RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)


	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

Three months ended June 30, Nine months ended June 30,
in millions, except per share amounts 2019 2018 2019 2018
Revenues:
Asset management and related administrative fees $ 879
$ 790
$ 2,527
$ 2,287
Brokerage revenues:
Securities commissions 358
395
1,095
1,236
Principal transactions 93
73
262
255
Total brokerage revenues 451
468
1,357
1,491
Account and service fees 183
187
559
535
Investment banking 139
145
439
349
Interest income 321
271
961
752
Other 27
30
95
100
Total revenues 2,000
1,891

5,938

5,514
Interest expense (73 ) (54 ) (221 ) (139 )
Net revenues 1,927
1,837

5,717

5,375
Non-interest expenses:

Compensation, commissions and benefits 1,277
1,208
3,767
3,557
Communications and information processing 92
89
278
262
Occupancy and equipment costs 55
49
159
149
Business development 57
57
141
134
Investment sub-advisory fees 24
23
70
68
Professional fees 22
20
61
48
Bank loan loss provision/(benefit) (5 ) 5
16
14
Acquisition and disposition-related expenses —
—
15
4
Other 65
68
205
178
Total non-interest expenses 1,587
1,519

4,712

4,414
Income including noncontrolling interests and before provision for income taxes 340
318

1,005

961
Provision for income taxes 83
86
252
367
Net income including noncontrolling interests 257
232

753

594
Net loss attributable to noncontrolling interests (2 ) —
(16 ) —
Net income attributable to Raymond James Financial, Inc. $ 259
$ 232

$ 769

$ 594

Earnings per common share – basic $ 1.84
$ 1.59
$ 5.42
$ 4.08
Earnings per common share – diluted $ 1.80
$ 1.55
$ 5.30
$ 3.99
Weighted-average common shares outstanding – basic 140.4
145.6
141.8
145.2
Weighted-average common and common equivalent shares outstanding – diluted 143.6
149.4
144.8
148.8

Net income attributable to Raymond James Financial, Inc. $ 259
$ 232

$ 769

$ 594
Other comprehensive income/(loss), net of tax:

Available-for-sale securities 24
(4 ) 65
(31 )
Currency translations, net of the impact of net investment hedges 6
(6 ) 1
(8 )
Cash flow hedges (19 ) 6
(49 ) 27
Total other comprehensive income/(loss), net of tax 11

(4 )
17

(12 )
Total comprehensive income $ 270
$ 228

$ 786

$ 582

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


	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

Three months ended June 30, Nine months ended June 30,
$ in millions, except per share amounts 2019 2018 2019 2018
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 1,917

1,748
1,808
1,645
Employee stock purchases 7

8
27
24
Exercise of stock options and vesting of restricted stock units, net of forfeitures 2

4
27
34
Restricted stock, stock option and restricted stock unit expense 21

21
85
77
Acquisition of noncontrolling interest and other (32 ) —
(32 ) 1
Balance end of period 1,915
1,781

1,915

1,781

Retained earnings:

Balance beginning of period 5,448

4,626
5,032
4,340
Net income attributable to Raymond James Financial, Inc. 259

232
769
594
Cash dividends declared (see Note 20) (47 ) (44 ) (146 ) (119 )
Other (1 ) —
4
(1 )
Balance end of period 5,659
4,814
5,659
4,814

Treasury stock:

Balance beginning of period (976 ) (412 ) (447 ) (390 )
Purchases/surrenders (86 ) (1 ) (598 ) (9 )
Exercise of stock options and vesting of restricted stock units, net of forfeitures 2
—
(15 ) (14 )
Balance end of period (1,060 ) (413 ) (1,060 ) (413 )

Accumulated other comprehensive loss:

Balance beginning of period (25 ) (23 ) (27 ) (15 )
Other comprehensive income/(loss), net of tax 11
(4 ) 17
(12 )
Other —
—
(4 ) —
Balance end of period (14 ) (27 ) (14 ) (27 )
Total equity attributable to Raymond James Financial, Inc. $ 6,502

$ 6,157
$ 6,502
$ 6,157

Noncontrolling interests:

Balance beginning of period $ 69
$ 101
$ 84
$ 112
Net loss attributable to noncontrolling interests (2 ) —
(16 ) —
Capital contributions —
—
2
—
Distributions and other (5 ) (8 ) (8 ) (19 )
Balance end of period 62
93
62
93
Total equity $ 6,564
$ 6,250
$ 6,564
$ 6,250

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 2019 2018
Cash flows from operating activities:
Net income attributable to Raymond James Financial, Inc. $ 769
$ 594
Net loss attributable to noncontrolling interests (16 ) —
Net income including noncontrolling interests 753
594
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:

Depreciation and amortization 81
72
Deferred income taxes (22 ) 99
Premium and discount amortization on available-for-sale securities and loss on other investments 14
3
Provisions for loan losses, legal and regulatory proceedings and bad debts 45
34
Share-based compensation expense 88
75
Unrealized gain on company-owned life insurance policies, net of expenses (9 ) (20 )
Other 47
22
Net change in:

Securities purchased under agreements to resell, net of securities sold under agreements to repurchase (61 ) (48 )
Securities borrowed, net of securities loaned (44 ) (24 )
Loans provided to financial advisors, net of repayments (28 ) (78 )
Brokerage client receivables and other accounts receivable, net 679
(144 )
Trading instruments, net (52 ) (88 )
Derivative instruments, net (137 ) 77
Other assets (83 ) (49 )
Brokerage client payables and other accounts payable (1,300 ) (184 )
Accrued compensation, commissions and benefits (99 ) (52 )
Proceeds from sales of securitizations and loans held for sale, net of purchases and originations of loans held for sale 27
(65 )
Net cash provided by/(used in) operating activities (101 ) 224

Cash flows from investing activities:

Additions to property and equipment (102 ) (96 )
Increase in bank loans, net (1,226 ) (1,875 )
Proceeds from sales of loans held for investment 210
140
Purchases of available-for-sale securities (689 ) (899 )
Available-for-sale securities maturations, repayments and redemptions 456
360
Business acquisition, net of cash acquired (5 ) (159 )
Other investing activities, net (30 ) 31
Net cash used in investing activities (1,386 ) (2,498 )

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended June 30,
$ in millions 2019 2018
Cash flows from financing activities:
Proceeds from borrowings on the RJF Credit Facility 300
300
Repayments of borrowings on the RJF Credit Facility (300 ) (300 )
Proceeds from/(repayments of) short-term borrowings, net 50
(610 )
Proceeds from Federal Home Loan Bank advances 850
850
Repayments of Federal Home Loan Bank advances and other borrowed funds (854 ) (854 )
Exercise of stock options and employee stock purchases 53
54
Increase in bank deposits 2,224
1,747
Purchases of treasury stock (616 ) (24 )
Dividends on common stock (143 ) (107 )
Acquisitions of and distributions to noncontrolling interests, net (54 ) (14 )
Net cash provided by financing activities 1,510
1,042

Currency adjustment:

Effect of exchange rate changes on cash (12 ) (47 )
Net increase/(decrease) in cash, cash equivalents, and cash segregated pursuant to regulations 11
(1,279 )
Cash, cash equivalents, and cash segregated pursuant to regulations at beginning of year 5,941
7,146
Cash, cash equivalents, and cash segregated pursuant to regulations at end of period $ 5,952
$ 5,867

Cash and cash equivalents $ 3,596
$ 3,180
Cash segregated pursuant to regulations 2,356
2,687
Total cash, cash equivalents, and cash segregated pursuant to regulations at end of period $ 5,952
$ 5,867

Supplemental disclosures of cash flow information:

Cash paid for interest $ 208
$ 127
Cash paid for income taxes, net $ 295
$ 192

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 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)

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

(Unaudited)

June 30, ~~2019~~2020

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

Raymond James Financial, Inc. (“RJF,” the “firm” or the “Company”) is a financial holding company which, together with its subsidiaries, is engaged in various financial services 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. The firm also provides corporate and retail banking services, and trust services. For further information about our business segments, see Note 2122 of this Form 10-Q. As used herein, the terms “our,” “we,” 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 of our Annual Report on Form 10-K ~~(the “2018~~(“2019 Form 10-K”) for the year ended September 30, ~~2018,~~2019, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and in Note 98 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 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 ~~2018~~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.

Reclassifications

Effective with the firm’s first fiscal quarter ended December 31, 2018, we have reclassified certain revenues among income statement line items and renamed certain line items. These reclassifications do not affect the Company’s reported total revenues or the total revenues in any of our segments for any of the previously reported periods. Prior period results have been conformed to the current presentation.

~~In addition to the reclassifications discussed in the preceding paragraph, certain other~~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 ~~2018~~2019 Form 10-K. During the nine months ended June 30, ~~2019,~~2020, there were no significant changes to our significant accounting policies other than the accounting policies adopted or modified as part of our implementation of new or amended accounting guidance, as noted in the following sections.

~~Loans to financial advisors, net~~

We offer loans to financial advisors and certain other key revenue producers, primarily for recruiting, transitional cost assistance, and retention purposes. We present the outstanding balance of loans to financial advisors 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 $22 million and $20 million at June 30, 2019 and September 30, 2018, respectively. Our allowance for doubtful accounts was $10 million and $8 million at June 30, 2019 and September 30, 2018, respectively.

Recent accounting developments

Accounting guidance recently adopted

~~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). 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. We early-adopted this guidance on January 1, 2019, our goodwill impairment test date. The adoption did not have any impact on our financial position or results of operations.

~~Revenue recognition -~~ In May 2014, the FASB issued new guidance related to 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. We adopted this guidance as of October 1, 2018, under a modified retrospective approach for all open contracts as of the date of initial adoption. As such, there was no impact on our prior period results.

The primary impact of this guidance was the change in the presentation of certain costs from a net presentation within revenues to a gross presentation, particularly costs related to merger & acquisitions advisory and underwriting transactions and certain administrative costs related to our multi-bank sweep program. These presentation changes had no impact on our net earnings. There were no material changes in timing of revenues recognized associated with the adoption. As a result, adoption of this guidance had no material impact on our net results of operations or financial position. See Note 16 for further information.

~~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 generally requires equity investments to be measured at fair value with changes in fair value recognized in net income, subject to certain exceptions, and amends certain disclosure requirements associated with the fair value of financial instruments. We adopted this guidance as of October 1, 2018, under a modified retrospective approach. As a result, on a prospective basis beginning as of the date of adoption, we record changes in the fair value of our investments in equity securities that were previously classified as available-for-sale in net income. Previously, such unrealized gains/(losses) were reflected in other comprehensive income/(loss) (“OCI”). The impact of adopting the new guidance resulted in a reclassification from accumulated other comprehensive income/(loss) (“AOCI”) to retained earnings of an accumulated gain of approximately $4 million at October 1, 2018. See Note 5 for further information.

~~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 provides guidance on disclosure and classification of certain items within the statements of cash flows. We adopted this guidance on October 1, 2018, under a retrospective approach. The adoption did not have a material impact on our consolidated statements of cash flows and did not have an impact on our financial position or 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). The guidance requires an entity to include restricted cash and cash equivalents in its total of cash and cash equivalents on its statement of cash flows and to present a reconciliation of the beginning-of-period and end-of-period total of such amounts on the statement of cash flows. We adopted this guidance on

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

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

October 1, 2018, under a retrospective approach. As a result of adoption, we recorded a decrease of $765 million in net cash provided by operating activities for the nine months ended June 30, 2018 related to reclassifying changes in cash segregated pursuant to regulations from operating activities to the cash and cash equivalents balance in the Condensed Consolidated Statements of Cash Flows. The total of cash segregated pursuant to regulations and cash and cash equivalents is included in a separate table in the Condensed Consolidated Statements of Cash Flows. The adoption did not have an impact on our financial position or results of operations.

~~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. We adopted this guidance on October 1, 2018, on a prospective basis. The impact of the adoption of this amended guidance is dependent upon acquisition and disposal activities subsequent to the date of adoption. The adoption did not have any impact on our financial position or results of operations.

~~Share-based payment awards (modifications) -~~ 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. We adopted the guidance on October 1, 2018, on a prospective basis. We generally do not modify our share-based payments awards. The adoption did not have an impact on our financial position or results of operations.

~~Share-based payment awards (nonemployee)~~ - In June 2018, the FASB issued amended guidance that aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions (ASU 2018-07). The amended guidance states an entity should measure the fair value of the award by estimating the fair value of the equity instruments to be issued and, for equity-classified awards, the fair value should be measured on the grant date. The amended guidance also clarifies that nonemployee awards that contain a performance condition are to be measured based on the outcome that is probable and that entities may elect, on an award-by-award basis, to use the expected term or contractual term to measure the award. We early-adopted this standard on October 1, 2018, using a modified retrospective approach. The adoption did not have a significant impact on our financial position or results of operations.

~~Accounting guidance not yet adopted as of June 30, 2019~~

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 permitted, we do not plan to early adopt. Upon adoption, we will use~~2019 using the alternative modified retrospective approach, with ~~a cumulative effect adjustment~~no adjustments to ~~opening retained earnings~~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 ~~the period~~“Other assets” and “Other payables” on our Condensed Consolidated Statements of adoption. Our implementation efforts include reviewing existing leases and service contracts, which may include embedded leases. We are near completion with the process of identifying and validating changes to our business policies and processes, systems and controls, and reports to support adoption of the new guidance. This new guidance will increase both ourFinancial Condition. The ROU assets and lease liabilities ~~on our statement of financial condition. We are evaluating the magnitude of such impact. We do not expect a material impact~~were primarily related to operating leases. The adoption had no effect 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 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 will apply the guidance prospectively for qualifying new or re-designated hedging relationships. The adoption did not impact our financial position 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 have elected certain expedients for cash flow hedges to assert that the hedged forecasted transaction remains probable, regardless of 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 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. Although permitted, we do not plan to early adopt. ~~We have continued with our implementation and evaluation efforts, which include a~~Our cross-functional team ~~to assess~~continues with the ~~required changes to~~implementation efforts. We are in the process of validating our credit loss ~~estimation methodologies~~models and ~~systems, as well as the determination of additional data~~establishing formal procedures and ~~resources required~~control documentation related to ~~comply with the~~this new guidance. In addition, we are finalizing required disclosures and policies.We ~~are evaluating~~continue to evaluate the impact the adoption of this new guidance will have on our financial

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

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

position and results of ~~operations, which~~operations. The impact will ultimately depend on, among other things, ~~the~~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.

~~Callable debt securities -~~
~~In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes 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. 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.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-cancellable~~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 controlled by the cloud service provider. This amended guidance is first effective for our fiscal year beginning on October 1, 2020, with early adoption ~~permitted. The guidance~~permitted, and may be adopted using either ~~using the~~a prospective or retrospective approach. We ~~are currently evaluating the~~plan to adopt this standard prospectively effective for annual periods beginning October 1, 2020. The impact of this ~~new guidance on our financial position and results of operations.~~

~~Derivatives and hedging (interest rate) -~~ In October 2018, the FASB issued guidance amending Derivatives and Hedging (Topic 815) to add the overnight index swap (OIS rate) rate based on the Secured Overnight Financing Rate (SOFR) to the list of US benchmark interest rates that are eligible to be hedged (ASU 2018-16). Thisamended guidance is ~~first effective for our fiscal year beginning~~dependent on ~~October 1, 2019. 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.~~implementation costs incurred subsequent to adoption.

Consolidation (decision making fees) - In October 2018, the FASB issued guidance on how all entities evaluate decision-making fees under the ~~variable interest entity~~VIE guidance (ASU 2018-17). Under the new 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. ~~Early adoption is permitted.~~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.

~~NOTE 3 - ACQUISITIONS~~

Effective April 2019, we increased our ownership of ClariVest Asset Management LLC (“ClariVest”) from 45% to 100% making ClariVest a wholly-owned subsidiary of Eagle Asset Management. ClariVest has been included in our consolidated financial statements since our initial investment of the 45% interest as we concluded we were required to consolidate as defined by accounting guidance. The increase in ownership was accounted for as a shareholder’s equity transaction.

In April 2019, we completed our acquisition of Silver Lane Advisors LLC (“Silver Lane”), a boutique investment bank focused on merger & acquisition advisory. Silver Lane has been integrated into our Capital Markets segment. We accounted for this acquisition under the acquisition method of accounting with the assets and liabilities of Silver Lane recorded as of the acquisition date at their respective fair values in our consolidated financial statements. For purposes of certain acquisition-related financial reporting requirements, the Silver Lane acquisition was not considered a material acquisition. Silver Lane’s results of operations have been included in our results prospectively from April 1, 2019.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 43 – 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 ~~2018~~2019 Form 10-K. The following tables present assets and liabilities measured at fair value on a recurring basis. Netting adjustments represent the impact of counterparty and collateral netting on our derivative balances included on 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 millions Level 1 Level 2 Level 3
Netting
adjustments
Balance as of
June 30,
2019
Assets at fair value on a recurring basis:
Trading instruments
Municipal and provincial obligations $ —
$ 242
$ —
$ —
$ 242
Corporate obligations 12
111
—
—
123
Government and agency obligations 32
84
—
—
116
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”) —
198
—
—
198
Non-agency CMOs and asset-backed securities (“ABS”) —
71
—
—
71
Total debt securities 44

706
—
—
750
Equity securities 12
1
—
—
13
Brokered certificates of deposit —
39
—
—
39
Other —
—
1
—
1
Total trading instruments 56
746
1
—
803
Available-for-sale securities - agency MBS and CMOs —
2,960
—
—
2,960
Derivative assets
Interest rate - Matched book —
246
—
—
246
Interest rate - Other 10
127
—
(80 ) 57
Foreign exchange —
1
—
—
1
Total derivative assets 10
374
—
(80 ) 304
Private equity investments - not measured at net asset value (“NAV”) —
—
59
—
59
Other investments 187
1
65
—
253
Subtotal 253
4,081
125
(80 ) 4,379
Private equity investments - measured at NAV 87
Total assets at fair value on a recurring basis $ 253

$ 4,081

$ 125

$ (80 )
$ 4,466

Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased
Municipal and provincial obligations $ 1
$ —
$ —
$ —
$ 1
Corporate obligations 1
16
—
—
17
Government and agency obligations 260
—
—
—
260
Total debt securities 262
16
—
—
278
Equity securities 6
—
—
—
6
Other —
—
3
—
3
Total trading instruments sold but not yet purchased 268
16
3
—
287
Derivative liabilities
Interest rate - Matched book —
246
—
—
246
Interest rate - Other 12
106
—
(100 ) 18
Foreign exchange —
4
—
—
4
Equity - Deutsche Bank restricted stock unit (“DBRSU”) obligation —
7
—
—
7
Total derivative liabilities 12
363
—
(100 ) 275
Total liabilities at fair value on a recurring basis $ 280
$ 379
$ 3
$ (100 ) $ 562

(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,
2018
Assets at fair value on a recurring basis:
Trading instruments
Municipal and provincial obligations $ 1
$ 247
$ —
$ —
$ 248
Corporate obligations 10
100
—
—
110
Government and agency obligations 19
72
—
—
91
Agency MBS and CMOs 3
124
—
—
127
Non-agency CMOs and ABS —
69
—
—
69
Total debt securities 33
612
—
—
645
Equity securities 15
—
—
—
15
Brokered certificates of deposit —
39
—
—
39
Other —
2
1
—
3
Total trading instruments 48
653
1
—
702
Available-for-sale securities

Agency MBS and CMOs —
2,628
—
—
2,628
Other securities 1
—
—
—
1
Auction rate securities (“ARS”) preferred —
—
67
—
67
Total available-for-sale securities 1
2,628
67
—
2,696
Derivative assets
Interest rate - Matched book —
160
—

—
160
Interest rate - Other —
74
—
(55 ) 19
Foreign exchange —
1
—
—
1
Total derivative assets —

235

—

(55 )
180
Private equity investments - not measured at NAV —
—
56
—
56
Other investments 201
1
—
—
202
Subtotal 250
3,517
124
(55 ) 3,836
Private equity investments - measured at NAV 91
Total assets at fair value on a recurring basis $ 250
$ 3,517
$ 124
$ (55 ) $ 3,927

Liabilities at fair value on a recurring basis:
Trading instruments sold but not yet purchased
Municipal and provincial obligations $ —
$ 1
$ —
$ —
$ 1
Corporate obligations 2
25
—
—
27
Government and agency obligations 194
—
—
—
194
Non-agency MBS and CMOs —
1
—
—
1
Total debt securities 196
27
—
—
223
Equity securities 5
—
—
—
5
Other —
—
7
—
7
Total trading instruments sold but not yet purchased 201
27
7
—
235
Derivative liabilities
Interest rate - Matched book —
160
—
—
160
Interest rate - Other —
114
—
(47 ) 67
Foreign exchange —
4
—
—
4
Equity - DBRSU obligation —
16
—
—
16
Total derivative liabilities —
294
—
(47 ) 247
Total liabilities at fair value on a recurring basis $ 201
$ 321
$ 7
$ (47 ) $ 482


$ 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.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 3 recurring fair value measurements

The following tables 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 may include changes in fair value that were attributable to both observable and unobservable inputs. In the following tables, gains/(losses) on trading instruments are reported in “Principal ~~transactions,”~~transactions” and gains/(losses) on ~~private equity and~~ other investments are reported in “Other” revenues, and gains/(losses) on available-for-sale securities are reported in either “Other” revenues (when included in earnings) or “Other comprehensive income” in our Condensed Consolidated Statements of Income and Comprehensive Income.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)	$	—

Three months ended June 30, 2019
Level 3 instruments at fair value
Financial assets Financial liabilities
$ in millions Trading instruments - Other Private equity investments Other investments Trading instruments - Other
Fair value beginning of period $ 2
$ 59
$ 67
$ (7 )
Total gains/(losses) included in earnings (1 ) —
(2 ) —
Purchases and contributions 26
—
—
7
Sales (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 ) $ —

Nine months ended June 30, 2019
Level 3 instruments at fair value
Financial assets Financial liabilities
$ in millions Trading instruments - Other Private equity investments
Other investments ⁽¹⁾
Trading instruments - 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 (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 ) $ —


~~(1)~~	Beginning of period balance includes $67 million of preferred ARS, which were reclassified from available-for-sale securities in connection with the adoption of ASU 2016-01. See Note 2 for additional information.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three months ended June 30, 2018
Level 3 instruments at fair value
Financial assets
Financial
liabilities
$ in millions Trading instruments - Other
Available-for-sale securities - ARS -
preferred

Private equity
investments
Trading instruments - Other
Fair value beginning of period $ 1
$ 108
$ 96
$ (1 )
Total gains/(losses) for the period:

Included in earnings —
—
4
—
Included in other comprehensive income —
3
—
—
Purchases and contributions 18
—
—
—
Sales (15 ) —
(28 ) (1 )
Transfers:
Into Level 3 —
—
—
—
Out of Level 3 —
—
—
—
Fair value end of period $ 4
$ 111
$ 72
$ (2 )
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ 1
$ —
$ —
$ —
Unrealized gains/(losses) for the period included in other comprehensive income for instruments held at the end of the reporting period $ —
$ 3
$ —
$ —


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


INDEX
~~INDEX~~		PAGE
		~~PAGE~~
Factors affecting “forward-looking statements”	5350
Introduction		5350
Executive overview		5350
Segments		5653
Reconciliation of GAAP measures to non-GAAP financial measures		5754
Net interest analysis		5854
Results of Operations
Private Client Group		6157
Capital Markets		6561
Asset Management		6662
RJ Bank		6965
Other		7469
Certain statistical disclosures by bank holding companies		7470
Liquidity and capital resources		7571
~~Sources of liquidity~~		76
Statement of financial condition analysis	7975
Contractual obligations		7975
Regulatory		7975
Critical accounting estimates		8078
Recent accounting developments		8179
Off-balance sheet arrangements		8179
Effects of inflation		8179
Risk management		8179

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

FACTORS AFFECTING “FORWARD-LOOKING STATEMENTS”

~~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 tax rules and~~ our effective tax 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.

~~Introduction~~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 bank holding company. Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S. equity and fixed income markets, changes in interest rates, market volatility, 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, ~~who 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 and asset valuations, which ultimately affect our business results.

~~Executive overview~~EXECUTIVE OVERVIEW

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

~~Net revenues were $1.93 billion for~~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 the pandemic. As a 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 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 U.S. equity markets during the quarter. Certain of our businesses benefited from the equity market appreciation, and PCG assets in fee-based accounts recovered, increasing 16%, which will have a positive impact on our fiscal fourth quarter results. However, our results continued to be negatively affected by the 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 disruptions related to the 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 fiscal 2020, although the extent of such effects will depend on future developments which are highly uncertain and cannot be predicted.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

During the quarter ~~an increase~~ended June 30, 2020, net revenues of ~~$90~~$1.83 billion decreased $93 million, or 5%., compared with the prior-year quarter. Pre-tax income of ~~$342~~$198 million ~~increased $24~~decreased $144 million, or ~~8%. Our~~42%, and net income of ~~$259~~$172 million ~~increased $27~~decreased $87 million, or ~~12%~~34%, ~~and our~~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 ~~$1.80,~~$1.23, reflecting a ~~16% increase. We generated an~~32% decrease. Our annualized return on equity (“ROE”) for the quarter ~~of 16.1%~~was 10.0%, compared with ~~15.4%~~16.1% in the ~~prior year~~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. During the quarter, we repurchased approximately 1.04 million shares of common stock under our repurchase authorization by the Board of Directors (the “Board”) for $85 million at an average price of approximately $81.70 per share. As of June 30, 2019, we had $373 million of availability remaining under this authorization.

The ~~$90~~$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 in brokerage revenues, as the fixed income business generated strong results due to higher client activity levels.

Compensation, commissions and benefits expenses were flat versus the prior-year quarter. Non-compensation expenses increased $51 million, or 17%, due to an $86 million increase in ~~net revenues~~the bank loan loss provision, which was $81 million in the current-year quarter compared with a $5 million benefit in the prior-year quarter, partially offset by a 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 13.1% for our fiscal third quarter of 2020 primarily reflected ~~higher asset management~~the impact of significant non-taxable gains on our corporate-owned life insurance portfolio on lower pre-tax earnings for the quarter.

The firm ended the quarter with capital ratios well in excess of regulatory requirements and ~~related administrative fees 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 second quarter of 2020.

Certain of the impacts of the COVID-19 pandemic will likely continue to affect our results in future quarters. Our net interest income ~~partially offset~~and RJBDP fees from third-party banks will continue to be negatively affected by ~~lower~~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. Total client assets under administration of $824.2 billion at June 30, 2019 increased $70 billion, or 9%, over~~revenues and investment banking revenues during the ~~prior year, reflecting~~pandemic. While our results during the ~~net addition of financial advisors~~third quarter were negatively impacted by elevated bank loan loss provisions, including losses on certain corporate 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 ~~equity market appreciation since the prior year quarter.~~

Non-interest expenses increased $68 million, or 4%. The increase primarily resulted from increased compensation-related expenses associated with the increase in net revenues, as well as increased staffing levels requiredrelated negative impact on our results, we are evaluating ways to ~~support our continued~~reduce costs and find efficiencies to remain well-positioned for future growth and ~~regulatory compliance requirements.~~success. To that end, we are currently engaged in a firm-wide process of evaluating both compensation and non-compensation expenses.

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

•Our PCG segment ~~generated~~ net revenues of ~~$1.35~~$1.25 billion ~~an increase of 6%~~decreased 8%, ~~and~~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 ~~increased 6%~~declined compared with the prior-year quarter, primarily due to ~~$140 million. The segment benefited~~a decline in revenues from ~~an increase~~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, ~~primarily due to starting~~brokerage revenues and investment banking revenues.

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

~~Management's Discussion and Analysis~~

the quarter with higher assets in fee-based accounts compared to the balances at the beginning of the prior year quarter. Account and service fees also increased due to fees related to RJBDP, the majority of which related to an increase in the per-account servicing fee from RJ Bank effective October1, 2018 (which eliminates in consolidation). These increases were offset by a decline in brokerage revenues. Non-interest expenses increased $64 million, or 6%, primarily due to an increase in compensation-related expenses.

•Capital Markets net revenues of ~~$251~~$323 million increased 3%29% and pre-tax income of $62 million increased ~~9% to $24 million.~~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 ~~equity brokerage~~merger & acquisition revenues ~~and investment banking revenues.~~compared with the prior-year quarter due to market uncertainty. Non-interest expenses increased $4$34 million, or 2%15%, ~~reflecting~~due to an increase in ~~professional fees due to~~compensation expense, primarily as a result of the ~~gross-up of certain investment banking transaction-related expenses which were netted against revenues~~increase in ~~previous years.~~net revenues.

•Our Asset Management segment net revenues of ~~$177~~$163 million ~~increased 5%~~decreased 8% and pre-tax income ~~increased 12% to $65 million. Financial~~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 ~~$143.1 billion increased 6% over~~GAAP measures to non-GAAP financial measures” in this MD&A for a reconciliation of this non-GAAP financial measure to the ~~prior year quarter primarily due to equity market appreciation~~most directly comparable GAAP measure, and ~~positive inflows from clients moving to fee-based alternatives from traditional transaction-based accounts.~~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 ~~$215~~$178 million ~~increased 14%~~decreased 17% and pre-tax income ~~increased 6% to $138 million. The increase in net~~of $14 million decreased 90%. Net revenues ~~resulted from an increase in net interest income~~decreased $37 million due to ~~growth in interest-earning assets and an increase in net interest margin, which was helped by higher~~the negative impact from lower short-term interest ~~rates.~~rates, partially offset by the benefit from higher interest-earning assets. Non-interest expenses increased ~~$19~~$87 million, or ~~33%~~113%, ~~largely due~~as RJ Bank recorded a loan loss provision of $81 million compared to ~~the aforementioned increase~~a benefit of $5 million in the ~~per-account RJBDP servicing fee paid to PCG.~~prior-year quarter.

•Our Other segment reflected a pre-tax loss that was ~~comparable to the loss generated in the prior year quarter, as a decrease in private equity gains~~$4 million larger compared to the ~~prior year~~prior-year quarter, ~~was offset by an increase in~~primarily the result of lower interest income ~~which was positively impacted by an increase in~~on corporate cash balances due to the negative impact of lower short-term interest rates, ~~earned on higher corporate cash balances.~~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, ~~2019~~2020 compared with the nine months ended June 30, ~~2018~~2019

Net revenues of ~~$5.72~~$5.91 billion increased ~~$342~~$194 million, or 6%3%. Pre-tax income of ~~$1.02 billion increased $60~~$796 million decreased $225 million, or 6%22%. Our net income of ~~$769~~$609 million ~~increased $175~~decreased $160 million, or ~~29%, compared with the prior year period, which included a loss of $117 million related to the Tax Cuts and Jobs Act (“Tax Act”)~~21%, and our earnings per diluted share were ~~$5.30,~~$4.33, reflecting ~~a 33% increase. We achieved~~ an 18% decrease. Our annualized ~~return on equity~~ROE during the nine months ended June 30, ~~2019 of 16.2%~~2020 was 11.9%, compared with ~~13.6%~~16.2% for the ~~prior year period.~~

~~Excluding a $15 million loss on the sale of our operations related to research, sales~~prior-year period, and ~~trading of European equities in December 2018, adjusted net income~~annualized ROTCE ⁽¹⁾ was ~~$784 million~~⁽¹⁾~~, anincrease of 10% compared with adjusted net income of $714 million~~⁽¹⁾ ~~for the prior year period. Adjusted earnings per diluted share were $5.41~~⁽¹⁾~~, a 13% increase compared with adjusted earnings per diluted share of $4.79~~⁽¹⁾ ~~for the prior year period. Our adjusted annualized return on equity for the nine months ended June 30, 2019 was 16.4%~~⁽¹⁾13.1%, compared with ~~adjusted annualized return on equity of 16.0%~~⁽¹⁾17.9% for the ~~prior year~~prior-year period.

The ~~$342~~$194 million increase in net revenues compared with the ~~prior year~~prior-year period ~~reflected~~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 ~~investment banking~~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. ~~Partially offsetting these increases, brokerage revenues declined~~

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~~prior-year period.

~~Non-interest~~ This increase was partially offset by lower travel and conference-related expenses ~~increased $298 million, or 7%. The increase primarily resulted from higher compensation-related expenses associated with~~as a result of the ~~increase in net revenues, as well as increased staffing levels required~~COVID-19 pandemic and the aforementioned private equity valuation losses attributable to ~~support our continued growth and regulatory compliance requirements. Other expenses were also higher, primarily related to losses on a consolidated tax credit fund,~~noncontrolling interests, which ~~were substantially~~is an offset in noncontrolling interests. Our acquisition and disposition-related expenses in the current year period included the aforementioned $15 million loss on the sale of our operations related to research, sales and trading of European equities.other expenses.

Our effective income tax rate was ~~25.1%~~23.5% for the nine months ended June 30, ~~2019, reflecting~~2020, a ~~federal corporate statutory~~decrease compared with the 24.8% effective tax rate ~~of 21% as result of the Tax Act enacted in December 2017. We estimate our effective income tax rate to be approximately 25-26%~~ for fiscal year 2019. Our future effective income tax rate may be impacted positively or negatively by non-taxable items (such as the gains or losses earned on our company-owned life insurance and tax-exempt interest), non-deductible expenses (such as meals and entertainment and certain executive compensation) as well as vesting and exercises of equity compensation.

1) “Adjusted net income,” “adjusted earnings per diluted share,” and “adjusted annualized return on equity” are each non-GAAP financial measures. Please see the “Reconciliation of GAAP measures to non-GAAP measures” in this MD&A, for a reconciliation of our non-GAAP measures2019, primarily due to the ~~most directly comparable GAAP measures, and for other important disclosures.~~

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

~~Management's Discussion and Analysis~~

~~During~~favorable impact of permanent tax benefits on lower pre-tax earnings during the nine months ended June 30, ~~2019,~~2020.

Pursuant to our Board of Directors’ share repurchase authorization, we repurchased ~~7.70~~approximately 2.7 million shares of common stock ~~under~~during the first six months of our ~~Board repurchase authorization~~current fiscal year for ~~$591~~$213 million at an average price of approximately ~~$76.70~~$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, ~~2019,~~2020, we had ~~$373~~$537 million of availability remaining under ~~this~~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~~prior-year period is as follows:

~~Our~~ •PCG segment ~~generated~~ net revenues of ~~$3.98~~$4.16 billion aincreased 5% ~~increase,~~, while pre-tax income of ~~$436~~$414 million decreased 2%5%. The $180 million increase in net revenues was primarily attributable to an increase in asset management and related administrative fees ~~primarily~~ due to higher average assets in fee-based accounts ~~compared with~~at the ~~prior year period. The segment also benefited~~beginning of each of the current-year periods. Offsetting this increase were decreases in RJBDP fees from ~~an increase in account~~third-party banks and ~~service fees related~~net interest income due to ~~RJBDP, the majority of which related to an increase in the per-account servicing fee from RJ Bank. These increases were partially offset by a decline in brokerage revenues.~~lower short-term interest rates. Non-interest expenses increased ~~$203~~$202 million, or 6%, primarily resulting from an increase in ~~financial advisor compensation-related~~compensation expenses ~~in line with~~largely due to the growth in compensable net revenues. ~~Non-compensation expenses also increased $26 million, or 6% over the prior year period.~~

•Capital Markets net revenues of ~~$781~~$881 million increased 13% and pre-tax income of $119 million increased ~~significantly to $77 million.~~55%. The $100 million increase in net revenues was primarily due to an increase in ~~investment banking revenues, largely due to merger & acquisition activity. The decline in equity brokerage revenues was offset by an increase in~~ fixed income brokerage revenues, ~~compared with~~due to higher client activity, as well as increases in equity and debt underwriting revenues. These increases were partially offset by a decline in merger & acquisition and advisory revenues, which were negatively impacted by the ~~prior year period.~~market uncertainty caused by the COVID-19 pandemic. Non-interest expenses increased ~~$66~~$58 million, or ~~10%~~8%, ~~primarily~~ due to ~~the aforementioned $15 million loss on the sale~~higher compensation expenses, primarily as a result of ~~our operations related to research, sales and trading of European equities, an~~the increase in ~~compensation-related expenses and an increase~~revenues.

(1) “ROTCE” is a non-GAAP financial measure. Please see the “Reconciliation of GAAP measures to non-GAAP financial measures” in ~~professional fees due~~this MD&A for a reconciliation of this non-GAAP financial measure to the ~~gross-up of certain investment banking transaction-related expenses, which were previously netted against revenues.~~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 net revenues of ~~$513~~$531 million increased 6%4% and pre-tax income of $206 million increased ~~8% to $184 million.~~12%. The increase in net revenues ~~reflected increases~~was driven by higher average beginning-of-quarter assets in ~~fees from managed~~ programs ~~a full period of results~~offered to PCG clients for ~~Scout Investments and its Reams Asset Management division (“~~which the ~~Scout Group”), which was acquired in November 2017, and~~segment provides administrative support, as well as higher ~~asset-based administration fees. Non-interest expenses increased $22 million, or 7%, primarily resulting from increased expenses related to~~average financial assets under management during the ~~addition of the Scout Group.~~current-year period.

•RJ Bank net revenues ~~increased 18% to $630~~of $604 million decreased 4% and pre-tax income ~~increased 6% to $384 million.~~of $163 million decreased 58%. The ~~increase~~$26 million decrease in net revenues ~~primarily resulted from an increase in net~~reflected the negative impact of lower short-term interest ~~income due to~~rates, which more than offset the growth in interest-earning ~~assets and an increase in net interest margin, lifted by higher short-term interest rates.~~assets. Non-interest expenses increased ~~$76~~$195 million, or ~~45%~~79%, primarily ~~reflecting an increase in RJBDP servicing fees paid to PCG largely~~ due to ana $172 million increase in the ~~per-account fee effective October 1, 2018.~~loan loss provision.

•Our Other segment reflected a pre-tax loss that was ~~flat~~$46 million larger compared to the ~~prior year~~prior-year period, ~~as lower gains on~~primarily due to private equity ~~investments were offset by an increase~~valuation losses, as compared to gains in the prior-year period, lower interest ~~income.~~income on corporate cash balances due to lower short-term interest rates, and increased interest expense, due to the issuance of $500 million of senior notes at the end of the fiscal second quarter.

SEGMENTS

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

~~Management's Discussion and Analysis~~

~~Segments~~

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


	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 June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Total company
Net revenues $ 1,927
$ 1,837
5 % $ 5,717
$ 5,375
6 %
Pre-tax income $ 342
$ 318
8 % $ 1,021
$ 961
6 %

Private Client Group

Net revenues $ 1,351
$ 1,279
6 % $ 3,978
$ 3,784
5 %
Pre-tax income $ 140
$ 132
6 % $ 436
$ 445
(2 )%

Capital Markets

Net revenues $ 251
$ 243
3 % $ 781
$ 690
13 %
Pre-tax income $ 24
$ 22
9 % $ 77
$ 43
79 %

Asset Management

Net revenues $ 177
$ 168
5 % $ 513
$ 482
6 %
Pre-tax income $ 65
$ 58
12 % $ 184
$ 171
8 %

RJ Bank

Net revenues $ 215
$ 188
14 % $ 630
$ 532
18 %
Pre-tax income $ 138
$ 130
6 % $ 384
$ 362
6 %

Other

Net revenues $ (4 ) $ (2 ) (100 )% $ (2 ) $ (3 ) 33 %
Pre-tax loss $ (25 ) $ (24 ) (4 )% $ (60 ) $ (60 ) —

Intersegment eliminations

Net revenues $ (63 ) $ (39 )
$ (183 ) $ (110 )

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 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 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. In the following table, the tax effect~~results of other companies. This non-GAAP ~~adjustments reflects the statutory tax rate associated with each non-GAAP item. These non-GAAP measures~~financial 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~~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. There were no non-GAAP adjustments for the three months ended June 30, 2019 and 2018.~~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		%

Nine months ended June 30,
$ in millions, except per share amounts 2019 2018
Net income $ 769
$ 594
Non-GAAP adjustments:

Acquisition and disposition-related expenses 15
4
Tax effect of non-GAAP adjustments —
(1 )
Impact of the Tax Act —
117
Total non-GAAP adjustments, net of tax 15
120
Adjusted net income $ 784
$ 714
Less allocation of earnings and dividends to participating securities (1 ) (1 )
Adjusted net income attributable to RJF common shareholders $ 783
$ 713

Earnings per common share:

Basic $ 5.42
$ 4.08
Diluted $ 5.30
$ 3.99
Adjusted basic $ 5.52
$ 4.91
Adjusted diluted $ 5.41
$ 4.79

Average equity $ 6,345
$ 5,844
Annualized return on equity 16.2 % 13.6 %
Adjusted average equity $ 6,356
$ 5,934
Adjusted annualized return on equity 16.4 % 16.0 %

~~Net income in the preceding table excludes noncontrolling interests.~~

Return on equity is computed by dividing annualized net income ~~attributable to RJF~~ for the period indicated by average equity ~~attributable to RJF~~ for each respective period or, in the case of ~~adjusted~~ return on tangible common equity, computed by dividing annualized ~~adjusted~~ net income ~~attributable to RJF~~ by ~~adjusted~~ average tangible common equity ~~attributable to RJF~~ for each respective period.

Average equity for the ~~year~~quarter-to-date period is computed by adding the total equity attributable to RJF as of the date indicated to the 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. ~~Adjusted average equity is computed by adjusting for~~

NET INTEREST ANALYSIS

In response to macroeconomic concerns resulting from the ~~impact on average equity of the non-GAAP adjustments, as applicable for each respective period.~~

For more information on acquisition and disposition-related expenses, see “Results of Operations - Capital Markets” and “Results of Operations - Other” of this MD&A. For more information on the impact of the Tax Act, see Note 16 of our 2018 Form 10-K.

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

~~Management's Discussion and Analysis~~

~~Net interest analysis~~

COVID-19 pandemic, The Federal Reserve ~~Bank announced an increase of 25 basis points in~~decreased its benchmark short-term interest rate twice in ~~December 2018, as it did in each~~March 2020 to a range of ~~the quarters in fiscal year 2018 and three~~0-0.25%, for a total decrease of ~~the quarters in fiscal year 2017.~~150 basis 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 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, including deposit rates paid to clients on their cash balances. Conversely, any ~~decreases~~increases in short-term interest rates and/or ~~increases~~decreases in the deposit rates paid to clients ~~would likely~~generally have a ~~negative~~positive impact on our earnings. Effective May 6, 2019, we modified our methodology for crediting interest on client cash balances, changing the basis from total relationship assets at the firm to total relationship cash balances at the firm. Accordingly, although the crediting schedule was revised upward on that date, we did not experience a corresponding increase in cost to the firm.

Refer to the discussion of the specific components of our net interest income within the “Management’s Discussion and Analysis ~~of Financial Condition~~ - Results of Operations” of our PCG, RJ Bank, and Other segments.

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

~~Management's~~ 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.

~~Quarter ended June 30, 2019 compared with the quarter ended June 30, 2018~~

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

Three months ended June 30,
2019 2018
$ 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 $ 1,613
$ 13
3.22 % $ 2,438
$ 14
2.22 %
Trading instruments 771
7
3.53 % 760
7
3.68 %
Available-for-sale securities 2,901
18
2.41 % 2,534
14
2.11 %
Margin loans 2,531
30
4.74 % 2,688
28
4.23 %
Bank loans, net:
Loans held for investment:
C&I loans 8,278
98
4.68 % 7,647
85
4.40 %
CRE construction loans 248
4
5.45 % 182
2
5.23 %
CRE loans 3,359
39
4.53 % 3,259
34
4.15 %
Tax-exempt loans 1,291
9
2.79 % 1,191
8
2.58 %
Residential mortgage loans 4,127
34
3.32 % 3,514
27
3.10 %
SBL and other 3,125
36
4.64 % 2,741
29
4.26 %
Loans held for sale 118
1
4.78 % 109
1
4.34 %
Total bank loans, net 20,546
221
4.30 % 18,643
186
4.04 %
Loans to financial advisors, net 912
5
2.06 % 895
4
1.70 %
Corporate cash and all other 4,107
27
2.72 % 3,518
18
2.05 %
Total interest-earning assets $ 33,381

$ 321
3.85 % $ 31,476

$ 271
3.44 %

Interest-bearing liabilities:

Bank deposits:
Certificates of deposit $ 561
$ 4
2.33 % $ 389
$ 1
1.64 %
Savings, money market and NOW accounts 20,842
29
0.56 % 18,423
18
0.37 %
Trading instruments sold but not yet purchased 307
2
2.39 % 294
2
2.72 %
Brokerage client payables 3,108
5
0.64 % 4,061
4
0.44 %
Other borrowings 897
5
2.20 % 901
6
2.32 %
Senior notes payable 1,550
19
4.71 % 1,549
19
4.69 %
Other 772
9
4.93 % 595
4
2.69 %
Total interest-bearing liabilities $ 28,037
$ 73
1.04 % $ 26,212
$ 54
0.82 %
Net interest income $ 248
$ 217

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 preceding ~~table. Payment or income~~tables. Any payments received onfor corporate nonaccrual loans are applied entirely to principal. ~~Income~~Interest income on residential mortgage nonaccrual loans is recognized on a cash basis.

Fee income on bank loans included in interest income ~~for the three months ended June 30, 2019 and 2018~~ was $3$1 million and $6$10 million ~~respectively.~~

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

~~Management's Discussion~~during three and ~~Analysis~~

~~Nine months ended June 30, 2019 compared with the~~ nine months ended June 30, ~~2018~~

~~The following table presents our consolidated average balances, interest income~~2020, respectively, and ~~expense~~$3 million and ~~the related yields~~$14 million during three and rates. Average balances are calculated on a daily basis, with the exception of Loans to financial advisors, net and Corporate cash and all other, which are calculated based on the average of the end-of-month balances for each month within the period.

Nine months ended June 30,
2019 2018
$ 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 $ 1,859
$ 42
3.01 % $ 2,752
$ 40
1.92 %
Trading instruments 727
20
3.66 % 702
17
3.23 %
Available-for-sale securities 2,831
51
2.39 % 2,358
37
2.09 %
Margin loans 2,620
93
4.73 % 2,559
77
4.03 %
Bank loans:
Loans held for investment:
C&I loans 8,065
286
4.67 % 7,538
237
4.15 %
CRE construction loans 205
9
5.58 % 166
6
5.03 %
CRE loans 3,433
120
4.60 % 3,160
95
3.97 %
Tax-exempt loans 1,285
26
2.70 % 1,126
22
2.57 %
Residential mortgage loans 3,999
100
3.32 % 3,363
78
3.08 %
SBL and other 3,098
109
4.64 % 2,594
78
3.98 %
Loans held for sale 149
5
4.87 % 123
3
3.83 %
Total bank loans, net 20,234
655
4.32 % 18,070
519
3.85 %
Loans to financial advisors, net 907
14
2.00 % 873
11
1.68 %
Corporate cash and all other 4,674
86
2.50 % 3,882
51
1.75 %
Total interest-earning assets $ 33,852
$ 961
3.79 % $ 31,196
$ 752
3.21 %

Interest-bearing liabilities:

Bank deposits:
Certificates of deposit $ 527
$ 9
2.20 % $ 353
$ 4
1.60 %
Savings, money market and NOW accounts 20,689
96
0.62 % 18,193
35
0.25 %
Trading instruments sold but not yet purchased 297
6
2.63 % 282
5
2.36 %
Brokerage client payables 3,430
16
0.62 % 4,289
10
0.32 %
Other borrowings 942
16
2.32 % 919
17
2.40 %
Senior notes payable 1,550
55
4.70 % 1,549
55
4.69 %
Other 759
23
3.95 % 591
13
2.93 %
Total interest-bearing liabilities $ 28,194
$ 221
1.05 % $ 26,176
$ 139
0.71 %
Net interest income
$ 740

$ 613

Nonaccrual loans are included in the average loan balances in the preceding table. Payment or income received on corporate nonaccrual loans are applied to principal. Income on residential mortgage nonaccrual loans is recognized on a cash basis.

~~Fee income on bank loans included in interest income for the~~ nine months ended June 30, 2019, ~~and 2018 was $14 million and $19 million,~~ respectively.

The yield on tax-exempt loans in the preceding tables is presented on a taxable-equivalent basis utilizing the applicable federal statutory rates for each of the years presented.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

RESULTS OF OPERATIONS – PRIVATE CLIENT GROUP

~~Results of Operations – Private Client Group~~

For an overview of our PCG segment operations, as well as 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 ~~2018~~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 June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Revenues:
Asset management and related administrative fees $ 718
$ 636
13 % $ 2,063
$ 1,843
12 %
Brokerage revenues:
Mutual and other fund products 147
172
(15 )% 449
535
(16 )%
Insurance and annuity products 105
97
8 % 308
308
—
Equities, ETFs and fixed income products 94
106
(11 )% 291
332
(12 )%
Total brokerage revenues 346
375
(8 )% 1,048
1,175
(11 )%
Investment banking 10
9
11 % 25
25
—
Interest income 56
50
12 % 170
140
21 %
Account and service fees:

Mutual fund and annuity service fees 85
85
—
250
246
2 %
RJBDP fees:
Third-party banks 67
70
(4 )% 215
198
9 %
RJ Bank 44
24
83 % 127
67
90 %
Client account and other fees 32
30
7 % 92
85
8 %
Total account and service fees 228
209
9 % 684
596
15 %
All other 3
8
(63 )% 19
24
(21 )%
Total revenues 1,361

1,287

6 %
4,009

3,803

5 %
Interest expense (10 ) (8 ) 25 % (31 ) (19 ) 63 %
Net revenues 1,351
1,279
6 % 3,978
3,784
5 %
Non-interest expenses:

Financial advisor compensation and benefit costs 805
759
6 % 2,358
2,258
4 %
Administrative compensation and benefit costs 237
214
11 % 700
623
12 %
Communications and information processing 57
55
4 % 174
164
6 %
Occupancy and equipment costs 43
38
13 % 122
114
7 %
Business development 37
39
(5 )% 90
84
7 %
Professional fees 8
12
(33 )% 24
29
(17 )%
All other 24
30
(20 )% 74
67
10 %
Total non-interest expenses 1,211
1,147
6 % 3,542
3,339
6 %
Pre-tax income $ 140
$ 132
6 % $ 436
$ 445
(2 )%
Pre-tax margin on net revenues 10.4 % 10.3 % 11.0 % 11.8 %

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Selected key metrics

PCG client asset ~~balances:~~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		%

As of
$ in billions June 30,
2019 March 31,
2019 September 30,
2018 June 30,
2018 March 31,
2018 September 30,
2017
Assets under administration (“AUA”) $ 787.4
$ 760.0
$ 755.7
$ 719.5
$ 694.8
$ 659.5
Assets in fee-based accounts ⁽¹⁾
$ 398.0
$ 378.4
$ 366.3
$ 343.1
$ 325.1
$ 294.5
Percent of AUA in fee-based accounts 50.5 % 49.8 % 48.5 % 47.7 % 46.8 % 44.7 %

(1)A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset 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.”


~~(1)~~	A portion of our “Assets in fee-based accounts” is overseen by our Asset 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.”

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 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 ~~asset~~portfolio management services in addition to administrative services.

WeThe vast majority of the revenues we earn ~~revenues~~ from fee-based accounts ~~for performing investment advisory, asset management and related administrative services for retail clients, which is~~are recorded in “Asset management and related administrative fees” inon 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 ~~impacted~~affected by changes in asset values, but rather the impacts are seen in the following quarter.

PCG assets under administration increased due to the net addition of financial advisors and equity market appreciation. In addition, PCG assets in fee-based accounts continued to increase as a percentage of overall PCG assets under administration due 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:~~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

June 30,
2019 September 30,
2018 June 30,
2018
Employees 3,228
3,167
3,126
Independent Contractors 4,676
4,646
4,593
Total advisors 7,904
7,813
7,719

~~The~~Although the number of financial advisors increased ~~primarily~~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 the employee channel due to ~~continued~~office closures, and slowed the transitions of new trainees. While financial advisor recruiting activity has started to recover and ~~high levels~~the pipeline remains solid, the impact of ~~retention.~~the COVID-19 pandemic on future recruiting is uncertain.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Clients’ domestic cash sweep ~~balances:~~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

As of
$ in millions June 30,
2019 March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018
RJBDP
RJ Bank $ 21,600
$ 21,023
$ 21,138
$ 19,446
$ 19,014
Third-party banks 14,425
14,343
18,320
15,564
16,971
Subtotal RJBDP 36,025
35,366
39,458
35,010
35,985
Money market funds —
4,001
4,436
3,240
2,687
Client Interest Program (“CIP”) 2,130
2,349
2,935
2,807
2,784
Total clients’ domestic cash sweep balances $ 38,155
$ 41,716
$ 46,829

$ 41,057
$ 41,456


	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 ~~our~~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 our clients’ deposits that are swept to such banks as 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 ~~relative to~~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 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 consolidation. ~~On October 1, 2018,~~

RJBDP fees from third-party banks and the ~~per-account servicing fee from RJ Bank was increased to reflect~~average yield on RJBDP (third-party banks) were negatively impacted by the ~~current cost of administration.~~

~~While~~significant decrease in short-term interest ~~rates have risen due~~rates. The Federal Reserve decreased its benchmark short-term interest rate twice toward the end of our fiscal second quarter, to a range of 0-0.25%, a total decrease of 150 basis points. These decreases were in addition to the three rate ~~increases by the Fed~~cuts implemented during 2019 (225 basis points in ~~recent periods, market deposit rates paid on client cash balances have not been impacted to as great a degree, resulting in an increase in RJBDP fees earned from third-party banks.~~total). Any additional decreases in short-term interest rates, ~~such as the one announced by the Fed in July 2019,~~ increases in deposit rates paid to clients, and/or a significant decline in our clients’ cash balances ~~would likely~~will have a negative impact on our earnings. ~~The impact on our earnings of any future rate increases will be largely dependent upon the change in the deposit rate paid on client cash balances.~~ Further, PCG segment results are impacted by changes in the allocation of client cash balances in the RJBDP between RJ Bank and third-party banks.

~~Money market funds were discontinued~~Although lower compared with March 31, 2020, client cash balances remained elevated as of June 30, 2020 as a ~~sweep option during~~result of the ~~three months ended June 30, 2019. Balances in those funds were converted to RJBDP or reinvested~~market uncertainty caused by the ~~client.~~COVID-19 pandemic.

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

Net revenues of ~~$1.35~~$1.25 billion ~~increased $72~~decreased $102 million, or 6%8%, ~~over the prior year quarter,~~ and pre-tax income of ~~$140~~$91 million ~~increased $8~~decreased $49 million, or 6%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 decreased $27 million, or 8%, reflecting lower revenues from annuity products and lower mutual fund revenues. Offsetting these decreases was an increase in revenues from equities, ETFs, and fixed income products due to an increase in client activity.

Account and service fees decreased $51 million, or 22%, due to the 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.

Net interest income decreased $19 million, or 41%, driven by a 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 lower legal and regulatory reserves. Partially offsetting these decreases was an increase in communications and information processing expense.

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 pre-tax income of $414 million decreased $22 million, or 5%.

Asset management and related administrative fees increased ~~$82~~$267 million, or 13%, ~~resulting from the 16% increase in~~primarily due to higher average assets in fee-based accounts asat the beginning of ~~March 31, 2019~~each of the current-year quarterly billing periods compared with ~~March 31, 2018, reflecting successful financial advisor recruiting and retention, as well as equity market appreciation.~~the prior-year periods.

Brokerage revenues ~~decreased $29 million, or 8%, reflecting~~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 ~~related to mutual funds, largely due to a continued shift to fee-based accounts.~~from annuity products.

~~Total account~~Account and service fees ~~increased $19~~decreased $61 million, or 9%, ~~primarily due~~driven by a decline in RJBDP fees 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 mutual fund service fees, and higher RJBDP fees from RJ Bank due to an increase in the ~~per-account servicing fee and, to a lesser extent, an increase in the~~ number of accounts ~~partially due to the discontinuation of the money market funds as a sweep option discussed above.~~at RJ Bank.

Net interest income ~~increased $4~~decreased $33 million, or ~~10%~~24%, primarily driven by ~~an increase in interest income from client margin loans due to the increase~~a decline in short-term interest ~~rates. Offsetting~~rates, reducing the ~~increase~~interest income earned on assets segregated pursuant to regulations and client margin loans. Partially offsetting the decrease in interest income, interest expense also ~~increased~~decreased due to the impact of ~~higher interest~~lower deposit rates paid on client cash balances in CIP.

~~Non-interest~~Compensation-related expenses increased ~~$64~~$224 million, or ~~6%, including an increase in compensation-related expenses due to higher net revenues as well as increased staffing levels to support our continued growth and regulatory compliance requirements.~~

~~Nine months ended June 30, 2019 compared with the nine months ended June 30, 2018~~

~~Net revenues of $3.98 billion increased $194 million, or 5%, while pre-tax income of $436 million decreased $9 million, or 2%.~~

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

~~Management's Discussion and Analysis~~

~~Asset management and related administrative fees increased $220 million, or 12%~~7%, primarily due to higher ~~assets in fee-based accounts compared with the prior year period, reflecting successful financial advisor recruiting and retention, as well as equity market appreciation.~~compensable net revenues.

~~Brokerage revenues declined $127~~Non-compensation expenses decreased $22 million, or ~~11%~~5%, primarily as a result of ~~the decline~~decreases in ~~mutual fund trails, which were negatively impacted by the decline in the equity markets during the first fiscal quarter of 2019~~conference and ~~the continued shift to fee-based accounts.~~

Total account and service fees increased $88 million, or 15%, primarily due to higher RJBDP fees from RJ Bank due to an increase in the per-account servicing fee and, to a lesser extent, an increase in the number of accounts. RJBDP fees from third-party banks also increased, driven by higher short-term interest rates.

Net interest income increased $18 million, or 15%, driven by an increase in interest income from client margin loans due to the increase in short-term interest rates and, to a lesser extent, higher average balances. Offsetting the increase in interest income, interest expense also increased due to the impact of higher interest rates paid on client cash balances in CIP.

~~Non-interest~~travel-related expenses increased $203 million, or 6%, led by an increase in compensation-related expenses due to higher net revenues, as well as increased staffing levels to support our continued growth and regulatory compliance requirements. Communications and information processing expense increased as a result of ~~our continued investment~~the COVID-19 pandemic, as well as lower legal reserves. Partially offsetting these decreases were increases in ~~technology infrastructure~~costs to support our growth.

~~Occupancy and business development expenses also increased and were driven by branch expansion in our employee affiliation option as well as financial advisor growth.~~

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 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 ~~2018~~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 June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Revenues:
Brokerage revenues:

Equity $ 31
$ 41
(24 )% $ 105
$ 123
(15 )%
Fixed income 73
53
38 % 201
190
6 %
Total brokerage revenues 104
94
11 % 306
313
(2 )%
Investment banking:
Equity underwriting 27
30
(10 )% 72
66
9 %
Merger & acquisition and advisory 78
85
(8 )% 279
200
40 %
Fixed income investment banking 24
21
14 % 63
58
9 %
Total investment banking 129
136
(5 )% 414
324
28 %
Interest income 10
9
11 % 29
24
21 %
Tax credit fund revenues 16
12
33 % 49
40
23 %
All other 2
1
100 % 9
10
(10 )%
Total revenues 261
252
4 % 807
711
14 %
Interest expense (10 ) (9 ) 11 % (26 ) (21 ) 24 %
Net revenues 251
243
3 % 781
690
13 %
Non-interest expenses:

Compensation, commissions and benefits 160
161
(1 )% 486
471
3 %
Communications and information processing 18
18
—
56
55
2 %
Occupancy and equipment costs 8
8
—
26
25
4 %
Business development 12
13
(8 )% 37
35
6 %
Professional fees 11
3
267 % 31
8
288 %
Acquisition and disposition-related expenses —
—
—
15
—
NM
All other 20
22
(9 )% 71
62
15 %
Total non-interest expenses 229
225
2 % 722
656
10 %
Income before taxes and including noncontrolling interests 22
18
22 % 59
34
74 %
Noncontrolling interests (2 ) (4 ) 50 % (18 ) (9 ) (100 )%
Pre-tax income excluding noncontrolling interests $ 24
$ 22
9 % $ 77
$ 43
79 %
Pre-tax margin on net revenues 9.6 % 9.1 % 9.9 % 6.2 %

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

Net revenues of ~~$251~~$323 million increased $8$72 million, or 3%29%, and pre-tax income of ~~$24~~$62 million increased $2$38 million, or 9%158%.

~~Total brokerage~~Brokerage revenues increased ~~$10~~$62 million, or ~~11%~~60%, due to an increase in fixed income ~~brokerage revenues, which were partially offset by~~and, to a ~~decline in~~lesser extent, equity brokerage revenues. ~~Fixed income~~The increase in brokerage revenues ~~improved due to increased~~reflected an increase in client activity during the ~~current year~~current-year quarter. ~~Equity brokerage revenues reflected the impact of lower client activity during the current year quarter and included the impact of the sale of~~Our trading inventory levels remain relatively low due to our ~~operations related to research, sales and trading of European equities.~~risk mitigation efforts.

Investment banking revenues ~~decreased $7~~increased $3 million, or 5%2%, ~~from~~due to an increase in both debt and equity underwriting revenues, as a ~~strong prior year quarter. The~~result of increased market activity, particularly for debt underwritings. Offsetting the increase in underwriting revenues was a decline in ~~revenues was due to decreased~~the number of merger & acquisition transactions compared with the prior-year quarter due to market uncertainty as a result of the COVID-19 pandemic. Merger & acquisition and ~~advisory activity. Non-interest~~underwriting activity may be negatively impacted in future quarters if market uncertainty continues.

Compensation-related expenses increased $4$35 million, or 2%22%, ~~reflecting increases in professional fees. Professional fees increased largely~~primarily due to ~~new accounting guidance we adopted effective October 1, 2018, which changed~~ the presentation of certain costs related to investment banking transactions from a net presentation to a gross presentation. The current year quarter included this change, with approximately $6 million of these transaction-related expenses. See Notes 2 andincrease in revenues.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Non-compensation expenses decreased $1 million, or 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.

~~16 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information on the adoption of this new accounting guidance.~~

Nine months ended June 30, ~~2019~~2020 compared with the nine months ended June 30, ~~2018~~2019

Net revenues of ~~$781~~$881 million increased ~~$91~~$100 million, or 13%, and pre-tax income of ~~$77~~$119 million increased ~~$34~~$42 million, or ~~79%~~55%.

~~Total brokerage~~Brokerage revenues ~~decreased $7~~increased $105 million, or 2%34%, ~~with~~due to a ~~decline in equity brokerage revenues partially offset by an~~significant increase in fixed income brokerage ~~revenues. Equity~~revenues, as well as an increase in equity brokerage ~~revenues continue to be challenged by the industry trend toward the separate payment for research and execution services and the shift from high to low-touch execution services.~~revenues. The increase in fixed income brokerage revenues was primarily due to an increase in client activity during the ~~current year period. Our Canadian Capital Markets business continues to be~~current-year period, particularly toward the end of our fiscal second quarter and into our fiscal third quarter. Equity brokerage revenues were challenged ~~by the difficult environment~~earlier in the year, but increased during our fiscal second and third quarters due to strong client activity driven by market ~~sectors in which we participate in Canada.~~ volatility as a result of the COVID-19 pandemic.

Investment banking revenues ~~increased $90~~decreased $15 million, or ~~28%~~4%, ~~led by increased~~due to a significant decline in merger & acquisition ~~and advisory activity.~~

~~Non-interest expenses increased $66 million, or 10%,~~activity compared with ~~the prior year~~a strong period-year period. ~~The current 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 the increase in revenues.

Non-compensation expenses were unchanged compared with the prior-year period, as increases in professional fees and other expenses were offset by a loss in the prior-year period of $15 million ~~loss~~ associated with the sale of our operations related to research, sales and trading of European equities. Compensation-related expenses increased primarily attributable to the increase in investment banking revenues. Professional fees increased $23 million largely due to the aforementioned new accounting guidance we adopted effective October 1, 2018. The current year period included approximately $18 million of these transaction-related expenses. Other expenses increased $9 million primarily due to losses related to a consolidated tax credit fund, nearly all of which were offset in noncontrolling interests.

~~Results of Operations~~RESULTS OF OPERATIONS – ~~Asset Management~~ASSET MANAGEMENT

For an overview of our Asset Management segment operations as well as a description of the key factors impacting our Asset Management 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 ~~2018~~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:
Managed programs	$	109	$	120	(9)	%	$	358	$	346	3	%
Administration and other	48		45		7	%	152		129		18	%
Total asset management and related administrative fees	157		165		(5)	%	510		475		7	%
Account and service fees	3		8		(63)	%	12		27		(56)	%
All other	3		4		(25)	%	9		11		(18)	%
Net revenues	163		177		(8)	%	531		513		4	%
Non-interest expenses:
Compensation, commissions and benefits	44		47		(6)	%	134		135		(1)	%
Non-compensation expenses:
Communications and information processing	10		12		(17)	%	33		33		—
Investment sub-advisory fees	23		23		—		74		68		9	%
All other	26		30		(13)	%	84		93		(10)	%
Total non-compensation expenses	59		65		(9)	%	191		194		(2)	%
Total non-interest expenses	103		112		(8)	%	325		329		(1)	%
Pre-tax income	$	60	$	65	(8)	%	$	206	$	184	12	%

Three months ended June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Revenues:
Asset management and related administrative fees:
Managed programs $ 120
$ 118
2 % $ 346
$ 336
3 %
Administration and other 45
39
15 % 129
114
13 %
Total asset management and related administrative fees 165
157
5 % 475
450
6 %
Account and service fees 8
9
(11 )% 27
22
23 %
All other 4
2
100 % 11
10
10 %
Net revenues 177
168
5 % 513
482
6 %
Non-interest expenses:

Compensation and benefits 47
45
4 % 135
127
6 %
Communications and information processing 12
10
20 % 33
29
14 %
Investment sub-advisory fees 23
22
5 % 68
66
3 %
All other 29
31
(6 )% 90
82
10 %
Total non-interest expenses 111
108
3 % 326
304
7 %
Income before taxes and including noncontrolling interests 66
60
10 % 187
178
5 %
Noncontrolling interests 1
2
(50 )% 3
7
(57 )%
Pre-tax income excluding noncontrolling interests $ 65
$ 58
12 % $ 184
$ 171
8 %
Pre-tax margin on net revenues 36.7 % 34.5 % 35.9 % 35.5 %

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Selected key metrics

Managed programs

~~We earn asset management and administration fees for performing asset management, investment advisory and related administrative services for retail and institutional clients.~~ Management fees recorded in our Asset Management segment are generally calculated as a percentage of the value of our fee-billable financial assets under management (“AUM”). These AUM include the portion of fee-based AUA in our PCG segment that ~~are~~is invested in programs ~~managed~~overseen by our Asset Management segment (included in the ~~AMS~~“AMS” line of the following table), as well as ~~certain~~ retail accounts managed on behalf of third-party institutions, institutional accounts orand proprietary mutual funds that we manage ~~(included~~(collectively included in the ~~Carillon Tower Advisers and affiliates~~ “Carillon Tower Advisers” line of the following table).

Revenues related to fee-based AUA in our PCG segment are shared by the PCG and Asset Management segments, the amount of which depends on whether clients are invested in assets that are in managed programs overseen by our Asset Management segment and the administrative services provided (see our “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for more information). Our ~~financial assets under management~~AUM in AMS are impacted by market fluctuations and net inflows or outflows of assets, including transfers between fee-based accounts and ~~traditional~~ transaction-based accounts within our PCG segment.

Revenues earned by Carillon Tower Advisers for retail accounts managed on behalf of third-party institutions, institutional accounts orand our proprietary mutual funds are recorded entirely in the Asset Management segment. Our ~~financial assets under management~~AUM in Carillon Tower Advisers are impacted by market ~~fluctuations~~and investment performance and net inflows or outflows of assets.

Fees are generally collected ~~quarterly and~~quarterly. Approximately 60% of these fees are based on balances as of the beginning of the quarter, approximately 15% are based on balances as of the end of the quarter, orand approximately 25% are based on average daily ~~balances.~~balances throughout the quarter.

Financial assets under ~~management:~~management


$ in millions	June 30, 2020		March 31, 2020		September 30, 2019		June 30, 2019		March 31, 2019		September 30, 2018
AMS ⁽¹⁾	$	96,048	$	83,971	$	91,802	$	89,106	$	84,906	$	83,289
Carillon Tower Advisers	57,457		51,674		58,521		60,737		59,852		63,330
Subtotal financial assets under management	153,505		135,645		150,323		149,843		144,758		146,619
Less: Assets managed for affiliated entities	(8,094)		(7,456)		(7,221)		(6,712)		(6,220)		(5,702)
Total financial assets under management	$	145,411	$	128,189	$	143,102	$	143,131	$	138,538	$	140,917

$ in millions June 30,
2019 March 31,
2019 September 30,
2018 June 30,
2018 March 31,
2018 September 30,
2017
AMS ⁽¹⁾
$ 89,106
$ 84,906
$ 83,289
$ 78,897
$ 76,091
$ 69,962
Carillon Tower Advisers 60,737
59,852
63,330
62,210
61,751
31,831
Subtotal financial assets under management 149,843
144,758
146,619
141,107
137,842
101,793
Less: Assets managed for affiliated entities (6,712 ) (6,220 ) (5,702 ) (5,573 ) (5,538 ) (5,397 )
Total financial assets under management $ 143,131
$ 138,538
$ 140,917
$ 135,534
$ 132,304
$ 96,396

(1)Represents the portion of our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”) that is invested in managed programs overseen by the Asset Management segment.


~~(1)~~	Represents the portion of our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”) that is invested in programs overseen by the Asset Management segment.

Activity (including activity in assets managed for affiliated entities):


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
Financial assets under management at beginning of period	$	135,645	$	144,758	$	150,323	$	146,619
Carillon Tower Advisers - net outflows	(1,968)		(910)		(4,356)		(3,584)
AMS - net inflows	1,534		1,751		4,806		4,138
Net market appreciation/(depreciation) in asset values	18,294		4,244		2,732		2,670
Financial assets under management at end of period	$	153,505	$	149,843	$	153,505	$	149,843

Three months ended June 30, Nine months ended June 30,
$ in millions 2019 2018 2019 2018
Financial assets under management at beginning of period $ 144,758
$ 137,842
$ 146,619
$ 101,793
Carillon Tower Advisers:
Scout Group acquisition —
—
—
27,087
Other - net inflows/(outflows) (910 ) (544 ) (3,584 ) 862
AMS - net inflows 1,751
2,348
4,138
7,283
Net market appreciation/(depreciation) in asset values 4,244
1,461
2,670
4,082
Financial assets under management at end of period $ 149,843
$ 141,107
$ 149,843
$ 141,107

AMS division of RJ&A

See “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for further information about our retail client assets, including those fee-based assets invested in programs managed by AMS.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Carillon Tower Advisers

Assets managed by Carillon Tower Advisers include assets managed by its subsidiaries and ~~affiliates~~affiliates: Eagle Asset Management, ClariVest Asset Management, Cougar Global Investments and the Scout Group. The following table presents Carillon Tower Advisers’ AUM by objective, excluding ~~non-discretionary asset-based programs,~~assets for which it does not exercise discretion, as well as the approximate average client fee rate earned on such assets for the ~~most recent fiscal year period.~~periods presented.


$ 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	%

$ in millions June 30,
2019 Average fee rate
Equity $ 29,874
0.51%
Fixed income 26,335
0.18%
Balanced 4,528
0.37%
Total financial assets under management $ 60,737
0.36%

Non-discretionary asset-based programs


$ in millions	June 30, 2020		March 31, 2020		September 30, 2019		June 30, 2019		March 31, 2019		September 30, 2018
Total assets	$	253,686	$	217,284	$	229,735	$	220,128	$	206,953	$	200,140

~~Assets~~

The preceding table includes assets held in certain non-discretionary asset-based programs for which the Asset Management segment does not exercise discretion but provides administrative support (including for affiliated entities) totaled $220.1 billion, $207.0 billion, $200.1 billion, $186.4 billion and $157.0 billion as of June 30, 2019, March 31, 2019, September 30, 2018, June 30, 2018, and September 30, 2017, respectively.. The increase in assets over the ~~prior year~~prior-year level was primarily due to clients moving to fee-based accounts from ~~traditional~~ transaction-based accounts, successful financial advisor recruiting and retention, and equity market appreciation. ~~Administrative~~The increase in assets during our fiscal third quarter was primarily due to the recovery of equity markets from the decline in the fiscal second quarter caused by the COVID-19 pandemic. As administrative fees associated with these programs are predominantly ~~calculated~~ based on balances at the beginning of the ~~quarter.~~quarter, the 17% increase in assets during the fiscal third quarter will positively impact our fiscal fourth quarter revenues.

RJ Trust


$ in billions	June 30, 2020		March 31, 2020		September 30, 2019		June 30, 2019		March 31, 2019		September 30, 2018
Total assets	$	7.1	$	6.4	$	6.6	$	6.4	$	6.2	$	6.1

~~Assets~~

The preceding table includes assets held in asset-based programs in RJ Trust (including those managed for affiliated entities) ~~totaled $6.4 billion, $6.2 billion, $6.1 billion, $5.8 billion and $5.5 billion as of June 30, 2019, March 31, 2019, September 30, 2018, June 30, 2018 and September 30, 2017, respectively.~~.

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

Net revenues of ~~$177~~$163 million ~~increased $9~~decreased $14 million, or 5%8%, and pre-tax income of ~~$65~~$60 million ~~increased $7~~decreased $5 million, or ~~12%~~8%.

~~Total asset~~Asset management and related administrative fee revenues ~~increased~~decreased $8 million, or 5%, ~~driven by an increase in administrative fees~~primarily due to ~~the aforementioned increase in~~lower average financial assets ~~held in non-discretionary asset-based programs.~~

~~Non-interest expenses increased $3 million, or 3%,~~under management at Carillon Tower Advisers, largely as a result of ~~an increase in compensation and benefits expense~~net outflows since the prior-year quarter, as well as ~~communication and information processing expenses, primarily to support~~ the ~~growth~~significant equity market decline in March 2020, which has since largely rebounded. Although AMS financial assets under management were higher than at the end of the ~~business.~~prior-year quarter, revenues decreased as assets in these programs are billed based on balances as of the beginning of the quarter, which reflected the significant equity market decline in our fiscal second quarter due to the COVID-19 pandemic. The increase in these assets as of June 30, 2020, primarily due to the market recovery in our fiscal third quarter, will positively affect our fiscal fourth quarter results.

Account and service fees declined $5 million, or 63%, primarily due to a decline in servicing fees related to the money market sweep program, which was discontinued in June 2019. A significant portion of these revenues were offset by fees paid to PCG related to the money market sweep program, which were reflected in Other expenses and eliminated in consolidation.

Compensation expenses decreased $3 million, or 6%, and non-compensation expenses decreased $6 million, or 9%. The decrease in non-compensation expenses was primarily due to a decline in travel-related expenses in response to the COVID-19 pandemic and a decline in fees paid to PCG related to the aforementioned discontinuance of the money market sweep program.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Nine months ended June 30, ~~2019~~2020 compared with the nine months ended June 30, ~~2018~~2019

Net revenues of ~~$513~~$531 million increased ~~$31~~$18 million, or 6%4%, and pre-tax income of ~~$184~~$206 million increased ~~$13~~$22 million, or 8%12%.

~~Total asset~~Asset management and related administrative ~~fee revenues~~fees increased ~~$25~~$35 million, or 6%7%, driven by higher assets in non-discretionary asset-based programs at the beginning of each of the current-year quarterly billing periods compared with the prior-year period, as well as higher average financial assets under management during the current-year period.

Account and service fees declined $15 million, or 56%, primarily due to a decline in servicing fees related to the money market sweep program, which was discontinued in June 2019.

Non-compensation expenses decreased $3 million, or 2%, primarily due to the aforementioned decline in fees paid to PCG associated with the money market sweep program, which was discontinued in June 2019, and lower travel-related expenses due to the COVID-19 pandemic, partially offset by an increase in ~~net revenues~~investment sub-advisory fees resulting from both managed and non-discretionary asset-based accounts. Managed programs increased due to the current year period including a full period of results for the Scout Group, which was acquired in November 2017. Administrative fees increased over the prior year period due to the aforementionedan increase in assets ~~held~~under management in ~~non-discretionary asset-based~~sub-advised programs.

Non-interest expenses increased $22 million, or 7%, primarily the result of an increase in compensation and benefits expense and other expenses. Compensation and benefits expense increased primarily due to the Scout Group acquisition in November 2017, in addition to an increase in personnel over the prior year period to support the growth of the business. The increase in other expense was primarily due to certain incremental costs associated with the Scout Group acquisition, including platform fees related to the new funds offered and the amortization of certain intangible assets arising from the acquisition.

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

~~Management's Discussion and Analysis~~

~~Results of Operations~~RESULTS OF OPERATIONS – RJ ~~Bank~~BANK

For an overview of our RJ Bank segment operations, as well as a description of the key factors impacting our RJ Bank 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 ~~2018~~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:
Interest income	$	181	$	246	(26)	%	$	635	$	732	(13)	%
Interest expense	(12)		(38)		(68)	%	(51)		(122)		(58)	%
Net interest income	169		208		(19)	%	584		610		(4)	%
All other	9		7		29	%	20		20		—
Net revenues	178		215		(17)	%	604		630		(4)	%
Non-interest expenses:
Compensation and benefits	13		13		—		38		36		6	%
Non-compensation expenses:
Loan loss provision/(benefit)	81		(5)		NM		188		16		1,075	%
RJBDP fees to PCG	43		44		(2)	%	138		127		9	%
All other	27		25		8	%	77		67		15	%
Total non-compensation expenses	151		64		136	%	403		210		92	%
Total non-interest expenses	164		77		113	%	441		246		79	%
Pre-tax income	$	14	$	138	(90)	%	$	163	$	384	(58)	%

Three months ended June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Revenues:
Interest income $ 246
$ 205
20 % $ 732
$ 571
28 %
Interest expense (38 ) (25 ) 52 % (122 ) (56 ) 118 %
Net interest income 208
180
16 % 610
515
18 %
All other 7
8
(13 )% 20
17
18 %
Net revenues 215
188
14 % 630
532
18 %
Non-interest expenses:

Compensation and benefits 13
12
8 % 36
31
16 %
Loan loss provision/(benefit) (5 ) 5
(200 )% 16
14
14 %
RJBDP fees to PCG 44
24
83 % 127
67
90 %
All other 25
17
47 % 67
58
16 %
Total non-interest expenses 77
58
33 % 246
170
45 %
Pre-tax income $ 138
$ 130
6 % $ 384
$ 362
6 %
Pre-tax margin on net revenues 64.2 % 69.1 % 61.0 % 68.0 %

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

Net revenues of ~~$215~~$178 million ~~increased $27~~decreased $37 million, or ~~14%~~17%, and pre-tax income of ~~$138~~$14 million ~~increased $8~~decreased $124 million, or 6%90%.

Net interest income ~~increased $28~~decreased $39 million, or ~~16%~~19%, ~~due to a $2.64 billion~~as the negative impact from lower short-term rates offset the higher interest-earning assets. The increase in average interest-earning ~~banking~~ assets ~~primarily reflecting a $1.90 billion increase~~was driven by growth in average cash balances of $1.99 billion, average available-for-sale securities portfolio of $1.54 billion, and average loans ~~and an increase in net interest margin.~~of $1.38 billion. The net interest margin ~~increased~~decreased to ~~3.37%~~2.29% from ~~3.30%~~3.37% due to ~~an increase~~the significant decline in ~~average asset yields, as a result of both higher~~ short-term interest rates and ~~higher average balances, partially offset by an increase~~the corresponding decline in ~~total cost~~LIBOR, the rate on which the pricing for most of ~~funds. The increase in total cost of funds resulted from higher deposit costs primarily due~~RJ Bank’s assets is based. Based on current LIBOR rates, we expect our net interest margin to ~~increased interest rates. Corresponding~~further decline to 2.1% - 2.2% over the ~~increase in average interest-earning banking assets, average interest-bearing banking liabilities increased $2.48 billion.~~next two quarters.

The loan loss ~~benefit of~~provision was $81 million compared to a $5 million benefit in the ~~current year~~prior-year quarter. The increase in the provision in the current-year quarter was ~~attributable~~in response to continued deterioration of macroeconomic conditions caused by the ~~substantial decrease in total criticized~~COVID-19 pandemic and included write-downs on certain corporate loans ~~due to several payoffs~~sold during the quarter. Continued deterioration of macroeconomic conditions will likely require us to increase our allowance for loan losses in the future or to experience loan losses in excess of

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

current ~~year quarter.~~reserves. Additional sales of certain corporate loans are also expected in the fiscal fourth quarter to further reduce credit risk in certain sectors.

~~Non-interest~~

Compensation expenses were flat compared with the prior-year quarter, while non-compensation expenses (excluding the provision for loan losses) increased $29 million, or 55%, including a $20 million, or 83%, increase in fees for RJBDP paid to PCG, primarily driven by an increase in the per-account servicing fee effective October 1, 2018 and the increase in number of accounts. In addition, there were increases in the reserves on unfunded loan commitments compared with the prior year quarter. The current year quarter included an increase in losses associated with certain of RJ Bank’s LIHTC investments. These LIHTC investments produce certain operating losses that impact non-interest expenses, but create incremental benefits in excess of such losses in the form of tax credits which benefit our consolidated income tax expense and liabilities.$1 million.

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

~~Management's Discussion and Analysis~~

The following table presents average balances, interest income and expense, the related yields and rates, and interest spreads and margins for RJ Bank.


	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:
Cash	$	2,990	$	—	0.11	%	$	998	$	5	2.36	%
Available-for-sale securities	4,437		23		2.01	%	2,901		18		2.41	%
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	%
FHLB stock, FRB stock and other	217		1		1.50	%	168		2		4.42	%
Total interest-earning assets	29,565		$	181	2.45	%	24,613		$	246	4.00	%
Non-interest-earning assets:
Unrealized gain/(loss) on available-for-sale securities	116						(6)
Allowance for loan losses	(319)						(218)
Other assets	407						390
Total non-interest-earning assets	204						166
Total assets	$	29,769					$	24,779
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	25,241	$	2	0.02	%	$	20,989	$	30	0.59	%
Certificates of deposit	1,104		5		2.00	%	561		4		2.33	%
FHLB advances and other	888		5		2.23	%	895		4		2.08	%
Total interest-bearing liabilities	27,233		$	12	0.17	%	22,445		$	38	0.69	%
Non-interest-bearing liabilities	253						156
Total liabilities	27,486						22,601
Total shareholder’s equity	2,283						2,178
Total liabilities and shareholder’s equity	$	29,769					$	24,779
Excess of interest-earning assets over interest-bearing liabilities/net interest income	$	2,332	$	169			$	2,168	$	208
Bank net interest:
Spread					2.28	%					3.31	%
Margin (net yield on interest-earning banking assets)					2.29	%					3.37	%
Ratio of interest-earning assets to interest-bearing liabilities					108.56	%					109.66	%

Three months ended June 30,
2019 2018
$ in millions Average
balance Interest
inc./exp. Average
yield/
cost Average
balance Interest
inc./exp. Average
yield/
cost
Interest-earning banking assets:
Cash $ 998
$ 5
2.36 % $ 660
$ 4
1.79 %
Available-for-sale securities 2,901
18
2.41 % 2,534
14
2.11 %
Bank loans, net of unearned income:
Loans held for investment:
C&I loans 8,278
98
4.68 % 7,647
85
4.40 %
CRE construction loans 248
4
5.45 % 182
2
5.23 %
CRE loans 3,359
39
4.53 % 3,259
34
4.15 %
Tax-exempt loans 1,291
9
3.35 % 1,191
8
3.41 %
Residential mortgage loans 4,127
34
3.32 % 3,514
27
3.10 %
SBL and other 3,125
36
4.64 % 2,741
29
4.26 %
Loans held for sale 118
1
4.78 % 109
1
4.34 %
Total bank loans, net 20,546
221
4.30 % 18,643
186
4.04 %
FHLB stock, Federal Reserve Bank stock and other 168
2
4.42 % 133
1
4.53 %
Total interest-earning banking assets 24,613
$ 246
4.00 % 21,970

$ 205
3.75 %
Non-interest-earning banking assets:

Unrealized loss on available-for-sale securities (6 )

(57 )

Allowance for loan losses (218 )

(195 )
Other assets 390

367

Total non-interest-earning banking assets 166

115

Total banking assets $ 24,779

$ 22,085

Interest-bearing banking liabilities:

Bank deposits:

Certificates of deposit $ 561
$ 4
2.33 % $ 389
$ 1
1.64 %
Savings, money market and NOW accounts 20,989
30
0.59 % 18,634
18
0.39 %
FHLB advances and other 895
4
2.08 % 939
6
2.09 %
Total interest-bearing banking liabilities 22,445
$ 38
0.69 % 19,962
$ 25
0.49 %
Non-interest-bearing banking liabilities 156

183

Total banking liabilities 22,601

20,145

Total banking shareholder’s equity 2,178

1,940

Total banking liabilities and shareholder’s equity $ 24,779

$ 22,085

Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income $ 2,168
$ 208
$ 2,008
$ 180

Bank net interest:

Spread

3.31 %

3.26 %
Margin (net yield on interest-earning banking assets)

3.37 %

3.30 %
Ratio of interest-earning banking assets to interest-bearing banking liabilities

109.66 %
110.06 %

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

Fee income on bank loans included in interest income for the three months ended June 30, 2020 and 2019 was $1 million and ~~2018 was~~ $3 million, ~~and $6 million,~~ respectively.

The yield on tax-exempt loans in the preceding table is presented on a tax-equivalent basis utilizing the applicable federal statutory tax rates for each of the three months ended June 30, ~~2019~~2020 and ~~2018.~~

2019.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table shows the effect that these factors had on the interest earned on our interest-earning assets and the interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average yield/cost. Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous year’s volume. Changes attributable to both volume and rate have been allocated proportionately.


	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 June 30,
2019 compared to 2018
Increase/(decrease) due to
$ in millions Volume Rate Total
Interest revenue:
Interest-earning banking assets:
Cash $ 1
$ —
$ 1
Available-for-sale securities 2
2
4
Bank loans, net of unearned income:
Loans held for investment:
C&I loans 7
6
13
CRE construction loans 2
—
2
CRE loans 1
4
5
Tax-exempt loans 1
—
1
Residential mortgage loans 5
2
7
SBL and other 4
3
7
Total bank loans, net 20

15
35
FHLB stock, Federal Reserve Bank stock, and other 1
—
1
Total interest-earning banking assets 24
17
41
Interest expense:

Interest-bearing banking liabilities:

Bank deposits:

Certificates of deposit 1
2
3
Savings, money market, and NOW accounts 2
10
12
FHLB advances and other (2 ) —
(2 )
Total interest-bearing banking liabilities 1
12
13
Change in net interest income $ 23
$ 5
$ 28

Nine months ended June 30, ~~2019~~2020 compared with the nine months ended June 30, ~~2018~~2019

Net revenues of ~~$630~~$604 million ~~increased $98~~decreased $26 million, or ~~18%~~4%, and pre-tax income of ~~$384~~$163 million ~~increased $22~~decreased $221 million, or 6%58%.

Net interest income ~~increased $95~~decreased $26 million, or ~~18%~~4%, ~~due to a $2.85 billion increase in average~~as the negative impact from lower short-term interest rates more than offset higher interest-earning ~~banking assets, as well as an increase in net interest margin.~~assets. The increase in average interest-earning ~~banking~~ assets was primarily driven by growth in average loans of ~~$2.16~~$1.38 billion, average cash balances of $847 million, and ~~a $473~~an $823 million increase in our average available-for-sale securities portfolio. The net interest margin ~~increased~~for the current-year period decreased to 2.82% from 3.32% from 3.20% due to an increase in asset yields, a result of higher short-term interest rates and average balances, partially offset by an increase in total cost of funds. The increase in total cost of funds resulted from higher deposit costs due to increased interest rates. Corresponding tofor the ~~increase in average interest-earning banking assets, average interest-bearing banking liabilities increased $2.62 billion.~~prior-year period.

The loan loss provision ofwas $188 million, compared to $16 million in the prior-year period. The increase in the provision in the current-year period was primarily attributable to the economic impacts of the COVID-19 pandemic during the current-year period as well as the aforementioned corporate loan sales.

Compensation and benefits expenses increased $2 million ~~higher than the prior year period~~due to annual raises and ~~was largely attributable~~increased staffing levels to ~~provisions related to certain credits downgraded during the current year period, partially offset by lower reserve rates on pass-rated loans.~~support our continued growth.

~~Non-interest~~

Non-compensation expenses (excluding the provision for loan losses) increased ~~$74~~$21 million, including an $11 million, or ~~47%, including a $60 million, or 90%~~9%, increase in fees for RJBDP paid to PCG, primarily driven by an increase in the ~~per-account servicing fee effective October 1, 2018 and the increase in the~~ number of accounts. ~~In addition, compensation and benefits expenses increased due increased staffing levels to support our continued growth. The current year period included an increase~~These fees are eliminated in losses associated with certain of RJ Bank’s LIHTC investments. These LIHTC investments produce certain operating losses that impact non-interest expenses, but create incremental benefits in excess of such losses in the form of tax credits which benefit our consolidated income tax expense and liabilities.consolidation.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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

The following table presents average balances, interest income and expense, the related yields and rates, and interest spreads and margins for RJ Bank.


	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:
Cash	$	2,078	$	10	0.66	%	$	1,231	$	21	2.33	%
Available-for-sale securities	3,654		60		2.18	%	2,831		51		2.39	%
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	%
FHLB stock, FRB stock and other	220		4		2.33	%	163		5		4.27	%
Total interest-earning assets	27,563		$	635	3.07	%	24,459		$	732	3.99	%
Non-interest-earning assets:
Unrealized gain/(loss) on available-for-sale securities	66						(37)
Allowance for loan losses	(251)						(214)
Other assets	388						404
Total non-interest-earning assets	203						153
Total assets	$	27,766					$	24,612
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	23,364	$	21	0.12	%	$	20,861	$	99	0.64	%
Certificates of deposit	993		15		2.06	%	527		9		2.20	%
FHLB advances and other	889		15		2.23	%	919		14		2.13	%
Total interest-bearing liabilities	25,246		$	51	0.27	%	22,307		$	122	0.73	%
Non-interest-bearing liabilities	225						191
Total liabilities	25,471						22,498
Total shareholder’s equity	2,295						2,114
Total liabilities and shareholder’s equity	$	27,766					$	24,612
Excess of interest-earning assets over interest-bearing liabilities/net interest income	$	2,317	$	584			$	2,152	$	610
Bank net interest:
Spread					2.80	%					3.26	%
Margin (net yield on interest-earning banking assets)					2.82	%					3.32	%
Ratio of interest-earning assets to interest-bearing liabilities					109.18	%					109.65	%

Nine months ended June 30,
2019 2018
$ in millions
Average
balance

Interest
inc./exp.

Average
yield/
cost

Average
balance

Interest
inc./exp.

Average
yield/
cost
Interest-earning banking assets:
Cash $ 1,231
$ 21
2.33 % $ 1,040
$ 12
1.48 %
Available-for-sale securities 2,831
51
2.39 % 2,358
36
2.00 %
Bank loans, net of unearned income:

Loans held for investment:
C&I loans 8,065
286
4.67 % 7,538
237
4.15 %
CRE construction loans 205
9
5.58 % 166
6
5.03 %
CRE loans 3,433
120
4.60 % 3,160
95
3.97 %
Tax-exempt loans 1,285
26
3.34 % 1,126
22
3.41 %
Residential mortgage loans 3,999
100
3.32 % 3,363
78
3.08 %
SBL and other 3,098
109
4.64 % 2,594
78
3.98 %
Loans held for sale 149
5
4.87 % 123
3
3.83 %
Total bank loans, net 20,234
655
4.32 % 18,070
519
3.85 %
FHLB stock, Federal Reserve Bank stock and other 163
5
4.27 % 138
4
4.13 %
Total interest-earning banking assets 24,459
$ 732
3.99 % 21,606
$ 571
3.54 %
Non-interest-earning banking assets:

Unrealized loss on available-for-sale securities (37 )

(39 )

Allowance for loan losses (214 )

(192 )

Other assets 404

373

Total non-interest-earning banking assets 153

142

Total banking assets $ 24,612

$ 21,748

Interest-bearing banking liabilities:

Bank deposits:

Certificates of deposit $ 527
$ 9
2.20 % $ 353
$ 4
1.60 %
Savings, money market and NOW accounts 20,861
99
0.64 % 18,426
37
0.27 %
FHLB advances and other 919
14
2.13 % 908
15
2.09 %
Total interest-bearing banking liabilities 22,307
$ 122
0.73 % 19,687
$ 56
0.37 %
Non-interest-bearing banking liabilities 191

176

Total banking liabilities 22,498

19,863

Total banking shareholder’s equity 2,114

1,885

Total banking liabilities and shareholder’s equity $ 24,612

$ 21,748

Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income $ 2,152
$ 610
$ 1,919
$ 515

Bank net interest:

Spread

3.26 %

3.17 %
Margin (net yield on interest-earning banking assets)

3.32 %

3.20 %
Ratio of interest-earning banking assets to interest-bearing banking liabilities

109.65 %
109.75 %

Fee income on bank loans included in interest income for the nine months ended June 30, 2020 and 2019 was $10 million and ~~2018 was~~ $14 million, ~~and $19 million,~~ respectively.

The yield on tax-exempt loans in the preceding table is presented on a ~~tax-equivalent~~taxable-equivalent basis utilizing the applicable federal statutory tax rates for each of the nine months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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


	Nine months ended June 30,
	2020 compared to 2019
	Increase/(decrease) due to
$ in millions	Volume		Rate		Total
Interest income:
Interest-earning assets:
Cash	$	15	$	(26)	$	(11)
Available-for-sale securities	15		(6)		9
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	(1)		(59)		(60)
CRE construction loans	—		(2)		(2)
CRE loans	10		(32)		(22)
Tax-exempt loans	(1)		—		(1)
Residential mortgage loans	20		(8)		12
SBL and other	13		(33)		(20)
Loans held for sale	—		(1)		(1)
Total bank loans, net	41		(135)		(94)
FHLB stock, FRB stock, and other	1		(2)		(1)
Total interest-earning assets	72		(169)		(97)
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market, and NOW accounts	12		(90)		(78)
Certificates of deposit	7		(1)		6
FHLB advances and other	(2)		3		1
Total interest-bearing liabilities	17		(88)		(71)
Change in net interest income	$	55	$	(81)	$	(26)

RESULTS OF OPERATIONS – OTHER

Nine months ended June 30,
2019 compared to 2018
Increase/(decrease) due to
$ in millions Volume Rate Total
Interest revenue:
Interest-earning banking assets:
Cash $ 2
$ 7
$ 9
Available-for-sale securities 7
8
15
Bank loans, net of unearned income:
Loans held for investment:
C&I loans 17
32
49
CRE construction loans 2
1
3
CRE loans 8
17
25
Tax-exempt loans 3
1
4
Residential mortgage loans 15
7
22
SBL and other 15
16
31
Loans held for sale 1
1
2
Total bank loans, net 61
75
136
FHLB stock, Federal Reserve Bank stock, and other 1
—
1
Total interest-earning banking assets 71
90
161
Interest expense:

Interest-bearing banking liabilities:

Bank deposits:

Certificates of deposit 2
3
5
Savings, money market, and NOW accounts 5
57
62
FHLB advances and other —
(1 ) (1 )
Total interest-bearing banking liabilities 7
59
66
Change in net interest income $ 64
$ 31
$ 95

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

~~Management's Discussion and Analysis~~

~~Results of Operations – Other~~

This segment includes our private equity investments, ~~as well as~~interest income on certain corporate cash balances, and certain corporate overhead costs of RJF that are not allocated to other segments, including the interest ~~cost~~costs on our public ~~debt, and the acquisition and integration costs associated with certain acquisitions.~~debt. For an overview of our Other segment operations, refer to the information presented in “Item 1 - Business” of our ~~2018~~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:
Interest income	$	3	$	12	(75)	%	$	27	$	42	(36)	%
Gains/(losses) on private equity investments	1		2		(50)	%	(40)		8		NM
All other	2		1		100	%	4		5		(20)	%
Total revenues	6		15		(60)	%	(9)		55		NM
Interest expense	(26)		(19)		37	%	(63)		(57)		11	%
Net revenues	(20)		(4)		(400)	%	(72)		(2)		(3,500)	%



Total non-interest expenses	9		21		(57)	%	34		58		(41)	%
Pre-tax loss	$	(29)	$	(25)	(16)	%	$	(106)	$	(60)	(77)	%

Three months ended June 30, Nine months ended June 30,
$ in millions 2019 2018 % change 2019 2018 % change
Revenues:
Interest income $ 12
$ 11
9 % $ 42
$ 28
50 %
Gains on private equity investments 2
3
(33 )% 8
21
(62 )%
All other 1
2
(50 )% 5
4
25 %
Total revenues 15
16
(6 )% 55
53
4 %
Interest expense (19 ) (18 ) 6 % (57 ) (56 ) 2 %
Net revenues (4 ) (2 ) 100 % (2 ) (3 ) (33 )%
Non-interest expenses:

Compensation and other 22
20
10 % 59
51
16 %
Acquisition-related expenses —
—
—
—
4
(100 )%
Total non-interest expenses 22
20
10 % 59
55
7 %
Loss before taxes and including noncontrolling interests (26 ) (22 ) (18 )% (61 ) (58 ) (5 )%
Noncontrolling interests (1 ) 2
NM
(1 ) 2
NM
Pre-tax loss excluding noncontrolling interests $ (25 ) $ (24 ) (4 )% $ (60 ) $ (60 ) —

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Quarter ended June 30, ~~2019~~2020 compared with the quarter ended June 30, ~~2018~~2019

The pre-tax loss of $29 million was ~~essentially unchanged from~~$4 million larger than the loss generated in the ~~prior year~~prior-year quarter.

Net revenues for the current quarter decreased $2$16 million due to a $9 million decrease in interest income earned on corporate cash balances due to lower short-term interest rates, which more than offset the increase in average balances, as well as a $7 million increase in interest expense due to the issuance of $500 million of senior notes in March 2020.

Non-interest expenses decreased $12 million, or 57%, primarily due to a decrease in gains on private equity investments, offset by an increase in interest income. Interest income increased primarily as a result of the increase in interest rates earned on higher corporate cash balances.compensation expenses due to lower earnings.

~~Non-interest expenses increased $2 million, or 10%, driven by higher advertising-related expenses.~~

Nine months ended June 30, ~~2019~~2020 compared with the nine months ended June 30, ~~2018~~2019

The pre-tax loss of ~~$60~~$106 million was ~~flat versus~~$46 million larger than the loss generated in the ~~prior year~~prior-year period.

Net revenues ~~increased $1~~decreased $70 million from a loss of $2 million in the prior-year period to a loss of $72 million, primarily due to $40 million of private equity valuation losses, compared with gains of $8 million in the prior-year period. In the current-year period, $23 million of the losses on private equity investments were attributable to noncontrolling interests, which are reflected as an ~~increase in~~offset within other expenses. These valuation losses were primarily the result of the negative impact of the COVID-19 pandemic on certain of our investments. Interest income earned on corporate cash balances also decreased due to lower short-term interest ~~income, primarily~~rates, partially offset by the impact of higher average balances, and interest expense increased as a result of the ~~increase in interest rates earned on higher corporate cash balances, partially offset by lower gains on private equity investments. The prior year period included gains on certain~~aforementioned issuance of ~~our private equity investments that were sold during fiscal year 2018.~~$500 million of senior notes.

Non-interest expenses ~~increased $4~~decreased $24 million, or 7%41%, primarily ~~driven by higher compensation-related expenses. The prior year period included certain expenses incurred in connection with our acquisition~~due to the aforementioned $23 million offset of ~~the Scout Group, which closed in November 2017.~~private equity valuation losses attributable to noncontrolling interests.

~~Certain statistical disclosures by bank holding companies~~CERTAIN STATISTICAL DISCLOSURES BY BANK HOLDING COMPANIES

We are required to provide certain statistical disclosures ~~required for~~as a bank holding ~~companies~~company under the SEC’s Industry Guide 3. The following table provides certain of those disclosures.


	Three months ended June 30,			Nine months ended June 30,
	2020	2019	2020	2019
Return on assets	1.5%	2.7%	1.9%	2.7%
Return on equity	10.0%	16.1%	11.9%	16.2%
Average equity to average assets	14.6%	16.7%	15.7%	16.6%
Dividend payout ratio	30.1%	18.9%	25.6%	19.2%

Three months ended June 30, Nine months ended June 30,
2019 2018 2019 2018
Return on assets 2.7% 2.6% 2.7% 2.2%
Annualized return on equity 16.1% 15.4% 16.2% 13.6%
Average equity to average assets 16.7% 16.7% 16.6% 16.3%
Dividend payout ratio 18.9% 19.4% 19.2% 20.1%

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

~~Management's Discussion and Analysis~~

Return on assets is computed by dividing annualized net income ~~attributable to RJF~~ for the period indicated by average assets for each respective period. Average assets for the quarter is computed by adding total assets as of the date indicated to the prior quarter-end total, and dividing by two. Average assets for the ~~year to date~~year-to-date period is computed by adding total assets as of each quarter-end date during the year-to-date period to the beginning of the year total, and dividing by four.

Return on equity is computed by dividing annualized net income ~~attributable to RJF~~ for the period indicated by average equity ~~attributable to RJF~~ for each respective period. Average equity for the quarter is computed by adding ~~the~~ total equity attributable to RJF as of the date indicated to the prior quarter-end total, and dividing by two. Average equity for the ~~year to date~~year-to-date period is computed by adding ~~the~~ total equity attributable to RJF as of each quarter-end date during the year-to-date period to the beginning of the year total, and dividing by four.

Average equity to average assets is computed by dividing average equity by average assets, as calculated in accordance with the previous explanations.

Dividend payout ratio is computed by dividing dividends declared per common share during the period by earnings per diluted common ~~share.~~share for the period.

Refer to the “Results of Operations - RJ Bank” and “Risk management - Credit risk” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations and to the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for the other required disclosures.

~~Liquidity~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and ~~capital resources~~Analysis

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is essential to our business. The primary goal of our liquidity management activities is to ensure adequate funding to conduct our business over a range of economic and market environments.

Senior management establishes our liquidity and capital management framework. This framework includes senior management’s review of short- and long-term cash flow forecasts, review of monthly capital expenditures, monitoring of the availability of alternative sources of financing, and daily monitoring of liquidity in our significant subsidiaries. Our decisions on the allocation of capital to our business units consider, among other factors, projected profitability and cash flow, risk, and impact on future liquidity needs. Our treasury department assists in evaluating, monitoring and controlling the impact that our business activities have on our financial condition, liquidity and capital structure, and maintains our relationships with various lenders. The objective of this framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

Liquidity is provided primarily through our business operations and financing activities. Financing activities could include bank borrowings, repurchase agreement transactions or additional capital raising activities under our “universal” shelf registration statement.

Cash and cash equivalents increased ~~$96 million~~$1.68 billion to ~~$3.60~~$5.63 billion during the nine months ended June 30, ~~2019,~~2020, primarily due to ~~$1.51~~$3.26 billion of cash provided by financing activities ~~which was~~and $2.66 billion of cash provided by operating activities, offset by cash used in investing activities of $3.02 billion and an increase in the amount of cash required to be segregated pursuant to regulations of $1.19 billion. Cash provided by financing activities primarily ~~driven by increases~~related to an increase in bank deposits, as client cash balances increased due to the impact of the COVID-19 pandemic, and ~~short-term borrowings,~~proceeds from our senior notes issuance in March 2020, partially offset by our open-market share repurchases and dividends on our common ~~stock during the period. Additionally, a decrease of $85 million in cash segregated pursuant to regulations was offset by $101 million of cash~~stock. Cash used in ~~our operating~~investing activities ~~during the current period. Investing activities used $1.39 billion~~ primarily ~~due~~related to ana net increase in ~~bank loans and the growth of~~ our available-for-sale securities portfolio ~~during the current period.~~due to our growth strategy for this portfolio, and a net increase in bank loans.

We believe our existing assets, most of which are liquid in nature, together with funds generated from operations and available from committed and uncommitted financing facilities provide adequate funds for continuing operations at current levels of activity.

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

~~Management's Discussion and Analysis~~

Sources of liquidity

~~Approximately $1.22~~Over $2.1 billion of our total June 30, ~~2019~~2020 cash and cash equivalents included cash on hand at the parent, as well as parent cash loaned to RJ&A. The following table presents our holdings of cash and cash equivalents.


$ 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 millions June 30, 2019
RJF $ 448
RJ&A 949
RJ Bank 1,419
RJ Ltd. 382
RJFS 131
Carillon Tower Advisers 89
Other subsidiaries 178
Total cash and cash equivalents $ 3,596

RJF maintained depository accounts at RJ Bank with a balance of ~~$147~~$185 million as of June 30, ~~2019.~~2020. The portion of this total that was available on demand without restrictions, which amounted to ~~$107~~$108 million as of June 30, ~~2019,~~2020, is reflected in the RJF total (and is excluded from the RJ Bank cash balance in the preceding table).

RJF had loaned ~~$794 million~~$1.66 billion to RJ&A as of June 30, ~~2019~~2020 (such amount is included in the RJ&A cash balance in the preceding table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities. ~~On July 1, 2019, we withdrew approximately $160 million of cash out of RJ&A segregated reserve accounts as a result of the period-end reserve calculation.~~

In addition to the cash balances described, we have various other potential sources of cash available to the parent from subsidiaries, as described in the following section.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Liquidity available from subsidiaries

Liquidity is principally available to RJF, the parent company, from RJ&A and RJ Bank.

~~RJ&A is~~Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities and Exchange Act of 1934. As a member firm of ~~the Financial Industry Regulatory Authority (“FINRA”),~~FINRA, RJ&A is subject to FINRA’s capital requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1 ~~and is required to maintain~~provides for an “alternative net capital requirement,” which RJ&A has elected. Regulations require that minimum net capital, as defined, be equal to the greater of $1.5 million or 2% of aggregate debit ~~balances~~items arising from client transactions. In addition, covenants in RJ&A’s committed ~~secured~~ financing facilities require its net capital to be a minimum of 10% of aggregate debit items. At June 30, ~~2019,~~2020, RJ&A significantly exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances. ~~There are~~FINRA may impose certain restrictions, such as restricting withdrawals of equity capital, if a member firm were to fall below a certain threshold or fail to meet minimum net capital requirements.

RJ&A, as a nonbank custodian of Individual Retirement Accounts (“IRAs”), must also ~~limitations on~~satisfy certain Internal Revenue Service (“IRS”) regulations in order to accept new IRA and plan accounts and retain the accounts for which it serves as nonbank custodian. To maintain adequate net worth under these regulations, RJ&A may have to limit dividends to RJF. We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of ~~dividends that may be declared by a broker-dealer without FINRA approval.~~liquidity available to RJF from RJ&A.

RJ Bank may pay dividends to RJF without ~~the~~ prior approval of its regulator as long as the dividend does not exceed the sum of RJ Bank’s current calendar year and the previous two calendar years’ retained net income, and RJ Bank maintains its targeted regulatory capital ratios. At June 30, ~~2019,~~2020, RJ Bank had ~~$271~~$274 million of capital in excess of the amount it would need at that date to maintain its targeted regulatory capital ratios, and could pay a dividend of such amount without requiring prior approval of its regulator.

Although we have liquidity available to us from our other subsidiaries, the available amounts are not as significant as those previously described and, in certain instances, may be subject to regulatory requirements.

Borrowings and financing arrangements

Committed financing arrangements

Our ability to borrow is dependent upon compliance with the conditions in our various loan agreements and, in the case of secured borrowings, collateral eligibility requirements. Our committed financing arrangements ~~are in the form~~consist of ~~either~~a tri-party repurchase ~~agreements~~agreement or, in the case of the Credit Facility, an unsecured line of credit. The required market value of the collateral associated with the committed secured ~~facilities~~facility ranges from ~~102%~~105% to 125% of the amount financed.

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

~~Management's Discussion and Analysis~~

The following table presents our committed financing arrangements with third-party lenders, which we generally utilize to finance a portion of our fixed income trading instruments, ~~held,~~ and the outstanding balances related thereto.


	June 30, 2020
$ in millions	RJ&A		RJF		Total		Total number of arrangements
Financing arrangement:
Committed secured	$	100	$	—	$	100	1
Committed unsecured ⁽¹⁾	200		300		500		1
Total committed financing arrangements	$	300	$	300	$	600	2

Outstanding borrowing amount:
Committed secured	$	—	$	—	$	—
Committed unsecured	—		—		—
Total outstanding borrowing amount	$	—	$	—	$	—

(1) The Credit Facility provides for maximum borrowings of up to $500 million, with a sublimit of $300 million for RJF. RJ&A may borrow up to $500 million under the Credit Facility, depending on the amount of outstanding borrowings by RJF. For additional details on our committed unsecured financing arrangement, see our discussion of the Credit Facility in Note 12 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

June 30, 2019
$ in millions RJ&A RJF Total Total number of arrangements
Financing arrangement:
Committed secured $ 200
$ —
$ 200
2
Committed unsecured ⁽¹⁾
200
300
500
1
Total committed financing arrangements $ 400
$ 300
$ 700
3

Outstanding borrowing amount:
Committed secured $ —
$ —
$ —

Committed unsecured —
—
—

Total outstanding borrowing amount $ —
$ —
$ —

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis


~~(1)~~	The Credit Facility provides for maximum borrowings of up to $500 million, with a sublimit of $300 million for RJF. For additional details on our committed unsecured financing arrangement, see our discussion of the Credit Facility in Note 12 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

Uncommitted financing arrangements

Our uncommitted financing arrangements are in the form of secured lines of credit, secured bilateral or tri-party repurchase agreements, or unsecured lines of credit. Our arrangements with third-party lenders are generally utilized to finance a portion of our fixed income securities or for cash management purposes. Our uncommitted secured financing arrangements generally require us to post collateral in excess of the amount borrowed. As of June 30, ~~2019,~~2020, we had outstanding borrowings under ~~three~~two uncommitted secured borrowing arrangements with lenders out of a total of 11 uncommitted financing arrangements ~~(six~~(seven uncommitted secured and ~~five~~four uncommitted unsecured). However, lenders are under no contractual obligation to lend to us under uncommitted credit facilities.

The following table presents our borrowings on uncommitted financing arrangements, all of which were in RJ&A.


$ in millions	June 30, 2020
Outstanding borrowing amount:
Uncommitted secured	$	228
Uncommitted unsecured	—
Total outstanding borrowing amount	$	228

$ in millions June 30, 2019
Outstanding borrowing amount:
Uncommitted secured $ 215
Uncommitted unsecured —
Total outstanding borrowing amount $ 215

Other financings

RJ Bank had $875 million in FHLB borrowings outstanding at June 30, ~~2019,~~2020, comprised of floating-rate advances totaling $850 million and a $25 million fixed-rate advance, all of which were secured by a blanket lien on RJ Bank’s residential mortgage loan portfolio (see Note 12 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding these borrowings). RJ Bank had an additional ~~$2.19~~$2.96 billion in immediate credit available from the FHLB as of June 30, ~~2019~~2020 and, with the pledge of additional eligible collateral to the FHLB, total available credit of 30% of total assets.

RJ Bank is eligible to participate in the FRB’s discount-window program; however, we do not view borrowings from the FRB as a primary source of funding. The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the FRB, and is secured by pledged C&I loans.

We act as an intermediary between broker-dealers and other financial institutions whereby we borrow securities from one broker-dealer and then lend them to another. Where permitted, we have also loaned, to broker-dealers and other financial institutions, securities owned by clients or the firm. We account for each of these types of ~~transaction~~transactions as collateralized agreements and financings, with the outstanding balances related to the securities loaned included in “Securities loaned” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q, in the amount of ~~$429~~$88 million as of June 30, ~~2019. Such financings are generally collateralized by cash or other collateral.~~2020. See Note 76 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for more information on our securities borrowed and securities loaned.

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

~~Management's Discussion and Analysis~~

From time to time we enter into repurchase agreements and reverse repurchase agreements. We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balances of the repurchase agreements included in “Securities sold under agreements to repurchase” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q, in the amount of ~~$165~~$228 million as of June 30, ~~2019 (which~~2020. These balances are reflected in the preceding table of uncommitted financing ~~arrangements).~~arrangements. Such financings are generally collateralized by non-customer, RJ&A-owned securities or by securities that we have received as collateral under reverse repurchase agreements.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The average daily balance outstanding during the five most recent quarters, the maximum month-end balance outstanding during the quarter and the period-end balances for repurchase agreements and reverse repurchase agreements isare detailed in the following table.


	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 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, 2019 $ 211
$ 212
$ 165
$ 442
$ 479
$ 411
March 31, 2019 $ 172
$ 210
$ 210
$ 358
$ 447
$ 447
December 31, 2018 $ 171
$ 189
$ 156
$ 413
$ 479
$ 399
September 30, 2018 $ 117
$ 186
$ 186
$ 355
$ 376
$ 373
June 30, 2018 $ 151
$ 165
$ 115
$ 364
$ 369
$ 343

At June 30, ~~2019,~~2020, in addition to the financing arrangements previously described, we had ~~$20~~$15 million outstanding on a mortgage loan for our St. Petersburg, Florida home-office complex that is included in “Other borrowings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q.

At June 30, ~~2019,~~2020, we had aggregate outstanding senior notes payable of ~~$1.55~~$2.04 billion. Our senior notes payable, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $250 million par 5.625% senior notes due 2024, $500 million par 3.625% senior notes due 2026, $500 million par 4.65% senior notes due 2030, which were issued during our fiscal second quarter of 2020, and $800 million par 4.95% senior notes due 2046. See Note 1513 of ~~our 2018~~the Notes to Condensed Consolidated Financial Statements of this Form ~~10-K~~10-Q for additional information.

Our issuer and senior long-term debt ratings as of the most current report are detailed in the following table.

Rating Agency

Rating

Outlook

Standard & Poor’s Ratings Services

BBB+

Stable

Moody’s Investors Services

Baa1

Stable

Our current long-term debt ratings depend upon a number of factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trends and volatility, balance sheet composition, liquidity and liquidity management, capital structure, overall risk management, business diversification and market share, and competitive position in the markets in which we operate. Deteriorations in any of these factors could impact our credit ratings. Any rating downgrades could increase our costs in the event we were to obtain additional financing.

Should our credit rating be downgraded prior to a public debt offering, it is probable that we would have to offer a higher rate of interest to bond holders. A downgrade to below investment grade may make a public debt offering difficult to execute on terms we would consider to be favorable. A downgrade below investment grade could result in the termination of certain derivative contracts and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions (see Note 65 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information). A credit downgrade could damage our reputation and result in certain counterparties limiting their business with us, result in negative comments by analysts, ~~and~~ potentially negatively impact investor and/or clients’ perception of us, and cause a decline in our stock ~~price and/or our clients’ perception of us.~~price. None of our borrowing arrangements ~~contain~~contains a condition or event of default related to our credit ratings. However, a credit downgrade would result in the firm incurring a higher facility fee on the $500 million Credit Facility, in addition to triggering a higher interest rate applicable to any borrowings outstanding on that line as of and subsequent to such downgrade. Conversely, an improvement in RJF’s current credit rating could have a favorable impact on the facility fee, as well as the interest rate applicable to any borrowings on such line.

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

~~Management's Discussion and Analysis~~

Other sources and uses of liquidity

We have company-owned life insurance policies which are utilized to fund certain non-qualified deferred compensation plans and other employee benefit plans. Certain of our non-qualified deferred compensation plans and other employee benefit plans are employee-directed while others are company-directed. Certain policies which we could readily borrow against had a cash surrender value of ~~$556~~$610 million as of June 30, ~~2019,~~2020, comprised of ~~$327~~$363 million related to employee-directed plans and ~~$229~~$247 million related to company-directed plans, and we were able to borrow up to 90%, or ~~$500~~$549 million, of the June 30, ~~2019~~2020 total without restriction. To effect any such borrowing, the underlying investments would be converted to money market investments, therefore requiring us to

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

take market risk related to the employee-directed plans. There were no borrowings outstanding against any of these policies as of June 30, ~~2019.~~2020.

~~On July 31, 2019, we received approximately $40 million as a result of the tender of certain of our auction rate preferred securities.~~

On May 18, 2018, we filed a “universal” shelf registration statement with the SEC pursuant to ~~be in a position to access the~~which we can issue debt, equity and other capital ~~markets~~instruments if and when necessary or perceived by us to be opportune. Subject to certain conditions, this registration statement will be effective through May 18, 2021.

See the Contractual obligations section of this MD&A for information regarding our contractual obligations.

~~Statement of financial condition analysis~~STATEMENT OF FINANCIAL CONDITION ANALYSIS

The assets on our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~financial condition~~Financial Condition consisted primarily of cash and cash equivalents (a large portion of which is segregated for the benefit of clients), receivables including bank loans, financial instruments held either for trading purposes or as investments, and other assets. A significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.

Total assets of ~~$38.68~~$44.68 billion as of June 30, ~~2019~~2020 were ~~$1.26~~$5.85 billion, or 3%15%, greater than our total assets as of September 30, ~~2018.~~2019. The increase in assets was primarily due to a ~~$1.17~~$2.87 billion increase in ~~net~~cash and cash and cash equivalents, including cash and cash equivalents segregated pursuant to regulations, primarily due to a significant increase in client cash balances due to the market volatility as a result of the COVID-19 pandemic, as well as proceeds from our $500 million senior notes issuance in March 2020. In addition, available-for-sale securities increased $2.54 billion, other assets increased $552 million, primarily due to ROU assets recorded as a result of the adoption of new guidance related to the accounting for leases, and bank loans, ~~and a $264 million increase in our available-for-sale securities portfolio, in line with our growth plan for such assets.~~net increased $332 million. Offsetting these increases, trading instruments and brokerage client receivables, net decreased ~~$730 million.~~$347 million and $325 million, respectively.

As of June 30, ~~2019,~~2020, our total liabilities of ~~$32.11~~$37.67 billion were ~~$1.15~~$5.48 billion, or 4%17%, greater than our total liabilities as of September 30, ~~2018.~~2019. The increase in total liabilities ~~reflected~~was primarily related to the significant increase in client cash balances and was comprised of a ~~$2.22~~$3.09 billion increase in bank deposits, ~~primarily due to~~reflecting higher RJBDP balances held at RJ Bank ~~as well as~~and certificate of deposit issuances during the period, and a ~~$46 million~~$1.59 billion increase ~~in other borrowings related to secured lines of credit. Offsetting these increases were a decrease~~ in brokerage client payables, ~~of $1.28 billion,~~primarily due to ~~a decline~~an increase in client cash held in our CIP as of June 30, ~~2019,~~2020. In addition, other payables increased $725 million, primarily due to operating lease liabilities recorded as a result of the adoption of new guidance related to the accounting for leases and ~~a decrease~~an increase in ~~accrued compensation, commissions and benefits of $96~~payables resulting from unsettled securities purchases. In addition, senior notes payable increased $494 million due to ~~annual payments~~the issuance of ~~certain incentive compensation made~~$500 million of 4.65% senior notes due April 2030.

See Notes 2 and 10 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information on our adoption of the new leasing guidance.

CONTRACTUAL OBLIGATIONS

In March 2020, we sold in ~~the nine months ended June 30, 2019.~~

~~Contractual obligations~~

~~There were no significant changes~~a registered underwritten public offering $500 million in ~~our contractual obligations presented in our 2018 Form 10-K, other than in the ordinary course~~aggregate principal amount of ~~business, as of June 30, 2019. See~~4.65% senior notes due April 2030. Refer to Note 1413 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding our senior notes.

Other than the item previously described, there were no other changes to the contractual obligations presented in our 2019 Form 10-K, other than in the ordinary course of business. See Note 15 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding our commitments as of June 30, ~~2019~~2020.

REGULATORY

~~Regulatory~~

Refer to the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in ~~Item~~“Item 1 ~~“Business~~- Business - Regulation” and ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory” of our ~~2018~~2019 Form 10-K.

In June 2019, the SEC adopted Regulation Best Interest and issued related interpretive guidance. Among other things, Regulation Best Interest requires a broker-dealer to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to such customer. Regulation Best Interest becomes effective June 30, 2020 and we anticipate the regulation will require us to review and modify our policies and procedures, as well as the associated supervisory and compliance controls, which may lead to additional costs. In July 2019, the Certified Financial Planner Board of Standards, Inc. announced that the compliance enforcement date for its expanded fiduciary standard would be June 30, 2020. Under this standard, all professionals using the “Certified Financial Planner” designation (including brokers) must act as a fiduciary when providing financial advice. In addition, various states have recently proposed legislation, which would impose (fiduciary) standards of conduct on broker-dealers. The adoption of such additional- and in many cases varying- standards could lead us to incur further additional costs.

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

~~Management's Discussion and Analysis~~

RJF and many of its subsidiaries are each subject to various regulatory capital requirements. As of June 30, ~~2019,~~2020, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. In addition, RJF and RJ Bank were categorized as ~~“well capitalized”~~“well-capitalized” as of June 30, ~~2019.~~2020. The maintenance of certain risk-based and other regulatory capital levels could ~~impact~~influence various capital allocation decisions impacting one or more of our businesses. However, due to the current

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

capital position of RJF and its regulated subsidiaries, we do not anticipate these capital requirements will have a negative impact on our future business activities.

Legislative and regulatory changes in connection with COVID-19

The COVID-19 pandemic has resulted in governments around the world implementing several measures to help control the spread of the virus, including, among others, quarantines, travel restrictions and business curtailments. In addition, governments globally intervened with fiscal policy to mitigate the impact of the pandemic, including the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in the U.S., which aimed to provide economic relief to businesses and individuals.

The CARES Act includes a broad range of provisions intended to support the U.S. economy. Among its provisions, the act allocates funds for a new Paycheck Protection Program that expands an existing Small Business Administration (“SBA”) loan guarantee program for small businesses to keep their employees on payroll and make other eligible payments. Currently, the firm does not act as a lender under these programs and facilities, and has no plans to do so.

The CARES Act also provides certain temporary regulatory relief for financial institutions, including RJF and its subsidiaries. The act permits financial institutions to temporarily suspend any determination of a loan modified as a result of the effects of COVID-19 as being a TDR, including impairment for accounting purposes. We elected to apply the CARES Act relief to certain loan modifications that relate to short-term payment deferrals and have not classified such modifications as TDRs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” for further information on the impact of such loan modifications. The act also permits financial institutions to temporarily delay the implementation of CECL for estimating allowances for credit losses. Given our later adoption date of October 1, 2020, we do not anticipate delaying our adoption. In addition, the Federal Reserve, the FDIC and the OCC issued a joint statement providing banking organizations optional temporary relief by delaying the initial adoption impact of CECL on regulatory capital for two years, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during 2020 and 2021 (i.e., a five-year transition period). As we do not adopt CECL until October 1, 2020, we are currently evaluating whether we intend to avail ourselves of such relief.

The CARES Act grants potential tax relief and liquidity to businesses, including corporate tax provisions that: temporarily allow for the carryback of net operating losses and remove limitations on the use of loss carryforwards, increase interest expense deduction limitations, and allow accelerated depreciation deductions on certain asset improvements. In addition, the CARES Act allows employers to defer the payment, including the deposit, of payroll taxes for the 2020 calendar year from March 27, 2020 until December 31, 2021 for 50 percent of such taxes and December 31, 2022 for the remaining 50 percent.

The CARES Act further provides a number of consumer finance protections. The act provides a range of forbearance rights with respect to any federally backed residential or multi-family mortgage loan and generally limits the ability of a lender or servicer to institute foreclosure or similar proceedings. The act additionally imposes a moratorium on evictions from dwellings of many tenants. These provisions are consistent with supervisory guidance previously issued by federal banking agencies, which also stated that they would not criticize financial institutions for working with customers affected by the outbreak in a safe and sound manner. We have modified our processes to ensure full compliance and are working as appropriate to support affected businesses and individuals during this time.

In ~~July 2019,~~addition to guidance regarding supporting customers, federal banking agencies have also taken a number of other actions. The Federal Reserve, for example, has taken active steps to inject liquidity into the economy. The Federal Reserve has reduced the benchmark interest rate in an attempt to stimulate the economy. As previously mentioned, this has and will continue to negatively impact our net interest earnings. In addition, the Federal Reserve has established a number of new facilities, including to provide liquidity for issuers of commercial paper, money market funds, new bond and loan issuances, outstanding corporate bonds, primary dealers, and small and medium-sized businesses, and has reduced the interest rates on borrowings under its discount window.

Many state and local authorities have also taken, or are considering taking, legislative, executive, or other action to respond to the economic disruptions caused by the spread of COVID-19, including with respect to foreclosure and repossession moratoriums.

The Company’s legislative and regulatory environment is continually changing in response to the outbreak of COVID-19, and new or modified laws, regulations and guidance may be promulgated at very short notice.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The Volcker Rule

In June 2020, the Fed, Commodity Futures Trading Commission, FDIC, Office of the Comptroller of the Currency (“OCC”) and the SEC finalized amendments to the rules implementing the Volcker Rule. The final rule includes new exclusions from the Volcker Rule’s general prohibition on banking entities investing in and sponsoring private equity funds, hedge funds, and certain other investment vehicles (collectively, “covered funds”) for credit funds, venture capital funds, family wealth management vehicles, and customer facilitation vehicles. The final rule also revises existing exclusions for foreign public funds, loan securitizations, and public welfare and small business funds. In addition, the final rule modifies the “Super 23” provisions of the Volcker Rule, which prohibit banking entities from extending credit to and entering into certain transactions with advised or sponsored covered funds, by exempting certain short-term extensions of credit, among several other previously prohibited transactions.

Many of the amendments contained in the final rule address aspects of the existing regulations that have, since their adoption in 2013, proven in practice to be complex and burdensome or to have unintended consequences. The final rule is intended to clarify and simplify compliance with the implementing regulations and permit additional fund activities that do not present the risks that the Volcker Rule was intended to address.

The final rule will become effective on October 1, 2020 for all banking entities subject to the Volcker Rule, including RJF and its subsidiaries.

Community Reinvestment Act regulations

The OCC issued a final rule comprehensively amending the Community Reinvestment Act (“CRA”) regulations applicable to ~~simplify~~RJ Bank and ~~clarify~~other OCC-regulated banks in May 2020. At the core of the OCC’s final rule is a ~~number~~set of new general performance standards that establish more quantitative measures of CRA performance than the tests set forth in existing ~~regulatory capital rules for certain banking organizations. Specifically, it simplifies~~CRA regulations.

While RJ Bank will be required to comply with the ~~capital treatment for mortgage servicing assets, certain~~final rule by January 2023, the OCC has deferred ~~tax assets, investments~~to a future rulemaking process the important decision of how key thresholds and benchmarks used in the ~~capital instruments~~rule will be applied to determine the level of ~~unconsolidated~~performance necessary to achieve a particular performance rating. As a result, the final rule creates some uncertainty for RJ Bank and other OCC-regulated banks in planning their CRA activities until that decision in made.

Neither the FDIC nor the Fed joined the OCC in issuing the final rule. State-chartered banks will therefore continue to operate under the FDIC’s and Fed’s existing CRA regulations rather than the final rule. In June 2020, certain organizations filed suit against the OCC asking a court to issue an order setting the rule aside, while in the same month, the U.S. House of Representatives passed a Congressional Review Act resolution of disapproval in an attempt to nullify the rule. These developments create further uncertainty for RJ Bank and others in planning their CRA activities.

Fiduciary duty

In June 2019, the SEC adopted a package of rulemakings and interpretations related to the provision of advice by broker-dealers and investment advisers, including Regulation Best Interest and Form CRS. Among other things, Regulation Best Interest requires a broker-dealer to act in the best interest of a retail customer when making a recommendation to that customer of any securities transaction or investment strategy involving securities. Form CRS requires that broker-dealers and investment advisers provide retail investors with a brief summary document containing simple, easy-to-understand information about the nature of the relationship between the parties. As of June 30, 2020, we are now required to comply with Regulation Best Interest and Form CRS. Implementation of the regulations required us to review and modify our policies and procedures, as well as associated supervisory and compliance controls, satisfy additional disclosure obligations, and provide related education and training to financial ~~institutions,~~advisors, which has led to additional costs. Additionally, various states have proposed, or adopted, laws and ~~minority interest. This rule would also allow bank holding companies~~regulations seeking to ~~repurchase common stock without prior approval~~impose new standards of conduct on broker-dealers that may differ from the ~~Fed unless otherwise required. It~~SEC’s new regulations, which will ~~be effective as~~lead to additional implementation costs. The Department of ~~April 1, 2020,~~Labor (“DOL”) has also reinstated the historical “five-part test” for ~~the amendments~~determining who is an investment advice “fiduciary” when dealing with certain retirement plans and accounts and proposed a new exemption to ~~simplify capital rules,~~allow investment advice fiduciaries to receive transaction-based compensation and ~~as of October 1, 2019 for revisions to the pre-approval requirements for the repurchase of common stock.~~engage in certain principal trades. We are studying and evaluating the proposal. The total impact of ~~this rule~~the DOL change on our ~~regulatory capital requirements.~~business will not be fully known until the proposal is finalized and could lead to additional costs.

See Note 1920 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information on regulatory capital requirements.

~~Critical accounting estimates~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

CRITICAL ACCOUNTING ESTIMATES

The condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during any reporting period in our condensed consolidated financial statements. Management has established detailed policies and control procedures intended to ensure the appropriateness of such estimates and assumptions and their consistent application from period to period. For a description of our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K.

Due to their nature, estimates involve judgment based upon available information. Actual results or amounts could differ from estimates and the difference could have a material impact on the consolidated financial statements. Therefore, understanding these critical accounting estimates is important in understanding our reported results of operations and financial position. We believe that of our accounting estimates and assumptions, those described in the following sections involve a high degree of judgment and complexity. Recent market disruptions as a result of the COVID-19 pandemic have made it more challenging for us to determine the amount of our allowance for loan losses and the fair value of certain of our assets, particularly our private equity investments. The current circumstances have required a greater reliance on judgment than in recent periods in determining these amounts as of June 30, 2020.

Valuation of financial instruments

The use of fair value to measure financial instruments, with related gains or losses recognized in our Condensed Consolidated Statements of Income and Comprehensive Income, is fundamental to our financial statements and our risk management processes. See Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K for a discussion of our fair value accounting policies regarding financial instruments owned and financial instruments sold but not yet purchased. See Note 43 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on our financial instruments at fair value.

Loss provisions

Refer to ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical accounting estimates - Loss provisions” of our ~~2018~~2019 Form 10-K for more information.

Loss provisions for legal and regulatory matters

The recorded amount of liabilities related to legal and regulatory matters is subject to significant management judgment. For a description of the significant estimates and judgments associated with establishing such accruals, see the “Contingent liabilities” section of Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K. In addition, refer to Note 1415 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding legal and regulatory matter contingencies as of June 30, ~~2019.~~2020.

Loan loss provisions ~~for~~arising from operations of RJ ~~Bank’s loan portfolio~~Bank

We provide an allowance for loan losses which reflects our continuing evaluation of the probable losses inherent in RJ Bank’s loan portfolio. See the discussion regarding our methodology in estimating the allowance for loan losses in Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K. See Note 87 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on our bank loans.

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

~~Management's Discussion and Analysis~~

At June 30, ~~2019~~,2020, the amortized cost of all RJ Bank loans was ~~$20.91~~$21.56 billion and anthe allowance for loan losses ~~of $215~~was $334 million, ~~or 1.03%~~which was 1.56% of the held for investment loan ~~portfolio, was recorded against that balance.~~portfolio.

Our process of evaluating probable loan losses includes a complex analysis of several quantitative and qualitative factors, requiring ~~a substantial amount of~~management judgment. As a result, the allowance for loan losses could be insufficient to cover actual losses. In such an event, any losses in excess of our allowance would result in a decrease in our net income, as well as a decrease in the level of regulatory capital.

~~Recent accounting developments~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

RECENT ACCOUNTING DEVELOPMENTS

For information regarding our recent accounting developments, see Note 2 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

~~Off-balance sheet arrangements~~OFF-BALANCE SHEET ARRANGEMENTS

For information regarding our off-balance sheet arrangements, see Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K and Note 1415 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

~~Effects of inflation~~EFFECTS OF INFLATION

Our assets are primarily liquid in nature and are not significantly affected by inflation. However, the rate of inflation affects our expenses, including employee compensation, communications and information processing, and occupancy costs, which may not be readily recoverable through charges for services we provide to our clients. In addition, to the extent inflation results in rising interest rates and has adverse effects upon the securities markets, it may adversely affect our financial position and results of operations.

~~Risk management~~RISK MANAGEMENT

Risks are an inherent part of our business and activities. Management of these risks is critical to our fiscal soundness and profitability. Our risk management processes are multi-faceted and require communication, judgment and knowledge of financial products and markets. We have a formal Enterprise Risk Management (“ERM”) program to assess and review aggregate risks across the firm. Our management takes an active role in the ERM process, which requires specific administrative and business functions to participate in the identification, assessment, monitoring and control of various risks. ~~The results of this process are extensively documented and reported to executive management and the Audit and Risk Committee of the Board.~~

The principal risks related to our business activities are market, credit, liquidity, operational, model, and compliance.

Governance

Our Board of Directors oversees the firm’s management and mitigation of risk, setting a culture that encourages ethical conduct and risk management throughout the firm. Senior management communicates and reinforces this culture through three lines of risk management and a number of senior-level management committees. Our first line of risk management, which includes all of our businesses, owns its risks and is responsible for helping to identify, escalate, and mitigate risks arising from its day-to-day activities. The second line of risk management, which includes the Compliance, Legal, and Risk Management departments, supports and provides guidance, advice, and oversight to client-facing businesses and other first-line risk management functions in identifying and mitigating risk. The second line of risk management also tests and monitors the effectiveness of controls, escalates risks when appropriate, and reports on these risks. The third line of risk management, Internal Audit, independently reviews activities conducted by the previous lines of risk management to assess their management and mitigation of risk, providing additional assurance to the Board of Directors and senior management, with a view toward enhancing our oversight, management, and mitigation of risk.

Market risk

Market risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory, ~~derivative~~derivatives and investment positions. We have exposure to market risk primarily through our broker-dealer trading operations and, to a lesser extent, through our banking operations. See ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Market risk” of our ~~2018~~2019 Form 10-K for a discussion of our market risk, including how we manage such risk. See Notes 3, 4 5 and 65 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for fair value and other information regarding our trading inventories, available-for-sale securities and derivative instruments.

Interest rate risk

Trading activities

We are exposed to interest rate risk as a result of our trading ~~inventories~~inventory (primarily comprised of fixed income instruments) in our Capital Markets segment. We actively manage the interest rate risk arising from our fixed income trading securities through the use of hedging strategies that involve U.S. Treasury securities, futures contracts, liquid spread products and derivatives. In response to

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

the significant market uncertainty caused by the COVID-19 pandemic, we took steps to proactively manage our market risk exposures, including enhanced review and monitoring of exposures and risk mitigation efforts. As a result, we reduced our trading inventory levels to reduce risk.

We monitor the Value-at-Risk (“VaR”) for all of our trading portfolios on a daily basis. VaR is an appropriate statistical technique for estimating potential losses in trading portfolios due to typical adverse market movements over a specified time horizon with a suitable confidence level. We apply the Fed’s Market Risk Rule (“MRR”) for the purpose of calculating our capital ratios. The MRR, also known as the “Risk-Based Capital Guidelines: Market Risk” rule released by the Fed, the ~~Office of the Comptroller of the Currency~~

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

~~Management's Discussion and Analysis~~

~~(“OCC”)~~OCC and FDIC, requires us to calculate VaR ~~numbers~~ for all of our trading portfolios, including fixed income, equity, foreign exchange and ~~derivative instruments.~~derivatives.

To calculate VaR, we use historical simulation. This approach assumes that historical changes in market conditions, such as in interest rates and equity prices, are representative of future changes. Simulation is based on daily market data for the previous twelve months. VaR is reported at a 99% confidence level for a one-day time horizon. Assuming that future market conditions change as they have in the past twelve months, we would expect to incur losses greater than those predicted by our one-day VaR estimates about once every 100 trading days, or about three times per year on average. For regulatory capital calculation purposes, we also report VaR numbers for a ten-day time horizon.

The Fed’s MRR requires us to perform daily back-testing procedures of our VaR model, whereby we compare each day’s projected VaR to its regulatory-defined daily trading losses, which exclude fees, commissions, reserves, net interest income and intraday trading. Regulatory-defined daily trading losses are used to evaluate the performance of our VaR model and are not comparable to our actual daily net revenues. Based on these daily “ex ante” versus “ex post” comparisons, we determine whether the number of times that regulatory-defined daily trading losses exceed VaR is consistent with our expectations at a 99% confidence level. During the ~~nine~~three months ended June 30, ~~2019,~~2020, our regulatory-defined daily loss in our trading portfolios did not exceed our predicted VaR. During the nine months ended June 30, 2020, our regulatory-defined daily loss in our trading portfolios exceeded our predicted VaR on eleven occasions due to significantly higher levels of market volatility during our fiscal second quarter as a result of the COVID-19 pandemic.

The following table sets forth the high, low, period-end and daily average VaR for all of our trading portfolios, including fixed income, equity and derivative instruments, for the period and dates indicated.

Nine months ended June 30, 2019 Period-end VaR Three months ended June 30, Nine months ended June 30,
$ in millions High Low June 30,
2019 September 30,
2018 $ in millions 2019 2018 2019 2018
Daily VaR $ 2
$ 1
$ 1
$ 1
Daily average VaR $ 1
$ 2
$ 1
$ 1


	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

The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations. While management believes that these assumptions and approximations are reasonable, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates. As a result, VaR statistics are more reliable when used as indicators of risk levels and trends within a firm than as a basis for inferring differences in risk-taking across firms.

Separately, RJF provides additional market risk disclosures to comply with the MRR. The results of the application of this market risk capital rule are available on our website under https://www.raymondjames.com/investor-relations/financial-information/filings-and-reports ~~under “Market Risk Rule Disclosure.~~within “Other Reports and Information.”

Should markets suddenly become more volatile, as they did in our fiscal second quarter of 2020, actual trading losses may exceed VaR results presented on a single day and might accumulate over a longer time horizon, such as a number of consecutive trading days. Accordingly, management applies additional controls including position limits, a daily review of trading results, review of the status of aged inventory, independent controls on pricing, monitoring of concentration risk, review of issuer ratings and stress testing. We utilize stress testing to complement our VaR analysis so as to measure risk under historical and hypothetical adverse scenarios. During volatile markets, we may choose to pare our trading inventories to reduce ~~risk.~~risk, as we did during our fiscal second quarter of 2020.

As a part of our fixed income public finance operations, we enter into forward commitments to purchase agency MBS which are issued on behalf of various state and local housing finance agencies. These activities result in exposure to interest rate risk. In order to hedge the 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 TBA security contracts with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future. See Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding these activities.

Banking operations

RJ Bank maintains an earning asset portfolio that is comprised of cash, C&I loans, tax-exempt loans, ~~SBL,~~ commercial and residential real estate loans, SBL and other loans, as well as MBS and CMOs ~~(both of which are held~~(held in the available-for-sale securities portfolio), ~~Small Business Administration~~SBA loan securitizations and a trading portfolio of corporate loans. ~~Those~~These earning assets are primarily funded by client deposits. Based on its

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

current earning asset portfolio, RJ Bank is subject to interest rate risk. RJ Bank analyzes interest rate risk based on forecasted net interest income, which is the net amount of interest received and interest paid, and the net portfolio valuation, both in a range of interest rate scenarios.

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

~~Management's Discussion and Analysis~~

One of the objectives of RJ Bank’s Asset Liability Management Committee is to manage the sensitivity of net interest income to changes in market interest rates. The methods used to measure this sensitivity are described in ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Market risk” of our ~~2018~~2019 Form 10-K.

We utilize a hedging strategy using interest rate swaps as a result of RJ Bank’s asset and liability management process. For further information regarding this ~~risk management objective, see the discussion of this~~ hedging strategy, insee Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form ~~10-K and in Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.~~10-K.

The following table is an analysis of RJ Bank’s estimated net interest income over a ~~12 month~~12-month period based on instantaneous shifts in interest rates (expressed in basis points) using RJ Bank’s own asset/liability model.


Instantaneous changes in rate	Net interest income ($ in millions)	Projected change in net interest income
+200	$848	32.5%
+100	$796	24.4%
0	$640	—
-25	$606	(5.3)%

Instantaneous changes in rate
Net interest income
($ in millions)

Projected change in
net interest income
+200 $880 (1.23)%
+100 $887 (0.45)%
0 $891 —
-100 $827 (7.18)%

Refer to ~~“Net~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Net interest analysis” inof this ~~MD&A~~Form 10-Q for a discussion of the impact changes in short-term interest rates could have on the firm’s operations.

The following table shows the contractual maturities of RJ Bank’s loan portfolio at June 30, ~~2019~~,2020, including contractual principal repayments. This table does not include any estimates of prepayments, which could shorten the average loan lives and cause the actual timing of the loan repayments to differ significantly from those shown in the table. Loan amounts in the table exclude unearned income and deferred expenses.


	Due in
$ in millions	One year or less		> One year – five years		> five years		Total
Loans held for investment:
C&I loans	$	208	$	4,425	$	3,098	$	7,731
CRE construction loans	25		153		41		219
CRE loans	559		2,466		670		3,695
Tax-exempt loans	—		76		1,214		1,290
Residential mortgage loans	—		5		4,912		4,917
SBL and other	3,610		21		—		3,631
Total loans held for investment	4,402		7,146		9,935		21,483
Loans held for sale	—		—		83		83
Total loans	$	4,402	$	7,146	$	10,018	$	21,566

Due in
$ in millions One year or less > One year – five years > 5 years Total
Loans held for investment:

C&I loans $ 138
$ 4,701
$ 3,562
$ 8,401
CRE construction loans 34
214
—
248
CRE loans 413
2,502
553
3,468
Tax-exempt loans —
31
1,265
1,296
Residential mortgage loans —
4
4,194
4,198
SBL and other 3,133
44
—
3,177
Total loans held for investment 3,718
7,496
9,574
20,788
Loans held for sale —
—
125
125
Total loans $ 3,718
$ 7,496
$ 9,699
$ 20,913

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The following table shows the distribution of the recorded investment of those RJ Bank loans that mature in more than one year between fixed and adjustable interest rate loans at June 30, ~~2019.~~2020. Loan amounts in the table exclude unearned income and deferred expenses.


	Interest rate type
$ in millions	Fixed		Adjustable		Total
Loans held for investment:
C&I loans	$	126	$	7,397	$	7,523
CRE construction loans	1		193		194
CRE loans	72		3,064		3,136
Tax-exempt loans	1,290		—		1,290
Residential mortgage loans	210		4,707		4,917
SBL and other	—		21		21
Total loans held for investment	1,699		15,382		17,081
Loans held for sale	4		79		83
Total loans	$	1,703	$	15,461	$	17,164

Interest rate type
$ in millions Fixed Adjustable Total
Loans held for investment:

C&I loans $ 96
$ 8,167
$ 8,263
CRE construction loans —
214
214
CRE loans 79
2,976
3,055
Tax-exempt loans 1,264
32
1,296
Residential mortgage loans 239
3,959

4,198
SBL and other 44
—
44
Total loans held for investment 1,722
15,348
17,070
Loans held for sale 125
—
125
Total loans $ 1,847
$ 15,348
$ 17,195

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

~~Management's Discussion and Analysis~~

Contractual loan terms for C&I, CRE, CRE construction and residential mortgage loans may include an interest rate floor, cap and/or fixed interest rates for a certain period of time, which would impact the timing of the interest rate reset for the respective loan. See the discussion within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk - Risk monitoring process” section of this Form 10-Q for additional information regarding RJ Bank’s interest-only residential mortgage loan portfolio.

In our RJ Bank available-for-sale securities portfolio, we hold primarily fixed-rate agency MBS and CMOs which were carried at fair value on our Condensed Consolidated Statements of Financial Condition at June 30, ~~2019,~~2020, with changes in the fair value of the portfolio recorded through OCI in our Condensed Consolidated Statements of Income and Comprehensive Income. At June 30, ~~2019,~~2020, our RJ Bank available-for-sale securities portfolio had a fair value of ~~$2.96~~$5.63 billion with a weighted-average yield of ~~2.46%~~1.90% and ~~an average expected~~a duration of three years. See Note 54 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional ~~information on the fair value of these securities.~~information.

Equity price risk

We are exposed to equity price risk as a ~~consequence~~result of our capital markets activities. Our broker-dealer activities are primarily client-driven, with the objective of meeting clients’ needs while earning revenues to compensate for the risk associated with carrying inventory. We attempt to reduce the risk of loss inherent in our inventory of equity securities by monitoring those security positions throughout each day and establishing position limits.

Foreign exchange risk

We are subject to foreign exchange risk due to our investments in foreign subsidiaries as well as transactions and resulting balances denominated in a currency other than the U.S. dollar. For example, a portion of our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling ~~$1.09~~$1.11 billion and ~~$1.05~~$1.10 billion at June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively. A portion of such loans are held by RJ Bank’s Canadian subsidiary, which is discussed in the following sections.

Investments in foreign subsidiaries

RJ Bank has an investment in a Canadian subsidiary, resulting in foreign exchange risk. To mitigate its foreign exchange risk, RJ Bank utilizes short-term, forward foreign exchange contracts. These ~~derivative agreements~~derivatives are primarily accounted for as net investment hedges in the condensed consolidated financial statements. See Note 65 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding these ~~derivative contracts.~~derivatives.

We had foreign exchange risk in our investment in RJ Ltd. of CAD ~~368~~346 million at June 30, ~~2019,~~2020, which was not hedged. Foreign exchange gains/losses related to this investment are primarily reflected in OCI inon our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 1516 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding our components of OCI.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

We also have foreign exchange risk associated with our investments in subsidiaries located in Europe. These investments are not hedged and we do not believe we have material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries.

Transactions and resulting balances denominated in a currency other than the U.S. dollar

We are subject to foreign exchange risk due to our holdings of cash and certain other assets and liabilities resulting from transactions denominated in a currency other than the U.S. dollar. Any currency-related gains/losses arising from these foreign currency denominated balances are reflected in “Other” revenues in our Condensed Consolidated Statements of Income and Comprehensive Income. The foreign exchange risk associated with a portion of such transactions and balances denominated in foreign currency are mitigated utilizing short-term, forward foreign exchange contracts. Such derivatives are not designated hedges and therefore, the related gains/losses associated with these contracts are included in “Other” revenues in our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 65 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our ~~derivative contracts.~~derivatives.

Credit risk

Credit risk is the risk of loss due to adverse changes in a borrower’s, issuer’s or counterparty’s ability to meet its financial obligations under contractual or agreed upon terms. The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction, and the parties involved. Credit risk is an integral component of the profit assessment of lending and other

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

~~Management's Discussion and Analysis~~

financing activities. See further discussion of our credit risk, including how we manage such risk, in ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our ~~2018~~2019 Form 10-K.

The decline in economic activity as a result of COVID-19 has caused increased credit risk in general and particularly with regard to companies in sectors that have been most significantly impacted by the economic disruption, including energy, airlines, entertainment and leisure, restaurants and gaming. Given the stresses on our clients’ liquidity, we have enhanced our credit monitoring activities, with an increased focus on monitoring our credit exposures and counterparty credit risk, including the risk that trades may not settle with a given counterparty. We have required collateral to be posted across our credit risk exposures in accordance with agreements with our borrowers and counterparties.

RJ Bank has a substantial loan portfolio. AWhile RJ Bank’s loan portfolio is diversified, a significant downturn in the overall economy, deterioration in real estate values or a significant issue within any sector or sectors where RJ Bank has a concentration ~~could~~will generally result in large provisions for loan losses and/or charge-offs.

~~Our allowance for loan losses is regularly evaluated with adjustments made on a quarterly basis. Several factors were taken into consideration in evaluating~~ RJ Bank determines the allowance ~~for loan losses at~~ ~~June 30, 2019~~, including the risk profile of the portfolios, net charge-offs during the period, the level of nonperforming loans and delinquency ratios. RJ Bank also considered the uncertainty related to certain industry sectors and the extent of credit exposure to specific borrowers within the portfolio. Finally, RJ Bank considered current economic conditions and other factors that might impact the portfolio. RJ Bank determined the allowance that was required for specific loan grades based on relative risk characteristics of the loan portfolio. On an ongoing basis, RJ Bank evaluates its methods for determining the allowance for each class of loans and makes enhancements it considers appropriate. ~~There was no material change~~

Our allowance for loan losses is regularly evaluated with adjustments made on a quarterly basis. Several factors were taken into consideration in ~~RJ Bank’s methodology for determining~~evaluating the allowance for loan losses at June 30, 2020, including the risk profile of the portfolios, net charge-offs during the ~~nine months ended June 30, 2019.~~period, the level of nonperforming loans, delinquency ratios and the impact of the COVID-19 pandemic. RJ Bank also considered the uncertainty related to certain industry sectors and the extent of credit exposure to specific borrowers within the portfolio. Finally, RJ Bank considered current economic conditions that might impact the portfolio. In response to the COVID-19 pandemic, we performed a portfolio-wide assessment on our loan portfolio. As a result, we downgraded loans in certain impacted industries, which gave rise to elevated loan loss provisions during our fiscal second and third quarters. In addition, we sold approximately $355 million, before charge-offs and discounts or premiums, of corporate loans in industries that we believe to be most vulnerable to the COVID-19 pandemic. We will continue to assess the impact of COVID-19 and, as more information becomes available regarding the financial repercussions to our borrowers, the risk ratings for individual loans will be updated and the allowance will be adjusted accordingly. Additional sales of corporate loans are also expected in the fiscal fourth quarter to further reduce credit risk in certain sectors.

RJ Bank’s allowance for loan losses as a percentage of bank loans ~~outstanding~~held for investment was ~~1.03%~~1.56% and 1.04% at June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively. See Note 87 in the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for detail on the changes in RJ Bank’s allowance for loan losses.

The bank loan loss provision for the nine months ended June 30, ~~2019 increased to $16~~2020 was $188 million compared to ~~$14~~a loan loss provision of $16 million infor the ~~prior year~~prior-year period. See further explanation of the loan loss provision increase in “Management’s Discussion and Analysis ~~of Financial Condition and~~- Results of Operations - RJ Bank” of this Form 10-Q.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The level of charge-off activity is a factor that is considered in evaluating the potential for severity of future credit losses. The following table presents net loan (charge-offs)/recoveries and the percentage of net loan (charge-offs)/recoveries to the average outstanding loan balances by loan portfolio segment.


	Three months ended June 30,														Nine months ended June 30,
	2020						2019						2020				2019
$ in millions	Net loan (charge-off)/recovery amount ⁽¹⁾		% of avg. outstanding loans		Net loan (charge-off)/recovery amount ⁽¹⁾		% of avg. outstanding loans		Net loan (charge-off)/recovery amount ⁽¹⁾		% of avg. outstanding loans		Net loan (charge-off)/recovery amount ⁽¹⁾		% of avg. outstanding loans
C&I loans	$	(71)	3.55	%	$	1	0.06	%	$	(71)	1.18	%	$	(2)	0.02	%
CRE loans	(2)		0.21	%	—		—		(2)		0.07	%	(3)		0.13	%

Residential mortgage loans	1		0.08	%	—		—		1		0.03	%	1		0.02	%


Total	$	(72)	1.31	%	$	1	0.02	%	$	(72)	0.44	%	$	(4)	0.03	%

Three months ended June 30, Nine months ended June 30,
2019 2018 2019 2018
$ in millions
Net loan
(charge-off)/recovery
amount

% of avg.
outstanding
loans

Net loan
(charge-off)/recovery
amount

% of avg.
outstanding
loans
Net loan
(charge-off)/recovery
amount
% of avg.
outstanding
loans
Net loan
(charge-off)/recovery
amount
% of avg.
outstanding
loans
C&I loans $ 1
0.06 % $ (5 ) 0.23 % $ (2 ) 0.02 % $ (9 ) 0.15 %
CRE loans —
—
—
—
(3 ) 0.13 % —
—
Residential mortgage loans —
—
1
0.08 % 1
0.02 % 1
0.05 %
Total $ 1
0.02 % $ (4 ) 0.08 % $ (4 ) 0.03 % $ (8 ) 0.05 %

(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.

The level of nonperforming loans is another indicator of potential future credit losses. The following table presents the nonperforming loans balance and total allowance for loan losses for the periods presented.

June 30, 2019 September 30, 2018
$ in millions
Nonperforming
loan balance

Allowance for
loan losses
balance

Nonperforming
loan balance

Allowance for
loan losses
balance
Loans held for investment:

C&I loans $ 22
$ 134
$ 2
$ 123
CRE construction loans —
4
—
3
CRE loans 10
46
—
47
Tax-exempt loans —
9
—
9
Residential mortgage loans 21
16
23
17
SBL and other —
6
—
4
Total $ 53
$ 215
$ 25
$ 203
Total nonperforming loans as a % of RJ Bank total loans 0.25 % 0.12 %


	June 30, 2020								September 30, 2019
$ in millions	Nonperforming loan balance			Allowance for loan losses balance		Nonperforming loan balance			Allowance for loan losses balance
Loans held for investment:
C&I loans	$	1		$	186	$	19		$	139
CRE construction loans	—			4		—			3
CRE loans	6			106		8			46
Tax-exempt loans	—			13		—			9
Residential mortgage loans	14			20		16			16
SBL and other	—			5		—			5

Total	$	21		$	334	$	43		$	218
Total nonperforming loans as a % of RJ Bank total loans	0.07		%			0.21		%

Included in nonperforming residential mortgage loans ~~in the preceding table~~ were ~~$10~~$7 million in loans for which $5$4 million in charge-offs were previously recorded, resulting in less exposure within the remaining balance. See Note 87 in the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for loan categories as a percentage of total loans receivable.

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

~~Management's Discussion and Analysis~~

The nonperforming loan balances in the preceding table exclude $11 million and $12 million as of June 30, 2020 and September 30, 2019, respectively, of residential TDRs ~~as of both June 30, 2019 and September 30, 2018,~~ which were returned to accrual status in accordance with our policy. Total nonperforming assets, including other real estate acquired in the settlement of residential mortgages, amounted to ~~$56~~$23 million and ~~$28~~$46 million at June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively. Total nonperforming assets as a percentage of RJ Bank total assets ~~was 0.22%~~were 0.08% and ~~0.12%~~0.18% at June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, respectively. Although our nonperforming assets as a percentage of RJ Bank assets remained low as of June 30, 2020, prolonged or further market deterioration could result in an increase in our nonperforming assets, an increase in our allowance for loan losses and/or an increase in net charge-offs in future periods, although the extent will depend on future developments that are highly uncertain and cannot be predicted.

We have received requests from certain clients for forbearance, or deferral of their loan payments to us, driven or exacerbated by the economic impacts of the COVID-19 pandemic. Certain clients have also requested modifications of covenant terms. In accordance with the CARES Act, we have elected to not apply TDR classification to any COVID-19 related loan modifications that were performed after March 1, 2020 to borrowers who were current as of December 31, 2019. Based on the outstanding principal balance as of the end of June 30, 2020, we have active short-term payment deferrals on approximately $364 million and $126 million of our corporate and residential loans, respectively. The borrower’s past due and nonaccrual status will not be impacted during the deferral period.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Loan underwriting ~~process~~policies

RJ Bank’s underwriting ~~processes~~policies for the major types of loans are described in ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our ~~2018~~2019 Form 10-K. There were no material changes in RJ Bank’s underwriting ~~processes~~policies during the nine months ended June 30, ~~2019.~~2020.

Risk monitoring process

Another component of credit risk strategy at RJ Bank is the ongoing risk monitoring and review processes for all residential, SBL, ~~and other,~~ corporate and tax-exempt credit exposures, as well as our rigorous processes to manage and limit credit losses arising from loan delinquencies. There are various other factors included in these processes, depending on the loan portfolio. There were no material changes to those processes and policies during the nine months ended June 30, ~~2019.~~2020.

Residential mortgage and SBL and ~~residential mortgage loans~~other loan portfolios

The ~~marketable~~ collateral securing RJ Bank’s SBL and other portfolio is monitored on a recurring basis, with marketable collateral monitored on a daily basis. Collateral adjustments are made by the borrower as necessary to ensure RJ Bank’s loans are adequately secured, resulting in minimizing its credit risk. Collateral calls have been minimal relative to our SBL and other portfolio with no losses incurred to date.

We track and review many factors to monitor credit risk in RJ Bank’s residential mortgage loan portfolio. The factors include, but are not limited to: loan performance trends, loan product parameters and qualification requirements, borrower credit scores, ~~occupancy (i.e., owner occupied, second home or investment property),~~ level of documentation, loan purpose, geographic concentrations, average loan size and ~~loan policy exceptions.~~LTV ratios. These measures, while considered and reviewed in establishing the allowance for loan losses, have not resulted in any material adjustments to RJ Bank’s historical loss rates.

The following table presents ~~as of the date indicated,~~ a summary of delinquent residential mortgage loans, the vast majority of which are first mortgage loans, which isare comprised of loans which are two or more payments past due as well as loans in the process of foreclosure.


	Amount of delinquent residential loans										Delinquent residential loans as a percentage of outstanding loan balances
$ in millions	30-89 days		90 days or more		Total		30-89 days		90 days or more		Total
June 30, 2020	$	5	$	7	$	12	0.10	%	0.14	%	0.24	%
September 30, 2019	$	2	$	10	$	12	0.04	%	0.22	%	0.26	%

Amount of delinquent residential loans Delinquent residential loans as a percentage of outstanding loan balances
$ in millions 30-89 days 90 days or more Total 30-89 days 90 days or more Total
June 30, 2019 $ 1
$ 15
$ 16
0.03 % 0.36 % 0.39 %
September 30, 2018 $ 2
$ 13
$ 15
0.06 % 0.33 % 0.39 %

Our June 30, ~~2019~~2020 percentage continues to compare favorably to the national average for over 30 day delinquencies of ~~2.99%~~2.51%, as most recently reported by the Fed.

Credit risk is also managed by diversifying the residential mortgage portfolio. Most of the loans in our residential loan portfolio are to Private Client Group clients across the country. The following table details the geographic concentrations (top five states) of RJ Bank’s one-to-four family residential mortgage loans.


	June 30, 2020
	Loans outstanding as a % of RJ Bank total residential mortgage loans	Loans outstanding as a % of RJ Bank total loans
CA	25.8%	5.9%
FL	16.4%	3.8%
TX	8.2%	1.9%
NY	7.1%	1.6%
CO	4.1%	0.9%

June 30, 2019
Loans outstanding as a % of RJ Bank total residential mortgage loans Loans outstanding as a % of RJ Bank total loans
CA 24.8% 5.0%
FL 16.6% 3.4%
NY 8.3% 1.7%
TX 8.1% 1.6%
CO 3.6% 0.7%

Loans where borrowers may be subject to payment increases include adjustable rate mortgage loans with terms that initially require payment of interest only. Payments may increase significantly when the interest-only period ends and the loan principal begins to amortize. At June 30, ~~2019~~2020 and September 30, ~~2018,~~2019, these loans totaled ~~$1.20~~$1.57 billion and ~~$992 million,~~$1.29 billion, respectively, or approximately

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

~~Management's Discussion~~ 32% and ~~Analysis~~

30% ~~and 25%~~ of the residential mortgage portfolio, respectively. The ~~weighted average~~weighted-average number of years before the remainder of the loans, which were still in their interest-only period at June 30, ~~2019~~,2020, begins amortizing is ~~6.3~~6 years.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

A component of credit risk management for the residential portfolio is the LTV ratio and borrower credit score at origination or purchase. The ~~most recent~~ weighted-average LTV ratios and FICO scores at origination of RJ Bank’s residential first mortgage loan portfolio were 64% and ~~761,~~762, respectively.

Corporate and tax-exempt loans

Credit risk in RJ Bank’s corporate and tax-exempt loan portfolios isare monitored on an individual loan basis. The majority of RJ Bank’s tax-exempt loan portfolio is comprised of loans to investment-grade borrowers.

Credit risk is managed by diversifying the corporate loan portfolio. RJ Bank’s corporate loan portfolio does not contain a significant concentration in any single industry. The following table details the industry concentrations (top five categories) of RJ Bank’s corporate loans.


	June 30, 2020
	Loans outstanding as a % of RJ Bank total corporate loans	Loans outstanding as a % of RJ Bank total loans
Office real estate	7.4%	4.0%
Automotive/transportation	7.2%	3.9%
Business systems and services	6.6%	3.6%
Hospitality	6.6%	3.6%
Multi-family	5.2%	2.8%

June 30, 2019
Loans outstanding as a % of RJ Bank total corporate loans Loans outstanding as a % of RJ Bank total loans
Business systems and services 8.2% 4.7%
Office real estate 7.6% 4.4%
Hospitality 5.3% 3.0%
Automotive/transportation 5.2% 3.0%
Consumer products and services 4.5% 2.6%

RJ Bank’s exposure to the energy, airlines, entertainment and leisure, restaurant and gaming sectors, those most affected by the economic disruption from the COVID-19 pandemic, were each less than 2% of the loan portfolio as of June 30, 2020.

Although we saw deterioration in oil prices during the current fiscal year, our energy portfolio primarily consists of loans to midstream distribution companies and convenience stores, with no loans to exploration and production enterprises. As a result, the portfolio has minimal direct commodity price exposure. However, if we continue to see a significant deterioration in oil prices, our clients, and as a result our loans to such clients, could be negatively impacted in the future.

Liquidity risk

See the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources” of this Form 10-Q for information regarding our liquidity and how we manage liquidity risk.

Operational risk

Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes, including cybersecurity incidents. See ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Operational risk” of our ~~2018~~2019 Form 10-K for a discussion of our operational risk and certain of our risk mitigation processes. ~~There~~

In response to the COVID-19 pandemic, we activated and successfully executed on our business continuity protocols and continue to monitor the COVID-19 crisis under such protocols. We have ~~been no~~endeavored to safeguard our associates and to ensure continuity of business operations for our clients. As a result, most of our associates are working remotely. Our systems and infrastructure have continued to support the increased volumes of activity, without any significant operational or technology disruptions. We did not incur any material ~~changes in such processes~~losses related to our operational risks during the nine months ended June 30, ~~2019.~~2020. The firm continues to monitor the situation and has developed a phased approach to reopening our offices based on regional indicators and in compliance with all applicable laws and regulations. As of June 30, 2020, we have reopened certain of our offices in a limited capacity and are working under strict precautions.

As more fully described in the discussion of our business technology risks included in various risk factors presented in ~~Item~~“Item 1A ~~“Risk~~- Risk Factors” of our ~~2018~~2019 Form 10-K and “Part II - Other Information - Item 1A - Risk Factors” of this Form 10-Q, despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, ~~cyberattacks~~cyber-attacks and other information security breaches, ~~as well as~~and other events that could have an impact on the security and stability of our operations. Notwithstanding the precautions we take, if one or more of these events were to occur, this could jeopardize the information we confidentially maintain, including that of our clients and counterparties, which is processed, stored in and transmitted through our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations or the operations of our clients or counterparties. To-date, we have not experienced any material losses relating to ~~cyberattacks~~cyber-attacks or other information security breaches; however, there can be no assurances that we will not suffer such losses in the future.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Model risk

Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models. See ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our ~~2018~~2019 Form 10-K for information regarding how we utilize models throughout the firm and how we manage model risk.

Compliance risk

Compliance risk is the risk of legal or regulatory sanctions, financial loss, or reputational damage that wethe firm may suffer from a failure to comply with applicable laws, external standards, or internal requirements. See ~~Item~~“Item 7 ~~“Management’s~~- Management’s Discussion and Analysis of

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

Financial Condition and Results of Operations - Risk management - Compliance risk” of our ~~2018~~2019 Form 10-K for information on our compliance risks, including how we manage such risks. There have been no material changes in our compliance risk mitigation processes during the nine months ended June 30, ~~2019.~~2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See ~~Item~~“Item 2 ~~“Management’s~~- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management” of this Form 10-Q for our quantitative and qualitative disclosures about market risk.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls are procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Securities Exchange Act of 1934 Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 17, 2015, Jyll Brink (“Brink”) filed a putative class action complaint in the U.S. District Court for the Southern District of Florida (the “District Court”) under the caption Jyll Brink v. Raymond James & Associates, Inc. (the “Brink Complaint”). The Brink Complaint alleges that Brink, a former customer of RJ&A, was charged a fee in her Passport Investment Account, and that the fee included an unauthorized and undisclosed profit to RJ&A in violation of its customer agreement and applicable industry standards. The Passport Investment Account is a fee-based account in which clients pay asset-based advisory fees and certain processing fees for ongoing investment advice and monitoring of securities holdings. The Brink Complaint seeks, among other relief, damages in the amount of the difference between the actual cost of processing a trade, as alleged by Brink, and the fee charged by RJ&A. On October 19, 2018, the District Court certified a class of former and current customers of RJ&A who executed a Passport Agreement and were charged processing fees during the period between February 17, 2010 and February 17, 2015.

On February 11, 2016, Caleb Wistar (“Wistar”) and Ernest Mayeaux (“Mayeaux”) filed a putative class action complaint in the District Court under the caption Caleb Wistar and Ernest Mayeaux v. Raymond James Financial Services, Inc. and Raymond James Financial Services Advisors, Inc. (as subsequently amended, the “Wistar Complaint”). Similar to the Brink Complaint, the Wistar Complaint alleges that Wistar and Mayeaux, former customers of Raymond James Financial Services, Inc. (“RJFS”) and Raymond James Financial Services Advisors, Inc. (“RJFSA”), were charged a fee in RJFS and RJFSA’s Passport Investment Account and that the fee included an unauthorized and undisclosed profit to RJFS and RJFSA in violation of its customer agreement and applicable industry standards. The Wistar Complaint seeks, among other relief, damages in the amount of the difference between the actual cost of processing a trade, as alleged by Wistar and Mayeaux, and the fee charge by RJFS and RJFSA.

Not applicable.

On April 5, 2019, the parties to the Brink Complaint and the Wistar Complaint agreed in principle to an aggregate settlement of $15 million. On June 11, 2019, the parties filed a Stipulation of Settlement and Joint Motion for Preliminary Approval of Class Action Settlement and Certification of the Settled Subclasses. On June 12, 2019, the District Court entered an order preliminarily approving the Class Action Settlement and set a hearing date of October 25, 2019 for final approval of the settlement. While the hearing for final approval has been set, the settlement remains subject to approval by the District Court. The settlement amounts for both complaints were included in “Other payables” in our Condensed Consolidated Statement of Financial Condition as of June 30, 2019.

ITEM 1A. RISK FACTORS

~~Not applicable.~~Our operations and financial results are subject to various risks and uncertainties which could adversely affect our business, financial condition, results of operations, liquidity and the trading price of our common stock. For information regarding these risks and uncertainties, see “Item 1A - Risk Factors” of our 2019 Form 10-K. The following represents material changes to our risk factors disclosed in our 2019 Form 10-K.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

The recent outbreak of COVID-19 has adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and results of operations.

The worldwide COVID-19 pandemic has negatively affected our business and the entire financial services industry and is likely to continue to do so. Since the beginning of January 2020, the outbreak has caused economic uncertainty and, particularly in our fiscal second quarter disruption in the financial markets both globally and in the U.S., and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the U.S., to impose measures intended to control its spread, 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. If COVID-19, or another highly infectious or contagious disease, continues to spread or the response to contain it is unsuccessful, we will likely experience further adverse effects on our business, financial condition, liquidity, and results of operations. A prolonged period of economic deterioration may also result in impairment of goodwill and identifiable intangible assets. The extent of such effects will depend on future developments which are highly uncertain and cannot be predicted, including the geographic spread of the virus, the overall severity of the disease, the duration of the outbreak, the measures taken by various governmental authorities in response to the outbreak and the possible further impacts on the global economy.

The continued spread of COVID-19 has caused and could continue to cause disruptions in our business. These effects have included restrictions on our employees’ ability to travel, as well as temporary partial or full closures of our facilities and the facilities of our customers, suppliers, or other vendors. We often recruit skilled professionals and new clients by visiting their offices or having them visit our offices. Although we have transitioned such visits to virtual meetings, continued travel restrictions or other disruptions that prevent us from meeting with professional prospects or potential new clients may adversely impact our ability to recruit such professional prospects or engage potential new clients. While we maintain contingency plans for events such as pandemic outbreaks, the further spread of COVID-19 or a similar contagious disease could also impair the availability of our executive officers who are necessary to conduct our business. In addition, any continued spread of COVID-19 or new outbreak could harm the operations of third-party service providers who perform critical services for our business.

The COVID-19 pandemic has caused, and is likely to continue to cause, economic, market and other disruptions worldwide. As a result of a shift to fee-based accounts over the past several years, a larger portion of our client assets is more directly affected by market movements. The significant decrease in the market value of our clients’ assets during our fiscal second quarter had a negative impact on our financial results due to the fact that asset-based fees are earned on the market value of the underlying client assets, many of which are billed based on assets as of the beginning of a quarter. Although equity markets recovered during our fiscal third quarter, any future declines in equity markets will likely have a greater negative affect on revenues and profitability than would have been experienced in prior years due to the increased proportion of our asset-based revenues. Market volatility, such as that seen in our fiscal second quarter, could also cause clients to move their investments to lower margin products, or withdraw them, which could have an adverse impact on our profitability. We could also experience a material reduction in trading volume and lower securities prices in times of market uncertainty, which would result in lower brokerage revenues, including losses on firm inventory. The fair values of certain of our investments could also continue to be negatively impacted, resulting in additional unrealized or realized losses on such investments. In addition, the market uncertainty related to the COVID-19 pandemic has caused a slowdown in merger & acquisition activity and may cause our institutional clients to abandon announced transactions and/or cease exploration of potential transactions, which could negatively impact our Capital Markets revenues.

Moreover, certain actions taken by U.S. or other governmental authorities, including the Federal Reserve, that are intended to ameliorate the macroeconomic effects of COVID-19 have had, and will continue to have, a negative effect on our business. The

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Fed significantly lowered interest rates in response to COVID-19 pandemic concerns in March. These decreases in short-term interest rates, in addition to those in late 2019, have had a negative impact on our results, as we have certain assets and liabilities, primarily held in our PCG, 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 RJBDP are also sensitive to changes in interest rates. These market interest rate declines will continue to negatively impact results in future quarters.

In addition, we are generally exposed to the credit risk that third-parties that owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, and this risk has been and may further be exacerbated by the macroeconomic effects of COVID-19. We lend to businesses and individuals, including through offering C&I loans, commercial and residential mortgage loans, tax-exempt loans, home equity lines of credit, and other loans generally collateralized by securities. We also incur credit risk through our investments. Our credit risk has increased, and such risk and credit losses may continue to increase to the extent our loans or investments are to borrowers or issuers who, as a group, may be uniquely or disproportionately affected by declining economic or market conditions as a result of COVID-19 such as those operating in the airline, restaurant, gaming, entertainment/leisure and energy sectors. The deterioration of our credit exposure due to COVID-19 has led to additional loan loss provisions and charge-offs and could lead to further additional loan loss provisions and/or charge-offs, or credit impairment of our investments, and subsequently have a material impact on our net income, regulatory capital and liquidity.

We cannot assure you that conditions in financial markets will not further deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, resulting in actions such as restructuring debt or obtaining additional financing on terms that may be onerous or highly dilutive.

Any cyber-attack or other security breach of our technology systems, or those of our clients or other third-party vendors we rely on, could subject us to significant liability and harm our reputation.

Our operations rely heavily on the secure processing, storage and transmission of sensitive and confidential financial, personal and other information in our computer systems and networks. There have been several highly publicized cases involving financial services companies reporting the unauthorized disclosure of client or other confidential information in recent years, as well as cyber-attacks involving the theft, dissemination and destruction of corporate information or other assets, in some cases as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties. Like other financial services firms, we experience malicious cyber activity directed at our computer systems, software, networks and its users on a daily basis. This malicious activity includes attempts at unauthorized access, implantation of computer viruses or malware, and denial-of-service attacks. We also experience large volumes of phishing and other forms of social engineering attempted for the purpose of perpetrating fraud against the firm, our associates, our advisors or our clients. Additionally, like many large enterprises, since mid-March 2020, we have shifted the majority of our associates to remote work arrangements in response to the COVID-19 pandemic. This change in our operating model has enabled us to successfully continue business operations, but also introduces potential new vulnerabilities to cyber threats. We seek to continuously monitor for and nimbly react to any and all such activity, and we develop our systems to protect our technology infrastructure and data from misuse, misappropriation or corruption.

Cyber-attacks can originate from a variety of sources, including third parties affiliated with foreign governments, organized crime or terrorist organizations. Third parties may also attempt to place individuals within our firm or induce employees, clients or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent. Although cybersecurity incidents among financial services firms are on the rise, we have not experienced any material losses relating to cyber-attacks or other information security breaches. However, the techniques used in these attacks are increasingly sophisticated, change frequently and are often not recognized until launched. Although we seek to maintain a robust suite of authentication and layered information security controls, including our cyber threat analytics, data encryption and tokenization technologies, anti-malware defenses and vulnerability management program, any one or combination of these controls could fail to detect, mitigate or remediate these risks in a timely manner. Despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, spam attacks, unauthorized access, distributed denial of service attacks, computer viruses and other malicious code, and other events that could result in significant liability and damage to our reputation, and have an ongoing impact on the security and stability of our operations.

We also rely on numerous third-party service providers to conduct other aspects of our business operations, and we face similar risks relating to them. While we regularly conduct security assessments on these third-party vendors, we cannot be certain that their information security protocols are sufficient to withstand a cyber-attack or other security breach. In addition, in order to access our products and services, our customers may use computers and other devices that are beyond our security control systems.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notwithstanding the precautions we take, if a cyber-attack or other information security breach were to occur, this could jeopardize the information we confidentially maintain, or otherwise cause interruptions in our operations or those of our clients and counterparties, exposing us to liability. As attempted attacks continue to evolve in scope and sophistication, we may be required to expend substantial additional resources to modify or enhance our protective measures, to investigate and remediate vulnerabilities or other exposures or to communicate about cyber-attacks to our customers. Though we have insurance against some cyber-risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits or are not covered under any of our current insurance policies. A technological breakdown could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to potential disciplinary action by regulators. Additionally, the SEC issued guidance in February 2018 stating that, as a public company, we are expected to have controls and procedures that relate to cybersecurity disclosure, and are required to disclose information relating to certain cyber-attacks or other information security breaches in disclosures required to be made under the federal securities laws. Further, successful cyber-attacks at other large financial institutions or other market participants, whether or not we are affected, could lead to a general loss of customer confidence in financial institutions that could negatively affect us, including harming the market perception of the effectiveness of our security measures or the financial system in general, which could result in reduced use of our financial products and services.

Further, in light of the high volume of transactions we process, the large number of our clients, partners and counterparties, the increasing sophistication of malicious actors, and the COVID-19 pandemic response, a cyber-attack could occur and persist for an extended period of time without detection. We expect that any investigation of a cyber-attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such an attack.

We may also be subject to liability under various data protection laws. In providing services to clients, we manage, utilize and store sensitive or confidential client or employee data, including personal data. As a result, we are subject to numerous laws and regulations designed to protect this information, such as U.S. federal, state and international laws governing the protection of personally identifiable information. These laws and regulations are increasing in complexity and number. If any person, including any of our associates, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates such data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and related revenue. Potential liability in the event of a security breach of client data could be significant. Depending on the circumstances giving rise to the breach, this liability may not be subject to a contractual limit or an exclusion of consequential or indirect damages.

See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Operational risk” of our 2019 Form 10-K and “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Operational risk” of this Form 10-Q for additional information regarding our exposure to and approaches for managing operational risks.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We did not have any sales of unregistered securities for the nine months ended June 30, ~~2019.~~2020.

We purchase our own stock from time to time in conjunction with a number of activities, each of which is described in the following paragraphs. The following table presents information on our purchases of our own stock, on a monthly basis, for the nine months ended June 30, ~~2019.~~2020.


	Total number of shares purchased	Average price per share		Number of shares purchased as part of publicly announced plans or programs	Approximate dollar value (in millions) at each month-end, of securities that may yet be purchased under the plans or programs
October 1, 2019 – October 31, 2019	5,582	$	84.80	—	$750
November 1, 2019 – November 30, 2019	86,720	$	89.35	—	$750
December 1, 2019 – December 31, 2019	132,723	$	89.33	125,567	$739
First quarter	225,025	$	89.23	125,567

January 1, 2020 – January 31, 2020	40,106	$	89.74	32,988	$736
February 1, 2020 – February 29, 2020	721,432	$	89.47	719,250	$672
March 1, 2020 – March 31, 2020	1,800,682	$	74.94	1,795,764	$537
Second quarter	2,562,220	$	79.26	2,548,002

April 1, 2020 – April 30, 2020	—	$	—	—	$537
May 1, 2020 – May 31, 2020	—	$	—	—	$537
June 1, 2020 – June 30, 2020	—	$	—	—	$537
Third quarter	—	$	—	—

Fiscal year-to-date total	2,787,245	$	80.06	2,673,569

Total number of shares
purchased

Average price
per share
Number of shares purchased as part of publicly announced plans or programs Approximate dollar value (in millions) at each month-end, of securities that may yet be purchased under the plans or programs

October 1, 2018 – October 31, 2018 469,566
$ 74.88
423,903
$182
November 1, 2018 – November 30, 2018 2,420,562
$ 77.66
2,341,466
$500
December 1, 2018 – December 31, 2018 3,449,198
$ 74.55
3,287,237
$255
First quarter 6,339,326
$ 75.76
6,052,606

January 1, 2019 – January 31, 2019 13,408
$ 75.16
—
$255
February 1, 2019 – February 28, 2019 4,050
$ 82.54
—
$255
March 1, 2019 – March 31, 2019 603,529
$ 78.23
602,938
$458
Second quarter 620,987
$ 78.19
602,938

April 1, 2019 – April 30, 2019 22,241
$ 81.07
—
$458
May 1, 2019 – May 31, 2019 302,699
$ 83.53
301,756
$433
June 1, 2019 – June 30, 2019 744,251
$ 80.95
742,076
$373
Third quarter 1,069,191
$ 81.68
1,043,832

Fiscal year-to-date total 8,029,504
$ 76.74
7,699,376

During the nine months ended June 30, 2019, we utilized the remainder of the previous Board authorization for repurchases of our common stock and outstanding senior notes. Accordingly, the Board approved two increases to the authorization totaling $750 million, including $500 million on November 29, 2018 and $250 million on March 1, 2019. Between July 1, 2019 and August 7, 2019, we repurchased 1.10 million shares of our common stock under this authorization at a weighted-average price of $76.60, for total consideration of $84 million. As of August 7, 2019, we had $289 million remaining under this authorization.

In the preceding table, the total number of shares purchased includes shares purchased pursuant to our Restricted Stock Trust Fund, which was established to acquire our common stock in the open market and used to settle RSUs granted as a retention vehicle for certain employees of our wholly owned Canadian subsidiaries. For more information on this trust fund, see Note 2 of the Notes to Consolidated Financial Statements of our ~~2018~~2019 Form 10-K and Note 98 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q. These activities do not utilize the ~~previously described~~ repurchase ~~authority.~~authorization presented in the preceding table.

The total number of shares purchased also includes shares repurchased as a result of employees surrendering shares as payment for option exercises or withholding taxes. These activities do not utilize the ~~previously described~~ repurchase ~~authority.~~authorization presented in the preceding table.

In response to the heightened market volatility as a result of the COVID-19 pandemic, we suspended our share repurchases from mid-March 2020 through the end of our fiscal third quarter. We resumed share repurchases to offset dilution in our fiscal fourth quarter.


~~ITEM 3.~~	~~DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


~~ITEM 4.~~	~~MINE SAFETY DISCLOSURES~~

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


~~ITEM 5.~~	~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

Not applicable.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

ITEM 6. EXHIBITS


~~ITEM 6.~~	~~EXHIBITS~~



Exhibit Number		Description
3.1	Restated Articles of Incorporation of Raymond James Financial, Inc. as filed with the Secretary of State of Florida on November 25, 2008, incorporated by reference to Exhibit 3(i).1 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on November 28, 2008.
3.2	Amended and Restated By-Laws of Raymond James Financial, Inc., reflecting amendments adopted by the Board of Directors on November 30, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 5, 2017.
10.1	~~First~~ Second Amendment to Credit Agreement,dated as of May ~~23, 2019,~~ 27,2020,among Raymond James Financial,Inc.,Raymond James &Associates,Inc., the Lenders party thereto and Bank of America,.N.A.
31.1	Certification of Paul C. Reilly pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of ~~Jeffrey P. Julien~~Paul M. Shoukry pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Paul C. Reilly and ~~Jeffrey P. Julien~~Paul M. Shoukry pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document ~~(The~~- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			RAYMOND JAMES FINANCIAL, INC.
			(Registrant)



			~~RAYMOND JAMES FINANCIAL, INC.~~
Date:		August 7, 2020	~~(Registrant)~~

~~Date:~~	~~August 8, 2019~~	/s/ Paul C. Reilly
			Paul C. Reilly
			Chairman and Chief Executive Officer

~~Date:~~		~~August 8, 2019~~	~~/s/ Jeffrey P. Julien~~
			~~Jeffrey P. Julien~~
			~~Executive Vice President - Finance and~~

Date:		August 7, 2020	/s/ Paul M. Shoukry
			Paul M. Shoukry
			Chief Financial Officer and Treasurer

9192



Florida						59-1517485
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



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



Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐



INDEX
				PAGE
PART I			FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)	3
			Condensed Consolidated Statements of Financial Condition as of June 30, ~~2019~~2020 and September 30, ~~2018~~2019 (Unaudited)	3
			Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended June 30, ~~2019~~2020 and June 30, ~~2018~~2019 (Unaudited)	4
			Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended June 30, ~~2019~~2020 and June 30, ~~2018~~2019 (Unaudited)	5
			Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, ~~2019~~2020 and June 30, ~~2018~~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	9
			Note 3 - ~~Acquisitions~~Fair value	11
			Note 4 - ~~Fair value~~Available-for-sale securities	1217
			Note 5 ~~- Available-for-sale securities~~	19
	~~Note 6~~ - Derivative assets and derivative liabilities	2019
			Note 76 - Collateralized agreements and financings	2321
			Note 87 - Bank loans, net	2522
			Note 98 - Variable interest entities	3229
			Note 109 - Goodwill and identifiable intangible assets, net	3330
			Note 10 - Leases	30
			Note 11 - Bank deposits	3432
			Note 12 - Other borrowings	3533
			Note 13 - ~~Income taxes~~Senior notes payable	3534
			Note 14 - Income taxes	34
			Note 15 - Commitments, contingencies and guarantees	3635
			Note 1516 - Accumulated other comprehensive income/(loss)	3938
			Note 1617 - Revenues	4139
			Note 1718 - Interest income and interest expense	4643
			Note 1819 - Share-based compensation	4743
			Note 1920 - Regulatory capital requirements	4744
			Note 2021 - Earnings per share	4946
			Note 2122 - Segment information	4946
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	5249
Item 3.			Quantitative and Qualitative Disclosures about Market Risk	8887
Item 4.			Controls and Procedures	8887
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings	8988
Item 1A.			Risk Factors	8988
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	9091
Item 3.			Defaults Upon Senior Securities	9091
Item 4.			Mine Safety Disclosures	9091
Item 5.			Other Information	9091
Item 6.			Exhibits	9192
			Signatures	9192



Level 3 financial instrument $ in millions	Fair value at June 30, 2019		Valuation technique(s)	Unobservable input	Range (weighted-average)
Recurring measurements
Other investments - ARS preferred	$	24	Discounted cash flow	Average discount rate	5.35% - 6.35% (5.85%)
				Average interest rates applicable to future interest income on the securities ⁽¹⁾	2.31% - 2.31% (2.31%)
				Prepayment year ⁽²⁾	2019 - 2022 (2022)
	$	40	Other investment-specific events ⁽³⁾	Not meaningful ⁽³⁾	Not meaningful ⁽³⁾
Private equity investments (not measured at NAV)	$	46	Income approach - discounted cash flow	Discount rate	25	%
				Terminal EBITDA multiple	10.0x
				Terminal year	2022 - 2042 (2023)
	$	13	Transaction price or other investment-specific events ⁽⁴⁾	Not meaningful ⁽⁴⁾	Not meaningful ⁽⁴⁾



☒			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



$ in millions, except per share amounts	June 30, 2019			September 30, 2018
Assets:
Cash and cash equivalents	$	3,596		$	3,500
Cash segregated pursuant to regulations	2,356			2,441
Securities purchased under agreements to resell	411			373
Securities borrowed	306			255
Financial instruments, at fair value:
Trading instruments (includes $557 and $465 pledged as collateral)	803			702
Available-for-sale securities (includes $16 and $20 pledged as collateral)	2,960			2,696
Derivative assets	304			180
Private equity investments	146			147
Other investments (includes $24 and $25 pledged as collateral)	253			202
Brokerage client receivables, net	2,613			3,343
Receivables from brokers, dealers and clearing organizations	274			257
Other receivables	631			592
Bank loans, net	20,691			19,518
Loans to financial advisors, net	936			925
Investments in real estate partnerships held by consolidated variable interest entities	69			107
Property and equipment, net	518			486
Deferred income taxes, net	210			203
Goodwill and identifiable intangible assets, net	635			639
Other assets	965			847
Total assets	$	38,677		$	37,413

Liabilities and equity:
Bank deposits	$	22,166		$	19,942
Securities sold under agreements to repurchase	165			186
Securities loaned	429			423
Financial instruments sold but not yet purchased, at fair value:
Trading instruments	287			235
Derivative liabilities	275			247
Brokerage client payables	4,343			5,625
Payables to brokers, dealers and clearing organizations	174			206
Accrued compensation, commissions and benefits	1,093			1,189
Other payables	686			459
Other borrowings	945			899
Senior notes payable	1,550			1,550
Total liabilities	32,113			30,961
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; 158,316,880 and 156,363,615 shares issued as of June 30, 2019 and September 30, 2018, respectively, and 139,666,546 and 145,642,437 shares outstanding as of June 30, 2019 and September 30, 2018, respectively	2			2
Additional paid-in capital	1,915			1,808
Retained earnings	5,659			5,032
Treasury stock, at cost; 18,650,334 and 10,693,026 common shares as of June 30, 2019 and September 30, 2018, respectively	(1,060		)	(447		)
Accumulated other comprehensive loss	(14		)	(27		)
Total equity attributable to Raymond James Financial, Inc.	6,502			6,368
Noncontrolling interests	62			84
Total equity	6,564			6,452
Total liabilities and equity	$	38,677		$	37,413



Three months ended June 30, 2018 Level 3 instruments at fair value
	Financial assets								Financial liabilities
$ in millions	Trading instruments - Other			Available-for-sale securities - ARS - preferred		Private equity investments			Trading instruments - Other
Fair value beginning of period	$	1		$	108	$	96		$	(1	)
Total gains/(losses) for the period:
Included in earnings	—			—		4			—
Included in other comprehensive income	—			3		—			—
Purchases and contributions	18			—		—			—
Sales	(15		)	—		(28		)	(1		)
Transfers:
Into Level 3	—			—		—			—
Out of Level 3	—			—		—			—
Fair value end of period	$	4		$	111	$	72		$	(2	)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	1		$	—	$	—		$	—
Unrealized gains/(losses) for the period included in other comprehensive income for instruments held at the end of the reporting period	$	—		$	3	$	—		$	—



Level 3 financial instrument $ in millions	Fair value at September 30, 2018		Valuation technique(s)	Unobservable input	Range (weighted-average)
Recurring measurements
ARS preferred	$	67	Discounted cash flow	Average discount rate	6.50% - 7.85% (7.13%)
				Average interest rates applicable to future interest income on the securities ⁽¹⁾	4.13% - 5.51% (4.47%)
				Prepayment year ⁽²⁾	2018 - 2021 (2021)
Private equity investments (not measured at NAV)	$	43	Income approach - discounted cash flow	Discount rate	25	%
				Terminal EBITDA multiple	10.0x
				Terminal year	2022 - 2042 (2023)
	$	13	Transaction price or other investment-specific events ⁽⁴⁾	Not meaningful ⁽⁴⁾	Not meaningful ⁽⁴⁾


~~(1)~~	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)~~	During the third fiscal quarter of 2019, an issuer within our ARS preferred portfolio commenced tender offers to which we tendered holdings with a fair value of $40 million as of June 30, 2019. The tender offers were settled and payment was received in July 2019.


$ 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


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


$ 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


	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		%


	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)


~~(1)~~	Substantially all relates to interest rate derivatives entered into as part of our fixed income business operations, including to be announced (“TBA”) security contracts that are accounted for as 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.



$ in millions	Location of gain/(loss) included in the Condensed Consolidated Statements of Income and Comprehensive Income	Gain/(loss) recognized during the
		three months ended June 30,					nine months ended June 30,
		2019			2018		2019		2018
Interest rate	Principal transactions/other revenues	$	2		$	3	$	4	$	5
Foreign exchange	Other revenues	$	(8	)	$	15	$	14	$	24
Equity - DBRSU obligation	Compensation, commissions and benefits expense	$	—		$	4	$	5	$	9


	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


$ 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 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 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


	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



	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, 2019
C&I loans	$	4	$	130	$	134	$	22	$	8,379	$	8,401
CRE construction loans	—		4		4		—		248		248
CRE loans	—		46		46		10		3,458		3,468
Tax-exempt loans	—		9		9		—		1,296		1,296
Residential mortgage loans	1		15		16		28		4,170		4,198
SBL and other	—		6		6		—		3,177		3,177
Total	$	5	$	210	$	215	$	60	$	20,728	$	20,788

September 30, 2018
C&I loans	$	—	$	123	$	123	$	2	$	7,784	$	7,786
CRE construction loans	—		3		3		—		151		151
CRE loans	—		47		47		—		3,624		3,624
Tax-exempt loans	—		9		9		—		1,227		1,227
Residential mortgage loans	2		15		17		35		3,722		3,757
SBL and other	—		4		4		—		3,033		3,033
Total	$	2	$	201	$	203	$	37	$	19,541	$	19,578


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


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


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


$ 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)



	Three months ended June 30, 2018
$ in millions	Private Client Group			Capital Markets			Asset Management			RJ Bank			Other and intersegment eliminations			Total
Revenues:
Asset management and related administrative fees	$	636		$	1		$	157		$	—		$	(4	)	$	790
Brokerage revenues:
Securities commissions:
Mutual and other fund products	172			2			3			—			(3		)	174
Insurance and annuity products	97			—			—			—			—			97
Equities, ETFs and fixed income products	84			40			—			—			—			124
Subtotal securities commissions	353			42			3			—			(3		)	395
Principal transactions ⁽¹⁾	22			52			—			—			(1		)	73
Total brokerage revenues	375			94			3			—			(4		)	468
Account and services fees:
Mutual fund and annuity service fees	85			—			—			—			(2		)	83
RJBDP fees	94			—			1			—			(24		)	71
Client account and other fees	30			2			8			—			(7		)	33
Total account and service fees	209			2			9			—			(33		)	187
Investment banking:
Equity underwriting	9			30			—			—			—			39
Merger & acquisition and advisory	—			85			—			—			—			85
Fixed income investment banking	—			21			—			—			—			21
Total investment banking	9			136			—			—			—			145
Other:
Tax credit fund revenues	—			12			—			—			—			12
All other ⁽¹⁾	8			(2		)	(1		)	8			5			18
Total other	8			10			(1		)	8			5			30
Total non-interest revenues	1,237			243			168			8			(36		)	1,620
Interest income ⁽¹⁾	50			9			—			205			7			271
Total revenues	1,287			252			168			213			(29		)	1,891
Interest expense	(8		)	(9		)	—			(25		)	(12		)	(54		)
Net revenues	$	1,279		$	243		$	168		$	188		$	(41	)	$	1,837



	Nine Months Ended June 30, 2018
$ in millions	Private Client Group			Capital Markets			Asset Management		RJ Bank			Other and intersegment eliminations			Total
Revenues:
Asset management and related administrative fees	$	1,843		$	6		$	450	$	—		$	(12	)	$	2,287
Brokerage revenues:
Securities commissions:
Mutual and other fund products	535			6			9		—			(4		)	546
Insurance and annuity products	308			—			—		—			—			308
Equities, ETFs and fixed income products	270			114			—		—			(2		)	382
Subtotal securities commissions	1,113			120			9		—			(6		)	1,236
Principal transactions ⁽¹⁾	62			193			—		1			(1		)	255
Total brokerage revenues	1,175			313			9		1			(7		)	1,491
Account and services fees:
Mutual fund and annuity service fees	246			—			1		—			(6		)	241
RJBDP fees	265			—			3		—			(67		)	201
Client account and other fees	85			4			18		—			(14		)	93
Total account and service fees	596			4			22		—			(87		)	535
Investment banking:
Equity underwriting	25			66			—		—			—			91
Merger & acquisition and advisory	—			200			—		—			—			200
Fixed income investment banking	—			58			—		—			—			58
Total investment banking	25			324			—		—			—			349
Other:
Tax credit fund revenues	—			40			—		—			—			40
All other ⁽¹⁾	24			—			—		16			20			60
Total other	24			40			—		16			20			100
Total non-interest revenues	3,663			687			481		17			(86		)	4,762
Interest income ⁽¹⁾	140			24			1		571			16			752
Total revenues	3,803			711			482		588			(70		)	5,514
Interest expense	(19		)	(21		)	—		(56		)	(43		)	(139		)
Net revenues	$	3,784		$	690		$	482	$	532		$	(113	)	$	5,375


	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	%