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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark one)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 20172023
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number: 1-9109
RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
FloridaNo. 59-1517485
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices)    (Zip Code)
(727) 567-1000
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueRJFNew York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred StockRJF PrBNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405(§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
x
Accelerated filero
☐
Non-accelerated filero (Do not check if a smaller reporting company)
☐
Smaller reporting companyo
☐
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨☐                              No x☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

145,614,962211,910,694 shares of common stock as of February 7, 2018May 4, 2023


RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES


INDEX
PAGE
PART I
FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
3
Condensed Consolidated Statements of Financial Condition as of December 31, 2017 and September 30, 2017 (Unaudited)
3
Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended December 31, 2017 and December 31, 2016 (Unaudited)
4
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended December 31, 2017 and December 31, 2016 (Unaudited)
5
Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2017 and December 30, 2016 (Unaudited)
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - Organization and basis of presentation
8
Note 2 - Update of significant accounting policies
8
Note 3 - AcquisitionsFair value
119
Note 4 - Fair valueAvailable-for-sale securities
1315
Note 5 - Available-for-sale securitiesDerivative assets and derivative liabilities
2218
Note 6 - Derivative financial instruments
24
Note 7 - Collateralized agreements and financings
2720
Note 87 - Bank loans, net
2923
Note 8 - Loans to financial advisors, net
30
Note 9 - Variable interest entities
3530
Note 10 - Goodwill and identifiable intangible assets, net
3731
Note 11 - Bank depositsOther assets
3932
Note 12 - Other borrowingsLeases
4032
Note 13 - Bank deposits
33
Note 14 - Other borrowings
34
Note 15 - Income taxes
4034
Note 1416 - Commitments, contingencies and guarantees
4235
Note 1517 - Accumulated other comprehensive income/(loss)Shareholders’ equity
4537
Note 1618 - Revenues
40
Note 19 - Interest income and interest expense
4844
Note 1720 - Share-based and other compensation
4844
Note 1821 - Regulatory capital requirements
5045
Note 1922 - Earnings per share
5348
Note 2023 - Segment information
5349
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5651
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
8894
Item 4.
Controls and Procedures
8994
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings
8995
Item 1A.
Risk Factors
8995
Item 2.Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer PurchasesUnregistered Sales of Equity Securities and Use of Proceeds
9095
Item 3.
Defaults Upon Senior Securities
9095
Item 4.Mine Safety DisclosureDisclosures
9095
Item 5.
Other Information
9095
Item 6.
Exhibits
9196
9197

2


PART I. FINANCIAL INFORMATION

Item
ITEM 1. FINANCIAL STATEMENTS


RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
$ in millions, except per share amountsMarch 31, 2023September 30, 2022
Assets:
Cash and cash equivalents$8,663 $6,178 
Assets segregated for regulatory purposes and restricted cash4,697 8,481 
Collateralized agreements379 704 
Financial instruments, at fair value:
Trading assets ($935 and $1,188 pledged as collateral)
993 1,270 
Available-for-sale securities ($26 and $74 pledged as collateral)
9,773 9,885 
Derivative assets91 188 
Other investments ($21 and $14 pledged as collateral)
318 292 
Brokerage client receivables, net2,575 2,934 
Other receivables, net1,711 1,615 
Bank loans, net43,683 43,239 
Loans to financial advisors, net1,108 1,152 
Deferred income taxes, net573 630 
Goodwill and identifiable intangible assets, net1,932 1,931 
Other assets2,684 2,452 
Total assets$79,180 $80,951 
Liabilities and shareholders’ equity:
Bank deposits$54,229 $51,357 
Collateralized financings327 466 
Financial instrument liabilities, at fair value:
Trading liabilities710 836 
Derivative liabilities351 530 
Brokerage client payables6,848 11,446 
Accrued compensation, commissions and benefits1,461 1,787 
Other payables1,597 1,768 
Other borrowings1,650 1,291 
Senior notes payable2,038 2,038 
Total liabilities69,211 71,519 
Commitments and contingencies (see Note 16)
Shareholders’ equity
Preferred stock120 120 
Common stock; $.01 par value; 650,000,000 shares authorized; 248,323,901 shares issued and 211,581,156 shares outstanding as of March 31, 2023; 248,018,564 shares issued and 215,122,523 shares outstanding as of September 30, 2022
2 2 
Additional paid-in capital3,035 2,987 
Retained earnings9,590 8,843 
Treasury stock, at cost; 36,742,745 and 32,896,041 common shares as of March 31, 2023 and September 30, 2022, respectively
(1,954)(1,512)
Accumulated other comprehensive loss(798)(982)
Total equity attributable to Raymond James Financial, Inc.9,995 9,458 
Noncontrolling interests(26)(26)
Total shareholders’ equity9,969 9,432 
Total liabilities and shareholders’ equity$79,180 $80,951 
$ in thousands, except per share amounts December 31, 2017 September 30, 2017
Assets: 
 
Cash and cash equivalents $3,897,529
 $3,669,672
Assets segregated pursuant to regulations and other segregated assets 3,569,414
 3,476,085
Securities purchased under agreements to resell 307,742
 404,462
Securities borrowed 184,971
 138,319
Financial instruments, at fair value:    
Trading instruments (includes $302,713 and $357,099 pledged as collateral)
 597,579
 564,263
Available-for-sale securities 2,393,321
 2,188,282
Derivative assets 292,140
 318,775
Private equity investments 189,033
 198,779
Other investments (includes $38,591 and $6,640 pledged as collateral)
 265,170
 220,980
Brokerage client receivables, net 2,666,268
 2,766,771
Receivables from brokers, dealers and clearing organizations 219,036
 268,021
Other receivables 642,542
 652,769
Bank loans, net 17,697,298
 17,006,795
Loans to financial advisors, net 890,072
 873,272
Investments in real estate partnerships held by consolidated variable interest entities 110,662
 111,743
Property and equipment, net 454,115
 437,374
Deferred income taxes, net 199,507
 313,486
Goodwill and identifiable intangible assets, net 651,339
 493,183
Other assets 857,161
 780,425
Total assets $36,084,899
 $34,883,456
     
Liabilities and equity:    
Bank deposits $18,725,545
 $17,732,362
Securities sold under agreements to repurchase 229,036
 220,942
Securities loaned 290,307
 383,953
Financial instruments sold but not yet purchased, at fair value:    
Trading instruments 213,024
 221,449
Derivative liabilities 356,505
 356,964
Brokerage client payables 5,820,347
 5,411,829
Payables to brokers, dealers and clearing organizations 189,144
 172,714
Accrued compensation, commissions and benefits 793,687
 1,059,996
Other payables 582,548
 567,045
Other borrowings 1,532,826
 1,514,012
Senior notes payable 1,548,975
 1,548,839
Total liabilities 30,281,944

29,190,105
Commitments and contingencies (see Note 14) 

 

Equity    
Preferred stock; $.10 par value; 10,000,000 shares authorized; -0- shares issued and outstanding —
 —
Common stock; $.01 par value; 350,000,000 shares authorized; 155,497,352 and 154,228,235 shares issued as of December 31, 2017 and September 30,2017, respectively, and 145,153,686 and 144,096,521 shares outstanding as of December 31, 2017 and September 30, 2017, respectively
 1,555
 1,542
Additional paid-in capital 1,705,308
 1,645,397
Retained earnings 4,420,368
 4,340,054
Treasury stock, at cost; 10,311,191 and 10,084,038 common shares as of December 31, 2017 and September 30, 2017, respectively
 (410,029) (390,081)
Accumulated other comprehensive loss (20,454) (15,199)
Total equity attributable to Raymond James Financial, Inc. 5,696,748
 5,581,713
Noncontrolling interests 106,207
 111,638
Total equity 5,802,955
 5,693,351
Total liabilities and equity $36,084,899
 $34,883,456
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

3

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
  Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Revenues:    
Securities commissions and fees $1,103,566
 $984,385
Investment banking 64,902
 61,425
Investment advisory and related administrative fees 142,023
 108,243
Interest 231,729
 182,782
Account and service fees 184,301
 148,791
Net trading profit 19,870
 20,555
Other 19,201
 22,587
Total revenues 1,765,592
 1,528,768
Interest expense (39,431) (35,966)
Net revenues 1,726,161
 1,492,802
Non-interest expenses:  
  
Compensation, commissions and benefits 1,152,767
 1,006,467
Communications and information processing 83,731
 72,161
Occupancy and equipment costs 49,814
 46,052
Business development 33,793
 35,362
Investment sub-advisory fees 22,321
 19,295
Bank loan loss provision/(benefit) 1,016
 (1,040)
Acquisition-related expenses 3,927
 12,666
Other 67,108
 94,324
Total non-interest expenses 1,414,477
 1,285,287
Income including noncontrolling interests and before provision for income taxes 311,684
 207,515
Provision for income taxes 192,401
 59,812
Net income including noncontrolling interests 119,283
 147,703
Net income attributable to noncontrolling interests 441
 1,136
Net income attributable to Raymond James Financial, Inc. $118,842
 $146,567
     
Earnings per common share – basic $0.82
 $1.03
Earnings per common share – diluted $0.80
 $1.00
Weighted-average common shares outstanding – basic 144,469
 142,110
Weighted-average common and common equivalent shares outstanding – diluted 148,261
 145,675
     
Net income attributable to Raymond James Financial, Inc. $118,842
 $146,567
Other comprehensive income/(loss), net of tax: (1)
  
  
Unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses (11,953) (4,146)
Unrealized gain/(loss) on currency translations, net of the impact of net investment hedges (187) 1,001
Unrealized gain on cash flow hedges 6,885
 25,738
Total comprehensive income $113,587
 $169,160

(1)All components of other comprehensive income/(loss), net of tax, are attributable to Raymond James Financial, Inc. 

 Three months ended March 31,Six months ended March 31,
in millions, except per share amounts2023202220232022
Revenues:  
Asset management and related administrative fees$1,302 $1,464 $2,544 $2,846 
Brokerage revenues:
Securities commissions369 422 721 847 
Principal transactions127 142 259 275 
Total brokerage revenues496 564 980 1,122 
Account and service fees258 179 547 356 
Investment banking154 235 295 660 
Interest income915 242 1,742 467 
Other32 27 76 78 
Total revenues3,157 2,711 6,184 5,529 
Interest expense(284)(38)(525)(75)
Net revenues2,873 2,673 5,659 5,454 
Non-interest expenses:  
Compensation, commissions and benefits1,820 1,852 3,556 3,736 
Non-compensation expenses:
Communications and information processing153 127 292 239 
Occupancy and equipment68 62 134 121 
Business development54 34 110 69 
Investment sub-advisory fees36 40 70 78 
Professional fees38 27 70 55 
Bank loan provision for credit losses28 21 42 10 
Other119 77 176 155 
Total non-compensation expenses496 388 894 727 
Total non-interest expenses2,316 2,240 4,450 4,463 
Pre-tax income557 433 1,209 991 
Provision for income taxes130 110 273 222 
Net income427 323 936 769 
Preferred stock dividends2 — 4 — 
Net income available to common shareholders$425 $323 $932 $769 
Earnings per common share – basic$1.97 $1.56 $4.33 $3.71 
Earnings per common share – diluted$1.93 $1.52 $4.23 $3.61 
Weighted-average common shares outstanding – basic214.3 207.7214.5207.0
Weighted-average common and common equivalent shares outstanding – diluted219.2213.0219.7212.6
Net income$427 $323 $936 $769 
Other comprehensive income/(loss), net of tax:  
Available-for-sale securities97 (320)144 (375)
Currency translations, net of the impact of net investment hedges7 (11)53 (11)
Cash flow hedges(11)29 (13)38 
Total other comprehensive income/(loss), net of tax93 (302)184 (348)
Total comprehensive income$520 $21 $1,120 $421 











See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

4

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)

 Three months ended March 31,Six months ended March 31,
$ in millions, except per share amounts2023202220232022
Preferred stock:
Balance beginning of period$120 $— $120 $— 
Shares issuances— — — — 
Balance end of period120 — 120 — 
Common stock, par value $.01 per share:  
Balance beginning of period2 2 2 2 
Share issuances— 

— — — 
Balance end of period2 2 2 2 
Additional paid-in capital:  
Balance beginning of period2,975 

2,055 2,987 2,088 
Employee stock purchases15 

14 22 22 
Distributions due to vesting of restricted stock units and exercise of stock options, net of forfeitures(11)

(17)(110)(122)
Share-based compensation amortization56 

41 136 105 
Balance end of period3,035 2,093 3,035 2,093 
Retained earnings:  
Balance beginning of period9,254 

8,003 8,843 7,633 
Net income427 

323 936 769 
Common and preferred stock cash dividends declared (see Note 17)(91)(70)(189)(146)
Balance end of period9,590 8,256 9,590 8,256 
Treasury stock:  
Balance beginning of period(1,604)(1,373)(1,512)(1,437)
Purchases/surrenders(358)— (505)(10)
Reissuances due to vesting of restricted stock units and exercise of stock options8 13 63 87 
Balance end of period(1,954)(1,360)(1,954)(1,360)
Accumulated other comprehensive loss:  
Balance beginning of period(891)(87)(982)(41)
Other comprehensive income/(loss), net of tax93 (302)184 (348)
Balance end of period(798)(389)(798)(389)
Total equity attributable to Raymond James Financial, Inc.$9,995 $8,602 $9,995 $8,602 
Noncontrolling interests:
Balance beginning of period$(26)$52 $(26)$58 
Net loss attributable to noncontrolling interests— (2)— — 
Deconsolidations and sales— (43)— (51)
Balance end of period(26)7 (26)7 
Total shareholders’ equity$9,969 $8,609 $9,969 $8,609 
  Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Common stock, par value $.01 per share:    
Balance, beginning of year $1,542
 $1,513
Share issuances 13
  
17
Balance, end of period 1,555
 1,530
     
Additional paid-in capital:  
  
Balance, beginning of year 1,645,397
  
1,498,921
Employee stock purchases 5,522
  
4,743
Exercise of stock options and vesting of restricted stock units, net of forfeitures 20,953
  
18,969
Restricted stock, stock option and restricted stock unit expense 33,373
  
30,971
Other 63
  
(322)
Balance, end of period 1,705,308
 1,553,282
     
Retained earnings:  
  
Balance, beginning of year 4,340,054
  
3,834,781
Net income attributable to Raymond James Financial, Inc. 118,842
  
146,567
Cash dividends declared (38,417) (34,274)
Other (111) —
Balance, end of period 4,420,368
 3,947,074
     
Treasury stock:  
  
Balance, beginning of year (390,081) (362,937)
Purchases/surrenders (7,183) (8,474)
Exercise of stock options and vesting of restricted stock units, net of forfeitures (12,765) (16,458)
Balance, end of period (410,029) (387,869)
     
Accumulated other comprehensive loss: (1)
  
  
Balance, beginning of year (15,199) (55,733)
Net change in unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses, net of tax (11,953) (4,146)
Net change in currency translations and net investment hedges, net of tax (187) 1,001
Net change in cash flow hedges, net of tax 6,885
 25,738
Balance, end of period (20,454) (33,140)
Total equity attributable to Raymond James Financial, Inc. $5,696,748

$5,080,877
     
Noncontrolling interests:  
  
Balance, beginning of year $111,638
 $146,431
Net income attributable to noncontrolling interests 441
 1,136
Capital contributions —
 4,998
Distributions (5,977) (26,557)
Other 105
 (2,284)
Balance, end of period 106,207
 123,724
Total equity $5,802,955
 $5,204,601

(1) All components of other comprehensive loss, net of tax, are attributable to Raymond James Financial, Inc. 








See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

5

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended March 31,
$ in millions20232022
Cash flows from operating activities:  
Net income$936 $769 
Adjustments to reconcile net income to net cash used in operating activities:  
Depreciation and amortization81 69 
Deferred income taxes, net(4)12 
Premium and discount amortization on available-for-sale securities and bank loans and net unrealized gain/loss on other investments(23)24 
Provisions for credit losses and legal and regulatory proceedings78 16 
Share-based compensation expense138 109 
Unrealized (gain)/loss on company-owned life insurance policies, net of expenses(86)19 
Other(3)10 
Net change in:  
Assets segregated for regulatory purposes excluding cash and cash equivalents— (8,294)
Collateralized agreements, net of collateralized financings186 59 
Loans (provided to) financial advisors, net of repayments34 (76)
Brokerage client receivables and other receivables, net145 (299)
Trading instruments, net163 160 
Derivative instruments, net(122)166 
Other assets(65)(39)
Brokerage client payables and other payables(4,892)6,556 
Accrued compensation, commissions and benefits(332)(278)
Purchases and originations of loans held for sale, net of proceeds from sales of securitizations and loans held for sale6 (153)
Net cash used in operating activities(3,760)(1,170)
Cash flows from investing activities:  
Increase in bank loans, net(621)(2,850)
Proceeds from sales of loans held for investment142 134 
Purchases of available-for-sale securities(325)(1,992)
Available-for-sale securities maturations, repayments and redemptions639 952 
Cash and cash equivalents acquired in business acquisitions, including those segregated for regulatory purposes, net of cash paid for acquisitions— 1,671 
Additions to property and equipment(69)(42)
Purchase of Federal Home Loan Bank stock, net(35)— 
Investment in note receivable— (125)
Purchases of other investments, net(6)(80)
Other investing activities, net(44)(71)
Net cash used in investing activities(319)(2,403)
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

  Three months ended December 31,
$ in thousands 2017 2016
Cash flows from operating activities:    
Net income attributable to Raymond James Financial, Inc. $118,842
 $146,567
Net income attributable to noncontrolling interests 441
 1,136
Net income including noncontrolling interests 119,283
 147,703
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:  
  
Depreciation and amortization 23,289
 19,941
Deferred income taxes 121,273
 10,928
Premium and discount amortization on available-for-sale securities and unrealized gain on other investments (496) (10,185)
Provisions for loan losses, legal and regulatory proceedings and bad debts 9,265
 33,017
Share-based compensation expense 34,417
 32,572
Compensation expense payable in common stock of an acquiree 3,925
 7,973
Unrealized gain on company owned life insurance, net of expenses (16,859) (5,088)
Other 5,693
 (5,724)
Net change in:  
  
Assets segregated pursuant to regulations and other segregated assets (96,759) 1,006,933
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase 104,290
 120,393
Securities loaned, net of securities borrowed (140,229) (232,438)
Loans provided to financial advisors, net of repayments (21,928) (14,554)
Brokerage client receivables and other accounts receivable, net 123,512
 83,887
Trading instruments, net (46,547) 152,474
Derivative instruments, net 30,449
 38,447
Other assets (18,799) 84,289
Brokerage client payables and other accounts payable 466,763
 (481,542)
Accrued compensation, commissions and benefits (266,453) (216,889)
Proceeds from sales of securitizations and loans held for sale, net of purchases and originations of loans held for sale (108,470) 35,162
Net cash provided by operating activities 325,619
 807,299
     
Cash flows from investing activities:  
  
Additions to property, buildings and equipment, including software (35,949) (78,371)
Increase in bank loans, net (645,197) (774,376)
Proceeds from sales of loans held for investment 21,580
 54,163
Purchases of available-for-sale securities (339,580) (377,235)
Available-for-sale securities maturations, repayments and redemptions 114,139
 56,647
Proceeds from sales of available-for-sale securities —
 7,308
Business acquisition, net of cash acquired (159,200) —
Other investing activities, net (29,669) 17,124
Net cash used in investing activities (1,073,876) (1,094,740)
     
     
(continued on next page)
     
     
     
     
     
     
     
     
     
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued from previous page)
  Three months ended December 31,
$ in thousands 2017 2016
Cash flows from financing activities:    
Proceeds from borrowings on the RJF Credit Facility 300,000
 —
Proceeds from/(repayments of) short-term borrowings, net (280,000) 208,400
Proceeds from Federal Home Loan Bank advances —
 100,000
Repayments of Federal Home Loan Bank advances and other borrowed funds (1,186) (1,138)
Exercise of stock options and employee stock purchases 25,954
 24,143
Increase in bank deposits 993,183
 927,243
Purchases of treasury stock (20,243) (26,058)
Dividends on common stock (32,499) (31,255)
Distributions to noncontrolling interests, net (5,977) (26,557)
Net cash provided by financing activities 979,232
 1,174,778
     
Currency adjustment:  
  
Effect of exchange rate changes on cash (3,118) (9,514)
Net increase in cash and cash equivalents 227,857
 877,823
Cash and cash equivalents at beginning of year 3,669,672
 1,650,452
Cash and cash equivalents at end of period $3,897,529
 $2,528,275
     
     
Supplemental disclosures of cash flow information:  
  
Cash paid for interest $28,026
 $32,442
Cash paid for income taxes $8,515
 $13,710































See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

6

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended March 31,
$ in millions20232022
Cash flows from financing activities:
Increase in bank deposits2,872 2,190 
Repurchases of common stock and share-based awards withheld for payment of withholding tax requirements(558)(59)
Dividends on preferred and common stock(174)(131)
Exercise of stock options and employee stock purchases25 32 
Proceeds from Federal Home Loan Bank advances1,650 850 
Repayments of Federal Home Loan Bank advances and other borrowed funds(1,291)(852)
Other financing, net(2)(5)
Net cash provided by financing activities2,522 2,025 
Currency adjustment:  
Effect of exchange rate changes on cash and cash equivalents, including those segregated for regulatory purposes258 (49)
Net decrease in cash and cash equivalents, including those segregated for regulatory purposes and restricted cash(1,299)(1,597)
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at beginning of year14,659 16,449 
Cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period$13,360 $14,852 
Cash and cash equivalents$8,663 $5,715 
Cash and cash equivalents segregated for regulatory purposes and restricted cash4,697 9,137 
Total cash and cash equivalents, including those segregated for regulatory purposes and restricted cash at end of period$13,360 $14,852 
Supplemental disclosures of cash flow information:  
Cash paid for interest$483 $76 
Cash paid for income taxes, net$389 $293 
Cash outflows for lease liabilities$60 $52 
Non-cash right-of-use assets recorded for new and modified leases$42 $26 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
7

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
DecemberMarch 31, 20172023


NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION


Organization


Raymond James Financial, Inc. (“RJF,”RJF” or the “firm” or the “Company”) is a financial holding company whose broker-dealerwhich, together with its subsidiaries, areis engaged in various financial services businesses,activities, including providing investment management services to retail and institutional clients, merger & acquisition and advisory services, the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of mutual funds and other investment products.  In addition, other subsidiaries of RJF provide investment management services for retail and institutional clients,The firm also provides corporate and retail banking services, and trust services. For further information about our business segments, see Note 20. As used herein, the terms “our,” “we,” “our” or “us” refer to RJF and/or one or more of its subsidiaries.


Basis of presentation


The accompanying unaudited condensed consolidated financial statements include the accounts of RJF and its consolidated subsidiaries that are generally controlled through a majority voting interest. We consolidate all of our 100% owned-owned subsidiaries. In addition, we consolidate any variable interest entity (“VIE”) in which we are the primary beneficiary. Additional information on these VIEs is provided in Note 2 and Note 10 of our Annual Report on Form 10-K (the “2017(“2022 Form 10-K”) for the year ended September 30, 2017,2022, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) and in Note 9 herein.of this Quarterly Report on Form 10-Q (“Form 10-Q”). When we do not have a controlling interest in an entity, but we exert significant influence over the entity, we apply the equity method of accounting. All material intercompany balances and transactions have been eliminated in consolidation.


Accounting estimates and assumptions


Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) but is not required for interim reporting purposes has been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of theour consolidated financial position and results of operations for the periods presented.


The nature of our business is such that the results of any interim period are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statementsConsolidated Financial Statements and notesNotes thereto included in our 20172022 Form 10-K. To prepare condensed consolidated financial statements in conformityaccordance with GAAP, we must make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements.


Reclassifications


Certain prior period amounts have been reclassified to conform to the current period’s presentation.




NOTE 2 – UPDATE OF SIGNIFICANT ACCOUNTING POLICIES


A summary of our significant accounting policies is included in Note 2 of our 20172022 Form 10-K. There have been no significant changes in our significant accounting policies since September 30, 2017.2022.


Loans to financial advisors, net

As more fully described in Note 2 of our 2017 Form 10-K, we offer loans to financial advisors and certain other key revenue producers, primarily for recruiting, transitional cost assistance, and retention purposes. We present the outstanding balance of “Loans to financial advisors, net” on our Condensed Consolidated Statements of Financial Condition, net of the allowance for doubtful accounts. Of the gross balance outstanding, the portion associated with financial advisors who are no longer affiliated with us was approximately $26 million and $22 million at December 31, 2017 and September 30, 2017, respectively. Our allowance for doubtful accounts was approximately $9 million and $8 million at December 31, 2017 and September 30, 2017, respectively.

8
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






Recent accounting developments

Accounting guidance not yet adopted

Revenue recognition - In May 2014, the FASB issued new guidance regarding revenue recognition (ASU 2014-09). The new guidance is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. It also provides guidance on accounting for certain contract costs and requires additional disclosures. This new revenue recognition guidance, including subsequent amendments, is first effective for our fiscal year beginning on October 1, 2018 and allows for full retrospective adoption or modified retrospective adoption. Although, early adoption is permitted for fiscal years beginning after December 15, 2016, we do not plan to early adopt. Upon adoption, we plan to use a modified retrospective approach, with a cumulative effect adjustment to opening retained earnings. Our implementation efforts include identifying revenues and costs within the scope of the standard, analyzing contracts and reviewing potential changes to our existing revenue recognition accounting policies. Based on our implementation efforts to date, we expect that we will be required to change our current presentation of certain costs from a net presentation within revenues to a gross presentation, particularly with respect to merger & acquisitions advisory transactions and underwriting transactions. We are still evaluating the impact the adoption of this new guidance will have on our financial position and results of operations. We are also still evaluating the impact to our disclosures as a result of adopting this new guidance.

Financial instruments - In January 2016, the FASB issued new guidance related to the accounting for financial instruments (ASU 2016-01). Among its provisions, this new guidance:

Requires equity investments (other than those accounted for under the equity method or those that result from the consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any.
Simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment.
Eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.
Requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes.
Requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option.
Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.
Clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

This new guidance is effective for our fiscal year beginning on October 1, 2018, generally under a modified retrospective approach, with the exception of the amendments related to equity investments without a readily determinable fair value and the use of an exit price notion to measure financial instruments for disclosure purposes, which will be applied prospectively as of the date of adoption. Early adoption is generally not permitted. We are evaluating the impact, if any, the adoption of this new guidance will have on our financial position and results of operations.

Lease accounting - In February 2016, the FASB issued new guidance related to the accounting for leases (ASU 2016-02). The new guidance requires the recognition of assets and liabilities on the balance sheet related to the rights and obligations created by lease agreements with terms greater than twelve months, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease will primarily depend upon its classification as a finance or operating lease. The new guidance requires new disclosures to help financial statement users better understand the amount, timing and cash flows arising from leases. This new guidance, including subsequent amendments, is first effective for our fiscal year beginning on October 1, 2019. Although early adoption is permitted, we do not plan to early adopt. Upon adoption, we will use a modified retrospective approach, with a cumulative effect adjustment to opening retained earnings. Our implementation efforts include reviewing existing leases and service contracts, which may include embedded leases. This new guidance will impact our financial position and results of operations. We are evaluating the magnitude of such impact.

Credit losses - In June 2016, the FASB issued new guidance related to the measurement of credit losses on financial instruments (ASU 2016-13). The amended guidance involves several aspects of the accounting for credit losses related to certain financial instruments including assets measured at amortized cost, available-for-sale debt securities and certain off-balance sheet commitments. The new guidance broadens the information that an entity must consider in developing its estimated credit losses expected to occur over the

9
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





remaining life of assets measured either collectively or individually to include historical experience, current conditions and reasonable and supportable forecasts, replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (“CECL”) model.  The new guidance expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating credit losses and requires new disclosures of the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. This new guidance is first effective for our fiscal year beginning October 1, 2020 and will be adopted under a modified retrospective approach. Early adoption is permitted although not prior to our fiscal year beginning October 1, 2019. We have begun our implementation and evaluation efforts by establishing a cross-functional team to assess the required changes to our credit loss estimation methodologies and systems, as well as determine additional data and resources required to comply with the new guidance. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of operations, which will depend on, among other things, the current and expected macroeconomic conditions and the nature and characteristics of financial assets held by us on the date of adoption.

Statement of Cash Flows (classification of certain cash receipts and cash payments) - In August 2016, the FASB issued amended guidance related to the Statement of Cash Flows (ASU 2016-15). The amended guidance involves several aspects of the classification of certain cash receipts and cash payments including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. This amended guidance is first effective for our fiscal year beginning October1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. The adoption of this new guidance will impact our Statement of Cash Flows and will not have an impact on our financial position and results of operations.

Income tax impact of intra-entity transfers of assets - In October 2016, the FASB issued new guidance related to the accounting for income tax consequences of intra-entity transfers of assets (ASU 2016-16). Current GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset has been sold to an outside party. Under this new guidance, an entity should recognize the income tax consequences of an inter-entity transfer of an asset when the transfer occurs. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of operations.

Statement of Cash Flows (restricted cash) - In November 2016, the FASB issued new guidance related to the classification and presentation of changes in restricted cash on the Statement of Cash Flows (ASU 2016-18). Current GAAP does not provide guidance to address how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. Under the new guidance, an entity should present in their Statement of Cash Flows the changes during the period in the total of cash and cash equivalents and amounts described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and ending-of-period total amounts shown on the statement of cash flows. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted under a retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our Consolidated Statements of Cash Flows.

Definition of a business - In January 2017, the FASB issued amended guidance related to the definition of a business (ASU 2017-01). This amended guidance clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. Given the adoption of this amended guidance is dependent upon the nature of future events and circumstances, we are unable to estimate the impact, if any, the adoption of this new guidance will have on our financial position and results of operations.

Goodwill - In January 2017, the FASB issued amended guidance to simplify the subsequent measurement of goodwill, eliminating “Step 2” from the goodwill impairment test (ASU 2017-04). In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this amended guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and subsequently recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is first effective for our fiscal year beginning October 1, 2019 and will be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We will adopt this simplification guidance in the earliest period it applies to our facts and circumstances.

10
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Callable debt securities - In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date instead of the contractual life of the security (ASU 2017-08). Discounts on callable debt securities will continue to be amortized to the contractual maturity date. This guidance is first effective for our fiscal year beginning on October 1, 2019 and will be adopted using a modified retrospective approach. Early adoption is permitted. We are evaluating the impact the adoption of this new guidance will have on our financial position and results of operations.

Share-based payment awards - In May 2017, the FASB issued amended guidance that clarifies when changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting (ASU 2017-09). The amended guidance states an entity should account for the effects of a modification unless certain criteria are met which include that the modified award has the same fair value, vesting conditions and classification as the original award. This amended guidance is first effective for our fiscal year beginning October 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. Given that this guidance applies to specific transactions and would only become relevant in certain circumstances, we are unable to estimate the impact, if any, this amended guidance may have on our financial position and results of operations.

Derivatives and hedging (accounting for hedging activities) - In August 2017, the FASB issued new guidance amending its hedge accounting model (ASU 2017-12). Among other things, the new guidance:

Expands the ability to hedge nonfinancial and financial risk components.
Reduces complexity in fair value hedges of interest rate risk.
Eliminates the requirement to separately measure and report hedge ineffectiveness.
Generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item.
Modifies accounting for components excluded from the assessment of hedge effectiveness.
Eases certain documentation and hedge effectiveness assessment requirements.

The new guidance is first effective for our fiscal year beginning October 1, 2019 and the amendments are required to be applied to cash flow and net investment hedges that exist on the date of adoption on a modified retrospective basis. Changes to presentation and disclosure requirements are only required on a prospective basis. Early adoption is permitted. We are considering whether we will early adopt this new guidance and the timing thereof, as well as the impact it will have on our financial position and results of operations.


NOTE 3 – ACQUISITIONS

Acquisitions completed during fiscal year 2018

In November 2017, we completed our acquisition of 100% of the outstanding shares of Scout Investments, Inc. (the “Scout Group”), an asset management and distribution entity, from UMB Financial Corporation. The Scout Group includes Scout Investments (“Scout”) and its Reams Asset Management division (“Reams”), as well as Scout Distributors. The addition of Scout, an equity asset manager, and Reams, an institutional-focused fixed income specialist, broadened the investment solutions available to our clients and has been integrated into our Asset Management segment. For purposes of certain acquisition-related financial reporting requirements, the Scout Group acquisition was not considered a material acquisition. We accounted for this acquisition under the acquisition method of accounting with the assets and liabilities of the Scout Group recorded as of the acquisition date at their respective fair values in our condensed consolidated financial statements. The Scout Group’s results of operations have been included in our results prospectively from November 17, 2017.

Acquisition-related expenses

The “Acquisition-related expenses” presented in our Condensed Consolidated Statements of Income and Comprehensive Income for
the three months ended December 31, 2017 pertain to certain incremental expenses incurred in connection with the Scout Group acquisition. Acquisition-related expenses for the three months ended December 31, 2016 primarily related to our fiscal year 2016 acquisitions of the U.S. Private Client Services unit of Deutsche Bank Wealth Management (“Alex. Brown”) and MacDougall, MacDougall & MacTier Inc. (“3Macs”), which are described further in Note 3 of our 2017 Form 10-K.







11
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The table below presents a summary of acquisition-related expenses incurred in each respective period.
  Three months ended December 31,
$ in thousands 2017 2016
Legal and regulatory $2,281
 $553
Severance 990
 4,803
Information systems integration costs 162
 1,205
Acquisition and integration-related incentive compensation costs —
 5,474
Early termination costs of assumed contracts —
 1,324
Post-closing purchase price contingency —
 (2,251)
All other 494
 1,558
Total acquisition-related expenses $3,927
 $12,666


12
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





NOTE 4 – FAIR VALUE


Our “Financial instruments owned”instruments” and “Financial instruments sold, but not yet purchased”instrument liabilities” on our Condensed Consolidated Statements of Financial Condition are recorded at fair value under GAAP.value. For further information about such instruments and our significant accounting policies related to fair value, see NoteNotes 2 and Note 4 of our 20172022 Form 10-K. There have been no material changes to our valuation methodologies or our fair value accounting policies since our year ended September 30, 2017.

The following tables below presentspresent assets and liabilities measured at fair value on a recurring and nonrecurring basis. Netting adjustments represent the impact of counterparty and collateral netting on our derivative balances included inon our Condensed Consolidated Statements of Financial Condition. See Note 65 for additional information.
$ in millionsLevel 1Level 2Level 3 Netting
adjustments		Balance as of March 31, 2023
Assets at fair value on a recurring basis:    
Trading assets:     
Municipal and provincial obligations$— $177 $— $— $177 
Corporate obligations17 520 — — 537 
Government and agency obligations40 83 — — 123 
Agency mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMOs”) and asset-backed securities (“ABS”)— 27 — — 27 
Non-agency CMOs and ABS— 106 — — 106 
Total debt securities57 913 — — 970 
Equity securities8 2 — — 10 
Brokered certificates of deposit1 9 — — 10 
Other— — 3 — 3 
Total trading assets66 924 3 — 993 
Available-for-sale securities (1)
1,021 8,752 — — 9,773 
Derivative assets:
Interest rate9 361 — (279)91 
Total derivative assets9 361 — (279)91 
All other investments:
Government and agency obligations (2)
97 — — — 97 
Other93 1 28 — 122 
Total all other investments190 1 28 — 219 
Other assets - fractional shares92 — — — 92 
Subtotal1,378 10,038 31 (279)11,168 
Other investments - private equity - measured at net asset value (“NAV”)99 
Total assets at fair value on a recurring basis$1,378 $10,038 $31 $(279)$11,267 
Liabilities at fair value on a recurring basis:
Trading liabilities:
Municipal and provincial obligations$1 $— $— $— $1 
Corporate obligations— 563 — — 563 
Government and agency obligations99 2 — — 101 
Non-agency CMOs and ABS— 4 — — 4 
Total debt securities100 569 — — 669 
Equity securities41 — — — 41 
Total trading liabilities141 569 — — 710 
Derivative liabilities:
Interest rate8 408 — (78)338 
Foreign exchange— 9 — — 9 
Other— — 4 — 4 
Total derivative liabilities8 417 4 (78)351 
Other payables - fractional shares92 — — — 92 
Total liabilities at fair value on a recurring basis$241 $986 $4 $(78)$1,153 
$ in thousands Quoted prices
in active
markets for
identical
instruments
(Level 1)		 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Netting
adjustments
 Balance as of
December 31,
2017
Assets at fair value on a recurring basis          
Trading instruments          
Municipal and provincial obligations $122
 $197,580
 $—
 $—
 $197,702
Corporate obligations 11,069
 33,723
 —
 —
 44,792
Government and agency obligations 6,376
 17,929
 —
 —
 24,305
Agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”) 2,128
 214,680
 —
 —
 216,808
Non-agency CMOs and asset-backed securities (“ABS”) —
 52,244
 5
 —
 52,249
Total debt securities 19,695

516,156
 5
 —
 535,856
Equity securities 18,497
 803
 —
 —
 19,300
Brokered certificates of deposit —
 32,173
 —
 —
 32,173
Other 27
 7,511
 2,712
 —
 10,250
Total trading instruments 38,219
 556,643
 2,717
 —
 597,579
Available-for-sale securities  
  
  
  
  
Agency MBS and CMOs —
 2,285,051
 —
 —
 2,285,051
Other securities 787
 —
 —
 —
 787
Auction rate securities (“ARS”) preferred securities —
 —
 107,483
 —
 107,483
Total available-for-sale securities 787
 2,285,051
 107,483
 —
 2,393,321
Derivative assets          
Interest rate contracts          
Matched book —
 263,851
 —
 —
 263,851
Other —
 58,660
 —
 (30,375) 28,285
Foreign exchange contracts —
 4
 —
 —
 4
Total derivative assets —
 322,515
 —
 (30,375) 292,140
Private equity investments (1)
         

Not measured at NAV —
 —
 88,810
 —
 88,810
Measured at NAV         100,223
Total private equity investments —
 —
 88,810
 —
 189,033
Other investments (2)
 263,978
 859
 333
 —
 265,170
Total assets at fair value on a recurring basis $302,984

$3,165,068

$199,343

$(30,375)
$3,737,243
           
Assets at fair value on a nonrecurring basis    
  
  
  
Bank loans, net  
  
  
  
  
Impaired loans $—
 $16,347
 $23,418
 $—
 $39,765
Loans held for sale (3)
 —
 69,057
 —
 —
 69,057
Total assets at fair value on a nonrecurring basis $—
 $85,404
 $23,418
 $—
 $108,822
 
(continued on next page)








13
9
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


$ in millionsLevel 1Level 2Level 3 Netting
adjustments		Balance as of September 30, 2022
Assets at fair value on a recurring basis:    
Trading assets:    
Municipal and provincial obligations$— $269 $— $— $269 
Corporate obligations16 579 — — 595 
Government and agency obligations86 85 — — 171 
Agency MBS, CMOs, and ABS— 123 — — 123 
Non-agency CMOs and ABS— 61 — — 61 
Total debt securities102 1,117 — — 1,219 
Equity securities20 — — — 20 
Brokered certificates of deposit— 30 — — 30 
Other— — 1 — 1 
Total trading assets122 1,147 1 — 1,270 
Available-for-sale securities (1)
986 8,899 — — 9,885 
Derivative assets:
Interest rate42 484 — (348)178 
Foreign exchange— 10 — — 10 
Total derivative assets42 494 — (348)188 
All other investments:
Government and agency obligations (2)
79 — — — 79 
Other92 2 29 — 123 
Total all other investments171 2 29 — 202 
Other assets - fractional shares78 — — — 78 
Subtotal1,399 10,542 30 (348)11,623 
Other investments - private equity - measured at NAV90 
Total assets at fair value on a recurring basis$1,399 $10,542 $30 $(348)$11,713 
Liabilities at fair value on a recurring basis:
Trading liabilities:
Municipal and provincial obligations$5 $— $— $— $5 
Corporate obligations— 555 — — 555 
Government and agency obligations249 — — — 249 
Total debt securities254 555 — — 809 
Equity securities27 — — — 27 
Total trading liabilities281 555 — — 836 
Derivative liabilities:
Interest rate40 547 — (65)522 
Foreign exchange— 5 — — 5 
Other— — 3 — 3 
Total derivative liabilities40 552 3 (65)530 
Other payables - fractional shares78 — — — 78 
Total liabilities at fair value on a recurring basis$399 $1,107 $3 $(65)$1,444 



(1)    Our available-for-sale securities primarily consist of agency MBS, agency CMOs and U.S. Treasury securities (“U.S. Treasuries”). See Note 4 for further information.

(2)    These assets are primarily comprised of U.S. Treasuries purchased to meet certain deposit requirements with clearing organizations.

10
(continued from previous page)
           
$ in thousands 
Quoted prices
in active
markets for
identical
instruments
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Netting
adjustments
 Balance as of
December 31,
2017
Liabilities at fair value on a recurring basis          
Trading instruments sold but not yet purchased          
Municipal and provincial obligations $742
 $3,082
 $—
 $—
 $3,824
Corporate obligations 608
 7,394
 —
 —
 8,002
Government obligations 183,510
 —
 —
 —
 183,510
Agency MBS and CMOs 328
 —
 —
 —
 328
Non-agency MBS and CMOs —
 —
 —
 —
 —
Total debt securities 185,188
 10,476
 —
 —
 195,664
Equity securities 16,294
 4
 —
 —
 16,298
Other 4
 —
 1,058
 —
 1,062
Total trading instruments sold but not yet purchased 201,486
 10,480
 1,058
 —
 213,024
Derivative liabilities          
Interest rate contracts          
Matched book —
 263,851
 —
 —
 263,851
Other —
 86,815
 —
 (42,284) 44,531
Foreign exchange contracts —
 19,710
 —
 —
 19,710
Deutsche Bank restricted stock unit (“DBRSU”) obligation (equity) —
 28,413
 —
 —
 28,413
Total derivative liabilities —
 398,789
 —
 (42,284) 356,505
Total liabilities at fair value on a recurring basis $201,486

$409,269

$1,058

$(42,284)
$569,529

(1)Of the total private equity investments, the portion we owned was $138 million as of December 31, 2017. The portion of the private equity investments we did not own was $51 million as of December 31, 2017 and was included as a component of noncontrolling interests in our Condensed Consolidated Statements of Financial Condition.

(2)Includes $45 million of financial instruments that are related to obligations to perform under certain deferred compensation plans and Deutsche Bank AG (“DB”) shares with a fair value of $21 million as of December 31, 2017 which we hold as an economic hedge against the DBRSU obligation. See Notes 2 and 20 in our 2017 Form 10-K for additional information.

(3)Loans classified as held for sale recorded at a fair value lower than cost.

14
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






$ in thousands Quoted prices
in active
markets for
identical
instruments
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Significant
unobservable
inputs
(Level 3)		 Netting
adjustments		 Balance as of
September 30,
2017
Assets at fair value on a recurring basis          
Trading instruments          
Municipal and provincial obligations $83
 $221,884
 $—
 $—
 $221,967
Corporate obligations 9,361
 81,577
 —
 —
 90,938
Government and agency obligations 6,354
 28,977
 —
 —
 35,331
Agency MBS and CMOs 913
 133,070
 —
 —
 133,983
Non-agency CMOs and ABS —
 28,442
 5
 —
 28,447
Total debt securities 16,711
 493,950
 5
 —
 510,666
Equity securities 16,090
 389
 —
 —
 16,479
Brokered certificates of deposit —
 31,492
 —
 —
 31,492
Other 32
 —
 5,594
 —
 5,626
Total trading instruments 32,833
 525,831
 5,599
 —
 564,263
Available-for-sale securities  
  
  
  
  
Agency MBS and CMOs —
 2,081,079
 —
 —
 2,081,079
Other securities 1,032
 —
 —
 —
 1,032
ARS preferred securities —
 —
 106,171
 —
 106,171
Total available-for-sale securities 1,032
 2,081,079
 106,171
 —
 2,188,282
Derivative assets          
Interest rate contracts          
Matched book —
 288,035
 —
  
—
 288,035
Other —
 86,436
 —
 (55,728) 30,708
Foreign exchange contracts —
 32
 —
 —
 32
Total derivative assets —

374,503

—

(55,728)
318,775
Private equity investments (1)
         

Not measured at NAV —
 —
 88,885
 —
 88,885
Measured at NAV         109,894
Total private equity investments —
 —
 88,885
 —
 198,779
Other investments (2)
 220,312
 332
 336
 —
 220,980
Total assets at fair value on a recurring basis $254,177
 $2,981,745
 $200,991
 $(55,728) $3,491,079
           
Assets at fair value on a nonrecurring basis    
  
  
  
Bank loans, net          
Impaired loans $—
 $17,474
 $23,994
 $—
 $41,468
Loans held for sale (3)
 —
 11,285
 —
 —
 11,285
Total bank loans, net —
 28,759
 23,994
 —
 52,753
Other assets: other real estate owned —
 880
 —
 —
 880
Total assets at fair value on a nonrecurring basis $—
 $29,639
 $23,994
 $—
 $53,633
           
(continued on next page)

15
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





(continued from previous page)
           
$ in thousands 
Quoted prices
in active
markets for
identical
instruments
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Netting
adjustments
 Balance as of
September 30,
2017
Liabilities at fair value on a recurring basis    
  
  
  
Trading instruments sold but not yet purchased    
  
  
  
Municipal and provincial obligations $304
 $—
 $—
 $—
 $304
Corporate obligations 1,286
 35,272
 —
 —
 36,558
Government obligations 167,622
 —
 —
 —
 167,622
Agency MBS and CMOs 2,477
 —
 —
 —
 2,477
Non-agency MBS and CMOs —
 5,028
 —
 —
 5,028
Total debt securities 171,689
 40,300
 —
 —
 211,989
Equity securities 8,118
 1,342
 —
 —
 9,460
Total trading instruments sold but not yet purchased 179,807
 41,642
 —
 —
 221,449
Derivative liabilities          
Interest rate contracts         

Matched book —
 288,035
 —
 —
 288,035
Other —
 101,893
 —
 (59,410) 42,483
Foreign exchange contracts —
 646
 —
 —
 646
DBRSU obligation (equity) —
 25,800
 —
 —
 25,800
Total derivative liabilities —
 416,374
 —
 (59,410) 356,964
Total liabilities at fair value on a recurring basis $179,807
 $458,016
 $—
 $(59,410) $578,413

(1)Of the total private equity investments, the portion we owned was $145 million as of September 30, 2017. The portion of the private equity investments we did not own was $54 million as of September 30, 2017, and was included as a component of noncontrolling interests in our Condensed Consolidated Statements of Financial Condition.

(2)Includes $44 million of financial instruments that are related to obligations to perform under certain deferred compensation plans and DB shares with a fair value of $19 million as of September 30, 2017, which we hold as an economic hedge against the DBRSU obligation. See Notes 2 and 20 in our 2017 Form 10-K for additional information.

(3)Loans classified as held for sale recorded at a fair value lower than cost.

Transfers between levels

We had $1 million in transfers of financial instruments from Level 1 to Level 2 during both the three months ended December 31, 2017 and 2016. These transfers were a result of decreased market activity in these instruments. There were no transfers from Level 2 to Level 1 during the three months ended December 31, 2017 and $1 million in transfers of financial instruments from Level 2 to Level 1 during the three months ended December 31, 2016. These transfers were a result of increased market activity in these instruments. Our policy is to treat transfers between levels of the fair value hierarchy as having occurred at the end of the reporting period.


16
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Changes in Level 3 recurring fair value measurements


The following tables below present the changes in fair value for Level 3 assets and liabilities measured at fair value on a recurring basis. The realized and unrealized gains and losses in the tables below may include changes in fair value that were attributable to both observable and unobservable inputs. Our policy isIn the following tables, gains/(losses) on trading and derivative instruments are reported in “Principal transactions” and gains/(losses) on other investments are reported in “Other” revenues on our Condensed Consolidated Statements of Income and Comprehensive Income.
Three months ended March 31, 2023
Level 3 instruments at fair value
Financial assetsFinancial liabilities
Trading assetsOther investmentsDerivative liabilities
$ in millionsOtherAll otherOther
Fair value beginning of period$6 $30 $(4)
Total gains/(losses) included in earnings— (2)— 
Purchases and contributions11 — — 
Sales and distributions(14)— — 
Transfers:  
Into Level 3— — — 
Out of Level 3— — — 
Fair value end of period$3 $28 $(4)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period$— $(2)$— 
Six months ended March 31, 2023
Level 3 instruments at fair value
Financial assetsFinancial liabilities
Trading assetsOther investmentsDerivative liabilities
$ in millionsOtherAll otherOther
Fair value beginning of period$1 $29 $(3)
Total gains/(losses) included in earnings— (1)(1)
Purchases and contributions36 — — 
Sales and distributions(34)— — 
Transfers:
Into Level 3— — — 
Out of Level 3— — — 
Fair value end of period$3 $28 $(4)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period$— $(1)$(1)

11
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to treat transfers between levels of the fair value hierarchy as having occurred at the end of the reporting period.
Three months ended December 31, 2017
Level 3 instruments at fair value
  Financial assets 
Financial
liabilities
  Trading instruments Available-for-sale securities Private equity and other investments Trading instruments
$ in thousands 
Non-agency
CMOs & ABS
 Other 
ARS - preferred
securities
 
Private
equity
investments
 
Other
investments
 Other
Fair value beginning of period $5
 $5,594
 $106,171
 $88,885
 $336
 $—
Total gains/(losses) for the period    
  
  
  
  
Included in earnings —
 (1,207) —
 2
 (3) (1,058)
Included in other comprehensive income —
 —
 1,312
 —
 —
 —
Purchases and contributions —
 20,279
 —
 —
 —
 —
Sales —
 (21,954) —
 (77) —
 —
Distributions —
 —
 —
 —
 —
 —
Transfers  
  
  
  
  
  
Into Level 3 —
 —
 —
 —
 —
 —
Out of Level 3 —
 —
 —
 —
 —
 —
Fair value end of period $5
 $2,712
 $107,483
 $88,810
 $333
 $(1,058)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $—
 $(243) $1,312
 $—
 $(3) $(1,058)
Three months ended December 31, 2016 Level 3 instruments at fair value
  Financial assets 
Financial
liabilities
  Trading instruments Available-for-sale securities Private equity and other investments Trading instruments
$ in thousands 
Non-agency
CMOs &
ABS
 Other 
ARS –
municipals obligations
 
ARS -
preferred
securities
 
Private
equity
investments
 
Other
investments
 Other
Fair value beginning of period $7
 $6,020
 $25,147
 $100,018
 $83,165
 $441
 $—
Total gains/(losses) for the period          
  
  
Included in earnings —
 (2,589) —
 1
 301
 (8) (1,792)
Included in other comprehensive income —
 —
 217
 3,857
 —
 —
 —
Purchases and contributions —
 18,683
 —
 —
 —
 —
 —
Sales —
 (11,062) —
 (23) —
 (15) —
Distributions —
 —
 —
 —
 —
 —
 —
Transfers              
Into Level 3 —
 —
 —
 —
 —
 —
 —
Out of Level 3 —
 —
 —
 —
 —
 (195) —
Fair value end of period $7
 $11,052
 $25,364
 $103,853
 $83,466
 $223
 $(1,792)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period $—
 $(124) $217
 $3,856
 $301
 $—
 $(1,792)
Condensed Consolidated Financial Statements (Unaudited)

Three months ended March 31, 2022
Level 3 instruments at fair value
Financial assetsFinancial liabilities
 Trading assetsDerivative assetsOther investmentsTrading liabilities
$ in millionsOtherOtherAll otherOther
Fair value beginning of period$2 $1 $98 $— 
Total gains/(losses) included in earnings— (1)— (1)
Purchases and contributions29 — 7 — 
Sales, distributions, and deconsolidations(18)— (40)— 
Transfers:
Into Level 3— — — — 
Out of Level 3— — (12)— 
Fair value end of period$13 $— $53 $(1)
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period$(1)$(1)$— $(1)
Six months ended March 31, 2022
Level 3 instruments at fair value
Financial assetsFinancial liabilities
Trading assetsOther investmentsTrading liabilitiesDerivative liabilities
$ in millionsOtherAll otherOtherOther
Fair value beginning of period$14 $98 $— $(1)
Total gains/(losses) included in earnings2 — (1)1 
Purchases and contributions54 7 — — 
Sales, distributions, and deconsolidations(57)(40)— — 
Transfers:
Into Level 3— — — — 
Out of Level 3— (12)— — 
Fair value end of period$13 $53 $(1)$— 
Unrealized gains/(losses) for the period included in earnings for instruments held at the end of the reporting period$(1)$— $(1)$— 

As of both DecemberMarch 31, 20172023 and September 30, 2017, 10%2022, 14% of our assets and 2% of our liabilities were instrumentsmeasured at fair value on a recurring basis and Level 3 assets represented less than 1% of our assets measured at fair value on a recurring basis.  Instruments measured at fair value on a recurring basis categorized as Level 3 as of December 31, 2017 and September 30, 2017 represented 5% and 6%, respectively, of our assets measured at fair value. Level 3 instruments as a percentage of total financial instruments decreased as compared to September 30, 2017, primarily as a result of the increase in total assets measured at fair value since September 30, 2017.


17
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The following table presents the gains/(losses) related to Level 3 recurring fair value measurements included in our Condensed Consolidated Statements of Income and Comprehensive Income.
$ in thousands Net trading profit Other revenues Other comprehensive income
For the three months ended December 31, 2017      
Total gains/(losses) included in earnings $(2,265) $(1) $1,312
Unrealized gains/(losses) for assets held at the end of the reporting period $(1,301) $(3) $1,312
       
For the three months ended December 31, 2016      
Total gains/(losses) included in earnings $(4,381) $294
 $4,074
Unrealized gains/(losses) for assets held at the end of the reporting period $(1,916) $301
 $4,073

Quantitative information about level 3 fair value measurements

The tables below present the valuation techniques and significant unobservable inputs used in the valuation of a significant majority of our financial instruments classified as level 3. These inputs represent those that a market participant would take into account when pricing these instruments.
Level 3 financial instrument
$ in thousands
 Fair value at December 31, 2017 Valuation technique(s) Unobservable input 
Range
(weighted-average)
Recurring measurements        
ARS preferred securities $107,483
 Discounted cash flow Average discount rate 5.76% - 7.03% (6.32%)
   
   
Average interest rates applicable to future interest income on the securities (1)
 2.97% - 3.96% (3.12%)
   
   
Prepayment year (2)
 2018 - 2021 (2021)
Private equity investments (not measured at NAV) $68,454
 Income or market approach    
    Scenario 1 - income approach - discounted cash flow Discount rate 13% - 25% (22.4%)
      Terminal growth rate of cash flows 3% - 3% (3%)
      Terminal year 2020 - 2042 (2021)
    Scenario 2 - market approach - market multiple method EBITDA Multiple 5.25 - 7.0 (5.8)
       Weighting assigned to outcome of scenario 1/scenario 2 87%/13%
  $20,356
 
Transaction price or other investment-specific events (3)
 
Not meaningful (3)
 
Not meaningful (3)
Nonrecurring measurements      
Bank loans: impaired loans - residential $20,421
 Discounted cash flow Prepayment rate 7 yrs - 12 yrs (10.3 yrs)
Bank loans: impaired loans - corporate $2,997
 
Appraisal or discounted cash flow value (4)
 
Not meaningful (4)
 
Not meaningful (4)


(continued on next page)


















18
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





(continued from previous page)
Level 3 financial instrument
$ in thousands
 
Fair value at
September 30,
2017
 Valuation technique(s) Unobservable input Range (weighted-average)
Recurring measurements      
ARS preferred securities $106,171
 Discounted cash flow Average discount rate 5.46% - 6.81% (6.03%)
   
   
Average interest rates applicable to future interest income on the securities (1)
 2.58% - 3.44% (2.72%)
   
   
Prepayment year (2)
 2017 - 2021 (2021)
Private equity investments (not measured at NAV) $68,454
 Income or market approach:    
    Scenario 1 - income approach - discounted cash flow Discount rate 13% - 25% (22.4%)
      Terminal growth rate of cash flows 3% - 3% (3%)
      Terminal year 2020 - 2042 (2021)
    Scenario 2 - market approach - market multiple method EBITDA Multiple 5.25 - 7.0 (5.8)
       Weighting assigned to outcome of scenario 1/scenario 2 87%/13%
  $20,431
 
Transaction price or other investment-specific events (3)
 
Not meaningful (3)
 
Not meaningful (3)
Nonrecurring measurements  
      
Bank loans: impaired loans - residential $20,736
 Discounted cash flow Prepayment rate 7 yrs. - 12 yrs. (10.4 yrs.)
Bank loans: impaired loans - corporate $3,258
 
Appraisal or discounted cash flow value (4)
 
Not meaningful (4)
 
Not meaningful (4)


(1)Future interest rates are projected based upon a forward interest rate path, plus a spread over such projected base rate that is applicable to each future period for each security within this portfolio segment.  The interest rates presented represent the average interest rate over all projected periods for securities within the portfolio segment.

(2)Assumed calendar year of at least a partial redemption of the outstanding security by the issuer.

(3)Certain private equity investments are valued initially at the transaction price until either our periodic review, significant transactions occur, new developments become known, or we receive information from the fund manager that allows us to update our proportionate share of net assets, when any of which indicate that a change in the carrying values of these investments is appropriate.

(4)The valuation techniques used for the impaired corporate loan portfolio are appraisals less selling costs for the collateral dependent loans and discounted cash flows for impaired loans that are not collateral dependent.


Qualitative disclosure about unobservable inputs

For our recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs are described below:

Auction rate securities:

One of the significant unobservable inputs used in the fair value measurement of auction rate securities presented within our available-for-sale securities portfolio relates to judgments regarding whether the level of observable trading activity is sufficient to conclude markets are active.  Where insufficient levels of trading activity are determined to exist as of the reporting date, then management’s assessment of how much weight, if any, to apply to trading prices in inactive markets versus management’s own valuation models could significantly impact the valuation conclusion.  The valuation of the securities impacted by changes in management’s assessment of market activity levels could be either higher or lower, depending upon the relationship of the inactive trading prices compared to the outcome of management’s internal valuation models.

The future interest rate and maturity assumptions impacting the valuation of the auction rate securities are directly related. These securities generally have embedded penalty interest rate provisions in the event auctions fail to set the security’s interest rate. These penalty rates are based upon a stated interest rate spread over what is typically a short-term base interest rate index.  As short-term

19
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





interest rates rise, the penalty rate that is specified in the security increases.  Changes in interest rates impact the fair value of our ARS portfolio, as we estimate that at some level of increase in short-term interest rates, issuers of the securities will have the economic incentive to refinance (and thus prepay) the securities.  The faster and steeper short-term interest rates rise, the earlier prepayments will likely occur and the higher the fair value of the security. Therefore, the short-term interest rate assumption directly impacts the input related to the timing of any projected prepayment. 

Private equity investments:

The significant unobservable inputs used in the fair value measurement of private equity investments relate to the financial performance of the investment entity and the market’s required return on investments from entities in industries in which we hold investments.  Significant increases/(decreases) in our investment entities’ future economic performance will have a corresponding increase/(decrease) on the valuation results.  The value of our investment moves inversely with the market’s expectation of returns from such investments.  Should the market require higher returns from industries in which we are invested, all other factors held constant, our investments will decrease in value.  Should the market accept lower returns from industries in which we are invested, all other factors held constant, our investments will increase in value.


Investments in private equity measured at net asset value per share


As more fully described in Note 2 of our 20172022 Form 10-K, as a practical expedient, we utilize net asset value (“NAV”)NAV or its equivalent to determine the recorded value of a portion of our private equity investments portfolio. We utilize NAV when the fund investment does not have a readily determinable fair value and the NAV of the fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.


Our private equity portfolio as of DecemberMarch 31, 20172023 primarily included various direct and third party privateinvestments in third-party funds, including growth equity, investments and various private equity funds which we sponsor. The portfolio is primarily invested in a broad range of industries including leveraged buyouts, growth capital, distressed capital, venture capital, and mezzanine capital.
Due to the closed-end nature of certain of ourlending fund investments, suchinvestments. Our investments cannot be redeemed directly with the funds. Our investment isinvestments are monetized through distributions received through the liquidation of the underlying assets of those funds. We anticipate 90%fund investments, the timing of these underlying assets will be liquidated over a period of five years or less, with the remaining 10%which is uncertain.

12
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to be liquidated over a period of nine years.Condensed Consolidated Financial Statements (Unaudited)

The following table below presents the recorded value and unfunded commitments related to our private equity investments portfolio.
$ in millionsRecorded valueUnfunded commitment
March 31, 2023
Private equity investments measured at NAV$99 $35 
Private equity investments not measured at NAV5 
Total private equity investments
$104 
September 30, 2022
Private equity investments measured at NAV$90 $39 
Private equity investments not measured at NAV5 
Total private equity investments$95 
    Unfunded commitment
$ in thousands Recorded value RJF Noncontrolling interests Total
December 31, 2017        
Private equity investments measured at NAV $100,223
 $20,739
 $2,256
 $22,995
Private equity investments not measured at NAV 88,810
      
Total private equity investments 
 $189,033
      
         
September 30, 2017        
Private equity investments measured at NAV $109,894
 $20,973
 $2,273
 $23,246
Private equity investments not measured at NAV 88,885
      
Total private equity investments $198,779
      


Financial instruments measured at fair value on a nonrecurring basis
Of
The following table presents assets measured at fair value on a nonrecurring basis along with the total private equity investments,valuation techniques and significant unobservable inputs used in the portions we owned were $138 million and $145 million as of December 31, 2017 and September 30, 2017, respectively.The portionsvaluation of the private equity investments we did not own were $51 million and $54 millionassets classified as of December 31, 2017 and September 30, 2017, respectively, and were included aslevel 3. These inputs represent those that a component of noncontrolling interests in our Condensed Consolidated Statements of Financial Condition.

Many ofmarket participant would take into account when pricing these fund investments meet the definition of prohibited “covered funds” as definedinstruments. Weighted averages are calculated by weighting each input by the Volcker Rulerelative fair value of the Dodd-Frank Wall Street Reformrelated financial instrument.
$ in millionsLevel 2Level 3Total fair valueValuation technique(s)Unobservable inputRange
(weighted-average)
March 31, 2023
Bank loans:
Residential mortgage loans$2 $9 $11 
Collateral or
discounted cash flow (1)
Prepayment rate7 yrs. - 12 yrs. (10.3 yrs.)
Corporate loans$— $76 $76 
Collateral or
 discounted cash flow (1)
Recovery rate44% - 80% (63%)
Loans held for sale$93 $— $93 N/AN/AN/A
September 30, 2022
Bank loans:
Residential mortgage loans$2 $10 $12 
Collateral or
discounted cash flow (1)
Prepayment rate7 yrs. - 12 yrs. (10.4 yrs.)
Corporate loans$— $57 $57 
Collateral or
 discounted cash flow (1)
Recovery rate24% - 66% (47%)
Loans held for sale$3 $— $3 N/AN/AN/A

(1)    The valuation techniques used to estimate the fair values are based on collateral value less selling costs for the collateral-dependent loans and Consumer Protection Act of 2010 (the “Dodd-Frank Act”).  We have received approval fromdiscounted cash flows for loans that are not collateral-dependent. Unobservable inputs used in the Board of Governors ofcollateral valuation technique are not meaningful and unobservable inputs used in the Federal Reserve System (the “Fed”) to continue to holddiscounted cash flow valuation technique are presented in the majority of our “covered fund” investments for up to an additional five-year conformance period, thereby extending our applicable holding period until July 2022 for such investments. However our current focus is on the divestiture of this portfolio.table.


20
13
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Fair value option

TheFinancial instruments not recorded at fair value option is an accounting election that allows the reporting entity to apply fair value accounting for certain financial assets and liabilities on an instrument by instrument basis.  As of December 31, 2017, the amount of financial instruments for which we had elected the fair value option was not material.

Other fair value disclosures


Many, but not all, of the financial instruments we hold arewere recorded at fair value inon the Condensed Consolidated Statements of Financial Condition. The following table presents the estimated fair value and fair value hierarchy of financial assets and liabilities that are not recorded at fair value on the Condensed Consolidated Statements of Financial Condition at March 31, 2023 and September 30, 2022. This table excludes financial instruments that are carried at amounts which approximate fair value. Refer to Note 4 of our 20172022 Form 10-K for a discussion of the methods and assumptions we apply to the determination of fair value hierarchy classifications of our financial instruments that are not recorded at fair value.

$ in millionsLevel 2Level 3Total estimated fair valueCarrying amount
March 31, 2023
Financial assets:    
Bank loans, net$26 $42,926 $42,952 $43,503 
Financial liabilities: 
Bank deposits - certificates of deposit$2,643 $— $2,643 $2,656 
Other borrowings - subordinated notes payable$92 $— $92 $100 
Senior notes payable$1,779 $— $1,779 $2,038 
September 30, 2022
Financial assets:
Bank loans, net$134 $42,336 $42,470 $43,167 
Financial liabilities: 
Bank deposits - certificates of deposit$400 $579 $979 $999 
Other borrowings - subordinated notes payable$95 $— $95 $100 
Senior notes payable$1,706 $— $1,706 $2,038 
The table below presents the estimated fair values by level within the fair value hierarchy and the carrying amounts of certain of our financial instruments not carried at fair value. The carrying amounts below exclude financial instruments which have been recorded at fair value and those recorded at amounts which approximate fair value in the Condensed Consolidated Statements of Financial Condition.

14
$ in thousands 
Quoted prices
in active
markets for
identical
instruments
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 Total estimated fair value Carrying amount
December 31, 2017          
Financial assets:          
Bank loans, net $—
 $104,044
 $17,353,626
 $17,457,670
 $17,588,476
Loans to financial advisors, net $—
 $—
 $704,853
 $704,853
 $879,929
Financial liabilities:        
  
Bank deposits $—
 $18,392,535
 $329,977
 $18,722,512
 $18,725,545
Other borrowings $—
 $28,030
 $—
 $28,030
 $27,627
Senior notes payable $—
 $1,693,153
 $—
 $1,693,153
 $1,548,975
           
September 30, 2017          
Financial assets:          
Bank loans, net $—
 $23,001
 $16,836,745
 $16,859,746
 $16,954,042
Loans to financial advisors, net $—
 $—
 $698,862
 $698,862
 $863,647
Financial liabilities:        
  
Bank deposits $—
 $17,417,678
 $313,359
 $17,731,037
 $17,732,362
Other borrowings $—
 $29,278
 $—
 $29,278
 $28,813
Senior notes payable $—
 $1,647,696
 $—
 $1,647,696
 $1,548,839


21
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






NOTE 54 – AVAILABLE-FOR-SALE SECURITIES


Available-for-sale securities are comprised of agency MBS and CMOs owned by Raymond James Bank, N.A. (“RJ Bank”) and ARS owned by one of our non-broker-dealer subsidiaries. Refer to the discussion of our available-for-sale securities accounting policies, including the fair value determination process, in Note 2 of our 20172022 Form 10-K.10-K for a discussion of our accounting policies applicable to our available-for-sale securities.


The following table details the amortized costcosts and fair values of our available-for-sale securities were as follows:
$ in thousands Cost basis 
Gross
unrealized gains
 
Gross
unrealized losses
 Fair value
December 31, 2017        
Agency MBS and CMOs $2,309,741
 $180
 $(24,870) $2,285,051
Other securities 1,575
 —
 (788) 787
Total RJ Bank available-for-sale securities 2,311,316
 180
 (25,658) 2,285,838
ARS preferred securities 101,674
 5,809
 —
 107,483
Total available-for-sale securities $2,412,990

$5,989

$(25,658)
$2,393,321
September 30, 2017  
  
  
  
Agency MBS and CMOs $2,089,153
 $1,925
 $(9,999) $2,081,079
Other securities 1,575
 —
 (543) 1,032
Total RJ Bank available-for-sale securities 2,090,728
 1,925
 (10,542) 2,082,111
ARS preferred securities 101,674
 4,497
 —
 106,171
Total available-for-sale securities $2,192,402

$6,422

$(10,542)
$2,188,282

securities. See Note 43 for additional information regarding the fair value of available-for-sale securities.

$ in millionsCost basisGross
unrealized gains		Gross
unrealized losses		Fair value
March 31, 2023    
Agency residential MBS$5,272 $1 $(520)$4,753 
Agency commercial MBS1,477 — (178)1,299 
Agency CMOs1,545 — (218)1,327 
Other agency obligations760 — (23)737 
Non-agency residential MBS518 — (39)479 
U.S. Treasuries1,043 — (22)1,021 
Corporate bonds145 — (5)140 
Other17 — — 17 
Total available-for-sale securities$10,777 $1 $(1,005)$9,773 
September 30, 2022    
Agency residential MBS$5,662 $— $(668)$4,994 
Agency commercial MBS1,518 — (208)1,310 
Agency CMOs1,637 — (233)1,404 
Other agency obligations613 — (31)582 
Non-agency residential MBS492 — (41)451 
U.S. Treasuries1,014 — (28)986 
Corporate bonds146 — (5)141 
Other18 — (1)17 
Total available-for-sale securities$11,100 $— $(1,215)$9,885 

The amortized costs and fair values in the preceding table exclude $25 million and $24 million of accrued interest on available-for-sale securities as of March 31, 2023 and September 30, 2022, respectively, which was included in “Other receivables, net” on our Condensed Consolidated Statements of Financial Condition.

See Note 6 for more information regarding available-for-sale securities pledged with the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Atlanta (“FRB”).

15
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table details the contractual maturities, amortized cost,costs, carrying values and current yields for our available-for-sale securitiessecurities.  Weighted-average yields are as presented below.calculated on a taxable-equivalent basis based on estimated annual income divided by the average amortized cost of these securities. Since RJ Bank’sour MBS and CMO available-for-sale securities (MBS and CMOs) are backed by mortgages, actual maturities willmay differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. Expected maturitiesAs a result, as of ARS may differ significantly from contractual maturities, as issuers may haveMarch 31, 2023, the right to call or prepay obligations with or without call or prepayment penalties.weighted-average life of our available-for-sale securities portfolio was approximately 4.38 years.
 March 31, 2023
$ in millionsWithin one yearAfter one but
within five years		After five but
within ten years		After ten yearsTotal
Agency residential MBS     
Amortized cost$— $138 $2,332 $2,802 $5,272 
Carrying value$— $134 $2,120 $2,499 $4,753 
Weighted-average yield— %2.47 %1.30 %1.90 %1.65 %
Agency commercial MBS
Amortized cost$— $876 $550 $51 $1,477 
Carrying value$— $797 $459 $43 $1,299 
Weighted-average yield— %1.63 %1.25 %1.87 %1.50 %
Agency CMOs 
Amortized cost$— $11 $41 $1,493 $1,545 
Carrying value$— $10 $37 $1,280 $1,327 
Weighted-average yield— %2.28 %1.51 %1.61 %1.61 %
Other agency obligations
Amortized cost$35 $609 $105 $11 $760 
Carrying value$34 $594 $99 $10 $737 
Weighted-average yield2.16 %3.42 %3.58 %3.07 %3.38 %
Non-agency residential MBS
Amortized cost$— $— $— $518 $518 
Carrying value$— $— $— $479 $479 
Weighted-average yield— %— %— %4.13 %4.13 %
U.S. Treasuries
Amortized cost$191 $852 $— $— $1,043 
Carrying value$188 $833 $— $— $1,021 
Weighted-average yield2.28 %2.78 %— %— %2.69 %
Corporate bonds
Amortized cost$1 $116 $28 $— $145 
Carrying value$1 $112 $27 $— $140 
Weighted-average yield2.88 %5.80 %4.95 %— %5.61 %
Other
Amortized cost$— $5 $5 $7 $17 
Carrying value$— $5 $4 $8 $17 
Weighted-average yield— %6.66 %5.23 %7.47 %6.67 %
Total available-for-sale securities
Amortized cost$227 $2,607 $3,061 $4,882 $10,777 
Carrying value$223 $2,485 $2,746 $4,319 $9,773 
Weighted-average yield2.27 %2.66 %1.42 %2.06 %2.03 %

16
  December 31, 2017
$ in thousands Within one year 
After one but
within five years
 
After five but
within ten years
 After ten years Total
Agency MBS and CMOs:          
Amortized cost $—
 $143,299
 $745,234
 $1,421,208
 $2,309,741
Carrying value —
 142,159
 737,410
 1,405,482
 2,285,051
Weighted-average yield —
 2.09% 1.94% 2.01% 1.99%
Other securities:          
Amortized cost $—
 $—
 $—
 $1,575
 $1,575
Carrying value —
 —
 —
 787
 787
Weighted-average yield —
 —
 —
 —
 —
Sub-total agency MBS and CMOs and other securities:  
  
Amortized cost $—
 $143,299
 $745,234
 $1,422,783
 $2,311,316
Carrying value —
 142,159
 737,410
 1,406,269
 2,285,838
Weighted-average yield —
 2.09% 1.94% 2.01% 1.99%
ARS Preferred securities:  
  
  
  
  
Amortized cost $—
 $—
 $—
 $101,674
 $101,674
Carrying value —
 —
 —
 107,483
 107,483
Weighted-average yield —
 —
 —
 2.52% 2.52%
Total available-for-sale securities:  
  
  
  
  
Amortized cost $—
 $143,299
 $745,234
 $1,524,457
 $2,412,990
Carrying value —
 142,159
 737,410
 1,513,752
 2,393,321
Weighted-average yield —
 2.09% 1.94% 2.05% 2.01%


22
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The following table details the gross unrealized losses and fair value,values of securities that were in a loss position at the reporting period end, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, are as follows:position.
 Less than 12 months12 months or moreTotal
$ in millionsEstimated
fair value		Unrealized
losses		Estimated
fair value		Unrealized
losses		Estimated
fair value		Unrealized
losses
March 31, 2023
Agency residential MBS$673 $(40)$4,018 $(480)$4,691 $(520)
Agency commercial MBS145 (4)1,154 (174)1,299 (178)
Agency CMOs40 (1)1,287 (217)1,327 (218)
Other agency obligations386 (11)301 (12)687 (23)
Non-agency residential MBS469 (39)— — 469 (39)
U.S. Treasuries749 (16)247 (6)996 (22)
Corporate bonds125 (5)— — 125 (5)
Other13 — — — 13 — 
Total$2,600 $(116)$7,007 $(889)$9,607 $(1,005)
September 30, 2022
Agency residential MBS$2,165 $(226)$2,829 $(442)$4,994 $(668)
Agency commercial MBS494 (41)816 (167)1,310 (208)
Agency CMOs337 (32)1,067 (201)1,404 (233)
Other agency obligations582 (31)— — 582 (31)
Non-agency residential MBS451 (41)— — 451 (41)
U.S. Treasuries982 (28)4 — 986 (28)
Corporate bonds128 (5)— — 128 (5)
Other17 (1)— — 17 (1)
Total$5,156 $(405)$4,716 $(810)$9,872 $(1,215)
  Less than 12 months 12 months or more Total
$ in thousands 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
December 31, 2017            
Agency MBS and CMOs $1,691,798
 $(14,157) $535,183
 $(10,713) $2,226,981
 $(24,870)
Other securities —
 —
 787
 (788) 787
 (788)
Total $1,691,798
 $(14,157) $535,970
 $(11,501) $2,227,768
 $(25,658)

  Less than 12 months 12 months or more Total
$ in thousands 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
September 30, 2017            
Agency MBS and CMOs $1,119,715
 $(5,621) $295,528
 $(4,378) $1,415,243
 $(9,999)
Other securities —
 —
 1,032
 (543) 1,032
 (543)
Total $1,119,715
 $(5,621) $296,560
 $(4,921) $1,416,275
 $(10,542)

The reference point for determining when securities are in a loss position is the reporting period end. As such, it is possible that a security had a fair value that exceeded its amortized cost on other days during the period.

Agency MBS and CMOs and Non-agency CMOs

The Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Associations (“GNMA”) guarantee the contractual cash flowsAt March 31, 2023, of the agency MBS and CMOs. At December 31, 2017, of the 195 U.S. government-sponsored enterprise MBS and CMOs1,072 available-for-sale securities in an unrealized loss position, 133395 were in a continuous unrealized loss position for less than 12 months and 62677 securities were in a continuous unrealized loss position for greater than 12 months or more. We do not consider these securities to be other-than-temporarily impaired due to the guarantee provided by FNMA, FHLMC, and GNMA of the full payment of principal and interest, and the fact that we have the ability and intent to hold these securities. months.

At DecemberMarch 31, 2017,2023, debt securities we held from FNMAin excess of ten percent of our equity included those issued by the Federal National Home Mortgage Association and FHLMC had anFederal Home Loan Mortgage Corporation with amortized costcosts of $1.56$5.07 billion and $626 million,$3.05 billion, respectively, and a fair valuevalues of $1.54$4.52 billion and $617 million,$2.70 billion, respectively.


During the three and six months ended DecemberMarch 31, 2017,2023 and March 31, 2022, there were no sales of agency MBS and CMO available-for-sale securities. During the three months ended December 31, 2016, there were $7 million in proceeds from the sale of non-agency CMO available-for-sale securities. These sales resulted in an insignificant loss, which was included in “Other revenues” on our Condensed Consolidated Statements of Income and Comprehensive Income.

ARS

Our cost basis in the ARS we hold is the fair value of the securities in the period in which we acquired them. The par value of the ARS we held as of December 31, 2017 was $120 million. Only those ARS whose amortized cost basis we do not expect to recover in full are considered to be other-than-temporarily impaired, as we have the ability and intent to hold these securities. All of our ARS securities are evaluated for OTTI on a quarterly basis. As of December 31, 2017, there were no ARS preferred securities with a fair value less than cost basis.

During the three months ended December 31, 2017, there were no sales of ARS. During the three months ended December 31, 2016, sales of ARS were insignificant.

Other-than-temporarily impaired securities

There is no intent to sell our ARS and it was not more likely than not that we would be required to sell these securities as of December 31, 2017.







23
17
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






Changes in the amount of OTTI related to credit losses recognized in “Other revenues” on available-for-sale securities were as follows:
  Three months ended December 31,
$ in thousands 2017 2016
Amount related to credit losses on securities we held at the beginning of the period $—
 $8,107
Decreases to the amount related to credit losses for securities sold during the period —
 (2,353)
Amount related to credit losses on securities we held at the end of the period $—
 $5,754


NOTE 65 – DERIVATIVE FINANCIAL INSTRUMENTSASSETS AND DERIVATIVE LIABILITIES


Our derivative assets and derivative liabilities are recorded at fair value and are included in “Derivative assets” and “Derivative liabilities” inon our Condensed Consolidated Statements of Financial Condition. Cash flows related to our derivative contractsderivatives are included within operating activities inon the Condensed Consolidated Statements of Cash Flows. The significant accounting policies governing our derivative financial instruments,derivatives, including our methodologies for determining fair value, are described in Note 2 of our 20172022 Form 10-K.

Derivatives arising from our fixed income business operations

We enter into interest rate contracts as part of our fixed income business to facilitate client transactions or to actively manage risk exposures that arise from our client activity, including a portion of our trading inventory. The majority of these derivatives are traded in the over-the-counter market and are executed directly with another counterparty or are cleared and settled through a clearing organization.

We also facilitate matched book derivative transactions in which Raymond James Financial Products, Inc. (“RJFP”), a wholly owned subsidiary, enters into interest rate derivative transactions with clients. For every derivative transaction RJFP enters into with a client, it also enters into an offsetting derivative on terms that mirror the client transaction with a credit support provider, which is a third-party financial institution. Any collateral required to be exchanged under these derivative contracts is administered directly between the client and the third-party financial institution. Due to this pass-through transaction structure, RJFP has completely mitigated the market and credit risk on these derivative contracts. As a result, derivatives for which the fair value is in an asset position have an equal and offsetting derivative liability. RJFP only has credit risk on its uncollected derivative transaction fee revenues. The receivable for uncollected derivative transaction fee revenues of RJFP was $5 million at both December 31, 2017 and September 30, 2017, and is included in “Other receivables” on our Condensed Consolidated Statements of Financial Condition.

Derivatives arising from RJ Bank’s business operations
We enter into forward foreign exchange contracts and interest rate swaps to hedge certain exposures arising out of RJ Bank’s business operations (see Note 2 of the 2017 Form 10-K for the accounting policies associated with these transactions). Each of these activities is described further below.

We enter into three-month forward foreign exchange contracts primarily to hedge the risks related to RJ Bank’s investment in their Canadian subsidiary as well as their risk resulting from transactions denominated in currencies other than the U.S. dollar. The majority of these derivatives are designated as net investment hedges.

The cash flows associated with certain assets held by RJ Bank provide interest income at fixed interest rates. Therefore, the value of these assets, absent any risk mitigation, is subject to fluctuation based upon changes in market rates of interest over time. RJ Bank enters into floating-rate advances from the Federal Home Loan Bank of Atlanta (“FHLB”) to, in part, fund these assets and then enters into interest rate swaps which swap variable interest payments on this debt for fixed interest payments. These interest rate swaps are designated as cash flow hedges and effectively fix RJ Bank’s cost of funds associated with these assets to mitigate a portion of the market risk.

Derivative arising from our acquisition of Alex. Brown

As part of our acquisition of Alex. Brown (see Note 3 of the 2017 Form 10-K for additional information regarding the acquisition), we assumed certain DBRSU awards, including the associated plan terms and conditions. The DBRSU awards contain performance conditions based on Deutsche Bank and subsidiaries attaining certain financial results and will ultimately be settled in DB common shares, provided the performance metrics are achieved. The DBRSU obligation results in a derivative, the fair value and notional of

24
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





which is measured by multiplying the number of outstanding DBRSU awards to be settled in DB common shares as of the end of the reporting period by the end of reporting period DB share price, as traded on the New York Stock Exchange.

Counterparty netting and collateral related to derivative contracts

To reduce credit exposure on certain of our derivative transactions, we may enter into a master netting arrangement that allows for net settlement of all derivative transactions with each counterparty.  In addition, the credit support annex allows parties to the master netting agreement to mitigate their credit risk by requiring the party which is out of the money to post collateral.  We accept collateral in the form of cash or other marketable securities.  Where permitted, we elect to net-by-counterparty certain derivative contracts entered into under a legally enforceable master netting agreement and, therefore, the fair value of those derivative contracts are netted by counterparty in the Condensed Consolidated Statements of Financial Condition. As we elect to net-by-counterparty the fair value of such derivative contracts, we also net-by-counterparty cash collateral exchanged as part of those derivative agreements. We may also require certain counterparties to make a deposit at the inception of a derivative agreement, referred to as “initial margin.” This initial margin is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition.

We are also required to maintain cash or marketable security deposits with the clearing organizations we utilize to clear certain of our interest rate derivative transactions. This initial margin is included as a component of “Receivables from brokers, dealers and clearing organizations” for cash initial margin or “Other investments” for marketable securities initial margin in our Condensed Consolidated Statements of Financial Condition. On a daily basis we also pay cash to or receive cash from these clearing organizations due to changes in the fair value of the derivatives which they clear. Such payments are referred to as “variation margin” and are considered to be settlement of the related derivatives.

RJ Bank provides to counterparties for the benefit of its U.S. subsidiaries, a guarantee of payment in the event of the subsidiary’s default under forward foreign exchange contracts.  Due to this RJ Bank guarantee and the short-term nature of these derivatives, RJ Bank’s U.S. subsidiaries are generally not required to post collateral with and do not generally receive collateral from the respective counterparties.


25
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






Derivative balances included inon our financial statements


The following table below presents the gross fair valuevalues and notional amountamounts of derivative contractsderivatives by product type, the amounts of counterparty and cash collateral netting inon our Condensed Consolidated Statements of Financial Condition, as well as collateral posted and received under credit support agreements that do not meet the criteria for netting under GAAP.
March 31, 2023September 30, 2022
$ in millionsDerivative assetsDerivative liabilitiesNotional amountDerivative assetsDerivative liabilitiesNotional amount
Derivatives not designated as hedging instruments
Interest rate - other (1)
$353 $407 $16,404 $462 $535 $14,647 
Interest rate - matched book8 8 170 52 52 1,340 
Foreign exchange— 4 1,128 4 5 958 
Other— 4 582 — 3 531 
Subtotal361 423 18,284 518 595 17,476 
Derivatives designated as hedging instruments
Interest rate - other (2)
9 1 1,300 12 — 1,050 
Foreign exchange— 5 1,149 6 — 1,092 
Subtotal9 6 2,449 18 — 2,142 
Total gross fair value/notional amount370 429 $20,733 536 595 $19,618 
Offset on the Condensed Consolidated Statements of Financial Condition
Counterparty netting(36)(36)(35)(35)
Cash collateral netting(243)(42)(313)(30)
Total amounts offset(279)(78)(348)(65)
Net amounts presented on the Condensed Consolidated Statements of Financial Condition$91 $351 $188 $530 
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition
Financial instruments (3)
(14)(8)(60)(52)
Total$77 $343 $128 $478 
  December 31, 2017 September 30, 2017
$ in thousands Derivative assets Derivative liabilities Notional amount Derivative assets Derivative liabilities Notional amount
Derivatives not designated as hedging instruments            
Interest rate contracts:            
Matched book $263,851
 $263,851
 $2,687,828
 $288,035
 $288,035
 $2,766,488
Other 58,660
 85,579
 5,093,255
 86,436
 100,503
 4,931,809
Foreign exchange contracts 4
 7,032
 529,000
 3
 530
 437,783
DBRSU obligation (equity) (1)
 —
 28,413
 28,413
 —
 25,800
 25,800
Subtotal 322,515

384,875

8,338,496

374,474

414,868

8,161,880
Derivatives designated as hedging instruments            
Interest rate contracts —
 1,236
 850,000
 —
 1,390
 850,000
Foreign exchange contracts —
 12,678
 893,317
 29
 116
 1,048,646
Subtotal —

13,914

1,743,317

29

1,506

1,898,646
Total gross fair value/notional amount 322,515

398,789

$10,081,813

374,503

416,374

$10,060,526
Offset in the Statements of Financial Condition            
Counterparty netting (6,471) (6,471)   (6,045) (6,045)  
Cash collateral netting (23,904) (35,813)   (49,683) (53,365)  
Total amounts offset (30,375) (42,284)   (55,728) (59,410)  
Net amounts presented in the Statements of Financial Condition 292,140
 356,505
   318,775
 356,964
  
             
Gross amounts not offset in the Statements of Financial Condition          
Financial instruments (2)
 (267,938) (263,851)   (293,340) (288,035)  
Total $24,202
 $92,654
   $25,435
 $68,929
  


(1)    The DBRSU obligation is notRelates to interest rate derivatives entered into as part of our fixed income business operations, including to-be-announced security contracts that are accounted for as derivatives, as well as our banking operations.
(2)    During the six months ended March 31, 2023, we entered into an interest rate swap to manage our risk of increases in interest rates associated with certain money market and savings accounts by converting the balances subject to an enforceable master netting arrangement or other similar arrangement. However, we held sharesvariable interest rates to a fixed interest rate. Such interest rate swap has been designated and accounted for as a cash flow hedge. Refer to Note 13 of DB as an economic hedge against this obligation with a fair value of $21 million and $19 million as of December 31, 2017 and September 30, 2017, respectively, which are a component of “Other investments” on our Condensed Consolidated Statements of Financial Condition. See additional discussion of the DBRSUs in Note 17.Form 10-Q for information regarding these bank deposits.

(2)(3)    Although the matched book derivative arrangements do not meet the definition of a master netting arrangement as specified by GAAP, the agreement with the third-party intermediary includes terms that are similar to a master netting agreement. As a result, we present the matched book amounts net in the preceding table.


18
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table above.

Gains recognizeddetails the gains/(losses) included in accumulated other comprehensive income/(loss) (“AOCI”), net of income taxes, on derivatives designated as hedging instruments are as follows (seeinstruments. These gains/(losses) included any amounts reclassified from AOCI to net income during the period. See Note 1517 for additional information):information.
 Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Interest rate (cash flow hedges)$(11)$29 $(13)$38 
Foreign exchange (net investment hedges)(3)(9)(17)(10)
Total gains/(losses) included in AOCI, net of taxes$(14)$20 $(30)$28 
  Three months ended December 31,
$ in thousands 2017 2016
Interest rate contracts (cash flow hedges) $6,885
 $25,738
Foreign exchange contracts (net investment hedges) 5,573
 11,326
Total gains recognized in AOCI, net of taxes $12,458
 $37,064


There was no hedge ineffectiveness andwere no components of derivative gains or losses were excluded from the assessment of hedge effectiveness for each of the three and six months ended DecemberMarch 31, 20172023 and 2016.2022. We expect to reclassify an estimated $1$29 million as additionalof interest expense out of AOCI and into earnings within the next 12 months. The maximum length of time over which forecasted transactions are or will be hedged is 10five years.



26
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Gains/The following table details the gains/(losses) on derivatives not designated as hedging instruments recognized on the Condensed Consolidated Statements of Income and Comprehensive Income were as follows:Income. These amounts do not include any offsetting gains/(losses) on the related hedged item.
$ in millionsThree months ended March 31,Six months ended March 31,
Location of gain/(loss)2023202220232022
Interest ratePrincipal transactions/other revenues$5 $7 $11 $10 
Foreign exchangeOther revenues$(6)$(2)$(36)$(3)
OtherPrincipal transactions$— $(2)$(1)$1 
$ in thousands 
Location of gain/(loss) included in the
Condensed Consolidated Statements of Income and Comprehensive Income
 Gain/(loss) recognized during the period
  Three months ended December 31,
  2017 2016
Interest rate contracts:      
Matched book Other revenues $38
 $(26)
Other Net trading profit $1,562
 $2,229
Foreign exchange contracts Other revenues $(1,366) $7,914
DBRSUs Compensation, commissions and benefits expense $(2,613) $(6,725)
DBRSUs Acquisition-related expenses $—
 $350


Risks associated with our derivatives and ourrelated risk mitigation related to, our derivative contracts


Credit risk


We are exposed to credit losses primarily in the event of nonperformance by the counterparties to forward foreign exchange derivative agreements and interest rate contractsderivatives that are not cleared through a clearing organization. Where we are subject to credit exposure, we perform a credit evaluation of counterparties prior to entering into derivative transactions and we continue to monitor their credit standings.  Currently, we anticipate that all of the counterparties will be able to fully satisfy their obligations under those agreements.standings on an ongoing basis.  We may require initial margin or collateral from counterparties, generally in the form of cash deposits or other marketable securities to support certain of these obligations as established by the credit threshold specified by the agreement and/or as a result of monitoring the credit standing of the counterparties. We also enter into derivatives with clients to which Raymond James Bank and TriState Capital Bank have provided loans. Such derivatives are generally collateralized by marketable securities or other assets of the client.

Our only exposure to credit risk in the matched book derivatives operations is related to our uncollected derivative transaction fee revenues. We are not exposed to market risk as it relates to these derivative contracts due to the pass-through transaction structure previously described.


Interest rate and foreign exchange risk


We are exposed to interest rate risk related to certain of our interest rate derivative agreements.derivatives. We are also exposed to foreign exchange risk related to our forward foreign exchange derivative agreements.derivatives.  On a daily basis, we monitor our risk exposure inon our derivative agreementsderivatives based on established limits with respect to a number of factors, including interest rate,sensitivity-based and foreign exchange spot and forward rates, spread, ratio, basis and volatility risks.  These exposures are monitored both on a total portfolio basis and separately for each agreement for selected maturity periods.limits.


Derivatives with credit-risk-related contingent features


Certain of theour derivative instruments arising from our interest rate contracts and forward foreign exchange contracts contain provisions that require our debt to maintain an investment-grade rating from one or more of the major credit rating agencies.agencies or contain provisions related to default on certain of our outstanding debt. If our debt were to fall below investment-grade or we were to default on certain of our outstanding debt, the counterparties to the derivative instruments could terminate the derivative and request immediate payment, or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that were in a liability position was $10$7 million at Decemberas of March 31, 2017, for which we had posted $12023 and $8 million as of collateral. Such amounts were not material at September 30, 2017.2022.



19
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 76 – COLLATERALIZED AGREEMENTS AND FINANCINGS


Collateralized agreements are comprised of securities purchased under agreements to resell (“reverse repurchase agreements”) and securities borrowed. Collateralized financings are comprised of securities sold under agreements to repurchase (“repurchase agreements”) and securities loaned. We enter into these transactions in order to facilitate client activities, invest excess cash, acquire securities to cover short positions and finance certain firm activities. The significant accounting policies governing our collateralized agreements and financings are described in Note 2 of our 20172022 Form 10-K.



27
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





For financial statement purposes, we do not offset our reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions because the conditions for netting as specified by GAAP are not met. Our reverse repurchase agreements, repurchase agreements, securities borrowing, and securities lending transactions are governed by master agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the parties to the transaction. For financial statement purposes, we do not offset our reverse repurchase agreements, repurchase agreements, securities borrowed, and securities loaned because the conditions for netting as specified by GAAP are not met. Although not offset on the Condensed Consolidated Statements of Financial Condition, these transactions are included in the following table.
Collateralized agreementsCollateralized financings
$ in millionsReverse repurchase agreementsSecurities borrowedTotalRepurchase agreementsSecurities loanedTotal
March 31, 2023
Gross amounts of recognized assets/liabilities$167 $212 $379 $150 $177 $327 
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition— — — — — — 
Net amounts included in the Condensed Consolidated Statements of Financial Condition167 212 379 150 177 327 
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition(167)(211)(378)(150)(173)(323)
Net amounts$— $1 $1 $— $4 $4 
September 30, 2022
Gross amounts of recognized assets/liabilities$367 $337 $704 $294 $172 $466 
Gross amounts offset on the Condensed Consolidated Statements of Financial Condition— — — — — — 
Net amounts included in the Condensed Consolidated Statements of Financial Condition367 337 704 294 172 466 
Gross amounts not offset on the Condensed Consolidated Statements of Financial Condition(367)(327)(694)(294)(162)(456)
Net amounts$— $10 $10 $— $10 $10 
  Assets Liabilities
$ in thousands Reverse repurchase agreements Securities borrowed Repurchase agreements Securities loaned
December 31, 2017        
Gross amounts of recognized assets/liabilities $307,742
 $184,971
 $229,036
 $290,307
Gross amounts offset in the Condensed Consolidated Statements of Financial Condition —
 —
 —
 —
Net amounts presented in the Condensed Consolidated Statements of Financial Condition 307,742

184,971

229,036

290,307
Gross amounts not offset in the Condensed Consolidated Statements of Financial Condition (307,742) (178,524) (229,036) (277,154)
Net amount $—
 $6,447
 $—
 $13,153
September 30, 2017        
Gross amounts of recognized assets/liabilities $404,462
 $138,319
 $220,942
 $383,953
Gross amounts offset in the Condensed Consolidated Statements of Financial Condition —
 —
 —
 —
Net amounts presented in the Condensed Consolidated Statements of Financial Condition 404,462

138,319

220,942

383,953
Gross amounts not offset in the Condensed Consolidated Statements of Financial Condition (404,462) (134,304) (220,942) (373,132)
Net amount $—
 $4,015
 $—
 $10,821


The required market valuetotal amount of the collateral associated with collateralized agreements and financings generally exceeds the amount financed. Accordingly, the total collateral received under reverse repurchase agreements and the total amount of collateral posted under repurchase agreements exceeds the carrying value of these agreements inon our Condensed Consolidated Statements of Financial Condition. In

20
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Repurchase agreements and securities loaned accounted for as secured borrowings

The following table presents the event the market valueremaining contractual maturity of therepurchase agreements and securities we pledgelending transactions accounted for as collateral in these activities declines, we may have to post additional collateral or reduce the borrowing amounts. We monitor such levels daily.secured borrowings.

$ in millionsOvernight and continuousUp to 30 days30-90 daysGreater than 90 daysTotal
March 31, 2023
Repurchase agreements:
Government and agency obligations$115 $— $— $— $115 
Agency MBS and agency CMOs35 — — — 35 
Total repurchase agreements150 — — — 150 
Securities loaned:
Equity securities177 — — — 177 
Total collateralized financings$327 

$— 

$— 

$— 

$327 
September 30, 2022
Repurchase agreements:
Government and agency obligations$183 $— $— $— $183 
Agency MBS and agency CMOs111 — — — 111 
Total repurchase agreements294 — — — 294 
Securities loaned:
Equity securities172 — — — 172 
Total collateralized financings$466 $— $— $— $466 

Collateral received and pledged


We receive cash and securities as collateral, primarily in connection with reverse repurchase agreements, securities borrowed,borrowing agreements, derivative transactions, not transacted through a clearing organization, and client margin loans. The collateral we receive reduces our credit exposure to individual counterparties.


In many cases, we are permitted to deliver or repledge financial instruments we have received as collateral forto satisfy our own use incollateral requirements under our repurchase agreements, securities lending agreements or other secured borrowings, satisfaction ofto satisfy deposit requirements with clearing organizations, or to otherwise meetingmeet either our or our clients’ settlement requirements.


The following table below presents financial instruments at fair value that we received as collateral, arewere not included on our Condensed Consolidated Statements of Financial Condition, and that were available to be delivered or repledged, along with the balances of such instruments that were delivered or repledged, to satisfy one of our purposes described above:previously described.
$ in millionsMarch 31, 2023September 30, 2022
Collateral we received that was available to be delivered or repledged$2,993 $3,812 
Collateral that we delivered or repledged$766 $947 

21
$ in thousands December 31,
2017		 September 30,
2017
Collateral we received that is available to be delivered or repledged $2,891,841
 $3,030,736
Collateral that we delivered or repledged $957,943
 $1,068,912


28
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Encumbered assets


We pledge certain of our financial instrumentsassets to collateralize either repurchase agreements or other secured borrowings, maintain lines of credit, to maintain our ability to hold certain deposits, or to satisfy our collateral or settlement requirements with counterparties or clearing organizations who may or may not have the right to deliver or repledge such instruments. 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. We also pledge certain loans and available-for-sale securities with the FRB to be eligible to participate in the Federal Reserve’s discount window program and to participate in certain deposit programs. During the quarter ended March 31, 2023, Raymond James Bank increased its borrowing capacity with the FHLB through the pledge of additional available-for-sale securities. The FHLB does not have the ability to sell or repledge such securities until they are borrowed against. For additional information regarding our outstanding FHLB advances see Note 14.

The following table below presents information about the fair value of our assets that have been pledged for one of the purposes described above:previously described.
$ in millionsMarch 31, 2023September 30, 2022
Had the right to deliver or repledge$982 $1,276 
Did not have the right to deliver or repledge$4,753 $63 
Bank loans, net pledged with the:
FHLB$8,768 $8,009 
FRB793 791 
Total bank loans, net pledged with the FHLB and FRB$9,561 $8,800 


22
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
$ in thousands December 31,
2017		 September 30,
2017
Financial instruments owned, at fair value, pledged to counterparties that:    
Had the right to deliver or repledge $341,304
 $363,739
Did not have the right to deliver or repledge $129,260
 $44,930


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

The following table presents the remaining contractual maturity of repurchase agreements and securities lending transactions accounted for as secured borrowings:
$ in thousands Overnight and continuous Up to 30 days 30-90 days Greater than 90 days Total
As of December 31, 2017:  
Repurchase agreements          
Government and agency obligations $48,281
 $—
 $—
 $—
 $48,281
Agency MBS and CMOs 180,755
 —
 —
 —
 180,755
Total Repurchase Agreements 229,036

—

—

—

229,036
           
Securities loaned          
Equity securities 290,307
 —
 —
 —
 290,307
Total $519,343

$—

$—

$—

$519,343
Gross amounts of recognized liabilities for repurchase agreements and securities loaned included in the table within this footnote $519,343
Amounts related to repurchase agreements and securities loaned not included in the table within this footnote $—
           
As of September 30, 2017:          
Repurchase agreements          
Government and agency obligations $107,284
 $—
 $—
 $—
 $107,284
Agency MBS and CMOs 113,658
 —
 —
 —
 113,658
Total Repurchase Agreements 220,942

—

—

—

220,942
           
Securities loaned          
Equity securities 383,953
 —
 —
 —
 383,953
Total $604,895
 $—
 $—
 $—
 $604,895
Gross amounts of recognized liabilities for repurchase agreements and securities loaned included in the table within this footnote $604,895
Amounts related to repurchase agreements and securities loaned not included in the table within this footnote $—

As of both December 31, 2017 and September 30, 2017, we did not have any “repurchase-to-maturity” agreements, which are repurchase agreements where a security is transferred under an agreement to repurchase and the maturity date of the repurchase agreement matches the maturity date of the underlying security.


NOTE 87 – BANK LOANS, NET


Bank client receivables are comprised of loans originated or purchased by RJour Bank segment and include commercialsecurities-based loans (“SBL”), corporate loans (commercial and industrial (“C&I”) loans, tax-exemptcommercial real estate (“CRE”) loans, securities basedand real estate investment trust (“REIT”) loans), residential mortgage loans, (“SBL”), and commercial and residential real estatetax-exempt loans. These receivables are collateralized by first orand, to a lesser extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue, securities or are unsecured.


29
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





We segregate our loan portfolio into six loan portfolio segments: SBL, C&I, commercial real estate (“CRE”), CRE, construction, tax-exempt,REIT, residential mortgage, and SBL. These portfolio segments also serve as the portfolio loan classes for purposes of credit analysis, except for residential mortgage loans which are further disaggregated into residential first mortgage and residential home equity classes.

tax-exempt. See Note 2 of our 20172022 Form 10-K for a discussion of our accounting policies related to bank loans and allowancesthe allowance for losses, includingcredit losses.

Loan balances in the policies regarding loans heldfollowing tables are presented at amortized cost (outstanding principal balance net of unamortized purchase discounts or premiums, unearned income, and deferred origination fees and costs), except for investment, loanscertain held for sale off-balance sheet loan commitments, nonperforming assets, troubled debt restructurings (“TDRs”), impaired loans recorded at fair value. Bank loans are presented on our Condensed Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for loancredit losses (“ACL”). As it pertains to TriState Capital Bank’s loans acquired as of June 1, 2022, the amortized cost of such purchased loans reflects the fair value of the loans on the acquisition date, and reserve for unfunded lending commitments, and loan charge-off policies.as described further in Note 3 of our 2022 Form 10-K, the purchase discount on such loans is accreted to interest income over the weighted-average life of the underlying loans, which may vary based on prepayments.


The following table presents the balances for both theheld for investment loans by portfolio segment and held for sale loans.
$ in millionsMarch 31, 2023September 30, 2022
SBL$14,227 $15,297 
C&I loans11,259 11,173 
CRE loans7,054 6,549 
REIT loans1,717 1,592 
Residential mortgage loans8,079 7,386 
Tax-exempt loans1,643 1,501 
Total loans held for investment43,979 43,498 
Held for sale loans119 137 
Total loans held for sale and investment44,098 43,635 
Allowance for credit losses(415)(396)
Bank loans, net (1)
$43,683 $43,239 
ACL as a % of total loans held for investment0.94 %0.91 %
Accrued interest receivable on bank loans (included in “Other receivables, net”)$192 $137 

(1) Bank loans, net as of March 31, 2023 and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in RJ Bank’s total loan portfolio. “Loans held for sale, net” and “Total loans held for investment, net” in the table belowSeptember 30, 2022 are presented net of $89 million and $112 million, respectively, of net unamortized discount, unearned income, and deferred expenses, which include purchase premiums, purchase discounts and net deferred originationloan fees and costs. The net unamortized discount primarily arose from the acquisition date fair value purchase discount on bank loans acquired in the TriState Capital acquisition. See Note 3 of our 2022 Form 10-K for further information.

  December 31, 2017 September 30, 2017
$ in thousands Balance % Balance %
Loans held for investment:  
  
  
  
C&I loans $7,490,219
 42% $7,385,910
 43%
CRE construction loans 164,847
 1% 112,681
 1%
CRE loans 3,136,101
 18% 3,106,290
 18%
Tax-exempt loans 1,136,468
 6% 1,017,791
 6%
Residential mortgage loans 3,270,780
 18% 3,148,730
 18%
SBL 2,530,521
 14% 2,386,697
 14%
Total loans held for investment 17,728,936
  
 17,158,099
  
Net unearned income and deferred expenses (30,231)  
 (31,178)  
Total loans held for investment, net 17,698,705
  
 17,126,921
  
Loans held for sale, net 189,862
 1% 70,316
 —
Total loans held for sale and investment 17,888,567
 100% 17,197,237
 100%
Allowance for loan losses (191,269)  
 (190,442)  
Bank loans, net $17,697,298
  
 $17,006,795
  

At December 31, 2017,See Note 6 for more information regarding bank loans, net pledged with the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. Seeand FRB and Note 1214 for more information regarding borrowings from the FHLB.


Loans heldHeld for sale loans


RJ BankWe originated or purchased $358$624 million and $522 million$1.43 billion of loans held for sale during the three and six months ended DecemberMarch 31, 20172023, respectively, and 2016,$999 million and $1.97 billion during the three and six months ended March 31, 2022, respectively. The majority of these loans were purchases of the guaranteed portions of Small Business Administration (“SBA”) loans that were initially classified as loans held for sale upon purchase and subsequently transferred to trading instruments once they had been securitized into pools. Proceeds from the salesales of these loans held for sale loansand not securitized amounted to $92$155 million and $150$353 million during the three and six months ended DecemberMarch 31, 20172023, respectively, and 2016,$339 million and $677 million during the three and six months ended March 31, 2022, respectively. Net gains resulting from such sales amounted to $1 million in bothwere insignificant for each of the three and six months ended DecemberMarch 31, 20172023 and 2016. Unrealized losses recorded in the2022.

23
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements of Income and Comprehensive Income to reflect the loans held for sale at the lower of cost or market value were insignificant in both the three months ended December 31, 2017 and 2016.(Unaudited)

Purchases and sales of loans held for investment


The following table presents purchases and sales of any loans held for investment by portfolio segment:
segment.
$ in thousands C&I CRE Residential mortgage Total
Three months ended December 31, 2017        
$ in millions$ in millionsC&I loansCRE loansREIT loansResidential mortgage loansTotal
Three months ended March 31, 2023Three months ended March 31, 2023
Purchases $147,442
 $20,087
 $45,011
 $212,540
Purchases$194 $— $— $110 $304 
Sales $31,143
 $—
 $—
 $31,143
Sales$147 $— $— $— $147 
Three months ended December 31, 2016        
Six months ended March 31, 2023Six months ended March 31, 2023
Purchases $114,649
 $38,980
 $81,662
 $235,291
Purchases$357 $39 $24 $300 $720 
Sales $81,579
 $—
 $—
 $81,579
Sales$147 $— $— $— $147 
Three months ended March 31, 2022Three months ended March 31, 2022
PurchasesPurchases$441 $— $— $223 $664 
SalesSales$61 $— $— $— $61 
Six months ended March 31, 2022Six months ended March 31, 2022
PurchasesPurchases$780 $— $— $407 $1,187 
SalesSales$112 $— $— $— $112 


30
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






Sales in the preceding table above represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period. As more fully described in Note 2 of our 20172022 Form 10-K, corporate loan sales generally occur as part of a loan workout situation.our credit management activities.


Aging analysis of loans held for investment


The following table presents an analysisinformation on delinquency status of the payment status ofour loans held for investment:investment.
$ in millions30-89 days and accruing90 days or more and accruingTotal past due and accruingNonaccrual with allowanceNonaccrual with no allowanceCurrent and accruingTotal loans held for investment
March 31, 2023      
SBL$— $— $— $— $— $14,227 $14,227 
C&I loans— — — 32 — 11,227 11,259 
CRE loans— — — 34 18 7,002 7,054 
REIT loans— — — — — 1,717 1,717 
Residential mortgage loans4 — 4 — 15 8,060 8,079 
Tax-exempt loans— — — — — 1,643 1,643 
Total loans held for investment$4 $— $4 $66 $33 $43,876 $43,979 
September 30, 2022      
SBL$— $— $— $— $— $15,297 $15,297 
C&I loans— — — 32 — 11,141 11,173 
CRE loans— — — 12 16 6,521 6,549 
REIT loans— — — — — 1,592 1,592 
Residential mortgage loans4 — 4 — 14 7,368 7,386 
Tax-exempt loans— — — — — 1,501 1,501 
Total loans held for investment$4 $— $4 $44 $30 $43,420 $43,498 
$ in thousands 
30-89
days and accruing
 90 days or more and accruing Total past due and accruing 
Nonaccrual (1)
 Current and accruing 
Total loans held for investment (2)
As of December 31, 2017:            
C&I loans $113
 $—
 $113
 $4,843
 $7,485,263
 $7,490,219
CRE construction loans —
 —
 —
 —
 164,847
 164,847
CRE loans —
 —
 —
 —
 3,136,101
 3,136,101
Tax-exempt loans —
 —
 —
 —
 1,136,468
 1,136,468
Residential mortgage loans:     

     

First mortgage loans 5,886
 —
 5,886
 32,364
 3,205,513
 3,243,763
Home equity loans/lines 75
 —
 75
 126
 26,816
 27,017
SBL 66
 —
 66
 —
 2,530,455
 2,530,521
Total loans held for investment, net $6,140
 $—
 $6,140
 $37,333
 $17,685,463
 $17,728,936
             
As of September 30, 2017:            
C&I loans $—
 $—
 $—
 $5,221
 $7,380,689
 $7,385,910
CRE construction loans —
 —
 —
 —
 112,681
 112,681
CRE loans —
 —
 —
 —
 3,106,290
 3,106,290
Tax-exempt loans —
 —
 —
 —
 1,017,791
 1,017,791
Residential mortgage loans:           
        First mortgage loans 1,853
 —
 1,853
 33,718
 3,086,701
 3,122,272
        Home equity loans/lines 248
 —
 248
 31
 26,179
 26,458
SBL —
 —
 —
 —
 2,386,697
 2,386,697
Total loans held for investment, net $2,101
 $—
 $2,101
 $38,970
 $17,117,028
 $17,158,099


The preceding table includes $90 million and $63 million at March 31, 2023 and September 30, 2022, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes troubled debt restructurings of $20 million, $8 million, and $10 million for C&I loans, CRE loans, and residential first mortgage loans, respectively, at March 31, 2023, and $11 million, $9 million, and $10 million for C&I loans, CRE loans and residential first mortgage loans, respectively, at September 30, 2022.
(1)Includes $15 million and $18 million of nonaccrual loans at December 31, 2017 and September 30, 2017, respectively, which are performing pursuant to their contractual terms.

(2)Excludes any net unearned income and deferred expenses.


Other real estate owned, included in “Other assets” on our Condensed Consolidated Statements of Financial Condition, was $4 million and $5 millioninsignificant at Decemberboth March 31, 20172023 and September 30, 2017, respectively. 2022.

24
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Collateral-dependent loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the underlying collateral. Collateral-dependent loans are recorded based upon the fair value of the collateral less the estimated selling costs.
Loan type ($ in millions)
Nature of collateralMarch 31, 2023September 30, 2022
C&I loansCommercial real estate and other business assets$9 $11 
CRE loansRetail, industrial, office and health care real estate$52 $21 
Residential mortgage loansSingle family homes$6 $6 

The recorded investment in residential mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was $17 million and $18$5 million at Decemberboth March 31, 20172023 and September 30, 2017, respectively.2022.


31
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Impaired loans and troubled debt restructurings

The following table provides a summary of RJ Bank’s impaired loans:
  December 31, 2017 September 30, 2017
$ in thousands 
Gross
recorded
investment
 
Unpaid
principal
balance
 
Allowance
for losses
 
Gross
recorded
investment
 
Unpaid
principal
balance
 
Allowance
for losses
Impaired loans with allowance for loan losses:          
C&I loans $4,843
 $5,910
 $1,846
 $5,221
 $6,160
 $1,963
Residential - first mortgage loans 22,663
 29,403
 2,375
 23,977
 31,100
 2,504
Total 27,506
 35,313
 4,221
 29,198
 37,260
 4,467
Impaired loans without allowance for loan losses:  
  
  
  
  
CRE loans —
 —
 —
 —
 —
 —
Residential - first mortgage loans 16,480
 24,096
 —
 16,737
 24,899
 —
Total 16,480
 24,096
 —
 16,737
 24,899
 —
Total impaired loans $43,986
 $59,409
 $4,221
 $45,935
 $62,159
 $4,467

Impaired loan balances with allowances for loan losses have had reserves established based upon management’s analysis. There is no allowance required when the discounted cash flow, collateral value or market value of a loan equals or exceeds the carrying value.  These are generally loans in process of foreclosure that have already been adjusted to fair value.

The preceding table includes residential first mortgage TDR’s of $26 million and $27 million at December 31, 2017 and September 30, 2017, respectively.

The average balance of the total impaired loans and the related interest income recognized in the Condensed Consolidated Statements of Income and Comprehensive Income were as follows:
  Three months ended December 31,
$ in thousands 2017 2016
Average impaired loan balance:    
C&I loans $4,966
 $32,808
CRE loans —
 2,776
Residential - first mortgage loans 39,935
 46,533
Total $44,901
 $82,117
Interest income recognized:    
Residential - first mortgage loans $287
 $333
Total $287
 $333


Credit quality indicators


The credit quality of RJ Bank’sour bank loan portfolio is summarized monthly by management using internal risk ratings, which align with the standard asset classification system utilized by bank regulators for the SBL and residential mortgage loan portfolios and internal risk ratings, which correspond to the same standard asset classifications for the corporate loan portfolios.regulators.  These classifications are divided into three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss). These terms are defined as follows:


Pass – Loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell, of any underlying collateral and generally are performing in a timely manner.accordance with the contractual terms.


Special Mention – Loans which have potential weaknesses that deserve management’s close attention. These loans are not adversely classified and do not expose RJ Bankus to sufficient risk to warrant an adverse classification.


Substandard – Loans which are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that RJ Bankwe will sustain some loss if the deficiencies are not corrected.


Doubtful – Loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently-known facts, conditions and values.


32
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Loss – Loans which are considered by management to be uncollectible and of such little value that their continuance on RJ Bank’sour books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted.  RJ Bank doesWe do not have any loan balances within this classification because, in accordance with itsour accounting policy, loans, or a portion thereof considered to be uncollectible are charged-off prior to the assignment of this classification.


25
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The credit quality of RJ Bank’sfollowing tables present our held for investment bank loan portfolio was as follows:
$ in thousands Pass Special mention Substandard Doubtful Total
December 31, 2017          
C&I $7,343,153
 $35,606
 $111,460
 $—
 $7,490,219
CRE construction 164,847
 —
 —
 —
 164,847
CRE 3,097,041
 38,933
 127
 —
 3,136,101
Tax-exempt 1,136,468
 —
 —
 —
 1,136,468
Residential mortgage:          
First mortgage 3,194,572
 6,914
 42,277
 —
 3,243,763
Home equity 26,525
 315
 177
 —
 27,017
SBL 2,530,521
 —
 —
 —
 2,530,521
Total $17,493,127
 $81,768
 $154,041
 $—
 $17,728,936
           
September 30, 2017         
C&I $7,232,777
 $63,964
 $89,169
 $—
 $7,385,910
CRE construction 112,681
 —
 —
 —
 112,681
CRE 3,048,847
 57,315
 128
 —
 3,106,290
Tax-exempt 1,017,791
 —
 —
 —
 1,017,791
Residential mortgage:          
First mortgage 3,068,290
 8,467
 45,515
 —
 3,122,272
Home equity 26,352
 75
 31
 —
 26,458
SBL 2,386,697
 —
 —
 —
 2,386,697
Total $16,893,435
 $129,821
 $134,843
 $—
 $17,158,099

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

March 31, 2023
Loans by origination fiscal year
$ in millions20232022202120202019PriorRevolving loansTotal
SBL
Risk rating:
Pass$20$18$92$41$26$82$13,948$14,227
Special mention————————
Substandard————————
Doubtful————————
Total SBL$20$18$92$41$26$82$13,948$14,227
The credit quality of RJ Bank’s performing residential first mortgage loan portfolio is additionally assessed utilizing updated loan-to-value (“LTV”) ratios.  Current LTVs are updated using the most recently available information (generally updated every six months) and are estimated based on the initial appraisal obtained at the time of origination, adjusted using relevant market indices for housing price changes that have occurred since origination.  The value of the homes could vary from actual market values due to changes in the condition of the underlying property, variations in housing price changes within current valuation indices, and other factors. Residential mortgage loans with estimated LTVs in excess of 100% represented much less than 1% of the residential mortgage loan portfolio as of December 31, 2017.
C&I loans
Risk rating:
Pass$454$1,193$1,254$1,223$1,097$3,272$2,526$11,019
Special mention—102938—1785
Substandard———40188413155
Doubtful————————
Total C&I loans$454$1,203$1,283$1,301$1,115$3,357$2,546$11,259

CRE loans
Risk rating:
Pass$613$2,346$1,195$784$654$1,180$149$6,921
Special mention7——36—22—65
Substandard———21353—68
Doubtful————————
Total CRE loans$620$2,346$1,195$822$667$1,255$149$7,054

REIT loans
Risk rating:
Pass$266$202$214$101$55$197$682$1,717
Special mention————————
Substandard————————
Doubtful————————
Total REIT loans$266$202$214$101$55$197$682$1,717

Residential mortgage loans
Risk rating:
Pass$915$2,956$1,661$965$455$1,057$40$8,049
Special mention——1—25—8
Substandard—2———20—22
Doubtful————————
Total residential mortgage loans$915$2,958$1,662$965$457$1,082$40$8,079

Tax-exempt loans
Risk rating:
Pass$165$298$165$56$108$851$—$1,643
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$165$298$165$56$108$851$—$1,643






33
26
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


September 30, 2022
Loans by origination fiscal year
$ in millions20222021202020192018PriorRevolving loansTotal
SBL
Risk rating:
Pass$14$27$72$44$36$41$15,063$15,297
Special mention————————
Substandard————————
Doubtful————————
Total SBL$14$27$72$44$36$41$15,063$15,297

C&I loans
Risk rating:
Pass$1,011$1,448$1,301$1,124$1,389$2,200$2,380$10,853
Special mention1028337—826166
Substandard1—602840614149
Doubtful————5——5
Total C&I loans$1,022$1,476$1,364$1,189$1,434$2,288$2,400$11,173

CRE loans
Risk rating:
Pass$1,916$1,345$892$707$816$551$176$6,403
Special mention—1——362—39
Substandard——14174630—107
Doubtful————————
Total CRE loans$1,916$1,346$906$724$898$583$176$6,549
REIT loans
Risk rating:
Pass$169$230$96$53$40$222$782$1,592
Special mention————————
Substandard————————
Doubtful————————
Total REIT loans$169$230$96$53$40$222$782$1,592
Residential mortgage loans
Risk rating:
Pass$2,984$1,704$1,023$477$290$843$35$7,356
Special mention11—2—4—8
Substandard1———120—22
Doubtful————————
Total residential mortgage loans$2,986$1,705$1,023$479$291$867$35$7,386
Tax-exempt loans
Risk rating:
Pass$264$169$56$115$192$705$—$1,501
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$264$169$56$115$192$705$—$1,501

27
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

We also monitor the credit quality of the residential mortgage loan portfolio utilizing FICO scores and loan-to-value (“LTV”) ratios. A FICO score measures a borrower’s creditworthiness by considering factors such as payment and credit history. LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan. The following table presents the held for investment residential mortgage loan portfolio by FICO score and by LTV ratio at origination.
March 31, 2023
Loans by origination fiscal year
$ in millions20232022202120202019PriorRevolving loansTotal
FICO score:
Below 600$6$1$3$2$3$55$—$70
600 - 699511551078831834519
700 - 7997182,3831,265700334647256,072
800 +1394162831748429381,397
FICO score not available134154321
Total$915$2,958$1,662$965$457$1,082$40$8,079
LTV ratio:
Below 80%$639$2,262$1,300$755$341$832$36$6,165
80%+27669636221011625041,914
Total$915$2,958$1,662$965$457$1,082$40$8,079

September 30, 2022
Loans by origination fiscal year
$ in millions20222021202020192018PriorRevolving loansTotal
FICO score:
Below 600$1$3$2$3$1$54$—$64
600 - 699155112903220684481
700 - 7992,4031,301744353219470225,512
800 +424284184874827361,306
FICO score not available353432323
Total$2,986$1,705$1,023$479$291$867$35$7,386
LTV ratio:
Below 80%$2,287$1,333$797$358$226$661$31$5,693
80%+6993722261216520641,693
Total$2,986$1,705$1,023$479$291$867$35$7,386

28
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Allowance for loancredit losses and reserve for unfunded lending commitments

Changes in the allowance for loan losses of RJ Bank by portfolio segment are as follows:
  Loans held for investment
$ in thousands C&I 
CRE
construction
 CRE Tax-exempt Residential mortgage SBL Total
Three months ended December 31, 2017  
  
    
  
  
Balance at beginning of period $119,901
 $1,421
 $41,749
 $6,381
 $16,691
 $4,299
 $190,442
Provision/(benefit) for loan losses 2,337
 686
 (1,104) 537
 (1,699) 259
 1,016
Net (charge-offs)/recoveries:  
  
  
    
    
Charge-offs (603) —
 —
 —
 (95) —
 (698)
Recoveries —
 —
 —
 —
 604
 —
 604
Net (charge-offs)/recoveries (603) —
 —
 —
 509
 —
 (94)
Foreign exchange translation adjustment (66) —
 (29) —
 —
 —
 (95)
Balance at end of period $121,569
 $2,107
 $40,616
 $6,918
 $15,501
 $4,558
 $191,269
               
Three months ended December 31, 2016            
Balance at beginning of period $137,701
 $1,614
 $36,533
 $4,100
 $12,664
 $4,766
 $197,378
Provision/(benefit) for loan losses (1,243) 581
 (2,010) 393
 997
 242
 (1,040)
Net (charge-offs)/recoveries:  
  
  
        
Charge-offs (3,389) —
 —
 —
 (87) —
 (3,476)
Recoveries —
 —
 5,013
 —
 65
 —
 5,078
Net (charge-offs)/recoveries (3,389) —
 5,013
 —
 (22) —
 1,602
Foreign exchange translation adjustment (164) (92) (4) —
 —
 —
 (260)
Balance at end of period $132,905
 $2,103
 $39,532
 $4,493
 $13,639
 $5,008
 $197,680


The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment.
$ in millionsSBLC&I loansCRE loansREIT loansResidential mortgage loansTax-exempt loansTotal
Three months ended March 31, 2023     
Balance at beginning of period$4 $222 $91 $15 $74 $2 $408 
Provision for credit losses1 18 9 — — — 28 
Net (charge-offs)/recoveries:      
Charge-offs— (20)— — — — (20)
Recoveries— — — — — — — 
Net (charge-offs)/recoveries— (20)— — — — (20)
Foreign exchange translation adjustment— (1)— — — — (1)
Balance at end of period$5 $219 $100 $15 $74 $2 $415 
ACL by loan portfolio segment as a % of total ACL1.2 %52.8 %24.1 %3.6 %17.8 %0.5 %100.0 %
Six months ended March 31, 2023
Balance at beginning of period$3 $226 $87 $21 $57 $2 $396 
Provision/(benefit) for credit losses2 18 11 (6)17 — 42 
Net (charge-offs)/recoveries:     
Charge-offs— (24)(1)— — — (25)
Recoveries— — 3 — — — 3 
Net (charge-offs)/recoveries— (24)2 — — — (22)
Foreign exchange translation adjustment— (1)— — — — (1)
Balance at end of period$5 $219 $100 $15 $74 $2 $415 
ACL by loan portfolio segment as a % of total ACL1.2 %52.8 %24.1 %3.6 %17.8 %0.5 %100.0 %
Three months ended March 31, 2022
Balance at beginning of period$3 $179 $72 $22 $30 $2 $308 
Provision/(benefit) for credit losses— 17 (1)3 2 — 21 
Net (charge-offs)/recoveries:     
Charge-offs— (1)— — — — (1)
Recoveries— — — — — — — 
Net (charge-offs)/recoveries— (1)— — — — (1)
Foreign exchange translation adjustment— — — — — — — 
Balance at end of period$3 $195 $71 $25 $32 $2 $328 
ACL by loan portfolio segment as a % of total ACL0.9 %59.5 %21.6 %7.6 %9.8 %0.6 %100.0 %
Six months ended March 31, 2022
Balance at beginning of period$4 $191 $66 $22 $35 $2 $320 
Provision/(benefit) for credit losses(1)7 5 3 (4)— 10 
Net (charge-offs)/recoveries:    
Charge-offs— (3)— — — — (3)
Recoveries— — — — 1 — 1 
Net (charge-offs)/recoveries— (3)— — 1 — (2)
Foreign exchange translation adjustment— — — — — — — 
Balance at end of period$3 $195 $71 $25 $32 $2 $328 
ACL by loan portfolio segment as a % of total ACL0.9 %59.5 %21.6 %7.6 %9.8 %0.6 %100.0 %

The allowance for credit losses on held for investment bank loans increased $7 million and $19 million during the three and six months ended March 31, 2023, respectively, resulting from a $28 million and $42 million provision for credit losses, respectively, partially offset by net charge-offs which were primarily related to two C&I loans. The provision for credit losses for the three months ended March 31, 2023 primarily reflected the impacts of charge-offs of certain loans during the quarter, loan portfolio segment, RJ Bank’s recorded investment (excluding anydowngrades in the CRE and C&I loan portfolios, and additional volatility in the macroeconomic outlook. The provision for credit losses for the six months ended March 31, 2023 was primarily due to a weaker macroeconomic outlook, net unearned income and deferred expenses)charge-offs, and the relatedimpact of loan growth during the period.

29
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The allowance for loan losses.
  Loans held for investment
  Allowance for loan losses Recorded investment
$ in thousands Individually evaluated for impairment Collectively evaluated for impairment Total Individually evaluated for impairment Collectively evaluated for impairment Total
December 31, 2017            
C&I $1,846
 $119,723
 $121,569
 $4,843
 $7,485,376
 $7,490,219
CRE construction —
 2,107
 2,107
 —
 164,847
 164,847
CRE —
 40,616
 40,616
 —
 3,136,101
 3,136,101
Tax-exempt —
 6,918
 6,918
 —
 1,136,468
 1,136,468
Residential mortgage 2,389
 13,112
 15,501
 44,429
 3,226,351
 3,270,780
SBL —
 4,558
 4,558
 —
 2,530,521
 2,530,521
Total $4,235
 $187,034
 $191,269
 $49,272
 $17,679,664
 $17,728,936
             
September 30, 2017            
C&I $1,963
 $117,938
 $119,901
 $5,221
 $7,380,689
 $7,385,910
CRE construction —
 1,421
 1,421
 —
 112,681
 112,681
CRE —
 41,749
 41,749
 —
 3,106,290
 3,106,290
Tax-exempt —
 6,381
 6,381
 —
 1,017,791
 1,017,791
Residential mortgage 2,506
 14,185
 16,691
 47,368
 3,101,362
 3,148,730
SBL —
 4,299
 4,299
 —
 2,386,697
 2,386,697
Total $4,469
 $185,973
 $190,442
 $52,589
 $17,105,510
 $17,158,099

The reserve forcredit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $10$21 million at March 31, 2023 and $19 million at both December 31, 20172022 and $11 million at September 30, 2017.2022.





34
NOTE 8 – LOANS TO FINANCIAL ADVISORS, NET
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
NotesLoans to Condensed Consolidated Financial Statements (Unaudited)financial advisors are primarily comprised of loans originated as a part of our recruiting activities. See Note 2 of our 2022 Form 10-K for a discussion of our accounting policies related to loans to financial advisors and the related allowance for credit losses. The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.

$ in millionsMarch 31, 2023September 30, 2022
Affiliated with the firm as of period-end (1)
$1,130 $1,173 
No longer affiliated with the firm as of period-end (2)
8 8 
Total loans to financial advisors1,138 1,181 
Allowance for credit losses(30)(29)
Loans to financial advisors, net$1,108 $1,152 
Accrued interest receivable on loans to financial advisors (included in “Other receivables, net”)$5 $5 
Allowance for credit losses as a percent of total loans to financial advisors2.64 %2.46 %



(1) These loans were predominantly current.

(2) These loans were predominantly past due for a period of 180 days or more.



NOTE 9 – VARIABLE INTEREST ENTITIES


A VIE requires consolidation by the entity’s primary beneficiary.  We evaluate all of the entities in which we are involved to determine if the entity is a VIE and if so, whether we hold a variable interest and are the primary beneficiary. Refer to Note 2 of our 20172022 Form 10-K for a discussion of our principal involvement with VIEs and the accounting policies regarding determination of whether we are deemed to be the primary beneficiary of VIEs.


VIEs where we are the primary beneficiary


Of the VIEs in which we hold an interest, we have determined that certain Private Equity Interests, a Low-Income Housing Tax Credit fundinvestments in low-income housing tax credit (“LIHTC fund”LIHTC”) in which RJ Bank is an investor and an affiliate of Raymond James Tax Credit Funds, Inc. (“RJTCF”) is the managing member, a LIHTC fund where RJTCF provides an investor member with a guaranteed return on their investment (“Guaranteed LIHTC Fund”), certain other LIHTC funds and the trust we utilize in connection with restricted stock unit (“RSU”) awards granted to certain employees of one of our Canadian subsidiarysubsidiaries (the “Restricted Stock Trust Fund”) require consolidation in our financial statements, as we are deemed the primary beneficiary of such VIEs.  The aggregate assets and liabilities of the VIEs we consolidate are provided in the table below.following table. Aggregate assets and aggregate liabilities may differ from the consolidated carrying value of assets and liabilities due to the elimination of intercompany assets and liabilities held by the consolidated VIE.

$ in millionsAggregate assetsAggregate liabilities
March 31, 2023  
LIHTC funds$55 $6 
Restricted Stock Trust Fund26 26 
Total$81 $32 
September 30, 2022  
LIHTC funds$59 $6 
Restricted Stock Trust Fund17 17 
Total$76 $23 



30
$ in thousands Aggregate assets Aggregate liabilities
December 31, 2017    
Private Equity Interests $97,475
 $3,614
LIHTC Fund in which RJ Bank is an investor member 56,556
 1,154
Guaranteed LIHTC Fund 50,870
 2,943
Other LIHTC Funds 7,519
 2,915
Restricted Stock Trust Fund 17,951
 17,951
Total $230,371
 $28,577
     
September 30, 2017  
  
Private Equity Interests $104,414
 $3,851
LIHTC Fund in which RJ Bank is an investor member 57,719
 1,055
Guaranteed LIHTC Fund 51,400
 2,872
Other LIHTC Funds 7,418
 2,544
Restricted Stock Trust Fund 12,122
 12,122
Total $233,073
 $22,444

In the Guaranteed LIHTC Fund, a multi-investor tax credit fund in which RJTCF is the managing member, RJTCF has provided one investor member a guaranteed return on their investment in the fund. See Note 9 in our 2017 Form 10-K for information regarding the financing asset associated with this fund and Note 14 of this Form 10-Q for additional information regarding this commitment.


35
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The following table presents information about the carrying value of the assets liabilities and equityliabilities of the VIEs which we consolidate and which are included withinon our Condensed Consolidated Statements of Financial Condition. The noncontrolling interests presentedIntercompany balances are eliminated in this table represent the portion of these net assets whichconsolidation and are not ours.
$ in thousands December 31, 2017 September 30, 2017
Assets:    
Cash and cash equivalents $2,343
 $2,052
Assets segregated pursuant to regulations and other segregated assets 4,242
 4,590
Other receivables 79
 168
Intercompany receivables 443
 454
Other investments 94,610
 101,905
Investments in real estate partnerships held by consolidated variable interest entities 110,662
 111,743
Trust fund investment in RJF common stock 17,949
 12,120
Other assets 43
 41
Total assets $230,371
 $233,073
     
Liabilities and equity:  
  
Other payables $11,968
 $9,667
Intercompany payables 22,302
 16,520
Total liabilities 34,270
 26,187
RJF equity 96,968
 101,445
Noncontrolling interests 99,133
 105,441
Total equity 196,101
 206,886
Total liabilities and equity $230,371
 $233,073

The trust fund investment in RJF common stockreflected in the table above is the Restricted Stock Trust Fund, which is included in “Treasury stock” in our Condensed Consolidated Statements of Financial Condition.following table.

$ in millionsMarch 31, 2023September 30, 2022
Assets:  
Cash and cash equivalents and assets segregated for regulatory purposes and restricted cash$5 $5 
Other assets50 54 
Total assets$55 $59 
Liabilities:  
Other payables$— $— 
Total liabilities$— $— 
Noncontrolling interests$(26)$(26)

VIEs where we hold a variable interest but are not the primary beneficiary


As discussed in Note 2 inof our 20172022 Form 10-K, we have concluded that for certain VIEs we are not the primary beneficiary and therefore do not consolidate these VIEs. Such VIEs include certain LIHTC funds, our interests in certain limited partnerships which are part of our private equity portfolio (“Private Equity Interests, certain LIHTC funds, New Market Tax Credit Funds (“NMTC Funds”Interests”), and other limited partnerships. Our risk of loss for these VIEs is limited to our investments in, advances to, and/or receivables due from these VIEs.


Aggregate assets, liabilities, and risk of loss


The aggregate assets, liabilities, and our exposure to loss from those VIEs in which we hold a variable interest, but as to which we have concluded we are not the primary beneficiary, are provided in the table below.following table.
 March 31, 2023September 30, 2022
$ in millionsAggregate
assets		Aggregate
liabilities		Our risk
of loss		Aggregate
assets		Aggregate
liabilities		Our risk
of loss
LIHTC funds$8,518 $2,759 $73 $7,752 $2,584 $136 
Private Equity Interests2,317 553 99 2,177 448 90 
Other109 70 3 159 101 8 
Total$10,944 $3,382 $175 $10,088 $3,133 $234 
  December 31, 2017 September 30, 2017
$ in thousands 
Aggregate
assets
 
Aggregate
liabilities
 
Our risk
of loss
 
Aggregate
assets
 
Aggregate
liabilities
 
Our risk
of loss
Private Equity Interests $9,270,590
 $177,780
 $71,048
 $10,485,611
 $174,354
 $73,457
LIHTC Funds 5,432,342
 2,129,756
 86,098
 5,372,367
 2,134,600
 60,959
NMTC Funds 30,196
 115
 9
 30,297
 105
 9
Other 169,462
 88,615
 3,535
 169,462
 88,615
 3,163
Total $14,902,590

$2,396,266

$160,690

$16,057,737

$2,397,674

$137,588



36
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





NOTE 10 - GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET


Our goodwill and identifiedidentifiable intangible assets result from various acquisitions. See NoteNotes 2 and 11 of our 20172022 Form 10-K for a discussion of our intangible assets and goodwill accounting policies. The following areadditional information about our goodwill and net identifiableintangible assets, including the related accounting policies.

We perform goodwill and indefinite-lived intangible asset balances as of the dates indicated:
$ in thousands December 31, 2017 September 30, 2017
Goodwill $479,775
 $410,723
Identifiable intangible assets, net 171,564
 82,460
Total goodwill and identifiable intangible assets, net $651,339
 $493,183

As more fully described in Note 3, we acquired Scout Group during the three months ended December 31, 2017, which included a number of identifiable intangible assets as well as goodwill. See Note 12 of our 2017 Form 10-K for a discussion of the components of our goodwill balance and additional information regarding our identifiable intangible assets.

Goodwill

The following summarizes our goodwill by segment, along with the balance and activity for the periods indicated:
  Segment  
$ in thousands Private Client Group Capital Markets Asset Management Total
For the three months ended December 31, 2017        
Goodwill as of beginning of period $276,713
 $134,010
 $—
 $410,723
Additions —
 —
 69,234
 69,234
Foreign currency translation (179) (3) —
 (182)
Goodwill as of end of period $276,534
 $134,007
 $69,234
 $479,775
         
For the three months ended December 31, 2016        
Goodwill as of beginning of period $275,521
 $132,551
 $—
 $408,072
Additions —
 —
 —
 —
Foreign currency translation (537) (1,038) —
 (1,575)
Goodwill as of end of period $274,984
 $131,513
 $—
 $406,497

The addition to goodwill during the three months ended December 31, 2017 arose from acquisition of the Scout Group.

As described in Note 2 of our 2017 Form 10-K, we perform goodwillimpairment testing on an annual basis or when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.value or indicate that the asset is impaired.  We performed our latest annual goodwill impairment testing during the quarter ended March 31, 2017,for our goodwill and indefinite-lived intangible assets as of our January 1, 2023 evaluation date, evaluating balances as of December 31, 2016, and no impairment was identified.2022. In that testing, we performed both a qualitative impairment assessment for certaineach of our reporting units and a quantitative impairment assessmentthat had goodwill, as well as for our two Raymond James Ltd. (“RJ Ltd.”)indefinite-lived intangible assets.

Our qualitative assessments consider macroeconomic indicators and industry and market considerations, such as trends in equity and fixed income markets, gross domestic product, labor markets, interest rates, and housing markets. We also consider regulatory changes, as well as company-specific factors such as reporting units operatingunit specific results and changes in Canada.key personnel and strategy. Changes in these indicators, and our ability to respond to such changes, may trigger the need for impairment testing at a point other than our annual assessment date. Based upon the outcome of our qualitative assessments, no impairment was identified. No events have occurred since our assessment during the quarter ended March 31, 2017such assessments that would cause us to update this impairment testing. See Note 12 in our 2017 Form 10-K for further information about our goodwill impairment testing.




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31
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





NOTE 11 - OTHER ASSETS

Identifiable intangible assets, net


The following table sets forthdetails the components of other assets. See Note 2 of our identifiable intangible asset balances by segment, net2022 Form 10-K for a discussion of accumulated amortization,the accounting polices related to certain of these components.
$ in millionsMarch 31, 2023September 30, 2022
Investments in company-owned life insurance policies$1,077 $944 
Property and equipment, net515 503 
Lease right of use (“ROU”) assets476 480 
Prepaid expenses249 173 
Investments in FHLB and FRB stock123 88 
All other244 264 
Total other assets$2,684 $2,452 

See Note 13 of our 2022 Form 10-K for further information regarding our property and activityequipment and Note 12 of this Form 10-Q and Note 14 of our 2022 Form 10-K for the periods indicated:further information regarding our leases.


NOTE 12 – LEASES
  Segment 
$ in thousands Private Client Group Capital Markets Asset Management Total
For the three months ended December 31, 2017        
Net identifiable intangible assets as of beginning of period $47,026
 $23,077
 $12,357
 $82,460
Additions —
 —
 92,290
 92,290
Amortization expense (1,496) (769) (871) (3,136)
Foreign currency translation (9) —
 (41) (50)
Net identifiable intangible assets as of end of period $45,521
 $22,308
 $103,735
 $171,564
         
For the three months ended December 31, 2016        
Net identifiable intangible assets as of beginning of period $52,936
 $27,937
 $14,101
 $94,974
Additions —
 —

—
 —
Amortization expense (1,520) (1,565) (498) (3,583)
Foreign currency translation (45) (38) (132) (215)
Net identifiable intangible assets as of end of period $51,371
 $26,334
 $13,471
 $91,176

The addition of intangible assets during the three months ended December 31, 2017 were attributable to the Scout Group acquisition.


The following table sets forthpresents the balances related to our acquired intangible asset balances by asset class:
  
Weighted average useful life
(in years)
 
Amount acquired
(in thousands)
Customer relationships 13 $34,900
Trade name 20 3,590
Developed technology 10 1,800
Intangible assets subtotal 13 $40,290
Non-amortizing customer relationships Indefinite 52,000
Total intangible assets acquired   $92,290

GAAP does not provide for the amortizationleases on our Condensed Consolidated Statements of indefinite-lived intangible assets. Rather, these assets are subject to an evaluation of potential impairment on an annual basis to determine whether the estimated fair value is in excess of its carrying value, or more often if events or circumstances indicate there may be impairment. In the courseFinancial Condition. See Notes 2 and 14 of our evaluation2022 Form 10-K for additional information related to our leases, including a discussion of the potential impairment of such indefinite-lived asset, we may perform either a qualitative or a quantitative assessment.  If after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value is greater than its carrying amount, then performing a quantitative analysis is not required.  However, if we conclude otherwise, we then perform a quantitative impairment analysis.  We have elected January 1 as our annual impairment evaluation date, evaluating balancesaccounting policies.
$ in millionsMarch 31, 2023September 30, 2022
ROU assets (included in Other assets)$476 $480 
Lease liabilities (included in Other payables)$478 $482 

Lease liabilities as of December 31.March 31, 2023 excluded $53 million of minimum lease payments related to lease arrangements that were legally binding but had not yet commenced. These leases are estimated to commence between dates later in fiscal year 2023 and fiscal year 2025 with lease terms ranging from two to 13 years.


Lease expense

The following summarizestable details the components of lease expense, which is included in “Occupancy and equipment” expense on our identifiable intangibleCondensed Consolidated Statements of Income and Comprehensive Income.
Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Lease costs$32 $29 $63 $57 
Variable lease costs$8 $8 $15 $15 

Variable lease costs in the preceding table include payments required under lease arrangements for common area maintenance charges and other variable costs that are not reflected in the measurement of ROU assets by type:and lease liabilities.


32
  December 31, 2017 September 30, 2017
$ in thousands Gross carrying value Accumulated amortization Gross carrying value Accumulated amortization
Customer relationships $133,610
 $(32,275) $99,749
 $(31,098)
Non-amortizing customer relationships 52,000
 —
 —
 —
Trade name 11,854
 (2,387) 8,366
 (2,076)
Developed technology 3,430
 (809) 1,630
 (706)
Intellectual property 538
 (144) 542
 (131)
Non-compete agreements 2,902
 (1,347) 3,336
 (1,551)
Seller relationship agreements 5,300
 (1,108) 5,300
 (901)
Total $209,634
 $(38,070) $118,923
 $(36,463)


38
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






NOTE 1113 – BANK DEPOSITS


Bank deposits include savings and money market and savings accounts, interest-bearing demand deposits, which include Negotiable Order of Withdrawal accounts, certificates of deposit, of RJ Bank, Negotiable Order of Withdrawal (“NOW”) accounts and non-interest-bearing demand deposits. The following table presents a summary of bank deposits, includingas well as the weighted-average rate, theinterest rates on such deposits. The calculation of whichthe weighted-average rates was based on the actual deposit balances and rates at Decembereach respective period end.
March 31, 2023September 30, 2022
$ in millionsBalanceWeighted-average rateBalanceWeighted-average rate
Money market and savings accounts$43,136 1.24 %$44,446 1.01 %
Interest-bearing demand deposits7,809 4.45 %5,286 2.77 %
Certificates of deposit2,656 4.15 %999 1.85 %
Non-interest-bearing demand deposits628 — 626 — 
Total bank deposits$54,229 1.86 %$51,357 1.21 %

Money market and savings accounts in the preceding table included $37.68 billion and $38.71 billion as of March 31, 20172023 and September 30, 2017.
  December 31, 2017 September 30, 2017
$ in thousands Balance Weighted-average rate Balance Weighted-average rate
Savings and money market accounts $18,377,271
 0.14% $17,391,091
 0.14%
Certificates of deposit 333,010
 1.64% 314,685
 1.60%
NOW accounts 5,982
 0.01% 5,197
 0.01%
Demand deposits (non-interest-bearing) 9,282
 —
 21,389
 —
Total bank deposits $18,725,545
 0.17% $17,732,362
 0.17%

Total bank deposits in the table above excludes affiliate deposits2022, respectively, of $246 million at December 31, 2017 and $243 million at September 30, 2017. These affiliate deposits include $193 million at December 31, 2017 and $192 million at September 30, 2017, held in a deposit account at RJ Bank on behalf of RJF.

Savings and money market accounts in the table above consist primarily of deposits that are cash balances which were swept to our Bank segment from the client investment accounts maintained at Raymond James & Associates, Inc. (“RJ&A”) to RJ Bank. These balances. Such deposits are held in Federal Deposit Insurance Corporation (“FDIC”) insured-insured bank accounts through the Raymond James Bank Deposit Program (“RJBDP”). Money market and savings accounts also included direct accounts held by TriState Capital Bank on behalf of third-party clients. Interest-bearing demand deposits in the preceding table included $2.75 billion of deposits as of March 31, 2023 associated with our Enhanced Savings Program, in which Private Client Group clients may deposit cash in a high-yield Raymond James Bank account.

The aggregatefollowing table details the estimated amount of time deposit account balancestotal bank deposits that are FDIC-insured, as well as the estimated amount of total bank deposits that exceeded the FDIC insurance limit at December 31, 2017 was $25 million.each respective period.

$ in millionsMarch 31, 2023September 30, 2022
FDIC-insured bank deposits$47,475 $43,520 
Bank deposits exceeding FDIC insurance limit6,754 7,837 
Total bank deposits$54,229 $51,357 
FDIC-insured bank deposits as a % of total bank deposits88 %85 %
Scheduled maturities
The following table sets forth the estimated amount of certificates of deposit arethat exceeded the FDIC insurance limit by time remaining until maturity as follows:of March 31, 2023.
$ in millionsMarch 31, 2023
Three months or less$38
Over three through six months23
Over six through twelve months29
Over twelve months13
Total estimated certificates of deposit that exceeded the FDIC insurance limit$103
  December 31, 2017 September 30, 2017
$ in thousands 
Denominations
greater than or
equal to $100,000
 
Denominations
less than $100,000
 
Denominations
greater than or
equal to $100,000
 
Denominations
less than $100,000
Three months or less $11,405
 $5,583
 $8,704
 $4,132
Over three through six months 5,251
 4,146
 4,692
 3,894
Over six through twelve months 42,837
 16,649
 34,005
 11,865
Over one through two years 37,836
 20,950
 38,713
 20,019
Over two through three years 49,602
 27,797
 48,082
 27,847
Over three through four years 9,462
 7,281
 21,819
 12,761
Over four through five years 62,534
 31,677
 50,805
 27,347
Total $218,927
 $114,083
 $206,820
 $107,865


Interest expense on deposits, excluding interest expense related to affiliateaffiliated deposits, is summarized in the following table.
Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Money market and savings accounts$128 $1 $245 $2 
Interest-bearing demand deposits62 1 109 2 
Certificates of deposit16 3 24 7 
Total interest expense on deposits$206 $5 $378 $11 

We use an interest rate swap to manage the risk of increases in interest rates associated with certain money market and savings accounts by converting the balances subject to variable interest rates to a fixed interest rate. Refer to Note 5 of this Form 10-Q for information regarding this interest rate swap, which has been designated and accounted for as follows:a cash flow hedge.



33
  Three months ended December 31,
$ in thousands 2017 2016
Certificates of deposit $1,272
 $1,135
Savings, money market, and NOW accounts 6,237
 1,648
Total interest expense on deposits $7,509
 $2,783



39
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






NOTE 1214 – OTHER BORROWINGS
 
The following table details the components of our other borrowings:
$ in thousands December 31, 2017 September 30, 2017
FHLB advances $875,000
 $875,000
RJF Credit Facility 300,000
 —
Secured lines of credit 180,000
 260,000
Unsecured lines of credit 150,000
 350,000
Mortgage notes payable and other 27,826
 29,012
Total other borrowings $1,532,826
 $1,514,012

Borrowings from the FHLB wereborrowings, which are primarily comprised of both floatingshort-term and fixed-rate advances. Aslong-term FHLB advances and subordinated notes.
March 31, 2023September 30, 2022
$ in millionsWeighted average interest rateMaturity dateBalanceWeighted average interest rateMaturity dateBalance
FHLB advances:
Floating rate - term (1)
5.09 %December 2023 - June 2024$850 3.32 %December 2023$850 
Floating rate - overnight (1)
N/AOvernight— 3.11 %Overnight140 
Fixed rate5.13 %April 2023 - June 2023700 3.45 %December 2022200 
Total FHLB advances1,550 1,190 
Subordinated notes - fixed-to-floating (including an unaccreted premium of $2 and $2, respectively) (2)
5.75 %May 2030100 5.75 %May 2030100 
Other— 1 
Total other borrowings$1,650 $1,291 
(1) Interest rates on these advances reset daily.
(2) Incur interest at a fixed rate of December 31, 20175.75% until May 2025 and September 30, 2017thereafter at a variable interest rate based on London Interbank Offered Rate, or an appropriate alternative reference rate. We may redeem these subordinated notes beginning in August 2025 at a redemption price equal to 100% of the floating-rate advances, which mature in June 2019principal amount of the notes to be redeemed plus accrued and haveunpaid interest rates which reset quarterly, totaled $850 million. thereon to the redemption date.

We use interest rate swaps to manage the risk of increases in interest rates associated with thesethe majority our floating-rate FHLB advances by converting the balances subject to variable interest rates to a fixed interest rate. Refer to Note 62 of our 2022 Form 10-K and Note 5 of this Form 10-Q for information regarding these interest rate swaps, which arehave been designated and accounted for as hedging instruments. The fixed-rate advance as of both December 31, 2017cash flow hedges. Refer to Note 6 for more information regarding bank loans, net and September 30, 2017, in the amount of $25 million, matures in October 2020 and bears interest at a fixed rate of 3.4%. All of the advances were secured by a blanket lien granted toavailable-for-sale securities pledged with the FHLB as security for our FHLB borrowings.

For further information on our residential mortgage loan portfolio. The weighted average interest rates on these advances as of December 31, 2017 and September 30, 2017 were 1.74% and 1.41%, respectively.

RJF is a partyother borrowing arrangements refer to a revolving credit facility agreement (the “RJF Credit Facility”) with a maturity date of May 2022 in which the lenders are a number of financial institutions. This committed unsecured borrowing facility provides for maximum borrowings of up to $300 million at variable rates of interest. The borrowings outstanding on the RJF Credit Facility bear interest at a rate of 2.98% per annum. The outstanding borrowings at December 31, 2017 were subsequently repaid in January 2018. There is a variable rate commitment fee associated with the RJF Credit Facility, which varies depending upon RJF’s credit rating. Based upon RJF’s credit rating as of December 31, 2017, the variable rate commitment fee which would apply to any difference between the daily borrowed amount and the committed amount, was 0.20% per annum. Any borrowings on unsecured lines of credit were short-term and were generally utilized for cash management purposes.

Any borrowings on secured lines of credit were day-to-day and were generally utilized to finance certain fixed income securities. In addition we have other collateralized financings included in “Securities sold under agreements to repurchase” on our Condensed Consolidated Statements of Financial Condition. See Note 7 for information regarding our collateralized financing arrangements.

The interest rates for all of our U.S. and Canadian secured and unsecured financing facilities are variable and are based on the Fed Funds rate, LIBOR, a lenders prime rate, or the Canadian prime rate, as applicable. For the three months ended December 31, 2017, interest rates on the U.S. facilities that were utilized during the period, other than the RJF Credit Facility which was previously described, ranged from 0.85% to 5.30%.

Mortgage notes payable pertain to mortgage loans on certain of our corporate headquarters offices located in St. Petersburg, Florida. These mortgage loans are secured by land, buildings, and improvements.  These mortgage loans bear interest at 5.7% with repayment terms of monthly interest and principal debt service and have a January 2023 maturity.


NOTE 13 – INCOME TAXES

For discussion of income tax accounting policies and other income tax related information, see Note 2 and Note 16 of our 20172022 Form 10-K.



NOTE 15 – INCOME TAXES

The income tax provision for interim periods is comprised of tax on ordinary income provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items.  We estimate the annual effective tax rate quarterly based on the forecasted pretaxpre-tax results of our U.S. and non-U.S. operations. Items unrelated to current year ordinary income are recognized entirely in the period identified as a discrete item of tax.  These discrete items generally relate to changes in tax laws, adjustments to the actual liability determined upon filing tax returns, excess tax benefits related to share-based compensation and adjustments to previously recorded reserves for uncertain tax positions. For discussion of income tax accounting policies and other income tax related information, see Notes 2 and 18 of our 2022 Form 10-K.



Effective tax rate


Our effective income tax rate of 22.6% for the six months ended March 31, 2023 was lower than the 25.4% effective tax rate for our fiscal year 2022. The decrease in the effective income tax rate was primarily due to nontaxable valuation gains associated with our company-owned life insurance policies that were recognized during the current period compared to fiscal year 2022 which had nondeductible losses.

Uncertain tax positions

Although management cannot predict with any degree of certainty the timing of ultimate resolution of matters under review by various taxing jurisdictions, it is reasonably possible that our uncertain tax position liability balance may decrease within the next 12 months by up to $10 million due to expirations of statutes of limitations and the completion of tax examinations.

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34
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The Tax Cuts and Jobs Act (the “Tax Act”)

On December 22, 2017, the Tax Act was enacted, which significantly revised the U.S. corporate income tax system by, among other things, lowering corporate income tax rates from 35% to 21% and implementing a territorial tax system which includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. As the firm’s fiscal year end is September 30th, our U.S. federal statutory tax rate will be 24.5% for our fiscal year ended September 30, 2018, which reflects a blended federal statutory rate of 35% for our first fiscal quarter and 21% for the remaining three fiscal quarters.  This blended statutory rate is the basis for calculating our effective tax rate, which is also impacted by other factors.

In response to the enactment of the Tax Act, the SEC issued guidance which summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Act. Further to (2) above, a registrant should record provisional amounts during a “measurement period” when the registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in tax law. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, not to exceed twelve months from the enactment date of the Tax Act. In accordance with the SEC guidance, our net income for the three months ended December 31, 2017 included an estimate of the discrete impact of the Tax Act of $117 million, primarily due to the remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate and, to a lesser extent, the transition tax on deemed repatriated earnings of foreign subsidiaries. This estimate incorporates assumptions made based on our current interpretation of the Tax Act and may change, possibly materially, as we complete our analysis and receive additional clarification and implementation guidance.

Reduction of U.S. federal corporate tax rate

We applied the SEC’s guidance in estimating the remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate, resulting in an estimated impact of $104 million. This calculation includes projections related to the timing of realization of deferred tax assets during the remainder of fiscal year 2018 and beyond. We will update our calculation throughout the year as more information becomes available. These estimates may change, possibly materially, as we obtain further information regarding the timing of realization of deferred tax assets.

Transition tax

We also applied the SEC’s guidance in estimating the transition tax, which we anticipate will be approximately $13 million, including the state tax liability associated with deemed repatriation of foreign earnings. Our tax liability calculations include projected amounts of unremitted earnings for our foreign subsidiaries for the remainder of the fiscal year. We will update our calculations throughout the year as more information on our foreign subsidiaries’ earning and profits becomes available. These estimates incorporate assumptions made based on our current interpretation of the Tax Act and may change, possibly materially, as we complete our analysis and receive additional clarification and implementation guidance.  

Executive compensation deduction limitation

We also applied the SEC’s guidance in accounting for the deferred tax assets potentially impacted by the Tax Act legislation. Effective for tax years beginning after December 31, 2017, the Tax Act eliminates the exception for performance-based compensation from the $1 million executive compensation deduction limitation. Our covered employees are paid a portion of performance-based compensation in the form of RSUs and stock awards which creates a deferred tax asset upon grant. The necessary information is not yet available to determine whether the deferred compensation previously granted will be deductible as a business expense as the legislation published to date is unclear on the effects to the deferred tax assets previously recorded. As such, we are unable to calculate a reasonable impact of this tax law change, thus in accordance with the SEC’s guidance, we did not include a provisional amount in our financial statements. We continue to apply accounting guidance based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. We will report provisional amounts in the first reporting period in which a reasonable estimate can be determined.

Indefinite reinvestment assertion

We are in the process of assessing the impact of the Tax Act on our current policy of indefinitely reinvesting foreign earnings, our related assertion to indefinitely reinvestment foreign earnings, as well as any such impact on our consolidated financial statements.  Accordingly, no adjustments were included in our Condensed Consolidated Financial Statements for the three months ended December 31, 2017 with respect to the firm’s indefinite reinvestment assertion.

41
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Effective tax rate

For the three months ended December 31, 2017, our effective income tax rate was 61.7%, including the estimated discrete impact of the Tax Act of $117 million, partially offset by a lower blended federal corporate statutory tax rate of 24.5%. The discrete impact of the Tax Act increased our effective tax rate by 37.6 percentage points. The effective tax rate for fiscal year 2017 was 31.2%.

Uncertain tax positions

We anticipate that the uncertain tax position liability balance will not change significantly over the next twelve months.


NOTE 1416 – COMMITMENTS, CONTINGENCIES AND GUARANTEES


Commitments and contingencies


Loan and Underwriting Commitmentscommitments


In the normal course of business, we enter into commitments for fixed incomedebt and equity underwritings. As of DecemberMarch 31, 2017,2023, we had one such open underwriting commitment, which was subsequently settled in an open market transactionstransaction and did not result in a significant loss.


As part of our recruiting efforts, we offer loans to prospective financial advisors and certain key revenue producers primarily for recruiting, transitional cost assistance, and retention purposes (see Note 2 of our 2017 Form 10-K for a discussion of our accounting policies governing these transactions). TheseLending commitments are contingent upon the occurrence of certain events, including, but not limited to, the individual joining us.  As of December 31, 2017, we had made commitments through the extension of formal offers totaling approximately $118 million that had not yet been funded; however, it is possible that not all of our offers will be accepted and therefore, we would not fund the total amount of the offers extended. As of December 31, 2017, $64 million of the total amount extended consisted of unfunded commitments to prospective financial advisors that had accepted our offers, or recently hired producers.

As of December 31, 2017, we had not settled purchases of $121 million in syndicated loans.  These loan purchases are expected to be settled within 90 days.

Commitments to extend credit and other credit-related financial instruments


RJ Bank hasWe have outstanding, at any time, a significant number of commitments to extend credit and other credit-related off-balance sheetoff-balance-sheet financial instruments, such as standby letters of credit and loan purchases, which then extend over varying periods of time. These arrangements are subject to strict underwriting assessments and each customer’sclient’s credit worthiness is evaluated on a case-by-case basis. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and our exposure is limited to the replacement value of those commitments.


The following table presents RJ Bank’sour commitments to extend credit and other credit-related off-balance sheet financial instruments outstanding:outstanding at our Bank segment.
$ in millionsMarch 31, 2023September 30, 2022
SBL and other consumer lines of credit$36,998 $33,641 
Commercial lines of credit$4,137 $3,792 
Unfunded lending commitments$1,153 $1,255 
Standby letters of credit$107 $94 
$ in thousands December 31, 2017 September 30, 2017
Standby letters of credit $38,436
 $39,670
Open-end consumer lines of credit (primarily SBL) $5,782,262
 $5,323,003
Commercial lines of credit $1,723,429
 $1,673,272
Unfunded loan commitments $521,676
 $386,950


SBL and other consumer lines of credit primarily represent the unfunded amounts of bank loans to consumers that are secured by marketable securities or other liquid collateral at advance rates consistent with industry standards. The proceeds from repayment or, if necessary, the liquidation of collateral, which is monitored daily, are expected to satisfy the amounts drawn against these existing lines of credit. These lines of credit are primarily uncommitted, as we reserve the right to not make any advances or may terminate these lines at any time.

Because many of our lending commitments expire without being funded in whole or in part, the contractcontractual amounts are not estimates of our actual future credit exposure or future liquidity requirements. We maintain a reserve to provideThe allowance for credit losses calculated under the current expected credit losses (“CECL”) model provides for potential losses related to the unfunded lending commitments. See Note 82 of our 2022 Form 10-K and Note 7 of this Form 10-Q for further discussion ofinformation on this reserveallowance for credit losses related to unfunded lending commitments.


Investment CommitmentsRJ&A enters into margin lending arrangements which allow customers to borrow against the value of qualifying securities. Margin loans are collateralized by the securities held in the customer’s account at RJ&A. Collateral levels and established credit terms are monitored daily and we require customers to deposit additional collateral or reduce balances as necessary.


A subsidiary of RJ Bank has committed $80 million as an investor member in a LIHTC fund in which a subsidiary of RJTCF is the managing memberWe offer loans to prospective financial advisors for recruiting and retention purposes (see Note 2 of our 20172022 Form 10-K and Note 8 of this Form 10-Q for information regardingfurther discussion of our loans to financial advisors). These offers are contingent upon certain events occurring, including the accounting policies governing these investments). Asindividuals joining us and meeting certain other conditions outlined in their offer.

Investment commitments

We had unfunded commitments to various investments, primarily held by Raymond James Bank and TriState Capital Bank, of December$63 million as of March 31, 2017, the RJ Bank subsidiary had invested $62 million of the committed amount.2023.


42
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Other commitments




We have unfunded commitments to various private equity investments, which aggregate to $36 million as of December 31, 2017. Of the total, we have unfunded commitments of $18 million to internally-sponsored private equityRaymond James Affordable Housing Investments, Inc. (“RJAHI”) sells investments in which we control the general partner.

Acquisition-Related Commitments and Contingencies

We have potential contingent payments related to our acquisitions of the Scout Group, The Producer’s Choice LLC and Mummert & Company Corporate Finance GmbH. The estimated fair values of such contingent payments were included in our Condensed Consolidated Statements of Financial Condition as of December 31, 2017.

Other Commitments
RJF has committed an amount of up to $225 million, subject to certain limitations and to annual re-approval by the RJF Board of Directors, to either lend to, or guarantee obligations of RJTCF in connection with RJTCF’s low-income housing development/rehabilitation and syndication activities. At December 31, 2017, RJTCF had $111 million outstanding against this commitment. RJTCF may borrow from RJF in order to make investments in, or fund loans or advances to, either partnerships that purchase and develop properties qualifying for tax credits (“project partnerships”) or LIHTC funds. Investments in project partnerships are sold to various LIHTC funds, which have third partythird-party investors, and for which RJTCFRJAHI serves as the managing member or general partner. RJTCFRJAHI typically sells investments in project partnerships to LIHTC funds within 90 days of their acquisition,acquisition. Until such investments are sold to LIHTC funds, RJAHI is responsible for funding investment commitments to such partnerships. As of March 31, 2023, RJAHI had committed approximately $149 million to project partnerships that had not yet been sold to LIHTC funds. Because we expect to sell these project partnerships to LIHTC funds and the proceeds fromequity funding events arise over future periods, the salescontractual commitments are usednot expected to repay RJTCF’s borrowings from RJF. RJTCFmaterially impact our future liquidity requirements. RJAHI may also make short-term loans or advances to project partnerships and LIHTC funds.


As a partFor information regarding our lease commitments see Note 12 of this Form 10-Q and for information on the maturities of our fixed income public finance operations, we enter into forward commitments to purchase GNMA or FNMA MBS (see the discussion of these activities withinlease liabilities see Note 214 of our 20172022 Form 10-K).  At December 31, 2017, we had $851 million principal amount of outstanding forward MBS purchase commitments which were expected to be purchased over the following 90 days.  In order to hedge the market interest rate risk to which we would otherwise be exposed between the date of the commitment and the date of sale of the MBS, we enter into to be announced (“TBA”) security contracts with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future.  These TBA securities and related purchased commitments are accounted for at fair value. As of December 31, 2017, the fair value of the TBA securities and the estimated fair value of the purchase commitments were insignificant.10-K.

Contingencies

RJF and certain of its subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations. The reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time into industry practices, which can also result in the imposition of such sanctions. Refer to the “Legal and regulatory matter contingencies” discussion within this footnote for information about related loss contingency reserves.


Guarantees


Our U.S. broker-dealer subsidiaries are required by federal law to be members of the Securities Investors Protection Corporation (“SIPC”). The SIPC fund provides protection up to $500 thousand per client for securities and cash held in client accounts, including a limitation of $250 thousand on claims for cash balances. We have purchased excess SIPC coverage through various syndicates of Lloyd’s of London. For RJ&A, our clearing broker-dealer, the additional protection currently provided has an aggregate firm limit of $750 million for cash and securities, including a sub-limit of $1.9 million per client for cash above basic SIPC. Account protection applies when a SIPC member fails financially and is unable to meet its obligations to clients. This coverage does not protect against market fluctuations. RJF has provided an indemnity to Lloyd’s of London against any and all losses they may incur associated with the excess SIPC policies.

RJTCF issues certain guarantees to various third parties related to project partnerships whose interests have been sold to one or more of the funds in which RJTCF is the managing member or general partner. In some instances, RJTCF is not the primary guarantor of these obligations, which aggregated to $3 million as of December 31, 2017.

RJTCF has provided a guaranteed return on investment to a third-party investor in the Guaranteed LIHTC Fund and RJF has guaranteed RJTCF’s performance under the arrangement.  Under the terms of the performance guarantee, should the underlying LIHTC project partnerships held by the Guaranteed LIHTC Fund fail to deliver a certain amount of tax credits and other tax benefits to this investor

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





over the next five years, RJTCF is obligated to pay the investor an amount that results in the investor achieving a minimum specified return on their investment.  A $16 million financing asset was included in “Other assets,” and a related $16 million liability was included in “Other payables” on our Condensed Consolidated Statements of Financial Condition as of December 31, 2017 related to this obligation. The maximum exposure to loss under this guarantee was $17 million at December 31, 2017, which represented the undiscounted future payments due the investor.


Legal and regulatory mattermatters contingencies


In addition to the matters specifically described below, in the normal course of our business, we have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our activities as a diversified financial services institution.


WeRJF and certain of its subsidiaries are also subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations. Reviews can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censures to fines and, in serious cases, temporary or permanent suspension from conducting business, or limitations on certain business activities. In addition, regulatory agencies and self-regulatory organizations institute investigations from time to time, among other things, into industry practices, which can also result in the imposition of such sanctions. For example, the firm is continuing its cooperation with the SEC in connection with an investigation of the firm’s investment advisory business’ compliance with records preservation requirements relating to business communications sent over electronic messaging channels that have not been approved by the firm. The SEC is reportedly conducting similar investigations of record preservation practices at other reviews, investigationsfinancial institutions.

We may contest liability and/or the amount of damages, as appropriate, in each pending matter. The level of litigation and proceedingsinvestigatory activity (both formal and informal) by governmentalgovernment and self-regulatory agencies regarding our business. Such proceedings may involve, among other things, our sales and trading activities, financial products or offerings we sponsored, underwrote or sold, and operational matters. Some of these proceedings have resulted, and may in the future result, in adverse judgments, settlements, fines, penalties, injunctionsfinancial services industry continues to be significant. There can be no assurance that material losses will not be incurred from claims that have not yet been asserted or other relief and/or require usare not yet determined to undertake remedial actions.be material.


WeFor many legal and regulatory matters, we are unable to estimate a range of reasonably possible loss as we cannot predict if, how or when such proceedings or investigations will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be. A large number of factors may contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental proceedings, potential fines and penalties); the matters present significant legal uncertainties; we have not engaged in settlement discussions; discovery is not complete; there are significant facts in dispute; and numerous parties are named as defendants (including where it is uncertain how liability might be shared among defendants).

We contest liability and/or the amount of damages, as appropriate, in each pending matter. Over the last several years, the level of litigation and investigatory activity (both formal and informal) by government and self-regulatory agencies has increased significantly in the financial services industry. While we have identified below certain proceedings that we believe could be material, individually or collectively, there can be no assurance that material losses will not be incurred from claims that have not yet been asserted or are not yet determined to be material.

We may include in some of the descriptions of individual matters below certain quantitative information about the plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings. Although this information may provide insight into the potential magnitude of a matter, it does not represent our estimate of reasonably possible loss or our judgment as to any currently appropriate accrual related thereto.

Subject to the foregoing, we believe, after consultation with counsel, and consideration of the accrued liability amounts included in the accompanying condensed consolidated financial statements,we believe that the outcome of such litigation and regulatory proceedings will not have a material adverse effect on our consolidated financial condition. However, the outcome of such litigation and regulatory proceedings could be material to our operating results and cash flows for a particular future period, depending on, among other things, our revenues or income for such period.


36
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
There are certain matters for which we are unable to estimate the upper end of the range of reasonably possible loss. With respect to legal and regulatory matters for which management has been able to estimate a range of reasonably possible loss (and excluding amounts subject to the below-described indemnification from Regions Financial Corporation (“Regions”)), as of DecemberMarch 31, 2017,2023, we estimated the upper end of the range of reasonably possible aggregate loss to be approximately $70$100 million in excess of the aggregate reservesaccruals for such matters.  Refer to Note 2 of our 20172022 Form 10-K for a discussion of our criteria for recognizing liabilities for contingencies.


Morgan Keegan Litigation

Indemnification from RegionsNOTE 17 – SHAREHOLDERS’ EQUITY


Under
Preferred stock

The following table details the agreement with Regions governingshares outstanding, carrying value, and aggregate liquidation preference of our 2012 acquisitionpreferred stock. For further details regarding our preferred stock see Note 20 of Morgan Keegan & Company, Inc., and MK Holding, Inc. and certainour 2022 Form 10-K.
$ in millions, except share countMarch 31, 2023September 30, 2022
6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”):
Shares outstanding40,25040,250
Carrying value$41 $41 
Aggregate liquidation preference$40 $40 
6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock (“Series B Preferred Stock”):
Shares outstanding80,50080,500
Carrying value$79 $79 
Aggregate liquidation preference$81 $81 

On April 3, 2023, we redeemed all 40,250 outstanding shares of its affiliates (collectively referred to as “Morgan Keegan”), Regions is obligated to indemnify us for losses we may incur in connection with any Morgan Keegan legal proceedings pending asour Series A Preferred Stock, which triggered the redemption of the closing daterelated depositary shares (“Series A Depositary Shares”), each representing a 1/40th interest of a share of Series A Preferred Stock, for that transaction, which was April 2, 2012, or commenced afteran aggregate redemption value of $40 million. The redemption of the closing date but related to pre-closing matters that were received prior to April 2, 2015.Series A Preferred Stock will be reflected in our condensed consolidated financial statements in our fiscal third quarter of 2023.



The following table details dividends declared and dividends paid on our Series A and Series B preferred stock for the three and six months ended March 31, 2023.
 Three months ended March 31, 2023Six months ended March 31, 2023
$ in millions, except per share amountsTotal dividendsPer preferred
share amount		Total dividendsPer preferred
share amount
Dividends declared:
Series A Preferred Stock$1 $16.88 $2 $33.76 
Series B Preferred Stock1 $15.94 2 $31.88 
Total preferred stock dividends declared$2 $4 
Dividends paid:
Series A Preferred Stock$1 $16.88 $2 $33.76 
Series B Preferred Stock1 $15.94 2 $31.88 
Total preferred stock dividends paid$2 $4 

44
37
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Common equity


The Morgan Keegan matter described belowCommon stock issuance

We issue shares from time to time during the year to satisfy obligations under certain of our share-based compensation programs. See Note 20 of this Form 10-Q and Note 23 of our 2022 Form 10-K for additional information on these programs. We may also reissue treasury shares for such purposes.

Share repurchases

We repurchase shares of our common stock from time to time for a number of reasons, including to offset dilution from share-based compensation. In December 2022, our Board of Directors authorized common stock repurchases of up to $1.5 billion, which replaced the previous authorization. Our share repurchases are effected primarily through regular open-market purchases, typically under a SEC Rule 10b-18 plan, the amounts and timing of which are determined primarily by our current and projected capital position, applicable law and regulatory constraints, general market conditions, and the price and trading volumes of our common stock. During the three months ended March 31, 2023, we repurchased 3.75 million shares of our common stock for $350 million at an average price of $93 per share under the Board of Directors’ common stock repurchase authorization. During the six months ended March 31, 2023, we repurchased 5.04 million shares of our common stock for $488 million at an average price of $97 per share under the Board of Directors’ common stock repurchase authorization. As of March 31, 2023, approximately $1.1 billion remained available under such authorization.

Common stock dividends

Dividends per common share declared and paid are detailed in the following table for each respective period.
 Three months ended March 31,Six months ended March 31,
 2023202220232022
Dividends per common share - declared$0.42 $0.34 $0.84 $0.68 
Dividends per common share - paid$0.42 $0.34 $0.76 $0.60 

Our dividend payout ratio is detailed in the following table for each respective period and is computed by dividing dividends declared per common share by earnings per diluted common share.
 Three months ended March 31,Six months ended March 31, 2023
2023202220232022
Dividend payout ratio21.8 %22.4 %19.9 %18.8 %

RJF expects to continue paying cash dividends. However, the payment and rate of dividends on our common stock are subject to such indemnification provisions. Asseveral factors including our operating results, financial and regulatory requirements or restrictions, and the availability of December 31, 2017, management estimated the range of potential liability of all Morgan Keegan mattersfunds from our subsidiaries, including our broker-dealer and bank subsidiaries, which may also be subject to indemnification, including the costrestrictions under regulatory capital rules. The availability of defense,funds from subsidiaries may also be subject to be from $12 million to $44 million. Any loss arising from such matters, after applicationrestrictions contained in loan covenants of any contractual thresholdscertain broker-dealer loan agreements and other reductions, as set forth in the agreement, will be bornerestrictions by Regions. As of December 31, 2017 our Condensed Consolidated Statements of Financial Condition included an indemnification asset of $25 million which was included in “Other assets,” and a liability for potential losses of $25 million which was included within “Other payables,” pertainingbank regulators on dividends to the Morgan Keegan matters subject to indemnification. The amount included within “Other payables” is the amount within the rangeparent from Raymond James Bank and TriState Capital Bank. See Note 21 of potential liability related to such matters which management estimated was more likely than any other amount within such range.this Form 10-Q for additional information on our regulatory capital requirements.

Morgan Keegan matter (subject to indemnification)

In July 2006, Morgan Keegan & Company, Inc., a Morgan Keegan affiliate, and one of its former analysts were named as defendants in a lawsuit filed by Fairfax Financial Holdings Limited and an affiliate in the Superior Court of New Jersey, Law Division, in Morris County, New Jersey. Plaintiffs made claims under a civil RICO statute, for commercial disparagement, tortious interference with contractual relationships, tortious interference with prospective economic advantage and common law conspiracy. Plaintiffs alleged that defendants engaged in a multi-year conspiracy to publish and disseminate false and defamatory information about plaintiffs in order to improperly drive down the stock price of Fairfax, so that others could profit from short positions. Plaintiffs alleged that the defendants’ actions disparaged them and harmed their business relationships. Plaintiffs alleged various categories of damages, including lost insurance business, losses on stock and bond offerings, reputational loss, increased audit fees and directors’ and officers’ insurance premiums, and lost acquisitions. They requested actual and punitive damages and treble damages under their RICO claims. On May 11, 2012, the trial court dismissed the plaintiffs’ RICO claims. On June 27, 2012, the trial court dismissed plaintiffs’ tortious interference with prospective relations claim, but allowed the other claims to go forward. Prior to commencement of a jury trial, the court dismissed the remaining claims with prejudice, and the plaintiffs appealed. On April 27, 2017, the Superior Court of New Jersey, Appellate Division, affirmed the trial court’s dismissal of certain claims against Morgan Keegan, including RICO allegations, while remanding to the trial court the claims of disparagement, tortious interference with prospective business relations, and civil conspiracy, and limiting the actual damages to certain lost insurance business. Plaintiffs petitioned the Supreme Court of New Jersey for review of the Appellate Division’s opinion, but on October 17, 2017, the Supreme Court of New Jersey denied the petition.


NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Other comprehensive income/(loss)

The activity in other comprehensive income/(loss), net of the respective tax effect, was as follows:
38
  Three months ended December 31,
$ in thousands 2017 2016
Unrealized loss on available-for-sale securities and non-credit portion of other-than-temporary impairment losses $(11,953) $(4,146)
Unrealized gain/(loss) on currency translations, net of the impact of net investment hedges (187) 1,001
Unrealized gain on cash flow hedges 6,885
 25,738
Net other comprehensive income/(loss) $(5,255) $22,593


45
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





Accumulated other comprehensive income/(loss)


All of the components of other comprehensive income/(loss) described below,(“OCI”), net of tax, arewere attributable to RJF. The following table presents the net change in AOCI as well as the changes, and the related tax effects, of each component of accumulated other comprehensive income/(loss):AOCI.
$ in millionsNet investment hedgesCurrency translationsSubtotal: net investment hedges and currency translationsAvailable- for-sale securitiesCash flow hedgesTotal
Three months ended March 31, 2023
AOCI as of beginning of period$139 $(216)$(77)$(855)$41 $(891)
OCI:
OCI before reclassifications and taxes(4)11 7 126 (7)126 
Amounts reclassified from AOCI, before tax— — — — (8)(8)
Pre-tax net OCI(4)11 7 126 (15)118 
Income tax effect1 (1)— (29)4 (25)
OCI for the period, net of tax(3)10 7 97 (11)93 
AOCI as of end of period$136 $(206)$(70)$(758)$30 $(798)
Six months ended March 31, 2023
AOCI as of beginning of period$153 $(276)$(123)$(902)$43 $(982)
OCI:
OCI before reclassifications and taxes(23)71 48 211 (5)254 
Amounts reclassified from AOCI, before tax— — — — (13)(13)
Pre-tax net OCI(23)71 48 211 (18)241 
Income tax effect6 (1)5 (67)5 (57)
OCI for the period, net of tax(17)70 53 144 (13)184 
AOCI as of end of period$136 $(206)$(70)$(758)$30 $(798)
Three months ended March 31, 2022
AOCI as of beginning of period$80 $(89)$(9)$(60)$(18)$(87)
OCI:
OCI before reclassifications and taxes(12)(2)(14)(433)35 (412)
Amounts reclassified from AOCI, before tax— — — — 4 4 
Pre-tax net OCI(12)(2)(14)(433)39 (408)
Income tax effect3 — 3 113 (10)106 
OCI for the period, net of tax(9)(2)(11)(320)29 (302)
AOCI as of end of period$71 $(91)$(20)$(380)$11 $(389)
Six months ended March 31, 2022
AOCI as of beginning of period$81 $(90)$(9)$(5)$(27)$(41)
OCI:
OCI before reclassifications and taxes(14)(1)(15)(505)43 (477)
Amounts reclassified from AOCI, before tax— — — — 8 8 
Pre-tax net OCI(14)(1)(15)(505)51 (469)
Income tax effect4 — 4 130 (13)121 
OCI for the period, net of tax(10)(1)(11)(375)38 (348)
AOCI as of end of period$71 $(91)$(20)$(380)$11 $(389)
$ in thousands Net investment hedges Currency translations Sub-total: net investment hedges and currency translations Available- for-sale securities Cash flow hedges Total
Three months ended December 31, 2017            
Accumulated other comprehensive income/(loss) as of the beginning of the period $60,201
 $(79,677) $(19,476) $(2,472) $6,749
 $(15,199)
Other comprehensive income/(loss) before reclassifications and taxes 7,607
 (5,760) 1,847
 (15,549) 6,774
 (6,928)
Amounts reclassified from accumulated other comprehensive income, before tax —
 —
 —
 —
 1,409
 1,409
Pre-tax net other comprehensive income/(loss) 7,607
 (5,760) 1,847
 (15,549) 8,183
 (5,519)
Income tax effect (2,034) —
 (2,034) 3,596
 (1,298) 264
Net other comprehensive income/(loss) for the period, net of tax 5,573
 (5,760) (187) (11,953) 6,885
 (5,255)
Accumulated other comprehensive income/(loss) as of end of period $65,774
 $(85,437) $(19,663) $(14,425) $13,634
 $(20,454)
Three months ended December 31, 2016            
Accumulated other comprehensive income/(loss) as of the beginning of the period $86,482
 $(121,576) $(35,094) $(4,156) $(16,483) $(55,733)
Other comprehensive income/(loss) before reclassifications and taxes 18,098
 (17,756) 342
 (6,858) 39,941
 33,425
Amounts reclassified from accumulated other comprehensive income/(loss), before tax —
 6,537
 6,537
 (12) 1,572
 8,097
Pre-tax net other comprehensive income/(loss) 18,098
 (11,219) 6,879
 (6,870) 41,513
 41,522
Income tax effect (6,772) 894
 (5,878) 2,724
 (15,775) (18,929)
Net other comprehensive income/(loss) for the period, net of tax 11,326
 (10,325) 1,001
 (4,146) 25,738
 22,593
Accumulated other comprehensive income/(loss) as of end of period $97,808
 $(131,901) $(34,093) $(8,302) $9,255
 $(33,140)


Reclassifications from AOCI to net income, excluding taxes, for the three and six months ended March 31, 2023 and 2022 were recorded in “Interest expense” on the Condensed Consolidated Statements of Income and Comprehensive Income.

Our net investment hedges and cash flow hedges relate to our derivatives associated with RJ Bank’s business operations (seeour Bank segment. For further information about our significant accounting policies related to derivatives, see Note 62 of our 2022 Form 10-K. In addition, see Note 5 of this Form 10-Q for additional information on these derivatives).derivatives.




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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





NOTE 18 – REVENUES

Reclassifications out of accumulated other comprehensive income/(loss)


The following table presents the income statement line items impactedtables present our sources of revenues by reclassifications out of accumulated other comprehensive income/(loss), and thesegment. For further information about our significant accounting policies related tax effects, for the three months ended December 31, 2017 and 2016:
Accumulated other comprehensive income/(loss) components:
$ in thousands
 Increase/(decrease) in amounts reclassified from accumulated other comprehensive income/(loss) Affected line items in income statement
Three months ended December 31, 2017    
RJ Bank cash flow hedges $1,409
 Interest expense
  1,409
 Total before tax
Income tax effect (402) Provision for income taxes
Total reclassifications for the period $1,007
 Net of tax
Three months ended December 31, 2016
RJ Bank available-for-sale securities $(12) Other revenue
RJ Bank cash flow hedges 1,572
 Interest expense
Currency translations 6,537
 Other expense
  8,097
 Total before tax
Income tax effect (3,076) Provision for income taxes
Total reclassifications for the period $5,021
 Net of tax

During the quarter ended December 31, 2016, we sold our interests in a number of Latin American joint ventures which had operations in Uruguay and Argentina. As a componentto revenue recognition see Note 2 of our computation2022 Form 10-K. See Note 26 of our 2022 Form 10-K and Note 23 of this Form 10-Q for additional information on our segment results.
Three months ended March 31, 2023
$ in millionsPrivate Client GroupCapital MarketsAsset ManagementBankOther and intersegment eliminationsTotal
Revenues:
Asset management and related administrative fees$1,102 $— $206 $— $(6)$1,302 
Brokerage revenues:
Securities commissions:
Mutual and other fund products135 2 1 — (1)137 
Insurance and annuity products113 — — — — 113 
Equities, exchange traded funds (“ETFs”) and fixed income products88 32 — — (1)119 
Subtotal securities commissions336 34 1 — (2)369 
Principal transactions (1)
28 96 — 4 (1)127 
Total brokerage revenues364 130 1 4 (3)496 
Account and service fees:
Mutual fund and annuity service fees105 — 1 — (1)105 
RJBDP fees411 1 — — (312)100 
Client account and other fees56 1 5 — (9)53 
Total account and service fees572 2 6 — (322)258 
Investment banking:
Merger & acquisition and advisory— 87 — — — 87 
Equity underwriting9 29 — — — 38 
Debt underwriting— 29 — — — 29 
Total investment banking9 145 — — — 154 
Other:
Affordable housing investments business revenues— 23 — — — 23 
All other (1)
9 1 — 6 (7)9 
Total other9 24 — 6 (7)32 
Total non-interest revenues2,056 301 213 10 (338)2,242 
Interest income (1)
117 21 3 749 25 915 
Total revenues2,173 322 216 759 (313)3,157 
Interest expense(29)(20)— (219)(16)(284)
Net revenues$2,144 $302 $216 $540 $(329)$2,873 

(1)    These revenues are generally not in scope of the gain or loss resultingaccounting guidance for revenue from such sales, we recognized the sold entities’ cumulative currency translation balances which, prior to such reclassification, had been a component of the accumulated other comprehensive loss.contracts with customers.




47
40
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Three months ended March 31, 2022
$ in millionsPrivate Client GroupCapital MarketsAsset ManagementBankOther and intersegment eliminationsTotal
Revenues:
Asset management and related administrative fees$1,245 $1 $226 $— $(8)$1,464 
Brokerage revenues:
Securities commissions:
Mutual and other fund products166 2 2 — (1)169 
Insurance and annuity products110 — — — — 110 
Equities, ETFs and fixed income products105 38 — — — 143 
Subtotal securities commissions381 40 2 — (1)422 
Principal transactions (1)
16 126 — — — 142 
Total brokerage revenues397 166 2 — (1)564 
Account and service fees:
Mutual fund and annuity service fees109 — — — — 109 
RJBDP fees69 — — — (49)20 
Client account and other fees53 2 6 — (11)50 
Total account and service fees231 2 6 — (60)179 
Investment banking:
Merger & acquisition and advisory— 139 — — — 139 
Equity underwriting9 52 — — — 61 
Debt underwriting— 35 — — — 35 
Total investment banking9 226 — — — 235 
Other:
Affordable housing investments business revenues— 15 — — — 15 
All other (1)
6 1 — 8 (3)12 
Total other6 16 — 8 (3)27 
Total non-interest revenues1,888 411 234 8 (72)2,469 
Interest income (1)
37 5 — 199 1 242 
Total revenues1,925 416 234 207 (71)2,711 
Interest expense(3)(3)— (10)(22)(38)
Net revenues$1,922 $413 $234 $197 $(93)$2,673 



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

41

RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Six months ended March 31, 2023
$ in millionsPrivate Client GroupCapital MarketsAsset ManagementBankOther and intersegment eliminationsTotal
Revenues:
Asset management and related administrative fees$2,155 $1 $403 $— $(15)$2,544 
Brokerage revenues:
Securities commissions:
Mutual and other fund products263 3 2 — (1)267 
Insurance and annuity products217 — — — — 217 
Equities, ETFs and fixed income products173 65 — — (1)237 
Subtotal securities commissions653 68 2 — (2)721 
Principal transactions (1)
56 196 — 8 (1)259 
Total brokerage revenues709 264 2 8 (3)980 
Account and service fees:
Mutual fund and annuity service fees203 — 1 — (1)203 
RJBDP fees816 2 — — (581)237 
Client account and other fees116 3 10 — (22)107 
Total account and service fees1,135 5 11 — (604)547 
Investment banking:
Merger & acquisition and advisory— 189 — — — 189 
Equity underwriting18 44 — — (1)61 
Debt underwriting— 45 — — — 45 
Total investment banking18 278 — — (1)295 
Other:
Affordable housing investments business revenues— 47 — — — 47 
All other (1)
15 1 2 19 (8)29 
Total other15 48 2 19 (8)76 
Total non-interest revenues4,032 596 418 27 (631)4,442 
Interest income (1)
226 44 5 1,425 42 1,742 
Total revenues4,258 640 423 1,452 (589)6,184 
Interest expense(51)(43)— (404)(27)(525)
Net revenues$4,207 $597 $423 $1,048 $(616)$5,659 

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

42
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Six months ended March 31, 2022
$ in millionsPrivate Client GroupCapital MarketsAsset ManagementBankOther and intersegment eliminationsTotal
Revenues:
Asset management and related administrative fees$2,407 $2 $453 $— $(16)$2,846 
Brokerage revenues:
Securities commissions:
Mutual and other fund products337 4 4 — (1)344 
Insurance and annuity products221 — — — — 221 
Equities, ETFs and fixed income products209 73 — — — 282 
Subtotal securities commissions767 77 4 — (1)847 
Principal transactions (1)
27 248 — — — 275 
Total brokerage revenues794 325 4 — (1)1,122 
Account and service fees:
Mutual fund and annuity service fees223 — — — (1)222 
RJBDP fees136 — — — (99)37 
Client account and other fees102 4 12 — (21)97 
Total account and service fees461 4 12 — (121)356 
Investment banking:
Merger & acquisition and advisory— 410 — — — 410 
Equity underwriting22 149 — — — 171 
Debt underwriting— 79 — — — 79 
Total investment banking22 638 — — — 660 
Other:
Affordable housing investments business revenues— 50 — — — 50 
All other (1)
13 3 1 14 (3)28 
Total other13 53 1 14 (3)78 
Total non-interest revenues3,697 1,022 470 14 (141)5,062 
Interest income (1)
70 10 — 386 1 467 
Total revenues3,767 1,032 470 400 (140)5,529 
Interest expense(6)(5)— (20)(44)(75)
Net revenues$3,761 $1,027 $470 $380 $(184)$5,454 

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

At March 31, 2023 and September 30, 2022, net receivables related to contracts with customers were $540 million and $511 million, respectively.


43
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1619 – INTEREST INCOME AND INTEREST EXPENSE


The following table details the components of interest income and interest expense are as follows:expense.
 Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Interest income:  
Cash and cash equivalents$75 $3 $130 $6 
Assets segregated for regulatory purposes and restricted cash55 7 105 11 
Trading assets — debt securities13 4 27 9 
Available-for-sale securities54 25 107 47 
Brokerage client receivables41 21 82 42 
Bank loans, net657 171 1,256 335 
All other20 11 35 17 
Total interest income$915 $242 $1,742 $467 
Interest expense:  
Bank deposits$206 $5 378 $11 
Trading liabilities — debt securities7 1 17 2 
Brokerage client payables23 — 40 1 
Other borrowings9 4 18 9 
Senior notes payable23 23 46 46 
All other16 5 26 6 
Total interest expense$284 $38 $525 $75 
Net interest income$631 $204 $1,217 $392 
Bank loan provision for credit losses(28)(21)(42)(10)
Net interest income after bank loan provision for credit losses$603 $183 $1,175 $382 
  Three months ended December 31,
$ in thousands 2017 2016
Interest income:    
Margin balances $24,095
 $19,981
Assets segregated pursuant to regulations and other segregated assets 12,122
 7,170
Bank loans, net of unearned income 160,020
 135,525
Available-for-sale securities 10,715
 3,400
Trading instruments 5,138
 5,006
Securities loaned 3,058
 2,732
Loans to financial advisors 3,502
 3,308
Corporate cash and all other 13,079
 5,660
Total interest income $231,729
 $182,782
Interest expense:  
  
Brokerage client liabilities $2,529
 $676
Bank deposits 7,509
 2,783
Trading instruments sold but not yet purchased 1,706
 1,328
Securities borrowed 1,479
 1,228
Borrowed funds 5,865
 3,719
Senior notes 18,180
 24,699
Other 2,163
 1,533
Total interest expense 39,431
 35,966
Net interest income 192,298
 146,816
Bank loan loss (provision)/benefit (1,016) 1,040
Net interest income after bank loan loss provision $191,282
 $147,856


Interest expense related to bank deposits in the abovepreceding table for the three months ended December 31, 2017 and 2016 excludes interest expense associated with affiliate deposits, which has been eliminated in consolidation.




NOTE 1720 – SHARE-BASED AND OTHER COMPENSATION

Share-based compensation plans


We have one share-based compensation plan, for our employees, Board of Directors and non-employees (comprised of independent contractor financial advisors). Thethe Amended and Restated 2012 Stock Incentive Plan (the “2012(“the Plan”), for our employees, directors, and independent contractor financial advisors. On February 23, 2023, our shareholders approved an amendment to the Plan to increase the number of shares available for grant by 18 million. Following this amendment, the Plan authorizes us to grant 40,244,000 new96.4 million shares including(including the shares available for grant under six predecessor plans. We generally issue newplans).  As of March 31, 2023, 21.0 million shares remained available for grant under the 2012Plan. We may utilize treasury shares for grants under the Plan; however,though we are also permitted to reissue our treasuryissue new shares. Our share-based compensation awards are primarily issued during the first quarter of each fiscal year. Our share-based compensation accounting policies are described in Note 2 of our 20172022 Form 10-K.  Other information related to our share-based awards areis presented in Note 2023 of our 20172022 Form 10-K.

Stock options

Expense and income tax benefits related to our stock options awards granted to employees and independent contractor financial advisors is presented below:
  Three months ended December 31,
$ in thousands 2017 2016
Total share-based expense $3,112
 $4,176
Income tax benefit related to share-based expense 307
 545

For the three months ended December 31, 2017, we realized $1 million of excess tax benefits related to our stock option awards which favorably impacted income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income.


48
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





During the three months ended December 31, 2017, we granted no stock options to employees and the stock option awards granted to independent contractor financial advisors were not material.
Pre-tax expense not yet recognized for stock option awards granted to employees and independent contractor financial advisors, net of estimated forfeitures, and the remaining period over which the expense will be recognized as of December 31, 2017, are presented below:
  Pre-tax expense not yet recognized Remaining weighted-average amortization period
  (in thousands) (in years)
Employees $12,757
 2.4
Independent contractor financial advisors 4,431
 3.5


Restricted stock and RSU awardsunits

Expense and income tax benefits related to our restricted equity awards granted to employees and members of our Board of Directors are presented below:
  Three months ended December 31,
$ in thousands 2017 2016
Total share-based expense $30,477
 $27,650
Income tax benefit related to share-based expense 8,090
 10,035

Total share-based expense during the three months ended December 31, 2016 included $5 million which is included as a component of “Acquisition-related expenses” on our Condensed Consolidated Statements of Income and Comprehensive Income.

For the three months ended December 31, 2017, we realized $8 million of excess tax benefits related to our restricted equity awards which favorably impacted income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income.


During the three and six months ended DecemberMarch 31, 2017,2023, we granted 1,089,000approximately 203 thousand and 2.1 million RSUs, to employeesrespectively, with a weighted-average grant-date fair value of $86.50. During$108.39 and $116.75, respectively, compared with approximately 550 thousand and 2.9 million RSUs granted during the three and six months ended DecemberMarch 31, 2017, we did not grant2022, respectively, with a weighted-average grant-date fair value of $107.06 and $98.86, respectively. For the three and six months ended March 31, 2023, total share-based compensation amortization related to RSUs to outside members of our Board of Directors.was $54 million and $130 million, respectively, compared with $41 million and $105 million for the three and six months ended March 31, 2022, respectively.


As of DecemberMarch 31, 2017,2023, there was $184were $430 million of total pre-tax compensation costs not yet recognized net(net of estimated forfeitures,forfeitures) related to restricted equity awardsRSUs, including those granted to employees and members of our Board of Directors.during the six months ended March 31, 2023. These costs are expected to be recognized over a weighted-average period of 3.42.8 years.

There were no outstanding RSUs related to our independent contractor financial advisors as of December 31, 2017.

Restricted stock awards associated with Alex. Brown

As part of our acquisition of Alex. Brown, we assumed certain DBRSU awards, including the associated plan terms and conditions. Refer to Note 20 of our 2017 Form 10-K for additional information regarding these awards. The DBRSUs are accounted for as derivatives. See Note 6 for additional information regarding these derivatives.

The net impact of the DBRSUs in our Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended December 31, 2017 and 2016, including the related income tax effects, is presented below:
44
  Three months ended December 31,
$ in thousands 2017 2016
Amortization of DBRSU prepaid compensation asset $1,312
 $1,542
Increase in fair value of derivative liability 2,613
 6,375
Net expense before tax $3,925
 $7,917
Income tax benefit $1,104
 $2,920

The table above includes the impact of DBRSUs forfeited during the three months ended December 31, 2016.


49
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Restricted stock awards




AsRestricted stock awards (“RSAs”) were issued as a component of Decemberour total purchase consideration for TriState Capital Holdings, Inc. (“TriState Capital”) on June 1, 2022, in accordance with the terms of the acquisition. See Note 23 of our 2022 Form 10-K for further discussion of these awards. For the three and six months ended March 31, 2017, there was a $9 million prepaid2023 total share-based compensation asset included in “Other assets” in our Condensed Consolidated Statements of Financial Conditionamortization related to these DBRSUs. This asset isRSAs was $2 million and $5 million, respectively. As of March 31, 2023, there were $16 million of total pre-tax compensation costs not yet recognized for these RSAs. These costs are expected to be amortizedrecognized over a weighted-average period of 1.82.5 years. As of December 31, 2017, there was a $28 million derivative liability included in “Accrued compensation, commissions and benefits” in our Condensed Consolidated Statements of Financial Condition based on the December 31, 2017 share price of DB shares of $19.03.
We held shares of DB as of December 31, 2017 as an economic hedge against this obligation. Such shares are included in “Other investments” on our Condensed Consolidated Statements of Financial Condition. The gains/losses on this hedge are included as a component of “Compensation, commissions and benefits expense” and offset a portion of the gains/losses on the DBRSUs incurred during the periods discussed above.



NOTE 1821 – REGULATORY CAPITAL REQUIREMENTS


RJF, as a bank holding company and financial holding company, RJas well as Raymond James Bank, TriState Capital Bank, our broker-dealer subsidiaries and our broker-dealertrust subsidiaries are subject to capital requirements by various regulatory authorities. Capital levels of each entity are monitored to ensure compliance with our various regulatory capital requirements.  Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial results.


As a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) that has made an election to be a financial holding company, RJF is subject to supervision, examination, and regulation by the risk-based capital requirementsBoard of Governors of the Federal Reserve Board. These risk-basedSystem (“the Fed”).We are subject to the Fed’s capital rules which establish an integrated regulatory capital framework and implement, in the U.S., the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The FDIC’s capital rules, which are substantially similar to the Fed’s rules, apply to TriState Capital Bank. We apply the standardized approach for calculating risk-weighted assets and are also subject to the market risk provisions of the Fed’s capital rules (“market risk rule”).

Under these rules, minimum requirements are expressedestablished for both the quantity and quality of capital held by banking organizations. RJF, Raymond James Bank, and TriState Capital Bank are required to maintain minimum leverage ratios (defined as tier 1 capital divided by adjusted average assets), as well as minimum ratios that compare measures of regulatorytier 1 capital, common equity tier 1 (“CET1”), and total capital to risk-weighted assets, which involveassets.These capital ratios incorporate quantitative measures of our assets, liabilities, and certain off-balance-sheetoff-balance sheet items as calculated under the regulatory accounting guidelines. RJF’scapital rules and RJ Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

In July 2013, the Office of the Comptroller of the Currency (“OCC”), the Fed and the FDIC released final U.S. rules implementing the Basel III capital framework developed by the Basel Committee on Banking Supervision and certain Dodd-Frank Act and other capital provisions and updated the prompt corrective action framework to reflect the new regulatory capital minimums (the “U.S. Basel III Rules”). RJF and RJ Bank report regulatory capital under the Basel III standardized approach. Various aspects of the Basel III rules are subject to multi-year transition periods through December 31, 2018.

RJF and RJ Bank are required to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), Tier 1 capital to average assets (as defined), and under rules defined in Basel III, Common equity Tier 1 capital (“CET1”) to risk-weighted assets. RJF and RJ Bank each We calculate these ratios in order to assess compliance with both regulatory requirements and their internal capital policies. The minimum CET1, Tier 1 Capital, and Total Capital ratios of RJF and RJ Bank are supplemented by an incremental capital conservation buffer, consisting entirely of capital that qualifies as CET1, that began phasing in on January 1, 2016 in increments of 0.625% per year until it reaches 2.5% of risk weighted assets on January 1, 2019. FailureIn order to maintain the capital conservation buffer could limit our ability to take certain capital actions, including dividends and common equity repurchases, and to make discretionary bonus payments.  payments, we must hold a capital conservation buffer above our minimum risk-based capital requirements.As of DecemberMarch 31, 2017, both RJF’s and RJ Bank’s2023, capital levels at RJF, Raymond James Bank, and TriState Capital Bank exceeded the fully-phased in capital conservation buffer requirement and are each entity was categorized as “well capitalized.“well-capitalized.”


For further discussion of regulatory capital requirements applicable to certain of our businesses and subsidiaries, see Note 2124 of our 20172022 Form 10-K.



50
45
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





To meet requirements for capital adequacy purposes or to be categorized as “well capitalized,“well-capitalized,” RJF must maintain minimum CET1,Tier 1 leverage, Tier 1 capital, CET1, and Total capital and Tier 1 leverage amounts and ratios as set forth in the table below.following table.
 ActualRequirement for capital
adequacy purposes		To be well-capitalized
under regulatory provisions
$ in millionsAmountRatioAmountRatioAmountRatio
RJF as of March 31, 2023:      
Tier 1 leverage$8,903 11.5 %$3,104 4.0 %$3,879 5.0 %
Tier 1 capital$8,903 20.1 %$2,653 6.0 %$3,538 8.0 %
CET1$8,788 19.9 %$1,990 4.5 %$2,874 6.5 %
Total capital$9,474 21.4 %$3,538 8.0 %$4,422 10.0 %
RJF as of September 30, 2022:
Tier 1 leverage$8,480 10.3 %$3,304 4.0 %$4,130 5.0 %
Tier 1 capital$8,480 19.2 %$2,651 6.0 %$3,534 8.0 %
CET1$8,380 19.0 %$1,988 4.5 %$2,871 6.5 %
Total capital$9,031 20.4 %$3,534 8.0 %$4,418 10.0 %

  Actual 
Requirement for capital
adequacy purposes
 To be well capitalized under regulatory provisions
$ in thousands Amount Ratio Amount Ratio Amount Ratio
RJF as of December 31, 2017:            
CET1 $5,052,629
 22.3% $1,018,048
 4.5% $1,470,513
 6.5%
Tier 1 capital $5,052,629
 22.3% $1,357,397
 6.0% $1,809,862
 8.0%
Total capital $5,266,339
 23.3% $1,809,862
 8.0% $2,262,328
 10.0%
Tier 1 leverage $5,052,629
 14.4% $1,400,054
 4.0% $1,750,068
 5.0%
             
RJF as of September 30, 2017:            
CET1 $5,081,335
 23.0% $994,950
 4.5% $1,437,150
 6.5%
Tier 1 capital $5,081,335
 23.0% $1,326,600
 6.0% $1,768,800
 8.0%
Total capital $5,293,331
 23.9% $1,768,800
 8.0% $2,211,000
 10.0%
Tier 1 leverage $5,081,335
 15.0% $1,359,168
 4.0% $1,698,960
 5.0%


The decreaseAs of March 31, 2023, RJF’s regulatory capital increase compared with September 30, 2022 was driven by an increase in equity due to positive earnings, partially offset by dividends and share repurchases. RJF’s Tier 1 capital and Total capital ratios at December 31, 2017increased compared to with September 30, 20172022 resulting from the increase in regulatory capital, partially offset by a small increase in risk-weighted assets. The increase in risk-weighted assets was primarily driven by increases in our bank loan portfolio, partially offset by a decrease in assets segregated for regulatory purposes.

RJF’s Tier 1 leverage ratio at March 31, 2023 increased compared with September 30, 2022 due to anthe increase in goodwillregulatory capital and identifiable intangiblelower average assets, related to the Scout Group acquisition and the growth of corporate loans at RJ Bank.primarily driven by a decrease in assets segregated for regulatory purposes.


To meet the requirements for capital adequacy or to be categorized as “well capitalized,“well-capitalized,” RJRaymond James Bank and TriState Capital Bank must maintain CET1,Tier 1 leverage, Tier 1 capital, CET1, and Total capital and Tier 1 leverage amounts and ratios as set forth in the table below.following tables. Our intention is to maintain Raymond James Bank’s and TriState Capital Bank’s “well-capitalized” status. In the unlikely event that Raymond James Bank or TriState Capital Bank failed to maintain their “well-capitalized” status, the consequences could include a requirement to obtain a waiver from the FDIC prior to acceptance, renewal, or rollover of brokered deposits and result in higher FDIC premiums, but would not significantly impact our operations.
 ActualRequirement for capital
adequacy purposes		To be well-capitalized
under regulatory provisions
$ in millionsAmountRatioAmountRatioAmountRatio
Raymond James Bank as of March 31, 2023:      
Tier 1 leverage$3,303 7.7 %$1,725 4.0 %$2,156 5.0 %
Tier 1 capital$3,303 13.1 %$1,512 6.0 %$2,016 8.0 %
CET1$3,303 13.1 %$1,134 4.5 %$1,638 6.5 %
Total capital$3,619 14.4 %$2,016 8.0 %$2,520 10.0 %
Raymond James Bank as of September 30, 2022:      
Tier 1 leverage$2,998 7.1 %$1,695 4.0 %$2,119 5.0 %
Tier 1 capital$2,998 12.1 %$1,485 6.0 %$1,979 8.0 %
CET1$2,998 12.1 %$1,113 4.5 %$1,608 6.5 %
Total capital$3,308 13.4 %$1,979 8.0 %$2,474 10.0 %
  Actual 
Requirement for capital
adequacy purposes
 To be well capitalized under regulatory provisions
$ in thousands Amount Ratio Amount Ratio Amount Ratio
RJ Bank as of December 31, 2017:            
CET1 $1,825,550
 12.2% $674,617
 4.5% $974,446
 6.5%
Tier 1 capital $1,825,550
 12.2% $899,489
 6.0% $1,199,319
 8.0%
Total capital $2,013,120
 13.4% $1,199,319
 8.0% $1,499,148
 10.0%
Tier 1 leverage $1,825,550
 8.6% $852,884
 4.0% $1,066,105
 5.0%
             
RJ Bank as of September 30, 2017:  
  
  
  
  
  
CET1 $1,821,306
 12.5% $654,901
 4.5% $945,968
 6.5%
Tier 1 capital $1,821,306
 12.5% $873,201
 6.0% $1,164,268
 8.0%
Total capital $2,003,461
 13.8% $1,164,268
 8.0% $1,455,335
 10.0%
Tier 1 leverage $1,821,306
 8.9% $816,304
 4.0% $1,020,379
 5.0%


The decrease in RJRaymond James Bank’s regulatory capital increased compared with September 30, 2022, driven by positive earnings, partially offset by dividends paid to RJF. Raymond James Bank’s Tier 1 and Total capital ratios at December 31, 2017increased compared to with September 30, 2017 was primarily2022 resulting from the increase in regulatory capital, partially offset by an increase in risk-weighted assets due to corporategrowth in the bank loan growth.portfolio and higher cash balances. Raymond James Bank’s Tier 1 leverage ratio at March 31, 2023 increased compared with September 30, 2022 due to the increase in regulatory capital, partially offset by an increase in average assets, primarily driven by an increase in the bank loan portfolio and higher cash balances.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

 ActualRequirement for capital
adequacy purposes		To be well-capitalized
under regulatory provisions
$ in millionsAmountRatioAmountRatioAmountRatio
TriState Capital Bank as of March 31, 2023:      
Tier 1 leverage$1,159 7.2 %$646 4.0 %$808 5.0 %
Tier 1 capital$1,159 13.9 %$499 6.0 %$666 8.0 %
CET1$1,159 13.9 %$374 4.5 %$541 6.5 %
Total capital$1,195 14.4 %$666 8.0 %$832 10.0 %
TriState Capital Bank as of September 30, 2022:      
Tier 1 leverage$1,093 7.3 %$601 4.0 %$752 5.0 %
Tier 1 capital$1,093 14.1 %$463 6.0 %$618 8.0 %
CET1$1,093 14.1 %$348 4.5 %$502 6.5 %
Total capital$1,122 14.5 %$618 8.0 %$772 10.0 %

TriState Capital Bank’s regulatory capital increased compared with September 30, 2022, driven by positive earnings. TriState Capital Bank’s Tier 1 and Total capital ratios decreased compared with September 30, 2022, due to an increase in risk-weighted assets, primarily resulting from increases in bank loans and available-for-sale securities, partially offset by the increase in regulatory capital. TriState Capital Bank’s Tier 1 leverage ratio at March 31, 2023 decreased slightly compared with September 30, 2022 as the increase in regulatory capital was offset by an increase in average assets, primarily driven by the increases in bank loans and available-for-sale securities.

Our banking subsidiaries may pay dividends to RJF without prior approval of their respective regulators subject to certain restrictions including retained net income and targeted regulatory capital ratios. Dividends paid to RJF from our banking subsidiaries may be limited to the extent that capital is needed to support their balance sheet growth.

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

The following table presents the net capital position of RJ&A:&A.
$ in millionsMarch 31, 2023September 30, 2022
Raymond James & Associates, Inc.:
  
(Alternative Method elected)  
Net capital as a percent of aggregate debit items44.3 %40.9 %
Net capital$1,086 $1,152 
Less: required net capital(49)(56)
Excess net capital$1,037 $1,096 
  As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James & Associates, Inc.:    
(Alternative Method elected)    
Net capital as a percent of aggregate debit items 25.37% 21.37%
Net capital $694,733
 $589,420
Less: required net capital (54,758) (55,164)
Excess net capital $639,975
 $534,256



51
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)





The following table presents the net capital positionAs of Raymond James Financial Services, Inc. (“RJFS”):
  As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James Financial Services, Inc.:    
(Alternative Method elected)    
Net capital $23,489
 $34,488
Less: required net capital (250) (250)
Excess net capital $23,239
 $34,238

The following table presents the risk adjusted capital of RJ Ltd. (in Canadian dollars):
  As of
$ in thousands December 31, 2017 September 30, 2017
Raymond James Ltd.:    
Risk adjusted capital before minimum $77,869
 $108,985
Less: required minimum capital (250) (250)
Risk adjusted capital $77,619
 $108,735

At DecemberMarch 31, 2017,2023, all of our other active regulated domestic and international subsidiaries were in compliance with and metexceeded all applicable capital requirements.





52
47
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






NOTE 1922 – EARNINGS PER SHARE


The following table presents the computation of basic and diluted earnings per common share:share.
 Three months ended March 31,Six months ended March 31,
in millions, except per share amounts2023202220232022
Income for basic earnings per common share:  
Net income available to common shareholders$425 $323 $932 $769 
Less allocation of earnings and dividends to participating securities(2)— (3)(1)
Net income available to common shareholders after participating securities$423 $323 $929 $768 
Income for diluted earnings per common share:  
Net income available to common shareholders$425 $323 $932 $769 
Less allocation of earnings and dividends to participating securities(2)— (3)(1)
Net income available to common shareholders after participating securities$423 $323 $929 $768 
Common shares:  
Average common shares in basic computation214.3 207.7 214.5 207.0 
Dilutive effect of outstanding stock options and certain RSUs4.9 5.3 5.2 5.6 
Average common and common equivalent shares used in diluted computation219.2 213.0 219.7 212.6 
Earnings per common share:  
Basic$1.97 $1.56 $4.33 $3.71 
Diluted$1.93 $1.52 $4.23 $3.61 
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive1.6 — 1.3 0.5 
  Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Income for basic earnings per common share:    
Net income attributable to RJF $118,842
 $146,567
Less allocation of earnings and dividends to participating securities (185) (310)
Net income attributable to RJF common shareholders $118,657
 $146,257
Income for diluted earnings per common share:  
  
Net income attributable to RJF $118,842
 $146,567
Less allocation of earnings and dividends to participating securities (182) (303)
Net income attributable to RJF common shareholders $118,660
 $146,264
Common shares:  
  
Average common shares in basic computation 144,469
 142,110
Dilutive effect of outstanding stock options and certain RSUs 3,792
 3,565
Average common shares used in diluted computation 148,261
 145,675
Earnings per common share:  
  
Basic $0.82
 $1.03
Diluted $0.80
 $1.00
Stock options and certain RSUs excluded from weighted-average diluted common shares because their effect would be antidilutive 1,355
 2,127


The allocation of earnings and dividends to participating securities in the preceding table above representrepresents dividends paid during the period to participating securities, consisting of certain RSUs, as well as the RSAs granted as part of our acquisition of TriState Capital, plus an allocation of undistributed earnings to such participating securities. Participating securities represent unvested restricted stock and certain RSUs and amounted to weighted-average shares of 239 thousand and 310 thousand for the three months ended December 31, 2017 and 2016, respectively. Dividendsrelated dividends paid toon these participating securities were insignificant for each of the three and six months ended DecemberMarch 31, 20172023 and 2016.2022.  Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

Dividends per common share declared and paid are as follows:
48
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
 Three months ended December 31,
 2017 2016
Dividends per common share - declared$0.25
 $0.22
Dividends per common share - paid$0.22
 $0.20



NOTE 2023 – SEGMENT INFORMATION


We currently operate through the following five business segments: Private Client Group;PCG; Capital Markets; Asset Management; RJ Bank; and Other.


The business segments are determined based upon factors such as the services provided and the distribution channels served and are consistent with how we assess performance and determine how to allocate our resources throughout our subsidiaries.resources. For a further discussion of our business segments, see Note 2426 of our 20172022 Form 10-K.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






The following tables presenttable presents information concerning operations in these segmentssegments.
 Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Net revenues:  
Private Client Group$2,144 $1,922 $4,207 $3,761 
Capital Markets302 413 597 1,027 
Asset Management216 234 423 470 
Bank540 197 1,048 380 
Other10 (18)19 (33)
Intersegment eliminations(339)(75)(635)(151)
Total net revenues$2,873 $2,673 $5,659 $5,454 
Pre-tax income/(loss):
Private Client Group$441 $213 $875 $408 
Capital Markets(34)87 (50)288 
Asset Management82 103 162 210 
Bank91 83 227 185 
Other (1)
(23)(53)(5)(100)
Total pre-tax income$557 $433 $1,209 $991 

(1)    The six months ended March 31, 2023 included the favorable impact of business:a $32 million insurance settlement received during the period related to a previously settled litigation matter. This item has been reflected as an offset to “Other” expenses on our Condensed Consolidated Statements of Income and Comprehensive income.
  Three months ended December 31,
$ in thousands 2017 2016
Revenues:    
Private Client Group $1,238,040
 $1,043,316
Capital Markets 222,534
 236,982
Asset Management 150,611
 114,096
RJ Bank 178,141
 144,517
Other 16,383
 15,459
Intersegment eliminations (40,117) (25,602)
Total revenues $1,765,592
 $1,528,768
Income/(loss) excluding noncontrolling interests and before provision for income taxes:
Private Client Group $155,063
 $73,358
Capital Markets 4,807
 21,444
Asset Management 57,399
 41,909
RJ Bank 114,155
 104,121
Other (20,181) (34,453)
Pre-tax income excluding noncontrolling interests 311,243
 206,379
Net income attributable to noncontrolling interests 441
 1,136
Income including noncontrolling interests and before provision for income taxes $311,684
 $207,515


No individual client accounted for more than ten percent of total revenues in any of the periods presented.

  Three months ended December 31,
$ in thousands 2017 2016
Net interest income/(expense):    
Private Client Group $38,487
 $30,387
Capital Markets 1,456
 2,508
Asset Management 330
 63
RJ Bank 163,039
 134,272
Other (11,014) (20,414)
Net interest income $192,298
 $146,816
The following table presents our net interest income on a segment basis.

Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Net interest income/(expense):  
Private Client Group$88 $34 $175 $64 
Capital Markets1 2 1 5 
Asset Management3 — 5 — 
Bank530 189 1,021 366 
Other9 (21)15 (43)
Net interest income$631 $204 $1,217 $392 

The following table presents our total assets on a segment basis:basis.
$ in millionsMarch 31, 2023September 30, 2022
Total assets:
Private Client Group$13,035 $17,770 
Capital Markets2,920 3,951 
Asset Management521 556 
Bank60,400 56,737 
Other2,304 1,937 
Total$79,180 $80,951 


49
$ in thousands December 31, 2017 September 30, 2017
Total assets:    
Private Client Group $10,328,475
 $9,967,320
Capital Markets 2,375,078
 2,396,033
Asset Management 347,922
 151,111
RJ Bank 21,600,312
 20,611,898
Other 1,433,112
 1,757,094
Total $36,084,899
 $34,883,456

Total assets in the PCG segment included $277 million of goodwill at both December 31, 2017 and September 30, 2017. Total assets in the Capital Markets segment included $134 million of goodwill at both December 31, 2017 and September 30, 2017. Total assets in the Asset Management segment included $69 million of goodwill as of December 31, 2017 which was entirely attributable to our fiscal year 2018 acquisition of the Scout Group.


54
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)






The following table presents goodwill, which was included in our total assets, on a segment basis.
$ in millionsMarch 31, 2023September 30, 2022
Goodwill:
Private Client Group$565 $550 
Capital Markets275 274 
Asset Management69 69 
Bank529 529 
Total$1,438 $1,422 
We have operations in the U.S., Canada, and Europe. Substantially all long-lived assets are located in the U.S.  RevenuesThe following table presents our net revenues and pre-tax income before provision for income taxes and excluding noncontrolling interests, classified by major geographic areasarea in which they were earned, are as follows:earned.
 Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Net revenues:  
U.S.$2,627 $2,430 $5,167 $5,019 
Canada144 129 278 266 
Europe102 114 214 169 
Total$2,873 $2,673 $5,659 $5,454 
Pre-tax income/(loss): 
U.S.$524 $406 $1,133 $937 
Canada36 14 67 32 
Europe(3)13 9 22 
Total$557 $433 $1,209 $991 
The following table presents our total assets by major geographic area in which they were held.
 Three months ended December 31,
$ in thousands 2017 2016
Revenues:    
$ in millions$ in millionsMarch 31, 2023September 30, 2022
Total assets:Total assets:
U.S. $1,633,022
 $1,416,281
U.S.$72,960 $74,428 
Canada 99,286
 84,845
Canada3,460 3,631 
Europe 33,284
 22,970
Europe2,760 2,892 
Other —
 4,672
Total $1,765,592
 $1,528,768
Total$79,180 $80,951 
    
Pre-tax income/(loss) excluding noncontrolling interests:    
U.S. $305,289
 $214,205
Canada 8,665
 (1,537)
Europe (2,711) (2,688)
Other —
 (3,601)
Total $311,243
 $206,379

OurThe following table presents goodwill, which was included in our total assets, classified by major geographic area in which they were held, are presented below:
it was held.
$ in thousands December 31, 2017 September 30, 2017
Total assets:    
U.S. $33,291,193
 $32,200,852
Canada 2,706,114
 2,592,480
Europe 78,851
 81,090
Other 8,741
 9,034
Total $36,084,899
 $34,883,456

Total assets in the U.S. included $425 million and $356 million of goodwill at December 31, 2017 and September 30, 2017, respectively. Total assets in Canada included $45 million of goodwill at both December 31, 2017 and September 30, 2017. Total assets in Europe included $10 million of goodwill at both December 31, 2017 and September 30, 2017.

$ in millionsMarch 31, 2023September 30, 2022
Goodwill:
U.S.$1,250 $1,250 
Canada24 23 
Europe164 149 
Total$1,438 $1,422 
55
50
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INDEX
PAGE
Introduction
57
Factors affecting “forward-looking statements”
5752
Executive overviewIntroduction
5752
SegmentsExecutive overview
5952
Reconciliation of GAAPnon-GAAP financial measures to non-GAAPGAAP financial measures
6055
Net interest analysis
6058
Results of Operationsoperations
Private Client Group
63
Capital Markets
6568
Asset Management
6670
RJ Bank
6873
Other
7275
Certain statistical disclosures by bank holding companies
73
Liquidity and capital resources
73
Sources of liquidity
74
Statement of financial condition analysis
7776
Contractual obligationsLiquidity and capital resources
7876
Regulatory
7883
Critical accounting estimates
7883
Recent accounting developments
7984
Off-Balance sheet arrangementsRisk management
7984
Effects of inflation
80
Risk management
80




56
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


FACTORS AFFECTING “FORWARD-LOOKING STATEMENTS”
Introduction

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of our operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Where “NM” is used in various percentage change computations, the computed percentage change has been determined not to be meaningful.

Factors affecting “forward-looking statements”


Certain statements made in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions, and divestitures, anticipated results of litigation, changes in tax rules, regulatory developments, effects of accounting pronouncements, and general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the SECSecurities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.


Executive overviewINTRODUCTION


The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of our operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Where “NM” is used in various percentage change computations, the computed percentage change has been determined to be not meaningful.

We operate as a financial holding company and a bank holding company. Results in the businesses in which we operate are highly correlated to the general overall strength of economic conditions and, more specifically, to the direction of the U.S. equity and fixed income markets, changes in interest rates, market volatility, the corporate and mortgage lending markets and commercial and residential credit trends.  Overall market conditions, interest rates, economic, political and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control.  These factors affect the financial decisions made by market participants, which includeincluding investors, depositors, borrowers, and competitors, impacting their level of participation in the financial markets. These factors also impact the level of investment banking activity including public offerings, as well as trading profits, and asset valuations, or a combination thereof.  In turn, these decisions and factorswhich ultimately affect our business results.


Three monthsEXECUTIVE OVERVIEW

Quarter ended DecemberMarch 31, 20172023 compared with the three monthsquarter ended DecemberMarch 31, 20162022


We achievedFor our fiscal second quarter of 2023, we generated net revenues of $1.73$2.87 billion, a $233 million, or 16% increase. Our pre-tax income was $311 million, an increase of $1057% compared with the prior-year quarter, while pre-tax income of $557 million or 51%increased 29%. Our net income available to common shareholders of $119$425 million reflects a decrease of $28 million, or 19%increased 32%, and our earnings per diluted share were $1.93, reflecting a 27% increase. Our annualized return on common equity (“ROCE”) for the quarter was $0.80, a 20% decrease.

During17.3%, compared with 15.0% for the prior-year quarter, and our annualized return on tangible common equity (“ROTCE”)was 21.3%(1), compared with 16.8%(1) for the prior-year quarter. Excluding $28 million of expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets, our adjusted net income available to common shareholders was $446 million(1) for the three months ended DecemberMarch 31, 2017, earnings were negatively affected by the estimated discrete impact of the Tax Act of $117 million, primarily related to the remeasurement of U.S. deferred tax assets at a lower enacted corporate tax rate. Excluding this discrete impact and $4 million of acquisition-related expenses,2023, 29% higher than adjusted net income was $238.8 million (1), an increase of 35% compared withavailable to common shareholders for the prior-year quarter, and our adjusted net income in the prior year. Adjusted earnings per diluted share were $1.61 $2.03(1), a 33% increase compared with25% higher than adjusted earnings per diluted share infor the prior year period.

Net revenues increased significantly inprior-year quarter.Adjusted annualized ROCE for the PCG, Asset Managementquarter was 18.2%(1) and RJ Bank segments. PCG and Asset Management benefited from growth in client assets in fee-based accounts. RJ Bank had significant growth due to an increase in average interest-earning assets and an increase in net interest margin. Net revenues in our Capital Markets segment declinedadjusted annualized ROTCEwas 22.3%(1), compared with adjusted annualized ROCE of 16.1%(1) and adjusted annualized ROTCE of 18.0%(1) for the prior year period, reflecting a decline in equity and fixed income sales commissions due to low market volatility. Total client assets under administration reached $727.2 billion at December 31, 2017, an 18% increase, primarily attributable to equity market appreciation and strong financial advisor recruiting and retention results.prior-year quarter.









(1)    “AdjustedROTCE, adjusted net income” and “adjusted available to common shareholders, adjusted earnings per diluted share”share, adjusted annualized ROCE, and adjusted annualized ROTCE are each non-GAAP financial measures. Please see the “reconciliation“Reconciliation of GAAPnon-GAAP financial measures to non-GAAPGAAP financial measures” in this Item 2,MD&A for a reconciliation of ourthese non-GAAP financial measures to the most directly comparable GAAP measures, and for other important disclosures.


5752
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


Quarterly net revenues increased compared with the prior-year quarter due to the benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks, as well as incremental revenues from our prior-year acquisitions of TriState Capital in June 2022, SumRidge Partners, LLC (“SumRidge Partners”) in July 2022 and, to a lesser extent Charles Stanley Group PLC (“Charles Stanley”) in late January 2022. These increases were offset by lower asset management and related administrative fees, primarily as a result of lower PCG client assets in fee-based accounts at the beginning of the current quarter compared with the prior-year quarter, as well as lower investment banking revenues due to a challenging market environment during the current quarter. Brokerage revenues also declined compared with the prior-year quarter primarily due to lower asset-based trailing revenues in the PCG segment, as well as decreased activity from depository clients in the Capital Markets segment.
Non-interest
Compensation, commissions and benefits expense decreased 2%, primarily attributable to the decrease in compensable revenues compared with the prior-year quarter, partially offset by incremental compensation expenses increased $129 million,arising from the aforementioned acquisitions, an increase in compensation costs to support our growth, and annual salary increases. Our compensation ratio, or 10%. The increase primarily resulted from increasedthe ratio of compensation, commissions and benefits expense associated with increasedto net revenues, was 63.3%, compared with 69.3% for the prior-year quarter. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 62.8%(1), compared with 68.8%(1) for the prior-year quarter. The decline in the compensation ratio primarily resulted from changes in our revenue mix due to higher net interest income and RJBDP fees from third-party banks, which have little associated direct compensation.

Non-compensation expenses increased 28%, due to incremental expenses arising from the aforementioned acquisitions, higher legal and regulatory costs, including the impact of an unfavorable arbitration award during the current quarter, as well as increased staffing levels required to support ourhigher communications and information processing expenses reflecting continued growthtechnology investments and regulatory and compliance requirements. Offsetting this increase was a $30 million decrease inhigher business development expenses relatedcompared to the Jay Peak matter, whichrelatively low prior-year level. The bank loan provision for credit losses was settled in$28 million for the prior fiscal year.current-year quarter compared with a provision of $21 million for the prior-year quarter.


Our effective income tax rate was 61.7%23.3% for our fiscal second quarter of 2023, a decrease compared with the 25.4% effective income tax rate for the prior-year quarter, primarily due to the favorable impact of nontaxable valuation gains associated with our company-owned life insurance policies in the current quarter reflectingcompared with nondeductible valuation losses in the estimated discrete impactprior-year quarter.

As of March 31, 2023, our Tier 1 leverage ratio of 11.5% and Total capital ratio of 21.4% were both more than double the Tax Actregulatory requirement to be considered well-capitalized. We also continue to have substantial liquidity with $1.8 billion(2) of $117cash at the parent as of March 31, 2023, which includes cash the parent loaned to RJ&A to invest on its behalf. Despite a challenging operating environment, we renewed our revolving credit facility in April 2023, expanding our borrowing capacity under the facility from $500 million partially offsetto $750 million. In addition, we increased our FHLB borrowings in the Bank segment by a lower blended federal corporate statutory tax rate$500 million as of 24.5%. ExcludingMarch 31, 2023 compared to December 31, 2022, and subsequently repaid $200 million of these borrowings in April 2023, leaving us with more than $9 billion of FHLB borrowing capacity in the estimated discrete impactBank segment. In addition, although recent turmoil in the banking industry has heightened awareness around bank deposits in excess of FDIC insurance limits, as of March 31, 2023, 88% of our Bank segment deposits were FDIC-insured, including nearly 95% at Raymond James Bank. We believe our funding and capital position provides us the Tax Act,opportunity to manage our adjusted effective tax rate was 24.1% (1) forbalance sheet prudently in the current operating environment and to continue being opportunistic and invest in growth. During the three months ended DecemberMarch 31, 2017. We estimate our effective tax rate to be approximately 28% for the remainder2023, we repurchased 3.75 million shares of our common stock for $350 million at an average price of $93 per share under the Board of Directors’ common stock repurchase authorization. After the effect of those repurchases, $1.1 billion remained under such authorization. We currently expect to continue to repurchase our common stock in fiscal year ended September 30, 2018, which reflects2023 to offset the blended federal corporate statutory tax rate, and approximately 24% for fiscal year 2019, reflecting the lower federal corporate statutory tax rate of 21% for the full year.  Our future effective tax rates are estimates and are based on assumptions based on our current interpretation of the Tax Act and may change, possibly materially, as we complete our analysis.  Our future effective tax rate will also be impacted positively or negatively, by non-taxable items such as the gains or losses earned on our Company-owned life insurance (“COLI”), tax exempt interest and non-deductible expenses such as meals and entertainment.  See Note 13 of this Form 10-Q for further information on the Tax Act.
A summary of our financial results by segment as compared to the prior year are as follows:

Our Private Client Group segment generated net revenues of $1.23 billion, a 19% increase, and pre-tax income of $155 million increased 111% over the prior year period which included $30 million in legal expenses related to the Jay Peak matter.  The increase in net revenues was primarily attributable to an increase in securities commissions and fees, driven by a stronger market environment and continued strong recruiting and retention results. The segment also benefited from the impact of higher short-term interest rates, resulting in an increase in account and service fees related to client cash balances in the RJBDP. Non-interest expenses increased $111 million, or 12%, primarily resulting from increases in compensation, commissions and benefits expenses, offset by a decrease in the aforementioned legal expenses.

The Capital Markets segment generated net revenues of $217 million, a 7% decrease over the prior year period. The decrease in net revenues was primarily due to a decrease in institutional commissions due to lower market volatility. Investment banking revenues increased slightly, as higher merger & acquisition and advisory fees more than offset lower equity underwriting fees and tax credit fund syndication fees. Non-interest expenses were relatively flat comparedshares issued with the prior year period which, combined with the decline in net revenues, contributed to a 78% decline in pre-tax income.

Our Asset Management segment benefited from increased fee-based client assets, generating a 32% increase in net revenues to $151 million, while pre-tax income increased 37% to $57 million. The increase in net revenues primarily reflected increases in advisory fee revenues from managed programs and, to a lesser degree, non-discretionary asset-based administration fee revenues. Financial assets under management in managed programs increased 64% over the prior year level aided by the acquisition of the Scout Group during the quarter. Non-interest expenses increased $19 million, or 27%, primarily resultingTriState Capital in fiscal 2022, as well as to offset dilution from increased investment sub-advisory feesshare-based compensation; however, we will continue to monitor market conditions and acquisition-related increases in administrative & incentive compensation and benefits expense.other capital needs as we consider these repurchases.


RJ Bank generated a 20% increase in net revenues to $165 million, while pre-tax income increased 10% to $114 million. The increase in pre-tax income resulted primarily from an increase in net interest income, partially offset by higher affiliate deposit fees paid to the Private Client Group due to increased balances. Net interest income increased due to growth in average interest-earning assets and an increase in the net interest margin.


Activities in our Other segment reflected a pre-tax loss that was $14 million, or 41% less than the prior year, primarily due to a decrease in acquisition-related expenses and lower interest expense related to a decrease in the average outstanding balance and average yield of our senior notes payable.

















(1)    “Adjusted effective tax rate”Adjusted compensation ratio is a non-GAAP financial measure. Please see the “reconciliation“Reconciliation of GAAPnon-GAAP financial measures to non-GAAPGAAP financial measures” in this Item 2,MD&A for a reconciliation of ourthese non-GAAP financial measures to the most directly comparable GAAP measures, and for other important disclosures.

(2)    For additional information, please see the “Liquidity and capital resources - Sources of liquidity” section in this MD&A.
58
53
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


Segments

We currently operate through four operating segmentsremain well-positioned entering our fiscal third quarter of 2023. We expect our fiscal third quarter results to be favorably impacted by higher asset management and related administrative fees, which will benefit from the 5% sequential increase in both PCG fee-based assets and financial assets under management as of March 31, 2023. In addition, our Other segment. The four operating segments are Private Client Group, Capital Markets, Asset Management,recruiting pipelines remain solid across our affiliation options and RJ Bank. The Otherwe continue to see solid retention of existing advisors. However, we expect our combined net interest income and RJBDP fees from third-party banks to decline in our fiscal third quarter due to a decrease in average balances swept to third-party banks and a contraction in the Bank segment’s net interest margin given the higher level of cash balances we plan to maintain in our Bank segment captures private equity activitiesdue to market conditions, as well as certain corporate overhead costs of RJF that are not allocatedthe impact from higher-cost diversified funding sources, including our Enhanced Savings Program, which was launched to operating segments, includingPCG clients in March 2023. We expect to continue to face macroeconomic uncertainties which may continue to have a negative impact on equity and fixed income markets. As a result, we may continue to experience headwinds for brokerage revenues and investment banking revenues, despite our healthy investment banking pipelines. In addition, although we have proactively taken steps to manage our credit risk in our loan portfolio, future economic deterioration or changes in our macroeconomic outlook could result in increased bank loan provisions for credit losses in future periods.

Six months ended March 31, 2023 compared with the interest cost on our public debt andsix months ended March 31, 2022

For the acquisition and integration costs associated with our acquisitions.

The following table presents our consolidated and segmentsix months ended March 31, 2023, we generated net revenues of $5.66 billion, an increase of 4% compared with the prior-year period, and pre-tax income/(loss)income of $1.21 billion, an increase of 22%. Our net income available to common shareholders of $932 million was 21% higher than the prior-year period and our earnings per diluted share were $4.23, reflecting a 17% increase. Our annualized ROCE was 19.3%, the latter excluding noncontrolling interests,compared with 18.1% for the periods indicated:prior-year period, and our annualized ROTCE was 23.8%(1), compared with 20.2%(1) for the prior-year period.

The six months ended March 31, 2023 included $57 million of expenses related to acquisitions completed in prior years, such as compensation related to retention awards and amortization of identifiable intangible assets, as well as the favorable impact of a $32 million insurance settlement received during our fiscal first quarter related to a previously-settled litigation matter. Excluding these items, our adjusted net income available to common shareholders was $951 million(1), an increase of 18% compared with the prior-year period, and our adjusted earnings per diluted share were $4.31(1), an increase of 13%.Adjusted annualized ROCE was 19.7%(1), compared with 19.0%(1) in the prior-year period, and adjusted annualized ROTCEwas 24.2%(1), compared with 21.2%(1) in the prior-year period.

The increase in net revenues compared with the prior-year period was primarily driven by the benefit of significantly higher short-term interest rates in the current-year period on both net interest income and RJBDP fees from third-party banks, as well as incremental revenues arising from our prior-year acquisitions of Charles Stanley, TriState Capital and SumRidge. These increases were offset by lower asset management and related administrative fees, primarily attributable to lower PCG client assets in fee-based accounts, and declines in investment banking and brokerage revenues primarily due to a more challenging market environment during the current-year period.

Compensation, commissions and benefits expense decreased 5%, primarily attributable to the decrease in compensable revenues compared with the prior-year period, partially offset by incremental expenses arising from our prior-year acquisitions of Charles Stanley, TriState Capital, and SumRidge, as well as an increase in compensation costs to support our growth and annual salary increases. Our compensation ratio was 62.8%, compared with 68.5% for the prior-year period. Excluding acquisition-related compensation expenses, our adjusted compensation ratio was 62.2%(1), compared with an adjusted compensation ratio of 68.0%(1) for the prior-year period.

Non-compensation expenses increased 23%, primarily due to incremental expenses arising from our acquisitions of Charles Stanley, TriState Capital, and SumRidge, as well as increases in business development expenses, the bank loan provision for credit losses, and communications and information processing expenses. The current-year period also included the aforementioned increase in legal and regulatory costs. Partially offsetting these increases was the aforementioned favorable insurance settlement received.
Our effective income tax rate was 22.6% for the six months ended March 31, 2023, a slight increase from 22.4% for the prior-year period.




(1)    ROTCE, adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted annualized ROCE, adjusted annualized ROTCE, and adjusted compensation ratio are non-GAAP financial measures. Please see the “Reconciliation of non-GAAP financial measures to GAAP financial measures” in this MD&A for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, and for other important disclosures.

54
  Three months ended December 31,
$ in thousands 2017 2016 % change
Total company      
Net revenues $1,726,161
 $1,492,802
 16 %
Pre-tax income excluding noncontrolling interests $311,243
 $206,379
 51 %
       
Private Client Group  
  
  
Net revenues $1,233,051
 $1,040,089
 19 %
Pre-tax income $155,063
 $73,358
 111 %
       
Capital Markets  
  
  
Net revenues $216,665
 $233,016
 (7)%
Pre-tax income $4,807
 $21,444
 (78)%
       
Asset Management  
  
  
Net revenues $150,600
 $114,082
 32 %
Pre-tax income $57,399
 $41,909
 37 %
       
RJ Bank  
  
  
Net revenues $165,185
 $138,015
 20 %
Pre-tax income $114,155
 $104,121
 10 %
       
Other  
  
  
Net revenues $(2,920) $(9,643) 70 %
Pre-tax loss $(20,181) $(34,453) 41 %
       
Intersegment eliminations  
  
  
Net revenues $(36,420) $(22,757) 


59
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


In December 2022, the Board of Directors increased the quarterly cash dividend on common shares to $0.42 per share and authorized common stock repurchases of up to $1.5 billion. During the six months ended March 31, 2023, we repurchased 5.04 million shares of our common stock for $488 million at an average price of $97 per share under the Board of Directors’ common stock repurchase authorization.
Reconciliation of
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP measures to non-GAAP measuresFINANCIAL MEASURES


We utilize certain non-GAAP calculationsfinancial measures as additional measures to aid in, and enhance, the understanding of our financial results and related measures. These non-GAAP financial measures have been separately identified in this document. We believe that thecertain of these non-GAAP financial measures provide useful information to management and investors by excluding certain material items that may not be indicative of our core operating results. We believe thatutilize these non-GAAP financial measures will allow for better evaluation ofin assessing the operatingfinancial performance of the business, andas they facilitate a comparison of current- and prior-period results. Beginning with our fiscal third quarter of 2022, certain of our non-GAAP financial measures have been adjusted for additional expenses directly related to our acquisitions that we believe are not indicative of our core operating results, such as those related to amortization of identifiable intangible assets arising from acquisitions and acquisition-related retention. Prior periods have been conformed to the current period presentation. We believe that return on tangible common equity is meaningful comparisonto investors as it facilitates comparisons of our results into the current period to those in prior and future periods. Theresults of other companies.In the following tables, the tax effect of non-GAAP adjustments reflects the statutory rate associated with each non-GAAP item. These non-GAAP financial informationmeasures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other companies. The following table providestables provide a reconciliation of GAAPnon-GAAP financial measures to non-GAAP measures for the periods which include non-GAAP adjustments. Non-GAAP measures for the three months ended December 31, 2016 have been revised from those previously reported to conform to our current presentation, which includes amounts related to the Jay Peak matter.most directly comparable GAAP measures.
Three months endedSix months ended
$ in millionsMarch 31,
2023		March 31,
2022		March 31,
2023		March 31,
2022
Net income available to common shareholders$425 $323 $932 $769 
Non-GAAP adjustments:
Expenses directly related to acquisitions included in the following financial statement line items:
Compensation, commissions and benefits — Acquisition-related retention
17 14 35 25 
Professional fees
— 5 — 7 
Other — Amortization of identifiable intangible assets
11 6 22 14 
All other acquisition-related expenses
— 6 — 6 
Total “Other” expense11 12 22 20 
Total expenses related to acquisitions28 31 57 52 
Other — Insurance settlement received
— — (32)— 
Pre-tax impact of non-GAAP adjustments28 31 25 52 
Tax effect of non-GAAP adjustments(7)(8)(6)(13)
Total non-GAAP adjustments, net of tax21 23 19 39 
Adjusted net income available to common shareholders$446 $346 $951 $808 
Compensation, commissions and benefits expense$1,820 $1,852 $3,556 $3,736 
Less: Acquisition-related retention (as detailed above)17 14 35 25 
Adjusted “Compensation, commissions and benefits” expense$1,803 $1,838 $3,521 $3,711 

Three months endedSix months ended
March 31,
2023		March 31,
2022		March 31,
2023		March 31,
2022
Total compensation ratio63.3 %69.3 %62.8 %68.5 %
Less the impact of non-GAAP adjustments on compensation ratio:
Acquisition-related retention0.5 %0.5 %0.6 %0.5 %
Adjusted total compensation ratio62.8 %68.8 %62.2 %68.0 %
  Three months ended December 31,
$ in thousands, except per share amounts 2017 2016
Net income (1)
 $118,842
 $146,567
Non-GAAP adjustments:
    
Acquisition-related expenses (2)
 3,927
 12,666
Jay Peak matter (3)
 —
 30,000
Sub-total pre-tax non-GAAP adjustments 3,927
 42,666
Tax effect on non-GAAP adjustments above (1,100) (12,365)
Discrete impact of the Tax Act (4)
 117,169
 —
Total non-GAAP adjustments, net of tax 119,996
 30,301
Adjusted net income $238,838
 $176,868
     
Earnings per common share:
    
Basic $0.82
 $1.03
Diluted $0.80
 $1.00
Adjusted earnings per common share:
    
Adjusted basic $1.65
 $1.24
Adjusted diluted $1.61
 $1.21
55
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Effective tax rate:      
For the three months ended December 31, 2017
($ in thousands)
 Pre-tax income including noncontrolling interests Provision for income taxes Effective tax rate
  $311,684
 $192,401
 61.7%
Less: discrete impact of the Tax Act (4)
   117,169
  
As adjusted for discrete impact of the Tax Act   $75,232
 24.1%
Management’s Discussion and Analysis

Three months endedSix months ended
Earnings per common shareMarch 31,
2023		March 31,
2022		March 31,
2023		March 31,
2022
Diluted earnings per common share$1.93 $1.52 $4.23 $3.61 
Impact of non-GAAP adjustments on diluted earnings per common share:
Expenses directly related to acquisitions included in the following financial statement line items:
Compensation, commissions and benefits — Acquisition-related retention
0.08 0.06 0.16 0.12 
Professional fees— 0.02 — 0.03 
Other — Amortization of identifiable intangible assets
0.05 0.03 0.10 0.07 
All other acquisition-related expenses— 0.03 — 0.03 
Total “Other” expense0.05 0.06 0.10 0.10 
Total expenses related to acquisitions0.13 0.14 0.26 0.25 
Other — Insurance settlement received
— — (0.15)— 
Tax effect of non-GAAP adjustments(0.03)(0.04)(0.03)(0.06)
Total non-GAAP adjustments, net of tax0.10 0.10 0.08 0.19 
Adjusted diluted earnings per common share$2.03 $1.62 $4.31 $3.80 
(1)Excludes noncontrolling interests.

(2)See Note 3 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.

(3)See Part I. Item 3 - Legal proceedings in our 2017 Form 10-K for more information on the Jay Peak matter.

(4)See Note 13 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for more information related to the discrete impact of the Tax Act.

Return on common equityThree months endedSix months ended
$ in millionsMarch 31,
2023		March 31,
2022		March 31,
2023		March 31,
2022
Average common equity$9,806 $8,601 $9,650 $8,482 
Impact of non-GAAP adjustments on average common equity:
Expenses directly related to acquisitions included in the following financial statement line items:
Compensation, commissions and benefits — Acquisition-related retention
9 7 18 12 
Professional fees— 3 — 3 
Other — Amortization of identifiable intangible assets
6 3 11 7 
All other acquisition-related expenses— 3 — 2 
Total “Other” expense6 6 11 9 
Total expenses related to acquisitions15 16 29 24 
Other — Insurance settlement received
— — (21)— 
Tax effect of non-GAAP adjustments(4)(4)(2)(6)
Total non-GAAP adjustments, net of tax11 12 6 18 
Adjusted average common equity$9,817 $8,613 $9,656 $8,500 
Net interest analysis

56
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
The Federal Reserve Bank announced an increaseManagement’s Discussion and Analysis
Three months endedSix months ended
$ in millionsMarch 31,
2023		March 31,
2022		March 31,
2023		March 31,
2022
Average common equity$9,806 $8,601 $9,650 $8,482 
Less:
Average goodwill and identifiable intangible assets, net1,936 992 1,934 955 
Average deferred tax liabilities related to goodwill and identifiable intangible assets, net(129)(77)(128)(72)
Average tangible common equity$7,999 $7,686 $7,844 $7,599 
Impact of non-GAAP adjustments on average tangible common equity:
Expenses directly related to acquisitions included in the following financial statement line items:
Compensation, commissions and benefits — Acquisition-related retention
9 7 18 12 
Professional fees— 3 — 3 
Other — Amortization of identifiable intangible assets
6 3 11 7 
All other acquisition-related expenses— 3 — 2 
Total “Other” expense6 6 11 9 
Total expenses related to acquisitions15 16 29 24 
Other — Insurance settlement received
— — (21)— 
Tax effect of non-GAAP adjustments(4)(4)(2)(6)
Total non-GAAP adjustments, net of tax11 12 6 18 
Adjusted average tangible common equity$8,010 $7,698 $7,850 $7,617 
Return on common equity17.3 %15.0 %19.3 %18.1 %
Adjusted return on common equity18.2 %16.1 %19.7 %19.0 %
Return on tangible common equity21.3 %16.8 %23.8 %20.2 %
Adjusted return on tangible common equity22.3 %18.0 %24.2 %21.2 %

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

Tangible common equity is computed by subtracting goodwill and identifiable intangible assets, net, along with the associated deferred tax liabilities, from total common equity attributable to RJF. 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. Adjusted average tangible common equity is computed by adjusting for the impact on average tangible common equity of the non-GAAP adjustments, as applicable for each respective period.

ROCE is computed by dividing annualized net income available to common shareholders for the period indicated by average common equity for each respective period or, in the case of ROTCE, computed by dividing annualized net income available to common shareholders by average tangible common equity for each respective period. Adjusted ROCE is computed by dividing annualized adjusted net income available to common shareholders by adjusted average common equity for each respective period, or in the case of adjusted ROTCE, computed by dividing annualized adjusted net income available to common shareholders by adjusted average tangible common equity for each respective period.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

NET INTEREST ANALYSIS

Largely in response to inflationary pressures, the Fed rapidly increased its benchmark short-term interest rates commencing in March 2022 and continuing into our fiscal second quarter of 2023. Over this period, the Fed increased the Fed funds target rate from a March 31, 2022 range of 0.25% to 0.50% to a March 31, 2023 range of 4.75% to 5%. The Fed further increased the Fed funds target rate by 25 basis points in December 2017. This increase is in additionMay 2023 and indicated that it intends to three 25 basis pointclosely monitor short-term interest rates throughout the remainder of our fiscal 2023. The following table details the Fed’s recent short-term interest rate increases since December 2016. Theseactivity.
Fed Funds Target Rate Schedule
RJF Fiscal quarter endedEffective date of interest rate actionIncrease/(decrease) in interest rates (in basis points)Fed funds target rate
March 31 2020March 16, 2020(100)0.00% - 0.25%
March 31, 2022March 17, 2022250.25% - 0.50%
June 30, 2022May 5, 2022500.75% - 1.00%
June 30, 2022June 16, 2022751.50% - 1.75%
September 30, 2022July 28, 2022752.25% - 2.50%
September 30, 2022September 22, 2022753.00% - 3.25%
December 31, 2022November 3, 2022753.75% - 4.00%
December 31, 2022December 15, 2022504.25% - 4.50%
March 31, 2023February 2, 2023254.50% - 4.75%
March 31, 2023March 23, 2023254.75% - 5.00%
Rate changes subsequent to March 31, 2023
June 30, 2023May 4, 2023255.00% - 5.25%

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

Given the relationship between our interest-sensitive assets and liabilities (primarily held in our PCG, Bank, and Other segments) and the nature of fees we earn from third-party banks on client cash balances swept to such banks as part of the RJBDP (included in account and service fees), which are also sensitive to changes in interest rates, increases in short-term interest rates have had a significant impact on our overall financial performance, as we have certain assets and liabilities, primarily held in our PCG and RJ Bank segments, which are sensitive to changes in interest rates. Given the relationship of our interest sensitive assets to liabilities held in each of these segments, increases in short-term interest ratesgenerally result in an overall 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.liabilities, including deposit rates paid to clients on their cash balances. Changes to the regulatory landscape governing the fees the firm earns on client assets, including cash sweep balances, could negatively impact our earnings.


In PCG,As a result of our diverse funding sources, strong loan growth and high concentration of floating-rate assets, we also earn feesbenefited from the increases in lieu ofshort-term interest rates during the three and six months ended March 31, 2023. However, despite the recent increases in short-term interest rates, we expect our combined net interest income from RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at RJ Bank and various third-party banks. Such fees are recorded in “Account and service fees” in our Condensed Consolidated Statements of Income and Comprehensive Income. RJBDP fees from third-party banks to decline in our fiscal third quarter due to a decrease in average balances swept to third-party banks as well as a lower net interest margin in our Bank Segment, given the higher level of cash balances we plan to maintain in our Bank segment due to market conditions, as well as the impact from higher-cost diversified funding sources, including our Enhanced Savings Program, which was launched to PCG clients in March 2023. Our domestic client cash sweep balances represent a relatively low-cost funding source. As we pursue further diversified funding sources other than our domestic client cash sweep balances, such as the Enhanced Savings Program, our costs may increase as those funding sources typically reflect higher costs than our domestic client cash sweep balances. In addition, our pace of loan growth may continue to fluctuate based onover time in response to changes in short-term interest rates relativeand other market factors.

Refer to deposit rates paidthe 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. Also refer to “Management’s Discussion and Analysis - Results of Operations - Private Client Group - Clients’ domestic cash sweep balances” for further information on client cash balances.the RJBDP.




60
58
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


The following table details the components of our domestic client cash balances:
  As of
$ in millions December 31,
2017		 September 30,
2017		 December 31,
2016
RJBDP      
RJ Bank $18,374
 $17,387
 $14,893
Third-party banks 20,836
 20,704
 25,456
Sub-total RJBDP 39,210
 38,091
 40,349
Money market 1,710
 1,818
 2,036
Client interest program 3,334
 3,101
 3,696
Total domestic client cash balances $44,254
 $43,010
 $46,081

The short-term interest rate increases in 2017 had a significant impact on fees earned from RJBDP; however, they have not had as significant of an impact on market deposit rates paid on client cash balances. However, subsequent to the December 2017 rate increase, we announced increases in our deposit rates paid on client cash balances and we expect market deposit rates will continue to rise with future increases in short-term interest rates. As such, any future increases in short-term interest rates may have less of an impact on our fees earned from our RJBDP, or could actually reduce our fees earned in this program, depending on the level of deposit rates paid on client cash balances.

If the Federal Reserve Bank was to reverse its previous actions and decrease the benchmark short-term interest rate or if deposit rates that we pay on client cash balances increased and resulted in a decline in spreads earned on our RJBDP program, the impact on our net interest income and account and service fees would be an unfavorable reversal of the positive impact described above.


61
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


The following table presents our consolidated average balance,interest-earning asset and interest-bearing liability balances, interest income and expense and the related yield and rates. Average balances are calculated on a daily basis

Quarter ended March 31, 2023 compared with the exceptionquarter ended March 31, 2022
 Three months ended March 31,
 20232022
$ in millionsAverage
daily
balance		InterestAnnualized
average
rate		Average
daily
balance		InterestAnnualized
average
rate
Interest-earning assets:     
Bank segment:
Cash and cash equivalents$3,093$364.64 %$1,601$10.22 %
Available-for-sale securities10,869542.00 %8,869251.16 %
Loans held for sale and investment: (1) (2)
Loans held for investment:
SBL14,493 240 6.63 %6,753 39 2.31 %
C&I loans11,236 188 6.69 %8,783 54 2.49 %
CRE loans6,961 123 7.07 %3,150 20 2.56 %
REIT loans1,671 31 7.11 %1,324 9 2.48 %
Residential mortgage loans7,979 62 3.13 %5,770 38 2.69 %
Tax-exempt loans (3)
1,652 10 3.16 %1,289 9 3.18 %
Loans held for sale170 3 7.23 %268 2 2.94 %
Total loans held for sale and investment44,162 657 5.97 %27,337 171 2.53 %
All other interest-earning assets153 2 5.80 %114 2 2.75 %
Interest-earning assets — Bank segment$58,277 $749 5.16 %$37,921 $199 2.11 %
All other segments:
Cash and cash equivalents$3,130 $39 5.10 %$4,318 $2 0.19 %
Assets segregated for regulatory purposes and restricted cash4,856 55 4.36 %19,522 7 0.15 %
Trading assets — debt securities1,057 13 5.05 %464 4 3.86 %
Brokerage client receivables2,205 41 7.66 %2,558 21 3.29 %
All other interest-earning assets1,817 18 3.12 %1,614 9 2.47 %
Interest-earning assets — all other segments$13,065 $166 4.98 %$28,476 $43 0.63 %
Total interest-earning assets$71,342 $915 5.13 %$66,397 $242 1.48 %
Interest-bearing liabilities:  
Bank segment:
Bank deposits:
Money market and savings accounts$44,554 $132 1.20 %$33,136 $1 0.01 %
Interest-bearing demand deposits5,620 62 4.47 %293 1 1.10 %
Certificates of deposit1,859 16 3.57 %733 3 1.83 %
Total bank deposits (4)
52,033 210 1.64 %34,162 5 0.06 %
FHLB advances and all other interest-bearing liabilities1,452 9 2.80 %864 4 2.17 %
Interest-bearing liabilities — Bank segment$53,485 $219 1.67 %$35,026 $9 0.11 %
All other segments:
Trading liabilities — debt securities$725 $7 4.14 %$168 $1 1.89 %
Brokerage client payables6,044 23 1.52 %21,405 — 0.01 %
Senior notes payable2,038 23 4.44 %2,037 23 4.44 %
All other interest-bearing liabilities (4)
113 12 3.72 %199 5 5.77 %
Interest-bearing liabilities — all other segments$8,920 $65 2.43 %$23,809 $29 0.47 %
Total interest-bearing liabilities$62,405 $284 1.78 %$58,835 $38 0.26 %
Firmwide net interest income$631 $204 
Net interest margin (net yield on interest-earning assets)
Bank segment3.63 %2.01 %
Firmwide3.59 %1.25 %

(1) Loans are presented net of Trading instruments, Loans to financial advisors, netunamortized purchase discounts or premiums, unearned income, and Corporate cashdeferred origination fees and all other, which are calculated based on the average of the end of month balances for each month within the period.costs.
  Three months ended December 31,
  2017 2016
$ in thousands 
Average
balance
 
Interest
inc./exp.
 
Average
yield/cost
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/cost
Interest-earning assets:            
Assets segregated pursuant to regulations and other segregated assets $2,887,422
 $12,122
 1.68% $3,589,973
 $7,170
 0.80%
Securities loaned 361,749
 3,058
 3.38% 533,000
 2,732
 2.05%
Trading instruments 648,088
 5,138
 3.17% 604,749
 5,006
 3.31%
Available-for-sale securities 2,275,219
 10,715
 1.88% 999,359
 3,400
 1.36%
Margin loans 2,484,016
 24,095
 3.88% 2,427,230
 19,981
 3.29%
Bank loans, net of unearned income            
Loans held for investment:            
C&I loans 7,413,409
 73,792
 3.89% 7,477,477
 71,306
 3.75%
CRE construction loans 140,472
 1,723
 4.80% 132,506
 1,505
 4.44%
CRE loans 3,036,603
 28,759
 3.71% 2,549,914
 22,254
 3.42%
Tax-exempt loans 1,039,814
 6,706
 2.58% 808,160
 5,246
 2.60%
Residential mortgage loans 3,245,333
 24,790
 3.06% 2,559,074
 18,564
 2.84%
SBL 2,471,054
 23,240
 3.68% 1,951,644
 15,389
 3.09%
Loans held for sale 115,882
 1,010
 3.46% 180,052
 1,261
 2.81%
Total bank loans, net 17,462,567
 160,020
 3.65% 15,658,827
 135,525
 3.47%
Loans to financial advisors 869,326
 3,502
 1.61% 833,760
 3,308
 1.59%
Corporate cash and all other 4,330,440
 13,079
 1.21% 3,215,887
 5,660
 0.69%
Total interest-earning assets $31,318,827
 $231,729
 2.96% $27,862,785
 $182,782
 2.62%
             
Interest-bearing liabilities:  
  
  
  
  
  
Bank deposits            
Certificates of deposit $323,503
 $1,272
 1.56% $303,243
 $1,135
 1.48%
Savings, money market and NOW accounts 17,820,706
 6,237
 0.15% 14,411,122
 1,648
 0.05%
Securities borrowed 122,310
 1,479
 4.84% 126,247
 1,228
 3.89%
Trading instruments sold but not yet purchased 258,095
 1,706
 2.64% 266,206
 1,328
 2.00%
Brokerage client liabilities 4,442,992
 2,529
 0.23% 4,919,792
 676
 0.05%
Other borrowings 1,031,298
 5,865
 2.26% 768,178
 3,719
 1.94%
Senior notes 1,548,885
 18,180
 4.69% 1,680,417
 24,699
 5.88%
Other 256,161
 2,163
 3.38% 249,595
 1,533
 2.46%
Total interest-bearing liabilities $25,803,950
 $39,431
 0.61% $22,724,800
 $35,966
 0.63%
Net interest income  
 $192,298
  
  
 $146,816
  

(2) Nonaccrual loans are included in the average loan balances in the table above. Payment or incomebalances. Any payments received onfor corporate nonaccrual loans are applied entirely to principal. IncomeInterest income on otherresidential mortgage nonaccrual loans is recognized on a cash basis.

Fee income on all loans included in interest income for the three months ended December 31, 2017 and 2016 was $9 million for both periods.

Three months ended December 31, 2017 compared with the three months ended December 31, 2016

Net interest income increased $45 million, or 31%, primarily reflecting increases in our RJ Bank and PCG segments, as well as a decrease in interest expense in our Other segment related to our senior notes payable.

The RJ Bank segment’s net interest income increased $29 million, or 21%, resulting from an increase in average loans outstanding and an increase the available-for-sale securities portfolio, as well as an increase in net interest margin. Refer to the discussion of the specific components of RJ Bank’s net interest income in the RJ Bank section of this MD&A.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Net interest income in the PCG segment increased $8 million, or 27%, driven by an increase in interest income from segregated assets, due to the impact of an increase in short-term interest rates on these balances, and an increase in interest income from margin loans primarily due to higher yields on these balances. The favorable impact of the higher interest rates was partially offset by a decrease in average segregated asset balances. A decrease in average client cash balances partially offset the impact of the increased rates paid on these balances.

Interest expense on our senior notes decreased by $7 million, or 26% as a result of a decrease in average outstanding balances, as well as the average rate on our outstanding borrowings. The average outstanding balance and average rate of our senior notes decreased due to our March 2017 redemption of our $350 million 6.90% senior notes and our September 2017 redemption of our $300 million 8.60% senior notes, partially offset by the May 2017 issuance of $500 million 4.95% senior notes.

Results of Operations – Private Client Group

For an overview of our PCG segment operations as well as the description of the key factors impacting our PCG results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2017 Form 10-K.

Operating results
  Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:      
Securities commissions and fees:      
Fee-based accounts $596,259
 $472,899
 26 %
Mutual funds 163,147
 158,590
 3 %
Insurance and annuity products 110,789
 95,351
 16 %
Equity products 83,220
 79,436
 5 %
Fixed income products 28,337
 28,952
 (2)%
New issue sales credits 9,302
 17,991
 (48)%
Sub-total securities commissions and fees 991,054
 853,219
 16 %
Interest 43,476
 33,614
 29 %
Account and service fees:     

Mutual fund and annuity service fees 80,621
 68,726
 17 %
RJBDP fees - third-party banks 61,007
 36,564
 67 %
RJBDP fees - RJ Bank 21,258
 11,653
 82 %
Client account and service fees 22,754
 24,697
 (8)%
Client transaction fees and other 7,745
 6,786
 14 %
Sub-total account and service fees 193,385
 148,426
 30 %
Other 10,125
 8,057
 26 %
Total revenues 1,238,040
 1,043,316
 19 %
Interest expense (4,989) (3,227) 55 %
Net revenues 1,233,051
 1,040,089
 19 %
Non-interest expenses:  
  
 

Sales commissions 736,459
 634,512
 16 %
Admin & incentive compensation and benefit costs 198,917
 171,889
 16 %
Communications and information processing 52,800
 44,017
 20 %
Occupancy and equipment costs 37,757
 35,488
 6 %
Business development 21,563
 23,450
 (8)%
Jay Peak matter —
 30,000
 (100)%
Other 30,492
 27,375
 11 %
Total non-interest expenses 1,077,988
 966,731
 12 %
Pre-tax income $155,063
 $73,358
 111 %


63
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Selected key metrics

Client Asset Balances:
  As of % change from
$ in billions December 31,
2017		 September 30,
2017		 December 31,
2016		 September 30,
2017		 December 31,
2016
PCG assets under administration $692.1
 $659.5
 $585.6
 5% 18%
PCG assets in fee-based accounts $316.7
 $294.5
 $240.2
 8% 32%

Financial Advisors:
 December 31, 2017 September 30, 2017 December 31, 2016
Employees3,038
 3,041
 2,985
Independent Contractors4,499
(1) 
4,305
 4,143
Total advisors7,537
 7,346
 7,128

(1) Our independent contractor financial advisor counts include 126 registered individuals who met the requirements to be classified as financial advisors in the December 31, 2017 period following our periodic review procedures.

PCG assets under administration increased 18% over December 31, 2016, resulting from equity market appreciation and net client inflows. Our net client inflows were primarily attributable to strong financial advisor recruiting results. PCG assets in fee-based accounts as a percentage of overall PCG assets under administration increased compared to December 31, 2016, due in part to clients moving to fee-based alternatives versus traditional transaction-based accounts in response to regulatory changes.
Excluding the impact of the individuals newly qualifying to be classified as financial advisors, the net increase in financial advisors as of December 31, 2017 compared to December 31, 2016 primarily resulted from strong financial advisor recruiting and high levels of retention. Notwithstanding the future impact of changes in the overall economy, and more specifically their impact on the markets, we believe that this increase in financial advisors is a positive indication of potential future revenue growth in this segment.

Three months ended December 31, 2017 compared with the three months ended December 31, 2016

Net revenues of $1.23 billion increased $193 million, or 19%. The portion of total segment revenues that we consider to be recurring was 82% for the three months ended December 31, 2017, an increase from 78% for the prior year period. Recurring revenues include asset-based fees, trailing commissions from mutual funds and variable annuities/insurance products, mutual fund and annuity service fees, fees earned in our RJBDP program, and interest, all of which contributed to the increase.

Pre-tax income of $155 million increased $82 million, or 111%.

Securities commissions and fees increased $138 million, or 16%.  The increased securities commissions and fee revenues were primarily driven by a stronger market environment as well as strong recruiting results.

Total account and service fees increased $45 million, or 30%, primarily due to higher RJBDP fees, primarily resulting from an increase in short-term interest rates since December 2016. Mutual fund and annuity service fees increased reflecting higher education and marketing support (“EMS”) fees and mutual fund omnibus fees. The increase in EMS fees is primarily due to the increased assets in the program, while the increase in omnibus fees was a result of an increase in the number of positions invested in fund families on the omnibus platform.

As previously discussed, net interest income in the PCG segment increased $8 million, or 27%.

Non-interest expenses increased $111 million, or 12%, primarily due to an increase in sales commission expenses, which increased $102 million, or 16%, in line with the increase in securities commissions and fees. Administrative & incentive compensation and benefits expense increased $27 million, or 16%, primarily due to increased staffing levels to support our continued growth and regulatory and compliance requirements. Communications and information processing expense increased $9 million, or 20%, a result of our continued investment in information technology infrastructure to support our growth. Offsetting these increases is a $30 million decrease in expenses related to the Jay Peak matter, which was settled in fiscal year 2017.


64
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Results of Operations – Capital Markets

For an overview of our Capital Markets segment operations as well as the description of the key factors impacting our Capital Markets results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis Financial Condition and Results of Operations” of our 2017 Form 10-K.

Operating results
  Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:      
Securities commissions and fees:      
Equity $53,371
 $64,319
 (17)%
Fixed income 65,201
 75,374
 (13)%
Sub-total securities commissions and fees 118,572
 139,693
 (15)%
Equity underwriting fees 8,956
 14,509
 (38)%
Merger & acquisition and advisory fees 42,998
 27,174
 58 %
Fixed income investment banking 8,132
 8,478
 (4)%
Tax credit funds syndication fees 4,817
 11,126
 (57)%
Sub-total investment banking 64,903
 61,287
 6 %
Investment advisory fees 8,335
 5,223
 60 %
Net trading profit 19,230
 19,319
 —
Interest 7,325
 6,474
 13 %
Other 4,169
 4,986
 (16)%
Total revenues 222,534
 236,982
 (6)%
Interest expense (5,869) (3,966) 48 %
Net revenues 216,665
 233,016
 (7)%
Non-interest expenses:     

Sales commissions 42,218
 50,973
 (17)%
Admin & incentive compensation and benefit costs 114,322
 102,867
 11 %
Communications and information processing 17,834
 17,647
 1 %
Occupancy and equipment costs 8,384
 8,455
 (1)%
Business development 10,155
 9,602
 6 %
Losses and non-interest expenses of real estate partnerships held by consolidated VIEs 2,666
 1,796
 48 %
Other 18,986
 22,337
 (15)%
Total non-interest expenses 214,565
 213,677
 —
Income before taxes and including noncontrolling interests 2,100
 19,339
 (89)%
Noncontrolling interests (2,707) (2,105) 29 %
Pre-tax income excluding noncontrolling interests $4,807
 $21,444
 (78)%

Three months ended December 31, 2017 compared with the three months ended December 31, 2016

Net revenues of $217 million decreased $16 million, or 7%, primarily due to lower commissions. Pre-tax income of $5 million decreased $17 million, or 78%.

Total commission revenues decreased $21 million, or 15%. Institutional fixed income and equity commissions each decreased $11 million as a result of lower client trading volumes driven by low levels of interest rate and equity market volatility.

Investment banking revenues increased $4 million, or 6%, due to higher merger & acquisition and advisory fees, partially offset by lower tax credit fund syndication fees and equity underwriting fees. Merger & acquisition and advisory fees increased $16 million, or 58%, primarily due to a stronger volume of both domestic and foreign merger & acquisition activity and higher average fees per transaction in the current year period versus the prior year period. Tax credit fund syndication fees decreased $6 million, or 57%, due in part to uncertainty over corporate tax reform impacting new investment activity and the timing of transactions.

65
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Equity underwriting fees decreased $6 million, or 38%, primarily due to fewer domestic lead-managed deals in the current year period as compared to the prior year period.

Non-interest expenses were flat over the prior year period, as a decline in sales commissions, in line with the decline in securities commissions and fees, and a decline in other expenses were largely offset by an increase in administrative & incentive compensation and benefits expense.

Results of Operations – Asset Management

For an overview of our Asset Management segment operations as well as the description of the key factors impacting our Asset Management results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2017 Form 10-K.

Operating results
  Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:      
Investment advisory and related administrative fees:      
Managed programs $103,845
 $76,308
 36 %
Non-discretionary asset-based administration 27,068
 21,194
 28 %
Sub-total investment advisory and related administrative fees 130,913
 97,502
 34 %
Account and service fees and other 19,698
 16,594
 19 %
Total revenues 150,611
 114,096
 32 %
Interest expense (11) (14) (21)%
Net revenues 150,600
 114,082
 32 %
Non-interest expenses:  
  
 

Compensation and benefits 36,597
 27,682
 32 %
Communications and information processing 8,444
 6,671
 27 %
Occupancy and equipment costs 1,424
 1,160
 23 %
Business development 2,647
 2,313
 14 %
Investment sub-advisory fees 21,694
 17,384
 25 %
Other 19,527
 15,756
 24 %
Total non-interest expenses 90,333
 70,966
 27 %
Income before taxes and including noncontrolling interests 60,267
 43,116
 40 %
Noncontrolling interests 2,868
 1,207
 138 %
Pre-tax income excluding noncontrolling interests $57,399
 $41,909
 37 %

Selected key metrics

Managed Programs - Our investment advisory fees recorded in this segment were earned based on balances either at the beginning of the quarter, end of the quarter or average assets throughout the quarter. Following the Scout Group acquisition during the three months ended December 30, 2017, approximately 60% of our fees were determined based on asset balances at the beginning of the quarter, 20% were based on asset balances at the end of the quarter and 20% were based on average assets throughout the quarter.


66
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Financial assets under management:

The following table reflects fee-billable financial assets under management in managed programs at the dates indicated:
$ in millions December 31, 2017 September 30, 2017 December 31,
2016
Asset management services division of RJ&A (“AMS”) $74,607
 $69,962
 $56,524
Carillon Tower Advisers and affiliates (“Carillon Tower”) 61,245
 31,831
 27,933
Sub-total financial assets under management 135,852
 101,793
 84,457
Less: Assets managed for affiliated entities (5,542) (5,397) (4,805)
Total financial assets under management $130,310
 $96,396
 $79,652
Carillon Tower above includes its subsidiaries and affiliates Eagle Asset Management, ClariVest Asset Management, Cougar Global Investments, and the newly acquired Scout Group.

The following table reflects fee-billable financial assets under management (including assets managed for affiliates) in managed programs by objective at the dates indicated:
$ in millions December 31, 2017 September 30, 2017 December 31,
2016
Equity $57,971
 $48,936
 $40,959
Fixed 33,806
 11,814
 10,920
Balanced 44,075
 41,043
 32,578
Total financial assets under management $135,852
 $101,793
 $84,457

Activity (including activity in assets managed for affiliated entities):
  Three months ended December 31,
$ in millions 2017 2016
Financial assets under management at beginning of period $101,793
 $81,729
Carillon Tower - net inflows:    
Scout group acquisition 27,087
 —
Other 720
 88
AMS - net inflows 2,178
 1,896
Net market appreciation in asset values 4,074
 744
Financial assets under management at end of period $135,852
 $84,457

Non-discretionary asset-based programs - Our assets held in certain non-discretionary asset-based programs (including those managed for affiliated entities) totaled $170.9 billion, $157.0 billion, and $123.9 billion as of December 31, 2017, September 30, 2017 and December 31, 2016, respectively. The increase in assets over the prior year level was primarily due to market appreciation and to clients moving to fee-based accounts from the traditional transaction-based accounts in response to U.S. Department of Labor (“DOL”) regulatory changes. The majority of the administrative fees associated with these programs are determined based on balances at the beginning of the quarter.

Three months ended December 31, 2017 compared with the three months ended December 31, 2016

Net revenues of $151 million increased $37 million, or 32%. Pre-tax income of $57 million increased $15 million, or 37%.

Total investment advisory and related administrative fee revenues increased $33 million, or 34%, primarily driven by an increase in financial advisory fees due to higher financial assets under management. The increase in financial assets under management was primarily a result of the Scout Group acquisition, as well as both market appreciation and recruiting. Administrative fees also increased during the quarter due to the aforementioned increase in assets held in non-discretionary programs.

Account and service fees and other income increased $3 million, or 19%, primarily reflecting increased trust fee revenue due to a 12% increase in trust assets in RJ Trust.


67
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Non-interest expenses increased $19 million, or 27%, primarily resulting from a $9 million increase in compensation and benefit expenses, a $4 million increase in investment sub-advisory fees and a $4 million increase in other expense. Compensation and benefit expenses increased primarily due to the Scout Group acquisition, annual salary increases and an increase in personnel over the prior year to support the growth of the business. The increase in investment sub-advisory fees resulted from increased assets under management in applicable programs. The increase in other expense was primarily due to expenses incurred to support the new funds offered on our platform as a result of the Scout Group acquisition during the current year.

Results of Operations – RJ Bank

For an overview of our RJ Bank segment operations as well as the description of the key factors impacting our RJ Bank results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis Financial Condition and Results of Operations” of our 2017 Form 10-K.

Operating results
  Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:      
Interest income $175,995
 $140,774
 25 %
Interest expense (12,956) (6,502) 99 %
Net interest income 163,039
 134,272
 21 %
Other income 2,146
 3,743
 (43)%
Net revenues 165,185
 138,015
 20 %
Non-interest expenses:  
  
 

Compensation and benefits 8,876
 7,724
 15 %
Communications and information processing 2,585
 1,867
 38 %
Occupancy and equipment costs 362
 351
 3 %
Loan loss provision/(benefit) 1,016
 (1,040) NM
FDIC insurance premiums 4,834
 4,260
 13 %
Affiliate deposit account servicing fees 21,258
 11,653
 82 %
Other 12,099
 9,079
 33 %
Total non-interest expenses 51,030
 33,894
 51 %
Pre-tax income $114,155
 $104,121
 10 %


68
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


The following table presents average balance, interest income and expense, the related yield and rates, and interest spreads and margins for RJ Bank:
  Three months ended December 31,
  2017 2016
$ in thousands 
Average
balance
 
Interest
inc./exp.
 
Average
yield/
cost
 
Average
balance
 
Interest
inc./exp.
 
Average
yield/
cost
Interest-earning banking assets:            
Cash $1,354,464
 $4,432
 1.30% $905,877
 $1,244
 0.54%
Available-for-sale securities 2,168,610
 10,143
 1.87% 872,859
 3,077
 1.41%
Bank loans, net of unearned income:  
          
Loans held for investment:            
C&I loans 7,413,409
 73,792
 3.89% 7,477,477
 71,306
 3.75%
CRE construction loans 140,472
 1,723
 4.80% 132,506
 1,505
 4.44%
CRE loans 3,036,603
 28,759
 3.71% 2,549,914
 22,254
 3.42%
Tax-exempt loans 1,039,814
 6,706
 3.42% 808,160
 5,246
 3.99%
Residential mortgage loans 3,245,333
 24,790
 3.06% 2,559,074
 18,564
 2.84%
SBL 2,471,054
 23,240
 3.68% 1,951,644
 15,389
 3.09%
Loans held for sale 115,882
 1,010
 3.46% 180,052
 1,261
 2.81%
Total loans, net 17,462,567
 160,020
 3.65% 15,658,827
 135,525
 3.47%
FHLB stock, FRB stock, and other 130,817
 1,400
 4.25% 171,818
 928
 2.14%
Total interest-earning banking assets 21,116,458
 $175,995
 3.32% 17,609,381
 $140,774
 3.21%
Non-interest-earning banking assets:  
  
  
  
  
  
Unrealized loss on available-for-sale securities (15,508)  
  
 (5,138)  
  
Allowance for loan losses (190,503)  
  
 (196,895)  
  
Other assets 402,839
  
  
 358,673
  
  
Total non-interest-earning banking assets 196,828
  
  
 156,640
  
  
Total banking assets $21,313,286
  
  
 $17,766,021
  
  
Interest-bearing banking liabilities:  
  
  
  
  
  
Deposits:  
  
  
  
  
  
Certificates of deposit $323,503
 $1,272
 1.56% $303,243
 $1,135
 1.48%
Savings, money market, and NOW accounts 18,065,017
 6,945
 0.15% 14,888,763
 2,156
 0.06%
FHLB advances and other 989,239
 4,739
 1.87% 796,174
 3,211
 1.58%
Total interest-bearing banking liabilities 19,377,759
 $12,956
 0.26% 15,988,180
 $6,502
 0.16%
Non-interest-bearing banking liabilities 93,462
  
  
 86,936
  
  
Total banking liabilities 19,471,221
  
  
 16,075,116
  
  
Total banking shareholder’s equity 1,842,065
  
  
 1,690,905
  
  
Total banking liabilities and shareholder’s equity $21,313,286
  
  
 $17,766,021
  
  
Excess of interest-earning banking assets over interest-bearing banking liabilities/net interest income $1,738,699
 $163,039
   $1,621,201
 $134,272
  
Bank net interest:  
  
    
  
  
Spread  
  
 3.06%  
  
 3.05%
Margin (net yield on interest-earning banking assets)  
  
 3.08%  
  
 3.06%
Ratio of interest-earning banking assets to interest-bearing banking liabilities  
  
 108.97%  
   110.14%

Nonaccrual loans are included in the average loan balances presented in the table above. Payment or income received on corporate nonaccrual loans are applied to principal. Income on other nonaccrual loans is recognized on a cash basis.

Fee income on loans included in interest income for both the three months ended December 31, 2017 and 2016 was $9 million.

(3) The yield on tax-exempt loans in the preceding table above is presented on a tax equivalenttaxable-equivalent basis utilizing the applicable federal statutory rates for each of the three months ended December 31, 2017years presented.
(4) The average balance, interest expense, and 2016.


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”.
69
59
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning banking 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 itsour interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. Changes attributable to both volume and rate have been allocated proportionately.
Three months ended March 31,
2023 compared to 2022
 Increase/(decrease) due to
$ in millionsVolumeRateTotal
Interest-earning assets:Interest income
Bank segment:   
Cash and cash equivalents$2 $33 $35 
Available-for-sale securities7 22 29 
Loans held for sale and investment:
Loans held for investment:
SBL76 125 201 
C&I loans19 115 134 
CRE loans41 62 103 
REIT loans3 19 22 
Residential mortgage loans17 7 24 
Tax-exempt loans— 1 1 
Loans held for sale— 1 1 
Total loans held for sale and investment156 330 486 
All other interest-earning assets1 (1)— 
Interest-earning assets — Bank segment$166 $384 $550 
All other segments:
Cash and cash equivalents$— $37 $37 
Assets segregated for regulatory purposes and restricted cash(11)59 48 
Trading assets — debt securities6 3 9 
Brokerage client receivables(6)26 20 
All other interest-earning assets4 5 9 
Interest-earning assets — all other segments$(7)$130 $123 
Total interest-earning assets$159 $514 $673 
   
Interest-bearing liabilities:Interest expense
Bank segment:
Bank deposits:
Money market and savings accounts$1 $130 $131 
Interest-bearing demand deposits60 1 61 
Certificates of deposit8 5 13 
Total bank deposits69 136 205 
FHLB advances and all other interest-bearing liabilities4 1 5 
Interest-bearing liabilities — Bank segment$73 $137 $210 
All other segments:
Trading liabilities — debt securities$4 $2 $6 
Brokerage client payables3 20 23 
All other interest-bearing liabilities4 3 7 
Interest-bearing liabilities — all other segments$11 $25 $36 
Total interest-bearing liabilities$84 $162 $246 
Change in firmwide net interest income$75 $352 $427 
60
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

Six months ended March 31, 2023 compared with the six months ended March 31, 2022
 Six months ended March 31,
 20232022
$ in millionsAverage
daily
balance		InterestAnnualized
average
rate		Average
daily
balance		InterestAnnualized
average
rate
Interest-earning assets:
Bank segment:
Cash and cash equivalents$2,705$584.24 %$1,876$20.19 %
Available-for-sale securities10,9611071.95 %8,688471.09 %
Loans held for sale and investment: (1) (2)
Loans held for investment:
SBL14,768 466 6.27 %6,519 74 2.26 %
C&I loans11,206 357 6.31 %8,681 109 2.49 %
CRE loans6,879 233 6.75 %3,044 40 2.61 %
REIT loans1,649 55 6.64 %1,227 16 2.51 %
Residential mortgage loans7,801 119 3.06 %5,609 75 2.68 %
Tax-exempt loans (3)
1,623 20 3.11 %1,293 17 3.19 %
Loans held for sale179 6 6.27 %254 4 2.94 %
Total loans held for sale and investment44,105 1,256 5.68 %26,627 335 2.53 %
All other interest-earning assets148 4 5.55 %141 2 2.21 %
Interest-earning assets — Bank segment$57,919 $1,425 4.91 %$37,332 $386 2.07 %
All other segments:
Cash and cash equivalents$3,401 $72 4.25 %$4,078 $4 0.19 %
Assets segregated for regulatory purposes and restricted cash5,554 105 3.81 %15,844 11 0.14 %
Trading assets — debt securities1,069 27 5.08 %516 9 3.35 %
Brokerage client receivables2,301 82 7.16 %2,521 42 3.32 %
All other interest-earning assets1,909 31 2.79 %1,622 15 1.92 %
Interest-earning assets — all other segments$14,234 $317 4.42 %$24,581 $81 0.66 %
Total interest-earning assets$72,153 $1,742 4.81 %$61,913 $467 1.51 %
Interest-bearing liabilities:
Bank segment:
Bank deposits:
Money market and savings accounts$44,864 $253 1.13 %$32,542 $1 0.01 %
Interest-bearing demand deposits5,382 109 4.05 %239 3 2.78 %
Certificates of deposit1,538 24 3.13 %789 7 1.85 %
Total bank deposits (4)
51,784 386 1.49 %33,570 11 0.06 %
FHLB advances and all other interest-bearing liabilities1,374 18 2.63 %863 9 2.19 %
Interest-bearing liabilities — Bank segment$53,158 $404 1.52 %$34,433 $20 0.12 %
All other segments:
Trading liabilities — debt securities$752 $17 4.63 %$187 $2 1.63 %
Brokerage client payables6,842 40 1.16 %17,275 1 0.01 %
Senior notes payable2,038 46 4.44 %2,037 46 4.44 %
All other interest-bearing liabilities (4)
133 18 2.45 %194 6 6.28 %
Interest-bearing liabilities — all other segments$9,765 $121 2.13 %$19,693 $55 0.55 %
Total interest-bearing liabilities$62,923 $525 1.61 %$54,126 $75 0.28 %
Firmwide net interest income$1,217 $392 
Net interest margin (net yield on interest-earning assets)
Bank segment3.51 %1.97 %
Firmwide3.38 %1.27 %

(1) Loans are presented net of unamortized discounts, unearned income, and deferred loan fees and costs.
(2) Nonaccrual loans are included in the average loan balances. Any payments received for corporate nonaccrual loans are applied entirely to principal. Interest income on residential mortgage nonaccrual loans is recognized on a cash basis.
(3) The yield on tax-exempt loans in the preceding table is presented on a taxable-equivalent basis utilizing the applicable federal statutory rates for each of the years presented.
(4) The average balance, interest expense, and average rate for “Total bank deposits” included amounts associated with affiliate deposits. Such amounts are eliminated in consolidation and are offset in “All other interest-bearing liabilities” under “All other segments”.

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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 year’speriod’s volume. Changes applicableattributable to both volume and rate have been allocated proportionately.
  Three months ended December 31,
  2017 compared to 2016
  Increase/(decrease) due to
$ in thousands Volume Rate Total
Interest revenue:      
Interest-earning banking assets:      
Cash $616
 $2,572
 $3,188
Available-for-sale securities 4,131
 2,935
 7,066
Bank loans, net of unearned income:      
Loans held for investment:      
C&I loans (611) 3,097
 2,486
CRE construction loans 90
 128
 218
CRE loans 4,247
 2,258
 6,505
Tax-exempt loans 1,503
 (43) 1,460
Residential mortgage loans 4,978
 1,248
 6,226
SBL 4,096
 3,755
 7,851
Loans held for sale (449) 198
 (251)
Total bank loans, net 13,854
 10,641
 24,495
FHLB stock, FRB stock, and other (221) 693
 472
Total interest-earning banking assets 18,380
 16,841

35,221
Interest expense:  
  
  
Interest-bearing liabilities:  
  
  
Bank deposits:  
  
  
Certificates of deposit 76
 61
 137
Money market, savings and NOW accounts 460
 4,329
 4,789
FHLB advances and other 779
 749
 1,528
Total interest-bearing liabilities 1,315
 5,139
 6,454
Change in net interest income $17,065
 $11,702
 $28,767

The following tables present certain credit quality trends for loans held by RJ Bank:
Six months ended March 31,
2023 compared to 2022
 Increase/(decrease) due to
$ in millionsVolumeRateTotal
Interest-earning assets:Interest income
Bank segment:
Cash and cash equivalents$2 $54 $56 
Available-for-sale securities15 45 60 
Loans held for sale and investment:
Loans held for investment:
SBL163 229 392 
C&I loans40 208 248 
CRE loans85 108 193 
REIT loans7 32 39 
Residential mortgage loans33 11 44 
Tax-exempt loans4 (1)3 
Loans held for sale(3)5 2 
Total loans held for sale and investment329 592 921 
All other interest-earning assets— 2 2 
Interest-earning assets — Bank segment$346 $693 $1,039 
All other segments:
Cash and cash equivalents$(2)$70 $68 
Assets segregated for regulatory purposes and restricted cash(26)120 94 
Trading assets — debt securities12 6 18 
Brokerage client receivables(11)51 40 
All other interest-earning assets5 11 16 
Interest-earning assets — all other segments$(22)$258 $236 
Total interest-earning assets$324 $951 $1,275 
Interest-bearing liabilities:Interest expense
Bank segment:
Bank deposits:
Money market and savings accounts$1 $251 $252 
Interest-bearing demand deposits104 2 106 
Certificates of deposit10 7 17 
Total bank deposits115 260 375 
FHLB advances and all other interest-bearing liabilities7 2 9 
Interest-bearing liabilities — Bank segment$122 $262 $384 
All other segments:
Trading liabilities — debt securities$9 $6 $15 
Brokerage client payables(2)41 39 
All other interest-bearing liabilities4 8 12 
Interest-bearing liabilities — all other segments$11 $55 $66 
Total interest-bearing liabilities$133 $317 $450 
Change in firmwide net interest income$191 $634 $825 
62
  Three months ended December 31,
$ in thousands 2017 2016
Net loan (charge-offs)/recoveries:    
C&I loans $(603) $(3,389)
CRE loans —
 5,013
Residential mortgage loans 509
 (22)
Total $(94) $1,602


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis

RESULTS OF OPERATIONS – PRIVATE CLIENT GROUP

For an overview of our PCG segment operations, as well as a description of the key factors impacting our PCG results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K.

Operating results
 Three months ended March 31,Six months ended March 31,
$ in millions20232022% change20232022% change
Revenues:   
Asset management and related administrative fees$1,102 $1,245 (11)%$2,155 $2,407 (10)%
Brokerage revenues:
Mutual and other fund products135 166 (19)%263 337 (22)%
Insurance and annuity products113 110 3 %217 221 (2)%
Equities, ETFs and fixed income products116 121 (4)%229 236 (3)%
Total brokerage revenues364 397 (8)%709 794 (11)%
Account and service fees:
Mutual fund and annuity service fees105 109 (4)%203 223 (9)%
RJBDP fees:
Bank segment311 49 535 %579 99 485 %
Third-party banks100 20 400 %237 37 541 %
Client account and other fees56 53 6 %116 102 14 %
Total account and service fees572 231 148 %1,135 461 146 %
Investment banking9 9 — %18 22 (18)%
Interest income117 37 216 %226 70 223 %
All other9 6 50 %15 13 15 %
Total revenues2,173 1,925 13 %4,258 3,767 13 %
Interest expense(29)(3)867 %(51)(6)750 %
Net revenues2,144 1,922 12 %4,207 3,761 12 %
Non-interest expenses:    
Financial advisor compensation and benefits1,118 1,231 (9)%2,193 2,418 (9)%
Administrative compensation and benefits345 289 19 %687 572 20 %
Total compensation, commissions and benefits1,463 1,520 (4)%2,880 2,990 (4)%
Non-compensation expenses:
Communications and information processing100 84 19 %189 155 22 %
Occupancy and equipment53 50 6 %104 96 8 %
Business development33 25 32 %70 52 35 %
Professional fees17 13 31 %30 22 36 %
All other37 17 118 %59 38 55 %
Total non-compensation expenses240 189 27 %452 363 25 %
Total non-interest expenses1,703 1,709 — %3,332 3,353 (1)%
Pre-tax income$441 $213 107 %$875 $408 114 %


63
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

Selected key metrics

$ in thousands December 31,
2017		 September 30,
2017
Nonperforming assets:  
  
Nonperforming loans:  
  
C&I loans $4,843
 $5,221
Residential mortgage loans:    
Residential first mortgage 32,364
 33,718
Home equity loans/lines 126
 31
Total nonperforming loans 37,333
 38,970
Other real estate owned:  
  
Residential first mortgage 4,299
 4,729
Total other real estate owned 4,299
 4,729
Total nonperforming assets $41,632
 $43,699
Total nonperforming assets as a % of RJ Bank total assets 0.19% 0.21%
Total loans:    
Loans held for sale, net $189,862
 $70,316
Loans held for investment:    
C&I loans 7,490,219
 7,385,910
CRE construction loans 164,847
 112,681
CRE loans 3,136,101
 3,106,290
Tax-exempt loans 1,136,468
 1,017,791
Residential mortgage loans 3,270,780
 3,148,730
SBL 2,530,521
 2,386,697
Net unearned income and deferred expenses (30,231) (31,178)
Total loans held for investment 17,698,705
 17,126,921
Total loans $17,888,567
 $17,197,237
PCG client asset balances

As of
$ in billionsMarch 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Assets under administration (“AUA”) (1)
$1,171.1 $1,114.3 $1,039.0 $1,198.3 $1,199.8 $1,115.4 
Assets in fee-based accounts (1) (2)
$666.3 $633.1 $586.0 $678.0 $677.8 $627.1 
Percent of AUA in fee-based accounts56.9 %56.8 %56.4 %56.6 %56.5 %56.2 %
Total loans
(1)Includes assets associated with firms affiliated with us through our Registered Investment Advisor & Custody Services (“RCS”) division of $123.5 billion as of March 31, 2023, $115.6 billion as of December 31, 2022, $108.5 billion as of September 30, 2022, $99.2 billion as of March 31, 2022, $101.6 billion as of December 31, 2021, and $92.7 billion as of September 30, 2021. Of these amounts, $103.6 billion as of March 31, 2023, $96.6 billion as of December 31, 2022, $89.9 billion as of September 30, 2022, $84.0 billion as of March 31, 2022, $85.5 billion as of December 31, 2021, and $77.2 billion as of September 30, 2021 were fee-based assets. Based on the nature of the services provided to such firms, revenues related to these assets are included in “Account and service fees.”
(2)A portion of our “Assets in fee-based accounts” is invested in “managed programs” overseen by our Asset Management segment, specifically our Asset Management Services division of RJ&A (“AMS”). These assets are included in our financial assets under management as disclosed in the above“Selected key metrics” section of our “Management’s Discussion and Analysis - Results of Operations - Asset Management.”

PCG net new assets
Three months ended March 31,Six months ended March 31,
$ in millions2023202220232022
Domestic Private Client Group net new assets (1)
$21,473 $24,093 $44,699 $60,194 
Domestic Private Client Group net new assets growth - annualized (2)
8.4 %8.6 %9.4 %11.4 %

(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 March 31, 2023 each increased 5% compared with December 31, 2022, and increased 13% and 14%, respectively, compared with September 30, 2022 due to equity market appreciation and strong net inflows of client assets during the period. We expect that the 5% increase in fee-based accounts compared with December 31, 2022 will positively impact our asset management and related administrative fees for our fiscal third quarter of 2023. Compared with March 31, 2022, PCG AUA declined 2%, primarily due to a net decline in equity markets since March 31, 2022, offset by the favorable impacts of our recruiting. PCG assets in fee-based accounts continued to be a significant percentage of overall PCG AUA due to many clients’ preference for fee-based alternatives versus transaction-based accounts and, as a result, a significant portion of our PCG revenues is more directly impacted by market movements.

Fee-based accounts within our PCG segment are comprised of a wide array of products and programs that we offer our clients. The majority of assets in fee-based accounts within our PCG segment are invested in programs for which our financial advisors provide investment advisory services, either on a discretionary or non-discretionary basis. Administrative services for such accounts (e.g., record-keeping) are generally performed by our Asset Management segment and, as a result, a portion of the related revenue is shared with the Asset Management segment.

We also offer our clients fee-based accounts that are invested in “managed programs” overseen by AMS, which is part of our Asset Management segment. Fee-billable assets invested in managed programs are included in both “Assets in fee-based accounts” in the preceding table and “Financial assets under management” in the Asset Management segment. Revenues related to managed programs are shared by our PCG and Asset Management segments. The Asset Management segment receives a higher portion of the revenues related to accounts invested in managed programs, as compared to the portion received for programs for which our financial advisors provide investment advisory services, as it is performing portfolio management services in addition to administrative services.

The vast majority of the revenues we earn from fee-based accounts are recorded in “Asset management and related administrative fees” on our Condensed Consolidated Statements of Income and Comprehensive Income. Fees received from such accounts are based on the value of client assets in fee-based accounts and vary based on the specific account types in which the client invests and the level of assets in the client relationship. As fees for the majority of such accounts are billed based on balances as of the beginning of the quarter, revenues from fee-based accounts may not be immediately affected by changes in asset values, but rather the impacts are seen in the following quarter.
64
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

Financial advisors
March 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Employees3,628 3,631 3,638 3,601 3,447 3,461 
Independent contractors (1)
5,098 5,068 5,043 5,129 5,017 5,021 
Total advisors8,726 8,699 8,681 8,730 8,464 8,482 

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

The number of financial advisors as of March 31, 2023 increased compared with December 31, 2022 and September 30, 2022, as the impacts of new recruits and trainees that were moved into production roles were partially offset by financial advisors who left the firm, including planned retirements where assets are generally retained at the firm pursuant to advisor succession plans. The recruiting pipeline remains solid across our affiliation options; however, the timing of financial advisors joining the firm may be impacted by market uncertainty. We expect to continue to experience transfers to our RCS division in fiscal 2023; however, consistent with our experience in fiscal 2022, we do not expect these financial advisor transfers to significantly impact our results of operations. Advisors in our RCS division are not included in our financial advisor metric although their client assets are included in PCG AUA.

Clients’ domestic cash sweep balances and Enhanced Savings Program balances
As of
$ in millionsMarch 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
RJBDP:
Bank segment$37,682 $39,098 $38,705 $33,570 $33,097 $31,410 
Third-party banks9,408 18,231 21,964 25,887 24,316 24,496 
Subtotal RJBDP47,090 57,329 60,669 59,457 57,413 55,906 
Client Interest Program (“CIP”)2,385 3,053 6,445 17,013 16,065 10,762 
Total clients’ domestic cash sweep balances49,475 60,382 67,114 76,470 73,478 66,668 
Enhanced Savings Program (1)
2,746 — — — — — 
Total clients’ domestic cash sweep and Enhanced Savings Program balances$52,221 $60,382 $67,114 $76,470 $73,478 $66,668 

(1) In March 2023, we launched our Enhanced Savings Program, in which Private Client Group clients may deposit cash in a high-yield Raymond James Bank account. These balances are reflected in Bank deposits on our Condensed Consolidated Statements of Financial Condition.

 Three months ended March 31,Six months ended March 31,
2023202220232022
Average yield on RJBDP - third-party banks3.25 %0.32 %2.93 %0.30 %

A significant portion of our domestic clients’ cash is included in the RJBDP, a multi-bank sweep program in which clients’ cash deposits in their brokerage accounts are swept into interest-bearing deposit accounts at either Raymond James Bank or TriState Capital Bank, which are included in our Bank segment, or various third-party banks. Our PCG segment earns servicing fees for the administrative services we provide related to our clients’ deposits that are swept to such banks as part of the RJBDP. 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 market environment the PCG segment revenues will reflect RJBDP fee revenues derived from the yield from third-party banks in the program and the Bank segment RJBDP servicing costs reflect such market rate for the deposits. The fees that the PCG segment earns from the Bank segment, as well as the servicing costs incurred on the deposits in the Bank segment, are eliminated in consolidation.

The “Average yield on RJBDP - third-party banks” in the preceding table is computed by dividing annualized RJBDP fees from third-party banks, which are net of unearned incomethe interest expense paid to clients by the third-party banks, by the average daily RJBDP balance at third-party banks. The average yield on RJBDP - third-party banks increased from the prior-year quarter as a result of the significant increases in the Fed’s short-term benchmark interest rate, which began in March 2022. We expect a decline in our RJBDP fees in our fiscal third quarter of 2023 due to lower average balances in the program.
65
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and deferred expenses. Analysis

Total loans held for investment included $1.77 billionclient domestic cash sweep and $1.61Enhanced Savings Program balances declined 14% compared with December 31, 2022 and 22% compared with September 30, 2022, as a result of continued cash sorting activity given the higher short-term interest rate environment, partially offset by the launch of the Enhanced Savings Program in March 2023, which resulted in $2.75 billion of loans to borrowers domiciledclient cash balances as of March 31, 2023. PCG segment results can be impacted by not only changes in Canada at Decemberthe level of client cash balances, but also by the allocation of client cash balances between RJBDP, CIP, and the Enhanced Savings Program, as the PCG segment may earn different amounts from each of these client cash destinations, depending on multiple factors.

Quarter ended March 31, 2017 and September 30, 2017, respectively. At December 31, 2017 and September 30, 2017, there were $1.09 billion and $1.00 billion, respectively, in Canadian dollar-denominated loans held for investment.

The following table presents RJ Bank’s allowance for loan losses by loan category:
  December 31, 2017 September 30, 2017
$ in thousands Allowance Loan category as a % of total loans receivable Allowance Loan category as a % of total loans receivable
Loans held for sale $—
 1% $—
 —
C&I loans 121,569
 42% 119,901
 43%
CRE construction loans 2,107
 1% 1,421
 1%
CRE loans 40,616
 18% 41,749
 18%
Tax-exempt loans 6,918
 6% 6,381
 6%
Residential mortgage loans 15,501
 18% 16,691
 18%
SBL 4,558
 14% 4,299
 14%
Total $191,269
 100% $190,442
 100%


Three months ended December 31, 20172023 compared with the three monthsquarter ended DecemberMarch 31, 20162022


Net revenues of $165$2.14 billion increased 12% and pre-tax income of $441 million increased $27107%.

Asset management and related administrative fees decreased $143 million, or 20%11%, primarily reflecting an increasedue to lower assets in net interest income. Pre-tax incomefee-based accounts at the beginning of $114 million increased $10the current quarter compared with the prior-year quarter due to declines in the equity market.

Brokerage revenues decreased $33 million, or 10%.8%, primarily due to lower trailing revenues from mutual fund and annuity products primarily resulting from market-driven declines in asset values for products for which we receive trails.


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

Net interest income increased $29$54 million, or 21%159%, due to the increase in short-term interest rates applicable to our cash, segregated cash, and client margin account balances.

Compensation-related expenses decreased $57 million, or 4%, primarily due to lower commission expense resulting from lower compensable revenues, including asset management and related administrative fees and brokerage revenues, partially offset by an increase in compensation costs to support our growth, annual salary increases, and, to a $3.51lesser extent, incremental expenses arising from our January 2022 acquisition of Charles Stanley.

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

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

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

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

Asset management and related administrative fees decreased $252 million, or 10%, primarily due to lower assets in fee-based accounts at the beginning of each of the current-year quarterly billing periods compared with the prior-year quarterly billing periods, partially offset by incremental revenues arising from the acquisition of Charles Stanley.

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

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

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

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

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


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

RESULTS OF OPERATIONS – CAPITAL MARKETS

For an overview of our Capital Markets segment operations, as well as a description of the key factors impacting our Capital Markets results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K.

Operating results
 Three months ended March 31,Six months ended March 31,
$ in millions20232022% change20232022% change
Revenues:  
Brokerage revenues:  
Fixed income$96 $125 (23)%$196 $245 (20)%
Equity34 41 (17)%68 80 (15)%
Total brokerage revenues130 166 (22)%264 325 (19)%
Investment banking:
Merger & acquisition and advisory87 139 (37)%189 410 (54)%
Equity underwriting29 52 (44)%44 149 (70)%
Debt underwriting29 35 (17)%45 79 (43)%
Total investment banking145 226 (36)%278 638 (56)%
Interest income21 5 320 %44 10 340 %
Affordable housing investments business revenues23 15 53 %47 50 (6)%
All other3 4 (25)%7 9 (22)%
Total revenues322 416 (23)%640 1,032 (38)%
Interest expense(20)(3)567 %(43)(5)760 %
Net revenues302 413 (27)%597 1,027 (42)%
Non-interest expenses:  
Compensation, commissions and benefits231 253 (9)%444 584 (24)%
Non-compensation expenses:
Communications and information processing26 22 18 %50 44 14 %
Occupancy and equipment11 10 10 %21 19 11 %
Business development17 9 89 %32 17 88 %
Professional fees14 7 100 %27 21 29 %
All other37 25 48 %73 54 35 %
Total non-compensation expenses105 73 44 %203 155 31 %
Total non-interest expenses336 326 3 %647 739 (12)%
Pre-tax income/(loss)$(34)$87 NM$(50)$288 NM

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

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

Investment banking revenues decreased $81 million, or 36%, as activity levels in the current quarter were negatively impacted by heightened market volatility and macroeconomic uncertainties which continue to dampen capital markets activity across the industry. Our investment banking pipeline remains healthy and, in part, reflects the investments we have made over the past several years; however, continued market uncertainty could delay, or ultimately prevent, the closing of transactions, which could negatively impact our results.

Brokerage revenues decreased $36 million, or 22%, primarily due to a decrease in fixed income brokerage revenues resulting from decreased activity from depository institution clients due to challenging market conditions, partially offset by incremental revenues from SumRidge Partners, which was acquired on July 1, 2022. We expect our fixed income brokerage revenues to continue to be negatively impacted by the challenging market conditions which have resulted in a decline in cash balances at many of our depository institution clients, decreasing their immediate demand for our products and services.

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

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

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

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

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

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

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

Non-compensation expenses increased $48 million, or 31%, primarily due to incremental expenses associated with SumRidge Partners, increased travel and event-related expenses and higher professional fees compared with the prior-year period.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

RESULTS OF OPERATIONS – ASSET MANAGEMENT

For an overview of our Asset Management segment operations as well as a description of the key factors impacting our Asset Management results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K.

Operating results
 Three months ended March 31,Six months ended March 31,
$ in millions20232022% change20232022% change
Revenues:  
Asset management and related administrative fees:
Managed programs$140 $149 (6)%$274 $300 (9)%
Administration and other66 77 (14)%129 153 (16)%
Total asset management and related administrative fees206 226 (9)%403 453 (11)%
Account and service fees6 6 — %11 12 (8)%
All other4 2 100 %9 5 80 %
Net revenues216 234 (8)%423 470 (10)%
Non-interest expenses:    
Compensation, commissions and benefits52 47 11 %99 93 6 %
Non-compensation expenses:
Communications and information processing14 14 — %28 26 8 %
Investment sub-advisory fees34 39 (13)%68 76 (11)%
All other34 31 10 %66 65 2 %
Total non-compensation expenses82 84 (2)%162 167 (3)%
Total non-interest expenses134 131 2 %261 260 — %
Pre-tax income$82 $103 (20)%$162 $210 (23)%

Selected key metrics

Managed programs

Management fees recorded in our Asset Management segment are generally calculated as a percentage of the value of our fee-billable financial assets under management (“AUM”). These AUM include the portion of fee-based AUA in our PCG segment that is invested in programs overseen by our Asset Management segment (included in the “AMS” line of the following table), as well as retail accounts managed on behalf of third-party institutions, institutional accounts and mutual funds that we manage (collectively included in the “Raymond James Investment Management” line of the following table).

Revenues related to fee-based AUA in our PCG segment are shared by the PCG and Asset Management segments, the amount of which depends on whether or not clients are invested in assets that are in managed programs overseen by our Asset Management segment and the administrative services provided (see our “Management’s Discussion and Analysis - Results of Operations - Private Client Group” for more information). Our AUM in AMS are impacted by market fluctuations and net inflows or outflows of assets, including transfers between fee-based accounts and transaction-based accounts within our PCG segment.

Revenues earned by Raymond James Investment Management for retail accounts managed on behalf of third-party institutions, institutional accounts and our mutual funds are recorded entirely in the Asset Management segment. Our AUM in Raymond James Investment Management are impacted by market and investment performance and net inflows or outflows of assets.

Fees for our managed programs are generally collected quarterly. Approximately 65% of these fees are based on balances as of the beginning of the quarter (primarily in AMS), approximately 15% are based on balances as of the end of the quarter, and approximately 20% are based on average daily balances throughout the quarter.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Financial assets under management
$ in billionsMarch 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
AMS (1)
$136.5 $129.5 $119.8 $140.1 $145.0 $134.4 
Raymond James Investment Management69.4 67.4 64.2 64.0 68.9 67.8 
Subtotal financial assets under management205.9 196.9 184.0 204.1 213.9 202.2 
Less: Assets managed for affiliated entities(11.5)(10.9)(10.2)(10.4)(10.7)(10.3)
Total financial assets under management$194.4 $186.0 $173.8 $193.7 $203.2 $191.9 

(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.

Activity (including activity in assets managed for affiliated entities)
Three months ended March 31,Six months ended March 31,
$ in billions2023202220232022
Financial assets under management at beginning of period$196.9 $213.9 $184.0 $202.2 
Raymond James Investment Management - net inflows/(outflows)1.1 (0.8)1.7 (1.2)
AMS - net inflows1.7 3.5 2.7 7.0 
Net market appreciation/(depreciation) in asset values6.2 (12.5)17.5 (3.9)
Financial assets under management at end of period$205.9 $204.1 $205.9 $204.1 
AMS

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

Raymond James Investment Management

Assets managed by Raymond James Investment Management 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”), which was acquired on June 1, 2022 in connection with our acquisition of TriState Capital. The following table presents Raymond James Investment Management’s AUM by objective, excluding assets for which it does not exercise discretion, as well as the approximate average client fee rate earned on such assets.
As of March 31, 2023
$ in billionsAUMAverage fee rate
Equity$24.6 0.56 %
Fixed income36.7 0.20 %
Balanced8.1 0.33 %
Total financial assets under management$69.4 0.34 %

Non-discretionary asset-based programs

The following table includes assets held in certain non-discretionary asset-based programs for which the Asset Management segment does not exercise discretion but provides administrative support (including for affiliated entities). 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”). Administrative fees associated with these programs are predominantly based on balances at the beginning of the quarter.
$ in billionsMarch 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Total assets$378.7 $355.6 $329.2 $379.7 $392.4 $365.3 

The increase in assets as of March 31, 2023 compared with December 31, 2022 and September 30, 2022 was largely due to equity market appreciation and continued growth in the PCG segment. The slight decrease in assets compared to March 31, 2022 was due to declines in the equity market since such time, offset by continued growth in the PCG segment and the favorable impact of our June 1, 2022 acquisition of Chartwell.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

Raymond James Trust

The following table includes assets held in asset-based programs in Raymond James Trust, N.A. (including those managed for affiliated entities).
$ in billionsMarch 31,
2023		December 31,
2022		September 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Total assets$8.2 $7.8 $7.3 $8.4 $8.8 $8.1 

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

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

Asset management and related administrative fees decreased $20 million, or 9%, driven by a lower beginning balance of assets in non-discretionary asset-based programs and financial assets under management at AMS, as well as lower average financial assets under management at Raymond James Investment Management (excluding Chartwell), in each case primarily due to market-driven depreciation in asset values. These declines were partially offset by incremental revenues arising from the acquisition of Chartwell. We expect the increase in financial assets under management and assets in non-discretionary asset-based programs as of March 31, 2023 compared with December 31, 2022, which occurred due to equity market appreciation and net inflows during the quarter, to positively affect our fiscal third quarter of 2023, as the majority of our asset management and related administrative fees are billed based on balances as of the beginning of the quarter.

Compensation expenses increased $5 million, or 11%, primarily due to the acquisition of Chartwell. Non-compensation expenses decreased $2 million, or 2%, primarily due to lower investment sub-advisory fees resulting from the decrease in the beginning balance of assets under management in sub-advised programs, partially offset by incremental expenses resulting from the Chartwell acquisition.

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

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

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

Compensation expenses increased $6 million, or 6%, primarily due to the acquisition of Chartwell. Non-compensation expenses decreased $5 million, or 3% due to lower investment sub-advisory fees, resulting from the decrease in assets under management in sub-advised programs, partially offset by incremental expenses resulting from the Chartwell acquisition.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

RESULTS OF OPERATIONS – BANK

For an overview of our Bank segment operations, as well as a description of the key factors impacting our Bank segment results of operations, refer to the information presented in “Item 1 - Business” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K. Our Bank segment results include the results of TriState Capital Bank since the acquisition date of June 1, 2022.

Operating results
Three months ended March 31,Six months ended March 31,
$ in millions20232022% change20232022% change
Revenues:  
Interest income$749 $199 276 %$1,425 $386 269 %
Interest expense(219)(10)2,090 %(404)(20)1,920 %
Net interest income530 189 180 %1,021 366 179 %
All other10 8 25 %27 14 93 %
Net revenues540 197 174 %1,048 380 176 %
Non-interest expenses:    
Compensation and benefits48 14 243 %88 27 226 %
Non-compensation expenses:
Bank loan provision for credit losses28 21 33 %42 10 320 %
RJBDP fees to PCG311 49 535 %579 99 485 %
All other62 30 107 %112 59 90 %
Total non-compensation expenses401 100 301 %733 168 336 %
Total non-interest expenses449 114 294 %821 195 321 %
Pre-tax income$91 $83 10 %$227 $185 23 %

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

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

Net interest income increased $341 million, or 180%, primarily due to the significant increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, as well as incremental net interest income from the June 1, 2022 acquisition of TriState Capital Bank. The increase in average interest-earning banking assets at Raymond James Bank was primarily driven by growth in the bank loan portfolio and, to a lesser extent, higher average cash balances and available-for-sale securities. The net interest margin increased to 3.63% from 2.01% for the prior-year quarter. We anticipate that the Bank segment net interest income and net interest margin will decline during our fiscal third quarter of 2023 due to the higher level of cash balances held by the Bank segment as a result of recent market volatility, as well as the impact from higher-cost diversified funding sources, including the Enhanced Savings Program launched to PCG clients in March 2023.

The bank loan provision for credit losses was $28 million for the current quarter, compared with $21 million for the prior-year quarter. The current quarter provision primarily reflected the impacts of charge-offs of certain loans during the quarter, loan downgrades in the CRE and C&I loan portfolios, and additional volatility in the macroeconomic outlook. The prior-year quarter provision for credit losses was primarily due to loan growth.

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

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Non-compensation expenses, excluding the bank loan provision for credit losses, increased $294 million, or 372%, primarily due to an increase in RJBDP fees paid to PCG and incremental expenses of TriState Capital Bank. RJBDP fees to PCG increased $262 million, or 535%, due to an increase in the market-based servicing fee incurred by the Bank segment for the administrative services provided by the PCG segment for such deposit balances, as well as an increase in client cash balances swept to our Bank segment as part of the RJBDP. As described in “Management’s Discussion and Analysis - Results of Operations - Private Client Group”, our Bank segment incurs servicing fee expense, reflected as revenues in our PCG segment, for the administrative services provided related to our clients’ deposits that are swept to our Bank segment as part of the RJBDP. These servicing fees are variable in nature and fluctuate based on client cash balances in the program, as well as the level of short-term interest rates and the interest paid to clients on balances in the RJBDP. As the yield from third-party banks in the RJBDP program continues to rise, the rate the Bank segment incurs on RJBDP deposits will also increase as it reflects a market rate for such deposits. These Bank segment fees and the revenues earned by the PCG segment are eliminated in consolidation.

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

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

Net interest income increased $655 million, or 179%, due to the significant increase in short-term interest rates and higher average interest-earning assets at Raymond James Bank, as well as incremental net interest margin.income from the acquisition of TriState Capital Bank. The increase in average interest-earning banking assets at Raymond James Bank was primarily driven by a $1.80 billionhigher average bank loans and an increase in average loans, a $1.30 billion increase in our average available-for-sale securities portfolio and a $449 million increase in average cash. The increase in average loans was comprised of increases in average residential mortgage loans, corporate loans, tax-exempt loans,

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


and SBL.securities. The net interest margin increased to 3.08%3.51% from 3.06%1.97% for the prior-year period.

The bank loan provision for credit losses was $42 million for the current-year period, compared with $10 million for the prior-year period. The current year provision for credit losses primarily reflected a weaker macroeconomic outlook, net charge-offs, and the impact of loan growth during the period. The prior-year period provision primarily reflected the impact of loan growth.

Non-compensation expenses, excluding the bank loan provision for credit losses, increased $533 million, or 337%, primarily due to an increase in asset yields partially offset by an increase in the total cost of funds. The total assets yield increase resulted from an increase in the loan portfolio yieldRJBDP fees paid to PCG and an increase in the yield on cash, bothincremental expenses associated with TriState Capital Bank. RJBDP fees to PCG increased $480 million, or 485%, due to ana significant increase in short-term interest rates. The total cost of funds increased due to an increase in deposit costs. Corresponding to the increase in average interest-earning banking assets, average interest-bearing banking liabilities increased $3.39 billion to $19.38 billion.

The loan loss provision increased by $2 million primarily due to the prior year reflecting a net benefit, a result of the resolution of certain corporate criticized loans. Additionally, the current period loan loss provision increased due to loan growth, partially offset by lower reserve rates on pass-rated loans as a result of improved credit characteristics.
Non-interest expenses (excluding provision for loan losses) increased $15 million, or 43%, primarily reflecting a $10 million increase in affiliate deposit account servicing fees due towell as an increase in client account balances.cash swept to our Bank segment as part of the RJBDP. These Bank segment fees and the revenues earned by the PCG segment are eliminated in consolidation.



Results of Operations
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis

RESULTS OF OPERATIONS – OtherOTHER


This segment includes our private equity investments, interest income on certain corporate cash balances, certain costs incurred in acquisition activities, as well asand certain corporate overhead costs of RJF that are not allocated to other segments, including the interest costcosts on our public debt, and the acquisition and integration costs associated with certain acquisitions.debt. For an overview of our Other segment operations, refer to the information presented in “Item 1 - Business” of our 2017 Form 10-K.

Operating results
  Three months ended December 31,
$ in thousands 2017 2016 % change
Revenues:      
Interest income $8,289
 $4,688
 77 %
Investment advisory fees 397
 484
 (18)%
Other 7,697
 10,287
 (25)%
Total revenues 16,383
 15,459
 6 %
Interest expense (19,303) (25,102) (23)%
Net revenues (2,920) (9,643) 70 %
      

Non-interest expenses:     

Compensation and other 13,055
 10,109
 29 %
Acquisition-related expenses 3,927
 12,666
 (69)%
Total non-interest expenses 16,982
 22,775
 (25)%
Loss before taxes and including noncontrolling interests (19,902) (32,418) 39 %
Noncontrolling interests 279
 2,035
 86 %
Pre-tax loss excluding noncontrolling interests $(20,181) $(34,453) 41 %


Three months ended December 31, 2017 compared with the three months ended December 31, 2016

The pre-tax loss generated by this segment of $20 million decreased by $14 million, or 41%.

Net revenues in this segment increased $7 million, or 70%, due to an increase in our net interest income of $9 million resulting from both a decrease in interest expense and to a lesser extent, an increase in interest income. The decrease in interest expense was due to a decline in the average outstanding balance and average yield of our senior notes. Interest income increased as a result of the increase in interest rates and higher corporate cash balances. Other revenues decreased $3 million, due to lower net gains (both realized and unrealized) arising from our private equity portfolio.

The acquisition-related expenses for the three months ended December 31, 2017 related to incremental expenses incurred in connection with our acquisition of the Scout Group which closed in November 2017. Prior year acquisition-related expenses primarily related to our acquisitions of Alex. Brown and 3Macs late in our 2016 fiscal year. See Note 3 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q for further information.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Certain statistical disclosures by bank holding companies

We are required to provide certain statistical disclosures required for bank holding companies pursuant to the SEC’s Industry Guide 3.  The following table provides certain of those disclosures.
  For the three months ended December 31,
  2017 2016
Return on average assets 1.3% 1.9%
Return on average equity 8.4% 11.7%
Average equity to average assets 15.9% 15.8%
Dividend payout ratio 31.3% 22.0%
Return on average assets is computed by dividing annualized net income attributable to RJF for the period indicated by average assets for each respective period. Average assets is computed by adding total assets as of the date indicated to the beginning of the year total and dividing by two.

Return on average equity is computed by dividing annualized net income attributable to RJF for the period indicated by average equity attributable to RJF for each respective period. Average equity is computed by adding the total equity attributable to RJF as of the date indicated to the beginning of the year total and dividing by two.

Average equity to average assets is computed by dividing average equity by average assets as calculated in the above explanations.

Dividend payout ratio is computed by dividing dividends declared per common share during the period by diluted earnings per common share.

Refer to the RJ Bank section of this“Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations” of our 2022 Form 10-K.

Operating results
Three months ended March 31,Six months ended March 31,
$ in millions20232022% change20232022% change
Revenues:
Interest income$36 $3 1,100 %$66 $4 1,550 %
Net gains/(losses) on private equity investments1 (2)NM3 3 — %
All other— 5 (100)%1 7 (86)%
Total revenues37 6 517 %70 14 400 %
Interest expense(27)(24)13 %(51)(47)9 %
Net revenues10 (18)NM19 (33)NM
Non-interest expenses:
Compensation and other33 35 (6)%56 67 (16)%
Insurance settlement received— — — %(32)— NM
Total non-interest expenses33 35 (6)%24 67 (64)%
Pre-tax income/(loss)$(23)$(53)57 %$(5)$(100)95 %

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

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

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

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

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

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

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

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


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and the Notes toAnalysis

STATEMENT OF FINANCIAL CONDITION ANALYSIS

The assets on our Condensed Consolidated Statements of Financial Statements in this Form 10-QCondition consisted primarily of cash and cash equivalents, assets segregated for regulatory purposes and restricted cash (primarily segregated for the benefit of clients), receivables including bank loans, financial instruments held either for trading purposes or as investments, goodwill and identifiable intangible assets, and other required disclosures.assets.  A significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.


Total assets of $79.18 billion as of March 31, 2023 were $1.77 billion, or 2%, less than our total assets as of September 30, 2022. Assets segregated for regulatory purposes and restricted cash decreased $3.78 billion, primarily due to a decrease in client cash sweep balances, which resulted in a decline in client cash held in our CIP and a corresponding decline in segregated assets. Brokerage client receivables, collateralized agreements, and trading assets also decreased $359 million, $325 million, and $277 million, respectively, compared with September 30, 2022. Partially offsetting these decreases was a $2.49 billion increase in cash and cash equivalents, driven by an increase in bank deposits, as well as an increase in bank loans, net of $444 million, primarily related to increases in corporate and residential mortgage loans, partially offset by a decline in securities-based loans.

As of March 31, 2023, our total liabilities of $69.21 billion were $2.31 billion, or 3%, less than our total liabilities as of September 30, 2022. Brokerage client payables decreased $4.60 billion related to the aforementioned decrease in CIP balances as of March 31, 2023. Accrued compensation, commissions, and benefits decreased $326 million primarily due to the payment of prior-year bonuses. These decreases were partially offset by an increase in bank deposits of $2.87 billion, primarily due to the launch of the Enhanced Savings Program to PCG clients in March 2023, which raised $2.75 billion of deposits during the period ended March 31, 2023, and an increase in other borrowings of $359 million as a result of a net increase in FHLB borrowings in the Bank segment during our fiscal second quarter of 2023.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital resources

Liquidity isare essential to our business. The primary goal of our liquidity management activities is to ensure adequate funding and liquidity to conduct our business over a range of economic and market environments.environments, including times of broader industry or market liquidity stress events. In times of market stress or uncertainty, we generally maintain higher levels of capital and liquidity to ensure we have adequate funding to support our business. We seek to manage capital levels to support execution of our business strategy, provide financial strength to our subsidiaries, and maintain sustained access to the capital markets, while at the same time meeting our regulatory capital requirements and conservative internal management targets.


Liquidity and capital resources are provided primarily through our business operations and financing activities.  Financing activities could include bank borrowings, collateralized financing arrangements or additional capital raising activities under our “universal” shelf registration statement. We believe our existing assets, most of which are liquid in nature, together with funds generated from operations and available from committed and uncommitted financing facilities, provide adequate funds for continuing operations at current levels of activity in the short-term. We also believe that we will be able to continue to meet our long-term cash requirements due to our strong financial position and ability to access capital from financial markets.

Liquidity and capital management

Senior management establishes our liquidity and capital management framework. Thisframeworks. Our liquidity and capital management frameworks are overseen by the RJF Asset and Liability Committee, a senior management committee that develops and executes strategies and policies to manage our liquidity risk and interest rate risk, as well as provides oversight over the firm’s investments. Our liquidity management framework is designed to ensure we have a sufficient amount of financing, even when funding markets experience stress. We manage the maturities and diversity of our funding across products and seek to maintain a diversified funding profile with an appropriate tenor, taking into consideration the characteristics and liquidity profile of our assets. The liquidity management framework includes senior management’s review of short- and long-term cash flow forecasts, review of monthly capital expenditures, monitoring of the availability of alternative sources of financing, and daily monitoring of liquidity in our significant subsidiaries. Our decisions on the allocation of capitalresources to our business units consider, among other factors, projected profitability, and cash flow, risk, and impact on future liquidity needs. Our treasury department assists in evaluating, monitoring and controlling the impact that our business activities have on our financial condition and liquidity, and capital structure andalso maintains our relationships with various lenders. The objectivesobjective of these policies areour liquidity management framework is to support the successful execution of our business strategies while ensuring ongoing and sufficient liquidity.

Liquidity is provided primarily through our business operations and financing activities.  Financing activities could include bank borrowings, repurchase agreement transactions or additional capital raising activities under our “universal” shelf registration statement.

Cash provided by operating activities during the three months ended December 31, 2017 was $326 million. In addition to operating cash flows related to net income, other increases in cash from operations included:

An increase of $467 million in brokerage client payables and other accounts payable, mostly due to increased client cash balances in brokerage accounts.
A decrease in our brokerage client receivables and other receivables of $124 million, including a decrease in margin loans.
A decrease of $104 million in securities purchased under agreements to resell, net of securities sold under agreements to repurchase.

Offsetting these, cash used in operations resulted from:
A decrease of $266 million in accrued compensation, commissions and benefits, primarily resulting from the annual payment of certain incentive awards.
A decrease in securities loaned, net of securities borrowed of $140 million.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis



PurchasesOur capital planning and originationscapital risk management processes are governed by the Capital Planning Committee (“CPC”), a senior management committee that provides oversight on our capital planning and ensures that our strategic planning and risk management processes are integrated into the capital planning process. The CPC meets at least quarterly to review key metrics related to the firm’s capital, such as debt structure and capital ratios; to analyze potential and emerging risks to capital; to oversee our annual firmwide capital stress test; and to propose capital actions to the Board of loans heldDirectors, such as declaring dividends, repurchasing securities, and raising capital. To ensure that we have sufficient capital to absorb unanticipated losses, the firm adheres to capital risk appetite statements and tolerances set in excess of regulatory minimums, which are established by the CPC and approved by the Board of Directors. We conduct enterprise-wide capital stress testing to ensure that we maintain adequate capital to adhere to our established tolerances under multiple scenarios, including a stressed scenario.

Capital structure

Common equity (i.e., common stock, additional paid-in capital, and retained earnings) is the primary component of our capital structure. Common equity allows for sale,the absorption of losses on an ongoing basis and for the conservation of resources during stress periods, as it provides us with discretion on the amount and timing of dividends and other capital actions. Information about our common equity is included in the Condensed Consolidated Statements of Financial Condition, the Condensed Consolidated Statements of Changes in Shareholders’ Equity, and Note 17 of this Form 10-Q.

Under regulatory capital rules applicable to us as a bank holding company, we are required to maintain minimum leverage ratios (defined as tier 1 capital divided by adjusted average assets), as well as minimum ratios of tier 1 capital, CET1, and total capital to risk-weighted assets. These capital ratios incorporate quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under the regulatory capital rules and are subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. We calculate these ratios in order to assess compliance with both regulatory requirements and internal capital policies. In order to maintain our ability to take certain capital actions, including dividends and common equity repurchases, and to make bonus payments, we must hold a capital conservation buffer above our minimum risk-based capital requirements. See Note 21 for further information about our regulatory capital and related capital ratios.

We have classified all of our investments in debt securities as available-for-sale and have not classified any of our investments in debt securities as held-to-maturity. Accordingly, we account for our available-for-sale securities at fair value at each reporting date, with unrealized gains and losses, net of tax, included in AOCI. Current Basel III rules permit us to make an election to exclude most components of AOCI when calculating CET1, tier 1 capital, and total capital. We have elected the AOCI opt-out for regulatory capital purposes and therefore exclude certain elements of AOCI, including gains/losses on our available-for-sale portfolio, from our capital calculations.

Recent events impacting the financial services industry, including the failure of certain banks in the industry, may result in a change to regulations applicable to bank holding companies, including higher capital requirements, which could negatively impact our regulatory capital ratios in the future. In addition, potential changes to the AOCI opt-out election would impact future regulatory capital calculations.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
The following table presents the components of RJF’s regulatory capital used to calculate the aforementioned regulatory capital ratios.

$ in millionsMarch 31, 2023September 30, 2022
Common equity tier 1 capital/Tier 1 capital
Common stock and related additional paid-in capital$3,037 $2,989 
Retained earnings9,590 8,843 
Treasury stock(1,954)(1,512)
Accumulated other comprehensive loss(798)(982)
Less: Goodwill and identifiable intangible assets, net of related deferred tax liabilities(1,804)(1,805)
Other adjustments717 847 
Common equity tier 1 capital8,788 8,380 
Additional tier 1 capital (preferred equity of $120, net of $5 of other items)115 100 
Tier 1 capital8,903 8,480 
Tier 2 capital
Tier 2 capital instruments plus related surplus100 100 
Qualifying allowances for credit losses471 451 
Tier 2 capital571 551 
Total capital$9,474 $9,031 

The following table presents RJF’s risk-weighted assets by exposure type used to calculate the aforementioned regulatory capital ratios.
$ in millionsMarch 31, 2023September 30, 2022
On-balance sheet assets:
Corporate exposures$20,597 $20,147 
Exposures to sovereign and government-sponsored entities (1)
1,952 2,002 
Exposures to depository institutions, foreign banks, and credit unions2,062 3,003 
Exposures to public-sector entities774 696 
Residential mortgage exposures4,087 3,732 
Statutory multifamily mortgage exposures92 71 
High volatility commercial real estate exposures126 128 
Past due loans149 110 
Equity exposures525 445 
Securitization exposures133 129 
Other assets7,868 7,325 
Off-balance sheet:
Standby letters of credit79 62 
Commitments with original maturity of one year or less121 98 
Commitments with original maturity greater than one year2,549 2,437 
Over-the-counter derivatives235 305 
Other off-balance sheet items250 423 
Market risk-weighted assets2,624 3,063 
Total standardized risk-weighted assets$44,223 $44,176 
(1)RJF’s exposure is predominantly to the U.S. government and its agencies.

Cash flows

Cash and cash equivalents (excluding amounts segregated for regulatory purposes and restricted cash) of $8.66 billion at March 31, 2023 increased $2.49 billion compared with September 30, 2022. The increase in cash and cash equivalents primarily resulted from an increase in bank deposits, including $2.75 billion of deposits from the launch of our Enhanced Savings Program to PCG clients in March 2023, as well as net proceeds from sales of securitizations and loans held for sale used $108 million.
An increase of $97 million in assets segregated pursuant to regulations and other segregated assets, primarily resulting from the increases in client cash balances.
Net trading instruments increased $47 million.

Investing activities resulted in the use of $1.07 billion of cashadditional FHLB advances during the three months ended December 31, 2017.  

The primary investing activities were:
A net increaseperiod, partially offset by common stock repurchases and dividends, investments in RJ Bankbank loans used $624 million.  
Purchases ofand available-for-sale securities, held at RJ Bank, netand the payment of proceeds from maturations, repaymentsprior-year bonuses.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and redemptions within the portfolio, used $225 million.Analysis
We used $159 million, net of cash acquired, for our acquisition of the Scout Group.
We used $36 million to fund property investments, primarily software and computer equipment.

Financing activities provided $979 million of cash during the three months ended December 31, 2017.  

Increases in cash from financing activities resulted from:
An increase in RJ Bank deposit balances of $993 million.
Net proceeds of $300 million from borrowings on the RJF Credit Facility.

Offsetting these, decreases in cash from financing activities resulted from:
Net repayments of $280 million of other lines of credit.
Payment of dividends to our shareholders of $32 million.

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

Sources of liquidity


Approximately $1.44$1.83 billion of our total DecemberMarch 31, 20172023 cash and cash equivalents (a portionincluded cash held at the parent company, which included cash loaned to RJ&A. As of which resides in depository accounts at RJ Bank) was available to us without restrictions. The cash and cash equivalents held were as follows: 
$ in thousands December 31, 2017
RJF $330,258
RJ&A 1,506,746
RJ Bank 1,276,703
RJ Ltd. 440,736
RJFS 125,269
Carillon Tower Advisers 65,033
Other subsidiaries 152,784
Total cash and cash equivalents $3,897,529
RJF maintained depository accounts at RJ Bank with a balance of $193 million as of DecemberMarch 31, 2017. The portion of this total that is available on demand without restrictions, which amounted to $152 million at December 31, 2017, is reflected in the RJF total and is excluded from the RJ Bank total in the table above.

2023, RJF had loaned $1.14$1.16 billion to RJ&A as of December 31, 2017 (such amount is included in the RJ&A cash balance presented in the table above)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 millionsMarch 31, 2023
RJF$692 
Raymond James Bank2,581 
TriState Capital Bank2,401 
RJ&A1,639 
Raymond James Ltd. (“RJ Ltd.”)502 
Raymond James Capital Services, LLC179 
Charles Stanley Group Limited131 
Raymond James Financial Services, Inc.121 
Raymond James Trust Company of New Hampshire94 
Raymond James Investment Management57 
Other subsidiaries266 
Total cash and cash equivalents$8,663

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

RJF maintained depository accounts at Raymond James Bank and TriState Capital Bank totaling $275 million as of March 31, 2023. The portion of this total that was available on demand without restrictions, which amounted to $234 million as of March 31, 2023, is reflected in the RJF cash balance and excluded from Raymond James Bank’s cash balance in the preceding table.

A large portion of the cash and cash equivalents balances at our non-U.S. subsidiaries, including RJ Ltd., as of March 31, 2023 was held to meet regulatory requirements and was not available for use by the parent.

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


Liquidity available from subsidiaries


Liquidity is principally available to the parent companyRJF from RJ&A and RJRaymond James Bank.



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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's DiscussionCertain of our broker-dealer subsidiaries are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities and Analysis


Exchange Act of 1934. As a member firm of the Financial Industry Regulatory Authority (“FINRA”), RJ&A is requiredsubject to maintainFINRA’s capital requirements, which are substantially the same as Rule 15c3-1. Rule 15c3-1 provides for an “alternative net capital requirement,” which RJ&A has elected. Regulations require that minimum net capital, as defined, be equal to the greater of $1$1.5 million or 2% of aggregate debit balancesitems arising from client transactions.balances. In addition, covenants in RJ&A’s committed secured financing facilities require its net capital to be a minimum of 10% of aggregate debit items. At DecemberMarch 31, 2017,2023, RJ&A significantly exceeded both the minimum regulatory requirements, and the covenants in its financing arrangements pertaining to net capital. At that date,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 had excess net capital of $640 million, of which $284 million was available for dividend while still maintaining the internally targeted net capital ratio of 15% of aggregate debit items.  There are also limitations onlimiting dividends it would otherwise remit to RJF. We evaluate regulatory requirements, loan covenants and certain internal tolerances when determining the amount of dividends that may be declared by a broker-dealer without Financial Industry Regulatory Authority approval.liquidity available to RJF from RJ&A.


RJ
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Raymond James Bank may pay dividends to the parent companyRJF without the prior approval of its regulator as long as the dividend doesdividends do not exceed the sum of RJ Bank’sits current calendar year and the previous two calendar years’ retained net income, and RJ Bankit maintains its targeted regulatory capital ratios.  At December 31, 2017, RJ Bank had $139 millionDividends may be limited to the extent that capital is needed to support balance sheet growth or as part of our liquidity and capital in excess of the amount it would need at December 31, 2017 to maintain its targeted total capital to risk-weighted assets ratio of 12.5%, and could pay a dividend of such amount without requiring prior approval of its regulator.management activities.


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


Borrowings and financing arrangements


CommittedFinancing arrangements

We have various financing arrangements

in place with third-party lenders that allow us the flexibility to borrow funds on a secured or unsecured basis to meet our liquidity needs. We generally utilize these financing arrangements to finance a portion of our fixed income trading instruments held by RJ&A or for cash management purposes. Our ability to borrow under these arrangements is dependent upon compliance with the conditions in theour various loan agreements and, in the case of secured borrowings, collateral eligibility requirements. Our

As of March 31, 2023, RJF and RJ&A had the ability to borrow under our $500 million revolving credit facility agreement (the “Credit Facility”), a committed financing arrangements are in the form of either tri-party repurchase agreements or, in the case of the RJF Credit Facility, an unsecured line of credit. The required market valuecredit; however, we had no such borrowings outstanding under this facility as of March 31, 2023. See our discussion of the collateral associated with the committed secured facilities ranges from 102% to 125%Credit Facility in Note 16 of the amount financed.Notes to the Consolidated Financial Statements of our 2022 Form 10-K for additional details on the Credit Facility. In April 2023, we amended our Credit Facility, increasing the borrowing capacity to $750 million, extending the term through April 2028, adding the secured overnight financing rate (“SOFR”) as an alternative reference rate, decreasing our variable rate facility fee, and removing the previous $300 million sublimit for RJF.


The following table presentsIn addition to our committedCredit Facility, we have various uncommitted financing arrangements with third-party lenders, which we generally utilize to finance a portion of our fixed income trading instruments held, and the outstanding balances related thereto:

  As of December 31, 2017
$ in thousands RJ&A RJF Total Total number of arrangements
Financing arrangement:        
Committed secured $200,000
 $—
 $200,000
 2
Committed unsecured —
 300,000
 300,000
 1
Total committed financing arrangements $200,000
 $300,000
 $500,000
 3
         
Outstanding borrowing amount:        
Committed secured $70,000
 $—
 $70,000
  
Committed unsecured —
 300,000
 300,000
  
Total outstanding borrowing amount $70,000
 $300,000
 $370,000
  
Uncommitted financing arrangements

Our uncommitted financing arrangements are in the form of secured lines of credit, secured bilateral or tri-party repurchase agreements, or unsecured lines of credit. Our arrangements with third-party lenders are generally utilized to finance a portion of our fixed income securities or for cash management purposes. Our uncommitted secured financing arrangements generally require us to post collateral in excess of the amount borrowed.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 DecemberMarch 31, 2017,2023, we had three outstanding borrowings under one uncommitted secured borrowing arrangements with lendersarrangement out of a total of 1513 uncommitted financing arrangements (nine uncommitted secured and sixfour uncommitted unsecured). However, lenders are under no contractual obligation to lend to us under uncommitted credit facilities.



Our borrowings on uncommitted financing arrangements, which were in the form of repurchase agreements in RJ&A, were included in “Collateralized financings” on our Condensed Consolidated Statements of Financial Condition. The average daily balance outstanding during the five most recent quarters, the maximum month-end balance outstanding during the quarter and the period-end balances for repurchase agreements and reverse repurchase agreements are detailed in the following table.
 Repurchase transactionsReverse repurchase transactions
For the quarter ended:
($ in millions)
Average daily
balance
outstanding		Maximum month-end
balance outstanding
during the quarter		End of period
balance
outstanding		Average daily
balance
outstanding		Maximum month-end
balance outstanding
during the quarter		End of period
balance
outstanding
March 31, 2023$174 $223 $150 $236 $310 $167 
December 31, 2022$245 $257 $150 $288 $306 $156 
September 30, 2022$196 $294 $294 $249 $367 $367 
June 30, 2022$203 $276 $100 $238 $300 $168 
March 31, 2022$271 $334 $140 $211 $304 $221 


75
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


The following table presents our borrowings on uncommitted financing arrangements, all of which were in RJ&A.
$ in thousands As of December 31, 2017
Outstanding borrowing amount:  
Uncommitted secured $339,036
Uncommitted unsecured 150,000
Total outstanding borrowing amount $489,036

Other borrowings and collateralized financings


RJ BankWe had $875 million$1.55 billion in FHLB borrowings outstanding at DecemberMarch 31, 2017,2023, comprised of floating-rate and fixed-rate advances. The interest rates on our floating-rate advances totaling $850are generally based on a SOFR. We use interest rate swaps to manage the risk of increases in interest rates associated with the majority of our floating-rate FHLB advances by converting the balances subject to variable interest rates to a fixed interest rate. In March 2023, we increased our fixed-rate FHLB borrowings by $1 billion. We repaid $500 million of such borrowings by March 31, 2023, with the remaining $500 million maturing on April 20, 2023. We subsequently repaid $200 million of the borrowings maturing in April 2023, while extending the remaining $300 million until May 26, 2023 at a rate of 5.23%.

During the quarter ended March 31, 2023, we increased our borrowing capacity with the FHLB through the pledge of additional available-for-sale securities. At March 31, 2023, we had pledged $8.77 billion of bank loans, net and a $25$4.64 billion of available-for-sale securities with the FHLB as security for the repayment of outstanding FHLB borrowings and to secure capacity for additional borrowings as needed. As of March 31, 2023, we had an additional $9.07 billion in immediate credit available based on collateral pledged, which does include additional capacity created by the $200 million fixed-rate advance, allrepayment of which are secured by a blanket lien on RJ Bank’s residential mortgage loan portfolio (see Note 12FHLB borrowings subsequent to quarter end, and with the pledge of additional collateral, we had additional credit availability from certain FHLB member banks. See Notes 4, 6, 7, and 14 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for additional information regarding these borrowings). RJ Bank had an additional $1.49 billion in immediate credit available frombank loans, net and available-for-sale securities pledged with the FHLB and for further information on our FHLB borrowings, including the related maturities and interest rates.

A portion of our fixed income transactions are cleared through a third-party clearing organization, which provides financing for the purchase of trading instruments to support such transactions. The amount of financing is based on the amount of trading inventory financed, as well as any deposits held at the clearing organization. Amounts outstanding under this financing arrangement are collateralized by a portion of our trading inventory and accrue interest based on market rates. While we had borrowings outstanding as of DecemberMarch 31, 20172023, the clearing organization is under no contractual obligation to lend to us under this arrangement.

Raymond James Bank and with the pledge of additional collateralTriState Capital Bank have access to the FHLB, total available credit of 30% of total assets.

RJFederal 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 is eligible to participate inTerm Funding Program that was created by the Fed’s discount-window program;Federal Reserve on March 12, 2023; however, we do not view borrowings from the FedFederal Reserve as a primary source of funding.  The credit available in this program is subject to periodic review, may be terminated or reduced at the discretionSee Note 6 of the Fed,Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding bank loans, net pledged with the FRB.

As part of the acquisition of TriState Capital, we assumed, as of the closing date, TriState Capital’s subordinated notes due 2030, with an aggregate principal amount of $98 million. See Note 14 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and would be securedNote 16 of our 2022 Form 10-K for additional information regarding these borrowings.

We may act as an intermediary between broker-dealers and other financial institutions whereby we borrow securities from one broker-dealer and then lend them to another.  Where permitted, we have also loaned, to broker-dealers and other financial institutions, securities owned by pledged C&I loans.

From time to time we enter into repurchase agreements and reverse repurchase agreements.clients or the firm.  We account for each of these types of transactions as collateralized agreements and financings, with the outstanding balances onbalance of $177 million as of March 31, 2023 related to the repurchase agreementssecurities loaned included in “Securities sold under agreements to repurchase”“Collateralized financings” on our Condensed Consolidated Statements of Financial Condition included inof this Form 10-Q. See Note 6 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q in the amountand Note 2 of $229 million as of December 31, 2017 (which are reflected in the table of financing arrangements above). Such financings are generallyour 2022 Form 10-K for more information on our collateralized by non-customer, RJ&A owned securities or by securities that we have received as collateral under reverse repurchase agreements.
The average daily balance outstanding during the five most recent successive quarters, the maximum month-end balance outstanding during the quarter and the period end balances for repurchase agreements and reverse repurchase agreements were as follows: financings.

  Repurchase transactions Reverse repurchase transactions
For the quarter ended:  ($ in thousands)
 
Average daily
balance
outstanding
 
Maximum month-end
balance outstanding
during the quarter
 
End of period
balance
outstanding
 
Average daily
balance
outstanding
 
Maximum month-end
balance outstanding
during the quarter
 
End of period
balance
outstanding
December 31, 2017 $218,690
 $229,036
 $229,036
 $443,391
 $506,711
 $307,742
September 30, 2017 241,365
 247,048
 220,942
 463,618
 503,462
 404,462
June 30, 2017 231,378
 226,972
 226,972
 479,653
 540,823
 483,820
March 31, 2017 204,623
 222,476
 222,476
 410,678
 535,224
 535,224
December 31, 2016 219,095
 241,773
 203,378
 424,548
 445,646
 358,493
Senior notes payable


At DecemberMarch 31, 2017, in addition to the financing arrangements described above,2023, we had $28 millionaggregate outstanding on a mortgage loan for our St. Petersburg, Florida home-office complex, that is included in “Other borrowings” in our Condensed Consolidated Statements of Financial Condition included in this Form 10-Q.

At December 31, 2017, we had senior notes payable of $1.55 billion. Our senior notes payable,$2.04 billion which, exclusive of any unaccreted premiums or discounts and debt issuance costs, iswas comprised of $250$500 million par 5.625%4.65% senior notes due 2024, $500 million par 3.625% senior notes due 2026, and2030, $800 million par 4.95% senior notes due 2046.2046, and $750 million par 3.75% senior notes due 2051. See Note 1517 of the Notes to the Consolidated Financial Statements of our 20172022 Form 10-K for additional information.information on senior notes payable.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Credit ratings

Our issuer, senior long-term debt, and preferred stock credit ratings as of the most current report are:
are detailed in the following table.
Rating AgencyCredit RatingOutlook
Rating Agency
Fitch Ratings, Inc. (1)
Moody’s
Standard & Poor’s Ratings Services
BBB+Stable(2)
Moody’s Investors ServicesIssuer and senior long-term debtBaa1A-A3A-
Preferred stockBB+Baa3 (hyb)Not rated
OutlookStableStableStable



(1)On March 17, 2023, Fitch Ratings, Inc. affirmed RJF’s issuer and senior long term debt A- rating, preferred stock BB+ rating, and stable rating outlook.
76
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES(2)On February 13, 2023, Standard & Poor’s Rating Services upgraded RJF’s issuer and senior long-term debt from BBB+ to A- and changed the rating outlook to stable.
Management's Discussion and Analysis



Our current long-term debtcredit ratings depend upon a number of factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trends and volatility, balance sheet composition, liquidity and liquidity management, our capital structure, our overall risk management, business diversification and market share, and competitive position in the markets in which we operate. DeteriorationsDeterioration in any of these factors could impact our credit ratings.  Any rating downgrades could increase our costs in the event we were to obtain additional financing.


Should our credit rating be downgraded prior to a public debt offering, it is probable that we would have to offer a higher rate of interest to bond holders.  A downgrade to below investment grade may make a public debt offering difficult to execute on terms we would consider to be favorable.  A downgrade below investment grade could result in the termination of certain derivative contracts and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing overnight collateralization on our derivative instruments in liability positions (see Note 6 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information).positions. A credit downgrade could create a reputational issuedamage our reputation and could also result in certain counterparties limiting their business with us, result in negative comments by analysts, and potentially negatively impact investorinvestors’ and/or clients’ perception of us and resultantly impactcause a decline in our stock price and/price. None of our borrowing arrangements contains a condition or event of default related to our clients’ perception of us. Acredit ratings. However, a credit downgrade would result in RJFthe firm incurring a higher commitmentfacility fee on any unused balance on one of its borrowing arrangements, the $300 million RJF Credit Facility, in addition to triggering a higher interest rate applicable to any borrowings outstanding on that line as of and subsequent to such downgrade. Conversely, an improvement in RJF’s current credit rating could have a favorable impact on the commitmentfacility fee, as well as the interest rate applicable to any borrowings on such line. None of our credit agreements contain a condition or event of default related to our credit ratings.  


Other sources and uses of liquidity


We have company-owned life insurance (“COLI”) policies which are utilized to fund certain non-qualified deferred compensation plans and other employee benefit plans. Certain of our non-qualified deferred compensation plans and other employee benefit plans are self-directedemployee-directed while others are company-directed. The COLIOf the company-owned life insurance policies thatwhich fund these plans, certain policies could be used as a source of liquidity for the firm. Those policies against which we could readily borrow against havehad a cash surrender value of approximately $460$863 million as of DecemberMarch 31, 2017,2023, comprised of $254$554 million related to employee-directed plans and $206$309 million related to company-directed plans, and we were able to borrow up to 90%, or $414$777 million, of the DecemberMarch 31, 20172023 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 arewere no borrowings outstanding against any of these policies as of DecemberMarch 31, 2017.2023.

During January 2018, we repaid the $300 million outstanding borrowing on the RJF Credit Facility as of December 31, 2017.


On May 22, 2015,12, 2021, we filed a “universal” shelf registration statement with the SEC pursuant to be in a position to access thewhich we can issue debt, equity and other capital marketsinstruments if and when necessary or perceived by us to be opportune. Subject to certain conditions, this registration statement will be effective through May 12, 2024.


See the “Contractual obligations” section below for information regardingAs part of our ongoing operations, we also enter into contractual obligations.

Statementarrangements that may require future cash payments, including certificates of financial condition analysis

The assets on our condensed consolidated statement of financial condition consist primarily of cash and cash equivalents (a large portion of which is segregated for the benefit of clients), receivables including bank loans, financial instruments held for either trading purposes or as investments,deposit, lease obligations and other assets.  A significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.  

Total assets of $36.08 billion at December 31, 2017 were $1.20 billion, or 3% greater than our total assetscontractual arrangements, such as of September 30, 2017. Our cashfor software and cash equivalents balances increased $228 million; refer to the discussion of the components of this increase in the “Liquidityvarious services. See Notes 12 and Capital Resources” section within this Item 2. Net bank loans receivable increased $691 million primarily due to the growth of RJ Bank’s securities-based, residential mortgage, tax-exempt and C&I loan portfolios during the period. Our available-for-sale securities portfolio increased $205 million, as RJ Bank increased their investments in such securities during the period in line with our growth plan for this portfolio. Goodwill and identifiable intangible assets increased $158 million due to the Scout Group acquisition. Offsetting these increases was a net decrease in deferred income taxes of $114 million, primarily due to the remeasurement of U.S. deferred tax assets at a lower enacted corporate tax rate as a result of the Tax Act, which was enacted during the quarter. Brokerage client receivables, net decreased $101 million primarily due to decreased margin lending at December 31, 2017.

As of December 31, 2017, our total liabilities of $30.28 billion were $1.09 billion, or 4% greater than our total liabilities as of September 30, 2017. Bank deposit liabilities increased $993 million as RJ Bank retained a higher portion of RJBDP balances to fund a portion of their increased securities portfolio and net loan growth. Brokerage client payable balances increased $409 million, reflecting

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Management's Discussion and Analysis


an increase in client cash balances in our client interest program. Offsetting these increases, accrued compensation, commissions and benefits decreased $266 million as a result of annual payments of certain incentive compensation paid during the quarter.

Contractual obligations

The Tax Act, which was enacted during the quarter ended December 31, 2017, includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries, which is permitted to be paid in annual installments over a period of 8 years based on the schedule outlined in the Tax Act. We currently estimate this transition tax to be $11 million (which excludes the related state tax liability), which is included in our provision for income taxes in our Condensed Consolidated Statements of Income and Comprehensive Income for the quarter ended December 31, 2017.
Other than the item described above, as of December 31, 2017, there have been no material changes in our contractual obligations presented in our 2017 Form 10-K, other than in the ordinary course of business. See Note 1413 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for additional information regarding certainour lease obligations and certificates of deposit, respectively. We have entered into investment commitments, aslending commitments and other commitments to extend credit for which we are unable to reasonably predict the timing of December 31, 2017.future payments. See Note 16 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information.


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Regulatory
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis
REGULATORY

Refer to the discussion of the regulatory environment in which we operate and the impact on our operations of certain rules and regulations including the DOL Rule and the Dodd-Frank Act, in Item“Item 1 “Business- Business - Regulation” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory” in our 20172022 Form 10-K.


RJF and many of its subsidiaries are each subject to various regulatory capital requirements. As of DecemberMarch 31, 2017,2023, all of our active regulated domestic and international subsidiaries had net capital in excess of minimum requirements. In addition, RJF, Raymond James Bank, and RJTriState Capital Bank were categorized as “well capitalized”“well-capitalized” as of DecemberMarch 31, 2017.

2023. The maintenance of certain risk-based and other regulatory capital levels could impactinfluence various capital allocation decisions impacting one or more of our businesses.  However, due to the strongcurrent capital position of RJF and its regulated subsidiaries, we do not anticipate these capital requirements will have a negative impact on our future business activities.

See Note 1821 of the Notes to Condensed Consolidated Financial Statements inand “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources - Capital structure” of this Form 10-Q for further information on regulatory capital requirements.


Critical accounting estimatesCRITICAL ACCOUNTING ESTIMATES


The condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during anyfor the reporting period in our condensed consolidated financial statements.period. Management has established detailed policies and control procedures intended to ensure the appropriateness of such estimates and assumptions and their consistent application from period to period. For a description of our significant accounting policies, see Note 2 of the Notes to the Consolidated Financial Statements inof our 20172022 Form 10-K.


We believe that of our accounting estimates and assumptions, those described below involve a high degree of judgment and complexity. Due to their nature, estimates involve judgment based upon available information. Actual results or amounts could differ from estimates and the difference could have a material impact on the consolidated financial statements. Therefore, understanding these critical accounting estimates is important in understanding theour reported results of our operations and our financial position.

Valuation of financial instruments

The use of fair value to measure financial instruments, with related gains or losses recognized in our Condensed Consolidated Statements of Income and Comprehensive Income, is fundamental to our financial statements and our risk management processes. See Note 2 We believe that of our 2017 Form 10-K foraccounting estimates and assumptions, those described in the following sections involve a discussionhigh degree of our fair value accounting policies regarding financial instruments ownedjudgment and financial instruments sold but not yet purchased.complexity.


Investments in private equity measured at net asset value per share

Our investments in private equity measured at NAV amounted to $100 million at December 31, 2017.



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Management's Discussion and Analysis


Level 3 assets and liabilities

As of December 31, 2017, 10% of our total assets and 2% of our total liabilities were financial instruments measured at fair value on a recurring basis. Financial instruments measured at fair value on a recurring basis categorized as Level 3 amounted to $199 million as of December 31, 2017 and represented 5% of our assets measured at fair value. Of the Level 3 assets as of December 31, 2017, our ARS positions comprised $107 million, or 54%, and our private equity investments not measured at NAV comprised $89 million, or 45%, of the total.  Level 3 assets represented 3% of total equity as of December 31, 2017.

Financial instruments which are liabilities categorized as Level 3 were insignificant as of December 31, 2017.

See Notes 4, 5 and 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q for additional information on our financial instruments at fair value.

Loss provisions

Refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical accounting estimates - Loss provisions” in our 2017 Form 10-K for more information.


Loss provisions arising fromfor legal and regulatory matters


The recorded amount of liabilities related to legal and regulatory matters is subject to significant management judgment. 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 20172022 Form 10-K. In addition, refer to Note 1416 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for information regarding legal and regulatory mattermatters contingencies as of DecemberMarch 31, 2017.2023.


Loss provisions arising from operationsAllowance for credit losses

We evaluate certain of our Broker-Dealers

The recorded amounts of loss provisions associated with brokerage client receivables andfinancial assets, including bank loans, to estimate an allowance for credit losses based on expected credit losses over a financial advisorsasset’s lifetime. The remaining life of our financial assets is determined by considering contractual terms and certain key revenue producers are subject to significant management judgment. For a descriptionexpected prepayments, among other factors. We use multiple methodologies in estimating an allowance for credit losses and our approaches differ by type of the significant estimates and judgments associated with establishing these broker-dealer related loss provisionsfinancial asset and the related allowances for doubtful accounts, see the “Brokerage client receivables, net” and “Loans torisk characteristics within each financial advisors, net” sections of Note 2asset type. Our estimates are based on ongoing evaluations of our 2017 Form 10-Kfinancial assets, the related credit risk characteristics, and Note 2 in this Form 10-Qthe overall economic and environmental conditions affecting the financial assets. Our process for information regardingdetermining the allowance for doubtful accounts associated with loans to financial advisors as of December 31, 2017.

Loan loss provisions arising from operations of RJ Bank

RJ Bank provides an allowance for loan losses which reflects our continuing evaluation of the probable losses inherent in the loan portfolio. See the discussion regarding RJ Bank’s methodology in estimating its allowance for loan losses in Note 2 of our 2017 Form 10-K.

At December 31, 2017, the amortized cost of all RJ Bank loans was $17.9 billion and an allowance for loan losses of $191 million was recorded against that balance. The total allowance for loan losses was equal to 1.08% of the amortized cost of the loan portfolio.

RJ Bank’s process of evaluating its probable loancredit losses includes a complex analysis of several quantitative and qualitative factors requiring a substantial amount of judgment. As a result,significant management judgment due to matters that are inherently uncertain. This uncertainty can produce volatility in our allowance for credit losses. In addition, the allowance for loancredit losses could be insufficient to cover actual losses. In such an event, any losses in excess of our allowance would result in a decrease in our net income, as well as a decrease in the level of regulatory capital at RJ Bank.capital.


We generally estimate the allowance for credit losses on bank loans using credit risk models which incorporate relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable economic forecasts. After testing the reasonableness of a variety of economic forecast scenarios, each model is run using a single forecast scenario selected for each model. Our forecasts incorporate assumptions related to macroeconomic indicators including, but not limited to, U.S. gross domestic product, equity market indices, unemployment rates, and commercial real estate and residential home price indices.
Recent accounting developments

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For information regardingManagement’s Discussion and Analysis
To demonstrate the sensitivity of credit loss estimates on our recent accounting developments, see Note 2bank loan portfolio to macroeconomic forecasts, we compared our modeled estimates under the base case economic scenario used to estimate the allowance for credit losses as of March 31, 2023, to what our estimate would have been under a downside case scenario and an upside scenario, without considering any offsetting effects in the qualitative component of our allowance for credit losses as of March 31, 2023. As of March 31, 2023, use of the Notesdownside case scenario would have resulted in an increase of approximately $200 million in the quantitative portion of our allowance for credit losses on bank loans, while the use of the upside case would have resulted in a reduction of approximately $40 million in the quantitative portion of our allowance for credit losses on bank loans at March 31, 2023. These hypothetical outcomes reflect the relative sensitivity of the modeled portion of our allowance estimate to macroeconomic forecasted scenarios but do not consider any potential impact qualitative adjustments could have on the Condensed Consolidated Financial Statementsallowance for credit losses in such environments. Qualitative adjustments could either increase or decrease modeled loss estimates calculated using an alternative economic scenario assumption. Further, such sensitivity calculations do not necessarily reflect the nature and extent of future changes in the related allowance for a number of reasons including: (1) management’s predictions of future economic trends and relationships among the scenarios may differ from actual events; and (2) management’s application of subjective measures to modeled results through the qualitative portion of the allowance for credit losses when appropriate. The downside case scenario utilized in this Form 10-Q.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.


Off-Balance sheet arrangements

For information regarding our off-balance sheet arrangements, seeSee Note 222 of the Notes to Consolidated Financial Statements inof our 20172022 Form 10-K for information regarding our methodologies and assumptions used in estimating the allowance for credit losses. See Note 147 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q.10-Q for information regarding our allowance for credit losses related to bank loans as of March 31, 2023.



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RECENT ACCOUNTING DEVELOPMENTS
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's DiscussionIn March 2022, the Financial Accounting Standards Board issued new guidance related to troubled debt restructurings and Analysisdisclosures regarding write-offs of financing receivables (ASU 2022-02), amending guidance related to the measurement of credit losses on financial instruments (ASU 2016-13). The amendment eliminates the accounting guidance for troubled debt restructurings for creditors, but requires enhanced disclosures for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, and requires disclosure of current-period gross write-offs by year of origination for financing receivables. This new guidance is effective for our fiscal year beginning on October 1, 2023 and will be applied on a prospective basis. Although permitted, we do not plan to early adopt. We do not expect the adoption of this new guidance to have a material impact on our financial position and results of operations.



In March 2023, the FASB issued amended guidance related to accounting for investments in tax credit structures using the proportional amortization method (ASU 2023-02). The amendment permits reporting entities to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met and makes the delayed equity contributions guidance applicable only when the proportional amortization method is applied to a tax equity investment. This amendment also requires entities to make disclosures about all investments in a tax credit program for which they have elected to account for using the proportional amortization method, including those investments in an elected tax credit program that do not meet the conditions to use the proportional amortization method. This new guidance is effective for our fiscal year beginning on October 1, 2024. This guidance may be applied on a retrospective basis or modified retrospective basis to all qualifying tax equity investments; however, the transition method must be applied consistently to all affected investments. Although permitted, we do not currently plan to early adopt. We are still evaluating the impact the adoption of this new guidance will have on our financial position, results of operations, and disclosures.
Effects of inflation

Our assets are primarily liquid in nature and are not significantly affected by inflation. However, the rate of inflation affects our expenses, including employee compensation, communications and occupancy, which may not be readily recoverable through charges for services we provide to our clients.RISK MANAGEMENT

Risk management


Risks are an inherent part of our business and activities. Management of these risksrisk is critical to our fiscal soundness and profitability. Our risk management processes are multi-faceted and require communication, judgment, and knowledge of financial products and markets. We have a formal Enterprise Risk Management (“ERM”) program to assess and review aggregate risks across the firm. Our management takes an active role in the ERM process, which requires specific administrative and business functions to participate in the identification, assessment, monitoring, and control of various risks. The results of this process are extensively documented and reported to executive management and the RJF Audit and Risk Committee of the Board of Directors.


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

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and legal.Analysis

Governance

Our Board of Directors, including its Risk Committee and Audit Committee, oversees the firm’s management and mitigation of risk, reinforcing a culture that encourages ethical conduct and risk management throughout the firm.  Senior management communicates and reinforces this culture through three lines of risk management and a number of senior-level management committees.  Our first line of risk management, which includes all of our businesses, owns its risks and is responsible for identifying, mitigating, and escalating risks arising from its day-to-day activities.  The second line of risk management, which includes Compliance and Risk Management, advises our client-facing businesses and other first-line functions in identifying, assessing, and mitigating risk. The second line of risk management tests and monitors the effectiveness of controls, as deemed necessary, and escalates risks when appropriate to senior management and the Board of Directors.  The third line of risk management, Internal Audit, independently reviews activities conducted by the previous lines of risk management to assess their management and mitigation of risk, providing additional assurance to the Board of Directors and senior management, with a view toward enhancing our oversight, management, and mitigation of risk. Our legal department provides legal advice and guidance to each of these three lines of risk management.

Market risk


Market risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory, derivativederivatives, and investment positions. We have exposure to market risk primarily through our broker-dealer trading operations and to a lesser extent, through our banking operations. Through our broker-dealer subsidiaries, we trade debt obligations and equity securities and maintain trading inventories to ensure availability of securities to facilitate client transactions. Inventory levels may fluctuate daily as a result of client demand. We also hold investments within our available-for-sale securities portfolio, and from time to time may hold SBA loan securitizations not yet transferred. Our primary market risks relate to interest rates, equity prices, and foreign exchange rates. Interest rate risk results from changes in levels of interest rates, the volatility of interest rates, mortgage prepayment speeds, and credit spreads. Equity risk results from changes in prices of equity securities. Foreign exchange risk results from changes in spot prices, forward prices, and volatility of foreign exchange rates. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Market Risk” in our 2017 Form 10-K for a discussion of our market risk including how we manage such risk. See Notes 4, 5 and 6Note 2 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Notes 3, 4, and 5 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for fair value and other information regarding our trading inventories, available-for-sale securities, and derivative instruments.


We regularly enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold shares issued in the offerings to which we are committed. Risk exposure is controlled by limiting our participation, the transaction size, or through the syndication process.

The Market Risk Management department is responsible for measuring, monitoring, and reporting market risks associated with the firm’s trading and derivative portfolios. While Market Risk Management maintains ongoing communication with the revenue-generating business units, it is independent of such units.

Interest rate risk


Trading activities


We are exposed to interest rate risk as a result of our trading inventoriesinventory (primarily comprised of fixed income instruments) in our Capital Markets segment. Changes in value of our trading inventory may result from fluctuations in interest rates, credit spreads, equity prices, macroeconomic factors, investor expectations or risk appetites, liquidity, as well as dynamic relationships among these factors. We actively manage the interest rate risk arising from our fixed income trading securitiesinventory through the use of hedging strategies that involveutilizing U.S. Treasury securities,Treasuries, exchange traded funds, futures contracts, liquid spread products, and derivatives.


Our primary method for controlling risks within trading inventories is through the use of dollar-based and exposure-based limits. A hierarchy of limits exists at multiple levels, including firm, business unit, desk (e.g., for equities, corporate bonds, municipal bonds), product sub-type (e.g., below-investment-grade positions) and, at times, at the individual position. For derivative positions, which are primarily comprised of interest rate swaps, we have established sensitivity-based and foreign exchange spot limits. Trading positions and derivatives are monitored against these limits through daily reports that are distributed to senior management.During volatile markets, we may temporarily reduce limits and/or choose to pare our trading inventories to reduce risk.

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Management’s Discussion and Analysis
We monitor daily, the Value-at-Risk (“VaR”) for all of our trading portfolios. VaR is an appropriate statistical techniqueportfolios on a daily basis for estimating potential losses in trading portfolios due to typical adverse market movements overrisk management purposes and as a specified time horizon with a suitable confidence level. We applyresult of applying the Fed’s Market Risk Rule (“MRR”) for the purpose of calculating our capital ratios. The MRR, also known as the “Risk-Based Capital Guidelines: Market Risk” rule released by the Fed, OCCthe Office of the Comptroller of the Currency and the FDIC, requires us to calculate VaR numbers for all of our trading portfolios, including fixed income, equity, derivatives, and foreign exchange instruments. VaR is an appropriate statistical technique for estimating potential losses in trading portfolios due to typical adverse market movements over a specified time horizon with a suitable confidence level. However, there are inherent limitations of utilizing VaR including: historical movements in markets may not accurately predict future market movements; VaR does not take into account the liquidity of individual positions; VaR does not estimate losses over longer time horizons; and derivative instruments.extended periods of one-directional markets potentially distort risks within the portfolio. In addition, should markets become more volatile, actual trading losses may exceed VaR results presented on a single day and might accumulate over a longer time horizon. As a result, management complements VaR with sensitivity analysis and stress testing and employs additional controls such as a daily review of trading results, review of aged inventory, independent review of pricing, monitoring of concentrations, and review of issuer ratings.


To calculate VaR, we use models which incorporate historical simulation. This approach assumes that historical changes in market conditions, such as in interest rates and equity prices, are representative of future changes. Simulation is based on daily market data for the previous twelve months. 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. For regulatory capital calculation purposes, we also report VaR and Stressed VaR numbers for a ten-day time horizon. The VaR model is independently reviewed by our Model Risk Management function. See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Model risk” of our 2022 Form 10-K for further information.


The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations that management believes to be reasonable. However, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates. As a result, VaR results are more reliable when used as indicators of risk levels and trends within a firm than as a basis for inferring differences in risk-taking across firms.

The following table sets forth the high, low, period-end and average daily one-day VaR for all of our trading portfolios, including fixed income and equity instruments, and for our derivatives for the periods and dates indicated.
 Six months ended March 31, 2023Period-end VaRThree months ended March 31,Six months ended March 31,
$ in millionsHighLowMarch 31,
2023		September 30,
2022		$ in millions2023202220232022
Daily VaR$3 $1 $1 $3 Average daily VaR$2 $1 $2 $1 

Average daily VaR was higher during the three and six months ended March 31, 2023 compared with the three and six months ended March 31, 2022 due to the impact of increased market volatility during the period, as well as the addition of the SumRidge Partners trading inventory beginning in July 2022. Period-end VaR was lower at March 31, 2023 compared to September 30, 2022, due to a decline in trading inventory.

The Fed’s MRR requires us to perform daily back testingback-testing procedures offor 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. Regulatory-defined daily trading losses are used to evaluate the performance of our VaR model and are not comparable to our actual daily net revenues. Based on these daily “ex ante” versus “ex post”post” comparisons, we determine whether the number of times that regulatory-defined daily trading losses exceed VaR is consistent with our expectations at a 99% confidence level. During the three and six months ended DecemberMarch 31, 2017,2023, our regulatory-defined daily losslosses in our trading portfolios did not exceed VaR.exceeded our predicted VaR on one occasion.



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Management's Discussion and Analysis


The following table sets forth the high, low and daily average VaR for all of our trading portfolios, including fixed income, equity, and derivative instruments, for the period and dates indicated: 
  Three months ended December 31, 2017 Period end VaR Daily average VaR
$ in thousands High Low December 31,
2017		 September 30,
2017		 December 31,
2017		 September 30,
2017		 December 31,
2016
Daily VaR $2,256
 $848
 $848
 $1,427
 $1,601
 $1,827
 $1,670

The modeling of the risk characteristics of trading positions involves a number of assumptions and approximations. While management believes that its assumptions and approximations are reasonable, there is no uniform industry methodology for estimating VaR, and different assumptions or approximations could produce materially different VaR estimates. As a result, VaR statistics 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.

Separately, RJF provides additional market risk disclosures to comply with the MRR. The results of the application of this market risk capital ruleMRR, including 10-day VaR and 10-day Stressed VaR, which are available on our website under at https://www.raymondjames.com/investor-relations/financial-report under “Market Risk Rule Disclosure.financial-information/filings-and-reports within “Other Reports and Information.”


Should markets suddenly become more volatile, actual trading losses may exceed VaR results presented on a single day
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and might accumulate over a longer time horizon, such as a number of consecutive trading days. Accordingly, management applies additional controls including position limits, a daily review of trading results, review of the status of aged inventory, independent controls on pricing, monitoring of concentration risk, review of issuer ratings and stress testing. We utilize stress testing to complement our VaR analysis so as to measure risk under historical and hypothetical adverse scenarios. During volatile markets we may choose to pare our trading inventories to reduce risk.  Analysis

As a part of our fixed income public finance operations, we enter into forward commitments to purchase GNMA or FNMA MBS which are issued on behalf of various state and local housing finance agencies.  These activities result in exposure to interest rate risk. In order to hedge the interest rate risk to which we would otherwise be exposed between the date of the commitment and the date of sale of the MBS, we enter into TBA security contracts with investors for generic MBS at specific rates and prices to be delivered on settlement dates in the future. See Note 14 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information regarding these activities.

Banking operations


RJOur Bank segment maintains an earninginterest-earning asset portfolio that is comprised of cash, SBL, C&I loans, tax-exempt loans, SBL, and commercial and residential real estate loans, REIT loans, and tax-exempt loans, as well as MBS and CMOs (both of which aresecurities held in the available-for-sale securities portfolio), Small Business Administration loan securitizations and a trading portfolio of corporate loans.  Those earningportfolio.  These interest-earning assets are primarily funded by client deposits.  Based on itsthe current earning asset portfolio, RJ Bank isour banking operations are subject to interest rate risk.  During the current period, RJ Bank has focused its interest rate risk analysis on the risk of market interest rates rising given the Federal Reserve Bank’s increases in short-term interest rates.  RJ Bank analyzesWe analyze interest rate risk based on forecasted net interest income, which is the net amount of interest received and interest paid, and the net portfolio valuation, both inacross a range of interest rate scenarios.


One of the objectives of RJ Bank’sthe Asset and Liability Management Committee is to manage the sensitivity of net interest income to changes in market interest rates. The methods usedThis committee uses several measures to measure this sensitivity are describedmonitor and limit interest rate risk in Item 7, “Management’s Discussionour banking operations, including scenario analysis and Analysiseconomic value of Financial Condition and Results of Operations - Risk Management - Market Risk” of our 2017 Form 10-K.

equity (“EVE”). We utilize a hedging strategy using interest rate swaps in our banking operations as a result of RJ Bank’sour asset and liability management process. For further information regarding this risk management objective, see the discussion of this hedging strategy, insee Note 2 of the Notes to Consolidated Financial Statements of our 20172022 Form 10-K and in Note 6Notes 13 and 14 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q.



To ensure that we remain within the tolerances established for net interest income, a sensitivity analysis of net interest income to interest rate conditions is estimated under a variety of scenarios. We use simulation models and estimation techniques to assess the sensitivity of net interest income to movements in interest rates. The model estimates the sensitivity by calculating interest income and interest expense in a dynamic balance sheet environment using current repricing, prepayment, and reinvestment of cash flow assumptions over a 12-month time horizon. 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.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis



The following table is an analysis of RJ Bank’sour banking operations’ estimated net interest income over a 12 month12-month period based on instantaneous shifts in interest rates (expressed in basis points) using RJ Bank’s ownour previously described asset/liability model:model, which assumes a dynamic balance sheet 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. We also perform simulations on time horizons of up to five years to assess longer-term impacts to various interest rate scenarios. On a quarterly basis, we test expected model results to actual performance. Additionally, any changes made to key assumptions in the model are documented and approved by the Asset and Liability Committee.
Instantaneous
changes in rate (1)
Net interest income
($ in millions)
Projected change in
net interest income
+200$2,12014%
+100$1,9897%
0$1,860—%
-100$1,733(7)%
-200$1,599(14)%
Instantaneous changes in rate 
Net interest income
($ in thousands)
 
Projected change in
net interest income
+200 $734,185 (0.53)%
+100 $765,382 3.69%
0 $738,110 —
-100 $599,527 (18.78)%
(1) Our 0-basis point scenario was based on interest rates as of March 31, 2023 and did not include the impact of the Fed’s May 4, 2023 increase in its benchmark short-term rate.


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


The Asset and Liability Committee also reviews EVE, which is a point in time analysis of current interest-earning assets and interest-bearing liabilities that incorporates all cash flows over their estimated remaining lives, discounted at current rates. The EVE approach is based on a static balance sheet and provides an indicator of future earnings and capital levels as the changes in EVE indicate the anticipated change in the value of future cash flows. We monitor sensitivity to changes in EVE utilizing Board of Directors-approved limits. These limits set a risk tolerance to changing interest rates and assist in determining strategies for mitigating this risk as EVE approaches these limits. As of March 31, 2023, our EVE analyses were within approved limits.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
The following table shows the contractual maturities of RJ Bank’sour bank loan portfolio at DecemberMarch 31, 2017,2023, including contractual principal repayments.  Maturities are generally determined based upon contractual terms; however, rollovers or extensions that are included for the purposes of measuring the allowance for credit losses are reflected in maturities in the following table. This table does not however, include any estimates of prepayments.  These prepayments, which could shorten the average loan lives and cause the actual timing of the loan repayments to differ significantly from those shown in the following table. Loan amounts in the table below exclude unearned income and deferred expenses.
 Due in
$ in millionsOne year or less> One year – five years> Five years - fifteen years> Fifteen yearsTotal
SBL$13,747 $400 $79 $1 $14,227 
C&I loans891 7,519 2,811 38 11,259 
CRE loans923 4,172 1,937 22 7,054 
REIT loans256 1,401 60 — 1,717 
Residential mortgage loans13 36 201 7,829 8,079 
Tax-exempt loans169 253 1,221 — 1,643 
Total loans held for investment15,999 13,781 6,309 7,890 43,979 
Held for sale loans— — 47 72 119 
Total loans held for sale and investment$15,999 $13,781 $6,356 $7,962 $44,098 
  Due in
$ in thousands One year or less > One year – five years > 5 years Total
Loans held for investment:  
  
    
C&I loans $152,551
 $3,826,227
 $3,511,441
 $7,490,219
CRE construction loans 11,612
 153,235
 —
 164,847
CRE loans 509,914
 2,014,252
 611,935
 3,136,101
Tax-exempt loans —
 22,630
 1,113,838
 1,136,468
Residential mortgage loans 1,016
 2,739
 3,267,025
 3,270,780
SBL 2,527,003
 3,518
 —
 2,530,521
Total loans held for investment 3,202,096
 6,022,601
 8,504,239
 17,728,936
Loans held for sale —
 17,098
 161,592
 178,690
Total loans $3,202,096
 $6,039,699
 $8,665,831
 $17,907,626


The following table shows the distribution of the recorded investment of those RJ Bankbank loans that mature in more than one year between fixed and adjustable interest rate loans at DecemberMarch 31, 2017. Loan amounts in the table below exclude unearned income and deferred expenses.2023.
 Interest rate type
$ in millionsFixedAdjustableTotal
SBL$12 $468 $480 
C&I loans899 9,469 10,368 
CRE loans419 5,712 6,131 
REIT loans— 1,461 1,461 
Residential mortgage loans230 7,836 

8,066 
Tax-exempt loans1,474 — 1,474 
Total loans held for investment3,034 24,946 27,980 
Held for sale loans2 117 119 
Total loans held for sale and investment$3,036 $25,063 $28,099 
  Interest rate type
$ in thousands Fixed Adjustable Total
Loans held for investment:  
  
  
C&I loans $1,700
 $7,335,968
 $7,337,668
CRE construction loans 4,588
 148,647
 153,235
CRE loans 43,732
 2,582,455
 2,626,187
Tax-exempt loans 1,104,568
 31,900
 1,136,468
Residential mortgage loans 230,142
 3,039,622

3,269,764
SBL 3,518
 —
 3,518
Total loans held for investment 1,388,248
 13,138,592
 14,526,840
Loans held for sale 5,650
 173,040
 178,690
Total loans $1,393,898
 $13,311,632
 $14,705,530


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

See the discussion within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit Riskrisk - Risk Monitoringmonitoring process” section of this Form 10-Q for additional information regarding RJ Bank’sour interest-only residential mortgage loan portfolio.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis



In our RJ Bank available-for-sale securities portfolio, we hold primarily fixed-rate agencyagency-backed MBS, agency-backed CMOs, and CMOsU.S. Treasuries, which were carried at fair value in our Condensed Consolidated Statements of Financial Condition at December 31, 2017 with changes in the fair value of the portfolio recorded through “Other comprehensive income” in our Condensed Consolidated Statements of Income and Comprehensive Income. At December 31, 2017, our portfolio had a fair value $2.29 billion with a weighted-average yield of 1.99% and an average expected duration of three years. See Note 5 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional information on the fair value of these securities.

Other

We hold ARS, which are long-term variable rate securities tied to short-term interest rates, that are accounted for as available-for-sale and are carried at fair value on our Condensed Consolidated Statements of Financial Condition. These securities generally have embedded penalty interest rate provisionsCondition, with changes in the event auctions fail to set the security’s interest rate. These penalty rates are based upon a stated interest rate spread over what is typically a short-term base interest rate index.  As short-term interest rates rise, the penalty rate that is specified in the security increases.  Changes in interest rates impact the fair value of our ARS portfolio, as we estimate that at some level of increase in short-term interest rates, issuers of the securities will have the economic incentive to refinance (and thus prepay) the securities.  The faster and steeper short-term interest rates rise, the earlier prepayments will likely occur and the higher the fair value of the security.portfolio recorded through OCI on our Condensed Consolidated Statements of Income and Comprehensive Income. At March 31, 2023, our available-for-sale securities portfolio had a fair value of $9.77 billion with a weighted-average yield of 2.03% and a weighted-average life of 4.38 years. The effective duration of our available-for-sale securities portfolio as of March 31, 2023 was approximately 3.65, where duration is defined as the approximate percentage change in price for a 100-basis point change in rates. See Note 4 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for additional information on the fair value of these securities.our available-for-sale securities portfolio.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Equity price risk


We are exposed to equity price risk as a consequenceresult of makingour capital markets in equity securities.activities. Our broker-dealer activities are primarilygenerally client-driven, withand we carry equity securities as part of our trading inventory to facilitate such activities, although the objective of meeting clients’ needs while earning aamounts are not as significant as our fixed income trading profit to compensate for the risk associated with carrying inventory.  We attempt to reduce the risk of loss inherent in our inventory of equity securities by monitoring those security positions throughout each day and establishing position limits. Equity securities held in our trading inventory are generally included in VaR.


In addition, ourwe have a private equity portfolio, included in “Other investments” on our Condensed Consolidated Statements of Financial Condition, which is primarily comprised of investments may be impacted by equity prices.in third-party funds. See Note 3 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional information on this portfolio.


Foreign exchange risk


We are subject to foreign exchange risk due to our investments in foreign subsidiaries as well as transactions and resulting balances denominated in a currency other than the U.S. dollar. For example, our bank loan portfolio includes loans which are denominated in Canadian dollars, totaling $1.54 billion and $1.51 billion at March 31, 2023 and September 30, 2022, respectively, when converted to the U.S. dollar. A majority of such loans are held in a Canadian subsidiary of Raymond James Bank, which is discussed in the following sections.


Investments in foreign subsidiaries


RJRaymond James Bank has an investment in a Canadian subsidiary, resulting in foreign exchange risk. To mitigate thisits foreign exchange risk, RJRaymond James Bank utilizes short-term, forward foreign exchange contracts. These derivative agreementsderivatives are primarily accounted for as net investment hedges in the condensed consolidated financial statements. See Note 62 of the Notes to Consolidated Financial Statements of our 2022 Form 10-K and Note 5 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for further information regarding these derivative contracts.derivatives.


WeAt March 31, 2023, we had foreign exchange risk in our investment in RJ Ltd. of CDN $320CAD 413 million at December 31, 2017,and in our investment in Charles Stanley of £274 million, which waswere not hedged. Foreign exchange gains/losses related to this investment are primarily reflected in other comprehensive income/(loss) (“OCI”) on our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 15 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for further information regarding allAll of our componentsother investments, consisting primarily of OCI.

We also have foreign exchange risk associated with our investments in subsidiaries located in the United Kingdom, Germany and France. These investmentsEurope, are not hedged, and we do not believe we havehad material foreign exchange risk either individually, or in the aggregate, pertaining to these subsidiaries.subsidiaries as of March 31, 2023. Foreign exchange gains/losses related to our foreign investments are primarily reflected in OCI on our Condensed Consolidated Statements of Income and Comprehensive Income. See Note 17 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding our components of OCI.


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


We are subject to foreign exchange risk due to our holdings of cash and certain other assets and liabilities resulting from transactions denominated in a currency other than the U.S. dollar. Any currency relatedcurrency-related gains/losses arising from these foreign currency denominated balances are reflected in “Other revenues”“Other” revenues in our Condensed Consolidated Statements of Income and Comprehensive Income. The foreign exchange risk associated with a portion of such transactions and balances denominated in foreign currency are mitigated utilizing short-term, forward foreign exchange contracts. Such derivatives are not designated hedges and therefore, the related gains/losses associated with these contracts are included in “Other revenues”“Other” revenues in our Condensed Consolidated Statements of Income and

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


Comprehensive Income. See Note 65 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q for information regarding our derivative contracts.derivatives.


Credit risk


Credit risk is the risk of loss due to adverse changes in a borrower’s, issuer’s, or counterparty’s ability to meet its financial obligations under contractual or agreed uponagreed-upon terms. The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction, and the parties involved. Credit risk is an integral component of the profit assessment of lending and other financing activities. See further discussion of our credit risk, including how we manage such risk, in Item“Item 7 “Management’s- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Managementmanagement - Credit Risk”risk” of our 20172022 Form 10-K.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Corporate activities

We maintain cash balances with the Fed and with various financial institutions, primarily global systemically important banks, in our normal course of business. A large portion of such balances are in excess of FDIC insurance limits. As a result, we may be exposed to the risk that these financial institutions may not return our cash to us in the event that the institution experiences financial distress or ceases its operations. In order to mitigate our credit risk to such financial institutions, we monitor our exposure with each institution on a daily basis and subject each institution to limits based on various factors including but not limited to financial strength, capitalization levels, liquidity, credit ratings, and market factors to the extent applicable.

Brokerage activities

We are engaged in various trading and brokerage activities in which our counterparties primarily include broker-dealers, banks, exchanges, clearing organizations, and other financial institutions. We are exposed to risk that these counterparties may not fulfill their obligations. In addition, certain commitments, including underwritings, may create exposure to individual issuers and businesses. The risk of default depends on the creditworthiness of the counterparty and/or the issuer of the instrument. In addition, we may be subject to concentration risk if we hold large positions in or have large commitments to a single counterparty, borrower, or group of similar counterparties or borrowers (e.g., in the same industry). We seek to mitigate these risks by imposing and monitoring individual and aggregate position limits within each business segment for each counterparty, conducting regular credit reviews of financial counterparties, reviewing security, derivative and loan concentrations, holding and calculating the fair value of collateral on certain transactions and conducting business through clearing organizations, which may guarantee performance. See Note 2 of the Notes to Consolidated Financial Statements of our 2022 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.

Our client activities involve the execution, settlement, and financing of various transactions on behalf of our clients. Client activities are transacted on either a cash or margin basis. Credit exposure results from client margin loans, which are monitored daily and are collateralized by the securities in the clients’ accounts. We monitor exposure to industry sectors and individual securities and perform analysis on a daily basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions. In addition, when clients execute a purchase, we are at some risk that the client will default on their financial obligation associated with the trade. If this occurs, we may have to liquidate the position at a loss. See Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K for further information about our determination of the allowance for credit losses associated with certain of our brokerage lending activities.

We offer loans to financial advisors for recruiting and retention purposes. We have credit risk and may incur a loss primarily in the event that such borrower is no longer affiliated with us. See Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K and Note 8 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q for further information about our loans to financial advisors.

Banking activities

Our Bank segment has a substantial C&I, CRE,loan portfolio.  Our strategy for credit risk management related to bank loans includes well-defined credit policies, uniform underwriting criteria, and ongoing risk monitoring and review processes for all credit exposures. The strategy also includes diversification across loan types, geographic location, industry and client level, regular credit examinations and management reviews of all corporate and tax-exempt SBLloans as well as individual delinquent residential loans. The credit risk management process also includes annual independent reviews of the credit risk monitoring process that performs assessments of compliance with credit policies, risk ratings, and other critical credit information. We seek to identify potential problem loans early, record any necessary risk rating changes and charge-offs promptly, and maintain appropriate reserve levels for expected losses. We utilize a thorough credit risk rating system to measure the credit quality of individual corporate and tax-exempt loans and related unfunded lending commitments. For our residential mortgage loans and substantially all of our SBL, we utilize the credit risk rating system used by bank regulators in measuring the credit quality of each homogeneous class of loans. In evaluating credit risk, we consider trends in loan portfolios.  Aperformance, historical experience through various economic cycles, industry or client concentrations, the loan portfolio composition and macroeconomic factors (both current and forecasted). These factors have a potentially negative impact on loan performance and net charge-offs.

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

Our allowance for loan losses is regularly evaluated with adjustments made on a quarterly basis. Several factors were taken into consideration in evaluating We determine the allowance for loan losses at December 31, 2017, including the risk profile of the portfolios, net charge-offs during the period, the level of nonperforming loans and delinquency ratios. RJ Bank also considered the uncertainty related to certain industry sectors and the extent of credit exposure to specific borrowers within the portfolio. Finally, RJ Bank considered current economic conditions that might impact the portfolio. RJ Bank determined the allowance that was required for specific loan gradespools based on relative risk characteristics of the loan portfolio.
Changes in On an ongoing basis, we evaluate our methods for determining the allowance for loan losseseach class of RJ Bank were as follows:loans and
90
  Three months ended December 31,
$ in thousands 2017 2016
Allowance for loan losses, beginning of year $190,442
 $197,378
Provision for loan losses 1,016
 (1,040)
Charge-offs:    
C&I loans (603) (3,389)
Residential mortgage loans (95) (87)
Total charge-offs (698) (3,476)
Recoveries:  
  
CRE loans —
 5,013
Residential mortgage loans 604
 65
Total recoveries 604
 5,078
Net (charge-offs)/recoveries (94) 1,602
Foreign exchange translation adjustment (95) (260)
Allowance for loan losses, end of period $191,269
 $197,680
Allowance for loan losses to bank loans outstanding 1.08% 1.25%

The loan loss provision increased to $1 million from a net $1 million benefit in the prior year. The current year loan loss provision increased due to loan growth, partially offset by lower reserve rates on pass-rated loans resulting from improved credit characteristics. The prior year net benefit resulted from the resolution of certain corporate criticized loans. As a result of improved quality in the loan portfolio, the total allowance for loan losses to total to bank loans outstanding declined to 1.08% at December 31, 2017 from 1.25% at December 31, 2016.

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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sManagement’s Discussion and Analysis


The following table presents net loan (charge-offs)/recoveries andmake enhancements we consider appropriate. Our allowance for credit losses methodology is described in Note 2 of the percentage of net loan (charge-offs)/recoveriesNotes to the average outstanding loan balances byConsolidated Financial Statements of our 2022 Form 10-K. As our bank loan portfolio segment: is segregated into six portfolio segments, likewise, the allowance for credit losses is segregated by these same segments.  See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 2022 Form 10-K for further information about the risk characteristics relevant to each portfolio segment.
  Three months ended December 31,
  2017 2016
$ in thousands 
Net loan
(charge-off)/recovery
amount
 
% of avg.
outstanding
loans
 
Net loan
(charge-off)/recovery
amount
 
% of avg.
outstanding
loans
C&I loans $(603) 0.03% $(3,389) 0.18%
CRE loans —
 —
 5,013
 0.79%
Residential mortgage loans 509
 0.06% (22) —
Total $(94) —
 $1,602
 0.04%


The level of charge-off activity is a factor that is considered in evaluating the potential for severity of future credit losses. The activityfollowing table presents net loan (charge-offs)/recoveries and the annualized percentage of net loan (charge-offs)/recoveries to the average outstanding loan balances by loan portfolio segment.
 Three months ended March 31,Six months ended March 31,
 2023202220232022
$ in millions
Net loan
(charge-off)/recovery
amount (1)
Annualized
% of avg.
outstanding
loans		Net loan
(charge-off)/recovery
amount		Annualized
% of avg.
outstanding
loans
Net loan
(charge-off)/recovery
amount (1)
Annualized
% of avg.
outstanding
loans		Net loan
(charge-off)/recovery
amount		Annualized
% of avg.
outstanding
loans
C&I loans$(20)0.71 %$(1)0.05 %$(24)0.43 %$(3)0.07 %
CRE loans— — %— — %2 0.06 %— — %
Residential mortgage loans— — %— — %— — %1 0.04 %
Total loans held for sale and investment$(20)0.18 %$(1)0.01 %$(22)0.10 %$(2)0.02 %

(1)    Net charge-offs during the current period resulted in an insignificant net charge-off, while the prior period reflected net recoveriesthree and six months ended March 31, 2023 were primarily resulting from the favorable resolution of a CRE criticized loan.related to two C&I loans.

The table below presents the nonperforming loans balance and total allowance for loan losses as of the period presented:
  December 31, 2017 September 30, 2017
$ in thousands 
Nonperforming
loan balance
 
Allowance for
loan losses
balance
 
Nonperforming
loan balance
 
Allowance for
loan losses
balance
Loans held for investment:  
  
  
  
C&I loans $4,843
 $(121,569) $5,221
 $(119,901)
CRE construction loans —
 (2,107) —
 (1,421)
CRE loans —
 (40,616) —
 (41,749)
Tax-exempt loans —
 (6,918) —
 (6,381)
Residential mortgage loans 32,490
 (15,501) 33,749
 (16,691)
SBL —
 (4,558) —
 (4,299)
Total $37,333
 $(191,269) $38,970
 $(190,442)
Total nonperforming loans as a % of RJ Bank total loans 0.21%   0.23%  


The level of nonperforming loansassets is another indicator of potential future credit losses. Nonperforming assets are comprised of both nonperforming loans and other real estate owned. Nonperforming loans include those loans which have been placed on nonaccrual status and certain accruing loans which are 90 days or more past due and in the process of collection. The amountfollowing table presents the balance of nonperforming loans, decreased during the three months ended Decembernonperforming assets, and related key credit ratios.
$ in millionsMarch 31, 2023September 30, 2022
Nonperforming loans (1)
$99 $74 
Nonperforming assets$99 $74 
Nonperforming loans as a % of total loans held for sale and investment0.22 %0.17 %
Allowance for credit losses as a % of nonperforming loans419 %535 %
Nonperforming assets as a % of Bank segment total assets0.16 %0.13 %
(1)    Nonperforming loans at March 31, 2017.  This decrease was due2023 and September 30, 2022 included $90 million and $63 million of loans, respectively, which were current pursuant to a $1 million decrease in nonperforming residential mortgage loans and an insignificant decrease in nonperforming C&I loans. Included in nonperforming residential mortgage loans are $29 million in loans for which $14 million in charge-offs were previously recorded, resulting in less exposure within the remaining balance.their contractual terms.


The nonperforming loan balances above exclude $12in the preceding table excluded $6 million and $14$7 million as of DecemberMarch 31, 20172023 and September 30, 2017,2022, respectively, of residential TDRstroubled debt restructurings which were returned to accrual status in accordance with our policy.



Although our nonperforming assets as a percentage of our Bank segment’s assets remained low as of March 31, 2023, any prolonged period of market deterioration could result in an increase in our nonperforming assets, an increase in our allowance for credit losses and/or an increase in net charge-offs in future periods, although the extent would depend on future developments that are highly uncertain.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management'sSee further explanation of our bank loan portfolio segments, allowance for credit losses, and the credit loss provision in Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q and “Management’s Discussion and Analysis - Results of Operations - Bank” of this Form 10-Q and Note 2 of the Notes to the Consolidated Financial Statements of our 2022 Form 10-K.



Loan underwriting policies


RJ Bank’sOur underwriting policies for the major types of bank loans are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk management - Credit risk” of our 20172022 Form 10-K. There were no material changes in RJ Bank’s underwriting policies during the three months ended December 31, 2017.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Risk monitoring process


Another component of credit risk strategy at RJ Bankfor our bank loan portfolio is the ongoing risk monitoring and review processes, for all residential, SBL, corporate and tax-exempt credit exposures,including our internal loan review process, as well as our rigorous processes to manage and limit credit losses arising from loan delinquencies. There are various other factors included in these processes, depending on the loan portfolio. There were no materialsignificant changes to those processes and policies during the three months ended DecemberMarch 31, 2017.2023.


SBL and residential mortgage loansloan portfolios


The marketableSubstantially all collateral securing RJ Bank’sour SBL portfolio is monitored on a daily basis. Collateral adjustments, as triggered by our monitoring procedures, are made by the borrower as necessary to ensure RJ Bank’sour loans are adequately secured, resulting in minimizing itsour credit risk. Collateral calls have been minimal relative to our SBL portfolio with noinsignificant losses incurred to date.


We track and review many factors to monitor credit risk in RJ Bank’sour residential mortgage loan portfolio. The qualitative factors include, but are not limited to: loan performance trends, loan product parameters and qualification requirements, borrower credit scores, occupancy (i.e., owner occupied, second home or investment property), level of documentation, loan purpose, geographic concentrations, average loan size, loan policy exceptionsrisk rating, and updated LTV ratios. These qualitative measures, while considered and reviewed in establishing the allowance for loan losses, have not resulted in any material quantitative adjustments to RJ Bank’s historical loss rates.

RJ Bank obtains the most recently available information (generally updated every six months) to estimate current LTV ratios on the individual loans in the performing residential mortgage loan portfolio. Current LTV ratios are estimated based on the initial appraisal obtained at the time of origination, adjusted using relevant market indices for housing price changes that have occurred since origination. The valueSee Note 7 of the homes could vary from actual market values dueNotes to change in the conditionCondensed Consolidated Financial Statements of the underlying property, variations in housing price changes within current valuation indices and other factors.

At December 31, 2017, the average estimated LTV was 53%this Form 10-Q for the total residential mortgage loan portfolio. Residential mortgage loans with estimated LTVs in excess of 100% represented much less than 1% of the residential mortgage loan portfolio as of December 31, 2017. Credit risk management considers this data in conjunction with delinquency statistics, loss experience and economic circumstances to establish appropriate allowance for loan losses for theadditional information about our residential mortgage loan portfolio.

At December 31, 2017, loans over 30 days delinquent (including nonperforming loans) increased to 0.84% of residential mortgage loans outstanding, compared to 0.73% over 30 days delinquent at September 30, 2017.  Our December 31, 2017 percentage, however, continues to compare favorably to the national average for over 30 day delinquencies of 4.09% as most recently reported by the Fed.
RJ Bank’s significantly lower delinquency rate as compared to its peers is the result of our uniform underwriting policies, the lack of subprime loans and the limited amount of non-traditional loan products.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis



The following table presents a summary of delinquent residential mortgage loans, the vast majority of which isare 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.
 Amount of delinquent residential mortgage loansDelinquent residential mortgage loans as a percentage of outstanding residential mortgage loan balances
$ in millions30-89 days90 days or moreTotal30-89 days90 days or moreTotal
March 31, 2023$4 $5 $9 0.05 %0.06 %0.11 %
September 30, 2022$6 $6 $12 0.08 %0.08 %0.16 %
  Amount of delinquent residential loans Delinquent residential loans as a percentage of outstanding loan balances
$ in thousands 30-89 days 90 days or more Total 30-89 days 90 days or more Total
December 31, 2017            
Residential mortgage loans:     

      
First mortgage loans $8,203
 $19,164
 $27,367
 0.25% 0.59% 0.84%
Home equity loans/lines 75
 115
 190
 0.27% 0.41% 0.68%
Total residential mortgage loans $8,278
 $19,279
 $27,557
 0.25% 0.59% 0.84%
             
September 30, 2017  
  
  
  
  
  
Residential mortgage loans:            
First mortgage loans $3,061
 $19,823
 $22,884
 0.10% 0.63% 0.73%
Home equity loans/lines 248
 18
 266
 0.91% 0.07% 0.98%
Total residential mortgage loans $3,309
 $19,841
 $23,150
 0.10% 0.63% 0.73%


Our March 31, 2023 percentage compares favorably to the national average for over 30 day delinquencies of 2.03%, as most recently reported by the Fed.

Credit risk is also managed by diversifying the residential mortgage portfolio. Most of the loans in our residential loan portfolio are to PCG clients across the U.S. The following table details the geographic concentrations (top five states) of RJ Bank’sour one-to-four family residential mortgage loans.
March 31, 2023
Loans outstanding as a % of
total residential mortgage loans held for sale and investment		Loans outstanding as a % of
total loans held for sale and investment
CA25%5%
FL17%3%
TX8%2%
NY8%1%
CO4%1%

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

December 31, 2017 September 30, 2017
 Loans outstanding as a % of RJ Bank total residential mortgage loans Loans outstanding as a % of RJ Bank total loans  Loans outstanding as a % of RJ Bank total residential mortgage loans Loans outstanding as a % of RJ Bank total loans
CA24.9% 4.6% CA23.8% 4.4%
FL18.2% 3.4% FL18.9% 3.5%
TX7.6% 1.4% TX7.8% 1.4%
NY6.9% 1.3% NY6.8% 1.3%
CO3.5% 0.6% CO3.4% 0.6%

Loans where borrowers may be subject to payment increases include adjustable rate mortgage loans with terms that initially require payment of interest only.  Payments may increase significantly when the interest-only period ends and the loan principal begins to amortize.  At DecemberMarch 31, 20172023 and September 30, 2017,2022, these loans totaled $748 million$2.71 billion and $683 million,$2.55 billion, respectively, or approximately 20%34% and 35% of the residential mortgage portfolio, at each period.respectively.  The weighted averageweighted-average number of years before the remainder of the loans, which were still in their interest-only period at DecemberMarch 31, 2017,2023, begins amortizing is 6.9six years.

A component of credit risk management for the residential portfolio is the LTV and borrower credit score at origination or purchase. The most recent weighted-average LTV/FICO scores at origination of RJ Bank’s residential first mortgage loan portfolio are as follows:
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December 31, 2017September 30, 2017
Residential first mortgage loan weighted-average LTV/FICO65%/75865%/758
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis
Corporate and tax-exempt loans


Other than loans classified as nonperforming, the amount ofCredit risk in our corporate and tax-exempt loan portfolios is monitored on an individual loan basis. The majority of our tax-exempt loan portfolio is comprised of loans that were delinquent greater than 30 days was not significant as of December 31, 2017.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


to investment-grade borrowers. Credit risk is also managed by diversifying the corporate bank loan portfolio. RJ Bank’sOur 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 RJ Bank’sour corporate bank loans.
March 31, 2023
Loans outstanding as a % of
total corporate bank loans held for sale and investment		Loans outstanding as a % of
total loans held for sale and investment
Multi-family10%5%
Industrial warehouse8%4%
Loan fund7%3%
Office real estate7%3%
Consumer products and services5%2%

The Fed’s measures to control inflation, including through increases in short-term interest rates, have had an impact on consumer behavior and are likely to continue to do so in the near-term. These and related factors could negatively impact our borrowers, particularly those in consumer-facing industries. In response to changing trends, and industry-wide challenges following the COVID-19 pandemic, we have closely monitored each loan in our commercial real estate portfolio, particularly office real estate, utilizing LTV ratios and other metrics. We have also focused on reducing our corporate loan exposure in certain sectors with increasing credit concerns, including selling approximately $430 million of loans subsequent to March 31, 2023 through May 5, 2023 at an average sales price of 99% of par value. Additional sales of corporate loans aremay be made during the remainder of fiscal 2023 to further reduce credit risk in certain sectors. In addition, we plan to be prudent in issuing new corporate loans for the remainder of fiscal 2023 as follows:a result of the recent market volatility.

December 31, 2017 September 30, 2017
 Loans outstanding as a % of RJ Bank total corporate loans Loans outstanding as a % of RJ Bank total loans  Loans outstanding as a % of RJ Bank total corporate loans Loans outstanding as a % of RJ Bank total loans
Power & infrastructure5.6% 3.8% Office (real estate)5.9% 4.0%
Hospitality4.9% 3.3% Retail real estate5.3% 3.6%
Retail real estate4.9% 3.3% Power & infrastructure5.3% 3.6%
Consumer products and services4.7% 3.2% Consumer products and services5.2% 3.5%
Office (real estate)4.5% 3.0% Hospitality4.7% 3.2%


Liquidity risk


See the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and capital resources” of this Form 10-Q for information regarding our liquidity and how we manage liquidity risk.


Operational risk


Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes, including cyber securitycybersecurity incidents. See Item“Item 7 “Management’s- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Managementmanagement - Operational Risk” inrisk” of our 20172022 Form 10-K for a discussion of our operational risk and certain of our risk mitigation processes. There have been no material changes

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 processesoperational challenges during the threesix months ended DecemberMarch 31, 2017.2023.


As more fully described in the discussion of our business technology risks included in various risk factors presented in “Item 1A - Risk Factors” inof our 20172022 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, spam attacks, unauthorized access, distributed denial of service attacks, computer virusescyber-attacks and other malicious codeinformation security breaches, and other events that could have an impact on the security and stability of our operations.  Notwithstanding the precautions we take, if one or more of these events were to occur, this could jeopardize the information we confidentially maintain, including that of our clients and counterparties, which is processed, stored in and transmitted through our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations or the operations of our clients or counterparties. To-date, we have not experienced any material losses relating to cyberattacks or other information security breaches; however, there can be no assurances that we will not suffer such losses in the future. 


Model Riskrisk


Model risk refers to the possibility of unintended business outcomes arising from the design, implementation or use of models. See Item“Item 7 “Management’s- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Managementmanagement - Model Risk” inrisk” of our 20172022 Form 10-K for information regarding how we utilize models throughout the firm and how we manage model risk.


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Regulatory
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management’s Discussion and legalAnalysis
Compliance risk


Compliance risk is the risk of legal or regulatory sanctions, financial loss, or reputational damage that the firm may suffer from a failure to comply with applicable laws, external standards, or internal requirements. See Item“Item 7 “Management’s- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Managementmanagement - Regulatory and legalCompliance risk” inof our 20172022 Form 10-K for information on our regulatory and legalcompliance risks, including how we manage such risks.


There have been no material changes in our risk mitigation processes during the three months ended December 31, 2017.

ItemITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


See Item“Item 2 “Management’s- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management” inmanagement” of this Form 10-Q for our quantitative and qualitative disclosures about market risk.




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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis


ItemITEM 4. CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


Disclosure controls are procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.


Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Securities Exchange Act of 1934 Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.


Changes in Internal Control over Financial Reporting


There were no changes in our internal control over financial reporting during the quarterthree months ended DecemberMarch 31, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES


PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


None.

ITEM 1A. RISK FACTORS

Not applicable.


ITEM 1A. RISK FACTORS2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Not applicable.We did not have any sales of unregistered securities for the six months ended March 31, 2023.


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ITEM 2.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


We purchase our own stock from time to time in conjunction with a number of activities, each of which is described below.in the following paragraphs. The following table presents information on our purchases of our own stock, on a monthly basis, for the threesix months ended March 31, 2023.
 Total number of shares
purchased		Average price
per share		Number of shares purchased as part of publicly announced plans or programsApproximate dollar value (in millions) at each month-end of securities that
may yet be purchased under the plans or programs
October 1, 2022 – October 31, 2022358,103 $105.94 354,313 $800
November 1, 2022 – November 30, 202278,798 $120.60 — $800
December 1, 2022 – December 31, 2022937,747 $106.64 937,737 $1,400
First quarter1,374,648 $107.26 1,292,050 
January 1, 2023 – January 31, 202353,430 $114.90 — $1,400
February 1, 2023 – February 28, 202313,586 $113.49 — $1,400
March 1, 2023 – March 31, 20233,745,485 $93.45 3,745,388 $1,050
Second quarter3,812,501 $93.82 3,745,388 
Fiscal year-to-date total5,187,149 $97.38 5,037,438 

In December 31, 2017:2022, the Board of Directors authorized repurchase of our common stock in an aggregate amount of up to $1.5 billion, which replaced the previous authorization.

 
Total number of shares
purchased
 
Average price
per share
 Number of shares purchased as part of publicly announced plans or programs Approximate dollar value (in thousands) at each month-end, of securities that may yet be purchased under the plans or programs
        
October 1, 2017 – October 31, 20178,493
 $85.25
 —
 $135,671
November 1, 2017 – November 30, 201718,539
 $85.32
 —
 $135,671
December 1, 2017 – December 31, 2017205,504
 $87.32
 —
 $135,671
First quarter232,536
 $87.08
 —
  

OfIn the preceding table, the total fornumber of shares purchased includes shares purchased pursuant to the three months ended December 31, 2017, share purchases for the trust fundRestricted Stock Trust Fund, which was established to acquire our common stock in the open market and used to settle RSUs granted as a retention vehicle for certain employees of our wholly ownedwholly-owned Canadian subsidiary approximated 72 thousand shares, for a total consideration of $6 million (forsubsidiaries. For more information on this trust fund, see Note 2 of the Notes to Consolidated Financial Statements of our 20172022 Form 10-K and Note 9 of the Notes to Condensed Consolidated Financial Statements inof this Form 10-Q).10-Q. These activities do not utilize the repurchase authorityauthorization presented in the table above.preceding table.


WeThe total number of shares purchased also repurchaseincludes shares whenrepurchased as a result of employees surrendersurrendering shares as payment for option exercises or withholding taxes. Of the total for the three months ended December 31, 2017, shares surrendered to us by employees for such purposes approximated 161 thousand shares, for a total consideration of $14 million. These activities do not utilize the repurchase authorityauthorization presented in the table above.preceding table.


ITEM 3.DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.ITEM 5. OTHER INFORMATION


ITEM 5.OTHER INFORMATION

Not applicable.


None.
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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES


ITEM 6. EXHIBITS

ITEM 6.EXHIBITS
Exhibit Number
Description
3.1
3.1.1
3.2
3.1.2
3.1.3
3.2
10.1
10.2
10.3
31.1
10.4
Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (time-based vesting) for Canadian Employees, as revised and approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan.
10.5
Form of Restricted Stock Unit Award Notice and Agreement for Stock Bonus Award (performance-based vesting) for Canadian Employees, as revised and approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan.
10.6
Form of Restricted Stock Unit Award Notice and Agreement for Non-Bonus Award for Canadian Employees, as revised and approved on May 17, 2017, under the Amended and Restated 2012 Stock Incentive Plan.
11
Statement Re: Computation of per Share Earnings (the calculation of per share earnings is included in Part I, Item 1 in the Notes to Condensed Consolidated Financial Statements (Earnings Per Share) and is omitted here in accordance with Section (b)(11) of Item 601 of Regulation S-K).
12
Statement of Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
31.1
Certification of Paul C. Reilly pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32
101.INS
XBRL Instance Document.Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


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RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RAYMOND JAMES FINANCIAL, INC.
(Registrant)
Date:FebruaryMay 8, 20182023/s/ Paul C. Reilly
Paul C. Reilly
ChairmanChair and Chief Executive Officer
Date:FebruaryMay 8, 20182023/s/ Jeffrey P. JulienPaul M. Shoukry
Jeffrey P. JulienPaul M. Shoukry
Executive Vice President - Finance Chief Financial Officer and Treasurer

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