~~0000720005rjf:InvestmentBankingRevenueDebtUnderwritingMember2020-04-012020-06-30~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended ~~June 30,~~December 31, 2021


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


For the transition period from						to

Commission File Number: 1-9109

RAYMOND JAMES FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


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

880 Carillon Parkway, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

(727) 567-1000

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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


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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes x No ☐

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


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

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

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

Yes ☐ No ☒

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

~~137,192,121~~207,602,043 shares of common stock as of ~~August 4, 2021~~February 3, 2022

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES


INDEX
		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Financial Condition (Unaudited)	3
	Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	4
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)
	Note 1 - Organization and basis of presentation	8
	Note 2 - Update of significant accounting policies	98
	Note 3 - Acquisitions	129
	Note 4 - Fair value	1410
	Note 5 - Available-for-sale securities	2015
	Note 6 - Derivative assets and derivative liabilities	2217
	Note 7 - Collateralized agreements and financings	2419
	Note 8 - Bank loans, net	2621
	Note 9 - Loans to financial advisors, net	3227
	Note 10 - Variable interest entities	3227
	Note 11 - ~~Goodwill and identifiable intangible~~Other assets ~~net~~	3328
	Note 12 - Leases	3429
	Note 13 - Bank deposits	3529

	Note 14 - ~~Senior notes payable~~Income taxes	30
	Note 15 - Commitments, contingencies and guarantees	30
	Note 16 - Accumulated other comprehensive income/(loss)	33
	Note 17 - Revenues	34
	Note 18 - Interest income and interest expense	36
	Note 1519 - ~~Income taxes~~Share-based compensation	37
	~~Note 16 - Commitments, contingencies and guarantees~~	37
	~~Note 17 - Accumulated other comprehensive income/(loss)~~	40
	~~Note 18 - Revenues~~	41
	~~Note 19 - Interest income and interest expense~~	4536
	Note 20 - ~~Share-based compensation~~Regulatory capital requirements	4536
	Note 21 - ~~Regulatory capital requirements~~Earnings per share	4539
	Note 22 - ~~Earnings per share~~	48
	~~Note 23 -~~ Segment information	4840
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5142
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	9076
Item 4.	Controls and Procedures	9076
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	9076
Item 1A.	Risk Factors	9076
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9177
Item 3.	Defaults Upon Senior Securities	9177
Item 4.	Mine Safety Disclosures	9177
Item 5.	Other Information	9177
Item 6.	Exhibits	9278
	Signatures	9278

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


$ in millions, except per share amounts	$ in millions, except per share amounts	June 30, 2021		September 30, 2020		$ in millions, except per share amounts	December 31, 2021		September 30, 2021
Assets:	Assets:					Assets:
Cash and cash equivalents	Cash and cash equivalents	$	5,982	$	5,390	Cash and cash equivalents	$	8,216	$	7,201
Assets segregated pursuant to regulations ($3,000 and $0 at fair value)		8,882		4,244
Assets segregated for regulatory purposes and restricted cash ($9,599 and $2,100 at fair value)						Assets segregated for regulatory purposes and restricted cash ($9,599 and $2,100 at fair value)	15,490		11,348
Collateralized agreements	Collateralized agreements	639		422		Collateralized agreements	347		480
Financial instruments, at fair value:	Financial instruments, at fair value:					Financial instruments, at fair value:
Trading assets ($352 and $265 pledged as collateral)		488		513
Available-for-sale securities ($21 and $23 pledged as collateral)		8,191		7,650
Trading assets ($292 and $326 pledged as collateral)						Trading assets ($292 and $326 pledged as collateral)	370		610
Available-for-sale securities ($19 and $20 pledged as collateral)						Available-for-sale securities ($19 and $20 pledged as collateral)	8,547		8,315
Derivative assets	Derivative assets	291		438		Derivative assets	214		255
Other investments ($6 and $37 pledged as collateral)		583		334
Other investments ($22 and $22 pledged as collateral)						Other investments ($22 and $22 pledged as collateral)	711		357
Brokerage client receivables, net	Brokerage client receivables, net	2,683		2,435		Brokerage client receivables, net	2,721		2,831
Other receivables, net	Other receivables, net	1,144		927		Other receivables, net	1,038		999
Bank loans, net	Bank loans, net	23,896		21,195		Bank loans, net	26,132		24,994
Loans to financial advisors, net	Loans to financial advisors, net	1,042		1,012		Loans to financial advisors, net	1,108		1,057
Property and equipment, net		552		535
Deferred income taxes, net	Deferred income taxes, net	289		262		Deferred income taxes, net	305		305
Goodwill and identifiable intangible assets, net	Goodwill and identifiable intangible assets, net	862		600		Goodwill and identifiable intangible assets, net	874		882
Other assets	Other assets	1,637		1,525		Other assets	2,388		2,257
Total assets	Total assets	$	57,161	$	47,482	Total assets	$	68,461	$	61,891

Liabilities and shareholders’ equity:	Liabilities and shareholders’ equity:					Liabilities and shareholders’ equity:
Bank deposits	Bank deposits	$	30,340	$	26,801	Bank deposits	$	34,092	$	32,495
Collateralized financings	Collateralized financings	285		250		Collateralized financings	268		277
Financial instrument liabilities, at fair value:	Financial instrument liabilities, at fair value:					Financial instrument liabilities, at fair value:
Trading liabilities	Trading liabilities	258		240		Trading liabilities	171		176
Derivative liabilities	Derivative liabilities	263		393		Derivative liabilities	232		228
Brokerage client payables	Brokerage client payables	11,843		6,792		Brokerage client payables	19,201		13,991
Accrued compensation, commissions and benefits	Accrued compensation, commissions and benefits	1,557		1,384		Accrued compensation, commissions and benefits	1,428		1,825
Other payables	Other payables	1,801		1,513		Other payables	1,524		1,701
Other borrowings	Other borrowings	859		888		Other borrowings	856		858
Senior notes payable	Senior notes payable	2,037		2,045		Senior notes payable	2,037		2,037
Total liabilities	Total liabilities	49,243		40,306		Total liabilities	59,809		53,588
Commitments and contingencies (see Note 16)		0		0
Commitments and contingencies (see Note 15)						Commitments and contingencies (see Note 15)	0		0
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding	Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding	0		0		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; 159,303,913 and 159,007,158 shares issued as of June 30, 2021 and September 30, 2020, respectively, and 136,948,422 and 136,556,559 shares outstanding as of June 30, 2021 and September 30, 2020, respectively		2		2
Common stock; $.01 par value; 350,000,000 shares authorized; 239,160,005 and 239,062,254 shares issued as of December 31, 2021 and September 30, 2021, respectively, and 207,465,632 and 205,738,821 shares outstanding as of December 31, 2021 and September 30, 2021, respectively						Common stock; $.01 par value; 350,000,000 shares authorized; 239,160,005 and 239,062,254 shares issued as of December 31, 2021 and September 30, 2021, respectively, and 207,465,632 and 205,738,821 shares outstanding as of December 31, 2021 and September 30, 2021, respectively	2		2
Additional paid-in capital	Additional paid-in capital	2,060		2,007		Additional paid-in capital	2,055		2,088
Retained earnings	Retained earnings	7,257		6,484		Retained earnings	8,003		7,633
Treasury stock, at cost; 22,355,491 and 22,450,599 common shares as of June 30, 2021 and September 30, 2020, respectively		(1,446)		(1,390)
Accumulated other comprehensive income/(loss)		(10)		11
Treasury stock, at cost; 31,694,373 and 33,323,433 common shares as of December 31, 2021 and September 30, 2021, respectively						Treasury stock, at cost; 31,694,373 and 33,323,433 common shares as of December 31, 2021 and September 30, 2021, respectively	(1,373)		(1,437)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(87)		(41)
Total equity attributable to Raymond James Financial, Inc.	Total equity attributable to Raymond James Financial, Inc.	7,863		7,114		Total equity attributable to Raymond James Financial, Inc.	8,600		8,245
Noncontrolling interests	Noncontrolling interests	55		62		Noncontrolling interests	52		58
Total shareholders’ equity	Total shareholders’ equity	7,918		7,176		Total shareholders’ equity	8,652		8,303
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	57,161	$	47,482	Total liabilities and shareholders’ equity	$	68,461	$	61,891

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
in millions, except per share amounts	in millions, except per share amounts	2021		2020		2021		2020		in millions, except per share amounts	2021		2020
Revenues:	Revenues:									Revenues:
Asset management and related administrative fees	Asset management and related administrative fees	$	1,262	$	867	$	3,502	$	2,828	Asset management and related administrative fees	$	1,382	$	1,067
Brokerage revenues:	Brokerage revenues:									Brokerage revenues:
Securities commissions	Securities commissions	415		343		1,239		1,116		Securities commissions	425		381
Principal transactions	Principal transactions	137		143		432		345		Principal transactions	133		147
Total brokerage revenues	Total brokerage revenues	552		486		1,671		1,461		Total brokerage revenues	558		528
Account and service fees	Account and service fees	161		134		465		484		Account and service fees	177		145
Investment banking	Investment banking	276		139		779		428		Investment banking	425		261
Interest income	Interest income	205		217		608		799		Interest income	225		203
Other	Other	55		33		155		47		Other	51		56
Total revenues	Total revenues	2,511		1,876		7,180		6,047		Total revenues	2,818		2,260
Interest expense	Interest expense	(40)		(42)		(115)		(136)		Interest expense	(37)		(38)
Net revenues	Net revenues	2,471		1,834		7,065		5,911		Net revenues	2,781		2,222
Non-interest expenses:	Non-interest expenses:									Non-interest expenses:
Compensation, commissions and benefits	Compensation, commissions and benefits	1,661		1,277		4,809		4,050		Compensation, commissions and benefits	1,884		1,500
Non-compensation expenses:	Non-compensation expenses:									Non-compensation expenses:
Communications and information processing	Communications and information processing	109		100		315		293		Communications and information processing	112		99
Occupancy and equipment	Occupancy and equipment	58		55		172		168		Occupancy and equipment	59		57
Business development	Business development	31		21		75		106		Business development	35		23
Investment sub-advisory fees	Investment sub-advisory fees	34		23		93		75		Investment sub-advisory fees	38		28
Professional fees	Professional fees	26		24		80		68		Professional fees	26		30
Bank loan provision/(benefit) for credit losses	Bank loan provision/(benefit) for credit losses	(19)		81		(37)		188		Bank loan provision/(benefit) for credit losses	(11)		14
Losses on extinguishment of debt		98		0		98		0

Acquisition-related expenses	Acquisition-related expenses	7		0		9		0		Acquisition-related expenses	6		2

Other	Other	81		55		220		167		Other	74		70
Total non-compensation expenses	Total non-compensation expenses	425		359		1,025		1,065		Total non-compensation expenses	339		323
Total non-interest expenses	Total non-interest expenses	2,086		1,636		5,834		5,115		Total non-interest expenses	2,223		1,823
Pre-tax income	Pre-tax income	385		198		1,231		796		Pre-tax income	558		399
Provision for income taxes	Provision for income taxes	78		26		257		187		Provision for income taxes	112		87
Net income	Net income	$	307	$	172	$	974	$	609	Net income	$	446	$	312

Earnings per common share – basic	Earnings per common share – basic	$	2.24	$	1.25	$	7.09	$	4.41	Earnings per common share – basic	$	2.16	$	1.52
Earnings per common share – diluted	Earnings per common share – diluted	$	2.18	$	1.23	$	6.92	$	4.33	Earnings per common share – diluted	$	2.10	$	1.48
Weighted-average common shares outstanding – basic	Weighted-average common shares outstanding – basic	137.2		137.1		137.2		137.9		Weighted-average common shares outstanding – basic	206.3		205.2
Weighted-average common and common equivalent shares outstanding – diluted	Weighted-average common and common equivalent shares outstanding – diluted	141.1		139.4		140.6		140.5		Weighted-average common and common equivalent shares outstanding – diluted	212.4		209.6

Net income	Net income	$	307	$	172	$	974	$	609	Net income	$	446	$	312
Other comprehensive income/(loss), net of tax:	Other comprehensive income/(loss), net of tax:									Other comprehensive income/(loss), net of tax:
Available-for-sale securities	Available-for-sale securities	25		5		(68)		67		Available-for-sale securities	(55)		(17)
Currency translations, net of the impact of net investment hedges	Currency translations, net of the impact of net investment hedges	5		11		25		(6)		Currency translations, net of the impact of net investment hedges	—		18
Cash flow hedges	Cash flow hedges	(2)		(4)		22		(37)		Cash flow hedges	9		5
Total other comprehensive income/(loss), net of tax	Total other comprehensive income/(loss), net of tax	28		12		(21)		24		Total other comprehensive income/(loss), net of tax	(46)		6
Total comprehensive income	Total comprehensive income	$	335	$	184	$	953	$	633	Total comprehensive income	$	400	$	318

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,					Three months ended December 31,
$ in millions, except per share amounts	$ in millions, except per share amounts	2021		2020		2021		2020		$ in millions, except per share amounts	2021		2020
Common stock, par value $.01 per share:	Common stock, par value $.01 per share:									Common stock, par value $.01 per share:
Balance beginning of period	Balance beginning of period	$	2	$	2	$	2	$	2	Balance beginning of period	$	2	$	2
Share issuances	Share issuances	0		0		0		0		Share issuances	—		—
Balance end of period	Balance end of period	2		2		2		2		Balance end of period	2		2

Additional paid-in capital:	Additional paid-in capital:									Additional paid-in capital:
Balance beginning of period	Balance beginning of period	2,028		1,953		2,007		1,938		Balance beginning of period	2,088		2,007
Employee stock purchases	Employee stock purchases	8		12		23		29		Employee stock purchases	8		6
Exercise of stock options and vesting of restricted stock units, net of forfeitures		(4)		(3)		(70)		(74)
Restricted stock, stock option and restricted stock unit expense		28		22		100		91
Vesting of restricted stock units and exercise of stock options, net of forfeitures										Vesting of restricted stock units and exercise of stock options, net of forfeitures	(105)		(59)
Restricted stock unit and stock option expense										Restricted stock unit and stock option expense	64		42

Balance end of period	Balance end of period	2,060		1,984		2,060		1,984		Balance end of period	2,055		1,996

Retained earnings:	Retained earnings:									Retained earnings:
Balance beginning of period	Balance beginning of period	7,004		6,205		6,484		5,874		Balance beginning of period	7,633		6,484
Cumulative adjustments for changes in accounting principles	Cumulative adjustments for changes in accounting principles	0		0		(35)		0		Cumulative adjustments for changes in accounting principles	—		(35)
Net income attributable to Raymond James Financial, Inc.	Net income attributable to Raymond James Financial, Inc.	307		172		974		609		Net income attributable to Raymond James Financial, Inc.	446		312
Cash dividends declared (see Note 22)		(54)		(51)		(166)		(157)
Cash dividends declared (see Note 21)										Cash dividends declared (see Note 21)	(76)		(59)
Balance end of period	Balance end of period	7,257		6,326		7,257		6,326		Balance end of period	8,003		6,702

Treasury stock:	Treasury stock:									Treasury stock:
Balance beginning of period	Balance beginning of period	(1,404)		(1,351)		(1,390)		(1,210)		Balance beginning of period	(1,437)		(1,390)
Purchases/surrenders	Purchases/surrenders	(48)		0		(127)		(222)		Purchases/surrenders	(10)		(18)
Exercise of stock options and vesting of restricted stock units, net of forfeitures		6		3		71		84
Vesting of restricted stock units and exercise of stock options, net of forfeitures										Vesting of restricted stock units and exercise of stock options, net of forfeitures	74		54
Balance end of period	Balance end of period	(1,446)		(1,348)		(1,446)		(1,348)		Balance end of period	(1,373)		(1,354)

Accumulated other comprehensive income/(loss):	Accumulated other comprehensive income/(loss):									Accumulated other comprehensive income/(loss):
Balance beginning of period	Balance beginning of period	(38)		(11)		11		(23)		Balance beginning of period	(41)		11
Other comprehensive income/(loss), net of tax	Other comprehensive income/(loss), net of tax	28		12		(21)		24		Other comprehensive income/(loss), net of tax	(46)		6

Balance end of period	Balance end of period	(10)		1		(10)		1		Balance end of period	(87)		17
Total equity attributable to Raymond James Financial, Inc.	Total equity attributable to Raymond James Financial, Inc.	$	7,863	$	6,965	$	7,863	$	6,965	Total equity attributable to Raymond James Financial, Inc.	$	8,600	$	7,363

Noncontrolling interests:	Noncontrolling interests:									Noncontrolling interests:
Balance beginning of period	Balance beginning of period	$	45	$	36	$	62	$	62	Balance beginning of period	$	58	$	62
Net income/(loss) attributable to noncontrolling interests		12		(2)		24		(26)
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests	2		13

Other	Other	(2)		16		(31)		14		Other	(8)		—

Balance end of period	Balance end of period	55		50		55		50		Balance end of period	52		75
Total shareholders’ equity	Total shareholders’ equity	$	7,918	$	7,015	$	7,918	$	7,015	Total shareholders’ equity	$	8,652	$	7,438

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,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		$ in millions	2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	974	$	609	Net income	$	446	$	312
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	97		88		Depreciation and amortization	35		32
Deferred income taxes	Deferred income taxes	(24)		(13)		Deferred income taxes	14		18
Premium and discount amortization on available-for-sale securities and loss on other investments		12		53
Premium and discount amortization on available-for-sale securities and net (gain)/loss on other investments						Premium and discount amortization on available-for-sale securities and net (gain)/loss on other investments	14		(1)
Provisions/(benefits) for credit losses and legal and regulatory proceedings	Provisions/(benefits) for credit losses and legal and regulatory proceedings	(29)		209		Provisions/(benefits) for credit losses and legal and regulatory proceedings	(8)		16
Share-based compensation expense	Share-based compensation expense	103		97		Share-based compensation expense	65		43
Unrealized gain on company-owned life insurance policies, net of expenses	Unrealized gain on company-owned life insurance policies, net of expenses	(159)		(10)		Unrealized gain on company-owned life insurance policies, net of expenses	(38)		(83)
Losses on extinguishment of debt		98		0

Other	Other	47		4		Other	(1)		22
Net change in:	Net change in:					Net change in:
Assets segregated pursuant to regulations excluding cash and cash equivalents		(3,000)		0
Assets segregated for regulatory purposes excluding cash and cash equivalents						Assets segregated for regulatory purposes excluding cash and cash equivalents	(7,499)		(2,749)
Collateralized agreements, net of collateralized financings	Collateralized agreements, net of collateralized financings	(178)		(61)		Collateralized agreements, net of collateralized financings	125		(62)
Loans provided to financial advisors, net of repayments	Loans provided to financial advisors, net of repayments	(69)		(23)		Loans provided to financial advisors, net of repayments	(56)		5
Brokerage client receivables and other accounts receivable, net		(425)		126
Brokerage client receivables and other receivables, net						Brokerage client receivables and other receivables, net	197		254
Trading instruments, net	Trading instruments, net	42		216		Trading instruments, net	209		22
Derivative instruments, net	Derivative instruments, net	41		(68)		Derivative instruments, net	58		(9)
Other assets	Other assets	(238)		(64)		Other assets	(431)		(530)
Brokerage client payables and other accounts payable		4,673		1,621
Brokerage client payables and other payables						Brokerage client payables and other payables	5,021		4,970
Accrued compensation, commissions and benefits	Accrued compensation, commissions and benefits	160		(161)		Accrued compensation, commissions and benefits	(395)		(253)
Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale	Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale	(1)		32		Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale	(43)		(86)
Net cash provided by operating activities		2,124		2,655
Net cash provided by/(used in) operating activities						Net cash provided by/(used in) operating activities	(2,287)		1,921

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to property and equipment		(99)		(97)
Increase in bank loans, net	Increase in bank loans, net	(2,620)		(978)		Increase in bank loans, net	(1,137)		(704)
Proceeds from sales of loans held for investment	Proceeds from sales of loans held for investment	248		272		Proceeds from sales of loans held for investment	75		16

Purchases of available-for-sale securities	Purchases of available-for-sale securities	(3,081)		(3,147)		Purchases of available-for-sale securities	(824)		(1,243)
Available-for-sale securities maturations, repayments and redemptions	Available-for-sale securities maturations, repayments and redemptions	1,658		744		Available-for-sale securities maturations, repayments and redemptions	501		544
Proceeds from sales of available-for-sale securities	Proceeds from sales of available-for-sale securities	969		222		Proceeds from sales of available-for-sale securities	—		519
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(245)		(5)		Business acquisitions, net of cash acquired	—		(218)
Additions to property and equipment						Additions to property and equipment	(19)		(25)
Investment in note receivable						Investment in note receivable	(125)		—
Other investing activities, net	Other investing activities, net	13		(31)		Other investing activities, net	(26)		(12)
Net cash used in investing activities	Net cash used in investing activities	(3,157)		(3,020)		Net cash used in investing activities	(1,555)		(1,123)

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


RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)					RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		$ in millions	2021		2020
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Proceeds from Federal Home Loan Bank advances		0		850

Increase in bank deposits						Increase in bank deposits	1,597		989
Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements						Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements	(51)		(35)
Dividends on common stock						Dividends on common stock	(60)		(55)
Exercise of stock options and employee stock purchases						Exercise of stock options and employee stock purchases	17		18
Repayments of Federal Home Loan Bank advances and other borrowed funds	Repayments of Federal Home Loan Bank advances and other borrowed funds	(29)		(854)		Repayments of Federal Home Loan Bank advances and other borrowed funds	(1)		(26)
Proceeds from senior notes issuances, net of debt issuance costs paid		737		494
Extinguishment of senior notes payable		(844)		0

Exercise of stock options and employee stock purchases		42		55
Increase in bank deposits		3,539		3,091
Purchases of treasury stock		(127)		(222)
Dividends on common stock		(163)		(154)
Other financing, net	Other financing, net	(6)		(2)		Other financing, net	(5)		—
Net cash provided by financing activities	Net cash provided by financing activities	3,149		3,258		Net cash provided by financing activities	1,497		891

Currency adjustment:	Currency adjustment:					Currency adjustment:
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	114		(27)		Effect of exchange rate changes on cash	3		73
Net increase in cash and cash equivalents, including those segregated pursuant to regulations		2,230		2,866
Cash and cash equivalents, including those segregated pursuant to regulations at beginning of year		9,634		5,971
Cash and cash equivalents, including those segregated pursuant to regulations at end of period		$	11,864	$	8,837
Net increase/(decrease) in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash						Net increase/(decrease) in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash	(2,342)		1,762
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year						Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year	16,449		9,634
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period						Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period	$	14,107	$	11,396

Cash and cash equivalents	Cash and cash equivalents	$	5,982	$	5,632	Cash and cash equivalents	$	8,216	$	5,377
Cash and cash equivalents segregated pursuant to regulations		5,882		3,205
Total cash and cash equivalents, including those segregated pursuant to regulations at end of period		$	11,864	$	8,837
Cash and cash equivalents segregated for regulatory purposes and restricted cash						Cash and cash equivalents segregated for regulatory purposes and restricted cash	5,891		6,019
Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period						Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period	$	14,107	$	11,396

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for interest	Cash paid for interest	$	113	$	118	Cash paid for interest	$	41	$	35
Cash paid for income taxes, net	Cash paid for income taxes, net	$	335	$	202	Cash paid for income taxes, net	$	12	$	67
Cash outflows for lease liabilities	Cash outflows for lease liabilities	$	84	$	73	Cash outflows for lease liabilities	$	25	$	27
Non-cash right-of-use (“ROU”) assets recorded for new and modified leases		$	101	$	60
Non-cash right-of-use assets recorded for new and modified leases						Non-cash right-of-use assets recorded for new and modified leases	$	16	$	50

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~June 30,~~December 31, 2021

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

Raymond James Financial, Inc. (“~~RJF,”~~RJF” or 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 to retail and institutional clients, merger & acquisition and advisory services, 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 2322 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 (“~~2020~~2021 Form 10-K”) for the year ended September 30, ~~2020,~~2021, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and in Note 10 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.

During our fiscal fourth quarter of 2021, our Board approved a three-for-two stock split, effected in the form of a 50% stock dividend, paid on September 21, 2021. All share and per share information has been retroactively adjusted to reflect this stock split.

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 and Notes thereto included in our ~~2020~~2021 Form 10-K. To prepare condensed consolidated financial statements in accordance with GAAP, we must make certain estimates and assumptions that affect the reported amounts of assets and liabilities and 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

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 ~~2020~~2021 Form 10-K. ~~During the nine months ended June 30, 2021, there were~~There have been no significant changes toin 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.~~

~~Accounting guidance adopted in fiscal 2021~~

~~Credit losses~~

In June 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the measurement of credit losses on financial instruments (ASU 2016-13), which replaces the incurred credit loss and other models with the Current Expected Credit Losses (“CECL”) model. The 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 in-scope financial assets. The measurement of expected credit losses includes historical experience, current conditions and reasonable and supportable economic forecasts.

This new guidance was effective for our fiscal year beginning on October 1, 2020 and was adopted under a modified retrospective approach. The impact of adoption of this new standard resulted in an increase in our allowance for credit losses of $42 million (including $25 million related to loans to financial advisors, $9 million related to funded bank loans and $8 million related to unfunded lending commitments) and a corresponding reduction in the beginning balance of retained earnings of $35 million, net of tax. Prior-period amounts were calculated under the incurred loss model and have not been restated. See Notes 8 and 9 for further information related to bank loans and loans to financial advisors and the related allowances for credit losses.

~~The following sections highlight changes to our accounting policies as a result of this adoption.~~

~~Available-for-sale securities~~

~~Available-for-sale securities are generally held by Raym~~ond James Bank and are classified at the date of purchase. They are comprised primarily of agency mortgage-backed securities (“MBS”) and agency collateralized mortgage obligations (“CMOs”), which are guaranteed by the U.S. government or its agencies. Available-for-sale securities owned by Raymond James Bank are used as part of its interest rate risk and liquidity management strategies and may be sold in response to changes in interest rates, changes in prepayment risks, or other factors. As a result of the adoption of the new CECL guidance, credit losses on available-for-sale securities are limited to the difference between the security’s amortized cost basis and its fair value and should be recognized through an allowance for credit losses rather than as a direct reduction in amortized cost basis. Given that our available-for-sale securities portfolio is comprised of government agency securities for which payments of both principal and interest are guaranteed, and based on the lack of historical credit losses, we expect zero credit losses on this portfolio and the related accrued interest receivable. On a quarterly basis, we reassess our expectation of zero credit losses to consider changes in the available-for-sale securities portfolio.

~~Other receivables, net~~

Other receivables primarily include receivables from brokers, dealers and clearing organizations, accrued interest receivables and accrued fees from product sponsors. Receivables from brokers, dealers and clearing organizations primarily consist of deposits placed with clearing organizations, which includes initial margin, and receivables related to sales of securities which have traded, but not yet settled including amounts receivable for securities failed to deliver. We present “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition, net of any allowance for credit losses. However, these receivables generally have minimal credit risk due to the low probability of clearing organization default and the short-term nature of receivables related to securities settlements and therefore, the allowance for credit losses on such receivables is not significant. Any allowance for credit losses for other receivables is estimated using assumptions based on historical experience, current facts and other factors. We update these estimates through periodic evaluations against actual trends experienced.

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

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

As permitted under the CECL guidance, we include accrued interest receivables related to our financial assets in “Other receivables, net” on the Condensed Consolidated Statements of Financial Condition instead of with the related financial instrument. We reverse any uncollectible accrued interest into interest income generally when the related financial asset is moved to nonaccrual status. As we write off uncollectible amounts in a timely manner, we do not recognize an allowance for credit losses against accrued interest receivable.

~~Loans to financial advisors, net~~

We offer loans to financial advisors for recruiting and retention purposes. The decision to extend credit to a financial advisor or other key revenue producer is generally based on their ability to generate future revenues. Loans offered are generally repaid over a ~~five~~ to 10 year period, with interest recognized as earned, and are contingent upon affiliation with us. These loans are not assignable by the financial advisor and may only be assigned by us to a successor in interest. There is no fee income associated with these loans. In the event that the financial advisor is no longer affiliated with us, any unpaid balance of such loan becomes immediately due and payable to us. Based upon the nature of these financing receivables, affiliation status is the primary credit risk factor within this portfolio.

We present the outstanding balance of loans to financial advisors on our Condensed Consolidated Statements of Financial Condition, net of the allowance for credit losses. Refer to the allowance for credit losses section that follows for further information related to our allowance for credit losses on our loans to financial advisors. See Note 9 for additional information on our loans to financial advisors.

~~Loans to financial advisors are considered past due once they are~~since September 30, days or more delinquent as to the payment of contractual interest or principal. Loans are placed on nonaccrual status when we determine that full payment of contractual principal and interest is in doubt, or the loan is past due 180 days or more as to contractual interest or principal. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is written-off against interest income. Interest is recognized on a cash basis until the loan qualifies for return to accrual status. Loans are returned to an accrual status when the loans have been brought contractually current with the original terms and have been maintained on a current basis for a reasonable period, generally six months.

When we determine that it is likely a loan will not be collected in full, the loan is evaluated for a potential write down of the carrying value. After consideration of the borrower’s ability to restructure the loan, sources of repayment, and other factors affecting the borrower’s ability to repay the debt, the portion of the loan deemed a confirmed loss, if any, is charged-off. A charge-off is taken against the allowance for credit losses for the difference between the amortized cost and the amount we estimate will ultimately be collected. Additional charge-offs are taken if there is an adverse change in the expected cash flows.

~~Allowance for credit losses~~

We evaluate our held for investment bank loans, unfunded lending commitments, loans to financial advisors and certain other financial assets to estimate an allowance for credit losses over the remaining life of the financial instrument. The remaining life of our financial assets is determined by considering contractual terms and expected prepayments, among other factors.

We employ multiple methodologies in estimating an allowance for credit losses and our approaches differ by type of financial asset and the risk characteristics within each financial asset type. Our estimates are based on ongoing evaluations of the portfolio, the related credit risk characteristics, and the overall economic and environmental conditions affecting the financial assets. For certain of our financial assets with collateral maintenance provisions (e.g., collateralized agreements, margin loans and securities-based loans), we apply the practical expedient allowed under the CECL model in estimating an allowance for credit losses. We reasonably expect that borrowers (or counterparties, as applicable) will replenish the collateral as required. As a result, we estimate zero credit losses to the extent that the fair value equals or exceeds the related carrying value of the financial asset. When the fair value of the collateral securing the financial asset is less than the carrying value, qualitative factors such as historical experience (adjusted for current risk characteristics and economic conditions) as well as reasonable and supportable forecasts are considered in estimating the allowance for credit losses on the unsecured portion of the financial asset.

Credit losses are charged-off against the allowance when we believe the uncollectibility of the financial asset is confirmed. Subsequent recoveries, if any, are credited to the allowance once received. A credit loss expense, or benefit, is recorded in earnings in an amount necessary to adjust the allowance for credit losses to our estimate as of the end of each reporting period. Our provision or benefit for credit losses for outstanding bank loans is included in “Bank loan provision/(benefit) for credit losses” on our Condensed Consolidated Statements of Income and Comprehensive Income and our provision or benefit for credit losses for all other financing receivables and unfunded lending commitments is included in “Other” expense.

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

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

~~Loans~~

We generally estimate the allowance for credit losses on our loan portfolios using credit risk models which incorporate relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable economic forecasts. After testing the reasonableness of a variety of economic forecast scenarios, we select a single forecast scenario for use in our models. Our forecasts incorporate assumptions related to macroeconomic indicators including, but not limited to, U.S. gross domestic product, equity market indices, unemployment rates, and commercial real estate and residential home price indices. At the conclusion of our reasonable and supportable forecast period, which currently ranges from ~~two~~ to three years depending on the model and macroeconomic variables, we use a straight-line reversion approach over a one-year period to revert to historical loss information for commercial and industrial (“C&I”), real estate investment trust (“REIT”) and tax-exempt loans. For commercial real estate (“CRE”) and residential mortgage loans, we incorporate a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the assets. The development of the forecast used for CRE and residential mortgage loans incorporates an assumption that each macroeconomic variable will revert to a long-term expectation starting in years ~~two~~ to ~~three~~ of the forecast and largely completing within the first five years of the forecast. We assess the length of the reasonable and supportable forecast period and the reversion period, our reversion approach, our economic forecasts and our methodology for estimating the historical loss information on a quarterly basis.

The allowance for credit losses on loans is generally evaluated and measured on a collective basis, typically by loan portfolio segment, due to similar risk characteristics. When a loan does not share similar risk characteristics with other loans, the loan is evaluated for credit losses on an individual basis. Various risk characteristics are considered when determining whether the loan should be collectively evaluated including, but not limited to, financial asset type, internal risk ratings, collateral type, industry of the borrower, and historical or expected credit loss patterns.

The allowance for credit losses on collectively evaluated loans is comprised of two components: (a) a quantitative allowance; and (b) a qualitative allowance, which is based on an analysis of model limitations and other factors not considered by the quantitative models. There are several factors considered in estimating the quantitative allowance for credit losses on collectively evaluated loans which generally include, but are not limited to, the internal risk rating, historical loss experience (including adjustments due to current risk characteristics and economic conditions), prepayments, borrower-controlled extensions, and expected recoveries. We use third-party data for historical information on collectively evaluated corporate loans (C&I, CRE and REIT loans) and residential mortgage loans.

The qualitative portion of our allowance for credit losses includes certain factors that are not incorporated into the quantitative estimate and would generally require adjustments to the allowance for credit losses. These qualitative factors are intended to address developing trends related to each portfolio segment and would generally include, but are not limited to: changes in lending policies and procedures, including changes in underwriting standards and collection; our loan review process; volume and severity of delinquent loans; changes in the nature, volume and terms of loans; credit concentrations; changes in the value of underlying collateral; changes in legal and regulatory environments; and local, regional, national and international economic conditions.

~~Held for investment bank loans~~

The allowance for credit losses for the C&I, CRE (primarily loans that are secured by income-producing properties and commercial real estate construction loans), REIT (loans made to businesses that own or finance income-producing real estate), tax-exempt and residential mortgage portfolio segments is estimated using credit risk models that project a probability of default (“PD”), which is then multiplied by the loss given default (“LGD”) and the estimated exposure at default (“EAD”) at the loan-level for every period remaining in the loan’s expected life, including the maturity period. Historical data, combined with macroeconomic variables, are used in estimating the PD, LGD and EAD. Our credit risk models consider several factors when estimating the expected credit losses which may include, but are not limited to, financial performance and position, estimated prepayments, geographic location, industry or sector type, debt type, loan size, capital structure, initial risk levels and the economic outlook. Additional factors considered by the residential mortgage model include Fair Isaac Corporation (“FICO”) scores and loan-to-value (“LTV”) ratios.

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

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

We generally use one of two methods to measure the allowance for credit losses on individually evaluated loans. A discounted cash flow approach is used to estimate the allowance for credit losses on certain nonaccrual corporate loans and all troubled debt restructurings (“TDRs”) that are not collateral-dependent. For collateral-dependent loans and for instances where foreclosure is probable, we use an approach that considers the fair value of the collateral less selling costs when measuring the allowance for credit losses. A loan is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral.

~~See Note 8 for further information about our bank loans, including credit quality indicators considered in developing the allowance for credit losses.~~

~~Unfunded lending commitments~~

We estimate credit losses on unfunded lending commitments using a methodology consistent with that used in the corresponding bank loan portfolio segment and also based on the expected funding probabilities for fully binding commitments. As a result, the allowance for credit losses for unfunded lending commitments will vary depending upon the mix of lending commitments and future funding expectations. All classes of individually evaluated unfunded lending commitments are analyzed in conjunction with the specific allowance process previously described.

~~The allowance for credit losses related to unfunded lending commitments is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition.~~

~~Loans to financial advisors~~

The allowance for credit losses on loans to financial advisors is estimated using credit risk models that incorporate average annual loan-level loss rates and estimated prepayments based on historical data. The qualitative component of our estimate considers internal and external factors that are not incorporated into the quantitative estimate such as the reasonable and supportable forecast period. In estimating an allowance for credit losses on our individually-evaluated loans to financial advisors, we generally take into account the affiliation status of the financial advisor (i.e., whether the advisor is actively affiliated with us or has terminated affiliation with us), the borrower’s ability to restructure the loan, sources of repayment, and other factors affecting the borrower’s ability to repay the debt.2021.

~~NOTE 3 – ACQUISITIONS~~

~~Acquisitions announced and completed during the nine months ended June 30, 2021~~

~~NWPS~~

In December 2020, we completed our acquisition of all of the outstanding shares of NWPS Holdings, Inc. and its wholly-owned subsidiaries (collectively “NWPS”), doing business as NWPS and Northwest Plan Services. As an independent provider of retirement plan administration, consulting, actuarial and administration services, the addition of NWPS expands our retirement services offerings, which now include retirement plan administration services, to advisors and clients. For purposes of certain acquisition-related financial reporting requirements, the NWPS acquisition was not considered a material acquisition. NWPS has been integrated into our Private Client Group (“PCG”) segment and its results of operations have been included in our results prospectively from the closing date of December 24, 2020.

During the nine months ended June 30, 2021, the NWPS acquisition resulted in the addition of $139 million of goodwill and $96 million of identifiable intangible assets. The goodwill associated with this acquisition primarily represents synergies from combining NWPS with our existing businesses. The identifiable intangible assets primarily relate to client relationships and have a weighted-average useful life of 24.8 years.

~~Financo~~

In March 2021, we completed our acquisition of all of the outstanding ownership interests of Financo, LLC and its subsidiaries (collectively “Financo”), an investment bank focused on the consumer sector. The addition of Financo expands our investment banking capabilities in the consumer and retail space, both domestically and internationally. For purposes of certain acquisition-related financial reporting requirements, the Financo acquisition was not considered a material acquisition. Financo has been integrated into our Capital Markets segment and its results of operations have been included in our results prospectively from the closing date of March 30, 2021.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the nine months ended June 30, 2021, the Financo acquisition resulted in the addition of $30 million of goodwill and $9 million of identifiable intangible assets. The goodwill associated with this acquisition primarily represents synergies from combining Financo with our existing businesses and is generally deductible for tax purposes over 15 years. The identifiable intangible assets primarily relate to client relationships and have a weighted-average useful life of 9 months.

NOTE 3 – ACQUISITIONS

~~See Notes 2 and 10 of our 2020 Form 10-K and Note 11 of this Form 10-Q for additional information about our goodwill and identifiable intangible assets, including the related accounting policies.~~Recent acquisition activities

~~Acquisition announcements~~

~~Cebile~~

On May 25, 2021, we announced we had entered into a definitive agreement to acquire all of the outstanding shares of Cebile Capital (“Cebile”), a leading private fund placement agent and secondary market advisor to private equity firms. The addition of Cebile deepens our investment banking relationships with the private equity community and expands our related service offerings. For purposes of certain acquisition-related financial reporting requirements, the Cebile acquisition will not be considered a material acquisition. Cebile will operate within our Capital Markets segment upon closing of the acquisition, which we expect to occur during our fiscal fourth quarter of 2021 once all regulatory and other closing conditions are satisfactorily resolved.

Charles Stanley

On ~~July 29, 2021,~~January 21, 2022, we ~~announced~~completed our ~~firm intention to make an offer for~~acquisition of all of the ~~entire issued and to be issued~~outstanding share capital of United Kingdom (“U.K.”)-based Charles Stanley Group PLC (“Charles Stanley”) at a price of £5.15 per share, or ~~approximately £279 million.~~£274 million ($372 million as of January 21, 2022). As of December 31, 2021, we had segregated $385 million in cash to fund the acquisition on the closing date, which was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition. The ~~combination would provide~~acquisition enables us ~~the opportunity~~ to accelerate our financial planning, investment advisory and securities transaction services growth in the U.K.; and, through Charles Stanley’s multiple affiliation options, ~~give~~gives us the ability to offer wealth management affiliation choices to financial advisors in the U.K. consistent with our Private Client Group (“PCG”) model in ~~Canada~~the U.S. and ~~the U.S.~~Canada. For purposes of certain acquisition-related financial reporting requirements, the Charles Stanley acquisition ~~will~~is not be considered a material acquisition. Charles Stanley will be integrated into our PCG segment and its results of operations will be included in our results prospectively from the closing date of January 21, 2022.

TriState Capital

On October 20, 2021, we announced we had entered into a definitive agreement to acquire TriState Capital Holdings, Inc. (“TriState Capital”) in a combination cash and stock transaction, valued at approximately $1.1 billion. Under the terms of the agreement, TriState Capital common stockholders will receive $6.00 cash and 0.25 RJF shares for each share of TriState Capital common stock, which represents per share consideration of $31.09 based on the closing price of RJF common stock on October 19, 2021. We have entered into an agreement with the sole holder of the TriState Capital Series C Perpetual Non-Cumulative Convertible Non-Voting Preferred Stock (“Series C Convertible Preferred Stock”) pursuant to which the Series C Convertible Preferred Stock will be converted to common shares at the prescribed exchange ratio and cashed out at $30 per share. The TriState Capital Series A Non-Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) and Series B Non-Cumulative Perpetual Preferred Stock (“Series B Preferred Stock”) will remain outstanding and will be converted into equivalent preferred stock of RJF. The transaction, which is subject to ~~U.K. Financial Conduct Authority~~customary closing conditions, including regulatory approvals and ~~Charles Stanley shareholder~~ approval by TriState Capital shareholders, is expected to close later in fiscal 2022. We currently have the ability to utilize our ~~fiscal first quarter of 2022. Charles Stanley will operate within our PCG segment upon completion~~cash on hand to fund the cash component of the acquisition. TriState Capital offers private banking, commercial banking, and investment management products and services. TriState Capital will continue to operate as a separately branded firm and as an independently-charted bank subsidiary upon closing of the acquisition.

On December 15, 2021, we loaned TriState Capital $125 million under an unsecured fixed-to-floating rate note (the “Note”). The Note matures on December 15, 2024 and bears interest at a fixed annual rate of 2.25% for the first year, and at a floating annual rate thereafter until maturity. The floating rate resets quarterly to a rate equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 2.11%. The Note is not redeemable prior to December 15, 2022. On and after December 15, 2022, the Note is redeemable on any interest payment date at 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. As of December 31, 2021, the outstanding Note balance of $125 million and the related accrued interest was included in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

Acquisition-related expenses

Certain acquisition and integration costs associated with these acquisitions and acquisitions completed in our prior fiscal year were included in “Acquisition-related expenses” ~~during fiscal 2021~~ on our Condensed Consolidated Statements of Income and Comprehensive Income. Such costs primarily included legal and other professional fees and ~~with respect to Financo,~~ amortization expense related to identifiable intangible assets with short useful ~~lives.~~lives associated with our fiscal 2021 acquisitions of Financo LLC (“Financo”) and Cebile Capital (“Cebile”). The following table details our acquisition-related expenses.


	Three months ended December 31,
$ in millions	2021		2020
Acquisition-related expenses:
Legal fees	$	2	$	1
Identifiable intangible asset amortization	4		—
Other professional fees	—		1
Total Acquisition-related expenses	$	6	$	2

139

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4 – FAIR VALUE

Our “Financial instruments” and “Financial instrument liabilities” on our Condensed Consolidated Statements of Financial Condition are recorded at fair ~~value under GAAP.~~value. For further information about such instruments and our significant accounting policies related to fair value, see Notes 2 and 34 of our ~~2020~~2021 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 6 for additional information.


$ in millions	$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of June 30, 2021		$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of December 31, 2021
Assets at fair value on a recurring basis:	Assets at fair value on a recurring basis:											Assets at fair value on a recurring basis:
Assets segregated pursuant to regulations		$	3,000	$	0	$	0	$	—	$	3,000
Assets segregated for regulatory purposes (1)												Assets segregated for regulatory purposes (1)	$	9,599	$	—	$	—	$	—	$	9,599
Trading assets:	Trading assets:											Trading assets:
Municipal and provincial obligations	Municipal and provincial obligations	1		139		0		—		140		Municipal and provincial obligations	—		91		—		—		91
Corporate obligations	Corporate obligations	13		40		0		—		53		Corporate obligations	11		40		—		—		51
Government and agency obligations	Government and agency obligations	16		81		0		—		97		Government and agency obligations	23		71		—		—		94
Agency MBS and agency CMOs		0		122		0		—		122
Non-agency CMOs and asset-backed securities (“ABS”)		0		17		0		—		17
Agency mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMOs”) and asset-backed securities (“ABS”)												Agency mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMOs”) and asset-backed securities (“ABS”)	—		89		—		—		89
Non-agency CMOs and ABS												Non-agency CMOs and ABS	—		27		—		—		27
Total debt securities	Total debt securities	30		399		0		—		429		Total debt securities	34		318		—		—		352
Equity securities	Equity securities	14		3		0		—		17		Equity securities	10		1		—		—		11
Brokered certificates of deposit	Brokered certificates of deposit	0		32		0		—		32		Brokered certificates of deposit	—		5		—		—		5
Other	Other	0		0		10		—		10		Other	—		—		2		—		2
Total trading assets	Total trading assets	44		434		10		—		488		Total trading assets	44		324		2		—		370
Available-for-sale securities ~~(1)~~(2)	Available-for-sale securities ~~(1)~~(2)	15		8,176		0		—		8,191		Available-for-sale securities ~~(1)~~(2)	15		8,532		—		—		8,547
Derivative assets:	Derivative assets:											Derivative assets:
Interest rate - matched book	Interest rate - matched book	0		221		0		—		221		Interest rate - matched book	—		171		—		—		171
Interest rate - other	Interest rate - other	7		150		0		(95)		62		Interest rate - other	3		111		—		(72)		42
Foreign exchange		0		7		0		—		7

Other	Other	0		0		1		—		1		Other	—		—		1		—		1
Total derivative assets	Total derivative assets	7		378		1		(95)		291		Total derivative assets	3		282		1		(72)		214
Other investments - private equity - not measured at net asset value (“NAV”)	Other investments - private equity - not measured at net asset value (“NAV”)	—		—		66		—		66		Other investments - private equity - not measured at net asset value (“NAV”)	—		—		75		—		75
All other investments:	All other investments:											All other investments:
Government and agency obligations ~~(2)~~(3)	Government and agency obligations ~~(2)~~(3)	321		0		0		—		321		Government and agency obligations ~~(2)~~(3)	436		—		—		—		436
Other	Other	78		2		23		—		103		Other	93		2		23		—		118
Total all other investments	Total all other investments	399		2		23		—		424		Total all other investments	529		2		23		—		554
Subtotal	Subtotal	3,465		8,990		100		(95)		12,460		Subtotal	10,190		9,140		101		(72)		19,359
Other investments - private equity - measured at NAV	Other investments - private equity - measured at NAV									93		Other investments - private equity - measured at NAV									82
Total assets at fair value on a recurring basis	Total assets at fair value on a recurring basis	$	3,465	$	8,990	$	100	$	(95)	$	12,553	Total assets at fair value on a recurring basis	$	10,190	$	9,140	$	101	$	(72)	$	19,441

Liabilities at fair value on a recurring basis:	Liabilities at fair value on a recurring basis:											Liabilities at fair value on a recurring basis:
Trading liabilities:	Trading liabilities:											Trading liabilities:
Municipal and provincial obligations		$	2	$	0	$	0	$	—	$	2

Corporate obligations	Corporate obligations	0		20		0		—		20		Corporate obligations	$	—	$	11	$	—	$	—	$	11
Government and agency obligations	Government and agency obligations	163		0		0		—		163		Government and agency obligations	128		—		—		—		128

Total debt securities	Total debt securities	165		20		0		—		185		Total debt securities	128		11		—		—		139
Equity securities	Equity securities	73		0		0		—		73		Equity securities	32		—		—		—		32

Total trading liabilities	Total trading liabilities	238		20		0		—		258		Total trading liabilities	160		11		—		—		171
Derivative liabilities:	Derivative liabilities:											Derivative liabilities:
Interest rate - matched book	Interest rate - matched book	0		221		0		—		221		Interest rate - matched book	—		171		—		—		171
Interest rate - other	Interest rate - other	6		115		0		(83)		38		Interest rate - other	2		101		—		(74)		29
Foreign exchange												Foreign exchange	—		32		—		—		32

Other		0		0		4		—		4
Total derivative liabilities	Total derivative liabilities	6		336		4		(83)		263		Total derivative liabilities	2		304		—		(74)		232
Total liabilities at fair value on a recurring basis	Total liabilities at fair value on a recurring basis	$	244	$	356	$	4	$	(83)	$	521	Total liabilities at fair value on a recurring basis	$	162	$	315	$	—	$	(74)	$	403

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


$ in millions	$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of September 30, 2020		$ in millions	Level 1		Level 2		Level 3		Netting adjustments		Balance as of September 30, 2021
Assets at fair value on a recurring basis:	Assets at fair value on a recurring basis:											Assets at fair value on a recurring basis:

Assets segregated for regulatory purposes (1)												Assets segregated for regulatory purposes (1)	$	2,100	$	—	$	—	$	—	$	2,100
Trading assets:	Trading assets:											Trading assets:
Municipal and provincial obligations	Municipal and provincial obligations	$	5	$	120	$	0	$	—	$	125	Municipal and provincial obligations	—		155		—		—		155
Corporate obligations	Corporate obligations	11		45		0		—		56		Corporate obligations	16		63		—		—		79
Government and agency obligations	Government and agency obligations	13		131		0		—		144		Government and agency obligations	15		94		—		—		109
Agency MBS and agency CMOs		0		130		0		—		130
Agency MBS, CMOs and ABS												Agency MBS, CMOs and ABS	—		211		—		—		211
Non-agency CMOs and ABS	Non-agency CMOs and ABS	0		13		0		—		13		Non-agency CMOs and ABS	—		14		—		—		14
Total debt securities	Total debt securities	29		439		0		—		468		Total debt securities	31		537		—		—		568
Equity securities	Equity securities	11		5		0		—		16		Equity securities	8		4		—		—		12
Brokered certificates of deposit	Brokered certificates of deposit	0		17		0		—		17		Brokered certificates of deposit	—		16		—		—		16
Other	Other	0		0		12		—		12		Other	—		—		14		—		14
Total trading assets	Total trading assets	40		461		12		—		513		Total trading assets	39		557		14		—		610
Available-for-sale securities ~~(1)~~(2)	Available-for-sale securities ~~(1)~~(2)	16		7,634		0		—		7,650		Available-for-sale securities ~~(1)~~(2)	15		8,300		—		—		8,315
Derivative assets:	Derivative assets:											Derivative assets:
Interest rate - matched book	Interest rate - matched book	0		333		0		—		333		Interest rate - matched book	—		193		—		—		193
Interest rate - other	Interest rate - other	16		224		0		(135)		105		Interest rate - other	16		128		—		(87)		57

Foreign exchange												Foreign exchange	—		5		—		—		5
Total derivative assets	Total derivative assets	16		557		0		(135)		438		Total derivative assets	16		326		—		(87)		255
Other investments - private equity - not measured at NAV	Other investments - private equity - not measured at NAV	—		—		37		—		37		Other investments - private equity - not measured at NAV	—		—		75		—		75
All other investments:	All other investments:											All other investments:
Government and agency obligations ~~(2)~~(3)	Government and agency obligations ~~(2)~~(3)	103		0		0		—		103		Government and agency obligations ~~(2)~~(3)	86		—		—		—		86
Other	Other	92		1		22		—		115		Other	77		2		23		—		102
Total all other investments	Total all other investments	195		1		22		—		218		Total all other investments	163		2		23		—		188
Subtotal	Subtotal	267		8,653		71		(135)		8,856		Subtotal	2,333		9,185		112		(87)		11,543
Other investments - private equity - measured at NAV	Other investments - private equity - measured at NAV									79		Other investments - private equity - measured at NAV									94
Total assets at fair value on a recurring basis	Total assets at fair value on a recurring basis	$	267	$	8,653	$	71	$	(135)	$	8,935	Total assets at fair value on a recurring basis	$	2,333	$	9,185	$	112	$	(87)	$	11,637

Liabilities at fair value on a recurring basis:	Liabilities at fair value on a recurring basis:											Liabilities at fair value on a recurring basis:
Trading liabilities:	Trading liabilities:											Trading liabilities:
Municipal and provincial obligations	Municipal and provincial obligations	$	1	$	0	$	0	$	—	$	1	Municipal and provincial obligations	$	2	$	—	$	—	$	—	$	2
Corporate obligations	Corporate obligations	0		5		0		—		5		Corporate obligations	—		6		—		—		6
Government and agency obligations	Government and agency obligations	136		0		0		—		136		Government and agency obligations	137		—		—		—		137
Non-agency CMOs and ABS		0		2		0		—		2

Total debt securities	Total debt securities	137		7		0		—		144		Total debt securities	139		6		—		—		145
Equity securities	Equity securities	96		0		0		—		96		Equity securities	28		3		—		—		31

Total trading liabilities	Total trading liabilities	233		7		0		—		240		Total trading liabilities	167		9		—		—		176
Derivative liabilities:	Derivative liabilities:											Derivative liabilities:
Interest rate - matched book	Interest rate - matched book	0		333		0		—		333		Interest rate - matched book	—		193		—		—		193
Interest rate - other	Interest rate - other	16		145		0		(112)		49		Interest rate - other	16		106		—		(88)		34
Foreign exchange		0		5		0		—		5

Other	Other	0		1		5		—		6		Other	—		—		1		—		1
Total derivative liabilities	Total derivative liabilities	16		484		5		(112)		393		Total derivative liabilities	16		299		1		(88)		228
Total liabilities at fair value on a recurring basis	Total liabilities at fair value on a recurring basis	$	249	$	491	$	5	$	(112)	$	633	Total liabilities at fair value on a recurring basis	$	183	$	308	$	1	$	(88)	$	404

(1) These assets consist of U.S. Treasury securities (“U.S. Treasuries”) with maturities greater than 3 months as of our date of purchase.

(2) Substantially all of our available-for-sale securities consist of agency MBS and agency CMOs. See Note 5 for further information.

~~(2)~~(3) These assets are comprised of U.S. Treasuries primarily purchased to meet certain deposit requirements with clearing organizations or to meet future broker-dealer customer reserve requirements.

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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” and gains/(losses) on other investments are reported in “Other” ~~revenues.~~

Three months ended June 30, 2021
Level 3 instruments at fair value
Financial assets Financial liabilities
Trading assets Derivative assets Other investments Trading liabilities Derivative liabilities
$ in millions Other Other Private equity investments All other Other Other
Fair value beginning of period $ 5 $ 0 $ 52 $ 23 $ (1) $ (4)
Total gains/(losses) included in earnings 0 1 14 0 1 0
Purchases and contributions 10 0 0 0 0 0
Sales and distributions (5) 0 0 0 0 0
Transfers:
Into Level 3 0 0 0 0 0 0
Out of Level 3 0 0 0 0 0 0
Fair value end of period $ 10 $ 1 $ 66 $ 23 $ 0 $ (4)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ 0 $ 1 $ 14 $ 0 $ 0 $ 0

Nine Months Ended June 30, 2021
Level 3 instruments at fair value
Financial assets Financial liabilities
Trading assets Derivative assets Other investments Trading liabilities Derivative liabilities
$ in millions Other Other Private equity investments All other Other Other
Fair value beginning of period $ 12 $ 0 $ 37 $ 22 $ 0 $ (5)
Total gains/(losses) included in earnings 0 1 29 1 0 1
Purchases and contributions 26 0 0 0 0 0
Sales and distributions (28) 0 0 0 0 0
Transfers:
Into Level 3 0 0 0 0 0 0
Out of Level 3 0 0 0 0 0 0
Fair value end of period $ 10 $ 1 $ 66 $ 23 $ 0 $ (4)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ 0 $ 1 $ 29 $ 0 $ 0 $ 1

The net unrealized gains included in earnings on our Level 3 private equity investments for the three and nine months ended June 30, 2021 primarily reflected the impact of continued improvement in market conditions and an improved outlook for certain of our investments. Of these gains, $9 million and $18 million were attributable to noncontrolling interests, which are reflected as an offset in “Other” expensesrevenues on our Condensed Consolidated Statements of Income and Comprehensive Income.


Three months ended December 31, 2021 Level 3 instruments at fair value
	Financial assets								Financial liabilities
	Trading assets		Derivative assets		Other investments				Derivative liabilities
$ in millions	Other		Other		Private equity investments		All other		Other
Fair value beginning of period	$	14	$	—	$	75	$	23	$	(1)
Total gains included in earnings	2		1		—		—		1
Purchases and contributions	25		—		—		—		—
Sales and distributions	(39)		—		—		—		—
Transfers:
Into Level 3	—		—		—		—		—
Out of Level 3	—		—		—		—		—
Fair value end of period	$	2	$	1	$	75	$	23	$	—
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	(1)	$	2	$	—	$	—	$	—

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


Three months ended December 31, 2020 Level 3 instruments at fair value
	Financial assets						Financial liabilities
	Trading assets		Other investments				Derivative liabilities
$ in millions	Other		Private equity investments		All other		Other
Fair value beginning of period	$	12	$	37	$	22	$	(5)
Total gains/(losses) included in earnings	2		15		—		4
Purchases and contributions	6		—		—		—
Sales and distributions	(17)		—		—		—
Transfers:
Into Level 3	—		—		—		—
Out of Level 3	—		—		—		—
Fair value end of period	$	3	$	52	$	22	$	(1)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period	$	3	$	15	$	—	$	3

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

Three months ended June 30, 2020
Level 3 instruments at fair value
Financial assets Financial liabilities
Trading assets Other investments Trading liabilities
$ in millions Other Private equity investments All other Other
Fair value beginning of period $ 21 $ 30 $ 22 $ 0
Total gains/(losses) included in earnings (5) 0 0 0
Purchases and contributions 11 0 0 0
Sales and distributions (12) 0 0 0
Transfers:
Into Level 3 0 0 0 0
Out of Level 3 0 0 0 0
Fair value end of period $ 15 $ 30 $ 22 $ 0
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ 2 $ 0 $ 0 $ 0

Nine Months Ended June 30, 2020
Level 3 instruments at fair value
Financial assets Financial liabilities
Trading assets Other investments Trading liabilities
$ 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) 0
Purchases and contributions 64 0 0 2
Sales and distributions (50) (1) 0 (1)
Transfers:
Into Level 3 0 0 0 0
Out of Level 3 0 0 0 0
Fair value end of period $ 15 $ 30 $ 22 $ 0
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $ 1 $ (32) $ (2) $ 0

The net unrealized losses on our Level 3 private equity investments for the nine months ended June 30, 2020 were primarily driven by the then anticipated negative impact of the coronavirus (“COVID-19”) pandemic on certain of our investments. Of these losses, $20 million were attributable to noncontrolling interests, which are reflected as an offset in “Other” expenses on our Condensed Consolidated Statements of Income and Comprehensive Income.

As of ~~June 30,~~December 31, 2021, ~~22%~~28% of our assets and less than 1% of our liabilities were measured at fair value on a recurring basis. In comparison, as of September 30, ~~2020,~~2021, 19% of our assets and 2%less than 1% of our liabilities were measured at fair value on a recurring basis. The increase in assets measured at fair value on a recurring basis as a percentage of total assets was primarily due to a significant increase in assets segregated ~~pursuant to regulations at fair value during fiscal 2021,~~for regulatory purposes, driven by a significant increase in client cash balances. As of both ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, Level 3 assets represented less than 1% of our assets measured at fair value on a recurring basis.

1712

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Quantitative information about level 3 fair value measurements

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

Recurring measurements

$ in millions

Recurring measurements

$ in millions

Fair value at June 30, 2021

Valuation technique(s)

Unobservable input

Range
(weighted-average)

Recurring measurements

$ in millions

Fair value at December 31, 2021

Valuation technique(s)

Unobservable input

Range
(weighted-average)

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

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

Discount rate

25%

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

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

Discount rate

25%

Terminal year

2034 - 2034 (2034)

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

10.0x

Fair value at September 30, 2020

Terminal year

2023 - 2035 (2024)

Fair value at September 30, 2021

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

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

Discount rate

25%

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

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

Discount rate

25%

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

9.0x

Terminal EBITDA multiple

10.0x

Terminal year

2021 - 2042 (2023)

Terminal year

2023 - 2035 (2024)

Qualitative information about unobservable inputs

The significant unobservable inputs used in the fair value measurement of private equity investments generally relate to the financial performance of the investment entity and the market’s required return on investments from entities in industries in which we hold investments. Increases in the discount rate would have resulted in a lower fair value measurement. Increases in the terminal EBITDA multiple would have resulted in a higher fair value measurement. Increases in the terminal year are dependent upon each investment’s strategy, but generally result in a lower fair value measurement.

Investments in private equity measured at net asset value per share

As more fully described in Note 2 of our ~~2020~~2021 Form 10-K, as a practical expedient, we utilize NAV or its equivalent to determine the recorded value of a portion of our private equity investments portfolio. We utilize NAV when the fund investment does not have a readily determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.

Our private equity portfolio as of ~~June 30,~~December 31, 2021 ~~includes~~included various direct investments, as well as investments in third-party private equity ~~funds and various legacy private equity funds which we sponsor.~~funds. The portfolio is primarily invested in a broad range of strategies including leveraged buyouts, growth capital, distressed capital, venture capital and mezzanine capital. Due to the closed-end nature of certain of our fund investments, such investments cannot be redeemed directly with the funds. Our investment is monetized by distributions received through the liquidation of the underlying assets of those funds, the timing of which is uncertain.

1813

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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


$ in millions	$ in millions	Recorded value		Unfunded commitment		$ in millions	Recorded value		Unfunded commitment
June 30, 2021
December 31, 2021						December 31, 2021
Private equity investments measured at NAV	Private equity investments measured at NAV	$	93	$	8	Private equity investments measured at NAV	$	82	$	8
Private equity investments not measured at NAV	Private equity investments not measured at NAV	66				Private equity investments not measured at NAV	75
Total private equity investments	Total private equity investments	$	159			Total private equity investments	$	157

September 30, 2020
September 30, 2021						September 30, 2021
Private equity investments measured at NAV	Private equity investments measured at NAV	$	79	$	9	Private equity investments measured at NAV	$	94	$	8
Private equity investments not measured at NAV	Private equity investments not measured at NAV	37				Private equity investments not measured at NAV	75
Total private equity investments	Total private equity investments	$	116			Total private equity investments	$	169

Of the total private equity investments, the portions we owned were $115 million and ~~$90~~$120 million as of ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively. The portions of the private equity investments we did not own were ~~$44~~$42 million and ~~$26~~$49 million as of ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively, and were included as a component of noncontrolling interests on our Condensed Consolidated Statements of Financial Condition.

As a financial holding company, we are subject to holding period limitations for our merchant banking activities. ~~As a result, we will be required to exit certain of our private equity investments by February 2022.~~ Additionally, many of our private equity fund investments meet the definition of prohibited covered funds as defined by the Volcker Rule enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act ~~of 2010~~ (“Dodd-Frank Act”). We have received approval from the Board of Governors of the Federal Reserve System (“the Fed”) to continue to hold the majority of our covered fund investments until July 2022. As a result of our holding period limitations, we have continued to exit or restructure certain of our private equity investments and will continue to do so during the remainder of fiscal 2022 in accordance with our regulatory deadlines.

Financial instruments measured at fair value on a nonrecurring basis

The following table presents assets measured at fair value on a nonrecurring basis along with the valuation techniques and significant unobservable inputs used in the valuation of the assets classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments. Weighted averages are calculated by weighting each input by the relative fair value of the related financial instrument.


$ in millions	$ in millions	Level 2		Level 3		Total fair value		Valuation technique(s)	Unobservable input	Range (weighted-average)	$ in millions	Level 2		Level 3		Total fair value		Valuation technique(s)	Unobservable input	Range (weighted-average)
June 30, 2021
December 31, 2021											December 31, 2021
Bank loans:	Bank loans:										Bank loans:
Residential mortgage loans	Residential mortgage loans	$	4	$	11	$	15	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.6 yrs.)	Residential mortgage loans	$	3	$	10	$	13	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.5 yrs.)
Corporate loans	Corporate loans	$	0	$	25	$	25	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)	Corporate loans	$	—	$	41	$	41	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)
Loans held for sale	Loans held for sale	$	68	$	0	$	68	N/A	N/A	N/A	Loans held for sale	$	161	$	—	$	161	N/A	N/A	N/A

September 30, 2020
September 30, 2021											September 30, 2021
Bank loans:	Bank loans:										Bank loans:
Residential mortgage loans	Residential mortgage loans	$	4	$	13	$	17	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.6 yrs.)	Residential mortgage loans	$	3	$	11	$	14	Collateral or discounted cash flow (1)	Prepayment rate	7 yrs. - 12 yrs. (10.5 yrs.)
Corporate loans	Corporate loans	$	0	$	15	$	15	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)	Corporate loans	$	—	$	49	$	49	Collateral or discounted cash flow (1)	Not meaningful (1)	Not meaningful (1)
Loans held for sale	Loans held for sale	$	38	$	0	$	38	N/A	N/A	N/A	Loans held for sale	$	29	$	—	$	29	N/A	N/A	N/A
Other assets: other real estate owned		$	1	$	0	$	1	N/A	N/A	N/A

(1) The valuation techniques used to estimate the fair values are based on collateral value less selling costs for the collateral-dependent loans and discounted cash flows for loans that are not collateral-dependent.

1914

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial instruments not recorded at fair value

Many, but not all, of the financial instruments we hold were recorded at fair value on the Condensed Consolidated Statements of Financial Condition. The following table presents the estimated fair value and fair value hierarchy of financial assets and liabilities that are not recorded at fair value ~~in accordance with GAAP~~ on the Condensed Consolidated Statements of Financial Condition at ~~June 30,~~December 31, 2021 and September 30, ~~2020.~~2021. This table excludes financial instruments that are carried at amounts which approximate fair value. Refer to Note 34 of our ~~2020~~2021 Form 10-K for a discussion of the fair value hierarchy classifications of our financial instruments that are not recorded at fair value.


$ in millions	$ in millions	Level 2		Level 3		Total estimated fair value		Carrying amount		$ in millions	Level 2		Level 3		Total estimated fair value		Carrying amount
June 30, 2021
December 31, 2021										December 31, 2021
Financial assets:	Financial assets:									Financial assets:
Bank loans, net	Bank loans, net	$	69	$	23,614	$	23,683	$	23,788	Bank loans, net	$	69	$	25,840	$	25,909	$	25,917
Financial liabilities:	Financial liabilities:									Financial liabilities:
Bank deposits - certificates of deposit	Bank deposits - certificates of deposit	$	0	$	904	$	904	$	880	Bank deposits - certificates of deposit	$	—	$	802	$	802	$	789
Senior notes payable	Senior notes payable	$	2,457	$	0	$	2,457	$	2,037	Senior notes payable	$	2,434	$	—	$	2,434	$	2,037

September 30, 2020
September 30, 2021										September 30, 2021
Financial assets:	Financial assets:									Financial assets:
Bank loans, net	Bank loans, net	$	72	$	21,119	$	21,191	$	21,125	Bank loans, net	$	116	$	24,839	$	24,955	$	24,902
Financial liabilities:	Financial liabilities:									Financial liabilities:
Bank deposits - certificates of deposit	Bank deposits - certificates of deposit	$	0	$	1,056	$	1,056	$	1,017	Bank deposits - certificates of deposit	$	—	$	898	$	898	$	878
Senior notes payable	Senior notes payable	$	2,504	$	0	$	2,504	$	2,045	Senior notes payable	$	2,459	$	—	$	2,459	$	2,037

NOTE 5 – AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities are primarily comprised of agency MBS and agency CMOs owned by Raymond James Bank. ~~As of October 1, 2020, we adopted new accounting guidance related to the measurement of credit losses on financial instruments, including available-for-sale securities.~~ Refer to Note 2 of our 2021 Form 10-K for ~~further information about this guidance and~~ a discussion of our accounting policies applicable to our available-for-sale securities.

The following table details the amortized costs and fair values of our available-for-sale securities.


$ in millions	$ in millions	Cost basis		Gross unrealized gains		Gross unrealized losses		Fair value		$ in millions	Cost basis		Gross unrealized gains		Gross unrealized losses		Fair value
June 30, 2021
December 31, 2021										December 31, 2021
Agency residential MBS	Agency residential MBS	$	4,958	$	53	$	(16)	$	4,995	Agency residential MBS	$	5,537	$	32	$	(49)	$	5,520
Agency commercial MBS	Agency commercial MBS	1,263		10		(18)		1,255		Agency commercial MBS	1,324		4		(37)		1,291
Agency CMOs	Agency CMOs	1,928		11		(13)		1,926		Agency CMOs	1,750		4		(33)		1,721
Other securities	Other securities	15		0		0		15		Other securities	15		—		—		15
Total available-for-sale securities	Total available-for-sale securities	$	8,164	$	74	$	(47)	$	8,191	Total available-for-sale securities	$	8,626	$	40	$	(119)	$	8,547

September 30, 2020
September 30, 2021										September 30, 2021
Agency residential MBS	Agency residential MBS	$	4,064	$	74	$	(3)	$	4,135	Agency residential MBS	$	5,168	$	46	$	(25)	$	5,189
Agency commercial MBS	Agency commercial MBS	948		22		(1)		969		Agency commercial MBS	1,285		7		(28)		1,264
Agency CMOs	Agency CMOs	2,504		27		(1)		2,530		Agency CMOs	1,854		9		(16)		1,847
Other securities	Other securities	15		1		0		16		Other securities	15		—		—		15
Total available-for-sale securities	Total available-for-sale securities	$	7,531	$	124	$	(5)	$	7,650	Total available-for-sale securities	$	8,322	$	62	$	(69)	$	8,315

The amortized costs and fair values in the preceding table exclude $14 million ~~and $15 million~~ of accrued interest on available-for-sale securities as of ~~June 30,~~both December 31, 2021 and September 30, ~~2020, respectively,~~2021, which was included in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

See Note 4 for additional information regarding the fair value of available-for-sale securities.

2015

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table details the contractual maturities, amortized costs, carrying values and current yields for our available-for-sale securities. Since our MBS and CMO available-for-sale securities are backed by mortgages, actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. As a result, as of ~~June 30,~~December 31, 2021, the weighted-average life of our available-for-sale securities portfolio was approximately 4four years.


		June 30, 2021																December 31, 2021
$ in millions	$ in millions	Within one year			After one but within five years			After five but within ten years			After ten years			Total			$ in millions	Within one year			After one but within five years			After five but within ten years			After ten years			Total
Agency residential MBS	Agency residential MBS																Agency residential MBS
Amortized cost	Amortized cost	$	0		$	49		$	2,160		$	2,749		$	4,958		Amortized cost	$	—		$	117		$	2,764		$	2,656		$	5,537
Carrying value	Carrying value	$	0		$	51		$	2,187		$	2,757		$	4,995		Carrying value	$	—		$	121		$	2,761		$	2,638		$	5,520
Agency commercial MBS	Agency commercial MBS																Agency commercial MBS
Amortized cost	Amortized cost	$	19		$	297		$	814		$	133		$	1,263		Amortized cost	$	33		$	315		$	892		$	84		$	1,324
Carrying value	Carrying value	$	19		$	301		$	803		$	132		$	1,255		Carrying value	$	33		$	313		$	862		$	83		$	1,291
Agency CMOs	Agency CMOs																Agency CMOs
Amortized cost	Amortized cost	$	0		$	1		$	44		$	1,883		$	1,928		Amortized cost	$	—		$	6		$	23		$	1,721		$	1,750
Carrying value	Carrying value	$	0		$	1		$	45		$	1,880		$	1,926		Carrying value	$	—		$	6		$	23		$	1,692		$	1,721
Other securities	Other securities																Other securities
Amortized cost	Amortized cost	$	0		$	7		$	8		$	0		$	15		Amortized cost	$	—		$	10		$	5		$	—		$	15
Carrying value	Carrying value	$	0		$	7		$	8		$	0		$	15		Carrying value	$	—		$	11		$	4		$	—		$	15
Total available-for-sale securities	Total available-for-sale securities																Total available-for-sale securities
Amortized cost	Amortized cost	$	19		$	354		$	3,026		$	4,765		$	8,164		Amortized cost	$	33		$	448		$	3,684		$	4,461		$	8,626
Carrying value	Carrying value	$	19		$	360		$	3,043		$	4,769		$	8,191		Carrying value	$	33		$	451		$	3,650		$	4,413		$	8,547
Weighted-average yield	Weighted-average yield	2.10		%	1.67		%	1.22		%	1.09		%	1.17		%	Weighted-average yield	2.08		%	1.67		%	1.11		%	1.08		%	1.13		%

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


		Less than 12 months				12 months or more				Total					Less than 12 months				12 months or more				Total
$ in millions	$ in millions	Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses		$ in millions	Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses		Estimated fair value		Unrealized losses
June 30, 2021
December 31, 2021														December 31, 2021
Agency residential MBS	Agency residential MBS	$	2,294	$	(16)	$	0	$	0	$	2,294	$	(16)	Agency residential MBS	$	3,976	$	(40)	$	367	$	(9)	$	4,343	$	(49)
Agency commercial MBS	Agency commercial MBS	851		(18)		0		0		851		(18)		Agency commercial MBS	479		(11)		570		(26)		1,049		(37)
Agency CMOs	Agency CMOs	968		(13)		44		0		1,012		(13)		Agency CMOs	1,104		(22)		372		(11)		1,476		(33)
Other securities	Other securities	3		0		0		0		3		0		Other securities	4		—		—		—		4		—
Total	Total	$	4,116	$	(47)	$	44	$	0	$	4,160	$	(47)	Total	$	5,563	$	(73)	$	1,309	$	(46)	$	6,872	$	(119)
September 30, 2020
September 30, 2021														September 30, 2021
Agency residential MBS	Agency residential MBS	$	966	$	(3)	$	0	$	0	$	966	$	(3)	Agency residential MBS	$	3,155	$	(25)	$	18	$	—	$	3,173	$	(25)
Agency commercial MBS	Agency commercial MBS	177		(1)		0		0		177		(1)		Agency commercial MBS	645		(13)		353		(15)		998		(28)
Agency CMOs	Agency CMOs	410		(1)		0		0		410		(1)		Agency CMOs	918		(12)		231		(4)		1,149		(16)

Other securities														Other securities	3		—		—		—		3		—
Total	Total	$	1,553	$	(5)	$	0	$	0	$	1,553	$	(5)	Total	$	4,721	$	(50)	$	602	$	(19)	$	5,323	$	(69)

The contractual cash flows of our available-for-sale securities are guaranteed by the U.S. government or its agencies. At ~~June 30,~~December 31, 2021, of the ~~208~~392 available-for-sale securities in an unrealized loss position, ~~205~~315 were in a continuous unrealized loss position for less than 12 months and 377 securities were in a continuous unrealized loss position for greater than 12 months. We do not consider unrealized losses associated with these securities to be credit losses due to the guarantee of the full payment of principal and interest, and the fact that we have the ability and intent to hold these securities. In addition, unrealized losses related to these available-for-sale securities are generally due to changes in market interest rates. At ~~June 30,~~December 31, 2021, based on our assessment of this portfolio, we did not recognize an allowance for credit losses on our available-for-sale securities. At ~~June 30,~~December 31, 2021, debt securities we held in excess of ten percent of our equity included those issued by the Federal National Home Mortgage Association ~~(“FNMA”)~~ and Federal Home Loan Mortgage Corporation ~~(“FHLMC”)~~ with amortized costs of ~~$4.84~~$5.47 billion and ~~$2.79~~$2.93 billion, respectively, which also approximated the fair values of the securities.

During the three and nine months ended June 30, 2021, we received proceeds of $450 million and $969 million, respectively, from the sales of agency MBS and agency CMO available-for-sale securities. During the three and nine months ended June 30, 2020, we received proceeds of $222 million from sales of available-for-sale securities. These sales resulted in insignificant

2116

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~gains~~During the three months ended December 31, 2021, there were no sales of available-for-sale securities. During the three months ended December 31, 2020, we received proceeds of $519 million, resulting in ~~each period, which were~~an insignificant gain, from the sales of agency MBS and agency CMO available-for-sale securities. The gain that resulted from the sales was included in “Other” revenues on our Condensed Consolidated Statements of Income and Comprehensive Income.

NOTE 6 – DERIVATIVE ASSETS AND DERIVATIVE LIABILITIES

Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative liabilities” on our Condensed Consolidated Statements of Financial Condition. Cash flows related to our derivatives are included within operating activities on the Condensed Consolidated Statements of Cash Flows. The significant accounting policies governing our derivatives, including our methodologies for determining fair value, are described in Note 2 of our ~~2020~~2021 Form 10-K.

Derivative balances included on our financial statements

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


		June 30, 2021						September 30, 2020							December 31, 2021						September 30, 2021
$ in millions	$ in millions	Derivative assets		Derivative liabilities		Notional amount		Derivative assets		Derivative liabilities		Notional amount		$ in millions	Derivative assets		Derivative liabilities		Notional amount		Derivative assets		Derivative liabilities		Notional amount
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments													Derivatives not designated as hedging instruments
Interest rate - matched book	Interest rate - matched book	$	221	$	221	$	1,862	$	333	$	333	$	2,174	Interest rate - matched book	$	171	$	171	$	1,559	$	193	$	193	$	1,736
Interest rate - other (1)	Interest rate - other (1)	157		121		14,977		240		161		19,206		Interest rate - other (1)	114		103		12,356		144		122		15,087
Foreign exchange	Foreign exchange	3		0		755		0		2		605		Foreign exchange	—		14		867		3		—		826
Other	Other	1		4		578		0		6		608		Other	1		—		570		—		1		551
Subtotal	Subtotal	382		346		18,172		573		502		22,593		Subtotal	286		288		15,352		340		316		18,200
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments													Derivatives designated as hedging instruments
Interest rate	Interest rate	0		0		850		0		0		850		Interest rate	—		—		850		—		—		850
Foreign exchange	Foreign exchange	4		0		918		0		3		866		Foreign exchange	—		18		936		2		—		939
Subtotal	Subtotal	4		0		1,768		0		3		1,716		Subtotal	—		18		1,786		2		—		1,789
Total gross fair value/notional amount	Total gross fair value/notional amount	386		346		$	19,940	573		505		$	24,309	Total gross fair value/notional amount	286		306		$	17,138	342		316		$	19,989
Offset on the Condensed Consolidated Statements of Financial Condition	Offset on the Condensed Consolidated Statements of Financial Condition													Offset on the Condensed Consolidated Statements of Financial Condition
Counterparty netting	Counterparty netting	(45)		(45)				(40)		(40)				Counterparty netting	(38)		(38)				(46)		(46)
Cash collateral netting	Cash collateral netting	(50)		(38)				(95)		(72)				Cash collateral netting	(34)		(36)				(41)		(42)
Total amounts offset	Total amounts offset	(95)		(83)				(135)		(112)				Total amounts offset	(72)		(74)				(87)		(88)
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	Net amounts presented on the Condensed Consolidated Statements of Financial Condition	291		263				438		393				Net amounts presented on the Condensed Consolidated Statements of Financial Condition	214		232				255		228
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition													Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
Financial instruments (2)	Financial instruments (2)	(233)		(221)				(349)		(333)				Financial instruments (2)	(181)		(171)				(205)		(193)
Total	Total	$	58	$	42			$	89	$	60			Total	$	33	$	61			$	50	$	35

(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 (“TBAs”) 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.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table details the gains/(losses) included in accumulated other comprehensive ~~income~~income/(loss) (“AOCI”), net of income taxes, on derivatives designated as hedging instruments. These gains/(losses) included any amounts reclassified from AOCI to net income during the period. See Note 1716 for additional information.


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2021		2020
Interest rate (cash flow hedges)	Interest rate (cash flow hedges)	$	(2)	$	(4)	$	22	$	(37)	Interest rate (cash flow hedges)	$	9	$	5
Foreign exchange (net investment hedges)	Foreign exchange (net investment hedges)	(9)		(21)		(48)		18		Foreign exchange (net investment hedges)	(1)		(29)
Total gains/(losses) in AOCI, net of taxes	Total gains/(losses) in AOCI, net of taxes	$	(11)	$	(25)	$	(26)	$	(19)	Total gains/(losses) in AOCI, net of taxes	$	8	$	(24)

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

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

There were 0 components of derivative gains or losses excluded from the assessment of hedge effectiveness for each of the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020. We expect to reclassify ~~$16~~$13 million of interest expense out of AOCI and into earnings within the next 12 months. The maximum length of time over which forecasted transactions are or will be hedged is 6 years.

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


$ in millions	$ in millions		Three months ended June 30,				Nine months ended June 30,				$ in millions		Three months ended December 31,
		Location of gain/(loss)	2021		2020		2021		2020			Location of gain/(loss)	2021		2020
Interest rate	Interest rate	Principal transactions/other revenues	$	2	$	0	$	12	$	5	Interest rate	Principal transactions/other revenues	$	3	$	4
Foreign exchange	Foreign exchange	Other revenues	$	(9)	$	(19)	$	(39)	$	13	Foreign exchange	Other revenues	$	(1)	$	(26)
Other	Other	Principal transactions	$	1	$	0	$	3	$	0	Other	Principal transactions	$	3	$	4
Other		Compensation, commissions and benefits expense	$	0	$	0	$	0	$	(1)

Risks associated with our derivatives and related risk mitigation

Credit risk

We are exposed to credit losses in the event of nonperformance by the counterparties to derivatives that are not cleared through a clearing organization. Where we are subject to credit exposure, we perform a credit evaluation of counterparties prior to entering into derivative transactions and we continue to monitor their credit ~~standings.~~standings on an ongoing basis. We may require initial margin or collateral from counterparties in the form of cash or other marketable securities to support certain of these obligations as established by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties.

Our only exposure to credit risk on matched book derivatives is related to our uncollected derivative transaction fee revenues, which were insignificant as of both ~~June 30,~~December 31, 2021 and September 30, ~~2020.~~2021. We are not exposed to market risk on these derivatives due to the pass-through transaction structure described in Note 2 of our ~~2020~~2021 Form 10-K.

Interest rate and foreign exchange risk

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

Derivatives with credit-risk-related contingent features

Certain of our derivative contracts contain provisions that require our debt to maintain an investment-grade rating from one or more of the major credit rating agencies. If our debt were to fall below investment-grade, the counterparties to the derivative instruments could terminate the derivative and request immediate payment, or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position was $14 million as of December 31, 2021 and was insignificant as of September 30, 2021.

2318

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 7 – COLLATERALIZED AGREEMENTS AND FINANCINGS

Collateralized agreements are comprised of securities purchased under agreements to resell (“reverse repurchase agreements”) and securities borrowed. Collateralized financings are comprised of securities sold under agreements to repurchase (“repurchase agreements”) and securities loaned. We enter into these transactions in order to facilitate client activities, acquire securities to cover short positions and finance certain firm activities. The significant accounting policies governing our collateralized agreements and financings are described in Note 2 of our ~~2020~~2021 Form 10-K.

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


		Collateralized agreements						Collateralized financings							Collateralized agreements						Collateralized financings
$ in millions	$ in millions	Reverse repurchase agreements		Securities borrowed		Total		Repurchase agreements		Securities loaned		Total		$ in millions	Reverse repurchase agreements		Securities borrowed		Total		Repurchase agreements		Securities loaned		Total
June 30, 2021
December 31, 2021														December 31, 2021
Gross amounts of recognized assets/liabilities	Gross amounts of recognized assets/liabilities	$	289	$	350	$	639	$	185	$	100	$	285	Gross amounts of recognized assets/liabilities	$	204	$	143	$	347	$	203	$	65	$	268
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	0		0		0		0		0		0		Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	Net amounts presented on the Condensed Consolidated Statements of Financial Condition	289		350		639		185		100		285		Net amounts presented on the Condensed Consolidated Statements of Financial Condition	204		143		347		203		65		268
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(289)		(339)		(628)		(185)		(96)		(281)		Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(204)		(139)		(343)		(203)		(62)		(265)
Net amounts	Net amounts	$	0	$	11	$	11	$	0	$	4	$	4	Net amounts	$	—	$	4	$	4	$	—	$	3	$	3
September 30, 2020
September 30, 2021														September 30, 2021
Gross amounts of recognized assets/liabilities	Gross amounts of recognized assets/liabilities	$	207	$	215	$	422	$	165	$	85	$	250	Gross amounts of recognized assets/liabilities	$	279	$	201	$	480	$	205	$	72	$	277
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	0		0		0		0		0		0		Gross amounts offset on the Condensed Consolidated Statements of Financial Condition	—		—		—		—		—		—
Net amounts presented on the Condensed Consolidated Statements of Financial Condition	Net amounts presented on the Condensed Consolidated Statements of Financial Condition	207		215		422		165		85		250		Net amounts presented on the Condensed Consolidated Statements of Financial Condition	279		201		480		205		72		277
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(207)		(209)		(416)		(165)		(79)		(244)		Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition	(279)		(195)		(474)		(205)		(68)		(273)
Net amounts	Net amounts	$	0	$	6	$	6	$	0	$	6	$	6	Net amounts	$	—	$	6	$	6	$	—	$	4	$	4

The total amount of collateral received under reverse repurchase agreements and the total amount of collateral posted under repurchase agreements exceeds the carrying value of these agreements on our Condensed Consolidated Statements of Financial Condition.

Collateral received and pledged

We receive cash and securities as collateral, primarily in connection with reverse repurchase agreements, securities ~~borrowed,~~borrowing agreements, derivative transactions and client margin loans. The collateral we receive reduces our credit exposure to individual counterparties.

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

2419

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Collateral we received that was available to be delivered or repledged	Collateral we received that was available to be delivered or repledged	$	3,515	$	2,869	Collateral we received that was available to be delivered or repledged	$	3,548	$	3,429
Collateral that we delivered or repledged	Collateral that we delivered or repledged	$	973	$	788	Collateral that we delivered or repledged	$	821	$	830

Encumbered assets

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


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Had the right to deliver or repledge	Had the right to deliver or repledge	$	379	$	325	Had the right to deliver or repledge	$	333	$	368
Did not have the right to deliver or repledge	Did not have the right to deliver or repledge	$	65	$	65	Did not have the right to deliver or repledge	$	65	$	65
Bank loans, net pledged at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta	Bank loans, net pledged at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta	$	5,581	$	5,367	Bank loans, net pledged at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta	$	5,747	$	5,716

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

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


$ in millions	$ in millions	Overnight and continuous		Up to 30 days		30-90 days		Greater than 90 days		Total		$ in millions	Overnight and continuous		Up to 30 days		30-90 days		Greater than 90 days		Total
June 30, 2021
December 31, 2021												December 31, 2021
Repurchase agreements:	Repurchase agreements:											Repurchase agreements:
Government and agency obligations	Government and agency obligations	$	88	$	0	$	0	$	0	$	88	Government and agency obligations	$	102	$	—	$	—	$	—	$	102
Agency MBS and agency CMOs	Agency MBS and agency CMOs	97		0		0		0		97		Agency MBS and agency CMOs	101		—		—		—		101
Total repurchase agreements	Total repurchase agreements	185		0		0		0		185		Total repurchase agreements	203		—		—		—		203
Securities loaned:	Securities loaned:											Securities loaned:
Equity securities	Equity securities	100		0		0		0		100		Equity securities	65		—		—		—		65
Total collateralized financings	Total collateralized financings	$	285	$	0	$	0	$	0	$	285	Total collateralized financings	$	268	$	—	$	—	$	—	$	268
September 30, 2020
September 30, 2021												September 30, 2021
Repurchase agreements:	Repurchase agreements:											Repurchase agreements:
Government and agency obligations	Government and agency obligations	$	87	$	0	$	0	$	0	$	87	Government and agency obligations	$	122	$	—	$	—	$	—	$	122
Agency MBS and agency CMOs	Agency MBS and agency CMOs	78		0		0		0		78		Agency MBS and agency CMOs	83		—		—		—		83
Total repurchase agreements	Total repurchase agreements	165		0		0		0		165		Total repurchase agreements	205		—		—		—		205
Securities loaned:	Securities loaned:											Securities loaned:
Equity securities	Equity securities	85		0		0		0		85		Equity securities	72		—		—		—		72
Total collateralized financings	Total collateralized financings	$	250	$	0	$	0	$	0	$	250	Total collateralized financings	$	277	$	—	$	—	$	—	$	277

As of both ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, we did not have any “repurchase-to-maturity” agreements, which are repurchase agreements where a security is transferred under an agreement to repurchase and the maturity date of the repurchase agreement matches the maturity date of the underlying security.

2520

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 – BANK LOANS, NET

Bank client receivables are comprised of loans originated or purchased by Raymond James Bank and include commercial and industrial (“C&I&I”) loans, ~~REIT~~real estate investment trust (“REIT”) loans, tax-exempt loans, commercial and residential real estate loans, and ~~SBL~~securities-based loans (“SBL”) and other loans. These receivables are collateralized by first and, to a lesser extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue, securities or are unsecured. We segregate our loan portfolio into six loan portfolio segments: C&I, commercial real estate (“CRE”), REIT, tax-exempt, residential mortgage, and SBL and other. See Note 2 of our ~~2020~~2021 Form 10-K for a discussion of ~~accounting policies related to bank loans.~~

~~As of~~our October 1, 2020 ~~we adopted~~adoption of new accounting guidance related to the measurement of credit losses on financial ~~instruments. See Note 2 for further information about this guidance~~instruments and ~~a discussion of~~ our accounting policies related to ~~our allowance for credit losses. We segregate our loan portfolio into 6 loan portfolio segments: C&I, CRE, REIT, tax-exempt, residential mortgage,~~bank loans and ~~SBL and other. Upon adoption, we redefined certain of our portfolio segments to align with the new methodology applied in determining~~ the allowance for credit losses. ~~Prior-period loan portfolio segment balances have been revised to conform to the current presentation.~~

Loan balances in the following tables are presented at amortized cost (outstanding principal balance net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs), except for certain held for sale loans recorded at fair value. Bank loans are presented on our Condensed Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for credit losses.

The following table presents the balances for both the held for sale and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in Raymond James Bank’s total loan portfolio.


		June 30, 2021				September 30, 2020					December 31, 2021				September 30, 2021
$ in millions	$ in millions	Balance		%		Balance		%		$ in millions	Balance		%		Balance		%
C&I loans	C&I loans	$	8,011	33	%	$	7,421	34	%	C&I loans	$	8,608	33	%	$	8,440	33	%
CRE loans	CRE loans	2,728		11	%	2,489		12	%	CRE loans	2,992		11	%	2,872		11	%
REIT loans	REIT loans	1,270		5	%	1,210		5	%	REIT loans	1,189		4	%	1,112		5	%
Tax-exempt loans	Tax-exempt loans	1,320		6	%	1,259		6	%	Tax-exempt loans	1,290		5	%	1,321		5	%
Residential mortgage loans	Residential mortgage loans	5,170		21	%	4,973		23	%	Residential mortgage loans	5,568		21	%	5,318		21	%
SBL and other	SBL and other	5,582		23	%	4,087		19	%	SBL and other	6,563		25	%	6,106		24	%
Total loans held for investment	Total loans held for investment	24,081		99	%	21,439		99	%	Total loans held for investment	26,210		99	%	25,169		99	%
Held for sale loans	Held for sale loans	137		1	%	110		1	%	Held for sale loans	230		1	%	145		1	%
Total loans held for sale and investment	Total loans held for sale and investment	24,218		100	%	21,549		100	%	Total loans held for sale and investment	26,440		100	%	25,314		100	%
Allowance for credit losses	Allowance for credit losses	(322)				(354)				Allowance for credit losses	(308)				(320)
Bank loans, net	Bank loans, net	$	23,896			$	21,195			Bank loans, net	$	26,132			$	24,994
Accrued interest receivable on bank loans	Accrued interest receivable on bank loans	$	47			$	45			Accrued interest receivable on bank loans	$	51			$	48

The allowance for credit losses was 1.18% and 1.27% of the held for investment loan portfolio as of ~~June~~December 31, 2021 and September 30, 2021, ~~was determined using the new CECL methodology, which was adopted on October 1, 2020. Prior periods have not been restated and were calculated under the incurred loss methodology.~~

respectively. Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

At ~~June 30,~~December 31, 2021, the FHLB had a blanket lien on Raymond James Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. See Note 1416 of our ~~2020~~2021 Form 10-K for more information regarding borrowings from the FHLB.

Held for sale loans

Raymond James Bank originated or purchased ~~$385~~$968 million and ~~$1.50 billion~~$582 million of loans held for sale during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 ~~respectively,~~ and ~~$185 million and $1.33 billion during the three and nine months ended June 30,~~ 2020, respectively. The majority of these loans were purchases of the guaranteed portions of Small Business Administration (“SBA”) loans intended for resale in the secondary market as individual SBA loans or as securitized pools of SBA loans. Proceeds from the ~~sale~~sales of these held for sale loans amounted to ~~$230~~$338 million and ~~$625~~$188 million during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 ~~respectively,~~ and ~~$130 million and $564 million during the three and nine months ended June 30,~~ 2020, respectively. Net gains resulting from such sales were insignificant ~~in all periods during~~for each of the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020.

2621

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Purchases and sales of loans held for investment

The following table presents purchases and sales of loans held for investment by portfolio segment.


$ in millions	$ in millions	C&I loans		CRE loans		Residential mortgage loans		Total		$ in millions	C&I loans		Residential mortgage loans		Total
Three months ended June 30, 2021
Three months ended December 31, 2021										Three months ended December 31, 2021
Purchases	Purchases	$	381	$	0	$	190	$	571	Purchases	$	339	$	184	$	523
Sales	Sales	$	116	$	0	$	0	$	116	Sales	$	51	$	—	$	51
Nine months ended June 30, 2021

Three months ended December 31, 2020										Three months ended December 31, 2020
Purchases	Purchases	$	1,041	$	0	$	350	$	1,391	Purchases	$	122	$	46	$	168
Sales	Sales	$	216	$	0	$	0	$	216	Sales	$	5	$	—	$	5
Three months ended June 30, 2020
Purchases		$	0	$	0	$	113	$	113
Sales		$	265	$	27	$	0	$	292
Nine months ended June 30, 2020
Purchases		$	363	$	5	$	371	$	739
Sales		$	285	$	27	$	0	$	312

Sales in the preceding table represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period. As more fully described in Note 2 of our ~~2020~~2021 Form 10-K, corporate loan sales generally occur as part of our credit management activities.

Aging analysis of loans held for investment

The following table presents information on delinquency status of our loans held for investment.


$ in millions	$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual with allowance		Nonaccrual with no allowance		Current and accruing		Total loans held for investment		$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual with allowance		Nonaccrual with no allowance		Current and accruing		Total loans held for investment
June 30, 2021
December 31, 2021																December 31, 2021
C&I loans	C&I loans	$	1	$	0	$	1	$	0	$	0	$	8,010	$	8,011	C&I loans	$	—	$	—	$	—	$	38	$	—	$	8,570	$	8,608
CRE loans	CRE loans	0		0		0		14		13		2,701		2,728		CRE loans	—		—		—		—		20		2,972		2,992
REIT loans	REIT loans	0		0		0		0		0		1,270		1,270		REIT loans	—		—		—		—		—		1,189		1,189
Tax-exempt loans	Tax-exempt loans	0		0		0		0		0		1,320		1,320		Tax-exempt loans	—		—		—		—		—		1,290		1,290
Residential mortgage loans	Residential mortgage loans	2		0		2		1		14		5,153		5,170		Residential mortgage loans	1		—		1		1		14		5,552		5,568
SBL and other	SBL and other	0		0		0		0		0		5,582		5,582		SBL and other	—		—		—		—		—		6,563		6,563
Total loans held for investment	Total loans held for investment	$	3	$	0	$	3	$	15	$	27	$	24,036	$	24,081	Total loans held for investment	$	1	$	—	$	1	$	39	$	34	$	26,136	$	26,210

September 30, 2020
September 30, 2021																September 30, 2021
C&I loans	C&I loans	$	0	$	0	$	0	$	2	$	0	$	7,419	$	7,421	C&I loans	$	—	$	—	$	—	$	39	$	—	$	8,401	$	8,440
CRE loans	CRE loans	0		0		0		0		14		2,475		2,489		CRE loans	—		—		—		—		20		2,852		2,872
REIT loans	REIT loans	0		0		0		0		0		1,210		1,210		REIT loans	—		—		—		—		—		1,112		1,112
Tax-exempt loans	Tax-exempt loans	0		0		0		0		0		1,259		1,259		Tax-exempt loans	—		—		—		—		—		1,321		1,321
Residential mortgage loans	Residential mortgage loans	0		0		0		3		11		4,959		4,973		Residential mortgage loans	2		—		2		2		13		5,301		5,318
SBL and other	SBL and other	0		0		0		0		0		4,087		4,087		SBL and other	—		—		—		—		—		6,106		6,106
Total loans held for investment	Total loans held for investment	$	0	$	0	$	0	$	5	$	25	$	21,409	$	21,439	Total loans held for investment	$	2	$	—	$	2	$	41	$	33	$	25,093	$	25,169

The preceding table includes ~~$28~~$59 million and ~~$15~~$61 million at ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes ~~TDRs~~troubled debt restructurings (“TDRs”) of $12 million for CRE loans and $13 million for ~~both CRE and~~ residential first mortgage loans at ~~June 30,~~both December 31, 2021 and ~~$6 million and $15 million, respectively, at~~ September 30, ~~2020.~~2021.

Other real estate owned, included in “Other assets” on our Condensed Consolidated Statements of Financial Condition, was insignificant at both ~~June 30,~~December 31, 2021 and September 30, ~~2020.~~2021.

2722

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Collateral-dependent loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the underlying collateral. ~~At June 30, 2021, we~~We had ~~$27~~$20 million of collateral-dependent CRE loans at both December 31, 2021 and September 30, 2021, which were fully collateralized by retail and industrial real ~~estate,~~estate. We had $7 million and $8$5 million of collateral-dependent residential loans at December 31, 2021 and September 30, 2021, respectively, which were fully collateralized by single family homes. Collateral-dependent loans do not include loans to borrowers who have been granted forbearance as result of the COVID-19 pandemic or loans for which the borrower had requested a loan modification, where the request had been initiated but had not been approved or completed as of ~~the end of the quarter.~~December 31, 2021. Such loans may be considered collateral-dependent after the forbearance period expires. The recorded investment in mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was $4 million ~~and $6 million~~ at ~~June 30,~~both December 31, 2021 and September 30, ~~2020, respectively.~~2021.

Credit quality indicators

The credit quality of our bank loan portfolio is summarized monthly by management using internal risk ratings, which align with the standard asset classification system utilized by bank regulators. These classifications are divided into three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss). These terms are defined as follows:

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

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

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

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

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

2823

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present our held for investment bank loan portfolio by ~~year of origination and~~ credit quality ~~indicator as of June 30, 2021.~~indicator.


																			December 31, 2021
																			Loans by origination fiscal year
$ in millions	$ in millions	2021		2020		2019		2018		2017		Prior		Revolving loans		Total		$ in millions	2022		2021		2020		2019		2018		Prior		Revolving loans		Total
C&I loans	C&I loans																	C&I loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	593	$	1,332	$	1,167	$	1,325	$	1,004	$	1,582	$	635	$	7,638	Pass	$	293	$	1,042	$	1,316	$	1,108	$	1,382	$	2,260	$	993	$	8,394
Special mention	Special mention	0		0		42		92		0		88		0		222		Special mention	—		—		—		40		—		76		4		120
Substandard	Substandard	0		0		39		84		0		28		0		151		Substandard	—		—		—		24		39		17		—		80
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		14		—		—		—		14
Total C&I loans	Total C&I loans	$	593	$	1,332	$	1,248	$	1,501	$	1,004	$	1,698	$	635	$	8,011	Total C&I loans	$	293	$	1,042	$	1,316	$	1,186	$	1,421	$	2,353	$	997	$	8,608


CRE loans	CRE loans																	CRE loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	330	$	432	$	477	$	653	$	227	$	177	$	63	$	2,359	Pass	$	154	$	615	$	397	$	431	$	642	$	380	$	76	$	2,695
Special mention	Special mention	0		45		86		27		0		0		0		158		Special mention	—		—		45		43		36		—		—		124
Substandard	Substandard	0		0		32		113		8		58		0		211		Substandard	—		—		—		48		80		45		—		173
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	Total CRE loans	$	330	$	477	$	595	$	793	$	235	$	235	$	63	$	2,728	Total CRE loans	$	154	$	615	$	442	$	522	$	758	$	425	$	76	$	2,992


REIT loans	REIT loans																	REIT loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	214	$	124	$	87	$	87	$	46	$	171	$	331	$	1,060	Pass	$	—	$	239	$	96	$	65	$	25	$	140	$	429	$	994
Special mention	Special mention	0		0		23		11		35		106		8		183		Special mention	—		—		—		13		11		138		6		168
Substandard	Substandard	0		0		21		0		4		0		2		27		Substandard	—		—		—		21		—		4		2		27
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	Total REIT loans	$	214	$	124	$	131	$	98	$	85	$	277	$	341	$	1,270	Total REIT loans	$	—	$	239	$	96	$	99	$	36	$	282	$	437	$	1,189


Tax-exempt loans	Tax-exempt loans																	Tax-exempt loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	125	$	59	$	121	$	209	$	272	$	534	$	0	$	1,320	Pass	$	—	$	158	$	57	$	118	$	200	$	757	$	—	$	1,290
Special mention	Special mention	0		0		0		0		0		0		0		0		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	0		0		0		0		0		0		0		0		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	Total tax-exempt loans	$	125	$	59	$	121	$	209	$	272	$	534	$	0	$	1,320	Total tax-exempt loans	$	—	$	158	$	57	$	118	$	200	$	757	$	—	$	1,290


Residential mortgage loans	Residential mortgage loans																	Residential mortgage loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	1,381	$	1,363	$	712	$	447	$	489	$	733	$	17	$	5,142	Pass	$	562	$	1,822	$	1,182	$	581	$	349	$	1,023	$	20	$	5,539
Special mention	Special mention	0		0		0		0		0		5		0		5		Special mention	—		—		—		2		—		5		—		7
Substandard	Substandard	0		0		0		1		2		20		0		23		Substandard	—		—		—		—		—		22		—		22
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	Total residential mortgage loans	$	1,381	$	1,363	$	712	$	448	$	491	$	758	$	17	$	5,170	Total residential mortgage loans	$	562	$	1,822	$	1,182	$	583	$	349	$	1,050	$	20	$	5,568


SBL and other	SBL and other																	SBL and other
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	0	$	45	$	12	$	0	$	0	$	0	$	5,525	$	5,582	Pass	$	—	$	6	$	45	$	12	$	—	$	—	$	6,500	$	6,563
Special mention	Special mention	0		0		0		0		0		0		0		0		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	0		0		0		0		0		0		0		0		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	Total SBL and other	$	0	$	45	$	12	$	0	$	0	$	0	$	5,525	$	5,582	Total SBL and other	$	—	$	6	$	45	$	12	$	—	$	—	$	6,500	$	6,563

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


	September 30, 2021
	Loans by origination fiscal year
$ in millions	2021		2020		2019		2018		2017		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	999	$	1,273	$	1,180	$	1,408	$	935	$	1,633	$	739	$	8,167
Special mention	—		—		41		—		26		54		1		122
Substandard	—		—		24		84		—		28		—		136
Doubtful	—		—		15		—		—		—		—		15
Total C&I loans	$	999	$	1,273	$	1,260	$	1,492	$	961	$	1,715	$	740	$	8,440



CRE loans
Risk rating:
Pass	$	533	$	459	$	442	$	652	$	223	$	174	$	62	$	2,545
Special mention	—		45		58		36		—		—		—		139
Substandard	—		—		32		98		8		50		—		188
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	533	$	504	$	532	$	786	$	231	$	224	$	62	$	2,872



REIT loans
Risk rating:
Pass	$	235	$	95	$	75	$	60	$	46	$	167	$	237	$	915
Special mention	—		—		13		11		33		106		6		169
Substandard	—		—		21		—		4		—		3		28
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	235	$	95	$	109	$	71	$	83	$	273	$	246	$	1,112



Tax-exempt loans
Risk rating:
Pass	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	158	$	57	$	124	$	204	$	272	$	506	$	—	$	1,321



Residential mortgage loans
Risk rating:
Pass	$	1,861	$	1,266	$	640	$	386	$	451	$	666	$	20	$	5,290
Special mention	—		—		—		—		—		5		—		5
Substandard	—		—		—		1		2		20		—		23
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	1,861	$	1,266	$	640	$	387	$	453	$	691	$	20	$	5,318



SBL and other
Risk rating:
Pass	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	3	$	45	$	12	$	—	$	—	$	—	$	6,046	$	6,106

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

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

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

We also monitor the credit quality of the residential mortgage loan portfolio utilizing ~~FICO~~Fair Isaac Corporation (“FICO”) scores and ~~LTV~~loan-to-value (“LTV”) ratios. A FICO score measures a borrower’s creditworthiness by considering factors such as payment and credit history. LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the held for investment residential mortgage loan portfolio by FICO score and by LTV ratio at origination.


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
FICO score:	FICO score:					FICO score:
Below 600	Below 600	$	66	$	67	Below 600	$	67	$	67
600 - 699	600 - 699	398		363		600 - 699	431		416
700 - 799	700 - 799	3,665		3,463		700 - 799	3,982		3,772
800 +	800 +	1,036		1,076		800 +	1,082		1,058
FICO score not available	FICO score not available	5		4		FICO score not available	6		5
Total	Total	$	5,170	$	4,973	Total	$	5,568	$	5,318

LTV ratio:	LTV ratio:					LTV ratio:
Below 80%	Below 80%	$	4,044	$	3,852	Below 80%	$	4,348	$	4,123
80%+	80%+	1,126		1,121		80%+	1,220		1,195
Total	Total	$	5,170	$	4,973	Total	$	5,568	$	5,318

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

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

Allowance for credit losses

The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment.


$ in millions	$ in millions	C&I loans		CRE loans		REIT loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total		$ in millions	C&I loans		CRE loans		REIT loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended June 30, 2021
Three months ended December 31, 2021																Three months ended December 31, 2021
Balance at beginning of period	Balance at beginning of period	$	203	$	74	$	36	$	2	$	26	$	4	$	345	Balance at beginning of period	$	191	$	66	$	22	$	2	$	35	$	4	$	320

Provision/(benefit) for credit losses	Provision/(benefit) for credit losses	(14)		2		(10)		0		3		0		(19)		Provision/(benefit) for credit losses	(10)		6		—		—		(6)		(1)		(11)
Net (charge-offs)/recoveries:	Net (charge-offs)/recoveries:															Net (charge-offs)/recoveries:
Charge-offs	Charge-offs	(1)		(3)		0		0		0		0		(4)		Charge-offs	(2)		—		—		—		—		—		(2)
Recoveries	Recoveries	0		0		0		0		0		0		0		Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	Net (charge-offs)/recoveries	(1)		(3)		0		0		0		0		(4)		Net (charge-offs)/recoveries	(2)		—		—		—		1		—		(1)
Foreign exchange translation adjustment	Foreign exchange translation adjustment	0		0		0		0		0		0		0		Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	Balance at end of period	$	188	$	73	$	26	$	2	$	29	$	4	$	322	Balance at end of period	$	179	$	72	$	22	$	2	$	30	$	3	$	308

Nine months ended June 30, 2021

Three months ended December 31, 2020																Three months ended December 31, 2020
Balance at beginning of period	Balance at beginning of period	$	200	$	81	$	36	$	14	$	18	$	5	$	354	Balance at beginning of period	$	200	$	81	$	36	$	14	$	18	$	5	$	354
Impact of CECL adoption		19		(11)		(9)		(12)		24		(2)		9
Impact of current expected credit loss (“CECL”) adoption																Impact of current expected credit loss (“CECL”) adoption	19		(11)		(9)		(12)		24		(2)		9
Provision/(benefit) for credit losses	Provision/(benefit) for credit losses	(29)		5		(1)		0		(13)		1		(37)		Provision/(benefit) for credit losses	(22)		42		3		—		(9)		—		14
Net (charge-offs)/recoveries:	Net (charge-offs)/recoveries:															Net (charge-offs)/recoveries:
Charge-offs	Charge-offs	(3)		(3)		0		0		0		0		(6)		Charge-offs	—		—		—		—		—		—		—
Recoveries	Recoveries	0		0		0		0		0		0		0		Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	Net (charge-offs)/recoveries	(3)		(3)		0		0		0		0		(6)		Net (charge-offs)/recoveries	—		—		—		—		—		—		—
Foreign exchange translation adjustment	Foreign exchange translation adjustment	1		1		0		0		0		0		2		Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	Balance at end of period	$	188	$	73	$	26	$	2	$	29	$	4	$	322	Balance at end of period	$	198	$	112	$	30	$	2	$	33	$	3	$	378

Three months ended June 30, 2020
Balance at beginning of period		$	196	$	54	$	38	$	11	$	18	$	7	$	324
Provision/(benefit) for credit losses		59		24		(3)		2		1		(2)		81
Net (charge-offs)/recoveries:
Charge-offs		(71)		(2)		0		0		0		0		(73)
Recoveries		0		0		0		0		1		0		1
Net (charge-offs)/recoveries		(71)		(2)		0		0		1		0		(72)
Foreign exchange translation adjustment		1		0		0		0		0		0		1
Balance at end of period		$	185	$	76	$	35	$	13	$	20	$	5	$	334

Nine months ended June 30, 2020
Balance at beginning of period		$	139	$	34	$	15	$	9	$	16	$	5	$	218
Provision/(benefit) for credit losses		117		44		20		4		3		0		188
Net (charge-offs)/recoveries:
Charge-offs		(71)		(2)		0		0		0		0		(73)
Recoveries		0		0		0		0		1		0		1
Net (charge-offs)/recoveries		(71)		(2)		0		0		1		0		(72)
Foreign exchange translation adjustment		0		0		0		0		0		0		0
Balance at end of period		$	185	$	76	$	35	$	13	$	20	$	5	$	334

The allowance for credit losses on held for investment bank loans decreased ~~$23~~$12 million to ~~$322~~$308 million during three months ended ~~June 30,~~December 31, 2021, primarily due to an improved forecast for macroeconomic inputs, including unemployment and gross domestic product, and improved credit ratings within the corporate loan portfolio. The allowance for credit losses decreased $41 million to $322 million since the adoption of CECL on October 1, 2020, largely attributable to ~~improved forecasts for certain~~improvement in credit quality in the C&I bank loan portfolio and continued improvement in macroeconomic inputs to our CECL model, ~~since our adoption date, including improved outlooks on unemployment and gross domestic product,~~ which ~~favorably impact~~positively impacted most ~~of our~~ loan portfolios, ~~as well as improved~~partially offset by provisions for credit ~~ratings within our corporate~~losses related to loan ~~portfolio.~~growth.

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

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

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was ~~$15 million, $17~~$12 million and ~~$12~~$13 million at ~~June 30, 2021, March~~December 31, 2021 and September 30, ~~2020,~~2021, respectively. The decrease in the allowance for credit losses on unfunded lending commitments during the three months ended June 30, 2021 was primarily due to an improved outlook for commercial real estate compared with March 31, 2021. The increase in the allowance for credit losses on unfunded lending commitments as of June 30, 2021 compared with September 30, 2020 was predominantly due to the adoption impact of CECL.

~~See Note 2 for further information about the adoption of CECL and the impact~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to ~~the allowance for credit losses.~~Condensed Consolidated Financial Statements (Unaudited)

NOTE 9 – LOANS TO FINANCIAL ADVISORS, NET

Loans to financial advisors are primarily comprised of loans originated as a part of our recruiting activities. See Note 2 of our 2021 Form 10-K for a discussion of our accounting policies related to loans to financial advisors and the related allowance for credit losses. The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021			September 30, 2021
Currently affiliated with the firm (1)	Currently affiliated with the firm (1)	$	1,059	$	1,001	Currently affiliated with the firm (1)	$	1,128		$	1,074
No longer affiliated with the firm (2)	No longer affiliated with the firm (2)	12		15		No longer affiliated with the firm (2)	9			10
Total loans to financial advisors	Total loans to financial advisors	1,071		1,016		Total loans to financial advisors	1,137			1,084
Allowance for credit losses	Allowance for credit losses	(29)		(4)		Allowance for credit losses	(29)			(27)
Loans to financial advisors, net	Loans to financial advisors, net	$	1,042	$	1,012	Loans to financial advisors, net	$	1,108		$	1,057
Accrued interest receivable on loans to financial advisors	Accrued interest receivable on loans to financial advisors	$	4	$	4	Accrued interest receivable on loans to financial advisors	$	4		$	4
Allowance for credit losses as a percent of the loan portfolio						Allowance for credit losses as a percent of the loan portfolio	2.55		%	2.49		%

(1) These loans were ~~predominately~~predominantly current.

(2) These loans were ~~predominately~~predominantly past due for a period of 180 days or ~~more and on nonaccrual status.~~

The allowance for credit losses as of June 30, 2021 was determined using the CECL methodology, which we adopted on October 1, 2020. Prior periods calculated under the incurred loss methodology have not been restated. The increase in the allowance from September 30, 2020 to June 30, 2021 was primarily due to the October 1, 2020 CECL adoption, which resulted in an increase in our allowance for credit losses of $25 million. See Note 2 for further information on the CECL adoption.more.

Accrued interest receivables presented in the preceding table are reported in “Other receivables, net” on the Condensed Consolidated Statements of Financial Condition.

NOTE 10 – VARIABLE INTEREST ENTITIES

A VIE requires consolidation by the entity’s primary beneficiary. We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary. Refer to Note 2 of our ~~2020~~2021 Form 10-K for a discussion of our principal involvement with VIEs and the accounting policies regarding determination of whether we are deemed to be the primary beneficiary of VIEs.

VIEs where we are the primary beneficiary

Of the VIEs in which we hold an interest, we have determined that certain limited partnerships which are part of our private equity portfolio (“Private Equity Interests”), certain Low-Income Housing Tax Credit (“LIHTC”) funds and the trust we utilize in connection with restricted stock unit (“RSU”) awards granted to certain employees of one of our Canadian subsidiaries (the “Restricted Stock Trust Fund”) require consolidation in our financial statements, as we are deemed the primary beneficiary of such VIEs. The aggregate assets and liabilities of the VIEs we consolidate are provided in the following table. Aggregate assets and aggregate liabilities may differ from the consolidated carrying value of assets and liabilities due to the elimination of intercompany assets and liabilities held by the consolidated VIE.


$ in millions	Aggregate assets		Aggregate liabilities
December 31, 2021
Private Equity Interests	$	48	$	4
LIHTC funds	119		52
Restricted Stock Trust Fund	24		24
Total	$	191	$	80

September 30, 2021
Private Equity Interests	$	66	$	4
LIHTC funds	111		52
Restricted Stock Trust Fund	15		15
Total	$	192	$	71

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

$ in millions Aggregate assets Aggregate liabilities
June 30, 2021
Private Equity Interests $ 57 $ 4
LIHTC funds 66 6
Restricted Stock Trust Fund 21 21
Total $ 144 $ 31
September 30, 2020
Private Equity Interests $ 39 $ 4
LIHTC funds 168 76
Restricted Stock Trust Fund 14 14
Total $ 221 $ 94

The following table presents information about the carrying value of the assets and liabilities of the VIEs which we consolidate and which are included on our Condensed Consolidated Statements of Financial Condition. Intercompany balances are eliminated in consolidation and not reflected in the following table.


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Assets:	Assets:					Assets:
Cash and cash equivalents and assets segregated pursuant to regulations		$	7	$	9
Cash and cash equivalents and assets segregated for regulatory purposes and restricted cash						Cash and cash equivalents and assets segregated for regulatory purposes and restricted cash	$	7	$	10
Other investments	Other investments	56		37		Other investments	47		63

Other assets	Other assets	65		164		Other assets	114		105
Total assets	Total assets	$	128	$	210	Total assets	$	168	$	178
Liabilities:	Liabilities:					Liabilities:
Other payables	Other payables	$	7	$	76	Other payables	$	44	$	45
Total liabilities	Total liabilities	$	7	$	76	Total liabilities	$	44	$	45
Noncontrolling interests	Noncontrolling interests	$	55	$	62	Noncontrolling interests	$	51	$	58

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

As discussed in Note 2 of our ~~2020~~2021 Form 10-K, we have concluded that for certain VIEs we are not the primary beneficiary and therefore do not consolidate these VIEs. Such VIEs include certain Private Equity Interests, certain LIHTC funds, and other limited partnerships. Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these VIEs.

Aggregate assets, liabilities and risk of loss

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


		June 30, 2021						September 30, 2020							December 31, 2021						September 30, 2021
$ in millions	$ in millions	Aggregate assets		Aggregate liabilities		Our risk of loss		Aggregate assets		Aggregate liabilities		Our risk of loss		$ in millions	Aggregate assets		Aggregate liabilities		Our risk of loss		Aggregate assets		Aggregate liabilities		Our risk of loss
Private Equity Interests	Private Equity Interests	$	7,398	$	43	$	81	$	7,738	$	96	$	67	Private Equity Interests	$	7,163	$	88	$	86	$	7,318	$	47	$	82
LIHTC funds	LIHTC funds	6,771		2,174		34		6,516		1,993		66		LIHTC funds	7,374		2,465		14		7,032		2,280		71
Other	Other	457		137		9		227		136		6		Other	714		176		11		519		155		10
Total	Total	$	14,626	$	2,354	$	124	$	14,481	$	2,225	$	139	Total	$	15,251	$	2,729	$	111	$	14,869	$	2,482	$	163

NOTE 11 - ~~GOODWILL AND IDENTIFIABLE INTANGIBLE~~OTHER ASSETS ~~NET~~

~~Our goodwill and identifiable intangible assets result from various acquisitions. During~~The following table details the ~~nine months ended June 30, 2021, we acquired NWPS and Financo, both~~components of ~~which resulted in goodwill and identifiable intangible~~other assets. See Note ~~3 for additional information on these acquisitions and the related goodwill and identifiable intangible assets. See Notes~~ 2 ~~and 10~~ of our ~~2020~~2021 Form 10-K for ~~additional~~a discussion of the accounting polices related to certain of these components.



$ in millions	December 31, 2021		September 30, 2021
Investments in company-owned life insurance policies	$	1,013	$	952
Property and equipment, net	491		499
Lease right-of-use (“ROU”) asset	439		446
Prepaid expenses	134		127

Investments in FHLB and Federal Reserve Bank stock	72		72

All other	239		161
Total other assets	$	2,388	$	2,257

See Note 13 of our 2021 Form 10-K for further information ~~about~~regarding our ~~goodwill~~property and ~~intangible assets, including the related accounting policies.~~equipment and Note 12 of this Form 10-Q and Note 14 of our 2021 Form 10-K for further information regarding our leases.

3328

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

We perform goodwill and indefinite-lived intangible asset impairment testing on an annual basis or when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value or indicate that the asset is impaired. We performed our latest annual impairment testing for our goodwill and indefinite-lived intangible asset as of January 1, 2021, our annual evaluation date, evaluating balances as of December 31, 2020. In this annual evaluation, we performed a qualitative impairment assessment for each of our reporting units that had goodwill, as well as for our indefinite-lived intangible asset.

Our qualitative assessments consider macroeconomic indicators, such as trends in equity and fixed income markets, gross domestic product, unemployment rates, interest rates, and housing markets. We also consider regulatory changes, reporting unit specific results, and changes in key personnel and strategy. Changes in these indicators, and our ability to respond to such changes, may trigger the need for impairment testing at a point other than our annual assessment date. Based upon the outcome of these qualitative assessments, 0 impairment was identified. No events have occurred since such assessments that would cause us to update this impairment testing.

NOTE 12 – LEASES

The following table presents the balances related to our leases on our Condensed Consolidated Statements of Financial Condition. ~~The weighted-average remaining lease term and discount rate for our leases was 5.8 years and 3.70%, respectively, as of June 30, 2021.~~ See Note 2 and 14 of our ~~2020~~2021 Form 10-K for additional information related to our leases, including a discussion of our accounting ~~policies~~policies.


$ in millions	December 31, 2021		September 30, 2021
ROU assets (included in Other assets)	$	439	$	446
Lease liabilities (included in Other payables)	$	445	$	450

Lease liabilities as of December 31, 2021 excluded $34 million of minimum lease payments related to ~~leases.~~

$ in millions June 30, 2021 September 30, 2020
ROU assets (included in Other assets) $ 344 $ 321
Lease liabilities (included in Other payables) $ 372 $ 345
lease arrangements that were signed but not yet commenced. These leases are estimated to commence between fiscal year 2022 and 2023 with lease terms ranging from four to 11 years.

Lease expense

The following table details the components of lease expense, which is included in “Occupancy and equipment” expense on our Condensed Consolidated Statements of Income and Comprehensive Income. ~~Lease expense is recognized on a straight-line basis over the lease term if the ROU asset has not been impaired or abandoned.~~


		Three months ended June 30,			Nine months ended June 30,				Three months ended December 31,
$ in millions	$ in millions	2021		2020	2021		2020	$ in millions	2021		2020
Lease costs	Lease costs	$	27	25	$	81	71	Lease costs	$	28	27
Variable lease costs	Variable lease costs	$	7	6	$	20	18	Variable lease costs	$	7	6

Variable lease costs in the preceding table include payments required under lease arrangements for common area maintenance charges and other variable costs that are not reflected in the measurement of ROU assets and lease liabilities.

~~Lease liabilities~~

~~The maturities by fiscal year of our lease liabilities as of June 30, 2021 are presented in the following table.~~

$ in millions
Remainder of 2021 $ 18
2022 98
2023 81
2024 60
2025 46
Thereafter 114
Gross lease payments 417
Less: interest (45)
Present value of lease liabilities $ 372

Lease payments in the preceding table exclude $136 million of legally binding minimum lease payments for leases signed but not yet commenced. These leases are estimated to commence between fiscal year 2021 and 2022 with lease terms ranging from one year to 11 years.

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

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

NOTE 13 – BANK DEPOSITS

Bank deposits include savings and money market accounts, certificates of deposit with Raymond James Bank, Negotiable Order of Withdrawal (“NOW”) accounts and demand deposits. The following table presents a summary of bank deposits, as well as the weighted-average interest rates on such deposits. The calculation of the weighted-average rates were based on the actual deposit balances and rates at each respective period end.


		June 30, 2021				September 30, 2020					December 31, 2021				September 30, 2021
$ in millions	$ in millions	Balance		Weighted-average rate		Balance		Weighted-average rate		$ in millions	Balance		Weighted-average rate		Balance		Weighted-average rate
Savings and money market accounts	Savings and money market accounts	$	29,257	0.01	%	$	25,604	0.01	%	Savings and money market accounts	$	33,103	0.01	%	$	31,415	0.01	%
Certificates of deposit	Certificates of deposit	880		1.91	%	1,017		1.94	%	Certificates of deposit	789		1.89	%	878		1.87	%
NOW accounts	NOW accounts	171		1.76	%	156		1.92	%	NOW accounts	164		1.84	%	164		1.84	%
Demand deposits (non-interest-bearing)	Demand deposits (non-interest-bearing)	32		0		24		0		Demand deposits (non-interest-bearing)	36		—		38		—
Total bank deposits	Total bank deposits	$	30,340	0.07	%	$	26,801	0.09	%	Total bank deposits	$	34,092	0.06	%	$	32,495	0.07	%

Total bank deposits in the preceding table exclude affiliate deposits of ~~$185~~$302 million and $301 million at ~~both June 30,~~December 31, 2021 and September 30, ~~2020, all~~2021, respectively. As of ~~which were~~December 31, 2021, these affiliate deposits included $229 million and $73 million held in a deposit ~~account~~accounts at Raymond James Bank on behalf of ~~RJF.~~RJF and Raymond James Trust Company of New Hampshire, respectively.

Savings and money market accounts in the preceding table consist primarily of deposits that are cash balances swept to Raymond James Bank from the client investment accounts maintained at Raymond James & Associates, Inc. (“RJ&A”). These balances are held in Federal Deposit Insurance Corporation (“FDIC”)-insured bank accounts through the Raymond James Bank Deposit Program (“RJBDP”). The aggregate amount of individual time deposit account balances that exceeded the FDIC insurance limit at ~~June 30,~~December 31, 2021 was approximately ~~$23~~$43 million.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the scheduled maturities of certificates of deposit.


		June 30, 2021				September 30, 2020					December 31, 2021				September 30, 2021
$ in millions	$ in millions	Denominations greater than or equal to $100,000		Denominations less than $100,000		Denominations greater than or equal to $100,000		Denominations less than $100,000		$ in millions	Denominations greater than or equal to $100,000		Denominations less than $100,000		Denominations greater than or equal to $100,000		Denominations less than $100,000
Three months or less	Three months or less	$	29	$	26	$	59	$	76	Three months or less	$	28	$	78	$	22	$	87
Over three through six months	Over three through six months	11		85		26		18		Over three through six months	20		30		21		76
Over six through twelve months	Over six through twelve months	33		104		19		26		Over six through twelve months	36		112		32		54
Over one through two years	Over one through two years	61		149		43		206		Over one through two years	95		171		93		170
Over two through three years	Over two through three years	55		157		67		170		Over two through three years	18		160		37		166
Over three through four years	Over three through four years	6		149		37		165		Over three through four years	6		18		6		99
Over four through five years	Over four through five years	8		7		7		98		Over four through five years	10		7		9		6
Total certificates of deposit	Total certificates of deposit	$	203	$	677	$	258	$	759	Total certificates of deposit	$	213	$	576	$	220	$	658

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

Three months ended June 30, Nine months ended June 30,
$ in millions 2021 2020 2021 2020
Savings, money market, and NOW accounts $ 1 $ 2 $ 4 $ 20
Certificates of deposit 4 5 13 15
Total interest expense on deposits $ 5 $ 7 $ 17 $ 35

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

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

~~NOTE 14 – SENIOR NOTES PAYABLE~~

~~The following table summarizes our senior notes payable.~~

$ in millions June 30, 2021 September 30, 2020
4.65% senior notes, due 2030 $ 500 $ 500
4.95% senior notes, due 2046 800 800
3.750% senior notes, due 2051 750 0
5.625% senior notes, due 2024 0 250
3.625% senior notes, due 2026 0 500
Total principal amount 2,050 2,050
Unaccreted premium 5 10
Unamortized debt issuance costs (18) (15)
Total senior notes payable $ 2,037 $ 2,045

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

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

In April 2021, we sold in a registered underwritten public offering $750 million in aggregate principal amount of 3.75% senior notes due April 2051. Interest on these senior notes is payable semi-annually. We may redeem some or all of these senior notes at any time prior to October 1, 2050, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the redemption date at a discount rate equal to a designated U.S. Treasury rate, plus 20 basis points; and on or after October 1, 2050, at 100% of the principal amount of the notes redeemed; plus, in each case, accrued and unpaid interest thereon to the redemption date.

~~Tender offers and redemptions of certain senior notes~~

Concurrently with the launch of our offering of $750 million in aggregate principal amount of 3.75% senior notes due April 2051 described above, we commenced cash tender offers (the “Tender Offers”) for any and all of our then outstanding 5.625% senior notes due 2024 and 3.625% senior notes due 2026 (the “Pre-existing Notes”). Pursuant to the Tender Offers, in April 2021 we repurchased an aggregate of $332 million outstanding Pre-existing Notes for an aggregate purchase price of $373 million.

In addition, in April 2021 we issued notices of redemption to holders of the Pre-existing Notes pursuant to the indentures governing such notes, to redeem any Pre-existing Notes that remained outstanding following the closing of the Tender Offers. In May 2021 we redeemed the remaining outstanding balance of the Pre-existing Notes of $418 million for an aggregate redemption price of $473 million.

These repurchases and redemptions of the Pre-existing Notes were funded with the net proceeds from our 3.75% senior notes due April 2051 and cash on hand, and resulted in a loss of $98 million which is comprised of make-whole premiums, unamortized debt issuance costs which were accelerated, and certain legal and professional fees. This loss was presented in

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

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

~~“Losses on extinguishment of debt” on our Condensed Consolidated Statements of Income and Comprehensive Income in our third fiscal quarter of 2021.~~


	Three months ended December 31,
$ in millions	2021		2020
Savings, money market, and NOW accounts	$	2	$	1
Certificates of deposit	4		5
Total interest expense on deposits	$	6	$	6

NOTE 1514 – INCOME TAXES

The income tax provision for interim periods is comprised of tax on ordinary income provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items. We estimate the annual effective tax rate quarterly based on the forecasted pre-tax results of our U.S. and non-U.S. operations. Items unrelated to current year ordinary income are recognized entirely in the period identified as a discrete item of tax. These discrete items generally relate to changes in tax laws, adjustments to the actual liability determined upon filing tax returns, excess tax benefits related to share-based compensation and adjustments to previously recorded reserves for uncertain tax positions. For discussion of income tax accounting policies and other income tax related information, see Notes 2 and 1618 of our ~~2020~~2021 Form 10-K.

Effective tax rate

Our effective income tax rate ~~was 20.9%~~of 20.1% for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 ~~which~~ was lower than the ~~22.2%~~21.7% effective tax rate for fiscal ~~2020.~~2021. The decrease in the effective income tax rate was primarily due to ~~an increase in~~a large tax benefit recognized during the fiscal first quarter related to share-based compensation that vested during the period, partially offset by lower valuation gains associated with our company-owned life insurance policies which are not subject to tax.

Uncertain tax positions

Although management cannot predict with any degree of certainty the timing of ultimate resolution of matters under review by various taxing jurisdictions, it is reasonably possible that our uncertain tax position liability balance may decrease within the next 12 months by up to $4$12 million as a result of the expiration of statutes of limitations and the completion of tax authorities’ examinations.

NOTE 1615 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and contingencies

Underwriting commitments

In the normal course of business, we enter into commitments for debt and equity underwritings. As of ~~June 30,~~December 31, 2021, we had ~~3 such~~no open underwriting ~~commitments, which were subsequently settled in open market transactions and did not result in significant losses.~~commitments.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Lending commitments and other credit-related financial instruments

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

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


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Open-end consumer lines of credit (primarily SBL)	Open-end consumer lines of credit (primarily SBL)	$	15,866	$	12,148	Open-end consumer lines of credit (primarily SBL)	$	18,980	$	17,515
Commercial lines of credit	Commercial lines of credit	$	1,813	$	1,482	Commercial lines of credit	$	1,919	$	2,075
Unfunded lending commitments	Unfunded lending commitments	$	502	$	532	Unfunded lending commitments	$	513	$	548
Standby letters of credit	Standby letters of credit	$	24	$	33	Standby letters of credit	$	23	$	22

Open-end consumer lines of credit primarily represent the unfunded amounts of bank loans to consumers that are secured by marketable securities at advance rates consistent with industry standards. The proceeds from repayment or, if necessary, the liquidation of collateral, which is monitored daily, are expected to satisfy the amounts drawn against these existing lines of

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

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

credit. These lines of credit are primarily uncommitted, as we reserve the right to not make any advances or may terminate these lines at any time.

Because many of Raymond James Bank’s lending commitments expire without being funded in whole or in part, the contractual amounts are not estimates of our actual future credit exposure or future liquidity requirements. The allowance for credit losses calculated under CECL provides for potential losses related to the unfunded lending commitments. See ~~Notes~~Note 2 of our 2021 Form 10-K and Note 8 of this Form 10-Q for further discussion of this allowance for credit losses related to unfunded lending commitments.

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

We offer loans to prospective financial advisors for recruiting and retention purposes (see ~~Notes~~Note 2 of our 2021 Form 10-K and Note 9 of this Form 10-Q for further discussion of our loans to financial advisors). These offers are contingent upon certain events occurring, including the individuals joining us and meeting certain other conditions outlined in their offer.

Investment commitments

We had unfunded commitments to various investments, including private equity investments and certain Raymond James Bank investments, of ~~$37~~$25 million as of ~~June 30,~~December 31, 2021.

Other commitments

Raymond James Affordable Housing Investments, Inc. (“RJAHI”), formerly known as Raymond James Tax Credit Funds, Inc. ~~(“RJTCF”)~~, sells investments in project partnerships to various LIHTC funds, which have third-party investors, and for which ~~RJTCF~~RJAHI serves as the managing member or general partner. ~~RJTCF~~RJAHI typically sells investments in project partnerships to LIHTC funds within 90 days of their acquisition. Until such investments are sold to LIHTC funds, ~~RJTCF~~RJAHI is responsible for funding investment commitments to such partnerships. As of ~~June 30,~~December 31, 2021, ~~RJTCF~~RJAHI had committed approximately ~~$167~~$97 million to project partnerships that had not yet been sold to LIHTC funds. Because we expect to sell these project partnerships to LIHTC funds and the equity funding events arise over future periods, the contractual commitments are not expected to materially impact our future liquidity requirements. ~~RJTCF~~RJAHI may also make short-term loans or advances to project partnerships and LIHTC funds.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

As a part of our fixed income public finance operations, we enter into forward commitments to purchase agency MBS. ~~See Note 2 of our 2020 Form 10-K for further discussion of these activities.~~ At ~~June 30,~~December 31, 2021, we had ~~$222~~$140 million of principal amount of outstanding forward MBS purchase commitments, which were expected to be purchased within 90 days following commitment. In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the commitment and the date of sale of the MBS, we enter into ~~TBA security contracts~~TBAs with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future. We may be subject to loss if the timing of, or the actual amount of, the MBS differs significantly from the term and notional amount of the ~~TBA security contract~~TBAs to which we entered. These ~~TBA securities~~TBAs and related purchase commitments are accounted for at fair value. As of ~~June 30,~~December 31, 2021, the fair value of the ~~TBA securities~~TBAs and the estimated fair value of the purchase commitments were insignificant.

For information regarding our acquisition commitments associated with our recent purchase of Charles Stanley and intended acquisition of TriState Capital, see Note 3 of this Form 10-Q. For information regarding our lease commitments, ~~including~~see Note 12 of this Form 10-Q and for information on the maturities of our lease liabilities, see Note ~~12.~~14 of our 2021 Form 10-K.

Guarantees

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

We guarantee the debt of one of our private equity investments. The amount of such debt, including the undrawn portion of a revolving credit facility, was $13 million as of June 30, 2021. The debt, which matures in 2022, is secured by substantially all of the assets of the borrower.

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

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

Legal and regulatory matter contingencies

In the normal course of our business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a diversified financial services institution.

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

We may contest liability and/or the amount of damages, as appropriate, in each pending matter. ~~Over the last several years, the~~The level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies in the financial services industry continues to be significant. There can be no assurance that material losses will not be incurred from claims that have not yet been asserted or are not yet determined to be material.

For many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss as we cannot predict if, how or when such proceedings or investigations will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be. A large number of factors may contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental proceedings, potential fines and penalties); the matters present significant legal uncertainties; we have not engaged in settlement discussions; discovery is not complete; there are significant facts in dispute; and numerous parties are named as defendants (including where it is uncertain how liability might be shared among defendants). Subject to the foregoing, after consultation with counsel, we believe that the outcome of such litigation and regulatory proceedings will not have a material adverse effect on our consolidated financial condition. However, the outcome of such litigation and regulatory proceedings could be material to our operating results and cash flows for a particular future period, depending on, among other things, our revenues or income for such period.

There are certain matters for which we are unable to estimate the upper end of the range of reasonably possible loss. With respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss as of ~~June 30,~~December 31, 2021, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately ~~$175~~$90 million in excess of the aggregate accruals for such matters. Refer to Note 2 of our ~~2020~~2021 Form 10-K for a discussion of our criteria for recognizing liabilities for contingencies.

3932

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1716 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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


$ in millions	$ in millions	Net investment hedges		Currency translations		Subtotal: net investment hedges and currency translations		Available- for-sale securities		Cash flow hedges		Total		$ 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, 2021
Three months ended December 31, 2021														Three months ended December 31, 2021
AOCI as of beginning of period	AOCI as of beginning of period	$	76	$	(81)	$	(5)	$	(4)	$	(29)	$	(38)	AOCI as of beginning of period	$	81	$	(90)	$	(9)	$	(5)	$	(27)	$	(41)
OCI:	OCI:													OCI:
OCI before reclassifications and taxes	OCI before reclassifications and taxes	(12)		14		2		36		(7)		31		OCI before reclassifications and taxes	(2)		1		(1)		(72)		8		(65)
Amounts reclassified from AOCI, before tax	Amounts reclassified from AOCI, before tax	0		0		0		(2)		3		1		Amounts reclassified from AOCI, before tax	—		—		—		—		4		4
Pre-tax net OCI	Pre-tax net OCI	(12)		14		2		34		(4)		32		Pre-tax net OCI	(2)		1		(1)		(72)		12		(61)
Income tax effect	Income tax effect	3		0		3		(9)		2		(4)		Income tax effect	1		—		1		17		(3)		15
OCI for the period, net of tax	OCI for the period, net of tax	(9)		14		5		25		(2)		28		OCI for the period, net of tax	(1)		1		—		(55)		9		(46)
AOCI as of end of period	AOCI as of end of period	$	67	$	(67)	$	0	$	21	$	(31)	$	(10)	AOCI as of end of period	$	80	$	(89)	$	(9)	$	(60)	$	(18)	$	(87)

Nine months ended June 30, 2021

Three months ended December 31, 2020														Three months ended December 31, 2020
AOCI as of beginning of period	AOCI as of beginning of period	$	115	$	(140)	$	(25)	$	89	$	(53)	$	11	AOCI as of beginning of period	$	115	$	(140)	$	(25)	$	89	$	(53)	$	11
OCI:	OCI:													OCI:
OCI before reclassifications and taxes	OCI before reclassifications and taxes	(63)		71		8		(84)		18		(58)		OCI before reclassifications and taxes	(38)		45		7		(18)		3		(8)
Amounts reclassified from AOCI, before tax	Amounts reclassified from AOCI, before tax	0		2		2		(7)		11		6		Amounts reclassified from AOCI, before tax	—		2		2		(5)		4		1
Pre-tax net OCI	Pre-tax net OCI	(63)		73		10		(91)		29		(52)		Pre-tax net OCI	(38)		47		9		(23)		7		(7)
Income tax effect	Income tax effect	15		0		15		23		(7)		31		Income tax effect	9		—		9		6		(2)		13
OCI for the period, net of tax	OCI for the period, net of tax	(48)		73		25		(68)		22		(21)		OCI for the period, net of tax	(29)		47		18		(17)		5		6
AOCI as of end of period	AOCI as of end of period	$	67	$	(67)	$	0	$	21	$	(31)	$	(10)	AOCI as of end of period	$	86	$	(93)	$	(7)	$	72	$	(48)	$	17

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		0		0		0		0		2		2
Pre-tax net OCI		(29)		32		3		7		(5)		5
Income tax effect		8		0		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		0		0		0		0		2		2
Pre-tax net OCI		23		(24)		(1)		90		(49)		40
Income tax effect		(5)		0		(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

Reclassifications from AOCI to net income, excluding taxes, for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 were recorded in “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income. Reclassifications from AOCI to net income, excluding taxes, for the three months ended December 31, 2020 were primarily recorded in “Other” revenue and “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income.

Our net investment hedges and cash flow hedges relate to our derivatives associated with Raymond James Bank’s business operations. For further information about our significant accounting policies related to derivatives, see Note 2 of our ~~2020~~2021 Form 10-K. ~~See~~In addition, see Note 6 of this Form 10-Q for additional information on these derivatives.

4033

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1817 – REVENUES

The following tables present our sources of revenues by segment. For further information about our significant accounting policies related to revenue recognition, see Note 2 of our ~~2020~~2021 Form 10-K. See Note 2322 of this Form 10-Q for additional information on our segment results.


		Three months ended June 30, 2021													Three months ended December 31, 2021
$ in millions	$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total		$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total
Revenues:	Revenues:													Revenues:
Asset management and related administrative fees	Asset management and related administrative fees	$	1,050	$	1	$	218	$	0	$	(7)	$	1,262	Asset management and related administrative fees	$	1,162	$	1	$	227	$	—	$	(8)	$	1,382
Brokerage revenues:	Brokerage revenues:													Brokerage revenues:
Securities commissions:	Securities commissions:													Securities commissions:
Mutual and other fund products	Mutual and other fund products	167		2		2		0		0		171		Mutual and other fund products	171		2		2		—		—		175
Insurance and annuity products	Insurance and annuity products	113		0		0		0		0		113		Insurance and annuity products	111		—		—		—		—		111
Equities, exchange-traded funds (“ETFs”) and fixed income products	Equities, exchange-traded funds (“ETFs”) and fixed income products	97		33		0		0		1		131		Equities, exchange-traded funds (“ETFs”) and fixed income products	104		35		—		—		—		139
Subtotal securities commissions	Subtotal securities commissions	377		35		2		0		1		415		Subtotal securities commissions	386		37		2		—		—		425
Principal transactions (1)	Principal transactions (1)	13		125		0		0		(1)		137		Principal transactions (1)	11		122		—		—		—		133
Total brokerage revenues	Total brokerage revenues	390		160		2		0		0		552		Total brokerage revenues	397		159		2		—		—		558
Account and services fees:
Account and service fees:														Account and service fees:
Mutual fund and annuity service fees	Mutual fund and annuity service fees	105		0		0		0		(1)		104		Mutual fund and annuity service fees	114		—		—		—		(1)		113
RJBDP fees	RJBDP fees	65		0		0		0		(47)		18		RJBDP fees	67		—		—		—		(50)		17
Client account and other fees	Client account and other fees	39		1		4		0		(5)		39		Client account and other fees	49		2		6		—		(10)		47
Total account and service fees	Total account and service fees	209		1		4		0		(53)		161		Total account and service fees	230		2		6		—		(61)		177
Investment banking:	Investment banking:													Investment banking:
Merger & acquisition and advisory	Merger & acquisition and advisory	0		153		0		0		0		153		Merger & acquisition and advisory	—		271		—		—		—		271
Equity underwriting	Equity underwriting	11		69		0		0		0		80		Equity underwriting	13		97		—		—		—		110
Debt underwriting	Debt underwriting	0		43		0		0		0		43		Debt underwriting	—		44		—		—		—		44
Total investment banking	Total investment banking	11		265		0		0		0		276		Total investment banking	13		412		—		—		—		425
Other:	Other:													Other:
Tax credit fund revenues	Tax credit fund revenues	0		17		0		0		0		17		Tax credit fund revenues	—		35		—		—		—		35
All other (1)	All other (1)	7		1		1		8		21		38		All other (1)	7		2		1		6		—		16
Total other	Total other	7		18		1		8		21		55		Total other	7		37		1		6		—		51
Total non-interest revenues	Total non-interest revenues	1,667		445		225		8		(39)		2,306		Total non-interest revenues	1,809		611		236		6		(69)		2,593
Interest income (1)	Interest income (1)	31		4		0		172		(2)		205		Interest income (1)	33		5		—		187		—		225
Total revenues	Total revenues	1,698		449		225		180		(41)		2,511		Total revenues	1,842		616		236		193		(69)		2,818
Interest expense	Interest expense	(2)		(3)		0		(11)		(24)		(40)		Interest expense	(3)		(2)		—		(10)		(22)		(37)
Net revenues	Net revenues	$	1,696	$	446	$	225	$	169	$	(65)	$	2,471	Net revenues	$	1,839	$	614	$	236	$	183	$	(91)	$	2,781

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

4134

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


		Three months ended June 30, 2020													Three months ended December 31, 2020
$ in millions	$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total		$ in millions	Private Client Group		Capital Markets		Asset Management		Raymond James Bank		Other and intersegment eliminations		Total
Revenues:	Revenues:													Revenues:
Asset management and related administrative fees	Asset management and related administrative fees	$	715	$	1	$	157	$	0	$	(6)	$	867	Asset management and related administrative fees	$	885	$	2	$	188	$	—	$	(8)	$	1,067
Brokerage revenues:	Brokerage revenues:													Brokerage revenues:
Securities commissions:	Securities commissions:													Securities commissions:
Mutual and other fund products	Mutual and other fund products	131		2		2		0		(1)		134		Mutual and other fund products	148		2		2		—		(1)		151
Insurance and annuity products	Insurance and annuity products	88		0		0		0		0		88		Insurance and annuity products	98		—		—		—		—		98
Equities, ETFs and fixed income products	Equities, ETFs and fixed income products	84		37		0		0		0		121		Equities, ETFs and fixed income products	95		37		—		—		—		132
Subtotal securities commissions	Subtotal securities commissions	303		39		2		0		(1)		343		Subtotal securities commissions	341		39		2		—		(1)		381
Principal transactions (1)	Principal transactions (1)	16		127		0		0		0		143		Principal transactions (1)	12		134		—		1		—		147
Total brokerage revenues	Total brokerage revenues	319		166		2		0		(1)		486		Total brokerage revenues	353		173		2		1		(1)		528
Account and services fees:
Account and service fees:														Account and service fees:
Mutual fund and annuity service fees	Mutual fund and annuity service fees	82		0		1		0		0		83		Mutual fund and annuity service fees	94		—		—		—		—		94
RJBDP fees	RJBDP fees	63		1		0		0		(44)		20		RJBDP fees	64		—		—		—		(43)		21
Client account and other fees	Client account and other fees	32		1		2		0		(4)		31		Client account and other fees	32		2		4		—		(8)		30
Total account and service fees	Total account and service fees	177		2		3		0		(48)		134		Total account and service fees	190		2		4		—		(51)		145
Investment banking:	Investment banking:													Investment banking:
Merger & acquisition and advisory	Merger & acquisition and advisory	0		60		0		0		0		60		Merger & acquisition and advisory	—		149		—		—		—		149
Equity underwriting	Equity underwriting	7		35		0		0		0		42		Equity underwriting	6		60		—		—		—		66
Debt underwriting	Debt underwriting	0		37		0		0		0		37		Debt underwriting	—		46		—		—		—		46
Total investment banking	Total investment banking	7		132		0		0		0		139		Total investment banking	6		255		—		—		—		261
Other:	Other:													Other:
Tax credit fund revenues	Tax credit fund revenues	0		20		0		0		0		20		Tax credit fund revenues	—		16		—		—		—		16
All other (1)	All other (1)	4		0		1		9		(1)		13		All other (1)	5		3		1		9		22		40
Total other	Total other	4		20		1		9		(1)		33		Total other	5		19		1		9		22		56
Total non-interest revenues	Total non-interest revenues	1,222		321		163		9		(56)		1,659		Total non-interest revenues	1,439		451		195		10		(38)		2,057
Interest income (1)	Interest income (1)	31		4		0		181		1		217		Interest income (1)	30		3		—		168		2		203
Total revenues	Total revenues	1,253		325		163		190		(55)		1,876		Total revenues	1,469		454		195		178		(36)		2,260
Interest expense	Interest expense	(4)		(2)		0		(12)		(24)		(42)		Interest expense	(2)		(2)		—		(11)		(23)		(38)
Net revenues	Net revenues	$	1,249	$	323	$	163	$	178	$	(79)	$	1,834	Net revenues	$	1,467	$	452	$	195	$	167	$	(59)	$	2,222

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

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

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

Nine Months Ended June 30, 2021
$ in millions Private Client Group Capital Markets Asset Management Raymond James Bank Other and intersegment eliminations Total
Revenues:
Asset management and related administrative fees $ 2,914 $ 3 $ 607 $ 0 $ (22) $ 3,502
Brokerage revenues:
Securities commissions:
Mutual and other fund products 498 5 7 0 (2) 508
Insurance and annuity products 320 0 0 0 0 320
Equities, ETFs and fixed income products 300 110 0 0 1 411
Subtotal securities commissions 1,118 115 7 0 (1) 1,239
Principal transactions (1)
38 394 0 1 (1) 432
Total brokerage revenues 1,156 509 7 1 (2) 1,671
Account and services fees:
Mutual fund and annuity service fees 298 0 0 0 (1) 297
RJBDP fees 192 1 0 0 (135) 58
Client account and other fees 113 5 13 0 (21) 110
Total account and service fees 603 6 13 0 (157) 465
Investment banking:
Merger & acquisition and advisory 0 424 0 0 0 424
Equity underwriting 33 196 0 0 0 229
Debt underwriting 0 126 0 0 0 126
Total investment banking 33 746 0 0 0 779
Other:
Tax credit fund revenues 0 57 0 0 0 57
All other (1)
20 5 2 22 49 98
Total other 20 62 2 22 49 155
Total non-interest revenues 4,726 1,326 629 23 (132) 6,572
Interest income (1)
91 12 0 505 0 608
Total revenues 4,817 1,338 629 528 (132) 7,180
Interest expense (7) (7) 0 (32) (69) (115)
Net revenues $ 4,810 $ 1,331 $ 629 $ 496 $ (201) 7,065

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

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

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

Nine Months Ended June 30, 2020
$ in millions Private Client Group Capital Markets Asset Management Raymond James Bank Other and intersegment eliminations Total
Revenues:
Asset management and related administrative fees $ 2,330 $ 4 $ 510 $ 0 $ (16) $ 2,828
Brokerage revenues:
Securities commissions:
Mutual and other fund products 438 6 6 0 (2) 448
Insurance and annuity products 288 0 0 0 0 288
Equities, ETFs and fixed income products 274 107 0 0 (1) 380
Subtotal securities commissions 1,000 113 6 0 (3) 1,116
Principal transactions (1)
50 298 0 0 (3) 345
Total brokerage revenues 1,050 411 6 0 (6) 1,461
Account and services fees:
Mutual fund and annuity service fees 260 0 2 0 (1) 261
RJBDP fees 267 1 0 0 (139) 129
Client account and other fees 96 4 10 0 (16) 94
Total account and service fees 623 5 12 0 (156) 484
Investment banking:
Merger & acquisition and advisory 0 192 0 0 0 192
Equity underwriting 29 117 0 0 0 146
Debt underwriting 0 90 0 0 0 90
Total investment banking 29 399 0 0 0 428
Other:
Tax credit fund revenues 0 50 0 0 0 50
All other (1)
20 4 2 20 (49) (3)
Total other 20 54 2 20 (49) 47
Total non-interest revenues 4,052 873 530 20 (227) 5,248
Interest income (1)
125 22 1 635 16 799
Total revenues 4,177 895 531 655 (211) 6,047
Interest expense (19) (14) 0 (51) (52) (136)
Net revenues $ 4,158 $ 881 $ 531 $ 604 $ (263) $ 5,911

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

At ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, net receivables related to contracts with customers were ~~$359~~$343 million and ~~$342~~$416 million, respectively.

4435

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1918 – INTEREST INCOME AND INTEREST EXPENSE

The following table details the components of interest income and interest expense.


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2021		2020
Interest income:	Interest income:									Interest income:
Cash and cash equivalents	Cash and cash equivalents	$	3	$	4	$	9	$	37	Cash and cash equivalents	$	3	$	4
Assets segregated pursuant to regulations		3		3		11		25
Assets segregated for regulatory purposes and restricted cash										Assets segregated for regulatory purposes and restricted cash	4		3
Available-for-sale securities	Available-for-sale securities	20		23		64		60		Available-for-sale securities	22		23
Brokerage client receivables	Brokerage client receivables	19		18		56		66		Brokerage client receivables	21		18
Bank loans, net of unearned income and deferred expenses	Bank loans, net of unearned income and deferred expenses	150		157		437		561		Bank loans, net of unearned income and deferred expenses	164		145
All other	All other	10		12		31		50		All other	11		10
Total interest income	Total interest income	$	205	$	217	$	608	$	799	Total interest income	$	225	$	203
Interest expense:	Interest expense:									Interest expense:
Bank deposits	Bank deposits	$	5	$	7	$	17	$	35	Bank deposits	$	6	$	6
Brokerage client payables	Brokerage client payables	1		3		3		9		Brokerage client payables	1		1
Other borrowings	Other borrowings	4		5		14		15		Other borrowings	5		5
Senior notes payable	Senior notes payable	25		24		73		61		Senior notes payable	23		24
All other	All other	5		3		8		16		All other	2		2
Total interest expense	Total interest expense	40		42		115		136		Total interest expense	37		38
Net interest income	Net interest income	165		175		493		663		Net interest income	188		165
Bank loan (provision)/benefit for credit losses	Bank loan (provision)/benefit for credit losses	19		(81)		37		(188)		Bank loan (provision)/benefit for credit losses	11		(14)
Net interest income after bank loan (provision)/benefit for credit losses	Net interest income after bank loan (provision)/benefit for credit losses	$	184	$	94	$	530	$	475	Net interest income after bank loan (provision)/benefit for credit losses	$	199	$	151

Interest expense related to bank deposits in the preceding table excludes interest expense associated with affiliate deposits, which has been eliminated in consolidation.

NOTE 2019 – SHARE-BASED COMPENSATION

We have 1 share-based compensation plan, The Amended and Restated 2012 Stock Incentive Plan (“the Plan”), for our employees, Board of Directors and independent contractor financial advisors. Generally, we reissue our treasury shares under ~~The Amended and Restated 2012 Stock Incentive~~the Plan; however, we are also permitted to issue new shares. Annual share-based compensation awards are primarily issued during our fiscal first quarter of each year. Our share-based compensation accounting policies are described in Note 2 of our ~~2020~~2021 Form 10-K. Other information related to our share-based awards is presented in Note 2123 of our ~~2020~~2021 Form 10-K.

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021, we granted approximately ~~50 thousand and 1.5~~2.3 million RSUs ~~respectively, to employees and outside members of our Board of Directors~~ with a weighted-average grant-date fair value of ~~$131.81 and $94.75, respectively.~~$96.99, compared with approximately 2.0 million RSUs granted during the three months ended December 31, 2020 with a weighted-average grant-date fair value of $60.85 (as adjusted for the September 21, 2021 three-for-two stock split). For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021, total compensation expense ~~for~~related to RSUs ~~granted to our employees and members of our Board of Directors~~ was ~~$27~~$63 million, ~~and $98 million, respectively,~~ compared with ~~$22 million and $89~~$41 million for the three ~~and nine~~ months ended ~~June 30, 2020, respectively.~~December 31, 2020.

As of ~~June 30,~~December 31, 2021, there were ~~$209~~$336 million of total pre-tax compensation costs not yet recognized (net of estimated forfeitures) related to RSUs, ~~granted to employees and members of our Board of Directors,~~ including those granted during the ~~nine~~three months ended ~~June 30,~~December 31, 2021. These costs are expected to be recognized over a weighted-average period of ~~3.1~~3.2 years.

NOTE 2120 – REGULATORY CAPITAL REQUIREMENTS

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

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

As a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) that has made an election to be a financial holding company, ~~(“FHC”),~~ RJF is subject to supervision, examination and regulation by the Fed. We are subject to the Fed’s capital rules which establish an integrated regulatory capital framework and implement, in the U.S., the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. We apply the standardized approach for calculating risk-weighted assets and are also subject to the market risk provisions of the Fed’s capital rules (“market risk rule”).

Under these rules, minimum requirements are established for both the quantity and quality of capital held by banking organizations. RJF and Raymond James Bank are required to maintain minimum ratios of common equity tier 1 (“CET1”), tier 1 capital and total capital to risk-weighted assets, as well as minimum leverage ratios (defined as tier 1 capital divided by adjusted average assets). These capital ratios incorporate quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under the regulatory capital rules and are subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. RJF and Raymond James Bank each calculate these ratios in order to assess compliance with both regulatory requirements and their internal capital policies. In order to maintain our ability to take certain capital actions, including dividends and common equity repurchases, and to make bonus payments, we must hold a capital conservation buffer above our minimum risk-based capital requirements. As of ~~June 30,~~December 31, 2021, both RJF’s and Raymond James Bank’s capital levels exceeded the capital conservation buffer requirement and were each categorized as “well-capitalized.”

For further discussion of regulatory capital requirements applicable to certain of our businesses and subsidiaries, see Note 2224 of our ~~2020~~2021 Form 10-K.

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


		Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions					Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions
$ in millions	$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio		$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
RJF as of June 30, 2021:
RJF as of December 31, 2021:														RJF as of December 31, 2021:
CET1	CET1	$	7,040	24.4	%	$	1,297	4.5	%	$	1,874	6.5	%	CET1	$	7,842	25.9	%	$	1,365	4.5	%	$	1,972	6.5	%
Tier 1 capital	Tier 1 capital	$	7,040	24.4	%	$	1,730	6.0	%	$	2,306	8.0	%	Tier 1 capital	$	7,842	25.9	%	$	1,820	6.0	%	$	2,427	8.0	%
Total capital	Total capital	$	7,382	25.6	%	$	2,306	8.0	%	$	2,883	10.0	%	Total capital	$	8,197	27.0	%	$	2,427	8.0	%	$	3,034	10.0	%
Tier 1 leverage	Tier 1 leverage	$	7,040	12.6	%	$	2,240	4.0	%	$	2,800	5.0	%	Tier 1 leverage	$	7,842	12.1	%	$	2,593	4.0	%	$	3,242	5.0	%

RJF as of September 30, 2020:
RJF as of September 30, 2021:														RJF as of September 30, 2021:
CET1	CET1	$	6,490	24.2	%	$	1,208	4.5	%	$	1,744	6.5	%	CET1	$	7,428	25.0	%	$	1,337	4.5	%	$	1,932	6.5	%
Tier 1 capital	Tier 1 capital	$	6,490	24.2	%	$	1,610	6.0	%	$	2,147	8.0	%	Tier 1 capital	$	7,428	25.0	%	$	1,783	6.0	%	$	2,377	8.0	%
Total capital	Total capital	$	6,804	25.4	%	$	2,147	8.0	%	$	2,684	10.0	%	Total capital	$	7,780	26.2	%	$	2,377	8.0	%	$	2,972	10.0	%
Tier 1 leverage	Tier 1 leverage	$	6,490	14.2	%	$	1,824	4.0	%	$	2,280	5.0	%	Tier 1 leverage	$	7,428	12.6	%	$	2,363	4.0	%	$	2,954	5.0	%

As of ~~June 30,~~December 31, 2021, RJF’s regulatory capital increase compared to September 30, 2021 was driven by positive earnings, ~~partially offset by~~net of dividends ~~and share repurchases, as well as an increase in goodwill and identifiable intangible assets arising from the NWPS and Financo acquisitions. See Note 3 for additional information.~~paid during our fiscal first quarter. RJF’s Tier 1 and Total capital ratios increased compared to September 30, ~~2020,~~2021, resulting from the increase in regulatory capital, partially offset by an increase in risk-weighted ~~assets. The increase in risk-weighted~~ assets ~~was~~ driven by increases in our loan portfolio and ~~available-for-sale securities.~~cash and cash equivalents. RJF’s Tier 1 leverage ratio at ~~June 30,~~December 31, 2021 decreased compared to September 30, ~~2020~~2021 due to increased average assets, driven by higher assets segregated ~~pursuant to regulations due to~~for regulatory purposes and cash and cash equivalents, primarily resulting from an increase in client cash in the Client Interest Program (“CIP”), as well as growth in ~~loans~~available-for-sale securities and ~~available-for-sale securities.~~loans. The ~~impact of higher~~increase in average assets was partially offset by the increase in regulatory capital.

4637

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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


		Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions					Actual				Requirement for capital adequacy purposes				To be well-capitalized under regulatory provisions
$ in millions	$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio		$ in millions	Amount		Ratio		Amount		Ratio		Amount		Ratio
Raymond James Bank as of June 30, 2021:
Raymond James Bank as of December 31, 2021:														Raymond James Bank as of December 31, 2021:
CET1	CET1	$	2,542	13.5	%	$	848	4.5	%	$	1,225	6.5	%	CET1	$	2,675	13.3	%	$	905	4.5	%	$	1,307	6.5	%
Tier 1 capital	Tier 1 capital	$	2,542	13.5	%	$	1,131	6.0	%	$	1,508	8.0	%	Tier 1 capital	$	2,675	13.3	%	$	1,206	6.0	%	$	1,608	8.0	%
Total capital	Total capital	$	2,779	14.7	%	$	1,508	8.0	%	$	1,885	10.0	%	Total capital	$	2,927	14.6	%	$	1,608	8.0	%	$	2,010	10.0	%
Tier 1 leverage	Tier 1 leverage	$	2,542	7.5	%	$	1,355	4.0	%	$	1,693	5.0	%	Tier 1 leverage	$	2,675	7.2	%	$	1,477	4.0	%	$	1,846	5.0	%

Raymond James Bank as of September 30, 2020:
Raymond James Bank as of September 30, 2021:														Raymond James Bank as of September 30, 2021:
CET1	CET1	$	2,279	13.0	%	$	788	4.5	%	$	1,138	6.5	%	CET1	$	2,626	13.4	%	$	883	4.5	%	$	1,275	6.5	%
Tier 1 capital	Tier 1 capital	$	2,279	13.0	%	$	1,051	6.0	%	$	1,401	8.0	%	Tier 1 capital	$	2,626	13.4	%	$	1,177	6.0	%	$	1,569	8.0	%
Total capital	Total capital	$	2,500	14.3	%	$	1,401	8.0	%	$	1,751	10.0	%	Total capital	$	2,873	14.6	%	$	1,569	8.0	%	$	1,962	10.0	%
Tier 1 leverage	Tier 1 leverage	$	2,279	7.7	%	$	1,183	4.0	%	$	1,479	5.0	%	Tier 1 leverage	$	2,626	7.4	%	$	1,411	4.0	%	$	1,763	5.0	%

As of ~~June 30,~~December 31, 2021, ~~Raymond James Bank’s regulatory capital increase was driven by positive earnings.~~ Raymond James Bank’s Tier 1 capital and Total capital ratios ~~at June 30, 2021 increased~~decreased compared to September 30, ~~2020,~~2021, due to ~~the increase in regulatory capital, partially offset by the impact of~~ higher risk-weighted assets, primarily ~~resulting from increases in our loan portfolio~~due to increased loans and available-for-sale ~~securities.~~securities, which were funded by increased client cash balances in the RJBDP swept to Raymond James Bank. The increase in risk-weighted assets was partially offset by higher regulatory capital. Raymond James Bank’s Tier 1 leverage ratio at ~~June 30,~~December 31, 2021 decreased compared to September 30, ~~2020,~~2021, due to increased average assets, driven by ~~the~~ growth in loans, cash and available-for-sale ~~securities, which was partially offset by the impact of the increase in regulatory capital.~~securities.

Certain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. The following table presents the net capital position of RJ&A.


$ in millions	$ in millions	June 30, 2021			September 30, 2020			$ in millions	December 31, 2021			September 30, 2021
Raymond James & Associates, Inc.:	Raymond James & Associates, Inc.:							Raymond James & Associates, Inc.:
(Alternative Method elected)	(Alternative Method elected)							(Alternative Method elected)
Net capital as a percent of aggregate debit items	Net capital as a percent of aggregate debit items	62.1		%	48.0		%	Net capital as a percent of aggregate debit items	65.5		%	72.1		%
Net capital	Net capital	$	1,811		$	1,245		Net capital	$	1,928		$	2,035
Less: required net capital	Less: required net capital	(58)			(52)			Less: required net capital	(59)			(56)
Excess net capital	Excess net capital	$	1,753		$	1,193		Excess net capital	$	1,869		$	1,979

As of ~~June 30,~~December 31, 2021, ~~Raymond James Financial Services, Inc. (“RJFS”), Raymond James Ltd. (“RJ Ltd.”), RJ Trust, and~~ all of our other active regulated domestic and international subsidiaries were in compliance with and exceeded all applicable capital requirements.

4738

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 2221 – EARNINGS PER SHARE

During our fiscal fourth quarter of 2021 the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, paid on September 21, 2021. All share and per share information has been retroactively adjusted to reflect this stock split.

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


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
in millions, except per share amounts	in millions, except per share amounts	2021		2020		2021		2020		in millions, except per share amounts	2021		2020
Income for basic earnings per common share:	Income for basic earnings per common share:									Income for basic earnings per common share:
Net income	Net income	$	307	$	172	$	974	$	609	Net income	$	446	$	312
Less allocation of earnings and dividends to participating securities	Less allocation of earnings and dividends to participating securities	0		0		(1)		(1)		Less allocation of earnings and dividends to participating securities	(1)		(1)
Net income attributable to RJF common shareholders	Net income attributable to RJF common shareholders	$	307	$	172	$	973	$	608	Net income attributable to RJF common shareholders	$	445	$	311
Income for diluted earnings per common share:	Income for diluted earnings per common share:									Income for diluted earnings per common share:
Net income	Net income	$	307	$	172	$	974	$	609	Net income	$	446	$	312
Less allocation of earnings and dividends to participating securities	Less allocation of earnings and dividends to participating securities	0		0		(1)		(1)		Less allocation of earnings and dividends to participating securities	(1)		(1)
Net income attributable to RJF common shareholders	Net income attributable to RJF common shareholders	$	307	$	172	$	973	$	608	Net income attributable to RJF common shareholders	$	445	$	311
Common shares:	Common shares:									Common shares:
Average common shares in basic computation	Average common shares in basic computation	137.2		137.1		137.2		137.9		Average common shares in basic computation	206.3		205.2
Dilutive effect of outstanding stock options and certain RSUs	Dilutive effect of outstanding stock options and certain RSUs	3.9		2.3		3.4		2.6		Dilutive effect of outstanding stock options and certain RSUs	6.1		4.4
Average common and common equivalent shares used in diluted computation	Average common and common equivalent shares used in diluted computation	141.1		139.4		140.6		140.5		Average common and common equivalent shares used in diluted computation	212.4		209.6
Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	2.24	$	1.25	$	7.09	$	4.41	Basic	$	2.16	$	1.52
Diluted	Diluted	$	2.18	$	1.23	$	6.92	$	4.33	Diluted	$	2.10	$	1.48
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive	Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive	0		1.8		0.1		1.6		Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive	—		2.1

The allocation of earnings and dividends to participating securities in the preceding table represents dividends paid during the period to participating securities, consisting of certain RSUs, plus an allocation of undistributed earnings to such participating securities. Participating securities and related dividends paid on these participating securities were insignificant for each of the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

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


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
		2021		2020		2021		2020			2021		2020
Dividends per common share - declared	Dividends per common share - declared	$	0.39	$	0.37	$	1.17	$	1.11	Dividends per common share - declared	$	0.34	$	0.26
Dividends per common share - paid	Dividends per common share - paid	$	0.39	$	0.37	$	1.15	$	1.08	Dividends per common share - paid	$	0.26	$	0.25

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 2322 – SEGMENT INFORMATION

We currently operate through the following 5 segments: PCG; Capital Markets; Asset Management; Raymond James Bank; and Other.

The segments are determined based upon factors such as the services provided and the distribution channels served and are consistent with how we assess performance and determine how to allocate our resources. For a further discussion of our segments, see Note 2426 of our ~~2020~~2021 Form 10-K.

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

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

The following table presents information concerning operations in these segments.


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2021		2020
Net revenues:	Net revenues:									Net revenues:
Private Client Group	Private Client Group	$	1,696	$	1,249	$	4,810	$	4,158	Private Client Group	$	1,839	$	1,467
Capital Markets	Capital Markets	446		323		1,331		881		Capital Markets	614		452
Asset Management	Asset Management	225		163		629		531		Asset Management	236		195
Raymond James Bank	Raymond James Bank	169		178		496		604		Raymond James Bank	183		167
Other	Other	2		(20)		(6)		(72)		Other	(15)		4
Intersegment eliminations	Intersegment eliminations	(67)		(59)		(195)		(191)		Intersegment eliminations	(76)		(63)
Total net revenues	Total net revenues	$	2,471	$	1,834	$	7,065	$	5,911	Total net revenues	$	2,781	$	2,222
Pre-tax income/(loss):	Pre-tax income/(loss):									Pre-tax income/(loss):
Private Client Group	Private Client Group	$	195	$	91	$	527	$	414	Private Client Group	$	195	$	140
Capital Markets	Capital Markets	115		62		349		119		Capital Markets	201		129
Asset Management	Asset Management	105		60		275		206		Asset Management	107		83
Raymond James Bank	Raymond James Bank	104		14		286		163		Raymond James Bank	102		71
Other	Other	(134)		(29)		(206)		(106)		Other	(47)		(24)
Total pre-tax income	Total pre-tax income	$	385	$	198	$	1,231	$	796	Total pre-tax income	$	558	$	399

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

The following table presents our net interest income on a segment basis.


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2021		2020
Net interest income/(expense):	Net interest income/(expense):									Net interest income/(expense):
Private Client Group	Private Client Group	$	29	$	27	$	84	$	106	Private Client Group	$	30	$	28
Capital Markets	Capital Markets	1		2		5		8		Capital Markets	3		1
Asset Management		0		0		0		1

Raymond James Bank	Raymond James Bank	161		169		473		584		Raymond James Bank	177		157
Other	Other	(26)		(23)		(69)		(36)		Other	(22)		(21)
Net interest income	Net interest income	$	165	$	175	$	493	$	663	Net interest income	$	188	$	165

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


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Total assets:	Total assets:					Total assets:
Private Client Group	Private Client Group	$	17,949	$	12,574	Private Client Group	$	25,431	$	20,270
Capital Markets	Capital Markets	2,359		2,336		Capital Markets	2,027		2,457
Asset Management	Asset Management	389		380		Asset Management	482		476
Raymond James Bank	Raymond James Bank	34,363		30,356		Raymond James Bank	37,789		36,154
Other	Other	2,101		1,836		Other	2,732		2,534
Total	Total	$	57,161	$	47,482	Total	$	68,461	$	61,891

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents goodwill, which was included in our total assets, on a segment basis.


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Goodwill:	Goodwill:					Goodwill:
Private Client Group ~~(1)~~	Private Client Group ~~(1)~~	$	418	$	277	Private Client Group ~~(1)~~	$	417	$	417
Capital Markets ~~(2)~~	Capital Markets ~~(2)~~	150		120		Capital Markets ~~(2)~~	174		174
Asset Management	Asset Management	69		69		Asset Management	69		69
Total	Total	$	637	$	466	Total	$	660	$	660

~~(1) The balance includes $139 million of goodwill arising from our acquisition of NWPS in December 2020.~~

~~(2) The balance includes $30 million of goodwill arising from our acquisition of Financo in March 2021.~~

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

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

We have operations in the U.S., Canada and Europe. Substantially all long-lived assets are located in the U.S. The following table presents our net revenues and pre-tax income classified by major geographic area in which they were earned.


		Three months ended June 30,				Nine months ended June 30,					Three months ended December 31,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2021		2020
Net revenues:	Net revenues:									Net revenues:
U.S.	U.S.	$	2,275	$	1,706	$	6,548	$	5,501	U.S.	$	2,589	$	2,079
Canada	Canada	128		86		363		293		Canada	137		105
Europe	Europe	68		42		154		117		Europe	55		38
Total	Total	$	2,471	$	1,834	$	7,065	$	5,911	Total	$	2,781	$	2,222
Pre-tax income:	Pre-tax income:									Pre-tax income:
U.S.	U.S.	$	353	$	191	$	1,165	$	770	U.S.	$	531	$	396
Canada	Canada	15		5		41		26		Canada	17		1
Europe	Europe	17		2		25		0		Europe	10		2
Total	Total	$	385	$	198	$	1,231	$	796	Total	$	558	$	399

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


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Total assets:	Total assets:					Total assets:
U.S.	U.S.	$	53,361	$	44,090	U.S.	$	64,589	$	57,952
Canada	Canada	3,627		3,260		Canada	3,670		3,724
Europe	Europe	173		132		Europe	202		215
Total	Total	$	57,161	$	47,482	Total	$	68,461	$	61,891

The following table presents goodwill, which was included in our total assets, classified by major geographic area in which it was held.


$ in millions	$ in millions	June 30, 2021		September 30, 2020		$ in millions	December 31, 2021		September 30, 2021
Goodwill:	Goodwill:					Goodwill:
U.S. ~~(1)~~	U.S. ~~(1)~~	$	602	$	433	U.S. ~~(1)~~	$	619	$	619
Canada	Canada	26		24		Canada	25		25
Europe	Europe	9		9		Europe	16		16
Total	Total	$	637	$	466	Total	$	660	$	660

~~(1) The balance includes $139 million of goodwill arising from our acquisition of NWPS in December 2020 and $30 million of goodwill arising from our acquisition of Financo in March 2021.~~

5041

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

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


INDEX
			PAGE
Factors affecting “forward-looking statements”			5243
Introduction			5243
Executive overview			5243
Reconciliation of non-GAAP financial measures to GAAP financial measures			5645
Segments			5846
Net interest analysis			5847
Results of Operations
Private Client Group			6350
Capital Markets			6753
Asset Management			6954
Raymond James Bank			7157
Other			7258
Certain statistical disclosures by bank holding companies			73
~~Liquidity and capital resources~~			7459
Statement of financial condition analysis			7859
Liquidity and capital resources			60
Regulatory			7865
Critical accounting estimates			7965
Recent accounting developments			8066
Risk management			8166

5142

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

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), anticipated timing and benefits of our acquisitions (including our acquisition of Charles Stanley completed on January 21, 2022, as well as our proposed acquisition of TriState Capital), and our level of success in integrating acquired businesses, ~~industry or market conditions, demand for and pricing of our products,~~ anticipated results of litigation, regulatory developments, impacts of the COVID-19 pandemic, 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~~is 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 and Current Reports on Form 8-K, 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

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, 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, 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

~~Quarter~~Three months ended ~~June 30,~~December 31, 2021 compared with the ~~quarter~~three months ended ~~June 30,~~December 31, 2020

~~Net~~For our fiscal first quarter of 2022, we generated net revenues of ~~$2.47~~$2.78 billion, ~~increased $637 million, or 35%, and pre-tax income~~an increase of ~~$385 million increased $187 million, or 94%,~~25% compared with the prior-year quarter, ~~which was negatively impacted by uncertainty resulting from the onset of the COVID-19 pandemic. Net~~and pre-tax income of ~~$307~~$558 million, ~~increased $135~~an increase of 40%. Our net income of $446 million ~~or 78%,~~was 43% higher than the prior-year quarter and our earnings per diluted share were ~~$2.18,~~$2.10, reflecting a ~~77%~~42% increase. Our annualized return on equity (“ROE”) ~~for the quarter~~ was ~~15.9%~~21.2%, compared with ~~10.0% in~~17.2% for the prior-year quarter, and annualized return on tangible common equity (“ROTCE”)was ~~17.7%~~ 23.4%(1), compared with ~~10.9%~~ 19.0%(1) for the prior-year quarter.

~~During~~The significant increase in net revenues compared with the quarter, we completed a $750 million, 30-year senior notes offering at 3.75%, utilizing the proceeds from the offering and cash on hand to early-redeem our $250 million of 5.625% senior notes due 2024 and our $500 million of 3.625% senior notes due 2026. We recognized losses on the extinguishment of such notes of $98 million. Excluding these losses and acquisition-related expenses of $7 million, our adjusted net income was $386 million ~~(1)~~ ~~and our adjusted earnings per diluted share were $2.74~~ ~~(1)~~.~~Adjusted annualized ROE for the~~prior-year quarter was ~~19.9%~~ ~~(1)~~primarily driven by higher asset management and ~~adjusted annualized ROTCEwas 22.2%~~ ~~(1). Client~~related administrative fees, primarily attributable to higher PCG client assets ~~under administration~~in fee-based accounts, and strong investment banking revenues, which also increased ~~to $1.17 trillion as of June 30, 2021, a 33% increase over June 30, 2020.~~

compared with the prior-year quarter.

(1) ROTCE ~~adjusted net income, adjusted earnings per diluted share, adjusted annualized ROE and adjusted annualized ROTCE are~~is a non-GAAP financial ~~measures.~~measure. Please see the “Reconciliation of non-GAAP financial measures to GAAP financial measures” in this MD&A for a reconciliation of ~~these~~this non-GAAP financial ~~measures~~measure to the most directly comparable GAAP measure, and for other important disclosures.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The $637 million, or 35%, increase in net revenues compared with the prior-year quarter was primarily driven by significantly higher asset management and related administrative fees, largely attributable to higher PCG assets in fee-based accounts, and strong investment banking revenues, also significantly higher than the prior-year quarter. Brokerage revenues were also strong and increased compared with the prior-year quarter. Revenues in the current-year quarter included $24 million of private equity valuation gains, of which $10 million were attributable to noncontrolling interests and were offset in other expenses, compared with insignificant gains in the prior-year quarter.

Compensation, commissions and benefits expense increased $384 million, or ~~30%~~26%, primarily ~~resulting from~~attributable to the growth in revenues and pre-tax income compared with the prior-year quarter. Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, ~~decreased to 67.2%~~was 67.7%, compared with ~~69.6%~~67.5% for the prior-year ~~quarter, primarily due to a change in the composition of net revenues compared with the prior-year~~ quarter. Our current quarter compensation ratio reflected the impact of strong net revenues in the Capital Markets segment, which had a 57% compensation ratio for the quarter, and from the private equity valuation gains, which do not have direct compensation associated with them.

Non-compensation expenses increased ~~$66~~$16 million, or ~~18%~~5%, primarily due to ~~the losses on extinguishment of debt of $98 million described above, the aforementioned private equity valuation gains attributable to noncontrolling interests~~increases in ~~the current quarter that were offset within other~~communications and information processing and business development expenses, ~~acquisition-related expenses, and increased~~as well as higher investment sub-advisory fees. Business development expenses also increased from the very low prior-year quarter level, primarily due to higher recruiting-related expenses and an increase in travel, meal and event-related expenses. ThesePartially offsetting these increases ~~were offset by~~was a ~~$100~~$25 million decrease in the bank loan provision for credit losses, which was a benefit of ~~$19~~$11 million in the ~~current-year~~current quarter ~~computed under the CECL methodology~~ compared with a provision of ~~$81~~$14 million in the prior-year ~~quarter computed under the incurred loss methodology.~~quarter.

Our effective income tax rate was ~~20.3%~~20.1% for our fiscal ~~third~~first quarter of ~~2021, an increase compared with~~2022, a ~~13.1% effective income tax rate~~decrease from 21.8% for the prior-year quarter. ~~Our~~The decrease in the effective tax rate infrom the prior-year quarter was ~~unusually low~~primarily due to a ~~significant change in~~larger tax benefit recognized during the ~~projected impact of~~current quarter related to share-based compensation that vested during the period, partially offset by lower valuation gains on our corporate-owned life insurance portfolio on our effective tax rate during that quarter, from a large non-deductible loss projected at March 31, 2020, to a relatively small non-taxable gain projected as of June 30, 2020 resulting from a significant rebound in equity markets during our fiscal third quarter of 2020. We expect our effective tax rate to be approximately 21% incompared with the ~~fiscal fourth quarter of 2021.~~prior-year quarter.

~~The firm ended~~As of December 31, 2021, our ~~fiscal third quarter~~total capital ratio of ~~2021 with capital ratios well in excess~~27.0% and tier 1 leverage ratio of 12.1% were each more than double the regulatory ~~requirements and~~requirement to be considered well-capitalized. We also continue to have substantial liquidity, with ~~approximately $1.6~~$1.4 billion(1) of cash at the parent ~~company. Pursuant~~company, which includes cash loaned to our Board of Directors’ share repurchase authorization, we repurchased 375,000 shares of common stock during our fiscal third quarter for $48 million at an average price of $128.55 per share, leaving $632 million of availability remaining under the authorization as of June 30, 2021.RJ&A. We expect to continue to be opportunistic in deploying our capital in ~~future quarters,~~fiscal 2022, through a combination of organic growth ~~additional share repurchases~~ and acquisitions, as evidenced by ~~the NWPS and Financo acquisitions, which were announced and completed during fiscal 2021, and the announced acquisitions~~our acquisition of Charles Stanley, which we completed on January 21, 2022, as well as our proposed acquisition of TriState Capital, which we expect to close later in fiscal 2022. In December 2021, our Board of Directors increased the quarterly dividend 31% to $0.34 per share and ~~Cebile.~~authorized share repurchases of up to $1 billion, which replaced the previous authorization. Due to regulatory restrictions following the announcement of our pending acquisition of TriState Capital, we do not expect to repurchase common shares until after closing; however, the increase in the authorization reflects our current intention to repurchase shares after closing. As of February 4, 2022, $1 billion remained available under the share repurchase authorization.

~~Our results for our fiscal third quarter of 2021 were strong and we~~We remain well-positioned entering our fiscal ~~fourth~~second quarter, with ~~strong capital ratios, over $1~~$1.26 trillion of client assets under administration ~~a 9% increase in PCG fee-based assets from March 31,~~as of December 2021 ~~to June 30, 2021,~~as well as strong financial advisor recruiting activity and a ~~strong~~robust investment banking ~~backlog.~~pipeline. With clients’ domestic cash sweep balances of $73.5 billion as of December 2021, we believe we are also well-positioned for anticipated increases in short-term interest rates given the exposure to short-term interest rates for both our RJBDP balances with third-party banks and a significant portion of our assets at Raymond James Bank. However, we also expect to continue to face ~~headwinds from near-zero short-term interest rates and continued~~ economic uncertainty, ~~resulting~~including that arising from inflation, supply chain complications, labor shortages, and uncertainty around U.S. economic policy. In addition, although the ~~ongoing~~economy has continued to improve since the beginning of the COVID-19 pandemic, ~~which continues~~the pace of recovery in the future is uncertain due to ~~evolve as recently experienced with~~concerns related to the ~~rapid~~pandemic, including the spread of ~~the Delta variant.~~variants. As a result, we may experience volatility ofin asset management fees, brokerage revenues and investment banking ~~revenues, which may negatively impact our ability to sustain the level of revenues in future periods which were achieved in the current quarter.~~revenues. Although our results during the quarter were positively impacted by a benefit for credit losses related to our bank loan portfolio, net loan growth should result in additional provisions for bank loan losses in future periods and/or future market deterioration could result in increased provisions in future ~~quarters.~~periods. In addition, although we have been focused on the management of expenses, we expect that expenses ~~may~~will continue to increase ~~over the next several quarters~~in fiscal 2022, as business and event-related travel continue to increase and as we continue to make investments in our people and technology ~~and~~to support our growth.

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

•PCG segment net revenues of $1.70 billion increased 36% and pre-tax income of $195 million increased 114%. The $447 million increase in net revenues was primarily attributable to a significant increase in asset management fees due to higher assets in fee-based accounts at the beginning of the current-year quarter, and higher brokerage and account and service fee revenues. Non-interest expenses increased $343 million, or 30%, primarily resulting from an increase in compensation expenses largely due to the growth in net revenues.

(1) 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~~

•Capital Markets net revenues of $446 million increased 38% and pre-tax income of $115 million increased 85%. The $123 million increase in net revenues was due to a significant increase in investment banking revenues from both mergers & acquisition activity and equity underwriting activity compared with the prior-year quarter, which was negatively impacted by the COVID-19 pandemic. Non-interest expenses increased $70 million, or 27%, primarily due to higher compensation expenses resulting from the increase in revenues.

•Asset Management segment net revenues of $225 million increased 38% and pre-tax income of $105 million increased 75%. The $62 million increase in net revenues was primarily driven by higher financial assets under management. Non-interest expenses increased $17 million, or 17%, primarily due to higher investment sub-advisory fees.

•Raymond James Bank net revenues of $169 million decreased 5%, while pre-tax income of $104 million increased 643%. The $9 million decrease in net revenues primarily reflected the negative impact of lower short-term interest rates and a shift in the composition of interest-earning assets, which more than offset the growth in interest-earning assets. Non-interest expenses decreased $99 million, or 60%, primarily due to the $100 million decrease in the bank loan provision for credit losses.

•The Other segment reflected a pre-tax loss that was $105 million larger than the loss in the prior-year quarter, due to the aforementioned losses on extinguishment of debt of $98 million and acquisition-related expenses of $4 million, partially offset by the impact of the private equity gains in the current-year quarter.

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

Net revenues of $7.07 billion increased $1.15 billion, or 20%, and pre-tax income of $1.23 billion increased $435 million, or 55%. Net income of $974 million increased $365 million, or 60% and our earnings per diluted share were $6.92, also reflecting a 60% increase. Our annualized ROE for the nine months ended June 30, 2021 was 17.4%, compared with 11.9% for the prior-year period, and annualized ROTCE was 19.3% ~~(1), compared with 13.1%~~ ~~(1)~~ for the prior-year period. Excluding the impact of losses on extinguishment of debt and acquisition-related expenses, adjusted net income was $1.06 billion and adjusted earnings per diluted share were $7.50 ~~(1)~~. ~~Adjusted annualized ROE was 18.7%~~ ~~(1)~~ ~~and adjusted annualized ROTCE was 20.8%~~ ~~(1)~~.

The $1.15 billion increase in net revenues compared with the prior-year period was primarily driven by higher asset management and related administrative fees, largely attributable to higher PCG assets in fee-based accounts, as well as strong investment banking and brokerage revenues, which also increased compared with the prior-year period. Revenues in the current year also included private equity gains of $56 million ($20 million attributable to noncontrolling interests), compared with $40 million of losses in the prior-year period ($23 million attributable to noncontrolling interests). Offsetting these increases was the negative impact of lower short-term interest rates on our net interest income and RJBDP fees from third-party banks.

Compensation, commissions and benefits expense increased $759 million, or 19%, primarily resulting from the growth in revenues and pre-tax income compared with the prior-year period. Our compensation ratio was 68.1%, compared with 68.5% for the prior-year period.

Non-compensation expenses decreased $40 million, or 4%, primarily due to a $225 million decrease in the bank loan provision for credit losses, which was a benefit of $37 million in the current year computed under the CECL methodology compared with a provision of $188 million in the prior-year period computed under the incurred loss methodology. Business development expenses also declined, due to lower travel and event-related expenses as a result of the COVID-19 pandemic, partially offset by an increase in recruiting-related expenses. Offsetting these decreases was the aforementioned losses on extinguishment of debt of $98 million in the current-year period and an increase in other expenses, primarily due to the change in private equity valuations attributable to noncontrolling interests compared with the prior-year period.

Our effective income tax rate was 20.9% for the nine months ended June 30, 2021, a decrease from 23.5% for the prior-year period, primarily due to the impact of larger non-taxable gains on our corporate-owned life insurance portfolio in the current-year period.

Pursuant to the Board of Directors’ repurchase authorization, we repurchased 982,750 shares of common stock during the nine months ended June 30, 2021 for approximately $118 million at an average price of approximately $120 per share.

(1) ROTCE, adjusted net income, adjusted earnings per diluted share, adjusted annualized ROE and adjusted annualized ROTCE are non-GAAP financial measures. Please see the “Reconciliation of non-GAAP financial measures to GAAP financial measures” in this MD&A for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure, and for other important disclosures.

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

~~Management’s Discussion and Analysis~~

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

•PCG segment net revenues of $4.81 billion increased 16% and pre-tax income of $527 million increased 27%. The $652 million increase in net revenues was primarily attributable to an increase in asset management fees largely due to higher assets in fee-based accounts at the beginning of each quarterly billing period within the current-year period, and higher brokerage revenues, partially offset by decreases in RJBDP fees from third-party banks and net interest income due to lower short-term interest rates. Non-interest expenses increased $539 million, or 14%, primarily resulting from an increase in compensation expenses largely due to the growth in revenues.

•Capital Markets net revenues of $1.33 billion increased 51% and pre-tax income of $349 million increased 193%. The $450 million increase in net revenues was primarily due to a significant increase in investment banking revenues from both mergers & acquisition activity and underwriting activity, as well as growth in fixed income brokerage revenues. Non-interest expenses increased $220 million, or 29%, due to higher compensation expenses primarily attributable to the increase in revenues, partially offset by a decrease in business development expenses.

•Asset Management segment net revenues of $629 million increased 18% and pre-tax income of $275 million increased 33%. The $98 million increase in net revenues was primarily driven by higher financial assets under management. Non-interest expenses increased $29 million, or 9%, primarily due to higher investment sub-advisory fees.

•Raymond James Bank segment net revenues of $496 million decreased 18%, while pre-tax income of $286 million increased 75%. The $108 million decrease in net revenues reflected the negative impact of lower short-term interest rates, which more than offset the growth in interest-earning assets. Non-interest expenses decreased $231 million, or 52%, primarily due to a $225 million decrease in the bank loan provision for credit losses.

•The Other segment reflected a pre-tax loss that was $100 million greater than the loss in the prior-year period, primarily due to the losses on extinguishment of debt of $98 million and acquisition-related expenses of $6 million in the current-year period. These negative impacts were partially offset by the aforementioned private equity gains compared with losses in the prior-year period.

5544

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

We utilize certain non-GAAP financial measures, including ROTCE, as additional measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures include adjusted net income, adjusted earnings per diluted share, adjusted ROE, ROTCE, and adjusted ROTCE. We believe certain of these non-GAAP financial measures provides useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a meaningful comparison of current- and prior-period results. We believe that ROTCE is meaningful to investors as this measure facilitates comparison of our results to the results of other companies. ~~In the following tables, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. These non-GAAP~~Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies. The following tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures for the periods indicated.

Three months ended Nine months ended
$ in millions June 30, 2021 June 30, 2021
Net income $ 307 $ 974
Non-GAAP adjustments:
Losses on extinguishment of debt 98 98
Acquisition-related expenses 7 9
Pre-tax impact of non-GAAP adjustments 105 107
Tax effect of non-GAAP adjustments (26) (26)
Total non-GAAP adjustments, net of tax 79 81
Adjusted net income $ 386 $ 1,055
Earnings per common share - diluted $ 2.18 $ 6.92
Non-GAAP adjustments:
Losses on extinguishment of debt 0.69 0.70
Acquisition-related expenses 0.05 0.06
Tax effect of non-GAAP adjustments (0.18) (0.18)
Total non-GAAP adjustments, net of tax 0.56 0.58
Adjusted earnings per common share - diluted $ 2.74 $ 7.50

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

~~Management’s Discussion and Analysis~~

Three months ended June 30, Nine months ended June 30,
$ in millions 2021 2020 2021 2020
Annualized return on equity
Average equity $ 7,728 $ 6,882 $ 7,483 $ 6,797
Impact on average equity of non-GAAP adjustments:
Losses on extinguishment of debt 49 NA 25 NA
Acquisition-related expenses 4 NA 2 NA
Tax effect of non-GAAP adjustments (13) NA (7) NA
Adjusted average equity $ 7,768 NA $ 7,503 NA
Average equity $ 7,728 $ 6,882 $ 7,483 $ 6,797
Less:
Average goodwill and identifiable intangible assets, net 865 603 791 606
Average deferred tax liabilities, net (56) (32) (51) (30)
Average tangible common equity $ 6,919 $ 6,311 $ 6,743 $ 6,221
Impact on average equity of non-GAAP adjustments:
Losses on extinguishment of debt 49 NA 25 NA
Acquisition-related expenses 4 NA 2 NA
Tax effect of non-GAAP adjustments (13) NA (7) NA
Adjusted average tangible common equity $ 6,959 NA $ 6,763 NA
Return on equity 15.9 % 10.0 % 17.4 % 11.9 %
Adjusted annualized return on equity 19.9 % NA 18.7 % NA
Return on tangible common equity 17.7 % 10.9 % 19.3 % 13.1 %
Adjusted annualized return on tangible common equity 22.2 % NA 20.8 % NA


	Three months ended December 31,
$ in millions	2021			2020










Average equity	$	8,423		$	7,239
Less:
Average goodwill and identifiable intangible assets, net	878			717
Average deferred tax liabilities, net	(64)			(45)
Average tangible common equity	$	7,609		$	6,567








Return on equity	21.2		%	17.2		%

Return on tangible common equity	23.4		%	19.0		%

Average equity ~~for the quarterly periods~~ 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. Tangible common equity is computed by subtracting goodwill and identifiable intangible assets, net, along with the associated deferred tax liabilities, from total equity attributable to RJF. Average equity for the year-to-date periods 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 the impact on average equity of the non-GAAP adjustments, as applicable for each respective period. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period.

ROE is computed by dividing annualized net income for the period indicated by average equity for each respective period or, in the case of ROTCE, computed by dividing annualized net income by average tangible common equity for each respective period. Adjusted ROE is computed by dividing annualized adjusted net income by adjusted average equity for each respective period, or in the case of adjusted ROTCE, computed by dividing annualized adjusted net income by adjusted average tangible common equity for each respective period.

5745

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

SEGMENTS

We currently operate through the following five ~~segments. Our business segments are PCG,~~segments: PCG; Capital ~~Markets,~~Markets; Asset ~~Management and~~Management; Raymond James ~~Bank. Our Other segment includes our private equity investments, interest income on certain corporate cash balances, certain acquisition-related expenses,~~Bank; and ~~certain corporate overhead costs of RJF, including the interest costs on our public debt and any losses on extinguishment of such debt.~~Other.

The following table presents our consolidated and segment net revenues and pre-tax income/(loss) for the periods indicated.


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Total company	Total company													Total company
Net revenues	Net revenues	$	2,471	$	1,834	35	%	$	7,065	$	5,911	20	%	Net revenues	$	2,781	$	2,222	25	%
Pre-tax income	Pre-tax income	$	385	$	198	94	%	$	1,231	$	796	55	%	Pre-tax income	$	558	$	399	40	%

Private Client Group	Private Client Group													Private Client Group
Net revenues	Net revenues	$	1,696	$	1,249	36	%	$	4,810	$	4,158	16	%	Net revenues	$	1,839	$	1,467	25	%
Pre-tax income	Pre-tax income	$	195	$	91	114	%	$	527	$	414	27	%	Pre-tax income	$	195	$	140	39	%

Capital Markets	Capital Markets													Capital Markets
Net revenues	Net revenues	$	446	$	323	38	%	$	1,331	$	881	51	%	Net revenues	$	614	$	452	36	%
Pre-tax income	Pre-tax income	$	115	$	62	85	%	$	349	$	119	193	%	Pre-tax income	$	201	$	129	56	%

Asset Management	Asset Management													Asset Management
Net revenues	Net revenues	$	225	$	163	38	%	$	629	$	531	18	%	Net revenues	$	236	$	195	21	%
Pre-tax income	Pre-tax income	$	105	$	60	75	%	$	275	$	206	33	%	Pre-tax income	$	107	$	83	29	%

Raymond James Bank	Raymond James Bank													Raymond James Bank
Net revenues	Net revenues	$	169	$	178	(5)	%	$	496	$	604	(18)	%	Net revenues	$	183	$	167	10	%
Pre-tax income	Pre-tax income	$	104	$	14	643	%	$	286	$	163	75	%	Pre-tax income	$	102	$	71	44	%

Other	Other													Other
Net revenues	Net revenues	$	2	$	(20)	NM		$	(6)	$	(72)	92	%	Net revenues	$	(15)	$	4	NM
Pre-tax loss	Pre-tax loss	$	(134)	$	(29)	(362)	%	$	(206)	$	(106)	(94)	%	Pre-tax loss	$	(47)	$	(24)	(96)	%

Intersegment eliminations	Intersegment eliminations													Intersegment eliminations
Net revenues	Net revenues	$	(67)	$	(59)	(14)	%	$	(195)	$	(191)	(2)	%	Net revenues	$	(76)	$	(63)	(21)	%

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

NET INTEREST ANALYSIS

~~The following table presents the high, low and end of period target federal funds rates for the periods presented.~~

Target federal funds rate
Low High End of period
Three months ended
June 30, 2021 0.00% 0.25% 0% - 0.25%
June 30, 2020 0.00% 0.25% 0% - 0.25%
Nine months ended
June 30, 2021 0.00% 0.25% 0% - 0.25%
June 30, 2020 0.00% 2.00% 0% - 0.25%

In response to macroeconomic concerns resulting from the COVID-19 pandemic, the Federal Reserve decreased its benchmark short-term interest rate in March 2020 to a range of 0-0.25%~~, a reduction of 150 basis points.~~. These ~~decreases, in addition to other~~near-zero short-term interest ~~rate cuts implemented during calendar 2019 (225 basis points in total),~~rates have negatively impacted our net interest income, as well as the ~~fees~~fee income we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees) which are also sensitive to changes in interest rates. The ~~negative impact of the decline in~~Federal Reserve has recently indicated that it intends to increase its short-term interest rates ~~has outweighed~~some time during our fiscal 2022 in response to inflationary pressures and given the ~~growth in interest-earning assets~~improving economic and ~~RJBDP balances swept to third-party banks compared with~~employment conditions since the ~~prior-year periods. We expect~~beginning of the ~~current near-zero interest rate environment to continue for the remainder of fiscal 2021 and into fiscal 2022.~~

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

~~Management’s Discussion and Analysis~~

COVID-19 pandemic.

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Raymond James Bank and Other segments) and the nature of fees we earn from third-party banks on the RJBDP, ~~decreases~~increases in short-term interest rates generally result in an ~~overall decrease~~increase in our net earnings, although the magnitude of the impact to ~~the~~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. As a result, we believe we are well-positioned for our net interest earnings to be favorably impacted by any increase in short-term rates that may arise. Conversely, any ~~increases~~decreases in short-term interest rates and/or ~~decreases~~increases in the deposit rates paid to clients would generally have a ~~positive~~negative impact on our earnings.

Based on our high concentration of floating-rate assets that are funded from clients’ domestic cash sweep balances, we estimate (based on static balances as of December 31, 2021) that an instantaneous 100 basis point increase in short-term interest rates would result in incremental pre-tax income of approximately $570 million annually, with approximately 65% reflected as net interest income and 35% reflected as account and service fees. The realization of such amounts is dependent upon a number of key assumptions and actual results may differ materially from our estimates.

Refer to the discussion of ~~the specific components of~~ our net interest income within the “Management’s Discussion and Analysis - Results of Operations” ~~for~~of our PCG, Raymond James Bank, and Other ~~segments.~~segments, where applicable. Also refer to “Management’s Discussion and Analysis - Results of Operations - Private Client Group - Clients’ domestic cash sweep balances” for further information on the RJBDP.

~~The following tables present our consolidated average interest-earning asset and interest-bearing liability balances, interest income and expense and the related rates.~~

~~Quarter ended June 30, 2021 compared with the quarter ended June 30, 2020~~

Three months ended June 30,
2021 2020
$ in millions Average
daily
balance Interest Annualized
average
rate Average
daily
balance Interest Annualized
average
rate
Interest-earning assets:
Cash and cash equivalents $ 5,644 $ 3 0.20 % $ 6,605 $ 4 0.26 %
Assets segregated pursuant to regulations 9,016 3 0.16 % 3,408 3 0.36 %
Available-for-sale securities 8,041 20 0.96 % 4,437 23 2.01 %
Brokerage client receivables 2,363 19 3.33 % 2,065 18 3.47 %
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans 7,936 50 2.51 % 7,957 58 2.93 %
CRE loans 2,748 18 2.59 % 2,610 19 2.85 %
REIT loans 1,327 9 2.53 % 1,412 9 2.45 %
Tax-exempt loans 1,294 9 3.33 % 1,272 9 3.34 %
Residential mortgage loans 5,126 34 2.70 % 4,983 37 2.97 %
SBL and other 5,208 29 2.22 % 3,576 24 2.59 %
Loans held for sale 142 1 2.92 % 111 1 3.22 %
Total bank loans, net 23,781 150 2.54 % 21,921 157 2.87 %
All other interest-earning assets 2,288 10 1.51 % 1,964 12 2.66 %
Total interest-earning assets $ 51,133 $ 205 1.60 % $ 40,400 $ 217 2.16 %
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts $ 28,908 $ 1 0.02 % $ 25,060 $ 2 0.02 %
Certificates of deposit 883 4 1.91 % 1,104 5 2.00 %
Total bank deposits 29,791 5 0.08 % 26,164 7 0.10 %
Brokerage client payables 10,486 1 0.03 % 4,751 3 0.18 %
Other borrowings 860 4 2.19 % 891 5 2.23 %
Senior notes payable 2,211 25 4.49 % 2,067 24 4.69 %
All other interest-bearing liabilities 602 5 1.12 % 586 3 1.10 %
Total interest-bearing liabilities $ 43,950 $ 40 0.34 % $ 34,459 $ 42 0.48 %
Net interest income $ 165 $ 175
Firmwide net interest margin (net yield on interest-earning assets) 1.31 % 1.75 %
Raymond James Bank net interest margin 1.92 % 2.29 %

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

5947

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The ~~yield on tax-exempt loans in~~following table presents our consolidated average interest-earning asset and interest-bearing liability balances, interest income and expense and the ~~preceding table is presented on a taxable-equivalent basis utilizing the applicable federal statutory rates for each of~~related yields and rates.

Three months ended December 31, 2021 compared with the three months ended ~~June 30, 2021 and 2020.~~

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 period’s volume. Changes attributable to both volume and rate have been allocated proportionately.

Three months ended June 30,
2021 compared to 2020
Increase/(decrease) due to
$ in millions Volume Rate Total
Interest income:
Interest-earning assets:
Cash and cash equivalents $ — $ (1) $ (1)
Assets segregated pursuant to regulations 5 (5) —
Available-for-sale securities 18 (21) (3)
Brokerage client receivables 2 (1) 1
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans — (8) (8)
CRE loans 1 (2) (1)
REIT loans 1 (1) —
Tax-exempt loans — — —
Residential mortgage loans 1 (4) (3)
SBL and other 9 (4) 5
Loans held for sale — — —
Total bank loans, net 12 (19) (7)
All other interest-earning assets 2 (4) (2)
Total interest-earning assets $ 39 $ (51) $ (12)
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts $ — $ (1) $ (1)
Certificates of deposit (1) — (1)
Total bank deposits (1) (1) (2)
Brokerage client payables 2 (4) (2)
Other borrowings — (1) (1)
Senior notes payable 2 (1) 1
All other interest-bearing liabilities — 2 2
Total interest-bearing liabilities $ 3 $ (5) $ (2)
Change in net interest income $ 36 $ (46) $ (10)

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

~~Management’s Discussion and Analysis~~

~~Nine months ended June 30, 2021 compared with the nine months ended June 30,~~December 31, 2020


		Nine months ended June 30,													Three months ended December 31,
		2021						2020							2021						2020
$ in millions	$ in millions	Average daily balance		Interest		Annualized average rate		Average daily balance		Interest		Annualized average rate		$ in millions	Average daily balance		Interest		Annualized average rate		Average daily balance		Interest		Annualized average rate
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Cash and cash equivalents	Cash and cash equivalents	$	5,548	$	9	0.22	%	$	5,013	$	37	0.99	%	Cash and cash equivalents	$	6,076	$	3	0.18	%	$	5,712	$	4	0.25	%
Assets segregated pursuant to regulations		8,307		11		0.18	%	2,853		25		1.20	%
Assets segregated for regulatory purposes and restricted cash														Assets segregated for regulatory purposes and restricted cash	13,011		4		0.12	%	5,816		3		0.21	%
Available-for-sale securities	Available-for-sale securities	7,837		64		1.08	%	3,654		60		2.18	%	Available-for-sale securities	8,511		22		1.02	%	7,478		23		1.21	%
Brokerage client receivables	Brokerage client receivables	2,222		56		3.38	%	2,290		66		3.87	%	Brokerage client receivables	2,484		21		3.35	%	2,082		18		3.48	%
Bank loans, net of unearned income and deferred expenses:	Bank loans, net of unearned income and deferred expenses:													Bank loans, net of unearned income and deferred expenses:
Loans held for investment:	Loans held for investment:													Loans held for investment:
C&I loans	C&I loans	7,670		149		2.57	%	8,012		225		3.70	%	C&I loans	8,581		55		2.49	%	7,535		51		2.63	%
CRE loans	CRE loans	2,665		52		2.57	%	2,593		72		3.63	%	CRE loans	2,941		20		2.67	%	2,582		17		2.59	%
REIT loans	REIT loans	1,290		25		2.49	%	1,349		34		3.33	%	REIT loans	1,133		7		2.56	%	1,235		8		2.43	%
Tax-exempt loans	Tax-exempt loans	1,253		25		3.34	%	1,236		25		3.35	%	Tax-exempt loans	1,297		8		3.19	%	1,237		8		3.35	%
Residential mortgage loans	Residential mortgage loans	5,044		103		2.73	%	4,823		112		3.09	%	Residential mortgage loans	5,451		37		2.68	%	5,001		35		2.77	%
SBL and other	SBL and other	4,709		80		2.24	%	3,460		89		3.37	%	SBL and other	6,289		35		2.20	%	4,286		25		2.29	%
Loans held for sale	Loans held for sale	153		3		2.54	%	138		4		3.77	%	Loans held for sale	239		2		2.94	%	141		1		2.94	%
Total bank loans, net	Total bank loans, net	22,784		437		2.57	%	21,611		561		3.46	%	Total bank loans, net	25,931		164		2.52	%	22,017		145		2.62	%
All other interest-earning assets	All other interest-earning assets	2,264		31		1.79	%	2,329		50		2.82	%	All other interest-earning assets	2,376		11		1.91	%	2,288		10		2.00	%
Total interest-earning assets	Total interest-earning assets	$	48,962	$	608	1.66	%	$	37,750	$	799	2.83	%	Total interest-earning assets	$	58,389	$	225	1.53	%	$	45,393	$	203	1.78	%
Interest-bearing liabilities:	Interest-bearing liabilities:													Interest-bearing liabilities:
Bank deposits:	Bank deposits:													Bank deposits:
Savings, money market and NOW accounts	Savings, money market and NOW accounts	$	27,732	$	4	0.02	%	$	23,190	$	20	0.11	%	Savings, money market and NOW accounts	$	31,894	$	2	0.02	%	$	26,637	$	1	0.02	%
Certificates of deposit	Certificates of deposit	911		13		1.90	%	993		15		2.06	%	Certificates of deposit	843		4		1.87	%	952		5		1.93	%
Total bank deposits	Total bank deposits	28,643		17		0.08	%	24,183		35		0.19	%	Total bank deposits	32,737		6		0.07	%	27,589		6		0.09	%
Brokerage client payables	Brokerage client payables	9,765		3		0.03	%	3,929		9		0.31	%	Brokerage client payables	14,300		1		0.03	%	7,324		1		0.06	%
Other borrowings	Other borrowings	863		14		2.20	%	893		15		2.23	%	Other borrowings	857		5		2.20	%	866		5		2.19	%
Senior notes payable	Senior notes payable	2,115		73		4.62	%	1,742		61		4.66	%	Senior notes payable	2,037		23		4.44	%	2,045		24		4.70	%
All other interest-bearing liabilities	All other interest-bearing liabilities	591		8		1.05	%	878		16		1.81	%	All other interest-bearing liabilities	650		2		1.16	%	574		2		1.14	%
Total interest-bearing liabilities	Total interest-bearing liabilities	$	41,977	$	115	0.36	%	$	31,625	$	136	0.56	%	Total interest-bearing liabilities	$	50,581	$	37	0.28	%	$	38,398	$	38	0.39	%
Net interest income	Net interest income			$	493					$	663			Net interest income			$	188					$	165
Firmwide net interest margin (net yield on interest-earning assets)	Firmwide net interest margin (net yield on interest-earning assets)					1.35	%					2.36	%	Firmwide net interest margin (net yield on interest-earning assets)					1.29	%					1.45	%
Raymond James Bank net interest margin	Raymond James Bank net interest margin					1.96	%					2.82	%	Raymond James Bank net interest margin					1.92	%					2.02	%

The yield on tax-exempt loans in the preceding table is presented on a taxable-equivalent basis utilizing the applicable federal statutory rates for each of the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020.

Net interest income increased $23 million, or 14%, compared with the prior-year quarter, as significant growth in average interest-earning assets outweighed the year-over-year decrease in net interest margin.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Nine months ended June 30,
2021 compared to 2020
Increase/(decrease) due to
$ in millions Volume Rate Total
Interest income:
Interest-earning assets:
Cash and cash equivalents $ 10 $ (38) $ (28)
Assets segregated pursuant to regulations 52 (66) (14)
Available-for-sale securities 69 (65) 4
Brokerage client receivables (3) (7) (10)
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans (11) (65) (76)
CRE loans 1 (21) (20)
REIT loans — (9) (9)
Tax-exempt loans 2 (2) —
Residential mortgage loans 5 (14) (9)
SBL and other 27 (36) (9)
Loans held for sale 1 (2) (1)
Total bank loans, net 25 (149) (124)
All other interest-earning assets (4) (15) (19)
Total interest-earning assets $ 149 $ (340) $ (191)
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts $ 4 $ (20) $ (16)
Certificates of deposit (1) (1) (2)
Total bank deposits 3 (21) (18)
Brokerage client payables 15 (21) (6)
Other borrowings — (1) (1)
Senior notes payable 13 (1) 12
All other interest-bearing liabilities (7) (1) (8)
Total interest-bearing liabilities $ 24 $ (45) $ (21)
Change in net interest income $ 125 $ (295) $ (170)


	Three months ended December 31,
	2021 compared to 2021
	Increase/(decrease) due to
$ in millions	Volume		Rate		Total
Interest income:
Interest-earning assets:
Cash and cash equivalents	$	—	$	(1)	$	(1)
Assets segregated for regulatory purposes and restricted cash	4		(3)		1
Available-for-sale securities	3		(4)		(1)
Brokerage client receivables	4		(1)		3
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	7		(3)		4
CRE loans	2		1		3
REIT loans	(1)		—		(1)
Tax-exempt loans	—		—		—
Residential mortgage loans	3		(1)		2
SBL and other	12		(2)		10
Loans held for sale	1		—		1
Total bank loans, net	24		(5)		19
All other interest-earning assets	2		(1)		1
Total interest-earning assets	$	37	$	(15)	$	22
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	1	$	—	$	1
Certificates of deposit	(1)		—		(1)
Total bank deposits	—		—		—
Brokerage client payables	1		(1)		—
Other borrowings	—		—		—
Senior notes payable	—		(1)		(1)
All other interest-bearing liabilities	—		—		—
Total interest-bearing liabilities	$	1	$	(2)	$	(1)
Change in net interest income	$	36	$	(13)	$	23

6249

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

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 ~~2020~~2021 Form 10-K.

Operating results


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Revenues:	Revenues:													Revenues:
Asset management and related administrative fees	Asset management and related administrative fees	$	1,050	$	715	47	%	$	2,914	$	2,330	25	%	Asset management and related administrative fees	$	1,162	$	885	31	%
Brokerage revenues:	Brokerage revenues:													Brokerage revenues:
Mutual and other fund products	Mutual and other fund products	167		131		27	%	498		438		14	%	Mutual and other fund products	171		148		16	%
Insurance and annuity products	Insurance and annuity products	113		88		28	%	320		288		11	%	Insurance and annuity products	111		98		13	%
Equities, ETFs and fixed income products	Equities, ETFs and fixed income products	110		100		10	%	338		324		4	%	Equities, ETFs and fixed income products	115		107		7	%
Total brokerage revenues	Total brokerage revenues	390		319		22	%	1,156		1,050		10	%	Total brokerage revenues	397		353		12	%
Account and service fees:	Account and service fees:													Account and service fees:
Mutual fund and annuity service fees	Mutual fund and annuity service fees	105		82		28	%	298		260		15	%	Mutual fund and annuity service fees	114		94		21	%
RJBDP fees:	RJBDP fees:													RJBDP fees:
Third-party banks	Third-party banks	18		20		(10)	%	58		129		(55)	%	Third-party banks	17		21		(19)	%
Raymond James Bank	Raymond James Bank	47		43		9	%	134		138		(3)	%	Raymond James Bank	50		43		16	%
Client account and other fees	Client account and other fees	39		32		22	%	113		96		18	%	Client account and other fees	49		32		53	%
Total account and service fees	Total account and service fees	209		177		18	%	603		623		(3)	%	Total account and service fees	230		190		21	%
Investment banking	Investment banking	11		7		57	%	33		29		14	%	Investment banking	13		6		117	%
Interest income	Interest income	31		31		—		91		125		(27)	%	Interest income	33		30		10	%
All other	All other	7		4		75	%	20		20		—		All other	7		5		40	%
Total revenues	Total revenues	1,698		1,253		36	%	4,817		4,177		15	%	Total revenues	1,842		1,469		25	%
Interest expense	Interest expense	(2)		(4)		(50)	%	(7)		(19)		(63)	%	Interest expense	(3)		(2)		50	%
Net revenues	Net revenues	1,696		1,249		36	%	4,810		4,158		16	%	Net revenues	1,839		1,467		25	%
Non-interest expenses:	Non-interest expenses:													Non-interest expenses:
Financial advisor compensation and benefits	Financial advisor compensation and benefits	1,082		783		38	%	3,053		2,555		19	%	Financial advisor compensation and benefits	1,187		931		27	%
Administrative compensation and benefits	Administrative compensation and benefits	251		235		7	%	760		727		5	%	Administrative compensation and benefits	283		249		14	%
Total compensation, commissions and benefits	Total compensation, commissions and benefits	1,333		1,018		31	%	3,813		3,282		16	%	Total compensation, commissions and benefits	1,470		1,180		25	%
Non-compensation expenses:	Non-compensation expenses:													Non-compensation expenses:
Communications and information processing	Communications and information processing	70		66		6	%	201		187		7	%	Communications and information processing	71		62		15	%
Occupancy and equipment	Occupancy and equipment	45		42		7	%	133		130		2	%	Occupancy and equipment	46		43		7	%
Business development	Business development	19		12		58	%	50		63		(21)	%	Business development	27		16		69	%
Professional fees	Professional fees	10		8		25	%	33		25		32	%	Professional fees	9		13		(31)	%
All other	All other	24		12		100	%	53		57		(7)	%	All other	21		13		62	%
Total non-compensation expenses	Total non-compensation expenses	168		140		20	%	470		462		2	%	Total non-compensation expenses	174		147		18	%
Total non-interest expenses	Total non-interest expenses	1,501		1,158		30	%	4,283		3,744		14	%	Total non-interest expenses	1,644		1,327		24	%
Pre-tax income	Pre-tax income	$	195	$	91	114	%	$	527	$	414	27	%	Pre-tax income	$	195	$	140	39	%

6350

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Selected key metrics

PCG client asset balances


		As of																	As of
$ in billions	$ in billions	June 30, 2021			March 31, 2021			September 30, 2020			June 30, 2020			March 31, 2020			September 30, 2019			$ in billions	December 31, 2021			September 30, 2021			December 31, 2020			September 30, 2020
Assets under administration (“AUA”)	Assets under administration (“AUA”)	$	1,102.9		$	1,028.1		$	883.3		$	833.1		$	734.0		$	798.4		Assets under administration (“AUA”)	$	1,199.8		$	1,115.4		$	974.2		$	883.3
Assets in fee-based accounts (1)	Assets in fee-based accounts (1)	$	616.7		$	567.6		$	475.3		$	443.0		$	383.5		$	409.1		Assets in fee-based accounts (1)	$	677.8		$	627.1		$	532.7		$	475.3
Percent of AUA in fee-based accounts	Percent of AUA in fee-based accounts	55.9		%	55.2		%	53.8		%	53.2		%	52.2		%	51.2		%	Percent of AUA in fee-based accounts	56.5		%	56.2		%	54.7		%	53.8		%

(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.”

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

The vast majority of the revenues we earn from fee-based accounts ~~are~~is recorded in “Asset management and related administrative fees” on our Condensed Consolidated Statements of Income and Comprehensive Income. Fees received from such accounts are based on the value of client assets in fee-based accounts and vary based on the specific account types in which the client invests and the level of assets in the client relationship. As fees for substantially all of such accounts are billed based on balances as of the beginning of the quarter, revenues from fee-based accounts may not be immediately affected by changes in asset values, but rather the impacts are seen in the following quarter. Assets in fee-based accounts in this segment increased 8% as of December 31, 2021 compared with September 30, 2021, which we expect will have a favorable impact on our related revenues in our fiscal second quarter of 2022, even after the offsetting effect of fewer days in the second quarter compared to the first quarter.

PCG ~~assets under administration~~AUA increased during the three months ended ~~June 30,~~December 31, 2021, primarily due to equity market appreciation as well as ~~net inflows~~strong retention and recruiting of ~~client assets.~~financial advisors. In addition, PCG assets in fee-based accounts continued to increase as a percentage of overall PCG ~~assets under administration~~AUA due to clients’ increased preference for fee-based alternatives versus transaction-based accounts. As a result of the ~~shift to~~continued increase in fee-based accounts ~~over the past several years,~~as a ~~larger~~percentage of total PCG AUA, a significant portion of our PCG revenues ~~are~~is more directly impacted by market movements.

Financial advisors


		June 30, 2021	March 31, 2021	September 30, 2020	June 30, 2020		December 31, 2021	September 30, 2021	December 31, 2020	September 30, 2020
Employees	Employees	3,423	3,375	3,404	3,379	Employees	3,447	3,461	3,387	3,404
Independent contractors	Independent contractors	4,990	4,952	4,835	4,776	Independent contractors	5,017	5,021	4,846	4,835
Total advisors	Total advisors	8,413	8,327	8,239	8,155	Total advisors	8,464	8,482	8,233	8,239

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

The number of financial advisors ~~increased~~as of December 31, 2021 decreased slightly compared ~~with the prior quarter and~~to September 30, ~~2020 due to strong recruiting of financial advisors~~2021 as new recruits and ~~new~~ trainees that were moved into production roles ~~partially offset~~were outpaced by the ~~impact~~number of financial advisors who left the firm, including planned retirements, where assets are generally retained at the ~~firm.~~firm pursuant to advisor succession plans. Advisor departures due to retirements or advisors choosing to leave the business are typically elevated during the December quarter compared to other quarters. The ~~growth in the~~ number of financial advisors included in our financial advisor metric has been negatively impacted over the past several quarters by the transfer of advisors who were previously affiliated with the firm as independent contractors or employees to our ~~RIA~~Registered Investment Advisor & Custody Services (“RCS”) division. Advisors in RCS are not included in ~~the~~our financial advisor ~~count,~~metric although their client assets, which were $101.6 billion as of December 31, 2021, are ~~still~~ included in ~~client assets under administration.~~PCG AUA. The recruiting pipeline remains ~~strong~~robust across our affiliation options despite ~~an increasingly~~a competitive recruiting environment.

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

~~Management’s Discussion and Analysis~~

Clients’ domestic cash sweep balances


		As of										As of
$ in millions	$ in millions	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020			$ in millions	December 31, 2021		September 30, 2021		December 31, 2020		September 30, 2020
RJBDP
RJBDP:													RJBDP:
Raymond James Bank	Raymond James Bank	$	29,253	$	28,174	$	26,697	$	25,599	$	24,101		Raymond James Bank	$	33,097	$	31,410	$	26,697	$	25,599
Third-party banks	Third-party banks	25,080		25,110		26,142		25,998		24,661			Third-party banks	24,316		24,496		26,142		25,998
Subtotal RJBDP	Subtotal RJBDP	54,333		53,284		52,839		51,597		48,762			Subtotal RJBDP	57,413		55,906		52,839		51,597
CIP	CIP	8,610		9,517		8,769		3,999		3,157			CIP	16,065		10,762		8,769		3,999
Total clients’ domestic cash sweep balances	Total clients’ domestic cash sweep balances	$	62,943	$	62,801	$	61,608	$	55,596	$	51,919		Total clients’ domestic cash sweep balances	$	73,478	$	66,668	$	61,608	$	55,596

Three months ended June 30, Nine months ended June 30,
2021 2020 2021 2020
Average yield on RJBDP - third-party banks 0.29 % 0.33 % 0.30 % 0.97 %


	Three months ended December 31,
	2021		2020
Average yield on RJBDP - third-party banks	0.28	%	0.31	%

A significant portion of our clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their accounts are swept into interest-bearing deposit accounts at Raymond James 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 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 average yield on RJBDP - third-party banks decreased slightly from the prior-year quarter, reflecting the impact of near-zero short-term interest rates and limited demand for deposits at third-party banks. If demand from third-party banks does not improve from current levels and short-term interest rates do not increase, we could continue to experience downward pressure on this yield or, in the case of an increase in short-term interest rates, may not experience a commensurate increase in this yield. The PCG segment also earns RJBDP servicing fees from the Raymond James Bank segment, which are based on the number of accounts that are swept to Raymond James Bank. The fees from the Raymond James Bank segment are eliminated in consolidation.

PCG segment results ~~are~~can be impacted by changes in the allocation of client cash balances inbetween RJBDP ~~between~~balances with Raymond James Bank, ~~and~~RJBDP balances with third-party ~~banks. PCG segment results are also impacted by changes in the allocation of cash balances between RJBDP~~banks, and CIP, as the ~~net yield to~~PCG segment typically earns different amounts from each of the ~~firm~~three client cash destinations, depending on cash balances in CIP (i.e., the spread between amounts earned on assets segregated for regulatory purposes and the interest paid to clients on CIP balances) is lower than the yield to the firm on RJBDP balances, on average.multiple factors.

Client cash balances ~~remained elevated~~continued to increase as of ~~June 30, 2021 compared to prior year~~December 31, 2021. The growing cash balances as a result of a number of factors, including the continuing economic uncertainty caused by the COVID-19 pandemic, as well as uncertainty related to the nature and timing of policy changes that may be put forth by the new federal government administration. The average yield on RJBDP - third-party banks decreased comparedcombined with ~~the prior-year periods due to a decline in short-term interest rates. We expect the average yield on RJBDP balances~~reduced capacity at third-party banks ~~to remain approximately 0.29%~~that participate in the RJBDP, resulted in a significant increase in cash balances held in CIP, also resulting in a significant increase in our assets segregated for ~~the remainder~~regulatory purposes balance presented on our Condensed Consolidated Statements of ~~our 2021 fiscal year; however, this projected yield could decline in fiscal 2022 if demand for deposits from third-party banks does not improve from current levels.~~Financial Condition.

~~Quarter~~Three months ended ~~June 30,~~December 31, 2021 compared with the ~~quarter~~three months ended ~~June 30,~~December 31, 2020

Net revenues of ~~$1.70~~$1.84 billion increased ~~$447~~$372 million, or ~~36%~~25%, and pre-tax income of $195 million increased ~~$104~~$55 million, or ~~114%~~39%.

Asset management and related administrative fees increased ~~$335~~$277 million, or ~~47%~~31%, primarily due to higher assets in fee-based accounts at the beginning of the ~~current~~current-year quarter. As assets in these accounts are billed primarily on balances as of the beginning of the quarter, the 9% increase in fee-based assets as of June 30, 2021 compared to March 31, 2021, should positively impact asset management fees in our fiscal fourth quarter of 2021.

Brokerage revenues increased $71 million, or 22%, due to higher trailing revenues from mutual and other fund products and annuity products, resulting from higher asset values in the current quarter, as well as higher transactional revenues.

Account and service fees increased $32 million, or 18%, primarily due to an increase in mutual fund service fees, primarily resulting from higher average mutual fund assets, as well as incremental client account and other fees resulting from our acquisition of NWPS at the end of our fiscal first quarter of 2021.

~~Compensation-related expenses increased $315 million, or 31%, primarily due to higher compensable net revenues.~~

6552

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

~~Non-compensation expenses increased $28 million, or 20%, in part due to increased recruiting costs and other business development expenses, including travel-related expenses.~~

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

~~Net revenues of $4.81 billion increased $652 million, or 16%, and pre-tax income of $527 million increased $113 million, or 27%.~~

Asset management and related administrative fees increased $584 million, or 25%, primarily due to higher assets in fee-based accounts at the beginning of each of the current-year quarterly billing periods compared with the prior-year quarterly billing periods.

Brokerage revenues increased ~~$106~~$44 million, or ~~10%~~12%, primarily due to higher trailing revenues from mutual and other fund products and annuity products, resulting from higher average asset values, as well as higher transactional revenues due to increased client activity.

Account and service fees ~~decreased $20~~increased $40 million, or 3%21%, primarily due to ~~a decline in RJBDP fees from third-party banks as a result of lower short-term interest rates. Partially offsetting this decrease was~~ an increase in mutual fund service fees resulting from higher average mutual fund assets, as well as incremental client account and other fees resulting from our acquisition of NWPS Holdings, Inc. at the end of our fiscal first quarter of 2021.

Net interest income decreased $22 million, or 21%, driven by a decline in interest income due to lower short-term interest rates applicable to both cash and segregated asset balances, which more than offset the impact of higher segregated asset balances. Our CIP balances increased significantly compared with the prior-year period resulting in the increase in segregated assets, and a majority of the increase was held in segregated short-term U.S. Treasury securities at very low interest rates. Partially offsetting the impact of a decrease in interest income, interest expense also decreased, despite the significant increase in client cash balances in our CIP, due to the impact of lower deposit rates paid on these balances.

Compensation-related expenses increased ~~$531~~$290 million, or ~~16%~~25%, primarily due to higher ~~compensable net revenues.~~revenues and continued improvement in financial performance, as well as an increase in compensation costs to support our growth.

Non-compensation expenses increased $8$27 million, or 2%18%, largely due to increases in travel and event-related expenses compared with the low levels incurred in the prior-year quarter, as well as higher communications and information processing expenses ~~partially offset by lower business development expenses~~primarily due to ~~limited travel and event-related expenses during the COVID-19 pandemic.~~

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

~~Management’s Discussion and Analysis~~

ongoing enhancements of our technology platforms.

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 ~~2020~~2021 Form 10-K.

Operating results


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Revenues:	Revenues:													Revenues:
Brokerage revenues:	Brokerage revenues:													Brokerage revenues:
Fixed income	Fixed income	$	124	$	125	(1)	%	$	397	$	296	34	%	Fixed income	$	120	$	131	(8)	%
Equity	Equity	36		41		(12)	%	112		115		(3)	%	Equity	39		42		(7)	%
Total brokerage revenues	Total brokerage revenues	160		166		(4)	%	509		411		24	%	Total brokerage revenues	159		173		(8)	%
Investment banking:	Investment banking:													Investment banking:
Merger & acquisition and advisory	Merger & acquisition and advisory	153		60		155	%	424		192		121	%	Merger & acquisition and advisory	271		149		82	%
Equity underwriting	Equity underwriting	69		35		97	%	196		117		68	%	Equity underwriting	97		60		62	%
Debt underwriting	Debt underwriting	43		37		16	%	126		90		40	%	Debt underwriting	44		46		(4)	%
Total investment banking	Total investment banking	265		132		101	%	746		399		87	%	Total investment banking	412		255		62	%
Interest income	Interest income	4		4		—		12		22		(45)	%	Interest income	5		3		67	%
Tax credit fund revenues	Tax credit fund revenues	17		20		(15)	%	57		50		14	%	Tax credit fund revenues	35		16		119	%
All other	All other	3		3		—		14		13		8	%	All other	5		7		(29)	%
Total revenues	Total revenues	449		325		38	%	1,338		895		49	%	Total revenues	616		454		36	%
Interest expense	Interest expense	(3)		(2)		50	%	(7)		(14)		(50)	%	Interest expense	(2)		(2)		—	%
Net revenues	Net revenues	446		323		38	%	1,331		881		51	%	Net revenues	614		452		36	%
Non-interest expenses:	Non-interest expenses:													Non-interest expenses:
Compensation, commissions and benefits	Compensation, commissions and benefits	256		195		31	%	767		545		41	%	Compensation, commissions and benefits	331		252		31	%
Non-compensation expenses:	Non-compensation expenses:													Non-compensation expenses:
Communications and information processing	Communications and information processing	22		19		16	%	61		58		5	%	Communications and information processing	22		19		16	%
Occupancy and equipment	Occupancy and equipment	9		9		—		27		27		—		Occupancy and equipment	9		9		—	%
Business development	Business development	8		7		14	%	23		38		(39)	%	Business development	8		9		(11)	%
Professional fees	Professional fees	12		12		—		38		35		9	%	Professional fees	14		13		8	%
Acquisition-related expenses	Acquisition-related expenses	3		—		NM		3		—		NM		Acquisition-related expenses	4		—		NM
All other	All other	21		19		11	%	63		59		7	%	All other	25		21		19	%
Total non-compensation expenses	Total non-compensation expenses	75		66		14	%	215		217		(1)	%	Total non-compensation expenses	82		71		15	%
Total non-interest expenses	Total non-interest expenses	331		261		27	%	982		762		29	%	Total non-interest expenses	413		323		28	%
Pre-tax income	Pre-tax income	$	115	$	62	85	%	$	349	$	119	193	%	Pre-tax income	$	201	$	129	56	%

~~Quarter ended June 30, 2021 compared with the quarter ended June 30, 2020~~

~~Net revenues of $446 million increased $123 million, or 38%, and pre-tax income of $115 million increased $53 million, or 85%.~~

Brokerage revenues decreased $6 million, or 4%, primarily due to a decrease in equity brokerage revenues, as uncertainty related to the onset of the COVID-19 pandemic drove high levels of client activity in the prior-year quarter. Similarly, fixed income brokerage revenues continued to be strong but were slightly lower than the prior-year quarter.

Investment banking revenues increased $133 million, or 101%, compared with the prior-year quarter, due to a combination of strong results in the current quarter, and a prior-year quarter which had been negatively impacted by a slowdown in activity during the onset of the COVID-19 pandemic. Merger & acquisition and advisory revenues increased significantly compared with the prior-year quarter, due to an increase in both the number and size of transactions, and reflected strong activity in both the U.S. and U.K. Equity underwriting revenues increased significantly, primarily due to higher levels of client activity and larger transactions in the current quarter. Debt underwriting revenues also increased, due to higher revenues from corporate underwritings, partially offset by lower revenues from public finance and asset-backed transactions. In addition to the strong results during the quarter, our investment banking pipelines remain strong and, in part, reflect the investments we have made

6753

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Three months ended December 31, 2021 compared with the three months ended December 31, 2020

Net revenues of $614 million increased $162 million, or 36%, and pre-tax income of $201 million increased $72 million, or 56%.

Investment banking revenues increased $157 million, or 62%, due to a significant increase in merger & acquisition and advisory revenues and, to a lesser extent, equity underwriting revenues. The significant increase in merger & acquisition and advisory revenues reflected an increase in the number of transactions due to continued high levels of client activity, as well as an increase in the average fee per transaction. The increase in equity underwriting was primarily due to higher revenues from private placements. In addition to our strong results during the quarter, our investment banking pipeline remains strong going into our fiscal second quarter and, in part, reflect the investments we have made over the past several years, ~~which has positioned us to enhance~~including our ~~services to our clients. The most recent example of such investments is our acquisition~~fiscal 2021 acquisitions of Financo and Cebile.

Brokerage revenues decreased $14 million, or 8%, primarily due to a decrease in fixed income brokerage revenues, which ~~closed at~~remained solid but were lower than the ~~end~~prior-year quarter as a result of a decline in client activity levels compared with a strong prior-year quarter. While inherently difficult to predict, we expect fixed income brokerage revenues to remain solid in our fiscal second quarter ~~of 2021.~~driven in large part by expected continued demand from depository clients.

Compensation-related expenses increased ~~$61~~$79 million, or 31%, primarily due to the increase in revenues.

Non-compensation expenses increased $9$11 million, or ~~14%~~15%, and included $3$4 million of acquisition-related expenses, comprised of the amortization ~~expense related to~~of intangible assets with short useful lives which arose ~~in our acquisition of Financo.~~

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

~~Net revenues of $1.33 billion increased $450 million, or 51%, and pre-tax income of $349 million increased $230 million, or 193%.~~

Brokerage revenues increased $98 million, or 24%, due to a significant increase in fixed income brokerage revenues as a result of an increase in client activity levels throughout the current-year period. The significant increase in client activity levels, particularly with depository clients, began toward the end of our fiscal second quarter of fiscal 2020.

Investment banking revenues increased $347 million, or 87%, due to a significant increase in merger & acquisition and advisory revenues and underwriting revenues. The significant increase in merger & acquisition and advisory revenues reflected larger individual transactions and an increase in the number of transactions, as the current-year period reflected high levels of client activity, while the prior-year period was impacted by low levels of client activity during the onset of the pandemic. Equity underwriting revenues also increased significantly, primarily due to an increase in market activity in both the U.S. and Canada. An increase in debt underwriting primarily reflected higher revenues from ~~corporate and asset-backed underwritings, partially offset by lower revenues from public finance transactions.~~

~~Compensation-related expenses increased $222 million, or 41%, primarily due to the increase in net revenues.~~

Non-compensation expenses decreased $2 million, or 1%, primarily due to lower travel and event-related expenses as a result of the COVID-19 pandemic, partially offset by smaller increases across various expense categories, including the aforementioned acquisition-related expenses associated with the Financo ~~acquisition.~~

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

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

Cebile acquisitions.

RESULTS OF OPERATIONS – 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 ~~2020~~2021 Form 10-K.

Operating results


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Revenues:	Revenues:													Revenues:
Asset management and related administrative fees:	Asset management and related administrative fees:													Asset management and related administrative fees:
Managed programs	Managed programs	$	148	$	109	36	%	$	414	$	358	16	%	Managed programs	$	151	$	129	17	%
Administration and other	Administration and other	70		48		46	%	193		152		27	%	Administration and other	76		59		29	%
Total asset management and related administrative fees	Total asset management and related administrative fees	218		157		39	%	607		510		19	%	Total asset management and related administrative fees	227		188		21	%
Account and service fees	Account and service fees	4		3		33	%	13		12		8	%	Account and service fees	6		4		50	%
All other	All other	3		3		—		9		9		—		All other	3		3		—	%
Net revenues	Net revenues	225		163		38	%	629		531		18	%	Net revenues	236		195		21	%
Non-interest expenses:	Non-interest expenses:													Non-interest expenses:
Compensation, commissions and benefits	Compensation, commissions and benefits	43		44		(2)	%	138		134		3	%	Compensation, commissions and benefits	46		45		2	%
Non-compensation expenses:	Non-compensation expenses:													Non-compensation expenses:
Communications and information processing	Communications and information processing	12		10		20	%	35		33		6	%	Communications and information processing	12		11		9	%
Investment sub-advisory fees	Investment sub-advisory fees	33		23		43	%	91		74		23	%	Investment sub-advisory fees	37		28		32	%
All other	All other	32		26		23	%	90		84		7	%	All other	34		28		21	%
Total non-compensation expenses	Total non-compensation expenses	77		59		31	%	216		191		13	%	Total non-compensation expenses	83		67		24	%
Total non-interest expenses	Total non-interest expenses	120		103		17	%	354		325		9	%	Total non-interest expenses	129		112		15	%
Pre-tax income	Pre-tax income	$	105	$	60	75	%	$	275	$	206	33	%	Pre-tax income	$	107	$	83	29	%

Selected key metrics

Managed programs

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 is invested in programs overseen by our Asset Management segment (included in the “AMS” line of the following table),

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

as well as retail accounts managed on behalf of third-party institutions, institutional accounts and proprietary mutual funds that we manage (collectively included in the “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 AUM in AMS are impacted by market fluctuations and net inflows or outflows of assets, ~~as well as~~including transfers between fee-based accounts and 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 and our proprietary mutual funds are recorded entirely in the Asset Management segment. Our AUM in Carillon Tower Advisers are impacted by market and investment performance and net inflows or outflows of assets.

Fees for our managed programs are generally collected quarterly. Approximately 65% of these fees are based on balances as of the beginning of the quarter, approximately 10% are based on balances as of the end of the quarter, and approximately 25% are based on average daily balances throughout the quarter.

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

~~Management’s Discussion and Analysis~~

Financial assets under management


$ in billions	$ in billions	June 30, 2021		March 31, 2021		September 30, 2020		June 30, 2020		March 31, 2020		September 30, 2019		$ in billions	December 31, 2021		September 30, 2021		December 31, 2020		September 30, 2020
AMS (1)	AMS (1)	$	131.8	$	121.2	$	102.2	$	96.0	$	84.0	$	91.8	AMS (1)	$	145.0	$	134.4	$	113.9	$	102.2
Carillon Tower Advisers	Carillon Tower Advisers	69.2		66.6		59.5		57.5		51.7		58.5		Carillon Tower Advisers	68.9		67.8		64.9		59.5
Subtotal financial assets under management	Subtotal financial assets under management	201.0		187.8		161.7		153.5		135.7		150.3		Subtotal financial assets under management	213.9		202.2		178.8		161.7
Less: Assets managed for affiliated entities	Less: Assets managed for affiliated entities	(10.0)		(9.6)		(8.6)		(8.1)		(7.5)		(7.2)		Less: Assets managed for affiliated entities	(10.7)		(10.3)		(9.2)		(8.6)
Total financial assets under management	Total financial assets under management	$	191.0	$	178.2	$	153.1	$	145.4	$	128.2	$	143.1	Total financial assets under management	$	203.2	$	191.9	$	169.6	$	153.1

(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.

Activity (including activity in assets managed for affiliated entities)


	Three months ended December 31,
$ in billions	2021		2020
Financial assets under management at beginning of period	$	202.2	$	161.7
Carillon Tower Advisers - net outflows	(0.4)		(0.3)
AMS - net inflows	3.5		1.7
Net market appreciation in asset values	8.6		15.7
Financial assets under management at end of period	$	213.9	$	178.8

AMS

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.

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

Three months ended June 30, Nine months ended June 30,
$ in billions 2021 2020 2021 2020
Financial assets under management at beginning of period $ 187.8 $ 135.7 $ 161.7 $ 150.3
Carillon Tower Advisers - net inflows/(outflows) (0.3) (2.0) 0.8 (4.4)
AMS - net inflows 4.5 1.5 9.8 4.8
Net market appreciation in asset values 9.0 18.3 28.7 2.8
Financial assets under management at end of period $ 201.0 $ 153.5 $ 201.0 $ 153.5

Carillon Tower Advisers

Assets managed by Carillon Tower Advisers include assets managed by its subsidiaries and affiliates: Eagle Asset Management, Scout Investments, Reams Asset Management (a division of Scout Investments), ClariVest Asset Management and Cougar Global Investments. The following table presents Carillon Tower Advisers’ AUM by objective, excluding assets for which it does not exercise discretion, as well as the approximate average client fee rate earned on such ~~assets for the period presented.~~assets.


$ in billions	$ in billions	June 30, 2021		Average fee rate for the three months ended June 30, 2021		$ in billions	December 31, 2021		Average fee rate
Equity	Equity	$	31.6	0.52	%	Equity	$	30.3	0.52	%
Fixed income	Fixed income	31.6		0.18	%	Fixed income	30.9		0.18	%
Balanced	Balanced	6.0		0.35	%	Balanced	7.7		0.35	%
Total financial assets under management	Total financial assets under management	$	69.2	0.35	%	Total financial assets under management	$	68.9	0.35	%

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Non-discretionary asset-based programs

The following 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). The vast majority of these assets are also included in 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”).


$ in billions	December 31, 2021		September 30, 2021		December 31, 2020		September 30, 2020
Total assets	$	392.4	$	365.3	$	313.5	$	280.6

The increase in assets as of December 31, 2021 compared to September 30, 2021 was primarily due to equity market appreciation and continued growth in the PCG segment. Administrative fees associated with these programs are predominantly based on balances at the beginning of the quarter.

$ in billions June 30,
2021 March 31,
2021 September 30,
2020 June 30,
2020 March 31,
2020 September 30,
2019
Total assets $ 361.5 $ 334.2 $ 280.6 $ 253.7 $ 217.3 $ 229.7

RJ Trust

The following table includes assets held in asset-based programs in RJ Trust (including those managed for affiliated entities).


$ in billions	$ in billions	June 30, 2021		March 31, 2021		September 30, 2020		June 30, 2020		March 31, 2020		September 30, 2019		$ in billions	December 31, 2021		September 30, 2021		December 31, 2020		September 30, 2020
Total assets	Total assets	$	8.1	$	7.8	$	7.1	$	7.1	$	6.4	$	6.6	Total assets	$	8.8	$	8.1	$	7.6	$	7.1

Three months ended December 31, 2021 compared with the three months ended December 31, 2020

Net revenues of $236 million increased $41 million, or 21%, and pre-tax income of $107 million increased $24 million, or 29%.

Asset management and related administrative fees increased $39 million, or 21%, driven by higher AUM and higher assets in non-discretionary asset-based programs. The increase in AUM resulted from both equity market appreciation and net inflows at AMS, partially offset by net outflows at Carillon Tower Advisers, which continued to be negatively impacted by the industry shift from actively managed investment strategies to passive investment strategies. Beginning October 1, 2021, AMS has received a lower portion of the client fee on certain managed fee-based products offered to PCG clients through AMS. These changes resulted in a $9 million reduction in asset management and related administrative fees in the Asset Management segment and an approximately $7 million reduction in firmwide pre-tax income during the quarter.

Compensation expenses increased $1 million, or 2%, and included the impact of higher net revenues. Non-compensation expenses increased $16 million, or 24%, largely due to higher investment sub-advisory fees, which resulted from the increase in AUM in sub-advised programs, and an increase in platform fees.

7056

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

~~Quarter ended June 30, 2021 compared with the quarter ended June 30, 2020~~

~~Net revenues of $225 million increased $62 million, or 38%, and pre-tax income of $105 million increased $45 million, or 75%.~~

~~Asset management and related administrative fees increased $61 million, or 39%, driven by higher AUM and higher assets in non-discretionary asset-based programs.~~

Compensation expenses decreased $1 million, or 2%, and non-compensation expenses increased $18 million, or 31%. The increase in non-compensation expenses was primarily due to investment sub-advisory fees, which resulted from the increase in AUM in sub-advised programs.

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

~~Net revenues of $629 million increased $98 million, or 18%, and pre-tax income of $275 million increased $69 million, or 33%.~~

Asset management and related administrative fees increased $97 million, or 19%, driven by higher AUM and higher assets in non-discretionary asset-based programs, resulting from both equity market appreciation and net inflows. Carillon Tower Advisers generated net inflows during the current-year period, despite the structural headwinds for active asset managers resulting from the industry shift from actively managed investment strategies to passive investment strategies.

Compensation expenses increased $4 million, or 3%, and included the impact of higher net revenues. Non-compensation expenses increased $25 million, or 13%, largely due to investment sub-advisory fees which resulted from the increase in AUM in sub-advised programs.

RESULTS OF OPERATIONS – RAYMOND JAMES BANK

For an overview of our Raymond James Bank segment operations, as well as a description of the key factors impacting our Raymond James Bank segment 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 ~~2020~~2021 Form 10-K.

Operating results


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Revenues:	Revenues:													Revenues:
Interest income	Interest income	$	172	$	181	(5)	%	$	505	$	635	(20)	%	Interest income	$	187	$	168	11	%
Interest expense	Interest expense	(11)		(12)		(8)	%	(32)		(51)		(37)	%	Interest expense	(10)		(11)		(9)	%
Net interest income	Net interest income	161		169		(5)	%	473		584		(19)	%	Net interest income	177		157		13	%
All other	All other	8		9		(11)	%	23		20		15	%	All other	6		10		(40)	%
Net revenues	Net revenues	169		178		(5)	%	496		604		(18)	%	Net revenues	183		167		10	%
Non-interest expenses:	Non-interest expenses:													Non-interest expenses:
Compensation and benefits	Compensation and benefits	13		13		—		38		38		—		Compensation and benefits	13		12		8	%
Non-compensation expenses:	Non-compensation expenses:													Non-compensation expenses:
Bank loan provision/(benefit) for credit losses	Bank loan provision/(benefit) for credit losses	(19)		81		NM		(37)		188		NM		Bank loan provision/(benefit) for credit losses	(11)		14		NM
RJBDP fees to PCG	RJBDP fees to PCG	47		43		9	%	134		138		(3)	%	RJBDP fees to PCG	50		43		16	%
All other	All other	24		27		(11)	%	75		77		(3)	%	All other	29		27		7	%
Total non-compensation expenses	Total non-compensation expenses	52		151		(66)	%	172		403		(57)	%	Total non-compensation expenses	68		84		(19)	%
Total non-interest expenses	Total non-interest expenses	65		164		(60)	%	210		441		(52)	%	Total non-interest expenses	81		96		(16)	%
Pre-tax income	Pre-tax income	$	104	$	14	643	%	$	286	$	163	75	%	Pre-tax income	$	102	$	71	44	%

~~Quarter~~Three months ended ~~June 30,~~December 31, 2021 compared with the ~~quarter~~three months ended ~~June 30,~~December 31, 2020

Net revenues of ~~$169~~$183 million ~~decreased $9~~increased $16 million, or 5%10%, and pre-tax income of ~~$104~~$102 million increased ~~$90~~$31 million, or ~~643%~~44%.

Net interest income ~~decreased $8~~increased $20 million, or 5%13%, as the negative impacts from lower average LIBOR and a shift in the composition of interest-earning assets compared with the prior-year quarter more than offset the impact of higher average interest-earning assets. The net interest margin decreased to 1.92% from 2.29% for the prior-year quarter, primarily due to ~~the decline in average LIBOR, as well as a higher concentration of agency-backed available-for-sale securities, which have a lower~~

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

~~Management’s Discussion and Analysis~~

yield on average than loans. Based on current rates, as well as the elevated prepayment of higher-yielding securities and mortgages, we project our net interest margin to decline to approximately 1.90% for our fiscal fourth quarter of 2021.

The bank loan benefit for credit losses was $19 million in the current quarter, which was calculated under the CECL model, compared with an $81 million provision in the prior-year quarter, which was calculated under the incurred loss model. The current quarter benefit reflected an improved economic forecast, as well as improved credit ratings within our corporate loan portfolio. The provision for credit losses in the prior-year quarter reflected the rapid and widespread economic deterioration and uncertainty at the onset of the COVID-19 pandemic.

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

~~Net revenues of $496 million decreased $108 million, or 18%, and pre-tax income of $286 million increased $123 million, or 75%.~~

~~Net interest income decreased $111 million, or 19%, as the negative impact from lower short-term interest rates more than offset the impact of~~ higher average interest-earning assets. The increase in average interest-earning assets was primarily driven by significant growth in ~~the available-for-sale securities portfolio and~~ securities-based loans and residential mortgages to PCG ~~clients.~~clients, as well as increases in average corporate loans and available-for-sale securities. The net interest margin decreased to ~~1.96%~~1.92% from ~~2.82%~~2.02% for the prior-year ~~period,~~quarter, primarily due to ~~the significant decline in~~lower short-term interest rates, as well as a higher ~~concentration~~balances of agency-backed available-for-sale securities, which on average have a lower yield than loans. Absent any changes in short-term interest rates during the period, we expect the net interest margin for our fiscal second quarter of 2022 to remain relatively flat to the fiscal first quarter; however we expect net interest income to be positively impacted by the growth in loans. Given that a significant portion of our interest-earning assets are sensitive to changes in market interest rates, our net interest earnings should be favorably impacted by any increase in short-term interest rates.

~~We had a~~The bank loan benefit for credit losses ~~of $37~~was $11 million ~~which was calculated under~~for the ~~CECL model,~~current quarter, compared with a ~~$188~~provision for credit losses of $14 million ~~provision in~~for the prior-year ~~period, which was calculated under the incurred loss model.~~quarter. The current ~~period~~quarter benefit was largely attributable to ~~improved economic forecasts utilized~~improvement in credit quality in the C&I bank loan portfolio and continued improvement in macroeconomic inputs to our CECL model, ~~since our October 1, 2020 adoption date, including improved outlooks on unemployment and gross domestic product,~~ which ~~favorably impact~~positively impacted most ~~of our~~ loan portfolios, ~~as well as improved credit ratings within our corporate loan portfolio. The provision~~partially offset by provisions for credit losses related to loan growth.

RJBDP fees to PCG increased $7 million, or 16%, due to an increase in the ~~prior-year period reflected the rapid and widespread economic deterioration and uncertainty caused by the onset~~number of accounts swept to Raymond James Bank as part of the ~~COVID-19 pandemic.~~RJBDP. These fees are eliminated in consolidation.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

RESULTS OF OPERATIONS – OTHER

This segment includes our private equity investments, interest income on certain corporate cash balances, certain acquisition-related expenses, and certain corporate overhead costs of RJF that are not allocated to other segments, including the interest costs on our public ~~debt and any losses on extinguishment of such~~ debt. For an overview of our Other segment 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 ~~2020~~2021 Form 10-K.

Operating results


		Three months ended June 30,						Nine months ended June 30,							Three months ended December 31,
$ in millions	$ in millions	2021		2020		% change		2021		2020		% change		$ in millions	2021		2020		% change
Revenues:	Revenues:													Revenues:
Interest income	Interest income	$	—	$	3	(100)	%	$	6	$	27	(78)	%	Interest income	$	1	$	3	(67)	%
Gains/(losses) on private equity investments		24		1		2,300	%	56		(40)		NM
Gains on private equity investments														Gains on private equity investments	5		24		(79)	%
All other	All other	4		2		100	%	7		4		75	%	All other	2		1		100	%
Total revenues	Total revenues	28		6		367	%	69		(9)		NM		Total revenues	8		28		(71)	%
Interest expense	Interest expense	(26)		(26)		—		(75)		(63)		19	%	Interest expense	(23)		(24)		(4)	%
Net revenues	Net revenues	2		(20)		NM		(6)		(72)		92	%	Net revenues	(15)		4		NM
Non-interest expenses:	Non-interest expenses:													Non-interest expenses:
Compensation and all other	Compensation and all other	34		9		278	%	96		34		182	%	Compensation and all other	30		26		15	%
Losses on extinguishment of debt		98		—		NM		98		—		NM

Acquisition-related expenses	Acquisition-related expenses	4		—		NM		6		—		NM		Acquisition-related expenses	2		2		—	%
Total non-interest expenses	Total non-interest expenses	136		9		1,411	%	200		34		488	%	Total non-interest expenses	32		28		14	%
Pre-tax loss	Pre-tax loss	$	(134)	$	(29)	(362)	%	$	(206)	$	(106)	(94)	%	Pre-tax loss	$	(47)	$	(24)	(96)	%

~~Quarter~~Three months ended ~~June 30,~~December 31, 2021 compared with the ~~quarter~~three months ended ~~June 30,~~December 31, 2020

The pre-tax loss of ~~$134~~$47 million was ~~$105~~$23 million larger than the loss in the prior-year quarter.

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

~~Management’s Discussion and Analysis~~

Net revenues ~~increased $22~~decreased $19 million, asprimarily due to a decrease in private equity valuation gains compared with the prior-year quarter. The current quarter included $5 million of private equity valuation gains, of which $1 million was attributable to noncontrolling interests and was offset within other expenses. The prior-year quarter included $24 million of private equity valuation gains, of which $10 million were attributable to noncontrolling interests and were offset within other expenses, compared with $1 million of gains in the prior-year quarter. The current quarter valuation gains primarily reflected the impact of continued improvement in market conditions and an improved outlook for certain of our investments.expenses.

Non-interest expenses increased ~~$127~~$4 million, or 14%, primarily due to ~~losses on~~increases in compensation and benefit expenses, primarily resulting from the ~~extinguishment~~continued improvement in the financial performance of ~~debt of $98 million (see Note 14 for further information), as well as~~our businesses, partially offset by the aforementioned ~~$10 million offset of~~decrease in private equity ~~valuation losses~~gains attributable to noncontrolling ~~interests in the current quarter.~~interests. The $4$2 million of acquisition-related expenses in the current quarter primarily included professional ~~expenses~~fees associated with our ~~acquisitions~~acquisition of ~~Cebile Capital, which was announced in our fiscal third quarter of 2021, and~~ Charles Stanley ~~which was~~and our announced ~~in July 2021.~~acquisition of TriState Capital.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

~~Nine months ended June 30, 2021 compared with the nine months ended June 30, 2020~~

~~The pre-tax loss of $206 million was $100 million larger than the loss in the prior-year period.~~

Net revenues increased $66 million, primarily due to private equity valuation gains in the current period, compared with losses in the prior-year period, which reflected the impact of challenging market conditions at the onset of the COVID-19 pandemic. The current period included $56 million of private equity valuation gains, of which $20 million were attributable to noncontrolling interests and were offset within other expenses. These valuation gains were primarily the result of continued improvement in market conditions and an improved outlook for certain of our investments. The prior-year period included $40 million of private equity valuation losses, of which $23 million were attributable to noncontrolling interests and were offset within other expenses. Interest income earned on corporate cash balances decreased compared with the prior-year period due to lower short-term interest rates, partially offset by the impact of higher average balances, and interest expense increased primarily as a result of the issuance of $500 million of senior notes in March 2020.

Non-interest expenses increased $166 million, or 488%, primarily due to the aforementioned losses on extinguishment of debt of $98 million, as well as the aforementioned $20 million in gains attributable to noncontrolling interests, compared with $23 million in losses in the prior-year period. The $6 million of acquisition-related expenses in the current year primarily included professional and integration expenses associated with our acquisitions of NWPS and Financo during fiscal 2021, as well as our announced acquisitions of Cebile Capital and Charles Stanley.

CERTAIN STATISTICAL DISCLOSURES BY BANK HOLDING COMPANIES

We are required to provide certain statistical disclosures as a bank holding 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,			Three months ended December 31,
		2021	2020	2021	2020		2021	2020
Return on assets	Return on assets	2.2%	1.5%	2.4%	1.9%	Return on assets	2.7%	2.5%
Return on equity	Return on equity	15.9%	10.0%	17.4%	11.9%	Return on equity	21.2%	17.2%
Average equity to average assets	Average equity to average assets	13.6%	14.6%	14.0%	15.7%	Average equity to average assets	12.9%	14.3%
Dividend payout ratio	Dividend payout ratio	17.9%	30.1%	16.9%	25.6%	Dividend payout ratio	16.2%	17.5%

Return on assets is computed by dividing annualized net income 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 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 for the period indicated by average equity for each respective period. Average equity ~~for the quarter~~ is computed by adding 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 period is computed by adding 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 for the period.

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

~~Management’s Discussion and Analysis~~

Refer to the “Net interest analysis” and “Risk management - Credit risk” sections of this MD&A and to the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for the other required disclosures.

~~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, cash flow, risk, and 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, collateralized financing arrangements or additional capital raising activities under our “universal” shelf registration statement.

Cash and cash equivalents increased $592 million during the nine months ended June 30, 2021 to $5.98 billion. During the nine months ended June 30, 2021, cash provided by our operations (including significant net income) and proceeds from our $750 million of 3.75% senior notes offering (net of debt issuance costs), were offset by cash used for the early-redemption of $750 million of our pre-existing senior notes and the related make-whole premiums, dividend payments, share repurchases, and investments in future growth with our acquisitions of NWPS and Financo. We also had significant increases in client cash balances, which increased both our brokerage client payables and our bank deposits. However, this cash was largely used to increase our assets segregated pursuant to regulations, primarily through the purchase of U.S. Treasuries, as part of our brokerage activities, and to increase our bank loan portfolio and available-for-sale securities as part of our banking activities.

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.

~~Sources of liquidity~~

Approximately $1.6 billion of our total June 30, 2021 cash and cash equivalents included cash held directly at the parent, or parent cash loaned to RJ&A. As of June 30, 2021, RJF had loaned $1.09 billion to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities. The following table presents our holdings of cash and cash equivalents.


~~$ in millions~~	~~June 30, 2021~~
~~RJF~~	$	~~480~~
~~RJ&A~~	~~2,262~~
~~Raymond James Bank~~	~~1,847~~
~~RJ Ltd.~~	~~869~~
~~RJFS~~	~~123~~
~~Carillon Tower Advisers~~	82
~~Other subsidiaries~~	~~319~~
~~Total cash and cash equivalents~~	$	~~5,982~~

RJF maintained depository accounts at Raymond James Bank with a balance of $185 million as of June 30, 2021. The portion of this total that was available on demand without restrictions, which amounted to $108 million as of June 30, 2021, is reflected in the RJF total (and is excluded from the Raymond James Bank cash balance in the preceding table).

~~A large portion of the RJ Ltd. cash and cash equivalents balance as of June 30, 2021 was held to meet regulatory requirements and was not available for use by the parent.~~

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

~~Management’s Discussion and Analysis~~

~~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.~~

~~Liquidity available from subsidiaries~~

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

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”), RJ&A is subject to FINRA’s capital requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1 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 items arising from client transactions. In addition, covenants in RJ&A’s committed financing facilities require its net capital to be a minimum of 10% of aggregate debit items. At June 30, 2021, RJ&A exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances. 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 satisfy certain Internal Revenue Service regulations in order to accept new IRAs and qualified plans and retain the accounts for which it serves as nonbank custodian. With growth in the value of client assets in such accounts, the capital of RJ&A may need to grow to continue to satisfy this requirement. As a result, RJ&A may limit dividends it would otherwise remit to RJF. We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of liquidity available to RJF from RJ&A.

Raymond James Bank may pay dividends to RJF without prior approval of its regulator as long as the dividends do not exceed the sum of Raymond James Bank’s current calendar year and the previous two calendar years’ retained net income, and Raymond James Bank maintains its targeted regulatory capital ratios. Dividends from Raymond James Bank may be limited to the extent that capital is needed to support its balance sheet growth.

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 consist of a tri-party repurchase agreement (i.e., securities sold under agreements to repurchase) and, in the case of the $500 million revolving credit facility agreement (the “Credit Facility”), an unsecured line of credit. The required market value of the collateral associated with the tri-party repurchase agreement ranges from 105% to 125% of the amount financed.

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, and the outstanding balances related thereto.

June 30, 2021
$ in millions RJ&A RJF Total Total number of arrangements
Financing arrangement:
Committed secured $ 100 $ — $ 100 1
Committed unsecured 200 300 500 1
Total committed financing arrangements $ 300 $ 300 $ 600 2
Outstanding borrowing amount:
Committed secured $ — $ — $ —
Committed unsecured — — —
Total outstanding borrowing amount $ — $ — $ —

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

~~Management’s Discussion and Analysis~~

Our committed unsecured financing arrangement in the preceding table represents our Credit Facility, which 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 14 of the Notes to Consolidated Financial Statements of our 2020 Form 10-K. In April 2021, we amended our Credit Facility, maintaining the $500 million maximum borrowing amount, but extending the term through April 2026 and incorporating a lower cost of borrowing under the facility and certain favorable covenant modifications.

~~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 and are generally collateralized by RJ&A-owned securities or by securities that we have received as collateral under reverse repurchase agreements. As of June 30, 2021, we had outstanding borrowings under three uncommitted secured borrowing arrangements out of a total of 11 uncommitted financing arrangements (seven uncommitted secured and 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 the form of repurchase agreements in RJ&A and were included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition.

~~$ in millions~~

~~June 30, 2021~~

~~Outstanding borrowing amount:~~

~~Uncommitted secured~~

~~185~~

~~Uncommitted unsecured~~

—

~~Total outstanding borrowing amount~~

~~185~~

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 are 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, 2021 $ 194 $ 185 $ 185 $ 283 $ 339 $ 289
March 31, 2021 $ 226 $ 260 $ 222 $ 242 $ 280 $ 224
December 31, 2020 $ 211 $ 236 $ 233 $ 204 $ 259 $ 162
September 30, 2020 $ 140 $ 165 $ 165 $ 199 $ 260 $ 207
June 30, 2020 $ 222 $ 278 $ 228 $ 168 $ 193 $ 193

~~Other borrowings and collateralized financings~~

We had $850 million in FHLB borrowings outstanding at June 30, 2021, comprised of floating-rate advances, all of which were secured by a blanket lien on Raymond James Bank’s residential mortgage loan portfolio (see Note 14 of the Notes to Consolidated Financial Statements of our 2020 Form 10-K for additional information regarding these borrowings). Raymond James Bank had an additional $3.11 billion in immediate credit available from the FHLB as of June 30, 2021 and, with the pledge of additional eligible collateral to the FHLB, total available credit of 30% of total assets.

Raymond James Bank is eligible to participate in the Federal Reserve’s discount window program; however, we do not view borrowings from the Federal Reserve 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 Federal Reserve, and is secured by pledged C&I loans.

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

~~Management’s Discussion and Analysis~~

institutions, securities owned by clients or the firm. We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $100 million as of June 30, 2021 related to the securities loaned included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q. See Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for more information on our collateralized agreements and financings.

At June 30, 2021, in addition to the financing arrangements previously described, we had $9 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.

~~Senior notes payable~~

In April 2021, we sold in a registered underwritten public offering $750 million in aggregate principal amount of 3.75% senior notes due April 2051. We utilized the proceeds from the offering and cash on hand to early-redeem our $250 million par 5.625% senior notes due 2024 and our $500 million par 3.625% senior notes due 2026, which had been outstanding as of March 31, 2021. See Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

After the issuance of the 3.75% senior notes due April 2051 and repurchase and redemption of the 5.625% senior notes due 2024 and 3.625% senior notes due 2026, at June 30, 2021, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051.

~~Credit ratings~~

Our issuer and senior long-term debt ratings as of the most current report are detailed in the following table. In April 2021, Fitch Ratings, Inc. assigned its first issuer and senior long-term debt rating for Raymond James Financial, Inc.

~~Rating Agency~~

~~Rating~~

~~Outlook~~

~~Fitch Ratings, Inc.~~

A-

~~Stable~~

~~Moody’s Investors Services~~

~~Baa1~~

~~Stable~~

~~Standard & Poor’s Ratings Services~~

~~BBB+~~

~~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. Deterioration 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. A credit downgrade could damage our reputation and result in certain counterparties limiting their business with us, result in negative comments by analysts, potentially negatively impact investors’ and/or clients’ perception of us, and cause a decline in our stock price. None of our borrowing arrangements 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 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.

~~Other sources and uses of liquidity~~

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

~~Management’s Discussion and Analysis~~

without restriction. To effect any such borrowing, the underlying investments would be converted to money market investments, therefore requiring us to take market risk related to the employee-directed plans. There were no borrowings outstanding against any of these policies as of June 30, 2021.

On May 12, 2021, we filed a “universal” shelf registration statement with the SEC pursuant to which we can issue debt, equity and other capital instruments if and when necessary or perceived by us to be opportune. Subject to certain conditions, this registration statement will be effective through May 12, 2024.

On May 25, 2021, we announced we had entered into a definitive agreement to acquire all of the outstanding shares of Cebile. We expect the closing date of the transaction to occur in our fiscal fourth quarter of 2021. We currently have the ability to utilize our cash on hand to fund the purchase. See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

On July 29, 2021, we announced our intention to make an offer for the entire issued and to be issued share capital of U.K.-based Charles Stanley at a price of £5.15 per share, or approximately £279 million ($387 million as of July 28, 2021). The transaction, subject to U.K. Financial Conduct Authority and Charles Stanley shareholder approval, is expected to close in our fiscal first quarter of 2022. We currently have the ability to utilize our cash on hand to fund the purchase. Under the terms of the intended offer, a loan note alternative will be available to Charles Stanley shareholders which will enable eligible Charles Stanley shareholders to elect to receive a loan note in lieu of part or all of the cash consideration to which they would otherwise be entitled under the terms of the offer. The initial interest rate for the loan note alternative for the first year is 0.1%. The note bears interest at a variable rate reset annually, calculated as the Bank of England’s base rate, plus a differential defined in the loan note, with the interest rate not to exceed 1.5% in any period. See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

STATEMENT OF FINANCIAL CONDITION ANALYSIS

The assets on our Condensed Consolidated Statements of Financial Condition consisted primarily of cash and cash equivalents, assets segregated ~~pursuant to regulations (segregated~~for regulatory purposes and restricted cash (primarily 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 ~~are~~were liquid in nature, providing us with flexibility in financing our business.

Total assets of ~~$57.16~~$68.46 billion as of ~~June 30,~~December 31, 2021 were ~~$9.68~~$6.57 billion, or ~~20%~~11%, greater than our total assets as of September 30, ~~2020.~~2021. The increase in assets was primarily due to a ~~$4.64~~$4.14 billion increase in assets segregated ~~pursuant to regulations,~~for regulatory purposes and restricted cash, primarily due to a significant increase in client cash balances. Bank loans, net increased by ~~$2.70~~$1.14 billion, primarily due to an increase in securities-based loans and residential mortgages to PCG clients, ~~and~~as well as an increase in corporate loans. In addition, cash and cash equivalents increased ~~$592~~$1.02 billion and other investments increased $354 million, ~~and available-for-sale securities increased $541 million. Goodwill and identifiable intangible assets, net increased $262 million~~primarily due to the ~~acquisitions~~purchase of ~~NWPS and Financo during the nine months ended June 30, 2021.~~U.S. Treasuries to meet future broker-dealer customer reserve requirements.

As of ~~June 30,~~December 31, 2021, our total liabilities of ~~$49.24~~$59.81 billion were ~~$8.94~~$6.22 billion, or ~~22%~~12%, greater than our total liabilities as of September 30, ~~2020.~~2021. The increase in total liabilities was primarily related to the significant increase in client cash balances as of ~~June 30,~~December 31, 2021, ~~including~~which resulted in a ~~$5.05~~$5.21 billion increase in brokerage client payables, primarily due to an increase in client cash held in our CIP, and a ~~$3.54~~$1.60 billion increase in bank deposits, ~~reflecting~~resulting from a higher RJBDP ~~balances~~balance held at Raymond James Bank. Partially offsetting these increases was a decrease in accrued compensation, commissions and benefits of $397 million, primarily due to the seasonal payment of annual bonuses and the funding of profit-sharing and employee stock ownership benefit plans which occurred during the three months ended December 31, 2021.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital are 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. We seek to manage capital levels to support execution of our business strategy, provide financial strength to our subsidiaries, and maintain sustained access to the capital markets, while at the same time meeting our regulatory capital requirements and conservative internal management targets.

Liquidity and capital resources are provided primarily through our business operations and financing activities. Financing activities could include bank borrowings, collateralized financing arrangements or additional capital raising activities under our “universal” shelf registration statement. 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 in the short-term. We also believe that we will be able to continue to meet our long-term cash requirements due to our strong financial position and ability to access capital from financial markets.

Liquidity and capital management

Senior management establishes our liquidity and capital management frameworks. Our liquidity and capital management frameworks are overseen by the RJF Asset and Liability Committee, a senior management committee that develops and executes strategies and policies to manage our liquidity risk and interest rate risk, as well as provides oversight over the firm’s investments. The liquidity management framework includes senior management’s review of short- and long-term cash flow forecasts, review of 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 resources to our business units consider, among other factors, projected profitability, cash flow, risk, and future liquidity needs. Our treasury department assists in evaluating, monitoring and controlling the impact that our business activities have on our financial condition and liquidity, and also maintains our relationships with various lenders. The objective of our liquidity management framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

Our capital planning and capital risk management processes are governed by the Capital Planning Committee (“CPC”), a senior management committee that provides oversight on our capital planning and ensures that our strategic planning and risk management processes are integrated into the capital planning process. The CPC meets at least quarterly to review key metrics related to the firm’s capital, such as debt structure and capital ratios; to analyze potential and emerging risks to capital; to oversee our annual firmwide capital stress test; and to propose capital actions to the Board of Directors, such as declaring dividends, repurchasing securities, and raising capital. To ensure that we have sufficient capital to absorb unanticipated losses, the firm adheres to capital risk appetite statements and tolerances set in excess of regulatory minimums, which are established by the CPC and approved by the Board of Directors. We conduct enterprise-wide capital stress testing to ensure that we maintain adequate capital to adhere to our established tolerances under multiple scenarios, including stressed scenarios.

Cash flows

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) increased $1.02 billion to $8.22 billion during the three months ended December 31, 2021, primarily due to a significant increase in client cash balances and positive net income during the quarter. During the three months ended December 31, 2021, we had a significant increase in client cash balances which increased our brokerage client payables and bank deposits. This cash was largely used to purchase U.S. Treasuries in our brokerage operations, which were segregated for regulatory purposes or held in anticipation of future broker-dealer customer reserve requirements as of December 31, 2021, and to increase our bank loan portfolio and available-for-sale securities as part of our banking operations. Due to the timing of the increase in client cash balances, on January 3, 2022, $685 million of the $1.02 billion increase in cash and cash equivalents was segregated for regulatory purposes in order to comply with broker-dealer customer reserve requirements.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Sources of liquidity

Approximately $1.40 billion of our total December 31, 2021 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A. This parent cash balance does not include $385 million of cash set aside by the parent in a restricted account as of December 31, 2021 to be used to fund the acquisition of Charles Stanley. As of December 31, 2021, this restricted cash was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition and is not included in the amounts presented in the following table. On January 21, 2022, we completed the acquisition of Charles Stanley, utilizing $372 million of this restricted cash to complete the acquisition. As of December 31, 2021, RJF had loaned $875 million to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities.

The following table presents our holdings of cash and cash equivalents.


$ in millions	December 31, 2021
RJF	$	553
RJ&A	3,470
Raymond James Bank	2,646
Raymond James Ltd. (“RJ Ltd.”)	882
Raymond James Financial Services, Inc.	129
Carillon Tower Advisers	95
Other subsidiaries	441
Total cash and cash equivalents	$	8,216

RJF maintained depository accounts at Raymond James Bank with a balance of $229 million as of December 31, 2021. The portion of this total that was available on demand without restrictions, which amounted to $152 million as of December 31, 2021, is reflected in the RJF cash balance and excluded from the Raymond James Bank cash balance in the preceding table.

On January 3, 2022, RJ&A segregated an additional $1.04 billion, comprised of $685 million of cash and $350 million of U.S. Treasuries, to meet its December 31, 2021 broker-dealer customer reserve requirement, resulting in a decrease in “Cash and cash equivalents” and “Other investments” on our statement of financial condition and an increase in “Assets segregated for regulatory purposes and restricted cash.”

A large portion of the RJ Ltd. cash and cash equivalents balance as of December 31, 2021 was held to meet regulatory requirements and was not available for use by the parent.

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.

Liquidity available from subsidiaries

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

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”), RJ&A is subject to FINRA’s capital requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1 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 items arising from client balances. In addition, covenants in RJ&A’s committed financing facilities require its net capital to be a minimum of 10% of aggregate debit items. At December 31, 2021, 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 and intends to use a portion of its excess net capital to remit dividends to RJF, in conformity with all required regulatory rules or approvals. 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 which may result in RJ&A limiting dividends it would otherwise remit to RJF. We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of liquidity available to RJF from RJ&A.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

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 consist of a tri-party repurchase agreement (i.e., securities sold under agreements to repurchase) and, in the case of our $500 million revolving credit facility agreement (the “Credit Facility”), an unsecured line of credit. The required market value of the collateral associated with the tri-party repurchase agreement ranges from 105% to 125% of the amount financed.


	December 31, 2021
$ in millions	RJ&A		RJF		Total		Total number of arrangements
Financing arrangement:
Committed secured	$	100	$	—	$	100	1
Committed unsecured	200		300		500		1
Total committed financing arrangements	$	300	$	300	$	600	2

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

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 and are generally collateralized by RJ&A-owned securities or by securities that we have received as collateral under reverse repurchase agreements (i.e., securities purchased under agreements to resell). As of December 31, 2021, we had outstanding borrowings under two uncommitted secured borrowing arrangements out of a total of 11 uncommitted financing arrangements (seven uncommitted secured and four uncommitted unsecured). However, lenders are under no contractual obligation to lend to us under uncommitted credit facilities.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis


$ in millions	December 31, 2021
Outstanding borrowing amount:
Uncommitted secured	$	203
Uncommitted unsecured	—
Total outstanding borrowing amount	$	203


	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
December 31, 2021	$	247	$	258	$	203	$	306	$	305	$	204
September 30, 2021	$	220	$	234	$	205	$	269	$	286	$	279
June 30, 2021	$	194	$	185	$	185	$	283	$	339	$	289
March 31, 2021	$	226	$	260	$	222	$	242	$	280	$	224
December 31, 2020	$	211	$	236	$	233	$	204	$	259	$	162

Other borrowings and collateralized financings

We had $850 million in FHLB borrowings outstanding at December 31, 2021, comprised of floating-rate advances which mature in December 2023. The interest rates on the floating-rate advances reset quarterly and transitioned to a Secured Overnight Financing Rate (“SOFR”)-based rate in December 2021. We use interest rate swaps to manage the risk of increases in interest rates associated with these floating-rate advances by converting the balances subject to variable interest rates to a fixed interest rate. These FHLB borrowings were secured by a blanket lien on Raymond James Bank’s residential mortgage loan portfolio. Raymond James Bank had an additional $3.33 billion in immediate credit available from the FHLB as of December 31, 2021 and, with the pledge of additional eligible collateral to the FHLB, total available credit of 30% of total assets. See Note 16 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K for additional information regarding these borrowings.

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 transactions as collateralized agreements and financings, with the outstanding balance of $65 million as of December 31, 2021 related to the securities loaned included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q. See Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for more information on our collateralized agreements and financings.

Senior notes payable

At December 31, 2021, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051. See Note 17 of the Notes to the Consolidated Financial Statements of our 2021 Form 10-K for additional information.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Credit ratings

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

Rating Agency

Rating

Outlook

Fitch Ratings, Inc.

A-

Stable

Moody’s Investors Services(1)

Baa1

Review for Upgrade

Standard & Poor’s Ratings Services

BBB+

Stable

(1) In November 2021, Moody’s Investor Services placed our senior debt and issuer rating on review for upgrade.

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. Of the company-owned life insurance policies which fund these plans, certain policies could be used as a source of liquidity for the firm. Those policies against which we could readily borrow had a cash surrender value of $896 million as of December 31, 2021, comprised of $553 million related to employee-directed plans and $343 million related to company-directed plans, and we were able to borrow up to 90%, or $807 million, of the December 31, 2021 total without restriction. To effect any such borrowing, the underlying investments would be converted to money market investments, therefore requiring us to take market risk related to the employee-directed plans. There were no borrowings outstanding against any of these policies as of December 31, 2021.

On January 21, 2022, we completed our acquisition of all of the outstanding share capital of U.K.-based Charles Stanley at a price of £5.15 per share, or approximately £274 million ($372 million as of January 21, 2022). As of December 31, 2021, we had segregated $385 million in cash to fund the acquisition on the closing date, which was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition. See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

On October 20, 2021, we announced we had entered into a definitive agreement to acquire TriState Capital in a combination cash and stock transaction, valued at approximately $1.1 billion. Under the terms of the agreement, TriState Capital common stockholders will receive $6.00 cash and 0.25 RJF shares for each share of TriState Capital common stock, which represents per share consideration of $31.09 based on the closing price of RJF common stock on October 19, 2021. We have entered into an agreement with the sole holder of the TriState Capital Series C Convertible Preferred Stock pursuant to which the Series C Convertible Preferred Stock will be converted to common shares at the prescribed exchange ratio and cashed out at $30 per share. The TriState Capital Series A Preferred Stock and Series B Preferred Stock will remain outstanding and will be

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

converted into equivalent preferred stock of RJF. The transaction, which is subject to customary closing conditions, including regulatory approvals and approval by TriState Capital shareholders, is expected to close later in fiscal 2022. We currently have the ability to utilize our cash on hand to fund the cash component of the acquisition. See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

As part of our ongoing operations, we also enter into contractual arrangements that may require future cash payments, including certificates of deposit, lease obligations and other contractual arrangements, such as for software and various services. See Notes 12 and 13 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our lease obligations and certificates of deposit, respectively. We have entered into investment commitments, lending commitments and other commitments to extend credit for which we are unable to reasonably predict the timing of future payments. See Note 15 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information.

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 1 - Business - Regulation” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory” of our ~~2020~~2021 Form 10-K.

RJF and many of its subsidiaries are each subject to various regulatory capital requirements. As of ~~June 30,~~December 31, 2021, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. In addition, RJF and Raymond James Bank were categorized as “well-capitalized” as of ~~June 30,~~December 31, 2021. The maintenance of certain risk-based and other regulatory capital levels could influence various capital allocation decisions impacting one or more of our businesses. However, due to the current 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. See Note 2120 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information on regulatory capital requirements.

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

~~Management’s Discussion and Analysis~~

~~Legislative and regulatory changes in connection with the COVID-19 pandemic~~

In addition to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act enacted in March 2020, the U.S. government enacted the Consolidated Appropriations Act, 2021 in December 2020. This additional stimulus bill provided further emergency COVID-19 relief, as well as extended certain provisions of the CARES Act. Under the CARES Act, financial institutions were permitted to temporarily suspend any determination of a loan modification as a result of the effects of COVID-19 as being a TDR, including impairment for accounting purposes. The Consolidated Appropriations Act, 2021 extended such relief until the earlier of: (1) 60 days after the date on which the national emergency concerning COVID-19 terminates; or (2) January 1, 2022. We elected to apply the extension for relief under the Consolidated Appropriations Act, 2021 to certain loan modifications that primarily relate to short-term payment deferral 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 loans.

~~Raymond James Bank~~

On February 2, 2021, Raymond James Bank filed an application with the Florida Office of Financial Regulation (“OFR”) to convert from a national bank primarily supervised by the Office of the Comptroller of the Currency (the “OCC”) to a Florida-chartered state bank. Raymond James Bank also filed an application with the Federal Reserve Bank of Atlanta to retain its membership in the Federal Reserve System. Effective June 1, 2021, upon conversion to a state member bank following approval by the Florida OFR, Raymond James Bank is no longer supervised by the OCC and is jointly supervised by the OFR and the Fed. As a state member bank, Raymond James Bank will also continue to be supervised by the FDIC and the Consumer Financial Protection Bureau. As a state member bank, we do not anticipate that there will be any material changes to Raymond James Bank’s existing business or operations.

~~Standard of care~~

The U.S. Department of Labor (“DOL”) is expected to amend the rule that determines whether an investment professional is a fiduciary to their clients’ retirement accounts under the Employee Retirement Income Security Act and Internal Revenue Code. While the DOL has finalized a new exemption to allow investment advice fiduciaries to receive transaction-based compensation and engage in certain principal trades, imposing a new standard of care on additional client relationships could lead to incremental costs for our business. We are evaluating how these regulatory changes may impact our business.

~~Community Reinvestment Act (“CRA”) regulations~~

On July 20, 2021, the Fed, the FDIC and the OCC issued a joint statement in which they committed to work together to jointly modernize the CRA regulations. Until such new regulations are implemented, Raymond James Bank will continue to operate under the Fed’s CRA regulations currently in effect. At this time it is uncertain what impact, if any, the impending CRA regulations will have on Raymond James Bank and other depositories with respect to their CRA activities.

~~Discontinuation of LIBOR~~Alternative reference rate transition

~~The administrator of LIBOR has proposed~~Central banks and regulators in the U.S. and other jurisdictions are working to ~~extend publication~~implement the transition to suitable replacements for the London Interbank Offered Rate (“LIBOR”). In December 2021, our FHLB borrowings and SBL converted from LIBOR-based interest rates to SOFR-based interest rates, resulting in an insignificant impact on interest income, interest expense, and cash flows. We continue to evaluate the effect of the most commonly used U.S. dollar LIBOR settings to June 30, 2023 and to cease publishing other LIBOR settings on December 31, 2021. The U.S. federal banking agencies have issued guidance strongly encouraging banking organizations to cease using the U.S. dollar LIBOR as aalternative reference rate ~~in new contracts as soon as practicable~~transition and ~~in any event by December 31, 2021. Our~~at this time, given current economic conditions, we ~~enterprise-wide initiative is continuing~~expect minimal financial impact. Refer to ~~assess~~“Item 1 - Business - Regulation” of our 2021 Form 10-K for additional information regarding the alternative reference rate transition and ~~implement necessary changes to~~ our ~~contracts pursuant to the Alternative Reference Rate Committee’s (“ARRC”) fallback recommendations, as well as updating systems, processes, documentation, and models~~. ~~We also began offering Secured Overnight Financing Rate (“SOFR”)-linked derivatives.~~planned response.

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 ~~2020~~2021 Form ~~10-K and Note 2 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.~~10-K.

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

~~Management’s Discussion and Analysis~~

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. Economic uncertainty as a result of the COVID-19 pandemic has made it more challenging for us to determine the amount of our allowance for credit losses and has required a greater reliance on judgment in recent periods in determining this amount.

Valuation of financial instruments

The use of fair value to measure financial instruments, with related gains or losses recognized on 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 ~~2020~~2021 Form 10-K for a discussion of our fair value accounting policies regarding financial instruments and financial instrument liabilities. See Note 4 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on our financial instruments at fair value.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Loss provisions

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 ~~2020~~2021 Form 10-K. In addition, refer to Note 1615 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,~~December 31, 2021.

Allowance for credit losses

We evaluate certain of our ~~held for investment~~financial assets, including bank loans, ~~unfunded lending commitments, loans to financial advisors and certain other financial assets~~ to estimate an allowance for credit ~~losses. Effective October 1, 2020, we adopted the CECL accounting guidance which changed the methodology used to measure the allowance for credit~~ losses ~~from an allowance based on incurred losses to an allowance~~ based on expected credit losses over a financial asset’s lifetime. The remaining life of our financial assets is determined by considering contractual terms and expected prepayments, among other factors. We employ multiple methodologies in estimating an allowance for credit losses and our approaches differ by type of financial asset and the risk characteristics within each financial asset type. Our estimates are based on ongoing evaluations of ~~the portfolio,~~our financial assets, the related credit risk characteristics, and the overall economic and environmental conditions affecting the financial assets. Our process for determining the allowance for credit losses includes a complex analysis of several quantitative and qualitative factors requiring significant management judgment due to matters that are inherently uncertain. This uncertainty can produce volatility in our allowance for credit losses. In addition, the allowance for credit 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. See Note 2 of the ~~discussion~~Notes to Consolidated Financial Statements of our 2021 Form 10-K for information regarding our ~~methodology~~methodologies and assumptions used in estimating the allowance for credit ~~losses in~~losses. See Note ~~2 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q. See Notes~~ 8 ~~and 9~~ of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for ~~additional~~ information onregarding our ~~bank loan and financial advisor loan portfolios.~~

~~Our~~ allowance for credit losses ~~at June 30, 2021 was primarily~~ related to bank loans ~~and loans to financial advisors. At June 30, 2021, the amortized cost~~as of all bank loans was $24.22 billion and the related allowance for credit losses was $322 million, or 1.34% of the held for investment loan portfolio. At June 30, 2021, the amortized cost of loans to financial advisors was $1.07 billion and the related allowance for credit losses was $29 million, which was 2.71% of the loan portfolio.December 31, 2021.

RECENT ACCOUNTING DEVELOPMENTS

The FASB has issued certain accounting updates which were assessed and either determined to be not applicable or are not expected to have a significant impact on our financial statements.

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

~~Management’s Discussion and Analysis~~

RISK MANAGEMENT

Risks are an inherent part of our business and activities. Management of risk 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 principal risks related to our business activities are market, credit, liquidity, operational, model, and compliance.

Governance

Our Board of Directors, including its Audit and Risk Committee, oversees the firm’s management and mitigation of risk, reinforcing 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,~~identifying, mitigating, and ~~mitigate~~escalating 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 and oversight to~~advises our client-facing businesses and other first-line ~~risk management~~ functions in identifying, assessing and mitigating risk. The second line of risk management ~~also~~ tests and monitors the effectiveness of controls, as deemed necessary, and escalates risks when appropriate to senior management and ~~reports on these risks.~~the Board of Directors. 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.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Market risk

Market risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory, derivatives and investment positions. We have exposure to market risk primarily through our broker-dealer trading operations and our banking operations. Our broker-dealer subsidiaries, primarily RJ&A, act as market makers and trade debt obligations and equity securities and maintain inventories to ensure availability of securities and to facilitate client transactions. Inventory levels may fluctuate daily as a result of client demand. We also hold investments in agency-backed MBS and agency-backed CMOs within Raymond James Bank’s available-for-sale securities portfolio, and from time-to-time may hold SBA loan securitizations not yet transferred. Our primary market risks relate to interest rates, equity prices, and foreign exchange rates. Interest rate risk results from changes in levels of interest rates, the volatility of interest rates, mortgage prepayment speeds and credit spreads. Equity risk results from changes in prices of equity securities. Foreign exchange risk results from changes in spot prices, forward prices and volatility of foreign exchange rates.

See ~~“Item 7 - Management’s Discussion and Analysis~~Note 2 of the Notes to Consolidated Financial ~~Condition and Results of Operations - Risk management - Market risk”~~Statements of our ~~2020~~2021 Form 10-K ~~for a discussion of our market risk, including how we manage such risk. See~~and Notes 4, 5 and 6 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.

We regularly enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold shares issued in the offerings to which we are committed. Risk exposure is controlled by limiting our participation, the transaction size or through the syndication process.

The Market Risk Management department is responsible for measuring, monitoring, and reporting market risks associated with the firm’s trading and derivative portfolios. While Market Risk Management maintains ongoing communication with the revenue-generating business units, it is independent of such units.

Interest rate risk

Trading activities

We are exposed to interest rate risk as a result of our trading inventory (primarily comprised of fixed income instruments) in our Capital Markets segment. Changes in value of our trading inventory may result from fluctuations in interest rates, credit spreads, equity prices, macroeconomic factors, investor expectations or risk appetites, liquidity, as well as dynamic relationships among these factors. We actively manage ~~the~~ interest rate risk arising from our fixed income trading securities through the use of hedging strategies ~~that involve~~utilizing U.S. ~~Treasury securities,~~Treasuries, futures contracts, liquid spread products and derivatives.

Our primary method for controlling risks within trading inventories is through the use of dollar-based and exposure-based limits. A hierarchy of limits exists at multiple levels, including firm, business unit, desk (e.g., for equities, corporate bonds, municipal bonds), product sub-type (e.g., below-investment-grade positions) and, at times, at the individual position. For derivative positions, which are primarily comprised of interest rate swaps, we have established limits based on a number of factors, including interest rate, foreign exchange spot and forward rates, spread, ratio, basis, and volatility risk. Derivative exposures are also monitored both for the total portfolio and by maturity periods. Trading positions and derivatives are monitored against these limits through daily reports that are distributed to senior management.During volatile markets, we may temporarily reduce limits and/or choose to pare our trading inventories 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~~basis for ~~estimating potential losses in trading portfolios due to typical adverse market movements over~~risk management purposes and as a ~~specified time horizon with a suitable confidence level. We apply~~result of applying 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 ~~OCC~~Office of the Comptroller of the Currency and the FDIC, requires us to calculate VaR for all of our trading portfolios, ~~(including derivatives), which include~~including fixed income, equity, derivatives, and foreign exchange instruments. 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. However, there are inherent limitations of utilizing VaR including: historical movements in markets may not accurately predict future market movements; VaR does not take into account the liquidity of individual positions; VaR does not estimate losses over longer time horizons; and extended periods of one-directional markets potentially distort risks within the portfolio. In addition, should markets become more volatile, actual trading losses may exceed VaR results presented on a single day and might accumulate over a longer time horizon. As a result, management complements VaR with sensitivity analysis and stress testing and employs additional controls such as a daily review of trading results, review of aged inventory, independent review of pricing, monitoring of concentrations and review of issuer ratings.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

To calculate VaR, we use models which incorporate 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 and Stressed VaR numbers for a ten-day time horizon. The VaR model is independently reviewed by our Model Risk Management function. See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our 2021 Form 10-K for further information.

The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations that management believes to be reasonable. However, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates. As a result, VaR results 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.

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


	Three months ended December 31, 2021				Period-end VaR					Three months ended December 31,
$ in millions	High		Low		December 31, 2021		September 30, 2021		$ in millions	2021		2020
Daily VaR	$	2	$	1	$	1	$	1	Average daily VaR	$	1	$	6

Average daily VaR was lower during the current-year period compared with the prior-year period due to the impact of scenarios of elevated volatility as a result of the COVID-19 pandemic (which commenced in March 2020) on our VaR model during the prior-year quarter.

The Fed’s MRR requires us to perform daily back-testing procedures offor 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

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

~~Management’s Discussion and Analysis~~

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,~~December 31, 2021, our regulatory-defined daily losses in our trading portfolios did not exceed our predicted VaR.

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

Nine months ended June 30, 2021 Period-end VaR Three months ended June 30, Nine months ended June 30,
$ in millions High Low June 30,
2021 September 30,
2020 $ in millions 2021 2020 2021 2020
Daily VaR $ 11 $ 1 $ 1 $ 8 Average daily VaR $ 2 $ 2 $ 5 $ 2

Average daily VaR was higher during the current year-to-date period compared with the prior year-to-date period, as a result of the impact of increased volatility from the COVID-19 pandemic on our VaR model during the first half of fiscal 2021. However, during our third fiscal quarter of 2021, the remaining COVID-19 pandemic-related scenarios fell outside of the VaR model’s twelve-month historical simulation period, resulting in period-end VaR decreasing to $1 million as of June 30, 2021.

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, including 10-day VaR and 10-day Stressed VaR, which are available on ~~the Investor Relations section of~~ our website ~~under “SEC filings and Other Reports - Other~~at https://www.raymondjames.com/investor-relations/financial-information/filings-and-reports within “Other Reports and Information.”

Should markets suddenly become more volatile, 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.

Banking operations

Raymond James Bank maintains an interest-earning asset portfolio that is comprised of cash, C&I loans, commercial and residential real estate loans, REIT loans, tax-exempt loans and SBL and other loans, as well as ~~agency~~agency-backed MBS and ~~agency~~agency-backed CMOs (held in the available-for-sale securities portfolio), and SBA loan ~~securitizations and a trading portfolio of corporate loans.~~securitizations. These interest-earning assets are primarily funded by client deposits. Based on its current asset portfolio, Raymond James Bank is subject to interest rate risk. Raymond James 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 across a range of interest rate scenarios.

One of the objectives of Raymond James Bank’s Asset and Liability ~~Management~~ Committee is to manage the sensitivity of net interest income to changes in market interest rates. This committee uses several measures to monitor and limit Raymond James Bank’s interest rate risk, including scenario analysis and economic value of equity. The methods used to measure this sensitivity are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Market risk” of our ~~2020~~2021 Form 10-K. We utilize a hedging strategy using interest rate swaps as a result of Raymond James Bank’s asset and liability management process. For further information regarding this hedging strategy, see Note 2 of the Notes to Consolidated Financial Statements of our ~~2020~~2021 Form 10-K.

8268

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

To ensure that Raymond James Bank remains within its tolerances established for net interest income, a sensitivity analysis of net interest income to interest rate conditions is estimated under a variety of scenarios. We use simulation models and estimation techniques to assess the sensitivity of net interest income to movements in interest rates. The model estimates the sensitivity by calculating interest income and interest expense in a dynamic balance sheet environment using current repricing, prepayment, and reinvestment of cash flow assumptions over a 12-month time horizon. Assumptions used in the model include interest rate movement, the slope of the yield curve, and balance sheet composition and growth.The model also considers interest rate-related risks such as pricing spreads, pricing of client cash accounts, and prepayments. Various interest rate scenarios are modeled in order to determine the effect those scenarios may have on net interest income.

The following table is an analysis of Raymond James Bank’s estimated net interest income over a 12-month period based on instantaneous shifts in interest rates (expressed in basis points) using our previously described asset/liability model, which assumes a dynamic balance sheet and that interest rates do not decline below zero. While not presented, additional rate scenarios are performed, including interest rate ramps and yield curve shifts that may more realistically mimic the speed of potential interest rate movements. We also perform simulations on time horizons of up to five years to assess longer-term impacts to various interest rate scenarios. On a quarterly basis, we test expected model results to actual performance. Additionally, any changes made to key assumptions in the model are documented and approved by Raymond James Bank’s Asset and Liability Committee.


Instantaneous changes in rate	Instantaneous changes in rate	Net interest income ($ in millions)	Projected change in net interest income	Instantaneous changes in rate	Net interest income ($ in millions)	Projected change in net interest income
+200	+200	$915	38.0%	+200	$1,033	33%
+100	+100	$855	29.0%	+100	$980	26%
0	0	$663	—	0	$778	—%
-25	-25	$637	(3.9)%	-25	$751	(3)%

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

The following table shows the contractual maturities of our bank loan portfolio at ~~June 30,~~December 31, 2021, 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.


		Due in									Due in
$ in millions	$ in millions	One year or less		> One year – five years		> Five years		Total		$ in millions	One year or less		> One year – five years		> Five years		Total
C&I loans	C&I loans	$	204	$	4,300	$	3,507	$	8,011	C&I loans	$	447	$	4,988	$	3,173	$	8,608
CRE loans	CRE loans	699		1,535		494		2,728		CRE loans	707		1,966		319		2,992
REIT loans	REIT loans	112		1,148		10		1,270		REIT loans	75		1,085		29		1,189
Tax-exempt loans	Tax-exempt loans	1		69		1,250		1,320		Tax-exempt loans	4		130		1,156		1,290
Residential mortgage loans	Residential mortgage loans	—		4		5,166		5,170		Residential mortgage loans	—		7		5,561		5,568
SBL and other	SBL and other	5,545		37		—		5,582		SBL and other	6,521		42		—		6,563
Total loans held for investment	Total loans held for investment	6,561		7,093		10,427		24,081		Total loans held for investment	7,754		8,218		10,238		26,210
Held for sale loans	Held for sale loans	—		—		137		137		Held for sale loans	—		21		209		230
Total loans	Total loans	$	6,561	$	7,093	$	10,564	$	24,218	Total loans	$	7,754	$	8,239	$	10,447	$	26,440

The following table shows the distribution of the recorded investment of those bank loans that mature in more than one year between fixed and adjustable interest rate loans at ~~June 30,~~December 31, 2021.


	Interest rate type
$ in millions	Fixed		Adjustable		Total
C&I loans	$	352	$	7,809	$	8,161
CRE loans	90		2,195		2,285
REIT loans	—		1,114		1,114
Tax-exempt loans	1,286		—		1,286
Residential mortgage loans	202		5,366		5,568
SBL and other	—		42		42
Total loans held for investment	1,930		16,526		18,456
Held for sale loans	1		229		230
Total loans	$	1,931	$	16,755	$	18,686

Interest rate type
$ in millions Fixed Adjustable Total
C&I loans $ 301 $ 7,506 $ 7,807
CRE loans 91 1,938 2,029
REIT loans — 1,158 1,158
Tax-exempt loans 1,319 — 1,319
Residential mortgage loans 191 4,979

5,170
SBL and other — 37 37
Total loans held for investment 1,902 15,618 17,520
Held for sale loans 1 136 137
Total loans $ 1,903 $ 15,754 $ 17,657

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Contractual loan terms for C&I, CRE, REIT 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 Raymond James Bank’s interest-only residential mortgage loan portfolio.

In our available-for-sale securities portfolio, we hold primarily fixed-rate ~~agency~~agency-backed MBS and ~~agency~~agency-backed CMOs which are carried at fair value on our Condensed Consolidated Statements of Financial Condition, with changes in the fair value of the portfolio recorded through OCI on our Condensed Consolidated Statements of Income and Comprehensive Income. At ~~June 30,~~December 31, 2021, our available-for-sale securities portfolio had a fair value of ~~$8.19~~$8.55 billion with a weighted-average yield of ~~1.17%~~1.13% and a weighted-average life of approximately 4four years. See Note 5 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

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

~~Management’s Discussion and Analysis~~

Equity price risk

We are exposed to equity price risk as a result of our capital markets activities. Our broker-dealer activities are generally client-driven, and we carry equity securities as part of our trading inventory to facilitate such activities, although the amounts are not as significant as our fixed income trading inventory. We attempt to reduce the risk of loss inherent in our inventory of equity securities by monitoring those security positions each day and establishing position limits. Equity securities held in our trading inventory are generally included in VaR.

In addition, we have a private equity portfolio, included in “Other investments” on our Condensed Consolidated Statements of Financial Condition, which is comprised of various direct investments, as well as investments in third-party private equity ~~funds and various legacy private equity funds which we sponsor.~~funds. Of the total private equity investments at ~~June 30,~~December 31, 2021 of ~~$159~~$157 million, the portion we owned was $115 million. See Note 4 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on this portfolio.

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, our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling ~~$1.21~~$1.26 billion and ~~$1.05~~$1.29 billion at ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively, when converted to the U.S. dollar. A majority of such loans are held by Raymond James Bank’s Canadian subsidiary, which is discussed in the following sections.

Investments in foreign subsidiaries

Raymond James Bank has an investment in a Canadian subsidiary, resulting in foreign exchange risk. To mitigate its foreign exchange risk, Raymond James Bank utilizes short-term, forward foreign exchange contracts. These derivatives are primarily accounted for as net investment hedges in the condensed consolidated financial statements. See Note 2 of the Notes to Consolidated Financial Statements of our ~~2020~~2021 Form 10-K and Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding these derivatives.

We had foreign exchange risk in our investment in RJ Ltd. of CAD ~~393~~360 million at ~~June 30,~~December 31, 2021, which was not hedged. Foreign exchange gains/losses related to this investment are primarily reflected in OCI on our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 1716 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding our components of OCI.

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 had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of ~~June 30,~~December 31, 2021. ~~As previous noted, on July 29, 2021~~On January 21, 2022, we ~~announced~~completed our ~~intention to make an offer for~~acquisition of all the ~~entire issued and to be issued~~outstanding share capital of U.K.-based Charles Stanley at a price of £5.15 per share, or approximately ~~£279 million. Upon closing, this~~£274 million ($372 million as of January 21, 2022). This transaction ~~would increase~~increased our foreign exchange exposure associated with investments in subsidiaries located in Europe.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

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 are included in “Other” revenues in our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our 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 financing activities. See further discussion of our credit risk, including how we manage such

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

~~Management’s Discussion and Analysis~~

risk, in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our ~~2020~~2021 Form 10-K.

The initial decline in economic activity as a result of the COVID-19 pandemic caused increased credit risk particularly with regard to companies in sectors that were most significantly impacted by the economic disruption, including energy, airlines, entertainment and leisure, restaurants and gaming. The speed and magnitude in which various sectors have recovered since the onset of the pandemic has been continually evolving. Given the stresses on certain of our clients’ liquidity, we enhanced our credit monitoring activities, with an increased focus on monitoring our credit exposures and counterparty credit risk. Since the onset of the pandemic, Raymond James Bank has enacted risk mitigation strategies including, but not limited to, the sale of loans in those sectors with a high likelihood of adverse impact arising from the pandemic. We have also required collateral to be posted across our credit risk exposures in accordance with agreements with our borrowers and counterparties. Although economic conditions have generally improved, we have maintained our increased focus on monitoring our credit exposures and counterparty credit risk.

Brokerage activities

We are engaged in various trading and brokerage activities in which our counterparties primarily include broker-dealers, banks and other financial institutions. We are exposed to risk that these counterparties may not fulfill their obligations. In addition, certain commitments, including underwritings, may create exposure to individual issuers and businesses. The risk of default depends on the creditworthiness of the counterparty and/or the issuer of the instrument. In addition, we may be subject to concentration risk if we hold large positions in or have large commitments to a single counterparty, borrower, or group of similar counterparties or borrowers (e.g., in the same industry). We ~~manage this risk~~seek to mitigate these risks by imposing and monitoring individual and aggregate position limits within each business segment for each counterparty, conducting regular credit reviews of financial counterparties, reviewing security and loan concentrations, holding and calculating the fair value of collateral on certain transactions and conducting business through clearing organizations, which may guarantee performance. See Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K and Notes 6 and 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our credit risk mitigation related to derivatives and collateralized agreements.

Our client activities involve the execution, settlement, and financing of various transactions on behalf of our clients. Client activities are transacted on either a cash or margin basis. Credit exposure results from client margin loans, which are monitored daily and are collateralized by the securities in the clients’ accounts. We monitor exposure to industry sectors and individual securities and perform analysis on a daily basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions. In addition, when clients execute a purchase, we are at some risk that the client will default on their financial obligation associated with the trade. If this occurs, we may have to liquidate the position at a loss. Further information about our determination of the allowance for credit losses associated with certain of our brokerage lending activities is described in Note 2 of the Notes to the Consolidated Financial Statements of our 2021 Form 10-K.

We offer loans to financial advisors ~~and certain other key revenue producers primarily~~ for recruiting ~~transitional cost assistance~~ and retention purposes. We have credit risk and may incur a loss primarily in the event that such borrower is no longer affiliated with us. See Note 2 of the Notes 2to the Consolidated Financial Statements of our 2021 Form 10-K and Note 9 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our loans to financial advisors.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Banking activities

Raymond James Bank has a substantial loan portfolio. Our strategy for credit risk management related to bank loans includes well-defined credit policies, uniform underwriting criteria, and ongoing risk monitoring and review processes for all corporate, tax-exempt, residential, SBL and other credit exposures. The strategy also includes diversification on a geographic, industry and client level, regular credit examinations and management reviews of all corporate and tax-exempt loans as well as individual delinquent residential loans. The credit risk management process also includes an annual independent review of the credit risk monitoring process that performs assessments of compliance with credit policies, risk ratings, and other critical credit information. We seek to identify potential problem loans early, record any necessary risk rating changes and charge-offs promptly, and maintain appropriate reserve levels for expected losses. We utilize a comprehensive credit risk rating system to measure the credit quality of individual corporate and tax-exempt loans and related unfunded lending commitments, including the probability of default and/or loss given default of each corporate and tax-exempt loan and commitment outstanding. For our SBL and residential mortgage loans, we utilize the credit risk rating system used by bank regulators in measuring the credit quality of each homogeneous class of loans. In evaluating credit risk, we consider trends in loan performance, the level of allowance coverage relative to similar banking institutions, industry or client concentrations, the loan portfolio composition and macroeconomic factors (both current and forecasted). These factors have a potentially negative impact on loan performance and net charge-offs.

While our bank loan portfolio is diversified, a significant downturn in the overall economy, ~~such as that experienced in our fiscal year 2020 as a result of the COVID-19 pandemic,~~ deterioration in real estate values or a significant issue within any sector or sectors where we have a concentration will generally result in large provisions for credit losses and/or charge-offs. Conversely, should the economy continue to recover at a faster pace than ~~initially~~ forecasted, we may experience an additional benefit for credit losses and/or ~~the negative impact~~recovery of ~~the significant downtown event be less than originally projected,~~amounts previously charged off, the timing and magnitude of ~~any decreases in required reserves for credit losses~~which can be uncertain. We determine the allowance required for specific loan grades based on relative risk characteristics of the loan portfolio. On an ongoing basis, we evaluate our methods for determining the allowance for each class of loans and make enhancements we consider appropriate.

Our allowance for credit losses methodology is described in Note 2 of the Notes to the ~~Condensed~~ Consolidated Financial Statements of ~~this~~our 2021 Form ~~10-Q.~~10-K. As our bank loan portfolio is segregated into six portfolio segments, likewise, the allowance for credit losses is segregated by these same segments. ~~The~~See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2021 Form 10-K for further information about the risk characteristics relevant to each portfolio ~~segment are as follows.~~

C&I: Loans in this segment are made to businesses and are generally secured by all assets of the business. Repayment is expected from the cash flows of the respective business. Unfavorable economic and political conditions, including the resultant decrease in consumer or business spending, may have an adverse effect on the credit quality of loans in this segment.

CRE: Loans in this segment are primarily secured by income-producing properties. For owner-occupied properties, the cash flows are derived from the operations of the business, and the underlying cash flows may be adversely affected by the

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

~~Management’s Discussion and Analysis~~

deterioration in the financial condition of the operating business. The underlying cash flows generated by non-owner-occupied properties may be adversely affected by increased vacancy and rental rates, which are monitored on a quarterly basis. This portfolio segment includes CRE construction loans which also look at other risks such as project budget overruns and performance variables related to the contractor and subcontractors. With respect to commercial construction of residential developments, there is also the risk that the builder has a geographical concentration of developments. Adverse developments in any of these areas may have a negative effect on the credit quality of loans in this segment.

REIT: Loans in this segment are made to businesses that own or finance income-producing real estate across various property sectors. This portfolio segment may include extensions of credit to companies that engage in real estate development. Repayment of these loans is dependent on income generated from real estate properties or the sale of real estate. A portion of this segment may consist of loans secured by residential product types (single-family residential, including condominiums and land held for residential development) within a range of markets. Deterioration in the financial condition of the operating business, reductions in the value of real estate, as well as increased vacancy and rental rates may all adversely affect the loans in this segment.

Tax-exempt: Loans in this segment are made to governmental and nonprofit entities and are generally secured by a pledge of revenue and, in some cases, by a security interest in or a mortgage on the asset being financed. For loans to governmental entities, repayment is expected from a pledge of certain revenues or taxes. For nonprofit entities, repayment is expected from revenues which may include fundraising proceeds. These loans are subject to demographic risk, therefore much of the credit assessment of tax-exempt loans is driven by the entity’s revenue base and the general economic environment. Adverse developments in either of these areas may have a negative effect on the credit quality of loans in this segment.

Residential mortgage (includes home equity loans/lines): All of our residential mortgage loans adhere to stringent underwriting parameters pertaining to credit score and credit history, debt-to-income ratio of borrower, LTV, and combined LTV (including second mortgage/home equity loans). We do not originate or purchase adjustable rate mortgage (“ARM”) loans with negative amortization, reverse mortgages, or loans to subprime borrowers. Loans with deeply discounted teaser rates are not originated or purchased. All loans in this segment are collateralized by residential real estate and repayment is primarily dependent on the credit quality of the individual borrower. A decline in the strength of the economy, particularly unemployment rates and housing prices, among other factors, could have a significant effect on the credit quality of loans in this segment.

SBL and other: Loans in this segment are collateralized generally by the borrower’s marketable securities at advance rates consistent with industry standards. These loans are monitored daily for adherence to LTV guidelines and when a loan exceeds the required LTV, a collateral call is issued. Past due loans are minimal as any past due amounts result in a notice to the client for payment or the potential sale of the collateral which will bring the loan to a current status.

In evaluating credit risk, we consider trends in loan performance, the level of allowance coverage relative to similar banking institutions, industry or customer concentrations, the loan portfolio composition and macroeconomic factors (both current and forecasted). These factors have a potentially negative impact on loan performance and net charge-offs.

Our allowance for credit losses as of June 30, 2021 was determined under the CECL model due to our October 1, 2020 adoption of the new credit impairment standard. See Notes 2 and 8 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information. Our allowance for credit losses, as well as our methodologies and assumptions used in estimating the allowance, are regularly evaluated to determine if our methods and estimates continue to be appropriate for each class of loans, with adjustments made on a quarterly basis. Several factors were taken into consideration in evaluating the allowance for credit losses at June 30, 2021, including loan and borrower characteristics, such as internal risk ratings, delinquency status, collateral type and the remaining term of the loan adjusted for expected prepayments. In addition, the estimate of credit losses considered the relatively small amount of net charge-offs during the period, the level of nonperforming loans and the impact of the COVID-19 pandemic. We also considered the uncertainty related to certain industry sectors, including commercial real estate, and the extent of credit exposure to specific borrowers within the portfolio. Finally, we considered current economic conditions that might impact the portfolio. We continue to assess the impact of both the COVID-19 pandemic and the economic recovery therefrom, as new 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.

Our allowance for credit losses as a percentage of total bank loans held for investment was ~~1.34%, 1.69%~~1.18% and ~~1.65%~~1.27% at ~~June 30,~~December 31, 2021 ~~October 1, 2020 (our CECL adoption date)~~ and September 30, ~~2020,~~2021, respectively. ~~During the three and nine months ended June 30, 2021, we had a~~The bank loan benefit for credit losses ~~on our bank loan portfolio of $19~~for the three months ended December 31, 2021 was $11 million ~~and $37 million, respectively,~~

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

~~Management’s Discussion and Analysis~~

compared to a provision for credit losses of ~~$81 million and $188~~$14 million for the ~~three and nine months ended June 30, 2020, respectively.~~prior-year quarter. See further explanation of the credit loss provision ~~increase~~decrease in “Management’s Discussion and Analysis - Results of Operations - Raymond James Bank” of this Form 10-Q and Note 8 in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for ~~detail on the changes in~~further information about our allowance for credit losses.

The level of charge-off activity is a factor that is considered in evaluating the potential 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									Three Months Ended December 31,
		2021				2020				2021				2020					2021				2020
$ in millions	$ 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		$ in millions	Net loan (charge-off)/recovery amount		% of avg. outstanding loans		Net loan (charge-off)/recovery amount		% of avg. outstanding loans
C&I loans	C&I loans	$	(1)	0.05	%	$	(71)	3.55	%	$	(3)	0.05	%	$	(71)	1.18	%	C&I loans	$	(2)	0.09	%	$	—	—	%
CRE loans		(3)		0.44	%	(2)		0.21	%	(3)		0.15	%	(2)		0.07	%

Residential mortgage loans	Residential mortgage loans	—		—	%	1		0.08	%	—		—	%	1		0.03	%	Residential mortgage loans	1		0.07	%	—		—	%

Total	Total	$	(4)	0.07	%	$	(72)	1.31	%	$	(6)	0.04	%	$	(72)	0.44	%	Total	$	(1)	0.02	%	$	—	—	%

~~(1) Charge-offs related to loan sales during the period were $1 million~~

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and ~~$3 million for the three and nine months ended June 30, 2021, respectively, and $61 million for both the three and nine months ended June 30, 2020.~~Analysis

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 credit losses for the periods presented.


		June 30, 2021					September 30, 2020						December 31, 2021					September 30, 2021
$ in millions	$ in millions	Nonperforming loan balance			Allowance for credit losses balance		Nonperforming loan balance			Allowance for credit losses balance		$ in millions	Nonperforming loan balance			Allowance for credit losses balance		Nonperforming loan balance			Allowance for credit losses balance
C&I loans	C&I loans	$	—		$	188	$	2		$	200	C&I loans	$	38		$	179	$	39		$	191
CRE loans	CRE loans	27			73		14			81		CRE loans	20			72		20			66
REIT loans	REIT loans	—			26		—			36		REIT loans	—			22		—			22
Tax-exempt loans	Tax-exempt loans	—			2		—			14		Tax-exempt loans	—			2		—			2
Residential mortgage loans	Residential mortgage loans	15			29		14			18		Residential mortgage loans	15			30		15			35
SBL and other	SBL and other	—			4		—			5		SBL and other	—			3		—			4
Total nonperforming loans held for investment(1)	Total nonperforming loans held for investment(1)	$	42		$	322	$	30		$	354	Total nonperforming loans held for investment(1)	$	73		$	308	$	74		$	320
Total nonperforming loans as a % of total bank loans	Total nonperforming loans as a % of total bank loans	0.17		%			0.14		%			Total nonperforming loans as a % of total bank loans	0.28		%			0.29		%

~~See Note 8 in the Notes~~(1) Total nonperforming loans held for investment at December 31, 2021 and September 30, 2021 included $59 million and $61 million of nonperforming loans, respectively, which were current pursuant to ~~Condensed Consolidated Financial Statements of this Form 10-Q for loan categories as a percentage of total loans receivable.~~their contractual terms.

The nonperforming loan balances in the preceding table exclude $8 million ~~and $10 million~~ as of ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively, of residential TDRs which were returned to accrual status in accordance with our policy. ~~Total~~

The following table presents total nonperforming assets, including the nonperforming loans in the preceding table and other real estate acquired in the settlement of residential mortgages, ~~amounted to $43 million and $32 million at June 30, 2021 and September 30, 2020, respectively. Total nonperforming assets~~ as a percentage of Raymond James Bank’s total ~~assets were 0.12% and 0.10% at June 30, 2021 and September 30, 2020, respectively.~~ assets.


$ in millions	December 31, 2021			September 30, 2021


Total nonperforming assets	$	74		$	74
Total nonperforming assets as a % of Raymond James Bank’s total assets	0.19		%	0.20		%

Although our nonperforming assets as a percentage of Raymond James Bank’s assets remained low as of ~~June 30,~~December 31, 2021, any prolonged ~~or further~~ market deterioration could result in an increase in our nonperforming assets, an increase in our allowance for credit losses and/or an increase in net charge-offs in future periods, although the extent will depend on future developments that are highly uncertain.

We have received requests from certain borrowers for forbearance, which is generally a short-term deferral of their loan payments, or modification of certain covenant terms, driven or exacerbated by the economic impacts of the COVID-19 pandemic. Based on the amortized costs, ~~approximately $34 million and $8~~only $2 million of our ~~corporate and~~ residential loans ~~respectively, were~~remained in active forbearance as of ~~June 30,~~December 31, 2021. As certain borrowers ~~exit~~have exited forbearance we have received requests for loan modifications, including repayment plans. In accordance with the ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act, 2021, we ~~are~~did not ~~applying~~apply TDR classification to any COVID-19 related loan modifications performed from March 1, 2020 through December 31, 2021 to borrowers who were current as of December 31, 2019. As of ~~June 30,~~December 31, 2021, we had residential loans of ~~$12~~$5 million for which the borrower had requested a loan modification, where the request had been initiated but not completed or approved. As the delinquency status is not affected for loans that are in active forbearance or for loan

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

~~Management’s Discussion and Analysis~~

modifications that have not yet been approved, the recognition of charge-offs, delinquencies, and nonaccrual status could be delayed for those borrowers who would have otherwise moved into past due or nonaccrual status. Forbearance and modification requests have continued to decline and the majority of the borrowers that have exited forbearance but have not requested loan modifications, have become current on their principal and interest payments.

Loan underwriting policies

Our underwriting policies for the major types of bank loans are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our ~~2020~~2021 Form 10-K. There were no ~~material~~significant changes in our bank loan underwriting policies during the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

Risk monitoring process

Another component of credit risk strategy for our bank loan portfolio is the ongoing risk monitoring and review processes, including our internal loan review process, for all residential, SBL, 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~~significant changes to those processes ~~and policies~~ during the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Residential mortgage and SBL and other loan portfolios

The collateral securing our SBL and other portfolio is monitored on a recurring basis, with marketable collateral monitored on a daily basis. Collateral adjustments, as triggered by our monitoring procedures, are made by the borrower as necessary to ensure our loans are adequately secured, resulting in minimizing ~~its~~our 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 our residential mortgage loan portfolio. The factors include, but are not limited to: loan performance trends, loan product parameters and qualification requirements, borrower credit scores, level of documentation, loan purpose, geographic concentrations, average loan size, risk rating and LTV ratios. See Note 8 in the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for additional ~~information.~~information about our residential mortgage loan portfolio.

The following table presents a summary of delinquent residential mortgage loans, the vast majority of which are first mortgage loans, which are comprised of loans which are two or more payments past due as well as loans in the process of foreclosure. Amounts in the following table do not include residential loans to borrowers who were granted forbearance as a result of the COVID-19 pandemic and whose loans were not considered delinquent prior to the forbearance. Such loans may be considered delinquent after the forbearance period or completion of loss mitigation efforts, depending on their payment status. As a result, the amount of residential loans considered delinquent may increase ~~significantly~~ in the future.

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, 2021 $ 5 $ 6 $ 11 0.10 % 0.12 % 0.22 %
September 30, 2020 $ 3 $ 7 $ 10 0.06 % 0.14 % 0.20 %


	Amount of delinquent residential loans						Delinquent residential loans as a percentage of outstanding residential mortgage loan balances
$ in millions	30-89 days		90 days or more		Total		30-89 days		90 days or more		Total
December 31, 2021	$	4	$	7	$	11	0.07	%	0.13	%	0.20	%
September 30, 2021	$	4	$	6	$	10	0.08	%	0.11	%	0.19	%

Our ~~June 30,~~December 31, 2021 percentage ~~continues to compare~~compares favorably to the national average for over 30 day delinquencies of ~~2.92%~~2.55%, 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 PCG clients across the ~~country.~~U.S. The following table details the geographic concentrations (top five states) of our one-to-four family residential mortgage loans.


		June 30, 2021			December 31, 2021
		Loans outstanding as a % of total residential mortgage loans	Loans outstanding as a % of total bank loans		Loans outstanding as a % of total residential mortgage loans	Loans outstanding as a % of total bank loans
CA	CA	25.3%	5.4%	CA	25.9%	5.5%
FL	FL	17.5%	3.7%	FL	17.2%	3.6%
TX	TX	8.9%	1.9%	TX	8.6%	1.8%
NY	NY	7.5%	1.6%	NY	8.2%	1.7%
CO	CO	4.1%	0.9%	CO	3.8%	0.8%

Loans where borrowers may be subject to payment increases include ~~ARM~~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

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

~~Management’s Discussion and Analysis~~

amortize. At ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, these loans totaled ~~$1.92~~$2.10 billion and ~~$1.67~~$1.97 billion, respectively, or approximately ~~37%~~38% and ~~34%~~37% of the residential mortgage portfolio, respectively. The weighted-average number of years before the remainder of the loans, which were still in their interest-only period at ~~June 30,~~December 31, 2021, begins amortizing is 67 years.

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis

Corporate and tax-exempt loans

Credit risk in our corporate and tax-exempt bank loan portfolios is monitored on an individual loan basis. The majority of our tax-exempt bank loan portfolio is comprised of loans to investment-grade borrowers.

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


		June 30, 2021			December 31, 2021
		Loans outstanding as a % of total corporate bank loans	Loans outstanding as a % of total bank loans		Loans outstanding as a % of total corporate bank loans	Loans outstanding as a % of total bank loans
Office real estate	Office real estate	7.7%	3.8%	Office real estate	7.1%	3.4%
Multi-family				Multi-family	6.6%	3.2%
Automotive/transportation				Automotive/transportation	6.6%	3.2%
Consumer products and services				Consumer products and services	6.5%	3.1%
Business systems and services	Business systems and services	6.9%	3.4%	Business systems and services	5.3%	2.6%
Automotive/transportation		6.3%	3.1%
Multi-family		6.1%	3.0%
Consumer products and services		5.8%	2.9%

~~The~~Since the beginning of the COVID-19 pandemic, ~~negatively impacted~~ our ~~corporate loan portfolio in fiscal 2020. Although we reduced~~credit risk efforts were focused on reducing our exposure and ~~revised~~revising our credit limits related to sectors that we ~~believe to be~~believed were the most vulnerable to the COVID-19 pandemic, such as the energy, airlines, entertainment and leisure, restaurant and gaming ~~sectors,~~sectors. Although economic conditions have continued to improve since the beginning of the COVID-19 pandemic, we may experience further losses on our ~~remaining~~ loans to borrowers in these sectors, particularly if economic conditions do not continue to improve in the future. ~~In addition, we~~We continue to monitor our exposure to office real estate, where trends have changed ~~rapidly and possibly permanently~~ as a result of the COVID-19 pandemic, and may experience ~~additional~~ losses on loans in this sector in the future. We may also experience further losses on corporate loans in other industries as a direct or indirect result of the pandemic, including on our CRE loans secured by retail and hospitality properties.

Although we saw deterioration in oil prices for much of fiscal year 2020 due to the pandemic, oil prices continued to improve during the first nine months of fiscal year 2021 and have now surpassed pre-pandemic levels as of the end of the fiscal third quarter of 2021. Our energy portfolio has minimal direct commodity price exposure since it consists of loans to midstream distribution companies and convenience stores, with no loans to exploration and production enterprises. However, in the event of significant deterioration in oil prices in the future, our borrowers, and our loans to such borrowers, could be negatively impacted.

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 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Operational risk” of our ~~2020~~2021 Form 10-K for a discussion of our operational risk and certain of our risk mitigation processes.

In response to the COVID-19 pandemic, we activated and successfully executed on our business continuity protocols and continue to monitor the COVID-19 pandemic under such protocols. We have endeavored to protect the health and well-being of our associates and our clients ~~and to ensure~~while ensuring the continuity of business operations for our clients. As a result, a substantial portion of our associates continue to work remotely. ~~The firm continues~~We continue to monitor conditions and ~~has developed a phased approach to reopening~~have reopened our offices ~~which complies~~in a limited capacity, complying with all applicable laws, regulations, and Centers for Disease Control ~~guidelines. As of June 30, 2021, we had reopened most of our offices in a limited capacity~~ and ~~have been~~Prevention guidelines and operating under strict public health and safety protocols in such locations. We ~~continue to monitor reports from health officials and had hoped~~are planning for a full return to office in ~~September 2021,~~the second quarter of our fiscal 2022, which ~~would~~will include more work location flexibility for our ~~associates. However, the recent~~associates; however, disruptions ~~in the U.S.~~ caused by ~~the Delta variant~~variants may impact the timing of the implementation of these plans.

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

~~Management’s Discussion and Analysis~~

Periods of severe market volatility, such as those that arose most notably in fiscal 2020 ~~in response to~~at the onset of the COVID-19 pandemic, can result in a significantly higher level of transactions on specific days and other activity which may present operational challenges from time to time that may result in losses. These losses can result from, but are not limited to, trade errors, failed transaction settlements, late collateral calls to borrowers and counterparties, or interruptions to our system processing. We did not incur any significant losses related to such operational challenges during the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

As more fully described in the discussion of our business technology risks included in various risk factors presented in “Item 1A - Risk Factors” of our 2021 Form 10-K, 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, cyber-attacks and other information security breaches, and other events that could have an impact on the security and stability of our operations.

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 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our ~~2020~~2021 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 the firm may suffer from a failure to comply with applicable laws, external standards, or internal requirements. See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Compliance risk” of our ~~2020~~2021 Form 10-K for information on our compliance risks, including how we manage such risks.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Item 2 - 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 during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not applicable.

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~~three months ended ~~June 30,~~December 31, 2021.

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~~three months ended ~~June 30,~~December 31, 2021.

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, 2020 – October 31, 2020 1,204 $ 80.04 — $487
November 1, 2020 – November 30, 2020 93,225 $ 90.50 — $487
December 1, 2020 – December 31, 2020 116,759 $ 93.02 107,750 $740
First quarter 211,188 $ 91.84 107,750
January 1, 2021 – January 31, 2021 2,401 $ 100.06 — $740
February 1, 2021 – February 28, 2021 6,941 $ 99.93 — $740
March 1, 2021 – March 31, 2021 501,760 $ 120.05 500,000 $680
Second quarter 511,102 $ 119.69 500,000
April 1, 2021 – April 30, 2021 887 $ 128.91 — $680
May 1, 2021 – May 31, 2021 — $ — — $680
June 1, 2021 – June 30, 2021 375,000 $ 128.55 375,000 $632
Third quarter 375,887 $ 128.55 375,000
Fiscal year-to-date total 1,098,177 $ 117.36 982,750


	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, 2021 – October 31, 2021	1,305	$	94.47	—	$632
November 1, 2021 – November 30, 2021	94,824	$	98.82	—	$632
December 1, 2021 – December 31, 2021	145	$	98.90	—	$1,000
First quarter	96,274	$	98.76	—

In December ~~2020,~~2021, the Board of Directors authorized repurchase of our common stock in an aggregate amount of up to ~~$750 million,~~$1 billion, which replaced the previous authorization.

In the preceding table, the total number of shares purchased includes shares purchased pursuant to the 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 ~~2020~~2021 Form 10-K and Note 10 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q. These activities do not utilize the repurchase 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 repurchase authorization presented in the preceding table.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

9177

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

ITEM 6. EXHIBITS


Exhibit Number			Description
2.1			Agreement and Plan of Merger, dated October 20, 2021, among Raymond James Financial, Inc., Macaroon One LLC, Macaroon Two LLC and TriState Capital Holdings, Inc., incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 26, 2021.
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 December 2, 2020, 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 8, 2020.
~~4.1~~10.1			~~Eighth Supplemental Indenture,~~Support Agreement, dated ~~as of April 1,~~October 20, 2021, ~~for the 3.750% Senior Notes due 2051, between~~by and among James F. Getz, Brian S. Fetterolf, Raymond James Financial, Inc., Macaroon One LLC and, ~~The Bank~~solely for purposes of ~~New York Mellon Trust Company, N.A.~~the last sentence of Section 9 thereof, TriState Capital Holdings, Inc., ~~as trustee,~~ incorporated by reference to Exhibit ~~4.2~~10.1 to the ~~Company~~’sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on ~~April 2,~~October 26, 2021.
~~10.1~~10.2			~~Third Amendment to Credit~~Support Agreement, dated ~~as of April 19,~~October 20, 2021, by and among T-VIII PubOpps LP, Raymond James Financial, Inc., ~~Raymond James & Associates,~~Macaroon One LLC and, solely for purposes of the last sentence of Section 9 and Section 10(c) thereof, TriState Capital Holdings, Inc.~~, the Lenders party thereto and Bank of America, N.A.~~, incorporated by reference to Exhibit ~~10.1~~10.2 to the ~~Company~~’sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on ~~April 22,~~October 26, 2021.
10.3			Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting with rTSR) under the Amended and Restated 2012 Stock Incentive Plan.
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 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 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.
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101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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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)

Date:	~~August 9, 2021~~February 8, 2022	/s/ Paul C. Reilly
		Paul C. Reilly
		Chairman and Chief Executive Officer

Date:	~~August 9, 2021~~February 8, 2022	/s/ Paul M. Shoukry
		Paul M. Shoukry
		Chief Financial Officer and Treasurer

9278


	$ in millions
Remainder of 2021	$	18
2022	98
2023	81
2024	60
2025	46
Thereafter	114
Gross lease payments	417
Less: interest	(45)
Present value of lease liabilities	$	372


	Three months ended		Nine months ended
$ in millions	June 30, 2021			June 30, 2021
Net income	$	307		$	974
Non-GAAP adjustments:
Losses on extinguishment of debt	98			98
Acquisition-related expenses	7			9
Pre-tax impact of non-GAAP adjustments	105			107
Tax effect of non-GAAP adjustments	(26)			(26)
Total non-GAAP adjustments, net of tax	79			81
Adjusted net income	$	386		$	1,055

Earnings per common share - diluted	$	2.18		$	6.92
Non-GAAP adjustments:
Losses on extinguishment of debt	0.69			0.70
Acquisition-related expenses	0.05			0.06
Tax effect of non-GAAP adjustments	(0.18)			(0.18)
Total non-GAAP adjustments, net of tax	0.56			0.58
Adjusted earnings per common share - diluted	$	2.74		$	7.50


	Target federal funds rate
	Low	High	End of period
Three months ended
June 30, 2021	0.00%	0.25%	0% - 0.25%
June 30, 2020	0.00%	0.25%	0% - 0.25%
Nine months ended
June 30, 2021	0.00%	0.25%	0% - 0.25%
June 30, 2020	0.00%	2.00%	0% - 0.25%


	Three months ended June 30,
	2021 compared to 2020
	Increase/(decrease) due to
$ in millions	Volume		Rate		Total
Interest income:
Interest-earning assets:
Cash and cash equivalents	$	—	$	(1)	$	(1)
Assets segregated pursuant to regulations	5		(5)		—
Available-for-sale securities	18		(21)		(3)
Brokerage client receivables	2		(1)		1
Bank loans, net of unearned income and deferred expenses:
Loans held for investment:
C&I loans	—		(8)		(8)
CRE loans	1		(2)		(1)
REIT loans	1		(1)		—
Tax-exempt loans	—		—		—
Residential mortgage loans	1		(4)		(3)
SBL and other	9		(4)		5
Loans held for sale	—		—		—
Total bank loans, net	12		(19)		(7)
All other interest-earning assets	2		(4)		(2)
Total interest-earning assets	$	39	$	(51)	$	(12)
Interest expense:
Interest-bearing liabilities:
Bank deposits:
Savings, money market and NOW accounts	$	—	$	(1)	$	(1)
Certificates of deposit	(1)		—		(1)
Total bank deposits	(1)		(1)		(2)
Brokerage client payables	2		(4)		(2)
Other borrowings	—		(1)		(1)
Senior notes payable	2		(1)		1
All other interest-bearing liabilities	—		2		2
Total interest-bearing liabilities	$	3	$	(5)	$	(2)
Change in net interest income	$	36	$	(46)	$	(10)