What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2021-02-08 · 545 added, 238 removed, 1408 unchanged (36% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

$ in millions, except per share amounts December 31, 2020 September 30, 2020

$ in millions, except per share amounts March 31, 2021 September 30, 2020

Cash and cash equivalents $ 5,851 $ 5,390

36 unchanged sentences

350,000,000 shares authorized;

159,127,724 and 159,007,158 shares issued as of December 31, 2020 and September 30, 2020, respectively, and 137,378,992 and 136,556,559 shares outstanding as of December 31, 2020 and September 30, 2020, respectively

159,231,968 and 159,007,158 shares issued as of March 31, 2021 and September 30, 2020, respectively, and 137,155,669 and 136,556,559 shares outstanding as of March 31, 2021 and September 30, 2020, respectively

Additional paid-in capital 2,028 2,007

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Treasury stock, at cost;

21,748,732 and 22,450,599 common shares as of December 31, 2020 and September 30, 2020, respectively

22,076,299 and 22,450,599 common shares as of March 31, 2021 and September 30, 2020, respectively

( 1,404 ) ( 1,390 )

Accumulated other comprehensive income 17 11

Accumulated other comprehensive income/(loss) ( 38 ) 11

Total equity attributable to Raymond James Financial, Inc.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

in millions, except per share amounts 2021 2020 2021 2020

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Investment banking

242 148 503 289

Interest income

200 285 403 582

44 ( 15 ) 100 14

Total revenues

2,409 2,111 4,669 4,171

Interest expense

( 37 ) ( 43 ) ( 75 ) ( 94 )

2,372 2,068 4,594 4,077

Non-interest expenses:

Compensation, commissions and benefits

1,648 1,422 3,148 2,773

Non-compensation expenses:

Communications and information processing

107 99 206 193

Occupancy and equipment

57 56 114 113

Business development

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Acquisition-related expenses — — 2 —

69 53 139 112

Total non-compensation expenses 277 407 600 706

1 unchanged sentence

Pre-tax income

447 239 846 598

Provision for income taxes

92 70 179 161

$ 355 $ 169 $ 667 $ 437

Earnings per common share – basic

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Weighted-average common shares outstanding – basic

137.8 138.4 137.3 138.4

Weighted-average common and common equivalent shares outstanding – diluted

141.2 141.1 140.4 141.3

$ 355 $ 169 $ 667 $ 437

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

Available-for-sale securities

( 76 ) 63 ( 93 ) 62

Currency translations, net of the impact of net investment hedges 2 ( 26 ) 20 ( 17 )

Cash flow hedges

Total other comprehensive income, net of tax 6 18

19 ( 43 ) 24 ( 33 )

Total other comprehensive income/(loss), net of tax ( 55 ) ( 6 ) ( 49 ) 12

Total comprehensive income $ 300 $ 163 $ 618 $ 449

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

$ in millions, except per share amounts 2021 2020 2021 2020

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Balance beginning of period

$ 2 $ 2 $ 2 $ 2

Share issuances

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Balance beginning of period

1,922 2,007 1,938

Employee stock purchases

Exercise of stock options and vesting of restricted stock units, net of forfeitures

( 8 ) ( 66 ) ( 71 )

Restricted stock, stock option and restricted stock unit expense

Balance end of period

2,028 1,953 2,028 1,953

Retained earnings:

Balance beginning of period

6,086 6,484 5,874

Cumulative adjustments for changes in accounting principles — — ( 35 ) —

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Balance end of period

7,004 6,205 7,004 6,205

Treasury stock:

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Balance beginning of period

17 ( 5 ) 11 ( 23 )

Other comprehensive income, net of tax ( 55 ) ( 6 ) ( 49 ) 12

Balance end of period

( 38 ) ( 11 ) ( 38 ) ( 11 )

Total equity attributable to Raymond James Financial, Inc.

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Balance beginning of period

$ 75 $ 61 $ 62 $ 62

Net income/(loss) attributable to noncontrolling interests ( 1 ) ( 23 ) 12 ( 24 )

Other ( 29 ) ( 2 ) ( 29 ) ( 2 )

Balance end of period

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended December 31,

Six months ended March 31,

$ in millions 2021 2020

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Premium and discount amortization on available-for-sale securities and loss on other investments

Provisions for credit losses and legal and regulatory proceedings 16 1

Provisions/(benefits) for credit losses and legal and regulatory proceedings ( 14 ) 124

Share-based compensation expense 74 74

Unrealized gain on company-owned life insurance policies, net of expenses ( 83 ) ( 35 )

Unrealized (gain)/loss on company-owned life insurance policies, net of expenses ( 117 ) 76

Other 31 ( 4 )

Net change in:

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Brokerage client receivables and other accounts receivable, net

( 123 ) ( 203 )

Trading instruments, net ( 90 ) —

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended December 31,

Six months ended March 31,

$ in millions 2021 2020

Cash flows from financing activities:

Proceeds from short-term borrowings, net — 6

Proceeds from Federal Home Loan Bank advances — 850

Repayments of Federal Home Loan Bank advances and other borrowed funds ( 28 ) ( 853 )

Proceeds from senior notes issuances, net of debt issuance costs paid — 495

Exercise of stock options and employee stock purchases 32 43

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Dividends on common stock ( 109 ) ( 103 )

Acquisitions of and distributions to noncontrolling interests, net — ( 1 )

Net cash provided by financing activities 2,269 7,951

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

March 31, 2021

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

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A summary of our significant accounting policies is included in Note 2 of our 2020 Form 10-K.

During the three months ended December 31, 2020, there were no significant changes to our significant accounting policies other than the accounting policies adopted or modified as part of our implementation of new or amended accounting guidance, as noted in the following sections.

During the six months ended March 31, 2021, there were no significant changes to our significant accounting policies other than the accounting policies adopted or modified as part of our implementation of new or amended accounting guidance, as noted in the following sections.

Accounting guidance adopted in fiscal 2021

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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 forecasts.

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, including reserves for unfunded lending commitments, of approximately $ 45 million and a corresponding reduction in the beginning balance of retained earnings of approximately $ 35 million, net of tax.

The increase in our allowance for credit losses was primarily attributable to loans to financial advisors and, to a lesser extent, bank loans.

Prior-period amounts have not been restated.

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 approximately $ 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.

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On a quarterly basis, we reassess our expectation of zero credit losses to consider changes in the available-for-sale securities portfolio.

Other receivables

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, including initial margin and receivables related to sales of securities which have traded, but not yet settled and amounts receivable for securities failed to deliver.

We present “Other receivables” on our Condensed Consolidated Statements of Financial Condition, net of any allowance for credit losses.

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 is recorded for other receivables using estimates and assumptions based on historical experience, current facts and other factors.

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.

As permitted under the CECL guidance, we include accrued interest receivables related to our financial assets in “Other receivables” 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

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

RAYMOND JAMES FINANCIAL, INC.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

nonaccrual status.

As we write off uncollectible amounts in a timely manner, we do not recognize an allowance for credit loss against accrued interest receivable.

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

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When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is written-off against interest income.

Interest is recognized using the cash method until the loan qualifies for return to accrual status.

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.

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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, expected prepayments and cancellation features, among other factors.

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.

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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.

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.

Credit loss expense 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 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 for credit losses for all other financing receivables and unfunded lending commitments is included in “Other” expense.

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.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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 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 linear 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.

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 reasonable and supportable forecast 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.

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.

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(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 model.

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.

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changes in the value of underlying collateral;

legal and regulatory requirements;

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”) multiplied by the loss given default (“LGD”) 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 and LGD.

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.

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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.

RAYMOND JAMES FINANCIAL, INC.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

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 for bank loans in the respective portfolio segment and also based on the expected funding probabilities for fully binding 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.

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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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 – ACQUISITIONS

Acquisition announced and completed during the three months ended December 31, 2020

Acquisitions announced and completed during the six months ended March 31, 2021

In December 2020, we announced and completed our acquisition of all of the outstanding shares of NWPS Holdings, Inc.

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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.

The NWPS acquisition resulted in the addition of $ 139 million of goodwill and $ 96 million of identifiable intangible assets during the three months ended December 31, 2020.

The NWPS acquisition resulted in the addition of $ 139 million of goodwill and $ 96 million of identifiable intangible assets during the six months ended March 31, 2021.

The goodwill associated with this acquisition primarily represents synergies from combining NWPS with our existing businesses.

The identifiable intangible assets primarily relate to customer relationships and have a weighted-average useful life of 24.8 years.

The identifiable intangible assets primarily relate to client relationships and have a weighted-average useful life of 24.8 years.

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 allows us to further grow 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.

The Financo acquisition resulted in the addition of $ 30 million of goodwill and $ 9 million of identifiable intangible assets during the six months ended March 31, 2021.

The goodwill associated with this acquisition primarily represents synergies from combining Financo with our existing businesses.

The goodwill associated with Financo 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.

Due to the timing of the close of this acquisition, certain information is not yet available and the amounts of goodwill and intangible assets are considered provisional.

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However, these provisional estimates may be adjusted upon the availability of new information regarding facts and circumstances which existed at the acquisition date.

We expect to finalize this valuation in our fiscal second quarter of 2021.

See Notes 2 and 10 of our 2020 Form 10-K for additional information about our goodwill and identifiable intangible assets, including the related accounting policies.

Acquisition announcement

On December 17, 2020, we announced we had entered into a definitive agreement to acquire all of the outstanding shares of Financo, an investment bank focused on the consumer sector.

The addition of Financo will allow us to strategically grow our capabilities in consumer and retail investment banking.

Financo will operate within our Capital Markets segment upon completion of the acquisition, which we expect to close in March or April of 2021, subject to regulatory and other closing conditions.

We expect to finalize this valuation by the end of our 2021 fiscal year.

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.

Acquisition-related expenses

Certain acquisition and integration costs associated with these acquisitions were included in “Acquisition and disposition-related expenses” for the three months ended December 31, 2020 on our Condensed Consolidated Statements of Income and Comprehensive Income.

Certain acquisition and integration costs associated with these acquisitions were included in “Acquisition and disposition-related expenses” during fiscal 2021 on our Condensed Consolidated Statements of Income and Comprehensive Income.

Such costs primarily included legal and other professional fees.

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$ in millions Level 1 Level 2 Level 3 Netting

adjustments Balance as of December 31, 2020

adjustments Balance as of March 31, 2021

Assets at fair value on a recurring basis:

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Agency MBS and agency CMOs — 193 — — 193

Non-agency CMOs and asset-backed securities (“ABS”) — 6 — — 6

Total debt securities 23 483 — — 506

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Interest rate - other 70 143 — ( 111 ) 102

Foreign exchange — 1 — — 1

Total derivative assets 70 345 — ( 111 ) 304

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Government and agency obligations 122 — — — 122

Agency MBS and agency CMOs — 22 — — 22

Total debt securities 123 44 — — 167

Equity securities 44 — — — 44

Other — — 1 — 1

Total trading liabilities 167 44 1 — 212

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Total liabilities at fair value on a recurring basis $ 231 $ 369 $ 5 $ ( 69 ) $ 536

(1) Substantially all of our available-for-sale securities consist of agency MBS and agency CMOs.

See Note 5 for further information.

(2) These assets are comprised of U.S.

Treasuries purchased to meet future customer reserve requirements or to meet certain deposit requirements with clearing organizations.

RAYMOND JAMES FINANCIAL, INC.

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Agency MBS and agency CMOs — 130 — — 130

Non-agency CMOs and asset-backed securities (“ABS”) — 13 — — 13

Non-agency CMOs and ABS — 13 — — 13

Total debt securities

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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 December 31, 2020

Three months ended March 31, 2021

Level 3 instruments at fair value

Financial assets Financial liabilities

Trading assets Other investments Derivative liabilities

Trading assets Other investments Trading liabilities Derivative liabilities

$ in millions Other Private equity investments All other Other Other

Fair value beginning of period

$ 3 $ 52 $ 22 $ — $ ( 1 )

Total gains/(losses) included in earnings

( 2 ) — 1 ( 1 ) ( 3 )

Purchases and contributions

Sales and distributions

( 6 ) — — — —

Into Level 3 — — — — —

Out of Level 3 — — — — —

Fair value end of period

$ 5 $ 52 $ 23 $ ( 1 ) $ ( 4 )

Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period

$ — $ — $ 1 $ ( 1 ) $ ( 3 )

Six months ended March 31, 2021

Level 3 instruments at fair value

Financial assets Financial liabilities

Trading assets Other investments Trading liabilities Derivative liabilities

$ in millions Other Private equity investments All other Other Other

Fair value beginning of period

$ 12 $ 37 $ 22 $ — $ ( 5 )

Total gains/(losses) included in earnings

— 15 1 ( 1 ) 1

Purchases and contributions

Sales and distributions

( 23 ) — — — —

Into Level 3 — — — — —

Out of Level 3 — — — — —

Fair value end of period

$ 5 $ 52 $ 23 $ ( 1 ) $ ( 4 )

Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period

$ — $ 15 $ 1 $ ( 1 ) $ 1

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three months ended March 31, 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

2 unchanged sentences

Total gains/(losses) included in earnings

3 ( 32 ) ( 2 ) —

Purchases and contributions

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$ 5 $ ( 32 ) $ ( 2 ) $ —

Three months ended December 31, 2019

Six months ended March 31, 2020

Level 3 instruments at fair value

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Total gains/(losses) included in earnings

3 ( 32 ) ( 2 ) —

Purchases and contributions

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$ 5 $ ( 32 ) $ ( 2 ) $ —

As of December 31, 2020, 23 % of our assets and 1 % of our liabilities were measured at fair value on a recurring basis.

The net unrealized losses on our Level 3 private equity investments for the three and six months ended March 31, 2020 were primarily driven by the then anticipated negative impact of the coronavirus (“COVID-19”) pandemic on certain of our investments.

Of these losses, approximately $ 20 million for both the three and six months ended March 31, 2020 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 March 31, 2021, 26 % of our assets and 1 % of our liabilities were measured at fair value on a recurring basis.

In comparison, as of September 30, 2020, 19 % of our assets and 2 % 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, driven by a significant increase in client cash balances.

As of both December 31, 2020 and September 30, 2020, Level 3 assets represented less than 1 % of our assets measured at fair value on a recurring basis.

As of both March 31, 2021 and September 30, 2020, Level 3 assets represented less than 1 % of our assets measured at fair value on a recurring basis.

RAYMOND JAMES FINANCIAL, INC.

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$ in millions

Fair value at December 31, 2020

Fair value at March 31, 2021

Valuation technique(s) Unobservable input Range

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We utilize NAV when the fund investment does not have a readily determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.

Our private equity portfolio as of December 31, 2020 includes various direct investments, as well as investments in third-party private equity funds and various legacy private equity funds which we sponsor.

Our private equity portfolio as of March 31, 2021 includes various direct investments, as well as investments in third-party private equity funds and various legacy private equity funds which we sponsor.

The portfolio is primarily invested in a broad range of strategies including leveraged buyouts, growth capital, distressed capital, venture capital and mezzanine capital.

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$ in millions Recorded value Unfunded commitment

December 31, 2020

March 31, 2021

Private equity investments measured at NAV $ 88 $ 9

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Total private equity investments $ 116

Of the total private equity investments, the portions we owned were $ 102 million and $ 90 million as of December 31, 2020 and September 30, 2020, respectively.

The portions of the private equity investments we did not own were $ 35 million and $ 26 million as of December 31, 2020 and September 30, 2020, respectively, and were included as a component of noncontrolling interests on our Condensed Consolidated Statements of Financial Condition.

Of the total private equity investments, the portions we owned were $ 105 million and $ 90 million as of March 31, 2021 and September 30, 2020, respectively.

The portions of the private equity investments we did not own were $ 35 million and $ 26 million as of March 31, 2021 and September 30, 2020, 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.

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(weighted-average)

December 31, 2020

March 31, 2021

Residential mortgage loans $ 4 $ 11 $ 15 Collateral or discounted cash flow (1)

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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 December 31, 2020 and September 30, 2020.

This table excludes financial instruments that are carried at amounts which approximate fair value.

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$ in millions Level 2 Level 3 Total estimated fair value Carrying amount

December 31, 2020

March 31, 2021

Financial assets:

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Senior notes payable (1)

$ 2,400 $ — $ 2,400 $ 2,045

September 30, 2020

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Senior notes payable $ 2,504 $ — $ 2,504 $ 2,045

(1) In April and May 2021, we repurchased or redeemed, as applicable, a portion of our Senior notes payable.

See Note 14 for further information.

NOTE 5 – AVAILABLE-FOR-SALE SECURITIES

Available-for-sale securities are primarily comprised of agency MBS and agency CMOs owned by RJ Bank, N.A.

Available-for-sale securities are primarily comprised of agency MBS and agency CMOs owned by RJ 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.

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unrealized losses Fair value

December 31, 2020

March 31, 2021

Agency residential MBS

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$ 7,531 $ 124 $ ( 5 ) $ 7,650

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 December 31, 2020 and September 30, 2020, respectively, which was included in “Other receivables” on our Condensed Consolidated Statements of Financial Condition.

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 March 31, 2021 and September 30, 2020, respectively, 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.

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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 of December 31, 2020, the duration of our available-for-sale securities portfolio was approximately 3 years.

December 31, 2020

As a result, as of March 31, 2021, the weighted-average life of our available-for-sale securities portfolio was approximately 4 years.

March 31, 2021

$ in millions Within one year After one but

35 unchanged sentences

fair value Unrealized

December 31, 2020

March 31, 2021

Agency residential MBS

3 unchanged sentences

1,210 ( 17 ) 25 — 1,235 ( 17 )

Other securities

$ 4,741 $ ( 84 ) $ 25 $ — $ 4,766 $ ( 84 )

8 unchanged sentences

government or its agencies.

At December 31, 2020, of the 119 available-for-sale securities in an unrealized loss position, all were in a continuous unrealized loss position for less than 12 months.

At March 31, 2021, of the 242 available-for-sale securities in an unrealized loss position, 241 were in a continuous unrealized loss position for less than 12 months and one security was 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 December 31, 2020, based on our assessment of this portfolio, we did not recognize an allowance for credit losses on our available-for-sale securities.

At December 31, 2020, debt securities we held in excess of ten percent of our equity included Federal National Home Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) which had an amortized cost of $ 4.93 billion and $ 2.68 billion, respectively, and a fair value of $ 5.00 billion and $ 2.70 billion, respectively.

During the three months ended December 31, 2020, we received proceeds of $ 519 million, resulting in an insignificant gain, from 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.

During the three months ended December 31, 2019, there were no sales of available-for-sale securities.

At March 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 March 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 $ 5.04 billion and $ 2.81 billion, respectively, which also approximated the fair values of the securities.

During the three months ended March 31, 2021, there were no sales of available-for-sale securities.

During the six months ended March 31, 2021, we received proceeds of $ 519 million, resulting in an insignificant gain, from 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

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Income and Comprehensive Income.

During the three and six months ended March 31, 2020, there were no sales of available-for-sale securities.

NOTE 6 – DERIVATIVE ASSETS AND DERIVATIVE LIABILITIES

4 unchanged sentences

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.

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

$ in millions Derivative assets Derivative liabilities Notional amount Derivative assets Derivative liabilities Notional amount

29 unchanged sentences

As a result, we present the matched book amounts net in the preceding table.

The following table details the gains/(losses) included in AOCI, net of income taxes, on derivatives designated as hedging instruments.

The following table details the gains/(losses) included in accumulated other comprehensive income (“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 17 for additional information.

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

2 unchanged sentences

Total gains/(losses) in AOCI, net of taxes $ 9 $ 9 $ ( 15 ) $ 6

There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for each of the three months ended December 31, 2020 and 2019.

We expect to reclassify $ 16 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 7 years.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

There were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for each of the three and six months ended March 31, 2021 and 2020.

We expect to reclassify $ 15 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 7 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 Three months ended December 31,

$ in millions Three months ended March 31, Six months ended March 31,

Location of gain/(loss) 2021 2020 2021 2020

3 unchanged sentences

Other Principal transactions $ ( 2 ) $ — $ 2 $ —

Other Compensation, commissions and benefits expense $ — $ ( 1 ) $ — $ ( 1 )

Risks associated with our derivatives and related risk mitigation

2 unchanged sentences

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 December 31, 2020 and September 30, 2020.

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 March 31, 2021 and September 30, 2020.

We are not exposed to market risk on these derivatives due to the pass-through transaction structure described in Note 2 of our 2020 Form 10-K.

3 unchanged sentences

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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 7 – COLLATERALIZED AGREEMENTS AND FINANCINGS

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Although not offset on the Condensed Consolidated Statements of Financial Condition, these transactions are included in the following table.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Collateralized agreements Collateralized financings

$ in millions Reverse repurchase agreements Securities borrowed Total Repurchase agreements Securities loaned Total

December 31, 2020

March 31, 2021

Gross amounts of recognized assets/liabilities $ 224 $ 227 $ 451 $ 222 $ 56 $ 278

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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.

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 December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Collateral we received that was available to be delivered or repledged $ 3,225 $ 2,869

3 unchanged sentences

The following table presents information about our assets that have been pledged for one of the purposes previously described.

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Had the right to deliver or repledge $ 424 $ 325

Did not have the right to deliver or repledge $ 65 $ 65

Bank loans, net pledged at Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta $ 5,359 $ 5,367

Bank loans, net pledged at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank of Atlanta $ 5,501 $ 5,367

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

1 unchanged sentence

$ in millions Overnight and continuous Up to 30 days 30-90 days Greater than 90 days Total

December 31, 2020

March 31, 2021

Repurchase agreements:

15 unchanged sentences

Total collateralized financings $ 250 $ — $ — $ — $ 250

As of both December 31, 2020 and September 30, 2020, 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.

As of both March 31, 2021 and September 30, 2020, 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.

RAYMOND JAMES FINANCIAL, INC.

2 unchanged sentences

NOTE 8 – BANK LOANS, NET

Bank client receivables are comprised of loans originated or purchased by RJ Bank and include C&I loans, REIT loans, tax-exempt loans, commercial and residential real estate loans, and SBL and other loans.

Bank client receivables are comprised of loans originated or purchased by RJ Bank, N.A.

and include C&I loans, REIT loans, tax-exempt loans, commercial and residential real estate loans, and 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.

4 unchanged sentences

C&I, CRE, REIT, tax-exempt, residential mortgage, and SBL and other.

We have redefined certain of our portfolio segments to align with the new methodology applied in determining the allowance for credit losses.

Prior-period loan portfolio segments have been revised to conform to the current presentation.

Loan balances on 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.

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 RJ Bank’s total loan portfolio.

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

$ in millions Balance % Balance %

11 unchanged sentences

Accrued interest receivable on bank loans $ 46 $ 45

The allowance for credit losses as of December 31, 2020 was determined using the new methodology under CECL, which was adopted on October 1, 2020.

The allowance for credit losses as of March 31, 2021 was determined using the new methodology under CECL, which was adopted on October 1, 2020.

Prior periods have not been restated and were calculated under the incurred loss methodology.

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

At December 31, 2020, the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings.

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

At March 31, 2021, the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings.

See Note 14 of our 2020 Form 10-K for more information regarding borrowings from the FHLB.

Held for sale loans

RJ Bank originated or purchased $ 582 million and $ 706 million of loans held for sale during the three months ended December 31, 2020 and 2019, respectively.

Proceeds from the sale of these held for sale loans amounted to $ 188 million and $ 214 million during the three months ended December 31, 2020 and 2019, respectively.

Net gains resulting from such sales were insignificant in each of the three months ended December 31, 2020 and 2019.

RJ Bank originated or purchased $ 528 million and $ 1.11 billion of loans held for sale during the three and six months ended March 31, 2021, respectively, and $ 443 million and $ 1.15 billion during the three and six months ended March 31, 2020, respectively.

Proceeds from the sale of these held for sale loans amounted to $ 207 million and $ 395 million during the three and six months ended March 31, 2021, respectively, and $ 220 million and $ 434 million during the three and six months ended March 31, 2020, respectively.

Net gains resulting from such sales were insignificant in all periods during the three and six months ended March 31, 2021 and 2020.

RAYMOND JAMES FINANCIAL, INC.

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

$ in millions C&I loans Residential mortgage loans Total

Three months ended December 31, 2020

$ in millions C&I loans CRE loans Residential mortgage loans Total

Three months ended March 31, 2021

Purchases $ 538 $ — $ 114 $ 652

Sales $ 95 $ — $ — $ 95

Three months ended December 31, 2019

Six months ended March 31, 2021

Purchases $ 660 $ — $ 160 $ 820

Sales $ 100 $ — $ — $ 100

Three months ended March 31, 2020

Purchases $ 296 $ 5 $ 100 $ 401

Sales $ — $ — $ — $ —

Six months ended March 31, 2020

Purchases $ 396 $ 5 $ 258 $ 659

Sales $ 20 $ — $ — $ 20

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.

3 unchanged sentences

$ 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

December 31, 2020

March 31, 2021

C&I loans $ — $ — $ — $ — $ — $ 7,816 $ 7,816

13 unchanged sentences

Total loans held for investment $ — $ — $ — $ 5 $ 25 $ 21,409 $ 21,439

The preceding table includes $ 13 million and $ 15 million at December 31, 2020 and September 30, 2020, respectively, of nonaccrual loans which were current pursuant to their contractual terms.

The table also includes CRE and residential first mortgage loan TDRs of $ 14 million and $ 15 million, respectively, at December 31, 2020 and $ 6 million and $ 15 million, respectively, at September 30, 2020.

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

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 December 31, 2020, we had $ 13 million of collateral-dependent CRE loans, which were fully collateralized by retail and industrial real estate, and $ 7 million of collateral-dependent residential loans, 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 coronavirus (“COVID-19”) pandemic.

Such loans may be considered collateral-dependent after the forbearance period expires.

The recorded investment in mortgage loans secured by

The preceding table includes $ 15 million at both March 31, 2021 and September 30, 2020 of nonaccrual loans which were current pursuant to their contractual terms.

The table also includes CRE and residential first mortgage loan TDRs of $ 13 million and $ 14 million, respectively, at March 31, 2021 and $ 6 million and $ 15 million, respectively, at September 30, 2020.

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

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

one-to-four family residential properties for which formal foreclosure proceedings were in process was $ 6 million at both December 31, 2020 and September 30, 2020.

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 March 31, 2021, we had $ 13 million of collateral-dependent CRE loans, which were fully collateralized by retail and industrial real estate, and $ 6 million of collateral-dependent residential loans, 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.

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 $ 6 million at both March 31, 2021 and September 30, 2020.

Credit quality indicators

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present RJ Bank’s held for investment loan portfolio by year of origination and credit quality indicator as of December 31, 2020.

The following tables present RJ Bank’s held for investment loan portfolio by year of origination and credit quality indicator as of March 31, 2021.

$ in millions 2021 2020 2019 2018 2017 Prior Revolving loans Total

33 unchanged sentences

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

RJ Bank also monitors the credit quality of the residential mortgage loan portfolio utilizing FICO scores and 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.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

RJ Bank also monitors the credit quality of the residential mortgage loan portfolio utilizing FICO scores and 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.

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

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Below 600 $ 67 $ 67

7 unchanged sentences

Total $ 5,001 $ 4,973

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Allowance for credit losses

1 unchanged sentence

$ in millions C&I loans CRE loans REIT loans Tax-exempt loans Residential mortgage loans SBL and other Total

Three months ended December 31, 2020

Three months ended March 31, 2021

Balance at beginning of period

$ 198 $ 112 $ 30 $ 2 $ 33 $ 3 $ 378

Provision/(benefit) for credit losses 7 ( 39 ) 6 — ( 7 ) 1 ( 32 )

Net (charge-offs)/recoveries:

Charge-offs ( 2 ) — — — — — ( 2 )

Recoveries — — — — — — —

Net (charge-offs)/recoveries

( 2 ) — — — — — ( 2 )

Foreign exchange translation adjustment

— 1 — — — — 1

Balance at end of period

$ 203 $ 74 $ 36 $ 2 $ 26 $ 4 $ 345

Six months ended March 31, 2021

Balance at beginning of period

$ 200 $ 81 $ 36 $ 14 $ 18 $ 5 $ 354

Impact of CECL adoption 19 ( 11 ) ( 9 ) ( 12 ) 24 ( 2 ) 9

9 unchanged sentences

$ 203 $ 74 $ 36 $ 2 $ 26 $ 4 $ 345

Three months ended December 31, 2019

Three months ended March 31, 2020

Balance at beginning of period

9 unchanged sentences

$ 196 $ 54 $ 38 $ 11 $ 18 $ 7 $ 324

The allowance for credit losses on held for investment bank loans increased $ 15 million to $ 378 million since the adoption of CECL on October 1, 2020.

The increase was primarily driven by forecasted declines in commercial real estate values, partially offset by the impacts of a reduction in criticized loans and improvements in other forecasted macroeconomic inputs, including unemployment and gross domestic product.

See Note 2 for further information about the adoption of CECL and the impact to the allowance for credit losses.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $ 20 million and $ 12 million at December 31, 2020 and September 30, 2020, respectively.

The increase in the allowance for credit losses on unfunded lending commitments was predominantly due to the adoption impact of CECL.

Six months ended March 31, 2020

Balance at beginning of period

$ 139 $ 34 $ 15 $ 9 $ 16 $ 5 $ 218

Provision/(benefit) for credit losses 58 20 23 2 2 2 $ 107

Net (charge-offs)/recoveries:

Charge-offs — — — — — — $ —

Recoveries — — — — — — $ —

Net (charge-offs)/recoveries

— — — — — — —

Foreign exchange translation adjustment

( 1 ) — — — — — ( 1 )

Balance at end of period

$ 196 $ 54 $ 38 $ 11 $ 18 $ 7 $ 324

The allowance for credit losses on held for investment bank loans decreased $ 33 million to $ 345 million during the three months ended March 31, 2021, primarily due to changes in macroeconomic inputs to our CECL model during the quarter, including an improved outlook for the commercial real estate and residential mortgage bank loan portfolios, partially offset by the impact of weakened equity market forecasts on the C&I and REIT loan portfolios and an increase in criticized loans.

The allowance for credit losses decreased $ 18 million to $ 345 million since the adoption of CECL on October 1, 2020, largely attributable to changes in inputs to our CECL model since our October 1, 2020 adoption date, reflecting improvements in certain forecasted macroeconomic inputs, including unemployment and gross domestic product, partially offset by forecasted declines in commercial real estate values since our CECL adoption date, as well as an increase in criticized loans.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $ 17 million, $ 20 million and $ 12 million at March 31, 2021, December 31, 2020 and September 30, 2020, respectively.

The decrease in the allowance for credit losses on unfunded lending

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

commitments during the three months ended March 31, 2021 was primarily due to an improved outlook for commercial real estate compared with December 31, 2020.

The increase in the allowance for credit losses on unfunded lending commitments as of March 31, 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 to the allowance for credit losses.

NOTE 9 – LOANS TO FINANCIAL ADVISORS, NET

2 unchanged sentences

The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Currently affiliated with the firm (1)

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

The allowance for credit losses as of December 31, 2020 was determined using the new methodology under CECL, which was adopted on October 1, 2020.

Prior periods have not been restated and were calculated under the incurred loss methodology.

The increase in the allowance from September 30, 2020 to December 31, 2020 was due to the October 1, 2020 CECL adoption, which resulted in an increase in our allowance for credit losses of $ 25 million.

The allowance for credit losses as of March 31, 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 March 31, 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.

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

6 unchanged sentences

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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

$ in millions Aggregate assets Aggregate liabilities

December 31, 2020

March 31, 2021

Private Equity Interests

7 unchanged sentences

Intercompany balances are eliminated in consolidation and not reflected in the following table.

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Cash and cash equivalents and assets segregated pursuant to regulations $ 11 $ 9

Other investments 46 37

Other receivables 5 —

Other assets 59 164

6 unchanged sentences

Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these VIEs.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

$ in millions Aggregate

8 unchanged sentences

Total $ 14,924 $ 2,491 $ 114 $ 14,481 $ 2,225 $ 139

NOTE 11 - GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET

Our goodwill and identifiable intangible assets result from various acquisitions.

During the six months ended March 31, 2021, we acquired NWPS and Financo which resulted in goodwill and identifiable intangible 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 Form 10-K for additional information about our goodwill and intangible assets, including the related accounting policies.

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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, no impairment was identified.

No events have occurred since such assessments that would cause us to update this impairment testing.

NOTE 12 – LEASES

As of December 31, 2020 and September 30, 2020, our lease commitments resulted in ROU assets of $ 350 million and $ 321 million, respectively, and lease liabilities of $ 372 million and $ 345 million, respectively, which were included in “ Other assets ” and “ Other payables ,” respectively, on our Condensed Consolidated Statements of Financial Condition.

The weighted-average remaining lease term and discount-rate for our leases was 5.5 years and 3.80 %, respectively, as of December 31, 2020.

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 5.7 years and 3.80 %, respectively, as of March 31, 2021.

See Note 2 of our 2020 Form 10-K for a discussion of our accounting policies related to leases.

$ in millions March 31, 2021 September 30, 2020

ROU assets (included in Other assets) $ 348 $ 321

Lease liabilities (included in Other payables) $ 376 $ 345

Lease expense

1 unchanged sentence

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 December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

3 unchanged sentences

Lease liabilities

The maturities of lease liabilities as of December 31, 2020 are presented in the following table.

Fiscal year ended September 30, $ in millions

The maturities by fiscal year of our lease liabilities as of March 31, 2021 are presented in the following table.

$ in millions

Remainder of 2021 $ 47

4 unchanged sentences

Lease payments in the preceding table exclude $ 123 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 three years to 11 years.

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.

5 unchanged sentences

The calculation of the weighted-average rates were based on the actual deposit balances and rates at each respective period end.

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

$ in millions Balance Weighted-average rate Balance Weighted-average rate

4 unchanged sentences

Total bank deposits $ 29,254 0.08 % $ 26,801 0.09 %

$ 27,790 0.08 % $ 26,801 0.09 %

Total bank deposits in the preceding table exclude affiliate deposits of $ 185 million at both December 31, 2020 and September 30, 2020, all of which were held in a deposit account at RJ Bank, N.A.

Total bank deposits in the preceding table exclude affiliate deposits of $ 185 million at both March 31, 2021 and September 30, 2020, all of which were held in a deposit account at RJ Bank, N.A.

on behalf of RJF.

Savings and money market accounts in the preceding table consist primarily of deposits that are cash balances swept to RJ Bank, N.A.

from the client investment accounts maintained at RJ&A.

from the client investment accounts maintained at Raymond James & Associates, Inc.

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 December 31, 2020 was approximately $ 22 million.

The aggregate amount of individual time deposit account balances that exceeded the FDIC insurance limit at March 31, 2021 was approximately $ 23 million.

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

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

$ in millions Denominations

14 unchanged sentences

Over three through four years

19 160 37 165

Over four through five years

1 unchanged sentence

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

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

2 unchanged sentences

Total interest expense on deposits

$ 6 $ 12 $ 12 $ 28

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 14 – SENIOR NOTES PAYABLE

The following table summarizes our senior notes payable.

$ in millions March 31, 2021 September 30, 2020

5.625 % senior notes, due 2024

3.625 % senior notes, due 2026

4.65 % senior notes, due 2030

4.95 % senior notes, due 2046

Total principal amount 2,050 2,050

Unaccreted premium/(discount)

Unamortized debt issuance costs

( 14 ) ( 15 )

Total senior notes payable $ 2,045 $ 2,045

In March 2012, we sold in a registered underwritten public offering $ 250 million in aggregate principal amount of 5.625 % senior notes due April 2024.

In July 2016, we sold in a registered underwritten public offering $ 500 million in aggregate principal amount of 3.625 % senior notes due September 2026.

Interest on these senior notes was payable semi-annually.

In April and May 2021, we repurchased or redeemed, as applicable, all of the outstanding 5.625 % senior notes due April 2024 and 3.625 % senior notes due September 2026.

See the discussion of the tender offers and redemptions of such senior notes described below.

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.

Senior notes offering

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.

These senior notes will be reflected on our Condensed Consolidated Statement of Financial Condition beginning in our third fiscal quarter of 2021.

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, we commenced cash tender offers (the “Tender Offers”) for any and all of our outstanding 5.625 % senior notes due 2024 and 3.625 % senior notes due 2026 (the “Existing Notes”), pursuant to which we repurchased an aggregate of $ 332 million outstanding Existing Notes for an aggregate purchase price of $ 373 million.

The Tender Offers expired on April 14, 2021.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

In addition, on April 1, 2021, we issued notices of redemption to holders of the Existing Notes pursuant to the indentures governing such notes, to redeem any Existing Notes that remained outstanding following the closing of the Tender Offers.

On May 3, 2021, we redeemed the remaining outstanding balance of the Existing Notes of $ 418 million for an aggregate redemption price of $ 473 million.

These repurchases and redemptions were funded with the net proceeds from our offering of 3.75 % senior notes due April 2051 and cash on hand and will result in a charge of approximately $ 97 million as a loss on extinguishment of debt, comprised of make-whole premiums and unamortized debt issuance costs, which will be included on our Condensed Consolidated Statement of Income and Comprehensive Income in our third fiscal quarter of 2021.

NOTE 15 – INCOME TAXES

5 unchanged sentences

Effective tax rate

Our effective income tax rate was 21.8 % for the three months ended December 31, 2020, which was lower than the 22.2 % effective tax rate for fiscal year 2020.

The slight decrease in the effective income tax rate was primarily due to an increase in valuation gains associated with our company-owned life insurance policies which are not subject to tax.

Our effective income tax rate was 21.2 % for the six months ended March 31, 2021, which was lower than the 22.2 % effective tax rate for fiscal year 2020.

The decrease in the effective income tax rate was primarily due to an increase in valuation gains associated with our company-owned life insurance policies which are not subject to tax.

Uncertain tax positions

We anticipate that the uncertain tax position liability balance will decrease by approximately $ 8 million over the next 12 months due to the expiration of the federal and various state statutes of limitations and the anticipated resolution of certain positions with the Internal Revenue Service (“IRS”).

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 the Company’s uncertain tax position liability balance may decrease within the next 12 months by up to $ 8 million as a result of the expiration of statutes of limitations and the completion of tax authorities’ examinations.

NOTE 16 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments and contingencies

Loan and underwriting commitments

Underwriting commitments

In the normal course of business, we enter into commitments for debt and equity underwritings.

As of December 31, 2020, we had one such open underwriting commitment, which was subsequently settled in an open market transaction and did not result in a significant loss.

We offer loans to prospective financial advisors for recruiting and retention purposes (see Notes 2 and 9 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 conditions outlined in their offer.

Commitments to extend credit and other credit-related financial instruments

As of March 31, 2021, we had five such open underwriting commitments, which were subsequently settled in open market transactions and did not result in significant losses.

Lending commitments and other credit-related financial instruments

RJ Bank has outstanding, at any time, a significant number of commitments to extend credit and other credit-related off-balance sheet financial instruments, such as standby letters of credit and loan purchases, which then extend over varying periods of time.

1 unchanged sentence

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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Open-end consumer lines of credit (primarily SBL)

7 unchanged sentences

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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Because many of our 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.

Because many of RJ 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.

3 unchanged sentences

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 2 and 9 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 conditions outlined in their offer.

Investment commitments

We had unfunded commitments to various investments, including private equity investments and certain RJ Bank investments, of $ 34 million as of December 31, 2020.

We had unfunded commitments to various investments, including private equity investments and certain RJ Bank investments, of $ 38 million as of March 31, 2021.

Other commitments

3 unchanged sentences

Until such investments are sold to LIHTC funds, RJTCF is responsible for funding investment commitments to such partnerships.

As of December 31, 2020, RJTCF had committed approximately $ 120 million to project partnerships that had not yet been sold to LIHTC funds.

As of March 31, 2021, RJTCF had committed approximately $ 178 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.

2 unchanged sentences

See Note 2 of our 2020 Form 10-K for further discussion of these activities.

At December 31, 2020, we had $ 318 million of principal amount of outstanding forward MBS purchase commitments, which were expected to be purchased within 90 days following commitment.

At March 31, 2021, we had $ 263 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 with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future.

1 unchanged sentence

These TBA securities and related purchase commitments are accounted for at fair value.

As of December 31, 2020, the fair value of the TBA securities and the estimated fair value of the purchase commitments were insignificant.

On December 17, 2020, we announced we had entered into a definitive agreement to acquire all of the outstanding shares of Financo.

We expect the closing date of the transaction to occur in March or April of 2021.

See Note 3 for additional information.

As of March 31, 2021, the fair value of the TBA securities and the estimated fair value of the purchase commitments were insignificant.

For information regarding our lease commitments, including the maturities of our lease liabilities, see Note 12.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

broker-dealer subsidiaries are required by federal law to be members of the Securities Investors Protection Corporation (“SIPC”).

6 unchanged sentences

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 December 31, 2020.

The amount of such debt, including the undrawn portion of a revolving credit facility, was $ 13 million as of March 31, 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 addition to any matters that may be specifically described in the following sections, in the normal course of our business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a diversified financial services institution.

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.

18 unchanged sentences

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 December 31, 2020, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately $ 180 million in excess of the aggregate accruals for such matters.

With respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss as of March 31, 2021, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately $ 180 million in excess of the aggregate accruals for such matters.

Refer to Note 2 of our 2020 Form 10-K for a discussion of our criteria for recognizing liabilities for contingencies.

We may from time to time include in any descriptions of individual matters herein certain quantitative information about the plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings.

Although this information may provide insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as to any currently appropriate accrual related thereto.

RAYMOND JAMES FINANCIAL, INC.

2 unchanged sentences

NOTE 17 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

All of the components of OCI, net of tax, were attributable to RJF.

All of the components of other comprehensive income (“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.

1 unchanged sentence

net investment hedges and currency translations Available- for-sale securities Cash flow hedges Total

Three months ended December 31, 2020

Three months ended March 31, 2021

AOCI as of beginning of period

2 unchanged sentences

Amounts reclassified from AOCI, before tax

Pre-tax net OCI ( 13 ) 12 ( 1 ) ( 102 ) 26 ( 77 )

Income tax effect 3 — 3 26 ( 7 ) 22

OCI for the period, net of tax ( 10 ) 12 2 ( 76 ) 19 ( 55 )

AOCI as of end of period

$ 76 $ ( 81 ) $ ( 5 ) $ ( 4 ) $ ( 29 ) $ ( 38 )

Six months ended March 31, 2021

AOCI as of beginning of period

$ 115 $ ( 140 ) $ ( 25 ) $ 89 $ ( 53 ) $ 11

OCI before reclassifications and taxes

( 51 ) 57 6 ( 120 ) 25 ( 89 )

Amounts reclassified from AOCI, before tax

— 2 2 ( 5 ) 8 5

Pre-tax net OCI

( 51 ) 59 8 ( 125 ) 33 ( 84 )

Income tax effect 12 — 12 32 ( 9 ) 35

2 unchanged sentences

$ 76 $ ( 81 ) $ ( 5 ) $ ( 4 ) $ ( 29 ) $ ( 38 )

Three months ended December 31, 2019

Three months ended March 31, 2020

AOCI as of beginning of period

11 unchanged sentences

$ 149 $ ( 191 ) $ ( 42 ) $ 83 $ ( 52 ) $ ( 11 )

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.

Six months ended March 31, 2020

AOCI as of beginning of period

$ 110 $ ( 135 ) $ ( 25 ) $ 21 $ ( 19 ) $ ( 23 )

OCI before reclassifications and taxes

52 ( 56 ) ( 4 ) 83 ( 44 ) 35

Amounts reclassified from AOCI, before tax

Pre-tax net OCI

52 ( 56 ) ( 4 ) 83 ( 44 ) 35

Income tax effect

( 13 ) — ( 13 ) ( 21 ) 11 ( 23 )

OCI for the period, net of tax

39 ( 56 ) ( 17 ) 62 ( 33 ) 12

AOCI as of end of period

$ 149 $ ( 191 ) $ ( 42 ) $ 83 $ ( 52 ) $ ( 11 )

Reclassifications from AOCI to net income, excluding taxes, for the three and six months ended March 31, 2021 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 RJ Bank’s business operations.

7 unchanged sentences

See Note 23 of this Form 10-Q for additional information on our segment results.

Three months ended December 31, 2020

Three months ended March 31, 2021

$ in millions Private Client Group Capital Markets Asset Management RJ Bank Other and intersegment eliminations Total

4 unchanged sentences

Insurance and annuity products 109 — — — — 109

Equities, exchange-traded funds (“ETFs”) and fixed income products 108 40 — — — 148

Subtotal securities commissions 400 41 3 — ( 1 ) 443

Principal transactions (1)

13 135 — — — 148

Total brokerage revenues 413 176 3 — ( 1 ) 591

Account and services fees:

Mutual fund and annuity service fees 99 — — — — 99

RJBDP fees 63 1 — — ( 45 ) 19

Client account and other fees 42 2 5 — ( 8 ) 41

Total account and service fees 204 3 5 — ( 53 ) 159

Investment banking:

Merger & acquisition and advisory — 122 — — — 122

Equity underwriting 16 67 — — — 83

Debt underwriting — 37 — — — 37

Total investment banking 16 226 — — — 242

Tax credit fund revenues — 24 — — — 24

All other (1)

Total other 8 25 — 5 6 44

Total non-interest revenues 1,620 430 209 5 ( 55 ) 2,209

Interest income (1)

30 5 — 165 — 200

Total revenues 1,650 435 209 170 ( 55 ) 2,409

Interest expense ( 3 ) ( 2 ) — ( 10 ) ( 22 ) ( 37 )

Net revenues $ 1,647 $ 433 $ 209 $ 160 $ ( 77 ) $ 2,372

(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)

Three months ended March 31, 2020

$ in millions Private Client Group Capital Markets Asset Management RJ Bank Other and intersegment eliminations Total

Asset management and related administrative fees $ 833 $ 1 $ 177 $ — $ ( 5 ) $ 1,006

Brokerage revenues:

Securities commissions:

Mutual and other fund products 163 1 2 — — 166

Insurance and annuity products 99 — — — — 99

Equities, ETFs and fixed income products 105 40 — — — 145

27 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three months ended December 31, 2019

Six months ended March 31, 2021

$ in millions Private Client Group Capital Markets Asset Management RJ Bank Other and intersegment eliminations Total

30 unchanged sentences

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

At December 31, 2020 and September 30, 2020, net receivables related to contracts with customers were $ 299 million and $ 342 million, respectively.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six months ended March 31, 2020

$ in millions Private Client Group Capital Markets Asset Management RJ Bank Other and intersegment eliminations Total

Asset management and related administrative fees $ 1,615 $ 3 $ 353 $ — $ ( 10 ) $ 1,961

Brokerage revenues:

Securities commissions:

Mutual and other fund products 307 4 4 — ( 1 ) 314

Insurance and annuity products 200 — — — — 200

Equities, ETFs and fixed income products 190 70 — — ( 1 ) 259

Subtotal securities commissions 697 74 4 — ( 2 ) 773

Principal transactions (1)

34 171 — — ( 3 ) 202

Total brokerage revenues 731 245 4 — ( 5 ) 975

Account and services fees:

Mutual fund and annuity service fees 178 — 1 — ( 1 ) 178

RJBDP fees 204 — — — ( 95 ) 109

Client account and other fees 64 3 8 — ( 12 ) 63

Total account and service fees 446 3 9 — ( 108 ) 350

Investment banking:

Merger & acquisition and advisory — 132 — — — 132

Equity underwriting 22 82 — — — 104

Debt underwriting — 53 — — — 53

Total investment banking 22 267 — — — 289

Tax credit fund revenues — 30 — — — 30

All other (1)

16 4 1 11 ( 48 ) ( 16 )

Total other 16 34 1 11 ( 48 ) 14

Total non-interest revenues 2,830 552 367 11 ( 171 ) 3,589

Interest income (1)

94 18 1 454 15 582

Total revenues 2,924 570 368 465 ( 156 ) 4,171

Interest expense ( 15 ) ( 12 ) — ( 39 ) ( 28 ) ( 94 )

Net revenues $ 2,909 $ 558 $ 368 $ 426 $ ( 184 ) $ 4,077

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

At March 31, 2021 and September 30, 2020, net receivables related to contracts with customers were $ 357 million and $ 342 million, respectively.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 19 – INTEREST INCOME AND INTEREST EXPENSE

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

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

5 unchanged sentences

Bank loans, net of unearned income and deferred expenses

142 198 287 404

All other 11 20 21 38

Total interest income

$ 200 $ 285 $ 403 $ 582

Interest expense:

Bank deposits

$ 6 $ 12 $ 12 $ 28

Brokerage client payables

14 unchanged sentences

Other information related to our share-based awards is presented in Note 21 of our 2020 Form 10-K.

During the three months ended December 31, 2020, we granted approximately 1.3 million RSUs to employees and outside members of our Board of Directors with a weighted-average grant-date fair value of $ 91.28 .

For the three months ended December 31, 2020, total compensation expense for RSUs granted to our employees and members of our Board of Directors was $ 41 million, compared with $ 40 million for the three months ended December 31, 2019.

As of December 31, 2020, there were $ 246 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 three months ended December 31, 2020.

During the three and six months ended March 31, 2021, we granted approximately 150 thousand and 1.5 million RSUs, respectively, to employees and outside members of our Board of Directors with a weighted-average grant-date fair value of $ 116.73 and $ 93.63 , respectively.

For the three and six months ended March 31, 2021, total compensation expense for RSUs granted to our employees and members of our Board of Directors was $ 30 million and $ 71 million, respectively, compared with $ 27 million and $ 67 million for the three and six months ended March 31, 2020, respectively.

As of March 31, 2021, there were $ 231 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 six months ended March 31, 2021.

These costs are expected to be recognized over a weighted-average period of 3.2 years.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 21 – REGULATORY CAPITAL REQUIREMENTS

3 unchanged sentences

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, RJF is subject to the risk-based capital requirements of the Fed.

6 unchanged sentences

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 December 31, 2020, both RJF’s and RJ Bank, N.A.’s capital levels exceeded the capital conservation buffer requirement and were each categorized as “well-capitalized.”

As of March 31, 2021, both RJF’s and RJ Bank, N.A.’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 22 of our 2020 Form 10-K.

4 unchanged sentences

$ in millions Amount Ratio Amount Ratio Amount Ratio

RJF as of December 31, 2020:

RJF as of March 31, 2021:

CET1 $ 6,787 23.6 % $ 1,296 4.5 % $ 1,872 6.5 %

8 unchanged sentences

Tier 1 leverage $ 6,490 14.2 % $ 1,824 4.0 % $ 2,280 5.0 %

As of December 31, 2020 RJF’s Tier 1 and Total capital ratios declined compared to September 30, 2020, resulting from an increase in goodwill and intangible assets arising from the NWPS acquisition and an increase in risk-weighted assets, partially offset by an increase in equity due to positive earnings, net of dividends.

The increase in risk-weighted assets was driven by increases in our loan portfolio and market risk-equivalent assets.

RJF’s Tier 1 leverage ratio at December 31, 2020 decreased compared to September 30, 2020 due to increased average assets, driven by higher assets segregated pursuant to regulations due to an increase in client cash in the Client Interest Program (“CIP”), as well as growth in available-for-sale securities and loans.

As of March 31, 2021 RJF’s Tier 1 and Total capital ratios declined compared to September 30, 2020, primarily resulting from an increase in risk-weighted assets, partially offset by an increase in equity due to positive earnings, net of dividends and share repurchases.

The increase in risk-weighted assets was primarily driven by increases in our loan portfolio and market risk-equivalent assets.

RJF’s Tier 1 leverage ratio at March 31, 2021 decreased compared to September 30, 2020 due to increased average assets, driven by higher assets segregated pursuant to regulations due to an increase in client cash in the Client Interest Program (“CIP”), as well as growth in available-for-sale securities and loans.

Our regulatory capital ratios as of March 31, 2021 were also negatively impacted by the increase in goodwill and intangible assets arising from our acquisitions of NWPS and Financo.

See Note 3 for additional information on our fiscal 2021 acquisitions.

RAYMOND JAMES FINANCIAL, INC.

8 unchanged sentences

RJ Bank, N.A.

as of December 31, 2020:

as of March 31, 2021:

CET1 $ 2,442 13.1 % $ 838 4.5 % $ 1,210 6.5 %

10 unchanged sentences

Tier 1 leverage $ 2,279 7.7 % $ 1,183 4.0 % $ 1,479 5.0 %

RJ Bank, N.A.’s Tier 1 capital and Total capital ratios at December 31, 2020 increased compared to September 30, 2020, due to positive earnings, partially offset by growth in loans and lending commitments and available-for-sale securities.

RJ Bank, N.A.’s Tier 1 leverage ratio at December 31, 2020 decreased compared to September 30, 2020, due to increased average assets, driven by growth in available-for-sale securities and loans.

RJ Bank, N.A.’s Tier 1 capital and Total capital ratios at March 31, 2021 increased compared to September 30, 2020, due to positive earnings, partially offset by growth in loans and available-for-sale securities.

RJ Bank, N.A.’s Tier 1 leverage ratio at March 31, 2021 decreased compared to September 30, 2020, due to increased average assets, driven by the growth in available-for-sale securities and loans.

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 December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Raymond James & Associates, Inc.

7 unchanged sentences

$ 1,591 $ 1,193

As of December 31, 2020, Raymond James Financial Services, Inc.

As of March 31, 2021, Raymond James Financial Services, Inc.

(“RJFS”), Raymond James Ltd.

5 unchanged sentences

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

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

in millions, except per share amounts 2021 2020 2021 2020

Income for basic earnings per common share:

$ 355 $ 169 $ 667 $ 437

Less allocation of earnings and dividends to participating securities

— — ( 1 ) ( 1 )

Net income attributable to RJF common shareholders

$ 355 $ 169 $ 666 $ 436

Income for diluted earnings per common share:

$ 355 $ 169 $ 667 $ 437

Less allocation of earnings and dividends to participating securities

— — ( 1 ) ( 1 )

Net income attributable to RJF common shareholders

$ 355 $ 169 $ 666 $ 436

Common shares:

Average common shares in basic computation

137.8 138.4 137.3 138.4

Dilutive effect of outstanding stock options and certain RSUs

3.4 2.7 3.1 2.9

Average common shares used in diluted computation

141.2 141.1 140.4 141.3

Earnings per common share:

2 unchanged sentences

Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive

0.1 0.7 0.2 0.6

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 the three months ended December 31, 2020 and 2019.

Participating securities and related dividends paid on these participating securities were insignificant for the three and six months ended March 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 December 31,

Three months ended March 31, Six months ended March 31,

2021 2020 2021 2020

Dividends per common share - declared $ 0.39 $ 0.37 $ 0.78 $ 0.74

Dividends per common share - paid $ 0.39 $ 0.37 $ 0.76 $ 0.71

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 23 – SEGMENT INFORMATION

4 unchanged sentences

For a further discussion of our segments, see Note 24 of our 2020 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 December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

2 unchanged sentences

Capital Markets

433 290 885 558

Asset Management

209 184 404 368

160 210 327 426

( 12 ) ( 44 ) ( 8 ) ( 52 )

Intersegment eliminations

4 unchanged sentences

Capital Markets

105 28 234 57

Asset Management

87 73 170 146

111 14 182 149

( 48 ) ( 46 ) ( 72 ) ( 77 )

Total pre-tax income

$ 447 $ 239 $ 846 $ 598

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 December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

1 unchanged sentence

Private Client Group

$ 27 $ 38 $ 55 $ 79

Capital Markets

Asset Management

155 205 312 415

Other ( 22 ) ( 5 ) ( 43 ) ( 13 )

1 unchanged sentence

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

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Total assets:

6 unchanged sentences

Total $ 56,066 $ 47,482

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 December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Private Client Group (1)

2 unchanged sentences

Total $ 636 $ 466

(1) The balance includes a provisional estimate of $ 139 million of goodwill arising from our acquisition of NWPS during the three months ended December 31, 2020.

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

(2) The balance includes a provisional estimate of $ 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.

1 unchanged sentence

The following table presents our net revenues and pre-tax income classified by major geographic area in which they were earned.

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

$ in millions 2021 2020 2021 2020

2 unchanged sentences

Canada 130 112 235 207

Europe 48 36 86 75

Total $ 2,372 $ 2,068 $ 4,594 $ 4,077

Pre-tax income/(loss):

$ 415 $ 227 $ 812 $ 579

Canada 25 13 26 21

Europe 7 ( 1 ) 8 ( 2 )

1 unchanged sentence

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

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Total assets:

4 unchanged sentences

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

$ in millions December 31, 2020 September 30, 2020

$ in millions March 31, 2021 September 30, 2020

Total $ 636 $ 466

(1) The balance includes a provisional estimate of $ 139 million of goodwill arising from our acquisition of NWPS during the three months ended December 31, 2020.

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

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements