CRE loans	7		12		—		8		13		—

Residential - first mortgage loans		16,480		24,096		—		16,737		24,899		—		Residential - first mortgage loans	11		16		—		11		17		—
Total		16,480		24,096		—		16,737		24,899		—		Total	18		28		—		19		30		—
Total impaired loans		$	43,986	$	59,409	$	4,221	$	45,935	$	62,159	$	4,467	Total impaired loans	$	27	$	39	$	2	$	49	$	63	$	7

Impaired loan balances with allowances for loan losses have had reserves established based upon management’s analysis. There is no allowance required when the discounted cash flow, collateral value or market value of a loan equals or exceeds the carrying value. These are generally loans in process of foreclosure that have already been adjusted to fair value.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The preceding table includes CRE and residential first mortgage ~~TDR’s~~loans troubled debt restructurings (“TDRs”) of ~~$26~~$6 million and ~~$27~~$16 million, respectively, at ~~December 31, 2017~~June 30, 2020 and C&I, CRE and residential first mortgage loans TDRs of $19 million, $8 million and $18 million, respectively, at September 30, ~~2017, respectively.~~2019.

The average balance of the total impaired loans ~~and the related interest income recognized in the Condensed Consolidated Statements of Income and Comprehensive Income were~~was as ~~follows:~~follows.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
C&I loans	$	2	$	26	$	10	$	19
CRE loans	6		10		7		4

Residential - first mortgage loans	19		24		20		25

Total average impaired loan balance	$	27	$	60	$	37	$	48

Three months ended December 31,
$ in thousands 2017 2016
Average impaired loan balance:
C&I loans $ 4,966
$ 32,808
CRE loans —
2,776
Residential - first mortgage loans 39,935
46,533
Total $ 44,901
$ 82,117
Interest income recognized:
Residential - first mortgage loans $ 287
$ 333
Total $ 287
$ 333

Credit quality indicators

The credit quality of RJ Bank’s loan portfolio is summarized monthly by management using the standard asset classification system utilized by bank regulators for the SBL and residential mortgage loan portfolios and internal risk ratings, which correspond to the same standard asset classifications for the corporate loan portfolios. These classifications are divided into three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss). These terms are defined as follows:

Pass – Loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell, of any underlying collateral in a timely manner.

Special Mention – Loans which have potential weaknesses that deserve management’s close attention. These loans are not adversely classified and do not expose RJ Bank to sufficient risk to warrant an adverse classification.

Substandard – Loans which are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that RJ Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently-known facts, conditions and values.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Loss – Loans which are considered by management to be uncollectible and of such little value that their continuance on ~~RJ Bank’s~~our books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. ~~RJ Bank does~~We do not have any bank loan balances within this classification because, in accordance with ~~its~~our accounting policy, loans, or a portion thereof considered to be uncollectible, are charged-off prior to the assignment of this classification.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the credit quality of RJ Bank’s held for investment loan ~~portfolio was as follows:~~portfolio.


$ in millions	Pass		Special mention		Substandard		Doubtful		Total
June 30, 2020
C&I loans	$	7,384	$	281	$	66	$	—	$	7,731
CRE construction loans	219		—		—		—		219
CRE loans	3,341		262		92		—		3,695
Tax-exempt loans	1,290		—		—		—		1,290
Residential mortgage loans:
First mortgage loans	4,861		9		23		—		4,893
Home equity loans/lines	24		—		—		—		24
SBL and other	3,631		—		—		—		3,631
Total loans held for investment	$	20,750	$	552	$	181	$	—	$	21,483

September 30, 2019
C&I loans	$	7,870	$	152	$	76	$	—	$	8,098
CRE construction loans	185		—		—		—		185
CRE loans	3,630		—		22		—		3,652
Tax-exempt loans	1,241		—		—		—		1,241
Residential mortgage loans:
First mortgage loans	4,392		10		25		—		4,427
Home equity loans/lines	27		—		—		—		27
SBL and other	3,349		—		—		—		3,349
Total loans held for investment	$	20,694	$	162	$	123	$	—	$	20,979

$ in thousands Pass Special mention Substandard Doubtful Total
December 31, 2017
C&I $ 7,343,153
$ 35,606
$ 111,460
$ —
$ 7,490,219
CRE construction 164,847
—
—
—
164,847
CRE 3,097,041
38,933
127
—
3,136,101
Tax-exempt 1,136,468
—
—
—
1,136,468
Residential mortgage:
First mortgage 3,194,572
6,914
42,277
—
3,243,763
Home equity 26,525
315
177
—
27,017
SBL 2,530,521
—
—
—
2,530,521
Total $ 17,493,127
$ 81,768
$ 154,041
$ —
$ 17,728,936

September 30, 2017
C&I $ 7,232,777
$ 63,964
$ 89,169
$ —
$ 7,385,910
CRE construction 112,681
—
—
—
112,681
CRE 3,048,847
57,315
128
—
3,106,290
Tax-exempt 1,017,791
—
—
—
1,017,791
Residential mortgage:
First mortgage 3,068,290
8,467
45,515
—
3,122,272
Home equity 26,352
75
31
—
26,458
SBL 2,386,697
—
—
—
2,386,697
Total $ 16,893,435
$ 129,821
$ 134,843
$ —
$ 17,158,099

Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.

The credit quality of RJ Bank’s performing residential first mortgage loan portfolio is additionally assessed utilizing updated loan-to-value (“LTV”) ratios. Current LTVs are updated using the most recently available information (generally updated every six months) and are estimated based on the initial appraisal obtained at the time of origination, adjusted using relevant market indices for housing price changes that have occurred since origination. The value of the homes could vary from actual market values due to changes in the condition of the underlying property, variations in housing price changes within current valuation indices, and other factors. Residential mortgage loans with estimated LTVs in excess of 100% represented much less than 1% of the residential mortgage loan portfolio as of December 31, 2017.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Changes~~The following table presents changes in the allowance for loan losses of RJ Bank by portfolio ~~segment are as follows:~~segment.


	Loans held for investment
$ in millions	C&I loans		CRE construction loans		CRE loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended June 30, 2020
Balance at beginning of period	$	197	$	3	$	88	$	11	$	18	$	7	$	324
Provision/(benefit) for loan losses	59		1		20		2		1		(2)		81
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(71)		—		(2)		—		—		—		(73)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(71)		—		(2)		—		1		—		(72)
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	186	$	4	$	106	$	13	$	20	$	5	$	334

Nine months ended June 30, 2020
Balance at beginning of period	$	139	$	3	$	46	$	9	$	16	$	5	$	218
Provision for loan losses	118		1		62		4		3		—		188
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(71)		—		(2)		—		—		—		(73)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(71)		—		(2)		—		1		—		(72)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	186	$	4	$	106	$	13	$	20	$	5	$	334

Three months ended June 30, 2019
Balance at beginning of period	$	140	$	3	$	45	$	8	$	17	$	5	$	218
Provision/(benefit) for loan losses	(8)		1		1		1		(1)		1		(5)
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	—		—		—		—		—		—		—
Recoveries	1		—		—		—		—		—		1
Net recoveries	1		—		—		—		—		—		1
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	134	$	4	$	46	$	9	$	16	$	6	$	215

Nine months ended June 30, 2019
Balance at beginning of period	$	123	$	3	$	47	$	9	$	17	$	4	$	203
Provision/(benefit) for loan losses	13		1		2		—		(2)		2		16
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(3)		—		(3)		—		—		—		(6)
Recoveries	1		—		—		—		1		—		2
Net (charge-offs)/recoveries	(2)		—		(3)		—		1		—		(4)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	134	$	4	$	46	$	9	$	16	$	6	$	215

(1) Charge-offs related to loan sales amounted $61 million for both the three and nine months ended June 30, 2020 and $2 million for the nine months ended June 30, 2019.

Loans held for investment
$ in thousands C&I
CRE
construction
CRE Tax-exempt Residential mortgage SBL Total
Three months ended December 31, 2017

Balance at beginning of period $ 119,901
$ 1,421
$ 41,749
$ 6,381
$ 16,691
$ 4,299
$ 190,442
Provision/(benefit) for loan losses 2,337
686
(1,104 ) 537
(1,699 ) 259
1,016
Net (charge-offs)/recoveries:

Charge-offs (603 ) —
—
—
(95 ) —
(698 )
Recoveries —
—
—
—
604
—
604
Net (charge-offs)/recoveries (603 ) —
—
—
509
—
(94 )
Foreign exchange translation adjustment (66 ) —
(29 ) —
—
—
(95 )
Balance at end of period $ 121,569
$ 2,107
$ 40,616
$ 6,918
$ 15,501
$ 4,558
$ 191,269

Three months ended December 31, 2016
Balance at beginning of period $ 137,701
$ 1,614
$ 36,533
$ 4,100
$ 12,664
$ 4,766
$ 197,378
Provision/(benefit) for loan losses (1,243 ) 581
(2,010 ) 393
997
242
(1,040 )
Net (charge-offs)/recoveries:

Charge-offs (3,389 ) —
—
—
(87 ) —
(3,476 )
Recoveries —
—
5,013
—
65
—
5,078
Net (charge-offs)/recoveries (3,389 ) —
5,013
—
(22 ) —
1,602
Foreign exchange translation adjustment (164 ) (92 ) (4 ) —
—
—
(260 )
Balance at end of period $ 132,905
$ 2,103
$ 39,532
$ 4,493
$ 13,639
$ 5,008
$ 197,680

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents, by loan portfolio segment, RJ Bank’s recorded investment (excluding any net unearned income and deferred expenses) and the related allowance for loan losses.


	Loans held for investment
	Allowance for loan losses										Recorded investment
$ in millions	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
June 30, 2020
C&I loans	$	1	$	185	$	186	$	1	$	7,730	$	7,731
CRE construction loans	—		4		4		—		219		219
CRE loans	—		106		106		6		3,689		3,695
Tax-exempt loans	—		13		13		—		1,290		1,290
Residential mortgage loans	1		19		20		25		4,892		4,917
SBL and other	—		5		5		—		3,631		3,631
Total	$	2	$	332	$	334	$	32	$	21,451	$	21,483

September 30, 2019
C&I loans	$	6	$	133	$	139	$	19	$	8,079	$	8,098
CRE construction loans	—		3		3		—		185		185
CRE loans	—		46		46		8		3,644		3,652
Tax-exempt loans	—		9		9		—		1,241		1,241
Residential mortgage loans	1		15		16		28		4,426		4,454
SBL and other	—		5		5		—		3,349		3,349
Total	$	7	$	211	$	218	$	55	$	20,924	$	20,979

Loans held for investment
Allowance for loan losses Recorded investment
$ in thousands Individually evaluated for impairment Collectively evaluated for impairment Total Individually evaluated for impairment Collectively evaluated for impairment Total
December 31, 2017
C&I $ 1,846
$ 119,723
$ 121,569
$ 4,843
$ 7,485,376
$ 7,490,219
CRE construction —
2,107
2,107
—
164,847
164,847
CRE —
40,616
40,616
—
3,136,101
3,136,101
Tax-exempt —
6,918
6,918
—
1,136,468
1,136,468
Residential mortgage 2,389
13,112
15,501
44,429
3,226,351
3,270,780
SBL —
4,558
4,558
—
2,530,521
2,530,521
Total $ 4,235
$ 187,034
$ 191,269
$ 49,272
$ 17,679,664
$ 17,728,936

September 30, 2017
C&I $ 1,963
$ 117,938
$ 119,901
$ 5,221
$ 7,380,689
$ 7,385,910
CRE construction —
1,421
1,421
—
112,681
112,681
CRE —
41,749
41,749
—
3,106,290
3,106,290
Tax-exempt —
6,381
6,381
—
1,017,791
1,017,791
Residential mortgage 2,506
14,185
16,691
47,368
3,101,362
3,148,730
SBL —
4,299
4,299
—
2,386,697
2,386,697
Total $ 4,469
$ 185,973
$ 190,442
$ 52,589
$ 17,105,510
$ 17,158,099

The reserve for unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was ~~$10~~$11 million and $9 million at ~~December 31, 2017~~June 30, 2020 and ~~$11 million at~~ September 30, ~~2017~~.2019, respectively.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 98 – VARIABLE INTEREST ENTITIES

A VIE requires consolidation by the entity’s primary beneficiary. We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary. Refer to Note 2 of our ~~2017~~2019 Form 10-K for a discussion of our principal involvement with VIEs and the accounting policies regarding determination of whether we are deemed to be the primary beneficiary of VIEs.

VIEs where we are the primary beneficiary

Of the VIEs in which we hold an interest, we have determined that certain limited partnerships which are part of our private equity portfolio (“Private Equity ~~Interests, a~~Interests”), certain Low-Income Housing Tax Credit ~~fund~~ (“~~LIHTC fund”~~LIHTC”) in which RJ Bank is an investor and an affiliate of Raymond James Tax Credit Funds, Inc. (“RJTCF”) is the managing member, a LIHTC fund where RJTCF provides an investor member with a guaranteed return on their investment (“Guaranteed LIHTC Fund”), certain other LIHTC funds and the trust we utilize in connection with restricted stock unit (“RSU”) awards granted to certain employees of one of our Canadian ~~subsidiary~~subsidiaries (the “Restricted Stock Trust Fund”) require consolidation in our financial statements, as we are deemed the primary beneficiary of such VIEs. The aggregate assets and liabilities of the VIEs we consolidate are provided in the ~~table below.~~following table. Aggregate assets and aggregate liabilities may differ from the consolidated carrying value of assets and liabilities due to the elimination of intercompany assets and liabilities held by the consolidated VIE.


$ in millions	Aggregate assets		Aggregate liabilities
June 30, 2020
Private Equity Interests	$	33	$	4
LIHTC funds	246		159
Restricted Stock Trust Fund	19		19
Total	$	298	$	182

September 30, 2019
Private Equity Interests	$	65	$	4
LIHTC funds	80		5
Restricted Stock Trust Fund	14		14
Total	$	159	$	23

$ in thousands Aggregate assets Aggregate liabilities
December 31, 2017
Private Equity Interests $ 97,475
$ 3,614
LIHTC Fund in which RJ Bank is an investor member 56,556
1,154
Guaranteed LIHTC Fund 50,870
2,943
Other LIHTC Funds 7,519
2,915
Restricted Stock Trust Fund 17,951
17,951
Total $ 230,371
$ 28,577

September 30, 2017

Private Equity Interests $ 104,414
$ 3,851
LIHTC Fund in which RJ Bank is an investor member 57,719
1,055
Guaranteed LIHTC Fund 51,400
2,872
Other LIHTC Funds 7,418
2,544
Restricted Stock Trust Fund 12,122
12,122
Total $ 233,073
$ 22,444

In the Guaranteed LIHTC Fund, a multi-investor tax credit fund in which RJTCF is the managing member, RJTCF has provided one investor member a guaranteed return on their investment in the fund. See Note 9 in our 2017 Form 10-K for information regarding the financing asset associated with this fund and Note 14 of this Form 10-Q for additional information regarding this commitment.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

The following table presents information about the carrying value of the assets ~~liabilities~~ and ~~equity~~liabilities of the VIEs which we consolidate and which are included ~~within~~on our Condensed Consolidated Statements of Financial Condition. ~~The noncontrolling interests presented~~Intercompany balances are eliminated in ~~this table represent the portion of these net assets which are~~consolidation and not ~~ours.~~

$ in thousands December 31, 2017 September 30, 2017
Assets:
Cash and cash equivalents $ 2,343
$ 2,052
Assets segregated pursuant to regulations and other segregated assets 4,242
4,590
Other receivables 79
168
Intercompany receivables 443
454
Other investments 94,610
101,905
Investments in real estate partnerships held by consolidated variable interest entities 110,662
111,743
Trust fund investment in RJF common stock 17,949
12,120
Other assets 43
41
Total assets $ 230,371
$ 233,073

Liabilities and equity:

Other payables $ 11,968
$ 9,667
Intercompany payables 22,302
16,520
Total liabilities 34,270
26,187
RJF equity 96,968
101,445
Noncontrolling interests 99,133
105,441
Total equity 196,101
206,886
Total liabilities and equity $ 230,371
$ 233,073

~~The trust fund investment in RJF common stock~~reflected in the ~~table above is the Restricted Stock Trust Fund, which is included in “Treasury stock” in our Condensed Consolidated Statements of Financial Condition.~~following table.


$ in millions	June 30, 2020		September 30, 2019
Assets:
Cash, cash equivalents and cash segregated pursuant to regulations	$	7	$	7

Other investments	32		63
Other assets	240		75
Total assets	$	279	$	145
Liabilities:
Other payables	$	156	$	4
Total liabilities	$	156	$	4
Noncontrolling interests	$	50	$	60

VIEs where we hold a variable interest but are not the primary beneficiary

As discussed in Note 2 inof our ~~2017~~2019 Form 10-K, we have concluded that for certain VIEs we are not the primary beneficiary and therefore do not consolidate these VIEs. Such VIEs include certain Private Equity Interests, certain LIHTC funds, ~~New Market Tax Credit Funds (“NMTC Funds”)~~ and other limited partnerships. Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these VIEs.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The aggregate assets, liabilities, and our exposure to loss from those VIEs in which we hold a variable interest, but as to which we have concluded we are not the primary beneficiary, are provided in the ~~table below.~~following table.


	June 30, 2020										September 30, 2019
$ in millions	Aggregate assets		Aggregate liabilities		Our risk of loss		Aggregate assets		Aggregate liabilities		Our risk of loss
Private Equity Interests	$	4,404	$	107	$	61	$	6,317	$	117	$	63
LIHTC funds	6,218		1,977		25		6,001		2,221		64
Other	216		130		5		205		115		4
Total	$	10,838	$	2,214	$	91	$	12,523	$	2,453	$	131

December 31, 2017 September 30, 2017
$ in thousands
Aggregate
assets

Aggregate
liabilities

Our risk
of loss

Aggregate
assets

Aggregate
liabilities

Our risk
of loss
Private Equity Interests $ 9,270,590
$ 177,780
$ 71,048
$ 10,485,611
$ 174,354
$ 73,457
LIHTC Funds 5,432,342
2,129,756
86,098
5,372,367
2,134,600
60,959
NMTC Funds 30,196
115
9
30,297
105
9
Other 169,462
88,615
3,535
169,462
88,615
3,163
Total $ 14,902,590

$ 2,396,266

$ 160,690

$ 16,057,737

$ 2,397,674

$ 137,588

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

NOTE 109 - GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET

Our goodwill and identified intangible assets result from various acquisitions. See ~~Note~~Notes 2 and 11 of our ~~2017~~2019 Form 10-K for ~~a discussion of our intangible assets and goodwill accounting policies. The following are~~information about our goodwill and ~~net identifiable~~intangible assets, including the related accounting policies.

We perform goodwill and indefinite-lived intangible asset ~~balances as of the dates indicated:~~

$ in thousands December 31, 2017 September 30, 2017
Goodwill $ 479,775
$ 410,723
Identifiable intangible assets, net 171,564
82,460
Total goodwill and identifiable intangible assets, net $ 651,339
$ 493,183

As more fully described in Note 3, we acquired Scout Group during the three months ended December 31, 2017, which included a number of identifiable intangible assets as well as goodwill. See Note 12 of our 2017 Form 10-K for a discussion of the components of our goodwill balance and additional information regarding our identifiable intangible assets.

~~The following summarizes our goodwill by segment, along with the balance and activity for the periods indicated:~~

Segment
$ in thousands Private Client Group Capital Markets Asset Management Total
For the three months ended December 31, 2017
Goodwill as of beginning of period $ 276,713
$ 134,010
$ —
$ 410,723
Additions —
—
69,234
69,234
Foreign currency translation (179 ) (3 ) —
(182 )
Goodwill as of end of period $ 276,534
$ 134,007
$ 69,234
$ 479,775

For the three months ended December 31, 2016
Goodwill as of beginning of period $ 275,521
$ 132,551
$ —
$ 408,072
Additions —
—
—
—
Foreign currency translation (537 ) (1,038 ) —
(1,575 )
Goodwill as of end of period $ 274,984
$ 131,513
$ —
$ 406,497

~~The addition to goodwill during the three months ended December 31, 2017 arose from acquisition of the Scout Group.~~

~~As described in Note 2 of our 2017 Form 10-K, we perform goodwill~~impairment testing on an annual basis or when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying ~~value.~~value or indicate that the asset is impaired. We performed our latest annual ~~goodwill~~ impairment testing ~~during the quarter ended March 31, 2017,~~for our goodwill and indefinite-lived intangible asset as of our January 1, 2020 evaluation date, evaluating balances as of December 31, ~~2016, and no impairment was identified. In that testing, we~~2019. We performed ~~both~~ a qualitative impairment assessment for ~~certain~~each of our reporting units that had goodwill, as well as for our indefinite-lived intangible asset. Based upon the outcome of our qualitative assessments, 0 impairment was identified.

Our qualitative assessments consider macroeconomic indicators, such as trends in equity and fixed income markets, gross domestic product, unemployment rates, interest rates, housing markets and trade policy. We also consider regulatory changes, reporting unit specific results, and changes in key personnel and strategy. Changes in these indicators, and our ability to respond to such changes, may trigger the need for impairment testing at a point other than our annual assessment date.

Subsequent to our annual impairment testing, as a result of a deterioration in market conditions due to the COVID-19 pandemic, we performed an evaluation to determine whether the economic impacts resulting from the pandemic were indicators requiring us to perform an impairment test as of June 30, 2020. Multiple factors, including performance, macroeconomic, and fair value indicators, were assessed with respect to each of our reporting units to determine whether it was more likely than not that the estimated fair value of any of these reporting units was less than its estimated carrying value. As a result of our review, we concluded that the fair value of our reporting units had not more likely than not been reduced below their respective carrying values and that the impact of the COVID-19 pandemic through the end of our fiscal third quarter of 2020 was not a triggering event to perform a quantitative test. We will continue to monitor the effects of the COVID-19 pandemic, including market declines, unfavorable economic conditions, declining financial performance, and other factors that could increase the risk of impairment of our goodwill and indefinite-lived intangible asset in future periods.

We have operating leases for the premises we occupy in many of our U.S. and foreign locations, including our employee-based branch office operations. We also lease certain office and technology equipment. At inception, we determine if an arrangement to utilize a building or piece of equipment is a lease and, if so, the appropriate lease classification. If the arrangement is determined to be a lease, we recognize a ROU asset and a ~~quantitative impairment assessment~~corresponding lease liability on our balance sheet. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. We have elected the practical expedient, where leases with an initial term of 12 months or less are not recorded as an ROU asset or lease liability. Our lease terms include any noncancelable periods and may reflect periods covered by options to extend or terminate when it is reasonably certain that we will exercise those options. As of June 30, 2020, the weighted-average remaining lease term for our ~~two Raymond James Ltd. (“RJ Ltd.”) reporting units~~ operating ~~in Canada. No events have occurred since~~leases was five years.

We record our ~~assessment during~~operating lease ROU assets at the ~~quarter ended March 31, 2017 that would cause us to update this impairment testing. See Note 12 in~~amount of the lease liability plus any prepaid rent and initial direct costs, less any lease incentives and accrued rent. We record lease liabilities at commencement date based on the present value of lease payments over the lease term, which is discounted using our ~~2017 Form 10-K~~commencement date incremental borrowing rate. Our incremental borrowing rate considers the weighted-average yields on our senior notes payable, adjusted for ~~further information about our goodwill impairment testing.~~

collateralization and tenor. As of June 30, 2020, the

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

weighted-average discount rate for our operating leases was 3.84%. Payments that vary because of changes in facts or circumstances occurring after the commencement date are considered variable and are expensed in the period incurred. For our real estate leases, we elected the practical expedient to account for the lease and non-lease components as a single lease. We have not elected the practical expedient for our equipment leases and account for lease and non-lease components separately. As of June 30, 2020, ROU assets of $326 million and lease liabilities of $351 million were included as components of “Other assets” and “Other payables,” respectively, on our Condensed Consolidated Statements of Financial Condition.

~~Identifiable intangible assets, net~~

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term if the ROU asset has not been impaired or abandoned.

The ~~following~~components of lease expense were as follows.


$ in million	Three months ended June 30, 2020		Nine months ended June 30, 2020
Operating lease costs	$	25	$	71
Variable lease costs	$	6	$	18

Variable lease costs in the preceding table ~~sets forth our identifiable intangible asset balances by segment, net~~includes payments for common area maintenance charges and other variable costs that are not reflected in the measurement of ~~accumulated amortization,~~ROU assets and ~~activity~~lease liabilities.

Finance leases and sublease income were immaterial for all periods presented. Short-term lease expenses for the ~~periods indicated:~~

Segment
$ in thousands Private Client Group Capital Markets Asset Management Total
For the three months ended December 31, 2017
Net identifiable intangible assets as of beginning of period $ 47,026
$ 23,077
$ 12,357
$ 82,460
Additions —
—
92,290
92,290
Amortization expense (1,496 ) (769 ) (871 ) (3,136 )
Foreign currency translation (9 ) —
(41 ) (50 )
Net identifiable intangible assets as of end of period $ 45,521
$ 22,308
$ 103,735
$ 171,564

For the three months ended December 31, 2016
Net identifiable intangible assets as of beginning of period $ 52,936
$ 27,937
$ 14,101
$ 94,974
Additions —
—

—
—
Amortization expense (1,520 ) (1,565 ) (498 ) (3,583 )
Foreign currency translation (45 ) (38 ) (132 ) (215 )
Net identifiable intangible assets as of end of period $ 51,371
$ 26,334
$ 13,471
$ 91,176

~~The addition of intangible assets during the~~ three and nine months ended ~~December 31, 2017~~June 30, 2020 were ~~attributable to the Scout Group acquisition.~~immaterial.

Weighted average useful life
(in years)

Amount acquired
(in thousands)
Customer relationships 13 $ 34,900
Trade name 20 3,590
Developed technology 10 1,800
Intangible assets subtotal 13 $ 40,290
Non-amortizing customer relationships Indefinite 52,000
Total intangible assets acquired $ 92,290

~~GAAP does not provide for the amortization~~Maturities of indefinite-lived intangible assets. Rather, these assets are subject to an evaluation of potential impairment on an annual basis to determine whether the estimated fair value is in excess of its carrying value, or more often if events or circumstances indicate there may be impairment. In the course of our evaluation of the potential impairment of such indefinite-lived asset, we may perform either a qualitative or a quantitative assessment. If after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value is greater than its carrying amount, then performing a quantitative analysis is not required. However, if we conclude otherwise, we then perform a quantitative impairment analysis. We have elected January 1 as our annual impairment evaluation date, evaluating balanceslease liabilities as of ~~December 31.~~June 30, 2020 were as follows.


Maturity of lease liabilities for fiscal year ended September 30,	$ in millions
Remainder of 2020	$	18
2021	102
2022	79
2023	63
2024	46
After 2024	85
Total lease payments	393
Less: interest	42
Present value of lease liabilities	$	351

~~The following summarizes our identifiable intangible assets by type:~~

Operating lease payments in the preceding table exclude $188 million of legally binding minimum lease payments for leases signed but not yet commenced. These leases are estimated to commence between fiscal year 2020 and 2021 with lease terms ranging from five years to 11 years.


$ in millions	Three months ended June 30, 2020		Nine months ended June 30, 2020
Cash outflows - lease liabilities	$	26	$	73
Non-cash - ROU assets recorded for new and modified leases	$	21	$	60

December 31, 2017 September 30, 2017
$ in thousands Gross carrying value Accumulated amortization Gross carrying value Accumulated amortization
Customer relationships $ 133,610
$ (32,275 ) $ 99,749
$ (31,098 )
Non-amortizing customer relationships 52,000
—
—
—
Trade name 11,854
(2,387 ) 8,366
(2,076 )
Developed technology 3,430
(809 ) 1,630
(706 )
Intellectual property 538
(144 ) 542
(131 )
Non-compete agreements 2,902
(1,347 ) 3,336
(1,551 )
Seller relationship agreements 5,300
(1,108 ) 5,300
(901 )
Total $ 209,634
$ (38,070 ) $ 118,923
$ (36,463 )

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Minimum future lease commitments (under previous GAAP)

As of the date of adoption, our undiscounted minimum annual rental commitments under operating leases were materially unchanged from the disclosure in Note 17 of our 2019 Form 10-K, which is included in the following table.


Fiscal year ended September 30,	$ in millions
2020	$	103
2021	95
2022	79
2023	66
2024	49
Thereafter	127
Total	$	519

NOTE 11 – BANK DEPOSITS

Bank deposits include savings and money market accounts, certificates of deposit ofwith RJ Bank, Negotiable Order of Withdrawal (“NOW”) accounts and demand deposits. The following table presents a summary of bank deposits including the weighted-average rate, the calculation of which was based on the actual deposit balances at ~~December 31, 2017 and September 30, 2017.~~each respective period.


	June 30, 2020						September 30, 2019
$ in millions	Balance		Weighted-average rate		Balance		Weighted-average rate
Savings and money market accounts	$	24,106	0.01	%	$	21,654	0.25	%
Certificates of deposit	1,088		1.98	%	605		2.33	%
NOW accounts	156		1.92	%	6		0.01	%
Demand deposits (non-interest-bearing)	22		—		16		—
Total	$	25,372	0.11	%	$	22,281	0.31	%

December 31, 2017 September 30, 2017
$ in thousands Balance Weighted-average rate Balance Weighted-average rate
Savings and money market accounts $ 18,377,271
0.14 % $ 17,391,091
0.14 %
Certificates of deposit 333,010
1.64 % 314,685
1.60 %
NOW accounts 5,982
0.01 % 5,197
0.01 %
Demand deposits (non-interest-bearing) 9,282
—
21,389
—
Total bank deposits $ 18,725,545
0.17 % $ 17,732,362
0.17 %

Total bank deposits in the preceding table ~~above excludes~~exclude affiliate deposits of ~~$246~~$185 million at ~~December 31, 2017~~June 30, 2020 and ~~$243~~$163 million at September 30, ~~2017. These affiliate deposits include $193 million at December 31, 2017 and $192 million at September 30, 2017,~~2019, all of which were held in a deposit account at RJ Bank on behalf of RJF.

Savings and money market accounts in the preceding table ~~above~~ consist primarily of deposits that are cash balances swept from the client investment accounts maintained at Raymond James & Associates, Inc. (“RJ&A”) to RJ Bank. These balances are held in Federal Deposit Insurance Corporation (“FDIC”) ~~insured~~-insured bank accounts through the Raymond James Bank Deposit Program (“RJBDP”). The aggregate amount of individual time deposit account balances that exceeded the FDIC insurance limit at ~~December 31, 2017~~June 30, 2020 was ~~$25~~approximately $47 million.

~~Scheduled~~The following table sets forth the scheduled maturities of certificates of ~~deposit are as follows:~~deposit.


	June 30, 2020						September 30, 2019
$ in millions	Denominations greater than or equal to $100,000		Denominations less than $100,000		Denominations greater than or equal to $100,000		Denominations less than $100,000
Three months or less	$	71	$	30	$	24	$	19
Over three through six months	55		73		26		21
Over six through twelve months	28		22		75		37
Over one through two years	36		198		32		36
Over two through three years	58		149		40		93
Over three through four years	56		156		66		47
Over four through five years	7		149		38		51
Total certificates of deposit	$	311	$	777	$	301	$	304

December 31, 2017 September 30, 2017
$ in thousands
Denominations
greater than or
equal to $100,000

Denominations
less than $100,000

Denominations
greater than or
equal to $100,000

Denominations
less than $100,000
Three months or less $ 11,405
$ 5,583
$ 8,704
$ 4,132
Over three through six months 5,251
4,146
4,692
3,894
Over six through twelve months 42,837
16,649
34,005
11,865
Over one through two years 37,836
20,950
38,713
20,019
Over two through three years 49,602
27,797
48,082
27,847
Over three through four years 9,462
7,281
21,819
12,761
Over four through five years 62,534
31,677
50,805
27,347
Total $ 218,927
$ 114,083
$ 206,820
$ 107,865

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Interest expense on deposits, excluding interest expense related to affiliate deposits, is summarized ~~as follows:~~in the following table.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Savings, money market, and NOW accounts	$	2	$	29	$	20	$	96
Certificates of deposit	5		4		15		9
Total interest expense on deposits	$	7	$	33	$	35	$	105

Three months ended December 31,
$ in thousands 2017 2016
Certificates of deposit $ 1,272
$ 1,135
Savings, money market, and NOW accounts 6,237
1,648
Total interest expense on deposits $ 7,509
$ 2,783

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

NOTE 12 – OTHER BORROWINGS

The following table details the components of other ~~borrowings:~~borrowings.


$ in millions	June 30, 2020		September 30, 2019
FHLB advances	$	875	$	875



Mortgage notes payable and other	15		19
Total other borrowings	$	890	$	894

$ in thousands December 31, 2017 September 30, 2017
FHLB advances $ 875,000
$ 875,000
RJF Credit Facility 300,000
—
Secured lines of credit 180,000
260,000
Unsecured lines of credit 150,000
350,000
Mortgage notes payable and other 27,826
29,012
Total other borrowings $ 1,532,826
$ 1,514,012

FHLB advances

Borrowings from the FHLB as of June 30, 2020 and September 30, 2019, were comprised of both floating and fixed-rate advances. As of ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017~~2019, the floating-rate advances totaled $850 million. The interest rates on the floating-rate advances, which mature in ~~June 2019 and have interest rates which~~December 2022, reset quarterly ~~totaled $850 million.~~and are generally based on LIBOR. We use interest rate swaps to manage the risk of increases in interest rates associated with these floating-rate advances by converting the balances subject to variable interest rates to a fixed interest rate. Refer to Note 62 of our 2019 Form 10-K for information regarding these interest rate swaps, which are accounted for as hedging instruments. ~~The fixed-rate advance as~~As of both ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017, in~~2019, the ~~amount of~~fixed-rate advance totaled $25 million ~~matures in October 2020~~ and bears interest at a fixed rate of 3.4%. This advance matures in October 2020. All of the advances were secured by a blanket lien granted to the FHLB on our residential mortgage loan portfolio. The ~~weighted average~~weighted-average interest ~~rates~~rate on these FHLB advances as of ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017 were 1.74%~~2019 was 0.50% and ~~1.41%~~2.17%, respectively.

Secured and unsecured financing arrangements

On February 19, 2019, RJF ~~is a party to a~~and RJ&A entered into an unsecured revolving credit facility agreement (the ~~“RJF~~“Credit Facility”). The Credit ~~Facility”) with~~Facility has a maturity date of ~~May 2022 in which~~February 2024 and the lenders ~~are~~include a number of financial institutions. This committed unsecured borrowing facility provides for maximum borrowings of up to $500 million, with a sublimit of $300 million atfor RJF. RJ&A may borrow up to $500 million under the Credit Facility, depending on the amount of outstanding borrowings of RJF. The interest rates on borrowings under the Credit Facility are variable ~~rates of interest. The~~and based on LIBOR, as adjusted for RJF’s credit rating. There were 0 borrowings outstanding on the ~~RJF~~ Credit Facility ~~bear interest at a rate~~as of ~~2.98% per annum. The outstanding borrowings at December 31, 2017 were subsequently repaid in January 2018.~~June 30, 2020. There is a ~~variable rate commitment~~facility fee associated with the ~~RJF~~ Credit Facility, which also varies ~~depending upon~~with RJF’s credit rating. Based upon RJF’s credit rating as of ~~December 31, 2017,~~June 30, 2020, the variable rate ~~commitment~~facility fee, which ~~would apply~~is applied to ~~any difference between the daily borrowed amount and~~ the committed amount, was ~~0.20%~~0.175% per annum. ~~Any borrowings on~~

In addition to the Credit Facility, we maintain various secured and unsecured lines of credit, ~~were short-term and were generally utilized for cash management purposes.~~

~~Any borrowings on secured lines of credit were day-to-day and were~~which are generally utilized to finance certain fixed income ~~securities. In addition we have other collateralized financings included in “Securities sold under agreements to repurchase”~~securities or for cash management purposes. Borrowings during the period were generally day-to-day and there were no borrowings outstanding on ~~our Condensed Consolidated Statements~~these arrangements as of ~~Financial Condition. See Note 7 for information regarding our collateralized financing arrangements.~~

June 30, 2020. The interest rates for ~~all of our U.S. and Canadian secured and unsecured financing facilities~~these arrangements are variable and are based on the Fed Funds rate, LIBOR, a lenders prime rate, or the Canadian prime rate, as applicable. ~~For the three months ended December 31, 2017, interest rates~~

We also have other collateralized financings included in “Securities sold under agreements to repurchase” and “Securities loaned” on ~~the U.S. facilities that were utilized during the period,~~our Condensed Consolidated Statements of Financial Condition. See Note 6 for information regarding our other ~~than the RJF Credit Facility which was previously described, ranged from 0.85% to 5.30%.~~collateralized financing arrangements.

Mortgage notes payable and other

Mortgage notes payable pertain to mortgage loans on certain of our corporate headquarters offices located in St. Petersburg, Florida. These mortgage loans are secured by land, buildings, and improvements. These mortgage loans bear a fixed interest atrate of 5.7% with repayment terms of monthly interest and principal debt service and have a January 2023 maturity.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 13 – SENIOR NOTES PAYABLE

The following table summarizes our senior notes payable.


$ in millions	June 30, 2020		September 30, 2019
5.625% senior notes, due 2024	$	250	$	250
3.625% senior notes, due 2026	500		500
4.65% senior notes, due 2030	500		—
4.95% senior notes, due 2046	800		800
Total principal amount	2,050		1,550
Unaccreted premium/(discount)	9		11
Unamortized debt issuance costs	(15)		(11)
Total senior notes payable	$	2,044	$	1,550

In March 2012, we sold in a registered underwritten public offering $250 million in aggregate principal amount of 5.625% senior notes due April 2024. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 50 basis points, plus accrued and unpaid interest thereon to the redemption date.

In July 2016, we sold in a registered underwritten public offering $500 million in aggregate principal amount of 3.625% senior notes due September 2026. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 35 basis points, plus accrued and unpaid interest thereon to the redemption date.

In March 2020, we sold in a registered underwritten public offering $500 million in aggregate principal amount of 4.65% senior notes due April 2030. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior notes at any time prior to January 1, 2030, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 50 basis points; and on or after January 1, 2030, at 100% of the principal amount of the notes redeemed; plus, in each case, accrued and unpaid interest thereon to the redemption date.

In July 2016, we sold in a registered underwritten public offering $300 million in aggregate principal amount of 4.95% senior notes due July 2046. In May 2017, we reopened the offering and sold, in a registered underwritten public offering, an additional $500 million in aggregate principal amount of 4.95% senior notes due July 2046. These additional senior notes were consolidated, formed into a single series, and are fully fungible with the $300 million in aggregate principal amount 4.95% senior notes issued in July 2016. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior notes at any time prior to their maturity, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 45 basis points, plus accrued and unpaid interest thereon to the redemption date.

NOTE 14 – INCOME TAXES

~~For discussion of income tax accounting policies and other income tax related information, see Note 2 and Note 16 of our 2017 Form 10-K.~~

The income tax provision for interim periods is comprised of tax on ordinary income provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items. We estimate the annual effective tax rate quarterly based on the forecasted pretax results of our U.S. and non-U.S. operations. Items unrelated to current year ordinary income are recognized entirely in the period identified as a discrete item of tax. These discrete items generally relate to changes in tax laws, adjustments to the actual liability determined upon filing tax returns, excess tax benefits related to share-based compensation and adjustments to previously recorded reserves for uncertain tax positions. For discussion of income tax accounting policies and other income tax related information, see Notes 2 and 16 of our 2019 Form 10-K.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~The Tax Cuts and Jobs Act (the “Tax Act”)~~

On December 22, 2017, the Tax Act was enacted, which significantly revised the U.S. corporate income tax system by, among other things, lowering corporate income tax rates from 35% to 21% and implementing a territorial tax system which includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. As the firm’s fiscal year end is September 30th, our U.S. federal statutory tax rate will be 24.5% for our fiscal year ended September 30, 2018, which reflects a blended federal statutory rate of 35% for our first fiscal quarter and 21% for the remaining three fiscal quarters. This blended statutory rate is the basis for calculating our effective tax rate, which is also impacted by other factors.

In response to the enactment of the Tax Act, the SEC issued guidance which summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Act. Further to (2) above, a registrant should record provisional amounts during a “measurement period” when the registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in tax law. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, not to exceed twelve months from the enactment date of the Tax Act. In accordance with the SEC guidance, our net income for the three months ended December 31, 2017 included an estimate of the discrete impact of the Tax Act of $117 million, primarily due to the remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate and, to a lesser extent, the transition tax on deemed repatriated earnings of foreign subsidiaries. This estimate incorporates assumptions made based on our current interpretation of the Tax Act and may change, possibly materially, as we complete our analysis and receive additional clarification and implementation guidance.

~~Reduction of U.S. federal corporate tax rate~~

We applied the SEC’s guidance in estimating the remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate, resulting in an estimated impact of $104 million. This calculation includes projections related to the timing of realization of deferred tax assets during the remainder of fiscal year 2018 and beyond. We will update our calculation throughout the year as more information becomes available. These estimates may change, possibly materially, as we obtain further information regarding the timing of realization of deferred tax assets.

~~Transition tax~~

We also applied the SEC’s guidance in estimating the transition tax, which we anticipate will be approximately $13 million, including the state tax liability associated with deemed repatriation of foreign earnings. Our tax liability calculations include projected amounts of unremitted earnings for our foreign subsidiaries for the remainder of the fiscal year. We will update our calculations throughout the year as more information on our foreign subsidiaries’ earning and profits becomes available. These estimates incorporate assumptions made based on our current interpretation of the Tax Act and may change, possibly materially, as we complete our analysis and receive additional clarification and implementation guidance.

~~Executive compensation deduction limitation~~

We also applied the SEC’s guidance in accounting for the deferred tax assets potentially impacted by the Tax Act legislation. Effective for tax years beginning after December 31, 2017, the Tax Act eliminates the exception for performance-based compensation from the $1 million executive compensation deduction limitation. Our covered employees are paid a portion of performance-based compensation in the form of RSUs and stock awards which creates a deferred tax asset upon grant. The necessary information is not yet available to determine whether the deferred compensation previously granted will be deductible as a business expense as the legislation published to date is unclear on the effects to the deferred tax assets previously recorded. As such, we are unable to calculate a reasonable impact of this tax law change, thus in accordance with the SEC’s guidance, we did not include a provisional amount in our financial statements. We continue to apply accounting guidance based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. We will report provisional amounts in the first reporting period in which a reasonable estimate can be determined.

~~Indefinite reinvestment assertion~~

We are in the process of assessing the impact of the Tax Act on our current policy of indefinitely reinvesting foreign earnings, our related assertion to indefinitely reinvestment foreign earnings, as well as any such impact on our consolidated financial statements. Accordingly, no adjustments were included in our Condensed Consolidated Financial Statements for the three months ended December 31, 2017 with respect to the firm’s indefinite reinvestment assertion.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Effective tax rate

~~For the three months ended December 31, 2017, our~~Our effective income tax rate was ~~61.7%, including~~23.5% for the ~~estimated discrete impact of~~nine months ended June 30, 2020, which was lower than the Tax Act of $117 million, partially offset by a lower blended federal corporate statutory tax rate of 24.5%. The discrete impact of the Tax Act increased our effective tax rate by 37.6 percentage points. The24.8% effective tax rate for fiscal year ~~2017~~2019. The decrease in the effective tax rate compared to the prior year effective tax rate was ~~31.2%.~~primarily due to the favorable impact of permanent tax benefits on lower pre-tax earnings during the nine months ended June 30, 2020.

Uncertain tax positions

We anticipate that the uncertain tax position liability balance will not change significantly over the next twelve months.

NOTE 1415 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and contingencies

Loan and ~~Underwriting Commitments~~underwriting commitments

In the normal course of business, we enter into commitments for ~~fixed income~~debt and equity underwritings. As of ~~December 31, 2017~~,June 30, 2020, we had ~~one~~11 such open underwriting ~~commitment,~~commitments, which ~~was~~were subsequently settled in open market transactions and ~~did not result~~none of which resulted in a significant loss.

~~As part of our recruiting efforts, we~~We offer loans to prospective financial advisors and certain key revenue producers primarily for recruiting, transitional cost assistance, and retention purposes (see Note 2 of our ~~2017~~2019 Form 10-K for a discussion of our accounting policies governing these transactions). These ~~commitments~~offers are contingent upon ~~the occurrence of~~ certain events occurring, including ~~but not limited~~the individuals joining us and meeting certain conditions outlined in their offer. Our unfunded loan commitments related to ~~the individual joining us. As~~such offers were insignificant as of December 31, 2017, we had made commitments through the extension of formal offers totaling approximately $118 million that had not yet been funded; however, it is possible that not all of our offers will be accepted and therefore, we would not fund the total amount of the offers extended. As of December 31, 2017, $64 million of the total amount extended consisted of unfunded commitments to prospective financial advisors that had accepted our offers, or recently hired producers.June 30, 2020.

~~As of December 31, 2017, we had not settled purchases of $121 million in syndicated loans. These loan purchases are expected to be settled within 90 days.~~

Commitments to extend credit and other credit-related financial instruments

RJ Bank has outstanding, at any time, a significant number of commitments to extend credit and other credit-related off-balance sheet financial instruments such as standby letters of credit and loan purchases, which then extend over varying periods of time. These arrangements are subject to strict underwriting assessments and each customer’s credit worthiness is evaluated on a case-by-case basis. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and our exposure is limited to the replacement value of those commitments.

The following table presents RJ Bank’s commitments to extend credit and other credit-related off-balance sheet financial instruments ~~outstanding:~~outstanding.


$ in millions	June 30, 2020		September 30, 2019
Open-end consumer lines of credit (primarily SBL)	$	11,397	$	9,328
Commercial lines of credit	$	1,373	$	1,527
Unfunded loan commitments	$	592	$	599
Standby letters of credit	$	30	$	40

$ in thousands December 31, 2017 September 30, 2017
Standby letters of credit $ 38,436
$ 39,670
Open-end consumer lines of credit (primarily SBL) $ 5,782,262
$ 5,323,003
Commercial lines of credit $ 1,723,429
$ 1,673,272
Unfunded loan commitments $ 521,676
$ 386,950

Open-end consumer lines of credit primarily represent the unfunded amounts of RJ Bank loans to consumers that are secured by marketable securities at advance rates consistent with industry standards. The proceeds from repayment or, if necessary, the liquidation of collateral, which is monitored daily, are expected to satisfy the amounts drawn against these existing lines of credit. These lines of credit are primarily uncommitted, as we reserve the right to not make any advances or may terminate these lines at any time.

Because many of our lending commitments expire without being funded in whole or part, the ~~contract~~contractual amounts are not estimates of our actual future credit exposure or future liquidity requirements. We maintain a reserve to provide for potential losses related to the unfunded lending commitments. See Note 87 for further discussion of this reserve for unfunded lending commitments.

~~Investment Commitments~~RJ&A enters into margin lending arrangements which allow customers to borrow against the value of qualifying securities. Margin loans are collateralized by the securities held in the customer’s account at RJ&A. Collateral levels and established credit terms are monitored daily and we require customers to deposit additional collateral or reduce balances as necessary.

A subsidiary of RJ Bank has committed $80 million as an investor member in a LIHTC fund in which a subsidiary of RJTCF is the managing member (see Note 2 of our 2017 Form 10-K for information regarding the accounting policies governing these investments). As of ~~December 31, 2017, the RJ Bank subsidiary had invested $62 million of the committed amount.~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Investment commitments

We ~~have~~had unfunded commitments to various investments, including private equity investments ~~which aggregate to $36~~and certain RJ Bank investments, of $38 million as of ~~December 31, 2017. Of the total, we have unfunded~~June 30, 2020.

Other commitments ~~of $18 million to internally-sponsored private equity~~

Raymond James Tax Credit Funds, Inc. (“RJTCF”) sells investments in ~~which we control the general partner.~~

~~Acquisition-Related Commitments and Contingencies~~

We have potential contingent payments related to our acquisitions of the Scout Group, The Producer’s Choice LLC and Mummert & Company Corporate Finance GmbH. The estimated fair values of such contingent payments were included in our Condensed Consolidated Statements of Financial Condition as of December 31, 2017.

~~Other Commitments~~

RJF has committed an amount of up to $225 million, subject to certain limitations and to annual re-approval by the RJF Board of Directors, to either lend to, or guarantee obligations of RJTCF in connection with RJTCF’s low-income housing development/rehabilitation and syndication activities. At ~~December 31, 2017~~, RJTCF had $111 million outstanding against this commitment. RJTCF may borrow from RJF in order to make investments in, or fund loans or advances to, either partnerships that purchase and develop properties qualifying for tax credits (“project partnerships”) or LIHTC funds. Investments in project partnerships ~~are sold~~ to various LIHTC funds, which have ~~third party~~third-party investors, and for which RJTCF serves as the managing member or general partner. RJTCF typically sells investments in project partnerships to LIHTC funds within 90 days of their ~~acquisition,~~acquisition. Until such investments are sold to LIHTC funds, RJTCF is responsible for funding investment commitments to such partnerships. As of June 30, 2020, RJTCF had committed approximately $130 million to project partnerships that had not yet been sold to LIHTC funds. Because we expect to sell these project partnerships to LIHTC funds and the ~~proceeds from~~equity funding events arise over future periods, the ~~sales~~contractual commitments are ~~used~~not expected to ~~repay RJTCF’s borrowings from RJF.~~impact our future liquidity requirements. RJTCF may also make short-term loans or advances to project partnerships and LIHTC funds.

As a part of our fixed income public finance operations, we enter into forward commitments to purchase ~~GNMA or FNMA~~agency MBS (see the discussion of these activities within Note 2 of our ~~2017~~2019 Form 10-K). At ~~December 31, 2017~~,June 30, 2020, we had ~~$851~~$426 million principal amount of outstanding forward MBS purchase commitments, which were expected to be purchased ~~over the~~within 90 days following ~~90 days.~~commitment. In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the commitment and the date of sale of the MBS, we enter into ~~to be announced (“TBA”)~~TBA security contracts with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future. We may be subject to loss if the timing of, or the actual amount of, the MBS differs significantly from the term and notional amount of the TBA security contract to which we entered. These TBA securities and related ~~purchased~~purchase commitments are accounted for at fair value. As of ~~December 31, 2017~~,June 30, 2020, the fair value of the TBA securities and the estimated fair value of the purchase commitments were insignificant.

~~Contingencies~~

RJF and certain of its subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations. The reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time into industry practices, which can also result in the imposition of such sanctions. Refer to the “Legal and regulatory matter contingencies” discussion within this footnote for information about related loss contingency reserves.

Guarantees

Our U.S. broker-dealer subsidiaries are required by federal law to be members of the Securities Investors Protection Corporation (“SIPC”). The SIPC fund provides protection up to $500 thousand per client for securities and cash held in client accounts, including a limitation of $250 thousand on claims for cash balances. We have purchased excess SIPC coverage through various syndicates of Lloyd’s of London. For RJ&A, our clearing broker-dealer, the additional protection currently provided has an aggregate firm limit of $750 million for cash and securities, including a sub-limit of $1.9 million per client for cash above basic SIPC. Account protection applies when a SIPC member fails financially and is unable to meet obligations to clients. This coverage does not protect against market fluctuations. RJF has provided an indemnity to Lloyd’s of London against any and all losses they may incur associated with the excess SIPC policies.

~~RJTCF issues certain guarantees to various third parties related to project partnerships whose interests have been sold to~~We guarantee the debt of one ~~or more~~ of our private equity investments. The amount of such debt, including the ~~funds in which RJTCF is the managing member or general partner. In some instances, RJTCF is not the primary guarantor~~undrawn portion of ~~these obligations, which aggregated to $3~~a revolving credit facility, was $13 million as of ~~December 31, 2017~~.

~~RJTCF has provided a guaranteed return on investment to a third-party investor~~June 30, 2020. The debt, which matures in ~~the Guaranteed LIHTC Fund and RJF has guaranteed RJTCF’s performance under the arrangement. Under the terms~~2022, is secured by substantially all of the ~~performance guarantee, should~~assets of the ~~underlying LIHTC project partnerships held by the Guaranteed LIHTC Fund fail to deliver a certain amount of tax credits and other tax benefits to this investor~~borrower.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

over the next five years, RJTCF is obligated to pay the investor an amount that results in the investor achieving a minimum specified return on their investment. A $16 million financing asset was included in “Other assets,” and a related $16 million liability was included in “Other payables” on our Condensed Consolidated Statements of Financial Condition as of ~~December 31, 2017~~ ~~related to this obligation. The maximum exposure to loss under this guarantee was $17 million at~~ ~~December 31, 2017, which represented the undiscounted future payments due the investor.~~

Legal and regulatory matter contingencies

In addition to ~~the~~any matters that may be specifically described ~~below,~~in the following sections, in the normal course of our business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a diversified financial services institution.

WeRJF and certain of its subsidiaries are ~~also~~ subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations. Reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time, toamong other ~~reviews, investigations~~things, into industry practices, which can also result in the imposition of such sanctions.

We may contest liability and/or the amount of damages, as appropriate, in each pending matter. Over the last several years, the level of litigation and ~~proceedings~~investigatory activity (both formal and informal) by ~~governmental~~government and self-regulatory agencies regarding our business. Such proceedings may involve, among other things, our sales and trading activities, financial products or offerings we sponsored, underwrote or sold, and operational matters. Some of these proceedings have resulted, and mayhas increased significantly in the ~~future result, in adverse judgments, settlements, fines, penalties, injunctions~~financial services industry. There can be no assurance that material losses will not be incurred from claims that have not yet been asserted or ~~other relief and/or require us~~are not yet determined to ~~undertake remedial actions.~~be material.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss as we cannot predict if, how or when such proceedings or investigations will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be. A large number of factors may contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental proceedings, potential fines and penalties); the matters present significant legal uncertainties; we have not engaged in settlement discussions; discovery is not complete; there are significant facts in dispute; and numerous parties are named as defendants (including where it is uncertain how liability might be shared among defendants).

We contest liability and/or the amount of damages, as appropriate, in each pending matter. Over the last several years, the level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies has increased significantly in the financial services industry. While we have identified below certain proceedings that we believe could be material, individually or collectively, there can be no assurance that material losses will not be incurred from claims that have not yet been asserted or are not yet determined to be material.

We may include in some of the descriptions of individual matters below certain quantitative information about the plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings. Although this information may provide insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as to any currently appropriate accrual related thereto.

Subject to the foregoing, ~~we believe,~~ after consultation with counsel, ~~and consideration of the accrued liability amounts included in the accompanying condensed consolidated financial statements,~~we believe that the outcome of such litigation and regulatory proceedings will not have a material adverse effect on our consolidated financial condition. However, the outcome of such litigation and proceedings could be material to our operating results and cash flows for a particular future period, depending on, among other things, our revenues or income for such period.

There are certain matters for which we are unable to estimate the upper end of the range of reasonably possible loss. With respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss ~~(and excluding amounts subject to the below-described indemnification from Regions Financial Corporation (“Regions”)),~~ as of ~~December 31, 2017,~~June 30, 2020, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately ~~$70~~$125 million in excess of the aggregate ~~reserves~~accruals for such matters. Refer to Note 2 of our ~~2017~~2019 Form 10-K for a discussion of our criteria for recognizing liabilities for contingencies.

~~Morgan Keegan Litigation~~We may from time to time include in any descriptions of individual matters herein certain quantitative information about the plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings. Although this information may provide insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as to any currently appropriate accrual related thereto.

~~Indemnification from Regions~~

Under the agreement with Regions governing our 2012 acquisition of Morgan Keegan & Company, Inc., and MK Holding, Inc. and certain of its affiliates (collectively referred to as “Morgan Keegan”), Regions is obligated to indemnify us for losses we may incur in connection with any Morgan Keegan legal proceedings pending as of the closing date for that transaction, which was April 2, 2012, or commenced after the closing date but related to pre-closing matters that were received prior to April 2, 2015.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Morgan Keegan matter described below is subject to such indemnification provisions. As of December 31, 2017, management estimated the range of potential liability of all Morgan Keegan matters subject to indemnification, including the cost of defense, to be from $12 million to $44 million. Any loss arising from such matters, after application of any contractual thresholds and other reductions, as set forth in the agreement, will be borne by Regions. As of December 31, 2017 our Condensed Consolidated Statements of Financial Condition included an indemnification asset of $25 million which was included in “Other assets,” and a liability for potential losses of $25 million which was included within “Other payables,” pertaining to the Morgan Keegan matters subject to indemnification. The amount included within “Other payables” is the amount within the range of potential liability related to such matters which management estimated was more likely than any other amount within such range.

~~Morgan Keegan matter (subject to indemnification)~~

In July 2006, Morgan Keegan & Company, Inc., a Morgan Keegan affiliate, and one of its former analysts were named as defendants in a lawsuit filed by Fairfax Financial Holdings Limited and an affiliate in the Superior Court of New Jersey, Law Division, in Morris County, New Jersey. Plaintiffs made claims under a civil RICO statute, for commercial disparagement, tortious interference with contractual relationships, tortious interference with prospective economic advantage and common law conspiracy. Plaintiffs alleged that defendants engaged in a multi-year conspiracy to publish and disseminate false and defamatory information about plaintiffs in order to improperly drive down the stock price of Fairfax, so that others could profit from short positions. Plaintiffs alleged that the defendants’ actions disparaged them and harmed their business relationships. Plaintiffs alleged various categories of damages, including lost insurance business, losses on stock and bond offerings, reputational loss, increased audit fees and directors’ and officers’ insurance premiums, and lost acquisitions. They requested actual and punitive damages and treble damages under their RICO claims. On May 11, 2012, the trial court dismissed the plaintiffs’ RICO claims. On June 27, 2012, the trial court dismissed plaintiffs’ tortious interference with prospective relations claim, but allowed the other claims to go forward. Prior to commencement of a jury trial, the court dismissed the remaining claims with prejudice, and the plaintiffs appealed. On April 27, 2017, the Superior Court of New Jersey, Appellate Division, affirmed the trial court’s dismissal of certain claims against Morgan Keegan, including RICO allegations, while remanding to the trial court the claims of disparagement, tortious interference with prospective business relations, and civil conspiracy, and limiting the actual damages to certain lost insurance business. Plaintiffs petitioned the Supreme Court of New Jersey for review of the Appellate Division’s opinion, but on October 17, 2017, the Supreme Court of New Jersey denied the petition.

NOTE 1516 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

~~Other comprehensive income/(loss)~~

~~The activity in other comprehensive income/(loss), net of the respective tax effect, was as follows:~~

Three months ended December 31,
$ in thousands 2017 2016
Unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses $ (11,953 ) $ (4,146 )
Unrealized gain/(loss) on currency translations, net of the impact of net investment hedges (187 ) 1,001
Unrealized gain on cash flow hedges 6,885
25,738
Net other comprehensive income/(loss) $ (5,255 ) $ 22,593

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~Accumulated other comprehensive income/(loss)~~

All of the components of other comprehensive ~~income/(loss) described below,~~income (“OCI”), net of tax, ~~are~~were attributable to RJF. The following table presents the net change in AOCI as well as the changes, and the related tax effects, of each component of ~~accumulated other comprehensive income/(loss):~~AOCI.


$ in millions	Net investment hedges		Currency translations		Subtotal: net investment hedges and currency translations		Available- for-sale securities		Cash flow hedges		Total
Three months ended June 30, 2020
AOCI as of beginning of period	$	149	$	(191)	$	(42)	$	83	$	(52)	$	(11)
OCI:
OCI before reclassifications and taxes	(29)		32		3		7		(7)		3
Amounts reclassified from AOCI, before tax	—		—		—		—		2		2
Pre-tax net OCI	(29)		32		3		7		(5)		5
Income tax effect	8		—		8		(2)		1		7
OCI for the period, net of tax	(21)		32		11		5		(4)		12
AOCI as of end of period	$	128	$	(159)	$	(31)	$	88	$	(56)	$	1

Nine months ended June 30, 2020
AOCI as of beginning of period	$	110	$	(135)	$	(25)	$	21	$	(19)	$	(23)
OCI:
OCI before reclassifications and taxes	23		(24)		(1)		90		(51)		38
Amounts reclassified from AOCI, before tax	—		—		—		—		2		2
Pre-tax net OCI	23		(24)		(1)		90		(49)		40
Income tax effect	(5)		—		(5)		(23)		12		(16)
OCI for the period, net of tax	18		(24)		(6)		67		(37)		24
AOCI as of end of period	$	128	$	(159)	$	(31)	$	88	$	(56)	$	1

Three months ended June 30, 2019
AOCI as of beginning of period	$	114	$	(142)	$	(28)	$	(9)	$	12	$	(25)

OCI:
OCI before reclassifications and taxes	(16)		18		2		32		(24)		10
Amounts reclassified from AOCI, before tax	—		—		—		—		(1)		(1)
Pre-tax net OCI	(16)		18		2		32		(25)		9
Income tax effect	4		—		4		(8)		6		2
OCI for the period, net of tax	(12)		18		6		24		(19)		11
AOCI as of end of period	$	102	$	(124)	$	(22)	$	15	$	(7)	$	(14)

Nine months ended June 30, 2019
AOCI as of beginning of period	$	88	$	(111)	$	(23)	$	(46)	$	42	$	(27)
Cumulative effect of adoption of ASU 2016-01	—		—		—		(4)		—		(4)
OCI:
OCI before reclassifications and taxes	18		(13)		5		90		(64)		31
Amounts reclassified from AOCI, before tax	—		—		—		—		(4)		(4)
Pre-tax net OCI	18		(13)		5		90		(68)		27
Income tax effect	(4)		—		(4)		(25)		19		(10)
OCI for the period, net of tax	14		(13)		1		65		(49)		17
AOCI as of end of period	$	102	$	(124)	$	(22)	$	15	$	(7)	$	(14)

$ in thousands Net investment hedges Currency translations Sub-total: net investment hedges and currency translations Available- for-sale securities Cash flow hedges Total
Three months ended December 31, 2017
Accumulated other comprehensive income/(loss) as of the beginning of the period $ 60,201
$ (79,677 ) $ (19,476 ) $ (2,472 ) $ 6,749
$ (15,199 )
Other comprehensive income/(loss) before reclassifications and taxes 7,607
(5,760 ) 1,847
(15,549 ) 6,774
(6,928 )
Amounts reclassified from accumulated other comprehensive income, before tax —
—
—
—
1,409
1,409
Pre-tax net other comprehensive income/(loss) 7,607
(5,760 ) 1,847
(15,549 ) 8,183
(5,519 )
Income tax effect (2,034 ) —
(2,034 ) 3,596
(1,298 ) 264
Net other comprehensive income/(loss) for the period, net of tax 5,573
(5,760 ) (187 ) (11,953 ) 6,885
(5,255 )
Accumulated other comprehensive income/(loss) as of end of period $ 65,774
$ (85,437 ) $ (19,663 ) $ (14,425 ) $ 13,634
$ (20,454 )
Three months ended December 31, 2016
Accumulated other comprehensive income/(loss) as of the beginning of the period $ 86,482
$ (121,576 ) $ (35,094 ) $ (4,156 ) $ (16,483 ) $ (55,733 )
Other comprehensive income/(loss) before reclassifications and taxes 18,098
(17,756 ) 342
(6,858 ) 39,941
33,425
Amounts reclassified from accumulated other comprehensive income/(loss), before tax —
6,537
6,537
(12 ) 1,572
8,097
Pre-tax net other comprehensive income/(loss) 18,098
(11,219 ) 6,879
(6,870 ) 41,513
41,522
Income tax effect (6,772 ) 894
(5,878 ) 2,724
(15,775 ) (18,929 )
Net other comprehensive income/(loss) for the period, net of tax 11,326
(10,325 ) 1,001
(4,146 ) 25,738
22,593
Accumulated other comprehensive income/(loss) as of end of period $ 97,808
$ (131,901 ) $ (34,093 ) $ (8,302 ) $ 9,255
$ (33,140 )

As of October 1, 2018, we adopted accounting guidance (ASU 2016-01) that generally requires changes in the fair value of equity securities to be recorded in net income. Accordingly, as of the date of adoption, we reclassified a cumulative unrealized gain on such securities, net of tax, from AOCI to retained earnings.

Reclassifications from AOCI to net income, excluding taxes, for the three and nine months ended June 30, 2020 and 2019 were recorded in “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income.

Our net investment hedges and cash flow hedges relate to our derivatives associated with RJ Bank’s business ~~operations (see~~operations. See Note 62 of our 2019 Form 10-K and Note 5 for additional information on these ~~derivatives).~~

derivatives.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 17 – REVENUES

~~Reclassifications out of accumulated other comprehensive income/(loss)~~

The following ~~table presents the income statement line items impacted~~tables present our sources of revenues by ~~reclassifications out of accumulated other comprehensive income/(loss), and the~~segment. For further information about our significant accounting policies related ~~tax effects, for the three months ended December 31, 2017 and 2016:~~

Accumulated other comprehensive income/(loss) components:
$ in thousands
Increase/(decrease) in amounts reclassified from accumulated other comprehensive income/(loss) Affected line items in income statement
Three months ended December 31, 2017
RJ Bank cash flow hedges $ 1,409
Interest expense
1,409
Total before tax
Income tax effect (402 ) Provision for income taxes
Total reclassifications for the period $ 1,007
Net of tax
Three months ended December 31, 2016
RJ Bank available-for-sale securities $ (12 ) Other revenue
RJ Bank cash flow hedges 1,572
Interest expense
Currency translations 6,537
Other expense
8,097
Total before tax
Income tax effect (3,076 ) Provision for income taxes
Total reclassifications for the period $ 5,021
Net of tax

~~During the quarter ended December 31, 2016, we sold our interests in a number of Latin American joint ventures which had operations in Uruguay and Argentina. As a component~~to revenue recognition, see Note 2 of our ~~computation~~2019 Form 10-K. See Note 22 of this Form 10-Q for additional information on our segment results.


	Three months ended June 30, 2020
$ in millions	Private Client Group		Capital Markets		Asset Management		RJ Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	715	$	1	$	157	$	—	$	(6)	$	867
Brokerage revenues:
Securities commissions:
Mutual and other fund products	131		2		2		—		(1)		134
Insurance and annuity products	88		—		—		—		—		88
Equities, ETFs and fixed income products	84		37		—		—		—		121
Subtotal securities commissions	303		39		2		—		(1)		343
Principal transactions ⁽¹⁾	16		127		—		—		—		143
Total brokerage revenues	319		166		2		—		(1)		486
Account and services fees:
Mutual fund and annuity service fees	82		—		1		—		—		83
RJBDP fees	63		1		—		—		(44)		20


Client account and other fees	32		1		2		—		(4)		31
Total account and service fees	177		2		3		—		(48)		134
Investment banking:
Merger & acquisition and advisory	—		60		—		—		—		60
Equity underwriting	7		35		—		—		—		42
Debt underwriting	—		37		—		—		—		37
Total investment banking	7		132		—		—		—		139
Other:
Tax credit fund revenues	—		20		—		—		—		20
All other ⁽¹⁾	4		—		1		9		(1)		13
Total other	4		20		1		9		(1)		33
Total non-interest revenues	1,222		321		163		9		(56)		1,659
Interest income ⁽¹⁾	31		4		—		181		1		217
Total revenues	1,253		325		163		190		(55)		1,876
Interest expense	(4)		(2)		—		(12)		(24)		(42)
Net revenues	$	1,249	$	323	$	163	$	178	$	(79)	$	1,834

(1) These revenues are generally not in scope of the ~~gain or loss resulting~~accounting guidance for revenue from ~~such sales, we recognized the sold entities’ cumulative currency translation balances which, prior to such reclassification, had been a component of the accumulated other comprehensive loss.~~contracts with customers.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Three months ended June 30, 2019
$ in millions	Private Client Group		Capital Markets		Asset Management		RJ Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	718	$	2	$	165	$	—	$	(6)	$	879
Brokerage revenues:
Securities commissions:
Mutual and other fund products	147		1		2		—		—		150
Insurance and annuity products	105		—		—		—		—		105
Equities, ETFs and fixed income products	74		29		—		—		—		103
Subtotal securities commissions	326		30		2		—		—		358
Principal transactions ⁽¹⁾	20		74		—		—		(1)		93
Total brokerage revenues	346		104		2		—		(1)		451
Account and services fees:
Mutual fund and annuity service fees	85		—		—		—		(1)		84
RJBDP fees	111		—		1		—		(46)		66


Client account and other fees	32		1		7		—		(7)		33
Total account and service fees	228		1		8		—		(54)		183
Investment banking:
Merger & acquisition and advisory	—		80		—		—		—		80
Equity underwriting	10		27		—		—		—		37
Debt underwriting	—		22		—		—		—		22
Total investment banking	10		129		—		—		—		139
Other:
Tax credit fund revenues	—		16		—		—		—		16
All other ⁽¹⁾	3		(1)		1		7		1		11
Total other	3		15		1		7		1		27
Total non-interest revenues	1,305		251		176		7		(60)		1,679
Interest income ⁽¹⁾	56		10		1		246		8		321
Total revenues	1,361		261		177		253		(52)		2,000
Interest expense	(10)		(10)		—		(38)		(15)		(73)
Net revenues	$	1,351	$	251	$	177	$	215	$	(67)	$	1,927

(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Nine Months Ended June 30, 2020
$ in millions	Private Client Group		Capital Markets		Asset Management		RJ Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	2,330	$	4	$	510	$	—	$	(16)	$	2,828
Brokerage revenues:
Securities commissions:
Mutual and other fund products	438		6		6		—		(2)		448
Insurance and annuity products	288		—		—		—		—		288
Equities, ETFs and fixed income products	274		107		—		—		(1)		380
Subtotal securities commissions	1,000		113		6		—		(3)		1,116
Principal transactions ⁽¹⁾	50		298		—		—		(3)		345
Total brokerage revenues	1,050		411		6		—		(6)		1,461
Account and services fees:
Mutual fund and annuity service fees	260		—		2		—		(1)		261
RJBDP fees	267		1		—		—		(139)		129


Client account and other fees	96		4		10		—		(16)		94
Total account and service fees	623		5		12		—		(156)		484
Investment banking:
Merger & acquisition and advisory	—		192		—		—		—		192
Equity underwriting	29		117		—		—		—		146
Debt underwriting	—		90		—		—		—		90
Total investment banking	29		399		—		—		—		428
Other:
Tax credit fund revenues	—		50		—		—		—		50
All other ⁽¹⁾	20		4		2		20		(49)		(3)
Total other	20		54		2		20		(49)		47
Total non-interest revenues	4,052		873		530		20		(227)		5,248
Interest income ⁽¹⁾	125		22		1		635		16		799
Total revenues	4,177		895		531		655		(211)		6,047
Interest expense	(19)		(14)		—		(51)		(52)		(136)
Net revenues	$	4,158	$	881	$	531	$	604	$	(263)	$	5,911

(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Nine Months Ended June 30, 2019
$ in millions	Private Client Group		Capital Markets		Asset Management		RJ Bank		Other and intersegment eliminations		Total
Revenues:
Asset management and related administrative fees	$	2,063	$	5	$	475	$	—	$	(16)	$	2,527
Brokerage revenues:
Securities commissions:
Mutual and other fund products	449		4		7		—		(2)		458
Insurance and annuity products	308		—		—		—		—		308
Equities, ETFs and fixed income products	232		99		—		—		(2)		329
Subtotal securities commissions	989		103		7		—		(4)		1,095
Principal transactions ⁽¹⁾	59		203		—		1		(1)		262
Total brokerage revenues	1,048		306		7		1		(5)		1,357
Account and services fees:
Mutual fund and annuity service fees	250		—		2		—		(9)		243
RJBDP fees	342		—		3		—		(131)		214


Client account and other fees	92		3		22		—		(15)		102
Total account and service fees	684		3		27		—		(155)		559
Investment banking:
Merger & acquisition and advisory	—		286		—		—		—		286
Equity underwriting	25		72		—		—		—		97
Debt underwriting	—		56		—		—		—		56
Total investment banking	25		414		—		—		—		439
Other:
Tax credit fund revenues	—		49		—		—		—		49
All other ⁽¹⁾	19		1		1		19		6		46
Total other	19		50		1		19		6		95
Total non-interest revenues	3,839		778		510		20		(170)		4,977
Interest income ⁽¹⁾	170		29		3		732		27		961
Total revenues	4,009		807		513		752		(143)		5,938
Interest expense	(31)		(26)		—		(122)		(42)		(221)
Net revenues	$	3,978	$	781	$	513	$	630	$	(185)	$	5,717

(1) These revenues are generally not in scope of the accounting guidance for revenue from contracts with customers.

At June 30, 2020 and September 30, 2019, net receivables related to contracts with customers were $320 million and $347 million, respectively.

We record deferred revenue from contracts with customers when payment is received prior to the performance of our obligation to the customer. Deferred revenue balances were not material as of June 30, 2020 and September 30, 2019.

We have elected the practical expedient allowable by the accounting guidance to not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1618 – INTEREST INCOME AND INTEREST EXPENSE

The following table details the components of interest income and interest ~~expense are as follows:~~expense.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Interest income:
Assets segregated pursuant to regulations	$	3	$	14	$	25	$	46
Trading instruments	4		7		17		20
Available-for-sale securities	23		18		60		51
Margin loans	18		30		66		93
Bank loans, net of unearned income and deferred expenses	157		221		561		655
Loans to financial advisors	5		5		15		14
Corporate cash and all other	7		26		55		82
Total interest income	$	217	$	321	$	799	$	961
Interest expense:
Bank deposits	$	7	$	33	$	35	$	105
Trading instruments sold but not yet purchased	1		2		3		6
Brokerage client payables	3		5		9		16
Other borrowings	5		5		15		16
Senior notes payable	24		19		61		55
Other	2		9		13		23
Total interest expense	42		73		136		221
Net interest income	175		248		663		740
Bank loan loss (provision)/benefit	(81)		5		(188)		(16)
Net interest income after bank loan loss (provision)/benefit	$	94	$	253	$	475	$	724

Three months ended December 31,
$ in thousands 2017 2016
Interest income:
Margin balances $ 24,095
$ 19,981
Assets segregated pursuant to regulations and other segregated assets 12,122
7,170
Bank loans, net of unearned income 160,020
135,525
Available-for-sale securities 10,715
3,400
Trading instruments 5,138
5,006
Securities loaned 3,058
2,732
Loans to financial advisors 3,502
3,308
Corporate cash and all other 13,079
5,660
Total interest income $ 231,729
$ 182,782
Interest expense:

Brokerage client liabilities $ 2,529
$ 676
Bank deposits 7,509
2,783
Trading instruments sold but not yet purchased 1,706
1,328
Securities borrowed 1,479
1,228
Borrowed funds 5,865
3,719
Senior notes 18,180
24,699
Other 2,163
1,533
Total interest expense 39,431
35,966
Net interest income 192,298
146,816
Bank loan loss (provision)/benefit (1,016 ) 1,040
Net interest income after bank loan loss provision $ 191,282
$ 147,856

Interest expense related to bank deposits in the ~~above~~preceding table ~~for the three months ended December 31, 2017 and 2016~~ excludes interest expense associated with affiliate deposits, which has been eliminated in consolidation.

NOTE 1719 – SHARE-BASED ~~AND OTHER~~ COMPENSATION

~~Share-based compensation plans~~

We have ~~one~~1 share-based compensation plan for our employees, Board of Directors and non-employees ~~(comprised of independent~~(independent contractor financial advisors). Generally, we reissue our treasury shares under The Amended and Restated 2012 Stock Incentive ~~Plan (the “2012 Plan”) authorizes us to grant 40,244,000 new shares, including the shares available for grant under six predecessor plans. We generally issue new shares under the 2012~~ Plan; however, we are also permitted to ~~reissue our treasury~~issue new shares. Annual share-based compensation awards are primarily issued during the fiscal first quarter of each year. Our share-based compensation accounting policies are described in Note 2 of our ~~2017~~2019 Form 10-K. Other information related to our share-based awards ~~are~~is presented in Note 2021 of our ~~2017~~2019 Form 10-K.

~~Stock options~~

~~Expense~~During the three and ~~income tax benefits related to our stock options awards~~nine months ended June 30, 2020, we granted approximately 100 thousand and 1.7 million RSUs, respectively, to employees and ~~independent contractor financial advisors is presented below:~~

Three months ended December 31,
$ in thousands 2017 2016
Total share-based expense $ 3,112
$ 4,176
Income tax benefit related to share-based expense 307
545

outside members of our Board of Directors with a weighted-average grant-date fair value of $64.98 and $87.76, respectively. For the three and nine months ended ~~December 31, 2017, we realized $1~~June 30, 2020, total compensation expense for RSUs granted to our employees and members of our Board of Directors was $22 million and $89 million, respectively, compared with $20 million and $81 million, respectively, for the three and nine months ended June 30, 2019.

As of June 30, 2020, there were $196 million of ~~excess tax benefits related to our stock option awards which favorably impacted income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income.~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~During the~~ ~~three months ended December 31, 2017, we granted~~ no ~~stock options to employees and the stock option awards granted to independent contractor financial advisors were not material.~~

~~Pre-tax expense~~total pre-tax compensation costs not yet recognized ~~for stock option awards granted to employees and independent contractor financial advisors, net~~(net of estimated ~~forfeitures, and the remaining period over which the expense will be recognized as of December 31, 2017, are presented below:~~

Pre-tax expense not yet recognized Remaining weighted-average amortization period
(in thousands) (in years)
Employees $ 12,757
2.4
Independent contractor financial advisors 4,431
3.5

~~Restricted stock and RSU awards~~

~~Expense and income tax benefits~~forfeitures) related to ~~our restricted equity awards~~RSUs granted to employees and members of our Board of Directors, ~~are presented below:~~

Three months ended December 31,
$ in thousands 2017 2016
Total share-based expense $ 30,477
$ 27,650
Income tax benefit related to share-based expense 8,090
10,035

~~Total share-based expense~~including those granted during the ~~three~~nine months ended ~~December 31, 2016 included $5 million which is included as a component of “Acquisition-related expenses” on our Condensed Consolidated Statements of Income and Comprehensive Income.~~

For the three months ended December 31, 2017, we realized $8 million of excess tax benefits related to our restricted equity awards which favorably impacted income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income.

During the three months ended December 31, 2017, we granted 1,089,000 RSUs to employees with a weighted-average grant-date fair value of $86.50. During the three months ended December 31, 2017, we did not grant RSUs to outside members of our Board of Directors.

As of December 31, 2017, there was $184 million of total pre-tax compensation costs not yet recognized, net of estimated forfeitures, related to restricted equity awards granted to employees and members of our Board of Directors.June 30, 2020. These costs are expected to be recognized over a weighted-average period of ~~3.4~~3.2 years.

~~There were no outstanding RSUs related to our independent contractor financial advisors as of December 31, 2017.~~

~~Restricted stock awards associated with Alex. Brown~~

As part of our acquisition of Alex. Brown, we assumed certain DBRSU awards, including the associated plan terms and conditions. Refer to Note 20 of our 2017 Form 10-K for additional information regarding these awards. The DBRSUs are accounted for as derivatives. See Note 6 for additional information regarding these derivatives.

The net impact of the DBRSUs in our Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended December 31, 2017 and 2016, including the related income tax effects, is presented below:

Three months ended December 31,
$ in thousands 2017 2016
Amortization of DBRSU prepaid compensation asset $ 1,312
$ 1,542
Increase in fair value of derivative liability 2,613
6,375
Net expense before tax $ 3,925
$ 7,917
Income tax benefit $ 1,104
$ 2,920

~~The table above includes the impact of DBRSUs forfeited during the three months ended December 31, 2016.~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of December 31, 2017, there was a $9 million prepaid compensation asset included in “Other assets” in our Condensed Consolidated Statements of Financial Condition related to these DBRSUs. This asset is expected to be amortized over a weighted-average period of 1.8 years. As of December 31, 2017, there was a $28 million derivative liability included in “Accrued compensation, commissions and benefits” in our Condensed Consolidated Statements of Financial Condition based on the December 31, 2017 share price of DB shares of $19.03.

We held shares of DB as of December 31, 2017 as an economic hedge against this obligation. Such shares are included in “Other investments” on our Condensed Consolidated Statements of Financial Condition. The gains/losses on this hedge are included as a component of “Compensation, commissions and benefits expense” and offset a portion of the gains/losses on the DBRSUs incurred during the periods discussed above.

NOTE 1820 – REGULATORY CAPITAL REQUIREMENTS

RJF, as a bank holding company and financial holding company, RJ Bank, ~~and~~ our broker-dealer subsidiaries and Raymond James Trust, N.A. (“RJ Trust”) are subject to capital requirements by various regulatory authorities. Capital levels of each entity are monitored to ensure compliance with our various regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on our financial results.

As a bank holding company, RJF is subject to the risk-based capital requirements of the ~~Federal Reserve Board.~~Fed. These risk-based capital requirements are expressed as capital ratios that compare measures of regulatory capital to risk-weighted assets, which involve quantitative measures of our assets, liabilities, and certain off-balance-sheet items as calculated under regulatory ~~accounting~~ guidelines. RJF’s and RJ Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

In July 2013, the Office of the Comptroller of the Currency (“OCC”), the Fed and the FDIC released final U.S. rules implementing the Basel III capital framework developed by the Basel Committee on Banking Supervision and certain Dodd-Frank Act and other capital provisions and updated the prompt corrective action framework to reflect the new regulatory capital minimums (the “U.S. Basel III Rules”). RJF and RJ Bank report regulatory capital under the Basel III standardized approach. Various aspects of the Basel III rules are subject to multi-year transition periods through December 31, 2018.

RJF and RJ Bank are required to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), Tier 1 capital to average assets (as defined), and under rules defined inunder the Basel III capital framework, Common equity Tier 1 capital (“CET1”) to risk-weighted assets. RJF and RJ Bank each calculate these ratios under the Basel III standardized approach in order to assess compliance with both regulatory requirements and their internal capital policies. The minimum CET1, Tier 1 Capital, and Total Capital ratios of RJF and RJ Bank are supplemented by an incremental capital conservation buffer, consisting entirely of capital that qualifies as CET1, that began phasing in on January 1, 2016 in increments of 0.625% per year until it reaches 2.5% of risk weighted assets on January 1, 2019. FailureIn order to maintain ~~the capital conservation buffer could limit~~ our ability to take certain capital actions, including dividends and common equity repurchases, and to make ~~discretionary~~ bonus ~~payments.~~payments, we must hold a capital conservation buffer above our minimum risk-based capital requirements. As of ~~December 31, 2017,~~June 30, 2020, both RJF’s and RJ Bank’s capital levels exceeded the ~~fully-phased in~~ capital conservation buffer requirement and ~~are~~were each categorized as ~~“well capitalized.~~“well-capitalized.”

For further discussion of regulatory capital requirements applicable to certain of our businesses and subsidiaries, see Note 2122 of our ~~2017~~2019 Form 10-K.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

To meet requirements for capital adequacy purposes or to be categorized as ~~“well capitalized,~~“well-capitalized,” RJF must maintain minimum CET1, Tier 1 capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the ~~table below.~~following table.


	Actual						Requirement for capital adequacy purposes						To be well-capitalized under regulatory provisions
$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
RJF as of June 30, 2020:
CET1	$	6,351	24.8	%	$	1,152	4.5	%	$	1,664	6.5	%
Tier 1 capital	$	6,351	24.8	%	$	1,536	6.0	%	$	2,047	8.0	%
Total capital	$	6,661	26.0	%	$	2,047	8.0	%	$	2,559	10.0	%
Tier 1 leverage	$	6,351	14.5	%	$	1,749	4.0	%	$	2,187	5.0	%

RJF as of September 30, 2019:
CET1	$	5,971	24.8	%	$	1,085	4.5	%	$	1,567	6.5	%
Tier 1 capital	$	5,971	24.8	%	$	1,446	6.0	%	$	1,928	8.0	%
Total capital	$	6,207	25.8	%	$	1,928	8.0	%	$	2,410	10.0	%
Tier 1 leverage	$	5,971	15.7	%	$	1,525	4.0	%	$	1,906	5.0	%

Actual
Requirement for capital
adequacy purposes
To be well capitalized under regulatory provisions
$ in thousands Amount Ratio Amount Ratio Amount Ratio
RJF as of December 31, 2017:
CET1 $ 5,052,629
22.3 % $ 1,018,048
4.5 % $ 1,470,513
6.5 %
Tier 1 capital $ 5,052,629
22.3 % $ 1,357,397
6.0 % $ 1,809,862
8.0 %
Total capital $ 5,266,339
23.3 % $ 1,809,862
8.0 % $ 2,262,328
10.0 %
Tier 1 leverage $ 5,052,629
14.4 % $ 1,400,054
4.0 % $ 1,750,068
5.0 %

RJF as of September 30, 2017:
CET1 $ 5,081,335
23.0 % $ 994,950
4.5 % $ 1,437,150
6.5 %
Tier 1 capital $ 5,081,335
23.0 % $ 1,326,600
6.0 % $ 1,768,800
8.0 %
Total capital $ 5,293,331
23.9 % $ 1,768,800
8.0 % $ 2,211,000
10.0 %
Tier 1 leverage $ 5,081,335
15.0 % $ 1,359,168
4.0 % $ 1,698,960
5.0 %

~~The decrease in~~As of June 30, 2020, RJF’s Tier 1 capital ratio was unchanged and our Total capital ~~ratios at~~ ~~December 31, 2017~~ratio increased slightly compared to September 30, ~~2017~~ ~~was primarily~~2019, due to positive earnings, net of share repurchases and dividends, offset by the impacts of an increase in ~~goodwill~~cash and ~~identifiable intangible assets related~~cash equivalents segregated pursuant to ~~the Scout Group acquisition~~regulations and growth in available-for-sale securities held at RJ Bank. RJF’s Tier 1 leverage ratio at June 30, 2020 decreased compared to September 30, 2019, due to the growth of ~~corporate loans~~average assets, primarily related to cash, cash and cash equivalents segregated pursuant to regulations and available-for-sale securities held at RJ ~~Bank.~~Bank, partially offset by the aforementioned change in equity.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

To meet the requirements for capital adequacy or to be categorized as ~~“well capitalized,~~“well-capitalized,” RJ Bank must maintain CET1, Tier 1 capital, Total capital and Tier 1 leverage amounts and ratios as set forth in the ~~table below.~~following table.


	Actual						Requirement for capital adequacy purposes						To be well-capitalized under regulatory provisions
$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
RJ Bank as of June 30, 2020:
CET1	$	2,247	12.8	%	$	790	4.5	%	$	1,141	6.5	%
Tier 1 capital	$	2,247	12.8	%	$	1,053	6.0	%	$	1,404	8.0	%
Total capital	$	2,468	14.1	%	$	1,404	8.0	%	$	1,755	10.0	%
Tier 1 leverage	$	2,247	7.6	%	$	1,187	4.0	%	$	1,484	5.0	%

RJ Bank as of September 30, 2019:
CET1	$	2,246	13.2	%	$	764	4.5	%	$	1,103	6.5	%
Tier 1 capital	$	2,246	13.2	%	$	1,018	6.0	%	$	1,358	8.0	%
Total capital	$	2,458	14.5	%	$	1,358	8.0	%	$	1,697	10.0	%
Tier 1 leverage	$	2,246	8.8	%	$	1,021	4.0	%	$	1,276	5.0	%

Actual
Requirement for capital
adequacy purposes
To be well capitalized under regulatory provisions
$ in thousands Amount Ratio Amount Ratio Amount Ratio
RJ Bank as of December 31, 2017:
CET1 $ 1,825,550
12.2 % $ 674,617
4.5 % $ 974,446
6.5 %
Tier 1 capital $ 1,825,550
12.2 % $ 899,489
6.0 % $ 1,199,319
8.0 %
Total capital $ 2,013,120
13.4 % $ 1,199,319
8.0 % $ 1,499,148
10.0 %
Tier 1 leverage $ 1,825,550
8.6 % $ 852,884
4.0 % $ 1,066,105
5.0 %

RJ Bank as of September 30, 2017:

CET1 $ 1,821,306
12.5 % $ 654,901
4.5 % $ 945,968
6.5 %
Tier 1 capital $ 1,821,306
12.5 % $ 873,201
6.0 % $ 1,164,268
8.0 %
Total capital $ 2,003,461
13.8 % $ 1,164,268
8.0 % $ 1,455,335
10.0 %
Tier 1 leverage $ 1,821,306
8.9 % $ 816,304
4.0 % $ 1,020,379
5.0 %

~~The decrease in~~ RJ Bank’s Tier 1 capital and Total capital ratios at ~~December 31, 2017~~June 30, 2020 decreased compared to September 30, ~~2017~~ ~~was primarily~~2019, due to ~~corporate loan growth.~~dividends paid during the period exceeding earnings and growth in assets, primarily available-for-sale securities. RJ Bank’s Tier 1 leverage ratio at June 30, 2020 decreased compared to September 30, 2019, due to the growth in average assets, primarily related to cash, available-for-sale securities and bank loans, as well as the aforementioned change in equity.

Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934.

The following table presents the net capital position of RJ~~&A:~~&A.


$ in millions	June 30, 2020			September 30, 2019
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items	46.1		%	39.7		%
Net capital	$	1,183		$	1,056
Less: required net capital	(51)			(53)
Excess net capital	$	1,132		$	1,003

As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James & Associates, Inc.:
(Alternative Method elected)
Net capital as a percent of aggregate debit items 25.37 % 21.37 %
Net capital $ 694,733
$ 589,420
Less: required net capital (54,758 ) (55,164 )
Excess net capital $ 639,975
$ 534,256

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~The following table presents the net capital position~~As of ~~Raymond James Financial Services, Inc. (“RJFS”):~~

As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James Financial Services, Inc.:
(Alternative Method elected)
Net capital $ 23,489
$ 34,488
Less: required net capital (250 ) (250 )
Excess net capital $ 23,239
$ 34,238

~~The following table presents the risk adjusted capital of~~June 30, 2020, RJFS, RJ Ltd. ~~(in Canadian dollars):~~

As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James Ltd.:
Risk adjusted capital before minimum $ 77,869
$ 108,985
Less: required minimum capital (250 ) (250 )
Risk adjusted capital $ 77,619
$ 108,735

~~At December 31, 2017,~~, RJ Trust and all of our other active regulated domestic and international subsidiaries were in compliance with and ~~met~~exceeded all applicable capital requirements.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1921 – EARNINGS PER SHARE

The following table presents the computation of basic and diluted earnings per common ~~share:~~share.


	Three months ended June 30,						Nine months ended June 30,
in millions, except per share amounts	2020		2019		2020		2019
Income for basic earnings per common share:
Net income	$	172	$	259	$	609	$	769
Less allocation of earnings and dividends to participating securities	—		(1)		(1)		(1)
Net income attributable to RJF common shareholders	$	172	$	258	$	608	$	768
Income for diluted earnings per common share:
Net income	$	172	$	259	$	609	$	769
Less allocation of earnings and dividends to participating securities	—		(1)		(1)		(1)
Net income attributable to RJF common shareholders	$	172	$	258	$	608	$	768
Common shares:
Average common shares in basic computation	137.1		140.4		137.9		141.8
Dilutive effect of outstanding stock options and certain RSUs	2.3		3.2		2.6		3.0
Average common shares used in diluted computation	139.4		143.6		140.5		144.8
Earnings per common share:
Basic	$	1.25	$	1.84	$	4.41	$	5.42
Diluted	$	1.23	$	1.80	$	4.33	$	5.30
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive	1.8		0.2		1.6		0.5

Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Income for basic earnings per common share:
Net income attributable to RJF $ 118,842
$ 146,567
Less allocation of earnings and dividends to participating securities (185 ) (310 )
Net income attributable to RJF common shareholders $ 118,657
$ 146,257
Income for diluted earnings per common share:

Net income attributable to RJF $ 118,842
$ 146,567
Less allocation of earnings and dividends to participating securities (182 ) (303 )
Net income attributable to RJF common shareholders $ 118,660
$ 146,264
Common shares:

Average common shares in basic computation 144,469
142,110
Dilutive effect of outstanding stock options and certain RSUs 3,792
3,565
Average common shares used in diluted computation 148,261
145,675
Earnings per common share:

Basic $ 0.82
$ 1.03
Diluted $ 0.80
$ 1.00
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive 1,355
2,127

The allocation of earnings and dividends to participating securities in the preceding table ~~above represent~~represents dividends paid during the period to participating securities plus an allocation of undistributed earnings to participating securities. Participating securities represent unvested restricted stock and certain ~~RSUs~~RSUs. Participating securities and ~~amounted to weighted-average shares of 239 thousand and 310 thousand for the three months ended December 31, 2017 and 2016, respectively. Dividends~~related dividends paid toon these participating securities were insignificant for the three and nine months ended ~~December 31, 2017~~June 30, 2020 and ~~2016.~~2019. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

Dividends per common share declared and paid are ~~as follows:~~detailed in the following table for each respective period.


	Three months ended June 30,						Nine months ended June 30,
	2020		2019		2020		2019
Dividends per common share - declared	$	0.37	$	0.34	$	1.11	$	1.02
Dividends per common share - paid	$	0.37	$	0.34	$	1.08	$	0.98

Three months ended December 31,
2017 2016
Dividends per common share - declared $ 0.25
$ 0.22
Dividends per common share - paid $ 0.22
$ 0.20

NOTE 2022 – SEGMENT INFORMATION

We currently operate through the following ~~five business~~5 segments: Private Client ~~Group;~~Group (“PCG”); Capital Markets; Asset Management; RJ Bank; and Other.

The ~~business~~ segments are determined based upon factors such as the services provided and the distribution channels served and are consistent with how we assess performance and determine how to allocate our resources throughout our subsidiaries. For a further discussion of our ~~business~~ segments, see Note 24 of our ~~2017~~2019 Form 10-K.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following ~~tables present~~table presents information concerning operations in these ~~segments of business:~~segments.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Net revenues:
Private Client Group	$	1,249	$	1,351	$	4,158	$	3,978
Capital Markets	323		251		881		781
Asset Management	163		177		531		513
RJ Bank	178		215		604		630
Other	(20)		(4)		(72)		(2)
Intersegment eliminations	(59)		(63)		(191)		(183)
Total net revenues	$	1,834	$	1,927	$	5,911	$	5,717
Pre-tax income/(loss):
Private Client Group	$	91	$	140	$	414	$	436
Capital Markets	62		24		119		77
Asset Management	60		65		206		184
RJ Bank	14		138		163		384
Other	(29)		(25)		(106)		(60)
Total pre-tax income	$	198	$	342	$	796	$	1,021

Three months ended December 31,
$ in thousands 2017 2016
Revenues:
Private Client Group $ 1,238,040
$ 1,043,316
Capital Markets 222,534
236,982
Asset Management 150,611
114,096
RJ Bank 178,141
144,517
Other 16,383
15,459
Intersegment eliminations (40,117 ) (25,602 )
Total revenues $ 1,765,592
$ 1,528,768
Income/(loss) excluding noncontrolling interests and before provision for income taxes:
Private Client Group $ 155,063
$ 73,358
Capital Markets 4,807
21,444
Asset Management 57,399
41,909
RJ Bank 114,155
104,121
Other (20,181 ) (34,453 )
Pre-tax income excluding noncontrolling interests 311,243
206,379
Net income attributable to noncontrolling interests 441
1,136
Income including noncontrolling interests and before provision for income taxes $ 311,684
$ 207,515

No individual client accounted for more than ten percent of ~~total~~ revenues in any of the periods presented.

Three months ended December 31,
$ in thousands 2017 2016
Net interest income/(expense):
Private Client Group $ 38,487
$ 30,387
Capital Markets 1,456
2,508
Asset Management 330
63
RJ Bank 163,039
134,272
Other (11,014 ) (20,414 )
Net interest income $ 192,298
$ 146,816
The following table presents our net interest on a segment basis.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Net interest income/(expense):
Private Client Group	$	27	$	46	$	106	$	139
Capital Markets	2		—		8		3
Asset Management	—		1		1		3
RJ Bank	169		208		584		610
Other and intersegment eliminations	(23)		(7)		(36)		(15)
Net interest income	$	175	$	248	$	663	$	740

The following table presents our total assets on a segment ~~basis:~~basis.


$ in millions	June 30, 2020		September 30, 2019
Total assets:
Private Client Group	$	11,655	$	9,042
Capital Markets	2,301		2,287
Asset Management	367		401
RJ Bank	28,830		25,516
Other	1,529		1,584
Total	$	44,682	$	38,830

$ in thousands December 31, 2017 September 30, 2017
Total assets:
Private Client Group $ 10,328,475
$ 9,967,320
Capital Markets 2,375,078
2,396,033
Asset Management 347,922
151,111
RJ Bank 21,600,312
20,611,898
Other 1,433,112
1,757,094
Total $ 36,084,899
$ 34,883,456

~~Total assets in the PCG segment included $277 million of~~The following table presents goodwill, at both December 31, 2017 and September 30, 2017. Total assets in the Capital Markets segment included $134 million of goodwill at both December 31, 2017 and September 30, 2017. Total assets in the Asset Management segment included $69 million of goodwill as of December 31, 2017 which was ~~entirely attributable to~~included in our ~~fiscal year 2018 acquisition of the Scout Group.~~total assets, on a segment basis.


$ in millions	June 30, 2020		September 30, 2019
Goodwill:
Private Client Group	$	276	$	275
Capital Markets	120		120
Asset Management	69		69
Total	$	465	$	464

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

We have operations in the U.S., Canada and Europe. Substantially all long-lived assets are located in the U.S. ~~Revenues~~The following table presents our net revenues and pre-tax income ~~before provision for income taxes and excluding noncontrolling interests,~~ classified by major geographic ~~areas~~area in which they were ~~earned, are as follows:~~earned.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Net revenues:
U.S.	$	1,706	$	1,793	$	5,501	$	5,318
Canada	86		101		293		290
Europe	42		33		117		109
Total	$	1,834	$	1,927	$	5,911	$	5,717
Pre-tax income/(loss):
U.S.	$	191	$	330	$	770	$	994
Canada	5		12		26		35
Europe ⁽¹⁾	2		—		—		(8)
Total	$	198	$	342	$	796	$	1,021

Three months ended December 31,
$ in thousands 2017 2016
Revenues:
U.S. $ 1,633,022
$ 1,416,281
Canada 99,286
84,845
Europe 33,284
22,970
Other —
4,672
Total $ 1,765,592
$ 1,528,768

Pre-tax income/(loss) excluding noncontrolling interests:
U.S. $ 305,289
$ 214,205
Canada 8,665
(1,537 )
Europe (2,711 ) (2,688 )
Other —
(3,601 )
Total $ 311,243
$ 206,379

(1) The pre-tax loss in Europe for the nine months ended June 30, 2019 reflects a $15 million loss on the sale of our operations related to research, sales and trading of European equities incurred during the fiscal first quarter of 2019.

~~Our~~

The following table presents our total assets by major geographic area in which they were held.


$ in millions	June 30, 2020		September 30, 2019
Total assets:
U.S.	$	41,459	$	35,978
Canada	3,099		2,754
Europe	124		98
Total	$	44,682	$	38,830

The following table presents goodwill, which was included in our total assets, classified by major geographic area in which ~~they were held, are presented below:~~it was held.


$ in millions	June 30, 2020		September 30, 2019
Goodwill:
U.S.	$	433	$	433
Canada	24		23
Europe	8		8
Total	$	465	$	464

$ in thousands December 31, 2017 September 30, 2017
Total assets:
U.S. $ 33,291,193
$ 32,200,852
Canada 2,706,114
2,592,480
Europe 78,851
81,090
Other 8,741
9,034
Total $ 36,084,899
$ 34,883,456

Total assets in the U.S. included $425 million and $356 million of goodwill at December 31, 2017 and September 30, 2017, respectively. Total assets in Canada included $45 million of goodwill at both December 31, 2017 and September 30, 2017. Total assets in Europe included $10 million of goodwill at both December 31, 2017 and September 30, 2017.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



INDEX
		PAGE
~~Introduction~~		57
Factors affecting “forward-looking statements”	5750
~~Executive overview~~Introduction		5750
~~Segments~~Executive overview		5950
Segments		53
Reconciliation of GAAP measures to non-GAAP financial measures		6054
Net interest analysis		6054
Results of Operations
Private Client Group		6357
Capital Markets		6561
Asset Management		6662
RJ Bank		6865
Other		7269
Certain statistical disclosures by bank holding companies		7370
Liquidity and capital resources		7371
~~Sources of liquidity~~		74
Statement of financial condition analysis	7775
Contractual obligations		7875
Regulatory		7875
Critical accounting estimates		78
Recent accounting developments		79
~~Off-Balance~~Off-balance sheet arrangements		79
Effects of inflation		8079
Risk management		8079

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

FACTORS AFFECTING “FORWARD-LOOKING STATEMENTS”

~~Introduction~~

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of our operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Where “NM” is used in various percentage change computations, the computed percentage change has been determined not to be meaningful.

~~Factors affecting “forward-looking statements”~~

Certain statements made in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions and divestitures, anticipated results of litigation, ~~changes in~~our effective tax ~~rules,~~rate, regulatory developments, effects of accounting pronouncements, and general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” ~~“intends,”~~ “plans,~~” “estimates,” “projects,” “forecasts,~~” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the SEC from time to time, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events or otherwise.

~~Executive overview~~INTRODUCTION

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of our operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Where “NM” is used in various percentage change computations, the computed percentage change has been determined to be not meaningful.

We operate as a financial holding company and a bank holding company. Results in the businesses in which we operate are highly correlated to ~~the~~ general ~~overall strength of~~ economic conditions and, more specifically, to the direction of the U.S. equity and fixed income markets, changes in interest rates, market volatility, ~~the~~ corporate and mortgage lending markets and commercial and residential credit trends. Overall market conditions, ~~interest rates,~~ economic, political and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These factors affect the financial decisions made by market participants, ~~which include~~including investors, borrowers, and competitors, impacting their level of participation in the financial markets. These factors also impact the level of investment banking activity ~~including public offerings, as well as trading profits,~~ and asset valuations, ~~or a combination thereof. In turn, these decisions and factors~~which ultimately affect our business results.

~~Three months~~EXECUTIVE OVERVIEW

Quarter ended ~~December 31, 2017~~June 30, 2020 compared with the ~~three months~~quarter ended ~~December 31, 2016~~June 30, 2019

~~We achieved net revenues~~In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency due to the impact of ~~$1.73 billion,~~the pandemic. As a ~~$233 million,~~result of the spread of COVID-19, governments and other authorities around the world imposed measures intended to control the spread of the disease, including restrictions on travel and the conduct of business, such as stay-at-home orders, quarantines, travel bans, border closings, business closures and other similar measures. In response, we activated our business continuity plan endeavoring to safeguard our associates, and nearly all of our associates transitioned to working remotely, while still maintaining our standard of client service. Although economies began to reopen during our fiscal third quarter, a substantial portion of our associates continued to work remotely. Our systems and infrastructure have continued to support increased volumes of activity without any significant operational or ~~16% increase. Our pre-tax income was $311 million, an increase~~technology disruptions.

The economic uncertainty that has resulted from the COVID-19 pandemic continued during our fiscal third quarter and market volatility remained elevated; however, market sentiment improved, reflected in the recovery of ~~$105 million, or 51%. Our net income~~U.S. equity markets during the quarter. Certain of ~~$119 million reflects~~our businesses benefited from the equity market appreciation, and PCG assets in fee-based accounts recovered, increasing 16%, which will have a ~~decrease of $28 million, or 19%, and~~positive impact on our ~~earnings per diluted share was $0.80, a 20% decrease.~~

~~During the three months ended December 31, 2017, earnings were~~fiscal fourth quarter results. However, our results continued to be negatively affected by the ~~estimated discrete~~significant reduction in interest rates implemented by The Federal Reserve toward the end of our fiscal second quarter and an elevated bank loan loss provision due to the economic impact and uncertainty attributable to the pandemic. Uncertainty remains with regard to the extent and duration of the ~~Tax Act of $117 million, primarily~~disruptions related to the ~~remeasurement~~COVID-19 pandemic as well as its continuing impacts on the global economy. We expect the COVID-19 pandemic and the measures taken to prevent its spread and to support the economy to continue to have an impact on our business during the remainder of ~~U.S. deferred tax assets at a lower enacted corporate tax rate. Excluding this discrete impact~~fiscal 2020, although the extent of such effects will depend on future developments which are highly uncertain and ~~$4 million of acquisition-related expenses, adjusted net income was $238.8 million~~ ⁽¹⁾~~, an increase of 35% compared with adjusted net income in the prior year. Adjusted earnings per diluted share were $1.61~~ ⁽¹⁾~~, a 33% increase compared with adjusted earnings per diluted share in the prior year period.~~cannot be predicted.

Net revenues increased significantly in the PCG, Asset Management and RJ Bank segments. PCG and Asset Management benefited from growth in client assets in fee-based accounts. RJ Bank had significant growth due to an increase in average interest-earning assets and an increase in net interest margin. Net revenues in our Capital Markets segment declined compared with the prior year period, reflecting a decline in equity and fixed income sales commissions due to low market volatility. Total client assets under administration reached $727.2 billion at December 31, 2017, an 18% increase, primarily attributable to equity market appreciation and strong financial advisor recruiting and retention results.

(1) “Adjusted net income,” and “adjusted earnings per diluted share” are each non-GAAP financial measures. Please see the “reconciliation of GAAP measures to non-GAAP measures” in this Item 2, for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

~~Non-interest expenses increased $129~~During the quarter ended June 30, 2020, net revenues of $1.83 billion decreased $93 million, or ~~10%.~~ 5%, compared with the prior-year quarter. Pre-tax income of $198 million decreased $144 million, or 42%, and net income of $172 million decreased $87 million, or 34%, both primarily due to a significant increase in the bank loan loss provision in response to the economic deterioration caused by the COVID-19 pandemic. Our earnings per diluted share were $1.23, reflecting a 32% decrease. Our annualized return on equity (“ROE”) for the quarter was 10.0%, compared with 16.1% in the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) ⁽¹⁾was 10.9%, compared with 17.8% for the prior-year quarter.

The $93 million decrease in net revenues compared with the prior-year quarter primarily reflected the impact of lower short-term interest rates on both net interest income and RJBDP fees from third-party banks. These declines were partially offset by an increase ~~primarily resulted from increased compensation,~~in brokerage revenues, as the fixed income business generated strong results due to higher client activity levels.

Compensation, commissions and benefits ~~expense associated with~~expenses were flat versus the prior-year quarter. Non-compensation expenses increased ~~net revenues, as well as increased staffing levels required~~$51 million, or 17%, due to ~~support our continued growth and regulatory and compliance requirements. Offsetting this~~an $86 million increase ~~was a $30 million decrease~~ in ~~expenses related to~~ the ~~Jay Peak matter,~~bank loan loss provision, which was ~~settled~~$81 million in the ~~prior fiscal year.~~

~~Our effective tax rate was 61.7% for~~current-year quarter compared with a $5 million benefit in the ~~current~~prior-year quarter, ~~reflecting the estimated discrete impact of the Tax Act of $117 million,~~ partially offset by a ~~lower blended federal corporate statutory~~decrease in business development expenses, as travel and conferences were halted as a result of the COVID-19 pandemic.

Our effective income tax rate of ~~24.5%. Excluding~~13.1% for our fiscal third quarter of 2020 primarily reflected the ~~estimated discrete~~ impact of ~~the Tax Act,~~significant non-taxable gains on our ~~adjusted effective tax rate was 24.1%~~ ⁽¹⁾corporate-owned life insurance portfolio on lower pre-tax earnings for the ~~three months~~quarter.

The firm ended ~~December 31, 2017. We estimate our effective tax rate to be approximately 28% for~~ the ~~remainder~~quarter with capital ratios well in excess of regulatory requirements and substantial liquidity, with over $2.1 billion ⁽²⁾ of cash at the parent company, which included the proceeds of a $500 million 10-year senior notes issuance at the end of our fiscal ~~year ended September 30, 2018, which reflects~~second quarter of 2020.

Certain of the ~~blended federal~~impacts of the COVID-19 pandemic will likely continue to affect our results in future quarters. Our net interest income and RJBDP fees from third-party banks will continue to be negatively affected by the 225 basis point reduction by the Federal Reserve of its benchmark short-term interest rate since August 2019. In Capital Markets, the high degree of market uncertainty will likely result in more volatility of both brokerage revenues and investment banking revenues during the pandemic. While our results during the third quarter were negatively impacted by elevated bank loan loss provisions, including losses on certain corporate ~~statutory tax rate,~~loans that were sold during the quarter, further market deterioration could result in additional provisions in future quarters. Due to the uncertainty caused by the COVID-19 pandemic, and approximately 24% for fiscal year 2019, reflecting the lower federal corporate statutory tax rate of 21% for the full year. Our future effective tax rates are estimates and are based on assumptions basedrelated negative impact on our ~~current interpretation~~results, we are evaluating ways to reduce costs and find efficiencies to remain well-positioned for future growth and success. To that end, we are currently engaged in a firm-wide process of ~~the Tax Act~~evaluating both compensation and may change, possibly materially, as we complete our analysis. Our future effective tax rate will also be impacted positively or negatively, by non-taxable items such as the gains or losses earned on our Company-owned life insurance (“COLI”), tax exempt interest and non-deductible expenses such as meals and entertainment. See Note 13 of this Form 10-Q for further information on the Tax Act.non-compensation expenses.

A summary of our financial results by segment as compared to the ~~prior year are~~prior-year quarter is as follows:

•Our ~~Private Client Group~~PCG segment ~~generated~~ net revenues of ~~$1.23~~$1.25 billion decreased 8%, while pre-tax income of $91 million decreased 35%. The $102 million decrease in net revenues was primarily attributable to the decrease in short-term interest rates, which negatively impacted both net interest income and RJBDP fees from third party banks. Brokerage revenues also declined compared with the prior-year quarter, primarily due to a ~~19% increase,~~decline in revenues from annuity products and mutual fund products. Non-interest expenses decreased $53 million, or 4%, primarily resulting from a decrease in travel and conference-related expenses as a result of the COVID-19 pandemic, as well as lower compensation expenses due to a decrease in compensable net revenues, which primarily include asset management and related administrative fees, brokerage revenues and investment banking revenues.

•Capital Markets net revenues of $323 million increased 29% and pre-tax income of ~~$155~~$62 million increased ~~111% over~~158%. The $72 million increase in net revenues was primarily due to an increase in fixed income and, to a lesser extent, equity brokerage revenues due to higher client activity, as well as an increase in debt and equity underwriting revenues. These increases were partially offset by a decline in merger & acquisition revenues compared with the ~~prior year period which included $30~~prior-year quarter due to market uncertainty. Non-interest expenses increased $34 million, or 15%, due to an increase in compensation expense, primarily as a result of the increase in net revenues.

•Our Asset Management segment net revenues of $163 million decreased 8% and pre-tax income of $60 million decreased 8%. The decrease in net revenues was largely driven by lower average financial assets under management at Carillon Tower Advisers.

(1) “ROTCE” is a non-GAAP financial measure. Please see the “Reconciliation of GAAP measures to non-GAAP financial measures” in this MD&A for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure, and for other important disclosures.

(2) For additional information, please see the “Liquidity and capital resources - Sources of liquidity” section in this MD&A.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

•RJ Bank net revenues of $178 million decreased 17% and pre-tax income of $14 million decreased 90%. Net revenues decreased $37 million due to the negative impact from lower short-term interest rates, partially offset by the benefit from higher interest-earning assets. Non-interest expenses increased $87 million, or 113%, as RJ Bank recorded a loan loss provision of $81 million compared to a benefit of $5 million in ~~legal expenses related~~the prior-year quarter.

•Our Other segment reflected a pre-tax loss that was $4 million larger compared to the ~~Jay Peak matter.~~ prior-year quarter, primarily the result of lower interest income on corporate cash balances due to the negative impact of lower short-term interest rates, as well as increased interest expense due to the issuance of $500 million of senior notes at the end of the fiscal second quarter.

Nine months ended June 30, 2020 compared with the nine months ended June 30, 2019

Net revenues of $5.91 billion increased $194 million, or 3%. Pre-tax income of $796 million decreased $225 million, or 22%. Our net income of $609 million decreased $160 million, or 21%, and our earnings per diluted share were $4.33, reflecting an 18% decrease. Our annualized ROE during the nine months ended June 30, 2020 was 11.9%, compared with 16.2% for the prior-year period, and annualized ROTCE ⁽¹⁾ was 13.1%, compared with 17.9% for the prior-year period.

The $194 million increase in net revenues compared with the prior-year period included higher asset management and related administrative fees, primarily attributable to higher average PCG assets in fee-based accounts at the beginning of the current-year periods and higher brokerage revenues, largely due to higher market volatility and a significant increase in institutional fixed income client activity in the current-year period. Offsetting these increases were the negative impacts of lower short-term interest rates on our net interest income and RJBDP fees from third-party banks, and valuation losses on private equity investments, a portion of which was attributable to noncontrolling interests (reflected as an offset in other expenses).

Compensation, commissions and benefits expense increased $283 million, or 8%, mostly due to an increase in compensable net revenues.

Non-compensation expenses increased $136 million, or 15%, due to a $188 million bank loan loss provision, compared with a $16 million bank loan loss provision during the prior-year period. This increase was partially offset by lower travel and conference-related expenses as a result of the COVID-19 pandemic and the aforementioned private equity valuation losses attributable to noncontrolling interests, which is an offset in other expenses.

Our effective income tax rate was 23.5% for the nine months ended June 30, 2020, a decrease compared with the 24.8% effective tax rate for fiscal year 2019, primarily due to the favorable impact of permanent tax benefits on lower pre-tax earnings during the nine months ended June 30, 2020.

Pursuant to our Board of Directors’ share repurchase authorization, we repurchased approximately 2.7 million shares of common stock during the first six months of our current fiscal year for $213 million at an average price of approximately $80 per share. Due to heightened market uncertainty as a result of the COVID-19 crisis, share buybacks were suspended from mid-March through the end of our fiscal third quarter. As of June 30, 2020, we had $537 million of availability remaining under the previously-announced authorization. We resumed share repurchases to offset dilution in our fiscal fourth quarter.

A summary of our financial results by segment as compared to the prior-year period is as follows:

•PCG segment net revenues of $4.16 billion increased 5%, while pre-tax income of $414 million decreased 5%. The $180 million increase in net revenues was primarily attributable to an increase in ~~securities commissions~~asset management and related administrative fees ~~driven by a stronger market environment~~due to higher average assets in fee-based accounts at the beginning of each of the current-year periods. Offsetting this increase were decreases in RJBDP fees from third-party banks and ~~continued strong recruiting and retention results. The segment also benefited from the impact of higher~~net interest income due to lower short-term interest ~~rates, resulting in an increase in account and service fees related to client cash balances in the RJBDP.~~rates. Non-interest expenses increased ~~$111~~$202 million, or ~~12%~~6%, primarily resulting from ~~increases~~an increase in compensation ~~commissions and benefits~~ expenses ~~offset by a decrease~~largely due to the growth in ~~the aforementioned legal expenses.~~compensable net revenues.

~~The~~ •Capital Markets ~~segment generated~~ net revenues of ~~$217~~$881 million ~~a 7% decrease over the prior year period.~~increased 13% and pre-tax income of $119 million increased 55%. The ~~decrease~~$100 million increase in net revenues was primarily due to ~~a decrease~~an increase in ~~institutional commissions~~fixed income brokerage revenues, due to ~~lower market volatility. Investment banking revenues increased slightly,~~higher client activity, as ~~higher~~well as increases in equity and debt underwriting revenues. These increases were partially offset by a decline in merger & acquisition and advisory ~~fees more than offset lower equity underwriting fees and tax credit fund syndication fees.~~revenues, which were negatively impacted by the market uncertainty caused by the COVID-19 pandemic. Non-interest expenses ~~were relatively flat compared with~~increased $58 million, or 8%, due to higher compensation expenses, primarily as a result of the ~~prior year period which, combined with~~increase in revenues.

(1) “ROTCE” is a non-GAAP financial measure. Please see the ~~decline~~“Reconciliation of GAAP measures to non-GAAP financial measures” in ~~net revenues, contributed~~this MD&A for a reconciliation of this non-GAAP financial measure to ~~a 78% decline in pre-tax income.~~the most directly comparable GAAP measure, and for other important disclosures.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

•Our Asset Management segment ~~benefited from increased fee-based client assets, generating a 32% increase in~~ net revenues ~~to $151~~of $531 million ~~while~~increased 4% and pre-tax income of $206 million increased ~~37% to $57 million.~~12%. The increase in net revenues ~~primarily reflected increases~~was driven by higher average beginning-of-quarter assets in ~~advisory fee revenues from managed~~ programs ~~and,~~offered to ~~a lesser degree, non-discretionary asset-based administration fee revenues. Financial~~PCG clients for which the segment provides administrative support, as well as higher average financial assets under management ~~in managed programs increased 64% over the prior year level aided by the acquisition of the Scout Group~~ during the ~~quarter.~~current-year period.

•RJ Bank net revenues of $604 million decreased 4% and pre-tax income of $163 million decreased 58%. The $26 million decrease in net revenues reflected the negative impact of lower short-term interest rates, which more than offset the growth in interest-earning assets. Non-interest expenses increased ~~$19~~$195 million, or ~~27%~~79%, primarily ~~resulting from increased investment sub-advisory fees and acquisition-related increases in administrative & incentive compensation and benefits expense.~~

RJ Bank generated a 20% increase in net revenues to $165 million, while pre-tax income increased 10% to $114 million. The increase in pre-tax income resulted primarily from an increase in net interest income, partially offset by higher affiliate deposit fees paid to the Private Client Group due to ~~increased balances. Net interest income increased due to growth in average interest-earning assets and an~~a $172 million increase in the ~~net interest margin.~~loan loss provision.

~~Activities in our~~•Our Other segment reflected a pre-tax loss that was ~~$14~~$46 million ~~or 41% less than~~larger compared to the ~~prior year,~~prior-year period, primarily due to ~~a decrease~~private equity valuation losses, as compared to gains in ~~acquisition-related expenses and~~the prior-year period, lower interest income on corporate cash balances due to lower short-term interest rates, and increased interest expense, ~~related~~due to ~~a decrease in~~ the ~~average outstanding balance and average yield~~issuance of ~~our~~$500 million of senior notes ~~payable.~~at the end of the fiscal second quarter.

SEGMENTS

(1) “Adjusted effective tax rate” is a non-GAAP financial measure. Please see the “reconciliation of GAAP measures to non-GAAP measures” in this Item 2, for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures, and for other important disclosures.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Management's Discussion and Analysis~~

~~Segments~~

We currently operate through ~~four operating segments and our Other segment. The four operating~~five segments. Our business segments are ~~Private Client Group,~~PCG, Capital Markets, Asset Management and RJ Bank. ~~The~~Our Other segment ~~captures~~includes our private equity ~~activities as well as~~investments, interest income on certain corporate cash balances, and certain corporate overhead costs of RJF, ~~that are not allocated to operating segments,~~ including the interest ~~cost~~costs on our public ~~debt and the acquisition and integration costs associated with our acquisitions.~~debt.

The following table presents our consolidated and segment net revenues and pre-tax income/(loss)~~, the latter excluding noncontrolling interests,~~ for the periods ~~indicated~~:indicated.


	Three months ended June 30,										Nine months ended June 30,
$ in millions	2020		2019		% change		2020		2019		% change
Total company
Net revenues	$	1,834	$	1,927	(5)	%	$	5,911	$	5,717	3	%
Pre-tax income	$	198	$	342	(42)	%	$	796	$	1,021	(22)	%

Private Client Group
Net revenues	$	1,249	$	1,351	(8)	%	$	4,158	$	3,978	5	%
Pre-tax income	$	91	$	140	(35)	%	$	414	$	436	(5)	%

Capital Markets
Net revenues	$	323	$	251	29	%	$	881	$	781	13	%
Pre-tax income	$	62	$	24	158	%	$	119	$	77	55	%

Asset Management
Net revenues	$	163	$	177	(8)	%	$	531	$	513	4	%
Pre-tax income	$	60	$	65	(8)	%	$	206	$	184	12	%

RJ Bank
Net revenues	$	178	$	215	(17)	%	$	604	$	630	(4)	%
Pre-tax income	$	14	$	138	(90)	%	$	163	$	384	(58)	%

Other
Net revenues	$	(20)	$	(4)	(400)	%	$	(72)	$	(2)	(3,500)	%
Pre-tax loss	$	(29)	$	(25)	(16)	%	$	(106)	$	(60)	(77)	%

Intersegment eliminations
Net revenues	$	(59)	$	(63)	NM		$	(191)	$	(183)	NM

Three months ended December 31,
$ in thousands 2017 2016 % change
Total company
Net revenues $ 1,726,161
$ 1,492,802
16 %
Pre-tax income excluding noncontrolling interests $ 311,243
$ 206,379
51 %

Private Client Group

Net revenues $ 1,233,051
$ 1,040,089
19 %
Pre-tax income $ 155,063
$ 73,358
111 %

Capital Markets

Net revenues $ 216,665
$ 233,016
(7 )%
Pre-tax income $ 4,807
$ 21,444
(78 )%

Asset Management

Net revenues $ 150,600
$ 114,082
32 %
Pre-tax income $ 57,399
$ 41,909
37 %

RJ Bank

Net revenues $ 165,185
$ 138,015
20 %
Pre-tax income $ 114,155
$ 104,121
10 %

Other

Net revenues $ (2,920 ) $ (9,643 ) 70 %
Pre-tax loss $ (20,181 ) $ (34,453 ) 41 %

Intersegment eliminations

Net revenues $ (36,420 ) $ (22,757 )

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

RECONCILIATION OF GAAP MEASURES TO NON-GAAP FINANCIAL MEASURES

~~Reconciliation of GAAP measures to non-GAAP measures~~

We utilize certain non-GAAP ~~calculations as additional~~financial measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures have been separately identified in this document. We believe that the non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. We believe that these non-GAAP measures will allow for better evaluation of the operating performance of the business and facilitate aannualized return on tangible common equity is meaningful to investors as this measure facilitates comparison of our results into the ~~current period to those in prior and future periods. The~~results of other companies. This non-GAAP financial ~~information~~measure should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, ~~our~~this non-GAAP ~~measures~~financial measure may not be comparable to similarly titled non-GAAP financial measures of other companies. The following table provides a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP ~~measures to non-GAAP measures~~financial measure for the periods ~~which include non-GAAP adjustments. Non-GAAP measures~~indicated.


	Three months ended June 30,									Nine months ended June 30,
$ in millions	2020			2019			2020			2019




















Average equity	$	6,882		$	6,434		$	6,797		$	6,345
Less:
Average goodwill and identifiable intangible assets, net	603			633			606			634
Average deferred tax liabilities, net	(32)			(31)			(30)			(32)
Average tangible common equity	$	6,311		$	5,832		$	6,221		$	5,743




Return on equity	10.0		%	16.1		%	11.9		%	16.2		%

Return on tangible common equity	10.9		%	17.8		%	13.1		%	17.9		%

Return on equity is computed by dividing annualized net income for the ~~three months ended December 31, 2016 have been revised from those previously reported~~period indicated by average equity for each respective period or, in the case of return on tangible common equity, computed by dividing annualized net income by average tangible common equity for each respective period.

Average equity for the quarter-to-date period is computed by adding the total equity attributable to ~~conform to our current presentation, which includes amounts related~~RJF as of the date indicated to the ~~Jay Peak matter.~~prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two. Average equity for the year-to-date period is computed by adding the total equity attributable to RJF as of each quarter-end date during the indicated year-to-date period to the beginning of the year total, and dividing by four, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated year-to-date period to the beginning of the year total, and dividing by four.

Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Net income ⁽¹⁾
$ 118,842
$ 146,567
Non-GAAP adjustments:

Acquisition-related expenses ⁽²⁾
3,927
12,666
Jay Peak matter ⁽³⁾
—
30,000
Sub-total pre-tax non-GAAP adjustments 3,927
42,666
Tax effect on non-GAAP adjustments above (1,100 ) (12,365 )
Discrete impact of the Tax Act ⁽⁴⁾
117,169
—
Total non-GAAP adjustments, net of tax 119,996
30,301
Adjusted net income $ 238,838
$ 176,868

Earnings per common share:

Basic $ 0.82
$ 1.03
Diluted $ 0.80
$ 1.00
Adjusted earnings per common share:

Adjusted basic $ 1.65
$ 1.24
Adjusted diluted $ 1.61
$ 1.21

Effective tax rate:
For the three months ended December 31, 2017
($ in thousands)
Pre-tax income including noncontrolling interests Provision for income taxes Effective tax rate
$ 311,684
$ 192,401
61.7 %
Less: discrete impact of the Tax Act ⁽⁴⁾
117,169

As adjusted for discrete impact of the Tax Act $ 75,232
24.1 %


~~(1)~~	~~Excludes noncontrolling interests.~~


~~(2)~~	~~See Note 3 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.~~


~~(3)~~	~~See Part I. Item 3 - Legal proceedings in our 2017 Form 10-K for more information on the Jay Peak matter.~~


~~(4)~~	~~See Note 13 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for more information related to the discrete impact of the Tax Act.~~

NET INTEREST ANALYSIS

~~Net interest analysis~~

In response to macroeconomic concerns resulting from the COVID-19 pandemic, The Federal Reserve ~~Bank announced an increase in~~decreased its benchmark short-term interest rate twice in March 2020 to a range of 250-0.25%, for a total decrease of 150 basis ~~points in December 2017. This increase is in addition to three 25 basis point interest rate increases since December 2016.~~points. These ~~increases~~decreases in short-term interest rates, as well as the three rate cuts implemented in 2019 (225 basis points in total) have had a ~~significant~~negative impact on our ~~overall financial performance,~~fiscal year 2020 results, as we have certain assets and liabilities, primarily held in our PCG, ~~and~~ RJ Bank and Other segments, which are sensitive to changes in interest rates. Fees we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP are also sensitive to changes in interest rates. The negative impact of the decline in short-term interest rates outweighed the growth in interest-earning assets and RJBDP balances swept to third-party banks compared with the prior year, and we expect a continuation of this negative impact for the remainder of fiscal 2020.

Given the relationship ofbetween our ~~interest sensitive~~interest-sensitive assets toand liabilities held in each of these segments ~~increases~~and the nature of fees we earn from third-party banks on the RJBDP, decreases in short-term interest rates generally result in an overall ~~increase~~decrease in our net earnings, although the magnitude of the impact to our net interest margin depends on the yields on interest-earning assets relative to the cost of interest-bearing ~~liabilities.~~

In PCG, we also earn fees in lieu of interest income from RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at RJ Bank and various third-party banks. Such fees are recorded in “Account and service fees” in our Condensed Consolidated Statements of Income and Comprehensive Income. RJBDP fees from third-party banks fluctuate based on changes in short-term interest rates relative toliabilities, including deposit rates paid to clients on ~~client~~their cash balances.

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Management's Discussion and Analysis~~

~~The following table details the components of our domestic client cash balances:~~

As of
$ in millions December 31,
2017 September 30,
2017 December 31,
2016
RJBDP
RJ Bank $ 18,374
$ 17,387
$ 14,893
Third-party banks 20,836
20,704
25,456
Sub-total RJBDP 39,210
38,091
40,349
Money market 1,710
1,818
2,036
Client interest program 3,334
3,101
3,696
Total domestic client cash balances $ 44,254
$ 43,010
$ 46,081

The short-term interest rate increases in 2017 had a significant impact on fees earned from RJBDP; however, they have not had as significant of an impact on market deposit rates paid on client cash balances. However, subsequent to the December 2017 rate increase, we announced increases in our deposit rates paid on client cash balances and we expect market deposit rates will continue to rise with future increases in short-term interest rates. As such, Conversely, any ~~future~~ increases in short-term interest rates ~~may~~and/or decreases in the deposit rates paid to clients generally have ~~less of an~~a positive impact on our ~~fees earned from our RJBDP, or could actually reduce our fees earned in this program, depending on~~earnings.

Refer to the ~~level~~discussion of ~~deposit rates paid on client cash balances.~~

If the Federal Reserve Bank was to reverse its previous actions and decrease the benchmark short-term interest rate or if deposit rates that we pay on client cash balances increased and resulted in a decline in spreads earned on our RJBDP program, the impact onspecific components of our net interest income ~~and account and service fees would be an unfavorable reversal of~~within the ~~positive impact described above.~~

~~RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES~~

~~Management's~~“Management’s Discussion and Analysis - Results of Operations” of our PCG, RJ Bank, and Other segments. Also refer to “Management’s Discussion and Analysis - Results of Operations - Private Client Group - Clients’ domestic cash sweep balances” for further information on the RJBDP.

The following ~~table presents~~tables present our consolidated average ~~balance,~~balances, interest income and expense and the related ~~yield~~yields and rates. Average balances are calculated on a daily basis, with the exception of ~~Trading instruments,~~ Loans to financial advisors, net and Corporate cash and all other, which are calculated based on the average of the ~~end of month~~end-of-month balances for each month within the period.

Three months ended December 31,
2017 2016
$ in thousands
Average
balance

Interest
inc./exp.

Average
yield/cost

Average
balance

Interest
inc./exp.

Average
yield/cost
Interest-earning assets:
Assets segregated pursuant to regulations and other segregated assets $ 2,887,422
$ 12,122
1.68 % $ 3,589,973
$ 7,170
0.80 %
Securities loaned 361,749
3,058
3.38 % 533,000
2,732
2.05 %
Trading instruments 648,088
5,138
3.17 % 604,749
5,006
3.31 %
Available-for-sale securities 2,275,219
10,715
1.88 % 999,359
3,400
1.36 %
Margin loans 2,484,016
24,095
3.88 % 2,427,230
19,981
3.29 %
Bank loans, net of unearned income
Loans held for investment:
C&I loans 7,413,409
73,792
3.89 % 7,477,477
71,306
3.75 %
CRE construction loans 140,472
1,723
4.80 % 132,506
1,505
4.44 %
CRE loans 3,036,603
28,759
3.71 % 2,549,914
22,254
3.42 %
Tax-exempt loans 1,039,814
6,706
2.58 % 808,160
5,246
2.60 %
Residential mortgage loans 3,245,333
24,790
3.06 % 2,559,074
18,564
2.84 %
SBL 2,471,054
23,240
3.68 % 1,951,644
15,389
3.09 %
Loans held for sale 115,882
1,010
3.46 % 180,052
1,261
2.81 %
Total bank loans, net 17,462,567
160,020
3.65 % 15,658,827
135,525
3.47 %
Loans to financial advisors 869,326
3,502
1.61 % 833,760
3,308
1.59 %
Corporate cash and all other 4,330,440
13,079
1.21 % 3,215,887
5,660
0.69 %
Total interest-earning assets $ 31,318,827
$ 231,729
2.96 % $ 27,862,785
$ 182,782
2.62 %

Interest-bearing liabilities:

Bank deposits
Certificates of deposit $ 323,503
$ 1,272
1.56 % $ 303,243
$ 1,135
1.48 %
Savings, money market and NOW accounts 17,820,706
6,237
0.15 % 14,411,122
1,648
0.05 %
Securities borrowed 122,310
1,479
4.84 % 126,247
1,228
3.89 %
Trading instruments sold but not yet purchased 258,095
1,706
2.64 % 266,206
1,328
2.00 %
Brokerage client liabilities 4,442,992
2,529
0.23 % 4,919,792
676
0.05 %
Other borrowings 1,031,298
5,865
2.26 % 768,178
3,719
1.94 %
Senior notes 1,548,885
18,180
4.69 % 1,680,417
24,699
5.88 %
Other 256,161
2,163
3.38 % 249,595
1,533
2.46 %
Total interest-bearing liabilities $ 25,803,950
$ 39,431
0.61 % $ 22,724,800
$ 35,966
0.63 %
Net interest income
$ 192,298

$ 146,816

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Quarter ended June 30, 2020 compared with the quarter ended June 30, 2019


	Three months ended June 30,
	2020										2019
$ in millions	Average balance		Interest inc./exp.		Average yield/cost		Average balance		Interest inc./exp.		Average yield/cost
Interest-earning assets:
Assets segregated pursuant to regulations	$	3,411	$	3��	0.34	%	$	2,268	$	14	2.62	%
Trading instruments	313		4		4.59	%	771		7		3.53	%
Available-for-sale securities	4,437		23		2.01	%	2,901		18		2.41	%
Margin loans	2,068		18		3.44	%	2,528		30		4.83	%
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	7,994		59		2.93	%	8,278		98		4.68	%
CRE construction loans	212		2		3.60	%	248		4		5.45	%
CRE loans	3,773		25		2.66	%	3,359		39		4.53	%
Tax-exempt loans	1,272		9		3.34	%	1,291		9		3.35	%
Residential mortgage loans	4,983		37		2.97	%	4,127		34		3.32	%
SBL and other	3,576		24		2.59	%	3,125		36		4.64	%
Loans held for sale	111		1		3.22	%	118		1		4.78	%
Total bank loans, net	21,921		157		2.87	%	20,546		221		4.30	%
Loans to financial advisors, net	973		5		1.94	%	912		5		2.06	%
Corporate cash and all other	7,675		7		0.31	%	4,272		26		2.45	%
Total interest-earning assets	$	40,798	$	217	2.09	%	$	34,198	$	321	3.76	%

Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	25,060	$	2	0.02	%	$	20,842	$	29	0.57	%
Certificates of deposit	1,104		5		2.00	%	561		4		2.33	%
Trading instruments sold but not yet purchased	71		1		0.83	%	307		2		2.39	%
Brokerage client payables	4,790		3		0.17	%	3,054		5		0.61	%
Other borrowings	891		5		2.25	%	898		5		2.20	%
Senior notes payable	2,045		24		4.74	%	1,550		19		4.71	%
Other	272		2		4.23	%	791		9		4.81	%
Total interest-bearing liabilities	$	34,233	$	42	0.48	%	$	28,003	$	73	1.03	%
Net interest income			$	175					$	248

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Nine months ended June 30, 2020 compared with the nine months ended June 30, 2019


	Nine months ended June 30,
	2020										2019
$ in millions	Average balance		Interest inc./exp.		Average yield/cost		Average balance		Interest inc./exp.		Average yield/cost
Interest-earning assets:
Assets segregated pursuant to regulations	$	2,852	$	25	1.16	%	$	2,472	$	46	2.50	%
Trading instruments	596		17		3.77	%	727		20		3.66	%
Available-for-sale securities	3,654		60		2.18	%	2,831		51		2.39	%
Margin loans	2,290		66		3.86	%	2,620		93		4.75	%
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	8,039		226		3.69	%	8,065		286		4.67	%
CRE construction loans	209		7		4.36	%	205		9		5.58	%
CRE loans	3,706		98		3.49	%	3,433		120		4.60	%
Tax-exempt loans	1,236		25		3.35	%	1,285		26		3.34	%
Residential mortgage loans	4,823		112		3.09	%	3,999		100		3.32	%
SBL and other	3,460		89		3.37	%	3,098		109		4.64	%
Loans held for sale	138		4		3.77	%	149		5		4.87	%
Total bank loans, net	21,611		561		3.46	%	20,234		655		4.32	%
Loans to financial advisors, net	975		15		2.04	%	909		14		2.00	%
Corporate cash and all other	5,963		55		1.10	%	4,651		82		2.33	%
Total interest-earning assets	$	37,941	$	799	2.79	%	$	34,444	$	961	3.71	%

Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	23,190	$	20	0.11	%	$	20,689	$	96	0.62	%
Certificates of deposit	993		15		2.06	%	527		9		2.20	%
Trading instruments sold but not yet purchased	194		3		1.80	%	297		6		2.63	%
Brokerage client payables	3,929		9		0.31	%	3,395		16		0.62	%
Other borrowings	892		15		2.24	%	936		16		2.33	%
Senior notes payable	1,716		61		4.73	%	1,550		55		4.70	%
Other	473		13		3.55	%	771		23		3.89	%
Total interest-bearing liabilities	$	31,387	$	136	0.57	%	$	28,165	$	221	1.04	%
Net interest income			$	663					$	740

Nonaccrual loans are included in the average loan balances in the ~~table above. Payment or income~~preceding tables. Any payments received onfor corporate nonaccrual loans are applied entirely to principal. ~~Income~~Interest income on ~~other~~residential mortgage nonaccrual loans is recognized on a cash basis.

Fee income on ~~all~~bank loans included in interest income ~~for the~~was $1 million and $10 million during three and nine months ended ~~December 31, 2017~~June 30, 2020, respectively, and ~~2016 was $9~~$3 million ~~for both periods.~~

~~Three~~and $14 million during three and nine months ended ~~December 31, 2017 compared with the three months ended December 31, 2016~~June 30, 2019, respectively.

Net interest income increased $45 million, or 31%, primarily reflecting increases in our RJ Bank and PCG segments, as well as a decrease in interest expense in our Other segment related to our senior notes payable.

The ~~RJ Bank segment’s net interest income increased $29 million, or 21%, resulting from an increase~~yield on tax-exempt loans in ~~average loans outstanding and an increase~~ the ~~available-for-sale securities portfolio, as well as an increase in net interest margin. Refer to~~preceding tables is presented on a taxable-equivalent basis utilizing the ~~discussion~~applicable federal statutory rates for each of the ~~specific components of RJ Bank’s net interest income in the RJ Bank section of this MD&A.~~years presented.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

RESULTS OF OPERATIONS – PRIVATE CLIENT GROUP

Net interest income in the PCG segment increased $8 million, or 27%, driven by an increase in interest income from segregated assets, due to the impact of an increase in short-term interest rates on these balances, and an increase in interest income from margin loans primarily due to higher yields on these balances. The favorable impact of the higher interest rates was partially offset by a decrease in average segregated asset balances. A decrease in average client cash balances partially offset the impact of the increased rates paid on these balances.

Interest expense on our senior notes decreased by $7 million, or 26% as a result of a decrease in average outstanding balances, as well as the average rate on our outstanding borrowings. The average outstanding balance and average rate of our senior notes decreased due to our March 2017 redemption of our $350 million 6.90% senior notes and our September 2017 redemption of our $300 million 8.60% senior notes, partially offset by the May 2017 issuance of $500 million 4.95% senior notes.

~~Results of Operations – Private Client Group~~

For an overview of our PCG segment operations, as well as ~~the~~a description of the key factors impacting our PCG results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2017~~2019 Form 10-K.

Operating results


	Three months ended June 30,										Nine months ended June 30,
$ in millions	2020		2019		% change		2020		2019		% change
Revenues:
Asset management and related administrative fees	$	715	$	718	—		$	2,330	$	2,063	13	%
Brokerage revenues:
Mutual and other fund products	131		147		(11)	%	438		449		(2)	%
Insurance and annuity products	88		105		(16)	%	288		308		(6)	%
Equities, ETFs and fixed income products	100		94		6	%	324		291		11	%
Total brokerage revenues	319		346		(8)	%	1,050		1,048		—
Account and service fees:
Mutual fund and annuity service fees	82		85		(4)	%	260		250		4	%
RJBDP fees:
Third-party banks	20		67		(70)	%	129		215		(40)	%
RJ Bank	43		44		(2)	%	138		127		9	%
Client account and other fees	32		32		—		96		92		4	%
Total account and service fees	177		228		(22)	%	623		684		(9)	%
Investment banking	7		10		(30)	%	29		25		16	%
Interest income	31		56		(45)	%	125		170		(26)	%
All other	4		3		33	%	20		19		5	%
Total revenues	1,253		1,361		(8)	%	4,177		4,009		4	%
Interest expense	(4)		(10)		(60)	%	(19)		(31)		(39)	%
Net revenues	1,249		1,351		(8)	%	4,158		3,978		5	%
Non-interest expenses:
Financial advisor compensation and benefits	783		805		(3)	%	2,555		2,358		8	%
Administrative compensation and benefits	235		237		(1)	%	727		700		4	%
Total compensation, commissions and benefits	1,018		1,042		(2)	%	3,282		3,058		7	%
Non-compensation expenses:
Communications and information processing	66		57		16	%	187		174		7	%
Occupancy and equipment	42		43		(2)	%	130		122		7	%
Business development	12		37		(68)	%	63		90		(30)	%
Professional fees	8		8		—		25		24		4	%
All other	12		24		(50)	%	57		74		(23)	%
Total non-compensation expenses	140		169		(17)	%	462		484		(5)	%
Total non-interest expenses	1,158		1,211		(4)	%	3,744		3,542		6	%
Pre-tax income	$	91	$	140	(35)	%	$	414	$	436	(5)	%

Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:
Securities commissions and fees:
Fee-based accounts $ 596,259
$ 472,899
26 %
Mutual funds 163,147
158,590
3 %
Insurance and annuity products 110,789
95,351
16 %
Equity products 83,220
79,436
5 %
Fixed income products 28,337
28,952
(2 )%
New issue sales credits 9,302
17,991
(48 )%
Sub-total securities commissions and fees 991,054
853,219
16 %
Interest 43,476
33,614
29 %
Account and service fees:

Mutual fund and annuity service fees 80,621
68,726
17 %
RJBDP fees - third-party banks 61,007
36,564
67 %
RJBDP fees - RJ Bank 21,258
11,653
82 %
Client account and service fees 22,754
24,697
(8 )%
Client transaction fees and other 7,745
6,786
14 %
Sub-total account and service fees 193,385
148,426
30 %
Other 10,125
8,057
26 %
Total revenues 1,238,040
1,043,316
19 %
Interest expense (4,989 ) (3,227 ) 55 %
Net revenues 1,233,051
1,040,089
19 %
Non-interest expenses:

Sales commissions 736,459
634,512
16 %
Admin & incentive compensation and benefit costs 198,917
171,889
16 %
Communications and information processing 52,800
44,017
20 %
Occupancy and equipment costs 37,757
35,488
6 %
Business development 21,563
23,450
(8 )%
Jay Peak matter —
30,000
(100 )%
Other 30,492
27,375
11 %
Total non-interest expenses 1,077,988
966,731
12 %
Pre-tax income $ 155,063
$ 73,358
111 %

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

Selected key metrics

~~Client~~PCG client asset balances


	As of
$ in billions	June 30, 2020			March 31, 2020			September 30, 2019			June 30, 2019			March 31, 2019			September 30, 2018
Assets under administration (“AUA”)	$	833.1		$	734.0		$	798.4		$	787.4		$	760.0		$	755.7
Assets in fee-based accounts ⁽¹⁾	$	443.0		$	383.5		$	409.1		$	398.0		$	378.4		$	366.3
Percent of AUA in fee-based accounts	53.2		%	52.2		%	51.2		%	50.5		%	49.8		%	48.5		%

(1)A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset ~~Balances:~~Management segment, specifically our Asset Management Services division of RJ&A (“AMS”). These assets are included in our Financial assets under management as disclosed in the “Selected key metrics” section of our “Management’s Discussion and Analysis - Results of Operations - Asset Management.”

As of % change from
$ in billions December 31,
2017 September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
PCG assets under administration $ 692.1
$ 659.5
$ 585.6
5 % 18 %
PCG assets in fee-based accounts $ 316.7
$ 294.5
$ 240.2
8 % 32 %

~~Financial Advisors:~~

December 31, 2017 September 30, 2017 December 31, 2016
Employees 3,038
3,041
2,985
Independent Contractors 4,499
⁽¹⁾
4,305
4,143
Total advisors 7,537
7,346
7,128

~~(1) Our independent contractor financial advisor counts include 126 registered individuals who met the requirements to be classified as~~Fee-based accounts within our PCG segment are comprised of a wide array of products and programs that we offer our clients. The majority of assets in fee-based accounts within our PCG segment are invested in programs for which our financial advisors provide investment advisory services, either on a discretionary or non-discretionary basis. Administrative services for such accounts (e.g., record-keeping) are generally performed by our Asset Management segment and, as a result, a portion of the related revenues is shared with the Asset Management segment.

We also offer our clients fee-based accounts that are invested in “managed programs” overseen by AMS, which is part of our Asset Management segment. Fee-billable assets invested in managed programs are included in both “Assets in fee-based accounts” in the ~~December 31, 2017 period~~preceding table and “Financial assets under management” in the Asset Management segment. Revenues related to managed programs are shared by our PCG and Asset Management segments. The Asset Management segment receives a higher portion of the revenues related to accounts invested in managed programs, as compared to the portion received for non-managed programs, as it is performing portfolio management services in addition to administrative services.

The vast majority of the revenues we earn from fee-based accounts are recorded in “Asset management and related administrative fees” on our Condensed Consolidated Statements of Income and Comprehensive Income. Fees received from such accounts are based on the value of client assets in fee-based accounts and vary based on the specific account types in which the client participates and the level of assets in the client relationship. As fees for substantially all of such accounts are billed based on balances as of the beginning of the quarter, revenues from fee-based accounts may not be immediately affected by changes in asset values, but rather the impacts are seen in the following ~~our periodic review procedures.~~quarter.

PCG assets under administration increased ~~18% over December 31, 2016, resulting from~~due to the net addition of financial advisors and equity market ~~appreciation and net client inflows. Our net client inflows were primarily attributable to strong financial advisor recruiting results.~~appreciation. In addition, PCG assets in fee-based accounts continued to increase as a percentage of overall PCG assets under administration ~~increased compared~~due to ~~December 31, 2016, due in part to clients moving to~~clients’ preference for fee-based alternatives versus ~~traditional~~ transaction-based accounts. As a result of the shift to fee-based accounts over the past several years, a larger portion of our PCG revenues are more directly impacted by market movements.

Financial advisors


	June 30, 2020	March 31, 2020	September 30, 2019	June 30, 2019
Employees	3,379	3,376	3,301	3,228
Independent contractors	4,776	4,772	4,710	4,676
Total advisors	8,155	8,148	8,011	7,904

Although the number of financial advisors increased from prior periods, the net addition of financial advisors was low relative to recent quarters as the COVID-19 pandemic impacted experienced financial advisor transitions, particularly in ~~response~~the employee channel due to ~~regulatory changes.~~

~~Excluding~~office closures, and slowed the transitions of new trainees. While financial advisor recruiting activity has started to recover and the pipeline remains solid, the impact of the ~~individuals newly qualifying~~COVID-19 pandemic on future recruiting is uncertain.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Clients’ domestic cash sweep balances


	As of
$ in millions	June 30, 2020		March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019
RJBDP
RJ Bank	$	24,101	$	28,711	$	21,891	$	21,649	$	21,600
Third-party banks	24,661		20,379		15,061		14,043		14,425
Subtotal RJBDP	48,762		49,090		36,952		35,692		36,025

Client Interest Program (“CIP”)	3,157		3,782		2,528		2,022		2,130
Total clients’ domestic cash sweep balances	$	51,919	$	52,872	$	39,480	$	37,714	$	38,155


	Three months ended June 30,						Nine months ended June 30,
	2020		2019		2020		2019
Average yield on RJBDP - third-party banks	0.33	%	1.95	%	0.97	%	1.90	%

A significant portion of our clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their accounts are swept into interest-bearing deposit accounts at RJ Bank and various third-party banks. We earn servicing fees for the administrative services we provide related to ~~be classified~~our clients’ deposits that are swept to such banks as ~~financial advisors,~~part of the RJBDP. The amounts from third-party banks are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates and the interest paid to clients by the third-party banks on balances in the RJBDP. The “Average yield on RJBDP - third party banks” in the preceding table is computed by dividing annualized RJBDP fees from third-party banks, which are net ~~increase~~of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balance at third-party banks. The PCG segment also earns RJBDP servicing fees from RJ Bank, which are based on the number of accounts that are swept to RJ Bank. The fees from RJ Bank are eliminated in ~~financial advisors as~~consolidation.

RJBDP fees from third-party banks and the average yield on RJBDP (third-party banks) were negatively impacted by the significant decrease in short-term interest rates. The Federal Reserve decreased its benchmark short-term interest rate twice toward the end of ~~December 31, 2017 compared~~our fiscal second quarter, to ~~December 31, 2016 primarily resulted from strong financial advisor recruiting and high levels~~a range of ~~retention. Notwithstanding~~0-0.25%, a total decrease of 150 basis points. These decreases were in addition to the ~~future~~three rate cuts implemented during 2019 (225 basis points in total). Any additional decreases in short-term interest rates, increases in deposit rates paid to clients, and/or a significant decline in our clients’ cash balances will have a negative impact ofon our earnings. Further, PCG segment results are impacted by changes in the ~~overall economy,~~allocation of client cash balances in the RJBDP between RJ Bank and ~~more specifically their impact on~~third-party banks.

Although lower compared with March 31, 2020, client cash balances remained elevated as of June 30, 2020 as a result of the ~~markets, we believe that this increase in financial advisors is a positive indication of potential future revenue growth in this segment.~~market uncertainty caused by the COVID-19 pandemic.

~~Three months~~Quarter ended ~~December 31, 2017~~June 30, 2020 compared with the ~~three months~~quarter ended ~~December 31, 2016~~June 30, 2019

Net revenues of ~~$1.23~~$1.25 billion ~~increased $193~~decreased $102 million, or ~~19%. The portion~~8%, and pre-tax income of ~~total segment~~$91 million decreased $49 million, or 35%.

Asset management and related administrative fees were largely unchanged, as assets in fee-based accounts at the beginning of the quarter were relatively flat compared with the beginning of the prior-year quarter. As assets in fee-based accounts are billed primarily on balances at the beginning of the quarter, the 16% increase in fee-based assets during the current quarter will positively impact asset management fees in our fiscal fourth quarter.

Brokerage revenues ~~that we consider to be recurring~~decreased $27 million, or 8%, reflecting lower revenues from annuity products and lower mutual fund revenues. Offsetting these decreases was ~~82% for the three months ended December 31, 2017,~~ an increase in revenues from ~~78% for the prior year period. Recurring revenues include asset-based fees, trailing commissions from mutual funds~~equities, ETFs, and ~~variable annuities/insurance~~fixed income products ~~mutual fund~~due to an increase in client activity.

Account and ~~annuity~~ service fees ~~fees earned in our RJBDP program, and interest, all of which contributed~~decreased $51 million, or 22%, due to the ~~increase.~~decline in RJBDP fees from third-party banks, driven by lower short-term interest rates compared with the prior-year quarter, which more than offset the impact of the significant increase in cash balances swept to such banks.

~~Pre-tax~~Net interest income ~~of $155 million increased $82~~decreased $19 million, or ~~111%.~~

~~Securities commissions and fees increased $138 million, or 16%. The increased securities commissions and fee revenues were primarily~~41%, driven by a ~~stronger market environment~~decline in short-term interest rates, reducing the interest income earned on assets segregated pursuant to regulations and client margin loans, and a decline in average client margin loan balances. Partially offsetting the decrease in interest income, interest expense also decreased due to the impact of lower deposit rates paid on client cash balances in CIP.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Compensation-related expenses decreased $24 million, or 2%, due to lower compensable net revenues. Compensation-related expenses did not decrease at the same rate as net revenues, as a significant portion of the decline in net revenues related to net interest income and RJBDP fees from third-party banks, which have no associated direct payout expense.

Non-compensation expenses decreased $29 million, or 17%, primarily as a result of decreases in travel and conference-related expenses as a result of the COVID-19 pandemic, as well as ~~strong recruiting results.~~lower legal and regulatory reserves. Partially offsetting these decreases was an increase in communications and information processing expense.

~~Total account~~

Nine months ended June 30, 2020 compared with the nine months ended June 30, 2019

Net revenues of $4.16 billion increased $180 million, or 5%, and ~~service~~pre-tax income of $414 million decreased $22 million, or 5%.

Asset management and related administrative fees increased ~~$45~~$267 million, or ~~30%~~13%, primarily due to higher average assets in fee-based accounts at the beginning of each of the current-year quarterly billing periods compared with the prior-year periods.

Brokerage revenues were flat as the impact of increased trading activity resulting from higher levels of market volatility in the current-year period, was offset by a decrease in mutual fund trails and lower revenues from annuity products.

Account and service fees decreased $61 million, or 9%, driven by a decline in RJBDP fees ~~primarily resulting~~ from third-party banks, as a result of lower short-term interest rates, which more than offset the impact of the increase in cash balances swept to such banks. Partially offsetting this decrease was an increase in ~~short-term interest rates since December 2016. Mutual~~mutual fund ~~and annuity~~ service fees, ~~increased reflecting~~and higher ~~education and marketing support (“EMS”)~~RJBDP fees ~~and mutual fund omnibus fees. The increase in EMS fees is primarily~~from RJ Bank due to ~~the increased assets in the program, while the increase in omnibus fees was a result of~~ an increase in the number of ~~positions invested in fund families on the omnibus platform.~~accounts at RJ Bank.

~~As previously discussed, net~~Net interest income ~~in the PCG segment increased $8~~decreased $33 million, or ~~27%.~~24%, primarily driven by a decline in short-term interest rates, reducing the interest income earned on assets segregated pursuant to regulations and client margin loans. Partially offsetting the decrease in interest income, interest expense also decreased due to the impact of lower deposit rates paid on client cash balances in CIP.

~~Non-interest~~Compensation-related expenses increased ~~$111~~$224 million, or ~~12%~~7%, primarily due to ~~an increase in sales commission~~higher compensable net revenues.

Non-compensation expenses ~~which increased $102~~decreased $22 million, or ~~16%, in line with the increase in securities commissions and fees. Administrative & incentive compensation and benefits expense increased $27 million, or 16%~~5%, primarily ~~due to increased staffing levels~~as a result of decreases in conference and travel-related expenses as a result of the COVID-19 pandemic, as well as lower legal reserves. Partially offsetting these decreases were increases in costs to support our continued growth and regulatory and compliance requirements. Communications and information processing expense increased $9 million, or 20%, a result of our continued investment in information technology infrastructure to support our growth. ~~Offsetting these increases is a $30 million decrease in expenses related to the Jay Peak matter, which was settled in fiscal year 2017.~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

RESULTS OF OPERATIONS – CAPITAL MARKETS

~~Results of Operations – Capital Markets~~

For an overview of our Capital Markets segment operations, as well as ~~the~~a description of the key factors impacting our Capital Markets results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2017~~2019 Form 10-K.

Operating results


	Three months ended June 30,										Nine months ended June 30,
$ in millions	2020		2019		% change		2020		2019		% change
Revenues:
Brokerage revenues:
Fixed income	$	125	$	73	71	%	$	296	$	201	47	%
Equity	41		31		32	%	115		105		10	%
Total brokerage revenues	166		104		60	%	411		306		34	%
Investment banking:
Merger & acquisition and advisory	60		80		(25)	%	192		286		(33)	%
Equity underwriting	35		27		30	%	117		72		63	%
Debt underwriting	37		22		68	%	90		56		61	%
Total investment banking	132		129		2	%	399		414		(4)	%
Interest income	4		10		(60)	%	22		29		(24)	%
Tax credit fund revenues	20		16		25	%	50		49		2	%
All other	3		2		50	%	13		9		44	%
Total revenues	325		261		25	%	895		807		11	%
Interest expense	(2)		(10)		(80)	%	(14)		(26)		(46)	%
Net revenues	323		251		29	%	881		781		13	%
Non-interest expenses:
Compensation, commissions and benefits	195		160		22	%	545		486		12	%
Non-compensation expenses:
Communications and information processing	19		18		6	%	58		56		4	%
Occupancy and equipment	9		8		13	%	27		26		4	%
Business development	7		12		(42)	%	38		37		3	%
Professional fees	12		11		9	%	35		31		13	%
Acquisition and disposition-related expenses	—		—		—		—		15		(100)	%
All other	19		18		6	%	59		53		11	%
Total non-compensation expenses	66		67		(1)	%	217		218		—
Total non-interest expenses	261		227		15	%	762		704		8	%
Pre-tax income	$	62	$	24	158	%	$	119	$	77	55	%

Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:
Securities commissions and fees:
Equity $ 53,371
$ 64,319
(17 )%
Fixed income 65,201
75,374
(13 )%
Sub-total securities commissions and fees 118,572
139,693
(15 )%
Equity underwriting fees 8,956
14,509
(38 )%
Merger & acquisition and advisory fees 42,998
27,174
58 %
Fixed income investment banking 8,132
8,478
(4 )%
Tax credit funds syndication fees 4,817
11,126
(57 )%
Sub-total investment banking 64,903
61,287
6 %
Investment advisory fees 8,335
5,223
60 %
Net trading profit 19,230
19,319
—
Interest 7,325
6,474
13 %
Other 4,169
4,986
(16 )%
Total revenues 222,534
236,982
(6 )%
Interest expense (5,869 ) (3,966 ) 48 %
Net revenues 216,665
233,016
(7 )%
Non-interest expenses:

Sales commissions 42,218
50,973
(17 )%
Admin & incentive compensation and benefit costs 114,322
102,867
11 %
Communications and information processing 17,834
17,647
1 %
Occupancy and equipment costs 8,384
8,455
(1 )%
Business development 10,155
9,602
6 %
Losses and non-interest expenses of real estate partnerships held by consolidated VIEs 2,666
1,796
48 %
Other 18,986
22,337
(15 )%
Total non-interest expenses 214,565
213,677
—
Income before taxes and including noncontrolling interests 2,100
19,339
(89 )%
Noncontrolling interests (2,707 ) (2,105 ) 29 %
Pre-tax income excluding noncontrolling interests $ 4,807
$ 21,444
(78 )%

Net revenues of ~~$217~~$323 million ~~decreased $16~~increased $72 million, or 7%29%, ~~primarily~~and pre-tax income of $62 million increased $38 million, or 158%.

Brokerage revenues increased $62 million, or 60%, due to ~~lower commissions. Pre-tax income of $5 million decreased $17 million, or 78%.~~

~~Total commission revenues decreased $21 million, or 15%. Institutional~~an increase in fixed income and, to a lesser extent, equity ~~commissions each decreased $11 million as a result of lower~~brokerage revenues. The increase in brokerage revenues reflected an increase in client activity during the current-year quarter. Our trading ~~volumes driven by~~inventory levels remain relatively low ~~levels of interest rate and equity market volatility.~~due to our risk mitigation efforts.

Investment banking revenues increased $4$3 million, or 6%2%, due to ~~higher~~an increase in both debt and equity underwriting revenues, as a result of increased market activity, particularly for debt underwritings. Offsetting the increase in underwriting revenues was a decline in the number of merger & acquisition ~~and advisory fees, partially offset by lower tax credit fund syndication fees and equity underwriting fees.~~transactions compared with the prior-year quarter due to market uncertainty as a result of the COVID-19 pandemic. Merger & acquisition and ~~advisory fees~~underwriting activity may be negatively impacted in future quarters if market uncertainty continues.

Compensation-related expenses increased ~~$16~~$35 million, or ~~58%~~22%, primarily due to ~~a stronger volume of both domestic and foreign merger & acquisition activity and higher average fees per transaction~~the increase in the current year period versus the prior year period. Tax credit fund syndication fees decreased $6 million, or 57%, due in part to uncertainty over corporate tax reform impacting new investment activity and the timing of transactions.revenues.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

~~Management's~~Management’s Discussion and Analysis

~~Equity underwriting fees~~Non-compensation expenses decreased $6$1 million, or ~~38%~~1%, as lower business development costs as a result of less travel and conference-related expenses due to the COVID-19 pandemic were partially offset by smaller increases across various expense categories.

Nine months ended June 30, 2020 compared with the nine months ended June 30, 2019

Net revenues of $881 million increased $100 million, or 13%, and pre-tax income of $119 million increased $42 million, or 55%.

Brokerage revenues increased $105 million, or 34%, due to a significant increase in fixed income brokerage revenues, as well as an increase in equity brokerage revenues. The increase in fixed income brokerage revenues was primarily due to an increase in client activity during the current-year period, particularly toward the end of our fiscal second quarter and into our fiscal third quarter. Equity brokerage revenues were challenged earlier in the year, but increased during our fiscal second and third quarters due to strong client activity driven by market volatility as a result of the COVID-19 pandemic.

Investment banking revenues decreased $15 million, or 4%, due to a significant decline in merger & acquisition activity compared with a strong period-year period. This activity was negatively impacted by the uncertainty caused by COVID-19 during the current-year period. Offsetting the decrease was an increase in both equity and debt underwriting net revenues, with an increase in the number of deals, as well as larger individual transactions.

Compensation-related expenses increased $59 million, or 12%, primarily due to ~~fewer domestic lead-managed deals~~the increase in revenues.

Non-compensation expenses were unchanged compared with the ~~current year~~prior-year period, as ~~compared to the prior year period.~~



Florida						~~No.~~ 59-1517485
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



Large accelerated filerx			x		Accelerated filero		☐

Non-accelerated filero ~~(Do not check if a smaller reporting company)~~	☐			Smaller reporting companyo		☐

		Emerging growth companyo	☐



	Three months ended December 31,
$ in thousands, except per share amounts	2017			2016
Revenues:
Securities commissions and fees	$	1,103,566		$	984,385
Investment banking	64,902			61,425
Investment advisory and related administrative fees	142,023			108,243
Interest	231,729			182,782
Account and service fees	184,301			148,791
Net trading profit	19,870			20,555
Other	19,201			22,587
Total revenues	1,765,592			1,528,768
Interest expense	(39,431		)	(35,966		)
Net revenues	1,726,161			1,492,802
Non-interest expenses:
Compensation, commissions and benefits	1,152,767			1,006,467
Communications and information processing	83,731			72,161
Occupancy and equipment costs	49,814			46,052
Business development	33,793			35,362
Investment sub-advisory fees	22,321			19,295
Bank loan loss provision/(benefit)	1,016			(1,040		)
Acquisition-related expenses	3,927			12,666
Other	67,108			94,324
Total non-interest expenses	1,414,477			1,285,287
Income including noncontrolling interests and before provision for income taxes	311,684			207,515
Provision for income taxes	192,401			59,812
Net income including noncontrolling interests	119,283			147,703
Net income attributable to noncontrolling interests	441			1,136
Net income attributable to Raymond James Financial, Inc.	$	118,842		$	146,567

Earnings per common share – basic	$	0.82		$	1.03
Earnings per common share – diluted	$	0.80		$	1.00
Weighted-average common shares outstanding – basic	144,469			142,110
Weighted-average common and common equivalent shares outstanding – diluted	148,261			145,675

Net income attributable to Raymond James Financial, Inc.	$	118,842		$	146,567
Other comprehensive income/(loss), net of tax: ⁽¹⁾
Unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses	(11,953		)	(4,146		)
Unrealized gain/(loss) on currency translations, net of the impact of net investment hedges	(187		)	1,001
Unrealized gain on cash flow hedges	6,885			25,738
Total comprehensive income	$	113,587		$	169,160


~~(1)~~	~~All components of other comprehensive income/(loss), net of tax, are attributable to Raymond James Financial, Inc.~~



$ in thousands	Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Netting adjustments			Balance as of December 31, 2017
Assets at fair value on a recurring basis
Trading instruments
Municipal and provincial obligations	$	122	$	197,580	$	—	$	—		$	197,702
Corporate obligations	11,069		33,723		—		—			44,792
Government and agency obligations	6,376		17,929		—		—			24,305
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”)	2,128		214,680		—		—			216,808
Non-agency CMOs and asset-backed securities (“ABS”)	—		52,244		5		—			52,249
Total debt securities	19,695		516,156		5		—			535,856
Equity securities	18,497		803		—		—			19,300
Brokered certificates of deposit	—		32,173		—		—			32,173
Other	27		7,511		2,712		—			10,250
Total trading instruments	38,219		556,643		2,717		—			597,579
Available-for-sale securities
Agency MBS and CMOs	—		2,285,051		—		—			2,285,051
Other securities	787		—		—		—			787
Auction rate securities (“ARS”) preferred securities	—		—		107,483		—			107,483
Total available-for-sale securities	787		2,285,051		107,483		—			2,393,321
Derivative assets
Interest rate contracts
Matched book	—		263,851		—		—			263,851
Other	—		58,660		—		(30,375		)	28,285
Foreign exchange contracts	—		4		—		—			4
Total derivative assets	—		322,515		—		(30,375		)	292,140
Private equity investments ⁽¹⁾
Not measured at NAV	—		—		88,810		—			88,810
Measured at NAV										100,223
Total private equity investments	—		—		88,810		—			189,033
Other investments ⁽²⁾	263,978		859		333		—			265,170
Total assets at fair value on a recurring basis	$	302,984	$	3,165,068	$	199,343	$	(30,375	)	$	3,737,243

Assets at fair value on a nonrecurring basis
Bank loans, net
Impaired loans	$	—	$	16,347	$	23,418	$	—		$	39,765
Loans held for sale ⁽³⁾	—		69,057		—		—			69,057
Total assets at fair value on a nonrecurring basis	$	—	$	85,404	$	23,418	$	—		$	108,822

(continued on next page)



(continued from previous page)

$ in thousands	Quoted prices in active markets for identical instruments (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Netting adjustments			Balance as of December 31, 2017
Liabilities at fair value on a recurring basis
Trading instruments sold but not yet purchased
Municipal and provincial obligations	$	742	$	3,082	$	—	$	—		$	3,824
Corporate obligations	608		7,394		—		—			8,002
Government obligations	183,510		—		—		—			183,510
Agency MBS and CMOs	328		—		—		—			328
Non-agency MBS and CMOs	—		—		—		—			—
Total debt securities	185,188		10,476		—		—			195,664
Equity securities	16,294		4		—		—			16,298
Other	4		—		1,058		—			1,062
Total trading instruments sold but not yet purchased	201,486		10,480		1,058		—			213,024
Derivative liabilities
Interest rate contracts
Matched book	—		263,851		—		—			263,851
Other	—		86,815		—		(42,284		)	44,531
Foreign exchange contracts	—		19,710		—		—			19,710
Deutsche Bank restricted stock unit (“DBRSU”) obligation (equity)	—		28,413		—		—			28,413
Total derivative liabilities	—		398,789		—		(42,284		)	356,505
Total liabilities at fair value on a recurring basis	$	201,486	$	409,269	$	1,058	$	(42,284	)	$	569,529



Three months ended December 31, 2017 Level 3 instruments at fair value
	Financial assets													Financial liabilities
	Trading instruments					Available-for-sale securities		Private equity and other investments						Trading instruments
$ in thousands	Non-agency CMOs & ABS		Other			ARS - preferred securities		Private equity investments			Other investments			Other
Fair value beginning of period	$	5	$	5,594		$	106,171	$	88,885		$	336		$	—
Total gains/(losses) for the period
Included in earnings	—		(1,207		)	—		2			(3		)	(1,058		)
Included in other comprehensive income	—		—			1,312		—			—			—
Purchases and contributions	—		20,279			—		—			—			—
Sales	—		(21,954		)	—		(77		)	—			—
Distributions	—		—			—		—			—			—
Transfers
Into Level 3	—		—			—		—			—			—
Out of Level 3	—		—			—		—			—			—
Fair value end of period	$	5	$	2,712		$	107,483	$	88,810		$	333		$	(1,058	)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	—	$	(243	)	$	1,312	$	—		$	(3	)	$	(1,058	)



Level 3 financial instrument $ in thousands	Fair value at December 31, 2017		Valuation technique(s)	Unobservable input	Range (weighted-average)
Recurring measurements
ARS preferred securities	$	107,483	Discounted cash flow	Average discount rate	5.76% - 7.03% (6.32%)
				Average interest rates applicable to future interest income on the securities ⁽¹⁾	2.97% - 3.96% (3.12%)
				Prepayment year ⁽²⁾	2018 - 2021 (2021)
Private equity investments (not measured at NAV)	$	68,454	Income or market approach
			Scenario 1 - income approach - discounted cash flow	Discount rate	13% - 25% (22.4%)
				Terminal growth rate of cash flows	3% - 3% (3%)
				Terminal year	2020 - 2042 (2021)
			Scenario 2 - market approach - market multiple method	EBITDA Multiple	5.25 - 7.0 (5.8)
				Weighting assigned to outcome of scenario 1/scenario 2	87%/13%
	$	20,356	Transaction price or other investment-specific events ⁽³⁾	Not meaningful ⁽³⁾	Not meaningful ⁽³⁾
Nonrecurring measurements
Bank loans: impaired loans - residential	$	20,421	Discounted cash flow	Prepayment rate	7 yrs - 12 yrs (10.3 yrs)
Bank loans: impaired loans - corporate	$	2,997	Appraisal or discounted cash flow value ⁽⁴⁾	Not meaningful ⁽⁴⁾	Not meaningful ⁽⁴⁾



Level 3 financial instrument $ in thousands	Fair value at September 30, 2017		Valuation technique(s)	Unobservable input	Range (weighted-average)
Recurring measurements
ARS preferred securities	$	106,171	Discounted cash flow	Average discount rate	5.46% - 6.81% (6.03%)
				Average interest rates applicable to future interest income on the securities ⁽¹⁾	2.58% - 3.44% (2.72%)
				Prepayment year ⁽²⁾	2017 - 2021 (2021)
Private equity investments (not measured at NAV)	$	68,454	Income or market approach:
			Scenario 1 - income approach - discounted cash flow	Discount rate	13% - 25% (22.4%)
				Terminal growth rate of cash flows	3% - 3% (3%)
				Terminal year	2020 - 2042 (2021)
			Scenario 2 - market approach - market multiple method	EBITDA Multiple	5.25 - 7.0 (5.8)
				Weighting assigned to outcome of scenario 1/scenario 2	87%/13%
	$	20,431	Transaction price or other investment-specific events ⁽³⁾	Not meaningful ⁽³⁾	Not meaningful ⁽³⁾
Nonrecurring measurements
Bank loans: impaired loans - residential	$	20,736	Discounted cash flow	Prepayment rate	7 yrs. - 12 yrs. (10.4 yrs.)
Bank loans: impaired loans - corporate	$	3,258	Appraisal or discounted cash flow value ⁽⁴⁾	Not meaningful ⁽⁴⁾	Not meaningful ⁽⁴⁾



$ in thousands	Location of gain/(loss) included in the Condensed Consolidated Statements of Income and Comprehensive Income	Gain/(loss) recognized during the period
		Three months ended December 31,
		2017			2016
Interest rate contracts:
Matched book	Other revenues	$	38		$	(26	)
Other	Net trading profit	$	1,562		$	2,229
Foreign exchange contracts	Other revenues	$	(1,366	)	$	7,914
DBRSUs	Compensation, commissions and benefits expense	$	(2,613	)	$	(6,725	)
DBRSUs	Acquisition-related expenses	$	—		$	350



$ in thousands	December 31, 2017		September 30, 2017
Collateral we received that is available to be delivered or repledged	$	2,891,841	$	3,030,736
Collateral that we delivered or repledged	$	957,943	$	1,068,912



	Loans held for investment
$ in thousands	C&I			CRE construction			CRE			Tax-exempt		Residential mortgage			SBL		Total
Three months ended December 31, 2017
Balance at beginning of period	$	119,901		$	1,421		$	41,749		$	6,381	$	16,691		$	4,299	$	190,442
Provision/(benefit) for loan losses	2,337			686			(1,104		)	537		(1,699		)	259		1,016
Net (charge-offs)/recoveries:
Charge-offs	(603		)	—			—			—		(95		)	—		(698		)
Recoveries	—			—			—			—		604			—		604
Net (charge-offs)/recoveries	(603		)	—			—			—		509			—		(94		)
Foreign exchange translation adjustment	(66		)	—			(29		)	—		—			—		(95		)
Balance at end of period	$	121,569		$	2,107		$	40,616		$	6,918	$	15,501		$	4,558	$	191,269

Three months ended December 31, 2016
Balance at beginning of period	$	137,701		$	1,614		$	36,533		$	4,100	$	12,664		$	4,766	$	197,378
Provision/(benefit) for loan losses	(1,243		)	581			(2,010		)	393		997			242		(1,040		)
Net (charge-offs)/recoveries:
Charge-offs	(3,389		)	—			—			—		(87		)	—		(3,476		)
Recoveries	—			—			5,013			—		65			—		5,078
Net (charge-offs)/recoveries	(3,389		)	—			5,013			—		(22		)	—		1,602
Foreign exchange translation adjustment	(164		)	(92		)	(4		)	—		—			—		(260		)
Balance at end of period	$	132,905		$	2,103		$	39,532		$	4,493	$	13,639		$	5,008	$	197,680



	Segment
$ in thousands	Private Client Group			Capital Markets			Asset Management		Total
For the three months ended December 31, 2017
Goodwill as of beginning of period	$	276,713		$	134,010		$	—	$	410,723
Additions	—			—			69,234		69,234
Foreign currency translation	(179		)	(3		)	—		(182		)
Goodwill as of end of period	$	276,534		$	134,007		$	69,234	$	479,775

For the three months ended December 31, 2016
Goodwill as of beginning of period	$	275,521		$	132,551		$	—	$	408,072
Additions	—			—			—		—
Foreign currency translation	(537		)	(1,038		)	—		(1,575		)
Goodwill as of end of period	$	274,984		$	131,513		$	—	$	406,497



	Weighted average useful life (in years)	Amount acquired (in thousands)
Customer relationships	13	$	34,900
Trade name	20	3,590
Developed technology	10	1,800
Intangible assets subtotal	13	$	40,290
Non-amortizing customer relationships	Indefinite	52,000
Total intangible assets acquired		$	92,290



Accumulated other comprehensive income/(loss) components: $ in thousands	Increase/(decrease) in amounts reclassified from accumulated other comprehensive income/(loss)			Affected line items in income statement
Three months ended December 31, 2017
RJ Bank cash flow hedges	$	1,409		Interest expense
	1,409			Total before tax
Income tax effect	(402		)	Provision for income taxes
Total reclassifications for the period	$	1,007		Net of tax
Three months ended December 31, 2016
RJ Bank available-for-sale securities	$	(12	)	Other revenue
RJ Bank cash flow hedges	1,572			Interest expense
Currency translations	6,537			Other expense
	8,097			Total before tax
Income tax effect	(3,076		)	Provision for income taxes
Total reclassifications for the period	$	5,021		Net of tax



	Actual				Requirement for capital adequacy purposes				To be well capitalized under regulatory provisions
$ in thousands	Amount		Ratio		Amount		Ratio		Amount		Ratio
RJF as of December 31, 2017:
CET1	$	5,052,629	22.3	%	$	1,018,048	4.5	%	$	1,470,513	6.5	%
Tier 1 capital	$	5,052,629	22.3	%	$	1,357,397	6.0	%	$	1,809,862	8.0	%
Total capital	$	5,266,339	23.3	%	$	1,809,862	8.0	%	$	2,262,328	10.0	%
Tier 1 leverage	$	5,052,629	14.4	%	$	1,400,054	4.0	%	$	1,750,068	5.0	%

RJF as of September 30, 2017:
CET1	$	5,081,335	23.0	%	$	994,950	4.5	%	$	1,437,150	6.5	%
Tier 1 capital	$	5,081,335	23.0	%	$	1,326,600	6.0	%	$	1,768,800	8.0	%
Total capital	$	5,293,331	23.9	%	$	1,768,800	8.0	%	$	2,211,000	10.0	%
Tier 1 leverage	$	5,081,335	15.0	%	$	1,359,168	4.0	%	$	1,698,960	5.0	%



Effective tax rate:
For the three months ended December 31, 2017 ($ in thousands)	Pre-tax income including noncontrolling interests		Provision for income taxes		Effective tax rate
	$	311,684	$	192,401	61.7	%
Less: discrete impact of the Tax Act ⁽⁴⁾			117,169
As adjusted for discrete impact of the Tax Act			$	75,232	24.1	%



	As of						% change from
$ in billions	December 31, 2017		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
PCG assets under administration	$	692.1	$	659.5	$	585.6	5	%	18	%
PCG assets in fee-based accounts	$	316.7	$	294.5	$	240.2	8	%	32	%



	December 31, 2017		September 30, 2017	December 31, 2016
Employees	3,038		3,041	2,985
Independent Contractors	4,499	⁽¹⁾	4,305	4,143
Total advisors	7,537		7,346	7,128


$ in millions	June 30, 2020		Average fee rate for the three months ended June 30, 2020
Equity	$	25,431	0.54	%
Fixed income	27,066		0.18	%
Balanced	4,960		0.37	%
Total financial assets under management	$	57,457	0.35	%


	Three months ended June 30,
	2020 compared to 2019
	Increase/(decrease) due to
$ in millions	Volume		Rate		Total
Interest income:
Interest-earning assets:
Cash	$	12	$	(17)	$	(5)
Available-for-sale securities	10		(5)		5
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	(3)		(36)		(39)
CRE construction loans	(1)		(1)		(2)
CRE loans	5		(19)		(14)

Residential mortgage loans	8		(5)		3
SBL and other	5		(17)		(12)

Total bank loans, net	14		(78)		(64)
FHLB stock, FRB stock, and other	1		(2)		(1)
Total interest-earning assets	37		(102)		(65)
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market, and NOW accounts	6		(34)		(28)
Certificates of deposit	1		—		1
FHLB advances and other	—		1		1
Total interest-bearing liabilities	7		(33)		(26)
Change in net interest income	$	30	$	(69)	$	(39)



	Three months ended December 31,
	2017 compared to 2016
	Increase/(decrease) due to
$ in thousands	Volume			Rate			Total
Interest revenue:
Interest-earning banking assets:
Cash	$	616		$	2,572		$	3,188
Available-for-sale securities	4,131			2,935			7,066
Bank loans, net of unearned income:
Loans held for investment:
C&I loans	(611		)	3,097			2,486
CRE construction loans	90			128			218
CRE loans	4,247			2,258			6,505
Tax-exempt loans	1,503			(43		)	1,460
Residential mortgage loans	4,978			1,248			6,226
SBL	4,096			3,755			7,851
Loans held for sale	(449		)	198			(251		)
Total bank loans, net	13,854			10,641			24,495
FHLB stock, FRB stock, and other	(221		)	693			472
Total interest-earning banking assets	18,380			16,841			35,221
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Certificates of deposit	76			61			137
Money market, savings and NOW accounts	460			4,329			4,789
FHLB advances and other	779			749			1,528
Total interest-bearing liabilities	1,315			5,139			6,454
Change in net interest income	$	17,065		$	11,702		$	28,767



	For the three months ended December 31,
	2017	2016
Return on average assets	1.3%	1.9%
Return on average equity	8.4%	11.7%
Average equity to average assets	15.9%	15.8%
Dividend payout ratio	31.3%	22.0%


$ in millions	June 30, 2020
RJF	$	479
RJ&A	2,603
RJ Bank	1,519
RJ Ltd.	662
RJFS	123
Carillon Tower Advisers	69
Other subsidiaries	177
Total cash and cash equivalents	$	5,632



$ in thousands	December 31, 2017
RJF	$	330,258
RJ&A	1,506,746
RJ Bank	1,276,703
RJ Ltd.	440,736
RJFS	125,269
Carillon Tower Advisers	65,033
Other subsidiaries	152,784
Total cash and cash equivalents	$	3,897,529



	As of December 31, 2017
$ in thousands	RJ&A		RJF		Total		Total number of arrangements
Financing arrangement:
Committed secured	$	200,000	$	—	$	200,000	2
Committed unsecured	—		300,000		300,000		1
Total committed financing arrangements	$	200,000	$	300,000	$	500,000	3

Outstanding borrowing amount:
Committed secured	$	70,000	$	—	$	70,000
Committed unsecured	—		300,000		300,000
Total outstanding borrowing amount	$	70,000	$	300,000	$	370,000


	Repurchase transactions										Reverse repurchase transactions
For the quarter ended: ($ in millions)	Average daily balance outstanding		Maximum month-end balance outstanding during the quarter		End of period balance outstanding		Average daily balance outstanding		Maximum month-end balance outstanding during the quarter		End of period balance outstanding
June 30, 2020	$	222	$	278	$	228	$	168	$	193	$	193
March 31, 2020	$	218	$	238	$	215	$	283	$	388	$	130
December 31, 2019	$	184	$	200	$	200	$	355	$	351	$	326
September 30, 2019	$	170	$	158	$	150	$	334	$	343	$	343
June 30, 2019	$	211	$	212	$	165	$	442	$	479	$	411



	Repurchase transactions						Reverse repurchase transactions
For the quarter ended: ($ in thousands)	Average daily balance outstanding		Maximum month-end balance outstanding during the quarter		End of period balance outstanding		Average daily balance outstanding		Maximum month-end balance outstanding during the quarter		End of period balance outstanding
December 31, 2017	$	218,690	$	229,036	$	229,036	$	443,391	$	506,711	$	307,742
September 30, 2017	241,365		247,048		220,942		463,618		503,462		404,462
June 30, 2017	231,378		226,972		226,972		479,653		540,823		483,820
March 31, 2017	204,623		222,476		222,476		410,678		535,224		535,224
December 31, 2016	219,095		241,773		203,378		424,548		445,646		358,493


	Nine months ended June 30, 2020						Period-end VaR							Three months ended June 30,				Nine months ended June 30,
$ in millions	High		Low		June 30, 2020		September 30, 2019		$ in millions	2020		2019		2020		2019
Daily VaR	$	6	$	1	$	5	$	1	Daily average VaR	$	2	$	1	$	2	$	1



	Three months ended December 31, 2017				Period end VaR				Daily average VaR
$ in thousands	High		Low		December 31, 2017		September 30, 2017		December 31, 2017		September 30, 2017		December 31, 2016
Daily VaR	$	2,256	$	848	$	848	$	1,427	$	1,601	$	1,827	$	1,670

Pre-tax expense not yet recognized

Remaining weighted-average amortization period

(in thousands)

(in years)

Independent contractor financial advisors