What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2022-02-08 · 542 added, 302 removed, 859 unchanged (50% of the section changed)

22 unchanged sentences

Certain statements made in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), anticipated timing and benefits of our acquisitions (including our acquisition of Charles Stanley completed on January 21, 2022, as well as our proposed acquisition of TriState Capital), and our level of success in integrating acquired businesses, anticipated results of litigation, regulatory developments, impacts of the COVID-19 pandemic, effects of accounting pronouncements, and general economic conditions.

In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, is intended to identify forward-looking statements.

Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions (including our announced acquisitions of TriState Capital and SumRidge Partners), divestitures, anticipated results of litigation, regulatory developments, and general economic conditions.

In addition, words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” “projects,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.

Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions.

Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements.

We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the SEC from time to time, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov.

We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the SEC from time to time, including our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov.

We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events or otherwise.

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EXECUTIVE OVERVIEW

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

For our fiscal first quarter of 2022, we generated net revenues of $2.78 billion, an increase of 25% compared with the prior-year quarter, and pre-tax income of $558 million, an increase of 40%.

Our net income of $446 million was 43% higher than the prior-year quarter and our earnings per diluted share were $2.10, reflecting a 42% increase.

Our annualized return on equity (“ROE”) was 21.2%, compared with 17.2% for the prior-year quarter, and annualized return on tangible common equity (“ROTCE”) was 23.4% (1) , compared with 19.0% (1) for the prior-year quarter.

The significant increase in net revenues compared with the prior-year quarter was primarily driven by higher asset management and related administrative fees, primarily attributable to higher PCG client assets in fee-based accounts, and strong investment banking revenues, which also increased compared with the prior-year quarter.

(1) ROTCE is a non-GAAP financial measure.

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

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

For our fiscal second quarter of 2022, we generated net revenues of $2.67 billion, an increase of 13% compared with the prior-year quarter, while pre-tax income of $433 million decreased 3%.

The decrease in pre-tax income was primarily due to a provision for loan losses in the current-year quarter compared with a benefit in the prior-year quarter.

Our net income of $323 million decreased 9%, and our earnings per diluted share were $1.52, reflecting a 10% decrease.

Our annualized return on equity (“ROE”) for the quarter was 15.0%, compared with 19.0% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 16.8% (1) , compared with 21.2% (1) for the prior-year quarter.

Excluding acquisition-related expenses of $11 million, our adjusted net income was $331 million (1) and our adjusted earnings per diluted share were $1.55 (1) .

Adjusted annualized ROE for the quarter was 15.4% (1) and adjusted annualized ROTCE was 17.2% (1) .

(1) ROTCE, adjusted net income, adjusted earnings per diluted share, adjusted annualized ROE, and adjusted annualized ROTCE are non-GAAP financial measures.

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

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Compensation, commissions and benefits expense increased $384 million, or 26%, primarily attributable to the growth in revenues and pre-tax income compared with the prior-year quarter.

The increase in net revenues compared with the prior-year quarter was driven by significantly higher asset management and related administrative fees, largely attributable to strong growth in PCG assets in fee-based accounts compared with the prior-year quarter and, to a lesser extent, incremental revenues resulting from our acquisition of Charles Stanley which was completed on January 21, 2022.

Net interest income also increased, primarily due to strong asset growth and a higher net interest margin at Raymond James Bank.

Compensation, commissions and benefits expense increased 12%, primarily resulting from higher revenues compared with the prior-year quarter and, to a lesser extent, incremental compensation expense due to the Charles Stanley acquisition and an increase in compensation costs to support our growth.

Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 69.3%, compared with 69.5% for the prior-year quarter.

Non-compensation expenses increased $16 million, or 5%, primarily due to increases in communications and information processing and business development expenses, as well as higher investment sub-advisory fees.

Partially offsetting these increases was a $25 million decrease in the bank loan provision for credit losses, which was a benefit of $11 million in the current quarter compared with a provision of $14 million in the prior-year quarter.

Our effective income tax rate was 20.1% for our fiscal first quarter of 2022, a decrease from 21.8% for the prior-year quarter.

The decrease in the effective tax rate from the prior-year quarter was primarily due to a larger tax benefit recognized during the current quarter related to share-based compensation that vested during the period, partially offset by lower valuation gains on our corporate-owned life insurance portfolio compared with the prior-year quarter.

As of December 31, 2021, our total capital ratio of 27.0% and tier 1 leverage ratio of 12.1% were each more than double the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity, with $1.4 billion (1) of cash at the parent company, which includes cash loaned to RJ&A.

We expect to continue to be opportunistic in deploying our capital in fiscal 2022, through a combination of organic growth and acquisitions, as evidenced by our acquisition of Charles Stanley, which we completed on January 21, 2022, as well as our proposed acquisition of TriState Capital, which we expect to close later in fiscal 2022.

In December 2021, our Board of Directors increased the quarterly dividend 31% to $0.34 per share and authorized share repurchases of up to $1 billion, which replaced the previous authorization.

Due to regulatory restrictions following the announcement of our pending acquisition of TriState Capital, we do not expect to repurchase common shares until after closing;

however, the increase in the authorization reflects our current intention to repurchase shares after closing.

As of February 4, 2022, $1 billion remained available under the share repurchase authorization.

We remain well-positioned entering our fiscal second quarter, with $1.26 trillion of client assets under administration as of December 2021 as well as strong financial advisor recruiting activity and a robust investment banking pipeline.

With clients’ domestic cash sweep balances of $73.5 billion as of December 2021, we believe we are also well-positioned for anticipated increases in short-term interest rates given the exposure to short-term interest rates for both our RJBDP balances with third-party banks and a significant portion of our assets at Raymond James Bank.

However, we also expect to continue to face economic uncertainty, including that arising from inflation, supply chain complications, labor shortages, and uncertainty around U.S.

economic policy.

In addition, although the economy has continued to improve since the beginning of the COVID-19 pandemic, the pace of recovery in the future is uncertain due to concerns related to the pandemic, including the spread of variants.

As a result, we may experience volatility in asset management fees, brokerage revenues and investment banking revenues.

Although our results during the quarter were positively impacted by a benefit for credit losses related to our bank loan portfolio, net loan growth should result in additional provisions for bank loan losses in future periods and/or future market deterioration could result in increased provisions in future periods.

In addition, although we have been focused on the management of expenses, we expect that expenses will continue to increase in fiscal 2022, as business and event-related travel continue to increase and as we continue to make investments in our people and technology to support our growth.

Non-compensation expenses increased 40%, primarily due to a $53 million increase in the bank loan provision for credit losses, resulting from a provision of $21 million for the current-year quarter compared with a benefit of $32 million for the prior-year quarter.

Communications and information processing expenses increased as a result of incremental expense of Charles Stanley, as well as continued investments in technology to support our growth.

Business development expenses also increased from the very low prior-year quarter level, primarily due to an increase in travel and event-related expenses.

Our effective income tax rate was 25.4% for our fiscal second quarter of 2022, an increase compared with a 20.6% effective income tax rate for the prior-year quarter, primarily due to the unfavorable impact of nondeductible valuation losses associated with our corporate-owned life insurance portfolio during the current quarter compared with nontaxable valuation gains in the prior-year quarter.

As of March 31, 2022, our total capital ratio of 25.0% and tier 1 leverage ratio of 11.1% were both more than double the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $2.2 billion (1) of cash at the parent as of March 31, 2022, which includes cash loaned to RJ&A.

We expect to continue to be opportunistic in deploying our capital in fiscal 2022, through a combination of organic growth and acquisitions, as evidenced by our acquisition of Charles Stanley completed on January 21, 2022, as well as our announced acquisitions of TriState Capital and SumRidge Partners, which we currently expect to close in our fiscal third and fourth quarters of 2022, respectively.

Although our Board of Directors authorized share repurchases of up to $1 billion in December 2021, we do not expect to repurchase our common shares until after the TriState Capital acquisition is completed.

As a result, as of the date this report was filed, $1 billion remained available under the share repurchase authorization.

We remain well-positioned entering our fiscal third quarter, with client assets under administration of $1.26 trillion as of March 31, 2022, as well as strong financial advisor recruiting activity and solid retention of existing advisors.

In addition, we expect our fiscal third quarter results to be positively impacted by a full quarter’s impact of the 25-basis point increase in the Fed’s short-term benchmark interest rate enacted in March 2022, as well as a partial quarter’s impact of the 50-basis point increase enacted in May 2022.

With clients’ domestic cash sweep balances of $76.5 billion as of March 31, 2022 and our high concentration of floating rate assets, we also believe we are well-positioned for further increases in short-term interest rates, which we expect to positively impact our net interest income and our RJBDP fees from third-party banks.

However, we also expect to continue to face geopolitical and macroeconomic uncertainties which may continue to have a negative impact on equity and fixed income markets.

As a result, we may experience volatility in asset management fees and brokerage revenues, as well as investment banking revenues, despite our robust investment banking pipelines.

Our fiscal third quarter asset management and related administrative fee revenues will be negatively impacted by the decrease in fee-based asset balances (excluding the impact of Charles Stanley) and financial assets under management as of March 31, 2022.

Net loan growth should result in additional provisions for credit losses in future periods and/or future market deterioration could result in increased bank loan provisions in future periods.

In addition, although we have been focused on the management of expenses, we expect that expenses will continue to increase in fiscal 2022, as business and event-related travel should continue to increase and as we continue to make investments in our people and technology to support our growth.

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

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Management’s Discussion and Analysis

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

For the six months ended March 31, 2022, we generated net revenues of $5.45 billion, an increase of 19% compared with the prior-year period, and pre-tax income of $991 million, an increase of 17%.

Our net income of $769 million was 15% higher than the prior-year period and our earnings per diluted share were $3.61, reflecting a 14% increase.

Our annualized ROE was 18.1%, unchanged from the prior-year period, and our annualized ROTCE was 20.2% (1) , compared with 20.1% (1) for the prior-year period.

Excluding acquisition-related expenses of $17 million, our adjusted net income was $782 million (1) and our adjusted earnings per diluted share were $3.67 (1) .

Adjusted annualized ROE for the year-to-date period was 18.4% (1) and adjusted annualized ROTCE was 20.6% (1) .

The significant increase in net revenues compared with the prior-year period was primarily driven by higher asset management and related administrative fees, primarily attributable to higher PCG client assets in fee-based accounts and incremental revenues from our Charles Stanley acquisition which was completed in January 2022, as well as strong investment banking revenues, particularly in our fiscal first quarter.

Compensation, commissions and benefits expense increased 19%, primarily attributable to the growth in revenues and pre-tax income compared with the prior-year period.

Our compensation ratio was 68.5%, unchanged from the prior-year period.

Non-compensation expenses increased 21%, primarily due to increases in communications and information processing and business development expenses, as well as higher investment sub-advisory fees.

The bank loan provision for credit losses increased $28 million to a provision of $10 million for the current-year period, compared with a benefit of $18 million for the prior-year period.

Our effective income tax rate was 22.4% for the six months ended March 31, 2022, an increase from 21.2% for the prior-year period.

The increase in the effective tax rate from the prior-year period was primarily due to the negative impact of nondeductible valuation losses associated with our corporate-owned life insurance portfolio during the current-year period compared with nontaxable valuation gains for the prior-year period, partially offset by a larger tax benefit recognized during the current-year period related to share-based compensation that vested during the period.

In December 2021, our Board of Directors increased the quarterly dividend 31% to $0.34 per share and authorized share repurchases of up to $1 billion, which replaced the previous authorization.

(1) ROTCE, adjusted net income, adjusted earnings per diluted share, adjusted annualized ROE, and adjusted annualized ROTCE are non-GAAP financial measures.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

We utilize certain non-GAAP financial measures, including ROTCE, as additional measures to aid in, and enhance, the understanding of our financial results and related measures.

We utilize certain non-GAAP financial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures.

These non-GAAP financial measures include adjusted net income, adjusted earnings per diluted share, adjusted ROE, ROTCE, and adjusted ROTCE.

We believe certain of these non-GAAP financial measures provide useful information to management and investors by excluding certain material items that may not be indicative of our core operating results.

We utilize these non-GAAP financial measures in assessing the financial performance of the business, as they facilitate a meaningful comparison of current- and prior-period results.

We believe that ROTCE is meaningful to investors as this measure facilitates comparison of our results to the results of other companies.

Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.

In the following tables, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item.

These non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.

In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies.

The following tables provide a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures for the periods indicated.

Three months ended December 31,

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

$ in millions, except per share amounts 2022 2022 2021

$ 323 $ 769 $ 667

Non-GAAP adjustments :

Acquisition-related expenses 11 17 2

Pre-tax impact of non-GAAP adjustments

Tax effect of non-GAAP adjustments

Total non-GAAP adjustments, net of tax

Adjusted net income

$ 331 $ 782 $ 669

Earnings per common share - diluted $ 1.52 $ 3.61 $ 3.16

Non-GAAP adjustments:

Acquisition-related expenses 0.05 0.08 0.01

Pre-tax impact of non-GAAP adjustments 0.05 0.08 0.01

Tax effect of non-GAAP adjustments (0.02) (0.02) —

Total non-GAAP adjustments, net of tax 0.03 0.06 0.01

Adjusted earnings per common share - diluted $ 1.55 $ 3.67 $ 3.17

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

$ in millions 2022 2021 2022 2021

Annualized return on equity

Average equity $ 8,601 $ 7,478 $ 8,482 $ 7,356

Impact on average equity of non-GAAP adjustments:

Acquisition-related expenses 6 NA 8 1

Pre-tax impact of non-GAAP adjustments 6 NA 8 1

Tax effect of non-GAAP adjustments (2) NA (2) —

Total non-GAAP adjustments, net of tax 4 NA 6 1

Adjusted average equity $ 8,605 NA $ 8,488 $ 7,357

Average equity $ 8,601 $ 7,478 $ 8,482 $ 7,356

Average goodwill and identifiable intangible assets, net 992 851 955 767

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Average tangible common equity $ 7,686 $ 6,683 $ 7,599 $ 6,638

Impact on average tangible common equity of non-GAAP adjustments:

Acquisition-related expenses 6 NA 8 1

Pre-tax impact of non-GAAP adjustments 6 NA 8 1

Tax effect of non-GAAP adjustments (2) NA (2) —

Total non-GAAP adjustments, net of tax 4 NA 6 1

Adjusted average tangible common equity $ 7,690 NA $ 7,605 $ 6,639

Return on equity 15.0 % 19.0 % 18.1 % 18.1 %

Adjusted annualized return on equity

15.4 % NA 18.4 % 18.2 %

Return on tangible common equity 16.8 % 21.2 % 20.2 % 20.1 %

Average equity is computed by adding the total equity attributable to RJF as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two.

Tangible common equity is computed by subtracting goodwill and identifiable intangible assets, net, along with the associated deferred tax liabilities, from total equity attributable to RJF.

Adjusted annualized return on tangible common equity

17.2 % NA 20.6 % 20.2 %

Average equity for the quarter-to-date period is computed by adding the total equity attributable to RJF as of the date indicated to the prior quarter-end total, and dividing by two, or in the case of average tangible common equity, computed by adding tangible common equity as of the date indicated to the prior quarter-end total, and dividing by two.

Average equity for the year-to-date period is computed by adding the total equity attributable to RJF as of each quarter-end date during the indicated year-to-date period to the beginning of the year total, and dividing by three, or in the case of average tangible common equity, computed by adding tangible common equity as of each quarter-end date during the indicated year-to-date period to the beginning of the year total, and dividing by three.

Adjusted average equity is computed by adjusting for the impact on average equity of the non-GAAP adjustments, as applicable for each respective period.

Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period.

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

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

RAYMOND JAMES FINANCIAL, INC.

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

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Total company

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Pre-tax income $ 83 $ 111 (25) % $ 185 $ 182 2 %

Net revenues $ (15) $ 4 NM

Net revenues $ (18) $ (12) (50) % $ (33) $ (8) (313) %

Pre-tax loss $ (53) $ (48) (10) % $ (100) $ (72) (39) %

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NET INTEREST ANALYSIS

In response to macroeconomic concerns resulting from the COVID-19 pandemic, the Federal Reserve decreased its benchmark short-term interest rate in March 2020 to a range of 0-0.25%.

These near-zero short-term interest rates have negatively impacted our net interest income, as well as the fee income we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees) which are also sensitive to changes in interest rates.

The Federal Reserve has recently indicated that it intends to increase its short-term interest rates some time during our fiscal 2022 in response to inflationary pressures and given the improving economic and employment conditions since the beginning of the COVID-19 pandemic.

In March 2020, in response to macroeconomic concerns resulting from the COVID-19 pandemic, the Fed decreased its benchmark short-term interest rate to a range of 0-0.25%.

These near-zero short-term interest rates negatively impacted our net interest income over the past two years, as well as the fee income we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees) which are also sensitive to changes in interest rates.

In response to inflationary pressures and given the improved economic and employment conditions since the beginning of the COVID-19 pandemic, the Fed increased its benchmark short-term interest rate by 25 basis points in March 2022 and an additional 50 basis points in May 2022 and has indicated that it intends to further increase short-term interest rates through the remainder of our fiscal 2022.

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Raymond James Bank and Other segments) and the nature of fees we earn from third-party banks on the RJBDP, increases in short-term interest rates generally result in an increase in our net earnings, although the magnitude of the impact to our net interest margin depends on the yields on interest-earning assets relative to the cost of interest-bearing liabilities, including deposit rates paid to clients on their cash balances.

As a result, we believe we are well-positioned for our net interest earnings to be favorably impacted by any increase in short-term rates that may arise.

Conversely, any decreases in short-term interest rates and/or increases in the deposit rates paid to clients would generally have a negative impact on our earnings.

Based on our high concentration of floating-rate assets that are funded from clients’ domestic cash sweep balances, we estimate (based on static balances as of December 31, 2021) that an instantaneous 100 basis point increase in short-term interest rates would result in incremental pre-tax income of approximately $570 million annually, with approximately 65% reflected as net interest income and 35% reflected as account and service fees.

As a result, we believe we are well-positioned for our net interest earnings to be favorably impacted by any additional increase in short-term rates that may arise.

Based on our high concentration of floating-rate assets that are funded from clients’ domestic cash sweep balances, we estimate (based on static balances as of March 31, 2022) that an instantaneous 100-basis point increase in short-term interest rates would result in incremental pre-tax income of nearly $600 million annually, with approximately 65% reflected as net interest income and approximately 35% as account and service fees.

The realization of such amounts is dependent upon a number of key assumptions and actual results may differ materially from our estimates.

Notably, of this 100-basis point instantaneous increase assumption, 75 basis points has already occurred with the recent interest rate actions by the Fed in March and May of 2022.

These assumptions do not incorporate any impact from our announced acquisition of TriState Capital, currently anticipated to close by the end of our fiscal third quarter, which we would expect to further increase our incremental net interest income based on their relatively high concentration of floating-rate interest-earning assets.

Refer to the discussion of our net interest income within the “Management’s Discussion and Analysis - Results of Operations” of our PCG, Raymond James Bank, and Other segments, where applicable.

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The following table presents our consolidated average interest-earning asset and interest-bearing liability balances, interest income and expense and the related yields and rates.

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

Three months ended December 31,

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

Three months ended March 31,

$ in millions Average

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Interest income on residential mortgage nonaccrual loans is recognized on a cash basis.

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

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

RAYMOND JAMES FINANCIAL, INC.

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

Three months ended December 31,

Three months ended March 31,

2022 compared to 2021

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Management’s Discussion and Analysis

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

Six months ended March 31,

$ in millions Average

balance Interest Annualized

Interest-earning assets:

Cash and cash equivalents $ 5,954 $ 6 0.19 % $ 5,500 $ 6 0.23 %

Assets segregated for regulatory purposes and restricted cash 15,844 11 0.14 % 7,954 8 0.19 %

Available-for-sale securities 8,688 47 1.09 % 7,735 44 1.14 %

Brokerage client receivables 2,521 42 3.32 % 2,152 37 3.42 %

Bank loans, net of unearned income and deferred expenses:

Loans held for investment:

C&I loans 8,681 109 2.49 % 7,537 99 2.60 %

CRE loans 3,044 40 2.61 % 2,623 34 2.56 %

REIT loans 1,227 16 2.51 % 1,272 16 2.47 %

Tax-exempt loans 1,293 17 3.19 % 1,232 16 3.35 %

Residential mortgage loans 5,609 75 2.68 % 5,003 69 2.75 %

SBL and other 6,519 74 2.26 % 4,460 51 2.26 %

Loans held for sale 254 4 2.94 % 159 2 2.36 %

Total bank loans, net 26,627 335 2.53 % 22,286 287 2.59 %

All other interest-earning assets 2,279 26 2.26 % 2,247 21 1.93 %

Total interest-earning assets $ 61,913 $ 467 1.51 % $ 47,874 $ 403 1.69 %

Interest-bearing liabilities:

Bank deposits:

Savings, money market and NOW accounts

$ 32,489 $ 4 0.02 % $ 27,144 $ 3 0.02 %

Certificates of deposit

789 7 1.85 % 925 9 1.90 %

Total bank deposits 33,278 11 0.06 % 28,069 12 0.08 %

Brokerage client payables

17,275 1 0.01 % 9,403 2 0.04 %

Other borrowings 856 9 2.17 % 864 10 2.21 %

Senior notes payable 2,037 46 4.44 % 2,045 48 4.74 %

All other interest-bearing liabilities 680 8 1.65 % 587 3 1.01 %

Total interest-bearing liabilities $ 54,126 $ 75 0.28 % $ 40,968 $ 75 0.36 %

Net interest income $ 392 $ 328

Firmwide net interest margin (net yield on interest-earning assets) 1.27 % 1.38 %

Raymond James Bank net interest margin 1.97 % 1.98 %

Nonaccrual loans are included in the average loan balances in the preceding table.

Any payments received for corporate nonaccrual loans are applied entirely to principal.

Interest income on residential mortgage nonaccrual loans is recognized on a cash basis.

The yield on tax-exempt loans in the preceding table is presented on a tax-equivalent basis utilizing the applicable federal statutory rates for each of the six months ended March 31, 2022 and 2021.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.

The following table shows the effect that these factors had on the interest earned on our interest-earning assets and the interest incurred on our interest-bearing liabilities.

The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average yield/cost.

Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous period’s volume.

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

Six months ended March 31,

2022 compared to 2021

Increase/(decrease) due to

$ in millions Volume Rate Total

Interest income:

Interest-earning assets:

Cash and cash equivalents $ 1 $ (1) $ —

Assets segregated for regulatory purposes and restricted cash 7 (4) 3

Available-for-sale securities 5 (2) 3

Brokerage client receivables 6 (1) 5

Bank loans, net of unearned income and deferred expenses:

Loans held for investment:

C&I loans 15 (5) 10

CRE loans 5 1 6

REIT loans — — —

Tax-exempt loans 2 (1) 1

Residential mortgage loans 8 (2) 6

SBL and other 23 — 23

Loans held for sale 1 1 2

Total bank loans, net 54 (6) 48

All other interest-earning assets 1 4 5

Total interest-earning assets $ 74 $ (10) $ 64

Interest expense:

Interest-bearing liabilities:

Bank deposits:

Savings, money market and NOW accounts $ 1 $ — $ 1

Certificates of deposit (2) — (2)

Total bank deposits (1) — (1)

Brokerage client payables 1 (2) (1)

Other borrowings — (1) (1)

Senior notes payable — (2) (2)

All other interest-bearing liabilities 1 4 5

Total interest-bearing liabilities $ 1 $ (1) $ —

Change in net interest income $ 73 $ (9) $ 64

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RESULTS OF OPERATIONS – PRIVATE CLIENT GROUP

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Asset management and related administrative fees

2 unchanged sentences

Mutual and other fund products

166 183 (9) % 337 331 2 %

Insurance and annuity products

110 109 1 % 221 207 7 %

Equities, ETFs and fixed income products

121 121 — % 236 228 4 %

Total brokerage revenues 397 413 (4) % 794 766 4 %

1 unchanged sentence

Mutual fund and annuity service fees

109 99 10 % 223 193 16 %

Third-party banks 20 19 5 % 37 40 (8) %

1 unchanged sentence

Client account and other fees

53 42 26 % 102 74 38 %

Total account and service fees 231 204 13 % 461 394 17 %

Investment banking

9 16 (44) % 22 22 — %

Interest income

37 30 23 % 70 60 17 %

6 8 (25) % 13 13 — %

Total revenues 1,925 1,650 17 % 3,767 3,119 21 %

Interest expense

(3) (3) — % (6) (5) 20 %

Net revenues 1,922 1,647 17 % 3,761 3,114 21 %

7 unchanged sentences

Communications and information processing

84 69 22 % 155 131 18 %

Occupancy and equipment

50 45 11 % 96 88 9 %

Business development

25 15 67 % 52 31 68 %

Professional fees

13 10 30 % 22 23 (4) %

17 16 6 % 38 29 31 %

Total non-compensation expenses

189 155 22 % 363 302 20 %

Total non-interest expenses 1,709 1,455 17 % 3,353 2,782 21 %

5 unchanged sentences

PCG client asset balances

$ in billions December 31,

$ in billions March 31,

2022 December 31,

2021 September 30,

2021 March 31,

2021 December 31,

1 unchanged sentence

Assets under administration (“AUA”) (1)

$ 1,198.3 $ 1,199.8 $ 1,115.4 $ 1,028.1 $ 974.2 $ 883.3

Assets in fee-based accounts (1) (2)

2 unchanged sentences

56.6 % 56.5 % 56.2 % 55.2 % 54.7 % 53.8 %

(1) These metrics include the impact from the acquisition of Charles Stanley, which was completed on January 21, 2022.

As of March 31, 2022, the impact on AUA was $33 billion and the impact on Assets in fee-based accounts was $21 billion.

(2) A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset Management segment, specifically our Asset Management Services division of RJ&A (“AMS”).

10 unchanged sentences

As fees for substantially all of such accounts are billed based on balances as of the beginning of the quarter, revenues from fee-based accounts may not be immediately affected by changes in asset values, but rather the impacts are seen in the following quarter.

Assets in fee-based accounts in this segment increased 8% as of December 31, 2021 compared with September 30, 2021, which we expect will have a favorable impact on our related revenues in our fiscal second quarter of 2022, even after the offsetting effect of fewer days in the second quarter compared to the first quarter.

PCG AUA increased during the three months ended December 31, 2021, primarily due to equity market appreciation as well as strong retention and recruiting of financial advisors.

In addition, PCG assets in fee-based accounts continued to increase as a percentage of overall PCG AUA due to clients’ increased preference for fee-based alternatives versus transaction-based accounts.

As a result of the continued increase in fee-based accounts as a percentage of total PCG AUA, a significant portion of our PCG revenues is more directly impacted by market movements.

PCG AUA was essentially flat compared with December 31, 2021 as the positive impacts of strong net inflows of client assets during our fiscal second quarter and the Charles Stanley acquisition were offset by a decline in equity markets.

Excluding the impact of the Charles Stanley acquisition, PCG AUA and assets in fee-based accounts each declined approximately 3% compared with December 31, 2021, which will negatively impact our asset management and related administrative fees for our fiscal third quarter of 2022.

PCG assets in fee-based accounts continued to be a significant percentage of overall PCG AUA due to many clients’ preference for fee-based alternatives versus transaction-based accounts and, as a result, a significant portion of our PCG revenues is more directly impacted by market movements.

Financial advisors

2021 September 30,

2022 December 31,

2021 September 30,

2021 March 31,

Employees 3,601 3,447 3,461 3,375

1 unchanged sentence

Total advisors (1)

8,730 8,464 8,482 8,327

(1) This metric includes the impact from the acquisition of Charles Stanley, which was completed on January 21, 2022.

As of March 31, 2022, the impact on financial advisors was the addition of 200 advisors.

The number of financial advisors as of March 31, 2022 increased compared to December 31, 2021 and September 30, 2021, as a result of the Charles Stanley acquisition, strong recruiting and strong retention of existing advisors.

The recruiting pipeline remains robust across our affiliation options despite a competitive recruiting environment.

Advisors in our Registered Investment Advisor & Custody Services division are not included in our financial advisor metric although their client assets, which were $99.2 billion as of March 31, 2022, are included in PCG AUA.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

The number of financial advisors as of December 31, 2021 decreased slightly compared to September 30, 2021 as new recruits and trainees that were moved into production roles were outpaced by the number of financial advisors who left the firm, including planned retirements, where assets are generally retained at the firm pursuant to advisor succession plans.

Advisor departures due to retirements or advisors choosing to leave the business are typically elevated during the December quarter compared to other quarters.

The number of financial advisors included in our financial advisor metric has been negatively impacted over the past several quarters by the transfer of advisors who were previously affiliated with the firm as independent contractors or employees to our Registered Investment Advisor & Custody Services (“RCS”) division.

Advisors in RCS are not included in our financial advisor metric although their client assets, which were $101.6 billion as of December 31, 2021, are included in PCG AUA.

The recruiting pipeline remains robust across our affiliation options despite a competitive recruiting environment.

Clients’ domestic cash sweep balances

$ in millions December 31,

2021 September 30,

$ in millions March 31,

2022 December 31,

2021 September 30,

2021 March 31,

Raymond James Bank $ 33,570 $ 33,097 $ 31,410 $ 28,174

1 unchanged sentence

Subtotal RJBDP 59,457 57,413 55,906 53,284

CIP 16,065 10,762 8,769 3,999

Client Interest Program (“CIP”) 17,013 16,065 10,762 9,517

Total clients’ domestic cash sweep balances

$ 76,470 $ 73,478 $ 66,668 $ 62,801

Three months ended December 31,

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

2022 2021 2022 2021

Average yield on RJBDP - third-party banks

0.32 % 0.30 % 0.30 % 0.31 %

A significant portion of our clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their accounts are swept into interest-bearing deposit accounts at Raymond James Bank and various third-party banks.

A significant portion of our domestic clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their accounts are swept into interest-bearing deposit accounts at Raymond James Bank and various third-party banks.

We earn servicing fees for the administrative services we provide related to our clients’ deposits that are swept to such banks as part of the RJBDP.

1 unchanged sentence

The “Average yield on RJBDP - third party banks” in the preceding table is computed by dividing annualized RJBDP fees from third-party banks, which are net of the interest expense paid to clients by the third-party banks, by the average daily RJBDP balance at third-party banks.

The average yield on RJBDP - third-party banks decreased slightly from the prior-year quarter, reflecting the impact of near-zero short-term interest rates and limited demand for deposits at third-party banks.

If demand from third-party banks does not improve from current levels and short-term interest rates do not increase, we could continue to experience downward pressure on this yield or, in the case of an increase in short-term interest rates, may not experience a commensurate increase in this yield.

The average yield on RJBDP - third-party banks increased only slightly from the prior-year quarter, as the 25-basis point increase in short-term interest rates in March 2022 occurred late in the current quarter.

Although the Fed has indicated that it intends to continue to increase its benchmark short-term interest rate throughout the remainder of our fiscal 2022, as evidenced by the 50-basis point increase in May 2022, the amount of this increase that we will realize is impacted by other factors, including the timing and magnitude of the amount of such rate increases paid to clients as well as the demand for our deposit sweep balances from third-party banks that participate in the RJBDP.

The PCG segment also earns RJBDP servicing fees from the Raymond James Bank segment, which are based on the number of accounts that are swept to Raymond James Bank.

The fees from the Raymond James Bank segment are eliminated in consolidation.

PCG segment results can be impacted by changes in the allocation of client cash balances between RJBDP balances with Raymond James Bank, RJBDP balances with third-party banks, and CIP, as the PCG segment typically earns different amounts from each of the three client cash destinations, depending on multiple factors.

Client cash balances continued to increase as of December 31, 2021.

The growing cash balances combined with reduced capacity at third-party banks that participate in the RJBDP, resulted in a significant increase in cash balances held in CIP, also resulting in a significant increase in our assets segregated for regulatory purposes balance presented on our Condensed Consolidated Statements of Financial Condition.

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

PCG segment results can be impacted by changes in the allocation of client cash balances between RJBDP balances with Raymond James Bank, RJBDP balances with third-party banks and our CIP, as the PCG segment typically earns different amounts from each of the three client cash destinations, depending on multiple factors.

Client cash balances continued to increase as of March 31, 2022.

The growing cash balances combined with limited capacity at third-party banks that participate in the RJBDP has resulted in a significant increase in cash balances held in our CIP, also resulting in a significant increase in our assets segregated for regulatory purposes balance presented on our Condensed Consolidated Statements of Financial Condition.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

Net revenues of $1.92 billion increased $275 million, or 17%, and pre-tax income of $213 million increased $21 million, or 11%.

Asset management and related administrative fees increased $277 million, or 31%, primarily due to higher assets in fee-based accounts at the beginning of the current-year quarter.

Asset management and related administrative fees increased $266 million, or 27%, primarily due to higher assets in fee-based accounts at the beginning of the current quarter, as well as incremental revenues related to Charles Stanley since the January 2022 acquisition date.

Brokerage revenues decreased $16 million, or 4%, due to a decline in trailing placement fees from mutual and other fund products.

Account and service fees increased $27 million, or 13%, primarily due to an increase in mutual fund service fees resulting from higher average mutual fund assets, as well as incremental client account and other fees resulting from our acquisition of Charles Stanley and higher RJBDP fees from Raymond James Bank due to an increase in the number of accounts swept to Raymond James Bank as part of the RJBDP.

Compensation-related expenses increased $220 million, or 17%, primarily due to higher revenues, our acquisition of Charles Stanley, and an increase in compensation costs to support our growth.

Non-compensation expenses increased $34 million, or 22%, due to incremental expenses resulting from the acquisition of Charles Stanley, higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, and increases in travel and event-related expenses compared with the low levels incurred in the prior-year quarter.

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

Net revenues of $3.76 billion increased $647 million, or 21%, and pre-tax income of $408 million increased $76 million, or 23%.

Asset management and related administrative fees increased $543 million, or 29%, primarily due to higher assets in fee-based accounts at the beginning of each of the current-year quarterly billing periods compared with the prior-year quarterly billing periods and, to a lesser extent, the acquisition of Charles Stanley.

Brokerage revenues increased $28 million, or 4%, primarily due to higher revenues from insurance and annuity products and mutual fund products, resulting from higher average asset values, as well as incremental revenues from the Charles Stanley acquisition.

Account and service fees increased $67 million, or 17%, primarily due to an increase in mutual fund service fees resulting from higher average mutual fund assets, as well as incremental client account and other fees resulting from our acquisitions of NWPS Holdings, Inc.

at the end of our fiscal first quarter of 2021 and Charles Stanley in our fiscal second quarter of 2022.

RJBDP fees from Raymond James Bank also increased due to an increase in the number of accounts swept to Raymond James Bank as part of the RJBDP.

Compensation-related expenses increased $510 million, or 21%, primarily due to higher revenues, incremental expenses resulting from our acquisition of Charles Stanley, and an increase in compensation costs to support our growth.

Non-compensation expenses increased $61 million, or 20%, due to increases in travel and event-related expenses compared with the low levels incurred in the prior-year, higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, and incremental expenses resulting from our acquisition of Charles Stanley.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

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

Account and service fees increased $40 million, or 21%, primarily due to an increase in mutual fund service fees resulting from higher average mutual fund assets, as well as incremental client account and other fees resulting from our acquisition of NWPS Holdings, Inc.

at the end of our fiscal first quarter of 2021.

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

Non-compensation expenses increased $27 million, or 18%, largely due to increases in travel and event-related expenses compared with the low levels incurred in the prior-year quarter, as well as higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms.

RESULTS OF OPERATIONS – CAPITAL MARKETS

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Brokerage revenues:

5 unchanged sentences

Merger & acquisition and advisory

139 122 14 % 410 271 51 %

Equity underwriting

52 67 (22) % 149 127 17 %

Debt underwriting

35 37 (5) % 79 83 (5) %

Total investment banking 226 226 — % 638 481 33 %

Interest income

5 5 — % 10 8 25 %

Tax credit fund revenues

15 24 (38) % 50 40 25 %

4 4 — % 9 11 (18) %

Total revenues 416 435 (4) % 1,032 889 16 %

Interest expense

(3) (2) 50 % (5) (4) 25 %

Net revenues 413 433 (5) % 1,027 885 16 %

1 unchanged sentence

Compensation, commissions and benefits

253 259 (2) % 584 511 14 %

Non-compensation expenses:

Communications and information processing

22 20 10 % 44 39 13 %

Occupancy and equipment

10 9 11 % 19 18 6 %

Business development

9 6 50 % 17 15 13 %

Professional fees

7 13 (46) % 21 26 (19) %

Acquisition-related expenses — — — % 4 — NM

25 21 19 % 50 42 19 %

Total non-compensation expenses

73 69 6 % 155 140 11 %

Total non-interest expenses 326 328 (1) % 739 651 14 %

Pre-tax income $ 87 $ 105 (17) % $ 288 $ 234 23 %

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

Net revenues of $413 million decreased $20 million, or 5%, and pre-tax income of $87 million decreased $18 million, or 17%.

Brokerage revenues decreased $10 million, or 6%, due to a decrease in fixed income brokerage revenues resulting from a more challenging trading environment compared with a strong prior-year quarter.

We expect fixed income brokerage revenues to be volatile over the next few quarters given high levels of interest rate uncertainty.

However, we expect our fixed income brokerage revenues to benefit from our announced acquisition of SumRidge Partners, which we expect to close in the fiscal fourth quarter of 2022.

Investment banking revenues were flat compared with the prior-year quarter.

Merger & acquisition and advisory revenues increased compared with the prior-year quarter.

This increase was offset by a decrease in equity underwriting revenues, primarily due to a decline in market activity during the current quarter as a result of market uncertainty and geopolitical concerns.

Our investment banking pipeline remains strong and, in part, reflects the investments we have made over the past several years, including our fiscal 2021 acquisitions of Financo and Cebile;

however, continued market uncertainty could delay, or ultimately prevent, the closing of transactions, which could negatively impact our results for the remainder of fiscal 2022.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

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

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

Compensation-related expenses decreased $6 million, or 2%, primarily due to the impact of lower revenues.

Non-compensation expenses increased $4 million, or 6%, including an increase in business development expenses over relatively low prior-year levels.

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

Net revenues of $1.03 billion increased $142 million, or 16%, and pre-tax income of $288 million increased $54 million, or 23%.

Investment banking revenues increased $157 million, or 33%, due to a significant increase in merger & acquisition and advisory revenues and, to a lesser extent, equity underwriting revenues.

The significant increase in merger & acquisition and advisory revenues reflected an increase in the number of transactions due to continued high levels of client activity, as well as an increase in the average fee per transaction.

The increase in equity underwriting was primarily due to higher revenues from private placements.

In addition to our strong results during the quarter, our investment banking pipeline remains strong going into our fiscal second quarter and, in part, reflect the investments we have made over the past several years, including our fiscal 2021 acquisitions of Financo and Cebile.

Brokerage revenues decreased $14 million, or 8%, primarily due to a decrease in fixed income brokerage revenues, which remained solid but were lower than the prior-year quarter as a result of a decline in client activity levels compared with a strong prior-year quarter.

While inherently difficult to predict, we expect fixed income brokerage revenues to remain solid in our fiscal second quarter driven in large part by expected continued demand from depository clients.

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

The significant increase in merger & acquisition and advisory revenues reflected higher levels of client activity, especially in the fiscal first quarter of 2022.

The increase in equity underwriting was primarily due to higher revenues from private placements, partially offset by a decline in public offerings.

Brokerage revenues decreased $24 million, or 7%, primarily due to a decrease in fixed income brokerage revenues, which remained solid but were lower than the prior-year period as a result of challenging trading conditions compared with a strong prior-year period, due to a more volatile interest rate environment in fiscal 2022.

Compensation-related expenses increased $73 million, or 14%, primarily due to the increase in revenues, as well as an increase in compensation costs to support our growth.

Non-compensation expenses increased $15 million, or 11%, and included $4 million of acquisition-related expenses, comprised of the amortization of intangible assets with short useful lives which arose from the Financo and Cebile acquisitions.

2 unchanged sentences

Operating results

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Asset management and related administrative fees:

4 unchanged sentences

Account and service fees

6 5 20 % 12 9 33 %

All other 2 3 (33) % 5 6 (17) %

2 unchanged sentences

Compensation, commissions and benefits

47 50 (6) % 93 95 (2) %

Non-compensation expenses:

Communications and information processing

14 12 17 % 26 23 13 %

Investment sub-advisory fees

39 30 30 % 76 58 31 %

31 30 3 % 65 58 12 %

Total non-compensation expenses 84 72 17 % 167 139 20 %

1 unchanged sentence

Pre-tax income $ 103 $ 87 18 % $ 210 $ 170 24 %

Selected key metrics

Managed programs

Management fees recorded in our Asset Management segment are generally calculated as a percentage of the value of our fee-billable financial assets under management (“AUM”).

These AUM include the portion of fee-based AUA in our PCG segment that is invested in programs overseen by our Asset Management segment (included in the “AMS” line of the following table),

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

as well as retail accounts managed on behalf of third-party institutions, institutional accounts and proprietary mutual funds that we manage (collectively included in the “Carillon Tower Advisers” line of the following table).

Revenues related to fee-based AUA in our PCG segment are shared by the PCG and Asset Management segments, the amount of which depends on whether clients are invested in assets that are in managed programs overseen by our Asset Management segment and the administrative services provided (see our “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for more information).

Selected key metrics

Managed programs

Management fees recorded in our Asset Management segment are generally calculated as a percentage of the value of our fee-billable financial assets under management (“AUM”).

These AUM include the portion of fee-based AUA in our PCG segment that is invested in programs overseen by our Asset Management segment (included in the “AMS” line of the following table), as well as retail accounts managed on behalf of third-party institutions, institutional accounts and proprietary mutual funds that we manage (collectively included in the “Carillon Tower Advisers” line of the following table).

Revenues related to fee-based AUA in our PCG segment are shared by the PCG and Asset Management segments, the amount of which depends on whether or not clients are invested in assets that are in managed programs overseen by our Asset Management segment and the administrative services provided (see our “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for more information).

Our AUM in AMS are impacted by market fluctuations and net inflows or outflows of assets, including transfers between fee-based accounts and transaction-based accounts within our PCG segment.

4 unchanged sentences

Financial assets under management

$ in billions December 31,

$ in billions March 31,

2022 December 31,

2021 September 30,

2021 March 31,

2021 December 31,

7 unchanged sentences

Activity (including activity in assets managed for affiliated entities)

Three months ended December 31,

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

$ in billions 2022 2021 2022 2021

Financial assets under management at beginning of period $ 213.9 $ 178.8 $ 202.2 $ 161.7

Carillon Tower Advisers - net outflows (0.4) (0.3)

Carillon Tower Advisers - net inflows/(outflows) (0.8) 1.4 (1.2) 1.1

AMS - net inflows 3.5 3.6 7.0 5.3

Net market appreciation in asset values 8.6 15.7

Net market appreciation/(depreciation) in asset values (12.5) 4.0 (3.9) 19.7

Financial assets under management at end of period $ 204.1 $ 187.8 $ 204.1 $ 187.8

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Carillon Tower Advisers

2 unchanged sentences

The following table presents Carillon Tower Advisers’ AUM by objective, excluding assets for which it does not exercise discretion, as well as the approximate average client fee rate earned on such assets.

$ in billions December 31, 2021 Average fee rate

$ in billions March 31, 2022 Average fee rate

Equity $ 27.1 0.56 %

2 unchanged sentences

Total financial assets under management $ 64.0 0.36 %

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Non-discretionary asset-based programs

1 unchanged sentence

The vast majority of these assets are also included in our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”).

$ in billions December 31,

$ in billions March 31,

2022 December 31,

2021 September 30,

2021 March 31,

2021 December 31,

1 unchanged sentence

Total assets $ 379.7 $ 392.4 $ 365.3 $ 334.2 $ 313.5 $ 280.6

The increase in assets as of December 31, 2021 compared to September 30, 2021 was primarily due to equity market appreciation and continued growth in the PCG segment.

The decrease in assets as of March 31, 2022 compared to December 31, 2021 was largely due to a decline in equity markets during the quarter.

Administrative fees associated with these programs are predominantly based on balances at the beginning of the quarter.

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

$ in billions December 31,

$ in billions March 31,

2022 December 31,

2021 September 30,

2021 March 31,

2021 December 31,

1 unchanged sentence

Total assets $ 8.4 $ 8.8 $ 8.1 $ 7.8 $ 7.6 $ 7.1

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

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

Net revenues of $234 million increased $25 million, or 12%, and pre-tax income of $103 million increased $16 million, or 18%.

Asset management and related administrative fees increased $39 million, or 21%, driven by higher AUM and higher assets in non-discretionary asset-based programs.

The increase in AUM resulted from both equity market appreciation and net inflows at AMS, partially offset by net outflows at Carillon Tower Advisers, which continued to be negatively impacted by the industry shift from actively managed investment strategies to passive investment strategies.

Beginning October 1, 2021, AMS has received a lower portion of the client fee on certain managed fee-based products offered to PCG clients through AMS.

These changes resulted in a $9 million reduction in asset management and related administrative fees in the Asset Management segment and an approximately $7 million reduction in firmwide pre-tax income during the quarter.

Compensation expenses increased $1 million, or 2%, and included the impact of higher net revenues.

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

Asset management and related administrative fees increased $25 million, or 12%, driven by higher average financial assets under management and a higher beginning balance of assets in non-discretionary asset-based programs.

The increase in average financial assets under management resulted from both equity market appreciation since the prior-year quarter and net inflows at AMS, partially offset by net outflows at Carillon Tower Advisers, which continued to be negatively impacted by the industry shift from actively managed investment strategies to passive investment strategies.

We expect the declines in financial assets under management and assets in non-discretionary asset-based programs compared with December 31, 2021 to negatively affect our fiscal third quarter net revenues as the majority of our asset management and related administrative fees are billed based on balances as of the beginning of the quarter.

Compensation expenses decreased $3 million, or 6%, and non-compensation expenses increased $12 million, or 17%.

The increase in non-compensation expenses was primarily due to higher investment sub-advisory fees, which resulted from the increase in AUM in sub-advised programs.

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

Net revenues of $470 million increased $66 million, or 16%, and pre-tax income of $210 million increased $40 million, or 24%.

Asset management and related administrative fees increased $64 million, or 16%, driven by higher average financial assets under management and higher assets in non-discretionary asset-based programs at the beginning of each of the current-year quarterly billing periods compared with the prior-year quarterly billing periods.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Compensation expenses decreased $2 million, or 2%.

Non-compensation expenses increased $28 million, or 20%, largely due to higher investment sub-advisory fees, resulting from the increase in AUM in sub-advised programs.

RESULTS OF OPERATIONS – RAYMOND JAMES BANK

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Interest income $ 199 $ 165 21 % $ 386 $ 333 16 %

5 unchanged sentences

Compensation and benefits

14 13 8 % 27 25 8 %

Non-compensation expenses:

Bank loan provision/(benefit) for credit losses (11) 14 NM

Bank loan provision/(benefit) for credit losses 21 (32) NM 10 (18) NM

RJBDP fees to PCG

49 44 11 % 99 87 14 %

30 24 25 % 59 51 16 %

Total non-compensation expenses 100 36 178 % 168 120 40 %

1 unchanged sentence

Pre-tax income $ 83 $ 111 (25) % $ 185 $ 182 2 %

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

Net revenues of $183 million increased $16 million, or 10%, and pre-tax income of $102 million increased $31 million, or 44%.

Net interest income increased $20 million, or 13%, due to higher average interest-earning assets.

The increase in average interest-earning assets was primarily driven by significant growth in securities-based loans and residential mortgages to PCG clients, as well as increases in average corporate loans and available-for-sale securities.

The net interest margin decreased to 1.92% from 2.02% for the prior-year quarter, primarily due to lower short-term interest rates, as well as higher balances of agency-backed available-for-sale securities, which on average have a lower yield than loans.

Absent any changes in short-term interest rates during the period, we expect the net interest margin for our fiscal second quarter of 2022 to remain relatively flat to the fiscal first quarter;

however we expect net interest income to be positively impacted by the growth in loans.

Given that a significant portion of our interest-earning assets are sensitive to changes in market interest rates, our net interest earnings should be favorably impacted by any increase in short-term interest rates.

The bank loan benefit for credit losses was $11 million for the current quarter, compared with a provision for credit losses of $14 million for the prior-year quarter.

The current quarter benefit was largely attributable to improvement in credit quality in the C&I bank loan portfolio and continued improvement in macroeconomic inputs to our CECL model, which positively impacted most loan portfolios, partially offset by provisions for credit losses related to loan growth.

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

Net revenues of $197 million increased $37 million, or 23%, while pre-tax income of $83 million decreased $28 million, or 25%.

Net interest income increased $34 million, or 22%, largely due to higher average interest-earning assets.

The increase in average interest-earning assets was primarily driven by growth in securities-based loans and residential mortgage loans to PCG clients, as well as increases in average corporate loans and available-for-sale securities.

The net interest margin increased to 2.01% from 1.94% for the prior-year quarter, primarily due to growth in higher-yielding assets.

We anticipate that the net interest margin for our fiscal third quarter of 2022 will be positively impacted by the Fed’s short-term interest rate increases enacted in both March and May of 2022.

In addition, given that a significant portion of our interest-earning assets are sensitive to changes in market interest rates, we expect our net interest earnings to also be favorably impacted by any additional increases in short-term interest rates that may occur over the remainder of our fiscal 2022.

The bank loan provision for credit losses was $21 million for the current quarter, compared with a benefit for credit losses of $32 million for the prior-year quarter.

The current quarter provision was largely attributable to loan growth.

The prior-year quarter benefit primarily reflected favorable changes in macroeconomic inputs to our model during the quarter.

RJBDP fees to PCG increased $5 million, or 11%, due to an increase in the number of accounts swept to Raymond James Bank as part of the RJBDP.

These fees are eliminated in consolidation.

These fees eliminate in consolidation.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

Net revenues of $380 million increased $53 million, or 16%, and pre-tax income of $185 million increased $3 million, or 2%.

Net interest income increased $54 million, or 17%, due to higher average interest-earning assets.

The increase in average interest-earning assets was primarily driven by significant growth in securities-based loans and residential mortgage loans to PCG clients, as well as higher average corporate loans and available-for-sale securities.

The net interest margin decreased to 1.97% from 1.98% for the prior-year period, primarily due to lower average short-term interest rates, as well as higher balances of agency-backed available-for-sale securities, which on average have a lower yield than loans.

The bank loan provision for credit losses was $10 million for the current-year period, compared with a benefit for credit losses of $18 million for the prior-year period.

The current-year period provision primarily reflected the impact of loan growth.

The prior year benefit was largely attributable to favorable changes in inputs to our model, reflecting improvements in certain forecasted macroeconomic inputs.

RJBDP fees to PCG increased $12 million, or 14%, due to an increase in the number of accounts swept to Raymond James Bank as part of the RJBDP.

These fees are eliminated in consolidation.

RESULTS OF OPERATIONS – OTHER

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Operating results

Three months ended December 31,

$ in millions 2021 2020 % change

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

$ in millions 2022 2021 % change 2022 2021 % change

Interest income $ 3 $ 3 — % $ 4 $ 6 (33) %

Gains on private equity investments 5 24 (79) %

Gains/(losses) on private equity investments (2) 8 NM 3 32 (91) %

All other 5 2 150 % 7 3 133 %

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Interest expense (24) (25) (4) % (47) (49) (4) %

Net revenues (15) 4 NM

Net revenues (18) (12) (50) % (33) (8) (313) %

Non-interest expenses:

Compensation and all other 24 36 (33) % 54 62 (13) %

Acquisition-related expenses 2 2 — %

Acquisition-related expenses 11 — NM 13 2 550 %

Total non-interest expenses 35 36 (3) % 67 64 5 %

Pre-tax loss $ (53) $ (48) (10) % $ (100) $ (72) (39) %

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

Quarter ended March 31, 2022 compared with the quarter ended March 31, 2021

The pre-tax loss of $53 million was $5 million larger than the loss in the prior-year quarter.

Net revenues decreased $19 million, primarily due to a decrease in private equity valuation gains compared with the prior-year quarter.

The current quarter included $5 million of private equity valuation gains, of which $1 million was attributable to noncontrolling interests and was offset within other expenses.

The prior-year quarter included $24 million of private equity valuation gains, of which $10 million were attributable to noncontrolling interests and were offset within other expenses.

Non-interest expenses increased $4 million, or 14%, primarily due to increases in compensation and benefit expenses, primarily resulting from the continued improvement in the financial performance of our businesses, partially offset by the aforementioned decrease in private equity gains attributable to noncontrolling interests.

The $2 million of acquisition-related expenses in the current quarter primarily included professional fees associated with our acquisition of Charles Stanley and our announced acquisition of TriState Capital.

Net revenues decreased $6 million, as the current quarter included a net $2 million of losses related to our private equity investments compared with $8 million of gains in the prior-year quarter.

Non-interest expenses decreased $1 million, primarily due to a decrease in compensation expense and lower amounts attributable to noncontrolling interests due to private equity losses in the current quarter compared with gains in the prior-year quarter.

Offsetting these declines were $11 million of acquisition-related expenses in the current quarter, which primarily included professional expenses and other costs incurred to effect our acquisition of Charles Stanley, which was completed in January 2022, and our announced acquisitions of TriState Capital and SumRidge Partners.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Six months ended March 31, 2022 compared with the six months ended March 31, 2021

The pre-tax loss of $100 million was $28 million larger than the loss in the prior-year period.

Net revenues decreased $25 million, primarily due to lower private equity gains compared with the prior-year period.

The current-year period included $3 million of private equity valuation gains, of which an insignificant amount was attributable to noncontrolling interests, compared with $32 million of private equity valuation gains for the prior-year period, of which $10 million were attributable to noncontrolling interests and were offset within other expenses.

Non-interest expenses increased $3 million, or 5%, primarily due to an increase in acquisition-related expenses, partially offset by lower private equity gains attributable to noncontrolling interests.

The $13 million of acquisition-related expenses in the current-year period primarily included the aforementioned expenses associated with our acquisition of Charles Stanley, as well as our announced acquisitions of TriState Capital and SumRidge Partners.

CERTAIN STATISTICAL DISCLOSURES BY BANK HOLDING COMPANIES

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The following table provides certain of those disclosures.

Three months ended December 31,

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

2022 2021 2022 2021

Return on assets 1.8% 2.6% 2.3% 2.5%

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Return on assets is computed by dividing annualized net income for the period indicated by average assets for each respective period.

Average assets is computed by adding total assets as of the date indicated to the prior quarter-end total and dividing by two.

Average assets for the quarter is computed by adding total assets as of the date indicated to the prior quarter-end total and dividing by two.

Average assets for the year-to-date period is computed by adding total assets as of each quarter-end date during the year-to-date period to the beginning of the year total and dividing by three.

Return on equity is computed by dividing annualized net income for the period indicated by average equity for each respective period.

Average equity is computed by adding total equity attributable to RJF as of the date indicated to the prior quarter-end total and dividing by two.

Average equity for the quarter is computed by adding total equity attributable to RJF as of the date indicated to the prior quarter-end total and dividing by two.

Average equity for the year-to-date period is computed by adding total equity attributable to RJF as of each quarter-end date during the year-to-date period to the beginning of the year total and dividing by three.

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

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

STATEMENT OF FINANCIAL CONDITION ANALYSIS

The assets on our Condensed Consolidated Statements of Financial Condition consisted primarily of cash and cash equivalents, assets segregated for regulatory purposes and restricted cash (primarily segregated for the benefit of clients), receivables including bank loans, financial instruments held either for trading purposes or as investments, and other assets.

A significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.

Total assets of $68.46 billion as of December 31, 2021 were $6.57 billion, or 11%, greater than our total assets as of September 30, 2021.

The increase in assets was primarily due to a $4.14 billion increase in assets segregated for regulatory purposes and restricted cash, primarily due to a significant increase in client cash balances.

Bank loans, net increased by $1.14 billion, primarily due to an increase in securities-based loans and residential mortgages to PCG clients, as well as an increase in corporate loans.

In addition, cash and cash equivalents increased $1.02 billion and other investments increased $354 million, primarily due to the purchase of U.S.

Treasuries to meet future broker-dealer customer reserve requirements.

As of December 31, 2021, our total liabilities of $59.81 billion were $6.22 billion, or 12%, greater than our total liabilities as of September 30, 2021.

The increase in total liabilities was primarily related to the significant increase in client cash balances as of December 31, 2021, which resulted in a $5.21 billion increase in brokerage client payables, primarily due to an increase in client cash held in our CIP, and a $1.60 billion increase in bank deposits, resulting from a higher RJBDP balance held at Raymond James Bank.

Partially offsetting these increases was a decrease in accrued compensation, commissions and benefits of $397 million, primarily due to the seasonal payment of annual bonuses and the funding of profit-sharing and employee stock ownership benefit plans which occurred during the three months ended December 31, 2021.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

STATEMENT OF FINANCIAL CONDITION ANALYSIS

A significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.

Total assets of $73.10 billion as of March 31, 2022 were $11.21 billion, or 18%, greater than our total assets as of September 30, 2021.

The increase in assets was primarily due to an $8.18 billion increase in assets segregated for regulatory purposes and restricted cash, primarily due to a significant increase in client cash balances and the addition of $2.34 billion of segregated cash balances resulting from the Charles Stanley acquisition.

The acquisition of Charles Stanley also contributed to the $338 million increase in brokerage client receivables and drove the $228 million increase in goodwill and identifiable intangible assets compared with September 30, 2021 (see Note 3 for further information).

Bank loans, net increased by $2.89 billion, primarily due to an increase in securities-based loans and residential mortgage loans to PCG clients, as well as an increase in corporate loans.

Available-for-sale securities increased $500 million.

Partially offsetting these increases was a decrease in cash and cash equivalents of $1.49 billion.

As of March 31, 2022, our total liabilities of $64.49 billion were $10.90 billion, or 20%, greater than our total liabilities as of September 30, 2021.

The increase in total liabilities was primarily related to the significant increase in client cash balances as of March 31, 2022, which resulted in a $8.71 billion increase in brokerage client payables, primarily due to an increase in client cash held in our CIP, and a $2.19 billion increase in bank deposits resulting from higher RJBDP balances held at Raymond James Bank.

The increase in brokerage client payables also reflected an incremental $2.60 billion of client payables resulting from the Charles Stanley acquisition.

LIQUIDITY AND CAPITAL RESOURCES

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to analyze potential and emerging risks to capital;

to oversee our annual firmwide capital stress test;

and to propose capital actions to the Board of Directors, such as declaring dividends, repurchasing securities, and raising capital.

To ensure that we have sufficient capital to absorb unanticipated losses, the firm adheres to capital risk appetite statements and tolerances set in excess of regulatory minimums, which are established by the CPC and approved by the Board of Directors.

We conduct enterprise-wide capital stress testing to ensure that we maintain adequate capital to adhere to our established tolerances under multiple scenarios, including stressed scenarios.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) increased $1.02 billion to $8.22 billion during the three months ended December 31, 2021, primarily due to a significant increase in client cash balances and positive net income during the quarter.

During the three months ended December 31, 2021, we had a significant increase in client cash balances which increased our brokerage client payables and bank deposits.

This cash was largely used to purchase U.S.

Treasuries in our brokerage operations, which were segregated for regulatory purposes or held in anticipation of future broker-dealer customer reserve requirements as of December 31, 2021, and to increase our bank loan portfolio and available-for-sale securities as part of our banking operations.

Due to the timing of the increase in client cash balances, on January 3, 2022, $685 million of the $1.02 billion increase in cash and cash equivalents was segregated for regulatory purposes in order to comply with broker-dealer customer reserve requirements.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

oversee our annual firmwide capital stress test;

and to propose capital actions to the Board of Directors, such as declaring dividends, repurchasing securities, and raising capital.

We conduct enterprise-wide capital stress testing to ensure that we maintain adequate capital to adhere to our established tolerances under multiple scenarios, including stressed scenarios.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) decreased $1.49 billion to $5.72 billion during the six months ended March 31, 2022, primarily due to the purchase of U.S.

Treasuries, which were largely segregated for regulatory purposes as of March 31, 2022, as well as investments in bank loans and available-for-sale securities.

In addition, on January 21, 2022, we completed our acquisition of Charles Stanley for £277 million ($376 million as of January 21, 2022).

Offsetting these cash outflows was the impact of positive net income during the period, as well as a significant increase in client cash balances which increased our brokerage client payables and bank deposits.

Sources of liquidity

Approximately $1.40 billion of our total December 31, 2021 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A.

This parent cash balance does not include $385 million of cash set aside by the parent in a restricted account as of December 31, 2021 to be used to fund the acquisition of Charles Stanley.

As of December 31, 2021, this restricted cash was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition and is not included in the amounts presented in the following table.

On January 21, 2022, we completed the acquisition of Charles Stanley, utilizing $372 million of this restricted cash to complete the acquisition.

As of December 31, 2021, RJF had loaned $875 million to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities.

Approximately $2.23 billion of our total March 31, 2022 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A.

These amounts include the impact of significant dividends from RJ&A during the three months ended March 31, 2022, as well as dividends from RJF’s other subsidiaries.

As of March 31, 2022, RJF had loaned $1.67 billion to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities.

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

$ in millions December 31, 2021

$ in millions March 31, 2022

Raymond James Bank 869

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(“RJ Ltd.”) 974

Charles Stanley Group Limited 130

Raymond James Financial Services, Inc.

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Total cash and cash equivalents $ 5,715

RJF maintained depository accounts at Raymond James Bank with a balance of $229 million as of December 31, 2021.

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

On January 3, 2022, RJ&A segregated an additional $1.04 billion, comprised of $685 million of cash and $350 million of U.S.

Treasuries, to meet its December 31, 2021 broker-dealer customer reserve requirement, resulting in a decrease in “Cash and cash equivalents” and “Other investments” on our statement of financial condition and an increase in “Assets segregated for regulatory purposes and restricted cash.”

RJF maintained depository accounts at Raymond James Bank with a balance of $255 million as of March 31, 2022.

The portion of this total that was available on demand without restrictions, which amounted to $178 million as of March 31, 2022, is reflected in the RJF cash balance and excluded from the Raymond James Bank cash balance in the preceding table.

A large portion of the RJ Ltd.

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

cash and cash equivalents balance as of March 31, 2022 was held to meet regulatory requirements and was not available for use by the parent.

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Liquidity available from subsidiaries

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

As a member firm of the Financial Industry Regulatory Authority (“FINRA”), RJ&A is subject to FINRA’s capital requirements, which are substantially the same as Rule 15c3-1.

As a member firm of FINRA, RJ&A is subject to FINRA’s capital requirements, which are substantially the same as Rule 15c3-1.

Rule 15c3-1 provides for an “alternative net capital requirement,” which RJ&A has elected.

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In addition, covenants in RJ&A’s committed financing facilities require its net capital to be a minimum of 10% of aggregate debit items.

At December 31, 2021, RJ&A significantly exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances and intends to use a portion of its excess net capital to remit dividends to RJF, in conformity with all required regulatory rules or approvals.

At March 31, 2022, RJ&A significantly exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances despite significant dividends to RJF during our fiscal second quarter of 2022.

FINRA may impose certain restrictions, such as restricting withdrawals of equity capital, if a member firm were to fall below a certain threshold or fail to meet minimum net capital requirements which may result in RJ&A limiting dividends it would otherwise remit to RJF.

We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of liquidity available to RJF from RJ&A.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Raymond James Bank may pay dividends to RJF without prior approval of its regulator as long as the dividends do not exceed the sum of Raymond James Bank’s current calendar year and the previous two calendar years’ retained net income, and Raymond James Bank maintains its targeted regulatory capital ratios.

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

December 31, 2021

March 31, 2022

$ in millions RJ&A RJF Total Total number of arrangements

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RJ&A may borrow up to $500 million under the Credit Facility, depending on the amount of outstanding borrowings by RJF.

The variable rate facility fee on our Credit Facility, which is applied to the committed amount, decreased to 0.150% per annum as of March 31, 2022 from 0.175% per annum as of September 30, 2021, as a result of Moody’s Investor Services (“Moody’s”) upgrade of our credit ratings in February 2022.

For additional details on our issuer and senior long-term debt ratings see our credit ratings table within this section below.

For additional details on our committed unsecured financing arrangement, see our discussion of the Credit Facility in Note 16 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Uncommitted financing arrangements

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Our uncommitted secured financing arrangements generally require us to post collateral in excess of the amount borrowed and are generally collateralized by RJ&A-owned securities or by securities that we have received as collateral under reverse repurchase agreements (i.e., securities purchased under agreements to resell).

As of December 31, 2021, we had outstanding borrowings under two uncommitted secured borrowing arrangements out of a total of 11 uncommitted financing arrangements (seven uncommitted secured and four uncommitted unsecured).

As of March 31, 2022, we had outstanding borrowings under two uncommitted secured borrowing arrangements out of a total of 12 uncommitted financing arrangements (eight uncommitted secured and four uncommitted unsecured).

However, lenders are under no contractual obligation to lend to us under uncommitted credit facilities.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The following table presents our borrowings on uncommitted financing arrangements, all of which were in the form of repurchase agreements in RJ&A and were included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition.

$ in millions December 31, 2021

$ in millions March 31, 2022

Outstanding borrowing amount:

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during the quarter End of period

March 31, 2022 $ 271 $ 334 $ 140 $ 211 $ 304 $ 221

December 31, 2021 $ 247 $ 258 $ 203 $ 306 $ 305 $ 204

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March 31, 2021 $ 226 $ 260 $ 222 $ 242 $ 280 $ 224

December 31, 2020 $ 211 $ 236 $ 233 $ 204 $ 259 $ 162

Other borrowings and collateralized financings

We had $850 million in FHLB borrowings outstanding at December 31, 2021, comprised of floating-rate advances which mature in December 2023.

We had $850 million in FHLB borrowings outstanding at March 31, 2022, comprised of floating-rate advances which mature in December 2023.

The interest rates on the floating-rate advances reset quarterly and transitioned to a Secured Overnight Financing Rate (“SOFR”) -based rate in December 2021.

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These FHLB borrowings were secured by a blanket lien on Raymond James Bank’s residential mortgage loan portfolio.

Raymond James Bank had an additional $3.33 billion in immediate credit available from the FHLB as of December 31, 2021 and, with the pledge of additional eligible collateral to the FHLB, total available credit of 30% of total assets.

Raymond James Bank had an additional $3.58 billion in immediate credit available from the FHLB as of March 31, 2022 and, with the pledge of additional eligible collateral to the FHLB, total available credit of 30% of total assets.

See Note 16 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K for additional information regarding these borrowings.

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Where permitted, we have also loaned, to broker-dealers and other financial institutions, securities owned by clients or the firm.

We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $65 million as of December 31, 2021 related to the securities loaned included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q.

We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $285 million as of March 31, 2022 related to the securities loaned included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q.

See Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for more information on our collateralized agreements and financings.

Senior notes payable

At December 31, 2021, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051.

See Note 17 of the Notes to the Consolidated Financial Statements of our 2021 Form 10-K for additional information.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Senior notes payable

At March 31, 2022, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051.

See Note 17 of the Notes to the Consolidated Financial Statements of our 2021 Form 10-K for additional information.

Credit ratings

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Fitch Ratings, Inc.

Moody’s Investors Services (1)

Baa1 Review for Upgrade

Standard & Poor’s Ratings Services BBB+ Stable

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

Standard & Poor’s Ratings Services (2)

BBB+ Positive

(1) In February 2022, Moody’s upgraded our senior debt and issuer credit rating to A3 from Baa1, which had a favorable impact on the interest rate and facility fee associated with our Credit Facility.

(2) In March 2022, Standard & Poor’s Rating Services revised their outlook to positive and affirmed our BBB+ issuer credit rating.

Our current long-term debt ratings depend upon a number of factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trends and volatility, balance sheet composition, liquidity and liquidity management, capital structure, overall risk management, business diversification and market share, and competitive position in the markets in which we operate.

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Of the company-owned life insurance policies which fund these plans, certain policies could be used as a source of liquidity for the firm.

Those policies against which we could readily borrow had a cash surrender value of $896 million as of December 31, 2021, comprised of $553 million related to employee-directed plans and $343 million related to company-directed plans, and we were able to borrow up to 90%, or $807 million, of the December 31, 2021 total without restriction.

Those policies against which we could readily borrow had a cash surrender value of $859 million as of March 31, 2022, comprised of $538 million related to employee-directed plans and $321 million related to company-directed plans, and we were able to borrow up to 90%, or $773 million, of the March 31, 2022 total without restriction.

To effect any such borrowing, the underlying investments would be converted to money market investments, therefore requiring us to take market risk related to the employee-directed plans.

There were no borrowings outstanding against any of these policies as of December 31, 2021.

There were no borrowings outstanding against any of these policies as of March 31, 2022.

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

Subject to certain conditions, this registration statement will be effective through May 12, 2024.

On January 21, 2022, we completed our acquisition of all of the outstanding share capital of U.K.-based Charles Stanley at a price of £5.15 per share, or approximately £274 million ($372 million as of January 21, 2022).

As of December 31, 2021, we had segregated $385 million in cash to fund the acquisition on the closing date, which was included in “Assets segregated for regulatory purposes and restricted cash” on our Condensed Consolidated Statements of Financial Condition.

See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

On October 20, 2021, we announced we had entered into a definitive agreement to acquire TriState Capital in a combination cash and stock transaction, valued at approximately $1.1 billion.

Under the terms of the agreement, TriState Capital common stockholders will receive $6.00 cash and 0.25 RJF shares for each share of TriState Capital common stock, which represents per share consideration of $31.09 based on the closing price of RJF common stock on October 19, 2021.

We have entered into an agreement with the sole holder of the TriState Capital Series C Convertible Preferred Stock pursuant to which the Series C Convertible Preferred Stock will be converted to common shares at the prescribed exchange ratio and cashed out at $30 per share.

The TriState Capital Series A Preferred Stock and Series B Preferred Stock will remain outstanding and will be

We have entered into an

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

converted into equivalent preferred stock of RJF.

The transaction, which is subject to customary closing conditions, including regulatory approvals and approval by TriState Capital shareholders, is expected to close later in fiscal 2022.

agreement with the sole holder of the TriState Capital Series C Convertible Preferred Stock pursuant to which the Series C Convertible Preferred Stock will be converted to common shares at the prescribed exchange ratio and cashed out at $30 per share.

The TriState Capital Series A Preferred Stock and Series B Preferred Stock will remain outstanding and will be converted into equivalent shares of preferred stock of RJF.

As of April 30, 2022, we had received approval to complete the transaction from the Board of Governors of the Federal Reserve System, the Pennsylvania Department of Banking and Securities, and FINRA, and TriState Capital received approval to complete the transaction from its shareholders.

Subject to additional applicable closing conditions, we currently expect the transaction to close in our fiscal third quarter of 2022.

We currently have the ability to utilize our cash on hand to fund the cash component of the acquisition.

See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

On March 28, 2022, we announced we had reached an agreement to acquire SumRidge Partners, a technology-driven fixed income market maker specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional preferred securities.

The transaction, which is subject to certain regulatory and other closing conditions, is currently expected to close in our fiscal fourth quarter of 2022.

The acquisition of SumRidge Partners will add an institutional market-making operation, as well as additional trading technologies and risk management tools to our existing fixed income operations.

We currently have the ability to utilize our cash on hand to fund the acquisition.

See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

As part of our ongoing operations, we also enter into contractual arrangements that may require future cash payments, including certificates of deposit, lease obligations and other contractual arrangements, such as for software and various services.

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RJF and many of its subsidiaries are each subject to various regulatory capital requirements.

As of December 31, 2021, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements.

In addition, RJF and Raymond James Bank were categorized as “well-capitalized” as of December 31, 2021.

As of March 31, 2022, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements.

In addition, RJF and Raymond James Bank were categorized as “well-capitalized” as of March 31, 2022.

The maintenance of certain risk-based and other regulatory capital levels could influence various capital allocation decisions impacting one or more of our businesses.

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Refer to “Item 1 - Business - Regulation” of our 2021 Form 10-K f or additional information regarding the alternative reference rate transition and our planned response.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

CRITICAL ACCOUNTING ESTIMATES

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See Note 4 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on our financial instruments at fair value.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Loss provisions

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For a description of the significant estimates and judgments associated with establishing such accruals, see the “Contingent liabilities” section of Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K.

In addition, refer to Note 15 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding legal and regulatory matter contingencies as of December 31, 2021.

In addition, refer to Note 16 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding legal and regulatory matter contingencies as of March 31, 2022.

Allowance for credit losses

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See Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K for information regarding our methodologies and assumptions used in estimating the allowance for credit losses.

See Note 8 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our allowance for credit losses related to bank loans as of December 31, 2021.

See Note 8 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our allowance for credit losses related to bank loans as of March 31, 2022.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RECENT ACCOUNTING DEVELOPMENTS

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

In March 2022, the Financial Accounting Standards Board issued new guidance related to troubled debt restructurings and disclosures regarding write-offs of financing receivables (ASU 2022-02), amending guidance related to the measurement of credit losses on financial instruments (ASU 2016-13).

The amendment eliminates the accounting guidance for troubled debt restructurings for creditors, but requires enhanced disclosures for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, and requires disclosure of current-period gross write-offs by year of origination for financing receivables.

This new guidance is effective for our fiscal year beginning on October 1, 2023 and will be applied on a prospective basis.

Although permitted, we do not currently plan to early adopt.

We do not expect the adoption of this new guidance to have a material impact on our financial position and results of operations.

RISK MANAGEMENT

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The third line of risk management, Internal Audit, independently reviews activities conducted by the previous lines of risk management to assess their management and mitigation of risk, providing additional assurance to the Board of Directors and senior management, with a view toward enhancing our oversight, management, and mitigation of risk.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Market risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory, derivatives and investment positions.

We have exposure to market risk primarily through our broker-dealer trading operations and our banking operations.

Our broker-dealer subsidiaries, primarily RJ&A, act as market makers and trade debt obligations and equity securities and maintain inventories to ensure availability of securities and to facilitate client transactions.

Our broker-dealer subsidiaries, primarily RJ&A, trade debt obligations and equity securities and maintain trading inventories to ensure availability of securities and to facilitate client transactions.

Inventory levels may fluctuate daily as a result of client demand.

We also hold investments in agency-backed MBS and agency-backed CMOs within Raymond James Bank’s available-for-sale securities portfolio, and from time-to-time may hold SBA loan securitizations not yet transferred.

We also hold investments primarily in agency-backed MBS and agency-backed CMOs within Raymond James Bank’s available-for-sale securities portfolio, and from time-to-time may hold SBA loan securitizations not yet transferred.

Our primary market risks relate to interest rates, equity prices, and foreign exchange rates.

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Risk exposure is controlled by limiting our participation, the transaction size or through the syndication process.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The Market Risk Management department is responsible for measuring, monitoring, and reporting market risks associated with the firm’s trading and derivative portfolios.

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Changes in value of our trading inventory may result from fluctuations in interest rates, credit spreads, equity prices, macroeconomic factors, investor expectations or risk appetites, liquidity, as well as dynamic relationships among these factors.

We actively manage interest rate risk arising from our fixed income trading securities through the use of hedging strategies utilizing U.S.

We actively manage interest rate risk arising from our fixed income trading inventory through the use of hedging strategies utilizing U.S.

Treasuries, futures contracts, liquid spread products and derivatives.

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As a result, management complements VaR with sensitivity analysis and stress testing and employs additional controls such as a daily review of trading results, review of aged inventory, independent review of pricing, monitoring of concentrations and review of issuer ratings.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

To calculate VaR, we use models which incorporate historical simulation.

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As a result, VaR results are more reliable when used as indicators of risk levels and trends within a firm than as a basis for inferring differences in risk-taking across firms.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

Three months ended December 31, 2021 Period-end VaR Three months ended December 31,

$ in millions High Low December 31,

Six months ended March 31, 2022 Period-end VaR Three months ended March 31, Six months ended March 31,

$ in millions High Low March 31,

2022 September 30,

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Daily VaR $ 2 $ 1 $ 1 $ 1 Average daily VaR $ 1 $ 6 $ 1 $ 6

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

Average daily VaR was lower during the three and six months ended March 31, 2022 compared with the three and six months ended March 31, 2021 due to the impact of scenarios of elevated volatility as a result of the COVID-19 pandemic (which commenced in March 2020) on our VaR model during the prior-year period.

The Fed’s MRR requires us to perform daily back-testing procedures for our VaR model, whereby we compare each day’s projected VaR to its regulatory-defined daily trading losses, which exclude fees, commissions, reserves, net interest income and intraday trading.

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Based on these daily “ex ante” versus “ex post” comparisons, we determine whether the number of times that regulatory-defined daily trading losses exceed VaR is consistent with our expectations at a 99% confidence level.

During the three months ended December 31, 2021, our regulatory-defined daily losses in our trading portfolios did not exceed our predicted VaR.

During the three and six months ended March 31, 2022, our regulatory-defined daily loss in our trading portfolios exceeded our predicted VaR on five occasions as a result of heightened market volatility during our fiscal second quarter.

Separately, RJF provides additional market risk disclosures to comply with the MRR, including 10-day VaR and 10-day Stressed VaR, which are available on our website at https://www.raymondjames.com/investor-relations/financial-information/filings-and-reports within “Other Reports and Information.”

Banking operations

Raymond James Bank maintains an interest-earning asset portfolio that is comprised of cash, C&I loans, commercial and residential real estate loans, REIT loans, tax-exempt loans and SBL and other loans, as well as agency-backed MBS and agency-backed CMOs (held in the available-for-sale securities portfolio), and SBA loan securitizations.

Raymond James Bank maintains an interest-earning asset portfolio that is comprised of cash, C&I loans, commercial and residential real estate loans, REIT loans, tax-exempt loans and SBL and other loans, as well as agency-backed securities held in the available-for-sale securities portfolio (primarily MBS and CMOs), and SBA loan securitizations.

These interest-earning assets are primarily funded by client deposits.

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For further information regarding this hedging strategy, see Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

To ensure that Raymond James Bank remains within its tolerances established for net interest income, a sensitivity analysis of net interest income to interest rate conditions is estimated under a variety of scenarios.

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On a quarterly basis, we test expected model results to actual performance.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Additionally, any changes made to key assumptions in the model are documented and approved by Raymond James Bank’s Asset and Liability Committee.

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

The following table shows the contractual maturities of our bank loan portfolio at December 31, 2021, including contractual principal repayments.

The following table shows the contractual maturities of our bank loan portfolio at March 31, 2022, including contractual principal repayments.

This table does not include any estimates of prepayments, which could shorten the average loan lives and cause the actual timing of the loan repayments to differ significantly from those shown in the table.

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Total loans $ 8,072 $ 9,688 $ 10,451 $ 28,211

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

The following table shows the distribution of the recorded investment of those bank loans that mature in more than one year between fixed and adjustable interest rate loans at March 31, 2022.

Interest rate type

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Total loans $ 2,016 $ 18,123 $ 20,139

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Contractual loan terms for C&I, CRE, REIT and residential mortgage loans may include an interest rate floor, cap and/or fixed interest rates for a certain period of time, which would impact the timing of the interest rate reset for the respective loan.

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In our available-for-sale securities portfolio, we hold primarily fixed-rate agency-backed MBS and agency-backed CMOs which are carried at fair value on our Condensed Consolidated Statements of Financial Condition, with changes in the fair value of the portfolio recorded through OCI on our Condensed Consolidated Statements of Income and Comprehensive Income.

At December 31, 2021, our available-for-sale securities portfolio had a fair value of $8.55 billion with a weighted-average yield of 1.13% and a weighted-average life of approximately four years.

At March 31, 2022, our available-for-sale securities portfolio had a fair value of $8.82 billion with a weighted-average yield of 1.30% and a weighted-average life of approximately four years.

See Note 5 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Equity price risk

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Equity securities held in our trading inventory are generally included in VaR.

In addition, we have a private equity portfolio, included in “Other investments” on our Condensed Consolidated Statements of Financial Condition, which is comprised of various direct investments, as well as investments in third-party private equity funds.

Of the total private equity investments at December 31, 2021 of $157 million, the portion we owned was $115 million.

In addition, we have a private equity portfolio, included in “Other investments” on our Condensed Consolidated Statements of Financial Condition, which is primarily comprised of investments in third-party funds.

See Note 4 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on this portfolio.

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We are subject to foreign exchange risk due to our investments in foreign subsidiaries as well as transactions and resulting balances denominated in a currency other than the U.S.

For example, our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling $1.26 billion and $1.29 billion at December 31, 2021 and September 30, 2021, respectively, when converted to the U.S.

For example, our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling $1.38 billion and $1.29 billion at March 31, 2022 and September 30, 2021, respectively, when converted to the U.S.

A majority of such loans are held by Raymond James Bank’s Canadian subsidiary, which is discussed in the following sections.

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See Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K and Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding these derivatives.

We had foreign exchange risk in our investment in RJ Ltd.

of CAD 360 million at December 31, 2021, which was not hedged.

Foreign exchange gains/losses related to this investment are primarily reflected in OCI on our Condensed Consolidated Statements of Income and Comprehensive Income.

At March 31, 2022, we had foreign exchange risk in our investment in RJ Ltd.

of CAD 372 million and in our investment in Charles Stanley of £278 million, which were not hedged.

All of our other investments in subsidiaries located in Europe are not hedged and we do not believe we had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of March 31, 2022.

Foreign exchange gains/losses related to our foreign investments are primarily reflected in OCI on our Condensed Consolidated Statements of Income and Comprehensive Income.

See Note 17 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding our components of OCI.

We also have foreign exchange risk associated with our investments in subsidiaries located in Europe.

These investments are not hedged and we do not believe we had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of December 31, 2021.

On January 21, 2022, we completed our acquisition of all the outstanding share capital of U.K.-based Charles Stanley at a price of £5.15 per share, or approximately £274 million ($372 million as of January 21, 2022).

This transaction increased our foreign exchange exposure associated with investments in subsidiaries located in Europe.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

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See further discussion of our credit risk, including how we manage such risk, in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2021 Form 10-K.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Brokerage activities

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In addition, we may be subject to concentration risk if we hold large positions in or have large commitments to a single counterparty, borrower, or group of similar counterparties or borrowers (e.g., in the same industry).

We seek to mitigate these risks by imposing and monitoring individual and aggregate position limits within each business segment for each counterparty, conducting regular credit reviews of financial counterparties, reviewing security and loan concentrations, holding and calculating the fair value of collateral on certain transactions and conducting business through clearing organizations, which may guarantee performance.

We seek to mitigate these risks by imposing and monitoring individual and aggregate position limits within each business segment for each counterparty, conducting regular credit reviews of financial counterparties, reviewing security, derivative and loan concentrations, holding and calculating the fair value of collateral on certain transactions and conducting business through clearing organizations, which may guarantee performance.

See Note 2 of the Notes to Consolidated Financial Statements of our 2021 Form 10-K and Notes 6 and 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our credit risk mitigation related to derivatives and collateralized agreements.

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See Note 2 of the Notes to the Consolidated Financial Statements of our 2021 Form 10-K and Note 9 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our loans to financial advisors.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Banking activities

Raymond James Bank has a substantial loan portfolio.

Our strategy for credit risk management related to bank loans includes well-defined credit policies, uniform underwriting criteria, and ongoing risk monitoring and review processes for all corporate, tax-exempt, residential, SBL and other credit exposures.

The strategy also includes diversification on a geographic, industry and client level, regular credit examinations and management reviews of all corporate and tax-exempt loans as well as individual delinquent residential loans.

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While our bank loan portfolio is diversified, a significant downturn in the overall economy, deterioration in real estate values or a significant issue within any sector or sectors where we have a concentration will generally result in large provisions for credit losses and/or charge-offs.

Conversely, should the economy continue to recover at a faster pace than forecasted, we may experience an additional benefit for credit losses and/or recovery of amounts previously charged off, the timing and magnitude of which can be uncertain.

We determine the allowance required for specific loan grades based on relative risk characteristics of the loan portfolio.

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See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2021 Form 10-K for further information about the risk characteristics relevant to each portfolio segment.

Our allowance for credit losses as a percentage of total bank loans held for investment was 1.18% and 1.27% at December 31, 2021 and September 30, 2021, respectively.

The bank loan benefit for credit losses for the three months ended December 31, 2021 was $11 million compared to a provision for credit losses of $14 million for the prior-year quarter.

See further explanation of the credit loss provision decrease in “Management’s Discussion and Analysis - Results of Operations - Raymond James Bank” of this Form 10-Q and Note 8 in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our allowance for credit losses.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Our allowance for credit losses as a percentage of total bank loans held for investment was 1.17% and 1.27% at March 31, 2022 and September 30, 2021, respectively.

The bank loan provision for credit losses for the three and six months ended March 31, 2022 was $21 million and $10 million, respectively, compared to a benefit for credit losses of $32 million and $18 million for the three and six months ended March 31, 2021, respectively.

See further explanation of the credit loss provision in “Management’s Discussion and Analysis - Results of Operations - Raymond James Bank” of this Form 10-Q and Note 8 in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our allowance for credit losses.

The level of charge-off activity is a factor that is considered in evaluating the potential severity of future credit losses.

The following table presents net loan (charge-offs)/recoveries and the percentage of net loan (charge-offs)/recoveries to the average outstanding loan balances by loan portfolio segment.

Three Months Ended December 31,

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

2022 2021 2022 2021

$ in millions Net loan

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amount % of avg.

loans Net loan

(charge-off)/recovery

amount % of avg.

loans Net loan

(charge-off)/recovery

amount % of avg.

C&I loans $ (1) 0.05 % $ (2) 0.11 % $ (3) 0.07 % $ (2) 0.05 %

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Total $ (1) 0.01 % $ (2) 0.04 % $ (2) 0.02 % $ (2) 0.02 %

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The level of nonperforming loans is another indicator of potential future credit losses.

The following table presents the nonperforming loans balance and total allowance for credit losses for the periods presented.

December 31, 2021 September 30, 2021

March 31, 2022 September 30, 2021

$ in millions Nonperforming

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Total nonperforming loans as a % of total bank loans 0.37 % 0.29 %

(1) Total nonperforming loans held for investment at December 31, 2021 and September 30, 2021 included $59 million and $61 million of nonperforming loans, respectively, which were current pursuant to their contractual terms.

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

The following table presents total nonperforming assets, including the nonperforming loans in the preceding table and other real estate acquired in the settlement of residential mortgages, as a percentage of Raymond James Bank’s total assets.

$ in millions December 31, 2021 September 30, 2021

(1) Total nonperforming loans held for investment at March 31, 2022 and September 30, 2021 included $92 million and $61 million of nonperforming loans, respectively, which were current pursuant to their contractual terms.

The nonperforming loan balances in the preceding table exclude $7 million and $8 million as of March 31, 2022 and September 30, 2021, respectively, of residential TDRs which were returned to accrual status in accordance with our policy.

The following table presents total nonperforming assets, including the nonperforming loans in the preceding table and, when applicable, other real estate acquired in the settlement of residential mortgages, as a percentage of Raymond James Bank’s total assets.

$ in millions March 31, 2022 September 30, 2021

Total nonperforming assets $ 104 $ 74

Total nonperforming assets as a % of Raymond James Bank’s total assets 0.27 % 0.20 %

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

We have received requests from certain borrowers for forbearance, which is generally a short-term deferral of their loan payments, or modification of certain covenant terms, driven or exacerbated by the economic impacts of the COVID-19 pandemic.

Based on the amortized costs, only $2 million of our residential loans remained in active forbearance as of December 31, 2021.

As certain borrowers have exited forbearance we have received requests for loan modifications, including repayment plans.

Although our nonperforming assets as a percentage of Raymond James Bank’s assets remained low as of March 31, 2022, any prolonged period of market deterioration could result in an increase in our nonperforming assets, an increase in our allowance for credit losses and/or an increase in net charge-offs in future periods, although the extent will depend on future developments that are highly uncertain.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

In accordance with the Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act, 2021, we did not apply TDR classification to any COVID-19 related loan modifications performed from March 1, 2020 through December 31, 2021 to borrowers who were current as of December 31, 2019.

As of December 31, 2021, we had residential loans of $5 million for which the borrower had requested a loan modification, where the request had been initiated but not completed or approved.

As the delinquency status is not affected for loans that are in active forbearance or for loan modifications that have not yet been approved, the recognition of charge-offs, delinquencies, and nonaccrual status could be delayed for those borrowers who would have otherwise moved into past due or nonaccrual status.

The expiration of these provisions on January 1, 2022, did not have a significant impact on our results of operations or our credit metrics, including delinquencies or nonaccrual loans.

Loan underwriting policies

Our underwriting policies for the major types of bank loans are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2021 Form 10-K.

There were no significant changes in our bank loan underwriting policies during the three months ended December 31, 2021.

Risk monitoring process

Another component of credit risk strategy for our bank loan portfolio is the ongoing risk monitoring and review processes, including our internal loan review process, for all residential, SBL, corporate and tax-exempt credit exposures, as well as our rigorous processes to manage and limit credit losses arising from loan delinquencies.

Another component of credit risk strategy for our bank loan portfolio is the ongoing risk monitoring and review processes, including our internal loan review process, as well as our rigorous processes to manage and limit credit losses arising from loan delinquencies.

There are various other factors included in these processes, depending on the loan portfolio.

There were no significant changes to those processes during the three months ended December 31, 2021.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Residential mortgage and SBL and other loan portfolios

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

Amounts in the following table do not include residential loans to borrowers who were granted forbearance as a result of the COVID-19 pandemic and whose loans were not considered delinquent prior to the forbearance.

Such loans may be considered delinquent after the forbearance period or completion of loss mitigation efforts, depending on their payment status.

As a result, the amount of residential loans considered delinquent may increase in the future.

Amount of delinquent residential loans Delinquent residential loans as a percentage of outstanding residential mortgage loan balances

$ in millions 30-89 days 90 days or more Total 30-89 days 90 days or more Total

December 31, 2021 $ 4 $ 7 $ 11 0.07 % 0.13 % 0.20 %

March 31, 2022 $ 1 $ 8 $ 9 0.02 % 0.13 % 0.15 %

September 30, 2021 $ 4 $ 6 $ 10 0.08 % 0.11 % 0.19 %

Our December 31, 2021 percentage compares favorably to the national average for over 30 day delinquencies of 2.55%, as most recently reported by the Fed.

Our March 31, 2022 percentage compares favorably to the national average for over 30 day delinquencies of 2.57%, as most recently reported by the Fed.

Credit risk is also managed by diversifying the residential mortgage portfolio.

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The following table details the geographic concentrations (top five states) of our one-to-four family residential mortgage loans.

December 31, 2021

March 31, 2022

Loans outstanding as a % of total residential mortgage loans Loans outstanding as a % of total bank loans

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Payments may increase significantly when the interest-only period ends and the loan principal begins to amortize.

At December 31, 2021 and September 30, 2021, these loans totaled $2.10 billion and $1.97 billion, respectively, or approximately 38% and 37% of the residential mortgage portfolio, respectively.

The weighted-average number of years before the remainder of the loans, which were still in their interest-only period at December 31, 2021, begins amortizing is 7 years.

At March 31, 2022 and September 30, 2021, these loans totaled $2.23 billion and $1.97 billion, respectively, or approximately 38% and 37% of the residential mortgage portfolio, respectively.

The weighted-average number of years before the remainder of the loans, which were still in their interest-only period at March 31, 2022, begins amortizing is seven years.

RAYMOND JAMES FINANCIAL, INC.

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The following table details the industry concentrations (top five categories) of our corporate bank loans.

December 31, 2021

March 31, 2022

Loans outstanding as a % of total corporate bank loans Loans outstanding as a % of total bank loans

Office real estate 7.1% 3.4%

Multi-family 6.4% 3.2%

Office real estate 6.3% 3.1%

Automotive/transportation 6.3% 3.1%

Consumer products and services 6.1% 3.0%

Business systems and services 5.3% 2.6%

Since the beginning of the COVID-19 pandemic, our credit risk efforts were focused on reducing our exposure and revising our credit limits related to sectors that we believed were the most vulnerable to the COVID-19 pandemic, such as the energy, airlines, entertainment and leisure, restaurant and gaming sectors.

Although economic conditions have continued to improve since the beginning of the COVID-19 pandemic, we may experience further losses on our loans to borrowers in these sectors, particularly if economic conditions do not continue to improve in the future.

We continue to monitor our exposure to office real estate, where trends have changed as a result of the COVID-19 pandemic, and may experience losses on loans in this sector in the future.

We may also experience further losses on corporate loans in other industries as a direct or indirect result of the pandemic, including on our CRE loans secured by retail and hospitality properties.

Industrial warehouse 5.7% 2.8%

While the impacts of the COVID-19 pandemic appear to be waning, certain sectors continue to be impacted by supply chain disruptions and changes in consumer behavior.

In addition, the Ukraine conflict has further exacerbated supply chain stresses and inflation concerns.

These and related factors could negatively impact our borrowers, particularly those in consumer-facing or supply-dependent industries.

In addition, we continue to monitor our exposure to office real estate where trends have changed as a result of the COVID-19 pandemic.

Liquidity risk

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

In response to the COVID-19 pandemic, we activated and successfully executed on our business continuity protocols and continue to monitor the COVID-19 pandemic under such protocols.

We have endeavored to protect the health and well-being of our associates and our clients while ensuring the continuity of business operations for our clients.

As a result, a substantial portion of our associates continue to work remotely.

We continue to monitor conditions and have reopened our offices in a limited capacity, complying with all applicable laws, regulations, and Centers for Disease Control and Prevention guidelines and operating under strict public health and safety protocols in such locations.

We are planning for a full return to office in the second quarter of our fiscal 2022, which will include more work location flexibility for our associates;

however, disruptions caused by variants may impact the timing of the implementation of these plans.

Periods of severe market volatility, such as those that arose most notably in fiscal 2020 at the onset of the COVID-19 pandemic, can result in a significantly higher level of transactions on specific days and other activity which may present operational challenges from time to time that may result in losses.

In response to the COVID-19 pandemic, we activated and successfully executed on our business continuity protocols.

Throughout the COVID-19 pandemic and in developing our plans to return to the office, we have endeavored to protect the health and well-being of our associates and our clients while ensuring the continuity of business operations for our clients.

During the fiscal second quarter of 2022, we implemented our return to office strategy, which included more work location flexibility for our associates.

We continue to monitor conditions and comply with all applicable laws, regulations, and Centers for Disease Control and Prevention guidelines, as applicable.

Periods of severe market volatility can result in a significantly higher level of transactions on specific days, which may present operational challenges from time to time that may result in losses.

These losses can result from, but are not limited to, trade errors, failed transaction settlements, late collateral calls to borrowers and counterparties, or interruptions to our system processing.

We did not incur any significant losses related to such operational challenges during the three months ended December 31, 2021.

We did not incur any significant losses related to such operational challenges during the six months ended March 31, 2022.

As more fully described in the discussion of our business technology risks included in various risk factors presented in “Item 1A - Risk Factors” of our 2021 Form 10-K, despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, cyber-attacks and other information security breaches, and other events that could have an impact on the security and stability of our operations.

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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 2. Management’s Discussion and Analysis