What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2024-02-07 · 547 added, 254 removed, 1075 unchanged (43% 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 (including changes in interest rates and inflation), demand for and pricing of our products (including cash sweep and deposit offerings), acquisitions, anticipated results of litigation, regulatory developments, and general economic conditions.

In addition, words such as “believes,” “expects,” “anticipates,” “estimates,” “projects,” and future or conditional verbs such as “may,” “will,” “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,” “intends,” “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 December 31, 2023 compared with the quarter ended December 31, 2022

For our fiscal first quarter of 2024, we generated net revenues of $3.01 billion, an increase of 8% compared with the prior-year quarter, while pre-tax income of $630 million decreased $22 million, or 3%.

Our net income available to common shareholders of $497 million decreased 2%, and our earnings per diluted share were $2.32, reflecting an increase of 1%.

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

For our fiscal second quarter of 2024, we generated net revenues of $3.12 billion and pre-tax income of $609 million, each 9% higher than the prior-year quarter.

Our net income available to common shareholders of $474 million increased 12%, and our earnings per diluted share were $2.22, reflecting an increase of 15%.

Our annualized return on common equity (“ROCE”) for the quarter was 17.5%, compared with 17.3% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”) was 21.0% (1) , compared with 21.3% (1) for the prior-year quarter.

Excluding the impact of $23 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 $514 million (1) for the three months ended December 31, 2023, an increase of $9 million, or 2%, compared with adjusted net income available to common shareholders for the prior-year quarter which, in addition to acquisition-related expenses, excluded the impact of a $32 million favorable insurance settlement received in the prior-year quarter related to a previously-settled legal matter, which did not recur.

Excluding the impact of $26 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 $494 million (1) for the three months ended March 31, 2024, an increase of 11% compared with adjusted net income available to common shareholders for the prior-year quarter.

Our adjusted earnings per diluted share were $2.31 (1) , an increase of 14% compared with the prior-year quarter.

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The increase in net revenues compared with the prior-year quarter was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter.

Investment banking revenues increased compared with the prior-year quarter but continued to be impacted by market uncertainty, which negatively impacted industry-wide investment banking activity.

Brokerage revenues also increased compared with the prior-year quarter largely due to an increase in client activity in the PCG segment.

Offsetting these increases was a decrease in combined net interest income and RJBDP fees of $25 million, or 3%, as the benefits of higher short-term interest rates on net interest income and RJBDP fees from third-party banks and of higher average interest-earning assets were more than offset by a significant increase in interest expense, primarily resulting from a shift in the mix of deposit balances at our Bank segment, as lower-cost RJBDP balances declined compared with the prior-year quarter, while balances in the higher-cost ESP, which was launched to PCG clients in March 2023, continued to increase.

Compensation, commissions and benefits expense increased 11%, primarily due to an increase in compensable revenues, as well as an increase in compensation costs both to support our growth and annual cost increases, including salaries.

Brokerage revenues also increased compared with the prior-year quarter largely due to an increase in client activity in the PCG segment, partially offset by lower fixed income brokerage revenues due to lower market volatility compared with the prior-year quarter.

Investment banking revenues increased compared with the prior-year quarter due to higher merger & acquisition and advisory and debt underwriting revenues.

Combined net interest income and RJBDP fees declined compared with the prior-year quarter, as the benefits of higher short-term interest rates and higher average interest-earning assets and RJBDP balances swept to third-party banks were more than offset by a significant increase in interest expense.

The increase in interest expense was primarily due to a shift in the mix of deposit balances at our Bank segment, as lower-cost RJBDP balances declined, while balances in the higher-cost ESP, which was introduced to PCG clients in March 2023, and certificates of deposit increased.

Compensation, commissions and benefits expense increased 12%, primarily due to an increase in compensable revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

Our compensation ratio, or the ratio of compensation, commissions and benefits expense to net revenues, was 65.5%, compared with 63.3% for the prior-year quarter.

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The increase in the compensation ratio primarily resulted from changes in our revenue mix due to increases in compensable revenues compared with the prior-year quarter, as well as a decrease in combined net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

Non-compensation expenses increased $64 million, or 16%, largely due to the favorable impact of a $32 million insurance settlement received in the prior-year quarter related to a previously settled litigation matter, the impact of a FDIC special assessment of $9 million, as well as higher communications and information processing expenses, primarily resulting from continued investments in technology to support our growth.

Our effective income tax rate was 21.0% for our fiscal first quarter of 2024, a slight decrease compared with the 21.9% effective income tax rate for the prior-year quarter.

As of December 31, 2023, our Tier 1 leverage ratio of 12.1% and Total capital ratio of 23.0% were both significantly higher than the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $2.1 billion (2) of cash at the parent as of December 31, 2023.

Non-compensation expenses decreased 6%, largely due to the favorable impact of a net legal and regulatory reserve release in the quarter of $32 million, while the prior-year quarter reflected incremental net expense including the impact of an unfavorable arbitration award.

The bank loan provision for credit losses also declined compared with the prior-year quarter, reflecting an improved economic outlook year over year.

Partially offsetting these decreases were higher communications and information processing expenses as we continue to invest in our technology for the benefit of our clients and advisors, and higher investment sub-advisory fees which are highly correlated with the increase in asset management fee revenues.

Our effective income tax rate was 21.8% for our fiscal second quarter of 2024, a decrease compared with the 23.3% effective income tax rate for the prior-year quarter, primarily due to a larger tax benefit recognized during the current quarter related to nontaxable valuation gains associated with our company-owned life insurance policies, compared to that for the prior-year quarter, as well as a favorable impact on our effective tax rate from lower nondeductible fines and penalties in the current quarter.

As of March 31, 2024, our Tier 1 leverage ratio of 12.3% and Total capital ratio of 23.3% were both significantly higher than the regulatory requirement to be considered well-capitalized.

We also continue to have substantial liquidity with $2.03 billion (2) of cash at the parent as of March 31, 2024.

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.

During the three months ended December 31, 2023, we repurchased 1.41 million shares of our common stock for $150 million at an average price of $106.51 per share under the Board of Directors’ common stock repurchase authorization.

After the effect of those repurchases, $1.39 billion remained under such authorization.

We currently expect to continue to repurchase our common stock in our fiscal second quarter of 2024 to offset the remaining impact of shares issued with the acquisition of TriState Capital in fiscal 2022 and to offset dilution from share-based compensation;

During the three months ended March 31, 2024, we repurchased 1.70 million shares of our common stock for $207 million at an average price of $122 per share under the Board of Directors’ common stock repurchase authorization.

In April 2024, we repurchased an additional 336 thousand shares of our common stock totaling $43 million, for a total of $400 million repurchased for the fiscal year, leaving $1.14 billion available under the Board of Directors’ common stock repurchase authorization as of the date of this Form 10-Q.

With the April repurchases, we have offset the dilution from shares issued as part of the TriState Capital acquisition.

We expect to continue to repurchase our common stock to offset dilution from share-based compensation and be opportunistic with incremental repurchases;

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

As we look ahead to our fiscal second quarter of 2024, we believe we are well-positioned for long-term growth, with our strong capital position and total client assets under administration of $1.37 trillion.

We expect our fiscal second quarter of 2024 results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 9% sequential increase in both PCG fee-based assets and financial assets under management as of December 31, 2023.

In addition, our financial advisor recruiting activity remains robust, including a strong recruiting pipeline.

However, absent a change to interest rates from December 31, 2023 levels, we expect our combined net interest income and RJBDP fees from third-party banks to further decline an estimated 5% in total in our fiscal second quarter compared with our fiscal first quarter of 2024 due to lower net interest income in our Bank segment reflecting the impact from higher-cost diversified funding sources, including our ESP which was launched to PCG clients in March 2023.

While we have a healthy investment banking pipeline and we believe the environment for M&A and advisory activity is improving, the pace and timing of transactions are heavily influenced by market conditions, and we expect investment banking activity to continue to be negatively impacted by market uncertainty during our fiscal second quarter of 2024 but start to improve later in our fiscal 2024.

We expect to continue to experience headwinds for brokerage revenues due to flat or declining 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, future economic deterioration or changes in our macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

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

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Management’s Discussion and Analysis

As we look ahead to our fiscal third quarter of 2024, we believe we are well-positioned for long-term growth, with our strong capital position and total client assets under administration of $1.45 trillion.

We expect our fiscal third quarter of 2024 results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 7% sequential increase in PCG fee-based assets and 5% sequential increase in financial assets under management as of March 31, 2024.

In addition, our financial advisor recruiting activity remains robust, including a strong recruiting pipeline.

While the timing of closings remains difficult to predict, we have a healthy investment banking pipeline and we expect investment banking revenues to improve along with the industry-wide gradual recovery.

We expect our combined net interest income and RJBDP fees from third-party banks for the remainder of the fiscal year to be largely dependent on the level of short-term interest rates, the stability of client cash balances and the trajectory of loan growth, which has been subdued in the current interest rate environment.

We have continued to experience headwinds for fixed income brokerage revenues due to flat or declining cash balances at many of our depository institution clients and we expect such headwinds to persist until short-term interest rates and cash balances at our depository institution clients stabilize.

In addition, although our current loan portfolio credit metrics are solid and we continue to proactively manage our credit risk in our loan portfolio, future economic deterioration or changes in the macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

For the six months ended March 31, 2024, we generated net revenues of $6.13 billion, an increase of 8% compared with the prior-year period, and pre-tax income of $1.24 billion, an increase of 2%.

Our net income available to common shareholders of $971 million was 4% higher than the prior-year period and our earnings per diluted share were $4.54, reflecting a 7% increase.

Our annualized ROCE was 18.3%, compared with 19.3% for the prior-year period, and our annualized ROTCE was 22.0% (1) , compared with 23.8% (1) for the prior-year period.

Excluding the impact of $49 million of expenses related to acquisitions completed in prior years, adjusted net income available to common shareholders for the six months ended March 31, 2024 was $1.01 billion (1) , an increase of 6% compared with adjusted net income available to common shareholders for the prior-year period which, in addition to acquisition-related expenses, excluded the impact of a $32 million favorable insurance settlement related to a previously-settled legal matter.

Our adjusted earnings per diluted share were $4.71 (1) , an increase of 9% compared with the prior-year period.

Adjusted annualized ROCE was 19.0% (1) , compared with 19.7% (1) for the prior-year period, and adjusted annualized ROTCE was 22.8% (1) , compared with 24.2% (1) for the prior-year period.

The increase in net revenues compared with the prior-year period was primarily due to higher asset management and related administrative fees, largely the result of higher PCG client assets in fee-based accounts at the beginning of each of the current-year billing periods compared with the prior-year billing periods.

Brokerage revenues also increased compared with the prior-year period largely due to an increase in client activity in the PCG segment.

Investment banking revenues increased primarily due to more favorable market conditions in the current-year period.

Offsetting these increases was a decrease in combined net interest income and RJBDP fees from third-party banks, as the benefits of higher short-term interest rates and higher average interest-earning assets and RJBDP balances swept to third-party banks were more than offset by a significant increase in interest expense.

The increase in interest expense was primarily due to a shift in the mix of deposit balances at our Bank segment, as lower-cost RJBDP balances declined compared with the prior-year period, while balances in the higher-cost ESP and certificates of deposit increased.

Compensation, commissions and benefits expense increased 11%, primarily due to an increase in compensable revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

Our compensation ratio was 64.7%, compared with 62.8% for the prior-year period.

Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 64.3% (1) , compared with an adjusted compensation ratio of 62.2% (1) for the prior-year period.

The increase in the compensation ratio primarily resulted from changes in our revenue mix due to increases in compensable revenues compared with the prior-year period, as well as a decrease in combined net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

(1) ROTCE, adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted annualized ROCE, adjusted annualized ROTCE, and adjusted compensation ratio are non-GAAP financial measures.

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Non-compensation expenses increased $34 million, or 4%, largely due to a $32 million insurance settlement received in the prior-year period related to a previously-settled litigation matter, the impact of an FDIC special assessment of $11 million, as well as higher communications and information processing expenses resulting from continued investments in technology to benefit our clients and advisors, and higher investment sub-advisory fees resulting from growth in assets under management in sub-advised programs.

Partially offsetting these increases in expenses, expenses related to legal and regulatory matters declined significantly as the current-year period reflected net legal and regulatory matter reserve releases while the prior-year period included elevated provisions for legal and regulatory matters including an unfavorable arbitration award.

Our effective income tax rate was 21.4% for the six months ended March 31, 2024, a decrease from 22.6% for the prior-year period, primarily due to a larger tax benefit recognized during the current-year period related to nontaxable valuation gains associated with our company-owned life insurance policies compared to the prior-year period, as well as a lower amount of nondeductible fines and penalties compared to the prior-year period.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

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

Three months ended December 31,

$ in millions, except per share amounts

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

$ in millions

2024 2023 2024 2023

Net income available to common shareholders $ 474 $ 425 $ 971 $ 932

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Compensation, commissions and benefits — Acquisition-related retention

Communications and information processing

Professional fees

Other — Amortization of identifiable intangible assets

Amortization of identifiable intangible assets

All other acquisition-related expenses

Total “Other” expense 13 11 24 22

Total expenses related to acquisitions 26 28 49 57

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Adjusted “Compensation, commissions and benefits” expense $ 2,032 $ 1,803 $ 3,942 $ 3,521

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

$ in millions, except per share amounts 2024 2023 2024 2023

Total compensation ratio 65.5 % 63.3 % 64.7 % 62.8 %

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Compensation, commissions and benefits — Acquisition-related retention

0.05 0.08 0.10 0.16

Communications and information processing

Professional fees 0.01 — 0.01 —

Other — Amortization of identifiable intangible assets

Amortization of identifiable intangible assets

0.05 0.05 0.11 0.10

All other acquisition-related expenses 0.01 — 0.01 —

Total “Other” expense 0.06 0.05 0.12 0.10

Total expenses related to acquisitions 0.12 0.13 0.23 0.26

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Adjusted diluted earnings per common share $ 2.31 $ 2.03 $ 4.71 $ 4.31

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Return on common equity Three months ended December 31,

$ in millions 2023 2022

Average common equity $ 10,808 $ 9,806 $ 10,584 $ 9,650

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Compensation, commissions and benefits — Acquisition-related retention

Communications and information processing

Professional fees — — 1 —

Other — Amortization of identifiable intangible assets

Amortization of identifiable intangible assets

All other acquisition-related expenses 1 — 1 —

Total “Other” expense 7 6 12 11

Total expenses related to acquisitions 13 15 24 29

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Adjusted average common equity $ 10,818 $ 9,817 $ 10,602 $ 9,656

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

$ in millions 2024 2023 2024 2023

Average common equity $ 10,808 $ 9,806 $ 10,584 $ 9,650

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Compensation, commissions and benefits — Acquisition-related retention

Communications and information processing

Professional fees — — 1 —

Other — Amortization of identifiable intangible assets

Amortization of identifiable intangible assets

All other acquisition-related expenses 1 — 1 —

Total “Other” expense 7 6 12 11

Total expenses related to acquisitions 13 15 24 29

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

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

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

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NET INTEREST ANALYSIS

Largely in response to inflationary pressures 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 throughout our fiscal 2023.

Since the beginning of our fiscal 2023, the Fed has increased the Fed funds target rate from a September 30, 2022 range of 2.25% to 2.50% to a December 31, 2023 range of 5.25% to 5.50%.

While the Fed has left its benchmark rate unchanged in its most recent meetings, it has indicated that it intends to closely monitor market conditions to determine whether it will continue to hold rates steady or initiate rate cuts in our fiscal 2024.

The following table details the Fed’s short-term interest rate activity since the beginning of our fiscal 2023.

Since the beginning of our fiscal year 2023, the Fed increased the Fed funds target rate 225 basis points from a September 30, 2022 range of 3.00% to 3.25% to a March 31, 2024 range of 5.25% to 5.50%.

While the Fed has left its benchmark rate unchanged in our fiscal year 2024 to-date, in its most recent meetings, it has indicated that it intends to closely monitor market conditions to determine whether it will continue to hold rates steady or initiate interest rate cuts later in our fiscal year 2024.

The following table details the Fed’s short-term interest rate activity since the beginning of our fiscal year 2023.

RJF fiscal quarter ended Effective date of interest rate action Increase in interest rates (in basis points)

Fed funds target rate

September 30, 2022 September 22, 2022 75 3.00% - 3.25%

December 31, 2022 November 3, 2022 75 3.75% - 4.00%

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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, while other deposit products utilized as part of our strategy to diversify our funding sources, such as our ESP introduced to our clients in fiscal 2023, have a higher relative cost than other alternatives.

Combined net interest income and RJBDP fees from third-party banks of $698 million for three months ended December 31, 2023 was $25 million, or 3%, lower compared with the prior-year quarter.

The benefits from increases in short-term interest rates throughout our fiscal 2023 and higher interest-earning asset balances compared with the prior-year quarter were more than offset by a significant increase in interest expense, primarily resulting from a shift in the mix of deposit balances in our Bank segment, as lower-cost RJBDP balances declined compared with the prior-year quarter and a significant portion was replaced with higher-cost ESP balances.

However, growth in the ESP allowed us to deploy remaining RJBDP balances to third-party banks, which coupled with higher rates earned on such balances resulted in an increase in RJBDP fees from such banks compared with the prior-year quarter.

Our domestic client cash sweep balances continue to represent a relatively low-cost funding source, while other deposit products utilized as part of our strategy to diversify our funding sources, such as our ESP introduced to our clients in our fiscal year 2023, have a higher relative cost than other alternatives.

Combined net interest income and RJBDP fees from third-party banks for the three and six months ended March 31, 2024, declined compared with the comparable prior-year periods driven by a decline in net interest income, as the benefits from higher short-term interest rates to-date in fiscal year 2024 over fiscal year 2023 levels, and higher average interest-earning asset balances were more than offset by a significant increase in interest expense.

The increase in interest expense primarily resulted from a shift in the mix of deposit balances in our Bank segment, as lower-cost RJBDP balances declined and a significant portion was replaced with higher-cost ESP balances, which was introduced to clients in March 2023, as well as an increase in certificates of deposit.

However, growth in the ESP balances since its introduction has allowed us to deploy a higher portion of RJBDP balances to third-party banks instead of our Bank segment which, coupled with higher yields earned on such balances, resulted in an increase in RJBDP fees from such banks compared with the prior-year periods.

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

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

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

Three months ended December 31,

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Three months ended March 31,

$ in millions Average

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

Three months ended December 31,

Three months ended March 31,

2024 compared to 2023

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Loans held for investment:

C&I loans (14) 22 8

CRE loans 8 13 21

REIT loans — 1 1

Residential mortgage loans 8 10 18

Tax-exempt loans (1) — (1)

Loans held for sale — — —

Total loans held for sale and investment 2 68 70

All other interest-earning assets 2 — 2

Interest-earning assets — Bank segment $ 38 $ 81 $ 119

All other segments:

Cash and cash equivalents $ (1) $ 9 $ 8

Assets segregated for regulatory purposes and restricted cash (19) 11 (8)

Trading assets — debt securities 3 3 6

Brokerage client receivables 2 4 6

All other interest-earning assets 1 2 3

Interest-earning assets — all other segments $ (14) $ 29 $ 15

Total interest-earning assets $ 24 $ 110 $ 134

Interest-bearing liabilities:

Interest expense

Bank segment:

Bank deposits:

Money market and savings accounts $ (61) $ 90 $ 29

Interest-bearing demand deposits 184 10 194

Certificates of deposit 8 6 14

Total bank deposits 131 106 237

FHLB advances and all other interest-bearing liabilities (1) — (1)

Interest-bearing liabilities — Bank segment $ 130 $ 106 $ 236

All other segments:

Trading liabilities — debt securities $ 1 $ 3 $ 4

Brokerage client payables (5) 3 (2)

Senior notes payable — — —

All other interest-bearing liabilities — (2) (2)

Interest-bearing liabilities — all other segments $ (4) $ 4 $ —

Total interest-bearing liabilities $ 126 $ 110 $ 236

Change in firmwide net interest income $ (102) $ — $ (102)

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Six months ended March 31,

$ in millions Average

balance Interest Annualized

Interest-earning assets:

Bank segment:

Cash and cash equivalents $ 5,889 $ 160 5.41 % $ 2,705 $ 58 4.24 %

Available-for-sale securities 10,207 112 2.18 % 10,961 107 1.95 %

Loans held for sale and investment:

Loans held for investment:

SBL 14,567 529 7.14 % 14,768 466 6.27 %

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Tax-exempt loans (3)

1,446 19 3.25 % 1,623 20 3.11 %

Loans held for sale 155 6 8.36 % 179 6 6.27 %

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Interest-bearing liabilities:

Bank segment:

Bank deposits:

Money market and savings accounts $ 31,572 $ 324 2.05 % $ 44,864 $ 258 1.16 %

Interest-bearing demand deposits 20,134 497 4.94 % 5,382 104 3.87 %

Certificates of deposit 2,717 62 4.62 % 1,538 24 3.13 %

Total bank deposits (4)

54,423 883 3.25 % 51,784 386 1.49 %

FHLB advances and all other interest-bearing liabilities 1,207 18 2.94 % 1,374 18 2.63 %

Interest-bearing liabilities — Bank segment $ 55,630 $ 901 3.24 % $ 53,158 $ 404 1.52 %

All other segments:

Trading liabilities — debt securities $ 777 $ 22 5.60 % $ 752 $ 17 4.63 %

Brokerage client payables 4,752 41 1.71 % 6,842 40 1.16 %

Senior notes payable 2,039 46 4.50 % 2,038 46 4.52 %

All other interest-bearing liabilities (4)

935 17 3.69 % 646 18 2.91 %

Interest-bearing liabilities — all other segments $ 8,503 $ 126 2.95 % $ 10,278 $ 121 2.19 %

Total interest-bearing liabilities $ 64,133 $ 1,027 3.20 % $ 63,436 $ 525 1.64 %

Firmwide net interest income $ 1,075 $ 1,217

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

Bank segment 2.70 % 3.51 %

Firmwide 2.94 % 3.38 %

(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.

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

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

(3) The average rate on tax-exempt loans in the preceding table is presented on a taxable-equivalent basis utilizing the applicable federal statutory rates for each of the years presented.

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

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

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

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

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

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

Six months ended March 31,

2024 compared to 2023

Increase/(decrease) due to

$ in millions Volume Rate Total

Interest-earning assets:

Interest income

Bank segment:

Cash and cash equivalents $ 83 $ 19 $ 102

Available-for-sale securities (8) 13 5

Loans held for sale and investment:

Loans held for investment:

SBL (5) 68 63

C&I loans (25) 64 39

CRE loans 15 40 55

REIT loans 1 10 11

Residential mortgage loans 18 20 38

Tax-exempt loans (2) 1 (1)

Loans held for sale (2) 2 —

Total loans held for sale and investment — 205 205

All other interest-earning assets 3 — 3

Interest-earning assets — Bank segment $ 78 $ 237 $ 315

All other segments:

Cash and cash equivalents $ (3) $ 31 $ 28

Assets segregated for regulatory purposes and restricted cash (49) 38 (11)

Trading assets — debt securities 2 5 7

Brokerage client receivables (3) 13 10

All other interest-earning assets 1 10 11

Interest-earning assets — all other segments $ (52) $ 97 $ 45

Total interest-earning assets $ 26 $ 334 $ 360

Interest-bearing liabilities:

Interest expense

21 unchanged sentences

Operating results

Three months ended December 31,

$ in millions 2023 2022 % change

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

$ in millions 2024 2023 % change 2024 2023 % change

Asset management and related administrative fees

2 unchanged sentences

Mutual and other fund products

141 135 4 % 277 263 5 %

Insurance and annuity products

127 113 12 % 252 217 16 %

Equities, ETFs and fixed income products

139 116 20 % 260 229 14 %

Total brokerage revenues 407 364 12 % 789 709 11 %

1 unchanged sentence

Mutual fund and annuity service fees

115 105 10 % 221 203 9 %

Bank segment 206 311 (34) % 429 579 (26) %

1 unchanged sentence

Client account and other fees

64 56 14 % 129 116 11 %

Total account and service fees 545 572 (5) % 1,091 1,135 (4) %

Investment banking

8 9 (11) % 19 18 6 %

Interest income

122 117 4 % 240 226 6 %

6 9 (33) % 10 15 (33) %

Total revenues 2,371 2,173 9 % 4,623 4,258 9 %

10 unchanged sentences

Communications and information processing

104 100 4 % 197 189 4 %

Occupancy and equipment

56 53 6 % 111 104 7 %

Business development

37 33 12 % 77 70 10 %

Professional fees

17 17 — % 31 30 3 %

19 37 (49) % 35 59 (41) %

Total non-compensation expenses

233 240 (3) % 451 452 — %

Total non-interest expenses 1,897 1,703 11 % 3,684 3,332 11 %

5 unchanged sentences

PCG client asset balances

$ in billions December 31,

$ in billions March 31,

2024 December 31,

2023 September 30,

2023 March 31,

2023 December 31,

15 unchanged sentences

PCG net new assets

Three months ended December 31,

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

$ in millions 2024 2023 2024 2023

2 unchanged sentences

Domestic Private Client Group net new assets growth - annualized (2)

3.2 % 8.4 % 5.7 % 9.4 %

(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) 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 December 31, 2023 each increased 9% compared with September 30, 2023, due to market appreciation and strong net inflows of client assets during the quarter, primarily due to the favorable impact of our recruiting.

PCG AUA and PCG assets in fee-based accounts as of March 31, 2024 increased 6% and 7%, respectively, compared with December 31, 2023, and increased 19% and 20%, respectively, compared with March 31, 2023, due to equity market appreciation and net new assets, due to the favorable impact of our advisor retention and recruiting.

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

13 unchanged sentences

Financial advisors

2024 December 31,

2023 September 30,

1 unchanged sentence

2023 March 31,

2023 December 31,

Employees 3,747 3,718 3,693 3,654 3,628

2 unchanged sentences

Total advisors 8,761 8,710 8,712 8,704 8,726

The number of financial advisors as of December 31, 2023 decreased slightly compared with September 30, 2023, as planned retirements drove a small net decrease in advisor count, net of new recruits and trainees that were moved into production roles.

The number of financial advisors as of March 31, 2024 increased compared with December 31, 2023 and March 31, 2023, as new recruits and trainees that were moved into production roles exceeded departures and planned retirements.

Planned retirements, where assets are generally retained at the firm pursuant to advisor succession plans, are seasonally higher in the fiscal first quarter.

3 unchanged sentences

Clients’ domestic cash sweep balances and ESP balances

$ in millions December 31,

$ in millions March 31,

2024 December 31,

2023 September 30,

1 unchanged sentence

2023 March 31,

2023 December 31,

Bank segment $ 23,405 $ 23,912 $ 25,355 $ 27,915 $ 37,682

7 unchanged sentences

$ 58,217 $ 57,973 $ 56,425 $ 57,978 $ 52,221

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

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

Three months ended December 31,

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

ESP balances held at Raymond James Bank as of the respective period end are included in “Bank deposits” on our Condensed Consolidated Statement of Financial Condition.

As of March 31, 2024, we had placed $324 million of ESP deposits with third-party banks, and accordingly such deposits held at third-party banks were not included in our bank deposit liability balance on our Condensed Consolidated Statement of Financial Condition.

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

2024 2023 2024 2023

Average yield on RJBDP - third-party banks

3.59 % 3.25 % 3.62 % 2.93 %

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

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

Balances swept to third-party banks 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.

Our PCG segment earns servicing fees for the administrative services we provide related to our clients’ deposits that are swept to banks 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.

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 interest-rate environment, the PCG segment revenues 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.

Under our intersegment policies, the PCG segment receives from our Bank segment 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 interest-rate environment, the PCG segment RJBDP fee revenues are 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, largely as a result of the significant increases in the Fed’s short-term benchmark interest rate.

The average yield on RJBDP - third-party banks for the three and six months ended March 31, 2024 increased from the prior year largely as a result of the increases in the Fed’s short-term benchmark interest rate.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Total clients’ domestic cash sweep and ESP balances increased 3% compared with September 30, 2023, due to growth in both the ESP as well as client cash sweep balances.

Total clients’ domestic cash sweep and ESP balances increased slightly compared with December 31, 2023, but increased 11% compared with March 31, 2023 as growth in the ESP, which was introduced to clients in March 2023, more than offset a decline in client cash sweep balances.

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 the RJBDP, the CIP, and the ESP, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

For example, continued growth in the ESP, which was launched to PCG clients in March 2023, has allowed us to sweep more RJBDP balances to third-party banks and reduce the amount of RJBDP balances held in our Bank segment.

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

For example, continued growth in the ESP since its introduction has provided us the flexibility to sweep more RJBDP balances to third-party banks and reduce the amount of RJBDP balances held in our Bank segment.

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Net revenues of $2.34 billion increased 9% and pre-tax income of $444 million increased 1%.

Asset management and related administrative fees increased $138 million, or 13%, primarily due to higher assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter resulting from growth as a result of advisor recruiting as well as market appreciation.

Brokerage revenues increased $37 million, or 11%, primarily due to higher client activity in the current quarter, particularly in fixed annuities.

Asset management and related administrative fees increased $181 million, or 16%, primarily due to higher assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter resulting from market appreciation, as well as growth from advisor recruiting.

Brokerage revenues increased $43 million, or 12%, primarily due to higher client activity in the current quarter, as well as higher trailing revenues, largely due to higher asset values.

Account and service fees decreased $27 million, or 5%, primarily due to a decrease in RJBDP fees resulting from lower client cash sweep balances.

RJBDP fees paid to PCG from our Bank segment decreased due to a decline in balances allocated to our Bank segment partially offset by an increase in short-term interest rates, while RJBDP fees from third-party banks increased slightly resulting from the aforementioned increase in short-term interest rates, partially offset by a decrease in RJBDP balances.

Partially offsetting the decline in total RJBDP fees, mutual fund service fees increased, primarily from higher average mutual fund assets.

Net interest income increased $5 million, or 6%, primarily due to the significant increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances.

Compensation-related expenses increased $152 million, or 11%, primarily due to higher commission expense resulting from higher compensable revenues, including asset management and related administrative fees and brokerage revenues, as well as an increase in compensation costs both to support our growth and annual cost increases, including salaries.

Non-compensation expenses increased $6 million, or 3%, due to higher communications and information processing expenses, occupancy expenses, and business development expenses, partially offset by the impact of lower provisions for legal and regulatory matters.

RJBDP fees paid to PCG from our Bank segment decreased due to a decline in balances allocated to our Bank segment which more than offset the impact of an increase in short-term interest rates, while RJBDP fees from third-party banks increased due to higher average balances swept to third-party banks, as well as the aforementioned increase in short-term interest rates.

Partially offsetting the decline in total RJBDP fees was an increase in mutual fund service fees, primarily resulting from higher average mutual fund assets.

Net interest income increased $4 million, or 5%, primarily due to an increase in short-term interest rates.

Compensation-related expenses increased $201 million, or 14%, primarily due to higher commission expense resulting from higher compensable revenues, including asset management and related administrative fees and brokerage revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

Non-compensation expenses decreased $7 million, or 3%, due to lower provisions for legal and regulatory matters as the prior-year quarter included the impact of an unfavorable arbitration award, partially offset by higher communications and information processing expenses and occupancy expenses as a result of our growth, and higher business development expenses.

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Net revenues of $4.57 billion increased 9% and pre-tax income of $883 million increased 1%.

Asset management and related administrative fees increased $319 million, or 15%, primarily due to higher assets in fee-based accounts at the beginning of each of the current-year quarterly billing periods compared with the prior-year periods resulting from market appreciation and advisor recruiting.

Brokerage revenues increased $80 million, or 11%, primarily due to higher client activity in the current-year period, particularly in fixed annuities, as well as higher trailing revenues, largely due to higher asset values.

Account and service fees decreased $44 million, or 4%, primarily due to a decrease in RJBDP fees resulting from lower client cash sweep balances.

RJBDP fees paid to PCG from our Bank segment decreased due to a decline in balances allocated to our Bank segment which more than offset the impact of higher short-term interest rates, while RJBDP fees from third-party banks increased due to the aforementioned increase in short-term interest rates, as well as higher average balances swept to third-party banks.

Partially offsetting the decline in total RJBDP fees, mutual fund service fees increased, primarily from higher average mutual fund assets, and client account and other fees increased reflecting higher custody and account maintenance fees.

Net interest income increased $9 million, or 5%, primarily due to the increase in short-term interest rates.

Compensation-related expenses increased $353 million, or 12%, primarily due to higher commission expense resulting from higher compensable revenues, including asset management and related administrative fees and brokerage revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Non-compensation expenses were flat compared with the prior-year period as higher communications and information processing expenses, occupancy expenses, and business development expenses were offset by the impact of lower provisions for legal and regulatory matters.

RESULTS OF OPERATIONS – CAPITAL MARKETS

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2023 2022 % change

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

$ in millions 2024 2023 % change 2024 2023 % change

Brokerage revenues:

2 unchanged sentences

Total brokerage revenues

122 130 (6) % 262 264 (1) %

Investment banking:

Merger & acquisition and advisory

107 87 23 % 225 189 19 %

Equity underwriting

23 29 (21) % 49 44 11 %

Debt underwriting

41 29 41 % 67 45 49 %

Total investment banking 171 145 18 % 341 278 23 %

Interest income

26 21 24 % 49 44 11 %

Affordable housing investments business revenues 22 23 (4) % 45 47 (4) %

4 3 33 % 8 7 14 %

Total revenues 345 322 7 % 705 640 10 %

4 unchanged sentences

Compensation, commissions and benefits

240 231 4 % 478 444 8 %

Non-compensation expenses:

Communications and information processing

30 26 15 % 57 50 14 %

Occupancy and equipment

12 11 9 % 23 21 10 %

Business development

15 17 (12) % 31 32 (3) %

Professional fees

11 14 (21) % 25 27 (7) %

30 37 (19) % 59 73 (19) %

Total non-compensation expenses

98 105 (7) % 195 203 (4) %

Total non-interest expenses 338 336 1 % 673 647 4 %

Pre-tax income/(loss) $ 3 $ (16) NM

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

Net revenues of $338 million increased 15% and the pre-tax income was $3 million, a $19 million increase over the pre-tax loss of $16 million in the prior-year quarter.

Investment banking revenues increased $37 million, or 28%, compared with the prior-year quarter.

Market conditions improved compared with the prior-year quarter;

however, market uncertainty continued to negatively impact industry-wide investment banking activity.

Compensation-related expenses increased $25 million, or 12%, primarily due to the increase in revenues, as well as an increase in compensation costs both to support our growth and annual cost increases, including salaries.

Non-compensation expenses decreased $1 million, or 1%.

$ (17) $ (34) 50 % $ (14) $ (50) 72 %

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Net revenues of $321 million increased 6% and the pre-tax loss was $17 million, compared with a pre-tax loss of $34 million for the prior-year quarter.

Investment banking revenues increased $26 million, or 18%, compared with the prior-year quarter, primarily due to improvement in merger & acquisition and advisory revenues, which continued to be subdued although improved compared with the prior-year quarter, as well as higher debt underwriting revenues in both our fixed income and public finance businesses.

Brokerage revenues decreased $8 million, or 6%, due to lower fixed income brokerage revenues, primarily due to lower interest rate volatility in the current quarter compared with the prior-year quarter.

Compensation-related expenses increased $9 million, or 4%, primarily due to the increase in revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Non-compensation expenses decreased $7 million, or 7%, primarily due to lower provisions for legal and regulatory matters and lower legal fee expense.

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Net revenues of $659 million increased 10% and the pre-tax loss was $14 million, compared with a pre-tax loss of $50 million for the prior-year period.

Investment banking revenues increased $63 million, or 23%, primarily due to a higher volume of transactions closed as a result of more favorable investment banking market conditions in the current-year period compared to the prior-year period.

Compensation-related expenses increased $34 million, or 8%, primarily due to the increase in revenues, as well as an increase in compensation costs to support our growth and annual salary increases.

Non-compensation expenses decreased $8 million, or 4%, largely due to lower provisions for legal and regulatory matters and legal fee expenses, partially offset by higher communications and information processing expenses.

RESULTS OF OPERATIONS – ASSET MANAGEMENT

1 unchanged sentence

Operating results

Three months ended December 31,

$ in millions 2023 2022 % change

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

$ in millions 2024 2023 % change 2024 2023 % change

Asset management and related administrative fees:

4 unchanged sentences

Account and service fees

5 6 (17) % 11 11 — %

All other 5 4 25 % 10 9 11 %

2 unchanged sentences

Compensation, commissions and benefits

58 52 12 % 111 99 12 %

Non-compensation expenses:

Communications and information processing

16 14 14 % 31 28 11 %

Investment sub-advisory fees

43 34 26 % 82 68 21 %

35 34 3 % 70 66 6 %

Total non-compensation expenses 94 82 15 % 183 162 13 %

5 unchanged sentences

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

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

4 unchanged sentences

Approximately 70% of these fees are based on balances as of the beginning of the quarter (primarily in AMS), approximately 15% are based on balances as of the end of the quarter, and approximately 15% are based on average daily balances throughout the quarter.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Financial assets under management

$ in billions December 31,

$ in billions March 31,

2024 December 31,

2023 September 30,

2023 March 31,

2023 December 31,

7 unchanged sentences

(1) Represents the portion of our PCG segment fee-based AUA (as disclosed in “Assets in fee-based accounts” in the “Selected key metrics - PCG client asset balances” section of our “Management’s Discussion and Analysis - Results of Operations - Private Client Group”) that is invested in managed programs overseen by the Asset Management segment.

(2) Represents the portion of the AMS AUM that is managed by RJIM and, as a result, are included in both AMS and RJIM in the preceding table.

(2) Represents the portion of the AMS AUM that is managed by RJIM and, as a result, is included in both AMS and RJIM in the preceding table.

This amount is removed in the calculation of “Total financial assets under management.”

Activity (including activity in assets managed for affiliated entities)

Three months ended December 31,

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

$ in billions 2024 2023 2024 2023

1 unchanged sentence

RJIM - net inflows/(outflows)

(1.3) 1.1 (2.2) 1.7

AMS - net inflows 2.5 1.7 4.2 2.7

Net market appreciation in asset values

11.4 6.2 30.2 17.5

Financial assets under management at end of period $ 240.1 $ 205.9 $ 240.1 $ 205.9

1 unchanged sentence

Assets managed by RJIM include assets managed by our subsidiaries:

Eagle Asset Management, Scout Investments, Reams Asset Management (a division of Scout Investments), ClariVest Asset Management, Cougar Global Investments, and Chartwell Investment Partners (“Chartwell”).

Eagle Asset Management, Scout Investments, Reams Asset Management (a division of Scout Investments), ClariVest Asset Management, Cougar Global Investments, and Chartwell Investment Partners.

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

As of December 31, 2023

As of March 31, 2024

$ in billions AUM Average fee rate

9 unchanged sentences

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

$ in billions December 31,

$ in billions March 31,

2024 December 31,

2023 September 30,

2023 March 31,

2023 December 31,

1 unchanged sentence

Total assets $ 462.9 $ 431.4 $ 391.1 $ 378.7 $ 355.6 $ 329.2

The increase in these assets as of December 31, 2023 compared with September 30, 2023 was primarily due to market appreciation, successful financial advisor recruiting and retention, and the continued trend of clients moving to fee-based accounts from transaction-based accounts.

The increase in these assets as of March 31, 2024 compared with December 31, 2023 and March 31, 2023 was primarily due to market appreciation, successful financial advisor retention and recruiting, and the continued trend of clients moving to fee-based accounts from transaction-based accounts.

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

2 unchanged sentences

(including those managed for affiliated entities).

$ in billions December 31,

$ in billions March 31,

2024 December 31,

2023 September 30,

2023 March 31,

2023 December 31,

2 unchanged sentences

Fees earned on trust services are primarily reported within “Asset management and related administrative fees” on the Condensed Consolidated Statements of Income and Comprehensive Income.

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

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Net revenues of $252 million increased 17% and pre-tax income of $100 million increased 22%.

Asset management and related administrative fees increased $27 million, or 14%, driven by higher beginning balances of assets in non-discretionary asset-based programs and financial assets under management at AMS, as well as higher average financial assets under management at RJIM, in each case primarily due to market-driven appreciation in asset values.

Compensation expenses increased $6 million, or 13%, including an increase in compensation costs both to support our growth and annual cost increases, including salaries.

Asset management and related administrative fees increased $36 million, or 17%, driven by higher beginning balances of financial assets under management and assets in non-discretionary asset-based programs at AMS, as well as higher average financial assets under management at RJIM, in each case primarily due to market-driven appreciation in asset values.

Compensation expenses increased $6 million, or 12%, primarily due to higher revenues and annual salary increases.

Non-compensation expenses increased $12 million, or 15%, largely due to higher investment sub-advisory fees, resulting from the increase in the beginning balance of assets under management in sub-advised programs.

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Net revenues of $487 million increased 15% and pre-tax income of $193 million increased 19%.

Asset management and related administrative fees increased $63 million, or 16%, driven by higher beginning balances of financial assets under management and assets in non-discretionary asset-based programs at AMS, as well as higher average financial assets under management at RJIM, in each case primarily due to market-driven appreciation in asset values.

Compensation expenses increased $12 million, or 12%, primarily due to higher revenues, as well as an increase in compensation costs to support our growth and annual cost increases, including salaries.

Non-compensation expenses increased $21 million, or 13%, largely due to higher investment sub-advisory fees, resulting from the increase in assets under management in sub-advised programs.

RAYMOND JAMES FINANCIAL, INC.

4 unchanged sentences

Operating results

Three months ended December 31,

$ in millions 2023 2022 % change

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

$ in millions 2024 2023 % change 2024 2023 % change

Interest income $ 868 $ 749 16 % $ 1,740 $ 1,425 22 %

5 unchanged sentences

Compensation and benefits

48 48 — % 91 88 3 %

Non-compensation expenses:

2 unchanged sentences

206 311 (34) % 429 579 (26) %

74 62 19 % 145 112 29 %

Total non-compensation expenses 301 401 (25) % 607 733 (17) %

1 unchanged sentence

Pre-tax income $ 75 $ 91 (18) % $ 167 $ 227 (26) %

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

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Net revenues of $424 million decreased 21%, while pre-tax income of $75 million decreased 18%.

Net interest income decreased $65 million, or 13%, primarily due to increased interest expense resulting from a higher-cost mix of deposits, as balances from the ESP, which launched in March 2023, replaced a portion of lower-cost RJBDP cash sweep balances.

The increase in interest expense was partially offset by an increase in interest income due to higher short-term interest rates and higher average interest-earning asset balances during the current quarter.

The net interest margin decreased to 2.74% from 3.36% for the prior-year quarter.

Net interest income decreased $117 million, or 22%, primarily due to increased interest expense resulting from a higher-cost mix of deposits, as balances from the ESP, which was introduced to clients in March 2023, replaced a portion of lower-cost RJBDP client cash sweep balances.

The increase in interest expense was partially offset by an increase in interest income due to higher short-term interest rates and higher average cash balances during the current quarter.

The Bank segment net interest margin decreased to 2.66% from 3.63% for the prior-year quarter.

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

The bank loan provision for credit losses for the current quarter primarily reflected the impacts of specific reserves in our C&I and CRE portfolios, loan downgrades, and charge-offs, partially offset by the favorable impact of loan repayments and sales, which had a larger impact on the current quarter expense than provisions on new loans.

The provision for credit losses for the prior-year quarter primarily reflected the impact of a weaker macroeconomic outlook at that time, primarily on the residential mortgage portfolio, and the impact of loan growth during the quarter.

Compensation expenses increased $3 million, or 8%, primarily due to increased compensation costs both to support growth and annual cost increases, including salaries.

Non-compensation expenses, excluding the bank loan provision for credit losses, decreased $24 million, or 8%, primarily due to a decrease in RJBDP fees paid to PCG resulting from the aforementioned decline in RJBDP balances swept to the Bank segment, partially offset by an increase in rates for such balances.

The bank loan provision for credit losses for the current quarter primarily reflected the impacts of specific reserves, loan downgrades and charge-offs in our C&I and CRE loan portfolios, partially offset by the favorable impacts of an improved economic forecast and net loan payments.

The bank loan provision for credit losses for the prior-year quarter 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.

Non-compensation expenses, excluding the bank loan provision for credit losses, decreased $93 million, or 25%, primarily due to a decrease in RJBDP fees paid to PCG resulting from the aforementioned decline in RJBDP balances swept to the Bank segment, partially offset by an increase in rates applicable to such balances.

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

Offsetting this decline was an increase in expenses related to deposits, including a special assessment enacted during the quarter by the FDIC to recover losses to its Deposit Insurance Fund, as well as expenses related to the ESP and certificates of deposit issuances during the quarter.

The impact of the special assessment was $9 million of incremental expense for the three months ended December 31, 2023.

Offsetting this decline was an increase in expenses related to deposits, including expenses related to the ESP and incremental FDIC expense related to a special assessment enacted during fiscal 2024 by the FDIC to its member institutions to recover losses it experienced in its Deposit Insurance Fund over the past twelve months.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Net revenues of $865 million decreased 17% and pre-tax income of $167 million decreased 26%.

Net interest income decreased $182 million, or 18%, primarily due to increased interest expense resulting from a higher-cost mix of deposits, as balances from the ESP, which was introduced to clients in March 2023, replaced a portion of lower-cost RJBDP client cash sweep balances.

The increase in interest expense was partially offset by an increase in interest income due to higher short-term interest rates and higher average cash balances during the current-year period.

The Bank segment net interest margin decreased to 2.70% from 3.51% for the prior-year period.

The bank loan provision for credit losses was $33 million for the current-year period, compared with $42 million for the prior-year period.

The bank loan provision for credit losses for the current-year period primarily reflected the impacts of specific reserves, loan downgrades and charge-offs in our C&I and CRE loan portfolios, partially offset by the favorable impacts of an improved economic forecast and net loan payments.

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

Non-compensation expenses, excluding the bank loan provision for credit losses, decreased $117 million, or 17%, primarily due to a decrease in RJBDP fees paid to PCG.

RJBDP fees to PCG decreased $150 million, or 26%, primarily due to the aforementioned decline in RJBDP balances swept to the Bank segment, partially offset by an increase in rates applicable to such balances.

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

Offsetting this decline were the aforementioned increases in expenses related to deposits, including the incremental FDIC special assessment enacted during the current-year period described above and expenses related to the ESP and certificates of deposit issuances during the current-year period, as well as higher communications and information processing expenses.

The FDIC special assessment resulted in $11 million of incremental expense for the six months ended March 31, 2024.

RESULTS OF OPERATIONS – OTHER

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Operating results

Three months ended December 31,

$ in millions 2023 2022 % change

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

$ in millions 2024 2023 % change 2024 2023 % change

Interest income $ 44 $ 36 22 % $ 93 $ 66 41 %

All other 2 3 (33) %

All other (2) 1 NM — 4 (100) %

Total revenues 42 37 14 % 93 70 33 %

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Insurance settlement received — — — % — (32) 100 %

All other 6 5 20 %

Total non-interest expenses 23 (9) NM

Pre-tax income

$ 3 $ 18 (83) %

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

Pre-tax income was $3 million, a decrease of 83% compared with pre-tax income of $18 million for the prior-year quarter.

All other (22) 7 NM (16) 12 NM

Total non-interest expenses 10 33 (70) % 33 24 38 %

Pre-tax income/(loss)

$ 7 $ (23) NM $ 10 $ (5) NM

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Quarter ended March 31, 2024 compared with the quarter ended March 31, 2023

Pre-tax income was $7 million, compared with a pre-tax loss of $23 million for the prior-year quarter.

Net revenues increased $7 million 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 $23 million, primarily due to a net legal and regulatory reserve release, partially offset by higher compensation and advertising expenses.

Six months ended March 31, 2024 compared with the six months ended March 31, 2023

Pre-tax income was $10 million compared with a pre-tax loss of $5 million for the prior-year period.

Net revenues increased $24 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 increased $32 million, primarily due to a $32 million insurance settlement received during the prior-year quarter related to a previously settled legal matter, which did not recur in the current-year quarter.

Non-interest expenses increased $9 million, or 38%, due to a $32 million insurance settlement received during the prior-year period related to a previously-settled legal matter and, to a lesser extent, higher compensation expenses, partially offset by the positive impact of the net legal and regulatory reserve release in the current-year period.

STATEMENT OF FINANCIAL CONDITION ANALYSIS

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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 $80.13 billion as of December 31, 2023 were $1.77 billion, or 2%, greater than our total assets as of September 30, 2023.

Cash and cash equivalents increased $893 million primarily driven by an increase in cash held at our bank subsidiaries, largely resulting from an increase in bank deposits during the period.

Total assets of $81.23 billion as of March 31, 2024 were $2.87 billion, or 4%, greater than our total assets as of September 30, 2023.

Cash and cash equivalents increased $688 million primarily driven by an increase in cash held in our Bank segment, largely resulting from an increase in bank deposits during the period.

Assets segregated for regulatory purposes and restricted cash increased $470 million, primarily due to an increase in client cash balances in our broker-dealer subsidiaries, which resulted in an increase in brokerage client payables and a corresponding increase in segregated assets.

Bank loans, net increased $407 million primarily related to increases in corporate and residential mortgage loans.

As of December 31, 2023, our total liabilities of $69.35 billion were $1.18 billion, or 2%, greater than our total liabilities as of September 30, 2023.

Bank deposits increased $1.19 billion, primarily driven by an increase in ESP balances.

Brokerage client payables increased $346 million, primarily related to the aforementioned increase in client cash balances in our broker-dealer subsidiaries as of December 31, 2023.

These increases were partially offset by a decrease in accrued compensation, commissions, and benefits of $418 million due to the payment of prior-year bonuses during the quarter.

Other assets increased $409 million, partially due to valuation increases on our company-owned life insurance policies.

Other receivables, bank loans, net, and collateralized agreements also increased by $391 million, $324 million, and $309 million, respectively.

The increase in bank loans, net was primarily related to an increase in residential mortgage loans.

As of March 31, 2024, our total liabilities of $70.25 billion were $2.08 billion, or 3%, greater than our total liabilities as of September 30, 2023.

Bank deposits increased $644 million, primarily driven by growth in ESP balances and other interest-bearing demand deposits, partially offset by a decrease in RJBDP client cash sweep balances swept to our Bank segment.

Collateralized financings increased $618 million due to an increase in securities lending activity.

Brokerage client payables increased $591 million primarily due to the aforementioned increase in client cash balances in our broker-dealer subsidiaries.

RAYMOND JAMES FINANCIAL, INC.

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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, including increased cash levels in our Bank segment, to ensure we have adequate funding to support our business and meet our clients’ needs.

In times of market stress or uncertainty, we generally maintain higher levels of 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.

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We have a contingency funding plan which would guide our actions if one or more of our businesses were to experience disruptions from normal funding and liquidity sources.

These actions include reallocating client cash balances in the RJBDP from third-party banks to our bank subsidiaries thereby bringing those deposits onto our Consolidated Statements of Financial Condition, increasing our FHLB borrowings at our bank subsidiaries, accessing committed and uncommitted lines of credit at the parent or certain operating subsidiaries, accessing capital markets or, in certain circumstances, accessing certain borrowings from the Federal Reserve.

We also have the ability to create additional sources of funding by developing new products to meet the financial needs of our clients, such as the ESP deposit offering launched to PCG clients in fiscal 2023.

These actions include reallocating client cash balances in the RJBDP from third-party banks to our bank subsidiaries thereby bringing those deposits onto our Consolidated Statements of Financial Condition, increasing our FHLB borrowings at our bank subsidiaries, accessing committed and uncommitted lines of credit at the parent or certain operating subsidiaries, accessing capital markets, or in certain instances accessing certain lending programs available from the Federal Reserve.

We also have the ability to create additional sources of funding by developing new products to meet the financial needs of our clients, such as the ESP deposit offering which was introduced to PCG clients in fiscal 2023.

With each of our deposit offerings, we work to obtain sufficient liquidity to support our business operations while also maintaining a high level of FDIC insurance coverage for our clients.

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Under the proposed rule, if enacted, there would be a three-year transition period for the elimination of the AOCI opt-out election.

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.

We are continuing to evaluate 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.

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

$ in millions

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Common equity tier 1 capital/Tier 1 capital

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$ in millions

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

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 $10.21 billion at December 31, 2023 increased $893 million compared with September 30, 2023.

The increase in cash and cash equivalents primarily resulted from an increase in bank deposits and net income earned during the period.

These increases were partially offset by payments of prior-year bonuses, purchases of bank loans, common stock repurchases and dividends paid on our common and preferred stock during the three months ended December 31, 2023.

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) of $10.00 billion at March 31, 2024 increased $688 million compared with September 30, 2023.

The increase in cash and cash equivalents primarily resulted from net income during the period, as well as an increase in bank deposits, net maturities of available-for-sale securities and short-term borrowings during the period.

These increases were partially offset by investments in bank loans, common stock repurchases, dividends paid on our common and preferred stock, and the payment of prior-year bonuses during the six months ended March 31, 2024.

Sources of liquidity

Approximately $2.08 billion of our total December 31, 2023 cash and cash equivalents was RJF corporate cash, which included the cash held at the parent company, as well as cash it loaned to RJ&A.

As of December 31, 2023, RJF had loaned $1.38 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 $2.03 billion of our total March 31, 2024 cash and cash equivalents was RJF corporate cash, which included the cash held at the parent company, as well as cash it loaned to RJ&A.

As of March 31, 2024, RJF had loaned $1.31 billion to RJ&A (such amount is included in the RJ&A cash balance in the following table), which RJ&A has invested on behalf of RJF in cash and cash equivalents or otherwise deployed in its normal business activities.

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

$ in millions December 31, 2023

$ in millions March 31, 2024

TriState Capital Bank 3,810

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Raymond James Trust Company of New Hampshire 102

Raymond James Investment Management 95

Raymond James Capital Services, LLC 83

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Management’s Discussion and Analysis

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $286 million as of December 31, 2023.

The portion of this total that was available on demand without restrictions, which amounted to $244 million as of December 31, 2023, is reflected in the RJF cash balance and excluded from Raymond James Bank’s cash balance in the preceding table.

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $290 million as of March 31, 2024.

The portion of this total that was available on demand without restrictions, which amounted to $247 million as of March 31, 2024, 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.

and Charles Stanley, as of December 31, 2023 was held to meet regulatory requirements and was not available for use by the parent.

and Charles Stanley, as of March 31, 2024 was held to meet regulatory requirements and was not available for use by the parent.

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

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

At December 31, 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 March 31, 2024, RJ&A significantly exceeded the minimum regulatory requirements, the covenants in its financing arrangements pertaining to net capital, as well as its internally-targeted net capital tolerances.

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

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

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

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

Our bank subsidiaries may pay dividends to RJF without prior approval of their regulators as long as the dividends do not exceed the sum of their current calendar year and the previous two calendar years’ retained net income, and they maintain their targeted regulatory capital ratios, among other restrictions.

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

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

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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 December 31, 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 December 31, 2023.

As of March 31, 2024, RJF and RJ&A had the ability to borrow under our $750 million Credit Facility, a committed unsecured line of credit.

We had no such borrowings outstanding under this facility as of March 31, 2024.

See Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding our Credit Facility.

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

As of December 31, 2023, we had outstanding borrowings under two uncommitted secured borrowing arrangements out of a total of 12 uncommitted financing arrangements (eight uncommitted secured and four uncommitted unsecured).

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

As of March 31, 2024, we had outstanding borrowings of $200 million under one uncommitted unsecured agreement, which was included in “Other borrowings” on our Condensed Consolidated Statements of Financial Condition, and $371 million under three uncommitted secured borrowing arrangements, which were included in “Collateralized Financings” on our Condensed Consolidated Statements of Financial Condition.

RAYMOND JAMES FINANCIAL, INC.

1 unchanged sentence

Management’s Discussion and Analysis

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

have a total of 12 uncommitted financing arrangements with third-party lenders (eight uncommitted secured and four uncommitted unsecured);

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

See Notes 6 and 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding these borrowings.

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

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

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during the quarter End of period

March 31, 2024 $ 256 $ 371 $ 371 $ 244 $ 449 $ 449

December 31, 2023 $ 171 $ 193 $ 169 $ 225 $ 252 $ 194

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

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

Other borrowings and collateralized financings

We had $1 billion in FHLB borrowings outstanding at December 31, 2023, comprised of floating-rate and fixed-rate advances.

We had $1 billion in FHLB borrowings outstanding at March 31, 2024, comprised of floating-rate and fixed-rate advances.

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

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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.

As of December 31, 2023, we had an additional $9.37 billion in immediate credit available from the FHLB based on the collateral pledged.

As of March 31, 2024, we had $9.52 billion in immediate credit available from the FHLB based on the collateral pledged.

With the pledge of incremental collateral, we could further increase credit available to us from the FHLB.

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 and available-for-sale securities pledged with the FHLB and for further information on our FHLB borrowings, including the related maturities and interest rates.

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 available-for-sale securities and bank loans pledged with the FRB.

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

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

As member banks, our bank subsidiaries 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 in March 2023 and is expected to expire in March 2024;

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 available-for-sale securities and bank loans pledged with the FRB.

At December 31, 2023, we had subordinated notes due 2030 outstanding, with an aggregate principal amount of $98 million.

While we had borrowings outstanding as of March 31, 2024, the clearing organization is under no contractual obligation to lend to us under this arrangement.

At March 31, 2024, we had subordinated notes due 2030 outstanding, 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 2023 Form 10-K for additional information regarding these borrowings.

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

We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balance of $347 million as of December 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 $584 million as of March 31, 2024 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 2023 Form 10-K for more information on our collateralized agreements and financings.

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Senior notes payable

At December 31, 2023, we had aggregate outstanding senior notes payable of $2.04 billion, which, exclusive of any unaccreted premiums or discounts and debt issuance costs, was comprised of $500 million par 4.65% senior notes due 2030, $800 million par 4.95% senior notes due 2046, and $750 million par 3.75% senior notes due 2051.

See Note 17 of the Notes to the Consolidated Financial Statements of our 2023 Form 10-K for additional information on senior notes payable.

At March 31, 2024, 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 2023 Form 10-K for additional information on our senior notes payable.

Credit ratings

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February 2024

February 2023

Preferred stock:

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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 $1.01 billion as of December 31, 2023, comprised of $667 million related to employee-directed plans and $343 million related to company-directed plans, and we were able to borrow up to 90%, or $909 million, of the December 31, 2023 total without restriction.

Those policies against which we could readily borrow had a cash surrender value of $1.09 billion as of March 31, 2024, comprised of $730 million related to employee-directed plans and $363 million related to company-directed plans, and we were able to borrow up to 90%, or $984 million, of the March 31, 2024 total without restriction.

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

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

There were no borrowings outstanding against any of these policies as of March 31, 2024.

RAYMOND JAMES FINANCIAL, INC.

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

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

Prior to its expiration, we intend to renew the shelf registration statement.

See Notes 12 and 13 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and Notes 14 and 15 of our 2023 Form 10-K for information regarding our lease obligations and certificates of deposit, respectively.

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

As of December 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 December 31, 2023.

As of March 31, 2024, 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, 2024.

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

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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.

The Department of Labor (“DOL”) recently proposed the “Retirement Security Rule.” This proposed regulation amends the definition of a “fiduciary” in connection with investment advice regarding employee benefit plans and individual retirement accounts (“the Proposed Fiduciary Rule”).

Along with the Proposed Fiduciary Rule, the DOL issued proposed amendments to several prohibited transaction exemptions.

If finalized, the Proposed Fiduciary Rule, along with the amended prohibited transaction exemptions, could have a material adverse effect on our business and results of operations.

In March 2024, the SEC issued a final rule that requires registrants to provide climate-related disclosures in their annual reports which is intended to enhance and standardize climate-related disclosures.

The rule requires, among other things, disclosures about the financial statement impacts of severe weather events and other natural conditions, as well as our climate-related oversight and risk management activities and material Scope 1 and Scope 2 greenhouse gas emissions.

These new disclosures are effective for annual periods beginning in our fiscal 2026, except for disclosures of Scope 1 and 2 greenhouse gas emissions and certain other disclosure which are effective for annual periods beginning in our fiscal 2027.

Several legal challenges were filed following the final rule issuance, and the rule is currently in review by the Eighth Circuit Court of Appeals (“Eighth Circuit”).

The SEC has exercised its discretion to stay the final rule pending completion of judicial review of the consolidated Eighth Circuit petitions.

We are monitoring the legal activity closely while continuing to evaluate the impact that this new guidance will have on our disclosures.

Compliance with these additional disclosures could result in additional costs.

On April 23, 2024, the Department of Labor (“DOL”) issued a final rule significantly expanding the definition of “investment advice fiduciary” under the Employee Retirement Income Security Act of 1974.

In related rulemakings, the DOL also finalized amendments to several Prohibited Transaction Exemptions (“PTEs”), which exempt certain compensation arrangements that would otherwise be prohibited.

The final rules generally become effective September 23, 2024, with a one-year transition period for certain conditions in the PTEs.

We are currently evaluating the impact of these new rules and the extent to which they are consistent with the SEC’s Regulation Best Interest.

We expect compliance with the rules will require us to alter our business practices and may impose additional costs.

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule which will prohibit companies from entering into any new post-employment non-competition agreements with employees and independent contractors and make existing non-competition clauses for the vast majority of U.S.

workers unenforceable.

The rule will permit companies to enforce existing non-competition clauses only with a narrowly defined group of “senior executives,” but provides an exception for non-competition agreements entered into as part of the sale of a business.

The rule will become effective 120 days after its publication in the Federal Register.

We are currently evaluating the impact of this new rule, including the status of legal challenges.

Compliance with the rule could require us to alter our business practices where such non-competition agreements are present and could accelerate the timing of compensation expense recognition in certain of our deferred compensation plans.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

CRITICAL ACCOUNTING ESTIMATES

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For a description of the significant estimates and judgments associated with establishing such accruals, see the “Contingent liabilities” section of Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K.

In addition, refer to Note 15 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding legal and regulatory matters contingencies as of December 31, 2023.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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, 2024.

Allowance for credit losses

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

To demonstrate the sensitivity of credit loss estimates on our bank loan portfolio to macroeconomic forecasts, we compared our modeled estimates under the base case economic scenario used to estimate the allowance for credit losses as of December 31, 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 December 31, 2023.

As of December 31, 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 $45 million in the quantitative portion of our allowance for credit losses on bank loans at December 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 March 31, 2024, 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, 2024.

As of March 31, 2024, use of the downside case scenario would have resulted in an increase of approximately $210 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, 2024.

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

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

To the extent

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K for information regarding our methodologies and assumptions used in estimating the allowance for credit losses.

See Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for information regarding our allowance for credit losses related to bank loans as of December 31, 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 March 31, 2024.

ACCOUNTING STANDARDS UPDATE

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We are evaluating the impact that this new guidance will have on our disclosures.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

In December 2023, the FASB issued amended guidance related to disclosures for income taxes (ASU 2023-09).

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We are evaluating the impact that this new guidance will have on our disclosures.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for information regarding new accounting guidance we adopted during the three months ended December 31, 2023.

See Note 2 of the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for information regarding new accounting guidance we adopted during the three and six months ended March 31, 2024.

RISK MANAGEMENT

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Our legal department provides legal advice and guidance to each of these three lines of risk management.

RAYMOND JAMES FINANCIAL, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

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

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While Market Risk Management maintains ongoing communication with the revenue-generating business units, it is independent of such units.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Interest rate risk

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VaR is reported at a 99% confidence level for a one-day time horizon.

Assuming that future market conditions change as they have in the past twelve months, we would expect to incur losses greater than those predicted by our one-day VaR estimates about once every 100 trading days, or about three times per year on average.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

that future market conditions change as they have in the past twelve months, we would expect to incur losses greater than those predicted by our one-day VaR estimates about once every 100 trading days, or about three times per year on average.

For regulatory capital calculation purposes, we also report VaR and Stressed VaR numbers for a ten-day time horizon.

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

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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

Three months ended December 31, 2023 Period-end VaR Three months ended December 31,

$ in millions High Low December 31,

Six months ended March 31, 2024 Period-end VaR Three months ended March 31, Six months ended March 31,

$ in millions High Low March 31,

2024 September 30,

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

Period-end VaR was lower at December 31, 2023 compared with September 30, 2023, due to lower net exposure as a result of a change in the mix of our trading inventory.

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

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

During the three months ended December 31, 2023, our regulatory-defined daily losses in our trading portfolios did not exceed our predicted VaR.

During both the three and six months ended March 31, 2024, 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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Assumptions used in the model include interest rate movement, the slope of the yield curve, and balance sheet composition and growth.

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

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

The model also considers interest rate-

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

The following table is an analysis of our banking operations’ estimated net interest income over a 12-month period based on instantaneous shifts in interest rates (expressed in basis points) using our previously described asset/liability model, which assumes a dynamic balance sheet, a weighted-average deposit beta on our interest-bearing deposit accounts without stated maturities of approximately 40% as both interest rates rise and fall, and that interest rates do not decline below zero.

related risks such as pricing spreads, pricing of client cash accounts, including deposit betas, and prepayments.

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

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, a weighted-average deposit beta on our interest-bearing deposit accounts without stated maturities of approximately 45% as interest rates both rise and fall, 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 $1,580 (8)%

(1) Our 0-basis point scenario was based on interest rates as of December 31, 2023.

(1) Our 0-basis point scenario was based on interest rates as of March 31, 2024.

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.

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government and government agency-backed securities, changes in fair value are primarily driven by changes in interest rates.

At December 31, 2023, our available-for-sale securities portfolio had a fair value of $9.20 billion with a weighted-average yield of 2.13% and a weighted-average life, after factoring in estimated prepayments, of 4.0 years.

At March 31, 2024, our available-for-sale securities portfolio had a fair value of $9.03 billion with a weighted-average yield of 2.25% and a weighted-average life, after factoring in estimated prepayments, of 3.9 years.

To evaluate the interest rate sensitivity of our available-for-sale securities portfolio we also monitor, among other things, effective duration, defined as the approximate percentage change in price for a 100-basis point change in rates.

As of December 31, 2023, the effective duration of our available-for-sale securities portfolio was approximately 3.37, which means that we would expect the market value of our available-for-sale securities portfolio to decline approximately 3.37% for every 100-basis point increase in interest rates and increase approximately 3.37% for every 100-basis point decline in interest rates.

As of March 31, 2024, the effective duration of our available-for-sale securities portfolio was approximately 3.30, which means that we would expect the market value of our available-for-sale securities portfolio to decline approximately 3.30% for every 100-basis point increase in interest rates and increase approximately 3.30% for every 100-basis point decline in interest rates.

See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K and 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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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 December 31, 2023, our EVE analyses were within approved limits.

As of March 31, 2024, our EVE analyses were within approved limits.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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

The following table shows the maturities of our bank loan portfolio at March 31, 2024, including contractual principal repayments.

Maturities are generally determined based upon contractual terms;

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Total loans held for sale and investment $ 16,533 $ 13,149 $ 5,949 $ 8,939 $ 44,570

The following table shows the distribution of the recorded investment of those bank loans that mature in more than one year between fixed and adjustable interest rate loans at December 31, 2023.

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, 2024.

Interest rate type

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

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Foreign exchange risk

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dollar (“USD”).

For example, our bank loan portfolio includes loans which are denominated in Canadian dollars (“CAD”), totaling $1.40 billion as of both December 31, 2023 and September 30, 2023, when converted to the USD.

For example, our bank loan portfolio includes loans which are denominated in Canadian dollars (“CAD”), totaling $1.35 billion and $1.40 billion at March 31, 2024 and September 30, 2023, respectively, when converted to the USD.

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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Management’s Discussion and Analysis

Investments in foreign subsidiaries

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See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K and Note 5 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding these derivatives.

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

At March 31, 2024, we had foreign exchange risk in our investment in RJ Ltd.

of CAD 446 million and in our investment in Charles Stanley of £287 million, which were not hedged.

We had other, less significant investments in foreign domiciled subsidiaries, primarily in Europe, which were not hedged;

however, we do not believe we had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of December 31, 2023.

however, we do not believe we had material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries as of March 31, 2024.

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

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

Brokerage activities

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

See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K and Notes 5 and 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our credit risk mitigation related to derivatives and collateralized agreements.

See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K and Notes 5 and 6 of the

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Management’s Discussion and Analysis

Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our credit risk mitigation related to derivatives and collateralized agreements.

Our client activities involve the execution, settlement, and financing of various transactions on behalf of our clients.

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See Note 2 of the Notes to Consolidated Financial Statements of our 2023 Form 10-K for additional 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.

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

We have credit risk and may incur a loss primarily in the event that such borrower is no longer affiliated with us.

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See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2023 Form 10-K for further information about the risk characteristics relevant to each portfolio segment.

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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

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

Three months ended December 31,

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

2024 2023 2024 2023

$ in millions Net loan

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amount Annualized

loans Net loan

(charge-off)/recovery

amount Annualized

loans Net loan

(charge-off)/recovery

amount Annualized

C&I loans $ (23) 0.89 % $ (20) 0.71 % $ (29) 0.56 % $ (24) 0.43 %

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Total loans held for sale and investment $ (28) 0.25 % $ (20) 0.18 % $ (36) 0.16 % $ (22) 0.10 %

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Management’s Discussion and Analysis

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

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

$ in millions December 31, 2023 September 30, 2023

$ in millions March 31, 2024 September 30, 2023

Nonperforming loans (1)

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Nonperforming assets as a % of Bank segment total assets 0.31 % 0.21 %

(1) Nonperforming loans at December 31, 2023 and September 30, 2023 included $87 million and $96 million of loans, respectively, which were current pursuant to their contractual terms.

The increase in nonperforming loans and assets as of December 31, 2023 as compared with September 30, 2023 was primarily due to two loans that were placed on nonaccrual status with an associated allowance during the three months ended December 31, 2023.

See table summarizing nonaccrual loans by category in Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

Although our nonperforming assets as a percentage of our Bank segment’s assets remained low as of December 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 March 31, 2024 and September 30, 2023 included $103 million and $96 million, respectively, of loans, which were current pursuant to their contractual terms.

The increase in nonperforming loans and assets as of March 31, 2024 as compared with September 30, 2023 was primarily due to certain loans that were placed on nonaccrual status with an associated allowance during the three and six months ended March 31, 2024.

See the table summarizing nonaccrual loans by category in Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

Although our nonperforming assets as a percentage of our Bank segment’s assets remained low as of March 31, 2024, 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 Consolidated Financial Statements of our 2023 Form 10-K.

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

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

There were no significant changes to those processes during the three months ended March 31, 2024.

See further discussion of our risk monitoring process in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk - Banking activities” of our 2023 Form 10-K.

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Management’s Discussion and Analysis

SBL and residential mortgage loan portfolios

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

Collateral calls have been minimal relative to our SBL portfolio with no losses incurred during the three months ended December 31, 2023.

Collateral calls have been minimal relative to our SBL portfolio with no losses incurred during the three and six months ended March 31, 2024.

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

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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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Management’s Discussion and Analysis

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

December 31, 2023 $ 5 $ 3 $ 8 0.06 % 0.03 % 0.09 %

March 31, 2024 $ 3 $ 4 $ 7 0.03 % 0.05 % 0.08 %

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

Our December 31, 2023 percentage compares favorably to the national average for over 30 day delinquencies of 1.88%, as most recently reported by the Fed.

Our March 31, 2024 percentage compares favorably to the national average for over 30 day delinquencies of 1.94%, as most recently reported by the Fed.

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

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

December 31, 2023

March 31, 2024

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 December 31, 2023 and September 30, 2023, these loans totaled $2.87 billion and $2.85 billion, respectively, or approximately 32% and 33% of the residential mortgage portfolio, respectively.

The weighted-average number of years before the remainder of the loans, which were still in their interest-only period at December 31, 2023, begins amortizing is six years.

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Management’s Discussion and Analysis

At March 31, 2024 and September 30, 2023, these loans totaled $2.89 billion and $2.85 billion, respectively, or approximately 32% and 33% 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, 2024, begins amortizing is five years.

Corporate and tax-exempt loans

Credit risk in our corporate and tax-exempt loan portfolios is monitored on an individual loan basis.

Credit risk in our corporate and tax-exempt loan portfolios is monitored on an individual loan basis for trends in borrower operating performance, payment history, credit ratings, collateral performance, loan covenant compliance, municipality demographics and other factors including industry performance and concentrations.

The majority of our tax-exempt loan portfolio is comprised of loans to investment-grade borrowers.

Credit risk is managed by diversifying the corporate bank loan portfolio.

Furthermore, we monitor the concentration in any one industry and have established limits relative to capital.

In addition, credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in our underwriting standards.

Our corporate bank loan portfolio does not contain a significant concentration in any single industry.

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

December 31, 2023

March 31, 2024

Loans outstanding as a % of

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Loan fund 6% 3%

Subscription lines of credit 5% 2%

The Fed’s measures to control inflation, including through increases in short-term interest rates in prior fiscal years, have had a dampening effect on the economy.

Coupled with the present uncertainty regarding future Fed interest rate cuts, both in terms of timing and magnitude, all lead to our expectation that such dampening will continue during our fiscal 2024.

These and related factors could continue to negatively impact our borrowers.

We continue to closely monitor economic factors, including inflation, interest rates, and a potential recession, that may impact our corporate loan portfolio, including our CRE portfolio.

We continue to maintain conservative underwriting standards for our CRE portfolio, including LTV limits that generally range between 65% to 80% at origination depending upon property type.

LTV ratios are subject to change over the life of the loan as property values change.

Our underwriting standards for our CRE portfolio, including LTV at origination, may be tightened in times of uncertainty.

Further, within the CRE portfolio, we have limited our exposure to office real estate loans to 3% of total loans held for sale and investment.

In addition, we have sold and may continue to sell corporate loans as part of our credit risk mitigation strategies.

Consumer products and services 5% 2%

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

The Fed’s measures to control inflation, including through increases in short-term interest rates in prior fiscal years, have had a dampening effect on certain sectors of the economy.

Coupled with the present uncertainty regarding future Fed interest rate cuts, both in terms of timing and magnitude, we expect that such dampening could continue through the second half of our fiscal 2024 and could continue to negatively impact borrowers.

We continue to closely monitor economic factors, including inflation and interest rates, that may impact our corporate loan portfolio.

Additionally, in our fiscal 2023 and year-to-date fiscal 2024 we have sold, and may continue to sell, corporate loans as part of our credit risk mitigation strategies.

The aforementioned dampening effect on the economy and changes in business and consumer behavior have most notably impacted the commercial real estate sector, specifically office real estate loans.

Risks related to such loans have increased due to pressure from higher interest rates, uncertainty related to tenant lease renewals, and elevated refinancing risks for loans with near-term maturities, among other issues.

To mitigate risks related to our CRE portfolio, we continue to maintain conservative underwriting standards, including LTV limits that generally range between 65% to 80% at origination, depending upon property type and, in times of uncertainty, we may originate loans at even tighter thresholds.

Currently, LTV at origination is generally at or below 70% for newly-originated CRE loans.

These LTV ratios are subject to change over the life of the loan as property values change.

We seek to mitigate our refinancing risks in our CRE portfolio by subjecting loans with stated maturities in the near term to enhanced monitoring procedures.

For example, approximately 40% of our office real estate loans are scheduled to mature in calendar years 2024 and 2025.

Such office real estate loans with near-term maturities are subject to monthly reporting if a loan reaches our lowest pass rating.

We also remain in frequent contact with the related borrowers well in advance of a loan’s stated maturity to take action on the loan ahead of any credit concerns, including working with the borrower to restructure the loan as necessary and ensuring that our allowances for credit losses are adequate to cover potential losses on the loans.

As of March 31, 2024, our highest industry concentrations within our CRE portfolio were multi-family, industrial warehouse, and office real estate which were 5%, 4%, and 3%, respectively, of total loans held for sale and investment.

As a result of the aforementioned pressures on office real estate loans within our CRE portfolio, we are actively monitoring credit metrics across these loans.

As of March 31, 2024, 11% of such loans were considered criticized loans and only 5% were nonperforming.

As of March 31, 2024, our allowance for credit losses related to office real estate CRE loans represented 5% of the amortized cost of such loans.

In addition to the aforementioned CRE loans, we also have certain owner-occupied commercial real estate loans of approximately $200 million as of March 31, 2024 that were appropriately classified as C&I loans as the primary source of repayment for these loans is based on the financial strength of the owner and the cash flows of the respective business rather than the ability of the collateral to generate cash flows.

Liquidity risk

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See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Operational risk” of our 2023 Form 10-K for a discussion of our operational risk and certain of our risk mitigation processes.

Effective the last week of May 2024, certain of our broker-dealer securities transactions, including those in the United States and Canada, will transition from a trade date plus two business days settlement timeframe to a trade date plus one business day (“T+1”) settlement timeframe.

The transition to a T+1 settlement timeframe subjects us to increased operational risk with respect to reporting and timely settlement of transactions, and heightens the need for careful coordination with and dependencies on other industry participants.

Our cross-functional working groups have partnered with industry groups to prepare us for the upcoming transition to a T+1 settlement timeframe, and we have taken appropriate action to meet the transition deadline.

As a result, we do not expect the transition to T+1 to have a material impact on our results of operations or financial condition.

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

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

We did not incur any significant losses related to such operational challenges during the three months ended December 31, 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 2023 Form 10-K, despite our implementation of protective measures and endeavoring to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to human error, natural disasters, power loss, cyber-attacks and other information security breaches, and other events that could have an impact on the security and stability of our operations.

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

See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our 2023 Form 10-K for information regarding how we utilize models throughout the firm and how we manage model risk.

These losses can result from, but are not limited to, trade

RAYMOND JAMES FINANCIAL, INC.

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Management’s Discussion and Analysis

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, 2024.

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

Compliance risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis