What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-08 · 391 added, 339 removed, 1245 unchanged (37% of the section changed)

21 unchanged sentences

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,” “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.

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

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EXECUTIVE OVERVIEW

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%.

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

For our fiscal third quarter of 2023, we generated net revenues of $2.91 billion, an increase of 7% compared with the prior-year quarter, and pre-tax income of $486 million increased 17%.

Our net income available to common shareholders of $369 million increased 23%, and our earnings per diluted share were $1.71, reflecting a 24% increase.

Our annualized return on common equity (“ROCE”) for the quarter was 14.9%, compared with 13.3% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 18.3% (1) , compared with 15.6% (1) 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.

Excluding $40 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 $399 million (1) for the three months ended June 30, 2023 and our adjusted earnings per diluted share were $1.85 (1) , each 15% higher compared with the prior-year quarter.

Adjusted annualized ROCE for the quarter was 16.1% (1) and adjusted annualized ROTCE was 19.7% (1) compared with adjusted annualized ROCE of 15.4% (1) and adjusted annualized ROTCE of 18.1% (1) for the prior-year quarter.

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Management’s Discussion and Analysis

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.

Quarterly net revenues increased compared with the prior-year quarter primarily 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 and SumRidge Partners, LLC (“SumRidge Partners”) in July 2022.

These increases were offset by lower investment banking revenues due to a challenging market environment during the current quarter, which continued to dampen capital markets activity not only in our business but across the industry, as well as 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.

Compensation, commissions and benefits expense increased 1%, primarily due to incremental compensation expenses arising from the aforementioned acquisitions, as well as an increase in compensation costs to support our growth and annual salary increases, partially offset by a decrease in compensable revenues compared with the prior-year quarter.

Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 63.7%, compared with 67.5% 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 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.

We currently expect to continue to repurchase our common stock in fiscal 2023 to offset the shares issued with the acquisition of TriState Capital in fiscal 2022, as well as to offset dilution from share-based compensation;

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

Non-compensation expenses increased $101 million or 22%.

Elevated provisions for legal and regulatory matters during the current quarter accounted for approximately $65 million of the increase, with the remainder primarily resulting from incremental expenses arising from the aforementioned acquisitions, as well as higher communications and information processing expenses, arising both from acquisitions and continued investments in technology to support our growth, and higher business development expenses.

The bank loan provision for credit losses was $54 million for the current-year quarter compared with a provision of $56 million for the prior-year quarter, which included an initial provision for credit losses of $26 million on loans acquired as part of the TriState Capital acquisition.

The bank loan provision for credit losses in the current-year quarter largely reflected the impacts of a weaker economic outlook for the CRE portfolio as reflected in the Moody’s CRE Price Index in our CECL model and, to a lesser extent, loan downgrades during the quarter.

Our effective income tax rate was 24.1% for our fiscal third quarter of 2023, a decrease compared with the 27.5% effective income tax rate for the prior-year quarter, primarily due to the impact on our provision for income taxes from nontaxable valuation gains associated with our company-owned life insurance policies in the current-year quarter compared with nondeductible valuation losses in the prior-year quarter.

As of June 30, 2023, our Tier 1 leverage ratio of 11.4% and Total capital ratio of 22.0% were both more than double the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $1.7 billion (2) of cash at the parent as of June 30, 2023, which includes cash the parent loaned to RJ&A to invest on its behalf.

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

We also have access to significant sources of funding for our business activities should the need arise, including borrowings against the $750 million balance available on our revolving credit facility, which was recently renewed and increased from $500 million in April 2023, as well as nearly $10 billion of FHLB borrowing capacity in the Bank segment.

During the three months ended June 30, 2023, we repurchased 3.31 million shares of our common stock for $300 million at an average price of $91 per share under the Board of Directors’ common stock repurchase authorization.

After the effect of those repurchases, $750 million remained under such authorization.

We currently expect to continue to repurchase our common stock in our fiscal fourth quarter of 2023 to offset the shares issued with the acquisition of TriState Capital in fiscal 2022, as well as to offset dilution from share-based compensation;

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

(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.

As we look ahead to our fiscal fourth quarter of 2023, we expect our results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 5% sequential increase in PCG fee-based assets and 3% sequential increase in financial assets under management as of June 30, 2023.

However, we expect our combined net interest income and RJBDP fees from third-party banks to decline an estimated 5% in total in our fiscal fourth quarter compared with our fiscal third quarter of 2023 due to lower net interest income in our Bank segment reflecting the impact from higher-cost diversified funding sources, including our Enhanced Savings Program which was launched to PCG clients in March 2023, as well as elevated cash balances we plan to maintain in our Bank segment due to market conditions, partially offset by an increase in RJBDP fees from third-party banks due to the combination of higher average balances swept to such banks as well as recent increases in short-term interest rates.

While we have a healthy investment banking pipeline, market uncertainty continues to impact the pace and timing of transactions, and we expect such uncertainty to continue in our fiscal fourth quarter, which may continue to have a negative impact on investment banking revenues compared to prior year levels.

We expect to continue to experience headwinds for brokerage revenues due to a decline in cash balances at many of our depository institution clients.

In addition, although we have proactively taken steps to manage our credit risk in our loan portfolio, including selling approximately $450 million of corporate loans during the fiscal third quarter of 2023, future economic deterioration or changes in our macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

For the nine months ended June 30, 2023, we generated net revenues of $8.57 billion, an increase of 5% compared with the prior-year period, and pre-tax income of $1.70 billion, an increase of 21%.

Our net income available to common shareholders of $1.30 billion was 22% higher than the prior-year period and our earnings per diluted share were $5.95, reflecting a 19% increase.

Our annualized ROCE was 17.9%, compared with 16.3% for the prior-year period, and our annualized ROTCE was 22.0% (1) , compared with 18.7% (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%.

The nine months ended June 30, 2023 included $97 million of expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets.

The nine months ended June 30, 2023 also included the favorable impact of a $32 million insurance settlement received during our fiscal first quarter related to a previously-settled legal matter.

Excluding these items, our adjusted net income available to common shareholders was $1.35 billion (1) , an increase of 17% compared with the prior-year period, and our adjusted earnings per diluted share were $6.17 (1) , an increase of 14%.

Adjusted annualized ROCE was 18.5% (1) , compared with 17.6% (1) in the prior-year period, and adjusted annualized ROTCE was 22.7% (1) , compared with 20.1% (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.

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

Compensation, commissions and benefits expense decreased 3%, 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.

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Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 62.4% (1) , compared with an adjusted compensation ratio of 67.6% (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.

Non-compensation expenses increased $268 million, or 22%, due most significantly to incremental expenses arising from our prior-year acquisitions of Charles Stanley, TriState Capital, and SumRidge, elevated provisions for legal and regulatory matters during the current period of approximately $100 million, as well as increases in business development expenses, communications and information processing expenses, and the bank loan provision for credit losses.

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.

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Management’s Discussion and Analysis

Our effective income tax rate was 23.0% for the nine months ended June 30, 2023, a decrease from 23.9% for the prior-year period, primarily due to the impact on our provision for income taxes of nontaxable valuation gains associated with our company-owned life insurance policies in the current year compared with nondeductible valuation losses in the prior-year period.

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.

During the nine months ended June 30, 2023, we repurchased 8.35 million shares of our common stock under the Board of Directors’ common stock repurchase authorization for $788 million at an average price of $94 per share.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

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

Beginning with our fiscal third quarter of 2022, certain of our non-GAAP financial measures have been adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, such as those related to amortization of identifiable intangible assets arising from acquisitions and acquisition-related retention.

Prior periods have been conformed to the current period presentation.

We believe that return on tangible common equity is meaningful to investors as it facilitates comparisons of our results to the results of other companies.

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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 Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Three months ended Nine months ended

$ in millions June 30,

2023 June 30,

2022 June 30,

2023 June 30,

Net income available to common shareholders $ 369 $ 299 $ 1,301 $ 1,068

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

Compensation, commissions and benefits — Acquisition-related retention

Compensation, commissions and benefits:

Acquisition-related retention 18 16 53 41

Other acquisition-related compensation 10 2 10 2

Total “Compensation, commissions and benefits” expense 28 18 63 43

Professional fees

Other — Amortization of identifiable intangible assets

Bank loan provision for credit losses — Initial provision for credit losses on acquired loans

Amortization of identifiable intangible assets 11 8 33 22

Initial provision for credit losses on acquired lending commitments — 5 — 5

All other acquisition-related expenses

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Compensation, commissions and benefits expense $ 1,851 $ 1,834 $ 5,407 $ 5,570

Acquisition-related retention (as detailed above) 17 14 35 25

Total compensation-related acquisition expenses (as detailed above) 28 18 63 43

Adjusted “Compensation, commissions and benefits” expense $ 1,823 $ 1,816 $ 5,344 $ 5,527

Three months ended Six months ended

2023 March 31,

2022 March 31,

2023 March 31,

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Three months ended Nine months ended

2023 June 30,

2022 June 30,

2023 June 30,

Total compensation ratio 63.7 % 67.5 % 63.1 % 68.2 %

1 unchanged sentence

Acquisition-related retention 0.7 % 0.6 % 0.6 % 0.5 %

Other acquisition-related compensation 0.3 % 0.1 % 0.1 % 0.1 %

Total “Compensation, commissions and benefits” expenses related to acquisitions 1.0 % 0.7 % 0.7 % 0.6 %

Adjusted total compensation ratio 62.7 % 66.8 % 62.4 % 67.6 %

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Three months ended Six months ended

Earnings per common share March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Three months ended Nine months ended

2023 June 30,

2022 June 30,

2023 June 30,

Diluted earnings per common share $ 1.71 $ 1.38 $ 5.95 $ 4.99

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

Compensation, commissions and benefits:

Acquisition-related retention 0.09 0.07 0.24 0.19

Other acquisition-related compensation 0.05 0.01 0.05 0.01

Total “Compensation, commissions and benefits” expense 0.14 0.08 0.29 0.20

Professional fees — 0.02 — 0.05

Other — Amortization of identifiable intangible assets

Bank loan provision for credit losses — Initial provision for credit losses on acquired loans

— 0.12 — 0.12

Amortization of identifiable intangible assets 0.05 0.04 0.15 0.11

Initial provision for credit losses on acquired lending commitments — 0.02 — 0.02

All other acquisition-related expenses — 0.02 — 0.05

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Adjusted diluted earnings per common share $ 1.85 $ 1.61 $ 6.17 $ 5.41

Return on common equity Three months ended Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Return on common equity Three months ended Nine months ended

$ in millions June 30,

2023 June 30,

2022 June 30,

2023 June 30,

Average common equity $ 9,873 $ 8,999 $ 9,705 $ 8,711

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

Compensation, commissions and benefits:

Acquisition-related retention 9 8 27 19

Other acquisition-related compensation 4 1 2 1

Total “Compensation, commissions and benefits” expense 13 9 29 20

Professional fees 1 2 — 5

Other — Amortization of identifiable intangible assets

Bank loan provision for credit losses — Initial provision for credit losses on acquired loans

Amortization of identifiable intangible assets 6 4 17 11

Initial provision for credit losses on acquired lending commitments — 3 — 1

All other acquisition-related expenses — 2 — 4

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Management’s Discussion and Analysis

Three months ended Six months ended

$ in millions March 31,

2023 March 31,

2022 March 31,

2023 March 31,

Three months ended Nine months ended

$ in millions June 30,

2023 June 30,

2022 June 30,

2023 June 30,

Average common equity $ 9,873 $ 8,999 $ 9,705 $ 8,711

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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

Compensation, commissions and benefits:

Acquisition-related retention 9 8 27 19

Other acquisition-related compensation 4 1 2 1

Total “Compensation, commissions and benefits” expense 13 9 29 20

Professional fees 1 2 — 5

Other — Amortization of identifiable intangible assets

Bank loan provision for credit losses — Initial provision for credit losses on acquired loans

Amortization of identifiable intangible assets 6 4 17 11

Initial provision for credit losses on acquired lending commitments — 3 — 1

All other acquisition-related expenses — 2 — 4

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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.

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

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 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.

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

Over this period, the Fed has increased the Fed funds target rate from a March 31, 2022 range of 0.25% to 0.50% to a June 30, 2023 range of 5.00% to 5.25%.

The Fed has further increased the Fed funds target rate by 25 basis points in July 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.

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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.

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.

Rate changes subsequent to June 30, 2023

September 30, 2023 July 27, 2023 25 5.25% - 5.50%

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.

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

In fiscal 2023, we introduced the Enhanced Savings Program to our clients as part of our strategy to diversify our funding sources, albeit at a higher relative cost than other alternatives.

Changes to the regulatory landscape governing the fees the firm earns on client assets, including cash sweep balances, as well as other market driven factors, could negatively impact our earnings.

As a result of our diverse funding sources and high concentration of floating-rate assets, we benefited from the increases in short-term interest rates during the second half of fiscal 2022 and continuing into the three and nine months ended June 30, 2023.

However, despite recent increases in short-term interest rates, our net interest income and net interest margin decreased during our fiscal third quarter of 2023 compared with the preceding quarter due to a more rapid increase in deposit costs than in recent periods due to growth in the Enhanced Savings Program.

Despite an additional 25-basis point increase in the Fed funds target rate in July 2023 and higher RJBDP balances swept to third-party banks, we expect our combined net interest income and RJBDP fees from third-party banks to further decline an estimated 5% in our fiscal fourth quarter compared to the fiscal third quarter of 2023, due to lower net interest income in our Bank segment largely resulting from higher interest expense associated with the continued success of our Enhanced Savings Program.

Further, we expect to continue to carry a relatively higher level of cash balances in our Bank segment due to market conditions.

In addition, our pace of loan growth may continue to be muted, or otherwise fluctuate over time in response to a number of factors which include changes in interest rates, credit spreads, and other market factors, which may moderate growth in interest income generated by loans in the Bank segment in the near-term.

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.

4 unchanged sentences

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

Three months ended March 31,

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Three months ended June 30,

$ in millions Average

48 unchanged sentences

Firmwide 3.33 % 1.77 %

(1) Loans are presented net of unamortized purchase discounts or premiums, unearned income, and deferred origination fees and costs.

(1) Loans are presented net of unamortized purchase discounts or premiums, unearned income, deferred origination fees and costs, and charge-offs.

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

12 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

2023 compared to 2022

46 unchanged sentences

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,

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

Nine months ended June 30,

$ in millions Average

48 unchanged sentences

Firmwide 3.37 % 1.46 %

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

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

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

12 unchanged sentences

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

Six months ended March 31,

Nine months ended June 30,

2023 compared to 2022

49 unchanged sentences

Operating results

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

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 % change 2023 2022 % change

51 unchanged sentences

PCG client asset balances

$ in billions March 31,

2023 December 31,

$ in billions June 30,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

5 unchanged sentences

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

(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.

(1) Includes assets associated with firms affiliated with us through our Registered Investment Advisor & Custody Services (“RCS”) division of $130.5 billion as of June 30, 2023, $123.5 billion as of March 31, 2023, $108.5 billion as of September 30, 2022, $109.7 billion as of June 30, 2022, $99.2 billion as of March 31, 2022, and $92.7 billion as of September 30, 2021.

Of these amounts, $109.9 billion as of June 30, 2023, $103.6 billion as of March 31, 2023, $89.9 billion as of September 30, 2022, $90.3 billion as of June 30, 2022, $84.0 billion as of March 31, 2022, 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 March 31, Six months ended March 31,

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 2023 2022

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(1) Domestic Private Client Group net new assets represents domestic Private Client Group client inflows, including dividends and interest, less domestic Private Client Group client outflows, including commissions, advisory fees and other fees.

(2) This metric includes the impact of the departure of approximately $4.6 billion of assets under administration related to the portion of advisors previously associated through a single relationship in our independent contractors division whose affiliation with the firm ended in the fiscal third quarter of 2023.

(3) 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 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 AUA and PCG assets in fee-based accounts as of June 30, 2023 each increased 5% compared with March 31, 2023, increased 18% and 19%, respectively, compared with September 30, 2022, and each increased 15% compared with June 30, 2022 due to net equity market appreciation and strong net inflows of client assets during the period, primarily due to the favorable impact of our recruiting.

We expect that the 5% increase in PCG fee-based assets as of June 30, 2023 compared with March 31, 2023 will positively impact our asset management and related administrative fees for our fiscal fourth quarter of 2023.

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.

6 unchanged sentences

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.

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

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Financial advisors

2023 December 31,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

3 unchanged sentences

Total advisors 8,704 8,726 8,681 8,616 8,730 8,482

(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.

(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 and the impact of the departure of 60 financial advisors, representing the portion of advisors previously associated through a single relationship in our independent contractors division whose affiliation with the firm ended in the fiscal third quarter of 2023.

The number of financial advisors as of June 30, 2023 decreased compared with March 31, 2023, primarily due to the impact of an independent contractor relationship whose affiliation with the firm ended in our fiscal third quarter.

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

The recruiting pipeline remains solid across our affiliation options;

4 unchanged sentences

Clients’ domestic cash sweep balances and Enhanced Savings Program balances

$ in millions March 31,

2023 December 31,

$ in millions June 30,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

10 unchanged sentences

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,

Three months ended June 30, Nine months ended June 30,

2023 2022 2023 2022

2 unchanged sentences

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.

Such balances swept to third-party balances are not reflected on our Condensed Consolidated Statements of Financial Condition.

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.

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 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.

In the current interest-rate environment the PCG segment revenues

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

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.

throughout fiscal 2023 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.

In fiscal 2022, the PCG segment revenues reflected the base servicing fee until May 2022, when the yield from third-party banks first exceeded such level.

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 increased from the prior-year periods as a result of the significant increases in the Fed’s short-term benchmark interest rate, which began in March 2022.

We expect an increase in our RJBDP fees from third-party banks in our fiscal fourth quarter of 2023 compared with our fiscal third quarter of 2023 due to higher average balances held at third-party banks in the program resulting in part from additional funding flexibility the Enhanced Savings Program provides us, as well as the recent increases in short-term interest rates including the 25-basis point increase in July 2023.

Total client domestic cash sweep and Enhanced Savings Program balances increased 11% compared with March 31, 2023 due to growth of Enhanced Savings Program balances at Raymond James Bank which more than offset a decline in domestic cash sweep balances largely due to quarterly fee billings and client tax payments in April 2023.

Total client domestic cash sweep and Enhanced Savings Program balances decreased 14% compared with September 30, 2022, as a result of 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 $11.2 billion of client cash balances as of June 30, 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

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Net revenues of $2.18 billion increased 11% and pre-tax income of $411 million increased 64%.

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 $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.

Asset management and related administrative fees decreased $50 million, or 4%, primarily due to lower assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter primarily due to declines in the equity market.

Brokerage revenues decreased $24 million, or 6%, primarily due to lower trailing revenues from mutual and other fund products and variable annuity products, primarily resulting from market-driven declines in asset values for products for which we receive trails.

Account and service fees increased $250 million, or 84%, 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, partially offset by lower average balances.

Net interest income increased $31 million, or 53%, due to the increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances, partially offset by lower average balances.

Other revenues increased $14 million, or 127%, primarily due to a favorable arbitration award during the fiscal third quarter of 2023.

The benefit of this award was largely offset by associated compensation expenses and external legal fees incurred over the duration of the claim period, a portion of which was incurred during the fiscal third quarter of 2023.

Compensation-related expenses increased $13 million, or 1%, primarily due to an increase in compensation costs to support our growth and annual salary increases, partially offset by lower commission expense resulting from lower compensable revenues, including asset management and related administrative fees and brokerage revenues.

Non-compensation expenses increased $51 million, or 24%, primarily driven by higher provisions for legal and regulatory matters and, to a lesser extent, higher communications and information processing expenses.

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%.

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

Net revenues of $6.39 billion increased 12% and pre-tax income of $1.29 billion increased 95%.

Asset management and related administrative fees decreased $302 million, or 8%, 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.

Brokerage revenues decreased $109 million, or 9%, 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, as well as lower sales of equity products, mutual and other fund products, variable annuities, and insurance products.

These decreases were partially offset by higher fixed annuity and fixed income product sales.

Account and service fees increased $924 million, or 122%, 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.

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

Net interest income increased $142 million, or 116%, primarily due to the significant increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances.

Other revenues increased $16 million, or 67%, primarily due to the aforementioned favorable arbitration award during the fiscal third quarter of 2023.

Compensation-related expenses decreased $97 million, or 2%, 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.

Non-compensation expenses increased $140 million, or 24%, due to higher provisions for legal and regulatory matters, incremental expenses resulting from our acquisition of Charles Stanley, higher communications and information processing expenses primarily due to ongoing enhancements of our technology platforms, and increases in travel and event-related expenses compared with the low levels incurred in the prior-year period.

RAYMOND JAMES FINANCIAL, INC.

4 unchanged sentences

Operating results

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

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 % change 2023 2022 % change

37 unchanged sentences

Pre-tax income/(loss) $ (34) $ 61 NM $ (84) $ 349 NM

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

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Net revenues of $276 million decreased 28% and the pre-tax loss was $34 million compared with pre-tax income of $61 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 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.

Investment banking revenues decreased $76 million, or 35%, as activity levels in the current quarter were negatively impacted by macroeconomic uncertainties which continue to dampen capital markets activity across the industry.

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

however, market uncertainty continues to impact the pace and timing of transactions, and we expect such uncertainty to continue to negatively impact our investment banking activity in our fiscal fourth quarter of 2023.

Brokerage revenues decreased $29 million, or 21%, 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 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

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

Compensation-related expenses decreased $23 million, or 9%, due to lower revenues, partially offset by incremental compensation expenses arising from growth investments, including our acquisition of SumRidge Partners in July 2022, as well as 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 $11 million, or 14%, primarily attributable to incremental expenses associated with SumRidge Partners.

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

Net revenues of $873 million decreased 38% and the pre-tax loss was $84 million compared with pre-tax income of $349 million for the prior-year period.

1 unchanged sentence

Brokerage revenues decreased $90 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.

Compensation-related expenses decreased $163 million, or 20%, primarily due to the decrease in revenues, partially offset by incremental expenses associated with growth investments, including 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 $59 million, or 25%, primarily due to incremental expenses associated with SumRidge Partners, increased travel and event-related expenses, and higher professional fees and provisions for legal and regulatory matters compared with the prior-year period.

RAYMOND JAMES FINANCIAL, INC.

4 unchanged sentences

Operating results

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

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 % change 2023 2022 % change

34 unchanged sentences

Financial assets under management

$ in billions March 31,

2023 December 31,

$ in billions June 30,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

6 unchanged sentences

Activity (including activity in assets managed for affiliated entities)

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

Three months ended June 30, Nine months ended June 30,

$ in billions 2023 2022 2023 2022

Financial assets under management at beginning of period $ 205.9 $ 204.1 $ 184.0 $ 202.2

Acquisition of Chartwell Investment Partners (1)

Raymond James Investment Management - net inflows/(outflows) (0.4) 0.3 1.3 (0.9)

2 unchanged sentences

Financial assets under management at end of period $ 212.5 $ 192.6 $ 212.5 $ 192.6

(1) Represents June 1, 2022 assets under management of Chartwell Investment Partners, a registered investment advisor acquired as part of the TriState Capital acquisition.

See Note 3 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K for further information about this acquisition.

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

3 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 March 31, 2023

As of June 30, 2023

$ in billions AUM Average fee rate

7 unchanged sentences

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

$ in billions March 31,

2023 December 31,

$ in billions June 30,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

Total assets $ 399.2 $ 378.7 $ 329.2 $ 339.7 $ 379.7 $ 365.3

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.

1 unchanged sentence

Management’s Discussion and Analysis

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

Raymond James Trust

1 unchanged sentence

(including those managed for affiliated entities).

$ in billions March 31,

2023 December 31,

$ in billions June 30,

2023 March 31,

2023 September 30,

2022 June 30,

2022 March 31,

2022 December 31,

2022 September 30,

Total assets $ 8.6 $ 8.2 $ 7.3 $ 7.6 $ 8.4 $ 8.1

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

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Net revenues of $226 million decreased 1% and pre-tax income of $89 million decreased 4%.

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.

Asset management and related administrative fees decreased $3 million, or 1%, 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, which was acquired on June 1, 2022), 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

We expect the increase in financial assets under management and assets in non-discretionary asset-based programs as of June 30, 2023 compared with March 31, 2023, which occurred due to equity market appreciation and net inflows during the quarter, to positively affect our fiscal fourth 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 $2 million, or 4%, due to incremental compensation expenses of Chartwell, and non-compensation expenses were flat compared with the prior-year quarter.

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

Net revenues of $649 million decreased 7% and pre-tax income of $251 million decreased 17%.

Asset management and related administrative fees decreased $53 million, or 8%, 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.

These declines were partially offset by incremental revenues of Chartwell.

Compensation expenses increased $8 million, or 6%, due to incremental expenses resulting from the acquisition of Chartwell and higher salary expenses in part due to annual salary increases.

Non-compensation expenses decreased $5 million, or 2% due to lower investment sub-advisory fees, resulting from the decrease in assets under management in sub-advised programs, and lower platform fees, partially offset by incremental expenses resulting from the Chartwell acquisition.

RAYMOND JAMES FINANCIAL, INC.

5 unchanged sentences

Operating results

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

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 % change 2023 2022 % change

15 unchanged sentences

Pre-tax income $ 66 $ 74 (11) % $ 293 $ 259 13 %

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%.

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Net revenues of $514 million increased 86%, while pre-tax income of $66 million decreased 11%.

Net interest income increased $227 million, or 84%, 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 increase in average interest-earning assets at Raymond James Bank was primarily driven by growth in the bank loan portfolio and higher average cash balances.

These increases were partially offset by increased interest expense at Raymond James Bank as we pursue more diversified funding sources which have a higher relative cost, such as an increased emphasis on certificates of deposit and the Enhanced Savings Program launched to PCG clients in our fiscal second quarter of 2023.

The net interest margin increased to 3.26% from 2.41% for the prior-year quarter.

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.

We anticipate that the Bank segment net interest income and net interest margin will decline during our fiscal fourth quarter of 2023 due to the impact from the aforementioned higher-cost diversified funding sources.

The bank loan provision for credit losses was $54 million for the current quarter, compared with $56 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.

The current quarter provision for credit losses largely reflected the impacts of a weaker economic outlook for the CRE portfolio as reflected in Moody’s CRE Price Index utilized in our CECL model and, to a lesser extent, loan downgrades.

The prior-year quarter provision for credit losses was primarily due to an initial provision for credit losses of $26 million on loans acquired as part of the TriState Capital acquisition, as well as additional provisions for credit losses at Raymond James Bank due to loan growth and a weaker macroeconomic outlook at that time.

Compensation expenses increased $27 million, or 129%, primarily due to incremental expenses of TriState Capital Bank.

Non-compensation expenses, excluding the bank loan provision for credit losses, increased $221 million, or 177%, primarily due to an increase in RJBDP fees paid to PCG and incremental expenses of TriState Capital Bank.

RJBDP fees to PCG increased $198 million, or 251%, due to a significant increase in short-term interest rates, partially offset by a decrease in balances swept to our Bank segment as part of the RJBDP, as deposit balances raised in the Enhanced Savings Program during our fiscal third quarter of 2023 resulted in a decrease in balances swept to the Bank segment from the RJBDP.

These Bank segment fees and the related revenues earned by the PCG segment are eliminated in consolidation (see “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for further information on these servicing fees).

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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.

As described in “Management’s Discussion and Analysis - Results of Operations - Private Client Group”, our Bank segment incurs servicing fee expense, reflected as revenues in our PCG segment, for the administrative services provided related to our clients’ deposits that are swept to our Bank segment as part of the RJBDP.

These servicing fees are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates and the interest paid to clients on balances in the RJBDP.

As the yield from third-party banks in the RJBDP program continues to rise, the rate the Bank segment incurs on RJBDP deposits will also increase as it reflects a market rate for such deposits.

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

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

Net revenues of $1.56 billion increased 138%, while pre-tax income of $293 million increased 13%.

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.

Net interest income increased $882 million, or 139%, due to the significant increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, primarily bank loans, as well as incremental net interest income from the acquisition of TriState Capital Bank.

These increases were partially offset by the aforementioned increased deposit costs at Raymond James Bank.

The net interest margin increased to 3.41% from 2.14% for the prior-year period.

All other revenues increased $24 million, or 120%, primarily due to incremental revenues from the TriState Capital acquisition largely related to derivatives, valuation gains on certain company-owned life insurance policies compared with losses in the prior-year period, and higher foreign currency gains compared with the prior-year period.

The bank loan provision for credit losses was $96 million for the current-year period, compared with $66 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.

The current year provision for credit losses primarily reflected the impacts of a weakened macroeconomic outlook for certain loan portfolios, including the impact of a weaker economic outlook for the CRE portfolio as reflected in Moody’s CRE Price Index utilized in our CECL model, as well as loan downgrades during the period.

These increases were partially offset by the impact of loan repayments and sales, which had a larger impact than provisions on new loans during the period.

The provision for credit losses in the prior-year period primarily reflected the aforementioned initial provision for credit losses on loans acquired as part of the TriState Capital acquisition, as well as the impact of both loan growth at Raymond James Bank and a weaker macroeconomic outlook at that time.

Compensation expenses increased $88 million, or 183%, primarily due to incremental expenses of TriState Capital Bank and, to a lesser extent, increased headcount and annual salary increases.

Non-compensation expenses, excluding the bank loan provision for credit losses, increased $754 million, or 266%, 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.

RJBDP fees to PCG increased $678 million, or 381%, primarily due to a significant increase in short-term interest rates and, to a lesser extent, 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.

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RESULTS OF OPERATIONS – OTHER

This segment includes our private equity investments, interest income on certain corporate cash balances, certain costs incurred in acquisition activities, and certain corporate overhead costs of RJF that are not allocated to other segments, including the interest costs on our public debt.

For an overview of our Other segment operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K.

Operating results

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

Three months ended June 30, Nine months ended June 30,

$ in millions 2023 2022 % change 2023 2022 % change

Interest income $ 37 $ 6 517 % $ 103 $ 10 930 %

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

Net gains/(losses) on private equity investments 2 (3) NM 5 — NM

All other — — — % 1 7 (86) %

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Non-interest expenses:

Compensation and other 33 35 (6) % 56 67 (16) %

Compensation and benefits 27 28 (4) % 71 70 1 %

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

All other 34 15 127 % 46 40 15 %

Total non-interest expenses 61 43 42 % 85 110 (23) %

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 $ (46) $ (64) 28 % $ (51) $ (164) 69 %

Quarter ended June 30, 2023 compared with the quarter ended June 30, 2022

Pre-tax loss was $46 million compared with a pre-tax loss of $64 million for the prior-year quarter.

Net revenues increased $36 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 $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

Non-interest expenses increased $18 million, primarily due to an increase in provisions for legal and regulatory matters and an increase in advertising expenses, partially offset by a decrease in acquisition-related expenses.

Nine months ended June 30, 2023 compared with the nine months ended June 30, 2022

The pre-tax loss was $51 million compared with a pre-tax loss of $164 million in the prior-year period.

Net revenues increased $88 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.

Non-interest expenses decreased $25 million, or 23%, primarily due to a $32 million insurance settlement received during the current-year period related to a previously settled legal 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 provisions for legal and regulatory matters.

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

Total assets of $77.63 billion as of June 30, 2023 were $3.32 billion, or 4%, less than our total assets as of September 30, 2022.

Assets segregated for regulatory purposes and restricted cash decreased $4.64 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 $570 million, $294 million, and $114 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.

The available-for-sale securities portfolio balances declined $319 million as a result of our intention to utilize the cash generated from maturities in this portfolio as a source of funding for our business activities.

Partially offsetting these decreases was a $2.20 billion increase in cash and cash equivalents as we have increased the cash held in our Bank segment since September 30, 2022 as a result of market factors that have impacted the banking industry during fiscal 2023, providing us flexibility to meet the needs of our clients.

As of June 30, 2023, our total liabilities of $67.71 billion were $3.81 billion, or 5%, less than our total liabilities as of September 30, 2022.

Brokerage client payables decreased $5.41 billion, primarily related to the aforementioned decrease in CIP balances as of June 30, 2023.

Collateralized financings and derivative liabilities also decreased $285 million and $137 million, respectively.

These decreases were partially offset by an increase in bank deposits of $2.41 billion, primarily due to the launch of the Enhanced Savings Program to PCG clients in March 2023, which raised $11.23 billion of deposits during the period ended June 30, 2023, enabling us to shift a portion of our client cash sweep balances in the RJBDP from being held as bank deposits in our Bank segment to third-party banks in our RJBDP, which do not impact our Condensed Consolidated Statements of Financial Condition.

The increase in deposits also allowed us to reduce our already modest level of borrowings from the FHLB by $190 million compared to September 30, 2022, despite the banking market conditions that arose during fiscal 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 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.

In times of market stress or uncertainty, we generally maintain higher levels of capital and liquidity, including increased cash levels in our Bank segment, to ensure we have adequate funding to support our business and meet our clients’ needs.

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

Liquidity and capital resources are provided primarily through our business operations and financing activities.

Financing activities could include bank borrowings, collateralized financing arrangements or additional capital raising activities under our “universal” shelf registration statement.

Financing activities could include bank borrowings, collateralized financing arrangements, new or enhanced deposit product offerings such as the Enhanced Savings Program, or additional capital raising activities under our “universal” shelf registration statement.

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

We also believe that we will be able to continue to meet our long-term cash requirements due to our strong financial position and ability to access capital from financial markets.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Liquidity and capital management

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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.

Our liquidity management framework is designed to ensure we have a sufficient amount of funding, 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.

Our decisions on the allocation of resources to our business units consider, among other factors, projected profitability, cash flow, risk, and future liquidity needs.

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

Our decisions on the allocation of resources to our business units consider, among other factors, projected profitability, cash flow, risk, future liquidity needs, and required capital levels.

Our treasury department assists in evaluating, monitoring and controlling the impact that our business activities have on our financial condition and liquidity, and also maintains our relationships with various lenders.

The objective of our liquidity management framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

The objective of our liquidity management framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient funding and liquidity.

Our capital planning and capital risk management processes are governed by the Capital Planning Committee (“CPC”), a senior management committee that provides oversight on our capital planning and ensures that our strategic planning and risk management processes are integrated into the capital planning process.

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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.

On July 27, 2023, U.S.

banking regulators issued proposed rules that, if enacted, would result in changes to regulations applicable to bank holding companies, including higher capital requirements and eliminating the AOCI opt-out election, which could negatively impact our regulatory capital ratios in the future.

We are evaluating these proposals, most of which would apply to us if our average total consolidated assets for four consecutive calendar quarters exceeded $100 billion, to assess their potential impact to our current businesses and strategies.

RAYMOND JAMES FINANCIAL, INC.

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$ in millions

March 31, 2023 September 30, 2022

June 30, 2023 September 30, 2022

Common equity tier 1 capital/Tier 1 capital

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Common equity tier 1 capital 8,852 8,380

Additional tier 1 capital (preferred equity of $120, net of $5 of other items)

Preferred stock 79 120

Tier 1 capital deductions (3) (20)

Tier 1 capital 8,928 8,480

Tier 2 capital

Tier 2 capital instruments plus related surplus 100 100

Qualifying subordinated debt 100 100

Qualifying allowances for credit losses 512 451

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$ in millions

March 31, 2023 September 30, 2022

June 30, 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) 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.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) of $8.38 billion at June 30, 2023 increased $2.20 billion compared with September 30, 2022.

The increase in cash and cash equivalents primarily resulted from net income earned during the period and an increase in bank deposits, as additional deposits from the launch of our Enhanced Savings Program to PCG clients in March 2023 and certificate of deposit issuances during the period more than offset a decline in RJBDP balances swept to our Bank segment.

These increases were partially offset by common stock repurchases during the fiscal year of $788 million and dividends.

RAYMOND JAMES FINANCIAL, INC.

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Sources of liquidity

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.

Approximately $1.72 billion of our total June 30, 2023 cash and cash equivalents included cash held at the parent company, which included cash loaned to RJ&A.

As of June 30, 2023, RJF had loaned $1.00 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 March 31, 2023

$ in millions June 30, 2023

Raymond James Bank 2,299

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(“RJ Ltd.”) 492

Raymond James Capital Services, LLC 179

Charles Stanley Group Limited 131

Raymond James Financial Services, Inc.

Charles Stanley Group Limited 129

Raymond James Trust Company of New Hampshire 96

Raymond James Capital Services, LLC 94

Raymond James Investment Management 84

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Total cash and cash equivalents $ 8,375

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.

Due to market volatility in the banking industry during fiscal 2023, we maintained a higher level of cash balances at Raymond James Bank and TriState Capital Bank as of June 30, 2023 compared with September 30, 2022 as part of our liquidity management practices.

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $279 million as of June 30, 2023.

The portion of this total that was available on demand without restrictions, which amounted to $237 million as of June 30, 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 March 31, 2023 was held to meet regulatory requirements and was not available for use by the parent.

subsidiaries, including RJ Ltd.

and Charles Stanley Group Limited, as of June 30, 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 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.

At June 30, 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.

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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.

As of June 30, 2023, RJF and RJ&A had the ability to borrow under our $750 million Credit Facility, a committed unsecured line of credit;

however, we had no such borrowings outstanding under this facility as of June 30, 2023.

See our discussion of the Credit Facility in Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

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 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 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).

As of June 30, 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.

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during the quarter End of period

June 30, 2023 $ 123 $ 128 $ 110 $ 179 $ 181 $ 181

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

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June 30, 2022 $ 203 $ 276 $ 100 $ 238 $ 300 $ 168

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

RAYMOND JAMES FINANCIAL, INC.

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Other borrowings and collateralized financings

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 had $1.00 billion in FHLB borrowings outstanding at June 30, 2023, comprised of floating-rate and fixed-rate advances, which reflects a decrease of $550 million from the balance outstanding as of March 31, 2023.

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

We pledge certain of our bank loans and available-for-sale securities with the FHLB as security for both the repayment of certain borrowings and to secure capacity for additional borrowings as needed.

During the nine months ended June 30, 2023, we increased our borrowing capacity with the FHLB through the pledge of additional available-for-sale securities.

At June 30, 2023, we had pledged with the FHLB bank loans and available-for-sale securities of $9.27 billion and $3.86 billion, respectively, as both security for the repayment of outstanding FHLB borrowings and also to secure capacity for additional borrowings as needed.

As of June 30, 2023, we had an additional $9.67 billion in immediate credit available from the FHLB based on the collateral pledged.

Further, with the pledge of additional collateral, we have additional credit available to us 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.

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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 March 31, 2023, the clearing organization is under no contractual obligation to lend to us under this arrangement.

While we had borrowings outstanding as of June 30, 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.

however, we do not view borrowings from the Federal Reserve as one of our primary sources of funding.

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.

As part of the acquisition of TriState Capital, we assumed, as of the closing date, TriState Capital’s subordinated notes due 2030, with an aggregate principal amount of $98 million.

At June 30, 2023, TriState Capital had subordinated notes due 2030, with an aggregate principal amount of $98 million.

See Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and Note 16 of our 2022 Form 10-K for additional information regarding these borrowings.

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

We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $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.

We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $71 million as of June 30, 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 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.

At June 30, 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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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 $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.

Those policies against which we could readily borrow had a cash surrender value of $917 million as of June 30, 2023, comprised of $598 million related to employee-directed plans and $319 million related to company-directed plans, and we were able to borrow up to 90%, or $825 million, of the June 30, 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 March 31, 2023.

There were no borrowings outstanding against any of these policies as of June 30, 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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RJF and many of its subsidiaries are each subject to various regulatory capital requirements.

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.

As of June 30, 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 June 30, 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.

Effective August 1, 2023, TriState Capital Bank completed its conversion from a state non-member bank, which was primarily supervised by the Pennsylvania Department of Banking and Securities (“PDBS”) and the FDIC, to a state member bank, which is primarily supervised by the PDBS and the Fed.

As a state member bank, TriState Capital Bank will continue to be supervised by the FDIC and the Consumer Financial Protection Bureau.

We do not anticipate any material changes to TriState Capital Bank’s existing business or operations as a result of the conversion.

The Financial Conduct Authority, which regulated the widely-referenced benchmark London Interbank Offered Rate (“LIBOR”), ceased publication of the most commonly used U.S.

dollar LIBOR tenors (“USD LIBOR”) on June, 30, 2023.

On September 30, 2022, the Adjustable Interest (LIBOR) Rate Act (“LIBOR Act”) was enacted into U.S.

federal law to provide a statutory framework to replace LIBOR with a benchmark rate based on the SOFR in contracts that do not have fallback provisions or that have fallback provisions resulting in a replacement rate based on LIBOR.

As of June 30, 2023, we no longer offer new contracts referencing LIBOR and legacy contracts indexed to USD LIBOR have transitioned to SOFR-based or other alternative reference rates in accordance with existing fallback provisions or the LIBOR Act.

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.

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Due to their nature, estimates involve judgment based upon available information.

Actual results or amounts could differ from estimates and the difference could have a material impact on the consolidated financial statements.

Actual results or amounts could differ from estimates and the difference could have a material impact on the condensed consolidated financial statements.

Therefore, understanding these critical accounting estimates is important in understanding our reported results of operations and financial position.

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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 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.

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 June 30, 2023.

Allowance for credit losses

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The remaining life of our financial assets is determined by considering contractual terms and expected prepayments, among other factors.

We use multiple methodologies in estimating an allowance for credit losses and our approaches differ by type of financial asset and the risk characteristics within each financial asset type.

We use multiple methodologies in estimating an allowance

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for credit losses and our approaches differ by type of financial asset and the risk characteristics within each financial asset type.

Our estimates are based on ongoing evaluations of our financial assets, the related credit risk characteristics, and the overall economic and environmental conditions affecting the financial assets.

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

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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.

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 June 30, 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 June 30, 2023.

As of June 30, 2023, use of the downside case scenario would have resulted in an increase of approximately $230 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 $50 million in the quantitative portion of our allowance for credit losses on bank loans at June 30, 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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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 March 31, 2023.

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 June 30, 2023.

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RECENT ACCOUNTING DEVELOPMENTS

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

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

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

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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.

Early adoption is permitted on a program-by-program basis.

We are still evaluating the impact, including from any potential early adoption, that 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.

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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.

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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 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

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

Other market factors, such as the recent downgrade of the U.S.

government’s credit rating by Fitch, could also impact the market value of our trading inventory and other financial instruments on our Condensed Consolidated Statements of Financial Condition.

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

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

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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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The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations that management believes to be reasonable.

However, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates.

However, there is no uniform industry methodology for estimating VaR, and different

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Management’s Discussion and Analysis

assumptions or approximations could produce materially different VaR estimates.

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

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

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,

Nine months ended June 30, 2023 Period-end VaR Three months ended June 30, Nine months ended June 30,

$ in millions High Low June 30,

2023 September 30,

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

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.

Average daily VaR was higher during the three and nine months ended June 30, 2023 compared with the three and nine months ended June 30, 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 June 30, 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 and six months ended March 31, 2023, our regulatory-defined daily losses in our trading portfolios exceeded our predicted VaR on one occasion.

During the three months ended June 30, 2023, our regulatory-defined daily losses in our trading portfolios did not exceed our predicted VaR.

During the nine months ended June 30, 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

Our Bank segment maintains an interest-earning asset portfolio that is comprised of cash, SBL, C&I loans, commercial and residential real estate loans, REIT loans, and tax-exempt loans, as well as securities held in the available-for-sale securities portfolio.

Our Bank segment maintains an interest-earning asset portfolio that is comprised of cash, SBL, C&I loans, CRE loans, REIT loans, and tax-exempt loans, as well as securities held in the available-for-sale securities portfolio.

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

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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.

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

For further information regarding this hedging strategy, see Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Notes 13 and 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

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

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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, that the interest rates on substantially all of our deposits change by an amount equal to the change in market interest rates (i.e., deposit beta of 100%), and that interest rates do not decline below zero.

While not presented, additional rate scenarios are performed, including interest rate ramps and yield curve shifts that may more realistically mimic the speed of potential interest rate movements.

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-200 $1,599 (6)%

(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.

(1) Our 0-basis point scenario was based on interest rates as of June 30, 2023 and did not include the impact of the Fed’s July 27, 2023 increase in its benchmark short-term rate.

The preceding table does not include the impacts of an instantaneous change in interest rates on net interest income on assets and liabilities outside of our banking operations or on our RJBDP fees from third-party banks, which are also sensitive to changes in interest rates and are included in “Account and service fees” on our Condensed Consolidated Statements of Income and Comprehensive Income.

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.

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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.

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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.

As of June 30, 2023, our EVE analyses were within approved limits.

The following table shows the maturities of our bank loan portfolio at June 30, 2023, including contractual principal repayments.

Maturities are generally determined based upon contractual terms;

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Total loans held for sale and investment $ 16,220 $ 13,718 $ 5,549 $ 8,314 $ 43,801

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.

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Management’s Discussion and Analysis

The following table shows the distribution of the recorded investment of those bank loans that mature in more than one year between fixed and adjustable interest rate loans at June 30, 2023.

Interest rate type

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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 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.

At June 30, 2023, our available-for-sale securities portfolio had a fair value of $9.57 billion with a weighted-average yield of 2.07% and a weighted-average life, after factoring in estimated prepayments, of 4.30 years.

The effective duration of our available-for-sale securities portfolio as of June 30, 2023 was approximately 3.54, 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 $1.54 billion and $1.51 billion at March 31, 2023 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 $1.49 billion and $1.51 billion at June 30, 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 March 31, 2023, we had foreign exchange risk in our investment in RJ Ltd.

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Management’s Discussion and Analysis

At June 30, 2023, we had foreign exchange risk in our investment in RJ Ltd.

of CAD 426 million and in our investment in Charles Stanley of £278 million, which were not hedged.

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.

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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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Corporate activities

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If this occurs, we may have to liquidate the position at a loss.

See Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K for further information about our determination of the allowance for credit losses associated with certain of our brokerage lending activities.

See Note 2 of the Notes to the Consolidated Financial Statements of our 2022

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Management’s Discussion and Analysis

Form 10-K for further information about our determination of the allowance for credit losses associated with certain of our brokerage lending activities.

We offer loans to financial advisors for recruiting and retention purposes.

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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

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Management’s Discussion and Analysis

make enhancements we consider appropriate.

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

Our allowance for credit losses methodology is described in Note 2 of the Notes to the 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 March 31, Six months ended March 31,

Three months ended June 30, Nine Months Ended June 30,

2023 2022 2023 2022

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(charge-off)/recovery

amount Annualized

loans Net loan

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(charge-off)/recovery

amount Annualized

loans Net loan

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Total loans held for sale and investment $ (15) 0.14 % $ (10) 0.12 % $ (37) 0.11 % $ (12) 0.06 %

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

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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 March 31, 2023 September 30, 2022

$ in millions June 30, 2023 September 30, 2022

Nonperforming loans (1)

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Nonperforming assets as a % of Bank segment total assets 0.21 % 0.13 %

(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.

(1) Nonperforming loans at June 30, 2023 and September 30, 2022 included $118 million and $63 million of loans, respectively, which were current pursuant to their contractual terms.

The nonperforming loan balances in the preceding table excluded $8 million and $7 million as of June 30, 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 June 30, 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.

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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.

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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 March 31, 2023.

There were no significant changes to those processes during the three months ended June 30, 2023.

SBL and residential mortgage loan portfolios

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See Note 7 of the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for additional information about our residential mortgage loan portfolio.

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

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

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

June 30, 2023 $ 3 $ 4 $ 7 0.03 % 0.05 % 0.08 %

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

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.

Our June 30, 2023 percentage compares favorably to the national average for over 30 day delinquencies of 1.91%, 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.

March 31, 2023

June 30, 2023

Loans outstanding as a % of

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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.

At June 30, 2023 and September 30, 2022, these loans totaled $2.78 billion and $2.55 billion, respectively, or approximately 33% 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 June 30, 2023, begins amortizing is six years.

RAYMOND JAMES FINANCIAL, INC.

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

March 31, 2023

June 30, 2023

Loans outstanding as a % of

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Consumer products and services 5% 2%

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.

The Fed’s measures to control inflation, including through increases in short-term interest rates, have had a dampening effect on the economy and are likely to continue to do so in the near-term.

These and related factors could negatively impact our borrowers, particularly those in rate-sensitive 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.

We have also focused on reducing our corporate loan exposure in certain sectors with increasing credit concerns, and have sold approximately $450 million, before charge-offs and discounts or premiums, of corporate loans during the three months ended June 30, 2023.

Additional sales of corporate loans may be made during the remainder of fiscal 2023 as part of our credit risk mitigation strategies.

However, to the extent credit spreads widen and present what we consider to be an attractive risk-adjusted return, we may increase our pace of corporate loan growth over the year-to-date levels during our fiscal fourth quarter of 2023.

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 six months ended March 31, 2023.

We did not incur any significant losses related to such operational challenges during the nine months ended June 30, 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.

10 unchanged sentences

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