What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-08 compared with 2023-02-03 · 589 added, 314 removed, 995 unchanged (48% of the section changed)

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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, divestitures, anticipated results of litigation, regulatory developments, and general economic conditions.

In addition, words such as “believes,” “expects,” “anticipates,” 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.

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 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 Securities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov.

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

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Overall market conditions, economic, political and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control.

These factors affect the financial decisions made by market participants, including investors, borrowers, and competitors, impacting their level of participation in the financial markets.

These factors affect the financial decisions made by market participants, including investors, depositors, borrowers, and competitors, impacting their level of participation in the financial markets.

These factors also impact the level of investment banking activity and asset valuations, which ultimately affect our business results.

EXECUTIVE OVERVIEW

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

For our fiscal first quarter of 2023, we generated net revenues of $2.79 billion, flat compared with the prior-year quarter, while pre-tax income of $652 million increased 17%.

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

For our fiscal second quarter of 2023, we generated net revenues of $2.87 billion, an increase of 7% compared with the prior-year quarter, while pre-tax income of $557 million increased 29%.

Our net income available to common shareholders of $425 million increased 32%, and our earnings per diluted share were $1.93, reflecting a 27% increase.

Our annualized return on common equity (“ROCE”) for the quarter was 17.3%, compared with 15.0% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 21.3% (1) , compared with 16.8% (1) for the prior-year quarter.

The three months ended December 31, 2022 included the favorable impact of a $32 million insurance settlement received during the quarter related to a previously settled litigation matter.

Excluding the favorable impact of the insurance settlement received, as well as expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets, our adjusted net income available to common shareholders was $505 million (1) , 9% higher than adjusted net income for the prior-year quarter, and our adjusted earnings per diluted share were $2.29 (1) , 6% higher than adjusted earnings per diluted share for the prior-year quarter.

Excluding $28 million of expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets, our adjusted net income available to common shareholders was $446 million (1) for the three months ended March 31, 2023, 29% higher than adjusted net income available to common shareholders for the prior-year quarter, and our adjusted earnings per diluted share were $2.03 (1) , 25% higher than adjusted earnings per diluted share for the prior-year quarter.

Adjusted annualized ROCE for the quarter was 18.2% (1) and adjusted annualized ROTCE was 22.3% (1) , compared with adjusted annualized ROCE of 16.1% (1) and adjusted annualized ROTCE of 18.0% (1) for the prior-year quarter.

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Management’s Discussion and Analysis

Quarterly net revenues were flat compared with the prior-year quarter as the benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks, as well as incremental revenues from our prior-year acquisitions of TriState Capital, Charles Stanley Group PLC (“Charles Stanley”), and SumRidge Partners, LLC (“SumRidge Partners”) were offset by lower investment banking revenues due to a challenging market environment during the current quarter, and a decrease in asset management and related administrative fees, as a result of lower fee-based assets at the beginning of the current quarter compared with the prior-year quarter.

Brokerage revenues also declined compared with the prior-year quarter primarily due to decreased activity from depository clients, as well as lower asset-based trailing revenues in the PCG segment.

Compensation, commissions and benefits expense decreased 8%, primarily attributable to the decrease in compensable revenues compared with the prior-year quarter, partially offset by incremental compensation expenses related to the aforementioned acquisitions.

Quarterly net revenues increased compared with the prior-year quarter due to the benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks, as well as incremental revenues from our prior-year acquisitions of TriState Capital in June 2022, SumRidge Partners, LLC (“SumRidge Partners”) in July 2022 and, to a lesser extent Charles Stanley Group PLC (“Charles Stanley”) in late January 2022.

These increases were offset by lower asset management and related administrative fees, primarily as a result of lower PCG client assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter, as well as lower investment banking revenues due to a challenging market environment during the current quarter.

Brokerage revenues also declined compared with the prior-year quarter primarily due to lower asset-based trailing revenues in the PCG segment, as well as decreased activity from depository clients in the Capital Markets segment.

Compensation, commissions and benefits expense decreased 2%, primarily attributable to the decrease in compensable revenues compared with the prior-year quarter, partially offset by incremental compensation expenses arising from the aforementioned acquisitions, an increase in compensation costs to support our growth, and annual salary increases.

Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 63.3%, compared with 69.3% for the prior-year quarter.

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The decline in the compensation ratio primarily resulted from changes in our revenue mix due to higher net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

Non-compensation expenses increased 17%, due to incremental expenses from the aforementioned acquisitions, as well as increases in the bank loan provision for credit losses, business development expenses and communications and information processing expenses.

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

Partially offsetting these increases was the aforementioned favorable insurance settlement received.

Our effective income tax rate was 21.9% for our fiscal first quarter of 2023, an increase compared with the 20.1% effective income tax rate for the prior-year quarter, a modest increase, as both periods included similar levels of non-taxable gains associated with our company-owned life insurance policies, as well as excess tax benefits on share-based compensation.

As of December 31, 2022, our Tier 1 leverage ratio of 11.3% and Total capital ratio of 21.6% were both more than double the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $2.0 billion (2) of cash at the parent as of December 31, 2022, which includes cash the parent loans to RJ&A to invest on its behalf.

We believe our funding and capital position provide us the opportunity to continue to grow our balance sheet prudently.

In December, the Board of Directors increased the quarterly cash dividend on common shares to $0.42 per share and authorized common stock repurchases of up to $1.5 billion.

During the three months ended December 31, 2022, we repurchased 1.29 million shares of our common stock for $138 million at an average price of $106 per share under the Board of Directors’ common stock repurchase authorization.

Non-compensation expenses increased 28%, due to incremental expenses arising from the aforementioned acquisitions, higher legal and regulatory costs, including the impact of an unfavorable arbitration award during the current quarter, as well as higher communications and information processing expenses reflecting continued technology investments and higher business development expenses compared to the relatively low prior-year level.

The bank loan provision for credit losses was $28 million for the current-year quarter compared with a provision of $21 million for the prior-year quarter.

Our effective income tax rate was 23.3% for our fiscal second quarter of 2023, a decrease compared with the 25.4% effective income tax rate for the prior-year quarter, primarily due to the favorable impact of nontaxable valuation gains associated with our company-owned life insurance policies in the current quarter compared with nondeductible valuation losses in the prior-year quarter.

As of March 31, 2023, our Tier 1 leverage ratio of 11.5% and Total capital ratio of 21.4% were both more than double the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $1.8 billion (2) of cash at the parent as of March 31, 2023, which includes cash the parent loaned to RJ&A to invest on its behalf.

Despite a challenging operating environment, we renewed our revolving credit facility in April 2023, expanding our borrowing capacity under the facility from $500 million to $750 million.

In addition, we increased our FHLB borrowings in the Bank segment by $500 million as of March 31, 2023 compared to December 31, 2022, and subsequently repaid $200 million of these borrowings in April 2023, leaving us with more than $9 billion of FHLB borrowing capacity in the Bank segment.

In addition, although recent turmoil in the banking industry has heightened awareness around bank deposits in excess of FDIC insurance limits, as of March 31, 2023, 88% of our Bank segment deposits were FDIC-insured, including nearly 95% at Raymond James Bank.

We believe our funding and capital position provides us the opportunity to manage our balance sheet prudently in the current operating environment and to continue being opportunistic and invest in growth.

During the three months ended March 31, 2023, we repurchased 3.75 million shares of our common stock for $350 million at an average price of $93 per share under the Board of Directors’ common stock repurchase authorization.

After the effect of those repurchases, $1.1 billion remained under such authorization.

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however, we will continue to monitor market conditions and other capital needs as we consider these repurchases.

We remain well-positioned entering our fiscal second quarter of 2023.

We expect our fiscal second quarter results to positively benefit from the realization of a full quarter impact of the increases in the Fed’s short-term benchmark interest rate of 75-basis points in November 2022 and 50-basis points in December 2022, as well as the 25-basis points increase in February 2023.

With clients’ domestic cash sweep balances of $60.4 billion as of December 31, 2022 and our high concentration of floating-rate assets, we also believe we are well-positioned for any 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 anticipate further declines in client cash balances during the second quarter as clients continue to move their cash from our cash sweep program into higher-yielding investment alternatives which could partially offset the otherwise positive impact on our results from the increase in interest rates.

Asset management and related administrative fees will be positively impacted by the 8% increase in PCG fee-based assets as of December 31, 2022, and we anticipate this to result in a benefit approximating 5%-6% compared to the first quarter level.

In addition, our recruiting pipelines remain solid across our affiliation options and we continue to see solid retention of existing advisors.

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

As a result, we may continue to experience headwinds for brokerage revenues and investment banking revenues, despite our healthy investment banking pipelines.

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

In addition, although we remain focused on the management of expenses, we expect that expenses will continue to increase in part as a result of inflationary pressures on our costs, and as we continue to make investments in our people and technology to support our growth.

(1) Adjusted compensation ratio is a non-GAAP financial measure.

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Management’s Discussion and Analysis

We remain well-positioned entering our fiscal third quarter of 2023.

We expect our fiscal third quarter results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 5% sequential increase in both PCG fee-based assets and financial assets under management as of March 31, 2023.

In addition, our recruiting pipelines remain solid across our affiliation options and we continue to see solid retention of existing advisors.

However, we expect our combined net interest income and RJBDP fees from third-party banks to decline in our fiscal third quarter due to a decrease in average balances swept to third-party banks and a contraction in the Bank segment’s net interest margin given the higher level of cash balances we plan to maintain in our Bank segment due to market conditions, as well as the impact from higher-cost diversified funding sources, including our Enhanced Savings Program, which was launched to PCG clients in March 2023.

We expect to continue to face macroeconomic uncertainties which may continue to have a negative impact on equity and fixed income markets.

As a result, we may continue to experience headwinds for brokerage revenues and investment banking revenues, despite our healthy investment banking pipelines.

In addition, although we have proactively taken steps to manage our credit risk in our loan portfolio, future economic deterioration or changes in our macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

For the six months ended March 31, 2023, we generated net revenues of $5.66 billion, an increase of 4% compared with the prior-year period, and pre-tax income of $1.21 billion, an increase of 22%.

Our net income available to common shareholders of $932 million was 21% higher than the prior-year period and our earnings per diluted share were $4.23, reflecting a 17% increase.

Our annualized ROCE was 19.3%, compared with 18.1% for the prior-year period, and our annualized ROTCE was 23.8% (1) , compared with 20.2% (1) for the prior-year period.

The six months ended March 31, 2023 included $57 million of expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets, as well as the favorable impact of a $32 million insurance settlement received during our fiscal first quarter related to a previously-settled litigation matter.

Excluding these items, our adjusted net income available to common shareholders was $951 million (1) , an increase of 18% compared with the prior-year period, and our adjusted earnings per diluted share were $4.31 (1) , an increase of 13%.

Adjusted annualized ROCE was 19.7% (1) , compared with 19.0% (1) in the prior-year period, and adjusted annualized ROTCE was 24.2% (1) , compared with 21.2% (1) in the prior-year period.

The increase in net revenues compared with the prior-year period was primarily driven by the benefit of significantly higher short-term interest rates in the current-year period on both net interest income and RJBDP fees from third-party banks, as well as incremental revenues arising from our prior-year acquisitions of Charles Stanley, TriState Capital and SumRidge.

These increases were offset by lower asset management and related administrative fees, primarily attributable to lower PCG client assets in fee-based accounts, and declines in investment banking and brokerage revenues primarily due to a more challenging market environment during the current-year period.

Compensation, commissions and benefits expense decreased 5%, primarily attributable to the decrease in compensable revenues compared with the prior-year period, partially offset by incremental expenses arising from our prior-year acquisitions of Charles Stanley, TriState Capital, and SumRidge, as well as an increase in compensation costs to support our growth and annual salary increases.

Our compensation ratio was 62.8%, compared with 68.5% for the prior-year period.

Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 62.2% (1) , compared with an adjusted compensation ratio of 68.0% (1) for the prior-year period.

Non-compensation expenses increased 23%, primarily due to incremental expenses arising from our acquisitions of Charles Stanley, TriState Capital, and SumRidge, as well as increases in business development expenses, the bank loan provision for credit losses, and communications and information processing expenses.

The current-year period also included the aforementioned increase in legal and regulatory costs.

Partially offsetting these increases was the aforementioned favorable insurance settlement received.

Our effective income tax rate was 22.6% for the six months ended March 31, 2023, a slight increase from 22.4% for the prior-year period.

(1) ROTCE, adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted annualized ROCE, adjusted annualized ROTCE, and adjusted compensation ratio 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 measures, and for other important disclosures.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

In December 2022, the Board of Directors increased the quarterly cash dividend on common shares to $0.42 per share and authorized common stock repurchases of up to $1.5 billion.

During the six months ended March 31, 2023, we repurchased 5.04 million shares of our common stock for $488 million at an average price of $97 per share under the Board of Directors’ common stock repurchase authorization.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

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

Three months ended

$ in millions December 31,

2022 December 31,

Three months ended Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Net income available to common shareholders $ 425 $ 323 $ 932 $ 769

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Other — Amortization of identifiable intangible assets

All other acquisition-related expenses

Total “Other” expense 11 12 22 20

Total expenses related to acquisitions 28 31 57 52

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Adjusted “Compensation, commissions and benefits” expense $ 1,803 $ 1,838 $ 3,521 $ 3,711

Three months ended

2022 December 31,

Three months ended Six months ended

2023 March 31,

2022 March 31,

2023 March 31,

Total compensation ratio 63.3 % 69.3 % 62.8 % 68.5 %

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Management’s Discussion and Analysis

Three months ended

Earnings per common share December 31,

2022 December 31,

Three months ended Six months ended

Earnings per common share March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Diluted earnings per common share $ 1.93 $ 1.52 $ 4.23 $ 3.61

Impact of non-GAAP adjustments on diluted earnings per common share:

Expenses directly related to acquisitions included in the following financial statement line items:

Compensation, commissions and benefits — Acquisition-related retention

0.08 0.06 0.16 0.12

Professional fees — 0.02 — 0.03

Other — Amortization of identifiable intangible assets

0.05 0.03 0.10 0.07

All other acquisition-related expenses — 0.03 — 0.03

Total “Other” expense 0.05 0.06 0.10 0.10

Total expenses related to acquisitions 0.13 0.14 0.26 0.25

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Adjusted diluted earnings per common share $ 2.03 $ 1.62 $ 4.31 $ 3.80

Return on common equity Three months ended

$ in millions December 31,

2022 December 31,

Return on common equity Three months ended Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Average common equity $ 9,806 $ 8,601 $ 9,650 $ 8,482

Impact of non-GAAP adjustments on average common equity :

Expenses directly related to acquisitions included in the following financial statement line items:

Compensation, commissions and benefits — Acquisition-related retention

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Other — Amortization of identifiable intangible assets

All other acquisition-related expenses — 3 — 2

Total “Other” expense 6 6 11 9

Total expenses related to acquisitions 15 16 29 24

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Adjusted average common equity $ 9,817 $ 8,613 $ 9,656 $ 8,500

Three months ended

$ in millions December 31,

2022 December 31,

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Three months ended Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Average common equity $ 9,806 $ 8,601 $ 9,650 $ 8,482

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

Expenses directly related to acquisitions included in the following financial statement line items:

Compensation, commissions and benefits — Acquisition-related retention

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Other — Amortization of identifiable intangible assets

All other acquisition-related expenses — 3 — 2

Total “Other” expense 6 6 11 9

Total expenses related to acquisitions 15 16 29 24

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Adjusted return on tangible common equity 22.3 % 18.0 % 24.2 % 21.2 %

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Total compensation ratio is computed by dividing compensation, commissions and benefits expense by net revenues for each respective period.

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

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

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NET INTEREST ANALYSIS

Largely in response to inflationary pressures, the Fed rapidly increased its benchmark short-term interest rates, commencing in March 2022 and continuing into our fiscal first quarter of 2023, including a 75-basis point increase in November 2022, a 50-basis point increase in December 2022, and a 25-basis point increase in February 2023.

The Fed indicated that it intends to closely monitor short-term interest rates throughout the remainder of our fiscal 2023.

Largely in response to inflationary pressures, the Fed rapidly increased its benchmark short-term interest rates commencing in March 2022 and continuing into our fiscal second quarter of 2023.

Over this period, the Fed increased the Fed funds target rate from a March 31, 2022 range of 0.25% to 0.50% to a March 31, 2023 range of 4.75% to 5%.

The Fed further increased the Fed funds target rate by 25 basis points in May 2023 and indicated that it intends to closely monitor short-term interest rates throughout the remainder of our fiscal 2023.

The following table details the Fed’s recent short-term interest rate activity.

Fed Funds Target Rate Schedule

RJF Fiscal quarter ended Date of interest rate action Increase/(decrease) in interest rates (in basis points) Fed funds target rate

RJF Fiscal quarter ended Effective date of interest rate action Increase/(decrease) in interest rates (in basis points) Fed funds target rate

March 31 2020 March 16, 2020 (100) 0.00% - 0.25%

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December 31, 2022 December 15, 2022 50 4.25% - 4.50%

Rate changes subsequent to December 31, 2022

March 31, 2023 February 2, 2023 25 4.50% - 4.75%

Increases in short-term interest rates positively impacted our net interest income during our fiscal first quarter 2023, 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.

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Bank, and Other segments) and the nature of fees we earn from third-party banks in 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.

March 31, 2023 March 23, 2023 25 4.75% - 5.00%

Rate changes subsequent to March 31, 2023

June 30, 2023 May 4, 2023 25 5.00% - 5.25%

Increases in short-term interest rates have positively impacted our net interest income and 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 is also sensitive to changes in interest rates.

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Bank, and Other segments) and the nature of fees 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, 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.

Changes to the regulatory landscape governing the fees the firm earns on client assets, including cash sweep balances, could negatively impact our earnings.

In addition, our pace of loan growth may continue to fluctuate over time in response to changes in interest rates.

As a result of our diverse funding sources, strong loan growth and high concentration of floating-rate assets, we benefited from the increases in short-term interest rates in our fiscal first quarter 2023 and believe we are well-positioned for our net interest earnings and RJBDP fees to continue to be favorably impacted by the recent increases in short-term interest rates, as well as any further fiscal 2023 increases.

However, we also expect this benefit to be offset to some degree by declines in domestic client cash sweep balances as clients invest a portion of these cash balances in higher-yielding investment alternatives.

In addition, our domestic client cash sweep balances represent a relatively low-cost funding source.

The favorable impact we experience from further increases in short-term interest rates may be partially offset to the extent we pursue diversified funding sources other than our domestic client cash sweep balances, as those funding sources are typically more expensive than our domestic client cash sweep balances.

As a result of our diverse funding sources, strong loan growth and high concentration of floating-rate assets, we benefited from the increases in short-term interest rates during the three and six months ended March 31, 2023.

However, despite the recent increases in short-term interest rates, we expect our combined net interest income and RJBDP fees from third-party banks to decline in our fiscal third quarter due to a decrease in average balances swept to third-party banks as well as a lower net interest margin in our Bank Segment, given the higher level of cash balances we plan to maintain in our Bank segment due to market conditions, as well as the impact from higher-cost diversified funding sources, including our Enhanced Savings Program, which was launched to PCG clients in March 2023.

Our domestic client cash sweep balances represent a relatively low-cost funding source.

As we pursue further diversified funding sources other than our domestic client cash sweep balances, such as the Enhanced Savings Program, our costs may increase as those funding sources typically reflect higher costs than our domestic client cash sweep balances.

In addition, our pace of loan growth may continue to fluctuate over time in response to changes in interest rates and other market factors.

Refer to the discussion of our net interest income within the “Management’s Discussion and Analysis - Results of Operations” of our PCG, 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 rates.

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

Three months ended December 31,

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Three months ended March 31,

$ in millions Average

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Money market and savings accounts $ 44,554 $ 132 1.20 % $ 33,136 $ 1 0.01 %

Interest-bearing checking accounts 5,149 47 3.59 % 187 1 1.62 %

Interest-bearing demand deposits 5,620 62 4.47 % 293 1 1.10 %

Certificates of deposit 1,859 16 3.57 % 733 3 1.83 %

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All other interest-bearing liabilities (4)

113 12 3.72 % 199 5 5.77 %

Interest-bearing liabilities — all other segments $ 8,920 $ 65 2.43 % $ 23,809 $ 29 0.47 %

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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,

2023 compared to 2022

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Money market and savings accounts $ 1 $ 130 $ 131

Interest-bearing checking accounts 44 2 46

Interest-bearing demand deposits 60 1 61

Certificates of deposit 8 5 13

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Management’s Discussion and Analysis

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

Six months ended March 31,

$ in millions Average

balance Interest Annualized

Interest-earning assets:

Bank segment:

Cash and cash equivalents $ 2,705 $ 58 4.24 % $ 1,876 $ 2 0.19 %

Available-for-sale securities 10,961 107 1.95 % 8,688 47 1.09 %

Loans held for sale and investment:

Loans held for investment:

SBL 14,768 466 6.27 % 6,519 74 2.26 %

C&I loans 11,206 357 6.31 % 8,681 109 2.49 %

CRE loans 6,879 233 6.75 % 3,044 40 2.61 %

REIT loans 1,649 55 6.64 % 1,227 16 2.51 %

Residential mortgage loans 7,801 119 3.06 % 5,609 75 2.68 %

Tax-exempt loans (3)

1,623 20 3.11 % 1,293 17 3.19 %

Loans held for sale 179 6 6.27 % 254 4 2.94 %

Total loans held for sale and investment 44,105 1,256 5.68 % 26,627 335 2.53 %

All other interest-earning assets 148 4 5.55 % 141 2 2.21 %

Interest-earning assets — Bank segment $ 57,919 $ 1,425 4.91 % $ 37,332 $ 386 2.07 %

All other segments:

Cash and cash equivalents $ 3,401 $ 72 4.25 % $ 4,078 $ 4 0.19 %

Assets segregated for regulatory purposes and restricted cash 5,554 105 3.81 % 15,844 11 0.14 %

Trading assets — debt securities 1,069 27 5.08 % 516 9 3.35 %

Brokerage client receivables 2,301 82 7.16 % 2,521 42 3.32 %

All other interest-earning assets 1,909 31 2.79 % 1,622 15 1.92 %

Interest-earning assets — all other segments $ 14,234 $ 317 4.42 % $ 24,581 $ 81 0.66 %

Total interest-earning assets $ 72,153 $ 1,742 4.81 % $ 61,913 $ 467 1.51 %

Interest-bearing liabilities:

Bank segment:

Bank deposits:

Money market and savings accounts $ 44,864 $ 253 1.13 % $ 32,542 $ 1 0.01 %

Interest-bearing demand deposits 5,382 109 4.05 % 239 3 2.78 %

Certificates of deposit 1,538 24 3.13 % 789 7 1.85 %

Total bank deposits (4)

51,784 386 1.49 % 33,570 11 0.06 %

FHLB advances and all other interest-bearing liabilities 1,374 18 2.63 % 863 9 2.19 %

Interest-bearing liabilities — Bank segment $ 53,158 $ 404 1.52 % $ 34,433 $ 20 0.12 %

All other segments:

Trading liabilities — debt securities $ 752 $ 17 4.63 % $ 187 $ 2 1.63 %

Brokerage client payables 6,842 40 1.16 % 17,275 1 0.01 %

Senior notes payable 2,038 46 4.44 % 2,037 46 4.44 %

All other interest-bearing liabilities (4)

133 18 2.45 % 194 6 6.28 %

Interest-bearing liabilities — all other segments $ 9,765 $ 121 2.13 % $ 19,693 $ 55 0.55 %

Total interest-bearing liabilities $ 62,923 $ 525 1.61 % $ 54,126 $ 75 0.28 %

Firmwide net interest income $ 1,217 $ 392

Net interest margin (net yield on interest-earning assets)

Bank segment 3.51 % 1.97 %

Firmwide 3.38 % 1.27 %

(1) Loans are presented net of unamortized discounts, unearned income, and deferred loan fees and costs.

(2) Nonaccrual loans are included in the average loan balances.

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.

(3) 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 years presented.

(4) The average balance, interest expense, and average rate for “Total bank deposits” included amounts associated with affiliate deposits.

Such amounts are eliminated in consolidation and are offset in “All other interest-bearing liabilities” under “All other segments”.

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,

2023 compared to 2022

Increase/(decrease) due to

$ in millions Volume Rate Total

Interest-earning assets:

Interest income

Bank segment:

Cash and cash equivalents $ 2 $ 54 $ 56

Available-for-sale securities 15 45 60

Loans held for sale and investment:

Loans held for investment:

SBL 163 229 392

C&I loans 40 208 248

CRE loans 85 108 193

REIT loans 7 32 39

Residential mortgage loans 33 11 44

Tax-exempt loans 4 (1) 3

Loans held for sale (3) 5 2

Total loans held for sale and investment 329 592 921

All other interest-earning assets — 2 2

Interest-earning assets — Bank segment $ 346 $ 693 $ 1,039

All other segments:

Cash and cash equivalents $ (2) $ 70 $ 68

Assets segregated for regulatory purposes and restricted cash (26) 120 94

Trading assets — debt securities 12 6 18

Brokerage client receivables (11) 51 40

All other interest-earning assets 5 11 16

Interest-earning assets — all other segments $ (22) $ 258 $ 236

Total interest-earning assets $ 324 $ 951 $ 1,275

Interest-bearing liabilities:

Interest expense

Bank segment:

Bank deposits:

Money market and savings accounts $ 1 $ 251 $ 252

Interest-bearing demand deposits 104 2 106

Certificates of deposit 10 7 17

Total bank deposits 115 260 375

FHLB advances and all other interest-bearing liabilities 7 2 9

Interest-bearing liabilities — Bank segment $ 122 $ 262 $ 384

All other segments:

Trading liabilities — debt securities $ 9 $ 6 $ 15

Brokerage client payables (2) 41 39

All other interest-bearing liabilities 4 8 12

Interest-bearing liabilities — all other segments $ 11 $ 55 $ 66

Total interest-bearing liabilities $ 133 $ 317 $ 450

Change in firmwide net interest income $ 191 $ 634 $ 825

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 2022 2021 % change

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

$ in millions 2023 2022 % change 2023 2022 % change

Asset management and related administrative fees

14 unchanged sentences

Client account and other fees

56 53 6 % 116 102 14 %

Total account and service fees 572 231 148 % 1,135 461 146 %

Investment banking

9 9 — % 18 22 (18) %

Interest income

117 37 216 % 226 70 223 %

9 6 50 % 15 13 15 %

Total revenues 2,173 1,925 13 % 4,258 3,767 13 %

10 unchanged sentences

Communications and information processing

100 84 19 % 189 155 22 %

Occupancy and equipment

53 50 6 % 104 96 8 %

Business development

33 25 32 % 70 52 35 %

Professional fees

17 13 31 % 30 22 36 %

37 17 118 % 59 38 55 %

Total non-compensation expenses

240 189 27 % 452 363 25 %

Total non-interest expenses 1,703 1,709 — % 3,332 3,353 (1) %

5 unchanged sentences

PCG client asset balances

$ in billions December 31,

$ in billions March 31,

2023 December 31,

2022 September 30,

2022 March 31,

2022 December 31,

6 unchanged sentences

56.9 % 56.8 % 56.4 % 56.6 % 56.5 % 56.2 %

(1) Includes assets associated with firms affiliated with us through our Registered Investment Advisor and Custody Services (“RCS”) division of $115.6 billion as of December 31, 2022, $108.5 billion as of September 30, 2022, $101.6 billion as of December 31, 2021, and $92.7 billion as of September 30, 2021.

Of these amounts, $96.6 billion as of December 31, 2022, $89.9 billion as of September 30, 2022, $85.5 billion as of December 31, 2021, and $77.2 billion as of September 30, 2021 were fee-based assets.

(1) Includes assets associated with firms affiliated with us through our Registered Investment Advisor & Custody Services (“RCS”) division of $123.5 billion as of March 31, 2023, $115.6 billion as of December 31, 2022, $108.5 billion as of September 30, 2022, $99.2 billion as of March 31, 2022, $101.6 billion as of December 31, 2021, and $92.7 billion as of September 30, 2021.

Of these amounts, $103.6 billion as of March 31, 2023, $96.6 billion as of December 31, 2022, $89.9 billion as of September 30, 2022, $84.0 billion as of March 31, 2022, $85.5 billion as of December 31, 2021, and $77.2 billion as of September 30, 2021 were fee-based assets.

Based on the nature of the services provided to such firms, revenues related to these assets are included in “Account and service fees.”

2 unchanged sentences

PCG net new assets

Three months ended

$ in millions December 31,

2022 September 30,

2022 December 31,

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

$ in millions 2023 2022 2023 2022

Domestic Private Client Group net new assets (1)

4 unchanged sentences

(2) The Domestic Private Client Group net new asset growth - annualized percentage is based on the beginning Domestic Private Client Group AUA balance for the indicated period.

PCG AUA and PCG assets in fee-based accounts increased 7% and 8%, respectively, as of December 31, 2022 compared with September 30, 2022, primarily due to equity market appreciation and strong net inflows of client assets during the quarter.

We expect that the increase in fee-based accounts, compared with the preceding beginning of the quarter level, will positively impact our asset management and related administrative fees for our fiscal second quarter of 2023.

Compared with December 31, 2021, PCG AUA declined 7%, primarily due to declines in the equity market since such time, offset by the favorable impacts of our recruiting as well as our January 21, 2022 acquisition of Charles Stanley.

PCG AUA and PCG assets in fee-based accounts as of March 31, 2023 each increased 5% compared with December 31, 2022, and increased 13% and 14%, respectively, compared with September 30, 2022 due to equity market appreciation and strong net inflows of client assets during the period.

We expect that the 5% increase in fee-based accounts compared with December 31, 2022 will positively impact our asset management and related administrative fees for our fiscal third quarter of 2023.

Compared with March 31, 2022, PCG AUA declined 2%, primarily due to a net decline in equity markets since March 31, 2022, offset by the favorable impacts of our recruiting.

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.

5 unchanged sentences

Revenues related to managed programs are shared by our PCG and Asset Management segments.

The Asset Management segment receives a higher portion of the revenues related to accounts invested in managed programs, as compared to the portion received for non-managed programs, as it is performing portfolio management services in addition to administrative services.

The vast majority of the revenues we earn from fee-based accounts is recorded in “Asset management and related administrative fees” on our Condensed Consolidated Statements of Income and Comprehensive Income.

The Asset Management segment receives a higher portion of the revenues related to accounts invested in managed programs, as compared to the portion received for programs for which our financial advisors provide investment advisory services, as it is performing portfolio management services in addition to administrative services.

The vast majority of the revenues we earn from fee-based accounts are recorded in “Asset management and related administrative fees” on our Condensed Consolidated Statements of Income and Comprehensive Income.

Fees received from such accounts are based on the value of client assets in fee-based accounts and vary based on the specific account types in which the client invests and the level of assets in the client relationship.

4 unchanged sentences

Financial advisors

2023 December 31,

2022 September 30,

2022 March 31,

2022 December 31,

4 unchanged sentences

Total advisors 8,726 8,699 8,681 8,730 8,464 8,482

The number of financial advisors as of December 31, 2022 increased slightly compared to September 30, 2022, as the impacts of new recruits and trainees that were moved into production roles were partially offset by financial advisors who left the firm, including planned retirements where assets are generally retained at the firm pursuant to advisor succession plans.

(1) Includes the impact of the transfer of one firm with 166 financial advisors previously affiliated as independent contractors to our RCS division during our fiscal third quarter of 2022.

The number of financial advisors as of March 31, 2023 increased compared with December 31, 2022 and September 30, 2022, as the impacts of new recruits and trainees that were moved into production roles were partially offset by financial advisors who left the firm, including planned retirements where assets are generally retained at the firm pursuant to advisor succession plans.

The recruiting pipeline remains solid across our affiliation options;

3 unchanged sentences

Advisors in our RCS division are not included in our financial advisor metric although their client assets are included in PCG AUA.

Clients’ domestic cash sweep balances

$ in millions December 31,

Clients’ domestic cash sweep balances and Enhanced Savings Program balances

$ in millions March 31,

2023 December 31,

2022 September 30,

2022 March 31,

2022 December 31,

6 unchanged sentences

49,475 60,382 67,114 76,470 73,478 66,668

Three months ended December 31,

Enhanced Savings Program (1)

2,746 — — — — —

Total clients’ domestic cash sweep and Enhanced Savings Program balances $ 52,221 $ 60,382 $ 67,114 $ 76,470 $ 73,478 $ 66,668

(1) In March 2023, we launched our Enhanced Savings Program, in which Private Client Group clients may deposit cash in a high-yield Raymond James Bank account.

These balances are reflected in Bank deposits on our Condensed Consolidated Statements of Financial Condition.

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

2023 2022 2023 2022

Average yield on RJBDP - third-party banks

3.25 % 0.32 % 2.93 % 0.30 %

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 either Raymond James Bank or TriState Capital Bank, which are included in our Bank segment, or 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 brokerage accounts are swept into interest-bearing deposit accounts at either Raymond James Bank or TriState Capital Bank, which are included in our Bank segment, or various third-party banks.

Our PCG segment earns 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

Under our intersegment policies, the PCG segment receives the greater of a base servicing fee or a net yield equivalent to the average yield that the firm would otherwise receive from third-party banks in the RJBDP.

The impact of this policy on our segment results in the current market environment is that the PCG segment revenues will reflect fee revenues derived from the yield from third-party banks in the program and the Bank segment RJBDP servicing costs reflect such market rate for the deposits.

In the current market environment the PCG segment revenues will reflect RJBDP fee revenues derived from the yield from third-party banks in the program and the Bank segment RJBDP servicing costs reflect such market rate for the deposits.

The fees that the PCG segment earns from the Bank segment, as well as the servicing costs incurred on the deposits in the Bank segment, are eliminated in consolidation.

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 increased from the prior-year quarter as a result of the combined 300-basis point increase in the Fed’s short-term benchmark interest rate during our fiscal 2022, as well as the 75-basis point increase in November 2022 and, to a lesser extent, the 50-basis point increase in December 2022.

These increases in short-term interest rates more than offset the decline in average RJBDP balances due to a continued decline in client cash balances.

We expect our fiscal second quarter of 2023 results to be favorably impacted by the recent increases in short-term rates;

however, RJBDP fees are expected to be negatively impacted by the continued decrease of RJBDP balances with third-party banks, as well as two fewer billable days in our fiscal second quarter of 2023 compared with our fiscal first quarter.

The average yield on RJBDP - third-party banks increased from the prior-year quarter as a result of the significant increases in the Fed’s short-term benchmark interest rate, which began in March 2022.

We expect a decline in our RJBDP fees in our fiscal third quarter of 2023 due to lower average balances in the program.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Client cash balances declined $6.7 billion, or 10%, compared with September 30, 2022, including a $3.4 billion, or 53%, decrease in cash balances in the CIP, as a result of continued cash sorting activity given the higher short-term interest rate environment.

We expect this trend to continue, as clients continue to move cash from lower-yielding bank deposits to higher-yielding investment products.

PCG segment results can be impacted by not only changes in the level of client cash balances, but also by the allocation of client cash balances between RJBDP and our CIP, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

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

Total client domestic cash sweep and Enhanced Savings Program balances declined 14% compared with December 31, 2022 and 22% compared with September 30, 2022, as a result of continued cash sorting activity given the higher short-term interest rate environment, partially offset by the launch of the Enhanced Savings Program in March 2023, which resulted in $2.75 billion of client cash balances as of March 31, 2023.

PCG segment results can be impacted by not only changes in the level of client cash balances, but also by the allocation of client cash balances between RJBDP, CIP, and the Enhanced Savings Program, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Net revenues of $2.14 billion increased 12% and pre-tax income of $441 million increased 107%.

Asset management and related administrative fees decreased $109 million, or 9%, primarily due to lower assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter due to declines in the equity market, partially offset by incremental revenues arising in the current quarter from our January 21, 2022 acquisition of Charles Stanley.

Brokerage revenues decreased $52 million, or 13%, primarily due to lower trailing revenues from mutual fund and annuity products primarily resulting from market-driven declines in asset values for products for which we receive trails, partially offset by incremental revenues arising from Charles Stanley.

Account and service fees increased $333 million, or 145%, primarily due to higher RJBDP fees from both third-party banks and our Bank segment resulting from significantly higher short-term interest rates compared with the prior-year quarter.

Client account and other fees also increased primarily as a result of incremental revenues arising from Charles Stanley.

Mutual fund service fees decreased primarily due to market-driven declines in average mutual fund assets.

Asset management and related administrative fees decreased $143 million, or 11%, primarily due to lower assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter due to declines in the equity market.

Brokerage revenues decreased $33 million, or 8%, primarily due to lower trailing revenues from mutual fund and annuity products primarily resulting from market-driven declines in asset values for products for which we receive trails.

Account and service fees increased $341 million, or 148%, primarily due to higher RJBDP fees from both our Bank segment and third-party banks resulting from significantly higher short-term interest rates compared with the prior-year quarter.

Net interest income increased $54 million, or 159%, due to the increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances.

Compensation-related expenses decreased $53 million, or 4%, primarily due to lower asset management and related administrative fees and brokerage revenues, partially offset by incremental expenses arising from Charles Stanley and an increase in compensation costs to support our growth.

Non-compensation expenses increased $38 million, or 22%, driven by incremental expenses resulting from Charles Stanley, higher communications and information processing expenses, primarily due to ongoing enhancements of our technology platforms, and an increase in travel and event-related expenses compared with the relatively low levels in the prior-year quarter.

Compensation-related expenses decreased $57 million, or 4%, primarily due to lower commission expense resulting from lower compensable revenues, including asset management and related administrative fees and brokerage revenues, partially offset by an increase in compensation costs to support our growth, annual salary increases, and, to a lesser extent, incremental expenses arising from our January 2022 acquisition of Charles Stanley.

Non-compensation expenses increased $51 million, or 27%, driven by higher legal and regulatory costs, including the impact of an unfavorable arbitration award during the current quarter, as well as higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, an increase in travel and event-related expenses compared with the relatively low levels in the prior-year quarter, and incremental expenses resulting from our acquisition of Charles Stanley.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

Net revenues of $4.21 billion increased 12% and pre-tax income of $875 million increased 114%.

Asset management and related administrative fees decreased $252 million, or 10%, primarily due to lower 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, partially offset by incremental revenues arising from the acquisition of Charles Stanley.

Brokerage revenues decreased $85 million, or 11%, primarily due to lower trailing revenues from mutual fund and annuity products primarily resulting from market-driven declines in asset values for products for which we receive trails.

Account and service fees increased $674 million, or 146%, primarily due to an increase in RJBDP fees from both our Bank segment and third-party banks resulting from significantly higher short-term interest rates compared with the prior-year period, partially offset by lower client cash balances in the RJBDP.

Mutual fund service fees decreased primarily due to market-driven declines in mutual fund assets.

Net interest income increased $111 million, or 173%, primarily due to the significant increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances.

Compensation-related expenses decreased $110 million, or 4%, primarily due to lower commission expense resulting from lower compensable revenues, including asset management and related administrative fees and brokerage revenues, partially offset by an increase in compensation costs to support our growth, annual salary increases, and incremental expenses resulting from our acquisition of Charles Stanley.

Non-compensation expenses increased $89 million, or 25%, due to incremental expenses resulting from our acquisition of Charles Stanley, higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, increases in travel and event-related expenses compared with the low levels incurred in the prior-year period, and the aforementioned increases in legal and regulatory costs.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RESULTS OF OPERATIONS – CAPITAL MARKETS

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2022 2021 % change

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

$ in millions 2023 2022 % change 2023 2022 % change

Brokerage revenues:

7 unchanged sentences

Equity underwriting

29 52 (44) % 44 149 (70) %

Debt underwriting

29 35 (17) % 45 79 (43) %

Total investment banking 145 226 (36) % 278 638 (56) %

Interest income

21 5 320 % 44 10 340 %

Affordable housing investments business revenues 23 15 53 % 47 50 (6) %

3 4 (25) % 7 9 (22) %

Total revenues 322 416 (23) % 640 1,032 (38) %

7 unchanged sentences

Communications and information processing

26 22 18 % 50 44 14 %

Occupancy and equipment

11 10 10 % 21 19 11 %

Business development

17 9 89 % 32 17 88 %

Professional fees

14 7 100 % 27 21 29 %

37 25 48 % 73 54 35 %

Total non-compensation expenses

105 73 44 % 203 155 31 %

Total non-interest expenses 336 326 3 % 647 739 (12) %

Pre-tax income/(loss) $ (16) $ 201 NM

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

Net revenues of $295 million decreased 52% and the pre-tax loss was $16 million compared with pre-tax income of $201 million in the prior-year quarter.

Investment banking revenues decreased $279 million, or 68%, compared with a strong prior-year quarter as activity levels were negatively impacted in the current quarter by very different market conditions compared with the prior-year quarter, including a notable increase in macroeconomic uncertainties in the current period.

Pre-tax income/(loss) $ (34) $ 87 NM $ (50) $ 288 NM

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Net revenues of $302 million decreased 27% and the pre-tax loss was $34 million compared with pre-tax income of $87 million for the prior-year quarter.

Investment banking revenues decreased $81 million, or 36%, as activity levels in the current quarter were negatively impacted by heightened market volatility and macroeconomic uncertainties which continue to dampen capital markets activity across the industry.

Our investment banking pipeline remains healthy and, in part, reflects the investments we have made over the past several years;

however, continued market uncertainty could continue to delay, or ultimately prevent, the closing of transactions, which could negatively impact our results.

Brokerage revenues decreased $25 million, or 16%, primarily due to a decrease in fixed income brokerage revenues resulting from decreased activity from depository institution clients, partially offset by incremental revenues from SumRidge Partners, which was acquired on July 1, 2022.

We expect our fixed income brokerage revenues to continue to be negatively impacted by challenging market conditions driven by higher interest rates which have resulted in a decline in cash balances at many of our depository institution clients which decreases their immediate demand for our products and services.

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

Brokerage revenues decreased $36 million, or 22%, primarily due to a decrease in fixed income brokerage revenues resulting from decreased activity from depository institution clients due to challenging market conditions, partially offset by incremental revenues from SumRidge Partners, which was acquired on July 1, 2022.

We expect our fixed income brokerage revenues to continue to be negatively impacted by the challenging market conditions which have resulted in a decline in cash balances at many of our depository institution clients, decreasing their immediate demand for our products and services.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Affordable housing investment business revenues decreased $11 million, or 31%, primarily due to gains on the sales of certain properties during the prior-year quarter which did not recur in the current quarter.

Compensation-related expenses decreased $118 million, or 36%, due to lower revenues, partially offset by incremental compensation expenses due to the acquisition of SumRidge Partners, higher salaries, including due to inflationary and market compensation pressures, and higher share-based compensation amortization resulting from production related awards granted in prior periods.

Non-compensation expenses increased $16 million, or 20%, primarily attributable to incremental expenses associated with SumRidge Partners and an increase in business development expenses resulting from increased travel and event-related expenses.

Compensation-related expenses decreased $22 million, or 9%, due to lower revenues, partially offset by incremental compensation expenses arising from our acquisition of SumRidge Partners, higher salaries, in part due to inflationary and market compensation pressures, and higher share-based compensation amortization resulting from production-related awards granted in prior periods which are amortized over the vesting period.

Non-compensation expenses increased $32 million, or 44%, primarily attributable to incremental expenses associated with SumRidge Partners, an increase in travel and event-related expenses from the relatively low prior-year levels, and higher professional fees.

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

Net revenues of $597 million decreased 42% and the pre-tax loss was $50 million compared with pre-tax income of $288 million for the prior-year period.

Investment banking revenues decreased $360 million, or 56%, compared with a strong prior-year period, as activity levels were negatively impacted in the current-year period by very different market conditions compared with the prior-year period, resulting from the aforementioned macroeconomic uncertainties impacting the industry.

Brokerage revenues decreased $61 million, or 19%, primarily due to a decrease in fixed income brokerage revenues as a result of the aforementioned challenging market conditions, partially offset by incremental revenues from SumRidge Partners.

Compensation-related expenses decreased $140 million, or 24%, primarily due to the decrease in revenues, partially offset by incremental expenses associated with SumRidge Partners, higher salaries, in part due to inflationary and market compensation pressures, and higher share-based compensation amortization resulting from production-related awards granted in prior periods which are amortized over the vesting period.

Non-compensation expenses increased $48 million, or 31%, primarily due to incremental expenses associated with SumRidge Partners, increased travel and event-related expenses and higher professional fees compared with the prior-year period.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RESULTS OF OPERATIONS – ASSET MANAGEMENT

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2022 2021 % change

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

$ in millions 2023 2022 % change 2023 2022 % change

Asset management and related administrative fees:

4 unchanged sentences

Account and service fees

6 6 — % 11 12 (8) %

All other 4 2 100 % 9 5 80 %

2 unchanged sentences

Compensation, commissions and benefits

52 47 11 % 99 93 6 %

Non-compensation expenses:

Communications and information processing

14 14 — % 28 26 8 %

Investment sub-advisory fees

34 39 (13) % 68 76 (11) %

34 31 10 % 66 65 2 %

Total non-compensation expenses 82 84 (2) % 162 167 (3) %

7 unchanged sentences

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.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Revenues earned by Raymond James Investment Management for retail accounts managed on behalf of third-party institutions, institutional accounts and our mutual funds are recorded entirely in the Asset Management segment.

2 unchanged sentences

Approximately 65% of these fees are based on balances as of the beginning of the quarter (primarily in AMS), approximately 15% are based on balances as of the end of the quarter, and approximately 20% are based on average daily balances throughout the quarter.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Financial assets under management

$ in billions December 31,

$ in billions March 31,

2023 December 31,

2022 September 30,

2022 March 31,

2022 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 2023 2022 2023 2022

2 unchanged sentences

AMS - net inflows 1.7 3.5 2.7 7.0

Net market appreciation in asset values 11.4 8.6

Net market appreciation/(depreciation) in asset values 6.2 (12.5) 17.5 (3.9)

Financial assets under management at end of period $ 205.9 $ 204.1 $ 205.9 $ 204.1

4 unchanged sentences

The following table presents Raymond James Investment Management’s 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.

As of December 31, 2022

As of March 31, 2023

$ in billions AUM Average fee rate

3 unchanged sentences

Total financial assets under management $ 69.4 0.34 %

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,

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

$ in billions March 31,

2023 December 31,

2022 September 30,

2022 March 31,

2022 December 31,

1 unchanged sentence

Total assets $ 378.7 $ 355.6 $ 329.2 $ 379.7 $ 392.4 $ 365.3

The increase in assets as of December 31, 2022 compared with September 30, 2022 was largely due to equity market appreciation and continued growth in the PCG segment.

Compared to December 31, 2021, PCG fee-based AUA declined 7%, primarily due to declines in the equity market since such time, partially offset by the favorable impact of our June 1, 2022 acquisition of Chartwell.

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

The increase in assets as of March 31, 2023 compared with December 31, 2022 and September 30, 2022 was largely due to equity market appreciation and continued growth in the PCG segment.

The slight decrease in assets compared to March 31, 2022 was due to declines in the equity market since such time, offset by continued growth in the PCG segment and the favorable impact of our June 1, 2022 acquisition of Chartwell.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Raymond James Trust

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(including those managed for affiliated entities).

$ in billions December 31,

$ in billions March 31,

2023 December 31,

2022 September 30,

2022 March 31,

2022 December 31,

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Total assets $ 8.2 $ 7.8 $ 7.3 $ 8.4 $ 8.8 $ 8.1

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

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Net revenues of $216 million decreased 8% and pre-tax income of $82 million decreased 20%.

Asset management and related administrative fees decreased $30 million, or 13%, driven by a lower beginning balance of assets in non-discretionary asset-based programs and financial assets under management at AMS, as well as lower average financial assets under management at Raymond James Investment Management, in each case primarily due to market-driven depreciation in asset values.

We expect the increase in financial assets under management and assets in non-discretionary asset-based programs as of December 31, 2022 compared with September 30, 2022, which occurred due to equity market appreciation and net inflows during the quarter, to positively affect our fiscal second quarter of 2023, 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 increased $1 million, or 2%.

Non-compensation expenses decreased $3 million, or 4%, primarily due to lower investment sub-advisory fees, resulting from the decrease in the beginning balance of assets under management in sub-advised programs.

Asset management and related administrative fees decreased $20 million, or 9%, driven by a lower beginning balance of assets in non-discretionary asset-based programs and financial assets under management at AMS, as well as lower average financial assets under management at Raymond James Investment Management (excluding Chartwell), in each case primarily due to market-driven depreciation in asset values.

These declines were partially offset by incremental revenues arising from the acquisition of Chartwell.

We expect the increase in financial assets under management and assets in non-discretionary asset-based programs as of March 31, 2023 compared with December 31, 2022, which occurred due to equity market appreciation and net inflows during the quarter, to positively affect our fiscal third quarter of 2023, 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 increased $5 million, or 11%, primarily due to the acquisition of Chartwell.

Non-compensation expenses decreased $2 million, or 2%, primarily due to lower investment sub-advisory fees resulting from the decrease in the beginning balance of assets under management in sub-advised programs, partially offset by incremental expenses resulting from the Chartwell acquisition.

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

Net revenues of $423 million decreased 10% and pre-tax income of $162 million decreased 23%.

Asset management and related administrative fees decreased $50 million, or 11%, driven by lower assets in non-discretionary asset-based programs and financial assets under management at AMS at the beginning of each of the current-year quarterly billing periods compared with the prior-year quarterly billing periods, as well as lower average financial assets under management at Raymond James Investment Management (excluding Chartwell), in each case primarily due to market-driven depreciation in asset values.

These declines were partially offset by incremental revenues arising from the acquisition of Chartwell.

Compensation expenses increased $6 million, or 6%, primarily due to the acquisition of Chartwell.

Non-compensation expenses decreased $5 million, or 3% due to lower investment sub-advisory fees, resulting from the decrease in assets under management in sub-advised programs, partially offset by incremental expenses resulting from the Chartwell acquisition.

RAYMOND JAMES FINANCIAL, INC.

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Operating results

Three months ended December 31,

$ in millions 2022 2021 % change

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

$ in millions 2023 2022 % change 2023 2022 % change

Interest income $ 749 $ 199 276 % $ 1,425 $ 386 269 %

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Compensation and benefits

48 14 243 % 88 27 226 %

Non-compensation expenses:

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

Bank loan provision for credit losses 28 21 33 % 42 10 320 %

RJBDP fees to PCG

311 49 535 % 579 99 485 %

62 30 107 % 112 59 90 %

Total non-compensation expenses 401 100 301 % 733 168 336 %

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Pre-tax income $ 91 $ 83 10 % $ 227 $ 185 23 %

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

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Net revenues of $540 million increased 174% and pre-tax income of $91 million increased 10%.

Net interest income increased $314 million, or 177%, primarily due to the increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, as well as incremental net interest income from the June 1, 2022 acquisition of TriState Capital Bank.

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

Net interest income increased $341 million, or 180%, primarily due to the significant increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, as well as incremental net interest income from the June 1, 2022 acquisition of TriState Capital Bank.

The increase in average interest-earning assets at Raymond James Bank was primarily driven by growth in the bank loan portfolio and, to a lesser extent, higher average cash balances and available-for-sale securities.

The net interest margin increased to 3.63% from 2.01% for the prior-year quarter.

We anticipate that the Bank segment net interest income for our fiscal second quarter of 2023 will benefit from the Fed’s short-term interest rate increases enacted during our fiscal first quarter and in February 2023.

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.

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

The current quarter provision primarily reflects the impact of a weaker macroeconomic outlook, primarily on the residential mortgage portfolio, and the impact of loan growth during the quarter.

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

We anticipate that the Bank segment net interest income and net interest margin will decline during our fiscal third quarter of 2023 due to the higher level of cash balances held by the Bank segment as a result of recent market volatility, as well as the impact from higher-cost diversified funding sources, including the Enhanced Savings Program launched to PCG clients in March 2023.

The bank loan provision for credit losses was $28 million for the current quarter, compared with $21 million for the prior-year quarter.

The current quarter provision primarily reflected the impacts of charge-offs of certain loans during the quarter, loan downgrades in the CRE and C&I loan portfolios, and additional volatility in the macroeconomic outlook.

The prior-year quarter provision for credit losses was primarily due to loan growth.

Compensation expenses increased $34 million, or 243%, primarily due to incremental expenses of TriState Capital Bank.

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Management’s Discussion and Analysis

Non-compensation expenses, excluding the bank loan provision/(benefit) for credit losses, increased $239 million, or 303%, primarily due to an increase in RJBDP fees paid to PCG and incremental expenses of TriState Capital Bank.

Non-compensation expenses, excluding the bank loan provision for credit losses, increased $294 million, or 372%, primarily due to an increase in RJBDP fees paid to PCG and incremental expenses of TriState Capital Bank.

RJBDP fees to PCG increased $262 million, or 535%, due to an increase in the market-based servicing fee incurred by the Bank segment for the administrative services provided by the PCG segment for such deposit balances, as well as an increase in client cash balances swept to our Bank segment as part of the RJBDP.

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These Bank segment fees and the revenues earned by the PCG segment are eliminated in consolidation.

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

Net revenues of $1.05 billion increased 176%, while pre-tax income of $227 million increased 23%.

Net interest income increased $655 million, or 179%, due to the significant increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, as well as incremental net interest income from the acquisition of TriState Capital Bank.

The increase in average interest-earning assets at Raymond James Bank was primarily driven by higher average bank loans and an increase in average available-for-sale securities.

The net interest margin increased to 3.51% from 1.97% for the prior-year period.

The bank loan provision for credit losses was $42 million for the current-year period, compared with $10 million for the prior-year period.

The current year provision for credit losses primarily reflected a weaker macroeconomic outlook, net charge-offs, and the impact of loan growth during the period.

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

Non-compensation expenses, excluding the bank loan provision for credit losses, increased $533 million, or 337%, primarily due to an increase in RJBDP fees paid to PCG and incremental expenses associated with TriState Capital Bank.

RJBDP fees to PCG increased $480 million, or 485%, due to a significant increase in short-term interest rates as well as an increase in client cash swept to our Bank segment as part of the RJBDP.

These Bank segment fees and the revenues earned by the PCG segment are eliminated in consolidation.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RESULTS OF OPERATIONS – OTHER

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Operating results

Three months ended December 31,

$ in millions 2022 2021 % change

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

$ in millions 2023 2022 % change 2023 2022 % change

Interest income $ 36 $ 3 1,100 % $ 66 $ 4 1,550 %

Net gains on private equity investments 2 5 (60) %

Net gains/(losses) on private equity investments 1 (2) NM 3 3 — %

All other — 5 (100) % 1 7 (86) %

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Interest expense (27) (24) 13 % (51) (47) 9 %

Net revenues 9 (15) NM

Net revenues 10 (18) NM 19 (33) NM

Non-interest expenses:

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Insurance settlement received — — — % (32) — NM

Total non-interest expenses (9) 32 NM

Pre-tax income/(loss) $ 18 $ (47) NM

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

Pre-tax income was $18 million compared with a pre-tax loss of $47 million for the prior-year quarter.

Total non-interest expenses 33 35 (6) % 24 67 (64) %

Pre-tax income/(loss) $ (23) $ (53) 57 % $ (5) $ (100) 95 %

Quarter ended March 31, 2023 compared with the quarter ended March 31, 2022

Pre-tax loss was $23 million compared with a pre-tax loss of $53 million for the prior-year quarter.

Net revenues increased $28 million primarily due to an increase in interest income earned as a result of higher short-term interest rates applicable to our corporate cash balances.

Non-interest expenses decreased $41 million, primarily due to a $32 million insurance settlement received during the quarter related to a previously settled litigation matter, which was reflected as an offset to Other expenses, and to a lesser extent a decrease in compensation and other expenses.

Non-interest expenses decreased $2 million, primarily due to a decrease in acquisition-related expenses, partially offset by an increase in compensation expenses.

Six months ended March 31, 2023 compared with the six months ended March 31, 2022

The pre-tax loss was $5 million compared with a pre-tax loss of $100 million in the prior-year period.

Net revenues increased $52 million, primarily due to an increase in interest income earned as a result of higher short-term interest rates applicable to our corporate cash balances, partially offset by an increase in interest expense due to the subordinated notes assumed as part of our acquisition of TriState Capital in June 2022.

Non-interest expenses decreased $43 million, or 64%, primarily due to a $32 million insurance settlement received during the current-year period related to a previously settled litigation matter, which was reflected as an offset to Other expenses, as well as a decrease in acquisition-related expenses.

These decreases were partially offset by an increase in compensation expenses.

RAYMOND JAMES FINANCIAL, INC.

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

Total assets of $77.05 billion as of December 31, 2022 were $3.90 billion, or 5%, less than our total assets as of September 30, 2022.

Assets segregated for regulatory purposes and restricted cash decreased $3.37 billion, primarily due to a decrease in client cash balances, which resulted in a decline in client cash held in our CIP and a corresponding decline in segregated assets.

Collateralized agreements, other receivables, and brokerage client receivables also decreased compared with September 30, 2022.

Partially offsetting these decreases was an increase in bank loans, net of $827 million, primarily related to increases in corporate and residential mortgage loans, partially offset by a decline in securities-based loans.

As of December 31, 2022, our total liabilities of $67.22 billion were $4.30 billion, or 6%, less than our total liabilities as of September 30, 2022.

Brokerage client payables decreased $3.72 billion, related to the aforementioned decrease in client cash balances as of December 31, 2022.

Accrued compensation, commissions, and benefits decreased $506 million due to the payment of prior-year bonuses and collateralized financings decreased $272 million.

These decreases were partially offset by an increase in bank deposits of $622 million.

Total assets of $79.18 billion as of March 31, 2023 were $1.77 billion, or 2%, less than our total assets as of September 30, 2022.

Assets segregated for regulatory purposes and restricted cash decreased $3.78 billion, primarily due to a decrease in client cash sweep balances, which resulted in a decline in client cash held in our CIP and a corresponding decline in segregated assets.

Brokerage client receivables, collateralized agreements, and trading assets also decreased $359 million, $325 million, and $277 million, respectively, compared with September 30, 2022.

Partially offsetting these decreases was a $2.49 billion increase in cash and cash equivalents, driven by an increase in bank deposits, as well as an increase in bank loans, net of $444 million, primarily related to increases in corporate and residential mortgage loans, partially offset by a decline in securities-based loans.

As of March 31, 2023, our total liabilities of $69.21 billion were $2.31 billion, or 3%, less than our total liabilities as of September 30, 2022.

Brokerage client payables decreased $4.60 billion related to the aforementioned decrease in CIP balances as of March 31, 2023.

Accrued compensation, commissions, and benefits decreased $326 million primarily due to the payment of prior-year bonuses.

These decreases were partially offset by an increase in bank deposits of $2.87 billion, primarily due to the launch of the Enhanced Savings Program to PCG clients in March 2023, which raised $2.75 billion of deposits during the period ended March 31, 2023, and an increase in other borrowings of $359 million as a result of a net increase in FHLB borrowings in the Bank segment during our fiscal second quarter of 2023.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital are essential to our business.

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

The primary goal of our liquidity management activities is to ensure adequate funding and liquidity to conduct our business over a range of economic and market environments, including times of broader industry or market liquidity stress events.

In times of market stress or uncertainty, we generally maintain higher levels of capital and liquidity to ensure we have adequate funding to support our business.

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

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Our liquidity and capital management frameworks are overseen by the RJF Asset and Liability Committee, a senior management committee that develops and executes strategies and policies to manage our liquidity risk and interest rate risk, as well as provides oversight over the firm’s investments.

Our liquidity management framework is designed to ensure we have a sufficient amount of financing, even when funding markets experience stress.

We manage the maturities and diversity of our funding across products and seek to maintain a diversified funding profile with an appropriate tenor, taking into consideration the characteristics and liquidity profile of our assets.

The liquidity management framework includes senior management’s review of short- and long-term cash flow forecasts, review of capital expenditures, monitoring of the availability of alternative sources of financing, and daily monitoring of liquidity in our significant subsidiaries.

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See Note 21 for further information about our regulatory capital and related capital ratios.

We have classified all of our investments in debt securities as available-for-sale and have not classified any of our investments in debt securities as held-to-maturity.

Accordingly, we account for our available-for-sale securities at fair value at each reporting date, with unrealized gains and losses, net of tax, included in AOCI.

Current Basel III rules permit us to make an election to exclude most components of AOCI when calculating CET1, tier 1 capital, and total capital.

We have elected the AOCI opt-out for regulatory capital purposes and therefore exclude certain elements of AOCI, including gains/losses on our available-for-sale portfolio, from our capital calculations.

Recent events impacting the financial services industry, including the failure of certain banks in the industry, may result in a change to regulations applicable to bank holding companies, including higher capital requirements, which could negatively impact our regulatory capital ratios in the future.

In addition, potential changes to the AOCI opt-out election would impact future regulatory capital calculations.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The following table presents the components of RJF’s regulatory capital used to calculate the aforementioned regulatory capital ratios.

$ in millions

December 31, 2022 September 30, 2022

March 31, 2023 September 30, 2022

Common equity tier 1 capital/Tier 1 capital

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Total capital $ 9,474 $ 9,031

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The following table presents RJF’s risk-weighted assets by exposure type used to calculate the aforementioned regulatory capital ratios.

$ in millions

December 31, 2022 September 30, 2022

March 31, 2023 September 30, 2022

On-balance sheet assets:

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government and its agencies.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) was $6.18 billion at December 31, 2022, essentially unchanged from September 30, 2022, as investments in bank loans, the payment of prior-year bonuses, repayments of certain FHLB borrowings and common stock repurchases during the quarter were offset by the impacts of positive net income, a decline in receivables, and an increase in bank deposits due to an increase in client cash swept to our Bank segment through the RJBDP.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) of $8.66 billion at March 31, 2023 increased $2.49 billion compared with September 30, 2022.

The increase in cash and cash equivalents primarily resulted from an increase in bank deposits, including $2.75 billion of deposits from the launch of our Enhanced Savings Program to PCG clients in March 2023, as well as net proceeds from additional FHLB advances during the period, partially offset by common stock repurchases and dividends, investments in bank loans and available-for-sale securities, and the payment of prior-year bonuses.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Sources of liquidity

Approximately $2.01 billion of our total December 31, 2022 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A.

As of December 31, 2022, RJF had loaned $1.36 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.

Approximately $1.83 billion of our total March 31, 2023 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A.

As of March 31, 2023, RJF had loaned $1.16 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, 2022

TriState Capital Bank 975

$ in millions March 31, 2023

Raymond James Bank 2,581

TriState Capital Bank 2,401

Raymond James Ltd.

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Raymond James Capital Services, LLC 179

Raymond James Financial Services, Inc.

Charles Stanley Group Limited 131

Raymond James Financial Services, Inc.

Raymond James Trust Company of New Hampshire 94

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Total cash and cash equivalents $ 8,663

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $272 million as of December 31, 2022.

The portion of this total that was available on demand without restrictions, which amounted to $232 million as of December 31, 2022, is reflected in the RJF cash balance and excluded from Raymond James Bank’s cash balance in the preceding table.

Due to recent market volatility, we maintained a higher level of cash balances at Raymond James Bank and TriState Capital Bank as of March 31, 2023 compared with more recent periods as part of our liquidity management practices.

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $275 million as of March 31, 2023.

The portion of this total that was available on demand without restrictions, which amounted to $234 million as of March 31, 2023, is reflected in the RJF cash balance and excluded from Raymond James Bank’s cash balance in the preceding table.

A large portion of the cash and cash equivalents balances at our non-U.S.

subsidiaries, including RJ Ltd., as of December 31, 2022 was held to meet regulatory requirements and was not available for use by the parent.

subsidiaries, including RJ Ltd., as of March 31, 2023 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 company from subsidiaries, as described in the following section.

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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, 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.

At March 31, 2023, 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.

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

Dividends may be limited to the extent that capital is needed to support balance sheet growth.

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

Borrowings and financing arrangements

Committed financing arrangements

Our ability to borrow is dependent upon compliance with the conditions in our various loan agreements and, in the case of secured borrowings, collateral eligibility requirements.

Our committed financing arrangements primarily consist of a tri-party repurchase agreement (i.e., securities sold under agreements to repurchase) and, in the case of our $500 million revolving credit facility agreement (the “Credit Facility”), an unsecured line of credit.

The required market value of the collateral associated with the tri-party repurchase agreement ranges from 105% to 125% of the amount financed.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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

December 31, 2022

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

Financing arrangement:

Committed secured $ 100 $ — $ 100 1

Committed unsecured 200 300 500 1

Total committed financing arrangements

$ 300 $ 300 $ 600 2

Outstanding borrowing amount:

Committed secured $ — $ — $ —

Committed unsecured

Total outstanding borrowing amount

Our committed unsecured financing arrangement in the preceding table represents our Credit Facility, which provides for maximum borrowings of up to $500 million, with a sublimit of $300 million for RJF.

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

For additional details on our committed unsecured financing arrangement, see our discussion of the Credit Facility in Note 16 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K.

Uncommitted financing arrangements

Our uncommitted financing arrangements are in the form of secured lines of credit, secured bilateral or tri-party repurchase agreements, or unsecured lines of credit.

Our arrangements with third-party lenders are generally utilized to finance a portion of our fixed income securities held by RJ&A or for cash management purposes.

Dividends may be limited to the extent that capital is needed to support balance sheet growth or as part of our liquidity and capital management activities.

Borrowings and financing arrangements

Financing arrangements

We have various financing arrangements in place with third-party lenders that allow us the flexibility to borrow funds on a secured or unsecured basis to meet our liquidity needs.

We generally utilize these financing arrangements to finance a portion of our fixed income trading instruments held by RJ&A or for cash management purposes.

Our ability to borrow under these arrangements is dependent upon compliance with the conditions in our various loan agreements and, in the case of secured borrowings, collateral eligibility requirements.

As of March 31, 2023, RJF and RJ&A had the ability to borrow under our $500 million revolving credit facility agreement (the “Credit Facility”), a committed unsecured line of credit;

however, we had no such borrowings outstanding under this facility as of March 31, 2023.

See our discussion of the Credit Facility in Note 16 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K for additional details on the Credit Facility.

In April 2023, we amended our Credit Facility, increasing the borrowing capacity to $750 million, extending the term through April 2028, adding the secured overnight financing rate (“SOFR”) as an alternative reference rate, decreasing our variable rate facility fee, and removing the previous $300 million sublimit for RJF.

In addition to our Credit Facility, we have various uncommitted financing arrangements with third-party lenders, which are in the form of secured lines of credit, secured bilateral or tri-party repurchase agreements, or unsecured lines of credit.

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

As of March 31, 2023, we had outstanding borrowings under one uncommitted secured borrowing arrangement out of a total of 13 uncommitted financing arrangements (nine uncommitted secured and four uncommitted unsecured).

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

The following table presents our borrowings on uncommitted financing arrangements, 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, 2022

Outstanding borrowing amount:

Uncommitted secured $ 150

Uncommitted unsecured —

Total outstanding borrowing amount

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

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

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during the quarter End of period

March 31, 2023 $ 174 $ 223 $ 150 $ 236 $ 310 $ 167

December 31, 2022 $ 245 $ 257 $ 150 $ 288 $ 306 $ 156

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

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

RAYMOND JAMES FINANCIAL, INC.

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Other borrowings and collateralized financings

We had $1.05 billion in FHLB borrowings outstanding at December 31, 2022, comprised of floating-rate and fixed-rate advances.

See Note 13 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding the maturities and interest rates on our FHLB borrowings.

The interest rates on our floating-rate advances are generally based on a secured overnight financing rate (“SOFR”).

We use interest rate swaps to manage the risk of increases in interest rates associated with our floating-rate FHLB advances by converting the balances subject to variable interest rates to a fixed interest rate.

At December 31, 2022, we had pledged $8.36 billion of bank loans, net with the FHLB as security for the repayment of these borrowings and had an additional $5.17 billion in immediate credit available based on collateral pledged.

As of December 31, 2022, with the pledge of additional collateral, we had additional credit availability from certain FHLB member banks.

See Notes 6 and 13 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding bank loans, net pledged with the FHLB and these borrowings.

A portion of our fixed income transactions are cleared and executed through a third-party clearing organization, which provides financing for the purchase of trading instruments to support such transactions.

We had $1.55 billion in FHLB borrowings outstanding at March 31, 2023, comprised of floating-rate and fixed-rate advances.

The interest rates on our floating-rate advances are generally based on a SOFR.

We use interest rate swaps to manage the risk of increases in interest rates associated with the majority of our floating-rate FHLB advances by converting the balances subject to variable interest rates to a fixed interest rate.

In March 2023, we increased our fixed-rate FHLB borrowings by $1 billion.

We repaid $500 million of such borrowings by March 31, 2023, with the remaining $500 million maturing on April 20, 2023.

We subsequently repaid $200 million of the borrowings maturing in April 2023, while extending the remaining $300 million until May 26, 2023 at a rate of 5.23%.

During the quarter ended March 31, 2023, we increased our borrowing capacity with the FHLB through the pledge of additional available-for-sale securities.

At March 31, 2023, we had pledged $8.77 billion of bank loans, net and $4.64 billion of available-for-sale securities with the FHLB as security for the repayment of outstanding FHLB borrowings and to secure capacity for additional borrowings as needed.

As of March 31, 2023, we had an additional $9.07 billion in immediate credit available based on collateral pledged, which does include additional capacity created by the $200 million repayment of FHLB borrowings subsequent to quarter end, and with the pledge of additional collateral, we had additional credit availability from certain FHLB member banks.

See Notes 4, 6, 7, and 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding bank loans, net and available-for-sale securities pledged with the FHLB and for further information on our FHLB borrowings, including the related maturities and interest rates.

A portion of our fixed income transactions are cleared through a third-party clearing organization, which provides financing for the purchase of trading instruments to support such transactions.

The amount of financing is based on the amount of trading inventory financed, as well as any deposits held at the clearing organization.

Amounts outstanding under this financing arrangement are collateralized by a portion of our trading inventory and accrue interest based on market rates.

While we had borrowings outstanding as of December 31, 2022, the clearing organization is under no contractual obligation to lend to us under this arrangement.

We are eligible to participate in the Federal Reserve’s discount window program;

While we had borrowings outstanding as of March 31, 2023, the clearing organization is under no contractual obligation to lend to us under this arrangement.

Raymond James Bank and TriState Capital Bank have access to the Federal Reserve’s discount window and may have access to other lending programs that may be established by the Federal Reserve in unusual and exigent circumstances, including the Bank Term Funding Program that was created by the Federal Reserve on March 12, 2023;

however, we do not view borrowings from the Federal Reserve as a primary source of funding.

The credit available in this program is subject to periodic review, may be terminated or reduced at the discretion of the Federal Reserve, and is secured by certain pledged C&I loans.

See Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding bank loans, net pledged with the FRB.

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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 $44 million as of December 31, 2022 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 $177 million as of March 31, 2023 related to the securities loaned included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition of this Form 10-Q.

See Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and Note 2 of our 2022 Form 10-K for more information on our collateralized agreements and financings.

Senior notes payable

At December 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.

At March 31, 2023, 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 2022 Form 10-K for additional information on senior notes payable.

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Management’s Discussion and Analysis

Credit ratings

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Moody’s Standard & Poor’s Ratings Services (2)

Issuer and senior long term debt A- A3 BBB+

Issuer and senior long-term debt A- A3 A-

Preferred stock BB+ Baa3 (hyb) Not rated

Outlook Stable Stable Positive

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Management’s Discussion and Analysis

management, capital structure, overall risk management, business diversification and market share, and competitive position in the markets in which we operate.

Outlook Stable Stable Stable

(1) On March 17, 2023, Fitch Ratings, Inc.

affirmed RJF’s issuer and senior long term debt A- rating, preferred stock BB+ rating, and stable rating outlook.

(2) On February 13, 2023, Standard & Poor’s Rating Services upgraded RJF’s issuer and senior long-term debt from BBB+ to A- and changed the rating outlook to stable.

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

Deterioration in any of these factors could impact our credit ratings.

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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 $811 million as of December 31, 2022, comprised of $513 million related to employee-directed plans and $298 million related to company-directed plans, and we were able to borrow up to 90%, or $730 million, of the December 31, 2022 total without restriction.

Those policies against which we could readily borrow had a cash surrender value of $863 million as of March 31, 2023, comprised of $554 million related to employee-directed plans and $309 million related to company-directed plans, and we were able to borrow up to 90%, or $777 million, of the March 31, 2023 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, 2022.

There were no borrowings outstanding against any of these policies as of March 31, 2023.

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.

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See Note 16 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information.

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Management’s Discussion and Analysis

Refer to the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations in “Item 1 - Business - Regulation” of our 2022 Form 10-K.

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

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

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

As of March 31, 2023, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements.

In addition, RJF, Raymond James Bank, and TriState Capital Bank were categorized as “well-capitalized” as of March 31, 2023.

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

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

See Note 20 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information on regulatory capital requirements.

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Management’s Discussion and Analysis

See Note 21 of the Notes to Condensed Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources - Capital structure” of this Form 10-Q for further information on regulatory capital requirements.

CRITICAL ACCOUNTING ESTIMATES

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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 2022 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 matters contingencies as of December 31, 2022.

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 matters contingencies as of March 31, 2023.

Allowance for credit losses

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gross domestic product, equity market indices, unemployment rates, and commercial real estate and residential home price indices.

To demonstrate the sensitivity of credit loss estimates on our bank loan portfolio to macroeconomic forecasts, we compared our modeled estimates under the base case economic scenario used to estimate the allowance for credit losses as of December 31, 2022, to what our estimate would have been under a downside case scenario and an upside scenario, without considering any offsetting effects in the qualitative component of our allowance for credit losses as of December 31, 2022.

As of December 31, 2022, use of the downside case scenario would have resulted in an increase of approximately $170 million in the quantitative portion of our allowance for credit losses on bank loans, while the use of the upside case would have resulted in a reduction of approximately $35 million in the quantitative portion of our allowance for credit losses on bank loans at December 31, 2022.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

To demonstrate the sensitivity of credit loss estimates on our bank loan portfolio to macroeconomic forecasts, we compared our modeled estimates under the base case economic scenario used to estimate the allowance for credit losses as of March 31, 2023, to what our estimate would have been under a downside case scenario and an upside scenario, without considering any offsetting effects in the qualitative component of our allowance for credit losses as of March 31, 2023.

As of March 31, 2023, use of the downside case scenario would have resulted in an increase of approximately $200 million in the quantitative portion of our allowance for credit losses on bank loans, while the use of the upside case would have resulted in a reduction of approximately $40 million in the quantitative portion of our allowance for credit losses on bank loans at March 31, 2023.

These hypothetical outcomes reflect the relative sensitivity of the modeled portion of our allowance estimate to macroeconomic forecasted scenarios but do not consider any potential impact qualitative adjustments could have on the allowance for credit losses in such environments.

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and (2) management’s application of subjective measures to modeled results through the qualitative portion of the allowance for credit losses when appropriate.

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Management’s Discussion and Analysis

downside case scenario utilized in this hypothetical sensitivity analysis assumes a moderate recession.

The downside case scenario utilized in this hypothetical sensitivity analysis assumes a moderate recession.

To the extent macroeconomic conditions worsen beyond those assumed in this downside case scenario, we could incur provisions for credit losses significantly in excess of those estimated in this analysis.

See Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K for information regarding our methodologies and assumptions used in estimating the allowance for credit losses.

See Note 7 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, 2022.

See Note 7 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, 2023.

RECENT ACCOUNTING DEVELOPMENTS

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

In March 2023, the FASB issued amended guidance related to accounting for investments in tax credit structures using the proportional amortization method (ASU 2023-02).

The amendment permits reporting entities to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met and makes the delayed equity contributions guidance applicable only when the proportional amortization method is applied to a tax equity investment.

This amendment also requires entities to make disclosures about all investments in a tax credit program for which they have elected to account for using the proportional amortization method, including those investments in an elected tax credit program that do not meet the conditions to use the proportional amortization method.

This new guidance is effective for our fiscal year beginning on October 1, 2024.

This guidance may be applied on a retrospective basis or modified retrospective basis to all qualifying tax equity investments;

however, the transition method must be applied consistently to all affected investments.

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

We are still evaluating the impact the adoption of this new guidance will have on our financial position, results of operations, and disclosures.

RISK MANAGEMENT

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

Our Board of Directors, including its Audit and Risk Committee, oversees the firm’s management and mitigation of risk, reinforcing a culture that encourages ethical conduct and risk management throughout the firm.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Our Board of Directors, including its Risk Committee and Audit Committee, oversees the firm’s management and mitigation of risk, reinforcing a culture that encourages ethical conduct and risk management throughout the firm.

Senior management communicates and reinforces this culture through three lines of risk management and a number of senior-level management committees.

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Foreign exchange risk results from changes in spot prices, forward prices, and volatility of foreign exchange rates.

See Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Notes 3, 4, and 5 of the Notes to Condensed Consolidated

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Management’s Discussion and Analysis

Financial Statements of this Form 10-Q for fair value and other information regarding our trading inventories, available-for-sale securities, and derivative instruments.

See Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Notes 3, 4, and 5 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for fair value and other information regarding our trading inventories, available-for-sale securities, and derivative instruments.

We regularly enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold shares issued in the offerings to which we are committed.

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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.

Treasuries, exchange traded funds, futures contracts, liquid spread products, and derivatives.

Our primary method for controlling risks within trading inventories is through the use of dollar-based and exposure-based limits.

A hierarchy of limits exists at multiple levels, including firm, business unit, desk (e.g., for equities, corporate bonds, municipal bonds), product sub-type (e.g., below-investment-grade positions) and, at times, at the individual position.

For derivative positions, which are primarily comprised of interest rate swaps, we have established limits based on a number of factors, including interest rate, foreign exchange spot and forward rates, spread, ratio, basis, and volatility risk.

For derivative positions, which are primarily comprised of interest rate swaps, we have established sensitivity-based and foreign exchange spot limits.

Trading positions and derivatives are monitored against these limits through daily reports that are distributed to senior management.

During volatile markets, we may temporarily reduce limits and/or choose to pare our trading inventories to reduce risk.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

We monitor Value-at-Risk (“VaR”) for all of our trading portfolios on a daily basis for risk management purposes and as a result of applying the Fed’s Market Risk Rule (“MRR”) for the purpose of calculating our capital ratios.

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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.

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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, 2022 Period-end VaR Three months ended December 31,

$ in millions High Low December 31,

Six months ended March 31, 2023 Period-end VaR Three months ended March 31, Six months ended March 31,

$ in millions High Low March 31,

2023 September 30,

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Daily VaR $ 3 $ 1 $ 1 $ 3 Average daily VaR $ 2 $ 1 $ 2 $ 1

Average daily VaR was higher during the three months ended December 31, 2022 compared with the three months ended December 31, 2021 due to the impact increased market volatility in December 2022, as well as the addition of the SumRidge Partners trading inventory.

Average daily VaR was higher during the three and six months ended March 31, 2023 compared with the three and six months ended March 31, 2022 due to the impact of increased market volatility during the period, as well as the addition of the SumRidge Partners trading inventory beginning in July 2022.

Period-end VaR was lower at March 31, 2023 compared to September 30, 2022, due to a decline in trading inventory.

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, 2022, our regulatory-defined daily losses in our trading portfolios did not exceed our predicted VaR.

During the three and six months ended March 31, 2023, our regulatory-defined daily losses in our trading portfolios exceeded our predicted VaR on one occasion.

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.”

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Management’s Discussion and Analysis

Banking operations

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One of the objectives of the Asset and Liability Committee is to manage the sensitivity of net interest income to changes in market interest rates.

This committee uses several measures to monitor and limit interest rate risk in our banking operations, including scenario analysis and economic value of equity.

This committee uses several measures to monitor and limit interest rate risk in our banking operations, including scenario analysis and economic value of equity (“EVE”).

We utilize a hedging strategy using interest rate swaps in our banking operations as a result of our asset and liability management process.

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Assumptions used in the model include interest rate movement, the slope of the yield curve, and balance sheet composition and growth.

The model also considers interest rate-related risks such as pricing spreads, pricing of client cash accounts, and prepayments.

The model also considers interest rate-related risks such as pricing spreads, pricing of client cash accounts, including deposit betas, and prepayments.

Various interest rate scenarios are modeled in order to determine the effect those scenarios may have on net interest income.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

The following table is an analysis of our banking operations’ estimated net interest income over a 12-month period based on instantaneous shifts in interest rates (expressed in basis points) using our previously described asset/liability model, which assumes a dynamic balance sheet and that interest rates do not decline below zero.

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-200 $1,599 (14)%

(1) Our 0-basis point scenario was based on interest rates as of December 31, 2022 and did not include the impact of the Fed’s February 1, 2023 increase in its benchmark short-term rate.

(1) Our 0-basis point scenario was based on interest rates as of March 31, 2023 and did not include the impact of the Fed’s May 4, 2023 increase in its benchmark short-term rate.

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 maturities of our bank loan portfolio at December 31, 2022, including contractual principal repayments.

The Asset and Liability Committee also reviews EVE, which is a point in time analysis of current interest-earning assets and interest-bearing liabilities that incorporates all cash flows over their estimated remaining lives, discounted at current rates.

The EVE approach is based on a static balance sheet and provides an indicator of future earnings and capital levels as the changes in EVE indicate the anticipated change in the value of future cash flows.

We monitor sensitivity to changes in EVE utilizing Board of Directors-approved limits.

These limits set a risk tolerance to changing interest rates and assist in determining strategies for mitigating this risk as EVE approaches these limits.

As of March 31, 2023, our EVE analyses were within approved limits.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

The following table shows the maturities of our bank loan portfolio at March 31, 2023, including contractual principal repayments.

Maturities are generally determined based upon contractual terms;

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Total loans held for sale and investment $ 15,999 $ 13,781 $ 6,356 $ 7,962 $ 44,098

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, 2022.

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, 2023.

Interest rate type

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Total loans held for sale and investment $ 3,036 $ 25,063 $ 28,099

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Management’s Discussion and Analysis

Contractual loan terms for SBL, C&I loans, CRE loans, REIT loans, 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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Treasuries, 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, 2022, our available-for-sale securities portfolio had a fair value of $9.79 billion with a weighted-average yield of 1.94%.

The effective duration of our available-for-sale securities portfolio as of December 31, 2022 was approximately 3.74, where duration is defined as the approximate percentage change in price for a 100-basis point change in rates.

At March 31, 2023, our available-for-sale securities portfolio had a fair value of $9.77 billion with a weighted-average yield of 2.03% and a weighted-average life of 4.38 years.

The effective duration of our available-for-sale securities portfolio as of March 31, 2023 was approximately 3.65, where duration is defined as the approximate percentage change in price for a 100-basis point change in rates.

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

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Management’s Discussion and Analysis

Equity price risk

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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 $1.52 billion and $1.51 billion at December 31, 2022 and September 30, 2022, respectively, when converted to the U.S.

For example, our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling $1.54 billion and $1.51 billion at March 31, 2023 and September 30, 2022, respectively, when converted to the U.S.

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

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See Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Note 5 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding these derivatives.

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

At March 31, 2023, we had foreign exchange risk in our investment in RJ Ltd.

of CAD 413 million and in our investment in Charles Stanley of £274 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 December 31, 2022.

All of our other investments, consisting primarily of 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, 2023.

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.

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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 2022 Form 10-K.

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Management’s Discussion and Analysis

Corporate activities

We maintain cash balances with the Fed and with various financial institutions, primarily global systemically important banks, in our normal course of business.

A large portion of such balances are in excess of FDIC insurance limits.

As a result, we may be exposed to the risk that these financial institutions may not return our cash to us in the event that the institution experiences financial distress or ceases its operations.

In order to mitigate our credit risk to such financial institutions, we monitor our exposure with each institution on a daily basis and subject each institution to limits based on various factors including but not limited to financial strength, capitalization levels, liquidity, credit ratings, and market factors to the extent applicable.

Brokerage activities

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The credit risk management process also includes annual independent reviews of the credit risk monitoring process that performs assessments of compliance with credit policies, risk ratings, and other critical credit information.

We seek to identify potential problem loans early, record any necessary risk rating changes and charge-offs promptly, and maintain appropriate

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

reserve levels for expected losses.

We seek to identify potential problem loans early, record any necessary risk rating changes and charge-offs promptly, and maintain appropriate reserve levels for expected losses.

We utilize a thorough credit risk rating system to measure the credit quality of individual corporate and tax-exempt loans and related unfunded lending commitments.

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

On an ongoing basis, we evaluate our methods for determining the allowance for each class of loans and make enhancements we consider appropriate.

On an ongoing basis, we evaluate our methods for determining the allowance for each class of loans and

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Management’s Discussion and Analysis

make enhancements we consider appropriate.

Our allowance for credit losses methodology is described in Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K.

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The following table presents net loan (charge-offs)/recoveries and the annualized 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,

2023 2022 2023 2022

$ in millions Net loan

(charge-off)/recovery

loans Net loan

(charge-off)/recovery

amount Annualized

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(charge-off)/recovery

loans Net loan

(charge-off)/recovery

amount Annualized

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Total loans held for sale and investment $ (20) 0.18 % $ (1) 0.01 % $ (22) 0.10 % $ (2) 0.02 %

(1) Net charge-offs during the three and six months ended March 31, 2023 were primarily related to two C&I loans.

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

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The following table presents the balance of nonperforming loans, nonperforming assets, and related key credit ratios.

$ in millions December 31, 2022 September 30, 2022

$ in millions March 31, 2023 September 30, 2022

Nonperforming loans (1)

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Nonperforming assets as a % of Bank segment total assets 0.16 % 0.13 %

(1) Nonperforming loans at December 31, 2022 and September 30, 2022 included $39 million and $63 million of loans, respectively, which were current pursuant to their contractual terms.

The nonperforming loan balances in the preceding table excluded $7 million as of both December 31, 2022 and September 30, 2022, of residential troubled debt restructurings which were returned to accrual status in accordance with our policy.

Although our nonperforming assets as a percentage of our Bank segment’s assets remained low as of December 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 would depend on future developments that are highly uncertain.

(1) Nonperforming loans at March 31, 2023 and September 30, 2022 included $90 million and $63 million of loans, respectively, which were current pursuant to their contractual terms.

The nonperforming loan balances in the preceding table excluded $6 million and $7 million as of March 31, 2023 and September 30, 2022, respectively, of residential troubled debt restructurings which were returned to accrual status in accordance with our policy.

Although our nonperforming assets as a percentage of our Bank segment’s assets remained low as of March 31, 2023, 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 would depend on future developments that are highly uncertain.

See further explanation of our bank loan portfolio segments, allowance for credit losses, and the credit loss provision in Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and “Management’s Discussion and Analysis - Results of Operations - Bank” of this Form 10-Q and Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K.

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 2022 Form 10-K.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Loan underwriting policies

Risk monitoring process

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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, 2022.

There were no significant changes to those processes during the three months ended March 31, 2023.

SBL and residential mortgage loan portfolios

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Collateral adjustments, as triggered by our monitoring procedures, are made by the borrower as necessary to ensure our loans are adequately secured, resulting in minimizing our credit risk.

Collateral calls have been minimal relative to our SBL portfolio with no losses incurred to date.

Collateral calls have been minimal relative to our SBL portfolio with insignificant losses incurred to date.

We track and review many factors to monitor credit risk in our residential mortgage loan portfolio.

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

December 31, 2022 $ 5 $ 6 $ 11 0.06 % 0.08 % 0.14 %

March 31, 2023 $ 4 $ 5 $ 9 0.05 % 0.06 % 0.11 %

September 30, 2022 $ 6 $ 6 $ 12 0.08 % 0.08 % 0.16 %

Our December 31, 2022 percentage compares favorably to the national average for over 30 day delinquencies of 1.98%, as most recently reported by the Fed.

Our March 31, 2023 percentage compares favorably to the national average for over 30 day delinquencies of 2.03%, 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, 2022

March 31, 2023

Loans outstanding as a % of

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The occurrence of a natural disaster or severe weather event in any of these states, for example wildfires in California and hurricanes in Florida, could result in additional credit loss provisions and/or charge-offs on our loans in such states and therefore negatively impact our net income and regulatory capital in any given period.

Loans where borrowers may be subject to payment increases include adjustable rate mortgage loans with terms that initially require payment of interest only.

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

At March 31, 2023 and September 30, 2022, these loans totaled $2.71 billion and $2.55 billion, respectively, or approximately 34% and 35% 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, 2023, begins amortizing is six years.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Loans where borrowers may be subject to payment increases include adjustable rate mortgage loans with terms that initially require payment of interest only.

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

At December 31, 2022 and September 30, 2022, these loans totaled $2.63 billion and $2.55 billion, respectively, or approximately 34% and 35% 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, 2022, begins amortizing is six years.

Corporate and tax-exempt loans

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

December 31, 2022

March 31, 2023

Loans outstanding as a % of

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Consumer products and services 5% 2%

Certain sectors continue to be impacted by supply chain disruptions and changes in consumer behavior.

In addition, macroeconomic uncertainty has further exacerbated supply chain stresses and inflation concerns.

Further, the Fed’s measures to control inflation, including through increases in short-term interest rates, have had an impact on consumer behavior and are likely to continue to do so in the near-term.

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 following the COVID-19 pandemic.

The Fed’s measures to control inflation, including through increases in short-term interest rates, have had an impact on consumer behavior and are likely to continue to do so in the near-term.

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

In response to changing trends, and industry-wide challenges following the COVID-19 pandemic, we have closely monitored each loan in our commercial real estate portfolio, particularly office real estate, utilizing LTV ratios and other metrics.

We have also focused on reducing our corporate loan exposure in certain sectors with increasing credit concerns, including selling approximately $430 million of loans subsequent to March 31, 2023 through May 5, 2023 at an average sales price of 99% of par value.

Additional sales of corporate loans may be made during the remainder of fiscal 2023 to further reduce credit risk in certain sectors.

In addition, we plan to be prudent in issuing new corporate loans for the remainder of fiscal 2023 as a result of the recent market volatility.

Liquidity risk

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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, 2022.

We did not incur any significant losses related to such operational challenges during the six months ended March 31, 2023.

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 2022 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.

Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models.

See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our 2022 Form 10-K for information regarding how we utilize models throughout the firm and how we manage model risk.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models.

Compliance risk

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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